Tips on How to Buy More Property and Grow a Real Estate Portfolio
Growing up in the regional areas of Victoria, Martin had never envisioned a future in real estate investment, let alone start his own advisory business for investors struggling in the property investment field, with an international property portfolio worth over $4 million and 12 property investments under his belt, Martin uses his past experiences to help guide others into comfortably buying and investing in property.
In this episode, Martin shares how he worked around the troubles of sustainably investing in property, how he learned from the disaster that was his first property investment, and how he uses his time effectively to balance his business and his own portfolio.
As the owner of his advisory business, KnowHow Property Finance, Martin’s day-to-day life is understandably quite structured.
So we normally wake about five-thirty. The first thing we do is, it’s a little gratitude affirmation that I go through in my head and then do a very quick meditation as five to 10 minutes it just focuses on an area that I want to be concentrating on at that particular time. My wife and I then visualise the day we actually verbalize this with each other so that we look at what’s coming ahead on the day and we actually visualise that in terms of everything going extremely well it’s amazing how that has really improved the way things track for us. We then spend some very precious moments, what we call our Samoyed time with our rescue Samoyed dogs. We’ve got for rescue Samoyed dogs. We’re big fans of rescuing abandoned pets.
So we’d spent some fantastic small time on the floor, that’s a big cuddle with them and then I head off to the gym. Get myself into places mentally and sometimes we’ll go for a walk or a run then I come home to a very leisurely breakfast. Breakfast is my favourite meal of the day Tyrone, just awesome brain food.
And then before we get into it, I play the piano for about 15 to 20 minutes. I make music and I just find the piano just a game just puts me in the right vibration to tackle today and then when we do sit down because my wife and I work in the business we’ve got a team of nine, very boutique concierge-style operation built around helping investors and we start with what we call our GSD session which, I’ll call it to get stuff done.
Which really is an accountability thing so we’ve got an annual planning process we go through every year we take ourselves off for three days and we just plough through tracking towards our long term goals what do we need to do this year,
what do we need to do this quarter, and therefore what I need to be doing this week and today to get to those things so we both commit to three things on that particular day that is moving us closer to the big rocks and then we get on with the day.
Martin is also a big fan of reflection, opting to keep a journal in order stay on top of his goals.
So I’ll also do a little, very mini, I call it the Bush journal sessions so I look at what were the top three wins yesterday, what made me uncomfortable, what am I avoiding, what’s my idea for what I call Bush Buys, a video or a blog or a post.
Any ideas thoughts and learnings are taken the day before and then just firm up those top three actions that we’re going to focus on the day ahead. It’s pretty structured. It doesn’t always go to plan obviously but the benefit of taking that approach is that we set the day up and we put all of the good stuff in before anything gets on the road. So you’re actually feeling calm. You’re feeling positive, you’re energized and that works extremely well for us.
In successfully running his business and providing the best services and advice for his clients, Martin has been nominated for Property Investor Magazine’s Top 10 Property Specialists and is constantly on the lookout for expanding his investment portfolio on an international scale as well.
Our business is KnowHow Property Finance Strategy and we specialize in helping time-poor professionals to regain their time and their freedom so that they can live more and work less by replacing their income through property. So the three key things that come out of that, the three specializations that support making that happen, and that means we have property investment advisers. We’ve got a Finance Broking licence because properties is a game of finance and we also assist in facilitating the property delivery through a group of independent experts so there are three key things we’re doing.
We’ve been very fortunate in being recognized for that. I was very humbled last year when the property investor magazine nominated myself amongst the top 10 property specialist in the country and I’m pretty confident that’s been a direct result of the seven/eight hundred investors that we’ve assisted over the last 12 years to secure over 600 million in the property. So it’s a real passion of ours. We love doing it. We’ve had some amazing impacts on people’s lives and it’s really followed the course of my wife Sonya and I, who have gone from zero to 12 properties over the last 7/8/9 years we’ve built up an international portfolio which includes some property in the US and we’ve documented that process in my book “The Freedom Formula” that’s about to be published in about two weeks time.
Martin spent his childhood moving around the regional areas of Victoria with his family before settling down in South Australia. Having entered university at the tender age of 15, Martin was an elite child who sought to pursue his passion for the arts through architecture.
Well with a name like Bushy, you can tell that I’m a boy from the bush.
And I was actually Bushy Junior, my father was the original Bushy and we were born and bred in the country, I was actually born in a tiny two-horse town and in western Victoria and I think they closed down the town down after the family left that’s how big it was. So and my father, we came off the land but my father was a stock and station agent which actually sold merchandise and he was an auctioneer selling sheep and cattle so we travelled all over the countryside. I’ve often joked that by the time I got to 40 I lived in 40 different places and that’s because dad was pretty good at what he did.
But they moved him around a fair bit, so we saw a lot of regional Victoria and then we saw a lot of regional South Australia and fell in love with South Australia and that’s why I’m now still living here because I think it’s the best-kept secret in the country. But I was a pretty sickly kid. I was born with a hair light and I had very bad asthma as a child.
I used to spend about four out of seven days in bed with asthma and what came out of it though, this what I love about adversity it really brings out the best in us. It meant that I spent most my time with a pen or a paintbrush in my hand designing, creating drawing. I just loved art. It was just that became an absolute passion of mine and I love designing things my old man being the rough and tough country like that he was kept saying well you’re not going to earn a crust out of that son you’ve got to get a real job. So the old brain got ticking and I thought to myself “Well if I become an architect I’m combining the creative side with something that’s real and tangible” as far as helping design and build buildings. So hence the reason for going down that road. Because we moved around a lot Tyrone and move states, I ended up being a lot younger than the rest of the crew in the class so I was generally at least a year to 18 months younger than anyone else in the year I was in. So for example I finished at school when I started uni I was 15.
By starting university at such a young age, Martin learned to work harder than everyone else and in doing so, travelled around the world to take on various architectural projects.
What it taught me I guess because I had the Harelip and the asthma exercise and because I was a lot younger which means a lot smaller, it meant that I feel my way forward was just to work harder than anyone else. And that became a bit of a modus operandi for me making forward. And that has positive sides and negative sides. So I went to uni, became an architect and continued travelling so.
My first job as an architect spent some time in Adelaide when there was no work for architects and I actually worked for nothing for three months with an architect just to get some experience, I scored a job and I call it my Indiana Jones period and I went to New Guinea and I worked for a crocodile farm building in a remote wilderness safari lodge way up in the middle of nowhere and did some townhouse work for him in Port Moresby which is a very interesting part of the world. And then I went from there to Darwin to Alice Springs back to Adelaide for a session then off to Bangkok over to Perth, and eventually came back to Adelaide and came back to Adelaide for a couple of reasons and not good reasons in a lot of respects. Unfortunately, I became a workaholic that I spoke to you about that work-hard ethic and I was working seven days a week 14 hours a day.
No relationship is going to survive that and that’s exactly what happened. So I lost my marriage which really shook me to the core.
Martin also accredits his motivation to pursue property investment to his father.
At the same time as my marriage went belly up, my good father started having a whole series of pretty serious health issues so strokes, cancer and dad was my role model.
He was the guy I always looked up to and had massive respect for and I remember grabbing him by the throat that staging and saying to me you’re slurring the other side of his mouth as he had a series of strokes. He said to me son learn from me, don’t do what I’ve done. It’s time that you started not working for money but getting your money working for you. And it had a massive impression on me at that time.
Martin’s first exposure to property investment was through a Robert Kiyosaki seminar, where he realised the worth and potential of passive income.
So I made a mindset to come to this Robert Kiyosaki seminar that was being held in Adelaide. And I went along and the penny dropped, and it was like a light bulb going off because the magic of passive income was just so very common now but in those days and I’m talking a fair while ago that wasn’t the common thinking. So from there on in everything we did was around passive income.
And because I knew the property, I eyeballed properties up until then and loved property as a result that became the obvious vehicle. We started investing and then Sonia and I were very unhappy with the quality of property managers that were dealing with our properties of the time so I got my real estate license and we started a property management business and then I realised pretty quickly you can’t get the money, you can’t continue to invest so I jumped board to pick up my finance broking ticket and then as we started to move through that as I say we started to realise that there’s a lot of people who have an interesting property but don’t know where to start.
Building on his own experiences with property advisors, Martin started his own business to help his clients make the most profitable and secure investment decisions.
They don’t have the time to do it and they don’t know who to trust. So we started to build a model around actually assisting investors to give them someone that they could trust and give them all the information they need to make informed decisions before they actually jumped in and secure the property. So that’s been the journey so far.
I pretty much love it now and from ground zero to 18 years forward and our property portfolio now gives us a fantastic lifestyle.
And if I look at the vision board, most of the goals that we’ve started with have been achieved or very nearly are and a lot of that has been built around the property journey.
So we’re very fortunate.
Martin’s first property investment ended in a disaster, having jumped straight into the industry without the knowledge backing him up nor a coherent plan to execute.
I actually got involved in property very early. So when I finished uni I ended up in Alice Springs at one stage and in fact, I had a practice there with a couple of others for quite some time and of course, at that stage, I was in my mid-20s thought I knew it all as a lot of people do at that age and I’d thought “Ah well this property thing can’t be that hard. I know all about the building side of it” so you know I got involved with three partners and we did an apartment development in Alice Springs. We spent way too much money at the wrong time on exactly the wrong result because it was going to win architectural awards, of course, wasn’t it. So
We did it for all the wrong reasons and got bitten very truly as a result of that. That was a disaster actually.
That was your first ever investment.
Yes straight in the eye. I tend to jump in while I’m a very conservative investor in terms of calculating and estimating all the risk before I do anything once I’ve done that I’ve got the confidence I’d jump in.
But the issue I had at that stage Tyrone and that’s something that we talked to a lot of others now is that I just didn’t have the knowledge because what I hadn’t recognised is that the property is the last thing you actually focus on. If you don’t get everything else right in the lead up to the property then why are you doing it? Where’s it going to get you to? What’s your capacity to do it? How do you need to structure it, all of those building blocks that are absolutely fundamental to the outcome, we were totally ignorant of. We just jumped in because it was all about the property and we see that with a lot of investors. I’m sure you’ve seen this before where all the focus is on the property. Well it’s actually the structure the strategy and everything that comes before that, that’s an important place and the property is just a means to an end and because we live in a home we think that investing just going buying a bunch of homes. Well, that’s the tip of the iceberg.
Learning from the mistake that was his first investment property, Martin started seriously investing with care, starting out with existing properties while considering their affordability.
So when we seriously start investing though, we went on a learning curve. We initially bought existing properties and they did well. There’s a bit of luck and a bit of fortune in what we’re doing. So we started with properties south of Adelaide and we’re talking in the late 90s Tyrone, say you’re buying three-bedroom homes for 80 to 85 grand south of Adelaide at that time. And so a lot has changed since then. Well I’ve still got one of those properties and it’s the latest evaluation was 440 so I wait and that’s. And again as I say it’s a mixture of calculation and good luck in reality but what we learned along the way I think the big learning curve for us is that where a lot of investors and we found it tight initially and moving forward is the affordability. And what I mean by affordability is the cashflow ongoing.
It’s not just buying the property it’s can you afford it given your lifestyle needs moving forward. And what we’ve found over time and where we’ve ended up doing a lot more work is in the building space so we generally build new properties on a block of land and a good growth area. And because of the stamp duty savings and the tax depreciation benefit you can apply to that the cash flowing of a new build is significantly better than an existing property so it means it’s not impacting on savings salary or lifestyle. And it means you can continue to do it and it’s you know you would know that most recent figures for first-time investors 50% of them sold their property within the first five years and I know for sure that’s because it hasn’t been structured properly and they haven’t set up the cash flowing so that just becomes unaffordable for them.
Martin even experimented in the US property market, treating himself as a guinea pig and investigating the American property industry straight after the GFC in 2009.
So that’s been the journey and I mean we’ve had some good and bad on that road. We’ve got properties in the US and that’s been very interesting to say the least. Big learning curve there and wouldn’t do it again and we’ve treated ourselves as the guinea pigs. We went to the US because all of our investors were biting at the bit after the GFC. And we said hold your horse we’ll be the guinea pigs and if it turns out being as good as what everyone’s saying it is then jump on. But until then don’t. And we came back after 12 months doing a second visit and told all our investors don’t touch it
Yes 2009 when the US fell off a cliff and we jumped straight on a plane and went over there did our reconnaissance mission initially, we picked up the number of properties and then revisited because we were unhappy and more unhappy with the professionalism of the team that we had over there than the properties actually. We’re very fortunate Australia. The quality of the professional in Australia I think far exceeds anywhere else that I’ve seen. And we took for granted that we’d get the same level of service as we did here and were very sadly disappointed. So it’s been a very interesting exercise and no capital growth in the US. Australia capital growth year is second to none. Yeah compared to the US it’s all about cash flow over there. Yes. And so very very different approach to property in that context.
When looking back at his property investment journey, Martin still sees his first investment as the most disastrous one. Now, after learning from his mistakes, Martin uses his experience to guide his clients into being clearer with their end goals and looking more at the affordability of long-term property investment.
It is that first one, no doubt about it. And just sort of summarizing, the property the redeveloped we did in Alice Springs we did a bolt over an old place and built for apartments. And because we just focused on the property and because we were architects and it was a developer that went in with us. We made all the wrong decisions. We spent too much money on the wrong things that made no difference. The assumption was we were going to get in and get out and walk away with a tidy profit. Because we’d overcapitalized in the market was pretty flat. After the 12 months of the development finished the market changed significantly and because we’d spent too much we then left holding the can. So we ended up renting the amount for a period and we end up getting out of it at about three or four years but had a big learning curve for us and that the learning curve as I keep reiterating is that we didn’t do the pre-work so we weren’t clear on why we were going. We weren’t clear on what the outcome was going to be.
We hadn’t looked at capacity, we hadn’t looked at the structuring and the finance structure and the entity structuring hadn’t been considered in any detail at all and these days we won’t touch something until we built it on paper first and I mean getting right down to it, including every conceivable cost involved in building and holding a property to look at how much per week is this property actually costing and if that’s affordable and we project that over 1 2 3 5 10 years if that doesn’t stack up walk away.
Martin’s property investment journey has had a steep learning curve and since learning from his mistakes, Martin has continuously grown his portfolio while keeping in mind the sustainability of working through a 15-year property cycle.
So that was a big learning curve for us. It increased our capacity significantly once we recognized that. So I keep saying to people yes it’s good to look at the purchase price that you can afford to either buy or build but it’s more important to lock in a worst-case basis at your cash flow affordability and take into account that you might be able to afford it today. But let’s look at what happens to rates, let’s watch what happens to rent, let’s build in a pretty significant vacancy factor. Let’s assume that you’re going to have kids and you’re going to send them to private schools etc. We need to build all that into the affordability matrix to make sure that long term you’re going to be able to hang onto this thing because as we all know the real estate cycles in the location range from anywhere between 8 to 15 years.
So I say to people you need to be in it for at least 15 years to go through a full cycle and that’s when you’re going to reap the capital growth but if you’re forced to get out of it early on then you’re cutting yourself well short in terms of wealth creation.
Bushy Martin on the Six Ps to adopting the correct mindset for property investment
When Martin first started out in property investment, he was quick to adopt the six components of motivation and mindset to ensure he could handle the stress of investing mentally.
There’s six “P”s in mindset, that again this is a lot of thinking that I’ve forced myself to do it in relation to the book and if I break those six “P”s down its Purpose, Perspective, Plan, Proactive, Probability, Patience and Persistence. And what I mean by that is, I’ll break that down into your thinking around that, you need to be clear on your purpose and this needs to be supported by the perspective of exactly how you want to live, then create a plan of how to get you from where you are to where you want to be. And you need to be proactive by implementing the action to make that happen and that needs to sit comfortably with your probability risk your sleep-at-night factor and you then need to monitor the performance of your investment and most importantly have the patience and persistence to stay the course and see it through.
This mindset was pivotal in helping Martin take action and stop procrastinating.
So my biggest issue around mindset initially was what I call procrastination because that’s the old analysis paralysis because I’m a numbers person and I’d like to really delve into things before I make the jump. Then early on that kept me out of the market because that perfect property wasn’t there. I’ve since learned there is no such thing as a perfect property and the best time to invest is every time you can afford to and then make most of the growth is in the location not the particular property itself.
Martin also found that he needed to be incredibly patient and expect profitable returns only in the long-term.
So if you focus on getting in the right area and then selecting the right property that’s going to get the highest growth at your affordability in that particular location then that’s what going to get you there. As I say, the key piece around mindset though is that long term approach and that’s a difficult one now because we just don’t have any patience.
We are born and bred in a world now where everything is instant and as I say a big part of getting your mindset right is making sure that you’re treating time as your friend and embracing time and expecting that it’s going to take time to get the maximum results. Because as Albert Einstein coined compounding returns is the eighth wonder of the world. It’s the old story. You know 80 per cent of the growth comes in the last 20 per cent of the time when we’re looking at something that is going to compound progressively and so getting really clear on that patience and persistence and then having that discipline.
Martin also warns against too much involvement with an investment property, instead encouraging investors to merely monitor their property with a team of professionals, rather than play around with it too much.
The interesting thing is that I find as people want to play with stuff too much. So yes you’ve got to be very careful when you get in but once you get in, just get out of the road. Let it do its thing. Yes, monitor it. I’m not saying just forget about it. You’ve got to make sure that you’re managing your team. What I often say is you’ve got to manage your managers. So if you’ve got a team around you, property investment adviser, mortgage broker you’ve got your financial planner and you’ve got your accountant. They are the four keys initially and then all the other players are property managers and everyone else part of it. You’ve got to manage them so don’t assume that buying the properties in the journey you just make sure you keep them on their toes. But if you’ve got good ones in the first place that makes it easy but treat time as your true friend rather than the foe. Everyone in this current society treats time as our enemy because we want it to happen yesterday and that thwarts our ability to really enjoy long term success in whatever that is, not just property it’s anything. If you give it time and you set it up the right way then you’re going to get the result. So the biggest challenge I think in mindset is developing those patience and persistence muscles.
While Martin has had many influential mentors in his life, the most influential has been his father-in-law, a Hungarian who had fled to Australia during the Russian Revolution.
I’ve had a whole series of mentors over the years. The mentors tend to change based on my own development at the time. I mean, the baseline mentors are my father and my father in law. My wife Sonja’s father was an amazing man. He passed away unfortunately last year but in terms of role model just inspiring he is someone he’s a Hungarian who broke out and broke the border during the Russian revolution got to Australia with four kids in tow and a suitcase. He went from zero to… And he went bust a couple of times because he’s absolutely fearless. He’s a man who saw his father put an axe through the back of a Russian soldier’s head and buried him under the floorboards just because they were about to machine-gun the family and that’s the age of four. So I think what comes of that is fearlessness. I mean it’s like, well if it doesn’t kill you, then let’s have a go. That’s pretty much his attitude and he used to say, well someone would say “I’ve got a problem with this” and he’d say “Well didn’t someone die? It wasn’t a problem then, that’s just a challenge”.
It puts a perspective on everything and I could tell you I could write a book actually on his life story but the take-home from that, he actually gave me the courage to jump out of that architecture. It was around the time that I first met him and I looked at what he’d achieved in his life and his fearless ability to get out and have a go at it in his mid-70s he was…
He used to go and visit some of his friends and nursing home and he’s so appalled at how they were being looked after. So he went and bought a bus and he used to be a chef so he started cooking and bringing food into them and then taking them out on day trips because he was so… And he didn’t get paid to do this but he just he wanted to make sure that they were enjoying… quite a few of them were younger than he was but he made sure that they were enjoying their twilight years.
In addition to what Martin’s father in law had taught him, he also lives by a quote from popular author Jeff Olson.
if we talk about it quote that I tend to live life by, it is that one and that’s the one by Jeff Olson which says very simply that “life is a curve construction, time is a builder and your choices are the master architects”.
That’s a brilliant credo that I tend to live by because it makes me focus on what am I doing now that’s going to contribute to where I want to be and it acts as a magnet but also a compass. So magnetically, I’m attracted to make sure that everything I do is taking me there but also a compass and that if something isn’t going to take me closer where I want to be then I don’t do it. So it helps me to say no.
Every day, Martin strives closer to his goals by being clear with his intentions and developing them with discipline.
But if I was giving some sort of summary advice to someone there are probably three things I would say Tyrone. That is, live by design not by default so become intentional, focused with your intention because if you do so intention plus attention equals no tension. If you’re very clear on where you’re heading then you can actually relax and you have the peace of mind of knowing that you’re doing the right thing.
I’d also say that freedom follows foster and what I mean by that foster’s a nicer word and discipline. I could say freedom follows discipline because of the opposite. If you want to have freedom then you’ve got to apply discipline. It’s pretty much a simple that. But if you’re fostering something that comes back that gardening concept of talking about is fostering something and growing and nurturing over time and finally I’m not sure where this quote comes from but I would say this to my son and I’ve said this in the book and that is “dream big as if you live forever but live today as if you’ll die tomorrow”.
Martin claims that the property investment field is all about numbers and sustainability and encourages fellow investors to work towards realistic goals while keeping their freedom in mind.
So as I reiterate property is a game of finance it is all about the numbers but you’re only going to sustain it if you’re very clear on what the vision of the outcome is. And again that’s the piece that I think a lot of people don’t spend enough time on.
Yeah, and what I’ve learned over the years and I’m now sort of mid 50s fulfilment really for me is when I give freely to others but I can only give freely to others if I’m in a position where I’ve got time on my hands.
And if I link that to freedom, for me freedom is being out to do what you want when you want but if you don’t have that time on your hands because you’re on the treadmill paying the bills, paying the mortgage and getting the rest of it then that doesn’t work. So time is the key ingredient if you’ve got time on your hands and you can beat a field because you have the energy and you’ve had the time to actually be helping others to achieve what they need to achieve and that’s where we really became what I call passive-aggressive you’ve heard that term but passive-aggressive is a term that we talk to people about you’ve got to be aggressive about being passive in terms of building your wealth and the Freedom Formula then that flows from that is a pretty simple process because it’s if you’ve heard preventative health yet another defender of health where you sort of focus on a good diet daily exercise rest and taking multivitamins.
Well in my upcoming book with a doctor that called it preventative wealth and preventative health is really aimed at trying to alleviate what I often refer to as the diseases of HIV and STD people suffer from and that’s not the ones you might think they are it’s HIV is high-income virus and they are sexually transmitted debt and that is you get married you get a massive home loan, a massive car loan, your credit card is out of control. And then all of a sudden you become trapped on the treadmill and you have to work to sustain that level of debt. So the concept of preventative wealth is really starting to take prescribed doses of multivitamins and it’s really a time-release income replacement program over 10 to 20 years that will ultimately grow, protect and maintain your lifestyle long term so that we start with – this is something that’s easy to get the head around – your freedom numbers.
Martin gives us an example of what he means by freedom numbers and states the importance of sustainable investment.
So if let’s say your combined household income at the moment Tyrone was 50 grand then 80 per cent of that is pretty much going to maintain the sort of the same sort of loss while you’re enjoying a pretty good lifestyle start there. So let’s say that’s 120 grand that’s your lifestyle no. We’re going to work out your nest egg number. So if you get a 5 per cent return on any income-producing assets and 120 grand is what you need then we need to 2.4mil as your nest egg number and then we incorporate your break free timeline so if you said to me that’s 20 years time then your freedom number in property terms is just two properties.
And for most people two properties is very achievable. But the key exercise there is the time if you drop that 10 years you’ve got to double the number of properties you need. So when I hear a lot of these brokers talking about 10 15 20 properties to the average Australian who actually they actually enjoy their work and they enjoy their career they don’t want to create a second job in property but they want to know that their future has been looked after by investing in a growing assets and then two to four properties is pretty achievable for most. And if you’ve done the homework on making sure they’re in the right areas that are going to optimize its growth.
He also recommends investors play the waiting game, as from his own experiences, investors who are in it for the short term will never come out on top.
And when I refer to mindset I’m talking about becoming a farmer, I’m off the land so I understand this but what I see a lot of these days Tyrone is that we live in the instant iPhone everything world and what’s happening as a result of that is that our patients and persistence muscles are in atrophy.
We don’t use them and we and therefore time becomes our enemy because we have to have everything now.
Whereas in my parent’s generation as farmers they learnt that good fruit was produced over long term so they’d plant a seed today, they cultivate it, they weighed it they take it through the droughts and the cold wet winters, they fertilize it. They trimmed back an inch and 15 or 20 years they’ve got an orchard of shady trees with a with some very full fruit.
And that mindset if you go into property thinking going to make a lot of money a short space of time, from the experience I’d had you kidding yourself. And so if you adopt that sort of long term hold exercise and then you exercise discipline and sticking to it and believe in the system and then get out of the way actually and get on with your life then you’re going to make it make the difference.
Martin also accredits his success in the field to his wife and his property investment team. Effective communication and networking allowed Martin to safely invest and expand his knowledge of the industry.
Then the last two components, info network say what I mean by the network is property is definitely a team game. And what I mean by team game is in several layers so we wouldn’t be where we are if it wasn’t for Sonia and I were both on the same page as husband and wife.
We work very closely together to make sure that we’re building our wealth over time and we understand exactly how that operates. Very difficult if you’re trying to do it on your own and then beyond that, there’s often referred to the property as us as a specialist sport. It’s an elite team sport. So you’re the owner of the team you’re not even a player if you’re a player on that team then you’re in trouble because unless you’re an expert you’re going to be up against others, you’re not going to do well and you’ll be taking your eyeballs off in terms of what you’re doing as far as your own career concern. So you surround yourself with a real estate investment adviser, a really good account and a financial planner and those three together will come up with an integrated strategy that looks at where you are, where you need to get to and how that’s going to happen. And then beyond that team particular the property investment advisor then introduces either a buyer’s agent of an existing property or a project manager if it’s a new build, again on your behalf to then keep all the other players in the game honest.
So then obviously the agents, the builders need a really good quality surveyor to make sure the depreciation is right and then make sure that one of the key players that people don’t focus on enough is the property manager because they are the people that will be looking after your property for the longevity and some really average property managers out there it’s worth really spending some time to get a good one so that’s the network side and then finally the strategy piece and as I say covered the strategy already it’s just a matter of pinpointing where you are on the capital growth cash flow curve.
Instead of investing in existing properties, Martin now focuses his money on newly built properties as he finds that they are more sustainable with his income and more profitable in the long term.
When we started investing in property again we were pretty time-poor so we focused on existing properties in what we identified as potential growth areas over time and from a capacity perspective that was okay growing inequity and we could borrow against them but what we were finding over time is that it was biting because it effectively negatively geared. This is a shortfall between the rental income and the costs of holding the property. We get to a point where you really can’t afford to do anymore and we’re fortunate enough to rub shoulders with an accountant who is also a very active property investor, he’s now our accountant obviously and he opened our eyes to the benefits of building in the context of stamp duty savings as well as the tax depreciation.
So a simple example I use on a 400000 dollar property for an existing property. Once you weed in all of the costs in securing and holding the property you’re not going to get out of it much for less than a shortfall of somewhere between 150 and 300 dollars a week and that’s a real cost and that’s assuming that your borrowings are somewhere between 80 and 90 per cent say leveraging the portfolio pretty heavily in the early days vs. do a new build property exactly the same value then it ranges from cash flow neutral through to sort of 20 or 30 bucks a week. So from an ongoing sustainability perspective, the ah-ha moment for us was recognising that new-build properties provided a significant opportunity to continue doing it because of its cash flow affordability.
Martin encourages investing beginners to be intentional about every step they take towards their goals and to take action with certainty and confidence.
I went back 20 years. It would be similar to what I was reinforcing similar messages really and that is to live by design, not by default. That would be the key because
If you are intentional about how you’re investing every second great things can happen but if you’re not it’s very easy to get off track and for life to be happening to you and end up in a place that you don’t expect because it’s that incremental. Yeah, you’re either moving up moving down either way, you’re going somewhere. So by being very intentional about where you’re spending your time each and every day then.
And the reason I say that in my early 20s I was pretty ambitious, I was focus was focused on the work regularly but I didn’t really seriously get into the investment side of life until that major crisis because it really forced me to stop and prop and have a look at what I learnt from this and what I’m going to do differently if I’d taken that advice and started that when I left school then.
Life’s really good now but I would have been doing it 10 years earlier.
In the near future, Martin is planning to take advantage of today’s advanced information systems to share his own experiences and knowledge with other investors.
There’s never been a better time to invest in property.
The reason I say that Tyrone is that we’ve never had access to the level of information that we can get our hands on for free. It used to take 10 times as long to get it at all.
And what really excites me is that because of the access to that information without drowning yourself you know there’s going to continue to be some very exciting ongoing opportunities in the property sphere. And it won’t be everywhere. I mean you know in some of the booms and in days gone by just about you just bought a property. Any property owner would do okay. That’s certainly not going to be the case moving forward but applying a little bit of due diligence to the process will mean that property particularly in areas where you’ve got a strong and growing income base which is driven around employment, the property side is going to continue to do well and what excites me personally about that is that through my book the Freedom Formula and the upcoming podcast Get Investing which will be going live soon.
I’m really excited about helping to inspire and motivate others to recognize that opportunity and really put themselves in a position where they can live life on their own terms.
Having applied his six-component mindset, Martin has successfully built a property portfolio of 12 properties worth approximately $4 million, all with positive cash flow.
So we’ve got 12 properties and that means diddly squat.
I always hear people bragging about the number of properties, it’s not the number of properties it’s the net equity that you’ve actually got that’s going to give you the wealth and generate the income. So we’ve got 12 properties but they’re quite low-cost property so three of those are in the States. They’re all existing properties and are cash flow vehicles that we’ve utilized. So they’re actually pretty good returns from a cash flow perspective. So that’s three existing there. We’ve got, we started with three existing properties here South of Adelaide. And then the rest of the portfolio is new build properties. The net asset base is about 4 million roughly varies with valuations obviously these days. It’s around about 4 million.
And without going into the nitty-gritty is we’ve got some pretty high yielding properties amongst those. Quite exceptional yields given some structuring that we’ve been able to take advantage of it gives us really good cash flow.
However, Martin believes that success in property investment is relative, as the end goal is to meet each investor’s individual idea of a comfortable lifestyle.
I always asked people how much is enough because once you know how much is enough or we need to do is generate the property equity that’s going to give you that and that’s game over say as we said before if 120 grand is enough to give you a comfortable lifestyle then and you’ve got 20 years to do it that’s two properties and that’s it. So you don’t need to go gangbusters here and get silly about it.
But I think early on we bought some very cheap properties I mentioned that 80 thousand dollar property and we bought a bunch of others that are pretty low so the number of properties doesn’t mean much at all but it’s the equity growth that we’re most interested in and what that then allows you to do. And we’ve got that mix of high yielding properties and it balances the cash flow side of thing. But initially all about growth and later about cash flow.
Besides your mentors, are there any other resources such as books, which have helped you achieve your success in property investment?
Yes, I’ve got an absolute library of them. I’ve always got five books on the go. I love reading and my evenings are spent diving into books. I don’t listen to music and quite consciously don’t plug into mass media because it’s all about great fear and depression.
So I tend to fill my mind with stuff that improves my outlook and interest in my skills. So there’s an absolute cracker mate that I would recommend to people and not just getting involved in property but just getting their lives on track. And I’d start with a book called Life and half a second by Matthew Michalowicz.
That was very inspirational and motivational to me because the concept of the book is that if you looked at our lifespan in the context of the world, our life represents half a second. So what are you doing with your half a second and this might sound a bit depressing but I have a doomsday screensaver that tells me how much longer I’ve got and you plug in your numbers based on your life and it tells you how long you’re likely to live and therefore how long you’ve got. I’ve got 20 years left Tyrone and I find that extremely inspirational in terms of I’ve got this fever now to spread the message I really want to help people to be able to live life on purpose and I see property as a vehicle do that. And because I don’t believe I’ve got limitless time that really gets me fired up about doing and the book also is a real step by step process to success in any endeavour.
Martin recommends investors to read books specific to property investment, but also books concerning lifestyle development and motivation.
The second one we’ve already talked about and that’s “A Slight Edge” by Jef Olson. Yeah I just find that if we talked about that passion and persistence exercise and embracing time and expecting that success is going to take time, we just need to keep doing David discipline’s and happy habits. That’s an absolute cracker.
The next one I’d suggest is a book by Michael Hyatt called Living forward and if you’re looking for something to help you get crystal clear on how you want to live. He’s really documented that beautifully. I’d then be suggesting a book by Malcolm Gladwell called Outliers which is a study at success and we’ve all heard you’ve got to be doing something for 10000 hours well that’s where it came from the book by Malcolm Gladwell and he’s such a storyteller. That’s just an excellent read. I’d then be suggesting that if you get down to the property side there’s a book by Steve McKnight called “0 to financial freedom” It’s a very short book, small, but the frameworks he has in there in terms of working out where you are and where you’re going to get to is very quick and easy to absorb.
And then there’s a book by Noel Whittaker that I picked up back in the… about 10 years ago called “Saving tax on your Investment Property”. In terms of structuring and getting the entities right and the treatments right.
And of course, Martin also recommends reading Robert Kiyosaki’s “Rich Dad Poor Dad” which he accredits to learning his fundamentals and kick-starting his journey into property investment.
Brilliant book and of course as the old-time favourite moment a little bit out of date but the principles of awareness to old classic Robert Kiyosaki’s Rich Dad Poor Dad.
Yeah been a long time since I’ve read it but that actually started me on my journey. There’s no question, there’s some really good fundamental. I literally get a library of them that I think I’ve read every book on property that has been written to help me get clear on what I believe and what works for me because we’re all different.
The thing that a lot of people got to take on board when we go back to that mindset question is that your sleep at night factor is going to be different from everyone else. So my approach might not work for you but if you get clear on what that looks like then you can adopt an investment approach that’s going to make sure that fear is not going to force you to do the wrong thing.
The most contributing personal habit to Martin’s success is the daily revisiting of his annual goals, as he makes sure that he stays focused and intent on achieving what he wants to do in a limited time frame.
I have that revisiting my annual vision something I’ve been doing for over 20 years and beyond that actually and that’s probably the best habit that I’ve had because, and I get really visual about what that looks as I say I’ve got a multicoloured vision board with photos of all the things that we want to achieve and it amazes me how quickly you end up achieving all of those.
So the habit of doing an annual revisit of your vision is an absolute key but then the one that’s made a big difference in recent times is, I mentioned the Bush journal. So because what I’m doing is reflecting every day on what I’m doing that’s taking me closer to that long term vision of how we want things to be.
For those who want to learn more about Bushy Martin or even seek his advice on their own property investment dilemmas, be sure to contact him through his company and keep an eye out for his upcoming projects.
Our business is KnowHow property finance and that’s easy to contact us. www.khgroup.com.au. We’re in the relationship business. We like to talk to people. Tyrone so pick up the phone 0 8 8 3 8 3 6 9 0. It’s far better than a remote contact as we start to respect and know each other once we are talking to each other. And in terms of the book, the book’s in entry register format and we want people to register on Bucci Martin dot com that you and read. It’s something I haven’t spoken about but we have got a big thing about eliminating abandoned pet euthanasia in Australia. So I want the proceeds of the book are going to a nonprofit group called “living it rough” which supports the health and needs of both the homeless and their pets because of a lot of the homeless. About 400,000 a night are out there doing it tough. Quite often they’re the only companion is their pet and living it rough actually supports both of those so they’ve actually got some companionship.