Timestamps:
00:24 | Property Power
02:36 | The Personalised Approach
04:39 | It’s the Flexibility For Me
10:12 | The Impact is Real
11:50 | What Came First— The Property Market, or The Egg?
14:08 | Silver Linings
15:37 | Be Careful You Don’t Surf With Sharks
18:24 | Diversify Your Sources
22:31 | Looking To The Future

Resources and Links:

[00:11:55] I'm seeing people that are first home buyers that are renting in the eastern suburbs, or renting in Manly, in the Northern Beaches, that never even thought about living on the Central Coast because they needed to be close to their job. Now that's changed. Now they're like, 'You know what? For the same money, we can actually pay off our own property. 

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 back with Matt Sharp, founder and Director of Sharp Property Buyers. He shares his views on the importance of lifestyle, how he realised not everybody shares the passion he has for property, and why the property market can sometimes resemble your Sunday brunch.

Sharp has two aha moments where he realised the power of property investment.

Matt Sharp:   

[00:00:24] I think the aha moment with property for me, there was probably two. I think there were two things. One is the power of leverage. So for people that don't understand leverage, if I have $50,000 cash savings— I'll just keep it as round numbers here— I can buy an asset worth $500,000. Now, if that asset increases in value, let's just say it increases 10%, over two years, you've basically doubled your cash investment. So that property's gone up to $550,000, your initial input was only $50,000. So that to me was very, very powerful. There aren't too many investments out there that you can double your cash in two years now. Look, I'm excluding costs and fees and everything that goes in with that, but just for argument's sake, the power of leverage was a massive aha moment for me. 

 

[00:01:18] And the other one was understanding that rental income can pay down your debt. Okay, so that rental income is absolutely an addition to your salary. So if someone's paying you $30,000 a year in rental income, that is an addition to your salary, but it's basically for savings. Or at least that's the way I look at it. So those were the two things for me, and how you want to take advantage of one, leverage and two, rental income, is entirely up to you. But those are the two things for me where I'm like, 'Okay, this makes a lot of sense to me.'

Tyrone Shum:   

His strategy is different for every client, tailored to their unique wants and needs.

Matt Sharp:   

[00:02:36] Sometimes someone's really young, like our age, and they've got a really long time for investing. Other people will come to us, they're nearing retirement, they might need something with a shorter term, or with a shorter view. 

[00:02:48] But the basics of our strategy is we always buy in really low risk suburbs. Like, high performing, but low risk. And when I say low risk, I mean the areas that we're buying in are well established. We don't speculate on new developments or greenfields or anything like that. The inventory levels are very low. So there is a scarcity factor. We try and buy in areas that have very, very diverse economies. Population growth is obviously very important. 

[00:03:20] Affordability and lifestyle are other things that we take into consideration as well, because that's human behavior. What can humans afford? We want to think about that, and how many humans within the population can afford to buy at a certain price point? It's a big factor. 

[00:03:34] And then I think lifestyle is a big one as well. I guess it's a side angle that not everyone considers. And maybe it's something that I've been exposed to because of where I live here on the Central Coast. Now, I'm not saying that you should buy in a coastal suburb, but I just think lifestyle is really important. And I think there's been a huge example of that over the last sort of 12 to 18 months with COVID, or 12 months with COVID, that people are very focused on their lifestyles. Whether it be for a tree change or a sea change, we're just more aware of it. 

 

[00:04:13] So, I think there's those things that we take into consideration of course. We're always looking for areas that have healthy yields, good growth prospects, and also really low vacancy rates. So I guess that's all about risk management type of stuff. But in terms of price point, and where we buy, it starts anywhere between $300,000 and up to $1 million, just depending on your budget and your strategy.

[00:04:39] And then diving down on the actual asset. I think it's always important to buy something that people want to live in within those areas. Okay, so does someone want a three bed one bath, or they always need four bed, two bath, two car? Like, what does it look like within that area is something that we also check.

He reveals the number one thing he looks for when searching for homes for younger people, including himself. 

[00:04:39] For me personally, and I think for young people, I always look for sites that have development potential, like long term development potential. Can you put a duplex on the block? Can you put a triplex on the block? Can you maybe put a granny flat? Is it dual street access? All of these types of things are things that I think about when we're really starting to get to the pointy end of the search. And when we're working out what property is going to be suitable. 

 

[00:05:26] And I also always think that value add's a good little kicker, as well. And something to be mindful of whenever you're buying property. Because, look, you can manufacture your own growth in most markets. You're not always reliant on how that market's performing. And look, if you're savvy and you've got some skills, or maybe your friends have some skills, and they can go and add some value at your property or in your property at a discounted costs, or even at trade costs, that can add substantial value to your property's value, regardless of what's happening in that local market. 

[00:06:04] So I think it's just about being flexible with the asset that you buy in a really, really good area, because it just gives you more options down the track. That's why we don't buy any apartments or any units or anything like that. And I think the reason for that is because I just don't see a huge amount of flexibility in those types of dwellings. You don't have the opportunity to add substantial value, you can't extend it, you can't develop it, you can't divide the block, you can't really do anything. I'm not saying that strategy doesn't work, because I know a lot of people have done very well, but for me, I'm just trying to buy the most amount of land in the best possible location we can afford and that stacks up for us.

Tyrone Shum:   

[00:07:51] Do you also look out for potential where you can do subdivisions, where you can actually subdivide the block off and sell off the back or keep the front as granny flats and so forth? Do you find any of those type of opportunities?

Matt Sharp:   

[00:08:02] Absolutely. And I think it's important just for flexibility, for me as an investor and also for clients that we look at. If we're considering two properties, for example, one has flexibility with maybe long term development, or maybe you can hammerhead the block and, and the other one doesn't, and they're around a similar price point. You're obviously going to go towards the one that has that development potential. 

[00:08:26] And even in some cases, the one that has development potential might be a little bit more in cost. So it might be an extra $20,000 [or] $50,000 [or] $100,000. But it's just understanding the value and the opportunity to be able to do that development on that site compared to the other property. 

[00:08:43] And look, it comes down to the individual as well. I think younger people tend to be a little bit more hungry and have the foresight for different opportunities down the track, whereas I feel like someone a little bit older probably just doesn't want the headache, and they might edge towards something that doesn't really have that development potential. It's not necessary for them, and they're prepared to save a little bit of money on the purchase price as well. So it's just really coming down to the individual. But for myself personally, absolutely, I look for that stuff. Absolutely. Because I just want more flexibility in my assets. I think that's gonna put you in a good position going forward.

Tyrone Shum:  

COVID has changed so much for so many people, and so many places. The Central Coast, with its proximity to Sydney, is one of them.

Matt Sharp:   

[00:10:12] Mate, COVID has just accelerated the Central Coast market by 20%, nearly even 30% in some areas. The impact has been real. Look, where the Central Coast is located, we're about an hour and a half to Sydney, predominantly, a lot of the people here on the coast would commute to Sydney for office jobs and whatnot. And obviously, or probably most importantly, for those high paying roles, you'd have to commute to Sydney.

  

[00:10:45] The whole COVID impact, now everyone's on Zoom, everyone works from home, it's allowed everyone to be so much more flexible with their living arrangements. Now, what you can get for your money in Sydney— and I'm talking owner occupied stuff here— what you can get for your money in Sydney, compared to what you can get for your money here on the Central Coast, it's far more value for your money up here. It's incredible. So I think a lot of people have just decided that, 'Let's sell in Sydney, we don't need to have the two and a half million dollar property 10 minutes from work. I'm now working from home. Let's cash in and go and buy something on the coast, far more affordable. Live a more laid back life, a more enjoyable life.'

 

[00:11:26] They still have the ability to travel to Sydney. And in some cases, the clients are traveling to Sydney, one day a week, two, three days a week, but it's just not that full time grind that will wear you down over time. Now with that, obviously, again, with a higher owner occupier presence, prices are going up, which obviously is good for the investors in the area as well. 

The shift towards working from home has meant people no longer need to make that daily commute in a lot of cases, giving Sydneysiders the freedom to move.

[00:11:50] I'm not going to discriminate and just say those clients around the two, two and a half million dollar mark. I'm seeing people that are first home buyers that are renting in the eastern suburbs, or renting in Manly, in the Northern Beaches, that never even thought about living on the Central Coast because they needed to be close to their job. Now that's changed. Now they're like, 'You know what? For the same money, we can actually pay off our own property. Let's go and live somewhere that we can afford to buy, I'm only going to work from home a couple of days a week. I'm only going to be in the office a couple of days a week, work from home the others. Let's go and pay off our own property.' Like it makes total sense. 

[00:12:28] So I think COVID just accelerated what was coming over the next 10 to 15 years with technology anyway. But I mean, it's been fantastic for us here. And I know it has been for a lot of the other regional markets as well, I think it's good. And I was listening to the Property Couch a couple of weeks ago, and I heard a really good analogy, I think Bryce Holdaway mentioned. It's like the fried egg. Picture the fried egg as basically a property market. So you've obviously got the yolk in the middle where everyone wants to be. That's where all the high paying jobs are. That's where all the money is. Then you have the egg whites around that. And that's obviously just scattered for your regional centres. But it's no longer a fried egg. It's now scrambled eggs. So it's consistent. It's more consistent everywhere, right across multiple areas. So I thought it was a pretty good analogy.

Coming up after the break, Sharp shares the realisation he had as a child that fostered his interest in property...

[00:15:25] I was very aware that friends and their families owned their property. And they'd lived in that one house for 10 years, and their whole lives and all of that. So I was very aware of that from a young age. 

Where he turns now to get his information...

[00:18:24] So there's loads of information out there. And it's just about aligning yourself with people that maybe you can relate to or that you can get some good synergy with.

He doles out his own advice that everybody needs to hear.

[00:20:44] You don't buy a property and the world caves in, you lose all your money. It's not really like that. The sun still comes up the next day, and life goes on.

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

Tyrone Shum:   

COVID has definitely been an unexpected storm for all of us, but sometimes great storms come out with colourful rainbows.

Matt Sharp:   

[00:14:08] I think it's a silver lining for what's happening here with COVID. I know it's awful. I know some people have gone through some terrible times. But I think relieving that stress of the commute and that big mortgage and whatever else and living a more chilled, relaxed life doing more things that you enjoy, spending more time with your loved ones— I think that's fantastic and obviously is going to have a really positive impact on your mental health as well as your well being.

Tyrone Shum:   

[00:14:43] Yeah, you've got me thinking as well. I better have a chat with my wife.

Matt Sharp:  

[00:14:49] I know someone up here that can help you buy something! 

Tyrone Shum:   

[00:14:53] I'll be reaching out to him straight away! So, Matt, let's jump into mindset and talk a little bit about your why. What's been the biggest why driving you behind investing into property and also helping your clients through a buyer's agency?

Matt Sharp:   

[00:15:10] It's something that I'm probably just starting to understand more as I get a little bit older. Now I mentioned when we were growing up, we rented a lot. So I was very aware that— and look, this isn't a hard luck story, I had a fantastic childhood— but we did rent a lot. And I was very aware that friends and their families owned their property. And they'd lived in that one house for 10 years, and their whole lives and all of that. So I was very aware of that from a young age. 

[00:15:37] And I think that gave me the initial motivation and desire to buy a family home. Because when I first started, all I wanted to do was just buy the family home, and then that was it. But I think the motivation for me, one would be security. And the other one that I guess from a business perspective, and obviously professional perspective when I'm helping people is: the motivation for me is allowing people to understand that it is achievable to gain financial freedom, and it is achievable to set yourself up in retirement. 

 

[00:16:17] I think in an industry that we're in, unfortunately, there are a lot of spruikers out there, and property sharks or investment sharks, whatever you want to call them. Even though I think they are diminishing, but they are out there. But there are some good people in this industry that do great things for their clients. And I think it's about just getting that message out there and getting people to understand that investing well, in the right assets can set you up for retirement and for your long term. 

  

[00:16:52] So, for me, I guess that's probably the main motivation. It's a hard one. And I just think helping people set themselves up for retirement and having good outcomes within this industry is the main motivator for us.

Tyrone Shum:  

Along with Margaret Lomas’ show, Sharp’s mentors include some other big names you may have heard before.

Matt Sharp:   

[00:17:28] There probably isn't a book that I haven't read that has property investing. But I reckon another book that had a major, major impact on me was A Surfer's Guide to Property Investing by Paul Glossop. I'm sure you're familiar with Paul and a lot of your listeners are as well. He has great information, his book's fantastic, it gives you a really good understanding of what a basic strategy would look like, I suppose, and where you would fit within that strategy. But he's been fantastic. 

[00:18:02] Obviously, Ben Kingsley and Bryce Holdaway from The Property Couch have been great. They're some of the Australian people that I like, but obviously Rich Dad, Poor Dad gave me great perspective and a great understanding of how money works and how investing works as well. So I think there are multiple avenues out there at the moment. Obviously this podcast shares a lot of great knowledge, too. 

[00:18:24] So there's loads of information out there. And it's just about aligning yourself with people that maybe you can relate to or that you can get some good synergy with. And maybe they speak your language, to get the most out of their insights that's going to help you along the way.

Tyrone Shum:   

[00:18:43] Yeah, I totally agree. And there's just so much information in our day and age that I guess sometimes the question is which ones you turn to first, with our busy lifestyles.

Matt Sharp:   

[00:18:52] Exactly. And I think, just from my own personal experience, Margaret is fantastic. But she's very much about educating and making sure that you, the individual, are educated on your own property journey and what you want to get out of it. And for a few years there, I would always be like, 'No, everyone, get educated, don't worry about engaging a buyer's agent, just do it yourself, do it yourself.' But I realised that not everyone wants to do it themselves. Not everyone is passionate about property. They don't care, you know? Which is probably something that I learnt from Paul Glossep, which obviously shared the value of what a buyer's agent can do, or an independent advisor or whoever it is. Which then sparked my interest, obviously, in becoming a buyer's agent. But Margaret was great from an education standpoint. And then I think Paul, for me, has been great from a professional and value add standpoint as well, and what we can provide to potential clients and people out there.

Tyrone Shum:   

With all the people he’s come across and wisdom he’s received, he shares what’s at the top of his advice list.

Matt Sharp:   

[00:20:08] The best advice I've received would probably be to get educated and take action. Like, you need to take some action, right? Otherwise, you can be the most educated guy in the library and not do anything. And then what? You really do only learn through doing in this game and in anything that you do. So I think taking action is the biggest one. Yeah, I would have to say taking action for sure. 

  

[00:20:38] And the other thing is it's not a big, scary world out there. You don't buy a property and the world caves in, you lose all your money. It's not really like that. The sun still comes up the next day, and life goes on, right. So I just wouldn't be scared about taking action. And I would steer away from some of the horror stories as well, because a lot of those things can be ironed out whenever you're doing your own research or doing your own education or leveraging on a professional.

Tyrone Shum:    

If he could do it all again, Sharp’s advice to his younger self echoes the general consensus. 

Matt Sharp:  

[00:21:19] Get started earlier and buy more properties! That's probably it. Get started earlier and buy more properties. I hear that answer a lot. Not from me, but from others. And I think it's pretty consistent across different investors.

Tyrone Shum:  

Other than his upcoming unit block purchase, he’s keen to learn as much as he can, grow his business, and his family.

Matt Sharp:   

[00:22:31] I just love learning from different people in different sectors, understanding their own journeys. You're very lucky that you can obviously have this role that you have with the podcast, you get to meet so many different people from different walks of life. But I think I'm looking forward to that and maybe leveraging off others' advice. 

[00:22:50] I'm seriously considering buying a commercial space. I don't have any commercial property. So looking at engaging someone to help me with that, most likely Jay Anderson. So interested to learn some more about that stuff. I think professionally, that's what I'm excited about, and personally, looking forward to growing my family and creating some good holidays, maybe in a caravan or something up the east coast of New South Wales, surfing some more. And obviously coaching some more kids as well. I do the best I can to try and have a balanced life, if there's even such thing as a balanced life! But sometimes, obviously, I put too much into work and not enough into the family, but really looking forward to some good times ahead with a young family and obviously growing the business. 

Tyrone Shum:   

[00:23:40] I think I've heard about a few people who have mentioned that since I think maybe COVID, and so forth, is that the caravaning aspect is that we're spending a lot more time now with our family. We want to, instead of being in the house, we want to get out of the house, but move around!

Matt Sharp:   

[00:23:56] The overseas holidays are being traded in for a caravan! And now we're on the hunt for a caravan. But unfortunately, that's not an investment. As you know, it's probably more of a liability. We'll get the unit block first and then we'll get the caravan.

Tyrone Shum:  

[00:24:19] How much of your success is due to your skill, intelligence and hard work? And how much of it is due to luck?

Matt Sharp:   

[00:24:30] There's always an element of luck. There just is. Whether it be buying a property for whatever reason, and there wasn't much competition or maybe you had a relationship with the agent or something like that. And even, I guess, smaller components of luck, like maybe you stumble across a show like I did, like Margaret Lomas and I just got hooked on it, and then that became part of my weekly routine. 

[00:24:56] But yeah, look, I would probably say, I don't know, 10% is luck? 20% is luck? I don't know! And the rest is obviously education, intelligence, hard work. I wasn't given anything as a kid, other than obviously love and a lot of support. So haven't had any handouts from parents or relatives or anything like that. So I worked my ass off to save for a deposit and still work my ass off today and make sure I'm on managing my money well today as well. That then allows us to then go and buy other investment properties and give us some flexibility. So I think that's very, very important. So education and whatnot's important. But yeah, there's always an element of luck. Sure.

Thank you to Matt Sharp, our guest on this episode of Property Investory.