‘11 properties by 31, now I’m stuck – what’s next?’

By Reporter 05 October 2016 | 1 minute read

A young investor who built an impressive portfolio by his early 30s is now in “property jail”. He reveals to The Smart Property Investment Show how he’ll overcome one of his biggest hurdles, and what investors can learn from his struggles.

Simon Loo podcast

Simon Loo opens up to The Smart Property Investment Show about what he’s done right, and what he’s done wrong – from buying the wrong properties to failing to get a building and pest inspection.

The team also discusses everything from cash flow, and where and why they bought certain properties, to using property to quit the rat race and how to add cheap, distressed properties to your portfolio.

All this and much much more in this episode of The Smart Property Investment Show. Tune in now!



The Smart Property Investment Show gives you insight, strategies and tactics that every property investor can use.

In each episode, the Smart Property Investment team and their special guests will break down what’s happening in the world of property investment, how it affects everyday property investors and how they can take advantage of it.

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Equity is the difference between the market value of a property and the amount owed to a lender that holds the mortgage or the loanable amount.


Equity is the difference between the market value of a property and the amount owed to a lender that holds the mortgage or the loanable amount.


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

Phil Tarrant: Good day everyone. Welcome to the show. Phil Tarrant here. I'm the editor of Smart Property Investment. Thanks for tuning in. I really enjoy doing this podcast. They're good fun. I guess if you tune into the program on a regular basis, we do it weekly, but you’ll know that I'm an avid property investor. I do like investing in property. I'm very fortunate as a journalist to be able to talk to people all day, every day. Just to see inside their property journey, and essentially use their experience to help me frame the way I see the world, and what I do as a property investor myself.

Thanks everyone for all your comments and a lot of the feedback we get, both to myself as the editor, [email protected], but also on iTunes as well so keep those reviews coming, and let us know what you want to know. I'm joined today by Vivienne Kelly, my regular co-host. Viv, how's it going?

Vivienne Kelly: Good. I'm excited to be back.

Phil Tarrant: It is good to have you here.

Property is interesting. If you do tune in to Margaret Lomas' show on Sky, it's Your Money, Your Call it's on Monday night, I sort of appeared on there with Margaret on Monday just talking about property in general. It was interesting to sort of think about, it's an hour and a half live on air, Viv, and you get a lot of questions from just people sort of dialling in. It comes through a sort of little microphone in your ear, and most of the time when people ask a question it's typically around ‘I'm thinking of buying in x suburb, can you tell me whether or not it's a good idea to do it?’ That's the question, right?

Vivienne Kelly: Yeah. I could spend all day responding to emails asking me where people should be buying or if they've bought in the right location, and it's a pretty loaded question, and probably one that we're not qualified to respond on, but it does seem to be something that occupies a lot of investors' minds.

Phil Tarrant: It is, and the way I always respond to these questions, most of the time, like geographically I'm pretty good. I know where most suburbs are in Australia, and some of them I know better than others, and I'm not qualified to actually give investment advice, but most of the time, no matter where anyone says ‘I'm thinking of buying this place, what do you reckon?’ My response is always, ‘Why have you chosen that spot?’ Most of the time people say, ‘Oh because I live in the area’ or ‘Someone told me it was really good at the barbecue’ or ‘I looked at some property data and it said that that's got the highest growth and yield and stuff’. It always goes back to the fundamentals. The answer is always around the fundamentals of property investment and why you should be buying a particular area.

The type of people we like to get onto The Smart Property Investment Show are not people who are buying in particular areas. They're typically investors who are looking to grow their portfolios and do it in a strategic and a very sort of methodical and structured way. We try to encourage that sort of stuff and we say speak to advisers, and use buyer's agents, accountants, and all of this sort of stuff.

The guy that we've got on the show today, Simon Loo, sort of fits into I guess the ideal type of person we like to have on the show. Someone who loves property, and is an avid investor, and quite accomplished, but someone who's still willing to put their hands up and say they're learning.

Vivienne Kelly: Yeah, definitely. Simon, he can tell you his stories himself, but he's only 31, he's got 11 properties, so he's obviously doing something right, but again, it's really good to have a young, successful investor on the show, but who's willing to admit ‘You know, I made a mistake here and there, and I'm still learning, and still just trying to get the most out of this wealth creation strategy’.

Phil Tarrant: Yeah. I hope to pick Simon’s brain, see what I can learn from him. Simon, mate, welcome to the show.

Simon Loo: Thanks Phil. Thanks Viv. Thank you for having me.

Phil Tarrant: Are you a long-time listener, first time participant?

Simon Loo: I am. Yes. I do follow your podcasts quite regularly. It's, yeah, really good advice for investors, whether they're just starting out or people who've even had a lot of experience. There's definitely something that a lot of people can take away from your shows, so excited to be on.

Phil Tarrant: Yeah, it's good to have you here. A lot of people tune in. It's a really popular show and that's good. Property sort of flows through the veins of most Aussies and everyone understands the ability to create wealth through property. But how do you use – you tune in, you listen to me droning on most of the time – but how do you use the information that you get from this podcast or anything really, whether you're reading magazines or websites and stuff, how do you use that information to influence the way that you think about your property portfolio?

Simon Loo: I think one of the main things when reading stories up on other people and what they've achieved and just reading articles on where the next growth suburbs are or where each location in Australia is at in terms of property clocks and all that kind of stuff, one of the main things for me is it helps me motivationally because building a property portfolio is something that does require quite a positive attitude, I guess you can say.

Aside from that, seeing what other people are doing, seeing different strategies that people are implementing to find success based on their own strategies and what they do individually is also something that it's always in the back of you mind if you reach a certain stage in your property journey, it's something that you can potentially use to move forward as well.

Vivienne Kelly: It's interesting that you mentioned positivity there because I think that's something that Phil, I've always noticed about you. No matter what doom and gloom is out there, you're always sort of positive about property investment and confident that whilst it's not the glitz and glamour that some people think it is, if you just keep going about your business, you don't buy into the property bubble and the crash that's coming, you just sort of keep going – and I've spoken to Simon Loo in the past before for previous articles on smartpropertyinvestment.com.au and he admits, ‘Yep, I've made mistakes, but you've got to have a goal, you've got to be positive and you've just got to keep going’, and I think you're quite the same.

Phil Tarrant: You get to make that choice as a person, you can either be a head in the sand and doom and gloom merchant and think the world's sort of falling in or around you and you can be a victim if you want of circumstance, you can be a victim of markets, you can be a victim of bad luck, you can be a victim of some sort of life situation which is stopping you achieving what you want to achieve – or you can be a positive person about it and go, ‘Well, mostly stuff I can't control anyway, so just get on with it and sort it out’. Or the stuff that you can control, absolutely do something about it to influence that change.

That's the way I see the world and from the stuff that you've been involved in Smart Property Investment before, Simon – you see the world the same way, right? You see a road block, what do you do about it? You don’t just sit there and put your head in your hands and cry about it? You find a way to get around it and not only overcome it, but use it as an opportunity to do something else.

Simon Loo: Yeah, definitely. I think I've always had the philosophy that taking action is so much more important than sitting around and being over-analytical about all the stuff that you hear in the media and doom and gloom as Viv mentioned.

In any time or place there's always an opportunity out there and it's really important just so that you consistently educate yourself to find where the next best opportunities are. Just look at your own personal situation, have your own goals and stick to them and basically find out what you need to do today to make those goals happen. Sometimes you might just have to think outside the square, step outside your comfort zone to make that happen.

Property investment on a grand scale is definitely something that requires that kind of attitude and positivity.

Phil Tarrant: One of the questions we get a lot when people write in for the show – as well as ‘Should I buy in this suburb?’ – a lot of people say, ‘Is it a good time to invest in property?’ Our position, my position, Viv’s position is that it's always an excellent time to invest in property.

There's two ways you can frame that. The first one is, let's look at the marketplace and does the marketplace show fundamental indicators that show there's going be growth, there's going to be this and that – and there’s markers within markets – but you can take a very macroeconomic view of it and look at Australia and go, ‘Is it good to invest in property in Australia?’ Well, yes it is. There's a lot of reasons why. If you listen to certain people, you shouldn't be investing in property in Australia, you should be putting money in different asset classes – but over time, historically, property's been a great asset class for Australians to create wealth. Is it a good time to invest in property? Yes it is, as long as you're investing in the right property.

Then, the other side of the question is: Are you capable as an individual to buy property at this point in time? Do you have a deposit? Do you have equity? Do you have finance? The micro indicators that are associated with an individual would determine whether or not it's a good time for you to invest in property.

Let's talk about your story, Simon. When did you start investing in property? And was it a good time, back then, for you to invest in property?

Simon Loo: Yeah, sure. I started in – I bought my first property right at the tail end of 2009 and in hindsight, that was not a good time to buy property. Sydney was – there was a lot of bad press about Sydney and where the market was heading. I spent a lot of time driving around different suburbs. Every single weekend, I'd go to like 10, 12 open inspections. Finally ended up buying my first property, which I'm actually living in now, in West Ryde and in hindsight, it was actually a mistake when I actually bought it. It was negatively geared. I paid a little bit too much for it. I was lured by the first time home buyer’s grant. So a lot of lessons learned.

From that experience, I guess I learned that I needed cash-flow positive purchases from then on. Back then, it was just starting to have that granny flat craze that you hear about in Sydney. Everyone's putting granny flats on 600 square metre lots. I bought my second property out in Blacktown, renovated it up a bit and obviously put a granny flat on as well, which gave me great yield. It was yielding almost 8 per cent at the time.

Phil Tarrant: As a collective?

Simon Loo: As a collective, yep. Both the front and the granny flat.

After that, I thought to myself, ‘Yep, definitely having a positively geared cash flow, positive portfolio is definitely the way forward.’

Having looked at Sydney at the time, I think the opportunities to get a cash-flow positive property was a little bit limited. Even at that time if you were looking around Mount Druitt and places like Penrith, you'd probably be likely to get 5.5, 6 per cent unless you bought a property that needed significant work to put in.

All the while, I was on just an average salary and I didn't have much savings. That's when I turned my focus to Brisbane, up around the Logan area where, at the time, you could buy 600 square metre, three-bedroom houses for $230,000-odd, completely not needing any renovation or anything like that and you can rent them out for $330, $340 a week which represented over 7 per cent rental yield.

I learned a lot just reading articles from Smart Property Investment and online forums and different media outlets as well. Basically, just built my connections up in Logan with all the agents that worked in the area. Soon enough, they started calling me about distressed properties. So that's when I started picking up mortgagee sales, divorce court orders, power of attorney sales, anyone who really needed to sell.

Phil Tarrant: That's where the real cream is in property investment, is when you get on the inside and you're starting to get approached by agents saying, ‘Hey, I got to shift this. I’ve got to shift it really quickly. It's distressed.’ When I hear ‘distressed’, I either hear ‘really really cheap’ or ‘it's really stuffed and I can create some value to it’. If you can move quickly to capitalise on that, that's where you really get a kicker in property investment.

Your first property, West Ryde, as a first time buyer, so you got a grant and all that sort of stuff…

Vivienne Kelly: … Just to jump back on that, Simon. It was interesting that you mentioned that you think that that was a mistake and we had a podcast go out on the 22 of September I think it was episode 41 or 42 with Rich Harvey where he answered some listener questions about how to bounce back from a bad purchase. And you also mentioned that you were lured by the first time owner grant, which we also discussed on that episode, Phil – so how did you bounce back from that mistake? If you were negatively geared, how did you go from you're paying too much, bought at the wrong time, lured by a grant, to now, like, 11 properties? What was the transition there?

Simon Loo: Yeah, that's a good question Viv and I ask myself that all the time: Why the hell am I doing this? It really comes back to your drive and your attitude to reach a certain goal.

I struggled in school and I didn't do really well in uni and I had to work really early on in life and that's when I realised that I actually hated my nine to five job. I hated working for a boss and obviously making his dreams come true while I sit around and wake up at 9, go home at 5, that kind of thing.

That was a constant driver for me, just having to experience that on a day-to-day basis. And because of that I thought to myself, ‘Okay. I need to make this work. I made a mistake, it's negatively geared. How do I balance that? Let's look at a different strategy and let's keep moving forward.’

I think that mindset and attitude is really important because now, Sydney's moved heaps and it's not a regret at all. Time healed everything, but at the time, if I lulled in my negativity, I probably wouldn't have bought anything else and would have just stayed there I guess.

Phil Tarrant: Did you work out then that that wasn't the right property for you? Or did it take you a couple years down the path to actually truly understand the fact that it wasn't right for you at that point in time?

Simon Loo: When you're buying property, whether it's first, second or third, fourth or fifth, you're constantly educating yourself. And when I bought that property and then I experienced the numbers going into my bank account and the numbers going out of my bank account, there was a big disconnect. It was costing me a hundred bucks, a couple hundred bucks to hold every week.

Aside from that as well, when you first start, you tend to listen to the wrong people, your family and your friends who've got great intentions, obviously for you to do well, but sometimes we grow up in a society where you buy property emotionally. Where as if you're investing in property, it really should be all about numbers and about how you can make money.

Phil Tarrant: It's a business.

Simon Loo: Yeah, it's a business. You've got to treat your whole portfolio and each property as though it's its own business.

Phil Tarrant: From that first property in West Ryde, to you bought in Blacktown, how long was that period?

Simon Loo: Eight or so months.

Phil Tarrant: Okay.

Simon Loo: Yeah, seven to eight months.

Phil Tarrant: It was during that period of time ... The buy in West Ryde is a very, very different proposition to buy in Blacktown – both in terms of the type of properties in those areas, the demographic of those areas, the yield you're going to get in those areas. It's also a wholesale shift to go from a West Ryde-type property, which might have been influenced by family and friends and whatever else, to buy out in Blacktown. Why did you buy in Blacktown? What was it that made you go, ‘I need to look somewhere else other than ...’ Did you live in West Ryde at that time?

Simon Loo: No, back then I was living with my parents, luckily for me. The short answer is, price. I wanted to find a house to build a granny flat on and there was no way I was going to buy anything east of Blacktown per se. I was spending my weekends driving around Doonside, Marayong, Blacktown, western Sydney basically, looking for a good property.

Phil Tarrant: So you did it all yourself, did all the groundwork yourself. You went out there and looked at properties all by yourself. You didn't get any help along the way?

Simon Loo: No, not at all and I think that's another thing that contributed to me consistently buying property is that I actually enjoyed the process. I enjoyed driving around. I enjoyed doing the research. I enjoyed speaking to all these agents and educating myself about this whole property investment thing. I think that really added wood to the fire.

Phil Tarrant: What did you pay for the place in Blacktown?

Simon Loo: I paid $379,000 for it.

Phil Tarrant: Okay. Where in Blacktown was it?

Simon Loo: It's actually right on Flushcombe Road, which is actually a bit of a main road.

Phil Tarrant: It is a main drag. So those properties around there, some of the ex-housing commissions or sort of a lot of standard fibro-type places around there, by memory?

Simon Loo: Correct, yes.

Phil Tarrant: Is that what you got, one big block?

Simon Loo: Yeah, it was just an old fibro house. It was a deceased estate. Another mistake that I made, it was full of asbestos, including the fences. And the guy that I bought it off was a pigeon racer and he had a massive pigeon aviary out the back that was all asbestos.

Vivienne Kelly: I have to ask, did you do a building and pest inspection?

Simon Loo: I didn't, no.

Vivienne Kelly: It doesn't sound like it.

Simon Loo: That was my mistake.

Phil Tarrant: Often the best $400, $500, you'll ever spend.

Simon Loo: Correct. Yes, in hindsight, yes, but –

Phil Tarrant: So you bought it.

Simon Loo: I bought it.

Phil Tarrant: You got someone to knock it all down, I hope?

Simon Loo: Yeah, definitely. I got it done professionally.

Phil Tarrant: Yeah. Good.

Simon Loo: I just had to suck it up. Yeah, it was just part of the cost of building the granny flat just to demolish everything and replace the fence with safe Colorbond.

Phil Tarrant: Can't go wrong with Colorbond.

Simon Loo: Can't go wrong with that.

Yeah, that was a big learning curve as well. Obviously, since the Sydney market's moved and I've got tenants in there.

Phil Tarrant: What a great place to be, Blacktown right now.

Simon Loo: Exactly, yeah.

Phil Tarrant: So, sorry, you paid $330,000 for it?

Simon Loo: Paid $370,000.

Phil Tarrant: $370,000. And then a bit of reno work, some repairs and maintenance and stuff. So what'd you drop on that, how much?

Simon Loo: About $20,000.

Phil Tarrant: Okay. Then the granny flat build was how much?

Simon Loo: Granny flat build, in total including demolition, came to about $110,000 also.

Phil Tarrant: All in for about high $400,000, right?

Simon Loo: Correct, yes.

Phil Tarrant: Just shy of $500,000.

Simon Loo: Yeah.

Phil Tarrant: Plus all your other, stamp duty and everything else.

So did you do the granny flat at the same time as you did the repairs and maintenance on the property to prepare that? Or did you do that and then do the granny flat?

Simon Loo: No, actually, we renovated it first and then found a tenant for it. Whilst the tenant was living in there, we dropped the rent a bit, obviously, and started digging up dirt in the back yard.

Phil Tarrant: And built the granny flat. Smart.

Simon Loo: Along the same time as well, because building a granny flat will take a couple of months, I think it took me six, seven, or eight months or something in total.

Phil Tarrant: Yep.

Simon Loo: If I didn't have a tenant in there, it'd be a massive –

Phil Tarrant: It'd be a huge holding cost.

Simon Loo: It's a holding cost. Yeah, exactly, so it was important to go down that path.

Phil Tarrant: You're in for $500,000, back in 2010.

Simon Loo: Yep.

Phil Tarrant: You still got the place now?

Simon Loo: No, I've actually sold it. That was one of the places that I sold recently, a few months back. I sold it for $851,000.

Phil Tarrant: Are you happy with that result? $350,000?

Simon Loo: I am. Well, it's $350,000, but strategically as well, because I recently just quit my job and I started a new business as a buyer's agent and that sort of helped me pay off a couple of my other properties to increase my cash-flow position. So the risk for me running this business was slightly less than what it would have been. I felt that I sold it, if not at the peak period, near peak.

Phil Tarrant: $850,000 there is a pretty good price.

Simon Loo: Yeah, it wasn't bad for main roads and the front house was quite terrible.

Phil Tarrant: Did you sell it to another investor?

Simon Loo: I think it was to an owner occupier at the end of it.

Vivienne Kelly: Simon, it's interesting that you mentioned there your cash-flow position and launching your new business. We were chatting before we were on air as I bustled into the room with my coffee and tried to work out what we were going to be talking about today. You are self-described ‘in property jail at the moment’. You say you've hit a bit of a serviceability wall because you've got these 11 properties. You've obviously got some debt on those properties and you've launched the business. So, what's the plan from here? How are you going to get around this serviceability wall? What are you going to do?

Simon Loo: Technically, I can actually still buy property. I've definitely got the funds available, it's just that the banks won't lend me anything because I don't have a pay slip at the end of the day.

Short of it is, I have to work for two years within my business with an ABN, producing a certain amount of income. That's my goal for now, just to get to that level and at the same time obviously, saving a bit of a war chest in terms of funds.

As soon as I hit that two-year mark, I can look at the next stage of my journey, which might be properties in a different state, location, maybe a different type of investing altogether, depending on where the market's at.

Vivienne Kelly: So Phil, any advice for Simon? You obviously run your own business and invest and have to pay yourself a salary and all those associated things.

Phil Tarrant: Sure. It's really big easy tip: just be profitable.

Simon Loo: Yeah. Right. Okay. Cool.

Vivienne Kelly: It's that simple?

Phil Tarrant: It is. It's like, I've run a business for a decade and classic story of starting in the front bedroom of my mum's house and now, we employ over 100 people.

From the very first day, I paid myself a salary. Never taking dividends, never done it. I've just received a salary. From the very first day I started the business through to today, I could show a bank a regular payment on the 30 or 31st of every single month saying, ‘Phil Tarrant gets paid this’. I've paid myself like a PAYG employee.

One of the challenges – a lot of property investors are self-employed. I do another podcast around the SME space called My Business and a lot of people become a business person or want to become self-employed for the flexibility and all this sort of stuff, which never ever happens because you end up working a lot more than what you ever did in corporate life. A lot of people run their business as an extension of their personal finances and that is – you're just doomed to fail.

If you just want to go out there and try and make as much money as possible and minimise your tax position as possible, go and do that, great. A lot of people run their businesses that way. But you get to a point when you try and secure finance and you might have a really good cash flow, you might be able to strip heaps of money out of your business, but you look at financials and people are showing losses. If a bank hasn't got confidence that you can repay debt – and there's a lot of ways that they can look at your serviceability – they're not going to lend you money.

If you're setting up your business right now, for other people who are just self-employed and listening to this podcast, you need a really good accountant, an accountant who actually understands what your goals are in terms of wealth creation through property as much as operating as an accountant who's looking after your best interest as a business person.

You've got to show profit. You've got to show good, regular, sustainable, predictable income that gives the bank confidence to lend money to you.

But there's ways around that as well. There is other lenders who have a lot of flexibility outside of say, major banks or your second-tier lenders, but non-banks will lend money to SMEs. They'll look at the way you generate your income a little bit more fluidly than what a traditional bank is.

Simon Loo: Okay. Good tip. Be profitable.

Phil Tarrant: You should be profitable. Don't strip everything out to try and go for cash flow. Show the bank that you've got the ability to meet your commitments and make money and they'll be happy to lend you. Banks are happy to lend me money. They're very happy to lend me money.

Simon Loo: Yeah. Definitely.

Phil Tarrant: That's for everyone. If you're self-employed, get an accountant that gets it. A lot of accountants don't get it. They'll just try and minimise your tax rather than plan for wealth creation.

Simon Loo: Yeah, that's really important.

Phil Tarrant: You flogged your Blacktown property to some point in the future.

How many more properties did you buy in the western suburbs of Sydney before you went to Brissie?

Simon Loo: Zero.

Phil Tarrant: So, you went straight to Brisbane?

Simon Loo: Yeah, straight to Brisbane. Straight up to Logan. The market's moved in Logan, but when I worked nine to five, my salary has always been average, so I was only limited to properties with a bit of cash flow if I wanted to grow a large net value of properties.

Yeah, it was just a simple strategy of buying them below-market value, stripping the equity and using that equity along with some of the funds that you've saved yourself in your day job, to go on to the next one and just create a bit of a snowball effect.

Phil Tarrant: All your properties now are in Logan Shire area in Brisbane or are they all in Brisbane?

Simon Loo: They're all in Queensland, yes, except for the West Ryde one that I'm currently living in.

Phil Tarrant: Yeah, okay.

Simon Loo: I've got one in the Moreton Bay area, which is up north and the rest are scattered around Logan.

Phil Tarrant: What sort of stuff did you get in Logan? There’s a lot of townhouses up there, but are they free standing or detached or?

Simon Loo: Most of them are houses, so their own houses, their own block of land. I've got one townhouse up there which was another mistake, that was the first property I bought up in Woodridge. That was a lesson learned. It's still viable as an investment. It's still cash-flow positive, but it's just the body corporate fees for some of these townhouse complexes around that area can be quite high.

Phil Tarrant: It’s in Woodridge is it?

Simon Loo: Woodridge, correct.

Vivienne Kelly: You've got something there, don't you Phil?

Phil Tarrant: Yeah, I've got a townhouse in Woodridge. Which street are you on?

Simon Loo: Nyanza street.

Phil Tarrant: Okay. I'm on North Road there.

Simon Loo: North Road, yeah.

Phil Tarrant: There's a lot of stuff like that up there.

Simon Loo: Exactly.

Phil Tarrant: You know, which is okay. They're good yielding properties. I haven't seen the same level of capital growth on that property compared to other properties I have in Logan which are freestanding houses. It's still, been pretty good. It's always the way with strata and other levies. It's another expense you need to cop, but as long as you don't have problems in your other houses…

Simon Loo: Yeah.

Phil Tarrant: … When hot water systems start breaking or your plumbing stuff or your electricity stuff or whatever.

Vivienne Kelly: I've done a story with Simon Loo, speaking of hot water, where he reckons he's replaced 20 hot water tanks in his time – that was one of the key things that he feels like he's spent money on is hot water tanks.

Simon Loo: I reckon I'm a licensed plumber at this stage.

Look, it sucks when these things happen at the time. Any kind of maintenance or any kind of major vacancies or if you get professional tenants that do runners on your property – but I think when you get past that and you zoom out a little bit, it's insignificant at all compared to the equity that you've made on the property, compared to the cash-flow position of each property. I think as long as you buy with that in mind, with those numbers in mind, it helps you weather through some of the pitfalls of owning property, the realistic things you have to do when it comes to owning property.

I think for me as well, there's been a bit of safety in numbers. If I had one or two properties and one of them was vacant for a couple weeks, I think it would affect me more than having saying 10 properties yielding 7 per cent, 8 per cent and you've got one or two that might be struggling a bit, you've got another 8 with enough cash flow…

Phil Tarrant: Diversification means many different things.

So what's the total value of your portfolio now?

Simon Loo: At the moment, you'd be looking at maybe around the $4.1 million mark, $4 million mark.

Phil Tarrant: 4.1, how much debt have you got?

Simon Loo: At the moment, I'm sitting on around $2.5 million, I think.

Phil Tarrant: Okay, 2.5. So you're sort of at a 60 plus-ish sort of LVR? So that's a lot of fat. Does that sounds right, Viv? Probably, 2.5 over 4.1.

Vivienne Kelly: I am not good at mental maths, so…

Phil Tarrant: Probably around that, around there somewhere.

Vivienne Kelly: … but it sounds good to me.

Simon Loo: As long as it's not 95, I'm happy.

Phil Tarrant: So it's not highly geared. You've got 1.6 million bucks in equity.

Simon Loo: Something like that.

Phil Tarrant: Yeah, and you created that over since 2009?

Simon Loo: Correct, yes. Well, I'd say right at the end. 2010.

Phil Tarrant: Over six years, right?

Simon Loo: Yeah, over six years or so.

Phil Tarrant: Over six years, you've made 1.6 million bucks.

Simon Loo: Yeah, I guess, if I were to sell everything, I'd have to pay a couple of gains, but…

Phil Tarrant: Well, you've got 1.6 in equity. So that gives you a lot of capacity. You're in a ... I can't remember the term you use, Viv.

Vivienne Kelly: Property jail.

Phil Tarrant: Property jail. Sometimes time is a forced waiting on the sidelines is a good thing in property, so if you can't borrow. I imagine with a good broker and stuff, you should be able to sort yourself out finance if you really wanted it. If you need to wait out two years as you grow your business and can provide financials to give the bank confidence to lend you money. Those two years, that 1.6 million equity is going to turn into a lot more, you would hope.

Simon Loo: That's the goal.

Phil Tarrant: Which is good. When you are ready to go, that's going to give you plenty of leverage in the market. You can go out there and you can draw down on that quite a lot and you can hit it pretty hard and buy a number of properties pretty quickly. Will that be the plan for you?

Simon Loo: Yeah, definitely. I think diversification as well is key. So at the moment a lot of my stuff is concentrated in Queensland. In a couple years’ time when I do get in the position where I can buy again. I guess I can buy now, but for the sake of leverage, I want to buy more when I can get that finance going. I might be looking at other markets, maybe down in Melbourne or maybe in Sydney if the Sydney correction ever comes.

I'll have to see in two years’ time. I don't like to make calls on and predictions about what's going to happen. Coming back to what I initially said, whenever you're in any position, you just need to take action and see what's best for you in the immediate present. If you stick to a strategy that's numbers based and I think that's when it'll work out in the end. That's where I'm at at the moment.

Phil Tarrant: What's your gem for people tuning into this podcast today? What's one bit of information you give them that they could go, ‘That's smart stuff Simon, I'm going to go and do that myself.’ What would that be?

Simon Loo: All properties have a value, make sure you purchase below that value, current market value. Don't get sucked into spruikers or what you hear and see in the media…

Vivienne Kelly: Except for smartpropertyinvestment.com.au Simon.

Phil Tarrant: We say as it is.

Simon Loo: Smart Property Investment and other property investment media is great, but sometimes if you tune in on Sydney Morning Herald and that stuff can be a little bit different.

Stick to numbers. If you're just starting out, buy what you can afford. Don't overextend yourself. Make sure you've got enough cash flow. Cash flow's super important because things do go wrong when you buy a property and if you've got enough cash flow there, you'll weather it out. It's just a matter of time before you can move on to bigger and better things.

Vivienne Kelly: Guys, we could talk about this all day, but I really think we are out of time. Especially because in less than an hour, Phil, you're meant to be giving us the quarterly business update of how Momentum Media is tracking, so I think you probably need time to get ready for that.

I think we do like to end by asking investors what you would go back and tell yourself when you started. So go back to ‘2009 Simon’, what would you say? What would you tell him?

Simon Loo: Even though I've accrued 11 or 12 minus the sale that I just had, I think I could have been much more aggressive. I think there were periods where I doubted a lot about this whole property investment thing and my attitude took a bit of a hit as a result.

So, remaining positive and keep going as hard as you can because it's much easier when you're young and when you don't have responsibility. I just got married last year and I am already getting a bit of responsibility, a bit of stress coming along from a personal perspective. I think when you're a bit younger that's good time for you to go for it. Just make the most of what you have.

Phil Tarrant: Thanks Simon.

Simon Loo: Yeah, cool.

Phil Tarrant: What would I take away from this Viv?

Probably a couple of points for this podcast: understand what you're trying to achieve, so your goals and objectives are going to change over time. Simon started off, bought a property in West Ryde and then moved on to 11 properties, but seeking a different career path. You've launched your own business, so that has restrictions in terms of how you can continue to grow your portfolio, so understanding what you're trying to achieve as a business owner or being self-employed and how that might influence your property. It's a key point because so many people fall into the wrong trap and get stuck for a long time and can never borrow. Buy the right property first is another.

Vivienne Kelly: I think the attitude thing was a huge theme here today as well.

Phil Tarrant: Just get on with it.

Vivienne Kelly: Simon’s admitted that a few times he got off track, but he had a choice to wallow and not doing anything, or to look at the finance, take it back to the numbers and get things back on track and I think that's something that you're a big advocate of as well, Phil. Keep going. It's always a good time to buy if you've done enough research and if you've got the money behind you and if you're getting the right property.

Simon Loo: Definitely.

Phil Tarrant: Make sure you're listening to the right people as well.

Simon Loo: Correct.

Phil Tarrant: Get the advice from people who actually know what they're talking about.

Simon Loo: Yeah, definitely.

Phil Tarrant: That's good. Okay, thanks, Simon. Let's get you back in again. I'd like to understand how you manage this portfolio you've got, particularly with most of them up in Queensland.

Simon Loo: Yeah, sure, no problem.

Phil Tarrant: We'll get you back in a couple months, we'll have a chat about it.

Simon Loo: Excited to come back. Thanks for having me.

Phil Tarrant: Nice one. Thank you, Viv. Thank you.

Vivienne Kelly: Thanks, Phil. Thanks, Simon.

Phil Tarrant: Remember to check out smartpropertyinvestment.com.au. We're on all the social channels as well, Facebook, Twitter. You can follow me on Twitter @PhillipTarrant. Any questions, whether it's for Simon, myself or Viv, or you just want to have a bit of a chin wag with us in general, you can contact us at [email protected]. Keep the reviews coming on iTunes, guys. Thank you very much for those, really do appreciate them and we'll see you next week. Bye bye.


‘11 properties by 31, now I’m stuck – what’s next?’
Simon Loo podcast
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