Latest / The Curve / How Sophie Actually Bought Her Investment Property.

Transcript

How Sophie Actually Bought Her Investment Property. · The Curve

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I made a ridiculous amount of money in a very short space of time through property.
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I invested in my first property ever, it was doing the burr approach, which is you buy,
0:11
you renovate, you rent it out, you refinance and then you go again.
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What's the last one?
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Repeat.
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So this is a property approach that a lot of people don't know about.
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It's really great if you're a beginner or you're wanting to get into the property market
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but you don't have a giant deposit.
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This is part two of a conversation with Peter West who is a property expert and he was the
0:33
guy that I did this with so if you would like to learn more about Peter West or you want
0:37
to get in touch with him about doing this yourself, you can email us, we've put our email
0:41
address in the podcast show notes and if you are not sure what I'm talking about and
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you haven't listened to part one, go back and do that because this is part two of a very
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long, in-depth way, basically of how I made 122,000 in six weeks.
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So if you have any questions, comment where you're listening.
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If you have a really long question or you don't want to share it publicly, we actually
1:03
have a curve hotline so you can leave a voice note and we can listen and respond in another
1:07
property episode so any questions, please let us know.
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This is new content for us and we really hope that you enjoy it.
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So here is part two.
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Welcome to our brand new property podcast.
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We do.
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This has been in the works for a long time and we're so excited to finally be able to speak
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to you.
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Regularly, every month, we're going to have a property podcast when we talk about home
1:33
ownership, property investing and that's whether you're trying to buy your first home, you're
1:39
trying to buy your second home, maybe you're wanting to buy an investment property and
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that is exactly why we're proud to be partnering with Ben Zed because they get it, they
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understand that there's no two situations that are the same and having a Ben Zed home
1:51
loan partner in your corner, you'll always have the expert advice and tools that can help
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you make it happen.
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But thank you so much, Ben Zed, for helping and power this property podcast.
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Welcome back to the property podcast, Peter West, thank you so much for joining us.
2:07
Oh God, I'm just like, I don't even really know where to start because there's so many
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things that we need to speak about.
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In our last conversation, we kind of covered what the B-R-R-R approaches, which for anyone
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who hasn't listened to that, definitely go back.
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We'll link it in the podcast show notes because it's a good intro into like, what is this
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approach to property, why have we even got paid on, who is this random man on the
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curve podcast?
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Yeah, so basically, Pete and I worked together over the last like six months, I guess
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probably the actual time we were doing was like within a three month period, but yeah,
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we used this approach, we bought a property and I thought it would be quite cool to speak
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to that process and like how we chose it and whatnot.
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But I think before we get there, it would be great to do a proper kind of pros and cons
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list on why this kind of property, what's really great about it, what's not so great about
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it.
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So people, as they listen to my experience and what I've done, they can kind of figure
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out if this would be right for them.
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We'll go through the pros and cons of both.
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So firstly, before I get into it, I suppose I just caveat with, there's no right or wrong.
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Depending on what your situation is, what you're trying to achieve will depend on which
3:26
strategy is right for you.
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So no shade on the passive approach, that's not my approach.
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Do you think people will come at you?
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Do you get like, people do you get a little bit like, oh, you're so one eye, you're just
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one eye.
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Oh my God, can you if I just get a lot?
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Yes.
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No, people are quite protective.
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I guess people are protective, like for example, opus partners who are really a really
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good company and Andrew and Ed, and everyone else that works there, they specialize in
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new builds and they help people generate money through new builds and that's a perfectly
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fine strategy.
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You know, Andrew's got a property portfolio, four or five properties or something like that
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and he's done that through new builds as far as I understand.
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So, but you know, different time and different strokes, different things like that.
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So it's a massive caveat so people don't come at me.
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Also, can I just say I think the same thing's true in the stock market investing space
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because for ages, VIX has always kind of spoken about how like there's a lot of people
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who believe in just buying really low fee ETFs and invest in all like just tracking the
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market and then there's people who have made a whole living out of like actively trying
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to invest in things that, you know, and sometimes that works for some people, sometimes
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you like a combination of both, you've actually had experience doing all of the different
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types of property investment and this is just the one that we're talking about today.
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It's not to say the other ones aren't valid.
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Bang on.
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So in terms of the passive approach, the pros of that approach is you get a really nice,
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freshly built house.
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So you're not having to deal with any maintenance.
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You know, the shower's not going to break down, the guttering's not going to be an issue
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for five or ten years.
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So it's really low maintenance, really low input and you don't have to do that much due
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diligence on the property.
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You don't have to check if the piles are okay, you don't have to check if the cladding's
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okay because it's just been built, you know, so it's quite a low input in terms of your
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time and energy needed to buy a property like that.
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It makes sense if you think about the idea of a new build, they're starting from scratch.
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They're using new materials and it's not going to be leaking.
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There's not going to be any fundamental things wrong with a well-assume if it's been well
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done.
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You'll need to check those things obviously, but it's a lot more straightforward and it
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would be odd or bizarre if there were defects that you needed that you found, right?
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And so that's some of the pros for that type of property.
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You can do it remotely, you know, you can buy something like that overseas because you
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don't really need, if it's an investment, you don't really need to come and see it.
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But the cons with that type of strategy is that the day you buy that property is as nice
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as it's ever going to be.
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It's only going to get more run down.
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That is such a good way to put it.
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Yeah.
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It's only going to get more run down by tenants, time and stuff like that.
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So it's only going to get worse over time and you can't do anything to that property
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to make it nicer.
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It's the nicer it's possibly going to do.
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So you can't forcibly appreciate it and hence your reliant on the market, which is
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a con.
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It's somewhat out of your control in terms of what the value of that property does.
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Also with the new builds because it isn't the idea of supply and demand so important.
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But if there's 500 of the exact same apartments, is there a chance where there's so many that
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it's hard to rent out because they can't find their tenants, is it there's no real like
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uniqueness to it.
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So when it comes to selling if 25 in the building, you're selling at the same time, it's
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kind of like all of those things as well, like potential cons.
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100%.
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Speak to anyone who's tried to sell a townhouse from Christchurch for the last two years and
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they won't tell you a pretty picture.
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So it's been pretty tough for that exact point because there are lots of them out there
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so it is pretty tough and that's another con as well.
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When the time does come to sell, it's going to be pretty hard.
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For those points that you've just highlighted there, there's lots of them.
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They're all pretty similar and so why would someone pick yours versus someone else's
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just down to price really, which is not the position that you want to be in.
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The other thing of when you said, you know, it's at its kind of tip top shape at the point
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in which you buy it.
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I think that's such a valuable point.
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It's kind of like a car.
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You drive it out of the dealership and it immediately loses value and obviously the difference
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with the property is that you've got the capital gains over time if you hold on to it.
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But it's not a situation whereby time goes on and you add value, you can actively increase
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it.
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You're more at the mercy of the idea of holding for a long period of time if you want
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to make money, right?
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Yeah, correct.
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So if you book purchase something like that in 2021, you know, it's gone down to value
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and you can't do anything other than just wait for it to come back.
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But if you bought a bit of a do up in 2021, you could do it up and then maybe it would
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be now worth what you paid for it or maybe a little bit more.
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And the other, I suppose, Con is around cash flow and yields.
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Typically these types of properties cash flow negative.
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So you have to put in money to top up the mortgage, which is not what you really want to be
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doing.
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You buy an investment property, you know, so ideally it pays you.
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And then the downside of it being cash flow negative is it's quite hard to go and then
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buy a borrow for the second or third property because the banks and their spreadsheets say,
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well, you can't afford it because you're having to top this property up.
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So how are you going to get a second or third mortgage?
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But I'm sorry, cash flow negative.
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Can we pause on that for a second?
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So that is the idea that to service it like the rates, the interest, the mortgage, everything
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is what you can get for it in terms of how much you can rent it out for.
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So it doesn't cover everything.
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Is that the general?
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Correct, bang on.
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And is that always the case with new builds or just most of the time?
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I would say most of the time, there might be some unique new builds out there that are
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sort of a dual key potentially, but by and large, definitely in Auckland, it's going
9:08
to be cash.
9:09
So a dual key, sorry?
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A dual key is sort of, it's, you buy one apartment, but there's actually two, there's
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two apartments in there, that makes sense.
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So you live in one side and you rent out the other side.
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So they're really good for you, or you'd have two people in there.
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But by and large, someone might going to shoot me down again and say, I managed to get
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a cash flow positive new build, but typically the require a top up.
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What we are looking forward to these podcasts and connet is for you to absolutely rip Peter
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Parts.
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So if you have got Amy, feedback on his approach, where I've been to care, and the comments
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feel free to go hard.
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I love the skin, bring it on.
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Love it.
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Okay.
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So these are all cons of a new build versus buying like a rundown shitter that you have
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to do up.
9:55
Yeah, correct.
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So over to the sort of more active shitter, they need to do it.
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So the cons of that, as opposed to a little bit more risk, you're buying a house that
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needs work.
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So there's a bit more, you can have to put more cash into it.
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There's a risk that that renovation costs more than you're assumed, and you have a budget
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blowout in that sense.
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Which happens a lot if you don't know what you're doing.
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That can happen, yeah.
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Absolutely.
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If you go into it with poor planning or poor knowledge, then definitely run a risk of
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that blowout happening.
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There's more maintenance required on an older home, you know, the, if a house has been there
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for 30, 40 years, the gutters are probably going to need to be replaced.
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The roof is probably going to need to be replaced shortly.
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So there's more things a little bit more tired.
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So those are some of the cons.
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Turn to the pros though.
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You can pick them up for a lot cheaper.
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You can renovate them so you can forcibly appreciate that value, so you're not so reliant
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on the market to take care of it.
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Forcibly appreciate, it's quite aggressive.
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Do you think that we could make more actively adding value or something, a little bit more
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positive?
11:00
Yeah, it's been a wanky property.
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It's so intense.
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Yeah, yeah.
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So I've been too deep on the property stuff.
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What do we, what do we agree with going with?
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I think we go with actively adding value or actively increasing the value.
11:14
Aav.
11:15
Yeah, yeah.
11:16
Absolutely.
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So we're going to have it actively adding value, which is doing all the good stuff, your
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painting, etc.
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Your distance more in your control versus further time waiting on the market to take care
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of it.
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They also cash low positive.
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You can pick up a house for $300,000 out on the regions, but you still achieve really
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good yields for that property, which means, or A, you don't have to top it up from your
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hard-earned cash, and then B, it better enables you to build a portfolio because you can
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go to the bank and potentially get the borrowing for the second and third property, which
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is really key if you want to build a portfolio.
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That's kind of the main part about this, which is great.
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And I think that that's, you know, anyone that has a new build, I'm sure it's a great
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investment.
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Like, we're definitely not trying to say, like, you've had a shocker, you shouldn't
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have bought that at all.
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It's just realizing that there's different ways you can make money through a property,
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and some of those mean, like, maybe you start a WhatsApp group called property moguls,
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like me taking my friend to a border house, you look at our planners to do this and have
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a portfolio of properties.
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Like, I'm not in a position where I want to be or need to be owning a first home that
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is at a spec or in a location that I want to live in.
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But there's also other ways of doing it, right?
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So let's say you've got a, for your first home, and you're living in a beautiful place
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and whatever.
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I mean, are you able to also borrow against that to go and do a smaller investment property
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somewhere else?
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Yeah.
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Correct.
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Which is probably a nice segue to talk about rent-vesting, which we haven't touched
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on, but we can, which is effectively what you're doing.
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And so rent-vesting is where you don't own your own home, but you rent-vesting.
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Rent-vesting.
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Rent-vesting.
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It's a thing.
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It's a term.
13:00
I do not.
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It's like, av.
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Rent-vesting.
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So it's like, you're renting while you're investing.
13:04
Oh, I like it.
13:05
Yeah.
13:06
Yeah.
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So yeah, we are trying to turn you into the mogulest of the moguls.
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Imagine being in the future, just like a photo of me with like 40 houses behind me.
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Like, you can do it, just like me.
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It's going to happen.
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It's going to happen.
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So visualizing.
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Rent-vesting.
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So yeah, that's where you don't own your own home.
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You continue to rent, but you invest in property outside, or maybe even the same town
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where you live.
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And that is, I think, a good financial decision.
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Sure.
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Buying a home is still a good financial decision.
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You're going to do a ride out of it if you hold it for a long enough, right?
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But also rent-vesting is also an option.
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So you can skip the step of owning your own home, and then borrowing for a property.
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Because most people do the typical approaches by your first home.
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Wait for it to go up and value or renovate it, and then take that equity and go and purchase
13:58
an investment property.
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If people get into property, that's the typical, almost common process, but you can skip
14:04
that step, continue to rent, and then go and purchase an investment property, which
14:08
is what I do.
14:09
It's an active decision that I've made.
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I don't want to own a home yet.
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I don't need an expensive home.
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I'm happy to live in a relatively small home, a one-bedroom apartment with my wife, pay
14:21
cheap rent, and then use my capital to invest in properties out in the regions.
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So a really great analogy for this is if you buy an expensive home, and let's just say
14:33
which is definitely a New Zealand dream.
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It's like, to be honest, there's a dream all over the world of the idea of buying a first
14:39
home, living in this place that blah, blah, blah, blah.
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It's so interesting, and I would say this is the biggest shift when it comes to property
14:47
and investing that's happened in the last three, thirty years, which is it used to be
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that you would buy a home, you would hold onto it, and because you would buy it for so
14:56
much less, then at the moment, I think, 2024, those stats are that the average first
15:02
home is seven points, seven times, someone's income or something, whereas it didn't use
15:07
to be that high, so buying a really nice property to live in and make capital gains through
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that was a really great way to create wealth.
15:15
Whereas it appears to me now that the most clever property investors or investors are
15:22
not living in their beautiful homes, they're doing exactly what you're doing, and it's
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kind of this interesting Mayan text switch of like, I'm not putting myself in the best
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asset on the most beautiful home, because I'm thinking about my long term wealth, and
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I know I can make better returns by putting that money elsewhere, which is so interesting,
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and I don't think a lot of people have had that moment of realization that that's actually
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the case.
15:45
Yeah, I don't think people stop, and rightfully so, I suppose because it's been drilled
15:50
into us, probably from a young age, and I get on the property later, but people don't
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truly stop and calculate, okay, what is the opportunity cost of that million dollar mortgage?
15:58
What does that mean?
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I can't do, or I'm having that 100% because so many people have these giant mortgages,
16:04
and then they can't do anything else.
16:06
Yeah, correct.
16:07
But of a golden handcuffs.
16:08
It is a bit, isn't it?
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And so I was lucky enough that I read results, and what hit home for me, where I got the idea,
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I got from Opus Partners, they got a podcast, what hit home for me, Andrew, I think has
16:19
like 40 odd properties, it doesn't own his own home, and I was like, ooh, okay, if that
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goes, you know, doing that, then that's probably a pretty good idea.
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And so, yeah.
16:31
Just to clarify, it's not that he doesn't own his own home, he doesn't live in a home
16:34
he owns, right?
16:36
He's still renting for his home.
16:38
Correct, he's on his own.
16:39
He's on his own?
16:40
Yeah, yeah.
16:41
Let's just clarify the fact that he does own 40 properties, so he does own property.
16:44
He does own properties, but he chooses to rent rather than going and buying a whatever,
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one million dollar mortgage.
16:52
Yeah, yeah.
16:53
Two million dollar mortgage.
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I haven't looked at him two dollar houses, so that would be nice.
16:58
So yeah, that's rent-vesting, which is an option for people out there coming back to
17:03
I think when we touched on in the first episode is, of it is still very much achievable for
17:08
people, you know, you don't have to be able to go and afford to buy a 1.5 or a million
17:14
dollar mortgage or a house, so you can still get in whilst renting, get on that ladder,
17:20
use that gain that you achieve through your investment property, and then maybe buy
17:24
your dream home if that's what you want.
17:26
The main pros for me with the active approach is the outcomes are far more in your control.
17:31
You're not right on the market, and you can continue to, you can continue to build a portfolio
17:36
because they're cash flow positive.
17:38
So when we first started talking, I was visiting a friend of mine in Hawks Bay, and her husband
17:45
is a commercial real estate agent.
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I was telling him about this idea that we'd been talking about, and also my friend was saying,
17:54
like, basically both of them were saying that, like, be really careful.
17:59
You're really careful, so because, by the way, this is not me taking the piss of them.
18:03
I just realized the tone in my voice is so rude, but basically there were like, a lot of
18:08
people don't make money in this way anymore, but you're really careful, like renovating
18:13
and adding value is not what it used to be.
18:16
Don't think this is a sure-fire return.
18:19
What would you say to people like that who are feeling skeptical about the idea of the
18:26
heyday of property's gone, making money and adding value and selling orders are dangerous
18:33
and potentially, like, you might even lose money, let alone not gain it?
18:39
I suppose a generic comment, and no, once again, shade to your friends, because it's
18:43
probably coming from a good place, I am always conscious of who I take information from
18:48
and absorb information, and a personal little anecdote.
18:51
My uncle is really against property, even though he's made lots of money through property.
18:58
Why?
18:59
He never told me why.
19:00
He's like, oh, property's going to crash, rent a bubble, and he's been saying that for
19:03
the last 15, 20 years now, and so that always put me off property, because he, I looked
19:10
up to him because he's done quite well financially, and always put me off, and then one stage,
19:16
I was just like, I've done my own research now, I've got enough facts, and so, and I've
19:21
jumped in, I'm glad I did it.
19:23
But that probably put me back because I put quite a bit of weight on their opinions,
19:28
so who you take information from and influence you is obviously really important, not to say
19:32
that your friends aren't in a position to provide you that commentary, but it's just a generic
19:37
statement.
19:38
But in terms of adding value, it is a pretty tried and true method, there is, you obviously
19:44
can get it wrong if you overpay for the property, or you, you know, the renovations blow out,
19:50
and of course you can get it wrong, but I suppose aligning yourself or using people with
19:56
the right skills so you reduce the risk where you can and go into it with a comfortable
20:00
level of risk, flipping is a lot harder to make money from 100%, but you're holding a
20:07
property for 20 years, and I've never heard someone, you know, lose money on a property
20:12
if that have held for 20 years.
20:14
So yeah, as long as you're holding it for the long term, you plan well, you should do
20:20
okay out of it.
20:21
It's so interesting, because actually I've had so many people lately, and I don't know
20:26
if this is like millennia chat, because these are my friends who are definitely in positions
20:30
where they don't need to be investing, to grow their money, and they've, you know, said
20:35
things like, oh, I think I'm going to sell my properties, or like, I just don't, I'm
20:38
not really into a property in this anymore, like, what?
20:41
It's, do you know what it feels like?
20:42
And I'm, I don't even know how to explain it, it almost feels like, because now lots of
20:48
people are doing it, it's become this uncool asset or something.
20:51
Really?
20:52
Okay.
20:53
Keep selling.
20:54
I don't know what it is.
20:55
And that could be me 100% just being like emotional about it, but I just feel like there's
21:01
been quite a few people lately who've said things like that, where I'm like, is this just
21:05
because other people are able to do it, and it's more common now, like, I don't know what
21:09
their thoughts are around why properties are not a good investment, but for me, I like
21:13
with my experience with you having made 125,000 and five weeks, I've never made that much
21:21
money ever in my life.
21:22
So I don't know if it's just that they're playing with bigger numbers, and for them, the
21:26
amount they can gain in other assets is more, but, you know, depends on the, on the type
21:31
of asset they may have, like if you go and purchase, you know, I don't know, house in
21:36
Alice leaf or $1.5 million, and you rent it out for $700, $800, it's not a particular
21:41
good investment.
21:42
So I could absolutely see where someone who's gone down that path and hasn't followed
21:47
a burrow approach out on the regions would feel that way.
21:50
Unfortunately, a lot of people do go down that approach because they think, oh, it can't
21:55
go wrong.
21:56
Do you know what I mean?
21:57
So they're not putting that much thought into it about the yields and what they're achieving.
22:00
So absolutely the vast majority of people, and that's why the vast majority of landlords
22:05
in New Zealand own one property, they don't go beyond that because the serviceability and
22:12
the ability to recycle the equity.
22:14
So I could see how a lot of people do feel that way, but it's making sure you choose
22:20
the right strategy, which I'd like to think that you have, and so you're in a position
22:24
that you're not having to top it up, and you're still happy with the return on your investment.
22:29
You mentioned just before that flipping is like potentially, you know, could go very
22:35
wrong.
22:36
I, one of my friends, who's also a hairdresser, she's amazing.
22:40
He's looking great.
22:41
Thank you.
22:42
Thank you so much.
22:43
I've had some really good feedback lately.
22:45
Anyway, she was saying that her partner, they did a flip recently, her partner's dad had
22:51
done flipping for years, was really experienced, but they lost quarter of a million dollars
22:55
on this property.
22:58
And I was just like, I cannot imagine, I cannot imagine losing that much money.
23:05
Even 5,000 I would be gutted, let alone a quarter of a million.
23:10
So would you say flipping is potentially one of those things that is not like, come out
23:16
of the gates really to go thinking that you can necessarily do a flip well, and actually
23:23
it probably requires even more guardrails and experience to do properly?
23:28
100%.
23:29
I wouldn't recommend anyone go flipping, and that's coming from someone who's a flipper.
23:34
It's hard.
23:35
Like anyone who thinks it's easy, it's not, it's really not like me and my day job, it
23:41
was so much easier to make money, turn up to my nine to five, take my check than what
23:44
I'm doing now.
23:45
It's really not easy, and it's been a particularly hard time over the last, let's say three years,
23:52
with the peaks and troughs that we've had in the property prices.
23:56
So if you purchase something in 2021, just before it fell off a cliff then, yeah, you would
24:02
have been absolutely burnt and hurt from that.
24:04
And so it has been tough because we just haven't had a steady rise since then, it's sort
24:08
of been up and down.
24:09
So trying to deal with that has been tough, but it's a little bit tougher for a few different
24:15
reasons.
24:16
There's far more costs involved when you flip, you have to pay the agents fees, you have
24:20
to stage the house, your finance is more expensive because you can't get money from a bank.
24:25
You have to pay GST, so there's a lot more costs which are incurred when you're flipping.
24:29
You also then have to convince someone to buy the house at the end of it, so you have
24:33
to really understand exactly what that person wants, exactly what that person's willing
24:37
to pay for it.
24:38
Versus when you're buying and holding, you just have to convince someone to rent that property
24:42
out, which is a much smaller decision versus someone asking someone to part with $800,000.
24:48
And then you've also got the changing markets that I just referred to.
24:52
If the house prices change in that period that you've held it, which is completely out
24:56
of your control, then you're going to get stunned, which is probably potentially without
25:01
knowing the detail, what happened to your friend.
25:03
The market changed, if it goes down 5%, that's a massive amount over $1.5 million property.
25:10
So it's definitely risky and you don't get nested out the end of it, so yeah, I wouldn't
25:16
necessarily recommend it.
25:17
It's not a tool to generate wealth, but there are pros to it, you can do more deals, you'd
25:22
learn more.
25:23
Look, I think most people are listening, flipping this is probably not for you.
25:26
I mean, I don't know if I'm on situations, but I'm assuming it's probably not the one.
25:31
Also, is it right in saying that, unless you can be actually the one physically helping
25:35
with it in terms of your labour is discounting what you're spending on, contractors and labourers
25:41
is another way that, like, if you're actively involved, it probably makes it a more potential
25:47
for it to be financially viable.
25:49
Definitely the more sweet equity or the more time you put into it, the less it's going
25:53
to cost, but there are full-time flippers out there who don't do any work themselves,
25:58
so it can be achieved without doing work yourself.
26:01
It's obviously just a little bit cheaper and easier if you do work yourself, but some
26:05
of the work, are you registered builder, can you do the plumbing, probably not, so there's
26:09
only a limited amount of work.
26:10
I just imagine myself a YouTuber like how to pull carpet off the ground, you know, like
26:16
not a club.
26:17
Yeah, if that's not where you enjoy, then you're not going to have a good time doing it
26:22
either as well.
26:23
Do you know what I mean?
26:24
Peace current situation is like essentially living in this, like, is it a blow-up mattress
26:29
on the floor?
26:30
A foam mattress.
26:31
A foam mattress on the floor.
26:32
Like it is grim.
26:33
Yeah, and it's not that glamorous.
26:35
Like, I've been camping in that house for 12 weeks now.
26:37
There's no power.
26:38
There's no water.
26:40
So I just can't, I take ways every night, you know, I have to go down to the local public
26:45
toilet.
26:46
And so that's like a reality of flipping, but there is this sort of romanticism, is that
26:51
a word?
26:52
Yeah, that is.
26:53
About flipping.
26:54
I think people said, oh, they bought it for 400.
26:56
They sold it for 600.
26:57
They just make 200 grand like that, which is not the case.
26:59
They ignore the fact that you spend 100 grand renovating it.
27:02
You paid 15 grand GST, you had to pay tax, you had to pay the stage at the agent, and
27:06
you got left with 20, 30 grand at the end of it.
27:09
And a lot of your time and energy, you know, I've been away mid-week from my wife, and
27:15
I don't know how you do it with kids.
27:17
So it is, it's not easy.
27:18
And also, imagine living in the house you were trying to flip.
27:21
Can you imagine it?
27:22
Like as in you're living in the one, you're flipping, but you don't imagine if you had a family
27:26
and you were trying to like live on a construction side.
27:28
Yeah, it wouldn't work.
27:29
Be so hard.
27:30
Yeah, it wouldn't work.
27:31
It wouldn't work.
27:32
Yeah.
27:33
Yeah, health and safety.
27:34
Yeah.
27:35
I've already had nails through foot.
27:36
You don't want that through your kids.
27:37
Oh my God, you stood on a nail.
27:39
Yeah, health and safety, I could probably improve my processes.
27:43
Yeah.
27:44
And your work boots would be a sneakers.
27:45
You don't have them?
27:46
No.
27:47
I was just using my sneakers.
27:48
Oh my God.
27:49
There's some room for improvement in that space.
27:51
Oh, God.
27:52
Okay.
27:53
So then have you ever had any disasters or like really big learnings, whether it be a
28:00
flip, whether it be the bermethod, I mean, you've obviously not been put off property
28:04
and you've done well overall, but like have there been some serious learnings or did
28:10
you just research the shit out of everything and actually manage to avoid any major?
28:15
No.
28:16
There's been a shitload of learnings along the way.
28:18
People can tell you things, but until you experience the pain yourself, you don't
28:23
really like people, you know, you know, yeah, yeah, and then you actually go through
28:26
it.
28:27
You're like, ah, yep.
28:28
I see what they are talking about.
28:29
And so there's been lots of those moments, I'm yet to lose money on a property.
28:33
But there's definitely.
28:34
Yeah, that's so good.
28:35
Touch.
28:36
Yeah, where's some word?
28:37
Touch wood.
28:38
Touch the table.
28:39
It's definitely been, I've definitely like could have made more money if I had done
28:43
things differently.
28:44
For example, one thing is around staying patient, which is quite generic, but I've had
28:49
buyers remorse before.
28:51
And we talked when we started this process around, hey, stay patient, Sophie, I mean, we
28:55
got lucky.
28:56
It took a couple of weeks, but I said, this could take three months and we just have
28:59
to slog it out and stay patient.
29:01
I think that was a, you know, I almost like guess, let myself into being like, you're
29:06
not going to get anything.
29:07
Like I did the extreme of like expectations are like lower than the ground because I didn't
29:14
want to get my hopes up, but it's so hard as soon as you've done the work on something,
29:19
like, you know, you did so much of all of it, really.
29:23
But yeah, the idea of doing that and then the numbers not adding up and therefore you
29:28
deciding not to go ahead with it, which you have to do, it's like if you're researching
29:32
a stock or a company or a fund manager, you do all this work and then you find a red flag.
29:38
You have to listen to the red flag and that comes down to the whole patient's thing, right?
29:41
It's like you put a lot of work in, but it's just not worth going ahead with something
29:48
unless every single thing lines up and sometimes that takes time.
29:51
It's kind of like dating.
29:52
Yes.
29:53
You've gone on first.
29:54
Oh my god.
29:55
It is.
29:56
Invested in the dinner, a few drinks, a few red flags and yes, you've invested, but you
30:00
just got to walk away because you're in the world of pain if you don't.
30:04
You've just, you know what, actually, Pete and I and his wife, Michelle, we were, we
30:07
had dinner not that long ago and we were talking about dating and if you should do the whole,
30:12
like, hey, nice to meet you, but no, thank you.
30:15
Yes.
30:16
And I was so impressed that Pete's answer was, yes, yes.
30:21
That is so true.
30:22
It's like, why waste anyone else's time?
30:24
You've already invested your time and money in spending with each other, but it's not the
30:29
one.
30:30
So we move on to the next.
30:31
Yeah.
30:32
Yeah, thank you.
30:33
Nice to meet you.
30:34
You're right.
30:35
It is very similar to dating.
30:36
And you get excited and you're like, this is great.
30:39
This is the one.
30:40
Let's buy this one.
30:41
Let's go on the second date and then you're like, oh, we've seen a red flag, oh, we've been
30:45
hit by another.
30:46
And then it's like, yeah, I have to listen to it.
30:48
It is key managing the feels or, you know, the emotions and the property sense because
30:53
you don't want to get connected to a property, which is so hard.
30:58
It's hard to walk away, but you've got to be led by the numbers.
31:01
So it's putting that emotion aside, numbers say, computer says no, move on.
31:05
So my lesson was around staying patient with property and my anecdote or example was I
31:11
was looking for a property, you know, when it was 2021.
31:16
And probably been looking for two or three months this point and I was getting pretty frustrated
31:20
with the process.
31:21
Like, oh, and I just bought something.
31:24
I did it right out of it, but of course, Murphy's Law, like the perfect property came
31:28
online, like three days later, and I couldn't do anything because I already purchased a property.
31:33
And so I was sort of kicking myself because I think I probably would have made maybe
31:36
a hundred grand on the other property more.
31:39
Oh, that's devastating.
31:42
And it was just, yeah, buyers, what I call buyers and more, you're like, ah, now I'm stuck
31:46
with this property, which I was kind of happy with.
31:48
So yeah, that was one lesson around just staying patient, sticking to your numbers because
31:54
if you're going to hold it for 20 years, who cares if you bought it in February or June?
31:58
You're not going to remember that in 20 years time, do you know what I mean?
32:00
It's such a small, it feels like a lot of time at the time when you're like looking through
32:04
trade me for a single day and keep getting disappointed, but yeah, stay patient.
32:09
Patience is a virtue.
32:11
It is.
32:12
And numbers don't lie.
32:14
No.
32:15
Well, this is kind of what happened with my property, our property, we have been under
32:21
strict instructions.
32:22
We're not allowed to say my friend's name, which really sucks anyway.
32:26
So yeah, so we had a situation where this property came up, Pete had been like, the less
32:31
his heart really trying to teach us the, you know, the theory of like kind of what we've
32:36
been talking about already.
32:38
And then all of a sudden, this property came up and it was kind of like all guns blazing,
32:44
like all of a sudden, yeah, it's Galonna, it's Galonna came up.
32:50
And we were like, oh, oh shit, we're going to have to ditch our theory sessions and go
32:54
straight into action mode.
32:55
Still need to finish this.
32:56
We went full steam ahead and it was ticking all the boxes structurally, it looked like
33:02
a good house, it looked like it had the bones of like what we needed, it didn't need a
33:06
big roof replacement, you know, essentially all the things that we spoke about in particular
33:11
the first episode we did with you, which if you haven't listened, it might be helpful
33:16
because we're not going to go over the same thing again, but essentially it didn't need
33:19
um, don't need anything with the piles, cladding was in good neck, gattering was in good
33:23
neck.
33:24
It was just tired.
33:25
It hadn't had anything done to it for, you know, 20 odd years.
33:28
It was a bit exhausted.
33:29
Yeah, it was.
33:30
It had a bad career.
33:31
It had a good life.
33:32
Yeah, yeah, yeah.
33:33
But it was not in tip-to-jank, yeah, yeah, definitely.
33:38
And let's talk through how we figured out the numbers based on the burr approach, watch,
33:45
what did we figure out in terms of what we needed to pay for all of that?
33:49
Yeah, so the process was, I'll go and check it out first and foremost, that's what I do,
33:53
just obviously you can tell a fair bit from the photos, but I've been to many places
33:58
which look good in photos and you turn out, but it's crap, yeah, houses are great for
34:01
catfishing, beware people.
34:04
So we didn't check that and it was pretty much perfect in terms of what we're looking
34:07
for.
34:08
So next step was to get the Renault team through.
34:10
Well, step one is actually figuring out what we're going to do to the property.
34:13
So I came up with a plan of, okay, let's put a bedroom here.
34:16
I think we can open the space up by getting rid of this wall.
34:19
Is it structural or not, figuring that stuff out?
34:22
And then getting the trades out on site and getting a quote for all of that work, we then
34:27
figured that out.
34:28
So we knew what it was going to cost us going into it.
34:31
And I think our budget was 85 grand.
34:34
And then it was figuring out what we thought the property was going to be worth at the end
34:38
of end of it, which is looking around the area and figuring out what other houses have
34:44
sold and making a conclusion based on that.
34:48
So what that looks like, if you know what I'm saying, what are you talking about?
34:51
It would be, so Escalona was in a particular area in Funganay, which is up north in New
34:57
Zealand and the North Island.
34:59
And basically, it was, okay, well, what sold in a similar area?
35:04
What does it look like?
35:05
Are some of these places like in a better condition than ours or what we think it's going
35:10
to look like at the end?
35:11
How much do they sell for?
35:12
And really trying to have a educated guess on what a facelift done to this house that
35:19
we're buying would mean it would be worth at the end.
35:22
Yeah, correct.
35:23
Because when you value the property at the end of the process, when we get the value
35:28
back out, that is exactly the process that they go through.
35:31
And so effectively, we're trying to be a valuer.
35:34
We are trying to say, okay, what is this property worth?
35:36
And so we follow the same process that they follow, which is looking at the sales on that
35:40
same street or a couple of streets over.
35:43
This house was similar, but it had a pool and it went for a hundred grand more.
35:48
So we're going to discount ours, ours is only going to go for 600, for example.
35:53
And you go through that process and come up with a conclusion.
35:56
And that is a bit of skill and nuance involved in that, but being able to come up with a
36:01
really, or being really confident in what that figure is, is key and for
36:06
Escalona.
36:07
I think we concluded it was going to be worth 60 to 680, I think was our range.
36:15
And so based on that, we worked backwards from there, sorry, 560 to 580.
36:22
Okay, so in terms of, just quickly, this isn't incredibly unrelated to property, but
36:28
I just need you to know a fun fact that I think is hilarious.
36:30
So Escalona, you know how we're trying to like say it with a Spanish accent.
36:36
Do you know the only reason that Spanish people have an accent?
36:40
Go on enlighten me.
36:41
So there was a king and he had a lust and he forced everyone to speak with a lust for
36:47
a man.
36:48
And I'm like, I love it from home, sorry, I'm like, I'm bald, I'm like, generations
36:53
lady.
36:54
It was like, Graffiath, if only he knew.
36:57
So back to the property, we realized that if we wanted it to be worth about 580, at the
37:06
end, after we've done the renovations, and we were only going to spend a max of 85,000
37:11
on the renovation, it meant that we could only buy the property for like 400,000.
37:17
Yeah, I think going into our, I'll use the word our, our auction, we agreed that 405
37:25
was our max price.
37:26
Yeah.
37:27
And I said to the others, I was like, come on guys, what about if it goes to 10, I reckon
37:33
maybe we just do it.
37:35
And they were really strict with me.
37:36
Both of them are like, no, this is our goal, this is the target, we're going for a hundred
37:40
grand uplift.
37:41
So that means if we're going through all this admin, we want that happening, otherwise
37:46
you may as well just not bother.
37:48
Yeah, we gave you a bit of a telling off.
37:49
Yeah, I was keen to just sleep that one slide.
37:52
Maybe 50 grand, 50 grand still good?
37:54
I don't know, I didn't see that.
37:56
Quite unquiet, so if you're like, yes, I did, you're right.
37:59
What, like it is, you're right, 100%, 50 grand is great.
38:03
But it's not great when you compare it to 100, which was effectively what we knew you
38:07
could achieve.
38:08
So there's an opportunity cost for settling for that.
38:11
Don't settle.
38:12
Don't settle, guys.
38:13
There's so much, the cat fishing don't settle, the honest and move on when you realise
38:19
it's not right for you.
38:20
Like there's lots of it.
38:21
There's a lot.
38:22
Very, very good.
38:23
So basically, let's just paint the picture of what was going on with this auction.
38:28
So we found out that the property was going to auction, which in itself is actually,
38:34
I mean, I don't know if that's a good thing or not, but I was quite nervous about the
38:39
idea of auction.
38:40
To be honest, that's the least preferred sale methodology.
38:43
And why is that?
38:45
Firstly, with an auction, you have to spend money, time and energy to get really for that
38:51
auction and you've got no guarantee of outcome.
38:53
You know, if you have to spend time getting the trades there or purchase a limb report,
38:59
you can potentially spend 1,500 bucks before you even turn it, building a board.
39:03
And heaps of time.
39:04
Heaps of time, emotional energy, before even knowing if you're going to get the property,
39:09
versus an negotiation, you can get the property under contract and then start to spend the money.
39:16
And then you know exactly if it's, or you know if it's worth investing in time and money
39:20
or not, generally.
39:21
Yes.
39:22
So it's, yeah, it's a shame because you have to spend a lot of time without any guarantee,
39:27
as the main downside.
39:28
And the other thing is, you know, like it's live, it's happening, you're not just
39:33
that you don't have the time in between to think or be like, let me just phone a friend
39:39
although I didn't have you on the phone.
39:42
There's a competition factor as well.
39:44
There's competition.
39:45
When you get two people in the room, I've been guilty of it.
39:47
You turn up to an auction going, I'm not leaving today without this property.
39:51
And if the other person also turned up with that same attitude, you can see what's going
39:55
to happen.
39:56
You just both bid and I've been in places where I'm like, oh, I'm 50 grand above my
40:00
max here.
40:01
And luckily in those situations, I've actually lost.
40:04
But afterwards, I was a bit like, oh, like, I think, I think God, I missed out on that
40:10
because I'd be talking about buyers remorse, that would have happened.
40:13
And so I've learnt some schools around how to make sure that doesn't happen.
40:17
But that is another downside as well.
40:19
And you know, just to bring it back to dating, you know, since we're on the theme of it,
40:22
let's just use the example of you find out that someone's dating three people, all
40:26
of a sudden you're more keen.
40:28
As soon as someone is like, yeah, okay.
40:30
What do I mean?
40:31
I thought you were going to go with lucky, you figured that out and moved on because it's
40:35
not the one you want.
40:36
Reflex.
40:37
Oh, that's quite good too.
40:38
But supply and demand.
40:39
But supply and demand.
40:40
You always want what you can't have.
40:41
Do you know what I mean?
40:42
Yeah, 100%.
40:43
Like as soon as you can't have something, you're like, no, I want it and you're like a dog
40:45
with the barn.
40:46
It's a school yard.
40:47
There's the single jock.
40:48
Yeah.
40:49
Girls are fighting over them.
40:50
Yeah.
40:51
Oh, God, I saw the jock from my primary school.
40:52
And Naveen's.
40:53
Well, I've been home.
40:54
I was like, do you know what he said to me?
40:57
I feel like I shouldn't even say this because it's probably, and I think it back to him
41:00
in some way.
41:01
Not that I've even seen who it was, but he was like the hot boy at our primary school.
41:05
When we did investigation, people go figure out who this is.
41:08
And I saw him at the civilian and he literally said the words, so are you still doing that
41:13
podcast thing?
41:14
And I was like, you fucking wanker.
41:16
I was like, I'm...
41:17
Yeah, we just raised a million dollars.
41:19
Yeah, like fuck off.
41:20
Go and take your cricket bat somewhere else.
41:24
That's cricket people.
41:28
I don't know how to do that.
41:29
I feel like I'm going to get so much regret for saying that.
41:32
But basically, yes, OK, so I feel like it would be quite helpful to talk about the idea
41:39
of options because for me, being able to literally phone you and be like, what do I do?
41:46
Why not do help me?
41:48
Lots of people don't have that.
41:49
And I have so many stories of people going to options and not getting lucky or, you know,
41:55
spending too much or whatever.
41:57
And I think there were some really practical tips that you gave me in terms of like what
42:00
to say, what not to say.
42:03
And I would love to talk about that.
42:05
Yeah, so firstly, I suppose we had a bit of a strategy session before the auction.
42:10
And I think that's important, like having a plan before you go into it, that can obviously
42:15
the plan can be blind out as soon as someone builds straight away more than you're willing
42:18
to pay for it, but at least have a plan going into it, which we did.
42:23
And now some key things that we sort of did a bit of what if planning?
42:27
We actually did contingency plans, we did BCD, didn't we?
42:30
If this happens, what are we going to do?
42:31
And I wrote it all down.
42:32
If this happens, you're a great student.
42:33
I was so like paying attention and I was so nervous for it.
42:38
Well, it's your first auction.
42:39
It was your first auction, right?
42:41
Oh, it was like, and all the stuff that they say, you're like, oh my God, what is this?
42:45
Like when's the time to bid?
42:46
Like it's very overwhelming.
42:48
So we had an auction 101 of like, this is what's going to happen, because it is quite
42:53
a nuanced process.
42:54
And if you don't know what a vendor bid was, you'd be like, what the hell is going on?
42:58
Yeah, do you know the word vendor was?
43:00
Yeah, so the machines, what's going on?
43:01
There's lots of terminology.
43:03
Yeah.
43:04
And properly, that being one of them.
43:06
So we had a bit of strategy session, the key things we agreed was, well what happens
43:10
if no one else turns up to the auction?
43:12
Because we didn't know how many people were going to turn up, right?
43:15
And so the agent was saying, oh, we're expecting two or three.
43:19
And so when we turned up and we were the only ones, we're like, oh, okay, but at least
43:22
we'd actually talked about that beforehand.
43:25
And so we talked about, okay, what is our, we're going into it and you know what our max
43:28
price was?
43:30
When we were going to stop bidding, then what our max price was, if it got to negotiations,
43:35
and then we had a price, we agreed if we were the only ones in the auction, when we were
43:39
going to start stop bidding.
43:41
And that's all around negotiating power and what you can work with with the vendor.
43:46
So why don't we use the example?
43:48
Why don't we actually use my example?
43:50
Because I think sometimes the hypotheticals can sound a bit weird, but you said, don't
43:55
bother even, like you know that you're trying to get to around the 400 mark, start in the
43:59
threes.
44:00
Like don't spend, like especially if you're bidding with yourself, because you're going
44:05
to be doing it for ages.
44:07
Yeah, not for that.
44:08
And once again, in auctions, I suppose a caveat, I'm all about my caveats, I guess,
44:11
the person who bids last wins.
44:13
So like yes, you've got these strategies, but ultimately the person who bids the most
44:17
is always going to win.
44:18
So.
44:19
And there's also only so much you can control, but I do think talking at this was helpful
44:22
for me.
44:23
But that strategy, which Sophie just mentioned, of being passed on or someone's told me
44:27
about that is bid is close to your final bid is possible.
44:31
Because if you start with $100,000, you get the emotions going because the next person
44:36
goes 120, you go 140 and it starts the gamification.
44:40
But if your top bid is 350 and you know that, just straight away go 330.
44:44
You cut out a lot of the emotion, this is loving told, I don't have, I feel like I started
44:49
in about 320 or 330 or 40 or something, like I didn't start super long.
44:55
So to give specifics, like you mentioned, we agreed that if there was nobody else in
44:59
the auction room, your max bid was going to be 375, I think, like mid to upper threes,
45:06
we agreed that if there was someone else in the room, we were going to stop it maybe
45:10
like 400 and then our absolute walk away price was like 405.
45:15
Yeah.
45:16
If we got into into a negotiation, and to be honest, in hindsight, if we had had other
45:20
people there and we'd stopped at around 400 and then that had gone into negotiations,
45:24
there's no way we would have got it because it was too close like you, and this is the
45:29
other thing that that Pete shared with me, which I think is such good insight is like
45:34
the idea is that you, particularly with a negotiation, there's, you want there to be
45:38
a negotiation.
45:39
Like it's a psychological idea as well of like meeting someone in the middle, like you
45:43
don't want someone to feel like they've had to move their goal post heaps and you've
45:50
not done any moving.
45:51
You need to give them something, like because it's not a nice feeling if one person's giving
45:56
something and the other person's not right, just like a relationship, 5050.
46:00
And so that was really beneficial.
46:03
Of course we knew you could go higher, but if you stopped at 370, then the vendor at
46:07
least felt like you were giving up and we communicated that and I hope I'm not giving too many
46:11
secrets away.
46:12
No, no, it's good.
46:13
It's good.
46:14
Listen to this.
46:15
But we said, you know, coming into this auction, our goal today was 380.
46:19
And so we're already at our max, but we want to get a deal done.
46:22
And so we're willing to go up to 400 and that I think helped because for context, we were
46:28
all on a Zoom call.
46:29
And so Sophie was doing.
46:30
It was quiet.
46:31
It was fun.
46:32
It was scary.
46:33
Sophie was doing the bidding on the phone and did an absolutely amazing job and myself
46:38
and Sophie's mate, who was 5050 in the property, was on the Zoom call.
46:44
From Prague on holiday.
46:45
It was 10 beers, wasn't it?
46:47
I mean, it's smashing beers.
46:48
It's so good.
46:49
Well, he's smashing darts and assholes.
46:52
But yeah.
46:53
He turned up to the auction and Sophie was the only one bidding, which was stroke of
46:57
luck.
46:58
Don't know if it was a bad campaign, but just absolutely our, you know, complete luck
47:03
for us.
47:04
And so a bit of vendor bidding, which is where the vendor bids against yourself.
47:08
Well, I think this is worth saying because I didn't know this until you said it.
47:11
Pete was like, if you're the only one, there will be someone else that's kind of like
47:15
counterbidding.
47:16
Their bids don't count, but it's just to help move the auction along.
47:19
Which you just don't even know unless someone tells you that.
47:22
Yeah.
47:23
And that only happens below the reserve.
47:25
So as long as they're bidding, we knew it was below the reserve and we stopped at whatever
47:29
we agreed.
47:30
370 or something like that.
47:31
375, I think.
47:32
And then it went into the longest negotiation I've ever been a part of.
47:35
It was about 20 minutes.
47:37
It was longer than that.
47:38
No, I was filming.
47:39
The whole thing was about half an hour.
47:40
Yeah.
47:41
It felt longer.
47:42
It did.
47:43
It felt like ages.
47:44
There was lots against it.
47:45
It moved two or three back and four.
47:46
Yeah.
47:47
I've like, okay, we can go 390.
47:48
And so for context, they disclosed that the reserve was 480.
47:53
Yeah, that's right.
47:54
Which I said to so, like, at that point, I was like, I don't think we're doing it.
47:58
I actually remember saying your face and you're just like, oh, damn, why are you not
48:01
going to.
48:02
Just a point of like, I don't think we're going to get this across the line.
48:04
And for context going into this auction, I also told so, Finn, said person, like, sit
48:10
your expectations.
48:11
I was like, I think it's more probable than not that we're not going to get this properly.
48:14
Yeah.
48:15
It's in a nicer area.
48:17
There's going to be a bit of competition.
48:19
And so I was quite surprised when A, we were the only one.
48:22
And then, but then the kicker was when they said the reserve was 480.
48:25
So I thought, we're not going to get this.
48:27
But we went into negotiations and backwards and forwards.
48:30
And we, well, you managed to, it was quite fun, managed to haggle them down.
48:35
So I was on the Zoom call.
48:38
You would like mute the person on the phone.
48:39
That's right.
48:40
What did I say?
48:41
We were like, go, go 390.
48:44
We were like on the chat on Zoom.
48:46
We were like muting ourselves.
48:47
I was like, I'm going to do the classic thing where someone accidentally picks a wrong phone
48:51
up and it's like, oh, fuck, I'm talking to Pete on the other hand and Pete's like, it's
48:55
me.
48:56
I was like, oh.
48:57
If you haven't had the privilege of seeing Sophie do small talks, she's bloody good at
49:00
it.
49:01
I'm quite good at small talk.
49:02
You can get that guy on the phone for like 20 minutes just.
49:05
That's right.
49:06
I'm just going to wipe and dog.
49:08
I was actually quite enjoying the conversation.
49:12
I was getting to know this guy who was on the phone.
49:14
I was like, really invested.
49:15
It's kind of sad when it came to an end.
49:18
Yeah.
49:19
And I'm pretty sure what we ended up finding out as well because there was a little bit
49:22
of guilt of like, we're really haggling this down.
49:25
You know, this person wants to sell it for 480.
49:28
And here we are quite far below that, you know.
49:31
But then the person who had owned it had it for 40 years or something and bought it for
49:35
33,000.
49:36
33,000.
49:37
So yeah, they wanted more.
49:40
But I don't realise, I don't, that was a never, that reserve was not realistic.
49:44
Yeah.
49:45
Like for that property.
49:46
I think that property was probably worth 450.
49:48
So I think you got probably a 50 grand discount because no one else turned up to the auction.
49:53
Like if there was competition, I think they would have sold for about 450.
49:57
Yeah.
49:58
Just looking at other properties.
49:59
So you got a 50 grand discount, which is great.
50:01
Probably that's because discount I've had it had.
50:03
Well it's amazing.
50:04
That's the thing with property.
50:05
Like just something like, like how long would it take you to earn in your job and extra
50:09
pay rise of 50 grand?
50:11
Yeah.
50:12
Years, right?
50:13
Unless you work in finance.
50:14
Yeah, yeah, you get a nice bonus.
50:16
So basically we got it and then it was like, it was back and forth, back and forth for
50:20
like a while and then and I kept being like, oh, this is not, this is too high, you
50:27
know, and it was the whole like kind of, but, but wanting to let them feel like I was
50:32
making an effort to meet them because I mean also it would have been great to get it
50:35
for even less, you know, but we kept creeping up and then we got to the point where it
50:39
was like, yeah, this is literally the absolute max, like we can't go any higher and manage
50:45
to get it.
50:46
Yeah.
50:47
Yeah, amazing.
50:48
God, it was good.
50:49
Oh my God.
50:50
That was such a euphoricime.
50:51
It really was.
50:52
It wasn't even my money or property, but it's amazing to share my experience.
50:57
And especially because it was both your first property.
50:59
So that was really special to be a part of and share that.
51:03
I feel like I'm like storming in the room.
51:06
I heard the screaming.
51:07
It was like a whole thing.
51:09
Yeah.
51:10
Cheaches.
51:11
That was so weird.
51:12
Border property.
51:13
Yeah.
51:14
Wasn't that longer, but it feels like quite a while ago because we've done so much with
51:16
the property.
51:17
Yeah.
51:18
I suppose one thing I'd touch on as well was that going in in terms of advice around
51:22
auctions and stuff like that was going into that auction.
51:25
We knew the vendor was quite motivated.
51:28
So we knew that we were in quite a strong position.
51:30
If it did get to negotiations, they just wanted the property sold.
51:34
And so that's a really important part to it is understand your vendors.
51:37
Do they really want to sell, if they want to sell, then you're probably not going to
51:41
be able to get a deal.
51:42
But if they've owned the property for 30 years and bought it for 33,000, do they really
51:47
care if they sell it for 450 or 14?
51:49
Probably not.
51:50
They've made whatever amount, hundreds of thousands on it.
51:53
And that's a really good point and we had Alex Harper on and she spoke about that too.
51:59
It's not just about not blowing out your renovation budget.
52:03
It's not just about all the other things.
52:05
It's actually really mostly about buying well.
52:08
You want to buy well and you want to buy a property where you're not overpaying.
52:12
Otherwise that's already eating into the potential of on selling it for more, which I think
52:17
is such a, it's so obvious when you know that but when you don't know it, it's not that
52:22
obvious.
52:23
Yeah.
52:24
And that logical thought is even more hyperinflated with flipping because you can't just
52:29
hold on to it for 20 years in that time, remedy your overpaying, you know, if you're selling
52:34
that property in six months time, then if you've overpaid, then it's pretty tough to make
52:39
money on it.
52:40
But of course, you don't want to overpay in general and even better if you can underpay
52:45
like you did.
52:46
And I guess just to wrap this chat up, basically what happened was we underspent on our
52:52
renovation, which is absurd and like honestly, most people say when you're renovating
52:56
times everything by three and that's how much it's going to cost.
52:58
So the fact that you had put that much due diligence and planning and actual precision
53:04
around what we were going to spend, what we were spending on, what kind of materials,
53:08
like that's the reason that we had our target and we actually did even better than our target
53:12
because we, we underspent on the renovation, but then when we had it revalued, so obviously
53:17
we bought it for 400, then we spent 73, I think it was on the renovation.
53:23
And then when we had it revalued, drum roll, 595 baby, 595, so we made 125 grand in five
53:32
and a half weeks.
53:33
122.
53:34
But same, same thing.
53:35
Same thing.
53:36
Give me around that.
53:37
I think that's right.
53:38
122.
53:39
Yeah.
53:40
Which is pretty amazing.
53:42
And so essentially what's happening now is we're trying to figure out if we can go again,
53:47
if we can do exactly what you're talking about, which is using the equity.
53:50
The last part of the hour.
53:52
Yeah.
53:53
So yeah, that's, that, I mean, that is, that was the goal going into it.
53:56
I think I mentioned, you know, as part of my, let's call it sales pitch.
54:00
Right, the start is, you know, my goal for you and your mate, who you're not sleeping
54:04
with.
54:05
Just to clarify people.
54:06
Just to clarify people.
54:07
It's not so dodgy, doesn't it?
54:08
Yeah.
54:09
My mate.
54:10
Yeah.
54:11
The goal was to do this first one and then get it, and get enough equity uplift that you're
54:17
in a position to get one on the second half of this year.
54:21
Become a property mogul.
54:23
fulfill your dream of becoming a mogul.
54:26
And we've got the equity side of the equation sorted, like we've now got enough for a deposit
54:31
to recycle that equity out for.
54:33
Just explain how that happened though.
54:35
So yeah, we haven't really touched on the refinance process, but we do the renovations
54:40
and then we get a value, a registered value to come back.
54:44
And they do that process that we talked about at the start.
54:47
What is this place worth compared to other properties and it's quite a process they go
54:52
through.
54:53
Like the reports like 20 odd pages.
54:55
But the thing you care about is the value at the bottom and they went through that process
54:58
and valued at 595 for you, which is an amazing result.
55:02
Such a result.
55:03
15 grand more than what we thought.
55:08
But I'd like to, in general, philosophy under promise over deliver, you know, much rather
55:14
I have this conversation than it's only worth 560, do you know what I mean?
55:17
So I'm always a little bit conservative on my numbers.
55:21
You can get a value who maybe values it, like you can get this two different values and
55:25
they may value it 30, 30, 40 grand apart, which is a bit of risk, do you know what I mean?
55:30
And so I factor that into those and that's why we have that range, you know, maybe you
55:34
get one of the lower range and one of the upper range.
55:39
So we've got that valuation and then the next step is going back to the bank and saying,
55:43
Hey, bank, this property is now worth 595.
55:46
I'm allowed to borrow 70% against this property.
55:49
70% of 595 is in certain number here.
55:51
I can't do that in my head.
55:53
I think it's 135.
55:55
Well, that's the deposit we need for the next place, but borrowing 70% of the 595.
55:59
Let's call it 450.
56:00
Yeah.
56:01
You can now borrow 450.
56:03
You take that equity and you use that as the deposit for the next house, which we need
56:08
130 grand.
56:10
So we take out the 122 user equity that you've all the 122 that you've gained and you
56:16
use that for the next place.
56:17
And obviously you've got some cash, which we can use to fund the renovations for that second
56:21
property.
56:22
So basically what it means, like for anyone that didn't follow those numbers, essentially,
56:26
it was well explained, Pete, but essentially it's the idea that when you, for us now,
56:31
we don't need another full deposit because we've got the value in the property.
56:36
So now, really, if we were to go for a similar price property, what we actually need is
56:41
the renovation money, which is, like, let's say, 80,000, if we went for a similar approach.
56:46
Well, you don't need the cash for the deposit.
56:48
You don't need 130 grand sitting in your bank account.
56:51
You can use the equity in your existing property as the deposit for the next place.
56:56
And yeah, for the next property that we're looking for, it'll be around that $123,000
57:02
for the deposit.
57:03
Yeah, which is similar, like a probably $400,000 on the house.
57:07
30% of 450, whatever that is.
57:09
And like, I just think, isn't that amazing?
57:12
And so many people don't know that, that you can get property and make money in these
57:17
like regional parts of New Zealand, like, or wherever you're living, like the fact that
57:22
that is a strategy that so many people don't know about, I'm just like, I know people
57:28
who are aware of property and are quite involved in this space, probably this is like, yeah,
57:33
this is second nature to them.
57:35
But it's so not democratised in that way.
57:37
And I think that we're actually going to start like a little, just like a short list because
57:42
obviously Pete doesn't have a million hours and his week needs to already work on other
57:46
projects.
57:47
But in the MVC club, we're going to start a, there's like a, like a short list or a waiting
57:52
list.
57:53
So if you're in a position where either you have a property already that you could potentially
57:57
loan against to go again and get a, you know, like what we're about to do, like an investment
58:02
property, or you haven't bought any property, perhaps you live overseas and you want to invest
58:08
in the New Zealand property market and you either can do it like me and my friend did
58:13
and go for about 110 in cash or do it all yourself.
58:17
It's in the MVC club, give us your details and when Pete's in a position where he can
58:21
take on more clients and work with people, then it'll just be first and first served.
58:27
Yeah, and that is just a side note.
58:29
That is one thing I've noticed as of progressed through my property journey is how many people
58:34
are actually in a position to do something for people who own their own homes.
58:38
They actually have enough equity in their own home to do something, but they don't realize
58:41
or they didn't know that you could use your equity in your home and it's amazing.
58:46
I have these conversations.
58:47
Oh, I'd love to buy an investment property and I go, yeah, what's your house worth?
58:50
What's your mortgage?
58:51
And I'm like, yeah, you've got $500,000 worth of equity you can use and they're blowing
58:56
away.
58:57
So it is amazing.
58:58
I mean, you have to own your own house for a while to get that equity.
59:02
But if you've owned your house for three, five years, you've probably got enough equity
59:07
in it to be able to do something.
59:09
The next concern from people are like, well, how could I afford the next mortgage?
59:14
And that's where buying the right property, that's cash flow positive, you're not going
59:18
to have to top it up, which is sort of well, you know, bought you on that journey.
59:21
But I think we're not going to have to put any of your money into this property once you
59:24
realize that.
59:25
Oh, well, it's great.
59:26
Like it runs itself.
59:27
It runs itself.
59:28
It runs itself.
59:29
We don't have to pay money to pay the mortgage down.
59:31
We're not doing that.
59:32
Pete, thank you so much for anyone who's interested in working with Pete, find the details
59:38
in the investing club, but also just like a public thank you because working with you was
59:43
like such a dream.
59:44
Like the most amazing comms, so much fun.
59:48
Like the whole thing was just like a really empowering process.
59:51
So thank you so much.
59:52
Yeah.
59:53
I was taking a punt.
59:54
It was actually a pleasure to get you on the ladder.
59:55
Onto the next.
59:56
Onto the next.
59:57
Property moguls.
59:58
Here we come.
59:59
Did you love the set the size of this?
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