Australia’s ‘super investors’: ten properties and counting
In 2020, Bhavi Desai purchased her first piece of real estate. Since then, she has acquired nine more properties, accumulating a portfolio of $10 million.
She has secured a 15 per cent rental yield on her highest cash-flow property to house participants in the fast-growing National Disability Insurance Scheme (NDIS).
“I should be able to reach 25 [properties] without too much stress … after that, I will have to work my magic to keep going,” the Sydneysider said.
AFR Weekend’s analysis of annual Tax Office data shows the 46-year-old investment lending manager is among 20,000 so-called “super investors” who own six or more properties. In 2021-22, hardcore property speculators made an average rental profit of $15,900.
Despite owning just 1% of the 2.27 million rental properties, super investors bought 4.6% of all investment properties with 151,086 properties between them.
Ten percent of investors had at least three properties, and collectively, they held one quarter of all rentals.
With her growing confidence in her investing abilities, Ms Desai began purchasing non-standard assets, including the property that will house NDIS participants next month.
Cash flow was the main reason for buying this NDIS property. Approximately 15% of the rental income is generated there. This is one of the advantages of owning a NDIS [property].
In addition to holding high-growth, low-yield properties, Ms Desai also purchased lower-growth assets with healthy cash flows.
Investors were increasingly likely to be positively geared as they purchased more assets, according to ATO data. Approximately two-thirds of super investors were cash-flow positive in 2021-22, meaning their rental income exceeded various expenses, including interest and strata fees.
However, after 13 interest rate increases by the Reserve Bank of Australia since May 2022, Ms Desai said her portfolio is now negatively geared.
Ms Desai’s “biggest hit” came in 2023 when her fixed terms expired and a 2.5 percent interest rate went straight to 6.5 percent.
While negotiating Labor’s housing shared equity scheme, the Albanese government has said it will not change negative gearing.
In spite of owning ten properties, Ms Desai lives in a rental apartment with her husband. Originally, the couple planned to buy a property for themselves to live in, but in 2020 they switched their focus to investing.
“I wouldn’t describe it as easy. Her advice was to increase your income constantly to be able to support [more borrowing].
Rental property expenses recorded by the ATO in 2021-22 totaled $43.8 billion, with loan interest ($15.8 billion), capital works deductions ($4.3 billion), and council rates ($3.9 billion) being the largest.
She said although her investment journey had been fairly smooth, there had been a few obstacles along the way, such as issues with valuations preventing her from securing financing.
The portfolio’s $10 million value is equivalent to about 50% of her debt, so Ms Desai doesn’t worry about something going wrong.
As long as they can, she and her husband will continue to invest.
There is a lot of pressure on my son right now. As soon as you turn 18, I will give you a mortgage as a birthday gift. I’ll pay your 20% deposit, but you must earn enough to cover your mortgage.”