Portfolio built on affordable houses evolves into commercial
Before it became fashionable, Ashish Malhotra had embarked on a property investment buying strategy that has seen him amass a portfolio of regional properties and move into large-scale commercial investment.
A few years before it became the fashionable investor thing to do, Ashish Malhotra had embarked on a property investment buying strategy that has seen him amass a portfolio of regional properties and other suburban and commercial sites.
What started as a property purchase in his native India at a young age, has blossomed into a Victorian residential portfolio that has included four properties in Geelong, one in Macedon Shire in central Victoria, and a couple of outer Melbourne houses in the Whittlesea and Wyndham councils.
While the year is only a month old, Mr Malhotra has already added his latest two investments to his growing portfolio, including his first foray into the commercial property sector.
“We bought our first land as an investment in India when I started my second job in 2006 at the age of 23, before migrating to Australia in 2014,” Mr Malhotra said.
By just 31, he had started a family, moved countries, found a new job and embarked on a property investment strategy that would change his financial future and his career path.
With the exception of his major step into commercial, he has focused his attention on affordable Victorian houses with a purchase price between $275,000 and $470,000.
“I wanted to fully capitalise on the boom that was underway in Victoria so kept buying and kept making gains,” he said.
Eschewing the notion of negative gearing, Mr Malhotra sought properties that offer generous rent returns that exceed financing costs.
“The key has been getting into some areas at the right time, just when they were on the brink of growth, areas low in supply and offering high rent yields.
“I picked up some properties that were distressed sales for one reason or another and retained a focus on high returns.”
Rinse and repeat
Rent yields of around six per cent and the potential for capital growth have been his primary focus.
“I have looked for a balance of growth and yield and cannot understand why an investor would only chase one when there are clearly options to have both,” he said.
Although a Sydneysider himself, Mr Malhotra studied the market and determined that regional properties within reasonable commutes to the Melbourne CBD, or other nearby CBDs, provided far better returns, infrastructure and lifestyle than middle ring or inner suburbs.
“One thing I have learnt is that one should buy keeping tenant quality in mind.
“Cheap properties may not necessarily grow to the right extent and may not be the right strategy.”
As well as NSW and Victoria, Mr Malhotra said South Australia and Western Australia now presented themselves as potential components within his broadening portfolio.
“There are markets within markets and you have 15,500 suburbs to choose from.
“If I have learnt one thing it is that with every year your buying strategy has to change.
“What I did in 2015 was different to what I did in 2018 is different to what I am doing now.
“It is very important to diversify but if one strategy or type of asset works for you a shorter term, then I will just rinse and repeat!”
|Purchased||location||Property type||Purchase price||Current valuation||Current status||Rent received||Rent yield||Strategy|
|2015||Greater Geelong, VIC||House||360k||600k||Rental||Then $420pw
|2016||Greater Geelong, VIC||House||275k||575k||Rental||Then $330pw
|2017||Wyndham, VIC||House||365k||500k||Rental||Then $350pw
|2017||Whittlesea, VIC||House||390k||590k||Rental||Then $390pw
|2019||Greater Geelong, VIC||House||470k||725k||Building||Expected
|2020||Greater Geelong, VIC||House||420k||666k||Rental||$440pw||5.44%||Sold|
|2021||Macedon Shire, VIC||Land||360k||420k||Developing||
|2021||Central Coast, NSW||Commercial||Subdividing||
His latest venture is his first in his home state of New South Wales. Even his principal residence in western Sydney is a rentvestment and not his own.
As a first step into the NSW market, it’s a big one.
With a $5.75 million development that now has a market value of around $8 million, Mr Malhotra is a one-third partner and business manager of a 25-warehouse subdivision on the Central Coast.
With his career having moved onto the setting up of his own property enterprise, the Auswide Buyers Agency in Westmead, western Sydney, his industry connections led to the opportunity to enter commercial property investing through and off-market deal.
“The risk is high but the rewards are high as well.
“Commercial requires high deposits, risk tolerance and more complex due diligence compared to residential, which is why it usually comes in the latter part of an investor’s journey, when they have a certain level of cashflow.
“Targeting the right commercial development is the key and having a good team in place - I have brokers, accountants, financial planners, property managers and many other professionals working beside me and the success is always a team effort.”
Investment to career
By 2017, with a proven record of success in investing, Mr Malhotra began to point out opportunities to friends.
Over the next few years, he committed to studying the real estate and finance sectors and early last year he took the plunge and began his own buyers agency, which now boasts clients around the world purchasing properties anywhere in Australia.
It was a typically bold step for a man who had a well-paying information technology role with a major bank but one accustomed to making big life decisions.
“Ultimately, I came to realise that everyone wants to rip off the buyer and that many buyers are unaware of what they should buy and what strategy to adopt when buying property.
“There is no one size fits all and I have a solution for each type of client.
"I love to understand their situation and help visualise what the next 10 to 15 years would look like in the journey, whether they are a first-timer, a high-net-worth investor, a developer or executive looking to buy premium real estate.”