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Last week we took a call from new clients who wanted to explore the 3+1 Plan. They had made an investment into property almost 20 years ago, and that one investment had changed their child’s life. Now they wanted to do something for themselves. They wanted to transform their retirement prospects.
In this post you’ll find out how Sean and Kate took a real simple investment idea and made their dreams for their daughter, Tamara, come true in the most spectacular way.
Investing in property for a purpose
Sean and Kate had been married for only a few months when they received the good news: Kate was pregnant with their first child. That gave them an immediate problem: the baby’s future. Both parents knew that they wanted their child to benefit from a university education. Both knew it would be expensive.
Being in the early twenties with a mortgage and soon a child to pay for, it was going to be tight to save a decent amount. So they came up with a simple strategy. They’d use someone else’s money to pay for their child’s education. The idea was to:
- Buy a house as a buy-to-let investment
- Let the tenant’s rent pay the mortgage
- After 18 years, either sell the property or refinance
- Pay for the child’s education with the proceeds
A tough first few years
Sean and Kate quickly discovered the benefits of using a mortgage broker. He got them a great deal, but even so, the first few years were tough. They had borrowed money from the Bank of Mum and Dad as a deposit and took on a mortgage of £30,000.
They moved in and out of positive cash flow but somehow managed to make ends meet. Every time they faced a new financial struggle, they simply looked at their daughter and remembered their goals.
Soon, though, and with the help of a reduced mortgage rate, their cash flow situation improved permanently. They were building up a large contingency fund, and every couple of years they would pay a lump sum off their mortgage. After 16 years their investment property was mortgage free – two years ahead of schedule.
18 years later, and their daughter’s education is paid for
The investment that Sean and Kate made has worked out even better than they had hoped. They had banked on house prices rising by an average of around 3%. In fact, their property had increased in value by more than 8% per year on average. It is now worth four times the price they paid.
Using the excess rent after tax, Sean and Kate managed to repay the £20,000 loan to their parents. Their parents used this loan repayment to fund a round-the-world cruise as a joint retirement treat to themselves.
Now, with the property paid for, Sean and Kate are sitting on an investment worth a little more than £200,000. A gross profit of around £150,000. More than enough to pay for Tamara’s university education (she’s decided to study law), and take the next step towards real financial freedom in retirement using the 3+1 Plan.
To find out how the next step in Sean and Kate’s quest for financial freedom is going to work for them, download your free copy of the Buy-to-let investment 3+1 Plan today. Its simplicity is its strength − just as was Sean and Kate’s simple strategy to pay for Tamara’s education.
To find out how property could transform your life, contact Gladfish on +44 (0)207 923 6100. We’ll walk you through the pros and cons of property investment, and tailor our conversation to your needs. No sales scripts here, just experience and expertise.
Live with passion
Bret Alegre-Wood
