7 Properties With $1 Million Equity A Year: Jane Slack Smith

When you're on a mine site and 300 men are on strike because they want to work with a girl, you've got to sit back and go, you know, why am I doing this and what am I concentrating on doing and why do I want to be here?

This is Property Investory where we talk to successful property investors, find out more about their stories and mindset and strategy. I'm Tyrone Shum and in this episode we continue the conversation with Jane Slack Smith. He will mentor us through the dangerous traps and failings of property investment and explain how anyone can build up their own portfolio through a little careful assessment and risk management. Also, before we delve into this episode, go over to propertyinvestory.com and subscribe to receive your free property investor case studies where you'll learn how to generate passive income from your properties. Go there now to sign up for free. Previously, Slacksmith shared her journey on building a multi million dollar property empire. An exciting story that originally started in the minds of Western Australia. Now we turn to the mindset. Was there anything holding her back from investing in property?

Look, I know it's a bit of a tragedy, but I run up against this regularly and I think concerned and well meaning friends and family can possibly be something that can hold you back. And I remember having a chat to my dad and he said, babe, you better be careful. One day you'll owe a million dollars. And I thought, bugger, I better not tell him. I already do. So, you know, I think a lot of people hear the stories around what can go wrong. And you know, I've spoken to a lot of people and I know there's people who've been on your podcast who are professionals these days who started out because their dads were taken advantage of and you know, lost the family fortune and they wanted to make the world a better place by making that not happen to other people in so you know, there's some terrible stories about things that go wrong and I think the real estate industry does have a lot of spruiking and people who are in it for themselves associated with the industry. However, the wonderful thing is there's so many people that are genuinely out there to assist those and I think we've seen a real change in the real estate industry and the level of education and support. Something as simple as a whole new industry of buyer's agents popping up in the last 10 years. There's so many different ways that you can get into property these days, but there's also so much information available free and paid on the Internet that people can use to validate their decisions on buying. So I think it's a good place to be these days.

She also reveals the vase instilled in her from her mentor that led her to keep going amidst the heavy obstacles of prejudice and risk.

You know, I was very fortunate as a child. My mum used to always say to my sister and I, you can do anything you try as long, and you can achieve anything you want to achieve, and you can even fly, you know, if you have God's help. And so she was very motivational. And, you know, we were always set up with the premise that we could achieve anything we put our minds to. And rightly or wrongly, you know, there's been some interesting experiences where I thought I could do things that possibly I couldn't. But going into any situation thinking of success and visualizing what the success looks like has definitely been a key to everything that I've ever done. When you're on a mine site and 300 men are on strike because they want to work with a girl, you've got to sit back and go, why am I doing this and what am I concentrating on doing and why do I want to be here? Understanding and being very much anchored by what you're trying to achieve is really important, and it's the same with renovation and property investing. Brendan Burchard was the first mentor. I worked with the Experts Academy, and then I looked at how to actually deliver online education, so the actual mechanisms and technology behind it. So I looked at Jeff Walker, and I've recently been part of Mastermind Group with Dean Jackson, who has a great podcast. I love marketing, and I genuinely. I love marketing. I love the opportunity to be able to talk to people and influence in the right way a change of thinking that will then lead them on a journey to go on as a quest to learn something more. They're the people I'm working with. For the last year, I haven't been with a mentor, and I know the importance of being stretched and held accountable with mentoring. And I'm heading out to spend four days with a new mentor that I'm working with next week. So he works with, I think, eight people a year. So. So really excited about that. So, yeah, it's kind of. What's the saying? It's, you know, when the time is ready, the master will come. I think.

Oh, yes. When the student is ready, the master will appear.

Yeah. Grasshopper. Yes. So I've been a grasshopper many a time, and I, you know, as you grow and Learn something from someone, it's time to move on. And that's been great opportunity for me. And I recently joined a fabulous group also called the League of Extraordinary Women and just fabulous group of business women. Incredibly successful, incredibly generous, they have wonderful events and just listening to what other business people go through and what they've had as great successes and failures and supporting each other is fabulous. I really encourage your listeners to if you are keen on property investing, find yourself a community where you can have a chat about it because it really makes for helping you get to your goals sooner.

The key to success in property investment is education, according to Slacksmith, who discusses how a lack of Australian education resources led her to create her own community of teaching.

Yeah, look, I'm on a constant course for learning and doing my best and excelling at it. So I really want to learn from those that are at the top of the game. And you know, back in 2011 I was looking around and I thought, if I'm going to make my next significant investment, it's not going to be in property, it's going to be in providing education for people so they can have good education in property. Who's the best in educating? And I wanted to see who was doing online education because obviously if you're doing face to face education, you're limited by the number of people you can, you can affect change with. And you know, I had the opportunity of being the finance and property writer for Australian Women's Weekly for a period of time and I created some videos to help people work out how to get from their home to maybe their first investment property or buy their home a bit better. And I can see that the having access to, you know, something online was giving people the opportunity to learn in their own time frame and be able to go back and look at it again. So I thought I want to find online educators who could teach me how to do this property properly and, you know, with integrity. I just didn't want to be the, here's the steak knives. I wanted to be able to be authentic and be who I am and you know, deliver the kind of no BS message. So, you know, it wasn't really covered with all the glitz and glamour and I couldn't find that in Australia. So I looked overseas and I found a mentor there and I spent a significant amount of time and money flying backwards and forwards being part of a mastermind group and being part of a group of like minded people and in a community and regardless whether it's property investing or, you know, Photography or cat raising, whatever it is that your passion is being part of a community of like minded people. You know, just being supported and understanding and speaking the same language is so important. So I just got the most amazing learnings from that. And that's when I came back and started your property success with the view of passing my knowledge and creating a community that could share their knowledge.

Practical, no nonsense advice is the name of the game for Slacksmith, which has led her helping hundreds of Australians purchase sound investment properties under their portfolios.

It is. And look, I spoke to a lady last year and she had said to me, look, we really got it wrong. We bought a house and land package in the outskirts of Melbourne. There was other developers there, there was an oversupply, so we had a house in the outskirts. It didn't work for us, so now we're going to buy a unit in a city. And I was like, how are you minimizing your risk? She said, well, it's not a house, it's a unit and it's not outskirts, it's in town. I was like, the risk's the same, it's an oversupply risk. And she's like, oh, I didn't think about it like that. And you know, it's kind of just getting people over that little aha moment. It's like, oh my gosh, I was about to repeat the same mistake and.

That'S just one example.

So I was doing one of the services I provide for my pre approved mortgage clients is if they find a property and they want a second set of eyes, I do an ideal review with them. And this client kept coming up with these properties and it's a review against their buying criteria and just wasn't meeting his buying criteria. And we looked big picture and the suburb actually didn't meet any of the criteria. So I was saying to him, look, if this buying criteria is what you need to get to your goals, then you're going to have to move suburbs and do some more analysis. And he was saying, it's just taking me three months of analysis to do this. I don't want to move on. It's like, well, investing in 10, 15 year plan here, another three months in getting the right suburbs so it delivers your plan for you. Sooner is probably better since you found the right suburb and then the right property and put that one to bed. But sometimes you have to kind of move on and sacrifice a bit of time. But you do learn from it and you learn to get quicker at the processing.

Yeah, it's like opportunity cost at the end of the day or sunken cost. You can spend all that time. You've got to sometimes decide, is it really worth continuing to move on. You keep pursuing it, and sometimes it's just better just to let it go. If it's not right, then you've got to move on to the next thing. Exactly, yeah, absolutely.

And there's a grieving period there. I speak to a lot of people, like, you know, they might miss out on auction on the dream property they're after. But, you know, if you're very clear on what you want, it's amazing how often within the next 10 days the right property comes up for them.

It's all emotion, isn't it?

Sometimes you got to separate it out. Yeah.

Motion versus logic. And did you seek any mentors also for renovating too, as well, when you're building up your equity through that path?

Yeah. Look back in 2000 and 2001, when I started renovating, there was no renovating experts out there. And so I really had to derive my own knowledge about what would work. And so once again, I went back to basics of what's the risk? And the risk is that you over capitalize or you renovate. People don't like the renovation. And my whole key around renovating and the reason I renovated was for the valuer. So getting that valuation up so I could pull equity was the number one reason that I wanted to renovate. The second one was to have it appeal to a renter so that the renter would rent it and I'd have low vacancies and high rental yields. So, you know, for me, I then, you know, worked out that it was the pricing disparity or the difference between unrenovated and renovated properties that was going to be the key to that strategy. And then doing the analysis and finding out what were the properties that were renovated on the market, how much were they selling for? What was the unrenovated property worth? How much would it cost me to get the unrenovated to the renovated? And was there a profit there? And for a lot of suburbs, there is no pricing disparity between renovated and renovated. So many properties deserve to be renovated, but very, very few should be. So. So it was finding that out that was, I guess, the secret to the success that I then shared with everyone.

Coming up after the break, Slacksmith will reveal the nuts and bolts of her investment strategy.

I didn't want to be an active property investor that is, you know, out there looking at properties every day. I Wanted to have a set and forget portfolio that just goes up in value by a million bucks a year, you know, how nice would that be?

How she applied the strategy to real world situations.

I found suburb that had the pricing disparity Carlton. I then looked at what the fixtures and fittings and standards were that the renovated properties were selling for and how.

You can learn from her success.

So I know that we've achieved over $100 million worth of lending in the last couple of years and helped clients get.

You've heard from Slacksmith how she sought mentors and spent a lot of time learning and implementing. Now she reveals the details of her investment strategy, how she applied that strategy to real world situations, and how you as listeners can learn from her success.

I was always looking for the twist. So how could I take a property and take it to a higher value and better value and do it as quickly as possible so I could create more equity to build my portfolio quickly because I didn't want to be an active property investor that is, you know, out there looking at properties every day. I wanted to have a set and forget portfolio that just goes up in value by a million bucks a year, you know, how nice would that be?

Nice. I'll join the club.

It pays for itself, essentially. I then went and did a lot. I was based in Melbourne at the time. I did a lot of research about the suburbs within 10ks that I could afford. Most of them I couldn't. And then I came up with three suburbs which was Fitzroy, Collingwood and Carlton. And I just walked the streets and got to know them intimately to the point where you go to auctions and predicting the price within 1%. And I knew that because I was going to use all of my $45,000, that if I wanted to buy a second property quickly, I had to create equity because my savings would take too long. So the renovation strategy was around creating that equity quickly.

Selectsmith said she wanted it as quick as possible.

I found suburb that had the pricing disparity Carlton. I then looked at what the fixtures and fittings and standards were that the renovated properties were selling for. And then I looked at the property that I had and worked out how I could find those fixtures and fittings at a cheaper price that had the same perceived value but didn't have the cost. So it was around sourcing the right properties from the right areas and finding and sourcing those and putting them in place.

Sorry to interrupt, just to ask, to put in perspective, what kind of house did we buy in the Carlton area and what was the average pricing? So we can sort of get an.

Idea of the average prices were between, were around 400. So, you know, back in 2001, and we kept driving up and down this street and it was, you know, one of the premium streets and had these beautiful old mansions in them, you know, three story 1860 built, you know, brick properties. And we'd say one day this is our end goal. And what came up was that two of these properties were being sold under the same bill of sale. So instead of saying going once, twice, 400,000, it was going once, twice, 800,000. So different titles, one bill or sale. And my husband and I, or my then boyfriend and I were looking at buying a property each because I wanted to minimize my risk just in case the relationship didn't go. And your borrowing capacity, I knew that individually our borrowing capacities was going to be higher individually and less land tax, et cetera, benefits. So I knew strategically buying individually was a good way to start. So These properties were three story, 1860 beautiful old mansions essentially that had been built within a kilometer of CBD Melbourne and completely hadn't been fixed or touched for a long period of time. And my husband had a higher borrowing capacity than I did. And he took the one that had been, had a, the parking at the back and had a little bit more renovation done. And mine was, you know, really in a bad condition. So the, we actually used the pest and building inspection and we used the Residex valuation report as part of the negotiating tool because we got to auction, it was passed in, we're the highest bidder. And we went in and said, gee, you know, look at this pest and building report. It says it's got about $50,000 of, of works just to make it livable. And you know, the comparable sales in the street are this, you know, and luckily the vendor said, okay, fair enough. And we got the properties.

So good negotiation.

Yeah, yeah. And having, you know, access to those material and reports, etcetera, gave us some credibility rather than saying, I just don't want to pay anymore. So they were sitting there going, well, if this person thinks this, the next person that gets the best pest and building inspection, you know, they're going to think the same thing. So, you know, bought it for 425, did the $50,000 renovation on it, had it revalued nine months later at 900,000, did a bit of a, in 2009, I did a bit of a top up to it as well as always rented since then at $1,000 a week. It's worth around 1.4 now.

Wow.

Great location, great property, always in demand. I've only ever had three tenancy agreements in that 15 years. So people just keep wanting to rent there and yeah, it's, it's, it's a great little cornerstone for the portfolio.

That's great. So from there you're able to start that first property off and then leapfrog to your next place by drawing out that equity to buy other properties. Is that how.

Yeah. And, and we were rent vestors for 10 years, so we rented ourselves and bought investment properties. Often we'd move into an investment property, had a little unit on beachfront at Bondi Beach. We moved in there over winter when no one and did a three month renovation and enjoyed that and then moved out and rented ourselves. So often just to save some money, we were living in the renovations and anyone who's ever done that, you know how bad that is. You're covered in class, going to work and you know, you're cooking in a microwave for months on end. But you know, when, when you're making more out of the equity gain in a property within a few months than you're making it work, it makes a difference. And I know, you know, a lot of people look at those numbers and they think, you know, I'm going to give up work and, or sell the property and release the equity straight away. We'd always had the strategy. It was around a buy and hold long term strategy and work was fine. I mean, I don't want to give up work. So for me it was around just having the choice to be able to work or not. But also I knew that I needed to have a job for the borrowing capacity, which is so important. And with the changes of ASIC and APRA in 2016, you know, investors have to be savvy about what they do and their financing and have the right income to be able to continue investing. And, and so I knew that I wasn't going to be giving up her job anytime soon.

Her property portfolio continues to grow with minimal effort. And even though she doesn't need to work, she keeps her job because she chooses to. She points out she's a very boring investor when it comes to buying more property.

Well, great revelation here. I'm a very boring investor who walks the talk. You know, I wrote the book that your property success with renovation. Two properties, one renovation, a million dollars in the bank. I don't believe you need hundreds of properties. I don't believe you need to be trading properties. I know you know, someone who has a home and accesses equity, who buys a property, has an equity growth that allows them to do a renovation in year three and equity growth to be able to buy a second property in year five, can set and forget their portfolio and within 15 years, six, sell it down. If you have the typical growth characteristics of an area, sell it down, pay off your mortgage, pay your capital gains tax and put a million bucks in the bank. And for me, it was about having that simplicity. So we haven't bought a property for many years and the portfolio goes up. Well located properties goes up quite considerably every year. And I think it's worth around about $8 million now with low LVR just based on the equity.

And how many properties are there in that portfolio?

7.

Excellent.

They all started around about $400,000 to $500,000.

Yeah. So you've just amassed and bought and hold. And that strategy allows you to be able to have that freedom because you've got enough equity to be able to, I guess, draw down equity on that. There are strategies out there. Do you believe on drawing out equity to live on the lifestyle, or do you rely on the cash flow really big?

In 2003, I know I spoke to quite a few people about doing that, and there is difficulty in living on borrowed money. And I know there's people who've been on your podcast who even buy their cars.

I can tell you who.

You and I both interviewed them. But I don't think debt is bad by any stretch of the imagination. I think there's good debt and bad debt and. And I know the reality is that a lot of people do live with some bad debt until they get to a position of managing their money better and understanding their goals and having that destination they can be anchored to so that they can achieve what they want every day, knowing what they're getting towards. But I've got clients. I mean, I obviously don't imply my strategies on all of my mortgage clients or my students. And I've got clients that do developments. I've got students that are doing granny flats. I've got people who do pull out equity and live off equity. So I've got clients on $40,000 with $2 million portfolios and have been really strategic about how they've bought and been very clever when the lending environment was a bit easier. You know, I think that it's really horses for courses. And when you work out what your strategy is and your risk profile and coming from the basis of your goals and understanding how many properties and what they need to look like to get to your goal. And that's why I developed that calculator on investorschoice.com the portfolio planner, because I know that how hard it is for people to go, I want $100,000 income in 10 years time. How many properties does that mean I need now? Because there's a capital gains tax implications and all of those things and I think you just need to simply understand what you need to be shooting for and then what do the property characteristics need to do to achieve that for you? So yeah, I think everyone has a different way to get there. We haven't bought a property in many years because we don't need to, don't want to. Property portfolio is fine. If I speak to my property managers once every three months, I'm happy.

Sykesmith believes that there is much to be gained from helping others achieve the success that she herself has accomplished.

So I know that we've achieved over $100 million worth of lending in the last couple of years and helped clients get there. So there's that kind of, I guess, transferred satisfaction of getting people into the properties they want to be in. And you know, we're kind of hands on, so we're interested in the property properties they're buying and where they're buying and having that conversation around their strategy as well. And also just the community of the students in the ultimate guide to renovation your property success club. Just seeing their renovations and their stories and what they're doing. Although I do, I did two renovations last year on existing properties. I'm not actively out there renovating all the time, but it's nice to have a hand in looking at what other people are doing.

When it comes to her personal values, slacksmith is unflinching in describing how her determination has contributed to her successful portfolio.

Look, I'm really tenacious, so I'm curious and tenacious, so I don't give up. And I'm very disciplined. And so if I have a goal or something that I want to achieve, regardless if it's in my personal life or professional aspirations, etc. I will do what it takes to without hurting anyone or myself to achieve that goal. So once I put my mind to something, I really give it my all. And I guess being tenacious is probably the dominant characteristic of that.

With so many amazing resources now available for those seeking help in property investment, what does Jane Slack Smith, Queen of your Property Success think is the best book to read?

Look, I have a long list of books I recommend. Obviously Jan Summers, I think, is probably the queen of property investing Australia. Low risk, really simple. She got the formula, she cracked it and she shared it. She was a schoolteacher. She writes like a school teacher. It's very clear and concise. So for people starting out, I think Jan Summers is fabulous. I think from an inspirational point of view, Rich Dad, Poor dad is great as well. There are so many writers and there's so many books out there that it's amazing. And when the publishers approached me and asked me to write a book, I was honestly, I was like, at that stage, I had 120 on my bookshelf. I was like, there's nothing I can say that people want to know that's different. And they're like, yeah, they probably just want to hear it in your voice. So often what you read is very similar in some of the books, but there's always one absolute gem that I pick up. So I'm always reading property books and trying to increase my knowledge and you know, our community is always recommending books to each other as well, so. But I'd start with the fundamentals. And I think, you know, Rich Dad, Poor dad, and Jan Summers is probably really good places to start.

Thanks to the great advice of Slacksmith, I'm sure many of you have learned a great deal about investment strategies. Do you have any more questions for Jane Slack Smith or do you wish to learn from her online property investment courses?

If so, you can Contact us on YourPropertySuccess.com Go in and have a look at the courses and the materials that we have available or investorschoice.com which is the finance arm of the business where we have the education reports and services to support your finance decisions.

Thank you again to Jane Slack Smith for joining us at Property Investory. If you want to hear about Jane Slacksmith's journey, originally a mining girl from Dubbo with no plans for property to becoming two time Australian Mortgage Broker of the Year.

Out there looking at properties every day, I wanted to have a set and forget portfolio that just goes up in value by a million bucks value, you know, how nice would that be?

Simply type in the search bar Jane Select Smith and select that episode to listen and learn more about her story. You can also get full transcript and show notes on our website.

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