Millionaire Case Studies

CUSTODIANMILLIONAIRE CASE STUDIES

CUSTODIANMillionaire Case StudiesWelcome to our first edition of Custodian Millionaire Case Studies.

I am excited to launch this ground breaking publication. Where else can you find a publication of case studies that profile ordinary Australians all using the ‘Custodian Principles’ that have built extraordinary wealth?

I am also very proud of the people who feature in this publication and extend my special thanks to them for sharing their stories and their inspiration. These are the people we call our ‘property millionaires’ - clients who have built net assets from residential property in excess of $1 million. The number of these clients is growing every day.

At Custodian WealthBuilders, we measure our success by our clients’ success.

My wealth building model is detailed in my bestselling book, Seven Steps to Wealth. In 1998 I wrote the book with the singular goal to teach the average Australian how to build wealth in real estate.

The number of Australians back then who were financially independent in retirement was pitiful (less than 5%), and today in 2012, post the GFC, that number is probably even worse with so many retirees losing so much in superannuation from the stock market crash during the GFC.

Since writing Seven Steps to Wealth, we have had thousands of investors who have bought properties through us, whether they have purchased one, or multiple properties with a portfolio of twenty.

Our clients are well educated – they know good principles of wealth building. Their focus is on compound growth and putting a structure in place using their income, tax deductions, and the benefits of property - growth, leveraging and income - to establish a basis that can build a portfolio. Our clients are familiar with finance, bank valuations, construction costs, tax, borrowing capacities and rental growth.

The system works because it is based on a simple truth; ‘demographics

is destiny’. We study population growth, housing starts, affordability, household disposable income and, of course, job growth. The demographics that underpin all this have never been stronger in Australia, with our population growing at the fastest rate in history by nearly one million people every 26 months.

Our clients are motivated, because building wealth is about repetition, and repetition takes discipline. Whilst demographics are our destiny, the number of Australians that will build a portfolio of more than four properties is a fraction of a fraction of 1%. This is an elite group, and it takes dedication and discipline. There is a saying that environment is stronger than willpower, and our Custodian millionaires work hard at ensuring their environment is the optimum for success. These are the teachings that are touched on in Seven Steps to Wealth but go beyond that to what the Custodian program really is.

This year and beyond, the growth in affordable housing looks set to continue, as the fundamentals that have made this performance possible (supply and demand) continue to work in the investors favour, with continued population growth and further shortages of supply. Developers simply cannot get the much needed funding, or council approvals to bring sufficient new stock onto the market.

Consequently, the rental market is a key driver for the success of the Custodian program. As the average Australian finds it increasingly difficult to afford their own home, the demand for quality rental properties close to employment centres and other community facilities is forecast to grow.

For wealth builders, the secret to success is just one thing – repetition. The Custodian program is about practicing that repetition. It is not about buying the one property that is going to make you wealthy or even the best property. It is about buying a property that you can use to duplicate and obtain compound growth.

The principles aren’t new. I’ve been

using them for myself and my clients for many years – and they work. They’ve given us financial freedom, security and a great lifestyle for ourselves and our families. And that’s just one part of what building wealth is about. For me, it’s also about the potential to make a difference in the world: an opportunity to be all I can be. I think of it as a journey to discover purpose.

This is what so many of our Custodian millionaires have done and are doing. You will notice something that they all have in common. They are passionate about what they are doing and where they are going. They focus on one thing and do it well, and they are excited about building a future for themselves and their families. I hope they inspire you and you can see what is possible for you to create as well.

That pretty much sums up the Custodian philosophy.

Welcome to the journey.

John L. Fitzgerald, CEO Custodian WealthBuilders

When Steve and Kerry met in 1988, they had no assets, except for a small amount of money from the sale of Kerry’s previous home. It was difficult to re-establish themselves having only a small deposit and with interest rates at 18.5 per cent. They eventually found a house they could afford and over time they made many improvements as well as paid off their mortgage.

“Kerry and I both work in the coal industry. I worked full time and had a good income. Kerry also worked part time,” Steve explains. Kerry adds, “The mining industry offers a lot of opportunities. I was able to earn good money part time while raising the girls and keeping house. It also meant Steve could do shift work and maximise his earnings.”

In 1998, after their daughters grew up and left home, they sold that home and built what they thought would

be their dream retirement home and again concentrated on paying down the mortgage.

When Steve and Kerry were in their 40s, they realised they needed to start investing for their future, even though retirement felt a long way off. They looked around at what other people were doing and their accountant set them up with a portfolio of shares. However, Steve says, “They were doing nothing fast. We realised shares weren’t going to help us get the capital growth we needed to change our lives.”

In 1999, Steve and Kerry bought their first property investment with Defence Housing Australia which Steve describes as ‘a very safe introduction’. In 2001, they invested in a residential property syndicate but when it came to seeing their investment returns, Kerry had to actively pursue their money. Three months after they got it, the company collapsed. The Bishops used that money to pay down their mortgage.

Around this time, Steve and Kerry saw one of John Fitzgerald’s TV infomercials for his Untold Wealth: Success from Scratch workbook and they decided to give it a try. After working half way through it, they attended one of John’s seminars. They

heard John speak, met a consultant, decided to finish the workbook and ‘put a toe in the water’.

In 2005, they used some of the equity in their home to fund the deposit for their first Custodian investment property in Brisbane. They also bought another investment property in Maitland for Steve’s parents to live in. Steve and Kerry went on to buy their second Custodian property in 2006 in Brisbane, and in 2007, their third Custodian property in Melbourne. They initially financed their properties using some of the equity in their home and then leveraged off the increased equity in their earlier investment property for their third. They also invested in Custodian’s Truganina land syndicate which matures soon.

In 2008, the Australian Government changed the laws governing self managed superannuation funds so that it was possible to invest in residential property so Steve and Kerry set up their own fund. Steve says, “I think everyone should have one, even if they just use it as somewhere safe to park their money when the stock market crashes.”

Steve and Kerry are committed to property investment. It has proven to be a stable asset class that has

Steve and Kerry Bishop own seven investment properties. They recently sold their family home in Maitland, NSW and are renting while their dream home is being built on the shores of Lake Macquarie.

STEvE & KERRy BIShOp

Occupations:

Steve: Mining Equipment Operator / Trainer

Kerry: Mining Equipment Operator

Age: 52 & 55

Family: 3 adult daughters & 4 grandchildren

Began investing in residential property: 1999

Property portfolio value (including principal place of residence): $4.1 million

Number of houses you own (including principal place of residence): 7 houses plus a vacant block of land

PROPERTY PURCHASE YEAR OF PURCHASE

PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home Private 2006 370,000^ 1,300,000^^

Thornton NSW Private 1999 182,000 360 390,000

Ashtonfield NSW Private 2005 345,000 340 400,000

Warner QLD Custodian 2005 409,000 425 460,000

Crestmead QLD Custodian 2006 335,000 340 360,000

Tarneit Vic Custodian 2007 288,000 295 365,000

Thornton NSW Private (SMSF*) 2009 339,000 380 410,000

Truganina Land Syndicate Custodian 2009 100,000 145,000

Thornton NSW Private 2010 234,000 360 340,000

Total value Private 2010 234,000 360 4,170,000

Total value 3,835,000

^Land only ^^Independent valuation based on completion *Self managed superannuation fund

pROpERTy BREAKDOwN

doubled in value every 7–10 years – without the wild fluctuations of the stock market.

They are always reading about property and talking to other property investors about their ideas and experiences. They try to attend as many Custodian functions as possible especially where John Fitzgerald is speaking.

The best investment decision the Bishops have made was to put their self doubt behind them, trust in their own judgement and ‘step off that cliff’ to start investing in residential property. They have been able to successfully build their portfolio by staying focused and disciplined. It is important not to get ahead of yourself and over commit. The Bishops believe in sacrificing up front. They have forgone overseas holidays, new cars etcetera in the short term to secure their financial future.

Kerry explains, “We work in an industry where people live in the moment and spend to the minute – it’s all about new cars, holidays, new houses and furniture. It’s hard to watch while we sit at home being

conservative but we know we can enjoy our later years. We know of people who retire and then three months later they’re back working on contract because they don’t have the income.”

The Bishops’ investment advice is simple: stop procrastinating and plan your cash flow meticulously.

“Investing in real estate has given us choices,” says Kerry. “We won’t be ‘retiring’, just changing direction.

We’re really looking forward to it.”

They also have some big holiday plans. Kerry says, “Our dream holiday is to go to Canada. We also want to go to Italy to learn the language and to cook Italian cuisine.”

Steve and Kerry’s journey has also been a positive influence on their daughters. One daughter and her husband have their own home and three investment properties so far and another one is about to take up the challenge.

View from Steve and Kerry Bishop’s soon to be completed dream home on the shores of Lake Macquarie, NSW.

Eddie and Vicki live in the mining town of Newman, 1200 km north of Perth. Fourteen years ago, Eddie met up with an old friend who had been working in the mines. He encouraged Eddie to get a job with a mining company and Eddie and Vicki decided to give it a go. They were attracted by the country lifestyle as well as the promise of better income and other benefits. They moved to Newman with their then two preschool children.

Initially, Eddie drove buses that transported BHP’s mine workers and mine tours for the Company’s VIP clients. He later went on to drive iron ore dump trucks.

“We’re certainly financially better off compared to when we were living in Perth,” says Eddie who worked in a range of jobs in Perth including maintenance for Telstra and driving public transport buses. “When I was driving buses, I worked shifts and took as much overtime as I could to pay off the mortgage on our house. I hardly saw the kids.”

As a residential worker for BHP, his contract includes perks such as an interest free housing loan, a favourable buy-back scheme and subsidised air conditioning. The family also get free air tickets twice a year for holidays. “The buy-back scheme means that we pay very little each week on the mortgage and any money we’ve spent on the house over the years we get back. With the capital

growth on the house, we’re in a great position when we sell. They don’t offer the housing scheme anymore because of the housing shortage but for new workers, they can rent a company house for $70 a week which covers everything,” explains Eddie.

Eddie advises that for people wanting to work for mining companies now, it’s best to get a job where accommodation is supplied because private housing in mining towns is scarce and very expensive.

As a result of the resources boom and the accommodation shortage, there has been a big jump in the number of FIFO workers. “A lot of young blokes get a FIFO job, buy a house, pay it off in 2–3 years, and then leave.”

Eddie works a four day on, four day off roster working a combination of two day shifts and two night shifts – a working lifestyle he says is very family friendly. “When the kids were young, on my days off I’d be a parent helper

at school in the classroom or during sport – anything they needed. It was a very positive experience,” he reflects.

“Some people said to us that living so far away from a city disadvantaged our kids, but we don’t think so. They’ve left school now but when they were younger, we took them on great holidays and when we went to Perth to visit family and friends, we had the money to spend on treats. We even took them on overseas cruises.” Eddie adds, “They also saw a lot more of me than they would have in the city and the country lifestyle is good. We’re a close and busy community and the kids are part of that.”

There is plenty of work in the town apart from mining. Vicki has worked as a canteen manger at school and now works as a restaurant manager.

INveSTINg

When Eddie and Vicki were living in Perth, they bought their first home

eddie: Production Technician

vicki: Restaurant Manager

Age: 55 & 56

Family: one teenage son living at home, one young adult daughter living independently

Live: Newman, Western Australia



Number of houses you own (including principal place of residence): 6 houses

EDDIE MULARCzyK AND vICKI BUTLER

Custodian has helped Eddie and Vicki get on track financially by not only explaining about the tax variation form but also setting up the correct loan structure and providing continuing investment support.

in Alexander Heights. Later, Eddie received a pay out from one of his jobs. They went to a financial advisor who recommended paying off their mortgage as interest rates at the time were at 17–18 per cent. When they settled in Newman, they kept their Alexander Heights home and decided to invest further in property but they didn’t know how to do it. Being so far away from Perth, it was difficult to get investment information or advice.

About eight years ago, a property investment company came to Newman. Eddie and Vicki bought a house and land package in Ashby near the regional city of Joondalup north of Perth. Later, a second investment company came to town and they bought a second house and land package, this time in Viveash near Midland, 16 kilometres from Perth. Eddie says, “Neither company followed up after the sales and we wanted to keep investing. We were waiting for someone to knock on our door.” In 2009, during a trip to Perth, Eddie saw an ad for Custodian WealthBuilders. “I thought it was worth going along. It was cheap – $20 and we got a copy of Seven Steps to Wealth.”

After the seminar, Eddie and Vicki booked an appointment with Custodian’s Wade Curtis. In 2010 they bought two Custodian properties, one in Redbank Plains, Queensland, and the other in Lalor, in Melbourne.

Reflecting on their investment experiences, Eddie says, “we had a property manager for our Alexander Heights home so that gave us some understanding of the process. But it was a bit daunting with the Ashby and Viveash properties. We didn’t know about the PAYG tax variation form. We didn’t understand how others did it – but now we do.”

Custodian has helped Eddie and Vicki get on track financially by not only explaining about the tax variation form but also setting up the correct loan structure and providing continuing investment support. Eddie and Vicki love going to the seminars where they can and meeting like-minded investors.

Eddie says that while there are a few people he knows who are investing for their retirement through a mix of property and shares, the majority of workers he knows live the high life and don’t plan for their retirement, with only their compulsory superannuation to rely on. “You see a lot of them with their $80,000 four wheel drives and spending up big on holidays,” says Eddie. “I’ve talked to a few blokes at work about Custodian but as far as I know they haven’t done anything about it. I’m going to leave a copy of Seven Steps to Wealth with my name on it in the lunch room. Hopefully during break times someone will pick it up and have a read and think, okay, this is worth following up,” he says.

“I’ve also talked to my daughter and her partner about it but it’s hard to get young people interested in investing. My nephew has just moved up here to get better work. He has one investment property and he wants to buy another one once he’s set himself up. We’ll head him towards Custodian.”

gOALS

Eddie and Vicki have six years before they have to sell their house back to BHP by which time Eddie will be 60 years of age. With the excellent capital growth, they will use that money to buy their retirement house ‘anywhere Vicki wants.’ Eddie says, “Vicki said she’d give Newman a try for three years and we’ve been here for fourteen. We’re looking around the Margaret River area or a bit further south around Dunsborough. When Vicki wants to retire, we’ll move and build our dream home, and I’ll do FIFO work for a few years.”

Eddie and Vicki have not only enjoyed their time living and working in a mining town, it has given them the financial opportunity to retire securely. “We’d like to invest in at least one or two more before we retire,” says Eddie. “When Wade gives us a call and tells us what’s on offer, we’ll talk to Investloan and work it out.”

Eddie drives this iron ore dump truck

JAG Lewis (a boarding school nickname based on his initials: J.A.G. Lewis) trained as an engineer and worked an on-shore–off-shore roster of four months at sea and two months at home on cruise ships for many years. When he and Donna immigrated to Australia and settled in Perth in 1992, he found it difficult to get used to his first onshore 9-5 job with Lloyds. “I was a ships surveyor and at the time, there wasn’t much shipping activity. It didn’t keep me busy enough and I didn’t like spending so much time in the office. There were also times when I had to work weekends. Our children were young and I spent very little time with them. They’d be in bed when I left for work in the mornings and when I got home, I would get about an hour of their time before it was their bedtime.”

After about 18 months of being a ‘desk jockey’, JAG got a FIFO job with BHP where he worked a four week on/four week off roster. Shortly afterwards, he moved to Woodside Energy where he still works. His roster is three weeks on/three weeks off/three weeks on/six weeks off. “I love it. There’s plenty of variety and I have freedom. It’s a mix of admin and hands on,” he enthuses. “When I’m on the ship, I’m there to work. The whole environment is about work. It’s

not for everyone and it can be hard on relationships. Typically wives find it difficult not having their husbands around for long periods of time and there are divorces.”

But for JAG, he not only likes the work, it has been good for the whole family. The roster system has allowed him to spend a lot more time with Donna and their four children. “It’s so much better,” says Donna.

“It was hard at first looking after four little ones. I had to be very organised. But in a way I was looking after them on my own when he was working for Lloyds. Before we had children, I was used to John working an on-shore–off-shore roster on the cruise ships. Sometimes I would go with him. It was great fun. Then with the children, we got into a routine and it works well. They know when Dad’s coming home and look forward to seeing him. He’s around to take them to school and has time for them.”

JAG’s job at Woodside has also benefited the family financially. “Shore-side, my wage was low and we struggled,” explains JAG. In comparison, he is not only paid a higher salary with Woodside but he also receives an offshore allowance and a living away from home allowance. On top of that, when JAG is working, his meals and accommodation are supplied.

JAG smiles, “Donna manages our money, and she gives me an allowance!” They both laugh. Donna says, “I give him money but he brings most of it home. It’s a dry ship and there’s no smoking so there’s nothing to spend his money on – just a beer at the airport on the way home.”

Custodian has helped us set up the right financial structures and shown us the way ahead.

Occupation

John: Offshore Installation Manager, Woodside Energy

Donna: Household manager and manages investment portfolio

Age: 51 & 50

Family: Two teenage daughters living at home & two sons living independently

Live: Sunshine Coast, Queensland



Number of houses you own (including principal place of residence): 11 houses

JAG (JOhN) AND DONNA LEwIS

The Lewises at their family home

INveSTINg

JAG and Donna bought their first home in the Perth suburb of Rockingham in 1992. “We were starting from scratch. We had no assets when we migrated – just a vintage Jaguar Sovereign car.” They concentrated on paying down their mortgage and later they also bought some land in Two Rocks, north of Perth. When they were nearly mortgage free, they bought their Warnbro home but had to sell their land and take out a mortgage. In 1997, JAG and Donna invested in a property through Defence Housing Australia which was also in Perth. After five years they sought financial advice – only to be told to ‘bite the bullet’ and sell the underperforming property for a capital loss and invest in shares. They followed that advice, made a $35,000 capital loss and over the following five years they lost money on their share portfolio and had to deal with the stress of constant margin calls.

Two years before quitting their shares, Donna started investigating investment property. She looked outside Perth because it was too expensive. “I started looking at Karratha because that’s where John flies out from,” says Donna. Karratha is in the Pilbara region of Western Australia where there is iron ore mining, and petroleum and LNG operations off the North West Shelf. This led the Lewises to buying a house in Karratha in 2005, one in

Kalgoorlie (gold and nickel mining) in 2006 and another house in Karratha in 2007. With the mining boom, these investments have seen excellent capital growth and yield high rental returns. In fact, these investments have provided a strong foundation to grow their investment portfolio.

In 2007, JAG and Donna attended a Custodian WealthBuilders seminar and met their consultant, Wade Curtis. The Lewises say that prior to going to Custodian, they were naive about investing. They wanted to invest but they didn’t know how to do it properly. Donna explains, “We listened to an awful lot of people and they were taking our money but we weren’t getting anywhere. We didn’t have a clear goal and we didn’t know how to do it.”

Since becoming Custodians, Donna and JAG have grown their portfolio to ten properties and they have established their own self managed superannuation fund. “Custodian has helped us set up the right financial structures and shown us the way ahead,” says Donna.

JAG adds, “I truly do trust Custodian and feel that I’m not another customer on the end of the phone. Custodian is very client focused and I would recommend anyone looking to test the waters of investing in property to give these guys a call. No pressure just down to earth honesty.”

gOALS

JAG and Donna now live on Queensland’s Sunshine Coast with their two youngest children (the older two have left home) and they are enjoying life. At 51, JAG continues to enjoy his work and lifestyle and says, “I’ve got a few years of work left in me yet.” He grins and adds, “I keep threatening to retire, but Donna doesn’t want me to!” Donna laughs, “No, I’m really happy with our lifestyle! And now we’re doing the right thing with our investment portfolio, we want to keep doing it while we can. I love property investment. It’s become a real hobby for me. Since meeting our first consultant, Wade Curtis, everything is falling into place. Custodian has enabled us to do what we’re doing and we’re well on our way to financial freedom and independence. We trust them and we are more confident with investing.”

JAG says, “I’d say there’d be about 50 per cent of people at my work facility that have investment properties. Working to pay off the mortgage is a common theme but many stay on because it is a safe work environment with good wages. There are also many young ones who use their money for travel and high living – unfortunately some of them can’t see that they can live well and invest for the future.”

Now that we’re doing the right thing with our investment portfolio, we want to keep doing it while we can.

JAG (right) at Keppel Shipyards, Singapore

BILL hARISIS & TONIA pAfLIS

Occupations:

Bill: Market Manager (automotive & refinery industry)

Tonia: Secondary school teacher

Age: 44 & 42

Family: Ephea, 5

Began investing in residential property (year): 2000

Property portfolio value (including principal place of residence): $6 million

Number of houses you own (including principal place of residence): 11

Bill Harisis and Tonia Paflis own their own home and have built a portfolio of ten houses over the past 10 years. They plan to have 20 investment properties by the time they retire.

Bill and Tonia knew they could never save their way to prosperity and a comfortable retirement so they were always looking for ways to make money. They dabbled in the stock market and tried numerous managed funds with various financial advisors and groups, but none of them were what Bill describes as ‘our cup of tea’.

They continued their search for a good investment vehicle. After learning about investment property and seeing

the capital growth in their first home, Bill and Tonia decided to try property investment. Their first investment was a unit in a large development which they bought off the plan in 1998.

Bill and Tonia came across Custodian through one of Bill’s colleagues who lent him her copy of John Fitzgerald’s Seven Steps to Wealth. “We thought John’s model was fantastic. It made a lot of sense and it was easy to understand,” remembers Bill. After

reading the book, Bill and Tonia realised that units weren’t the best way to invest so they sold their unit, holding it for only 12 months.

In 2002, they purchased two investment properties through Custodian and they were able to duplicate approximately 18 months later, buying another two. Bill says, “We probably could have done so earlier but we were a little ‘slack’ back then!” The third and fourth

PROFILeS

also met mentors through their involvement with other investment and personal development programs. Those programs have helped Bill and Tonia identify their core values and what is important to them as well provide focus and structure on how to achieve their goals.

Bill and Tonia have a very different outlook on life compared to when they began their property investment journey.

Much of what they hope to achieve now is about others rather than themselves. Their lives and outlook changed after adopting their daughter, Ephea, from India in 2006.

Bill explains, “We’d been a couple for 15 years and we only had to worry about ourselves. Having a daughter has obviously changed our lives but after visiting the orphanage and seeing how others lived, it hit home about how important it is to give back. It really opened our eyes. Yes we want to help Ephea but she’s our daughter and she’ll be all right now. What we really want to do is help those kids who don’t have anyone.”

properties spurred them on to buy another house through Custodian in 2005, build a new home in a beachside suburb of Melbourne, keep their first home as an investment property, and purchase another four properties through their own property development.

The best moment in Bill and Tonia’s wealth building journey was when they purchased their second lot of properties with Custodian. It was only then that they realised how great an investment property can be and how much capital growth they had actually achieved.

Bill and Tonia like residential property as an asset class because it is ‘solid’. Bill says, “It’s something you can touch, feel, and see. It doubles in value every 7–10 years, so you can’t really go wrong.”

MANAgINg CASh FLOw

Bill says, “Cash flow is critical to your survival. You need to get your cash flow right so that you’re not eating into your own savings. The tax deductions that come with ownership of an investment property must be

accessed through a PAYG income tax variation form, especially if you have multiple investment properties.” Bill and Tonia have learnt the importance of having a line of credit and their own savings to fall back on when they need it. While Bill says he understands it’s not realistic for everyone to have a comfortable amount of savings put aside, you at least need the safety net of a line of credit.

LIFeLONg LeARNINg

Bill says, “We’re not only on a financial journey but also a personal one so things aren’t set in stone – personal growth and development are just as important as making money. It’s important to continue to learn in all aspect of our lives, so we attend a range of seminars and conferences and we read as much as possible.”

Maintaining the right mindset is critical in order to achieve those goals. Bill and Tonia admit is hasn’t always been easy but by attending seminars, keeping up-to-date with their reading and having mentors helps them stay on track. At first, John Fitzgerald was indirectly their mentor and later on he became their advisor. They have


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home (now renovated) Private 2006 445,000 1,100,000

Cheltenham Vic (previous home) Private 1994 182,500 435 800,000

Victoria Point Qld Custodian 2001 275,000 435 485,000

Scarborough WA Custodian 2001 232,500 405 460,000

Underwood Qld Custodian 2003 325,000 420 460,000

Ormeau Qld Custodian 2003 311,000 385 440,000

Hillcrest Vic Custodian 2005 340,000 380 435,000

Hoppers Crossing Vic Private 2008 320,000 300 385,000

Carrum Vic Private 2009 450,000 470 510,000

North Lakes Qld Private 2009 375,000 360 440,000

Augustine Heights Qld Private 2010 425,000 370 480,000


pROpERTy BREAKDOwN

hUNG KwAN

Occupation: Pharmacist

Age: 50

Family: married with three children in their 20s living at home


Property portfolio value (including principal place of residence): $17 million +

Number of houses you own (including principal place of residence): 22 residential +1 commercial

Hung Kwan owns his own home, and has a portfolio of 21 residential investment properties, and one commercial property. Most of that investment has occurred in the past 10 years.

At seventeen, Hung Kwan moved from Hong Kong to Melbourne to finish his high school studies and go to university. When Hung qualified as a pharmacist, the pharmacist responsible for his on-the-job training offered Hung a one third partnership in the business. Hung borrowed the money to invest in the business which was a small loan and repaid it in about three years. Around that time, with some savings and help from his parents, Hung also put a deposit on a house in a brand new development in Doncaster East, an outer eastern suburb of Melbourne.

Hung had no other investments or savings until a friend encouraged him to contribute monthly into a share trust. He had no knowledge of investments and thought regularly investing a small amount of money and getting something at the end was better than nothing at all. All went well until the stock market crash of 1980. Hung reflects, “I lost money but I didn’t have the know-how to

look for other investment options so I just concentrated on building up the business and going out and having fun.”

In the late 1990s, Hung turned to residential property investment. He went to a few property seminars but it took him a while to understand the concept of negative gearing and capital growth. He didn’t feel confident in his ability to deal with investment property and it seemed like a ‘hassle’. In 2000, Hung saw an ad for Custodian WealthBuilders and went along to hear John Fitzgerald speak. He says, “The main push to invest came from listening to John. He seemed straight forward and honest and I thought here’s someone who can do everything for me.”

Hung bought his first Custodian property in Queensland in 2000. In the following year he bought another three, again in Queensland. He stopped for a while, concentrating on his business and consolidating.

Later, Hung went on to invest in ‘period homes’ within a seven kilometre radius of the Melbourne CBD as well as in other sort after locations. However, he reached a point where he felt the strain on his cash flow. “Those houses have large capital growth but they’re also very expensive. The rent is very low – 2.5 per cent,” Hung explains. “Now I buy new properties in outer suburban areas. I get a higher rent return and I can get good depreciation and tax advantages. I am just about to settle on four more Custodian properties.”

Reflecting on his wealth building journey so far, Hung says, “Apart from property I’ve also invested in shares, day trade options, CFDs and derivatives, but they’re very unpredictable and eventually, I lost money on them.” Hung likes property as an asset class because it is stable, highly geared, there are good tax advantages, no day-to-day worries, and the banks love it as security.

PROFILeS


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home Private 1985 112,000 2,500,000

Richmond Vic Private 1992 145,000 440 870,000

North Balwyn Vic Private 1998 141,000 320 531,000


Albert Park Vic Private 1999 171,000 440 1,300,000

Fig Tree Pocket Qld Custodian 2000 285,000 440 520,000

Carina Qld Custodian 2000 258,000 430 480,000

Prahran Vic Private 2001 401,000 400 800,000

Port Melb Vic Private 2002 380,000 470 850,000

Bardon Qld Private 2002 340,000 430 650,000

Newport Vic^ Private 2002 300,000 340 550,000

Newport Vic^ Private 2002 345,000 260 750,000

Footscray Vic Private 2003 240,000 270 385,000

Dockland Vic Private 2005 480,000 410 550,000

Bentleigh Vic Private 2005 435,000 450 884,000

Ocean Grove Vic Private 2006 360,000 250 750,000

Safety Beach Vic Private 2006 385,000 330 580,000

Mont Albert Vic Private 2006 340,000 500 800,000

Doncaster Vic Private 2008 520,000 330 790,000

Epping Vic* Private 2010 380,000 385 380,000

Epping Vic* Private 2010 380,000 395 380,000

Epping Vic Private 2010 380,000 385 380,000

Point Cook Vic Private 2010 432,000 420 432,000

Warner Qld Custodian 2010 456,000 under construction 456,000

* Adjacent properties


SOLD 2005

Magnolia Grove Qld Custodian 2000 275,000 340,500

Ferny Grove Qld Custodian 2000 235,000 358,000

pROpERTy BREAKDOwN

MARK & MARGARET wAChNIK

Occupations:

Self-employed (commercial office fit-outs)

Age: 50 & 44

Family: Two teenage boys, 11 & 15


Property portfolio value (including principal place of residence): Approx $8 million


Mark and Margaret Wachnik own their own home and have built a portfolio of 12 investment properties in just ten years.

Mark and Margaret lived with Margaret’s parents in south Sydney until they had saved up enough money for a deposit for their first home. In 1989, they bought a house and they were determined to repay their loan as quickly as possible.

“We lived very plainly,” Margaret explains. “We didn’t take holidays and we often just took sandwiches to work. We had second hand furniture from St Vincent de Paul’s and some of the rooms were unfurnished for many years. Any money we had went on the mortgage. We paid it off in five years – even with the interest rate at 16.5 per cent.”

Three years after being debt free, the Wachniks had no savings. They were

spending everything they earned so they decided to buy something and pay it off. They borrowed money to buy some land for their dream home and to buy Margaret’s father’s small goods manufacturing business.

They made these decisions without financial advice because they didn’t know anyone they could turn to. Margaret decided to read some books on personal finance. One of those books was John Fitzgerald’s Seven Steps to Wealth. It made complete sense.

Margaret says, “It was the first time we understood we had to think about our financial future. And it was the first time we’d heard about passive income and what are true assets. We

were always looking for other sources of income and we decided that property was for us.”

In 2000, Mark and Margaret attended a Custodian seminar and soon afterwards they purchased two investment properties in Brisbane. A few months later they bought a third, also in Brisbane. In 2002 during the boom, they bought their fourth property in Brisbane and in 2003 their fifth in Western Australia through their private superannuation company.

Buying the first two properties was a great start but at that early stage of their wealth building journey, they didn’t understand about securing an 80 per cent loan, negative gearing

PROFILeS


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home NSW Private 2008 1,640,000 2,225,000

Carina Qld Custodian 2000 246 ,000 440 460,000

Wynnum Qld Custodian 2000 182,000 385 410,000

Ferny Grove Qld Custodian 2000 254,000 395 480,000

McDowall Qld Custodian 2002 315,000 465 460,000

Canning Vale WA Private 2003 263,000 415 540,000

Bracken Ridge Qld Custodian 2004 330,000 410 420,000

Warner Qld Custodian 2006 380,000 415 450,000

Carseldine Qld Private 2006 382,000 475 515,000

Derrimut Vic Custodian 2007 325,000 300 405,000





pROpERTy BREAKDOwN

and tax advantages. Instead, they sold their land to help finance the houses, paying a 50 per cent deposit on each. They treated the houses as if they were their principal place of residence and wanted to pay them off quickly.

It wasn’t until later, when they had a meeting with John Fitzgerald that they understood they had plenty of equity to duplicate. Furthermore, by owning positively geared properties and working in professional jobs, they were paying more tax than they needed to.

While they have the right loan and taxation structures now, they still save the 20 per cent deposit for each new property. “We just can’t bring ourselves to use the equity in the houses,” laughs Margaret.

In 2008, Mark and Margaret bought their new home with water views on Sydney’s lower North Shore. In 2010 they moved in and renovated.

The Wachniks like property as an asset class because it is tangible and they

have control over it – and they also saw how much the value of their own home had increased over the years.

Mark and Margaret have been on an incredible journey and they have achieved more than they imagined. They consider themselves to be on a personal journey just as much as a financial one.

“Our family think we’re lucky to be in the financial position we’re in now but they don’t realise how humble our beginning was,” says Margaret.

Mark and Margaret want to pass their wealth building knowledge onto their sons so they can start earlier in life and take advantage of time in the market and compound growth.

Mark and Margaret’s view from their new home.

hEINER & KARIN KARST

Occupations:

heiner: Executive Coach

Karin: Small Business Administration

Age: Both 59

Family: Three Adult Children


Property portfolio value (including principal place of residence): Approx $3.5 million


Heiner and Karin Karst own their own home and they built a property portfolio of six investment properties between 2001 and 2004. They are currently reviewing their portfolio and goals.

When Heiner and Karin migrated to Australia 20 years ago with three young children, they started their new life with almost no net wealth. After 20 years in corporate life living in South Africa and Germany, the Karsts had some superannuation and a small deposit for a house after selling their home in South Africa. Effectively, they had what Heiner describes as ‘high executive income, no wealth’.

Within a year the Karsts bought a house to live in. They were well aware that the move to Australia had been at a financial cost and nearing

their forties they were looking for ways to build wealth to secure their retirement.

Heiner and Karin joined a multi level marketing business in 1991. While they did not build any financial wealth, they expanded their minds, thanks to numerous self development functions and reading lots of books.

Ten years later, they were in a better financial position: Heiner was on a good salary, working as Chief Information Officer for the technology company Siemens. However, their

accountant was unhappy: he told Heiner that he was paying too much tax and advised him to leverage his equity and tax to build a substantial investment portfolio outside superannuation.

The accountant encouraged Heiner to borrow money to buy shares but Heiner says, “I was scared of shares – their volatility and the threat of margin calls.” The accountant then got Heiner and Karin thinking about property and suggested several books about investment property. They spent months looking at properties

PROFILeS


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home Private 1991 165,000 750,000

Sunnybank Hills Qld Custodian 2001 275,000 450 470,000

Sunnybank Hills Qld Custodian 2001 255,000 430 480,000

Algester Qld Custodian 2002 270,000 430 460,000



Underwood QLD Custodian 2004 311,000 445 450,000


pROpERTy BREAKDOwN

within a 15 kilometre radius of the Melbourne CBD.

The more they learned about investment property, the more they learned about its traps. That was before reading John Fitzgerald’s Seven Steps to Wealth. The book made such an impression on them that Heiner made an appointment to see Custodian’s then Victorian State Manager wanting to buy an investment property immediately. He tried to convince Heiner to go to one of John’s seminars first but Heiner was ready. So the Karsts travelled to Brisbane, which at that time was approaching its next growth cycle, to look at properties before attending a Custodian seminar. They signed up for two properties in Sunnybank Hills using the equity in their home for the deposits.

Heiner is grateful he read Seven Steps to Wealth because when he and Karin first considered investing in property, they were thinking of buying a 100-year-old terrace house in Fitzroy. “We would have made all the classic mistakes and lost all the taxation and depreciation advantages that a new home provides,” reflects Heiner. Also, using Investloan meant the Karsts were able to invest in three properties within the first year compared to just one investment property their own bank was prepared to finance.

Heiner and Karin bought six houses between June 2001 and February 2004 because, as Heiner says, “We wanted to, we needed to and because we could.” They used the equity in their own home for the first three properties and then the equity in the first two for their fourth and fifth. The sixth was financed using the equity in the first three properties.

Without a doubt, Heiner and Karin say that their best investment decision was ‘building a property portfolio in a proven, fool proof system with other people’s money to leverage compound growth of assets secured by growing asset value due to supply shortages and population growth.’

In 2004, when the Karsts started building their sixth Custodian investment property they hit problems. There were unexpected

ground works and bureaucratic delays for almost a year which usually has financial consequences. However, the effect of those delays was virtually eliminated by the Custodian fixed price contract and by the insurance they had with Custodian which covered the extended construction interest payments until the property

could be tenanted. Despite this set back, the capital growth in the property continued.

“People need to know that Custodian is different,” says Karin. “The fixed price contract and insurance saved us. Custodian kept their word and did everything they could to help get the house finished.”

The Karsts like property as an asset class because it is ‘unsophisticated’. “You can leverage using the houses as building blocks to wealth. Housing demand is linked to population growth which keeps growing and it’s secure. Our properties all maintained their value during the GFC,” explains Heiner. gOALS

By 2004, the Karsts achieved their goal of owning six investment properties. Since then those properties have been growing in equity while Heiner has been working on another important goal – reinventing himself as an executive coach and growing his business. Heiner and Karin are now at an age and point in their lives where they will revisit and adjust their short- and long-term goals.

MANAgINg CASh FLOw

Managing cash flow is vital and it is important to have a financial safety net in the form of an equity loan in case of emergencies. It is also important to have a good real estate agent who will ensure appropriate rents are set and keep vacancy periods between tenancies to a minimum. Heiner and Karin advocate finding an agent who will be proactive on your behalf, working to your agenda, not their own nor the tenants.

INveSTMeNT ADvICe

Heiner, who is now an executive coach asks, “What are you waiting for? An

investment portfolio would put you in that very small group of Australians who have sufficient alternative sources of income to allow them the freedom to do what they want to do, not what they have to do. I meet a lot of high income, no wealth people. I encounter this all the time.”

LIFeLONg LeARNINg

Heiner is passionate about being the best one can be and he regularly coaches his clients on personal development. He and Karin both read widely, and Heiner is constantly expanding his network and ‘associates with positive and uplifting people who are going somewhere in their lives’. Karin and Heiner also attend Custodian events such as the client conferences, breakfasts, and summits which give them an avenue to link up with like minded others. They also take a lot of people along to John’s seminars.

“It’s impossible to stand still when associated with a person like John Fitzgerald. He’s growing and expanding his mind all the time so we couldn’t help being ‘infected’. And he very generously shares his insights with his Custodian clients and inspires and challenges us all the time,” enthuses Heiner.

As a result of the Karsts wealth building journey, with the financial security it brings and the personal growth it engenders, Heiner and Karin can look forward to a financially

secure future that gives them choices. This complements Heiner’s coaching practice, which is a journey of constant

exploring and learning. “Now I can do what I was born to do, not what I have to,” he says with great satisfaction.

Their wealth building journey has also been an important lesson for their children and associates to watch, appreciate, and want to emulate.

Using Investloan meant the Karsts were able to invest in three properties within the first year compared to just one investment property their own bank was prepared to finance.

“hOUSINg DeMAND IS LINKeD TO POPULATION gROwTh whICh KeePS gROwINg AND IT’S SeCURe. OUR PROPeRTIeS ALL MAINTAINeD TheIR vALUe DURINg The gFC.”

“PeOPLe NeeD TO KNOw ThAT CUSTODIAN IS DIFFeReNT. The FIxeD PRICe CONTRACT AND INSURANCe SAveD US.”

MOIRA MCLEAN

Occupation

Owner of a TV commercial production business and TV presenter

Age: 50ish

Family: Liam, 19




Moira McLean owns her own home in Sydney’s Northern Beaches and two investment properties, both in Queensland. While she is a cautious investor, she is committed to providing for her financial future and helping her son.

Moira’s father has always had in an interest in the stock market and built up a portfolio of shares. When Moira was starting out, she decided to have a go at investing in shares but she soon realised that it didn’t interest her and she didn’t make any money.

At 22-years-old, she bought a small one bedroom flat in Sydney’s Meadowbank, 15 kilometres west of the CBD. The value of that flat doubled in just five years. In 1989, she sold it to buy a house with her then partner in Lane Cove. In 1994, after again experiencing excellent capital growth, they sold that house to buy one close to the beach.

Moira’s first experience in residential property investment was in 2000, when she and her partner invested in a townhouse in the upmarket Melbourne suburb of Brighton, which they bought off the plan. Unfortunately, it wasn’t a positive experience. Being in Brighton, it cost a lot of money to buy, there were long delays in the building, and then it took a long time to find the right tenants who could afford to pay the rent. It became too much of a financial strain and they sold it two years later.

In that same year, Moira and her partner sold their home and went their separate ways. Moira says, “Being on my own again was a wakeup call. I realised I had to do my bit to look after my son and myself now that I was one, not part of two.” Fortunately, their home had doubled in value in just six years so she was able to buy a family home for Liam and herself in a nearby suburb.

Around this time, Moira was working with Michael Quinn on Bert Newton’s ‘Good Morning Australia’ TV program where she met John Fitzgerald. After GMA ended Moira ramped up her business and started working on John’s infomercials. Listening to John’s wealth building principles, Michael had his own wakeup call and Moira watched as Michael went from

owning his small flat and a motorbike to buying a million dollar

home on the North Shore and rapidly building a property portfolio. He even left his lucrative TV job to work for Custodian. Moira reflected that she was managing her finances well on her own and, “If Quinny can do it, so can I.”

In 2005, Moira used the equity in her home to buy her first investment

property in Ormeau, south of Brisbane. “It was daunting at the beginning but once the property was built and tenanted, the rent started coming in and it was very manageable. If I’d known how easy it could be I would have done it much sooner, I really didn’t notice any impact on my cash flow. “

“Quinny and John were encouraging me to duplicate, but I’m a cautious investor and I wasn’t ready. By the time I was, John challenged me to stretch myself a bit further so I did. I bought my second investment property in 2009 in Pacific Pines on the Gold Coast. When I bought it I borrowed the maximum amount to take full advantage of the tax benefits. It was also at a time when the economy was still feeling the effects of the GFC and I certainly had some worrying moments with my cash flow. My production business is dependent on people advertising and that’s the first thing to be cut back in an economic downturn. Fortunately for the last 12 months clients are becoming more positive about their advertising plans and now the work is really picking up,” explains Moira.

Moira considers her best moment as buying her first investment property. Even though she knew she wasn’t supposed to get ‘emotionally

PROFILeS

“IF I’D KNOwN hOw eASy IT COULD Be I wOULD hAve DONe IT MUCh SOONeR.”

attached’ to the house, she enjoyed inspecting it and felt proud that she had taken a positive first step toward rebuilding her wealth and securing her financial future.

Her worse moment was in 2009. There were a couple of weeks where she didn’t have tenants in either property, she was concerned about the GFC, and her business was in a slump. However, determined to stay in control of her finances, she stepped back and worked out her options if things became too tight.

gOALS

Moira aims to be financially secure, to help out her son, and to afford a fun and adventurous lifestyle. On a more personal note, she strives to be a good person, daughter, sister, mother, and friend. She is also planning to downsize and buy a house closer to the beach. “I’ve reached a new chapter in my life with my son finishing school and going to university. When he was young, I felt it was important to provide a family style home for him – with room to play, a garden and a pool. But now that he’s older, I’ll change to something smaller, better located, and lower maintenance. He’ll always have a bedroom but it’s time to focus on what I want – and I’m sure he’ll enjoy it too,” she explains.MANAgINg CASh FLOw

Moira laughs at the idea of offering advice on managing cash flow. “I’m no expert but I have drawn up a chart of all my incomings and outgoings each month. What I’ve learnt is to expect the unexpected. There’s always some small maintenance thing that needs to be paid for. It might only be $300–400 but that comes out of the rent and all of a sudden you have a short fall. I don’t have extra borrowings I can draw on but I have put aside about $2,000 in an offset account for each property which I can draw on if I need to.”

INveSTMeNT ADvICe

“If you’re planning for the future, investing in residential property is the ideal way to go,” advises Moira. “I’ve seen so many friends and family lose a lot of money through the stock market. Property is nice and steady and reliable.”

Moira also makes the point that it takes a long time to save $100,000 – a lot longer than it does than through investing in property, which is something she experienced firsthand. “It’s a solid, consistent way to make a decent amount of money in a relatively short amount of time,” she enthuses.

“I like investing in property because it has a track record as a stable and consistent performer. You can look back over the records and see that property doubles in value every 10 years. There’s also not much that can go wrong – if you buy the right type of course,” she adds.LIFeLONg LeARNINg

Moira has interviewed Custodian clients for the past eight years as part of John Fitzgerald’s program of infomercials which has put her in a unique position. “I’ve interviewed hundreds of Custodians and listened to their stories. I’ve been to their homes – and even to their new dream homes. I know their stories are real and their wealth building is working,” she explains. “I’ve also worked my way through John’s program Untold Wealth: Success from Scratch and I often refer back to it. My wealth building journey has made me more

mature and I am a stronger person. I’m better able to deal with personal

difficulties and I’ve taken control of my finances. When things get shaky, I talk to family and friends or to Quinny and John. I’m not afraid to ask for help, advice, or moral support.”

She has also learnt to say ‘no’ when she gets invitations to costly entertainment or holidays if they don’t fit into her budget. “I just say, no, I’m not going to spend $200 to go to that concert with you or no, I’m not going to Bali with you for the holidays. I’m going camping on the New South Wales coast instead.” She explains, “I’m a wealth builder.”

Moira has been educating her son about property. While still a teenager, he is aware of what Moira is doing and he’s intrigued, “When Liam sees a picture of a new property, he says: ‘Cool, we own that.’ And I let him know how the values are going, so he gets a feel of what property can do”.

“IT’S A SOLID, CONSISTeNT wAy TO MAKe A DeCeNT AMOUNT OF MONey IN A ReLATIveLy ShORT AMOUNT OF TIMe.”

Moira is also committed to her charity work. She makes regular donations to the Variety Club that supports children in need and every year she hosts Variety Club’s Christmas party for up to 5000 special needs children at Sydney’s Darling Harbour.

I like investing in property because it has a track record as a stable and consistent performer.

DAvID & DADA BAILEy

Occupations:

David: Consultant Civil Engineer

Dada: Retired

Age: 61 & 57

Family: Three adult sons between them




David and Dada Bailey have been together for eight years and between them they have acquired ten investment properties. They have recently restructured their finances and plan to move to their ‘dream home’ to enjoy their retirement.

PROFILeS


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE



Sippy Downs Qld Private 2002 240,000 420 480,000

Redland Bay Qld Custodian 2005 380,000 430 460,000


Pearsall WA Custodian 2005 336,000 440 500,000

Wattle Grove WA Private 2006 427,000 455 490,000






pROpERTy BREAKDOwN

For about ten years, David had been looking for a secure way to create wealth and manage his tax in order to provide a secure retirement. He had a good income, worked long hours and was paying off his mortgage but he realised it was not enough – he needed something more to create wealth, and he hated paying so much tax! He spoke to numerous financial advisors, accountant, and tax agents before he attended one of John Fitzgerald’s seminars in 2001. He immediately saw a straight forward way of passively building wealth through property investment.

When David and Dada met, David had two investment properties and the investment structure in place, and Dada had her own home. They both wanted a secure retirement and a lifestyle that would allow them to spend quality time together so they continued with what David had started by acquiring another eight properties.

Like so many people, the only investments the Baileys had before investing in property were their family homes and their superannuation.

The Bailey’s first investment property was financed through the equity in the family home. Since then, as the equity has grown they have refinanced the house and used the equity in their investment properties to duplicate.

Three years after the Bailey’s bought their first two investment properties, they were able to use the equity that had built up to purchase their third property. They kept going from there, buying another property whenever they could.

David and Dada have enjoyed their wealth building journey and consider their portfolio as a business. “It’s been really exciting to build our property portfolio and watch our wealth grow as we meet new friends along the way,” explains Dada. The security it provides has allowed them to ride out some very challenging times such as redundancy, setting up David’s own business and ill health, with a positive outlook.

David enjoys the flexibility of working for himself. He can spend time looking after the properties and spend quality time with Dada.

The Baileys consider the best decision they made was to get into property investment and to follow John’s advice to duplicate whenever they could. They have pushed themselves hard and purchased whenever possible as they learnt that delaying a purchase impacts on the opportunity to duplicate later on.

While David and Dada have a significant property portfolio, they live what Dada describes as a great life in a modest three-bedroom home in outer Melbourne and drive inexpensive cars. She says, “We’re patient people. We save and we’re responsible with our money.” This mindset has allowed the Baileys to grow their portfolio while still enjoying annual holidays in Australia and overseas.

Investing in property works for the Baileys. David says, “We weren’t comfortable with shares. We didn’t know enough about them to do a good job. Most banks and advisors push shares and super because they get something out of it but you don’t have control over your investment.”

“Property is not just bricks and mortar. It’s recognised as a solidly performing investment option. It gives us a continuous growth with proven increases in capital value over many years and good rental return. The banks allow us to regularly review the property value and access the increase in equity to buy additional properties. It’s not a vehicle for instant wealth, but by following John’s duplication philosophy, we’ve found that the compound growth benefits over the longer term are unbelievable,” David enthuses.gOALS

The Bailey’s financial goals were to build an investment portfolio of six properties to provide them with a strong financial retirement and to show their children what can be achieved through strong commitment. They reached their initial goal of six properties after four and a half years and thought they had completed their journey – until John Fitzgerald convinced them to push harder.

Dada laughs, “When we thought we had completed our journey, we emailed John to find out what we needed to do to start preparing for our retirement, which we planned for April 2010. John had other ideas. He told us owning six houses was a

great achievement but suggested that we should push harder and purchase some additional properties.”

John challenged them to use the equity in their six investment properties to buy another four houses in a block with the idea that in time, with decreasing block sizes, the Baileys could redevelop the site and put seven to eight dwellings on it. It was an audacious goal. David says, “How often do you borrow $1.2 million in one go for an investment?” Fortunately, the timing was right and with the low interest rates, the Baileys were able to invest without selling any of their existing properties.

David and Dada have recently subdivided their home and restructured their finances so that they can access some of the equity for their ‘dream home’. Their plan is to hang onto the properties as long as they can and gradually sell the investment properties to fund their retirement. They plan to keep some properties as an inheritance for each of their three children. In the next twelve months they plan to move to their ‘dream home’ to enjoy their retirement, buy a new car and book some of the overseas holidays that are on their ‘bucket list’. MANAgINg CASh FLOw AND INveSTMeNT ADvICe

Cash flow is critical to the Bailey’s investment business and David is a self-confessed ‘spreadsheet fanatic’. They have spreadsheets for their personal finances, business, and properties which David regularly reviews. David proactively manages their portfolio by doing a bank reconciliation every day to make sure the rents are in and to keep an eye on their expenditure. He says, “Rents are the lifeblood of this business. You have to monitor them closely.”

The Baileys believe it is essential to regularly review rents and carefully manage the way real estate agents handle rent arrears and maintenance issues. David explains, “I’m in close contact with the real estate agents. Fortunately we haven’t had too many problems with tenants but sometimes they do fall behind in the rent due to job loss or ill health. By keeping a close eye on things, we can help resolve issues quickly.”

Managing interest payments and interest rates is also critical to the

success of their business. “You need to be proactive in reviewing the market to keep interest costs down. Insurance is essential to minimise unforeseen costs, but always allow a little extra as there will always be unexpected costs” explains David.

When it comes to investment advice, the Baileys say: set your goals high, stay positive, regularly review and reward your achievements, always seek advice from professionals, and do not deviate from your successful strategies.

David knows firsthand what that can be like. When he first told his family and friends he intended to invest in property, he had a mixed response. Some thought it wasn’t a good idea to invest so heavily in property even though they were not qualified to offer advice. In fact, when David started, he signed up for two Custodian investment properties at Warner in Queensland. His friends expressed concerns about John’s wealth building principles and convinced him to be more conservative, buying one Custodian property and one independently. He doesn’t regret buying the independent one but he does regret not buying the second Custodian property as it is now worth more than twice the purchase price.

David also makes the point, “You need to be prepared to take on debt and understand the difference between good and bad debt – and know that good debt is working for you.” Furthermore, it is important to understand that investing in property is not instant wealth. In the Bailey’s experience, they had a good income but they needed ten years to go through a full property cycle to truly benefit from the gains. LIFeLONg LeARNINg

David and Dada believe it is essential to keep seeking advice and learning from successful people. They regularly attend John’s presentations and Custodian seminars, finding that they learn something new every time. They keep in touch with John via Email, meet with their bankers, financiers, property agents and accountant and carefully consider how they can use the advice to improve their position.

It is also important to stay positive and healthy and keep sight of the big picture. They regularly revisit their

goals and by identifying and rewarding themselves for their successes, they keep themselves motivated.

Building a secure future has allowed the Baileys to have a comfortable living, enjoy their holidays, and spend valuable time with family and friends. They are able to contribute to the quality of life of their children and donate regularly to people in need.

The Baileys consider the best decision they made was to get into property investment and to follow John’s advice to duplicate whenever possible as they learnt that delaying a purchase impacts on the opportunity to duplicate later on.

JAMES SMITh

Occupation:

Computer Software Engineer

Age: 46

Family: Single



Number of houses you own (including principal place of residence): 10James Smith owns his own home in a north-

western suburb of Melbourne, 15 kilometres from the CBD. Over the past ten years he has built a residential investment portfolio of nine properties as well as buying his own home. He intends to continue to buy more properties whenever he can until he retires.

PROFILeS

pROpERTy BREAKDOwN


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE


Runcorn Qld Custodian 1999 185,000 395 460,000


Runcorn Qld Custodian 2000 206,000 420 460,000


Shailer Park Qld Custodian 2000 250,000 410 470,000


Canning Vale WA Custodian 2003 230,000 415 500,000

Deer Park Vic Custodian 2008 337,000 310 440,000

Beechworth Vic Private 2008 330,000 300 330,000


SOLD 2006

In the early 1970s, James’s mother passed away and he inherited a share portfolio from her estate. In investment terms, this gave him a great boost.

“Receiving an inheritance from my mother certainly made a difference to my ability to build my investment portfolio. I couldn’t have done as much as I have without it,” he explains. When he immigrated to Australia in 1995, his portfolio was worth approximately $250,000.

Prior to investing in residential property James grew his share portfolio, financed by share trading and his earnings as a computer software engineer. He was happy to rent a house as he ‘didn’t feel like buying his own home’ and he channelled his savings into shares and bank bills. James earns a good salary: for the past 10 years he has been earning around $90,000 per annum.

James selected shares based on the advice from his broker and his own research. However, his experience with shares has been mixed. While he still has a small share portfolio, James realised over time that it was ‘time to get out’.

“If you’re lucky and skilled, you can do quite well but often shares go down. However, property generally doesn’t. Yes, you might not have bought well, but overall, the market doesn’t go down. Shares are high maintenance and volatile. You have to constantly monitor them. Property is low maintenance and after you’ve set up the right structure, it looks after itself,” says James.

In 1999, James went along with a friend to a Custodian WealthBuilders seminar. James had been reading about residential property investment so he was open to what John Fitzgerald had to say – and he wasn’t disappointed. “I was impressed by the fact that they guarantee that when you buy a property through them it is at the bank valuation price. It may not be a bargain but you’re not getting ripped off. There are a lot of sharks out there and the bank valuation is the key. I liked what Custodian was doing and I jumped,” explains James.

That year, James converted some of his investments to cash to fund the 20 per cent deposits on two Custodian investment properties in South

East Queensland. In 2000, James purchased another four properties in outer Brisbane. He had bought all six properties before the early 2000s Brisbane property boom and by 2003, the value of his portfolio had almost doubled.

James also bought two properties in Perth prior to the boom there and he sold one of those houses in 2006 to buy his current principal place of residence. In 2008, James purchased two more houses, one in Deer Park, Melbourne and one through another investment company in the North Eastern Victorian town of Beechworth.

James purchased his first six investment properties through his earlier investments and later through the increased equity in his property portfolio. He paid off his principal place of residence but has since redrawn some of the equity to duplicate. The interest payments for his investment loans are all paid through a combination of rental income and his salary – and the tax breaks that come with negative gearing. “Once you have 4–5 properties, you pay very little income tax,” he explains.

James considers his best investment decision was building a property portfolio despite a couple of ‘bad tenant’ experiences. In 2009, James had tenants who wouldn’t pay their rent. After being served with an eviction notice, James says the tenants ‘disappeared and trashed the place’. However, James had insurance which helped cover the cleanup costs, “The property was a bit tired and needed painting and re-carpeting so the insurance money went towards that.”

He has also had to evict another tenant for non payment of rent but James says while it is a hassle, that is the beauty of having a property manager. “Yes, these things happen and the property manager rings up and says, ‘I’m sorry to tell you something else has happened’, but they’re the ones who have to deal with it. In the scheme of things, the hassles are insignificant.”

After 10 years, James is well and truly a property man. When buying his own home, he not only bought something he was happy with but he also considered it in terms of whether it is a good investment. “It’s a good

investment and if I move, I’ll try to keep it and rent it out – even if it means I have to rent something else. I hate selling and re-buying because you lose money in paying stamp duty,” he says.MANAgINg CASh FLOw

“Cash flow is very important: interest rates fluctuate; properties aren’t tenanted 100 per cent of the time; and there’s the cost of maintenance. I’m fairly cautious with my spending habits. It also depends on how much you want to push yourself as to how tight you run your cash flow. You need to be disciplined. For example, after a while, you may think you have a lot of equity and think ‘I can draw on that and spend it’ but if you do, you still have to pay interest. But if you draw on it to buy a house, you get income and another asset,” James enthuses.

“I built my portfolio quickly. It was daunting initially but I got used to it and once you’ve set up the right structure it largely takes care of itself. There’s less work and less worry than having a share portfolio,” says James. He has a spreadsheet that details each investment property – the buying price, the current valuation, the rent, the loan amount and interest rate so he has a clear snap shot of his portfolio. INveSTMeNT ADvICe

James advises to have a buffer in the form of a line of credit – for James that buffer is equivalent to a year’s salary. He explains, “If something bad happens – high interest rates or I lose my job – the buffer gives me time to work out what to do. I might have to sell a house or two but you need time – selling a house doesn’t happen overnight and you might not have to if you have some breathing space.”

He also advises to look carefully at the break cost fees for investment loans before signing. “Some loans have prohibitive fees if you want to pay off the loan and refinance with another lender. I found this out the hard way. I have a couple of loans with lenders which I want to refinance because their interest rates are no longer competitive – but I can’t without incurring huge break cost fees. I’ll just have to wait until they no longer apply – which is five years from the time the loan contract was signed,” explains James.

As for investment advice for people

starting out, James says that while it is good to buy a house to live in, it is better to buy an investment property and rent somewhere to live. “You are better off and you pay less tax. It’s all about deductible and non deductible interest payments. If you’re lucky enough to buy your own home outright, then that’s okay but most of us aren’t and it takes a long time to get enough equity to be able to start investing,” he advises.

James investment philosophy is simple: “Whenever you get equity, you can either spend it or invest it for the future. In day-to-day cash flow terms, I’m probably worse off. If I just had super, I’d have more spending money now but I don’t mind having less money while I’m working. I’d rather have it when I retire.”

gOALS

James’ motivation for building his investment portfolio is providing for his retirement. “I looked at the money I had in super and it really wasn’t enough. I didn’t have the income to get a good lump sum by the time I retired. Besides, I don’t like super as an investment vehicle because super funds charge fees whether they make you money or lose it. And I don’t trust the government: tax policies on super change over time. The current government might be okay but a future government might be looking for money, change the rules and heavily tax super.”

James aims to keep growing his portfolio, buying a house whenever he can until he retires. “I don’t have a set number of properties or a dollar value in mind. However, I do want to retire comfortably with the same kind of income I’m used to now. Most people retire with little spending money. It’s not much fun having little or no spending money, especially when you’re older. When you’re younger, it doesn’t matter so much and you have more options. If you lose your job, you can get another one or go back to study and re-train. I like my work and I’ll keep working until it suits me to stop – perhaps at 60–65. And I’m still in the growth phase of my portfolio.”

While James hasn’t thought much about what he will do in his

retirement, he’s clear about his goal. He says, “My goal isn’t to become super rich but to retire comfortably, with the same kind of income I’m used to now. I have family in England and I visit them every year. I want to be able to continue to travel when I stop work.”LIFeLONg LeARNINg

Reflecting on his investment journey so far, James says that it has been a good learning experience. “The experience of being a landlord certainly teaches you to be financially responsible and that flows through to other parts of your life. Having my investments in place and on track is one less thing for me to worry about. If I didn’t have property, I’d be worrying about my retirement. My portfolio gives me peace of mind,” he explains.

It is also important to be positive and maintain a positive mindset. “There are times when you may be tempted to get

discouraged, for example, if you have bad tenants. But you have to take it in your stride. It’s part of doing business and the benefits far outweigh the hassles. Building a portfolio takes effort but in the scheme of things, that effort is insignificant in relation to the investment return. It’s not like it’s active all the time. You buy when you can in a lower point in the market cycle and then relax for a while until after the next boom, when you can then get new valuations, re-finance and draw down on the equity to duplicate,” says James.

James attends Custodian events, which he says helps him keep on track by reminding him why he’s doing it and how well residential property investment works as an asset class. “Every ten years your property portfolio doubles in value. That means if you have a $1 million portfolio with $500,000 in equity, in 10 years it is worth $2 million and your equity has tripled. You won’t make money over night and you need to be patient, but the return is very high for the amount of effort involved.”

Before investing with Custodian, James had a share portfolio and savings. He now owns his own home, has nine investment properties and he

has kept a small number of shares.

“BUILDINg A PORTFOLIO TAKeS eFFORT BUT IN The SCheMe OF ThINgS, ThAT eFFORT IS INSIgNIFICANT IN ReLATION TO The INveSTMeNT ReTURN.”

If I didn’t have property I’d be worried about my retirement. My portfolio gives me peace of mind.

BENJAMIN & NATAShABUICK

Occupations:

Benjamin: Manager, Queensland Rail Natasha: Office manager, real estate business

Age: 39 & 37

Family: Two Children 6 & 3




Benjamin and Natasha Buick own their own home and four investment properties. They aim to own ten investment properties by 2015 – and eventually to live in Tuscany six months of every year.

PROFILeS


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home (Melbourne) Private 1995 212,000 800,000

Family home (Brisbane) Private 2007 465,000 600,000

Marsden QLD Custodian 2008 372,000 390 440,000

Truganina Vic Custodian 2009 315,000 290 360,000

Oakhurst Syd Custodian 2010 390,000 470 470,000


pROpERTy BREAKDOwN

Benjamin Buick is the sixth of nine children and he grew up in a big house in the leafy eastern Melbourne suburb of Malvern. At 23-years-old, he had just finished a plumbing apprenticeship when his parents’ financial circumstances changed and they had to sell their home. Benjamin took a redundancy package and used that money to help buy a new family home with his parents. They bought it in the nearby and more affordable suburb of Carnegie for $212,000 in 1995.

Prior to buying the house, Benjamin invested in a managed fund that a friend had recommended. He contributed monthly until the fund became defunct and it was bought out by a life insurance company. He was offered a life insurance policy but instead he transferred some of the money out to buy shares in the Commonwealth Bank and APN News & Media which he still owns. The remaining balance has slowly whittled down over time. “I still have those shares but they’re for my children now. The experience made me realise that I had little influence over their direction,” he explains.

“My property journey began when I bought the house with Mum and Dad. It was a four and a half bedroom house and I ended up with the half. We were a large family but all we really needed was enough room for monthly family dinners where about 20 plus adults and 15 children could sit around a table or two to eat,” says Benjamin.

Soon after, Benjamin met Natasha whom he later married. Initially, she was happy to move into Benjamin’s family home but he says, “Her enthusiasm lasted about 12 months and then the pressure was on to find a place of our own.” In 2000, they bought a duplex in East Malvern for $196,000.

Before long, Benjamin was managing a large commercial cleaning company and work was everything. Then in 2007, while on a plane, Benjamin read an article in an in-flight magazine about risk taking and how the farther down a person is in the birth order of a family, the more risks that person is likely to take. It struck a chord.

Benjamin realised that his older siblings were conservative but his younger siblings were risk takers. He

felt underappreciated and unhappy at work, he rarely saw his son who was asleep when he got home from work and asleep when he left, and he realised he hadn’t taken any risks. The Benjamin and Natasha talked it over and they decided to move to Brisbane to have a better lifestyle. Within a few weeks of putting out feelers, Benjamin had a new job. They sold their East Malvern home for $531,000 which gave them a substantial deposit for their home in Morningside where they now live and are currently renovating.

The Buicks’ property investment journey began in 2008 when Benjamin was reunited with an old friend from Melbourne, Custodian WealthBuilders Queensland Sales Manager, Gary Sparks. Gary showed him an easy way to achieve his financial and lifestyle goals. “There were a few triggers but the one that really got me thinking about my future was the birth of our first child. Children often have a way of refocusing us on what is important and what is not. I realised my goal of financial security wouldn’t be met on the path I was currently travelling,” he says. However, it was seeing Gary’s goal sheet where he aimed to own 12 investment properties and 10 had been crossed off that really got him going. “I thought if Gary could do it, so could I. When we bought our home in Brisbane, we made sure we had enough to buy an investment property as well.”

Benjamin admits, “I was prompted to invest in property because of the growth I had seen in my homes in Carnegie and in East Malvern. I didn’t do any research; I took advice from a friend.” Under Gary’s guidance, the Buick’s bought their first investment property in Queensland through Custodian using the equity in their home. Gary also gave him John Fitzgerald’s Seven Steps to Wealth to read“. This book literally changed our lives. It showed us that just an average family like ourselves could build real wealth in property and never have to worry about money again.”

The Buicks bought their second investment property in Melbourne in 2009 and their third in Sydney in 2010, using the equity in their Morningside home and the house in Carnegie. Not long after buying their first investment property, Gary asked Benjamin to join Custodian as a consultant.

Again Benjamin was consumed by

his work and fell in to the same trap of working too hard for too long. He decided to take a leap of faith. He joined just before the GFC. “Custodian has helped keep my head above water. There are lots of distractions in life. Working in this environment every day, and being surrounding by positive people stops me from getting sidetracked,” he explains.

“Without a doubt, the best part of my journey so far is helping Mum and Dad get back on their feet and have a place they could call home. I didn’t understand leverage and equity back then and the motivation for buying was from the heart. However, all of my recent purchases have been made with one purpose in mind: how will this allow me to duplicate to the next, ” enthuses Benjamin.

Benjamin’s life philosophy is not to see things as ‘bad’ otherwise there is a risk they can get on top of him. However, he says if anything, the worse moments are seeing Natasha get disappointed and frustrated over delays in finance and settlement for their investment properties – and there have been delays each time. He also feels disappointed that he hasn’t been able to educate his family about property investment. “They’re not interested and I’m not the brother they turn to for advice – I’m sixth in the pecking order after all – but that may change,” he says hopefully.

Benjamin likes property as an asset class because for him, “It just makes sense. We’ve all seen property do wonderful things over time. It’s something you can see and also directly influence. I can dictate what goes on with tenant selection, rent increases, and future acquisitions.” gOALS

The Buick’s original goal was to have 10 properties by the time they reached 50-years-old or 10 properties in 15 years. Their current success means that they are now likely to reduce that time frame to 10 properties in 10 years. And after a one-on-one goal session with John Fitzgerald, he challenged them to achieve 10 houses in five years. “John is audacious with his goals and when you sit one-on-one with him he inspires you to strive for more. We need ten properties to have a net worth of $3 million.”

One of Benjamin’s personal goals

which drives him to build wealth is that he wants to live in a beautiful little Italian village in Tuscany for six months of every year. When Benjamin and Natasha married, they could only afford a short honeymoon. “We planned a three week trip to Europe based on having a coffee in St. Mark’s Square in Venice, having a beer at Oktoberfest and visiting my brother, Dominic, in London. My mother-in-law wanted us to visit one of my sister-in-law’s pen friends who lives in a small village in Tuscany. I couldn’t imagine anything worse but I included it to keep her happy. How wrong I was! Raphael and her now husband were renovating a castle on top of a hill and we fell in love with the place and the people,” explains Benjamin.

Benjamin is working towards a new lifestyle. He wants to take regular breaks from work, learn a new language, loves cheese and wine, and wants his children to benefit from having a different cultural experience. “I’m definitely going and Natasha and the kids can come too if they like,” he laughs.

“After a recent Custodian WealthBuilders event Natasha is looking to increase our net worth to $6 million so it’s more of the same for us as we work towards that new target. Our net worth currently sits bang on $1 million,” Benjamin says proudly.MANAgINg CASh FLOw AND INveSTMeNT ADvICe

Benjamin confesses that he and Natasha ‘don’t work to a budget that well’ and they haven’t had to until recently. “It became a bit tight about six months ago. We were living a five star life on a three start budget so I admit I occasionally get ahead of myself. We had to refinance to buy our next property. With two children it’s easy to make impulse buys. Knowing that I’m likely to keep doing that, I always have a buffer in my equity loan to accommodate unforeseen costs. Each buffer is about $8,000 so I’m always covered. I also use the buffer to help fund any shortfall in interest or out of pocket expenses on the property,” he explains. “Cash flow is the big thing for everyone. People are right in one sense when they say they can’t afford to buy an investment property so you borrow enough to cover it. Over time, the rents go up and the property becomes cash flow neutral so that

buffer has done its job.”

When it comes to investment advice, Benjamin laughs, “It’s probably not my place to offer advice, but what I do is educate people so they can choose their own path. But from what I’ve learnt so far: don’t reinvent the wheel; buy brand new with high land content; hold and never ever sell.” He also says that he takes comfort from the fact that so many people have gone before him and successfully invested in property. He also looks at the research that shows where areas are doing well and where areas will improve. It is all about investing over time to get a good return.LIFeLONg LeARNINg

“I’m very lucky to have direct access to John Fitzgerald and others who are on the same path. Every day is an opportunity to learn more about the history in property which we all know repeats itself. My forecast for the future is based on the detailed analysis of the past. There is no first time for the properties I own. History is repeating itself. I also I surround myself with like minded people. There’s no negativity in my life,” he states.

Put simply, wealth building has given Benjamin and Natasha direction in their lives and they are really enjoying the journey. The positive experience has a flow on effect on how they live, act and motivate others. “I’m ready to help anyone identify their goals, financial or otherwise, and share my knowledge and contacts to help them achieve their potential.” But there is still more to do and with successful wealth building the Buicks intend to give back to the community. Benjamin says, “I am looking for my calling. I used to help coach football in Melbourne and I dream about having enough money to buy a house for the old footy club to use. Something will come.”

Benjamin likes property as an asset class for him. It just makes sense. We’ve all seen property do wonderful things over time. It’s something you can see and also directly influence. I can dictate what goes on with tenant selection, rent increases, and future acquisitions.

JACqUI ThOMAS

Occupations

Creative Director

Age: 45

Family: One Teenage Son




PROFILeS

Jacqui Thomas owns her own home in a beachside suburb of Melbourne, five investment properties and a share portfolio. She recently sold her business and after a short ‘temporary retirement’, she has embarked on an exciting new business venture.

In 1988, Jacqui Thomas set up her own graphic design and branding business. She was a sole trader until 1994 when she employed her first staff member. At the time, Jacqui was six months pregnant with her son and she says, “I had no idea how I would keep the business running being a new mum.”

In 1996, after Jacqui separated from her husband, she realised it was either life as a full time mum on a sole parent pension or build up her business to create a future for herself and her son. “It was an easy choice really!” laughs Jacqui.

By 2000, Jacqui bought her current home, employed four staff, and had several blue chip Australian companies as clients. She started investing in shares. At first she invested in the companies she was working for and took part in a couple of share floats. She also sought advice from other people who were investing in shares as well. As her interest in shares and

her portfolio grew, Jacqui decided it would become a way of saving for her son’s private secondary school

education.

Jacqui continued to build her business, employing nine staff and expanding the

range of services she offered clients and increased her client base. Around this time, her accountant advised her to invest in property as a way to be more productive with the tax she was paying, make her money work harder, and provide a second future income stream.

At first, Jacqui went to a lot of property seminars but she came across some questionable people and wealth building attitudes. Then a friend of Jacqui’s bought a property through Custodian.

Jacqui did her research but sat on it for ten months. In the end, she decided she would give investing in

property with Custodian a go. Her understanding of shares and the stock market is limited and she wanted to diversify her investment portfolio.

In 2004, Jacqui bought her first two investment properties – in Pimpama and Bracken Ridge in Brisbane. She used cash savings to fund the deposits for both properties and she has a line of credit against her own home.

“The experience was very easy and that surprised me. I used Investloan and they were very good at answering my questions. I’m financially very conservative and I don’t like debt but I started to understand the difference between serviceable and unserviceable debt,” explains Jacqui.

In 2006 Jacqui bought her

third and fourth properties, again in Queensland. She had a similar positive experience although it took a while to secure tenants for one of the properties. In 2007, Jacqui bought her fifth property in Deer Park, Melbourne.

“My BeST INveSTMeNT DeCISION wAS TO STOP OveRANALySINg AND START INveSTINg – AND eMPLOyINg A SeNSATIONAL ACCOUNTANT whO eNCOURAgeS Me AND UNDeRSTANDS whAT I’M DOINg.”

The exPeRIeNCe wAS veRy eASy AND ThAT SURPRISeD Me.”

Jacqui likes property as an asset class because, “It’s provided me with an alternative channel of investment to complement my business and other investments. It appears to be easier to understand than shares and it’s not something that needs to be watched on a daily basis.”

She regards the best moments in her wealth building journey as building a successful business and when she paid off the mortgage on her home five years ago. Her worse times have been dealing with bad tenants, property damage, and a poorly performing real estate agent for her Deer Park property. She also received a $2500 water bill as a result of a broken water pipe. However, she accepts that it is part of investing in property and she had insurance as well as a line of credit to help her through those times.

Jacqui says, “My best investment decision was to stop overanalysing and start investing – and employing a sensational accountant who encourages me and understands what I’m doing.”

GOALS

Jacqui’s financial goals have been to provide a secure foundation for her retirement as well as to fund her son’s education and provide him with financial security if anything happens to her. While Jacqui is going through a period of re-evaluation since selling her business, she says, “If nothing goes horribly wrong, it appears I will have a comfortable self-funded retirement.”

Personally, she would like to indulge in some luxury travel and have the freedom to make choices. Jacqui also plans to undertake a big renovation of her home and not work full time. She aims to strike the right balance between work, fitness, and socialising.

MANAGING CASH FLOW

Jacqui has a line of credit against her home that she uses as an operating account for rents, loan repayments, and property costs. She advises new investors to be aware that the loan interest paid during a house construction is not immediately tax deductible. It can only be claimed when the house is sold in the future.

“Make sure you have the cash flow to cover it during the 28 week construction period,” she says.

INVESTMENT ADVICE

When it comes to investment advice, Jacqui says, “Do lots of research until you’re comfortable with your decision

then act as soon as you can. Expect a few surprises along the way. Even though you don’t have to monitor things closely, it does pay to do it, especially when you have multiple properties. For example, making sure you’re getting the best interest rate across all your loans. Every three months I check with my bank manager to keep up to date.”

LIFELONG LEARNING

“You can’t help learning along the way because from the moment you start to build wealth, you have a vested interest, you talk with others, you watch, you learn and naturally want to learn more,” says Jacqui.

Her motivation for reaching her goals and maintain the right mind set is her love of leading a well balanced life. She says it is important to go through dynamic periods complemented by periods of rest, reflection and forward planning.

The combination of Jacqui’s successful business and her wealth building has meant that at the moment, she doesn’t need to work. She can take a break and reassess her options.

However, after losing her passion for the design industry and its processes as well as the demands of running her own business for 21 years, it didn’t take long for Jacqui to embark on a new venture. With her ex creative director as a business partner, Jacqui has become a hunter and gatherer of Australian contemporary designers and design. Her new online venture, sooperdesign.com.au, is an online store offering design inspiration and products of excellence and innovation from Australian designers.

“I USeD INveSTLOAN AND They weRe veRy gOOD AT ANSweRINg My qUeSTIONS.”

I’m financially very conservative and I don’t like debt but I started to understand the difference between serviceable and unserviceable debt.

JOhN & ANN CARTER

Occupations:

John: Account Executive –Southern Cross Austereo

Age: 44 & 40

Family: Son Lachlan, 8 and Ryan 5


Property portfolio value (including principal place of residence): Approx $2 million+


PROFILeS

John and Ann Carter own their own home and three investment properties. They aim to continue buying investment property whenever they can.

In 1993, newlyweds John and Ann Carter moved to the Gold Coast from Sydney for a lifestyle change and armed with a five year plan: to establish themselves financially and then return to Sydney. They bought their first home in Daisy Hill and within a couple of years, they decided to stay.

Prior to investing in real estate, the Carters regularly made additional contributions to their superannuation. They also invested in shares after being encouraged by one of Ann’s employers who had said he had done well in the stock market. Ann did a short course in an attempt to understand the financial principles involved but as John says, “It was confusing and after 5–6 years of time and effort, we came out neutral.”

Another investment for the Carters was building up a successful retail business which they eventually sold. Leading on from that sale, John went into a partnership to build up a national retail chain which they sold out of seven years later. The business allowed the Carters to grow their quality of life and the sale allowed them to invest in both residential and commercial property. But as John says, they didn’t start investing the correct way until they bought

their first investment property with Custodian.

The Carters saved the cash deposit for their first home and it was at that point that they realised how hard it is to do and that you can’t save yourself to wealth. Five years after buying their home in Daisy Hill, they decided to upgrade. They also decided to become ‘property investors’ by keeping their first home and renting it out.

Later, with the proceeds of their business sale, the Carters had the cash to invest further and Ann started focusing on property. Ann had worked for a real estate agent for a while and could see the benefits. The Carters next investment property was purchased through a real estate agent. In hindsight, John says, “It was a terrible decision. We bought using emotion not logic and we didn’t do our homework. It was an older property so it had maintenance issues. We certainly didn’t understand the true costs involved and didn’t maximise the tax benefits of owning property.” A few years later they invested in a commercial venture, buying some land and building shops. It took a long time to develop due to all the red tape and there were lots of unexpected costs. “It was a hassle but once it was completed, it was true

passive income. However, it came at a much higher risk. We got great income but not so much capital growth which impacted on our potential. The lender recognised the risks so held more security over our home. At one time we didn’t have tenants in one of the shops for over 12 months, then there were rent free periods and shop fit out costs for new tenants. It bought holidays but that was about it,” reflects John.

Investment wise, John says, “We stalled for a few years because life got in the way and then one day we realised how old we were. We looked at what we wanted to do in the future and realised we had no plan to fund it.” The only true asset they had was the amount of time they had to make a difference. But they also wanted a lower risk way to invest with better leverage than commercial property to reach their goals.

While the Carters still had their commercial property, they decided to invest in another house, and again they went through a real estate agent. They selected another older house based on emotion, signed the contract and paid the deposit. Around that same time, Ann came across Custodian through a past colleague. He explained John Fitzgerald’s wealth

building model and gave them Seven Steps to Wealth to read. John was sceptical but Ann was the proactive one and saw the potential. After a lot of talking and a lot questions, John changed his perspective, “it was like a light globe going on in my head, realising there was a better way.” The Carters cancelled the contract on the house and they bought their first Custodian home in 2007. They have also recently sold their commercial property and intend to use the funds to invest in more houses. John says, “The leverage is better and there’s less risk.” The Carters also plan to sell their older investment properties and redirect their money into new more efficient investment houses. “I would never buy old again,” reflects John.

John considers his best moment in their journey as finding a positive investment strategy utilising compound growth. It is not just about the property, it is about the journey and the person you become. John and Ann now have shared big picture goals, they’ve given themselves a timeframe, and they are less stressed over their investments, seeing them in a positive light. As a result, there is more communication and they have a better relationship. They also consider their best investment decision has been to pick a solid performing asset class and focus on it.

The worse part has been John’s realisation that he can’t share their wealth building journey with some of the members of their families. Their negative approach to debt and following a ‘herd mentality’ of borrowing little and paying back quickly puts them at odds. “While I’m not against that, I can see a far more beneficial way.” He finds it difficult to see them without a sufficient plan to fund their retirement.

The Carters like property as an asset class because of ‘stability and ability’. Investing in lower end residential property is a proven performer and offers stability during market fluctuations and greater benefits during cycles. This kind of property is geared for capital growth which gives the Carters the ability to leverage into more property. John adds, “I’m not experiencing the risks associated with other investment classes and I don’t need to know what the market is doing every day like in shares. Property is a ‘set and forget’ commodity and we all need to live

somewhere – it’s a matter of supply and demand. We also don’t have to compromise our quality of life to build wealth through affordable property.” gOALS

While the Carters have different short-term personal goals – John admits he’s more ‘into lifestyle’ – their long-term goals are in sync. They also have a shared goal of ensuring their children have an understanding of property and have a legacy they can add to. With both their personal and financial goals, they realise that to continue to enjoy their quality of life, they need to have a good income. That income will be primarily derived from their property investments. Combined with their superannuation and savings it provides choice rather than sticking only to what is affordable.

MANAgINg CASh FLOw AND INveSTMeNT ADvICe

John says, “Cash flow is very important and that’s why we choose to invest the way we do – it’s one of the most affordable ways. You have to balance your investment for both capital growth and income. On the income side I manage my rents very effectively and am not afraid to try for that extra bit. On the capital growth side, I now only choose a very specific class of property that caters to a selected target market and based on a pre existing model. The other aspect is to only buy property when you can actually afford to. Plenty of people suffer the consequences of over committing. It’s about being slow and steady.”

While the Carters haven’t had to work to a strict budget, it has made them more aware of household expenditure and they’re prepared to accept ‘short-term pain for long-term gain’.

Ultimately, it is important to do something different compared to what most people do which seems to be nothing. Don’t reinvent the wheel. Find people who have successfully gone before you and follow their path; surround yourself with people who are on the same journey and learn from them.

If you decide to invest in property, learn to deal with the ‘lumps and bumps’ along the way. “You’re dealing with property so anything can happen. A council can delay development, you can have bad tenants, the builder can go broke etcetera. You have to work

through them but there’s also ways to minimise the risk through education, understanding what the risks actually are and leverage, and you can have an ‘exit strategy’ in place in case something goes wrong,” explains John.LIFeLONg LeARNINg

John warns against confusing learning with research. He describes learning as the ability to sort through information, taking on aspects that will help educate you and help you move forward – and filtering out the rest. There are plenty of people who do the research but never move forward because they get stuck on the detail. It is important to think big.

John finds the best way to maintain the right mind set and a positive attitude is to learn detachment as there is a lot of negative information and attitudes around us. ‘Bad’ things happen but it’s how we respond to it that matters so use it as an opportunity to learn and improve how to do things in the future. “The definition of stupidity is doing the same thing over and over and expecting a different outcome. Improve how you do things and surround yourself with positive people,” John advises. “People often let themselves down over their potential. They spend all their money on lifestyle and don’t strive for anything extra. We have a distinct advantage in that we aim for what we want and find a way to do it. It’s simply a matter of working out what you want then putting a step-by-step plan in place to achieve it. The main part of that plan is actually believing that you can do it.”

Building wealth has taught the Carters that being goal focused is a very important part of success. It has also taught them that there are some areas in life where they need to detach from the strong negative influences that surround everyone on a daily basis and maintain a positive attitude. In turn, this is reflected and radiates out to others.

John and Ann are passionate about building wealth through residential property and John says, “I’m lucky to have the opportunity to educate average people every day on how they can affordably build wealth. Average people can definitely do this.”

phILIp AND ANGE KERR

Occupations

Philip – Retired teacher and administrator in special education

Ange – Community Resource Officer, Department of Communities Disability and Community Care Services

Age: 55

Family: Two Adult Children Living Independently




Philip and Ange Kerr own their own home and have four investment properties. They bought their first home in 1982, and bought the first two of their investment properties in 2007. In 2008 they bought their third and in 2009 the fourth property. They plan to buy another property every year until Ange retires.

PROFILeS

Philip and Ange both trained as teachers. Prior to buying their first home when they were 28-years-old, the Kerrs had little in the way of savings or investments. Before they married, Philip dabbled in some shares but he says, “They went up and down and I lost money.” They took out a personal loan to finance a four month trip to Europe. When they returned home to Mackay, North Queensland, Philip got a job and Ange stayed at home with their first child.

When Philip’s parents died, he inherited a half share of the family home in Brisbane. The house was sold and the Kerrs used that money towards a house of their own. Even though they had $30,000 deposit and only needed to borrow $20,000, it was difficult to get finance. Ange says, “It was in the days before bank deregulation and the banks could do what they wanted. Travelling for four months and only Phil having a job went against us.”

In 1989 they moved to Brisbane to undertake further study and rented out their house in Mackay. In 1993, they moved to Nerang on the Gold Coast. “We owned the Mackay house. Unfortunately we sold it to help buy in Nerang. We now know we should have used that equity to buy our family home on the Gold Coast,” reflects Ange.

After settling into life on the Gold Coast, the Kerrs had no thoughts about investing. Philip had a stable job and good superannuation. Ange had worked in, and resigned from, various

teaching positions over the years so her superannuation was smaller. Ange explains, “In our 40s we thought Philip’s superannuation would be enough for our retirement. It seemed so much at the time.”

In the late 1990s, the Kerrs were introduced to a property investment company through an acquaintance at their church. “It seemed like a fun idea and we thought, wow, we could have two houses,” says Philip. They paid a fee, inspected some land, and even picked out the tiles for the investment home. The purchase was based on using the equity in their Nerang home but in 1998, property values dropped and the value of their home dipped from $180,000 to $160,000 so they couldn’t get the finance. Philip and Ange were disappointed by the experience. “We paid $500 but we didn’t learn anything and there was no follow up from the company,” says Ange.

Instead, the Kerrs purchased shares on an ad hoc basis, paying cash for Telstra T1 and T3 public offers and Milton. The Telstra shares didn’t grow much and Milton dropped during the GFC. The Milton shares are now at about 70 per cent of the pre GFC price. The shares still provide income, although if they sold them, it would be at a loss.

When the Kerrs reached their 50s, they realised Philip’s superannuation wouldn’t be enough for their retirement. This realisation together with the downturn in the stock market prompted them to look for a more

stable investment vehicle.

One Sunday Ange was watching TV and she saw one of John Fitzgerald’s infomercials. That led to the Kerrs buying the Untold Wealth: Success from Scratch workbook and attending a seminar. They were both impressed by how John spoke, the sort of person he appeared to be, and how he gives back to the community. Several weeks later, their journey began.

They read Seven Steps to Wealth before their interview with their consultant who is an ex teacher and they related well to him. After reviewing the Kerrs’ financial situation, site visits were organised and they selected two properties – one in Heritage Park, the other in Drewvale, both in southern Brisbane. Heritage Park started building immediately and Drewvale took over six months to go through council planning and be registered.

Ange says, “We were pleased we’d chosen the two. We would’ve been disappointed if we’d had to wait six months. Our son who was studying a course in design at the time used the construction period of the first house to take weekly photos of the building process.”

The first house was completed in the required time frame and rented immediately. The second property required tenant gap cover for four and a half months before it was available to be rented due to builder delays. Their other two properties are in South Morang and Tarneit,

Melbourne, purchased sight unseen and they are both rented.

Three of the Kerrs’ investment properties were bought using the equity in their home and the fourth using their own home and equity in the Drewvale property.

To Philip, the best part of their investment journey so far was realising how easy the process can be and that they can trust their investment team. The worst period was related to the tenancy of the first two sets of tenants at Heritage Park (but one did alert them to a termite problem, so that was a blessing in disguise). Their third set of tenants in the same house has been great.

Ange considers the best moment for her was when they started investing in property, taking a positive step towards their financial security. The worst was dealing with the solicitor when signing contracts for their first investment property who couldn’t answer Ange’s questions, but their consultant quietened her nerves.

As for their best investment decision, Phil laughs, “I bought an Aboriginal dot painting in the 1970s for $5 when no one was interested in Aboriginal art. I sold it in the 90s for $9000. I should have kept it for a while longer!”gOALS

Ange was born in Germany and has many relatives there. The Kerrs haven’t travelled overseas since their European trip backpacking in the 1980s so they’d like to go back, visit relatives, and travel in comfort. They also plan to help their children financially where they can. Ange says, “We now know that by investing in residential property we will be financially secure and be able to meet our goals.”

The Kerrs aim to add another five houses to their portfolio over the next five years although Ange says, “I am dealing with some health issues so I may not last working until I’m 60. We’ll see how I go.” If not, they intend to buy a house every year Ange is still working. Once she retires, they’ll sell down to pay off their Nerang home and keep the remaining ones. Between Philip’s superannuation and the income from their remaining portfolio, they will be able to live comfortably.


When the Kerrs first started going to investment seminars, a speaker said that he wrote down everything he spent so he knew exactly where his money went. Phil and Ange kept a financial record of their expenditure for a year. While they don’t adhere to a strict budget, the exercise helped them become aware of where their money went and what they were prepared to do without. “So much money runs through your hands,” explains Ange.

The Kerrs manage their finances by borrowing against their own home or use the capital growth from their investment properties each time they begin a new house. This money is used as the deposit on the land and to cover interest payments while the property is under construction. Once the property is completed and they have received the depreciation report, they complete their PAYG income tax withholding variation forms. In early June each year, they repeat the process for the next tax year. Philip says this is a key part of managing their cash flow. “It’s crazy to wait until the end of the financial year. We couldn’t imagine doing it without it.”

They know how much they would be paying in tax if they did not have properties and they look at the tax they are paying after the forms have been processed, then work out how much extra cash they are receiving from their pay. They have the difference transferred into their investment account the day after payday. This account receives all rent money and they use it to pay the interest for the loans. They try to spread out their repayments across the month. To make sure they have enough money available in case a property needs repairs or becomes vacant, they also keep up extra repayments on their home loan. They ring their agents immediately they see any delay in rent payments into their account. They also check their accounts daily now that they have four properties.

However, Philip says, “Since we started building our portfolio, I haven’t worried one bit. I’m vigilant but I don’t worry. I know others do but I can see that things are only getting better as time passes. You have to look at what you own. Ange is more inclined to worry, so I don’t tell her some things

and she’s happy with that.”

The Kerrs advise to start investing as soon as possible. If you are young, make good use of time. If you are older, there is still time to improve your financial position so get going. Make sure you have an excellent accountant who knows property and charges reasonable fees.

Philip also advises that any tax concession you get should be put back into the investment and keep a $5,000–7000 buffer in an offset account for each loan. LIFeLONg LeARNINg

As Christians the Kerrs have always been part of a church community and feel that by building wealth they will be able to continue to support the work from within the church or the general community as they feel led. They feel extremely privileged to have had this opportunity to learn about being wise with the resources they have.

The Kerrs attend Custodian seminars and are always looking for people who are interested in investing among the people they meet. They not only look for positive people they can learn from but also for positive people who want to learn how to invest – and do it right. To that end, the Kerrs have introduced several people to Custodian.

The Kerrs didn’t expect to be able to achieve so much to secure their financial future so late in their working lives but as Ange says, “John Fitzgerald says to surround yourself with people who are going to encourage you and inspire you. He always has something new to say and challenges you to stretch yourself further.”

Philip and Ange enjoy contributing to the community. Philip teaches beginning weaving skills and Ange plans to volunteer in the community once she retires.

JENNy fORDhAM-LEppITSCh

Occupation:

Southern States Sales Manager, Custodian WealthBuilders

Age: 51 & 60 Family: Married to Hans; two sons 13 and 10; two adult step-children and four grandchildren




PROFILeS

Jenny and her husband, Hans, own their own home and eight investment properties, one of which was purchased through their private superannuation fund. They aim to buy another 2–3 properties before retirement.


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home Private 2003 620,000 1,200,000

Berwick Vic Private 2007 270,000 315 360,000

Tarneit Vic Custodian 2007 290,000 305 340,000

Eagleby Qld Custodian 2008 380,000 400 395,000

Point Cook Vic Custodian 2008 396,000 335 480,000

Baxter Vic Private 2009 307,000 200 370,000

Warner Lakes Qld Custodian 2009 430,000 415 450,000

Pimpama Qld Custodian 2010 424,000 410 435,000

Redbank Plains Qld Custodian 2010 355,000 370 365,000

Glenfield NSW Custodian 2011 510,000 530 510,000

Total value $4,905,000

pROpERTy BREAKDOwN

Before investing in property, Jenny and Hans were shareholders in a hotel in Richmond, inner Melbourne and had a small share portfolio, which they still have.

In 1993, they bought their first investment property. “I was in my early 30s and earning good money so we decided to buy an investment property and negatively gear it. Not that we actually knew what negative gearing was. We just knew that we would get a much better tax return,” explains Jenny. “We were so naive. I look back now and laugh – we didn’t even know what stamp duty was and we certainly used up every cent we had when we realised we had to pay that as well!”

A financial planner encouraged them to buy a townhouse off the plan in Mildura, in regional Victoria, telling them that Mildura was the growth capital of Australia. We put together the $30,000 we needed through our savings and I cashed in the non preserved part of my super, we didn’t even know about using equity.” says Jenny.

Unfortunately, their first foray into property was not a success. It took nine years for Jenny and Hans to sell that property for $5,000 less than they bought it for. In the meantime, they bought a unit in Cheltenham, Melbourne. This time the value of the property doubled in five years.

They also bought shares in a syndicate to build 30 Burger King fast food restaurants. “Unfortunately, that ended in tears,” reflects Jenny. “There were all sorts of hold ups with the developments, mainly due to Councils, and the funds dried up after just four restaurants were built.” Jenny and Hans were left with a debt of $130,000. They sought advice from both a reputable tax agent and tax lawyer but they both advised the only way out of it was to sell the unit in Cheltenham. Jenny says it was a decision that never seemed right.

It wasn’t until 2007 that Jenny and Hans started to build wealth as opposed to investing. A few years prior to joining Custodian, Jenny had walked away from a corporate career with Lions Nathan after she had her second child, James. When she returned to work, Jenny decided it was time to start pursuing the things she was passionate about and

after being approached by the agent she bought her home in Mt Eliza through in 2003, she attained her Agent’s Representative licence and began working with a local real estate agent. Jenny then moved on to a role as General Manager of a property investment company that was a master agent for Devine Homes.

At the same time Jenny’s brother was involved with Custodian Wealth Builders and encouraged her to go along to one of their seminars. Jenny says, “I thought I was an astute investor but after I heard John speak, three things really stuck in my mind. 1. Buying a property and hanging on to it. 2. It’s the land that appreciates and 3. There is a big difference between investing and building wealth. After the seminar, Jenny left the Custodian office in Bentleigh and went straight back to the company she worked for and bought a brand new home as an investment property, using the same principles that John had spoken about.

Within a matter of days of attending the seminar Simon Meehan, the then Custodian Victorian State Manager, invited Jenny to work for Custodian. She took her time to check into Custodian and joined the company four months later as a consultant.

From 1997 to 2011 Jenny and Hans bought nine investment properties.

Jenny and Hans’ first family home was in Patterson Lakes in the south eastern suburbs of Melbourne and its value tripled in thirteen years. They then bought their current home in Mt Eliza on the Mornington Peninsula at the same time buying an older property in the same suburb as an investment. John Fitzgerald spent time with Jenny and Hans and advised them to sell an old investment property as in reality it was a money pit and not helping them build real wealth. They had good equity in their own home and were in a strong position to build a wealth portfolio with Custodian. Jenny explains, “Neither Hans nor I are fearful of debt. You have to have debt if you’re building a business and that’s what we’re doing. We contracted and built eight homes in four years and we’ve been able to do this by using the equity in our home to cover the deposits and costs of all the properties in our portfolio.”

Jenny says the worse moment for

her is every time she has to apply for finance. She explains, “I absolutely hate having to chase up an endless ream of paperwork and documents. It can be daunting but I know it has to be done. John Fitzgerald always says to learn to love what you hate, but I’m not convinced I’ll ever learn to love the process! However, I do love what we are building and visualising the end result.”

As for the best moment, “It’s when Hans and I talk through getting our next property and then see the plans, order the contracts – and the icing on the cakes is when the finance is approved and I can breathe.”

Jenny and Hans like property as an investment class because it is not only ‘as safe as houses’ but because it is what Jenny knows and does best. “I am excited about the business I’m building. I want minimum input for maximum growth. If it wasn’t for our property investments we could never dream of achieving what we will over time with our portfolio,” enthuses Jenny.MANAgINg CASh FLOw AND INveSTMeNT ADvICe

Jenny says that apart from getting an investment loan, managing your cash flow well is the most important thing you can do. Be aware of all the costs but don’t over commit – make sure you still enjoy life. To help, she advises others to get organised and make sure you know which loan is which and what property it belongs to as well as leaving enough money in your line of credit to act as a safety net. It provides a sense of security, knowing you could manage for a while if your financial circumstances change. If you have to use that safety net, it gives you breathing space so you can make informed decisions.

Jenny constantly monitors the property market to enable her to make informed decisions about her portfolio, admitting she ‘does figures all the time’. Over the past five years Jenny has been in the acquisition phase, buying property for growth. Her goal now is to consolidate and allow her portfolio time to grow.

As for investment advice, “Whether you’re young or old, do whatever you can whenever you can. Don’t be afraid of the ‘what ifs’. Stop waiting for the planets to align and for perfect conditions because every time you

purchase is the right time. Get your financial structure right and the portfolio will grow. I spend so much time with people who keep making excuses as to why they’re not quite ready.” Jenny adds, “We only have a limited amount of time while we’re working to build wealth. Apart from family and our health, the most important asset is time. You have to make it work for you, once it’s gone you can’t get it back.”

FINANCIAL AND PeRSONAL gOALS

Jenny and Hans are well on their way to achieving their financial and personal goals but as Jenny points out, “...only because we were prepared to go for it.”

In fact they have already achieved more that they thought they would. When Jenny joined Custodian, they set their goal at four investment properties and thought if they achieved that, they would have done well. Once they reached four, they reset their goals to six over ten years and now they have nine. We moved quickly with our portfolio due to our age, knowing we had a limited timeframe to build wealth for our future. Not that we think we are old by any means - it’s just like a good bottle of wine that needs time to mature, our portfolio needs time to grow.”

Jenny says that their financial and personal goals are intertwined. “The financial allows us to pursue our personal goals. Hans works from home and we have more time for family.”LIFeLONg LeARNINg

Jenny says that she is always learning. “Even when you think you know a lot, you can surprise yourself with something new,” she says. She also says that for her, it is easy to stay on track. “I’m extremely grateful to work for a company that offers me continual learning and coaching (by John). It’s great to be around like minded, positive people and the team of people I work with are second to none. I read a lot and also watch property and finance shows,” she explains. “I also remind myself every day that we’re building a passive business for our future. If I close my eyes I can see it, touch, and smell it. I know I’m not going to have to survive on a pension. That keeps me totally motivated. I can’t get enough of my

calculator! I also thrive on working with my clients on creating their own personal model and can’t help but be enthusiastic at the projected outcome. In five years time, then 10 years and even longer, it’s brilliant, it’s great to smile and know you are going to enjoy the next 30 years of your life.

Jenny also maintains her positive mindset by coaching clients and prospective clients every day and when she is not coaching, someone is asking her questions. She wants to help as many people as she can be all they can be.

Learning to build wealth has had a big influence on Jenny and Hans’s lives. “It’s changed our lives dramatically as far as setting goals for the short and long term. I now know what it is we want and how we are going to get there and what the end looks like – and it looks good. Before Custodian, we really didn’t think much or talk much about retirement. We were more focused on the present as we have two young sons. I look back now and apart from owning one property in super I don’t know how we thought we were going to survive retirement. I have watched my parents trying to make ends meet on an aged pension and they really struggle just with the day to day cost of living.”

Jenny encourages her family to be bold enough to chase their dreams. “I want my two sons to have a life rich with experience and choices so they can grow up to be good people and work in an area that they are passionate about. The legacy is inspiring them to be bold enough to chase their dreams. As long as they have a pay packet and will listen to me, I can teach them to build wealth. I’d like them both to have three properties by the time they are 30 and six by the time they are 40. Then I will know I have been successful, and all this through property.

Before Custodian, we didn’t really think much or talk much about retirement. We were more focused on the present as we have two young sons. I look back now and apart from owning one property in super, I don’t know how we thought we were going to survive retirement.


PROFILeS

Occupation:

James: Dentist

Age: 84

Began investing in residential property (year): Approx. 1960

Property portfolio value (including principal place of residence): Approx $8 million


DR JAMES wALSh-BUCKLEy

James Walsh-Buckley was 72 years of age when he first met John Fitzgerald and started investing with Custodian. Now aged 84, this remarkable man lives and invests according to a very simple creed: In the absence of clearly defined goals, we are forced to concentrate on activity, eventually becoming enslaved by this activity.

When talking with Dr James Walsh-Buckley, you get the impression that age is no barrier for this man. On the contrary, he appears to have more energy and drive than many people half his age, continuing to work three to five days a week in his dental surgery and training at least once a week to maintain his black belt karate status.

James preserves his youthful zest for life by having a positive attitude and continuing to create and pursue goals with unswerving resolve. He believes that having goals is the key to living well, being happy and staying vibrant. It is also an attitude he has strived to instil in his four sons.

“There’s a quotation well worth remembering,” says James. “In the absence of clearly defined goals we are forced to concentrate on activity, eventually becoming enslaved by this activity’.

He believes that if you fail to set goals throughout life, you find yourself, “running around like a fowl with its head cut off. There’s a lot of action but you’re getting nowhere and achieving very little, so goals are most important.”

He adds, “I focus on working toward my goals. I still work at the surgery and have no intention of retiring. I’m very fit and well. I can still pistol shoot accurately. As long as I have continued health and a steady hand I’m more than happy.”

When it comes to his property investment career, James is the first to admit that he’s made some costly mistakes.

He describes his investment ventures prior to Custodian as a ‘tale of woe’, that commenced many years back when he lived in England. James says the purchase and subsequent sale of a house in the exclusive London

borough of Wimbledon has been his most expensive error to date.

“Going back about 40 or 50 years, I bought that property for around £11,000, then sold it soon after for £25,000. A girl we know who works in real estate over in England came to Australia recently to look me up and told me that same property had been listed for £5 million, but £6 million would secure it!”

Upon returning to Australia, James still subscribed to the theory that to get rich from real estate, you should buy something, sell it for a profit and then take the capital gain to move on to the next venture, repeating the same process.

He tells of another lesson learnt the hard way with a property purchased in well known Victorian resort town of Lakes Entrance in East Gippsland. Approximately 20 years ago, James paid $85,000 for a house which

boasted Lake Frontage and its own private jetty. He sold it a few years later for $135,000, thinking he had made an excellent return on his initial outlay. It’s now worth at least $1.5million, perhaps approaching the $2 million mark,” James says.

As if that wasn’t enough of a dent in James’ investment endeavours, he confesses two further lapses in judgement that saw him forego a potential windfall.

“I had several properties in Loch Sport (Gippsland coastal town), that I bought for about $3000 and then sold for perhaps $10,000. They’re now worth around $56,000 to $60,000.”

A staggering $5 million was sacrificed when James secured 25 acres of prime vacant land on the Murray River in the historic Victorian port of Echuca.

“I bought the 25 acres for $5000 and sold the lot to Elders (Real Estate) for $25,000, so $1000 an acre, making what I thought was a decent $20,000 profit. They cut it up into building blocks; approximately four per acre and sold each one for $50,000 to $60,000.”

Rather than wallowing in self pity or regret however, James maintains a sense of humour and that ever present positive mindset with regard to his inventory of property faux pas.

He laughs as he willingly imparts his story and explains, “I was creeping along on the right track, but just wasn’t doing it properly.”

James says that upon learning of the massive opportunity he sacrificed in Echuca that someone else was fated to make millions from; he had to rethink his flawed strategy.

“I thought to keep properties you had to live off the smell of an oily rag and I wasn’t prepared to do that. I had no idea how to be taught because I wasn’t getting the true value from my earning potential.

“I found it damn difficult going it on my own because I had the wrong formula; I didn’t have a clue. I was buying these properties outright, then hanging on and selling for a profit so I could buy another one outright with the capital gains I made. Quite obviously that wasn’t the way to go.

I simply didn’t know enough; I didn’t know about the taxation aspects and compound growth.”

James has always favoured property over shares as he is, “happy to see bricks and mortar,” and wanted to, “stick with” what he knew. However he didn’t just want to make money for money’s sake. More importantly, he wanted to set an example for his children; to impart the lessons he had learnt and teach them the correct approach to investing in property to build wealth.

Although all four of his sons are successful in their own right, James has always been determined to edify them in the ways of wealth creation. For him, property is, “a future lifestyle and investment for the children. It’s important to build wealth for them and for their children.”

“I want to correct my mistakes, because I want to teach my kids the right way to build wealth

John Fitzgerald says the Custodian investor must be positive, responsible and proactive. The fact that James, at 72 years of age, was willing to embrace Custodian’s investment formula in order to create a lasting legacy for his family illustrates that he possesses these three characteristics in spades.

James says he remembers reading about Custodian in the paper and decided to attend one of the seminars. He says, “Listening to John, I was fascinated by the way he portrayed to the audience how he genuinely wanted them to get involved in wealth building and I thought, that fellow really means it. That’s why I delved deeper and got involved – merely because of John’s sincerity.”

A little over a decade on and James has used the Custodian blueprint to accumulate, and more importantly hand on to, ten properties, for which he initially outlaid approximately $2 million in total. He estimates that his portfolio, which includes homes in Melbourne and Brisbane, is now worth somewhere in the vicinity of $8 million.

Not content to rest on his laurels, James says he intends to continue working with Custodian to invest in further properties. “Now that I have

the formula down ten properties is not enough for me. The only thing that’s slowed me up at the present time is one of my sons,” explains James.

He proudly lists each of his offspring’s achievements; a barrister, a forensic scientist, a builder who is ‘right into property investment’ and the fourth son (whom James is helping out financially as he makes his way though a law degree at Bond University) has a Masters in Business Construction and Project Management.

James is more than willing to help his sons strive for and attain their goals, particularly as they have always shown a great deal of ambition. Obviously, as the old adage goes, the apple doesn’t fall far from the tree in the Walsh-Buckley family.

All of James’ boys have been inspired by their father’s journey and have inherited his keen interest in real estate.

“Two of my sons have multiple properties, the one who’s a builder has a young family and plans to get into property investment and Cameron who is studying at Bond is well and truly going to go for it; that’s his ambition and that’s why he’s doing law now,’ James asserts.

He continues, “The barrister has started investing in real estate and the forensic scientist is away too. They’ve all gone out on their own, but they will get around to investing with Custodian, because I told them they should.”

Upon observing his recent success, James’ brother-in-law has also become a Custodian client. He currently owns eight properties and regularly attends Custodian seminars.

James says, “I’m very pleased that I’ve been able to share the Custodian formula with other people. I just hope my sons will continue investing in property using that formula while they’re young.”

As for his own goals, this vibrant man who lives every day with purpose and resolve declares, “Very simply I want to have 30 or 40 properties and follow in John Fitzgerald’s footsteps, because I respect and admire him. That’s the reason I got in touch with him in the

first place; I wanted a lot of property, he’d managed to achieve that goal and I wanted to know how.” Although James has no intention of retiring from his day job as long as he remains in good health and has the ability to practice, he already has a plan of attack when it comes to crystallising the value of his portfolio one day in the future.“I’ll definitely try not to sell – that’s number one and ill seek advice from a financial planner who understands property. But really, I love my work and don’t intend to stop any time soon and ill continue to build my portfolio.”

James is a true inspiration in so many ways. He proves that age is no barrier, particularly when you focus on your goals and the road to reach them, rather than the ticking of time.

He keeps his mind in the game by continuing in his career as a respected Melbourne dentist and now as a successful Custodian property investor and his body fit by steadfastly practicing martial arts and exercising every day.

James earned his black belt in karate from a Japanese master whom he met in 1970 and trained with for 35 years. He credits the sport with helping him to sustain the positive mindset that has allowed him to overcome the investment mistakes of the past and find success at a time when many would have well and truly settles into retirement.

Of course behind (or in James’ case- right beside) every successful man is a strong, supportive woman. James and his wife Gaye have been married for 35 years and he credits her with keeping him young.

“I met her as a dental nurse and we still work together to this day,” says James. “She’s 23 years younger than me and keeps me active! Gaye is right behind everything I do one hundred per cent and she goes to many business meetings with me.”

“Otherwise you’d get lost!” Gaye interjects in the background. James has many words of wisdom to impart and an outlook on life that anyone would benefit from adopting. If one sentiment was to sum up this remarkable man, it would be James’ own pearl of wisdom that he shares with a smile; “You are as young as your self confidence, as old as you

fear, as young as your visions of hope and as old as your despair. Simple as that – so you don’t want to fear nor despair.”

James says he remembers reading about Custodian in the paper and decided to attend one of the seminars. Listening to John, I was fascinated by the way he portrayed to the audience how he genuinely wanted them to get involved in wealth building and I though, that fellow really means it. That’s why I delved deeper and got involved - merely because of John’s sincerity.


PROFILeS

Occupations: Aaron: Manufacturing Manager, Tyeswater

Dora: Chief Financial Officer, JLF Group of Companies.

Age: 41 and 44

Family: Two sons - Franky (10) and Harry (6)


Property portfolio value*: $2.4 million

Number of houses you own*: 4

(*Including principal place of residence)

AARON & DORA MCBAIN

Aaron and Dora McBain met 17 years ago when Dora was holidaying on the Gold Coast. Although it was love at first sight, Dora returned to Melbourne to finalise her plans to move overseas. She decided to stop off on the Gold Coast to see Aaron on her way but she could not leave him, and has been there ever since.

Aaron and Dora rented a house in Mermaid Beach for five years, until they worked out that it cost the same to buy a house to live in and repay the mortgage as it did to pay rent. However, financing the deposit was hallenging. Dora explains, “We owned a lot of luxury stuff and boys toys and had no savings. We sacrificed those things so we could get a deposit together. Aaron sold his jet ski and boat. It was really hard to get finance as we didn’t have a savings history, so we financed our first deposit through our luxury toy sale and I took out a personal loan. The bank thought I was buying a car! Investloan wasn’t set up at that stage, but a mortgage broker who worked with John Fitzgerald helped us get finance.”

In 1996, they bought their first home in Currumbin on the southern Gold Coast, where, at the time, there were lots of young families. Dora says, “It was so exciting buying a house and enjoying the feeling when we spent the first night in our new home. Our rental house had been a bit of a surfers’ hangout so it was great to move into our own home and have the house to ourselves. It was time to grow up.”

Dora continues, “However, with the joy of owning a home came the responsibility of having a mortgage. We had a pretty relaxed lifestyle before buying the house. For me, it meant that I took my work a bit more seriously.Having that commitment changed my mindset. All I could focuson was paying it off as quickly as possible.”

Aaron and Dora settled into paying their mortgage. Their next financial decision was when to have a family and how they would afford it. In 2001,they had their first child, Franky, and after six months maternity leave, Dora returned to work. “I have been working for John since 1995. He’s great to work for and he is very family friendly. There were times when I could bring the baby into work, which helped a lot.”

In 2002, Aaron and Dora decided to buy their first investment property in Palm Beach on the Gold Coast. Dora explains, “We’ve always loved the southern part of the Gold Coast. We looked at similar houses close to Surfers Paradise but they were double the price. It’s an old house but it’s in a good location. While it costs more to hold the property because it’s old

If you want things, you need to have a roadmap and put a plan in place.

Our best investment decision so far has been to actually start the journey.

and we don’t get as much rent as we do with our others, in the long term we think it’s a good investment. It was more of an emotional buy as we see it as something we can retire to, or somewhere our children can live in when they’re older.“Our second and third investment properties have been brand new Custodian properties, which we are very happy with. Financing our first investment property was eally easy compared to our first home, because we used the equity in our own home to finance the deposit,” smiles Dora.

Working for John Fitzgerald put Dora in a unique position when it came to seeing how wealth can be built

through investing in property. “John talked about his investment model constantly, that’s his passion, but he

never sat me down and said, ‘Dora, there’s a boom coming. Act now.’ However, I watched the last property

cycle and saw how much money Custodian clients made and I decided I wanted to be part of it. When John

bought land on the Gold Coast for the first time, I thought ‘This is it’. A lot of John’s staff and John himself bought into that development,” says Dora.

In 2004, Aaron and Dora bought their first Custodian investment property in Mudgeeraba, close to the M1

Motorway. “I was very excited. I had the benefit of driving past it on the way to work so I could see it develop, and I knew the builder,” says Dora. The second property, in Victoria Point, south of Brisbane, is a different story. “I haven’t even seen that one,” laughs Dora. “We decided to buy because the environment was very positive. Property was rising steadily and we have secure, well paid jobs.” Finance for all their investment properties has been through the one bank. “I know John says not to, but so far it hasn’t been a problem. Each time we’ve wanted to buy, the bank has valued our properties and given us finance. I suppose it could be a problem one day if I want to buy more properties quickly, but if that happens, then I’ll refinance,” Dora says confidently.

In 2005, Aaron and Dora were expecting their second child. They decided it was time to sell their Currumbin house and bought a

house close to where they had previously rented – 800 metres from the beach, close to the shops and Surfers Paradise itself. “The house in Currumbin more than doubled in value in the nine years

we lived there, and that helped us buy what we wanted closer to Surfers. We still live there. The prices in our area have increased significantly in the past seven years,” says Dora.

Aaron and Dora like property as an asset class because it is a ‘set and forget’ investment. Dora explains, “You don’t have to look at it as often as shares. If you’ve done your homework, you just need to review it when the lease comes up. We check current market rents to ensure we’re getting the right rent. We have professional managing agents handling the day to day work for us, to ensure our properties are being maintained and looked after.

“The other part is the ability to get finance. The banks love residential property as an asset class so they

are forthcoming in providing finance compared to shares. That’s two big ticks. Up to this point, our investment journey has gone very smoothly. Ourbest investment decision so far has been to actually start the journey.”

gOALS

Dora’s financial goal is to retire with a good asset base, and both Aaron and Dora’s personal goal is to retire at 55 years of age. “I’ve worked it all out. We should have our home paid off in seven years. By then, the property market will have picked up and we’ll make some decisions. Eventually rents will catch up with the mortgage repayments. We have time for that to happen so we’re well on the way to achieving our financial and personal goals,” she says.

Dora adds, “If I was a perfect Custodian, I would have bought another two properties by now, one in Melbourne and one in Sydney, and had more capital growth. But we’re conservative investors by nature. For now, we’re regrouping, paying down the mortgage on our house and raising our kids.”

For Dora, retirement means looking forward to spending six months in the

Greek Islands. She explains, “My

parents are Greek, and when I was eight years old, we lived as a family in Greece for a year. We then constantly went back to Greece for holidays. My parents ran businesses and my Dad’s brother would look after the business while we were away and take the profits for his hard work.”

Aaron and Dora’s personal goal for their children is very simple but important, “We just want them to

grow up as happy and confident individuals.”

MANAgINg CASh FLOw “When it comes to managing cash flow, you’ve got to keep on top of what rents should be and ensure

you’ve got the right agent representing you. You’ve also got to have a good accountant and ensure that you claim all your tax deductions,” Dora explains. She also says it is important to be aware of your bank’s interest rates and If you want things, you need to have a roadmap and put a plan in place.

Our best investment decision so far has been to actually start the journey.

CLIeNTS

44 ISSUE 5 2013 negotiate to get the best deal. Banks do negotiate, but you have to ask. Keep looking for opportunities to lock in interest rates, as it really helps you to manage your cash flow. “A few years ago, we locked in a three year loan at a good time in the interest rate cycle. For the first two and half years of those three, we were paying 2.5 per cent below the variable rate over that loan period,” she says.

INveSTMeNT ADvICe

Dora says, “Take that first step and get that first property. Just do it. Once you’ve got your first home and first loan, it gets easier.” She also advises to pay off the mortgage on your principal place of residence as quickly as you can and don’t worry about the rising debt on your investment properties, as it is tax deductible.

LIFeLONg LeARNINg

It is important to continue learning while building an investment portfolio, and that means being around people who are on the same path. There is a lot of negative reporting in the media about property investment and the state of the economy, but Dora has learnt to separate the facts from the emotion.

“Between 1996 and 2000, it was all doom and gloom in Australia in general. I was working at the JLF

Group by then, and John Fitzgerald was saying, ‘Invest now, there’s going to be a boom’. I missed out on an

opportunity to buy an additional property before the market peaked. I


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home, Mermaid Beach, QLD Private 2005 $670,000 $950,000

Palm Beach, QLD Private 2002 $370,000 $350 $570,000

Mudgeeraba, QLD Custodian 2004 $413,000 $450 $460,000

Victoria Point, QLD Custodian 2008 $407,000 $450 $450,000

Total value $2.430.000

pROpERTyS SUMMARy

thought ‘Next time, I’m going to take

advantage of that!’ I hadn’t been part of a property boom as an adult, so that was a real lesson for me. I knowthat based on 100 years of data, it’s going to happen again. That helps me maintain a positive mindset. I keep focused and informed, always focusing on the big picture.”

The experience has also taught Dora that ‘things don’t just happen; you have to make them happen’. She believes, “If you want things, you need to have a roadmap and put a plan in place. It’s the same discipline

you’d normally apply to other areas of your life. For example, when we were planning to have children, we knew

we had to save a bit before having them.”

Dora considers herself very lucky to have the choice to work for an employer who not only promotes proactive wealth creation but who is also responsible for and contributes to a cause she believes in - the Toogoolawa School. She says, “The JLF Group’s involvement with Toogoolawa influences me every day. I’m good at what I do and I work hard with the financial position of the Group, as this translates into the success of Toogoolawa. I’m lucky that I share the same values as the company I work for, which is a positive driving influence. What more could I want, being surrounded by like-minded people who are making a contribution to society?”


PROFILeS

Occupations: Lino: Technical Consultant, IBM Australia

Brenda: Kindergarten Assistant

Age: Both 51

Family: Daughter Meagan (24)


Property portfolio value*: $2.2 Million



MANNy (LINO) & BRENDA AvELLINO

Lino and Brenda Avellino own their own home, and four investment properties. They plan to own six investment properties by the time they retire.

Lino and Brenda met through a mutual friend in 1977. They were both only 17, but married three years later. As young newlyweds, they didn’t have an investment strategy, so they bought a house to live in like their parents had. Before marrying, Lino owned a small shop site on the Ballarine Peninsula that his parents had bought for him as an investment, but the site was never developed and was rezoned for housing. He sold it soon after they married to add to their savings. Aside from the land, Lino had some superannuation and savings.

Brenda also had some savings. “We had very little money so we chose to live in a caravan at the back of Brenda’s parent’s house to save some money for a deposit. We were able to save enough after 12 months,” says Lino. The couple bought their first home in the north western Melbourne suburb of Niddrie in 1981,

which they still live in. “It was a small weatherboard house and we paid $39,500 for it. I remember feeling at the time that it was such a lot of money and that I’d never pay it off. The thirty year term worried me,” laughs Lino. Lino and Brenda wanted to renovate

their home before they started a family, so they saved for four years. In 1985 they transformed the house into a modern, solid brick home. Lino says, “It was very challenging living in the house while we renovated. To save

money, I became an owner–builder and did a lot of the work myself with the help of family and friends. In my teen years I helped my father build a beach house, so I had the skills.” After renovating, Lino and Brenda concentrated on paying down their mortgage.

Lino explains, “My parents migrated from Europe. Their philosophy was to buy your home and pay down the loan. If it was paid off and there was money left over, then you bought a beachside holiday house. It’s exactly what my parents did. So I guess the family influence was to get established in your own home and pay it off as soon as you can.” Brenda’s family had a similar philosophy.

When it came to investing, Lino says, “I must admit I’m a procrastinator.

After spending many years trying to understand how I could use property to build wealth and not getting anywhere, it was Brenda who pointed out a newspaper ad for one of John Fitzgerald’s seminars. She said, ‘Look, why don’t you go listen to this John Fitzgerald guy – it’s free!’ It was 1998 and John had just started Custodian WealthBuilders.

“In a short two hour seminar, John was able to explain in simple terms how the pieces fitted together – capital growth, depreciation, cash flow, breaks etc. It wasn’t until then that I realised how important the depreciation on the building and fixtures is in the first five years of an acquisition to make it affordable.

Suddenly I realised that if I wanted to build wealth through investing in property, I needed knowledge

Brenda and I were impressed with the estates and the surrounding facilities, so we signed up for a property in each estate.

and a rock solid program from an organisation whose business is property.”

After the seminar, Lino read John’s book, Seven Steps to Wealth. “It’s a great book. It sets out everything simply and clearly. By putting the different components together, it removed all my doubts.”

For Lino and Brenda, building wealth is composed of two main ingredients: knowledge and a well-structured program. Lino explains, “As a husband,

father and full time employee it is difficult for me to find the time and energy to focus on wealth building. And to be honest, most of us rely on superannuation to provide all the answers in retirement. But as so many Australians find out, superannuation is not enough.”

weALTh BUILDINg JOURNey

Lino and Brenda bought their first two Custodian investment properties in September 1998. Lino had been working in the finance industry at the time and the couple had enough equity in their place of residence to purchase two investment properties.

Their Custodian consultant organised a visit to both the Bracken Ridge and Pimpama Rivers estates in Brisbane.

“Brenda and I were impressed with the estates and surrounding facilities, so we signed up for a property in each of them. This was definitely the best moment in our investment journey.

The team at Custodian were well co-ordinated and provided so much support and guidance throughout the whole process, from initial signing to placing a tenant. I felt a sense of achievement even though all I had was further debt of $310,000!

“We were in our late thirties at the time. I also began investing in shares, and became involved in a number of share education programs. Over ten

years, I bought a range of shares but I certainly lost more money than I could afford to. The impact of the GFC on my share portfolio was without a doubt my worst moment. The volatility of the share market requires investors to be very knowledgeable in many aspects

of the market, including local and overseas market conditions, individual company analysis, currencies etc.

“I had been convinced by the share trading education programs that all I needed to do was ‘technical trading’ using a computer and an analysis program. Plug in the variables and bang, it provided buy and sell triggers. How wrong could they be! Investing in any investment class requires knowledge and skills. You have to be very careful about the capacity you have to research and invest while working full time and bringing up a family. I remember John Fitzgerald saying in his presentations and seminars that you should concentrate on one investment class and do it well - very good advice,” reflects Lino. However, Lino and Brenda have also faced challenges whilst building their property portfolio. In August 1999 the Avellino’s bank confirmed they were in a position to duplicate and gave them a verbal agreement for finance so Lino and Brenda committed to their third Custodian property. However, after signing up for the property and submitting the loan documents, the bank rejected the application, saying they would be over committed and unable to service the loan.

Lino recalls, “I found myself in all sorts of bother. The only way forward was to refinance all our assets, including our place of residence, through a finance broker, and I wasn’t comfortable with that. I wrote a letter to John Fitzgerald explaining my predicament and withdrew from the purchase. It was a big knock to my self confidence and it took me a while to get it back.

“What I learnt from that experience is that it’s okay to have some disappointments along the way and what’s important is that you learn from them. In 2007 we purchased our third Custodian property in Brimbank Gardens, Derrimut, Melbourne and in 2011 our fourth in Mt Cotton, Brisbane – again using the equity in our home for the deposits.”

Despite the setback, the Avellinos are very clear on what are their best investment decisions – buying their own home and paying it off and signing up with Custodian.


Lino and Brenda’s financial goal is to be financially independent by the time they retire, knowing they can’t rely on a government pension or on their superannuation alone. “Having the benefit of time and watching the capital growth in our properties, it’s clear that investing in residential property is by far the safest and most reliable investment class for us. My personal goal is to have six investment properties by the time I retire.

I believe this will give me and my family the best opportunity to have a comfortable lifestyle in retirement and leave something for my family. In retirement, we plan to travel overseas and tour around Australia as much as we can,” says Lino.


Lino says, “Cash flow is vital for the investment class we’re in. Obviously so is your job and insurances – income protection, life, building and landlord insurance. I’m blessed with two great independent real estate agents in Brisbane. Your property portfolio is a business, and you have to rely on your agents as your employees. The quality of your agents will ensure that the rental income is there on time, that the tenants are well selected and that the properties are maintained to the highest standard.

“It also helps to have some tools to manage your investments and cash flow, such as internet banking, and

It’s great to have Custodian’s expertise on hand.

So much of your wealth building is about your mindset and self confidence.

accounting software. These tools help me manage my accounts and tax positions, separate property funding and lines of credit. You also need discipline to keep on top of recording all cash flow activities.

“If you’re going to invest in any asset class, don’t do it alone. Find a group that specialises in that asset class and has a long history of success.

For me, Custodian WealthBuilders is an organisation that’s committed

and focused on helping ordinary Australians build wealth using property that meets tried and proven criteria. Through the leadership of John Fitzgerald, who is one of Australia’s most successful and recognised property developers and

educators, Custodian has provided me and thousands of other ordinary

Australians the knowledge and structures required to be successful using property to build wealth.” Being with Custodian from the beginning, Lino says the organisation has grown from strength to strength.

“Custodian has a complete service that includes all aspects of property investment. They’re there to talk to and there’s no pressure to sign up. Investing can be overwhelming. Youcan have lots of ideas but be time poor because of your job and your family, so it’s great to have Custodian’s expertise on hand.”LIFeLONg LeARNINg

Lino is committed to continually learning about wealth building. “Custodian provides me with theknowledge I need to keep up-to date with my wealth building. I get regular property market updates through workshops presented by John and other experts such as property analysts and accountants. These information sessions are great opportunities to rekindle my energy, remind me of my goals and why I’m using property as an investment strategy.

“So much of your wealth building is about your mindset and self confidence. For example, committing to your third, fourth and fifth

Custodian provides me with the knowledge I need to keep up-to-date with my wealth building

properties can be a bit of a barrier. The level of debt is much greater and you have to believe in yourself enough to live with the debt. Regular updates and talking to like-minded people help you stay on track.”

What has also been rewarding for Lino is to pass on his knowledge of the Custodian program to people who have been in the position he was when he wanted to build wealth through property but didn’t know how.

“I feel a great sense of pride and empathy to be able to help guide people to reach their goals. Custodian and John’s passion for building and growing the program gives me absolute confidence in introducing family, friends and work colleagues to Custodian, so that they too can succeed in building wealth. It’s like giving someone a gift when you want nothing in return, and to me that’s a very powerful and rewarding feeling,” he says with satisfaction.

Best of all, Lino and Brenda are role models for their daughter, Meagan. Lino says, “She’s well informed on how and why we invest in property and I believe that we have been a role model for her. She will be interested in building wealth though property once she’s established in her profession.”


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home, Niddrie, VIC Private 1981 $39,500 $700,000

Bracken Ridge, QLD Custodian 1998 $131,000 $290 $290,000

Pimpama, QLD Custodian 1998 $167,000 $360 $390,000

Derrimut, VIC Custodian 2007 $345,000 $325 $410,000

Mt Cotton, QLD Custodian 2011 $475,000 $475 $475,000


pROpERTy BREAKDOwN

PROFILeS

Occupations: wayne: Electrician

Melissa: Policy Officer, Australian Government

Age: 48 and 44

Family: One son (7) and Melissa’s daughter (18) and son (16)

Began investing in residential property: Together in 2009

Property portfolio value*: Approximately $2 Million



wAyNE & MELISSASCARLETT

Wayne and Melissa Scarlett own their own home, three investment properties and are in the process of buying their fourth, this time in Melbourne. They plan to have a portfolio of ten investment properties by the time they retire in ten year’s time.

Wayne and Melissa met in 2001 through a mutual friend and married in 2004. Melissa has two children from her previous marriage and together they have one son. Before they met, they both had homes of their own – Wayne owned his outright and Melissa had a small mortgage. Wayne and Melissa researched how best to use their assets to create the family home they needed leaving little or no mortgage. After considering selling both houses, they took advantage of the land value and block size of

Wayne’s property and sold Melissa’s so they could extend and refurbish Wayne’s house. The sale of Melissa’s property paid for all the rebuilding costs. Melissa says, “I was looking to sell in 2003 just after the Canberra bushfires, and my property just kept on increasing in value. The sale covered all costs and we were left

with no mortgage.” After renovating their house, Wayne and Melissa were planning on starting a family and saved their money so Melissa could take a year’s maternity leave. When Melissa was nursing her newborn son late one night, she saw John Fitzgerald’s infomercial for Custodian WealthBuilders. Melissa had invested in property with her first husband and wanted to try again.

She explains, “The infomercial wasthe catalyst. We decided that after I

returned to work and our son was at school and we didn’t have childcare costs, we would use the money we weren’t used to having to invest in our retirement. We went to a Custodian seminar in 2009 and met consultant Dirk Brammall, who explained how the process worked without any pressure to commit to buy. A month later, we travelled to Brisbane to look

at the properties that were for sale.”

Wayne and Melissa like investing in property because it is easy to understand, and it isn’t time consuming. “We weren’t confident with shares and felt like we always had to be monitoring them. Sure you still have to monitor your properties, but it is a common sense approach.Even before we were introduced to Custodian, we knew that property was a great investment if you are in it for the long haul,” says Wayne

INveSTMeNT JOURNey

Both Wayne and Melissa come from low income farming families and theirparents were conservative with money.

Wayne says, “I learnt at a young age not to waste money and to save for what I wanted. At 23, I inherited some money and decided to buy a house so I wasn’t wasting my money on rent. In the early years, I rented out the rooms to help pay the mortgage. I paid it off in eleven years.”

Melissa also learnt valuable lessons from her father’s attitude to money. “Dad was very cautious with money and every week he’d balance the books. He inherited the farm from his

father and never borrowed money,

When we first learned about Custodian, I tried to find the ‘dirt’ on them - but I couldn’t find any!

believing if you couldn’t afford to pay for something out of your savings, you went without. While my attitude to investment and debt is different today, I saved when I was young and believe in living within your means. Budgeting is second nature to me and I reconcile our income and expenditure weekly,”

she explains. “I also have two brothers: one is heavily into shares and the other one is into property.” Melissa adds, “I have some shares which I bought when I was single. I also salary sacrificed money into superannuation when I was single, but not now. The government has too much control of the rules and regulations. I’d much rather invest in property. Other than that, before investing in property, we had some interest bearing deposits.”

The Scarlett’s investment journey in property has moved quickly, with them purchasing two properties in the first 12 months in Goodna and Redbank Plains in Brisbane. They have just settled on a property in Middleton Grange in Sydney and have signed up for a property in Melbourne. The deposits for the properties have all been financed using the equity in their home. Melissa likes to put the money aside to pay the mortgage shortfall before they buy to ensure they can afford it.

“The best part of our journey has been to finally say we’ve started securing a financially independent retirement. The worst part of the journey would have to have been the 2011 Queensland floods when we didn’t know for days if our Goodna property had gone! “Actually, it’s a prime example of how good it is to have JLF behind you. The property

was in an elevated area, and the flood water reached the bottom of the street. Later our Consultant said that’s why we pay our two per cent to Custodian – for them to do the investigatory work,” says Melissa.

Wayne and Melissa believe their best investment decision was to become Custodians and buy property in Sydney. “It will provide a great return for us and enable us to duplicate even further,” says Wayne.

Melissa adds, “The benefit of joining Custodian is the advice and support they provide. In my first marriage we bought investment properties and

did our own research. Unfortunately, we came unstuck and had to sell one property at a loss, so Custodian was attractive. They do all the research, construction, project management and legal. It’s well worth the commission and it pays for itself in the long run. You can’t know everything, so you need experts on your side.”


The Scarletts aim to have a portfolio of ten investment properties by the time they retire in ten years. They are confident they can achieve their goal – and have a further goal of purchasing 15 properties in total. While it is ambitious, they are not concerned, knowing they can slow down if they need to.

Melissa says, “I want to keep my mind active in retirement. If we do end up with 15 properties then I’m sure it will be a great way.” She also says that she has taken John Fitzgerald’s advice to heart to constantly improve herself and set both financial and personal goals.

“This year my goal is to improve my income. In my current job in the public service, my salary is fixed and I would have to study to get a promotion. I’m not academic so I don’t want to go to uni. Instead, I’ve committed to a second income stream by setting up a jewellery business from home. It’s early days but it’s going well. I get so much pleasure from it and I earn good money at the same time,” she enthuses.

“I set myself yearly goals and really do my best to achieve what’s on the list

by the end of the year. If not, it goes on the following year’s list. It’s great to have a goal chart to monitor my progress.”

When it comes to retirement plans, Wayne and Melissa love to holiday in their caravan and plan to travel to the Northern Territory and Western Australia. They would also like to take short overseas trips but they aren’t waiting until retirement to start.

Melissa says, “We’re going to take the whole family to Disneyland this year on my jewellery business money. It’s probably the last time we’ll holiday as a family now that Sarah is 18 and Kerrod is 16.”

Wayne, meanwhile, would like to have some acreage along the southern New South Wales coast. As for a dream home, Wayne says, “We have the home we want now. Once the kids have left home it will be too big for us and we’ll find something smaller, but not too far away from the kids.” Melissa laughs and adds, “One thing we do know is that it will have an in ground swimming pool!”

MANAgINg CASh FLOw

Having a realistic budget and sticking to it is crucial to successfully building an investment portfolio. Melissa believes it is simple: “The key is to prepare a budget for the whole year and reconcile it regularly. Put in all your regular and annual costs like car rego in a spreadsheet as well as your income. Check it regularly. If you have only $200 in the bank and your spreadsheet says you should only have $200 in the bank, then you know you’re on track, because later you’ll have more. And if you have an overspend, then you have to be prepared to cut back in another area until you’re back where you should be.” At the end of each year, the

The best part of our journey has been to finally say we’ve started securing a financially independent retirement

The benefit of joining Custodian is the advice and support they provide.

Scarletts have a minimum amount of money they aim to roll over as the next year’s buffer.

INveSTMeNT ADvICe

Wayne and Melissa say it is important to have the self belief that you can build an investment portfolio. Don’t be frightened by the debt, as it’s ‘good debt’, and the way Custodian structure the investment, you are guaranteed to never lose more than you first invested. Use common sense by doing your own research and continually asking your consultant questions, as well as others in your network. Melissa explains, “I’ve learnt a lot of simple things and made a lot of comparisons with other Custodians over many a Custodian function. Try to keep your mind active and learn more as you go.”

LIFeLONg LeARNINg The Scarletts say that the longer they are involved in property investment, the more they realise how much more they still have to learn. But it is not just about investment, it is also learning about themselves. Melissa explains, “I get a form of peace of mind when I am continually learning. I listen to John Fitzgerald speak whenever possible, talk with our consultant, and talk to other Custodians who reassure us we’re on track, and we gain new ideas and skills.”

Melissa says, “Staying positive is an

important key to having a successful life. Sometimes you can get so bogged down by your troubles that you just have to lift yourself up, snap out of it and get on with it. Today is no different from back when I was a single parent.

Life still continues to hand out its fair share of tough times for our family - as it does every family - but the fact that we can look back and say we’ve committed to property investment while faced with life’s challenges makes us feel proud.

“Even before joining Custodian, I was a fan of the goal chart. It started when I had to face life as a single parent with very little money behind me. I was so determined to get back on my feet and rebuild what I had lost. There were many bumps in the road, but having my goal chart helped me. I wrote down exactly what I wanted for myself and my two young children. When I look back now, I laugh to myself because everything I wrote down has happened – even allowing someone special into my life. John Fitzgerald stands behind the goal chart and so do I. It’s a way of realising our goals and helps us remain positive – and in many ways it’s the basis of what keeps us happy and successful.”

INSPIRATION

Melissa’s daughter, Sarah, has a traineeship with the public service and

is keen to begin investing in property. Melissa explains, “Sarah is mature for her age and she’s seen what we’ve been able to achieve. She’s been to Custodian seminars and understands what she needs to do to start building wealth.” Sarah is currently saving to buy her own home that she will initially rent out until she is ready to move in. After she has established herself she will start building a property investment portfolio. Melissa adds, “We’ve been a role model

for her, but it’s more than that - we need at least one of the children to understand how to run the portfolio and keep it going.” Wayne and Melissa have achieved more than they expected in the timeframe. “We’re proud of what we’ve accomplished, that’s one of the reasons we wanted to do this interview – and to show others that it can be done,” says Melissa


PURCHASE PRICE

WEEKLY RENT

ESTIMATED VALUE

Family home (renovated), ACT Private 1985 $84,000 $660,000

Goodna, QLD Custodian 2010 $380,000 $345 $410,000

Redbank Plains, QLD Custodian 2011 $395,000 $345 $400,000

Middleton Grange, NSW Custodian 2012 $465,000 $550 $560,000


pROpERTy BREAKDOwN

PROFILeS

Occupations: grant: Auto Electrician

Lisa: Social Worker

Age: 50 and 54

Family: Two grown sons from Grant’s previous marriage a daughter (16), and twin boys (14)




GRANT & LISA INNES

Grant and Lisa Innes own their own home and have three investment properties. They aim to buy a bigger family homein the next 12 months and then concentrate on building their investment portfolio.

In 1994, Grant and Lisa met in the southern New South Wales coastal town of Batemans Bay. Grant grew up in ‘the Bay’ and worked as a fisherman. His parents owned and ran a local business. Lisa was in her mid twenties when she arrived in town and met Grant soon after. “I was a bit of a free spirit, living in different cities and doing office work or working in pubs. I was enjoying what life had to offer,” explains Lisa.

Their relationship grew and they soon married, living as a family with Grant’s two boys from his previous marriage, who were then nine and ten years of age. Lisa says, “The boys are great and I consider them like my own.” In 1996 a daughter was born, then in 1998 twin boys arrived. The Inneses lived in the small house Grant owned and concentrated on paying down the relatively small mortgage. “We didn’t know anything about investing but we did know it was important to pay down our debt – and we paid off a substantial amount,” says Lisa proudly.

While Grant and Lisa didn’t have any investment goals, they did take the opportunity to buy some acreage

from Grant’s family’s business. They refinanced but couldn’t afford to build, so instead bought a house in Sydney and moved it to their new land. They then sold their first home to renovate their new house to suit a family of seven (a mix of teenagers and toddlers). They completed the renovations themselves during some hectic family times.

Grant says that while they didn’t make a conscious decision to start building a portfolio, they both worked hard to get established and focused on paying off the mortgage. He says, “We still work hard, but we’re better paid now and are more settled.”

In 2003, Lisa felt it was time to study. She enrolled in a four-year social work degree in Newcastle. The family moved to Newcastle and their Batemans Bay home became an investment property. In 2004, they bought Lisa’s grandmother’s small home and again concentrated on paying down that mortgage.

Late one night in 2009, Lisa was having trouble sleeping. While she was watching TV, she saw one of John

Fitzgerald’s infomercials. She liked what she saw and soon after, a friend lent her John’s book Seven Steps to Wealth. Lisa says, “We wanted to invest. Grant was very keen but financially, the timing wasn’t right.”

In March 2011, Lisa attended a Kurek Ashley motivational seminar where he talked about John Fitzgerald as his mentor and friend. This inspired Lisa to ring Custodian the next day to enquire about going to a seminar. She attended one, and Grant read Seven Steps to Wealth. They met with a consultant who helped them look at their finances and they then looked at property in south east Queensland. By the end of June they had bought their first Custodian property in Goodna. Lisa says, “It went very smoothly. We’ve had experience building and we knew how it was.”

Grant and Lisa got their finance through Investloan. George at Investloan and Peter, our Custodian consultant, were so supportive. We used the capital in the Batemans Bay property for the deposit on the first property. In 2012 when we bought the second in Windaroo, we again used capital from Batemans Bay and a little from our home in Newcastle, which we’re paying off now,” explains Grant. “We had a couple of challenges with the second loan, but George was really helpful and got it through. Dealing with both George and Peter

was so reassuring. They explained what would happen every step of the way as well as foreshadowing possible problems – but they also explained that they knew how to solve them. We’re very happy with their service.”

The Inneses like property as an asset class because as Grant says, “The figures don’t lie. It’s constant. My father believed that real estate is the best investment, and it worked for

him. Having someone living in your investment property paying off your loan is too sensible!”

Both Grant and Lisa believe their best investment decision has been the time they have spent with their Custodian and Investloan consultants – although Grant is quick to say that Lisa is by far his best ‘investment’.


With their Batemans Bay property and the purchase of two Custodian properties in a year, Grant and Lisa are now focusing on their personal goal of buying a bigger family home. Lisa explains, “The twins are still sharing a bedroom and they still have a lot of growing to do! We’re aiming to buy something in the next 12 months.” Grant adds, “We have a 10 year plan to build up our investments and then retire. We want to do it sooner rather than later, but we don’t have a fixed number of properties in mind at this stage. What we do know is that Custodian is a good fit with our goals and that we’ll be looking to invest in other states.”

“One of the things we really like about Custodian is that they have embraced the importance of our family goals as well as our investment goals. It’s given us confidence in the Custodian way,” says Lisa.

MANAgINg CASh FLOw AND INveSTMeNT ADvICeManaging cash flow and investment advice Lisa says, “We’ve had some tight years but it’s taught us discipline.” It is important to live within your means and keep focused on your goals. Grant adds, “When you’ve got a family, nothing else matters. You know you’ve got to go to work. You just put your head down

and do it. There are the usual bills and some things we like to do cost a bit but we also have simple pleasures. For example, I love to surf and it’s great when the kids come too. Lisa often joins us at the beach.”

Grant is very clear about what investment advice to offer, “Stop procrastinating. Start as soon as you can. You can get nervous but at the end of the day, Custodian offers consistency and peace of mind. Eight years ago when I read Seven Steps to Wealth I felt like it was written for me. There’s a better way to get ahead than just slogging away at your job, trying to pay off your home and save some money. John Fitzgerald and Custodian have proven to me that it’s a great way to invest and that I can do it too.”

LIFeLONg LeARNINg

Lisa believes that being open to new information and learning is key to living a successful and happy life. She says, “I believe we can always improve on things. It’s how I see the world.” Grant is also committed to improving life for himself and his family. In 2007, after years working as a fisherman, he sought an adult apprenticeship with the company where he was then working as a trades assistant. He is now in his final year training as an auto electrician. “Fishing is a very physical job. I needed to retrain for myself and for my family. With the

GFC and a family to support, I needed stability and a better income.”

Grant and Lisa value the regular updates from Custodian and the client events. Grant says, “We enjoy the breakfasts. We’re both morning people. It’s great listening to the speakers and talking to other Custodians. And John’s vision is not just about making money. It’s also about developing yourself to your full potential.” Lisa adds, “His passion for Toogoolawa and personal development really spoke to me, especially with my sense of social justice and the social work I do. I’d love to visit the school one day.”

Grant admires John’s loyalty and commitment to help ordinary Australians build wealth and achieve personal growth, which in turn improves our society as a whole. At home, Grant and Lisa are happy to be setting a good example for their children. While the teenagers are too young to be aware of the financial plans they have in place, they are guided by the couple’s belief in constant improvement. Grant talks regularly to their older sons about investing and provided a lot of guidance to one of them when buying his first home, which has since become an investment property.

Grant has also encouraged friends to invest with Custodian. In fact, one of his work mates has just bought his second Custodian property.Grant concludes, “If you are looking to invest, take a long, hard look at what Custodian offers. We’ve had both personal and financial growth. When you’re surrounded by good people, you can see life is good. You’ll be in touch with all the right people throughout the investment process. I recommend them with absolute confidence.”

If you are looking to invest, take a long hard look at what Custodian offer. We’ve experienced both personal and financial.

National Head Office

JLF Corporation Pty Ltd

ACN 010 231 222

7027 Nerang-Southport Road

Nerang MDC, QLD 4211

Telephone: (07) 5527 4999

Facsimile: (07) 5527 4955

Email: [email protected]

Queensland

Custodian

Level 1, 172 Robertson Street

Fortitude Valley, QLD 4006

Telephone: (07) 3831 4135

Facsimile: (07) 3831 4262


New South Wales

Custodian

Level 3, 213 Miller Street

North Sydney, NSW 2060

Telephone: (02) 8904 0555

Facsimile: (02) 8904 0499


Victoria

Custodian

Level 2, 100 Dorcas Street

South Melbourne, VIC 3205

PO Box 5186, South Melbourne, VIC 3205

Telephone: (03) 9699 4955

Facsimile: (03) 9699 6233


Western Australia

Custodian

Telephone: (08) 9221 7002

Facsimile: (08) 9221 8002

Toll Free: 1800 801 553


Websites:

www.custodian.com.au

www.investloan.com.au

www.jlf.com.au

www.toogoolawa.com.au

Corporate Directory

JLF Corporation Pty Ltd ACN 010 231 222 T/A Custodian

CONTACTS

Documents

Millionaire Case Studies