What is a Game Plan™?
Your Game Plan™ is a property plan that is tailored to your personal circumstances, goals and risk appetite. We create it by combining robust research, data, machine learning and rigorous risk reduction assumptions. The purpose of the Game Plan™ is to help you best understand what your next move can be, and how that may impact your long-term financial position. Think of a Game Plan™ as a useful guide, a roadmap that exists in the background, giving you insight into what is possible with what you have.
How does it work?
We'll present you up to four Game Plan™ options—single purchase, multiple events; conservative, moderate and aggressive—based on varying degrees of risk and outcomes.
Each Game Plan™ consists of different types of events—purchases, renovations or builds and sale events—over a period of 5 to 20 years. Purchases can include both residential and commercial investment properties as well as family home and lifestyle purchases.
If you already own existing property, during your Game Plan™ preparation we will assess the health and potential of those properties and propose recommendations to hold, renovate or sell.
Flexible by nature
By no means are you made to lock yourself into one particular plan for multiple years. We focus on the first event e.g. an investment purchase with a renovation, and then each subsequent Game Plan™ event thereafter has the potential to change. Before each new event in your Game Plan™ timeline, you can update, pivot and tweak accordingly to suit your changing circumstances or market conditions.
How much do I need to get started?
Initial cash investment
When you start your property investment journey, you'll come to us with a pot of money, we call this your ‘initial cash investment‘. Your initial cash investment amount can be made up of two parts:
Cash—actual money you actually have. It's liquid, as in, it's not tied up in something else like a term deposit that we can't access.
Equity—if you already own existing property and the current value is higher than what you owe, we might be able to use a portion of that equity.
Cash flow is king
Having a bunch of money upfront is essential to start investing, but the thing that is often overlooked or under-cooked is the budget required to cover any additional expenses each month. Simply put, the more money you can spare each month to put towards holding costs, the more we can do with your investments. It's a very important aspect of property investing, especially if you have a modest initial cash investment.
If you have a Game Plan™ that is focused on capital growth, the chances are you will own one or more investment properties where the monthly expenses are higher than the monthly rental income. These are called holding costs and the monthly flow of money in and out is called cash flow. The intention here is that the total holding costs add up to be way less than the capital growth of each property over time.
Nonetheless, we will create a Game Plan™ that is tailored to your particular circumstances and goals.
Do I have to have a Game Plan™?
In short, no they are not mandatory for purchasing properties with Milk Chocolate, however, we will still show you a long-term forecast for a single purchase as a minimum. Of course, we recommend adopting a Game Plan™ as early as possible—property investment is a long-term play—and acting strategically will help ensure success in the long term. However, if you choose not to follow one initially, that's fine, we can generate options down the track. If you decide that a longer-term view is something you want to understand better, we'll be here to show you how your future financial potential looks. After you on-board with Milk Chocolate, we will present you with up to four options to illustrate for you what you could potentially do with your assets as they perform over the long term.
Our assumptions consider everything
Our Game Plan™ goes into incredible detail, each one includes a set of assumptions to help ensure the most accurate outcome possible. To give an indication of the scale of our analysis, there are 135 assumptions built into our models. For example, CPI, capital growth and interest rates assumptions, through to invasive plumbing assessments in purchase costs and vacancy rate buffers in cash flow summaries.
For each property, we factor in an extensive set of purchase costs, holding costs and estimated renovation costs. All subsequent fees have been included across purchase, renovation and property management to create a complete picture.
Game Plan™ process
- Register with Milk Chocolate, agree to our terms, make payment and share some details
- Review your options and select your Game Plan™: We will create 3 options providing a range of outcomes. Either pick a preferred option or provide feedback. You can make changes to your investment amount at this point also. If changes are required, a revised Game Plan™ option will be sent to you for review.
- Approve your Game Plan™ and subsequent first purchase.
- The first property search begins when we activate the brief. Follow our progress on the Milk Bar™, then review and approve two rounds of extensive research on our recommended property. Once purchased, track portfolio performance on our Own™
- Review and adjust your Game Plan™: We notify you that another purchase is possible when enough available equity is reached. At this point, if your circumstances or market conditions have changed, you can make adjustments to your Game Plan™.
- We constantly monitor your property(s) performance, providing recommendations where necessary.
Two fundamentally different types of Game Plan™
Optimised for equity generation
A Game Plan™ that is optimised for maximising your asset and equity position. Asset selection will generally include blue-chip, high growth assets, whilst strategies applied to further maximise your return will be focused on larger structural renovations and potential subdivision projects. Generally, this strategy will be higher leveraged, focusing on asset acquisition and manufacturing equity.
Optimised for passive income
Optimised for maximising the ability to generate an income through property, with less reliance on your total asset and equity position. These Game Plans™ are geared towards minimising your debt and ongoing costs, ensuring you maximise the income generated from the asset. We focus on higher yielding assets, in particular commercial properties, whilst strategies applied to further maximise your return will be focused on creating dual income assets and renovations geared towards increasing your yield.
What events does a Game Plan™ include?
Purchases
- Residential investment property: Our bread and butter. A property purchase that is intended to either grow in value, generating equity, and/or a passive income if the holding costs are less than the rental income.
- Commercial investment property: These are typically included when high rental income is required and generally feature in Game Plans™ where passive income is the focus. Generally, a commercial property is an office, retail space or industrial warehouse.
- Family Home: This is your primary place of residence. The reason for buying this is driven by your personal needs as an individual or a family. The process we go through to find and recommend is focused on your preferences for the home itself, and its location, not specifically investment criteria.
Build projects
- Cosmetic renovation: This includes things like modernising kitchens and bathrooms, repainting, sanding floors or replacing carpets, adding internal joinery and so on. If this is for an investment property, we tend to recommend standard fixtures and neutral palettes to suit a broad range of tastes. If it's for a family home, well, the sky is the limit!
- Structural renovation: These are more involved and complex projects that increase the spec of the home by adding rooms and floor space. These projects often require a longer planning phase to allow for professional services such as architects, surveyors and structural engineers, likewise, council approval.
- Granny flat (self-contained studio): For properties that have the space, adding a ‘granny flat’ can be a great way to supercharge both capital growth and rental income. They have the flexibility to work as a separate income stream or combine it with an existing dwelling’s income. The granny flat is added to the existing title and is usually a self-contained free-standing dwelling ranging from a studio up to two bedrooms. We recommend these when passive income is the focus of the Game Plan™.
- Small sub-division: We define a small subdivision for a property that goes from one to two titles. The new title will have a new house build—either free-standing or duplex— and the existing dwelling can either be renovated or knocked down and rebuilt. Each can be held and rented, sold or one used as a family home, depending on the Game Plan™. More possibilities, more options and more potential to generate capital growth and rental income.
- Large sub-division: A large subdivision is similar to a small subdivision, except the existing land is split three ways or more, creating three or more separate dwellings. The same as above applies but the input and output is bigger.
- New build: This one is pretty straightforward, it applies to either a land purchase or a property purchase where there is an existing dwelling that is viable to knock-down and rebuild.
Sales
- Sometimes we recommend selling a property as part of a Game Plan™ When a client comes to us with an existing property in their portfolio, we will assess whether the property is suitable for their strategy, or is under-performing. If so, we would recommend selling. There are also situations where a property purchased through our Game Plan™ is intended to sell at a later date, in order to use the cash for a bigger purchase or to simply liquidate that asset and pay down debt in the portfolio.