Investor In Focus - Michael Perry
Investor In Focus - Michael Perry
Following a near-fatal bike accident Michael Perry drew on savings from the sale of an investment property, reaping the benefits of having independent income away from traditional employment. Determined to make his money work from the outset, Michael had bought his first home at 23 years of age in partnership with his wife-to- be, Bianca. While both had no idea how crucial that decision would be for their financial survival after Michael’s accident, their early move towards independent wealth saved them during his 18 months of unemployment. Now committed to increasing their equity position through positive cash flow and strong returns on investment, they’ve developed a commercial investment strategy that continues to support their lifestyle.
It was the worst kind of AHA moment imaginable when Michael had his accident, but proceeds from the sale of an investment property covered expenses during that highly stressful period. An older style house in Wollongong, it had been their second real estate purchase. They’d worked to improve it over a year and a half and made $70k courtesy of a renovation and good capital growth from buying in the right suburb.
“It really brought home the benefits of investing well,” Michael says.
When Michael was fully rehabilitated from his injuries and able to work again, the couple looked into improving their financial independence by getting educated about investing. Their first steps were through a financial planner, but it wasn’t a successful process.
“I still didn’t like that someone else was in control of my destiny and that the ‘40 year retirement plan’ was going to be our reality,” Michael says. “The old ‘work hard and invest in the share market’ theory that was returning almost nothing on my money didn’t seem to be what the successful people had done.”
With the success of their previous forays into real estate, it become evident this would be their path.
“At the start you do the standard thing and go and talk to real estate agents, but that’s not really investing,” Michael says.
By uplevelling and finding mentors who’d made it “big time” in the property game, the couple learnt valuable insights. Through that investigations they could see commercial property investment outperformed residential in all areas they were using as performance indicators.
“We then used this knowledge and experience for two development projects.”
The first of these undertakings was a development site on the New South Wales Central Coast that ticked all of Michael and Bianca’s boxes.
“Whilst investigating markets that were in demand now and would be in the next five to 10 years and beyond, I came across commercial warehouse or storage units,” Michael says. “Not only did they have stable tenants providing secure income but the returns and cashflow from these were consistently at least double the average residential property returns for the state.”
These key features piqued Michael’s interest from previous feasibility studies he’d undertaken, with the proposed complex having the ability to cater for the small to medium sized businesses storage and investors seeking high yield property to add to their portfolio.
“Self storage is booming, with growth of over 3.3% in 2018 to $1.1 billion annually,” Michael says.
“Commercial loans are also more about the numbers and tighter residential investor loans means that in many cases it’s easier to get finance on these commercial units than on standard residential units.”
With a keen eye towards the future, Michael says his investment aim now is to consistency increase his equity position so that he can continue with more development projects. “I’m passionate about living a better lifestyle and helping others to do that too.” Michael has certainly whetted the appetite of investors for his latest storage development, with a 5.5% net rental return guaranteed for the first year.
Confident that the path towards education was what turned things around, Michael says new investors must increase their understanding around property, have a clear strategy and seek positive cash flow.
“You’ll never go broke making a profit,” Michael says. “That’s the ultimate.”
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