Daniel Walsh is a property buyer’s agent and founder of Your Property Your Wealth. He has years of experience in helping his clients explore and find the best properties for their portfolio and is kind enough to share some of that knowledge with us. He is here to answer the questions that you want answers to the most. 

Join us as Daniel Walsh answers your burning questions and gives us his expert advice on various aspects of property investing. We delve into how to add value to commercial properties, how to overcome fear from previous mistakes and losses, why you should be looking to invest at an early age and how it can set you up 40-50 years from, and much much more!

Let’s get started..

The first question is, I'm a 63-year-old former self-employed married man. We have a home worth $590,000 with a $200,000 mortgage and an investment property, which is a factory, worth $1.25 million with an interest-only loan of $530,000. It's rented out at $78,000 per annum for 10 years with a 4% yield increase. I'm finding it difficult to get employment. We're thinking of selling our home to buy a $400,000 place and I'm wondering whether to sell our factory and invest the money or keep it and live off the rent, which could be potentially $49,000 per annum after interest. What should I do? Phil.

We were just talking about this before about locking in the price and he's done well obviously from this factory. He's actually got an asset that's already creating passive income. So he's got $49,000 after the interest. So it sounds like he's already got passive income. He's 63 years old and he’s thinking about selling it. So he's already done the hard yards and now he's going to sell it. I always say, you know, if you've got an asset, something like that's actually creating new income, it's something you should probably never sell. And that's just because it's going to be very hard to be able to get that income back. So, and he's got the 4% yearly increase, he’s actually increasing his wage by 4% per year from that factory that he owns. So I think, you know, if it was me, I wouldn't be looking at selling the factory.

He is obviously struggling to get employment, so he's going to need income. So the $49,000 is the income. At least he's got some good income coming in. If he's not working in terms of downsizing his house, I mean, if he's happy to downsize his house, that's the way that I'd be going. He can free up some capital and pay off his own home and buy a house that's smaller. You know, and be able to own the house outright and then have the $49,000 coming in to live off. That just means that if he doesn't get a job or he, you know, he's not earning as much money as he probably once was. He's going to be in a scenario where he's debt-free on his own home. Yes, he's still got a debt on the factory, but it's producing him income after everything.

So if it was me, I would be looking to downsize my own house, get rid of that debt and continue to keep that factory, increase the rents over time, see what I can do to get that rent up. I mean, I wouldn't probably be still investing in buying more and more because of, you know, his age is going to be very hard to borrow at that point. So I think I'd be looking more so how can I maximize the position that I'm currently in? And I think selling down that factory would probably be a wrong idea if you did that way.

This is the thing that I'm going to mention here as well, is that there is potential with your existing assets to do something with it. And what I mean by that is that he could look at potentially, depending on how big the factories or what it's currently got in there, what kind of tenant, if he can actually somehow split the factory into something else, such as maybe having an extra office in the back or maybe there's extra garage space and rent that out, he could add additional value, therefore adding additional rent to it and generate more revenue. Because I mean at $78,000 a year, that's substantial. It's quite good. But you know, potentially if there's an opportunity to develop the property. You can easily bring it up to maybe a 10% return, which would be about $125,000 now, I don't know how the factory looks but I'm guessing, I'm making assumptions here, is that there is an opportunity here because it's a factory, you know, there's probably plenty of space.

So I would go in and renegotiate with the tenant when that comes up to see that they can actually get some free space that he can do some kind of development, add additional revenue to it in addition as well. Depending on your home, there may also be some upside there too to add some renovation and to get some equity out of it as well. So, you know, rather than looking at downsizing, maybe you might have that extra space and you can rent it out. So opportunities there that I think could be well worthwhile to look at unless, you know, cause we don't know the exact situation behind it. But I think definitely to explore these options to save, they can be value-added to these properties that you have.

You don't want to be jumping the gun and selling something until you know you have a sound strategy at the end of it. And especially something like a factory unit where it's already giving him income. You know, like you said there's plenty of opportunity may be there to look at how we can increase the income from the assets we've already got. Rather than selling them down because once you sell them, you then need to look at where are you going to invest the money next, then what return will you get there? He's doing quite well and I think that you know, if you can look and explore those different options, you know, opportunities that he may be able to have in front of them, I think that that's definitely a good option for him going forward.

I actually want to add one last thing because I talk from personal experience. I have a commercial property, which intentionally when I first purchased it, I just wanted to get the revenue from it, like the rent coming through. After exploring, speaking to various town planners and also builders and so forth, they said that I could actually develop the property and add a few more units in the back because it was a free block of land plus I could build up as well and built it aside. Now, if I didn't do that research and ask, I wouldn't have known about that and therefore would have potentially missed out on some extra revenue there. So there's no harm in just going out there and having a look and exploring it. And now that I've discovered that, I can also add more, I think I'm going to be able to increase my revenue for about an extra $500 on front and then another $1000 on the back, about $1500 extra per week because I just did a little bit of research.

Obviously there's going to be cost involved to develop it, but you know, that extra revenue and that income. You know that that's going to definitely add an increased value of the property and therefore you could potentially draw the equity to invest into more properties down the track. So just an example like that is possible and I'd say just explore it first. So the next question I have is from Mary. She says, help! We are in our late thirties with two kids under four. My husband is on $100,000 and I'm on $70,000 per year. The mortgage is $130,000 on a house valued at $500,000. We have no savings and we have a couple of credit cards, they are paid off each month. So here's our problem. We don't fit in our house or our cars, so we need to upgrade. We could subdivide and build a two-bedroom house for $250,000 but we've lost a lot of investment properties in the past, over $100,000 and are scared we would make the same mistakes again. What should we do?

You've got to take into account that they want to, I mean they've got another block at the back of this house. So they are looking to expand and build a second dwelling so that they can live in both of these dwellings or are they looking to sell one of those to be able to go in the back? I guess that's unknown. But it really depends. They obviously want to upgrade. They need a bigger house overall. So I'm not sure what the front house or the house that they've currently got is in size. But it depends on what they're looking at doing. If they are going to go the way of selling. Firstly what I would be doing is saying, well they've already really acknowledged that they can subdivide, so to add value to that property, at least go get the DA approval. So that if you do go to sell that you can sell that with a debt approval and maximize your position on the out. So meaning that you're going to get the most value out of that property before you sell it because a lot of money is left on the table. If you don't go through those hard yards of DA approving it, especially if you're going to sell it. So I would be looking to do that if I'm going to sell that property and upgrade. What do you think?

Totally agree. That's the thing people will really underestimate even though it may sound like a lot of work and all of it is unknown. You know, if you haven't spent a bit of time understanding how developments and subdivisions work, it can be a complete black hole there and you can spend a lot of money for getting a very little return. So again, the first thing is probably first to educate yourself on how this all works. Understand what the process is for sub development. So our subdivision, before you go into any of this, cause it is considered a little bit of a property development strategy. I wouldn't say it's advanced, it's not too hard. It's probably sort of a medium strategy that you could get into. But you do need to spend a bit of time educating yourself.

If you're stuck on that. I'd say just probably speak to a lot of town planners and get a few quotes around and get guidance from them because they're going to be the experts knowing what's possible and so forth. Obviously you know that it can be subdivided. So I would start finding out roughly how long it's going to take, speak to council, what's the requirements, speak to a few architects, a few town planners, and get some quotes. And then from there, you know, make an informed decision based on what's going to be involved in this whole process. And by the end of it, if it works out that we can subdivide it and build a two-bedroom house and still get a good return by renting them out, then it's definitely worthwhile to actually keep it. I know there's possibly some fear and you're worried about making mistakes.

Yes, mistakes will come and are going to occur. But I think at the same time you'll build up that muscle and that strength, you know, to help you do this in the future because ultimately investing in their property is going to be a skill that everyone will need to learn. It's not something that you are brought up that you know how to do. But you can minimise that risk by seeking out really, really good professionals and surrounding yourself with a team and that's what I think is going to be key for you to do. Coming back to the strategy of what you want to do, you know, if you want to fit into the house or you need to move out because if you've got more cars and so forth, then maybe consider renting for that period of time and renting out the front house that you've got there and doing the subdivision so that that's possibly another option as well. What do you think?

It all comes down to the state that they're going to be doing this in. You know, I know that in Victoria we've done subdivisions there and DA approvals cost between 15,000-$20,000 where we've been able to build townhouses to the rear of properties. So it's a misconception sometimes on how it's going to cost to be able to DA property. So you've really got to look at it and explore those options. But it's vital to make sure you have your architects, your town planners, and you have the right team on your side before you jump into it. Because what happens is often people say I can subdivide, but they don't actually do the numbers on is it going to be viable to subdivide? And that's the key thing here, not just because you're subdividing, just because you're developing.

And I know a lot of people think that that's, you know, kind of sexy at the moment where they're developing and they're doing all these different things and that's what they want to go down that track. You've got to look at it and say, is this going to be viable to do this? I've seen a lot of times where people that are going to say, let's say they're going to do development and sell the development, it's actually more viable to do the DA and sell it at a premium than it is to do the development. Especially if you don't have the contacts, you're not doing it every day where you know you're going to have to pay someone to manage that project. As a project manager, it's going to cost you more than say a professional developer at that point. So it depends on how much or how far they want to go down that track.

If they're going to keep them and rent them out and then leverage the equity to buy their own home, they could definitely look at doing that, living in one DA approving, building the next one, and then maybe even moving out of it and keeping them as rentals. They could look at doing something like that. But you've got to really make sure that the numbers stack up before you do it. You've got to make sure you have your contingencies in there. So you're across everything before you even literally put down the first dollar and start doing the process. You've got to make sure that you're over every number.

My suggestion to add onto that is to have three possible exit scenarios rather than just focused on the one because at the moment we're looking at one scenario for you and possibly two. But I'd say sit down and brainstorm what are the potential three different scenarios and we've kind of already helped you with two and maybe see what the other options are for the third one. Write down, compare them and do the numbers on each one and then see which one works out for your scenario. Because ultimately if one scenario doesn't work or one extra strategy doesn't work, then focus on trying to figure out the elements that will work. So you've got fallback plans and that's the way we can always mitigate risks because I understand that from what you're saying, you're worried about making the same mistake to mitigate any mistakes. You've got to make sure that you have as many exit strategies as possible because if one doesn't work, at least you’ve got fallback plans to, you know, work out and I think at the end of the day with any type of investment into property or anything, the way to mitigate risk is to make sure that you have all the facts in front of you, you’ve done your due diligence, making sure the numbers stack up and so forth and seeking the right team around you as well. 

I was going to say I think with that as well, making sure before you even do anything, go to your broker if you're going to go down that track of, I do want to develop it, I do want to add something to the back of that. The very first thing I would do is go straight to my mortgage broker or straight to the bank, whoever you deal with at that point, making sure that they're all over this sort of stuff and saying, what is my serviceability? How much can I borrow? Can I actually get a construction loan and can I do this development? Because it might be viable, but you've got to make sure that you can serve it and you've got to make sure that you can get through it to the other end.

A lot of especially small-time developers, they've done it once or twice and they end up going broke because at the end of the day, you know, they can't get the loans or they can't get it across the line or something goes wrong and they haven't had the contingencies that they should've had. And then next minute they can't actually complete the development. So making sure you can complete it if you're going to do it and making sure that the third thing you do is you go see what's your serviceability like and can you complete it from a finance perspective?

We've given a little bit of insight into that and hopefully, Mary can reduce the number of risks that she possibly could go through. So let's take a look at the next question. This is an interesting one. A few years ago I bought a house and was taken to court. I won the case but was left with the house repairs, bad debt, and also $157,000 in lawyer bills. This has been putting me in $500,000 in debt with $120,000 in a loan at 10%. I'm 51, married with one 23 year old who's moving out in a few months time. Should I sell the house and walk away with $50,000 considering I earn $2,000 per week after tax, am I better off cutting my losses and starting again or should I look for another investment to somehow offset this? Thanks, John. 

One of the big things is how we don't know what his equity position is. So looking at, you know, can he leverage out or can he salvage I guess the investments that he has now. He's obviously paying $120,000 loan at 10%. So that's quite hefty there, that's going to hit the cash flows. So it's one of those scenarios where we don't have, I guess the full story on it. But by looking at the cash flows, what I would say is, firstly, I'd look at the overall cash flows on what does it cost you per year in terms of the loan and the debts. Is it going to be better off to just reset and sell everything and reset and start again instead of having a 10% loan, you can then be going back down to threes and fours.

So I think it depends on what the overall cash flow scenario is at that point and then looking at how long is it going to take him to get to where he needs to be. So looking into the future, the next 5, 10, 15 years, if he keeps going down the scenario of paying the debt, where's he going to be at the end of this if he holds. Or if he does sell everything and he resets, can he then, you know, save up some money, get back into that position where he can go out there and start buying investments and start getting back into the market and reset everything with 3 to 4% interest rates instead of say 10%.

Factor in also the costs as well to sell because that's the other thing that may also hit the total income that comes back down. And also to take into consideration that it's opportunity costs. So as Daniel said, if you do sell, the opportunity costs that you could potentially put that money back into might actually be a better option. Now as we don't know the exact numbers, I'd say run the numbers on both scenarios where you don't sell, how much is it going to cost and say after 10 years what's it going to be potentially worth. And then the second scenario is if you do sell, how much would you actually get back that you could potentially reinvest in the future?

The scenario that he's in now, if he doesn't sell, can he continue to build his asset column while, you know, over the next 10 years while paying these debts? Or is he in a position where resetting and starting again and actually getting himself back on board in terms of you still have $50,000 obviously at the end of it he reckons. So if he can get back on board and start investing all over again, will it be in a much better position to accumulate assets over the next 10 years? Whereas he might be just treading water the way he's going for the next 10, so you've got to look at the position and say, am I going to be prospering in the next 10 years in this position if I continue to pay down this debt and stay the course and can I keep investing? Which it sounds like it would be quite hard, you know, with 10% loans at $120,000 or do I reset and then get into a position where I go, you know what, I'm going to knuckle down, save, I'm going to put more money away and I could actually then build my asset column up over the next 10 years to get myself back into position.

I'm going to also sort of be a little bit brave as well too and put my point of view out there. Now whether or not you agree with me, John, this is my point of view here. If I was in this situation and I had this property also with repairs and all sorts of things as well, I would probably have this lingering over me for a while and just thinking, okay, it's too hard. So I would probably go ahead and try to clear this out by selling it. And I'm obviously trying to get some tradespeople just to repair it before you put it on the market and sell and then just start fresh because having this on my mind and just having this experience on my mind of having such a big bill from the lawyers and so forth, it would probably tarnish me from wanting to invest any more in the future so that that would be sort of my path.

I'd go down and start fresh and then get more assistance and guidance from a team around me to find good investment properties that will help me without, you know, having to go down a path like this. Again, this is a learning lesson and I think a lot of people would appreciate it and being honest that you've actually shared this with us. I really, really want to just say thank you that you've been able to be open about this and it's a good thing that I think we can all discuss and try to see how we can help you as well too. Let's take a look at another question. The next one is from Sheridan. She says, I'm 23 years old and in my second year of working as a full time registered nurse, I received $65,000 gross a year and I salary sacrifice up to the cap per year, which is approximately $9,000 for rent and also living expenses. My question is, should I salary sacrifice more into super above the compulsory contributions or should I invest into a property? This would be my first one as well.

Sheridan, I guess this is actually a common question that I come across actually where people do salary sacrifice, especially at young ages. And they're putting, you know, the maximum amount they can into super. I'm an advocate of I want my money now and I want it to be working for me now and locking it away into something that's unknown, that I can't control, and I don't even know where the rules are going to be in the next 30, 40 years isn’t what I like. I don't know what's going to happen with my super. I feel like I don't have any control over it and I'm going to have to wait too long and I might not ever even see that money. So for me, I would always like to control where my life is heading. So when you look at it, let's say that you're to be, you know, you can get into a position where you can buy your first investment property.

You could start to leverage and build more investment properties. You could potentially retire in say a 15 to 20 year period, but if you go down the salary sacrificing, you're going to have to wait another 40-45 years until you can actually access the super that you have. So you might not even make it to that. You know, you might be salary sacrificing all those years and might not even make it there. Or we don't even know if you're allowed to access it at 65 or 67 at that time. It might be in the 70s before we actually get to that age. So for me, I think controlling my own future is what I like and being able to control my own assets so that when I get to that point, you're going to have super anyway, you're going to have the super that when you retire you're going to have a nest egg there, but maybe build something outside of that so that you have property and you have the super so that both of them are working for you, but you can actually retire as offering the property much, much earlier because you have access to it now.

So that's probably what I'd be thinking is, you know, let's control the assets now, let's control my money now. How can I get myself out of the rat race? How quickly can I do that rather than, you know, more so being scared about how am I going to retire in my seventies I think, you know, let's retire in your thirties and forties rather than seventies.    

It is important to be looking forward and ensuring that your future is set up in the best way possible but you can take control of that now by making smart investments rather than waiting for that money to come to you. 

Your age is going to determine what you should be doing. And I think being so young and not having access to this in the next 10-15 years is vital to sort of make up your mind to say, you know what, I have so long to wait before I can even access this. It's a different story if you're already 55 and you know that you can be putting money away, salary sacrificing, you're going to get it in the next 10 years. You'd know your exit strategy. When you're so young you don't even have an exit strategy. It's not an exit strategy. To me it's more so just put it in there and it'll go up in value, but there's just no strategy behind what you're trying to achieve at the end of it.

Obviously you want a higher super balance. You want to be able to retire well, but how about the quality of life in between that next 45 years? What happens if you get yourself into a position where you're very comfortable with three, four or five investments in the future where, you know, once you get to your mid-forties you go, you know what, I've actually got enough financial security that I only have to work part-time. Is that not a better quality of life over the next 45 years rather than having to wait it out to get to your, maybe mid-sixties and early seventies to be able to actually access that. And then who knows? By then your health might not even be able to get you there. So I think it's really, you know, depending on your age is what you should do at that point.

But I think being really super young, I think that you could actually be buying assets now that you can control that are going to compound over the next 30-40 years and your wealth will be able to compound. Remember you can leverage up to five times in the property. Your dollar goes five times further by being able to leverage your money and you could buy it. You know, even a $100,000 deposit could buy you a $500,000 house. Using the compounding interest over time and leveraging yourself five times so that you know that you're going to create more wealth over the long term. So I think that it really comes down to your age at the end of the day as well.

I guess when you look at it from that perspective, if you're investing in your early twenties which we're starting to see a lot more people even come through here where they are in their early twenties investing, people look at it from a risk perspective. You have next to no risk because you have the next 40 years, 50 years ahead of you. So you can minimise that risk because you're thinking long term and you say, you know what, I can buy an investment property. What's the likelihood of it going down over the next 30 years? It would have to be next to zero in my opinion. So you almost got no risk associated with it. I see more risk when somebody is in their mid-fifties trying to do this right because they have a time limit. To be able to achieve it in your 20's you're out there just grabbing assets, accumulating assets that are going to make you more wealthy in the future.

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

Jill McIntyre is a property and life coach that has years and years of experience behind her when it comes to getting out of her comfort zone. She gives us some of her expert advice on how we are able to grow as a person if we push ourselves outside of our normal limitations.

Join us as we delve into the topic of getting out of our comfort zone and how that will help us grow, how taking smaller steps in the early stages will eventually lead to us being able to take a larger leap, strategies that can help you build up your confidence to push the boundaries of what you thought was possible, and much much more!

McIntyre talks to us about an example in her life when she was pushed out of her comfort zone. 

Getting out of that comfort zone, I think if I look back when I was struggling many, many years after my husband died and things seemed to be a mess around me for a long time, it was a bad, a different way of thinking that I had to incorporate how to move forward in life. And the big thing was I didn't have the tools back then or there wasn't the support system back then to do it. And so little by little, we take on little snippets like this mindset Monday jar of what can I take away from this mindset Monday that's going to help me win on challenge or I need to get out of my comfort zone and to move forward. And as time's gone on, it doesn't mean that I don't even at the level of where I am today.

And I'm sure you're the same. It doesn't mean to sigh with continued growth. We aren't continually having the bowel rise to rise above and move forward in what we do, what we're passionate about, which report is coaching for Navien property mindset and helping other people. But there was even at the moment I'm doing a childcare centre with a couple of good friends and we're, the three of us are in it. And it's interesting because all of the boxes are ticking or were ticked or attic for getting approval. And because we had an icing objectors along with the wide that came along. And now that I didn't want to charge a case into the, yeah, we went, ended up going to a full council healing and that became very political, very emotional and we were picked on the past. And so now we're heading to the cut in March.

But this comes back to the comfort zone. When the three of us all came out of that meeting, it was not what we expected because we ticked all the boxes. We took pants with boxers, we'd done all the things that we should have done according to cancel and getting out of that comfort zone very much that I work that I wasn't feeling comfortable with walking out of that place with the decision we are all was, but it was out of my hands. So I'll have to start to introduce what was I going to do to move forward because if I didn't get out of my comfort zone of while it was really uncomfortable zone. But this is where we stay when things aren't working for us. If I didn't bring in a different way of thinking [inaudible] I would have still been doing over that days and days later and all I can think of is I pay, we've got all of the facts lined up, what are we going to do now?

So they're actually, I do a shift when I'm challenged about knowing that I've got to move out of the comfort zone, but also there's a big part of me that doesn't want to move out of my comfort zone. I automatically put it in, okay, this is the problem, what's the solution? And then once my mind goes into a solution node, it is automatic. And that was a hard one to take on years ago when I was really struggling mentally, physically and emotionally after my husband died so many, many years and matured, didn't were having their own nightmares along with all of these sorts of things too. We've got to really keep on coming back to us being in control of their own mind that is going to flip a situation of growth or something that's not working. And usually, it's to get out of their comfort zone, which product? An either discomfort Zion, but we don't realize that at the time.        

We find out about her situation with VCAT and some of the potential roadblocks she is facing with that. 

Just for those that are listening in, they cat am in Melbourne and they cash is the Melbourne entity of the higher pass and cancel in niche whilst in Queensland. It's called the land environment court. And it's not a cheap exercise to go there. So just that's a little bit of background on the side time of what we need to do there. So coming back to what was your question about moving out of our conference zone and more what were the things that challenge me?        

What were some of the things that were challenging?

At the time, yes. The young fan of solver too. We had all the boxes ticked and obviously there's been lots of things through life. Every one of us and for Mary with, with, you know, going through the last 20 odd years of the ups and downs of, of, of growth and things with my children and coming out the other end, there have been lots of things that I feel haven't been fair and the decision, the indecision wasn't fee. And I'm sure a lot of people listening in can relate to what I'm talking about, but there have been things happen in and around them or in the work environment or with properties or with things that people have seen that haven't been fair. The app com didn't go according to habit. It should have gone for my perception because we had all the boxes tick say with, with our, our decision here.

And so automatically the old experiences that I'd had that had created the unfairness automatically popped up again. It's like a pinprick of something that happens to us 20 years ago. You know, I, I don't know, some of you probably we had a franchise business and my many years ago when after my husband died because I needed to get out and make more money and property wasn't on the agenda at that age. I'm getting into the franchise business. It was just something else are passionate about. And I had, I taught Britt miking and DH or these product cooking situations with our very big retail shop. And from day one we were taken to the cleaners by a franchisor, and within about three years, I was between a rock and a hard place. I couldn't move forward and sell a business because there's no money, never taken any money out of it, of any grudge shakes.

I couldn't pull out and just say that tape because I had a method, I have a draft, I was up to the naked did. And so father this banded together and approached the ACCC to come on and work with us on unconscionable behaviour against the frame shots or, and this really rattled not cage Todd and big-time because it was, went for 12 months or so as they put any litigation. And the bottom line with all of this was I had to get out of my comfort zone. Well, I wasn't getting up to, I was out of my comfort zone. I was feeling distressed and I was broken into twice by the franchise owners and lots of things that I felt were so unfair because we were doing all the right things. The bottom line was that it took so long to take us on because I've never ever contested a franchise before, but we won that case for unconscionable behaviour.

And that law is now in place against other franchises that can go and support them against their franchise ores, which is a plus that's come out of it. But what was left with all of that was a shattered deal. Absolutely shattered. I had a filter and saw the plug had been pulled out from me. I felt how unfair all of this was, and I think it's unfair, even with what we were doing at childcare and going to console it, just pushed that sign button. And that franchise was 25 years ago, shot something 20 years ago or something like that a long time ago. So we don't ever forget the pine. It keeps on coming up in other things that are similar, but we do learn to manage them differently. We learn to cope with them differently. And as soon as that decision came up with the council hearing, that same button was pressed at the young fairness.        

Those were some amazing stories that McIntyre shared with us. She shares with us why it is important to actually get outside of your comfort zone. 

Everyone that's listening to this podcast I'm sure will be thinking about, this isn't right. I need to earn more money. I need to really step up in property or I need to go and work on a different approach work. We are continually challenged with things that are happening and what we do is stay in the same position with everything around us putting up with us because we don't know how to get out unless we fall in AYP or do us, you know, pump and get in good. And if we could think of things logically and work through, okay, this is where I am at the moment. Use our need to earn some more money. And that's what challenged me all those years ago. It was the surge that I needed to bring more money in as a single parent back then to help and support my very young children.

And so when we're challenged, you might be happy with an outcome that you've got at the moment if you're listening in to this and they might be, yes, I want to get into property more. It's certainly the vehicle that I can relate to. What are you going to do about it? And it's all right to think, yes, I'm in. You use it. Resolutions, whenever they come around, I'm going to make more money. She and I are going to do something. But what physical strategies have you put into place? What action plan has taken? And to do this, we've got to change our habits. There's no doubt about that. To put it into our dye. And you and I have both been talking about this earlier before we started, how you start your day off and having time an hour or so in the morning jobs for you to work on your mindset and to your head and the [inaudible]. Yes, I do it every morning as well. And if we don't have a plan to work with, nothing's got to change. But we can have that plan button, this takes action with that time a punch. Useless.

Having a planning place is really, really powerful and important. But as you said, without the action, and I think the biggest issue is that a lot of people have roadblocks just like myself. And I asked myself what or who could be holding us up, holding us back from taking that action and it'd be actually good to talk about that because maybe understanding that subconsciously or understanding it consciously would help us breakthrough that and get out of our comfort zone.

It's interesting because I had a coffee with a person who got in touch with me on a couple of days ago. We went out and had a coffee. He was interested in coming on board and, and, and being coached by me. And when he went through the number of ancient Asian people that he had bought their product with property, at the end of the time when we're having the coffee and we were talking further, would I be correct? He has done a lot of property workshops. You have bought a lot of packages. He said, yes. I say, well, what, why haven't they been successful? Or why haven't you been successful in property? And he shook at me. And the big thing is we get the adrenaline going when the person who is selling a product, they tell us all the benefits, benefits, benefits to us, the adrenaline chai, we get excited. Wow, this will be good. When I can do this by buying the product, the product probably doesn't even get open for about 80% of people. We then go ahead and yes, the next 10% we'll do something while I'm truly, but it's only about 1% that will be really successful. So what do you see in gradient? She that we need time with what we're doing in moving forward. Don't spend money because something sounds exciting if you're not going to follow through with it.

Is that a good way to think about angel money? Did it in your pocket or someone else's if you're not going to take action. And action means getting out of your comfort zone, starting Shea to ring IgE and some Nick and quarries. Then follow up calls with them, awake light and then awake. Lija hi, my name's Jill McIntyre. I rang you awake. It does. This is my strategy. Have you got anything in the area? It's about you having a plan, not just doing it once and then expect to get a real estate agent to ring you back. That doesn't happen unless they are really, really proactive and a hungry.

That doesn't usually happen, most of the time we have to follow up ourselves.

If I ring them up and I also follow it, if I went round and met someone and yes, I wanted to work with them, I would certainly send it with a follow up with an email. My strategy is buy/reno/subdivide/sell for example. I'm cashed up, I'm looking for a quick fix deal in the area. I'm looking to do a number of them. I'm looking for a motivated divergent to work with. End of story. Can I keep in touch with you? And then a week later I would ring him again.        

It’s so important to be consistent and create that habit within your life and once you do that it becomes a normal action.

It's creating a habit and it takes 66 days to create a new habit. First of all, we've got a plan on what we need, which is the habit to change that. The first 21 dies of that hybrid of the hardest because our ego was fighting against it at time. Restraints in, in our old life, are fighting against us. We haven't got the motivation. We haven't got the fire in our belly to get out of our comfort zone. They have to be a foreign belly or there has to be reasoning why you are going to push through your pain barrier, comfort zone, and there has to be a consistency that goes with it.        

A lot of people often think about diving into property investing but never actually take that leap of faith, we delve into some of the steps you can take to finally break out and dive right in. 

What we've tried to, you know, it's funny when I faced start with a con also I'll work on, I want to know the overall of where they are in a preliminary assessment and I'll look at their goals and they wrote, my goal is to make $5 million by the time I'm whatever age, which is, you know, two years ago to use a buys type stuff. And if we, yes, it's good to have a big goal or something to work towards, but I very much believe in the drip system. If we can start small and build a firm foundation that then takes us all the way forward for what we want to do. If we don't have that firm foundation, we lack confidence because little by little, a lot of you listening in or B sign years, but I don't know how to move, meet other people.

I haven't gotten any money. How can I find money partners? And I don't know the first thing about property other than I live in one. I'm taught stuff and we are going to start a, what are you going to do? And all of your podcasts are a fabulous energy time for people to come back and learn from you. Also exposed people to a network of people, if that makes sense. You interview people, you talk to people, even you and I talking and I'm open. If people want to bring me up at times or email me would be the best way to follow through and hi, I've got a problem and we do. I go from here and coaching Martin Bay, what you want right now, but it is about even getting out of your comfort zone to sending that email. It's doing something different that is going to give you a different result to the one that you've got at the moment.        

You don’t always have to jump straight into the deep end, McIntyre encourages us to take small steps and ease into the process. 

Little steps to make big steps. And it's interesting. I've got a journal. I love my journal. I read it yesterday. I don't do it. Every guy that made two and it's there for my goals, for my intentions that are due on a regular basis. But tensions, it's there for me, has it on the challenge for the exciting. It's fear. If I listened to a podcast customer, it's got you know, some gold information for me, but it's also very, very good. I used to be moved forward and we grow, we can forget where we were six months ago and that might sound strange, but we get caught up with the growth moving forward and the new area that comes into our life. It is so good to document where we outta die. Where am I going to be next week? What am I going to be the week later?

And then to look back at any point in time and think that's where I was six months ago. And I do this a lot with clients every now and again when they feel ology, they haven't been making massive moves and, and he is, I haven't got to this, well I don't talk to me about 5 million initially after the first session, but they haven't made the money that they originally thought that they would. But what they're doing is we're working on multiple streams of income. We're working on the foundation, we're working on them feeling very differently about how they approach things, the confidence level that they go in that they can magnetize people into them because they stand up with confidence to be able to move forward. And this all starts from the pinprick believing that you can do it because that your first steps in change are your most difficult. And at the end of the day, congratulate yourself. Even if you took a couple of steps forward with growth because they are the hardest. Would you agree with me there was, is it easier for you now plan in moving forward. And even your streams of income and getting into properties, is it easier for you now than what it was five years ago?

It's a level of action and also a level of change in the mind as well too. Because to actually jump into any deals that are like over say 300,00-$ 400,000 was a fear for me because I'm thinking, what would happen if I lost that money? And then jumping into deals that are 600,000 to $1 million dollars and so forth. It's getting used to that fact. And for me, it was those kinds of fears and those barriers. But I think just taking small little steps to make the course, to actually speak to people, to learn from each other. and then just to build that confidence that you've got a lot of knowledge, a little experience to actually jump into it now. It has given me that confidence to do it. And that's the thing I was really, really scared and afraid because I started off with very little money and said to myself, look, you know, I'm going to try and build this up, but I don't know where to start. And it's filling that gap, that void that we've just been talking about, and stretching yourself to that comfort zone and every day just by doing little by little, you build that confidence and that's what I feel like I've done.

Anyone listening to this podcast, what are you going to take from this podcast? What are you going to do about it? Don't just keep on thinking about it and have an affirmation. I'm going to really get into property more. I'm going to get into the property. That's useless if you don't believe it in your heart and soul and take action. You haven't taken over ownership of that affirmation. So it is about setting a plan out and the hardest one is believing in yourself that you can do it. That's a hard one. And once we start to, it's all right to think, yes, I could do it. They've got that skill set or they're good at communication or they're good at something else, bring it all back to you. If every one of us has got specialties in certain areas and skillsets and strengths, identify them and use them.

And I used to hate public speaking. I used to be petrified. Now model happiest price would be up on stage presenting and so things can change, but you've got to get all that. I'm a comfort zone. When I was initially asked to come and present on a regular basis with my early mentor on property, ask a couple of years that I've been with him, absolutely petrified. And for days before my stomach could be and target. And it would be, Oh, do I have to go, I have to go. And the stronger part of me was saying, of course, you're going to be there. Of course, you're going to be there. But the pine in the bicep, my stomach was dying. Now you don't need to go the, and it was a continual challenge and that took me a long time to get up and be viewed by bad ID people every six weeks at a property.

Five-day property workshop was pretty fearsome. And I saw it in the deep end, but did I allow myself to give up? And that's a big question you've got to ask yourself. If it gets too hard or you feel that you're going to be moved out of your space that you don't feel comfortable with, what are you going to do econ to stop? Or you are going to look at property and say for example, yes, my first deal was going to be a small deal and unfitting myself. The challenge that within 12 months of made another, or I've made 70,000 out of a property deal or 50,000 start small. It might be that you are getting into a deal with sweat equity, which is no money but your skillset, you're going to get into that deal with sweat equity and that be your contribution and you got to roll your sleeves up and you got to do it out of the arena.

Or you're going to be doing research on where to look and compare, whatever your strength is. If you are very good at figures or negotiating, find out what it is and identify it and then go and sell that point to someone else. And if you haven't got money, use it as sweat equity. I'd like to walk beside you and it might be for the first deal that you purely walk beside someone else while they're doing a deal. Just learn the ropes because the practical experiences of absolutely gold to us and that's where we learn our ups and downs of what I'm doing, what we do.

It's really interesting that you say that because it's just basically taking action. You know, as you said, start with that small deal. But if you're like, you know, taking action on doing something to present to other people, meeting other people, and also saying that you could potentially be in the sweat equity in that deal, then at least you're getting out of your comfort zone to take action. Because it's worse to not do anything and just say, it's not for me.

It's all about the more that you can do it, you've got to work out why you're doing this too. Your why factor is very important. Why do you want to earn more money or why do you want to get into property? Money isn't the be-all and end-all. Yes, it makes life easy for us to have money. It's hard when we haven't, money got money and I've been there too. So I know both sides of the spectrum. But the thing is that money is purely a tool. It's what we've got to do. You have a look at all of these people. Do you think Richard Branson or any people at his level, do you think they're driven by money or do you think they're driven by motivation and the excitement of what they do?

I think it's more about the motivation and excitement because the money is a product or the end result of what they've achieved. So if you're passionate as maybe a violinist or a musician or whatever hobby that you're interested in, whether it be skiing or whatever it is, that will show through and eventually, that will actually come back as a reward. Whether it be monetary, whether it is based on emotion, whether it be, fame, whatever it is. It will eventually come back to whatever you want to receive. And it sounds pretty much like what we were talking about with Richard Branson.

I've got a beautiful client who does heartfulness meditation and I just love our sessions. And at the end of it, he's doing a rooming-in Brisbane and also in Shellharbour in New South Wales. And he's got businesses and things like that, but he's also a very spiritual guy that I just love his space. And it was interesting a couple of sessions ago, he said to me, money has never been my main driver. And I felt what an interesting thought that he had. He said, it's been the passion in me that has allowed me to grow in and Archie, that he's gotten interested from major interested in property in all that he attaches. Yeah. But he said, funnily enough, the money turned up. And I'm not saying we can't live without money because we do need money, but how much or how, how do we overthink about, I've got to make more money, I've got to make more money, I've got to make more money and we get caught up in the money beat. Instead of taking out, I pay, I'm going to go and do dog walking. And with dog walking, I can get $25 a dog every day and I'm going to build up a little dog walking business and around what I'm doing. I could walk at six o'clock in the morning and make an extra couple hundred bucks a week or something. And I've got a client that's done just that with his 11-year-old son. In the first month I started this little dog business, they might have a thousand dollars

And I have two animals. They do, they have a dog come in or animals come in and they mind animals in their dementia care and they have two at a time. They are booked up now for months. I hate and Raleigh is only 11 years of age and to have a Guinea pig, it's I think six $9 a month for Guinea pig. And it just at that being creative. And this all started because he had to have talked about a dog at school and he didn't have a dog. So my car dad said, what about we go and do some dog walking and then you can model them dog walking. And so all the way along, I'm working with this prod on what he's going to do with a product to help move forward. And he's got a business, I'm bringing $1,000 a month on walking dogs and looking after, you know, Guinea pigs and things like that in a domestic cats.

Stop not being creative. Don't give yourself permission to be creative. And a lot of people aren't creative, but that's right. And, and brainstorm and if you put it down, what's going to evolve format and stop to think and aim increase. Your circle is going as you're going around as to how it can happen. So, you know, it's exciting and once she gets a bug of the drip-feeding it just becomes a way of loss. But you wouldn't go back to the old off.

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

Simon Loo is a successful property buyer’s agent and director of property buyer’s agency, House Finder. He has vast experience in the property industry, working as a buyer’s agent for many, many years. We are lucky enough to gain some knowledge and receive some advice on the varying topics about property investing. 

Join us as we delve into the topic of tactics and negotiation skills and the insider secrets on the best way to come out with an amazing deal. We hear about an example of one of his clients and the negotiation tactics that he used to get a great deal, what to expect when you begin negotiating a deal and how to soften the blow, what you can use to your advantage during negotiations, a key point you should always remember, and much much more!

The topic of “winning negotiation” is quite important when getting the best property deal as it can mean a difference of a few hundred dollars to tens of thousands of dollars. We hear a story about one of Loo’s clients that he was able to help. 

This particular buyer, the property just settled actually, so it wasn't that long ago. He reached out to me and he’s Sydney based. He actually runs his own business and he's quite a young investor looking to start out. And he wanted me to help him find a property that was going to create another stream of passive income for him so that he could focus more time on expanding the business or have the financial capacity to expand what he's currently doing, which is his passion. So, you know, he signed up, we started looking for some properties, ticking the fundamental boxes of properties that are distressed below market value. Properties in good areas and within capital cities that, you know, have the fundamentals for long term growth, consistent long term growth.

And also ensuring obviously properties that have good cash flow so that he can hold onto it and move onto the next one afterwards as well. So we had a couple of options I sent to him and he was really happy with one property, which I started negotiating. We were already very happy with the purchase price. We did all the checks in terms of the visual inspection, making sure it wasn't in any flood zones, bushfire zones, power lines, main roads, easements or anything like that. So it was a really good property and to add to that as well, the property was actually in a zone where you could develop high-density units in the future.

What kind of property was this?

It was a single-story brick house. It was four bedrooms, two bathrooms. It had one garage and one carport. So I guess you can say two-car accommodation. It was on about 700 square metres within about 25 kilometres of the Brisbane CBD. Walk to shops, schools, parks, and also walk to a train station, which was really good. The reason why the zoning was high density as it was located by residential properties, but it was very close to an area that had more sort of commercial type properties. So your shops and your little restaurants and things like that. We could see that it was going to be inevitable that this area was going to be built on at some point in the future.

So that was actually a bonus. We didn't start looking for this property with the outset of having a property that you could rezone and redevelop one day but just happened to be nice to have. So when we did the comparable market analysis, looking at the comparable sales and all that type of stuff, we figured out that this property was around about $55k below market value based on what we bought the property for. The property was owner-occupied, so it was lived in for a very long time before and it was in original condition but it wasn't falling apart. It was livable, it was rentable from day one probably, you know, could do with a bit of a cosmetic update. But from an investment perspective, sometimes it's just easier to leave everything as is as long as it's clean, tidy, safe. Get it rented, get the cash flow moving and then move on.

So that was the intention of this property. So we negotiated, we did the visual inspection, we did all the title searches, we made sure there are no red flags. Part of the due diligence is looking at surroundings as well. So making sure there are no dodgy neighbours or nothing extraordinary that would sort of bring this property down. So after we've done all that, it came to do the building and pest. Now, this is one of the reasons why having a really solid team around you that knows exactly how you work can work to your benefit. So the building and pest person that I use personally and the business uses, I have a very strong relationship with him. He knows exactly how I work. He knows exactly what I need and he's extremely thorough in what he does as well when it comes to doing these reports. So that's what you want. Especially if you're doing lots and lots of building and pest inspection reports, you want to make sure that it's checked out correctly before you invest in a property, especially for 100%. I mean, you go, you can do all the inspection, visual inspections on this planet and you just won't know what's in a wall. You just won't know what's in the roof cavity, you don't know what the ins and outs on maybe what material is used to build the property. There's just so many things that a building and pest inspector will reveal that you won't know until you get it done.

We find out more about the intricacies of a building and pest report and the importance of having someone that you can trust do the inspection.

This guy you went through, did the inspection. And the reason why I like using this particular building and pest inspector and that we've got a good relationship is that he’s extremely thorough. And there's a couple of reasons why he's extremely thorough. The main reason is for me and the buyer to find out everything that's wrong with the property, from little cracks that could be structural or it could be just settlement cracks, through to maybe some really minor termite damage in the fence line, in the back fence line. But then there might not be a termite barrier to the inside of the house may be affected. Maybe there's moisture reading inside a wall of a shower which could indicate inner foul waterproofing, anything and everything. He goes in, he's just extremely thorough for that reason, to give you a very thorough picture on not only what's wrong with the house currently, but what could be a risk in the future or what could develop into something severe.          

We learn about what a building and pest report actually looks like and what you should be looking for in the report. 

A building and pest report starts off with a lot of regulatory jargon. Probably the first six or seven pages is about, this report negates risk to the inspector and you need to do your further inspections and all this legal disclaimer stuff. And then it usually goes into a bit of a summary about things that have been found. I guess major red flags. It'd be a small summary of if there is termite issues, it'd be on there or if there are structural cracks or beyond there and where it is and that type of stuff.

And then after that, it would sort of detail every single room, every single part of the house, from a door binding to the most severe of items, including pictures. So after you've gone through the building component, you've seen every single room, all the defects, after that would be a pest component. So that pest component would cover things like obviously termite damage, termite activity. It could be wood rot, it could be high levels of moisture or a wood borers. Anything that would relate to current damage or a risk of infestation at some point in time. So when you combine these three elements, it just gives you a very clear picture on anything that's wrong with the house.

Structurally you don't want any surprises. No one wants to buy property and realise that, you know, half the house is falling apart and they have to spend tens of thousands of dollars to fix it. So you always get a building and pest inspection.

Not only is getting a building and pest inspection important, it’s to help understand possible problems with the property and how it can also be used to your advantage when it comes to effective negotiation skills.

This is what this particular buyer did and what we ended up doing for this particular buyer is that when we got these inspections, it naturally is extremely detailed. And to cut a long story short, it's going to look pretty bad. Even if there's nothing wrong with, or very little wrong with the property. If the property is a little bit older, it's going to come up with a lot of other little things, big things or potential risks. So as investors or as buyers, we can sometimes use this to our advantage to potentially get a price reduction on the property. Now there's a certain art to maximizing this potential. One of the ways that I use is to time it very, very specifically, a lot of people make the mistake of getting the building and pest done and asking for money off maybe a week before the building and pest condition is due. So if you're doing that, then you're basically giving the seller a weeks opportunity to do their own research to see if whatever you're claiming is legitimate or to basically maybe do their own quotes or maybe even fix some of the stuff themselves.

Or look at maybe other buyers, maybe some competitors that may be wanting to buy the property, but they don't want to reduce the price anymore. So for this particular buyer and for all my buyers, I always leave the building and pest inspection negotiation to the very last second. Giving the buyer a lot of urgency to make a decision, but also not giving them too much of an opportunity to research or to suss out if there are any other buyers that are willing to buy at a high price. So that's one of the little things. The other little thing is you have to make sure that you're not coming across as super greedy. If you just say, Oh, we found these issues in the building and pest report, we want $20,000 off.

But the things that are found in the report actually don't equate to $20,000. The worst thing that can happen is you end up with a seller that will just get their back up. Originally they may be willing to have given you some money off but now that they've seen that clearly all you want is just a quick buck or to take advantage of them, then they'll just say, no, we're not giving you anything. We will give you nothing at all. So you have to be reasonable. You have to position it so that it looks like you're doing them a favour instead of them doing you a favour. And that includes, you know, listing out the actual things that are found in the report.

There are some useful skills and tactics that you can utilise to soften the impact when negotiating a better deal with the vendor.

Making it very clear, we accept that the house is 20 years old. If the house is 20 years old and there are going to be some defects some wear and tear items as well, cosmetic items, but these are the main issues. As a result, we want X amount of the original purchase price and the amount you asked for. It has to be reasonable as well. And what I actually like to do is state approximately how much it would cost to fix all those issues and going below that, because when you're going below that, you come across as the good guy. You're trying to look, I mean, it's going to cost $7,000 to fix everything, but in a spirit of getting the deal done, you know, I'm happy to take off $6,000.

Little things like that really give you an advantage at the end of the day and it makes you not look like just a money-hungry investor that just wants to suck the blood of every single vendor out there. This is exactly what we did with my client's property that I was talking about. We did the building and pest inspection. We found out that even though there were issues to get the property to a safe, rentable, clean condition, it would only cost around $1000. But because of the nature of the building and pest report and some substantiated risks as well, we actually managed to negotiate $13,000 off the contract price just by negotiating well and not being afraid to ask for it as well. So that was definitely a very good outcome.

Above and beyond what was already a really good purchase price. I always consider building and pest inspection negotiations as gravy on top. You never want to rely on it to get a good deal. But it was certainly pretty good gravy. 

We delve deeper into the negotiation side and we hear from Loo’s experience on some of the reactions he gets from sellers when he tries to reduce the price. 

Sometimes you do get a bit of push back. Actually, when I say sometimes, you do most of the time get some kind of a counter offer. For this particular seller, it comes down to finding distressed sellers. This particular seller didn't really have the time or the capacity to negotiate and he was willing to just let it go which was good for us. Every negotiation has two sides. It was a situation where we got what we wanted and they managed to sell the property in a very quick and timely manner. The property was off-market by the way, so it wasn't actually advertised. And in other negotiations, building and pest, sometimes they might come back with another figure and then you just negotiate maybe to the halfway point or a point where it's more skewed towards you. And look, sometimes you get an outright no.        

That's just the reality of different situations. And at that point, you need to assess whether it's worth it, whatever money you get off. Or even if you get no money off to proceed with a deal, 9 times out of 10 you would still want to proceed because remember that the purchase price that you originally negotiated should be the price that you will be happy to buy the property. The only time where you wouldn't is if the building and pest actually revealed some serious issues and that would have cost whatever amount of money to fix and the seller just wasn't willing to play ball. And then you kind of have to assess, okay, is it worth it if I spend this amount of money, do I still get a good property as a result?

There's a lot of different scenarios that can play out. But by doing a few little things that I talked about earlier, you just put things to your advantage at the end of the day. So that's what it's all about. 

Loo explains the process of getting the building and pest report done and the timeframe you should be looking to negotiate within.

It's a little bit different in each state, but in Queensland, you get a property under contract. Usually, there's a finance and a building and pest condition, which is normally about 14 days. And within this 14 day, you do all your due diligence. You could get the property valued by a bank or broker. You do the building and pest inspection and at the end of 14 days, you have to either waive these conditions or you can, as I said, use it to negotiate new terms or a new price. After this particular point, if you waive to conditions, then the contract is what we call unconditional. And that's when you’re basically obliged to purchase the property. Exchange a contract and settle on the property within the rest of the settlement date period. 

We have heard about skills and tactics to use for negotiations but what happens after terms have been agreed on.

Just staying on top of all the dates is super important. Having a really good solicitor that advises you throughout each step. What your obligations are, how much you have to pay is also super important. Most of the solicitors that I've worked within the past have been all about just purely obligations. What you need to do, what you should do, what you shouldn't do. A good property solicitor should give you advice or give you tips on how to use certain conditions or certain scenarios to your advantage. Using the building and pest example, like having a really good solicitor that's willing to help you draft up that negotiation email or letter to the seller's solicitor is super important.

Because you're on such a tight timeframe, having a solicitor that you can get access to, even by text message, which is what I do with my solicitor, is super important, you know, where's this negotiation at? It literally could be the last 15 minutes of the day before you come up with an agreement with a seller. So there needs to be that kind of constant communication. So that's very, very important as well. During the stage between buying, getting a property under contract and settlement, you have to be mindful of not inconveniencing the seller too much before the property goes unconditional. Because especially for distressed sellers, you may have bought the property for cheap with the notion that you're not going to be wasting time.

You're not going to be stuffing around too much with delaying finance conditions or you may not be stuffing around too much with 50 inspections, which happens a lot if let's say you’re a first time home buyer. You're kind of unsure of what you're doing. You might check out the property and you might get your mum to check out the property and then your grandma. So I'm not saying that we shouldn't do the research that we need to do to make us feel comfortable or to make us know the complete ins and outs of the property, but we should try and make it as easy as possible for the seller and as convenient as it is for them to ensure that the sale goes through as quickly as possible. But also to let them know that we're not here to waste their time. So that would be the other tip that I would give during the conditional stage.        

We find out about what you should do if you are planning on adding value to the property, as in subdividing or renovating, and whether you should negotiate that before settlement. 

Getting early access is something that I ask for on pretty much every property that I buy. For me, my client's price is number one. So what usually happens when you're working with a seller, giving the buyer a discount is the last thing they want to do. So you should always negotiate on the building and pest first, get that sorted, get that out of the way. Then ask for things like early settlement because if you ask for early settlement and building and pest at the same time, if you put these two things on the table for the seller, you know, you can give me $13,000 off and early access, you're really giving them a choice and they're just going to be like, well I'm not going to give you $13,000 but I'll give you early access. So you just need to be a little bit smart about it, set your priorities right, making sure that you lock in the most important thing first before moving to another thing. I think I might be revealing too much. That's a one really small part on obviously the whole negotiation process. If you do it right, it usually works fantastic. 

So it's basically a staggered approach, get the best price first. Then from there, you'd go back in to ask for potentially early access or whatever else you need to do. 

That's something that the building and pest example, there were so many other things like when you're actually negotiating the price of the property, you know having a really solid relationship with the agent is crucial. Because if you think about it, you're not actually dealing with the seller. You're dealing with the agent, you're talking to him.

You don't contact the seller at any point during the entire transaction process. So your job isn't really to sell the buyer to take your offer, it’s to sell the agent. And that comes with a good rapport, really good relationship. You need to establish yourself so that you're not there to waste their time. But most importantly, it's the understanding that there's a myth out there that the agent works for the seller. Now, I'm sure there are some agents out there that only have the seller's interest at heart. But the reality of it is every single agent out there is a real estate agent to make commission, make money and sell houses. Now, if you provide an avenue for the agents to sell that house as quickly as possible, AKA them getting paid as quickly as possible, then they’re going to work in your favour.              

Real estate agents are looking for the best deal possible, as quick as possible. Remembering this might just be the key to closing a deal in the future. 

You have to also understand that most agents get paid 1-2% commission from the selling agent. And you know, $50k difference in price may not mean that much to them from a commission perspective. But you know, if it means them not having to do 50 inspections, you know dealing with time-wasters and silly offers or anything like that. If you provide them an avenue just to bypass all that process, they’re not too fussed about 1 or 2% of $50k. Potentially you might be able to pick up a good deal just by doing that. 

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

Daniel Walsh is a real estate buyer’s agent and founder of Your Property Your Wealth. He helps his clients purchase investment properties in growth areas. The company’s aim is to help build their clients’ property portfolios and provide useful strategies that can adapt depending on each individual’s circumstance. 

Join us as Walsh answers some of your burning questions and he gives us his expert advice on varying aspects of property investing. We delve into how to start building your property portfolio and where you should be looking when you are beginning your property investing journey, how to invest in property if you only have a small amount of money saved up, why refinancing your mortgage can help you in the long run, and much much more!

Let’s delve right in...

Currently, I have a preapproval for $450,000 and I want to buy a property, but I just don't know where to start. I have paralysis analysis. I'm in my mid-thirties, married with three kids and I've been having the debate in my head if I should buy a unit or house. Can you clarify what way I should go? Thanks, John. So what do you think Daniel?

It sounds like obviously John's been debating this for quite a while and I have seen this scenario play out with quite a few clients and people that do come to me, what they do is they actually, they have so much data or so much come to them in terms of data that they just don't know what way to go about it. What data should they take on board and what data shouldn’t they take on board? And then eventually everything just gets a bit blurred and they don't know what they should buy in the end. I guess the biggest debate that he's having is obviously should he buy a house or should he buy a unit? And I think when it comes to the type of dwelling that you're going to buy, you have to look at what's in demand in the area.

That's first and foremost. You shouldn't be dictating whether you buy a unit or a house, it should be the market that's dictating that. And you just have to really recognise what does the market want and then you cater for that market. So whenever I go into a new market, what I do is I actually would call different agents or I call property managers. And I start to sort of uncover the area in terms of what are people looking to buy and what are people looking to rent. Cause I want to be able to solve both of those problems, right? So if I can solve the renting problem and make sure that I'm buying something that's going to be in demand, buy or rent that property, but also have the problem solved from a buying perspective to say that I'm buying the right type of dwelling so that it's going to be in demand when I'm going to sell that property as well.

So I think when it comes down to buying a house or a unit, he really needs to do the research and just really cater for that market that he's buying it. Now in terms of, he doesn't know where he's even going to buy at this stage. Again, that's going to come down to he's got a preapproval of $450,000. The first thing that I would start with is what yield do you want to really return? What's your overall return on investment? Do you have the capability in terms of your wages and cash flow to be able to have a property that's costing you a little bit to hold? Or do you want to make sure that that property is costing absolutely nothing and/or making you a bit of money each week? So it really comes down to the personal scenario on what can you personally afford the cash flow for this property because that's going to dictate the area. So really he needs to work out what he's going to be able to carry over in terms of cash flow each month and then he's going to have to work out exactly what type of dwelling is in demand for the area before he buys.        

We learn about the other possible experts that you should be looking to utilise in this type of situation.

In terms of experts, I mean obviously there's buyer's agencies out there, there are different people that do analytics and analysis on different areas as well. So, you know, maybe being able to seek out some people that can help you out in making sure that when you choose a location, you know why you're choosing that location. I think often what people do is they buy off emotion rather than buy off the data. So they might not necessarily even have the data available. So that's sort of why they are looking a bit more emotionally rather than data-centric. Whereas for me, I always want to make sure that I'm not emotionally attached to the investment property, but I'm buying off what I can see in the market at that time. So it really comes down to, you know, making sure that he's buying in the right market in terms of the cycle.

So making sure he is buying in the right state first. Does that state, he's got $450,000, that pretty much counts him out of places like Sydney at the moment. Whereas he might be able to look further abroad and look at different sorts of states that are going to offer a good return for him. Also, be in that price bracket of around that $450,000 and then choosing the right house or unit depending on what he thinks is going to be best off in the future. With the analysis paralysis, I think a lot of people, the way that I help people get over this, ‘what should I buy’, is you've really got to look at an investment property and say, how long am I going to be in this investment for? What is this investment going to do for me over the next 10-15 years and what am I trying to achieve out of it?

Am I trying to achieve out of this capital growth? Am I trying to achieve cash flow out of it or am I trying to have a balance of both of those? That all comes down to how big is the portfolio that he already has and what is he looking for to add to that portfolio? Because at the end of the day, you don't want to be chasing a regional property that might not grow with really high cash flow. If you know you're on a really high wage at that point and you're not really chasing the cash flow and you're chasing the capital growth and you're wanting to build the portfolio using the equity, it really comes down to your specific situation and identifying what you're trying to chase first. The timeframes that you're going to be doing that in. And then starting to look at the state by state, how they're performing, where they're up to in their cycles, and then honing down into suburbs from there.

Let's move on to the next one, which is from Nick. He says, I purchased my first investment property at the age of 23, about five years ago, so he's probably about 28 now. And I want to know if I can buy a second investment property and how I go about doing it the right way. My property is currently worth around $650,000 and I owe about $450,000 and that's from Nick. 

First I just want to say congratulations, he's done very well at such a young age getting his first investment property and it's also performed very well as well. So he's not only got an investment property, he's now got some equity in there that he can start to leverage now. Just comes down to how much equity can he leverage? How does he do this in a safe way? And then where does he go next? So I guess they're the questions of a new investor where they may have, you know, bought their first investment property, especially at a young age where there they may have bought something that's around their own sort of neighbourhood. It's grown in value, but they can't necessarily go buy another property in that same neighbourhood because it's already grown in value. So they're going to have to look at different markets and possibly even different states to be able to get into a new market, maybe around 300,000 to $400,000 mark so they can rebuy into another market and get the second investment property.

In terms of where he's at. He's obviously got some equity there. It's just about looking at how much usable equity does he have. And generally, it really comes down to how much do you want to be leveraged on a portfolio. So typically I like to say that you don't want to take an existing property that you have in your portfolio beyond about 80% of its values. So if you go up to 80% of its value and then you can have the equity between the debt and 80% of the valuation from the bank, that's roughly what you've got in equity that's available. Now, if you go beyond that and you go up to 90%, what happens at that point is you're going to be paying lender's mortgage insurance and you're going to be overall a higher LVR on the total portfolio, which puts you at a greater risk overall in terms of if there was any negative equity in that property in the future.

So it comes down to how aggressive you're going to be with that portfolio. Do you want to pay the lenders more insurance? Do you want to be doing it in a safer way? Maybe looking around that 80%. So in terms of Nick's situation, he has, you know, if you were to look at it, if the bank valuation was $650,000, he owes $450,000, if you take that up to 80% he roughly has $70,000 worth of equity. So he wouldn't be able to go buy again for $650,000 in that same area. But he could possibly go, you know, put a 10-12% deposit down, search out a new market around that 300,000-$400,000 mark and put that equity, that $70,000 to use and buying in a different market and possibly in a different state to be able to diversify the total portfolio that he has.

That way he has two properties that are working for him in two different locations. So I think with his portfolio as well, it's just vital to understand exactly how much equity you have before you're going to go out there. And purchase property. A lot of people want, you know, they start to look at houses before they've even set it up, right? You need to be setting up your equity, you need to be going to a mortgage broker, you need to be discussing with them and getting the valuation done, extracting that equity correctly. And generally, the way that you do that is you would generally get a split loan from that. So what happens is you would go there, you'd get it valued, you would get your $70,000 out as a separate loan with a mortgage broker, and then you would use that $70,000 to go out there and purchase. I see a lot of people, what they do is they actually look for the property first and think about the structure second. And you've got to be doing it the other way around and making sure you're prepared. So when you do find a property and you do know where you're going to buy that you're ready to pounce on the opportunities that present itself.

The next person we have on is Luke, he says, I currently have $100,000 in savings and I live at home with my parents. I'm in my early twenties and I'm single and I want to start investing, but I'm not sure on where I should invest. Where would you say I should put $100,000 in today's market? 

I just want to say obviously Luke's done extremely well for himself. Early twenties, he’s saved $100,000. It reminds me of me when I was younger. Obviously I did pretty much the exact same thing where when I was staying at home, I saved as much money as I possibly could because I knew at that time was when I could save the money to be able to get into it and invest in property. I knew that when I moved out of home it was going to be a lot harder to be able to do that. So sort of capitalising on that position and I think that a lot of young people need to do that these days. So Luke's done very well from that perspective. He's got his $100,000 saved. He can jump into the market and leverage himself in terms of being able to access that compounding interest from the property market early so that over time he can continue to build upon that and build quite a nice little portfolio in his twenties and thirties.

So in terms of where would I be investing $100,000 right now? To be honest, $100,000 would be about a 400,000-$500,000 purchase roughly. And that's because you're going to need a little bit leftover for a cash buffer at the moment where we're seeing pretty much but most prospects in terms of capital growth and overall balancing of capital growth and cash flow is probably Brisbane. Now Brisbane hasn't had a real cycle in about 10 years. And what we're seeing at the moment is interest rates dropping and we're seeing that we can still buy houses at the same rate as they were in say, 2009. And for me, I'm looking at that and saying, okay, Brisbane is the most affordable at the moment in the last decade. Whereas if you're looking at places like Melbourne and you're looking at places like Sydney, it's the most unaffordable.  

It's only been in the last 10 years. So when you look at it from that perspective, I can see that Brisbane is a market where I can go and get a balance of yield so I can buy a property that's either making me money and cash flow or costing me nothing and have very useful cash flow at that point. But I'm also going to be buying a property at the right time of its cycle, which is really in a recovering cycle at the moment. We're starting to see price growth there and we've seen price growth anywhere from between 5-7% in capital growth per year on average annual growth rate for about the last five years. But if you have a look at it, even today, you can still buy properties at the same price as they were in 2009, which was the last peak of Brisbane.

So I really think that Brisbane is the market to be in over the next 10 years, and that's just purely from an affordability point. So the net interstate migration at the moment is the highest into Brisbane. And that's moving from obviously Victoria, which was taking the lead a few years ago. So we can see that people are wanting to move to Brisbane because of its affordability. We're seeing infrastructure projects going there. We're seeing the jobs starting to increase. And I think that you can't go wrong in a market that's already bottomed out. I'm much more fearful of a market that's at the top than a market that's at its bottom. As long as you can identify the characteristics on why that area or why that state is going to increase in value. So I think Brisbane is a very safe bet. And I think for Luke with $100,000 that would be able to get him into a nice sort of house anywhere from sort of maybe 15-25 kilometres out of the CBD and he can have the land component through that as well. So I think that's a state to be watching at the moment.        

He talks us through what the expectations should be when you’re at your starting point and what returns you should be looking at.

It really depends on where he's buying. Obviously the closer to the CBD that you go, you're going to be getting a lower return. And that depends as well on what type of dwelling. So typically, you know, if you stick to say a house and you're buying around that sort of 20-25 kilometres from the CBD, depending on north or south at the moment, what we're seeing is in the south side the yields are a little bit higher than say the north side of Brisbane. But you can generally find around that sort of 5-5.5%t return on a property around that 400,000-$450,000 mark quite easily. So you know, you could have a property, especially when you're putting cash money into it. So if you put a 10-12% deposit down you're going to be able to have a property with a 5% yield where it's probably making you between 1000-$2000 a year just to keep that property.

And that's factoring in your maintenance and your water bills and your rates and maintenance, everything like that, Insurances. So when you factor all of that in, you can own or control an asset with 400,000-$450,000 costing you nothing per year to hold. Now when that investment obviously goes up in value, he can then leverage upon that and buy another investment that's not going to cost him anything to hold because at that time when you're building a property portfolio, you want to be really mindful of the cash flow because if something's costing you too much to hold each week, then you're going to be looking at it from a perspective and say, how many of these properties can I actually hold until I can no longer continue to invest? So Brisbane is a great market for that. You know, comparing that to say Sydney where it's already had 80-90% gains in that market.

It's really interesting that we talk about it from that point of view because yes, the returns are a bit better because of the lower cost of entry into buying these houses. But also too, there is potentially more capital growth in the future because when you look at it, say you're going to buy a property that's $800,000 to $1 million in Sydney for the estimated growth of 50%, there's going to be a substantial jump between that. And that also comes to affordability. Whereas if you go and buy a property, say in Brisbane for 400,000-$500,000 to go at 50% and essentially not quite a big ask because people in Sydney already used to that price point. So it has a very interesting and different appeal. 

I think also as well, like just on that, not only that, if house prices are still at the same rate roughly as 2009 but the interest rates have gone down, that's basically saying that and the serviceability calculators have also dropped as well. And as interest rates are dropping, serviceability calculators are dropping. So what we're seeing really is affordability becoming even greater in places like Brisbane where you're still getting the same yield as you were maybe two or three years ago, but your overall holding costs are actually decreasing. So you're holding the same asset but decreasing your overall holding costs. And like you said, if you go buy something in Sydney and you pay $1 million, what you've got to look at is can my wage actually support that property going to $2 million, in my opinion, I don't believe there's many areas that can sustain that level of growth again. Whereas if you look at Brisbane, you look at our house to say 400,000-$500,000, can that go from 400,000-$800,000? Well, yes. People could still afford that level and when you work out the median wages, you can understand that exactly. Those house prices can go there. Now let's figure out why they will go there.

The next question we have is from Corey. He says, my wife and I had been fighting about what to do with our home. We bought it about eight years ago for $330,000 and it's now worth about $550,000. We are both in our mid-forties with no kids and have a combined income of $120,000 a year. We still owe about $240,000 which for us is a lot and I've been thinking that instead of putting the extra into the home loan to pay it off, should we invest it into some property investments? What do you think? 

I think from looking at the situation, obviously, they've done fairly well in terms of they've got a small debt. The house is increased in value, which is good. They are in a really good income. They're in their forties, they don't have kids, so their overhead should be quite low and they've still got what, another 20, 25 years to actually invest before they retire. So as I always say to anyone, when you're investing, it's about timing the market. So how long are you going to be in that market for? The longer you're in the market, the less risk you have and the more upside for growth and being able to obviously achieve your goal of financial freedom will come. So they're sort of looking at it and saying, should I just be focusing on paying off that mortgage or should I be investing my money?

I don't think there's really, you don't have to do one or the other. And I've been explaining this to a few people where you can actually do both. Why not keep paying off your mortgage? You can see you've got $240,000 loan. Why not still pay off your mortgage, but every dollar that you're paying off your mortgage, you're just looking at the end of it looking to refinance that money back out as equity to go out there and invest in property. And I think what happens is people miss the opportunity over the years where they're so honed in on paying off their mortgage. At the end of the day, what you've got to look at is when you pay your mortgage off, where are you going to be? Zero. And that means that you're not going to be paying any interest per month.

So that's not going to allow you to retire though. You know, just because you have no bill on your house in terms of the interest, you still have to create income to be able to live. So why not do both at the same time? Why not continue to pay off your mortgage and the available equity that you have, which is at the moment lazy equity. It's not doing anything for you. Why don't you refinance that equity out, go out and buy a few investment properties, have those investment properties roughly pay for themselves? So that's not changing your scenario and paying off your own home. You're still paying your own home off fairly much at the same rate. You're just refinancing the equity out and using it for a different purpose. And that's for investment. That just means that by the time you've paid your house off, let's say that you pay your house off and you're 60 by the time you've paid that off, you may have two, three, four investment properties at that point and you may have bought them maybe 15 years earlier and those investment properties have doubled in value now.

So at that point, you've not only paid off your own home at retirement, but you've also got three or four investment properties that would be creating new income and you have more opportunities to look at options with your retirement rather than just having your own home. And I think that people don't really look at it from that perspective. They think I'll pay my house off first and then I'm going to invest. Well to invest you're going to have to get your mortgage and read mortgage in terms of using the equity anyway. So why not use the equity early enough or now to be able to invest and be in the market a lot longer so that you can be exposed to the upside potential growth of the market.        

Continuing on this topic, we find out more about how you should be using your funds in order to pay both at the same time in the most efficient way.

It all comes down to the way that you structure obviously your loans and having a good broker on your side to be able to help you do that. So the way that I like to do it is you can still have a $240,000 loan and you're going to go out there and use the available equity. Let's say that for the first investment property, you're going to use $100,000 worth of equity. You go to your broker, you say, can I please have $100,000 worth of equity? Can I have that as a separate loan? That's a split loan. So now you have your own home loan of $240,000 and you have a split loan, $100,000. Now the way I like to think about it is you haven't increased your mortgage by $100,000 because the $100,000 is going to belong to the new investment property that you purchase.

So when you're factoring in your calculations for the new investment property, what you're factoring in is how much is this new investment property going to cost me on 100-105% borrowing? Because what you're doing is you're borrowing for the entire amount because you've used the equity and you're also borrowing to the statutes, so it's 105% leveraged at that point. Now if you can go out there and buy a property and let's say it costs you $10 a week, $20 a week at 105% LVR, meaning that you've borrowed the whole amount, then you've now essentially got yourself an investment property costing you maybe next to nothing or maybe 10-$20 a week, but you've also still got your mortgage at $240,000 now, yes, it's hitting you by $20 a week, but what you're looking at it saying, if I bought an investment property, say $400,000 over the next 15 years, if that goes to $800,000 you've made $400,000 now the rents are going to increase over that period of time and what that's going to do is make it even more positively geared at that point.

So it might be able to even pay itself off in the next 5 to 10 years and then you can just have that property just sort of burning in the background. But your mortgage hasn't changed. Your position hasn't changed because the investment property is still paying for itself. So now what you can do is still be paying off your mortgage at the same rate as you were before you've leveraged out of that property. So I think it just comes down to making sure that you've got the correct structure and also the right mindset and how you're thinking about your debt. You know, where is the debt really allocated to? The $100,000 isn't on your personal home loan. You actually extracted that out and used it for investment. So now it belongs to the investment property.        

Walsh provides an example on how beneficial it can be if you decide to refinance your mortgage and buy 1 or 2 more investment properties. 

I was reading an article the other day that was in the old newspapers and it was houses in Turramurra. They were $88,000 in 1976, right? 88,000. Now, could you imagine that scene where that person bought the house for $88,000 and they were paying it down, but they actually refinanced and bought one or two investments? If they had done that, they would have, you know, fast forward to now this is 40 years on, but fast forward to now, what you're looking at is you'd have your own home paid off and you would have had another two investment properties. Those current homes are now worth about $1.8 million apiece. So you know a number 21 times. So you look at that scenario and you say, could you imagine the two different scenarios? You bought the house for $88,000 and today, now we have to say 1.8-$2 million.

You own it. You've done very well for yourself. But imagine if you did that and you had the $88,000 and you bought two more investment properties and now you’re worth $6 million. You know, you've tripled your net worth over that time and it didn't have to cost you the earth to be able to do that. You still could have been executing on the same strategy, which is paying off your mortgage, but you were just using the equity to buy more houses, to continue to be able to increase your net worth. Because at the end of the day, your asset base, whatever your asset base is, look at that in the next 15 to 20 years, double that, and that's roughly where you'll be. So it's all about how large is my asset base. If you control more assets, you're going to be worth more in the future.        

We receive some valuable advice and something that we should remember when we are looking to buy investment properties.

That's the thing, like when you're buying property, what you're doing is you're locking in today's prices, right? It's like buying stocks, but going, I'm going to lock in today's price and it's only costing you a fraction of what the actual house is worth. If you have a house worth $500,000 and you put $100,000, your real entry cost is $100,000 not $500,000, so your entry is $100,000 but you've leveraged yourself to $500,000 and then over that period of time, if that goes to $1 million, you've made $500,000 off of $100,000.

You've got to look at it and say, if we buy a house right now, let's say it is $1 million and you buy a house right now, if that goes up 200,000-$300,000 and you've delayed buying a house because you just think, you know what, I'm going to wait for the market, and all of a sudden the market jumps 200,000-$300,000 at that point, it's going to take you a lot longer to pay that extra 200,000-$300,000 off the exact same house because you didn't lock your price in early enough. And that's what it comes down to overtime. We know that prices always generally increase over long periods of time. So you buy houses when you can unlock the pricing when you can.

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

Successful and sustainable property investment in housing and property market involves separating fact from fiction.
Unfortunately, there are many untruths out there, which are sometimes taken as gospel by novice investors and first home buyers.
These myths and fantasies are abundant online, with anyone having the ability to call themselves an “expert” without having to prove a thing.
While fundamentally property investment is about strategy, skill and experience, it is also about ignoring common myths.
Here are five of them.

1. Blue-chip is best

One of the longest-standing myths is that blue-chip property investment is the best.

Now, when I say blue chip, I mean inner-city suburbs that generally have high median house prices that are only affordable to the top end of income earners.
Straight away you should be able to see a hole in this argument.
If only a small proportion of people can afford these locations, then there won’t be the strong demand needed to keep driving prices higher.

More affordable areas, on the other hand, are in demand from more people, which over time sees prices increase.
Just think of locations where prices used to be $300,000 but are now $600,000, which is a figure that is still affordable to the majority of home buyers and investors.
However, a suburb that has a median house price of $1 million will already be overpriced for the majority.

So, it stands to reason that it will be difficult for that suburb to double in price because there is just not the demand from enough people with enough money to keep prices growing.

With lower buy-in prices, investors can also afford to own a number of properties, in different locations for diversification reasons, instead of just one or two expensive ones that are usually significantly negatively geared.
With a portfolio of five or six affordable properties, in the future, they can sell down half of their portfolio to pay off the debt of the others and create passive income.

• Property investment involves sacrificing lifestyle

One of the reasons why so many people never actually become property investors is because they think they’ll have to sacrifice their lifestyle to do so.
They imagine (false) scenarios that see them forking out hundreds of dollars out of their own pockets each week to hold an investment property.
The next thing they know they have to skimp on their daily coffees, they believe.
While investing in the wrong property in the wrong location may cause this to happen, strategic property investment won’t.
In fact, you can buy an investment property today that not only won’t cost you anything to hold each week, but it is also forecast to grow in value over the medium-term.

• You have to be rich to invest

One of the most frustrating myths is that all investors are “rich”.
Seemingly, they own dozens of properties and swan around lighting their cigars with $100 bills!
Of course, this is ridiculous, with most investors owning two or three properties and earning average wages as well.
In fact, only about 20,000 Australians own six or more investment properties!
To get a start on the property investment ladder, many people use the equity in their homes to buy their first and perhaps the second one, rather than being wealthy

• You must invest in rising markets

During Sydney’s boom a few years back, many home buyers and investors didn’t make their move until prices had been firming for a year or two.
Most of them bought just before the peak of the market and saw the prices of their properties start to fall straight away.
A bit like lemmings running off a cliff, following the crowd when investing in property is always a bad idea.
Rather, property investment experts are able to pinpoint locations where prices are able to strengthen before anyone else.
They then buy the best properties in those areas before anyone else and capture the benefits from an entire market cycle.
They are not worried about what a property market is doing now because they are concentrating on its future performance over the medium- to long-term.
5. There is only one property market
The final property investment myth that needs to be busted is that Australia has one “property market”.

Educated investors and property investments experts know otherwise and are regularly buying in a variety of locations around the nation.
Just consider the different market cycles occurring in our capital cities at present, with some locations posting price growth but others recording price falls.
If you add major regions into the mix, you have a diverse range of market cycles happening at the same time.
The truth of the matter is that there are multiple markets around Australia.

Property prices in each State and Territory grow at different times, plus there are submarkets within each state as well.

Savvy investors always look for the best opportunities across the nation – and buy when the time is right not because everyone else is doing so.

At the start of every year, we always receive a flurry of enquiries from potential clients keen to invest this year.

Amongst those enquiries are always a cohort of people who want to “get rich quick” supposedly using the property as the wealth creation vehicle.

It doesn’t take Einstein to realise that they never engage our services.

That’s because our business has always been about creating real estate wealth over the medium- to long-term.

Often, they get annoyed when we try to educate them about the realities of successful real estate investment – specifically that it takes time for properties to grow in value and for wealth to be created

We tell them that even when investing in locations with strong market fundaments now and into the future, it is unlikely that anyone is going to become a property millionaire inside a decade.

Short-term thinking

Many of these people are fixated on what the media is saying certain markets are doing right now.

They falsely believe that if they buy any old property in a location that may have produced solid growth over recent years, then the money train is on its way.

Little do they know, literally, that the train has already past their station and they didn’t jump on board soon enough to ride the capital growth journey.

It is common in real estate for some people to have short-term investment mindsets.

Unfortunately, with such a point of view, these people often speculate in risky markets, hoping that the returns will keep flowing forever and a day.

What often happens is they’re left with a property that has fallen in value, as well as one they can’t rent out either.

Over history, this has happened plenty of times, and especially in one-industry locations such as mining towns.

About a decade ago, the resources sector was booming, and property prices in those locations were, too, albeit temporarily.

Speculative investors piled into regions that were heavily reliant on the mining industry – today they are paying the price for their poor decision-making.

Consider Gladstone in Queensland where median house prices have fallen 30 per cent over the past five years.

Some suburbs have seen prices plunge even further, with Calliope recording a massive price drop of 42 per cent and West Gladstone down 43.7 per cent over the same period.

On top of that, about four years ago, residential vacancy rates in Gladstone hit an eye-watering 9.9 per cent.

So, those investors who were enticed by unrealistic future house price growth were soon left wondering where it all went wrong – and often in terrible financial shape indeed.

Invest for future tomorrows

Smart investors, on the other hand, bought in locations that had sound fundamentals that would continue to underpin their property markets in the future.

Today, their portfolios have increased equity as well as the potential for passive income in the near future.

They understood that real estate investment is never about making a stab in the dark and hoping for the best.

They worked with experts and over time invested in the best locations for the future.

One thing that they also always did was adopt of a long-term mindset, which meant they paid little notice of the short-term vagaries of market conditions.

Even when prices temporarily flat-lined or softened, they weren’t worried, because they understood the most important thing was the end result – not what happened one or two years amongst decades of property ownership.

A case in point is Sydney and Melbourne, where prices softened for a time recently, but rebounded by the end of last year to both post 5.3 per cent median dwelling value growth.

I guess the point I’m trying to make is that superior investment locations will always have temporary ups and downs.

One thing that never changes, however, is their market and economic fundamentals, which will underpin property price performance over the many years ahead.