Is it possible to live off the equity in your property portfolio? Yes it is and we share some living proof that anyone can do it as we talk to Eddie Fuller about how he is ‘living the dream’.
Kevin: I had the privilege recently of attending Michael Yardney’s Wealth Retreat on the Gold Coast. Earmark it for next year. If you haven’t been to a Wealth Retreat, you should get along. Some great people. A very, very inspirational five days.
While I was there, I caught up with Eddie Fuller who has built a great portfolio for himself of property, so much so that he now lives off of that portfolio entirely. I was keen to know how he has done it and to find out some of the lessons he has learned along the way.
Eddie, have you always had an investor mindset?
Eddie: No. I think it is something that was developed. I probably got the investor mindset when I got into real estate. To start off in real estate, I read all of the investment books and learned the knowledge.
I think also my first boss was my mentor. He just basically said to me, “Eddie, what you have to do is make your income from real estate, but by real estate build your wealth through the assets of buying real estate.”
I think constantly going to seminars and things like that would have helped.
Kevin: How did you get started? Tell me about your first property.
Eddie: In investing, the first property I purchased was a little three-bedroom property. I was in real estate for about three years. It was just a residential three-bedroom, and it was a private sale.
Kevin: In those early days when you were working with a principal, is that when you learned the skills to be able to become financially independent through your own portfolio?
Eddie: Yes, it started from there. I think it started with watching. Like I said, my boss was quite successful even though he didn’t have a large property portfolio. That’s where I started with. Continuing from that, it was the books and the seminars, and was pretty much self-taught. I was probably from a very early start more interested in building a property portfolio.
Kevin: Did that come from your family background, Eddie? Were your family into property?
Eddie: Definitely not, no. My family were from a poor background, so I definitely did not get any investor intelligence from the family.
Kevin: In those early days when you started investing, what sort of feedback did you get from your family and your friends about what you were doing?
Eddie: The family was pretty much just my wife, and they were all supportive. I didn’t get any negative feedback, funnily enough, so I didn’t have anybody saying, “Don’t do this. You might lose your money.” I heard a bit of that later on as I started to build a portfolio, but I’d already educated myself not to listen to the negative people.
Kevin: Tell me about your best investment. Where was that, and do you still have it?
Eddie: My best investment was my first property that I kept – not my first property because the first property I purchased, unfortunately, I made the mistake as everybody else does: I sold. So the best investment was the first property that I purchased. I purchased that in around 2000 for $170,000, and that would be worth around $800,000 today.
Kevin: Why did you sell that? Was it just a lack of knowledge?
Eddie: Yes, I think I made the fundamental mistake that everyone does. I had it for a while, and I knew that you shouldn’t sell the properties. I knew that. It wasn’t to release equity; I think it was to release equity to buy further properties. In hindsight, I could have refinanced and kept the properties.
Kevin: Have you done much by way of renovations – adding to properties, adding value?
Eddie: Yes. My first investment strategy – when I actually adopted an investment strategy – was buy, renovate, and hold. I’ve done plenty of renovations on those properties, yes.
Kevin: Tell me about your worst investment. Where was that, and what made it so bad?
Eddie: I haven’t really had a worst investment. There was probably nothing that I’ve done that was fundamentally tragic.
Kevin: That’s interesting. Do you put that down to the fact that you had a strategy and just stuck to it, or were you very diligent about your due diligence?
Eddie: Yes. I’d put it down to that. I think being in real estate enabled me not to be buying properties that were like going to Queensland and buying a property for $200,000 when it was worth $100,000, and reading and educating myself as I was actually growing a portfolio.
Kevin: Is your portfolio diversified in terms of location?
Eddie: Yes, it’s mainly concentrated in and around the Melbourne area, but I do have a few properties in Brisbane that I’ve recently purchased, just to diversify and to spread some land tax around.
Kevin: Would you ever buy sight unseen, or is that part of your due diligence – you want to get your feet on the ground?
Eddie: The last two that I bought through Metropole were sight unseen. The one I’ve just purchased recently in around Brisbane, I haven’t seen it yet. I’ll go and have a look at that in the next few weeks.
Kevin: Just in closing out, Eddie, what would be your advice to someone who wants to get in to build a portfolio like you’ve done and make it enough to support you and your lifestyle?
Eddie: I would think that if you’re serious about building a portfolio to live off, you have to treat it as a business. You have to take it seriously. Treat real estate as a business. You have to learn, you have to have a strategy so you have to at least be following a strategy, and just ensure that there is plenty of equity so that when you do retire, you have the ability to draw down that equity, and have provisions for borrowing.
Kevin: As I said at the start of this interview, if you haven’t been to one of the Wealth Retreats held every year about this time each year, I can highly recommend it to you as a great way to meet some like-minded people, get some tremendous inspiration if you are really serious about developing your property portfolio.
Thanks to Eddie, too, for giving me some time during the retreat.