From the stock market to property through love
From the stock market to property through love
As far as pathways to an international property portfolio go, the route travelled by author, buyer’s agent and investor Pete Wargent is anything but typical.
From a young age, author, finance and real estate expert Pete Wargent had always held lofty ambitions of achieving the elusive goal of financial freedom.
Investing in property, however, was not initially a part of that dream.
In the early to mid 2000s, Mr Wargent worked for big four accounting firm Deloitte, earning a comfortable living in London through a combination of his salary and stock market investments.
“A big part of what my job was was auditing listed company financials, then later I went into industry so I was literally writing annual reports for listed companies,” Mr Wargent told Australian Property Investor Magazine.
“My thinking was, if anybody had the ability to analyse Australian financial statements it would surely be me, because that’s what I was literally doing for my work.
“What I discovered though, when you are analysing companies, there is more to it than looking at a balance sheet or a profit and loss statement, because that’s historic information and it doesn’t tell you much about the future.
“Plus these days there are so many people analysing financials, it is actually harder than it looks to find an edge.”
Mr Wargent’s investment strategy would soon be flipped on its head, after he met his then soon-to-be wife Heather while working at Deloitte.
Early on in their relationship, Pete and Heather compared financial strategies, and as it turned out, one half of the couple was way out in front.
“Heather had inherited a small amount of money when she was 20 and got onto the property ladder by buying a house at that time, and by the time we had met she had already killed half of the mortgage,” Mr Wargent said.
“This was in Cambridge in the UK, and the housing market went ballistic as well.
“So when I compared the results of what she’d achieved through property and shares, versus me just in shares, it was like chalk and cheese.
“She came from a farming background, where her dad had always bought farmland and always went on the theory that you never sell it, you just acquire and don’t sell.
“So she had been schooled in the value of buying property and land and it was my wife who got me interested in the idea in the first place. Before that, I was only interested in stocks.”
After seeing the potential of property, Mr Wargent decided to take the plunge, acquiring his first investment property in Bondi in 2007.
But while it turned out to be a solid buy, Mr Wargent said at the time it could hardly have been described as a well-researched and informed investment.
“When I started out, all I was thinking was these were areas where a young professional like myself would want to live, therefore other people would probably think along similar lines,” Mr Wargent said.
“It wasn’t a whole lot more sophisticated than that.”
In the following two years, Mr Wargent acquired two more Sydney properties, in Darling Harbour and the inner west, firmly convinced that the best way to build wealth was through property investment.
The associated freedom through having substantial passive income allowed the Wargents to leave full-time work and embark on a 15-month tour of Europe in the early 2010s, and it was during this trip that Mr Wargent decided it was time to help others emulate his success.
“When I first got interested in investing, “I would read books and a lot of them were either US or UK-centric, and they didn’t necessarily align with my experience investing in Australia,” he said.
“I’d often read books and say to my wife ‘this is garbage’, and she said ‘if you think that’s the case then you should write your own’.”
Mr Wargent wrote his first book, Get a Financial Grip, on that trip, and has now authored six guides to investment, sharing his insights of stock market investing and some of his and his wife’s experiences of investing in property.
“I don’t think I ever planned to write half a dozen books, it was more a case of having enjoyed writing the first one and it was highly-rated by Dymocks and Money magazine, and I got really good feedback on it so that led on to writing another one and another,” he said.
While Mr Wargent was closely guarded on the value of he and his wife’s shared portfolio as it stands today, he said it was more than a dozen properties located in Sydney, Brisbane, and Victoria, as well as in London, Cambridge and England’s Home Counties.
But like his entry into property, Mr Wargent’s investment strategy since getting into the market has been anything but ordinary.
“There is certainly a good case to be made, if you really want to supercharge your portfolio you can look at demand to supply ratios and try to pick hotspots and so on, but with my journey there were a couple of things that were slightly different,” Mr Wargent said.
“One was that my wife has been absolutely adamant that we’re never selling, so the properties that we buy are going to the kids and we’re not selling them.
“That has basically forced me to consider what would be the safest bet over a 30 or 40 year time horizon.
“Her dad taught her to buy land and not sell it, so if that’s the case, picking the best-performing property over the next year or two, although that’s desirable, it’s probably less use to me than picking the proven performers like places like Bondi, Pyrmont and Erskineville.
“You can say with a fairly strong degree of confidence that over the long run there will be a lot of demand in those markets.”
Other guiding principles of Mr Wargent’s strategy are more commonly held by other investors, such as prioritising land value over the dwelling itself, buying close to train stations and other transport links, and buying into walkable neighbourhoods with high levels of amenity.
“In Australia, the real scarce commodity is well-located land,” he said.
“Particularly since 2012, we have seen that industrial sites can always be rezoned for high-rise apartments, so if you are going to buy a unit or an apartment, you need to get into a market where the supply is somehow constrained, like for example, Sydney’s eastern suburbs on the beaches where they just never really build much.
“Or for a lot of people, if they have got the budget, buying a good block of land in a landlocked suburb that’s close to the city and good school zones, that sort of thing is always going to have an inherent scarcity value.
“It is the land that appreciates so that’s what will do the heavy lifting in the long-run for you.
“With a lot of those high-rise apartments, it’s all building value and the land is just a tiny component.
“For most people, if they’ve got the budget, a house on a good block of land would probably be the best bet. In Sydney, quite often people can only afford units, and if that’s the case, the more boutique development the better, in areas where there is going to be not so many built.”
Mr Wargent said another factor he liked to evaluate was the potential to add value to a property at some stage down the track, a strategy he said was particularly pertinent in today’s finance environment.
“When I started out, for one thing you could borrow 100 per cent mortgages, and more in the UK,” he said.
“These days, you need a deposit but also the amount of debt a person can carry is capped at a certain ratio to your income.
“If the amount of debt is finite, you really need to maximise the value and get the best bang for your buck.
“I actually think the best thing you can do, is if you can buy a house that is good enough to be rented out to a professional couple or a young family today, but it has the potential to be renovated or improved down the track, then it gives you an extra direction to take the property in.
“Personally I have bought properties and renovated them, but these days with debt being capped, the best bang for your buck might well be to secure the best investment property locations that you can and do the renovations sometime in the future - it’s almost like equity on ice.”
With an impressive portfolio behind him, as well as six investment guides, one might assume Mr Wargent was planning for an early retirement.
That’s not the case, however, with much of his energy since early 2020 going towards establishing a startup national buyer’s agency known as Buyers Buyers.
Prior to setting up Buyers Buyers, Mr Wargent had worked as a buyer’s agent across Sydney and London, in a small three-person office.
But like his dream of financial freedom, his buyer’s agency ambitions got bigger, particularly after his Buyers Buyers co-founder Doron Peleg came to him with the idea of setting up a buyer’s agency aggregator on a similar model as a mortgage broker.
“The buyer’s agency industry has grown up as a cottage industry, there’s been lots of one-man-bands and small agencies, but nobody has ever really done a national aggregation,” Mr Wargent said.
“My co-founder Doron Peleg brought me the idea a couple of years ago, and it’s funny because working in real estate I’ve had no end of people coming to me over the years with ideas saying that we’re going to disrupt with all kinds of crazy schemes.
“But with Buyers Buyers, the more I thought about it, the more I thought it made perfect sense.
“We can follow the aggregation model that’s already been successful in the mortgage broking space and just replicate it in the buyer’s agency space.”
Agents on the Buyers Buyers aggregated panel include Real Estate Buyers Association of Australia founder Michael Ramsay and former REBAA president Rich Harvey, as well as reigning REBAA Buyer’s Agent of the Year Claire Corby.
“We’ve tried to focus on getting the best in the business where we can,” Mr Wargent siad.
“We don’t want to work at the lower quality end of the spectrum, because if we underdeliver, these days with chat forums and the like, everyone will soon find out about it, so we’re focusing on quality when we can.”