She was never going to achieve financial independence, or even the financial comfortability she wanted, if she relied solely on her career.

She loved her job, but all around her she saw older colleagues struggle financially.

“They didn’t own their own home. It made me scared. I thought: ‘I didn’t want to be in the same situation as them’,” she says.

It just wasn’t enough. Since her early twenties she had dreamed of financial freedom. The financial ability to pursue her true loves, art collection and travel. But the question was: How?

A Calculated Leap of Faith

Miao describes her start into property investment as: “coincidental”

During the great financial crisis in 2009, she took advice from her former university flatmate who’d studied property valuation, who told her about the money to be made from property investment. At the time, houses were “dirt-cheap” and the opportunity was there to be taken.

Miao took the leap.

“I had no idea about property or investment. I knew nothing,” she says.

But the concept fascinated Miao.

Very quickly she realised property was a great vehicle to get her where she wanted to go (financially speaking).

“I could follow a pattern to get my passive income and achieve what I wanted to achieve,” she explains.

So, in 2009, Miao bought her first property in West Auckland. The following year she bought her next property. In April 2021, she settled her 5th property.

It was 12 years of sacrifice and stress but she made it work, looking at each stress as a learning opportunity and refusing to deter from her long-term goals. But then the government introduced the new tax deductibility laws and changed everything.

Double-Edged Negative Gearing

The new laws meant property investors could no longer expense interest from taxable profit for existing builds. So, in the IRD’s eyes, investment properties looked profitable so investors would need to pay additional tax. All the while still having to pay the interest. It was a double-edged sword that would massively impact any passive cashflow.

For Miao, it meant her passive cashflow dropped through the floor. Her last property settled a month after the announcement and she found herself suddenly moving further away from her financial goals.

Her four earlier properties were cashflow positive under the old tax laws, but the 5th was deemed profitable under the new tax law, and was negatively geared due to being 100% leveraged against her portfolio.

Not only that, but she’d hit the ceiling in terms of what she could borrow. If she wanted a sixth property, her broker told her she would need to increase her income by $1000 per week. An impossible figure to achieve overnight, let alone on a nurse’s salary.

So, Miao was a successful property investor facing a dilemma of how to make more money or start losing money. She had to get creative.

Mimicking the Mentor

Then while at the gym one morning she heard Ilse Wolfe’s property investment story on the Property Academy podcast.

Ilse Wolfe is the director of Opes Accelerate – a coaching programme for renovations-focused investors. She’s also a successful property investor with a sizeable portfolio.

Ilse’s story inspired Miao, who had always dreamed of trying a renovations project. It appealed to the creative in her, but she didn’t have the tools or know how.

Miao believes when you have a good mentor, you’re already achieving your goals.

So, she placed her confidence in Ilse and the Opes Accelerate investment coaching program. Through Ilse’s story, she knew she would gain the results she needed to unlock the next purchase, getting back on the right track to achieving financial freedom.

“Difficulty has forced me to be creative, and I’m very appreciative that it happened because it opened my horizons.”

Together, the pair worked through Miao’s 12-year long portfolio and worked out how to enhance each rental’s value, then adjust the rent to fit the current market.

Ilse Wolfe has developed her own 6-step Cashflow Hack playbook for maximising both rental returns and equity increases through renovation. It’s her own take on the tried-and-true BRRRR (Buy, Renovate, Rent, Refinance, Repeat) method.

Fresh analyses calculated the potential rent gain post-renovation, compared to current rental return. Once completed Miao’s total portfolio rent increase by an extra $1085 per week and exceed the required $1000 per week.

But it’s not just that. Different floor plans were considered, renovation scopes and relative investment required. And finally, which strategy would generate the best return on investment (ROI).

The Art of Financial Freedom

The end result was, if she added additional bedrooms to three of Miao’s properties, cosmetically refreshed a large home & income (double-income property), and topped-up the neglected rents to current market value, Miao would be able to completely match her full-time nursing income through passive rent cashflow.

It was a huge moment. Never before had Miao considered this an actual, tangible, possibility.

It was also a relief to have the answer to offsetting the impacts of the new tax laws.

“To replace my income was mindblowing to me,” she says.

Currently, two of five properties have been completed, so Miao is now one property away from realising a full-time passion for art and travel.

But all five properties will be completed in the end.

The first in Manurewa, Manukau City, gained $225 in rent per week after a $35,000 renovation spend. This included around $20,000 of unexpected spend that was lurking within the walls – a slow water leak that had compromised the floor of the bathroom and laundry.

The second in Otara, Manukau City, gained $250 per week after addition of an internal room and external cabin, and cost only $25,000 in total.

The Return on Investment for these properties are 33% and 52% (which means able to be paid back within 3 and 2 years), respectively.

The other three based in Waiuku, New Lynn and Massey (all Auckland) are ready and waiting. She’s working in order of preference, based on a consideration of situation of tenant, rent uplift opportunity and complexity.

Miao says she’s proud to see the realisation of her financial goals, and the payoff to all the sacrifices she made along the way.

So yes, while the tax change was a big blow to private landlords, Miao says it was an opportunity. She had all this potential at her fingertips, and she never even knew it.

She just needed help to unlock it.

Ilse Wolfe is Director of Opes Accelerate coaching program. To enquire about coaching memberships and how you could accelerate your personal investment pathway, contact Ilse at ilse@opespartners.co.nz. For further information visit www.opespartners.co.nz/accelerate Follow Ilse at @ilsewolfenz on Instagram.