Property portfolio is an innings built on sensible batting

Building a portfolio of ten properties required Mahesh Kumar to overcome a series of struggles, including losing his job during the pandemic.

Property investor Mahesh Kumar with the Sydney Opera House in background
Affordable properties have been the bedrock of Mr Kumar's property investment strategy

The past few years have been a rollercoaster ride for property investor Mahesh Kumar.

He has rapidly built a portfolio of ten properties but only two years ago he had lost his job, taken a heavy hit on the stock market and was forced to sell his family car.

For the married father of two young children, the pandemic years had wrought havoc on his financial plans and his family’s financial wellbeing.

But like a cricketer whose team is on the ropes, Mr Kumar came out swinging.

“I had started my innings with a property purchased in Liverpool, Greater Western Sydney, back in 2016 but my game really got going from late 2019 and throughout 2020 when I bought six investment properties when everyone was hiding and scared of the new virus,” Mr Kumar said.

“As the saying goes, others’ pessimism is your opportunity.

“I seized an opportunity when everyone was thinking the property market was going to crash and no one wanted to buy real estate, with all the major media outlets predicting a property price crash of 40 per cent or even more.”

Property prices subsequently surged throughout 2021 and Mr Kumar’s focus on affordable houses and apartments that generated positive cash flow paid dividends.

Unafraid to look beyond his own backyard, he acquired properties in Queensland and Western Australia, as well as within New South Wales. Whether regional or suburban, the focus was always on generating enough rent to cover the mortgage with some income to spare.

One such property, a house in Logan Central, 30 kilometres south of Brisbane, was bought for just $221,000 and has doubled in price in a few years and generates more than $700 per month in rent.

Property Address Estimated value Purchase price Rent per week Loan Remaining Rate Fixed or variable  IO or PI Monthly payment
Liverpool, NSW $595,000 $546,000 $520 $475,000 2.29% Variable PI $1,994
Southport, QLD $280,000 $221,000 $365 $216,000 2.99% Variable IO $538
Walloon, QLD $390,374 $205,000 $330 $226,992 2.99% Variable IO $566
Kallangur, QLD $232,394 $160,000 $295 $159,515 2.99% Variable IO $397
Maylands, WA $180,000 $160,000 $320 $138,400 2.99% Variable IO $345
Logan Central, QLD $440,634 $221,000 $325 $224,800 2.99% Variable IO $560
Singleton, NSW $340,000 $230,000 $370 $240,000 2.99% Variable IO $598
Rockhampton City, QLD $185,000 $140,000 $300 $112,000 2.99% Variable IO $279
Bundaberg East, QLD $225,000 $160,000 $370 $135,000 2.99% Variable IO $336
Mount Pritchard, NSW $780,000 $585,000 $450 $496,000 3.79% Variable IO $1,567
  $3,648,402   $15,840 /month $2,423,708       $7,180
Equity $1,224,694 Positive cash flow $8,659

With the exception of his first property, Mr Kumar has paid no more than $230,000 for a property.

“Affordable properties are risk-proof properties,” he said.

“In any market, the affordable properties are stable and have upside growth potential and they provide great return on dollar invested, so I adhere to a rudimentary fundamental of investing, risk mitigation.”

Value before location

Every homeowner is aware of the phrase location, location, location, but for Mr Kumar the mantra is value, value, value.

“I only enter into any deal when I see value, which means I need to be making money from the first day.

“There’s no such thing as a free lunch so I don’t rely on speculation about property prices but instead focus on value purchases that generate cashflow, regardless of location.

“Speculating is just gambling, not investing.”

He is no fan of negative gearing either.

“Spending money every month to hold a negatively geared property and speculating that one day in the future it will be hold more value is too risky.

“If that growth isn’t forthcoming, you’re out of the game altogether.”

And as with any cricket team, to borrow from Kumar’s preferred analogy, it’s not about the individual but about the team.

“Property investing is a game, and to play this game you need to build a good team around you.

“A team consists of accountants, solicitors, property managers, mortgage brokers, insurance brokers, buyers agents and tradies.

“It’s equally important to develop good relationships and build trust with the real estate agents that can secure the best property deals.

“Property investing shouldn’t be exciting, risky and dangerous, but rather be a methodical process and a formula for making money that you stick to,” Mr Kumar said.

Mining for gold

Looking ahead, he sees value in mining towns and opportunity presented by interest rates that remain historically low.

“In 2010s, the interest rate was very high, in the range of 8 per cent, but nowadays interest rates are lingering below 3 per cent.

“So, when people say property prices are now unaffordable, they should do some basic maths.

“If you bought property in 2010 for $250,000, you had to pay $20,000 in interest and might be getting $300 per week rent.

“But the same property may now be sitting around the $800,000 or even million-dollar mark, so to buy that property now in 2022 with the interest rate 2 per cent, you are still paying $20,000 in interest but you may get $500 in rent, so the properties are effectively more affordable now considering the easy lending criteria and low interest rates.”

“I can see the resources sector booming and this could boost the property market in mining areas,” he added.

An information and communications technology specialist, Mr Kumar’s long game is to achieve financial independence.

“I want to create a portfolio that has the cashflow to replace my work income.”

“It’s all about being at a stage in life where I can control my time and have choices.”

At this stage he is firmly focused on building his innings and sticking to his winning formula.

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