Two years after starting his property investment journey at the age of 18, Jack Henderson now holds a property portfolio worth $2.5 million, with assets spread all across Sydney suburbs that are expected to be gentrified in the near future and knows where to look to stay ahead of the curve.
The young investor’s properties are located in two eastern beach-side suburbs—in Bondi Beach, and in Maroubra, which is about “four to five beaches down” from Coogee and referred to as “the Mount Druitt of the eastern suburbs”. One of the main reasons why he chose to invest in the said areas is their gentrification, which would increase the properties’ potential to go up in value over time., near
“If you look at Bondi and ... you actually move further down the beaches … you can see now [that] it's starting to move,” he said.
The increasing demand for properties in these suburbs will make way for increased rental prices and growth in yield, according to Smart Property Investment’s Phil Tarrant.
Jack, together with property professionals Steve Waters and Victor Kumar, shares the importance of studying locations carefully when investing and how property investors can benefit from being “one or two suburbs ahead”:
What was the trend in Coogee and Maroubra when you decided to invest in properties there?
Jack: It started off at Bondi and North Bondi and then when that got unaffordable for the average Joe, they moved down a beach and then they moved down a beach [further] ... Now, [even] Coogee is ridiculously priced … Then, from Coogee, you can only go to South Coogee and Maroubra, and that's the end. So, I think, from Coogee, it'll [just] move down to Maroubra.
Are beach-side suburbs considered good locations for investment?
Steve: This is the dynamic that you see in markets right across Australia, as in beach-side markets—it's about suburbs that surround really attractive, gentrified suburbs slowly through the change … It's about being one or two suburbs ahead of where this flux is going to come to.
Why should property investors strive to be “one or two suburbs” ahead?
Victor: That way, you're not paying a premium and you are waiting for the change to reach your suburb. Of course, you don't want the change to be too far out. You need to actually start seeing those signs there first before you actually jump in, otherwise, you may be holding for long-term, waiting for the change to come.
Is there a way to know which suburbs will be affected by gentrification?
Phil: That's a bit of an inexact science—if it's going to be [a] sentiment, it's going to be data, it's going to be spotting that trend … [and] local knowledge.
Do you manage your properties all by yourself?
Jack: No I don't, I've got a property manager … [He is an agent and] we got along really well. He helped me a lot, too, because … [when I was] buying my first property, I was nervous to say the least and he helped me through it a lot. We got along really well and then I just said, ‘Alright, I'll give the management to you’ and it hasn't been vacant for a week—as soon as someone moves out, someone moves in the next day.
You talked about being nervous for your first purchase—how bad was it?
Jack: Not so much the dollars, the dollars didn't both me at all … The big thing, and especially with the Asian suburbs, I was an 18-year-old kid walking into these places [with] all these agents… and I was asking questions ... I was really nervous about [it] because I was an 18-year-old kid [looking] at these people in their suits and driving their Mercedes Benz out the front ... I thought, ‘What am I?’ and that's honestly how they looked at me, too. They were like, ‘What are you doing here?’ So, I found that really tough and I looked through … 50 or 100 properties over six months, every weekend.
Have you gained confidence now to move forward in your journey?
Jack: I've got more confidence but there's still something about them … The market's been so good, it's like if you don't buy it, someone else will come in after you and buy it. That's the sort of way I look at it.
What’s your long-term plan?
Jack: This is just good money, for now, and once the portfolio's at a max and the banks won't lend me any more money, I think I'll move into the buyers, not missing any opportunities.
Tune in to Jack Henderson’s episode on The Smart Property Investment Show to know more about the gentrification of a suburb, buying before content, and what your list of priorities should be for a new property.