Daniel Walsh. NSW real estate.
A former freight train driver and auto electrician who started buying properties while earning just $39,000 a year has this year bought his 20th home, including a $6m residence on Sydney’s northern beaches.
Daniel Walsh, 33, has achieved this feat thanks to a property buying masterstroke that’s helped him gain a fortune, despite the meagre income he had when he started investing.
And it’s not just an empire built on debt – he claims that more than $10m worth of his $20m portfolio is equity. He also nets about $300,000 a year in net rental income after his mortgage obligations are paid.
Eight of his properties were purchased in the last year, according to Mr Walsh.
He said the tactics he has used to build his property portfolio relied on careful property selection and using the banking system to his advantage.
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Daniel Walsh started investing as an auto-electrician and then a garbage train driver.
The former tradie, who now works as a wealth adviser in the property industry, tends to target lower cost housing in areas that have lagged the rest of the market and are due more growth in values.
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It many cases, he will then add value to the property through a renovation or similar project and as the value rises he draws out the equity to fund his next purchase.
Despite this, the debt to value ratio of his portfolio has remained low because many of the properties were purchased years ago and the value has risen substantially.
“This doesn’t happen overnight,” he said. “I’ve been able to do a lot of this because of the amount of time I’ve been in the market. Values have risen hugely in many areas, especially during Covid.”
More recently he has begun short turnaround property developments to increase the cash reserves he can pump into longer term investments.
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His initial earnings while an apprentice were $39,000 a year.
He also has a different view of debt, as evidenced by the purchase of his residence on the northern beaches.
He paid for the property with a 20 per cent deposit, most of which he acquired from renovating his previous residence and selling for a profit of about $500,000.
But rather than paying down the principal on his new home each month, he instead took out an interest-only loan with an offset account.
Mr Walsh then diverted all his savings and many of the profits from his development projects into the offset account to minimise the amount of interest he pays.
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One of Mr Walsh’s first properties in southwest Queensland.
“By doing this I’ve been able to hold an asset that’s I wouldn’t be able to afford if I was paying interest and principal,” Mr Walsh said.
He added that the balance of his offset account has reduced his interest bill to nearly zero, meaning he benefits from all the value growth without needing to splash out his own money on repayments.
Mr Walsh said starting out his investment journey as a low income earner encouraged him to think differently.
Mr Walsh started this portfolio while working as an apprentice auto-mechanic earning just $39,000 a year. Mr Walsh said the key to building his portfolio was patience and making sacrifices when he was younger.
Mr Walsh, with wife Sophie, recently bought a $6m residence on Sydney’s northern beaches. Picture: Tim Hunter.
His first purchase in 2010 was a property in Thirlmere on the outskirts of Sydney, where he built a new house from the shell of partially started project.
The land and build cost $320,000 and he used a 5 per cent deposit scraped together from high school savings. He also sold his car to fund some of the building costs.
He was 19 at the time, supplementing his income with a second job at McDonald’s, and was living with his parents.
His second property was on the same Thirlmere street, which he purchased by refinancing his first property and drawing out some of the equity to use as a deposit – a process known as leveraging.
Both properties surged in value in the next few years and, as he saved more money and began to earn a higher income, he had more money to plough into new deposits and stamp duty costs.
Not wanting to trade his time for money as a tradie prompted his to get serious about property investing.
He later moved to a job working as a driver of garbage trains. His peak income from that job was $80,000 a year, which grew to $100,000 if called to do lots of overtime.
“Because I was driving long-distance trains, this meant that I usually had several hours free during each journey to dedicate my time to investment education,” he said.
Subsequent properties were purchased in Melbourne, southeast Queensland and Adelaide.
These properties tended to be in areas with higher rents relative to the mortgage costs and the values rose quickly. Most were bought through leverage.
Getting new loans was the biggest challenge, he said. He solved the problem by getting mortgage brokers to continually restructure his portfolio and by approaching second or third tier lenders, rather than the major banks.
He said recent interest rate increases hadn’t affected his as much as other buyers because his rents increased by higher margins than his repayments.
Many of his properties are in southwest Queensland.
Mr Walsh said younger Australians could replicate his success if they were prepared to take risks and work hard.
“To make the jump from being working class to middle class is easier than before because of increasing rates of education, including tertiary, as well as baby boomer property wealth being passed on to their Gen X and Millennial children,” he said.
“But, making the transition from middle class to wealthy is a path too long for most people because they generally don’t invest – nor do they have the ability to hold over the long-term – in assets that can make them richer.
“The major impediment, though, is that most people spend their entire working lives trading their time for money via wages, a salary, or being self-employed but never really getting ahead financially to any great degree.
“I remember being very angry about how little I was managing to save from my meagre apprentice wages, because I knew I was never going to become richer if I carried on trading my valuable time for not so valuable money.
“I started to understand that if I ever wanted to become wealthy, I needed to save enough of my apprentice wages, so that I could start buying assets that were likely to increase in value forever.”
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