Latest / The Follio Property Podcast / Why Property Is The Best Investment | ft. Cal Doggett

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Why Property Is The Best Investment | ft. Cal Doggett · The Follio Property Podcast

• 0:00
  Since the origin of the American dollar, property's been the thing. And what was the cost of the project? 1.8. Yeah, so three times. Three. Where have you seen the best gainers, probably in Australian level? The strange part there is that that land didn't change over the time. It's the same dirt. When they announced the Sydney Olympic Games in 2000, the massive movement in residential house price growth over that time.
• 0:24
  No. We've left it with all too early. I'm going to skip the intro today after Lachlan's request because he actually mentioned in the last episode. So joining me today and Lachlan today is a special guest. I'd like to welcome Cal Doggett, Managing Director from Properties and Pathways, one of Australia's most successful commercial property investors.
• 0:45
  Welcome to the podcast. I think that's an understatement. We've got the guru of commercial property in the room right now. And very sharply dressed too, I might add. Yeah, there was half a chance I was going to rock up in a t-shirt, but no, I'm glad I put the jacket on.
• 0:58
  Good to have you, mate. Really enjoying this episode. Very, very lucky to be here. Thank you. Awesome. Cal, I think the first question should be, why property? Well, you know, geez, how far back do you want to go? Since the origin of the American dollar, property's been the thing that's appreciated most in human interaction with investments, full stop. So, yeah.
• 1:22
  You know, you can take a short view on that, I suppose, if you wanted to. Now we can wind it back. But that's not bad, you know, like humans behaviorally obviously interact with property. And it's been an asset class that, yeah, since the origin of the most recent currency we know of, the American dollar, it's been an outperformer.
• 1:39
  But there's so much out there at the moment that people can invest in, right? So I agree. Property is tangible. People can feel it, touch it. And that's what's unique about property. But, you know, 2025, there's cryptos, Bitcoin's the flavor of the month. Every second conversation, the share market is up, it's down. You know, you can invest in bonds. There's so much out there that people can, you know, invest in or park their money, you know, for wealth creation. Why do you think, you know, why is it real estate for you?
• 2:10
  Well, look, I mean, first and foremost, it's finite. So we love that. The factory's closed. It is what it is unless we, you know, find our way in Mars at some point. The factory's closed on more land. So I like that. And then the other thing which we've seen over time and I've spent, and I know you too, Lockie, you've spent quite a lot of time looking at what's happened in years gone by,
• 2:34
  But there's a direct, there tends to be a correlation between GDP growth and household wealth and even corporate wealth, actually, about that value of money finding its way back into land at some point. So...
• 2:55
  whether it's the improvement of what that land can offer in terms of zoning changes or in terms of its impact to human behaviour, why does it always go... Why does any infrastructure project always end up in more land value? You know, like the great example that I was told, and I went and actually fact-checked this, but like in the late 1900s, they extended the Jubilee Line in London. And they extended it by, I think it was six stops
• 3:23
  And during the construction period alone, they spent 1.2 billion dollars, billion pounds, sorry, extending this line. And then they did a look at land values over those six stops within a 500 metre radius of each of those stops. And what happened to land values just during the construction period, not even once the trains are open, just the construction period.
• 3:46
  And the combined value growth was $4.2 billion of land within a 500-meter, just a 500-meter radius of a stop. And what was the cost of the project? 1.8. There you go. So three times. Three times. And that was in the build process as well. That was just the build process. So then obviously once your train line then opens, you've now got people actually coming in and out of these stops. So that's just like this, how did all that cost in infrastructure, which is building a train line, how did that get back into land value?
• 4:14
  So I think it's a really tried and tested and proven wealth creator, but also a wealth preserver in a lot of ways. There is a tangible, obviously you can touch and feel, but there is a need for land in a particular location. Yeah, for the use of that land, right? Yeah, totally. And obviously higher and better use, greater value. Yeah, and that's probably what people...
• 4:40
  don't always understand is the current use of a property. You know, that Jubilee example, there was a use at the time and it was probably low density residential. It might have been industrial. And obviously the change in that use increases in value. Where have you seen the best gainers, probably in an Australian level, for that type of gain through a change of use?
• 5:02
  Um, geez. Yeah, there's, there's some fantastic examples in the bigger capitals of Australia. Um, you look at like Melbourne did a really good job like 10 years ago of, uh, rezoning industrial land to residential. So you've gone from literally one of the cheapest land usage. You've got like agriculture, which is very cheap. Then you've got industrial, which is basically next cab off the rank. And on a rate per square meter, what sort of figures loosely?
• 5:26
  geez, you know, if you're looking at industrial land, you're picking up at like $150, like $175 a square metre for industrial land. Now you'd be looking at $1,000. Yeah, for residential. For residential. It's the same. You're sort of talking 6, 7x. Oh, unreal. And that's the strange part there is that that land didn't change over the time. It's just the human use. The human use. So I've said it before, but I like the simplicity of it.
• 5:53
  is that it's human interaction with land that gives it its value. And preservation, the most important thing, probably why people during times of uncertainty
• 6:04
  They revert to gold, but the usage of that is not like property, right, where people typically put their money back into real estate when there's times of uncertainty because of that. Because you need, fundamentally, you need shelter. So people need somewhere to live, which you've touched on a lot, but also the variety of use you get that's not just residential. And that's sort of the field that you play in, right? And that's typically commercially, industrial. Totally.
• 6:28
  Look, another really good example comes to mind when they announced the Sydney Olympic Games in 2000. They announced that, you know, like 11 years prior. And you see the massive movement in residential house price growth over that time. Now, were the houses changing?
• 6:47
  You know, like, were houses changing over that time? Were they going from two bed to 15 bedrooms? Like, no, but the land value was, as a result of all the infrastructure going in to create obviously the 2000 Olympics. And we'll probably see a similar story in Brisbane. Well, we've seen that already play out, right? Yeah, that's what I was gonna ask you. We're probably seeing it more from a residential space, but from a commercial aspect as well. Are you already seeing that sort of play out in the areas of Brisbane or surrounding Brisbane because of the infrastructure that's coming? Yeah, yeah, we are. In fact,
• 7:16
  One of the things I'm most excited about is that in Brisbane, there's a really interesting thing happening now where, because of this infrastructure that's being built, obviously we've got the games in 2032,
• 7:28
  There's almost no capacity for private construction. Like all of the people in Brisbane, and they're coming in by the truckload, are there to construct public service like stadiums and roads in the Olympic Village, right? So if you want to go and get a commercial product done, you want to go build a retail toga centre or large format centre or fast food or whatever it is,
• 7:53
  You're fighting with the public sector who already overpay. You're fighting with them to get labourers on site. And there's just no chance. Like there's the numbers that we're looking at. There's going to be like a four-year window where there's going to be like negative capacity to actually get someone to take on projects. And what will that do? It's got to swell rental rates. If there's no supply coming online. Rents arise. Exactly. Exactly.
• 8:18
  Yep, supply and demand imbalance. And you could see that correlating to the residential sector as well, right? If you don't have those trades to build these stadiums are also the trades that build the apartment complexes. If they're not available, they can't build more product. We're in undersupply already. Therefore, a lack of supply will result in increased rents and therefore prices.
• 8:37
  Yeah. And then so, you know, from a commercial perspective, we look at that and go, okay, opportunity. How do you capitalize on that best? Do you buy it now? Or do you buy an asset now with like a four year whale or like a four year lease? So you know that by the time that lease comes up, you're at like peak shortage of supply, potentially, you know, like how do you time your entry and time your exit?
• 8:58
  Yep. And that's a great segue because I know you're big on the markets and cycles in particular, right? And correct me if I'm wrong, but I believe you did time the top of the commercial cycle. Do you want to talk us through that and the importance of how cycles interrelate with property?
• 9:17
  Yeah, look, I could talk forever on it. It's a passionate subject. Because I think some people, sorry to jump in, but I think some people are naive to the fact that real estate and property, whether that residential, commercial, industrial, it all operates in a cycle. And some people, and probably our Sydney listeners, who have been in a market now of 14 years of growth,
• 9:37
  probably think that's bullshit. And they're listening to this saying, you're going to call that out? Because I've never seen a dull year. Being in Perth, you know, locally at the moment, we have been through cycles. We've had the hard times. We've seen the uptimes. Talk to us through that just nationally, your view on property markets and cycles and how they sort of play out.
• 9:53
  Yeah, look, the interesting thing is that I came across this accidentally, right? So my old man was a property fanatic and was never sell, like just never sell. It always goes up. Buy no, buy no. And I was like, look, brilliant. If you've got a forever timeline, why not? Okay, because as we said, like since the origin of the American dollar, property's done pretty well.
• 10:14
  But if you take a smaller view and a smaller view, you can see that during 100 years, there's a few dips along there. And you go, well, if you could time your entry and your exit to that dip,
• 10:24
  you can make X factor returns rather than just good returns. So, and look, multiple, multitude of things can impact that from interest rates to, you know, Trump to, to cryptocurrencies, like it can all impact it. But what I think is true is that it all depends on your lens and your lens on how long you want to be invested in the market. So my old man,
• 10:51
  he was looking at buying property for generational wealth. So I was like, I'll buy it now, I won't sell it and I'll give it to my kids. Fantastic. Great for you. Yeah, fantastic for me and my six siblings. But if you look at a syndicate, which I accidentally started in 2012, our syndicate game, investors want their money back at some point.
• 11:08
  And it was like this view of, oh, we'll never sell was good until such time as it wasn't. And you're like, oh, God, now we're underwater. Like, do we wait another five years to get back above water? Or, you know, how do we manage investor expectations? Because they need to get their money back. And that's what got us looking at. There is actually, when you look back in time, you go, wow, if you were buying industrial property then and selling it then,
• 11:32
  that four year period was worth 12, sometimes 15 years before it. So you could have made the same growth in 15 years as four, you know, or you pick your residential timing into the Perth market or into the Sydney market. You go, yeah, cool, like it might run for six, but is there a four year period or a two year period or a five year period where 80% of that gain was made. So you would be, you would then have a lens to try and time your entry.
• 12:00
  Because the opportunity costs then, right? Totally. And I think what becomes the next step to that is it's not just timing the entry, but timing the entry and buying what? Like, what are you going to buy? So if you can buy an absolutely solid A-grade, triple rated, triple net lease, like, you know, or an absolutely core precinct, core suburb, you know, house that is going to be in incredible demand, no matter what economic state we're in. And then if you can time that,
• 12:28
  with your market. So the underlying asset's solid, but your timing's right, that's when you go. That's when you get your extra returns. That's when you get extra returns. So I mean, you and I were buying property in 2020 in Perth and everyone was looking at us thinking we're crazy. Like I went and bought my house when there were home opens and no one was coming to home opens because it was coronavirus.
• 12:47
  So that's an example of timing an entry into a market. And now it's about, okay, how do I time the exit of that market? Because if we hold it for 10 years, it'd be good. If we hold it for 50, it'll be good. If we hold it for 100, I have no doubt it'll be good. But if I'm only going to hold it for less than 10, there's got to be a place there that makes the most sense.
• 13:06
  Yep. And if you look, like you said, and for those listening, that period of time, if we just took 2010 as a snapshot to 2025, that's 15 years. If you look at Perth, Adelaide and Brisbane, we can really bundle them up. And if you were to invest in those three markets from 2010 until now, you're up somewhere between 120, 130 percent, of which 90 percent of that growth has occurred in the last six to seven years of that cycle.
• 13:32
  So you're right, albeit if you take a long-term approach, you're probably going to be okay, but you've just shortened your horizon from 15 years to five. Yeah, totally. And you mentioned it before, but the opportunity cost of your capital invested
• 13:48
  If you're not looking at that, then you're really not a true investor. Like investors by nature have to, or sorry, they cannot be loyal to any one asset class. You have to look at what is the opportunity cost of this money. So if you're sitting in the residential market for 15 years to make 120% growth, well, what could you have made in bonds during that time for no risk?
• 14:09
  Do you see what I mean? So it's all relative, right? And true investors have to be looking at any particular investment only relative to others.
• 14:21
  It definitely feels like a generational comment as far as the buy and hold. I know you mentioned your father. That was his strategy. I was brought up with that strategy. We love the comments. A lot of the comments we get in YouTube when we talk about trading strategies and hold strategies, a lot of the older generation is quite firm on holding. And I think it sounds like there wasn't a lot of education out there now, obviously, with social media and you've got a lot of buyers agents out there and people like yourself with the syndicates.
• 14:51
  people are now starting to see that as the right strategy to have in terms of trying to grow a portfolio.
• 14:57
  Yeah. Well, I mean, there's, I think that's the benefit of being on the earth longer is you have this gorgeous amount of experience. And data and research, right? And certainly getting better. That's true. And you also, I don't think like there's no way of getting 70 years experience rather that you just got to be around for 70 years. So, you know, it was a 36 year old whippersnapper. Like I can't come and say, no, those guys are wrong. It's the opposite. You got to listen to the people that have been in the game the longest. Yeah.
• 15:23
  I just think that what you said earlier, like the data's here now probably more available than it's ever been. And then we're able to interrogate that data in ways that we've never been able to, and look, you know, there's markets within markets. We've always said that. So you can then start to take a little lens at, well, what did that particular suburb do in that particular region, in that particular state, in that particular country, like, and you can get that granular. Whereas, you know, 50 years ago, like you had to read newspaper headlines. Yeah.
• 15:52
  Drive around the suburbs, I guess, yourself and do a bit of groundwork. That's it. That's it. And it's very easy to get taught. And speak to operators. What's your lease? What's your gross lease? And get that data on a manual level.
• 16:02
  Yeah, absolutely. And just circling back to Lockie's initial question about you timing the commercial market. Speak to us about that one. Tell us the story because it's important that people understand because it's ballsy to pick the top of the cycle and tell people to exit, particularly at the scale you did it in.
• 16:23
  Yeah, thank you. It's interesting, when we were coming into the industrial market, we didn't have this idea of divesting perfectly. We just looked at a market and saw massive potential for rental growth because there was an undersupply. So those characteristics got us into the industrial market. Once we had bought one or two properties, we started to realise that cap rates, capitalisation rates, essentially demand, right, were starting to ramp up and there was an undersupply.
• 16:54
  I think the rubber hit the road four years later when we started to look at the weight of industrial property that we had in our portfolio. And we started to say, well, we need to make really clever decisions about this because not only do all our investors have a huge weighting of industrial property, but we naturally, by investing alongside them, have a huge weighting of our own capital industrial property. So let's get that right.
• 17:16
  And we went out to a friend of mine from Deep End Services, who's a demographer in Melbourne, and I said, look, I want to see a chart of comparable, basically economic data from 1980 to now, right? And this is like crazy. We didn't even find that data.
• 17:34
  Honestly, listen to the story, right? So I said, I want to see the CPI. I want to see inflation. I want to see cash rates, 30-day, 90-day. I want to see one-year, three-year, five-year bank bill swap rates. I want to see population growth. I want to see GDP growth. I want to see average yields for property. And then I want to see that broken down into yields for industrial, retail, office, and other.
• 17:59
  since 1980 and I want to compare them all on a chart and then on a graph to today. And that today was basically right at the back of 2020.
• 18:10
  And he had to go to the Melbourne library to get the information because it wasn't available. And he was like, this is going to cost you like an inordinate amount of money. And I was like, well, okay. Like this is, yeah, this is important. Like we can't just make decisions based on a headline that we saw in the paper. Let's go to what the data did over the last 40 years and have a look at it and just see maybe it shows us something. And we were brave enough to like fork out all this money for this report.
• 18:36
  And then we got the report and we were like, holy moly. We just looked at it and it's like, okay, so capitalisation rates for property in general had never been this low ever in history. Ever. Or since the data that we had, so 1980 onwards. We're like, we've never seen capitalisation rates be this low. And for people listening, what's that a reflection? What's a cap rate? Why is it low in this context? And it's typically where interest rates are at 5%, your cap rate would be...
• 19:05
  Sure. Yeah. So usually, as we said before, like you've got to compare any asset class to others, right? So really capitalization rates are a way of talking about a return that you could get in property. So in a bank sense, it's an interest rate from the bank. In a bond, it's a return from the bond or a coupon. In property, it's a cap rate.
• 19:23
  So at this particular time, what were interest rates from the bank? Interest rates were like 0.1. There you go. So that's a return you're getting from the bank. Yeah. And what were you getting in commercial? Yeah. So historically, oh, sorry. At that time in industrial, you were getting like 4.5 to 4.75. Which is the tightest it's ever been. By a country mile. Okay. So historically, where does it sit? Historically, industrial had been double digit. Okay.
• 19:47
  So like only since 2015 had industrial then fallen below double digit to like 9%. So still, there's a massive, massive amount of room there from like 9%. And then it had tightened all the way down to like 4.5, 4.75. And why? Why do you think that was? Do you know what? We think it was because people started to recognize that you could get
• 20:12
  as good a covenant in industrial property as any office building or retail building. And they just hadn't cottoned onto it before, but you're getting way bigger chunks of land. So right now, like I can go buy a shopping center and get Woolworths as a tenant.
• 20:26
  I could also go and buy an industrial property and I can have Woolworths as a tenant and it's their distribution or their cold storage. So the covenants is identical. Exactly. But your land's larger. You're getting way bigger chunk of land. So therefore potentially higher capital growth on that land. Absolutely. And then you think about what is it that really, you know, improves over time. It's the land value, like the four walls and the building end up depreciating over time. So the more land you can gather. So I think people started the cotton on to, and when I say people, I really mean
• 20:55
  investors but in at the big end of town like the institutionals and the funds that are going well I could pay six percent for a yield in a shopping center to have Woolworths as my anchor or I could get it at six and a half percent and I got same tenant in industrial and so this weight of capital started moving into industrial and then coronavirus hit.
• 21:15
  And everyone started going, well, my office building, that was leased to all these ASX titans and the biggest listed companies in the world. So I'm not getting rent there anymore. So where does that capital find a home? It's like, where's the next place I can get? Where's the safest place? And at that point in time? It was industrial. And then you add on the fact that now, because of coronavirus, you've got distribution happening and cold storage happening and last mile happening and all these incredible kind of...
• 21:45
  Different things all culminating at once. But what happened was we saw the numbers and we were like, this is historically as low as it's ever been. And then me and my directors, my brother and my best friend, Justin, we looked at each other and we said, if we're comfortable that we are never going to pick the top, then if you're comfortable with that and you're brave enough to just say that, we're never going to pick the top, then you're either going to be too early or too late. And which one of those do you want to be?
• 22:17
  And that was what got us to move. Because we said if we're too late, the whole energy of the market's moving away from us, right? Correct. So now demand is less. You're selling into a difficult market versus selling into a very hot market. You're going to get a better exit. That's right. And then what happened if you...
• 22:34
  play that out. Were you selling? Did you pick the top? Did you pick the bottom? Were you early too late? We just said, we just said, oh my God, like given what we've given that. So if we're not going to pick the top, we know we're not going to get that absolute top to the day. And we're going to be too soon or too late. We'd rather be too soon. We protect everyone's capital. We put incredible amounts of money back in their pocket. Like,
• 22:53
  we're talking triple digit returns in a number of years, like incredible returns. So we're like, so we've ticked the investor box, we've ticked our box, we think we've done what we need to do, protect capital first,
• 23:05
  And so we literally just went like within days, we just went, okay, bang, like all these properties were going to go now. And we went now. And like during the campaign, interest rates went from like 0.15 or 0.2 at the time to like 0.5. We were like, oh my God, no. We left it, we thought it was too early, but now we actually could be slightly too late. It can happen like that.
• 23:26
  And to be really honest, we had a price chip at the end because the market started to move as we put these properties on the market. And we ended up having to forfeit about $2 million across the portfolio. What appeared to be too early ended up being slightly too late because it's so volatile, so fickle that moved. And can we give context to the entry for people listening at home? And we're not talking about a couple of dollars, a couple of cents and a bit of chump change. What was your entry and exit?
• 23:55
  Yeah, we entered, it was around about 68 million all up. So you went in at 68 million in 2000? Yeah, anywhere between 2018, kind of 17, 18, we were entering. And then we were out by the start of 2021 at about 174 million. And, you know, the equity, return on equity there was like triple digit. So in about four years.
• 24:18
  That is insane. And now the best part is we've gone back to deep end services and said, can you give us the data from there to now? And it's like, oh, wow. So cap rates have gone from 4.5, the lowest they've ever been in industrial, and now they're at six and a half.
• 24:32
  Just like that. We're talking in a matter of three years. So cap rate wise, it looks like we picked it. Okay. The only other story there is has rent really grown enough to offset the cap rate movement? And there has been significant rental growth in industrial. So there have been some of my competitors that have gone into the market and gone pretty healthy returns.
• 24:54
  So back to that question around cycles, and that's where it's so important. So if you took a 10 year view on that, entered in 15 and you continue to hold in the test of time, you've left not only a lot of money on the table, but you potentially, you talk about preservation being at the forefront, you're taking clients and their funds into periods of time where arguably, some of these assets, some of these super funds are buying things that are negative equity from day one.
• 25:21
  It's a scary place. Yeah. We, you know, today is probably the most I'm looking around going, what is everyone else doing here? Like I'm starting to question some of the acquisitions that are happening and some of the market information that's coming out in the commercial space. Because I think that, you know, our whole ethos has been protect capital first.
• 25:45
  and then try and deliver a return. But don't get backwards on your money. Like that's, I mean, Warren Buffett was like, rule number one, don't lose money. Okay. Let's stick to that. If we do nothing else, that's a pretty good rule. The guy's, you know, the goat. So let's just, that's not a bad way to start. So let's start there. And then I think you've got to be humble enough to recognize that in order to do that, you have to buy property that's got a lot of fantastic features that a lot of people want. So you're having to fight the market to try and find value that others have like just missed.
• 26:13
  Yeah. And like I said, you've got to be humble for you to realize that we're not going to pick the top. We're going to be too early, too late. Let's not be too proud and too arrogant to think, you know, Cal Doggett, who's probably more qualified than any to think that they could pick the top with the data and the research you had. Let's just take a call. And I love that. So then what was the movement? And we talk about cycles and we talk about looking out at different asset class. Because essentially as investors, we've got to look at all bets on the table. It doesn't matter what it is.
• 26:41
  And although you've been heavily involved in commercial, that shifted then to residential. Talk us through that shift and the fact that you went out to, I suppose, an area that's probably not something that you specialised in, but could see the opportunity.
• 26:53
  That's exactly right. It goes back to the earlier comment of if you are a true investor, you cannot be loyal to any one asset class. So important. You can't be. Because what happens if all of a sudden banks start offering you a 15% interest rate risk-free? Like, well, why would you invest in commercial property at 5%? You can get 50%. So...
• 27:12
  So that made us think that if that is true, again, like if we're going to actually hold ourselves accountable to that, then we have to start looking at where we think the next best place to put our money is. And the data was telling an incredible story for Perth Residential. And so we did. We took like...
• 27:30
  hundreds of millions of dollars and we went and bought residential. And again, while we think we timed the entry pretty well, what we made sure we did was, even though we entered at a place when a lot of people thought, you guys are crazy, and you probably had that a few times yourself, like some of your clients were like, what now, really? And you're like, yes, like now. But what we did was we went in at a way, we said, well, even if the market doesn't move, so let's say the market, which we can't control,
• 27:58
  does nothing, we could still subdivide this property or we could still renovate it to add enough value to protect the capital. So it was like, cool. So if we can back solve protecting capital, yeah, we've got to roll up our sleeves and get our hands dirty and really look after our investors' money. If we can do that as a worst case scenario, then any market movement that comes here is just going to be cream. And we went into that potential acquisition with our investor group and our closest investors and we actually restructured our whole fee structure
• 28:28
  so that they felt comfortable. And we actually said, look, we're not going to make any money out of this unless it goes. So there's no like fees on the way in and there's no management fees. We just cut it all out and said, we're taking a risk with you. If we're going to do this, let's do it together. Like co-owner, like instead of, oh, you're an investor and I'm a manager. It's like, no, no, no, we're co-owners now. We're doing this together. So we're doing this together. So here's the data. Like, let's agree this together. Then we could go in in a fashion and say, cool, we're going to bring it to life, but we win, you win.
• 28:58
  It's brilliant. And to go outside a space of, again, not too proud to say it's a commercial, it's commercial, it's commercial. It's really not subjective to any market. It's based on data and the fundamentals.
• 29:11
  Yes. Look, we've learned a little bit about how to do that better. We had some feedback from the investor base. They were like, what are you doing? We're not into that. There's always a cohort of investors that don't necessarily want things to change, but there was a larger cohort that were like, look, you seem to have timed it on the industrial market. Let's have a go. Let's take two. So we were lucky enough that, yeah, our investor base kind of mostly followed us into it.
• 29:41
  And then where's the residential portfolio at this point in time? You entered in 2022? Yeah, we entered like, yeah, late 2021. We've been in some even like mid, yeah, mid to early 2021. And then, yeah, we're kind of, we'll be exiting now probably over the next kind of 12, 18 months. We'll start to drip feed into the market. We've got a lot that we can't do it at once. We've probably got to just be a bit smart about it. And what sort of returns are you looking to release?
• 30:09
  I would have thought investors would probably have made anywhere between 80 to 100% in kind of three or four years. And how does that compare to some of the commercial assets? That's so interesting. Yeah. Like, because it was interesting looking. I probably would have assumed your business would have been predominantly commercial, which it sounds like that's the expertise. But what sort of, how does some of those residential assets compare to some of the commercial assets you bought over your time?
• 30:39
  And actually another question is, do you, is that a common practice for you to put your own skin in the game when you are talking with your investors? Is that quite key? Yeah, it absolutely is. It was our, it was kind of our backbone of our whole offering when we started in 2012. It was like, we're putting our money into this. Do you want to come along with us? It was that kind of a motto. And with every single syndicate we've done, every investment we've done, our money's on the table.
• 31:06
  Um, so yeah, yeah, it's an absolute cornerstone of ours. And I think our investor base has come to know that. So they don't even ask the question anymore, but our money is in every single one of our deals. Um.
• 31:17
  But to answer your question, yeah, I think that the residential portfolio may end up being, you know, like top three or four performers of any property we've owned at a portfolio level. So what I'm saying is there's properties within our commercial portfolio that have done enormously well, right? Like a little outlier here and an outlier there. And you go, wow, that's like 150% in three years. Like that's unreal.
• 31:42
  A little bit of luck, which is good. But as a portfolio, this residential, I think, will probably outweigh the gains we made on the industrial and will prove, will hope so, will prove to be the best move we made. Have you got the appetite now for residential? Was the data just showing Perth, it was too good of an opportunity to pass up or is it you're now sort of looking at other areas throughout Australia on the residential side that...
• 32:09
  the data is proving attractive? Yeah. Yeah. Look, it's a, that's a fantastic question. It's one we're asking ourselves a lot at the moment. Like if we do divest a lot of our resi, what, you know, what then you start asking that question. Um,
• 32:24
  And the short answer is, yeah, we go back to the, let's not be loyal to anyone asset class, let's look at everything. It's certainly opened our eyes though, is what I would say. So commercial was our backbone, we really knew that, we could manage that really well. We had this ability to like really maintain tenancy and drive growth with tenants and improve rents. Then you go to the residential game and you're like, wow, okay, the tenant relationship here is very different, they're living in it.
• 32:53
  It's their home. Like you can't just pull the rug out from them, you know, and there's a lot more regulation and all these kinds of things. So we've kind of learnt that landscape. And so it's given us a few more strings in the bow. But, you know, the next step, if we were to look at the next kind of, you know, venture for investment wise, it wouldn't have to be a residential. But now that we've done resi, I think we would venture back into that place again. We would want to make sure the data points out.
• 33:18
  to exactly what kind of returns we're wanting. So, you know, the Brisbane story could be a good one, although it has seen a huge amount of growth already. If it hadn't seen that amount of growth already, we'd be probably looking a bit more keenly at it. It's the affordability issue there, right? It's starting to tap out, so it makes it difficult to see or be a lot of infrastructure, so I completely agree.
• 33:37
  Yeah, but then, you know, like there's pockets in Melbourne that we hear could be looking at good value. And you look at Melbourne as like one of the third or second most desirable places to live in the world. So fundamentally, again, you go, well, that...
• 33:52
  That's got to come back to a reasonable level of value at some point in time. Yeah, downward risk is sort of limited to the fact that, you know, worst case scenario, it's got to get back to the norm at some point in time. And at the moment, it's the sixth most expensive capital city in Australia where it's typically two. Yeah, so that's when I look at Melbourne. It's like the downside risk. That's exactly right. Yeah.
• 34:14
  So yeah, there's little markets like that, little opportunities like that. I mean, you look at agricultural land now, you're like, wow, geez, that's been a really sustained performer over a long time. So we're not exactly sure what the next step will be. We want to articulate the exit on our current portfolio. And that's your secret sauce, right? You're not going to sit here on a podcast and tell us where he's parked his money. I'll just start to write some notes down. That's what you're paying for. And there's a course that you can tune into. You want to talk a little bit more about that or is that coming soon?
• 34:43
  No, it's pretty fresh. Yeah, it's kind of limited to just a few people that want to attend, but I'm going to run a mastermind at the end of July, 25th and 26th of July. And yeah, I plan to cover a lot of what we've just talked about. Really, what I want to do is empower people that rock up to go, I can do this. It's not complex. I mean, it is incredibly complex, but you can make it really simple with a few...
• 35:12
  You know, there's sometimes a few levers that create all the value. So instead of having to worry about like doing 100 things at once, it's like those two levers there, you pull those two and leverage can create enormous returns. And you kind of want to empower people to do that. Done it for investors, done it for friends, done it for family. It's like, well, what's the next step? Yeah, done it for yourself. Let's see if, you know, kind of randoms on the street want to rock up and listen to Cal. So, yeah, I'm pretty excited about it. Awesome. We'll drop the link in the show notes to that one, Cal.
• 35:41
  Brilliant. Thank you. Awesome. So thanks for coming, mate. Really, really enjoyed that one. I think I certainly learn a lot, so I hope the audience has. And it's good to hear someone else's voice besides Lockie's for a change too. Yeah. I think everyone's enjoyed that. So thanks, Kel. No, I appreciate it, guys. It's been great. Make sure to join us next episode. Stay informed, stay curious, and keep going on the bullshit.