S2E12 - Investor Confessions: What Property Investing Really Looks Like

[00:00:00]

Skye: So we're kicking off a new series today, Investor Confessions. The idea's pretty simple, bringing on real investors and talking through what's actually happened, not just what was supposed to happen, or not just the pretty picture. So as you all know, Pete's our buyer's agent. He's actually done the things. He's bought eight properties. We are six properties deep now, so let's get straight into it.

1

Skye: What is the one property that you still lose sleep over and why?

Pete: That'd have to be the one that I sold early. So I've purchased eight, but I've effectively sold two. The one that hurt the most was one in Perth.

I think it was the end of 2023, but I'd bought it in 2020, so peak COVID season. So I bought that for 299,000 and then ended up selling it a couple of years later for about 470, if my memory serves me correct. So I still got some pretty good uplift there. But that property now, like Perth has had a massive run.

I knew it was gonna have a run but it's had a huge run, and that'd be sitting closer to 800 now. So [00:01:00] effectively $300,000 worth of growth lost.

Skye: That's why you're losing sleep?

Pete: I think losing sleep, it's annoying, it's frustrating, but for me, I sold it to fund the business, to have the confidence to get into the business, to quit my full-time job and have that backing.

Skye: Mm.

Pete: But it wasn't necessarily the one I really wanted to sell, 'cause I loved the location. I just picked the wrong property.

Skye: Why was it the wrong property? Well- Do we jump into that now? Or,

Pete: Yeah, no, let's do it now. So I had the grand idea I wanted to be a developer and all that other stuff, so I bought the oldest property I could find in the cheapest location on corner block, so it was about 1,000 square meters. In Perth, as I said, so metro location, which was great, but it was a fibro home.

Skye: Mm.

Pete: It was just not great. Like-

Skye: Not well-maintained ...

Pete: not well-maintained. Because these are, these homes are really old. Mm. So if these fibro homes aren't maintained well, it's just a boatload of maintenance. So again, I overlooked that.

The building report wasn't great, but I had this grand idea, like I said, I'd develop it.

Skye: Didn't matter.

Pete: It didn't matter to me.

Skye: 'Cause you're gonna knock it.

Pete: I'm gonna develop it in a few years and build three or four, [00:02:00] which, I'd never do these days either. I just don't want the headaches. The maintenance that came with that was phenomenal.

But I also had a long-term tenant in there for 10 years. I'll get into that a bit more, but that was also a red flag. So 10 year-

Skye: So the long-term tenant was the flag?

Pete: Yeah, yeah, 'cause it was also self-managed.

Skye: Mm.

Pete: And obviously maintenance wasn't being done.

Skye: Wasn't done with-

Pete: Yeah

Skye: ... the self-managing owner before.

Pete: No, and obviously low

Skye: rent- So you come in and it's all ... Yeah.

Pete: Yeah, it all is what it is. It hasn't been managed. The rent's really low, which is why, I guess, the owner hasn't done the work and why the tenant hasn't- reported it

Skye: Hasn't pushed it too hard because-

Pete: Yeah

Skye: ... they're getting a good deal.

Pete: Yes.

Skye: You see these deals all the time, right?

Pete: Yeah, I do, and that's why I have to question them, 'cause I've been in that position where-

Skye: Mm

Pete: ... it looks great on paper. And look, I could have held it and it would've done really well, but the maintenance and the headaches that would've come with it-

Skye: Wasn't the right fit for you.

Pete: Yeah. I would have ideally sold another property within the portfolio in a market that I'd kind of already known had peaked. Hasn't performed anywhere near as well as Perth, but it comes down to the property type. I picked the wrong property type, and I paid the consequences [00:03:00] later, and that was in a lot of growth.

Skye: Mm. Yeah, that it burns, doesn't it?

Pete: It does. Yeah. It does, 'cause had opportunities to buy a better quality property, but I kept passing on them because, I thought I was gonna be a developer and I wanted that 1,000 square meter block on a corner.

Skye: Mm. So I feel like there was a few things that went wrong for you, all in that one deal. And even if you were going to develop the property, it looks good on paper, but the reality is, okay, what happens after settlement?

Pete: Yep. Yep. And then-

Skye: Throwing money at it ...

Pete: exactly, throwing money at it with low rent, with tenants that couldn't afford to pay more.

Lovely people. But again- Yeah ... all these flags that I should, I would see now, I didn't see at the time, because rent's cheap for a reason, it's self-managed for a reason- Mm ... and the property is in the condition for a reason. So yeah, lesson learned there. And that does keep me up at night, 'cause I probably didn't need to sell it in the end, but like I said, it helped me have the confidence-

Skye: Helped you

Pete: to build the business and actually quit the job, have that backing. It all worked out in the end. Mm. I could have just picked another property in the portfolio, which I would've preferred to sell. But again, what was I saying before? It's like-

Skye: Hindsight

Pete: ... yeah, sold the right property within [00:04:00] the portfolio, but the wrong location.

Skye: Yep. Yep. Because the two things are separate-

Pete: Yeah

Skye: ... when we're talking property investment.

2

Skye: The next question ties into this and it's Be honest, have you ever cried over a property deal? Is it this one?

Pete: Oh, look, it is- Or

Skye: is there a different one?

Pete: It is that one too, but there's always multiple deals, right? I was pretty stubborn back in the day. And I would pass on a property for a couple of grand. The agent would pretty much be really upfront with me and say, "Look, if you can come up a little bit, we won't run the open on the weekend." And they were very clear and transparent about it.

Me being the naive investor, I just thought, "Nah."

Skye: I'm not paying. Stuff it.

Pete: "Stuff them. I'm just, you know-"

Skye: There's another deal.

Pete: Well, not even that. There's no other buyers. You're not gonna get anyone else, and then they'd go and sell it the next morning or after the open, and I'd missed the deal.

And that kinda leads into this one too where I had better opportunities, but I was being a bit of a tight ass and thought I was being smart by not offering a little bit more money. Had I done that, I would've gotten to a better quality property-

Skye: Mm ...

Pete: in the Perth market and held that.

Skye: Yeah.

Pete: So I think it's... Yeah, it's interrelated, but yeah not necessarily cried, but very disappointed. And-

Skye: Mm-hmm ...

Pete: it definitely pops up in my mind more [00:05:00] than it should.

Skye: Lingers.

Pete: Yeah. Yeah, it lingers. That's probably the right word to use. Yeah.

Skye: I think we've all got a story like that. I like that there's multiple facets to this as to why it was a bad deal. It's not just because you overpaid. It's not just because you bought the wrong property. There's a lot of things going on.

Pete: Mm.

3

Skye: Drawing a line what experiences or what one thing would you never do again in your property journey?

Pete: Aside from sell early it would have to be the self-managing aspect- Mm ... of it all, 'cause that was really hard.

Skye: 'Cause you self-managed that one, didn't you?

Pete: Yeah, I did. And it-

Skye: Because they were?

Pete: Yeah, 'cause they'd been doing it for 10 years.

Mm. And I was like, "Oh, you know what, if it's been good for 10 years, then why don't I save like, two grand a year?" The red flags were all there. A lot of this stems to this one property.

Skye: Mm.

Pete: But yeah, self-managing I'd never do again.

Skye: Had you increased the rent or no? Because they-

Pete: This is my next thing

Skye: couldn't afford it ...

Pete: so it was during COVID, right?

Skye: And- Oh, we had rent freezing, didn't we?

Pete: Yeah.

Skye: Or it was different in

Pete: every

Skye: state. Not, not in WA.

Pete: Yeah. But- It was ... Just trying to think back. '

Skye: Cause- I can't think what they called it, but it was a period of time where landlords could either freeze [00:06:00] subsidise during that time.

Pete: Yeah, there were some rules around it, but I don't think it applied to this one. A, I was quite scared of losing them.

Skye: Mm.

Pete: See, I'd bought this property knowing I didn't know where the hell another tenant was gonna come from. Now, the vacancy rates in this market were super, super low, looking back, and I would've found a tenant.

But I was super nervous about losing them and then not being able to lease it out, or having to dump a lot of money into this property to fix it, bring it up to standard.

Skye: Mm-hmm.

Pete: And then I was just gonna develop it later on, which I was never going to, but I thought I would. So I locked them in for two years, and I did try to up the rent but they couldn't afford it.

So they pushed back.

Skye: So how did that conversation go, though? Because you were self-managing.

Pete: Exactly, yeah. Didn't make a personal relationship, but I felt sorry for 'em. Because I had to do all the communication. So I had-

Skye: That there is the reason number one why you shouldn't self-manage. Yeah. Because you can't be objective.

Pete: Mm-hmm. Yep. I was like, "Hey, we're gonna bump the rent up." They're like, "Mm, we can't afford it." And I was like-

Skye: Oh ...

Pete: "Oh, okay."

Skye: And I feel like a greedy landlord-

Pete: Exactly ... 'cause I own your house. Exactly. Yeah. And it was during that COVID period where there was lockdown.

Mm. Not that WA got affected, but still, it was a very uncertain time.

Skye: [00:07:00] Moratorium. Sorry to cut you off.

Pete: Mm.

Skye: Did you not have that in WA?

Pete: is the thing, there might've been, but again, naive landlord, I wasn't following the rules. I wasn't checking what the rules were. I knew I could increase it, but I didn't know if there was that stuff in place.

Skye: Yeah.

Pete: Again, I could have gotten stuck too.

If I had actually pushed a rental increase and that was in place and they took a tribunal, I would've been-

Skye: You might have to pay it back.

Pete: Exactly right, and that's the stuff. Being self-managed landlord, I'm not following what's going on. I am now, 'cause I'm in the space, but back then I wasn't following all the new rules.

Skye: Mm-hmm.

Pete: So I probably could've been stung there possibly as well, but yeah, at the end of the day, I, I didn't wanna increase it 'cause I felt sorry for 'em.

Skye: Mm.

Pete: And that also led to the whole maintenance side of things too. So by not being able to increase the rent, I was very frustrated when all the maintenance stuff came through.

Skye: Mm-hmm.

Pete: Was very frustrated as rates started to rise as well. And then I had a property manager go through to look at the property.

They didn't wanna touch it. So it all kinda stemmed from that incorrect decision flowing through, getting frustrated, and then just the easier thing for me to do was just sell it.

Skye: Yes.

Pete: All of this kind of made my decision, and as I'm [00:08:00] talking about it now, I can understand why I did it.

Skye: Yeah. Cause we see this all the time.

Pete: Yeah, yeah,

Skye: yeah. Every day.

Pete: Yeah. It happens to everybody.

Skye: And I understand why it happens. I'd almost consolidate the answer to this question, what would you never do again in your property journey, I feel like it's almost I would never self-manage. Because that led to all of that.

Because the problem with, say, implementing a rent increase when you're the landlord, it's an indelicate power balance. Whereas when I have those conversations, I'm not the landlord. Mm. I've got zero feelings about this.

Pete: Yep ...

Skye: it's an entirely different approach that I don't think people appreciate until they're doing it, and especially- Yeah ... they get pushback, and it's "Oh, okay, we'll keep the rent low." Is low rent that big of a deal? Well, yeah, when you're constantly sinking money-

Pete: Mm ...

Skye: into the property-

Pete: And

Skye: you're frustrated ... you're taking the hit-

Pete: Yeah ...

Skye: left, right, and center, and then you're just resentful.

Pete: Yeah. So basically, by not having a property manager, it cost me $400,000 almost in growth.

Skye: Ooh.

Pete: That's a good way to kinda sum it.

Skye: There's a line.

Pete: Yeah. But it's true though. Yeah. I, I ... 'Cause in the scheme of things it massive. I mean, it was, 'cause of the age of the property.

Skye: It wasn't a big [00:09:00] deal at the time, but it led to everything.

Pete: It just bottled up, yeah. Mm. Yeah, and I ... Why did I buy this property? There's just all this maintenance. All these things flow through it, but had it been properly managed from the start- You might not have

Skye: had that scenario

Pete: I would've held, I would've held it. 100% would've held it. Yeah. I, I wasn't dealing directly with them. I was also trying to start the business as well, and managing a tenant. Not that they were difficult people, it's just-

Skye: Mm. The situation ...

Pete: I had to manage the rent coming in.

Skye: Mm.

Pete: They were also running a business from there too, which as we know-

Skye: Complex

Pete: insurance doesn't actually cover that.

Skye: Mm.

Pete: So I had to get that in email from them saying that they're not running it, even though I kinda knew they were.

Skye: You knew they were.

Pete: Like, what am I gonna do? I I can't get another tenant in there.

Skye: No.

Pete: And the business that they were doing ...

Skye: What was the business?

Pete: It was to do with cars, so it wasn't a bad thing or anything like that, but I catastrophised what could happen.

Skye: Mm.

Pete: In my opinion, it was a high risk business if I don't have things set up when it's in an old shed, and the switchboards and all that haven't been upgraded, and it's an old home. And all that kinda stuff goes through your head. Mm. And then insurance, they'll find a way not to cover you.

Skye: Of course.

Pete: So again, that was another layer [00:10:00] of it too. Yeah. So yeah, no, if I had a property manager in there all of these things I just mentioned wouldn't have been an issue.

Skye: Mm.

Pete: So there you go.

Skye: Fascinating.

Pete: Mm-hmm.

Skye: Love that.

4

Skye: I hope you've got a different story, that this doesn't relate to the same one, but tenant reality check. Have you ever had a tenant horror story? And what did that teach you? So I feel like you've touched on it lightly there that self-managing-

Pete: Mm

Skye: ... taught you that there's a reason why you need to be removed rather than it's not that you couldn't manage the property, but just having that arm's distance is-

Pete: Mm

Skye: very helpful. Have you had a different horror story that you can-

Pete: Mm

Skye: ... relate to in any of your other properties?

Pete: Yeah, I can. it's not a horror, horror story. probably just comes down to the property selection-

Skye: Mm-hmm

Pete: ... and doing the due diligence properly. So I bought a property in, Victoria, so Bendigo.

Good property. It's done its work. I paid 280 for it. It'd be worth double that now, which is great, in seven or eight years. But I went real cheap. That was quite cheap for the area.

Skye: Doesn't surprise me, Pete.

Pete: Exactly. I know. And cheap properties do perform well, but again, old weather board home.

Skye: Mm.

Pete: There's a [00:11:00] lot of maintenance with that property as well. I won't even get into that. This is the one I probably should have sold. But anyway.

Skye: Mm.

Pete: It's a constant turnover of tenants.

Skye: Because of the quality of the property?

Pete: Yeah. It's renovated and it's not too bad. It's like a 900 square meter block, high maintenance property.

Skye: Mm.

Pete: Trees at the back. Again, I thought I was gonna be a developer. But that particular street isn't great.

Skye: Right.

Pete: So it's a bit of a higher social housing pocket. And look, if you're going cheap, I tell my clients, "If we're going cheap, that's the trade-off."

Skye: That's the risk.

Pete: "It's gonna be in a higher social housing pocket." They're still gonna perform as long as you're not paying the same price as a property in a street that doesn't-

Skye: That's better ...

Pete: have any social housing.

Skye: Mm.

Pete: So if this particular property was elsewhere, I would've paid 350 at the time in a better pocket.

So, it still did the job.

Skye: I think that's valid to point out.

Pete: Yeah.

Skye: It's, don't be afraid of buying there.

Pete: No.

Skye: But maybe don't pay the same-

Pete: Yep ...

Skye: price you pay elsewhere.

Pete: There needs to be a compromise.

Skye: And be aware of what's coming.

Pete: Yeah, yeah.

Skye: Because yeah, it's more complex.

Pete: and I knew all that going into it, but I didn't factor in the tenant turnover.

Skye: Mm.

Pete: Because I'm-

Skye: Which is a huge expense to your bottom line, right?

Pete: Yep.

Skye: Over seven, eight years.

Pete: Yeah. I've had four or five tenants in [00:12:00] there.

Skye: Mm.

Pete: And again, the property's renovated. It's actually quite nice. It's just that particular pocket's not attractive, and because it's on the lower end as well, 'cause obviously if I'm paying that kinda money for a property in that area, the rent's gonna be on the lower side, too.

Skye: Mm-hmm.

Pete: Still a fantastic yield, but like-

Skye: Mm

Pete: ... you could go down the road to a better property and pay an extra 70, 80 bucks a week, but you're in a better pocket. So I'm obviously attracting a lower quality tenant as well. And I haven't had big issues.

Skye: Mm.

Pete: I've just had more turnover than any other property in my portfolio-

Skye: Mm

Pete: with that particular one.

Skye: That's a really good point. I think a lot of investors do not consider that.

Pete: No.

Skye: What sort of tenant is your property going to attract?

Pete: Yeah,

Skye: I'll tell people I'll tell them "You're not getting good tenants with this property. It's potentially not a good purchase," because of that endless headache.

Either you're getting the horror story tenants and it's an endless stress or they're just not staying.

Pete: Yeah.

Skye: I don't wanna shut down main road properties.

Pete: Mm. I don't buy main road.

Skye: But I find that main road properties do have a higher turnover-

Pete: Mm-hmm ...

Skye: than one a street back.

Pete: Yeah, 'cause they're cheaper and people think they can deal with the noise, but [00:13:00] same, thing.

Skye: Then they find out they can't.

Pete: Buying directly backing onto a train line. They're cheap for a reason, and they can still perform.

Skye: The problems that-

Pete: Yeah ...

Skye: yeah, you find with it if you were to live there, the tenants have the same.

Pete: Mm. Yeah. But if we overlaid the experience I had, imagine if I had problem tenants every time. And that is a real risk. I'm very strict on who I put in there, knowing that. But it does take some time to fill it, too.

Skye: Mm.

Pete: actually get a lot of applications, cause it's quite cheap.

Skye: 'Cause of the price point.

Pete: Yeah, but we have to filter through that, so we might get 10 applications on day one, but none of them are good.

Skye: None of them.

Pete: So I'm very selective on who I put in there. And now the current tenants have been there for a while, which is great.

Yeah, that's

Skye: great.

Pete: They've been there for a couple of years, but I had to kinda-

Skye: Keep the rent the same ...

Pete: yeah, and the rent's low.

Skye: Reward them for staying.

Pete: Yeah, it's not market rent or anything like that, so.

Skye: Yeah.

Pete: Yeah. '

Skye: Cause it's one less headache for you.

Pete: Yeah,

Skye: yeah.

Pete: Yeah. Again,

Skye: good. I think there's a bit of theme here.

Pete: Yeah, yeah, yeah. I know,

Skye: yeah. Keep your stress low- Yep ... and you can stay in it.

Pete: Yep.

5

Skye: The next question is the deal that got away. Everyone's got at least one that they think about.

Pete: Mm.

Skye: I could think about at least three that I would just, oh, kills me to this day.

But what deal do you regret not [00:14:00] doing, and what held you back?

Pete: So it would've been moving onto my third purchase. So the first two were in Adelaide.

Skye: Mm-hmm.

Pete: They were a couple streets apart, but anyway,

Skye: We won't talk about why.

Pete: Yeah, that's another-

Skye: That's not a good thing.

Pete: They perform well, but that's not how I operate now with clients. It's about diversifying. I could have bought a property in... Oh, Tasmania was the big thing back then.

Skye: Mm-hmm.

Pete: And that's done phenomenal growth over a couple of years, and that's where I should have bought. I had opportunities to buy there, but I ended up sitting on the fence for 18 months. I could have bought stuff there for like- 280 and then didn't do it. Again, some of these numbers are so cheap.

Skye: I know.

Pete: It's ridiculous. But-

Skye: Yeah

Pete: ... at the time it was 280, and I could have grabbed that, but I didn't do anything. And then all of a sudden it was worth close to 400 12 months later.

So sitting on the fence yeah, that's probably the one that got away. Because then after that, I was buying every year. It was just that 18-month period where I was very nervous and listened to everybody's opinion about interstate. I did all this on my own income.

Yeah. I didn't have-

Skye: It's scary, right?

Pete: Yeah, yeah. '

Skye: Cause you can't drive past it.

Pete: No, you can't. No.

Skye: Yeah.

Pete: And I didn't have a partner to... yeah, this is all me. Yeah. My own income doing this. No support from family and all that. So I [00:15:00] had to buy cheapies.

Skye: Mm.

Pete: I had no choice. So I couldn't really grab anything in Adelaide.

Skye: Mm.

Pete: I probably could have, but location-wise.

Skye: It wouldn't have ticked the other boxes that you wanted either.

Pete: No, and I didn't wanna buy another one in Adelaide with land tax. I think land tax changes happening in Adelaide around that time, too.

But yeah, I sat on the fence for 18 months because of people's opinion, even though I knew I could have done it.

Skye: Mm.

Pete: So that would have to be the deal that got away, 'cause basically could have leveraged that for an extra property. Yeah ... .. Again, none of this is terrible.

Skye: No.

Pete: 'Cause it ended up being a good outcome in the end.

, If you're ready to go now, it's a good time

Skye: I think what's probably relevant to the market at the moment is the one deal that keeps me up at night-

Pete: Hmm

Skye: ... was a pair of maisonettes in Plympton, right? And it was, I think 480 at the time.

Pete: Yeah.

Skye: And I think they'd price guided it at 390. So we'd gone to the auction, and we're just watching this, and once it cracked over 450, which is our limit, now this is a pair.

Pete: Mm.

Skye: Mm. Mm. This is two properties.

Pete: And Plympton is-

Skye: Plympton's-

Pete: You'd have to pay a million bucks to get into Plympton now,

Skye: so. yeah, five minutes from the beach.

Pete: Mm.

Skye: 15 from the CBD, like great location. But in terms [00:16:00] of that fear, that comfort level at the time, maybe it was the two properties, it was too complex, like looking back, we could have stretched to that.

But this was also... I can't even remember what year, but it was when the market was doing this upward trend, and we just panicked.

Pete: Mm.

Skye: And we're like, "No, let's just go buy one property." And that one keeps me up at night.

Pete: Yeah.

Skye: But it's driven by fear.

Pete: Yeah.

Skye: And again, going, "Surely it's not worth that." And I have these conversations all the time. People are like, "Surely we're not paying this."

Pete: Mm.

Skye: But we're laughing about the fact that maybe-

Pete: We keep making the same mistake.

Skye: Yeah.

Pete: We won't make that now, but people-

Skye: Real estate is never as cheap as it is today.

Pete: No. No.

Skye: That's the key thing

Pete: it will keep going.

Skye: And so the hesitation is uncertainty, which is driven by fear, so.

Pete: Which is very relevant for today.

Skye: Maybe it thinks back to how we think about money in the first place, and for my deal, that was it. It was too much. It was past my limit of where I was comfortable.

6

Skye: What's one money belief that you had to unlearn to grow your portfolio?

Pete: You gotta spend money to make money.

Skye: Ooh.

Pete: Yeah. You know, [00:17:00] everyone says that, but I think when I heard that- Maybe not the first time. It had to be a couple of times of hearing it-

Skye: Mm-hmm

Pete: that kinda clicked. 'Cause yeah, you gotta spend money-

Skye: Mm ...

Pete: to buy properties.

Skye: Mm-hmm.

Pete: You gotta maintain properties.

Skye: You gotta spend money to keep the properties.

Pete: Yes. And then you'll make the money later on. And that's the same in anything. So, if you wanna-

Skye: So the opposite of that belief though is we've gotta hang on to the money, right?

Pete: You gotta save it, put it in the bank, yeah.

Skye: Yeah, like a lack mindset. Which, I think all of us get our money mindsets from our parents. Thanks, guys. How do you think it held you back though? Was there a period where that shifted, where you initially were trying to hang on to everything and then we relax

and you actually saw the growth

happen because that belief changed?

Pete: Yeah, look, I could have probably purchased earlier. I think I purchased my first one at 23.

Skye: Mm.

Pete: Probably could've done it earlier. But I just loved having the money in the bank.

Skye: Mm.

Pete: Didn't do anything with it.

Skye: I know so many people like you.

Pete: I just liked it there. It's the Greek thing, I think.

Skye: Yeah.

Pete: But I liked it, and I liked my cars at the time as well, but I just liked growing it.

Skye: Mm.

Pete: But I never spent it. Mm. So-

Skye: We hang on tight ...

Pete: a curse, but also not at the same time. As long as you do something with it [00:18:00] eventually. I do know a lot of people who haven't bought, like friends and stuff, and they've just continued to save, and inflation's just eaten it.

Mm. Like, They haven't saved. They're still so far behind.

Skye: They think it looks good, but-

Pete: Yeah

Skye: ... it's, yeah-

Pete: Yep ...

Skye: an illusion.

Pete: Yeah, that's exactly right, and I think just once that clicked, then, yeah.

Skye: Mm.

Pete: I just make sure anything I spend money on, if I'm investing, I know that I double it. It's gotta be real strategic.

Skye: Yeah.

Pete: But

Skye: I ... Yeah. And I think a lot of investors miss that, 'cause they're focusing on the short-term numbers-

Pete: Yeah

Skye: ... instead of the bigger picture of-

Pete: Yep

Skye: ... what you're actually doing. So I love that. ' Cause I say it all the time, but you've got the actual proof that it works.

7

Skye: Moving into the next question, do you think that investors are too obsessed with the numbers and not enough with the people? Where do you think that could go wrong?

Pete: Yeah, I think a lot of investors try and be very transactional.

Skye: Mm.

Pete: And I think that's okay when you're trying to work out growth predictions and locations and your budgets and all that.

Skye: Which is what a lot of you do. You do that every day, right?

Pete: Yeah, and you need to do that.

Skye: Mm.

Pete: But when it comes to getting the right deal, you need to have a people [00:19:00] aspect to it. So you need to be good with the agent, and you need to just- negotiate and not trust everything, but have the people skills that you need to work out whether or not the agent's lying, the agent's telling the truth, and just kinda come to an agreement and get the deal done, basically. Not worry about two grand. Because if you're gonna worry about two or three grand, that's when you're becoming too obsessed with numbers, and that's what I did and missed out on some great deals.

Skye: Mm.

Pete: And then ended up buying the wrong property, 'cause I had a bit of FOMO too with that one. And I actually overpaid for that Perth property too, in the end. It was funny, I tried to hold back a couple of grand and ended up overpaying for that property, and it was off-market too. But anyway I don't care now. But at the time I definitely did overpay because I was scared of missing out, because I was too obsessed with numbers. Post-purchase, you gotta be good with the property manager.

Skye: Mm.

Pete: You gotta be good with the tenants. Anyone who's in direct contact with the property, you need to have those people skills.

Skye: Mm.

Pete: And it doesn't really become about numbers after that. I think it's numbers up front.

Once you've worked out your budget, your strategy, your location, then it becomes all about people.

Skye: Mm.

Pete: And then even post that too, because after you've purchased, you should already know your numbers. You should already know [00:20:00] your You shouldn't be checking the growth statistics every six, 12 months.

Like, Just let the property do its thing over 7 to 10 years.

Skye: Mm.

Pete: And really, it comes down to the people skills, I think, afterwards.

Skye: Yeah. That's a really important point, 'cause there's a very small percentage of landlords who are so focused on the numbers. I'll never forget one I spoke with that had a whole unit complex, and they were so run down, and he wanted me to come manage them.

And I'm like, "Well... these are not really the sort of property that I would like my brand associated with" . I can't remember what I said, but it was a lot more polite than that. But he's like, "Yeah, but it doesn't make any sense for me to spend..." I think there were eight units, so you know, " Doesn't make any sense for me to spend 40, 50k on painting, have the vacancy. There's no ROI on that."

Pete: Mm.

Skye: I'm like, "But you're going to get a better quality of tenant, more longevity, 'cause they'll stay." But he's like, "They're staying 'cause I'm getting cheap rent." I'm like, "Hang on, you're looking at the numbers the wrong way around. If you actually got a better tenant at better rent, over time that's gonna perform so much better."

Pete: Yeah.

Skye: It's that short term-

Pete: Yeah ...

Skye: number aspect, plus also didn't care about his tenants.

Pete: Yeah.

[00:21:00] Yeah. Not surprised at all.

Skye: No.

Pete: People forget the maintenance that comes with property.

Skye: Mm ...

Pete: you do need to do paints every 10 years. You need

Skye: to maintain.

Pete: Like you do, yeah.

Skye: Yeah. I think there's an even smaller portion who are like, "That carpet was brand new." Yeah, 15 years ago.

Pete: Yeah. Exactly.

Skye: Time flies.

8

Skye: I do have one question that you haven't pre-approved. What's something that you hate about being a property investor that no one talks about?

Pete: That-

Skye: I think I know your answer, but I wanna put you on the spot ...

Pete: i think it's the things I can't control.

Skye: Okay.

Pete: It's probably not the answer you were thinking of.

Skye: No, it's interesting. What things can't you control?

Pete: Interest rates.

Skye: Mm.

Pete: How tenants change over time.

Skye: Mm. Yeah, 'cause you can have a good tenant-

Pete: Yeah

Skye: ... and the circumstances change.

Pete: Yeah. There's uncertainty around it. But investing is uncertain. Like how's the market gonna go?

Skye: Mm.

Pete: It's really the things I can't control, the uncertainty around it. Interest rates are going back up again.

Skye: And so you've gotta strap yourself in for the next-

Pete: Y- yeah. And we'd all just-

Skye: Next thing

Pete: ... got over that.

And now it's back and it's "Oh, okay.

Gotta look at my numbers again."

Skye: Yeah.

Pete: Tenants go through life changes and-

Skye: Mm

Pete: ... they turn to bad tenants.

Skye: Yeah.

Pete: Property management [00:22:00] turn, property manager turnover. Yeah. Sorry. There's just the things that you can't really control which bother me, but I'm a bit of a control freak. But-

Skye: You don't

Pete: say.

Yeah, exactly. But you, that, that would be, that would be what's... And the repairs too, maintenance, things that you just can't-

Skye: You can't

Pete: foresee ... that you should... Well, you do foresee if you've done the budget, but you don't know when it's gonna hit.

Skye: No.

Pete: So you don't know when you're gonna have multiple pipes burst across different properties-

Skye: Yeah

Pete: all at the same time. Like it

Skye: all- Which I think you had- Yeah, yeah ... not long ago, right? Yeah. Everything was just, you'd spent 10 grand by- Yeah ... 11:00 AM.

Pete: Yeah,

Skye: yeah.

Pete: Yeah. Just money that I had there.

Skye: Just gone.

Pete: Didn't wanna spend, but I knew I had to.

Skye: It's gone.

Pete: But it all hit. Like it all hit at once. So as someone

Skye: who likes seeing that money in your bank- Yeah

that must have been pretty painful.

Pete: Oh, yeah. See, that's how I have, like a certain- You've

Skye: made peace with it now.

Pete: Yeah, I've made peace with a certain amount of money that I just don't touch.

Skye: Mm.

Pete: And that goes towards the expenses of holding- Holding ... the portfolio.

Skye: Which is what I think every good landlord should do.

Pete: Yeah.

Skye: Because it's, yeah, it's not your money. It belongs to the property.

Pete: Exactly. It does. What were you thinking I was gonna say?

Skye: I think th I have been pushing for this particular episode to be recorded for the better part of a year, and I'm so glad that we're [00:23:00] actually doing because I've wanted to ask you these questions just when we're just hanging out, but I wanted to save it all for the podcast.

But maybe the perception around investors was what I thought you were going to say. Yeah. Similar to what we were talking about before with having that rent increase conversation when you're the landlord. You're not like that at all, but I think there is the perception that all landlords are like this.

'Cause all of my good landlords-

Pete: Mm

Skye: ... are facing the same perception, and it's not fair, quite frankly, 'cause I find the majority are really good, and it's the 10% that ruin it for everyone. So I wasn't sure if that was it, because you're generally quite a private person, and so you toot your own horn, so to speak.

Pete: Mm.

Skye: You're quite humble about your achievements, and I think you should be prouder. So, I thought that was gonna be your response.

Pete: I reckon it would've been before the business.

Skye: Yeah. '

Pete: Cause you know when you start posting stuff, you have to just ignore people's opinions.

Skye: Absolutely.

Pete: So I feel like-

Skye: We've got tougher skin- Yeah ... 'cause we've weathered the storms.

Pete: Yeah. You get it more than me, but you just don't care what people think. But that is a big thing, though. Like, I think investors definitely cop it. Most of [00:24:00] them-

Skye: Mm

Pete: ... I shouldn't say only own, but the reality is most own one or two.

Skye: One, yeah.

Pete: I think it's like, 90% of investors own one or two.

Skye: It's huge, yeah.

Pete: And most of them are good.

Skye: Mm.

Pete: It's just, again, like in any industry. And some

Skye: of them can be misguided though, too.

Yeah. They're actually good people. They've just received bad advice.

Pete: They don't know any better.

Skye: Yeah. Yeah. Exactly. So I think it's just that really small quota that kind of give it all a bad name, and it seems to be that the minority of people who have an opinion about this have quite a loud voice.

Pete: Yeah. Well, they tend to be the loudest.

Skye: Yeah.

Pete: So,

Skye: yeah. Yeah. So no, I just thought maybe-

Pete: Mm ... '

Skye: cause I've been pushing for this information for ages, so I'm so glad that we got to record this, and thank you for being so open about your journey. I'm sure that we will do some follow-ups to this, but this is a series that we want to continue on with and we wanna have real stories from real investors who've actually done the And hopefully you can find their lessons relatable and learn what not to do. And we look forward to inviting more investors on the podcast. If you [00:25:00] enjoyed this episode, please feel free to share it on socials, tag us, and if you've got time, we'd love it if you leave a review on the podcast platform you listen on.

It really helps to get the word out there. We'll see you next week