2017 Strategic Investor of the Year: Crystal Palmer

15/02/2018

“I was basically a sponge...”  our 2017 Strategic Investor of the Year award winner Crystal Palmer. explains, this is what her success boils down to: soaking up research, and a lot of it.

“I researched a lot about property investing and what different strategies could help me achieve,” Crystal says of her property journey.

“I knew I didn’t want to work up to retirement age, and I knew that property was a way to achieve this. Once I started, I became addicted to property investing, as I was able to physically see something in front of me – something to show for the hard work I had put into it.”

AT A GLANCE

Years investing: 10

Current number of properties: 21

Portfolio value: $4,045,000

Just 19 years old when she first dipped her toe into the property market, Crystal said it was learning from someone else’s mistakes that showed her the right path forward.

“I was fortunate enough to know someone who had a number of negatively geared properties, and that strategy clearly didn’t work for him or his cash flow,” Crystal says.

“We spoke at great length about investing in property with a positive cash flow strategy, 

and the benefits of low-priced investments with strong rent returns. I was only just out of high school with a part-time job.”

Though she wasn’t yet convinced about her career path, Crystal knew she needed to find something she was passionate about – and it didn’t take long to realise it was property.

She began with just $30,000 in savings and leveraged it from one deal to the next, doing cosmetic renovations along the way to maximise profits and improve yields.

Her first property purchase was back in 2007 – it was a house in Narrabri in NSW. She paid $92,500 for the home, which has since more than doubled in value.

Cheap and cheerful strategy

Crystal’s ‘cheap and cheerful’ strategy, which involves buying affordable regional homes under market value and then instantly boosting equity through cosmetic renovations, is one that she has used again and again – and with great success.

“Generally, when I purchase a property, if I include paint, heating/cooling, floor coverings and maybe a new kitchen or bathroom plus general handywork around the property, I’d be looking at a $15,000 renovation. For this $15,000, I look to put $50,000 equity onto the property as a minimum,” she says.

Crystal’s Taree property – one of two homes she bought in the regional NSW town

WHAT DID THE JUDGES SAY?

“Crystal started young and has achieved so much. I love that she reduces her risk by buying 

low-priced properties with a great yield” 

Tyron Hyde

Director, Washington Brown 

“A great example of the thoroughness of research and understanding the fundamentals of value in property, even if an individual property is not highly priced. Also a good strong example of diversification and being clear on your strategy”

Kylie Davis

Head of content and product marketing, CoreLogic Australia

“My latest purchase was in Glen Innes, NSW. I purchased this property for $110,000, which I knew was well below market value. It was a deceased estate, so they wanted a quick sale.

I wasted no time in inspecting it and moving on an off er. It needed a bit of work, so I spent more than what I normally would – around $40,000 in renovations. But I knew that when it was complete the property value would be between $200k and $210k, giving me $50k in equity. I successfully rented it out for $280 per week. With a loan repayment of $300 per month, this investment was a home run!”

This is just one of more than 20 property deals Crystal has embarked on. But with properties all over Australia, how does she research her deals?

“I look to buy something under market price, starting by looking for houses in NSW under the $150k mark, and with the potential of a strong rent return. I look for a rental yield capable of achieving 12–13% after expenses, which include interest repayments, insurances, rates and management fees. This gives me at least $50-plus per week clear – though my portfolio ranges right up to $175 clear per week.” 

To guide her purchase decisions, Crystal has created an Excel spreadsheet that keeps track of all the numbers. 

“If I look to purchase a property, I input these figures into the spreadsheet to see if the deal is viable,” she says.

Risk mitigation in regional areas

To build a portfolio of 21 properties, one might assume that some complicated financial footwork would be involved, but again, Crystal says a simple strategy has worked best.

“I have only ever used the equity in my existing properties by refinancing them twice, and I’ve only done so to a limit whereby they don’t exceed 80% LVR, so it is still a positive cash flow investment,” she says.

“I successfully rented [the property] out for $280 per week. With a loan repayment of $300 per month, this investment was a home run!”

“As my strategy is to buy positive cash flow properties that achieve a rental yield of 9–13%, with this additional form of rental income I have never had to financially contribute to any property investment unless a new purchase was involved, with deposit, stamp duty or renovation costs.”

Crystal minimises risk by only looking to complete a basic cosmetic renovation rather than large-scale, structural changes – “to the extent whereby it achieves maximum rental return without overcapitalising”.

In 2017, Crystal settled four more properties, bringing her total portfolio to 21

“Cash flow is extremely important from a risk perspective; that is why I track how much to expect in rents each month, and should any large expenses arise that cannot be claimed through insurance, like a new roof replacement or a hot water system, then the funds have already been generated by the properties to attend to these issues. I also ensure that I have enough funds set aside and a line of credit available as another option,” Crystal says.

“These areas demonstrate stability, have numerous forms of employment, and demand for low-cost housing. I conduct in-depth research prior to my offer, and only proceed once I am confident that the property will only ever increase in value over time and off er a strong rent return.”

There’s quite a bit of time, effort and work involved in keeping her property investments ticking over, but Crystal wouldn’t have it any other way.

“I’ve become better at knowing what to look for, and as time has progressed the financial rewards have been stronger,” she adds. “But property investing is something that I truly love. I throw myself into it and it drives me to reach for bigger and better things.”

WHAT DID THE JUDGES SAY?

“Having a portfolio comprised solely of properties in regional areas could be seen as a risk. However, the diversity of her portfolio offsets this risk. She has also locked in her interest rates, increasing the certainty around her outgoings, and because she has high-yield properties, she is well placed to ride out vacancies” 

Suzanne Pitson

General manager, sales and marketing, Defence Housing Australia 

“You can’t get past Crystal’s dogged determination to succeed in property. She did all the hard work, learning about property, nding a niche market to invest into, and then kept going on her trajectory. Well done!”

Philippe Brach

CEO of Multifocus Properties & Finance