When he purchased his first investment property, Eric Brown argued over a mere $10,000. Little did he know that he was about to strike gold.
“I bought my first investment property in Rozelle, Sydney in 2005, ultimately to build wealth.
Meanwhile, I was happy renting. We were in an apartment and it was just really comfortable. It was easy.
I even had kids shortly after moving into that apartment, and I thought that would make me want to move into the ‘Australian dream’ of having my own house, but it didn’t.
I saw the benefit, particularly tax-wise, of someone else paying off your mortgage. So that’s why I decided to buy an investment property while I continued to rent, instead of buying a home.
So I bought the one-bedder in Rozelle. I sort of fell into that a little bit by accident, because my mate owned the one next door and told me this was for sale.
I remember arguing with the vendor at the time over $10,000. It was listed at $480,000 and I only wanted to pay $470,000.
We had this ongoing battle, and looking back on that, it was probably silly of me to argue over that $10,000 because capital appreciation has been astronomical in that area. So I’m glad I didn’t pull out of the deal on that 10 grand, very glad.
I put a tenant in there from the get-go, who didn’t stay for very long, so then I did some renovation work on it.
I spent $300,000 on it actually, but then I rented it out for nearly $2,000 a week.
It more than paid for the mortgage and the cost of the renovation, so it worked well for me.
Today, that property is worth $1.35 million.
At the time, to be completely honest, I was thinking half a million dollars for a one-bedroom semi was a little bit over the top. But I did see gentrification of the area and I did honestly believe that, in a few years’ time, instead of hanging in Balmain to have fun and then move on somewhere else to have a house and land package, more people would start to realise that they loved the area so much that they would decide to stay on.
And that’s what I thought the trend was going to be.
It’s the great Australian dream to own your own house, and I think a lot of people buy one house because that’s what they’ve always grown up wanting to do.
And I think the stepping stone to go to two, three or 10 properties after that takes a bit more effort and a bit more belief that you’re doing it for the right reasons and it’s going to pay off in the end.
But the first one, I would say, a lot of people fall into.
Now I’ve got 11 investment properties in my portfolio; I’ve diversified. I’ve got some commercial property and I’ve got some higher-end residential and some lower-end residential. I purchased each of them for different reasons, but I’m glad that I do have a bit of a diverse property portfolio.”