Property Market Investor caught up with Lloyd Edge, who generously shared his real estate investing story. His journey includes buying brand new property, purchasing in mining towns, and creating his own equity through duplex development.
Lloyd has built up a 16-property portfolio since his humble beginnings as a music teacher in Sydney.
Lloyd’s story as a property investor is really one of, “If he can do it, then so can I”, and his journey has allowed him to enjoy the lifestyle he always dreamt of. This includes living in his waterfront property in Cronulla, Sydney with his wife and newborn son.
Getting started in real estate investing
Lloyd bought his first property in 2003 for $260,000. It was a brand new apartment in Rockdale, Sydney. He didn’t buy it with the intention of kickstarting a career as a property investor, although he knew the property had potential.
“I didn’t think I was going to be a big property investor,” he tells us.
“I knew I would have some investments in the future, so I bought it with the intent that I would be able to rent it out in the future. It was near the station and the water down at Brighton-Le-Sands, so I knew it had good investment potential.”
It wasn’t until 2007 when Lloyd started to think seriously about property investment. He bought a second property and rented out the Rockdale apartment.
“I didn’t achieve much growth in the Rockdale apartment at all at that time. Apart from the fact that I was buying a home, I also didn’t know much about property at the time. So I bought it without any sort of a strategy in place, and at the wrong time in the cycle,” he explains.
Through 2004-2005 there was a slight decline in Sydney property prices, and Lloyd’s apartment didn’t make any capital growth for about three or four years.
When looking to buy his second property, Lloyd didn’t have enough equity to fund his next purchase. He made a conscious decision to live frugally in order to save up for a deposit.
“At the time I didn’t have a big income as I was working as a teacher. I was trying to build up a portfolio, but I managed to get lending for that second property and still keep that first property,” he tells us.
Lloyd bought his second property at 90% LVR, with a 10% cash deposit and lenders mortgage insurance.
Lloyd’s investment property in sydney was giving him a rental yield of above 7%, which helped his real estate investing career gain momentum.
“It was a reasonably good position for me to be in, because I could then go buy the next property, and that helped with my serviceability,” he says.
Learning through mistakes
With two properties under his belt, Lloyd realised there was a lot more he could do with his property investment career.
“Until you get into it, it’s like, ‘Oh I’ll have a property’ and maybe at the age of 60 it’ll double in value, triple in value, and then I can sell that asset and I’ll have a few hundred grand in the bank.’ But as you get more immersed into property you realize, actually there’s a lot more that I could do.”
Lloyd tells us this was a turning point in his life. He saw the potential of making real money with property investment in Australia, and decided to push things a step higher.
“I actually wanted to start setting myself up so that I could actually retire from having that nine to five job,” he explains.
“I was in my early 30s. So to some extent I was probably a bit of a late bloomer, ’cause there are people these days who are younger and really thinking about things.”
However, he tells wanna-be property investors that he is the living proof that “It’s never too early or too late to start.”
When looking for his third property, Lloyd crunched some numbers and realised he could add another property into his portfolio, as long as it was positively cashflowed.
He enlisted the help of a buyer’s agent who found him a high-yielding property in a mining town.
“The buyer’s agent went and found for me exactly the type of property that I’d told him I wanted. But looking back on that, it was actually the wrong property,” he reflects.
“It was in a mining town that at the time was getting about 28% growth so it was huge. It continued to get growth for a couple of years after that so I thought I was onto a winner.”
However, when the mining industry slowed down at the end of 2012, property prices collapsed.
“I learned throughout that process that you should never buy in an area that has only one industry, a one horse town so to speak,” he says.
By this time Lloyd had built some equity in his Rockdale apartment and used it to grow his portfolio.
He bought a property in Newcastle and one in Toowoomba, and when he was up to about five properties he decided it was time to push things even further.
He realised he had a good portfolio but that “it wasn’t fantastic.” With an inkling that there had to be a better way to make money with property investment in Australia, he started to educate himself and learn as much as he could about being a property investor.
“That’s when I really started to do a lot of research. Speaking to people, contacting successful property investors, listening to podcasts. I was doing everything I could to really immerse myself,” he tells us.
Lloyd learnt about cycles and markets, how to add equity to properties, as well as manufacturing growth instead of waiting for the market.
“That’s when things started to really turn around for me,” he says.
Armed with this new-found knowledge, he decided to venture into the world of property development. He built a duplex in Armadale and then subdivided it.
This was a life-changing project. Lloyd was earning $70,000 a year as a teacher and he made $141,000 in equity from his first duplex development.
“In future deals that I’d done I made more equity than that but this one was sort of a starting point. This was a key moment in my career where it sort of doubled my income and I always remember thinking that was my ‘aha’ moment. This is when I thought: Okay, this is what I need to do.”
“And that’s what I started to do, find deals like that and repeat that process,” he explains.
Growing his portfolio
By this time, Lloyd had a couple of properties in Sydney, a mining town cashflow property, and he was building duplexes.
This is when he decided to diversity and start looking at other types of investment.
“I did a few other things,” he says. “For example, when I’d take equity out of a property, I would use some of that equity and put a deposit on an off the plan apartment or something. I bought a couple of them.“
Lending wasn’t an issue for Lloyd at that time, because he had positive cashflow, but he advises those wanting to become property investors that it is essential to find a mortgage broker that would have the vision to think about long-term strategies. “It’s not just one property, they need to think about what your overall plan is. So what is your next property gonna look like, how are you gonna fund the next property. That’s something that I regularly talk with my clients and their brokers about, to make sure that we’re all on the same page about a long-term plan.”
He also adds, “When I first started I always just assumed that lending is unlimited and I can just buy and buy and buy, and if I created equity during the process then that’s fine. It’s only actually from going through the process that you realize you know what, money is not limitless from the bank.”
As a result, he has gone through four or five different mortgage brokers.
“To an extent, as an investor, your potential is limited by the mortgage broker and the team that you work with, so if they’re maybe not working with investors that have 10, 15, 20 properties themselves, then of course their knowledge will be limited” he says.
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The present and beyond
Lloyd currently has an investment portfolio of 16 properties with a value of about $12 million and sitting on circa 50% LVR.
He says the most important piece of property investment advice he can pass on to those wanting to get started in the industry is the importance of having a thorough and well-planned strategy. “If you don’t have a strategy then you end up getting lost. You can make money in any market, as long as you have a strategy on how you’re actually going to do that.”
Looking into the future, Lloyd tells us that he is planning to get into commercial property. “Commercial properties, obviously they have higher yields so they’re attractive for cashflow but also have long-term tenancies in place, which a lot of people find attractive.”
This move is, however, part of a well-planned strategy. “You don’t need to be just buying more and more properties just for the sake of it,” he says.
“I don’t need to be one of these people that has 40, 50, 60 properties, and also I don’t think a number is really what you need, it’s more about the value of the properties and the quality of them and how they can help you achieve your goals.”
Lloyd’s property investment advice
Lloyd is also writing his first book, which will be packed with property investment advice. It will take a look at his whole real estate investing journey, including the ups and downs, and will also include an honest look at mistakes he’s made.
“Why things didn’t take off for me for the first five years, and then how I managed to build up a large portfolio and the type of strategies that I’ve used,” he tells us.
“I go into a lot of detail talking about finances, the need to have a good mortgage broker on your side, and different strategies. Not just the duplex strategy but also other ones I’ve used like renovating properties, and how you can actually add some value and build some equity quickly through a bit of a renovation that may only take you two or three weeks.”
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