‘After a long time between drinks’: How this investor got himself back into the property investment game

“The new property has a role to play in our portfolio… I'm confident with the risk profile of it at 66 per cent and if we were today to look to refinance the whole portfolio and look to dredge out some more money and start buying again, there's plenty of fat in there for us to do that,” Phil shared.

“We're at an interesting point of our portfolio right now where we're looking to move into a more sophisticated strategy and find assets which allow us to continue to grow, [at the same time], look for a longer-term future-proofing [for] that portfolio as well.”

Phil and his buyer’s agent Steve Waters share the process they went through to secure the latest addition to their property portfolio, and how they plan to use it to ultimately achieve their financial goals:

 What kind of property did you want to add to the portfolio?

Phil Tarrant: The objective of this particular property, like most of the other stuff in our portfolio, is both a capital growth play [and] also a ‘you’ play… And a renovation play.

How did you know that the Queensland-based property you eventually purchased was the right choice?

Steve Waters: Every property has a direct purpose for anyone's portfolio. In relation to [Phil’s], this was going to give him some medium-term added cash flow via second income or another dwelling and a unit, to be precise. It has enough ground square metres—a footprint of 790-odd square metres—and really good access.

It was a high set house, which is in itself unique, but it [also] had been fitted out, so to speak, on the bottom story. Now, technically, it's storage, but it has a kitchen in it, it has another bathroom, so... the potential upside of this property is renovation, a second income to add total yield to the portfolio or total cash flow to your portfolio and also the capital growth.

Phil Tarrant: A lot of investors are buying up in Queensland and these are the… high-set properties [where the] bottom is being turned into storage… A lot of people sort of look to get some greater use out of it and turn that into maybe a home office or like a teenager's retreat… another lounge room or a rumpus room or whatever—this is what this property really reflects.

Did the location of the property have a great impact in your decision-making?

Phil Tarrant: The property's location, it's an area where we have secured previous properties in Logan… There's a lot of noise around Logan Shire and it's been popular with investors for a good… four, five years. There's still quite a lot of upside investing in Logan [in terms of] long-term fundamental factors, which should help properties in the area continue to grow over time… [There’s] a lot of population, obviously…. The property that we bought, it's in the suburb of Kingston… Just one of the classic suburban street in Kingston close to all the amenities, transport links, all the basic stuff that you should be looking for when you are investing in a property.

Steve Waters: Yes—shopping centers, transport, education, hospitals. It's all there… We like the profile. We like the fact that we're buying in a below-cost of replacement and, yes, that's a pretty loose term… We like the yield, the cash flow that it generates… all the fundamentals—great infrastructure, good population growth, good yield, and growth follows.

Were you concerned about diversification now that you’ve jumped back in the property game?

Phil Tarrant: When you look at our strategy as property investors investing in Queensland… it's a diversification in terms of geography… We're identifying affordable properties in affordable corridors with high demand, long-term for population growth and livability, and also a price point which matched where we're looking to buy.

What is the most important basis of your decision to purchase this particular property?

Steve Waters: [It] just suits your profile, it suits your strategy in terms of how much you want to spend, the risk... in terms of the cash flow it generates, and how much you want to put your hand in your pocket on a weekly basis to support the portfolio.

Tune in to The Smart Property Investment Show’s episode on Phil Tarrant’s portfolio to know more about his team’s insight into pest and building inspections, as well as their top tips for finding the right marketplace for investment and identifying growth opportunities within their portfolio to increase its value.