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BLOG: Keeping it realistic with your portfolio, for tenants and you

21 JUN 2018 • By Phillip Tarrant • 3 min read • Investor Strategy

Looking at both a tenant's and my end of the portfolio, it’s important to keep both ends of things simple and realistic, and here’s why.

PHIL BLOG

One property we have in Cambridge Park, it’s a great property, we’ve renovated it, it’s a very family-orientated area, a stone’s throw from Kingswood or Penrith.

It’s still on $650,000. That’s a lot of money, right, and people say affordable, but a lot of them say unaffordable.

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At the end of the day, we say the affordable areas, but we’re saying, these are the areas that your average Australian family will be buying property now, and definitely into the future. For me, it’s the great places to be.

There’s going to be greater demand for these type of products, than what there is demand for, and we’re recording this looking out over Neutral Bay at the moment. There’s going to be a greater demand for those properties out in the west, than what it will be here in Neutral Bay — purely because of the number of properties, but also the ability for people to build a home, build a family, build a life in these highly attractive areas of Sydney, which are only going to get better and better.

 
 

Affordability is not just the buying price as well, or the cost of purchase. It’s also about how much it is to rent. Because not everybody is going to own property, and there are going to be people that just rent, and they might be a rent investor, for example.

I’m also happy to report that our cash position is, it’s probably 20-odd per cent improved from where we were a year prior, with the portfolio having a net growth of 39 per cent. The net result, however, is that it’s costing us in hard cold cash $46,000 a year to hold this portfolio.

We haven’t tried to paint a really nice picture here. That’s the real numbers. They’re the real numbers. Numbers are numbers, at the end of the day, and the numbers are very good.

We can all sit around here and pat ourselves on the back and so on and so forth, but it’s about what we do from here going forward. Buying the property, or actually creating the portfolio to begin with, is actually relatively simple — it’s about controlling it and giving yourself longevity.

Part of that is the cash flow, and I have talked about it before on the Smart Property Investment Show. I have talked about some of the ways that we can arrest some of the cash flow negativity, shortfall, and, more importantly, do so over the next, probably, six months.

The thing is that, during conversations with my financial team, I said to them: “Okay, let’s not do anything from here on in, let’s not touch it, let’s not do any refinancing, let’s not buy anything. Let’s just manage it well, so make sure we keep our interest rates competitive and keep our rents competitive.”

At the end of the day, it’s a good portfolio and it’s performing well.

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RELATED TERMS

Property
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.
Tenant
A tenant, also known as a renter or occupant, is a person or entity that leases space for residential or commercial use.
Phillip Tarrant

Phillip Tarrant

AUTHOR

Phillip Tarrant is executive editor – Real Estate at Momentum Media. He is also an investor with a large property portfolio.

He leads the content strategy and corporate growth for a range of market and business intelligence platforms at Momentum Media, including Smart Property Investment – the authoritative voice for Australia’s property investment community.

As head of the Smart Property Investment Podcast Network, he also steers the largest network of property podcasts in Australia, which collectively generates nearly 2 million downloads every year.

There are over 2.6 million investment properties in Australia, with over 2.1 million Australians (or around 8 per cent of all Australians) owning one or more investment properties. A vibrant and critical sector for creating wealth for Australians, the property investment sector is expected to remain a pillar to the national economy.

For nearing a decade, under Phillip’s stewardship Smart Property Investment has been informing and educating property investors on the tactics and strategies to create wealth through property.

Trusted by over 100,000 Australians each month as the turn-to independent resource for property market insights and information, the brand supports the mantra of "for investors", by investors’, drawing on the unique position that Phillip and Smart Property Investment share, warts and all, its own journey through property.

The Smart Property Investment Show, part of the Smart Property Investment Podcast Network, is one of Australia’s most popular podcasts, forming the keystone of an integrated digital platform delivering daily property updates, live broadcasting, insights, opinion and data to property investors across the nation.

Underpinned by a content team universally recognised for their knowledge of the sector and approach for clear and concise communication, Smart Property Investment has become a central part of Australia’s property community.

About Momentum Media

Momentum Media is a leading media and market intelligence company, and the business behind Smart Property Investment, REB and RPM.

Guided by a strong sense of purpose to support our communities, Momentum Media has forged its place as one of Australia’s most influential media and professional development businesses.

We have been equipping Australia’s corporate, investor and SME sectors with market and business intelligence for over a decade.

Across an integrated business supported by digital, events, broadcast, research, print and social platforms, we are guided by the purpose: Be Better informed.

This passion for informing, educating and inspiring drives us to build more engaged communities, delivering greater leadership to the markets we connect to and forging closer relationships with our audiences.

Being at the forefront of media innovation, backed by a pioneering spirit, has been central to Momentum Media’s growth.

We’re an evolving, forward-thinking business based on a purpose that supports corporate Australia and the markets critical to our nation’s economic prosperity and security. We’re also focused on delivering exceptional value to our commercial partners.

We adapt on a daily basis to rapidly changing market places; we’re a fluid media business, unanchored to any particular technology, channel or tone of communication.

With a reach spanning nearly 2 million professionals, high-net-worth individuals and SME business owners, we’re connected to the rapidly changing preferences and attitudes of our communities – and we’re making a positive contribution for our communities to thrive.

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