How a 28-year-old investor used Uber to help him buy six properties

Taku Ekanayake is a 28-year-old Uber driver in Sydney. But he’s not your average Gen Y.

He’s also a real estate investor with six properties, more on the way, and $1.5 million of debt. 

On a middle-income salary plus commissions and renting a sharehouse in Marrickville, a lot of his extra cash to buy properties has been earned through Uber, which he does on top of his full-time job in sales.

When he was 24 and living at home, he’d initially wanted to buy a home to live in. But then he read Robert Kiyosaki’s Rich Dad Poor Dad, which recommended buying investments rather than liabilities to create passive income. And he decided real estate was the best approach.

Having worked part-time in retail during his early and mid-20s, while studying business at university, he managed to save $70,000 before he moved out of his parents’ house. This would become his initial deposit.

But by the time he was ready to invest, in late-2014, “it was halfway through the current Sydney boom”, he said.

He was priced out of the market. But unlike many young Sydneysiders who thought they’d missed the boat and gave up, he started researching.

And what he found surprised him.

“There are so many different markets in Australia, and over the long term Sydney isn’t the best performing market,” he said.

“Over the last 15 years – Sydney, Brisbane and Adelaide have all performed the same.”

When he found this out, he decided to broaden his search and ended up in Brisbane, where prices were more affordable but the city was still established and rental yields were attractive.

His first property purchase

On his first trip to Brisbane to look at real estate he planned to “get a feel” for the open homes. But on his last inspection of a house, which turned into a silent auction, he ended up making an offer –and was successful.

While the property has done well for him, it’s his most regretted purchase of the portfolio because he didn’t have a clear strategy other than to “buy and hope”.

“After the first property it took me 12 months to buy the next one. I had to put in a lot of work,” he said. He saved as hard as possible and began Ubering 20 hours a week on top of full-time work.

“Once I had a clear strategy, I bought four in 13 to 14 months. That’s what a good strategy allows you to do.”

His strategy now is to buy homes that are 10 to 20 per cent under market value, often requiring minor renovations, and negotiating early access with the vendor.

Taku’s property portfolio

This allows him to renovate before settlement, meaning as soon as he owns the home he can have it re-valued with the bank and pull out the deposit again to buy his next investment.

He also looks for homes with high rental yields and future development potential.   

But he didn’t come up with the strategy alone – he found good mentors. This included using a buyer’s agent for his South Australia purchase, and an experienced broker who he speaks to “every day”, who has 16 properties himself.

“By this time next year, November 2017 – I want to have 10 properties in my portfolio and I want to have a net equity position of over $1 million,” he said. 

“Long-term I’d like to have a net passive income of $1 million by 36 years old.”

He currently has six properties, with more planned, and has mapped out how to get to his double-figure goal.

With his broker’s advice in mind, he created specific requirements for his property purchases that would allow him to buy again more quickly.

While he accepted there was always risk with investing, he said that if the market went sour he could sell out to stay afloat and with his strategy to buy under market value he was “confident” about his debt levels and risk management.

Strategies of Gen Y buyers

Director of property investment firm Rethink Investing, Scott O’Neill, and his wife are in their 20s and own 25 investment properties. He said the most common strategy for under-35s is buying in affordable areas with high rental returns, while continuing to rent.

“When you can buy a nice positively geared house 30 minutes out of the Brisbane CBD for under $350,000, you can appreciate how that option seems a whole lot more attractive than buying a negatively geared one-bedroom unit in Sydney for $500,000 the same distance out of the CBD,” Mr O’Neill said.

And the younger investors get on the wagon the better, due to the compounding effect of property growth.

“Buying the first property will always be the most difficult as that is the time you work and save. However, it is key is to make sure you start off with a clear investment plan and then find the correct first investment property that fits the plan.”

Another prolific investor from a young age, Binvested buyer’s agency founder Nathan Birch, said more siblings are investing together to get into the market earlier.    

“Unsurprisingly, young investors use the parental-bank, the one where mum and dad cough up the deposit or sign on to become guarantor, or alternatively opt to live rent-free with mum and dad until they have enough saved to afford a small deposit for themselves,” he said.