A 35-year-old gym owner and his wife have revealed the bold strategy that helped them amass a staggering real estate empire worth $11.5 million.
Michael Pritchatt and wife Elisha, 32, currently hold a jaw-dropping 26 properties across the country that generate $11,000 a week, or $460,000 a year, in gross rental income.
The couple said they sit on about $3 million in equity once accounting for their mortgage debts.
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But their property wealth wasn’t built on the traditional Australian Dream: to afford their portfolio, the parents of three don’t even own the roof over their heads.
“We don’t own a primary place of residence,” Mr Pritchatt revealed, explaining that they currently rent his mother-in-law’s granny flat as a way to save more money for investments.
Elisha and Michael Pritchatt, with son Luca, have bought 26 properties across Australia. Picture: Rohan Kelly
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Mr Pritchatt, who runs a Rouse Hill gym and online coaching business that today brings their combined income to around $400,000 a year, said they didn’t achieve their portfolio overnight.
They did much of their investing while earning a meagre income, while also trying to build their gym business, which required considerable start up funds.
Much of their recent investing relied on a multi-pillar strategy: they accessed equity from existing investments through refinancing deals to use as deposits on new properties.
Those new properties were typically cheaper homes in areas with high rents, bought for below market value – often distressed sales where the vendors valued speed of sale over price.
These cheaper homes tended to be in high growth markets where home values were rising. This, coupled with the below market value prices, meant they got rapid equity to use for their next purchases, repeating the cycle.
Learning strategies the hard way
The couple didn’t use their current strategy at first.
Mr Pritchatt bought his first property at age 18 using a $40,000 inheritance from his grandfather. He was working as a tradie at the time.
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The couple own a unit within this complex. They spread their purchases across units and houses.
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This was followed by other properties over subsequent years, but they eventually got stuck on only a few properties because they reached their maximum borrowing power.
Looking back, he said a problem with his early investments was that they were heavily negatively geared, leaving the couple “tapped out” and lacking the cash flow needed to service their loans.
Everything changed in the years after the Covid pandemic when a brutal shift in strategy triggered a property acquisition spree. In just the last three and a half years, the couple has acquired 24 properties.
Mr Pritchatt said they accomplished this feat through ruthless frugality and by rolling the profits from four sold properties directly into new deposits.
“We didn’t have holidays, I was driving a $3000 Hyundai,” Mr Pritchatt said. “We don’t spend on things like (cars). We spend on investments.”
They also took a completely different approach to the types of homes they targeted.
Buying Cheap and ignoring the haters
Instead of looking for luxury homes, the couple hunts for cheap, below-market-value properties that “wash their own face” financially. Essentially, they target homes where the rents will cover most, if not all, of their mortgage expenses.
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The couple prioritise homes with high rents relative to the mortgage costs, something they achieved in this complex.
Their sprawling portfolio includes real estate in the Northern Territory, Melbourne, Queensland, Tasmania, NSW, and Perth.
By targeting lower price points, they have seen massive returns, taking advantage of units bought for just $150,000 that have since doubled in value to $300,000.
The couple rely on buyer’s agency B.Invested to help source these deals.
“Some people have limiting believes on one-bed units. But if you look passed it, you can find value,” Mr Pritchatt said. “People snub these properties, but they go up in value.”
One of the properties the couple purchased using leverage: a process of accessing equity from previous investments to use for the upfront costs of new purchases.
Despite holding $8.5 million in loans amid a high-interest-rate climate, Mr Pritchatt insisted their financial position is rock solid. They contribute around $1,000 a week to a dedicated rent account to cover council rates and maintain a strict financial buffer.
“Worst case for us, if anything goes to shit with our properties I can just sell them,” he said. “I am not living beyond my means. We always have a buffer.”
Looking forward, the 35-year-old has no intention of selling his portfolio anytime soon, viewing his investments as a “buy and hold” game that will eventually provide his family with financial freedom.
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The couple do not own the home they live in and rent to free up capital for more investments. Picture: Rohan Kelly
Mr Pritchatt said he was not worried about potential capital gains tax changes, or even a halt on negative gearing. Both reforms have been under review ahead of the release of the next federal budget in May.
Mr Pritchatt said that if the capital gains tax changes meant a rise in rents, it would be a “positive” for investors.
“If fewer other investors are buying, and rents go up, that’s a good thing for a buy and hold investor,” he said. “I think it would be a bigger problem if your strategy was to flip houses.
“For me, I just see it as another price to pay. It doesn’t really phase me.”
For Australians frustrated by the housing crisis and wondering how one couple can hold 26 homes, Mr Pritchatt offered a blunt response.
“They can do it too,” he said. “You don’t need that big of a deposit to buy … Where would you end up if you put in the effort?”
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