{"id":37159,"date":"2022-02-28T12:26:32","date_gmt":"2022-02-27T23:26:32","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=37159"},"modified":"2022-02-28T12:26:32","modified_gmt":"2022-02-27T23:26:32","slug":"property-portfolio-is-an-innings-built-on-sensible-batting","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/property-portfolio-is-an-innings-built-on-sensible-batting\/","title":{"rendered":"Property portfolio is an innings built on sensible batting"},"content":{"rendered":"

PHOTO: Affordable properties have been the bedrock of Mr Kumar’s property investment strategy<\/strong><\/p>\n

REPUBLISHED WITH PERMISSION – API MAGAZINE<\/a><\/p>\n

The past few years have been a rollercoaster ride for property investor Mahesh Kumar.<\/p>\n

He has rapidly built a portfolio of ten properties but only two years ago he had lost his job, taken a heavy hit on the stock market and was forced to sell his family car.<\/p>\n

For the married father of two young children, the pandemic years had wrought havoc on his financial plans and his family\u2019s financial wellbeing.<\/p>\n

But like a cricketer whose team is on the ropes, Mr Kumar came out swinging.<\/p>\n

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\u201cI had started my innings with a property purchased in Liverpool, Greater Western Sydney, back in 2016 but my game really got going from late 2019 and throughout 2020 when I bought six investment properties when everyone was hiding and scared of the new virus,\u201d Mr Kumar said.<\/p>\n

\u201cAs the saying goes, others\u2019 pessimism is your opportunity.<\/p>\n

\u201cI seized an opportunity when everyone was thinking the property market was going to crash and no one wanted to buy real estate, with all the major media outlets predicting a property price crash of 40 per cent or even more.\u201d<\/p>\n

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Property prices subsequently surged\u00a0throughout 2021 and Mr Kumar\u2019s focus on affordable houses and apartments that generated positive cash flow paid dividends.<\/p>\n

Unafraid to look beyond his own backyard, he acquired properties in Queensland and Western Australia, as well as within New South Wales. Whether regional or suburban, the focus was always on generating enough rent to cover the mortgage with some income to spare.<\/p>\n

One such property, a house in Logan Central, 30 kilometres south of Brisbane, was bought for just $221,000 and has doubled in price in a few years and generates more than $700 per month in rent.<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Property Address<\/th>\nEstimated value<\/th>\nPurchase price<\/th>\nRent per week<\/th>\nLoan Remaining<\/th>\nRate<\/th>\nFixed or variable<\/th>\nIO or PI<\/th>\nMonthly payment<\/th>\n<\/tr>\n
Liverpool<\/a>, NSW<\/td>\n$595,000<\/td>\n$546,000<\/td>\n$520<\/td>\n$475,000<\/td>\n2.29%<\/td>\nVariable<\/td>\nPI<\/td>\n$1,994<\/td>\n<\/tr>\n
Southport<\/a>, QLD<\/td>\n$280,000<\/td>\n$221,000<\/td>\n$365<\/td>\n$216,000<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$538<\/td>\n<\/tr>\n
Walloon<\/a>, QLD<\/td>\n$390,374<\/td>\n$205,000<\/td>\n$330<\/td>\n$226,992<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$566<\/td>\n<\/tr>\n
Kallangur<\/a>, QLD<\/td>\n$232,394<\/td>\n$160,000<\/td>\n$295<\/td>\n$159,515<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$397<\/td>\n<\/tr>\n
Maylands<\/a>, WA<\/td>\n$180,000<\/td>\n$160,000<\/td>\n$320<\/td>\n$138,400<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$345<\/td>\n<\/tr>\n
Logan Central<\/a>, QLD<\/td>\n$440,634<\/td>\n$221,000<\/td>\n$325<\/td>\n$224,800<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$560<\/td>\n<\/tr>\n
Singleton<\/a>, NSW<\/td>\n$340,000<\/td>\n$230,000<\/td>\n$370<\/td>\n$240,000<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$598<\/td>\n<\/tr>\n
Rockhampton City<\/a>, QLD<\/td>\n$185,000<\/td>\n$140,000<\/td>\n$300<\/td>\n$112,000<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$279<\/td>\n<\/tr>\n
Bundaberg East<\/a>, QLD<\/td>\n$225,000<\/td>\n$160,000<\/td>\n$370<\/td>\n$135,000<\/td>\n2.99%<\/td>\nVariable<\/td>\nIO<\/td>\n$336<\/td>\n<\/tr>\n
Mount Pritchard<\/a>, NSW<\/td>\n$780,000<\/td>\n$585,000<\/td>\n$450<\/td>\n$496,000<\/td>\n3.79%<\/td>\nVariable<\/td>\nIO<\/td>\n$1,567<\/td>\n<\/tr>\n
<\/th>\n$3,648,402<\/th>\n<\/th>\n$15,840 \/month<\/th>\n$2,423,708<\/th>\n<\/th>\n<\/th>\n<\/th>\n$7,180<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
Equity<\/th>\n$1,224,694<\/th>\nPositive cash flow<\/th>\n$8,659<\/th>\n<\/tr>\n<\/tbody>\n<\/table>\n

With the exception of his first property, Mr Kumar has paid no more than $230,000 for a property.<\/p>\n

\u201cAffordable properties are risk-proof properties,\u201d he said.<\/p>\n

\u201cIn any market, the affordable properties are stable and have upside growth potential and they provide great return on dollar invested, so I adhere to a rudimentary fundamental of investing,\u00a0risk mitigation.\u201d<\/p>\n

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Value before location<\/strong><\/p>\n

Every homeowner is aware of the phrase location, location, location, but for Mr Kumar the mantra is value, value, value.<\/p>\n

\u201cI only enter into any deal when I see value, which means I need to be making money from the first day.<\/p>\n

\u201cThere\u2019s no such thing as a free lunch so I don\u2019t rely on speculation about property prices but instead focus on value purchases that generate cashflow, regardless of location.<\/p>\n

\u201cSpeculating is just gambling, not investing.\u201d<\/p>\n

He is no fan of negative gearing either.<\/p>\n

\u201cSpending money every month to hold a negatively geared property and speculating that one day in the future it will be hold more value is too risky.<\/p>\n

\u201cIf that growth isn\u2019t forthcoming, you\u2019re out of the game altogether.\u201d<\/p>\n

And as with any cricket team, to borrow from Kumar\u2019s preferred analogy, it\u2019s not about the individual but about the team.<\/p>\n

\u201cProperty investing is a game, and to play this game you need to build a good team around you.<\/p>\n

\u201cA team consists of accountants, solicitors, property managers, mortgage brokers, insurance brokers, buyers agents and tradies.<\/p>\n

\u201cIt\u2019s equally important to develop good relationships and build trust with the real estate agents that can secure the best property deals.<\/p>\n

\u201cProperty investing shouldn\u2019t be exciting, risky and dangerous, but rather be a methodical process and a formula for making money that you stick to,\u201d Mr Kumar said.<\/p>\n

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Mining for gold<\/strong><\/p>\n

Looking ahead, he sees value in mining towns and opportunity presented by\u00a0interest rates that remain historically low.<\/p>\n

\u201cIn 2010s, the interest rate was very high, in the range of 8 per cent, but nowadays interest rates are lingering below 3 per cent.<\/p>\n

\u201cSo, when people say property prices are now unaffordable, they should do some basic maths.<\/p>\n

\u201cIf you bought property in 2010 for $250,000, you had to pay $20,000 in interest and might be getting $300 per week rent.<\/p>\n

\u201cBut the same property may now be sitting around the $800,000 or even million-dollar mark, so to buy that property now in 2022 with the interest rate 2 per cent, you are still paying $20,000 in interest but you may get $500 in rent, so the properties are effectively more affordable now considering the easy lending criteria and low interest rates.\u201d<\/p>\n

\u201cI can see the resources sector booming and this could boost the property market in mining areas,\u201d he added.<\/p>\n

An information and communications technology specialist, Mr Kumar\u2019s long game is to achieve financial independence.<\/p>\n

\u201cI want to create a portfolio that has the cashflow to replace my work income.\u201d<\/p>\n

\u201cIt\u2019s all about being at a stage in life where I can control my time and have choices.\u201d<\/p>\n

At this stage he is firmly focused on building his innings and sticking to his winning formula.<\/p>\n

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