Login
How manufactured growth took one investor’s portfolio from zero to $10m+
With sentiment weakening and buyers fleeing the market, one investor has shed light on the strategy that saw him reach a $10 million property portfolio by manufacturing growth
Over a 10-year investment journey, Adam Beasley has created a property portfolio worth in excess of $10 million and achieved financial freedom.
Strategic Brokers founder Hung Chuy said in the How I Met My Broker podcast that while many investors strove to achieve the goal through market-driven value growth, Beasley took matters into his own hands.
He said that by leveraging the skills he developed over his career as an electrician, Beasley managed to drive growth in his properties while strengthening their yields.
“That was probably key to allowing him to be where he is today,” Chuy said.
In the current state of the market, Chuy said there was a significant opportunity for handy investors to take advantage of the downturn and purchase assets at a discount.
“These are the times when you should be sweeping in and taking advantage,” he said.
“Construction prices are at an all-time high, but somebody who has a bit of craft in the trade can see beyond that, and that’s what Adam has always been good at.”
Subdivision, an investor's friend
Beasley said a major tool for his portfolio's growth was subdivision, which he used several times throughout his journey.
By targeting blocks with sufficient land size to add an extra dwelling and then subdivide the land, Chuy said investors could see a significant boost in value and yields.
He said the original house would continue to be valued close to its original price, while the added dwelling would boost both equity and revenue.
“If you could subdivide for a second dwelling, that is where you’re going to get a massive uplift,” Chuy said.
“Because now you’ve got two properties, sitting side-by-side, and they’re classified as individual houses. The more bedrooms you can stack in the second house, the more the valuation will stack up.”
Additionally, Beasley said that knowing he could carry out the work to manufacture equity himself enabled him to target properties that may have been less attractive to other investors.
He said that owners could add significant value to their property in a variety of ways, from performing minor works in the bathroom or kitchen to adding additional accommodations through a granny flat.
“If you can work with your hands, great, you can go and find a property that’s in need of a bit of love,” Beasley said.
Lessons learned throughout a ten-year journey
Manufacturing equity has been a priority of Beasley’s investment strategy from the very beginning, with major renovations to uplift the value of his first property, a fixer-upper he purchased for $265,000 in 2006.
“Mum and dad, they’re not from a trade background at all, and they were like, “Mate, you’ve got rocks in your head; what are you doing?” Beasley said.
“But they backed me, and with just a bit of elbow grease, I pulled out the kitchens and bathrooms and did the renovation.”
He eventually added a granny flat, and within a few years, Beasley’s property had seen an uplift in value that allowed him to draw out equity and make his next purchase, this time in Newcastle.
When he first began targeting assets in the Newcastle region, Beasley said he would relate certain areas to their Sydney equivalent to inform his decision-making.
Growing up in Western Sydney, Beasley saw similarities between the expansion of the M4 freeway and the Hunter Expressway in Newcastle and predicted that areas along the transport link would likely see their values climb.
“That’s where I figured that was going to be a growth corridor, with easy access back to Newcastle. So I started picking up properties out there,” Beasley said.
Similarly, he said Newcastle East was comparable to Sydney’s Bellevue Hill, while Stockton and Manly shared many of the same characteristics.
Despite achieving financial freedom, Beasley said his investing journey was not finished, and he was actively targeting upgrades in the current market.
“If you are getting a 5 per cent discount of $3 million vs a $1 million, you are making a bit of arbitrage there,” Beasley said.
Listen to the full episode here.
Want to see more stories from trusted news sources?
Make Smart Property Investment a preferred news source on Google.
Click here to add Smart Property Investment as a preferred news source.