In this episode we’ll hear about Dinh buying his first property at a very young age, then realising he hadn’t accounted for all the possibilities that come with buying property after the initial purchase. We’ll find out what happened to that property in Ermington and what became of its dilapidated tennis courts, discover how he came up with the idea for Futurerent, and how he got it up and running after several years of run-ins with red tape. We’ll also unearth the nitty-gritty ins and outs of Futurerent and how it can provide you with the upfront funds you need, fast.

Timestamps:
01:00 | He Worked His Way Up
05:49 | A Day in The Life
07:27 | The Old School Yard
11:53 | In Hindsight...
16:24 | Seeing Through the Noise
20:20 | Purpose-Built
23:46 | Keen as a Bean
26:42 | He Wanted a Solution, So He Created It

Resources and Links:

[00:04:53] I ended up basically selling it a couple years later. Made a little bit of money, but nowhere near what I should have. Next buyer came along, subdivided the block, made a fortune. And that's where I probably learnt one of my first lessons, where you just shouldn't sell. And it also was part of the inspiration for Futurerent. 

 

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 founder and CEO of Futurerent, Godfrey Dinh. We’ll learn more about how he came up with the marvelous idea for the innovative business, along with how he finds creating wealth for himself more satisfying than working with one of the biggest investors in real estate on the globe.

 

 

Dinh realised that there weren’t any services for property investors that gave them the ability to access their future rent, so he jumped on it. He spends his days solving investors’ cash flow and investment needs.

Godfrey Dinh:  

[00:01:00] I spend a lot of time talking to property investors every day, trying to help them with their investment goals, and whatever their needs are. I actually got started in property with actually studying property. So I studied property economics at UTS. And I was lucky in that my dad actually had a friend who was a developer and he'd studied the same degree and put me in contact with him, and I was talking to him about what to do. 

[00:01:33] I was really interested in property, because I think in property you just have so much more control, there are less 'ifs' that are out of your control. And you could be really strategic about what it is that you want to do. So I chose to go into the field. And I was lucky enough to start working at a company called Investec, in an area which was set up to basically lend money to property developers, and also invest in anything from shopping centers, to residential developments, office buildings, a whole range of things. 

[00:02:11] So I was quite fortunate to start my career there and have some really interesting learnings. And then I moved on to work for Deutsche Bank. And I worked my way up to Vice President of commercial real estate there. So I was really lucky in that I could cut my teeth with the bank's money, and also working alongside some really great clients, who had some really great experience. So over that time, I invested about $1.3 billion into property deals for those organisations. And a lot of quite active investment property strategy, so really buy, fix, sell type of stuff. 

He jumped on to the property ladder at that point, and realised he may have bitten off more than he could chew.

[00:02:53] I remember the first investment property I bought was actually a house on a big block of land in Ermington in Sydney. And it actually had an old, dilapidated tennis court at the back of the property. And I thought, well, it'll be great, I should be able to— under all the planning controls— subdivide it into effectively two houses. 

[00:03:26] But I started very young, I bought my first investment property when I was literally just out of university, and I really emptied my bank account to do it. I had enough money for the deposit, for the stamp duty... but I don't even know if I really thought about all the closing costs that I had to come up with. And then I looked at my bank account, and I was like, 'Wow, how am I going to actually fund a subdivision? How am I actually going to pay for the council DA lodgement fees and all that sort of stuff?' 

 

[00:04:04] It was really interesting in that I had these two parallel experiences, working for some really big organisations, investing lots and lots of money in property, but then my own personal experience as a property investor, where I realised the banks, they do a good job of helping you buy the property, but after that you're on your own. The banks, they generally don't help you with your cash flow, with your investment needs, they’re not gonna help you generally, in an easy way, buy the next property or with capital to invest in whatever strategy it is that you want to do with your investment properties.

[00:04:46] With that property in Ermington, I made probably a pretty big mistake in that I ended up basically selling it a couple years later. Made a little bit of money, but nowhere near what I should have. Next buyer came along, subdivided the block, made a fortune. And that's where I probably learnt one of my first lessons, where you just shouldn't sell. And it also was part of the inspiration for Futurerent. 

Tyrone Shum:  

He currently spends his days talking to property investors, as he likes to have those conversations himself with his clients.

Godfrey Dinh:   

[00:05:49] At the moment, there's a lot of people and I can get into some examples with you later. But a lot of people, for instance, trying to make the most out of their investment properties. So with the banks, generally capping people out at a certain level, when they get to a certain number of investment properties, you really need to, I think, be quite deliberate about making sure your investment properties are working as hard as they possibly can for you. 

[00:06:19] We've been doing a lot in the renovation space. So helping a lot of property investors finance their renovations on their investment properties, renovating their homes, those sorts of things. Obviously, we don't get involved except for basically just helping people with the capital component, and actually giving them access to their rent early, so they can make their next move. 

Tyrone Shum:  

Dinh grew up in Cherrybrook in northwest Sydney, and started his schooling at Dural and Normanhurst Boys’.

Godfrey Dinh:   

[00:07:27] I think I had a very middle Australia regular upbringing. My dad was an engineer. Mum, after she spent a bunch of time looking after us, she actually dived into real estate herself and worked for a little bit as a real estate agent. And they really got ahead by buying— they weren't big investors— but buying a couple of investment properties. And I think I saw how much of an impact that had on their ability to meet their financial goals. And that was a big part of the reason that really got me interested in property. 

 

[00:08:24] I actually went to primary school in Dural. So if you know that, it sounds like you know the area pretty well. It was beautiful. It wasn't as built up as what it is today. We were probably one of the first families to move out that way. But it was suburban paradise. Kids could just go and ride their bikes and spend all day out, come home, and your parents would have nothing to worry about. So it was amazing. 

Tyrone Shum:  

After finishing high school, he didn’t waste any time and jumped straight into working on his career.

Godfrey Dinh:   

[00:09:53] I finished school and straight away I started just working. I got an admin job working at the place that my dad was working, just doing some admin sort of stuff before uni started. And then I started a degree, actually specifically in property. There's a degree called Property Economics at UTS, which is a really interesting degree. It's got a really good combination of the economics around property in terms of demand, supply, demographics, those sorts of things. Then, as well covering off on planning, urban planning, and those sorts of things and finance and development construction. So a really good, broad range of experience. 

[00:10:45] It's a four year degree at UTS, but the first two years, they have that full-time and the second two years actually try to place you into different property companies or different organisations. So second two years, I was able to start working for Investec. And that's how I got that job there. And I was still a kid, I think I was 20 years old when I started there, and it was a huge learning experience and a huge, huge growth opportunity. So I was very fortunate to be given that. 

Tyrone Shum:  

He learnt a lot working at Investec that he’s taken with him and helps him with his property journey today.

Godfrey Dinh:   

[00:11:53] We did a fair bit in the development space. And one of the big things that really stood out was in development when people are buy, fix and sell, you often— five years later, after you finish the project— look back and go, 'Wow, should I really have sold that? Imagine if I'd actually kept that, what the value of that would be today.' So I sort of think that— especially when you take into account the fact you pay tax and all of these sorts of things— unless the market really moves in your favour, you'd be quite lucky generally, to make, say, a 20% return on a project. 

[00:12:37] And then you spread that out over that period of time that it takes you to do the project, and take into account tax and all of those sorts of things. So your returns sometimes aren't as good as they would be if you'd just actually just kept the thing. So I think that's one of the first principles that I really took out was, if you can— buy, fix and keep. And then actually think about how you can achieve the same outcome and get the same amount of money, but through a financing strategy. 

[00:13:12] So I think I was lucky in that working at these organisations, within their property, investment and finance areas, allowed me to really understand the capital side and the finance side of the equation really well. And it's more about recycling your capital, and building a sustainable portfolio that can sustain itself. And you're achieving the same outcomes, you're just not paying tax, and you're able to grow and you're able to continue your journey. So definitely a couple of big lessons for a young kid. 

 

Coming up after the break, we hear about Dinh’s time working at Investec during and after the GFC, and an old adage he lives by...

 

[00:17:41] There was some phenomenal buying opportunities, really, for us from 2010 to 2014. And the market started to really heat up again. 

 

He shares the moment that led him to realise sometimes bigger doesn’t always mean better... 

[00:20:25] One of the things that stood out to me was, working on those bigger deals sometimes can be less interesting and exciting than what you can do yourself, and how you can create wealth through property yourself. 

 

He delves further into how Futurerent came about.

[00:22:34] Often, the tenants need to pay their rent a year in advance. But that's just not something that's available for everyday property investors. So I figured, look, it should be as simple as that. It should be as simple as a choice. 

 

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

 

 

Tyrone Shum: 

Dinh delves into the ins and outs of Futurerent, and has a tip for listeners that he usually saves for property investors.

Godfrey Dinh:   

[00:14:54] I think it's about thinking creatively about your financial solutions. And that's one of the interesting points that we're actually helping a lot of people with as well, where instead of having to sell, they can actually use their future rent to buy their next investment property. So actually one tip for your listeners, which we don't actually have on the website, but we actually give property investors— where they're using the money to buy a new investment property, we actually give them up to two years’ worth of rent up front. Which is quite considerable, that can really be the deposit for your next place.  There are a lot of interesting options out there. But you can, I think, do so much better if you just stick to that buy, fix, keep type of approach. 

Tyrone Shum:  

Dinh worked at Investec from 2006 to 2010, which can certainly be described as an interesting time in property and finance.

Godfrey Dinh:   

[00:16:24] Obviously, there was the financial crisis in 2008, and a lot of that really trickled through in 2009 [and] 2010. So there were some really interesting buying opportunities, which when I moved across to Deutsche Bank, we did quite a lot of. I think buying at that time, a lot of properties, people couldn't really see a way out, or they couldn't really see a scenario where there was going to be growth again. 

[00:17:00] And I think, in those situations, it's about really being able to look through the immediate noise and the immediate fear. And see, 'Okay, well, where is value? Where can we actually see that we've got our downside covered?' And if we work out what the worst case scenario is, we think that, at that time we were buying things below replacement cost. So your downside is really, significantly covered. And then you work out what your upside can be on some reasonably conservative assumptions. And you can do really, really well. 

[00:17:41] There was some phenomenal buying opportunities, really, for us from 2010 to 2014. And the market started to really heat up again. It's interesting, that whole 'Be greedy when others are fearful and fearful when others are greedy', is a really, really good rule to live by. 

[00:18:34] There were, for instance, quite a number of shopping centers, those sorts of things. One of the things we did with one of our clients, Blackstone, was we bought Top Ryde Shopping Centre, which had basically just completed, but they got the tenancy mix completely, completely wrong, and all the rents were overcooked. And so there were a huge number of issues with the centre that needed to be changed and turned around. So yes, some really, really tremendous buying opportunities. 

[00:18:35] Then we did a reasonable amount in the residential development space. A reasonable amount in office, a whole range of things, really. 

Tyrone Shum:   

[00:19:25] And you mentioned Blackstone, because I have heard of Blackstone— that's an American company that has also got, from memory, a book they wrote as well, too, isn’t it? It’s quite a large fund?

Godfrey Dinh:  

[00:19:38] Yeah, they're a really big US private equity firm. One of the biggest investors in real estate globally, if not the biggest, actually. 

[00:20:02] They're huge. They own a lot of real estate here, industrial, a whole range. 

Tyrone Shum:   

[00:20:08] Wow, I wouldn't have known, but that's the thing. People don't really talk about that in the media and stuff, because it's sort of behind the scenes and big players that only play those kind of things, I guess. 

Godfrey Dinh:   

[00:20:20] Yeah. So some really, really good learning opportunities. But I guess one of the things that stood out to me was, working on those bigger deals sometimes can be less interesting and exciting than what you can do yourself, and how you can create wealth through property yourself. And also, how we can help people. And so that's really what my focus now is, is really Futurerent, and helping property investors with their journey. So we really wanted to create something which was purpose-built for property investors, and is a better alternative to refinancing or dealing with the banks. 

[00:21:09] It's interesting. I think, if you look at the process, like, a lot of clients we talk to now, they don't seem to get prioritised by the banks. So they might spend up to two months going through a refi process and ultimately seeing it fall away, or end up not pursuing it. I was staggered when I saw that something like more than 50% of refinance applications don't actually proceed. 

Tyrone Shum:   

[00:21:43] Wow, that's crazy. That is nuts.

Godfrey Dinh:   

[00:21:45] So it takes a really long time. People have to provide a ream of paperwork, documentation. And it was seeing how difficult that experience was for myself, and how easy it should be, that was a big part of the reason that why we started Futurerent. It sounds like a novel concept, getting a whole year's rent upfront, but on the commercial space, and I think this is something which most people don't realise, but a lot of commercial tenants actually get their rent paid quarterly, six monthly, sometimes even annually. If you look at specialised assets like service stations, where there's a lot of capex or a lot of money that often needs to be spent on the property. 

[00:22:34] Often, the tenants need to pay their rent a year in advance. But that's just not something that's available for everyday property investors. So I figured, look, it should be as simple as that. It should be as simple as a choice. When do you want to get your rent? Do you want to get your rent paid annually? Or do you want to wait for it to trickle in? 

Tyrone Shum:  

He was super eager to get his foot on the property ladder as soon as he could, which compelled him to buy the property at Ermington.

Godfrey Dinh:   

[00:23:46] From my own parents' experience, they made so much more money through property than they did through their own earnings, in terms of their day jobs. And I think property is something that is really like that. It's quite an entrepreneurial thing where people are going out and trying to invest and achieve their financial goals independently. 

[00:24:10] So for me, I was just super, super keen to buy something. And that property particularly appealed to me because it was a big block of land. The market hadn't really moved a lot at the time that I bought it, it would have been 2008, thereabouts. So it was decent timing. I think timing is so important. It's really interesting where the situation that we're in at the moment, there seem to be areas that you look at and prices haven't really moved much in five [or] six [or] seven years. And then there are areas where in the last 18 months, it's gone absolutely nuts. So it’s something that I think people really keep an eye on obviously, and where you see that and when you start to see things getting below replacement costs starts to look really, really interesting.

Tyrone Shum:  

The house was built in the ‘70s, when the suburb looked very different to how it does today.

Godfrey Dinh: 

[00:25:27] It had a big old tennis court on the back, which was largely derelict. I think it would have been maybe one of the earlier houses that were built there on the big blocks of land. But at the time, there had been some other properties that had started to be subdivided, but generally not. It generally wasn't at the point where it would be super profitable, necessarily, to do it. You sort of need the cycle to sometimes catch up to a point where it'd actually make sense from a land value perspective. 

[00:26:07] I sort of had, I guess, part of the right ingredients, in terms of I had the right idea. The timing was probably pretty good. But I just sold it a bit too early, and they didn't have the capital to execute on the plan. 

Tyrone Shum:  

His original idea to subdivide it fell through, and after some time with it being negatively geared, he sold it and stumbled upon the idea for Futurerent.

Godfrey Dinh:   

[00:26:42] Well, at that time, interest rates were probably double what we're paying now. So there was a little bit of a shortfall every year. So it's not like now, I guess, where properties are largely positively geared without really even having to try. So I guess I was probably a little bit negatively geared. I sold because I wanted to buy another place. That ended up doing, still, reasonably well for me. So it's hard to point all the blame at selling. 

 

[00:27:30] But I wish there were other solutions out there for me at the time, like Futurerent, where I could have— instead of having to sell because I wanted to pull cash out— been able to extract money through other means. It's crazy. I think, on our numbers, something like the average property investor on our numbers has about $170,000 in equity tied up in their investment property. And that's a big number. 

[00:27:59] And it's not as though property investors earn more than anyone else. On our estimates, they're earning the same as everyday Australians, but they're trying to manage the household budget, the investment property expenses, other investment goals, all of these sorts of things. And how do you actually achieve that when you've got $170,000 in equity tied up in your investment property. It's tough, right? 

Tyrone Shum:   

[00:28:26] Yeah. Plus sometimes you have to actually make the shortfall as well, too, because sometimes you just don't have that. But you've just got equity in there, you can't access easily. 

Godfrey Dinh:   

[00:29:30] Absolutely, absolutely. Yeah, the banks just make it so, so difficult for people. And I guess we sort of realised there's nothing that's purpose-built for property investors.

Godfrey Dinh’s story continues in the next episode of Property Investory. We’ll hear what motivated him to start Futurerent...

 

[00:04:37] Why shouldn't you be able to get it paid early? And if people are doing that in the commercial world, why shouldn't residential and everyday investors have that same ability to get paid their rent early?

 

He divulges how it’s an option for every property investor...

[00:12:26] The only thing we really care about is that our clients are paying their mortgage. As long as you've been paying your mortgage, you're not late on your mortgage repayments, you're eligible.

He shares the philosophy he lives— and buys— by.

[00:25:15] And in real estate, for example, the only way you're actually able to see through all the mess and buy well when everyone else is fearful, is by engaging that type of philosophy. 

 

And that’s next time on Property Investory.