This transcript was generated automatically and may contain small errors.
It's such a foreign concept because a lot of these suburbs that you mentioned, I've never heard of before you came to me. And you still haven't even seen. Yeah, to be honest, I've never gone and visited any of my properties. That is a fun fact that I have never actually seen any of these properties live. But the fact that we are able to put the trust in the experts who do the right thing by us and set ourselves up, that we can have that trust in them, I think it's pretty amazing to say.
Now, mate, there's obviously a journey where people go through where they make that transition and they make that transition from an investment that's had some pain to a first investment. But there's all these other things that they need to consider. There's pain that doesn't come back again. Yeah. Paying a professional.
There's uncertainty on where you go, the city, the town, because you walked through something before, you're not walking through something now. One's in Sydney, one's nowhere near Sydney. And actually, if you actually think about Brisbane, Brisbane prior that 2021 time, the last 10 years being the fact that your banking financial experience as well in other industries has given you this understanding of data and looking into it. It didn't look crash hot for the 10 years prior to that. So you've got past data validation not looking amazing.
You've got uncertainty because of previous pain and doing it again. And then you've also got unfamiliarity. From a mindset perspective, though, you still got over the other side and you didn't just get over the other side, you did it multiple times over. There might be others listening or watching to this going, I haven't had the best run of my life in property and I'm about to enter a similar territory to wanting to make it better. But these three things, unfamiliarity, uncertainty, how do you get past that?
I think you sort of hit the nail on the head when you talk about, I guess, that uncertainty or the apprehension that comes with, I guess, delving into property after a poor experience previously. I think the trust which we had in going down this path is ensuring that we're putting our, I guess, knowledge and trust in the experts who actually know what they're doing. I think for us, just people in general, you go to the experts for anything that you need help with in life, whether it be health problems, whether if you want to get fit, you go get a personal trainer. My mindset is why wouldn't you do that for your investment journey when it comes to property as well? So when it came down to that and we realized, okay, these people who work with you and your broader team, they know what they're doing.
They're data-driven, they're rational with their decision-making, they're not driven by emotional choices, et cetera. And then you look at some of the, I guess, successes that other people have had working with people such as yourself, then it's a no-brainer for us. And I think that trust was only, I guess, built even further after the success of that first property that obviously went gangbusters pretty quickly as well. And then we were quite confident to go through you guys multiple times after that. So yeah, coming back to your previous point, I think that risks and uncertainty that comes along with going into the property journey when you've already had a pretty poor experience, I think that is unfortunately one of those things that people do have to go through to get to the other side, but it is something worth exploring and going down because the successes that come with that far exceed, I guess, the apprehension that comes with whether to do it or not.
Yeah. And so now you're on the other side, you have the first one happen, it's 2021, and that momentum creates the second one. But then in 22, 23, these years onwards, these are years where there's met with a lot of uncertainty, just like years like today. And in that uncertainty, if we go back, this is coming out the other side of lockdowns. This is interest rates rapidly rising in that purchase that we were making in 2022.
And then all of this common belief with monetary policy, the opposite happened in terms of the asset seed purchased. When it comes to that next level of uncertainty, this is uncertainty not just in the bad time of the first investment, which turned around to be good, but now these things have gone good and you're faced with uncertainty again at a macroeconomic level. Today we have budgets, today we have tax policy changes. So it doesn't seem like there's ever been a year since 2020 where uncertainty, I'll go back to since 2016, where there hasn't been uncertainty. So in uncertainty now, even after things have gone on, what do you look to to stay on?
Because you made purchases even when things had gone well, but macro environments were uncertain. Not your decision of the unit, macro. How do you get past that? I think the macroeconomic side of things, things will look great for certain years, things will look pretty drastic at other times as well. I think I always try and take a bigger picture view of this.
And you can rewind 20, 30, 40 years, macroeconomic conditions in Australia have gone up and down, but that shouldn't stop you from doing the right thing in terms of investing in the right asset classes, getting into the property game when you need to get in, et cetera. So I don't think you should be phased too much by what is happening at a macro level. Make the right fundamental decisions to put yourself in a position to succeed. So when the macro conditions do turn in your favor, you can take advantage of that as well. Absolutely.
Now, rent vesting is a strategy that's been very popular for you through this time. And I want to talk about just committing to that strategy because there could have been moments in this journey where you may have pivoted and gone for the home. But throughout the strategy, you stayed committed to building a portfolio first. What's the strategic reasons for you and the strategic benefits you've had over time from rent vesting? And then secondly, the strategic benefits you found from continuing on this journey until there comes a time where that shifts.
Yeah, I think a few factors for me. So number one is financial. So number one, it allows us to rent in a place in our home city of Sydney where we want to live. It's close to work. It's close to childcare.
It's close to family, et cetera, friends. And it allows us to rent in a pocket of Sydney that if we were to purchase, number one, it would have probably been outside of our budget. And even if we were to get into the market, it probably would have put a heavy burden on our heads in terms of mortgage repayments, et cetera. So that's probably the first aspect of it. It's allowing us to live in a part of Sydney that we want to live in without that burden of a heavy mortgage that comes along with it.
I think it's also the capacity it frees up to continue on this investing journey. And it's not just property for that matter. It could be other asset classes that we're also diversified into as well, giving us that flexibility and capacity from a financial aspect to go in to be like, okay, we're not owning our own home as of today. However, let's not rest on our laurels and not continue that investment journey to set ourselves up for the future. So it gives us that capacity to do that.
And I think also lifestyle. I think we want to travel. We want to go on holidays. We want to spend on things we want to spend on as well. And it gives you that financial freedom to do that without having to worry about that mortgage repayment every single month.
And I guess even in this current macroeconomic environment we're in with rising interest rates, inflationary pressures, wage growth isn't probably keeping up, et cetera. Those are things that are still in the back of our mind and things we need to consider. But at the same time, it's not a heavy burden front of mind for us because we don't own that multimillion dollar mortgage within Sydney at the moment. Yeah, so I hear a really good point because you mentioned like three different things. You mentioned the burden mentally.
You mentioned the wealth effect and the lifestyle, like the lifestyle piece of still doing travels and other things because there's leftover money in the household budget. And then the third part is financial, just being in a financial position. And like far too often I see so many people just absolute left turn to go, I just want that PPR and they try and grab it too early. Because when it comes to the PPR, one of the biggest mistakes that people don't realize is that it is hard debt to acquire. It is in certain major cities of this country, extremely high levels of debt.
It is after tax income and also it is high levels of deposits and stamp duty because they're usually aspirational homes rather than investments that make sense. And so when that happens early on, you can truly get stuck. Now it's not to say it's a bad financial decision if you do it early on because guess what? You can downsize tax free. You can then use equity of it and buy more properties.
But it's what's your financial means. And interestingly enough, our 20s and 30s in life is actually the best times for our travel, body, mind, health to kind of come together. And so if you're going to use a lot of that in financial kind of call it prison of a PPR at the start just for the safety or comfort to know that that's my place. Remember when you're renting, it's still your place because you've got an agreement, you've got a lease. And guess what?
If things move, I can assure you if you weigh up the cost of removalist, cleaning, packing, new removing and fitting, then also reapplying and slightly higher rental increases, do all the math. It is actually still cheaper than a major PPR in Sydney. And so what that does for you is that you can then commit to it. But also what I see people do is they commit to investments and then at this midpoint, they go, oh, we should maybe do a PPR. And one of two things happens there.
They either realize they still don't have enough and they pause their investing journey for way too long or they do just commit to something and then they realize that there are only a couple of investments away from actually like reaching the whole plan. Now me and you've built a portfolio plan together and we've reverse engineered the current portfolio for properties. That combined with your own independent financial advice on your own shares that you have gets you to your long-term goal. So now you know that with these four properties diversified across three states, diversified in equities as well, your family's financial future is set. It means I think the trust in the level of service that I get, not just from yourself, but your broader team as well, is second to none.
I think the fact that we can come to you guys, we can confidently make a purchase knowing that every single aspect of that purchase journey will be taken care of. And even if something goes wrong, you guys will be there front and center to help us out along the way. So I think the trust in not just yourself, but the broader team that you have created definitely gives us a lot of confidence to obviously purchase through you guys and continue that investment journey with yourself as well. I think the other one is it's a bespoke service, even though you guys have scaled so far and have so many customers on your books now, it's still very much a bespoke service that we feel like we get. So it's not to say that, okay, Sid's wanting to get to X number of properties by X day.
He wants to acquire this much wealth by this year, et cetera. And you're not just mirroring that for someone else. You're not copying someone else's strategy and just putting it onto us. It's very much looking at our own personal situation, our own personal goals, and mapping out a strategy based on that. So I think that's what I really value is the trust component that comes with working with a team of experts who are way smarter than what I will ever be when it comes to the property investment side of things.
But also, I guess, the bespoke nature of that level of service as well. No, thank you so much, mate. I mean, you touched on a really good point about the scale and bespoke balance because far too many people in this industry blame, attack the scaler. And the issue I have with that is that your inability or lack of risk or taking or feeling that you might not know how to or want to go through the growth journey of a business means that many people attack an industry that, hey, someone's growing, someone's scaling. But what they don't realize is that on the other side of that is an impact and a mission-driven journey.
When I catch up with you, when I catch up with our mutual friends, Ani, Vij, a few other, our partners, and I just see around my close friend circle how much lives have been changed and how much they've helped me and how much we've all trusted and supported each other and just where we're all at in our life as a result of these positive decisions. I just think it's selfish for me to just sit there and not make an impact to so many more in that same way. And there are so many more seeking that same way. And this is why it's such a passion part of what I do is that the growth part. And just to hear it from you to go, hey, not only are you guys doing that impact large, but you guys are just making sure it's bespoke the whole way is exactly why we have the team at the scale we do, the segmentation of the divisions the way we do, the reinvestment into the technology the way we do, because that's so important to us.
You can't, in the pursuit of high impact, lose the thing that made it impact. And so I just really appreciated you calling that out because it's just special recognition to that team who's making it all possible and makes me commit to this journey even more. So thank you. I wanted to talk about just about the strategy and unpack for listeners and viewers a bit more. Some very intentional things that we did.
The first intentional piece was that I knew in the initial part of our journey, stretching your comforts for you and Liz would already stretch that comfort by going borderless. We'd already stretched that comfort by having some timber aspects of the home and an older build and also one bathroom, I think it is. Three beds, one bathroom. So I'm stretching some comforts because I know mentally that can stretch comforts, but performance-wise, those things don't matter. They're just a feature of the property that gets priced in at the price you pay.
Because if you add the brick, the second bathroom, the fancy renovation, and in Sydney, you're just paying for it. It's not cheaper. It's not worse or better. You're just paying for it. And so as a result, that first part of the strategy, I knew I didn't want to stretch the function or stretch the mindset too much.
So I stayed in the capital city. We refer to this as foundational purchases. And then from there, our diversity, our experience started happening. And so when you could see that, the second function of the strategy kicks in, which is diversity. We're in Queensland, we go to SA, right, as an example.
The other part is I could also then get you to see the benefit of trust in the data, which you did. And then we now have the regional parts, Bundaberg. Hey, whatever the numbers say was the wording now. Whereas before was the asset, the build, the materials, all these questions come up. They're great questions, but that's just questions coming up in the face of uncertainty.
And to see that evolve over time, this is our strategy also coming to life. Diversity, aggressive scaling where possible, affordable properties with balanced rental yields that have high growth opportunities, cycle analysis. And then from there, we acquire. This is our acquisition phase. We went through what we call foundation properties and momentum properties.
And so then what happens in the next part of our strategy, which you've seen many times over, is this on our mapping tools, is our consolidation phase. We'll eventually not fall in love with these properties forever. They're just a tool. We'll eventually get rid of them, move them into commercial, move them into maybe other assets with a financial planner and more equities and other things that pay a high income return when you're ready to draw the income. But it's just more strategic context for people listening and watching to do that and to understand it.
Now, if you're speaking to others, friend circle, colleagues, watchers, listeners, and you're trying to like, you know, rewind your journey or think through all these milestones, what are some pieces of advice you have for them? I think understand your risk appetite. I think, and that's actually the first time I've heard you sort of describe it like that in terms of understanding that risk appetite or that risk averseness quite early on and ensuring that first purchase wasn't going above and beyond that. I think for people out there, they should really understand what is appropriate for them and what level of risk they should feel comfortable with as well. And don't feel obligated to go above that.
I think that is the number one thing to get your foot in the door, put the trust in someone who knows what they're doing, and then let the results speak for themselves. And once you do have that confidence in the system, the confidence in the process that they go through, then that risk appetite naturally goes up as well. So you are willing to look at regional areas. You are looking at other states that you probably wouldn't have ever considered before as well. So I think understanding your risk appetite, put the trust in the process, and then go along on that journey with the team as well.
You mentioned data-driven as well. I think really trust the data. And in saying that, like a lot of the times when you present the data to us, I have no idea what you're talking about if I'm being completely honest, but I can see the level of detail and the thinking and the thought process that has gone behind that as well. And then when I step back and look at it, I'll be like, you know what, this actually makes sense. Everything he's saying adds up.
And even though you might be presenting a left-of-field suggestion for a particular area or a particular kind of property, when you look at the actual signals that sit behind it in terms of why this would be a good investment purchase, it does stack up. And you're able to make a rational decision to be like, you know what, let's go ahead, let's pull the trigger, and let's go on this journey. Mate, it's very valuable tips. And look, one thing I'll do is give everyone a tip in assessing what I've seen you and Liz do. One thing you both do, which is very powerful, it'll help many other investors have that same success, is you assess things, and I'm not sure if it's a tangible checklist, I'll call this a virtual checklist for now, but you assess things through this checklist.
And it's like, okay, can we afford it? Is the bank giving us money? Can we have enough in monthly savings to handle negative cash flow? Do we have buffer left over? Are we making a data-driven decision from the team on the side?
Yes. Are we diversifying the portfolio? Yes. Do we have a plan designed, and that plan is getting one step closer? Yes.
Is the plan built on worst-case 5% to 7% long-term growth assumptions? Yes. And do we have the capability from not just borrowing capacity, but the funds to complete from equity? Yes. Okay, why wouldn't we?
And I just feel like I saw that all the time in our conversations. Like you just have this run-through. We have this conversation. And it's just like any time in our journey when it was hitting these boxes, you all just acted on it. Was that intentional?
Was there a secret science behind it? Is this the way your minds work? Yeah, I think we're both very logical and rational people in that sense. Like any sort of decision you're making, big or small, you sort of have that mental checklist of what you want to do. And I think you touched on a really good point to say that, okay, if for some reason the worst-case scenario plays out, we both lose our jobs, this property tanks for whatever reason, is this a worst-case scenario that we are comfortable with?
