Tradie goes from broke to 18 homes, $11m after power move
An Aussie sparkie and nurse who had been losing $40,000 a year have revealed the surprise change that turned it all around.
A trained electrician and nurse who were once bleeding $40,000 a year in losses have revealed the remarkable way they turned their lives around to get $11 million in property wealth over 18 properties.
It’s an unlikely empire that generates them nearly $542,000 a year in gross rental income – but it almost never happened.
Michael Kowalczyk, 35, said he was in a desperate situation a few years back when his then eight properties were burning a hole in his pocket and, with a baby on the way, he was stuck.
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The father of four recalls it being a nightmarish scenario given how well he and wife Nicole had launched their real estate investing ambitions only a few years before.
Mr Kowalczyk had bought his first property aged just 21 using money saved from his work as an apprentice electrician. He was also moonlighting at a local cinema.
He had saved his deposit faster by living with his parents and being “super frugal”, he said.
Wife Nicole had also got into the real estate game early, snapping up her first property at age 23 while working as a registered nurse.
The couple had then used a combination of smarts, renovations and clever timing to leverage their investments into six more properties around the country by 2017. But that’s when the problems started.
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“Eight properties sounds like a great position, but it was hard,” Mr Kowalczyk said. “We were relying on negative gearing and it was so overwhelming we considered selling everything.”
With Nicole pregnant with their first child, the couple had to go through some hard introspection.
It was a bitter irony. Mr Kowalcyzk had spent years chasing the dream of financial independence, a dream born from the memory of growing up in public housing in Sydney suburb Greenacre, watching his parents, Polish immigrants, struggle to make ends meet.
Money had been tight growing up. The future, always uncertain. “I didn’t want my kids reliving what I did,” Mr Kowalcyzk said.
An epiphany helped turn the couple’s fortunes around, he added. The couple realised they knew other investors who had succeeded in getting more than 10 properties without the same issues as them.
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“Clearly there was something missing in the puzzle piece … we had to get more educated,” he said.
What followed was a re-evaluation of the strategies they had used to build their property portfolio in the beginning.
Mr Kowalcyzk’s first investment had been a townhouse in the Western Sydney suburb of St Marys. It had delivered solid capital growth, giving him rapid equity to leverage into his next buy.
Subsequent purchases used the same formula: they aimed for high growth properties that would rise in value quickly and allow them to pull out equity for the next purchase through refinancing deals.
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The missing piece was cash flow. “We had to restructure the whole portfolio. It took us two years to turn it around from negative to positive and it cost a lot of money.”
One of the other tactics that helped was expanding the types of real estate they purchased, often with a focus on acquiring properties with a dual income – such as those with granny flats.
They also began to dabble in commercial properties, which typically have much higher rents relative to the purchase prices.
Today, they get 21 rental incomes from their 18 properties because many are dual occupation sites.
About $6.5 million of their $11 million portfolio is debt and the rest is held in equity.
Mr Kowalcyzk said high rents relative to their mortgage costs mean the portfolio is cash flow positive after their expenses are paid.
He added that they turned their portfolio around by working out their end goal and working backwards.
“In the beginning, things were a lot more emotionally driven,” he said.
“It’s a common problem for investors. They don’t start with any thought of what they want to accomplish. You have to think of what you want to do and how each property is going to (contribute).”
The couple changed careers during the Covid pandemic.
Mr Kowalcyzk worked as an electrician for close to 10 years but, with Nicole, is now a buyer’s advocate after founding agency Tailored Property Group.
They meet lots of budding investors and Mr Kowalcyzk said a common mindset often holds them back: they won’t consider investing outside of where they live.
“We’ve bought in WA, NSW, Queensland and Victoria. You have to be open to where the opportunities are.”
Originally published as Tradie goes from broke to 18 homes, $11m after power move