Rental warning from IT guru who owns 12 Qld properties – Daily News

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Bharat Patel took his Qld real estate holdings to 12 during the Covid-19 pandemic,

Bharat Patel took his Qld real estate holdings to 12 during the Covid-19 pandemic,

An IT manager who owns 12 rental properties in Qld – most bought during Covid-19 – has warned renters of more grim times ahead. And it’s not because of interest rates.

Bharat Patel, who first dipped his toes in the real estate market during the last major global financial crisis in 2009, says tremendous pressure on rentals will see higher rents persist until the construction crisis is solved.

Mr Patel says a combination of factors are impacting on the rental market – with global supply chain issues, cost of materials and shortage in labour causing construction to be very expensive exerting the greatest pressure.

”I would expect $50 to $150 a week rents to rise in a year in a few suburbs,” he said. “When the interest rate rises, people are fearful and will not buy. This will push them into the rental cycle forever. Due to the less stock in Qld it will push rents higher and higher. It is all about supply versus demand”.

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Demand for rentals in Helensvale saw rent rise dramatically for this property this year.

He has already extended leases over the past three months and raised weekly rent by $360 a week in total for the 12 properties – almost half of that coming off a Gold Coast property.

“We have 60 applications for my Gold Coast property in the well-known neighbourhood of Helensvale, and they all want to pay that much rent. The weekly rent has gone up from $460 to $600. All of my assets have vacancy rates below 1 per cent, and in some of the suburbs, they are as low as 0.1 to 0.3 per cent.”

He said prices of Qld homes had “skyrocketed” since his purchases.

The most expensive purchase the investor made over the Covid-19 period was this Loganlea home for $491,750.

“Currently, interest rates are rising, but investors still have a good chance to raise rents, especially in Qld suburbs with low vacancy rates. This is a result of interstate movement, improved lifestyles, and opportunities for work from home.”

Investors such as Mr Patel are not fazed by horror stories around rentals.

“My major objective is to buy as many properties as I can during the accumulation phase. I make sure to screen the tenant from the start and maintain a positive connection with my property manager,” he says of his approach to tenancy.

Inside the Rasmussen rental property he bought for $210,000 in October 2021.

He believes the numbers still stack up in Qld and geography does not matter.

“I bought 12 homes in Qld during COVID-19, bringing my total to 23, and I plan to buy two more in a month, bringing my portfolio to 25 properties.”

“An income of $4,045 per week, net of expenses, is being produced by 12 Qld properties purchased.”

Mr Patel says in less than two years, the value of his Qld portfolio rose around $650,000.

Property records show the cheapest property he bought during the pandemic was $65,000 in Moores Pocket a month after Covid-19 hit Australia in March 2020 to as much as $491,750 in Loganlea in February last year.

One of his largest homes is this four bedroom property in Chinchilla, bought for $260,000 in February this year.

“Two have been purchased outright. In terms of funding it was a combination of savings, cash flow from previous investments and equity.”

Emotions shouldn’t come into investment decision-making, he says.

“I see property as a vehicle which can take you from A to B.”

“Every property that I have secured, I always think what would I get out of it? In terms of growth and cash flow. You need to treat your investments as a business.”

“For example, if you have 10 properties and if you increase $20 rent a week which will become nearly $10k increase in income which helps to cover your rising interest rates and put you in far better financial position.”

This one bedroom, one bathroom Moores Pocket unit was bought for $65,000 in March 2020.

“Today it can be used to replace my full-time salary,” Mr Patel says, but he has no plans to quit his day job or sell his properties if it can be helped.

“I would never sell any of my assets if I can hold, and it is possible to hold if you plan accordingly.”

His suggestion for anyone considering real estate investment was to get on the ladder as soon as possible.

“At the end of the day, if you can start somewhere, you are in the game of property investment instead of waiting many years to save large deposits and the market to cool down.”

“Most people are fearful of rising costs of living, interest rates and uncertainly about the jobs and markets, but there is always a market where the price is coming down and you will need to make your decisions to enter into it.”

This three bedroom house in Norman Gardens was bought for $245,000 in Sept 2020.

His property hunt focuses on buying property under market value or rebuild costs, looking for consistent growth with enough cash flow to take it through market cycles.

“Most investors fail to understand this and they could not afford the large portfolio due to lack of cash flow projections. Every property I have purchased had a contingency buffer, so in case of emergencies that fund can be used to pass the hard times.”

Bharat Patel on the Gold Coast during AREC.

Mr Patel says he was sharing his experience to help spur others onto the market.

“At the end of the day, people are people. Some are not willing to do anything, A few people read and don’t take a cent of advice. As we speak I just purchased in Townsville and it settles in two weeks time.”

“A few people are missing the market just thinking about interest rates. Think about it as a business. It doesn’t have to be posh suburbs, there are many suburbs still in Qld where there are opportunities like $300,000 for a house with land. At the end of the day all the income will cover your expenses when you rent it out – and it will rent out because there is huge demand for rentals and there won’t be enough stock for years.”