A PROMINENT Sydney property investor who has been “collecting properties like kids collect action figurines” has announced he is selling up some of his 200-plus portfolio worth more than $55 million.

Nathan Birch, founder of Binvested, has been buying cheap properties since the age of 18 and channelling the equity from capital gains into deposits for new purchases. His firm helps clients get onto the property ladder using the same technique, which some critics describe as risky.

While buying multiple, highly leveraged properties can be a successful strategy in a rising market, investors can quickly get into trouble if the market goes south.

In a blog post on Thursday, Mr Birch announced he was selling up. “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.”

Mr Birch told news.com.au he was looking to offload up to 20 properties. If all goes to plan, he estimates he will reduce his debt to about $18 million, with a $50 million portfolio and a “big chunk of cash”.

He said he thought the property market had turned but wasn’t expecting a “collapse”. “I don’t want to sell them, but what I’ve realised is the finance market is really, really tight,” he said. “My clients, in the past I’d help them buy 20 properties in two years, now they’ll struggle to do eight in two years.

“I’m feeling it, the developers are feeling it, the people that haven’t felt it yet are all those properties that are yet to settle, the big Meriton units. I don’t think the property market’s going to collapse, what I see is a slowdown.”

He said he wasn’t selling because he was “fearful”. “I just don’t want to have to deal with that anymore. For me, the reason why I’m selling is different, I’m in a different position. I don’t think anyone should sell just based on my decisions,” he said.

“I am personally still actively buying in the Sydney market but as always the below market value stock. I have a swag of settlements lined up for my buy-and-hold portfolio. It’s like in Monopoly when you trade the four green houses for the red hotel.”

In the blog post, Mr Birch stressed he hadn’t stopped buying, but was moving from his “foundation portfolio” to the “development phase in my investment journey”.

“Now, I’m not selling up because my grand plan has failed, vindicating the ‘negative Normans’ out there,” he wrote. “Not at all! I can sit on this portfolio and ride these finance changes out without breaking a sweat, but that doesn’t sit well with me. I want more!

“I want to keep moving in a market where almost every investor is stuck in quick sand — even if that means selling. 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 blamed the decision on tougher loan serviceability restrictions by the banks. “Anytime you withdraw equity, you need to show income to service that new loan,” he wrote. “Sadly, the banks don’t value rental income as highly as they once did.

“The fail-safe way to access equity today for anyone with a large portfolio is plain old-fashioned selling. The cash can be used to buy up new properties better suited to the current market. For me that’s anything I can develop and flip for a chunky cash profit.”

Mr Birch said about 70 per cent of his portfolio was in “bread and butter” properties like townhouses or units. “I bought many of these for $150,000 whereas today they are worth $500,000 or more,” he wrote.

“Roughly speaking, I’d be looking to make $350,000 on these from selling. As you can see, that’s a nice cash release once I repeat it 10 to 20 times — but I will make sure to keep most of my foundation portfolio intact.”

Mr Birch advised his clients to follow suit. “Let’s say you are someone who followed my strategy over the last six years and now has 15 properties, which were purchased for $200,000 each,” he wrote.

“These properties each have $180,000 owing on them, however the property value has gone up to $500,000. The leaves the overall equity position at $4.8 million. It’s unlikely the banks will let you extract that equity because of all your existing loan repayments, and your limited employment income.

“However, you could sell down half of your properties, clear your debt and enjoy a passive cash flow. Alternatively, you could use that cash to buy some land, build a house on it, sell it off and make $200,000 to $300,000 each time. Then just rinse and repeat. Either way this can get your portfolio moving again or let you enjoy Pina Coladas in the Bahamas.”

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frank.chung@news.com.au