If you’ve been in the property investment game for two decades, just like Sam Saggers has, you’re likely to experience both the good and the bad. Here, Sam talks candidly about his investment mishap, the deal that got away, and his dream property
You’ve been investing for two decades. When you look back, what’s the most disastrous experience you have had so far? How has that shaped your strategy going forward?
The most significant setback I had was when the GFC hit; I owned one property in the Golad Coast. At its peak value, the property was worth $460,000. I bought it for $320,000, but during the worst of that period the property value fell to $220,000. I have not needed to sell, and would say the market is slowly recovering.
I've learned, through this deal, that you need to buy close to commerce. Generally speaking, you don't get the peaks and troughs that more regional or smaller markets get. Bigger cities have performed better for me, and I base this around the fact that people want to live and work in clients, and don't choose to live in locations because of a new piece of infrastructure, a mining rush, or, in the case of the Gold Coast, great tourist attractions. My experience in those areas has been far more up and down. Areas of true commerce, like Sydney, Perth
, Melbourne, and Brisbane, have been solid performers.
Have you ever been tempted to give up and just get out of the property game? Why?
I have been in property since I left school. I don't really know another life. I enjoy the variety and opportunity it brings. I could never see myself doing anything other than being a property investor. No other asset class inspire me, nor do I find it interesting.
Tell us about that one deal that got away – how and why?
The biggest deal that got away is a family story. I think about it every second day! The deal was on Bayswater Road in Potts Point in Sydney and it is now a luxury apartment complex. The combined property value is $25m. My family owned this piece of land for over 40 years, operating a bed and breakfast. After becoming tired of that business, my family chose to sell the property for $200,000 in 1982. At that time, my parents spent the profit on a Datsun Sunny motor vehicle and a two-bedroom unit at North Bondi. Five years later, the property on Bayswater Road sold for millions of dollars and has since resold for more. Now the land alone is worth over $9m.
The original buyers understood something about the area that my parents didn't. At the time, Sydney's Potts Point was a very different landscape to what is today. As it neighboured the suburb of Kings Cross, it wasn't the safest or nicest area. Its close proximity to the city made it a hotbed of action. However, at the top of Bayswater Road in Potts Point, there are amazing city views, including a view of Sydney Harbour.
I think every family has a story about the property that got away from them. Most homeowners look at real estate retrospectively (the 'I should have bought there 20 years ago' types). Buying, holding and selling real estate requires an understanding of the suburb 'gentrification'. Success in property investing requires some foresight. This involves being able to consider the possibilities that might arise in the future and determine how they can change the area.
See, in the end it was my family's naivety to the 'highest and best use' of the suburb that robbed them of an achievable small fortune. If my parents had looked at the town plan and understood the pending alterations that would allow zoning an infrastructure changes, they would have known that gentrification would soon follow and development was possible.
What’s your dream property? If there’s one property you can buy now, what, where and why?
I own my dream property. It's a luxury home on the harbour in Sydney. I don't dream anymore because I am living my dream. I worked hard and have insvested well, which anyone can do.
What’s next for you, world domination aside?
I've achieved all my business goals, and after 20-plus years of hard work I'm going to focus on my personal life and enjoy the rewards of my hard work early on. As for Positive Real Estate, we're expanding our business with the hope of making financial freedom a reality for all our clients. As for real estate, I intended to keep buying real estate around the country and will continue to fast-track paying down some of the debt on my portfolio using debt reduction strategies.
This article was published in the July 2014 edition of Your Investment Property magazine. You can subscribe to the magazine here.