Investor in focus: Guy Williams, part two
Announcement posted by Ripehouse Advisory 23 Dec 2016
Ten properties in ten months
Following on from our first interview with Guy Williams where he talks about his property investment strategy, we sat down again with this incredibly successful investor to find out more about the means by which he has achieved such great success. Speaking candidly about how he overcomes his fear to make confident decisions when purchasing, he shares with us the mechanisms by which he has ramped up his property search of late to purchase ten properties in the last ten months.
Guy's Fast Facts:
Since July 2015, Guy has used Ripehouse to research and purchase 10 properties. He uses the street level research to position his purchases in the key Ripehouse Sweetspot streets, primed for imminent growth - streets placed firmly in the BUY recommendation territory.
Across these 10 properties he has achieved 25% annualised growth on purchase price. His cash on cash return is far higher, over 105% assuming 80% LVR across all purchases.
What has it cost Guy to hold these investments? His average yield across these 10 properties is 6.25% - firmly placing these acquisition in cash flow positive territory, putting dollars in Guy's pocket each and every week from day one.
You shouldn’t be losing sleep
Guy’s property investment life is lived by the rule that ‘you shouldn’t be losing sleep’. While by his own admission his strategy is not a , ‘get rich quick scheme’, he attributes his sure and steady approach as paramount to his ability to continually add to his portfolio, which currently stands at an impressive 35 properties.
As discussed in his earlier interview, Guy chooses to purchase positively geared houses at a ‘sub 300K price point’. This decision is directly linked to his need for peace of mind through risk mitigation, which is achieved through the following considerations:
Firstly, Guy is confident in his means of investment. Choosing the tangibility of property over shares, he jokes that, ‘unless we are going to go back and live in caves, people will always need houses. They are a sure commodity.’ Thus he states, ‘there will always be the need for people to either buy from me or rent from me’.
Secondly Guy finds that, ‘if the property is positively geared from the outset, there is no pressing need for it to go up at all. If your initial purchase achieves 6% yield + and your mortgage is set at around the 4% mark, you will not get into any trouble’. He also fixes his investment only loans to give some certainty around repayments Guy gives the example of a couple of Rockhampton properties he bought in 2008 that have not experienced the growth he had expected. Because they were positively geared to start with, they are not draining his portfolio financially so consequently, he has been able to hold onto them. His experience in the property market, during the past 20 years gives him the confidence to believe that over time they will begin to perform again.
Thirdly, Guy argues that ‘by the laws of the pyramid, if needed, to find another buyer at that price point - it wouldn’t be difficult’. Similarly, finding a renter at that end of the market has to date presented no issue. If he is struggling to find a tenant, he understands that in that particular market his asking price is too high, so he adjusts quickly and accordingly to ensure his property is not vacant for long and his business does not lose crucial cash flow.
Finally Guy overcomes his fear by testing his resolve in relation to a worst case scenario, suggesting that while he, ‘always hopes that [a property] will go up in value – [if] worst case, it was to became $0,’ in regard to a sub 300k property, he could ‘probably live with that’. This would not be the case if his purchases where each around the $1m mark.
Support and positivity is essential if one is to succeed
Guy is also very open about his decision to not go it alone as a DIY investor. His wife is extremely supportive and he chooses to listen to industry experts when making his property selections. He does not let fear mongering in the media or the anecdotes of individuals who have not been there, done that stall his process. He believes that people can always find an example of something going wrong to suit their story, but you need to consider the relevance. Positive people ‘who have actual experience in property investment are who you should be taking notice of’.
As discussed in his previous interview, Guy treats his portfolio as a business and employs a team of experts to help him manage it. He makes his decisions after listening to industry experts and using the property research platform, Ripehouse.com.au. He regards these experts and tools as employees in his business model. He also engages property managers to look after the day to day running of each business unit (individual property) entrusting them in this undertaking as they have ‘access to contractors to handle any issue’ and a ‘ready list of tenants waiting to go’. This encircling positive network is his foundation and affords Guy the freedom of concentrating on what’s truly important to him – his family and his primary business, his corporate training company.
Do your research
Of course to be as successful as Guy, doing your research is non negotiable. While diligent investigation has always been the focal point of his strategy, it has meant that the process of accumulation has been very slow – on average one, sometimes two properties a year since 1996. Over the past 10 months however, Guy has been able to really ramp up his acquisition strategy through his engagement with the online property platform, Ripehouse.com.au. The platform allows him to pinpoint properties perfectly suited to his strategy. Using the cash flow filters he is able to shortlist a select number of candidates. His second step of selection involves pursuing properties from this list with the highest days on market (DOM). The reason being, this generally provides excellent scope for negotiation. Guy suggests that as DOM rise, ‘agents become tired [of the property] and are keen to get them off their books.’ He often finds the agents begin working with him against the vendor by massaging their expectations. I guess for an investor, this is the perfect scenario.
The table below outlines the 10 purchases Guy has made over the past 10 months, using the Ripehouse platform.
Ripehouse Purchase One: 9 Months, 13.5% return.
Purchased: July, 2015
Council: Ballarat,VIC
Purchase Price: $258k
Current Rent: $260pw
Yield (at cost): 5.25%
Current Est Val: $293k (04/2016)
Ripehouse Purchase Two: 9 Months, 3.1% return.
Purchased: July, 2015
Council: Logan, QLD
Purchase Price: $256k
Current Rent: $300pw
Yield (at cost): 6%
Current Est Val: $264k (04/2016)
Ripehouse Purchase Three: 8 Months, 1% return.
Purchased: August, 2015
Council: Logan, QLD
Purchase Price: $271k
Current Rent: $320pw
Yield (at cost): 6.1%
Current Est Val: $274k (04/2016)
Ripehouse Purchase Four: 8 Months, 2.9% return.
Purchased: August, 2015
Council: Wodonga, VIC
Purchase Price: $202k
Current Rent: $260pw
Yield (at cost): 6.6%
Current Est Val: $208k (04/2016)
Ripehouse Purchase Five: 7 Months, 40.9% return.
Purchased: September, 2015
Council: Delacombe, VIC
Purchase Price: $210k
Current Rent: $260pw
Yield (at cost): 6.4%
Current Est Val: $296k (04/2016)
Ripehouse Purchase Six: 6 Months, 23.3% return.
Purchased: October, 2015
Council: Salisbury, SA
Purchase Price: $193k
Current Rent: $285pw
Yield (at cost): 7.6%
Current Est Val: $238k (04/2016)
Ripehouse Purchase Seven: 5 Months, 3.6% return.
Purchased: November, 2015
Council: Salisbury, SA
Purchase Price: $248k
Current Rent: $310pw
Yield (at cost): 6.5%
Current Est Val: $257k (04/2016)
Ripehouse Purchase Eight: 4 Months, 24.7% return.
Purchased: December, 2015
Council: Sebastopol, SA
Purchase Price: $230k
Current Rent: $260pw
Yield (at cost): 5.8%
Current Est Val: $287k (04/2016)
Ripehouse Purchase Nine: 2 Months, 5.8% return.
Purchased: February, 2016
Council: Wodonga, VIC
Purchase Price: $256k
Current Rent: $330pw
Yield (at cost): 6.7%
Current Est Val: $271k (04/2016)
Ripehouse Purchase Ten: 1 Month, -1.1% return.
Purchased: March, 2016
Council: Caboolture, QLD
Purchase Price: $287k
Current Rent: $310pw
Yield (at cost): 5.6%
Current Est Val: $283k (04/2016)
http://www.ripehouse.com.au
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