Today I saw a news that Li Ka-shing invested billions of yuan, and house prices will rise...
If you were a speculator, would you still invest in real estate? Let's look at how foreign tycoons invest in real estate.
Renowned Australian investor Nathan Birch already owns more than 200 properties and snapped up six more homes during the COVID-19 crisis.
Such a crazy real estate investment tycoon, normally speaking, should be a rich second generation, right? Should be rich, right?
But I never expected...
This investment tycoon comes from an ordinary working family, and is a counterattack dick!
This investment tycoon has not achieved good academic performance since childhood, and he is also mentally retarded!
The investment mogul is currently in debt of $18 million!
Under the epidemic, why are you heavily indebted to buy real estate? Could it be that his intellect is malfunctioning again?
If you want to understand his magic operation, you need to start from his early experience
First, the story of the counterattack of the failed high school students
Nathan Birch, who was not a wealthy second-generation man, was born in 1985 in the toongabbie district, a suburb of western Sydney, Australia, known for its majority of Indian immigrants. In an ordinary working family, his father was an insurance company claims adjuster, his mother was also an ordinary migrant worker, and Nathan was the youngest in the family.
As a child with attention deficit disorder, from kindergarten to high school graduation, he failed the exam every year. Hating his parents' constant nagging about his studies, Nathan longed to live on his own as a teenager, and from the age of 13, he planned to buy his first home.
Inspired by his brothers getting married and buying houses, the young Nathan realized that to become a rich man, he had to own a lot of real estate. However, for a child who is not yet an adult, it is a bit whimsical to want to buy a house on his own?
However, Nathan's other peers are different, he is not addicted to games and football and basketball, nor does he concentrate on reading, but spends all his spare time working to earn money, even in several jobs, the purpose of making money is simple, is to make enough down payment to buy the first house.
Because of his poor academic performance, Nathan naturally had no connection with college. With no education, no skills and no background, he could hardly find any serious work. But because he loves real estate too much, he has worked hard to find a position as a real estate agent in a real estate company. Most of the reason he got the job was because he wanted to know more about buying a home. In addition, Nathan sells advertising for a company, and in the evenings and on weekends, he works part-time at a bar, working almost 20 hours a day, with only 7 days off a year.
Nathan's so desperate job is to spend almost all of his income on savings so that one day he can buy a house earlier.
In order to save money, he often buys discounted food from the supermarket and moves home to live with his parents, just to save rent and save enough down payment as soon as possible.
In order to save money, Nathan never travels or attends parties organized by friends, which he considers completely unnecessary, and his goal is clear: to save a sum of money and buy the first apartment as soon as possible.
Australian law sets the minimum age to buy a property at 18, so in 2003 Nathan, who turned 18, couldn't wait to buy a three-bedroom house near Mount Druitt for $248,000, his first home in his life.
Nathan chose Druid Mountain as his starting point for simple reasons, as the district is not far from the Tuncabi district where he was born and grew up, and he knows the place well.
As a fledgling investor, Nathan's budget is extremely limited, and this money is the hard-earned money he earned from his hard work, and he repeatedly reminds himself to keep a clear head.
He doesn't want to fail, and he can't fail.
The house was purchased below market value, and he is optimistic about the future prospects of the area.
At that time, Druid Mountain was still a rotten area that many people sneered at and tried to stay away, and the streets were full of social idlers, mostly Filipinos and islanders, because the security situation was relatively bad.
But the good news was that house prices were cheap and fit his budget, and the rental rate of return here was high enough to give him plenty of cash flow and cover his bank loans and interest. In case of risk, you can also consider selling your house and profit from buying and selling transactions. So Nathan didn't hesitate to take the house.
As it turned out, his judgment was correct.
Ten years later, in Druid Hill, the streets are full of people, the residential areas are full of immigrant families, multiculturalism has taken root here, shopping malls, shops, restaurants, schools are readily available, full of strong living atmosphere, and housing prices continue to increase in value.
The first investment was very successful, which made Nathan more determined in his investment strategy, Nathan soon had enough money to buy his second house, and the next thing was logical, in the previous successful experience, simply repeat the purchase of the house, do not waver.
Second, set new goals and continue to buy and buy like crazy
Nathan set himself a new goal of owning 10 homes by the age of 30 and generating some passive income for each property. With the goal in mind, Nathan began to work harder, while at the same time he kept a close eye on the entire housing market, carefully searching for the next high-yielding home.
His principle of screening houses is simple:
(1) The house must be located in an area with lower house prices.
(2) House prices in these areas have room to rise in the future.
(3) Use your negotiation skills to buy a house at a lower price than the market price.
In 2006, Nathan was 21 and earned close to $100,000 a year. The high income further enhanced his ability to continue saving, greatly consolidating his cash flow.
After getting better, making a lot of money, and finding the feeling of investment, Nathan's concept gradually changed, and he thought that investment was becoming more and more like a numbers game, and he was very successful in this game.
For him, he said, the sale and purchase of real estate has become a number, as long as it is ensured that the house can make money, where the house is, what kind of house it is, these are no longer important.
Nathan insists on buying a house below market price and focuses on improving cash flow, following this formula and constantly copying it.
It is worth mentioning that many of his subsequent homes were purchased during the global financial crisis of 2008 and 2009. These homes are usually cheap homes in low-income sydney, or homes in south-east Queensland that are purchased "below market prices".
Their value rose rapidly after the global financial crisis passed, which allowed him to withdraw equity from real estate for additional loans for more real estate. Banks are usually willing to continue buying new loans for him because the properties have "positive cash flow," meaning rents are higher than mortgage repayments.
Later, nathan began to buy and buy like crazy in order to expand his asset portfolio.
Sweeping a bunch of broken bargains (houses) at the market, this time he changed his strategy, renovating, renovating, renovating, and then listing them for sale on the market.
In 2009, Nathan was 24 years old and already owned 14 homes, and he received a net cash flow gain of about $30,000 a year from these properties.
In 2010, Nathan was 25 years old and already owned 25 homes, and the number of properties has increased by 20-30 in each year since.
In 2013, he already owned a sprawling property portfolio of 72 homes worth more than $10 million.
Since then he has invested in more and more properties.
Over the years, he has purchased more real estate projects through mortgages and some properties through trusts.
So you may be wondering, can the bank lend him a loan every time?
Yes, because his property has "positive cash flow," i.e. the rent on the existing property is higher than the mortgage repayment amount.
The bank was not worried that he would not be able to repay the loan, so it was more than happy to provide him with a loan.
To date, he owns more than 200 properties with a total value of over $50 million.
He became a well-known investment tycoon in the investment circle!
Third, why is it that now that he is in debt, he is crazy to buy a house?
Speaking of this, I believe it is not difficult for everyone to understand why he is now in debt, but he is crazy to buy a house!
After years of groping in the investment circle, Nathan has formed his own unique investment ideas.
He believes that under the epidemic, it is precisely the economic downturn that is creating unprecedented real estate investment opportunities.
As long as there is a suitable project, it is definitely the best opportunity to start at present.
He said the current situation is very similar to the financial crisis a decade ago.
Many sellers want to get their homes out of hand as soon as possible and are therefore willing to accept bargains.
He believes that investing in real estate is like "printing money". This is not to say that the value of the property will increase, but that the value of the money will be greatly reduced, resulting in an increase in the price of the property.
Saddled with a huge debt of $18 million, but he insists on continuing to invest, is there no repayment pressure?
At present, Australian interest rates have reached a record low of 0.25%, and interest rates will not rise in the short term, because too many companies are heavily indebted today, and rising interest rates will undermine the steady development of the economy.
Based on the current low level of interest rates, he doesn't feel a lot of pressure.
Although some people advised him to "give up the wrong idea of investing in real estate", he still enjoyed it and looked for investment opportunities.
Nathan, 35, is preparing for another takeover spree despite being saddled with $18 million in debt, as he firmly believes the current economic downturn is creating "unprecedented" real estate investment opportunities.
It's one thing to not be able to afford a property, it's another to not seize the opportunity to buy.
Nathan said: "I'm thrilled. The situation is similar to a decade ago, when the time has come to worry about mortgage debt and buyers are pulling out of the market. This is intensifying real estate competition at a time when sellers are increasingly willing to negotiate prices. People say the housing market is going to crash, but it's not going to crash. It will rise. ”
Nathan is now one of Australia's most famous and youngest property investors. Driving a Bentley every day to handle the company's business, while running the company, I also cherish the time with my family.
And all that Nathan has now started when he invested in his first home when he was 18 years old.