How did these two local men born in the 90s come to own multiple investment properties so young?

At 26, many young New Zealanders may still be enjoying working holidays overseas or saving a deposit for their first home. Yet Jonathan Brownlee, the subject of today's story, has only just turned 26 this year and already owns properties with a market value exceeding NZ$20,000,000... We hope his story will inspire the many young first-home buyers still working hard to save a deposit and help them realise their home ownership dreams sooner.

A young property investor Jonathan Brownlee

How he realised his investment dream

{ad}

Let us first turn back to 2015, when, aged just 18, he received financial support from his parents to buy his first property in Hamilton for NZ$413,750. He then continued buying numerous properties with bank mortgages. Last week, just before his 26th birthday, Brownlee bought an entire block of 8 units in one go, bringing his portfolio to an astonishing 51 properties.

After deducting NZ$11,000,000 in bank loans from the total value of his assets, his net equity now stands at NZ$9,000,000. In other words, if he sold all his properties tomorrow and repaid his bank debt, he could cash out a total of NZ$9,000,000. He also receives approximately NZ$1,000,000 in gross rental income. Undeniably, this is the kind of wealth many New Zealanders might spend a lifetime pursuing, but this young man appears to have no intention of stopping his property investment journey.

Jonathan Brownlee sees rising mortgage rates and falling house prices as an opportunity to buy property rather than bad news. He says now may be a good time to secure a property you want more easily, because there are fewer buyers and less competition. He hopes his story will give other buyers currently in the market greater confidence to purchase.

At the same time, he also criticises investors who buy large swathes of property, accusing them of disrupting the market and driving up prices. According to the Real Estate Institute of New Zealand, Auckland has been ranked among the world's least affordable cities for housing. During the COVID pandemic, Auckland house prices surged by more than 30%, reaching a record median sale price of NZ$1,300,000 in November 2021. Although prices have fallen over the past six months, rising interest rates and stricter bank lending application rules have further deterred prospective buyers.

What is his investment secret?

Asked about his investment secret, he says it is looking for opportunities outside Auckland, such as in his home town of Hamilton. So how did he secure enough mortgage lending? While still at school, he began earning money for a deposit by importing goods through China's Alibaba website and reselling them locally on Trade Me. If he fell short, his parents would lend him the remaining purchase funds and act as guarantors for his bank loans, enabling him to secure lending. Meanwhile, when he had his properties valued every six months, he found their market values had increased substantially. He then used this additional equity to apply for a bank loan to buy another property.

From then on, he repeatedly used the strategy of buying properties 'below market value', renovating and revaluing them, then borrowing against their 'higher' values. Within just three years, by the age of 21, his portfolio had grown to 11 properties. His properties are reportedly spread throughout New Zealand, including Auckland, Wellington, Hamilton, Hastings, Dunedin, Masterton, Whanganui and Invercargill. As both his parents are accountants, they provided considerable financial guidance and assistance in the early stages of his property investment journey. Encouragingly, he says he has now repaid everything he borrowed from them, with interest. He sees no shame in receiving help to buy property and advises people to seek assistance from anyone who may be able to help.

For example, five years ago, the third house he bought, in Masterton, cost NZ$90,000, while he purchased his Dunedin house for as little as NZ$65,000. Many Aucklanders might ask why anyone would buy a low-value property needing renovation in these areas. In his view, buying an affordable property below market value, renovating it and having it revalued makes it relatively easy to obtain more bank lending. Investors who acquire several such properties can then sell them and buy a better property in Auckland. Continually buying affordable properties and benefiting from their appreciation is an effective route to eventually purchasing in Auckland.

His future investment plans

He is now turning his investment attention to Australia

Brownlee says he has begun looking towards Australia and has identified opportunities in Cairns, Townsville and North Queensland. In these tropical areas, with populations of only a few hundred thousand, he can readily buy a one- or two-bedroom property for NZ$150,000. First-home buyers can also obtain a mortgage with a deposit as low as 5%, and New Zealanders may qualify for Australian government first-home buyer grants. This means New Zealanders could purchase a property for an upfront cost of just NZ$15,000, including legal and other fees.

Brownlee says that over his years of property investing, he has received extensive advice from successful property investors on YouTube, including Australian investor Rich Birch, who owns more than 200 properties. He also attended a mentoring course Birch held in Sydney and has benefited greatly from this advice. Overall, Brownlee attributes 60% of his success to skilful financial and mortgage arrangements, and the other 40% to his eye for properties with potential. For example, by restructuring his mortgage portfolio before new, stricter loan-to-value ratio (LVR) restrictions took effect, he was able to borrow an additional NZ$3,000,000 from the bank. Asked how to buy suitable properties, he explains that this means finding properties 'below market value' and generating greater investment returns by renovating them or raising rents to market levels.

Being a socially responsible property investor

Asked why he needs to buy so many houses and what benefit this brings society, he says New Zealanders need more rental homes. Unlike speculators and property developers, he plans to retain all his rentals rather than sell them when prices are high. Across his 51 properties, he has completed as many as 20 major renovations, personally taking part in 15. He believes these homes must be repaired and maintained before being offered to tenants. If he sold these rental properties, he says, growing numbers of renters would be unable to find somewhere to live. He has also established a company called Get Property to help buyers with shared requirements purchase the types of properties they want.

The importance of mortgage advisers

Similarly, New Zealand mainstream media recently reported on another young property investor, Alexander McAlpine. Although only 31 this year, he already owns multiple investment properties in South Auckland and Rotorua and enjoys helping more investors enter the property market. McAlpine, who works for a mortgage finance company, was named mortgage adviser of the year in this year's NZ Adviser awards. Reportedly, qualifying for this honour required him to help clients secure at least NZ$50,000,000 in home loans over the past year.

Alexander McAlpine was named by NZ Adviser as 2022 mortgage adviser of the year

These two examples clearly show that Jonathan Brownlee received considerable help and investment advice from his accountant parents early in his property investment journey, while Alexander McAlpine is himself an excellent mortgage adviser. This demonstrates the very important role sound guidance from financial advisers plays in property investment. In last week's YIJU New Zealand article dated 11 August, advisers from the excellent local Jiayuan Finance mortgage team offered plenty of advice for first-home buyers. Our editorial team has summarised the key points below:

Always be prepared and understand your ability to repay a mortgage. This includes establishing how much you can borrow before you start looking for a home.
2. Make sure the spending shown in your accounts is reasonable.
3. Keep your spending in order. Avoid unnecessary purchases for three months. Do not use instalment payment services such as Afterpay.
4. Increase your income as much as possible. Banks also place importance on the size of your savings and your ability to repay a loan.
5. Find an experienced mortgage adviser and give them an accurate picture of your finances so they can provide the best lending advice.