Jason Pitkeathly knew from a young age that a day job wasn’t the key to financial success. Following in the footsteps of his favourite mentors, Jason started to take property investment seriously and has created a $2 million portfolio in just five years.

After dipping his toe in the investment waters of his native New Zealand in his mid-20s Jason sold off what he had accumulated and set sail on an overseas travelling adventure. Eventually landing across the ditch in Australia his desire to build wealth through property investment was still strong and he found plenty of opportunities in his new homeland.

Starting afresh

Arriving in Sydney with limited knowledge of local property market, Jason and his now wife Monique Esplin, purchased a two bedroom property in Queenscliff, Sydney, using the first home buyers grant. “I purchased the unit in Queenscliff because I wanted to live by the beach so I could surf,” Jason explains. Purchased in May 2005 for $425,000, the property is now worth $525,000 and attracts a weekly rent of $425. Using a 100% LVR loan at the time of purchase, Jason’s Queenscliff property has now built up equity and is currently leveraged at 79%.

Jason’s next purchase was another two bedroom unit, this time in Manly Vale, Sydney. “We purchased the Manly Vale unit because it had golf course frontage and at the time, research was showing that Australian properties with golf course frontage were providing an average of 26% growth per year,” he says. Using the equity he had built up in the Queenscliff property to provide a $40,000 deposit, Jason purchased the Manly Vale property for $580,000 using a 93% LVR loan.

Jason’s research proved to be on the money with the property now attracting a rental yield of 5.29% and currently valued at $750,000. “Using an investment buyer’s agent to negotiate our way through the purchase proved to be a wise decision as we have just recently had a bank valuation at 29% higher than the purchase price. The property has outperformed median price growth by approximately three times,” says Jason.

In 2006, Jason purchased again, this time buying a property in Darwin. “I purchased an apartment in Darwin off the plan in 2006 for $527,950. When it came to settle in September 2008 I received a bank valuation of $670,000 which enabled me to borrow the entire purchase price plus costs,” says Jason. What made the purchase more exciting was the return on investment. Jason managed to secure the property with a deposit bond costing only $5,500, making a tidy $122,050 profit immediately after settling. The property continues to perform well, providing $600 per week in rent for the couple.

Strategy for success

Jason’s strategy has been to buy as much well located, quality property as possible with a view to holding onto it for as long as he can.

“The most successful strategy is to buy and hold,” says Jason. “Property is a medium to long term investment. Entry and exit costs are too high in Australia to flip property regularly,” he says. However, Jason cautions investors against ignoring short term growth potential. “Research is critical. While property should be treated as a long term investment, missing short and medium term growth can be one of the biggest risks of property investment. It’s this growth that can provide equity for your next investment,” he explains.

By choosing interest only loans and making additional repayments on them, Jason has lower than average repayments, which frees his cash and provides him with a buffer. “I build in a buffer of cash and other more liquid assets which can be used to cover any loss of rental income,” explains Jason.

After buying his unit in Darwin Jason watched his properties increase in value for three years before purchasing one bedroom units in Rhodes NSW and later Melbourne, both of which have provided solid capital growth.

For Jason, now it’s time for family. While he will continue to invest and grow his portfolio, he sees property as a means to an end.

“Since the age of 18 my goal was to have 8-10 properties by the age of 40. I still believe that is sufficient to provide an adequate income and lifestyle so by the time I reach 50 I have the choice as to how, when and if I work at all”

“Most of all I want the time to continue to spend with my wife Monique and our two boys. I want to be able to participate in their growth. I also really enjoy helping others and hope to bring some friends with me to an early retirement,” he says.