Investor In Focus - Hayden Shaw
Building a portfolio during his twenties may have kept Hayden Shaw from the lifestyle options others enjoyed, but his future is assured by the strong asset base he’s created. Hayden got his foot in the door as a 20 year old, when the government’s First Home Owners Grant offered $24k for brand new property. An offer too good to pass up, it put real estate on his radar and showed the promise of bricks and mortar. But when the looming Global Financial Crisis threatened to put an end to things before Hayden had a chance to launch, he had to stand firm.
“I had to get multiple pre-approvals over the time, with the banks constantly changing the goal posts and lending criteria,” he says.
This immediate challenge fuelled a stressful situation. Not only was Hayden young and on a tight budget, as a first-time lender, he was forced to jump through hoops. He was compelled to generate numerous pre-approvals, a process which meant a large amount of paperwork even his financiers couldn’t successfully navigate. Lost in the figures - and running the wrong numbers - they denied him finance for a Newcastle apartment he’d hoped would finally be ‘the one’.
Not one to be dissuaded, Hayden pursued another off-the-plan apartment in the same complex. By this stage, the Charlestown development was running overtime, with much negativity about the project. “I knew the back story and was able to negotiate a price that would see me come out ahead,” he says.
Hayden then lived in the two bedroom apartment with a friend for 12 months, before moving out and tenanting it - effectively becoming a ‘rentvestor’ which he remains to this day. In 2014 he bought his second property - a four bedroom house plus studio apartment in Wallsend, 11 kilometres west of Newcastle’s CBD. Launching into a full-scale renovation, Hayden says this is where he made his worst investment decision.
“It took too long, so there was a lot of dead money in it,” he says.
Taken by the location, Hayden started to imagine himself living there one day so he added elements to the construction project he’d want to see in his own home. “Obviously that’s a no-no when you’re in the middle of a renovation but I’ve learnt from that,” he says. “If you buy as an investor, you have to stick to that.”
Fortunately for Hayden, the additions he made meant the well-specced property became highly sought after on the rental market, achieving a premium return. It’s also become a stand-out in terms of its saleability potential but all the same, Hayden warns other investors about the risks of getting emotionally attached to their investments.
While his first apartment was his best investment decision in terms of getting into the market, Hayden’s third property has been where he’s seen the most rewards. Bought for its capital growth potential, the three bedroom property sits a street back from Lake Macquarie at Eleebana. “It was the cheapest property of its kind in the suburb for over 12 months,” Hayden says.
Looking at the land value, he could see the potential of one day undertaking a major renovation or knock down/rebuild project to maximise the site and its water views. In the meantime, Hayden did a minor renovation to prepare the property for tenancy and was able to up its rent from $360-400 to $460 per week.
Now with a portfolio worth approximately $1.6m, Hayden says he knows he could have travelled more and done fun things with his money at a young age, but he’s been able to set himself up for the future. He intends to buy more properties over the next few years - at a faster pace than until this point so far.
“I’m looking for properties in solid areas with good growth potential, then I’ll reuse their equity to buy more,” he says. He’s keen to flip a couple of properties and pay down some debt, but the main goal is to create passive income to bolster his other interests.
Hayden encourages new investors to do their research, for example, if you’re wanting to do a renovation you need to have a good solid reason for doing so. Always hold a cash buffer - and not just for building projects, because something always comes up. He says a good team is essential, especially when it comes to taking out investment loans, finding a good accountant and getting yourself a quantity surveyor. “Many people are unaware of the risks,” he says. “It takes experience and knowing what to ask.”