After buying two duds, following the advice of friends and family, and reaching his lending limit, one investor managed to unlock his portfolio. Here is how.
Electrician and business owner Brenton Russo’s entry into investing was not a smooth one.
Like many around him, Russo acted on the advice given to many budding investors: get onto the property ladder one way or another.
He listened to family and purchased two units in Sydney for around $400,000 each, a decision that soon caused him a headache.
“I went off my parents’ advice and the uncle at the family barbecue’s advice to just buy anything,” Russo said.
“I thought it was a good purchase; I didn’t know any better.”
According to InvestorKit founder Arjun Paliwal, for their first purchase, it was not uncommon for new investors to be influenced by the media or their close confidants.
“That story and that feeling are happening to so many Aussies every single day,” Paliwal said.
When the bank pointed out that Russo wouldn’t be able to service the debt if one of the properties were vacated, he realised he had already hit a wall in his investing journey.
“They were both covering themselves. I was able to keep saving; I thought I was doing well,” he said.
“I walked away thinking, there is no way. How are people doing it? I just had no idea.”
Paliwal said that a major reason Russo hit a wall in the early stages was that he didn’t understand what was preventing the bank from continuing to lend to him.
“The reason you weren’t getting more wasn’t just the whole ‘covering themselves’ part,” Paliwal said.
“It was actually strategy, structure, location and capital growth.”
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Lean on the experts
Russo said the roadblock from the bank led him to seek advice from other investors, who told him to find support from experts before expanding his portfolio.
“I was told, ‘Don’t buy property by yourself because then you’re going to be in the position you are now. You need an expert.”
He said the expert advice had helped get his own investing journey back on track.
Despite being told he would be unable to borrow more to purchase another property, Russo said that with Paliwal’s support, he found another way to continue building wealth.
Within six months, Russo had purchased a unit in Brisbane for $297,000, with a fourth property in Adelaide for $475,000 following shortly afterwards, which he bought with zero deposit using equity from his existing purchases.
“The bank told me I couldn’t do that, and suddenly I’m buying my fourth property,” he said.
“To think that one year and those two investment decisions changed my life completely.”
Additionally, Russo said that a buyer’s agent who really understands the market could identify opportunities others had overlooked.
He said that was the case when he was presented with a property in Ipswich for purchase, when all of his family said it was a bad idea.
But by following the advice of someone who truly understood the market, Russo’s purchased the property, which then tripled in value.
A shot of confidence
In addition to helping grow their property portfolio, Russo said that having an experienced buyer’s agent to lean on enabled him to stand firm when the market wavered.
He said that while confidence in the property market fell as the COVID-19 pandemic took hold, having the right support systems enabled him to make the right decisions.
Russo said investors needed to ensure they aligned with one that shared their vision and that they trusted to guide them.
With the rise of social media, Russo said that it was easier than ever for investors to find a buyer’s agent.
“I don’t even know where I would have found a buyer’s agent. I had never even heard of a buyer’s agent back then,” he said.
“I didn’t know where to go for advice or to listen to the right people.”
In the current day and age, Paliwal said that while information was easier to come by, it could make it even harder for some investors to decide to take action.
“But when you have the right team that you can trust and the expertise around you, you take action.”