5 Ways of Income Return in just One House From $3,000 Investment
We’re chatting to buyer’s agent, Zoran Solano, who at 19 years of age had already secured a real estate licence and purchased his first investment property. You’ll learn about his journey to success and how his client-focused attitude will serve you when looking for the best deals – like Solano’s recent property purchase of just $3,000!
Also discover why it’s so important to review your portfolio to ensure you’re investing in properties that will provide security, why Solano has little time for underperforming properties and how you can use leverage to grow your portfolio, creating the equivalent of five incomes in a two-person household.
To begin with, what does Solano do actually in any given day?
My day can be very dynamic, because we do assist in that full circle of people owning property, you know I could have an initial consultation with someone, just this morning I had a call from someone who just had, has come across an inheritance and would like to now move forward in purchasing some investment properties to make the best of that. So sometimes it’s initial strategy and property investment strategy, you know, inspecting property, negotiating a deal or coordinating some renovations to improve the performance of my client’s portfolio. So my day is very dynamic both in and out of the office.
Solano has grown up around the property investment industry and shows a real passion for it, describing himself as a hands-on investor.
I’m a long term player when it comes to property. I don’t think property is a get rich quick scheme, and I think that you know, successful property development can be a really powerful thing in an investor’s portfolio. I think all, your… have some diversification within your portfolio, but for me property is just such a, it’s a tangible asset, it’s a real asset that I know intimately. So for me, that’s the type of investor I am, is someone who likes to be hands-on. I personally have a buy renovate hold, or buy develop hold strategy for my wealth creation.
Every pathway to property investment success is different. Solano’s story begins in his late teens in a place called Clayfields on Brisbane’s northside.
So I graduated from Churchie, which is a Anglican Church grammar school here in Brisbane which gave me a really great platform to enter up into the family business when I completed that.
I stepped straight into the industry, having grown up around property through my teens I really learnt, you know, in the workforce working and doing what we do in buyer’s agency and stepped straight into buyer’s agency when I finished school. In Queensland you can’t hold a real estate license until you’re 18 so I actually undertook all the credentials for my real estate license before my 18th birthday and on my 18th birthday submitted the paperwork to the office of fair trading and became an agent as quick as I possibly could, and that’s the legislation that we act under here in Queensland for what we do. So yes, straight into it and now, yeah nearly 10 years in the industry.
I would say for a long time I was probably the youngest buyer’s agent in Australia, I would say being 18 and being a fully-fledged buyer’s agent you know….. searching, evaluating, negotiating you know, the full process of buying and property acquisition, so definitely. And I initially found that as a challenge, because a lot of people questioned my knowledge and ability given I was so young, but I think when they understood the extended knowledge that I had at that age and the experienced that I had already by you know growing up around Liz Willcox who is my mum and who is a very successful buyer’s agent in her own right, you know, really gave me the piece of the puzzle that I needed to really start being a buyer’s agent and from there it’s just grown.
While his mother was a key influencer in his transition into the industry, it was also his grandfather, a property investor who peaked his interest in real estate.
My dad was the complete opposite, he would be the share… so you know, on my dad’s side of the family, it was actually my grandfather, who was the keen property investor, you know typical story of an Italian migrant coming to Australia working in the sugarcane industry, the sugar cane fields in far North Queensland and obviously you know, it was a high paying job for the time but it was also a tough job as well. So you know, he worked in that industry for many years to save money and he put that money towards property investment here in Brisbane.
This is where Solano’s property buying story began.
Well look it really all started look, for as long as I can remember, especially on my dad’s side with my grandfather’s portfolio. Being, again being a typical old Italian guy he you know, liked to pick up the rent in cash every week or fortnight, you know used to undertake the maintenance of the, we had a couple of blocks of flats and apartments that he would used to you know, do the common area maintenance. So you know, for me when I was a young kid, I was pushing a lawnmower around a block of flats that my grandfather owned, you know. So that’s where really I think it all started for me and my interest around the property, that you know, that this is possible.
And so you know, my grandfather accumulated several properties through, over a number of years, and when he passed away those properties were then passed down for generations so to speak and yeah, so I think that’s where it really all started. Throughout my teenage years while I was in high school, I worked with my mum as a research assistant, so you know, going along to inspections and assisting her with her role as a buyer’s agent at a previous business. So then in 2008 we launched Hot Property Buyer’s Agency, so yeah that was coinciding with the same sort of time I finished high school. So having said, straight out of high school into the business, and yeah we’ve grown from there.
With influence from both his mother and grandfather, Solano bought his first property at 19 years of age.
I bought my first property at 19, the property was an established house that had some value-adding opportunity, and it was a lower budget style property. In fact, the first property I ever purchased was in Logan, Logan Lee, south of Bristen. But I found that, as my knowledge changed, as my skills sophisticated and my strategy evolved, that property I knew fairly quickly within sort of 12 to 18 months, that that property wasn’t going to do what I wanted it to do for my portfolio. It didn’t have the consistency of capital growth, and it didn’t really have the opportunity that I wanted in my portfolio. So although that property did create a bit of capital gain for me to stick into my next property a couple of years later, it was something that I quickly identified after probably about 12 to 18 months as I mentioned, that it was no longer something that suited my investment strategy. So my strategy changed.
After realising he had purchased a property that was not really for him, he moved onto the next investment with a new procedure in mind.
So basically, I undertook a renovation net property which did create a bit of equity for me, and time went on where I was then looking to purchase another property with my partner and so at this stage, I’m 21 and she’s 19, and we then purchased a property in Wavell Heights on Brisbane’s northside, about 8km from the Brisbane CBD. Great property, great opportunity, so you know, what I really identified with my portfolio, you know the first property I purchased was a little bit of right place right time, I had the opportunity to buy it below market value, to purchase the property, but as my property investment sense of knowledge changed and my strategy sophisticated dramatically over those few years, my focus really shifted to purchasing more quality blue-chip location, closer to the Brisbane CBD. And that’s really, and that decision in my portfolio had made a massive, massive difference with where I am today, you know just 4 or 5 years later. So for me, it was the best move I ever made, it’s one move a lot of investors don’t do enough of. They don’t review their portfolio and make a decision to divest with underperforming property in order to expand the portfolio in a new direction. Sometimes you know, the opportunity costs, if they were to sit on that property, can really hurt the performance of their portfolios so.
Solano then confidently purchased more investment properties and established quite an impressive investment portfolio.
So currently, personally I’ve got three investment properties which are currently in my portfolio, all of which have development upside which I plan on undertaking in the next few years to undertake the development to 5 properties that those 3 properties have the opportunity to be subdivided into 5. So that’s sort of where I’m at at the moment with my personal portfolio, but amongst certain entities that I control along with my family as well, we have several investment properties throughout the family trust that they also control, so yeah pretty established portfolio across the board, but still looking to grow. But also still looking to enjoy my 20’s as well so. For me you know, could definitely be up to more properties than what I currently have but I’ve chosen to enjoy a bit of balance in my life as well so. I’ve been lucky enough to do a fair bit of travel so.
With any property investment, there is the risk of making the wrong decision or a bad investment. Solano has seen this happen with some of his clients.
One thing that I do is I undertake a portfolio review for clients, whether they are existing clients or new clients who engage my services. And I had a couple who were in their late 50’s early 60’s , so approaching retirement approximately ten years ago they started investing in property and they purchased quite a few properties in a short period of time, and their strategy was really around quantity not quality. And what I mean by that is they purchased several low budget properties that fit within their serviceability within their capacity, which you know, involves you know, two units, sorry two townhouses down in Logan, two properties out at Ipswich, one at Oakey, west of Toowoomba. So there were several properties within their portfolio.
When I reviewed their situation, what I found was in the years that they had owned that portfolio, it had no capital growth. In fact, some of the properties had deteriorated due to a lack of maintenance, that those properties actually would cost them money to bring them up to a level that was worth what they had paid. So, and this is what I found, that these guys hadn’t used my services to purchase, hadn’t used the right property manager to manage their portfolio through the time of ownership, because it’s all well and good going out and purchasing you know, you could purchase the best property you know, in Australia, but if you don’t maintain it, you don’t manage it, you don’t look after it, it will deteriorate. And that’s exactly what happened. So, unfortunately, these people had an LVR, a low to value ratio that was pretty much 100%. They had no equity, they’d heavily leveraged against these properties, unfortunately, and they hadn’t really done anything. And that’s due to choosing to, I believe, the incorrect properties for their portfolio, and not realizing it sooner.
So that’s probably, you know, when I do what I do and I see people who believe they have done the right thing, and they go out and buy an investment property or several investment properties, they don’t have a strategy, they don’t have a plan, they don’t review the plan and they don’t have the right guidance. And that’s often the lowest point of what I have to do with, unfortunately tell people that that property has not done what they wanted it to do. So yeah, that cost them a lot of time in what I have to do, unfortunately. But then the next process is obviously getting them back on the right path, to the right opportunity, to the right property to build their portfolio strong and secure. You know whether that means undertaking renovations to improve those properties’ performance within their portfolio, or divesting of underperforming properties so.
Beginning his journey at an early age meant that he learnt very quickly to adapt his strategies in order to succeed. In this instance, he learnt the importance of a good portfolio and how to assess his own performance.
When I first bought my first property and my strategy then evolved because I reviewed it, that’s when I also identified that I needed to sell and so for me I’ve learnt, I learnt quite quickly for myself that that was very important to review your portfolio and monitor its performance, and also divest of underperforming properties you know, to, you know to realize opportunity costs. You know, be conscious of opportunity costs if you are sitting in the wrong spot. You know I’ve learnt that lesson myself you know at the age of 19, 20, and now implementing that into people’s portfolios, you know that had doubled or tripled my age when they realized that. For me, the sooner you know, I can create a relationship within an investor and the longer the relationship we can have, the more I can help them. So that’s one thing that I’ve learnt quite quickly.
After that, he was able to experience more success.
There’s been a couple of you know, ‘aha’ moments for me because I’m constantly learning. You know we’re all constantly learning and getting better. And one thing that you know that happened to me was exactly that, reviewing my portfolio, divesting of bad properties, and that, that property that I purchased and then divested of, the first one, the second one I purchased has created the equity for me to buy my third property. So the equity you know as leverage against that first property is a bit of deposit. The third property I just recently purchased last year, …I purchased, it has, it literally cost me $3000 cash to buy that property, everything else was used, my equity.
So my portfolio is at a stage where you buy the right property , your portfolio grows itself, you know, you leverage property, use your equity, especially in the growth stage of your portfolio which is where I am now, is growing that asset base. You know when you have a portfolio that builds itself, you can still take those holidays. You can still have that time off, and you know… That was one of the big ‘aha’ moments for me, is when you realize that you’re going to work 9 to 5 creates you an income you know, whatever it might be per annum, but the leverage that you obtain when you obtain quality investment property and the income and growth that creates is significant you know. For me and my partner, it’s like we’ve got you know, five incomes in a you know, a two people family, you know, really because those properties are creating that income. So that’s really what it’s about for me, that ‘aha’ moment.
One thing that I find a lot of investors also don’t realize is they get so caught up with cash flow, they look at the weekly rent in and the cost of ownership out, but don’t remember them or don’t realize the capital growth. Because capital growth I feel, happens in the background a lot of the time, and people only realize that growth when they choose to sell or perhaps when they choose to revalue. So the capital growth and creating equity is something that’s happening every day, property prices are moving every day whether it’s up, down, sideways, for the right property in the right location, it should have that consistency. So yeah, that’s another ‘aha’ moment for me and what I encourage my clients to also consider is cash flow is one element of the equation, and it’s probably not the most important element.
In successfully buying for clients, Solano also has the opportunity to discover diverse markets that interest him, such as the Brisbane market.
I’m excited about the Brisbane market, to be really honest. I’ve got, I see a great opportunity you know when you look at the meeting outside of Brisbane being half that of Sydney, that’s historic. You know, we have really never seen the price differential between the Brisbane, Sydney market, so wide. And I think that creates a really strong value proposition in the Brisbane market, and that value proposition should be considered to investors as an opportunity to invest. Our rental yield is still really strong relative to the interstate, and so you know, we’re still getting really strong rental deals, so that’s really positive for investors to consider as well. But I think personally for me, I’m most excited about you know, where my own portfolio is going and the things that I’m doing, not only myself, but with my family, and also with our staff members as well. You know, like one of the key fundamentals that we stand by is you know, we’re here to create wealth through our clients and help them create wealth, but in turn, you know, we also create wealth by doing that. You know, and obviously a difference in our business is to help people to purchase property, but it also helps us, and you know, we recently purchased one of our team, a great little investment property here in Brisbane, and yeah wherever we can, you know we like our staff to also do well so.
With three investment properties to his name, there are many elements and strategies which he adopts to get the best value for his clients.
I think for everyone it’s something slightly different. The, I think the value in what we do is made up by all the little, you know, one… that we do, you know, whether it’s initial strategy. You know, like I’ve had clients who you know, I’ve educated about a different strategy, and it’s a strategy that has saved them $20 000, $30 000, you know, and you know, that’s invaluable to them. So some people got the value out of that element. But you know, I think it’s the accumulation of strategy, the guidance but also physically the time. The time that we take in the marketplace to do the searching, inspecting and evaluation of property and shortlisting properties. Because when you’re, especially interstate, we have a lot of interstates overseas, in time…, those are the three key demographics that use our service, and especially when you’re any one of those people, you don’t have the time to search locations. You don’t have the time to research “is that flood-affected” “is that a… this property worse.
And at the end of the day, the selling agent is there to sell the properties for the greatest and represent the seller. So buyers historically, have been left to their own devices and have to fend for themselves, it’s really buyer beware. So the value is in all of those little bits and pieces that come together for the full service, the negotiation not only on price but on terms and conditions. It’s the research, it’s the, buying the right property that suits the right demographics for the area, but it’s also filled… the contract. A Queensland contract process of purchasing properties is very different to Sydney and Melbourne. So in the process of buying is different. So having an intimate knowledge in how that process works to save time and money, because some people see the value in that, so this is where there is no really one specific person who would use our services. It’s anyone who wants to buy property, and wants to take it seriously.
The Ripple Effect: How To Switch Your $5 Coffee for Capital Growth with Zoran Solano
So was there anything holding him back from starting to invest in property?
Thankfully for me, I had a really great opportunity when I first got into the market. It was at a time where the first home owners grant was available for established property and obviously the stand duty concession for people buying property as well the first time.
So for me that was really a great opportunity. I’d always worked till at high school, so I’d saved money and by the age of sort of nineteen where I purchased my first property. I had around thirty thousand dollars cash at bank ready to go plus also the incentive from the government so for me I had consciously decided in my teens that property investments was for me and my focus was ok. How do I get into property?
Step 1, you need a deposit and for me I wanted to save that myself and so I did. So as I said throughout school I always had a part-time job, a holiday job and then immediately after I decided finishing school straight into the workforce helping clients buy property and be the buying agent as I am today.
In getting into the property buying business, the passion and interest he harboured for property was supported by those close to him who had experience in the field.
Mum was probably the main mentor during that time obviously given that she was one of the leading buying agents in Brisbane at the time and one of the most active buying agents in the Brisbane market. So for me, that was quite self-evident, that’s what I should do.
But also mention of the previous podcast. My grandfather, seeing the opportunity of property plus time. Sorry, let me say that again. The right property plus time and the equation that is and the answer that can give you and it can give you options. It can give you growth, it can give you a rental return. So I saw that dwelling up as a really great opportunity and for me a natural progression into it and that was probably one of the main drivers and influences.
With a lot of family influence in property and experience in the field, Solano has received a lot of valuable advice that has given him the ability to move forward and invest himself.
I think the methods of advice that I’ve gotten over listening to other property experts is well over the years and it for me, I’ve created my own brand in buying property in a strategy that I believe works and it’s using a mixture of strategies from different people and maintaining my independence in what I do. For me, buying quality as to opposed to quantity is very important. I don’t believe , ten properties in ten years or whatever the height or hot sort of thing might be at that time.
It’s all well and good having ten properties, but are they going to perform, are they going to do what they should be doing, are they working hard for you and that’s also the reason why my portfolio is where it is. Its like John West. The tuna that he rejects that makes him the best. That’s the same as me. The properties that I reject, the properties that I don’t buy that make my property portfolio stronger. So that’s one of the key things that drives the strategy of what I do and that’s why I really believe in the quality over quantity.
Solano was able to develop a strategy which was mainly centred around the idea of quality over quantity and using the ripple effect created by capital growth to his advantage.
When we specifically talk about Brisbane and the Demographics of Brisbane, we see that it’s predominantly in an established housing market, that is where we see a lot of opportunities. Currently if we look at right now, this moment in time, the Brisbane property cycle with regards to growth and we are seeing a lot of unit and apartment development which is also supplying that market. So the strategy for me is to stay within that distance radius from the Brisbane CBD, because when you compare us to more established cities like Sydney and Melbourne. It’s those kind of inner and middle-ring suburbs. Well, Sydney is inner city now just in case, but for Brisbane, that’s still middle length.
That’s where the real growth has occurred, that’s where the real opportunities have been and for Brisbane, we are a younger city, we are a smaller city but we grew rapidly. In the migration of like three quarters has been on the increase while NSW has to be on the decrease, shows the population in QLD expanding and inside properties increasing. So for me, my investment strategy is really around that proximity to the city and proximity to the Brisbane CBD areas that do have that changing cafe culture, restaurant culture and public transport. Areas that are gentrifying and changing is where I love to buy for myself and the client. For me I’m a big lover of buying renovate hold or anyone that has ever sort of spoken to me, you know that strategy which is applicable to the right person I suggest.
One of the other key things I consider is the little effect of capital growth. How often we see in a rival market the inner and middle-ring suburbs that benefit from growth first and then it’s those bridesmaids suburbs who would join it further out from CBD that have fueled growth. That ripple, we see that occur in every capital city. We see that growth rippling from the centre out, but reversely when we see soft times in market change and times of uncertainty. It’s often those outer areas feel that downturn or flat line and then it retracts back to the CBD. So that’s where that ten to fifteen km increases sort of radius from. Brisbane Capital CBD is where I focus my investment to myself and clients.
With successful decision-making skills when it comes to buying property, he has started to focus on buying a certain property type to strengthen his portfolio.
For me is focus on established residential property. There’s a number of reasons for that. In established areas you don’t have a lot of greenfield development opportunity, so when you look further out from the CBD, 30-40 km you’ve got this large acreage farms and stuff that have been subdivided into half land packages. There’s no scarcity. You know when you look at supply and demand you think back to year 10 economics. Supply and demand is one of the key drivers to growth and price and when you look at other areas or if you look at the unit market, Melbourne and Brisbane right now is oversupplied and when this oversupply occurs it starts to saturate the market, not only for sales but also for rentals.
When you have such a high proportion of investors purchasing those style properties, you see that then that rental market starts to become saturated. So for me, I prefer to buy in owner-occupier dominated areas in blue-chip suburbs or the best suburbs my clients can afford or that I can afford because I know that those kind of areas are the ones that perform well.
When looking to buy a property Solano likes to do his research into the history of the property. While nobody can predict the future of the market, doing the research is always key.
So for me, I will always look at historical growth. Obviously no one has a crystal ball to predict the future but we have historical data to go on to see how that area has performed and also what things are in the pipeline to expect change, in that area. For me, I’m not a speculator. When I’m investing, I don’t like to gamble and guess. I like to make informed decisions in established areas that have that consistency and growth historically and then also have some form of stimulation in that market to promote future growth. So in a lot of the markets that I buy in or pockets that I buy in around Brisbane. As I mentioned before we seeing gentrification, we are seeing the change of the guard, we seeing the older demographics selling three bed one bath type to the young family who come in and do the kitchen, the bathroom, the deck, they spend for the yard for the puppy dog and that sort of stuff.
So for me those sort of areas showing capital growth opportunity they showing the change. So that’s why I love buying in areas with high owner-occupier demographics as well. Owner-occupier, they buy, they renovate, they look after in general and that improves the areas as well. When you look at tenants, people want to live in desirable areas. There’s another thing I often talk about which a not of people understand but their supply and demand and for me, supply is obviously the available property. Everyone has to live somewhere. In general most people a roof over their head, they need to occupy some form of property to live. Now there’s a secondary factor which is the “want” factor.
So is the suburb you buying in, an area people want to buy? Does it have the desire, is it desirable for the consumer because people will need to live somewhere and they’ll sacrifice their budget or their family situation and they have to live in a certain area. A lot of people strive to live in aspirational areas. So for me, I love buying in those most aspirational areas or areas that have gone through that kind of change because it means people want my property, they want to live there, they want to rent it, they want to buy it. I’m always thinking that if my situation changes then if I need to sell or liquidate my portfolio or reduce my debt and lower my LVR. If I need to sell. What’s my market, and how quickly is that market going to react to my property? So those are all the factors that I look at.
In order to be smart and make good investment choices, he is conscious of his day-to-day spending which helps to keep him on the upward path to success.
For me, I’m always very conscious of the day to day spending where I need to be. I enjoy the luxury here and there but in general, you have to be disciplined because often that a five or ten dollar a week coffee can add up in the long term. Let’s use coffee for argument sake. you buying five or six week of them a week, which I’m sure most people are probably doing. that thirty dollars a week times fifty-two is one thousand five hundred and sixty dollars a year. That doesn’t sound like much, but when we produce that money as an investment into our portfolio. A thousand five hundred dollars I could add stand like combos to my three-bedroom investment property which increases the rentability of that property but also that expense is now a tax deduction.
So I look at all those kind of opportunity cost everywhere in my life of, how can this money work for me? But also the bigger picture which often this might scare some people or even think about is the compounding growth of that one thousand five hundred and sixty dollars a year in twelve years time and it’s a very high concept especially when you’re a young person to really realise the cost of that five-dollar coffee. Because that could be compounding over six per cent per annum over the next thirty years and can really change the end result. So for me every little cost I’m very conscious of but having said that you do need to live, you do need to enjoy.
Yeah that’s a very good point. because if you want to invest it’s also important to put money aside as well and saving those extra dollars, makes a huge difference even when you say having no coffee will stop you achieve from having those goals.
Honestly it’s one of my largest frustrations about people. Unfortunately these days people want to get ahead, but they not willing to sacrifice anything to do it. I think it’s a generational thing as well, unfortunately, but don’t get me wrong, there’s still people there, they sacrifice and they want to get ahead and willing to make a change. But I have an initial confrontation with people who want the world. They want everything handed to them on a silver platter and unfortunately, that’s not how the world works sometimes.
So, yeah being very conscious of those cost and look what I’m saying may be very controversial to a lot of people and there might be people listening, there might be some people who completely agree. It’s up to them. I’m always known as a straight shooter and yeah that’s my thought.
With a background in the property buying world, Solano searched for other forms of inspiration for his own buying strategies in order to develop a strategy that suited what he wanted to achieve and the type of properties he wanted to buy.
I’m currently reading a book that’s not really property specific, but I guess for me I’m always a fan of Biographies. When I’m reading I often grab the audiobook and sort of listen to it when I’m travelling or whatever the case might be.
So that’s one of the main things I enjoy. I’m personally a big fan of Branson. Richard Branson for me that style of business and the concept of his business strategy is really important and I think I take a lot from that.
At the moment I’m reading a book by Aaron Sansoni, ”Think Like“ and it basically breaks down the world’s top twenty most successful business people and goes into what drives their success.
So for me that’s what I’m currently reading and Aaron Sansoni is a very good friend of mine. I have done some training and work with him. He’s one of the key influences, negotiators and that’s where I’ve done a lot of training and negotiation to help my clients and yeah, one of his books is what I’m currently reading.
If you want to connect with Solano and get more information on his property investment strategy to get you started in your own journey, visit his website.
You can jump on my website. Hot propertiesbuyersagency.com to look at what we do but I’m happy to give out my direct number. 0424271123 because I really love having initial consultations with people and chat to people and I’m available all the time.
Properties for me as you can tell is my life and I love talking to people during the day, on the weekend that sort of stuff. Anyone interested give us a call. Our office is 07 3170 3760 if you can’t get a hold of me.