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Susan Farquhar Transcript

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Susan Farquhar:
So how do I identify the right property in the right place at the right time, given I’ve spectacularly stuffed it on the wrong properties in the wrong place at the wrong time.

Tyrone Shum:
This is Property Investory where we talk to successful property investors, find out more about their stories, mindset and strategy.

I’m Tyrone Shum and in this episode, we talk with Susan Farquhar, founder and CEO of Australia’s leading property agency Calla Property. She shares with us some personal stories while starting and running her successful business, the failures she’s experienced with property, and all the things she has learned as a business woman and property investor.

Farquhar spends her time running Calla Property, a specialist company focusing on using data to help their clients find the best investment properties catered to them.

Susan Farquhar:
Calla Property really was founded on a proven research methodology using 130 points to evaluate the right property in the right place at the right time.

It’s really useful and I just I’ve always liked you know a data driven approach to pretty much anything. So it works.

Tyrone Shum:
Farquhar’s everyday routine varies quite a bit depending on her workload and business ventures.

Susan Farquhar:
So at the moment I’m waking up at 4:00 in the morning, I’m going to the gym about an hour and then I’m coming home and playing the piano for half an hour and then I’m pretty much getting ready for work and having them put my day coming to work probably by around, probably around seven or so seven thirty and then my staff come in and sort of between eight thirty and nine. And look you know running a business is every aspect of running a business from you know sales and marketing and training to platforms and processes and procedures.

Today I met with someone I would like to come work with me and went through a couple of CVs as I’m currently bringing on new BDMs (Business Development Manager). I gave another staff member the day off because she said she wasn’t feeling very well yesterday and she always goes above and beyond so I just said you know work from home. If I take the day off she wouldn’t do it. So I said work from home hoping that she won’t do too much work. So yeah come into work and I just really try to work in blocks so that I don’t get too distracted by emails but that doesn’t always work.

So yeah it’s been a been a busy day. I had a radio guy pitch to me you know potential radio advertising ideas and what else, sort of ensuring that clients who are settling got their rental strategy in place so that we can try to ensure that they have a tenant secured before the property actually settles.

Tyrone Shum:
Everyday, she is trying to make improvements to her company’s internal operations strategies as well.

Susan Farquhar:
One of the things that I think we do really well at Calla Property is have a whole, have quite a few little strategies within the well, above and beyond the property selection process that really helped to risk investing in property. So we’ve got a valuation strategy and we’ve got a rental strategy or a tenant strategy.

So yeah that’s one of the things I was just checking today. I’ve got a couple of clients that are sort of coming close to practical completion in Brisbane and I said I’d better just check and sure enough my GUN account manager had that sorted two months ago.

Tyrone Shum:
However, Farquhar’s only consistent habit is being inconsistent, as she changes up her daily activities from time to time.

Susan Farquhar:
I’m not very good at doing anything you know on a regular basis long term. That’s sort of what I’ve been doing for the last week and I’ll probably keep it going for another two weeks then you know then, a lot of you know as I said before that 130 check 130 point checklist is indicative of a very research heavy company and I do a lot of that research.

So we have a couple of full time researchers that are constantly evaluating the markets around Australia, 550 markets as you know. But once we’ve so just to kind of give you a bit of a rundown on on that research methodology, we’ve got – the first section is some macro research. So one of the one of the drivers of capital growth. And once you know once we’ve looked at those key research areas, that points us in the right direction in terms of the capital city or the region that sets a strong capital growth. And then we drill down further. The micro research is really about evaluating the right property in the right location. So macros about the right time. So I check up on those. Like I won’t recommend property to any of my clients until I’ve actually been on site and I’ve spent you know between three to seven days in the area making sure that you know everything really stacks up. So you know a couple weeks in Canberra is going to break my gym and piano routine and you know a couple weeks ago I was in Geelong and Melbourne. So yeah I’m not very good at being consistent except I’m consistently good at being inconsistent.

Tyrone Shum:
Farquhar lived in many places while she was growing up, both around Australia and overseas.

Susan Farquhar:
I was actually born in Malaysia, yeah my dad was in the Air Force so I went from Malaysia to Adelaide and Melbourne before I was six and then my parents separated and mum brought us to Brisbane so I went to primary school in Brisbane mostly and then I went to high school in Canberra so that was living with my dad and then when I was 15 I took a year off and went to France and did schooling in France for a year. So yes Canberra and France for high school and then university in Melbourne and Japan and I also lived in Thailand and the Blue Mountains and now I’ve been in Sydney.

Tyrone Shum:
Having experienced so many different lifestyles and cultures, she now has the ability to adapt to any business environment and be agile when operating her business.

Susan Farquhar:
I think it really helps me with… Because I have lived in so many areas in Australia and I know them very intuitively, that’s been really helpful in kind of directing the research or making sense of some of the research and so far that’s you know having that sort of layer of intuition has I think been really really valuable to the recommendations that I make to my clients. I think to just being able to handle agility, thriving on agility, I don’t need that structure and routine I can sort of jump from one thing to the other with quite a bit of laxity and I think that’s been that’s useful for running a business you know being able to jump from one thing to the other and as well as keep your eye on what everyone else, what everyone is doing, how the staff is handling things how all of your external suppliers are managing.

I mean I’ve also got a very amazing P.A. who helps me enormously with all of that. Without her I think there would be a lot more balls dropped from the air. Juggling a million things at once so she manages to catch all the things that I miss which is amazing.
So yes I think that’s been that’s been really instrumental. It’s very much a big part of who I am I think. Surprisingly I don’t crave or require stability. I like the gymnastics of life you know. Especially in running a business and being able to handle a lot of different locations that I am actually quite familiar with. It’s really helpful when I’m talking to clients.

Tyrone Shum:
After an unfortunate and severe injury, Farquhar left university to start up her own business in ceramics.

Susan Farquhar:
When I was at university study my first degree, I studied international relations and I speak a lot of languages as well so I was kind of heading down the path of probably you know the UN or you know international policy. At the same time I was lecturing in fine arts and running the ceramics studio at Melbourne Uni, it’s part of the activity centre. And then I was writing my thesis on Australian aid agencies and ethics and I was halfway through my thesis when I fell off a building. I fell seven meters head first into blue stone and fractured my skull and my back in two places so that kind of put a damper on things.

So I ended up, that was in Melbourne and I was very very frail and very very weak and you know, I just couldn’t think properly I had a massive head injury and we ended up moving my partner and I at the time ended up moving up to the Blue Mountains ironically because we were very avid rock climbers.

I mean I thought well that’s a good place for me to come to convalesce as well as for him to still be able to be active in climbing and we already knew some people up there in the climbing scene so that seemed like a good idea at the time and I actually set up my ceramic studio there and I ended up supplying 60 shops around Australia and exporting to four countries with my ceramics company.

Tyrone Shum:
While her ceramics studio was her first official experience running a business, she had always had an inkling for entrepreneurship ever since she was young.

Susan Farquhar:
Other than some little ones. When I was little, I used to make stuff and sell it when I was like 10. I had a little stall at the front of the church.

And also an inventor like I used to invent things all the time even though I might not have actually created it but i conceptualised it. Funnily enough the latest one that’s come out is Nuromol, the tablet that’s Nurofen and Panadol and I came up with that idea when my daughter, she… it’s funny how history repeats itself. She jumped off a ledge and was you know showing off to me because I’m the brave one and she was always pretty chicken. And she’s like “Mum look I jumped off this ledge” and it was at Coogee beach into the sand. And I said “okay cool”. Anyway so I went over to watch her jump and she wouldn’t jump and I’m like “Okay honey, if you jump or not, I don’t care I’ve got to go back to my friends”. Anyway she jumped and she knocked herself out with her knee. Like her knee hit her chin. There was blood everywhere. Anyway so she’s off to hospital and getting her tooth extracted and you know because it was a vertical fracture from her tooth into her gum and that’s as bad as a broken bone in terms of it, I actually didn’t realise.

So anyway after that she had to have you know two Nurofen every six hours and two panadol every four hours. And I thought that’s really awkward. You know can’t they just put it in one and have it every two hours or four hours. So used to kind of think that way and come up with stuff like that for a pretty young age. So you know, I guess, I’m quite a kind of natural thinker and I quite enjoy economic time thinking, macroeconomics way. Sort of like if this happens then what happens here. If the Chinese goes up, well what effect will that have on Australian iron or immigration to Canada or whatever.

So yeah so that was my first real you know company I guess where I was employing people and you know I was in Vogue Living and every other interior magazine that was around at the time.

Tyrone Shum:
After her ceramics business, Farquhar pursued a few other business ventures before settling on Calla Property.

Susan Farquhar:
I just went on to a series of other businesses and when I was probably about 37 I think so about seven or eight years ago, I did my MBA and I really enjoyed maths and economics and finance and accounting and stuff which really surprised me. I was quite good at maths at school but I always had that really creative bent as well.

And I’d already done a financial planning course from because of a previous company that I ran. I sort of needed that just to kind of cover my tracks if there was any recourse in terms of advice given over the phone. It was actually a marketing company but I just didn’t want to be exposed so I did my financial planning qualifications and then did my MBA and then when I finished my MBA I became a mortgage broker and yeah kind of then I was looking at property and finances and that’s really where I got into Calla Property.

Tyrone Shum:
Despite her early start in business, Farquhar’s talent in entrepreneurship was purely her own as her parents did little to help her along the way.

Susan Farquhar:
I’m not really sure where that came from because my parents didn’t do particularly well in property either.

But you know the funny thing the funny thing is I remember like all of my life feeling like a little annoyed that my dad didn’t teach me better about money because he was he’s so smart and you know he’s just done so I thought he had done so well for himself.

But then I actually did, I got a commercial loan for him and I was going through his finances and I just looked at his finances and went okay.

You didn’t teach me because you actually didn’t know you know, not that he was doing badly it’s just that things like there were so so much more opportunity than he realized. And you know I know I often talk about how if you look at you know my parent’s generation or baby boomers, life was either really cheap or free for them. You know they lived on one income you know one car, lived in a small house with one bathroom, they earned well, they had jobs for life. So they didn’t have to think about it properly. Well certainly about property but they certainly didn’t have to even think about money or pensions or anything like that in the way that we do. You know the assumption was that you know you pay taxes or live your life you get the pension. My dad worked for the Air Force so he had a defined benefit pension as well. So you know they just didn’t have to think about these things. Credit cards weren’t around when my dad was a kid. So you know yeah it was it was silly to think that Dad would have taught me anything differently you know. These weren’t things that he’d ever had to think about.

Tyrone Shum:
However, she does believe it wasn’t unfair for her parents to not share any of their tips on financial planning as those questions were simply not asked during their time.

Susan Farquhar:
I think that this is a fairly you know these are fairly recent you know generational concerns that we have about tax minimisation, about future security, about leaving things for your kids.
You know I grew up fully knowing that I wasn’t going to get anything like that. So I got nothing. You’re not getting anything. Cool yeah, fair enough. I agree with that. I don’t want anything, you know like spend spend my inheritance you’ve worked really hard for that. And I’m you know very lucky that my parents are so healthy and you know I travel every year and you know they just got back from camping in Botswana for God’s sakes not glamping. Like seriously camping.

But then the year before you know we were all skiing in Aspen together. So you know yeah they’ve got you know they’ve set themselves up really well but they’ve done that through investing their businesses which has been their motel so the first commercial loan was for a motel in Gunnedah and then the second they spring bought it off and got a second one in Armidale so you know they’ve done really well with that but yeah they didn’t, I didn’t have those questions because those questions weren’t asked you know I don’t really think that my parents influenced that too much. I think I actually don’t know.

Tyrone Shum:
Coming up after the break, we delve into Farquhar’s property journey, where she shares what went wrong with her first five properties…

Susan Farquhar:
I just remember at the time thinking, gosh it just didn’t even occur to me that I needed to know anything about property.

Tyrone Shum:
How she managed to research her way into property investment…

Susan Farquhar:
When I look at the macro research which is you know economy, employment, infrastructure, supply and demand, demographics and population when you look at those key things you know I often say to my clients you know with this methodology, there are a couple of Kill Points right?

Tyrone Shum:
How Calla Property came about…

Susan Farquhar:
And that was my aha moment where I looked at the numbers and then I spoke to cause then I had a partner, and I spoke to my partner and I said “What do you think”. And he said “we’re going to be fine” and that’s all I needed.

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

Farquhar was quick to invest in property at the age of 22, however due to her lack of knowledge and experience in property, her investments did not turn out as profitable as she had hoped.

Susan Farquhar:
I think my first property was when I was about 22 or 23, I bought a block of land and then I built a house on it and then I bought another property and other land and so a property that was on three blocks of land that I was doing a subdivision on and anyway then, when I was 26 my mum died and then I split up with my partner from my 20s and then you know then I was a single mother with a three day old baby and all of this sort of happened bang bang bang sort of within three years and I had to look at what I could do to survive and that was obviously selling some of my portfolio.

And that’s when I realised in a fairly significant way that I had bought the wrong property in the wrong place at the wrong time five times over. And the reason for that was I bought land that doesn’t give you any income.

So that was not a good idea. I bought another property in the peak of the market and then this was at the bottom of the market so I was actually in negative equity. I also bought another property on a no doc loan that I never should have got lending on. So that was you know back in the 90s. So you know, things just hadn’t aligned well and they could’ve aligned so well but I was really royally stuffed up five times. So and I just remember at the time thinking, gosh it just didn’t even occur to me that I needed to know anything about property.

Tyrone Shum:
However, she never gave up on property and after saving enough for another investment property, started to really research into the industry and its technicalities.

Susan Farquhar:
I just had always had that property makes money which is why I had just always put my money into property. That was much more suited to my risk profile than shares or stocks. So that’s when I started to… well not straight away, it took me quite a lot of time to recover. But when I started getting some money together again and savings I thought okay, property is still the right vehicle for me in terms of wealth creation. I know I can do really well in property but obviously there’s a lot more that I need to know. So how do I identify the right property in the right place at the right time, given I’ve spectacularly stuffed it on the wrong properties in the wrong place at the wrong time.

So about 18 years ago actually I started researching about what does make a good property. So I remember at the time thinking you know if I’d just bought one thing in Sydney I would be minted now. You know I wouldn’t be concerned about this at all but even that’s probably not true. You know like it’s easy to look at that but you know again I mean, if you bought an apartment in Rosebery in Sydney right now would that be a good investment in six years time. Who knows you don’t know, the declining market, it’s over-supplied the rental yield is very low in Sydney compared to most other capital cities. So I may well have also been in that situation where I couldn’t afford to hold the property to realize the capital growth because it was causing too much stress on my lifestyle. So it’s you know it’s very easy to make those assumptions so I just thought okay really I’m good at research I’ve written a thesis I’ve done all of that work at uni, how hard can it be. So I started looking into it.

Tyrone Shum:
Farquhar found that there are certain “kill points” when it comes to looking at property investment from a bigger picture.

Susan Farquhar:
In the end it really isn’t rocket science but there is a science to it you know and being able to put it together in a methodology that is methodical and you know makes sense and flows you know like one of the, when I look at the macro research which is you know economy, employment, infrastructure, supply and demand, demographics and population when you look at those key things you know I often say to my clients you know with this methodology, there are a couple of Kill Points right. And that means that if this criteria is not satisfied to the right degree then we stopped the research right there, there’s no point continuing. So out of those areas as macro research, what is the first kill point.

It’s the economy right if the economy’s not diversified enough…

So think mining towns okay if you’ve got a single driver of growth for the economy or a small economy then that’s inherently risky. You don’t have enough insulation for your property. So we even use this metric and this is probably quite controversial at the moment but I even look at the capital cities of Brisbane and Perth and Brisbane is, the Brisbane economy is very much you know the success of that economy is driven by mining as is the Perth economy. However Brisbane has a much more diversified mining companies and mining types from bauxite to coal to gold and silver and many other things, sand, magnesium, copper, nickel you know gas you name it. Whereas you know Perth is really very very much dependent on iron ore. Yes it has a couple of other you know good mines but you know Argyle mine is closing hopefully, lithium will be a good option for WA but if something happens in a mining, Perth is hugely impacted by it and we’ve seen that in the last cycle. So while many investment experts are saying you know great time to invest in Perth, I disagree. I think for you know a 400000 dollar investment, there are better options for a savvy investor.

Tyrone Shum:
And that’s opportunity cost as well. You know if you put your money in yen per for forty four point thousand you have to wait 10 years before gross you possibly have missed out on other opportunities around the overstatement. Yeah you get the wrath as well.

Susan Farquhar:
Exactly. And that’s why the macro research is so important to get the timing right. We’re really looking to invest in getting to a property that is in a rising market because look really when you’re looking at new property in particular which is what we specialize in, it’s really the time in the market that you’re going to make the most amount of money and it’s compound interest that does you more favours than anything else in the long term.

But if you get the timing right then and you invest in say like 7 8 9 on the property clock, then the gains that you’re going to make between 9 and 12 which is really the growth quadrant of the market should insulate your investment from the shocks that are going to come in the declining market. And the you know the trust market you know 12 to 6 and even if by the time you get around to seven you’re kind of really at the same point that you know because you’ve gone up and then you’ve gone down that’s still okay because at that point the compound interest really kicks in and that’s when you double the property in that you know 11 years for capital city and 15 years for a regional town if you get that part right.

Tyrone Shum:
She bases her whole business on this research because it applies to all investors and gives them a broader understanding of the macroeconomics behind the industry.

Susan Farquhar:
That’s the research that we do and you know I’m so glad I did it because you know when I was when I started to invest again and started to do well in the property market I had friends and family take note and go you know this is really great what you’re doing. And I really did mortgage broking as a way of researching the market for property before I set it up. So I really wanted to understand more about finance because it’s access to finance that really sort of is the reason why a market goes into decline and the reason why the market goes up again. Right. So finance always precedes the fall or the growth. And we’ve seen it this cycle with APRA. Normally they place interest rates but this cycle has been you know imposing various constraints on lending and that’s really what has helped to take the heat out of the market. So other policy changes like changes to foreign investors and stamp duty for foreign investors as well as Chinese internal policy for taking money out of China for Chinese nationals.

So they’re the kinds of things that I thought well, they’re just the kinds of things I didn’t understand about cycles so I did my mortgage broking and yeah look the mortgage broking qualification is an easy thing but it’s more the practice you know and having a couple of years practising and going okay this is what this market is about, you know really understanding the role of the RBA and different policies and how the rate is not necessarily the most important thing when you’re talking about this stuff.

Tyrone Shum:
By readily preparing this research beforehand, Farquhar is able to answer all the questions her clients may have.

Susan Farquhar:
It’s hugely beneficial in terms of being able to add value to my clients because while I’m qualified as a financial planner, mortgage broker, real estate agent all I do is this very narrow thing which is Calla Property for generally speaking busy professionals who, you know there’s so much chatter in the market.

They’ve listened to their friends and family, they’ve heard all the stuff on the media and they still don’t know what to do. So they want a trusted adviser who can help them invest. And that’s what we do. So we don’t do any lending or any financial planning but it really is very helpful to understand policies and lending because we’re often the starting point for our clients. We trust really lies with us. We have a fantastic referral network of amazing professionals who we refer our clients to. We call that their wealth creation team and you know it really helps when the client comes back to us and says you know I’m earning a million dollars and I’ve got five hundred thousand dollars in equity. Why can I only borrow 400000. Okay well this is why, this is what’s happening. Or when they say to us why would we go interest only instead of PNI.

All those questions tend to come back to us and it’s really just I think a really good value add for our clients to be able to answer those things with probably a level of insight that a lot of other property people wouldn’t be able to do. Certainly real estate agents, you know or buyers agents.

Tyrone Shum:
Despite knowing so much about property investment and the broader industry, starting Calla Property was not an easy feat for her.

Susan Farquhar:
When I first set up Calla Property I was, look even though I’d set up a number of businesses prior they were all in the Blue Mountains right.

And it’s easy to be brave when life is cheap and you know when the last company I set up was like a database marketing company that was pre Google year 2002 or 2003, it was no year 2001 I set that up.

So when I was you know kind of putting all this research together and doing the mortgage broking I knew that this is what I wanted to do but I was just really worried about the cost of Sydney, the cost of living. I was a single mother with a seven year old daughter and I was just like you know what, how am I going to do this. You know so I started looking at investors and put together a business plan and I was presenting the business plan to someone because this is somebody who had said to me about a year earlier look I’ve got 150000 dollars to invest and I want to invest in you. Whatever business you want to do, I know you’re going to do really well. So let’s go partners and you know just whatever it is you want to do.

But I wasn’t ready for it then and it was a really amazing offer and I felt incredibly flattered but I didn’t know exactly what I wanted to do. I knew that mortgage everything was in it says it’s too detailed for me like I’m much more of a big picture you know grow kind of something amazing. So it wasn’t exactly, not saying that you can’t do that in mortgage broking, you absolutely can but it wasn’t something I was passionate about.

Tyrone Shum:
However, a year later, after completing her business plans, Farquhar was unable to get together the money she thought she needed to start up the business.

Susan Farquhar:
I put together the… so this is now a year and a half later presenting to the person who said that they’d like to invest in me and so I did this presentation and he said look that was a year and a half, I don’t have that 150000 anymore because he’s invested in it in other things. And he used to work for St George actually and he ended up getting out of St. George and setting up his own broking business. But I was looking at the numbers and I just really thought about it and thought okay this is how much I need to earn. And I know I can start this business and look at the costs of an office that was under a demolition clause you know. So I was only like a thousand dollars a month on George Street in the city. Including everything right. It was month by month but I ended up staying there for just over two years which was amazing because you know they’ve done all the light rail and this was just above Wynyard Station so they were going to demolishing the building.

Tyrone Shum:
But she did not give up on her business and instead after looking at her numbers again, decided to do it herself.

Susan Farquhar:
I looked at the figures and I thought okay if I put 30000 into this which was something I could comfortably you know put into this business then how long do I have before I get a client you know and I started doing the sums on that and working backwards and again you know data driven approach. Girl that loves numbers, it always works and tells a story that words don’t you know. So I looked at it and just went okay I’m going to do this and I was so miserable where I was working like I was getting sick all the time when I never ever get sick. And that was my aha moment where I looked at the numbers and then I spoke to cause then I had a partner, and I spoke to my partner and I said “What do you think”. And he said “we’re going to be fine” and that’s all I needed. You know he said I will back you all the way. We’re going to be great and you’ve got I think I had about six months or something before I needed a client and anyway so I went out on my merry way and set up my office and I brought my laptop from home and my printer from home and just did everything very very cheaply in case it failed because that’s what I was gearing towards making sure that it didn’t fail and I didn’t really plan for it succeeding in the first few months and I had six clients in the first six weeks it was extraordinary. Yeah and it’s just gone from strength to strength. So I think that was my aha moment. I had two potential investors. I presented both of them and then I looked at it and just went what am I doing, you can do this you know. So that was it. That was an amazing moment for me. That was very powerful. And I haven’t looked back.

Susan Farquhar:
I think that they do what they’re really good at and I do what I’m good at and that’s pretty much how we run Calla Property and it’s really nice. Makes for a really nice culture.

Tyrone Shum:
This is Property Investory where we talk to successful property investors, find out more about their stories, mindset and strategy.

I’m Tyrone Shum and in this episode we continue our conversation with Susan Farquhar, CEO of research-based consultant company Calla Property. After losing all her properties during the GFC, Farquhar shares how she built her property portfolio back up from scratch, how she runs her business and some interesting insights into her soul-feeding hobbies.

Now with Calla Property, Farquhar’s mindset has changed to incorporate her clients and their goals with her own.

Susan Farquhar:
For property I’ve got I just rely on Calla Property and our research methodology and you know that’s fantastic to have that resource obviously so but in terms of business I think you know being able to partner with really good people who can add value to your clients. That’s really the biggest thing for me. Our slogan is building your dreams.

And so we curate our client’s wealth creation team that helps build their dreams and but they also help me build my dreams and it’s kind of a 360 thing so I’ve got fantastic mortgage brokers for my clients. you know fantastic property lawyers, fantastic property managers and I very much rely on them for information that I need to make sure that I’m still current and doing a good job. You know when there are changes to lending policy or you know I know that I can talk to my broker about that. One of my brokers who I refer clients to and to say okay what’s happening with interest only. Can we still get 80, 90 percent LVR for an interest only loan for an investment property. If so what’s the rate.

So I know that when I’m doing the cash for my clients, I stress everything that it’s there’s enough fat in it to actually reflect reality and reality plus shocks really.

Tyrone Shum:
While working as a property investment consultant, Farquhar is always looking to explain all her reasoning and research to her clients to share her knowledge and make sure they understand the logics behind their investment.

Susan Farquhar:
Back then my first client who was really really really savvy, she’d already bought two investment properties in Sydney and she is really good at research as well and she said I want to invest in Brisbane and that’s where my research had taken us as well.

I think what’s unique about what I do is it’s not just presenting the properties, it’s showing the research behind it. What are the macro drivers of capital growth. Why Brisbane what is the infrastructure what’s the supply and demand. What’s the population, the demographics, the net interstate migration, net overseas migration, natural population growth. Yeah like really putting a whole lot of information together around it about why we’re recommending this particular property.

So I’ve got a lot of the information on the macro and then the micro. So why would we recommend, I don’t know, back then it was like why would we recommend Kedron over Cannon Hill for example you know, similar proximity to the CBD. And what type of property, are we looking at apartments or townhouses or house and land.

So really making that very clear to the client so that there aren’t any smoke and mirrors, this isn’t magic. This is research and then presenting a number of properties that fit their criteria based on their budget. So we focus on the cash flows not the kitchen, right. So forget the pretty pictures. This is an investment property. How is this property going to perform. So then I do the cashflow so we do a straight line cashflow which is basically what this property will cost you week on week in, week out.

Tyrone Shum:
Farquhar also looks to budget everything and calculate all the numbers before making an investment.

Susan Farquhar:
Then we do our research on the market rent for a property like that and then you use that figure for our cash flow so that you know your net annual position right and then we can break that down. Now why that’s so important is it’s not about whether a property is cash flow positive or cash flow negative. You can have a fantastic property that’s five thousand dollars a year cash flow negative that could suit someone quite well. But if they’re very tight like we’ve got you know one family we’re dealing with at the moment, only one income earner and two young children and they would like to have a third one and they are really quite tight in terms of their budget, they can comfortably borrow what they’ve needed to to buy a house that we’re recommending in Britain but they really don’t have a lot more beyond that, that I would feel comfortable them dipping into.

So based on that there were a number of opportunities that we discounted because just like no I don’t even want you to pay 10 dollars a week out of pocket because if any of these figures change in the first 12 months you know that could be too stressful for you and I know what that feels like.

Tyrone Shum:
By basing all her decisions for her clients on solid research, she ensures she leads them to success.

Susan Farquhar:
I think that’s also one of the things I love about what I do and the ethics behind what I do and what I teach and train my BDMs is you have to know what it feels like to lose a property you know because you can’t afford it, it’s awful. I’m just so glad that happened to me when I was so young because I had so long to recover from that. But if it happened to you when you were 50 and this is your first property, that’s just unacceptable. You just can’t do that. So yeah so I really take that kind of stuff very seriously. You know you’re dealing with people’s money, you’re dealing with people’s future you know and their hopes and dreams especially in retirement. So that’s why I keep you know like the research now Calla Property insights incorporates 130 points of criteria. I think I started out with 24. You know it just keeps growing and growing. The more I learn the more, I see the more, I realize. I mean the classic example is that awful awful case of the apartment block that went up in flames in England. You know cladding wasn’t something that we’d really thought of you know we wasn’t on our radar.

We looked at cladding as in in terms of the way we look at inclusions and looked at ratings and so forth but the ratings you know the ratings weren’t current enough either. You know people like the ratings agencies didn’t realise that this was happening either. So that’s something that we now incorporate into our research just as an example.

Tyrone Shum:
Farquhar had no fears while purchasing her first investment property back in the 1990s.

Susan Farquhar:
I literally had… had cash from my business and my you know my partner and I bought a block of land for 27 thousand dollars so I think we only had five thousand dollars or so, that was all we needed.

And back then I had a bank manager who just really believed in me you know and yeah it was really amazing. It was really like having a finance partner for all of those properties at the beginning, not all of them because the low doc loan that I got that was through a broker who was a friend. So yeah I didn’t, I wish I’d had a different mindset though, I wish I had understood more about what can go wrong with property where I just sort of heard that.

I mean this is we’re talking like 1995 right. And I was so young. So it’s not like I’d read books about this stuff. It’s just I’d heard that you’d do well with property. So that’s what I did.

Tyrone Shum:
She had no strategy when she bought her first few properties and has since learned to be more calculative with what property she decides to invest in.

Susan Farquhar:
I did the classic things wrong like I know this area, I don’t know this area. I knew nothing about it, I didn’t know about you know the infrastructure that was proposed and you know how long you know that bloody road from Sydney the Blue Mountains took 20 years when it was meant to take five. You know I didn’t know the unemployment rate. I didn’t know the average rental return. I mean I bought property that was on land that I could have actually done very very well with and I actually did end up selling that to a developer who ended up doing exactly what I planned to do. But then I had a tiny baby and I was on my own and I just didn’t have the bandwidth to deal with it. But yeah I certainly was, I mean that was my third property I wish and the first two I’d have a little bit more awareness of what I needed to know. I mean the first property not so much because that was for my own home and we actually did very very well out of that because of the value add you know by adding a house onto it.

Yeah but the second one I mean I bought that house because it was like a little three bedroom weatherboard with terracotta tiles really well made. But I bought it because it had a tiled bath. I thought that was cool. Again I focus on cash flows.

Tyrone Shum:
It’s just like a beautiful kitchen because we all fall in love.

Susan Farquhar:
Yeah yeah totally. And look I never live there I was never going to live there. So why do they care about the bath, I shouldn’t have cared about any of it. So yeah it was I wish I had had more awareness but I don’t know.

I mean unless you had a parent who taught you that stuff it just wasn’t something that was very well known or understood, there’s so many more people who can help you now than what was around then but it didn’t even occur to me to look for someone to help me. I just thought that property did well.

Tyrone Shum:
As for the best advice she’s ever received, Farquhar recalls the classic “do what you love to do”.

Susan Farquhar:
I think that probably the first one that springs to mind, it took me a long time to actually hear this I think. But it’s a classic line but it’s just you know do what you really want to do and you know I love what you do and you’ll never work a day in your life.

Yeah I really love that and I love that I’m now living that like I had a really tough week a couple of weeks ago because of the stake that an external party made. And you know it was really really hard and it made me realise how few bad days I have. You know I think that was it was only a couple of days and it was so significant because every day at Calla Property is you know a happy sunshiny day, we just have such a great time here but that’s really helped me is when it comes to people management. I’ve set up the systems within my company and my H.R. systems that I make sure that everyone who has a role with me is just doing what they love and not very much that they don’t like doing. So if you look at the BDMs for example all they do is is talk to clients.

They don’t do any paperwork, any admin they don’t have to create presentations they don’t have to take an ELI through a contract and settlement, they’ve got an account manager who will do all of that with them. So dedicated account manager for every single client who isn’t the BDM right. So because salespeople are not very good at it, it’s not where they’re best utilized within a business.

Tyrone Shum:
She also applies this advice to all her employees since their start at her company.

Susan Farquhar:
Whenever I bring on a new person who is in an admin role I get the existing admin people to just write down what they love about their role and what they hate about their role.

Not necessarily hate that you know things that they’d rather not do during the day and then we make sure that we can take that away from them and allocate that to the new person. So we make sure that we get somebody on who likes doing that stuff right. So yeah that’s something that works really well and I think it’s also something that helps us relate to our clients. You know there’s endless amount of information out there and you know our clients are smart savvy business people, a lot of them are professionals. I’m sure they could they could do fairly well and have a pretty pretty educated guess where would be a good place to invest. Yes but they understand that this is something that I love, that I’m good at and you know then it’s worthwhile deferring that to me. So yeah I think that they do what they’re really good at and I do what I’m good at and that’s pretty much how we run Calla Property and it’s really nice. Makes for a really nice culture.

Tyrone Shum:
Coming up after the break, Farquhar shares more about the most contributing habit to her success…

Susan Farquhar:
What do I actually want to be doing that would make me feel really fulfilled rather than busy.

Tyrone Shum:
Her plans for the near future…

Susan Farquhar:
It wasn’t just a job for me, I had a bigger vision than that. I just needed someone to kind of articulate that for me you know and that’s why I decided that I really wanted to invest in Calla Property and grow it.

Tyrone Shum:
And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

One of Farquhar’s most contributing habits to her success is her ability to focus down and rid herself off any unproductive activities and distractions.

Susan Farquhar:
I have an idea that comes from at the beginning of the year so I’ve lived in Sydney now for 10 years right. And one of the things that really bugs me about people in Sydney that I hadn’t noticed in other places, mind you I’ve been living in the Blue Mountains for 12 years is that you’d say hey how are you and people would say people would respond with busy and it’s like well that’s not how you are, this is what you’re doing. Like you know everyone’s busy. Like how are you. And people would say busy and it used to really bug me.

So I was like I don’t know what that means but it’s also that’s, it’s not a choice you know, it’s not something I like the sound of anyway. In January this year someone said “How are you” and I said “busy” and I went Oh my God I’ve just done the thing that I hate. But as I said I’ve always said this is a choice so I thought okay what does that mean for me if I say I’m busy. So I actually realised that the things that I really have never liked doing were creeping into my days so coming home being tired, sitting down and watching TV for hours or you know mucking around on Facebook on the bus and you know social media and stuff and things that don’t have any value for me any intrinsic value.

It’s just not something that I derive a huge amount of joy from, it’s a distraction. So I thought okay if I you know everyone’s got the same amount of time in the day, what do I actually want to be doing that would make me feel really fulfilled rather than busy which to me seems like an abstract distraction right. So I thought okay I really want to just come back from Mexico and Cuba and I said I liked to learn Spanish. I want to read more books. And I want to play the piano and I also do pottery still. And you know get fit and I thought about how will I cram all of that into my day.

Tyrone Shum:
Due to this habit, Farquhar has started to participate in more productive hobbies.

Susan Farquhar:
It’s like you take away five hours of distraction it’s actually not very difficult to get that into your day. Well certainly into your week. So you know this year has been all about making sure that I do pottery because for me, I need that creative outlet and I find it really relaxing and you know it’s really you know it’s my happy place you know. And you know I swim in Summer so I was swimming a lot then and you know I really enjoy doing that reading for pleasure as well as business. Got into reading books again, playing the piano. Spanish hasn’t quite worked it.

And also I pick up languages very very easily. Like I speak you know probably 10 languages pretty well. So I’m actually better off just going to the country for a month and then getting fluent that way. So it’s that kind of makes more sense to me than trying to you know.
Yeah I mean I did subscribe to Babel and to be honest in you know being in Cuba and Mexico for two weeks I actually got by pretty well on the Spanish that I had. In fact my fiance said to me oh I didn’t know you spoke Spanish so I said no no neither did I. So I speak French fluently so it’s not that difficult to kind of you know put on a Spanish accent and speak French, it was very convincing and a few hand gestures. You know you get away with the lot.

Tyrone Shum:
During her spare time now, Farquhar participates in soul-feeding hobbies rather than simply lounging around watching TV as she did before.

Susan Farquhar:
That was really a very conscious decision to okay I’m not going to be watching TV. I’m not going to be you know, I know Facebook off my phone and you know if I want to access Facebook I can but I have to be at a computer which you know that’s just at work and when I’m at work and I have time to that. So yes that’s been a really good decision you know in terms of habits and that’s something that I would like to continue because I actually noticed a few weeks ago that I was starting to, I got addicted to Suits.

Okay so that’s my concern. So I’m on the eighth season right and I just can’t, I can only watch one episode like a month because I just don’t want it to end. After binge-watching the first seven seasons, I’m taking this one very slowly.

Yes I realize that I was spending weekends on the couch watching Suits and that’s fine when it’s winter and it’s cold and stuff but it’s just not really me. So it just in the last few weeks it’s like nope, turning the TV off, playing the piano, going to the gym and yes that’s a really nice thing to do. Things that feed my soul you know rather than just make me feel like I’ve done nothing

Tyrone Shum:
Say she met herself 10 years ago what would she say to her?

Susan Farquhar:
Do this sooner. I really wish I had done this sooner. You know while I’m really glad and very proud of everything that I’ve achieved to date that wasn’t Calla Property, nothing satisfies me to date, there’s nothing I’ve loved as much as Calla Property. I just so enjoy helping my clients invest well in property and make them feel secure and looked after.

And I think we just do it in such a nice way where we really, you know the client is front and center of everything. You know we get invited to, well you know me and some of the team get invited to client’s birthdays and weddings and christenings. It’s beautiful like you just become such a close part of their family really. And they’re very much part of our family. Calla is actually the initials of my family and it’s you know it’s actually the first and last point of research in our 130 points. It’s like if I wouldn’t recommend this to my family I wouldn’t recommend it to a client. So that’s very much the philosophy that we have it’s it’s in our training it’s in our vision, mission, values and it’s how I treat my staff as well. You know they’re very much a part of my family now as well. And I love that, I love growing a team. So they’re just fantastic. I just love my team you know they’re so fantastic, contribute enormously to me personally as well as professionally.

It’s surprising to me actually how much I really just love property. Yeah you know I’ve always loved research. I’ve always loved numbers. But yeah this is something you know, there’s no other asset class that performs as consistently while long term as property. And that’s just a nice nice space to play in.

Tyrone Shum:
While Farquhar has grown her own property portfolio since losing most of them in the GFC, her primary focus is now in her business.

Susan Farquhar:
We’ve got a nice portfolio that’s quite well rounded in terms of different markets and you know having that risk, you know risk mitigation. But really you know really what… I have another aha moment if you like is after the I’d been running the business for two years on my own I’m sitting down with a girlfriend who did the MBA with her husband. We were just talking about it and he’s done very well in business and anyway still sort of talking about what I wanted to do like you know the first two years I had quite a nice lifestyle. You know the income was coming in and I didn’t have to work particularly hard. You know everything was sort of already done it was a matter of networking and meeting clients and he just said to me really clearly said Susan, you just need to decide whether this is going to be a lifestyle business or a business that you grow into something. And I never really heard those terms before you know like a lifestyle business. And I thought oh that’s really interesting and it took me probably another year to decide probably another six months actually to decide that even though this is quite a cushy job if it was just a job, it wasn’t just a job for me, I had a bigger vision than that. I just needed someone to kind of articulate that for me you know and that’s why I decided that I really wanted to invest in Calla Property and grow it.

Tyrone Shum:
She hopes to continue to grow Calla Property and eventually work on her own property portfolio in the future.

Susan Farquhar:
You went from 1 to 7 employees in 12 months and you plan on doubling that in the next year or so and that’ll just keep on going. So now I’ve got you know and I’ve got probably 15 external suppliers that are regular. They’re like my Calla Property marketing team but they’re external or PR or you know I.T. department, accounting, bookkeeping you know H.R. all the things that you need to run a company. So I’ve kind of my partner still investing but I’m kind of reinvesting Calla Property money to keep growing Calla Property so that I can help more and more clients and then probably in the next 12 months I’ll get back into you know continuing to grow my portfolio.

Tyrone Shum:
When considering the broader side of her property journey, Farquhar believes luck wasn’t a big factor to her success.

Susan Farquhar:
I would say I haven’t had particularly good luck. But if I had been more intelligent and worked harder when I was younger I had been luckier. But I think you know that you know the harder I work the luckier I get, it’s really true. But I am you know I really set out to prove myself wrong or to find holes in my argument.

You know I’m not interested in an agenda or you know I challenge confirmation bias all the time. I think it’s just it’s so and that’s why my research methodology has gone from 24 points to 130 and probably this time next year it will be at 150. You know the more I learn the more I want to add to it, the better I want to be and you know that we’ve got a very we have a very funny thing around the office that caters our continuous employment and every time you know any time that there’s even the slightest issue, we go back over everything that we do and how can we improve our processes. What did we get wrong. Where was it not articulated well enough. You know, how is that going to change the way we do things moving forward. So it’s not about you know recrimination and blame it’s just like okay cool, this is a gift right. This is something that we could do better.

Tyrone Shum:
And for our listeners who are interested in her story, you can reach her at

Susan Farquhar:
Probably the best way is to email me at susan@callaproperty.com.au or jump on our website www.callaproperty.com.au. Like us on Facebook LinkedIn Twitter Instagram. You know it’s pretty easy to find us really.

Tyrone Shum:
Thank you to Susan Farquhar, our guest on this episode of Property Investory.

If you want to hear more about her journey, then visit our website at www.propertyinvestory.com.

Also, if you haven’t subscribed to receive your free property case studies that I only send out exclusively via email. You can text me your email address to 0499 88 10 40 to subscribe. These real case studies are from experienced property investors where they share specific numbers of their portfolio, the strategies and much more. Simply text me your email address to 0499 88 10 40 to get your free case studies. As always, thanks for listening!

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