Property investments help propel career spanning Melbourne, London and Perth

Michael Lee’s property journey is testament to just how heated the Perth property market has become post-Covid.

As a relatively experienced property investor who had previously profited from a house sale in Melbourne and bought two properties in London’s competitive market, buying a family home in Perth was expected to be this difficult.

After living in London for 20-years and working in senior corporate investment and finance roles for major multinationals, Mr Lee could’ve been excused for thinking that buying a home in Perth’s western suburbs would be a relatively straightforward proposition.

But he wasn’t quite ready for the bear-pit that had become the Perth property market and hadn’t expected to be house-sitting, staying in Airbnbs and renting.

After being delayed by Covid, Mr Lee and his wife, Kirsty Bentley, returned to Perth in 2022.

“We explored all options across our preferred areas of Perth, having fortuitously house-sat in the interim for a mate who was overseas for a few months.

“The property market was hot so we deliberated carefully and then resorted to a number of Airbnb units while considering a rental for a year or two but this wasn’t our preference, having not rented in the past.

“We made the decision we would buy a house but soon realised this was easier said than done, having attended a handful of house openings and seen firsthand the desperation to buy in the face of the extreme stock shortage,” Mr Lee said.

The couple had all but given up having bid on a property in coastal Floreat, which had its flaws but went for 20 per cent over the asking price.

In the two years from April 2020 to 2022, Floreat’s median house price soared from $1.04 million to $1.46 million. Mr Lee found himself competing against elderly couples who were downsizing and cash buyers who’d recently sold their house in a nearby area for twice the amount this house would cost them.

It took a game of tennis to serve up the stroke of luck they needed.

“The president of my wife’s tennis club had overheard us talking in the clubhouse after Saturday play about the challenges we were facing in finding a house within our price range.

“He reached out to me the following week asking whether we might be interested in looking at his house, which he was selling but didn’t want to engage an agent.

“We bought the house after several visits via an off-market transaction and in doing so avoided the ever increasing competition for property, as well as saving on some transaction fees.”

They have now been settled into their home in Wembley since mid-2023 and have a major renovation underway to improve and modernise the 1990s property, specifically bathroom upgrades and a reorganisation of the downstairs floor plan.

The plight of the building sector has weighed on that process but they have made progress.

“Finding a builder was a major task but we are delighted with the quality of the work thus far and thankfully the project is running to schedule and budget, thanks to my wife keeping a close eye on the works and invoices!”

First home in Melbourne

Mr Lee’s first foray into the property market was back when Australia still had a thriving car industry.

With much trepidation, he bought his first investment property in 1994 at age 22 in Melbourne – a very small one-bed unit in Prahran, bought for $125,000.

The selling agent had guaranteed a 7.5 per cent rental yield, which was not uncommon at that time. The downside - mortgage rates were around 8.75 per cent, having peaked at 17 per cent a few years earlier.

“It was great location with public transport nearby, security gated, off-street parking and a 12-unit block.

“I was fortunate that my mother taught me the importance of compulsory saving from an early age, and I had a decent deposit saved and leant on the Bank of Mum and Dad for the small remaining balance to cover the $20,000 deposit required.”

“The property was never vacant, being ideally suited to medical professionals, given the hospital was nearby, and city workers thanks to having the direct tram route into the CBD.”

London-bound

Mr Lee had been selected for a national graduate program in 1996, consisting of a two-year role rotation and graduate training across Ford Credit and Motor Company.

In 2000 he landed a job as an investment analyst responsible for portfolio management and soon after an internal transfer to London beckoned and his career was on its way.

The Melbourne property was held until 2018 and sold for $390,000 to fund another property and renovation.

Having rented in London for a few years, the young couple bought a three-bed apartment in Fulham, underwent a major renovation and then sold to buy a larger family home in leafy Richmond, near the Thames.

They renovated the property in 2017 before selling in 2019, with a plan to return to Australia but were delayed due to Covid lockdowns and travel restrictions.

Property strategy takes long view

Mr Lee said the focus of his property strategy for the principal residence was to take a 10-year view.

“Start with the ideal suburb you want to reside in, then consider the surrounding suburbs to cast the net wider.

“I like to draw up a list of must-haves, such as a garage, security/privacy, garden space, number of bathrooms and toilets, and then negotiate hard and stay within your price range.”

Similarly, he adopts the ten-year rule for investment property.

“Be conservative with borrowings – never take on debt purely for tax benefit reasons.

“The property and area might not to be your liking but be objective and consider whether it represents a strong rental opportunity, is an attractive rental area and has capital growth potential.

“If an apartment/unit, I prefer to focus on smaller blocks (up to 20 dwellings) that possess scarcity value.”

Michael now has a teenage daughter and works as a commercial real estate investment manager for APIL in Perth, where he plans to stay.

“I’m delighted to be back in Oz and furthering my professional career in Perth after an amazing two decades living and working in London.

“We think Perth is the greatest place on earth and hence, we’re here to stay.

“Although a Melburnian, we’re hoping to be sworn in as genuine Sandgropers at some point!”