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...
This episode of the Smart Property Investment show takes us further afield than just the Australian property investment market. Phil Tarrant is joined by co-owner of Myoko Vista Warrick O’Brien who shares how he went from investing in property in Australia to owning and running a ski lodge just two hours from Tokyo.
With Warrick and his wife Louise looking to change their life direction, the pair gave up their corporate jobs in what Warrick refers to as a “midlife crisis” with the intention of combining their passion for the snow and for property investment.
Warrick shares his story of visa complications, the language barrier and what many Australians would consider an unusual business transaction and discusses what it was like renovating in Japan comparative to Australia.
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Announcer: Welcome to The Smart Property Investment Show with your host, Phil Tarrant.
Phil Tarrant: Well, g'day everyone. Thanks for joining us on The Smart Property Investment Show, going to have a bit of fun today. It's an interesting story of an investor who has probably done something very different than, I'd say, most of our listeners at any point in time. It's a lifestyle which I think I could have potentially fallen into myself, had I chosen a different path. We're going to talk about snowboarding today. We're going to talk about ski resorts. We're going to talk about property investing. And I have Warrick O’Brien in the studio to have some fun chatting through this. Warrick, how you going?
Warrick O’Brien: Good, thanks, how are you?
Phil Tarrant: Good. So you're a ski patrol guy. And you transition between Australia and Japan every year, following the snow.
Warrick O’Brien: So, yes. Had a ... what I call my mid-life crisis, in my 30's, and gave up my corporate work and bought a place in Japan and moved across to professional ski patrolling for Thredbo Resort.
Phil Tarrant: Sounds pretty cool. So, I spent a ... Actually, I went to Whistler this year. Our 20 year reunion, pack of blokes that I worked with over there. Back in the late '90s, I was working as a snow board instructor, in my early 20's. I could have stayed and ended up doing that, I think, as a full-time job and I didn't. Now I do what I do and I don't really know what I do but I like the lifestyle, I think it's quite cool.
So, you now just straddle two different continents, being a ski patrol guy. But you've bought a property in Japan, having liquidated your investment properties in Australia to facilitate it. So, I thought ... be a good story for today.
Warrick O’Brien: Yeah, no. That's pretty much spot on. We, my wife and I, were looking to change our life direction. Obviously, we had some investment properties and we didn't want to go backwards or stall. We'd been looking at some form of investment that we could make that would be a bit of a love investment, but still a practical investment. One that we can still move forward financially and economically while maintaining our lifestyle.
So, we looked in America. We'd looked in Canada. We'd looked at other places and considered the ideas of a condo, or other forms of investment like that, that we could do and get a holiday out of it. And we'd done a few trips to Japan and fell in love with the mountains of Japan and an area that wasn't very Westernised yet, but still Western enough that you could get by. Fell in love, started doing some inquiries. Have a friend in Japan who's also a business partner in a coffee shop in Japan. One thing led to another and we ended up buying a disused company lodge over there and turning it into a hotel.
Phil Tarrant: That sounds pretty good. So, whereabouts is it?
Warrick O’Brien: So, Myoko Kogen area, in Niigata. It's a two hour bullet train ride from Tokyo, so it's nice and close. It just ticked all the boxes. Moments of insanity but, at the end of the day, the bottom line, it was a workable investment. It's something that we can combine our passion and get an income. Which are two things you need in life.
Phil Tarrant: So, you mentioned a couple of things here. So, there's obviously lifestyle, and there's also investment. And, when you get both of them side-by-side, I think it's the Holy Grail. So, you bought a disused lodge, hotel ... Do you live in that, sort of, six months of the year when you're in the area? Or, how does that work?
Warrick O’Brien: So, we live on-site when we're there during the winter running. We also have some staff on-site. Then, we use the place in the off-season to go over and do renovations and other business work. Historically until recently, we couldn't stay for more than three months in one go because of visa issues. So, although we had a business in Japan that was registered and a property, we still had to jump and do the visa back and forth. Now that we have Japanese visas, we can stay as long as we want because Louise and I are both residents now.
Phil Tarrant: Okay. That's cool. Tell us a little bit about the property. How many rooms is it? Have they all got their own en suites and showers and stuff?
Warrick O’Brien: The building itself was not unlike a small, double brick, block of flats in Australia. Four stories high, basement, garage, bath house, heating unit downstairs, manager's quarters, lounge room, and then rooms. The building itself was a company lodge, which means it was setup for very much Japanese usage. So, there was a toilet and sink in every room, but that's it. What we've done is we've gone through and renovated the place and put Western bathrooms in. Our penthouse has got a big Western bathroom. We've actually changed the licencing setup of the building for less people, so there's more room, more space. We've gone for Western-style beds. Trying to bring Japanese and Western ... Obviously, we're not Japanese. We never will be. But we're trying to bring the Western comforts in. So, that was an interesting game as well, renovating in a foreign country.
Phil Tarrant: So, your clientele then is Aussies and other Westerners who want to experience the Japanese ski fields, essentially?
Warrick O’Brien: Primarily, yes. And it will almost always be, because Japanese people are often happy to go to where they've been going with their family for years. So, we get some interest from younger Japanese people but, generally speaking, most of our clients are Australian, New Zealand, Canadian, American, and some Europeans. Actually, a surprising amount of Europeans are coming to the area.
Phil Tarrant: It's really popular, Japanese ski fields, particularly for Australians over the last 10 years it's just boomed. I went and did a week in Niseko, sort of five, six years ago, and there's bloody Aussies everywhere. I was trying to get away from them but, you know, we do travel well.
Warrick O’Brien: We travel everywhere in the world.
Phil Tarrant: So, this sounds cool. So, you've gone, "I don't want to do my job anymore. I'm going to go follow a dream," I guess you can call it, with your partner who hasn't joined us today, Louise. So you had some investment properties that you built up here, over time and you just said, "Let's liquidate it and then buy outright ..." pretty much " ... a property in Japan." Is that how it worked?
Warrick O’Brien: So if I drift too far, please let me know, but the Japanese investment structure's a little bit back to front. I'm sure if you've got billions of dollars to throw into the country it would be different, but for us to get our business visas and set up the business, we couldn't approach anybody and ask for finance and ask for help. We actually had to put our money where our mouth is, so to speak. So we had no choice but to sell our property in Australia and move our money over in cash and buy the places outright.
Phil Tarrant: So did you have to walk in with all that cash strapped to your legs, have you any more than 10,000 yen?
Warrick O’Brien: Not far from it. So we had to use a local agent, who was actually our real estate agent and through my friend and business partner in the coffee shop in Japan, we had to sort of work out ways to legally move the money over traceably but it's very much a ... you have to pass the money to Japan, then the money comes out and it was literally a cash transaction.
Phil Tarrant: Okay, like a bag of money?
Warrick O’Brien: The property transaction was done in a bank and the bank manager walked out with all of the money in cash and handed it to me and then I had to hand it to the various parties. Very different to the process of Australia, where it's-
Phil Tarrant: That's quite cool.
Warrick O’Brien: ... it's all done with signatures and that's about it. It was quite daunting having all this cash handed to you.
Phil Tarrant: So you bought the lodge outright?
Warrick O’Brien: Yes.
Phil Tarrant: Okay, so through funds that you realised through liquidating a investment…So what did you have to sell here in Australia, to raise that cash?
Warrick O’Brien: So we sold some townhouses and units that we had that we'd sort of ... Some we'd been living in, some we'd bought as investments to live in and renovate. We'd been doing that typical small investor thing where you buy and renovate a house and you don't buy the house of your dreams, you don't buy the house you want to live in permanently, you buy a property that you can see a potential to caretake and make money off. So we'd done that with a few places and we'd finally found the house that we wanted after 15 years of being together and we also had an investment townhouse, so we sold that and that's how we moved the money to Japan.
Phil Tarrant: So where do you live now? Where's home for you would you say?
Warrick O’Brien: Wherever my suitcase is parked for the night. Four months in Jindabyne, four months to six months in Japan, depending on what I've got to do and then short stints down on the south coast when I can get sunburned.
Phil Tarrant: That sounds ... we're in the wrong job here I reckon, you sound like you've got it right. So renovating property in Japan, I imagine it's quite good fun and a headache, let's touch on that quickly. Beforehand, do you work within the lodge when you're in Japan, or do you actually work on the mountain as a ski patrol guide?
Warrick O’Brien: I work in the lodge. So we have staff and we've been increasing our staff numbers. So we've been getting, basically, younger guys that want to chase the snow to work in the lodge and that's been something that we've done to pull back from the coalface, so to speak, and to be able to put more time into business management systems, procedures-
Phil Tarrant: The product.
Warrick O’Brien: Yeah, we're now out of the treading water stage.
Phil Tarrant: And you've renovated the whole lodge? Or is it sort of a work in progress, each summer you do a little bit more?
Warrick O’Brien: The lodge, although it hadn't been occupied for 10 years-
Phil Tarrant: So was it unoccupied for 10 years, just sitting there?
Warrick O’Brien: Unoccupied for 10-
Phil Tarrant: Did you get it cheap?
Warrick O’Brien: In Japan, the Japanese people think we paid a lot of money for it, but comparatively to what you could get in Australia, you couldn't get one bedroom bedsitter in Sydney.
Phil Tarrant: Oh really? Okay.
Warrick O’Brien: So it's a very different market, and that comes back to what is perceived as value in property in Japan and what is not. There's blocks of land in the centre of town with no real potential to build, you'd be hemmed in on all sides by all the hotels. You'd have the politics of building in the middle of everybody that are worth five times as much as a building on the edge of town which is an operating business. What's valuable and what's not valuable from an investment perspective, which is what we're talking about, the business that we've set up in Japan is not a business that would likely sell in Japan to native investors. It's likely to go to non-domestic Asian investors, or American, Australian investors.
Phil Tarrant: And is that the objective of what you're doing right ... as well as having the lifestyle choice and the flexibility, at a point in time do you think you'll sell the business along with the property? Maybe? Depends?
Warrick O’Brien: Being honest, in investment terms, I think anyone who invests in something would say the same thing, everything is for sale. We haven't found the Holy Grail that we want to hold on to forever. We're extremely happy with it, we enjoy being there, the town's fantastic, the snow is great. Now we've gone through all the hurdles of visas and accounts and bank accounts and registration and everything, it's becoming a lot easier. So, five to 10 year plan is definitely to keep it, run it and establish a very solid set of books behind it, possibly expand as well because we've got the on-ground infrastructure now, we need staff, so it's finding that sweet spot where we can expand a little bit potentially, and not have to over extend ourselves, and utilise what we've got. Vehicles, machinery, staff. So five to 10 years would definitely see us there but if the town goes gangbusters, I wouldn't say I wouldn't sell out.
Phil Tarrant: How many other Western, I think that's the right term to use, how many other Western business owners are there in town, doing what you're doing? Is there cadre of you guys or is it ...?
Warrick O’Brien: We're definitely not the same level as Hakuba or Hokkaido, the North island where you've been, but there is ... I think we're now into 20 Australian business owners in town, from ... I think when we bought our place, we've just gone past the third winter, I think we're about the eighth Australian to buy into town.
Phil Tarrant: Do you all get on? Is there a little Aussie club there and you share knowledge and resources and vent your frustrations, no doubt, as well?
Warrick O’Brien: We do drag out a 44 gallon drum from time to time and have a barbecue in the snow and look like a bunch of idiots, but we definitely do all catch up when we can. Obviously the season itself, so late December through to March, most of us are running around extremely busy and there's a lot of different foreign business models, if you like. There's some people that are very much running your family lodges, so they're in there living with the people, driving them everywhere, being almost like extended family, through to some newer investors that have come through and completely gutted buildings. They've got on-ground shareholders in the business, silent backers, and they're coming in and doing big renovations. So it's changing, who's investing, but there's still a lot of what I'd call more investors that are lifestyle orientated people that have decided to ... instead of the sea change into retirement, you know, sell your city house, buy an investment property and move somewhere cheaper out of the city, they're buying somewhere a couple of hours out of the city in Australia, still spending six months a year here and then putting their investment money, their retirement money, their superannuation, into Japan.
Phil Tarrant: That sounds cool. It's got me sitting here thinking. Maybe it's not for me, not at the moment anyway. What's it like to do business with the Japanese? Is it relatively easy? Having spent like ... My experience of Japan is like a week and I quite like the formality of the Japanese people and there's a lot of respect, I guess, but how does that translate into trying to do business?
Warrick O’Brien: I think ...
Phil Tarrant: Big smile there, by the way, so ...
Warrick O’Brien: It's just, it always makes me laugh. Being honest, you'll never be a Japanese business or business investor, you'll be seen as always a foreigner but you know where you stand. There's no false smiles, there's nothing ... This is a business sale, this is a business transaction and going further into that, every dealing that we've had in Japan has been very transparent, very honest. It is one place that obviously you need to do your checks and balances, and you need to make sure that you're not leaving yourself exposed to risk and liability. You need to have somebody that you trust, or somebody that can translate some of the legal documents and so forth, but Japanese business transactions, or all of the ones that I've had, have been very moral, simple, what you've asked for has been delivered. There's not the same stress, for example, when we negotiated for our property, our agent informed us that the property was still for sale but they were no longer negotiating with anybody else. So there is a very moral and process driven way that things are done so Now that we have our head around it, we find it quite easy to do dealings.
Phil Tarrant: And the real estate agent that you had was a local Japanese real estate agent? Because I remember when I was in Niseko, there was a Hooker or a Ray White. I can't remember, it was one of the big franchise brands. I went out to chat to the guy, it was quite interesting, but you dealt with a local Japanese real estate agent who ... Japanese native speaker but also an English speaker, is that ...?
Warrick O’Brien: He doesn't actually speak English. So we had a translator along for help with that and that was probably the funnest part in the early days, was trying to get questions about, "Who clears the road?" And then having to get that translated and then, "What's this part of the contract say?" And those sorts of things. So there is, in Nagano for example, there are Australian real estate agents now as well and as you've said, near the North island. Luckily we don't have that yet so it makes it even more fun, because it is. It's ...
Phil Tarrant: So there's a question there. Why are you doing this? So you've had a reasonable investment portfolio here in Australia and you've gone, "Stuff this, I'm selling up and I'm going to go chase the dream. "It's probably not the right ... "To chase this new opportunity." and you've gone and done that, and you've done three seasons, three winters, in Japan now, so you're there to stay. Why? Like, why?
Warrick O’Brien: Some might say insanity but it's ... obviously my wife and I, if we stayed in our corporate jobs and continued on the path we were going, we had good momentum, we had good equity and asset under our belts, but there comes a point when you start to wonder, or question, how much do I really need? So like I said at the start of our chat, we want to keep moving forward, we don't want to move into retirement and eat into our assets and our investment and cash, but this was a good opportunity to slow our earnings, so to speak, but grow a business, grow something that we were doing for ourselves while still enjoying the lifestyle that we wanted and actually being able to combine one of our passions with investing and running our own business.
Phil Tarrant: And your wife, Louise? Wife?
Warrick O’Brien: Yes.
Phil Tarrant: Is she a snowboarder? Skier?
Warrick O’Brien: Snowboarder as well.
Phil Tarrant: Alright, so you're a snowboarder, who's a better snowboarder? About the same? You must be pretty good now, right? You were ski patrol, so you're pretty handy.
Warrick O’Brien: On the grounds that this could get me in trouble, I'm going to choose to skip this one.
Phil Tarrant: So you had a passion for snowboarding.
Warrick O’Brien: Yes.
Phil Tarrant: I quite like snowboarding, I've got about five runs in a morning in me and then I'm straight to the bar, but that's the way I like to roll. Do you get much time on the mountain when you're actually in Japan, or you're too busy, sort of cleaning the snow and stuff?
Warrick O’Brien: If my staff listen to this podcast, they might get a little bit annoyed, but we do look at the weather forecast constantly and ...
Phil Tarrant: You base work around ...
Warrick O’Brien: ... make our rosters fit to get us into the best snow that we can.
Phil Tarrant: That's great.
Warrick O’Brien: We have the luxury too of ... part of our business model was providing a level of service that nobody in town's really providing. So a little bit more towards a concierge service, so we try to get our guests into the best snow. So what that means is that we have to take them there.
Phil Tarrant: Oh, that's just going above and beyond.
Warrick O’Brien: There's method to the madness. We are definitely there to enjoy the snow, so we do try to get out as much as possible.
Phil Tarrant: What's the snow like where you are? I know Japan belts down, but you get big dumps in your village?
Warrick O’Brien: This is like asking what the surf's like at our secret point break.
Phil Tarrant: Should have been here yesterday.
Warrick O’Brien: Officially it's terrible, don't come. It's ...
Phil Tarrant: It's pretty good right?
Warrick O’Brien: Yeah, we get a lot of snow. The season just gone was 14 metres. The year before was a light one at nine, before that it was 16. We've had 26 metres of cumulative snowfall, few years ago. So, good snow, regular snow, so as a business owner, you can pick and choose, sneak out for a couple of hours and when you're there for four months, you don't need to do the eight hour full days to get your money's worth, so to speak. You go out, cherry pick the best of the day, get a few runs in, come home.
Phil Tarrant: So what's your job then? When you're not on the mountain, being a great host to your guests and finding the best powder for them, what do you do? What's your job?
Warrick O’Brien: Herding people around to get them what they want, helping people have that experience that we've spent time chasing. By the concierge side of things, you're trying to get people into Japan. Part of why we like the town is because it's not overrun with Westerners, so you're trying to push people. You encourage the Aussie family that can't dream of the idea of going and having an onsen and being naked in front of a whole lot of strangers, you're trying to encourage Australian guests and foreign guests to try something different. Try a culture they haven't stepped into, experience something that they haven't experienced. So it can be as simple as driving people places, taking them out to the ski fields, helping people when they get injured, taking them down to the local physiotherapist. Helping cook breakfast, shovelling snow, paying bills, dealing with something that's broken. So it's everything from handyman work through to management. Luckily I get to pass the marketing side of things to my wife, so she does the photography and the social media side of things, dealing with emails, problem shooting, dealing with staff. So you're everything, if that makes sense?
Phil Tarrant: But you've sort of delineated the key things that you guys look after, which is important. I know we're running out of time here, but take me through renovating in Japan. Have you renovated in Australia beforehand?
Warrick O’Brien: Yes.
Phil Tarrant: Okay, what's the biggest difference between doing it here in Australia versus renovating, and I imagine doing some reasonable structural stuff, seeing that you've done new bathrooms and whatnot?
Warrick O’Brien: Trades in Japan are very defined. For example, we had to put penetrations through the floor to run new gas and water lines and things like that. The plumber didn't want to do that, he was of the impression that was demolition work. He didn't want to take his liability there, he didn't want to step outside his comfort zone. He normally works with a demolition guy, so he will bring a guy in, he will concrete, core a hole, and then he will come in and plumb. So we stepped up and did a lot of that, whereas in Australia, bang, bang, bang. Also, Japanese people do not want to do bigger jobs on hourly, they will always quote, very detailed quoting, so you can't just call the local plumber up and say, "Hey, can you drop in for an hour or two?"
Phil Tarrant: Fix some stuff.
Warrick O’Brien: "Fix a couple of things for me and just send me an invoice or I'll pay you on the spot." He'll come out and quote. The work is always done extremely well, everything's finished well, there's a lot of time taken in how things are done, there's a lot of pride in work but there is also a speed at which people work. You can't push and say, "I'll pay you a bonus." Or, "We'll give you a bit more money." Or, "Can you hurry this up?" No, this job's going to take two to three weeks, it will take two to three weeks. It's unusual to get anybody to do overtime, or to really push but like I said, you get what you pay for, the work is well defined. Again, you don't have to worry about trades and Japanese renovations. Some things are easier to do yourself. DIY isn't a big thing in Japan, so sometimes getting the materials is difficult.
Phil Tarrant: Okay, there's no Bunnings in ...
Warrick O’Brien: There is recently a chain of stores that are like a Bunnings that have a lot of stuff, but the DIY thing in Japan is definitely a long way behind. The Japanese people that we had through our place would walk in in the morning and often look at the work we'd done overnight and laugh. As we did a lot of the tiling ourselves and we hand poured seven and a half tonnes of concrete to bring up our floor levels to get drainage in and our plumber would walk around each morning with wide eyes, just looking at what we'd achieved overnight. "Wow." We heard that a lot, "Wow."
Phil Tarrant: Yeah, that's cool, sounds like it's a good experience, you're enjoying it, you know?
Warrick O’Brien: It's getting better, I'm getting a chance to enjoy it now.
Phil Tarrant: So it's been hard has it? Would you say, yeah? More difficult than you thought?
Warrick O’Brien: No, we didn't go into it naively. When you're still renovating, you've got an operating hotel, you're working 18, 20 hours a day, you're up in the morning putting your smile on for the guests, you're helping with the morning shuttles and someone's boot's broken, you're finding a shop to get it fixed, all the while thinking about the next job you've got to do, how long the paint's going to take to set, when the next guest's due. So we were very much in a transition, our first season, when we're renovating while we were operating and that was crazy, long days. So that's why I say now we're getting to enjoy the fruit of labour. It's a lot more controlled, the amount of work we're doing and the stress levels.
Phil Tarrant: You'd do it all again?
Warrick O’Brien: I'd be surprised if I don't.
Phil Tarrant: Sounds like you are. So any more opportunities pop up, you'd be buying up half the town and filling it full of Aussie skiers and snowboarders, I don't know if that's a good thing or a bad thing. I've been skiing in Japan, go and do it, it's cool. It's really, really interesting culture, really interesting people, food is great and it's a real experience. So, Warrick mate, I really enjoyed you sharing your journey from ... I think a lot of people listen to this and say, "That sounds pretty cool." And a lot of people dream these type of scenarios but it's ... hat off to you that you've gone out there and gone, "Stuff it, I'm going to do this." So mate, keep at it and keep enjoying it and I might even come out and check it out. Sounds pretty cool.
Warrick O’Brien: Check with me in five years and see if I'm still smiling.
Phil Tarrant: We might do that, we'll bring you back in and see if you're still happy. So you're in a bit of a grey zone right now, so the ski season's ... it's now April, ski season's finished in Japan and there was dump, actually two days ago, I heard, down in Thredbo, which is cool but it was still a good two months off the start of the season. Is that right? Mid July?
Warrick O’Brien: Yeah.
Phil Tarrant: Yeah. What's your prediction? It's going to be a bumpy year? There was a fair bit of snow late season last year. Don't know?
Warrick O’Brien: It could get better, it could get worse, it could stay the same. How about you ask me in October?
Phil Tarrant: Cool, what do you think about investing in Jindabyne as a property investors?
Warrick O’Brien: The new gondola's forecast for Thredbo, Perisher's been purchased by Vail. I think, long-term I don't think it's a bad investment, but being honest, I think there's better places to invest in Australia if you're looking for something. I think there's a lot of coastal areas that are still quite cheap compared to the cities. I think if you're living out there it's a no-brainer but as an investment, I think there's other places that you could go that would probably be better bang for buck.
Phil Tarrant: Yeah, I'd probably agree with you there. It's how you make your money work for you. But you're fortunate, you're balancing investing with lifestyle and business, so sounds cool.
Warrick O’Brien: Like I said, ask me in five years, see if I'm still smiling?
Phil Tarrant: We'll do that. Nice one Warrick, appreciate it mate. Any questions at all, email the team [email protected] whether it's for Warrick or for me, or anything we've spoken about today, I'm happy to give you some more info if you're not subscribing yet to Smart Property Investment, it's smartpropertyinvestment.com.au/subscribe, first to know what's going on in property investment, making sure that you receive an update every time we do a new podcast. If you like getting your info from social media, just search Smart Property HQ across all the different platforms, you can like us and follow us and keep connected with what we're doing and please keep those reviews coming on iTunes. If you're listening to it right now, you can probably just press a button for the five stars, and we do appreciate the feedback. We'll be back again next time. Until then, bye bye.
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