کسب ثروت از طریق بازسازی خانه: مصاحبه با خانم Jane Slack-Smith بخش اول

Hi everyone, my name is Shapur and today here I have very special guest with me. She's Jane Slacksmith. She's a property market commentator. She's a very well known educator in property market. She's an author, she's a podcaster. You can see tens of podcasts on the Internet by her. And she's been awarded Australia's Mortgage Broker of the Year twice. She's a co creator of the Ultimate Guide to Renovation and so on and so forth. Hi Jane, thanks so much for being with us today.

It's a pleasure. Thank you so much for inviting me.

Thank you. Just for the audience to know, I called Jane today and requested to spare some time for the interview and did not actually give her time to say no. So that's how I do interviews. Thanks so much, Jane.

I think it's easier to ask for forgiveness than permission half the time, isn't it?

Of course, of course. I will ask later on. Okay. Jane started her career as an explosives engineer decades ago. And when I was thinking of what kind of person would be an explosive engineer and then I'm specializing explosives and then get into the property market, I was trying to profile such a person. I came up with the idea that, okay, that person should know risk very well and they should also know apart from the fact that risk exists, they should also know ways to tackle risk. I know in the property market a lot of people are afraid to get into the market. So do you have anything to tell us with regards to risk management and risk when it comes to property investment and renovations?

Well, Shapal, you've nailed it exactly. Risk assessment and bringing those skills to my property investing journey were really important to me because to be quite frank, I was a bit of a scaredy cat when it came to property investing. And my now husband, but boyfriend back 22 years ago had said to me, hey, I've got a property in New Zealand where he was from and he had started lawn mowing business and he was mowing the lawn for this guy and this guy said, you did such a good job, I've got three other properties. He said, you're 25 years old, how do you have so many properties? And he said, the first one's the hardest. And you know, he really kind of inspired my husband. And my husband came and said, we should invest in property. And my boss had kept saying to me, if you buy, if you get a property and have a mortgage, I know you're tied to me forever. So quick, go buy a property. So I was foot loose, fancy free 28 going, I'm not going to buy a property. And then I thought, and I looked at the share market and, you know, on a whim, things changed and I couldn't really predict it. And being an engineer, you know, I'd spreadsheet things, I'd do analysis, I'd do due diligence on everything. And to your point, as an explosives engineer, I would. Every single day was looking at the likelihood of something going wrong and the consequence. And based on that, then coming up with an action which might be, we can't do it, or hey, if I put these actions in place, I can do it. So I bought that skill set to property investing and I thought, if I can look at the risks and then look at the consequence of those risks, I could accept them or I could move on. And how do I work out how to de risk investing? And so essentially I looked at the 16 and a half thousand suburbs in Australia. I looked over 20 years, the ones that had outperformed the others. I looked at characteristics that those suburbs had and that narrowed it right down to like a thousand. And then I thought, how can I, if I have an investment property, how can I deal with risk that there's, there's not going to be a vacancy? So why don't I go into an area that has 30% renters, which is the general rental number across Australia? So I first of all then filtered off the suburbs that had less than 30%. And then I thought, well, I don't want to have an oversupply of properties, so I want to have more properties that like more people looking for properties than properties in the market. So I wanted a vacancy rate less than 3%. So I just kept going down and down and down and down to the price point I could afford. Came up with three suburbs and got to know those suburbs very, very well and bought a property. Bought a property, my first property, for $425,000 and with a renovation potential, renovated strategically and fit for the market on budget, you know, very, very strategic renovation and had that property revalued nine months later at $700,000. So yeah, I bought risk to the property investing space.

Beautiful. Jen. When I asked this question, I was thinking of what kind of answer I would receive. And I'm very happy that I did not receive pep talk. I received strategies. I received procedures. Beautiful. Thank you very much. Just for that part of the audience who might not know, Jane wrote her book, your property success with renovation back in 2012, if I'm not mistaken. Right? Yeah. 10 years ago. And I had the privilege of reading that book very, very shortly after it was published. So we have the book here. Yeah. And the COVID design is so beautiful, so appealing to the reader.

I designed the COVID but it's, it's actually still in print and a bestseller. I just keep getting me printed and you know, it's great. The information is timeless. And that's one of the things I found about property investing and renovation. If you get it right, it's, you know, to Warren Buffett, he says, if you're doing it and it's exciting, you're probably doing it wrong. And the editor of Money magazine used to ring me up and say, Jane, I need your boring meat and potato strategies. Because they're boring, but they just always work.

Always work. That's beautiful. A lot of people, after they see these beautiful scenes on the TV screen in Flip House's programs, they decide that okay, they need to buy a property to Flip. And as soon as they see this rundown property, they mistakenly think that this is the ideal opportunity for a renovation. So my question is, could you possibly elaborate on the idea of renovate this trap a bit for us?

Sure. And that's so accurate. Shapur. The thing is that not every property that is run down or in need of a renovation deserves a renovation or can be renovated profitably. And if you're in the business of property investment to grow wealth and grow equity and have long term tenants and put the rent up, then you want to have a renovation that achieves that for you. But where it starts is with the right property and where that property has to be is in the right suburb. So one of the things that I do when teach in that Ultimate Guide to Renovation course and in the book specifically is understanding pricing disparity. So within a suburb, you have to have the proof of the renovated properties to be big enough or high enough above what you're buying the unrenovated property for to make money. So for instance, if you're buying for $400,000 and it's going to cost you, let's say a 10% cosmetic kind of renovation, $40,000. And it's cost you 20,000 for stamp duty and 10,000 DOL for holding costs, etc. You know, we're getting up to like four hundred and seventy, four hundred eighty thousand dollars. And if you are only finding proof of renovated properties at $500,000, you know there's only like a $20,000 profit in there. Whereas what I teach is I want you to have at least $2 for every $1 you spend. So if you are buying a $400,000 property and you spend $40,000 in renovation, I want you to make 40,000 on the profit and then put on that 30,000 on top of that the cost. So that gets us to like 530. So if you can't find within a suburb the unrenovated properties for 400 and the renovated at 530 or you know, as those numbers move up, you know, 600 and 780 thousand, etc. Then maybe there's not capacity in that suburb to even start spending your time. But when you do then find the suburb that you want to concentrate that renovation strategy in, you then need to actually find the right property. So there's no point in going, wow, you know, this is fantastic. You know, we've got the pricing disparity and you then go and buy a two bedroom house on 400 square meters where the typical property is actually a three bedroom house on 600 square meters because you've already behind the curve to start with. And then finding a property that has a lot of structural issues, so you have to, you know, put up a retaining wall or replace the roof or you know, do water treatment or whatever, that's not going to add a higher and better value to the property. It's just everyone expects a property to be, you know, structurally sound. So you might have wasted 40, $50,000 just getting the unseen things done. Exactly. So, you know, the traps people make is they buy in the wrong suburb without pricing disparity, they buy the wrong property and then they get into the renovation and they may over capitalize. So they like, you know, I always wanted to have Caesar stone bench tops at home, so I'll do it. But they're in, you know, western Sydney where you know, a really nice Caesar stone, look, lemon X is fine. And then it cost you 2000 less. Or they might go, oh, you know what, I'm going to save some magic money and I'm going to do all the renovations myself on the weekend. And it'll take like two years of not having, you know, the rental capacity coming in as opposed to getting professionals in for six weeks. Or the budget blows out and you start going. And you know, I have been, this did happen to me, you know, I was walking through one of my houses that I'd been renovating and the electrician said to me, did you want dimmer switches? And I was like, oh yeah, that sounds like a good idea. You know, normal switch, five bucks dimmer switch, $12. All of a sudden, all the switches throughout the house that divers on it and it doubled the cost. Right. And I hadn't thought about like budgeting, being on budget and being, you know, very. And keeping to the time frame are also some of the traps that people.

They're as important. You're right. So after renovation, to give our viewers some value with regards to the renovation projects they might have in the future. I remember about this time last year I created this podcast under the title of how to buy several properties in a short time. And there I told people to have several strategies, multiple strategies instead of one single one. Okay. And that reminds me of your tried and strategy with renovations because a lot of people have learned this terminology from you and I know a lot of people have in ways misunderstood it. So I would like to hear from yourself, what is your Trident strategy with renovation projects?

First, let me just tell you a funny story, Shapal. I had someone recently ring me and they said as a mortgage client and as a discovery call and they said, look, you may not fully understand this, but I am a student of the Trident strategy. Let me explain it to you because I want to do it. I was like, oh, okay, tell me all about it. And so I'm so glad that it's now become almost mainstream as a strategy type.

It's become a college.

Well, here's the thing. A lot of people depend on the hope strategy. I hope this property will go up in value. I hope this property will give me an income. I hope someone will rent it. I hope someone will buy it one day and hope some are a strategy you can pin your future wealth on. And so what I love about what you've saying there about having almost like a multiple strategy is really plays into my, my risk assessment because I was a scaredy cat and I thought if I really get this wrong, how can I have a plan B and maybe even a plan C to get it right? And so I have three ways of making money on a property. And the first way is actually the research. Do the research. Know the suburb, know the price point, know the motivations. If you can find out of why people are selling the property, understand how to negotiate. It's not a, I'll give you $520,000 and you can tell me yes or no by Monday. It's give you $520,000 or I'll give you $540,000 and pay you in six months. It's like an either or so. They're not going to a yes or no. So that first part is about how to buy below the market, know the market, know how to negotiate. Now, if there was any one of the strategies that I'd give up, it would be that one fast moving market. You know, 600,000 this week is 650 next week. And you know, you need to be able to, to understand that, but you can still negotiate. And I had a lot of my mentoring students over the last two years where we've had phenomenal growth and no one can buy in Brisbane, it's impossible. Buy in Hobart. They're in there and they're actually doing deals. So there's people who, for whatever the terms that we provided were acceptable to them, and they were buying less than what other offers were on the table. So I know that's possible. And then the second strategy, so you're making money straight up. You know, if you're thinking you're buying at $400,000, for instance, and you able to buy it at 360, that's 10%. 40,000 is 10% growth in a real world, not 20, 20, 21, that's like two years worth of growth. You're ahead of the curve. So I love that. And then.

And apart from that. Sorry to interrupt. When you buy on the market value, even if at some stage worse comes to worse, and you decide not to proceed with your renovations, you'll have already made some money. Okay, that's a very important point.

Exactly. And which allows you to hold it potentially for a little bit further, or if the market does come down, you're not losing out.

Exactly.

And then making money in the midterm, and that's where I use renovation. So that's getting in. So, you know, I bought that $450,000 or $425,000 property and with a $50,000 renovation, made it $700,000. So I made equity, created it out of thin air, strategic renovation, fit for the market, fit for the demographic, on budget, on time. And what's beautiful about that is I always renovate just a bit above the typical property in the area so that people want to stay there. So my vacancies are very small, or if they are, property is vacant. It's for a short period of time. But most of my tenants, I mean, I've currently got tenants that have been there for nine years in one of my properties, so they don't move out. And I can charge a bit more. So that's my second part of the trident strategy. And then the third part, and obviously being able to charge A bit more for rent is always great because it's the cash flow that helps you hold the property for the 10, 15, 20 years. But it's the third part of the strategy that helps you get out and that's the growth. So you know that $425,000 property now is worth $2 million, you know, so you know, it's the growth that will give you the retirement that you want and being able to target growth. I've got a couple of ways that I do that. I look at the ripple effect. So I look at, you know, when people can't afford one area they move into the next area so anticipating that next area. So I, I use a.net technique as you would know, that allows people to do that. And then I also, I look at the, you know, population movements. I'm very excited when the, the 2021 census data has come out. You know, I'm looking at that and looking what, what people are after. I'm looking at how do you, some of these strange things like you know, work from home, affect the type of properties, what people are looking for in the properties they want. And so I'm looking where there's growth potential as well. So that's three ways of making money with a property. Buy below the market, renovate to add value and growth to get you to your wealth goals.

Definitely, well put. And what sounds most appealing to me with regards to this Trident strategy is that it's absolutely opposed to the old fashioned idea of buy and hold. Buy and hold, which is still unluckily advised by a lot of advisors to potential investors, is a rotten strategy I think because it sort of prevents you from having something like the Trident strategy.

Well to the point, the major part of the wealth that I see people make is from that capital growth which is the hold. So it is, it allows people to, it's not like a one and done buy and hold, set and forget and move on and maybe in 10 years time there's enough money to pull it out to do the second one. It's more like an active buy and hold strategy. So you buy, create equity that you can pull out and do the next one whilst this one keeps going up in value and giving you that long term plan.

Definitely, definitely. Thank you very much. I have a question regarding mindset and mentality. I was thinking because, because you are a really well known success guru so I was thinking of requesting you for another perhaps interview to have a chat about mentality of success and mindset in the property market. Because I'VE heard you talk about the mindset of abundance as opposed to the mindset of lack. So if we can briefly have a touch upon this one, that would be much appreciated.

I just correct you. I'm not the sage on the stage or the guru. I'm someone who's on the path of learning as well. So I definitely don't know it all and packed up my books and gone home. I'm learning every day. And I think that's one of the characteristics that I found with those that are successful and having having sold thousands of courses to, you know, thousands of property investors. And you know, for the last nine years I've monthly been running a Q and A call for my, you know, my club. And so I get to hear the questions and I'm responding, you know, in helping people. And I guess one of the things that really struck me is some people are successful even though, you know, they bought the courses and the books, they're successful. And some people who've done the same thing have, aren't. And it fascinates me and it has been a study of mine for the last five years to really go deep in, well, how can I help people be successful despite themselves? Right? How can I almost guarantee success, which would be my absolute goal for people to have that wealth, financial abundance so that they can get on with life and live their true purpose and passions and not be wage slaves and have more time talking to their kids. And so what I've found is that the mindset, it's an amazing thing. And we all come from the traditions and the different countries that we've come from. And we've been told things like, you know, it's rich people have got their money through bad ways, or we've been told that, you know, rich people are bad, or, you know, it's better to be poor and happy than rich and sad. And so there's all these stories that we have and a lot of them from our childhood. And so I've really been looking into that mindset piece and I'd love to talk to you more about it. But what I have found is that the people who are successful are very, very clear on the vision that they have, emotionally connected to the vision and they understand there's action to get there from their current reality. But they're also, they have a higher and greater passion to have their financial freedom to have more time with their family or to be able to contribute to the community, create a legacy or an impact. So often it's more than just them making money and have a Ferrari is what I have. So I've kind of doubled down into this and recently just started your success club to help people kind of look at some of these limiting beliefs and mind blocks. Because, I mean, as you know, there's people who've been. We talk to, have said for the last 15 years that they want to buy property, but they just don't know when and they just don't know how. And I think it's the how is there. Like, you read the book, you did the course, you know the how is there and you. And I've got like 120 books on property, so I know the how's there. I think it's the understanding of yourself and that competence and confidence that you get, and some of that is just actually identifying some of the things that are limiting you and holding you back. And I really enjoy playing in that space and helping people work through those kind of realizations so they can then get on and do what they really want.

Definitely. I hope I'll have the privilege of having you for a chat in this realm as well.