Choice that got beauty worker 20 properties

A former beauty therapist who pockets nearly $700,000 a year in net rental income from her $20 million portfolio of 20 properties has revealed one major decision made her real estate empire possible.

Helen Tarrant, whose family migrated from China to Australia when she was young with $70 to their name, said buying commercial, rather than residential, properties was the key to her success.

The rest was down to a combination of investing smarts, good timing and incredible rent and price rises in the commercial market.

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Ms Tarrant said she had long planned to invest in property as a way to build wealth but was originally intent on buying whatever she could afford in the residential market.

Being self-employed limited her borrowing capacity and she was close to purchasing a small one-bedroom studio in Sydney’s lower north shore a decade ago but had a last-minute change of heart.

“I was working hard as a beauty therapist but my 80-year-old landlord was going out fishing most of the week,” she said.

“It got me thinking about what it would be like to be on the other side and I started thinking about commercial property … once I looked more into it, I realised it was almost like this secret society. People don’t know about it and what you can do.”

Ms Tarrant bought her first commercial property in 2012 – a 52sqm restaurant premises with a Japanese eatery as the tenant.

She bought it for $360,000 and got an 8 per cent rental return. The tenant was locked into a five-year lease. The net cash flow after mortgage costs was $10,000 a year.

“I was keeping money after paying all my outgoings. I would never have got that kind of cash flow with a one-bedroom studio,” Ms Tarrant said.

“What people don’t realise is this kind of cash flow makes it much easier to accelerate the growth in your portfolio because you can keep borrowing as long as the cash flow is good.

“With residential, most people stop buying when they can no longer service new mortgages.”

Ms Tarrant bought her next properties in 2014: two office premises in Roseville on the upper north shore. They subdivided each into two additional offices to get four sources of rental income.

She and her husband financed the deal by tapping into equity in their home and pulling out additional equity in the North Sydney restaurant.

It was with these purchases that her buying strategy for subsequent properties began to take shape: she normally aims for properties with multiple tenants, easy accessibility and high cash flow.

She now has 52 tenants across her 20 commercial properties, The properties include warehouses, shops and office space in metro areas.

Twelve of the properties are in southeast Queensland, two are in regional NSW, three are in Sydney and three are in regional Victoria, including Wodonga.

“What I look for depends on the type of property. With retail, you want something that’s driving foot traffic there. Maybe it’s near an Aldi or a Coles.

“With warehouses, you want good access for trucks, maybe something near a highway.

“And then with offices, it doesn’t have to be in the CBD, but you have to look at who the other tenants are in the building, are they paying their rent … the safest tenants are doctors and lawyers.”

Ms Tarrant no longer works as a beauty therapist and is now a commercial buyer’s agent. She said there were three major advantages that came with investing in commercial real estate:

Tenants pay outgoings: Unlike residential property where the landlord pays strata, electricity, water and land taxes, commercial tenants pay all the outgoings. You don’t need to dip your hand into your own pocket when large bills are due.

Yields are higher: A $1 million residential property in Sydney might rent for $600 per week. After removing the outgoings and mortgage, you end up being negatively geared, Ms Tarrant said. The same $1 million investment in commercial, if done right, could earn net returns of over $1,000-$2,000, she said.

Capital growth potential: “I recently sold my very first commercial property in June 2021 for $1.05 million, having originally purchased it for $360,000 back in 2012. All the time getting positive cash flow while I held it.”

Originally published as Beauty therapist reveals key decision that got her 20 properties worth $20m