Garry Harvey - 33 Properties Across All States In 19 Years
Prolific property investor, Garry Harvey has built an impressive portfolio of 33 properties in 19 years spanning all states and territories excluding ACT. In a must-read API Investor In Focus, Garry details how his strategy of diversification is a key driver behind his own story of success.
From a 26-year-old mortgage holder purchasing his first home in 2000, it’s been a relatively rapid rise to award-winning real estate investor and proprietor of Garry Harvey – The Property Guy. Garry’s first purchase was a $187,000 property on the outskirts of Melbourne, and through a combination of intuition and initiative, he has forged a business and a personal portfolio comprising dozens of properties. With the equity in his property growing as prices rose, Garry undertook a property course and set off on an investment journey that changed his life.
API: Having built up an impressive portfolio of 33 properties in 19 years, can you tell us what drew you to property in the first place?
GH: My first home was a duplex and my now wife and I lived in one and rented out the other. We had not only purchased our first home but also our first investment property. It sparked an interest in me to learn more about investing in property and how it could provide financial security for us in the future.
We knew that just working all our lives and trying to pay off our home wasn’t going to deliver financially, and that we needed to do something else that was going to deliver over the long term. I craved education and went about learning how to scale what I had already started with the resources that we had.
API: The vast majority of investors get stuck at one or two properties. How have you managed to accumulate so many properties?
GH: I am a very determined and motivated person and accepted early on that anything was possible if I learned about the property sector. I set about learning the many components required to build a portfolio. I went in with an open mind and preparedness to learn from others that were doing what I wanted to do, which was to be to be successful in real estate investing.
API: Lending restrictions over the past two years have made it difficult for many investors to continue building their portfolios. Has this affected your own situation, and what is your advice for those who have reached a financial roadblock?
GH: The changing lending landscape has presented challenges for investors but the opportunity to build a multi-property portfolio still exists. It hasn’t greatly affected my portfolio, as I am not looking to acquire additional properties and am now in the phase of aggressively paying off the debt on the properties I currently have.
Investors that have reached lending roadblocks can still move forward once they understand the requirements to access lending and ensure their circumstances are aligned with those requirements. The formula to accessing credit is quite simple: have a good credit rating; have enough income to service the loan you are requesting; and have enough cash or equity to keep the loan to value ratios at an acceptable level.
Changes to your current setup may need to be made to move forward. This could be something simple, like reducing credit card limits or changing lenders to an institution that looks move favourably on additional lending, or it could be structural changes such as disposing of an expensive car that has a loan on it and opt for something less expensive that doesn’t require a loan. Or it may necessitate a change to your current investment strategy.
API: I understand that you currently hold property in all Australian states and territories, excluding the ACT. Is diversification a key part of your overall strategy?
GH: One of the biggest responsibilities we have as investors is to manage risk and diversification plays a role in that. Diversification can come in many forms, whether it is different investment strategies, property types, lender diversification as well as location.
API: Can you share with us some of the benefits of diversification?
GH: Investing across many states has assisted in keeping my land tax obligations to a manageable level. If too much of your property investment income is being eroded by land tax it can render the investments you hold unsustainable. This could mean you are forced into moving those assets on or settling for insufficient returns.
I had a keen interest in the mining and resources sector but wasn’t able to get the exposure I was looking for by investing solely in Victoria. This sector certainly has some unique risks that need to be understood and factored into any decisions but if managed well can add strength to a portfolio.
API: In your early days of investing, did you come across any challenges, or hit a wall?
GH: There were challenges at every step of the journey, which is probably the case for all investors. The two biggest were accumulating enough equity to keep purchasing, and accessing the credit needed for those purchases.
API: What was the solution to acquiring that equity?
GH: To address the cash, or equity, challenge there were two strategies that really helped. The first was renovating to improve the value of the properties quite quickly and the second was purchasing a number of multi-unit properties that were on one title and separating the titles. This improved the value of those properties, giving me the equity that I could borrow against to keep purchasing.
On the challenge of being able to keep sourcing the credit required to grow the portfolio, again there were two strategies that stand out. The first was focusing on properties that would provide reasonable capital growth over time as well as great rental returns.
It was the high rental returns that kept income to levels the lenders demanded in order to keep advancing credit. The second was creating different entities to purchase the properties. For example, I set up a trust where I was the sole director of the trustee company and also set up a trust where my wife was the sole director of the trustee company. This strategy meant that each entity was assessed on its own merit. When purchasing and borrowing in each entity, the debts of the other entity didn’t need to be assessed as ongoing liabilities, which ultimately resulted in a higher borrowing capacity across the board.
API: You have made great gains over the past 19 years. Where are you looking to take your property investing from here?
GH: My plan is to pay down the debt on the portfolio as quickly as practical, which will most likely involve selling off some of the properties. I recently turned 45, so my goal is to try and own outright around 20 properties by the time I reach my mid to late 50’s. That will generate a reasonably strong income into the future. I have some properties that are underperforming, so another focus to work on lifting the performance of those properties to optimise the returns.