Picture this; a young 17 year old long sun bleached blond haired, skinny, shy Bundaberg country surfer boy from working class family joined the navy back in 1996 without having too much of an idea of what he was getting himself into!.
My name is Marcus Westnedge, I am 30 years of age, been investing for 11 years with 7 properties currently gross value $2.8mil through a buy & hold strategy in Brisbane, Perth & Melbourne on a Navy income.
I guess looking back the Navy was a great start for a young person, from the perspective of; a steady medium income & something to keep my over active mind busy & most importantly an opportunity to save.
To build wealth you;
- Need to save a portion of your income.
- Invest what you save.
- Do both consistently over time – that is wealth building.
By the second year of service, Christmas leave period I had saved $13,000 for my first deposit. With the help of my Mum we drove to the sunshine coast looking for my first property to purchase. What we looked for was the closeness to amenities & beach – that was quite simply the strategy at that point.
The first purchase was fairly intuitive, the price for the land was $58,000 at Currimundi, Queensland & with the help of Mum once again (remembering that I was 19 at the time!) facilitated a construction at $68,000 – so the total package price was $130,000 & $190 p/w rents in 1998. Now what a wanted to illustrate was the power of residential; not much thought went into this deal, in terms of research however the present value of that property is $450,000 & $400 p/w rents whist receiving a nice tax deduction through depreciation, reducing my tax.
The opportunity lies with having a secure job & steady income & a long term position with a solid firm or employer; this assisted me in the early days for securing finance. I marveled in the relative ease in which the banks proceeded to lead me money into my first couple of deals, cross securitizing my first two properties to purchase the third, but in turn had them all on principle & interest.
Without having the knowledge I sold the third property a year later, but quite simply could have changed it to interest only & also talked to my accountant to put in a tax with holding variation form to get my tax back in my pay each fortnight to fund the deals until such point as rents increased enough to improve my cash flow position it’s a way of holding multiple growth assets over lengthy periods of time.
When you look at it, it’s a very simple structure; Acquire an asset, such as a rental property, offset your borrowings & other costs with income (rents) & use the capital growth & leverage potential from the property to acquire further assets & repeat the process again & again. This is a passive style of wealth building, buy ‘n hold, set ‘n forget – as a passive investor you can look to get returns of 8 – 15 % while reducing your tax from maximizing depreciation by brand new properties, with little or no maintenance. This is the building blocks to acquire your asset base, in a save & simple way While providing you with a stable financial & planning structure.
After 12 years in the Navy & 10 years of residential investing I was more interested in my next property deal or what the market was doing. I have since left the forces to pursue my passion for property. I now have a new higher purpose for teaching basically anyone that wishes to learn these simple principles so Andrew Glendenning & I set up Capital Properties!
I am very proud also to be involved in an industry first program called "Defence Futures", a program inspiring wealth creation specifically designed for Defence Force personnel Australia wide with Capital Properties as this strategy suits very nicely. My intentions are to help Navy and Defence Force personnel to build property portfolios like I have done.
I am really excited & well down the path to teaching people to build a portfolio of property that for the betterment of their retirement, inadvertently teaching our children by the example we set when leaving a legacy to this generation & the next.
An important factor in my mind is mindset! Or personal development, I link personal development as part of the program for a "prosperity mind set" this gives you the power to break old limiting beliefs born from conditioning of attitudes towards wealth creation. I find most people keep their cards close to their chest, why not learn from each others experience to better enhance our futures.
For example; when where you taught how, when & where to buy appreciating assets?
There are some simple holistic universal rules; "when you know better, you can do better".
Capital Properties deal directly with a wholesale builder / developer which enables us to match clients to property based on the ‘outcome’ of an individual & couples financial goals, life values & beliefs. Things like active vs. passive wealth building, units vs. residential, regional vs. city & positive versus negative gearing & so on everyone is different.
We coach & mentor on all levels & encourage clients to be the "best they can be" & through a "prosperity mind set" wealth building is all about belief, conduct & attitude as "you can’t actually save yourself to wealth" to build a portfolio requires starting a journey into yourself. It really marries up the mindset for success & merges attitude with belief.
We are also embarking on a seminar series of workshops & educational syllabus for clients other than Defence Force Personnel wanting to learn more, as I encourage them to investigate the wealth building journey.
The thing I like the most about residential investing is that you can start from where ever you are financially, from a small financial base. Its simple, easy & with aggressive bank lending you can get started with about $35,000 – start with the end in mind, know what it is that you want, with a clear cut strategy.
An asset has to provide 3 things:
- First some income, income to offset the cost of the assets acquisition & running costs.
- Some opportunity for leverage, which is a security value that finance can be raised for further acquisitions.
- Capital Growth – it is capital growth that builds wealth.
With long term investing stick within a 30km, in some cases 40km radius from the major capital cities – Perth, Brisbane & Melbourne these are emerging markets with land available around the CBD which will absorb over the next 10 – 15 years, with serious population growth, supply & demand issues & are currently under valued, compared to Sydney which is a mature market. If nothing else it is the quality of the investment that counts, stay with the best land developers & you can build a whole portfolio off this structure.
Marcus Westnedge
Senior Investment Director
Capital Properties
