From $22k To Multi Million Dollar Property Portfolio in Victoria Market
Pradeep Laxminarayana is a property buyer’s advocate, an investor in the property market and founder of Property Magnate Consulting in Victoria. His company is able to help their clients build the best possible portfolio using their incredulous amount of resources that they have built up. Laxminarayana has been in property investing for over a decade and uses that experience to help others achieve their goals.
Come with us as we delve into his background from growing up in India, moving to Nigeria and eventually making his way to Australia, we learn about facing adversity in his early days in Australia and how he was able to overcome that, how his property investing journey got started, the incredible story of his first property and much much more!
Laxminarayana shares a little bit of his background and what work he was going on in his life at the moment.
I originally come from India and I’m in IT, I also do a bit of part-time print modelling, short films and my core business, my core passion is being a buyer’s advocate for my customers. My own business, the name of the business is Property Magnate Consulting and that’s where my passion is.
He has more going on than just property and we learn about his mindset behind juggling all of them at once.
You only live once and if you have different passions and as far as you know, you’re not hurting anyone and you’re fulfilling it, then have it go, break that ceiling, break that threshold and just pursue everything you can and as long as you enjoy it. So I quite enjoy it. I enjoy my work in it. I enjoy my shots and making, and I’m absolutely passionate about the property because that just gives us that, what I call, financial independence or financial buffering if you like, to be able to pursue your different passions.
We find out what a typical day for Laxminarayana looks like and how his team is able to help their clients when it comes to property.
The kind of customers that I actually help are people who are first home buyers to investors. People generally who have the fear of paying for properties, perhaps not knowing where to start, how to go about researching about properties. Me and my team, we work on data, I believe data is the new oil. So data and facts, it kind of takes the emotions away, if that makes sense. So we work on that to locate properties which are high growth, high capital yield, but really strategising and focusing on the industrial plan. I think property comes later. It’s about the entry as well as exit strategy.
He talks to us about his background and we learn about where he grew up and how that upbringing has helped him.
I actually grew up across two countries. So I’m originally from India. I spent a good time of my life there. We then went to Nigeria, Africa. I spent close to 10 years there in that country, and then the next one, third is in Australia. So not sure where the next one is going to be. It’s my life. My life so far has been split across three countries. Travel has helped me quite a bit in terms of, you know, tolerance and appreciating different cultures and people. So that’s really been helpful.
Spending his childhood across two countries on different continents, he learned about what he wanted in his future.
My schooling has been across two countries, so India, as well as Africa, West Africa, Nigeria, and the school, was good. I mean, I think my parents, especially my mother, she didn’t want to put me somewhere very far. So the school was really as close to close to home, walkable distance if you like. And you know, middle-class family, nothing out of the ordinary or extravagance. But we had a decent middle-class family. Parents worked very hard obviously to give us the basics, you know, shelter and ensure that there was no shortage of anything. But I was always intrigued, there’s more to life than just going to work 9 to 5 and there has to be something. And I always thought about, how do we go out of our way, out of the box and create that journey or that pathway to success, whatever that might be. Because again, that’s a really subjective thing to every human being. So, you know, I just thought the traditional way, schooling, college and then go towards 9 to 5, that’s okay. But surely, you know, we could be entrepreneurial in our individual journeys and create that financial freedom.
Laxminarayana tells us the amazing story about how his family eventually transitioned from living in India to moving to Nigeria.
My dad got an opportunity to work in Nigeria. So he at that stage said, look, I’ve got to take this opportunity to grow a better life for myself and the family. So he went there and my mother, my sisters, myself, we went there. We stayed there for a few years, I think close to a decade, almost 10 years. And I think, you know, we came back when I was probably around 14, 15. I think I came back to the country, back to India. But it was more to provide a better life for the family and my father continued to work there as well for a few more years, even after we came. So that’s the sacrifice he had to make, you know, he said he sent us back, my mum, my sisters and myself back to India and he stayed there and it always stayed in my mind that, you know, the parents always go above and beyond for their kids in the family.
I’m a father now, you know, and I’ve got my wife. Can you imagine if I got separated from my wife and kids and lived out of the state? I mean let alone another country to provide a better life. It’s just what most middle-class families do for a better life. So that’s always stayed with me, you know, that thought of, they’ve worked so hard to establish a foundation for me. Hopefully I could use that and do something better.
Being apart from a parent at that age was extremely difficult for him and we find out about how often he was able to see his father when they were living in different countries.
Back in those days, he was coming once in two years, you know, because it was tough for him as well. We would try and make it an annual kind of a thing. But at times, and back in those days, you know, we didn’t have the internet or mobile phones, if you like, so it’s used to be, we used to call it a trunk call, international call. And an international call is a trunk call, it was a big thing, it was expensive. You had to call perhaps the neighbours or someone and then you could go and get the phone from there and it was definitely not easy and I think I appreciate and respect the sacrifice he made, my mother made so that we as kids could have a decent middle-class life. So, you know, it’s a very, very early age that you realise that the world is very competitive to run, you know, it’s a competitive world. It’s extremely materialistic as well. You’ve got to live, you got to pay your bills and you got to work. And I always thought, that’s great, but what if you created that financial freedom sooner than expected. There surely must be a way to create that financial freedom to be able to achieve whatever you want to achieve rather than wait until your late 50s or 60s
Meet people and grow individually. I think we all grow, right? You know, hopefully, we all grow every day. We’ll learn from our mistakes, absorb, digest, and just keep rolling. So you just can’t be fixated on one particular job. We’re here to enjoy life, enjoy the sun.
He shares more about what he set out to do after high school and some of the sacrifices that needed to be made for him to achieve his goals.
My primary education was split between India and Nigeria. Initially, it was in India and then went to Nigeria. And then from Nigeria, we went back to India. So I continued my secondary, we call this college here in Australia, but there was seven standards back in India or year 7. Did my engineering there as well. And from there in 2003, I came to Australia as an international student. With a loan of $16,000, you know, and now please put this into context. Back then there was a lot of money from my family, you know, $16,000 multiplied by 30 rupees, which was, you know, the conversion rate back then was a lot of money for us, my parents.
And my father had to take a loan. It was an educational loan taken. So he said, whatever you do, don’t fail. Because as an international student, not many people are aware, if you do fail, then you’ve got to pay three times the price per subject. Something’s going for $300. If you do fail, you’ve got to pay three times the price, like $900, as opposed to what a normal kid would pay. So the idea was, look, we’ve got a loan, you know, you’ve got three years. And I still remember them saying, telling me that at the airport. He gave me 3000 Aussie dollars and 10 US dollars. I still have 10 US dollars. I still kept it and I keep telling him, showing it to him. I went around, meet him. The key was don’t fail.
What did you do when you came to Australia to study?
My areas of study were IT. So computer science. But in IT, I’ve got my Bachelor’s in Computer Science Engineering. So the idea was I get my masters in it from Latrobe University and I got you to know, some credits for that because of my background, a bachelor’s of engineering and all that. So, fortunately, a two-year course was reduced to a one year masters between a master’s was just too many masters. And because of the credits, I could gain I scored from my previous study, which was great. But having said that it was still you know, I still remember the first day in Australia. I had my 20 kilos of luggage and I didn’t know a single soul, you know, and there was, for me, the longest walk was when the taxi driver dropped me at the campus.
And Latrobe University is a massive campus, by the way, in Melbourne. It’s a massive campus. So that walk from where he dropped me from the gates till the campus, you know, almost you know, one and a half kilometres. That walk was, you’d reflect a lot, you know, literally carrying your own luggage. There’s no one to help you, you’re just by yourself. It’s just you. You’re trying to find your room. There’s a lot of thoughts and emotions in your mind. You don’t want to fail, you know, you have education and also, you know, you’ve got enough money to perhaps last for a month. So you’ve got to actually find a job.
We had as a student, you’ve got to work 20 hours a week. That was the law. So I think it still is. So the goal was to find a job as soon as possible. And unfortunately, I didn’t know how to cook. Actually I still don’t, by the way. So it was thinking, hang on a second, how do I manage this? How do I advise my finances and get through this? It was an emotional journey, but I’m glad, you know, it happened to me because I wouldn’t be where I am today without that. That was character building for me.
We discuss the living conditions that he had to deal with when he first arrived in Australia and how he dealt with it.
I had to find accommodation myself. So when I landed, I was at the luxury of a university. My accommodation was for three days only. So within three days, the idea was I had to find local accommodation. The reason for that being, you know, campuses are expensive and, as I said, I only have $3,000. The idea was, you know, you want to ensure that you quickly go into a shared accommodation where the rentals are cheaper. So the goal was to find something closer to the university as well. You had to study, everybody who comes fails as well. So you got to find time to be attentive and all that, and also find a job because you know, you’ve got to be able to manage your expenses. So I had to befriend people, the right kind of people, fortunately, find a job that can pay the bills.
So it was challenging, but you know, you come across all kinds of people even the ones who aren’t very helpful. That’s okay. You learn from that, from a diversity of times, and then you get some lovely people who go above and beyond to help you. I think one particular incident that stays with me is I remember when I was, back in those days I didn’t have a mobile phone and the only mobile phone, my sister gifted to me, I lost in a tram. So it was like, Oh my God, what I do. So we used to use international calling cards, we used to get international calling cards to call India. It used to be valued at $10, which is a big amount of money for me back then.
Out of which the connection fee, $2 used to go into connection fee. So all you’re left with is eight bucks and you had like 55 minutes to speak. And I used to use the Telstra booth, Telstra phone booth to, you know, put in the card and call my parents, I think one such time, I think the calling card you know, got finished on. I couldn’t finish my conversation with my mother and my father, so I was very upset and I was sitting on the bench upset. There was this great Aussie guy who came, I don’t even know the guy. He just comes across and says, Hey, you all right, buddy, I said, yeah, I’m all right. You know, this happened. I couldn’t speak to my parents. Unfortunately, the money in the calling card got over and I don’t have much money left, so I’ve got to wait for the next month to speak with them.
The idea was to call them once in a fortnight or at least once a month. He very kindly took out his mobile phone, which was a big luxury back then. I’m talking about 2003 and hands me the phone and says, call your parents. I said, well, so this is an international call, it’s going to cost you a lot of money. He goes, that’s okay. You go ahead. So for me, what was great about Australia is that, you know, there are good and bad people everywhere, but you also meet people who are so kind and helpful. You know, this was an absolute stranger, very generous heart, a stranger, you know, so it was very inspiring and humbling as well. You know, when you met some lovely people. I thanked him a lot and obviously I didn’t take up the offer, but I thanked him for his generosity. Just that kindness. So yeah, that’s where I knew that, you know, I want to pay it forward. If I achieve some degree of success, then it’s all about paying it forward.
There is a funny story behind the first job that Laxminarayana had when he was still at University.
My first job was at university and was working as a taxi driver, I got fired in four hours flat, less than four hours. Because back in those days we used to get the Melway. We didn’t have the GPS and I’m bad with directions. I’m horrible with directions. And you know, a foreign country going through using Melway for directions, you know, it was hard. How can you read maps from here to there? And I eventually got better at it. But the point is for us was, again, taxi business is a competitive business. As an international student, if you’re not quick enough, there’s someone else ready to take your job. It’s pretty simple.
Did you have a license already?
I had an international driver’s license. I could drive, all above board and legal. I did have my international driver’s license. So yes, I could drive, but the point is you know, I was just too slow and the owner of the taxis, God bless him, he actually said, look, man, you’re too slow. You know, you can’t be taking 10 minutes to look at the Melway and rightly so. I understand you’re new in the country, but you know, I actually will find someone else. So I lost that. Then I started washing cars and I got fired from that as well for a few days because they said, you’re too slow, you’re too slow. This was the day and age in our way, used to wash cars.
Not the machine wash. I used to be too slow and they’re like, nope, you’re too slow. You know, you’ve got to clean everything and you’ve got to look at the tyres and this and that. He’s just too slow. So he fired me on the spot. So I lost that job. Then I was rejected by McDonald’s, which is really sad because I’d prepared for rates and all that, but you know, I just couldn’t get through. They said your English wasn’t very good. The feedback was your English was not very good.
We couldn’t understand you or your accent. So I thought, okay, what do I do now? So I had a few rejections and I don’t know, surprise, surprise. I got a job in a call centre in a telecommunications call centre for someone who people said you couldn’t speak good English or we couldn’t understand you. I was in a call centre. And I think that was my, I would say a decent break because you know, doing all kinds of odd jobs as you say, as a student that helped me with cash flow and that actually helped me pay for my own expenses, paying for my own rent.
With so much pressure on him to pass his subjects with the fear of having to pay 3 times its original cost, we find out whether he passed or failed.
When I did pass, that’s with an A grade. So when I did pass and the transcripts came, I was like, wow, this is great. My parents were extremely happy as my mother was in tears because, you know, it’s a big thing back in India, you know, education is a big thing, especially with the big investment and the sacrifices they have made. So yeah, they’re really happy with that. I was very happy to be honest with you. I don’t know how I passed, but I passed, so the idea was just a pass and the A grade was just icing on the cake.
We delve into his life after university and what he decided to do after passing his subjects.
I went into work for somebody else. I mean, after the call centre gig, that really helped me with my groundwork. I got into different kinds of IT jobs from IT sales to delivery to recruitment, to product management, business intelligence and data. And then finally got a foot in the door so to speak in the IT world, the IT industry. And since then, you know, do contracting as well, which obviously helps with cash flow. And that helps quite a bit. But perhaps what was missing was I said, you know, I knew that whilst I enjoyed what I did, I was very consumed with work like we all are, you know, your work, we say it’s nine to five, but it’s never nine to five, you know, whether you’re working for a consulting organisation or working for [inaudible], work never stops. So I said, well, that’s great and I’m enjoying it. That’s fantastic. But surely there could be some alternative ways of creating income, you know, and I thought, well, one thing that I really like is property. So that’s how my property journey actually started.
During his property investing journey, we find out how he purchased the first property.
We saw a property in [inaudible]. The land was 717 square metres, a big parcel of land. It’s an old house, obviously a very old house. So my partner and myself, she’s my wife right now. But then my girlfriend who said, this is a great investment. Let’s get it. You know, it’s an old house, obviously pretty old house. But then if you look at the dynamics of the area, you know, it’s 12 kilometres to Melbourne CBD. You know, the land always appreciates to your own. And I thought, look, there’s a lot of drivers for this area. It was near the bus stop. You could walk to the train station. I did a lot of research. I went and visited the council, the local council, and I said, look, what are your plans for growth for this area and what’s your five-year plan? Looked like they were very surprised because not many people walk into the council and ask about a five-year plan.
But I think the more and more I researched the area, the more I realised that you know, the surrounding areas were policed 40 to 50% at least. And this was like literally five minutes away, you know, from the suburbs, which were 50% more. So I said, look, let’s get it. And yeah, we got that property way under market.
What year was that roughly when you got into that particular property?
In 2003, so the same year I said, look, let’s take a chance. And you know, we had to pay LMI and all that, but look, back then they were accepting 5%, even now they do, but even back then it was probably a bit more lenient. The banks were slightly a bit more lenient if that made sense. So the idea was that look, we put up a deposit as much as we could, we then use that as leverage to enter the property market, see how we can create our wealth. So that’s what I did. The trade-off back then was, you know, do we pay off the education loan or do I basically buy my first property? And that was a trade-off. That was a massive trade-off. You know, I said, we’ll keep the interest from our $16,000 education loan, but I’ll buy this property. But please understand back then there was a lot of resentment as well, you know, and a lot of people from family and friends saying, what are you doing?
It’s an old property. You’ve got an unstable job, I can put it that way because, you know, even though I had just gotten my break, my salary was $22,000, which was not a big amount of money even back then. So, you know, for me the critical part was the entry price. You know, if we had secured that property price point, I knew we would do well. And fortunately, you know, I was fortunate enough to turn up at the auction and have the guts to be there and we secured the property for $200,000. Which, you know, that was exactly what I had, you know, $15,000 together with my partner and we were able to pull that, you know, 15,000-$20,000 together and we said, look, let’s go ahead with it. It was a big decision back then.
Since he was still paying off his education loan and bought his first property in Australia, we delve into how he was able to string together the finances to get the deal done.
In hindsight, when I look back now, I wish I had a team. We would talk about my entry criteria. My exit strategy or strategy. You know, I wish I had that kind of support. I never had that to say cause I was new in the country. It was that everything was self-taught. One thing I knew though was that this is gonna appreciate, this is going to make money. Now, my view at that point in time was that I keep the property for a few years and then sell at that point in time. That was my strategy. All the three I still do have the property, for the record and it’s done well for me, but back then as a, you know, 23, 24-year-old, that was just my objective was I want to get in there.
I’ve got a good deal here. Let me get in here. I know I’m paying 5%. I know I’m paying LMI, but you know what, let me just get in there and secure this opportunity. Back then the interest rates were high as well. You know, the interest rates were 8, 9% which was big. But what I did was my research told me that in Australia back in the 80s, the interest rates were 16%-17%. So I said to myself, it doesn’t present as good, you know obviously it’s got much better now, right now with time, but everything was perhaps subjective to that time. And it was a big commitment, but I took it as a calculated risk. You know, I said to myself, well, hang on, this is a calculated risk. You know, 8 to 9%, you know, if in the event I can pay these repayments, I could rent it out as well, you know? So these were my options at that stage and I just went ahead with it.
He talked about the amount of research that he did before buying it, and anything else that ensured him that this property was going to make money.
I think the for me was the gentrification. I talk about that kind of people there in that community because you could see that there’s a lot of younger crowd getting to that area, you know, so yes, the infrastructure was great. Yes, there were, you know all of these schools coming up there and all that kind of stuff. I think schools are a massive driver, you know, especially now I am a parent then I wasn’t, I used to think, hang on a second, should I get married and have kids one day? Obviously you want to send your kids to the best school that’s there, public or private, and there was a lot of that happening back then. You know, there was a lot of good schools coming out, the gentrification side of things. I could see a lot of younger couples coming in that area.
I had rented in that area as well, you know, for the first six months, seven months. So I knew what was happening in that area. I would always observe the kind of people coming in on trams and trains. And I thought, well look long term this is going to go well. More importantly, the surrounding areas. These areas are, right now they are booming. And even then they were booming, you know, at that point in time from a price point. But there was this massive difference in price. For example, something going in Preston and back then was going for around, you know 450,000-$500,000 and the very next suburb was going for $250,000. That’s almost half the price, you know, 200,000-$300,000 almost from the price. So I said to myself, geez, and in terms of the time, it’s a five-minute drive. The suburbs are literally five minutes from each other. They’re not far. Few trams stops away, you know, so I thought to myself, man, for an extra three or four tram stops, I mean that is a lot of money. That’s, you know, 200,000 to $220,000 is a lot of money. It’s not a, you know, a 10,000 or 20,000 difference. You’re talking about hundreds of thousands of dollars. So I said to myself, I’ve got to give myself a chance. It is a calculated risk. The other key point was the entry price. Perhaps it is the entry price. And again, boring capacity, serviceability comes into the picture as well. My point was if I could secure the property around the $220,000 mark. I would be okay.
We continue the conversation on the incredible story of his first property and how he was able to identify it as a profitable investment.
I still managed to pay the repayment and staff. Worst case I could even rent it out, the position of the property was such that it was close to universities as well, so I could rent it out to students as well. So all these thoughts were in my mind that should I not be able to service the mortgage, well, I’m going to rent it out and go renting myself. I’ll go and share accommodation, live in the property as well as rent out the other rooms. So all these things would play in my mind and I thought, I’ve got to secure this because what I could see is other investors and other people at that point in time, all my friends and mates were saying, it’s an old property, you know, you’re not going to make money.
And for me, what I want, I said to myself as well, the land is massive. I could see development opportunities, I could see, and I had no idea how to go about getting permits. Now I do. But back then I had no idea. But that’s what other people are doing. I could see other people knocking down homes and building townhouses and stuff. Maybe one day when I can afford to do that, but I just want to secure this property. So it wasn’t just a gut feeling, it was just all these data and facts. And look, you’ve got to be realistic. You know, for me, I had to say, can I service the mortgage? Because buying a property is one thing, you know, the holding costs, the holding of a property over a period of time, probably more tougher than just buying property. A lot of people who’ve lost money in property as well, you know, a lot of people that have bought all priced properties and even properties and can’t even afford the repayments. So that was my gut feeling. Go with my drivers.
How Having The Right Attitude And Mindset Can Help You In Property Investing With Pradeep Laxminarayana
We learn about a moment throughout Laxminarayana’s career that might not have gone the way that he was hoping it would.
There was a property that I purchased in New South Wales and I think in hindsight I actually paid less for that. But I just realised that I thought, look, I would probably do well just from a cash flow perspective. We bought the property for around 300,000-$350,000. But the issue was that I had not done my due diligence. Especially when you’re buying an existing property, you know, you’re pest and building inspection, all that kind of stuff was not taken into account. That ended up costing me a lot more than expected. But I believed in, you know, you fail fast, you learn faster, I flipped that property and moved on.
I sold, cut loss, and moved on. But the lessons I learned from that property, cheap does not necessarily mean good. I learned that just because something is cheap, well, you’ve got to ask, why is it cheap? So, you know, I looked at that area and the surrounding houses where they were at least 50,000, $60,000 more. I was like, this is what it doesn’t list, I’m just going to buy it. It was probably a more emotional decision in hindsight when I look back now and laugh about it rather than thinking, did I ask for the pest control inspection report, the buildings inspection report, why is it selling for less? I think what I learned from that is, the biggest lesson I learned is, cheap doesn’t necessarily mean the best. I think due diligence is so important. Bear in mind, I was travelling with work as well.
So you buy one property and you think you know everything, unfortunately, that’s human psychology. But I learned the hard way because I didn’t lose money. Fortunately, I sold it, I got all the issues fixed and finally sold it for a decent profit. But it was, I believe in hindsight better. I could’ve picked a better if I picked the right property, perhaps I wouldn’t have even had to sell it. Perhaps, you know, the cash flow would have been much better in terms of the rentals, all that kind of stuff. So that was a solid learning lesson for me.
How long was that process from the start to purchasing all the way to flipping and selling it?
Fortunately, with me, my attitude in life is you fail, you learn, you fail fast. It’s not so about failing. But I don’t regret too much. I take it as a learning moment because I think time kills deals and we all have one life, as you rightly said at the start. Yes, we can keep sitting down and thinking, well what if I could’ve done this? What if I could have done that or take an action to rectify that? So within one year, it took me one year to get in.
Laxminarayana talks us through the moment in his journey when everything felt like it had fallen into place for him.
I think there’ve been two. One of them, on a personal level, is the drive for success because you’ve got to have that hunger for success. Otherwise, you’re not going to be successful on a personal front, right. And taking that first step to where it’s, you know, when I saw Reservoir, I went ahead with it. What I’m trying to, I guess kinda mention to listeners is I didn’t hold back, you know, if the data was right, if all the facts prove that a property is going to appreciate, I defined what an asset for me was. You know, is it going to create cash flow for me tomorrow? Is it going to grow in the capital? That’s an asset. I didn’t let any emotional fears hold me back. Unfortunately, we have a lot of people who have, despite all the data and the facts and all that, they sit on the bench, it’s gone.
Go ahead. And I guess that’s something which I’ve been able to overcome on a personal level, you know that’s really helped me quite a bit. And that’s why I started Property Magnate. The reason I started Properly Magnate was I believe, and I truly believe that look, property’s timeless. Education is timeless. [inaudible] this year together, educate people about the fundamentals of property investing. But to create a strategy which will work for them to run. To gain that financial independence to do what they find significant, whatever that might be. That could be travelling. That could be, I don’t know, watching Netflix, perhaps, doing whatever they want with their lives. So for me, the aha moment was getting the right strategy in place and because there was no one to help me, I learned the hard way.
I had to make mistakes. There was no one who was there to guide me along the process. No one who taught me, you know what’s the difference between the townhouse or unit or an apartment, you know, locations, regions. What would be my entire strategy? I mean, everything should have an exit strategy. Should I pay LMI, you know, can it work for me? Does it go against me? You know, all that kind of stuff. So I guess that’s why I formed Property Magnate herein Victoria because the call was to educate people about investing in the property market, prime education, that’s part of the business. They could take that strategy and go anywhere else. You know, they could go to other buyer advocates. They can go to real estate agents, they could do them by themselves, but 9 out of 10 times what I find is that people do come back and say, we appreciate the strategy provided. You know, can you help us execute that? You know, so that’s where I guess I add value.
Let’s talk a little bit about your property portfolio and your journey behind that. How many properties have you purchased since today?
In terms of totally purchased properties, probably eight.
We find out how long it took him to build up his property portfolio to this point.
Out of the eight properties I’ve purchased and flipped and all that, I’ve probably got six that I still currently hold in Australia. But that has taken me a good, you know, 15 years to do that.
We delve into the strategy that has helped him build such a strong property portfolio
It comes down to there are so many different strategies going on in property, there’s a buy and hold strategy. There is basically flipping as well. There are renovations as well. There is, you know, cash flow is definitely the key. There are renovations, you know, that I’m fond off as well. It really comes down to what that individual strategies for me personally. What’s worked is a combination of all these cause I don’t think any of these are actually wrong. You know, anything that generates a profit it is a good strategy. We’ve recently been able to secure building permits as an example. It took me and my wife a good one year to get that sorted out by the council. But for me it’s a good investment where I’ve got the permits to build four townhouses, you know, so when I look back now, all that effort makes it worth it.
They’re not getting rich schemes. I suppose I would like to focus on that. You know, if people say, it’s an easy way out and people make it easy and there’s a get rich scheme, I personally don’t agree with it. I think it’s a journey. You know, it is a journey, you’ve got to put in the time and long term, the right kind of assets will do well. You know, it’s just about understanding what kind of assets do you want to get into initially, you know, do you want your dream house with a swimming pool and this and that straight away or can that wait until you have a strong foundation of properties to be able to get there. So that’s definitely my passion and focus.
Laxminarayana shares an example of some of his strategies and how he has been able to implement them and how they have turned out for him.
Some of them that I’ve employed is around cash flow, pure cash flow because I believe cash is king at the end of the day, cash is king. So one of the properties that I have I’ve been able to secure, I’ve been offering it out to Defence Australia. So for me, that’s having an absolute great tenant. Guaranteed rent and obviously periodically there are rental increases, which helps as well. Pay on time, so there’s actually no headache, you know, where you rent it out to the government and you’re doing well. So it’s again, picking those properties where you know that if some of these governments would be interested in investing and renting out those properties. So I picked suburbs based on that as well.
That’s one of the strategies I’ve done. I’ve used it as well. I’ve also looked at depreciation as well. You know, at times depreciation is a big thing. It’s kind of overlooked. A lot of people overlook that aspect of it. I think especially with the first home buyers were husband, wife or working with the average wages and stuff. Not many people realise one-third of what people work for goes in taxes. You work for the tax man, pretty much. And that’s just life, unfortunately, as I said, death and taxes. So one of the strategies I do is I look at people’s income as well. Expendable income, absolutely important. I work with my team of financial planners, certified financial planners will look at that and say, well, all right, you know, one of the ways you can perhaps save tax is looking at potential companion properties as well from a depreciation perspective. You know so if there’s a law that allows you, why not leverage it, you know, it’d be silly not to do it, to not utilize that. So it’s employing all these strategies. It cannot be just one strategy. For me, it’s been a combination of all these.
There needs to be a motivating factor that drives you to succeed in anything and we find out what that was for him.
Simply put, it was financial freedom for me. When I say financial freedom, I mean freedom to do whatever, you know, I wanted to pursue my passions. I have a passion for making short films, you know, that requires money and time. My family, my kids, I’ve got three kids. I want to spend time with them. I see people rushing to work. I see people going on trains and trams and all that, and I just wanted to get away from that. You know, I talked to myself, I wanted to have an alternative stream of income that creates wealth which will be steady, which will be stronger, should be solid for years. Something which I could do and pass onto my kids, underlying performing assets, I always keep saying this happened with performing assets.
So that was a key driver. You know, I knew that if you love what you do, then, you know, someone has said this, right? If you love what you do, then it’s not really a job anymore, it’s just your passion. So for me, they were the drivers, you know, financial freedom, really having that independence to do whatever I could do with my life. I saw an opportunity with property and I thought this is the way I’m going to create it for myself and the family. And fortunately, we’ve been able to do that
A lot of people have mentors they can go to learn and get advice from but sometimes you just have to rely on yourself and your own research.
I didn’t have the right kind of mentors. And what I mean by what kind of mentor is, I used to read a lot about Warren Buffett and there’s so many others. You know, even in Australia, I wouldn’t take names, but there’s so many other successful entrepreneurs and in the property market who have done so well for themselves. But I, for some reason, you know, the connection wasn’t there. As I said, not that they were wrong, it’s just that I couldn’t connect with them. Perhaps they couldn’t get it with my journey as well. So you know, for me, I said, well, if I have learned the hard way through my experiences but that has actually made that entire journey, you know, to put it into financial terms because it’s not just about the money. But if I just put it in fewer financial terms from $3,000 to $3.6 million portfolio, and in 15 years, when I look back, when I came to Australia, if someone told me that, I would take it.
I wouldn’t believe that would happen. But when I look back now and I think you know, a person who came to this country without knowing a single soul with $3,000 to $3.6 million portfolios. That is something which I’m extremely proud of. You know, have I made mistakes along the way? Absolutely. I have. I’ve learned from it. There have been some property mistakes, some silly mistakes buying a property. You know, just because it’s cheap. That was silly not doing my due diligence. Not having the right team, you know the right kind of solicitor, the right kind of mortgage broker. Not even having a property advisor, you know, a buyer’s advocate. That I think really hurt. I think I would have done a lot better with the kind of knowledge I have now if I had a property buyer’s agent advocate and advisor, the right team around me. I wish I could have done a lot better, which I have now by the way. But yes, back then if I had what I have now back then, I would have been a lot better off.
It’s important to continue to learn about your craft and gain insights using numerous sources. We find out about the books or podcasts that have helped him along his journey.
I read a lot. I think it’s all about the mindset. So I think if you if you can absorb that knowledge and knowledge is probably nothing like it, but one person who I really am a huge admirer of is actually a Warren Buffett and you know, the series of books in his name, you can Google that. There are so many books about him. Just the way, even right now, the way he conducts his business at this age, despite being super successful, a billionaire, the way he picks his properties or even stocks is amazing. You know, the kind of due diligence he does is amazing. So I would definitely recommend reading about Warren Buffett just as an investment strategy and there are so many books, so it’s not, I think any and all of the books that are written from Berkshire Hathaway, which is his company.
I think for me that is really inspiring. I would even say Nelson Mandela’s book, and I know I’m going a bit philosophical here from [inaudible], Nelson Mandela is a book called ‘Long Walk To Freedom’. And I think that is extremely self-reflecting on the human emotion aspect. The reason I draw a comparison to property here is at the end of the day, whoever is buying a property or selling a property, emotions are involved here on, that is a fact. And the way I look at it is I believe the mindset that Nelson Mandela had in overcoming his struggles in his personal life. I think a lot of that can be applied as well to our individual lives. Especially when we’re going about buying an asset. It’s all those mental challenges and fears that we have.
You know, I’m not saying to just go blindly buy a property. That’s not what I’m advocating, but all I’m saying is if you’ve got the right strategy in place for what comes later, promptly comes later. For me, it’s having the right strategy. You know, a first home buyer strategy would be completely different from an experienced investor, you know? So what is aligning your personal goals, your financial goals? It’s very important. It’s so important. Once you align that and your strategy is clear and you think, alright, to generate that kind of income, how many properties do I need? And you know, how do I go about acquiring them? So last but not the least, I do believe that you know, call me pompous, but obviously it’s my business, I believe people should contact Property Magnate and see what we can offer and what we can deliver.
Laxminarayana shares some of the best advice he has ever received and how that impacted on his career.
The best advice I received was from an experienced investor who unfortunately is no longer alive. He passed away. I happened to cross paths with him in one of the seminars I attended. We became friends, got talking and stuff. He said that was an expensive mistake that I learned along the way. But he says, always go with your gut feeling. Always go with your gut feeling, you know, it’s just a feeling and doesn’t be afraid to make mistakes as long as you learn from it. I think deep within we all know. When we listen to a podcast or we listen to a book, we absorb, we digest. I think something happens within us deep within, we actually know, Hey, are we making the right decision or not?
And many times we know this is the right decision. But we still don’t make it because of that fear of stopping us from taking that first step. So you know, it could be with the job, not just buying a property. It could be with a job, it could be anything, it could be in a car. I bought this car and I thought, geez, I shouldn’t have bought this car. But you know what, just peer pressure perhaps, you know, and I come across customers like that. So let’s say we bought a property because of peer pressure because everyone’s buying a property. And I think that’s just silly. Just because everyone’s buying a property, I want to buy a property, the rationale is not right. I would definitely say, for me, that was the best piece of advice. Make mistakes as long as you learn from it, don’t be shy and fail fast.
If you met yourself say 10 years ago, what would you have said to him?
Just do it. I do believe I could have been a lot better when I look back now. And as you rightly said, hindsight is a great thing but I think if I knew what I knew back then, perhaps, you know, I’ve done 40 this year, I probably would have achieved that maybe at least five years quicker, you know, five, six years quicker. And that’s a big thing, you know, five, six years of a human’s life is a lot of time given that we don’t know how long we’re going to be here on mother nature. So if I knew what I’m doing now, absolutely that would’ve saved me a good five, six years. And just being surrounded and just have a good team, you know.
I couldn’t highly advocate enough about having a good buyer’s advocate by the side. And a good property advisor by your side. And two things I would always say, ask them two things. Whoever they are, one, how long they’d been doing it for because it’s so important that again, through the journey, you know, and they’ve been through cycles. Property goes through cycles, like any other market. No disrespect to the new I guess entrepreneurs out there. And that’s all great. But I think experience also matters. And the second question would be, how many properties do they have themselves? It’s so important because if you can’t practice what you preach, I think there’s a problem. There is a problem there. So, unfortunately, you know, there’s a lot of agents and people that we come across who say, buy this property, buy that property, I think you should do that.
Let’s face it, everyone in Australia is a property advisor. Right from the receptionist to barbecue conversations. We love property and we would love to talk about that and that’s great. But I’m not quite sure how many of them are really qualified. But what I’ve been, my qualification is not just being a member of the property association investors association of Australia. Not just that, the question is, have they walked that path and how many of their own properties have they invested and what’s their portfolio looking like? Can they evidence it? You know I certainly do evidence that in my coaching sessions with my customers and this is not to show off, but basically to say, look, this is the kind of person you’re dealing with. This is what I have learned from my journey. And that’s been resonating well with my customers.
We learn about his goals and what he is looking forward to achieving in the near future.
I really want to pass on this knowledge to my kids, that is going to be the exciting part. My daughter is 10, so early days, but you know, I think that’ll be really great to pass on. You know, as a father and as an investor in the property market and see how she goes in her journey. So on a personal level, that would be great. Professionally I would really, and you know, there are a thin line here personal and professional goals here, but my mission is to actually help 100 people. That’s my mission. I want to really add value to 100 people. I’ve kicked off the business, started my own business. Despite being an investor for 15 years, I took the time and I saw there was a gap there. That’s why I formed Property Magnate Consulting in Victoria and certainly, my mission is to help 100 people over the next five years.
I’ve got one last question for you is how much of your success is due to skill intelligence and hard work and how much of it is because of luck?
Everything in equal proportion, I mean, the way I look at it is the harder I work, the luckier I get. Perhaps, you know, 33.3% hard work, 33.3% luck, and 33.3% talent skill. But I think for me the foundation is really attitude. My attitude towards knowledge. Because knowledge is power, you know, I really mean that. Knowledge is power. Most people don’t go beyond one property. The stats say 90% don’t go beyond one property, 70% go beyond two properties. You know, it’s a very small percentage of people going and buying three properties and people with five properties plus are even less, you know, and as I said, not just buying it, but holding it over a period of time, you know over a decade.
And I’ve held my properties for over a decade. Not many people have done that successfully. So for me, it’s the attitude too. It’s creating the kind of life I want to through property investing and to the knowledge, you know, getting that knowledge and applying that. That’s what I would say, have the right attitude towards your own life in terms of what you want to get out of this property journey. Cause none of us is going to be here forever. We all know that we can’t take any of these properties single, whether you have 5, 6, 10, 20. So the question is what kind of legacy do you want to build? What do you want to achieve? And this is what I focus on in my coaching sessions with people. You know, your entry criteria, your exit criteria.
Why are you buying a property? Don’t buy a property because your neighbour is buying a property or you mate at a barbecue is buying a property. It’s not just like having a beer. No, I know it sounds like that, but it’s not like that. So have your own reasons, your own verified, validated reasons. And that is what all my strategy is all about. You know, when I meet people that strategy focus is extremely strong and then buying a property becomes much easier. Actually, you know, I absolutely support them and hold their hands on everything, right through every single step. But the mortgage broker team that I’ve got with, and this is across Australia, Victoria, New South Wales and Queensland you know, I’m a licensed agent myself, so I understand the challenges there. You know, solicitors, conveyancers, the whole lot, financial planners, the whole team is there. But again, that all comes a secondary focus on the strategy. Strategy is the key.
If you want to contact Pradeep Laxminarayana after the podcast, here are his details
Jump onto www.propertymagnate.com.au. We’ve got a Facebook page as well, but yes, all the contact details are there. I can be contacted by email as well as my mobile number. So all my contact details are on the website, but the website will be the best way to accommodate you.