A career-driven couple spent years saving for their ideal “forever home” only to discover it wasn’t the happy ending they thought it would be.

Here’s how the pair sold their dream property to create the retirement of their dreams instead.

The investors

Married couple Sammy and Leon, 41 and 42, had saved for years to buy the ultimate property: a 400m² house on a seven-hectare section. Together they were earning just shy of $290,000 a year, $155,000 and $135,000 respectively.

Life seemed great, but it was soon clear their long-desired dream had flaws.

Their huge, luxurious home was far too expensive to run (eg cleaning, maintenance, electricity, rates and insurance). And not only that, it was incredibly inconvenient to live 60 kilometres out of the city centre, often requiring a two-hour commute to work each day.

And finally, such a large home was actually stopping them from investing further, because their lending was so limited by all the expenses. They were stuck (and not just in traffic).

How much money

Sammy and Leon wanted to switch things up. They decided it was time to sell the property and focus more on creating a retirement plan, through property investment, so they came to see me in my role as an Opes Property Partner.

But to make a plan, you need to figure out what you’re investing for. In other words, you figure out: “How much money do I need to make a goal a reality?”

Sammy and Leon’s goals were to create a $150,000 passive income in 10-15 years’ time when they retired. I worked out they were on track for a passive income of $65,000 a year.

They had a wealth gap and needed $3.7 million worth of assets to get them to their goal. But things were a bit unique for Sammy and Leon because their jobs allowed them to work overseas, sometimes for years at a time.

This is great news for selling the house they don’t need to live in, but it raised financial questions. What do they do with the profit from the house while overseas? And how do they get the bank to approve a mortgage for an investment property if they aren’t in the country?

Sure, the job would still be a Kiwi company earning Kiwi dollars – which made it easier for lending – but what about income and deposit limitations?

I had a solution.

How many properties

To get around this, Sammy and Leon gained maximum lending against two properties: an Auckland two-bed and a Christchurch three-bed. They then set up a revolving credit to reduce interest costs with the additional funds.

Also, they did research on which banks they would use for lending. This is because different banks have different deposit amounts for overseas lending.

Sammy and Leon chose a split banking strategy, between TSB and Westpac, because they had the lowest deposit requirements (20 per cent and 30 per cent respectively) for overseas buyers. Other banks have deposit requirements up to around 40 per cent.

Together, these properties will get them to 89 per cent of their goal ($134,000) in 15 years. And there will be the option to buy another property to close this gap further. But this will be considered in an annual review – maybe when the couple return from overseas.

Next steps

Sammy and Leon’s experience might resonate with a lot of homeowners. Maybe the house you thought you wanted isn’t all you thought it would be. Maybe you’re considering selling your owner-occupier to rearrange your investment portfolio. There are always options for you.

If you want the same service as Sammy and Leon, your next step is to book a Portfolio Planning Session with us here at Opes Partners.

Disclaimer: Just remember this is a column in a magazine, going out to thousands of people. It’s not personal financial advice. But, it is an example of what can be achieved with personalised financial advice. If you are wanting to book a consultation, email us through the website at https://www.opespartners.co.nz.