A message for disheartened property investors: ‘Everything moves in cycles’

A message for disheartened property investors: ‘Everything moves in cycles’

By Bianca Dabu
buying property with super, buying property with equity

After more than a year since he was able to build a six-property portfolio, Julian Lancey found himself hitting a wall—unable to grow his portfolio because he has pushed his servicing capacity to the max. Is there a way out of this predicament?

Julian basically had been refrained from buying any new property in the past 18 months.

“I've gone to banks, I've gone to brokers, and the restrictions that they've placed on investor[s] in th[ese] past couple of years … have basically made it impossible for me,” he said.

In order to keep his property portfolio afloat, he has refinanced and pulled a bit of equity out of his assets. However, he admits that, as a property investor, it’s frustrating to watch others buying assets while he’s made to sit on his hands for quite some time.

Refinancing for equity

According to Smart Property Investment’s Phil Tarrant, many property investors go through this phase, but if you were able to build your portfolio with good properties, they will most definitely go up in value for as long as they stay in the market.

Most of Julian’s investment properties are in the city—Potts Point, Darlinghurst, Northern Beaches and Western City—and their values have “gone crazy” since the time they have been bought.

Julian shared: “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 … and to turn 40 and think, ‘Oh wow, I've hit a million bucks.’ ”

As good as it sounds, Julian can’t see himself retiring just yet because he still carries the same passion and hunger for property investment that he had when he first started in the business of creating wealth through real estate assets.

“I would buy if I could buy [but] I can't, so what can I do? I've done different things—I've renovated, I've fixed this [and] that, I've refinanced—I just can't get another one,” Julian said.

‘Everything moves in cycles’

A lot of property investors find themselves struggling to get financing at some point in their journey, especially after banks have elevated their serviceability requirements

Phil said: “These are all mechanisms that have been put in place … by APRA, the Prudential Regulation Authority, to try and slow down investor lending and I think by doing that, they're going to slow down the property market and make property more attainable for all Australians.”

Despite this challenge, investors will do well to remember that “everything moves in cycles” and the walls will most probably won’t stand strong and tall forever.

“The dynamics [of] the marketplace is in response to perceived—some would say actual—unsustainable rampant increases in property values … There's been a lot of people in the market buying property who perhaps shouldn't be [buying] property, who are redlining it,” Phil explained further.

According to Julian, he wants to continue to seek and create opportunities to manufacture wealth through property because, for him, “there’s no better investment”. After all, he aims to provide financial security and stability not just for himself but, more importantly, for his growing family.

Phil’s advice to him: “Things move in cycles … so [there will] be a point in time when the banks are able to take the handbrake off some of the way[s] in which they lend … Banks want to lend money. That's how they make money.”

“Markets change—today's market isn't tomorrow's market—[and] we're fortunate that, as a nation, we have a strong property market, we have strong banks,” Phil said.

“I hope if I can ... [get a] couple more places because I don't want to lose that desire. Buying property has been one of the best things in my life. I love it,” Julian concluded.

Tune in to Julian Lancey’s episode on The Smart Property Investment Show to know more about the challenges he endured when renting out his investment to drug addicts, the importance of landlord insurance, and his insights on how to avoid making the same mistake.

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Bianca Dabu

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A message for disheartened property investors: ‘Everything moves in cycles’
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