Home' API Magazine : October 2014 Contents 10 n APIMAGAZINE.COM.AU n OCTOBER 2014
NEWS AND VIEWS n In the hotseat
How much do you estimate your entire
portfolio went up over the past year?
On average my properties went up 10 to 15
per cent each. I often get them valued and
refinanced every 12 months to draw out any
spare equity but my valuer actually rang me
six months after the previous valuation and
said it’s probably well worth doing again.
Does it make you glad you bought during
the GFC? What lessons have you learnt?
I’m very glad that I bought when I did as when
the market moves it does overnight, with
all the ‘sheep’ jumping in at the same time.
While buying during the GFC meant that I had
a few years of paying the negative cash flow,
it meant I bought better located properties for
a cheaper price and I took advantage of every
single day of the upswing. Even the experts
can’t time the market and so the golden rule
is buy when you have the cash available and
you’re able to hold on for the medium-term.
Are you still buying in Sydney or do you
think the market is overheated?
We’re still buying in Sydney as most upswings
tend to be three to four years so even if the
growth rate is slowing, it still means that
property prices are growing and getting
more expensive. We always buy based on
conservative bank valuations and so no matter
whether the market is in boom or flat territory,
we know we’re buying great located properties
at reasonable prices that are likely to grow
decade after decade. Even in the GFC, my
personal properties trickled upwards and so
I’m happy to buy anytime.
What advice would you give to investors
keen to purchase in 2014?
Stop trying to be too clever and out-think
the market. It’s ‘time in the market’ that’s
important, not ‘timing the market’. We’ve seen
clients wait for the perfect property, they’ve
still not bought 12 months later and the prices
are up at least $100,000. We’ve had others
delay their decision, waiting for the market to
fall and they’ll probably wait another 10 to 20
years before realising it’s unlikely to happen in
the median priced blue-chip areas we buy in.
Knowledge is great but at some point you’ve
got to take some action.
Do you still believe in renting your own
principal place of residence?
I’m definitely a renter for life and I’m more
and more convinced every day. A harbourfront
property I recently rented for $2500 per
week sold for $6.7 million – that equals
just 1.9 per cent return. I then use that $6.7
million to buy investment properties that
get me 4.5 per cent return and all my debt
is then tax deductible. If I were to buy my
own home instead, for that same outlay of
$2500 per week, I’d only get a $1.5 million
home, assuming a seven per cent interest
rate plus strata fees etc. Own your own $1.5
million home, or live in a $6 million to $7
What has been your best investment over
the past couple of years and why?
It’s really been my whole portfolio that’s
working well, rather than one individual
property. It’s currently around $12 million
across 13 properties and at 10 to 15 per cent
growth, it’s making $1 million per year in
capital growth. All those years of hard work
and being deep in debt is finally paying off.
And because it’s passive it’s giving me lots of
time to travel.
Do you regularly review your rents/
refinance/look at your entire portfolio?
What does the strategy/review involve?
I don’t really need to review my individual
property purchases as they were all bought
with a lifetime-hold horizon and nothing has
really changed in the 20 years since the first
purchase, despite the GFC etc. My property
manager automatically reviews the rents on
its anniversary, which means I don’t need to. I
refinance every 12 months if the properties
have grown and so that’s automatic
too. The valuer contacts the property
manager directly and I just get the
summary. It all happens passively in
What’s your number one
Just do it. Procrastination gets
you nowhere and if you do
make a mistake it’s never
as bad as you anticipated
anyway. I meet a lot of
very intelligent and
high-income earners in
my travels and talks,
most of them are
too clever to the
wealth. You’ll never get rich on a salary, it’s
assets that build real wealth.
Anything else you would like to add?
Even though I’m only 42 I’ve had many
friends, family and other acquaintances
being touched by cancer, strokes and other
illnesses and many people have said ‘if only
I’d...’ I believe in living for today and my
focus has been on living first and working
second, as you never know what tomorrow
will bring. If you sacrifice for a few years, build
some appreciating assets, it can give you a
wonderful balance a few years later. Property
and compound growth is one of the best
inventions in the world. For some though, it’s
too close for them to actually see.
n YOUR EMPIRE BUYERS’ AGENT
CHRIS GRAY EXPLAINS WHY HE
DOESN’T FOLLOW THE CROWD.
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