Why property investor parents can be the best resource for first-time investors

Mr Burgess explained that he inherited money from his grandmother and was steered into property investment by his parents.

“The parents have really done well out of the property market and… [investing in property] was 100 per cent a requirement,” Mr Burgess added.

He continued: “I think it was the passing of my grandmother, and mum said she wanted to help us all, so she gave us all an equal amount of money, and she probably was integral in helping all of us pick what we were going to invest in.”

At first, just after his inheritance money had come through, Mr Burgess had planned to form a property investor trio with his two brothers, which did not sit well with their mother.

“She never wanted money to come between us, so we decided to go our separate ways and invest,” Mr Burgess said.

He added: “She’s very savvy with that kind of stuff, so it was really a great help to have her, not only for the cash side, but [to] be able to pick a good investment.”

Mr Burgess’ inheritance came in the form of a mortgage-free apartment in the Blue Mountains.

The property accrued a low level of rental income and had little potential for growth, Mr Burgess said. Further, of the 24 units contained within the block, 18 were owned by a single landlord.

Mr Burgess added that the strata managers were getting paid a “pretty penny” and were most likely his “mates”, so it was “kind of something you want to get out of”.

It would not have been easy for Mr Burgess to understand these property-specific details, or realise the underlying dangers and dilemmas of holding on to this investment, without the knowledge of his parents guiding him to sell it off immediately.

In order to maximise gains, Mr Burgess was advised by his parents to approach the landlord who owned three-quarters of the apartment block and offer a purchase price above market value.

Becoming a buyer

Mr Burgess said that inheriting the investment knowledge of his parents came as a packaged deal, with “very strict” rules around investing his inheritance money into property.

According to Mr Burgess, these investment rules included: “That we invest in something that was blue chip, something that we weren’t looking to flip in a couple years’ something that we weren’t wanting to sort of redo and refurbish, and any of that kind of stuff.”

“It was about strong rental return and good increase in capital.”

As a result, Mr Burgess invested in a one-bedroom apartment in the heart of Potts Point, a Sydney suburb trapped between Sydney’s harbourside naval base and Kings Cross train station – the Eastern Suburbs crime-and-party capital at the time and, therefore, a less desirable location to live in.

Mr Burgess’ parents realised the potential in the harbourside suburb, which neighbours the Botanical Gardens and Sydney’s CBD. Little did they know that years later, the NSW government’s controversial lockout laws would come into effect.

As a result, the majority of nighttime venues in Kings Cross began shutting up shop, effectively dismantling a party culture that never slept in Kings Cross, which acted as a repellent to residential property investors.

Today, Potts Point is one of the most expensive suburbs to live in, following its fast-paced gentrification that became a magnet for rich residents.

Mr Burgess said that it requires a great deal of knowledge and experience to know what kind of property to invest in, and for what reason, as well as how to manage properties or make adjustments to them to maximise their value.

However, there is certainly an element of luck to the property game that can be crucial to an investor’s success.

Setbacks of having investor parents

Mr Burgess added that his property journey in the future may be limited by the rules that his parents’ “rules” enforced around investing.

This includes only purchasing properties within driving distance of his place of residence.

“I guess the other side is that my parents are pretty old-school with their sort of investment strategies, so they would never buy in another city, because they couldn’t go and visit it or fix it up themselves”.

Although he has inherited investment insights from his parents, which have been invaluable to his success story thus far, it has made him feel less confident as an independent investor – despite his intentions to expand his portfolio in the future.

Mr Burgess explained: “I guess that’s the problem with the bank of mum and dad, and having the insight from them, is that it makes you a bit fearful that if you were to go out and do it without them, that you might make the wrong decision and throw it all away.”

He concluded: “So it is something I want to do, but it’s something that I feel like I probably need a bit of good guidance on.”