In this episode of The Smart Property Investment Show, Brisbane-based couple Charles and Charlotte are in the studio to discuss the unusual money-saving technique that saves them $20,000 a year!
They join host Phil Tarrant to explain why they’re future-proofing themselves through property investment, how their house sitting venture enables them to save more money for their growing portfolio, and why they believe investment is possible for all millennials if they’re willing to make the choice to put the hard yards in.
Tune in now to hear all of this and much, much more in this episode of The Smart Property Investment Show!
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Suburbs mentioned in this episode:
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Phil: G’day, everyone this is Phil Tarrant here. I'm the host of The Smart Property Investment Show. Thanks for joining us. It's always good to have you on board. We're going to have a good time today, I think. Just chatting off here with our guests who I'll introduce in a second, something of which we haven't really covered before, an interesting article out of strategy, but it's an interesting life situation or position that these guys have put themselves in to help them supercharge investing in property.
Interestingly, and this is something that you can not read a paper, or listen to a podcast, or watch anything on the news these day without hearing about housing affordability problems, particularly with our Gen Ys or Millennials. I guess you can replace those terms either way but in Sydney in particular, it's expensive to buy property here. It's a global city and, as you would expect, if you want to live within 15 kilometre of the CBD, you're going to have to pay a pretty penny for it.
When you look outwards in Australia, property by and large is quite affordable. We speak often on the show about housing affordability and how it works and how it's sort of inhibiting people from realising if it exists anymore, the great Australian dream of property ownership.
I've asked Charles and Charlotte onto the show today to have a bit of a chat with us. I don't really like asking people their ages, but how old are you guys?
Phil: Okay. So I imagine you guys are a couple?
Charles: Yes. Have been for a while.
Phil: Been going out for a while?
Charlotte: Eight years, yes.
Phil: So guys started going out at 18.
Charles: Yeah, bit after that – 18, 19.
Phil: That's cool. Excellent.
You're down from Brisbane. We're recording in Sydney today. Coming down to Brisbane for the show so thanks for making a trip down.
Charlotte: Yeah. No. Make a day of it.
Phil: How's the ... things pretty wet up there? You guys got the cyclone? We're obviously recording this a week after the madness.
Charles: Yeah. It wasn't too great. Not so bad in Brisbane. North of us and south of us got hit pretty hard but we ended up doing okay.
Charlotte: We had a rain day which is the most exciting part of it.
Phil: A rain day?
Charlotte: A rain day, like a snow day. No school, no work kind of thing.
Phil: Really? Sounds all right. Good day off.
Charlotte: No disrespect to all the people that really struggled through. It's all good.
Phil: It's good to see so many emergency services people up here sort of cleaning up and sorting stuff out. I know there's been a lot of nervous investors around worrying whether property is going to go underwater and for many they have done. We're going to touch on that today. You guys invest in property already, so let's have a chat about where you are right now. You guys are property investors?
Phil: How many properties in your portfolio?
Charles: One at the moment. We started ... We bought it late last year so January this year. That was the first property that we bought that was up in North Brisbane in Kallangur.
Phil: How much did you pay for it?
Phil: That's all right. Was that an easy purchase or did you sort of ... Was there a lot of research? Was there a lot of questions?
Charles: It took us a while.
Phil: It took you a while?
Charlotte: It took us a very long time. We came back from a big overseas trip this time last year with no money and we knew we wanted an investment property but we didn't know where. We didn't know where to start. We didn't know what to do. We had so many ideas; land, houses-
Phil: Too many ideas?
Charlotte: Too many. Too many. We'd investigate everyone at length. We'd have plans of going what this option, what does that option mean for this and this and this? We got to the point where we were like, we could start anywhere. I don't think we could go wrong with any of the option that we essentially picked, but we ended up picking something that was as low risk as we possible could do, just because it was our first one. We're still very low income owners and we felt like it was a really good starting block for our hopefully large portfolio.
Phil: Our last portfolio. Which of you two guys is the driver of this sort of passion of property?
Charles: It's about 50 per cent.
Phil: It's 50/50? Normally it's sort of-
Charles: It's usually off. Yeah.
Phil: - seesaws sometimes.
Charlotte: But no, we uh-
Charles: Listening to the show we've kind of picked up on that. It's usually there's one driver. I think it's pretty 50/50.
Charlotte: We're just as into it.
Phil: Do you sort of have complimenting skill sets? Is there sort of ... how do you go about assessing all these different ideas and working out what's right for you guys. Does it just happen organically? You just chat about it all the time and you sort it out?
Charles: It's always a topic of conversation I suppose. Charlotte's quite into floor plans and locations in suburbs and that sort of thing. I suppose I like the renovation side of things. Down the track we're going to look at that. I'm quite handy in that respect. Talking about it, it's-
Phil: Just happens.
Charles: It just happens.
Charlotte: Yeah, it just happens. We enjoy talking about it. Anyone that seems slightly interested we'll just latch on-
Phil: Just jump onto them?
Charlotte: Jump onto them and talk to them and-
Phil: The place you brought up in North Brissy, $303k. You said that's the first of a large portfolio.
Charlotte: Hopefully large, yes.
Phil: Why do you want to create a big property investment portfolio. What's the why? Why do you guys want to do that?
Charles: For wealth creation down the track. Eventually we'd like to have the ability or the option of part time work from 40 onwards. We obviously want to generate a bit of a passive income from property. I guess just looking at all the options that it just seems to be the best option to be able to do that, especially with the interest rates at the moment and that sort of stuff. Just a good way to generate that and be able to cut back on work. You see a lot of people at 60, 70 still working full time. Don't really want to be in that position. That's probably why, from my angle I suppose.
Charlotte: I agree. Definitely. We both like what we do work-wise, but-
Phil: What do you guys do for a living?
Charlotte: I currently work in events. I just stare at a computer a lot, which is great.
Phil: Spreadsheets and all that sort of thing?
Charlotte: Emails and on the phone and all that standard stuff. It's not my forever career. There’s not a career that I'm searching for but we have always approached our property investment to be a business. That's my drive at the moment. The work is good and I enjoy it enough to support that. The property investment is what I enjoy currently but it's also something that I can future-proof my future and enjoy the things ... We love travelling, we love ... Just adaptability of your future. You're not pigeon-holing yourself into something. Things like that.
Phil: This is going to give you a choice when you want to have a choice in life.
Charlotte: Exactly. I think just having choices, not getting to the point where you don't have choices. We're lucky enough to be in a position in our life to make those decisions now to be able to set it up for ourselves in the future that we continue to have choices. No matter what we do in our lives or where our careers or family kind of take us, we always have the choice of what we're doing.
Phil: You guys are 26. You're young comparatively, I guess. A lot of people think I'm 26 and I've only got one investment property, what am I doing? I'm sort of slowly ... You're starting at 26, why don't you go out and spend all your money and go on more European vacations. It sounds to me that you guys have thought a lot about this, like a lot about this. Do you think you've thought too much about it?
Charlotte: It did hit a couple of points last year that we almost got to the point where we're overthinking things. That's when we overthought before we even put in the offer on the property that we ended up purchasing. We overthought that and broke down the numbers. We broke down the numbers on everything and then it's like it is what it is. You can't predict what the future is.
Charles: You come back to it and you think, "Just go for it."
Phil: The only way you get experience is just by doing it. Right?
Phil: I first bought my property, how I thought about that to now. I'm buying a place right now. I kind of remember the address, I now it's somewhere in Brisbane. I've got people looking in after it for me. I know it's a good investment, and it's going to perform well in my portfolio. I've got a chat about pest and building stuff and I'll look at that five minutes and I'll go, "What do you reckon? Yeah, sounds good. Let's go."
The experience levels, once you do more and more of it you're confident in your ability and your knowledge improves so much that you just go, "What did I even worry about that?" You've got to get through that process. It's important.
Charlotte: For sure. We already are so ... Constantly learning over the last 12 months. Even now, it just seems like such a big deal we bought a property. Now, I've settled, rent's coming in, I don't even think about it. We've set everything up and it's just-
Phil: It's one of the beautiful things about property investment is, I always say, you can be as involved or engaged as you want. If you buy well, and you've got a tenant in there, you probably don't have to think too much about it. Whereas if you share trading on whatever and you think, "How's my shares today? I've lost X number of thousand dollars." It's very different with properties.
So $303k, what's the rent you're getting on the property now?
Phil: $350. Okay. You're getting a pretty reasonable yield on that. It's pretty standard for Brissy. What's the long term plans with that property? Just let it sit there?
Charles: Let it churn over.
Charlotte: We bought it for the location. The new university is going less than a kilometre away probably even, you could walk there in ten, five minutes. That's why we bought it. It's the new train line -
Phil: Do you think it will be a student combination or you think some professional that works at the university would live there?
Charles: A bit of both.
Charlotte: A bit of both.
Charles: It's a townhouse. It's very accessible to a new train line that's also being built that's 30 minutes to the city, so you can have a variety of people living there. Ten minute drive to North Lakes as well. It's quite central and the reason we bought it was a bit of a cash flow positive property for down the track to help support other potential purchases. From what we've looked at, I don't think it's every going to not be rented, because of the location of it. Which is what we're after.
Phil: Which is what you want. The whole idea of property investment is you buy something that's to go up in value and it costs you as little as possible to hold it. It's not hard. A lot of people over-complicate it.
You guys have bought this property and it's going to be the start of a portfolio that you look to build over time. People always talk about this housing affordability debate. It's impossible to buy a house in Australia or the great Australian dream is dead. You guys have bought your first property as an investment property rather than a home to live in. Rather than sort of the great Australian dream of buying a quarter acre block with - they don't really have picket fences anymore, but you know what I mean.
So how come you guys didn't go down that route of having a home. A home. Rather than a property that you have as an investment. Is there any particular reason?
Charles: The home, I guess, there's a lot of benefits to that at our stage at life and the fact that we can sort of take a bit more risk here and there, no kids, no pets, no nothing like that. Going down the track of an investment property and potentially renting or house sitting like we do, it's just a better option. You can put people into rent it so you're not having to foot the mortgage bill – the renter's doing that. Bit of the tax man, you fill it in if you need to but it's cash flow positive. That was the main reason we went down that track so we've still got flexibility to move around. We're not stuck in one spot. And yeah, generating us an income.
Phil: It's probably affordable.
Charles: Exactly. Yep.
Phil: It is. Straight from the horse mouth from Gen-Ys. Property is affordable.
Charles: Yeah, definitely. Hundred percent.
Charlotte: Hundred percent!
Charles: You just have to know ... you've just got to buy in the right spot.
Phil: What about your peer group, your mates, are they sort of all thinking about this home they want to live in for the future or ... I think the way you've gone about investing in property you don't really talk to them ahead of-
Charles: We try.
Charlotte: We try. We try to talk to anybody. Anyone who will listen.
Phil: What do they reckon about what you're doing? What's their sort of thoughts on it?
Charles: They think it's awesome. They think it's great. Not many people are willing to take the step to do it. They're sort of hanging back, "Yeah, it sounds really good. That's really good, but no I don't reckon I could do it.
Charlotte: Yeah. There's always a but.
Phil: What's the main buts? What's the reason why they won't do it?
Charlotte: "Oh, I can't do that because I don't have enough money." Or, "I couldn't do that because I don't know about ..." It makes us sound like we're really educated but we just read. We didn't do anything extra special that we can't do. I don't know, maybe it's intimidating? I have no idea. We're definitely in the minority in the people that we know. It's funny. It's almost motivating actually to be around people like that. We know, not to be cocky, but we know that we'll be in a better position than them in 15 or so years. It just definitely motivates you to get in as early and that's why we're always anxious to get to the next property.
Phil: Do you think you're behind the eight ball? Like you guys actually think-
Charlotte: A hundred percent.
Charles: We feel like we are.
Phil: You do?
Charlotte: We should have started ten years ago.
Phil: Why? Why do you-
Charles: Because we listen to the show.
Phil: Most people are old, right? Grizzly guys like me.
Charles: Yeah, that's true, but-
Charlotte: We can just see the benefits. I enjoy the process, enjoy the ride. It's like something that – can just see how it can benefit you in your life, you can grow it yourself. It makes you accountable for your own future instead of just doing what ... Society I suppose tells you to go and do a job and putting a little money aside so you can retire and do that. It just makes you take hold of that, and it gives you a bit more control. I mean, there's not 100 per cent over property at all, but it just means that you can go, "I decide to do this. I decide to have choice. I decide to have that flexibility in my future."
Phil: Do you like the idea ... What I sort of read from this chat is that you've got this whole wealth creation thing that's going to provide choice in the future. We talked about that, but do you like being able to sort of steer your own ship? It gives you decision making power so you can actually affect your life. You have to work every day and you say, yes you look at spreadsheets or whatever else, and you get paid. You might be able to get a pay raise if you work hard and ask the boss the right way for more money, but does this actually give you control to actually make a bigger impact on your life or what you're doing? Is that the thing that really drives you do you think?
Charlotte: Definitely. It's kind of not getting someone else to tell you how to live your life and going, "This is how I want to do it." I'm not saying this is the right way to do it, but this is how we want to do it.
Charles: As opposed to giving it to a fund manager or something like that and letting them invest it, we just do it ourselves and-
Phil: I looked at my super, my last super-return. I got like such a bad return on it, I felt like saying, "How dare." I won't say who it was but, big fund right? I think I got like a 0.1 per cent return on my super. I was just like this is madness, but I like taking control. It's been easy with decision making because I sort of run a business, I often feel like I'm sick of making decisions so I just want somebody else to sort it out for me. I get what you're saying, and I hear that a lot from property investors that they like the idea they can actually take control of something and make decisions. You might not always make the right decisions, but as long as you don't make too many wrong decisions you're okay. It means you can go about doing it.
You've got one property in North Brissy. What's the game plan? How are you going to grow this portfolio?
Charles: At the moment, like I said, with the house thing that we're doing, we're looking at purchasing again at the end of this year. Just how it increases the amount of a speed that we can save up. Generating a deposit or saving for a deposit is quite fast for us.
Phil: You mention you house sit, so you don't pay any rent.
Charles: No rent, no bills, nothing.
Phil: How does that work? Like-
Charlotte: We've been living in Brissy for five or six years, and then we went overseas as I mentioned and came back. Our options were, we were working, we go back and rent. We knew investing was probably a goal and we just looked at options. House-sitting came up and we don't have family in Brisbane, we don't have ... I mean, we've got a friendship group, but no close family or anything. That was our option. There's a couple of websites out there and you just make a profile and this person says, "I'm going away for six weeks." This person says, "I'm going away for two weeks." You just go, yes, I'm available. You kind of meet up for essentially like an interview I guess, and then you go house sit their house. We've done it successfully enough that we've done it back to back.
Phil: So you time it perfectly so you go from one to another.
Charlotte: We time it perfectly-
Charles: From one to the other, yeah.
Charlotte: We've been doing it for just on 12 months.
Phil: For a year? Wow.
Charlotte: Yeah, we've only had a couple of days we've had to stay at a B&B. For two nights we had to stay in a motel a couple of months ago for a couple of nights. It's all part of the journey. It's been really good.
Phil: Sounds like fun. It can be anywhere in Brissy or is it normally in particular area?
Charlotte: With obviously, with work, I can work from home most of the time, which is a really big bonus for the house sitting because we look after a lot of older pets with an older couple or the older generation that are going away. They like having someone at home. Charles gets up, goes to work every day, and goes to the same place every day, so we need to ... that's our one point in Brisbane that we need to be around. We just put a maximum ten, twelve kilometres around it, what we're comfortable to commute around and we pick the houses that come up in there. Luckily he works close enough to the city that a lot of houses come off around. We've house sat everywhere. Lots of different houses, lots of different places?
Phil: Have you stayed in any cool places?
Charles: We just left a riverfront property, like a Heritage-listed $4 or $5 million dollar home.
Phil: I just want to know, what's a dog there that you look after or something?
Charles: Just a couple of dogs, just a bit of extra safety around the place. Water the plants, that sort of stuff. In exchange we get rent free, bills, all that sort of stuff paid for us.
Phil: That's cool. How much do you save? What would you be paying, if you rented you'd be what 600 bucks a week probably up in Brissy for something okay?"
Charlotte: We did numbers ... Again numbers, spreadsheets, everything. We did numbers, pretty detailed numbers and it saves us about $20k a year. Obviously that adds to whatever your savings.
Phil: That's all deposit money.
Charles: All deposit, yeah. That's on top of what you would normally save if you were paying rent which is obviously a lot smaller. It generates a deposit for a home nearly every year, which is pretty good.
Charlotte: It depends on what you're buying.
Charles: It depends on what you're buying, but if you're buying around that $303k kind of mark-
Phil: You're sort of okay -
Charlotte: It's getting you close to it.
Phil: That's a really good strategy you guys have put in place. You guys are sort of, it's all about saving the positives, getting the positive money so you can buy investment properties.
Charlotte: We recognise that we are, at the moment, low income owners. We also realise that we're also child free, pet free, we've haven't got a lot of belongings so that's a great option for us. It takes a lot of boxes. It's not amazing all the time, but neither is renting, neither is any other situation.
Phil: I think it makes a lot of sense for guys in your situation. I don't know why more people aren't doing this. There's – how competitive is it to get more places?
Charles: The last place we were in had about 80 applicants.
Charlotte: This is the Heritage one.
Charles: That's a really nice place.
Charlotte: It doesn't happen all the time.
Charles: Generally they'll have between five and 10. We took some smaller length stays in the beginning so one week, that sort of stuff. It was a bit annoying at the time, obviously moving house quite a bit.
Phil: Did you get like five stars and stuff so people -
Charles: Yeah, you generate references and that sort of stuff. Then when you go for the bigger lengths of stay, so staying in places for two months, three months, four months, they obviously require references. They've got more people applying for it so they've got more choice. We created a reference list and that's helped us to get the better ones. Now, it's a lot easier to get them because when 80 applicants come in, they still come through to pick us because-
Phil: You're an experienced house sitter.
Charles: We're experienced. Yeah, exactly.
Phil: You like pets, obviously?
Charles: It's all good fun. Looking after dogs and cats and that sort of stuff.
Charlotte: We're pet people and we'd have a pet if we weren't doing it.
Phil: So what’s your war chest? How much cash you got at the moment to ready to buy? How far off the next deposit year can you-
Charles: Not too far.
Charlotte: I think it all comes down to the financial year and what ... Another reason why we're also doing house-sitting is that Charles is on commission and I'm self-employed. That created a lot of, not issues, but there was definitely some limitations when it came to our first property and where we could get a loan and our serviceability. So it's going to come down to that review at the end of the financial year. We're on track with our savings, but it's just going to come down to whether or not we can – what serviceability we can afford. One step at a time.
Phil: It all comes down to serviceability right? You're in a commission-oriented job, are you?
Charles: I'm a physio? I'm a physio, so I've got a base wage which is like a salary base but then commission on top of that.
Phil: So the harder you work, the more money you get.
Charles: Exactly. Which is good, it pushes you to work a bit harder so that's good. But there's no definite, and having been in the work for 18 months the banks want to see usually a two year history and even then they average you down to 80 per cent. You're struggling against the serviceability side of things.
Phil: When you say you pay no rent or anything that sounds a bit weird. Do they-
Charles: The bank don't like it.
Charlotte: There was a couple of things we had to do at the bank that they couldn't cross. A) We didn't have an address. We didn't even have family that we could put an address down. We have a PO Box.
Charles: No fixed address.
Charlotte: No fixed address, and they're like, "You want a home, do you? Oh, okay." We had to work around a couple of things. That's just how ... we just didn't want to wait.
Charles: It comes down to that. We've got a deposit at the moment we could service a similar property again, but it's whether they loan us the rest. That's the question.
Phil: Do you have that money sitting in an off-set account against -
Charles: Off-set accounts.
Phil: You finance this $303k probably 80 per cent or 90?
Charlotte: We went a 12 per cent deposit. We paid ... Yeah Lender's Mortgage.
Phil: So you've got LMI on it. Your savings that you have sitting in the offset against this property, what's this have you on interest sort of a month? Would it halve your interest payments?
Charles: Close to. We've got about $60k in an offset account ... I'm sorry, $60k in a variable and the rest is in a fixed. It's offsetting most of the variable.
Phil: That's a really good point. Who suggested you structure it that way?
Charles: We went through a mortgage broker and he set all that sort of stuff up. Through the research that we'd done, we kind of knew we wanted to go down that path anyway but, he confirmed that an explained it further as to how to do it the best way.
Phil: Just for our listeners, what they're talking about here is that if you've got a chunk of savings you can put it in an offset account and that offsets against the mortgage that you have on a property. What it means then is that you only pay the interest on whatever the balance is between your savings and what the actual debt is. For these guys here it's sort of halving their interest payments because it pretty much offsets all of their -
Phil: If you owe $60k and you've got $60k in an offset account, you're not going to pay any interest at all.
Charles: The difference between putting it into the mortgage is that, the offset account you can just withdraw from it whenever you feel like it so you don't have to remortgage the property to gain that money.
Charlotte: Obviously we had the money sitting there to go the full 20 per cent deposit but we decided to go the 12 per cent which we were told the sweet spot no matter how you look at it.
Phil: How much LMI – Lender's Mortgage Insurance do you pay on that? It's probably sort of too sort of two and a bit grand, three grand was it?
Charlotte: Yeah, it was about three.
Charles: About three.
Charlotte: We decided we were happy enough to pay that which gets put on top of that mortgage.
Phil: It's capitalising the mortgage so you don't really see it. It just increases your interest payments a little bit.
Charlotte: It does. It just mean that we had ... Because, again, at this starting stage we just want to have the money accessible at this point, we didn't want to, especially since we wanted to go again relatively quickly and we knew that, considering the uni isn't built yet and there's a couple other elements with our first property. We're not going to be able to remortgage in 12 months. This is not realistic. It's a cash flow property that we needed to think about our next step. That next step means we're going to have cash to be able to buy that next property. If we had it in the property and then remortgaged, you're going to pay Lender's Mortgage Insurance anyway. We might as well just set that all for the start.
Charles: In investment property obviously, putting the least amount of cash into it as possible is beneficial.
Charlotte: Your own cash.
Phil: You're still young, right? You've got time on your side to start paying down debt.
Charlotte: Of course.
Phil: The idea though is you want to keep increasing your earning capacity or stability of the way you guys generate income so that banks are happy to lend you money is a really important point. Do you think you're sticking in the same job doing what you're doing, or-
Charlotte: I'm not sure. I'm not sure.
Phil: See what happens?
Charlotte: It definitely is working really well for us at the moment, but yeah, not sure.
Phil: What percentage of what you guys earn, I'm not asking how much you earn, but what percentage of what you earn do you save do you think, putting it in a deposit seeing that you live rent free? Like you're sort of eating Maggi noodles and baked beans or do you ...
Phil: You're not going sort of-
Charles: Salmon and tuna or-
Phil: Salmon and tuna. Caviar.
Charlotte: We don't feel like we're-
Phil: Do you feel like you're going without? Do sit there and go, "Oh, I'm getting paid for that ... is this going to be-"
Charles: No, definitely not. I mean, we're going to Japan next year skiing, go on a few trips this year, that sort of stuff. We're definitely not skimping. We still get to live that lifestyle but we get to save at the same time, so it's -
Charlotte: Best of both worlds. But we're pretty ... We track our expenses like everything from that two dollar coffee to everything on through on up. Which just makes us accountable. It's not necessarily a way for us to go. I mean it can, you go, "Oh, you spent a lot of money this month. Let's cut back." It's also just at any one point, I know how much is coming in, I know how much is going out. I know if someone is saying, "Oh, can you afford $100 extra a month because of this property?" I can go yes or no.
I know that there's some really, really realistic expectations about how much we can save over the next 12 months because I know on average how much we spend. It just makes everything so much easier. It just makes ... Money then is not a scary thing if you just think about what you're doing and accounting for what you're doing. It's your money. I think a lot of people kind of step back from that relationship with money and they are almost a bit in denial about what's happening. We just ... It's just transparent. As long as everything is-
Phil: What do you think of people who find themselves in financial troubles? Guys your age you have $20 or $30k on the credit card, they only ever pay the minimum they have to pay back on it, they're still buying stuff and they're always in trouble and they can't afford it. What do you reckon of that? Is it just - take responsibility?
Charles: It's a choice. It's always a choice. Well, not always.
Charlotte: Not always.
Charles: A lot of the time it's a choice. I think it comes down to education as well. Whether you've educated yourself in that area or been lucky enough to have your family educate you as you're growing up. I think in school and that sort of stuff it's not touched on at all.
Phil: How did you guys learn about money? Does it just sort of just happened?
Charles: Just kind of a self-interest.
Charles: Our parents ... Charlotte's parents run a business or her dad does. My dad is in financial planning. So it's always kind of -
Phil: Well you should have a good background then. You know?
Charles: Yeah, yes and no. It wasn't so much talked about as much as I hoped that it would have been. Still, the idea is there and the concepts are there and they've got a few investment properties and stuff. I guess that has generated us to be inquisitive about it and curious and do our own research from there. That's kind of where that started. I guess some people might not be lucky enough to have that spark in their life somewhere.
Phil: What do they reckon about what you're doing, your parents? Are they supportive of? They think it's good?
Charles: They love it.
Charlotte: They love it.
Phil: Do you talk to them about it?
Charles: Yeah, I talk to them about it.
Charles: They're a bit jealous I think. I don't' think they took the steps when they could have.
Phil: You're a physio. Have you got HECS debt? Have you paid off -
Charles: Got a HECS? No, it's, I just-
Phil: Just pay it off with part of your salary.
Charles: Just pay it off as it comes up. I'm not too focused on getting that down.
Phil: What's the interest rate on a hex debt these days? It must be nothing, right?
Charles: It's pretty low.
Phil: It took me a while to pay mine off.
Charles: I'm not in too much of a rush. It's pretty decent having been at Uni for five years and-
Phil: It's just the way it is.
Charles: Just the way it is.
Phil: Well you don’t want it to be a dampener you know. You don't really see it if it comes out of your salary. You know what your net position is so-
Charles: I know it comes off if you earn about $53k?
Charlotte: $52, $51?
Charles: $52, $53? Being on commission it fluctuates sometimes it comes up sometimes it comes down, especially when you're getting paid weekly or fortnightly. It's all dependent.
Charlotte: Back to what you're saying, I think it's just also about attitude. Attitude towards money. Attitude to what your priorities are in life. For us, our priority is that future-proofing, but it's also, I mean, we've definitely got short-term goals and long-term goals and personal and financial and career. We've got a lot of goals and a lot of-
Phil: Do you write them down? Are you like goal writer down people?
Charlotte: Yeah, we are. We talk about it a lot and we also … We like to repeat it going, "This is our goal. How does this sit in with this goal." Going back to our first property, it was always about how is this property going to set us up for the future? It was never just one step at a time. It's this step, how's this going to compliment the next step? How is that next step going to compliment the next step? It's always about looking into the future and making sure, to the best of our ability, that we're doing the right thing.
Phil: I think it's really good. I wish I was as organised as what you guys were at your age. Steve Jobs talked a lot about at … he talked about sort of linking the dots. When you get to a point you can look back over time and say, "Hey, you did all these things" and you can link them together to work out how you got to where you are today. But it's sort of a reflective, retrospective type of thing. That's sort of what I've done. I can look back and go, "Well what I'm doing now I wouldn't have been able to do if I didn't do this, that, that, that. I wasn't doing doing that, that, that in order to do this.”
Whereas you guys are sort of going ... I think it's commendable being able to sort of goal set because you say, "My short term goals are save money so I save my next deposit on a place and then I'll buy again and again." Your long terms goals are sort of longer term wealth building up every day and that sort of stuff. I just did what I did and got to the point where I go, "Hey, look, isn't that fortunate?"
Charles: Check this out.
Phil: Whatever works really. Whatever works for you guys.
Charlotte: Yeah, we don't know if our goal is going to work.
Charles: Obviously the goal change and adapt over time. Having a general idea about where you're heading is a definite -
Phil: Have you guys ever done a massive, in business terms they call it a pivot wig, and think "Oh, shit, that's not working, I better do this." Have you guys sort of done, this as part of this property journey you've been on? Have you been so adamantly passionate about going down a particular path and then going, well that's not right, on this journey to buying the first property and moving or is it been sort of a very organic process?
Charles: I think the property component of that, no. It wasn't like, oh, we're going to do property. Let's go shares. That's been set. That hasn't changed. I think the type of property changed. Initially it was, let's buy a rundown property on some land, do a good reno, put some people into rent it, generate some equity, that sort of stuff. We were hard set on that track and then we sort of changed to going back to something more low risk considering the situation with house sitting and that sort of stuff where we're not so stable. If something was to go wrong, foundations, something needs to happen, stuff like that. There's a lot more risk involved in there. In that sense we did change track for sure. The property investment has stayed pretty strong.
Charlotte: Yeah, strong.
Phil: Stay true to the course. That's good. I like it.
Charlotte: It's been like a third person in our relationship for the last 12 months just sitting there always. In our dreams.
Phil: Looking over your shoulder.
Charlotte: Sitting there, breakfast, lunch, dinner -
Phil: It's good to see people who are passionate about what they're doing in property investment. Not everyone is in property investment. A lot of people lose money investing in property. The fact that it's – and it sounds like you guys have done this – you've really taken responsibility for your own education. You haven't been sold an off plan apartment at some sparking session and find yourself in trouble with a house in Murimba or something that's worth nothing. You've taken responsibility for your education. It's all about education. Then you can really make the right decisions or be knowledgeable enough to actually make a call that you're satisfied is going to be the right thing. Hats off to you guys.
Charles: Any time. We've been to a few of those off the plan sections and just gone, "Yeah, no. No thanks." Even the education is, you know, you go down that track and flag it and go what is this like? Is this good or not? You hear a lot of negativity about off the plan and that sort of stuff, but you gotta check it out.
Phil: Some people do really well off the plan. I think it's great, but if you buy the wrong off the plan apartment in a wrong market in the wrong cycle, you get hurt.
Charlotte: We're always the type of people that if someone you something, tells us something, we always question it. Even, and we had so many different moments when we didn't understand some of the processes even through buying the property and leading up to buying and purchasing and all of those things, if someone tells you, "You need to do this. You need to sign this." You're like, but why? Why are we doing this? Why are we structuring like this? What are we doing?
I always wanted to understand every process. I'm 100 per cent not opposed to having people help me. I understand that I can't do everything even though I'd like to. But I want to have a team around us and our team will only grow as our portfolio grows. I want to understand what they're doing and how they're actually helping – I don't want to just go, "Here you go. Have this. Do whatever you want." I want to understand what they're doing and what they're contributing to my portfolio and my future. So I need to understand that they're team player.
Phil: If you don't ask questions. Don't ever be scared to ask questions even if they are silly or stupid. Ask them. If you don't ask them, you're stupid I think. That's my point. Guys, I really enjoyed the chat. When you get your next place, you're going to have to come back down and chat with us.
Charlotte: Yeah, sure.
Phil: I appreciate you coming down from Brissy again.
Charles: Yeah, no worries.
Phil: You're back on a plane tonight?
Charles: Yeah heading back. Got work tomorrow.
Phil: Good. Nice.
To finish off, what would be your piece of advice, and I'll ask you guys individually, for the Gen-Y investors out there who are either spending all their money on beer and overseas trips and thinking that you'll never, ever going to be able to buy property because it's unaffordable, what would you say? Charles?
Charles: We're 26. I've spent from 20 to 26 buying beer and travelling and doing all that sort of stuff. I think my biggest thing is it's about choice. Sure you can do that, but be aware of the consequences of that down the track, and be aware of how time is your friend when you're investing in property. The earlier you get in the better. Obviously if you get in too early, you're going to potentially restrict yourself in terms of having fun and doing all that sort of stuff that people think you are going to be restricted on.
I think the biggest thing is choice. Have a think about it, educate yourself, and make sure you know what you're doing. If you get 30-35 and go, "Oh, geez. I should have done that at 25." It's a bit late. You can't do that anymore. You can still buy property, but you're not going to have that ten years of growth or potential growth up your sleeve.
Charlotte: There's that difference between being at 35 and looking back at 25 and grinning it or being at 25 and going, "No, I choose to continue my lifestyle for ten more years. I want to travel and continue to…"
Phil: Which is cool.
Charlotte: Which is cool, but you've made that choice as opposed to you didn't even stop to think about your choices and think about, "What can I do at this point? Where do I want my life to go?" If you go, "I want to go down this way or I want to go, okay, maybe in two more years I'm going to stop, I'm going to do this, I'm going to set a goal." I just think that it makes you, just not get to that point where you're older and you look back and go, "What did I do?"
Personally, I just never wanted to get to that point in my life and think I've wasted an opportunity or I've wasted time. That wasted time could mean doing nothing for a year. I took three gap years. I wanted to do that. I wasn't ready to continue my education and I travelled and I did lots of things, but I chose to do that. I didn't want to get pushed into something I didn't want to do and I chose to get an education…
Phil: You gotta march to the beat of your own drum. That's the most important thing. To be happy in your own decisions and not let anyone force what they think-
Charles: If you're going to go down that path, go hard for it. Go live in London. Go travel Europe or do something specific. Don't just sort of sit in the rat race and do nothing. Kind of do one or the other. Make the decision.
Phil: Make the choice.
Charles: Yeah, exactly.
Phil: I really enjoyed the chat, guys. We're going to have to wind up, but thank you. It's good.
If you want to hear more about Charles and Charlotte, check out smartpropertyinvestment.com.au. There will either be stuff up online based on this chat and some other things as well.
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