Our Portfolio

Should you buy properties in bulk?

By Bianca Dabu
Buy properties in bulk, property investment, investing, house property, rental market, property market, real estate, investment strategy

Smart Property Investment’s Phil Tarrant has recently bought a block of five properties, each having their own individual strata titles—a strategy that makes financing easier and provides multiple exit strategies, but is it actually worth all the risks and costs associated with it?

According to buyer’s agent Steve Waters, operating an entire block of units as five separate properties entails higher costs because five titles mean “five council rates, five water rates, so on and so forth”.

However, he said, “At the end of the day ... if that's the worst thing, then that's quite okay.”

Phil agrees that the benefits of these unique real estate property far outweighs the risks as well as the additional costs that he may have to deal with. After all, financing becomes easier since it ceases to become a commercial deal after it was bought on separate titles, meaning, the property investor can spread the loan onto different lenders. 

The set-up also makes it possible for multiple exit strategies should he decide to sell one or more properties from the block in the future. These advantages are all due to the simple fact that the block of properties is located in “a hub for economic growth and development”.

“This location ... Lawnton, it's attractive [because] there's the train line that heads north from [Brisbane] … It's one station from Petrie, and Petrie's going to be the hub for the new university campus,” according to Phil.

Knock-on effect

The big campus being built near the block of properties will bring a knock-on economic benefit because, aside from the students coming in, jobs will also increase—from professors to all the ancillary staff.

Moreover, being mere minutes from the airport, shopping centres, and other major establishments also makes the properties very “liveable”—one of the most important keys to maintaining demand. Being built in an area where multiple dwellings in a single block are allowed also makes the investment more sustainable.

As attractive as the individual houses are, the block also provides more wealth-creation opportunities. Since it sits within the urban neighbourhood zone, there is a potential for medium- to high-density development along the way—should Phil and his team want to do it, they can build a four- to five-level apartment on the block.

According to Steve, the 1,000 square metre-block is, basically, “the future”.

He explained: “Right now, we're controlling good income. 7 per cent … On its own two legs, as it stands today, it's a really, really good asset.”

“We could just go, ‘That's it’, and we just keep this block for ever and just generate good yield … wait for it to go up in value. It will go up in value, it will be pulled up in value as that market climbs,” Phil added.

An asset that ‘doesn’t come around often’

The property investor and his team have spent seven years planning and preparing for this purchase, and they could not be happier to have hit the ‘sweet spot’.

According to Steve: “The reason that they're in such high demand is because it's a five-plex, sits in that sweet spot in terms of who wants it. For the mum and dad investor, as such, it's just out of their reach.”

“For the big players in town, well, it's not really big enough for them. It's in that no man's land for established portfolios like yourself where you can have a good go at it.”

For $1,000,000, both Steve and Phil consider the asset well-priced despite the financial complexities of purchasing one block of five properties on five separate titles.

Steve explained: “The value was in the eye of the beholder … Did we get it cheap? I believe so. When something's priced accordingly, one of the good indicators ... is how much inquiry? How many people were waiting for you to fall over as a purchaser from the real estate agent side to be able to mop up? Or take over your contract, so to speak.”

“When we've got something at below cost of replacement, that ticks the first box; when you've got a yield of 7 per cent, ticks the second box; when you've got the infrastructure and the fundamentals, which we all talk about and we all know ... that ticks another box as well.

“It's got all the right ingredients. Time will tell as it always does, but you're off to a good head start.”

Tune in to Phil Tarrant’s portfolio update on The Smart Property Investment Show to know more about the benefits buying in bulk, the purchases fundamentality for the portfolio, and the opportunities it will bring as a hub for economic growth and development. 

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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  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!

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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
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    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
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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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