Case Study 3 Background Ravi and Alice Patel have been thinking about their future and are ready to purchase their first investment property. They have lived in their current home for 10 years

Jamez

16 Oct 2025 • 6 min read

Case Study 3

Background

Ravi and Alice Patel have been thinking about their future and are ready to purchase their first investment property. They have lived in their current home for 10 years. They would like to utilise the equity they have built up to purchase an investment property in Kingswood, a suburb in Sydney’s west. They believe that the suburb has its good parts and is a growth area. It has a hospital, university and a new shopping precinct under development. Ravi is a self-employed carpenter specialising in renovations and extensions. Alice is an interior designer and has been working part time since the children came along. With their combined skills they feel that taking on an older property and doing it up themselves will set them up to make a profit and/or build up equity in the short term, which will help them to scale up to their next investment property.

Ravi and Alice have been married for 20 years and have two teenage children. Their son Jay is age 16 and their daughter Zara is age 15. The investment property is located near a university and they feel this may be somewhere Jay and Zara could live while they attend university. Alice contacted your office following a recommendation she found on a local Facebook group. After the complications they experienced when they got their home loan 10 years ago (as Ravi is self-employed) they decided to let a broker help them out this time round. You have conducted an initial meeting with Ravi and Alice at their home.

Following that meeting the clients have provided the information and documents that you requested pay slips, tax returns, profit and loss and balance sheet for their company, bank statements, property details for review/verification. They have been looking at properties for the past five months and have found an older established property set on a large 800 sqm block. It is in need of a new kitchen and the laundry is on the back patio and needs to be built in to give it internal access, which will help to modernise the home. The back outdoor decking area is also in need of repair. Ravi is able to undertake these renovations while Alice will paint and decorate. They have signed a Contract of Sale and paid a 10?posit. Settlement is due in 60 days.

The following is a summary of the details of the property they wish to purchase, the couple’s financial and employment details, and the loan features they require.

The loan Requirements

25-year term if possible
interest only variable interest rate (for this case study, use 6.6% p.a.)
interest only term of five years (then converts to principal and interest)
proposed settlement date 60 days from exchange of contracts. Other information
The clients have advised that they do not want to pay ongoing monthly fees on their loan.
They want to keep repayments as low as possible.
They want to build equity as soon as possible, yet have asked for an interest only loan for the first 5 years.
They would like to purchase a property at Nelson Bay within the next 10 years to use as a holiday home and plan to retire there.
Borrowing 100% of the purchase price plus costs
The property will be vacant for 12 weeks pending renovations.
Anticipated rental income for the investment property is $600 per week
Ownership of the property will be shared 50/50 with Ravi and Alice
They have expressed that they do not have a problem refinancing their current home loan if they need to, as they understand they will need to use their current home as cross collateral security to support the new loan. For tax reasons, the borrower has requested two loans, one loan to refinance their existing home and the other for the investment property, including costs.

Assessment Requirements Summary

The primary objective of this assessment is to develop a structured financial and lending plan for clients (Ravi and Alice Patel) seeking to purchase an investment property. The key points to be addressed in the assessment include:

Client Background & Financial Position
- Personal details: family composition, ages of children, employment, and income sources.
- Current assets, liabilities, and equity in their existing home.
Investment Property Details
- Location, size, condition, and renovation requirements.
- Expected rental income and potential capital growth.
Loan Requirements & Preferences
- Loan term: 25-year term preferred.
- Interest-only variable rate: 6.6% p.a. for the first 5 years.
- Avoid ongoing monthly fees.
- Borrowing structure: 100% of purchase price plus associated costs.
- Use of current home as cross-collateral security.
- Two-loan structure for refinancing the existing home and funding the investment property.
Client Objectives
- Keep repayments low initially.
- Build equity over time.
- Enable self-managed renovations to increase property value.
- Plan for future property acquisition (holiday home).
Risk & Compliance Considerations
- Assess capacity to meet repayments.
- Consider interest rate variability and potential refinancing.
- Tax implications of dual loans and shared ownership.

Step-by-Step Approach Guided by the Academic Mentor

The Academic Mentor guided the student to approach the assessment systematically, ensuring a logical flow from client understanding to financial recommendation:

Step 1: Client & Property Analysis

Objective: Gain a thorough understanding of the clients’ financial situation, goals, and property requirements.
Actions Taken:
- Reviewed pay slips, tax returns, profit and loss statements, balance sheets, and bank statements.
- Evaluated the investment property’s condition, renovation needs, and potential rental yield.
Outcome: Identified the property as suitable for renovation and potential equity growth.

Step 2: Loan Requirement Assessment

Objective: Determine the optimal loan structure to meet client preferences.
Actions Taken:
- Calculated interest-only repayments at 6.6% p.a. for the first 5 years.
- Evaluated a 25-year term for manageable repayment levels.
- Considered two-loan structure for refinancing and investment property purchase.
- Checked feasibility of using the current home as cross-collateral.
Outcome: Structured loan solution aligned with client goals and financial capacity.

Step 3: Risk Assessment & Scenario Planning

Objective: Identify potential financial risks and develop mitigation strategies.
Actions Taken:
- Analyzed interest rate fluctuations and impact on repayments.
- Assessed rental income assumptions and vacancy periods (12 weeks).
- Evaluated renovation timelines and costs to ensure property value enhancement.
Outcome: Highlighted areas of risk and proposed strategies for repayment flexibility and refinancing.

Step 4: Recommendation & Reporting

Objective: Provide a clear, client-focused loan recommendation.
Actions Taken:
- Prepared a structured report detailing the recommended loan options.
- Included repayment schedules, interest-only vs. principal & interest comparison, and cross-collateral implications.
- Advised on future investment plans (holiday property in Nelson Bay).
Outcome: Delivered a comprehensive and actionable financial plan aligned with the clients’ short- and long-term objectives.

Learning Objectives Covered

Through this assessment, the following learning outcomes were achieved:

Financial Analysis Skills – Evaluating income, equity, and property investment potential.
Loan Structuring Competence – Designing interest-only and principal & interest loan options.
Risk Assessment & Management – Identifying repayment and market risks, including refinancing strategies.
Client-Focused Recommendation – Developing actionable and tailored financial advice.
Professional Communication – Presenting complex financial information clearly for client understanding.

Get Inspired, Stay Original: Access Your Assignment Resources

Looking for guidance on your assignments? Download our sample solution to see a well-structured approach, gain insights, and understand how to tackle complex case studies effectively. Remember: This sample is provided for reference only. Submitting it as your own work can lead to plagiarism issues and academic penalties.

Want a solution that is fully unique, tailored, and plagiarism-free? Our team of professional academic writers can create a fresh, customized assignment that:

Matches your specific assessment requirements
Ensures 100% originality
Helps you save time and meet deadlines
Provides a structured, high-quality solution you can confidently learn from

Take the next step towards academic success: