Ten-property portfolio built on nurse, kindy teacher salaries

Buying and building new, low cost homes in outer Melbourne is a property strategy that has paid rich dividends for two hard workers on modest salaries with an impressive real estate portfolio.

Sanjeev (right) and Rajni Kumar sit at a cafe table.
Unapologetic advice from Mr Kumar is that hard work on any salary can lead to security through property investment. (Image source: Sanjeev Kumar)

A nurse and kindergarten teacher who have bought and occasionally sold ten properties since their first tentative purchase in in 2007 have dispelled a few myths along the way.

On two very humble salaries, Sanjeev and Rajni Kumar have demonstrated to anyone with a plan, tenacity and determination that financial security through property investment is attainable.

Their strategy of buying affordable Melbourne houses almost exclusively in the citys west and north west suburbs also goes against the more common advice to diversify your asset base. But it is a tactic that has delivered outstanding returns and proven that well-chosen locations are the key.

Some factory floor advice in an early job paved the way to what would become a major property portfolio.

Mr Kumar’s current financial security is a long way from his days growing up in the north Indian state of Punjab before arriving on a student visa in 2002 and becoming an Australian citizen in 2004.

Now married with two children, his early aspirations to become a doctor went unfulfilled but he persisted with a love for healthcare and became a nurse, a career that has helped build a property stable that has delivered well in excess of $1 million dollars in capital growth alone.

What is now a solid portfolio with numerous properties valued around three quarters of a million dollars began with a nervous step onto the bottom rung of the property ladder with a townhouse bought in St Albans for just $163,250.

Sanjeev's Victorian property portfolio

Suburb Type Purchase date Purchase price Current value Rent per week
St Albans Townhouse March 2007 $163,250 $400,000 Sold October 2021
Derrimut Freestanding house November 2009 $315,000 $750,000 Principal residence
Deer Park Freestanding house October 2012 $328,000 $650,000 $395
Weir Views Freestanding house June 2015 $480,000 $750,000 $430
Weir Views Freestanding house May 2018 $440,000 $680,000 $390
Melton South Freestanding house August 2020 $460,000 $650,000 $400
Melton South Freestanding house November 2022 $460,000 $571,000 Sold June 2023
Melton South Land February 2023 $189,000 $225,000 n/a

Two additional land and commercial property investments not included in table above.

“I was working in factory making carpets and lots of people were working there for more than 20 years and I was the youngest.

“There were twin brothers who would always talk about investing in properties and they themselves owned multiple properties.

“One day, I sought advice from them and they told me that investing in property is the safest way to make money in Australia, if you hold each property for at least 10 years.

“They suggested I should go for the smallest two-bedroom unit first and not buy a big, fancy house, to ensure we had a manageable mortgage and would soon be able to borrow money for the next property,” Mr Kumar said.

For those worried about today’s interest rate levels, his story is salient.

“It required some sacrifice to save the deposit as I was the only income earner at that time.

“It was a very nervous first step with interest rates at more than 8 per cent.”

Buy cheap and aim for capital growth

Conservative, some might even say pessimistic, forecasting has been a hallmark of Mr Kumar’s strategy built primarily on rental yield, capital appreciation and high depreciation.

While many panic, cut spending and offload investment properties in the face of the unfolding mortgage cliff, Mr Kumar said he had already factored in interest rates of 6 per cent even when they were flatlining around 2 per cent and the official cash rate was near zero.

“I focus on buying the cheapest possible new properties close to all amenities that will have low mortgage repayments, high rent, and maximum depreciation over ten years, creating more cash flow and high equity to buy the next property.”

While his approach to buying in one part of Melbourne may seem unsophisticated or risky, his strategy has proven astute and his methodology founded on some basic principles familiar to may successful investors.

“My strategy is simple; buy the cheapest possible land in outlying suburbs within five kilometres of childcare, primary and secondary schools, shopping centres, with access to a freeway and train station.

“Whenever I am ready to buy the next property, I always have building cost quotes from four mid-size builders and create competition between them by showing each other quotes.

“Whoever gives me the cheapest quote at that time, I sign the contract with that builder – as simple as that.

“Dealing with banks was not an issue for me as I always go for my next project when there is enough equity in my existing properties.

“Additionally, my wife and I are always focused on increasing our wages by upskilling our careers through further education and training.”

Building industry issues raise their head

While the strategy seems simple, even the best laid plans can come unstuck and the couple have not been immune from the woes besetting the building industry.

Kumar Investment property in Weir Views

Investment property in Weir Views

“I just finished my latest project, which was delayed for three months and my builder asked me to pay extra $18,000 before signing the contract early last year due to the shortage of building materials and labour,” Mr Kumar said.

“As my project was the cheapest possible in Victoria and close to all amenities, I was able to absorb the price increase.

“Again, go for cheapest available land and a mid-size builder.”

With his borrowing capacity curbed by stricter lender criteria, Mr Kumar is now dabbling in diversification.

An investment in a regional Victorian childcare centre is his first dalliance in commercial, as well as regional, property and land is now a focus too.

“Now I am buying land and building a house with cash only and selling it just after construction.

“I sold my first property in November 2021 to have some cash in hand and this year I sold a new project with a gross profit of $112,000 and I’m going to start another one next month.”

No substitute for hard work, sacrifice

Now aged 46, Mr Kumar said the plan is to sell half the properties and retire at 55 with rental and superannuation forming the basis of their retirement liquidity.

Kumar Family Skiing

The Kumar family is now enjoying the benefits of early years spent working and saving hard.

He had some advice for those on low incomes and pondering how to change their circumstances.

Planning is the key.

“My advice is that people need to get out of their comfort zone, they need to make lots of sacrifices such as holding off on holidays, not buying a new car, cutting down on subscriptions, stop eating takeaway and dining out, and not buying overpriced branded clothes and shoes.

“Stick to buying groceries on special and increase your income by finding second job.

“I know that it may sound a bit harsh but the more sacrifices you make now, the sooner you will able to buy your first home and grow from there.”

He also added that it was important to take advantage of any government grants and help for first home buyers.

“There are also lots of tips and information available for buying your first house on the Government moneysmart website.”

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