Dropout To Young Success
A minimum wage job and a desire for financial freedom gave young Auckland property investor Josh Warner the impetus to look for a different path to success, writes Louise Richardson.
1 March 2016
It's Difficult To Believe Successful
young investor Josh Warner really left school just twelve years ago with no significant qualifications.
At just 16, Warner dropped out of school in his sixth form year, with no skills, no job to go to and nowhere to live.
But Warner, by all accounts, is an atypically tenacious person. His drive to survive at that time, is equally matched now by his drive to succeed.
And succeed he has - at aged just 28, through hard work, sacrifice and self- education, Warner has managed to acquire a number of rental properties in Auckland.
Stuck In A Rut
Immediately after leaving school, Warner scoured the newspapers and online for labouring positions and was prepared to try anything at all. He eventually landed a job as a store-person, driving forklifts at a trucking company in South Auckland.
“I absolutely hated it and it only paid $10 an hour, but I felt I had no choice so I stayed there. I must have been doing okay though because I eventually got a promotion to the front counter, which was $15 an hour. That’s about today’s minimum wage!”
Still unhappy, Warner began looking for ways to improve his lot.
“I knew that I needed something more in my life, but I had no idea what it was. I started reading self-help and self-improvement books because I was determined to find a way out.”
While he was chatting to a co-worker who owned an investment property, the penny suddenly dropped.
Warner got researching, started buying NZ Property Investor magazine and found some relevant websites, which all proved to be very useful.
“Soon I knew exactly what I wanted to do but I had no money to do it with, so straight away I knuckled down and started saving,” he says.
“Luckily there was the option of doing overtime at work and I started putting in 50 or 60 hours a week.
“My friends were all buying fancy phones, cars and clothes. They were partying and going overseas while I drove a $1,900, 1993 Honda Civic and brought my own lunch from home each day.”
It was a tough few years for Warner, but he never lost sight of his goal. In 2008, he decided the $20,000 he’d saved was enough for the deposit on his first property - if a bank would lend him $200,000.
The perfect purchase turned out to be a two-bedroom unit in the North Shore suburb of Birkenhead, which was on the market for $240,000.
He worked with a mortgage broker who urged him to offer $225,000 and promised to organise the finance in time.
Unfortunately that particular loan fell through but with the help of a second broker, Warner secured the unit.
“I was still only 20 and it felt really good. I was quite proud of myself!” he says.
“The bathroom was dark and dingy so that was quickly repainted. I gave the rest of the unit a bit of a refresh and with some basic landscaping it looked good enough.”
Warner set the weekly rent at $250. “Mortgage rates were still around 8-9% back then so I had to put in $100 each week myself and that was pretty hard.”
Back To The Books
As if the new title of landlord wasn’t enough, in 2009 Warner decided to pursue another long-held dream, leaving labouring behind in order to become a web developer.
“I’d always liked IT at school but it never occurred to me at the time that I could actually have a career in it.”
After throwing himself into full-time study for a year, Warner found a junior web developer position and with money coming in again, began saving for his next foray into the rental market.
Having the Birkenhead property revalued helped him when he found a suitable investment: a two-bedroom house in Papatoetoe which he snapped up for $250,000 early in 2012.
“Again, I tidied it up as much as I could and the existing tenant stayed on, which was very convenient.”
Time To Approve
Warner says that by mid-2012 he was “hungry” for more investment properties, and kept saving furiously. Towards the end of 2012 he bought again – a home and income on a 960sqm section in Manurewa.
With three properties in his portfolio, now was the time to decide upon a future strategy. It made sense to improve his houses and unit to the highest possible standard in order to attract tenants with deeper pockets, but he couldn’t stretch to doing a full renovation on all three, so reluctantly he let the Manurewa property go at the start of 2014.
“I didn’t make a huge profit in that short time but it was enough to fund the work I was planning,” he says.
First up for renewal was the Papatoetoe house; a process which took several months.
“I often wish that I’d had a mentor when I started getting into property but I certainly have one now in my project manager Sharon Trafford from Renovate to Profit. She’s so switched on and helpful. I simply couldn’t have completed any of my projects without all the good advice she gave me.”
Later that year Warner had the Birkenhead unit renovated too, then sat back to focus on his career for a few months - meanwhile, updating his master plan.
Launching into the next phase he had the two properties revalued and was thrilled to discover his equity had sky-rocketed.
It was enough to get him back into the now blazing market where it was becoming harder and harder to find reasonably priced investments, especially while having to compete with first-home buyers who often had similar, sub-$500,000 budgets.
Eventually, late in 2014, Warner came upon a villa in Otahuhu, which was split into two units, and he bought it for $470,000 that very day. “It was in okay condition but I had to renovate the kitchens and bathroom right away. It was definitely worth it though in terms of improving my rental yield, and the property brings in $790 per week.”
By 2015 Josh had moved in with his Brazilian partner Bruna Rodrigues who works as national retail and marketing manager at Natural Sugars Ltd.
And, around this time, completely by coincidence, the unit next door to Warner’s first purchase, in Birkenhead, came on the market so the young couple decided to try and buy it together. They managed to secure it for $425,000 and having spent $60,000 on its renovation they now rent it out for $460 per week - a respectable figure, he thinks.
“This particular purchase allowed us to improve the look of the whole block, therefore upping the value of both units.”
Time To Enjoy
By 2015, Warner was beginning to treat himself to some of the pleasurable things in life; something he had always dreamed of as he scrimped and saved for those all- important deposits.
“I’m crazy about sports and adventure activities,” he says.
“I work out six days a week and in the weekends, Bruna and I like to head to the slopes for snowboarding, or out to the beach for surfing.
The pair are about to set off on a five-week trip to South America where Warner will meet Rodrigues’ parents for the first time.
At the moment the pair are living in an enormous 200sqm central city apartment, in which they are tenants.
“I know it might seem weird that we should be renting ourselves, but it suits us very well. It’s close to my work in College Hill so I can cycle in every day and don’t need my own car.”
Warner has recently also been dabbling in the world of Air B&B.
“Right now we’ve got a visitor from Estonia staying and we’re fully booked for the next month. It’s been a very interesting adventure so far!”
As a landlord Warner never forgets his own childhood experience. His family owned their own home until he was in his teens, after which they rented.
“I’ve had mixed experiences with properties and landlords over the years. There were places that had issues, such as cold and damp and it could be very frustrating.
“I think that has driven me to be a better landlord myself. For example, all of my properties that can be insulated, have been. I’ve put it into the ceilings and under the floors and I’ve also had heat pumps installed in colder dwellings.
“I like to ensure that I always have a friendly property manager - and that I’m approachable myself – while still treating my investments as a business, of course.”
So, what lies ahead for Josh Warner, self-taught investor?
“Hopefully more money, less work,” he laughs.
In reality, it could be a home in Queenstown, where he and Rodrigues love to heli-ski and heli-board.
“I also love spending time with my three sisters, their kids and my father in Auckland.”
Warner hasn’t lost sight of other potential investments, picking that Hamilton is going to be the next big thing in terms of rentals, and he’s also considered buying properties in Dunedin for students at Otago University to live in.
“The possibilities are endless, when you think about it!”
He may have missed embarking on the great OE at the time his contemporaries were doing theirs, but at this rate it looks as if Warner’s own might be a whole lot more luxurious.
“I certainly hope so!” he says.