02: Property Investment Fundamentals with Jan Somers

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 voted by her classmates as the most likely to become a nun. Jane Slacksmith.

Oh my gosh.

True or false?

False. You know it's false. That's you and John Blackman setting me up for your own amusement, Right?

So you say.

Yeah, I actually was a bit of a goody two shoes, you know, head captain, the boarding school head of the library committee. Yeah, none never actually fell under that.

They might have done it while you were away that day?

Possibly. I was never away. Good attendance record. Well, John, I am so excited about today's show. Just to let you all know, when we threw around some names here in the office of who should be our very first guest on the podcast, there was only one name that really came up.

Yeah, it was pretty unanimous and that.

Is none other than best selling author, educator and one of the biggest names in Australian property investment, Jan Summers. She has literally been responsible for changing the lives of 30 thousands of Australians through her books and teaching. And you'll hear all about that and some timeless property investment advice, I'm sure in this interview as she shares with us some of her amazing story. John, can you tell me about Jan Summers?

Oh, I'm a huge fan, huge fan. My father in law gave me the. I think it was building wealth through investment property in 1999 and it was just a revelation to me because I really didn't have any real experience of property investment, didn't understand it, didn't really know what was possible. And it just really opened up a whole world for me.

Look, I also read her book in 1999 and I just devoured all of them quickly and that I love the case studies book so that building wealth through story, story by story by story. And I've still got here on my bookshelf. Her books are front and center because they're timeless. What she taught was just is as relevant today as it was then. Simple, practical tips and the way it.

Was laid out, it's just such accessible in layman's terms, you know. So for someone, you know, like me, I was a tradesman, I could read it and it wasn't financial kind of gobbledygook, you know, it made sense. And yeah, it's something that we could take in and apply.

Well, guys, settle in for an absolute real masterclass in the fundamentals of good property investing today with one of Australia's most respected experts, Jan Summers. Jan, welcome to your Property Success podcast.

My pleasure. Thank you.

Well, gosh, I don't know where to start with you. You know, I'm so excited to be speaking with you and there's so many things I can ask. So I guess, you know, big picture. If someone was going to sit next to Jan Summers on the plane and ask you what you do for your living, what would you tell them?

I remain fairly anonymous in most situations. My answer is usually I'm a retired teacher with the emphasis on retired and ex teacher. We started a software company. Most times I don't even need to know what that. And I dabble in property. But I've never treated property as a kind of sales pitch for me or anybody else. I've never treated it, heaven forbid, like an Amway product that I can make money from or I need to sprout to someone else. It's not a religious belief or anything, but I think staying quietly in the background has helped with the credibility as well.

And I think that's such a lovely thing about reading your books and getting to know you through articles and magazines over. Well, for me over the last 15 years and for a lot of people a lot longer than that, is that, you know, you are so very humble with what you've done and just, you know, so practical with your advice. And, you know, I think of the. Well, you've written a lot of books. I think four out of the five books you've written have been about wealth in the title. You know, what is your definition for wealth?

It's an abundance of what gives you pleasure, really. It can be possessions, it could be money, it can be your health, it can be your family. And for everyone, that description of wealth is really different. I guess he is richest whose pleasures are cheapest. And for me, although I have many pleasures that are very cheap, it was also very important to be independent. So wealth to me, gave me a large degree of. Of independence together with my husband and family.

Absolutely. And I think one of the things about you. And we've called out to our students to list down some questions they'd like to ask. And a lot of people came back and said one of the inspiring things that they've read about you over the years is that it's not just about wealth, but it's also about health. You're probably one of the fittest people out there. That we all know.

I could well write a book on health, I'm sure.

I think Jan Summers, wealth and Health is a book that we'd all read.

Yes, good title.

Now Jan, you obviously have had an amazing career and as I said in the introduction, you're a best selling author, you're a respected educator and a public speaker. Where did it all start for you? Where did property investing really come on your radar?

Well, the first house we bought at the end of 1972, a month before we were married. And the only reason was because our parents had said this is the order that you do things, you get married and you buy a house and then you have a family and, etc, etc. So that was kind of fulfilling the familial requirement of 1, 2, 3. But then when we moved at the end of 1973, being a little bit miserly, we didn't really want to sell. So it became our first investment property at the end of 1973 and from then on, that was 43 years ago, from very humble beginnings, we've acquired quite a substantial portfolio. And I remind people of that, that that particular house that we still own today was only 7.4 squares. So when people get grandiose ideas about their first property, I remind them that that's where we lived.

Gosh. So very humble beginnings. But a lot of advice from mum and dad kind of helped you on the way to property.

Yes, in a sense, yes.

And I remember one of the stories in the first book that I picked up that I read of yours that really struck me. There seemed to be kind of a chance conversation you had with a real estate agent that gave you the opportunity to think that maybe you could invest without paying off your home first. Is that right?

Yes, yes. We had quite a few properties by the time we went to Sydney at the end of 1980, we'd already had a trip of five months overseas. So we were fairly comfortable, but we still had no idea about borrowing money. And buying a place in Sydney was really totally out of the question. And when I say totally out of question at that stage, properties down there were about $75,000. We had quite a few properties that were still in the 40, $50,000 range, but we didn't particularly want to fill and, but we didn't have any cash either. So I started looking at some properties with a, with an agent and I don't mind saying he was from Rain and Horn at that time in Sydney. And we looked and we looked and we looked and he said, well, I said, look, I Can't, I really can't afford these. We have to sell a place in Sydney. And he said, well, to buy in Sydney, he said, well, what have you got? And I said, well, up in Brisbane we've got this and this and that. And he said to me, lady, with what you've got, you can buy four properties in Sydney today. Today. Oh, okay. And I'm here thinking that he's just one of these sales pitch real estate agents who's trying to lead me down the garden path and sell me heaps of properties that I can't afford. But he explained how to use the equity and I have to admit at that time the penny still didn't drop. It was another year or two after that, in 1982 when our first was born, that I had time to sit, think and reflect. And away we went. But it's like anything when you have to be ready when that teacher appears.

Yeah. And it's interesting, I'm embarrassed to say as well, because I've now had a mortgage breaking business for 10 years. But when I first heard 15 years ago that you didn't have to pay off a property, but you could use equity from a property to kind of leverage yourself out, it was just an absolute light bulb for me. And you know, this conversation, reading that was one of the moments when I thought, oh my gosh, you know, this is amazing. But I still speak to people today who don't realize that, which is limiting.

Yes, well, it was even a bigger revelation back then. It was pre kicking days and pre financial regulation. So it was really a totally innovative idea. It's not so much these days, but those were the days in the early 80s when you really did need a cash deposit. And to suggest that you might need equity was just totally out of left field. So it wasn't the common thing. It took me a little while for it to work out and for a bank to agree that yes, we could do it this way, but it was definitely not the trodden path.

Yeah, it's a bit of a trailblazer for all of us. And I think it's amazing, isn't it, that way back then in 1980 when the median price was around $75,000, it seemed too exp for you. And now we fast forward to today and the median price in Sydney is over a million dollars and it's still very expensive for a lot of people.

Yes, that's a fact of property that I'm always told that we bought when properties were cheap. And of course that noise mean no end that at that time they were very expensive and people forget that.

I get told that I've been very lucky when I bought my properties, which drives me crazy. Yes, luck does. You have to work very hard, don't you work very hard to get lucky.

Luck comes with a lot of hard work.

So what were the first steps? It sounds like, you know, you obviously turned your home into an investment property. There was four or five more properties then, before you came to Sydney. How did that kind of transition go? Well, let's keep keeping these properties or buying.

Well, they were all by accident, really. I think the first three or four properties were. We lived in it, we moved, we bought another one because we couldn't bring ourselves to sell the one that we had just left and we've done that. I think half a dozen of our properties are all ones that we have lived in at one stage or another. And that wasn't a process of, we must keep this because this is the formula that works. It was kind of just a miserly reaction to, I don't really want to get rid of this. It was like a hoarding, hoarding attitude more so than an investing attitude.

So I gather that you say that these were kind of by accident. Were there some mistakes? Was it a bit of a trial and error to build up your portfolio then?

There were lots of mistakes. I think the biggest mistake was a non event and that was by not borrowing enough early on and not understanding that my personality was not suited to particular types of investing. We dabbled in, let's buy an old property and renovate it. Well, that didn't work. The only reason we made money was because the market had moved in the meantime and we were lucky to get our money back. But I still make a lot of mistakes. I've dabbled with developments and subdivisions and building and while I quite like building, I detest dealing with councils and. And things that are totally out of my control. And I've realised It's taken sometimes 40 years to realise that that's not me. Stick to the formula, stick to the basic property, do what you enjoy doing and don't go out of your comfort zone.

It really is about. I talk about my beige or my meat and potato kind of investing. It's a bit boring, but people like yourself have been doing it for 40 years and if it's making, making money by buying the right property in the right location, you know, why get really quick?

Why change it? Why change a wooden formula?

So did you struggle early on? It sounds like, I mean, you Talk about being miserly. But were you financially struggling with both the concept of property investing and financially having these properties?

Well, we always told our kids when we walked down the aisle that they want and they wanted their chocolates and Smith's crisps and all the rest of it. My answer was, well, we can't afford that. And it was probably not the right answer. I needed to explain to them that we could afford it, but we had other priorities. So that's the best way of explaining how we did accumulate a lot. We had priorities of you must pay the mortgage, you must put money into the loan first. And while we could afford the luxury TV and the luxury lounge, it was not our priority. So therein lies a huge difference to what a lot of people see today. The reason they can't afford property is because they have other priorities. The holiday and the big TV and the big fridge comes before this investment in property scenario.

It is interesting, isn't it? I see a lot of talk to a lot of people and see their financials and that whole keeping up with the Joneses. You know, not everyone realises this, but the Joneses are broke.

Oh, usually the Joneses have got the Mercedes and the BMW and everyone else and they look the part but underneath they're struggling. They don't have that finances and it doesn't take very much to break it down. A very little glitch in the global financial crisis and they're soon out of their mansion and into rented accommodation.

Which is interesting, isn't it, because, you know, just with some low risk strategies in investing and when we are obviously talking about property now, but you know, getting the formula right and as you said, you know, following the system, it can actually create that wealth.

Yes. And just to relate a little story of a property that we bought in 87, I think it was just before negative gearing came back in legally and it was $53,000 I had put in, it was accepted and I had asked the agent, could I just hop around and just check out a few dimensions of the property? Well, when I went around there, the people were loading all of their furniture into a huge truck and the furniture was, this is, remember 87, this is 10 times better. They had the biggest TV on the market, which was one of these two tonne homophonic lead lead weighted boxes. They had the most beautiful furniture. And I said to them, look, look, if you really want to, I can tear this contract up. Why don't you sell some of this furniture and use it to pay off your debts and etc, etc oh no way. Oh no. We know we can't live without all this. We've spent too much money. We'll get something for it, I'm thinking, and at least put it back into property. And I got the contract out the car. Look, I said I'll tear it up if you want to do that. It was already an approved, signed and sealed contract. No. And off they went. I don't ever know what happened to them. But it's very typical today that people have these luxurious priorities that they think is important to them.

It's interesting, it reminds me of someone I spoke to last year and I was saying to them, you know, if you gave up Foxtel, you could actually afford this investment property that we're looking at. And they said, oh no, we couldn't do that.

No, no. There's an interesting article on the BBC not so long ago and it's called Stuffication. And it means that we've got so much stuff that we just can't breathe. It's stuffication. I thought that was very appropriate that we buy stuff. We surround ourselves with stuff. They counted 2,000 odd items in a couple of bedrooms without even opening the drawers. And that's where the money goes. It doesn't sound like a lot of the time we'll just buy a $5 trinket or a couple of pairs of earrings, but it certainly mounts up.

Absolutely. Well, I have to say, you know, I was having a conversation over breakfast with my 7 year old son and husband this morning and I was looking at actually the, the book that my husband had picked up over 20 years ago in New Zealand, Making Money that you co wrote with Dolph Deroos. And my son said making money and he's always trying to sell X Lego on ebay and stuff. And he said what's that about, Mum? What's that book? And I said this is the book that started this lady who wrote this book. The lady started the inspiration for daddy and I for buying houses and that's why daddy can paint today and mummy can now go and do this education stuff and help other people. And he said wow, she must be really great. And I was like, well it all starts with the, it all started for us with a book. So did it start for you with books too? Did you start picking up books and start learning this?

It did, but there were very, very few books around in the early 80s there was a book by an American called Robert Allen. He had a system of buying properties with no deposit, but they had a very strange system which they still have in America, that there's a lot of vendor finance that goes on. So he had this no deposit. Screw the vendor for what you can and you'll buy a property. But he had the same philosophy of accumulating properties and accumulating, accumulating so that ultimately you'd finish up with a large portfolio of properties. But he. It kind of set me, I suppose, after we'd already bought numerous properties, that, well, okay, this works in America. Must work here too. But the no deposit clearly doesn't work. I think as I got my own thoughts together. Noel Whitaker was putting a lot of his books together at the time. And although he didn't influence me, he certainly reinforced my ideas and. And I became very confident in my own formula. He was a very smart man, or is a very smart man, Noel Whittaker. And one of his little sayings at the time that was, if you got a lot of money, where are you going to get the best interest rate? You're going to get it in this bank. And he named a few banks, or that bank, or this building society, or do you have another suggestion? Of course, people are trying to rattle off the Commonwealth bank as this and Francor as this, and on and on it goes. And he said, no, none of you are right. The best you will get and the best you can do for your money is in a concrete box in the backyard where you can never get it. Because when people have got access to money, it goes, it's just spent. I said, no matter what your income is, you will always spend that income, plus another 20%. People always spend more than they earn, no matter what the lowest and the highest income. So he had a lot of good parables that just reinforced, hey, it's okay for me to do these things. And he's still written some wonderful books, although he's a financial advisor. We agree to disagree on a few things.

Well, let's get into it. Obviously, you have dabbled, as you said, in subdivision development and a bit of renovation, and I know that you've been doing some of those now as well. But how did the system and your personal philosophy that then took you through the rest of the years develop?

I stuck to the same formula pretty much. I never doubted what I was doing. I stuck to the same formula, except for when I did dabble. I didn't lay everything on the line. I think those people who've made their billion dollars have almost got to lay a billion dollars on the line to make another billion dollars. And that was it. I never put at risk what I already had and each time I tried something different, I said, no, that doesn't work. Renovating in a big way is not my cup of tea. Renovating in a small way is, and I very much enjoy that. But doing a major overhaul. So over the years, I just developed this buy it and keep it formula that was built around basic properties, even the holiday units, a lot of them didn't quite work out either. So I can just reinforce that the formula is very simple, very basic, stick to it.

So the basic system that you talked about, you know, over the last 40 years, buy, keep it, basic little renovation. Does that work today, do you think, in today's market?

Well, my philosophy hasn't changed, but yes, it certainly does work today. I don't think anything has changed in thousands of years. It's always been the landholders of England and we can go back to 1066 with the Norman invasion and William I distributed all the lands to his favourite barons and earls and everyone else, and today they own probably 90% of England. It's a sad story, really, but that is the fact of life, that it's not just a recent invention, that buying land was property on it is a good investment. It's always been that way. And if it's got a property on it that rents, then the financial system at the moment favours that kind of investment rather than just holding land.

I think you and I have to be grateful that they have changed a few things and now women can actually own land and inherit it. So of this, the. The buy, you know, buy land, hold it and, you know, watch it go up in value. I mean, there are so many benefits for that. And when we put it in the context, I guess, of wealth and family, you know, can you just talk to that for me?

Well, I've chosen this particular way of borrow, buying and keeping, particularly properties in the lower end because I had a career. I was teacher, I was a maths teacher, I hope a good one. I taught zoology and then later on biology as it became available. And then as we were buying a lot of properties, I had a very young family and I wasn't working, so I had to get into things that I considered not risky. The main benefit of doing it my way is that it wasn't risky and you could concentrate on a career. And that career might just be whatever you've chosen as a teacher or a solicitor or a domestic, it doesn't really matter. And then it might still be that you've had a family, but this doesn't require any particular skill. If you shovel your money into property and keep it along the way. That's what, that's what I like about it is that the biggest benefit is that anyone can do this, but it takes time.

And I think the kind of disclaimer there is that you could say you could buy any property and it will go up in value, but the reality is some areas go up faster than others. So it might take you 50 years to get to the same point that another property could get you in 10 years.

That's right. If you're buying property with a view to making a fortune over the next two or three years, forget it. Doing it for the wrong reason.

Absolutely. Well, I guess let's talk about that for people who are just starting out and my gosh, I know when I was starting out there's so many competing strategies and ideas out there and it can be confusing. What are some of the different strategies and ideas or even lies that you're hearing at the moment?

Well, the get rich quick scheme do not work. You've got to have the right kind of personality to be a gung, what I call a gung ho investor. And I think personality comes into it quite a lot that people will play on this idea that you can get rich quickly and everyone in the audience jumps up and says, yes, that's me, that's me. I want to get rich quickly. But very soon they're disillusioned because they realise they don't want to put everything that they own on the line, they don't want to stop working at their normal job, they don't want to get into risky investments. And at least I realised that very early on that that wasn't my personality to go down that gung ho trap. And so I think people, if they accept who they are and that the get rich quick schemes are only for 0.01% of the population, then move on, get your career, have your family and do this kind of as on the side. There were some times in the early years I never even thought about the property. They just kind of looked after them themselves. I think the other thing that holds people back when they're investing is that there's a lot of those who've never tried it, family, friends and who will almost put a block in front of you that you have to then be strong enough to overcome that.

Absolutely. That's why picking up a book that's 20 years old is just as relevant today as it was back then, I think.

Yes.

So what are Some of the. I mean, you're seeing the media and I know that you comment on things in magazines often. What are some of the misconceptions that people have and where do you see people who are going wrong today that are just starting out?

It comes back to this get rich quick idea and they need to understand that it takes time. It just takes time. When you're young and you're 20, it's very hard to look ahead 20 or 30 years and decide that you're going to take action now and reap the benefits 20 or 30 years later. That's a hard concept for people to get hold of, but it's one of those. It's just one of those things that you need to bite the bullet and it takes time and it takes debt because you can't possibly save the amount of money that you're going to need in retirement. So I think the compounding effect of time and debt is the most important concept in building wealth to investment property.

And I mean, such sound advice. You know, it's. I often speak to people who have been to a seminar or they've read the latest book or they read something about the latest craze of property investing and it seems like by next year they would have retired or.

Yes, yes. You can't. You've got to get back to basics. You've got to get back to basics and you can't be going home. Of course, everyone leaves a seminar on a high, but you've got to come back to reality. But then on the other hand, you just can't turn into a gunner. We're going to do this and gonna do that. You have to do something at a level that suits you and your situation.

And sometimes having too many options is the thing that can stop you because. Because you feel like you can't choose rather than those who have to decide.

In a lolly shop, they don't make up their mind and spend an hour looking. And sometimes you only need half a dozen properties to look at and you can find one that will suit the bill.

So it does takes time. You do have to go and look at those properties. So why should people go to all this trouble? Is it easier just to wait for the pension?

Well, I think people are slowly realising that there's not going to be a pension and there's certainly not going to be a grand pot of gold if they invest in super either. It's not enough. So I think people know that. I think they know that now. What they don't know is that they needed to have started very early to accumulate this so that they're totally independent of the pension. They're actually totally independent of what is the compulsory 10% superannuation. Because 10% is not nearly enough. How much they need to live on? How much do they need to accumulate?

Yeah, how much does a comfortable living take?

Well, you could talk to 10 people and they will all lead a different. They all need a different amount. For some people two properties will be enough. For others they can't do without 10. It's usually those who think they're going to need 10 because they've got an extravagant lifestyle, they'll never get to 10 anyway because of their spending habits right now won't allow them to get to the amount that they need.

They're future living their retirement fund, aren't they?

Yes. Yeah, that's right. But again, he is richest whose pleasures are cheapest and the simplest. And if I have a choice and I want to go and do things I'm not too proud to be seen in Saint Vinnies and I use a lot of second hand stuff and I do a lot of small renovations myself rather than call a plumber. I know how to change valves, I know how to change taps and I know how to fix bench tops when the water's got into the chipboard. And it's not as though I knew those things, but I had to learn and I learn a lot as I go along. I'm even learning today.

It's interesting, isn't it? It makes me think of the books, the millionaire next door, the people with the flashy cars. And I know I got ribbed by my friends for years. Having a 1995 secondhand RAV4 for 10, 15 years that for me spending money on a car where I could put that on a deposit on a property or you know, people going off on holidays or jewellery, whatever. It just wasn't, it wasn't on my agenda. I knew what I had to work for to get to where I wanted to be.

Yeah, that's right.

So I mean, I guess the thing is about also living comfortably. Often I challenge people to go back and, and kind of work out what they need to have a comfortable lifestyle. And it isn't the number that they originally throw out that I need 100 grand a year or even 75, $50,000 a year. You know, you can live quite comfortably and have your simple needs met on a lot less than that. I mean if that's sometimes the first step for the first goal and then getting to add A few extra luxuries in. That's always a good thing too.

Yes, it comes back to, well, I've just organised a trip on the Norford track, but there's no way I'm going to go the luxurious way. Take my sleeping bag and I'll sleep in a hut and I'll enjoy it. So you have to, you don't have to live simply. I probably take it to the nth degree, but mind you, I'm going to. When I fly to Europe and do our treks over there, I'll fly business class. But people need to get the priorities of what's important and where can they save money. And it's about not spending, it's not about how much you earn and how much you make, it's about what you do with what you've got.

So if people do have then the savings or the equity in their home and they want to start the first move into property investment, would you tell them to go and see a financial adviser or a financial planner?

Well, logically, yes, but practically no. Most financial advisors really have nothing to do with investment property because they don't get a commission from it. I've had arguments with the financial advisory industry many, many times over and been booed down and all sorts of things because they don't get any commission from recommending property. It comes down. You need to do your own homework yourself. There's no other way for it. And get that information together. Read as many books as you can, talk to someone who's done it before. And no financial adviser or the official financial planner, unless they're specifically into property. It's not a good idea because you'll be sidetracked into doing something that you really didn't want to do.

Exactly. Well, you obviously did a lot of homework and, you know, I'd love to hear about where it all started for you and helping others do their homework. So I think your first book was in 1992, where, you know, you really described your property investment journey and, you know, what kind of started that process for you and why did you want to become an author?

I think that the first book, the first official book, was in 1992, that's for sure, but there was a precursor to that that was called A Manual for Residential Property Investors. And I guess having a teaching background and I was always good at research, one of my fortes at the university was that I had that power to read something and pull the eyes out of it and know exactly what it was. And so it kind of was A way of gelling my own thoughts together to put a little manual together. I was actually working in a real estate agency at a time and I thought this is something I can hand out to people or even sell to people. And I'd already been through the financial consulting rigmarole and I could see that that wasn't the way to go. I wanted something that was just not a one on one on my time. I could hand it out, people could do their own thing. So I wrote down a few notes and my husband actually typed it for me on my little Mac computer because I couldn't. When I eventually did type, I actually liked writing the word property because it ended in erty and those letters all ran together on the keyboard and I got very good at typing erty very quickly. But later on I did manage to learn to type, so to speak. And the book resulted. And the reason the book resulted was because we had sold about 5,000 of the manuals back in 89. And I thought there really is a need for this. People are really interested in this. And I don't necessarily need one on one face to face with people doing a consulting all the time. I had a young family at that stage. My kids were 10, 8 and 6. So I virtually took a year off and put together the first book. Building wealth to Invest Investment property. And there were no other books on the market at the time, nothing on property. And it just became a runaway success back then.

So I mean I imagine there was a need and you filled it. You know what is a runaway success? Was it. Did you publish it yourself or you had it?

Yes, I self published and we still self published. It just meant putting. It was putting your money where your mouth was. I was confident enough that I was going to get my money back. I knew I'd already sold 5,000 of these little manuals that got handed out. So we did a print run of 10,000 and it was just really self publishing is all about just paying for it yourself. I employed a publicity person who was from the Image Bureau in Sydney. She was very good, Colleen McSween. And she said, look at me, what's your angle? I said, well, what's an angle? She said, no, what's your angle? What is it that you've done that's different, that we can sell this story? I said, well, nothing. I'm just a mum with a few kids and I had this idea. She said well that's the angle. And away it went. And we did A Current Affair and the Midday show. I think it was at that time and lots of different publicity events. And I really enjoyed that process of getting out there. I felt like I wasn't selling anything. I wasn't standing there selling soap. I was just selling a concept to people. They could invest in a 20 or $30 book and find out what to do themselves. But because I'd come from a very practical university situation, I really enjoyed the process of actually writing the book.

And I think it's just your terminology there and investing in a book or investing in education. Often we look at things as a cost, but when it comes to books and education, it's always an investment, isn't Is. So I'd love to hear. I'm sure you get letters and emails now all the time from people who've read your books and had successes. Are there any that really kind of stick stand out for you?

Look, after I had done seminars and I was on the seminar circuit for probably 15 or 16 years, and people would bail me up at the end and tell me, look, I don't want anything from you. I don't want to. I've already got your books. I don't want to sign anything. But I just want to tell you we've done this, this, this and this and this. And I want to shake your hand. So it was very humbling experience to hear all those stories. And later on, that's how I think it was the third book in the series, or the fourth book, depending on what you call the first. It was building wealth story by story, and I didn't have to do much work for that except format it, because people had given me all their stories of how they had achieved things. But also there were some very disastrous stories in there as well. And I think to balance the book, I put in things that people told me that they could have done, should have done, and some of the things that they had done that worked out very well for them.

And it's such a great. That book of stories is such a great balance because it gives people the opportunity, well, the aspirational opportunity to see, you know, coming up with a system following the formula, getting it right, repeating it work, and those that kind of deviate or procrastinate, then, you know, sometimes it doesn't always turn out how you want it to be.

No, there were certainly a lot of gunners that went to a lot of those seminars that I did, which is kind of.

It kind of brings me to, I think, you know, the trendy term now is mindset. But one of the things about your books and Obviously about your core message is that, you know, there are the gunners and you have to be of the right person, personality and risk profile, etc. But you don't jump straight into talking about property investing and wealth and you're going to have the flash car and the fancy plane trips. You spend a lot of time talking about goals and attitude as well. Why is that so important?

Well, because for most people to buy property, to borrow, to buy property, it's a complete change in conventional thinking. The idea that that good debt is okay and that there are different kinds of debt is something totally new because you can't lump all debt together. Debt on credit cards is just astronomical, and that is as bad as debt gets. I'm probably one of those people that the bank asterisks because I make sure that all my bills are paid on time, so I'm of absolutely no benefit to their bottom line at all. But good debt is okay. And I wanted to spell it out to people that it does need a change of mindset. And I think the book was a good way of doing that to outline this complete change of goal setting and attitude that needed to precede any formula. And then, and once I had created the formula, it was important to set it out in dot point and make sure that the book was laid out properly so that it was very easy for people to read. And one thing I hate when I pick up a book, if someone's created a book with a table that spills over from the bottom to the top of the next page, it just irritates. And it means someone hasn't. If they haven't spent the time to format the book properly, they haven't spent the time to research the information properly. And I could just open a book and I can just tell that every book I've ever written, there's a set of information that starts at the top of the page and finishes at the bottom. And I had an enormous amount of difficulty sometimes writing, writing, writing, writing. And at the end I needed to cut out a few lines or a few words and I could sit there for days trying to trim it down so it finished at the bottom. And the next page had a complete graph all to itself. And anyone who looks at those books today will see that the chapters all start at the right hand side of the page. And it's just I spent as much time formatting as I did collecting the information.

It's meticulous. I bet you that spills over to your renovation too. It's interesting. I said to my husband when we were talking about him picking up the book in New Zealand and me picking up the book here in Australia and our first impressions. And he said, for me, it was the first book that wasn't a book, it was like a handbook or a guide. And it really kind of step by step takes people through it. Simple. And I guess that's the important thing, isn't it?

Yes.

For someone who's listening now to the podcast and they're thinking, I'm going to take the plunge. I'm going to buy my first investment property. Where should they start? What's the very first step that you'd encourage them to think of?

Well, a lot of people don't have a lot to show for what they've actually earned. They might be on $100,000 a year, but because their spending habits are just way off the planet, they've got their big TV and their two door fridge and, and their four wheel drive which has now depreciated in value to about less than a quarter of what they bought it for. They probably need to sit down and say, well, how much have I made in the last few years? What's my net worth? How much have I actually accumulated? And for many people, if you now discount your $1,000 fridge to $200 and your four wheel drive you spent $50,000 on, it's now worth $11,000. And, and in many cases they've borrowed to buy those things, so they've still got the $50,000 loan on the car that's now worth 11,000. People would be horrified to think that they aren't worth anything. They don't have anything, they don't have any net worth at all. In fact, for most people, they would have a negative net worth. And so that's the first step, is to see what you're worth, have a look at your spending habits to see where all of this money has gone.

Yep. And then changing your attitude and start.

Saving and that's right.

Well, I guess, you know, we take people through the, you know, look at what you're spending and looking at your lifestyle and saving a bit of money. You know, they're thinking about buying a property and they've heard from you and I that being a bit miserly is not such a bad thing and they've got some money behind them now. We hear a lot about location. So, you know, is the location of a property such an important thing or is it, you know, should we just buy close to the CBD or what's location?

Location is Very important. But it's not necessarily the cbd. You need to be near infrastructure. So you don't have to be in the cbd, but provided you're near a train line or a bus line, then that makes a good investment, something that's near infrastructure. And that's what makes these great cities like London and Paris work, is that they have that infrastructure so that even if you're a fair way out, you still have access to the important things. And with that goes hand in hand, the idea that a mining town just doesn't work. I don't know how many people say, well, I've just had a chance to buy this property for 800,000 and I'm thinking of buying two of them. And it rents for about somewhere between two and $4,000 a week. Don't do it. And now those properties are just worth. Well, Port Hedland is a classic example, a million dollar property that now they can't get $350,000 for. So it's important to go with infrastructure. Those mining towns have only one piece of infrastructure, and if the iron ore boom dies, then so do all the properties around it. You don't have to go to cbd. And tenants actually like properties in a location where it's close to transport. So I would say that handy is the operative word. Handy with a decent amount of infrastructure makes the best investment.

Great advice. So what makes a better investment than a property with a low rental yield and a higher capital growth, or a property with a higher rental yield and a lower capital growth?

Okay, both. Both can be good depending on the situation. And it depends on a person's income and their age. So someone who's on their $200,000 a year has a medical practice, they can afford to go for a low rental yield and a higher capital growth. Someone who's on a not so good income because they're working as a cleaner can do equally as well. That's not to denigrate that profession equally as well by buying a property with a higher rental yield and a lower capital growth. So someone who's young on a high income will go for the growth, and someone who's perhaps older on a lower income might go for the yield. And each one has advantages and disadvantages, but both work equally well depending on your situation.

So if someone did have the borrowing capacity and they were looking at building a portfolio, is it better for them to have a number of lower priced properties or a fewer number of more expensive properties?

Probably cheaper properties.

So that's where you've concentrated your portfolio, isn't it?

Yes, that was the backbone of our portfolio. Cheaper properties. We have a number of expensive properties, holiday units and properties I've built because I couldn't let go and they were over capitalised. But to be honest, the cheaper properties work best for two reasons. You can always rent them out at a reasonable kind of rent, no matter what the market is. If you've got a very expensive property and it's a downturn in the economy, no matter how much money you've got, you can't afford those properties, so you always have to drop the rent. So there are certain times when it to comes expensive properties rent for not much more than a cheap property. So you may as well have bought a cheap one. And the other reason is that at the time when you want to sell it, it appeals to a much broader market who can afford those cheaper properties.

So if we're just to clarify what a cheap property is, if a median price in an area is 500,000 and we're talking the one that are right down the end at the 300-00 or are we talking 10%, 20% below the median?

I would say I like to describe it as the bottom quarter of the market, but the top end of the bottom quarter of the market, if that makes sense. So halfway between the absolute bottom and closer to the median price. Because sometimes the median price is distorted depending on if you've got a canal estate or something else in your particular area, but not above the median price. Somewhere just below is something that rents well, sells easily and you can't go wrong.

And that kind of comes back to the whole low risk approach, isn't it, that you want the majority of the market in any financial economic trend, wherever we are in the market, to be able to either be able to rent it or buy it.

Yes, that's what property investment relies on. Someone renting it and ultimately perhaps someone buying it when you're ready to retire.

Which means that you kind of want a typical property. You don't want the one off special different looking property in the area. You want something that's just beige.

Run of the mill. Yes, run of the mill, but very well maintained. Tenants are pretty choosy now. They just don't need. You can't get away with two elements on a stove that don't work. You've got to have something, you've got to keep it up to scratch.

Absolutely. And it saves you on the long term too, doesn't it? When vacancy rates, because they don't move out for Those people who've now bought their first investment property. Do you want to give us the steps of how to grow that portfolio?

Well, it's a matter of just buying property when you can afford to. I've never ever looked at the cycle saying now is a good time to buy or it's not a good time to buy. It always comes back to your own personal financial situation. That's the best time to buy another property. And in the meantime, there's two ways you can build equity. You can rely on capital growth, which may not be there year in, year out, or you can reduce the debt. So it always helps to have a particular property. While I'm a great believer in fixing interest rates and you can't reduce the loan, there should be a third of that debt that has a variable rate where you can shovel the money in as it becomes available and reduce that debt. So building the portfolio relies on. On buying the property when you can afford to and building equity and not just relying on capital growth, but reducing the debt. And the quicker you've got equity, the sooner you can borrow against it to go again.

Well, look, I've got some questions here from some of our students too, so I'd love to just throw these into the mix. And they're in no particular order, if you're happy to take those on.

Yes, sure.

So Chris Yong has asked that I ask you, if you were doing it all again and starting investing in properties, how would you do it?

Absolutely. Exactly the same. Not a single thing. Except to say I probably would have borrowed more. And if I can pass on any advice at all, I would stick to my own rules. Something which I haven't done and I've been fortunate hasn't cost me any money, but it certainly didn't make me any money in buying expensive properties and doing subdivisions and major, major renovations that weren't worth it. My advice is stick to my own rules. And I would do exactly the same again in borrowing and buying and keeping over that longer term, but possibly borrowing more than I ever did in the beginning.

Yeah. And I guess the thing is, although some of these mistakes don't cost you financially, they can cost you in time, can't they?

They certainly do. I think for the last four years of doing a development, I was lucky to get 50 cents an hour.

Absolutely. And even some of those investments that don't work, they can actually. Or over capitalizing on a renovation or buying a property in the wrong location that doesn't go up in value, it takes the time to recover that position so it's time out of the market that it could cost you a borrowing capacity.

Well, it does. I guess the only good thing thing was I certainly learned an awful lot about councils and why I don't want to deal with them anymore.

Okay, well you've scared me off. I'm definitely not going to look at subdivisions or developing. I've got a question here from Steven Ryan. What are the most important skills required to be a successful investor?

There's a couple. Patience is the most important thing. Don't get sucked into the get rich quick schemes. You've got to have that patience to, to write it out. And you've also got to have some good saving skills. We can't believe that it's only high income earners who can do this. And I've said before earlier in the interview, it's really what you do with what you've earned that makes a difference. So those saving skills are very important. Don't keep chasing the higher income. Look at where you're spending the money.

Great advice. I've got a question here from Tim Gordon and Tim says, how do you do your due diligence and what factors do you look for to know when, say the Sydney market is turning upwards or downwards?

I speak to a lot of people. I'm always chatting to people. I have people all over the place that can feed me information. I often ring my brother if I'm gluing up a chicken bench and say, well, I've got to stick some stainless steel on here. What's the best kind of glue? And is it sudal or is it this or is it that? So I'm always one to ask questions. It doesn't matter if it's about finance or glue. You've got to talk to someone else to know and that due diligence can only come from that homework in bleeding other people for information. I think Henry Ford always surrounded himself with experts. He said, I don't know anything about cars but there's a lot of people who do.

Absolutely.

So picking the market, it's not something I've ever tried to do. I think there's probably. If anyone could pick the market then there'd be a lot more millionaires out there today than there is now. I think it's, it's beyond what I even contemplate. My philosophy is not to try and pick the time, but to get in and hold on for a long time.

Good advice. Time in the market. Well, I've got a final question here from Stacy Walker from our student Questions and she says, I think with a degree of frustration, if you have created a non productive portfolio, what is the best way to recognize rectified the mess?

If you've bought a few duds, it sounds like then selling can actually cost you more money. Sometimes the expense of getting out and into a better property may not be worth it. You need to do the sums on selling up, what are the costs buying into another property, more stamp duty, etc. Etc. And unless you've bought a complete dud like in a mining town and you're prepared to sit it out, mining towns are a classic example and you may need to get out of something like that. It might be another 20 years before there's a boom. So cut your losses and move on. But in the meantime it comes back to those saving skills and save like crazy to build more equity to counter what your dud investment has just produced for you. So don't sit and dwell on the mess. Move on. Make a decision to keep it or flick it and move on.

No. Great advice because I think sometimes, well, there's such a low percentage of people who have an investment property, whoever buy a second one, I think often that they've been disappointed by the first without being able to look at what they could possibly do to that property and maybe add some value to it.

Yes. So it's also important then that you make the next decision. But you don't put what you already have at risk in trying to rectify the message you've already made.

Well, let's give Stacey some motivation here. Have you got a favourite property success story? Perhaps someone that's, you know, their life has changed for their family or themselves?

I think lots of, lots of success stories. I think mostly kids are a good example. I never kind of forced them into property, but they've seen what I've done. My second boy has only just discovered what property renovation is all about and he's 30. I never dragged him along to any renovation renovations I was doing. He's just kind of looked from the sideline. So it's nice that there has been things rubbed off on my own family, but there's also so many thousands of people out there that have done exactly the same thing that I couldn't even begin to count. But it has changed their lives. It's changed their lives in that it hasn't given them necessarily the money to buy a Picasso, but it's given them sufficient financial independence. That's what's important.

Well, you can claim me as one of your success stories. Jan.

I'll send you the bill later.

Absolutely. Maybe I should just send you a bottle of scotch, eh?

Yes, Glen Fiddick's my favorite.

I'm onto it. I'm onto it. Look, I think a great takeaway today from today's episode for someone who's just starting out is there isn't, you know, there isn't the get rich quick, there isn't the magic pill, you know, it really to become a successful investor, you know, according to you. And what we've seen is, you know, there's work that has to be done, but it can be profitable. And you know, we're not talking about complicated things, we're talking about a system that can be applied. And I think the thing is that I don't know about you, but have you seen any get rich in property fast products out there that have actually worked for anyone?

I would say one in 100. There's always someone and there's always going to be an advertising program based around that one person in 100 because that's that one person who had that particular personality and a lot of good luck to make it work. But in general, no, it comes back to time in the market and it comes back to people not wanting get rich quick schemes. Instant gratification, I call it. You can't want too much too early. It is a time factor.

Yeah, absolutely.

Well.

Talk about you. What's happening for you now? What are you doing? You've mentioned you've done a couple of little renovations yourself.

Yes, well, I haven't exactly stopped working. I haven't stopped teaching. I have stopped teaching, but I haven't stopped teaching in the sense that I'm very happy to help other people along the way. I don't do seminars. I did a circuit for a long time and thoroughly enjoyed it and interaction with people. But my time now, and I hope I'm still a role model to my family and for anyone else, is that I do do a lot of hands on renovation. I don't necessarily do everything if I'm busy, just about to go trekking overseas for five or six weeks, which we do every year in the French or the Swiss Alps. Then the agent emails and says, you know, this needs doing. Well, it just get a plumber. So I work long hours. I'm often up before six doing things, looking after all the financials of a large property portfolio is a job in itself and organizing trades people. But the nice thing is I can do as much or as little as I want. So if I want time off I take it. And I don't think I'd want it any other way because as soon as you stop doing things, the mind dies, the body dies and you've got to stay alive and make life worthwhile and I hope a happier place for other people.

Now, I did pull an incredible. And you're a master of storytelling and I pulled a great analogy out of one of the books and you told a story about your son and talking about. About frogs sitting on a lily pad. Can you tell us a bit about that and why it's relevant to someone who's just starting out?

Yes, my nine year old son who's now my 32 year old son. Now that was such a long time ago. He now has his own property portfolio, but he understood that story even back then. And he came up to me with a question and said, there's three frogs on a lily pad and two of them decide to jump. How many are left? Well, I'm a maths teacher. I can work that out pretty easily. So I said, well, there's only one left. And he said, wrong three, because they only decided to jump. They haven't jumped yet. And I think that's a classic in deciding and being a gunner. And there's a big difference between being a doer. You've got to be a doer. You can't just decide. You can't just read a book and define. You can't say, I'm going to do this. You have to be a doer.

Yeah. Oh, Jan, it's just been such a wonderful experience talking to you today. I really appreciate your generosity.

No problem.

And look forward to chatting to you in the future.

Okay. I hope it works out well for you and I'm sure people will have learned a lot.

Thank you, Jan.

Ah, Gold. I don't care if there's an episode three now. That was. That's enough. That was great.

Really, really great.

Oh, gosh. How could you top that?

Perhaps with Suburbs against the Clock.

Oh, I knew you'd bring that up at some stage.

Yep, that's coming up. That's coming up. But I guess we better do a recap of what we covered. Hey.

Oh my gosh. I learned so much. Okay, so where do you start? There's so much information.

Probably her story. I just love her story. The first property was seven Squares and then she just went for it. And she was, I mean, she kind of broke ground in so many areas. I mean, obviously on the education front.

She was an author. Yeah.

As an author and so on. But also Just with how she described tapping the equity. That agent that she met that showed her how to tap the equity, and.

Then it just changed my future. I was like, wait, I don't have to wait 10 to 20 years and pay off my home first. There's a way I can do this and have two properties going up in value, let alone 3, 4, 5.

Yeah, and probably a fortunate. I mean, I'm sure she would have got there one way or the other anyway, but probably a fortunate timing to have that agent tell her that at the time that she was ready to buy and so on.

And I guess also her warnings about, you know, that kind of quit your job and get rich quick kind of scheme. It's for 1% of the population, but it's usually the loudest percentage of the population.

They make for great stories, don't they? Like you. You know, they're great magazine covers and, you know, made X amount and X amount of time and that kind of thing. But, yeah, that really resonated with me. It's a particular personality type, and often they're the ones that are willing to risk everything for the reward, which was a good way of thinking about it.

And she never put everything on the line. But interestingly, she said that if she could do it again, she'd borrow more and do it, do more. And, I mean, I feel exactly the same way. Start earlier, borrow more, do more, and back yourself with your research knowledge, you know, and she just, you know, she.

Also said that she dabbled in all these things and kind of ignored her own advice and then, you know, subdivision and development and building and then kind of slapped herself on the wrist and returned to a formula that she was suited to. So.

And look, the fact that she's still on the tools, you know, she goes out and she does the work as well. You know, I just think if you haven't read a book, read is timeless.

Yeah, absolutely. That stuff just doesn't change.

And I think, you know, just finally that beautiful simplicity of. What's wealth mean to you? It could be health, you know, it could be freedom of time. Whatever it is, independence. It's what's. What's for you. And a lot of people concentrate on the money aspect of it. And the reality is, you know, wealth is so much more than that. And just hearing that from. From Jan was, for me, the absolute bomb.

So, okay, so what's the time chain?

Are you gonna tell me that it's competition time?

Yes, it's that time again, where you get the chance to test your suburb Knowledge while the entire nation holds its breath. 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?

Are you there, Megan?

Yes.

Oh, wonderful.

Oh, Megan, do you understand understand the complicated rules of this game? I do. So what is your city of choice?

Yep.

Brisbane, please.

Ah, Brisbane. Okay, Jane, am I asking or are you?

Oh, no, it's all on you, Josh. I'll just count.

Megan, you've got 20 seconds to name us. 10 suburbs. 10 Brisbane suburbs within 10 kilometres of the CBD.

The Limba, Hawthorne, Tawong, Kuparoo, Cannon Hill, Ascot.

10 seconds.

You can do it. Bowen Hill Valley. And one more.

Tim.

I think we have a winner.

We have.

Oh my gosh.

The sound of quiet applause.

Oh my gosh. You've had too much time on your hands. Congratulations, Megan. That is a year's membership to the monthly youy Property Success Club.

Thank you.

Oh my gosh. Congratulations. I was there counting away and having just done the hot spotting workshop up there. I've been staring at dot maps for a long time of the 10k zone. So good job with your answer.

Thank you very much.

Fantastic, Megan. We'll get those your Property Success Club details out to you shortly and we'll look forward to seeing inside the club. And Jane, if anyone else would like.

To be a contestant or they have some subjects that we can use because I think we're going to raise our thoughts up very soon.

Keep them coming in. I don't think we've got any from last week. So if you'd like to be a.

Contestant on Suburbs against the clock, please.

Email supportpropertysuccess.com that's supportpropertysuccess.com well, John, that's it for today.

Join us in episode three when we talk to our next guest, John Edwards, the founder of Residex, a man who is virtually unrivalled in the field of suburb prediction and analysis. He's spent his entire career putting his reputation on the line with his suburb predictions month in, month out and has a lot of practical tips to share with us, I'm sure.

Yep.

Looking forward to that.

And if you'd like, instant access to the transcript of today's shows and all the show notes with the links to everything mentioned in the show, or go back to previous episodes and you can go to YourPropertySuccess.com ep2 that's YourPropertySuccess.com the letter E for Echo, P for Papa, and the number two. So that's it for today. 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 length 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.

Now, John, look.

I don't know. That didn't feel right.

Oh, why?

Look, I think I may have stuttered a bit on the second line.

Yeah, I don't think so. I didn't hear a stud.

You sure? You were listening carefully, weren't you?

Yeah, I was listening.

Okay. I just want to make the disclaimer good.

Yeah, I understand.

Can we listen to it back?

Yep, sure.