What assets we own - Part 2 Our properties

This is part 2 of the 4 parts series about the assets we are currently owning.

Sydney house

That brings me to what we own (and hopefully will keep for a while). After buying and selling 3 apartments in Sydney we have moved on to our first house. That was 11 years ago. We still own it. House was great place for living and working in Sydney. It took me bit over 1 hour driving 20km to work every day there and back. Yes quite long, but actually it is reasonably short commute by Sydney standards. Main reason I have put up with 1 hour commute and not 15 minute are the beaches. I could have bought half size freestanding house closer to city (on much smaller block) probably within 20 min from my CBD job. But it would be too far to the beaches and as I originally come from landlocked country, I have become hopeless ocean addict. I need to live close to the ocean. This house was less than 10 min to the most beautiful Sydney beaches where I used to regularly go surfing.

House had plenty of other pros. Location. It was 20km to CBD, 5 km to beaches and 1 km to the mall. Also it is on reasonably quiet side street. It has some views as it is on the slope. Best one is that it had established 3 independent living quarters, almost units with own entry, bathroom and kitchen. After small renovation it got all let out and that helped us to clear our mortgage and set on path towards FIRE (before I have ever heard about FIRE). So yes they say location, location, location but the cash flow was really nice cherry on the top of the cake. Who gets extra income with their primary residence? Unfortunately only minority of people.

The house was/and still is great investment when it about doubled in value over 10 years while generating great income as we lived there. Also it now became solid rental. Obviously there were some hassles with letting out. I would still call it passive investment but it is nowhere near to the Real Estate trusts which you can buy on the stock exchange. There were some less than average tenants, damages to the property, renovations, sewer lines issues, etc. But nothing unreasonable and some tenants stayed many years.

South Coast mini farm cottage

3.5 years ago we bought small acreage in tiny coastal town. We knew the place as we have holidayed there often. This was almost after decade of checking more houses to buy. We actually thought that we do not expect too much growth from the place as it was small town with quite seasonal market. But location was great too and I believe one day it might turn up OK investment. Town has all services including high schools, council, child care, hospital, supermarket, etc. There is beautiful river great for fishing, unspoilt nature and surf beaches are only 10 minutes away. House is just outside town, surrounded similarly sized properties (10,000sqm) and paddocks.

It is actually higher end area of the town. Block has nice 4 bedroom solid cottage on it with new hardwood deck, storage shed, small orchard and dam. For about 1/3 of the average Australian house price it seemed like a good deal. Also after all our property investment experience, we thought that if we like it so much, tenants or the next owner would like it too. Which would have made it good investment. We have lived there for only about 9 months after we have escaped our employments. The only reason we moved away was that we thought if this place is so awesome and we are so free now, let’s find out best place in the world for FIRE lifestyle. We didn’t have jobs, kids were small, there was still some cash left so we could have gone wherever we liked. Not only in Australia. In the world.

Sunshine Coast residence on small acreage

So we have let the house out and moved to Sunshine Coast in Queensland! That brings me to our third current property investment. We currently live in 3 bedroom brick house with extra space from converted garage, with swimming pool, car port and beautiful park like garden with many mature trees and dam. There is another 3 bedroom brick cottage shielded from main house by bushes and trees. Cottage is let out supporting our current FIRE lifestyle. Do I think this house is not only good residence but also great investment? 100%. It is surrounded by similarly sized (and bigger) properties and paddocks. Couple of sheds and chook house. Very private. Quiet street. Within 15 min to all the services and 30 min to the beaches.

House already generates good rent. If we ever move out it should be reasonably easy to rent out the main house too. It is large block but regular maintenance is mostly only monthly mowing. Price was about half of the Australian average house price and we got lots of house for it. Also area of Sunshine Coast is one of the fastest growing areas in Australia. It is was always popular with holiday makers and retirees. As it has grown, it now has all the services as highway, hospitals, many high schools and even a University. Now the people escaping from capital cities like Melbourne or Sydney started turn up and also new immigrants started liking it. Did I mention weather? Except couple of months when temperatures sit every day in middle thirties (degrees of Celsius), rest of the year is extremely pleasant weather with almost non-existent winter. We are using our wood fire heater for 3 months, but only about a month of this is really needed. I really like hot weather.

Currently we own 3 residential properties. Each of them is absolutely great home and at the same time each should be a good investment. Cash flows from each of them are very satisfactory, capital gains should be good, but that will be confirmed only once sold. Here in Australia many people are betting on capital gains only, ignoring cash flows. And they have done quite well so far. But we wanted to have it both ways. We have focused on cash flow because of couple of reasons. It makes investment stable. If property has currently good cash flow, value should not be too volatile as it can be always let out. Buyers like that. The cash flow makes it also affordable. If you are relying on great capital gains in far future, you will soon run out of funding.

Also as we are getting older, we don’t like the debt. That means property loans only, because luckily with our modest upbringing and lifestyle I never had any other debt. No credit cards, car finance, personal loans. If I cannot pay for it, I don’t buy it. It worked well so far and I don’t intend to change it. Maybe we could get richer if we have used property debt more extensively in the past, but having good sleep must have a value attached to it too. That’s why we got our property loans always as small as possible and pay them off as fast as we could. I am not big on paying interest to someone if I don’t have to. Even if the interest is tax deductible from the investment loans. Not having much debt gives you flexibility and freedom which I prize above financial wealth.

Continues in Part 3

What assets we own – Part 1 Australian property

What assets we own – Part 2 Our properties

What assets we own – Part 3 Our ETFs

What assets we own – Part 4 Our pension funds (Superfunds) investment