After acquiring nine properties in four years, investor Arjun Paliwal decided to diversify his portfolio even further by making his next purchase abroad. Find out how he plans to go about this next stage of his investment journey:
At 26 years old, Mr Paliwal has enjoyed significant returns on his investment properties, which are spread across NSW, Queensland, Tasmania and Victoria.
The next step in his wealth-creation journey is to continue investing outside his backyard – this time, in property markets overseas.
“I will just keep going with the formula that’s worked. Trying to find assets where it can balance a bit of that cash flow and capital growth, then just really going outside the backyard – I’m taking backyard to different states and different countries and really add an element of different types of asset.”
“I’m lining up to purchase in the USA at the moment. I would also be cashing up from the business front and focusing it on either adding a few more residential properties or some commercial properties,” Mr Paliwal highlighted.
While this new strategy will undoubtedly come with challenges, Mr Paliwal remains confident as he plans to continue engaging professionals along the way.
By engaging professionals, Mr Paliwal can come to understand the property market of the United States, which could be ‘a different beast’ compared to the Australian property market, and ultimately formulate strategies that will help him succeed over the long-term.
According to him: “The same way I got support purchasing property in Australia, I’m also engaging professionals when I purchase in the USA – professionals in the USA, those who own property in the USA and those who understand the Australian space and how the problems we might have here affect what's happening there.”
“The same way I would preach to engage professionals, build your team in Australia no matter how big your portfolio is, I’d do the same as I’m trying to go into a whole new country.”
Once in the overseas market, the property investor should focus on acquiring residential properties first before moving on to more sophisticated types of asset.
“At the end of the day, to me, markets are markets. I just got to be coached on the numbers and understand what’s driving them… and just try to see it like, ‘Okay, can I create a long-term play here?’”
While major capital cities across Australia have been on a downward trajectory in terms of property price growth, Mr Paliwal said that the country’s property markets continue to offer wealth-creation opportunities.
His decision to invest overseas was more about his ability to service additional loans moving forward as well as the potential for return of investment.
According to the investor: “It was a matter of lendings not happening for me this early on in my business journey. I'm getting the itch, like I always need to buy something, but it just doesn't make sense from an ROI perspective to buy cash deals in Australia when we have lending as good as we have it.”
“So, I thought, let’s just wait it out in Australia with funds outside of super to be able to see what I can get here when the time’s right in terms of lending for me.”
“The itch to buy something all the time could be pretty dangerous, especially when you’re new into a business of your own. I find that the earlier phases you’ve got to wait it out until you get those loans from the banks.”
While he waits for his servicing to recover, Mr Paliwal aims to continue growing and diversifying his portfolio – all without overcapitalising or having to take negative impact on his serviceability.
“I believe the USA came up because prices are a fraction in some markets, cash flows are very strong… They are starting to show the foundations of a couple of markets coming alive again,” he concluded.