podcast

How this 'stubborn' investor recognised a property lemon

By Tamikah Bretzke
Simon Grant

Simon Grant says he's incredibly stubborn, but he isn’t afraid to admit when he’s made a mistake. Like many investors, he’s made a few blunders on his investment journey. However, the trick to overcoming these mistakes, he says, is knowing when to move on and when to ask for help

In this episode of The Smart Property Investment Show, Simon joins host Phil Tarrant in the studio to explain why he’s investing not only for himself, but also for his children, his thoughts on educating youth on finance and his advice to fellow investors on how with the help of a financial team, they can better recognise a property lemon and get back on the road to success.

Tune in to hear all of this and much, much more, in this episode of The Smart Property Investment Show!

Would you like to share your story with the team? Contact [email protected] and lend your voice to the show.

 

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Did you like this episode? Show your support by rating us on iTunes (The Smart Property Investment Show) and by liking and 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 insight! 

Listen to other instalments of The Smart Property Investment Show:
Episode 95: The top 10 things every investor should check before buying a property
Episode 94: BONUS EPISODE: From 1 to 28 properties – what's his secret?
Episode 93: 28 properties and an $11.5 million portfolio – how this investor did it
Episode 92: BONUS EPISODE: Investor reveals top tips for better property management
Episode 91: Why being 'pedantic' about property will enable this investor to be debt-free by 45
Episode 90: Portfolio update: SPI gives the inside scoop on its latest property purchase
Episode 89: Renovating as a couple: two young investors share their story
Episode 88: Everything you want to know about the short-term rental market revealed
Episode 87: BONUS EPISODE: Former Olympian shares his property development know-how
Episode 86: How a former Olympian found new sport in property development: Ed Fernon's success story

Full transcript

Phil Tarrant: Good evening everyone it's Phil Tarrant here. I'm the editor of smartpropertyinvestment.com.au and the host of The Smart Property Investment Show. Thanks for joining us this week. It's always a pleasure to have you.

I'm gonna go solo today and I don't have any guests, any regular, what do I call them Sam – co-hosts on the show. I'm all alone, it's a Friday afternoon and I think they're all out at long lunches doing what good journalists should do and that is connect with people and get the intel over a couple of schooners.

But I am quite happy about that because it's going to give me a chance to dominate this conversation and not participate anyone else in it. Which I often like to do. My guest today is a property investor, a guy called Simon Grant. Simon how are you going?

Simon Grant: I'm well thanks Phil. Thanks for having me.

Phil Tarrant: No it's good to have you here mate. It's quite funny, and just so our listeners know how this works I am very fortunate to have a really good team of people behind me here at Smart Property Investment that co-ordinate all of our podcasts. And my brief to, in particular Tamikah who I work with is to go and find me good investors to talk to and Simon I think you fall right into that case.

There is a line-up of people here who are experts in property investments so accountants and lawyers and buyers agents and mortgage brokers and the list goes on and on. But pure to the DNA of The Smart Property Investment Show we like investors and we like to sort of get their story and understand what makes them tick and what they have done good and bad in property investment.

I guess with that preface then, Simon. I don't know where to start with you should it be the bad stories, the good stories, the indifferent stories or -

Simon Grant: A mix of both actually.

Phil Tarrant: Yeah.

Simon Grant: So wherever you want to start I'm happy.

Phil Tarrant: You’re happy to go there?

Simon Grant: Yeah. I've got both.

Phil Tarrant: Let’s start down in the doldrums and we will sort of move up to all the positivities. Oh you know what? Why do you invest in property? What's your thing?

Simon Grant: I'm early 40s. I go back to my mid 20s and I found Robert Kiyosaki, Dolf de Roos, Jan Summers.

Phil Tarrant: All the classics?

Simon Grant: All the classics. Steve McKnight and that sort of kicked off my desire and passion for it. Got married. My wife and I were fortunate enough to buy an investment property. Thought this is the skies limit, we are heading in the right direction here and then things didn't go so well.

And that kind of set us back but the reason that I have sort of, probably the last 12 to 18 months jumped back into it and made some really conscious decisions on education and steps forward, that sort of stuff is we have two kids and I am from Sydney, for your listeners, and the property prices here are stupid. And I look out and think well okay it's a three pronged attack for me.

First is I need some kind of income when I get older. The government’s not going to support me, I know that much. Superannuation yeah that will take me so far but I want a life style down the line.

The second one is I've seen a lot of people do it. I know that it can be done. I'm not the smartest guy going around but I think I can actually do this.

And the last and most important one for me is i don't know how my kids are ever going to be able to afford to live in Sydney and I want them to have that option if they can. And if I can do some things now, which down the line mean that they have got an opportunity to lean on me and say, "Hey dad can we get a little bit of equity or can we help us kick-start something." Then that is where we want to go.

So Julie, my wife, Julie and I made a decision that they're kind of our overarching plans I guess you can go that way.

Phil Tarrant: Are they plans or principals really?

Simon Grant: Principals I guess.

Phil Tarrant: I guess they are more principles aren't they? So give your kids a bit of a head start, commendable, I think it's great. There'd be an argument that say don't give them to much of a head start. 

Simon Grant: Yeah that's right yeah.

Phil Tarrant: You want to keep them hungry. You know?

Simon Grant: Absolutely. And they know that this investment pathway for us is not about just handing something over to them. It's about making sure they understand why we are doing what we are doing. They are only 10 and 12 so at this point in time there is a little bit more education they need to get.

Phil Tarrant: Let’s stick on that so do they know what you are doing?

Simon Grant: Yeah.

Phil Tarrant: Do they know you guys, would they go ... say you go to show and tell and go, "my mum and dad are property investors”. 

Simon Grant: Yeah.

Phil Tarrant: Would they identify you as that?

Simon Grant: Yeah they ... would they identify us as property investors? Probably not as property investors but they know we have a portfolio, small at this point in time, and they know we have plans to get that bigger. They ask us about them you know why did we do that? And why did we purchase this? And what are you doing with this house?

We've always had a policy of just being upfront with them. I come from a generation where our parents said, "pay your mortgage off and that's it and don't do anything else." You never spoke about finances. It wasn't discussed in the household around the kids. I don't believe in that ethos.

I think that kids these days are getting smarter and they need to understand a bit more about what's out in the real world, within limits. I don't want them to be stressed about, oh gee we can't afford this or can we afford that. They want to have a good life. I want to give them a good life but by the same token they know that we are doing this for a number of reasons.

Phil Tarrant: I recorded a podcast, I think it was last week or the week before, where we had an actual chat around financial literacy and who's responsibility it's to teach people how to be fiscally responsible and also have the scope, capacity and awareness to be able to take responsibility for creating a retirement that is not reliant on the government. For you guys that's part of the process of your property investment journey is to try and equip your kids with some skills to go out do. Do you like talk about it around a dinner table? Or is it just one of those really informal things you just -

Simon Grant: Probably more informal. Dinner table for us is trying to get the kids not to talk about Minecraft.

For us it's very, you know a mortgage broker will come in and the kids will understand we are looking at this property or we are looking at that one. "Why are we doing this dad?", "oh it's down there and this is the reason and this is where we think it's going to go." We haven't taken too much to them yet. I will, as they get a bit older, you know my oldest is in High School now so having some fiscal discussions with them, and they know, earn their money. My youngest is great at spending it all on lollies and he blew a whole lot of his birthday money recently and went, "oh I've got no money to buy anything with because I have just spent it on sugar." "That's it mate." "Oh can I borrow- " "Nope, you’re not getting any money you had it you've lost it."

It may be tough love but I think there is a time and a place to understand a bit. Each sort of chunk, each year they go through to give them a bit more understanding of what money means and how it can work for you and how it can work against you.

Phil Tarrant: I think I probably see the world the same way you do. I like it to be a real organic thing. You know with, and our kids are younger than yours but we are just trying to instil that understanding of stuff doesn't come easily. You have got to work hard for stuff. It's probably a thing all parents think about and have challenges about but how do you instil the discipline of people to actually appreciate potentially a gift or a head start in life through realising some equity or a property portfolio but a responsibility to look after it because a lot of people burn things as well. I don't yet know the direction.

I think it's sort of you make it up as you go along but I think financial literacy in kids is so, so important. Learning how to budget early on, not blowing all your money on lollies. Right?

Simon Grant: Yeah.

Phil Tarrant: If you'd do this here is a consequence. You rack up $20-30,000 on a credit card in your early 20s there's a consequence.

Simon Grant: Yep.

Phil Tarrant: You might have a great time doing it but it might set you back a little further. But anyway I digress.

Simon Grant: Yeah, yeah.

Phil Tarrant: But I like those – it's important, it's an important point. So your portfolio now do you want to tell us a little bit about it?

Simon Grant: Sure. Two. Massive two. Principle place of residence and we have just repurchased so I will take it back a notch I guess. Our journey has been both principle place of residence and investment. So we started with a unit in Miranda 2001.

Phil Tarrant: Okay so you have been at this for like 16 years?

Simon Grant: Yeah.

Phil Tarrant: Sort of. Okay so it's a story. Good.

Simon Grant: As I go on you will sort of understand why.

2001 we bought a two-bedroom unit. It was classified as off the plan but it had basically been finished. We moved in there and lived in that for just under two years. Through some circumstances inherited a bit of money and ended up moving.

So we bought a house in Kareela and as everybody does, great I am in a house now and I have got a bit of spare cash, let's invest somewhere. So we actually ended up selling, stupidly, the unit in Miranda. That helped to finance some renovations we did on the house, as our principle place of residence and ended up buying in Sydney.

Interestingly enough that went really, really badly of us. For about, well we sold it last year so -

Phil Tarrant: What did you buy?

Simon Grant: I bought a studio.

Phil Tarrant: Okay.

Simon Grant: And for all you listeners who listen to this a lot. That's your first mistake. In a very large block in World Square.

Phil Tarrant: Okay. We have actually spoken specifically about World Square and someone had a very similar ... yeah.

Simon Grant: So…look at the time and place I think there was a lot of emotion in it.

Phil Tarrant: So that was your question was it?

Simon Grant: That was my question.

Phil Tarrant: What did you think of our response?

Simon Grant: I actually liked your response. I got home and I said to my wife, "just listen to about 25 minutes of the guys talking through exactly what we've uncovered over our journey I guess."

Phil Tarrant: I've only just worked out that connection then – for our listeners we did a Q&A session probably three weeks ago.

Simon Grant: Would have come up about three weeks ago.

Phil Tarrant: Probably three or so weeks ago. Okay good. We just did good justification of your -

Simon Grant: Very much so.

Phil Tarrant: Okay.

Simon Grant: So we bought that unit with all good intentions of thinking okay, the goal of being Sydney's a world city. Sydney it will eventually go up in value. It is smack bang in the centre of Sydney. So you can't get any better location. And all of those principles held true except for the fact that there are so many units in Sydney now, it's a studio with no parking and it was in a very very large complex which had three different stratas – pools, gyms the works. So the strata fees were exorbitant.

And over time when Meriton decided to offload a few of them the price dropped. So we then started with negative equity. And so it has just taken a long time to drag back up there. And if your listeners recall I'm the ridiculously stubborn person, who my wife kept saying we need to sell this and I'm not going to sell it and make a loss. I'm going to hang onto this thing.

Phil Tarrant: Did we give you a hard time?

Simon Grant: You did yeah, massively hard time. That's fine cos I -

Phil Tarrant: Sorry.

Simon Grant: No, no that's okay. I deserve it. We held onto it, held onto it and ended up selling it last year and we ended up making a smaller profit off it. But at that point in time that was enough for us. I guess in the mix in there to we'd had two kids and my wife had been off work for five or six years, or sort of seven years all up part time work. So your ability to service debt drops dramatically.

So it took us a while to get back to a point where we felt comfortable. We stayed in a house in Kareela for eight years and through that time did some renovations. Managed to sell and move to where we are now in Caringbah South in 2011.

Phil Tarrant: Okay.

Simon Grant: And so the value of what we have has increased. Obviously part of that is the Sydney but part of it is just through going unit, house, house. Which has allowed us to feel a lot more comfortable with where we sit. Servicability, what we have got in equity and what we can do as our next steps.

That's been our sort of short journey and then as of the start of this year, end of last year we've started working with a property group. One of the key tenants of your show is to find yourself property buyers agents. So we've managed to do that fortuitous through a person that I know. Set them a task and we ended up buying a property down in Adelaide which we settled on at that start of this year. The previous owners have come back in as tenants for 12 months.

Phil Tarrant: Okay. Interesting. So that Q&A session we did that included, and I have just been trying to flick through my phone to get this. It was the 2nd of Feb, you can go and check it out. I remember discussing that particular thing where I went, "Oh World Square, I reckon there's a thousand units." Or hundreds and hundreds and hundreds and hundreds.

Simon Grant: A lot. For me it was blinkers. It was really just the emotional side of it got the better of us. And we were thinking okay we need to make the most of what we have here, let’s do this. I went to a real estate group at the time and this is what we are doing and it all made sense. I had a friend at work who had been investing through these same guys and his story had gone really well.

And so everything said to me invest and for probably a year or two it wasn't too bad and then the market declined there because of -

Phil Tarrant: It's all the secondary market moving stuff.

Simon Grant: That's correct. Yeah.

Phil Tarrant: I think the lesson from that is that, I can't remember exactly the conversation around it but I imagine it is what we said, irrespective of all the classic fundamentals are big global city, desirable location right near transport, right near amenities, right near restaurants, right near ticks all the boxes. 

Simon Grant: Yeah.

Phil Tarrant: But if you look at it at a micro level there is hundreds and hundreds and hundreds of apartments in there so the demand is always going to be.

Simon Grant: Yeah and that was it we paid $450,000 for that and sold it last year for $560,000. So in -

Phil Tarrant: In a market which has gone gangbusters.

Simon Grant: 13 or 14 years it's -

Phil Tarrant: If you put that same amount of money into four places out in Mount Druitt you'd be doing all right at the moment.

Simon Grant: Hence the reason I am standing here talking to you trying to figure out where I went wrong.

It all makes sense now and you are right, it's really about the strategy and how you approach that. And that's I think, where I say I had a start and I have a now and there is a piece in the middle. That's why the piece in the middle, the hamster wheel of life took over and I wasn't looking anywhere else. It was just about getting my head down and paying off the home mortgage and figuring all that out and I have blown a good ten years.

Both my wife and I have been disappointed in that but we are now at a point where okay we are setting that aside, I'm 41 now is the time to kick it off again. I've got plenty of time left.

Phil Tarrant: You are quite fortunate in that. For a lot of people the wrong purchase – that's it that there gone. For a lot of people I say wrong purchase, buying in mining towns, Port Headland, some people were paying ridiculous amount of money for properties up there that are now quarter of the value and they are negative. If they sell it they are in trouble. They have got to hold it but it is costing them money. They are probably out of the property investment game forever.

Simon Grant: Yeah.

Phil Tarrant: It has completely ruined them.

Simon Grant: That is where we sat for probably five years I guess because there was negative equity plus you know when you roll in the loan costs etcetera to it the loan was $470,000 and the last one had sold for $380 so I couldn't sell because I didn't have that much equity in the house and my wife was not working.

Phil Tarrant: You didn't want the banks sort of sniffing around saying, "Hey look this is negative equity give us our money back."

Simon Grant: Yeah. The only upside to that was I had one tenant for 11 of those 13 years.

Phil Tarrant: Oh that's okay. So that's good.

Simon Grant: She was there, reliable and paid every day. There was no questions about that so it helped to get through it. My buyer’s agent said exactly the same thing, "you were very lucky to have been come out the other side." And we were and so that is where we say okay we were lucky with that to a degree, silver lining, but jeez it hurt for the last 10 years what we could have had.

Phil Tarrant: I guess a boxing analogy. You have taken a whole barrage of punches, you’re on the canvas, you are nearly down and out, it is nearly game over. How have you been able to bounce back? Like mentally? Financially you are differently but mentally how have you been able to sort of shake that off and go there for someone who self admittedly is sort of quite stubborn? So that is probably a good thing right?

Simon Grant: Yeah, no it is. I guess internally I am pretty much an optimist so I look on the bright side of everything. And I am married, I have got two healthy kids, I live in a nice house. Life could be a whole lot worse.

Phil Tarrant: Attitude and gratitude.

Simon Grant: Yeah that's it right.

Phil Tarrant: Absolutely.

Simon Grant: You have to be thankful for what you have. I spend an hour and probably an hour to an hour and a half each way in the car each day to work and it gives you a lot of time to think. It gives you a lot of time to distress, even though people might think it is a stressful thing to do. I actually don't find that. Knowing that there is still a goal for me and I have always had that goal. I guess I just look at it as that period of time where I lost my focus. Earlier on to I guess, my wife is brilliant as most people partners are, and she was very supportive of this journey. But she wasn't really as invested in it.

Phil Tarrant: Is your wife a teacher?

Simon Grant: No she is a nurse.

Phil Tarrant: A nurse. That's right. I knew it was like, I was trying to remember that.

Simon Grant: But at the start of last year she decided that she needed something else as well. So she likes her job but doesn't want to be doing it forever and she came to me and said, "we've got to get back into property."

And that I guess kicked me off as well because it helps to have somebody who is with you on that journey. Up until that point of time, I think we had just forgotten about it. We had just kind of let things go so. In terms of why same reasons but they just became clouded in that period where I was unhappy with the performance of the property.

Phil Tarrant: So you'd say now that you have got quite a lot of clarity in your direction and goals long term?

Simon Grant: Very much.

Phil Tarrant: So you are a young bloke. You are only sort of 40 you have probably got at least another 25 years left of work in you. 

Simon Grant: Unfortunately.

Phil Tarrant: Well what you are doing I guess gives you a choice.

Simon Grant: Yeah.

Phil Tarrant: Let’s have a quick shat about that. What's your long term, as a couple as a unit, goal in terms of property investment? Do you have a number of passive income that is going to allow you to retire comfortably?

Simon Grant: I think it is not, and a lot of people I listen to on here some will have a number of houses they want. It's not that for me it's the passive income piece. So the goal is $100,000. I think that is the easiest number for most people to work with cos it is a simple number.

How we get there is, however many properties that is, and the reason for that is because it allows us to live the life we want to live and allows us to do whatever we need to do for our children in that point in time. When that occurs the goal for is is 15 years. I think is realistic, oh we will see. But that is also having the principle place of residence paid off. So I am still old school. We are both still old school and we want the home paid off as quickly as we can and whether or not it is going to be achievable I have set a target of that with my wife for 10 years. So 10 years to get rid of the home so to speak and then 15 years to have built up the equity to be able to then sell and do whatever we need to do.

Phil Tarrant: One of the great things about this show, it is quite rude to talk about money traditionally. In social circles talking about money is bad. This show is talking about money so I can go, I can ask you directly without any problems whatsoever.

Simon Grant: Yeah sure.

Phil Tarrant: How much is your house worth? And that is okay because that is what this show is about. I don't really get into how much money people make and stuff normally.

Let’s have a chat about your principle place of residence. So you want to grow your portfolio, your investment portfolio to help you realise $100,000 in passive income over time, 15 years. It's a good goal. How do you sort of weigh up driving down your mortgage and saying okay our repayment? How much are your repayments on your principle place of residence a month?

Simon Grant: Not huge. Probably we do about $1,500 a month we pay off.

Phil Tarrant: $1,500 a month and do you pay off more than what you need to pay off?

Simon Grant: Yeah.

Phil Tarrant: So I guess the question is how do you weigh up driving down your principle place of mortgage to get rid of that debt and it's good to be clear because it's good asset to hold, you don't pay any capital gains on that. Versus well if I was actually channelling that money into potentially supporting another property purchase or numerous property purchases. How do you do that balance?

Simon Grant: It's a delectate balance. And that is for us probably the next step. I guess with selling the Worlds Square unit and purchasing in Adelaide we have basically just swapped out what we were paying and what where the overheads so we are now at a point where the accountant has got to come in and sit down and we will have a look at the numbers. I work in an industry where if sales targets are met bonuses are paid. So generally the way -

Phil Tarrant: Are you a sales guy?

Simon Grant: No I work in marketing.

Phil Tarrant: Okay.

Simon Grant: But we still get sales bonuses associated with -

Phil Tarrant: You still get remunerated?

Simon Grant: Yeah.

Phil Tarrant: Good.

Simon Grant: For me we look at it and say okay when the bonuses come in there either going to one of three things. Paying bills, putting it onto the home loan or having a holiday. They are kind of our three luxury items. The salary is the salary and that pays all the bills and anything extra just goes on there. For us over the last few years it had just been about pumping down the home loan. And now we've got the equity and we are comfortable and there is, I guess the safety feel for both of us. That if everything went - 

Yep if I need to sell the house I can still afford to buy something else we can all afford to live in. That I think is going to be the biggest challenge for us moving forward. What steps do I take with Julie to make sure we can still invest but also we can pay the home loan down. So the 10 years may not be reasonable on the home loan. I'm prepared to admit that. But you have got to put a goal out in front of yourself and see if you can hit it I guess.

Phil Tarrant: It's quite funny depending on who you speak to as a sort of trusted confidant or a financial advisor. I know if I went to my accountant and said. "oh I am thinking of paying down my family home before I do anymore investment." he would go, "You're a mad man. You've got 50, 60% equity in your Principle place of residence you should be using that to create wealth over here." And you would go to other people and they would say don't invest in anything drive your home loan down and get that nice and secure.

You are going to get different advice from different people depending on your risk apatite and how you feel about it. A lot of people think it is madness to be extracting equity out of a family home to support risky in sort of quotations "property investment decisions". Where is your risk appetite really lie with that?

Simon Grant: We are right in the middle. People would say I am conservative. I don't believe I am that conservative and I know my wife and I are very similar in that sense. We are very aware of finance. She does all the, looks after all the finance for us. Which is why when you asked me what I pay I had to think of it.

We are kind of right in the middle. I think that there is a line that we can take which will allow us to do both. We have a good amount of equity but it doesn't mean that I can't still add to that. Which is my sort of safety buffer. And at the same time use the equity that I have to start, and the idea obviously here is currently work Cross-collateralize, which is not what I want to do down the line. But if I can get to a point with Adelaide that we are comfortable with it we take that off and then Adelaide is where we start to get out equity out of and then maybe start a second one with Caringbah and we sort of go that way.

So it is actually taking a bit of equity and paying a bit off, and taking a bit and paying a bit off, and taking a bit. That's the way I look at it. Now as you said some people will say it may offer you a, I don't know what it is 50 per cent, 60 per cent at the moment maximise that out. But it is also the serviceability side. I'm in a full time role my wife's four days a week as a nurse. We're not millionaires we don't own lots of money so it's being able to actually pay those if everything goes south. So that's where the conservative part comes in. I am not going to put us at too much risk and my wife doesn't want that either so what steps do we take?

Phil Tarrant: So the place that you bought in Adelaide did anyone help you with that purchase?

Simon Grant: Yeah so we used a buyer’s agent.

Phil Tarrant: Okay.

Simon Grant: And said look we've got a certain amount of money can you find us something.

Phil Tarrant: And they put you in Adelaide?

Simon Grant: Yeah for that you are probably not going to get much in Sydney so we paid $530,000 for it. It may be right it may be wrong. Queensland, I don't know but Adelaide is where they were looking, Adelaide and parts of Melbourne. 

Phil Tarrant: Okay.

Simon Grant: And they found this one a couple of k's out of the centre of Adelaide 840 square metres, decent sized block. The catch on it at the moment is you can't subdivide just yet.

Phil Tarrant: Okay. So it sounds like something you can build on but ... so you bought that asset with the idea of, obviously you want it to wash its own face, so generate a reasonable yield. But it's been purchased for the primary reason that it should be going up in value so you can use that to extract equity.

Simon Grant: That is correct yeah. So the goal of us is one or two, probably two growth properties and then look at something as a yield to give us that conservative side of things to just cover us a little bit more and then go back for another growth or two and then another yield. We are trying to get a bit of a balance there so there is almost a self-servicing of the properties as they go.

Phil Tarrant: So the way that you are talking right there, a couple of growth plays and a yield play etcetera you weren't even thinking of that in 2004?

Simon Grant: No. God no. It was, "Hey look at that great unit in the city let’s just buy that." That was as simple as it got. And that was the issue. I was talking to Sam here about the steps you need to take and how you can mind can get open to a whole lot of other ways of doing things.

Phil Tarrant: So if you could jump in a time machine and go back to you standing there looking at ... so the World Square was built?

Simon Grant: It was built.

Phil Tarrant: You could see it going, wow wouldn't it be great to buy an apartment there. We’re going to get rich because of it.

Simon Grant: We walked in, we looked at it.

Phil Tarrant: What would be the one thing you would say to yourself other than don't do it?

Simon Grant: Well that's it I'd take a big bat and hit myself in the head and drag myself away. It's just no. There is no way in the world. I would probably actually sit down with myself and say, "here's the numbers and here is what you have got to look at from a longer term perspective. Sydney whilst it is a great place, have a look around what you are paying you could actually buy an established, in probably a smaller sized black still in Sydney maybe two bedrooms or one bedroom with a car. You’re glazed over by this idealistic world that doesn't exist."

Phil Tarrant: Did you get sold the property or did you buy it?

Simon Grant: I think we got sold the property.

Phil Tarrant: That's an important difference.

Simon Grant: Yeah it is. I mean we spend a bit of time going backwards and forwards and checking out the location and doing the numbers on it and we had a spreadsheet done for us. And they made sense if the equity grew at the rate the equity was meant to grow.

Phil Tarrant: And they gave you projected equity?

Simon Grant: They gave me projected equities and that thing.

Phil Tarrant: Do you have all that still sitting there?

Simon Grant: I have still got it yeah. It's just sort of on my desk at home just to remind me of how bad a decision it was.

Phil Tarrant: Good.

Simon Grant: And it was meant to be worth a million dollars by now.

Phil Tarrant: What did you sell it for?

Simon Grant: We sold it for $560,000. I guess that is for the listeners out there make sure you really do your homework. And don't just think of the numbers as you said it ticked every box except for the fact that it was a studio and it was a little bit small. And so we made it a conscious decision to get out of Sydney, out of the Sydney unit market at least. I drive past Roseberry, Green Valley-

Phil Tarrant: Yeah I do a lot of trips to the airport and I see it all of the time and I just go -

Simon Grant: Nup, not at the moment. And I know that there is still an appetite for it and I know that everybody says, "yeah but everybody's still buying the units." That's great, I'm not.

Phil Tarrant: What will happen there, and for our listeners that don't know, it's sort of the Eastern Distributor from Sydney to the Airport and there is a massive development going through there right now – Alexandria, those areas, it's quite a cool area. You know Menai is good there is big shopping centres and stuff there. It will get to a point where they cannot build anymore units and then overtime, it might be two decades when, okay it's a desirable place to live right now but the need and drive for people to live in that area, because the rest of the world has got even more expensive, it is going to start going up in value.

But you don't want to be the first person in there particularly in somewhere that is going to grow and evolve. Okay lessons learned Simon I like it. I am happy you came on. I didn't make the connection beforehand so it's probably prefer it to happen on the show because it just reminds me that people need to be reflective about their property investment journey. It's okay to say, "I need some help please." Or it's okay to say, "I've made a mistake here and I need to do something about it." The fact that it probably took you a little bit longer to do something about it than what you did, at least you did something.

Simon Grant: Yeah.

Phil Tarrant: So that is the right thing to do. But you have learned from it and you are a much better and more sophisticated property investor as a result.

Simon Grant: I think you have to be, I think the key for me was, and fair credit to Julie my wife she's been on me about this for a long time, it's first and foremost we are a partnership and I should have listened. But more importantly for those people out there who are considering a property and whether they get into it you've got to be doing it the right reasons and the right way.

And as you have said many, many times if you do it the right way it's great. There are steps you can take and ways you can do it and for me right now is about building our team. So I have got a good mortgage broker now, who works well with us and structured out loans really well for this last purchase. So we still had the unit when we had the purchase going through for Adelaide. So it shows us that we can still borrow.

My accountant I haven't seen for a while. He's been good when I have seen him but that was the reason I wrote in and asked you the question about how do you look for a good accountant?

Phil Tarrant: Yeah.

Simon Grant: Buyer’s agents and buyer’s advocacy groups. The group we worked with I was comfortable with, we will probably actually have a look at maybe some others the next time around just purely out of interest.

Phil Tarrant: Shop around.

Simon Grant: To again, not just be stuck with one and think that is what we need to do. Ask the right questions of people. If you are going to buy, it is an investment and it's a big commitment. You are not buying a new car for $20,000 – it's half a million dollars plus in a lot of instances.

Phil Tarrant: I'm really conscious about that sometimes because we talk big numbers and it might sound quite flippant. You go $500,000 okay where else did you buy? How much was that? Okay $600,000. It's a lot of money.

Simon Grant: It's huge.

Phil Tarrant: It's a lot of money. Because we on the show and smartpropertyinvestment.com.au we are so used to talking about these things we talk about it with a certain level of confidence, it's a commodity right? But it is a big investment and people need to understand that if you are investing in property it's a serious game. You want to get it right. You want to do everything in your possible disposal to make sure you get it right. Because if you get it wrong it can set you back 10 years.

Simon Grant: It can.

Phil Tarrant: If you get it really wrong -

Simon Grant: It could be worse.

Phil Tarrant: You could be worse. Simon, mate I have really enjoyed the chat. Thanks for coming in mate.

Simon Grant: Yeah no problems.

Phil Tarrant: It's good fun.

Simon Grant: Thank you Phil.

Phil Tarrant: Let’s get you back when you are buying your next place we will get you back on the show and you can tell us all about it. 

Simon Grant: I've got to go and get the tax return and get through this year and all the capital gains etcetera to see where I end up but then back on for the next one.

Phil Tarrant: Nice. It's good. Keep it up. Remember to check out smartpropertyinvestment.com.au – heaps of stories, everything you ever want to read about property investment is probably there. If you'd like to ask us any questions and Simon – you can testament to this so if you write in we get back to you and stuff happens.

Simon Grant: It was pretty quick as well.

Phil Tarrant: Yeah. Good.

Simon Grant: Appreciate it.

Phil Tarrant: Appreciate the feedback while I’ve got to shout to Tamikah for sorting that out but do write to us [email protected], even if it's just an observation about the show or a specific question that we can answer or if you'd like to come onto the show we are always looking for good investors to bring on. Remember to follow us on all the social stuff Facebook, Twitter, LinkedIn – just search Smart Property Investment and please keep those rankings coming on iTunes we really do appreciate them.

Thanks for tuning in we will see you next week. Bye bye.

 

 

 

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