Investor In Focus - Helen Tarrant
Sydney investor Helen Tarrant turned to commercial property investment when the returns from her residential portfolio stagnated. Since then she's watched her profits soar and achieved her goal of financial freedom many years ahead of schedule.
Sydney investor Helen Tarrant turned to commercial property when her residential portfolio stagnated: a strategy that’s seen her profits soar with positive cash flow and capital growth providing financial freedom. Committed to building wealth from a young age, Helen moved to Australia from China with her parents in 1988. With just $70 in her pocket, Helen’s mother fired up her industrial sewing machines and got to work, doing everything she could to build a better life for her family. At peak times Helen helped, but it was during the quieter periods she realised the need to develop her own financial independence through investments and leverage rather than just by getting a job. This drive to succeed has fuelled her to continuously look for new investment strategies, propelling her own investments and helping others through teaching commercial strategies as a speaker for Freedom 360.
Eager to get into the property market and build independent wealth, Helen was in her mid-20s when she bought her first investment in 2008. Self-employed at the time, she selected a dual occupancy property on the central coast near Sydney to achieve positive cash flow from day one.
“It was important to buy a house over a unit because a house and land always appreciate and there are always more upsides to increase value,” Helen says. The flexibility of land was also a bonus, with its potential to be developed into something else later.
Helen says that in the early days of investing, there’s always the challenge of getting your next deposit and having enough cashflow to build your portfolio. Her own growth was dented when a costly run-in with bad tenants leaving her with a $12k repair bill. Suffering from a loss of confidence, Helen had to re-examine her strategies.
“It could have happened to anyone,” she now acknowledges. “They gradually got behind in rent, took ages to evict and then they trashed the place.”
After a minor refurbishment to her dual occupancy investment, Helen’s returns increased and she realised that despite her setback, property was still the way forward.
“When I first started, it was only $20-30 per week extra, but I could see the rents would increase over time,” she says. “Being self-employed, it really helped me know that my properties were self-sufficient. I have always chased cashflow because [it] can always sustain your portfolio growth.” From thereon in Helen focused on buying more positive cash flow properties.
Helen sought out investments in regional towns, where properties were cheap but offered high yields. Unable to travel to undertake research she looked online, searched agents’ websites and learnt how to read the fine print.
“I must have gone through at least 50 contracts,” she says. “I didn’t have to be physically present to view the properties, but realised I could still find a good deal if the numbers stacked up and that removed the emotions out of the purchase.”
Using this process, Helen was able to find investments including a property in Armidale, New South Wales, that she purchased for $185k and that was rented out for $330 per week.
“It’s very positive cash flowed, even after I took out my expenses,” she says.
Not long afterwards, however, Helen discovered the downside of residential regional investment - a lack of growth that caused her portfolio to stagnate and threatened her progress.
“I couldn’t leverage on my equity and instead had to save up the deposit for my next property. It was a tough and frustrating position,” she says.
Helen then investigated commercial property and realised she could get much better returns by shifting strategy - what she admits is her best investment decision to date. In 2012, in partnership with her husband she bought a tenanted North Sydney restaurant premises that was cashflow positive from day one. Helen says that it was a “ridiculous” time in the local Sydney market when everyone was focussed on residential and developments, avoiding commercial.
“I could get close to 9% net return on a $360k purchase in commercial while everyone else was chasing 5% gross return in residential,” Helen says. “I couldn’t even get a one bedroom apartment for that in the same suburb.”
With returns three to four times higher than residential, Helen says when commercial property investment is done right you don’t need a large number of properties in your portfolio.
“You just need three to four [commercial] properties to give good positive cash flow and growth that you can retire on or subsidise your lifestyle,” she says. “It’s all about the numbers and that’s what I love about commercial. I haven’t looked back.”
From starting out with an investment goal to retire through passive property income, Helen’s earnings have now well and truly exceeded her initial estimates with a nationwide portfolio. In the future, she wants to continue to do more commercial investment deals through syndication and commercial developments, with higher returns again.
“They may take longer to eventuate, but I don’t need immediate cashflow,” she says.
Helen’s outstanding success through independent commercial investment caught the attention of the team behind the property seminar company Freedom 360, who brought her on board as a speaker in late 2016. Helen now runs boot camps and seminars, helping to share her invaluable commercial property investment insights.
Now with the ability to live on her own terms, Helen advises new investors to take responsibility for their own due diligence. “Don’t rely on agents, solicitors or other parties to do [it]. You have to make sure the deal stacks up for you for your financial situation.”