How to Build a Global Property Portfolio with Little Capital

April 3, 2013

With the skyrocketing property prices in Singapore, many investors are looking overseas to find attractive investment opportunities. In this article we interview Dr. Rohan Weerasinghe, one of the United Kingdom’s most recognized wealth creation experts and a speaker at the National Achievers Congress 2013, on both his failures and successes in building his property portfolio, and how investors can build a global property portfolio with little capital.

Dr. Rohan Weerasinghe

Could you share your story of how you began your property investing journey and achieved the success that you have today?

I started my journey in 2001 when my business partner and I purchased our first property using money we had saved up. Over the next 10 months we viewed properties and read books and magazines on property but found we had a limited understanding of how to grow our property portfolio.

Because of my PhD and experience in Engineering I was a little cautious and almost overly analytical, which I believe held us back for a short period. I believed we could “do it on our own”. But we weren’t growing as fast as we wanted.

Finally in 2002 my business partner literally dragged me to a two hour presentation which changed the direction of our attitude towards property. From there we took a three-day property training course with Tigrent Learning UK and it was like somebody had put a rocket engine on our backs. We then took a variety of classes and worked with a professional property Mentor who kept us focussed.

We discovered creative ways to finance property deals, how to negotiate with sellers and to buy multiple properties at the same time. We realised that we were not limited by how much we had available in our bank account and that there were many strategies we could apply as the market conditions changed.

With these new tools, over the next year or so we purchased and traded around 40 properties and my business partner was able to set up a property sourcing business which allowed him to buy almost 100 properties in 14 months.

What does your property portfolio look like today? What steps did you take to build up that portfolio?

Our success was based on a team effort, with the two of us working together to develop a portfolio with our mentors and support from Tigrent. We bought, sourced and traded over 150 properties, which allowed the development of both passive income and cash generation, which I will teach at the NAC when I speak.

We started with a strategy to acquire buy-to-let property producing a positive income. We started with smaller properties that were cheaper to purchase and which we could refinance and pull our money back out.

Over time we expanded into renovating properties, buying land for development and also buying properties that can be rented to multiple tenants to produce a higher income. Today this last strategy is one that I am particularly focussed on.

People looking to generate wealth from the markets are faced with a wide range of options that include trading and investing in property, stocks, options, futures and foreign exchange. Which of them do you think would be more suitable for a beginner looking to build his or her wealth?

Over the past 12 years I have not only invested in property, but have also built businesses and traded the stock market. As I travel the world I see people attempt to juggle multiple businesses and strategies at the same time. It is my belief that property underpins all other wealth vehicles simply because it has the ability to produce a passive income from tenants who live in your properties.

Even if the market is flat and not increasing in value, your property will still produce income for you whether you are fit and healthy or unable to work or to run your business.

Another great benefit to property is that during a recession many people are unable to purchase properties so they must rent which increases the possibility of renting.

As an international investor you have the ability to purchase properties in countries where there are high yields, generate an income and still bring the income back into your home country that you can then live off.

What property types (e.g. residential, commercial etc) do you recommend investing in and why?

This is a great question and it must be addressed when understanding the investor’s primary needs.

For example international investors buying in the UK have opportunities to create yields at 10%, 15% and in excess of 20% on residential properties. A good place to start would be income generating residential properties where the access to financing is simpler and interest rates enable the property to produce a high positive cash flow.

Property can be purchased below the market value and then refinanced 6 to 12 months later enabling investors to withdraw the initial investment capital and start buying another property. This can be repeated to build a multi-million pound portfolio.

Most importantly do not focus on just one area. For example, some countries or cities do not produce the correct yield and you cannot make the properties work. Therefore as an investor you must be prepared to diversify and move out of your location in order to create the income that you’re seeking, and this may involve investing in other countries.

Which global property markets do you think have the greatest profit potential for an investor and why? Which markets do you think investors should avoid?

I have been privileged to teach investors in nine different countries and I personally believe that there is no market currently that matches the United Kingdom. The USA does have some strong strategies, but one must be exceptionally careful in view of their economy and you must be very specific on the location of where you have your investments.

The UK has the benefit of financing available to overseas investors, interest only mortgages, a growing population with not enough properties available and therefore high demand for rental properties. The yields in the United Kingdom at present vary from 5% at the low end to over 20%.

There is also the ability to purchase properties below market value from distressed sellers and then later refinance the property without having to sell other properties that you own.

Be careful about developers and countries where there are a lot of new developments, apartments and large blocks of properties being developed over a five year period or so.  These properties are often incorrectly valued and rents are overinflated for a short period under guarantee and then drop away, causing the investor a lot of problems further down the line.

What pitfalls should a global property investor be wary of?

There are several indicators you can look at when it comes to buying properties in different countries. It is important to buy properties in marketplaces where there is a high demand for rental if your long-term strategy is to produce passive income. Be careful of properties where the market has overinflated prices and where you do not have an exit strategy.

For example, if you are for whatever reason finding it difficult to sell a property because you haven’t done your research properly, then you should at least have the ability to rent the property out and produce income.

I believe the greatest pitfall is ignorance. The lack of education, lack of knowledge and the belief that you can try and do this on your own….that is one of the greatest pitfalls I’ve seen for investors that have lost money.

How much capital do you need to have to build a property portfolio and what sort of rental yield and capital gains can you get? Could you share with us some of your best and worst property investments?

This question really needs to be answered in conjunction with a question about the investor’s strategy. I teach people that you do not have to own a property to make money from it, which means you don’t have to put any money down at all.

However, if you’re typically looking at a property for rental income then you might initially want to put aside 20 to 25 percent of the purchase price to buy into the deal.  If financed correctly with the right discount on entry you have the ability to pull this capital back out six months or 12 months later, which means ultimately it can become what is known as a ‘no money down’ deal.

Where this becomes very creative is when you start to work with other people’s money to buy properties which means that you can invest into deals using external funding and then pull that money back out which means you never had to use any money at all.

One of my worst deals was when we purchased a property without doing the correct due diligence and research. We did not plan our exit strategy properly and therefore it took a lot longer to sell the property than expected.  This was many years ago and that one experience taught me to always be clear on having several strategies to exit the deal whether you are holding it or selling it.

The best deals that we have done always revolve around purchasing the property at a sufficiently low price to enable you to create a great income even after you have refinanced the property and released the equity back out.

What are the most important lessons you’ve learnt about living a happy, successful and meaningful life?

My father died when I was 13 years of age and he was just 46 years of age. From an early age I learned how important it was to value every minute and to get the most out of life and the experiences that you have.

I have also learned that success is not about chasing money – it is about doing what you love and being passionate about what you do. For example, property for many people may simply be a vehicle. But if you can be passionate about building a vehicle that creates freedom then you can truly live your purpose and go and do the things you enjoy most.  I also believe in living a healthy life, which creates more vitality to enjoy the special and magical moments that occur every day.

Dr. Rohan Weerasinghe will be going in depth on the strategies he has used to build a global property portfolio with little capital at the National Achievers Congress 2013.