Australian Economy Analysis in Property Market with Jacob Field
Jacob Field is a successful property investor and founder of RipeHouse, a research system that uses a unique algorithm to determine profitable property purchases. He will be sharing the story of how he turned a passion into a career, combining his love for technology and research
Join us in this episode of Property Investory to hear about the development of Field’s research company and how their research has helped his clients build successful property portfolios.
Jacob Field has been working with computers from the ripe age of 4 years old when his father encouraged him to dive into the world of computer coding. Little did he know that decades later his professional career would hinge on this very skill.
I guess the core part of what I do is I founded Ripehouse. It’s a property research platform so I’m right in the game of property investment each and every day and have been investing for over 15 years. I’ve been around the block a little while and live and breathe property investment.
Any given day in the life of Jacob Field revolves around managing and improving the tech behind his company.
The research that we do perform within Ripehouse we try to remove the human from the equation. So I’m not actively bringing the opinion to the table. I’m monitoring. I guess the signals that we use normalizing that across the whole country and then I guess helping and assisting individual investors to use that research and actually make decisions, property purchases by using that research. In any single day could see me talking directly with property investors other professionals in the industry and then working with my team in terms of the technical side of the product which is very, quite innovative and then obviously marketing and I guess networking in the property industry which is an exciting component.
Tell me a little bit more about what’s been the most interesting part about what you do on your day?
Research is taken for granted. You know Ripehouse has been around since 2011 so it has matured and formed now into quite a well-known business and we do things in a standardised way. But the thing that really makes me tick is the engagement with other investors and other professionals in the industry and I’m in quite a unique position I guess I’m impartial. I don’t necessarily compete against many experts or other professionals so potentially the most interesting part of my day is learning the good and the bad. Helping investors to navigate towards the goods, using research to actually make decisions and really strong high-performance decisions and also potentially the most interesting is learning about the bad.
There’s many I guess dodgy components of the industry and because I’m impartial and sit in the middle and working very closely with many investors they come to the forefront regularly. So I guess I’m not here to be a judge or a jury. I guess but I do like to keep abreast of that industry and try and guide it towards the good side.
Enjoying the peaceful atmosphere of Tasmania, Field recalls why he decided to raise his kids there.
I’m actually from Tasmania. So it’s a very cold place. It is part of Australia believe it or not but it is a beautiful area to raise the kids. We did live in Sydney with my wife for a few years and then moved back here when they were at school age. I guess it’s a little bit quieter and we’re about a five-minute drive to school. Everything is quite nice and close by so I’m a Tasi born and bred.
Great and you mention you went up to Sydney to live. What was the reason for that? Because it is quite a lifestyle change coming from Tasmania?
This was probably five years into my investing journey so I had been investing since the early 2000s about five years into meeting my beautiful wife and we decided to move to the big smokes. I guess that was for professional reasons at that point I guess is a mass exodus around us or just after uni age of people sort of in the professional career after uni etc moves into to where the jobs might be. We moved there for professional reasons but then continued our investing. I guess as a Tasi local Sydney was great. We had a great lifestyle I guess in the inner city area and then when we had kids we moved out into Lanecove. We bought a house out there and we’re renovating it and continued on that journey and then I guess things got pretty full-on. RipeHouse started building so we made the decision to move back down here and continue focusing on the research and providing this offer etc.
That’s great. And just taking a step back let’s talk a little bit about your growing up like you went to school in Tasmania is that right. Did you study at all in Tasmania before moving to Sydney?
We didn’t really have a huge amount of money growing up and for a long time my dad was studying at uni and I was living with him, the two of us. And yeah we were on public benefits for until I was about 16 or 17 and I was actually in charge of the family money for a lot of that I suppose and I’d budget and save and I guess that made me sort of quite focused on security and you know I guess building a future and you know an eye towards how money can really assist in moving us through and bringing that security and change our lives. I suppose that probably gave me a little you know a strong burning ambition to understand how to invest and move through shares into the property.
I did invest start investing very young as well. I probably would have invested on my 18th birthday if my dad hadn’t talked me out of it. I instead bought a sports car from Japan with all of my savings and that was a great investment and I realized once it arrived I couldn’t actually insure it. I think it was three and a half thousand to ensure that. It was a beautiful car and so I ended up selling it and then not looking back I went straight in and bought a property and then another one soon after. Yeah and that was actually just before the first major Hobart boom. We’re having the back end of another one now or probably at the top of the Pocky clock. But that was in the previous property boom down here so reasonable timing.
Field’s initiation into the property investment world was when he made the life-changing decision to buy his first investment property after turning 18 years old.
I was in uni at the time. This was probably a major focus. I was easily distracted I guess at uni operating different businesses. And yeah in it in the technology space once again in the earlier days and then the property was something that as soon as I bought the first one I really was focused on and I sort of had a connection with.
I can remember doing the first renovation on that property and renting it out. I think about 145 thousand for it back at the time actually got 7000 first home buyers grant and lived in it for a short period and then renovated it and rented it straight out for 240 dollars a week. So that was you know that properties well and truly grown since then as well and I still own it today but that allowed me to move into the second one quite quickly.
Field shares how he grew his property portfolio and reveals which key influences along his investment journey helped pave the way.
Moving to Sydney I still had that burning drive and ambition and I saw property it is probably what I originally bought Telstra shares by the way. That was my first official investment outside of the car and then sold all that but Jan Sommer’s wrote a book called No More wealth from residential property and she had a property forum. Sommorsoft. That really helped me to understand using other people’s money so property was it for me. I bought the two down here and moved to Sydney. Really wanted to continue going as soon as I moved to Sydney and the job was going well. We were looking in the western suburbs of Sydney in the Mount Druitt area had a lot of friends that had purchased there and met them through the online forum. So we were looking through there and it and it really was a foreign planet to me I didn’t really understand value and I didn’t understand why people lived in certain areas and why they paid what they did and which areas might grow.
One particular property we looked at was quite priced really reasonably. It was about 100000 dollars back in Sydney so let’s go back to the 2009 ish area. We looked at the property online and we drove out to the suburb and checked it out on the weekends and I could sort of see immediately why it was cheap it was at the end of a cul de sac and the locals were using it the thoroughfare. They had knocked down the back fence and there was a large public housing block and there was a train station and so this cut about 400 metres off that journey. So it obviously had problems with the property and this got me thinking it’s like what if we could map every public housing compound every train station, all shopping, schools, transport on maps and then I actually worked with a researcher from Stanford University.
He was the person that worked under the person who did the first criminal hotspot. In the 80s and he developed a number of algorithms and I actually rewrote all of those algorithms for him to another programming language and for doing that he actually gave me the algorithms so the algorithms were around hot-spotting it so it’s around looking at price pockets and how they changed within a suburb. And now we’ve also applied those to find growth. So we actually have individual sweet spots within each suburb that have lower public housing, really strong tenant demand, lots of them and in-demand property types and so using the right software you’re able to find those sweet spots in a suburb and it’s routed right back into me actually trying to work out how to invest in Sydney and that was the beginning of the framework.
You’ve invested in quite a number of properties and you’ve done it in two major markets which is really really good. You’ve had some experiences let’s go back into a time where you had one of you know perhaps your worse investing moments. Do you have a story you could share with us about that?
Now potentially I’m more refined but I guess I probably isolated in the earlier days one direction to the other. One of my observations was towards the really high yielding properties. So I was trying to pick key regionals and a bought-in Dubbo as an example lower price point the yield was 12 per cent straight off the bat. And it was in a lower socio pocket with reasonably high public housing in Dubbo. I actually used RipeHouse to pick it before we were really strong on the recommendations side but we were very strong on the street level and property level was great in the early days so I used it to find the streets but I personally dialled it right up to find potentially the lower price point with a very high yield to suit my strategy and put it there next to a shopping centre that was going in 8 million dollar shopping centre that was being built in the western side of Dubbo that ended up being my worst investment and it was because I really did probably go to the bottom of that band.
I was outside of the median. You know I guess that the common types of property on the lower socio side and we had tenant problems with that property over and over again to the point where the house next door burned down by the locals. Then the lease expired and it was nine months before we could find a tenant. It was a huge and so I guess every time we had a phone call with that extension you know that the Dubbo area code. I thought it was going to be someone telling me the house had burned down for a period of time. You know it was a bit of a worry and I was out on the insurance policy to open I could tell you. Yeah, that sort of. We actually sold that property down again.
Now focused more towards that. We want to meet the market. We’re not forcing our strategy onto a market that is emerging and that’s one of the major rules within RipHouse. But we are staking out properties that are in your condition focusing on a type of tenant that has jobs putting a nice product into a market which then lowers our stress as an as a property manager or managing a property manager.
Field shares with us one of his best purchases in his property investment journey.
It wasn’t going against the grain. So I’m not trying to recreate the wheel I’m not trying to work against a cycle I’m just doing the research backing my decision and purchasing not meeting the market. I guess maybe the first property in Newcastle was a really good example we went in a sort of younger a young couple and renovated that extensively used tradies but also did stuff our self and rented it out. We didn’t overcapitalized really hit the market and were able to revalue that very quickly for a very good profit reinvest again.
The takeaway is not trying to get too creative. Just doing something. Just keeping things simple just finding a commoditization satellite area that is growing in the right time and a property cycle investing in the suburbs of streets that are really driving forward the locals are really you know someone was moving to the area where the locals recommend their family to move in to try to find those spots that has that appeal and then putting it into that market what people are demanding and not trying to do a renovation for renovations sake or a subdivision for a subdivision say it’s literally just renovating to the standard that will appeal to the widest demographic of tenants and that will allow you to charge obviously the most rent but then also increase the rents at or above the suburb average. So that’s that for me was probably the aha moment is just going with the grain and not trying to fight it.
What the Next 5 Years in the Property Investment World and Australian Economy Will Look Like
In the last episode, we had the chance to hear about the journey behind Field’s decision to get into the property investment scene. Let’s explore the mindset behind these decisions…
I’ve always had the attitude of I’m just going to jump in. I’m going to do it and I’m going to make it work. There’s just never even a second thought of even to my own detriment potentially of should I be doing this?
So that has been you know I’ve tried a high price point, lower price point, capital growth, renovations, non-renovations, yields, catch by plays etc. I’ve really jumped in and done as opposed to thinking in some cases.
The danger is sitting back and trying to accumulate this knowledge and becoming this expert before we have any runs on the board.
Through his property investment journey, Field has learnt the strategies and tactics which have worked for him.
One thing I’ve seen over the years as well from investors coming through the right circle has been where you might go to a seminar you might pay five thousand dollars it’s great value for money and you’re learning a system, you’re learning a way of doing things but you’re still not you know you might not have the deposit or you might not have the confidence to buy. Yes. So then you go along to a second seminar and you’re hearing another system okay and you don’t necessarily have the skills and you haven’t actually implemented either so you can’t compare and contrast but they’re telling conflicting stories. So that then is I think the key driver for analysis paralysis is conflicting systems or stories and people don’t know how to apply one or the other in the right circumstance.
Field reflects on his earlier days in the property investment world and the resources he depended on back then to support him through his journey.
The support I found from Somersoft forum in the early days was very strong. That was something that you know there wasn’t a huge amount of. It wasn’t an established industry or mature industry property investment I guess so there weren’t a huge amount of sources you could go to to learn. So it really did push it back to finding that core group of investors. People like Nathan Birch would be someone I talked through in the early days of Somersoft and James Smith again and I’ve learned from people that I now work with in the industry at that sort of level so I’ve never sort of went to a property seminar in the earlier days because I was here in Tasmania for one then there weren’t necessarily that many options.
I was sort of forced to learn from the online space and community there but certainly, that form is actually no longer operating.
So yeah it’s been changed into different ownership but yet it still has a thriving community there and the commune has grown so much that yet it gets to that same point where you go gosh it’s such a large community. Who do you speak to? At the same time because when it’s small it’s easier to connect with the people. But once it grows so large it’s like nowhere to go.
That’s a bit of a danger I guess in terms of that as more information is not necessarily better or more helpful. One thing that’s working quite successfully is only a recent evolution within my Ripehouse is a private Facebook group that we have for members only. The reason why we did that was that yes it’s free-flowing conversation and it’s open-ended but it is guided by a supportive community with I guess moderators who are you know they might be staff but also another sort of advanced investors within Ripehouse who can help and guide and it’s very succinct. There is an outcome to a thread. It’s not just you know when it comes to the point and we moderate that to find a resolution. The resolution might not be coming from us but we have to find a resolution. And I think if a group in that sort of format is a great medium to do that and there’s other Facebook groups that are merging quite strongly as well I think that it allows that guidance and I guess the conversation to find that resolution.
Having worked mainly within the research sector of the property investment industry, Field shares some key pieces of advice that have contributed to not only his work ethic but his success as a property investor.
Don’t settle for the status quo.
I think of myself as a tech person and things are moving fast at the moment. But I’ve got to remind myself and I guess this is the best advice that I’ve seen and it’s not coming from the property space it’s coming from the technology space, it’s let’s embrace this change and work together and have an abundance mentality with other investors and other professionals in the industry and I guess focus on what’s important and that’s moving towards what we’re trying to do in this property game which has great wealth for ourselves and our families and the next generation and move towards those goals. The advice it is things are moving quickly and as you say there are so many different sources of information but let’s push through and let’s make decisions and innovate and do it together.
Field’s property portfolio reflects a range of strategies he has used. It is through this mix of strategies that he has accumulated several profitable properties and built his portfolio to the level it is at now.
The portfolio is multiple millions and the average a year would be about 7 per cent now. That’s not worth necessarily at 7 per cent on purchase but some properties have been in the portfolio for about 15 years. If you were to describe my strategy now moving forward it would be buying in high growth areas with I guess there’s two types of high growth areas is one that’s based on a scarcity strategy, a longer-term strategy. So as Sydney it would be a scarcity that is driving a market and that might be an owner-occupied driven scarcity. So think of the eastern suburbs or the Mosman is you know you don’t have those ocean views being manufactured that market may outperform Sydney every year on average by 1 per cent over 25 years very consistently or you move into a market that’s emerging. It may have causal factors so it may have train lines or infrastructure spends etc. I don’t necessarily track those. So RipeHouse doesn’t give you that information because you don’t need it. If you follow train line builds or you know a government notoriously doesn’t follow through with what they have planned so you might get the where right. What we’ve learned is you can get the when right, when you look at the effect way you look at the on market activity when you how, can you actually understand and identify when a market is responding to those employment, jobs, population, infrastructure or whatever it is. And as soon as you understand that it is responding you’re ready to pounce. So if you look at the market metrics to determine that. So my strategy is finding those markets just about to go into an uplift, they haven’t grown yet. Okay by the way rents have been increasing, yields have been increasing as well as the two metrics that we start looking at. So that’s demonstrating that growth hasn’t occurred yet. We see sales volume spiking because people are renting in and enough to buy. So they like in any job and you know whatever the reason why they move to the areas they are now looking for sales volumes.
When Field buys into a market where yields are very strong how does he get the upper hand.
I’m buying into a market where yields are at very strong high points and growth is likely to be imminent. Okay, I’m able to negotiate very strongly because there hasn’t actually been that growth. We’re in the very early part of a cycle for that market before the heat arrives so my strategy revolves around negotiating very hard on property and purchasing under market on entry and also I guess the personal side to this is I buy blocks that I can split. So most of my portfolio still sits on blocks that I haven’t done anything with but I could split if I wanted to. So here as I sort of gravitate and mature I’m now looking to actually subdivide and look in behind. I guess that’s adding another strategy or potential outcome without actually doing it. So I’m not getting caught up into a property and say hey I’m going to stop here I’m going to renovate this or subdivided it and learn and do I’m buying properties with options. If for some reason the growth doesn’t occur there is forecast, the yields still cash flow positive in a market where you are at a high point in the cycle if for some reason you know vacancy rates increase and the tenants market falls through the floor then we can still look at subdividing and doing something about manufacturing equity not about protecting ourselves. That would probably be a summary of currently my strategy.
Excellent. I mean you cannot cover both aspects. You’ve got both the cash flow that will cover and sustainable portfolio but at the same time manufacturing possibly to increase your equity or get some growth out of it. Not necessarily sort of buying and praying that things would go up. You’ve actually done a strategic thought and careful research to be able to purchase those.
Field shares with us his most profitable properties and why they have grown in value in the short and long term.
We can talk in terms of short term growth and we can talk in long term growth.
So over longer-term growth properties that have performed the best have been those that are closest to CBD or that major commuter hub. So first probably as an example that I purchased it five minutes sort of walking distance sort of seven minutes walking distance to the Hobart CBD in West Hobart which is a blue-chip suburb down here in Hobart that has always performed and amplified and even led in the last cycle we recommended West Hobart to RipeHouse investors in 2015. It led to Hobart emergence that is a suburb that is driven by that proximity to the city. You’ve got a very large Y demographic that want to live there. So it is sort of always leading that charge and I guess that was the theme around Lane Cove as well.
Field found a pattern that helped him navigate around the areas with the most profitable properties.
Looking back the best performers have been those that are closest to those strong drivers of long term growth in the short term growth. Yeah, once again I’d just make the analogy if you’re talking about scarcity driven suburbs they generally are stable for longer periods. They don’t have spikes and troughs but when you’re talking about really strong growth uplifts if you were to have that crystal ball and look ahead in the next 12 months where are going to be the strongest markets for growth that are generally led by tenants where first-quarter tenants are responsible for moving to an area and driving that value increase. So in finding those markets I have had success going to the region also into the Newcastle example based on the tenant demand and up into the Hunter region which was around 2012 for memory following that tenant demand that’s I guess the best results in the short term that tenants can deliver growth for three years up to five years maybe and then things will really fall back into the mean but it’s plugging a gap into your portfolio growth it’s achieving a different purpose.
He shares with us his personal habit that allowed him to grow a substantial portfolio.
Someone who can embrace change and understand risk and use it.
I’ve never been afraid to probably going back to that first property where you know I think the property at the time was $80000 from memory that was when I was 18 and by the time I actually bought a year or two after that same property would have been about $150000 so that was in a really strong growth up this time in Hobart. Okay so that would have been a deal that would have made a lot of money straight off the bat for me and I was all gung ho ready to go into it and buy and then dad actually saw a loan and a loan for a property as a huge risk it’s a different generation so I didn’t see it in the same way and that actually stopped me. So I’d just go for understanding risk and make decisions clearly have your framework and your abilities etc. but you’ve still got to do, so take that step and then learn from it. But we’ve got to be in this game. We’ve got to start investing some time or buy that next time.
In terms of resources, Field reveals the book that changed the game for him.
The only book that really changed my mindset fundamentally was More Wealth from Residential Property.
You know I have mentioned it before and it is going back to the early days but if it might be a little bit difficult to come across now but it breaks things down, it helps you understand how to use other people’s money, to move from one property into the next and structure your portfolio. That would be the if people haven’t read it then go back and read it would be my advice.
What are you most excited about in your property journey say in the next five years as well?
This is going to be a very interesting five years to put it bluntly. I feel we’ll be looking back at where we are now and property might be a different space. We’re already seeing the emergence of it so we’re actually getting really good at being very specific with the properties that we recommend. So not just the suburbs but the streets and the properties within it’s not you know it’s not enough really to just give you a say you go in and invest in Hobart and leave it for the investor to figure that out. We’re getting better at it but so is the industry. So it might get to the point where we’re also seeing fractional investing in emerging. So you’re able to purchase only a small part of a property with a group of others.
Field shares his thoughts on how he thinks the property investment industry will change in the future.
We might be moving into space where you don’t actually need to buy property you can just invest in an algorithm. You can invest in the technology that underrides it. You can invest with turn that you want to receive and you can almost pick it off the shelf and deliver it into your portfolio. I mean this is probably something that we need to challenge ourselves you know argue in the property game because of what investing properly delivers you for your lifestyle or retirement or you’re in the property game because you actually legitimately enjoy learning about property investments and investing in property and just be honest with ourselves because you know we might be heading towards a future where you don’t actually need to go to a seminar you don’t actually need to learn. You can actually trust maybe computers or you can trust an algorithm or you can trust a company based on it more so than a shark or a spruiker. So if you can do that and you have that trust in the results then you maybe don’t need to learn about the proper investment you just do it you know. We’ve got some you know if you’re looking at the share industry it’s so far ahead of the property space and you’ve got Robo financial planners that are a huge part of the industry in America that maybe the emergent component of that industry and people don’t need to learn how to be a financial planner or invest they’re super or you know to manage risk etc. they just buy into that fund. Once we get better and you’re getting more comfortable with the results you might be able to start out small with say fractional but I think that’s where we might be heading.
To connect with Jacob Field, you can reach out to him via
I’m at RipeHouse on Twitter but probably the best way would be just to jump onto the right home page so WWW dot RipeHouse dot com dot au. There’s a free trial on there too. The whole community to our private Facebook group which I’m regularly contributing to and they can use their full suite of market analysis, tools etc. on that trial.
That might sound a little roundabout but connect up into that trial is the gateway to getting contacts in our community. And I’m very open and part of that. But the Facebook program excites me probably on the other side of it as well. I guess if you’re a professional in the largest investor result folks just get in to see what’s a feature in a stand out as well. We’d love to have a bat and see if we can speak with each other as best investors.