It is daunting for less experienced buyers to ponder playing with hundreds of millions of dollars to invest in property. Here are some advice for investors with budding property portfolios to overcome their trepidation in order to start thinking big.
Dabbling in diverse strategies and property options has paid off for property investor Chris Gray, whose portfolio is worth around $15 million.
But needless to say, there have certainly been situations where his investment strategy went off the rails, Mr Gray stated on the Smart Property Investment Show, where he outlined his strategies for resilience in order to keep pushing his portfolio sky-high.
Mr Gray said: “I didn’t start off with a $10 million dollar portfolio, I started off with an £80,000 house. It’s just step-by-step. I’m dealing in tens of millions now with these option, things where we’ll be looking at hundreds of millions. Your journey just moves along.”
His first piece of advice is a no-brainer: to invest in self-education before investing in property, which might not be followed diligently enough by all property investors.
Mr Gray explained: “One of the bits of advice I was given by someone before is maybe play with 10 per cent of your portfolio. Also reinvest 1 per cent of your portfolio into your education.”
In the early days of his property journey, Mr Gray invested in a joint venture with an Australian duo in the UK and said “the property went okay” – it went up 50 per cent.
But according to Mr Gray, Sydney had gone up 100 percent in the same year, which he suggested is an opportunity he should not have missed and must learn to foresee.
“So I still made a profit. Is that a mistake? Maybe, maybe not... but I just knew, well, that’s not going to suit me moving forward,” Mr Gray said.
According to Mr Gray, there’s no such thing as a perfect portfolio. At times his cash flow has been neutral, other times it has been down $300,000, he said. “[At the time] I was going through the GFC, I think my portfolio was maybe $10 million or something, [so] I was losing $300,000 a year.”
He continued: “But at the same time, that... is [a] 3 per cent loss, which is 2 per cent after tax. So my bet is, do I think the property market’s going to grow more than 2 per cent? Yes I do. I just then need to have the cashflow to hold on.”
Mr Gray also mentioned that he has recently raised a $1 million fund to do some property options, in order to embark on a “completely different strategy, something completely on the side”.
He continued: “It’s daunting for a first home buyer, saying, ‘Oh, these guys are talking big numbers’, but it’s just another zero.”
“That’s what I’m learning. $1 million is just another zero. You then do $10 million, $100 million and it’s just zeros, but the percentages are the same thing.”
Word for word, Mr Gray said that refinancing is one of his most dreaded options as a property investor with a $15 million strong portfolio.
Mr Gray added: “You think you’ve got problems on one property? You try and owe the bank $10 million or $12 million, and then you’ve got a problem.”
In order to mitigate against any losses incurred as a result of this year’s royal commission recommendations, Mr Gray is going a step further, by dabbling in the complex realm of mortgages.
He said: “The banking commission’s after people like me. So now we’re trying to set up our own mortgage fund.”
Understandably, most investors might not even desire to reach a level of property expertise where they would benefit from taking such a step.
But Mr Gray’s story is a testimony to property investor perseverance, stepping out of the comfort zone in order to achieve the best outcome.