How to build a £1,000,000 property portfolio in just 2 years
+ Nate Chai interviews Stephanie Brennan, who managed to build an AUD$ 2.3 million property portfolio in just two years
After reading a news story about a 24-year-old with an AUD$2.3 million property portfolio, I knew that we absolutely had to interview her. Stephanie Brennan (pictured in the header) has managed to begin her property empire early in her life and shares her proven advice here.
In this interview, we find out; how to streamline your property management, the trade secrets of estate agents, and how to snowball your property portfolio.
Looking at your (rather incredible) story, many would assume that the reason you got so knowledgeable about property is due to your time spent as an estate agent.
What are the three biggest lessons about property you learned from your time as a property manager and as an estate agent?
My time in real estate taught me a lot about the sales, purchasing, and management process involved with having an investment property. Such as, the difference in fees across various real estate agents, and the difference in the service you would receive.
My top three investment lessons for the readers are:
- The importance of routine inspections and what maintenance items to look out. For example, you can find the areas where you can increase capital value or rental return in your property through renovations or things like new blinds, or new carpet
- The importance of professional photos and paying for priority listing on realestate.com.au and domain.com.au as 85 per cent of people don’t look past the first page when searching for a property
- Learn about what to buy, where to buy, and the capital and rental returns property could bring as an investment
Prior to building a property portfolio, I was very keen to invest in shares and really hadn’t thought about investing in property aside from buying a home to live in.
Property as an investment option was reaffirmed in my mind when I studied a Diploma of Financial Planning the same year I purchased my first property.
What are the best resources for those whose professions are not in real estate to learn about property?
My advice to others would be to attend as many seminars as possible and do your research. There are plenty of books on property (some of which I have written myself).
There are also plenty of free suburb reports available online that you can use to research the average growth and rental return or the demographics in the area you are looking at. This will give you an understanding of where to look and whether a unit or a house would best suit the demographics of the area.
A large amount of my knowledge came from my research and studies along with my career, but also through my own trial and error.
With investing it’s largely common sense; pick a place most people want to live or would like to live and a suburb that is largely desired. For example, the majority of people like to live near to a CBD so by buying a property within 20kms of the CBD will often result with an investment that performs more consistently over time.
Managing properties (and tenants) is one of the biggest headaches for anyone with a property portfolio, what are your favourite ways to streamline that side of the business?
I currently have a managing agent that manages my properties. How I manage this relationship is that I set myself a maintenance budget each year for each property. This way I can undertake repairs as need be (up to a certain limit) without being concerned about eating into the positive return I make on my properties.
I also ensure the agent runs all maintenance requests past me prior to arranging them, and that I attend routine inspections where possible so I can evaluate the condition of the property. If I can’t attend an inspection I have the agent send me a report and as many photos as possible and, sometimes, a video.
If the agent sends me a rent increase recommendation, I review this rent increase to ensure that it’s accurate, then I review my budget and the relationship with the tenant. Often I don’t proceed with the increase because to me a quality renter is more valuable than an extra $10 (£4.60) a week.
In my business, I often work with the same agents that manage my own properties so I can ensure that my clients are receiving the same level of service that I receive.
You tout the low deposit required (five per cent) as one of the reasons you were able to begin purchasing properties. But the value of the properties you currently own is through the roof, where did you find all that capital?
With my own purchasing, I did have the 20 per cent deposit saved but I had my Mum agreed to go guarantor [her Mum would be liable should Stephanie be unable to pay back the mortgage – Nate] for the loan so I could put my funds into an offset account.
I’ve predominantly used the increase in the property market and in turn the increase in my property’s value to release equity from one property in order to use this cash as the deposit on the next.
This is how you can leverage yourself into more properties.
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