In today’s episode, we’ll hear about Heritage’s life changing moments, such as contracting medically induced bacteria. As well as this, we’ll explore how bumping into an old friend at a high school reunion kicked off his career, the importance of asking questions and the strategy that has led him to success - option deals!

Timestamps:
3:00 | Growing Up
4:43 | Discovering New Passions
6:55 | The Push to Change
8:52 | The Value of an Old Friend
16:55 | Why Property Investment?
20:00 | Everyday Lessons
23:40 | Success Stories
31:50 | Finding Your Strategy
38:40 | Having a Good Mindset
40:24 | Shaping Your Journey
45:40 | Everyday Actions That Aid Success

Resources and Links:

[13:19] The gastroenterologist sort of said to me, at that point, you're very lucky, because between 6% to 30% of people that contract what you had actually die. So, that was probably the lightbulb moment for me is that there is a tomorrow and everything's going to be okay, but what do I learn from the experiences that I've had?

 

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 the director of Vista Group and Associates, Mark Heritage. We’ll delve into his journey, including how he came to direct multiple successful businesses and we’ll hear about his life changing moments, such as a marriage breakdown and contracting medically induced bacteria that propelled him forward.

 

 

 

In his everyday life, Heritage is kept busy by helping investors achieve their property investing goals…

 

[0:25] I'm the director of VISTA Group and Associates, proprietary limited and we have two businesses. We have Vista Property Buyers and we also have YouGrow Investments. So, they're two completely different business but linked to property, directly and indirectly.

 

[1:34] So, in terms of what we do, the mainstream business of ours is linking investors looking for high growth on their capital, with small to medium enterprise needing money fast. So, effectively with peer to peer lenders, just creating opportunities for investors to grow their capital base securely, in a different way, or a way in which they may not even know that is possible. That's a VISTA Group and Associates. Now, a lot of our, sorry, that's our YouGrow Investments. So, that's in terms of the YouGrow Investments, a lot of people ask, well, why would they come to us and not go through mainstream finance? 

You know, we're dealing with directors and the credit impaired businesses that need money fast, different purposes as to why banks won't lend such as ATO debts, etc, etc. So, we screen what, you know, qualified mortgage brokers certified in that manner and also licenced real estate agent. So, it's very important for us to conduct their due diligence, to ensure that the borrower has the right information. We are dealing either under the code or outside the code, depending on what purpose the lend is for, and what entity is actually looking to borrow the funds. So, it's just a creative way to make money and deliver upon a, you know, an opportunity, I suppose, where a borrower needs money fast and can't source it through mainstream avenues.

 

Let’s take a step back in time and discover where Heritage grew up…

 

[8:35] I'm originally from Bendigo, Tyrone, in central Victoria. Beautiful little town going through major growth and has gone through major growth recently, and will continue to grow for the next foreseen 30 odd years. You know, the current population that in the areas around 120,000, they're forecasting near 200,000 people within 30 years. So, that's significant infrastructure change and service changes required in that area, such as you know, similar to Geelong and Ballarat and these sorts of regions as well.

 

[9:11] So, that's, that's a bit of my background. So, educated in Bendigo, and then moved to Echuca, and lived there for 18 years, worked for a global giant and worked my way through the organisation.

 

Heritage’s role in this organisation was very different to what he does today…

 

[11:50] We're in manufacturing, fast moving consumer goods. So, very dynamic environment. And, you know, it does take its toll and when you manage, managing such a large group of people with the dynamics of that type of environment, that's where I sort of said, I lost the desire, I lost the passion for what I was doing, not the people but the process. So, I just needed to discover a little bit about myself, which we'll go into later on. But also find something of a niche that I can really specialise in and support, grow myself, but also add value and add some services to other people to, you know, that may or may not be in a similar situation to where I was once upon a time.

 

 

After 10 years at this organisation, Heritage lost his passion and knew that he had to make a change…

 

[9:31] I was looking for some alternatives to continue to develop myself and educate myself to one day be able to leave that organisation and do something myself that I'm really passionate about. And, you know, I think from that point, once I made that decision, the rest was pretty easy. And what I find a lot of people struggle with is they get to a particular point in their job or in their work as an employee, and they think of all their current financial situations and how hard it can often be to make that change and what's involved. Although they see other people do it, they think, well, the safety net for me is to just stay where I am, and just accept that that's part of my life. And that wasn't, wasn't me. That's not who I am. I'm all about personal development and growth.

 

[10:20] So, I went out and I pursued a vendor finance background. I pursued, you know, upskilling myself in renovations, upskilling myself in property, getting my head around finances, all these sorts of things. And I quickly developed a skill set where, you know, at the end of the day, I put together vendor finance transactions, option deals, joint venture deals, all often in the one deal within itself. So, you know, how I catapulted in or springboard into that was surrounding myself with a very close group of people that I trusted. Now, a great question I often get asked is, well, how did you get to that point? And it's a fantastic question, because everyone has a different answer. But for me, it was asking questions of individuals. And for me questions are the answers, and I'll continue to ask questions every day, because that's how I grow and learn. But that was pretty much for me, linking myself within networks in those fields of property, and continuing to dig down and drill down to see what people have actually done. See what they're actually doing today, and see what they're planning to do for the future. And what their actual motivation in wanting to do something with me actually is. Yeah, that was a few key components for me.

 

 

It takes a lot of courage to make a career change. For Heritage, life gave him the push that he needed…

 

[12:50] All our stories are different, but mine was sort of, you know, I'd been through a marriage breakdown. And that was one thing. And then within three months, I contracted a medically induced bacteria that almost killed me, within three months. So, I had a massive sort of six month period where I was in intensive care, looking at liver transplants, these types of things. And I was a very fit, athletic sort of guy that always prides himself on doing the right thing and training every day. And, you know, the gastroenterologist sort of said to me, at that point, you're very lucky, because between 6% to 30% of people that contract what you had actually die.

 

[13:25] So, that was probably the lightbulb moment for me is that, there is a tomorrow and everything's going to be okay, but what do I learn from the experiences that I've had? And from that moment, moving forward, knowing once I returned to full health and living a healthy lifestyle every day and being connected with myself, I knew everything would be okay, because I have a lot to offer. I have skill sets that I've developed over a period of time through multiple renovations and me and my previous business partner, we've completed 30 odd renovation projects combined. And you know, there’s a significant amount of experience and skills that you develop not just in doing the renovations and outsourcing and those types of things, but it's the negotiations, it's the sourcing, it's knowing what questions to ask of selling agents or vendors directly. These types of things. So, that's where I had the value from the clients as part of this to property buyers and you know, I work with a very select group of individuals right now that want me to source and secure property and negotiate the, you know, the terms for them, but I'm looking to expand that aspect from a business as well, as continue to grow the YouGrow Investments aspect from the peer to peer lending perspective.

 

 

Let’s explore Heritage’s property investing journey and how it started…

 

[15:12] I was still working full time, in a job that I lost the desire for. So, I'd started to, you know, just talk to people. And you know the person I connected with at the time was an old school colleague, we met at a reunion, and we sort of just had a discussion around, you know, where we're at in life and what had transpired and what really, you know, the next chapter could look like. And, you know there's a lot of alignment there, and synergies within what we were both doing. So, we embarked upon a journey together for a period of time, you know, almost five years and, and that sort of led us through to the point where, you know, we would upskilled ourselves in renovation, vendor finance, to the point where we obtained our, you know, real estate agent licence.

 

[15:59] Then we went down the private lending aspect of, you know, we were stuck in a project once where we purchased the property at auction and had commitment from the bank to give us the money. And then we found that instead of them giving us 80%, to do what we needed to do, they're only going to give us 65%. So, we were 15% short. So, we thought creative hat on, what are we going to do? So, we sourced a professional  investor and got a private lender in for a six month period, gave them a 15% secured return. And they were stoked because we turned that property over and sold within four months, and still had their 15% locked in. So, it was an even better return for the investor.

 

[16:45] But, you know, that's what leads you down one path to sort of think well, okay, if I'm in a liquid cash position, or if I've got cash sitting on the sidelines, instead of sitting in an offset account, saving the 4.5% to 5% interest, switch the mind to say, well, how can I actually get that money to work for me rather than save for me? And what can I do with that securely? Even if it's not the full amount, even if it's a portion of that? How can I do that? Or what can I do with it? So yeah, that's what sort of led us to the point where we thought, well, how can we do that? What do we need to do? So, we went out and got our cert four in finance and mortgage broking and conducted multiple transactions. And, you know, we've done over 40 odd business loans over the last 18 months, and that's been a fantastic experience and growth opportunity for us. And now, that's a pure focus of mine, along with the next phase of, or chapter of looking to grow the VISTA Property Buyers business, as well.

 

Heritage’s businesses have now been operational for some time now.

 

[17:58] It did take us a little while to establish ourselves and get active in the marketplace. So, we were conducting our own renovation projects, and that was providing, it proving difficult to focus on growing our business while we were knee deep in projects and on tools, most days, if that makes sense, Tyrone. So, it was pretty tough to grow our brand and our position and our identity. You know, whilst we were, whilst knee deep in burning chunks of money without focusing on how can we provide cash flow and build cash flow position and still focus on those chunk deals as well?

 

With an increase of competition regarding business loans, Heritage finds it crucial to establish long-term relationships with clients…

 

[3:19] There's always more and more competition coming to the business loan space as time goes on. There's, a massive niche and an opportunity there, particularly with APRA. Tightening lending policy and banks accordingly, looking to reduce the risk or the portfolio size for investments. So, it's making it tougher for developers and people to get money from mainstream sources. So, there is a growing market, looking to provide business lending. For us, it's a matter of working with repeat clients that know our process, and also understand that we are looking for them to actually grow from this scenario, not just our investors. So, it's all about you growing as an individual investor, or entity and it's all about the business growing. So, we can, you know, establish that long term foundation relationship, that's very important for us in terms of our business.

 

To be able to have funding for investors, Heritage’s business uses their own cash…

 

[4:31] We're in a good position that we can put forward our own cash into investments. But that's a side note, and the mainstream reason for us getting into this space is to, is that we saw benefit in putting money securely into those types of investments and securing it against real estate as either a first or a second mortgage position registered against title. So, we thought, well, why don't we open those sorts of opportunities up to investors looking for good solid growth securely - and we're talking anywhere between can be 10% to 15% per annum. Now, you know, as you're aware, Tyrone, you know, the banks are offering, you know, 2.5% maybe 3% per annum.

 

[5:12] So, it's just something else out there without actually owning property directly where you can control property. Because if you go into a transaction, and you're looking to lend money for a six month period, and everything's cruising along until the expiry comes, and for some reason, the borrower doesn't pay the money back, we have options up our sleeve, because we're registered against title, we have some control over that asset. So, although we continue to work with the borrower, and we're not debt collectors, we need to uphold our position because it is a business transaction. So, that's where we have the control aspect to secure our locked in position of that set return. You know, and obviously beyond that six month period, if things don't transpire or settle on time, we have a default rate that kicks in for the investor as well. So, their money is continuing to work for them until settlement occurs.

 

The return on this type of funding is usually higher and, so is the risk involved…

 

[6:22] Some people love to get out there and throw everything they got at everything and, you know, others are more conservative and like to assess the risk, conduct their due diligence, and do all those sorts of things that we put forward, you know, for the investor, for consideration in every transaction will conduct the due diligence and put a proposal to the investor. And, you know, it all depends on what you are comfortable with at the end of the day in terms of your risk profiling, and a lot of people don't even know that.

 

[6:57] So, it's for us, it's basically questions of the answer. So, just digging a little bit deeper into their situation and understanding their investment strategy and why they're looking to do something as such. Because, you know, a lot of people may come with $10,000, they might may come with $100,000 or a $1,000,000. And we'll assess that and say like, hey, based on, you know, say for example, your $100,000 position, what are you comfortable with putting forward in that? And they might say $50,000 or $80,000? And we might say, well, okay, let's for your first transaction, or your first investment opportunity, why don't we revise that down to 50%, of what you're comfortable with. Or out of the 100, let's say $30,000 $40,000. So, we can build some confidence and assurance in the process. So, you understand that moving forward and see the benefit that it's actually adding to your, to your life, rather than throwing the $100,000 in and really not fully understanding the process and not conducting full due diligence. You know, we're trying to educate the investors as well to be in a position where they've got full control over their, not just their assets, but also their liquid cash position, because that's what really can help them compound to a position of, you know, potential retirement or growth a lot sooner.

 

We’ve heard about how Heritage got involved with property investment. Now, let's explore his why…

 

[19:49] I suppose for me, it's about, I'm very much a numbers person, you know, I'm not a motive with, with property. You know, to me, it's just a vehicle or a money tap that can be generated, you know, multiple ways. But for me it was about well, what are the numbers tell you? And I started putting numbers together, and that's a lot of my background in analysis type work and continuous improvement. So, for me, it was a no brainer, really, when you get to the point where people are looking at property because 90% of people I find are so emotionally attached to certain deals. The first question you asked was okay, do you have finance pre approval? Or what are the numbers telling you? And the answer is no and no, or yes and no, there's just no alignment.

 

[20:37] So, for me, it was pretty straightforward that, you know, if you're purchasing a property, you know, the traditional method, you know, factoring in your stamp duty, factoring in, you know, your capital gains tax, if you're flipping property, you renovation costs plus a bit more, because it's always going to eventuate. And then, knowing your target market and exit point, is very important, because people get so fixated, I find on, well, what are we going to pay for it? You know, for me, it's about working the other way, seeing the potential in the property every time you inspect it, to see where you can create or manufacture that growth to say, okay, if I do this or if I do that, how long is it going to take me? Who's going to be required? And how much money is going to be required? And at the end of the day, what may that look like in a sales price? And then build all those calculations in and work backwards to say, okay, for all that and to make a chunk of cash out of it that I'm happy with, whether it be 10% or 20%, or 30% profit, what does the entry price need to be? And if I go into that, if I go north of that, at any stage, through negotiations I'm jeopardising and putting at risk, my position or my profit.

 

[21:49] Because, you know, it's very, very easy to say, okay, we'll buy it for this without actually knowing that endpoint based on proven market statistics and comparables in that area. Because if we're in something for 6 to 12 months, we don't know what's going to change in that period of time. Market could grow or could retract, we just, it's just the unforeseen sort of thing. That's where, for us, the option deals have been fantastic. The joint venture deals have also been fantastic, where you're working with a partner that can bring something to the deal, not just because you like that person, or you see what they do. Sometimes it's good to learn but you also always really want to ensure that whoever is involved in the joint venture transactions are actually adding some form of value or skill set that you don't have. And that's been pivotal to all our, all our joint venture deals that we've conducted.

 

Within every investment transaction, Heritage believes that there is a valuable lesson…

 

[24:54] I think if you look back through the different transactions, you'll find multiple if you choose to find them. A lot of people choose not to, but in every transaction of ours, has everything gone to plan? No, it hasn't. Have some worked? Yeah, absolutely. And have some not? Absolutely. Have we lost money out of a transaction? Yes, we have. So, it's about, these are early days. So, we've built the process and understanding and change the mindset and all these sorts of things to a point now, where you are basing everything on logic, and absolutely nothing on emotion. And, you know, early days, when I was getting started, I was looking for property, I found something with a big backyard. I just went ahead and decided to do things and, you know, this is going to be good, you know, let's look at purchasing something like that. Because in time, we should be able to do this, that and that the other. You know, without really looking at precedents in the area, without really looking at the council plans for the zone, these types of things. So, very important to understand what the council is doing, what the vision for the region is, over what period of time, what's actually happening, what's forecast to happen, and these are the types of dynamics we look at when making current investment decisions ourselves and for clients, is to see what's actually driving the market.

 

[26:32] There's some deals that were put together based on, as I said, purchase on emotion where you purchase a property under a joint venture arrangement, and then all of a sudden the zoning or council regulations don't allow you to do what you thought you could do. So, not conducting thorough due diligence. And, you know, then, once mindful of that, turning the property over, and not losing a lot of money from it, but by the time you pay your stamp duty and pay your agents costs on exit within a period of time, and if the market hasn't gone up as in this case, you can often be $10,000 to $20,000 out of pocket. You know, we're talking properties in the $300,000 to $400,000 range, not $3 million to $4 million range, otherwise, it could be totally different.

 

[27:20] So, those experiences early days, were very important. You know, even renovation projects where, you know, you expect to be, you know, spending $10,000 quickly turns into $30,000, because of all the unforeseen, you know, problems with the laundry, the water, the plumbing, the, you know, the termites in the wall that weren't identified, these sorts of things. So, that just diminishes your project to walk away with, you know, maybe $5,000, after six weeks of hard work, as opposed to $40,000. So, there's been all those types of experiences. And, you know, that's why now when representing clients from a VISTA Property Buyers perspective, and we're buying property, you know, the main thing is not just the vision and the strategy, or sourcing and securing the right property, it's about understanding, firstly, what condition is the property in? So, getting professional building and pest inspection. That's paramount, getting an electrical inspection, based upon the building inspectors report. And then being able to determine well, okay, we know that that's clear. We know that the plumbing the situation, everything is right. There's nothing scary. There's no moisture around. We're comfortable moving forward to submit an offer but without that building and pest inspection, it creates some uncertainty, and you know, if you're investing with uncertainty, to me, it's purely emotive driven. And that just doesn't make sense and that's only through experience, you learn that.

 

Although there are lessons to be learned in every investment, that doesn’t mean that they’re not a success. Heritage shares one of his biggest property investment successes…

 

[29:08] The main one I can sort of think of is the property that was featured in the Australian Property Investor magazine, back in November last year. It was a property where high level we made net $130,000, which was secured within five days of starting the actual project. Up until that point, the negotiations took some time. So, we had a dilapidated property, a joint venture partner got in touch with us, we build a plan together. And we were bringing something to the table in terms of finance and negotiations, and they were bringing the sourcing of the property to the table as well as being able to add value with managing trades and doing the work required on the property. So, you know, going back to that -  we built a plan based on an inspection report based on opinions of sales agents in the area. Because we weren't familiar with, or I wasn't familiar directly with that area. So, I was relying upon not just my joint venture partner, but also conducting my own due diligence and engaging other professionals that could help me in making a decision with what would be best in this scenario.

 

[30:19] So, at the end of the day, we expected to be in this thing, and it was in terrible condition. And the photos in the article actually demonstrates that, but we look to just clean the basics of it up, leave the full renovations, painting, cleaning, polishing the floorboards, replacing kitchens, everything to the next person coming through. So, we wanted to sell it as a renovator's delight. Now, we got, so that was going to make us about $80,000, or sorry, $50,000 within two weeks of cleanup work. That was, that was our target, which is fantastic. Absolutely, you would not be disappointed with that. So we got into the project and once we cleaned everything out and filled two container loads full of stuff that was inside and outside of the property, we realised that structurally, the property was very good. We realised that it wasn't going to cost us much time and much more money or capital to actually fix this thing up ourselves.

 

[31:25] So we change tact. And we thought, well, okay, we've actually had a private lender come into this option deal under a joint venture. So, it was a joint venture deal between us and the joint venture partner to secure the deal. We put it under auction with the vendor or the landlord at the time. And then we had a vacant position, and we engage the moneylender to provide the funds required to work on it, and that, at that point, it was going to be about $10,000 to $15,000 to clean it all up. Skip hire, trades, you know, commercial cleaning, those types of things, and wages. And then we found out that partway through, two days later, in fact, that we'd filled up two skip loads and we were at a point where we could extract more than this and if we spent another $10,000. So, you know, we had the potential to get up to, you know, to $10,000 to 20,000, maybe even slightly more. So, we engage with our private lender, had a discussion around what we wanted to do. They increase their position, they were happy with the outcome and further to that we had conversation with the next door neighbour because there was no running water or power on site. So, we touch base with them say, look, we'll give you some money. Is it okay if we ran a cord over the back fence? Blah, blah, blah, we expect to be here for two weeks. They were more than accommodating because they wanted the property fixed up because it was an eyesore in the street.

 

[32:56] So, we'd, we'd been down that track and cut a long story short, within two days, the people from next door had come in and had a look at the property, although it was unrenovated at the time just cleaned out. They said we're interested to buy the property. So, it was fantastic for us that that property was under contracts, within five days of actually starting. Now, I said to, I said to my JV partner, what would you be happy with? And he sort of said, look, if we can get to $210,000, now before, you know, we'll renovate it and finish the job off, but if we can get that, we'll be stoked. So, you know, I went to work, and I sort of done my due diligence further, spoke to some local agents around, you know, fully renovated sales price for that type in that area. Give me some comparables, look at what we need to do to get it to that level, and they come back at $240,000 etc. And I thought well, that's pretty good.

 

[33:51] So, what I negotiated with the neighbours is that if we could lock it in under contract at $230,000, the deals done, how do they feel with that? And basically, they said, let's do it. So, we got the contract preparation done, and I went back to the JV partner and said, look, you're happy with $210,000? You know, I think we can get a little bit more than that and he said, well, $1,000 or $2000, you know, be fantastic. I said, look, we've got under contract $230,000. The deals done. You know, it was, it was happy days, because you know, we've gone from offloading this thing for $150,000, to a renovator who would go in and do all the job. You know, we've extracted another $80,000 out of this project for $10,000 spend and an extra, an extra two weeks of work. So, that's where you get back to your point, you know, was there an aha moment? Yes, absolutely. Plans can change, sometimes for the, for good and sometimes, you know, not so good. But this was a real moment where if you've got a plan stick to it, yes, but be open to suggestions and be open to different ways of looking to do things. If you see an opportunity and you're not sure how to go about it, ask someone. You know, always seek out help that where people are professionals that you can trust can add some value. Take some photos, put it on Facebook groups, do these types of things, because you may be cutting yourself short.

 

Coming up after the break, we’ll explore Heritage’s investment strategy…

 

[9:12] An option for us has worked quite effectively because it gives us control of the asset without actually owning it.

We’ll delve into what was holding Heritage back and how he changed his mindset…

 

[0:26] Because I think we all ask ourselves, well, what's holding you back.

We’ll hear about the personal habits that contribute to Heritage’s success…

 

[19:11] And for me, it's my anti-ageing method is high intensity, interval training and, and I train every day.

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

To find success in property investment, it is important to find a strategy that works for you. For Heritage, a key strategy is granting options…

 

[9:12] An option for us has worked quite effectively because it gives us control of the asset without actually owning it. So, we're avoiding stamp duty capital gains tax, these types of things from a transaction. So, legal title doesn't transfer from us, sorry, from the vendor to us, unless we exercise that option. Now that option can consist of, you know, it can be a 30 day option, it can be a 60 day option, can be a six month 12 month option. Whatever timeframe you define, and negotiate with, with the vendor is the actual option deed timeframe. So, there will be an option fee. For us, there needs to be a deed. So, you know whether it's $1 or whether it's $1,000, depending on the situation of the vendor, and once again, it just questions are the answers, you'll, you'll understand the motivation of the vendor.

 

[10:08] A lot of times we work with agents that aren't too sure of the situation of the vendor, because they don't ask the questions. They're just there to sell the property and that's okay, that's what they're employed to do. But when you get to the level of understanding the motivation, sometimes there's some flexibility around getting the result. And dealing with the vendors directly is a really powerful method or strategy for investors looking to do something in property because it can be quite creative. And whether it's an option, or whether it's a joint venture deal with the actual vendor or looking to sell the property, it can be as simple as you know, what we've done in the past is instead of an option deal, we go in and do a joint venture with the actual vendor, who's looking to sell. We'll spend our money, our capital will protect that with a caveat and basically, upon sale of the property, we've increased the value to a certain point.

 

[11:04] So, above a certain level, which will agree on a price before we start, as an example, it might have been $300,000 before we started our renovation. We'll spend a certain amount, say in this case, $10,000, and the property sells for $340,000. You know, the vendor is getting their first $300,000. They're paying the actual agents commission, and the marketing costs. We've put in $10,000 and we've profited $30,000, from the transaction. So, that's how the joint venture can work and secured against the actual title. But the option is also quite powerful, as well. So there's a number of ways in which you can do it creatively with very little money down and controlling the asset without actually owning. But the option is definitely a powerful method. You need to be mindful that different states have different laws around options and stamp duty and those types of things. So, that's up to the individual to consider at the time or seek advice out. But for us, it's always been the best method or strategy to invest, because often we've done it with none of our own money and particularly in the case of the API article, that was none of our own money, that was all invested cash put into the deal. And all it was, was our negotiations and our time required to extract that outcome.

 

After discovering the strategy that works for him, Heritage continues to use it in many of his deals.

 

[12:40] We're actually negotiating one right now in Bendigo, with a distressed client. But what I'll do is I won't go through the finer details of that one, because that's not, that's not complete. But if I go back to the Adelaide, South Australian deal we completed [at] the end of last year, it was an option deal where the client was in distress, it was an unencumbered property. So, there was no debt. So, no mortgages, which is fantastic, because you're not dealing, you're not dealing with anybody. It's just council rates that were behind schedule, and a property that was in desperate need of some attention. Now the agent come through, we're just going to get his opinion on selling the property as is. He said, 'I can't sell it as is, it's too dilapidated. The place needs to be cleaned. And I can't even sell this as a renovator’s delight, because there is no running water, there's no power, there's no anything like that'. So, we needed to get, get it to that point.

 

[13:40] So, we thought, well, what's the timeline required to do that, you know, maybe two to four weeks. So, we thought if we get in and do that, in two to four weeks, how long is it going to take us to sell? We thought, well, if we option it, maybe a month marketing campaign 30, 60, 90 day settlement - within six months, we're going to have an outcome for everybody involved. So, we decided to put forward a six month option. We had that signed off by the vendor with an option fee of $5,000. And where we use the option fee as a good example of negotiations is we understood the situation of the vendor, we knew the motivation and what they needed there and then. And that was to move out find another property so they could rent, pay their first month's rent, their bond, etc, etc, get back on their feet, furniture, etc.

 

[14:33] So, we thought, well, how much is going to be required to do that? So, we did some sums, we work with the vendor and thought, well, if we put forward $1,000, is that going to get them to where they need to get to? No it's not, but we found that there was more bargaining room on the option price to purchase the property if we increase the option fee upfront, which ultimately comes off the option price. So, we thought if we were offering you know, say $1,000 initially, on a $65,000 option price - we thought, well, if we increase that option, price option fee to $5,000 upfront, that gives a little bit more negotiation room potentially, to see how open they are. All of a sudden, we come down to $60,000 option price, which is just building more and more profit into the transaction for us. Now, this is, uh, you know, this slightly below land value, but we're factoring in demolition costs, everything like that. We're not just focused on land cost, as is, you know that, the building's got to come down, someone's got to pay for that. So, we're not paying a premium for a dilapidated property, just based on land value. It's got to be all cleaned up. So, that may cost us $20,000, $30,000 in some cases. We don't know what's involved. So, we'll negotiate all those aspects into whatever deal we're looking at, at the time, if those types of demolitions are required.

 

 

Throughout his career, Heritage has found success. However, at the start of his journey he faced a challenge which he believes holds many people back…

 

[0:28] Because I think we all ask ourselves, well, what's holding you back. And a lot of it's, it's the values that have been instilled in us from a young age, it's the colleagues at work that tell us that, you know, it's not a good idea. It's, it's the parents in the back of your mind sort of saying, well, you know, don't do this or don't do that. So, it's all those aspects coming to the fore now, where it feels like, although we may be educated, and we are surrounding ourselves with good people, that we feel paralysed, and we actually haven't taken a step where we feel like we're taking a step, where we made, you know, a phone call, to have a conversation with an expert. But the next stage is the fear, where we're reading too much through newspaper articles, we're listening to the media, we're envisaging, you know, a major catastrophe that's going to chew up and take all my money, these types of things.

 

[1:18] So, I think it's just that the paralysis and fear factor that, you know, definitely stops people from doing anything, although they may be in a position to do so. They're the ones that look back and will realise in 12 months time that there may have been a correction, there may not have been a correction, and what opportunities have they missed. So, definitely having the right mindset and being positive through that, to realise that there are opportunities in every marketplace, you've just got to have the right people on board and you've just got to trust in the process and continue to ask the right questions to be sure in your own mind that this is a journey that you need to start, if this is, if this is what's important to you, and your future and your family.

 

 

Heritage pushes the importance of talking to the right people and asking questions.

[2:30] There's a lot of boot camps, there's a lot of seminars, these types of things and you know, I went along to those. And at this stage, you know, for me, the best experience I had was actually going to those types of events and meeting people of like minds, and some were current students, others weren't, they were just there for the experience and seeing what they could benefit from. And for me, it was about asking current students the questions. It was about, well, what are you doing? What have you benefited from? What would you change about, you know, your decision to actually invest in this course? So, getting to their level and asking them as to why should I actually start this journey?

 

[3:17] And I found that a lot of people that were current students would say, look, you know, if I had my time over again, I wouldn't do it. Or I found that this, I was taken for a bit of a ride, or, you know, I didn't get the support later on that I expected, and it cost me $5,000. But then there's a lot of good stories where yeah, this is the person you need to speak to. You know, if you want renovation stuff, go and speak to Sheree Barber, conduct one of their courses, you know, associate yourself with like minds, get the templates, get the tools, these types of things - if that's what's important to you. If you want to do development type work, you know, Mark Rolton, these types of guys, there's plenty of people around and I'm not promoting any particular individual, because that's the course that I've done because that's not what I'm about. I think it's finding someone that you connect with as a mentor and then asking current students, asking for references, and asking them the questions as to where you are right now and where you want to get to and how you think that person can add value to your life. Because it's not just money that you're investing, it's time. So, you know, that's one thing that we cannot give back. So, let's do it wisely. Let's invest it smart and make sure that these people are actually doing something for us.

 

Throughout any stage of your property investment journey, Heritage encourages you to continue to ask questions, in particular, why?

 

[4:42] When I sit down with people and you know, this is the purchase property and they'll say look, my financial advisor suggested this and financial advisors are fantastic. Do not get me wrong. They are fantastic and they are much required in people who need to develop a plan or, you know, get to that sort of stage of their life sooner. But what I find is I always ask, what is your financial planner doing? Why are they suggesting that? You know, they're suggesting you put in your managed fund, why are they suggesting that? Have you outlined the benefits of what you're trying to do and where you're trying to get to? Same with your accountant, same with your solicitor.

 

[5:24] I always love to understand what they're doing today as investors, are they investors? Or are they not investors? And some may be and some may not be, and that's not good or bad. It's about getting an understanding whether they're actively in the marketplace today, as investors doing what you want to do? And if so, cool, what are they doing? And asking those types of personal questions, because I've had people come back that have asked the questions, and the financial planners have had, you know, their own principal place of residence and that's all they do. Now, when you're wanting to become an active property investor, for me, you've got to find like minds in that field of professionals that can help you and guide you and direct you.

 

Heritage finds questions to be so important because of a course he took in the early days of his career…

 

[6:31] Allan Pease is fantastic for asking questions. So, questions are the answers and I get back to that, because that's how I like to base my business now - to understand not just my clients and where they want to get to in their investment strategies, but also, through the process of acquiring property or putting transaction deals together, it's very, very important to be understanding why people want to do what they want to do, and why they coming to you, and why they wanting your services. So, through those types of questions on both sides of the coin, as either a buyer of property or an investor, or a borrower of money, it's questions or the answers. So, continue to ask questions and if you're not sure what type of questions to ask, be upfront with the individual and say, look, you know, I'm not so sure what questions I need to ask, but I need some help to try and understand this in my world, because as you can appreciate, we're all different. We all learn and relate to each other on different levels. So, is there something that you can help me with here? This is what I think I want to do. You know, is that something you can offer? And if so, how? And what have you done about your situation? So, I think, without confusing it all, I think the questions are the answers is very, very much how I live my life, to learn, develop and grow every day in what I do. And also very important for me conducting business with my clients.

 

When it comes to personal habits that have aided Heritage along his journey, he attributes meditation and exercise…

 

[17:39] We recognise but don't know how to change, or we start on the way to, you know, trying to modify that behaviour or that habit. Now, for me, it was a book called The Slight Edge - which really changed the way I started to think. And for me, the personal development journey is crucial to my growth and my learning and my development. Just personally, as well as in business. So, for me it's the morning meditation ritual where I get up, and I practice meditation. Because I do have to practice it, I'm no different to anybody else. It's not yet part of everyday, everyday activity for me, although I'm working towards that becoming part of who I am, or, as you mentioned, a habit. So, that's a work in progress for me.

 

[18:28] Just to clear the mind, get over that, get all the positive energy flowing through my body and that way, once I'm fully engaged, with every ounce of energy I can extract from the universe, I'm going to be the best version of me for everybody and anybody I'm associated with that day. So, post that, you know, it's getting straight into the work mindset. And that can be you know, following up emails, documenting my list and just following through on things, making sure that everything's in control. Now, beyond that, it's you know, for me, high intensity, you know, people say to me you look good for your age, and I'm 42 years of age and I feel as fit as I am when I was playing professional football back as an 18 year old.

 

[19:11] And for me, it's my anti ageing method is high intensity, interval training and, and I train every day, or most, mostly mornings, with the balance of night time sessions at F45 in Northcutt. That's really my outlet where I can just get into the zone, really work hard on me and my body and my soul. And because I know that that is what is going to give me the best form of longevity in my life as well as a balanced diet of really good intake and really good input of vitamins and minerals and food. So, that's me in essence. I'm really passionate about health and fitness. I'm really passionate about people, you know, improving their current state, regardless of how good or how dire that is right now. But also just developing that positive mindset because once they do that, they'll see clarity and they'll be able to make some decisions which will catapult them into not just a better person but a financially better place longer term.

 

In a typical day, Heritage is excited to be helping others as well as investing into his personal development…

 

[20:41] I'm really excited today, because, you know, I've got up, I've done my ritual, I've done my meditation, I've, you know, been to a 9:30 gym class, I've got the opportunity to share my story and meet a fantastic person as yourself who's there to add value to other people's lives. I've got a client catch up shortly, with a guy that's really emotionally connected to this property, and I'm providing some logic around that to help develop his skill set and mindset around the biggest, one of the biggest investments people will make in their life. So, we'll have some lunch, and we'll talk about that. And we'll look at the pros and cons and, and the whys and the why nots. And you know, we'll develop a plan together. So, I'm really excited about shedding some light and adding value to someone else's life today. And, you know, just building tomorrow, you know, more clients and another meetings with new people. And that's what will help me grow, not just a personal development journey, but also the interaction with great people. And that's what I'll continue to source and investigate, you know, for many, many years to come, because I'm really invested in my future self.

 

Thank you to Mark Heritage, our guest on this episode of Property Investory.