Building wealth through time travel
Imagine if you could pull forward property profits and rents from the future?
1 September 2021
Time-travelling. It’s a unique way to think about property investment. But that’s how property investment coach Ilse Wolfe describes her business style.
Cashflow hacking is Wolfe’s high impact and tailormade approach to her renovations-based property portfolio. From her own experience, she’s created a tight-knit sequence of six principles alongside pin-pointed purchasing criteria that have aspiring investors gravitating to her new service: Opes Accelerate property coaching.
Put simply, cashflow hacking is the new-world version of the BRRRR renovation strategy, enabling investors to manufacture, very quickly, substantial equity gain from their properties and significantly increase rent. It actively, and quite literally, builds wealth in only a few weeks of work.
“I don’t want to wait for organic market growth, so I manufacture it,” she says.
“I maximise the outcomes for investors who would like to be in charge of their results, both in terms of portfolio performance and their own quality of life.”
The Six Principals
If the BRRRR (Buy - Renovate - Rent - Refinance - Repeat) is the tried and true long-term buy and hold strategy for equity gain, cashflow hacking is Wolfe’s playbook for how to run it to its highest efficiency.
The six principles are brilliantly simple: add a bedroom (mandatory), re-assess rental options, renovate the kitchen and bathroom, upgrade all the fittings, give it a fresh paint job and sort out the flooring.
By employing these principles, investors are taught to pull rents forward from the future, rent they mightn’t see for seven, eight or even nine years according to the long-term 4.8 percent compounded growth the New Zealand rental market has experienced.
“Bring it all forward. Bring rent forward, bring retirement forward, bring your financial goals forward. Financial time travelling at its best,” she says.
Clients are taught how to analyse a potential purchase (or their existing portfolio) against these principles and a ROI framework which qualifies it as high performing.
Wolfe refuses to concede that each investment property must be either a high-yielding or a high-capital gain producing asset. Once cashflow hacked, investors comfortably enjoy both.
“Positive cashflow and high capital gains needn’t be mutually exclusive. Astute investors should demand it all – in fact we need to with the recent tax changes,” she says.
“There is no buying blind-folded. I would never allow a client to buy an investment property without having accurately forecasted the post-renovation return. This is the most crucial part of their property investment education because it will empower them for long after they are done with me.”
Tax Deductibility Changes
Recently, the need for fast-tracking an increased cashflow from rents became urgent for some investors, who all-of-asudden found their property investments to be negatively geared as a result of the government’s interest deductibility tax changes.
Overnight, landlords were slapped with having to increase rents by 29 percent in order to keep the same financial position they were in the day before.
This is simply not financially viable if investors were to sit around waiting for market value to catch up. By that stage, the negatively-geared hole is well and truly dug.
“The majority of investors are not financially-led with their purchases, so they begin without assessing the true return or risk on their rentals. Then this heavy-hitting tax impacts even further on their assets and future servicing ability with lenders,” she says
Investors are now therefore faced with two options; buy new builds, which are exempt from the new tax laws; or renovate properties to increase value and the amount of chargeable rent.
But in order to do this, they need to work fast.
That’s why “impatient” investors go to Wolfe, which is great because she’s a selfproclaimed impatient herself. Hence Opes Accelerate as the umbrella of her coaching services. Her investment approach is entirely about figures, how to hack them, and accelerate outcomes for her clients.
The creative design is simply a by-product of what these figures lead her to do.
“Begin with the numbers and then only look twice to the design, if the principles can be deployed in a cost-effective way,” she says.
Back To The Future
At the very heart of all of her thinking lies the future tenant. Everything goes back to the future.
I always think about the “who” first, she says.
“To review the rent, you must revisit the location. Is there a new hospital, new schools, new zoning? The who is going to rent this property, so the what they need should advise your renovation plan.”
Micro-trends emerge in every neighbourhood, and it’s a landlord’s job to know what the trends are and how to capitalise on this for their rental occupancy.
For example, Covid-19 led Waikato District Health to bring in a lot of overseas medical staff. In turn, the surrounding neighbourhood swelled with doctors and nurses needing smaller dwellings and professional flats. A five-bedroom family home isn’t going to be much use to these transient, working professionals.
This is precisely how a rental in Glenview, Hamilton was cashflow hacked to increase rent from $400 to $1070 per week. Visualising the end rental product is a sixth sense developed over time.
For the most part, just walking into a property will tell Wolfe whether or not she can add another bedroom based on the layout. Or if the window positioning whispers at another use of the space.
But it’s also about knowing when to walk away. Even if that does means wading through numerous due diligence processes just to buy one house.
Investors commonly project their own personal needs on to purchases, and financially, this is where things quickly fall apart. Some houses you just can’t add another bedroom and it’s foolish to try and force a renovation that won’t suit the house or the people flow.
“It has to be the right property, and for the right price. If you can spot an opportunity neither the vendor nor the sales agent has spotted, you’re already ahead.”
Alongside her Opes Accelerate business, Wolfe is still growing her $12 million personal portfolio.
Everyone has a reason for trying to time travel financially, and her motivation is to spend more quality time with her young family. She’s buying that time with her kids, one smart investment at a time.
Ilse Wolfe is Director of Opes Accelerate coaching program. To enquire about coaching memberships and how you could accelerate your personal investment pathway, contact Ilse at [email protected]. For further information visit www.opespartners.co.nz/accelerate Follow Ilse at @ilsewolfenz on Instagram.