November 13, 2019 by Dymphna

$1 Million+ in Equity and $71,000 Positive Cash Flow – Sue and Mark’s Story

Coming from a place of want shouldn’t stop you from being a property investor. That’s what Sue and Mark discovered with I Love Real Estate.

There’s this negative mindset that seems to permeate much of Australian society when it comes to property investing.

So many of us think that it’s too expensive. We tell ourselves we need hundreds of thousands of dollars just to make a start.

And that thought leads many people to avoid investing altogether.

This mindset often develops when you come from a place of want. You start to assume you’ll never get something, just because you’ve never had it.

And this belief can serve as a straightjacket, a paralysing force holding you in place…

Or it can be the motivation that drives you to build a better future.

Sue and Mark Make a Change

Both Sue and Mark came from humble beginnings.

In Sue’s case, she grew up almost entirely on her grandmother’s pension. And Mark’s mother died when he was very young. His father remained distant, so he had no choice but to practically raise himself.

Neither could ever afford anything while they were growing up.

But they didn’t want to let that poverty mindset hold them back.

As adults, they both wanted to move away from a place of want and create an amazing life for themselves.

The Early Efforts

Sue used to hear all her childhood friends talking about how they “had” to go to their holiday homes during the summer.

That was an alien concept to her. She couldn’t understand why her friends saw having a second home as such an inconvenience. And it was then that she decided she’d have a holiday home of her own when she grew up.

That childhood dream represented her start in property investing.

But it was also a drain on her resources!

Sue bought a caravan so she could have the holiday home she’d always wanted. But that home also created a $5,000 negative cash flow.

Still, she and Mark continued on their investment journey. And by the time they came to I Love Real Estate (ILRE), they weren’t in a terrible position. 

They had $500,000 in equity to play with. They also had another investment property.

Unfortunately, that investment property was also negatively geared. And what hurt the most was that it had started out generating a positive cash flow. Their accountant’s mistakes had led to it losing its positive attributes.

So the couple had a fairly strong equity position. However, a negative cash flow of $22,000 per year left them in a precarious situation.

They needed help from the investment experts.

Our Solution

The first thing we told Sue and Mark ended up cutting Sue pretty deeply…

She needed to get rid of the holiday motorhome.

Having your dream property doesn’t mean much if it’s costing you money every year. By selling the caravan, they eliminated $5,000 in negative cash flow.

Then we needed to look at improving their current situation.

Sue’s mother was the couple’s primary concern. She’d fallen ill, and Sue wanted to keep her close so she could receive proper care. So they built a granny flat at their principal place of residence (PPR).

In addition to the emotional motivation, this represented a good financial move. That flat added value to their PPR, and may even generate revenue in the future. It cost them $50,000 to build and added about $80,000 in equity.

From there, they started to build their portfolio.

Their first investment was a large house…that they made a mistake with. They ended up buying it without seeing the interior first. Their intention was to subdivide and rent it on.

The couple paid over $500,000 for an exhibition house. But after a $100,000 renovation, they made it habitable. Plus, they were able to claim depreciation on the work they did.

The deal that followed was far more successful. It provided them with $40,000 of positive cash flow and about $250,000 in equity.

Now they’re in a position to build a really strong portfolio.

Where They Are Now

Today, Sue and Mark have a positive cash flow of $71,000.

That’s a huge turnaround from the negative cash flow of $22,000 they started with before working with ILRE.

They also have over $1 million of equity, which they can leverage to keep building their portfolio.

So, what are the key lessons you can learn from their story?

Lesson #1 – Your Situation Doesn’t Determine Your Outcome

Both Sue and Mark had difficult upbringings and came from positions of poverty.

It would have been all too easy for them to stay in that cycle of poverty as they grew older. But instead, they chose to use their experiences as the motivation they needed to invest.

Lesson #2 – Choose Your Accountant Wisely

To this day, Sue and Mark don’t know how their old accountant turned a positive cash flow property into a negative one.

They suspect that some funny business went on behind the scenes.

The lesson here is that you have to be very careful when choosing who you work with. Vet them extensively so you feel sure that they’re up to the job.

Lesson #3 – See it, Be it, and Habit

Sue says that she visualises her whole day before she gets out of bed each morning.

She sees what she wants to achieve so she can be that person when she starts her day.

This is such an important habit to have. Visualising the success you desire can serve as a huge motivator. It also helps you to figure out what you need to do to get to where you want to be.

It All Starts Now

Perhaps you come from a similar situation to Sue and Mark’s?

The most important message this story delivers is that success is all about your mindset. If you think you can’t achieve something, the odds are high you never will.

But if you change how you think and tell yourself that you deserve more, you open the door to success.