In this episode Xia shares the ups and downs from his young life and the beginning of his property journey. Looking back fondly on his uni days (where he spent as little time at uni as possible) and a little less fondly on his early corporate career, Xia’s story is full of entertaining tangents that always end in wise words. His inspiring tale reminds us that it’s never too late to chase your dream, regardless of how many false starts you had in the beginning— and that when the unexpected happens, it’s never your first suspect.

Timestamps:
00:56 | He Works Hard for the Money
04:04 | From Shanghai to Chinatown
08:51 | Pick Me, Pick Me!
12:55 | Want It, Gotta Have It
17:22 | It’s Never Too Late
20:30 | The Corporate Ladder Was Getting Unsteady
23:31 | 39 Properties by 39
27:52 | Setting His Sights on New Heights
29:42 | Get Your Tin Foil Hats Out

Resources and Links:

[00:11:56] Even in high school, and then a little bit later in uni, my parents would be like, 'Look, save your dollars, when you can buy something, go and then buy something.' So that was always in the back of my mind. I would say it would be when I was 20 [or] 21. That's when I bought my first property. And it was the worst investment that I ever did. 

 

This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

 

I’m Tyrone Shum and in this episode we’re speaking with Michael Xia, owner of Mortgage Channel. We’ll hear how he manages to run his company and buy 39 properties over a decade. How the surprising number of years it took to complete his degree, and we look back on the days when he had so much of a good thing he didn’t know what to do with it!

 

 

Tyrone Shum:
Xia has been investing for the last 10 to 15 years, but he’s only just getting started. A married man, father of one with another on the way, he manages to find time to run his company, spend time with his family, and fulfil his property dreams as he goes. However at the moment, much of his days are spent chained to a computer, approving loans!

Michael Xia:   

[00:00:56]  I think in the current climate, a lot of investors want to buy yesterday, just with how much the market is going up. So it's just wake up [at] seven [or] eight o'clock in the morning, I'm stuck at my desk probably until eight or nine o'clock in the evening. And then we just repeat that. And at the moment, we're working six and a half days a week. So it's pretty full on.

Tyrone Shum:   

[00:01:16] That's full on, man. And you've got a family yourself as well. How do you juggle all that from home?

Michael Xia:   

[00:01:21] It's hard. It's hard. I think one of the ways is to have a lot of support. So we do have help around our little one. My missus works from home too. So she helps in managing the property portfolio. So she assists from that side. But I think kind of the key consensus is there's not enough time in the day. And that's been the case for the past couple of years.

Tyrone Shum:   

Xia grew up in Shanghai before moving to Australia when he was seven years old. His family chose to relocate to Sydney, where he grew up and has spent most of his life.

Michael Xia:   

[00:02:19] I would say your typical Asian upbringing in Australia. So as a kid [I was] definitely pushed towards schooling academically. The idea was: Okay, get a good schooling, go to uni, find a good job, and have a family. I mean, that was basically kind of the life plan. 

  

[00:02:42] And [I] followed pretty much a lot of that up until a couple of years into [working in the] corporate [world]. And then I just realised this wasn't for me. And funnily enough, we actually met when I was in my corporate role. So we knew each other way before even all of this property stuff started. Which I think is pretty interesting.

Tyrone Shum:   

Xia and I have known each other for a long time, even pre-property investing! From a budding investor buddy to where he is now is a phenomenal story.

Michael Xia:   

[00:03:24] When we first knew each other, property investing was an idea. It was, like, an inkling of something that can work. And I know over the last 10 years, we've caught up either on the podcast or just as friends. And I guess it's good now in 2022 to kind of reflect back on that 10 year journey and just kind of see how it’s unfolded. 

Tyrone Shum:   

As he moved from Shanghai to Sydney at just seven years old, his memories from Shanghai are hazy, but he does remember snippets of his early childhood there.

Michael Xia:   

[00:04:04] Just your typical childhood memories, playing with friends. I do remember that move from Shanghai to Sydney quite clearly. I remember first coming to this country, the language struggles, getting bullied somewhat at school mainly because you couldn't communicate. 

  

[00:04:23] And when we moved to Sydney back then we actually moved to a suburb called Eastwood. So for those Sydney listeners, Eastwood is essentially Chinatown. One half is Korean and also one half is Chinese. 

  

[00:04:35] But I can tell you in 1991 in our grade, there [were] only two Chinese students. And there was no Chinese store in Eastwood whatsoever. So you think of the Granny Smith Festival and kind of everything that that kind of holds, that was kind of Eastwood back then. It [was] completely different to what it is today. And coming to a new country, having to learn the language, that was definitely a struggle in the first couple of years. And I do remember that quite vividly.

Tyrone Shum:   

He stayed in Eastwood throughout his childhood, where he went to Eastwood Primary until he finished his primary education. Before he knew it he was essentially working in a factory, but not the type you’d expect.

Michael Xia:    

[00:05:47] Started there from year one, went all the way up to year six. And I was lucky enough in year six to get into James Ruse, which is one of the more academically gifted schools in Sydney. 

  

[00:05:59] And from that environment of both from the teachers and also from parents, and also the peers, getting good grades at school was really the top of the goals lists. They call James Reese a UAI factory, you basically just go through, and then at the end of it, you get a good UAI. 

  

[00:06:21] And I would say in terms of high school, that was really the only thing that you were kind of taught. And going to uni, it was just one of those things. I think some kids know what they want to do in life. But I had absolutely no idea. And just did not know what I wanted to do later in life. And I guess that's why I picked commerce for my undergrad in uni, mainly because it gave the broadest possibilities of getting a job. 

  

[00:06:52] And the other thing I remember vividly is in high school, in terms of your day, your after hours school, in terms of what you're meant to do, it was very regimented. And when I went to uni, the lecturer didn't care if you didn't do your homework. They didn't care if you didn't go to the tutorial. 

  

[00:07:12] So I think for the first two and a half years of my uni career, I probably only went to less than maybe 15 classes altogether. We have common friends around uni, and it was just, like, a continual joke that I would just never go to uni. 

 

[00:07:33] And to put it into perspective, I did commerce, which is a three year degree— it took me eight and a half years to finish just because I failed so much. I kind of went from this ultra strict high school environment, where academically that was everything. And then when I went to uni, I just lost control.

 

[00:08:26] I didn't think a strict schooling can be good, but— I don't know if there's any kind of truth to it— but the number of people from our school that actually didn't do that well in uni, the percentage was actually quite high. Just because you came from this environment that there was so much pressure to perform, and suddenly, then you're let loose in uni and just don't know how to control yourself. 

Tyrone Shum: 

He credits his casual job as his saving grace. While it started out as a casual role, he soon proved his worth and ended up having more money than he knew what to do with— at the time!

Michael Xia:  

[00:08:51] I started off working in market research, [I] had a casual job there. And then what happened from casual was then the hours just started to increase. Basically, the team manager that was working in this market research company will go to all the students scheduled for the shifts, and the other students will be like, 'Oh, I've got assignments to do. I've got exams to study for.' 

  

[00:09:15] And then they just kept asking me [if] I want[ed] more shifts, and every time I just put my hand up. So getting paid casually as, like, an 18 year old, going to uni and paying them to teach me whereas I was at work, I was learning about market research and getting paid for it. I was just like, 'Work is so much better than going to uni!' So I just spent all my time working. 

  

[00:10:04] As an 18 year old, getting paid $150 [to] $200 for a workday, it's awesome. You felt like you had so much money that you just couldn't spend it if you wanted to.

Tyrone Shum:   

He stayed at his first company, AC Nielsen, for seven years. When he was 25 he jumped to a rival market research company called Lightspeed, and stayed there until he was 30, when the property bug bit him hard. 

Michael Xia:   

[00:11:41] I guess the property journey starts off quite young for me. And I guess, coming from an Asian Chinese family, that notion of investing or buying a place is kind of instilled on you. 

  

[00:11:54] I do remember even in high school, and then a little bit later in uni, my parents would be like, 'Look, save your dollars, when you can buy something, go and then buy something.' So that was always in the back of my mind. I would say it would be when I was 20 [or] 21. That's when I bought my first property. And it was the worst investment that I ever did. 

  

[00:12:19] When I speak to clients now, I reflect back on that, and I share my story, just so that they don't rush in and then buy a property just as a whim. So kind of to paint that story: It was actually at a friend's party that we were playing poker one night. And one of my friends that has no background in property investing, knows nothing about it, but just goes, 'Hey, look, there's an off the plan being built across from Epping station. I think it's got really good potential. I'm thinking of buying something in that complex. Why don't you have a look at it?'

 

[00:12:55] Knowing nothing about property investing and thinking, 'Oh, actually, this might be a really good idea', I went the very next day, got shown through the showroom and I saw the sauna, the gym, the pool. And it was a very good sales technique. And I'm like, 'Man, I've got to get into this building'. 

  

[00:13:13] So I basically turned around to the person on the spot there and asked him, 'What is the cheapest unit that I can buy to get into this complex?' And he goes, 'The bottom level studio, you can buy for $340,000'. 

  

[00:13:29] And to put things into perspective, this would have been about 2002 [or] 2003. $340,000 back then in Sydney could have bought you a house in Blacktown. And then this was a 39 square metre shoebox in Epping. And lo and behold, I signed on the spot. 

Tyrone Shum:
While he was quick to sign, he was also quick to forget, which led to some interesting discussions with his friends.

Michael Xia:  

[00:13:53] Because it was off the plan, and they weren't going to build for the next two years, I just kind of parked it away. I didn't even think about it. The next time that it kind of came to fruition was when they were going, 'Hey, looks it's only about two or three months until settlement', which was two years later. And I do remember at the time, I of course hadn't saved the money for the deposit up until then. I was borrowing from friends just to pay for the deposit. 

  

[00:14:16] And ever since holding that property, that property today if I had to sell it over almost 20 years [later], it's gone from about $340,000 to maybe $500,000 for [a] studio in Epping. It's very difficult to rent out, like if you go through Epping, there's just high rises after high rises. We've had to drop the rent continually. COVID hasn't helped in that regard. If I had put the same $340,000 in a house in, say, for instance, Western Sydney, that house would be worth easily $800,000 to $900,000.

  

[00:15:21] The key lesson I get from that is there's many units in Epping that have done phenomenally well. Houses have done phenomenally well. But the key part comes down to research. I bought at the top of the last Sydney cycle, for something that was way overpriced, did not do my research. And even to this day, like almost 20 years later, I'm paying the penalties for it. And it's like every quarter, they still increase the strata rates on us. It's, like, crazy for a studio, I think the strata is over, like, $1,500. It's a joke. 

Tyrone Shum:   

Despite his parents urging him to buy his first property, they weren’t exactly investors themselves. However, they weren’t novices when it came to property either. 

Michael Xia:   

[00:16:12] They [had] a traditional kind of mindset where the property is for where you live. So they moved from Eastwood, we bought a two bedroom unit. I think back then they paid, like, $100,000 for it. Then they sold it for, like, $130,000, to move into a duplex in Oatlands. 

  

[00:16:31] And then they sold that. And each time they bought and sold, they literally bought and sold at the same price. And this was, like, you know, five [to] eight years later. And it's unfathomable to even speak about Sydney in that light, because everyone just thinks Sydney, a couple of years, and you'll double your money. 

  

[00:16:48] But during those times, it wasn't like that. I mean, the interest rates were more than 10%. My parents didn't get the timing right, and each time that would almost buy at a peak and then sell at a low.

 

[00:17:07] Then we moved from Oatlands and then we moved to Glenwood after that. And again, they kind of bought a little bit higher. And, like, they always knew to buy properties. But it was a very different concept in terms of investing as we know investing today. 

 

Coming up after the break, we delve into how easily influenced he was in the early days…

 

[00:18:53] I then purchased a unit in Macquarie Park, an older red brick style of unit. This would have been 2010. And again, it was just by whim, it was no research whatsoever. 

He shares the reason why not knowing what you want to do early on isn’t the be all and end all…

[00:20:52] And that was the tipping point for me to explore other options. So be it running your own business, be it investing in shares, be it investing in properties. And I never really knew what I wanted to do. 

We hear about one of his early investments brimming with drama and conspiracy theories.

 

[00:28:59]  It settled, and the settlement was really close to Christmas. So it would have been, like, a week out from Christmas. And this property needed work. It was in very, very poor condition. 

 

And that’s next. I’m Tyrone Shum and you’re listening to Property Investory.

 

Xia’s parents may not have gotten the timing right in the beginning, but once they saw the results of their son’s hard work, they felt it was time to try again. 

Michael Xia:   

[00:17:22] When I did get into investing quite heavily, they also saw how it worked [and] the numbers behind it. So later in life, like in their 50s, then they started getting into property investing. They hold now more than 10 properties and have done very, very well from it. 

 

[00:17:41] So it also shows from their journey that it's never too late to get started. I've got clients coming to me and saying, 'Hey, I'm in my 40s. Is it too late?' And I think to my parents, they were in their mid to late 50s and they still did very well out of it.

Tyrone Shum:  

He was still working full-time in market research when he got into property investing, where every day reminded him how badly he wanted to complete his career transition.

Michael Xia:   

[00:18:36] I bought that [first] property when I was quite young. And then it would have been four or five years later [that I left my corporate role]. And I was just not knowing what to do with money. But I'd be working a large number of hours, saving, putting into the bank account, and it would just slowly grow with time, not really knowing what to do. 

  

[00:18:53] I then purchased a unit in Macquarie Park, an older red brick style of unit. This would have been 2010. And again, it was just by whim, it was no research whatsoever. Again, it was another friend— you can tell I was easily influenced back then! But his parents actually owned four units in that complex. 

  

[00:19:17] And it was a funny story because every time I'd go and pick him up for touch footy training, he would give me a different address. He'd be like, 'Pick me up from unit 39'. Next time it would've been, like, unit 45. And then the following time was, like, unit 52.

  

[00:19:31] I was like, 'What the hell is going on? Are you going in between all of these units?' And he goes, 'Actually, my parents own all of these units and they just rent them out to uni students and they do pretty well from it'. And I was like, 'Oh, that's actually really interesting, that's a great idea'. 

  

[00:19:46] And then just lo and behold, it would have been a couple of weeks after that conversation, two units came up for sale from the same owner. I went with Dad and we basically gave what the agent was asking for and then bought both those units. So my parents bought one and then I bought one. 

  

[00:20:03] And being an older style unit in Macquarie, over time it's performed quite well. I'll put a kind of a caveat on that— since COVID, it hasn't done too well! But all units in Sydney haven't done too well. But up until then, it's been really, really good for us. So that was the extent of the research on the second one. 

He’d spent close to 10 years in the corporate world when he started to feel the accumulation of its effects.

Michael Xia:  

[00:20:30] Being young, I loved corporate, I loved going to work, learning, climbing the corporate ladder. But then I think everyone gets [to] a point in time where they start to get jaded. There's only so many nos, and so many 'Sorry, you're not going to get your bonus this year', that eventually it starts to take its toll. 

  

[00:20:49] I will say it was probably about seven [or] eight years into corporate that I started to wonder, 'Hey, look, every year, I've been getting a 2% pay increase on my $70,000 [to] $80,000'. I was looking at where that would take me. And if I even fast forward that 10 [to] 20 years old like, 'Frick, this is not going to give me the lifestyle that I wanted'. 

  

[00:20:52] And that was the tipping point for me to explore other options. So be it running your own business, be it investing in shares, be it investing in properties. And I never really knew what I wanted to do. And it was almost a lightbulb moment in that sense when I started to come across a number of property investors. There was one that stood out by miles ahead of the others, and as some of your listeners will know, he's called Nathan Birch. 

  

[00:21:40] Back then, he would have been only 26 [or] 27. And he was posting these YouTube videos of him renovating these fire burnt places in Western Sydney for like $30,000, turning them into properties that would get positive rent. And he had 75 properties at that point in time. 

  

[00:22:02] To be honest, I thought I was doing quite well with two properties! And I'm like, 'Great, this guy is younger than me with 75 properties. And he didn't even finish uni!' I'm like, 'What the frick!' And that sent me down a rabbit hole of just researching properties. And that was really the turning point. 

  

[00:22:18] The more that I learnt, the more that my eyes were opened up. I was very fortunate to meet some people in my journey that have helped me immensely. One of them being my mortgage broker, Rolf, who mentored me. He basically then kind of opened up this world of possibilities in terms of 'Yes, if you buy the right types of properties, structure it in the right way, you can do quite well from it'. So I would say it would have been from the second property onwards when the light bulb moment switched for me.

Tyrone Shum:   

Now in his late 30s, Xia is reaping the rewards of his years of hard work and determination. He looks back on his philosophies and goals he’s achieved, and plots out a few more.

Michael Xia:   

[00:23:31] That lightbulb moment, to put it specifically, happened in 2013. That's when I really got addicted to property investing, was living and breathing property investing. So in 2013, I had two investment properties. So fast forward nine years, 2022, me and my wife currently hold 39 properties. 

Tyrone Shum:   

[00:23:52] Awesome. How old are you now, if I may ask? We're not revealing too much?

Michael Xia:   

[00:24:02] I'm turning 38 this year.

Tyrone Shum:   

[00:24:05] That's awesome. It's almost like 39 properties when you're 38 or 39.

Michael Xia:   

[00:24:10] The funniest thing was when I was starting out, I had this goal of being financially free by 33 because it rhymed. And then part of that was trying to buy 33 properties by 33. And that didn't eventuate, I didn't get that far. 

  

[00:24:28] And then the next goal after that was 36 by 36. And I'll remember it was, like, one month before my birthday, and I was like, 'Frick, I have to buy a property'. And we finally did buy that property, so I hit 36 by 36. So now I've got a feel after that it's gonna be a lot easier.

Tyrone Shum:  

Xia is never short of stories to tell, and while most of them are impactful and inspiring, some are more the stuff of investor nightmares.

Michael Xia:   

[00:25:24] I will say that a lot of the character building situations happen early on in your investment journey. And also, if I'm working with new investors, looking to build their property portfolio, it's that early portion that's really important. 

  

[00:25:44] Mainly because even when I was building the property portfolio, you'll see Nathan Birch with 75 properties, you'll see other people on Property Chat, which is another forum that I learnt so much from. A lot of the people that I met in my journey was through Property Chat, and they would have, you know, 20 [to] 30 properties. But in the back of my mind, I'm like, 'Of course you could do that, you were buying in western Sydney when the property prices were $150,000 to $100,000. Of course, you would do back then'. 

 

[00:26:15] So early on, whenever you got a setback or something didn't quite go your way, then that would really affect you. So I'll give you an example of that. This would have been my fourth purchase, and to kind of put it into context, in 2013, [the] Sydney market was starting to go up. 

  

[00:26:38] I still remember vividly going to Mount Druitt, going to auctions and for a three bedroom fibro shack— and it was punched in, auctioned off by the Housing Commission— they were selling for about $240,000. I even did building and pest [inspection] on all the auctions that I attended, which is something that I wouldn't do today because it's just throwing money down the drain in some instances. But I decided not to buy those because two months earlier those properties were selling for $210,000. 

  

[00:27:15] Hindsight is a beautiful thing. Hindsight should have told me that that would have been the perfect time to buy. But I'm like, 'Hey, look, this is crazy. This is overheated. $30,000 in two months?! Where can it go from here?!' 

It was here that he moved away from looking in Mt Druitt and western Sydney, and focused his sights on the regions surrounding the city.

Michael Xia:  

[00:27:35] I'll remember reading Property Chat, back then it was called Somersoft. And during that time when they analysed previous cycles, every time Sydney went up, a year or two later, the satellite cities went up. So your Newcastles and your Wollongongs would then start to go up after that. 

 

[00:27:52] So I remember one weekend I'd drive up to Newcastle, then the next weekend I would drive down to Wollongong and I was just searching for properties. And the property market back then in Newcastle was so dead. It was like, you would go to an open home and it would just be so out of the blue for the agent to see someone from Sydney drive all the way to Newcastle to buy. And then I'm like, 'Why do you even want to buy here? It doesn't go up in Newcastle'. 

  

[00:28:20] I bought two properties. One for $220,000. It was a three bedroom study on 600 square metres in Cardiff. And I also bought a two bedroom on 800 square metres in Gateshead for $195,000. So, incredibly cheap. To put it into perspective, I'll be honest, I don't know the prices of Newcastle very, very accurately right now, but they are around $700,000 to $800,000. That's when they've been selling for. 

  

[00:28:50] The hard part of in terms of the setback that I experienced is a Cardiff property that I bought. It settled, and the settlement was really close to Christmas. So it would have been, like, a week out from Christmas. And this property needed work. It was in very, very poor condition. The tenant that was living in there before was a hoarder. So you literally needed to get a skip bin there just to fill it with all the rubbish and then remove it. 

  

[00:29:24] So when I got the property it needed a lot of work. But because it was over Christmas, I could get no tradies in for a good month and a bit. And during that stage I was getting phone calls from the next door neighbour telling me that, 'Oh, someone's been trashing your property'. 

Tyrone Shum:
As a landlord, those are the kinds of words that send shivers down your spine. Although he had no idea what he was in for, he wasn’t going to let anybody mess with what he’d worked so hard to earn.

Michael Xia:  

[00:29:42] Every couple of days they would give me a call and go, 'All your windows just got smashed in'. Or, 'I heard someone breaking into your home'. And it was giving me sleepless nights. And I would go out to the property and each time I just see another $5,000 or $10,000 more worth of repairs. If you wanted to I could send you some photos of everything being punched in, but it was, like, crazy. 

  

[00:30:05] And I didn't know who it was. And I mean, at one point, I thought it was a builder that I had hired. I thought he was doing a dodgy on me, because sometimes he would report the damages to me. I thought he was going to the property, smashing in some wars and going, 'Oh, Michael, your renovation bill just went up another $5,000'.

Tyrone Shum:   

[00:30:24] Just so he could charge more. Well, that's crazy.

Michael Xia:   

[00:30:26] And I'm like, 'What the hell is going on?' And then we drove up there, every time we got [a call] we'd drop our stuff, me and my dad. I would grab him in the car and then we'd drive out and things like that. We'd go to the neighbours, give them a box of beer and just go, 'Hey, look, can you please look out for this property? See if you can catch anyone'. 

Michael Xia’s story continues in the next episode of Property Investory. We’ll hear the thrilling conclusion to the Cardiff tale…

 

[00:31:37] But through that whole experience, the sleepless nights, you're going into property investing not knowing if we could work. And then there was points of time where I was like, 'Frick, maybe I should just sell this property [to] not have to deal with the headache. I don't even know if this could work'. 

 

The interstate weekend adventures that nearly put an end to his investment career before it could even start…

 

[00:06:52] It was okay if you found a property. But most of those trips were fruitless. And I guess it was just really wanting to quit corporate and having that goal in mind that really kind of pushed you ahead. 

He demonstrates how a suburb’s reputation can influence your perception of it, but why it’s important to do your own research and come to your own conclusions.

[00:09:19] Me and my dad went to the hire car place, I think it was called Alpha Cars or something. And the guy at the counter goes, 'Where’re you going to?' And I'm like, 'Logan'. And he just made this face and goes, 'Why the hell you going there?' And I'm like, 'To buy properties.' And he was like, 'Are you serious? 

 

And that’s next time on Property Investory.