Being financially ready for when the unexpected occurs

By Todd Stevens 26 March 2018 | 1 minute read

A financial buffer is one of the best decisions that you can make as a property owner to avoid any unnecessary headaches. Or at least that seems to be what has worked for property investor Andrew Scott.

Smart Property Investments Portfolio, St Marys Property

In this episode, Smart Property Investment’s Phil Tarrant sits down with Andy, who shares one of those potential headache scenarios from his time investing. When a bill that should have been around $800 ended up costing more than six times that amount, Andy was able to effectively manage both his funds and stress levels, sharing now how his prior planning made that a possibility.

Andy shares what he sets aside for each of his three properties as a way of minimising risk, and just how and when that money should be spent.

The pair will also cover the benefits and challenges of investing interstate, whether property yield should be a main deciding factor when purchasing a property, and answer some questions for those looking at using a property buyer.


Make sure you never miss an episode by subscribing to us now on iTunes! 

If you like this episode, show your support by rating us or leaving a review on Apple Podcasts and by following Smart Property Investment on social media: FacebookTwitter 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!



Eight common investor mistakes eating into your wealth

Time and effort: What makes a good buyer’s agent

Why you should invest in multiple properties



About the author

Announcer:    Welcome to the Smart Property Investment Show with your host Phil Tarrant.

Phil:    Okay everyone. Welcome to the Smart Property Investment Show. Good to have you with us today. We're recording this on the same day that it's being released, which we typically try to do to make sure it's timely and newsworthy.

            I'm going to get something off my chest and out of the way before we get into it because I'm sure it's going to be brought up as soon as you hear the accent of the gentleman I have in the studio today, Andy Scott, Property Investor. Andy, how you going?

Andy: I'm good Phil. How's things?

Phil:    Good. Let's get this cricket thing out of the way, because I know you're going to bring it up.

Andy: Well, I wasn't going to but now you have brought it up.

Phil:    Well, you can't cheat in property investment but it seems you can cheat in cricket.

Andy: Well, yeah. Your Aussie heroes, mate, they've let the world down.

Phil:    Yeah, what's your view of it all?

Andy: They all do it. All professional sports people are cheats. They don't all get caught though, do they? And that's the trouble right there.

Phil:    It's not a good look, is it?

Andy: No, it's not a good look. And it certainly is ... although Aussie citizen now, so proud I'll be travelling on Aussie passport, but certainly can't point too many fingers when it comes to English cricket as tampering with the ball as well. Nice mints on there. Getting a bit of reverse going. They all do it, but they don't all get caught.

Phil:    Yeah. Just thought I would invite to you the studio today. You're a property investor I believe. You got about two or three properties with you in your pile?

Andy: Yeah, I've got ... I mean myself and my partner have three properties between us. I got two originally and then I harangued and badgered her to use the money that she had sitting in her bank account earning very little interest to get a property herself as well. So we've got three now.

Phil:    Okay, so really for today we'll have a look at this portfolio, the way you see the world, your appetite and sentiments towards property right now. Obviously it's in the news as an asset class, which is potentially going to come down sort of 40 plus percent depending on who you hear about. I'll get your views on that.

            You mentioned that you are a proud Aussie citizen now and investing in Aussie property. Why are you investing in property, Andy?

Andy: Look, I think if you go back throughout the annals of time, those that have done well for themselves when it comes to ... their own financial freedom is the buzzword that gets used nowadays ... but the fact that the people who have money generally own land. To own land generally means you've got to own something on that land as well. There's no point in having a patch of land out in whoop-whoop somewhere that's never going to do anything. To me it's always appealed to me, the idea of property. I think it's always been a solid thing.

            If I look at people I know in my life, everyone I know who's done quite for well for themselves owns a property in some way, shape, or form. Now that may not be necessarily be an investment class, the way I use it, but they've all had properties nonetheless. It's always something that's appealed to me. I guess the challenge always is with property is it's quite an expensive thing to get into. You can sit there with a couple grand in your pocket and start dabbling in stocks and shares and other asset classes, but with property obviously you need a little bit more to get yourself going.

Phil:    You're pretty representative of the classic, typical, whatever you want to call it Aussie investor. You've got two investment properties. There's a lot of people in this market who only ever buy one investment property. Often they want to buy more but the first property they buy is the wrong property and therefore, it hamstrings for a period of time. You have two properties. Is this something you're looking to grow? You're looking to grow your portfolio?

Andy: Yeah, well my long-suffering partner, we've been together 12 years now so what's mine is hers-

Phil:    So three properties then.

Andy: Yeah.

Phil:    So three properties.

Andy: One and a half. But absolutely I'm conscious of, I've seen investors and to a certain degree I've saw it with my partner as well, the first property she's picked up has not all been sunshine and lollipops, you know. I was very lucky with my first property, didn't have any trouble with it, everything went swimmingly, got a reevaluation on it 12 months later and it was valued at plus 50,000, 60,000 that I bought it from. Hers has not been like that. She's had a lot of problems with plumbers, with tenants, with all sorts of niggly things that's no surprises to anyone who invests in property a lot. But if it's your first one, I think that's probably enough to make you go, ugh that's put me off. She refrains to me a lot going off put 60 grand into this and I'm not seeing any profit, I'm not seeing any money back.

            I think without having support around you or knowing it's a bit of a long-term play, you know what there's going to be downs as well as ups, so I think it's really easy for people to go, I'm not going to do another one. It's an expensive thing. It's easy to say, "It doesn't work." Especially in an environment where there's lots of other things that appear to be working well. Geez, get your money in crypto. There you go, you have a million percent profit in three days time sort of thing. I think that's something that happens to a lot of people.

            I consider myself really fortunate that knowing a lot of investors, knowing a lot of people who have gone down this path and got a lot of properties, these were the sorts of things that were coming and it's not a short-term game. It's a long-term game and you've got to get yourself prepared for that. Not just financially but mentally as well to understand that yeah, that's going to happen. You might have something that's going to be a bit of a pain in the ass, to be honest, to deal with for months at a time, years at a time, but ultimately the fundamentals behind it, if you've done your homework and you've got the money behind it to be able to help support what you're doing, you're on the right track and you're in good stead.

Phil:    How do you go from your current portfolio to adding to that? Is there any particular steps that you need to do in order to get there or you just need to wait until the current properties you have take off in value so you can draw down on some equity?

Andy: Look, it's six of one and half dozen of the other. I had enough, I'd saved enough money to be able to get more than one investment property, but it was very much the first one. What I'll do is I will sit there and get it and see how that goes, get used to being a property investor, get used to the calls that come in, get used to the various sheets that come in from your property manager about what rent's come in, what payment needs to go out because-

Phil:    the reconciliation

Andy: Yeah, all that sorts of thing. But I always of the mind I wanted to get more. I was confident from, I used a property buyer, and I was confident from their track record and conversations with them that they would get me a good property that would allow me to go up in equity and scrape equity out. But it wasn't the only thing, it wasn't, if it doesn't go up in equity then I'm stuffed, not stuffed but I'm sort of stuck on one. I've made sure the first property I did was cheap and cheerful and that I had capacity to get another one without having to save that much more in those regards. So that was sort of my approach to ...

Phil:    So you've been looking for high growth properties in terms of equity-

Andy: Yes.

Phil:    as a primary consideration and the fact that it generates good yield is a secondary consideration.

Andy: Yeah. Initially I wanted areas that were going to grow well. I had planned to put money aside so that if I needed, if I had a shortfall between in goings and outgoings that that wouldn't leave me hamstrung with other things to do. But I always wanted to make sure that the growth was there so that it would easy for me to get the second one and then from there easier to get the third one. You know yourself Phil, if you have one property and you have problems with it, you've got problems with it. If you've got two, three, four properties and you have problems with one of them, those problems are actually smaller in impact in terms of their impact over the overall portfolio.

Phil:    Do you think so far, you've been a good investor if you're going to sort of hard mark yourself and say I could have done this better or that better. What would those few things be?

Andy: Oh no. I'd struggle to give myself above average-

Phil:    Really?

Andy: as an investor. Yeah.-

Phil:    Slightly just above average?

Andy: I probably wouldn't even go that far. And I think the thing and the reason I say that is and this is probably part of the reason my partner is anxious about these things. She's a fantastic planner so she'll plan everything, she'll get all the numbers down and she'll look at everything and look at everything and plan it all out to where she's going. I'm a bit more back of an envelope kind of guy so I will look at the number, yeah they look all right, yeah. I don't mean that blasé but I'll make sure it's okay but once it's up and running, it's all right. I'll check the monthly statement, yeah rents coming in, yeah mortgage hasn't gone up that much, yeah should be all right don't worry about it. I could probably be a lot more diligent on these things. I know for a fact that I’ve got a property that I haven't got depreciation schedule done on. I have on one, I haven't done it on the other one yet. In my mind I'm like I'll get to that, I'll get to that. Which really, I should do it straight away. So I wouldn't rate myself highly at all.

Phil:    But that's a fair and honest, frank assessment and the fact that you can consider the way you're operating and your approach to property is quite a good thing, right? It's okay to say, "I could do better." But do you think it really matters that much? If you're spending two or three times more time now than what you're doing spending on your property portfolio, would it make any difference whatsoever?

Andy: I think, in terms of how the property performs, no. In terms of how the portfolio performs, no. In terms of the mental health of the people around me, probably yes because there would be that feeling that things are more in control and there's less to worry about because everyone knows what's going on in those situations. I certainly, as I said, am a bit more, clearly adopted that from my country of origin now with She’ll be right.

Phil:    She’ll be right!

Andy: But yeah, I think it would but better in those terms for sure but it's not something that I worry too much about. To put it back up, I don't stumble in like a blind idiot, you know, throwing money away and not worrying about this and not worrying about that and yeah I'll be lucky, it'll be fine. But I'm not as meticulous as some people are. When it comes to tax time and getting those things, yeah I've got my numbers organised. I've got it all there, I've put it all together, but I'm not one of these people who sort of reviews their portfolio every month, which I know a lot of people do.

Phil:    They do and a lot of people are mistaken in thinking that property is a passive investment. The best investors I see are on it all time. They're very tight with their numbers. They actually understand how their mortgages are ebbing and flowing depending interest rate environment or when it might be coming off an interest only period. They know their tenants, they know when their leases are due, they know etc., etc.

            Of course other people are a bit like yourself, who just know it will sort of sort itself out in the wash. And what works for you is right for you and that's okay. But to your point around worry and risk I guess, because worry is associated with risk. If you're risky but don't think you're risky, you probably don't worry too much about it. Whereas some people who probably push the boat out too far for themselves and sit there and concern themselves and worry about it all the time can put themselves in a bad situation in terms of mental health challenges-

Andy: Yeah. I think so. I would add that the caveat to that, I made sure I had a buffer. You know, I've got-

Phil:    So how big's your buffer? Have you got a number that says I've got three months worth of being able to pay the portfolio costs without attending in there. Is that how you frame it?

Andy: I'm not even that meticulous about it. I make sure I've got about 10 grand sitting there for every property, as a buffer. So I've got about 30 grand sitting there that's not part of the offset  it's not part of anything else, it's part of that-

Phil:    Just cash money.

Andy: Yeah, if I need to. Only it's sitting there but I know that's earmarked. As long as I don't draw out, that's there for any big problems that come up. The biggest problem that came up with one of my properties is I've got a nice little rate statement through, it's a property I've got up in Homeview, which is in Midlothian and Queens now. I've got a nice little rate statement come through-

Phil:    Is it a house or a unit?

Andy: It's a house.

Phil:    A house.

Andy: The rates typically were about the 800, 900 mark for a quarter, which is fine. And then this bill came through for about $3,500, which obviously I was quite surprised about by that. Looked at it and it was water that seemed to be the issue. So I called up my rental people and like what the hell is going on with this, what's going on, what are my tenants doing. They were like, oh yeah we had the meter reader came around and there's been a burst in the main base at link. As is always the case, it's your side of the meter, which means you're responsible for it.

Phil:    Let's just quickly pick it up. If your side of the meter means, where your little tap is at the front of your house, if the problem is from there into your house, it's your problem. If it's on the other side of that, it's the water board's problem-

Andy: Yeah. Basically. So it was my problem. I said, "Okay. Let's first see how that's going to get fixed." And then the ... probably something I should have looked at when I got the place originally, but the main pipe that comes through, someone back in the day when they built the thing, planted a lovely little tree just over where the line is, which is now, sort of 20, 25 years later, a lovely big tree and they suspected that yeah, the leaks probably under that. There's no way we're getting to that without-

Phil:    Going through the tree.

Andy: a ridiculous amount work. Get rid of the tree, digging it all up, all that sort of stuff. You're only other option is to basically put in a new pipe. So I had the huge bill and then I had the pipe to put in as well. Now that all up was probably a hit of about four or five grand.

            Don't get me wrong, I don't want bills like that coming through my letter box ever. But at the same time, I was able to go well, you know what, did I want in this situation? Of course I didn't. But have a put something aside for if these situations come up? Well yes I have. It's not ideal and you know what it may have put the portfolio back a year or 18 months but I'm not panic station. I'm not all of a sudden, oh my giddy aunt! I'm on tomato soup for a week, or six months to try and get this money back. I had it there put aside to do those things. So got all those bills paid, got that sorted out, that's fine now. Now my focus is well now I just made to put money into build my buffer up again, which hopefully will come before another upset like that comes about. Like I said that was just for that one. I've got another 10 K sitting on the other property and we've got another 10 K sitting for the other property, just for those things aside.

Phil:    It's rainy day money.

Andy: Yeah. Whereas I'm not one to be meticulous all over facts and figures, I'm reasonably risk averse, when it comes to real money. If you see play poker for $10, then yeah, obviously I'm a bit of a maniac, but why wouldn't you be. When it comes to real money, then I'm a bit more, I'll build myself a buffer basically to minimise risk as much as possible, as much as for my own benefit as anything else.

Phil:    What you've just done there, Andy, is you've given me the focus for this particular podcast as in this dire circumstances and Andy was there to fix it and you've given me about 1,000 sounds bits and quotes where I'm sure we can write plenty of stories off the back-

Andy: Well, happy to help.

Phil:    You've just given to-

Andy: Happy to help.

Phil:    flavour and texture to your story-

Andy: Well there we go. Thank you very much.

Phil:    which is always ... you mentioned that you, so you used property manager for all your properties. Is that-

Andy: Yes. Not the same property manager because they're in different, they're all in Queensland properties. One's in Homeview which is in Logan. One's in Slack's Creek, which a stone's throw away to be honest. And then we've got one in Leichhardt in Ipswich.

Phil:    What is the total value size of your portfolio, do you think?

Andy: Total value of the property is about 850 K.

Phil:    Okay. You know what sort of debt you carry on them?

Andy: Off the top of my head, we're probably carrying about 600 on that.

Phil:    Okay. You've a bit of equity in there.

Andy: Yeah.

Phil:    Yeah. And you're still saving on the side as well?

Andy: Yeah, yeah, yeah.

Phil:    Okay.

Andy: Absolutely. I haven't changed.

Phil:    So when are you going to go again? When's the next purchase?

Andy: I don't know yet. This year is the plan.

Phil:    Okay, good.

Andy: This year is the plan, it's just a question of looking whereabouts. Interestingly, the place we got in Leichhardt, you will probably know, there's a recent government contract that's gone through there. So Leichhardt, for those that don't know, backs right onto a big airbase. I think it's an airbase there. There's a big military base there. It's going to be, there's going to be a lot of contractors and work going through that so there's going to be a lot of jobs going into the area, which is great for us to have property in there. In my mind, I was like I want to diversify out of Queensland, because I've already got three in Queensland, but you go where the money is, right, in those regards. So if those underlying things are good for Queensland and the fundamentals are right, then I'd be happy to look at going there again.

Phil:    You've had no concerns about investing in the state that you don't live, because a lot of investors have a lot of concerns about that. They feel as they need to be able to jump in a car and drive past a property and make sure it's all okay; whereas your purchase is ... have you seen all these properties?

Andy: No. Never seen them.

Phil:    Never seen them. Never seen them once?

Andy: No. I've seen them on Google Maps.

Phil:    Okay, and that's the extent of it?

Andy: Yeah, that's the extent of it. I get reports from my property agents that show me pictures of the inside. I say the inside, I assume it's the inside of my property. I don't know one way or the other. I've seen a couple of walk-through videos of it as well. No, it doesn't concern me, because ... and being a renter in Sydney as well, I've never seen the person that owns mine place.

            I've got property managers that are okay, but if there's a problem, like a serious problem, they sort of get on it. So I've got that reassurance that I'm paying professionals. Now, are they the absolute best at what they do? Probably not, but are they the worst? Well, definitely not. They're probably at least average or above. You've got to have-

Phil:    Sounds like your portfolio is just average all across then. You're average ... your properties don't average though.

Andy: No, they go well, they go well.

Phil:    That's the important thing right?

Andy: Exactly.

Phil:    It's okay, if they’re good and everything else is average.

Andy: Exactly. It's not something, if I owned a place 20ks down the road, if anything, if I had a problem with our tenants have brought a dog into the place and they're not supposed to. Tenants are complaining about the veranda out in the back's collapsed and they need it. Tenants complaining ... I'd probably be more stressed because I'd be tempted to go, I'm going to go and have a look, I'm going to sneak ... I'd be like one of these weirdos, slow crawling down the street because I don't want them to know I'm the owner but I'll just have a quick sneaky-peek and see what's going on.

            The fact that there is that distance, it's probably something that helps keep anxiety and stress down about those things because I can treat it very much at arm's length, very much dispassionately like that, which I think is important. Generally you don't make smart decisions when you're over excited and when you're getting anxious about things and when you're emotionally charged.

Phil:    Just given me plenty more sound bites there as well Andy. Talking about weirdos and whatnot. You can see the headlines now, can't you?

            I really enjoyed the show Andy. I do appreciate your frank and honest assessment of your own capabilities and investments. I think the message I'd be taking from this podcast is that it's important to self-reflect and self-analyze if you feel you could be doing what you're doing better. There's nothing stopping you doing that.

Andy: No absolutely.

Phil:    You can get on with that straightaway and get practical, start ticking off ... get yourself a nice to-do list, start working through it and you'll get a level of satisfaction once you do that of accomplishment. I'm sure Andy, you're going to go and do that right now. Think back on this. I'm going to hold you to this.

            Let's get you back in. I've enjoyed chatting to you. It's been an interesting discussion, which I didn't think it would go the way it did but what I'm going to take away from this chat is that you're a guy who sees the value in investing in property and you obviously got a plan and a strategy. And I'd like drill deeper into that because it's been a bit superficial. You want to create wealth through property, that's what most people will do. I'd like to understand the mechanics of you getting to a point where you work out what you're trying to do. We'll get you back in the studio. Now the chat ... if you don't mind coming back in?

Andy: No, that's fine. My takeaway from this seems to be that I've just been given a homework assignment-

Phil:    You have. I'm going to hold you accountable.

Andy: So thanks I think?

Phil:    I'm going to lift you from a four out of ten to a five out of ten property investor.

Andy: Oh there we go.  I like it. Dream and achieve.

Phil:    That's good. I appreciate it Andy.

Andy: No worries. It was good. Thanks

Phil:    I really enjoyed it. Remember to check out for more stories like Andy's. Just normal, everyday property investors trying to do the best they can. Remember to check it out. If you're not yet subscribing to our daily morning marketing intelligence feed, first to know what's going on in property before everyone else, help you make more informed property investment decisions,\subscribe or if you get on social media just search Smart Property HQ.

            Any questions for me or even from Andy and I'm happy to pass them through to him if you want some info on what he's doing, email the team editor at

            We'll be back again next time, until then bye-bye

Announcer:    The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs and should not be relied upon. Before making any investment, insurance, tax property or financial planning decision, you should consult a licenced professional, who can advise whether your decision is appropriate for you. Guests appearing on this podcast may have a commercial relationship with the companies mentioned.


Being financially ready for when the unexpected occurs
Smart Property Investments Portfolio, St Marys Property
spi logo

Get the latest news & updates

Join a community of over 100,000 property investors.

Check this box to receive podcast updates

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.