01: The Biggest Questions Facing Investors…

Did you know with just two investment properties and one single renovation that you could put over a million dollars in the bank? It's true. And why stop there? Welcome to your Property Success podcast, the show that explores the practical steps to making your property investment dreams a reality. And now, here's your host, a lady who was once waved through airport security even after admitting to handling explosives. Jane Slacksmith.

True or false?

That is actually true.

Really?

Yep. I was an explosives engineer and had been out on site in Mount Isa and flew back to Brisbane. And the guy, it was 2002, so everything had just happened and he said, you know, have you been dealing with explosives today? And I said, yes. And he said, go on through. We don't know what to do yet if someone comes back positive.

Haven't got that standard operating procedure yet.

So it's all changed since then. But John, you shouldn't even be here yet. I haven't introduced you.

Yes, sorry, go ahead.

So down to the business of this podcast and thank you, John. Welcome, everybody. Welcome to the very first episode of your Property Success podcast. I really appreciate you taking the time to be here, and we have some really exciting things planned which I will tell you all about shortly. My name is Jane Slacksmith and I've been investing in property for over 15 years now. And I've put my property portfolio together using a very simple, an uncomplicated method. And I'll be sharing with you what's worked for me and how I've built my property portfolio relatively quickly and with minimal risk. And I'll also be interviewing other investors and breaking down and really deconstructing what has been working for them also so that we can take the best bits and apply them to our own property investing. Plus, we'll be hearing from you coming up. You are going to visit real investment properties, renovation projects, development sites, and hear some great bits, boots on the ground stories from real people working hard now to create the future they desire. So there's a lot to look forward to now in this podcast. Being our very first podcast, it's going to be a little bit different because it's being recorded live, because in this first episode, we really wanted to incorporate some of the biggest questions that investors have, particularly when they're just starting out. So we're recording this podcast, but via webinar, and joining us as we speak online, there's over 500 property investors. However, before we speak to them, first, I need to introduce you to the man sitting alongside me in front of the mixing desk, Renovator Property developer, co creator of the Ultimate Guide to Renovation, John Hubbard. Hi, John.

Hey, Joan. Great to be here. Great to have this finally up and running.

Oh, I've got a confession to make. John has been working on me for two and a half years on starting this podcast. So tonight is. You're a happy man.

Yeah, yeah.

Thank you, Julie. Noted. Yeah, no, I think it's gonna be great. I'm really excited about this because, you know, I sit around the office and you. And you see people come in like John Edwards and Peter Kulios from time to time and, you know, hear these conversations and I think, oh, we should be recording this, you know.

I know. Well, we are.

Yes, we are. And I want to let people know to hang around to the end of the podcast to catch our inaugural quiz.

Oh, what's it called, John?

Oh, I'm glad you asked, Jay.

Suburbs against the clock.

What can go wrong?

Right.

What can go wrong?

So we have that to look forward to towards the end of the show. And the winner will win one year's access to your property Success Club valued at over $300.

Great. So with introductions out of the way, let's make a start.

Okay, Jay. So first caller, I have Damien with his hand up here with a question for you about how to choose the right location to invest in.

What a good way to start. Hey, Damien, are you there?

I am. How are you?

I'm good, thanks. You have a question?

Yeah, I did. I just wanted to know if I'm buying in a certain area, what I guess guarantees I would be getting in that area in making sure that I do get a return on the property.

So give me a little bit of background. You've invested before?

I did a few years back now, but I invested and sold the property. It was a rental property in Carrum Downs.

Okay, and were you happy with that investment?

It really didn't move. But then again, I shouldn't have been looking at a short term option. I should have been looking a little longer in that area.

Okay. And you've got your own home now or you're renting.

Renting, yeah.

Perfect. So I guess the real crux of your question is, if you're going to do this, how do you know where to buy and make sure that you have the fundamentals right, so that, you know, it is creating wealth for you as well as, you know, helping you out with the cash flow as well.

Yeah, that's right. Because I think really, I guess the advice I got was really, I didn't get really much advice Anyway, it was sort of a friend of a friend who said, yeah, why not Caram Downs? And back then, you know, I really didn't have the knowledge or expertise to sort of be able to say, oh yeah, well that's a growing area and that's going to do well. And yeah, so my question is to you guys basically is, you know, is there some sort of. Do you look at certain areas and say, okay, this is the amount of money you have at this stage, that this is what you can be investing in and what areas you should be investing in?

Yeah, look, it's a great question because I think a lot of people that I speak to have been a little bit lost in their past investment decisions and probably a little bit disappointed about where they have bought. And I think the best I heard someone said that the taxi driver told him it was a good idea, so he ended up investing in an area. So a friend of a friend's not that bad, Damien, to be honest.

That's exactly right. Because you often find that some of the advice you're getting, you know, you're not actually, you're getting it from either a friend or a family member or. And they're not necessarily, you know, the experts in that.

Exactly, exactly. Well, look, the good news is I'm not going to say there's a magic pill, but there is a formula and a foundation that I definitely use when assessing a location. And you know, I have a whole step by step methodology on how to do this. But that anticipation, and you didn't infer to the fact that, you know, you felt that there was a population demand in Carrum Downs, that one of the drivers of capital growth. And if you're familiar with my Trident strategy, I try to have three ways of making money in a property. Just in case I get one wrong, I've got two to fall back on. And those are knowing an area well enough and doing the research to be able to buy below the market. So creating instant equity. The second is having the ability to renovate and add equity in the meantime and push the rent up to keep the cash flow, the difference between the rent and the mortgage payments and the costs down. And then long term having that growth to have that sustained kind of wealth accumulation. There's some key fundamentals. You know, I start with my whole dot map methodology which is kind of looking at the ripple effect. So what has driven the market in the past? So I look at what the past 10 year growth has been for suburbs in a particular state. So I might take a capital City of Melbourne is obviously where you're investing. And I'll, you know, map out what the capital growth has been in the last 10 years. And what you can often see is some pressure, points of pricing pressure where one area might become unaffordable. And so the need to the market kind of pulls over into the next suburb. So it kind of pulls up the price of the next suburb. And that ripple effect is something that's, I guess, at a high level, the first pass indicator that I'd look at. But then I try to get really deep into the fundamentals of what makes a successful suburb for my strategy. So if your strategy is that buy and hold, then you're targeting the rental market. So my minimum requirement for renters in an area is a 30%. So I want to make sure that at least 30% of the market in a particular suburb are renters. And so I want. That kind of gives me the confidence that when I go to rent my property, there's. There's a market, but also I want to make sure that there's not an overflow of stock there. And one of the indicators of that is vacancy rate. So what? There's a general consensus that if the vacancy rate is at 3%, then the market's in equilibrium. The same amount of people looking is available to properties to rent, but for less than 3%. So if you read in the back of one of the magazines, data banks, it might say, you know, that, for instance, Brunswick has a vacancy rate of 1.5%. That means that there's a lot more people looking than properties available. So that gives you an indication, also a bit of risk minimization in the sense that what happens if I can't rent the property? If you had a rental vacancy of 4% or 5%, there's a lot more market available, a lot more properties on the market, then there are people who are actually looking. So that would be the second thing that I'd look at just as an absolute precursor because as you've indicated, you've got money that you want to invest and create wealth, and knowing where to buy is so very important. Does that make sense?

Wonderful. Makes a lot of sense. If I had had that information before we purchased Karen Dance, I think I would have done a lot better. And I think what you mentioned before, with the risk minimization that you put in place, it ticks all the boxes and covers everything.

Well, I'm so glad we could help you and I look forward to hearing about your next success.

Yeah, no, thank you. And I'll have to come directly to you this time.

Absolutely. Thanks so much for your question, David.

No worries at all. Thank you.

Now Jane, you touched on the Trident strategy. There would be good for people who aren't familiar with the Trident Strategy. Could you rewind a bit and maybe go back to how you developed it? Obviously you've used it to build your portfolio and so on, but I imagine that, you know, you weren't born with it, you learned it at some stage. So could you take us back to where you started when you were, when you were kind of a wet behind.

The ear young property investor way back when? Look, you're right. You know, I was a mining engineer, so I graduated mining engineering. I spent the last 10 years of that 18 year career as an explosives expert. So I got to run around the world and blow things up as an explosives engineer. Every single day was about risk assessment and in actual fact, safety and risk assessment was so, I guess ingrained in me that I did my thesis at university on risk assessment and it was the first kind of risk assessment introduction to the mining industry through that thesis. So for me it was about how can I minimize my risk. I only had $45,000. I was 28, and there was, there was no way I'd be separated from that money without making a lot of good decisions. So I decided that if I was going and I went to all the seminars and I listened to everyone, I listened more interestingly to all of their mistakes than what they did. And it kind of struck me that I didn't want to just have a plan A, I wanted to have a B and C in case I got one wrong. So I really, I sat down, Todd and I like, how are we going to, you know, manufacture money? But going to all those seminars, what really interested me was, you know, not so much what people were doing to get it right, but what they did when they got it wrong. And I don't know, maybe it was the engineer's brain or something. I just didn't want to lose my deposit because that at that time was so important to me because I'd spent, you know, a lot of time and honestly at the coal face, you know, hand on heart, I was a coal miner, underground coal miner, literally had been.

Working in a coal mine to earn that money.

But you know, I was not going to give up on that lightly. So that's kind of how I arrived at my strategy. And later it was named the Trident Strategy. Back then it was around just safeguarding that little nest egg that I Had. For people who don't know, this was extremely simple. But it's such a powerful strategy that I've developed. And it's about having three pillars of making money repetitively, and that's buying below the market value so that I could have money or equity from the get go. So I was actually getting equity in to start with renovating, add value. So I was actively forcing up the value of the property and the rent as well by renovating it. So I was creating and manufacturing that equity as well. And then I was selecting a property in a high capital growth area. So over the long term, it was growing equity. So it was being pushed along by the market. So I was making money in three ways, buying at a discount, renovating. And now I aim at trying to get $2 back minimum for every dollar I spend, and then the equity gains from the capital growth. Because I spend so much time that selecting a suburb that I predict will experience capital growth and just riding the coattails of that through the years of having the property in my portfolio. The real benefit of the Trident strategy for me was that it's a threefold risk minimization strategy, which is you get one wrong, you kind of stuff something up, at least you've got two others to fall back on to make money. But just having that strategy, and then from that, I created my buying criteria that I could use to help me to select the suburb and then select the property. And so, as some of you may know, you know, I purchased my first property 15 years ago today for $425,000 in the Melbourne suburb of Carlton. And I used all of my $45,000 in savings, and then I spent $50,000 of borrowed money on a renovation. And, you know, I did get some bits wrong because I was still learning, but I made a profit. You know, nine months later, that property was revalued at $700,000, which was $225,000 increase in value. You know, 225,000. So, you know, that was a huge deal for me. And in fact, you know, if I.

Look back at it now, you're still celebrating.

Well, I am. We've got a big plan on Saturday night to celebrate the 15 year anniversary. You know, it seriously just changed my life because that property became the springboard for purchasing the next property. And we used the same strategy and we did the same thing again, and the next property and the one after that. So, you know, I look at that Carlton property now and it effectively became the absolute foundation for building a multimillion dollar portfolio over the following 15 years.

Yeah. That's awesome. And what it drives home to me is just how important it is getting that first property right, isn't it? It's not kind of just about sticking your toe in the water. It's actually carefully laying the foundation for your property portfolio. Now, Jane, while we've been chatting here, the board has been lining up with questions. And I have a question from Pia here, so I'm going to unmute Pia's line.

Hi, Pia, you have a question?

Yes. Hi, Jane. Thanks for taking my call.

Pleasure.

So I actually like everything I've heard so far. Very interesting and good information. But I've got one more question. I'm quite busy. I work four days a week and I've got a little one. And I've got a husband and I've got a life. So how do I fit it into my whole structure?

It's a good question because the fact of the matter is there's not a lot of people who don't have other things going on.

On.

Right.

And we're always trying to fit in, work in our everyday lives with trying to get to our goals. We all have those things. But I think it's around getting very clear on setting your goals and understanding what you're trying to achieve and having that clarity of what maybe the investing strategy or the renovating strategy is going to work for you so you can create that plan or that roadmap for yourself. So you're getting very, very clear on what your criteria is. So, yes, there's a little bit of work that goes into that kind of upfront, what you need. But what we've found in the past that some people have taken that clear criteria and gone well, now I actually have the confidence to know exactly where I'm looking. They've taken that and very quickly found a property that suits those needs because they don't have the clutter of going through 14,000 suburbs in Australia. Or they take that criteria and they give it to a buyer's agent and they say to the buyer's agent, this is specifically what I'm after. The buyer's agent. Agent is someone who you employ who works for you up to 60% of the properties that buyer's agents actually have available for them to look at, or real estate agents are presenting to them are actually off the market, which means that you're not going to see them on realestate.com or domain.com au so they have access to some other properties so they can actually really search Based on your criteria, which is great. And even renovating. I recently did a renovation in one of my properties in Sydney and the rental agent managed the whole thing. I said, I need quotes for these. I have a builder who can do some of these things, but I need carpet paint. And they went and found the people at no charge to do that and got me three quotes on each of those. You can actually then outsource if you wanted to, the project management of the renovation itself. For busy people who have a life, sometimes it feels too much. And, you know, when we start talking about you have to go and do all this research on suburbs and streets, et cetera, you can get to the point of just having those goals and those buying criteria solidified in your mind, and that can deliver to you, that you could deliver to the professionals that can help you out.

Fantastic. That could work in my life.

Well, especially with little kids, right? You know, you never know what's going to happen or what's around the corner, do you?

Exactly. Exactly.

Thank you so much for your question, Pia. All the best.

Okay, up next, I have a written question here, Jane, from Jeremy, who says, how do you avoid over capitalizing on a renovation?

Oh, Jeremy, this is a great question because it's something that a lot of people do. Now, John, I think this one's for you. This is an area where you have had a lot of experience.

Okay. One of the easiest ways that I find to think about it, to avoid over capitalization, if you think about what the end value of the house will be worth, so what am I renovating up to? If I have a look at the open for inspections or at the past sales and so on, and I can see that there's renovated houses that are the same number of bedrooms and they're selling for $450,000. And then if I'm looking at properties in that area, unrenovated properties, and I'm looking at how much work is needed in the property, from that, I can work out my renovation cost. And then it's just a matter of working backwards to arrive at the amount that you need to purchase the property for. So if you were to take your end value, then you subtract your renovation costs, and then you subtract all of your other costs, like the transaction cost, stamp duty, holding costs, etc. And then the amount of profit you wanted to make. So you can, you know, Some people say 10% of the purchase price they want to make, or you can just have a round dollar figure and then basically that tells you what you've got to buy it for in order to make a profit.

Yeah.

So that's a really concrete way of not over capitalizing. But then if I zoomed out a little bit and think of some of the other reasons. Location. Yeah, because not all suburbs have that capacity for renovation and there's lots of reasons for that and. And we could go into that. But for instance, new suburbs where the, you know, the houses a couple of years old, you know, very little capacity to add value to a house like that, you know, through renovation, for instance. But what really makes strategic renovation viable is the difference in the price between the unrenovated properties and the renovated properties. And we refer to that as pricing disparity. So that's a spread of values at a street level and then there's the property choice. So what's that saying, you know, that some games, the only way to win is not to play. And it's kind of like that when you're choosing some of the properties, because not all of them, they might be unrenovated, but not all of them have that capacity to add value through the renovation because of the amount of work that needs to be done.

Yeah.

And I know when a couple of years back when I was doing some due diligence on Essendon in Melbourne, I was going through and I was recording the, you know, doing the three months, going through everything on the market, myself and my partner Eileen would have competitions on, you know, at each auction, of which I know you and Todd did this as well. You know, how much is it going to sell for Winner buyers dinner.

Yeah, that's right.

And then I would write down, depending on what the state of the property is, whether it's unrenovated or dated, which I considered to be kind of, you know, 90s, maybe 2000s renovation or renovated. So recently renovated, you know, maybe in the last five years, I'd record the sale price and then I'd work out the square metres and so on. And what I found was the dated and the unrenovated properties would often go for the same rate per square metre. So the popularity of the unrenovated properties was pushing them up into the data range, where you could buy a dated property, a lot less money, a lot less to do on it. Perhaps it's been built in the 70s or 80s and is already large enough. Yeah, people would buy these unrenovated properties that needed a hell of a lot of work because they hadn't done the numbers on them, they just assumed they could add value.

Absolutely. Well, I remember back in 2002, looking in Newtown in Sydney, exactly the same thing. Two open homes opposite each other open at the same time. The block had just come out and there was this line up for this fallen down property. And across the road was this completely renovated property. Young couple. And just looking at how much they'd spent on it, you did the back calculation, like much better. By buying the renovated place, you save yourself time and money and you ended up going, well, I think they were pretty disappointed in what they got for it. But yeah, absolutely. There's. Just because it can be renovated doesn't.

Mean it deserves it, doesn't mean you should. Yeah, that's right. And I guess the last thing that, I mean we often talk about this, Jane, is just the other trap is renovating to your own tastes. That's something you often see people do. I think they probably. It's an opportunity for a bit of creative expression rather than being around the.

Numbers or what they want in their own home that they could never have.

Yeah, that's right. Yeah.

Well, so there you go, Jeremy. We've talked about over capitalization a few things, but John, you mentioned the Essenin. So we met a few years ago and you were actually researching Essenin at that time. Yeah. You're doing some due diligence and I was really impressed when, you know. So you were showing me your spreadsheet and you were showing me that dollars per meter squared per renovated, unrenovated and dated.

I remember we were comparing charts of watching markets over various periods of time and people's predictions. Yes. And when lines intersected and all this very exciting stuff.

You attended one of the courses I was running with Medine Simmons. Yes, but it was kind of at that time, after the workshop, you invited Tod and myself to come and look at a property that you were working on.

Yeah, yeah. That was a structural renovation box on the back that I was flipping at the time.

Well, and I think the thing is, when the thing about the property that we visited that really struck home to us and was the beauty of the box on the back, the fact that you had, you know, transformed a little house into this beautiful home with this incredible, you know, there was the butler's pantry and the beautiful aspect, the glass to look out the back that, you know, Mum cooking in the kitchen, could see the kids playing around and it was just so beautifully finished. And I think that's what really impressed Todd and I. And the fact that that structural renovation technique could be done once again on a budget that was, you Know, something that we felt that we could do with cosmetic renovations that you were doing with the structural renovation and creating something that you could then flip really well. So. Yeah, and we were really impressed with looking at that.

Yeah, thanks. The thinking was, and I guess the thinking from the start and probably the advantage of being a tradie and what I had thought a lot about was how I could build inexpensively and quickly. And that was just by, you know, using a few elements and rearranging rooms to make the, the open plan at the back and then you could fill in the other rooms and make them as bedrooms and bathrooms and so on. And it, and it really just reconfigured the house quite simply by just, you know, adding one box on the back.

Well, and I guess guys, that's, that's our timeline. You know, you. 2001, I started with my first property, 2009, you realized with your home how much value you'd added. And then, you know, we started working together. I asked you some feedback on my book at the time and you know, at that stage we started talking about the fact that all those renovation courses out there were so Renault centric and didn't have that location component that we felt was important and you had all that video experience and.

Well, one thing led to another. Yeah.

And the ultimate guide to renovation was born.

Yes, that's right. So more hands up here, Jane. Let's see if I can unmute Mary's line here. Hello, Mary.

Hi.

Have you got a question? Mary?

Good to have you.

Yes, I do. Between investing in a CBD area, but it's not, not really in the central CBD, I mean like maybe out 40km radius and investing in regional area, but very close to the center of the regional, within 2,5 kilometer radius. Do you think which one is the better options in terms of growth?

Yeah, look, it's a really, really good question, Mary, and I'm glad you threw in terms of growth at the end of it because, you know, it does come down to what your particular strategy is. And if you have a buy and hold strategy, which is buy a property and hold it for a long period of time and let time make your property go up in value, then that is the growth based strategy. It's about buying the best property you can afford to buy in the area. But how do you, as soon as you can afford it, but how do you determine what that is? If you've got, for instance, you know, $500,000 to spend and we're talking 40Ks out of Sydney compared To, you know, buying somewhere that's that regional that you could get a whole lot more, you know, money for that's closer to the center of town. So, you know, I guess one of the things that has been always been my philosophy has been, you know, under the trident strategy has been having the three ways of making money. So, you know, having a property that I can buy below the market, getting instant equity, add value through renovation and have more equity and then have the capital growth do its magic and then capitalize on that obviously as an end game. But when I look at that and growth is the one thing that I will never give up of those three strategies, and that's just because cash flow is fabulous, because it can help you hold properties for the period of time. But being focused on that goal, you need to have that capital growth to get you out of your portfolio and into the lifestyle that you want at some stage in the future. So, you know, regardless of whether it's 40ks out or if city property or if it's 2ks out of a regional property, I would be looking at the specific growth dynamics in those areas. So, and you know, growth is really driven by demand. So when there is more demand than there is supply, that's when growth is driven. And one of the factors or risks that you have is buying in those outer suburbs is that there could just be copious amounts of land at any time that they could just keep building on. Usually that infrastructure getting out to those areas is a little bit delayed as well. So you may not have that immediate growth dynamic. And if you had a five year plan rather than a 15 year plan, then you may not have the growth in the short term to actually drive that property up in value. But if you were in, you know, a major regional area and you know, I know I've had chats with Terry Ryder and Jacob from Ripe House about, you know, areas like, oh gosh, Albury and Bendigo and Geelong and Wollongong and Newcastle, you know, some of those regional areas that, you know, you can get more bang for your buck, arguably for than being in a CBD capital city, they may actually have the better drivers for growth in the long term for you to invest in.

Sure. Thanks for that.

Great question. Thank you Mary.

Thanks Mary.

Thanks so much.

Great. Well, Jane, up next I have a written question from Brian. How do you know financially when you have the ability to purchase your next property?

Brian, great question. Look, understanding this is really important for building your portfolio because it comes down to two things. A, it comes down to what you personally can afford that comes out of your cash flow. And secondly, do you have the deposit and costs to actually purchase the property? Now these are basic the two things that any lenders are going to look at when they're assessing people's borrowing capacity. A, can you afford it? And B, do you have the cash to contribute? Now you're going to know if you can afford it and often if you run the numbers, and I run the numbers for people regularly and say, can you afford, afford $50 or $100 a week out of your cash flow? Sit in that for a couple of months and see if it's something that you can actually do and if it is something that you can actually do whilst you're doing your research and looking for a property, then it's about, well, if you can afford that financially from your own personal costs, then what equity do you have available? Is there equity in a current property that you have or are you going to look at your savings? So how do you know when you're ready? Well, one, if you can afford it out of your weekly cash flow and two, if you've got the equity to invest. So that'd be the first answer.

Yeah, I can remember learning for the first time that you could tap one property to tap equity and one property to.

Sounds like magic, didn't it? Yeah, well, I think most people think that they pay one property off and they're 10, 15, 20 years down the track. And now I can think about a second property and that whole, well, you've got some equity in one property, you can actually use that for deposit and costs to purchase into another property. And that was, I mean, as I said, I started with $45,000 in 2000. I did my research, I bought my first property in 2001. I did a nine month renovation that cost me $50,000 that I funded through a personal loan. Now that property that I purchased went up in value by $275,000. So we're talking about 425,000 up to, to 700,000. I pulled out equity, I moved it from a 90% loan up to a 95% loan up to an 80% loan. So left equity in there, pulled out equity. If I did it all again, I'd probably pull out more equity and purchase my next property in that time in Sydney. Did it again, did it again, did it again. So we just leapfrogged. So other than that first $45,000, I never used my own savings to purchase another property.

So one deposit did all of the Properties, Exactly.

And I meant my book. Two properties, one renovation, a million bucks in the bank. You don't have to have hundreds of properties.

So just outline that for people that may not have read your book. What does two properties, one renovation, million dollars in the bank mean?

Well, look, it really came down to the fact that I was reading all these books about these people having hundreds of properties. And I was an engineer, so I do love my Excel spreadsheets and I spreadsheeted it all and I looked at it and thought, well, if I just bought one good property, property, and I waited for growth and then I, because I couldn't afford, say the renovation and then I pulled out the money to do the renovation and then I waited more growth. So buy property in year zero with either savings or equity in your, you know, from equity from your home in year three, spend some money on the renovation in year five, have enough equity to buy a second property, then just get on with life, you know. So in the first five years you've kind of paid your future tax and doing it a little bit tough and finding the properties and renovating and maybe saving a bit the next 10 years, up until the 15 year mark, you know, you get on with your own life, the properties are going up in value.

Find yourself a new hobby.

Yeah, exactly. So it doesn't have to be an active sport. And that's what I really loved. And you know, the whole modeling that I did on that, on average assumptions on growth and average incomes and property prices and inflation and stuff got to the point where by just doing the median house price across Australia and buying those two properties at those two points in time, in 15 years time, if you chose as your exit strategy to sell up everything and put the money in the bank and earn 5%, that's a million dollars that you could put in the bank after paying capital gains tax and selling costs and the loans back. And at a 5% return, that's 50 grand. 50 grand per annum, today's dollars with the future dollars, obviously inflation applied to it, but you know, that's.

I like the way you do that, use that. I mean, obviously you could choose different exit strategies or whatever, but using that scenario where if you put it all in the bank and you're just getting interest, you get 50 grand a year. It's just a nice clean target, isn't it, to go for. It allows you to set your parameters.

Yeah, and look, there's different exit strategies that might be, you know, sell off some properties and pay others down, which I personally like. Because I hate the idea of losing future growth in properties and if I've done all that research to find the growth properties, then, you know, that's what I'd like to do. But you know, it's one of those things where it doesn't have to be complicated if you get the right properties to put in your portfolio. So, you know, this doesn't have to be an active sport. So it is, it is a well targeted decision.

Yep.

Great.

Okay, I have Robin on the line who has a question about the property market cycle and how to know when it's the right time to buy.

Hello, Robin. Actually I recognise your name from the Facebook pages.

Oh yes, I enjoy your property success on Facebook. How are you, Jay?

I'm good, I'm good. Now. You have a question?

I do. So at the moment we are perplexed whether to buy now or to wait and see if the market drops at all. What would you suggest?

Oh, good question. Million dollar question. Tell me where abouts are you looking? Have you actually targeted an area or state or city?

We're thinking Sydney area. Just because we're trying to get a foot in the door, probably for our son down the track.

Okay. I guess the big answer is that there's different markets throughout Australia. So where one market might still have some legs to it, another market may not. So really being clear on should we wait or should we not is really market specific. And in actual fact there's markets within markets. So from a point of view, should we wait or should we not? I always say, look, get into the market when you can afford it in the best possible place you can afford because the whole crystal ball, it may pay off, it may not. And you know, I remember talking to a client back in, oh gosh, it was like 2007 and she was saying, you know, the Sydney market is overpriced. I'm going to wait till it pulls back. And I had to talk to her this year and she's still waiting. So, you know, sometimes I think you can miss the market as well and I mean, obviously that's a nine year gap. But I've been talking to clients in, you know, Melbourne who might have targeted one suburb and the market in the last three months has moved $50,000 and is now outside their price range and they were potentially a little bit picky with what they were looking at. So sometimes I think that you need to be a little bit more flexible. You need to target your area and based on your price point, obviously based on the key fundamentals that I think make for a good long term investment like the capital growth potential, which means the fit property for the demographic and you know, having those things to protect your investment. But if you're ready and primed and you know what your buying criteria is and where you're going to target. Robyn, I'd say start doing the work and get in there.

Sounds great, Great advice.

Okay, so is this your first investment or have you invested before?

No, look, we've had regional investment properties before and we sold all those up to buy in Sydney. And so we've been out of the investment market for a while, but this is our first delve back into it for quite a few years.

What you'll find in the difference between buying regionally and in the city also is a, there's usually a lot more information and you know, you might have, you know, Dubbo west and Dubbo south and Dubbo north, but you're going to have, you know, maybe 150 to 200 suburbs that are, that might fit your buying potential in Sydney. And what you need to do is just really be close with the criteria. So if it's around something for your son and it's around him going to university and be able to, you know, live in the property or him just having something as a fallback for potential wealth, we're talking a long term investment, you know, the 15, 20 year type of investment. So you've got time on your side. But I wouldn't allow time to be the excuse to be able to buy anywhere. I'd say, you know, target the best property possible. Property that's going to allow you to have the growth but potentially allow you to have maybe a bit of a twist in maybe renovating, creating equity or you know, getting rid of the back block and selling that off and you know, just having that kind of backup plan as well for the properties that you're looking at.

That sounds good. We actually looked at Chippendale about 12 years ago and were too scared to buy because it was Chippendale on the verge of Redfern and we just weren't game and it was really cheap and now we're really sorry.

Yep, I did the same thing and my numbers stacked up for Darlington and it ran into that Everleigh Redfern area as well. And I ended up, I believed in the numbers, I bought it. So I did that 12 years ago. So around about the same time. So if the numbers work out, sometimes you just have to back yourself. That's what I tell my 8 year old son when he's trying to do his maths homework.

And see, that's why we come to you because you know, to take the risk and to back yourself where, you know, as someone not as experienced, we don't have that little bit of extra knowledge that might just push us over. So that's why we come to you.

Oh, thank you, Robyn. But remember, it's always a calculated risk. We always make sure that we're minimising the risk by having the research behind us.

Yes, great.

All the best with your investment and I look forward to seeing on Facebook what you do.

Okay, thanks, Jane.

Okay, bye, Robyn.

Bye.

So, John, I'd like to share a question that someone sent me today because it's an important question about buying off the plan. And now this person has purchased my book and emailed me and I think he actually was a bit surprised that I actually emailed him back. Which was their question was that they had a friend who was about to buy a one bedroom off the plan unit in a middle ring suburb in Melbourne and they wanted to know how that fitted into the Trident strategy and how that fitted into is this a good thing to do? So I had a few, I guess not knowing anyone's specific details, etc, I can only give some general kind of comments, but for me, off the plan, I mean we've all heard about the fact that Sydney and Brisbane and Melbourne cbd, there's a lot of units going up at the moment and in actual fact the government's just announced the fact that they're going to penalise, well, not penalise, charge a fee for overseas buyers and there will be a penalty if they break that fee. So there's I think it's $10,000 for every million that overseas buyers is like an application fee that they have to pay and there's a 25% of the value of the property that they are charged as a penalty if they've bought a property with not following the Foreign Investment Review Board guidelines and they have to sell the property. So they're getting a bit tough on that. So there's been a lot of speculation that there's some issues around overseas buyers actually driving the market up. So the government's taking that on board. So we'll see how that goes. But off the plan in middle ring suburbs, the things that really, I guess triggered my concerns was once again straight back down to what we always talk about, John, which is target market. And a one bedroom unit in a middle ring suburb to me does not talk to a target market. Middle ring suburbs are generally families. You know, there are some middle ring suburbs that do have some exceptions to this. But even one bedroom units, although there's a large demographic move to single person living, most of those single person livings want at least a two bedroom property. So a one bedroom unit. I don't think middle ring is a target market. So I'd be doing my target market analysis first. And the other thing about off the plans, and I've had this conversation with John Edwards from Residex over the years and he thoroughly believes that, you know, because you're taking a bit of a risk in purchasing a property with, you know, sight unseen to some degree and not understanding what could happen in the economy and predictions of growth, etc. Etc. Which is interesting coming from him, is that off the plan properties should not be priced higher than their comparable current established properties, but possibly lower because of the risk associated. So you know, often what people think is that they're buying an off the plan property at say unit of $400,000 that you know, they don't have to pay for it for a year. It's fabulous. They might put down a deposit bond which is means that they don't actually have to put the cash out of their pocket for a year's time and they sign up for, for a property. And the thing is, I mean you need to anticipate the fact that you're taken out of the market potentially in your borrowing capacity for a year. And putting my mortgage broker hat on here because you can't, you need to know that if rates change or something changes, you have to be able to commit to fulfilling your agreement in the contract that you've signed. So sometimes you can be out of the market. The other thing is, you know, a lot of the developers work in the future value of the property so they're like, you know, it's 400 now is the comparable for other two bedroom units in the area. But you know, this is a good growth area and it's brand new and whatever they say in their sales and marketing, you know, buy it for 440, they've actually anticipated some growth or maybe 420. And the other thing with off the plan is, you know, often and during the GFC, you know, sometimes you had to have 50% or even 100% pre sales, now it's back to 50%. So the marketers had to sell these properties before they even had approval from the banks to finance them. So you know, sometimes when they get down to the end of the properties available, they're Going to discount those. So that could actually work against you at the end because, you know, you've actually got these sale prices that are lower than what you've committed to. So there's all these off the plan things. Now, I know people have made a lot of money from off the plan properties. I know people have lost a lot of money. But you know, just be aware of the fact that. How does this fit into the Trident strategy? Well, obviously buying below the market, you're not too sure of that. And sometimes, as I said, the developers have factored in a higher price. Then we talk about the Trident strategy. Number two is adding value in the middle term by renovating. You can't really renovate a brand new property. And three, capital growth. Capital growth is driven by many, many things, but capital growth is driven by first and foremost a demand. And if your target market or the biggest market in that area does not demand that type of property, then you've missed the target market. So in actual fact, we could have ding, ding, ding, ding, ding, ding, fail on three points here on the Trident strategy. So basically I suggested that she has a chat to a friend about is the one bedroom unit right for the target market.

Okay, I think we can sneak in one more question here, Jane. Now remember, we still have the competition to come and I can see some familiar faces standing by. Lorraine, I'm going to unmute your line.

A favorite of ours. Hey, Lorraine, how you going?

Hello, Jane.

John, how you going?

Hello.

Hello. Good, thank you.

Now, did I see that you've had some developments in your purchasing?

Yes, we're very. Yep, we're very lucky. We've, it's all underway. Property will be cooling off tomorrow and.

Yeah, great.

It's all happening.

Congratulations. And luck had nothing to do with it. You know that, don't you?

No luck, no luck.

There's hard work finding the right property. So you were thinking about flipping this, I think last time we spoke to you. We are, yep. So tell us, what's your question?

I was just, just out of interest, wondering, how do you work out whether you should stage the house or not stage it when you sell it? Like how you know, is it worth it, Is it not worth it?

Well, I've only ever sold one property and it's happened in the last three months. But John has done this as a flipper many times and we've got a very, very strong opinion about this, haven't we, John?

Yeah, if it's a viable renovation, that is. There's the spread of values in the street and you know, the renovation cost doesn't eat into any potential profit that you want to make, then it would automatically qualify for me to be staged. Just about every time I would say. I struggle to think of a case where I wouldn't stage a property for sale unless I hadn't. Unless it was maybe one that I owned already or there was some other circumstances around it. If I was buying it for the reason of renovating and selling, I would definitely stage it because there's a kind of. People just haven't got an imagination. You need to provide it for them and paint the lifestyle. Yeah.

And I think also, what type of.

Profit do you reckon?

I was just.

I was just gonna say, what type of profit do you think you get from it? Like, if you spent like, 3,000 on staging, how much more do you expect to get?

It's hard. It's hard. On the other end, there's that thing where you. If you think about every single little decision you make in that renovation, like, you know, how much does it.

The tap type.

The.

Yeah, the tap from square to round. How much difference does that make? Or how much difference does a window.

Yeah.

The kitchen. So they're all. Yeah, they're all incremental, and the hole is greater than some of the parts art. So it's. To me, it's one of the big ones. It's kind of staging, painting, street appeal. Yep, street appeal. They're just the really big. And there's plenty of other 1 percenters that you can argue about, like, for instance, the. The. The shower screen or the type of taps or the type of tiles or whatever. But the staging never gets off my list.

And you talk to valuers and they say, you know, staging doesn't affect our decision, but there is a subconscious kind of connection that you want people to make with a property. And you know yourself when you're doing inspections and that, you know, you're walking through that, you got that clunk, clunk, clunk, sound of your feet walking on the. The bare boards. Everything echoes. You're kind of looking at the area going, oh, gosh, could you fit a double bed in here? I don't know. And you walk really quickly through the rooms, and just next time you do an inspection, go to one that's furnished, and you're taking the time in the rooms mentally, you spend more time there. And I think it's one of those. As John said, it's hard to put a number on it. But a property that has been finished well, presents well, sells well. I've Got friends that have begged, borrowed and stolen down to the fancy towels from friends and family to stage their property and they've had it on the market unstaged and then got a bit desperate, borrowed all the furniture for a weekend and staged it. And who knows whether it was the staging or not, but it has sold really quickly and I think that it's an investment if you're going to put all the front effort in. Don't give up when you're going for that end run because that's where the cash is as well.

Yeah. And it's easy to fall into the trap of, oh well, people can see through. It's only. They can. They know it's higher furniture or whatever, but people buy an emotion. They don't. People don't buy rationally.

And flipping is all about selling to an owner occupier and getting that emotional connection.

Emotional connection.

Now, John, have you seen the. Oh, God, what do you call it? It Photoshop staging.

Yeah, I think that's brilliant too. Yep. And I mean, we've just sold off the plan and done the whole artistic impressions and so on, which cost, you know, hideous amounts of money.

More money than an actual staging.

Yeah, absolutely. Probably the same as staging, but. And it was the difference between someone looking at a two dimensional plan or looking at an artistic impression of the lounge room and the facade and so on. So, yeah, I think it makes a huge difference presentation. Yeah, absolutely.

So please, we would love to see. Maybe, maybe we can get your before and afters onto the private Facebook page.

There will be.

Excellent.

Can't wait.

All the best with the cooling off coming off tomorrow.

Bye. See ya.

Well, John, that's it. We've just about made it to the end of our very first podcast. Yes, I know. The competition still comes, so a huge first episode. And let me tell you about some of the guests we've got coming up in the next few episodes. Our first guest is Jan Summers. Now, she is a lady that literally changed the lives of thousands of everyday investors around Australia through her books and teaching. She's true, you know, amazing person, great educator, lovely lady to speak to. So I can't think of anyone better to start with, so don't miss that episode. And then we've got John Edwards, the founder of Residex, who virtually is unrivaled in the field of suburb predictions and analysis. And he's a wealth of information and someone that we can really tap into. So I'm really looking forward to hearing from him.

Yeah, absolutely. And Peter Kulios. I'M looking forward to that because he's developer and he does all sorts of weird and wonderful things.

Peter Kulios, he's a property professor from South Australia.

Yeah. Yep. So that'll be great.

No, he's a. He's a great guy and a real good friend of ours here, so. And then Bernard Salt. Famous Bernard, probably, I don't know, Australia's best known demographer and social commentator. You probably read him in the newspapers in the weekends or social media. He's out there. But he just shares and gives such clarity on interpreting the census, information on demographics and what the population wants.

All very useful stuff that we can use as investors to our advantage.

So lots more to come.

Yes. So, Jane, I think it's time. Are you ready?

Oh, gosh, yes.

Ladies and gentlemen, it's time to play Suburbs against the Clock. The rules are simple to play. All you have to do is answer a question about 10 suburbs in the city of your choice. Within 20 seconds. The lucky winner of Suburbs against the Clock will win one year's free access to your Property Success Club. Your Property Success Club is an in depth monthly masterclass which gives you the practical tools needed to grow your portfolio yourself without having to spend a fortune on expensive seminars or even leaving your own home. So who do we have standing by to play Suburbs against the Clock?

So we have Rommel standing by. Our very first contestant, Rommel. Hello.

Yes, sir. Hello.

Oh, wonderful.

Okay, so the rules of the game.

The rules of the game are we're going to ask you a question and you can. Well, firstly, what city would you like to answer for?

Let's go with Sydney.

Sydney. Okay.

Your choice.

Yep.

Because if you didn't choose in 10 seconds, the default is Darwin. Yes, that's right.

So we're going to ask you a question in a second, Rommel, and you're going to have to answer with 10 suburbs in Sydney that match this criteria that we're going to ask you. It's not too hard, but you only have 20 seconds to do it.

20 seconds on the clock.

Yes. Righty o.

So you've got the rules.

Yeah. Is that clear enough?

Yes, it is.

Okay. All right now, Jane, do you want to ask the question or am I going to ask?

Oh, this is all you, John.

Okay. Rommel, can you name 10 waterfront suburbs in Sydney? 20 seconds.

Bondi. Keep going.

Mossman. 10 seconds.

Keep going.

Keep going.

Clavelli.

Five. Come on. Five to go.

Quick. Bronte. Six. So close. But you know what? Because you're the first ever to do this Competition. We're going to give him a whole year's access anyhow. Can we? Yes, yes, yes.

Okay.

Okay. The rest of you, get ready because the questions get tougher. But Rommel, please put in your details into the chat box because we'll be sending you access to that.

Yep, yep.

Lovely. Thanks very much.

No worries. Thank you. And if you would like to be a contestant on Suburbs against the Clock.

Or you have an idea for Suburbs against the Clock.

Yeah, because we're going to run out of ideas pretty quickly.

Very quickly. Very quickly. Yes.

Email. SupportOurProperty. That's SupportOurPropertySuccess.com and look, guys, if you.

Want access to the transcript of today's show and all of the show notes and links to everything we've mentioned in the show, including a video on the dot map even then, Simply go to YourPropertySuccess.com EP1 that's YourPropertySuccess.come for echo, P for papa, and number one. And you'll also find some pretty pictures of John's box in the back there as well. So lots of great content on that site. So that's it for today, guys. Stay safe. And as always, here's to your property success.

Ladies and gentlemen, it's important for you to understand that you need to take care in applying what you've heard on this podcast to your own personal circumstances. Everyone's situation is different, and while we go to great lengths to ensure that everything we share is accurate, the information in today's podcast was based on personal experiences and opinions and is not intended to be specific to your circumstances. We are not real estate agents, financial planners, lawyers or accountants and are not liable for any loss, damage or misunderstanding caused by reliance on any information provided or inferred. We highly recommend you seek out the services of a professional or mentor to help chart your own path to property success. How was that?

Great. Great. Thanks, John. I reckon we're all done.

Yep. Do you think I placed enough emphasis on the we are not really estate agents line? You know, I really don't want anyone to think that we're real estate agents.

You know what I mean?

Yeah.

No, I think you know it.

Really?

Yep.