Money Australia - August 2019

(Barré) #1
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

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