Seven-property portfolio built in just three hectic years

In just three industrious years, Casey Taylor and his partner have gone from buying their first property at the start of the pandemic to building a portfolio of seven properties that have generated capital growth of more than $1.2 million.

Further embellishing the investment outcome is a cash flow positive range of properties in which the rental income outweighs the mortgage repayments.

Casey Taylor and partner admitted the journey wasn’t easy, with the pair working two jobs, seven days a week and budgeting carefully to get themselves into the property market.

Now living in Newcastle, they focused their investment strategy on Brisbane before their most recent purchase earlier this year in Adelaide.

While their buying activity over the past few years has been frenetic, the plan to set themselves up for life through property had a longer gestation period.

“Years ago we made the decision that prices here (in New South Wales) were too expensive and that we’d follow a rentvesting strategy and purchase nationwide,” Mr Taylor said.

“We don’t come from wealthy families nor families that invested in property; we just worked hard, delayed our gratification and work two jobs to save as much as possible and inject those savings and leverage into property.”

The first two properties were purchased with cash deposits and subsequent buys relied on the equity built up from there.

Casey’s metropolitan house portfolio

“I have had a passion and interest in property investing since I was a teenager and this allowed me to learn as much as possible and realise that long term it’s a strong performing asset class with lower risk than other asset types.

“This gave myself and my partner the confidence to invest in property as we know that in 15 to 20 years’ time the portfolio we create now will have grown exponentially.”

While some investors will attest that timing the property cycle is a key to success, Mr Taylor said a longer-term approach rendered timing less of an issue.

“I’m a strong believe that the more you delay the more you pay.

“Prices today are an absolute bargain in comparison to what they will be in five or 10 years.”

A national real estate outlook

While timing the property cycle has not been a major focus, Mr Taylor said he was aware the larger cities tended to enjoy capital growth first, with Brisbane, Adelaide and Perth performing better in the second half of the cycle.

He said Brisbane and Adelaide were the cities he had identified as having the right mix of affordability and price growth prospects.

“If cities for the last decade have underperformed in comparison to their long-term averages, history shows that during the next decade they’ll perform above the long-term average.

“As income levels in these cities are still high, the more people earn the more they can borrow, pushing prices higher.

“If Melbourne and Sydney can climb as high as they have, so can Brisbane and Adelaide.

Low vacancy rates also mitigated the risk of properties sitting unoccupied and push rents higher, he said.

“These two cities also have massive infrastructure projects taking place and if you’re targeting the right areas in these cities building approvals are low, which secures high demand with limited supply which leads to scarcity and growth.”

Higher interest rates have presented a challenge to their goal of only holding cash flow positive properties.

All seven properties were providing income after repayments and expenses were factored in but that is no longer the case.

“It does cost money to hold some of the properties now but the capital growth outweighs the holding costs so we are still building our asset base and net worth.

“As an investor you have to understand that holding property long-term, cash flow will always vary.

“As rents increase in line with the market, the portfolio will naturally see the gross yield increase over time and already has since holding our portfolio.”

Strategy for new investors

Mr Taylor said he is a firm believer that anybody with a decent work ethic and perseverance can build their own property portfolio.

“I’m just a country boy from Tamworth who wasn’t handed anything.

“I’m just an average guy with an above average work ethic that stayed consistent with the daily habits to help get me to where I am today.

“I’ve never been naturally gifted or the smartest person in the room but this just made me work hard and it helped that my dad and pop set a great example of what hard work looked like.

“I’m a strong believer that if I can achieve these results then other Australians can achieve the same.”

Mr Taylor, now Managing Director of Taylored Property Wealth, shared his key finance, purchasing and location identification strategies for aspiring property investors.

Finance:

• Work as hard as possible and delay gratification early on to boost borrowing capacity.
• If you increase income, keep expenditure low. At the height of earning a salary I was saving 64 per cent of my income.
• Obtain interest-only loans to help cash flow.

Purchases:

• Target areas with a minimum 5 per cent gross yield.
• Target areas with rental income growth, as over time the gross yield increases in value creates further passive income.
• Act without emotion and purchase purely on key fundamentals: infrastructure spending, building approvals, income levels in an area, types of employment in an area, past growth of areas.
• Use rentvesting to your advantage, to get into the market sooner.

Location:

• Buy in metropolitan locations primed for growth, which will allow you to leverage equity sooner and decrease your loan-to-value ratio (LVR) without paying that debt down.
• Diversify into multiple metropolitan locations.
• Make sure there’s no noise pollution or flood risks.
• Avoid buying in the less pleasant part of a suburb that may be priced as if in the better area.
• Get access to off-market properties to eliminate competition.