Timestamps:
1:20 | Bouncing Back
5:59 | Invest Into High Quality
9:00 | Investing Criteria
13:20 | Different Mentors for Different Stages
15:12 | Be a Man of Value
18:42 | Combining Luck and Skill

Resources and Links:

[16:59] It’s really the compounding over the longer term that's going to give you the wealth to actually change your life. So, those quick gains that you make, it might be more than you make in one year's salary, but it does help you build up some capital and get into better investments. But yeah, compounding is where you really end up changing your life.

 

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 the managing director of Investors Edge Real Estate, Jarrad Mahon. He will detail the importance of being patient and buying for quality instead of quantity. As well as this, he will show that it is okay to change mentors when they are no longer serving you and explain what it truly means to be a person of value.

 

 **END INTRO MUSIC**

 

 

When we last spoke to Mahon, he was telling the unbelievable story of a tenant going to the extreme to avoid some fees. Now, let’s hear how he bounced back from the situation.

 

[8:56] I was doing a renovation project. One of them at the time and I had a really experienced investor named Denise around to give me some advice on what to do and I got all of her trades and contacts and stuff to do the renovation. So, she really helped out and I knew that she used to be a property manager and she'd done many more renovations and was really a seasoned investor to tell. She helped me see that there is this profit that is possible, like she had grown a very decent portfolio and kind of just showed me, gave me hope again.

 

[9:34] So, I was, she was going in and troubleshooting and trying to fix other businesses' rental portfolios. So, she was a bit disillusioned with the property management industry herself and by that stage, she was just going in and fixing up people's businesses for them. So, we became really good friends and she ended up asking me if I'd be interested in starting a property management focused agency.

 

[10:04] And I'd never even given the idea thought to be honest and I tried to change manager a few times and didn't find the right ones. And no one had sort of that investment mindset that I wanted and everyone was, property management back then was like a back of office thing where the sales agents were the stars of the office and the property management was neglected and it would have pretty inexperienced juniors and it just wasn't given the attention or the focus that it is today by the property management specialists that we sort of now have.

 

[10:41] So, it was her idea to start Investors Edge Real Estate and I came up with that name I think when I was in the shower. That was in part, what I was, I was already on leave from a engineering job and not knowing exactly what I was going to do. I wanted to do property full time and I thought, well, if I can help other people with their investing and go through their learning cycles and give them the kind of property management service that I wanted, that was really my main inspiration. And I thought, if I can be in property all day and I love it this much, then that was a big, massive turning point for me.

 

Of course, starting any business is going to be difficult but Mahon underestimated just how hard it would be.

 

[11:23] I had no business experience and I had no experience as a real estate agent and there was massive learning curves and it took a really long time to get traction. But we, I went and met up with a lot of the investors I knew and I put it out on the Somersoft Property Investment Forums, used to organise meetups so that I could find out how other investors were successful and also speak to them about what they were wanting from their property managers.

 

[12:01] So, similar to my job as an engineer, I just went around asking everyone what would you want in a service? And what things would make you choose someone as a property manager? And why would you leave your existing one? I basically then just designed or engineered the service, based on everyone else's feedback and we've continued to do that every year. We survey our clients and I love reading every single survey and going deep into their frustrations and their ideas for how I can improve the business. And then we go back and tell them all the things we've done that they suggested and they love that too.

 

[12:38] So, that's sort of iterative, you know, just giving people what they want and using their ideas. And I had a lot of, I did the same with sort of business coaches and other people that I surrounded ourselves with to make the business a success. So, yeah 14 years on now, we are one of the most awarded property managers in Australia and we're one of the most highly rated on Google in Perth. So, it's, I pinch myself like that I'm in a job I love, we're helping so many investors get ahead and improve their lives. And like, that's a big part of my why's to why I come to work now.

 

Since finding his groove in property investment, Mahon values the strategy of investing for quality, not quantity.

 

[14:25] I was more about buying quantity of properties previously and I was also about trying to force appreciation of value through renovation and building. I was often very impatient with my whole approach to investing and very short term focused. So, I often think if I went back and just bought, instead of buying multiple properties, bought the higher quality property and had a longer term focus to things and let compounding do its work, that I might be a hell of a lot better off because I wouldn't have paid as many taxes, I wouldn't have put so much effort into that adding value and actively being in property.

 

[15:19] And yes, I learned a lot and it got me where I am today but, so I don't regret it. But also, I now lean more towards evidence based selection of properties and buying the higher quality of property that you can afford and letting compounding do its work over the long term. And so, I'm more thinking about a forever hold and does this property, is this going to be a great legacy to leave to my kids? And do I see this property doubling and tripling in the next 20 to 30 years? And that's more how I'm approaching my investing these days.

 

Mahon even used this strategy when buying his family home.

 

[17:47] We went about choosing our home that way, recently and that's done very well over the last, so we bought in, it was in December 2020. So, quite recently and in the 18 or how many months has it been?

 

[18:11] About 18 months. So, next door just sold for $350,000 odd higher than what we paid and it was, it's proven to be a really great selection and did 20 odd percent in over a year. And part of that choice was I wanted to put the hat on as an investor when choosing the family home and not approach it separately.

 

[18:39] So, we got our daughter in to a really great school but there's the proven history of performance in this suburb and it's more of a steady, growth performer. Not, it doesn't go through crazy levels of growth and then have nothing for 10 years. It's more of a steady, good, longer term performer.

 

When looking for his family home, Mahon was thinking like an investor and had made a list of criterias.

 

[19:28] I went really deep into formulating an ideal criteria over the last few years. Again, not creating all these ideas myself but getting stuck into other people's books and other people's podcasts and take some ideas from them and some ideas from them and some ideas from them. Then I've got my ideal criteria. Now all my clients use that for overlaying on their purchases too.

 

[19:54] So, I did a lot of research studies as well as to what different quality school makes compared to a non-quality school catchment. Like when suburbs are even next to each other and typically, in that case, in Perth, it's made like around a 2% difference in the average annual growth rate over time. So, when you also look at other factors like I did another study into what difference does being next to the coastal water or water give to the suburb? And that also equated to around 2% difference as well in the average annual growth rate.

 

[20:33] And this is all kind of reflected when you look back at the past growth rates of an area and if those things haven't changed, then it's more than likely that it's going to benefit the area and growth moving forward as well. So, I'm more trying to focus on those ideal criteria that that are going to give growth in the future. And it can be adopted at the lower end budgets as well as the upper end budgets to choose between suburbs.

 

Although a 2% growth rate may sound small, overtime it can be a substantial difference.

 

[21:27] Over 30 years on a $500,000 purchase, the difference at 2% is $1,100,000. So, yeah, once I got that and then when you combine that with thinking on a forever hold, getting that extra incremental one or two percent, imagine applying that across a whole portfolio. You know, that's where life changing wealth is made.

 

 

Coming up after the break, we learn about the mentors that Jarrad Mahon has had along his journey…

 

[22:26] At different stages, I've had different mentors that I can't, that get me to a certain place and then I feel like I'm not, I've got a diminishing return from them.

 

He shares some of his top resources…

 

[23:24] Well, my favourite one is the Wealthy Gardener.

 

We’ll hear the best advice that he has ever received…

 

[25:07] That stuck with me and it's really helped me in my darkest times when the markets been down or I've had difficult things to do.

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

 

 

 

Mahon has had multiple mentors throughout the different stages of his property investment journey.

 

[22:20] I looked at my Audible account the other day and I've read [or] listened to 330 odd books. At different stages, I've had different mentors that I can't, that get me to a certain place and then I feel like I'm not, I've got a diminishing return from them. So, I usually find that I'm with a mentor or a coach for like one or two years.

 

[22:44] These days, I think running the podcast is just, I end up speaking to the people I interview for 30 to 60 minutes before doing the recording and picking their brains and that's my favourite way to get access to great thinkers in this space. So, it's hard to pinpoint to anyone but it's all together in my mixing bowl.

 

He mentioned that he has a habit of listening to a lot of audio books. He has listened to over 300, so what books stood out to him?

 

[23:24] My favourite one is the Wealthy Gardener. And I don't think many Australians know about it, but it covers like the sort of the internal journey towards wealth and the principles for success. And it's told with an engaging story. So, it's part fiction story and part nonfiction, where he lays out the principles. And I'm so obsessed with this book that I listened to it when I'm going to sleep each night.

 

[23:54] So, I've read it four or five times. And I just find that the narrator to be very calming too. So, I'm really tapping into my subconscious as I'm going to sleep. You can't listen to a book if it excites you when you're going to sleep. So, I'm now, I've now listened to it enough that it's calming.

 

As well as lessons from all of the books that he’s read, Mahon has been taught lessons from the people in his life.

 

[24:41] I don't know who told me, it might have even been my business partner but when we were having our difficult times and early on, I was really just trying to prove myself and become a success. And I think it was Denise that said to me, try not to become a man of success but a man of value. And it was Albert Einstein that originally said it.

 

[25:04] And that's just, I don't know if it was Denise that told me but that stuck with me and it's really helped me in my darkest times when the markets been down or I've had difficult things to do. If I can just be a value to other people and then I will receive the worth what I'm worth. And yeah, that's really changed my life.

 

[25:49] There's so many dimensions to it. You know, being of value to others can have many dimensions. Like, it's not and it can be applied from the discussion you have with your barista in the morning to the client that you're helping that day, to your friends and everything.

 

With all of the lessons that Mahon has learned over the years, he has some advice of his own.

 

[26:28] Just hang in there. That the roller coaster will all be worth it and everything moves in cycles. So, I didn't understand just how important the cycles were to business and investing. And especially in Perth, I didn't appreciate that we were, because we had one of the biggest booms in history, I didn't appreciate that we would have to have had one of the bigger corrections to in history.

 

[26:56] And the next five years is going to be so different to the last five and I can already see that we're going to have our time in the sun ahead. And I'm just so glad that I've stuck in there because now I'm getting the rewards and I'm getting that the roller coaster is coming back up and the cycles turning around again and Perth, it's still been forgotten a bit, you know. And we're now the lowest priced capital city in Australia,

 

[27:30] We've got the lowest but we've got the best fundamentals. So, we've got the lowest unemployment, we've got the highest surplus to our government budget. I don't know if you saw like there's $8 billion surplus and $4 billion coming from GST. We've had one of the safest Covid periods even though we've had, locked everyone out of our state for good reason. And you also look at our rental yields. They're the highest in Australia of any capital, when you combine that with affordability.

 

[28:02] The last couple of months, we've seen a lot of investors coming that were planning to buy in Brisbane. Now Brisbane has become overpriced and their floods have put a lot of people off. Yeah, we're seeing that wave move over here now and it's been coming for a long time, but it seems to finally be here. And I still think there's a lot of value buying for investors and that's why I'm still buying here personally as well.

 

 

[29:30] So, Jarrad, how much of your success of your whole property journey that you've been through right now, how much of your success is due to intelligence, skill and hard work? And how much do you think is because of luck?

 

[29:42] Good question. I think probably initially my success was more from the hard work and the burning desire to create a better life for myself. But after 14 years in the business of property I've developed, probably a lot of more experience and skills to draw on. So, I think it's a combination.

 

[30:17] But then when you say luck as well, if I didn't meet my previous business partner Denise, I wouldn't have Investors Edge and I wouldn't be in the position that I am to help so many other investors and I also met my wife when she was acting as a settlement agent and she was on one of many sales. So, I was chatting to her over the phone and I looked her up on Facebook and she was single and next time when we were coordinating the settlement I asked her to catch up for coffee and uh, that's all she wrote. So, eleven years later we're still together and have a beautiful daughter. So, if there's not luck in meeting those two key partnerships that I've had, I have to pinch myself and thank myself for being that lucky too.

 

 

Thank you to Jarrad Mahon, our guest on this episode of Property Investory.