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I'd call Arjun, I came in. Do you reckon we're in a position that we can buy a house? You did not stop. Let's go. Went down a massive rabbit hole.
How can you really build wealth? How can you really build options for yourself? Sadly, that's one of the things we don't really get taught how to do in school. Residential real estate is the number one sort of asset class. 5x the size of the Australian share market.
Why should I only focus all my effort in my own backyard? And even then I may not get it right. Is that you didn't let that get in the way. Eight properties, New South Wales, Vic, Queensland, SA. Mate, absolutely surreal.
Treat it like a bricks and mortars bank account. Everything for you two came back to the portfolio. You did everything you could. Nerd alert! Property Nerds.
The home for data-driven property investors. Where we uncover Australia's hot and cold markets, latest headlines and trends. Hey Arnie, welcome to the show, mate. Great to be here. Long time coming.
Our relationship goes way back. 2014, if I'm not mistaken. That's right. Or more than 10 years ago. Yeah, yeah, yeah.
Mate, I want to jump into one thing in particular to kick things off. You were one of the early believers of InvestorKit when things were quite new. I know I kicked off in 2018 and we kicked off things 2019. But even since the dad kicked it off, you were like, Arj, as soon as I line a few of these things up, we're going together. We're going to do something.
So I'm very grateful for that, man. And I actually, funnily enough, talking to a few team members before recording today's show, I was saying that you are actually the creator of, if not one of, the largest referral link at InvestorKit history. So we've served over 1,600 Aussies. But if you start the old InvestorKit family tree, your referral that's linked on to just so many other families. I mean, just that alone, put the support for the business aside because you know how grateful I am.
But how does it feel just hearing that and all the lives that you've changed of friends, family, colleagues, long-time mates? How does that feel hearing that? I mean, it doesn't surprise me at all. I mean, it does surprise me that I'm kind of up there in the echelons of the top sort of referral. But I mean, even this week, I might have told you, I've had two or three people contact me out of the blue.
I haven't heard from them in ages. And they're like, hey, I think I've seen you work with Arjun. What's it like? What's InvestorKit like? And I give them the entire sort of thing, completely balanced view, right?
And your question around the belief in InvestorKit and the belief in you, it started with you, right? I mean, I backed you as a brand, as a person. And that's really what has kind of created what we have today. And also, that's the opportunity that exists for everyone else that I speak to, who asked me like, hey, what was your investment journey like? Pros and cons?
Should I really be looking outside of Sydney? That's really where it all comes to, right? And I think fundamentally, what I say to them every single time is, not only is Arj an incredibly optimistic person with a huge can-do attitude and a massive growth mindset, which resonates really strongly with me, it's also a case of your pedigree, right? Like you worked at a tier one branch of the biggest bank in Australia. You've seen people structure deals.
You've seen deal flow. You've seen the actual structures in terms of you go as a sole owner versus all the different tax structures. You've seen people create real wealth and use their wealth to create even more wealth. So you had the pedigree. You had your own portfolio of something like five or six properties in various kind of spots around Australia before you even launched the business.
So when you came up to me at work and you were like, we were colleagues when you came up to me at work and you were like, hey, mate, thinking of branching off and doing this, I said, I'm in, mate. Like you tell me when you launch, I'm in. Let's go. Yeah, man. Look, it still gives me just goosebumps.
It just brings me back to those moments and how things were. You know, if I go back to your own buying journey now, you'd bought interstate property before we'd collaborated. And when you look at going borderless, we did it again, like in terms of a different city outside of Sydney. When you think back to how many mates and people that you know that haven't done that, haven't tested outside of the box of Sydney or haven't considered even something like that, going back to 2018-19 when you kicked off doing this, what gave you the confidence to do that so early on, especially if you have a look at that last seven years of Sydney, it like had gone gangbusters, right, from 2012, 2011, all the way to 2017. But you've gone, you know what, I'm going to actually test these other areas.
What helped you become that early trend backer and also just start investing borderless to begin with? Yeah, I think like for me, it started back around 2017. I went down a massive rabbit hole and this is part of my ongoing curiosity around how can you really build wealth? How can you really build options for yourself and your family down the track in the future and everything else, right? Because I think, sadly, that's one of the things we don't really get taught how to do in school or at work.
It's really a sort of personal quest and kind of going back to your first question as well, that's sort of how our conversation started. I was like, hey, what are you investing in? What are you investing in? Oh, this is really cool. So like it really came down to, you know, I went deep down a rabbit hole in 2017, tried to absorb as much information as I could about property investing because we know that, you know, Australia, if you look at the Australian market, residential real estate has and continues to be the number one sort of asset class, right?
It's almost 5x the size of the Australian share market and, you know, I don't have the actual details sitting behind that, but it's been a proven vehicle for wealth building and creating that sort of financial freedom in the future. So the concept of going down the investment property route, that was kind of tick over there. And then when you look at the kind of next layer of detail, right, and I think this is really where you excel in terms of going super detailed with your analysis, making sure it ties up back to that initial strategy and the planning session that we have to come back and say, Adelaide's prime for growth and here's why. Next layer down, this particular pocket within Adelaide, right? If you look at the price that you just mentioned, somewhere around 418K, right?
Where else in Australia would you be able to get access to a property that's four kilometers away from the closest beach, 10 kilometers away from a proper global major city? Absolutely nowhere else, right? And then you talk about the actual asset that we purchased. This was firstly had the land component, which a lot of the examples that you just touched on in terms of the units in Sydney or units in Melbourne, they just don't have the land component and your growth is going to come from that land component primarily, right? Assuming you've got the location right, the pocket right and everything else, land is what's going to appreciate, the building depreciates, right?
So once we looked at all those factors, it was a very obvious decision to move forward with. And then I think the cherry on top was you flagged that the property right next door to this one, identical layout, but the owners had actually knocked down and rebuilt and put a triplex on there. That's right. So your kind of, I won't say selling point, but the cherry on top that really made this deal a sweet pickup was the fact that in the future, if we wanted to manufacture growth, we had a huge potential to do so there, right? And I'm a pretty lazy investor, as you know.
I want to go as passive as possible. We haven't had to explore that option yet, but we know that it's there in the back pocket should we need to call upon it. And that's the type of results you want is like that should be cherries on top. When you rely on that to be the core strategy, so much can go wrong. A sewer pipe now needs to be longer than it is.
A boundary fence is shorter by this much meters. The house that you wanted to fit is now not that house and it needs to be attached to the walls and so much can go wrong. So I'd rather always have it where it's like, okay, we're focusing on the growth of the market, what the portfolio needs, which is your point on strategy, and that's a cherry on top. Now, one thing I want to get into your mind of here is that that property is not the prettiest looking property. And that's another thing I've got to give hats off to you for is that you didn't let that get in the way.
When it comes to your decision making, how do you try and best separate emotion from it? Because if I look at that property, so many people would be like, why would you buy that? It doesn't look nice. It doesn't look great. It doesn't have the beds and baths and the garages and the fancy finishes.
But it's like to you, it served its purpose. How do you separate that But how common is it to get $5,000 of repairs every year, every single year if we have a whole ownership? Unlikely, right? And even if it was common, we'd still take it because it's 5% versus 6% and it's likely tax deductible, depreciable, and you're probably replacing at $5,000 something with something better, nicer, so it just keeps renting for more too, right? And then the third and final part I thought of was like, when you talk about the plan and then the maintenance approach, the other approach was like, you realize that you did everything you could.
And I feel like that's a big difference maker in mindset too, is that when someone goes back and goes, oh, I wish that didn't happen to me, I wish this didn't happen to me, I'm so, why me? Why did I have that maintenance? For you, it was like, hold on, let's take a step back. Did we get a building inspector? Did we have a professional?
Did we have a conveyancer? Did we have a bank and a valuer? Did we have everything check out? Everything did. And yet something came up.
Did we get multiple opinions? Did we get quotes? Did we get this? Yes, we did. We deal with it.
Absolutely. And I feel like these three, for everyone tuning in, like these three traits, no matter how good, and I appreciate the credit you've given, but like no matter how good the research, no matter how good the data is, no matter how good that is, if an investor or just a human in wealth building or any journey doesn't have these kind of traits attached to them, they're just not going to go as far. Even if you ditto the same income, same savings habits, same everything, they just won't go as far. So man, like you got to pat yourself on the back for that one. No, look, I appreciate that.
And I think credit where credit is due as well, right? I'd slightly reframe kind of how you put it, right? We don't just see them as just another asset, right? Like there was significant meat and bones behind why that asset, that pocket, that suburb, that location, like there was so much that sort of goes into that. So like I wouldn't oversimplify that as you just did, right?
And funnily enough, that Toowoomba purchase was the one that my wife and I would always look back and say, if everything else goes belly up, that's a really pretty property. We'll go with it. And so like it was great bones, great pocket, definitely a lifestyle sort of location as well. So yeah, it ticked a lot of boxes. Well, funnily enough, I drove there with Lee.
She and I went up to Toowoomba and checked it out. And like there's this place called Carra Drive or Carra View Drive or something. It's in the same suburb, Rangeville, most beautiful suburb out. Man, the views, the mountaintops, they're ridiculous. Like we even had a phase of ourselves.
We were just going to be like, internet lifestyle, shall we just move? And not many people, I don't think anyone knows. I don't think I've ever shared this story. But like the top three locations across Australia for us to move to and just disappear, one of them was like Toowoomba. And we're about to go to the hills and be up there in those Mount Lofty, Rangeville, these sort of suburbs.
So, mate, two thinking like that. Even though I didn't share that with you, that's like two people thinking just like that. I want to go real back in time now because on the building of the journey, there's obviously been some successes. Having an over $7 million portfolio is a very special one. But there's some mistakes along the way too.
And I don't mean to bring up battle scars, my man, but I want to talk about this because what this does is give so many people out there lessons and learnings around what to look out for and what's helped you. Because once you face that, you recalibrate and you know what to shoot for, right? You had a property in Melbourne that was an apartment. Now, this purchase was one that you looked at and it hadn't done anywhere near the growth that you wanted to. But so many people could have made that decision.
And so many people do. I see it all the time. Even in our own friend circle, so many of our other mates had decisions so similar. Why do you feel so many people make decisions like that? And then what do you feel went wrong with that decision where that property didn't perform to the level you wanted it to?
Yeah, yeah, yeah. So I think, again, I'm going to sound like a broken record here, mate, but it came back to the regular strategy sessions that we have, right? So it came to a point where I think your counsel was, you know, you've built a really good base and let compounding do its thing. It'll do what it says on the tin and, you know, it'll go in the right direction. We've purchased well, the numbers show it, and it will continue to do so.
And then your counsel was, you know, we either think about going into a commercial asset or we look at something like this, which ended up being a triplex. And where we were, like all our strategy conversations would always start. And for the listeners out there, Arj hasn't really mentioned this, but every two or three months I'd call Arj and be like, hey, man, do you reckon we're in a position that we can buy a house? Because that was always the number one goal for my wife and I, right? Like we wanted to purchase a house in Sydney.
You know, we were about to start a family, had a dog and all that. So we were like, look, we would love to map out a path that gets us into a home, but we also want to make sure, and this was thanks to your encouragement, right, to say like don't just sit on the sidelines. These markets are moving incredibly quickly, as you've seen with what you've already purchased. Now start to pivot into income-generating assets. The conventional path that you and I kind of first started talking about was get the growth assets, then get the PPLR, then get the income assets.
We tweaked that slightly given where we were in terms of there was quite a bit of equity already starting to build up in the existing asset base. There was some borrowing capacity left over after all the other purchases as well. So you were like you might as well deploy that without having any impact on your deposit for your home when you eventually get around to that. But, you know, having that capital deployed and through the power of leverage, you're going to get a control and asset that is not only going to grow, but in the case of this one, give you that income injection as well. And that's been fantastic.
And even today when there's a bit of a shortfall in the other accounts, the kind of settlement accounts, this is the one that's taking care of all of them. This is a major turning point. The fact that you mentioned it, it just gives me some memories of that conversations. Every two or three months I say, Arj, catch up, let's go have a plan. And so for like those tuning in, that's one big factor that I haven't mentioned as much here today is this word of like reviews and portfolio reviews.
Like you don't just get to a portfolio of, you know, eight properties coming together like this from just being able to afford it. You need finger on the pulse. Absolutely. And you need to constantly stay attached to like goals, current performance. So it's like where we're at now, how's it going, where do we want to go?
And just constantly we realigned a lot on that. And that was good because what that did is this comes to this part of the whole home thing. The amount of couples I see across Australia where they buy an investment and they get in this weird middle. And the weird middle is, but I want to buy a home, should we go for the second investment? And the most common move is don't do anything.
Because it's just like if I use deposit and borrowing capacity, I won't have home money. If I don't do, if I go and do the home, I won't have the right home that I want. And you just get stuck. The biggest X factor for you and your journey was that you did not stop because you knew that whether I have a goal to invest for my future or whether I have a goal for my home or both, I just know that having more money in the market will give me a bigger playing pool of funds that if I needed to do something with, I can. And secondly, because we're planning it so meticulously, it's like in all purchases, we're trying to minimize cash you use and use equity.
And so it wasn't like this deposit was disappearing. It was just there building up for that. But it was like it still had this function of money that you could use. And here's the thing that many people don't realize, and this is one thing you weren't attached to, is that you were attached to the property that gives you the outcome, not the property. And so that meant that if you had to get rid of some to get to the end goal, you could treat that as just a decision.
And you did that. Like you sold one of your properties. You had that consolidation strategy to step forward. But the beauty about constantly actively investing, even if it uses deposit, even if it uses borrowing capacity, is that you have choices. Absolutely.
