Stories of success: The O’Neills prove millennials can succeed in property investment

“If I worked past 5:30 p.m., I'd be disgusted. I hated it,” he said.

Not long after, he let go of his stable job to create a financially free future through property investment.

Though the transition has not been without challenges, Mr O’Neill knew that he wanted to dedicate his time and efforts to create a strong portfolio and ultimately provide financial freedom for himself and his family.

During the early years of his journey, he was getting $15,000 worth of earnings every year on a $425,000 property renting for $800 a week.

According to him: “I thought, ‘Imagine owning 10 of those. You can actually replace your income’. I was obsessed from that point. I just chased high cash flow stuff and they all grew in value, too. That allowed me to have deposits and be in a position to move forward.”

“It's been a long road but it was always the plan—to treat it like a business to replace engineering,” he highlighted.

Aside from building a portfolio worth more than $17 million, Mr O’Neill and his wife have also secured their dream family home for $5 million early this year.

The couple has also started a property investment advisory company where they help budding investors succeed in the wealth-creation business by acting as their mentors and guiding them through the different stages of the venture.

How it all started

Mr O'Neill and her wife started their investment journey when the Australian property markets are deemed to be in its worst state in recent history.

The big markets, including Sydney, dropped and didn't pick up until 2012. Other markets across the country are also softening, so understandably, everyone was advising everyone to avoid buying real estate assets.

Naturally, the couple was terrified of the doom-and-gloom headlines that claim a 30 to 40 per cent drop that's bound to happen. However, instead of following the crowd and waiting for a 'good time' to invest, they jumped in and trusted the numbers.

"I just basically found a property that gave me a good enough cash flow so I wasn't relying solely on growth and it allowed me to get one of the best buys of my life because there was no one else buying at the time. There were many good deals around,” Mr O'Neill said.

From the beginning, the couple understood that dedicating time and effort to acquire updated market intelligence and investment knowledge and establish long-lasting professional relationships are going to be critical to their success.

Once, Mr O’Neill letterbox-dropped around 300 properties in Port Macquarie as part of his research—only one replied. This anecdote reflects his dedication for property investment throughout their wealth-creation journey

Ultimately, loving what they do got them through the initial challenges of the venture. “I don't mind looking up properties at 8:00 p.m.,” Mr O’Neill said.

Their first purchase in 2019 was a house in Sutherland, which they moved into and lived in for a while to avoid paying stamp duty and be eligible to the First Home Owners Grant worth $7,000.

After a while, they did a renovation worth $45,000, which added a granny flat to the property. They rented it out a year later and enjoyed good cash flow.

From their initial purchase up to the last one, the couple used their professional skills as an engineer and a financial planner to focus on the numbers and chase properties with good yield so that their assets are not ‘reliant on doing good’.

The properties they look at include unit blocks, commercial properties and duplexes, which have generally higher incomes than the average investment properties.

By doing so, they continuously save funds for their future purchase and, if they happen to be in a growth market, they also enjoy long-term capital growth.

Strategies

Renovation and development potential

A big part of the couple’s successful investment journey is their ability to maintain good serviceability by buying high-yield properties with the potential to add value for under market value.

In 2012, Mr O'Neill and his wife bought their second property, which is a $620,000-unit located in Maroubra. Like the first property, they also invested on a renovation. This time, it cost them $20,000.

While the property was giving them good cash flow, the couple spent two years refraining from buying. Instead, they studied their options and spoke to mentors to plan their next step.

They continued looking for areas with high rental yields and ended up buying a block of apartments worth $480,000 in Port Macquarie. Two months later, they bought three apartments located in Queensland, all of which are on separate titles but in one block. Using the same strategy, they were able to buy another three properties in Queensland shortly after.

In 2014, they also started buying apartment developments and subdivision projects.

By 2018, their portfolio has a unit in Maroubra, a million dollar-house in Sydney and a variety of properties in Brisbane, including duplexes and houses with good land component where he can add value by building townhouses or property extensions.

'Cash flow is king'

Throughout his investment journey, Mr O'Neill and his wife have only ever sold two investment properties—assets with the highest values but lowest yields.

According to him, as they spent year after year in the wealth-creation business, they started to appreciate the value of good cash flow over other investment benefits.

“They were two of my favourite properties but the cash flow was just not good enough. I do prefer the cash flow more and more because you can retire off it,” he said.

The couple also did a subdivision to increase the total equity on their portfolio. The sales and the subdivision lowered the number of his properties to 26 but raised the total value of his portfolio to $17.3 million.

Diversification

Mr O’Neill and his wife took the time and effort to discover ‘future hotspots’ and ultimately improve their knowledge of the property markets across Australia.

Through research, they were able to find assets that will provide good cash flow and significant equity over a short period in areas which have yet to see a high level of competition that is present in bigger markets.

These properties ended up giving returns similar to his Sydney property but the cash flow is certainly better.

Once again, the success of this strategy is owing to his willingness to ‘burn the shoe leather’ and do due diligence.

“You've got to love it. I spend hour after hour reading nearly every article to do with property, looking at all the stats on 10 different websites. You won't be able to do that for long-term unless you love it,” Mr O’Neill highlighted.

Professional relationships

The best and worst performers in the couple's multi-property portfolio are often determined by the quality of team that they have at the time.

One of the properties that performed poorly in terms of cash flow is an asset in Happy Valley, Adelaide, where Mr O'Neill and his wife have limited professional contacts.

According to him: "Contacts are a big thing—having a rental appraisal that's correct, trusted maintenance guys, and having a good building report."

After the purchase, it turned out that they needed to spend another $15,000 to make it tenant-ready. Moreover, the rent was 20 per cent lower than what he thought they would get.

"On top of it, the Adelaide market, it's pretty lukewarm, there's not much going on growth-wise… I think rents go for $410 and I paid about $340k for it, but the maintenance killed me on that one," Mr O'Neill added.

In contrast, the jewel of their portfolio, which is a medical centre in Perth, was acquired through an off-market deal with a trusted agent.

The couple paid $680,000 for the property and it rents for over $100,000 a year. An additional tenant will add an extra $15,000 on their annual income soon.

The purchase of their second best property, a block of five units in Port Macquarie, was also overseen by multiple professionals. They hired a builder to inspect the property and, knowing that they would use strata titles, the couple also brought in a professional specialising in strata titles to help them negotiate. Shortly after they bought it for $710,000, the units are now worth $230,000 each.

Beyond acquisition, a reliable team of professionals also helped Mr O'Neill and his wife manage their portfolio.

Back when they only had 10 properties, the couple opted to self-manage all of their assets—a decision that led to multiple 'tenant misfortunes' no matter how much time they spend on securing each of the property.

From then on, they started to appreciate the value of professionals in every stage of their investment journey. All of their assets has since been under the care of professional property managers.

This strategy has helped them focus on expanding their portfolio and learn more sophisticated ways to create wealth. Ultimately, having professionals back you up is worth its weight in gold, according to them.

What's next?

Right now, the couple has been enjoying the benefits of their portfolio by travelling in between buying more investment properties.

They're currently looking to buy assets abroad, but not without studying the markets, which would be totally different than the Australian markets they have navigated for almost a decade.

While studying markets overseas, Mr O'Neill and his wife also plan to continue buying one to four property every year, usually around December to avoid too much competition.

After units, houses and subdivisions, they are now keen to explore the commercial market even further.

According to Mr O'Neill: "Imagine a Thai restaurant that's in front of a major shopping centre—there's going to be tenants there for the next 50 years. People have got to eat. As long as the population grows around it, there's going to be people continually needing that spot. They're the types of commercials I've been targeting—office space, some kind of industrial stuff."

Their ultimate advice to budding investors: Break down the numbers.

Mr O'Neill said: “I see so many people buy because their uncle said, ‘Buy this area because I feel like it's going to grow,’ and that's it. They make decisions on purely growth without looking at the PNL [profit and loss] statement—what's the cash flow in and out. They kind of predict things around population growth.”

"Instead of buying with emotions, look at the cash flow in and out, then predict things based on population growth and other growth drivers."

“Just break the numbers down in every way—that's how you can reduce risk,” he concluded.

The information has been sourced from Domain and the Smart Property Investment website.