Secrets to building a $12-million portfolio: Lloyd Edge
Investor Lloyd Edge has successfully built an 18-strong property portfolio with assets spread across three states, now v...
Despite the softening of the major property markets across Australia, smart investors continued on their wealth-creation journey, keeping in mind that property investment is a long-term commitment. How did these investors find opportunities in today’s changing market?
Apart from building a property portfolio with his business partner Phil Tarrant, Smart Property Investment’s Alex Whitlock has decided to build his personal portfolio in order to pay down his mortgage.
With the help of buyer’s agent Paul Glossop, Mr Whitlock sought to take advantage of property ‘as a long-term opportunity to build wealth, grow equity and generate cash flow.’
Over the past three years since he has made the decision to create a separate, personal portfolio, the property investor continues to see property as a unique opportunity, despite the uncertainties brought about by the softening of some major property markets, particularly Sydney and Melbourne.
How did his portfolio thrive through the ebbs and flows of the property market?
According to Mr Glossop: “We did have a bit more of an emphasis on opportunities or properties with an opportunity for above-and-beyond growth. That does not necessarily mean that we decide that the suburb's going to go above and beyond anything else in the market, but the properties within those market should be within the KPIs that we set out.”
Mr Whitlock highlighted: “It was looking at properties that offer options moving forward. They have a position to grow for good fundamentals—it’s not always about immediate things. We look at blocks of land, the properties on there and, ultimately, the scope to develop or to enhance, one way or another. That was the remit when we went into this,” the property investor added.
Ever since he started buying properties in 1998, Mr Whitlock continues to believe on real estate’s ability to generate long-term growth.
“I've seen a number of market cycles go through and, regardless of where we're at at the moment, I still fundamentally believe, that property is a long-term strategy. It is something that, for me, over a number of cycles, has always given me greater returns than any other type of investment,” according to him.
Over the past decade, the property markets of Australia has undergone major changes, particularly in the capital city markets.
According to Mr Glossop, between 1990 and 2000, most major markets have seen astronomical growth, which was followed by stagnation between 2002 and 2008, particularly across the markets of Sydney and Melbourne.
Despite the softening of the markets, smart investors knew that it has not dented their ability to continue investing by looking at other, more lucrative markets.
Their secret? Simply going back to the fundamental of property investment.
“The focus is on assets, which should be fundamentally strong assets over the long term, and cash flow. Cash flow is going to be a really important component in what's going to drive the interest of investors over the next three or four years,” the buyer’s agent said.
Mr Whitlock highlighted: “If you're looking to get into the market, if you haven't got into the market just yet, there are opportunities to get into the property market outside of some of the centres or the focal points and the big capital cities. If you can access $60,000, you can be in the market and you can start getting growth on your money immediately.”
“It might not be going up 10 per cent every year, but as soon as you're in a market with a well-purchased property and you take a five-, seven- or 10-year view, that growth can begin from the outset.”
At the end of the day, despite the doom-and-gloom headlines rampant across the media, Australia continues to be a strong economy, providing several wealth-creation opportunities to investors who know just where to look and what to look for.
According to Mr Glossop: “We go back to the fundamentals of this country and we are looking very, very stable. We've got five-year interest rates. Interest in money is not going anywhere. The cost of money is not going anywhere. Anyone who's fearing price hikes of two or three per cent is going to be waiting a long, long time.”
“We've got population growth of close to two per cent across the country. We've got unemployment dropping, and most likely, by this time next year, it's going to be the lowest level it's been in over a decade. We've got extremely strong infrastructure plans slated and paid for. We're looking good."
Beginning to build a property portfolio three years ago, at a time when the property market was starting to change, naturally presented unique challenges to Mr Whitlock and Mr Glossop. However, the conditions of the market did not alter their long-term investment strategy.
For the property investor, it was all about patience because, despite the ups and downs across the market, the cycle will always continue.
Mr Whitlock said: “In terms of where we're at now, cutting aside the noise in the media, we're just in a normal market cycle.”
“I bought off-the-plan apartments in the Southbank in 1998. They were not necessarily the best purchase to be made at that particular time. I'm sure there were properties that would've given me a better cash return, but because I was patient, I bought a number of them.
“They all went up in value because I didn't react to immediate market conditions. By the time I sold them, I have doubled my money on all of them. All because I was just patient.”
His advice to fellow investors: Try not to get too excited by boom markets or too discouraged by doom-and-gloom headlines because, at the end of the day, success will come down to their personal goals and long-term strategies.
Success in property investment is not dependent on market conditions, but on the way how investors swim through the waves.
“I try not to get too excited by boom markets and I certainly don't get too downcast or concerned about flatter markets and even potentially declining markets, as long as I’m well resourced and I have good cash flow for when things are a little bit slower, because it’s about long-term goals and long-term gains,” Mr Whitlock concluded.
Tune in to Smart Property Investment's portfolio update to know more about the strategies used by Phil Tarrant and Alex Whitlock to thrive in a changing property market.