Jazz Sidana, buyers agent and an IT professional who was looking to purchase a family home in Melbourne when he began his real estate investing journey. Now he has expanded his portfolio to six properties and is showing no signs of slowing down!
We will find out about his upbringing in India, how he originally wanted to become an accountant, why rent-vesting works for him and how he learned the hard way that education is one of the most important things when considering investing in property.
As a family man, Sidana tells us about his activities in a busy day of life.
I currently work in IT for a big retail corporation and I've been with the same company for the last 10 years now. I look after a team of developers, as a development manager.
The day honestly for me is pretty busy, I mean my job is basically nine to five - the good thing is I don't live that far from work so it's only 10 minutes walk - but I don't have to be there at nine or finish at five, it's flexible hours, but that the sort of framework. Outside that, I've got a family with two kids - two boys. So that just keeps me busy!
My other passion is property and finance, so I spend most of my time reading about financial news and what's happening in the world of property and investing in general.
Originally born overseas, Sidana completed his Masters when he moved to Australia.
I am from North India, a city call Ludhiana. I studied in the local school, it was one of the good schools over there - an English-speaking school. My whole family is in the same town, I'm the only one actually who decided to leave the country. My father was a businessman there and I was more of a person who likes to experiment stuff and try new things and I said, ‘I want to go out and study somewhere outside India.’ I happened to pick Australia at the time because a few of my friends were here. So I just came here for my Masters - I did my Bachelors from my hometown and then decided to do a Masters here.
So I guess that's a good excuse to say to your parents, ‘Dad, Mum, I'm going overseas to study.’
Yeah, it's actually funny. We have five siblings, I'm the youngest one, I've got four sisters. And my father made all this effort into having a boy and I decided to leave the country.
I wonder what he must have said about that!
I don't think he is very happy with that!
Sidana tells us more about his family in India and his father’s business.
He is more or less retired now, but back home he had a manufacturing unit. He used to manufacture paper for the local suppliers over there.
He actually suffered a fair bit of loss from that in the later years and decided to shut it down completely. My sisters are married. They're all pretty wealthy so they're living their life.
With so many occupations and countries to choose from, why IT? Why Australia?
The Bachelors that I did was in IT. Honestly, I didn't know, I didn't have a clue of what I wanted to get into. But Dad sort of knew at the time and he was like, ‘Get into it, it’s the more upcoming thing,’ and I was like, ‘No I want to do accounting.’ He sort of forced me into it. And it actually is good that I got into it because I really enjoy doing it.
So for the last 10-15 years, I've been in the same area and it's been one of the more disruptive technologies out there. So I've been enjoying that part quite a lot.
At the time I was looking at America, Canada and Australia and I said, ‘I don't know many people anywhere anyway.’ All my family is back home and it's just I had two or three friends over here in Australia, so I knew someone over here at least - in case I really needed some help, then I can ring someone. So that was the reason I picked Australia at that time, to be honest.
I have a pretty good life and I've enjoyed this country, I absolutely love it. Melbourne is a great city. I moved to the Gold Coast about seven years ago, but it was too laid back for me, so I decided to come back to Melbourne.
After becoming an Australian citizen, Sidana found a steady job in IT and settled down in Melbourne with his wife.
I came to Australia when I was 22 on a student visa and I was here for two years doing a Masters in IT. From there, I applied for my citizenship over here, I think I was 25 or 26 when I got my citizenship. Then I started looking for jobs in IT and finally found the company that I was looking for and I've been with them for the last 10 years really.
My whole family is back home in India. But the girl I'm married to has risen over here as well, so she came here before me - I think she has been here for the last 15 years now. We met at a call centre that I used to work for and it sort of kicked in from there.
So I’ve got two boys who are thirteen and five months old. Yeah, so I'm a family man now. All the late-night hangouts are gone!
The influence to begin property investing came from the desire to own family home. However, being uneducated in property investing at the time didn’t sit well for Sidana.
Actually I think I'm one of those people who gets influenced very quickly. I just naturally happened to get into it - I used to live in Windsor which is an inner-city area in Melbourne. I was renting over there and I was planning to get married, so I started looking for houses and I couldn't afford anything in that area. So I had to go 45 km out in the outer suburbs to the south-east and I bought my first block of land over there to build my own house - and that was where the journey started.
But I sold that block of land within the first year of buying because I think it was in 2007 when I bought it and the property market was pretty hot at the time. So within the first year, I made like $30 000 profit off it and it was short term thinking - I wasn't really educated, I didn't know much about property, finance, any of that stuff. In short, I decided to sell it and I was in a fixed rate and trust the time, I actually ended up paying $20 000 break fee to the bank.
I made a $10 000 profit, which I was still pretty happy with. After all the costs I'm saying, ‘Yeah, I’m going to take that profit!’ But in hindsight, if I was educated at the time I would have never done that, I would have still kept that because it's three times the money now.
Prior to finding work in IT and beginning his property investing journey, he undertook several different jobs. This was a challenge, as he was limited to working a certain number of hours per week while on a student visa.
During my student visa as I was starting, we were only allowed to work part-time, 20 hours a week. So it was hard to find professional jobs at the time plus I didn't have any qualification in hand, or experience, so at the time I used to work in a call centre in the CBD. That worked out pretty well for me, it was an inbound and outbound call centre. I also did security for a little while just to pay off my bills.
Having purchased his first property and sold it, Sidana searched to find another home to live in. He located one in close proximity to the first house and then eventually drew equity from that to buy another investment property.
I looked at a few houses first and I was like, ‘I don't really like the floor plan for any of them,’ and to be honest I didn’t even know what I wanted at the time. So I was like, ‘I'm going to build my own.’ And I bought this block of land with a view of the mountains and it was a good block, 700 square metres.
Wow, that’s big.
Yeah. These days it is big and back seven years ago, it wasn't really. Especially in the outer suburbs. So yeah, I bought the block of land thinking that I would put my own house on it but as I said, it was a short term thinking at the time. I was making that $10 000 profit after all the expenses, like ‘Let's sell it and we’ll buy something again,’ because I didn’t know much of property at all.
Then I bought a house in the suburb next door, a small house built on a similar-sized block, which I still hold to date - it is rented out. And that was my principal place of residence, lived there for roughly three or four years before buying a bigger place to live.
But in the meantime, I did buy another investment property because I had made that equity because 2007-2008 was when the property prices were going up. So I was able to pull equity out once again to buy another one. So that's all how it got started after that.
Since the beginning of his investment journey, Sidana’s properties have almost doubled in value and accumulated six properties in his portfolio.
So the actual block that I bought was $175 000 and I sold it for - I think it was around $210 000 at the time. After all the expenses as I said, I made roughly about $10 000 profit. Then I went on to buy my house that was my principal place of residence and I bought that for $287 000 and I still hold it today. It's doubled in value pretty much so it's roughly around $575-580 000 already. So that's done pretty well.
Within the first year of buying, the property prices were going up. So I was able to pull equity out once again and I bought another one within the same area, which was a corner block 550 square metres, with a three-bedroom one-bathroom house. I still hold that today and it's rented out and that was for $307 000 - today it's probably worth again around a similar price, somewhere between $550 000 to $600 000.
So at this point in time, it's six [properties]. I mean the number doesn't really mean anything, the whole portfolio is roughly about $3.2 to $3.5 million. And in terms of gearing, I'm 60-65% geared. So I do hold enough equity basically.
If I take into consideration the actual tax that I get back, it's actually a little bit positively geared at the moment. I would probably leave roughly around $10 000 in my pocket every year.
With many people rent-vesting, it’s a cost-effective alternative whilst acquiring wealth through property investing.
I'm renting my own place now. So all of the investment properties are obviously rented out and the place that I'm living in, which is sort of closer to the city and work, I'm renting that place.
For me, it has worked out very well because I only live within 10 minutes walking distance to work. I actually used to hold two cars and I sold one of them because I didn't need it anymore. And my wife was on maternity leave, so that's straight away saving $1 000. Then the other property that was my principal place of residence is now rented out, so that's tax-deductible as well. So if I truly do the numbers, I end up being better off renting right now than living in my own house. Plus I'm closer to the city, so if I want to go and watch a match in the stadium, ACG or whatever, or just hang out in the city with friends. It literally takes me 10 minutes. And Uber these days is pretty cheap too.
Although he has had a positive outcome with his property investments overall, he still regrets selling the first property he purchased. He owns that education was the key to unlocking the benefits in his journey.
In all honesty, really I don't have the worst moment as such. But in hindsight, that block of land that I sold was a silly thing that I did at the time - I could have actually put a house on it and rented that out and that would have done pretty well. I would have been sitting on roughly a $4 million portfolio right now, with 55-60% gearing. That's the mistake that I made.
Once I got started, I learned pretty quickly that education was the key to it. Which if I look back if I could have started that even earlier it would have been better for me, but I was new to the country so there was a lot to learn at that time.
Sidana’s a-ha moment occurred gradually, via educating himself about the property and the workings of the market.
It's not something of a revelation that happened [at once]. But as I kept educating myself, by reading magazines, Financial Review newspaper or [watching] the Sky business channel, all of that - is sort of a revelation that I had over time.
I got to a point where I was like, ‘I can now start even predicting what the next move of the interest rates is going to be,’ and all of that. So with my portfolio, what I did was when the interest rates were at rock bottom I fixed 80% of the portfolio. And since then the rates have only gone up. So it's really been educating myself all this time and understanding. And now I think I'm fairly comfortable with predicting, after reading all the stuff based on what economists are writing and everything, that I can make informed decisions of what's going to happen next.
I think it's more important for people to understand that property is important; obviously the location is important, the kind of property that you buy in the area is important, but what's more important than that is understanding the finance setting of the structures right, understanding the interest rates. Then when you're dealing with it, if you have one property it doesn't really matter that much, but once you've got a couple under your belt that becomes very important. And setting those structures upright is very important if you want to keep growing that space essentially.
With this in mind, Sidana’s exciting goal is to continue building his property portfolio and attain the financial freedom to be able to do what he likes.
In my head, it was that I wanted to achieve a $10 million portfolio. I'm not the kind of person who would ever retire, I really do like working. But I want to be in that position where I've got $10 million worth of portfolio, which is 40-50% geared and it leaves enough in the pocket that I can spend time on the things that I actually enjoy, which is really helping people in property and finance. So that’s the sort of thing which I've been doing along with my friends and everything. So freeing up my time to do the stuff that I want is the goal essentially.
I don't think I'll ever stop, I think I'll keep always investing. It doesn't matter what the newspapers say - I've stopped reading the newspapers completely now. I think it's important to educate yourself and I'm not after the money, I'm just after the freedom so I can get to do what I want. Spend time with the family, travel around, all of that.
How I’m Continuing to Build My Portfolio Towards $20 Million with Property Management Strategies
So was there anything that initially held Sidana back from investing in property?
Nothing was holding me back, it was more just I didn't know where to look for it what to buy at that time. So that area that I first bought in, all my friends were living in that area, so I was like, ‘Yeah, these guys are going to help me out and I'll just go and buy there, that's the place that I can afford right now.’ It sort of started from there but there was nothing else holding me back - I was never scared of debt at all. As long as it's good debt, not bad debt, nothing ever stopped me from investing.
Since the beginning of his property journey, his mindset has also shifted.
The mindset has changed completely. When I started, I bought a block of land hoping that I would build my house on it, then it will take me 30 years to pay it off. But in reality, after selling that block and buying the next house within the first three to four years, I was able to bring debt a fair bit down by just putting money into it constantly and spending less on travelling - and I used to travel a fair bit. Relatively I could have done more travelling, but I decided to pay off my house quicker and I was able to bring the debt down pretty quickly. From there it was like, ‘Now the debt is gone now and equity has gone up, let's go and reinvest in that space.’
But in these challenging times when properties are worth about $1 million on average, how do you pay off such a large debt?
Compounding is generally the eighth wonder of the world, it does work very well. If you start paying off your house quickly and if the price keeps going up - I mean the property is never going to be easy to buy, Australia is a very sought after place, population is growing constantly. So it's a dream if you think that the property prices are going to crash or that property is going to be affordable and it's going to be able to do something for you. You just need to save for your deposit - how will you do that? Spend less on travel, or spend less on coffee, whatever that is. You just have to save for a deposit to get into it and from there for the first few years it will be hard, but it just sort of kicks in after that.
Honestly, it's not that complicated. It's just knowing your numbers and making sure that you truly stick to them and don't spend too much money on everything else. Just try and save a little bit and if you already have a house, just try and pay off debt quicker or go out and reinvest if you're worried enough equity already in it. Or otherwise, just try and save money for the deposit. If you're hoping that, ‘Oh, there's been stamp duty changes now,’ yeah you don't need to pay stamp duty, but you still need to save enough deposit so you just have to do it. No one else is going to do it for you unless you've got wealthy parents.
While there is never a set percentage that Sidana sets aside to save for property expenses, he does implement a specific plan to achieve this.
What I've tried to do all this time is - and it holds true today - is that I've always tried to live on one salary, although both of us were earning all the time. But all the expenses including the mortgage repayments, we always tried to cover up all the expenses on one person's salary and then try and save the other. So that's the mode that I've always lived on - it's only one person working in the house not the other. Because my wife as an example is on maternity leave so the way I have structured my expenses or the way I set my living standards is basically that I can live on single income always essentially and anything else just goes towards paying the mortgage.
The thing is, there's always going to be times in life where either one person is made redundant, or you're on maternity leave, or something else has happened, health issues or whatever, that you're not able to work. You always want to control your expenses then try and live within the means. And if you can do that if both of you are working and if one person can at least save the money, then that's pretty good. I actually paid off my house last year and it was like, ‘There’s far too much equity sitting there.’ Then I went and bought two properties again, interstate this time. So yeah, I think that's the best way of doing it.
One of the best things that have helped Sidana with his property investing journey is following the advice of other successful people.
Success always leaves clues, so find the people who have done it, figure out how they have done it. The Internet has made life much easier, there's enough information floating around, there's no reason for anybody to be not able to find the information on the things that they are trying to achieve or the cause that they have in mind. So as an example, I'm trying to build up a $10-20 million portfolio. I look at all the people who have actually done that, then try and figure out how they have done it and try and get in touch with them and see if they can give me any guidance or advice.
And there's plenty of ways these days to easily get connected to people through social media, Facebook, LinkedIn. You can easily get in touch with these people and generally, you'll find the people who are successful are willing to share information and knowledge.
Sidana shares more about the six properties he has invested in over the years, which now make up his expanding portfolio.
So the first three are actually located within 10km radius to each other and that's towards the southeast of Melbourne which is Berwick and the first one that I purchased was for $287,000 and currently, it's close to $600,000. The second one that I purchased was $307,000 and it's probably close to $570,000. The third one I purchased was my house, principal place of residence and that was in 2012 that I purchased it when the market was at rock bottom; I purchased it for $436,000. Today it's probably worth $700,000.
And the fourth one that I purchased - this is the time when I decided to branch out because I had enough knowledge and I was comfortable to invest in a property that I decided to branch out of the backyard and invest in other suburbs. So I bought in Frankston in 2013 and I purchased that for $340,000 and today it's anywhere between $600-620,000 - that area has actually done really well. It's a decent-sized block backing a golf course, so it had a few good things to it. And the fifth one that I purchased was in Queensland. It's in Springwood, which is about 20km from the CBD and that I bought for $415,00 and then I spent roughly $10,000 to renovate it; currently it's probably worth about $450-460 after doing the renovation. So the rent on that before renovations was roughly around $370-380 and after renovation, it was about $410 per week. [00:08:19] The last one is actually in Adelaide which is a house and it's in Kristy's Beach and that one I bought for $315,000 and I can actually knock that house down and put four units on it if I really want to. But I'm not going to do that straight away, maybe in another few years once it's gone up a little bit. Plus as my wife is on maternity leave, we’re sort of busy with the family so I don't want to focus on that stuff right now. But in a few years time, I will.
With the potential to either subdivide or add value to most of his properties, he explains how he could go about it.
Most of the properties are very traditional style purchases, which is house and land, that kind of thing, with a very old house and a decent-sized block. And the majority of them except the third I bought - which was again a bigger house than I planned to live in down the line - all the other ones pretty much can be at some point knocked out and subdivided, to put two or three units on it depending on what the council local regulations are at the time.
It's not a house and land package that I'm buying - the older house which has got either which way some improvements that can be made, or where the block size is decent enough that it can be subdivided, or if I knock it down I can put multiple units. Like the one that I bought in Queensland recently, it's a corner block right opposite to a school. Regulations are changing, zoning is changing constantly, so today I could put two units onto it, or if I knocked the house down and I can just put a granny flat without knocking the house down. But if I was to knock the house down within three or four years, I'll actually be able to put two or three units on it depending on what the regulations are at the time.
So what has been the strategy behind SIdana’s portfolio, enabling him to achieve what he has so far?
The way it was started was I wanted to build a base portfolio which could grow itself.
I was trying to build a base portfolio which is these six properties. But when I say a base portfolio, I was being very careful when I was building so that I can actually add some value to it down the line at the same time. Now that that's done and I've got enough equity sitting in place, I’m more heading towards either buying a block of units where there are two or three or four units in a block and I can buy the whole block, or heading towards development rather than just a buy and hold strategy, which is the base portfolio essentially. But even with this base portfolio, I know I can make changes to it and generate equity out of it.
Having such a well thought out strategy, it took a gradual education for Sidana to get to the stage where he could utilise and benefit from it.
I have been constantly listening to all the podcasts that come out, I'm always on the Skype Business Journal at night like I spent two hours if I'm not able to record the shows and watch it over the weekend or whatever-related to property and shares. I'm constantly reading the Financial Review to see what's happening with the economy. So as I said, it's not just a property game it's also a numbers game, which is where the interest rates are heading, where the economy is heading - so it's important to understand that as well. I actually genuinely do spend at least an hour a day just catching up with all the stuff that's happening in the economy, with the interest rates, if there's any RBA News coming in, or if there's unemployment or employment news, that ABS data that's coming out. So I do spend a lot of time on that. It's funny, finding the property is not hard. That's the easy part. It's understanding what's happening in the economy, which areas to invest in, where the infrastructure is heading towards - that's more tricky, I think.
To learn more about finance - an important aspect of investing - he sought help from accountants and other trusted experts.
One thing that I've been lucky with is that my wife, she is a chartered accountant. She's not tax accountant, she’s a chartered accountant, so I was able to learn from her off all the tax returns I've done, the depreciation, all the basic stuff I mean. And then the more advanced stuff, setting the structures up, whether the property needs to be cross-collateralised or not, all of that stuff that was more sitting with a few tax accountants out there, the people - I wouldn't call them mentors because I never had a mentor - by taking advice from people who have bought much bigger portfolios, whether it's $10 million, 20 million. Speaking to them, listening to them constantly and it's putting the right team in place around you, whether you want to call them mentors or if you just follow someone in terms of reading news and all of those particular economists, then having the right bank lending manager or mortgage broker. Which I think is very important actually to have in place, because they should be able to understand what your needs are, where you're trying to head to and from the very start put the structure in place accordingly.
I was lucky in that time the bank that I was dealing with lending as it was pretty smart. I built up a relationship with them, then down the line, I found a good mortgage broker, so I had built up a relationship with them. I've got a very good relationship with our accountant who was actually in Sydney and I'm in Melbourne. So I I don't look at the same state - wherever I find the right person I just go ahead with it. Like my lending manager is sitting in Queensland, my accountant is in Sydney, all the positions that getting done from are basically in Victoria and for the property regulations and all, I constantly have agents advising me on that stuff. So you really need to bring the right team there, which is the core and that's also another hard part.
So what personal habit has contributed to Sidana’s success?
A lot of reading, a lot of reading and a lot of reading to be honest, whether it's Financial Review, whether it's property magazines, money magazines, or there's different books - What It Takes or Think and Grow Rich, Extreme Money, that kind of stuff. So apart from having the right team in place, it's just educating yourself as much as you can.
He would recommend these books and resources to read, to gain insight into the strategy that is right for you.
I'm not a big fan of anyone book, but I have read a few myself like Mark Bouris What It Takes, Think and Grow Rich by Napoleon, Extreme Money by Satyajit Das. There's quite a few of the intelligent investor Warren Buffett always shares about. What you need to do is you need to grab a few of them and try reading to see what resonates with you, because every person is different, everybody's personal strategy is different. So try a few different things and reading different books or different kind of magazines or newspapers - but don't read the gossip newspapers. Read some true stuff. And the Financially Review is a good paper to read and some of these books and then see what really resonates with you.
If he were to meet himself 10 years ago, what would he say?
The thing is I migrated to this country, so I didn't have enough knowledge or anyone who could guide me on the path so it took me a bit of time. First of all I was 25-26 when I got my citizenship so it wasn't really late when I got started but still I could have started a bit earlier. But that wasn't a choice for me. So if I knew different sources from where I could educate myself at the time, if I could have found that information before I wouldn't have stayed, I would have been on it completely. These days, all I do is I don't really care about what area I’m going to buy in next or what sort of property I’m going to buy or what shares I'm going to buy - none of that. All I try and do is educate myself, predict what's going to happen in the economy next, whether it’s with the GDP growth, whether it's the interest rate or not whether it's with inflation and see if what I have guessed is right or not.
As I said, I fixed 80% of my portfolio at the time when the rates were at rock bottom, so that was an educated guess that I made. It's always a guess at the end of the day, no one's got a crystal ball. But that was an educated guess that I made and that worked out pretty well for me. I mean they’re fixed at the lowest rate right now for the next 5 years, so I don't even have to worry about anything.
Yeah, you've got yourself set so you can easily get equity out more often and build more equity up or keep investing, which sounds like that's where you're heading which is fantastic.
I'm just trying to fast track things a little bit - I set the pace but the portfolio has been laid out. Now I'm just trying to fast track things a little bit, now that I've got equity. The challenge that I'm finding right now is I find if I'm going into joint venture projects, I'm trying to find like-minded people who have certain goals and that we share our goals. So that's the challenging part I'm facing right now - I've got the equity, I've got the knowledge. As I start doing the bigger deals, it's just going to be that that's the challenge that I face now.
This is also what he is most excited about at this point in his property journey - being in the position to invest more and continue the cycle.
Just the situation that I’m in - I'm pretty happy like I'm a bit more I won't say the word relaxed, is not the right word, but I'm pretty happy in the situation that I am in currently. My portfolio is 60-65% geared and I've got enough equity, my house as I said I've more or less paid off, but I took some money out of it and invested more. So I'm pretty happy that the situation that I am in right now and I really just want fast track things from here.
Honestly to all the people who are listening out there, don't procrastinate too much, just decide that you want to do it, start educating yourself and set the right team around you. It will just happen. If you find the right like-minded people, or the people who you admire or want to be like, just follow them. There is always enough information out there and it will happen. If you are committed to it it's going to happen, no matter what.
If you would like to connect with Jazz Sidana to find out more about his strategy, you can do so through.
Anyone who wants to, they can hit me up on Facebook basically. My Facebook handle is J A Z Z Sidana S I D A N A. So you can find me on Facebook and I'm more than happy to share the knowledge or discuss anything in general if anyone's keen about it.