Investor on humble income accumulates seven investment properties

For anyone struggling on a modest single income, the sizeable property portfolio built by this hardworking investor is a source of inspiration.

A qualified chef who has worked as a caterer, cook, driver and menu developer for an airline, Alex Turnbull has accrued seven investment properties and secured his financial future.

While the 52-year-old got his foothold on the property ladder in 1998 when property prices were far more affordable than today, his savings ethic, use of equity and steady approach serves as template for others seeking to develop their own portfolio.

He is in rarefied air among property investors in Australia – only 0.89 per cent (or 19,920) hold six or more investment properties.

To have accomplished this on what he readily concedes was a very ordinary employment income renders the achievement all the more meritorious.

“I am not too career orientated, as I decided early on that with the right mindset you can eventually generate more cash flow than most employers are willing to offer, through property.

“It is still very beneficial to develop skills that employers are looking and, more importantly, to develop your own skills and development but do so with a goal in mind.”

Mr Turnbull, of Maylands, said his real secret to success was a pretty straightforward savings and work ethic.

“Being able to develop good savings habits was a key.

“When I first started working, I saved and invested any shift penalties, overtime, bonuses and unexpected income and was able to live comfortably on a basic wage.

“If I required more income for a deposit I picked up other basic labouring work.”

The New Zealander moved to Perth after falling for the city during a 1998 holiday visiting his sister.

Finding property in his home country too pricey for his liking, and developing an instant rapport with the city on the Swan River, Mr Turnbull expressed disbelief at the city’s real estate affordability.

The median dwelling value in Perth in 1998 was approximately $130,000, so his immediate fixation on the city as an option to buy was understandable. Today that median property price is $855,267.

“I couldn’t believe how new the city looked, the weather, beaches, the beautiful people.

“I decided then that I would come back a few months later and make a permanent move.”

The first property purchases

After renting a two-bed, one-bath unit in Victoria Park for a couple of years Mr Turnbull decided it was time to buy.

In 2000 and benefiting from a first home buyers grant, he put a $15,000 deposit on “a cheap 3x1” on Canning Highway in Perth for $130,000.

“I lived at that Como property for 19 years and always knew it would eventually be a great rental due to its location near the CBD, river, schools, Curtin University and transport services.”

The seed for the Perth property portfolio was planted.

A strategy was also starting to emerge in his mind, one that would centre on affordable properties on the suburban outskirts or working class suburbs.

The initial results were not, however, encouraging.

The second property was in Kenwick and was uncovered through a pretty simple research procedure.

“Research is probably too strong a word; I pretty much just went onto a popular real estate website and searched for the five cheapest free standing houses within 15kms of Perth, thinking that one, I could afford it, and two, it would make a good rental for the next 25 years!”

Things didn’t quite go to plan.

“The house developed subsidence issues eight months after I purchased it and became structurally uninhabitable.”

Undeterred, and with his trademark determination, he became his own project manager and hired help to resurrect the home.

“They injected resin into the ground to support the property as at one end it had sunk around 80mm, causing large cracks in parts of the house.

“The tile roof also required replacing with a lightweight Colorbond roof, walls needed crack stitching, re-rendering, plastering and painting and carpets also had to be replaced.

“I learnt so much by buying a dud property and learning how to turn it from an ugly duckling into something tenants would be happy to live in.”

The investment strategy

Even with today’s much inflated prices, Mr Turnbull still adopts a similar strategy focused on relatively affordable properties and has no plans to stop building the portfolio even after going part-time at work.

Unlike many property investors who insist capital growth needs to be the primary focus for investors, he sets his sights on more immediate necessities.

“I am mainly driven by, and endeavour to seek out, cash flow and high rental yields.

“I feel that Perth as a city and destination has so much going for it in the long term that Perth property, and Australian property over time, will appreciate anyway.”

Obtaining finance can also prove a major obstacle for investors but Mr Turnbull said a savings ethic took care of that.

“I have found the easiest way to get finance is spending a good three months saving, working hard, being frugal - it’s only for a few months after all - and finding a mortgage broker who will get you the highest amount of cash you are willing to spend.

“Owning a property is like forced saving to meet the repayments.

“If you can’t make the repayments you could lose the property, so I have always made sure I was able to make the repayments and also make the property slightly positively geared so I could go onto the next property.”

Eventually with capital appreciation and rent increases the properties have become increasingly positively geared, allowing him to buy another slightly negatively geared property to help reduce tax obligations.

Did he feel Perth property had peaked?

“I see Perth property prices continuing to grow for the next three or four years.

“Hopefully they eventually flatten and even decline slightly so others can enjoy the benefits of home ownership.

“But with the Perth lifestyle being so attractive, it will always be a popular place in which to live.”