Dreams of overseas travel spurred investor Matt Savage’s first purchase: seven properties later he buys in growth areas, renovates and holds to gain passive income and keep the wanderlust alive.
Investor Matt Savage’s biggest mistake was also his best: a spur of the moment purchase that made $50k profit in 12 months and launched his passive income property portfolio. Now well on his way to his goal of owning 10 properties, Matt says it kicked off in 2008 as he searched for a way to fund the travel bug. Curious, the then 21 year old landed at an auction to see the end result and walked away the successful bidder. Although funding the deposit meant a loan from his mum and selling his beloved 1964 HR Holden, it was the best decision of his life.
“While I felt at the time it was a really bad mistake, when I made that $50k profit it really got me motivated,” he says.
Renovation strategy pays off, boosts equity and rental yield
Further purchases followed in Adelaide and Brisbane, then a property in Sydney’s Liverpool, which after four years of underperforming made Matt feel disheartened. He was urged not to sell by his property advisory at the time, as they felt it would eventually do well.
Looking for a way to make that much-wanted equity boost reality, Matt signed up for Jane Slack-Smith’s step-by-step Renovation program. It was a $1600 investment he couldn’t even begin to put a value on now, as it’s been “priceless” for his portfolio.
“My mate and I smashed out a reno in two weeks,” he says. “We wouldn’t have been able to do it as efficiently without that plan.”
Matt more than doubled his rent from $210 to $450 and saw his equity lift by $100k as a result. Five renovations later, he says his efforts have added at least $500k value to his portfolio and increased his rental yields across the board.
Houses for long-term performance through capital growth
Matt owns four of his seven properties in partnership, which has helped to grow his portfolio faster than he could have done on his own - but not without challenges. “You don’t know people until you’re in partnership with them,” he says.
With only a few more purchases left to complete his portfolio, Matt says the next one will most likely be a flip. He aims to pay down some of his debt, then hold the properties that are going to perform, all of which have been purchased in growth suburbs and had renovations completed.
“I want to stick to houses over apartments, that’s where I see the growth,” he says. “Rent keeps you in the game, but capital growth is what makes you the money.”
Busy with work commitments Matt’s just signed with Ripehouse, crediting the performance of their property selection software which he says made it a “no brainer”. An additional timesaver is to work with the same broker to fund his purchases. “He knows me and my portfolio, which makes it a lot easier to get loans.”
A close call with overseas investment, but gains overall
Keen to broaden his portfolio reach, Matt invested in the United States against professional advice. Half-way through the purchase, he discovered it was a scam but it was too late to back out. Of the 10 Australians affected, Matt came out the best with a rentable property from which he’s still getting income. “I’m doing alright so it’s not too bad,” he says.
Despite the setback, Matt says residential property investment has shaped his life in a very positive way. Acknowledging the success of that very first auction, he says new investors shouldn’t be scared to make a mistake as they never know where it’s going to take them. He’s just spent seven weeks travelling through Europe and dreams one day of cruising around with his snowboard from season to season, bankrolled by his portfolio as per his goals from day one.
“It’s helped me get closer to financial freedom. I’m aiming for $50k passive income, which I think is a pretty achievable goal,” he says. “With that, you can decide exactly what you want to do.”
Original article: http://www.apimagazine.com.au/property-investment/investor-in-focus-matt-savage