Pizza, post office and pandemic: miner strikes gold with daring portfolio

Long hours on planes flying across the country to and from his fly-in fly-out (FIFO) job in the Pilbara that were spent studying investing and the property market have paid rich dividends for a former retailer turned miner.

Now living in coastal Gladstone in Central Queensland, Ben Reyne’s property investment journey has been as geographically diverse as it has been adventurous and varied.

From a pizza shop to a post office in Tasmania, to a large block and rundown home in outer suburban Melbourne’s Seaford and units in Gladstone, Mr Reyne’s tentative first moves into the property market have evolved into a wide ranging property portfolio embracing commercial, residential and development components.

“My very first purchase was a home I lived in that I bought just after the GFC (global financial crisis) with a 5 per cent deposit and the government’s first home buyer grant.

“It was small three-bed, one-bath brick veneer in Frankston for the princely price of $346,500 but at the time it might as well have been a million dollars, as I remember thinking what I have done?”

As it turned out, this property became one of only two to date that Mr Reyne and his partner Janelle have sold, making a tidy return of $100,000 five years later.

“It must be said that this was bought and sold before my mining start and was sold because of a pervious relationship breakdown,” Mr Reyne said, referencing his early days working for a major supermarket chain.

Having grown up in Rye on Victoria’s Mornington Peninsula, he spoke of admiring the real estate on his commute to Rosebud Secondary College.

By the time he’d shed his retail job and begun FIFO work, the property bug had bitten.

“My flights were spent reading books like Think and Grow Rich, Rich Dad Poor Dad, and countless other classics, only stopping to find inspiration among real life testimonies found in API Magazine (then a hard copy publication).”

With his portion of the profits from his first property venture, an old house on 1,200 square metres in Seaford was bought and held for seven years with a long-term tenant. It is now being developed after a few delays caused by the Covid pandemic.

Their next major move was packing in the FIFO work and settling in Gladstone.

“Once the gas construction project finished in Gladstone, we witnessed first-hand what has been described as the biggest boom followed sharply by the biggest bust in Australian property history.

“We didn’t hold any property in Gladstone at the time but did enjoy much cheaper rents, and we kept a keen eye on the Gladstone market.

The couple then made their first joint investment, purchasing a commercial space in Davenport, Tasmania - a high yielding dual dwelling incorporating a pizza shop in the front (with a five plus five-year lease) and the rear office warehouse with a new nationally recognised brand (on a two plus two-year lease)

That was 2017 and cost $430,000, returning a 9 per cent yield.

“This property is in a great location on 1,100 square metre block with great development potential and prime for an electronic billboard, again meeting our expectations for manufactured growth and great yields, and it was purchased in our company trust structure,” Mr Reyne said.

FIFO beckons again

As most people can attest, life is never a simple trajectory and a determination to avoid the family stresses of FIFO work was undermined by a lack of employment options.

“After four years in Gladstone and jobs at an all-time low, I was back on the FIFO bandwagon and travelling long hours on a four week on, one week off roster in Western Australia.

“But this once again wore thin and with a new bundle of joy now joining our small family, and major infrastructure works kicking off in our home city of Melbourne, it was time to move home.

“With the Seaford property into gear with plans and permits approved for a redevelopment, by February 2020 things were going perfectly, I had scored a job on the Metro Tunnel project, and we had secured a construction loan and evicted our tenant – and then Covid hit!”

Little did he know at the time it would precede another Tasmanian investment opportunity.

“I was fortunate enough to continue working through the pandemic, the bank pulled the construction loan due to the uncertainty of Covid but also the risk of us being first time developers, and the government rescinded our eviction notice, also advising us to drop our rent to help our tenant, which we did despite our tenant then going into rent arrears and refusing to pay the rent.

“We took this time to go back to council and amend our planning permit to allow for a Section 173 subdivision in hopes to secure a construction loan with limited risk, however, Covid went a little longer than we first thought so we took up an opportunity to purchase another commercial space in Tasmania.”

The yield on this post office, property purchase number four, was 7.5 per cent, with a five-year lease.

It was made using Janelle’s offer from the Government of early release of her superannuation as their deposit, and “was a steal” at $190,000.

“With historically low interest rates it made for a nice cash flow-positive addition and we settled in October 2020.”

With their knowledge of the Gladstone market, they made purchase number five, a block of five residential units.

“As we saw it there were two potential avenues for manufactured growth here, one being a strata title play, with the units being divided into a two-lot and a three-lot subdivision as they didn’t share a common wall.

“In doing this we will be able to sell off either the two- or three-block units once the market has met the total debt on the purchase price, being $495,000.

“Breaking the units up also means that come time to sell we’ve opened the pool of potential buyers up, as the lending for unit blocks three or under generally falls under a residential product.

“The second play was meeting the market on rental price.

“Upon purchase the units were renting for an average of $150 per week and within 12 months we were able to bring this up to $250p/w with no disruption or vacancies.”

This property is now valued as $730,000 and has yet to be strata titled.

As construction began and interest rates started to head upwards, the couple made the decision to sell the post office, making a $100,000 profit in 14 months.

Investment opportunities aplenty in 2024

Mr Reyne is very bullish about the prospects for property investors heading into 2024.

“With a strong labour market and record numbers of skilled migrants arriving daily it becomes a supply and demand equation.

“Australia has one of the best lending structures in the world, withstanding the 2008 GFC and now a global pandemic.”

Mr Reyne said his advice for people starting out in real estate is to know your numbers.

“Rent money isn’t dead money; let’s consider a scenario whereby an investor buys a house to live in, this takes a huge portion of their leading capabilities and has zero tax offset.

“And for what? After 30 years of paying, it down you’ve earned the right to downsize in retirement buying something smaller in the same market you’ve just sold in.

“We feel that the purchase of the family home has a time and place but is better suited in the later years.”

“If you’re investing with a partner, support each other and be on the same page.”