Hosted By Tyrone Shum

From Electrical Miner to Real Estate Investor in Adelaide Market

Updated 04/03/2019

Luke Bailey started his career as a fly-in-fly-out electrical miner in rural South Australia, however, now has a double-digit investment portfolio in real estate and his own buyer's agency in Adelaide to his name. Having started investing at the age of 19, Bailey has a lot of experience and stories to share.

Tune in to this episode and learn all about Bailey’s journey from the mines to the property ladder, to starting his own business, and the highs and lows of the journey so far.

"When you start to get it and you start to realise it's a big moment where you think that if you feel really good because you know that the majority of properties that you buy are going to be going to outperform the market."
-Luke Bailey

In addition to building up his investment portfolio, Bailey owns his own business which runs out of Adelaide.

I am a buyer's agent so I buy up properties for people all around Australia pre-dominantly in the Adelaide market and also the Tasmanian markets currently as well.

Initially, Bailey was on quite a different career path.

This is my own business so I've been running this business for a little over 12 months now. So originally I was actually an electrician working away in the fly in fly out industry and the mining industry and I was a property investor from a very young age and I just saw the shortage in Adelaide of Buyers Agents and wanted to follow my passion. So that's why I started Fourtier Property which is a buyers agency.

After seeing a gap in the market, Bailey’s business took off.

I guess what was happening in Sydney and Melbourne with the buyer's agent industry it really has taken off and people are now understanding the need for buyer's agent so that's why I really felt this. Know you can bring that bottle from Sydney and Melbourne across Starlite.

Bailey’s daily routine consists of finding and servicing his clients.

It's a matter of finding clients as a buyer's agent. So you're having a lot of referral meetings with business the businesses and then also managing and prospecting the current clients that you have. So that's usually split up a combination of winning business and also closing business if that makes sense.

Yeah yeah. I mean it's a juggling act, isn't it? Managing clients and also looking for deals at the same time.

Yeah, it certainly is and you've got to really plan and structure your day so you're getting the most out of that. So you know as a business owner it's a combination as their winning business but you've also got to manage the current clients that you have. Make sure that they are being properly serviced.

He grew up in a small town outside of Adelaide before moving to the city.

Yeah, I grew up in a small town called Goolwa which is actually on the south coast around an hour hour and a half from Adelaide on the south coast. I'm currently living and living in Glenelg in Adelaide.

Bailey attended a small rural school, not too far from his town.

I actually went to a school called Mount Compass which was a very country top school. You know there's a lot of farming around the area. It's around 20 minutes from Goolwa around 40 minutes south of Adelaide but it's a small community and it was a great school.

You know when you're so small how many people are we talking about.

Look the town probably has maybe maybe maybe 2000 people and the school probably 300 but there's a lot of farms around Mount compass that's you know how kids coming into the main school.

Being 40 minutes from the CBD is a long way for someone from a smaller city.

I mean it's funny because when I buy properties personally as an investor but also as a client in Hobart and nobody he started talking more than 25 minutes away from Hobart CBD the locals would say what do you mean that's a long way.

But when you know talking to a city in Melbourne it's you know it's causing quite a small.

Bailey stayed in school until year 11 before working hard at an apprenticeship.

So I went to high school, finished in year 11 and then I wasn't someone that was ever going to go to university and I wanted to get a trade background so.

I actually working away in the mining industry in oil and gas when I was 17 years old and is quite young yet. Yeah think being exposed to that and I guess I was lucky enough at the time to actually gain an electrical apprenticeship where I spent four years flying out working away finishing the apprenticeship.

He elaborates on what he means by ‘fly in fly out’.

Fly in fly out is you're not residential. So basically I was living in Goolwa at the time but you would take a plane from Adelaide and you'd fly to a remote mining camp basically where there's you know maybe 2000 3000 miners or workers that fly from all around Australia.

So flying fly out means you don't actually live there. You use your position there and you live on-site that makes sense.

Ah. So how long will you be staying in those places in the mining area.

Typically anywhere from two to four weeks.

So you would be on a roster where there are many different rosters out there but typically it was two weeks on two weeks off or it might have been three weeks on one week off but it typically was in a four-week cycle.

adelaide real estate

Having so much free time gave Bailey the ability to look into the property.

Yeah. It is quite a good lifestyle, to be honest, and it's time you give you a lot of free time and you catch up with friends. Now I started going to property at a young age. Do a lot of research with property and whatnot and yeah I guess just live my life and the road to travel which is also good as well.

He explains what kind of work he was doing at the time

It was initially oil oiling gas sites so they were they would extract the oil out of the ground or go through different processes and then yes I was doing all the electrical work for these big mine sites or oil and gas or should I say around Australia predominantly northern part of South Australia but also in parts of Queensland as well.

He wasn’t doing the typical residential jobs you would expect from an electrical apprentice.

It's completely different. It's actually a completely different ball game. You know when I was actually you know I'd almost finished my apprenticeship and I had never actually wired a house for start to finish which sounds very funny if they say look you're an electrician at a White House but it was true because it was different type of work and different type of electrical work but it's just a different concept when you explain that to people.

Bailey explains the main difference between electrical work in the mines and residential electrical work.

In terms of the work with mining electrical work, it's typically things like big motors and big ah control panels and things that are controlling the ones that get the flow of gas in and things like that opposed to domestic which would be a PowerPoint lights fans air conditioners these sort of things. So it is a big difference. That's for sure.

Bailey spent over a decade dedicated to this trade.

I spent about four and a half years away working during my apprenticeship and then from there I worked probably for another six or seven years as an electrician on and off in the fly in fly out industry working all around Australia so offshore facilities off the coast of Western Australia. Queensland's Northern Territory so I stuck in the role on and off for quite a number of years gaining experience and just working in different environments.

Like many young investors, Bailey’s parents were a significant factor in encouraging him to enter into property investment.

My parents were probably the initial force telling me that I need to get into property you know that they were property investors themselves and they were pushing me into the property and I did try other things as well like you know I invested in shares and things like that. Just try it out see what was going to best work for me and best suit my style so it was initially the influence from watching my parents pushing me towards you know making a solid investment.

First of all.

That's good. What are your parents do.

They're both retired now. My dad actually was originally was as a superintendent and a plant manager in the same one that I was at. So that was hence how I got the start in yeah as an apprentice electrician working at 17 guys he got me to start so he was a worked for basically Australia's biggest oil and gas companies so he worked his way up the ranks. You know throughout the years and my mother works in local government.

So for different governments.

After earning a good income from a young age, Bailey started investing quite young, buying two properties before he turned 21.

I bought my first property when I was 19 I was I guess I was I had the luxury of being on higher wages than the typical apprentice that was working in the city so that enabled me to get into my property on my first property very quickly and my second one went out when I was 20 so I got good on the property ladder quite early and I guess that was the beginnings of you know investing in property for me.

Bailey bought locally, although wasn’t yet that educated on investment strategy.

So initially it was on the south coast of Australia say Araik Goolwa and Victa Harbour which is where I was living at the time and I would have done things much differently. You know speaking to me I guess my younger self but I guess the most important thing was I did take action at a young age the properties that I thought I wouldn't have autumn you know if I knew about different markets at the time but when you're 19 20 you really don't know a whole lot about property to be honest and just getting in the markets the best thing.

After the first two purchases, Bailey took some time before entering into the real estate market for the third time.

So I bought my first one when I was 19 work when I was 20 and then I had a bit of a breakthrough quite a few years where I didn't buy any properties at all and it was probably initially maybe buying the wrong first two properties I didn't see much capital growth there initially and the rental units were quite low so I was actually put off a little bit after those first two purchases and it wasn't until I started to I guess really educate myself on what makes the property market moves start to get some mentors and people around me that knew a lot more about property than I did so I could learn from them and not make not as if the first two were mistakes they having you know increase in value but they weren't the best options at the time. So I guess I didn't really start buying again and to was around twenty-five or 26 and then from there I'd been able to accelerate the journey and by number another company since then.

Now that I am well equipped and well educated I guess.

He shares the ways in which he educated himself on property and investment strategies.

"It's about not getting ahead of yourself but really once you once you work out some of the fundamental things that cause price growth you really start you can start to dig into that and really look at the property cycle and where are the next best places to invest in."
- Luke Bailey

It was probably doing a lot of research into other people's journeys and seeing other people that had made a couple of mistakes early on but been able to resurrect and accumulate property portfolio and then once you read stories like that you're a little bit of inspiration and then you think hey maybe there is a way maybe that the way that I'm doing things right now isn't the right way and I have to educate myself and find out what is the right way and it was a combination of I guess really a lot of books and also doing a lot of property courses and education courses based around property investment which is probably the initial spark and then finding out that's you don't necessarily have to invest in your own backyard there. We've got a whole year here that we can invest in. And when one place is necessarily going up and Bali another place may be declining so it's about really I guess getting ahead of the crowd and really educating yourself.

Even after more research and education, Bailey still hit some roadblocks with the next two properties which taught him valuable investment lessons.

When I started to get investing a little bit was probably around more property 3 and property 4 I started to understand it a little bit more but I still didn't fully understand it and I realised I wanted to buy a higher-yielding property which was going to increase the cash flow. The flipside of that was sometimes high yielding properties are in lower socio-economic areas. And it's not always a bad thing but if you in lower social-economic areas you can attract bad tenants.

And I've had a place I bought trashed and I couldn't get the tenant out. So I was it was probably six to eight months a period where I think in the end it turned out okay but I just had to obviously fix the house up, try to recoup my damages, try to recoup the loss of rent and that was a bit of a bitter lesson I guess in the fact that high yielding properties can be really good but you've really got to also do your homework probably even more so with finding the correct tenant because that can really bring you undone.

He spells out the lesson he learnt from purchasing a property in such an area, that was already tenanted.

I actually bought it with that same tenant in there and you know when you look when you buy properties a lot of people think that buying a property with a tenant already in there is a good thing and it can be because you've got the guarantee of rent straight away. But I guess you can also say there might be a reason why that person is selling that property and it could be because of the bad tenant and being a little bit younger and not knowing as much as what I know now that could have been the underlying reason. So I bought the property with a tenant already in there and then things almost immediately started to go pear-shaped when they were just late on their rent a few times and then I guess they stopped paying rent altogether and then it was hard to get them out. I guess some tenants really know the tenancy laws pretty well and they don't play it to their advantage and then when we finally got them out we went into the house and it was you know there were holes in the problem that brickwork all the way through and no doors that have been ripped off. Windows have been smashed and it wasn't known the best experience but I try and put it down as a good lesson.

Despite the hiccups, Bailey has had some great investment experiences too.

When I started as a buyer personally in Hobart around the 18 months to two years ago I was like that and it was Hobart was really starting to move in some of the suburbs and a lot of inner-city suburbs three to four kilometres from the CBD started to really move in Valley and then I started to do some research into the ripple effect of how when one suburb starts to go the next suburb in an in a lot of research you that. I started buying in some areas of Hobart and we think one of the properties grew I think 35 per cent in value in one year. Now that was probably an aha moment for me because I realized that if you really know what you're looking for when you're starting the real estate markets and I'm a very analytical person so I dive deep into data and what makes the property market move and sales volumes are starting to increase and days on market reducing all those tentacle things. When you start to get it and you start to realise it's a big moment where you think that if you feel really good because you know that the majority of properties that you buy are going to be going to outperform the market.

Wow and that's really inspiring to hear because once you have to figure that out which you have it's like that turning point.

I mean I kind of stop buying more and just scale it up.

Yeah. Correct and it's about not getting ahead of yourself but really once you work out some of the fundamental things that cause price growth you really start you can start to dig into that and really look at the property cycle and where are the next best places to invest in. So being a buyer's agent now I can relay some of the information to my clients which is fantastic to see them have results.

To understand his timeline, Bailey’s third purchase was his primary residence, before continuing to grow his investment portfolio

I basically I was working way fly in fly out industry so that the third one was actually the primary residence that I bought and then that's done really well and then the fourth property was an investment property and then different from their own units and a number of investments.

Bailey started buying again a few years ago.

I mean that was around. Third property might have been around since 2013 was at around 6 years ago

The “Keeping it Simple” Strategy with Luke Bailey

adelaide real estate

Bailey shares the strategies he uses to grow his portfolio.

It really has evolved I guess you could say as time went on and like it does for many people once you start to learn more you start to evolve your strategy. So initially it was you know just buying anything, by the way, we're all where I was living which is not the right she but as it evolved to turn I would say the last few or least now it is buying properties that are high yielding yeah buts. But in indecent areas where you're going to get some solid capital gross, I'm looking at high yielding properties where the rent will cover all the associated cost with her house and probably rule number one. Number two would be buying under market value. So buying something you know under the comparative market sales is what is selling in a particular suburb. Thirdly now I'm looking for things where I can add value. So the add value components really probably only become apparent the last couple of purchases where I'm looking at things like Is there a potential for subdivision. Is there a potential for a cosmetic renovation to uplift the value of this property.

So I'm not just relying on capital growth I mean capital growth is is is what you know what you're aiming for a property but if you can add value as well as that you're really double down on your equity positions.

When we last spoke to Bailey, he discussed his first 4 investments. He now describes the current state of his portfolio.

Currently selling my 14th property so I guess last time I got 12 or almost 14 it looks as if touchwood that kept going through.

But yes since then it's probably been number eight I reckon I started to think about adding value through and through cosmetic or renovations or structural renovations or subdivision's or have that in in the back of the mind and it's not something that I initially do straight away. It's something that I buy with the other thought process that I can do this at any time to it to uplift in and increase the value I'd necessarily have to buy it. Uplift it and then use that equity. It's just something that I've got there.

These properties are now all over the country.

Currently they are across three different states I've got South Australia Tasmania and also parts of Brisbane Queensland. So in terms of where they're located mostly south coast of South Australia Adelaide Hobart Launceston and also South of Brisbane.

And which one so far today you think has performed the best for you.

It's probably the Hobart purchase that I initially spoke about as well as the primary there are that I have that I bought as property number three in Glenelg in 2013.

I think it was and that's performed exceptionally well it was you know really bought at the bottom of the market in Glenelg Kiehl's bought it a really good price and that's performed exceptionally well so I'd say probably those two have done the best.

Bailey expands on the purchase of his primary residence in Adelaide, and how he sourced that property.

The one in Glenelg was actually on the market.

"I'm probably still someone that just loves the simple buy and add value and keep things simple because I know that when you start getting into property development it can be a different ball game."
- Luke Bailey

I was actually working away at the time and I was looking for a property here in Clennell which is that for people that don't know Glenelg it's sort of a prestige suburb of Adelaide it's run on the beach and yes quite nice and I always wanted to live there. So yeah it was this one was on rea estate market and I guess I got in really quickly and had lie out you know my finances fully approved because they were because I was working away the time which I think was probably initially what got over the line. And yeah it's the Glenelg market as it has done really well over the last few years so it has been a good market.

He explains how he pulled together an impressive portfolio in the time frame which he did.

With lending as hard as it is now. It is even tougher. It's going to be tougher for people to even break the 10 Mark Reval the five Mark but I guess when I was doing a lot of this I was on really high income so I was working away as a majority as time as a firefly electrician where I was on a good couple of hundred thousand dollars a year as a full-time employee so that when you're on that sort of money it's so much easier to borrow money to oppose someone that's maybe working in the city and also focusing on properties that are a higher level higher-yielding properties as well as increasing the steps. So you really have to focus on that particularly moving forward. You know I'm a big supporter of boy high yielding properties but as they go to support sensibility why is it getting your next one a lot quicker.

Bailey is planning to stick by his tried and tested strategy of ‘keeping it simple’.

I think potentially going into property development could be on the radar but it's I'm probably still someone that just loves the simple buyer and add value and keep things simple because I know that when you start getting into property development it can be a different ball game and depending on you know how many you're wanting to build. You know you can roll into commercial finance and get a little bit tricky in that. So at the moment I'm really thinking just about keeping it simple not trying to complicate things and you know if there's an opportunity to get into property development I might even go into a Javy partnership probably the Doleman seems to operate as a silent partner but be honest I'm not someone that likes to keep things really simple.

He discusses why he started and continues to grow his portfolio.

I think it's really to set or helped set myself and my family up for years the Carmen and not have to worry so much about the financial side of things and ultimately probably underlying the why is to enable me to be able to control my time and I'm not so much a money orientated person but I understand that controlling your time and not being a slave to something you're not necessarily wanting to do is probably more underlying driver of why I'm doing all this because you know we've only got a certain amount of time on this earth and you want to be able to.

Save every moment and do what you're wanting to do with it.

As he started investing so young, Bailey says many people had varying opinions of his choice to do so.

There are so many people out there that love to have their opinion about different subjects and property being such a fabulous topic in Australia. Everyone's got an opinion about it whether it's good or bad you know people have an opinion. So there was probably some people that we're saying you know even back in 2000 what was 2006 when I bought my first property but the market's already topped out. And if we look now about what's happened since 2006. He definitely hasn't topped out. It's had exceptional growth around Australia so it was probably listening to people that had opinions based around property that it's only their opinion I think sometimes you've really got to seek out people that have already achieved what you're wanting to achieve and I think that's super important no matter whether it's in property or whether it's in somebody else finding getting your information from the right source is super important to me.

adelaide real estate

Due to his career, Bailey thinks a lot of these opinions could be based on personal experiences of a bad investment.

I was just going to say one thing that is is I'm working in the fly in fly out and mining industries.

A lot of mining towns in Australia haven't performed that well over the last few years I think everybody is quite aware of what sort of a Gladstone and Port Hedland haven't done so well so working in you know in those sort of areas as a regional it as an electrician a lot of people that invested in those areas because they were working in those towns and they are obviously very anti-property because they've bought you know properties you know maybe I know the properties are now worth 400000 and you really got a feel for those and yeah you really have a feel for them but I guess they were you know it comes back to educating yourself from the correct sources.

Bailey made sure to get himself properly educated when he started investing seriously.

I find a combination of doing a lot of education of course a lot of these were paid courses where you're actually paying money to be you'd be around other people that are on the same journey learning from somebody that has achieved what were you wanting to achieve. So you know a lot of these will pay courses but I managed to find some people within my networks that owned 50 60 100 properties and managed to get in front of some people for coffee or for lunch and the amount of coffees and lunches that I've had from people that I've learnt things from. Whether it's in property or business I think I've lost count. It's a great way to for anybody just wanting to learn something. Even if you don't have the money to invest in a paid course there are genuinely people out there that are happy to have a coffee or have a lunch just to share some knowledge and give back.

Totally agree and that's what's happened on this podcast. A lot of people who have come on so gracefully. I'm so grateful for their time as well as it is an hour of their time to share their knowledge like yourself and it's just been phenomenal to learn so much from each and every individual as well. What books have you got any books that you could recommend to listeners and also why you suggest them.

Yes so I'm an avid reader of both are property-related books but I also self-development and personal development I like to read two or three books per week. I think it's been books have been one of the things that have really helped me out but in terms of recommendations. Property-based I think yeah. Donald a lot love him hiding. I think Donald Trump Art of the deals is a really good book. Talking about how he's gone about a lot of his deals. But I think Australia Australian books I think anything from John Lindemann unlocking the Australian property market is a good one maybe seven steps companies exact title was Seven Steps to the un-mocking world market. I think yeah that's correct yeah. That's a really good one. Michael Yani has a good couple of books as well that advises people on a range of topics from get you getting your boy incertae correct straight away to what to look for in investing and things like that. So that's a really good resource out there but yeah I'm a big fan of John Lindemann and his books.

He shares the best advice he believes he has ever received.

The best advice would be I think probably when I started to understand how someone really started to teach me about the power of leverage not um not over-leveraging but the power of leverage which I'll explain what I mean by it is with property debates allow you in many cases to borrow at least 80 per cent but in some cases, 90 90 per cent and above just depends on the situation where you're already you're buying something that says example 400 thousand dollars and you may have only put maybe 40 or 60000 off of your own money. But if that property goes up 5 per cent per annum you're not making 5 per cent on your money you're actually making 5 per cent on the higher amount which is the majority of its leveraged which can actually mean you know 30 40 50 per cent even higher return on your money. And when I started to get that it was kind of game-changing for me because I, I understood that with the property you can put a very small amount down and it fits if you're buying the right property with the power of leverage. It's going to compound and compound and you want to Warren Buffett's famous sayings is what does the 70 wander off the wall. I wonder of the world is gone down interest and it's so true. And yeah Cobley the power of leverage. But not over-leveraging is is a very good thing that I guess I learnt.

Here’s an example of what he means by this.

Let's say we use a 400 thousand dollar property as an example it let's say that property increase is 5 per cent per annum.

So that let's say from when you bought it for two year one it increases by 5 per cent. So that property has gone from 400 to now 120 because that's 5 per cent but the actual property initially know you really only you know you might put down a 10 per cent posit plus stamp duty in few other bits and pieces that might have only cost you sixty thousand dollars to acquire that property out of your own money but you've actually made twenty thousand on it so you've made on your money you know 33 per cent return on investment so far. Now that's an example I've just thrown out there based on 5 per cent capital gross and you've obviously got it in interest repayments and council rates and things like that but if you're getting the rent to cover all of that I guess your return on investment is much higher than many other investment strategies out there such as superannuation and bank interest and things like that. So does that sort of explain a little bit.

Bailey has learned various habits that contribute to his success from others, including his daily morning routine.

Probably a couple of years ago actually I started to develop a morning routine and I'm a little bit obsessed with people I love learning about people's morning routines because I know that it's really given me an edge I think and that's getting up in the morning and you know doing some exercise and doing some mindfulness training and getting into it getting into a really good structure because I think it's key to success in here and I think that's you Riedl you know you read about a lot of people that have done really well for themselves in different areas of their life and most of those people have a set morning routine. I know yeah I loved reading and listening in and talking about morning routines because I think when you see yourself up in the morning and you have a good morning you really have a good day.

If Bailey could give his younger self some advice he’d like to say this:

If I met myself 10 years ago it would have been fine. It's the people that you want to be like and convince them to teach you of acquirement mentors. Over the last few years but I would have liked to have met some of these people earlier. Some of the people that I aspire to be like and I think that's something that everybody should do is really to find people that you're wanting to be like and really do whatever it takes to learn from them.

His excited to expand his business in the next five years.

Most excited about is relining some the information that I've managed to learn over the years and actually teaching other people through my buyer's agent and relaying some of the information that both good and bad things to help other people fast track. And if people can get good advice and in the property industry around Australia there are some really good advice out there and that there's also some poor advice and I think I think I'm really excited about you know teaching people that yeah the things that I love that I've learnt and hopefully know if I can teach a couple of people that's a good thing.

Bailey believes in making your own luck, and turning it into action to get results.

I actually think a famous quote by Gary Play ‘The harder you work the luckier you get’. It's a really good quote. You know some people do get lucky but it's a very small percentage of people. The ones that make it make it work and make it happen are the ones that seek out the education and seek out the ways the right ways to do things and then just take massive action. It's all well and good too to know something but that's only half the equation you've really got to take massive action and to make things happen.

If you’re looking to get in contact with Luke Bailey here’s how to do it.

Yes, they can check me out on my website which is fourtier dot com dot au or they can find me through Facebook which is Fortier buyer's agency. I put out a lot of property-related content and videos and they can watch them and hopefully, they can learn some of the things that I've learned over the years. So yes Fortier year property.

This episode was produced by Ashlyne Ocampo with narrations and interviews conducted by Tyrone Shum.

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