Stories of Success! How a property portfolio became an insurance policy

Hey, everyone, it is Jane Slacksmith here and welcome to everyone in your Property Success Club. Now, it is March, which means that it is Capital Growth Month, and it is Friday, which means that we are going to be talking to someone from our community who has an exceptional capital growth story. And this one in particular I absolutely love. And what a great way to kick off Capital Growth Month with because we have the gorgeous Sarah Crawford with us. And Sarah has just joined us now. I'm just going to let her know. Hey, Sarah, how are you going?

Good, Jane, how are you?

Oh, what a great clear picture. It's like we planned this, isn't it?

It's easy. It comes easy to us, Jane.

Well, it is so great having a chat to you. And you know, when I had a chat to you, well, I think it was in November and December and we were talking about other things, which we'll get to in a little bit. One of the things I think that really, really touched me about your story and was really interesting was that when you initially emailed me and said, look, thanks so much for your support. Over the last year or so, you know, the family's been going through some differences, but I just want to let you know how much having this property that we purchased back in, what, 2013 has made significant changes.

Correct? You're correct.

So tell me about that purchase. So back in 2013, buying a first investment property, do you want to just take me back through what you were looking at and why this was important to you? Because you had a very young family then as well.

Very young family, very tight budget. I wouldn't say any spare change floating around, really, but I guess the asset that we had is that we had started to generate some equity in our own home. So we started to do a little bit of a shop around. I remember reading an article that was written by yourself, Jane, which was regarding the benefits of granny flats in the back of properties and how you can swing your property into a positive cash flow just from popping in a granny flat at the back. And I remember thinking, I don't even have the money to purchase a granny flat to put in the back. You know, I looked into it to purchase the granny flat. We were looking anywhere from, say, 25,000 to 150,000 for that granny flat that wasn't lying around. But as I said, what I did have was the equity. Yeah, I believe at that time the article that you had written was referring to granny flats in Sydney. I didn't have the confidence in the Sydney market because I wasn't well researched. So I started just investigating my local market, being Melbourne, to see what we could afford as a family. And I very quickly came across Broadmeadows, which admittedly didn't have the best name. It's a little bit of tough town out there, but it's very close to the cbd.

And it's a very. It's characteristic of that area like Blacktown that I wrote about in Sydney, of that kind of almost lower socioeconomic area, kind of looked down upon, upon others. You know, it's the western suburbs or you know, the outer suburbs or broady kind of kind of mentality. But when it comes down to the numbers, it doesn't really matter about those parochial opinions.

Does. Doesn't matter. But being young myself to invest, having a young family, having budget restrictions, other people's opinions did matter to me. And I had to really train myself to block them out, to go by my own research, to go by your guidance. It was very quick into my search when I thought, I'm just going to ring Jane and introduce myself to her and start the ball rolling. And that's where we came across. I found a property that had one bungalow in the backyard that was being used just as singular bedroom. There was no utilities in there at all. But I also identified that there was a separate shed on the property which looked very similar to the bungalow extension externally, but inside was really run down. It was very cheap. It was about 300,000, I believe it was advertised for. And I rang you up and I said, I think I can make this property work. You just need to show me my finances.

And then the magic happened.

Right then the magic happened. You were like a bulldozer, didn't stop at anything, found a way in which we could do it, which was, I want to say it was borrowing against our equity. But somehow you said that the investment property could then stand alone. So it wasn't tied to my house, which has been a real benefit because we've since moved from that initial residence that we were in. And when we sold, it didn't affect our investment property at all. We just sold our residence and we moved on.

And I think this is. It brings up a few interesting things. First of all, your original home had some capital growth that allowed you to have the equity that you could pull out to invest. And then having the strategy around how that money was actually released. So we didn't cross collateralize your properties. So we didn't have two properties supporting the one loan on the new investment property. We had that full loans A bit of money came out of your home equity and that was used for deposit and costs. And there was only one security and one loan against the investment property. So, you know, everything was kind of structured. Right. But the lovely thing about, I guess your assessment was that you knew as a young family that you didn't have a lot of extra cash to contribute, you had some equity. So you were very defined in what your strategy was, which was you needed to make sure that this property kind of covered itself or covered the costs of itself. So you went in, which is interesting, with an initial kind of cash flow strategy. But what has happened is that we've had that gentrification of the areas and as people couldn't afford Brunswick and Coburg and North Coburg, et cetera, they're moving out of that ripple effect to Broadmeadows. So all of a sudden, that property back from 2013, that was valued at what he bought it at like $300,000. What have you recently had? Three hundred and five. What's the recent? Four years? Down the track.

Down the track, we've just had it valued at 650 plus.

So that's extraordinary, isn't it? Most people are trying to double their money with 7% capital growth. So the rule of 72 is 72 divided by 7 means it takes 10 years to double your money. I mean, the growth that you've had, you've doubled your money in less than four years. So, you know, I really, I think this is such a lovely success story because not only did you go in there with the mindset of, you know, affordability, young family, we have to make sure that this covers itself and you tailored your strategy to finding the right property that could help you do it. But hey, check out what growth's done.

For you that what's gross done. And when I researched, it was strikingly to me that there was no choice but for area to boom. We just needed to get that hurdle of crossing over the ring road. So it had dried up to one side ring road, the DBD side of the ring road, and the other side still, in my opinion, undervalued. So we had bought there and I thought surely it'd be too much time till we make that leap. The train lines have already extended out and as I said, I assessed the property had a strong ability to be positively geared. And to be honest, if I have things that should just. Four years, if I'm really honest, four years ago, I actually was assessing to generate a greater income than what we were capable of. So Just the cash flow in itself. With my calculations, if I was to renovate the two properties, which probably cost us around the 50,000 mark, to put kitchenettes and ensuites into the two bungalows, that would then in turn generate $300 per week of positive cash flow into our pockets. And as a young family, on one wage, that was our groceries paid for every week. And it was a real benefit to us. Real benefit to us. But that as in summary, that purchase of that property has not only generated us an income, it's grown in value. We used our equity to purchase it, which to me never felt like real money. And we're benefited at the end of the day. We're financially very secure now because of these steps. And one step that I didn't explain to everybody was we initially did have a pool of savings. We had $75,000. And I remember stressing over this $75. And I'm doing this because it was really our nest egg. That's all. We had nothing else. I like my style. I like to live in comfort. And we bought the ugliest house in the best area that we could afford with our primary residence. And I so desperately wanted to do it up, but I was eager to get into the property market with investing as well. So I actually took the step of putting that 75,000 into our place of residence, renovating that, giving it a real cosmetic facelift, then that then grew our equity of that property by at least 200,000. So if you like, my nest egg grew again. I then took a bit out of that, put it into Broadmeadows, purchased, took a little bit more out, put it into renovating Broadmeadows and watched it flourish. And we've since bought another property in Broadmeadows and done the same.

And it's amazing. So at the moment, what's the rent that you're getting on that Property?

We're getting $750 a week rent in the Broadmeadows property.

So it's making you like 20 grand a year?

Positive. 20 grand a year, yes. The rest all pays off the mortgage. We do cover the utilities for our tenants, so. So there's a big cost that goes into running that property. But at the end of the day, we withhold $20,000 profit in our own bank account as play money, if you like.

So you've kind of replenished that $75,000 quite easily over the years as well.

Over and over again. It's fantastic.

And I think we're talking about March being our Capital Growth Month. And I really want people to understand, you know, the personal stories behind what, you know, selecting the right area and the right property can do for you. And I think, you know, your, your story is so fundamental to that because by having that right property to start with and renovating it strategically and being able to pull out the equity allowed you to get into your first investment property. You had a strategy, you were very laser focused on where you purchased. You, you were looking at those dynamics that drive growth as well. So you knew about the infrastructure changes and what those fundamentals were. Now the ripple effects caught up and I guess, you know, if we come full circle now, one of the, I guess the missions, my transformative purpose that I'd like to contribute to the world is be able to help people get rid of money worries so they can get on with life and pay attention to things that are important.

Now.

You've really had some life changes in the last couple of years that having the flexibility to sell this property and pay off your own home loan could really help. Do you want to tell us a bit about that?

We do. As I said before, when we started on the investment journey, or investment train, I should say, things were tight. We had a young family and my focus was getting through day by day, financially and emotionally. I might slip in there and I guess I didn't have a much larger picture than that. I just needed the numbers to work for now and that's where my line of research went. Of course, I always had the hope of capital growth, which it's proved to do and it's come at the right time for us. Our third little girl, who is now just turned three years old, has a very serious illness that's prevented me from working at all. I'm a full time carer for her many times per annum. My husband also needs to stay home from work, so that's two of us at the moment. He's on long survey. We can just refocus ourselves. Had a hard 18 months with many ICU admissions and lots of upheaval. And so he's long standing service leave, he's on half pay. But.

We'Ve just lost you there.

Sarah had to move house again so that we could put my youngest daughter into a safer environment to suit her needs. And once again to get into the market that we needed to, we had to buy a bit of a rundown property in the best area that we could afford. And we have chosen now that we have done a full, full house renovation. I'm talking about gutting Every wall, every room redesign, transforming it again. Looking smico. If I, if looking smico. If I had the, if my house was clean, I would take the phone through and show you what we've done. But we are now in the position where we can sell off one of our investment properties and it covers the lot. Yeah.

So you can actually, you have a mortgage free home.

You know, we've got our cake and we're eating it too.

And you know what is so lovely about this? This started in 2013. A good looking one at that.

Jane.

Sorry, what'd you say, Sarah?

It's quite rapid, isn't it? It's quite rapid, isn't, is?

And you know, the thing is.

It'S.

So important that, you know, people understand that getting this right and getting the location right is just so fundame to you, creating your own financial security and your own wealth. And that's why we spend so much time talking about location and getting that location right and not just the suburb, but getting the streets in the suburb and the right property as well. So, you know, I think that one of the things that we're, we're really, really committed to is making sure that we can actually find, you know, give people the skills. Oh, she's back. Give people the skills to buy the right property, but also give you the skills to understand that having the right property in the right area is, and being able to capitalize on that capital growth can get you to your goals a lot sooner. A lot of people I talk to say, you know, in the next 10 to 15 years, I'd like to have a portfolio that I could sell down, pay off my home and have something to live off. The reality is, Sarah, you know, four short years, Sarah and Heath have been able to do that. And the most amazing blessing with that is that having a very sick child and not knowing that you have that kind of stability of income that you can go out every day and work, and having that kind of requirement to turn up at hospital and having one parent at the hospital all the time and one parent at home with the other kids, you know, just being able to pay off the mortgage or have the income from this positive cash flow property really allows you to have that freedom of choice and flexibility. So I think it's just such a great story, Sarah. It just incorporates every single thing. And why we think that growth is so important.

Absolutely. It's our version of life insurance, Jane.

Exactly. And the way they use renovation to renovate your home, renovate the bungalows, and now being able to Upgrade your home. Once again, targeted the best area, but the worst property that you could add value to. I mean, it is such a beautiful circle. You know me, I love renovation. So I know it's a strategic decision, creating wealth. And you've done it, you know, numerous times. Well, and it is, isn't it? So now, now, some of you may actually have seen Sarah before, as I have on my little table all the time. Sarah and he have taken their learnings and their experience that they have been through in helping little Piper deal with epilepsy and the diagnos and I guess, understanding and living with a child with epilepsy. And they've actually created this amazing foundation, the Pippilepsy foundation, that supports those that give the resources for diagnosis and for families who are just coming to terms with their children with epilepsy. And I know epilepsy has touched so many people's hearts. And if you're in the club, you may have actually joined the club under our amazing new, new way of getting in, which is pay what you can afford to pay. And. And all the money goes straight to the Peopleepathy Foundation. And we're really excited. I think we've just cracked two and a half thousand dollars, Sarah, so, you know, we're committed to getting to that 10 grand.

What a gift, Jane, that you're giving to your whole community, not just us. We're incredibly grateful, but it's a gift you're giving to others as well. And if anybody wants to learn more about our foundation, we are very happy to answer whatever questions they may have. We need to grow it and grow it.

You've got a big weekend ahead of you too, don't you?

We certainly do. That would be next weekend. We're doing Run for the Kids. We're calling out for everybody to join Team Pippilepsy. The Royal Children's Hospital has confirmed that any monies we've raised through the pipilepsy team will be held in trust by the hospital to go straight to the neurology wards to be used for services specific to treating epilepsy. Huge achievement.

Oh, that's great. It's really hard to. Getting an allocation of funds to a hospital is one thing, but understanding that you can get it to the right area is another. Now, I know we've got a few people watching. If you do have any questions, please type your questions in. We will. Getting there. This is in the club. Sarah's a member of our club and community and I'm sure the both of us will get in there. And if There is any questions you have about her journey. Maybe we might be able to find a potential buyer for your property too, Sarah, you never know.

We are happy to walk you through the property. No questions.

We might get, we could get actually a collective of the entire community buy it. Maybe that's something you and I should talk about. We can talk.

We might have to get the camera crew through the property chain. That would be fun. We can have a live to air auction.

Oh, that would be fun too. Oh, the mind boggles. Well guys, I really appreciate your time, Sarah. I really appreciate you pulling back the door and really showing us through your property investing journey. From the worries of being a young family with limited cash flow to being very strategic. And I've just been, it's been an absolute privilege and I'm humbled to be part of that journey with you and to see just such an inspiring story and to really, I guess understand that true value of what growth can be and give you the choices that you now have to spend the time where you need to spend it. Which is exactly what most of us who have families or even single people just want to do. Spend the time on what we want to do ourselves and have the choice rather than having life due to financial worries dictate them to us. So great story.

Thank you. Just gotta be a little bit brave sometimes and I hope that people can take from our story that we're on the tightest budget we just had to put our thinking caps on, be a little bit creative and be exceptionally brave and do it. If we can do it, I can assure you anybody can do it.

Well, Sarah, thank you for being our first guest on Capital Growth Month. It's so nice to hear the stories from our community. If you've got a story that you'd like to share, love to hear it. I'm getting some beautiful emails from people about, you know, what I guess you know their journey has been and some of the choices they've made, some good, some bad, and what they've learned from them. So next Friday, 12:30, we'll be back here chatting to another member of the community. This Wednesday at 12:30, we will be chatting to Louis Christopher from SQM Research. We'll be talking all things growth with him. And for those of you, even if you're in the club and you'd like to make a donation to the peopleepsy foundation, going to put a link below, go over there, click on it and make a donation. We are just so happy to be part of the Epilepsy foundation. And making a contribution to helping children and supporting their families and those that resource and diagnose the kids with epilepsy. So it's great to be involved.

Great to have you. Thank you, Jane.

See you later. Have a great weekend, everyone. Bye. Bye.