How this investor recovered from a succession of property blunders

Tell us about your renovation in Campbelltown.

I was still on the renovation drive path at that time and had gone in, done a little bit of work initially, rented it out – was going okay. Then I got stuck in property at one point. I just did it all myself. On YouTube, sitting in the corner absolutely devastated, not knowing what I’m doing; watching videos on how to lay new screed in the bathroom and tiling, and it took me literally four weeks to do this full place. It was $7,000 eventually and I had to borrow money off my wife Alex at the time. I was like, ‘Babe, I’m stuck. Give me some money please.’ That was also reason or the instigation or the impetus for me to never renovate ever again by myself.

How about the problem you faced in Hunter Valley?

It seems like a lot of us in that same period of time bought in very similar places. If I look back at it, instead of waiting until I was able to buy something strategically, I was like, “I’m killing it. Let’s get some money out, buy something else.”

Purchase price was $105. At the peak, rented for $340 a week, and then everybody knows what happens after that in Muswellbrook, in the Hunter. Everybody knew that the mining boom ended and we ended up in a position where mining towns and the satellite cities surrounding it were affected big time. I still hold the property, I still have it. It rents full time to a local tenant, but the rent has come down to $130 a week.

From $340 to $130...

I keep this one because it’s my education piece. It’s the reminder. I was looking at some numbers a couple of weeks ago, when it was really bad and it was obviously costing a little bit of money, but somebody said to me, “Don’t think of it.” You know, along that same idea of, “It’s a learning opportunity rather than a mistake.” She said, “You just paid for your education,” and I was like, “Alright, gotcha. I’m with you on that.”

Did you experience more blunders along the way?

In Kempsey, same thing. My equity gains were starting to thin out a little bit. I tapped into Liverpool a few times, tapped into Campbelltown. For this Kempsey purchase, I remember scraping money out of Muswellbrook and there was nothing, literally next to nothing there. It was in addition to the Campbelltown money I was taking out.

Once again I was working at a low income job, so my strategy, my sole focus at the time, was cash flow 100 per cent. Growth prospects – maybe I didn’t understand the market as much either and how the dynamics of markets grow. Key drivers and all these bits and pieces. The purchase of that property, although made a lot of cash. I look back at it before I sold it, it didn’t move by much at all.

So you sold the Kempsey property?

I paid $103,000; sold it for $102,500. Another lesson learnt.

Are you taking advice from buyer’s agents or are you still doing research on your own?

To be honest, I think I was actually probably too heavily invested in a buyer’s agent. I was reading and researching but I probably didn’t have enough confidence in my own ability at the time. It was really around this time that I was starting to be more concerned about education. I was looking at where I was going and thinking, “All right, I’m chasing all this yield and I’m at the point now where my equity is so little that I can’t move on to the next.” I’ve either got to sit really, really still and wait for the market to be more buoyant or I’ve got to create equity by doing some renovations or some development, or I’ve just got to rack up cash from my wages.

Realistically, none of those were an option for me at the time. I thought what am I doing wrong here? How do people continue to buy 5, 10, 15 properties? I’d read magazines at the time and see all these young guys doing the same thing and compare myself to them, and be “All right, well I’ve got to do something different.” I guess I sat on my hands for a little tiny bit and thought okay, this strategy has to change.

What has helped you overcome your previous mistakes?

I think the importance of numbers. Now that I’m working in the broking space, I look at other people’s numbers all day (and ask), “How can we tidy that up? Can we reduce that rate? What about the rent here?” I guess I’m pretty diligent with the monthly paperwork and my spreadsheets and filling in all my information. When I look at something and I can see I know what X is doing something special with their interest rates, and I look at mine ... if they don’t compare, it gives me the opportunity at least to make a move or make a decision.

So we can learn one thing from you: It doesn’t always go according to plan.

I guess the reason was having some solid goals set in the initial phase and then knowing, okay, this is a little hurdle or it’s a little side step. Let’s get back on track and do what has to be done. Everyone has that competitive edge in them. I’m just competing with myself, you know, or the market. There’s no way I’d let something like that slow down the big goal.

After 10 years in an investment journey, how will you describe a successful property investor?

Someone who’s happy and has achieved their goals, because what a property investor means to me is probably something different than what it means to the next person. Did you meet the objective that you wanted? Are you satisfied? Are you happy? That’s the end goal, right? We want to be happy.

What is your advice for budding investors?

Don’t listen to the haters. The ones who haven’t dabbled and have read all the negativity, and also haven’t had a shot either. Haters gonna hate. That’s what they’re going to do.

One more thing: I love live seminars with experts where you have an ability to have somebody - who’s been there and done it, who’s maybe better at it than you are - impart their knowledge into your brain and transfer some information.

A property investment journey is not an easy venture to begin with, but Michael proved that education and determination are enough for you to find your way back to the path of success despite setbacks.

Smart Property Investment’s Phil Tarrant concluded, “For anybody that wants to do something and get involved is, it’s not always going to go according to plan. It’s not always going to come up roses, so just be prepared to fight a little bit when you need to.”

Tune in to Michael Henry’s episode in The Smart Property Investment Show to know more about the importance of researching the market and why you don’t need wealth to begin your investment journey.