{"id":22891,"date":"2018-10-12T01:00:25","date_gmt":"2018-10-11T14:00:25","guid":{"rendered":"https:\/\/realestatetalk.com.au\/?p=22891"},"modified":"2018-10-12T01:00:25","modified_gmt":"2018-10-11T14:00:25","slug":"playing-the-long-game","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/playing-the-long-game\/","title":{"rendered":"Playing The Long Game"},"content":{"rendered":"

“Always buy with your head, not your heart, unless you\u2019re going to be living in the property”<\/p>\n

\"\"<\/p>\n

AT A GLANCE<\/strong>
\nYears investing: 12
\nCurrent number of properties: 5
\nPortfolio value: $2.19m<\/p>\n

Patricia Cheah<\/strong>\u00a0inherited her interest in property from her mother as a child.<\/p>\n

\u201cMy mum would drag us out to home opens when we were young, and that first sparked my love of property,\u201d she says.<\/p>\n

\u201cShe used to tell me how much she regretted selling our past homes. In hindsight, she wished she\u2019d kept them as investments.\u201d<\/p>\n

One of these regretful sales was the family\u2019s home in the\u00a0Perth<\/a>\u00a0suburb of\u00a0Thornlie<\/a>, which they sold in December 2000. The property was eventually resold by its new owners 11 years later for almost three times what they bought it for.<\/p>\n

\u201cIt was stories like these that got me interested in property investing. I could see the long-term benefits of capital growth and how it could fund a comfortable retirement,\u201d Patricia explains.<\/p>\n

So in 2006, at the age of 19, she took the plunge on her first investment \u2013 a block of land in Yangebup, WA.<\/p>\n

\u201cMy friend had suggested that Yangebup was an up-and-coming area, so I took their advice and purchased a block with ocean glimpses. My parents put the property in their name as they were able to secure a loan; however, I made 50% of the repayments,\u201d Patricia says.<\/p>\n

\u201cIt was an impulsive buy. I was young and somewhat naive \u2013 if I had known then the information that I know now, I probably would have scared myself out of investing. But in this case, ignorance played in my favour. I didn\u2019t get any expert advice, and I didn\u2019t really do any research. I purchased with my heart and not my head, but it worked out.\u201d<\/p>\n

The long haul<\/strong><\/p>\n

Patricia would go on to purchase three more homes in the next five years, two of which were sold at a profit. However, her beginner\u2019s luck would soon run out.<\/p>\n

\u201cI made a loss early in my investment journey after purchasing an off-the-plan apartment in Northbridge, a city centre,\u201d she says.<\/p>\n

\u201cI think I bought above market value \u2013 this is typical in new developments because there are a lot of parties involved and they all need to be paid.So the developers typically add a healthy margin to the sale price.\u201d<\/p>\n

Patricia signed the contract back in 2007, but the development itself was not completed until 2009. And as Perth\u2019s value as a capital city went down, so did the chances that the property would make money.<\/p>\n

\u201cI sold in 2012 at a loss of around $50,000, after stamp duty and other costs,\u201d she says. This severe blow to her finances taught Patricia \u201cto do my research before jumping in, and to always buy with your head, not your heart, unless you\u2019re going to be living in the property\u201d.<\/p>\n

She also realised that new homes might not be the best deal to jump on. \u201cI learnt that the new shiny homes are often the ones that are most appealing, but people tend to overcapitalise on the build, which means it may not produce high capital growth in the future,\u201d she says.<\/p>\n

An eye on development<\/strong><\/p>\n

As it is for most investors, Patricia\u2019s property journey has been a bumpy one, but with the struggles have come victories.<\/p>\n

\u201cMy strategy from the start was always to hold for as long as I could. If I didn\u2019t need to sell, I wouldn\u2019t. But it wasn\u2019t until later that I learnt it was OK to let go of underperforming properties,\u201d she says.<\/p>\n

\u201cI also now focus on properties with a decent land component, because they\u2019re not making any more land.\u201d A feather in Patricia\u2019s cap has been her Forrestfield investment \u2013 a house purchased back in 2014, which is currently valued at $415,000.<\/p>\n

That value is set to surge, however, thanks to a sudden new development.<\/p>\n

\u201cWhen I purchased it, the zoning changes had not been approved, but in the past few months I\u2019ve received great news that zoning changes have gone through and I can now fit two dwellings on the corner block,\u201d she says.<\/p>\n

Patricia entered the Forrestfield market at a good time, as the suburb has been going through a major infrastructure upgrade. \u201cForrestfield is currently going through a massive revitalisation \u2013 the state and federal governments have injected $1.86bn into the Forrestfield Airport Link project,\u201d she says. Patricia\u2019s newest purchase, a property in Como bought in 2015, has been her most recent success.<\/p>\n

\u201cI purchased it at $450,000 and within a year had it valued at $480,000 \u2013 in a trying Perth market where prices were stagnating or decreasing,\u201d she says.<\/p>\n

Patricia has been in the property game for over 10 years now and continues to focus on acquiring and keeping as many properties as she can to avoid missing out on capital gains. At this point, she certainly seems to be meeting her goals, as the value of the assets in her current portfolio comes in at roughly $2.19m.<\/p>\n\n

A strong close<\/strong><\/p>\n

Patricia is still paying off the loans on her properties, but she has high hopes for the next steps in her investment journey. \u201cThe first milestone of reaching $2m in total asset value when I purchased my latest property was really exciting,\u201d she says.<\/p>\n

\u201cThe first renovation I did \u2013 on my Dianella property \u2013 was a great learning experience as well. I realised that I love being hands-on and would happily jump into another reno project.\u201d With profit being her main goal, Patricia does not intend to limit herself to residential property.<\/p>\n

\u201cMaybe one day I\u2019ll veer off the well-known path and dip my toes in commercial or interstate property,\u201d she says.<\/p>\n

\u201cI\u2019d like to explore developments as well, as I have two blocks that are zoned to hold two dwellings each. I\u2019ve renovated in the past, and that was a very exciting journey; I wouldn\u2019t mind doing more of those.\u201d Patricia\u2019s end goal is to eventually fund her own retirement with her earnings as an investor.<\/p>\n

\u201cI\u2019m relying on capital growth and negative gearing to get through to retirement. I\u2019m not sure what the future will look like when I reach retirement age, but I know that I\u2019d like to self-fund my retirement rather than rely on the government to do so,\u201dshe says. \u201cI think that will relieve the pressure on the government to look after an ageing population.\u201d<\/p>\n

PATRICIA\u2019S TOP 4 PROPERTY INVESTMENT TIPS<\/strong><\/p>\n

1. Know where the state houses are<\/strong>
\nAsk the agent if homes located in the area are state housing, as this could affect property prices.<\/p>\n

2. Check the vacancy rate in the suburb\u00a0<\/strong>
\nUltimately those vacant homes in the area will be your competition when you come to lease your property out.<\/p>\n

3. Bank on your deposit\u00a0<\/strong>
\nHaving a strong deposit, and finance terms of less than 80%, with 14 days\u2019 approval and a quick settlement, allows you to negotiate.<\/p>\n

4. Understand strata quirks\u00a0<\/strong>
\nIf the property is strata, make sure you get a firm understanding of what kind of strata.<\/p>\n","protected":false},"excerpt":{"rendered":"

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