As An Investor Starting Out – What Would Nathan Do Differently?
Nathan often gets asked what he would do if he was an investor starting out today. How would he build his portfolio? What would he do differently?
Here’s what he has to say.
Nathan loves this question.
Why? Because it is so easy to answer. You see, he built his portfolio in a market just like what we are seeing today.
While so many people are too scared to take action, Nathan says this is actually a time when those who are smart go out and take advantage of properties on sale.
His strategy is sustainable.
In other words, it is a strategy that can be used in any sort of market. It is one that worked 16 years ago, one that could work now, and one that could work in another 16 years’ time.
Let’s assume the following…
Hypothetically, let’s say Nathan is starting out today with $100,000 in savings, an income of $50,000 to $80,000 and no assets or debts.
Here’s what he would do.
Buy in capital cities.
Nathan would buy properties in the greater Sydney area, which extends from the Blue Mountains to Vaucluse and from Newcastle to Wollongong.
He would also buy in Queensland from the Tweed coast to the Sunshine Coast and not too far inland in Brisbane.
Buy affordable properties.
The sorts of properties he’d buy are ones that he could pick up for $150,000 in Brisbane, $200,000 in the Gold Coast and $250,000 in Sydney. They would need to have good growth potential and strong cashflow.
What’s that you say? You can’t buy properties in Sydney for $250,000?
Well, Nathan recently picked up a two-bedroom unit for just $235,000.
Structure his lending well.
With a 20% deposit, Nathan would spend about $30,000-$60,000 to get into one of these deals. He would buy a couple of these properties and try to save as much money as possible.
He’d buy below market value and use his equity to buy a few more once his existing properties had gone up in value.
Streamline his position.
He’d also work hard to keep his expenses as low as possible so he could put more cash into his investing.
Buy properties that have a strong cashflow.
This would keep the banks happy and ensure the portfolio was paying for itself.
For metro properties purchased at $150,000, he’d be looking at $250 rent per week.
For those he paid $200,000 for, he’d be looking at $300 a week.
And for those Sydney properties he purchased for $250,000-$350,000, he’d be getting a bit more.
He recently picked up a property in Parramatta for a client that was priced at $529,000.
Guess how much he paid for it?
Rent on this one is coming in at $400 each week.
He wouldn’t change his strategy.
In other words, he’d pretty much do what he did when he started out – only this time he would happily invest in apartments as well as buy interstate in capital cities.
The basic strategy he would use would be the same – buy below market value, with a good upside for growth and a strong cashflow.
After all, it has worked well for both his clients and himself throughout all kinds of markets – so why would he change it?
What would you do if you had $100,000 in savings and an $80,000 income? What would you do if you were an investor starting out today? Would you do anything differently to Nathan? Please share your thoughts in the comments section below.