Simon Loo is a successful property buyer’s agent and director of property buyer’s agency, House Finder. He has been working in the property industry for a vast amount of years and has gained a wealth of knowledge along his journey. He is generous enough to share some of his expert advice on how to buy an affordable home and improve your skills when it comes to investing in property. 

Come with us as we delve into today’s topic of housing affordability and the biggest issues surrounding this problem, we learn about one of his clients and the situation they were in and how Loo was able to help them, we discuss the current climate of the property market in relation to the ongoing global pandemic, we find out about some of the strategies we can implement to be able to purchase property and make a profit, and much much more!

In this episode, we are diving into the topic of property affordability and we learn about one of Loo’s clients on how they adapted a strategy to the current property climate. 

It's no secret that Sydney is unaffordable for, you know, both investors and owner-occupiers. A lot of people come to me who, let's say, for example, they live in Sydney and they're fixated on investing or putting their money in their own backyard, which comes down to a bit of a comfort zone type thing. So, you know, as an example, I met with a relatively young investor who was around about 26, 27 years old. You know he's been working for maybe about five, six years, finally saved up a deposit to buy, to invest in property. He had his heart set on investing rather than buying a place to live in and, you know, with around about a $700,000 borrowing capacity or a buying capacity.

You know, he was only looking around Sydney, he was looking at some options in Western Sydney and in places further out or maybe even smaller units in the city. Two things were apparent. He could have bought the same properties that he was looking at not very long ago for in many cases, half the price of what they are now. And the other thing was wherever he looked, the cash flow was extremely poor. So, you know, he would, even with low super low-interest rates, he would still be looking at a negatively geared property unless he was prepared to buy something where he had to put some money into it to renovate it, you know, whether to make it more appealing from a rental perspective or maybe add extra rooms or add value to it. So, you know, when we sort of met up, I kind of sat down with him.

I go, look, you know, I had exactly the same problem when I started investing. I invested in my own backyard as well, purely for comfort because, you know, you're familiar, you can go see it, you can go touch it. But in Australia, there's markets, thousands and thousands of different property markets, not just Sydney, not just Melbourne. We kind of expanded on the viability of, okay, what's your ultimate goal with your property investment journey? Like are you planning to create a passive income or are you planning to create equity to ultimately buy like a principal place of residence in Sydney? And this particular client was definitely going down the passive income route because he actually ran a side business as well you know, apart from his day job and he wanted to focus on this business, which was in a very niche sector.

We find out about the motivation of his client and why he decided he wanted to start investing in property.

It wasn't a type of business where you could just jump in and start making, you know, a living out of it, so to speak. But it was his true passion and he really wanted to pursue it regardless. So, you know, he wanted that passive income to sort of go down that route and quit his job and focused on the business full time. I kind of said to him, look, instead of buying one unit or one property in Sydney, you'd be leveraged, you know, to the hills just to own this one property. You're putting all your risk into this one property where if a tenant becomes a little bit too difficult to not pay rent or anything like that or any maintenance issue, then the little bit of cash flow that you do have is going to be affected.

To create a true passive income, you need multiple properties. You can't just rely on one property to bring in the passive income. Especially once you quit your job. It's extremely risky. So I kind of suggested to him, look, why don't you have a look at other states? Why don't you have a look at other places in Australia that, you know, you could buy a decent property that doesn't compromise on location, doesn't compromise on lifestyle amenities? You're not necessarily buying in, you know, bad or lower socio kind of areas, but the affordability is much better because the house prices that you're buying into are much lower and in turn, the cash flow component makes a lot more sense because the yields, let's say on a $400,000 house, you might be renting that house for $450 a week or $500 a week and it's just much better returns on a day to day basis.

And if your goal is to buy multiple of these in the future, then it's important to have that flow in as we kind of discussed in previous episodes. So, you know, we talked about that a little bit more and we talked about, you know, different locations and different types of properties to buy and he was ultimately convinced that this was a better route. Instead of buying one, let's say two-bedroom unit in Sydney with his borrowing power at the moment, he was set on buying 2-3 properties interstate with the price point being a lot lower. The quality of the property was much higher as well in terms of the physical quality of it or all the investment viability of it, which basically means that there were proper houses. 

We discover why the housing prices vary from state to state. For instance, why the property prices in Sydney are so much higher than Brisbane.

It simply comes down to market cycles. You know, like Sydney, if you look historically, Brisbane is always a few years behind Sydney in terms of boom cycles. So once Sydney reaches the very top, which I don't have a crystal ball, I'm not sure if it has or not, but you know, I think it's fair to say that it's very close to it if not there already. That's when Brisbane, you know, maybe a few years later would then start to pick up, which at this current point in time, I'm actually seeing a lot of that happening. I mean, it's really no secret the media's been sort of going at it you know, in early 2020 as well, just in regards to a lot more sort of buy activity in Brisbane. In fact, last week I saw a property that was in the Redlands Bay area in Brisbane that had around about 55 different parties rock up to the first open house.

I'm starting to see, again, this is not unique, you know, a particular indication that it's really starting to pick up but I guess anecdotally, you know, I could definitely see a lot of changes that I haven't seen pretty much for the past three to five years in the Brisbane market. So, you know, it really comes down to the fact that there are different markets within markets, different markets in Australia as well. Sydney had a really good run in the past, sort of five to six years. I think there's a lot of fear of missing out the sentiment in Sydney as well, where people are thinking, if I don’t get in now I'll never get in. And again, from an investment perspective, it just doesn't make much sense because the cash flow is so low that the property prices are so high and a lot of people are turning to areas like Brisbane where the signs are that it's going to be next in line in terms of, you know, seeing consistent and accelerated growth.

Now, once Brisbane has had its run, which, you know, again, I don't know when that is, but once it does, it won't be time to look in Brisbane anymore. It might be time to look in other areas, maybe Perth. That's if the Perth market has kind of recovered at that particular point in time, or at least at a point where it's not still going backwards. And so as an investor, I think it's really important to look outside the square, you know, look outside your comfort zones and just sort of make decisions based on logic and based on numbers, based on investment reasons rather than based on more sort of emotional reasons.

Now that we understand Loo’s strategy in helping his client, we find out more details on the property that he helped his client to buy.

In Brisbane for example, which is where we ended up buying, we bought one property so far together. It ended up being a property 25 kilometres from the Brisbane CBD. We ended up paying $347,000 for a house. And in turn, it rented for $410 a week. Didn't require any renovations. It was just a buy. We had to put, I think about $2,000 into it to fix up a few little minor things. I think it was like new curtains and you know, a really solid clean because nobody had lived in this property for a little while. So a bit of yard work, a bit of cleaning, new curtains. And that was it basically, some new locks as well. And it was in a good area, you know, 25 kilometres out. It wasn't like a low socio area. It was kind of like a, you know, family-friendly, quiet, suburban, it was close to a major Westfield.

It was close to trains, parks and schools and things like all those typical emotional things that you look for. And it was much better for this particular client's goals because this is the type of property that I guess enables you to keep going. You don't just kind of own one property and then you're kind of just stuck there wondering how else are you going to buy your next one to reach your goal, to reach his goal, which was to build a passive income. So you know, those kinds of properties I think to stack up a lot more wherever you are, whether you're in Sydney, Melbourne, Brisbane, Adelaide, it doesn't really matter. But those kinds of properties just make a lot more investment sense. And they're the kind of properties as well that if you do reach a certain level of properties.

They're the kind of properties that you want to keep for a very, very long time because you know, the cash flow is consistent. They're low maintenance, you know, you've bought them, you know, the quality of the property as well. You're not making a compromise based on how much you could afford. So, you know, this particular house was brick. It was, you know, a single storey, on over 600 square metres of land. It's been there for about 20 years. So the house was about 20 years old. You know, when we did the inspections and the checks, there was nothing wrong with it. So it's the kind of house that'll last for at least another 20 years without much structural damage, touch wood. And it's just one of those properties that are solid and you're buying it. You know, in this particular area that we looked at, you know, the median house price between eight to ten years ago hasn't changed.

It hasn't changed too much, you know. So when I say that, a lot of people consider that as a bad thing, it hasn't really experienced that much growth for the past eight to ten years. Why would I buy there? But from my perspective, I feel like that's precisely the reason why you should be buying there because the trends or the likelihood of that property going up in the short term is higher because you've basically had a stagnant period for between four to around eight years already. So I mean, it's kind of contrary to what a lot of people expect growth to happen. You know, they kind of look at a very short term history and think, Oh, you know, Sydney's gone up. You know, this particular suburb of Sydney may have gone up 50% or 100% I need to get in now because there's that history of growth. But what they actually don't realise is they've actually missed out on a lot of the growth already.

With the current situation of the world and the global pandemic, we learn about the impact that it’s had on the property market.

I mean on the ground, again, anecdotally I haven't actually seen a slowdown. I've seen a taper off on the very top end of the market. And by the way, whilst this has been recorded, we're probably about a month into Australia starting to become serious and the top end has kind of tapered off. And when I say the top end, I mean like the really top end because as a buyer's agent as well, I actually do buy property in Sydney, but the clients that I have in Sydney are looking for places to live in rather than to invest. And what I've noticed is that the very top end of the market people are not showing up to auctions anymore, which is traditionally how they sell very premium property in Sydney.

As you've heard, you know, losses in the stock market, losses globally, you know, pretty much every other asset out there. A lot of the demographic that's buying into expensive properties have a large share portfolio or run their own businesses or have investments outside of the property itself. So I've noticed some people have, some of the demographics of buyers that are buying these very expensive properties are perhaps losing a lot of money elsewhere and they're not necessarily looking to buy multi-million dollar houses or anything like that. But on the more affordable side of things, which I'd say covers 80-90% of what I do, I've actually noticed an increase in appetite, especially in the price range that I was talking about.

So around the 300,000 to $400,000 or maybe up to the $500,000 mark, because I think the appetite for investing in property has a slow down. You know, people still see it as a bit of a safe haven. We're getting all these interest rate cuts as well, which is boosting, not boosting, but at least maintaining confidence. And I think given what's actually happening in Australia, one of the requirements is that people would need housing because people need to stay indoors. They're working from home and they need a place to be. So I think that the simple, neat necessity of having a property or having a house, so living whether you're renting or buying is not if anything has increased. So from that perspective, I mean we're a month in and I haven't really noticed too much of a drop-off, but who knows, you know, it's early days.

I have had a couple of clients come to me and say, you know, it's time to hold off a little bit for their own affordability reasons. Again, they may have a share portfolio that's lost a little bit of money, but I think that if you can borrow money and if you are eligible to buy property, I don't think it's a bad time to start looking around, you know because there are definitely people that are, you know, look, I use the term hurting, but you know, people who are in situations where they might have to sell even more urgently than they previously had to. So if you're at the right place at the right time, you might be picking yourself up some bargains.

When moments like this arise it is important to be ready to pounce and make the most of an opportunity if it presents itself.

It's obviously a black swan event. It's unprecedented. You know, I've always been a huge advocate of people taking action whatever the situation is in the world. You just kind of have to push forward. Not without, not obviously just do anything, but obviously you have to look at the risks and all that type of stuff involved as well. But typically when these types of things happen around the world, that's when the best opportunities present themselves. Hopefully, this thing is going to be temporary that we're going through. And once you know that there is some good news out there, a lot of these markets are going to start bouncing back and the typical losses that people have experienced are going to be, you know, it's just going to come back at some point in time. So if you're ready and you have the means to, it's not a bad time to be looking around as well.

We delve into how Loo was able to figure out what was affordable for his client and the different factors that he took into consideration. 

I think when people look at affordability, they look at how much they can afford to spend to buy the property. But I think a lot of people don't realise affordability can come in the form of owning the property as well. So if you were to buy a one $800,000 house or units and $800,000 is all you could afford to buy an investment property, you know, you're essentially exposing all that $800,000 capital or debt to one tenant, to one house, one bathroom, one kitchen, one air-con, like all these kinds of factors. Because if something happens to that one kitchen or one bathroom or one tenant or one household, one property, then it takes money, it takes time to fix it. It takes time to replace tenants if they're not paying rent, you know, you're just exposing yourself to a lot of risks and ultimately it's going to hurt your back pocket because the reality is these things are going to happen.

Part of investing and owning properties is managing these issues and it's almost certain that something will go wrong with your house at some point in time. So you know, to curb that issue is instead of buying, you know, having an $800,000 capital, if you split that up into two or three properties, you know, you've got suddenly three separate tenants, you've got three separate kitchens, three separate bathrooms. Now I know what a lot of listeners may be thinking, they're thinking, okay, there are three things to go wrong there, that is true. But if one of those things go wrong or one of those houses experiences, you know, a little bit of difficulty, at least you still got, unless you're extremely unlucky, two properties that's doing its own thing, you know, bringing in cash flow, they're still renting out.

There's no maintenance issues there. So you know, you’re just kind of spreading your risk a little bit more. And if let's say you were unlucky enough so that all three properties were experiencing some sort of issues together, then it wouldn't really be any difference in having that one property that you spent $800,000 on that's experiencing problems as well. So, you know, spreading risk like that has worked extremely well for my own portfolio. My portfolio at the moment consists of a bunch of houses that are just being rented out normally. And I'm always going through a vacancy or I'm always going through some kind of maintenance issue, but it doesn't really affect me too much because I've got a bunch of other properties that's doing what it's supposed to be doing.

So, you know, affordability from that perspective is also important because you're owning these properties for several years. Often even more. And at the end of the day, if you don't have the cash flow or the capacity to own these properties long term, you know, even more people now because of what's happening in the world. Then you might be in a position where you're forced to sell a house prematurely,  which is where people lose money. So I think the fact that buying properties that you can afford by looking in different markets and having the bonus of having that cash flow so that you can manage them or own them long term without too much of an impact to you is also two important things to think about when it comes to vulnerability.

By having more than one property and not putting all your eggs in one basket is advantageous and can mitigate a lot of your risk.

There are other tax benefits as well, such as land tax thresholds are kind of just moving, you know, having different properties in different markets. But what you'll find is like even if you start off with two or three properties in one particular market, you know, in the long term if the goal is to own, you know, let's say a dozen properties in the next sort of 20-30 years, you might not just have one in every state. You might be having a few in every state. So there's no real right or wrong in the sense of, okay, I need to buy one in every state in the next year. Again, you need to look back at, you know, where the markets are at. You know, just diversifying for the sake of diversifying is never a great idea because if you buy, let's say, you know, you've got a property in Brisbane at the moment already, if you wanted to buy just purely to diversify, you might be looking in the Sydney market, which as we kind of discussed, probably not the best place to be buying an investment property at the moment.

So even if you end up with two properties in Brisbane, at some point in time you might still be buying property in Sydney again when the market's a little bit more conducive to investing as well.

We find out about where the client is situated at this time and what the next move is that they’re planning. 

He's definitely looking for property number two. This is actually quite a recent client. So, you know, we've just settled on the property. We've just got the property rented out. He's going back to his broker to get the okay for property number two. And then once that happens, then we'll definitely be looking for the second one. The second one we're thinking will be something, again, quite similar. As a buyer’s agent, I specialise in finding distressed properties where you know that there is that potential to take out equity from these houses within the three to six month period. So we're going to kind of be doing that in tandem because this particular client that we've been talking about has enough cash deposit for the second property already.

So we don't really need to take out equity from the first house to buy number two. But we will, we'll also be doing that so that we can use a mixture of his deposit. I make sure if he's on cash and equity from the first property to buy number three. So it's a little bit different for this particular client. He's obviously worked very hard to save a larger chunk of deposit to invest with. So, you know, it's just a matter of finding the right types of properties at the end of the day.

Daniel Walsh is a property buyer’s agent and founder of Your Property Your Wealth. He has years and years of experience in helping his clients on how to successfully buy a house and properties and build their portfolios in the smartest way possible. We are lucky enough to have him share some of his expert advice and knowledge with us on how we can improve our property investing. 

Join us as we dive into today’s topic of Overcoming The Fear of Buying Property. Walsh talks about a couple that he worked with and helped overcome their initial fear of jumping into property investing. We find out more about what their initial fear was and how he helped them overcome that obstacle, the process that he was able to help them with and their reaction after buying their first property, and much much more!

Inside this episode we are diving into the topic of overcoming fear of buying property and we hear about a particular couple that Walsh has worked with and learn about their experience.

This couple were Sydney based. They were in their mid-thirties. They both were, well, she actually worked as a social worker and he ran his own business. So just a sort of a small business that he ran for, I think he was about five years into his business at that point. And they lived in Sydney. They bought their own family home, their principal place of residence and they had just gone or experienced the Sydney boom. So this couple, I guess they had their two children, they had some good steady income coming in. They've had some equity in their property. So they'd had a bit of equity there and they started thinking about, you know, property investment. We've got some equity, should we be using that equity to invest in property but I guess one of the biggest fears that stopped them from doing this was they didn't know firstly how to even invest or where to even invest. They were quite scared of doing it wrong or going about it the wrong way and, you know, maybe having bad tenants.

So they were quite fearful of investing because they just didn't know too much about it and they weren't really educated with investment or they didn't really know anyone that had invested themselves and were successful. So they're a little bit scared at that point. But they did know at that point that they wanted to invest and they needed to invest because they were in their mid-thirties. And they still had, you know, a good 25 years, 30 years left ahead until they retired. So they wanted to invest as early as possible. But they had to overcome some of those fears that they inherited from maybe family members or friends.

Walsh talks to us about how they were able to overcome their fear and how his own situation was able to help them.

The first conversation was, you know, they were looking at my situation and seeing what I had done. So I guess they had looked at that and said, okay, so you've built a really large portfolio. How did you do that? So I just had a conversation around how I built my portfolio, how it all worked, how I coped with the debt and how you can actually invest safely. So that was one of the biggest things with them is, you know, they were focusing so much on if we go buy another investment property and that's going to be $400,000 for the debt, then they just focused on the debit side of things. How are we going to pay that debt back? They weren't focusing on the rental income. They weren't focusing on how they could cash flow that property.

It was more so we're just taking on more debt. And that was stopping them straight away from investing. So we had a conversation around how we could overcome that fear. And one of the things was, you know, making sure that we had a cash buffer. We had some money left aside, you know if something was to go wrong. So a rainy day, you know, if they were to lose their jobs or something was to go wrong with their health or maybe their business slows up a little bit. And I guess that's a common fear that most people have. You know, what happens when things don't go right. And for me, I said to him, you know, the way that I do it and the way that I've run my portfolio is if I can cash flow my portfolio for say, 6, 12, 18 months and then depending on, you know, how risk-averse you are, the longer you would need obviously to have a cash buffer. 

But if you could have that cash buffer, would that put your mind at ease? Would you now be able to invest? And you know, yes, you are taking on maybe another $400,000 with a debt. But what happens if you have $50,000 sitting in a bank account that would be able to cash flow that portfolio for the next 5-10 years? Would that make that a much easier process? Getting into property and having that conversation with them, that's when they realise that, you know what, debt isn't scary if you know how to manage debt. So before getting in debt, let's structurally make sure that we can do this. Set the finance up in a way that you can structurally build a portfolio but also cash flow the portfolio as well. So that you’re already, I guess, foreseeing things that could go wrong in the portfolio, let's say it had vacancies or you know, like I said, lost jobs and stuff like that. If you could already build that into your contingencies of the portfolio, then all of a sudden it's not as scary. So that's sort of how we overcome, I guess, the interim of investing. And that's when we then started going out there and setting up their finances so that they could invest in their first property.

We find out more about the process and the discussions they had leading up to making their decision to jump into property. 

Typically we sat down with them for a night and I sat down with them for about an hour and a half, maybe two hours, and sort of went over some of the fears that they had. You know, once we rationalise those fears and work out, you know, okay, this isn't as scary as we thought. And we had a look at the finances where we could go in terms of building the portfolio and saying, okay, you do have scope to be able to build a property portfolio. You've got the equity, you've got the income, we've got the contingency plan. You know, there's not really too much left in terms of holding you back. You know, now it's just about, you have to jump into the first one, you're going to have to experience it. And then from there you'll build your confidence as well.

So, and not only that, I guess they came from a place where they thought they were doing it all on their own. So once they came to me and we talked to them and we have a full team, obviously that was going to help them out. They felt at ease at that point that they had professionals holding their hand from start to finish. They didn't know how they're going to set the finances up. They didn't know how or where they were going to purchase or even why they're going to purchase that property. They didn't even know what price point they were going to purchase it for. They didn't have any pest and building connections or soliciting connections. So because they didn't have that infrastructure or the team in place, they were really stuck straight away.

So once we could I guess, tell them that here's the team and this is how we're going to do things. We put it out there on paper. We built that plan with them. That's when they started to really understand that, you know what, this isn't that scary. As long as we have this team that's done it before, then we can overcome those fears as well. So we really started, I guess from there, from that one conversation, it went from that to going straight into the final stage and structuring their finances, releasing the equity. And then, you know, obviously getting the pre-approval ready for their first investment.

There are always going to be challenges that you need to overcome in order to achieve your goals and we learn about some of the obstacles the couple faced when buying property.

I mean always with finance, there's always some sort of hiccup with the banks I think these days, you know, and that is one thing that deters a lot of people, the finance side of things is always going to be difficult. And I do pre-warn anyone, you know, building a portfolio is not easy. You know, if it was easy everyone would do it. So you've really got to understand that it's not going to be easy, but it's going to be worthwhile. And that's probably the biggest thing, even when I built my portfolio and I told my clients like it doesn't matter if you have a $10 million portfolio or a $1 million portfolio, it's never easy throughout the entire journey. You're going to have to overcome little obstacles and it might be little things like you know, changing banks so that you can get finance and things like that and you might have to change over where your repayments come out of and maybe cut up some credit cards and stuff like that.

That's always going to be there. It's just about now let's figure out what those hurdles are and we just jump one hurdle at a time. Don't look at it as a massive big process. Let's just look at each stage as it comes. So let's just go into the finance stage and get the finances set up correctly, and then we'll start thinking about the area after that. Now, once we get the area down pat, we know where we want to invest, we know what we're looking for, then we go out there and we go out there to look for a property. We purchased that property. Now let's go to the next step. Okay, we've got to get the pest and building. So you've got to really break the whole process down so you don't become overwhelmed. And realise that there's always going to be little hurdles that you have to jump. You've just got to make sure you have the right team to be able to help you jump those.

People can maybe set up a team, but is it the right team? Have they used that team before? And I know from the early days of when I started nearly a decade ago, it was filtering out to find, you know, you can find a broker or a finance broker. But can you find the right finance broker for you? And that was, you know, the biggest thing in my learning was working with a team over time that had already created success in their avenue that they were going down. So whether that's a property manager or whether that's a finance broker or an accountant or a lawyer, finding those people and then bringing them all together to be part of your team to be able to help you succeed in property.

How long was that period just to sort of paint the picture? How long did that take in terms of maybe weeks or months?

It depends obviously on the complexity of what you've got to do in terms of refinancing, but in this scenario, it was fairly straightforward. We just had to extract the equity out of the home. We had to have that as a split loan. So we knew what we were going to be dealing with in terms of deposit size. And then from there just going out there and getting the pre-approval. So I think the time of collecting all the information, lodging for the pre-approval, it was probably around that sort of four to five-week mark before it was all set up, ready to go. And then we could go out there and obviously start looking for different areas and properties.

The larger the portfolio, the tougher and the slower it moves. That's probably the biggest thing you know, that I've learned. Because the larger you build that portfolio, you build up the confidence and you build up the expertise as you build your portfolio and you need that because it does become slower, you move slower as you get bigger. But like I said, in the early days you can move around and you can get loans and you can do different things fairly simply. But when you have, you know, 8, 10 properties, it's a lot harder to be able to collect all that information ready for the banks and put your case forward to be able to get another loan. But I guess at the end of the day, you also are growing with your portfolio as well in terms of expertise.

After getting themselves into a position where they were ready to buy, we learn about the next stages of their journey. 

Firstly we actually show them all the information on different locations that we're investing at that point. So again, it's not coming down to an emotional side of why, you know, we don't want to buy in our backyard, we don't want to buy just because we know the area or we're emotionally attached to the area. What we want to do is really break it down and say, where is the growth going? What's happening? And we've got to look at that Australia wide. So it's not just looking at it from, you know, one state perspective or the state that you live in. But okay, where are all the states at? And then let's break that down and now let's look within that state, where are the growth locations and what are we looking for in that property as well?

Is it the yield? Is it the capital growth? Is it a balance? So looking at that, what we did was obviously send different area reports that we do, you know, I guess very in-depth reporting systems. And when we asked the 10 key data questions and why these areas are going to grow. So what we're doing is painting a picture on what's happening with that area and what's going to happen with the area in the future. We had a little sit down where we've showed the different areas that we could invest in. At that point in time, we did select Victoria, we knew that Victoria was moving quite rapidly and we wanted to capture that growth because we knew that over the next sort of 18 months we're going to have significant growth in the portfolio from day one, you know, just purchasing, right?

And then making sure that we purchase in a growth location. So we set up to purchase in Victoria and that's when obviously I went out there and purchased them there. Their first property, we actually lost the first property. So I think it was the very first property we presented them at went about 30,000 or $40,000 over what we had valued that property at. So, you know, they were a little bit disheartened at the start. Obviously, you know, you've lost a property and it's the first property that they will be emotionally charged from that. And it was sort of, you know, let's bring it back down to earth. It all comes to the numbers. We will win some and lose some. But we've got to make sure we get the right deal. Then it was only about two or three weeks later and we ended up purchasing, I guess the right property that came along. We paid $379,000 for that property. It was a house on like a 750 square metre block on a corner block. It was a three-bedroom, two-bath, two-car garage. It was sort of that older style home, maybe about 25, 30-year-old home. But it was a nice solid home and a nice big block, corner block. So it was a really good steady investment for them.

We find out more about the property they purchased and discuss why it was the right property for their portfolio.

It was coming down to what sort of yield we were chasing and we wanted to sort of balance the yield out with the capital growth. So we know that we wanted to chase the capital growth. We were going to have to sacrifice a little bit on yield, but we didn't want to sacrifice the yield so much that it was, you know, highly negatively geared or anything like that. So we wanted to sort of balance it out for them. Now in terms of choosing the property, we knew that in the area that what was in demand at that time was houses. We wanted to buy a nice sized block for them. We wanted to buy something that also because it was their first investment that they didn't have to heavily renovate or anything like that. But something where you could potentially add some value down the track to it.

But you know, you could just stick a tenant in there from day one and it didn't really need anything. So it was a nice sort of steady investment where they didn't have any maintenance issues, they didn't have anything they really had to outlay which, you know, sometimes can discourage some people, at least when they're new to investing and they do not sort of understanding that side of things. So we wanted to make sure that it was just a really nice, easy flowing investment property for them, but also at the right price. You know, we wanted that sort of under $400,000 price. They wanted something they could, I guess, get into their first property but not be in $500,000 worth of debt for the first one. They wanted to just sort of, I guess ease into it, you know, in the $300,000 range was what was going to suit them.

At that time, they only had their own home. Their debt wasn't that large. I mean we possibly could have borrowed about $1 million dollars. I think it was at that point, you know, it was quite, quite high. But we didn't need that much. Obviously we went in there with a pre-approval, I think it's about $450,000 with the aim of spending between sort of that 350,000 to $450,000. You know, we wanted to balance that yield out as well. So it was sort of, I guess, you know, we went in there with a 12% deposit on the first one as well, so we didn't extract too much equity out of their own home. We capitalised the lender's mortgage insurance onto the loan as well. And obviously, you know, it just means that they didn't have to put 20% down, a lot larger deposit. And again, that can sometimes bring back more emotions that they're putting more money into it. You know, rather than just using, say, a 12% deposit, we can actually split a few different deposits up with building more properties in their portfolio over time.

Walsh explains the process that happens after you have purchased a property and signed the contract. 

Obviously that's when everything starts pretty much from there. That's why you get to the point where you go, I finally purchased the property and then all of a sudden the journey really starts from there. You've got to sign a lot of different things. So obviously we went in, we signed all the contracts up. So firstly you've got to make sure you're reviewing the contracts. So we had solicitors review the contracts. Made sure that our guys knew exactly what they were in for when they're getting into that property, you know, is there any easements on the property, is there anything that is going to inhibit our property or hurt that property going forward? So we need to know everything about that property before we sign on the dotted line. So they go through all of that with you.

They signed on the dotted line and then from there it was you know, let's go out there and get the pest and building done and make sure that everything is sound with the property, instructional sound at the property. Thankfully everything was, you know, I think there was pretty much next to nothing on the property. It was a very tidy property. It was an older lady that lived in that property. So it was a nice, well looked after property. But we went in there, signed them up to the pest and building. From there we're working in the background on the finance. So you know, things don't stop there. You're always working on something. So we're working with the finance, getting the rental statements to make sure that we can get the finance all approved.

And then once the finance is approved and the pest and building is all done, we then go unconditional with the property. So you go unconditional with the property and then it's making sure that you've done all the checks. And getting ready for the settlement. So obviously make sure you've got the funds available, you're putting them in the trust account to the solicitors and putting everything across. At the same time you're doing that, you're also making sure that you've signed up to your property manager, your property manager knows what's going on when the property is going to settle and the keys are going to handover. How to get a tenant and again that comes down to making sure you have a really good property manager and the property manager’s sort of setting everything up in the background. They're going to collect the keys for you.

They're going to go out there and get photos. If they need to have the property, they're going to list that and make sure they can get the tenant for you. And we always make sure that we can try and get into that property a little bit earlier before it settles. So instead of waiting for settlement, which is what a lot of people do, they wait for settlement and then they start that process of I need that property manager, I need this. And then all of a sudden they've got four weeks, five weeks worth of vacancies. What we're doing is let's get everything done so that when it comes time to settle, we've lined up a tenant, we're ready to go, the finance is done, it's all settled, the house settles, and then the tenant moves in from there.

It is important to try and get ahead of the game even before the property has been settled and start working on finding tenants.

If we can get in there and get two open homes done two weeks before settlement, it just means that we're two weeks ahead of the ballgame or when we settle that property. And more often than not, you know, probably about 95% of cases we've already rented that property before that property settles. Just means that it's a very smooth transition for the clients to be able to get rental income from day one instead of having to wait, you know, two, three weeks for a tenant. And also that's emotionally draining as well. You know, if they've got to wait another month for a tenant, you know, they're starting to get a bit more anxious about it. Whereas if they're going into the settlement knowing they've got a tenant it just makes everything much smoother. They're going to get paid from day one and they've got no vacancies.

Walsh talks us through how they were able to figure out how much they could get on rental returns.

Before we even purchased the property, we would actually have our property managers go through that property with us and we make sure that, you know, they've already conducted a rental analysis to make sure that we know what it's going to rent for before we even purchase the property. Because before you purchase the property, you want to know your numbers backwards. You want to know what's the worst-case scenario, what's the best-case scenario? How much is this going to cash flow? Is it going to be cash-flow positive, cash flow neutral or cash flow negative? Because at that point that's going to determine what type of investment you're going into. So you need to know the numbers. And the biggest mistake that I see is people, they go into a property and then all of a sudden the real estate agent starts to tell them what they can rent the property for.

And often that's an inflated number. So that you know, it attracts them to buy the property. So what we want to do is make sure that we're getting the property managers in there. They can see the condition of a property, they know what other properties are renting for, and they can give a real accurate rental appraisal based on that. So we know within sort of 5 to $10 exactly what that property is going to rent for instead of being out by 30 or $40 because the real estate agents told us that it's going to rent for an extra 50 bucks.

His clients had overcome their initial fear of buying property and he tells us what their reactions were shortly after that period. 

They didn't even have any keys in their hands and everything went straight to the property managers. Everything got handled by us and them. I remember talking to them as soon as it settled and they said, it feels like I haven't purchased a property. They said, it doesn't feel real. And I said, it doesn't, and that that's the thing when you're purchasing property and you're doing it the right way, it shouldn't be a difficult process. This shouldn't be very hard. You shouldn't be going backwards and forwards and you know, doing all this stuff. Once you do settle the property, it should be like, okay, that's all I have to do and the property managers should be doing the work from there. You know, you've got to have the property managers make sure that you set up everything correctly.

So we make sure that the rates are going through the property managers and they're paying all the bills, and maintenance is going through them and you know, it's taking all the load off the client to have to pay all these or make sure that, you know, everything's coming in right. That's what the property managers are there for. So they really take care of all of that for you. And I guess from there it was about, I think it was about two or three months later. And I always, you know, have a chat with them and say, you know, now the process is over. You know, in this case, we were looking to purchase multiple properties. It's just, let's get over the first one, let's get that first one done. And about three to four months later, they gave me a call.

They go, Daniel, I've noticed the properties have all gone up around there and I said, houses around that area are growing and they're doing quite nicely at the moment and they felt more confident from that because it was like, okay, this is actually working. So they wanted to get back into purchasing the next one. So again, let's go through the process from the start. Let's go back. Let's get the finance done. We'd already extracted the equity from the first property from their principal place of residence. So that was already set up. So the second time around, things were a lot easier. We just had to go back and get a pre-approval. So it wasn't as difficult to go back the second time. And it was around that sort of two-week mark before we got the pre-approval and we're ready to go out there and purchase a second property.

They had purchased their first property and overcome their fear, so now it was time to move on and buy their next property. 

When we looked at the first property, when you're building a property portfolio, you shouldn't be looking at isolating one property from another. You should be looking at the total portfolio. So what we did was obviously on the first property, that first property was around $1,200 a year negative. So it wasn't positive cash flow, but what we were chasing was the growth. In the first year, we had about 20% growth. So it did what we expected and it was a little bit negative. So on the second one when we went to purchase the second property, let's go to Brisbane. Let's purchase a property with a bit of cash flow and that will offset the other properties so that your total portfolio is neutral, meaning that it's just not going to cost you anything to hold that property portfolio, but you're going to have two solid assets growing to be able to leverage from in the future.

So it was sort of building that foundation portfolio. So we bought the next property for $407,000 in Brisbane. That property was a little bit different. It was more the intermediate sort of property for an investor. So I guess they're at the next stage at that point. And we purchased a four-bed, two bath, a double garage with two separate living spaces. So when we chose that property, what we noticed was two living spaces were in demand in the area. And the four bedrooms obviously for a family. So we specifically sought out that type of property with the two living spaces. So there'll be, I guess more in demand for a rental side of things, but it would be also in demand if you were to ever settle that property as well.

Walsh delves into how he decides on the difficulty of each property and why he wanted to go up a level with his clients. 

The first one was, there was nothing to do with the property. It was literally just put a tenant in there, set and forget. And that was it. Now the second property that we walked through had the potential, it was only about sort of 13 or 14 years old. So it wasn't a very old property. But it was still when you walked through, it was a grubby looking house. It needed paint, it needed the carpets. I think we need to change the toilets as well. They looked a bit old and not that great. And so that was sort of, I guess more on an emotional side to be looking at the property more from a data perspective and looking at it from a numbers perspective, I guess more so and say, okay, we can now look for a property and understand that this doesn't look good now, but maybe with a small renovation we can actually uplift the property. It created a bit more value or a bit more equity out of the property and then put a tenant in there. So we had to do a little bit of work before we actually put the tenant into this property. So that was sort of the more intermediate wasn't just a set and forget, but we actually had to do a little bit of work.

With the first property in the portfolio, he talks us through the process of looking for the next one and the criteria he had laid out. 

What we wanted to do was make sure that it was going to have a good solid rental return. So we paid $407,000 for that property. We also wanted to balance the growth, so we wanted to make sure they had good growth but also had a fairly good rental return as well. So that was renting for, or we could rent that property for $430 per week. And we paid $407,000 for it. Now we did a small cosmetic renovation and I think it was at the $415,000 mark, by the time that we finished the renovation and what that meant was once the renovation was done, it was brand new paint, brand new carpets, brand new toilets. Everything was sort of done, looked really nice and neat and back up to scratch so that we're going to attract a very good tenant for that property.

So in terms of looking for the property in terms of the criteria that we're looking for at that point was we wanted something at that point where it was going to be a bit more positive cash flow for them, but also balance out the capital growth. We wanted it to target families. So we wanted the four-bedroom because we knew that was going to be in the most demand. So when we'll speak into the locals in the area, we're looking at what people wanted in terms of the tenancy. We wanted to attract those family orientated people and that's just because we knew that they were going to stay longer in the property and we're going to have less vacancies over time. So it was just about making sure we've got that right property.

We find out how long it took them to not only purchase the property but then to renovate and find a tenant to move in.

The pre-approval took about two weeks, to actually find that property took about four weeks. So we're looking at sort of six weeks from pre-approval to actually finding the property at that point. And then it took a further six weeks to settle that property. Now with that property, we couldn't get into that property early, so we actually had to wait for it to settle before we could do the renovation. But we had all the tradesmen lined up, they'd already done their quotes, they were ready to go in there from day one and we painted, carpeted and everything was ready to go within about a week and a half. So it was only a week and a half downtime. And then the following two weeks we ended up renting that property. So we had a lot of interest and obviously came down to making sure that we chose the right tenant as well.

And making sure you have a good property manager that recognises the difference between a bad tenant and good tenant. And you know, maybe you have to go through 5 or 10 applications, but you want to find the right tenants and they're not going to ruin your house or anything like that. So I would say all up, it was probably about 12 to 14 weeks was the time that we were ready to purchase to the time that it was renovated and then get ready for a tenant.

They have just purchased their second property after overcoming their initial fear to simply buy property. We get an understanding of how they were feeling at this point in their journey. 

They thought this was easy. This was easier than they anticipated. So I remember speaking to them and they said, we speak to our friends and family about this, you know, and how easy it is to invest in property. I said, it is easy when you've got the right team. Obviously, you know, if you've got people that know what they're doing, you've already got the team in the area that you want to work in, then everything becomes a lot easier because you can call on them to be able to do everything for you. So it made it a lot easier. They didn't have to do too much in terms of they get to go to work, do their daily thing. They had to sign a couple of documents and that was about it. The rest of it really got taken care of for them.

So they were very, I guess, ambitious. Now they're looking at it and going, okay, I can now build a portfolio. I've overcome the barrier of debt. They're now, you know, not scared to death. They understand how to leverage, they understand what it means to build a property portfolio. So I guess the mental barriers that they had at the start and especially another one were tenants. You know, what happens if I get a bad tenant? What happens if things don't go right? And now that they've sort of got that confidence up. They've been in the property market, they've got the investment properties that they bought interstate. And they've realised that you know what, it's not really that hard to do. They overcome their fears and now they're looking to purchase their next property. We're going through the finance stage to be able to purchase their next investment.

So over a year to a year and a half we’ve bank valued both of those properties and currently, the equity position is $136,000, so they made a $136,000 off those two investment properties with a bit over a year.

We recap on the topic of overcoming the fear of buying property and just how Walsh was able to help his clients get into the property market.

I guess the number one thing in overcoming their fears was obviously the debt and also maybe the tenants and making sure that they can, you know, purchase these properties. But I guess the biggest fear was the debt. So overcoming those fears was rationalising them. So sitting down with a team that's already done that. So sitting down with somebody that's already built a portfolio that's already maybe had to go through all of those fears himself over those years. I've already had to overcome those fears myself and I’m able to sit down with these clients and say, here's how you overcome these fears. This is just more of a mental block or roadblock, but let's rationalise these fears and then let's work out a plan to be able to overcome them. Let's put a cash buffer in place that you know that you can overcome, that the whole fear of debt all of a sudden is not such a big issue.

Jill McIntyre is a property and life coach that has years and years of experience when it comes to helping people improve themselves especially when it comes to procrastination. We hear some of her expert advice on how we are able to overcome the obstacles we place in front of ourselves and get the job done.

Join us in this next installment in the Mindset Monday series as we delve into the topic of procrastination and we hear about some of her clients that she has helped on how to overcome and stop procrastination, we learn about the different strategies that can help conquer the habit of putting things off, the interesting relationship between procrastination and a particular personality trait and much much more!

We dive into the topic of procrastination by hearing about a client of McIntyre’s and their situation in relation to this issue. 

It's interesting because when I'm preparing for our Mindset Mondays, I think about what's happened with my clients around this time. And that gives me the topic to go ahead and connect with that. So it's funny that you should ask that question because I've had a client this week, in fact, there's two of them that they're working together. So these guys are just fabulous guys. They know their stuff. Know it backwards. The thing is that they’re over analysing because they've done a deal earlier or both of them have done property deals earlier and they've lost some money and because they've lost some money, it automatically sinks in that they’re so over-cautious with moving forward that it paralyses them. And when they're telling me about where they are looking, and I've had a couple of discussions with them, numerous discussions with them, they know their stuff. They know their area of focus. They know how much renovation on what they're doing for a very small deal for quick turnover, seven-week turnover. They get it back on the market, get into the market, get out of the market in the same market. They know all of that. They know the demand for the strategy that they're working on, which is a buy/reno/sell. They know the strategy backwards. They know the demand for rental properties. They know absolutely everything.

The fear is coming up for them into areas and one of them is that they've lost money before, will they lose money again.

We learn more about her clients and what their background is and why they needed her help.

One is a builder. But the other one is, you know, they've lost their confidence because of losing money and will I do it again. But the other one is that they need to ask and get money from outside sources, so other people's money. Having the confidence to ask for money just becomes for so many people an absolute slog. Where will I go, how will I do it? What happens here? And it all comes down to self-confidence. These guys I would put my money on without any doubts whatsoever. And the deals that they are doing are small deals, the low end of the market that's got a good cash flow positive return for investors buying those deals for a hold on a rental without any problems whatsoever. But the problem is that they don't have the confidence or they've lost the confidence. And these two guys have got it summed up,

Even with the experience that her two clients have, it shows how integral confidence is in getting the right deals done. 

The thing is too because they've lost money, and their strategy is to use other people's money and I totally honour that because I would say probably 85-90% of my clients all use other people's money. I'm using other people's money in my childcare development that I'm doing at the moment. And it's a strategy that I love and I've worked with them for many, many years. So you don't have to have money to buy a property. But you have to have the confidence to know what's happening in your deal and the confidence to be able to sell that deal. Say for example, and we all often talk over our Mindset Mondays and in our podcasts about personalities. And if you [inaudible] a personality, you might be good. You might be a handyman or a builder that can do it but you're not good at connecting and selling yourself with people. And so this is where the block comes in that you've got it all on the table. You're absolutely a gold nugget, but you can't get it out to sell it to other people. And so you procrastinate and you go up and down. So I put these guys on a timeline and within four weeks I want a deal on the table. They've got a deal at the moment, but they won't go out and maybe put an offer on the deal.

Because they haven't gotten anyone lined up for the money. So it's like a ripple effect that goes on and on and on. But one thing affects another that affects another and nothing happens.

McIntyre tells us about one of the strategies she uses to get people on how to overcome and stop their procrastination.

I always say I'm pretty good at getting the broom behind people. And you know, it's timelines and even with you and you know, as we do coaching and I'm coaching you at times and I put timelines on you, with things that you need to do within your property and within your business. We all need it.

I’ve got timelines on what I do and I keep myself accountable with what I'm doing with my intentions on a monthly basis and very much so we need a timeline to stick to, to get outcomes happening.

I can talk from personal experience. I've been procrastinating on a particular property for the last seven months. And it's painful because the last thing I wanted to do was to feel that way and then it just, I had to make some decisions. And the hardest thing was to actually say, look, what am I actually going to do. Maybe I should paint a picture of what I've done with this particular property. I bought a property in the regional part of Victoria about seven months ago and the first probably week or two of that property being taken over, the tenant just moved out. And I thought, why did that all happen? It just seemed like very, very odd because that first week they originally were planning to stay for a long time. So I said, all right, that's fine. We'll let that tenant move out because their intention was to renovate that unit anyway. But unfortunately due to a lot of circumstances, unable to get down there and unable to find tradespeople and so forth, it's dragged on for so long because nothing happened with the property manager and nothing happened on actually getting down to that regional location.

Some months later I'm now feeling the pain because potentially another tenant has also moved out as well. And now you know, it's going to definitely hurt and bring negative cash flow. So I've made a decision now to find another property manager and also look for tradespeople. And I actually had to do that myself recently because it's supposed to be the property manager’s responsibility to help me find trades to fix up repairs. And because the last property manager that I'd been working with hadn't done any of those and just wasn't even sure what they wanted to do, then basically, you know, I just said, look, I'm looking for someone that's local, I'm looking for someone that's going to be able to have contacts with tradespeople and just get things done. So that's where we had this conversation this morning about trying to figure out what's going to be the next steps. And it's hard for me to admit it because it's also an ego thing that I don't know why I put this off for so, so long, but it's also a wake-up call that I need to make these big changes now.

And it all falls into place. This morning we've organised [inaudible] and we've organised [inaudible] and they will fix all of that up and then we've organised when the tenants will be moving in. Then we've organised when you'll be actually building and applying for the plans and we've organised what stage two could be in the backyard, building townhouses. All of that happened in a very, very short space of time in our connection this morning.

I'm thinking why did I not have this conversation with you earlier? Like months and months earlier. And that that really puts us back onto procrastination because I just kept putting it off and off and off because I had so many other things and I made so many excuses and I guess this is the reason why this is a perfect topic to talk about in Mindset Monday today because of the fact that I've done it. I'm pretty sure a lot of other people who are listening to this podcast have done the same thing as well. And I think this is why it's so important to have this conversation with yourself. You know, Jill today because you're helping me and coaching me through all this. How can we actually stop putting off things like challenging tasks like this and to stop procrastination and stop that fear of thinking it can't be done or something's blocking us. 

The other thing is too, sometimes we are too close to what we're doing obviously for pride or for fear of, or ego, to be able to do something about it. For me, with each one that I work with and including you, I put my coaches hat on when I’m having a session and then I'm looking at you as an overview and it's very, very clear to me where we’re going, what we're doing, how we're doing it. We even worked on the strategies of the best outcome for the building or office space or units or returns. We've talked about the best or considered the best way of getting tenants in there and what could be the opportunities and the benefits for them. So it's about brainstorming. It's about getting out of your own head and asking for help.

And you don't come to me and say you need help here, but straight away you said something to me about Portland, after we said hello this morning and it was virtually within the first minute, and I picked up on Portland. We haven't talked about Portland for a while or what’s happening down there or is it Campbelltown down there or is it Warrnambool down there or is it further and closer in or is it Port Fairy. Wherever your property is over the area of Victoria or New South Wales or Queensland, we need to focus on what's happening in that area. What do we need to do in that area? You know, what's happening in the Geelong area in Victoria and we need to go in and find out, get specifics. What's the market doing, where are we going? We've got to help and support ourselves by educating ourselves with the end result of what we're looking for. You've done this with your area of focus with your properties. You know the rental returns. Do you know the rental returns with a value-added property where you're going to do a renovation, you know, all of that? You went into all of that before you signed on the dotted line of the contract with a very in detail feasibility. We've talked about it at that time with the potential.

I knew all that. I had all the knowledge. I even have all the experience understanding this because I've worked in the areas of that kind of thing, but I guess that blockage and I think one thing that came up quite constantly in the back of my mind and even raised it up without even me having to say is that I have a fear of spending money to make money. And I kept putting that off because the challenge that I faced was I was waiting for someone to go down there with me who already had access to transportation to get down there and I just kept waiting and waiting and waiting because I didn't want to go and spend that time and money myself to go down instead. Because I know that to actually fly from where I am right now in Sydney, all the way down to regional Victoria, it's going to be at least a day's worth of travel and you know it's going to take a whole day worth. But also, it's going to cost money to do that and then I have to figure out, you know, a combination and all that kind of stuff. So I kept putting that off and putting it off and the cost of that has been seven months of no income from a rental and looking back at it, it's just a silly thing to do.

This is a typical one that we're talking about. You had been concentrating fully on the problem instead of automatically shifting to a solution mindset. And my thoughts as you were just mentioning about that, you could ring up five handyman builders that are advertised down there and interview them because the first person that you get to, it's not a [inaudible], but they actually will be getting the job from you.

And as I said to you this morning, you've got to be really upfront and ask some really cutting questions of the new agents that you're going to be working with. The one that you've got at the moment, if they don't cut it, give them four weeks to find tenants or otherwise you’re moving onto another one, but let them know what's happening in a nice way. We're not coming over as a bully. We're coming from integrity, but this is business that's hurting your pocket.

You need to be able to make the tough decisions if people are not providing the best service and it is impacting on your own pocket.

I had another client yesterday that had been working with an agent and the agent has been procrastinating on selling the property. The agent has not been putting a property amount in for selling it. Now if I see a property of no amount in there and you'd look for, ring up and we will discuss, you know, what the amount will be, that's too hard for me. I don't go near it all. I want to know when I look at an advertisement or whatever, what price range am I talking about? Time is money to get going, to not put a price there and price on application on an everyday property that's worth $300,000 is absolutely ridiculous.

We're not talking about a $3.5 million property. We're talking about a $300,000 property. And so this agent has cost money and holding costs, but also his procrastination of, “I’m gonna, gonna, gonna,” and nothing happens. Anyway for various reasons, because the deal has taken so long he eventually got a buyer on board, but it was at a very discounted price because he kept on telling my client, who was the owner, that this was what he should accept. So they accepted that amount and because it's gone over the three extension times because of the holdup for various other reasons, which aren't my client’s happenings or doing, it's now that the people who are buying these properties are pulling out. So when I heard that I was absolutely ecstatic. They can get a higher price with an agent that can sell it in five minutes.

The demand for that property, the vacant site and the house, the market for those properties are far higher now than what it was when it was signed at the wholesale price all that time back. I could never have heard better news on that day. And so going to a new agent, what always looks like doom and gloom, there was an interesting saying last night. And someone said, did you catch the wrong train but did you end up at the right destination? And I thought, what a good summing up of a situation. Did you catch the wrong train but end up at the right destination?

Yes. In this case, just once again, caught the wrong train with the wrong agent that tried to sell it and all of this that cost them huge amounts of money but ended up in the right direction because it backfired on the agent. Now the agent turned around then and sent the most revolting text to my client last night because he pulled out and went to someone else and I said we’re following through. We're going to report him because there’s no need for you to put up with that from an agent. And this is a very, very small amount of agents. 99.99% of agents are absolutely fabulous. Like everything, there's one person that spoils it and this guy doesn't need to be in real estate. And so we'll follow through on that one. But it's a good outcome. So it's all about not having a voice to change things at times, or working on a solution mindset rather than a problem mindset because all of these months with your property, I hadn't heard about it for various reasons. 

We learn about an interesting relationship between a particular personality trait and procrastination, and the role that fears and successes play as well. 

The thing is with procrastination, it can come through a fear of failure for whatever reason. It could even be a success. You might be fearful of success because success will take you to more notoriety. More people will want a part of you and you might be a shy person or not have the confidence. Fear can come through rejection, it can come through losing money on a deal previously. It can be all shapes, sizes, and you know, often people who procrastinate haven't got a good relationship with time either. That's an interesting one. And I've heard it said by a guru that those that procrastinate don't have a good relationship with time because they don't respect time. And I think that's a good way of putting it because time can be the opponent that's wanting to out with them and with a procrastinator, they’re always trying to do better. There's got to be a better outcome, I’ve got to do better. A lot of very analytical people are quite often procrastinators, they go hand in hand as a personality. And this is where we've got to draw the line and say, what's the pattern that I'm doing here?

Is it working for me? Is it giving me good bang for my buck for my time? And it's not. Those that are listening, for each of you that are listening to me right now. What are you putting off that you should have done last week? Now I know if this is me, I'll put off my Tax, getting my tax done. I'll put it off and off and off till I have to do it. When I get into it, I love it. Because I love the numbers and it flows. It's not even hard work for me.

McIntyre delves into the mindset behind what can be blocking us from getting on with finishing our intentions.

And I was proud of myself last year because I got it all done before Christmas and it didn't have to be lodged until April. I was excited about that one but I'm dragging my heels this year I must admit. But I know when I get it out that I've got to devote time and it's all out on my table because I get anything out, you know, a docket for an online stock and things there. And yes, I've got to devote a section to it.

But I know that next month with it being March next month, I'll know in my intentions, it will be in my monthly intention to complete my tax with a smile on my face. So it's about me. It hasn't been in my thinking and on my agenda because I've had other things that I'm doing that I want to get finished this month. So I still feel comfortable. I still don’t have to have it in by April or something. The end of March, whatever it is I'll be told by the accountant. But nevertheless, it is just one of those things that I [inaudible]. There’s no pressure on me to do it. So why bother doing it now?

When you don’t have the urgency behind you to complete what needs to be completed, that is when procrastination can start to creep in.

Once again, I just had a client and working with her, and she's doing some fabulous, really big deals. But she even said to me in our session this week, she leaves so much of what she's doing until the eleventh hour and she loves working under pressure. And I can understand this. The best I work is when the pressure's on and I've got to really commit but it's not good for us and we don't need that pressure at the end to be working at the 11th hour. It's about planning a day in our week. As I said, my tax will be in my next month's intentions because that fits well.

We find out more about what exactly monthly intentions are and how they can help you to overcome and stop procrastination.

The intentions are like our goals. It could be short, medium, long term goals. I might do them in the December period for the next 12 months. My intentions, I do every month. I do it actually on a new moon every month. Because a new moon is the beginning of a new stage. So I feel very much that it wipes the last month off and then I move forward and I know in a previous podcast I've gone through how to write it. How to write a goal, how to write an intention. It must always be in the now as if I’ve actually achieved that outcome. So I would write it, today is a month on from when we’re going to be doing it. And I can’t get the grin off my face, the content that I feel because my tax is already in and sent to the accountant. To get that off my plate gives me such an enlightened feeling of freedom. Plus the outcome that I know where I am on a taxable basis to be submitting it to my accountant to work on.

It’s crucial that you are setting out your intentions or goals as it creates a deadline for when they need to be met and decreases the chances of procrastinating. 

With my intentions that I do monthly, they really keep in the forefront of my mind, what I need to have accomplished over my month. And I'm writing a product at the moment and I'm getting myself in my intentions this month that I had to finish chapter number five and number six. I’ve got another couple of weeks before I do my intentions again and I will finish chapter number six this week. It pushes me and it gives me the drive and the motivation to get going. And in fact, I will be writing chapter number seven. And I'm pretty excited about that before I even get there.

So it's my motivation. I put it in the diary, went off, finished what my plan is, what I'm doing for the day. I work very much in a now thinking, that if my goal is to say complete chapters, I'm doing it that what have I got to do today to make an extra move on with that writing with the chapter. What have I got to do? How far have I got to go? Who do I need to bring in? What thoughts do I need to bring in that are going to help and support me? It becomes my game plan for the day to fit in around what I'm doing.

And at the same stage, I'm very big on timelines like you and I have talked about with your property. I'm very big on timelines because these timelines make us work to a deadline. If we don't have timelines we haven't got a plan to work with and yes, well maybe I'd like it finished by the end of next week. That's too fluffy for me. You can keep on moving the goalposts with that type of communication within your own head. Well, it's raining outside today, so yes, it's too cold today, cut the excuses. If you've got a deadline if you've got a timeline, if you've got an intention to step up and meet it, and you'll be surprised how it works because you are committed because you’ve made a promise to yourself.

But you've got to believe in that promise to yourself and you've got to value you're on word to stick to it. And I would be the first to say, there's plenty of humps in the road, plenty of ups and downs. Life gets in the way for all of us. None of us is unique, and in fact, life would get pretty boring if we didn't have some humps in the road. I look at my humps in the road as being challenges. If I have got something happening with my children, my grandchildren, with whatever's happening around me for whatever reason, and there's been some pretty major stuff once again, this last couple of months. Compartmentalise it. Work on today what you need to be working on, but utilise your diary, utilise your daily planner, still fit in what you need to fit in, but also with accomplishing and growing at the same time.

I think that's really, really powerful to talk about it from that point of view because it's very easy to make up excuses and not commit to it. But once you actually have a set timeframe, which you've made for me for the 7th of March, I know that now I have to, my brain is already starting to think, okay, how can I get the tradespeople in by then? How can I actually get the agents to sort this out and so forth? It makes you think much faster and also make sure that you meet that deadline.

Also, you know that I'm going to be calling you on a certain date to check in on you. That's not very far down the track. In fact, it's about, what is it, two and a half weeks away from now. And I want the roof done, I want the carpenter done and I want the place rented. And you know that I'm keeping you accountable to that date and it's keeping you accountable. If you can't keep yourself accountable, you need an outside person that is going to keep you accountable. And all we’ve done today in our session is to brainstorm. But obviously my brainstorming is pretty action taking but not taking you way out of your comfort zone that you can't find your feet. We just need to take it a day at a time and work on specifics and hone down further and get an outcome happening.

Having a coach in your corner like McIntyre can be extremely useful in keeping you accountable and constantly moving you forward rather than staying stagnant and procrastinating. 

It's not the only property that we're talking about, it's having a business mindset that helps us in our personal life because I do timelines and things like that, what I need to do. Even from a personal side of things, what I need to do for my children and my grandchildren, deadlines that have to happen for them, that I have to work into what I'm doing. Which I do with such a pleasurable balance because I need balance in my life. I'm pretty work-oriented because I'm passionate and love what I do. I love my property side, I love my coaching side, but I also realise that for me, I need that balance in my life for family, friends, things like that. So on the family side and the friend's side and the lunch side and the coffee side where I'm going after we finish recording.

That's equally as important as what my property side and my business side is. But I'm able to do this because I've got a business mindset of clarity and bringing in and working under a timeline, under what I need to do daily. I don't just get up in the morning and start to write down what I need to do for the day. As you and I finish, I write what I need to do in the diary for when I need to ring you on that day. So everything is a work in motion. When I need to do A, when I need to do B when I need to do C. And automatically I just look at the diary the night before, what do I need to be ready for? What do I need to do? And it's thinking ahead that we’re not working at the eleventh hour and that we're not putting pressure on ourselves by doing it.

Simon Loo is a successful property buyer’s agent and director of property buyer’s agency, House Finder. He has been working in the property industry for numerous years and has gathered a wealth of knowledge and experience that is hard to replicate. We are lucky enough to gain some of that knowledge and receive some strategies, property plan and advise on the varying topics of investing in the property market.

Come with us as we delve into this topic and we find out about what we need to look for when buying a property and how that can help you track down when you decide to sell or rent it out, the best places to buy and the type of property that can be the most advantageous, how putting a little bit of money in can allow for much more money to come back out, and much much more!

We are delving into the topic of, your exit is as important as your entry. We hear about an example where this has been applied in Loo’s experience.

The notion of your exit is as important as your entry when anyone buys a property, all they're thinking about is what they're buying. You know, is it a good investment property? Does it generate cash flow? Is it in a good area? You know, does it have equity and can you add value to it? Which is all very important. But a lot of people, what they don't think of is that when they sell a property is equally as important. Because when you sell a property ultimately, whether you're holding it for 1 year, 10 years, 50 years, the sellability of that property will determine how much money you make. You know, you can strip equity out of it forever, but until the day that you sell it, you know, that's when you actually make income.

So a story that I have is, and I actually have quite a few of these stories is I get investors sometimes coming to me with a few properties under their belt and they've bought properties that are very skewed towards high cash flow. Now, these properties maybe some kind of odd dual living set up. It might be a property with an abnormally large amount of rooms inside the house that they might be renting out to students. It might be a small townhouse, you know, in a lower socioeconomic area that has great on-paper yields and great cash flow on paper.

These are not necessarily in regional towns. They're in capital cities.

In capital cities and you hear nowadays like dual key properties quite a lot. You know, where the house is actually, it looks like a normal house from the front. But inside is actually two separate houses joined together. So basically kind of like a duplex but without the facade. And you know, there are a lot of people selling these properties, you know, with the notion of having super high cash flow, which is what a lot of people chase. And a lot of people buy these properties. So the example that I have would be a property where they bought a townhouse, you know, on paper was 8% yield, which is really, really good as you can imagine.

The problem is nobody wants to buy these properties in this particular area because there's just so many of them and also houses are very cheap. So in this particular area which is in Brisbane in the Logan area you know, the price of a two or three-bedroom, let's say a three-bedroom townhouse, you might be looking at $220,000, which is very cheap. You might get a per cent rental yield coming out of that property, which looks really good. But there are a couple of pitfalls. So number one thing is a body corporate. You know, when you're buying a house that cheap with such cheap rent, you're very exposed to little costs. You know, little costs can impact your cash flow significantly. And body corporate is one of those little costs that is a huge cost when it comes to buying or owning one of these townhouse properties.

But I'm digressing a little bit into the actual ownership of the property. The struggle is when you're buying these properties, they only ever appeal to novice investors because they are lured in by the cash flow, by the price point. So these units achieved very little capital growth because nobody wants them. But when you're selling it, if you're trying to sell it, if you're in a position where you have to sell the property, whether it's personal circumstances or you can't financially move on to the next property, whatever it is, nobody is going to buy it, you're going to have to sell it to another novice investor and novice investors under the same criteria or the same limitations as you were when you bought the property, which is a very small budget. That high cash flow is the only thing luring them in.

Your own personal assumptions compared to what the actual reality of the situation is, can be completely different and Loo sheds some light on this. 

You're only going to be selling that property for the same price, if not less than what you pay for it. And you're in that period of time that you hold onto as well, which means that you're making a loss. Now, using the dual key example property, you know, the only type of people buying those types of properties are investors. No one is going to be looking at that type of property to live in one day. You know, so you've immediately cut off the owner-occupied market completely, which is actually the kind of people you want to sell your investment property to because unoccupied people buy emotionally and when people buy emotionally, they don't really care too much about price, you know. So if you were to sell it to of maybe like a first home buyer that wants to live in the property, you know, and they're looking at their lung capacity, an extra $50K or $100K to them might be meaningless.

It's more of a lifestyle decision lifestyle if they love it, that type of thing. So dual key properties, you know, is another thing. You know, any property with some really odd layout where it's more conducive to creating a little bit of extra cash flow may not be in your best interest, especially when you exit from that property at a point in time. Again, kind of moving on into the whole holding of that property as well. You know, I think a lot of people at least on paper expect there probably to work a certain way during the ownership. But the reality of it is if you, let's say, for example, you have a house with a lot of rooms, you know, and the property you bought is near a university. So the intention is to get a huge cash flow by renting to students.

That's the intention. But the reality is a lot of vacancies. Students moving in and out. A lot of maintenance, not only have you got, you know, eight individuals potentially using one kitchen, using one bathroom, you know, the demographics of students by nature are not going to be looking after this stuff inside. So you're going to be spending a lot of money on, you know, replacing taps and a lot of wear and tear and all that type of stuff. So, and this goes for a lot of these types of properties that have these sort of dual living or maybe any capacity to bring in some short term rental boost. You know, it may not work out how you planned, you know, during the ownership. And what I see is at that point, at a certain point, that's when they want to try and get rid of it. They're stuck, they have to take a loss. So your exit is really equally as important as your entry. Because we know your ability to sell a house in the market is crucial. When you buy something and it goes up in value, you only really, truly realise that is when you sell it.

We gain some perspective on this topic as we hear about one of Loo’s clients and the situation he had on his entry and exit.

Most of my clients haven't actually sold their properties yet. But I did have a particular client that did buy a townhouse in the Logan area and his intention was to sell it, but he couldn't. And now, luckily for this particular client, he had funds to buy another property anyway, but he kind of just wanted to get out of, you know, a bit of a dud property that he initially purchased. 

So what was his reasoning behind purchasing that one initially in the townhouse there? Do you know what his motivation was behind it? 

He was attracted by the yield. It was sold, that particular property, with the yield in mind. And a lot of investors need to be very careful because there are a lot of people out there that are pushing the yield agenda, the cash flow agenda to sell a property. Whether it's a selling agent or a spruiker or any so-called property expert. It's very important to do your due diligence, can you rent it out, will it stay rented?

What are the true costs of owning that property? And again, what's the exit strategy? So for this particular client, you know, initially was lured in by the yields and it got to a point where it just wasn't performing as an investment property. So in order to move forward, he wanted to sell it and replace it with a property that will actually perform, you know, over time. 

What does non-performance look like? 

Non-performance is basically just holding a property that does nothing over a long period of time. You might get some really bad tenants in there, which is actually a lot of the case when you're buying cheap housing in very low socioeconomic areas. You know, the type of tenant that, if it is a low socio area, that can't afford even a house and they have to look at like a townhouse option, then I'm renting to a demographic that is maybe just barely able to afford the rent in the first place.

So again, that would translate to very transient tenants moving in and out. A lot of vacancy periods. You know, a lot of wear and tear, a lot of maybe malicious damage to your property, a lot of insurance claims. So investors, like any rational investor can only experience that for so long before they're like, you know, it's too much for me. I need to either sell it or stop investing altogether. And this is actually one of the reasons why I see most investors, they start off very optimistic. They see, you know, other people experience success and you know, they might be a little bit naive, you know, entering into property and they buy a property or they get sold to a property that promises cash flow because cash flow is safe.

People when they first start off investing, they're kind of looking at less risky options and in their mind, if a property looks after itself with cash flow, then it's going to be safe. So a lot of people take advantage of that. That’s the expectation of new investors. And unfortunately, a lot of new investors fall into the trap. And when this maintenance and vacancies and just headaches build-up, it really puts a damper on, you know, is property investment really for me, or can I really achieve my goals? And they become really negative. And really like you speak to any investor that's reached a certain level where they've maybe achieved their goal of passive income or, you know, quote-unquote success. It's all mindset. It's all attitude, you know, being able to own assets like during the whole ownership period to be able to manage those constant headaches and manage that up and down cause property isn't as it gets painted out to be as consistent, you know, there's ups and downs.

There is more to property investing than meets the eye and we gain some behind the scenes knowledge about what goes into it.

You can have a string of really bad tenants, you know, and it could cost you thousands of dollars, but if you don't focus on the big picture, then sometimes it can really really, really make you question whether it's all worth it or not. I think a lot of people glamorise owning lots of properties. You know, it's all about, you know, living the life and retirement and this type of stuff. The actual reality is, the more properties you own, the more calls you're going to get from your property manager, the more hot water tanks you're looking after, the more kitchens you're looking at, the more tenants you have to babysit.

You know, the risk of having something go wrong is higher. And we might get to a certain level where you're getting a call every week or every other day about a leaking tap, fix the air con. You know, we're recording this in December and I've already had to replace three aircon in my properties because what happens is no one uses them during the winter period and they collect dust, no one looks after them. And then when they turn it on in summer, something's wrong with it. You know, it needs to be fixed. So, you know, little things like that can really put a damper on your property during the ownership period. So coming back to what this particular client does, that's the reason why I wanted to sell because he bought this property with the intention of a really good yield.

It was just way too much for him and he just wanted to get out of it. But when he found out, when it came to selling, he couldn't actually sell it. He couldn't sell it for a price where he didn't lose money. Because don't forget, when you buy a property, let's say you buy a property at $200,000, you know, you've got your stamp duty, you got your legal costs. You know, if you put a few thousand dollars into it to get it up and running, you've got that to add on top. And when you sell it, you've got to pay commissions. You know, there are all these legal costs. Again, all these costs to add to the ownership of a property. And even if you were to sell it for $200,000, so he bought it for $200,000, you’re making a loss. So that's a bitter pill for a lot of people to swallow and that's why having a solid exit strategy from any property is super important. 

So roughly how long did this person have this property for? 

Ït was only a two to three year period. Not a very long period at all. I mean, it really only takes one bad tenant to really undo a lot of the initial intention of what the property was going to play out to be. 

We find out about the current situation of his client and whether he has been able to sell and move on from that property.

It remains to be seen because he hasn't sold the property that we bought together. But what I like to stick to when I'm buying these properties is obviously, you know, like I talked about in previous episodes, are the fundamentals of what makes a good property. You know, the area, the numbers below market value, cash flow, all that type of stuff. But one of the other things that we should also focus on is buying a property that will appeal to everybody, buying a property that will appeal to investors, to owner-occupiers, to any developers. So the houses I tend to go for and the type of house that he bought was a property that's just a standard four-bedroom brick house. It was a corner block over 700 square metres with a lot of lands, a lot of side access that you can put up maybe even a granny flat at some stage or a nice big shed.

The internal floor plan, the house was about 25 years old, which is actually a good thing because back then the floor plan was a lot more generous than they are today, you know, your standard house on the packages nowadays are very, very small in internal layout in the market. So this particular house was about 25 years old. So you know, it had four bedrooms but it also had two or three living areas. You've got a rumpus, you've got a living room, a dining room, you've got like a family room. So what that translates to is a lot of ability to add value internally. X rooms, you know, you can reconfigure and that again adds value. But this is one of those houses that you can plan and see if you were to spend, you know, if you were to sell in the market one day, let's say for example, for this property, we paid, I think it was about $340,000 or something for it in this particular suburb.

You know, it's experienced its capital growth, you know, potentially you could sell it again for $500,000. But it's the kind of property that if you spent $50K on it to make it look, you know, render it to do a bit of landscaping to obviously paint and carpet inside, new kitchen, new bathrooms. You could potentially, every dollar you put in, you might be able to get three back because you sell it. If you suddenly create that appeal to an owner-occupier who is after that kind of thing, you know, like after comfort, after new, after something that they can imagine themselves living in.

And in any suburb in Australia, regional, the capital city, blue-chip, lower socio, you know, www.realestate.com.au, type in the suburb. If you filter it from high to low in terms of pricing, if we're comparing like the same four-bedroom, two bathrooms, two garage house, the newly renovated ones with nice pictures that have been staged, those are the ones that get a significant price. A significantly higher price than the ones that are a little bit dated or they have weird layouts and things like that.             

We delve into how to go about looking for properties that are worthy of investing in but still manage to fit within your budget. 

Using Logan as an example, you know, it's a huge area. You know, there are 64 suburbs in Logan and geographically it's actually larger than Brisbane as well. So within Logan, you've got probably some of the worst areas in Australia, you know, but then you've also got some of the nicest areas in Australia in terms of some really large acreage properties. There are some suburbs that are, you know, million-dollar mark type properties. So, you know, it's important to look at individual suburbs based on their own merits or they're own downfall. You really don't want to buy at the bottom end. If your budget doesn't allow you to buy in a family-friendly, suburban, quieter area, even if it's low socioeconomic, that's not a deal-breaker. But if you can only afford the worst house in the worst suburb in the worst area, my advice is don't buy and just save up a bit more money.

It's not going to be a lot. And to focus on areas that are a little bit livable, you know, have more of a chance of gentrification. Let's say these super-low socio areas don't have that same potential, but it's less likely and it will also take longer.

And ultimately when you're building up a portfolio as well I guess the tenants are going to be crucial to choose. So that demographic is important, which ties back into, you know, the exit strategy. Because if you're buying a property that has good tenants in there for the long term, then obviously if you're going to sell it in the market in the future, you might also have good tenants or owner occupy appeal as well. 

We all will have the intention to reach our goals in the property. But property is a very long term game. Most of the time it's 10 years plus between buying and selling a property. But a lot can happen in 10 years, you know, that are out of our control. So if you're in a position that you have to plan to sell the property financially or for whatever personal circumstance that you're under duress at that particular time, you know, they say properties aren’t liquid, but at least you need to know that you should be able to sell it in the market without having to completely drop your pants on price. So I think it's super important to just ensure that you have a sellable house. 

Loo shares with us what he recommends we should be looking at when buying a property that will ultimately help on exit. 

Unless you're getting a bargain, you should buy a property that is not super polished. Because think about it, when you're buying a property that's not super polished, you're buying a property at a not polished price. So there's more of a chance that you can pick up a good deal, an ugly duckling on the way in. A cosmetic reno does not cost a lot of money. I think people watch too many television shows where renovations cost hundreds, thousands of dollars, and it might do so in your personal house to live in, but you know, even just $20,000 can go a very long way to spruce up a house completely. So look for that potential where you can put in a dollar and get three out when you sell. 

On the topic of renovation, Loo talks us through some of the specific renovations that can add the most value.

From a pure investment perspective, the number one thing about a renovation is keeping the budget down. It's not about the way a certain thing looks. You can make a house look very, very presentable on a very small budget. It comes down to actually investing as a whole. Just don't get emotional about it. When I say don't get emotional, you don't need to buy the $400 tap. The $50 tap looks just as presentable, from a selling perspective. Don't forget when you're selling a property, most people just view the property.

They don't even spend half an hour looking at the property. We'll go in and go out and then negotiate and then they end up buying the property. So it's all about first impressions. So keep it clean, keep it tidy, keep it simple, keep it neutral, don't do anything out there. Don't do anything a bit weird. Just stick to neutral colours. Look to save money. A really good example is kitchens, you know, instead of buying new cabinets, can you refurbish the existing ones? If you've got a burnt countertop, can you send it down and recoat it. Bathtubs, you know, if it's old, you know, instead of replacing it, can you just paint over it?

So little things like that make a big difference. Is there anything you can save? So if you have to replace a shower or you want to retile the shower, can you keep the screen? It might be in full working order. So don't go over the top, keep a budget in mind. And you know, do what's necessary. There's no need to, I mean, it really depends on what area. Obviously, if you're renovating somewhere like a super blue-chip area, then you kind of need to use the same kind of standards of fit and finish. But most of the time when we're talking about investment-grade properties, simple is best. 

Like light fittings, changing light fittings can be a huge thing. One of the biggest differences that I see with kitchens is just simply changing the doorknobs, the knobs to the wardrobe. If it's like an older style one, if you just, you know, go out and buy some like, you know, $4 ones, things that are a nice sort of modern brushed aluminium kind of look to it. That can completely change the look. So look for those tiny little shortcuts that can make a huge difference. 

Making the slightest difference with a renovation can have a huge impact on the perception of the house in the tenant's eyes. 

I'm always on the philosophy that you shouldn't spend too much money before having a tenant move in because a tenant will never look after your brand new paint, your brand new carpets. Actually that's a really bad assumption on my behalf. I apologise to all the tenants out there. They're just not going to, I mean, you're just going to experience wear and tear. Even with the most careful of tenants, you know, you're going to get your walls, they're going to be bashed around a little bit. They're going to be scratched, you know, you're going to have the bed marks on the carpet and the couch marks and all that type of stuff. So you know, I always just keep the property in a rentable safe, tidy, presentable condition. And then when you plan to sell it in the market, that's when you want to spend the big bucks to make it look complete.

Even with paint nowadays, I paint the rooms individually. You know, a lot of people when they say paint, they think about painting the entire house. There are some marks on this particular room. Looks particularly bad. Just paint this room and be done with it. 

This is a very interesting conversation, but I think it was kind of important to just to give people an idea because when you are looking at buying, you also want to consider that exit as you've mentioned as well too. Is there anything else you want to add about the exit strategy if you're looking at, I'm looking at buying as well. 

My only suggestion is just don't get lured into, you know, over-promised cash flows and don't step outside of the norm if you're talking about residential, stick to residential. Think about what most people want to live in, what they want to buy, which makes it good property. Just stay away from the absolute cheapest, you know, bottom type properties.

This episode was produced by Andrew Faleafaga with narrations and interviews conducted by Tyrone Shum.

One of the many changes in property investment over the past decade has been the increase in borderless buying.
By borderless, I mean buying in a State or Territory other than your own.
Some of the reasons for this include increased education about property investment generally and, finally, the recognition that Australia is a country of many property markets, often operating at different phases of their respective market cycles.
Indeed, according to the Property Investment Professionals of Australia, about 45 per cent of investors are looking to invest outside the state they live in this year. It is important to know the detailed risks analysis and buying strategies for interstate

However, buying somewhere unfamiliar is not for the uninitiated.

So, here some of the dangers of going it alone.

1. Buying sight unseen

Some investors wind up buying sight unseen because they physically aren’t able to inspect the property in a location that may be hundreds or even thousands of kilometres away.
Of course, this is always a terrible idea, as we all know that photos of anything on the internet are often not what they seem.
We invest interstate for clients every day and our team include experts in a variety of locations around the nation that inspect potential investment properties.
They are able to provide feedback on whether the property is worthy of an offer or should be immediately shelved for the next opportunity.

2. Flying visits

Depending on where they are buying, some novice investors jump on a plane to attend half a dozen or more open homes on a single day interstate.
They rush from one to the next, without really having time to take a breath or inspect it thoroughly.
On top of that, if they’re investing in locations where there is plenty of interest, they are likely to have missed out on the property by the time the first open home is even held.

As professional buyers’ agents, we have close relationships with sales agents across the nation who give us early notice of any properties that are coming on the market.
That way, we can determine whether they are a good fit for any of our clients before anyone else knows about the property.  

3. Not understanding the area

Another danger when buying interstate is not understanding the local market or the area.
In every market, there are good and bad locations.
Some pockets might be gentrifying while others, a mere few streets away, have a high proportion of housing commission properties, which will always keep prices lower.

Newbie investors who attempt to buy interstate often start with a general concept of, for example, “I want to buy something in Brisbane.”
Then, almost like a game of darts, they cast the net over the whole city, which actually has nearly one million dwellings.
Often, they wind up buying something simply because it is within their budget without understanding whether the location is primed for growth or is more likely to flat-line.
They also might buy a property that is in a flood zone or has high-density zoning, which means it will always struggle to produce above-average capital growth.

So, as you can see, buying interstate isn’t a strategy for investment beginners.
However, it is a strategy for investors who recognise the myriad market opportunities available around the nation – and who recognise that working with experts is their best chance of maximizing them.

With markets firming in many locations around the nation, some novice housing buyers and investors are searching for properties with low price points.

Unfortunately, this often means they are selecting properties and locations purely because they “seem” affordable to them.

In reality, often this means they wind up with an inferior property in a second-class location that will always be cheap.

That’s because there are big differences between cheap and affordable properties.

Here are three ways to differentiate between the two.

1. Cheap will always be cheap

When a property is listed for sale at a price far below the norm in a particular location it is usually because there is something wrong with it.

Now, this could be that it has significant structural problems, which sometimes can be remedied.

Most of the time, though, it’s because its location is a bit on the nose – meaning on a noisy main road, next to a train line, amongst an abundance of housing commission homes, or perhaps even abutting a petrol station.

While you can generally remedy dwelling problems, if not too significant, you can never change the physical position of the block of land that it sits on, which will always have a negative impact on its price.

• Affordable price – for now

The number one reason why a property can be classified as affordable is generally that its market is the same way.

This doesn’t mean that it will stay that way forever.

In fact, its market has all of the fundamentals that will likely see prices growth strongly over the medium- to long-term.

These capital growth signposts include such things as a strengthening local economy with jobs growth, gentrification, major infrastructure, population growth as well as more demand than supply.

At present, specific locations within Greater Brisbane are firmly in this basket in my opinion.

One of the other reasons why property prices are affordable is because their price points are vastly below the “norm” in Sydney and Melbourne, yet wages are not that different.

Of course, that is one of the reasons why hundreds of people are currently migrating away from southern capitals to the Sunshine State capital. 

• Good suburb, bad pocket

To make differentiating a cheap property from an affordable one even more tricky for the uneducated is the fact that they can both exist in the same suburb.

A particular street, or streets, may be seen as more desirable than others, perhaps because houses have been renovated or they are within particular school zones.

Houses in these locations, therefore, are affordable to the people who want to live there, which helps to drive prices higher.

Conversely, there could pockets not far away that have properties priced for hundreds of thousands of dollars less.

Novice buyers and investors falsely presume that being relatively close to the suburb’s “glitter strip” will result in their property rising in value to the same degree.

• 

This is unlikely to happen, especially if their pocket is a bit “warty”, such as having excessive traffic noise, it falls outside a well-regarded public school zone, or it falls within a zone that has been earmarked for future transport infrastructure.

Expert buyers agents understand their investment locations intimately and know the good pockets from the bad.

They understand that while dwellings can be updated, its physical location within a suburb will be the main difference between inferior or superior capital growth in the years ahead.