Lakhwinder Singh is very candid about why he chose to settle in Australia. He explains that, like many others in his home state of Punjab at the time, he was drawn to the allure of foreign opportunities. So, in 2007, he moved to Sydney to study Business Marketing.
“The purpose was to gain permanent residency (PR),” he admits. Over time, he changed course and decided to study baking. In 2013, after completing his course and gaining work experience, he was granted PR.
Singh’s story may not be uncommon, but what stands out is how he remained focused on his dream of building wealth through real estate, from India to Australia.
It was challenging for Singh at the start. He worked multiple jobs to cover living expenses while studying. “During this time, I began searching for ways to invest my money, aiming to secure a better future and break free from the cycle of constant struggle.”
By 2013, he had decided to invest most of his savings into property. “My decision was based on historical data, as property is one of the few asset classes with over 100 years of data, and historically, Australian property has outperformed other asset classes when leverage is taken into account in calculating return on investment (ROI),” says the father of two.
It took him two years of serious continuous learning—through books, property seminars, and networking with other investors—to gain enough confidence and knowledge to purchase his first property. As a baker starting at 2 a.m., with no one to talk to, he would listen to wealth-building podcasts, dedicating up to eight hours a day to learning.
“When I first approached a broker, my income was low, and I was barely qualifying for a loan. To boost my borrowing capacity, I took on a second job. Later, when my wife joined me, she also started working, which further helped us improve our financial situation. But there were many sleepless nights. Eventually, I secured my first property in 2015.”
Going from broker to broker and bank to bank was a steep learning curve. By the time Singh was purchasing his third property, he found himself advising the bank’s lending manager.
“I had learned so much in one year that I felt confident guiding bank managers on how to secure loans,” he shares, adding with a laugh, “Bank managers are not very creative; brokers are.”
Cut to 2024, Singh has built a 5-million-dollar portfolio, owns seven properties, and runs his own business, Value Buyers. Drawing from his experience and knowledge as a property investor, he aims to inspire others to enter the market amidst Australia’s ongoing housing affordability crisis.
Singh’s advice for migrants with similar dreams is not to wait until you’ve saved a lot for that dream home in a high-demand area. “By the time they save $150,000, property values often increase. I recommend exploring smaller markets with lower entry costs and similar returns.
“In Australia, properties can start at $400,000 with a deposit of around $60,000. After a few purchases, you’ll be closer to your dream home. Rent-vesting allows you to own properties without sacrificing lifestyle, and I don’t believe rent is ‘dead money’—interest payments to the bank are similar.”
Singh argues that instead of spending money on buying a property you like, it’s smarter to invest in a property with a large land component, which has the potential to grow at an average of seven percent annually in Australia.
As a reference, Singh leases his properties for $450 to $620 per week, depending on their location and value. He rents a home in Blacktown, Sydney.
He cautions that the property market is not always smooth sailing. “When you face some hurdles, there can be unexpected expenses. It’s important to be aware of potential maintenance costs and have a buffer to cover them. Many people exit the property market because they have no money for rainy days.”
Thirdly, Singh advises, “If you’re new to the property market, start by building your team. I spent years learning, but if you don’t have the time, talk to others in the business. Even though I’ve been in the business full-time for two years, I feel I’ve been doing this for ten years.”
When asked about the ‘mortgage cliff’ and how it has affected his strategy, Singh explains that he prefers not to fix his rates because it gives him the flexibility to refinance if needed. He said that banks have better research teams than individual investors, so it’s hard to beat them. While fixing rates during the pandemic might have been a good option, keeping his loans variable allowed him to buy two more properties, which ended up making more profit than any savings from fixing the rates.
He explains that if you want to own more than 3-4 properties, careful planning is needed to avoid problems with borrowing. He suggests using an SMSF (Self-Managed Super Fund), which allows separate borrowing from personal loans. As long as the SMSF gets contributions, it can buy property. Singh shares that one of his best investments was through an SMSF, which grew by nearly 60 percent in two years, and SMSFs pay only 10 percent capital gains tax after the first year.
Singh is now in expansion mode. “My 5-year plan is to grow my $5 million portfolio to $10 million, with most of the growth coming from organic market appreciation. I plan to add three more properties to accelerate this goal. My target loan-to-value ratio (LVR) is 50 percent after five years, which will provide me with $5 million in equity to focus on cash flow generation through small developments, strategic renovations, adding second dwellings, and swapping some properties for high cash-flow assets.”
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💼 Lakhwinder Singh turned challenges into a $5M property portfolio, inspiring migrants to build wealth through strategic investments. 🌟 What's your property investment strategy? 🤔 #TheIndianSunhttps://t.co/koi1xAohbs
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