An investor is ultimately responsible for their wealth-creation efforts. But while property investment is not a set-and-forget venture, it can be easy to lose sight of one’s portfolio.
In this episode of Investing Insights, the team from Right Property Group, Steve Waters and Victor Kumar, reveal the dangers of turning a blind eye to one’s portfolio and share their tips for investors on how they can effectively reconnect with their assets, prepare for the long term and steer their own course to success.
For more insight, tune in now to hear all of this and much, much more in this episode of Investing Insights!
Did you like this episode? Show your support by rating us on iTunes (Investing Insights) and by liking and following Right Property Group and Smart Property Investment on social media: Facebook, Twitter and LinkedIn. If you have any questions about what you heard today or any topics of interest you have in mind, feel free to email [email protected] or [email protected] for more.
Suburbs mentioned in this episode:
Previous episodes of Investing Insights:
How do we pay off the portfolio debt: what's the endgame?
Mastering the fine art of manufacturing equity
Do you have a plan? Advisers’ tips on future-proofing your investment portfolio
The cost of money – can you service your debt?
Don’t ask, don’t get: advisors’ tips and tricks to property negotiation
Why a balanced portfolio is key to investment success
Units v houses: what you need to consider
Phil: G’day everyone. Phil Tarrant here. Thanks or joining us on our next instalment of Investing Insights with the Right Property Group. I have my regular co-hosts in the podcast studio, Steve Waters and Victor Kumal. How is it going guys?
Steve: Yeah, well mate, how are you?
Phil: The market.
Steve: The market.
Phil: The market, how do you feel about the market Steve? We talk pretty much every other day, it feels like. I speak to you more at the moment than my wife, and it concerns me and alarms me -
Steve: Like why don't you just put that out there a little further.
Phil: I know. But that’s what a good buyer’s agent does keeps connected and communicated. We're buying at the moment through you guys and we often speak about the market and markets are changing and we're in an interesting cycle ... Part of the cycle right now where some markets are good, some markets are bad, some markets are indifferent. Perth coming back up, led to believe?
Steve: According to the media.
Phil: According to media, fake news?
Phil: Perhaps. Sydney is down and dusted. Brisbane is the place to be allegedly and-
Steve: Parts of, yeah.
Phil: And I'm still reading stories about the crisis of Australian debt where every Australian owes $2 for every $1 they make every single year. So it's definitely the sky is falling here.
Steve: Scary numbers, right? Look, I've been in the markets, not much has changed in the markets over the obvious regions of oversupply, which we've been all banging about for the last 18 months and they've now come to fruition. I think the big key to the market at the moment is around finance. If we take the obvious fundamentals away and what have you, finance is the driving factor here. The lack of serviceability perhaps for some investors being able to perpetuate into the next property or whether it be to release equity, whatever it is.
And what we also find is with the increasing interest rates and the rising pricing, we have that double effect of lowering yields or cash flow, which is essentially what enables us to old onto the property. Having said all that, there is some good markets still at metropolitan areas around Australia that are showing yields of 6 per cent to 7 per cent growth of course. And when the cost of your money is what? Now average about 5 per cent if we're going to be a little negative or conservative. 5 per cent is still cheap money. The biggest thing that we've seen in the media at the moment and perhaps with the unsophisticated investor is that the panic is around rising interest rates.
But let's be fair here. It's only two years ago or thereabouts that we group hug, high five if we got 5 per cent of 4.99. Now, that we're back at that because we were used to 4.1 and what have you, there is a little bit of panic there and for us it's still cheap money. On a long time average is still cheap money.
Phil: So, the question for you Victor is it a good time to be investing in property?
Victor: Look, yes and no. If you are right on the redline in terms of servicing the loan, so you're pushing yourself to get into a property and you're relying on the interest rates to be stable, the rents to be consistent for you to be able to hold on to the property and the lender that you've chosen is the only lender you could ever qualify with, I think you should take some time out. But in these sorts of markets, that's when the bargains start coming out, that's when there is a lot more flexibility in terms of what you can negotiate and for someone that is better prepared and well prepared and well connected, this is the market to invest in.
Steve: Well, that's the case and being well prepared even if you're in that consolidation phase, you still want to be prepared for the what ifs and just in case you need to pounce. What was interesting … I saw on the news the other day that there is zero $400,000 and below -
Victor: In Sydney.
Steve: Properties in the Sydney basin, which I find amazing because it's been rapid growth and I think there will be a period of very little growth so we can get those averages so to speak. But I still think it's amazing that it wasn't too long ago ... Well, if we even take your property Phil, say, one of the Mount Druitt units, what was that? $200,000 or $180 or something like that, and look at it now? It's actually one of those very few properties under $400,000.
Phil: Yeah, but it goes back to timing the market rather than time in the market and ... But it's not what I want to chat to you guys today about. I want, I guess I have book ended my comments to you guys around the market because property investment is a game of time rather than a game of chance.
Victor: Very deep, Phil.
Phil: It is. And you know I get deep, I can get in touch with my deeper side. And I have just come off back of a surf trip, so I really got my -
Steve: Back in touch with nature?
Phil: Yin and yang sorted out at the moment. I'm thinking with a lot more clarity. But we're going through a period of growth in our portfolio after a bit of a hiatus and you can listen to it on The Smart Property Investment Show where I chat with Steve about it. But I've been thinking a lot about managing my portfolio lately, and we've sort on some previous podcast about ... And to your point, and this is something that I have always sort of you've explained well is that, a lot of people get carried away thinking that property is a passive investment. You guy are the first to say, hang on a second, property is not a passive investment.
You know if you really want to grow, if you want to create wealth through property you need to be hands on. So managing your portfolio is critical for anyone who wants to build a portfolio of multiple properties. And a lot of people I think when they think about managing their portfolio they think about property managers and making sure the hot water system is working or I got to replace some locks or whatever. Managing your portfolio is something very different -
Steve: Far more than that. Far more than that. And I think just coming back to the common where property is not passive, I think the only passive part of property is probably it's growth. And that's of course if you don't do the renovations and yeah, force equity. That I suppose could be passive, but certainly the cash flow management is not – that's where it's a hands on approach and you got to be involved. And that's everywhere from as you mentioned Phil, managing your property manager because they have a role to play, through to insurance, through to your broker or your financiers. Yeah, there is a lot involved.
I think Victor likes to sit down on a Sunday night because he's got nothing else better to do and iron out his next property. And he adjusts his cash flow there whereas I'm probably not that pedantic, I love to do it every month. But I suppose that's because we're in the market everyday doing everybody else's reviews and management.
Phil: On that basis then, and I'm one of probably the biggest advocates of surrounding yourself with people who can do stuff better than yourself and I usually get guys to buy my properties and I've got a good broker and a good accountant. I look to outsource part of the management of my portfolio because the people I work with are good at what they do and I don't have a lot of time. But you will always fundamentally say back to me, you're responsible for managing your portfolio, you can't expect other people to manage it. So let's touch on that quickly? Do you think a lot of people get that wrong? They think that it's someone else's job if I pay them?
Steve: Yeah, probably the biggest example of that would be a property manager. You pay your 7 or 8 per cent and you expect stuff to be done and be done on time, and that you don't have to remind them. But you need to understand that property management is if not the hardest it'd be the second hardest job in terms of property. And so they're constantly busy and they rely upon a lot of systems and procedures and also -
Victor: Ever changing goals -
Steve: Yeah, and rules and regulations, so some things do get missed, and they require a lot of direction from the landlord. But unfortunately, some of those landlords just think, well, yeah, I'm paying them, you make that decision. And a really good example of that would be, they find a new tenant for you and they vet check them do to speak and done the P&L of the assets and liabilities, but 99 per cent of the time the property manager will come back to you as a landlord and say the decision is yours, and that's why need to be involved. You need to be involved in the increase or the decrease of your rent.
Phil: So should you be prompting the property management to do that or they should come to you to do it?
Steve: Well, look, in a theoretical world, no – you should wait for them to come to you because that's what they do they're in the market every day. But I think that's a bit of a cop out. If you want to be invested in your own business then you should be monitoring at on a monthly basis at the very least to see what's the market is doing, not just in terms of value but in terms of cash flow being the rent. And if you haven't got enough time to talk to your property managers, well then, more for you.
Phil: Victor how do you know if you're not managing your portfolio very well?
Victor: Well, the first thing is if you start losing sight of the numbers. In other words, what your property is rented for, whether the tender is up to date, where your interest rate are at, all those sort of stuff then you start to lose control of the portfolio because then you're flying blind.
So that's one of the things that I find quite common is that when you talk to most investors and you ask them what their interest rates are, or what rent they're getting? They're probably quoting something that's three, four, maybe six months old in terms of the information. If you got that wrong, then it's start unravelling, and it starts unravelling rather rapidly especially in this market as changing where you'd want to keep a tenant on, that's a good paying tenant because your rents are starting to ease out a bit because of where the market is right now. It's purely a cyclical thing.
So if you lost a tenant today, there's a likelihood that you’d be, depending on the area, depending on the condition of the property and so forth and depending on how good the property manager is and how proactive they are that you would be vacant for two, three weeks. And it could be all prevented if you had a finger and the pulse and if the tenant had asked for something mundane, you actually granted that but not getting into a habit of granting everything that the tenant ask for.
Steve: I think the problem is that people get lost within their own portfolio, those that do take notice I suppose or are involved. You get lost because you're always looking at your own figures. And it really does pay dividends to get someone outside of that to dig in there for you. And a really good example is I'll look at Victor's portfolio, look at mine then we start to tweak and give advice on each other's portfolio even though that's what we do every day. But more amazing is how many people actually don't review their scenario or their position on a constant ... And I'm not even talking annually, I'm talking a couple of times of year.
Phil: See, I'd put my hands up and say, what you were just talking about Victor I sometimes feel like I fall into that, right.
Victor: It's hard to catch up once you've let it go.
Phil: It's hard to catch up and I generally need a bit of a prompt to get back in there and sort it out, and you've just done that for me, so I'm going to ... I know our portfolio is fine, right? It's cool and there is mechanisms for it to keep doing what it's doing, but if you put against my head and said, "What's your rent on all your different properties?" I'd probably couldn't tell you. I'd thereabouts know, and I'm always ... You got to know your numbers, right? I'd should know how much or what my properties are whether or not they got tenants in there-
Steve: That's always a good start.
Phil: And to be fair, two weeks later and I've not known that one of them was vacant, I'd go, what's going on? But whose fault is that? Obviously it's my fault.
Steve: Ultimately it's your fault.
Phil: It's my fault.
Steve: It doesn't matter whether the property manager has told you or not, you should have noticed that there is no income coming in. And this is one of the things that we encourage all our clients to do. We supply a portfolio tracker, which essentially is a Google doc but it's with you all the time. It's on your smartphone, it's on your computer so that whenever anyone asks you these questions whether it be your financier or accountant, is they are with you. You don't have to go home and then email, it is there with you. That way you can stay on top of things.
The other thing, which we find is really, really important and that most people miss is dates and the dates when things expire. Such as -
Steve: Insurance is huge. There’s a client that we have around Christmas every year about three of four of their policies start to lapse and we need to chase them.
Phil: Was this whose work within in the media?
Steve: Mr Tarrant. Actually, what were you called the other day on Fox? Mr Tarrant?
Phil: Mr Tarrant. Its Italian version of -
Steve: One of the dates that we often see people missing and especially in today's market is when their interest only terms expire. I've sat with a few clients recently where their expiry date is within six months and ... Yeah, they need to giddy up now and start organising going forward.
Phil: Because if you're proactive and go back to bank now and say, hey, look, I want to extend my interest only terms for another three or four years, I'll go -
Victor: You've got a greater chance.
Phil: You've got a greater chance. But if that expires and reverts straight to a P&I at a higher rate -
Steve: Correct. This is where people don't take responsibility for their own investment-
Phil: But that's a broker’s job, isn't it?
Steve: No. Well, yeah, potentially but it's your job, it's your life, it's your money, its call.
I think if people took a bigger responsibility, they'd be in a far better financial position. So a year out is when you should start looking at this things, when does your lease expire as an example, and giving two months’ notice whether the tenant should go, or increase the rent, or re-sign them whatever it may be. When does your insurance, as we talked about a little earlier on, and what's the current rates.
Phil: Yeah. I'm quite cyclical in my attention to detail in our portfolio, and we haven't got a massive portfolio and it's not a small portfolio, right? It's quite a lot of moving parts. Properties all over Australia and et cetera, et cetera. But I know that when I start to feel a little bit less connected with my portfolio, which I do right now, Victor by the way, and you've just prompted me to sort some stuff out. I know it's quite quick to be able to be reconnected with my portfolio. If I spent half a day, I can sort it out, right? I'm back into it, I know what's going on, I know if there is any pressure points, I know whatever. And the way I manage my portfolio, I've got somebody who I work quite close with here who just a system for telling me when there is problems.
I don't now Victor how you manage your portfolio in a very similar way the guy who's making sure somebody does that for you, but you've got a relationship with someone who knows what information you need in order for you to be connected with your portfolio and that works for you.
Victor: That does. And one of the things that you find is a good property portfolio it's really easy to lose connection with it because it doesn't feel like a cash flow drain. And when it is not a cash flow drain you tend not to focus on it. But it's actually when it starts hurting that most people re-focus on the portfolio, and by the time it's too late.
Steve: We often say, if you're not feeling it, it's dangerous. Because if you're not feeling it, you'd said Vic, well, it's out of sight out of mind. But if are having to skimp around and scrounge around for every dollar, well, then you'd be well on top of your portfolio. And unfortunately, you're often a victim of your own good portfolio.
Phil: Well, that’s it and again, I purchased a property probably two months ago – you were helping me out with it up in Callingur and it needed a little bit of work done to it. And I think the mortgage is like $1,300 bucks a month or something like. And I went, I got to get it sorted out but I was doing so many other things and sat there and probably didn't work as fast as it should have done for me to get to a point where it could get rented out, which just happened now. So I probably carried that probably for two months now without any income on it.
And I actually went $1300, that hurts a bit but it didn't hurt so much that I jumped to it really, really quickly. And that's -
Steve: But you would have?
Phil: Yeah. That's not good, that's not good on my behalf. And that should have been a really big signal to me to sort this stuff out. I think I officially went, shit, I got to sort this out. This actually started to hurt a bit, right. So it was a really good motivator that keep, keep it on. So how do you strike that balance so to – I know in business, I work the best when I'm under the pump, right?
Steve: Well, this is it, right? And because we're all in business and we've all got property portfolios often when you've got deadlines and you need to achieve stuff, that's when your best results, that's when your best work happens. But when things are speculating, they're ticking over, well, it is –
Phil: You become complacent.
And that's what our scope is. That's what our job is with our client. We regulate their reviews and we like to do them every quarter in a perfect world where we sit and we go through the numbers, we tweak the portfolio on what we should do now three months, six months, twelve months so that we're adjusting the cash flow, we're adjusting their timing but it also gives us a very clear direction on what, when, and where it should be next.
So whether that be consolidating, whether that be buying again 12 months or what actions we need to do now to let's say perhaps release equity in six months. What are we going to do now to get that result in six months? How do we adjust serviceability by perhaps using some of the equity to pay out a car loan, speak to you broker though and your financial advisor so that your serviceability is a little more enhanced. To put rent up, whatever it may be.
But if you're not connected to your portfolio, as you put it, that closely, it's not just the now that's hurting you it's actually what's going to happen in six months. It's what's going to happen in 12 months.
Phil: Things snowball quickly.
Steve: Very quickly. Very quickly. And if you go back to the worst time that any of us have experience, which was the GFC, and I don't know of anybody that really lost their portfolio or any property from a lack of equity, it was from a lack of cash flow. And that's why it's so important. We often talk about controlling your cash flow is about the next important thing behind oxygen. You just need it.
Phil: This might be a bit of a generalisation but I imagine – you guys work with investors right across Australia, and over the years that I've worked with you guys we sort of anecdotally spoke about the type of people you know our engineers or a particular sort of beast than you might be doing to work with doctors who see the world a little bit different. So, people are all wired slightly different, but if I was going to generalise you'd probably have people who are mad property investors who are every single day living and breathing property. Then you got people who are – I would probably fall into this – someone that wants to create wealth through property and sort of just expects it to happen -
Steve: In the background.
Phil: In the background for them. So you got two very different types of people. In your experience working with your client Victor and maybe one for you, do most people because they use a buyer’s agent have typically got their shit in order or do you find that ... How do you have those tough conversations with people where it goes wrong?
Victor: It comes back to what the systems and procedures the buyer’s agent or the property strategist brings to the table, right? If it's just you want a property and here's a property and off you go, then that's different. So what I find is that most people that I invest in that tend to differ to their accountant and so the only they're really looking at their portfolio is during tax time. And of course the accountant then says depending on when they've bought it that you've got this much depreciation, so your property is actually costing you X or Y, and it's always sugar-coated in terms of tax and depreciation and what add-backs they've been able to get.
But if you manage the portfolio based on how we help our clients manage it in the same way we manage our portfolio, it is spending a little bit of time on a regular basis. So it doesn't have to be all life-consuming and that's all you do. A little bit of scheduled time whether it's weekly, fortnightly, monthly – I wouldn't go beyond a month – to see first of all whether all of your properties are rented, if you're getting the rent that's quoted on the statement as the net rent that's coming to your account and has actually dropped into your account, and whether there is some simple stuff as you've been invoiced for something twice.
So you actually need to look at the statements, you need to look at all the paperwork that comes across to you -
Victor: Yeah, that's right.
Steve: At the end of the day. And I think that's where people -
Victor: That's where they fall down.
Phil: The boring stuff though, isn't it?
Steve: It's an hour a month, like that's all it takes. I sat with someone yesterday, he's got 21 properties, they spend literally an hour a month entering the data into their portfolio trackers that we supply, and that's all it takes. But if you miss one month, then it's probably a week's worth.
Phil: So let’s have a chat about this person, 21 properties, I don't who they're but that's how they manage their portfolio and that's sufficient enough for them to realise their investment goals for investing in property -
Steve: That hour a month is enough for data entry.
Phil: That's just data entry?
Phil: Okay. So how much other time this person spend on managing their portfolio?
Steve: It's funny because things go cycles, you might have a heavy couple of months on maintenance but you may not have had anything for three years, or you may have a lot of vacancies in one hit. So, there is no real standard time but I would assume if I ... And knowing them, I would suggest they'd spend probably 10 hours a month between emails, phone calls. Yeah, when you've got 21 properties, 10 hours a month is not much in the scheme of things.
Phil: It's a pretty good hourly rate, right? If you think about, you've got 21 properties, what value is that going up every single month divided by your time, it's probably the highest hourly rate you'll ever going to get better than MacDonald?
Steve: They're what I would call a sophisticated investor, they're fully dialled in to their position. They live it, they breathe it as well as holding down two full time jobs. And they enjoy it, that's the key. But then there are a lot of people that have one property or two properties that are just as dialled in but they obviously don't need as much time. And then there is probably investors that just absolutely forget about everything and at the end of the day it will be what it will be, and that's dangerous.
Phil: So let's flip on here, we're talking about how much time you should spend investing in property ... Sorry, by investing your time in managing your property. Do you think some people over-invest their time in managing? Like if you got one or two properties, can you spend too much, can you over think your portfolio too much -
Steve: I think you can overthink very easily. That overthinking is usually done before you by the property. So analysis paralysis as we all know about, but you spend so much time researching an area and then running the numbers, which is all that is sort of the tick, tick, tick, the ABC of what you should do right. But then once you've settled the property and you've got a few rent checks or a few paydays and paid the mortgage just sort of withers away into the back of your mind and to the back of your life until you want to reinvest again and then you start to get this -
Victor: Or if there is an issue that comes up.
Steve: Or if an issue comes up. And this is the problem, it's I truly believe that too many people are reactive to the situation rather than being proactive and I go back to your accountant comment earlier on, yeah, most accountants are a reactive scenario, you there to do your tax at the end of the financial year and what can we do rather than what can we do for next year, and very much the same with property.
Phil: What should a good accountant be doing to help you manage your portfolio more effectively?
Victor: I think it's the other way round, what should you be doing to help yourself with the accountant services? So really what you should be doing is if your serious about property investing is at least have one or two meetings during the financial year with the accountant to see how you are tracking, and what you can do to further enhance your portfolio and also look at fine-tuning things so that you're doing some tax planning along the way and you're programming your acquisition or consolidation depending on what your tax situation is, what you're family situation is and in fact what your goals are. And the accountant can help you with that along with your broker, along with your strategist.
So one of the things we do for clients that have multiple property portfolio, we have a round table meeting with their accountant and their broker along with us so that we're all on the same page. Because, like I said earlier, they're all different moving parts, and we want to be making sure they're all moving in the same direction and not pulling against each other so that the accountants are totally focused on tax minimisation, whereas the broker can't get you a loan because you got aggressive tax minimisation happening. So, all of those things needs to work hand in hand.
Phil: They all need to work together and I've seen it many times where a lot of property investors that run their own business, they may be a sole trader, or in a partnership or a PTY, whatever it is. And their accountant will look to minimise their tax as much as possible so they don't show any income, right? When you take that to the mortgage broker to say, I'd like to get some money ... You're making a loss, pay some tax – no, no, no, it's not really like that ... So it's so important in terms of managing your portfolio that the different pillars talk to each to actually understand what the strategy is. It's okay to make a profit if -
Steve: It's okay to pay tax.
Phil: It's good to pay tax.
Steve: That's what pays for infrastructure at the end. Like you can't have it both ways. And I think that's once again ... If you're just starting the journey so to speak you need to get together with a broker, with an accountant, and with a strategist is that be case and harsh that plan, and harsh out the goals over for what it's going to be for you for the next 6 and 12 Months. And those that already got a portfolio and especially in today's market being driven by finances, we talked about earlier on, now is the time to get on top of your scenario if you're already not because they might be some good opportunities that come up over the next 6 to 12 months, and if the worst case scenario it isn't and you've prepared yourself with some liquidity, well then, happy days. If that's your biggest problem that you've got too much liquidity and you haven't spent it, well, deal with that.
Phil: The time taken to effectively manage your portfolio is going to depend where you are within a circle, whether you're accumulating property or you’re paying down debt or whatever. So you're probably going to say, Victor to this question, it depends, but is there a magic equation? So if you're paying an accountant to manage your tax component of your property, if you're using a buyer's agent or a strategist to help you understand your portfolio and the direction, is there a magic equation that says, this is how much money you should spend on managing your portfolio based on the size of it or where it is within a cycle? Is that just the impossible thing to sort out?
Victor: It would be an impossible thing to sort out. So it will depend on the type of property, the temperament of the investor to begin within, whether you're a serial renovator, where you want to renovate something even though it doesn't need renovation.
Phil: Does that happen?
Victor: Yeah, it does happen quite a bit.
Phil: People watch the block and go, oh yeah, I'm going to renovate it, yeah.
Steve: Yeah, absolutely.
Victor: I think the easiest way to manage it really is ... What I do is I get all of my rentals regardless of entities, and the accountants hate this. All of the rentals regardless of entity dropping into the one bank account and all of my direct debits starting from the bank account as well. So, I know very quickly if there isn't enough money in there, which means that, hang on there is something wrong. One of the tenants hasn't paid, or I've got several repays. So if I've not got the finger on the pulse, that's a really failsafe way of getting some warning signals. It does not still take away from the fact that you do need to look at the finer details. But it's an easy way to manage it in that sense.
Phil: So, has there been a time ... And you've been investing in property for quite some time, but if you look retrospectively on the building of your portfolio, has there been a time where you have sort of perhaps let it go too far through not managing it effectively and paid a penalty for it or consequence whether it's a missed opportunity cost or a financing issue?
Victor: In the early years, yeah absolutely because we all get gung-ho and think that property investing is all about buying properties. It's about buying well and managing the property itself. So, yes you do get swayed that way especially when the portfolio started getting a little bit bigger, when the brokers that I was using would ask for paperwork and it would take you two, three weeks to get all the paperwork together. And as we go and come a full circle, so if you are applying for a loan right now, most banks would want for all of your facilities if you've got a sizable portfolio, they will want for all your facilities at least four to six months’ worth of statements. Now, if you haven't got all of your paperwork in order that's going to take you -
Phil: That’s what I’m going through right now, it's a nightmare. It's a headache.
Steve: That's why I'm a fan of this paperless scenarios or environments. And I mentioned earlier on about portfolio trackers on Google Drive, all of my statements are in there, everything is in there incase of the scenario that you're in right now for where the broker is saying give me this, this, and this ... Unless you're at home or within the office you're not going to be able to do it, whereas on the road or flying around you -
Phil: But is there certain sort of pressure points as you grow as a property investor and the number of properties you acquire ... And we won't go into that but just the size so, once you get the five properties does it start getting into a different realm of headache or ... So what are those critical points, do you reckon?
Steve: Property one, that's the hardest because it's all new and you're getting used to it and you're listening to everybody else on how they do it and you just got to find your own groove. Property two gets easy. I reckon the next magical milestone in terms of everything ... So, I'm talking finance, management, head space pressure is around that five mark. Now, I'm just taking an average purchase price here, we're not talking about five $1 million properties, just your average purchase price. Think five is that magic milestone.
Phil: Is that where it could come unravelled if you don't get that right, if you can’t get past the five -
Steve: I think even number one. You need to start as you mean to continue, does that make sense?
Phil: Absolutely, yeah, yeah, you're right. It makes sense.
Steve: Because if you don't you're create bad habits.
Phil: So how do you keep the energy that you had on property number one all the way through to property number 20, 30, 50?
Victor: Pretty easy I suppose. It's just focusing on the goal. So if you got a goal sorted out, the energy is there. If you're just investing for the sake of investing, yes it becomes sort of a thing that you're doing in the background, and therefore you would lose sight of the detail, you lose sight of the reason as to why you're investing.
Steve: For me I'm a bit like I agree with Vic, the goals are a very, very big part of it but the goals are always changing for me especially as your family grows. So for me it's about the instant gratification and ... And I think we've talked about this before, like, property it's often one of this asset vehicles that you can't get instant gratification. So I look back retrospectively and I look at what my portfolio has done for me over the last year, then I break it to a month, down to a year, down to a day, down to an hour, a minute, down to a second. And I know that's a little bit creepy and that's a little bit over the top -
Phil: How much money do you make every second Steve? There used to be that calculator that went around and said Rupert Murdoch made this much money in this much time?
Steve: Yeah, yeah. Look, some of it is subjective obviously because you're only giving your own valuations on your own portfolio, but I think for me to keep the energy ... We're very I suppose privileged that we surround ourselves with people that are doers. And when you surround yourself with those people and vice versa, you ride off each other’s energies and results, and it's a very, very good environment to be in.
Phil: Well, one of these things ... I know we do it occasionally where we'll at our portfolio and I'll go, X property here Steve, what do you think the valuation is? I really enjoy about the valuation game. And generally we're really good because when we get a bank val against the sort deemed val and that's obviously through some science and comparable properties and stuff and the fact that you're in the market all the time, I really enjoy doing that and -
Steve: It's good fun, right?
Phil: Oh, where is that going? You reckon is going up that much?
Steve: Yeah, yeah. It's good fun
Phil: It's a nice fun bit about managing your property and making money, right?
Steve: Yeah, well it is, but you can't do it every day because you won't feel that, oh yeah, that's gone up $1,000 bucks this week.
Victor: You start fudging the numbers too.
Steve: Well, you do and I think you're going to be real otherwise you -
Phil: Well, you always err on the side of conservative and I reckon that's even harder than that -
Steve: Right, I'm the negative one.
Phil: It's good, that's all right. So managing your property, I think we've done that done pretty reasonable sort of justice. Victor summarise it for me in three points.
Victor: In three points.
Steve: Don't steal my points though.
Phil: What are the three pillars to being good at managing your property?
Victor: Don't lose sight of the numbers. Don't lose sight of the reason why you started investing, and keep re-evaluating your goals and making sure that you are looking at the paperwork on a regular basis.
Phil: All right, very good. Steve can you do better than that?
Victor: Don't steal my points though.
Steve: The pressure. Be involved, be real, and be prepared.
Phil: There you go.
Victor: That's a Girl Scout thing isn't it?
Steve: You got 20 cents in your pocket there for a phone call.
Phil: I don't have any money, you got all of my money. The way I would summarise is you got to be connected with your portfolio, right? And I ebb and flow and I think everyone does that's why we're humans. Life catches up with you sometimes, but you need to find a mechanism to somehow shake yourself to make sure you get back and get involved. And Victor you've prompted me to go on and sort of hustle some people this afternoon going what's going on with this, what's going on with that, let's have a look at rentals and stuff like that.
But I actually get a lot of satisfaction about being organised some a bit weird like that, right? And if I feel things are sort of drifting away from me if I can grab it and pull it back in and feel organised, I get a lot of satisfaction. That makes me feels good. So works for me, works for me.
So we're nearing the end of the first series of the Investing insights with Right Property Group, I think we got two more -
Steve: Two more to go.
Phil: Two more things. And we're thinking about something really creative for one of the final ones and we'll make sure that we let everyone know what we're going to do in that regards. But I think we're talking about doing a bit of a Q&A session because we've been at this, I think, this is the 10th episode of this particular series and I know the questions have been flooding in Victor, so I don't want people to feel frustrated that they've been emailing us and we haven't gotten back to them, we have collected them and the team of sort of synthesised different questions, so I'm going to look to do a Q&A session. So if you don't yet or you haven't yet emailed the guys at [email protected] about absolutely anything. Please do so because we want get ... Some of the questions are quite similar, some common things that keep appearing but please do write in and let us know what you would like to have a chat about and we'll have some good fun. We'll do a bit of an extended episode. So work for you Victor?
Victor: Looking forward to it.
Phil: You want to say anything before we sign off?
Steve: Get your stuff together, you got property to buy.
Phil: Keep buying. Thanks for joining us everyone. We do appreciate it, remember to check out rightpropertygroup.com.au if you want to know any more information about the guys. I've been to some these as well, you still doing your Tuesday night?
Steve: Yep, once a month.
Phil: Once a month in Parramatta Rydges and you can see that on our Facebook page or the website and then once a month in Melbourne as well.
Steve: Do you have to register for those or you just rock up?
Phil: Go to the Facebook page or the website and then it will show you how to do that.
Phil: Outside of listening to you guys droning on, what I like about it is a lot of really, really good investors who are pretty from all walks of life right, from people who are passionate investors, some people who are new or somebody who ... Sort of whatever type of people.
Steve: And it is a safe space like we don't allow developers or sort of marketing companies flogging their stuff in there, it's an open forum. We're pretty relaxed and we get up and we have a different subjects, we'll talk about and just through questions at us all night or to the panel that we may have up there.
Phil: Yeah, it's good fun. Meet some like-minded people. Thanks for coming in guys.
Steve: Appreciate it.
Phil: And we'll be back again next month. See you. Bye.
Disclaimer: The information featured in this podcast is general in nature and it's not taken into consideration or individual needs and it 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.
About the Blogger
More from this writer
- The pros of using a buyer's agent: why this investor brought someone in
- Investor advocates using a buyer's agent
- 5 key personnel investors should work with
- The ins and outs of strata: what buyers should consider
- INVESTING INSIGHTS WITH RIGHT PROPERTY GROUP: Units v houses: what you need to consider