Money Australia - August 2019

EAMON

GALLAGHER

CASE

STUDY

NAME:DylanHanel

STATUS:22-year-oldhomeownerwith

threeinvestmentproperties.

QUESTIONS:ShouldI bepayingoffmy

debtorbuyingmoreproperties?Should

I keepbuyingin Albury,whereI live,or

diversifyinterstate?Whereis theeconomy

heading– is it towardsa recession?Where

is thecashrategoing?Wherewillhouse

pricesbein 12months?

ANSWERS:Interestratesaregoing

downandhousepriceswillbenefit.You

havea greatlocalknowledgeofAlburyso

keepbuyingthere.Insteadofapartments,

buyhousesastheyhavemoredevelop-

mentpotential.Makesureyouhavea cash

buffer,incomeprotectioninsuranceand

enduringpowerofattorneyforprotection

in caseofillness.Considerbranchingout

frompropertybyaddingliquidinvestments

suchaslow-costexchangetradedfunds.

B

uyinganinvestmentpropertyin

a bigAustraliancitywillmost

probablygiveyouanincome

(aftercostssuchasstratafees,agentfees

andmaintenance)ofaround1%-2%ofyour

capital.If youbuyina regionalcityortown

wherepricesarelower,youryieldcanbea

lothigher.Butthetricktobeingsuccessful

is toknowtheareawhereyouintendto

buy,confirmthequalityofthebuilding

andunderstandtherentaldemand.

PropertyinvestorDylanHanel,wholives

inAlbury-Wodonga,is acrossallthreeare-

as.Thequalifiedcarpenter,whogrewupin

Albury,saysit is easytofindgoodtenants.

Albury,whichhasa populationofabout

120,000,hasanaveragepropertyprice

ofaround$340,000,accordingtoPRD

research.Theaverageyieldis 4.4%for

housesand5.5%forapartments.

Dylancurrentlyworksasa shotfirer,

settingexplosivesat a mine,whichpays

morethancarpentry.Heputa depositon

Are four properties enough?

ASK THE EXPERTS

his Albury home when he was 20. Working

in a remote mine has a savings advantage –

there’s nothing to spend his money on.

When a two-bedroom apartment in a

1970s building came on the market, he ran

the numbers and realised he could afford

to buy it, especially since he had the skills

to do his own renovating. When two more

similar apartments came on the market

he bought them, too.

Dylan wants to build a bigger portfolio

of positively geared properties over the

next decade. He has mortgages on his three

investment properties, with the rent cover-

ing the repayments on all three.

He wonders if he should keep going

and buy another investment property in

Albury? But as the economy weakens, he

is wary of putting more money into real

estate and wonders if he should reduce the

debt instead. He says he realises he should

diversify and perhaps buy interstate but he

knows Albury well and he is time poor. COMPILED BY SUSAN HELY

A successful young investor is cautious about taking on more debt