Property Market Outlook and Investment Opportunities in Australia
Chatting with the business owner and director Ben Everingham, watch his less than smooth journey unfold as he details scenarios of his experience, fluctuating from profitable properties to tenant horror stories. Also, learn how Everingham has made it his mission to set his family up for life, using the property as a vehicle!
You will learn how to seize every opportunity – from taking a variety of different jobs and meeting with some inspiring role models, to being transfixed by a life-changing book. You’ll discover that while investing in property isn’t always a garden of roses, the rewards far outweigh the risks.
Everingham’s typical working week is structured around strategy sessions, shooting videos for a podcast and working with clients.
So my day is extremely regimented I suppose because I’m a father and live on the Sunshine Coast with my wife I’ve got two little girls up here. So my thought process is you know the time that I take away from those girls needs to be put to it’s the absolute best use. So on a given day at the start of my week obviously plan my week and the things that I’m looking to achieve over that period of the week.
Monday is generally catching up with the team and setting up for the week reviewing the previous week and then the marking started my business which I love. Like the shooting the video in the podcast and the cool stuff like that.
A Tuesday would be catching up with clients in what we call our strategy sessions where we talked with people for an hour and find out where they are and where they’re looking to go and so I might do those conversations back to back from 8:00 am to 8:00 pm. And then on Wednesday is working with existing clients in the team and reviewing the properties that we’re looking at that week.
Thursday is a little bit the same, working with clients. Then a Friday is kind of the getting to everything that’s left in the wake and finish off all of those things that I haven’t had time to do, type thing. So you know a general day the same way that everyone starts planning the day, getting the emails, and then I focus on one or two parties or tasks per day. Those are those big rock type things just so that I can knock them over.
As a director of several successful businesses, Everingham also owns a property management business which has steadily expanded over time.
One of those businesses is pumped on property where a buyer’s agency buys between 50 and 70 million dollars worth of property per year in Australia. And I also own a property management business which manages our clients’ properties. We bought them for them.
I suppose you know our philosophy with our business is very simple. We only take on 10 new clients per month and you know we can get into a lot of what I like to buy personally later on in the podcast. But yeah, it’s been a great little business and obviously a whirlwind in terms of the growth over the last couple of years as well.
Everingham describes himself as conservative when it comes to purchasing a property. He believes the most important thing is the right timing and long-term capital growth, along with gradually adding value to each property.
Probably one of the most conservative people in the Australian property market that’s actually still buying property. You know there are five things that are very important to me and in that service the foundation of what I think every successful portfolio – the number one thing is timing the market.
An example I’d give would they anyone that’s bought in Sydney or Melbourne in the last five years now knows the type. The power of timing the right market at the right time and riding that capital gains way up at the right time of the cycle. The second most important thing to me outside of timing is obviously consistent long term capital growth, which means targeting major metro markets. From my perspective, the next thing that’s very important to me is buying the property that you can add value to over time so that if the market stops performing or goes backwards you’ve got a way to continue to build your portfolio which might mean subdivision’s duplexes renovations etc. And then the fourth thing that’s very important to me now especially as I become a more mature investor is above average returns of good cash flow.
And you know with the recent changes in lending in 2017 – during that time and recording this broker is becoming increasingly difficult for certain investors in the market to borrow money. So it’s important to have a strong cash flow position, and I like a lot of the people that listen to this podcast and money and pay tax on that money.
So I do like to have some form of taxable benefit with the properties that I buy as well.
Growing up in Sydney, Everingham was educated at a competitive school where sports were a big part of the culture. He learned a lot from his father, who taught him how he could succeed in business.
I grew up on the southern side of Sydney. So in an area or a suburb called Engadine which is about 20 minutes inland from Cronulla Beach. I know the area very well actually. That’s where I bought some I bought my car and also that’s well on my surfy friends used to live as well.
I went to a school a Catholic school in and getting called Bosco I went to Bosco primary and Bosco High School there. I grew up playing a lot of sport surfing and doing a lot of competitive sports so Bosco was a good fit. From that perspective, the sport was a big part of their curriculum there and it was a very competitive school. One of the best competitive sports schools in the state and also a lot of the kids used to get on the train and we’d go surfing at the beaches after school and on the weekends, and skateboards and stuff like that.
And then my parents: my mum grew up on the northern beaches of Sydney and my dad grew up in the western suburbs, out near sort of Canterbury, Bankstown which is why I’m still a Bulldog fan and a lot of old buds always gave me a hard time about that.
But you know that’s kind of their journey and you know dad started with absolutely nothing. One of eight children, lost his dad when he was 4 years of age. So you know he kind of was a self-made guy and had worked really hard his entire life to create a better life for us and maybe, I don’t know, 45 years of age. He started his own business or bought an established business and continued to run. So at an early age, I learnt that you know businesses could be great things and businesses could also be successful and last thing you could do the right thing and look after people in business and still make good money. So that was a really good thing, that I didn’t realise the significance of until much later in life when I had you know the confidence to the very early age to step out on my own and go and do my own thing.
While Everingham’s parents never invested in property, it still gave their son a sense of understanding of the potential opportunities that he could take advantage of in the future. Everingham says that the benefits far outweigh the risks.
So my mums owned three or four properties over her entire life but never more than one at the time. It’s always been her own home in Sydney. Recently she moved up to the coast. And my dad it’s the same sort of thing, his own three properties over his entire life and all three of those properties have actually been the house that his routine.
I remember going on to a family holiday when I was in primary school and I remember my parents seeing this house right on the beach for ninety thousand dollars at the time. It was 20 years ago and I remember hearing them talk as I grew up about that house at that time and what their life would have been like if they had bought it. So very early I understood like that. Property prices I suppose can go up over time and they didn’t want to be the person that missed out on these opportunities. Tim was talking about you know spending a lifetime worrying about money or thinking about that sort of stuff.
Leading up to his career as a businessman and his initiatives in property investing, Everingham owns that he has had many jobs prior to realising his dream.
I think over from the time I got my first job when I was like 12 years of age and I think from that time until now I’ve literally had over 50 different jobs.
I’ve worked with some of the biggest companies in the world some like your IBM and you j.j. GARDNER homes in your American Express in your qantas’s right through the like you know local corner stores. And I did like landscaping and labouring for four years when I was at uni, worked in cafes and bars and absolutely everything you can imagine.
I was kind of that person that hid from a young age. And so I just wouldn’t put up with sh** like that in terms of you know getting treated the way I think it’s situated. Even as a young guy. And secondly, I was a bit like the kid in the candy store with learning and so I go into positions and jobs and learn as much as possible. But then my learning curve you know I don’t fight it very quickly I didn’t want to be in that space. After 3, 6, 12 months I think the longest job I actually ever had before starting the business was about a three year period – which is kind of crazy now that I look back at it, but I didn’t realise how invaluable all of those experiences observing different types of leaders and different types of businesses would now be.
Everingham also states that having been a jack-of-all-trades has coincided with meeting many inspiring role models, whose knowledge he has been able to apply to his business strategies in the present.
I’ve met some incredible people. You know, one of the guys that I think of often is my last post at my last job, which was you know as a marketing manager for six different global brands, and three of those brands were in the building game in Australia, America and New Zealand. And I just observed a very young guy at the time when I started with him – I think he’s 34 – making very good money and not really working a lot. I think in the last 12 months that I worked with him he probably came into the office 20 days out of 12 months. He just said, ‘Try to build a sustainable business model,’ and working with those types of people and observing those things at a young age is extremely powerful because it changes your paradigm and it changes the way that you think about everything from seeing someone else it’s already gone out there into that area.
Everingham began his property investing journey at a party as a young man, where he learned the power of investing in compound interest over time through the inspirational book, Rich Dad Poor Dad by Robert Kiyosaki.
So I remember I picked up Rich Dad Poor Dad when I was 23 years of age and I think for everyone that doesn’t come from money, that book has a pretty significant effect on when they read it young enough. And when I was 23 I had a year and a half, or a year and a half I think, left of university. I remember going to my now wife – at the time girlfriend’s – friend’s house and having like a party and everyone was getting headstrong and can I just pick up the book the day before and I literally could have put it. So I took it to this party and just sat on the porch all day reading it in the summer while everyone else got smashed around me. And I felt like an arsehole looking back about it now.
But at the time it was just so captivating I couldn’t put this thing down and what I learned from that book, even though I didn’t have money to go out and buy property at times because I was still at university living out of home, was that assets are definitely better than wages. And so I learned the power of investing in compound interest over time. And I also learned that running your own business is better than working for someone else. And so from that time I read that book I knew that I would at some point in my future invest in property and then I’d use that property and that passive income to go in and start my own business without the fear of doing that.
So the first year I got out of university I saved a bunch of money. A friend of mine it was the first time I’d really had money in my life and a friend of mine came up for a holiday and he said ‘You want to go to America?’ And I said yes. I actually went and sent my first deposit on a trip to America with some friends. I came back got a big slap over the knuckles from my wife’s father, who was a very high profile investor and just sort of said what the f*** are you doing here.
It took me another six months to save another deposit and then I went and bought my first place which was a two-bedroom unit in the southern shire in Sydney – Miranda, and then three or four months after that I went and bought a second property which was a five-bedroom house with the granny flat on the Central Coast. So from that time on, I was hooked and you know that was sort of seven, seven and a half, eight years ago now. So you know over that time we’ve accumulated and sold in bought and held and built a lot of different properties and now that’s where we are today.
Everingham also shines a light on a real-life story – a property investment tragedy which even made the local news in the Central Coast.
So it’s Friday afternoon at 4 o’clock. Three weeks ago. And I get a call from my old mate who said, ‘Have you checked on the local news?’ And I said, ‘What local news?’ first thing.
He said, ‘I think your property is on the local news on the Central Coast.’ And I said what. And then he said, ‘You should probably ring your property manager.’ I’m like, okay what’s going on.
I ring my property manager and I’m like, ‘What’s going on?’ And she’s like, ‘Well because I recently found out that I’d lease the property out to one lady who’d been there for eight years. But I found out in the latest inspection that she’d subleased it out to eight other adults.’
So it was a house with a granny flat you know eight out of living in one property is just deadly, as you know. Especially the quality of the tenants certainly.
And so I’ve kind of gone, ‘What happened?’ and she’s like, ‘Well there was a domestic issue at the property the other night two of the males in the property had a knife fight.’ And I said, ‘That’s insane. Like what the hell happened?’ And she said, ‘They’ve done a fair bit of damage to the property.’
And so the next couple of days later, some six detectives have rocked up to the property because they’ve realized that something else is going on and these people have effectively run out the back of the property and I don’t know what happened. But at the exact moment, the detectives have rocked up to my granny flat which has been there for eight years, is caught on fire and burnt to the ground. So the cause of the fire was undetermined from the police. And the detectives couldn’t enter the property until the fire was out. So two fire trucks have cropped up into this little suburban street by the beach on the Central Coast. And then there are six detectives there and then escorted back up and as they’ve called the backup and sectioned off this street. These adults have run out of the property, apparently, four of them have got away and four of them have been put in cuffs. It’s the most extreme example of what could ever happen to a property.
That’s why I’m very happy that you have a very good story.
This is why I love this story is like the start to grow like this just escalates over a period of weeks. So these people for the fourth hammering cuffs and about to be put in the car. Then a couple of the neighbours come out to have a hose, you can see people in the house. And they start breaking off fence palings and getting cricket bats and then attacking these people that have their arms cuffed behind them.
So there’s now 30 or 40 members of the public in a full-blown fight in the street because for whatever reasons that I didn’t know and my property manager never told me that there’s a massive issue in the street with these tenants. And so there’s like now 30 or 40 policemen on the property and 30, 40 people literally fire.
And you know you think the story is going to end there and you know these people go away then the tenants get back into the property. We’ve gone to the tribunal and obviously using the police event ventilator allowed them. The courts have granted that they’ve got 10 days to get out of the property and remove all their stuff. I have about a 10 day period.
There were two more knife fights and that tenants during those fights broke every single window in the property and put their heads and arms through about every single wall in the house so the entire house is now the station had hit show.
And so that’s where the second insurance claim comes on top of the first one and then you know they’ve left.
They’ve vacated the property but before they have it’s a long weekend and the electricity companies cut the power off so then the person in my property got an extension cord illegally plugged it into the neighbour’s house and he’s running the entire house off this one cord and it’s raining. The cord catches fire and has to be put back. And then they’ve finally got out of the property, they haven’t cleaned anything, and not only that they’ve actually dumped four stolen cars onto the property before they left. So this all literally occurred in the last three weeks and this is my last just trying to go through this thing that I don’t know many people that have had an entire house trashed.
You know what looks like some form of illegal activity occurring in the house. Their granny flat burnt down three nice flights in four illegal cars dumped in one sitting, but you know that’s one of the worst-case scenarios never happened to me.
If I didn’t laugh about it I’d have to cry.
Despite his struggles, everything fell into place for Everingham after purchasing his second investment property which gave him a great sense of self-gratification.
I realised a number of things. You know not many people where I grew up had an investment property. So the fact that I was 24 and had a couple of properties was a big deal in my own mind. It was kind of like a pat on the back and a feeling of worth or something like that, if you know what I mean, and gave me some self-gratification. What I also learned from buying that second property is that you can buy well below market value if you know the pain points for other people. So that was huge for me.
The biggest thing that I’ve probably learned in the last seven years and there’s been everything that I’ve been focusing on lately is just timing. You know, the power of buying those initial properties in the right markets at the right time you know directly after the GFC or during the GFC. What would have been very close to the bottom of the market? And then riding that way back up kind of made me realise that most of the hard work in property is actually done over a very short period of time and then a lot of it’s just sitting back and continuing to consolidate and get yourself into a better position, a safer position.
Everingham adds that he was also inspired by Phillip Anderson’s book The Secret Life of Real Estate and Banking.
He’s an economist in Australia who’s got businesses in America, in London and for anyone that seen that movie ‘The Big Short.’ He was one of those guys that identified the housing crash in 2005 in America and shorted the American market all the way down. And he wrote this book called The Secret Life of Real Estate and Banking, which looks at the last 300 years of boom and bust cycles in America and Australian property – and is just the most powerful book I’ve ever read, in terms of understanding the bigger picture and the timing of different markets. What was interesting to me was there a very consistent pattern of 14 years of relatively stable upward growth, in four years of very hard times.
So it was extremely interesting to see you know over such a long period a pattern repeating itself based on a centralised banking system that constantly breaks at some point based on a certain amount of pressure in a market. So that’s big for me to kind of be able to see a little bit more of the future than I’ve been able to see before, as well as a good review of the past.
At 31 years of age, Everingham says that he is excited that he has a clear investment strategy set up for himself for the future.
It took me a really long time to understand what my personal investment strategy was and I’ve tried a lot of different things. Luckily with the timing of the market, most of those things have come off in a positive way. But what I’ve now realised and what I’m most excited about is the fact that I know that Sydney, Melbourne and Brisbane are going to be my playground for buying property over the next 30 years. I know that I’m gonna be buying walking distance to the beaches or, you know, within 10 kilometres of the say their day. I know that I’m always going to be able to find those distressed assets and then add value to them over a very short period of time to release immediate equity.
I understand that capital growth is affected by a few things; and far fewer things than most people think about higher-quality properties is actually what gets you there in a shorter period of time, as opposed to stuffing around with all sorts of different things or create businesses out of. Because they say nature in the marketplace not because it’s the most effective thing for people. And so yeah, I’m excited that I’ve got a plan in place that I’m at a stage of life where I know what I now know and I’m just consistently applying that for the next 30 years.
So many people come to me and they’re like, ‘I’ve spoken to someone who says I need to have 10 to 20 properties.’ And I’m like, ‘Why what’s your goal?’ They say, ‘$100 000 per year, passive income.’ I’m like, ‘Four properties in the next three years, hold them for 15 years and you’ll achieve your goal.’
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Initially, Everingham had to overcome things like fear of failure and fear of success in order to move forward in his property investing journey…
I think an investor lives and dies by internal belief systems and values in their mind. So I’ve had to overcome the same things that I think every investor has to overcome – a fear of failure. Then after you get over that fear of failure, fear of success and actually, ‘Oh s**t, I’ve achieved what I wanted to achieve. Now what?’ That actually took me a long time to come to terms with. Things were getting better in my life and I was redefining myself once I did achieve all those goals that I set out to achieve when I was younger.
The same things that plague every investor – the information overload, the different types of strategies, different opinions and all the noise in the industry. Taking the different pieces of each of those strategies and actually defining something for myself that was in line with my personal risk profile and thoughts on investing.
So I’ve had to overcome those things and then at different times, not having the right mentors or coaches around me, feeling isolated and pretty lonely, to be honest with you, because I didn’t have a lot of people to connect with that were at the same stage of life in terms of their investment journey.
I wouldn’t say I’ve overcome everything, there are still so many times that I wake up going, ‘Holy hell, the whole world is going to fall on its head today,’ when you see a couple of bad articles. But then to get past that stuff, I just remember that my long term objective is about year on year returns. It’s about consistency over time and there will be good times and there will be bad times and to just not buy into the hype that’s happening around me based on only two things and that boom or bust. So if one is not selling it, the other one is and it’s easy to get caught up on that stuff if you don’t have a consistent long term vision and plan for yourself.
As he wasn’t able to connect with people in his immediate circle of friends, he focused on learning from the most successful individuals in the industry.
I’ve done a lot of things that a lot of other people in the industry initially tried. I went to what I thought were awesome educational nights and they turned out to be property market spruikers, and financial planners that weren’t financially independent just flogging the trap. I’ve gone to the nights where the accountants and the solicitors get involved and they’re also trying to please the drivers that you don’t need. I’ve gone to a lot of seminars and the big events – I’m not going to name names, but a lot of the people that everybody knows in the industry. I’ve listened to their day programs and I listen to their podcasts.
Three years ago I looked at every one of the wealthiest hundred property investors of all time and the 100 wealthiest traders. Whether that’s in bonds, commodities or stocks and then I looked at every single one of those hundred wealthiest people and if anyone of those people had read a book, I bought it. So I ended up buying about 65 books over the last three year period. If you’re going to be the best, you’ve got to model the best of the best. So I suppose I didn’t really have direct people in my life until my previous job.
But those books, podcasts and all those sorts of things were a big helping hand for a long period of time in my journey.
Some of these resources included books by Robert Kiyosaki, Tony Robbins and Paul Coelho.
I really enjoyed Rich Dad Poor Dad for the people who are just getting started. I actually just finished Tony Robbins’ new book Unbreakable, which is a condensed version of the book he wrote last year about money mastery and I actually found it to be one of the better financial books that I’ve read for a person to digest. I read that one on the way down and back on the weekend to Melbourne for a mate’s wedding.
From a property investment perspective, there’s probably not a hell of a lot of others that have had a huge impact on me. A lot of the share trading and investing books have because I think those guys are a lot smarter and a lot more sophisticated than the average Australian property investor or a spruiker. I kind of like a couple of books that are a bit outside the genre, for example, The Richest Man in Babylon and The Alchemist and those types of things as well – a lot more motivational or mindset-related stuff.
Everingham has taken the knowledge he has learned from these resources and applied them to develop his own successful strategy.
I think the best advice as I’ve gotten older is from Warren Buffet which is, ‘Be fearful when others are greedy and be greedy when others are fearful.’ Everything that I’ve been reading in the last couple of years has been related to markets and patterns over time globally and the effect that it has on the local market place. So my strategy has changed dramatically from just buying whenever I had enough money to buy, to buying very strategically at certain times in the market. I know I’ve only been wrestling for seven years so I haven’t been through even half of the full cycle yet.
But that’s been very important to me, which is the reason why as a buyer’s agent I stopped buying in Sydney for our clients a couple of years ago and transferred our focus to the Brisbane marketplace, which is just starting to get some great results now.
He also believes that the market has changed dramatically from what it used to be 10-20 years ago. In order to achieve financial independence, a different kind of strategy is needed.
Unfortunately with only 1% of Australians owning more than five investment properties, there’s not a lot of people that you can actually turn to that have been there and done that. There’s plenty of people who talk crap about doing it, but there are not many people that have really achieved financial independence through property investing. A lot of the people that are currently in the industry haven’t really done anything since the 80s or 90s, which was when properties doubled every seven years. So you didn’t really have to do anything back then you could just buy and then hold on and you’d be a millionaire; where today, returns aren’t guaranteed. That’s a lot more competitive. And markets just don’t do the consistent things that they used to do, so you’ve got to be more sophisticated in terms of your strategy to get the same results.
Yeah, that’s really interesting that you say that. I agree to some extent. I mean I guess I’m going to challenge some of that as well. It’s why. Why do you think at this point in time it’s harder in this particular market compared it compared to a previous life.
I think in the good old days of investing in anything, the mindset was that property prices double every seven years – in a worst-case scenario, they double every 10 years – and I just don’t think that’s true anymore. Sydney and Melbourne have gone through a great wave of growth in most suburbs growing between 40 and 80% in the last five years. The story that people aren’t showing is the 10 years of completely flat property values that Sydney had before that. So I don’t think those things ring true anymore.
And what type of forecasting does Everingham do for his own portfolio?
When I’m forecasting personally for my own portfolio, I do my assumption that Sydney and Brisbane will only do 4% capital growth per annum for the next 20 years. Wages have an increase in my property values and so I know it’s an international marketplace now, particularly Sydney and Melbourne, which means local income doesn’t matter as much. But when the correction does come, there’s going to be a lot of people that are significantly overexposed from perspective, in talking to eight or 900 investors every single year and intimately understanding their situation.
I read a really good report based on the top 20 global cities that billionaires and multimillionaires around the world want to invest in and I think Sydney was ranked number 10 or 11. From an international perspective, Sydney and Melbourne are very affordable for the lifestyle and the security that they provide wealthy people.
So internationally I don’t think there’s any problem with the pricing in the market. My thoughts on the market there at the moment, I don’t believe there’s going to be a major crash or correction. In fact, I think by the time this cycle’s over and actually peaks out before the next proper land crisis lead recession, prices are going to be significantly higher than they are today in seven or eight years time from now. We’ll be going, ‘I can’t believe you could buy that in Bankstown for $600 000.’ I’m not necessarily like doom and gloom, saying that the whole thing’s fall on its head immediately. I’m just concerned when Bankstown for example, the average income in the suburbs is a thousand bucks a week but property prices are $800 000 – $1 million. We’re in uncharted territory in terms of averages over the last 50 years if you look at the true data and that’s concerning to me when the average person can’t buy the average property. Longer-term, it’s got to have an effect on supply and demand at some point or another.
It took some time for Everingham to develop his property investing strategy, as he didn’t fully understand the market value of the properties he was considering.
When I first started buying property, I wish I could say there was a strategy behind it. But the reality was I knew I wanted to buy a property, but I was in that stage where I didn’t know what I didn’t know as an investor. That’s a very dangerous stage when you make decisions based on third party advice that might not be in your best interests. For example, at that time in my life, if the mortgage broker was prepared to get me the money, I was prepared to stand that was my money, my attitude, a mentality what I was very lucky. The years that I finished university was that middle section of the GFC, the market was tough for certain people and people were still scared and not buying stuff because they hadn’t been through a cycle. I went on a buying rampage and effectively, every time I had a 5% deposit when I bought another property in Sydney or the Central Coast of Brisbane. So at that time, I didn’t really have a strategy, I knew that high-quality properties in good areas close to the beach or close to the city were what I wanted but that was about as far as it went.
My scope for identifying coverage at the time was pretty much limited to buying resides report, having a look at a couple of numbers, talking to a couple of local agents, looking on realestate.com and buying something that was very basic.
Over time his strategy has evolved – from purchasing the ‘ugly duckling’ to timing the market and investing in properties with good capital growth.
I was looking for suburbs that had a predicted average annual price rise for the next eight years in a resort that supported over 6% per annum. I was looking for a rental vacancy rate in the suburb below 2% because I knew that represents an undersupply of property for rent. And then what I thought represented value, which has changed dramatically now, was the cheapest property in the worst condition in a good suburb. So I thought that value shopping meant buying cheap and buying something that no one else wanted to touch. But I now realise that buying cheap can sometimes mean that you lose 1%, potentially even 2% capital growth per annum over a longer period of time.
So that was my strategy – just buy the really ugly duckling, buy them off people that were in a distressed state, like divorcees. You know, very easy properties and to be pretty aggressive with trying to buy something that I thought was below market value. Which in real terms, the agents would have been laughing seeing me coming, because market value is whatever someone is prepared to pay. I didn’t have access to the sales history data at that time so I actually had no idea what market value was.
And how does his strategy differ from other investors?
My strategy is super simple. The number one thing is timing the market, so I do not buy someone else’s profit and that’s why I haven’t been touching Sydney or Melbourne for a while now. I like to buy at the rising stage of the property market in Sydney, Melbourne or Brisbane. When it’s top of the market, I would never be buying property, I’d be very cautious – when there’s a 14 to 18-year property cycle at play – and probably not buying any property for quite a period of time and waiting until the bottom of the next market to get back in.
On top of timing, consistent average capital growth is very important. As I said, you get that in Sydney Melbourne and Brisbane very close to the CBD, premium suburbs or on the beaches. Then I like to buy the property where I can add value as well. So whether that’s buying a very cheap piece of land and getting a bill for a discount; or buying a three-bedroom, one-bathroom home, converting it into a four-bedroom, two bathrooms home and then renovating it; or doing both of those things and then adding a granny flat. I’m a very very active investor and my wife’s an interior designer, so between the two of us, I buy well, she adds value and then I sell well.
That’s a very good team to be in!
It just helps, it’s complimentary. The best thing is the people who are complete opposites because of you kind of fill in the weaknesses of the other person.
So that’s my strategy. Time the market, buy for capital growth, add value to everything that I buy and then like I said, I like cashflow. But it’s so many things that I now overlay when I’m buying literally 300 things by the time I physically inspect a property that I’ve checked off. And if at least 40 of those things aren’t in alignment with my current strategy, it’s an immediate ‘No.’ So instead of trying to buy a property as most investors do, I try and eliminate properties out of the market so that only leaves me with a handful of options every 12 months that I would seriously consider for myself.
Creating a checklist of things to look for in a property is something that he believes every investor should do, as they could avoid making simple mistakes.
I think the average investor by making the decision that they make on the average property probably costs themselves between $100-150 000 in capital gains over 10 years. I just think people make the mistakes that they could avoid by listening to people like yourself and the people that you bring onto your shows, or doing better research – they spend so much time looking at the fluffy stuff and not enough time looking at how do I identify the right properties? How do I identify the right market? How do I identify timing you know those more sophisticated things that everybody has had to stretch further?
What’s a personal habit which has contributed to Everingham’s success? For him, it comes down to his passion for property.
I’m obsessive about property, I can’t help it. It’s my passion, it’s my purpose for being here. It’s what I love to do, it’s what I would talk about all day. I don’t talk about it outside of work, luckily when I am at work I talk about it most of the day. That kind of gives me my fix.
But I’m OCD, I’m constantly learning, I’m not one of those investors that’s like, ‘Oh, capital growth works, so now I’ll just do capital growth for the rest of my life until it doesn’t work.’ I’m not a high-risk taker, which means I avoid the development stuff that a lot of other people decide to take on. There are so many examples of people over the last five years that have done five developments, where if they had just bought one property in Sydney they’d been a better overall position right now.
So I think the fact that I’m detail-oriented, I’m very patient now and that I have a very structured way of buying – from identifying markets to identifying suburbs to reviewing suburbs, to identifying quality properties, to reviewing those properties. It just makes the process simple and automatic. I can qualify our suburb in about two minutes which people could spend two months looking at before they actually decide to walk away.
So the simple processes that I’ve set up because I’m so over the top with this stuff, I want to do the right thing by myself and the people that we help has enabled us to just systemise it down to a point where it’s hard for us to miss something now. It’s very difficult for me to buy the wrong type of property myself, outside of obviously the whole global market crashing and burning – which is probably going to happen two or three times during my investment journey and I’ve just had to come to terms with that.
Something which Everingham has struggled with in the past and the mistake he believes many property investors make is to overcomplicate things.
A number one reason why I see most investors failing and that is something that I’ve done personally. The reason I say this is not to have a dig at anyone but myself in the past.
It’s literally that people get bored and people want to tinker. People want to overcomplicate very simple things and once you’ve bought a couple of houses and you know how to do that, then people go, ‘Well I don’t want to just buy anymore. I want to do this or I want to do that’. I get to have about 700 sessions a year with very sophisticated investors, with portfolios of between three and 30 properties. And from speaking to all these people, once they find a strategy that works you’ve got to evolve with the market and the market conditions and different strategies will work at different times. Once they find an approach that works for them, they just rinse and repeat it but they repeat it for long enough that it can actually be an effective result.
Where most investors buy one house – probably a unit or a townhouse – and then they go and build something so that’s a bit newer and more exciting and then they’re looking for a little splitter block or a subdivision. It’s just if you don’t consistently do a one activity over time, then you don’t learn enough about that one activity to really refine it and improve it. You’ve got a lot of these people running around looking for splitter blocks where they’re only making 8% to 12% net returns; where had they just bought high-quality property close to the city, done a renovation and added a bedroom or bathroom, they would have added 30% of the value. It’s just crazy how illogical people are and how much their need for change affects their long term results. I think that’s where most people get it wrong.
I mean so many people come to me and they’re like, ‘I’ve spoken to someone who says I need to have 10 to 20 properties.’ And I’m like, ‘Why what’s your goal?’ They say, ‘$100,000 per year, passive income.’ I’m like, ‘Four properties in the next three years, hold them for 15 years and you’ll achieve your goal.’
Just do that and then focus on having a sick life during that period of time and repaying what debt you can. And at the end of it all, renovate a couple and sell them to pay off the other two outright. It’s that simple. But people want to make it so much harder than it really is.
If you would like to learn more about his strategy and the mindset behind his success then here’s some information about Everingham’s service.
Our buyer’s agency like everything in my life is simple. So 12 months ago I read this amazing article that was sent to me by Seth Godin, the legendary marketer in America. It said at the top of the article, ‘Why be bigger? Why not be better?’ and at the time we were helping buy about 15 properties per month and probably on our way at that time to opening a Sydney and Melbourne office and becoming one of the big boys in this space. I read that article and literally that day, I talked to my wife and I told my team and said, ‘Let’s just focus on being the best and better.’ And since that day we’ve never taken on more than 10 clients a month – that’s meant that, in previous times, we’ve sold out anywhere between one and five months in advance.
But it means that we choose the people we work with that are culturally aligned, we choose the people that we work with because their strategies are aligned and because I’d actually want to have a drink with those people and spend some time with them. And it’s completely changed our business and our model from the whole property industry – bigger and bigger, more and more – where we just say, ‘Let’s get above-average returns for our clients. Let’s aim to get a 1% or 2% average annual capital gain better than the market average in the state we’re buying. Let’s get 1% or 2% better rental return than the average in the state that we’re buying and let’s try and do that consistently for the next 20 or 30 years.’
And the other thing that we’re obsessive about is customer service. We’re by far the most hands-on buyer’s agency in the industry and it’s really about when you come to us, working with me, my sister and my brother directly, there’s no one else you’ll ever have a conversation with. We’re super hands-on with what we do and I think that some of the special sauce that is pumped on properties now become, which is definitely by far one of the agencies in the industry that is trying to do the right thing by people and just telling you how it is. It’s not us taking everybody’s money just because they’re prepared to give it to us, it’s helping the right people execute on a strategy and actually create the right strategy before you start wasting money and time looking at stuff and buying things.
To connect with Everingham simply visit.
They can jump over to www.pumpedonproperty.com or they can just Google “Pumped On Property.” We do heaps of videos, we run some cool stuff every now and then, do about four webinars a year and we send out a fortnightly newsletter. So if people are interested just jump over there and check it out and they can make their own mind up.