Investor In Focus - Shan Manickam
After 16 years of adding value to his portfolio through renovations, Shan Manickam wants to focus on the ground up for the next stage of his investment career. Having owned property throughout Sydney and Melbourne, Shan has been well-rewarded for his wealth-creation efforts. He commenced with a buy and hold strategy, but in recent years has felt the need to really create something. Now with the means behind him to do so, Shan wants to subdivide land and bring it to building permit stage - a strategy shift he can’t wait to bring to life.
Inspired by an investment seminar, Shan bought his first property in 2001 - a two-bedroom Art Deco flat for $194k in Sydney’s Ashfield. Following a move to Melbourne, he added to his portfolio with two one-bedroom apartments in St Kilda and has purchased a number of properties since then. There were a few hiccups regarding borrowing capacity in his early days, but Shan says that’s all part of the learning. “I don’t believe in walls or challenges,” he says.
Shan says his best investment decision was to purchase a property in Spotswood, when real estate was “on the nose” in 2013. Interest rates were low and he snapped it up for a great price. “It doesn’t have a great yield, but it will do well,” he says.
In recent years, Shan was one of a group of 12 to buy units in a Fitzroy North development through Advantage Property Consulting’s Group Block Challenges. All purchasers put money in a kitty to makeover the externals, while each individual then renovated their own dwellings internally. Shan says the unit was bought and sold within about 12 months. “It was a good property in a good location,” he says.
While he had a slight hesitation prior to the project - coinciding with media hype around the idea of a property bubble - Shan says it wasn’t the first time he’d bought through Advantage, so he went in boots and all.
A solid, double-brick 1904 Federation home in Clifton Hill, the property had been so badly renovated there were no signs of the charmer that lay beneath. As he passed everyone in the hallway screwing up their noses, Shan knew this was the perfect opportunity to buy an undervalued piece of real estate. “I then used Frank’s market intelligence to negotiate,” he says.
For his next investment, Shan is looking for land to subdivide in Melbourne’s north - primarily around Reservoir, Preston, Plenty and Rosanna. He then aims to take it to planning stage and sell off to developers, with the view to create something the city desperately needs.
“Our capital cities need more dwellings and they need them in the right areas,” he says. “It’s a little more capital intensive, but I’m in the situation where I can do that now.”
Shan says the only real danger from this move is that it may be hard to get plans and permits. “I expect the first one could be a challenge, but that’s part of the punt.”
Referencing Warren Buffett when describing his overall investment philosophy, Shan says that if it sounds too complicated and you don’t understand it, you probably shouldn’t invest in it. The experiences that haven’t been as successful as he’d hoped were with investments he just didn’t understand. Instead, Shan says he’s all about the grind. “There are no real easy wins.”
He acknowledges that you have to do the hard yards and be willing to compromise when it comes to property. “There are still gems out there, you just have to find them,” he says. “Then get in there and get your hands dirty, because no-one else will do it for you. You’ve got to make it happen.”