Property Market Investor recently had the opportunity to interview seasoned international investor Chris Gray who has built up an impressive property portfolio worth over $15 million.
Chris took the painstaking decision to retire from his day job at the age of just 31 years old. This was the direct result of the great success achieved through his investing strategy. So what is Chris’s strategy? It is buying quality properties in the blue-chip, middle-ring of Sydney.
Read on to find out more about Chris’s real estate investing journey. He also provides us with some valuable advice as well as his Sydney property market forecast.
Chris’s desire to purchase his first home came in his early 20s. He was living with his parents in the UK when one fateful day his mum gave him a midnight curfew under the “my house, my rules” motto.
Eager to find his independence, Chris started searching for a home to buy with a £10,000 deposit.
“I went shopping for bachelor pads,” he explains. “And I found this amazing one for about £100,000 pounds. And basically, you get drunk down the local pub, which was about 20 miles north of London, then you fall down the hill and you basically end up on the doorstep.”
Chris realised that he couldn’t afford to service the loan on his salary, but he crunched some numbers and figured out that if he got two flatmates, their rent payments would cover the whole mortgage repayments.
Deciding to get on the property ladder, Chris approached his dad “not really for a handout” he says, to get his financial backing to get a loan from the bank.
Chris’s dad looked at the numbers and was happy to back him with a parental guarantee.
With his dad’s support, Chris put in an offer of £80,000, which was £20,000 under the asking price, and it was accepted. This first dealing with property was enough to have Chris hooked.
“So I basically got a free house because the two tenants paid my rent. And I made two years salary overnight. And that’s what I thought was absolutely amazing,” he says.
A couple of years later, Chris refinanced his home and borrowed some money to buy a car.
“I couldn’t afford a Porsche on a three-year lease. And then I saw an advert in a paper where they said you could use your home equity for home renovations or to buy a car. And this is back in the early nineties; it was unheard of to do this kinda stuff,” he tells us.
“And so I went to the bank saying, ‘Hey, can I borrow three grand for a car?’ And they said, ‘No, the minimum is 15,000.’ And I said, ‘Well, if you lend me 15,000, I’ll take it.’ Then went straight down to the Porsche dealer, and bought a second-hand Porsche.”
“And I basically got a free Porsche as well. So I got a free house, free Porsche, and I live for free,” he adds.
This was at the age of 22. Chris had no books or resources he could access to educate himself. He was self-taught.
“it was just magic,” he remembers. “Why work for a living when you can just make this easy money from property.”
Growing as a property investor
A year later, Chris bought his second house. Chris heard through a real estate agent friend that there were some properties on sale that were under-valued. With this information in hand, Chris approached his father again with a proposal to do some more investing.
Chris sold his dad the idea of creating a father-and-son team that would best utilise each other’s resources.
He tells us that his approach was, “Now, you’ve got the money and the banking and the income to get the mortgages, but you haven’t got the time or the want to go off and do it. I’ve got all the time in the world and I’ve got the contacts, I can deal with all the hassles, and all the rubbish that you don’t wanna deal with. And then we maybe split the profits 50/50.”
Chris’s dad accepted his proposal, but he says it wasn’t about the money, “I think it was more that he wanted to do a father and son type thing,” Chris says.
Chris is aware his background helped him get started as a property investor, but that there are a lot of people from well-off families who don’t have the drive or the interest to invest.
“A lot of skeptics out there will say, ‘Oh, look, you come from a rich background. You’re very privileged and you had your parents back you in the rest of it,’ which is true, but at the same time, my brother and sister had the same background and they didn’t do the same thing,” he says.
“There are lots of people with stacks of cash that have done absolutely nothing. So it doesn’t matter what your background is, what your circumstances. If you really wanna do this, you can.”
Getting started in the Sydney property market
At the age of 27, Chris gave up everything in the UK and moved to Australia. “I basically pulled equity out of the two UK properties and I used that as a deposit to buy in Coogee in 1999”
Chris was looking for a 3-4 bedroom house but ended up buying a two-bedroom apartment for $360,000 because it was all he could afford.
“Everyone said, ‘Chris, you’re mad. You’ve paid way over the odds. It’s gonna crash. Don’t do it’ Like the normal skeptics that we’re surrounded by today,” he remembers.
However Chris followed his gut and has proved them wrong. Chris first investment property Sydney is now worth $1.2 – $1.3 million.
This is when Chris’s real estate investing career started gaining momentum.
“So I bought the Coogee one then I refinanced later on, did it up a tiny bit and then bought a forth. Then I bought a fifth and sixth, and it wasn’t until then that the bank said, ‘No, that’s the end of it.’ And that was in the good ol’ days of low doc loans and no doc loans.”
Taking it a step further
At this stage Chris started educating himself and reading everything he could about investing and the Sydney property market.
He was working as an accountant at Deloitte, and wanted to attend a real estate investing seminar with a price tag of $15,000.
“Everyone at Deloitte’s said, ‘You’re mad. Why would you pay 15 grand to go and do a course?’ And I said, ‘I’ve gotta do it myself.’ And they all thought I was stupid. But within a year, I basically retired at 31 and I bought a 35 Ferrari, which was my dream car,” he says.
Chris has proved them wrong once again.
Chris says his real estate investing strategy hasn’t changed from when he was a young lad getting started as a property investor.
“My thought at 22 was to rent a nice house or apartment to wealthy young professionals that have got good jobs,” he says.
“They’re gonna pay their rent and they can look after the property ’cause they don’t want their boss finding out that they’ve trashed a property or they’ve got a debt. And that’s stead me in the best, I guess, the best possible strategy forever,” he adds.
In the UK, Chris was investing in areas popular with young people. Especially those with heritage buildings, which couldn’t be built up any more.
When it comes to the Sydney property market, Chris has invested in Coogee, Bondi, and Tamarama.
“You’ve got three-story height limits there,” he says. “You can’t physically build anymore property because all the neighbors have bought up next to each other. So there’s no more supply or property, but there’s loads of demand from young professionals that want to work in the city.”
When looking at the current Sydney property market, Chris says that some properties in these areas may have dropped in price between 2% and 5%, but this is not much compared to areas like Zetlands where tens of thousands of apartments could be down 30-40%.
“If there’s none of something and lots of people want it, the prices are stable or their rising,” he adds.
“So my strategy of going after the people with the money, but without paying five or 10 million, staying around the medium price, it’s worked so well. And I literally don’t change strategy. I don’t change suburbs; we bought in the same suburbs for the last 20 years.”
Chris advice for getting started as a property investor
Chris understands that a lot of people can’t afford to buy in those blue chip suburbs.
“When you’re young, you’re not gonna be able to get in the best places unless you’ve got parental help or something like that,” he admits.
“So it’s trying to get in the next best thing or as close. So I’d rather have, say, a one-bedroom unit in a really good suburb than have a two-bedroom unit that’s, say, two suburbs away, for instance,” he adds.
Chris says that location is the one aspect where property investors should not compromise.
“It’s just about getting a foot in the door. Because you’re not necessarily gonna live in this property and it’s not the be-all and end-all if you’re building a whole portfolio. It’s just giving you a start.”
Sydney property market forecast
We asked Chris to give us a Sydney property market forecast, and he told us that he doesn’t believe in cycles.
“I buy when I’ve got the money to buy, when I can get a mortgage, and when I’ve got enough cashflow to hold on for the short-term, i.e. the first few years,” he says.
“So I’ve bought in booms, I’ve bought in busts.”
Chris says that he has bought 14 properties over the past 30 years, and his strategy has been to buy them when he had the means.
“Some of my best bargains were in the GFC. And, really, they weren’t bargains, I just bought a better property for a reasonable price.”
“And so quite often I see that people want the perfect scenario,” he adds. “They want high capital growth. They want high rent. They want low-interest rates. They want easy-to-borrow money from the bank and easy-to-buy property. And I’ve never in 30 years seen those five things happen.”
Chris real estate investing advice
Chris wrote a book back in 2008 called The Effortless Empire, where he talks in detail about his investment strategy.
He tells us that the book is still very much relevant in today’s market. “Literally, nothing has changed. So we’ve produced, I don’t know, 60-70 thousand copies. And nothing’s changed in the book. With all that learning, with the GFC, all of that stuff, the only thing we changed was in 2008, the average price of property was 500 grand. I rewrote it in 2015. The only thing I’ve changed was the examples were then a million dollars, i.e. they’re doubling in that seven years.”
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