Mark is 42 years old and has been semi-retired for about five years, thanks to the income from six rental properties he owns. While working as a safety consultant in Dubai for 14 years, he was able to put away 70% of his salary, which he invested in property.
“I watched my dad build up his property portfolio and retire at the age of 59. He’s now 70 and has been living off his rental properties for 11 years. So it’s always been my plan to own property, as it gives you both capital growth and an income stream,” he says.
Mark built up his portfolio slowly by first renting out his own small apartment when he worked offshore. Once that was paid off, he bought his next one and waited until that was paid off too before purchasing a third one.
“The offshore oil rig industry is cut-throat. If someone doesn’t like your face, they can just fire you and you’ll never work there again, so I didn’t want to have a lot of mortgage debt in case I lost my job,” he says. He found that unless he could put down a deposit of about 30% on the apartment, his rental wouldn’t cover the mortgage costs, in which case he’d have to top it up each month.
Mark uses a rental agency to manage his six apartments. “This was largely because I was working offshore, but rental agencies also are more aware of the rental market and what one should be charging,” he explains. He also advises investing only in apartments where the outside maintenance is covered by the body corporate, thus reducing the risk of a tenant trashing the property out of neglect or malice.
Property’s worked well for Mark, but he warns that, like any business, it has its challenges. “I’m dealing with a terrible tenant now, who’s refusing to leave and using the legal system to stay in the apartment without paying rent. If I only had one apartment, I’d be bleeding right now, but fortunately, I’m still receiving income from the other five,” he says. He adds that removing a tenant is a lengthy process, but it’s important to work with the system and not take the law into your own hands.
The only protection against a defaulting tenant is to do your homework upfront and screen prospective tenants carefully.
