Our Portfolio

Finding properties that will ‘outperform the market’

By Bianca Dabu
Property

After successfully growing a $6.15 million-worth property portfolio from scratch since August 2011, Smart Property Investment’s Phil Tarrant and his team are moving on to reach greater goals through more sophisticated strategies.

Phil started his property investment journey purchasing “boring assets” which gave him sustainable cash flow and lending capability, as well as a good potential to refinance.

“[These are] foundation-type properties… [which] suited our strategy thus far. [It’s] buying under market value properties in affordable areas where we can manufacture equity through renovation, or just by buying well, and it doesn't cost as much to hold them. That's what we've been doing,” he shared.

These foundation properties have enabled the property investor to get to the next level of his journey, according to his buyer’s agent Steve Waters.

At this point, Phil and his team are starting to look for portfolio additions—assets that have “a bit of X factor”—and just recently, they have managed to secure a block of units with five two-bedroom units in the north of Brisbane.

“A block of units in entirety… 25 minutes to the [central business district] of Brisbane… and returning… 7.1 per cent yield, which in anyone's terms is just fantastic,” Steve said.

Phil explained further: “All of these properties are strata’d, so it means that they all have their own title but we control the lot because there's no one else on these properties… There are five properties within this block of land all individually owned now by us.”

This type of real estate asset could be hard to come by because aside from its steep price, every investor, especially the ones who are looking for a 10- to 15-year play, wants to acquire the same asset.

In fact, according to Steve, the entire complex of five units hit the market at around midday, and by 12:10, “we had all but done and dusted the negotiation.”

Why buy a block of properties?

Phil and his team are now after assets that could add to their cash flow position, and with each of the properties in their newly-secured block renting at $275—with a total of $1,365 and $70,980 combined rent—it’s safe to say that they have made the right decision.

Aside from metropolitan Brisbane’s being close to good infrastructures, there are a lot more big-ticket projects that are due for completion in the next three to four years, making the area a prime spot for investment.

“With that structure comes jobs, comes population, comes a demographic shift… and this complex of units is well-positioned to take advantage of that in the future. In the meantime, we're going to enjoy 7 per cent yield,” Steve said.

Phil added: “There's some big infrastructure projects happening up and around this part of Brisbane, which will see not only an increase in the demand for rentals but will actually put a lot of price increases also.”

Outperforming the market

This “upgrade” in portfolio addition could not have been possible had Phil and his team failed to create a good equity position through the foundation properties they have initially purchased.

“We've been able to create this good equity position where we have [the] capacity to draw down on this portfolio. We're currently at 64 per cent LVR, so we're going to have to pull some cash out of it, which will take our LVR position to about 66 per cent... [adding] about another 800 grand of debt into the portfolio,” according to Phil.

He believes that their equity position will remain stable because “what we're pulling out, we're putting back in,” and since the asset is located in a prime location, good growth is pretty much guaranteed for in the next 10 to 20 years.

For Steve, the key to their success from now on will be finding properties that could outperform the market in the long run.

“This [new asset] will because we've bought it right… under market value [and] it's got the cash flow to support it, [as well as] the infrastructure that's not just already there, but there's a mountain more going in which will perpetuate the value of the area,” the buyer’s agent explained.

“Then we've got this net migration numbers from the southern states [because of] big lifestyle change—three times bang for your dollar in terms of the house, and perhaps more opportunities… We're starting to see those numbers climb.”

Tune in to Phil Tarrant’s portfolio update on The Smart Property Investment Show to know more about his acquisition costs, “boring” assets, risk mitigation, cash flow management and yearly income, as well as the inside scoop on a new property that could take the team’s investment strategy to the next level.

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  string(5) "18297"
  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
  ["alias"]=>
  string(72) "mortgages-in-a-tighter-lending-economy-and-why-brisbane-is-a-good-option"
  ["introtext"]=>
  string(255) "

Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

" ["fulltext"]=> string(818) "

To hear more about these services, make sure to tune in to this episode of Property Showcase!

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

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

    \r\n
  • The pitfalls that he has seen people get into<\/li>\r\n
  • Interest only loans and if that is the way to go<\/li>\r\n
  • How the mortgage division supports the overall business of Rethink Investing<\/li>\r\n<\/ul>","clientImage1":"images\/podcasts\/Son-Pham.jpg","clientUrl1":"https:\/\/rethinkinvesting.com.au\/","clientName2":"OpenCorp","clientDesc2":"

    Whether it\u2019s building a successful property portfolio or investing in one of their Development Funds, Open Corp can help you through every stage of your investment journey. The team has 40 property specialists who collectively have been involved in over $4 billion worth of property transactions and the acquisition of more than 8000 homes and investment properties.<\/p>\r\n

    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

      \r\n
    • Why Brisbane is a good investment option right now<\/li>\r\n
    • How he wants to help clients take advantage of the current market<\/li>\r\n
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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

" ["fulltext"]=> string(2483) "

In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1183 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

" ["fulltext"]=> string(2323) "

Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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