I’ve always loved property because I’ve seen just how powerful it can be in helping people build wealth.
I became interested in property at a young age and started investing when I was still studying at university. My intentions were good, I simply wanted to provide a better future for my family as I’d seen happen with plenty of other property investors.
Little did I realise at the time, that there was a lot more to investing in property than I thought and over my journey, I would have to effectively lose $1 million to work out the right way to go about it.
Like most people in Australia, I wanted to purchase a property at an early age, spurred on by friends who also owned investments that had seen considerable growth over the years. In hindsight, that was my first mistake.
When I purchased my first property as a 19-year-old commerce student, I bought a positively geared property in the hopes that it might help me increase my serviceability and build my portfolio down the track. There wasn’t much due diligence behind my first investment, and I ultimately bought a property in an area I was familiar with in Melbourne.
After working for a few years to increase my borrowing capacity, I had the option of purchasing my next property and I had the choice of buying two properties in a ‘growth corridor’, or investing in one in a more established area with better fundamentals in the inner-ring of Melbourne.
Unfortunately, I decided to follow the advice of a close friend and purchased the property in the growth corridor believing that growth would actually occur. Not only that I purchased a second one in a similar location not long after.
That was the first real lesson that I needed to learn when it come to investing in property. What I discovered first-hand, is that there is a big difference between what could only be called speculation and buying property based on the pure fundamentals of supply and demand.
The first property I purchased in the growth corridor, turned out to do absolutely nothing for many years, and when I ultimately sold it, I walked away with a loss of around $70,000. Had I purchased the one property in inner-city Melbourne, I would have been sitting on a capital gain of around $1 million. So the lost opportunity cost of those early decisions was massive.
However, unlike a lot of other first time investors, I didn’t walk away from property. I was convinced, I could build the financial future I wanted for myself and my growing family if I simply understood what truly drove house prices. I needed to stop speculating and turn towards high-level research and analysis.
Coming from a professional background that focused heavily on data and analytics, I quickly found that there was a very simple yet effective way of identifying properties that would ultimately grow in the short term and outperform the broader property market.
Factors such as the number of listings compared to the overall number of sales, the impact of vacancy rates and the pipeline of future supply are some of the largest factors that impact the value of properties in a suburb in the short term. When I started modelling the data, the results were clear as day as to what drove house prices.
When I bought into a growth corridor, there were high vacancy rates, plenty of supply and more ahead with moderate demand at best. That combination of factors led me to have significant issues finding and retaining tenants and ultimately not achieving any real growth.
Since those early days, I’ve fortunately managed to turn things around and have been able to help others start to build a property portfolio based on the same fundamental factors and plenty of research and due diligence. I now use data to identify the very best opportunities across a number of regions in Australia and can usually see very clearly where the next surge in growth is going to come from.
Having been forced to battle over many years to develop these skills and wanting to share what I had learned with others, led me to start my own business, Mecca Property Group, where I help investors identify those opportunities that are ripe for future growth.
Given that I have seen how important it is to get those early investments right, it drives me to be able to help as many people as I can to build wealth through property.
For me, had I bought smarter early on, my portfolio would be significantly larger than what it is today, but would I have been driven to study the market and truly understand how to find those fantastic opportunities? Maybe not.
I now feel very fortunate that I am able to help investors get started the right way and that they can learn from my mistakes and benefit from everything that I’ve learned over the years.