Investors Who Not Only Survived the GFC, But Have Since Thrived

The investment journey travelled by Dr Greg Kelaart-Courtney and wife Lisa has taken them from their hometown on the Brisbane River to the Yarra in Melbourne, the traditional wooden abras plying the waterways of the Khor Al Maqta in Abu Dhabi and Dubai’s Creek, all via the water taxis of Singapore and an early trip across the Pacific to work in the US. But their liquidity these days owes much to more than two decades of property investing that has seen the doctor and the Director at Central Bank of the UAE build a diverse portfolio of a dozen properties.

With an emphasis on Queensland, but with houses and apartments throughout the country, the peripatetic couple have reaped the rewards of property booms in the early to mid-2000s and later growth periods in the 2010s. But they’re investment strategy, which has focused on a range of investments beyond a reliance on property, has also weathered the Global Financial Crisis (GFC) and is now contending with the evolving fallout of the coronavirus.

It has been an entertaining journey that API Magazine quizzed them on in more detail.

How did you get a foothold a foothold in the property market to start with?

Savings! Lisa and I had only been together for six months before we decided to move to Melbourne for my work. We had our own individual personal savings, and tax refunds we received in 1999.

How have you determined where to buy over the years?

Mostly on our local knowledge, we would look for properties in popular suburbs and typically make an offer well below the market price. The important thing was never to become attached to a property and know exactly where your limit is, should a targeted property go beyond what we deemed appropriate we would move on to the next property.

Do you have a diversified investment strategy or rely on property?

Lisa and I had always had a philosophy of investment in threes; property, investments and savings.

You had accumulated eight properties before the GFC occurred. Did your portfolio take a hit or was it a resilient investment, and how did your investment strategy change thereafter?

At the time of the GFC, we had approximately 40-45 per cent equity within our properties, which meant when the housing market dropped we still had adequate equity in our portfolio.

The reason we had adequate funds within our property portfolio was due to a handful of things. Firstly, when there was a weak Australian dollar, we sent funds back to Australia to offset against the mortgages. Secondly, if and when we received an end of year bonus at work we put that directly into our mortgage and thirdly, Lisa introduced a philosophy of ‘buckets’ whereby we had several designated accounts that were separate from our day-to-day accounts, and each month automatic transfers moved a percentage of our wages to these accounts. Finally, although we had an active social life, we lived well within our means.

Have you had to overcome any fears to achieve your property goals?

Our largest fear has always been the level of debt and potentially having a seven-figure debt was quite daunting for us. However, when we exceeded an accumulated seven-figure mortgage this only became a number and what was more important was the debt to equity ratio, which we tried to keep above 40 per cent.

You divide your respective schedules between the UAE and Melbourne. Have you sought assistance from mortgage brokers or expatriate finance experts and, if so, how have they assisted?

We originally moved overseas to Singapore in 2000 and stayed until 2004, during this time we managed our loans directly with the bank, including the research undertaken by Lisa, to take our loans from a normal Australian mortgage to a currency switching facility (where loans can be moved between currencies, and become subject to the interest rates of the country in which the loan is denominated). We met Helen (Avis, Smats Group Director of Finance) and husband Steve (Douglas, Smats Group Executive Chairman), at an expat’ function and became very good friends. But we didn’t partake in their services just because of our friendship. It was only when we moved to Dubai in the UAE in 2004 that we started to utilise the services of SMATS and Specialist Mortgage, and we have used them ever since for all our tax, property and investment needs.

Has renovation played a significant role in your investment strategy? If so, how has that been managed from overseas?

Several years ago we realised that our properties were subjected to the zeal and capabilities of whatever property manager managed our rental portfolio. We decided we would invest in creating partnerships with various tradespeople who we would work with to provide various services for our properties. This was difficult to manage from overseas. So we ended up identifying a small handyman company with whom we developed a level of trust.

This individual would accompany the real estate manager on all inspections. He ensured any maintenance issues with the properties were dealt with appropriately. He also sourced various other tradespeople, whom he trusted, to provide the services that were beyond his expertise, such as painters, plasterers, electricians, plumbers and air conditioning specialists. When we would decide on a property to renovate, we would work with this individual to define what we wanted and he would project manage the end-to-end project, conduct inspections and provide sage advice. Over the period of the last five years that we have had this partnership, we have completed several total house renovations that led to an increase in our property values and an increase in rental income.

Have you bought internationally?

Yes, against our better judgment we bought in Dubai - once was a completed apartment and once was off-the-plan. This is something that we would probably not do again, in Dubai at least. We are open to investing in other markets.

What is your ultimate goal in regard to your property investments and what purchasing plans do you have from here?

We have divested some of our property holdings in Queensland as the state taxes do not encourage investment in property. We are also looking at changing our property portfolio mix to be more focused on new properties and apartments this lowers our maintenance and land tax costs.

Do international crises such as the coronavirus or GFC impact your nett values, affect your plans or alter your strategies?

Yes, they do. Our share portfolio is down by more than 40 per cent from historical highs, as we typically invest in bluechip stocks, however, we have used some of our cash savings to put in buy requests for shares at historically low rates, as we believe that in the long term the markets will recover. One needs to be prepared for a long-term investment and not try for the quick win. We are looking more at strong dividend returns, in the range of 4 to 7 per cent, and long-term market recovery.