Co-founder and buyer's agent at Dash Dot, Glenn McGrath, otherwise known as Goose, is a successful property investor helping Australians learn how to research and start investing real estate. From a start in organising music events and festivals, he then moved onto the real estate space, inspired by those who had developed passive incomes and achieved financial independence. Despite the environment, Glenn McGrath grew up on, where buying property was not encouraged, he has managed to buy two and a half property over a span of 18 months.
Join us as we chat to Glenn McGrath and discover the lesson he learned about buying off-the-plan apartments, how he devoted himself to studying property research and economics and his three-part strategy that allows for the purchase of property investments safe and risk-averse to any economic climate and much much more!
-Glenn Goose McGrath
Glenn McGrath, otherwise known as Goose, is the co-founder and buyers agent at Dash Dot. On any given day, he helps everyday Australians learn how to invest in property, gets involved in helping clients find a property and guiding them with mindset.
There are two parts to what I do in a day. There's the holistic “what do I do in a day”, which is helping out everyday Australians build wealth through real estate. So we're actually on a mission to try and change the financial future of 150 Australians by April 2020, which is pretty awesome. What that constitutes in a day is roughly 20 to 30 percent of the day I work with our partner Gabby to work out how we can help spread that message and how we can help educate people and provide really valuable stuff to people. And about 25 percent a day I'm on the phone giving people advice and helping them through their journey. Obviously we want to support them in that. But people are at different stages, so I'm really passionate about trying to help people and ask the questions even if it's just to help give them some guidance and then the rest of the day is focused on servicing our existing clients and property research and stuff like health and mindset.
Growing up in a small town in regional Victoria, McGrath actually started his career in organising music events and festivals.
When I was a kid, we had 200 people in primary school in Glengarry. I went to high school in the big smoke, the big town, and the nearby town that had traffic lights and stuff like that, that was pretty exciting and that's where I got the nickname Goose, was when I was at high school there. I started organizing festivals and events when I was 14 years old in that area. And that kind of dictated a lot of the path in subsequent years, and I moved to the big, big smoke Melbourne when I was 18 and I went headlong into pursuing a career in events.
The economic impact when power stations got privatised in Glengarry made quite an impression on him and influenced his ideas about economics later in life.
Glengarry's roughly 200 kilometres east of Melbourne in Gippsland and so it's quite an industrial area. I mean, from our kitchen you could see one of the power stations, Yallourn power station, Loy Yang Carr station, so it's quite an industrial area. And for what it's worth, economically, it was quite an interesting space. My dad was a fitter and generator at the power station and my mom was a nurse, so it was quite a classic regional family to grow up in, a nuclear family too, in a sense, one brother. So it's a very kind of standardised format there but then obviously when the power stations and stuff got privatised, I watched a really huge economic impact happen to that region and that kind of shaped a lot of my opinions around economics and society in general.
He goes onto explain why he decided to move from his small town to Melbourne, citing his desire to experience more of the world.
I've always been desirous of expanding my potential and expanding my circle of experience in the world. I never really had this small-town mentality. I was always going to move. As I say, I was involved in events and starting to run my own events in the local area and it was a natural kind of progression to want to pursue that further. I'd already started getting work in Melbourne and we started to work on larger and larger events. It was a bit of a natural progression. I broke up with my girlfriend at the time and I thought right now is the big opportunity, I'm out of here, and packed my bags and headed for life in the big smoke.
McGrath shares about the events he was helping to run that kick-started his career before he went into real estate.
Everything was a journey, so I started out on small events. My first professional gig was when I was 16 years old, I got paid to stage-manage at Moonbath for Paul Kelly and the Wetlands, and naturally at 16 years old and has only been in Melbourne about twice, it was all pretty daunting and shaking in my boots, but my whole career in events grew quite quickly. I worked on Big Day Out in Melbourne so that was obviously a large festival there and it's taken me all over the world. I've done events in the UK or through Asia, Europe, and the states, places like Glastonbury, Burning Man, London Olympics, and organised events for the Malaysian government for one million people and stuff. So it's been a pretty wild and varied journey over a very long period of time, including working on pretty much every one of Australia's largest touring festivals.
How long have you been doing that for now?
I've obviously moved into the real estate space but I started events I was 14. So I've been doing it for sixteen years or something like that. I'd say for a good 10 years I was only spending six months in Australia. It's fantastic. Twenty-six months on the road overseas, touring, living on festival sites, putting on big shows, so it's been a pretty radical decade.
He then reminisces on the memories that stood out for him during this period of his life when he was running events.
Look, like everything you go through phases. I've had a pretty varied experience over the past 16 years. I even took a year out of that to live in Vietnam and work as an adventure motorcycle tour guide which was pretty exciting, change of pace as well. I've kind of had the opportunity to get around quite a bit and the biggest driver for me has usually been the people side and the creative side, so I've always had an affinity for wanting to try and create a positive space or a positive experience for people. So the ability to manipulate that with events, I mean events in and of themselves are I guess quite, let's be honest, quite wasteful. Well, they are. I mean in a resource sense. But if you can create an environment that has the potential to benefit to people, like give them an experience they can then take back into their communities and take back into their homes and may help transform that that their state into a positive state is a really powerful position to be in. Seeing some of those kind of impacts on people and places, particularly places like Burning Man in Nevada and places like Glastonbury, they're truly unique events with unique unparalleled levels of creativity and immersiveness. It's like another world in those places.
Starting His Own Company
At the age of 17, McGrath left school to start his own events company after much serious consideration and discussions with his parents.
I didn't finish school so I started organising events when I was 14. I was actually really good at school and I loved it. I wasn't one of those like “school's never fitted for me”. I mean, I was disruptive but I actually quite excelled in academia. By 17, I was already running enough events, already knew what I wanted to do and I gave it a lot of really serious consideration. My perspective on that was that, as I said, I was quite good at school but I knew that I wasn't fully focused because I was already running a business. And I went, “Well if I do it, I know that I'm not gonna be giving it 100 percent”. Maybe if I want to do it I can come back and maybe say repeat year 12, if I really find that I need to do that. I discussed it with my parents at length and they'd seen what I've been doing for three years at that point and they fully supported me and endorsed me and encourage me to seek out my path.
At 17 you're very mature to start running a business. Kids at that age are still I guess getting their foot in the ground. Should I go to university, should I start going to work. It's a lot of decisions to make and it sounds like you already had that decision made up already with such great support from the family.
It's quite funny actually because you know the big consideration did you go and get tertiary education in that sector, say do an event course. But actually by the time I was 18 and after I'd just moved to Melbourne I was actually guest lecturing at universities on event management and festival management. So with people that were my age...I was actually an older lecturer. I was going and being their guest lecturer, teaching them how to do it.
So I was pretty confident I took the right path.
How did it feel to be talking to people in your sort of age group and telling them this is what you do in the real world?
It was equal parts exhilarating and great for stroking the ego and also. Absolutely terrifying.
Even though McGrath can’t pinpoint an exact trigger that encouraged him to get into property, he recognises the role podcasts and other people’s investing stories have played in his property journey.
I think there's is actually like on a really unique point of difference between myself and most people.
Now I am inspired obviously by this podcast. I've been a subscriber for about 18 months or something and a lot of other podcasts and there's a massive commonality that I see between a lot of people's stories. Don't get me wrong, it's huge and varied, listening to everyone like Jane Slacksmith and Mark Rosen and so many different people who have come from many different places. But there's a general kind of consensus that at some point early on there's been a trigger that's encouraged people to get into the property. That's not something that ever really happened in my life. I mean I'm actually currently trying to convince my parents that they need to do something to bolster their retirement. The environment that I grew up in was not one that really kind of went into that. So for me, my property journey has actually been fairly short.
Why Investing Real Estate?
McGrath then shares with us why he got started in property despite the environment he grew up in.
I was not even in that environment where I was surrounded by people saying it was a good idea to get into the property; in fact, the general consensus from my peers and also even my family is that it was too expensive, too risky, too hard. You're never going to get there, you're never going to make it. No one can afford to buy a property, how are you supposed to get on the property ladder, what are you supposed to do, it's too risky, how are you ever going to know. It became a quite commonly accepted theme, particularly amongst my peers, that it was a foregone conclusion that we'll probably never get into the property. For me, it's been quite a steep journey over the last couple of years as I've become educated about real estate and also the power of it. It's also become a passion of mine to try and break that psychology that surrounds the real estate and inaccessibility to it. For me my journey in investing started around 18 months ago roughly. And in fact, it didn't start really that proactively or that well. I mean I like to say that we've got two and a half properties. My partner Gabby and I, we've been educating ourselves, reading books and doing all that kind of stuff, and we felt we were ready to make that next big step. As every young couple, you're thinking about what are we going to do. At that stage in my life, I was working around 100 hours a week in events and to be honest, after that long in events, I'm losing a lot of the passion spending that much time on the road and everything like that. And like most people I was looking at what's that next step.
That's like burn out, 100 hours a week you're working twice as much as what an average person or even more, two and half almost hours worth of most people who do a 40 hour week on average. So you know that is definitely a trigger point then if you've been doing that for many years, I don't know how you survive that. I have to say you know my hat's off to you. That's amazing.
It's pretty extreme, obviously not 100 hours a week every week but on average it was at least double a normal working week. The human condition can handle quite a lot for quite a long period of time but at a certain point you start to think “Is this it?” And that commonality of phrase is actually something that I have heard so many times in the last few months, particularly from my peers that I've previously just mentioned, the general consensus is we'll never know, it's going to be too hard... the amount of people that said you know “is this it?” is a huge thing and I guess I've reached that point the last couple of years. Gabby and I naturally started thinking “alright, what are we going to do?” and “let's try get somewhere” and I remember there was a public holiday and I said to Gabby, we were sitting around reading books, I said, “Let's go for a bike ride”. “Where are we going to ride to?” “I see there are a few apartment blocks being built. Let's go for a ride and have a look at some of the display units, do a bit of window shopping,” and then lo and behold we came across one and kind of got spruiked to and sold on and decided that was a very fantastic idea. And pretty much signed up to buy an apartment off the plan.
McGrath and his partner were convinced they had made a good decision but later realised, after attending a seminar, they had possibly not made the right choice in their investment.
We were convinced we were not making an emotional decision, we were convinced we were making a well-thought-out structured decision and it was gonna be the right decision for our future, and the glossy docs looked great and the salesman was fantastic and we were convinced we were making an amazing step forward for our future. Now at that point in our lives we didn't have much money. So that's always a barrier, to create a little bit of money saved up, but we had to know we had to go to our family ask for help to get started and luckily we found a bit of support from our family so that was fantastic and wonderful, and we'd sit there every night and we sort of look at the glossy doc and think isn't this cosmopolitan dream gonna be fantastic. And then I remember quite vividly the day that we signed the contract. I was in my office and we had to leave early and I'd been pretty quiet about the subject of buying an apartment because I knew at that point not many other people I knew had even bought property. So I guess there was this element where I didn't know how to talk about it and my business partner said: “Oh, where are you off to?”. “Just gonna sign a contract.” We raced out and it was four o'clock in the afternoon and we were frantically scribbling as fast as we could quickly trying to sign the contracts because we'd booked in to go to a property education seminar that night. So we were trying to rush through the contracts. Well, hurry up, we've got to go. So we signed all these contracts as quickly as we could. We jumped in the car. We had a celebratory dinner of Halal snack pack on the way to the property education seminar. It's very highbrow and we're celebrating in the car-sharing spoonfuls of Halal snack pack. And we got to, it was actually a rich dad poor dad's property education seminar and say what you want about poverty education seminars, but it definitely opened our eyes to some degree and by the end of that evening we're pretty certain we might have potentially not made the right choice.
With this particular property, McGrath believed it would help improve his financial situation, seeing it as both a place to move into and live and to later use it as an investment.
We had a lack of real comprehensive understanding of property economics at the time. You know the saying property doubles in value every 7 to 10 years? Now you’re obviously in a position that you understand that that's not an absolute truism but for the majority of people, that is an absolute truism. That is what people think and if you think that, then just buy anything. It doesn't matter because you buy property, it's going to double every seven to 10 years. It's a no-brainer. Now obviously that's not true but the majority of Australians do think that and we were in that. So it was our view that it was going to help us get ahead financially. Pretty much straight after I looked a lot more into the growth statistics were for two-bedroom apartments in that area, and my heart sank a little bit and also right about right at that time it was right at the start of the slump. So perfect. It was a massive lesson to learn. Now that being said who knows what the economic climate is going to be like when it's built because it's still not built and this why I say we've got two and a half properties.
McGrath’s First Property Purchase
So this first one was just off the plan and you just put a deposit and sign the contract.
Correct. But it's a substantial deposit. We've signed the contract and locked ourselves in and started gearing ourselves up to get that ready. It was originally supposed to settle this year but it's really being pushed back to Q4 twenty-one now. So the sands have shifted quite a lot on that. But the most amazing thing about that whole experience was that it was an absolute trigger for the rest of the journey that unfolded quite quickly.
Taking into consideration fluctuations in economic conditions, McGrath will hold onto his first property as he believes it will be a cash flow positive investment.
It's quite a way to start, considering it hasn't settled yet, but I can tell you we're much more confident about it now. Now, who knows what the economic conditions and climate are gonna be at the time but our expectation on our analysis is that it is going to be a cash flow positive investment to us. It might not be amazing. Our view is that we are going to continue to hold it, not the least of which because we borrowed money off our family to try to get it, so we want to make sure we make the most of that as well.
Two years ago the market was pretty on a rise or have been towards the end of the market cycle.
This was towards the middle of last year.
At the moment as you realize the market has changed quite substantially since then. When you say it's something that you will hold and it is cash flow positive...how is that possible for a property like that in, say, Melbourne?
Based on the rents basically. That's why I say it's gonna be dependent on the economic climate at the time because if the demand changes too much and the rents don't carry as they are forecasted to, then it might not be lucrative. But because it's a two-bedroom apartment, and just at the price we bought and at the expected rent, say, the price is around five hundred fifty-six thousand dollars and the expected rent for comparable rent for something like that is around 600 dollars, 620. So there's a potential that we should still be able to hold it.
So basically you might have to inject a little bit of money into it because that's six hundred dollars a week. That probably would just be a little bit under to cover interest rate on.
This is why it's going to come down to the economic conditions at the time now because if it's Q3 20 21 or even if it's a bit longer, there's the likelihood that rents may have increased in that time. But there's also a huge amount of supply risk in that area because if you look at it in isolation and you go, awesome, it's a two-bedroom apartment with good finishing, so it's an above-average quality apartment, it's within four and a half kilometres of the CBD. It's on the riverfront and it can be built out. It's beautiful. Absolutely fantastic. Great facilities but also those facilities are the drawbacks too, you got the lifts and you've got the pool and you got all these wonderful things you've got to pay for. So the body corporates come into play as well. But it's really going to come down to what is the situation at time and what is the expected rent at the time, so the reality is we're going to make good on it because, well again, we're going to wait and see, because we've already put a substantial deposit into it. So we're hopeful that the climate has shifted by the time that settles and we're gonna make good on that. And to be honest, if it's not cash flow positive we'll probably go live in it. As I said it's amazing, it's got a pool and a gym and a movie room and all kinds of stuff.
“So it was that point when I realized that it was completely feasible to bolt together the exact metrics that you need to create a unicorn kind of property, and you could actually go and find those.”
McGrath then advises on buying off the plan apartments and despite his not so great first investment in property, praises it as being a catalyst for his property investment journey.
Having learned what I've learned and gone through the experience that I've gone through, I absolutely categorically advise people not to buy off the plan apartments. That being said of course if it's the right deal and it's the right price, then, great, go for it. But in a general sense financially it was a very poor decision. However, from my perspective, my first property one of the best decisions I've ever made because it was the catalyst that kind of put me on onto this property journey.
You sometimes need a bit of a catalyst and a bit of a shock to kind of strike change. The biggest change happens through impact and I think that's what's happened there. I definitely don't have any bad feelings around our investment choice. You know I'm like “Okay cool”. It's either gonna be a beautiful and amazing place to live or it's gonna be a moderate to okay investment but it's what's got us here and I'm extremely grateful for that every day.
The Education Journey
He goes a little deeper into his property education journey and what he discovered along the way.
That first property was definitely the catalyst for a pretty intense journey into property education. Now, a lot of people get a crappy education and property experience and I guess absorb it gradually potentially over years or even decades and so they have a well-formed, well-rounded opinion. My general pace in life is usually much faster than other people's. I went full bore, Gabby and I went right into it. We did as many courses as we could, read as many books as we could. We became as immersed in that as humanly possible. The time shift between my work went from sort of 80 to 100 hours a week working in events to, I scaled that back to around probably on average over the of this sort of middle part to the later part of last year to around 50 hours and then was dedicating the other fifty to purely to property research and understanding and we went really really deep into it. I'm very analytic in my processes. I was looking around me and I could see all these stories of people who had grown wealthy and developed passive incomes and achieve financial freedom. It really comes down to three things that people want, and I'm sure if you ask yourself exactly the same thing you would find exactly the same answers.
People want freedom. They want significance and they want transformation. So those three fundamental drivers with things that I can kind of see happen to other people, people had found freedom, whether it be financial freedom, time freedom, they'd found freedom of choice; they'd found significance in the fact that they built a legacy for their family, they created something more, they had some way that they were going to make an impact on the world. And they'd been able to transform their lives and I can see what works. I had understand “how” and “why” and I went really deep into trying to understand property economics and what all these shifting sands mean and all of the different parameters, and macro and microeconomic factors that dictated the movements, and pros and cons and impacts and enhances, all the factors of what makes real estate move and shapes that economic landscape. So I got a lot of advice and got to understand people.
Now my big “aha” moment though was when I...People talk about real estate, there's a lot of different views on it, there's stuff around negative gearing or you know buying hold or just buy a property and it'll double in value every 7 to 10 years. There is kind of always really general statements but I wanted to understand what the pure mechanics of it were, that you could make it work. So once I understood what you need, cash flow so that it can self-sustain the portfolio and you want significant capital growth and you want to buy to be able to offset any risk of economic decline or downturn by having a mechanical lever that you can pull, so value add strategy. And I thought, well if you had all those three, then surely it just works. And of course everyone goes, yes, but you can't find them. So I sort of went, “What do you need to bolt together”. I looked at all the serviceability requirements in finance and I started to understand the percentages you needed to be able to bolt together. And then I set out to try and find those properties and realized you could actually find lots of them, and so it was that point when I realized that it was completely feasible to bolt together the exact metrics that you need to create a unicorn kind of property, and you could actually go and find those. And that was the moment that I suddenly realized that it was possible and it was possible to build a portfolio that was repeatable and was safe and secure and risk-averse to almost any economic condition.
That was the turning point, when I kind of put that together and I had that kind of eureka moment, like “Oh my God, I think I've worked it out.” Now that might not be that revolutionary to a lot of people but for someone who didn't understand that, that was a really unique moment and I run that past a lot of mentors and peers and stuff like that. “Is this right?” “Can you really do this?” And the general consensus was “yes” and I was like, “Wow. Fantastic”. And that subsequently is the strategy that we've applied to build our portfolio and it will continue to apply to building our portfolio. And that's also the strategy that we apply and encourage other people to apply as well.
Leveraging Equity Into Another Property With Glenn McGrath
During our previous episode, McGrath shared briefly with us his investing real estate strategy, which requires cash flow, capital growth, and the ability to offset any risk of economic downturn or decline.
My whole passion is about trying to change people's lives and for a large part, there's a degree of education involved in that. So we've put together what we call the high-performance property strategy which is basically a triangle almost that kind of fits together. It has those three components. Cash flow growth and value add strategies. Now, the way I explain it to people is that from a cash flow perspective it's not just about getting extra pocket money, it's about increasing your survivability and also making sure the property can pay for itself. So typically what we're looking for there is around six percent yield. Anything above 6 percent, it doesn't really bolster your serviceability too much. However, it does add a little bit of extra pocket money in your pocket. Let's say you have a five or ten thousand dollar property and it's yielding at say 6.5% or 6.7% over a 15 year period. That's going to put an additional, say, a hundred and thirty-one thousand dollars in your pocket.
So over the long term, there's a huge benefit in having a cash flow positive portfolio. But that's one part of it. Now if you just wanted cash flow that had no growth you wouldn't get the value of all the compounding growth. So a lot of people don't understand compound growth and what it is. I mean, I talk to my peers, I ask my family and they're just like, they've never heard of it, they don't understand what it does. So I spend a lot of time looking looking at the mechanics of that and looking at the macroeconomic factors that are going to continue to drive that and particularly timing in the cycle, because the worst thing you can do is buy right at the bottom of the market and then lose all your money to opportunity cost. So in terms of strategically what we're looking for is cash flow positive in a high future growth potential area. The timing in it, the right point, the buying stock so you can get the maximum uplift in the shortest amount of time. But we're also looking at the value add strategy. So typically under market value and then with either subdivision potential, renovation potential, granny flat potential, or the potential to turn it into a boarding house, depending on what people want to do.
The Property Strategy In Action
He then shares with us a practical example of this strategy in play.
I've done a little analysis like a kind of hypothetical analysis of a five hundred thousand dollar property year to get 6.76% and went through the motions of okay, so if we bought it today and if we did this...by having a cash flow positive property and driving a value to add strategy, you can literally add 300 percent to the return on investment over a 15 year period. So when you start looking at that you know from a wealth creation point of view, that's what gets people interested, they're like, “Oh wait to hang on what? I'm not that worried about taxes.”
McGrath informs us about the importance of structuring your portfolio with a plan in mind and his holistic view when it comes to property investment.
I tend to find talking to people, particularly when you look at a strategy that I'm quite opposed to, which is negative gearing...the problem with that is that most people get locked out at one or two properties and they think that's all you can do, and they have a liability in their portfolio and then hopefully one day if they can hold onto it for long enough they're going to be able to sell it at the end and lose a whole bunch of money to capital gains tax, and then you live off the rest. I'm a firm believer that if you structure your portfolio correctly and if you look at what steps you want to take and where you want to go – I always try and take a 10 to 15-year view. Wherever you are now, work out where you want to be in 10 or 15 years and where you want to be from a career perspective, an intellectual perspective, a health perspective, a social perspective, family, finance everything; you want to look at the whole yin and yang of your life. You want to look at what the fundamental, holistic wealth perspective looks looks like, not just how many properties you want; you want to look at where you want to be spiritually, physically and emotionally in ten years time and then remember that the real estate is just a vehicle You want to then look at what assets do I need to accumulate over what period of time with exactly what outcomes in order to achieve that holistic well space in 10 to 15 years.
When it comes to investing in property, McGrath doesn't focus on particular locations but instead concentrates on getting the right deals through research and analysis when choosing his assets.
My perspective on it is that areas always change. So I'm definitely location androgynous. I don't think there is the best location. Really what you've got to look at is the opportunity for the right deals, that selection of the asset. Now that being said, there's roughly two hundred and fifty thousand property houses on the market at the moment, in roughly 15000 different suburbs. So if you just took a scattergun approach and “I'm just going to go outlook for the best deal”, you're going to find yourself awash in a sea of choice and a sea of indecision. And that's the problem that I think most people face. As I said, I've always gone quite deep into the analytics and the research and in doing so you can kind of narrow the focus. We go through eight different stages of the selection process to break it right down to sort of the top couple of different suburbs and we update that every week. When I say top suburbs at any given point in time there's probably about 160 odd investable or an investment class suburbs around Australia and that's based on the current economic conditions and population growth, migration, jobs in the pipeline, projects in the pipeline, all that kind of stuff. But what you really got to look at is where the timing of the market is, what the buy distress is and really trying to understand that and breaking it down into a really deep and human level, and looking at the psychographic overlay of the suburbs understand where it sits in the buying cycle and what the potential uplift is.
Due to the landlord selling the house McGrath was renting with his partner at the time, he was compelled into buying a property near Geelong, and then was able to purchase one in Queensland as well.
It was a pretty interesting story after we got off the plan apartment, we certainly realized we were up against it. So we started saving money pretty heavily—we were either investing money into property education or we were squirreling it very firmly away, for the day that the apartment was going to settle. We were actually renting at the time and then our lease came up and we said, “No, let's just go month to month, should be right.” Then straightaway the landlord said “right, you're going to have to get out” because he wanted to move back in because he had just sold his property. This is actually a week before I was running my own music festival. So it was pretty inopportune timing. So Gabby and I sort of very quickly looked at each other and went, “Well, we're not renting again”. So how much money have we got? And we looked at how much money we had and it wasn't a hell of a lot of money. Where does that mean we can afford to buy? And we did a lot of research obviously and much much more diligence.
We ended up buying a property in Norlane just outside of Geelong. We didn't buy it at the optimum point in the buying cycle for that. However, it did suit our budget. We managed to pick that up for about three hundred thousand dollars, so it ended up about 340. So that was a good little way to start. And in fact, the reason we bought it is that it needs a bit of work. So we're kind of living in it now and we're slowly chipping away at renovating it, and also subdividable. So we had the strategy that went with it, that it was forty thousand dollars under the market value, subdividable and rent available. So that gives us a lot of value add perspective with it. So whilst it's not cash flow positive because you know we're living in it, it did enable us to leverage that into another property. So it was only in January that we settled on the property in Norlane and moved in and we've already leveraged that into buying another property in Queensland. So it's kind of two and a half properties in about just under twelve months.
Leveraging Into More Properties
In telling us a bit more about his property in Queensland, McGrath also shines a light on the strategy of leveraging equity out of one investment into another property.
That sum is valued at 320, we bought it for 290. It's yielding 6.7% and it's about twenty-five minutes outside of Brisbane, four-bedroom, two bathrooms, 14-year-old brick and tile in a really desirable little pocket. And I'm extremely confident of the economic outlook there. Vacancy rates to those houses or for that format of housing—four by twos—is around 0.7%. So it's an extremely good purchase. We're really happy with it. In fact, can I just add on to that, because we got to leverage our strategy, our only out of pocket expense for that was 1450 dollars in holding the deposit and building inspection? So one of the big messages I've been trying to spread at the moment is that if you can, make sure you're putting your strategy together properly and making sure that you're leveraging assets against each other. You have the ability to build a property portfolio without it suddenly being this whole, like, “I need to save, I need to save, I need to save”. You know we were able to literally lever the equity out of one property and into another, and put in our hands in our pockets about fifteen hundred dollars and buy another house. And once you start trying to explain that to people, particularly that again that's not revolutionary to people who have built large portfolios or established in the market or have a lot more experience. But I can tell you something for nothing when you start saying that to people who either don't have a property yet or maybe only have one, that's a light bulb moment and you can see that starting to change the psychology, the way people are thinking about their wealth creation story.
McGrath checks the metrics when he is buying property to ensure his investments will be lucrative.
It is entirely about leverage and it's entirely about intelligence. So even with the property, we bought in Queensland, so yeah great we got that 30 thousand dollars on the market. I'm pretty confident that's going to experience a very steep economic growth over the coming 12 months because of the positioning of the local economy and the way the demographics and psychographics are changing in the area. Further to that as well, even though it is in pretty good condition it is currently tenanted, so we have no necessary need to do any renovations on it right now. However, based on what we can do, we could probably spend around 10 to 15 thousand dollars on that and get out probably around, I reckon about two dollars fifty for every dollar we spent. So there is the opportunity to go be able to leave out the equity in the property into increasing the value of the property even more. So once you start thinking about how you can...I like to call it pulling the mechanical levers of the property to make it worth more. You can suddenly allow yourself the ability to create an essentially repeatable portfolio, as long as you have those metrics right of what the cash flow is, what the yield is and all of that kind of stuff to be able to support further borrowing. That's going to allow you to keep tapping into future properties.
What Motivates Glenn McGrath Daily?
McGrath shares with us the reason he gets up in the morning and what motivates him to help Australians invest in property.
My biggest “Why” is that I want to be able to help other people. It sounds really altruistic and real pie in the sky kind of stuff, and I mean look, it started out as I wanted to get ahead and I wanted to try and you know do something with my life. But really the thing that gets me out of bed at 4:30 every morning and keeps me working until 10:00 today every night is a really genuine and burning desire to go help people. I mean, I look at people like my parents, who I love and they're amazing and great parents and but they're not... their biggest concern is what's going to happen to their pension. I look around at lots of other people... I'm talking about everyday Australians. When I say that I mean I'm talking about people like teachers and you know professionals and there's a lot of people out there who don't understand, they don't really have an advanced financial IQ. Let's put it that way.
I've got a real desire to want to try and help people. To encourage them to be able to support their future and change our lives. And I guess that's kind of what's really pushing me forward every day.
McGrath’s Favourite Resources
He mentions many sources of knowledge and inspiration on his property journey from books to courses all over Australia.
Like most people, I started out with the classic Rich Dad Poor Dad book, which is great.
Then I got very good at Cash Flow the board game. I definitely loved all that stuff but one of the books that I got to say really galvanized my perspective on the property was Seven Steps to Wealth by John Fitzgerald. When you have the author of a book reading out their content, it gives you a much deeper understanding of their real passion. They have the right emphasis on the parts. So listening to John read that book and narrate that book was going to say to a large degree life-changing.
Because Rich Dad Poor Dad, like most people, gives you the kind of perspective that you can do more with money, and then it changes your view on finance and particularly cash flow and all of that kind of stuff. But in terms of getting a fundamental understanding of Property Economics, I don't think anyone starting out their journey can really go wrong listening to that book. There are some bits in it that I don't necessarily agree with anymore in terms of like how I apply my strategy to property and stuff. But in terms of forming that understanding, it's absolutely foundational to that kind of stuff. And look, we did all kinds of different courses with all of them, I guess, the big names in property education around the country and just read about books and listened to podcasts. I mean I think I've digested almost every property-related podcast there is in the country and did a lot of that kind of stuff. We're also digging deep into research and looking at all those kind of data analytics websites and trying to bottle that together. I honestly there is no single source of information in my opinion. So what I tried to do was I guess aggregate all of that information in a huge array of very complex spreadsheets.
At the end of the day, you've just gotta be able to aggregate whatever is important and as you've said, times and people's strategies evolve over time as you become more and more knowledgeable. And that's normal. You know you start with a foundation which has been John's book but over time you have to develop your own, I guess strategy that fits within what you're comfortable with. And then ultimately grow it. You know implementing it.
You've got to form an opinion. You know my view on it is that no one has the answer right. So when I'm ever giving advice to people, if I ever have to get to a position where I've got to tell someone to trust me, it means that I haven't provided the valuable information, if that makes sense. You need to be able to look at a broad range of information and overlay that information together and look at what the pattern recognition or pattern interlay, is so you can kind of form a picture.
His parents instilled into him mottos of self-belief, which eventually led him to become not only a property investor but a buyer's agent.
-Glenn Goose McGrath
I don't spend a lot of time listening to a lot of people. I'm very action-oriented. But I think from an early stage before I even really sort of started out in my events career, my parents really instilled in me a truism that you can literally be whatever you wanna be. You can as long as you can basically see it in your mind's eye, you can do it, and that really empowered me with a belief that anyone can achieve anything. Which is the fundamental building block for a strong mindset? More recently though, when I was going through all these kind of breakthroughs in terms of understanding property and how it all works and seeing all these huge pattern recognitions, starting to join all the dots in terms of property research and property economics and understanding how that works...I was actually running these theories past a broker and sort of going, “Is this right?” and he was like “Yeah”. After some discussion, he said, “Have you ever thought about taking up a career as a buyer's agent?”. I was like, “Wow. Yeah. That sounds pretty cool.” I gotta say that was turning point because at that point I was getting a little burnt out with all the event stuff and I was like “Wow, yeah, I could just help people do this all the time, how wonderful”. So I gotta say it was a pretty cool.
McGrath’s Big Goals
McGrath attributes many habits to his success, in particular, his practise of setting out 25-year goals.
It's not one habit. It's a series of habits and it's very meticulous. Wake up at 4;45 every morning. Then I instantly go make a coffee and then I sit down and I write out my 30-day goals, my 90-day goals, and my 25-year goals. I do that every single day. Then I follow that up by going to the gym for one hour every day. Find that routine. Look, there are days when that doesn't happen okay. But as a general habit and a general routine, it sets you up for an ability to be resilient and focused and understand where you want to go. Can I just share with you why twenty-five years? Do you set goals? I'll tell you you're one of the most revolutionary things that I learned about setting goals is to set twenty-five-year goals. The reason for that is when you break 25 years up into 90-day pieces, say three months or 12 weeks. There are one hundred ninety-day pieces or quarters in twenty-five years. So when you're setting goals, there's that old kind of saying that you overestimate what you can do in a day and underestimate what you can do in a year. So if you can set twenty-five-year goals and go right where do I want to be in twenty-five years, and let me tell you I've got some pretty big hairy audacious goals in twenty-five years, when you bust it up into 90-day sections, three months sections, it's much more edible. And that is 1 percent of your journey. 90 days is 1 percent of twenty-five years. One quarter of a year is one percent of twenty-five years.
If you break it up like that then all of a sudden your vision starts to take shape in a much more tactile way. Gabby and I have actually written out in our six segments in our life—and this is a fundamental part of mindset, daily habit—we've mapped out our six segments of life, so career, finance, intellect, health, family, social and intimacy, so certain segments and we've mapped them out for 30 days, 90 days, five years, or one year, five years, and twenty-five years. So then when you build that roadmap and you write that down every day, then you understand exactly what you need to do each day, each week, each month to take those steps to where you want your goal to be.
When asked what advice he would have given himself 10 years ago, McGrath instantly knows the answer.
I would have taught myself the benefits of compounding growth and leverage. As someone who's a fairly analytical and a process-driven, I didn't understand those values.
Don't get me wrong, I've had an amazing life, I've travelled the world and I've done amazing things and it's you know it's been a radical existence so far and one that's not going to stop, but oh my God. When you start doing the math, it's like, “Why didn't anyone teach me this?” They might have touched on it once in high school but I did not pay attention. Once you understand leverage and leverage in compounding interest it's a game-changer and if I had known that... And if I can kind of encourage people to learn about that's something that once you understand it the true power of it you can't ignore it. And once you can get that in a real sense then you can't ignore it, then it's going to start you on your investing journey.
In the next five years, McGrath has lots of plans for his buyer's agency and his own property journey.
As I say we've mapped out our goals quite extensively. So in the next five years, I want to grow our buyer's agency, so we want it to be a lot more than just a buyer's agency. We've got a mission to, as I say, help people and to help transform their lives. So we want to grow that quite large and have a large impact on people. We also want to move into the development space, as much as anything to be able to also encourage other people to get into the development space and help kind of foster people to do that in terms of small developments. I'm also planning to start an education segment in the business as well. So from that front, we've got quite strong ambitions to teach people and help them grow financially. And then also Gabby and I 've got our goals set on 25 properties in the next five years.
McGrath attributes much of his success in property investment to skill and intelligence rather than pure luck.
It depends on how you want to look at it right. I think we were unlucky to start and that forced me to take a position of hard work and knowledge. And I was never in a position where I was like, “Oh well we'll just see what happens and invest in property.” Except for that first one which then stimulated me to try and become really educated about it and then now purely just look at it, “Okay, what are what is this is on a mechanical level?”
If you're interested in reaching out to or finding out more about Glenn McGrath, otherwise known as Goose, here's the best way to do so:
We have our website Dashdot.com.au but if you want to reach out via Facebook we're pretty active there. So facebook.com/dashdotbuyersagents people can get in touch and see what we do, we try to put out a lot of valuable content. As I say we're trying to encourage people to grow in this space, so we're trying to provide a lot of value in what we're putting out there as well.
This episode was produced by Annie Gao with narrations and interviews conducted by Tyrone Shum.