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A buyer’s agent is one of the most integral elements to consider when looking to buy a new property. We have heard both good and bad experiences on the show when it comes to investors using buyer’s agents, but how do you know if you have found the right one?
In this episode of the Smart Property Investment Show, Chris McMullen tells us why he spends more time looking for his buyer’s agent than looking for property, why he educates himself through seminars, this podcast show and getting out into the field to be able to determine the good from the bad.
The long-time listener explains why this show “was a bit of a turning point” for his investment journey and how he utilises other guests’ personal stories, experiences and mistakes as research towards buying his own properties.
Chris also shares what he would have said to himself a year ago with what he knows now, as well as where he hopes to be in a years’ time.
Tune in to hear about why it’s okay to be a “pain in the ass” toward your buyer’s agent, the invaluable education processes and why thinking like an investor for your first home will change the game.
If you liked 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!
SUBURBS MENTIONED IN THIS EPISODE:
Chris McMullen's story he shared with us:
The Naive Property Investor
At the end of last year I thought it might be nice to buy an investment property. I’m an Art Director btw, Not real Art, Ad’s, I work in Advertising, I basically annoy people for a living.
While it’s fair to say I don’t know a lot about real estate and investing, I have created work for banks and brokers. So it was interesting to see how helpful my knowledge in advertising was when it came to making a purchase. Thankfully, in retrospect, my experience in advertising has also given me a pretty good bullshit filter.
So I gave myself the goal of buying a place and getting some renters in by EOFY 17.
No real reason at the time, just thought it would be easier for my accountant if I had it all wrapped up by then.
Roughly 6 months to buy a place and fill it with paying tenants, how hard could it be?
Step one. Set goal. Tick.
I mentioned it to my broker, she organised a valuation of my property and recommended a seminar. I went along to the seminar and they showed me how I could express interest in buying a property in one of their developments.
They would then show me some options to choose from and it would be guaranteed 12% yield (whatever that meant). I could even give them my super as a deposit if I wanted to, they’ll sort it out through a SMSF for me. Cool!
Seemed easy, plenty of time, I’ll do it in the new year.
Luckily, I had bought a 2 bedroom unit off the plans in 2012. I say luckily because I had no idea at the time what I was doing when bought it. I was saving for a deposit and someone told me there was a development nearby selling off the plan, so I went and had a look in their show room. Then I just picked one, which I could barely afford at the time. It was a bit more because it had a yard and I wanted a dog so that was good enough for me. It wasn’t til my broker got back to me with the valuation that I realised I had actually not bought a lemon. Incredible. My apartment in Marrickville was quite well timed, it had doubled in value in just 4 years. And I got a dog. I was actually in good shape, I just had to do it again. Simple.
Over the xmas break I started researching online, mainly following up on tips and recommendations from BBQ chats. At one BBQ a friend said he had just bought from JDL strategies and they were great, they just did everything. So I googled them. Through that search I found this thread, which is someones story over five years (research, mistakes and all).
It gave me a good start. http://forums.whirlpool.net.au/archive/1732871
It was the first time I was listening to other people in the same situation as me. It didn’t take long to discover there were a lot of scammers out there, spruikers were rampant and came in many different forms. I stumbled across a few good forums such as property chat and somersoft and I began to see the light.
It wasn’t long after that a friend recommended your podcast. I became obsessed.
Hearing other peoples stories was the best education I could find. Every Monday night after work I’d listen to your show to get myself in the mindset, then research til midnight. This soon became most nights of the week and my room soon looked like Rusty’s room in a A Beautiful mind.
I researched all the Capital cities plus Gold coast, Newcastle, Wollongong and so on. I researched Investment advisors, coaches and mentors and went to as many seminars as I could. Some were educational, some were blatant sales pitches and some just felt like a bizarre cult. I learn’t how to come up with a strategy and the meaning of capital gains and yield. Importantly I learnt what sort of property to buy, not just something because it was shiny and new. I also discovered what a Buyers Agent was.
I really enjoyed researching where to buy and why, but the more I learnt the more I would change my mind. In the end I played it safe. I decided to buy a two bedroom unit 5kms from the CBD, much like I had done in Sydney. Earlier on my location searches had been based on yield, but I soon saw the strength in capital gains and could see the benefits of big cities. Sydney was looking like it was hitting the peak of its cycle and I knew a little bit about Melbourne geographically so I felt like this was the next best bet. I was also interested in getting into Melbourne before the new First home owners grants kicked in which validated my deadline (eofy17). I could also see the same thing happening down there that was happening in Sydney, North Melbourne was following the same trend as Marrickville.
High speed Gentrification. Best of all, it was half the price.
So I drove down to Melbourne to have a look around and took my dog (she’s a great dog btw). I had a theory that walking the dog is a great way to wander around and suss out a suburb without looking too dodgy. yep. I stayed at a friends place and looked around Brunswick, Collingwood, Coburg and the surrounding suburbs. It might sound like I was really diligent but it was closer to a pub crawl in the end and I’m not really sure what suburbs we saw but they seemed nice. Most importantly I met up with Buyer agents, as many as I could. I had lined up two interviews in the mornings each day I was there. It gave me an excellent insight into the local areas and it taught me more than I could’ve known just wandering around. Or at the pub. I had a very long drive home ahead to think about it.
Through your show I found ‘The Property Couch' so I listened to that and I spent the trip and deciding on a BA. I had already listened to each SPI cast twice (sometimes more) times over so it was a refreshing change and helpful for the Melbourne market. When I got back to Sydney I decided on a Buyers Agent, I had shortlisted 10 down to 3 in the car.
I signed the contract and I was off. It wasn’t an easy choice either, oddly harder than deciding on a property in some ways.
Within 2-3 weeks I had bought a unit. I was a property investor. Wooooo!
In the end the BA won the auction for me at 50k under my budget. I was very happy… numb… relieved. The BA couldn’t have been better and for the right reasons I knew I had made the right choice. Now the only frustration is having to wait a few years before I can do it all again. And it will probably be quite different the next time.
Astonishingly, I had succeeded in achieving my goal, however it was a very different path to what I had anticipated. I was surprised at how long I had spent researching location and strategy, compared to purchasing the property itself. It was also empowering buying an IP and knowing why you are buying it, not letting someone do the whole journey for you. By just listening to your podcast I was able to to turn myself from a naive property owner into a smart property investor.
Speaker 1: Welcome to The Smart Property Investment Show with your host Phil Tarrant.
Phil Tarrant: G'day, everyone. It's Phil Tarrant here. I'm the host of the Smart Property Investment Show. Thanks for joining us today. It's a Friday afternoon, and I'm treating myself to a bottle of Corona as I record this about 4:30. It's a crappy day outside and everyone's gearing up for the weekend.
A lot of people I imagine are probably looking through RealEstate.com or Domain. Getting their sheet together about where they're gonna visit, and what properties they're gonna see tomorrow. And I'm not going to be one of you guys who are doing that. I like to outsource my property buying and property hunting to my buyer's agent. I like my weekend to be my weekend, and I like to invest my time with my family on the weekend rather than going through open houses. But for those of you who are doing it, make sure ... Some great tools out there you can use right now to help map your hunting. All property investors, you need to be out there doing the leg work whether or not you're outsourcing it or you're doing it yourself. Make sure you know the markers that you're operating in.
Our guest today, and I want to use it as a bit of a segue into it, I guess today is Chris McMullen. Now, Chris's come on the show. And he's got an Asahi standing here and we're just having a bit of a chat before we come on air, and he said that he's spent more time looking for his buyer's agent, than what he was looking for his most recent property. And I thought that was really interesting. So, I'm going to pick that up and use it as a way to start our conversation today, and we're going to get into some other stuff as well about Chris's journey as a property investor and how he's gone about reaching his goals. Chris, how are you going, mate?
Chris McMullen: Good, Phil. How are you?
Phil Tarrant: Good. So you're a long-term listener of The Smart Property Investment Show, which is always good.
Chris McMullen: I am. I am. I actually was referred to the programme by a good friend, Linda, who I'll say hello to. She put me onto the show, and I think it was a bit of a turning point for me, once I started listening to the show, because I'm not very financially able. I come from a creative background in my work, and I just found this show very easy to listen to and very easy to pick up the points, and the things I needed to do. Because it's one thing to know you can use your equity off a property to buy something else, but I think the big thing was, how do you make that first hurdle? And I think that's what I want to talk about today, is how did I make that first hurdle, and hopefully that helps other people.
Phil Tarrant: Yeah. So you're saying hurdle. Hurdle is typically something that you got to get over, it's more of a ... It has been for you, is it?
Chris McMullen: Well I think that just getting that first investment property is probably the biggest hurdle, and then it becomes a bit easier because you know what you're doing after that. And I think one of the things I wish I did being a first home buyer is think like an investor, because it would've really changed the way I would've bought and set myself up.
Phil Tarrant: Interesting you say that, and just sort of sticking on the show for a moment. I see you've got a helmet and a leather jacket, so I'm going to assume you ride a motorbike of some sort?
Chris McMullen: I do.
Phil Tarrant: I doubt it's a motor scooter, it's a motorbike?
Chris McMullen: It's a Triumph Street Triple.
Phil Tarrant: Okay. Like a proper bike, right? Do you tune in the podcast while you're riding your bike-
Chris McMullen: Never.
Phil Tarrant: Or are you one of these guys whose needs to be really surrounded in a moment? You want to know what's going on.
Chris McMullen: Yeah. No, at the beginning of this year I started making a little habit of coming home and having a beer on Monday night and listening to your podcast.
Phil Tarrant: Great.
Chris McMullen: And that would get me into the mindset where I'd just sit down and start researching, and started working out what I needed to know and who I needed to have on my side, when I was going into buying investment property. I already had a mortgage broker and they'd helped me with my first property. When I told them I was going to buy another property, they sent me off to a seminar, and at that seminar they said ... They promised I could get 12% yield, and-
Phil Tarrant: Who's seminar? Their seminar or someone they knew?
Chris McMullen: Someone they knew.
Phil Tarrant: Okay. Is this still your a mortgage broker, or you've changed mortgage brokers?
Chris McMullen: It's interesting you say that. No, I stuck with him, but I was just very aware. I think working in advertising you get a good bullshit filter, and I knew that ... I'll come to them when I need a mortgage, but I'll do all the groundwork myself.
Phil Tarrant: Okay, that's important. To my original points about, I don't want to be the guy out in the front line tomorrow looking at houses for me to invest in. I want someone to do that for me, but I've invested in my education so I know ... I've gone and done that many, many times, and I know the drill and I'm able to challenge my buyer's agent they look at, because I am educated. So can’t outsource responsibility for education and decision-making, and it's good that you say that.
Chris McMullen: Yeah, and I think there's a lot of people out there, as soon as you've got money to invest, there's a lot of people that want to take that off you. And they'll promise you the whole package, and you'll go through it. There's a lot of places out there - I'll hold off listing their names - but they will promise you pretty much everything. They'll take your super if you give it to them, and they'll do whatever. And I think they're the ones really to watch out for.
Phil Tarrant: You said that, and I think you're a bit hard on yourself, you're not as financially ... literally sophisticated as what you would like to be, but you're conscious of that. So you're saying that you're a creative guy, right? But you've made this conscious decision though, to be really in tune with the buying decisions you're making as a property investor, and really trying to understand what you're trying to achieve as an investor. Does some of that sort of happen organically?
Chris McMullen: I think so. I think I got more and more addicted to the research side of it, and realising what a buyer's agent was and looking into that and trying to find the right one. But then, what I really got interested in was working out where I was going to buy. So I initially thought, "Gold Coast, that would be a nice spot. I like to go there for a holiday." That's probably the worst thing to start with.
Phil Tarrant: Maybe.
Chris McMullen: Then I started trying to be a little bit tricky and I looked at Newcastle, and I thought, "There's a few prospects there, and I'd drive out by the rocks sometimes. So I stopped on the way through, met up with a buyer's agent, Teyren, up there, who was fantastic. The guy should be mayor of Newcastle. He knows everything about it. But it was interesting talking to him over coffee about where to buy property. I said, "Where's a good spot? Near the railway line or good apartments?" And he said, "That's where you're wrong. That's where you've got a city mentality. In Newcastle, you stay away from the railway lines because they're industrial. And the other things is, people don't buy units up here. They buy the little workman's houses and do those up." So that was a learning just straightaway.
Phil Tarrant: And that's ground truth, right? Which you're trying to get if you actually visit a place.
Chris McMullen: Absolutely. And I think it's important to look at buyer's agents that know their area in that sense, because you just get that local knowledge. I looked at a few buyer's agents that are nationwide. I think I looked at National Property Buyers. They were looking quite good. I was very close to buying in Brisbane. Obviously, listening to the show is a big influence. And one of the other things I learned was just the difference between capital gains and yield. Obviously, I think you want your cake and eat it too. And that's what you're trying to achieve, but-
Phil Tarrant: You can't always get it. It's nice if you can.
Chris McMullen: You can't. Yeah, that's it. And I thought, "I might be able to get that from Brisbane." But I didn't see the growth that I was seeing in other places, and I went to a lot of different seminars. There's Destiny, there's-
Phil Tarrant: Margaret’s stuff is really good.
Chris McMullen: Really good. And I went and saw the guy at St Leonard's 00:07:28, I think it was, and we had a chat, and he didn't really seem enthusiastic. He told me they were more about teaching you how to be the buyer's agent, how to give you that knowledge, and they have meetings, and that wasn't really what I was after. Then I went and spoke to ... Who was it? Michael Yeardley's guys, and they had a really interesting seminar. I think it was Dr. Andrew Wilson.
Phil Tarrant: Yep. He's Domain's economist, he's a knowledgeable bloke.
Chris McMullen: Hey he did a fantastic job.
Phil Tarrant: Yeah, he knows his numbers.
Chris McMullen: He talked about Melbourne, and how the first homeowners' grant was going to kick in after July. And how there'll be a bit of a rush on properties under that $500-600,000 mark, which is where I was buying. So I thought, "Maybe it's good to get in just before that and purchase a property in Melbourne." I went and saw one of the guys from their office in Sydney and I told him what I was thinking about Brisbane and Gold Coast and those areas, and he said "I think you're crazy, I think you should just buy a place in Sydney, go for the capital growth and move from there." And it really shocked me, what he said, and I came away from it thinking, "Maybe I'm completely wrong in my thinking." And I could see what he was saying, so I turned my attention to Melbourne, thinking, "Melbourne's half the price of Sydney. There's a bit of catching up it's gotta do." And if you look at what ... I'd bought that place in Marrickville. That had done really well. Maybe I can replicate that in Melbourne.
Phil Tarrant: So the place in Marrickville is your principle place of residence?
Chris McMullen: That's right. And what happened there was amazing. It's almost doubled. So I thought, "I like Brunswick and around that area in Melbourne. I've lived down in Melbourne before. I know the suburbs and the spread. I might just focus my attention on that, and try and do that sort of thing, and just buy a pretty comfortable two-bedroom unit." I liked the look of the ... Well, I didn't like the look so much. I liked the sturdiness of those 80's 6-7-8 apartments. They're just well built. They last forever and there's not a lot you have to do.
Phil Tarrant: There's no lifts in there or swimming pools, all that sort of stuff.
Chris McMullen: Exactly you have no strata. And I wanted 5km's out of the city, cause I know that's ... Your growth spreads like a ripple from the CBD.
Phil Tarrant: Sort of like Marrickville, but down in Melbourne.
Chris McMullen: Exactly. I had this weird theory. This is quite funny. If you take Melbourne, and you spin it anti-clockwise 90 degrees. It's almost become Sydney. Your St Kilda’s become Bondi, your Brunswick and that becomes your inner west. All the suburbs almost line up, and you can match it out in the same way. There's no science to that. It's just how I looked at it.
Phil Tarrant: Well I guess it's looking at ... There's a lot of commonality between Sydney and Melbourne in that you have, I guess, suburbs which have the commonality of what you have up here and what you have down there in Saint Kilda, Bondi. Though I wouldn't call Saint Kilda Bondi, but you've got suburbs that attract a particular type of people that want a particular type of living environment. You've got your hipster cafes and your more grungy areas like your Newtown's and ... See, it's not even grungy anymore like Erskineville or Marrickville or ... That belt along the train line there. You have similar pockets of suburbs in Melbourne, but then you've also got your Tooraks and your very expensive properties in the Melbourne belt which are very similar to stuff you have in the eastern suburbs, or Mosman is very similar to those. So there is a lot of commonalities between these things. It's just comes down to the demographics of it.
So you're looking down in Melbourne, and is that where you actually ended up buying or what happened?
Chris McMullen: It is.
Phil Tarrant: It is, yeah.
Chris McMullen: Well, I took a week or two off work, packed the dog in the car, drove to Melbourne.
Phil Tarrant: So it wasn't on the back of your bike?
Chris McMullen: No. No, too long of a drive. I took the dog because it's nice to just get out on the streets and walk the dog. You don't look as suspicious wandering around, which is nice, with a dog and you see the area-
Phil Tarrant: That's a really good point.
Chris McMullen: And I was just staying with a friend down there. And I went and I lined up six different buyer's agents. So National Property Buyers was one of them. Cohen Handler had just started down there. There is empower wealth
Phil Tarrant: Okay. Ben Kingsley. Good operator.
Chris McMullen: Basically. And I came across his show from listening to your show, the Property Crossover Show.
Phil Tarrant: Really good podcast.
Chris McMullen: Really good, and especially the first couple of episodes on their show. They're really educational. So I went and spoke to them, and I think there was three others but I won't bother with naming them. And I think there were a couple of factors. I looked for a property as soon as I got down there in Coburg, Brunswick that interested me, and just kept that as a card to pull out and ask what they thought of it. But the other thing was, I think, it's just having someone you can have a beer with, because you're gonna be working with ... That person's gonna be by your side.
Phil Tarrant: You've gotta like your buyer's agent. I'm sure my buyer's agent's listening right now and I don't particularly like him. He's hard work. No, he's a good guy.
Chris McMullen: Well, the surprising thing was that I think there was some really experienced ones like National Property Buyers and Empower Wealth, but when I showed the property in my meeting in Empower Wealth, I was pretty much ready to sign there and then. And I asked about the property, and she said, "I've got that for someone else, but we can show you some other properties." And I realised that was probably the detriment of going with these guys, is that you're competing with other people like yourself.
Phil Tarrant: So you'd identified this property yourself that Empower Wealth had also identified that as a potentially good property that they were working on for someone else? For you it's a good testament that you're on the right page, because if those guys are identifying properties in the open market like that it means you've gone through the process probably quite well.
Chris McMullen: Definitely. And I'd listened to your show back to front, and I'd listened to their show. And their show's good because it's got that perspective in Melbourne, and I knew what I was targeting. That 80's, maybe a front villa of a property or something like that. Something that was a good build, but no strata like you were talking about.
Phil Tarrant: Not high-strata.
Chris McMullen: I knew I was looking at the same head space as what they'd be looking to recommend. I wasn't looking at those new developments or anything of that where they're all cookie cutter. So I had some really interesting meetings down there and I learned a lot just by talking to all these people. And I came away from it thinking the guy from Cohen-Handler was new. He had a background in building. He was also evaluation. He worked in evaluation for banks. And he was the only one, that I met up with him he said, "Come on, let's get in the car." He took me out and he showed me a couple of properties, and he was the only one that did that. And I got comfortable with him and what he'd be like to work with. We went and stopped at a few properties and he pointed out some things, and I got a gauge of what he'd be like to work with. And I knew that, because he was new, he didn't have anyone else. He'd be just going headstrong, fighting just to find me a place, and make a name for a place in this new place that he'd joined. So that was my thinking when I came to sign with him and get him on board.
Phil Tarrant: To the point I made, so you spent longer looking for a buyer's agent then the property itself.
Chris McMullen: Definitely.
Phil Tarrant: So in working with the buyer's agent, the idea is that they find you the property. So this is the journey that you've gone down to find a partner you feel as though best reflects the way you see the world and the way you like to operate, and what you're looking for. And all the companies that you've mentioned, Cohen-Handler, Empower Wealth, they're all exceptionally good businesses.
Chris McMullen: Very good.
Phil Tarrant: They know what they're doing. They're the good guys in this space. They're not gonna try and stitch you up with an off-plan apartment that they're getting a huge kickback on.
Chris McMullen: I feel like Empower Wealth would be someone I'd go back to when I was-
Phil Tarrant: Sounds like an ad for Empower Wealth, but I know you listen to this, mate. I know you're liking this.
Chris McMullen: I actually wrote him an email, and he responded really quickly. I thought it was really good. But they're the sort of place I'd probably go back to before I'd worked out the location and everything. But I feel like the location really determined what buyer's agent I went with.
Phil Tarrant: So you purchased a place in Brunswick? Is that where you bought?
Chris McMullen: I ended up getting a place in Flemington.
Phil Tarrant: Okay. So why Flemington?
Chris McMullen: It wasn't far from Brunswick. It was in that area and I could see that that gentrification belt was moving out over that area. It was a two-bedder-
Phil Tarrant: So your buyer's agent found you this place?
Chris McMullen: He did. I would say it took two weeks. We went through a few places. I'd get on and I'd send him a list of about 10 things. He'd come back striking out for certain reasons why, or he'd know something about that property. And we'd have a little shortlist and then he'd go out and have a look at them, take photos, send them back. And this was just like a mad scramble for two weeks. And there were two that I was really keen on, and then there was a last minute one on a Thursday. And he said, "This one's going for auction on the weekend. I can get all the papers, everything in line, and I'll go to the auction." And my budget was about 500,000, and he said, "Look, I know this place will probably go for that. Maybe a little bit over. We'll see how it goes in the auction, but I reckon their reserve's 450." So he went in with that bid and got it. And I was sitting with my coffee Saturday morning at home with it on speaker phone just listening, and got the property.
Phil Tarrant: So a couple of questions about this since it's quite an interesting scenario. So you obviously are a passionate property investor. You give a shit and you obviously enjoy it as well, right? Which can be a huge benefit but can also be potentially a detriment for you as well moving forward. I want to touch on that in a second. So in terms of this particular property in Flemington, two-bedder, red brick type apartment.
Chris McMullen: Yep. Up the back of the property, ground floor.
Phil Tarrant: Ground floor. Court yard and all?
Chris McMullen: It had been renovated. It's got a little courtyard. So the person to sell it had done a quick renovation on it.
Phil Tarrant: To sell it, effectively?
Chris McMullen: Yeah. So I didn't have to do anything.
Phil Tarrant: That's good. And are you a handy guy? You don't touch that sort of stuff or?
Chris McMullen: I've renovated my place in Marrickville, and I definitely overcapitalized. That was a good learning process in itself, but I knew the less I could spend on it the better. I might put a two-way air-con or something in there just to keep the tenants happy, and that's enough.
Phil Tarrant: So you paid 450 for it?
Chris McMullen: That's right.
Phil Tarrant: How long ago was this?
Chris McMullen: That was just before end of financial year this year.
Phil Tarrant: Okay. June-ish?
Chris McMullen: Yep.
Phil Tarrant: What's the rent that you're receiving on that?
Chris McMullen: The rent was interesting. He put me onto Little Property. They recommended around-
Phil Tarrant: The property manager?
Chris McMullen: Yeah. It was about 380 it was renting for. I wanted over four. Ideally I wanted 5%, but the person next door put theirs up for 430, and were advertising. So I showed the property manager who was recommending 400, and they said, "Right. Let's go in for 420." And they got it based on that.
Phil Tarrant: Okay. So 420 a week. So you're getting a reasonable yield on it for-
Chris McMullen: Yeah, so that's about 4.6, 4.8.
Phil Tarrant: Can't complain.
Chris McMullen: I feel like I got to eat my cake and ... I have the cake and eat it too, in that sense. I think there'll be a good growth in that area.
Phil Tarrant: So do you think you've paid market for it or do you think you got I under market?
Chris McMullen: I think so. From what little I know, I felt comfortable with that and I think that's the main thing.
Phil Tarrant: So in terms of loan, did you do a 80% lend on it? How did you finance it?
Chris McMullen: I borrowed probably about 200 deposit back onto my home loan.
Phil Tarrant: Okay, so did you already have ... Did you redraw the money out of your current home loan? Or did you refinance your home?
Chris McMullen: I refinanced my home loan.
Phil Tarrant: Okay. Pulled 200-grand out. Okay, so you got a LVR of 56% on this property.
Chris McMullen: Yes.
Phil Tarrant: Okay. Because you would've had to pay stamps and the yields and all that sort of stuff. So you're not carrying a huge amount of debt on it. So you've used the equity in your principal place of residence in Marrickville.
Chris McMullen: I'd say there's probably, what, there's about 500 equity in that.
Phil Tarrant: Still in there after you've done this refinance?
Chris McMullen: No.
Phil Tarrant: Okay. So you've done this refinance so you've got 300-odd, 250-grand equity still in your ... If you spoke to my accountant he'd be saying, "You should keep pushing harder. There's probably lots of capacity if you" ... I don't know what you earn for a living, but if you're a credit director you're not badly paid doing that sort of work.
Chris McMullen: No, and I've got no kids.
Phil Tarrant: You've got no kids so you've probably got a bit of spare cash coming through. Is the idea now to buy more? Are you gonna try and accelerate on this?
Chris McMullen: I think so.
Phil Tarrant: Is there any particular reason for that? You just want to? Like to? Do you want to become a property millionaire? You know what I mean? What's the goals? I know you're probably quite big on goals, so what's the goal now?
Chris McMullen: I think I'd like to work out a cashflow in my 50's where I don't have to work. And I don't have any ambitions to buy sports cars or be rich. I'd just like to have a comfortable income from my assets.
Phil Tarrant: So that's the goal, then? To be able to create passive income. So you get to make a choice as to whether or not you're gonna work, which is probably what most property investors want to do, right?
Chris McMullen: I think so. If I was gonna buy a farm up near Lismore or Byron and have an income I can live off, I can be happy.
Phil Tarrant: So what do you need to do in order to achieve that then?
Chris McMullen: I don't know.
Phil Tarrant: How are you gonna work that out?
Chris McMullen: I'm just gonna keep going and see where I'm at. I think that's the best way to do it.
Phil Tarrant: It works. Some of it works for me. A lot of people though would ... And if I sit with my accountant - and Munzurul, hello, I know you listen to this, mate - I imagine the conversations he has with me is probably different to a lot of his other clients in that he would be happy a conversation which says, "Okay, why are we investing in property?" And most people would say, "Well, I want to have a nice passive income and a nice retirement." He would say, "Okay, how much do you need for that to be the case?" And most people would say, "Well right now it would be X amount of money," and then they would work backwards and work out what it would mean in terms of how many ... What value of properties you need unencumbered in order to deliver you that income at a point in time, right? Obviously goals change over time and your goals today are different to your goals in 6 months’ time, 12 years’ time, or 4 years’ time. I personally don't have a number that I want to retire at. I just know that if I keep doing what I'm doing, it's probably gonna be okay. And that's the way I see the world, and I'm quite happy with that.
Chris McMullen: Yeah, I'm the same in the sense that I like it to be quite fluid. When I was 30, which is about 8 years ago, I had nothing. I broke up with my girlfriend, moved home, and saved for a place. And that's how I ended up buying this place in Marrickville. And I was talking to some friends at the pub last night. They're 30. And I said, "Look, you just can't compare my chapter 10 with your chapter 4. It'll get you nowhere. But you'll get there. It just happens. Just let it happen." You can't predict where you're gonna be in your life, and it's nice just to let it flow and see where it goes.
Phil Tarrant: And obviously, this conversation's getting a bit philosophical now, but that works for me because I've always known it'll be okay. Don't worry about it. But for a lot of people, though, they don't like operating in an environment where they feel as though they don't have control or they don't have direction, or they don't have a goal. And if your goal is to create wealth through property, that's okay. You need to understand what you need to do in order to achieve that. Whereas, a lot of people won't want to operate in something which is so intangible or nothing really set in stone. They need to know, "I need to do this, that, that, that, that, at this particular time, and I need to reach these milestones," in order for them to wire their brain a particular way to endorse the fact they're doing something good, or give them a way in which they can navigate this path, which is gonna be lumpy or rocky or bumpy or whatever, but stay on the course. Whereas guys like myself, and it sounds like guys like you, are quite happy for it to ... Just go with the low a little bit and see opportunities when they arise and move quickly to do it, but still have the confidence that ... When I go to bed at night I don't sit there worrying about my property portfolio. I worry about other things, right?
Chris McMullen: That's it.
Phil Tarrant: So I'm okay with that. So the point I made beforehand. You've spent all this time to shop around, inverted commas, for a buyer's agent, and I'm very pro-buyer's agents and there are certain ones out there. You've mentioned some. I think they're a huge asset to realise a goal of creating wealth through property. But do you feel now that you could potentially be one of those guys who is hard to have as a client? So I'll frame that in, I look at my relation with my buyer's agent. He'll call me up. I'll go, "I'm ready to buy. You know what I'm trying to do. These are the sort of stuff I'm looking for. This is my portfolio right now. Here's the sorts of assets. Go and find them for me." Then they go away and find them. Whereas you're like, "Hey, I really like these things," going, "Are these correct? Do you think these are the right properties?" Do you think you're stepping into the toes of what you're paying the buyer's agent to do, and therefore you might be quite difficult to build a relationship with? Or do you think that actually works for the buyer's agent you're working with?
Chris McMullen: I think, unfortunate in my work that my job is to annoy people to get a good job, and the end result.
Phil Tarrant: I get that, by the way. I know what you mean.
Chris McMullen: It's almost that process of labour is forgotten once the baby's born. All the hardships and everything you go through, once you've got the end result, that's all that you reflect on. So I don't mind being a pain in the ass through the buying process, as long as we both achieve the goal at the end. And I say, "We," because I feel like it's a bit of a partnership with your buyer's agent.
Phil Tarrant: Absolute partnership. So what's your buyer's agent's name?
Chris McMullen: It was Brad.
Phil Tarrant: Brad. So you would you say Brad enjoyed the process of working with you-
Chris McMullen: Definitely.
Phil Tarrant: On helping you secure that property?
Chris McMullen: And he's stayed with me. There's been the odd problem here and there, and he goes over and checks it out or he'll give me updates on the place. So he was probably around the same age and we got along really well, and he just really looked out for me. Whereas, I feel like some of the other buyer's agents it would've been after the sale they switch off.
Phil Tarrant: Well, you gotta feel comfortable with the person. So you talk about this team right, your account, your broker, your buyer's agent, your property manager, all this sort of stuff. So you need to actually like them as a person. They've gotta be able to operate the same way. And a good buyer's agent or a good accountant will be malleable enough to actually change the way they deliver service to an investor so it best suits them. And that's what you expect.
But organically, you've gotta be able to enjoy each other's company, because there will be friction at points. There's always friction in any relationship. It doesn't matter what it is. So if you've got a good set of ground rules, a good relationship, or a good level of trust and respect, when that friction does happen you can get through it okay and it's not personal. It's just, "Okay, let's sort this out and move on." And it is, to your point, a genuine partnership.
Chris McMullen: Yeah. And I think you've always got to remind yourself that you're the one with the half a million dollars in your pocket - or the bank's money - and you shouldn't be bullied. You're the one that's got the money and they're working for you, so it's fine if you're a little bit of a pain here and there. But you do want to find someone based on personality that you will get along with, and if you do say the wrong thing or they say the wrong thing at times you'll smooth that out and you'll get over it.
Phil Tarrant: Yeah, you need to. So you purchased just before end of financial year, so June time.
Chris McMullen: That was the goal.
Phil Tarrant: That was the goal? So you set yourself a goal.
Chris McMullen: I set myself a goal of buying a place in six months. And I started listening to your show at the beginning of the year, and that's where my journey began. So I feel like this is the show I wanted to listen to, this particular one, of buying that first property. What are the steps you have to go through to do that? Because I feel like that's the hardest.
Phil Tarrant: So if you want to call me out on anything I've said over the six months you've been listening to me, or anything I've done that's annoyed you, is there anything at all? I can cop it, but is there anything at all? What do you think I could do better in terms of ... The reason why I do this is to help guys like yourself expand their knowledge and their education and go out and make decisions to improve their quality of life and invest in property and stuff. So what can I do better, do you think?
Chris McMullen: I think you're doing everything right. I think it's what you're doing that no one else is doing, is just keeping that casual chat and making information easy to digest.
Phil Tarrant: Gotta give me something to work on, right? You're a creative director. You've gotta give creative feedback.
Chris McMullen: I think there's some funny stories. I'm no expert.
Phil Tarrant: What would you like to see more of, though? Did you like the stories of investors?
Chris McMullen: I think it'll be nice for people hearing novice investors like myself. I'm definitely not an expert. It's nice to hear people who are starting that journey as well. I think that's really important because that's probably the majority of people listening to the show. Most of the people that know what they're doing won't be listening because they know what these experts are talking about and they're in that game, and there's a lot of people like yourself who are linked to people who are already in the game. Whereas, I'm coming from somewhere that's completely removed from investing and banking and that sort of thing. So I'm quite naïve to it. So it's nice to hear it from novices that have done those steps and how they've done it.
Phil Tarrant: So your start then was, listen to a couple of shows and make the conscious decision, "Hang on a sec, I need to be more educated in order for me to do what I want to do." That's cool. So your start was the decision to actually invest in your personal development around property and property investment, and get educated?
Chris McMullen: Yep.
Phil Tarrant: And you've only just begun, right? I still educate myself every day. I've learned lots just from chatting to you. So now how are you gonna go from ... You've got a principal place of residence, so I won't call that an investment property. How are you gonna go from one property to many properties? What's next?
Chris McMullen: I don't know, and it's really ... I find that really amazing, the way that some people I spoke to said, "You could probably go two or three properties if you went to remote areas." That felt quite risky to me. I thought my first property investment I was just gonna play it safe. I'll just stay within my budget and go within 5km's of a city, a CBD, and play it safe in that sense. I might move out a little bit further and take a bit more risk, but I was really cautious of some places like Binvested and things like that where you'll go and pay them to go out, find a place for you, and allocate a place. Something just didn't feel right about that. There are a lot of places out there that something just jarred with me, and the fact that if I wasn't interested they were constantly ringing me. I thought, "If you guys are ringing me, chasing me, then there's something wrong there."
Phil Tarrant: Yeah, different strokes for different folks. And this goes back to there are some very good people out there that can help Australians down this path. And I think, over time you'll see there'll be greater regulation in property investment. There's still some way to go, and PIPA, the Property Investment Professionals Australia, working hard to try and work with government to get some of this in place. But it still comes down to caveat empty or whatever it is, buyer beware. You cannot outsource responsibility for investing in property with other people. That said, you can use other people to support you to do it. And this is the path that you were going down. So it's really exciting. If you could go back to yourself six months, a year ago, before you started down this path, and could grab yourself and give a good old shake, what would you say to yourself?
Chris McMullen: I think I'm glad ... You ask this of everyone. I've always thought about this and reflected on it. And most people say, "I wish I bought earlier." I don't think that's the case with me, because I know I would've made a mistake. And in property investment, that's a really expensive mistake and that can set you back a couple of years. I think everything happened at the right time. I think I was lucky that I had the education of these podcasts and the information that's available out there on the internet and property chat and those sorts of forums where you can get there on and ask those questions. They're just invaluable. And shows like this. Whereas, a year ago if I was to do it, I would've made a big mistake and I think that's one of the valuable things I've listened to on this show is listening to other people's mistakes, and hearing those guys that go, "Yeah, I bought it off the plans in Zetland, and I'm still waiting for something to happen," or, "It hasn't gone anywhere." That guy that was talking about the place he bought in World Square.
Phil Tarrant: Yeah, that hurt him.
Chris McMullen: Yeah. That was probably my fear going into it was that I'd make a mistake like that.
Phil Tarrant: Sometimes my mind boggles. And I'm gonna have to wind up. I'm getting the wind up signal here. But the amount of information available to property investors today, but people still ... Often they still get it wrong, and a lot of the time it's for all the same reasons that people were getting it wrong 5 years ago, 10 years ago, 20 years ago, when there was less readily available information. Whereas a guy or girl in a fancy suit and a good sales pitch will flog them a property. And there's just no excuse for it these days. So it still concerns me and worries me when I hear about these stories, and I feel bad for them. I just go, "Shit. Why did you do that?" You don't have to make those mistakes because if you take the responsibility to educate yourself, or at least expand your knowledge base or get second opinions or whatever it is, you don't have to make those mistakes. So if you're listening to this, just don't go and make those mistakes. Follow what Chris is doing and going slow and don't overthink it, and go with the flow. Nothing wrong with that.
Chris McMullen: I think the research is the most interesting part. Personally, I hated going and looking at houses on the weekend. You talked about that at the beginning. That was the thing I just can't stand doing. But I love that location search and the strategy, and going onto RealEstate.com and looking at the investor map and seeing what areas are red and orange, and what amounts, and working all that out.
Phil Tarrant: It's okay with property investment to really invest yourself in the stuff that you really like doing, but the stuff that you need to be right across or you need to be highly invested in but is not particularly your skill set or you don't really have the aptitude for doing it. A lot of people just couldn't be bothered with the admin, right? Because they hate looking at spreadsheets, right? All of that stuff you can get support for, but you still need to take responsibility for it.
So Chris, we've got to wind up, mate. But I'm gonna bring you back in a year's time.
Chris McMullen: Great.
Phil Tarrant: I want you to have a chat to yourself, Chris, in a year's time. What have you done?
Chris McMullen: I'd like to buy something else. I'm in that acquisition stage, and I think the main thing is to try and buy a different property in each state. So I'll probably turn my attention again to Brisbane. I think things are gonna start going ... Well, Queensland, anyway. That's where my head's at the moment. That might change in six months. We'll see. But that's the goal at the moment. I'd love to come back on the show.
Phil Tarrant: Let's do it, mate. And keep in touch. I want to know how you're going.
Chris McMullen: Yeah, definitely.
Phil Tarrant: And probably give up that motorbike. They're dangerous. But I'm not gonna say anything. Yeah, really enjoyed the chat, mate, and I quite like the balance between making wealth, creating wealth and creating a nice life, but you obviously enjoying the journey getting there as well. You need both hand-in-hand.
Chris McMullen: Yeah, it's addictive.
Phil Tarrant: The journey's half the fun, right?
Chris McMullen: I think the only disappointing thing was one I bought the property it's like, "What do I do now?" I've just got to sit still.
Phil Tarrant: It's like having a massive property hangover, right? You gotta wait for the next one, but it'll come. Don't worry. It's good. Thanks, Chris. Remember to check out SmartPropertyInvestment.com.au. If you're not subscribing yet to our daily morning marketing intelligence bulletin, please do. You'll be the first to know what's going on in the world of property. SmartPropertyInvestment.com.au/subscribe. Chris, it's not too scary coming on the podcast. It's good to be on the-
Chris McMullen: I feel like I’m in the pub. It's great. With microphones.
Phil Tarrant: So you just emailed us, right?
Chris McMullen: Yeah, just sent you an email. It was a good bottle of red, and I just popped out an email and I forgot about it. And then Naz called me back and said he really enjoyed reading it, why don't you come on and talk to Phil?
Phil Tarrant: Excellent. So the email address is [email protected] Email the team and we're looking to share investors journeys. And whether or not you've bought 1 investment property or 50 investment properties, 100, everyone's got a story to tell and we're happy to share it with the community. Remember to leave those reviews on iTunes, the team really does appreciate it including Sammy who's sitting here turning dials and making us all sound really good and stitching it all together. The feedback's important. It helps us also to grow the community also. So please leave a review. We really do appreciate it. We're on all the social stuff, if you want to check it out as well. Follow us. Just search, "Smart property." And that's about it.
Some interesting stuff gonna be happening over the next couple of weeks also with the Smart Property Investment Show. We're gonna be expanding the network. Had a lot of really good ideas and some great input from people, and we're listening. So watch this space. And until then, we'll be back again soon.
Speaker 1: 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.