It included this photo of her standing in front of a nondescript apartment block, smiling at the camera, with her arm outstretched. But it was what she was holding in her hand that made the internet go into meltdown.
What was it?
A fistful of keys — a kind of property prop that fit perfectly with the click-bait headline: “Sydney property investment guru Stephanie Brennan has $2.3 million portfolio aged 24.”
The story, which detailed (roughly) how she’d bought six properties, was one the most read articles on news sites across the country last week — even BuzzFeed ran with the yarn (their headline read like a bitchy 13-year-old: ‘Everyone’s Furious About The Advice Of This “Self Made” Property Mogul’). The article generated about 3000 comments, many from dejected young’uns who couldn’t afford one property, let alone six.
So I decided to catch up with this ambitious 24-year-old real-estate-agent-cum-buyers-agent-cum-mortgage-broker and discuss how she’s done so incredibly well despite breaking every single one of my Barefoot Investor wealth-building rules.
It was a corker of an interview: we respectfully agreed to disagree on pretty much everything — from the get-go.
Barefoot: “So, where do you see yourself at age 30?”
Brennan: “My plan is to have 21 properties in the next five years. I have six now.”
Barefoot: “What’s the average yield across the portfolio?”
Brennan: “I don’t know … I’ll have to check”.
Brennan stressed that her properties were all ‘positive cashflow’ (which means the rental returns are higher than all her loan repayments and upkeep costs). By way of explaining her strategy, she revealed that she’s recently bought two more properties in Queensland, one for $339,000 which is bringing in $500 a week, and another for $327,000 which is bringing in $550.
For those of you without a Casio on hand, that last one works out to be an 8.7% gross rental return. That sounded high, so I called up respected property analyst Louis Christopher from SQM Research to get his take on it. “We track rental yields across Queensland, and that’s way out of whack from anything we’ve seen,” said Christopher, one of the few analysts to correctly pick the Sydney property boom of the past few years.
Fair enough. Maybe she just picks her property very, very well.
Indeed, she told me that she wasn’t worried about a downturn: “There are always times when the market moves up or sideways … but it also depends on what and where you buy it. You need to look at your strategy and de-risk your investments. Historically the property market has been the only investment that’s given above-inflation returns.”
Barefoot: “Okay, so you have six properties worth a total of $2.3 million. How much debt do you have?”
Brennan: “I don’t know the figures right now … but I have around $500,000 in equity.”
Barefoot: “Is that what you’ve added in yourself, or is it based on bank revaluations?”
AND there’s the rub. My Barefoot strategy is the financial equivalent of getting advice from your great-grandfather — the guy who lived through the Great Depression, looked after his family, worked hard, paid his debts.
It’s not flashy and it’s certainly not sexy, but it keeps you and your family safe.
Brennan’s strategy, on the other hand, is like that of a lot of people who go to fast-money property investment seminars: buy high-rent-returning properties, hold them for a year, get the bank to revalue them, use the equity to borrow more money.
And if it all goes to plan, she’ll do it three times a year and end up with 21 properties before she’s in her dirty-thirtys.
At this stage of the interview I resembled a cast member of Real Housewives of Melbourne: my eyebrows were giving me pins and needles from being suspended too close to my hairline. I began blurting things out at her:
“What happens if interest rates head back to their historical average of 7.44%? Where will you find the extra $60,000 per year?”
“What happens if there’s a prolonged downturn in the market?”
“You’ve just opened a business that itself is leveraged to the property market — what happens if you hit tough times?”
And I’ve got to say she had an answer for everything. None of them completely satisfied me, but then again, it didn’t need to — it’s not my backside on the line.
Besides, you have to look at it from her point of view: she’s done very, very well, thank-you-very-much.
Well, for the past three years anyway.
The way I see it is this: it’s like she’s turned up to a party at five minutes to midnight, when the booze is flowing and everyone’s loosey-goosey, and made the assumption that the party will last forever. And for her it actually has: Australia is living through the longest uninterrupted economic boom in history — and it started the year she was born.
Now I could be wrong, but I doubt she’ll get to her 21 properties. However, I don’t have any worries that she’ll be fine. I was honestly genuinely impressed with her chutzpah.
She’s got more front than Myer, and it’s always refreshing to see a young person giving it a red hot go. Smart, gutsy, big-picture people like her always work out all right. Just look at Alan Bond.