Exclusive, Australia's youngest property tycoon sets the record straight

Exclusive, Australia's youngest property tycoon sets the record straight

Stephanie Brennan is one of Australia’s youngest real estate entrepreneurs, at just 27 she already owns properties across three continents rumoured to be worth $3.2 million.  

The real estate savvy millennial caused a storm of controversy in 2015, with critics claiming her good fortune was due to an inheritance and being given a hand up from her parents.

Today she sets the record straight on how she built her property empire and how she deals with her critics. 

stephanie brennan

Source: LinkedIn

How old were you when you bought your first investment property?

I purchased my first investment property on Sydney’s Northern Beaches in Manly Vale on my 22nd birthday back in 2012. 

Tell us how did you get started in property investment?

Originally, I was more interested in entering the stock market than property, however, this changed after I started working with an experienced property investor. Seeing the returns and how quickly you could build wealth piqued my interest. After moving into property management to better understand property investments, I started investing and it’s become my addiction.

How did you save for your deposit?

Although the focus in the media has very much been on my mum guaranteeing my first property, she only agreed after I had saved the deposit. In hindsight, this was a means of protecting her own wealth, and a valuable first lesson on asset protection. 

Fortunately, I had always been interested in money and working hard for it. My mum had plenty of undesirable chores to earn pocket money – let’s face it, no one wants to change the kitty litter!

Once I had my P Plates, I would skip school to work at my local retirement village. I also worked at the supermarket on the weekends and delivered pizzas in the evenings.

What sacrifices did you make along the way? 

At one point, I had a monthly budget of $50 to see friends. Most of the time I worked and stayed home, counting my money and working towards to goal of seeing my savings increase. 

Being able to buy my first home and all future investments to date has made the lack of smashed avo worth it. It’s also given me good budgeting habits I still stick to, but luckily I can afford the occasional smashed avo now. 

What advice do you have for other twentysomethings looking to buy a home?

Don’t focus too much on the background noise like interest rates and negative talk. Everything is possible if you want it badly enough. 

If you focus too much on the short term, and not enough on the long term, you will never reach your goals, whether that’s buying a property or otherwise. Taking 12 or 24 months to save may seem like a long time, but when you compare that to the 60, 70 plus years of life you still have left, the time passes more quickly than you realise.

You’ve copped some flack online for having a privileged start in life – what do you say to your detractors?

Bill Gates has a great quote –no one chooses where they start in life but they can choose where they finish.

I didn’t choose the family I was born into and I know I’m incredibly lucky. The reality is that everyone gets help in one way or another, it may not be financial and you may not even realise it at the time, but sometimes a disadvantage makes for a great advantage and can even be a driver behind your ambition and future success.

I may have had different opportunities then someone else my age and I’ve taken each opportunity and at times created more. It doesn’t matter what opportunities you’re given as long as you create something of value because of them, which has been a huge driver behind my current business, giving others the opportunity to create their own wealth and their own ideal future without any cost. 

How do you ensure you always buy the right investment property?

My strategy looks partly at cycles in terms of where I buy and sell to maximise my wealth, but mostly, I look at where the future markets are headed and where they’ve been in the past. Coupled with this, I’ll pivot my strategy, such as looking at high returns to increase my serviceability and then holding, capitalising off those returns and then selling and rebuying by porting the security so I can capitalise off the higher growth potential in other states or countries. I prefer to be proactive, but at times you have to react. Those are the times that you learn the most and become a better investor. 

How important is it to secure the right finance for your property loans?

Incredibly important! If you secure the wrong finance, it’s not the end of the world, all problems can be solved, but it’s far better to get your financing structure right from the start. Understanding what you want to achieve in the next 1 to 5 years ideally, will help give you an initial idea of how to structure your finance. 

What are your three key pieces of advice every first home buyer should know?

    1. Set a goal, write it down, then work backwards – it’s the first step to making your goal a reality.
    2. Check out a comparison site, a broker, your bank, whomever you want to go to find out how much you can borrow. Also, it’s so important at this stage to understand your budget by writing down every single expense you can think of. Make sure you save/invest before you spend any money on entertainment or items that aren’t a dire need, like your smashed avo.
    3. Find a property that matches your goal and don’t fear going outside your comfort zone or the areas you’re familiar with. A property within a 20-30km radius of a major CBD with strong population growth is a more conservative bet to gain capital growth. 

What are you top three tips for property investors?

    1. Strategy is so important. Get to know your bank’s or several banks’ policies on lending and this could help you grow your portfolio quicker.
    2. It’s also far cheaper to pay for your own renovation than for someone else, so finding an un-renovated property gives you the ability to create your own capital growth even when the market isn’t booming.
    3. Reducing debt is just as important as building wealth. You need to protect what you build and reducing debt will give you more comfort and flexibility when personal circumstances change or when things like interest rates increase.

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An estimate of how much your desired property is worth. 

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

This type of loan is a flexible mortgage that allows you to draw on funds when you need them, similar to a credit card.

What does pre-approval' mean?

Pre-approval for a home loan is an agreement between you and your lender that, subject to certain conditions, you will be able to borrow a set amount when you find the property you want to buy. This approach is useful if you are in the early stages of surveying the property market and need to know how much money you can spend to help guide your search.

It is also useful when you are heading into an auction and want to be able to bid with confidence. Once you have found the property you want to buy you will need to receive formal approval from your bank.

What is an investment loan?

An investment loan is a home loan that is taken out to purchase a property purely for investment purposes. This means that the purchaser will not be living in the property but will instead rent it out or simply retain it for purposes of capital growth.

What is equity? How can I use equity in my home loan?

Equity refers to the difference between what your property is worth and how much you owe on it. Essentially, it is the amount you have repaid on your home loan to date, although if your property has gone up in value it can sometimes be a lot more.

You can use the equity in your home loan to finance renovations on your existing property or as a deposit on an investment property. It can also be accessed for other investment opportunities or smaller purchases, such as a car or holiday, using a redraw facility.

Once you are over 65 you can even use the equity in your home loan as a source of income by taking out a reverse mortgage. This will let you access the equity in your loan in the form of regular payments which will be paid back to the bank following your death by selling your property. But like all financial products, it’s best to seek professional advice before you sign on the dotted line.

What is stamp duty?

Stamp duty is the tax that must be paid when purchasing a property in Australia.

It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

What is equity and home equity?

The percentage of a property effectively ‘owned’ by the borrower, equity is calculated by subtracting the amount currently owing on a mortgage from the property’s current value. As you pay back your mortgage’s principal, your home equity increases. Equity can be affected by changes in market value or improvements to your property.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

Why was Real Time Ratings developed?

Real Time RatingsTM was developed to save people time and money. A home loan is one of the biggest financial decisions you will ever make – and one of the most complicated. Real Time RatingsTM is designed to help you find the right loan. Until now, there has been no place borrowers can benchmark the latest rates and offers when they hit the market. Rates change all the time now and new offers hit the market almost daily, we saw the need for a way to compare these new deals against the rest of the market and make a more informed decision.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out.