He’s Australia’s most surprising real estate mogul but at 32, Nathan Birch’s success has been achieved by following some very basic investment rules.
Since buying his first home as an 18 year old, Nathan has built an empire of 200 properties worth an estimated $55 million.
How did he do it? In a Sunday Night exclusive, Nathan revealed his three golden rules to property success; Buying below market value, having upside growth and having a strong cash flow.
“The below market value will give you a buffer to ensure that you're protecting yourself when purchasing the property - having upside for growth is you know you make money when you sell a property off”, Nathan told Sunday Night’s Denham Hitchcock.
During his teenage years in western Sydney, Nathan began saving for his property empire. He worked multiple jobs and saved every cent he earned.
“I didn't have any silver spoon in my mouth, I failed every grade from kindergarten to year 12. I worked two full time jobs on occasion three jobs in order to get less than a six figure income.” he said.
Now at the age of 32 and with 200 properties under his belt, Nathan is starting to see a change in the Australian property market. House prices around the country are beginning to plateau, with some even reducing in value. But, Nathan isn’t concerned.
“You must do your research to actually understand what is good value and what is not - what a real estate agent puts as a price for the property has no relevance to me, what has relevance is based on recent sales and other properties currently on the market that are selling, how does the property that I'm looking at compare to them and where does the value lay if I had to sell that property, what would I get for it”, Nathan said.
The key to Nathan’s investment strategy is utilising interest-only home loans, a type of loan where repayments only cover the interest on the amount borrowed, during the interest-only period. This type of loan has lower repayments in the short term and may provide greater tax deductions on an investment property.
However last year, many major investors who use this investment strategy were forced out of the market after the Australian Prudential Regulation Authority (APRA) imposed new rules to ensure lenders are recognising the heightened risk in the lending environment. The rules meant that banks and lenders had to limit the flow of new interest-only lending to 30 per cent.
Nathan admits times are getting tough for investors including himself. At the end of last year, Nathan reshuffled his portfolio and sold a few of his properties to release some capital. He says this gives him more options when considering further future investments.
Earlier this month, it was reported that Nathan had been sued by his lender, Permanent Mortgages, after defaulting on a $535,000 high-interest mortgage for a Gold Coast investment property.
But Nathan refutes this report. “There was in fact a loan in arrears, to the value of $13,000 – it was in arrears because I believed it to have been paid”, he said.
“Upon learning of the judgement against me, in which the court did award the property back to the lender, I paid the full outstanding amount. The property was not in fact repossessed by the lender, and it is still in my portfolio”, he said.
Nathan says he is always looking to invest in property and currently believes the best places to buy are on the Gold Coast and Brisbane. He says the most undervalued suburb is Coomera.
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