How this 32-year-old built a $2.5m property portfolio
Being a first-generation migrant who saw his parents work hard for everything they had, this property investor used it a...
For many, a property portfolio is something that is built up gradually over a long period of time. Then you have investors like Greta Francis who, after deciding that she didn’t want to retire on the pension alone, purchased four properties — in the space of just one year.
Greta sits down with Smart Property Investment’s Phil Tarrant to share her strategy and to discuss how she was able to make it happen. She explains how she originally had very little idea what to look for when trying to find an investment property, and the steps that she took that have resulted in her now having a very clear list of buying rules.
The pair will discuss the importance of having a mentor, and Greta will share her long-term investment plan as well as some ideas on how she approaches learning about a potential investment area.
If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: Facebook, Twitter and LinkedIn.
If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!
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Announcer: Welcome to the Smart Property Investment Show with your host Phil Tarrant.
Phil: Hello everyone, welcome to the Smart Property Investment Show. Thanks to all of you for joining us as we get on this path of exploring property investor. As you know, also, we'd like to bring in investors of all shapes and sizes. Whether it was their first property. Whether they got 50 properties. Whether they've been doing this for one year or been doing it for 20 years and have in the studio today Greta Francis who is a property investor who has got the pedal down at the moment, accelerating hard to accumulate property.
What we hope to do today is get inside her story. Work out what she's doing and why she's doing it. Greta, how're you going? Thanks for joining us on the show.
Greta: Fine, thank you. Thanks for having me along.
Phil: Before we come on air we had a real quick chat and you mentioned that your portfolio now. You've got four properties in your portfolio and a principle place of residence as well. But you got those four properties in the space of a year. That's pretty quick going. Why are you rushing so much?
Greta: Because my husband and I, heading towards retirement in 10 to 15 years and really we don't want to retire on the pension. We want to have a lifestyle that's a little bit better than the pension. Doesn't have to be extremely glamorous but better than the pension. We need to do something. We realised we needed to do something and also the idea of property. We want to give it time to grow. Really, we need to get on by now and have that other 10 to 15 years of growth.
Phil: Potentially at least one, maybe two market cycles if you're lucky.
Phil: What was the realisation? Was there just a point in time you just went, "Hang on a second, we've got to start thinking about retirement?" Or has this been an idea which has incubated over a period of time?
Greta: Yeah, a period of time, I think. We have had properties in the past and a property we sold so that we could move into our principle place of residence and I think we were just sitting, cruising along. We had a financial advisor and he advised us to go and buy something in super.
Phil: A property in super?
Greta: A property in super.
Greta: We started. We did that and he suggested an area and we went off and we looked. We looked each Saturday and we came back and went, "Yeah, well we don't know." Then we went again the next Saturday and the next Saturday and we lost momentum and we just stopped. Then, again, we spoke to our property financial advisor and he said, "Yes, Newcastle's doing really well. You really should go and do that." We started again and we went and we walked away just going, "Actually, we don't know what we're dong."
We'd only ever purchased before in our own area and so we realised we needed to get educated. That was what we did.
Phil: Education's pretty important with property. Your friends financial advisor was saying, "Hey go and look in this area. Buy a property in this area." Was he basing that advice on any particular numbers or drivers, did you know?
Greta: Only his own personal experience.
Greta: I mean, I think he was seeing that the market was going up in Newcastle and, yeah, he just thought that was a good place to go. He wasn't in property himself other than just having purchased for himself.
Phil: Yeah, and this is one on the show we get a lot of people talking about using a financial advisor. A lot of financial advisors aren't property specific. They might be really hot on stocks and shares and bonds, and managed funds, and whatever else. What other investment classes, but they're typically not that strong in property so the four investment properties you have now, are they always in your super or you have some in super, some out super?
Greta: No, just one. The last one we purchased was in super.
Phil: Okay, so you set up an SMSF?
Greta: Mm-hmm (affirmative).
Phil: Went looking to try and put a property into it. Went, "That's too hard. Let's park it." Went and bought three properties outside of super and then put one in super.
Greta: Yeah, we didn't as far as setting up the SMSF so we said, "No, this is all too hard." Left it. Ended up finding, getting ourselves educated. We became members of Real Wealth Australia, which is education and ongoing mentoring. We've gone and had a couple of days in an academy learning about what you need to know for real estate. Buying real estate, what to look for. Everything that's encompassed with real estate.
Then we walked away from there going, "Actually, we know what to do now. We can do this. We can buy a property," and we did. We did not in super, so we got three and this last fourth one in with super.
Phil: Was in your super.
Greta: In the meantime we set up the super fund because it takes a little while to set up a super fund.
Phil: Yeah, it's a headache.
Greta: Not really, because I let everyone else do it.
Phil: Yeah, good.
Greta: They say get a panel of experts and that's what we did.
Phil: That's the way it is.
Phil: The three properties that you have outside of super, where are they? What sort of properties are they?
Greta: Two in Tasmania and one is in Canberra. The second one is in Canberra as well.
Phil: Okay, is there any particular reason why you've chosen Tazzie and Canberra to invest in?
Greta: Of course.
Phil: What are those reasons?
Greta: Of course there are. Conscious choices. Very, very conscious choices. What we learned with Real Wealth was to do due diligence. Look into an area. Look at its infrastructure. Call the town planning, the councils. Look at what's going out. Population movement, employment so that you could choose an area that was growing. The idea for us, of course, is to get in at a price that's affordable for us and be able to let the property sit there and grow.
We've picked places for capital growth but also getting a decent yield. Now we're not, we haven't really put our hands in our pocket for having to cover any of the costs at this point in time so there all sitting neutral, I think.
Phil: Okay, well that's a good thing. You spoke before about having a retirement where you don't need to live off the pension and the state or the government based pension in Australia, you're not living like a king on that.
Phil: A lot of people struggle actually living on a pension so you want to empower yourself for a better retirement, which is cool. What's the strategy then? Is four properties enough? Are you just going to sit there now and wait 15 years and sell a couple off and then retire on the rest of the income or what's the plan?
Greta: No, definitely not stopping. We're going, we're still moving fast ahead. Fortunately because we did have a property in Sydney that hit the market going as crazy as it did. It gave us this opportunity to withdraw our equity in our home that we could go forward with all of this so we were in a good position for starting. I think we'll just keep going as much as we can, but in the initial set up was for Real Wealth was 10 in 10. 10 in 10 years. Now, I think for us we were thinking we'll do it faster than that because we didn't have 10 years to sit.
The last one buying in 10 years time was no good for us. We want that sooner. What we'll do is we'll keep buying until we run out of the money and we'll let our equity build up in those properties and then we'll take the equity out of those and we'll go again and buy a few more properties. Then we'll sit on those and, I think, I don't know. We either sell off a few, pay them off. I don't know. There's a few options, I think, at this point in time to ideally sell off a couple. Pay them off, have the rent coming in and the capital growth still.
Phil: Do you have a number that you want as passive income when you do choose to retire? Is that how you've worked out what this retirement will like and built a portfolio around that.
Greta: Yeah, I look, kind of.
Phil: You don't have to tell me a number but you do have a number?
Greta: Yeah, yeah. We have a broker who's a bit of a dynamo and do I do names on that?
Phil: You can do. If I don't like the guy I'll just stitch it up. No, who is it?
Greta: It's in from Blue Ink Finance.
Phil: I don't know those guys.
Greta: Okay, David Wagner and he's a real dynamo and he keeps us motivated and very in line about what we've got and what we can do. Also recognising that you can actually do a lot. You can think big.
Phil: It's okay to think big, but a lot of investors really struggle with that concept that they don't think big. You've got, you're already four properties in a year. 10 properties is the goal and the number you have and the number being for our listeners, what you want to retire on and what sort of passive income you need and therefore how big you need your property portfolio to be. Therefore, what yield you get on it and you work backwards from there. But, a lot of people are very hesitant and procrastinate when it comes to properties.
You guys aren't that, you're the other side of things. You're hungry and quite aggressive because you don't have a lot of ... You've got 15 years, 20 years, that time on your side. You paint yourself as being really old, you're not, so you're not. But, so you haven't got a problem there but my experience that people who are very hungry, if you're too hungry and you move too quickly without a real thought out process of every single property you acquire and where it sits within your portfolio. That's where things go wrong.
Do you think you might fall into that trap at all?
Greta: Definitely not.
Greta: No, but I totally understand that. I get that and I think that my husband and I actually are very conservative. What we're doing, and it's because we're being supported in this. It's not all of us, like we've got experts, mentors, so from Real Wealth. If I have a particular mentor who really knows me, can work with me and Marron, I can ring her all the time to keep on track. I think what we're doing and when we're purchasing is we're doing enough due diligence to avoid any big pitfalls.
I think we're being quite conservative in what we're doing, really, because we're buying properties and we're already seeing the growth in them. They're actually not costing us anything to hold and because we're doing that we can keep moving forward and being able to borrow more money.
Phil: Yeah, I'm not that familiar with Real Wealth. Do you pay them a fee to mentor you or is it like a buyers agent? How does it work?
Greta: We had an initial upfront cost, so you have to get over that idea about the initial cost and I had a couple phone calls and when I stumbled across it online, I had spoke to a woman and she was really able to just tell me her story. She was like a real person as we were. We're just people getting along with our lives and she was able to show me that there was, that you can step forward because we were really hesitant for all those reasons that, I guess, a lot of people are. Making the wrong choice, blowing the chance of keeping your home.
Maybe losing your home. We had initial upfront costs, all the education, and now I have this mentor and I can ring my mentor. I mean, there's several mentors in there but I guess you get used to one person. I can ring her any time, as many times a day, and sometimes I ring her three or four times a day if something's going on. If I'm doing a deal, ringing the real estate. I'll ring her back. I said this, they did this. She can guide me and gives me that help that I need.
Phil: You're doing all the work, you're just leaning on someone to support you to stress test decisions, structure decisions. How you pitch things to real estate agents. That's how it works, so it's not a buyers agency.
Phil: You're doing all the work, they're providing you with the education.
Greta: Yeah, and they're very big on that with Real Wealth. They're very big on do it yourself. They will never tell you an area to choose. They'll only ever guide you. There's a lot. They give you a lot of templates, questions to ask the councils, the town planners, the real estate agent. The property managers. I mean, these are all things that I just didn't know. When we were going up to Newcastle, I didn't know. I didn't know.
Do you buy a two bedroom? A three, four, five bedroom home? I don't know. Now, I know. I look, find an area. I find exactly what the tenants are wanting, I find out if there is a big enough rental market. I guess, because you're doing enough research you get to buy in the right place.
Phil: What was it about Canberra that attracted you, outside of the fact that yes it's going up in value and it was a good yield? What were the actual fundamentals, the four or five different attributes of Canberra which said to you, "It's for these reasons that this is going to go up in value?"
Greta: Yeah, okay, so Residex is a big one. Residex had some areas in Canberra in the Tugwanon area that were high on the capital growth. Then, that's one thing. Looking at the numbers. Then it's going and talking to real estate agents. What's selling, how much is selling, what increases they have seen. Talking to property managers about how much, what the tendencies like in the area. Looking at the infrastructure, what's being built. What's going on.
Phil: It's always a challenge to pick spots because there's I don't know how many thousands and thousands of suburbs in Australia, so to choose the suburb that's going to be performing the best in any particular time now and I'm the future is always a tough one to answer. The reason I ask the question. It does come down to do those fundamental drivers which are going to influence what happens to property and obviously you're looking for a capital growth play, as in you need these things to go up in value as quick as possible while still getting a good yield.
From what you're saying, you're still pretty neutral in terms of the cost to hold these properties. What did you and your husband do for living? You're like massive income earners and you…
Greta: Yeah. No. No.
Greta: Both government.
Greta: I teach high school special needs.
Greta: My husband is in the museum industry and maintenance. Far from it.
Phil: Far from it, so ...
Greta: Yeah, far from it.
Phil: I bet you've been doing that for many, many years I imagine so you've been ...
Greta: He has. I didn't see the point in working all that much all the time. I was a bit slow to come to that and then we worked for a couple of years and then we had children because we had four.
Phil: Kept you busy?
Greta: I full time parented for a long time.
Phil: This path that you're doing now around creating wealth prepared for retirement. How old are your kids?
Greta: 19, 17, and two 14's.
Phil: Okay, so are they understand or across what you guys are trying to achieve?
Phil: Do they understand?
Greta: Yeah, a little bit.
Phil: Because one of the biggest challenges today is financial literacy with our next generation coming through. I always ask people how they teach that literacy to their kids. Are you explaining to them, "I bought this property, this is what it does, this is how it works?" Are they interested?
Greta: Yeah, a little bit. Yeah, yeah, they are. A little bit. I mean, there's a balance between ... I mean, we do. Yeah, we bought another property but there's a balance between not making life materialistic and about what we're buying and purchasing and everything, but understanding that we are growing our wealth really and I think, of course, the first thing that they all realised in their little eyes all lit up. "Yeah, maybe one day they'll be leaving us a house."
Phil: Well, you've got four there already, one’s in the super fund which is a bit hard, but they can move, if they want to live in Tasmania or Canberra.
Greta: Yes, that's right.
Phil: Is, obviously you're building this portfolio for a comfortable retirement but is there ... What's the plan with this portfolio? Is it to pass it to these guys at some point in time?
Greta: Well, you know what in the ideal world and I guess as you say about that thing about being conservative. I think our goal is to, we're enthusiastic, we're going, keep going. We can keep stopping, checking in and everything is fine. I do have an end figure in mind but it doesn't even have to be that. For me it's just if we've given it a really good shot. Ideally, if it goes really well which is obviously what we're aiming for, we could bring the kids in onboard and we could be helping them buy property so we could go join our ownership. Things like that.
Give the kids a hand because as we see living in Sydney, I mean, at this point in time it's hard to know that your kids could get into the real estate market at all.
Phil: Yeah, I was reading the paper over the week and it was showing population growth by, I think, it was 2042 in Sydney's like, it just blew my mind. We're just not prepared for it. We haven't got the road structure, rail structure, the housing. Which is good for property investors because yes Sydney and Melbourne is going through a bit of a flat period in terms of prosperous right now. Off the back of it, a huge couple years of growth. The fundamentals for price grab at the time is great, which is good for people who are in the Sydney market.
On the Sydney market you've got your principal place of residency here but it's going to get harder and harder for the younger people to secure property and that's just the reality of the world. It's tough but are you buying actively at the moment? You getting ready for the next purchase?
Phil: How far off is that?
Greta: I'm doing my due diligence at the moment so that means sitting in front of the computer for hours researching areas, articles, council planning. Looking at what infrastructures going on. I'm doing that at the moment and because I'm on school holiday's.
Phil: Your full time property investor at the moment?
Greta: Absolutely, this week I am.
Phil: The school holiday's two weeks isn't it?
Greta: Yeah, just started.
Phil: Great. Yeah, traffic was good today.
Greta: Traffic was good today. Yeah, so and then my husband and I'll get to, we'll go, we've booked a flight to the next destination.
Phil: Where's that or is it a secret?
Greta: Well, we're going to head up to Brisbane.
Greta: Yeah and have a look around because we don't know these areas. I guess the other thing that all this is for us is another little adventure. I'm in my midlife adventures so he and I get to go off. We've been parenting for a long time and he and I get to go off and do all this together and we really like that and we both like looking at houses.
Phil: This is like a business for you guys, really.
Greta: Yeah, it really, it is. It is.
Phil: Who's the CEO? You or your husband?
Greta: I am. I am. As my sister says, "Your husband's the boss, but she's the big boss."
Phil: She's the big boss.
Greta: I think that's the same. I think I put more time to it than he does.
Phil: Are you more into it than he is?
Phil: Yeah, okay. Is that from just because you're ... You know what the end goal is but you like the process of getting it? Is that the bit that you like?
Greta: I think so.
Greta: Yeah, I do like the process. Yeah, and I'm the one on the phone all the time saying, "Mayor, what's this? What's this?" Yeah.
Phil: When you guys, you fly up to Brisbane, the airport there, and I imagine get a rental car. What do you do, what happens first?
Greta: You get the map out. What will happen is ...
Phil: Do you have like a big hit list of places you're going to go to check out? Are you there just to, I'll use the term just look around, drive around the main streets and see what's going on?
Greta: Yeah, a bit of both.
Phil: Yeah, okay.
Greta: We will. We'll go to the areas. I will probably line up a few real estate agents. This is what I've done, I did in Tazzie. I lined up agents and got them to drive me around and they, then, showed me their town. Their area and what was going on and what they knew. You do it a couple of times because people have always got different opinions so I'm hoping to do that. We'll do that and it'll coincide with the Saturday so we'll have a couple of days to speak to real estates, do our own driving around looking. Then do some open homes.
Then you get a sense of what you're looking for.
Phil: Are you looking for, I don't know, are you as a prescripter saying, "We want three bedroom houses on 600 square metres of land?"
Greta: Yes, absolutely.
Phil: Is that what you're ...?
Phil: You're that prescriptive?
Greta: That's your buying rules and this is the thing that Real Wealth has told you about because you just get rid of a lot of wasting your time because you can just go out and look at a lot of houses if you wanted to but you've got to be very, very scripted in what you're doing. I'll go and talk to you a few more property managers first but from my understanding so far it's three bedrooms, two bathrooms. That's what you look for. You don't look for anything else.
That's right, if you want to have a bigger block of land, we might look for a bigger block of land now and think about subdivision down the track. We won't look for anything under whatever, 800, maybe 1,000, council rules. What council are saying, what you can subdivide sizes too.
Phil: Have you sent it in to a particular council area in Brizzie where you're going to be looking, is that this weekend, did you say?
Greta: Next weekend.
Phil: Next weekend, next weekend. Yeah, and any particular area of Brisbane you're looking at?
Greta: I haven't narrowed that down yet.
Phil: You've got a week to work that out?
Greta: Yeah, that's right. Like I'm on holidays.
Phil: Yeah, that's cool.
Greta: Yeah, because I started looking north of Brisbane but I think those areas might already be a bit too pricey for what we're after.
Greta: Because we also have to be mindful of not buying things that are too expensive because then that'll be it. We'll run out of money and not be able to keep going so it's about servicing all your properties and your loans as well.
Phil: How are you going with financing at the moment? Are the banks happy to lend because most investors have had challenges over the last year or so but the read I get on market is banks are starting to, they have a lot more appetite now for investors again. How are you finding that?
Greta: Yeah, I read that. Look, I didn't notice any difference for us. We did switch over to doing interest and principle.
Phil: Okay, to try and get cheaper rates for some.
Greta: Yeah, because at that time when the banks were pooling in.
Phil: Yeah, it can be a percentage point difference between interest only and principle interest.
Greta: Yeah, it was and more I think, though, we're doing so we did do that and that's okay because we're paying off those loans. I mean, that's the goal in the end anyway.
Phil: Paying down the debt. Well, you've got to retire the debt. People talk about it, so, otherwise if you've got a huge portfolio with a lot of debts on it, it's not really helpful.
Greta: Well, that's right. That's right, and so those properties go up and the rent goes up and the line goes down.
Phil: Yeah, is your broker confident that you can continue to secure finances as you go down this path of acquiring your properties?
Greta: Yeah, yeah, yeah. Absolutely. We got a little pool of funds ready for deposits so that's all there ready. He's calling us, "Come on, when's the next one?" Yeah.
Phil: How far down have you drawn on your principlized residence to realise the equity sitting on it? Have you pushed that right back up or is it still a comfortable level for you guys from a debt perspective?
Greta: No, I think it's still okay. It's still fine, we're okay.
Phil: You're conservative but want to keep going pretty hard.
Greta: Yeah. That's right and I think just keep making the right decisions and we can keep going.
Phil: If you go back to yourself, back in time 15 years or so, what will you tell yourself now that you're down the path as a property investor when you were potentially thinking about it back then and not getting it right? What would you do different if you had a time machine?
Greta: Yeah, if I had a time machine I, well, honestly I would've gone into the Real Wealth earlier because ...
Phil: It's about education, essentially.
Greta: Yes, it's about the education. It just keeps you tightly focused on where you're going. It's very easy to keep deviating from your path. Either making a choice, a bad choice. Choosing an area that's not increasing. Choosing an area that's too heavy debted that you can't, then, service the loan or that's all you can do. I guess, two, it's just taking out all the fear, for me. We were always a bit fearful, "What do we do going ahead here," as I said. I think having that education and having ... But also that continued mentoring.
It's great to learn it all and you can come away from those things and you go there's so much more and all those ideas about using your panel of experts, the people that you need. Your broker, your accountant. The depreciation people for your properties. That's great and absolutely essential but the ongoing thing for me is just the real winner as well.
Phil: So many moving parts, isn't it?
Phil: You've got to take control.
Greta: That's right, and we are the ones in control.
Phil: You're happy and confident. What keeps you awake at night when you think about your property portfolio?
Greta: Where next, where next.
Greta: Yeah. Yeah, I don't ever ... I must say I've never thought about that question other than I just keep thinking, "Right, okay."
Phil: You're not moving fast enough, is that the problem?
Greta: Well, I guess I like nailing it. I think that's probably what it is. I haven't thought about it before but it's like, I like ... My husband came home yesterday and I go, "Right, this is what I found out and this is this," and I can ring my mentor and she'll say, "Well consider this as well."
Phil: Cool, nice one Greta. Enjoyed the chat.
Greta: Yeah, thank you.
Phil: Let us know. Keep in touch, let us know how you get on. You're down as four in a year so what it's going to be another four in another year, is that the idea?
Greta: Actually I don't think so. I think this year two, maybe three.
Phil: Okay, two maybe three.
Phil: Well let's check in, in a years time and see how you're going. Enjoyed it.
Phil: Great chat, thank you.
Greta: Thank you.
Phil: If you got any questions at all, if you want to pick Greta's brain. Email the team, I'm happy to answer any questions as well. [email protected] We'll get in touch with you. We've also got Q&A session coming up as well so we try and get through everyone's questions so anything you would like to know about property we'll get them answered by myself and some people I bring to the studio to help me out with that.
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