Large blocks, big dreams, ample cashflow forge Dragan’s property portfolio

From buying his first property at 21 but making plenty of subsequent real estate investment mistakes, Dragan Dimovski has built an impressive multi-state property portfolio with a surprising emphasis on a particular property type.

Dragan Dimovski with Sydney in background
As a struggling small business owner from Sydney, Dragan Dimovski got advice from a wealthy landlord that changed his life forever.

Investor Dragan Dimovski bought his first unit in Sydney aged 21, and on reflection it’s the mistakes he made along the way that have refined his choices now, developing an instinct for property that offers him the best short-term gains.

The son of immigrant parents, Dragan Dimovski grew up with few material possessions, but at 21 his strong work ethic led him to open his first business in Sydney, a photography studio, where he realised fairly quickly it wasn’t going to bring him the wealth or lifestyle he really desired.

The owner of the building he rented for his business, however, had nice cars and clothes that prompted him to ask him how anyone managed to afford these things. The response he got changed the course of Dragan’s life, setting him on a path to growing his personal wealth.

He quickly booked himself into a seminar to learn about property investment, where the presenter’s first lesson was to follow in his footsteps and buy one- and two-bedroom apartments in serious need of renovation.

“So, I thought I’d do the same, but obviously, not really understanding what I was actually buying I bought a two-bedroom, one bathroom apartment in Pymble, in northern Sydney, where that type of property then, was worth around $500,000,” Dragan explained to API Magazine.

“I could buy the unit for $440,000 but after $20,000 in renovations, $20,000 on stamp duty, buying and selling fees, solicitors etc., I was just breaking even, so, no, the due diligence wasn’t there.

“I was overexcited and gung-ho in my youth, so my approach was ‘just buy something’.”

After realising he’d spent too much on the renovations, he held on to the property and purchased another two-bedroom, one bathroom unit, this time in the south western Sydney suburb of Liverpool.

“I should have held on to the Pymble unit for a few years and then sold, because I would’ve flipped it right away, but I decided to hold on to it for longer and buy in Liverpool because at the time there was a lot of talk about building a casino there and that was a big part of my motivation.

“However, despite all the hype the casino didn’t get approved, so I copped the loss and I’d just overpaid for it thinking that property prices were going to go up and then later the council decided not to go through with it, because all the investors pulled out so, I held on to that for a few years too.”

Still in his 20s, he turned his sights to a new apartment in the inner western Sydneys Leichhardt but again didn’t realise he was overpaying, spending $550,000 only to let it go a few years later.

“From there I started doing more research, attending seminars, building my network, and this is when I began to get an understanding and hearing other people’s trials and errors, and I watching how the market trends were moving.

“After my period of buying units, holding them, renting them out, I moved on to purchasing properties with larger blocks of land, 1,500 or 2,000 square metre blocks, mainly on the north coast of NSW and in Brisbane and then I’d do the research to see if I can subdivide, or build on that land, and I’ve been doing that now for nine or ten years,” he said.

Subdividing without building

Having a close mentor also made a difference to Dragan’s approach and one of the most important ones was an uncle he hadn’t realised was into property investment too.

“I wasn’t really in contact with him all that much but once I started getting into property investment and he saw I had an interest, we sort of got together and he was a guiding hand helping me to decide what to do or not to do, it was very handy to have someone in the family that could help in those early days.”

Over time, Dragan has developed a portfolio that purposely avoids hanging on to a property for more than 10 years, but instead he takes an accelerated route.

“My tip is purchasing an older house that’s on about 1,000 square metres, which you know can be subdivided then ride the growth for 5, 7 or 10 years, but then cut up the block to sell and pay out the rest of the debt.

“Also, the risk isn’t there, so you’re still getting good income from the rent and land banking, and when the time comes, you don’t have to kick people out who are renting the house as their home, to do a full development.

“You just do a subdivision, which is always as paper shuffle through council or hire a town planner to get it done, which means paying their fees but you’re not losing any money, there’s no real risk of a builder going bust or things like that.

“The other option, if in seven years’ time for example the valuation in that area for a property like that is $600,000 - which is getting you a $550 or $650 rental return - then instead of going off and purchasing another property for $600,000 to get that rent, you’ve got the land there, spend $300,000 to build a four-bedroom, two-bathroom, double lock up garage on it.

“There are builders out there that will do a full turnkey service for you with development approval building and landscaping for $300,000 and you’ll get that $600 rent.

“There’s all sorts of strategies.”

Young property investors should not be deterred

For people starting out in property investment Dragan recommends making mentors a priority and linking with them as soon as possible, as well as attending as seminars, courses or read as many books as you can.

“Education is everything, don’t think you know everything, ask professionals who can help you understand why a certain strategy is best suited to your set of individual circumstances,” he said.

To young people looking at today’s market, Dragan also says it’s not true they can’t break into the market; they’re just not looking in the right places.

“They’re usually just looking in their backyard so if they’re in places like Melbourne or Sydney, prices are crazy in the $1 million-plus bracket but in Queensland and some areas along the north coast of NSW, where population growth is increasing every year, there’s low vacancy rates, and affordable housing at $400,000 to $600,000, it’s doable, but if you have the mindset that you can’t, you won’t.”

Article Q&A

What are the secrets of building a property portfolio?

Property investor Dragan Dimovski: "After my period of buying units, holding them, renting them out, I moved on to purchasing properties with larger blocks of land, 1,500 or 2,000 square metre blocks, mainly on the north coast of NSW and in Brisbane and then I’d do the research to see if I can subdivide, or build on that land, and I’ve been doing that now for nine or ten years."

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