More than a decade ago, Victor Kumar ploughed an $8,000 payment from a workplace injury into a $70,000 unit.
The medical worker had migrated to Australia from Fiji with his wife a few years earlier with less than $5,000 to their names.
But they soon set their sights on property investment as a vehicle to a more financially secure future — and it paid off.
“It was a hard slog in the initial stages, we sacrificed a lot, we started our family late, we didn’t have much of a social life in the early stages,” he said.
The couple now owns more than 100 rentals, with an additional 30 being built.
Mr Kumar’s extensive property portfolio places him among a top tier of property investors often discussed but about whom little is known.
Now Australian Tax Office (ATO) data obtained exclusively by the ABC under Freedom of Information laws shows he is among at least 2,500 investors in Australia who own or part-own 10 or more rental properties.
These investors control more than 33,200 rentals — roughly the same number of dwellings in the Melbourne suburbs of Richmond and South Yarra combined, or the Waverley council area in Sydney’s east, according to CoreLogic data supplied to the ABC.
Mr Kumar is also part of the 172 investors in an even more elite class, with interests in 20 or more properties.
These investors have interests in 4,395 rentals between them, equivalent to the number of dwellings in Darwin City or North Perth.
The ATO data provides an insight, but not a holistic view of the investor market, because it does not capture rentals held in companies or trusts, or properties without rental income.
It may also include commercial properties if they are owned by individuals, although economists say this figure would be extremely small and unlikely to affect results.
Mr Kumar said he understood investors like him were often criticised in Australia’s heated public debate over housing affordability but they played an important role in increasing housing supply.
“These are hard workers that have actually done something for themselves and they’re enjoying the fruits of their labour,” Mr Kumar said.
“We have an accommodation shortage so we need more of these.”
A small percentage of investors control a chunk of the rental market
Despite amassing multi-million-dollar portfolios, the ATO data suggests these landlords are carrying more debt on their rentals than investors with smaller portfolios.
While investors who owned between one and 19 properties made a profit in the 2021/22 financial year, those who had portfolios with 20 or more properties turned a loss on average, according to the data.
Australia Institute chief economist Greg Jericho said it was “quite extraordinary” any investor made a loss during 2021/22 — a time when interest rates were at rock bottom, reducing mortgage repayments, and rents were jumping fast.
Mr Jericho said the data highlighted how many of the benefits of negative gearing and the capital gains discount went to the largest investors.
“They are actually getting a much better average benefit from negative gearing than your more traditional mum-and-dad investors,” Dr Jericho said.
“The system we have at the moment … it’s really kind of geared towards assisting people who are able to borrow against [the] equity of one property to buy another property, and then to borrow against that and buy another property.”
Negative gearing, which is used by investors to reduce their tax bill, has been back in the spotlight since it was revealed Labor asked Treasury to start to work on options for reform.
While the prime minister has since said the government has no plans to take negative gearing reforms to the next election, one idea being floated in the public discussion capping the number of rentals investors can negatively gear.
Dr Jericho said the only reason large investors would keep rentals that consistently lost them money was because they could use negative gearing to reduce their tax bill before getting a big pay-off when they sold.
Head of research at property data firm CoreLogic, Tim Lawless, agreed these individuals were likely benefiting the most from capital gains discounts and negative gearing tax deductions.
He said any move by the federal government to immediately implement changes to negative gearing for people who owned multiple properties could trigger a sell-off, which might impact prices.
“If it wasn’t grand-fathered, then you’d have to think there would be a much more significant offloading of investment properties, given how low yields are and the fact mortgage rates are quite elevated,” Mr Lawless said.
While Mr Kumar is funding a number of new builds, not all economists agree that property investors overall are substantially contributing to housing supply.
Independent economist Saul Eslake said ABS data showed only about 23 per cent of investor loans were for new housing.
“Seventy per cent of what they borrow goes to the purchase of established housing, and all that does is drive the price up of housing that we already have,” he said.
True number of major investors in Australia likely much higher
Large-scale property investor Margaret Lomas also runs an investment advice business.
She estimates that the true number of landlords with 20 or more rentals is much higher than the ATO’s figure of 172 — and is likely more than 1,000.
She said the large debts carried by top investors were likely a result of using the equity in one property to purchase the next.
“If you’ve got a million dollars’ worth of equity in your property, that’s enough to borrow $800,000, which is two more properties, or 10 more properties, if the bank will enter you with $80,000 deposit on each,” she said.
“The more you get, the easier it is, to a point.”
Ms Lomas acknowledged the increasing difficulty young Australians faced getting into the market, but said those who had built wealth in the market had simply worked within the system available to them.
“The motivations behind many property investors isn’t to create grand wealth for themselves, it’s often to help their own families,” she said.
“Other people are just simply trying to put together that retirement income.”
Property investor Michael Yardney has accumulated more than 20 rentals over the years.
He agreed successive government policies had resulted in homes being seen as a method of making money rather than a human right, resulting in many people being reliant on the bank of mum and dad to buy their first home.
“It is very much creating a have and have-not society, which I don’t like seeing,” he said.
But with two-thirds of Australians still owning their own home and some politicians owning multiple rentals, he does not believe the government will do anything to lower house prices overnight.
For others, the home-ownership dream is further away
For Brisbane-based building foreman Thomas Bowness, 26, and nurse Shannon Nielsen, 24, the toll of constantly missing out on their first home has been heavy.
They are delaying having children until they buy their own place, but they keep losing out to investors.
“It is frustrating. It does feel like the market is getting further and further away,” Ms Nielsen said.
They are keen to buy in Logan, south of Brisbane — an area traditionally more affordable for first home buyers.
But since they started looking in 2022, Mr Bowness said the price of homes they were interested in had increased from about $600,000 to $750,000.
Their mortgage broker Wayne Bennett said the couple’s experience was not unusual around Logan.
“It’s a constant trend of these poor first home buyers that do everything that’s asked of them by me to get them ready to buy a house and then the goalposts have been moved via the market having drastic uplifts,” he said.
“It puts them back to square one.”
Mr Bowness said it was hard to accept that there were people who owned more than 20 houses.
“That’s over the top in my eyes,” he said.