A former apprentice electrician who owns 10 investment properties has revealed why he is still renting and his tips for climbing the property ladder.
Daniel Walsh, the founder of the Your Property Your Wealth buyer’s agent, bought his first house at age 19 for $342,000.
Little more than eight years later, he owns nine houses and a block of land as part of a $4million portfolio, while still owing $2million to the bank.
A former apprentice electrician who owns 10 investment properties has revealed why he still rents and his tips for climbing the property ladder (pictured is Daniel Walsh with wife Sophie)
Instead of being an owner-occupier in a nice Sydney suburb, Mr Walsh and his wife Sophie choose to rent – a situation known as ‘rentvesting’.
‘The reason why I choose to be a rentvestor is because I can rent for cheaper in a capital city like Sydney than owning that same property,’ he told Daily Mail Australia on Wednesday.
‘I can then invest my money into more affordable properties in growth locations around Australia that don’t cost me anything to hold.
‘Over time my investments create me passive income that pay for my lifestyle so I can live rent free.’
In 2011, Mr Walsh bought his first investment property, starting his portfolio with a $342,000, four-bedroom house at Thirlmere, 90km south-west of Sydney as he continued to live at home with his parents.
Median house prices in that suburb, next to Picton, have since almost doubled to $612,000 despite two years of price falls, CoreLogic real estate data showed.
That is still significantly less than Sydney’s median house price of $877,220.
Daniel Walsh, the founder of the Your Property Your Wealth buyer’s agent, bought his first house at age 19 for $342,000. Median house prices at Thirlmere, 90km south-west of Sydney, have now soared to $612,000
Now aged 28, Mr Walsh also owns houses on the outskirts of Brisbane, Adelaide and Melbourne.
A CoreLogic analysis of Census data showed 72.8 per cent of Australia’s two million housing investors owned just one property.
Mr Walsh said too many investors made the mistake of focusing on buying property in a nice location, only to receive low rental yields.
This caused them to rely on negative gearing tax breaks to cover rental losses against monthly mortgage repayments.
‘They buy with emotion and will buy a property in an expensive location that is negatively geared and that property ends up draining their cash flow,’ Mr Walsh said.
Mr Walsh said a better alternative would be to buy in areas that delivered high rental returns of at least five per cent – or the annual rent collected as a proportion of the property price.
That means buying in outer suburban areas where prices were more likely to grow.
‘A lot of investors are too nervous to own more than one investment and they believe it will hurt their lifestyle and become a burden to them,’ Mr Walsh said.
‘We are often changing many of our clients mindsets to understand you can build a large portfolio without it changing your lifestyle at all.’
Mr Walsh said too many investors made the mistake of focusing on buying property in a nice location, only to receive low rental yields. This causes them to rely on negative gearing (pictured is Manly on Sydney’s northern beaches)
Saving up a for a mortgage deposit is often the biggest hurdle.
To achieve this feat, Mr Walsh said younger people needed to cut back on unnecessary spending.
‘Bad debt is when your credit card is always maxed out every month because you can’t stop yourself from overspending on things like Uber Eats and you never have the money to pay off the balance every month,’ he said.
‘It is also debt such as personal loans that are used to buy cars, that you often don’t really need, but are lumped with a double-digit interest rate that will see that price that you paid skyrocket to far more than it was ever worth.
‘A new form of bad debt has arrived recently, too, which is short-term lending on discretionary items like a new pair of jeans through services like Afterpay.’