The Success of Sydney’s Mortgage Broker With Hank The Bank Hong
Well known in the finance industry, in this podcast we’ll be speaking with Sydney’s mortgage broker Hank Hong. Delving into his personal story, Hong will be talking about how despite his family’s uninterest in property investing and a university degree that he didn’t end up using, he unexpectedly found himself in the finance and investing industry.
Furthermore, talking about his portfolio, Hong will be explaining how he purchased his first property, the mistakes he’s seen people make when it comes to investing and how you can avoid these same pitfalls. So join us as he also discusses the insightful reasons why investing in older properties may be the better route for some and other useful tips and tricks throughout the podcast.
My name’s Hank Hong. I’m known as Hank the Bank Hong in our finance industry. I’ve been doing finance for over 14 years now and I am a full-time mortgage broker, part-time property builder license, license builder and also the father of a beautiful 7-week old daughter.
Juggling work as a mortgage broker and as a recent Father, Hong’s day is divided into finance, assisting clients and time with his wife and daughter…
On a given day, I’m part of a mortgage broker firm that operates out of Sydney. My day is pretty much broken up in giving advice on the finance side of things. I also help people construct to their I guess not to financial advice but just giving ideas of how a lot of my other clients, invested into the market and different investment tools. Yeah. And the rest is trying to be a father.
From humble beginnings, Hong grew up with his parents, fulfilling his educational requirements before going to university and beginning work in the finance industry…
I’m a second-generation Vietnamese. So my parents came over on the boats back in the 70s or 80s. So in 1980 it basically was you know, a basic little family. Dad worked in the factories, Mum worked in the factories, I went to university. Dad’s earning 50 grand income to put us through university, and during the time I was in university my second year I was pushed to work in the finance basically cold calling for the first 12 months then working in the finance team. So I’ve been in the game for about 14 years. I’m 34 this year.
So all I know is to live and breathe finance. Pretty much home loans, commercial loans, car loans, anything else that’s got a dollar sign behind it, I can handle. So yeah, so basically worked for a mortgage for four years then worked inside a mortgage credit team for another four years and then for the last – I don’t even know if the maths is right – but about seven years. And the last eight years I’ve been a broker working for, prior before that a major Australian brokerage. And also now I work for smaller guys that we have a lot more control over. The finance awards – I’ve been ranked in the top 100 Australia. I’ve got a builder’s license as well so I built pretty much, I guess we’ll get through that as well. So we build display homes, homes and we also do a lot of small development ourselves as well. So a little bit of finance and property, it’s a good marriage.
He expands on what he studied and how his choice of study course didn’t actually dictate his current profession as a mortgage broker…
I studied financial planning. I studied four years of financial planning and I never used the degree, so it’s a good 20 – 30 grand down the drain. But that’s where I met some other guys and they introduced me into finance firm where I cold-called for the first six months and then started learning about home loans. So I never used my degree, I just fell into it.
Back in the day, it was only just a Certificate 4 [that was needed], then it became an additional course and now you need a diploma. So there is ongoing training and there is a lot of licensing now to jump through to become to be able to work in finance.
When you’re giving advice there has to be a standard level of experience and knowledge.
He delves into the fact that despite his parents purchasing a property, they did not influence him onto the property investing path and have little interest in investing themselves…
We were I guess more of a not really a socioeconomic family. South West Sydney, we were from Bankstown. Mum and Dad didn’t really do any kind of finance. They bought a house and they still have that one house, to date. So being old Asian parents they don’t believe in finance. They paid off all their debt and you know they’ve got the one house and they don’t believe in leveraging to purchase other investments and stuff like that. So nothing really came from that. It was just from working at the finance firm.
They’re really happy with what I’ve done so far for myself. They leveraged, I leveraged them – their property – to purchase my first home about nine years ago. So they’re willing to help, they just don’t want any finance on themselves.
Telling us the story of how he got to purchase his first home, Hong explains how he began his portfolio cost-effectively…
I’m 34 now. I believe I was about 25. So after I finished working for one of the big mortgage managers I went in and worked for a small brokerage firm. In my first year there I made good money and at that point, there was the first home buyers grant. So back then it was buying an existing property, you can evade the stamp duty and you get some money on top. So my first purchase was actually a townhouse in South Strathfield. That was $480 000 back in the day. I used Mum and Dad to leverage it in, the stamp duty was waved, so I pretty much had no cost, and they each gave us fifteen thousand dollars on top of that. That was my first home purchase. I lived in it for six months and then after that, I moved back home. One of the best ways I believe in investing and creating a portfolio is just living at home. Mum and dad don’t charge you rent and you can keep increasing your portfolio. So that was my first step using the government grant.
I’m not condoning this, but it was the situation we were in. I didn’t want to live there anymore. I moved back home and I had an investment property which I walked in without stamp duty. I still had occupied rates, rent paid itself off and I’ve still got it today.
But how did he expand his portfolio and what factors came into consideration before making those next few purchases?
It’s a very lucky buy for the first year. After that, we started delving into other areas. I’m a big fan of areas that are underdeveloped, areas that might have a bad stigma against. So you know being from a Vietnamese heritage, I went and bought a unit in Cabramatta. Now, Cabramatta back in the day still had a bit of a drug problem here and then. That’s all cleaned up and it’s a fantastic place now. But we were picking up units back then for ninety-five thousand to one hundred and fifty dollars. So picked up a couple of those and the combination of those few properties back in the day gave me enough equity to purchase other properties. So it also comes down to timing as well, like times are a lot different back then to now. There’s a lot of people that go look we can help you buy thirteen properties in four years. I call a bit of bullshit on that because back then, yes. 10 years ago when properties were two hundred grand or three hundred grand, or as high equity in all that, and incomes were you know, and the banks were a bit easier. In this day and age, it’s very hard to pick up 10 properties. It’s hard enough to pick up your first property.
He states that working in the finance industry really assisted him in assessing the property’s potential, and gives insight into who you should be seeing to make the right purchase yourself
Based on incomes and the way the banks are. The one big thing where I am that I’m lucky to see, is because I work in finance and I’ve built and I’ve seen so many or worked with so many clients… Not one way of investing is incorrect or correct. The best way to invest is whatever suits your situation, what your income is at this point in time and how much risk you want to take. So by dealing with clients and their finances, I’ve seen nearly every single type of I guess financial vehicle, investment vehicle or investment technique. Negative gearing, positive gearing, building, planning, renting flats, buying units and flipping them, buying houses and flipping them, building developments, purchasing acreages to subdivide. I’ve seen every single kind of financial investment tool without actually having to invest in them myself. So if you can find a good broker that’s got this much knowledge, they can go, “Yeah this might be right, that might be right”. Rather than speak to a real estate agent that goes look I got a property, or the best property I’ve got is a unit, so you should buy a unit. So the brokers should be probably your best person to speak to because they’re unbiased. They’re only doing the finance. They’re going to say yep this investment is good, they’re not going to say come invest here unless they’re selling properties themselves as well, because then there’s a little bit of bias there as well.
Hong delves on the location of his investments and how the diversification of his portfolio came about…
I’ve got stuff to the Eastern Seaboard. There’s a couple of houses that we bought up in Queensland probably 20 30 kilometres north of Brisbane. We’ve got one or two units in Brisbane as well. And then that’s just stuff that’s in I guess the personal family name. The other side of it is with the building game. So for the past about five years, I partnered up with my business partner and we had a construction company. And that company built and we had a display. The home company built a lot of houses for other people and pretty much we’ve done a lot of small developments ourselves, just doing duplexes, small townhouses, maybe seven or eight townhouses, just to make extra cash on the side with smaller developments. We’ve never delved into the big stuff. It’s a lot of work doing the small developments, it’s even crazier work to do big units.
And how the opportunity for investment came unexpectedly…
My business partner now was my first boss back in the day about 12 14 years ago. So I was doing my stuff. I had the income capacity to do so. And he said look you want to merge together, throw some money in and then we’ll run the construction side of things. I was being a partner and he’s taking care of the properties and the construction side of things and he goes did you wanna do this project? And I go yeah, so he goes let’s go do the project. And yeah there’s always been a bit of side money on the side.
But exactly how big has his portfolio gotten and how many properties does he own now?
Well at the moment, I’d say maybe about 7 or 8? And then we’ve got other properties that are just been sitting there waiting to be developed on as well. It’s a mixture. Some’s with the family, on my own name, some’s on the wife’s name, so it’s a bit of a mixture. At one point on the income side of things, you can’t service anymore.
So that’s when you use or you leverage into family and the business side of things, yeah you do as much as you can.
Additionally, he goes back to reflect on the positive and negative investing moments he’s experienced throughout his property investing journey…
I’ve been lucky with the property game. I’m investing in other vehicles like shares and floating companies. I’ve lost 20 – 30 grand there and I swore I’d never do it ever again. I’ve always stayed out of the share market because I have an addictive personality. So if I watched the share market I wouldn’t sleep at night. Property has always been an investment tool where I could just buy and leave it and then have a real estate person look after the property and it’s assessed again. As long as I have the repayments to cover the repayments, that’s all I needed.
It’s always been quite a safe bet in Sydney and especially the Australian market in the last 10 years. So I don’t think I’ve had any worst or bad experiences. I’ve had clients who’ve had bad experiences. Okay, so if we’re talking about bad experiences, I’ve had clients – who about four years ago – we were assisting and purchasing properties for in mining towns. So mining towns have been a big who-ha in the last couple of years. One town were in WA (Western Australia), and the properties they were buying [were selling] for $600 000. The market kept going up. They built duplexes there. They owed a debt of about $1.5 million, they were receiving rent of $16 – $20 000 a month, because the mining towns and the mining companies were paying all the rent and everything was inflated in the area. Then the miners disappeared and those properties that had a debt of $1.6 million are now worth maybe $500 000 – $600 000. And if the miners never come back those properties are going to be zilch. So those kind of things is like those get rich quick schemes. You need to get in and get out quick. Make the money, but if you stay long enough then, unfortunately, things like that can happen.
And what that says is that when something looks too good to be true it’s too f* good to be true.
He also gives us insight into how you can know if you’re overpaying for a potential property…
So I’m probably gonna burn a lot of people in this and a couple but there are real estate guys out there that sell you units in areas and they turn around and go “we’ll guarantee rent for the next two years… we’ll do this… we’ll even lower the price by $10 000”. Now a friend of mine who works in car sales said if the car salesperson is giving you free umbrellas and free maps and free everything, you’ve overpaid. If they don’t want to give up that umbrella then that means you screwed them down to the perfect dollar. So when you go to these, and there’s a lot of property shriekers out there that go look, “Buy this property! Buy this property, it’s great, it’s got this, it’s got that… there’s rental guarantee and all that”. F* that. F* the rental guarantee, give me the refund. Like if you’re gonna rental guarantee me for two years or $600 a week for next 24 months, give me $30- 40 grand off the price of the thing and I’ll consider it. If it’s too good to be true, it’s too good.
And how even though there are good real estate agents, there are sometimes better offers around the corner.
A lot of these guys have a 3 per cent margin which is provided to the sales guy, currently makes another 2 per cent margin. So you’ve already lost 5 percent of the property value. For a million-dollar property, that’s $50 000.
There are agents out there that do a great job and they only charge one or two per cent and that’s perfect including all the marketing they’re offering.
But when there are companies out there that are marking up the price 10 per cent, just for a sale and a lot of these guys aren’t even trained, real estate people. They go, “Here’s a price list, go sell this property. Just stand near Westfield and go sell a unit for $600 grand. When a unit clearly, you can buy a second hand one in the same area for $500 000, and the rent difference is only $20 – $30.
He expands further on how that brand new building doesn’t always mean the best quality investment…
One of the things I talk to my clients a lot about is that I love red brick. Old red brick units. There’s only six in the area, six in the complex, there are only two-level stairs so there are no strata. These things are usually 120 square metres, so they’re massive. They’re not built like the new units where it’s like a maze of hallways. It’s spacious, it’s solid and the strata’s low. It’s a great investment. And the difference in rental price might be $60 – $70 bucks but then you don’t have to pay strata. You don’t have to pay for a pool or an elevator that you won’t use.
On another note, Hong goes back to around five years ago, to spill the details on the aha moment where everything fell into place and investing just clicked for him…
There was an investment that we were looking up in Queensland and I wouldn’t say it was an aha moment but everything just seemed like it was perfect timing. So it was perfect timing, there was a railway that was being built into that area. What did they call it? Redcliffe. So Redcliffe in Queensland, which is about 30 kilometres North. It pretty much had a train line that was scheduled to finish and finished in 2017. The train line that brought it straight into Redcliffe. Redcliffe is a suburb right on the water near Harbury Bay and stuff like that. So you can pick up a house there for about $300 000 back in the day, 600 square metres. The great moment about that situation was a Costco was opening up two suburbs away. The train line was finishing. I think there was a hospital being built around that area as well. So we were lucky enough to jump in and then the prices went up by about $200 000 in the space of about a year and a half because the Costco went up. You know, Costco pulls a lot of money into a suburb. So Costco came in, the hospital came in, the train line finished up, so basically, you can train to Brisbane in about 30 – 40 minutes and you’re about 400 metres away from the beach. So in Sydney, it was like you know, if they build a high-speed train line to Gosford and Newcastle, those properties would go double instantly. If you can get from Newcastle to Sydney in the space of 35 minutes. That’s an f* win.
And the main thing we’re looking for was – Well whenever I look at investment, because of the building experience, I always look at the potential to build. So I stopped buying units back in the day and I look for land because later on you could subdivide, and build a duplex. So the frontage and the size of the land was always of importance.
With so much knowledge to pass on and a ton of successes up his sleeve, he finishes by expanding upon what made him buy property in Queensland rather than closer to home in Sydney…
Sydney got overpriced. The market for duplex and small developments – there was too many builders out there. I remember five or six years ago we were still talking about the Mum and Dad builders. Mum and Dad builders are gone, because the cost of buying the land, the cost of building, only builders themselves or someone that’s in industry companies or something that can call up friends, that’s when you can make a profit. To purchase a block of land and to want to build a duplex and have the Mum and Dad come along, you lose a 15 to 20 per cent margin to the builder already. After Capital Gains and a bit, you’re going to be left with maybe $30 – $40 grand. That’s not worth it to sink a million dollars in, to make $30 grand.
So you look outside, interstate.
The Importance of Starting off Small and Other Investing Strategies with Hank Hong
Thinking back to when he purchased his first property in South Strathfield, Hong talks about whether or not that held him back from making that first buy…
I was at that age where you know before that happened I was still working in the banks and earning you know, $50 – 60 000 – so basic wage. It was just really, trying to go into the property market. I don’t think anything really held me back. The hardest thing was having a deposit. Even back then. And I think a lot of people now are having issues with deposits, living expenditures are a lot higher than what it used to be. So I was lucky enough to have Mum and Dad guarantee me to be able to leverage myself into the first purchase.
He also explains that he didn’t have to save up for a deposit due to using his parent’s house as leverage…
I used Mum and Dad to back me up. So Mum and Dad used their house to support the purchase for me.
So I was able to purchase in with 100 per cent lending and there was no stamp duty.
Because mum and dad backed me up with their property there was no mortgage insurance. It gets done at 80 per cent lend.
I was very lucky. And from there the equity went up and then I was able to leverage on from that and also working hard or so then start saving up a lot more deposit and living at home allows me to save a lot.
More on the mindset side of things, Hong delves into whether or not there were specific mentors that guided him on his successful property investing journey
Because I’ve worked in the finance game I kept dealing with so many clients that had five properties or ten properties or people that already paid off their property so I would learn and speak to them and it would be proven. You just talked to clients that have six properties and there’s a 50 per cent. They did something right, the biggest thing I got from them, was to start as early as you can. Some people like to say well I’m gonna wait for the market to drop and everything. Everyone that I spoke to has a large portfolio started when they were like 20 [or] 21. They bought the first property because they weren’t looking at a quick buy and sell flip in six to twelve months. Those days are long, long gone. They were going to always hold it for a long long time. So if you buy property at the age of 21 or 20 – if possible – that was always the best way to do it.
And then they just kept saving and buying more because once you buy the first one you see how it’s easy to handle it. You keep saying you go for the second one then it becomes a slide addiction.
Hong also provides insight into how people found areas for potential growth and where he is fond of purchasing in.
When Sydney went through the roof quickly… what did people do? People went out to Wollongong, they went to Newcastle, they went to Queensland. Then they came back, they found the areas where there was potential growth. So you do your best. At the end of the day, I’m a big fan of Sydney. If you can get one in Sydney, just buy it. Because in five to ten years time it’s always going to make money.
On another note, Hong also explains that while he’s read some books that have made him knowledgeable about property investing, a lot of what he’s learnt has come from experience…
I never really had any property books because I was always working in the industry. A lot of it or a lot of the stuff that I’ve got in my head was just experience-based and taught in dealing with clients and their finances. No, so I haven’t read too many books. I’ve always given books to read. I just read cartoons and I can watch cartoons and stuff that’s probably the best I can.
Sharing this knowledge with us, Hong provides us with the best advice he’s received while providing real-life examples of why its worked…
I think one of the best ones always try to stay along train lines if we’re looking at investment. Actually, the biggest one for investment is it can’t be personal, it’s got to be all numbers. So a lot of people that purchase investment properties might walk into a property and go “Oh I don’t like the colour, I don’t like this, I don’t like that”. That’s something you shouldn’t look at. You should be pretty much [looking at just] the price, the rental yield, the potential of the area of more population coming through, and the train lines. Like I said one of our best investments, as you can see I’ve always stuck near the train lines and one of the best investments was in Cabramatta. Cabramatta, year and year, it just keeps increasing.
The rental vacancy in that area is one or two per cent. And the reason why I like Cabramatta? It reminds me of the Auburns, the Lakembas. Stopped short of me sounding very racial at the moment, but anywhere that’s got a culture feel, has its own Culture Hub, Culture Village, so it could be ethnicity or a religious area. They’re f* great because there’s going to be people coming from overseas. So here’s one example of Cabramatta. Cabramatta is basically the Vietnamtown, Chinatown. When a Vietnamese person comes overseas to Australia, the land usually in certain areas like Marrickville, Cabramatta and Bankstown. So you’ve got a new person coming here and that’s where they’re going to stay.
If their English isn’t that great, they’re going to be working in that area. They’re going to be renting in that area, so it’s got its own organic rent. Now when they finally save up money the only area they can buy, is in the same area. So you’ve got a renter, you’ve got a purchaser, a long term person. And as they buy their units, they can progressively keep working, save and buy a house. Those areas are still some of the cheapest areas in Sydney, but they’ve gone up severely. So now the next spots that I believe are great ones are Campbeltown, Minto and Glenfield, that bottom line has gone through a lot more now because Leppington, Badgerys Creek and the airports gone off. So any area that has a stigma, is f* great because when other people don’t want to invest and that means the price is still gonna blow. The area Whalan and stuff just near the Blacktown area. There is probably still a bit of a drug issue around those kind of areas, but they will clean up one day. You know, Redfern was a shit area, Waterloo was a shit area, Balmain back in the 60s with a hippie area. So all these areas will get cleaned up at one stage, then the blossoms and the locals are there.
Additionally, he provides us with insight into why attempting to purchase in already established areas, as opposed to one with a temporary stigma, can have its downsides…
If you go off and try to buy in established areas right now like Chatswood, Rhodes or Wentworth Point, there are a million units there, and they’re all a million dollars. So you’re not going to make two million dollars from a million dollars. Not for the next 20 to 30 years, unless the market goes actually crazy. So you’ve got to find where you can afford. You’ve got to find what suits your situation.
On a more personal note, Hong states that it is his efficiency and open communication with his clients that have contributed to both his own success and the success of those he works with.
One of the biggest things I’ve been on about as well as when I get emails I’ll respond to an email a couple of minutes. So whatever I’m doing, clients can have full conversations for me in very very quick time span. Being a workaholic. Waking up early I’ll be up around five-six o’clock in the morning and I’ve answered all my emails for the day. So by the time eight o’clock hits and everyone started dozy on into their work life, I’m ready to reply back and talk and learn what my clients need very quickly. So efficiency is important.
With a building license in hand and the ability to successfully expand his own portfolio, Hong takes a moment to talk about the property investing strategy from the building perspective.
From the building side of things, truthfully I don’t have too much involvement. I’m a numbers man, I’m on that side of things and a director and a business partner. I do have the final say. And the one big thing I’ve kept with us is that we’ve always kept small. So I’d never want to build more than four townhouses or a duplex. The bigger the projects have always been a lot more money and a lot more – It’s a lot scarier and more moving parts. Never thought about going to units in any way shape or form. But with duplexes, everyday people that aren’t in the finance and building game can still make a bit of money from duplexes. You find a land, you build it, you can load it off and make an extra 50 hundred grand a year on top of your normal income, and that’s great. And you continue to keep rolling with that. You don’t have to be greedy and runoff and try to build units or townhouses. I’ve seen people make massive mistakes going, “Hank, I want to build 10 or 20 units here”. “Your income’s only like you know 100 000 dollars a year, how are you gonna do this?”… “Oh but the builder can do this.” They get sold, that it can be done. Stick small, work your way up. One of the best ways [to that], with one of my client, is that we started about four years ago and he went off and just built duplexes. And every six months, he’d flip a duplex over. So we’d buy and just as we’re ready to go through that, he was making about $120 000 per duplex.
And this was going back four years ago. By the time his third duplex came back. All he needed from me was money to buy the land. Because he had $400 – $500 000 in cash now, from the profits from the last three free properties. So after the fourth property, he just used his own money and by the time I think it was about two years ago, he didn’t need my finance anymore. He goes “Hank, I’ve got a million dollars sitting there that’s just constant, I can build.”. And he just keeps building duplexes and making $100 grand a year, but he’s just using his own money at his own leisure so therefore he doesn’t pay interest. He’s more aggressive with the builders. It’s all about taking steps to where you want to be. I’ve got clients that want to buy a million-dollar house but they can’t afford it so what you do is you buy investments on the side. You buy two or three investments so that when the market does go up, you can sell those properties, take out some cash and buy your home. If you can’t hit it straight, take a couple of steps to it.
Keeping in mind Hong’s advice that the best way to gain success is to work your way up, he clarifies what type of areas he generally looks at investing and developing into…
We were lucky enough to pick up enough sites in the last couple of years. We haven’t picked up any sites for the last two years, because the prices have been, even three years, the prices have been through the roof. Everyone that thinks they can sell their property with the DA approval, was selling their property for an extra two, three hundred grand. The property should be only worth eight hundred but they’re going it’s worth a million dollars. So the meat in the sandwich isn’t there. But we were able to pick up lots of properties four, five years ago and they’ve just been sitting there, renting themself up and being ready to – when we’re ready to go – to start building here and there. So it was more of a kind of pick me up game, before then rolling through buildings and so on. We’re just trying to pick up cheap spots. Like I said all these areas I mentioned a bit earlier, we picked up houses in. You know, they’re just sitting there and we picked them up back in the day for five hundred grand. They’re probably worth about maybe eight hundred grand now. So with the potential that we could build, later on, they’re all just sitting there waiting.
He also sheds light onto where he sees the current residential market going in the near future.
If you’ve got the money you’ve been saving and waiting for the next 12 months is when you’re going to be able to get in.
And the reason I say that is you can see it in the numbers already. Auction rates at the moment are seeing a 52 per cent. When we were at that peak it was like 92 per cent with everything that was going on. And that’s 52 per cent not based on the number of numbers that we used to see in the market. There are only maybe 3 or 4 properties in each suburb going up so that there are no properties on the market. The prices are all dropping back down. What everyone should be doing – This is not advice this is just my personal opinion, so this is Hank waving his black flag – Don’t blame me. So in the next twelve months what’s going to happen is, unfortunately, a lot of people might suffer. And when I say suffer is because of a lot of interest-only loans – and this is coming from the finance side – interest-only loans, people that would’ve had them for three or four years or five years, they might become lost principal in interest. Where this is going to hurt is people that have multiple investment properties that were all interest only, will flip over the principal of interest, so the repayments will pretty much nearly double. Their rent is still the same and because there are so many properties in the market now rents are going to be competitive, so it’s not gonna be as high as it used to be. In combination with that, the guy that has lots of properties or has been paying interest only, won’t be able to refinance his loan back to interest-only because the banks have tightened up severely on their lending. So you can be holding four or five properties.
So these guys have to offload their properties. And offloading those properties in a downturn market means they’re not going to get top dollar. What that means is people that held out the market for the last two, three, four or five years due to I guess the overseas influence and the amount of market that we’ve been going the lower rates, it’s your chance to get in. So a lot of people sit there and go, “oh I’m just going to wait for the market to bottom out”. No one knows when it’s going to bottom out. If you’re in a position and you can see something that you can buy and you’re happy with, buy it. It will ruin a great market. It’s not the same as it was in the last two to three years. Think about it, it might drop another 10 per cent, but it will flip back up at one stage because everyone’s waiting and then the problem is that once it hits the bottom, FOMO (fear of missing out) kicks in and everyone starts rushing.
Further explaining the after-effects of this frenzy, Hong advises us on what he thinks one should do regardless of the current market…
Then the market shoots back up, and when the market shoots back up it’s going to go gangbusters.
So yeah it’s too late and then you’ve got people you know you’ve got the finance guy saying it’ll take two to three years, you’ve got a guy saying one year, a guy saying it’s six months. It’s safe to say that a lot of the people that have predicted the crash in the last five years have predicted wrong. Every single year, they said it’d crash.
It hasn’t crashed for eight years, nine years. Not since the GFC, we’ve been killing it.
So it all comes down to you. If you’re ready to buy a property and you can get a loan and you can do all that, just get it. I didn’t think about the market when I bought my first property. I just thought, “Look it’s time I can handle repayments, let’s do it”.
And you’ve got to get the first one. That’s when you can leverage to your second one.
Moreover, he provides insight into the state of the Australian market…
All over Australia has the same markets, it’s the same thing. So if you pull Sydney up, Sydney usually goes first and then everyone else after that trickles behind, and it’s a cycle. This is nothing new, this is just a standard cycle story. Same with Sydney. If you pull up the City and everything afterwards goes up in value, once the City goes up, then it hits the end back in the Blue Mountains and then it starts up again. So it’s all over Australia, the same markets.
Whilst being ever grateful for where he is now, Hong spills the details on what advice he would have given himself ten years ago…
I would say don’t invest into those shares in those companies that you thought were going to be going up. Potentially purchase more properties, leverage the shit out yourself back in the day. But you know, I’ve done a pretty good job on that with the last ten years, so I don’t know.
I think I’ve been lucky. Because of where I was and the thing is that it’s not just the personal side things, I’ve helped a lot of people. That’s where I love to wear a big badge. A lot of people that I know, because I’d be working in this industry for 10 years. Everyone that I helped get into a home or into an investment property on that upward market have all made a killing. They’ve all doubled. Like 10 years ago, anyone that bought a property that I helped with, doubled. They bought Blacktown for five hundred thousand dollars, now it’s worth eight, nine hundred thousand dollars. So it was just a great time and this is where buying the right property and where it should be, comes down to importance and not being taken down the road by some salesperson that stands in the middle Westfield’s. Yeah, it’s just, I’ve been blessed. Yeah. So yeah, well done to old Hank.
With such drive, motivation and the desire to help others build their portfolio as well his own, we take a look towards Hong’s exciting and undoubtedly achievable plans for the future…
The next five years… The most honest thing is that we’re hoping to finish another two developments and the journey will actually finish when I get to buy my home. So to be honest, I’m still renting at the moment. I rent because it’s convenient to everything.
The rents are cheap. It’s like 600 bucks a week. All my money, because I couldn’t back in the day go off and buy my dream house, which back in the day was a million dollars or something, I went the route of buying smaller investments and using the equity from that. And I always thought that in five years time I’d sell those properties and buy another home. But then the market went up and I leveraged myself onto other projects. In the next two projects and this is my 10-year journey, I should be able to buy my own home. This is the dream home, I have with my wife and my beautiful daughter, I should be able to buy that with cash. I think that I’ve been told once that probably one of the best investments you can do is buy your home. I’ve heard one of the other tools is you buy a home, renovate it, live in it for a year, flip it and sell it because there’s no capital gains tax. And you can just keep moving and keep rolling the money forward and forward. So everything that I’ve done for the last 10 years will be to buy my home. And the price now because I’ve waited so long – the price range is going to be two million dollars to two and a half million dollars. So that’s the end game. That’s 10 years from now. 10 years of doing everything, making the right moves and doing that sort of thing. So I think everyone’s end game is the Australian dream, to buy a home. And investing is either to have a retirement or to get into the home at one stage.
This episode was produced by Alex Cooper with narrations and interviews conducted by Tyrone Shum.