Cash flow issues catch up with investor Nathan Birch on Paradise Point property

Cash flow issues catch up with investor Nathan Birch on Paradise Point property
Cash flow issues catch up with investor Nathan Birch on Paradise Point property

The young high flying Sydney investor Nathan Birch has been quietly sued by a lender after his company defaulted on a $535,000 mortgage on a Gold Coast Investment Property.

Birch has confirmed he had "briefly" fallen behind on "one or two mortgages" citing increased lending restrictions arising from the much-heralded Australian Prudential Regulation Authority investor crackdown.

Birch (below), who proudly describes himself as a little bit bogan, drives a $200,000 Bentley bearing the number plate CSHFLO.

He was named Your Investment Property magazine's runner-up investor of the year in 2013.

The arrears situation is a small part of the portfolio built up by Birch who describes himself as "young, bold, brash" - and "one of Australia’s most successful, respected and listened-to property investors."

His $50 million portfolio of over 200+ properties, saw him tally a net worth exceeding $30 million dollars with a passive income after expenses north of $2 million since buying his first property at eighteen.

Court documents cited by the Australian Financial Review showed Birch's company HLG One Holdings Pty Ltd had failed to pay amounts owing on a $535,000, 30-year interest-only mortgage for 9 Victor Avenue, Paradise Point, which has three two-bedroom rental units on one title.

Cash flow issues catch up with investor Nathan Birch on Paradise Point property

HLG One Holdings, of which Birch is the sole shareholder and guarantor over the loan, was given 31 days to remedy the situation or be in mid-year default.

At the time in a blog post, Birch announced he was selling down his portfolio.

“For a long time now, I’ve been collecting properties like kids collect action figurines in a Happy Meal,” he wrote. “I never like to see one go.

“But recently, the finance environment has changed. It’s a bitter pill to swallow for a buy-and-hold investor — but I need to optimise to [suit] the times we are in by letting go.”

Birch told mid-year he was looking to offload up to 20 properties estimating he would reduce his debt to about $18 million.

Birch blogged that he was adjusting his portfolio and riding the finance challenge "without breaking a sweat".

"For years now I have been channelling equity into deposits for new properties, but it's no secret that equity is very hard to release these days – even if you have millions of dollars of it," he told his many devotees.

His recent HLG company sales include a Box Hill, outer Sydney holding which fetched $625,000 last November, having cost $567,000 in 2015.

Among the property HLG retains is a townhouse at Woodridge in Queensland which was bought in 2015 at $124,000 when tenanted at $220 a week. Last month it sought tenants at $200 a week having sought tenants in November at $230 a week.

Permanent Mortgages sued HLG One Holdings and Birch claiming repossession of the property together with $548,367 and interest accrued on the amount at a rate of 11.94 per cent a year from August. The claim was filed in the Brisbane District Court by solicitors Dunstan Hardcastle, acting on behalf of Permanent Mortgages, a subsidiary of non-bank lender La Trobe Financial.
On October 24 Permanent Mortgages secured judgement against HLG One Holdings, but has yet to undertake any public sale. It last sold in 2016 at $815,000, then returning a total of $780p/w.
In his recent emailed response on the court matter to the Financial Review, Birch advised 2017 had "more than anything highlighted just how important strong cashflow is".

He said that he had had to adapt his investment strategy.

"As a result of the tighter lending practices, I have simply sold some smaller properties and purchased larger ones to set myself up for a development phase in my portfolio," he advised.

Cash Flow Mortgage Demand

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