Investor In Focus - Nathan Seal
Australian Expat Nathan Seal's shift from passive to active investing lifted his property portfolio from $35k negatively geared to $55k positively cash flowed in just over a year.
Expatriate investor Nathan Seal embarked on a major strategy shift to turnaround his property portfolio from $35k negatively geared to $55k positively cash flowed in just over a year. A long-term investor, Nathan bought his first principal place of residence at 18 and had since built a portfolio throughout his hometown of Adelaide. After 13 years of working and living overseas, it became apparent the strategies Nathan had used as an Australian resident were no longer effective. He’d long-since lost the tax advantages offered by negative gearing, with different rulings in place for expats. He not only needed to cough up a 30% deposit for properties purchased at home, his overseas salary was calculated differently too, with harsher lending criteria applied by Australian banks.
In June 2016, Dubai-based Nathan realised the need for drastic change if he ever wanted to achieve his portfolio goal to replace his full-time salary with investment income. As a health & safety advisor throughout 22 countries across Asia and the Middle East, Nathan says so much of his life was spent on planes that a more family-friendly lifestyle was top of his list.
“I had to do things differently,” Nathan says. Negative gearing had been great to reduce tax when he was living in Australia, but it was no longer relevant to him as an expat. The alternative solution was to become positively cash flowed and increase his equity.
Moving swiftly from a passive to an active investment strategy, Nathan took action. He undertook a property investment course, then put that knowledge to work assessing his existing portfolio and began implementing multiple strategies to add value. With the help of his mortgage broker, they soon identified two underperforming properties that needed to be moved on. “I could at least get the deposit out and do something else to generate income or further equity,” Nathan says, acknowledging the freeing up of cash from reduced mortgage payments brought further relief.
The next step was to subdivide a couple of two bedroom maisonettes - originally worth $520k as a whole, the formalities cost $15k and increased the overall property’s value to $700k. Nathan now rents out the properties by the room offering affordable housing to singles through share accommodation with a Class 1B permit, meeting additional fire and safety regulations
From Dubai, Nathan then put his Adelaide ‘A Team’ to work renovating an older style South Australian beach house (houseofhenley) that’s now rented out as an executive rental via a number of rental platforms, increasing rental yields by double. Another portfolio boost currently in the pipeline is a development in regional South Australian. Nathan took a 2000sqm block and renovated the house on the front of the land, then carved off four blocks from the rear of the property. Each of these now have two bedroom homes under construction, due for completion in March.
With such a strong “why” driving his desire to invest and replace his salary, Nathan says his sharper focus has started to pay dividends. Over the past couple of years, he’s also moved into projects in Dubai, flipping two properties in partnership with his wife Emma Vorwerk. Rather than being a daunting undertaking, with Emma’s years of experience in the region as a top interior designer meant she was able ensure a professional job every step along the way on time and within budget.
“Emma has her own contractors, suppliers and ‘A Team’ over here,” Nathan says.
Having put so much time and effort into working out investment strategies aligned with his status as an expat, Nathan says he hopes to share all his knowledge with other expats and now start a property investor mentoring group in Dubai. Nathan has also recently founded a development company in conjunction with Emma and they’re now looking at projects locally and back home. Under consideration are group investments with other expats, reducing the strain of finding a 30% deposit for offshore lending.
“If we do group investments, we still get good returns for a much smaller outlay,” Nathan says.
Reflecting on his success, Nathan acknowledges while the hardest part was taking that first step and getting into property, education was key. The fundamental mind shift that enabled him to undertake renovations and develop properties back in Australia has been life-changing. “At first I thought it was too hard because I’m away, but now I’m much more plan-oriented and focused driven,” Nathan says.
And if that means getting up at 4 o’clock in the morning to make phone calls to Australia, so be it.
“Property isn’t easy,” Nathan advises new investors. “There are lots of set-backs and doors are constantly shut in your face but if you keep getting up, the rewards are massive.”