Hayder Shkara, a former Taekwondo Olympian turned property investor and law firm owner, has successfully built a portfolio of nine investment properties valued at around $10 million. His journey into real estate began at 30 when he purchased his first property on New South Wales's South Coast.
Rather than relying solely on savings like many first-time buyers, Shkara opted to cash out from a modest share portfolio. This unconventional decision has proved pivotal in his property investment journey. Shkara reflects on his approach, stating, “I was like, okay, I can’t buy in Sydney, can I buy in the next suburb out of Sydney? Not really, and then how far do I have to go? OK, South Coast, I can purchase there.”
Investment Philosophy and Market Outlook
Mr. Shkara showcases a pragmatic mindset toward fluctuations in property values, considering a potential drop in prices as a necessary compromise for increased affordability. He mentioned, “Sure it’s going to annoy people if people don’t see their property prices go up, but I think also the flip side of it is a majority of Australians do think (property has) become unaffordable.” He believes that desiring affordable housing should come with the realization that it could lead to decreases in current property values.
Shkara's first acquisition was a property priced around $600,000, which he considers a manageable entry point into the market due to favorable financing conditions at that time. He emphasizes the significance of understanding one's financial capacity, saying, “You need to know your means and know what you can afford and what you can’t afford.” By using the rising equity in his initial property, he leveraged that value to secure additional investments, keeping subsequent purchases below the $600,000 mark.
The yield on his portfolio sits between 5% and 5.5% annually, slightly below the required 6% to break even with interest rates. Despite this, Shkara is strategic in his thinking, ensuring that his investments are not only profitable but also align with broader market trends.
Tax Reforms and Future Strategies
Shkara’s property investment strategy has been affected by recent regulatory changes, including an increase in capital gains tax and the removal of negative gearing benefits for established properties. He believes such changes could deter many investors from entering the market, stating, “It’s reduced everyone’s borrowing capacity and then (investors are) not going to be able to buy all these properties.”
While expressing no objections to the intended effects of these changes, he is critical of the lack of transparency from politicians regarding their aims. “It kind of shocks me… nobody wants to just say ‘hey, we do want housing prices to drop a bit.’” His view reflects a broader sense of frustration among investors regarding the inconsistency and clarity of government messaging.
Moving forward, Shkara suggests that aspiring investors might need to adopt alternative strategies such as purchasing properties under company structures rather than as individuals. He believes this shift will be necessary for maintaining their investment potential in light of recent market dynamics.
Practical Tips for New Investors
For those looking to follow in his footsteps, Shkara emphasizes the importance of building a solid foundation before diving into investments. He recommends starting with affordable properties, ensuring a wise balance between risk and potential rewards. He acknowledges the mental exhaustion potential investors face, dubbed "decision fatigue," and has utilized services like InvestorKit to streamline the property acquisition process.
In closing, Shkara encourages a cautious yet optimistic approach to property investments, suggesting that achievable goals exist for those willing to navigate challenges mindfully. “There are a lot of different ways you can enter (the property market). It doesn’t need to be as daunting as you think it is,” he advises, underscoring the accessibility of the market for prepared investors.
As the market evolves, staying informed and adaptable remains key to succeeding in property investment, a lesson well encapsulated in Shkara's own journey.