How are we helping a client build a $135k per annum passive income – after tax 

In 2009, Mr and Mrs Brown approached Erskine Owen with a clear goal: retire in 2029, with $135,000 per year income after tax.  

Erskine Owen directors Alan Henderson and Lisa Phillips got to work. Working backwards from their 2029 financial goal, they put together a 20-year plan to achieve it through intelligent property investment.  

The strategy was to invest in growth and build equity during the Browns’ productive working years, then turn the fruits of that growth into steady income during retirement.  

A specific plan was created that looked like this:  

• Buy five residential properties between 2009 and 2013 
• Collect rent and build equity over the subsequent 16 years 
• As 2029 approaches, sell up and reinvest the proceeds into higher-yielding investments like property syndicates 

The projected growth in the value of the properties, the rents earned from the properties, and the declining debt levels would allow the Browns to achieve their goals by 2029.  

 

Execution 

EO helped the Browns identify and purchase properties with characteristics that maximised their wealth building potential. They purchased the five properties as planned, then sat back and watched their property values grow. And grow. And grow!  

Take a look:  

Fast forward to 2022 and the Browns are reaping the rewards of their property investment planning. The growth in the value of their properties has exceeded the expectations set out in their original plan and they are getting ready to retire – 7 years earlier than planned!  

With their equity goal achieved, the Browns are now transitioning to the next phase of their retirement plan. They’ve sold several of their residential investment properties and invested in higher yielding commercial property syndicates like the Westland Property Syndicate LP, the NZ Warehousing & Logistics Property Fund LP, and the NZ Daycare Properties Fund LP. These funds provide monthly cash distributions of more than 6% per annum.     

 

Results 

Their original goal in 2009 was to achieve a passive gross income of $200,000 (around $135,000 net of tax) – or $256,000 in 2022 dollars. In 2021, the Browns told us they were on track to meet that gross income goal in the next 1-2 years – well ahead of schedule!