Sydney-sider Zain Zama is now in his mid-20s, but he knew that property investment was his key to wealth creation from a much earlier age.
He started working in a bank when he was 18 and for the first time came across strategies that could help him become a property investor while he was still in his teens.
“I was 18 when I started working at the bank and it introduced to the world of finance. In that time, I got to see all the good habits and the bad habits,” he says.
“I thought it would be pretty cool to own a property in my teens I guess.
“So it was a mixture of wanting to create wealth and really try to take care of my family from an early age, and also a bit of ego attached to it as well, as I wanted to try acquire a property in my teens”
With help from colleagues, Zain bought his first property – a unit in Penrith – in March 2013.
Even then, he’d decided that rentvesting was a better option for him as it would accelerate his wealth creation and not stymie his lifestyle.
The issue, he says, was he made the common beginner investor mistake of buying in the same suburb that he lived.
Still, buying in Sydney four years ago, meant that the property has recorded strong capital growth.
“I thought at the time that it would be cool if I could own something nearby so I can drive past it. That was my mentality and the 19-year-old me coming out,” he says.
“I didn’t really have anyone to help me make investment decisions in terms of where of one should buy, etc. I was just thinking about what was the most affordable and was nearby so I could have a look at it every now and then.
“But it has worked well in terms of capital growth, but I think that perhaps I should have bought a house instead of a unit, but it was still a good decision.”
After his first purchase, Zain says he decided to buy a property every year but his path was not to be as smooth as he would’ve hoped.
He says that his lack of experience resulted in him buying properties that ended up being less than ideal.
His second property was a house in regional New South Wales because he thought he needed to chase cash flow instead of capital growth.
“The rental return was a lot higher. It was coming up to about 12 per cent return but at the same time I realised I’d taken a lot of risk going into that space as well,” he says.
“This is where the mistakes come into play. I did not do my research well enough because I simply chased cash flow and went for it.
“It’s been a good lesson for me. For the first couple of months it did work out for what I wanted it to be because it brought in some extra cash into the pocket.”
Zain’s third purchase was a block of land in Tasmania, which he still owns.
After buying three investment properties in quick succession Zain decided that he wanted to pass on the valuable lessons he’d learned to other young property investors.
He says rentvesting remains a strategy that he promotes because it allows him, and other young people, to invest and still be mobile.
“My goal was that I just wanted to build wealth, but I don’t want to be tied down by too much debt,” he says.
“(Today) I ask people why they want to buy property. Is it because everyone else owns a property or security? What’s the real reason behind it? More than half the time they say they don’t know.”
Zain admits that he benefited from the rising Sydney market and it’s more difficult for first homebuyers or investors today than it was back in 2013 but that doesn’t mean that it’s impossible.
Would-be property investors need to get out of the historical mindset that they must buy in suburbs where they live or ones that they know, he says.
“The thing is that now, realistically, you can’t do that anymore so what I always say is to reverse engineer it,” he says.
“The main issue is affordability, so find out exactly what you can afford and work backwards from there.
“That’s more realistic than falling in love with something and then finding out it isn’t possible and then getting frustrated with the system.”
Property portals such as realestate.com.au allow users to search by price and by state, he says, which means rentvesters can easily identify locations that are within their price range.
“At some point, there will be properties that show up. Sure it might not be the property that you’ve always wanted, but there are properties out there in your range. You have to start somewhere,” he says.
“The Australian dream has always been owning a quarter block of land with a backyard but maybe it’s time to rethink that dream and think about another dream.
“Maybe we should have a different type of Australian dream.”