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The Housewife Millionaire: Buying a Property Investment in Australia

Founder of Somersoft Jan Somers will disclose her investment strategy for buying a property in Australia with no need for a deposit and how the Somersoft software can help you purchase a property – even by simply putting aside $50 a week!

Somers will discuss how to rethink your debt by using loans or appreciating assets to catapult your portfolio’s success and eliminating bad debt, like credit cards and flashy car loans that will suck your wealth dry. Also, find out why you should be keeping with fixed interest rates and using equity to leapfrog your way to wealth.

Bestselling author of the Building Wealth series and investment property expert, Jan Somers relives her long journey from school teacher, to mother, to property investor, to one of the most reputable sources of education on the property in Australia.

My name’s Jan and I’ve done an awful lot, not only in property investing but I’ve been a teacher, I’ve been a barmaid. I’ve done just about everything in life and I can look back and I hope that the experience has been very helpful to other people.

So what does Somers do in any given day?

Well, I’m a bit of an early bird and I’m also a late lad, too. Usually between about 5:00 and 5:30 because my husband goes cycling. We’ll have a cup of tea and then I always go for a walk. I’ve been for a walk for about the last 50 years of my life very early in the morning. Sometimes with the dog, who recently passed away. Now I do it with my daughter who has a young baby. I do a lot of paperwork when I get back between 7:00 and 9:00 AM, pay bills, do things, and then I have a late breakfast, about 9:00 o’clock. Then after that, it’s more paperwork or it might be I’ve got a renovation to do somewhere. I might be cutting trees, fixing kitchen cupboards, sewing curtains or I might be, these days, minding the two grandsons. Or we go to Europe once a year to do a hiking trip and I might spend a lot of time planning for that. This year we’re going to the Pyrenees so, I have a pretty full day. Not too many spare moments. In the middle of that, I squeeze a light lunch. 

Then about 4:00, I’ll do another hour of exercise. A bit a little more intense. Maybe a swim, maybe bike ride. At the gym, never on the road. Just anything to fill in that hour before dinner. We have an early dinner, about 5:30 PM. Watch the news, I’m not sure what for. You can miss it for two months and catch up on where you left off. Then my favourite shows. Whodunits like Agatha Christie, something on the History Channel, cricket. Then I got to bed about 11:00 AM. Unless I get stuck on Ancestry.com and then I’m up until about 2:00 in the morning

Wow. You have a very, very full day there. You mentioned that a large component of your daily ritual seems to be exercise, which is quite important. Does that help with the mindset and also help you with what you do day today?

It does. It always has. You not only think better, but you sleep better. I’ve been the same way for 50 years of my life. I just love getting out to do something and enjoy the world for what it is.

She has also developed many varied skills over her decades-long journey, which she has put to good use in her properties.

I just was asked in the beginning, how would I describe myself? I think probably the best answer in hindsight now is I was just a Jack of all trades. I learned a lot about a lot of things. I wasn’t necessarily a builder, a renovator, or a good financier. Nothing in the best property investor. I was prepared to have it done and learn a lot of things along the way.

Jan Somers Personal Background Story

Property investing was never the plan for Somers, who didn’t even know that she wanted to be a teacher until she fell into it and found her feet – very much like her entry into the property world.

I stumbled – is another good word to use because that’s how I got into teaching. I did three years at university. I took a year off because I couldn’t think of what I’d do next. I spent a year in Europe and travelling overseas before anyone knew what the word was, travelling overseas. Then I came back and I felt, what do I do next? So, I did a deployment education and became a teacher. I was always intrigued by the research. I knew how to dig out information. That was my strength and so, once I’d finished teaching and we had a young family, I was able to dig out sufficient information on property that made it work for us.

After retiring from teaching in the 80s, Somers continued her love of education into her new passion: property investing.

When we had a lot of properties underway and I was busy buying the property and doing things to the property, having kids and a family. I didn’t really have time for teaching then. I did join – I did do a lot of teaching in the sense that I lectured on property investment probably two or three times a week for many, many years. Which, I really enjoyed.

Again, it was an accidental passion that she found herself in as originally, she had absolutely no interest in property investment.

We grew up with the idea that we knew how to save money. We were taught very good monetary value. We were also taught a very good work ethic. It’s just so natural that the first thing we did when you got married was that you bought a property, which we did. More because that was the traditional way of doing things. We moved to the other side of town. We bought another property. We moved back to the other side of town. We bought another property and this went on for quite some time before we went back and forth to Sydney. We actually never bought a property in Sydney, but I can’t say I ever became interested until the mid-eighties when I had family and strangely enough, with three children at home, I had a lot of time to make a lot of phone calls. There was no Internet then. Do a lot of homework, understand the tax system as it related to property, and understand how good an investment it had been to us in the last ten years. I never started out with our first property. With the property’s a good investment, let’s get rolling.

It’s a very humble journey that you’ve gone through.

Well, I hope that I can short circuit that plan for a lot of people by saying yes, get into your first time because there’s too many people that will just hesitate and say I can’t afford it, but you can and you’ve really got to look at the basics in property and get started straight away. You can’t start with a six-bedroom, three ensuite house. You’ve got to start small.

We all started small somewhere. I have people who say to me, oh, we’ve just bought our first home and its got three bedrooms and one bathroom, and it’s only ten squares. I said, well that’s really good because our first home was three really small bedrooms, one really small bathroom, and it was only 7.4 squares or 74 square meters in the new terminology. We started really, really small and people need to get that idea that if you want to get into the market, I don’t apologize, but sorry, you do have to start small.

Absolutely. Baby steps.

Think big, but start small.

Jan Somers Property Investing Journey

The traditional expectations to buy a house after marriage is what began Somers’ journey. From there, it was a simple matter of not letting go of the next home that they lived in and instead of turning it into an investment.

We grew up in the Redcliffe area, both my husband and I. We went to the same high school together. Our property investing started mostly by accident. We bought our first property in Kippa-Ring, which now incidentally and accidentally is only about 100 meters from the new Kippa-Ring railway station that’s been very popular lately. Each place that we bought – because my husband shifted around so much – we managed to keep. More because we didn’t really know what to do with it and we’d been taught to save and to not squander money, and to put it into something. Such as something decent. We were always taught to save. Always for a rainy day, but I’m not sure when the rainy day ever came. We just managed to get it into property.

From there she quickly picked up the tricks of the trade that would lead her to the buy, reno, hold method favoured by many property investors.

Even from the first few properties that we bought back in the late ’80s, one of them I bought was only a half fixed house and I was able to get in, do some tiling. Which I’d never done in my life before.

Even our own home. We sanded the floor ourselves. My brother is a builder and he’s done a lot of renovations in England. If I ever got stuck, I’d just ring up and say hey, look. I want to stick this piece of stainless steel on top of a piece of laminex because someone’s put a pot down and it’s burned a hole. What glue should I use? I’ve always been prepared to ask questions for answers that I don’t know.

From years of research and hard work, Somers realised that she had something truly special and important to share with the world, which is how she came to teach about the property.

Probably because I didn’t want to go back to teaching. I didn’t want to teach kids anymore who didn’t want to be there. I had a lot of information about a property, that no one else had back in the late ’80s. I had an enormous amount of information. What do I do with it? I wasn’t going to teach high school if the kids weren’t interested in what I was offering. I started out doing a few little seminars in a local real estate agency with about ten people. I wasn’t really paid anything at all. I just really enjoyed it and I got to sell a few little bits of notes that I had put together. 

That was my introduction and then it just caught on like wildfire. All of a sudden I had lots of invitations to speak. Then I developed a more concrete strategy and I was able to research the book that we put together in ’91/’92, to explain why the strategy had worked. Digging up all the statistics on property over 100 years, enabled me to say I know property works. I’ve done it, but here’s the reason why and here’s all the research on shares and property to explain why and how we did it.

The journey simply continued from there with these little seminars, to an entire book dedicated to sharing Somers’ knowledge.

Well, the stapled notes turned into a little manual. It was called Manual for Residential Property Investors, which was about 50 pages. I had a cousin print it for me. He was in the printing industry and we had 5,000 printed because it didn’t cost very much to print 5,000 and I used to take them along to seminars. Before I knew it, within the year they were all gone. They were all sold. At that point, I virtually diverted a whole year to putting together a book. The book was the first of the Building Wealth through Investment Property series. So, I completed the book, I paid for my own editing. I paid for my own printing. In other words, I did the work. I didn’t know anything about marketing books.

So, I went along to a distributor at Herron. Herron World Distributors at the time. I said look, I’ve got this book. At that time I’d already been turned down by Penguin and someone else, and someone else, and someone else. He had one look at it and he said, if you can get a publicist then we can do this. Well, I did get a publicist who introduced me to the world as the housewife millionaire. Which remained kind of stuck. Did the Ray Martin on the Midday Show and a few current affairs. It was just like a whirlwind. It absolutely blew me away and just took off because no one had ever explained before how you invest in property. What’s the burns of investing in property, how and why does it work? I had a little formula and a little winner, but I didn’t set out to write a book and then sell millions of copies. It was just putting all this information down and then printing it ourselves, researching it ourselves, and finally we put it to market.

The seminars had been an exciting chapter of her life, but it was not forever.

I virtually finished doing seminars in about 2004. I had belonged to a Skipping organization that my daughter was very keen on and I decided with my organizational skills, that I could organize a world event. Which we did. We had people from about 30 different countries come to the Gold Coast and we had the World Championship Skipping on the coast. I took a year off because I could afford to take a year off. I really enjoyed doing it and I thought, I probably enjoy doing this and I don’t necessarily need to go back doing seminars anymore. Which I really did – I didn’t do it, certainly for the money or for the sale of books. When I stopped enjoying it, it was time to stop.

Probably about that time – although we had been involved in renovating properties on a small scale before that, that’s when I became much more involved. I’d be the first to go and check out the kitchens, check out the realtors, and do a lot ourselves from that point on.

However, it has not all been smiles and easy work for Somers over her investment journey, where the fickle nature of the property market could have been the end of her.

We had bought quite a lot of properties in the ’80s and with the clear intention of keeping them. I already had this buy and keep mentality back then. Except that we had been so successful I thought well, we’ve been very successful. I can afford to delve a little bit and buy a property, renovate it, do it up, and then flick it on and make even more money. So, we bought a property in 1988 and we paid exactly $50,000 for it. It was a dump. It was a dump, but we decided we could renovate it and then unsell it in a short period of time. We got in and ripped out the carpet, did everything that we could possibly do. I can’t recall exactly, but we probably spent $3,000 to $5,000, ten per cent of the property’s value at the time. Thinking well, that’s brought it up to $55,000. Maybe we can sell it for $60,000/$65,000 and that’s a good start with the renovation. 

So, we got the same agent back again and he walked in and he had a look. He said, you really want to know what it’s worth? I said, yeah. I’d like you to sell it for us again. He said, well I still only think I can get $50,000 for it. The same price that you paid. I thought, yeah, what have we done all this work for? All this work and spent all this money, and now it’s not worth anything more than what we paid for it and it probably wasn’t. It started a dump and it really was always a dump. We probably needed to spend much more money on that to make it work. We decided to put some tenants in it. We decided to put some tenants in it for two or three years. Probably more through to follow my commitment of at least, make something work.

The market turned and we decided to sell it. That was about ’89. 1989 the market had really, really shot along for the end of ’88 and ’89. The share market crashed in ’87, followed by a property burn because all the money poured out of shares and into the property. We were lucky to sell it at $86,000. 

That’s not really a bad story.

It wasn’t because of our skill in renovating, it wasn’t because we had picked the time of the market. We were very lucky. We weren’t experienced in renovating. We shouldn’t have had a buy and sell mentality. We were just lucky the change in the market got us out of trouble. From that point on, it’s really the very strong buy to keep philosophy.

That’s interesting. From that experience, it really taught a lesson to us all that you can put in all other money into actually renovating, but not necessarily what actually increased the value in a short period of time.

That’s right. It also teaches you that you need to identify more skills. At that stage, I was a basic hammer and nails girl. I didn’t have a lot of skill in knowing how a kitchen was put together. I do now because I’ve done a lot of renovations, all with the idea of keeping the property and just making it more rentable.

At the time, you learn a lot about yourself. I wasn’t skilled enough to know what renovations needed to be done and I really didn’t have the backing, the financial backing to say I can buy this and be able to flick it on, on my $10,000 or $20,000 and if I don’t, well I’ll just buy another one and make even more money. It was a good lesson in not only identifying your personality but identifying your skills as well.

The best moment for Somers was at the very beginning where, still a novice to the game, she discovered how to use equity to build her portfolio to the impressive figure it is today.

A few years probably. I was in Sydney when I had one of those a-ha moments that we’d gone down there in the early ’80s and we had quite a few properties in Brisbane. We wanted to buy into the Sydney market, but I didn’t think that we could afford to because at that stage and probably now, too – property down there is twice as expensive as it is in Brisbane. I thought well, that probably means that we’ll have to sell two properties in Brisbane in order to buy down in Sydney. I did have a chat with the real-estate agent and he wasn’t too interested in me because we had one income. I was pregnant with our first child and I didn’t have a job. Here I was asking a lot of questions about the property. He was trying to throw me off until he discovered that we did have a lot of property in Queensland and he made a very profound statement to me then. He said, lady, with what you’ve got in Queensland, you could have probably bought four properties down here in Sydney. 

He explained how using the equity and borrowing the money. I come home and I thought about it. I started looking up some more properties and I thought, no. It took another few years before the idea gelled. In fact, it was probably exactly four years. It was ’87 by the time we were on a roll and it all fell together.

Wow. Isn’t that amazing? I mean, time always tells. Back at that point in time, do you remember how much the properties were in Brisbane compared to Sydney?

Ah, yes. Yes, for sure. The properties in Brisbane were around about the $50,000 mark and in Sydney, you were looking at $100,000.

Wow, okay.

Compare that to today. The average price, though the median price in Brisbane is about $500,000 give or take, but the median price in Sydney is over the million marks now. I suppose we’re still relative in value. All that’s happened and even when I wrote the book, the property values were still of that nature. I tell people, look. If you think the book’s out of date, just go through and add a zero to everything.

That’s so true [laughs]. It’s interesting how the market cycles continue to follow that previous history. History seems to repeat itself and you just said it yourself. Brisbane was half the price of Sydney and just in today’s dollars, it’s still the same thing. That’s going back almost 30 years ago, actually or 25/30 years ago.

Yes.

Wow.

About 35 years ago. Yes, that’s right. Well, even going back to ’72 when we bought our first property. That was always the case. We bought our first property at $11,000. At that time, Sydney properties were around about the $20,000/$25,000 mark. That’s just – that’s how it has been and it always is. I guess that’s my strength in the property. The longevity that I’ve been in the industry and I’ve seen things happen, come ago. Over almost 45 years, since we bought our first property.

Rather than keep every property they’ve bought since the ‘70s, Somers and her husband have begun selling off some of their investments to reduce debt. And as they near their 70s, due to the work that is required to maintain so many properties.

We did sell a property. In the last few years, we’ve sold a few properties to wind down the debt. My husband and I, we’re approaching 70 and it’s time to look at other things for want of – well, we can’t continue having a huge portfolio. My kids keep saying, I can’t look after that, mom. So, it’s time to probably just – we have moved on a few. Just in the last two years.

So after doing so much, and accomplishing what seems like everything, there is to accomplish, what is there left to be excited about?

Probably it’s a complete turnaround. Now our family is grown up and I hope that some of the information that we’ve learned along the way has rubbed off and clearly it was because they’ve all been able to buy property. I’m very keen to pass on even more information to help them. One of their kids’ is doing a renovation so, I can help them where the kitchen benches and walls are, knock out walls, fix drainage problems, help them to work out the right way to buy. Money. I helped co-write the plans for my daughter’s house. I think it’s been time to help the family. I think I’ve helped a lot of people along the way and now that my kids are all old enough, I think they’ve got the property investment message well and truly. I can channel a little bit more time back into them.

So is it a Somers’ legacy? Will we be reading the next book in the line of succession or are her kids on their own path?

I think they all have their own careers. It’s something that we’ve been very strong on. It’s not like the farmer who hopes his son will become the farmer and so on, adding. I had a special interest in property and renovations. My husband had a special interest in computing, but it’s not something we ever said, hey look. Here’s the six inches drink of the manual that goes with the computing software program. You can take that over if you want. They’re interested, but they’re not interested in this business. I think it’s really important to allow children to develop their own set of skills and channel their own energy into what they really want.

Why Jan Somers Has No Need For A Deposit: How To Buy A $500,000 Property in Australia for $50 A Week

So what held Somers back from investing in more properties?

SOMERS: The idea that you needed a lot of money to make a lot more money. Even when we had a few properties and we were absolutely cash-strapped because not only did we have principal and interest loans; both principal and interest loans take another 10 years or 30 years. That was the bank’s philosophy back then. They wanted their money back A-S-A-P. And so we were busy trying to pay off properties at the rate of knots. We never had any money. We never had any cash. We had a lot of equity. And the idea of borrowing was probably instilled from the family who thought that borrowing money for anything, anything was a big no, no.

It took that real-estate agent back in Sydney and back in 1983 to set a train of thought in my mind. But it took a few more years to really bite the bullet, to say we can borrow money. And now I’ve got the hang of it, I’m going to borrow a lot of money.

Somers also believes the worst thing you can do is buy consumer goods.

SOMERS: The cars, the boats, and the big TV’s. We need to be careful that yes, borrowing money is a good thing and it’s okay to buy something that is going to appreciate in value. But cars, boats, and TVs are all going to depreciate. In 10 years you’ve got to ask yourself: What have I got to show for what I just borrowed? In most cases, you’ve got nothing to show and you’ve still got a big debt. 

It’s scary.

SOMERS: Unless you’ve bought property because most people just borrow frivolously to support a lifestyle.

Yeah. I mean, there’s people out there who have got a lot of property as well, but they borrow against that property to be able to live a lifestyle. What’s your belief or what’s your thoughts on that?

SOMERS: Well, they’re not alone. I’d say very conservatively, half the world is about supporting a lifestyle. To me, I have very simple tastes. I don’t need to have a flashy car. My car is a 12-year-old Beamer that I bought even secondhand, and I don’t need the latest car. Borrowing to buy money for frivolous things might show you off as the wealthiest person right now, but you’re not. Underneath, you’re not. The appearance of wealth doesn’t necessarily follow that you are wealthy.

So how do you change your thinking? How do you condition your mindset to accept the risks of Australian property investment? And how do you even go from procrastination to active investing?

SOMERS: I think you just need to rethink debt. Never borrow for cars, TV’s, credit cards. I probably don’t make the banks a lot of money at all from my credit card. I pay mine off well before the due date. I never pay interest on credit cards except when, occasionally, I’ve forgotten, or it’s been an oversight. But that’s where banks make their money. That’s where retail stores make their money on credit cards that go over because people are too busy trying to support that lifestyle. And you’ve got to change that strategy. Okay, you don’t have to go to some Jenny’s as I did for a long time. You don’t have to wear secondhand things and buy secondhand clothes, but you do need to have a mindset that you can’t continue to borrow beyond your means—unless, of course, you’re buying for an appreciated asset and then you’re just burying the money into a loan.

Actually, having a loan is a great way to save money because it forces you to put money into it—only if you’ve got something to show for what you have at the end of that time, like a property.

As a cash-strapped teacher and mother, how did Somers managed to juggle all her responsibilities with the high cost of living in Australia?

SOMERS: Well, it comes back to I had very simple taste and we did borrow a lot of money. In the ’80s, I was probably buying four or five properties a year— Sometimes even every few months. And to borrow those enormous amounts of money with a principal and interest loan was exorbitant. But the key to it came when I had spent the time to talk to a lot of lenders. I guess I didn’t exactly have a mentor, but I learned a lot from making a lot of phone calls, which you can do when you’re a stay-at-home mom.

I made a lot of phone calls. And I finally discovered what an interest-only loan was. Not an interest-free. It’s an interest-only; we only paid interest. Immediately, if you’re only paying the interest on—say, for simpleness, say a $500,000 loan today—, if you’re only paying the interest of 5 percent, you’re paying $25,000 in interest. Now, if that was a principal and interest loan, you’d probably have to pay $50,000 a year. Converting all our loans from principal and interest to interest-only made a huge difference to that cash flow. I started out skimping and saving. I thought we can’t go on like this forever. It was still viable, but this made a huge difference in discovering what interest-only loans were, which came about at the end of the ’80s with the deregulation of the financial market.

Oh… Back then, was it compulsory then that you had to pay interest?

SOMERS: Yes… In the late ’70s and early ’80s when we were buying, you not only had to take a principal and interest loan, it was usually over the furthest term possible of about 10 years. And not only that, you needed to have about a 25 percent cash deposit for that next house.

Wow.

SOMERS: Those were the three things that made you cash-poor. You had a principal and interest loan, so your payback was enormous. You needed to save for a deposit for the next property at the same time—or, say, we thought you did. And it really made a huge impact in switching to interest-only and not having to save a deposit in the late ’80s with the deregulation of the market.

What was the interest rate back then?

SOMERS: Well, it started out at a normal rate, which was about 7 or 8 percent. And with the collapse of the share market in ’87 and property investment took off in about ’88/’89—that’s when property virtually doubled in value from $50,000 to $100,000—, there were probably a lot of cowboys in the industry who said, “Well, now we can borrow zillions”. And they poured it into developments and it went on and on and on. Keating came in and he said, “Well, this has got to stop”. And interest rates went to about 20 percent.

One part of Somers’ strategy is to always fix interest rates on loans, to lower the risk of a variable rate skyrocketing, and taking her money with it.

SOMERS: And that’s one of the reasons I always fix interest rates at the moment—because we lived through that. But we lived through it with fixed-rate loans. And so I was never afraid that we were going to be blown out the back door because I made sure that our backside was covered.

That’s a very smart thing to do. Because as a variable rate and as interest rates increased, especially on the substantial portfolio, it can really hurt the back pocket too.

SOMERS: Oh, it sounds very good at the time when you can get a variable right now at 3.5 percent. It’s not going to stay 3.5 percent forevermore.

Jan Somers Property Investing Blueprint: Australia Investment Overview

Somers keeps her wealth-building strategy simple. She shares the smart way on how to borrow money, how to safely use equity, and how long you should be keeping your properties for.

SOMERS: It’s really simple and it’s so simple that the people are looking for something complicated and something that needs a university degree to interpret. It’s not like trying to invest in a share market and guessing derivatives. It’s really simple. It’s about borrowing money, buying a property, and keeping it for the long-term. And it’s so simple that we miss it. I guess to explain just a little bit on that—it’s borrowing money with interest-only because that’s going to reduce your payback amount rather than a POI. I fix the rate to keep me able to sleep at night. And you use the equity in your own house to be able to borrow the whole lot. You don’t need to deposit anymore for a property.

Then when you buy a property, I’d suggest you buy a medium residential price because that’s the sort of property everyone wants to buy in the first homeowner’s market. It’s the kind of property that everyone wants to rent. And you make sure that it’s in an area with reasonably good infrastructure, not a mining town. And then, the third thing is, you keep it for the long-term. You can renovate if you want, but don’t be like we did and renovate to sell and make a quick quid. Don’t sell and you’ll never have to worry about timing—because otherwise if you’re buying a property to sell, timing is really important. What’s more important is time, not timing. And so that’s the strategy. It’s simple. Borrow and buy, and don’t worry about the timing. Keep it for the long-term.

To add value to an existing property, she focuses on the cosmetic upgrades and never spends more than a week on renovations.

SOMERS: I don’t do major stuff. I don’t do anything like pull-out walls and reconfigure the whole house. That can be very expensive, and it doesn’t necessarily add a lot of dollars. I do things like, I might take off all of the cupboards from the kitchen front. And if there’s any marks on the laminate, I have a little trick where I have a tradesman who supplies me with stainless steel cutouts and I stick it on to cover up all of the bits. By the time you’ve replaced the catches, it finishes up looking like new. I might get someone to paint it. I rarely paint. I’m good at painting fences but not houses. And replace the carpet.

And if you’ve only got a little place to start with—that’s just a three-bedroom, one or two bathrooms at the most—it doesn’t take long. What I can’t get done in a week just doesn’t get done. So it’s almost back to new. And then I might spend two days in the yard, getting rid of the trees, trimming it. It doesn’t take long. Any more than a week and you’re wasting your time and wasting your money.

And are you doing those renovations yourself, or are you getting tradespeople to help you?

SOMERS: Well, a little bit of both. A little bit of both. I definitely get people in to do the painting and replace the carpet. I’m not into that. Or I might be a little selective and I only replace the carpet in a couple of rooms. But if it’s anything to do with just fixing up the kitchen or replacing taps and things in the bathroom, then I can do that. I’m very good at fixing up vanities—-just trim the whole lot with aluminium trim to hold it all together. I’ve turned some pretty dilapidated chip boarding to something that will hold together, at least for another five or six years. It was delaying the inevitable. If you can delay putting in a new kitchen for another 10 years then make it respectable and clean, then that’s a good renovation.

So then… would you be interested in getting those properties that we call “dumps”? Or would you just go past those and stick with those once that just need simple fixes/renovation?

SOMERS: I would have to identify—the perception of a dump is in the eye of the beholder. Now, if I looked at an old Queenslander, and the weatherboard is completely rotted on the outside and it badly needs paint—that’s quite major and it’s extremely expensive. So I weigh up in my own mind: How much is that going to need? Although Queensland is great to live in and they’ve got great character about them, they don’t necessarily make the greatest investment because of the maintenance issue. But if you can do the maintenance yourself, well that’s fine. But they do create major problems along the way and some people love that.

As the founder of Somersoft, she came up with the software’s concept decades ago when it was originally just a spreadsheet.

SOMERS: It started out as an Excel spreadsheet, which I put together in the ’80s to say, well why does property cost me so little now? I put this spreadsheet together to understand the difference between a principal and interest and an interest-only loan, primarily. I could work out that if I had a P&I loan, it was going to cost me $100 a week or if it was just an interest-only, it was going to cost me $50 a week. The template is there as an Excel spreadsheet. Of course, my husband was a computing programmer. Did I say to him, well you can write this in a piece of software, can’t you? Over several years he did. Over many years he’s added to it and added to it.

It enables people to put in a property for say, $500,000 or whatever it is. It works out what all the purchase costs are, etcetera, etcetera. You can put the rent in, you can put what your wages are. It does a lot of general guesswork on what the depreciation will be for things and the property. The bottom-line tells you, hey this property is going to cost you $50 a week. Now, if I buy a different property, one that’s perhaps new, I might get some more tax deductions. How much will that cost me? It’s very good for comparing properties along the way and understanding how it works. Should I buy a unit? Should I buy an old house? Should I buy a new house? You can put in those variables and get an answer that is quite a definitive answer because it was there in dollars and cents. Not this might be better and that might be better.

That’s really good. Does it update automatically for say, depreciation schedules, taxes, and all those kinds of things as well?

Yes. It’s not an accounting program, so it’s not something that you can punch the figures into and then hand your accountant at the end of the year. For example, you’re able to put in – if your $500,000 property is a new property and you get depreciation or capital allowance because it’s new, you can just put in the figure. This property has got a – I’ve paid $500,000 for. It’s got a $300,000 building on it that’s brand new and it can be written off at 2.5% or whatever the depreciation, the capital allowance is at this point in time. You get an instant answer for all the variables that you do change.

Fantastic.

There are several versions. There are the investor’s version and one for professionals. The investor’s version just allows people to get an instant answer instead of wondering, how much is this property really going to cost me? It teaches people to look past the $500,000 mark and look at the bottom-line, which might be $40 or $50 a week.

You can purchase this software online and then you’ll be sent a code to download it.

You download it. We actually send you a copy. You purchase it online and we give you a code that unlocks what you downloaded. We’ve probably sold thousands and thousands over the years. The feedback has just been enormous. The letters – I have filing cabinets full here, full of thank you’s from people, of stories that they told me, which resulted in another book, a story by the storybook.

The idea for the Somersoft Forum was born when Somers began to become bombarded with questions from aspiring investors.

It started out when we started getting hundreds of phone calls a day on should I buy this or should I buy that, and what’s the best? I didn’t really want to get into the consulting side of things. I think you need to know too much about a person’s situation before you can start giving that kind of advice. I didn’t really want to get into the advice side. We set up a forum so that like-minded investors could talk to each other about these kinds of things. Now, what if I do this? Should I buy here or should I buy in a mining town, or what do you think and what do you think? It attracted a lot of people that could discuss things with each other and then virtually support each other rather than using us as the mentor in the background.

This became a large community, with thousands of members joining up over the years.

Literally, thousands and thousands of members on that Somersoft forum, which, unfortunately, has come to an end because it was so popular and tens and tens of thousands joined and we needed to have different and better software. It became Property Chat that Simon is now looking after for us.

It just became a monster that was almost unmanageable because of the number of people on there. To be fair to the end, without resorting to advertising in dollars, which I’m sure we could have if we’d approached some big banks. I didn’t want to go down that route because we’ve always retained our credibility by not supporting anyone in particular.

Jan Somers Personal Habits

Certain personal habits make a person better at property investing, like goal-orientation, passion and commitment. But what habits have contributed to Somers’ property investing success?

SOMERS: Of later years, I’ve probably been able to stick my neck out, that I make sure that everything I do is covered. That’s—I’m willing to have a go, and I’m willing to learn. I think that’s really important. But I think it’s also important that I have quite simple tastes. I don’t buy extravagant cars, clothes, jewellery, anything. I mean, we could afford a Rolls Royce, and we could eat at market restaurants every night, but I’m quite happy with my old secondhand car. And I have steak and chips probably once a fortnight at the local pub. But it doesn’t mean that you have to go without buying investment property. It just means that you have to be very careful in managing your money and to not be extravagant. So those personal habits I think have been handed down from my parents. And I think my children also have developed a very good sense of monetary value

As the author of one of the bestselling Australian series on property investment and wealth-building, what books does Jen Somers recommend you read to help you in your property investment journey?

SOMERS: Well, back in the ’80s when I was learning a lot and learning about spending habits, I was a great fan of Noah Whittaker. I know he’s now steered into investment planning, but he has a very great philosophy on why some people do become wealthy and others don’t. He thinks it’s back down to their own spending habits. And I did a conference with him in the early ’90s. I think he had a couple of books out. I had a couple of books out. And I had a discussion with him at this conference where we were both speakers. He said, many people, the best investment that they could possibly make is a concrete box buried in the backyard—where you can only put your money into a little slot, but you can’t get it out easily. I thought, well that’s a strange thing to say. He’s just written a book on investing, but he says the biggest problem that people have is that they get their mitts on money and it’s at their fingertips—and it’s a recipe for disaster because they always spend what they have.

That’s also why property is so good because it forces you to contribute to a loan and that’s money that you probably what have frittered away. I still think getting back to basics – I think sometimes the property investment will look after itself. I could probably summarize what to do in the ‘Borrow, Buy, and Keep’ as a formula. Developing some good money habits is very good. I couldn’t go past Noah Whittaker’s book back then “Making Money Made Simple”.

If you want to connect with Somers or check out the books she has penned about property investing, you can visit her company’s website.

Well, the books are still through bookstores, but there’s a website at https://www.somersoft.com.au/. If they’re interested in the software, I’ve talked about the property is affordable, Borrow, Buy, and Keep. The software shows people have a $500,000 property might only cost $50 a week, which is equivalent to a couple of trips to McDonald’s through the week.

Frequently Asked Questions

This episode was produced by Alex Cooper with narrations and interviews conducted by Tyrone Shum.