After years of investing in properties, Julian Lancey found himself unable to secure financing for his next purchase. However, being smart about building his six-property portfolio helped him generate $1 million in equity and saved his portfolio from crashing and burning.
Before facing serviceability issues, Julian was buying property after property in the city, cutting costs by self-managing, utilizing his own handyman skills for minor repairs, and investing in small-sized units. He even sets up the furniture in each of his investment properties to increase its value in the short-term rental market.
Julian told Smart Property Investment: “[All my properties are] in the city … Potts Point … and Darlinghurst … and Northern Beaches and Western City … I'm just buying whatever I can, getting as much as I can.”
The property investor shares how buying in good locations has kept his portfolio afloat as he works his way towards being able to secure financing once again and buying his next investment property:
Is your portfolio positively geared at a gross level, before the consequence of tax?
Julian Lancey: Yes … [All of my properties are positively geared] except for one … which is my one in Western Sydney … It's in Baulkham Hills.
Why did you invest in Baulkham Hills?
Julain Lancey: To invest in Sydney, [and because of] the Northwest rail link—[it is the] one and only reason I thought this is going to be awesome.
I would love to [move out there]. I really would. I probably would have never thought I would say that when I was born and bred in Manly, but it's the best life. It's the best life out there.
Is the property a house or a unit?
Julian Lancey: It's a unit. It's a really big one, [with] three beds … I've renovate[d] that, too. I put floorboards in and painted it.
How much did you pay for it? Has it gone up in value ever since?
Julian Lancey: That was [worth] $550,000 … four years or so ago … It's gone apeshit again—[now it’s worth] $800,000 something.
Have you done well in Baulkham Hills?
Julian Lancey: It's gone crazy—what a beautiful area … I am so excited about that new rail line. I go to bed with brochure under my pillow every night thinking about it. I love infrastructure, but most of all, I love the Northwest rail link. I am so excited.
It goes all the way up the top, and then it's going to come down to Chatswood, and then there's going to be a new tunnel, so to speak, that's going to go through the [North Sydney].
Is it generally wise to invest in capital cities, or has any suburb in Sydney gone down recently?
Phil Tarrant: Certain pockets. I think if you're buying mansions around Rose Bay, I think some of them have sort of come off a little bit, and maybe some Palm Beach residents. But you're talking the top end of the market where if someone goes down a million dollars, it's like a percent or two. It's all relative.
I think most people who have invested in Sydney over the last five years or have held property in Sydney for at least five years, have at least done pretty well.
In the 18 months that you have not bought anything, have you seen an increase in value in your portfolio?
Julian Lancey: Yeah, definitely. It's gone crazy … I can honestly say, I'm not very good with statistics … but I just turned 40 a couple of weeks ago and if I sold all my properties, I'd be a millionaire.
That's a wonderful feeling to know—that in my life I've never been given anything when it comes to handouts when it comes to family or government, or stuff like that. To turn 40 and think, ‘Oh wow, I've hit a million bucks,’ that's a big [achievement].
What would be your best advice for budding property investors?
Phil Tarrant: You invest in property in areas which have got the basic fundamentals to drive positive price increases … [Time will grow] your portfolio … If you go back to the fundamentals and if you're investing in the right places, you're probably going to do okay in property.
Julian Lancey: Infrastructure, [transportation and accessibility], close to cities or a hub … near the shops, yeah.
Do you believe investors who have hit a wall can still continue their journey?
Phil Tarrant: There's lots of people [getting it] hard … but markets change and today's market isn't tomorrow's market, so we're fortunate that, as a nation, we have a strong property market, we have strong banks … a strong economy, and a strong prudential oversight who are looking at these issues and making sure that, as investors in a nation, we're not building anything that's going to burst too much.
Embrace change, it's a great thing.
Tune in to Julian Lancey’s episode on The Smart Property Investment Show to know more about the challenges of the market dynamics that he faced, how he tried to overcome the restrictions placed on him by renovations and refinancing, and why he thinks “property is the best”.