What Property Spruikers Don’t Want You To Know: Margaret Lomas

Chatting to Margaret Lomas – author of eight bestselling property investing books and mentor to thousands of people around Australia – we’ll discover how she protects her clients from spruikers, how her education in training and development set her on the path to property investing and how radio advertising turned into a lucrative business prospect.

Learn more about how Lomas became one of Australia’s leading property experts and her journey to success – just click play!

Any property investor can't expect too much capital in the first five to seven years of buying an investment unless your timing is exceptional. - Margaret Lomas

Margaret Lomas is arguably Australia’s leading property expert, educating and mentoring property investors across the nation for many years. She has poured her property investing expertise into her published books, which have become the go-to bible for many property investors.

I wrote my first book in 2001 and it was at a time when nobody had really written a book that was useful for property investors. When I say that, I am aware that Jan Somers had written a very good book called Real Estate Investing. But her position in writing that was from a position of a property investor who really focused very much on the physicality of buying property. So her book was really centered around the notion that you would find an area – most likely that you knew quite well, that was near where you lived – that you would then seek out a median priced property. Much of her advice centered around what that property needed to look like, how to get one that was tenant-friendly, more about the asset itself. So up until that point in time, nobody had really written a book about property that took more of an economic view and considered all aspects of property investing, including the tax aspects and being able to identify the right places to buy.

So I guess you could say that my book was fairly groundbreaking in that regard, although when I look back at that book now, to me it is notable by what it misses out on. When I wrote that I had only bought seven properties, which today most of my clients have. And to think that I could write a book back then was probably stretching it a little bit. I wrote the book, people liked it and from there my own journey continued and I stayed for a long time one step ahead of the readers. But eventually it got to the point where I did build my expertise and was able to write books that were far more useful than the first one.

Over time, some of her earlier books have been compiled to create information which is easily accessible to all property investors, regardless of where they are in their personal journeys.

I’ve written eight books. To be fair, the eighth one was a rewrite of those first three; so the first three books were part of my How To series and each one built a little of the one prior. I guess I picked up on that information that I subsequently learned and experienced at least in the book before, so it seemed to be a good idea more recently.

So about a year and a half ago I took those first three and rewrote them. They made a really nice, big book that had three components: a component for brand new beginners, a component for people who were already on the journey, then a component for people who were possibly getting to the end of that property investment strategy and thinking about exiting it. So it just means that you can buy that at any phase of your journey and get a fair amount of information out of it.

That’s great. A lot of people who I’ve had on the podcast has always referenced your books as being the go to bible person for the investing industry so kudos here. It’s you know huge huge huge resource for everyone to use.

Probably a lot of the difference there is that when I first started writing, I had a real genuine desire to share my knowledge to tell all of those secrets that the spruikers were charging thousands of dollars to come and listen to, that weren’t really secrets at all. And I really wanted to educate people. These days really if you think, a lot of people have the opportunity to self-publish to write books, many of those books are really a business card for them or a way for them to sell a product. So I think it’s very important for the listeners to understand that there are some good books out there that you can read, but there’s also plenty of books that are really written as a promotional tool and you do have to be careful of those.

In any given day Lomas spends time talking directly with her clients and prospective investors.

I sit at my computer and do a number of things. I write scripts for upcoming episodes of the program. I answer the emails that come in to me, because it’s very important to me for people to get answers directly from me; I also get a lot of questions through my Facebook page which I try to answer as well and work on different ways to get information out there to property investors, so that they can invest in property safely, but they’re protected.

Spirit is a key part of that in my work with the Property Investment Professionals of Australia (PIPA), which is not-for-profit association that I was involved in for over a year and I was very instrumental in getting that up and off the ground, getting a course developed and making sure that consumers all over Australia – in the absence of regulation by governments – have some kind of protection against the people who are just trying to rip them off.

In this way, she has been instrumental in creating a safer environment for property investors around Australia to draw information from PIPA.

We have a long way to go, but I think that if all consumers make sure that they only ever deal with a team member, at least they know that Amber has done a qualification. The qualification is quite comprehensive and does involve a fair amount of work and input by the advisers, including doing the qualification known as a qualified property investment adviser.

But even though I can’t guarantee that every member of PIPA is going to operate honestly and effectively for you – because we do our best to search the backgrounds of the people applying for membership and we try to make sure that it’s not that easy to become a member – we still do have members who may not perform the way we would like them to. We take complaints from the public about our members and we make sure that we deal with them. The ways we deal with them are that if we can substantiate that complaint after a lengthy investigation, we will terminate that member and make sure that we put out a press release that we have terminated that member. And that hopefully either changes how the operating room doesn’t have that opportunity anymore.

So I guess the way we’ve been able to assist the industry is in at least providing a background to the kind of people that are members. So if you’re going to get an adviser to help you with your journey in property, that somebody is watching the show and providing some standards and accreditation for members.

The protection that PIPA ensures is essential when dealing with spruikers. And with her vast experience, Lomas has seen it all.

In my time I’ve seen some shocking examples of people being ripped off and a lot of people just don’t realise how ripped off they’re getting. If you think about it, you’ve got people out there who are charging $15 000 to help you buy a single property. You’ve got advisers out there who are saying that they’re property investment advisers when what they really are are middlemen for developers and the advice they give you is to buy their product.

Now what are the chances that someone like that just happens at that moment in time to have a property that matches your own personal needs? In addition to one that matches your personal financial circumstances, as well as being in a hot spot at that moment in time, the chances of that are very slim. Yet people everyday are taken advantage of by the spruikers who call themselves property investment advisers. They are a front for a selling operation.

Growing up in south western Sydney, Lomas’ parents came across good fortune when purchasing a block of land.

I grew up in Sydney art in a place called Padstow which at the time was thought to be sticks in south western Sydney. My parents had saved up to purchase the block of land with the benefit of one of those building society trees, which was where back in the day the building society would take all of the applications full fight and basically almost put them in a hat and every month, pick a couple. So they were lucky enough while they were living with two children and with my mother’s parents to win that lottery and be given the finance to buy that land.

They built a little garage in the back shed – I guess about the size of today’s granny flat, with three rooms at the lounge, a bedroom and a kitchen and they lived in that for another five years. My dad began construction on the house, he was an electrician and at the time he had a lot of contacts amongst his mates. He knew plumbers and builders and a lot of trades people, so they all helped each other out at the time. If he did the electric work on someone’s house who might have been a plumber, he could do plumbing work on his house. Eventually they built the three bedroom, one bathroom home that they needed to. I was born there and lived there my entire life, right up until I was well moved out of home.

Her schooling, though cut short, would lead to her into an unexpected journey.

When I was in Year 10, I always had a fairly strong sense of justice. I went to a girls school, which was a public school and at the time our school didn’t allow any of the girls to wear long pants in winter and I thought that was unjust.

It was a very long time ago, when you all had hats and gloves and dresses. I made the decision that while some of the other schools in our area were getting up to date with the times and allowing their girls to wear long pants, that I should as well. So I made that decision that I would start a campaign to try to get our school to change. Part of that campaign was me calling in the local newspaper – I think it was actually the Sydney newspaper, the Daily Mirror at the time – getting a story on wearing trousers to school, along with another girl and then encouraging the entire student body to strike out over the issue. Now that didn’t go down well with the principal, who probably decided that I needed to be expelled from school. I was lucky at the time though, because the principal of a nearby school who had formerly been the deputy principal to the principal who had expelled me and didn’t like her, offered to take me into her school, which I did.

After a while, Lomas felt very unsettled…

Despite the fact that I’d done very well in school, in primary school, I didn’t do well at all at my High School Certificate and I essentially failed that. Straight after school, I became an exchange student for a year and I lived in Jakarta, Indonesia for a year which was a great experience for me and definitely changed a lot of my attitudes. I came back from overseas with two career paths in mind. The first one was that I was going to go back to school, redo my High School Certificate and qualified for medical school; the other career path was that I was going to come back from overseas and enroll in the National Institute of Dramatic Art and become an actor. Neither of them eventuated there.

The day after I got back, I met the man who would become my husband and we decided quickly that we would get married and instead I needed to work. I got a job in a bank, which was the last thing I wanted to do because when I was at school, back in those days most girls were schooled in Year 10 and then worked for a bank. And I didn’t want to do that because I’d chosen not to attend and here I was, back three years later getting a job in a bank. I decided that I didn’t want to work in the bank but I wouldn’t mind being in the training department and that was the Bank of NSW then, which became Westpac. After a lot of harassing and hounding of everyone I could find in that bank who kept telling me that I needed five years experience and needed to be 25 years of age, I finally broke everybody down and got training.

So when I was just 21, after two years in the bank, it was really the beginning of a career for me because training and development became something that I went back to night school to learn. For years I went to night school, trudging up the hill after I worked three nights a week, to qualify with a diploma in Human Resource Management – specialising in Training and Development – and I went on to have my own training company. [00:16:24] My early career was very much centred around the training area.

From there, Lomas was proactive and did everything she could to get ahead.

So I was married, had two children and was working at the time. After I left the bank to have my first child, I needed to work because we didn’t have any money and I went and got a job in a chemist on the weekends. I worked part time at a pharmacy since I was 14 and so I was able to do that. The chemist owner also owned a chain of video stores, when videos came out and that chain was called Hollywood Boulevard. He found out about my training background, then sought me out to help him with some training of the managers as every time he opened a new store, he needed to train the managers. So he got me to design a training program for these managers, which I had the skills to do. From there, I went on and started my own training company.

As Lomas couldn’t afford to buy in Sydney, she drew her attention to Perth, where her brother lived and where work was readily available.

When we first arrived there I did a whole lot of different things – I started a shop at the Baby Store, employed women to sew for me. I worked at the YMCA and I did everything you could imagine to get work but still had my skills and experience in training and human resource management behind me.

So eventually, I decided that I wanted to get back into that corporate world and I got a job for a community-based service that was funded by the Department of Training and Development. My job there was to run a small project where I trained mentors, who would go on and help unemployed people. [00:19:31] So this would be 1987-1988 and I managed to get this job which was a full time position and was funded every year by the Department of Training and Development. I spent three months a year riding your tenders to try to get money for the following year, but in between I was training mentors, running these training programs and overseeing the relationship between the mentor and a job seeker and basically helping them by helping them to understand how to write a resumé.

The training I did, all of that kind of thing, came from my background in training development in my time at the bank. Certainly it gave me a lot of skills in training and I credit the fact that I can effectively public speak today to my time in the bank’s training department, because it was a very good training ground for me.

After separating from her husband and raising 3 children under five years on her own her life changed.

Along the way I met my now husband, who was a police officer at the time. He helped me out with a few issues that I was having and we ended up together, married and had two more children. Now it was around this time, about 1998, that again I was the girl who did everything I could to try to get ahead. I was running a training company, then I started another training company. I was the person who wrote the first ever trainer course and had that nationally accredited. I was tendering for courses through the government, so I would run courses for Centrelink at the time. They’d be either job search courses or personal development courses for range of things I was doing, little bits and pieces of everything. I can remember saying to my husband, ‘If we buy a computer (and computers were very expensive, around $5 000) and a printer, I can add to our income by writing in an application for people at night.’ So I convinced him we needed to take out with finance planning, buy this computer – which we did – and I started to write these application letters that advertised in the local paper. I was doing all of this in my spare time while I had five more minutes and a training business and anything else I could think of at the time.

Then another opportunity arose which allowed her to show others how to pay off their mortgages early, which lead her and her husband to start their own business.

One night, one of the clients who I was helping to get a job in the mining industry came to the house and he said, ‘I had to leave early tonight because a financial adviser is coming to my house to tell me how to pay off my mortgage early.’ Now I’m always interested in those sorts of things, so I said, ‘Oh you need to tell them I want to pay my mortgage earlier as well.’ So the next day, I got a call from the seller who proceeded to come around to see me and told me about a new system where you could get a line of credit. You could use a credit card and by putting all your expenses on the credit card and holding your money in your line of credit for a while, you could pay off your line of credit quicker – you’d be out of line in 15 years instead of 30 and you’d pay $100 000 in interest. Now I liked the sound of that but I didn’t like the sound of the $2 000 that I had to take to help me do it. So I said, ‘Well I can do that on my own.’ And he said, ‘Oh well, maybe.’ And he didn’t seem to be up to offering me anything for the idea, so I offered all of this up for myself.

I worked for him part time and showed other people this great new system because I knew that if I could help other people pay off their mortgage earlier, I could offer a bit of after-sales service as well by helping them with their budgets and and encouraging them. So I became a consultant for another company, basically helping people pay off their mortgages early and it was long before my husband – who was a police officer working for the Bureau of Criminal Intelligence, who had a lot of spare time on his hands because we lived in an area where there wasn’t a lot of crime activity – it didn’t take long for him, who had been also learning a little bit more about computer programming, and me to work out that we could actually do a similar service but offer it in a better way. We were consistently disappointed with the company I was working for and their delivery of services and we felt they let people down a lot. So we decided that since we were doing all the work anyway that we should start our own company.

And that’s when Destiny began in 1994 and it basically began in LA midterms. What we did then was simply help people to pay off their mortgages earlier; we would go out at night and see clients and help them with their budget. And that’s how we began.

By taking risks, Lomas’ property investing journey began when Destiny Financial Solutions started to gain momentum.

It didn’t take long for us to decide that we wanted to build the business into something that was a bit bigger. But at the time Perth seemed so remote and didn’t seem to have the opportunity that we could get if we were on the East Coast. We made that decision that we were going to move the business to the East Coast and start from there. Now bear in mind that business was something we did on top of our own regular jobs and all of our friends thought that we were probably the most successful couple they knew. Even though in light of how you think of successful couples today, probably we weren’t that successful but we looked at everybody else and we made the decision that we would throw in all of our jobs, sell everything and move to the East Coast to start this business all over again. Looking back, I’m not sure why we did it either because by the time we sold everything, including a house, we had $80 000. We moved over to NSW on the Central Coast in 1996 with $80 000 in the bank, five children under 10 and no jobs.

So it was a bit of a risk at the time but we have always backed ourselves. We’ve always been confident that we can come up with some way to make money. So we did it and in the first six months, it looked like we made a big mistake. We managed to rent a house. We were going through our money fairly quickly at that point in time, but we were up there pounding the pavement, dropping off leaflets into letterboxes, offering people the chance to pay off their mortgages earlier and save a lot of money in interest. We knew that we could help people and we were getting the occasional client, but we weren’t really getting enough to make a business. So the decision was made that one of us would probably have to go and get work because we were down to $20 000 in the bank.

One day, a golden opportunity presented itself – a risk which Lomas was willing to take for her family’s future.

I can remember being out one day again pounding the pavement and I came home and my husband said, ‘I called the radio station because I heard a radio ad and they said that for $400 you could advertise.’ So the guys from the radio came out the next day, listened to what we needed to happen, went away and came back two days later with a proposal for a radio campaign that was going to cost $18 000. We had $20 000 in the bank and that was the sum total of our entire assets. So we talked about it for 24 hours then we decided that we would go ahead with the campaign and secondly, that since we promised the kids when we moved that as we were going to be a bit closer, we thought we should spend the remaining $2 000 on a holiday. Just in case it didn’t work out and we were flat broke, at least they would have a holiday to remember.

So the radio station prepared the campaign, it was going to be a four week campaign and they came out and they talked us through the fact that with radio, you need repetition but we couldn’t get stressed out if nothing happened in the first week or two. And that if there was something else we could do to take our minds off it, that would be a good idea.

On the morning of our first day of our holiday, when the ad was due to go on just after news night, we packed the family up and we set off. But three minutes past 9:00am, my phone began to ring and I had all the kids in the car so I’m turning around to the kids every time the phone rang to quiet them, then I would answer the phone and say, ‘Good morning, welcome to Destiny. How may I help you?’

And for that entire trip to the Gold Coast, the phone had not stopped ringing. By the time we got to the Gold Coast, we had our diaries fully booked for three months with appointments. And the rest is history. We began Destiny pretty much from there and didn’t look back.

This maneuver, although risky, was a catalyst for how Lomas considered her financial situation and encouraged her to learn more about positive cash flow.

In hindsight it was very stupid because I guess we felt that if it didn’t work, both of us had skills and we wouldn’t have had a problem getting a job, that we would be OK. When we first started the business all we were really doing was helping our clients to pay off their mortgages earlier, but we were doing that for ourselves as well and so it wasn’t long before we started looking around for ways to improve ourselves. We both liked the idea of property investing but didn’t have a clue how to invest in property. I read some books and got a couple of ideas and we went out and bought a couple of investment properties of our own. But fairly quickly, we were able to look back at those investment properties and work out what we did well and what we did badly.

My husband had been reading a bit about positive cash flow investing and become interested in that concept. He worked out that out of the three properties that we bought, one was positive cash flow. We also worked out that with all of them, we hadn’t really thought too much about where we were buying – we pretty much bought them off spruikers who sold the benefits of the property, but we didn’t think too much about the area. So we started to work on it: how could we do this better? There was no information out there available, but we started to think about better ways to invest in property and bought a couple more that were really good investments. Then our clients started to say, ‘Hey, we want to do that too. We want to talk about our investment,’ and they started to need that guidance.

So we began advising on property investing. We were only six properties ahead of our clients at the time, but I wrote the first book. The book was obviously a national publication, so we started to get inquiries from all over the country that gave us the opportunity to start to open up in new places, open new branches and pretty soon we had an office in most states. We were really flying along.

However, it was years before her properties began to work for her.

Unless we bought a property upfront, there were two divisions which had gained value fairly quickly. So it was really only the first investment property that we needed to bring cash in and out, but every other property has been funded through equity. But having said that, in the first couple of years of Destiny we didn’t make any money. All of the money we were making was going out to wage that stuff that we had. In fact there were years where we were using our personal line of credit to fund the operations of Destiny, so we weren’t really getting very far ahead, even with those six properties. Every step forward in equity, we would take steps backward in either using some of that line of credit to the business, or to fund the next property purchase. So for the first five years, if you had a look at our equity position that didn’t change much. We were getting a wider spread of assets but we definitely weren’t getting ahead in our net worth at that point in time.

So what point in time did that all start to change when you could actually see that this portfolio was starting to reap its benefits and start to pay some passive income and also growing grow and grow even further with your equity.

Once we had about seven or eight properties under our belt, the wider base that you can get it and as long as it’s a diversified base and situated in different areas, because one area is going to grow and stabilise. You don’t want all of your properties in that one area when it’s stabilising, because you’re not getting any equity in those years. So we were careful to buy it at first. So the right properties in different states. We had some in NSW, we had some in Perth, we had I think one in SA, some in Queensland and one in Darwin and they were growing at different rates. Every time one area was growing, we were able to pull that equity out.

But after we had those seven or eight there we were going through periods of time where they were growing pretty well and creating more equity that we needed for the next purchase. So it’s really that wider base that makes the difference. For any property investor, you can’t expect too much in that first five to seven years unless your timing is exceptional with every purchase – which it isn’t going to be, but that second time you start to see something happen, that’s great.

Many investors have negative experiences when investing into property and for Lomas, not doing her due diligence impacted her in this way when she made her very first investment.

I guess the first bad investment that I made was my first one. And that was because I bought it from a guy in a brown suit. He came into my house and told me about this wonderful area and all of the wonderful things he’s going to bring to me. And I absolutely did not do my due diligence in checking whether what he was telling me was even correct or based on anything. We bought a two bedroom unit at a time when there was a pipeline supply and I didn’t even think about the fact that Cairns was going to be an itinerant market, that meant that it could never have sustainable growth.

So Cairns has what I call almost a sympathetic growth, where the sympathies of property investors tell the fortunes of how the growth occurs. There’s nothing else to create real growth in Cairns because it’s 100% specifically tourism money, or 80% to 20% retirement mecca. So we don’t have the big important things in the area that we need to grow properly, which is infrastructure, employment and population growth in the family demographic.

What we do see is plenty of renters who come there for the work. We see people move in and out of camps very quickly. People think it’s going to be a great place to live, some people fall in love with it and other people find it aggressively hot and back out again. And because we also don’t have those underlying employed drivers, what we will see from Cairns will only ever be growth driven by the sentiment of investors who suddenly flocked there because it’s cheap and you’re getting a good cash flow. Now push prices up for a while and that affects the cash flow, because the rents don’t go up the same lead again and the properties go down. My property has gone from $160 000 that I paid, down to $140 000 because I was ripped off by the spruikers by up to $225-300 000, at one point valued by the bank. And I think at the moment after 17 years, it’s worth what I paid for it.

Another bad investment came about in a small town in Queensland, where she was eventually forced to cut her losses.

We bought emotionally, a block of land in a little town called Agnes Water. Look to be fair, the council told me that I could get three properties on that one block. So I thought if I built the three, I could sell it for a profit, hopefully almost pay off my input and then have a rental or at least a rental with a local gauge and it could be something that over time might be OK.

It was a speculative investment but I thought I was really covering my bases by being able to put in place a strategy that I now need to reduce my mortgage on that by building these three and then selling them. Not long after I settled on that property, I contacted council to find that no account plan had changed. The guy who told me I could do three knew the town plan was changing and that I’d be lucky to get to on it. Then after I did the feasibility on the two, just with the high construction costs in the area, it came out being negative cash flow for me, in terms of what I could get on my rental that it just wasn’t worth having.

Unfortunately because I lead a busy life, one of my weaknesses is that I probably don’t pay attention to some of those things as well as I could. We held that block of land for probably seven or eight years, paying the interest on that mortgage for all of that time, before I finally took my own advice and decided to cut the losses on that. We bought that property for $330 000 and it was fortunate to get $294 000 for it and I say fortunate, because it was probably worth in the low 200 000s and we had paid all of that interest on the way. That was a big cost for me and a lot of money lost on that deal.

Despite this, many property investments have paid off for Lomas, such as a purchase she made in Darwin.

We bought a unit in Darwin and while Darwin isn’t doing as well now as it has done for me, it’s still doing very well. They’re mining with improved interest with affordability. We only paid $120 000 for that unit. Now I could probably only sell it today and make $350 000 – that’s still a pretty good result. At one stage it was definitely worth well over $400 000, but I will say I get a really good rental on that. My rent return is sitting at about 14% and that’s without any of the tax breaks that we’re getting as well, so you’re getting a really good wrench on my initial purchase price.

When I bought it, people said to me, ‘Why in God’s green earth would you buy in Darwin?’ I just felt from my research that something was coming to Darwin and I was correct. I did the same thing in Perth – I bought a property on a very big block. So it’s got three street frontages, the house that was built to one side or close to the front of the block. I paid 125 staff so that I was able to put a fence down the back and build a second dwelling. At the time I couldn’t subdivide, although I could today it has changed. [00:43:36] That is a 1 000 square metre block but I was able to build a second dwelling. Construction costs were low at the time so I paid $120 000 in trust and dwellings. And I’m getting $400 a week on each of them. So $240 000 buy-in price for over $600 000, probably $650 000 equity position today, with $800 a week rent isn’t a bad one.

She has also invested in development sites, which have had some positive outcomes as well.

I think I’ve worked out that development can be good or bad. I’ve got one going at the moment that isn’t necessarily going to turn out the way I would like – it’s a development site that I bought where I was quick enough to develop it. And before that I thought I could build is now three because of the changed account plan. Again that’s probably not going to be a viable investment. I have another one that I bought a house with with a big block of LA land that nobody knew whether it could be subdivided or not. But in the end it got subdivided by getting it out of policy decision by the council, that’s made a lot of money for me, $400 000 to the original house after we chopped off the block. The original house was valued at $550 million but it lost that back block. It’s now worth nearly $800 000 today. I only had it for four years.

I’ve worked out that two things can happen if you’re careful about the development sites that you buy: you can make money from them in a way where you don’t have to necessarily purchase an entire dwelling, but you can get that second ruling because you can get some free land. [00:46:03] And I’ve also worked out that the account plan isn’t necessarily 100% set in concrete if you can put up a good enough case to a council house and you can often get things approved that are technically outside the development plan for the area.

20 Questions: Pick Properties For Growth With Margaret Lomas

So what held Lomas back from investing in property initially?

We’ve always had a fierce desire to be independent financially so we’re all faced with the fact that on one side of the coin you must become financially secure and on the other side you have an aversion to risk. There’s a disconnect between those two sides got to work out. And the way we worked that out as we sat down together and we talked about what each of us was prepared to attempt taking risk and where each of us needed to stop so that we could minimize the risk as well. And in doing that we worked out that there were certain kinds of property that we would buy and that we wouldn’t buy but we knew that in in that choice and for us the choice was to buy just standard residential property in areas that we knew would always be able to get a tenant of some kind even if we had to drop the rent a little bit.

In making that decision we also knew that what we were for going was the opportunity to maybe make a lot of money in a short period of time by being a bit more speculative and doing more speculative investments. So I think one of the things that you can’t do is if you’re like we were which is needing to get financially secure but not wanting to take big risks you also have to accept that what you’re going to see in the future is plenty of things that did better than what you did or what you invested in and you can’t sit there and think oh damn I should have bought that instead. Because your risk profile at the time dictates the steps that you’re prepared to take. You’ve got to be able to look back on that and say what I did then was appropriate for me at the time.

In retrospect, many investors regret not purchasing properties during the boom period. However Lomas’ aversion to risk proved to protect her from biting off more than she could chew.

I didn’t buy a lot in the Sydney boom – I am fortunate that I did buy two, but I would never have bought two in the Sydney market in the early part of my investing. I can look back now and think, ‘Well I advised people to buy into Blacktown, because Blacktown lead the boom, I told everyone to buy in those places and I didn’t buy them myself.’ And people would think that’s the definition of stupid.

I was going to say, why didn’t you?

Because at the time the number of properties that I already had in my portfolio had used up all of my appetite for risk at that point in time and I just didn’t want to further leverage myself. I had a certain amount of equity that was my comfort zone. So for my husband and I, our comfort level of equity was that we owned 40% and we’d agreed on that at the outset. Now to buy into that Sydney boom, we would have had to compromise that 40% equity that we worked so hard to get to, because initially we were at 20%. We worked really hard to get reduction and doing everything we could to reach that 40% level, to buy into the Sydney boom we would have had to compromise that and that would have been an uncomfortable position for both of us to be in. What would have happened if that hadn’t turned out for us?

So it’s very important that you’re aware of these things, understand that you might not always buy into the very best thing and it might not be appropriate for you at the time, but as long as you identify and understand your own risk appetite – but still push yourself within those parameters – then eventually you’ll end up with a portfolio that does pretty well for you.

One of her mentors, although not interested in property himself, has been instrumental in developing her positive mindset.

One of my mentors is Noel Whittaker, he’s been a great friend of mine for quite a long time now. For those listeners who haven’t heard of him, all you need to do is look him up just to see what a fabulous background he has. He’s probably the most well known financial advisor in Australia who wrote a book called Making Money Made Simple many years ago and it was actually voted one of the top 100 most influential books of the 20th century. He’s always been a little bit of a mentor to me, he doesn’t invest in property and we have wonderful debates about that because he hates property and says it’s lousy. But I can always win a debate with him in property and I have a lot of respect for Noel. And I must say that while Noel may not be mentoring me all the time as such, any time spent with Noel always gives you that real boost of motivation that makes me realise why I am doing all of this. It helps me to understand my own family values and it really gives me a good outlook on life.

Apart from that, it’s been very hard to get mentors because Reuben and I have always been way ahead of ourselves and jumping ahead, we find it difficult to find a mentor under those circumstances – especially when you don’t have a lot of time. So we do spend a fair amount of time bouncing off each other. Reuben runs Destiny, so he’s the managing director of Destiny and while most people like to think that it is me, I definitely don’t wear the pants in the business. I am the face and the property expert and Reuben would definitely accede to that, but in terms of running the company he’s the one who has always done that. He’s that guy who has a lot of good ideas on how the business should be run and structured.

As a result of her husband’s structuring of the business, Lomas reveals that an exciting new phase is imminent for Destiny. It all started with Destiny as a property adviser company.

Against the backdrop of the fact that if you think about it, Destiny really was the first company to offer property advice in a financial advising model, so prior to Destiny if someone was a property company they were a property seller really. We made the decision very early on that what we wanted to do was advise people how to buy property using both an economic and financial planning approach. So in other words, take the focus away from the physical assets, put it on the economics of why you should buy and where should buy and we were the first people to provide that as opposed to providing that approach where we looked at the property itself. We always promised ourselves and guaranteed our clients that we would never be on the other side and never sell property. If you think about it, somebody who advises on how you should buy property and what you should buy and then sells it to you is a major conflict of interest. We’ve always done that and for so many years we were the only people who did that. But now it seems every man and his dog has copied that and everybody is doing education, support and charging people. We then made the decision that you know there’s a lot of additional costs in the business, maintaining premises all around the place. We found there became a bit of a declining demand for our services as people became more busy.

Our services were very much around, ‘Come to our office, meet with our advisers, come to all of our events.’ We would run what we call property action teams that people could join and work within a community of like-minded people to achieve their own goals, while helping other people to achieve their goals. We found what was happening was more and more people were saying, ‘I can’t commit to coming in every month, I can’t come to those things.’ The second thing that was happening as well is that as we got bigger, I was losing a lot of that personal involvement with our clients because I just couldn’t have that involvement with our clients. So my husband started to look at it and because he’s a software programmer by nature and loves technology – and I do too, I might add he started to think about ways that we could bring our services just as effectively into people’s homes, but not have them have to make that big commitment to go out on a Wednesday night after work, or to actually go somewhere.

With this in mind they designed a way to reach out to their clients in a personalised way, while adding a layer of convenience to the business.

So we’ve developed the new digital services and I must say, they’re turning out fabulously well. So if someone comes to Destiny now the first thing they do is go to our website and they get to actually view a presentation that I put together. I’m lucky to own a TV studio so I can create some pretty good quality video. I put together a proposal about our services that include the full disclosure on what we charge – which is very cheap I might add. People look at that and decide without feeling threatened if we’re right for them or not, without having someone in the room pressuring them to sign up.

Once they’ve done that, they get a whole range of things. They get all of their meetings done via a fabulous web meeting tool that we’ve developed; after the first two minutes you feel like you’re in the room with that other person. So people say, ‘Well I like face-to-face.’ It is face-to-face, it’s just over your computer. So we can use screen sharing, we can do all sorts of things. The second thing that they get is every month I now run a webcast purely for our clients and every month it’s something different. So in the first month we do a guest speaker, we’ve had some fabulous guests speakers recently on small developments, which was great.

Next month we do a town spotlight where I’m telling my clients where they should be looking way before I release it to the general public and giving a good rundown on a couple of new areas.

Then on the third one, we do my quarterly economic update and property market update and they happen every month.

There is also a platform where clients can interact with one another and solve issues where needed. From this, It is evident that Destiny is leading the way for the future of property advising.

Then they get involved in my Cloud rooms, where I run small groups of under 10 – we all join in a room on the Cloud with me leading that group every month and work together to achieve all their property goals. So they share information, ideas, research and basically when you’re working with nine other people, you’re far more efficient in what you’re doing – you’re supported and motivated because other people are also buying and it’s a great environment. The second last thing is Destiny Chatter which is almost like a Facebook iteration, where all clients come on and ask questions and we solve problems and get everything you can imagine happening on that.

At the moment for example, someone has a strata issue, someone else has a property manager issue and all the other clients are all jumping in and helping each other out. It’s like a forum.

And then the last thing of course is Destiny Live which is a fabulous property tracking and analysis tool, that not only helps to assess properties you’re going to buy but it completely tracks all your personal and property financials. It produces and creates tax schedules at the end of the year to save money on your accountant, it’s got an adviser section where we can log in, look at your stuff and communicate you with you via that adviser section and really keep on top of your financial circumstances to guide you.

So it’s a very exciting way for us to operate, it’s brought me back to my clients and it’s enabled me to share all of my expertise much more openly and widely and our clients so far are really loving it.

When considering the best advice she has received, her father’s inspirational words have allowed her to tackle whatever obstacles she encounters in her journey.

I’ve received so much advice in my life that it’s very difficult to put my finger on what the best piece of advice, but I suppose many years ago my father always encouraged me to believe in myself.

When the chips are down and things are looking shaky in that I’m not sure whether or not I can do this thing, whatever the thing is I’m doing at the time, I always think that in the past I’ve always made things work. And if things do not work, then I’ve found a way to come around from that and move on. When one window closes, a door always opens somewhere else, even if it’s a long time between the window closing and the door opening. So believing in yourself, that you’re going to handle whatever comes.

I think what that does is it removes the fear of the future from you and it’s the fear of what may happen that holds many people back. I’ve always got an attitude that it doesn’t matter what happens in the future, I want to be able to deal with it in some way. As long as it doesn’t kill me then I’ll be able to deal with it in some way and so just having that belief that you can deal with whatever comes your way gives you a little more courage to take on with your head.

Lomas also shares with us the philosophy behind her property investing strategy, which has allowed her to build her portfolio over many years.

While I believe in buy and hold, I don’t mean buy and hold throughout a lemon property. So it’s buy and hold but divest bad assets as soon as you can recognise them, which I obviously learned from my experience with that block of land. It is a strategy of understanding that the debate about whether you buy a cash flow property or a growth property is really a big one. Everybody should want to buy a property that delivers the best cash flow for the best growth that they can get. So with the 20 Questions For Every Property Investor, we were asking them with a view to being able to firstly identify an area that is going to grow in the future at some point in time and preferably in the shorter term, but if it happens in the medium term then that’s acceptable as well. So we’re identifying an area that’s going to grow, not one that’s already grown or one that’s in the middle of its boom, but one that can grow in the future.

But we’re also identifying one that provides a cash flow that allows you to stay in the market until you get to that growth, just in case the growth doesn’t come as soon as you would like. So we really want people to understand that nobody can tell you when a property is going to grow. But with the right kind of research you can identify if a property is likely to grow and reduce the incidence of you buying a lemon.

Talking through the steps of finding the best properties for your situation, Lomas says that it’s important to locate an area which has the potential for growth.

So the first thing is that finding a property is the last thing you do – it’s finding an area that you do first and a lot of people ignore that. What often happens is somebody sees a property that they think might be a good investment, they go back and do the research on the area and it stacks up OK, so they buy the property. What they don’t realise is that there could have been a better area somewhere else with almost the same property in it that would have been a better investment at the time. So starting with a property is a backwards way to begin. You’ve got to start with an area first, identify the area that is going to take off next. Now it’s all well and good to read the magazines, but if you do you’re probably just going to be buying where everybody else is buying. I like to use some expert’s hot spots as a guide for maybe a generalised area, where I might start looking at ways out from that and try to identify areas that haven’t yet taken off that might be on the periphery of those hot spots.

So the area is a suburb or town. There are times when a town in a regional area might be a suitable investment and there has certainly been times in the past where an investment in a regional area could be a good investment to marry. But essentially, I define an area by local government area. So when I look at the local government area I try to have a look at what suburbs there are – which one out of all of those suburbs is the most likely to grow next? Usually when you are going to find a local government area, you’ll find that there are some suburbs in that area that have already taken off and you can tell that by having a look at the days on the market, comparing the trends over that and see which ones are selling more quickly than others.

But usually if a suburb is in a local government area, it’s going to be the recipient of whatever infrastructure development happens there and it’s also going to be an area that will take off once the more favored areas become overpriced. You know we often see the favoured areas and some people want to invest in those, but I never want to invest in the favoured ones. But I usually like to invest in the less favourable ones because I know that once the favoured areas start to become really pricey, people start to wave out a little bit, be prepared to take properties in the outlying areas and they’ll begin to grow.

She outlines what to look for when researching the right areas and properties in her book, 20 Must Ask Questions For Every Property Investor.

The reason why I wrote the 20 Questions book – you can get the 20 questions I’m sure from the website – is because those 20 questions make up the research. The first eleven questions are about the area, the second ones are when you get to property selection; the questions you have to ask to choose the right property in that area and to encompass all things. Like how to find employment data, how to read the employment data, what kind of industry you need, what the demographics need to look like, things like median household incomes and what you’re looking for in those trends. They identify the trends that you’re seeking and help me to focus in on that research in a really targeted way, so that you don’t miss any of the important steps.

Lomas shares some of the investments she has made in development sites, advising that if you’re careful about what you buy there can be great potential in that side of property.

I think I’ve worked out that development can be good or bad. I’ve got one going at the moment that isn’t necessarily going to turn out the way I would like – it’s a development site that I bought where I was quick enough to develop it. And before that I thought I could build is now three because of the changed account plan. Again that’s probably not going to be a viable investment. I have another one that I bought a house with with a big block of land that nobody knew whether it could be subdivided or not. But in the end it got subdivided by getting it out of policy decision by the council, that’s made a lot of money for me, $400 000 to the original house after we chopped off the block. The original house was valued at $5 million but it lost that back block. It’s now worth nearly $800 000 today. I only had it for four years.

I’ve worked out that two things can happen if you’re careful about the development sites that you buy: you can make money from them in a way where you don’t have to necessarily purchase an entire dwelling, but you can get that second ruling because you can get some free land. And I’ve also worked out that the account plan isn’t necessarily 100% set in concrete if you can put up a good enough case to a council house and you can often get things approved that are technically outside the development plan for the area.

A personal habit which has contributed to her success? Never get sick!

My dad always taught me to have a very good work ethic and I have taught that to my children. One of the things I can always recall my father doing is getting up every single morning, going to work and coming home every single night at dinner time. He didn’t work weekends, but he did work nights and I’m the same although now I’m doing an occasional night for our Cloud rooms.

But apart from that I’ve got not only a good work ethic, but I’ve got a good balance of work as well. Family time is important so that work ethic has gotten me through all of the jobs I’ve ever had to do, just by knowing that I’ve got to get up in the morning. I don’t take sick days, mainly because I don’t get sick, but I think I don’t get sick because I’ve got a good work ethic that my brain doesn’t let me. I think having that good work ethic then applies across all facets of your life – if you have a good work ethic, then that carries through to any activity you’re undertaking, or any job that you’ve got and carries through into your family as well.

So if she could speak to herself from 10 years ago, what would she say?

I would say that life is going to get a lot better, because 10 years ago I had a lot of things going on in my personal life and so I would say, ‘Hang in there!’ Which is what I did because things are going to get even more wonderful.

My children are all grown up and left home now and many parents hate that time. It’s a wonderful time, I like having my own personal space back again which I haven’t had. I love the relationship that I have with my adult children and their families. It’s a very exciting time! I’m 57 now, at 47 I guess I might have been approaching 50 but I didn’t know because I was enjoying the journey so much.

Buying properties which have the potential for development in the future is an exciting prospect for Lomas.

One of the things that I’ve done with the last maybe seven or eight properties that I’ve bought is I made sure that I’ve bought properties that have development potential in them. So I bought properties that were good enough investments on their own, even if I did nothing else except just rent out the house, but I also had the opportunity to develop them in the future.

I’ve just come through doing two of them, I’ve taken two duplexes so that’s four separate rentals altogether down in South Australia and I’ve demolished them and turned them into four and four. So I’ve just taken two old duplexes and turned them into four new units. And that was actually quite exciting doing that and there’s a lot more of that now that I really want to do. I have gained a lot of confidence through doing that. I’ve decided to write a book along with Peter Calypsos about the property development journey because nobody has written one yet and it needs to be written. So that’ll be a great guide for people who want to do small property developments. But I’ve got plenty more sites now that I could look at with the development eye and that’s what I want to be doing for the next 10 years.

If you wish to connect with Lomas and learn more..

Best place is just to go to our website www.destiny.com.au. Or even Facebook, people ask me questions on my professional Facebook page – which is just Margaret Lomas – all the time and I try to get back to them as soon as I can. But by all means, it would be great if everyone went and had a look at our webpage and just took that time to have a look at the presentation that I put up there under the ‘What We Offer’ tab on my website. Because it’s worthwhile finding out more about what we can do at Destiny.

This episode was produced by Alex Cooper with narrations and interviews conducted by Tyrone Shum.

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