Do Your Due Diligence. Work Hard. Get On With It. Have Fun.
Investing to build recurring income for early retirement,JohnOehlersrealised he'd far prefer to keep active and enjoy his investments - including a pastoral holding where he can't help but have fun.
Tempted by the thought of early retirement, John Oehlers set out to build recurring income through a property portfolio and live a life of his own choosing. Well on the way to achieving this goal first through residential and later commercial property, the reality of lying on a beach doing nothing lost its appeal. John realised he could stay actively involved with property and do more with his income, including helping his dad fully retire instead. Having built substantial income from his property portfolio John has taken his foot off the pedal from the intense early days of wealth creation, John now gets more enjoyment from his portfolio, with a pastoral holding offering huge appeal.
New to the real estate industry in 2004, John was in his early 20s when he first heard the concept of recurring income. Immediately attracted to the proposition, he had visions of spending the rest of his life on a tropical island with nothing to do all day but enjoy the sunshine. He purchased a rundown duplex for $65k in the New South Wales regional centre of Armidale, renovated and sold 12 months later - doubling his money as the boom hit.
Not enamoured by the hands-on nature of flipping property, John knew he’d have to factor in the costs of external trades if he was going to continue with this wealth-building strategy.
“I quickly learned that renovating was not my skill set,” he says.
Despite this realisation, John had done so well from the sale that he knew he always wanted to be involved with property. How to actually achieve his desired returns - minus the expense of outsourcing labour - meant a longer-term strategy shift and 6 years later he ventured into commercial real estate. Aware that investors have to start where they’re able, this period was a time of huge learnings.
“You have to go through these stages,” John says. “You have to fall a few times and learn that you only fail if you give up.”
His relationship with commercial property began when John needed a home base for his first real estate business. Seeing far higher net rates of return than with residential, he began to get upwards of 10-15% yields with this new investment strategy, doing wonders for his portfolio.
The increased returns have given John freedom to speculate on some properties and hold others, buying into a mixed residential/commercial investment in Sydney’s Narrabeen in 2015 for $1.4m and selling 14 months later for $2m. Featuring two commercial units and a small three bedroom residence not far from the Narrabeen Lagoon, John had seen its resale potential. Undertaking a minor makeover to increase the property’s net yield, he then marketed and sold it to a developer who would receive their own profitable holding income before enacting their own improvements.
“I realised this particular property with the right marketing & increased yeild would be a fantastic opportunity to purchase and flip.”
As John’s portfolio grew, he became less keen to pursue early retirement.
“You have to do something to tick your brain over,” he says. “Human beings are happier when they’re growing.”
Armed with a renewed philosophy, John sought partnerships through which he could further increase his returns again, able to take on larger projects than he could alone. Not always as successful as hoped, he could see that where problems occurred it came down to a lack of mutual vision. “Alignment in outcome was critical” John says, with essential elements including a shared end goal, how to get into an investment, how to get out, how long to hold and how to value that time.
“All decision-making refers back to that agreement,” John says.
One successful example includes a partnership that’s enabled John to jointly invest in a 1500 acre Guyra pastoral holding located within the rich agricultural tableland of New England, New South Wales.
“Partnering with others who offer different skill sets but the same desired outcome is a great lesson to anyone”.
“One partnership I have is with well-known New England grazier Michael Jackson who is a 7 th generation farmer with 35 year’s experience in rural property, stock and station. What he doesn’t know about the farming isn’t worth knowing”.
“Our partnership has been amazing, I’m overseeing our very successful regional Real Estate business based in Tamworth and he runs our rural holding operation.”
Currently experiencing harsh drought conditions, John remains confident good times will return and they’ll make a good profit.
“Patience is the key to any business or investment, whether purchasing or selling.”
With long-term plans to increase carrying capacity through pasture improvement, renewed fencing and upgrading infrastructure, the partners are aiming to make three to four times their initial investment.
Seeing property investment as very much a staged process, John says new investors need to assess where they can start, even when it may appear they don’t have enough money. “Do your due diligence, work hard and get on with it, then don’t let one decision rule your thinking.”
If John was to deliver one piece of advice to any potential new investor it would be understanding that wealth comes from making your money work for you, so have an intense understanding of exactly what net return you are getting on the money you have invested.
Enjoying the rewards from his portfolio, John travels from his home on Sydney’s northern beaches to the New England regularly, enjoying the contrast in lifestyles and local characters. “finally, you can talk about getting the best return, but sometimes it’s just about having fun and well…. we don’t miss out there!”