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...
The Property Mentors’ Matthew Bateman and Luke Harris don’t consider themselves to be in the real estate business. Instead they consider themselves to be in the business of changing lives.
Having recently released their book “Let’s Get Real”, Matthew and Luke catch up with host Phil Tarrant to share what they believe makes them experts in property. They will give an overview of their book and discuss what makes it different to other reads that are currently available to property investors.
The pair will also share what they believe is stopping investors from getting the results that they are trying to receive, and give details on how to spot the “bad guys” in the industry while protecting yourself from bad investment decisions.
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 Tarrant: G'day everyone, how you going? Thanks for joining us on the Smart Property Investment Show. Great to have you on board as we discover and navigate our way through this thing called property investment. If you're new to the show, welcome, I hope you enjoy. We pretty much just tell stories of what investors are up to, how they go about doing it and often we actually get some people within industry to come and have a chat on the show as well to tell us what they're up to and share their vision, their insights, and their knowledge on how you can make better informed investment decisions. Today a couple of guys in the studio, you might know them, Luke Harris and Matthew Bateman. They're from the Property Mentors. Guys, how you going?
Matthew Bateman: Really good, thanks for having us.
Phil Tarrant: Luke, can you say something so we know who you are.
Luke Harris: Luke here.
Phil Tarrant: Okay and then Matt.
Matthew Bateman: Welcome.
Phil Tarrant: Okay, they sort of sound the same, but different. Welcome, it's their first time on the show, so I've been looking forward to having a chat with you guys, but it's not the first podcast you've done today, is it? Where else have you guys been?
Matthew Bateman: Well we've been around the trap, we're up in Sydney, our base is Melbourne, but obviously with the success of the book and we're getting a lot of media opportunities to go out and really share the message of what The Property Mentors is all about and what we do and why we do it and having a lot of fun doing it.
Phil Tarrant: Before we came on here, you mentioned that you were on Mark Bouris’ show The Mentor. Good show. I don't mind a bit of cross promotion. Go and tune in to it. I enjoy the way that guy goes about his line of questioning and he can often be hard and also be quite soft.
Matthew Bateman: Absolutely.
Phil Tarrant: What's the curliest question he asked you today, Luke?
Luke Harris: The emotional side of
Matthew Bateman: The emotional side of investing.
Luke Harris: More around the owner occupies side of things. Why the owner occupies are buying emotionally rather than buying logically.
Phil Tarrant: Okay, that's a pretty important theme, right? A lot of people or property investors get that wrong when they buy with the heart rather than I guess dollars and sense. Well cents being C-E-N-T-S AND S-E-N-S-E. I imagine that's what you guys are trying to do with this book that you've got. I've got a copy here in front of me, Let's Get Real, discover the reasons most Australian property investors fail to get the results they desire by Luke Harris and Matthew Bateman, available at all good bookstores. I'm sure. I don't mind giving you guys a quick plug. A lot of property investment books out there, why should I read this one?
Matthew Bateman: Well, my personal belief, and again I'm going to be biased here, but I guess maybe give you the background on why we wrote the book. We've been working with members for a long time and a lot of them have asked us to put down on paper like what we do, why we do it and how we do it, so when Luke and I first started the business, we sort of sat down and sort of reconstructed the whole property investment space, because as long term I investors ourselves, I've been investing now for 20 years in property. Luke bought his first property at 20 years of age. We've done pretty much all the strategies that are out there. Luke, how many renovations have you done now?
Luke Harris: 13 renovations now.
Matthew Bateman: Yeah, I'm up to number eight.
Luke Harris: Started young.
Matthew Bateman: Yeah, so you've done a few more than I but we've both done things like small scale subdivision, larger scale development, our development pipeline at the moment is sitting at about $150 million. Over the journey we've learned a thing or two and the people that asked us to write this book was really saying "What do we need to know to get the sort of results you guys are able to achieve and enjoy now?" When we sort of sat down and thought about it, we said, well there's plenty of books on the shelves that will talk probably about the how to of investing, how to do property research or due diligence. Now I won't argue that some of those books are great, some of them are average and some of them are actually probably sending you down the wrong path.
There's no shortage of information on the planet. We didn't want to certainly, bog down the internet and everything else that's out there with more information just for information's sake. We said, "What's stopping investors from really getting the types of results that they want to achieve?" Luke, you might want to explain that a little bit more, about the biggest planning folly that most people go through.
Luke Harris: Look, it's come all through our own experience in investing ourselves, is that we realise that we've been investing for a number of years and getting a particular result. Haven't got good or bad results, as such, I've made money in property, Matt made money in property, but most investors haven't actually identified why they're investing in the first place. Everybody wants to make money and the common question we ask, "What are you trying to achieve through your property investing?" Most people put their hand up and say they want ten properties in ten years with $100,000 passive income. That's the standard default response. What we worked out is that most investors haven't actually identified specifically what they're trying to achieve for their own circumstances.
Everyone's got different goals, everyone's getting up and going to work every day and they're out there investing for a particular reason and most people, most adults have never actually taken the time to sit down and write down exactly what they're trying to achieve. When we wrote the book it was all about what does each individual investor want, rather than trying to fit everybody into a cookie cutter type system and let's work backwards from the end, point B position they're trying to achieve right back to where you're at today.
Phil Tarrant: Okay, and one of the objectives of today's podcasts, I want to draw down on some of the content of the book, but before we get there, what's your story? How did you guys end up writing a book together, and I imagine being in business together? How did that happen?
Matthew Bateman: Well, I guess let's start at the beginning. I'm from Sydney originally, so I've been in Melbourne for the last 15 odd years. Grew up here in the southern suburbs of Sydney, went to a pretty typical public school for Sydney, went on, found the actual academic side of school not too challenging, so I thought I better use my brain and I went and did a couple university degrees. Ended up graduating as a chiropractor, went out and started running health and wellness businesses, started generating some profit from those businesses and as most people do, you go well what do I do next? So I invest. Unfortunately, I learned a few hard lessons early on in my investment career.
I probably sucked as an investor, because despite having obviously multiple degrees and being, let's call it educated, what I wasn't was educated in the property space, and not just property. I threw money at shares, I went into exploratory gold mining, multi-level marketing businesses, anything shiny, bright, promises of..
Phil Tarrant: You were that guy, were you?
Matthew Bateman: I was that guy. Took me awhile to learn through the school of hard knocks that if you want to do something and do it right, you've got to have a plan. That was really, after a number of years of losing money and time, I actually sat down and said, "You've got to do something different and what is that difference?" I made a really big commitment to my education, so I spent, over the last 20 years, I've spent in excess of probably a quarter of a million dollars on reading other people's books and DVD courses. Back in the day they were video tapes and even cassette tapes. I've still got that stuff in storage somewhere.
I ended up buying a shipping container to put all the stuff in because I've spent a lot of money and a lot of time attending events and trying to really educate myself in these areas and become an expert and a specialist to be able to present the information that we present to you today. Obviously along that journey, got to a point where I decided to take the business profits and reinvest them into real estate and was fortunate that obviously property has been a pretty forgiving mistress, largely. I haven't lost a huge amount in property.
I've lost some money chasing, again, shiny get rich quick type schemes in property, but the properties that I've just bought that are good quality assets in good areas with good growth prospects have done really well, helped me build a multimillion dollar portfolio. Got to the stage where my businesses were going well and I sold them off and did what most people do. You get to that nirvana called retirement and then you find there's only so much golf and sitting on a beach you can do before your brain gets engaged again and you want to do something.
I guess, part of this book also is really giving back to the community, in that you can go out and try and do what I did and learn all the lessons yourself and take the time and spend the money to do it, or you can leverage off people that have already gone out and done it and are happy to come back and share what they've done and what they've learned. Really for me, the emotional rewards of helping other people get their own success on track and get their own portfolios being built, is really what drives us at the moment.
Phil Tarrant: When did your two paths collide then? How did that happen?
Luke Harris: Yeah look, my background in the electronic security industry, I started, left school and started my first business at 19, bought my first property at 20 and then I built my portfolio during my 20s. I did renovations and subdivisions and unit developments and went through this process until I got to 30, where I sold my second business, which was in Melbourne. I grew up inand moved to Melbourne. Sold the business, sold the property and then during this 18 month mini retirement that I had, again, sitting on the beach, travelling the world, went to Europe, went to South America, came back from that and met Matt. We actually had a lot in common.
We'd been through the same sort of journey, I'm a little bit younger than Matt, but been through the same sort of journey going out there and investing in property, had really good results but we got chatting about the types of events and the books and the seminars and all the things that are out there that investors can assess to try and make their financial decisions. We realised that our journeys had been pretty similar in that there wasn't anybody really out there to hold your hand through the entire journey. There were people who will teach you renovation strategies and they're good at what they do, people that will teach you how to do a development.
There's people that will teach you how to do various components of property investing and I remember reading all of the books. I remember all of the books when I was 16, 17 and reading Robert Kiasaki and all of these things, but what we realised was there was nobody really to talk about the Australian property market and how to actually set out a plan. What we did is, we actually really sat down and got along really well and stripped back the entire property industry and worked out what works in the industry for the end buyer, for the investor and what works really well for the sales companies that are on the other side of making huge commissions.
We realised that there's a win/win situation that can be arranged in the middle there and that's how we really put the business together, is that not all businesses have to be a win/lose. Any good business is a win/win. That's where we set up the Property Mentors, really to get that win/win relationship happening so that the investor gets a win and the business gets a win as well.
Phil Tarrant: The question then is, what do you guys do? What business are you in? Is it property investment or are you in a different sort of business?
Matthew Bateman: That's actually a good question. I would argue no, we're probably not in property investment. Property is just a vehicle, so what we're in is the business probably of changing lives. The way we do it is that we've got a lot of skill and experience and networks and resources in the property space, so we use that as one of our primary vehicles, primary assets, to get the result. Now, ultimately the way we look at it is that every single person that we work with has got some sort of dream, goal or vision for their life and they're either moving towards that and are going to achieve that or they're not moving towards it and they may never achieve it.
If we can come on board and partner up with them and share that journey with them, then hopefully we can help them get there safer, faster and more predictably than if they go out and try and recreate the wheel, if you like, and try and learn everything we've already learned. It's really just about taking that journey with us and the value proposition for our business is, if you can't see that you can get a bigger win working with us than working on your own, then don't work with us. We're okay with that.
Phil Tarrant: If you had to crystallise in a sentence or so your view of property, how you see property, the strategy somebody needs to take in order to be successful creating wealth through property, what is it?
Luke Harris: I guess the strategy for getting the best results in property is to get a really good understanding of your point A position, which is where you're at right now and how you got there. See, a lot of people just get some money together through equity or whatever it might be and they go out and they start investing. If you've got a really good understanding of how you handle money and how you got to this position, how did you end up with $30,000 in credit card debt? How did you end up paying, fixing your interest rates when they were eight percent? How did you get to this position where you're at right now?
When you get a clear understanding of your point A position and you work out your point B position, what are you actually trying to invest for, whether it's for retirement or whether it's just to get a cleaner in once a week or whether it's to have a new car or a holiday, whatever it might be, once you've got a clear understanding of your point B position, then you can bridge the gap between your point A and your point B position. Most investors don't take the time to really understand where they're at right now and how they even got there. They might get some equity or they might come into an inheritance or whatever it might be and they go out there in the marketplace and they start looking at property.
We go to barbecues and they say, "Where's the best place to invest? Luke, where's the best place to invest?"
Phil Tarrant: I imagine there's a bit of a journey for you guys putting this book together and you work together, so you know each other well, is there anyway you fundamentally disagree when it comes to property?
Matthew Bateman: Not yet.
Luke Harris: Not really.
Matthew Bateman: I think, if I can, one of the things that's really powerful is that Luke and I are very different people. We're not the odd couple but we've got different skill sets and I think, and I've been through a number of business relationships and I've had good ones, bad ones and average ones. The reason I like working with Luke is that we compliment each other, so the skills and things that he does, I don't necessarily have those skills or the desires to want to do those and vice versa. We've got enormous trust in each other, that we can rely on each other to do those components of the business. This is the thing, as an individual property investor, do you really have the time and resources to go and do everything yourself?
Can you become an accountant, financial planner, a mortgage broker or a quantity surveyor, a property manager? Do you have time and the energy and even the desire to want to go and learn to become an expert in all those areas or at some point are you going to use the power of other people's experience and time and money to actually get the result that you want? That's really where we were as a business team, I think, is that we compliment each other brilliantly.
Phil Tarrant: How long have you guys been doing this?
Luke Harris: Started the business 2014.
Phil Tarrant: Okay.
Luke Harris: How long we've been doing this as in…probably I would say since I was 20, I bought my first property. I was talking to all my mates in Perth, everyone, you need to buy a property, you need to buy a property and this is when Perth prices, four bedroom house near the beach was $157,000, which is my first property. I've been doing this my whole life, really, to help people. I don't know if you look back at the even earlier years when I came home from school one day and I was tearing up the bathroom. Mom and dad were at work and I was tearing up the bathroom, doing my first renovation as a 12 year old because I didn't like the blue tiles. Mom and dad love that story.
We finally did the renovation a few years later when they had the money to do it, but I guess property's always been in my blood and probably always will be. I think the power for helping friends and family during my 20s to get into their property. I've got a friend in Perth, one of their goals was just to pay off their own home, and got them into a couple of properties and they sold them now but through that process they paid off their mortgage in their early 30s.
Phil Tarrant: It all comes down to goal setting, but do you think you need to be a sophisticated investor, have a large portfolio in order to help other people be good at doing it?
Matthew Bateman: I'd say it's an advantage to at least have the runs on the board. It's like any coaching role, do you need to have been a star athlete to be able to coach a athlete yourself? Look, chances are it's not an absolute requirement, but obviously it helps.
Phil Tarrant: I guess the question then is, you may have some scar tissue, right, like any investor today.
Matthew Bateman: I think you need some experience and I think you need some runs on the board and you need to have seen the good, the bad and the ugly of the industry from both sides of the fence, and that's what we've done. As Luke mentioned earlier, when we started the business, because we didn't have to work. We said, well we enjoy what we're doing and we're both pretty much doing parallel things. We're both on the same rail track, just he's on the left one, I'm on the right one. We're both helping friends and family to move into the space, why don't we do it as a business? If we're going to do it as a business, what should the business look like and that's really where we stripped it all back and started from the ground up, put the things in there that we thought were appropriate.
Again, we asked the question, if we were starting out again, what sort of support and guidance would we want to have access to and what sort of opportunities would we want to have access to? You mentioned sophisticated investors, obviously sophisticated investors by and large get access to some opportunities that individual investors may never see. What we've tried to do is, we've tried to bring, let's call it sophisticated type strategies to our audience and to our members so that they can get better results. As I said, everything we do, we say can we do it safer, can we do it faster, and can we do it more predictably. That sort of, I guess, is the fundamental focus for the business moving forward.
Phil Tarrant: Is it a challenging industry, property investment, because it's not really regulated on one hand, and you talk about the good, bad and ugly and there's a lot and ugly in this property investment space, right? What's your view on that? Is it more good than bad and ugly or is this one for you, Luke?
Luke Harris: Look, we refer to that in the book.
Phil Tarrant: Oh do you? There you go. I haven't read the book yet…
Luke Harris: I know you've only had it an hour, so we'll forgive you that. We've actually put a section in the book about sharks and cowboys.
Phil Tarrant: Okay.
Luke Harris: Because we've actually been there, so we thought who are the good guys and the bad guys out there and there's plenty of good people out there in the property investment space, don't get us wrong, but we've seen the sharks and the cowboys out there. The sharks are circling around, looking for somebody that's got some money ready to invest and they'll get a bite when they feel it suits them to get a quick sale and a quick commission. Then there's obviously the cowboys who are blatantly going out there, flogging anything and everything and we've seen a lot of those in the newspapers in the last few years. If you scroll back to the early 2000s, there were quite a few more of them, a few names that we won't mention, but the sharks and cowboys are really out there and they come and go. In any property cycle you'll see them come and go.
Phil Tarrant: How do you spot them there? What's the key to spotting the bad guys?
Luke Harris: I guess it's the big old get rich quick scheme. You'll make big riches and his big returns and his huge percentage returns and I think the main thing is they have events, seminars and events, a lot of these people run these big high, not high pressure necessarily, but they're hyped up events. People standing on chairs and patting each other on the back and jumping off the, we've seen all of that stuff and as an early teenager and early 20s I got excited about that stuff. I thought, "Wow, this is really cool."
Phil Tarrant: Is that where you go to the back of the room and sign up for..
Luke Harris: Rush to the back of the room…That's where the sharks and the cowboys terminology really came from. We've got a nice image in there of a cowboy riding a shark in the book. Really for us, as long term property investors ourselves, when we set up the Property Mentors business our focus and our view for this business is to create a long term relationship with our members. It's not for us to be getting in and making a quick buck and getting out. We've already made money in property and we continue to do so. We want to be able to share that with each of our members. The more members we have in our system, the better we can negotiate and the bigger deals that we can put together for everybody involved. It is a true win/win, and as Matt mentioned before, if people can't see the win/win in what we do, don't work with us.
Phil Tarrant: There you go. Page 181 is the cowboy riding a shark. Get rich quick mentor tip, accountants property seminars, books, home study course and marketing companies posing as investment businesses. In the 21st century there are a lot of scams that you need to be careful of. Just Google and find out at that point. Let's look at some of this stuff in the book. Looking at the contents page, I've underlined a couple of things. There's a big thing about why you're talking about really on. Is that like the why you invest in property, or why you're even thinking about this? What's the why?
Luke Harris: Ultimately the why is going to give you your motivation. See right now, everyone that's listening to this, they got up this morning but was there a reason they got up? Was it really that they got up excited about the day and all the prospects of the day has or did they just get up and they're just going through the motions? They're shaving the same way, they start on the right and they finish on the left and then they have breakfast and they have the same breakfast and they hop in the car and they drive the same distance to work. They're doing all the same things day in day out. Now that's fine, as long as they understand that there's a reason that they're doing it.
Most people are going through life with what I call the blinkers on and they're just performing, whereas what we're saying is if you can get clear as to why you're doing something and you can really identify the emotional factors that are going to give you that juju juice or that extra motivation you're going to be more excited, you're going to get more done, you're going to get better results and so for us, it's really about focusing on why you're doing all of this in the first place, because if we can maintain a focus on the why, then all the stuff that comes later, the property selection, the due diligence, and the research and all the, let's call it work that you have to do, it's going to be much easier to go through that process if you've got a clear target as to what you're aiming for.
Phil Tarrant: Then you've got after, sort of working on what your why is and interesting choice of word, you've got rediscovering your why rather than discovering your why. Do most people sort of know what they're doing and they've got to resort it out?
Luke Harris: I guess if you know anyone that's got kids, you talk to the kids, what do you want to be when you grow up and they all want to be a fireman, or want to be an astronaut and everyone's got big goals and dreams when they're a kid because there's no limits on what they can do. Then as you get older and you become into your high school years and you get beaten up a few times or whatever happens in your, so start bringing your world a little bit smaller and as you get into your first job and your boss yells at you and you start minimising your goals because you think I can't do that, I can't do that.
I think rediscovering it is actually really looking at the big picture again, getting in the helicopter, doing the helicopter view, looking back down at your life and saying why am I actually here? We're on this planet one time, why am I actually here in the first place and what do I really want to do with my life? What happens, and I realised this very quickly because I'm 37 now and I realised very quickly when I turned 30, my 20s are gone and very quickly my 30s are going to be gone, very quickly your 40s and you don't get them back. I think as you start seeing your family get older and my family is over in WA, mom and dad, so I don't see them as often. Every time you see them you think, wow, they're getting a little bit older.
You just realise that your time you can't get back. You can always make more money, but you can't get the time back. Rather than wait until you're 67 and look in your account and see if you've got enough money to retire, start planning for it now. The more you can plan for it, the more you can get ahead in the younger year, the more compounding growth that you can get for your future.
Phil Tarrant: Matt, I should have asked you, you're okay with Matt…is he precious Luke?
Matthew Bateman: Not overly precious. I've called him worse.
Phil Tarrant: I'll go through the content here, because it's quite interesting. Chapter five here, what type of investor are you and I've spoken about this before, everyone's different but you've, and I'm just skimming here, but you frame this as the wanna be investor, and everyone knows them, the frugal investor, that could me. The I'll try everything at the buffet investor, yep. The impatient investor, lots of them. The burnt or heavily singed investor, lots of them out there. The cynical investor, the been there/done that investor, the aha investor and the arm chair] investor. A lot of investors there. They're all a bit sort of negative. There's not a lot of positive in here, Matt.
Matthew Bateman: No, there's a couple positives there towards the end. Basically what we're doing is going through a list of what we have seen typically over a long period of time working with thousands of investors and really this is a general classification. When you read this you'll see parts of yourself maybe in one or two or three of the descriptions and it's not there to try and generalise everyone. It's just to try and bring focus and awareness to what type of investor you are now and then more importantly, what type of investor do you actually want to become.
Phil Tarrant: It's all about mindset, right? I know you get into that in the second part of the book but you've really loaded the front into being quite a soul searching type of thing, so actually being in tune with who you are and why you're doing stuff and how you, and I hard mark myself quite a lot, all the time, I'm a very reflective type in that way. I think a lot of people do that. It looks like you've gone essentially three parts of the book, the first two parts are about getting your head sorted out and the last bit's about okay, now you're getting to the property bit. Do you think it's normally cart before the horse, that's how most people go into stuff, right? Then they get back and they might have a big portfolio and go, okay, let's start thinking about this a little bit more philosophical?
Matthew Bateman: Yeah, I think it's not even that they need to build a big portfolio to start thinking about it. For what we've seen historically, I mean, classic example is this, you go to a barbecue and they say what do you do? You meet someone for the first time at a dinner, what do you guys do. What I say is, I just say I help other people make bucket loads of money in the property investment space. it's short and sweet. What it does is, it opens up a question because normally the very next question is oh, because they're either going to be really interested in property investing or they're not, so it opens a conversation or it shuts it down. If they're open the very next question we normally always get is, so where should I be buying next?
Phil Tarrant: Where's the next hot spot?
Matthew Bateman: Yeah. Look, it's not…It's not a bad question, it's just for us it's a process and a decision that should come a little bit later down the track. The first question we'll ask is, "Well why are you investing in the first place? What's the goal of your investments?" Because property is just a vehicle and we'll say this again and again. Property is just a vehicle. It's one asset class amongst others. You've got shares, you've got gold, rare art, coins, collectibles, bit coin if you want to invest in that sort of stuff. There's plenty of different ways to generate wealth in your life. What we try and do is take something that's relatively complex in terms of, obviously, all the macro economic stuff.
You're looking at interest rates and inflation and exchange rates and all that sort of stuff but we try and make what's complex and try and bring it back to, I think it was Einstein that said if you can't explain it to a kindergarten student, you don't know it yourself. Trying to bring wealth creation back to a really basic level and for us it's this, why are you investing, what's the long term outcome you're trying to achieve and then it's a matter of finding the opportunities that will help you best fit that outcome. That's why the where question's important, but we start with the why, the how, the when, because you may not be ready to invest. Just because you've got some dollars in your pocket, we don't recommend you go and just throw them at the first property you see.
Luke Harris: This is the name of the book, came out through obviously the first few years of running our business and working with people. We've spoken to literally thousands of people to come up with this book. The title of the book, Let's Get Real is really around a combination of all of those conversations where a lot of people and myself included and a lot of people, friends and family, were a little bit delusional really, drifting through life and investing in this and that and kind of hoping it works, going to work every day and paying the bills but not actually having a clear plan.
When we titled the book Let's Get Real, it was about to get the real results that you're after and to get long term sustainable wealth, you need to get real with your situation and have a real understanding of what you're trying to achieve. Once you've got that clarity, the decisions that you make in your investing becomes so much clearer. There's a lot of people, myself included, I was going out there, I was doing renovations because I was reading everything in the newspapers. I was reading books and magazines and going to seminars and reading all the things out there and I was trying to find out what's going to work for me, because everyone said, I was reading the Steve McKnight book, Zero to 130 Properties.
I thought, well if he can get 130, surely I can get ten or twenty, they're only 40 grand each, so I could just go and get as many as I could. I was going out there and doing what a lot of people do, is they're looking for the silver bullet that's going to help them build wealth. If most investors just bought one property every five or ten years, starting in your 20s, buy another one in your 30s, another one in your 40s and just stuck to that plan, most people would be retiring extremely well, comfortably.
Matthew Bateman: You said the genesis of this book is working with people, right? You use a sporting analogy, we sort of touched on before hand, there's a lot of really exceptional sports people around but they're not very coachable, right? They might be great and talented and stuff but they might be a bit of a knob, they don't want to take advice and all that sort of stuff. I imagine you guys see this as well. You talk about being reflective and understanding the way that you're wired and the way you work and the first couple chapters in your book deals with that, but how can you, as a property investor, how can you be coachable? How can you be able to be able to change the way you do stuff based on the information that you receive?
Luke Harris: It's an interesting question. I think the main thing, as a property investor you've got to be understanding of the fact that you don't know everything. You don't know what you don't know. As Matt alluded to before, I'm not an expert in finance. I know enough about finance so that I can have a really good conversation with my mortgage broker. I'm not an accounting expert and I don't want to be, but I know enough to talk to my accountant about structures and tax planning and things like that. I think the main thing as a property investor, if you want to get high level results, you're going to have to get your education up to a high level.
If you want your property investing to be a hobby, by all means go and do a renovation every couple years and treat it as a hobby, but you'll get the results of somebody that's running a hobby. To step up to the next level, you need to increase your education and get an expert team around you.
Matthew Bateman: Look, I mean, that's a good analogy, sports because my background, as a chiropractor I actually went through three different Olympic campaigns, worked one on one with a whole range of Australia's best athletes in the pool and on the rugby field and cricket and boxing and a whole range of sports, so rowing, etc. I know a thing or two also about elite level of performance and the mindset that's behind elite level performance. It doesn't matter whether it's sport, whether it's business, whether it's health, whether it's relationships, at the end of the day if you want to get to the top echelons or to the top levels in any area, it's a conscious decision.
Sure you want to have some motivation, sure you want to have some bare bones talent, but then yeah, you do want to be coachable, you want to put your hand up and say hey, this is where I want to go and you want to have as many people who's shoulders you can stand on to get there sooner. That's what great sports people do. They don't, it's not one person, sure they might be ultimately responsible for diving into the pool and doing the 50 metre splash, but ultimately behind them there's a whole raft of people. There's the Australian Institute of Sport, state level institutes of sports, there's coaches that they have that have helped them through their journey from junior level all the way through to senior.
There's support staff, there's chiropractors, physios, strength and conditioning coaches. There's a huge team that sits behind anybody that's performing at a high level. I mean, you can't perform at the highest level and just say I can do it all on my own.
Phil Tarrant: I completely agree with that. Do you have a lot of people that connected with you guys, you just go I don't want to deal with this person, they're just not coachable, to use that term?
Luke Harris: I wouldn't say a lot of people.
Phil Tarrant: That happens.
Luke Harris: From time to time there is people out there that say, "I want to do it all on my own," and we let them. We're still going to be here and I think that's the cool thing about what we do, is that Matt and I are making money in property anyway.
Phil Tarrant: So you guys are making money as property investors yourselves
Luke Harris: That's our gig. We've got a pretty good pipeline at the moment. We've got about 150 million under development that we're controlling. We've got multimillion dollar portfolios. We don't have to do this, we do this by choice and we always say that everything we do, any communication we have, even relationships with you, it's got to be a win/win. If it's not a win/win, so we've got a client who comes in and is very demanding, or won't follow our guidance and they're going to do everything the opposite to what we recommend, well clearly that relationship is not going to be a win, because it's not a win for us to work with somebody who doesn't want to get the type of results that we're able to help them get.
Ultimately at some stage we do lovingly say we're not the company for you and good luck with your journey and we'll focus on the people that genuinely A, want our help and B, need our help to get the results they want.
Phil Tarrant: Everyone will be going this all sounds really good, all right. Hopefully they might go and read your book, buy it, I guess.
Luke Harris: Let's hope so.
Phil Tarrant: They'll be going all right, that all sounds good, right, but they'll go, all right, where are you guys? Where are you guys buying at the moment? What sort of stuff is attractive to you as property investors right now? Matt?
Matthew Bateman: I'll ask the question, are we buying for capital growth or cashflow?
Phil Tarrant: Capital growth.
Matthew Bateman: Okay, so I'm looking at…
Phil Tarrant: And that's an important question.
Matthew Bateman: Yeah, and that's one of the first questions we're going to ask. Then the next question I'd be probably looking at is I'd be saying, okay, so if we're looking at property, you buying for the short term or long term? Is this a quick flip or are you buying for the next 20, 30, 40 years?
Phil Tarrant: Long term, it’s a buy and hold strategy, and it's capital growth.
Matthew Bateman: Okay. At the end of the day, do you want to pay full retail or do you want to get some wholesale discounts in your buying?
Phil Tarrant: I want the best property I can buy for as cheap, the cheapest price I can get it for.
Matthew Bateman: Okay, so here's the thing. A moment ago you asked me where I should buy, now what we've just done is we've redirected the conversation to actually working out a strategy for what it is, so from that conversation that we've had, three questions we've worked out, you want to buy for the long term, you want to buy for maximum capital growth but you also want to get a pretty good deal into this so that you're locking in some of your profits up front.
Phil Tarrant: Absolutely.
Matthew Bateman: Okay, now the next sort of question I'd ask is, okay, what sort of capacity do you have to take that purchase? Are we talking about a $500,000 investment, a million dollar investment, a five million dollar investment? We need to get a bit more, I guess parameter around what we do before we start talking about areas.
Phil Tarrant: I'm happy, I'm really happy that you've actually gone down that approach answering that because, and we say it all the time on the Smart Property Investment show everyone's circumstance is different.
Matthew Bateman: Absolutely.
Phil Tarrant: The right property for me, it's a different property for you, it's a different property for you.
Luke Harris: Here's the thing, a lot of investors sit on the sideline waiting for the perfect property to present themselves and the problem with that is that you're missing out on really good opportunities because you're waiting for the perfect one. Chances are, you're not going to find the perfect one…
Phil Tarrant: ... imperfect action is better than perfect inaction.
Luke Harris: Yeah, and the thing is, I teach people as well, is that through your investing career, if you're building a multimillion dollar portfolio or even if you're getting two or three properties, at the end of the day, any property in your portfolio is just one property. If you're building wealth for the long term and you look back in retirement years and you're looking back at your property portfolio and you never sold anything, then you go you know what? That decision that I was stressed about 25 years ago, it's less relevant now because it's putting income in my pocket every week.
Matthew Bateman: I might ask another question, because we're up here in Sydney and I'd ask you a question, if I could find you a property in Sydney today at 1987 prices.
Phil Tarrant: 1987 prices.
Matthew Bateman: If I could find you a property in Sydney at 1987 prices, would you want me to present that to you? Would you be more than confident to probably put that into your portfolio?
Phil Tarrant: You would think so, yeah.
Matthew Bateman: Does it matter which suburb it's in?
Phil Tarrant: It doesn't matter which suburb.
Matthew Bateman: Here's the thing, at the end of the day, and again, property obviously has a long term historical performance, it's got a lot of long term stability, there's strong population growth, low interest rates, so there's a lot of macro factors to suggest that property will continue to perform in the longer term. What we try and do is de-emphasis the actual property, because that's just the vehicle that's going to help you to get to where you want and what we really want to emphasis is who are you as an investor, what are you trying to achieve and can we bring opportunities to the table that will actually help you to get there safer, faster and more predictably.
Phil Tarrant: Going back to the, I can't remember what page it was, a cowboy riding a shark, you go and see someone and you go, I want to be a property investor. They go great, I've got this property here you can buy today. Is that one of them?
Matthew Bateman: It's hard to say
Luke Harris: The way that works, if you're at a seminar and they start showing you floor plans and they show you the theatre room and they show you the amazing swimming pool and you're seeing all of these things and then all of a sudden there's a finance guy at the back of the room, and then all of a sudden at the other side of the room there's a girl out there with a clipboard ready to sign you up and a credit card machine, you should walk out of that. Let's finish with that. Sage advice I reckon.
Phil Tarrant: That's all good. Thanks for sharing that guys. You're Melbourne based, eh? Keep in touch, let us know how you're getting on. I know you're sort of out there doing a bit of media now. Where can we get your book? I don't normally do a plug, but it's just…
Luke Harris: ... Dymocks, Amazon.
Matthew Bateman: It's in all the bookstores...
Phil Tarrant: I've only flicked through it, so I’m assumed not to have read it but I'll give it a read through. It looks like one of those books that you can pick up and put down, right, which is what you need.
Matthew Bateman: You only put it down when you've finished reading the book.
Luke Harris: Look, it's designed to be an easy read, but it's also designed to be a challenging read. Easy in that it's, the chapters are broken up in such a way that it makes sense, hopefully, for you to follow but also challenging in that we are going to ask the tough questions of you as an investor, so it's not just, here's a recipe and a formula that you follow and you get the result. It's saying well, why are we baking in the first place before we even start talking about recipes.
Phil Tarrant: Good, all right. Nice one. That's Luke Harris and Matthew Bateman. They're from the Property Mentors. Guys, thanks for coming on.
Luke Harris: Thanks for bringing us
Phil Tarrant: Remember to check out smartpropertyinvestment.com.au if you're not yet subscribing to our morning marketing intelligence newsletter, so you're the first to know what's going on in property. Smartpropertyinvestment.com.au\subscribe and you can follow us on social media if that's where you like to get your information if you're not an email person. We're out there all the time. Remember to keep those reviews coming in on iTunes as well, or wherever you're listening to it. The team here appreciate them. Any comments, any questions, email the team editor at smartpropertyinvestment.com.au and we'll get back to you. We do Q & A sessions all the time as well, so we'll answer them on there and any questions for Luke or Matthew, happy to pass them on as well. We'll be back again next time. Until then, bye bye.
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Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.