Perth property investor's portfolio strategy mixes high-risk and caution
A mix of property types, complemented by some volatile currency-linked mortgage manoeuvres, have been hallmarks of the portfolio strategy of a Perth accountant and property investor.
For most of her 20s and 30s, travel and adventure were far bigger priorities than mortgages and interest rates.
When Perth-based accountant and property investor Lisa Parry decided that at least part of her foreign income could be put towards a longer-term financial goal, she was based in Hong Kong with the first of her two children on the way.
Having spent three years in Dubai in the late 1990s and a couple more in London at the turn of the millennium, the lack of career certainty and openness to relocation meant renting was more practical than buying in a foreign city.
But a career opportunity for her partner initiated a move from the UK to Hong Kong in early 2001 and led to a new job in the communications sector, as well as the start of a family and her property investment journey.
Benefiting, by her own admission through more good luck than planning, from an Australian dollar that was languishing at 50 cents to the US dollar (that same decade it would soar to more than $1.10 to the USD), Ms Parry set aside any doubts about job security in a fickle market and bought her first property in the leafy inner Perth suburb of Mount Hawthorn.
The Perth market may have been subdued compared to its other capital city counterparts over the past eight or so years, but in the early to mid-2000s it launched.
The $210,000 corner block villa proved a canny purchase and after a couple of years had generated enough equity through double-digit capital growth that Ms Parry’s confidence to invest in property and build a portfolio was cemented.
Although she didn’t know that her plans to be in Hong Kong for “a few years of travel and experience” would become a decade-long second home from home where she’d raise two children, she proceeded to invest in a range of Perth properties, and a smaller dalliance in neighbouring Macau.
An introduction on the expat circuit to SMATS Group Executive Chairman, Steve Douglas, and the start of a more studied approach to investing and loan finance and the purchase of two more properties in Perth.
“We spoke to SMATS and they arranged the finance with Australian lenders who provided a multi-currency loan service, which led to some interesting times and thankfully, some great results,” Ms Parry said.
Multi-currency loans allowed the borrower to switch their debt between Hong Kong dollars (which is pegged to the US dollar) and Australian dollars, receiving the interest rate applicable to that location.
At the time, the interest rate was far lower in Hong Kong, but with the currencies going through a volatile time, Ms Parry and her partner regularly shifted their loans between currencies. With astute timing, they managed to cut sizeable portions from their loan by switching the debt between currencies and timing the highs and lows with a degree of precision.
“It was very nerve-wracking watching the value of your mortgage moving rapidly up or down against the currency from which you had switched but we generally timed it right and shaved tens of thousands of dollars off the debt with each switch,” Ms Parry said.
“With the dollar in the mid to late 2000s moving erratically, we did see other people switch on the wrong side of the currency movement and unfortunately add to their debt.
“It was a rollercoaster ride, given that property is usually seen as a more stable form of investment.”
Their second property was an off-the-plan apartment in Highgate, close to the city centre, which was recommended by SMATS. The Beaufort Central complex offered pool, gym and facilities and over the course of a few years, almost doubled in price from its $275,000 purchase.
With two smaller properties now rented out, a third was bought by Ms Parry in coastal Safety Bay, on the southern outskirts of the metropolitan area.
“We felt we should diversify from the inner suburban villa and apartment, so bought a four bed, two bath house on a decent block a street back from the beach,” Ms Parry said.
“It was seen as a suburb that was benefitting from the new wealth of fly-in fly-out (FIFO) workers and it looked to be a good buy when the price quickly rose from the purchase $460,000 to around $530,000.
“But within a couple of years it had retreated back to the purchase price, so we sold.
“Over the next few years it slipped back to around $360,000 and stagnated for a year, so it was a good reminder not to get attached to properties or make any assumptions about growth being guaranteed – we dodged a bit of a bullet getting out when we did.”
Living for ten years in the same rented 26th floor apartment on Hong Kong Island, Ms Parry said that had they known how long they were going to be there, buying where they lived would’ve been a very rewarding investment.
“We thought about buying in Hong Kong and in hindsight should’ve but prices seemed outrageous even then, and they probably doubled from that over the years we were there.
“We did do well from a relatively small investment in a Macau property syndicate, where 10 expats bought 11 cramped multi-room apartments in the gambling city and converted them into spacious studios that appealed to the growing number of incoming international casino middle management type of workers.”
When it came time to return home, the family of four bought in the suburb of their first purchase, Mount Hawthorn.
The $910,000 cottage-style character house bought in 2010 was originally rented out and is now home. After a fairly flat decade in Perth, it has recently shot up to around $1.2 million.
“We’ve generally made a healthy profit from our six property purchases, so you can’t complain or moan because we’ve been lucky and appreciate what we have.
“But from a pure investment point of view, then I’d have to acknowledge that if we’d broadened our horizons beyond our home state and bought in Sydney, for example, in 2010, well, we all know how that market went in the past ten years.”
Ms Parry’s most recent property purchase was literally a few streets away, a two-bed apartment in a small complex of six. It is now the only property she owns outside the family home.
“The rent comfortably covers the mortgage, almost double in fact, and there’s been some good early capital growth over these two years.”
That purchase in 2020 followed the sale of the very first purchase, where a $210,000 buy eventually grew into a $585,000 sale.
So, what’s next on the property agenda?
“One son is considering studying in Melbourne or Canberra, so we could look at buying there.
“I’m also very interested in moving into commercial, perhaps through a syndicate with some secure returns and a good track record in the industry, so that I’m not hands-on in a sector I don’t have experience in but can still gain exposure to this market.”
“Property has been kind as an investment, so I’ll continue to explore different options, with the aim of rental and capital growth income eventually supporting the retirement years.”