Borderless investing

Borderless investing
December 17, 2018 Propertyology

Home is where the heart is. But the heart is the last organ that one should listen to when it comes to making financial decisions. Smart decisions in real estate are made with an understanding that where one chooses to live has no bearing on where the best opportunities to invest might be. Australia is a huge country!

Borderless investing is a concept which Adam and Claire could grasp quicker than most.

This cross-cultural clan have travel in their DNA. Adam, is a 44-year-old IT manager who was born in Hong Kong and is of Russian/British heritage.

After attending a Sydney boarding school, Adam took a ‘two year’ trip to the United Kingdom that lasted 14 years. There, he met his Scottish-born wife and the couple settled in London.

“Our kids were born in London and when they were one and three, I thought, ‘I cannot stand having a young family in this city – it’s not like Australia,’” Adam said.

This family isn’t easily defined by geography obviously, so Adam brought his brood to Sydney in 2013 and settled in.

The couple had owned property in London and Edinburgh, so they weren’t novices in bricks and mortar, but Adam couldn’t believe how much it cost to become a real estate owner in the Harbour City.

“We thought, ‘This is ridiculous! Let’s wait for prices to fall a little bit.’ We made the perfectly wrong decision – not just the currency (exchange rate) going against us but the market exploded from then on.”

It was a little demoralising, but they knew there were more opportunities both personally and professionally in Australia compared with the UK. So, Adam decided to begin a programme of self-education about property.

“I started talking to more and more people – I even went to seminars, which were a waste of time – and I soon realised that property should be bought and held for a long time.”

Adam’s first great investor revelation was that Australia’s broad market meant opportunities weren’t just in Sydney and Melbourne. There were many markets operating at different speeds and at different stages of their price cycles.

“I then thought, ‘You know what? If there are good buying opportunities somewhere in Australia at any moment in time, I need people to help me find them.’”

That led to his next steadfast property principle – you need a team of experts around you. He was surprised to discover there were very few reputable property investment firms who genuinely analyse the fundamentals of all property markets across Australia.

There was another reason Adam was keen to offload the buying responsibilities.

“I actually hate real estate trading – I mean, I hate the games that go on and the mind tricks. I just think it’s flawed in a moralistic sense.”

This meant he was happy to remove himself from the emotion of the investment process and focus solely on the numbers and results.

“I don’t waste my time looking at them (his investments).” Like other savvy borderless investors, Adam gathers the important information that he needs, evaluates it accordingly, and works with local property managers with matters requiring a physical presence.

Adam appreciates the value of leverage. “It could just as easily be a series of hotdog stands around Australia. As long as it’s leveraged and as long as it generates cash flow, that’s all that matters.”

Adam got in touch with Propertyology after he’d listened to their Head of Research, Simon Pressley, in a podcast interview.

“He said a few things that really resonated with me. The first was that there’s always a buying opportunity at any moment in time, the question is just ‘where?’

“The second thing was, to look at property as a share in a community.”

Propertyology’s analytic approach to choosing locations and justifying their choices really appealed to Adam.

“He (Simon) goes into the data and builds a story about why a given locale, wherever it is in Australia, offers really good, long-term growth potential. This is a very intellectually sound approach to property investing that really won me over.”

“I don’t trust people just because they say they’ve been successful in the past – I want to see the methodology, the thinking and intellect behind it. I believe Propertyology is the only company out there that does that.”

Adam employed Propertyology to find him his first investment in late 2017. About one week after appointing them, their buyer’s agents recommended a solid property within a capital city location that had some exciting infrastructure projects in the pipeline.

Adam bought the four-bedroom, one-bathroom circa-1980 house for $410,000 then secured a tenant for the low-set brick rental at $400 per week. He couldn’t be happier.

As soon as they’d settled, Adam was ready to go again… that’s when the tough 2018 finance environment hit

Despite being immediately keen to purchase, it became apparent that obtaining a loan was going to take some strategic planning. With guidance from his mortgage broker, Adam and his family worked on their household budget and, over eight months, adopted a disciplined approach to their home finances.

They reached the point where the bank would say, ‘yes’ to the next loan.

Again, Propertyology applied their studious approach to markets and this time recommended investing in a strong regional city that was in a completely different state. The rationale of diversifying in both the states that you own property in and the key industries to each location’s economy is what borderless investing is all about.

The growth drivers of the second location include a thriving economy, especially tourism and manufacturing, plus state and federal government investment in new infrastructure. Adam confesses that the there’s no way he would have found this location as a DIY researcher.

Adam was thrilled with the 3-bedroom house that Propertyology’s buyer’s agents successfully negotiated for $455,000 in September 2018. The property is close to new medical infrastructure and they secured a university employee as a tenant paying $415 per week rent.

“It’s a character house in a great location and it’s been finished to a really high spec.”

Now with a portfolio that includes two very affordable properties in completely different and strategically-chosen cities, Adam is very content that he and his family have laid a good foundation for their future. He says the long game is an important ethic of his investment philosophy.

“As long as you don’t ‘buy dumb’, like at the top of the cycle in a boom. If you hold a given property for 25 years, it’ll quadruple in value.”

His family ambitions are realistic and reasonable too.

“I don’t want to get super rich, I just want to comfortable in retirement.”

“My next purchase will probably be our primary residence in Sydney, but straight after that we’ll be back to Propertyology for the next one for sure.”

Adam said reaching out to the team at Propertyology was one of the best calls he’s made, and he’s sharing the love. “I recommend them to everybody!”

 

Propertyology is a Brisbane-based buyers agency and (national) property market research firm. Our multiple-award-winning business is currently helping everyday people to invest six locations across four different states. Like to know more? Contact us here.

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