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Momentum Wealth success story

Tuesday, 5th Jul 2011

 

More than 70% of investors only manage to buy one property. This is why our Rising Stars this issue, Helen and Paul Walpole, are certainly not your average investors. To date Helen and her husband Paul have acquired a portfolio of 7 properties, a feat which less than 1% of investors ever reach.

Helen and Paul’s journey in property began about 10 years ago when Paul, a self-employed plumber, was working for a customer renovating a group of old units in Mount Lawley. Having had friends that had done well through property, this astute couple decided to take the plunge and buy one of these units from the owner once they were complete. This success of this investment started a love affair with property which saw them acquire further properties throughout the southern suburbs of Perth roughly every 2 years.

Having always purchased properties with a buy and hold mentality and never selling, the couple eventually decided that now their kids were grown up, it was time to up the ante and move on to developing. The couple were well aware that this was going to be a different ballgame and that they were going to need professional advice to do it right.

“I thought I’m new at this; I want to align myself with somebody who already does this type of thing”, says Helen.

After attending a few of Momentum Wealth’s seminars and undertaking a consultation with acquisitions specialist Mark Casey (who has a portfolio of 17 properties himself), Helen appointed Momentum Wealth and the couple began taking the first steps on their development journey.

Early this year after plenty of planning and research, Mark located a development opportunity that met all the required criteria. It was an old home located on a large block not far from the city in Cloverdale, zoned to suit redevelopment to 3 villa’s or 4 townhouses. After extensive negotiations Mark managed to secure the property $40,000 below its market appraisal. Mark also negotiated early access so Helen and Paul were able to go in to undertake some minor refurbishments prior to settlement in order to prepare the property for rent while the development plans get underway.

With the help of Mark’s development experience and feasibility calculations, the couple are intending to spend a total of approximately $1.9 million (including the purchase price) developing the property, and estimate the final value of the development should generate a gross rental yield of 5.7% and a capital gain of at least $400,000.The couple aren’t planning to sell any of the newly built properties unless they really need to.

Together with the depreciation benefits received on new construction the project will be self funding upon compleition and benefit from on-going rental growth and capital appreciation.

Assuming all goes well, the couple are already planning to do it all again on another development project and perhaps even a few more after that. At that point, they are thinking of changing tack by paying down the debt on their portfolio and living off the rents.

Despite Helen and Paul’s significant investment experience, they are relieved to know they were not alone when it came to moving into development, an area they openly acknowledge they knew little about. Helen has been ecstatic with the help received so far from Momentum Wealth, from improving her knowledge about the development process through to saving them time and money in a range of areas. She has also been surprised with how much more they’ve learnt about investing in general, even though they’ve been investing for many years.

When Helen looks back on their investment journey to date, she counts herself lucky. They proceeded with knowledge and trusted in their beliefs despite what others might have said, and it paid off. Her advice for would-be investors is to remember that it’s time in the market, not timing of the market “so the sooner you start the better off you’ll be”. And forget about the media and what your risk-averse friends think. Trust in the knowledge of those ‘in the know’ and make the move as soon as it’s right for you.