Investors In Focus: Rajagopal And Gayathri Venkatesh
When excessive superannuation management fees eroded her retirement funds, business analyst Gayathri Venkatesh opted for property investment with husband Rajagopal Venkatesh, seeking an alternative path to wealth creation. They’d been in the market before - albeit unsuccessfully - and knew that with a structure matched to their risk appetite, they might just recoup Gayathri’s savings and secure their later years. When their financial advisor recommended a mentoring session delivered by Paul Flynn Property Group they realised they could achieve their goals through a positively geared portfolio.
Rajagopal and Gayathri’s first investment had been well-intended - they’d heard much about negative gearing and thought it would be a great way to reduce their tax obligations. But as they tried to juggle repayments on their principal place of residence, lower than projected rental returns started to bite. Add to that, problems with tenants, less than ideal property managers and the Venkatesh’s financial commitments created the perfect storm.
“We started panicking as we had to use our own money,” Rajagopal says. “We thought we’d taken too much risk so we had to sell the negatively geared investment property.”
They made money on the sale, but their problems with loan serviceability left an impact. Once bitten through negative gearing, they didn’t want to make the same mistake again. Aged in their 50s, they had a low-risk appetite as they edged closer to retirement. As such Paul Flynn’s proposed investment model sparked their interest, whereby properties were purchased by identifying motivated sellers eg. mortgage in possession, distressed sales, off-market transactions and government auctions, then positively geared by adding value through small renovations.
At the same time, their financial advisor suggested a self-managed superannuation fund (SMSF) for Gayathri, as a better means of building her retirement nest egg as a private sector employee. SMSF rules at that stage prevented them from borrowing to purchase property, however nothing stopped them from buying it outright.
“We bought two positively geared properties through super,” Rajagopal says. “After that, we became comfortable because we were not losing money.”
When the rules changed regarding borrowing - and they could access up to 80% for investment mortgages - the couple further added to their portfolio. They now own six properties in and around Brisbane’s growth corridors, having just sold one in Cairns and another one in Brisbane suburb. Their principal place of residence in Sydney has unwittingly been their best investment, with its ever-increasing value in the now popular Cabarita area (closer to Breakfast Point). Their overall real estate assets have left Rajagopal and Gayathri well-placed to meet their retirement needs in only a short period of time.
“Even if we sell our portfolio one-by-one, we should retire comfortably. The income generated will be enough to cover our needs,” Rajagopal says. “Our house will be free of a mortgage and we’ll be able to draw money down during the income phase of our SMSF.”
Encouraging new investors to seek professionals for help with tasks including property selection and management, Rajagopal says it’s essential to not put all your eggs in one basket. “Take calculated risks and work out how much risk you can accept.”
For their own property investment strategy, Rajagopal says they’ve moved further away from share investment and more into property. “Shares are another form of good investment, but whatever risks we want to take such as indices, call and put options, we try outside superannuation with small amounts.”