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Winning Against The Tide

Winning Against The Tide
March 2, 2021 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

‘Job’ is an acronym for ‘Just-Over-Broke’. That is exactly how Canberra couple, Sean and Janet, view the importance of working towards acquiring financial independence. And they are thrilled to have already made $165,000 progress in just two years.

Think about it: where does one’s money come from when one gets older, and either no longer want to work or health ailments significantly constrain one’s income-earning ability?

The complacent ones who think life will be cruisey on superannuation and aged pensions are in for a rude shock.

“Striving for financial independence by owning or controlling assets rather than being content with the JOB is what drives us to invest”, said Sean.

With stable incomes and reasonable equity in their family home, this everyday Aussie couple realised that they had ample capacity to invest and they understood the importance of engaging expertise.

To their credit, Sean and Janet already realised the significant shortcomings of being a hometown property investor.

When they first engaged the team at Propertyology at the beginning of 2019, there was nothing wrong with the prospects of the property market of their hometown. But, with well over 100 individual towns and cities with populations greater than 20,000 people, the odds of one’s hometown (conveniently) having the best potential in Australia will always be very slim.

And there is no bigger Golden Rule for investing than do not place all of your eggs in the one basket. Unfortunately, very few property investors pay respect to this critically important principle for good financial decisions.

People get consumed by neighbourhood features and benefits and the bricks-and-mortar of real estate. Invariably, they invest in the same town that they live in (or another nearby town in the same state). They pay zero attention to the investment fundamentals of the other 95 percent of their options. It really is crazy!

Related article: Capital growth, diversity and sustainability

For Sean and Janet, they had a couple of near misses with “ill-informed financial advisers and bogus buyer’s agents” and were each making separate enquiries to find a suitably skilled firm to work with.

Sean chuckled as he recalled a discussion with Janet. “I said to Janet ‘…we should check out this outfit called Propertyology.’ And my dear wife responded with ‘yes, I know dear… I was talking to you about them a month ago.”

Transparency, credibility and knowledge were the key reasons that Sean cited for choosing to engage the investment specialist buyer’s agency services of Propertyology in February 2019.

Taking advantage of Propertyology’s thought-leading research, Sean and Janet purchased two low-maintenance, affordable houses – one in Victoria and the other in Tasmania.

They used the very popular strategy of raising deposit monies against the equity in their family home. In other words, they didn’t use a single dollar of their own cash.

Their annual rental income has already increased by $1,000.

Good rental yields and incredibly strong rental markets in each city that they invested means that annual rental incomes cover 100 percent of annual expenses. If that does not excite you, this surely will…

In January this year, Sean got back in touch with us to begin preparations for investing again. Their mortgage broker had already obtained fresh bank valuations and confirmed that the combined value of their two investment properties had (already) increased by $165,000.

Yep, they have turned $0 cash into $165,000 within less than 2-years!

While it is well known that bank valuations are very conservative, Sean and Janet’s 2-year capital growth rates of 29 percent and 16 percent are outstanding in any era, let alone this specific 2-year period.

When they entered the property market in February 2019, this entire nation was devoid of confidence. There was a banking Royal Commission, significant political instability, we were only a few months out from a federal election, there was a distinct possibility that negative gearing was about to be abolished, and credit supply was insanely tight.

Fast-forward to the middle of the same 2-year block and drought had turned into widespread bushfires.

The last of those 2-years was consumed by the germ. A big bunch of civil liberties had been taken away from everyone, economists said we were heading for Earth’s Greatest Depression and a cast of thousands were predicting Australia’s biggest ever property market crash.

Here’s a huge, heartfelt CONGRATULATIONS to Sean and Janet for ignoring the noise and for understanding that, in a country as big and diverse as Australia, there will always be multiple locations with strong performing property markets.

The right time to invest in one’s future is always ‘as soon as you can afford to’. The most important question is never ‘when’, but ‘where’.

“We had confidence in Propertyology’s comprehensive, Australia-wide market analysis right from the start,” said Sean. “Having Bryan Loughnan acting as our dedicated buyer’s agent was superb. And warm referrals to local specialists was invaluable.”

With the confidence of rents from their first two properties more than covering costs and continued upward pressure on their asset values, Sean and Janet’s current focus is on taking full advantage of opportunities in other locations.

They truly are wonderful role models whom exemplify what everyday Aussies can achieve.

Propertyology are national buyer’s agents and Australia’s premier property market analyst. Every capital city and every non-capital city, Propertyology analyse fundamentals in every market, every day. We use this valuable research to help everyday Aussies to invest in strategically-chosen locations (literally) all over Australia. Like to know more? Contact us here.

We walk-the-walk. Here’s a recent example of our work for a client.