Ep. 17 Renovating with the Renovation Queen - With Jane Slack-Smith

It's time to get your property news tips and tricks from a different pro every week. I'm Todd Sloan and you're listening to Peter and Property. Hello and welcome to another episode of Pizza and Property. We're your host, Todd Sloan. How have you been? How's your 2020 kicking off?

Yeah, not too bad. Pretty quiet Christmas. Usually we do kind of like an all day thing. It was a very quiet one this year.

Yeah. Okay. Quiet like boring quiet or quiet like this is actually really nice to relax. Quiet.

I got a bit of a stomach bug before on Christmas Eve actually, so I was vomiting all Christmas Eve.

Poor thing.

Yeah, I didn't kind of want to pass that on, so. Stayed at home all day.

Good on you. All right. No one likes that sick person rocking up at the party.

No.

Okay. How about. What's something fun that's been happening then? It sounds like you've been through a bit of the wars with it.

Yeah, I had a trip to Melbourne this weekend.

That's right, you went and saw the Harry Potter musical. How was it?

Yeah. So just a weekend trip. Yeah, quite good. Really good actually. My partner is a massive Harry Potter fan. I. Not so much. I still like it, but yeah, she. I kind of got her tickets for her birthday, so we went over. It was. It was an amazing show. Yeah.

Awesome.

Yeah.

Okay. I am not a huge musical fan, but I think that is a musical I would love to see. Yeah. Just because I. I'm. I'm not like a full on. Like. I think they're known as potheads, like proper Harry Potter fans. But I'm a pretty big fan. Like I've seen all the movies more than five times, put it that way.

Wow.

Yeah, it's pretty good. But. So you'd recommend people to have a. Have a watch?

Yeah, and it's not a musical either, so it's. It's like a stage show. No, like they don't burst out into song or anything.

Oh, that's even better because that's what I think. I don't like. I don't like the music.

It kind of builds on the story as you know it, but then they go back in time and it kind of weaves in throughout the whole story. They've got like a time traveler thing.

Yeah. Cool. All right, awesome, man.

How about yourself? What's happening?

Bits of Renault stuff. Yeah. Little bits and pieces of everything really. Over Christmas been. I got stuck into it. Cause I had a big sell off with almost stock list just before Christmas and then all of my clients basically Said, look, let's launch in the new year unless we absolutely have to. So I got a whole lot of stock about to launch over the next couple of weeks. But yeah, just getting stuck into the project. The bathroom's almost done. We're about 80% through.

Yeah, we went around there last night. It's looking good.

Kitchen's looking good, Just got the splashback tiled. I was actually going to give that a go myself, but the Tyler is actually one of my good mates and he's been doing it 20 years. Like he's forgotten more about tiling than most people will ever know. It's just he knows it so well. And he basically said it to me like, look, you can do this and you'll probably do an okay job, but it's probably going to take you like two weeks where it will take me like two seconds. Not quite the right time, but you know what I mean? I thought for, for the few hundred dollars he was charging me, I was like, I'd be silly to say no to that.

Yeah.

While he was there, pretty much, yeah. But otherwise just, just pretty much all renos did go out. Bit of laser challenge the other day. I've been on a bit of a health kick, not drinking at all. A bit of a detox. I not really a big drinker at the best of times anymore, but like absolutely cut it out to zero. And so instead of the, the knockoff drink on a Friday, me and my mates went out and played some laser challenge which was good fun. But it was school holiday so we're like shooting kids and everything. But we, we kind of got taken for a ride because there were these two kids that were like, towards the end of the night they're like, yeah, yeah, we'll go like doubles and me and my mate. Yeah, this would be fun. Like we're gonna obviously dominate this. We did not. These kids were like, turns out they were actually state champions. I didn't even know you could be a state champion of laser tag. And they were like wanted like curving the laser around corners just about. They annihilated us. It was a bit embarrassing to be that badly beaten by a couple of 10 year olds, but it was good fun though.

That's funny.

Yeah. But otherwise, who we got on the show today? Jack, let's keep it on topic. What are we talking real estate wise?

Yeah. So today we've got Jane Slack Smith on. So Jane is the founder and director of your Property Success, Investor Choice, Mortgages and the Ultimate Guide to Renovations.

She wears a few hats, doesn't she?

Yeah. And she's got a lot of content out there and particularly renovations. I find her stuff amazing. Yeah.

And this something that I've been looking forward to is speaking with Jane is the fact that we're not just talking to a mortgage broker, we're not just talking to a renovator. We're talking about someone that understands both sides of the fence on that as well. So actually, look, why don't we cut straight to it? Do we, do we have Jane on the line yet?

We do. Jane, how are you?

Jane, how you going?

Hey. Good. How are you guys?

Very good. And morning podcast is a little bit different for us. We hear you're a bit of an early bird as well.

With kids you have to be right.

I don't have them, but Jack's got a little one, so I'd imagine that they were be pretty good alarm clocks.

Yeah, I just did the out of hours school care drop off and it always takes longer than expected.

Yeah, well, right at the moment, we're in the middle of school holidays and I have a 12 year old who doesn't want to be in kids care and I thought might have been too young for teen care. So we've been testing out the teen care and my goodness, these guys are having a better day. I'd be signing up for it, you know, Australian Open yesterday or skating today, Luna park tomorrow. I'm like, I'm in.

Does sound fun.

They do. Keep them busy.

Yeah.

Nice stuff. All right, well, like we were saying beforehand, we just really do want to respect your time with this Jane. So if you don't mind, can we just jump straight into the questions and let's start picking your brain for some knowledge.

Sure. Let's go.

Awesome.

We might kick off just by giving our listeners a rundown on your background and how you began investing in property.

Yeah, look, it's not really a typical journey. I was brought up on a farm in Dubbo. My dad was a farm laborer and I kind of wanted to get out. And I'd been away at school for a few years and I thought, what can I do to actually solidify some skills in the world? And I realized that it probably wasn't the. I realized that it wasn't the degree that I did. It was more on learning the skills and learning how to learn. So I pretty much applied to every university for every scholarship you could possibly get. And who knew 30 years ago they needed women in mining engineering. And I became a mining engineer and I was really good with maths. And science. So I proceeded with an 18 year career as a mining engineer. The last 10 years of that I was an explosives expert. Flew around the world and blew things up for a living, which was great. And taught people how to do it. And I realized when I was about 28 that my parents were going to retire just on the pension, 30 grand a year. And I thought, I'm going to have to do something about this. But I didn't know what to do. And I was sitting in a park visiting a friend in Wellington in New Zealand and I read Rich dad, Poor dad. And I thought, my gosh, you know, this completely changes things. I work for my money, my money doesn't work for me. So I then met my now husband, Todd.

Good.

Yeah, that's easy to remember talking to. And he was saying, oh look, there's this whole thing about property investing. I was like, no, no, you know, I'm not into the bricks and mortar thing. I don't need a home. I put loose and fancy free. He's like, no, it doesn't have to be like that. And so we went on this journey of investigating about property. We signed up to all the two hour free courses. We got to the point where we'd seen so many of them were waiting for the picture of a big or the lock the door and you don't get out until you sign up for something at the end. I thought, you know, as a mining engineer, all I do every day is I assess risk. The consequence of something going wrong and the likelihood. If I could apply that skill set to property investing and de risk it, how wonderful would that be? And I also, you know, was a master of Excel spreadsheets and research. I thought, well, if I go back and have a look at the last 20 years of suburbs in Australia and see which ones outperform the others and the characteristics of those. And I applied this low risk kind of, this low risk formula. Yeah, kind of thinking where would we be? And so all of a sudden I, we started doing this research. You know, we ended up buying property in Melbourne after that research. You know, my first property cost $425,000. I only had $45,000 as a deposit, 25 grand went to the, the government in stamp duty. I borrowed 50 grand, did a renovation. Nine months later it was worth $700,000. And my husband did the same with his coffee next door. Yeah. And one of the things that we really came up with was being a scaredy cat. And I only had $45,000 I needed to de Risk everything. So I didn't want just a plan A, I wanted a plan A, B and C. And so I came up with the Trident strategy, which involved. I'll tell you about that later, but involved that renovation characteristic. But we started investing in property in 2001, and by 2005, I'd taken my friends and my family through it. They had multimillion dollar properties that were property portfolios going up of value. And being the good Catholic girl, I kind of felt like it was a bit of a sin if I didn't share it. So I was like, how can I share all this information? And I started doing a financial planning course. And the guy there said, you are way too enthusiastic about this. What's your plan to help people, you know, buy properties that are going to government value and get them financial security for them and their families intergenerationally creating change. And he's like, no, no. Financial planners are salespeople sell financial products. I was like, well, how did I talk to people about property? And that's when I became a mortgage broker. So I started Investors Choice mortgages in 2005, and my entire focus was the goals that people wanted to achieve, helping them with the property and just, you know, actually suiting the right finance to that and got something right. One Australia's mortgage broker of the year in 2009 and 2012. And in 2012, I thought, you know, I can really escalate this. So I started your property success online education. Started the ultimate guide of renovation. Put together an algorithm with all the suburb data from around Australia, the 15,655 suburbs, applied my low risk criteria to it so that you could have a curtailed list of where to buy, getting down to the street level and down to the property level so people will really be risked on what they're buying. And then I started a club which had gone to allowing people to join it with a donation to a children's charity with just about $10 off, hitting our $10,000 goal on that, and started mentoring for a very small group of people. So, you know, from a kind of, you know, girl in Dubbo through to, you know, living in Melbourne now and, you know, teaching other people what to do.

That's incredible, Jane. Like, that's like, did you sleep? Or like, how.

I'm a lot older than I look.

Oh, my God. And look, coming from the risk analysis background, like, what was it about property that made you jump in? Because I would have thought you would have been maybe more attracted to, like, the stock market shares Bonds, all that, that sort of data driven. I mean, not saying that it's not data driven, but yeah. What was it that jumped out to you about real estate?

Well, I really, for my 30th birthday I thought, you know, I still was very resistant to this whole bricks and mortar because my boss had said to me, I can't wait for you to get a mortgage. When you have a mortgage now you're set for life as an employee with me. And I was like, oh my God, this mortgage thing is bad. If you think about mortgage, the word mortgage, you know, that comes from the word mort Latin, which means death. So I was like, I'm not having a part of that. So I started doing that ASX stock exchange courses and I thought, for my 30th birthday, I'll buy. Three sessions with three different financial planners and one of them wanted to day trade for me, which is, I felt way too risky. And the other two essentially said, all we do is assess how risky you are. And I said, well, I'm really low risk. And they said, well, we'll just put you into a, a long term low risk investment with my $45,000, I have to do better. And we went along to. You may recall there was a guy in Melbourne back then called Henry Cade, went along to one of his talks and I was listening to what he was saying and you know, a lot of it was the sales stuff, but there was a lot of fundamentals around how you can assess and use knowledge based interpretation into where to buy. And I thought there's got to be something behind this. And that's when I started doing the research. So property for me, you know, when I started kind of like paper trading with shares, I'd do all this research and I go, fantastic, I know what to buy. And then all of a sudden they change the board or their opinion and the next day all that research was worth nothing. Where, if I had done the research of where to find the typical type of property in the right area, set for growth, you know, I had years ahead of me of making hundreds of thousands of dollars. So that's why I went to property. Not sure. Yeah.

And the CEO of the local council doesn't exactly just like all of a sudden overnight change the direction of what's going on.

Yeah, exactly. By the way, tomorrow all this is going to be an industrial estate. So yeah, it doesn't work that way.

It makes sense now you've got quite.

A bit of content online around renovating properties. We were just wondering what kind of Attracted you to the renovation and flipping side of things.

Yeah, to be completely clear, I have never flipped. I'm not into flipping. Way too risky for me. I do have a lot of students who do flip. And I find a lot of the students that come in or have come into the ultimate guide to renovation over the last seven years, they come in with the intent to flip, and then we show them the numbers. And in my book, you know, chapter 13 is why flip flop. You know, a lot of people hide those numbers. And I wanted to use renovation as a strategy to lower my risk. So my trident strategy, buy in an area that has set for growth. So I've got long term income and growth potential. Renovate to add value and push up the rent to help me hold the property in the near term and then be so across the market to buy below the market, which you guys do every day, but buy below the market and understand what the value of the property is. So I'm making money in three ways. And that renovation strategy allowed me to create money out of thin air. You know, my first property, I $425,000, I spent 50 grand and it was valued at $700,000. Nine months later, renovation for me was that.

Sorry, I can understand why that would kind of get you hooked after that first.

Yeah, absolutely. And then you're like, okay, I pull out 100 grand, I go and buy again and do it again. And that's all we did. You know, we bought for a very short period of time a really good put together, really good portfolio that was worth many, many millions of dollars and pay for itself and goes up in value.

Okay, out of interest, what would your thoughts be around things like deeds of assignment if people did want to flip? Because personally, I'm not really into the flipping side of things either. I'm really on board with the way that you approach things. But if people, some people are just like, that's it. They watch zombie flippers, they watch the block.

Seems to be the trendy thing, doesn't it?

Yeah. And I think sidestepping stamp duty really seems to be one of the ways that you can potentially make it happen. But deeds of assignment come with their own kind of complications. I was wondering, what are your thoughts on them?

Look, I have absolutely no experience in deeds of assignment. And, you know, back in the day, they talked about options and there was all of these other little fancy strategies of, you know, buying in the name that you could change to the other person's name so that you could scape stamp duty. All of These kind of loopholes get caught up and covered up and found out. And you know, I talked to, no, I've got 30,000 people in my community, you know, 1500 into a little private Facebook group. We're talking about all of these kind of concepts and things that come up all the time. You know, five years ago it was buying in the US and then it was nra. It just, there's all of these things that come and go and for me, I'm boring meat and potatoes the whole way. For me it's just like, look, I just want to be able to retire comfortably for me and my family, to set an example for my son, for him to aspire to be able to be financially free himself and have the opportunity to be able to make a difference in the world. That's it. You know, I don't need to get caught up in the, you know, if I can do the government out of 20 grand, but potentially it's going to risk me in the future. And I mean, to have to buy something that's suboptimal. I'm not into that kind of short term thinking.

I was kind of expecting that answer because I mean, to me, using options, using deeds of assignment, whilst they can work really, really well, it does add this whole other layer of risk that realistically is unnecessary.

It goes back to what Jane was saying initially, doesn't it? It's another layer of risk that you don't want. Yeah, necessary.

And I can tell you as a sales agent as well that's recently tried to sell a property with deed of assignment, that it came with a lot of pushback from young buyers because they were like, what is this? I don't know what it is. I'm scared. I'm walking away. So it's. Yeah, there's a whole layer of complexity to that. I don't want to talk anyone out of it, but definitely do your research if you're going to look into stuff like that. But speaking of research, without giving away too many of your secrets on all the research you've done, Jane, would you be able to give our listeners a little bit of an insight to how you can actually pick a property that's got renovation potential? Because there's obviously ones that are duds and ones that are winners. How do you spot them?

Look, I've been giving away my information for 20 years with the hope that people use it. So I'm more than happy to give you all the secret sauce because it really just comes down to the properties with renovation potential just Because a property looks like it needs some love and renovation does not mean that it deserves it to be able to justify it to be done profitably. And that's the underlying assumption. So you know, I'll walk into properties and see people doing inspections and they're like, check this brown bathroom out. Wow, we could do da da da da da. And the reality is it comes, you have to get a 10,000 foot view. So if we look at the 10,000 foot view, we're not looking at the property, we're not looking at the street, we're looking at the suburb and then we're looking at the city. So we're looking at the growth potential of the city. So you know, first of all, population movement. So you're looking at, you know, where are people going to be moving and where the jobs created, that kind of big economic decision making. And we know east coast Australia is predominantly where most people live. We know that the biggest cities are the ones, all the satellite cities that feed those cities are the ones that have, have the best growth. We get that. We know houses outperform units. So if you start with that assumption, we get to the suburb level. And to renovate you have to have a suburb that has pricing disparity, which means just the difference of pricing between the renovated and unrenovated properties. So I'm always looking at suburbs and going, what's the unrenovated property selling for? What are the renovated properties selling for? And then I'm looking at a very simple calculation. So what's the cost of buying? What's the cost of the renovation? What's the cost of me holding it, which is a function of interest rates and time and then what's the profit I want to make? Now if all of those numbers add up to a number that is less than what the renovated comparable properties are selling for, Winner, winner, chicken dinner, that's the suburb and that's where I start. And then I get down to. For me, because I want to hold my property, I use the census data and you know, it did take me like 18 calls and emails with census to work out how to get this. But you know, in a five minute tutorial I can show people how to work out what streets the renters want to live in. So I first, then I overlay my filters. So I have a number of filters. I have about 18 different filters to minimise my risk. One is I have to have at least 28 to 30% renters. So I need to have demand there. I have to have a Vacancy rate of less than 3% and I have to have more than 60 sales a year. Those three basic things allow me to just de risk that suburb as well. So pricing disparities for renovation, then de risk it. And so I'm looking at the renovation potential of the trident strategy, then I'm looking at the opportunity for growth. Now growth for me is about the ripple effect. So I'm always looking at well, what's the next suburbs that are going to take off? And I happily stole, with her permission, Nadine Simmons dot mapping technique, which is essentially looking at the last 10 year growth. Putting your legend together and dotting the cities that you're interested in and looking where those ripples are. And being a tech person, I've obviously Google dotted that ripple a lot quicker than the process most people do by hand. But finding out what the ripple suburbs are. So if I've got a, a suburb that's set for growth, I've got a suburb with pricing disparity and then I've got the calculation that works with knowing what streets to buy. Then I look at the typical property which is once again a low risk assessment, which census tells you it's a three bedroom house. And you know, the typical block might be 5 to 800 square meters. Because if I have to sell quickly through death, divorce, debt, whatever, or if I have to sell in the long term, I want to sell to the biggest market. So I don't want to have the one bedroom unit where everyone's got a three bedroom house. I want the three bedroom house, typical property. And then I would get to work finding the typical property. So it's 10,000 steps, puts view all the way down.

If you've been listening to all of the podcasts and you're listening to this one right now, I can't help but think that you'd be noticing the same common theme that I'm noticing right now is scarcity. Scarcity is the big thing that always jumps out with every professional we talk to.

Supply and demand.

Yeah, it just, it totally makes sense.

Absolutely. And, and you know, I remember speaking to this lady at a party and she was saying we're about to buy our next investment property. We've got the first one wrong. I'm like what went wrong? And she's like, well, you know, based in Melbourne, she said we bought in Point Cook this investment property. I have this beautiful home in Kew that you know, we bought a house and land package. It was the same as every other one where they kept developing, they kept having the new properties, the tenants kept moving to the newer properties. We had long vacancies. In the end, to be financially viable, we had to move from our beautiful home in Kew to this little house out in Point Cook and commute every day. We had to drive the kids backwards and forwards to their private school to do their violin lessons. We learned our lesson. Now we're going to buy an inner city unit. I'm like, you've got the same mistake you've got. You know, there's a huge amount of properties of that type of. There's nothing distinguishing it. You can't, Abdulloh, make yours different. You know, the supply and demand factor is here is actually the same. You think you've done the right thing. From going out of town to in town, from going a house to a unit, you've actually just replicated the same mistake you made in the beginning.

So they were thinking that the mistake was locality, where you were explaining to them that it wasn't, whilst that definitely had a part of it. But it was more about the scarcity.

There's going to be a scarcity.

Yeah, it's demand. Exactly. And trying to add something different to your property to make it one that stands out. When there's two similar properties up for rent in the area, I want people to walk into mine and go, oh, polished floorboards. Oh, I've got some security. Oh, look, there's Foxtel. You know, whatever it is, but just the things that are just a little bit better. I'm not talking about TVs in the bathroom. I'm just talking about just a little bit of forethought of what people might want built in wardrobe.

Do you ever use swimming pools? No, didn't think so.

Yeah. I mean, in Queensland, I can see how there's some interest. I mean, Jack, you probably see this all the time. People add $100,000 swimming pool, and the value of the property goes up by what, 20 grand?

Exactly.

Yeah. I'm renovating my first pool house at the moment and oh, my goodness, only got it because all the numbers stacked up in every other way. Otherwise I never would have bought one. But when I got the pool guy around, like, great guy and everything, but he kept talking about how much they add value and they're amazing. I'm just thinking they really don't. Like, I understand he's trying to sell pools, but, yeah, I gotta tell you.

The only pool house I'd be interested in was one that has, like the snook or stick associated with it.

I was wondering what you meant then, but.

All right, so you've talked us through selecting a good property to renovate. Is there, are there any common mistakes that you see novice renovators or flippers make? There's like a trend that you see clients that you deal with kind of making mistakes on a regular basis, like.

Putting pools in or buying houses with pools.

It's just some really simple ones. They buy the wrong property, they renovate to their own taste, they over capitalize, they don't treat it like a business, you know, and I think I remember speaking to one couple who saying, we're about to go into the flipping business, we're giving up our jobs. We've always made money on our homes. We're very good at this matter. Just send me the details on your home purchase price, what you spend on the renovation, what you sold them for. And I came back and showed them the capital growth in those areas whilst they held those properties was the equivalent to the value that had been added that they'd sold their property for. They'd made nothing out of the renovation. They were about to give up their jobs and start flipping. So I think it's a numbers game in the sense that it's not a game, but you need to actually understand that it is a business and you need to be able to make sure it works for you. So don't over capitalize, buy the right properties. Don't, don't renovate your own taste and buy what people want.

The thing people that flip don't consider damp duty. That does my head in.

Yeah. Or capital gains tax.

Yeah, yeah. And they're two very big entry and exit costs there. It's, it's one of those things that if you don't put it into the numbers in the beginning, you can end up thinking that you've just made a whole lot of money and really you've either broken even or sometimes even lost money.

I've seen and you know, they're trying to do it in the same market. The market might move, but then, you know, they get, then they have to, they get caught up in the marketing plan that the agent talks them about or they get caught up with, well, then I have to spend five grand staging the property or good spend, you know, they're going to make the money, but the things they haven't considered in the beginning. And that number just comes off your profit.

Absolutely. And, and looking at it as a, like you said, looking at, as the numbers actually tell you the truth. And it's a business, it can't be done as well. This is really pretty. So I'm going to make money. You've just got to look at the facts and the figures. And I remember speaking to a developer not that long ago, and he was talking about some developers are now taking on projects with like 8% profit margins. And it's just, I don't understand how they do it because all that has to happen is all of a sudden your building costs go up by 4% and maybe your sales cost is going to go down by 3 or 4% and you've just done the whole thing for nothing. And those are two very easy movements to happen as well.

I remember, you know, when I used to talk to the banks about the developers kind of finance, you know, five years ago, they were looking at like 25%. They dropped it down to 18, 20, so 8%. You know, they wouldn't be able to get funds for it. They'd have to fund that themselves.

Yeah, I think he was referring to more like mum and dad, kind of one into two, not. Not big scale. We're not talking about doing apartment buildings or anything like that. You'd like to think you know what you're doing if your. Your projects are that big.

They were the numbers for townhouses, like three to four townhouses. That was what the banks were expecting in return.

Yeah.

Wow. Yeah. Okay.

All right, Jane, So putting your mortgage broker hat on. With the Royal Commission into banking misconduct in 2019, there was a real threat to the mortgage broker industry. Now we know that mortgage brokers are accountable for approximately 60% of the loans that kind of go through in Australia. What changes have you seen because of this? And what changes do you think you'll see moving forwards?

You know, there was a line in the sand that was kind of drawn in in early 2019, and the Royal Commission findings came out. And my phone rang off the hook with other mortgage brokers ringing up going, did I miss something? Wasn't this a commission into banking misconduct? You know, people who were dead being charged super fees. Like, wasn't this about the banking industry doing wrong? How did the mortgage brokers in the end have potentially your entire business and profession jeopardized? And we went, we went through this shock and we had clients ringing up going, what the. I don't know what happened. And so there was this absolute period of shock. And, you know, the Mortgage and Finance association and the sba, you know, they did an incredible amount of campaigning and they were very much poised in case something went wrong to educate the people, but also to educate the government and the decision makers about what mortgage brokers do. And you know, what it seemed to come down to was there was this conversation about trail income that mortgage brokers get. And many years ago the banks, in the interest of interest way back then for their clients are saying we don't want these mortgage brokers writing a loan for someone and doing a one and done and not really caring that it's the right loan for a period of time. So what we want to do is we're going to separate some of your income into upfront income and some income, long term income so that you're going to get a trial, it's going to be long term, but it makes sure that you put the person in the right loan. So that was the premise of this whole upfront in trail. And then in this one sweep it's like we're going to get rid of trail, which was a significant part of how mortgage brokers build their business. And these businesses are valued and bought and sold. And so there was this shock and when the government decided to give a reprieve for three years into that trial kind of income decision, that was great. But what they also did is they said, look, you know, when mortgage brokers write loans, for instance, they might write a $400,000 loan accessing $100,000 for future financial investment purposes or renovation or the kids wedding or whatever it is, and they put that extra money into an offset account and we're only going to pay on the difference of the loan and the offset account. Now what that in theory, I think what they were trying to do there was say we don't want you to go and get big loans for people and give them a cash that a, they might spend really nearly without thought but you know, and think you're going to get paid for it. But fair enough, there was some thinking there. But the reality is a mortgage broker, when I look at someone's situation, I'm not looking at a one and done loan. I'm looking at the fact for the next 15 years they would like to build portfolio of maybe two or three properties that's going to get them to a retirement that they would like to have. And that means that they need to have buffers of cash if things go wrong, if their kids become Olympians and need to, you know, fly around the world or you know, there's an illness in the family they have to deal with or you know, their properties are vacant, they need to have cash. So in my mind the best interest is to Give them a buffer of cash. And I'm not talking half a million dollars, I'm talking like 50, $100,000. But what that has meant to me and other mortgage brokers is that the banks actually put that recommendation in straight away. And so our income on the mortgage brokers also went down 30% last year. So you can imagine turning up to work and your boss says, by the way, tomorrow you're going to get 30% less money. That's essentially what happened to, yeah, big pay cut. But then they put on all of these extra things that mortgage brokers have to do. So it no longer takes them 10 hours to write a loan, it takes 10, 17 hours.

So, you know, sorry to interrupt. What was the difference there? No longer takes what, how many hours?

It used to take 10 hours to like do a full assessment for someone, do consequential thinking. You know, if you're going to do this loan, how's that going to affect their plans for the future? And maybe taking out equity post renovation or building a granny flat or building the next property in two years time or having the kids go to private school, whatever it is. Yeah, so all of that used to take about 10 hours. Do the application, get the supporting docs, send them in, make sure the banks, the value is turn up on time, which we know they do, Jack, when they're good, professional, you know, make sure that the solicitor understands, you know, what is necessary on the time of settlement. Everything goes fine. That used to take around about 10 to 12 hours. It takes about 17 hours to 25 and I've just spent 60 hours on one refinance. For a professional, he did have 10 properties now of that refinance because it took 60 hours, but because all of the money was money for him for future use. And the way that the things change now, I got paid, I think, $2,000 for it because all the money went into the offset account, which was best for his interest. So there's this whole, you know, being a mortgage broker, there's this kind of like the reality and then there's the. What this Royal Commission has done. And I think what has happened is it's mean, you know, the 18,000 mortgage brokers, a lot of them have looked at this and said, a, it's harder to service our client. You know, we have all of these best interest duty and things that we thought we were doing right, but there's now this extra complexity of documentation that we have to do, which I completely agree with that. You know, we need to make sure that we do things right for our clients.

Absolutely.

But I think what happens is a lot of them are looking at this going, we're doing more work for less money. If we do it right for our clients, should we be doing this? And I think the insurance people and the financial planners who left that industry when there was these reforms, I think potentially we'll have a shakeup. And the mortgage brokers that you'll see who stay are mortgage brokers who do look at the bigger picture. For instance, I know an investor's choice what we do strategy calls. So I can help people pinpoint where to buy the properties and I give them access to RP data so that they their pre approvals convert quicker because they know where to find the properties in the streets and I give them all that intel. And we're talking about giving them access to software that allows them to look at things or someone to overlook at the property or introduction to conveyances and pest and building inspectors and negotiators so that they have the right team together to start with. So I think we're going to see this with more mortgage brokers that are going to go how can we help service our clients better and make sure that a we're helping them get the result that they want, they refer us to others and they come back sooner. And I think we're going to see a real benefit to the mortgage broking industry. I don't think we'll see a reduction in the amount of mortgages going to banks. I just think that the mortgage brokers that people work with are going to be those that are not into the one and done or even if you go into a bank it's a different person every day. You're kind of talking to people want that continuity of working with someone who has their long term interest at heart. And I think it's a great thing for the industry. It's just that economically it's been a bit tough for everyone.

It sounds like sort of summarizing it would be more work for the mortgage broker but better service for the customer, is that?

Absolutely, yes. And I think the way that mortgage brokers are going to help reclaim some of that cost is that they're going to add services on. So you might see like there's a paid service that you can have, you know, to assist. Like for instance I do mentoring, you know, make sure that people get to the property they want with one on one help. I think you'll see that or you'll see relationships with buyer's agents or you might see relationships with, they might bring, you know, some other services into the their business to help the client. But whilst they can actually generate the revenue to make sure that they can service their clients, the issue I see.

With the scenario that you just kind of talked about with your client with 10 properties, there's no financial incentive for you to do the right thing. No immediate financial incentive for you to do the right thing by your client. Is that because you're not getting paid for doing the right thing by him.

So if you, and you know, 20% of our work is actually helping our current clients who might want to fix interest rates or might move them interest only to principal and interest or get another valuation or potentially do a $30,000 top up or $50,000 top up. There's no, that's just love, you know, that's just part of us being responsible professionals who maintain relationships with their clients.

Yeah, all our bridging loans because they're either like no money for you or very little, aren't they?

Exactly, absolutely. And that is, you know, that's the thing, there's so many products that are out there that if you were Machiavellian, I guess you could go, oh, I'd rather put someone in a line of credit at a higher interest rate for them to get access to the money than money in the off debt. We just know that's not right in some circumstances. In other circumstances you want 30 years of interest only so you don't get conversion to P and I paying a little bit extra for line of credit. Fantastic. Obviously this is not specific advice, please don't rush out and get a line of credit. But you know, that's why you need someone to do, you know, not typing numbers into a computer program and says, the computer says, yes, the three banks, let's push the button. It's about, you know, doing a dedicated lending plan, looking at your long term goals, understanding consequential thinking about if you do this, how will it affect you in the future and do you have room in case things change and what could change? And looking at the bigger picture, with two properties in 15 years the average family can retire with a million dollars in the bank. I know that I've done the calculations, I've serviced the door two boring meat and potato properties in boring meat and potato places which is going to go up in value and start paying for themselves. And you know, at the end of the day they pay them off the loans off, pay the capital gains tax, put the money in the bank and there's an income.

Yeah. And speaking of changes, something that we've had a little, a bit of a whisper about is you've recently proposed a bit of an investing model to potentially sort of turn property investing on its head. I understand if you can't talk about it if I'm sort of jumping ahead, but if you could.

No, I will.

Awesome. Very interested to hear more.

Well, look, we all have challenges and things that come up in our lives and for me, I was diagnosed with a brain tumor last in Easter 2019 and it was a pituitary gland tumor. I had very high cortisol, I couldn't work out while I was putting on weight, couldn't lose, exclusive, you know, very diligent in exercise and diet, et cetera. And after investigations come back and said, really high cortisol, which might explain me going all the time on, on, but you've got a brain tumor. So I had that out in August and I came out of the operation, I was in recovery and you know, the nurses have to ask questions, make sure you're cognitive. And this nurse said to me, tell me, what do you do? And I said, oh look, I help people use low risk strategies to buy residential property in Australia so that they can achieve their financial goals and affect not just the change in their families and friends, but intergenerationally. And this woman said, oh, this is fantastic. I'm about to buy a house and land deal for my first home out in. No, no, no, no. That does not have the fundamentals of growth. You know, when you think about fundamentals of growth, let's talk about supply and demand and infrastructure. She said, wait a second, let me get the other nurses because they're looking at buying their first time. I was like, so I'm in recovery post brain surgery. I haven't even made it towards after. This is like about an hour and I'm doing a mini masterclass on property investing for first time buyers. And I was like this call came down from the room saying, look, you know, there's a tool year old boy and her husband must be waiting for Jane. She doesn't turn up soon. Oh yes, I forgot about that. So within the next 10 days I did about three or four masterclasses for nurses around the hospital bed. And so it got me thinking. I thought, you know, brain surgery, if I couldn't think again. And I had to kind of put a process together to teach people everything I'd learned in 20 years and simplify it and I could hope the best possible outcome for anyone to get this Right. What would that look like? And I thought, well, who are the people in my mortgage business that I'm talking to? Mostly I'm talking to 45, 50, 55 year olds who got to that age and went, oh my God, I'm going to retire poor. And they've made a quick investment decision, usually that's the wrong one and they've bought somewhere in that's not going up in value, upset them and whatever and we're in a rescue situation or someone who's like, oh my God, I have to do this so quickly they rush in and I think, what if I could grab that 45, 50 year old person and bring them back to their 25 year old self and then what if I could get the government to help them pay someone else, help them to pay for this property and they have this property as a home for a period of time using all the investor smart and then convert it into an investment property. And they don't have 10, 15 years of this growth, they have 20, 30, 40 years of capital growth in this property. What if I could change investing and put it on its head and use all these smarts to help first home buyers actually become first time investors? So I thought, so I came up with this concept of home vesting, which is precursor to rent vesting. And so home vesting essentially was around this framework. And the thing about this financial freedom framework is it doesn't just work for finance for first time buyers, it can work for anyone. So my idea was, you know, it's essentially six steps. The first one is see it to understand what the vision is, understand what the goal is for this property and how it fits into your life. Now we're not talking like 20, 30 years, we're talking let's say the next one to three years. So you know, could you live in this property for a year as a first time buyer and get the grants and first time loan deposit scheme and all the things possible and get in with the 5 deposit a property now rather than waiting 4, 5, 6 years for you to get a 20% deposit, which the property value's probably gone from 400 to 600 then. So now you're looking at the equivalent in 4 or 5 years time of a property that was worth 250 back then, you know, get into the market sooner in a growth trajectory and then set it. So see it, set it, slam it, source it, supersize it, stash it, see it's the goal, understand your budget, understand what you can save now, understand what it's going to cost you once you're in the property. Understand what it's going to cost you once you're an investor and you know the money's coming out of your pocket. Understand about the importance of getting the loans right, understanding how you are going to manage this property so that setters and get your loan set up, pre approval borrowing capacity done. So you know exactly what to do when we need to source it. Source it. Look at the trident strategy, you know, can you buy below the market by understanding the market so well and doing your research? Can you have a look at the drivers of capital growth and all the things that we talk about for capital growth, you know that we would look at for your infrastructure and population growth and income growth and ripple effects and then apply the filters, you know the low risk filters around vacancy rates and percentage ranges. So can we make sure we've got the ticket property? So source it properly and then I look at slam it and slam it is get it right. So this is where a lot of people go I've got the property now I can almost give up. So you know we have in our team a professional negotiator who can negotiate on people's behalf because let's face it, not every one of you is a great negotiator. Real estate agent Todd, you learn how to do it, we don't. In the immortal world we have your personal building inspection. People miss this and they end up with a termite for instance. We have people who don't get their loan, sorry their contract reviewed by a conveyancer beforehand and find out there's an easement in it. This is just about slamming it and getting that right, getting it set up and then there's the optional extra if you move in there or if you're an investor it's the supersize it. So do something to add value. Now my go to is renovation but a lot of my mentoring students do granny type so you know there's the opportunity to add that value and supersize and it pull up the rent but also the long term growth and then stash it, you know, park it up, get the value at the time. If you're a first home buyer or quantity surveyor to come in and set what the value of the property is when you move out, different type of gains tax reasons later that it's all good. Or if you're an investor this is about getting the right property manager making sure that you understand what the implications are going to be on your budget in the future. So this See it, set it, slam it, source it, supersize it, slash it is essentially the financial freedom framework. And I thought at the time whilst laying in my hospital bed, why don't I start a first home buyer show? So I did like a 10 episode first home buyer show about it on Facebook as well, just to help first home buyers. So, you know, it was essentially just a very simple framework which makes sure that every single element is crossed off, that people can sit back and just watch their property grow.

Just because I know we've got limited time with you today, Jane. Where can people find that if they want to learn a bit more detail?

So if they go to learn with Jane Slacksmith on Facebook, that's where the show is. But if you just go to investorschoice.com all the details are there to all the different things that I do.

Brilliant, Amazing. I know we do have a couple of first homeowners that listen to this. That'd be good.

I'd like to think there's more than a couple.

But the thing is with the first home buyers is that a lot of them have given up with the question of ever having a home. And you've probably got listeners here who have kids or they might be in that age group of 50, which you know, where I kind of sit very soon I'm starting my festival of 50 next year. But you know, they've got aging parents almost at a stage where they're leaving them a legacy of funds and money. And then I've got kids that they're like worried about getting their first home. I think there's a beautiful opportunity for not just the traditional 25 year old first home buyer listener going, oh, this is me. It's people across the range going, in actual fact, I can help my kids or my parents are about to leave me some money. I could use this framework for myself to make sure that I've ticked every goal.

I think it's such a mindset thing as well, because when I speak to people like here in Adelaide and I'll speak to first home buyers and they're like, oh, I just don't know how we can get in the market. It's like 350, 400 grand, whatever it is. And then I'll speak to people in Sydney and they're like, oh, I just don't know how we're getting the market. It's like 6, 7, 800,000, but they do it. And then. But if you have a 6, 7, $800,000 conversation with someone in Adelaide, it's Like, well, that's impossible. So obviously it's not because there are these people doing it, but it's because they're forced into. That's the reality. So it's.

If you think about it like I was born in 1970s. The median health crisis Sydney in 1970 was $24,000. And if you took a person from 1970 and you said the median house price in Sydney in 2020 is going to be 1.3 million, they go, come on already. And if you said, you know, the projections for Sydney for 2030 is 2.6 million, they go, what? I mean, it always. No matter where you are. And that's why I think people trying to time the market are doing themselves a disservice. It's like, I've always thought when I can afford in the best possible area for growth, that I could afford to do.

Yeah. Something I heard you say on another interview the other day was it's not about timing the market, it's about time in the market. I really like that.

Absolutely. I think so. And I think, you know, we. We see this real estate as a transaction. For me, this is a lifestyle choice that's going to get you to the lifestyle that you want.

Yeah, definitely. Awesome.

All right, Jane, on a little bit more of a lighter note, do you have any kind of funny renovation stories? Anything that kind of takes the cake?

It's got to be something.

Okay, if I get back, oh, my gosh, this is more like a horror story than a funny story. But if I go back to my very first renovation. So we were doing two renovations side by side. My husband bought one property, I bought the other property. You know, I very. I can do this by myself, blah, blah. And so, you know, we had done these renovations. They'd taken about nine months. They're beautifully, beautifully done. You know, we were really proud of them. And we were moving from Melbourne to Sydney the next day. We had flights. And that night there was this torrential rain. And as I was sitting out in the back kitchen, I noticed the water was starting to come into the kitchen. And what had happened during the day was the final work on just fixing up this little cobblestone wall in the backyard. The guy had actually covered up the drain and blocked it. So there's torrential rain. So I got out there and I started pulling these cobblestones out with my hands up this drain, trying to get this concrete out, et cetera. Meanwhile, my husband was two stories up in the house, and water started coming down the wall and through the light Fitting. And I was like. And he's like, we've got problems with water. I was like, I know, I'm fixing them. He's like, no, it's the roof. I think the guy who painted the roof and put a hole in the roof. And so we then got this painter in and this guy was this burly. He only painted part time. He was actually a security guard at Crown Casino. He got out this tiny little window with this elastic in his hand on this roof. And he's like covering up this hole in the roof. And so we had this water going everywhere and it was like, you know, five hours later at 3am and finally we kind of fixed everything up and we packed everything up, made everything pretty. The guy came back the next day and fixed up the wall, we cleaned up the house and we still made our flight. But, you know, it was just like one of those, oh my God, could everything go wrong at once? And if you look at that, you know, I'm very much about making lemonade out of lemon. Could you imagine if it happened the next day and we were in Sydney?

In some ways it's lucky it happened when you were still.

Yeah, that's what I was just thinking. As much as that, it would have been like a few hours difference and that could be ultra horrible.

I know. And so, you know, it was just like. It was just like, oh my God. If this had happened one day later and the tenants went down and move in for a week, they could have been a week with the water there.

Yeah, and water damage is so bad. I had a property once where I actually had the next door neighbor call me because I always make friends with the neighbors whenever I buy a house. And he calls me up, this real like simple bloke, a lovely guy, and he's just, oh, Todd, your house isn't supposed to leak, is it? What do you mean, Steve? Well, there's just water coming out of it that's not supposed to. I'm like, it's absolutely not supposed to be like that. And I was just so lucky that he called me because. Because I gave him my number and plumber went around. Turns out one of the, the little, what they called the, the hoses underneath the sink, it just burst. And yeah, yeah, it had only been going for a few hours, but I wasn't going back up there for a week. So I would have had serious troubles if he didn't actually call me. So it sounds like you were in a very similar boat. It was just saved by the bell time wise Absolutely.

So, yeah, so renovations, you know, we've been renovating the property, trying to save a bit of money. We're like, well, whilst they paint the bedrooms, we'll just, you know, sleep in the kitchen, on the floor, in the swag or, you know. And I remember one night we, we were running up against, we were doing a renovation. The guy who was going to come and do the floorboards the next day was about to turn up the following day and we had to move everything into the kitchen. But that day in the kitchen, the tiler had just laid all of these great 600 by 600 tiles. And so we put everything, you know, into the, into the middle of the kitchen so I can get around it. And about 2am I wake up and I said to Todd, oh my God, we've actually put all of the weight on the middle of these tiles. They're going to sink. We have to go and disperse the weight across these tiles. So 2am back in the car, back to the house. We're renovating, we're moving everything out, dispersing the weight against this newly tiled kitchen because we knew the following day the guy was going to turn up at 7am to do the floorboard. So, you know. Yeah, yeah, yeah. Like, oh my God, what have we done? So, yes, but, you know, it's kind of those things that you being in a renovator, you're often just a detective. Something's going to come up and you think, I'm going to have to find the source of this problem and find a solution to it or I'm going to have to just, you know, deal with it as best possible I can and get the experts in to do what they can do to help me with it. So. But yeah, it's many renovating stories I could share with you, but let's not go there.

I've got a feeling you're not going to wrap up your career in real estate for a very long time. But when you do, you could probably write a very comical book of all of the different little mistakes that have happened.

That'd be a good read, I have to say. My. The people in my you Property Success club on Facebook, some of the stories that they share. It's just you sit back and you go, okay, I'm just going to make a book about them. Their story is way better than mine.

Well, Jane, we've been, yeah, I think taking too much of your time already. I've just looked at the clock here. I think we've almost been chatting with you an Hour and understand that you're a very busy woman. So we want to ask you one last question and then let you get back to your day. Probably the most important question as well. Jane Slack Smith, what is your favorite pizza?

Oh, my favorite pizza. My favorite pizza would have to be the Stallion. That was from a pizza restaurant in Lachlan Street, Waterloo, Sydney, called the Red Star, which sadly is no longer there.

Stallion. What's on it? They don't put horse on it, do they?

No, I'd have to say the premise behind it was a hot Sicilian sausage.

Okay. All right.

Lots of flavor.

That is definitely not the answer I was expecting.

Sounds good though.

No. Awesome. Well, look, Jane, thank you so much for your time. You've been absolutely amazing. I hope you guys listening have got so much from this as well. And if anyone wants to learn little bit more about you or a lot more about you, whereabouts can they they find you? How can they get in touch all the rest of it?

Look, if you just go to investorschoice.com pretty much all the information is there about my courses, books, mentoring, you know, the first time buyer show. We're here to help and I'm all happy to give as much information to people as they need.

Beautiful. And we'll leave some links in the show notes on the podcast as well, make it a little bit easier for you to find Jane. And yeah, is any other parting words that you'd like to give to our audience?

Look, I love what you guys are doing at Pizza and Proper. And I think the more people that get exposed to understanding how good property investing can work and change their lives and that not just of themselves, but their family and their kids and future generations. You know, all kudos to you for doing what you're doing.

Awesome. Thank you very much, James. Really appreciate that. We better let you get back to it, but thank you so much for coming on the show.

Have a good day.

Take care. Bye, guys.

Oh, how'd you find that, Todd?

Jack, that was really good. I thoroughly enjoyed that. That is so much information. And I like the fact that. Did you notice we didn't really talk about bricks and mortar the same way we didn't talk about paint on the walls, tiling, bathrooms? Yeah, we talked about renovation, but it was more so about selection and yeah, all the data behind it.

Yeah.

Which I think that's really what people need to understand much, much clearer that that's what really matters. Obviously you need the actual works to be done correctly, but it doesn't matter how well the works are done. If they're done in the wrong spot, in the wrong property.

Yeah, I found that. Good. She kind of mapped out. You kind of start with asset selection. Renovation is part of the process, but it's the last. Almost the last step.

Definitely. What do you think your favorite bit was? Biggest takeaway.

I like the story behind her latest. What would you call it?

Who pictures like you? So you've just had a brain tumor removed. You're in bed after anesthesia. How much commitment is that? Yeah, I'm just picturing her right now, like, whining on it, writing on a whiteboard with all these nurses around her and, like, this big, like, bandage around her head, like, Jane. That's amazing. I don't know how you do that. I like to think I've got a work ethic, but that's next level.

Yeah, I guess there's a common thread. Like, I mean, Simon Presley was in a hospital bed when we spoke to him. It's a. It's a passionate. Yeah, maybe group of people we have on.

Yeah. Really, isn't it? Like, nothing gets in the way. I mean, it just really shows to the persistence, doesn't it?

Yep. Yeah.

Awesome.

Really.

All right, well, I really enjoyed that interview. I hope you guys enjoyed that as well. And as always, if you've got any questions at all, leave me in the comments, get in touch with any of the contact details, and as always, if you're watching on YouTube, hit that subscribe button, the like button. Get all this stuff going on. Guys, we really appreciate you listening, and, yeah, we'll see you next time.

Thanks, guys.