Pete Wargent - Four Green Houses and a Red Hotel: New Strategies for Creating Wealth Through Property

FOUR

GREEN HOUSES

AND A RED HOTEL

New strategies for creating wealth through property

FOUR

GREEN HOUSES

AND A RED HOTEL

New strategies for creating wealth through property

Pete Wargent

This book is written to provide competent and reliable information on the subject matter covered. However, the author does not operate as a licensed financial advisor.

This book is written on the understanding that the author disclaims any liability from the use or application of the contents of this book. The reader should always consult a financial advisor before making any investment decisions.

Copyright Pete Wargent 2013

First published 2013

Copyright remains the property of the authors and apart from any fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without written permission.

All inquiries should be made to the publishers.

Big Sky Publishing Pty Ltd

PO Box 303, Newport, NSW 2106, Australia

Phone: 1300 364 611

Fax: (61 2) 9918 2396

Email:

Web: www.bigskypublishing.com.au

Cover design and typesetting: Think Productions

Printed in China by Asia Pacifica Offset Ltd.

National Library of Australia Cataloguing-in-Publication entry (pbk)

Author: Wargent, Peter, author.

ISBN: 9781922132383 (paperback)

Dewey Number: 332.60994

National Library of Australia Cataloguing-in-Publication entry (ebook)

Author: Wargent, Peter, author.

ISBN: 9781922132390 (ebook)

Dewey Number: 332.60994

To the traditional owners of Australia.

In loving memory of my one-time opening batting partner, talented cricketer and dear friend, David Randall (19852012), lost to cancer too young.

Thank you to my beautiful wife, Heather. Partly for her editing of the book, but mostly just for putting up with me.

The author will donate 10% of the proceeds of this book to the McGrath Foundation for breast cancer research and support.

Writing something new and different about personal investment, yet appropriate to our changing times, is a tough gig. But Pete Wargent, one of Australias leading young financial commentators, has mastered this in his latest book. It contains an incredible wealth of real world insights from someone who has actually achieved what most readers will want to accomplish.

I have been investing for over 40 years and read almost every book written on property investment in Australia yet I still learned new concepts in this book. I recommend it for beginning investors to get a good grounding and for experienced investors to receive a fresh perspective.

Michael Yardney, bestselling author and voted Australias leading property investment adviser.

Its hard to find a balanced voice that paints a common sense picture of our property markets. Peter is one such voice - his extensive expertise and experience in both finance and property is clearly evident as he takes us on a tour of Australias real estate terrain imparting valuable lessons including holding for the long term and staying well diversified. I have no hesitation in recommending his book to anyone interested in real estate investment.

Catherine Cashmore, Real Estate Expert on The Circle (Channel Ten)

Ive had the privilege of interviewing Pete on a number of occasions for our various real estate investing shows. I thoroughly recommend his new book. It is a great read!

Kevin Turner, Fairfax Radio real estate expert, Sky Television property commentator and host of Real Estate Talk and 4BCs Real Estate Show

Ive always had a great deal of respect for Pete Wargents thorough and entertaining market commentary. His book shares a wealth of state-by-state knowledge and experience for those interested in success through property. He delivers a common sense approach to investing in a manner that makes sense for every reader.

Iggy Damiani, Real Estate News (Sky News Business), Managing Director of Equilibrium Property

This book is the one stop shop of buying property in Australia. Peter teaches the how and the where to buy. Combined with great resources you can put in place today a strategy to build your own wealth through property. This book gives you the rules so you can get on the board, roll the dice and start growing a successful property portfolio without leaving anything to chance!

Jane Slack-Smith, Director, Investors Choice Mortgages and author of Your Property Success with Renovation: 2 properties, 1 renovation, $1 million in the bank

Contents

Introduction

My Aussie real estate tour de force

I am a property, finance and investment expert and author. But one thing used to trouble me a lot: can you call yourself an expert in real estate markets when you havent actually seen them for yourself? Im well aware that there are those who say that you can, and Im equally sure that there are many who do. Indeed, some of our good friends in the US like to refer to themselves in a grandiose manner as global real estate experts apparently with no sense of irony.

These are often the same guys who have been predicting 50% to 85% meltdowns in prices for Australias property markets for a long time now. As I write this, we are supposedly still waiting for that to happen. Meanwhile, smart counter-cyclical investors make their assessments of the best states in which to buy for future capital growth while sentiment is relatively low.

I understand the theory that you can do all of your research on every property market in Australia today simply by using the power of the internet. You can track sales prices, vacancy rates, auction clearance rates, rental yields and a whole host of other data. This is true to a point, but I do believe that if you havent travelled to a region, then you may still lack a true understanding of some of the key factors and drivers of growth.

What you could miss via purely internet or press-based research might include the changing nature of an areas demographics, the rate at which construction is progressing or simply the less quantifiable feel of a suburb. Graffiti, youth problems, racism, levels of unreported crime or a high rate of homelessness are just a few of the things that rarely seem to show up on property reports.

I quit my full-time job at the age of 33 having successfully built a portfolio of shares, index funds and multiple investment properties, and was fortunate enough to be able travel the Big Lap of Australia with my wife in our beloved Kombi van. We took a full 12 months to travel around as much of the country as we could, and we visited every significant real estate market in Australia.