Show notes – The best advice from our own journeys (Ep.177)

1. If we think holistically about our own experience and outcomes from property purchasing and investing, what is our most solid-gold nugget of wisdom that we’ve gained and feel compelled to share with others?

Pete – buy and hold. Best way to make money in property, not the only way. But certainly the last two years, has really brought it home. Personally retirement is looking better today than 2 and a half years ago, because held multiple properties for a long period of time. Generally slow increases, but cream on the cake is when the boom comes. It’s not just buy anything, right type of property, in the right street in the right suburb.

Cate – get in as early as you can and be as patient as you can. Some properties I bought in my earlier years, I would not have purchased now. They’re not all A-grade, but they’ve still performed. No one wants to buy a dud, but if you can afford to hold it for the long-term and be patient, then you can just wait. The only time I would sell a property, is if it is a dud, a head ache or some legislation changes or changes in personal circumstances (relationship breakdown). Sit tight and back yourself. Just do it, we all could have done it better. But at least we did it. If I waited to get the perfect capital growth asset, I would have had to wait for my salary to get me there. And I was impatient when I was young, but they still delivered. Not great capital growth, but yielding pool of assets.

Dave – As soon as you start earning a full time income, make sure that you’re saving as much as possible and then buy a property as soon as you can. Get into it early. Action trumps knowledge in life. The only other time that you may choose to sell is if you need to sell to get into long-term family home, because you’re prioritising lifestyle.

2. When did we start to realise this?

Pete – Bought first property in 1991, recession, not much happened. Then there was a 40 to 50% increase in property prices in the early 2000’s and that made me realise how valuable it is to hold property.

Cate – when started going cash flow positive, so excited. Never see such an excited tax payer. First hint of that was post GST interest rate retraction. I could not believe that we had interest rates at 4.99%. Never happened before, just madness. Paled in comparison with covid shock introduction, but did get a taste of cash flow positive on a few of the assets. Once you’re in that position, you have to try to pull back about getting excited about more money, because you still have debt. Then coming home with paper titles to stick in the safe – it’s such a milestone.

Dave – as I’ve had kids. You think more and more about the way that you’d like them to grow up and advice that you’ll give. As they finish school and uni, how clear it is about how soon they can get into investing. Because of compounding and time, set foundation that you can build on top of. That’s what I’ll be trying to help them get a passion for. Can dabble in shares and build up understanding and then get into property.

3. What surprised us about the simplicity of our own retrospective gold nugget?

Pete – patience, could take decades. Sometimes it’s the property that will attract the bad tenant. But you need to find yourself a decent property and decent location. From time to time, you’ll get tenants that give you some hassle, you will have to dip into your own pocket. But you just have to have the long-term goal in mind. There is a lot of water that goes under the bridge in that period of time.

Cate – just get in early and hold it for a long time. When you get in early, you don’t have the income, backing, education and resources to get a professional to advise you. I didn’t have the skill set in my early years, but the surprise that I have around this, it could be best described as not so great, they’ve still performed. The requirement to get the perfect property, is sometimes over inflated. Don’t go out and buy anything, but those you are perfecting, you can do it for 15 years and skill up, or you could have bought a B-grade 15 years ago, it won’t look as good because you have lost 15 years of growth and rent. You can over-finesse and over-perfect and lose your footing on the property ladder.

Dave – when you’re young, your life is simple. Get your first job, not yet married, don’t have kids, living expenses not as high, no mortgage. It’s the easiest time of life to save money to get into your first property. Live in a rental with friends, live with parents a bit longer. Make the most of investing when life is simple and use the opportunity to invest and get ahead.

4. What positive role model experiences were shared with us in our early years from successful investors?

Pete – I learnt more from my father and dealing with property myself, than from university degrees. They are to get a career in a chosen field and make money from a salary. Mix with people that have done it, learn from them and work out what’s best for you.

Cate – role models that said and did the right things:

1. Local real estate agent – always wore a top hat, happy guy, gregarious and outgoing and knew property inside out. I was in his ear for a lot of that time. He probably couldn’t type, didn’t have internet. Collated some things for me and cut out pictures and adds and circled properties on good pieces of land in my budget. He was thinking with his capital growth hat on and gave me advice that I didn’t take.
2. First thing my friends dad did was buy property in Thornbury, sacrifices required when you’re young and they let the property do it’s thing and it’s served them well.

Dave – trying to learn from people who had been successful. When I set up the mortgage broking arm to a life insurance business who I played cricket with. Put myself around people who were successful and learn from them. He was big on investing and ultimately, looking for people who had been successful, talking to people, asking questions, reading magazines and reading books. Gathering information and advice, even if it’s with people you don’t know as well. Mum and dad bought some properties before I bought my first one. They bought in Richmond and Abbotsford, I bought in Kew East.

5. Have the market conditions, lending conditions and social pressures of today changed how this gold nugget could work in today’s climate?

Pete – market conditions are different, are they better or worse, hard to say. We needed a deposit of 20%, now only need 5%. Back in the 80’s it was finish school, apprenticeship, job, get married and get a house. Now it’s finish school, get two degrees, stay there as long as you can, get life experiences. Buying a home is not as important today as it was in the past. Many of your friends in their late 20’s won’t have a home.

Cate – some things have gotten easier. Something that we can’t estimate is the power of job security that we enjoyed. It is a casualised work force right now, but security is not that high. People on contract or in casual jobs. Teachers, sometimes have to re-go for their roles, yet we still have people re-applying because they’re on contract format. People are nervous jumping into debt when their job situation.

Lenders lot more flexible around casualised employment. Ability to grab LMI, have a 5 or 10% deposit. Interest rates, ratio of income to household debt, we’ve all had our challenges. Gold nuggets getting in as early as you can, my advice would stand.

Dave – more money is being thrown at helping people buy their first home than ever before. FHOG only came in when I was buying my first home. That is a relatively new thing, governments are putting even more money than they have before. Property values have outstripped wage growth over the last 10 or 30 years, that’s harder. Access to finance in Australia is as good as it’s ever been in history, got harder after GFC, but it was a lot harder 30 years ago.

Big picture, life is about your mindset and you really can’t worry about that. If you think things are hard, then it will be hard. People will figure out how to buy if they want to buy. If you get too caught up in what’s going on externally you just make your life harder.