Young Investor Set To Settle On His Sixth Property
As a 20-year old, Beau Arfi quickly came to the realisation that simply keeping your money in the bank was never going to allow him to achieve his financial goals. Arfi decided that he couldn’t afford to wait until he was older and more established in life to start his investing journey so began developing a plan to achieve the life he wanted to live.
For Beau, the equation was simple, “getting an investment property was going to be better than saving and that’s that. In the long run, you’re going to make more money.”
After speaking to an investment savvy family friend, Beau devised a strategy that would suit his current financial situation and then limited borrowing capacity. Fast-forward four years and Beau is getting set to settle on his sixth property and he is now setting himself up to achieve his financial goals before he turns 30.
Beau ultimately wanted to purchase high-quality properties in the inner ring suburbs, which traditionally see the highest growth. To start out with, he realised he simply couldn’t afford the $800,000+ price tags that came with the types of properties he wanted to buy, so he adjusted his expectations and lowered his goals to get a foot on the property ladder. As a result, Beau decided to look for a combination of yield and growth and focus on areas that were just outside the city that would be viable with a $25,000 deposit.
“I purchased my first property in Ballarat when I was 20. I think I’d just started my second year of Uni. The property in Ballarat was worth about $135,000. It was a house and then in about 12 months, the property went from $135,000 to $200,000.”
The quick uplift in equity was enough for Beau to quickly realise, “You know what? This could actually work. I could do this more and more and more. I could start to duplicate this.”
Beau released the equity to purchase a further two properties in the same area of Ballarat.
“I just thought Ballarat was a good springboard and it was well-priced for where it was in terms of the distance from the city. I thought you could pay $200,000 for somewhere that’s probably an hour and fifteen out of the city,” he said.
Early on Beau needed an investment strategy that would allow a combination of yield and growth. The higher yields helped with repayments and obtaining finance, while the growth was enough for him to continue to purchase more properties. After getting a foothold in Ballarat, Beau then moved on to trying to identify some locations in major cities around Australia, that were reasonably priced and offered a good combination of yield and location.
He managed to negotiate a bargain price for a property in Melbourne that the owner needed to sell quickly for tax reasons.
“I was finally able to get a property in the city in Southbank. It was a studio apartment from a gentleman who was a tax agent and an investment banker and he lost a lot of money on the property.”
“He purchased it off the plan for $460,000 and then I snapped it up off him four years later for $355,000. The property started to pay itself off, basically, from the get-go when we got offered $500 a week for it.”
Since then Beau has purchased another property in Ballarat as well as Brisbane.
“My final property is near Toowoomba, but it’s well-priced for what it is. The properties all have quite good yields so I have no problem getting finance.”
As a 20-year old there are many issues you run into when starting out as a property investor. You more than likely have a limited deposit you can put down. It’s far tougher to get finance and in many cases, agents don’t take you seriously. None of those things stopped Beau from getting started.
Beau believes there are many things that put people off investing when they’re young. However, he suggests the biggest mistake you can make is simply not getting started at all.
“Don’t procrastinate. Don’t wait for markets to go down. I think 2019’s actually going to be a good year to buy while the market is going to be down. Just get a good deal. Even though times might look bad with the market, I feel like you can get good deals. It just means that you’ve got a bit more bargaining power.”
“My biggest mistakes have been when I’ve waited for markets to decrease. I was going to purchase a property in Cranbourne about two and a half years ago and I was talking to the agent. It was a two-bedroom house on a 750m 2 block. They wanted $260,000 for it and I offered $235,000 and they said, “No.” So I offered $245,000. They said, “No.” and I didn't go ahead with it. Today that same property is probably worth at least $500,000.”