Binvested founder Nathan Birch’s path from beginner to heavy-hitting investor with 200 properties came with plenty of lessons learned along the way. Let’s take a closer look.
An early epiphany
In 1998, with no internet access, a 13-year-old Nathan began to get excited about property and would read the Homes Pictorial weekly magazine at the train station on the way home from school. He thought that rich people were the ones who bought and owned properties, so he wanted to follow suit. He saw property as a vehicle to avoid a life of being stuck in the rat race.
Prognosticate, don’t procrastinate
A couple of years later, Nathan came up with a goal to own 10 properties. Being under 18, he wasn’t able to invest or sign contracts yet, so he worked hard and saved every cent he could.
Losing his dad to a heart attack, Nathan further resolved to live his own life differently. He saw the toll that working two jobs to get by and pay off a mortgage had taken on his father.
When he turned 18, Nathan had saved $35,000, which he used as a deposit to buy his first property, a house in Mount Druitt. He soon bought others, in a bid to generate wealth and cashflow. It was harder to get knowledge and education without the online space that we enjoy today, so Nathan recorded and calculated investments and savings in his school books.
He worked out he could reach his 10 property goal before 30 by buying one a year. He calculated it would deliver him a passive income of $50,000 a year, a good income at the time.
It was a clear, foolproof strategy that took five years of planning and he had the benefit of watching a market boom and bust while he was underage, waiting to invest.
Nathan had no mentor, but had a healthy dose of cynicism and a rational mindset. He used his eyes and ears at investment exhibitions to learn to identify spruikers and scammers, asking them why they didn’t own the interstate properties they were trying to sell to investors. He never bought new, shiny, off the plan properties because it didn’t seem right. He learned from the bad decisions and mistakes of other people around him.
Nathan believes mentors can help, or they can hurt your prospects. If you do have one, make sure they can get themselves to where they want to be, otherwise how will they help you?
Regrets, he’s had a few
Nathan has never taken a big hit where a property has crashed and lost lots of money. He has had the odd place burn down, but been adequately insured. His biggest regrets are not jumping on more deals that could have been done. One was a two-storey house that he could have purchased for $200,000 but was spooked by a lot of repossessions happening in the market at the time. He realises now he could have sold that one later for $700,000 if he had have backed himself and gone through with the purchase.
Fear, opinions and regrets cost Nathan a lot more than bad deals. But on the flipside, other people have lost a lot of money by making a fast decision to buy something new, or off the plan from a spruiker.
While he may drive past houses and think ‘I should have bought that’, he remembers to give himself some good advice: ‘Don’t beat yourself up, you did the best that you could on the day’.
He wished he knew
When starting out, Nathan says he would have benefited from a greater understanding of finance; how money works, the banking system, inflation and the economy as a whole. That understanding would have alleviated a lot of his fear.
He wished he knew how interest rate policy worked. In the mid-2000s, he fixed his interest rates for five years at 9% for fear that rates might rise to 15 or 20%. But he didn’t know how currency, liquidity and interest rates worked. Rates fell to around 5% and fixing ended up costing Nathan significant savings.
This is why he shares the knowledge he has now with his clients.
Looking at his portfolio, over the years Nathan believes that all the properties have served their purpose. Some have outperformed others. In an ideal situation his portfolio would be all unit blocks that he owns outright, or shopping centres, or acreage sites. But it has consisted of regional properties, renovation properties, big commercial properties, small ones, houses and acreages. They have all performed in different ways.
Make money on the way in
Nathan is a contrarian investor who targets properties for below value purchases. If the market is hot, he’s not buying. If it is depressed, that’s when he takes advantage. If someone pays $500,000 for a property and he buys it from them for $200,000 later, he simply then has to wait until the market returns to the condition where someone is willing to buy for $500,000 again.
Finance and debt strategy
Nathan points out property is only part of the strategy. If you have a property, but can’t fund it, you don’t really have a property. You need to understand how that property will help you move forward. What is your finance strategy? Your debt accumulation strategy? What is that debt going to do for you? How will it help you? It’s not just buying any old property as you might be buying the wrong property for your situation and goals. It’s so important to have clearly defined goals. Treat property like a business because numbers don’t lie. Emotions, feelings, friends and other people can all lie, but not numbers.
Live life on your terms
Nathan has always had the motto ‘live life on your terms’, reflecting that early desire not to spend his life working in a job he didn’t want. That was his goal and that is the lifestyle he created. He thinks everyone should be working towards their goals at all times and have clarity on how they are going to achieve that.