Childhood Dream Becomes Reality

When buying his first property, Danny Stojovski always had a clear goal in mind: to generate $50,000 a year rental income after expenses. Three years later with a portfolio of three properties, he is well on his way to realising this dream. Alastair Lynn tells his story

Simply put, Danny Stojovski was not your typical everyday kid. While most eight-year-olds were spending their pocket money on lollies, he was putting another hard earned dollar in the piggybank.

While most 10-year-olds were out saving the world with their favourite superheroes, he was learning about investment from his father.

He had big plans for someone so young and all it took was one auction to get hooked on property.

“I was actually there at an auction with my father when I was about 10 years old,’’ Danny says.

“I remember him bidding for this little unit in Surfers Paradise. From that day onwards, I just wanted to know everything about that property, how it was going, and how to build an income from it. I still remember the day and that’s what stuck.’’

Working for a surfboard distribution company, Danny began saving every cent he could to prepare for the day he would finally get his name in the game.

“From about eight or nine years of age, I’ve always put money aside and thought about the future. You need to have a reason why you’re doing that and not just spending money on stuff right now. I’ve always had one eye on the present and one eye on the future.”

Fortunately, a career in the surfing industry was not to last. After a stint at a golf shop while at university, Danny now works in wealth management.

His first purchase was in 2012 and now three years later at 26, Danny is the owner of three investment properties. Through various ups and downs, he has managed to prove the doubters wrong and is convinced that young people need to get into the property market.

“Don’t get caught up in all the hype,” he says. “The media does a great job in fear mongering and spruiking property investments to promote their name. Go out there, do your own research and back your judgment.”

The benefit of having a clear dream early in life is that you can get a head start on making it a reality. Danny was able to kick-start his portfolio with a deposit that was 100% of his own money. Years of saving meant that being only six months into a new job, he managed to purchase his first property in Chevron Island, Queensland.

Because his father had property in the area, Danny felt comfortable with making the investment. With a bit of background knowledge, coupled with some extensive research and good advice, Danny was able to negotiate the unit down from $214,000 to $185,000.

The small, two-bedroom unit was a bit rough around the edges. Paint was peeling off the walls, the carpets needed replacing decades ago and the kitchen was something straight out of the dark ages.

However, in a location that was quickly gentrifying and indicating good rental yields, the potential for renovation was screaming out. As soon as the tenants left, Danny pounced and within 10 days the property’s value had shot up by $20,000.

“I saw that opportunity there. I let the tenant finish their lease up and I already had all the measurements made. I knew exactly what I wanted to do. New kitchen, paint job, carpets and re-tile the bathroom. The whole renovation cost me about four grand and the value that was created was quite substantial.”

Buy, renovate, increase cash flow and hold for the long term – this was the strategy he had developed. To be successful in improving properties, Danny knew he had to apply the same comprehensive approach to renovation as he had to acquisition. “I’m not too handy with the tools,” he admits. “But I know how to manage people.”

“I just went out and got quotes on everything. I did the groundwork and I spoke to several different people who do renovations. Then I just stuck with the best price for the best service and track record.”

The property today has been valued at an impressive $240,000. This constituted $55,000 capital growth in just over three years. Its success ignited a fiery passion that has spurred on Danny’s love affair with the property market.

“It was a really good buy at the time. From then on all I wanted to do was research properties. So I got stuck into the magazines and the online subscriptions, and that’s when I started to look into other areas.”

The very next year he decided to dive further into the property market with his second purchase. A two-bedroom unit on a good sized block came across his radar. However, this one – in Newtown, Toowoomba – was a bit further from home.

“At first, my friends and family were totally against it. They thought you should only buy investment properties close to home so you can see them and physically drive past them if you wanted to.”

Despite their concern, Danny backed his research and went for it. The property had good rental returns, and underlying growth in the area was promising. Obviously, this managed to pay off because in August 2014, Danny purchased another property just up the road in Rockville.

“With my most recent purchase, I spoke to the real estate agent, I had a property manager in the area, and I had a building inspection done. They all gave me the same detailed descriptions of the property.

“I backed the reports from all three of them, and I didn’t even see that property – it was signed unseen. It worked and I went for it.”

While Danny is sitting comfortably now, the road to success was not always so smooth. Getting into the property game so young would always have its unique set of problems, and he admits there were some significant hurdles to overcome throughout his journey. “You get a lot of doubters,” he says. “I was often forced to talk to friends and family. They would question me on why I was doing it, if I was sure I was going to be able to afford it; and it just put doubt in my mind.”

Real estate agents also often proved to be a prickly bunch. Looking only at age, many would not take Danny seriously at first.

“I remember when I first started looking at property, I was very young and agents often just judged me and quite literally just blew me off.

“I had done my research and my cash flow analysis; I did everything and knew that I just needed to back my judgment and really go for it.”

As most young professionals were enjoying the perks of finally earning a decent income, Danny was not. While friends were off buying cars, boats and other frivolous items, the mounting debt was something that always lurked in the back of his mind.

“That sort of worried me a little bit. But if I got rental income of above 6%, I was comfortable that it wouldn’t affect my lifestyle too much.”

Adding to his financial worries, Danny hit a wall in January 2014. After returning from a well-deserved holiday, a call from his property manager presented a serious dilemma.

“They said ‘there’s been an incident at the unit. Don’t be alarmed, we’re just giving you a courtesy call. We’ll let you know when we get into the unit and figure out what the damage is’.”

The tenant of his Chevron Island property had up and left after completely trashing the unit.

“When I got there, the place was just a mess. Broken glass, holes in the wall, the carpet was ruined and it needed a new paint job.”

Being in-between jobs, low on cash and with a mortgage to pay on his two properties at the time, Danny found himself at a crossroads.

“I obviously panicked, freaked out a little bit there, and thought how bad it was going to be.

“At the time, I really didn’t have the funds and I just wondered if I had done the right thing. I started to question myself and thought if this keeps happening, then I don’t want to be a property investor anymore.”

Danny could see only two options. He could get out of the game, sell the property at a loss and prove all the naysayers right. Or he could figure a way out of the mess he was in.

“I just sat back and asked ‘well, how do I deal with this?’

“From there, I mapped out what I wanted to do; I gave myself a timeframe for each task and got all the logistics in order.

“I had to pretty much do another mini renovation. I called on some of my cash buffer. With help from some family and friends, and putting in my own time, the matter was resolved in two weeks. I had a tenant in there actually paying more money than before the incident by the end of it.”

With the danger averted, Danny feels that he is now far better off. The situation essentially provided him with a crash course in the dangers of property investment. “At the end of it all, I learnt a bit about project management and how to deal with these situations. I think that I’ll be ready for anything after that. I’m definitely better off that it happened. I know it sounds silly to say this, but I feel like I can tackle any problem now.”

At the time of the ‘incident’, Danny could have easily thrown in the towel, but now he is well on track to achieving his long-term goal of $50,000 a year rental income after expenses. Maintaining focus and a clear strategy have been a key part of his success.

“You can’t just let things slide and think your property manager is going to look after everything. I still monitor the market, monitor sales and rentals of all the suburbs that I’m invested in. Just stay on top of the ball; never take your eye off it.

“You really need to love property if you want to stick to having a big portfolio. Just remember what your end goal is. I knew I couldn’t do it with one property, so I just had to build up a strategy to be able to service a big portfolio.”

Danny also credits his achievements to choosing the right people to place his trust in.

“You obviously have to back your property manager. I’ve got a very competent one and that’s why I’m comfortable with my decisions.”

Finally, he stresses the importance of doing well rounded research.

“Don’t get caught up in it all. You definitely need to do your research because there are a lot of buyers and sellers out there who know what’s hot and are just trying to get that sale.

“Just be aware and know your market, whether that’s Sydney or Melbourne or the Gold Coast, you just need to know what’s going on at all times.”

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