podcast

How travelling cross-country helped this investor buy 9 properties in 6 years

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Kevin Sum says property investment is a lot like dating, but that by casting a wide net across various Australian property markets, investors can increase their chances of happiness by finding ‘the one’.

In this episode of The Smart Property Investment Show, he joins host Phil Tarrant to detail his cross-country investment journey, discuss his thoughts on emotional investment, what he looks for in the right property market and his advice to budding investors on how they too can begin their whirlwind romance with property.

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

 

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

 

Listen to other instalments of The Smart Property Investment Show:
Episode 78: How house-sitting is helping this young couple achieve their investment goals
Episode 77: How will the government's changes to tax depreciation impact investors?
Episode 76: SPI portfolio update: what's next for the team?
Episode 74: How this investor plans to double his portfolio within 10 years
Episode 73: Bad builders: how this investor bounced back
Episode 72: Policy changes to interest-only loans: what buyers need to know
Episode 71: How this 'stubborn' investor recognised a property lemon
Episode 70: How this investor complements each property and balances his portfolio
Episode 69: Are you a ‘lazy’ investor? Consider the benefits to working with a financial team
Episode 68: Special episode: audience discussion live from the Property Buyer Expo

Full transcript

Phil Tarrant: G’day, I'm Phil Tarrant from The Smart Property Investment Show, thanks for joining us. Always good to have you. We like stories here; stories of investors. That's pretty much what our show is about, so we try really hard to get diversity in the topics we get on the show. Everyone sees the world a little bit differently when it comes to property investment. Some people love buying off a plan, some people hate off the plan purchases. Some people think you should buy a property and flip it really quickly to make a few bucks whereas other people's strategy is to buy and hold and look to create wealth over a long time.

Myself, I'm a buy and hold sort of guy. I like to buy market under market value property to add or manufacture equity where I can through cost-effective renovations and hold those properties through a number of cycles. So if you haven't listened to the stories around my own portfolio, I do encourage you to do so. If you look back through some of the other episodes of The Smart Property Investment Show, you'll see them all there. I chat with my buyer's agent account. So I'm happy to share my story and I appreciate when people come onto the show to share their stories. I think through sharing stories you can get a lot of different ideas about how people see the world and the way in which they go about building wealth through property. And I guess on that basis, I've invited Kevin, Kevin Sum onto the show today. Did I get that right? Kevin Sum?

Kevin Sum: Yeah, that's it.

Phil Tarrant: S-U-M?

Kevin Sum: That's me.

Phil Tarrant: That's you. Onto the show. And he's going to chat about his property portfolio. So for those people who have been on the show and if you'd like to come on the show, make sure you get in connect with us to let us know your story and you have to come on. These are very unscripted so I know that Kevin, number one, is a property investor, and I know, number two, he's happy to come onto the Smart Property Investment show to share his story. So let's have a chat about you, Kevin.

Kevin Sum: Yeah, thanks Phil. So yeah, I basically started investing six years ago. Or, basically, it can't really be called investing because six years ago, I was just out of uni, got my first job, and then I was thinking, you know what? Why not buy a property, live in it, and hopefully pay it off so in the future, if things happen, at least I've got a property to my name.

Phil Tarrant: So the classic Aussie dreams of buy a property and work really hard and pay it off so you're debt fee.

Kevin Sum: 100 per cent.

Phil Tarrant: Okay. So how long did it take you to change that mindset?

Kevin Sum: Basically six months.

Phil Tarrant: Okay.

Kevin Sum: So what happened was I found a property in Granville.

Phil Tarrant: That's Granville, New South Wales.

Kevin Sum: Yes, Granville.

Phil Tarrant: For our listeners outside of New South Wales.

Kevin Sum: That's right. Actually on Pitt St in Granville. So I bought that in 2009, took advantage of the first home buyers grant. Back then it was like $14,000. So moved in for a while, around six, seven months, and then after six, seven months decided, 'You know what, let's move back home, it's much easier.' So then-

Phil Tarrant: Sorry, was that a house or a unit?

Kevin Sum: It's a unit.

Phil Tarrant: A unit. Where's Pit Street in Granville? Was that like on the main drag there is it?

Kevin Sum: It's near Westfield.

Phil Tarrant: Okay.

Kevin Sum: So it's the street leading up to Westfield but towards the Maryland side.

Phil Tarrant: Okay.

Kevin Sum: Yeah, lucky I moved back home, because after I moved back home, decided to rent it out, and I actually got pretty good rent. I think it was like 6 per cent or more than 6 per cent.

Phil Tarrant: Yield on it? Gross yield?

Kevin Sum: Gross yield, yeah.

Phil Tarrant: So that's in Granville on Pit Street. So how much did you pay for...

Kevin Sum: I paid $258,000.

Phil Tarrant: $258,000 for a two bed-

Kevin Sum: For a two bed, one bath.

Phil Tarrant: Car spot?

Kevin Sum: Yeah, one garage.

Phil Tarrant: A garage.

Kevin Sum: Yup. So it's one of those small blocked off units. I think there was 15 in the block. And yeah, just vanilla, no lifts, no nothing. So it was good and stuff, looked pretty new, it was built in 1999 or 2000.

Phil Tarrant: Okay.

Kevin Sum: So yeah, I guess I was happy with it, looked pretty new. I was happy to live in it. But as I said, easier to live at home, so I moved back home. And found an agent to rent it out and I got basically $350 from day one.

Phil Tarrant: Okay. So it was positively geared essentially?

Kevin Sum: That's right. And I guess what led me into investing was basically my mortgage. So back then I was with a bank that I didn't really like, so then I refinanced my mortgage to another bank. So usually like, as you know, when you refinance, they always do evaluation on it, and I was like, 'Okay, it's pretty good. It actually went up.' So I took the extra equity and basically just started my investment journey.

Phil Tarrant: So you bought it for $258,000 in... When was it?

Kevin Sum: 2009.

Phil Tarrant: And when did you refinance? When did you get an evaluation on it to refinance?

Kevin Sum: I got evaluation probably around mid to late 2010.

Phil Tarrant: Okay, so like a year later.

Kevin Sum: I think it was less than a year. Like 10 months or something.

Phil Tarrant: And what was the evaluation then?

Kevin Sum: It came back at like $285,000 or something like that.

Phil Tarrant: $285,000.

Kevin Sum: Yeah.

Phil Tarrant: So you made like $33,000 increasing value. Creditable equity.

Kevin Sum: In equity, yeah.

Phil Tarrant: So 200... Did you go hang on, that's the easiest $35,000 I've ever made.

Kevin Sum: Exactly.

Phil Tarrant: Yeah.

Kevin Sum: Yeah. I was only earning $40,000 back then.

Phil Tarrant: Okay. So you made, say without doing any work, you made pretty much your annual salary in ten months just holding on to an asset which happened to be bricks and mortar.

Kevin Sum: Exactly, yeah. It basically just buy my home, basically.

Phil Tarrant: And did you get that straight away? Like did you go, 'Oh, is that how it happens?' Did you have any expectation that you'd get that growth?

Kevin Sum: No, it was actually by accident. I was actually pretty surprised. It's funny because when I actually bought the property, the bank valued it at lower than my purchase price, but I still went ahead because I thought, 'Look, it's a good property. It's really dirty in side, but you spend $400, get someone to do a clean, it looks like new.'

Phil Tarrant: So how'd you stump up the cash then? So you bought it for $258,000.

Kevin Sum: Yeah.

Phil Tarrant: So the bank lent you on what evaluation?

Kevin Sum: They lent me on around $230,000. So I actually went to the ma, 95 per cent or something.

Phil Tarrant: So you did 95 per cent lend at $230,000.

Kevin Sum: Exactly, yup.

Phil Tarrant: All right.

Kevin Sum: So then, yeah. Basically during that year, I was paying my mortgage when I was living there, but at the same time investing shares, saved like crazy, and when I revalued it, I was like okay, I've got some extra cash now, shares made me some money, so I decided to keep going.

Phil Tarrant: Okay. So you moved back with your parents?

Kevin Sum: Yeah.

Phil Tarrant: How'd that go? Was it all right?

Kevin Sum: It was good.

Phil Tarrant: Pretty easy?

Kevin Sum: Yeah.

Phil Tarrant: Get your food and stuff, coffee and looked after, washing done.

Kevin Sum: Everything's done, yeah.

Phil Tarrant: That's cool. So do you still live at home? No.

Kevin Sum: No.

Phil Tarrant: Yes? No. Okay.

Kevin Sum: I actually moved out only last year.

Phil Tarrant: Oh, really?

Kevin Sum: Yeah.

Phil Tarrant: So you lived at your parents' for all this time.

Kevin Sum: Yeah.

Phil Tarrant: And just before we came on air, you told me that you now hold nine properties, so.

Kevin Sum: I sold two.

Phil Tarrant: You sold two, okay. So we're going to go through the story of how you've done that with your parents, which is pretty cool.

Kevin Sum: Yeah.

Phil Tarrant: So moved back home with your folks. So what did you buy after that?

Kevin Sum: So after the refinance, I was thinking, 'Yeah, is property something for me or should I look into other investment vehicles like shares and managed funds and stuff?' And I was like, no, property is good; you can see it, feel it, you'll get rental income and I think it's relatively safe, so I started looking. I didn't have much money back then, so looked wherever the cheapest place is and stumble upon Campbelltown.

Phil Tarrant: Okay.

Kevin Sum: So I found a house there. I think they were asking for $310,000 or $320,000 – something like that.

Phil Tarrant: What'd you get it for?

Kevin Sum: I got it for like $308,000. It's a good old fibro. I got attracted to it because it got high rent so there was an existent tenant there paying $390.

Phil Tarrant: That's good yield.

Kevin Sum: And back then, because I wasn't on a high income, I was like, yeah, okay, at least there's a tenant there, it pays $390, so it covers the mortgage, covers most of my costs.

Phil Tarrant: One of your objectives in investing in property was ensuring that the yield play was good.

Kevin Sum: Back then, yes.

Phil Tarrant: Back then. So because you earned what you earned, I think it $40,000 or something like that.

Kevin Sum: $40,000, yeah.

Phil Tarrant: Which is not a bad salary. But you don't have a lot of fat there to play with should your property be un-tenanted, so you needed to find properties that delivered a yield and had some steady tenants in there.

Kevin Sum: Correct.

Phil Tarrant: So was that in Campbelltown or one of the suburbs of Campbelltown.

Kevin Sum: No, that's actually in Campbelltown.

Phil Tarrant: Okay. After Campbelltown, where did you go to?

Kevin Sum: South of Campbelltown, worked there for like a year, and then I thought, 'Okay, let's try to revalue my Campbelltown place and my Granville places together,' and I forgot what the value was back then, but then I got some equity as well, sold some of my shares, and decided to look for my third property. Then I was thinking, 'Okay, I really don't have much money left.' At the same time, I don't want to use all the money that I have for deposits, so then I looked for something even cheaper.

So then it was just like doing some research on line, looking at forums, reading magazines, everything. And I stumbled upon Orange. Basically just one weekend, drove to Orange, had a look at the town, and started looking at the houses there. It's a nice town. Back then it was 38,000 people. I think now it's risen to like 41, 42,000 or something like that. And yeah, basically just found a cheapie there. So I bought a house in Orange for $147,000.

Phil Tarrant: Okay. Is that like walking distance to sort of downtown, the centre and stuff?

Kevin Sum: Yes. It's on East Orange and I think you can walk to the cafes and the post office. There's one in East Orange, I think there's a post office.

Phil Tarrant: So Orange. Where did you go after Orange?

Kevin Sum: What happened with Orange was very interesting. I was actually making an offer for Orange, but someone beat my offer. So I think I offered like $145,000, but someone paid $147,000. So then I lost it. I was pretty unhappy about that. Back then, you get emotional. So I was like, 'no, I need to find another.' So I kept looking from Orange. I was looking at towns from Orange, surrounding Orange and even further than Orange, so I looked at towns like Dubbo and further towns like Broken Hill. So then, yeah, three weeks later the agent came back and said, 'The original buyers' finance fell through so do you want it? If you want it, pay two grand extra, just match his price and it's yours.' So that's how I got it for $147,000.

Yeah, but at the same time, because during those three weeks, I was basically looking crazy because I just wanted to get something. You know how when you've nearly got something and then you lose it, you feel really bad. So yeah, I did a lot of research in Broken Hill. So then after Orange, I went to Broken Hill and bought it. So I took two weeks off, me and my mate in little Toyota Yaris drove down to Melbourne, went to the wine yards, Yarra Valley, then went to Adelaide Rose Valley, have some wine as well, then drove up to Broken Hill and bought a house there.

Phil Tarrant: Obviously chasing yield?

Kevin Sum: Chasing yield, yup.

Phil Tarrant: In Broken Hill? You get some great yields out there. So you bought one property in Broken Hill.

Kevin Sum: Yes, I did.

Phil Tarrant: And how much did you pay for it?

Kevin Sum: $48,000.

Phil Tarrant: $48,000, okay. And what sort of yield did you do on it?

Kevin Sum: Well, from day one it was getting $180, so gross yield was around 18 per cent or something. Net yield I worked it out to be around 5 per cent.

Phil Tarrant: So when did you buy that property for $48,000?

Kevin Sum: 2012 or 2013, I forgot.

Phil Tarrant: And what's it worth now do you think?

Kevin Sum: I got it valued two years ago for like $100,000. Well, basically, it was a $100,000 six months after I bought it. After I got it valued, it didn't really go up much after that.

Phil Tarrant: So why is that do you think? Why did it jump up? Why did it double in value in six months?

Kevin Sum: I think because I bought cheap.

Phil Tarrant: Okay.

Kevin Sum: Yeah. Back then, when I went there, I spoke to one of the largest rest agents in town and I said, 'Look, we have a house to market,' and basically she said, 'To be honest, this month I've sold five houses.'

Phil Tarrant: Okay.

Kevin Sum: Yeah, they're the biggest in town. Then a year later, I went back there again, drove down there again, and had a look at how the house is going, see if it still exists, and I asked her the same question; how's the market? And she said, 'Oh, I sold five houses in two weeks.' So I guess I was lucky. I bought at the correct cycle.

Phil Tarrant: And what did you buy for $48,000? What was it?

Kevin Sum: It's a three bedroom, ironclad house on 500 land.

Phil Tarrant: Okay. And close to town?

Kevin Sum: Close to town.

Phil Tarrant: Would you ever live there?

Kevin Sum: No.

Phil Tarrant: Why not? What's wrong with Broken Hill? It's a great place.

Kevin Sum: It's a good place.

Phil Tarrant: It's hot.

Kevin Sum: Yeah. It's middle of... You can't go anywhere. The closest capital city is probably Adelaide, like five hours away.

Phil Tarrant: The reason why I ask you that is why is a property $48,000 and why is a property $100,000, right? It's all about demand for those properties. And I know a lot of people who've been out to Broken Hill chasing yield and the yields are great. The yields are brilliant. But when you look at it in absolute terms, in terms of dollars, it's not that much, right? The number sounds really good. I guess the message for readers then is as part of a diversified portfolio, is it okay to have a Broken Hill asset in there? Yeah, absolutely sure, it's great.

Kevin Sum: Of course, yeah.

Phil Tarrant: But for new investors who might be attracted to $50,000 or $80,000 properties out in Broken Hill, the question to ask yourself is why are you investing in property and if you're investing in property on the basis that, like all good investors, you're hoping the property will go up over time, Broken Hill might not be that place for you. You should be maybe looking somewhere else. What would you say about that?

Kevin Sum: Yes and no. It depends how you look at it. My theory is, I bought in Broken Hill because I only had that 20 per cent deposit back then, so.

Phil Tarrant: That's what you had. That's what you could afford.

Kevin Sum: I only had like maybe $20,000 in the bank. So to buy that Broken Hill property for $48,000, 20 per cent is just under $10,000. I think stampduty was like $900 or something like that. Something crazy. So all in all, I paid probably like $12,000 deposit. Now that $12,000 deposit got me back from evaluation an extra $40,000 because it got valued at $100,000 and I cashed out 80 per cent of the equity.

Phil Tarrant: Well you manufactured.

Kevin Sum: Correct.

Phil Tarrant: $45, $50,000 by doubling that. So it's whether or not you're a really a shrewd investor and you spot something with is 50 per cent under market value and if that's the case, absolutely brilliant. You've been able to make yourself $50,000 by acquiring something. That $50,000, you take that into a city market or to a Melbourne market or to a Brisbane market, it's a deposit in Brisbane, plus all your other incentives, 20 per cent, like a $300,000 property.

Kevin Sum: Exactly.

Phil Tarrant: So you had a percentage usage for that money because of the reason for investing in Broken Hill. Which is okay. Like I said, it's a bit of a smart play. But did you get lucky by getting something so far under market value, I don't know. There's a lot of luck in property investment.

Kevin Sum: I think so as well.

Phil Tarrant: I've been lucky. But you make your own luck as well, don't you?

Kevin Sum: Yeah.

Phil Tarrant: So you need to be in there doing it to make your own luck.

Kevin Sum: I actually drove like 15 hours there.

Phil Tarrant: It's a long way. It's a beautiful place to go to. It's crazy out that way.

Kevin Sum: I even got pulled over by a cop in the Outback, driving a little Yaris for speeding.

Phil Tarrant: Oh yeah? Did you get 'What are you doing out here?'

Kevin Sum: Exactly. I even asked him, 'Are you coming back my way or are you going the opposite way.' And he told me, 'I'll be going opposite way.'

Phil Tarrant: Okay, put your foot down.

Kevin Sum: Exactly.

Phil Tarrant: It just reminds you how big Australia is.

Kevin Sum: That's right.

Phil Tarrant: Okay, so after Orange, where did you go?

Kevin Sum: So after Orange was Broken Hill. After Broken Hill, I was still on low income. I think the city market hasn't gone crazy back then yet. So I was still chasing yields so I looked into a town called Moree.

Phil Tarrant: Moree out northwest?

Kevin Sum: Yes.

Phil Tarrant: New South Wales?

Kevin Sum: Yes.

Phil Tarrant: Another rural town.

Kevin Sum: Yes.

Phil Tarrant: I got that right. Northwest?

Kevin Sum: Just on the boarder of New South Wales and Queensland. I forgot how I stumbled onto that town. I think I was looking at properties at the same time I was looking for hot springs. So I love my hot springs, go down to Melbourne on the weekend, spend a night at the Mornington Peninsula Hot Springs. And I read there's some hot springs; I think the Artisan Ball? Okay, so why don't we make a trip up there? So me and my mat-

Phil Tarrant: In the Yaris?

Kevin Sum: No, not in the Yaris this time, in my Toyota Aurion this time. A little bigger. Went up there, went to the hot springs, at the same time had a look at the real estate, that's what we do.

Phil Tarrant: Does that make it a tax deduction does it? For the petrol because you're driving out there looking at property?

Kevin Sum: I thought I could, but apparently because I haven't bought it, I can't.

Phil Tarrant: Not yet. Got to be careful.

Kevin Sum: I need to buy first.

Phil Tarrant: A good accountant will tell you that.

Kevin Sum: That's right. So it was an interesting town. You've got the good parts of town, bad parts of town. So I found something in one of the better parts of time, a house, 3 bedroom house on I think around 700 or 800 land. It's like a little small brick veneer, 3 bedroom, 3-1-1 house. Bought it for $175,000 and I was getting $320 rent from that.

Phil Tarrant: Another good gross yield.

Kevin Sum: Yeah, just good yield. Don't think that one has moved much. Probably it's a similar price or maybe it's go up maybe $20 or $30,000, but nothing major.

Phil Tarrant: So after Moree, did you say regional or you went back to the cities?

Kevin Sum: Yeah, after Moree, I actually went back to the cities. After Moree I started looking Brisbane, I think that was still the early stages of Brisbane. People started looking, but not a lot. That was three years ago I think. Then yeah, I started looking Brisbane and I didn't know anything about Brisbane so virtually what I was doing was I opened Google Maps and I started from the city. So basically typed in each suburb into realestate.com.au and just basically researched the houses. Probably spent four or five hours every single night just on that realestate.com looking at different suburbs.

Phil Tarrant: So you're responsible for all their traffic increasing for website traffic.

Kevin Sum: Exactly. They should thank me for it.

Phil Tarrant: Exactly. Okay, well let's have a chat about that. So you look at a suburb and go, 'Okay, I'm going to look at suburb X, wherever.' What do you look for though? What did you think was the right things for you to look at to realise whether or not a property or a town or an area was right for you?

Kevin Sum: Well let's talk about capital city, let's talk about Brisbane because it's a capital city which I had no idea about. I look at relative value, so I start off in suburbs near the city, then go further out. So it's like; okay, why is this suburb much cheaper than that suburb, but it's only like a five minute drive? Then I start researching into it, okay, that's a flood, or what type demographics, you know? Is there potential? Is there infrastructure? So, for example, Springfield and Redbank Plains, it's just like five, ten minutes’ drive. Why is Redbank Plains much cheaper than Springfield? Yes, Springfield has a lot of infrastructure, but when you're talking about a ten minutes’ drive, it doesn't really matter. I just look for relative value.

Phil Tarrant: And did you have like a checklist? Do you go through and say, 'Okay, has it got this, has it got this, has it not?' You just sort of... It's a very organic, fluid thing for you, is it?

Kevin Sum: That's right.

Phil Tarrant: You just get a gut feel for it and you start to sort of... I guess you start drawing the dots, right? You start going, 'Okay, that's right. It's got that, it's got that. Let's explore this place a little bit further. Has it go this?' Then you start looking at local councils, is there any infrastructure development plans? So that helps you sort of locate a particular suburb or area and then you start digging down further, is that what you do?

Kevin Sum: That's right, yeah. And usually in terms of finding the actually house in the suburb, I try to look for something which is one of the cheaper houses and the suburb. I'll find out why is it cheap? Is it just because it's run down? If it's run down, you can fix it up. Or is it because of small land? Small land, then forget about it because you can't increase the land size. Or is it because there's easement? If there's easements, then, depending on what easements, it's probably another forget about it.

Phil Tarrant: So just for our listeners, can you explain what an easement is?

Kevin Sum: So an easement is like if there are some restrictions to doing anything to the property. So an example might be; there's a sewer drain, a council sewer drain, or there's like a rain water drain up in Ipswich, a lot of houses might be effected by the gas pipe and even building up, there might be restrictions on how tall you can build. Usually that's not an issue. So basically restrictions.

Phil Tarrant: And how do you find out that information when you're exploring and looking at a property?

Kevin Sum: I just go to council websites.

Phil Tarrant: Okay.

Kevin Sum: Yeah. Just go to the council website, property inquiry, and it will tell you if there's any restrictions on that property.

Phil Tarrant: But it's a very good point. You spoke earlier in this conversation about you get emotionally invested in stuff and I think a lot of people get emotionally attached to a potential purpose and then they identify a problem or an easement or something significant, but they're rationalise that it's all okay. They'll go, 'Oh, it doesn't really matter, we'll sort that out later on, I'll fix it up.' But that is like a fundamental thing that can often change the upsides in investment from being just another house, something that you can develop or put granny flats on and stuff. So it's a very good point for our listeners, if I can point out. Sorry to interrupt you.

Kevin Sum: That's cool. Fully agree.

Phil Tarrant: So okay, you're exploring the Brisbane market, and where did you identify as a good place to buy?

Kevin Sum: I actually bought my next one in the Deception Bay.

Phil Tarrant: I know Margaret Lomas always talks about Deception Bay.

Kevin Sum: A little bit about Deception Bay; 20 year ago it had the highest housing commission population in the whole of Queensland. Now why I looked into that area is because Deception Bay is next to the water, it's a bay side suburb. Now you cannot have more water. You can keep building inland, but you can't have more water suburbs. So back then it as chief. I picked up my Deception Bay house, it's a 3 bedroom, 3-1-1, again, so it's a hardy plank house on a 600 land. I picked it up for $230,000 and from, actually not from day one. Six weeks before settlement I was collecting $310 rent.

Phil Tarrant: Okay.

Kevin Sum: So basically, I did a deal with the vendor and for some reason the vendor agreed to it and basically I was collecting rent even before settlement.

Phil Tarrant: You got the title. So did you negotiate on other terms of the settlement then to get that?

Kevin Sum: Basically what happened was; initially I just wanted to have early access because I knew that the vendors were going to move in-state and they had to sell. So I said, look, can you give me early access? And they said, 'Yeah, you can actually do whatever you want to the house, but the condition is you need to release $5,000 off the deposit to me. Now usually, when you buy a house, you'd never release the deposit because what if it falls through? It's hard to get the money back, especially when they've spent it. But was thinking, okay, $5,000, it won't break the bank. I can take the risk. At least it gives me time to clean up the house. They even told me, look, you know, if you find a tenant, you keep the rent. So yeah, it's an interesting purpose that one settlement got delayed like five times by the vendor and it got delayed for I think two or three months.

Phil Tarrant: Why was it delayed? Do you know?

Kevin Sum: I think the vendor’s bank had some problem releasing the title.

Phil Tarrant: So obviously, there's a lot more going on. They obviously needed some case and they probably-

Kevin Sum: Correct.

Phil Tarrant: So, it's quite interesting when, and it's a really good point that you're making, that often people get obsessed with negotiating on price and sometimes price isn't... Yes, drive hard on price, but there's so many other things you can negotiate on and one being early access. So you got access to the property.

Kevin Sum: I basically-

Phil Tarrant: How long were you receiving rent on that property before you actually started having to pay mortgage on it?

Kevin Sum: What happened was, I cleaned it up, I took me like three or four weeks to basically do some cosmetic renovations and after that, I started looking for a tenant. Booked them within two or three weeks and I was actually collecting rent for six weeks before it actually settled.

Phil Tarrant: So six weeks rent at $310, so you probably got two months mortgage repayments out of it.

Kevin Sum: Exactly, yeah. I didn't have to pay mortgage, no council, nothing.

Phil Tarrant: Or your renovations were free.

Kevin Sum: Exactly.

Phil Tarrant: Paid by the tenants. Smart move. So that's Deception Bay. Then where did you go after that?

Kevin Sum: After Deception Bay, kept looking Brisbane, got obsessed with the Redcliffe Peninsula, I think partly because of tall the infrastructure, which is going to go in and back then they didn't have the rail. So I was like, keep looking, then stumbled upon this house, which is one house from the water in Scarborough. Basically, It's a really rundown house, it's got termite damage and stuff, but it's one house from the wear and it's a slope down. So basically what happens is, one day, if I knock it down and build a story two house, on the second story I've got a 180 degree water view. I picked up for $429,000.

Phil Tarrant: So that's the most expensive property you've purchased today then?

Kevin Sum: Yes, correct.

Phil Tarrant: Was there anything after that property?

Kevin Sum: Yeah. I think a few months after that, I started looking into the Ipswich area and I bought a house in Red Bank Plains. That one’s a pretty interesting one; three bedroom, 3-1-1 as well, brick veneer, I bought it for $258,000, but it's on a 1,100 square metre land, which is 20 metre frontage.

Phil Tarrant: Big block. So you could put a duplex on it if you want.

Kevin Sum: I could build another house. Basically next year has actually subdivided.

Phil Tarrant: So you said that you're getting a lot more sophisticated as an investor as you sort of outline your journey from investing from 2009, your first property purchase, through to some regional towns. I notice you haven't gone back to the regional towns.

Kevin Sum: No.

Phil Tarrant: Into now, you're identifying and buying property's which has the potential for upsides that you spoke about.

Kevin Sum: Yeah.

Phil Tarrant: Potentially building something two stories, water views, something that give you development potential. So you've becoming a more sophisticated investor, that's for sure. How would you explain your journey? Do you sort of think yourself back when you started investing going, 'You have no idea what you're doing.'

Kevin Sum: Yeah. My first one I didn't even want to invest.

Phil Tarrant: You paid over the valuation with the bank, right?

Kevin Sum: Exactly. At this stage, I was basically sick and tired of looking at houses because I made a few offers, I think there was one that just fell through it by two hours because I hadn't gotten the finance yet. So I just said, 'You know what? Let's just get it. It's a good place. It looks good.'

Phil Tarrant: So you settled, pretty much.

Kevin Sum: Yeah.

Phil Tarrant: Like settled for...knowing what you know now is that it's part of the game that you get knock back all the time. It's the knock backs that... If you want to put a lot of offers out there and if everyone comes, you'd be going, 'What's going on? Maybe I'm offering too much?'

Kevin Sum: Yup, that's it.

Phil Tarrant: You expect to get knocked back and get back up again and that's the nature of the beast.

Kevin Sum: Yeah, that's it. Looking back, I think it was interesting journey. If you ask me if I would've done it again, I'm probably yes because back then I really didn't have much capital so the regional areas made me feel safe. At least I could sleep at night because I know that look, they're paying good rent, even if I lose one tenant, I could probably get another one and I've spread my risk across a few properties.

Phil Tarrant: It's a good point. I don't invest in regional towns. If opportunities came up and offered a good chance to do so in industry diverse town that have perspectives for both, I'd definitely look at it, but I think what you've done is that you got a good apprenticeship as a property investor, so when you started this in property, you don't know what you don't know, right?

Kevin Sum: Yeah, exactly.

Phil Tarrant: You worry about stuff that you probably don't need to worry about. You spend a lot of time on things that you don't need to spend a lot of time on. So buy those regional places has given you a sort of apprenticeship. So it's turned you into a property investor without a lot of risk associated with it as well. But obviously, the places you've been buy are good yielding properties; they're going to go up in value over time. They should do.

Kevin Sum: Hopefully.

Phil Tarrant: But they're never going to perform like the stuff that you bought later in your property portfolio has done.

Kevin Sum: Exactly.

Phil Tarrant: So your sort of number one piece of advice to budding property investors who are just getting started right now and are out there putting bids into places and getting knocked back every weekend or spending all weekend looking for properties and going to open homes, what would be your one tip for them to perhaps shape the way they view property investing.

Kevin Sum: I guess keep looking. It's just like anything else. It's like looking for a job. Even like dating. The more you go out there, the more you see, the more educated you are.

Phil Tarrant: So property investing is like dating, is it?

Kevin Sum: Same thing, you know?

Phil Tarrant: I don't know if I've heard that analogy before? It's a numbers game.

Kevin Sum: It's a numbers game, yeah. That's it. The wider the net, the more chances you have.

Phil Tarrant: The good thing about dating though, and I like an analogy, the good thing about dating is that you gotta focus on quality, not quantity, right?

Kevin Sum: Exactly.

Phil Tarrant: So you want to get a portfolio full of quality assets.

Kevin Sum: Well, yeah. Exactly. That's right. So you find something which is on the market, has potential.

Phil Tarrant: See the thing is, you're talking about spending four or five hours a night checking out real estate, so it's better than spending four or five hours a night on internet dating sights, you know?

Kevin Sum: Exactly.

Phil Tarrant: One thing is going to not create wealth, the other one is going to create wealth right?

Kevin Sum: That's right.

Phil Tarrant: Anyway, that's enough of that. We could probably do a whole podcast on why dating is like property investment. Anything you want to finish up with Kevin?

Kevin Sum: To all the other property investors, good luck, keep going, you're not alone.

Phil Tarrant: Good. Well thanks for coming on. Really enjoyed the chat. It's been a bit of a mechanical conversation looking at these different properties, but I'm happy we did that, and that was a very organic thing, but what you've done is you've showed your growth as an investor and the way you've changed, like, the person you are today is because of this process that you've gone through finding your feet through investment and a lot of the reasons why you bought the properties that you bought over the sort of breadth of your property investment, is because of necessity more than anything else. So you had a certain salary that you're earning and therefore it framed the amount of money that you had to invest in properties.

A lot of people would've sat around, and you hear all the time, sit around and go, 'It's too expensive to invest in properties because I don't have enough money or I can't get financing.' But you've gone out and done it and going out and doing it is most of the way there.

Kevin Sum: That's it.

Phil Tarrant: Rather than sitting around procrastinating about it.

Kevin Sum: That's right. Just go out and make offers and just do it, you know.

Phil Tarrant: Got to be in it to win it.

Kevin Sum: That's it.

Phil Tarrant: Good. Thanks, Kevin. Appreciate your time.

Kevin Sum: Cool.

Phil Tarrant: I hope you enjoyed listening in guys. It's always good having you with us. Remember to check out smartpropertyinvestment.com.au. If you have any questions for me or Kevin or about any of our podcasts or if you want to come on, you can email the team: [email protected] Remember to check us out on all the social stuff. If you like what we are talking about, can you please give those reviews and keep that ranking coming on iTunes. We do appreciate them. We're tracking really well at the moment, sort of nudging the top of business podcasts in Australia, so I want to keep that going. Let us know what you want to hear and what we're doing that you like and what we're not doing that you'd like us to do. We like feedback and we always try to grow and evolve like all good property business do. Thanks for joining us, we'll see you again next week. Bye bye.

 

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