How to use your Property into a Positive Cash Flow
Tack Lee & Hoe Ping Lo have managed to grow their portfolio to include a staggering amount of 19 properties. However, doing so has been no easy feat, especially when juggling family, work, two businesses and the obstacles that property investing can throw your way!
Join us in this episode of Property Investory as Tack Lee and Hoe Ping Lo delve into the story behind their meeting, how they fell into the property world and the mistakes that led to them owning a negatively geared portfolio. We’ll also learn from them how they managed to turn it all around, how they learnt the importance of education and much, much more!
-Tack Lee & Hoe Ping Lo
Talking to husband and wife, Tack discusses a little bit about their interesting journey…
We started probably back when we bought our first property back in 06 and since then we’ve sort of accumulated, at a stage I think we got up to 19 properties and then but then we’ve all.
Yeah, it’s a very interesting journey that we’ve had though we’ve always done things ourselves.
And I mean we got ourselves in a bit of trouble along the way and there were a couple of things there were things that to turn things around which we did.
Juggling work, family and life in general, Tack Lee describes what he does on a daily basis…
I do a lot of like strategic thinking so how we can grow our business, how we can basically become faster stronger more efficient. I do a lot of mind feed and a lot of networking and forming relationships and after that, I go pick up the kids from school. I said you know as I was saying no family is always first and if you are succeeding at home you’re not succeeding in life.
Hoe Ping also adds what her everyday routine looks like…
For me generally, I get the kids ready in the morning take them to child care and school then go for an exercise class. When I come back from exercise I feel energized and then I’m ready to start the day.
Coming from different areas before moving to Australia they both talk about where they grew up…
I’m originally from Malaysia from a town called Ipoh, so my family migrated to Australia about 30 years ago now and yeah been growing up in a suburb called North Bowen in Melbourne.
I am also from Malaysia but I grew up in a small town in Borneo so an Eastern part of Malaysia.
I was pretty lucky to be able to have the opportunity to further my studies here in Melbourne and I have been here since then.
She met me and now she’s stuck.
Thinking back to their schooling days Lee tells us where he studied…
Ah, sort of my primary I did sort of half, so that’s giving away my age.
I went to primary in que.
And then after that in high school, I went to Bowen High for two years and spent the last four years of my high school in Melbourne Grammar school and after that, you get a bachelor of Germanics engineering at Melbourne Uni.
Similar to him, Lo tells us where she studied as well both in high school and university…
Well, I started in Malaysia and then I had two years in Melbourne.
in Mac Robertson High School and then I studied physiotherapy at Melbourne Uni.
Having studied in completely unrelated fields, Lee takes a moment to explain how he and Lo met…
We met at University, through mutual friends
So yeah it’s as you said completely different field. But I guess know like they say opposites attract.
So I represent Melbourne Uni in badminton and let’s just say that Hoeping’s brother was a teammate and that’s how it all began.
At the start wasn’t too keen you know I was visiting him a lot, not really for him but yeah.
Working in the building and infrastructure sector while at university, Lee shares that his property investing journey didn’t actually start straight away…
I had a couple of jobs when I was at uni as well just a couple my final years I worked in like a door to door sales. I was a delivery guy and then yeah after I graduated I worked as a consultant based on the engineering side and yeah I worked across major transport infrastructure projects around Victoria.
Lo, on the other hand, had a smaller number of various professions…
I’ve only been a physio. I studied as a physio and I worked as a physio.
Given that both only later decided to get into the property, Lee shares whether or not his parents influenced him to get into the investing world…
In terms of me on the property side, it wasn’t something that, that came to mind.
I mean my dad was in business and I had I’ve got an older brother he sort of always travelling like an ex-pat. So in my family upbringing, we were quite open. So and in terms of property all some came to mind and I actually had to thank Hoping for bringing the property’s side of things into my life.
While this was the case for Lee, Lo explains that investing was something she always heard about when growing up…
When I was a kid I always remember hearing my parents talking about investing.
My parents worked very hard and they worked long hours like six to seven days a week and they always tell us that you know when you’re working to make sure you save all the money that you save then you can start investing.
So my parents explain to me that you know she’s very volatile you know you can earn a Toyota one day and then the next day you can lose a Mercedes Benz. Right. Okay and then they also mention that you can also invest in property. You need to make sure that you know you’re in there for the long game, so you buy and hold and the property will eventually rise in value.
Very wise, very wise and it seems to ring true.
It is definitely for I guess I’ve always been a little bit more risky in terms of what I do because I actually got into shares way before I got into the property.
Where Lo’s childhood led her to realise the importance of property over other investment vehicles, Lee shares that the opposite was the case for him…
The shares my and my dad and my brother do a bit of trading. So I guess that’s how I picked it up and yeah I was doing that. You know when I actually won when I was in uni and now when I graduated I did pretty good in that. And I guess for me when when I met Hoeping and then started talking about the property side and how it’s more solid, more you know you can actually see it and you can control it as opposed to shares where you can only control it to a certain extent. And yeah that’s probably my tipping point in regards to when I sort of changed from trading in shares to property.
Talking more about the beginning of their property journey, Lee and Lo take us back to the moment it all started…
As I said to say we owned 6 when we first bought our first property and it was Hoping that sort of us which again the properties I mean we started looking.
And yeah she can probably fill you in a little bit better on that.
So how happened for me you know I mentioned before I started physiotherapy. So my first job was working as a physiotherapist in the hospital and you know we get to do a few rotations in a year and like within the first few months of being in my job very quickly I realised that being in a job wasn’t the ultimate plan for me now.
I saw so many people who have worked so hard all their lives, you know they saved their money for their retirement and then only to realise that a few months into their retirement something drastic happens to their health. And they’re really put things into perspective for me and since then I was very motivated to invest as much as I can early on to set myself up for the future.
And she brought me along for the journey. So and after really thank you for well. Thank you. Thanks, Hoe Ping for that.
Fortunate for realising this early on in life, Lee talks about the first property purchases they made in back in 2006, their journey starting with a surprising twist…
It was in Templestowe Lower. Okay. Yeah yeah. It’s I actually bought one with my brother and Hoeping bought one herself.
Having purchased their properties separately, Lee and Lo expand on the story behind that first investment…
It was the same development.
Same development. It was 11 townhouses in total and at that time we could only afford buying in Lower Templestowe.
We actually have had a look at other properties in better suburbs but then we just couldn’t stretch ourselves that much.
Buying within the same development, Lee shares how they approached the purchase…
We bought it off the plan and I guess the way that we approach is okay we’re going to buy two from the developer so we sort of negotiated on that.
And yeah got them to throw a few things in that wasn’t in the plan.
Having started with those two separate properties and eventually building their portfolio to a staggering 19 properties, Lee takes a moment to share with us one of the harder investing moments they faced…
We’ve got a few but if we had to pick one I say the worst it would be not fully understanding how right off the plant purchasers work as we did by a lot of the plan from the start. And yeah all we knew about investing back then was was basically oh yeah off the plan purchases. And when we asked our accountant you know what to do. And yeah that was what he told us. And unfortunately, we took his words literally and it was all about educating ourselves before we started. And I go on this on this property journey and I guess for us that was a big no-no. As in terms of the worst investing moment, I’ll say probably eight years ago.
When we were in that accumulation phase in our plan was to buy, buy, buy, buy, buy, buy, as much as we could back then.
And you know our thinking was like oh I was great you know we need to put down 10 per cent. We have a couple of years to settle right. Right. And then you know when we settle we can refinance but we didn’t really have any exit strategy and yeah I mean to make a long story short we need what we needed to settle seven properties in about a 12 month period. Ouch. Yeah, I think it was about it was a house. It was a townhouse and the rest was probably apartments and the thing was about him probably about 3 million worth of property that we had to settle. And so yeah I mean we were doing okay but it was like a brick in their head. We already had a few properties with mortgages. So it was a real juggling act to manage the sort of like what we already had just this seven new ones that were going to come on board and also keeping in mind that our portfolio back then was all negatively geared so that does that hurt as well.
Building on this last point, both explain how they sustained a negatively geared portfolio…
It has always been negative from day one.
It actually slowly accumulated to about almost negative 100K a year.
Yeah, they got up to it and it was about 110 negative.
When and when the kids came that is really when we started to feel the squeeze.
With 110 thousand dollars worth of negative gearing to make up for, Lee and Lo explain how exactly they managed to juggle it all…
We worked a lot off I think.
I guess for me the more properties that we accumulated the more jobs I had to work and ended up having like five jobs at one stage.
And I got back into trading and a bit of share. After that yeah I was lucky in the way that worked out for me and also importing some stuff from overseas and selling it on eBay back then yeah just to try to make that extra cash.
It was only after having kids that they realised they needed to get out of their situation…
I mean I guess we had. I would just say. It was a real wake up call.
Yeah. And I mean when you start when you’re a face of such a big problem that is when we decided oh no we had to do something. You know what we’re doing now isn’t really working anymore.
So we had to go out and actually educate ourselves.
Yeah because I mean with what we’ve been doing you know as they say a fool learns from their own mistakes whereas an expert and a wise man learns from other people’s mistakes.
So we decided to you know to get ourselves educated and we used to actually see education as costing us money rather than how much it’s going to save us in time or mistakes and things like that. So now it’s different. We see education as you know how much it’s actually going to take us in the future.
Looking on the flip side, Lee takes us on another part of their journey, this time talking about the investing moment that really cemented the positive benefits that property could bring…
There were two big aha moments for us. The first one was when we got into all of the planned purchases and we had a lot of townhouses and apartments. The first was you know we need to buy more land and property to control land so we can manufacture growth. So from then on, we started buying land and properties so we could manufacture great through renovations for development and yeah we did well with the reno’s.
So I would say were the longest would try to get along as settlement you know negotiate for access prior to the settlement and we’ll do water ran out and when it’s time to settle we’ve refinanced back and we sort of got back a 1 to 3 return on those and yeah we did really well.
So that was one aha moment where we stopped buying off the plan properties. And the second one will be I’ll say passive income, so cash flow and not just kind of growth.
And this is when sort of the period where we started getting education and coaching and yeah I mean we [had] the realisation that the best investment is to as you said is to invest in yourself.
Expanding on the changes they made to turn their portfolio around, Lee explains how they ended up starting a business in property and the steps they took to get to their current position…
Back then we never really looked at property investing as a business. You know initially while we were doing things ourselves we took the properties you bought as just investments and that’s it. And yeah the very first thing that we did when we felt when we got the education and coaching is to do portfolio analysis and calculate that opportunity costs and what we did was to treat each of our properties that we had lot like staff you know do a performance review at each and every one of them and those that are not performing we basically got rid of them and those that might not be costing you money but might be costing you opportunity you know opportunities elsewhere sort of kept for a little while.
See what we could do with them and yeah I mean the best thing sometimes I said I guess when we got down to it is to cut your losses and start rather than holding on. Sometimes it’s better to do that.
They also talk about how long this process took for them…
Well because we did everything else at the start so buying things in our own name, cross collateralize.
Every mistake that investors should make we made all of them. It was a bit of time I was about 18 months to two years.
Having learnt so much, Lo sums up everything they did to change their portfolio, this process despite taking two years, changed their investing lives for the better…
Like Tack mentioned like those that weren’t doing anything.
We sold off so we would catch up to be able to and looking to other properties. At the start, we only looked at capital growth in the properties but in fact, you actually need capital growth and cash flow to continually grow the portfolio.
So what we actually did to better position ourselves is to get some cash flow coming into our portfolio. So we turned some of our apartment into short term rental and some apartments with two car parks we leased either one out separately then we also looked into and we bought into a commercial property to be more cash flow as well and really continue to invest in coaching and education.
From Renovations to Businesses with Tack Lee & Hoe Ping Lo
Drawing on the previous episode, Lee and Lo share the steps they undertook when deciding where to purchase land for renovations and developments….
Renovations were one of the big things that we did and we sort of target it more back than any in that inner circle of Melbourne. So within five kilometres. So we bought in places like Brunswick, Fitzroy and we would find like sort of places that need a facelift.
We did our due diligence and worked out you know, with the properties that we wanted to buy, the land that we hold close to or like amenities, have good public transport and things like that.
In terms of specific strategies, Lee also shares one of the ways they often land better deals…
The other thing that we sort of looked at is when some properties get passed in an option and it gets a bit stale that’s when we sort of see-saw as an opportunity there because they would just be stuck in the market and then yeah we could negotiate better terms with the owner.
Both add that these were skills they developed and learnt by educating themselves…
Pre the education when you sort of learn to learn as we went along. Yeah.
And I say it’s lucky in the way that we did, did some things right and not you know all wrong.
I guess really educate ourselves but you know once in a while we go to like a one-day event and you hear something happen that they teach you and they’re out of whatever.
And then we just went home and do it ourselves.
However, despite all their success so far, Tack Lee admits that there is some things they could’ve done better…
We’ve always said we sort of never have a problem meeting our goals but in the way our goals we were ow do you say uneducated? I mean we could have been a lot better position if we knew what we knew now type of thing.
We don’t regret anything because that’s what’s made us who we are today.
Talking about the development side of things, Lee also mentions what he and Hoeping did to add value or manufacture equity and growth to some of their properties…
We’ve done a few new builds. One to two and yeah and we sort of did that ourselves as well. Yeah. Pretty well I know we’ve had a lot of learnings to in terms of like. If you’re going to build it if you’re going to be built to sell and yet to really see what the area are and what the people will pay you. Instead of building something your heart my mood light I will like to stay in that.
– Hoe Ping Lo
In terms of building developments, Lee and Lo share some of the obstacles they faced along the way…
I’ll just give you an example of office development. So we just went to the architect and went okay we’ve got this piece of land-based off a floor plans for us. So as architects do not design the event you know.
We’ll draw the Taj Mahal.
Yeah absolutely amazing you know. And they go. It’s great and we actually had the plans all ready to go probably within three months three or four months ago.
We are steaming along you know without council approval. And now I can now have to go find a builder and that’s when we sort of got unstuck a little bit. Because it was designed in such a way that not. A lot to keep the story short. When would a commercial build our residential houses in the because the other buildings they basically said it was too difficult.
A few actually said to us if you can find a builder to let them know.
Delving into more detail, Lo shares why this building was difficult…
I mean so this was prior to education so we had great drawings like this a lot of really cantilevers. As the floor to ceiling was like four to five meters on one part and we have glass everywhere.
So pretty much and very expensive material and just the design I think there was a lot of design to it.
So a lot of steel beams were required because of the design. That’s why a lot of builders didn’t really know how to build it.
So this is an architectural type of design which would be targeted towards maybe an upper market. Would that be the case?
Yeah, it is. And then we sort of ran into a problem with the site as well. I mean it was sort of just that at that. That is the land, it looks great we’ll buy it but then we didn’t really understand what we got the Geotech report back. What it says is okay we’ve got to take before take and we didn’t know what it meant and that’s that site was actually a piece of it and. Not really a good site for building. Yeah and as a foundation for that development was to point one metre. Two-point one made as well.
I think the standard is 900 million years ago so that’s very helpful.
There was a lot of learning.
While this development certainly thought them a lot, it has in no way held them back from the development world..
We’ve done another one to two with the same builder because they did such a good job.
And yeah that one was smooth because we know what to look out for.
Having learnt so much, Hoe Ping and Tack tell us of their updated and revised portfolio building strategies…
We’ve built quite a good base with our portfolio now.
So the next thing that we’re looking at is mainly cash flow and looking more into the commercial space.
So yeah we’ve got a show with three shops and now we’re sort of in negotiation with another one and I guess in terms of when we go to commercial Well we do that. We don’t want to just buy something that is a shop. So well let’s look for something that we can develop in the long run. Yes. So like for one of those that we have in Queensland now we’re looking at getting a development application for you know retail offices and apartments at the top as in the city in the city I think it’s got like a height restriction of about 46 metres or something. So we look for sites like that where it gives you gives a lot of good cash flow but then we can also manufacture growth and basically built on it you know in the long term so that deals went through or you still negotiating a deal at the moment that that one has gone through and we’re just in a negotiation with another one now.
With a revised strategy and 19 properties to date in their portfolio, Lee and Lo share the ratio of residential to commercial properties they currently have…
We’ve got a mixture of residential commercial units like retail office and we’ve got like a half where we’ve got accommodation up in the ski fields.
Which we use a lot as well.
Yes part of our portfolio analysis, after we got educated.
We actually sold down quite a lot that wasn’t really doing much finance.
And then we sort of bought back or back a couple. Readjusting to find the best things so I can say in our personal portfolio now probably have about. Maybe about around 8 million and we’re sitting at around about 53 per cent.
With so much equity, they now actually have a self-sustaining portfolio and all their properties provide them with an additional passive income…
It’s probably about thirty-five, we’re looking to increase that which is a big I mean which is a big difference compared to negative a hundred and ten.
Yeah. So that that that’s been a big bonus and yeah we’re always trying to figure out how we can increase cash flow from our portfolio now as well. So actually another thing to mention is we did a lot of managed to manage property managers. Because a lot of them were just happy managing the property and they were really keeping track of the market value market rental value and it became a lot actually. So we actually let you go and yeah it’s just basically to bring everything up to what the market. the market is and that’s sort of added a bit of cash flow.
Having had so much success with their portfolio building, Lee and Lo take a moment to walk us through their reasons for also starting their own business…
Diversify and try and get us another stream of income. Yeah. So we’re in the process of starting a new business and creating innovative travel products for a family with young children.
Excited about the launch of their family-friendly travel business, Lee shares that much of what he and his wife do, all comes down to valuing their time…
I mean what would I say. Time is free, but it’s priceless. And it really is yeah family is real yeah. That’s what keeps us going, the kids.
Hoe Ping adds to this, explaining what else drives them to keep busy, and stay successful…
Well, I always thought that I could do a lot more. So just being just really being a better version of yourself and you know leaving a legacy for your family. Yeah and then once you get to there, you can start giving back to the community, make the world better.
That’s us why.
On another note, they share who has been their biggest mentors and what has been their most useful resources along their journey…
As Hoe Ping said in 2016 that’s when we sort of started our book out looking out for coaches and education and the big, big, big, big, big mental coach we had was Dymphna Boholt. He was really able to turn a situation around and also really work on mindset because yeah back in 2016 we had two kids under three and had to sort of sustain such a big portfolio. It was really hard to play on our mind as well just what have we got ourselves into. As I said she was she was a big help with regards to the mindset and yeah turning things around.
Having learnt so much from others themselves, both Lee and Hoe Ping share what they believe would be the most beneficial resources for other new or established investors out there..
I’ll say probably Dale Carnegie’s How to win friends and influence people. I read that book not too long ago a couple of months ago and yeah I mean everything is about relationships and you can win people to your way of thinking you’ll be successful. And I think that book since I’ve read that book it has really sort of propelled me to the next level as well.
In business and in my life.
For me, I really like the Four Hour Work Week by Tim Ferriss. That book really taught me how to value my time and you know what can I do to be more efficient when you’re juggling a few things at the same time.
Definitely picked up a few ideas from that.
While these resources and mentors have made such an impact on their journey, they add that another source of their success has come from the best pieces of advice they’ve been given…
I guess it’s simple but it’s something we often overlook and it’s basically it’s meant to be it’s up to me to not know what to do it for ya. So many people out there that want to open a new door but don’t actually open it. They don’t knock on it you know. No one is going to do it for you. You have to do it for you.
Yeah, yeah and I mean for me you don’t have to wait to order that lineup and roll before you take action. You know you get yourself educated just do it and then you can figure things out. Yes is true. Very true. If you wait for things to become perfect. It’s never going to happen.
Reflecting on their daily routines, both also talk a little bit about the personal habits they believe contribute to their success…
Our personal habit.
I guess I am quite a risk-taker. But then if you take out the risk you take opportunities.
So from what I believe has made me successful and or as successful is we do take risks. And from that calculated risk, we’re given the opportunities that we would have now.
And also I mean I’ve always been a good saver. I remember back in my high school days like I’d get from one dollar a day for pocket money and seven dollars a week.
I saved every single dollar and I never bought anything from the canteen. That really taught me the value of saving and how important it is at the end of the day it’s not how much you earn in your job it’s how much you can save that takes you further.
Thinking to the past and knowing what he does now, Lee takes a moment to tell us the important piece of advice he would have given himself ten years ago…
If I met myself 10 years ago… Don’t buy cars. Hahaha just kidding. Just get coaching, so the best investment is to invest in yourself. You know you get to where you want to go a lot quicker then yeah trying to make things up yourself.
Very true. What about you Hoe Ping?
That would be the same for me. The coaching is the best gift that you can give to yourself.
With so much more than a growing portfolio to look forward too but also an exciting business ahead, they tell us what excites them most when they think about the next five years ahead….
For me, [it] will be controlling more than and yeah I don’t think I’d be a better time to buy in Melbourne and Sydney at the moment. So we’re looking to control a bit more land in those in those places. Getting investors on board and growing sort of that side of our business, doing joint ventures, doing bigger projects and developments.
That sounds exciting. And what about you Hoe Ping are you on the same idea as well?
Yeah well really leveraging our experience in the property to go ahead and kick start this business venture that I mentioned earlier. So starting our new business and growing that business was exciting.
On a final note, Tack Lee and Hoe Ping Lo put their spin on whether they believe skill or luck has been the driving factor towards their success…
I think we make our own luck. And also persistence. I mean we we we work hard I mean I’m not going to say we’re just you know we just lie on the beach and do nothing else. They were the period where we were working probably about how many hours a day just to make the thing work and to control our portfolio back then. And yeah I don’t think I mean luck does play a little bit on it. But yeah I always believe that we make our own luck.
While you definitely don’t need to be intelligent to be successful. Just keep working at it. Be persistent and never give up.
This episode was produced by Ashlyne Ocampo with narrations and interviews conducted by Tyrone Shum.