An accountant's concerns about a multiple-property portfolio
Munzurul Khan has been the property accountant instrumental in the success of Smart Property Investment's Phil Tarrant, who boasts an 11-property portfolio built over a period of only five year s— a fruitful property investment journey.
What's impressive about the portfolio is its 49 per cent compounding growth. The accountant admits that he still harbours concerns over multiple-property portfolios like Phil's.
According to Munzurul, it may take a while before a property portfolio with multiple assets matures in different ways.
"[Phil has] got a whole bunch of properties in New South Wales ... in Queensland as well. One [could] suggest that, 'Well, we can diversify it a little bit more.' One doesn't need to diversify for the sake of diversification, but in an ideal world, if you have New South Wales, Queensland, and quite a bit in Victoria . . . then you're sort of taking that cycle as such."
He also expresses concerns over a portfolio's natural growth.
"[Phil's has] ... natural growth. That 49 per cent [compounding growth] is fundamentally a natural growth with a little bit of renovation and capital improvements. But I'm a big fan of saying that [we should also] have the second driver, which is the manufactured growth," Munzurul said.
"[There is] bigger land that we can subdivide, bigger land that one can have a little bit of investment at the end, or you can have a granny flat and those sort of things."
Despite the possible hurdles, consistency, due diligence, education and responsible delegation are some of the things that Phil's financial team ensures to guarantee that they are only moving forward in their journey.
Having field experts and professionals by his side helped the property investor get a good grasp of the state of his portfolio as well as a good understanding of the markets and their nitty-gritty details, which will ultimately help him make wise decisions as a property investor.
"Know your cash position, use your real numbers, don't try to fabricate it or paint a picture that isn't true. You need to actually know the ground truth of your portfolio. You need to actually know your actual situation at any point in time because that's going to empower you to make the investment decisions that you need to make,"Phil said:
He concluded that good management is absolutely key and you need to think about the opportunity cost. "If you need to spend a little bit of money to underpin your ability to manage your portfolio so you can capitalise on those opportunities when they arise, I'd be looking to invest in that."
Tune in to The Smart Property Investment Show's special episode on Phil Tarrant's 11-property portfolio to know more about the realities of managing a large portfolio and some worst-case "what if?" scenarios.
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