Brisbane investor doesn't venture far from home in building off-the-plan portfolio
Even a career in property cannot eliminate mistakes when it comes to investing, but Adam Cox has built a property portfolio by the age of 40 that is focused on one part of his home state.
Forty-year-old Adam Cox works in the Brisbane property game and his personal investment journey has evolved in parallel with his career, but what it hasn’t done is guard against making the same mistakes starting out as any other first-time property investor.
He did wisely place value in the advice of industry professionals and obsessively self-educating, which has yielded dividends.
His first purchase was a one-bed apartment in Broadbeach on the Gold Coast for $215,000, and he said he had “absolutely no idea” what he was doing.
“I was able to pay it down a bit and sell it for a small profit, but it wasn’t until my second purchase, a house in Arundel on the Gold Coast for $430,000, that things changed for me,” Mr Cox said.
“At the time, it was a stretch to buy it, as it needed a renovation from its rundown peach and beige bulk built housing estate interior.
“After a small renovation, it soared pretty quickly in price, which set up the journey.”
That journey has, however, not ventured beyond southeast Queensland where all of Mr Cox’s investments have been made.
“I am a believer in becoming an area expert as I’m someone who loves to deep dive into the analysis of things, sometimes to my own detriment.
“It was advice stressed to me by Rob Flux of the Property Developer Network.
“The main investments I currently have are two off-the plan apartments that have risen by more than 100 per cent and 50 per cent respectively, and a house that has risen by 120 per cent over the past four years,” he explained.
Capital growth on this scale surprises Mr Cox, who believes in part it has boiled down to luck but said his obsession about the area’s property market played a role in making the right choices.
Despite CoreLogic finding Brisbane’s unit capital growth falling from 15.3 per cent to 8.5 per cent in the past 12 months, Mr Cox said he’s seen an example of two brothers who bought their first off-the plan apartment investment in southeast Queensland for $680,000 in 2019. After Covid delays it settled three years later and sold in 2023 for $1,250,000.
“It was a pivotal moment for me in understanding how top property can command new price points quickly,” Mr Cox said.
The construction cost factor
Developing his own property has been a theme in his strategy but over time this has evolved as his portfolio has grown.
“I’ve gone from believing heavily in small property developments, as an active manufacturer of value into real estate, to playing a longer game and I’ve pivoted to some off-the plan investing, as it suits my life far greater than the stress of developing properties,” he said.
“The cost of construction at all levels has dramatically shifted this focus.
“I have recently had quotes to lift and raise a Brisbane property up, and basically build in underneath, which came in above $950,000 - hence the pivot to buying off-the plan investments.
“That will probably shock some readers. Everyone seems to have an Uncle Peter, who once lost $50,000 on an off-the plan purchase in 1987 on an apartment project, however, if you understand what is going on in the capital cities around construction and the enormous rise in pricing to build stock, the sheer weight of the supply and demand metrics can’t be ignored,” he said.
“I have a few projects I’ve invested in, that have already risen dramatically from the purchase price, and I have no mortgage on them at all currently.
“They are rising in value every day, and I am not vulnerable to the current mortgage environment we are in.
“At completion of these projects, I can choose to have a mortgage for a day and sell them or rent them out as a buy-and-hold strategy as the rents rise to future market rates.”
The key, he said, is to understand these projects and their desirability, the developers, the financiers, the consultants and mostly, the builders.
“They are the ones that will bring these visions to life, and deliver the masterpieces that developers are striving for.”
Like most investors who wish they knew then what they know now, Mr Cox said he’s learned valuable lessons from many mistakes, with two that stand out.
“The one regret every property investor has is that they didn’t start earlier; there’s only one better time to buy than now, and that was yesterday,” he said.
“If I could do anything differently, I would have bought more houses on the Gold Coast and Brisbane, as close to the beach and amenity as possible because after Covid, southeast Queensland became red hot.
“But we all have our own risk profiles and fortune favours the brave, and I wish I went harder over the past few years.”
Buying off-the-plan still a winning proposition
Evolving an interest in off-the plan developments also taught him that just because a property can be built, doesn’t make it profitable.
“I say be careful about construction costs when developing, as they can end up far higher than you could have ever predicted because even a healthy contingency plan for cost overrun in a small project development feasibility can quickly go underwater due to unforeseen issues,” he said.
“Play the long game more through market and product investment, and not to try and force value onto property through development, where the risk/reward factor is far greater.”
Mistakes haven’t been his only teacher and when starting out Mr Cox sat in on private seminars, then took short courses where he learned about various online tools and turned to Think Property Club and I Love Real Estate to acquire a sound property developer/investor strategy.
“You don’t know what you don’t know, and in small property development, what you don’t know can invite ruin into your life when starting out.
“It wasn’t until I studied a property economics degree, combined with my professional career, that led me to understanding how a more passive strategy can be just as good, when understanding all of the market fundamentals, and can also be far less risky if you are willing to play by a longer game.”
To Mr Cox, that long game includes looking for new opportunities and being ready to take advantage of them.
“The supply/demand metrics for southeast Queensland in particular are very eye opening and will likely get way worse before it gets any better due to the construction situation we are in, so that’s what keeps me going,” he said.
“There is a huge opportunity right now for investment, all based around the lack of construction activity in great locations.”
