Investor In Focus - Ben Everingham
When it comes to investment, position, position, position is key according to Ben Everingham whose portfolio has been strategically constructed to capitalise on high growth through well-situated premium property.
Noting how property performs right down to its street position, investor Ben Everingham has niched down with a strategy that’s upped the ante in his journey towards financial freedom. A far cry from his initial portfolio built by purchasing the worst house on the best street, in recent years Ben has opted for premium property in Sydney and Brisbane. Having studied historic prices in the United States, United Kingdom and throughout Australia, he could see that particular properties in certain markets did better over time.
“I used to think about the number of properties I wanted, but now it’s about owning a select number of premium properties,” he says.
“I go really niche and look at a state, focussing on one or two suburbs.”
Honing in further, Ben seeks to maximise returns by opting for houses on larger pieces of land which historic data shows has achieved 2-3% higher returns when compared to units. He also opts for properties within 10 kilometres from the CBD or close to water, guided by further data showing 2-4% higher returns in these areas. “By focussing on these basics, I’m in a much better position,” he says.
According to Ben, the narrow focus he’s adopted for property selection helps him to whittle out 99.9% of the market that doesn’t achieve his goals. He favours great cash flow with yields over 5%, good long-term capital growth potential and buying well on the way in to get immediate manufactured growth. This stronger focus on strategy is something he advises new investors to get right from the start.
“Know where you want to be in 12 months, then 10 or 15 years,” he says.
With a firm eye toward time in the market, Ben says he doesn’t hesitate to sell down properties to capitalise on their growth. In doing so, he’s recently sold out of Sydney to shore up his existing portfolio and access funds to purchase in markets towards the bottom of their cycle.
He’s also been able to strengthen his personal financial position, owning his principal place of residence outright by the age of 32.
Far from being smooth sailing however, Ben’s property journey to this point has thrown up some of the largest challenges imaginable for an investor. The biggest of these was a frantic phone call from his property manager announcing a police raid on his Central Coast investment, one of the first he’d purchased when starting his portfolio.
“They had a meth lab in the granny flat,” Ben says. “It was the worst case scenario of what can happen with a property.”
What turned a nightmare situation around for Ben was having all the right risk mitigation strategies in place. The cash buffer he’d set up as an emergency fund paid the rent while the property was vacant and insurance covered damage wrought by the tenants on their departure.
“It was just a matter of rolling with the punches,” Ben says. “I can laugh about it now.”
While that experience takes out the gold medal for his all-time worst investment situation, a close second was the period during which Ben’s portfolio growth was stymied by his inability to purchase further properties. By that stage, he’d bought his first couple of houses but as a young investor on a graduate wage, money was tight.
“I just wasn’t earning enough,” he says.
When his wife, Lisa, became pregnant and they lost access to her income, Ben realised it was time for drastic action. He took on a second job, started his own small business on the side and they moved into a granny flat adjoining Lisa’s parents. Shortly afterwards Lisa returned to work and Ben got a new, higher-paying job.
“I knew long-term exactly where I wanted to be, but it was extremely frustrating at the time,” he says.
Ben’s awareness around the need for investment had developed while he was at university, but his major lightbulb moment around property came from working in an industry surrounded by franchisees. He says many of them were millionaires and they’d built successful portfolios.
“I could see how well they’d done from investing rather than having an income,” Ben says.
Now well and truly hooked on property as a means to build financial freedom, he’s aiming to build up to $200k per annum in passive income. This is double his initial estimate but has grown as his personal commitments have increased - especially with his growing family. He started his own business aged 28 and four years later is helping other people achieve their own property goals.
“Property is like my passion and absolute obsession,” Ben says. “It’s something I can’t help coming back to.”