A former Taekwondo Olympian has revealed the surprise move that allowed him to buy nine investment properties worth a combined $10m.
Hayder Shkara was 30 when he bought his first investment property on NSW’s South Coast and rather than drawing directly on savings like most buyers, he cashed out of a modest share portfolio.
Mr Shkara, now the owner of a law firm, said he doesn’t have an issue with property values dropping if it boosts affordability for others.
“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,” Mr Shkara said.
“So you can’t want things to be affordable and then not take a hit to your properties, you know, you can’t have it both ways,” he said.
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Hayder Shkara is a property investor, former taekwondo Olympian and owns a law firm. Picture: Supplied.
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Mr Shkara “knew his means” and played it safe when he bought his first property for around $600,000.
“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,” Mr Shkara said.
“It wasn’t scary because it was affordable and was at a time when (interest) rates were lower so the gap for the rent and the rates was good,” he said.
He then bought his second property around two years later by using the increase in value on his first house as collateral for a new mortgage.
“I just waited for (the property) to go up and then I kind of drew that (value) down to purchase the next one and again, that would have been like sub $600,000 as well,” Mr Shkara said.
Mr Shkara estimated the yield on his properties sits at around 5 to 5.5 per cent a year, which is just below the 6 per cent needed to match interest rates and break even.
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Hayder Shkara has investment properties across the country with multiple houses in some cities like Brisbane.
Buying his properties as an individual meant he could use negative gearing to offset his tax bill with these losses.
Mr Shkara said he expects the government’s recent increase in capital gains tax and scrapping of negative gearing for established properties will push many investors out of the market.
“It’s reduced everyone’s borrowing capacity and then (investors are) not going to be able to buy all these properties,” Mr Shkara said.
“There’s much more incentive now to have a more expensive principal place of residence.
“But that’s what (the government) intended so it’s having the intended effects and like it’s not necessarily a bad thing, like maybe it needs to happen.
“I don’t have an issue with it at all but I think the lack of transparency and the semantics and the play on words is frustrating because it doesn’t give people clarity,” he said.
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Prime Minister Anthony Albanese and Treasurer Jim Chalmers delivered the federal budget in May, with the Treasurer saying it aimed to boost affordability. Picture: NCA NewsWire / Martin Ollman
Mr Shkara said he’s mainly annoyed that politicians haven’t been upfront about the goals of recent budget reforms.
“It kind of shocks me and surprises me that nobody wants to just say ‘hey, we do want housing prices to drop a bit’ but no one has the courage to say that,” Mr Shkara said.
“I just don’t understand why the politicians aren’t coming out and saying that because that’s what these actions are doing,” he said.
Mr Shkara said anyone who wants to do what he’s done will need to adopt new strategies like purchasing property under a company instead of as an individual.
“I would think that more people would definitely be purchasing under the company structures than they were before,” Mr Shkara said.
“But the banks don’t seem to have caught up and lending under company structures is quite troublesome and not as open and available as purchasing under an individual, so you know, that also causes problems,” he said.
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The Reserve Bank of Australia will decide if interest rates will rise next month and the decision will be handed down by Michele Bullock. Picture: NewsWire / John Appleyard
Mr Shkara said the main thing that people need to remember if they’re looking to invest is that it’s achievable but it’s not worth “hurting” financially.
“You start off cheap … you need to know your means and know what you can afford and what you can’t afford,” Mr Shkara said.
“There’s a lot of different ways that you can enter (the property market).
“It doesn’t need to be as daunting as you think it is,” he said.
Mr Shkara started using a buyer’s agency called InvestorKit after finding there was significant “decision fatigue” involved in property investment.
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Arjun Paliwal is the CEO of InvestorKit and says government changes created initial uncertainty but that many investors have become more selective. Picture: Supplied.
Arjun Paliwal is InvestorKit’s chief executive officer and said the recent tax benefit changes have made investors more selective when buying property but it hasn’t slowed demand.
“(Investors) should be buying assets that have the highest probability of delivering strong capital growth over the next 10, 20 or 30 years,” Mr Paliwal said.
“What has changed is that investors are asking more questions and taking more time to
understand the implications of the Government’s changes before making a decision,” he said.
Mr Paliwal said properties are selling for prices that would have been too hard to negotiate before the budget as many buyers step to the sidelines.
“Right now, our research continues to show that well-located established houses in fundamentally strong markets provide the strongest foundation for long-term wealth creation,” Mr Paliwal said.