4 properties by 24 – how to build a portfolio without sacrificing fun, travel or food

By Vivienne Kelly
Mitchell Shad on The Smart Property Investment Show

Sick of stories of successful young investors who only made it by living at home, never travelling or only eating tinned tuna for four years? This investor reveals how he’s building up wealth through property whilst not missing out on life’s luxuries.

Mitchell Shad hasn’t even hit a quarter of a century yet, but he’s amassed a four-property portfolio.

How did he do it? What strategy did he use? Where did he buy, and why? Is he really having his cake and eating it too? What can investors of all ages learn from Mitchell's successes? 

All these questions and many more – including whether or not he plans on “being minted” – are answered on this episode of The Smart Property Investment Show.

Make sure you never miss an episode by subscribing to us now on iTunes.


Listen to other instalments of The Smart Property Investment Show: 
Episode 45: Special guest Mark Bouris on what really makes property prices rise and when to invest
Episode 44: '11 properties by 31, now I'm stuck: What's next?' 
Episode 43: 22 properties by 30: Can Generation Ys build massive portfolios?
Episode 42: SPECIAL EPISODE: All your burning property investment questions answered
Episode 41: 14 properties and $13,000 cash flow positive: how this investor did it
Episode 40: How I achieved financial freedom in the face of divorce
Episode 39: $2 million in just five years: SPI porfolio update
Episode 38: Identifying an under market value property: buyer's agent reveals all 
Episode 37: How to find - and keep - the perfect tenant 
Episode 36: How to get the best properties for the best price
Episode 35: Top investors reveal how to reduce your interest rates and borrow more money 
Episode 34: 4 properties in 4 months: The SPI Show gives the inside scoop on its portfolio
Episode 33: How we’re creating wealth for our young family: Investor reveals how real-life mum and dads invest 
Episode 32: From family tragedy to successful young investor: 'How I did it' 
Episode 31: How to beat other investors
Episode 30: How you can be millions in debt and loving it
Episode 29: How to succeed where other investors fail: real estate mogul reveals all
Episode 28: How a poker night led to a terrible property investment
Episode 27: Australian test cricketer reveals all about his property portfolio
Episode 26: 'How we bought 11 properties in less than 5 years': The SPI Show reveals all
Episode 25: 'How I bought six properties even though the banks don't want to lend to me and I'm self-employed'
Episode 24: 'How property helped me quit the rat race'
Episode 23: 'The worst property investment decision we made' 
Episode 22: 7 properties by 25. How this young investor did it 
Episode 21: The magic formula for negotiating on properties
Episode 20: 'How we recovered from our auction nightmare and bought a property goldmine'
Episode 19: ‘How I built a multimillion-dollar portfolio even though I bought the wrong properties’
Episode 18: ‘What’s the worst that can happen?’ The ups and downs of DIY property management
Episode 17: The secrets to my success – how I built a massive portfolio on a modest income
Episode 16: How I'll retire on $200,000 a year
Episode 15: 10 properties in 6 years – how this elite sportsman will create a passive income
Episode 14: How I turned $4,500 into a multimillion-dollar portfolio 
Episode 13: Are we about to see real estate Armageddon? 
Episode 12: My sink-or-swim investment strategy
Episode 11: How your living expenses will affect your borrowing ability and is it time to chat with your lender?
Episode 10: Is it boom or doom in 2016... and is ready access to finance assured in the year ahead?
Episode 9: How a tradie bought 12 properties in under 4 years 
Episode 8: 'How I bought 9 properties on a modest income - all before 30'   
Episode 7: How to pick a hotspot; Here comes the squeeze!
Episode 6: How to start investing without a plan
Episode 5: 'How I built a portfolio from scratch'
Episode 4: Christmas special! We look back on 2015 and forecast what's in store for investors in 2016
Episode 3: Are we in a property bubble? Does aircraft noise depress property prices? And where's the next boom?
Episode 2: Where are prices on the way back? What's the future for mining towns? Are we all in a ponzi scheme?
Episode 1: What do you do when rates rise? How APRA is affecting investors. And have we found new hotspots? 


Introduction: Welcome to the Smart Property Investment Show with your host Phil Tarrant.

Phil Tarrant: Good day, Phil Tarrant, here, editor of Small Property Investment. Thanks for tuning in to the show. I'm joined by my regular co-host, Vivienne Kelly. Viv, how you going?

Vivienne Kelly: I'm good, thanks, Phil. How are you?

Phil Tarrant: I’m not too bad at all. We did a podcast recently when we were chatting with a young Gen Y-er, a Millennial, or I don't know what you would call them.

Vivienne Kelly: Gen-Y will do.

Phil Tarrant: We'll stick with Gen-Y. Stephanie is a really good, ambitious, impressive young lady who is investing in properties. She's got how many properties, Viv?

Vivienne Kelly: She's got seven at the moment. She's twenty-five. I think she's twenty-six in a matter of days.

Phil Tarrant: Twenty-six.

Vivienne Kelly: She wants to get 22 properties before she hits the big 3-0, so she's definitely going to have to ramp up her rate of acquisition over the next few years.

Phil Tarrant: It's funny. In that podcast, we had quite an interesting discussion around some of the challenges, some of the trials and tribulations of Gen-Ys in today's modern market and even yesterday, I was watching the television and this debate is sort of ongoing and I'm reading stuff in the papers now saying that, most Gen-Ys will never own property or you need save up for 10 years now in order to get enough for a deposit to be a property owner.

Vivienne Kelly: Yes, I think the Gen-Y debate may be the new negative gearing debate. Maybe it's just never going to go away. I think there are very strong arguments on both sides. Stephanie’s obviously proving that it is possible, but I don't think that that means that there are no issues surrounding Generation Y and the property ladder.

Phil Tarrant: Yes, I think it's all about affordability and it’s also, I think it's a lot about education and I think a lot of Gen-Ys ... I feel the Gen-Y pain. I'm a Gen-Xer, but I sort of get the challenges, to actually get into property considering wage growth versus property growth. It's quite disparate right now and you need to be saving for quite some time, but that said, anyone can get into property, I believe, as long as you can highlight to a bank, that you have serviceability, you earn enough income, you can service a mortgage. It doesn't matter who you are. Whether you're a 21-year-old or a 61-year-old, you can get into property and you can do that, Viv, by thinking about things a little bit differently.

A lot of Gen-Ys think property investment is owning a million-dollar property five kilometres from the CBD and yes, that's probably not going to happen. I think a lot of Gen-Y’s problem is they think their first home is going to be their ideal home or their dream home and I think it's about setting expectations and understanding what your goals are.

With that as a basic preamble, I guess today, Mitchell Shad, we’ve asked him in. He's a young bloke, he's 24-years- old and he's a guy who I think is representative of opportunities for Gen-Ys today. Fair call?

Vivienne Kelly: Yes, definitely. I mean, Mitchell, as you said, he's 24. He's got four properties and he's doing that term that's becoming more and more prevalent which is rent-vesting, so he obviously can afford property, but maybe not where he wants to live, so he's renting where he wants to live, but starting to build up that wealth through property and get on the property ladder by buying elsewhere. So he's a great example of that alternative strategy of getting started.

Phil Tarrant: It is. Well, let's ask him some questions. Mitchell, how you going, mate?

Mitchell Shad: Good, Phil. How are you?

Phil Tarrant: All right. Are you okay with Mitch?

Mitchell Shad: That's fine.

Phil Tarrant: Good, ‘cause I always shorten things. Thanks for coming in. You just heard what we're chatting about with Gen-Ys and stuff. You probably hear it all, yourselves. How many of your ... You're twenty-four years old, right? A young bloke. How many of your mates own four properties?

Mitchell Shad: None. It's a big argument that comes around even in social settings for us at the moment, too. Because there's a lot in the media about it and how it's becoming impossible for younger people to buy property, but I think you hit the nail on the head before when you mentioned everyone sort of sees property as buying that home to live in, that the million-home within the CBD range. If you look and take it from a long-term point of view, there's easy ways to get in the market. First of all, just get your foot in the door and work up from there.

Phil Tarrant: You work in finance, right? You're a mortgage broker?

Mitchell Shad: Yes. That's right.

Phil Tarrant: How long you been doing that for?

Mitchell Shad: About three years.

Phil Tarrant: Okay. Do you have a university degree? Did you go to uni or anything?

Mitchell Shad: Yes, Bachelor of Commerce.

Phil Tarrant: Formal education, Bachelor of Commerce, and then become a mortgage broker?

Mitchell Shad: Yes.

Phil Tarrant: Cool. You see a lot of people and you see how they are creating wealth through property, so you get a bit of inside view on the benefits of investing in property. We talk about why invest in property a lot on the show. I guess we could start with that. What's your goals in investing in property?

Mitchell Shad: It's all about, obviously, security in the future. I think it's quite obvious that property is a long-term game. You're not going to get in and out of property in a year or so and make millions of dollars. It's not the way it works. I see it is a conservative way to do it, but a more sure way to build wealth as well.

You look at the history of property growth and property prices and in every area, as long as you're investing with the key principles in terms of schools, education, jobs and you know what you're doing there, I think there's always a good opportunity for growth in a property. It just depends on how long you're willing to wait and how long you're willing to see it out. But I think it's a good entry point to get in and there's not a huge down payment to get into property. I think, obviously, if we're looking at expensive properties, there is, but if you're looking at sort of the lighter market, it's not. I think over the long-term, there's a lot of wealth to be built, so I think it's a great way to do it.

Phil Tarrant: So for you, it's wealth creation. Is what you're playing?

Mitchell Shad: Yes.

Phil Tarrant: Okay, so you're thinking about your retirement now at 24?

Mitchell Shad: Absolutely, yes.

Phil Tarrant: Okay. Going back to my original question, are you mates thinking about retirement?

Mitchell Shad: I dare say not.

Phil Tarrant: What makes you different?

Mitchell Shad: I've come from a very financial family. My Dad was an accountant. My brother did the same degree as me. It's just always been in the back of my head and doing the degree and just always having that brain on me, it's just always been a thing.

I've looked to the future, I've lived for tomorrow which I think is massively important and I don't know whether the other guys that are around my age have that same upbringing or that same sort of ideas in the back of their head. I think a lot of them are thinking about travel and different things, enjoying life, not working too hard, but at the day, I can do that in sort of 10, 20 years’ time, once I've worked hard now.

Vivienne Kelly: Speaking of enjoying life, Mitchell, this is a discussion that we had with Stephanie back on Episode 43 towards the end of September. You said that you're living for tomorrow. Do you think that you'll come to regret that later? Do you feel like you're missing out on anything? What have you sacrificed and how do you think that sort of plays off in terms of sacrificing something today for a better tomorrow?

Mitchell Shad: Yes, it's always in the back of my head and a lot of people do ask me that. End of the day, I've been to the US for six weeks. I've been to a lot of different countries around the world for different holidays. Working full-time doesn't stop me from doing that. In fact, working full-time and investing and having a bit of money allows me to do it better even now. I'm just not able to go do that six, 12-month trip overseas and backpack around the world which, yes, is a sacrifice, but I don't see it as a massive sacrifice.

I think my enjoyment in life comes from knowing that my future is going to be secured and those sort of trips that the three- or four-week trips I can have every now and then will let me experience the world as well. I see it as a sacrifice, but it's definitely a sacrifice I'm willing to make.

Vivienne Kelly: You're just not eating tuna out of a can on the floor with no furniture?

Mitchell Shad: No, not at all. Not at all. I’ve probably made it sound a bit bad. Not that at all. The questions I get are more about how I can't go and do a year abroad or I'm locked into a job, locked into these properties. I can't just get up and leave my job – which I don't think is really what anyone should be thinking about or considering doing anyway. It's just more of a sensible way to enjoy myself now and absolutely, there's no sacrifices from a general wellbeing point of view. It's not like that at all. Generally, properties, good properties will cover themselves. It’s more just about getting that foot in the door.

Phil Tarrant: So it sounds like you’re having your cake and eating it too right?

Mitchell Shad: Ideally, yea. Absolutely.

Phil Tarrant: Do you want to be absolutely minted? Is that the goal?

Mitchell Shad: I think the first goal is to sort of be secure and have my family accounted for and have enough money not to be worrying about where the next pay cheque is going to come from. Yes, there's always in the back of my mind, as well, there's always that push to really want to have it all and be able to put some money into things I know are good things and put money into things I know will grow as well in terms of businesses and things, but to do that and have a base to do that I need to have obviously built that up. Yes, it's not the primary goal, but definitely one of them.

Phil Tarrant: If you do everything right along the way, that's probably the result of it?

Mitchell Shad: Yes. That's right.

Phil Tarrant: Do you have an actual, tangible goal though? Do you have someone that says, by the age of 30, I want this many properties worth this much money or by 40, I want this? Have you sort of written that down or have you thought about that?

Mitchell Shad: Yes, I have. There was actually an article done in the AFR a couple years ago and it was, 'Ten Properties by Thirty,' which obviously, is on track at the moment, but as I go along obviously things keep coming up and there's expenses that come along with property that you need to take into account. That's why the way you invest and what you invest in is very important to getting to a goal like that.

Phil Tarrant: Okay. Let's have a chat about that because our listeners really love hearing about the makeup of people's portfolios. You've got four properties.

Mitchell Shad: Yes.

Phil Tarrant: Let's run through them really quickly. What's the first one? Where's it at?

Mitchell Shad: The first one's in Riverwood, just down south-west of Sydney.

Phil Tarrant: Okay, Riverwood. What'd you buy it for?

Mitchell Shad: I bought it for $650,000.

Phil Tarrant: $650,000.

Mitchell Shad: Yes.

Phil Tarrant: That was your first property?

Mitchell Shad: Yes, that was with my sister though, so jointly.

Phil Tarrant: So, jointly. What's it worth now?

Mitchell Shad: It's worth about $940,000 now. That was the last valuation done.

Phil Tarrant: $940,000 When did you buy it at $650,000?

Mitchell Shad: That was 2011, I think.

Phil Tarrant: Okay.

Mitchell Shad: Or 2012 maybe.

Phil Tarrant: Okay. You’ve done well out of that. At $650,000, property in Riverwood, is that sort of near the train station? A newer-type of build-type place?

Mitchell Shad: Yes, it was a new-ish. I think about 10-years’ old.

Phil Tarrant: Yes.

Mitchell Shad: It was a townhouse.

Phil Tarrant: Yes.

Mitchell Shad: Yes. It's about a five-minute walk from the train station.

Phil Tarrant: Yes.

Mitchell Shad: School's very close by as well as the supermarket close by. It ticked all the boxes.

Phil Tarrant: Second property?

Mitchell Shad: Second property is up in Townsville.

Phil Tarrant: Okay.

Mitchell Shad: In north Queensland. That was only about $250,000 and I bought that through a property agent.

Phil Tarrant: Okay.

Mitchell Shad: It's a townhouse, as well, two-bed townhouse which obviously, you think of a two-bed townhouse in Sydney and you won’t get it for anywhere near $250,000. So that's been a bit flat. I only bought that about two or three years ago now. It’s been a bit flat but I expect it will hit its straps in the next few years.

Phil Tarrant: What's sort of valuation would you get on it now?

Mitchell Shad: I would leave it at $250,000.

Phil Tarrant: You’d leave it at $250,000? Okay. I like that. Realistic. That's good. The third property you bought?

Mitchell Shad: That's in Windsor, just outside Brisbane.

Phil Tarrant: Okay.

Mitchell Shad: That was bought for $325,000.

Phil Tarrant: Yes.

Mitchell Shad: It's worth about $360,000 now.

Phil Tarrant: Okay.

Mitchell Shad: It's a little two-bed apartment.

Phil Tarrant: You've been on that for a year or so?

Mitchell Shad: Yes, I bought that last April.

Phil Tarrant: Okay. Year and a bit. Your most recent purchase?

Mitchell Shad: Actually, was about three weeks ago. It was in Penshurst down in south of Sydney, again.

Phil Tarrant: Okay. It's not far from Riverwood, really?

Mitchell Shad: That's right, yes. That was $571,000 for a two-bed apartment.

Phil Tarrant: You sort of bought that at market value or did you get a good deal on it?

Mitchell Shad: No, I think I got a good deal. Actually, there was an agreed price for $591,000 a few weeks before I actually came in and bought it.

Phil Tarrant: Okay.

Mitchell Shad: Something happened with the finance and with moving out. There was something to do with the owner didn't want to move out at the time the buyer wanted to move in, so that actually fell through and the agent told me that and showed me that and I had negotiated down to $571,000 knowing that. Got a lot of potential to develop as well, a lot of internal renovation that can be done. Very, very simple things that will really drive it up.

Phil Tarrant: So you reckon the val’s around $590,000?

Mitchell Shad: Yes, I think it would. That was an automated valuation done at $591,000 on that one.

Phil Tarrant: Okay, that's pretty good. You have a bit of equity in your portfolio already?

Mitchell Shad: Yes.

Phil Tarrant: You've got sort of between $300,000 and $400,000?

Mitchell Shad: Riverwood was actually my little cash cow, so I used that to buy the last three.

Phil Tarrant: Okay, so you pulled equity out of that?

Mitchell Shad: Pulled equity out, yep.

Phil Tarrant: What's your sort of portfolio LVR now, do you reckon?

Mitchell Shad: It'd be about 85% at the moment.

Phil Tarrant: 85%, so for our listeners, LVR, if you're not familiar with the term, it means loan-to-value ratio. That is the size of the debt versus of the value of the asset, so 85%, some people would say it was sort of on the high side. Some people would say you're very risk averse – some people think it should be at 95%, so it's all about where you sit. My portfolio sits about 65%, 67%, but it sort of fluctuates depending if I'm pulling equity out. It can go up and down and stuff like that.

So you’ve gone New South Wales, so Riverwood, so southwest Sydney. Townsville, up in Queensland. Windsor in Brissy and then back to Sydney. So your most recent one in Sydney. Why did you invest in these particular properties? In these areas?

Mitchell Shad: The Townsville one it was bought reasonably soon after the Riverwood one, so I just wanted to get in again and I really wanted to diversify.

Phil Tarrant: Yes.

Mitchell Shad: Obviously, the right property works, markets can go out at different times and there was a lot of talk about Sydney being at its top, being at its peak and people have been talking about that for a few years now. What to believe and what not to believe, but I always wanted to be smart about it and make sure I wasn’t putting all of my eggs in one basket. So, north Queensland and also, Brisbane itself, I'd heard and I'd read a lot about that being the next place to move. So, waiting for that to happen.

Phil Tarrant: Okay. Have you located those properties yourself? You said that the Townsville place you found via an agent.

Mitchell Shad: Yes, that was through a buyer's agent. That Windsor place was by myself and Penshurst was by myself.

Phil Tarrant: Penshurst by yourself. How did you go about identifying these properties? Talk us through the cycle of going, "Okay, I'm ready to buy again." What did you do from that point?

Mitchell Shad: The first part was, it's just Domain. It's as simple as going on Domain and searching for the sort of price range I'm looking at in the vague area that I'm looking to buy in. Once a property comes up in a particular suburb, I'd then go and research that suburb directly. At work, being a broker at Smartmove, we've got access to RP Data reports. We've got access to a lot of research about these different areas, so I look at the median prices in the area. I look at what's in the area. I look at the schools, the supermarkets, the jobs, the education, everything that's there. There's about four or five different boxes I like to tick. I think that's the potential, that's the growth, that's where it's going to come from if people are able to live there and are able to survive there and work there and I think there's always going to be demand for those properties and that's obviously going to drive the price.


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