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Property investor Luke Harris.
A high school dropout with more than 30 homes bought while carving out a living selling alarm systems has revealed the two key elements that made his unlikely property empire possible.
Luke Harris, 41, owns investment properties spread across Western Australia, Victoria and Queensland and they have a combined value of about $18 million.
Close to half of the value of this portfolio was debt and the rest was equity, Mr Harris said.
He has also be involved in numerous other deals, including house flips and a now sold investment in Tasmania. Three of his properties are awaiting settlement.
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The Perth native, who now bounces between residences in Prahran in Melbourne and Airlie Beach in Queensland, said his success was due mostly to patience and an entrepreneurial approach.
Mr Harris said he used a variety of tactics and lending strategies to build the portfolio, but amassing so many properties was mostly down to a willingness to play the “long game” and take action.
Luke Harris started his investing while installing alarm systems in homes.
“I’d put it down to delayed gratification,” he said. “That, and understanding what will happen if you don’t do anything.
“Some people are happy to get a job and work normal hours, finish at five, and the rest of the day is theirs. For me, I want to be in control. I don’t enjoy working for other people. I didn’t enjoy school.
“I realised the only way I could get what I want was to do things myself, take the reins, and back myself. You dive in and learn how to swim.”
Mr Harris added that where most other investors go wrong is they don’t link their long-term goals with their property investments and most of their decisions are guided by short-term events.
“They want to make money, but beyond that they haven’t thought about why. They go through the trouble of getting a loan and finding a tenant, but there’s no connection to a goal.
Luke Harris’ investment in Duncraig, WA.
“The other thing is people’s lives change. They get sick, or they’re offered jobs overseas, and when these things happen, they sell based on short-term goals. The challenge is to stick to a long-term plan.”
THE BEGINNING
Mr Harris started investing as a 20-year-old in Perth.
He was self-employed at the time, having dropped out of school to work for a security installation company, which he later subcontracted for as an independent business.
“I left school at 16 and after 18 months of working for someone else I told my boss ‘you’re not paying me enough’. He said be a contractor and I started a business.”
The business, ran from his parents’ house, went well. And, having an interest in property, Mr Harris bought a four-bedroom house in the suburb of Duncraig in Perth’s north for $157,500.
He used a small deposit and spent about $60,000 renovating the property. “My friends were tradies. They helped on the weekends. I paid mates’ rates and in lots of beer and barbecues.
Mr Harris with a friend at an investment property in Seaford in Victoria.
“Because I was one of the first in my friendship group to buy, my place was where we hung out.”
He said the purchase delivered him a lot of capital growth quickly but it was largely a “fluke”.
“For its location, it was a good price. I wish I bought 10 of them … there was no strategy. It was near where I grew up and wasn’t based on a particularly well thought out plan.
“I was just lucky Perth was picking up then, and then it skyrocketed in the mid-2000s as the mining boom picked up.”
Mr Harris business was growing rapidly and soon he had staff and a fleet of cars, but he was bored of living in Perth and decided to sell the business.
With the $200,000 he got for the business, he moved to Sydney at age 23 and began work as a sales consultant for a security company.
Mr Harris, pictured in Prahran, has also dabbled in larger projects.
Now having a salary – rather than being self-employed, which made getting loans difficult – Mr Harris bought a second property in the Perth suburb of Wembley: a two-bedroom unit for $115,000.
“It was an absolute dump,” Mr Harris said, adding that he used money from his business sale to fund the deposit and flew back to WA for the renovation, which he completed with a friend in 11 days.
His third property was six months later in Queenstown, a small town in Tasmania. He bought the four-bedroom house for $79,000 using more cash from his business sale.
He was drawn to the purchase because the rents were more than the mortgage costs.
He later sold it for $120,000, but said it was a bad purchase. “I was following someone else’s strategy and I learnt what works for one person may not work for you.”
Luke Harris outside an investment property in the Frankston area.
By the time Mr Harris was ready to make new property investments he had moved to Melbourne and started another business. He claims the business was a success from the start.
His next purchase was a development in Bonbeach in Melbourne for $255,000 in 2005.
“It was an old house. The doors didn’t lock, it was full of rats and mice and wasn’t safe, but it was 300m from beach and close to the train station.
“It was a budget friendly renovation to tidy it up. I subdivided the block, the market picked up, and I ended up selling a few years later for a lot of money.”
This was followed by similar property plays in nearby suburbs Seaford and Carrum, just north of Frankston.
BUILDING THE PORTFOLIO
Subsequent purchases were made with a combination of refinancing previous investments to draw out equity to use as deposits.
Luke Harris’ investment in Duncraig, WA, pictured in the early 2000s, remains one of his best deals.
Most of his properties attract high rents and this helps with the debt servicing. The portfolio wouldn’t be possible without a “fantastic” mortgage broker to help, Mr Harris said.
“What I learned, is that you need a plan and you need to understand why you need that plan. So you start with your goals, set a date you want to achieve them and work out how much money you need to do it. If you have a clear goal you can work backwards. It’s not a get rich scheme. It’s slow and steady wins the race.
“You need to be patient and delay gratification. Money for holidays or cars could be used for deposits and it is going to take years before you see results. Delayed gratification makes you successful.”