Super Investor Ian Hosking Richards

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Ian Hosking RichardsIan Hosking Richards is part of Australia’s elite, a property investor with a portfolio valued at around $14m. Even more remarkable is that he built it from nothing, starting as a working holidaymaker who was earning just $35,000. Aidan Devine finds out how he did it.

If you’re looking from a high vantage point, the Malaysian island of Penang affords a great view.

The Straits of Melaka have an opal hue and on windless days the ocean looks like a giant sheet of glass stretching in all directions. Rickshaws buzz about the streets and shops breathe a spicy mix of Malay curries into the air. It’s a view that Ian Hosking Richards knows well. For him, it’s a lifestyle he has a personal stake in. It’s also one that’s come about through property investing.
 
Super Property InvestorsThanks to 32 Australian investments, tallying up $14m, Ian can afford a 6,000 square foot oceanfront penthouse in Penang, and says life couldn’t be better. “For a small portion of the year, I get a chance to be away from it all, and that’s great. I love Malaysian food, I love the climate. I feel very lucky to own a property there,” he says.
 
It isn’t just dreamy travel destinations that property investing has unlocked for Ian. He is now in a position where he can also pursue another love: fast cars. “It’s a very loud, sort of in-your-face thing to do, but I’m thinking about getting an Aston Martin Vanquish. I know many people get things like this as a statement, but I just genuinely like the cars.”
 
Indeed, much of lan’s life would be the envy of many. The 50-year-old native of Cornwall, England, officially left the Australian workforce nine years ago, but continues to do the kind of work and projects he chooses to. And for Ian, that means property.
 
Ian is the founder and chief executive of Rocket Property Group, a leading independent real estate investment company that he started as a way to share his property experiences with others. “Not long after I’d quit my job and left the workforce, a lot of friends and coworkers were asking me how they could invest. I saw an opportunity there and that’s how Rocket started.”
 
The group is expanding throughout Australia and Ian says being involved in the company is great because it keeps him close to the action. “I love Australian property,” he says. “Part of the reason I own a house in Malaysia is that it’s really hard for me to pull myself away from the property industry. There’s always something happening that grabs my attention and occasionally I just need to be in a place where I can’t allow myself to get pulled into it all.”
 
How he built the empire
Ian says that many people are surprised to hear that he didn’t start off investing with a lot of money. Arriving in Australia in the early 90s as what many would consider a backpacker, he initially planned to stay in the country for a short period on a ‘working holiday’.
 
“I’d been working for an upmarket hotel in the UK for a few years, but thought that since I’d never taken a proper gap year, I’d do one in Australia. The problem was that I was past the age of 30, so I couldn’t get a working-holiday visa. As it turned out, I had qualifications and experience that made it easy enough for me to apply for permanent residency, which I did just before I came.”
 
With the door open for Ian to stay in Australia indefinitely, he found himself starting to settle in the country and the plan to stay for only a gap year started to fade. After taking up permanent employment, he soon felt a growing urge to dig roots until, by the time he was 35, working a warehouse job he despised, the feeling became irrepressible.
 
“I thought to myself, if the second half of my life is anything like my first half, I’ll be working like a dog for the rest of my life and I’ll retire with nothing.” 
 
He remembers this realisation as prompting him to get serious about investing. He began educating himself on the topic and started attending seminars and reading books. He makes it clear that he was no expert when he started.
 
“I knew very little about the process,” he says. “I’d sit down and read up on the subject, but I didn’t find this particularly helpful. There was plenty of information available, but much of it was contradictory and the more I read the more confused I got.”
 
As a consequence, Ian adopted a simple approach. He looked at what successful investors were doing and copied them. “In the beginning I used to simply talk to highly successful investors. I’d ask, ‘where are you buying?’ And then I would buy where they were buying because they were doing all the research.
 
“I think it is important for people to understand that investing in property is easy. I’m not particularly intelligent, but what I do is take action. I find a lot of people think too much, over-analyse and end up doing nothing. I’m not like that. I follow a simple but detailed qualifying system for all my purchases and because of that I don’t really need to think about it that much.”
 
The first brick
Ian made his first purchase in July 1999. He had just received a lump sum payment from an endowment policy he cashed in from the UK, and this gave him $22,000 to invest with. He certainly needed it. Earning just $35,000 a year at the time, the banks were only prepared to lend him $160,000.
 
He says he was initially tempted to buy in Sydney, his adopted city, but soon realised it was far above his budget.
 
“I could afford a small property somewhere in the city, but that wasn’t what I wanted, so it made sense to look for opportunities in places where prices were more affordable and rents were higher.”
 
His then job required him to frequent Brisbane fairly regularly and Ian decided it was worth looking around the Sunshine State capital next time he visited for something to buy. Soon enough he located a three-bedroom townhouse that was being sold off-the-plan. It was in Wynnum, a bayside suburb, and with the promise of high rents and a price tag of $154,000, Ian calculated it would be cashflow positive.
 
Impulse got the better of him and Ian signed the paperwork almost straight away. It being off-the-plan, he only had to settle in February 2000.
 
Adding mortar
Eighteen months later, Ian decided to do it again. “Based on the growth in the townhouse, my bank said I could afford another one, and so I decided to stick with Brisbane and buy another property [there],” he says.
 
“I found a similar three-bedroom townhouse to the south of Brisbane, in Calamvale. The developer was in financial difficulty and was trying to sell quickly, so even though it was valued at $178,000, he was prepared to let me have it for $148,000.”
 
Shopping around for a lender willing to give him a loan against the higher valuation proved tricky, but not impossible. Ian’s eventual lender accepted the $30,000 difference between the purchase price and the valuation as the deposit, which meant Ian found himself with some spare cash. He had a deposit ready for the purchase, but didn’t need it anymore. He thus decided to use it for a third purchase: a two bedroom unit in Labrador, on the Gold Coast.
 
His fourth purchase was two years later. Choosing the Gold Coast once more, this time Biggera, Ian purchased a single bed unit for $165,000. Thanks to impressive capital growth in his other properties, this purchase pushed Ian’s then portfolio close to the million dollar mark. What he did next was take advantage.
 
“I quit my job,” he says. “My properties were going up at around 10% per year, so I thought, if I leave half of that capital growth in there and take out the other half to live on, it would replace my income.”
 
Exiting the workforce
Ian says the initial feeling of not having to work was great. He was no longer at a job he disliked and had plenty of time on his hands. The problem was that as the months went by he started becoming bored. He admits that the money he was getting from his investments was good enough to live on, but not good enough to have fun on. He couldn’t travel and had to budget carefully if he was going to buy new toys.
 
All the while friends, acquaintances and old work colleagues were constantly ringing him up for property advice. He was the guy who had been able to quit his job because of his investments and suddenly his words had a stamp of authority.
 
Ian started smelling an opportunity and a business idea began developing in his head. “I thought, why not make money helping people to do what I’d done and loved? And so I got this idea in about January 2004 to launch a business aimed at helping people start buying investment properties.”
 
Ian took it extremely seriously. He spent two-and-a-half months studying to become a qualified real estate agent and followed this up with a course in mortgage broking and, later, a diploma in financial planning. He started by working out of his home and gradually began taking on more and more clients. Eventually the business grew to such an extent that he had to take on staff.
 
Taking stock
Meanwhile, Ian continued to build his own portfolio. “What’s helped me grow my portfolio quickly is buying off-the-plan. Many investors say it’s too risky, but I’ve found that if you know how to time the market it can work in your favour,” he says.
 
Ian adds that the trick is knowing when a market is on the up. What you want, he says, is an area where property values are increasing so quickly that in the time between signing and completion, a development’s value has escalated so much that the price you paid is effectively a discount. 
 
The other benefit is that if the value of the property at completion time far exceeds the sales price, it’s often possible to buy without a deposit. “If you know what you’re doing, buying off-the-plan can be a great way to multiply the number of properties you own,” he says.
 
Ian also stresses how much taking action has played a part in building his portfolio to over 30 properties. “I don’t advocate taking silly risks, but I think there’s a point where you’ve got to just go for it. It surprises me how often I meet people who feel the need to spend weeks poring over price guides, attending every property seminar. The irony is that many of these people don’t always make good property investors.
 
They know how to gather information but do not possess the experience to filter it in a meaningful way.
 
“Because one thing I’ve found over the years is that in this industry things are not always as they seem – statistics can be misleading and many other aspects of property investing are counter intuitive. It is true that most bad investment decisions are made by people who do not have all the relevant information at the time of purchase, but to build wealth through property you have to actually go out and buy something.”
 

 

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