Property Investory
Thinking Long-term: From Being $1,000,000 in Debt to Owning 7 Properties with Jyh Kao
May 11, 2022
Jyh Kao is the founder and director of mortgage brokerage, JD Capital. Kao is originally from Taiwan but at just 1 year old, he and his family moved to Australia. Growing up, he felt out of place amongst his peers; however this eventually led to his passion for property.
In this episode, Kao will explain how he bounced back from being afraid and $1,000,000 in debt, to having an impressive portfolio of seven properties! As well as this, learn about the importance of understanding equity and the power that comes alongside it, and much more!

0:55 | The Daily Grind
4:14 | Feeling Out Of Place
8:24 | Childhood Hobbies
10:37 | Beginning of a Business
14:55 | Climbing the Corporate Ladder
18:58 | Watch and Learn
23:03 | Hitting Roadblocks
27:30 | Understanding Equity


1:00 | Different Strategies
6:09 | Investing Interstate
9:13 | Building a Portfolio
13:02 | A Second Investment Vehicle
21:13 | Resources That Aid Success
23:58 | Get Uncomfortable
26:09 | Take the Opportunity

Resources and Links:


Jyh Kao:
[6:38] One of the best aha moments was understanding equity and that power of it.
Tyrone Shum:
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 founder and director of JD Capital, Jyh Kao. Kao will delve into feeling out of place while growing up, and how this led to a passion for property. As well as this, learn how Kao bounced back from being afraid of having $1,000,000 in debt, to having an impressive portfolio of seven properties!
The Daily Grind
Tyrone Shum:
Kao is an avid property investor and is passionate about anything related to property. To follow this passion, he founded his own mortgage brokering company.
Jyh Kao:
[1:05] JD Capital is a mortgage brokerage company that's focused on investment lending, and I started this just over a year ago. I was quite inspired by a mentor of mine. So, some of you might have listened to a previous podcast with Michael sharp. So, he's been a really big inspiration for me and I kind of took that pathway down, deciding to leave corporate and get into property.
[1:29] And I just was kind of stuck at one point deciding what I wanted to do[with] my career. And I always thought, initially, I wanted to climb the corporate ladder and I remember I was very, very driven. And I always wanted to kind of focus on personal development, and I guess throughout the years of working in corporate, I kind of realized it's not really something that I wanted to do longer term — like just keep climbing ladder. Because you end up working more and more hours, but not necessarily on things that you're passionate about, and [you're] not necessarily able to control a lot of things working in such a large organization.
[2:04] So, I guess it was about two to three years ago, just before COVID, I kind of got to a point where I just felt really stuck in my career. But alongside, I've always been investing in property since 2013 and so, when I got to that point when I hit my 10 year mark at my old company, I decided to take a career break. Because our company actually had offered a career break and that one year really allowed me to focus on my passion, which was property.
[2:35] And I decided to go down the finance space, mainly because finance is the kind of enabler, and we know that in property [it] is usually a game of finance. So, getting close to finance and getting close to people's goals around enabling them, just basically allowed me to go down that path. So, yeah, I would say over the last year or two, I've just been really focusing on personally building up my property portfolio, investing and also help building up JD Capital and reaching as many clients as we can.
Tyrone Shum:
Kao is also very passionate about fitness and uses this to help achieve his property-related goals.
Jyh Kao:
[4:06] So, for me, I love exercising. So, I like staying fit. So, I used to go to the gym quite a lot. For me now, it's more just around health and just being active. So, I have this mantra where you know, each day I just need to move. It doesn't have to be a very long gym session, but I just try to spend, you know, 30 minutes to even 45 minutes just doing some form of exercise. That might be going to the gym, [it] might be going for a walk, sometimes cycling or it might be going to just the local park, having a coffee and kind of walking back home.
[4:39] So, just some sort of daily movement. Just to keep the brain fresh, and just kind of keep me motivated for the day. So, that's kind of usually how I start or end the day. And then during the day is pretty hectic because being in the mortgage broking space but constantly on the phone with banks, with clients and just trying to get property settled and refinance etc. So, there's usually a lot of deadlines. So, during the day [is] pretty crazy. And then at night-time, I just try to wind down a little bit.
Feeling Out of Place
Tyrone Shum:
Originally from Taiwan, he moved to Australia with his family at only 12 months old.
Jyh Kao:
[5:56] My parents, like a typical Asian migrant story, they came to Australia in 1989 and I was only 12 months old. So, just a little baby. I came here [and] didn't really have much memory of what was really happening to be honest. My dad always wanted to leave Taiwan [and] to get out into the western culture. So, he found work here and then my mum followed, and me and my mum came.
Tyrone Shum:
Kao and his family settled on the northern beaches of Sydney and although he enjoyed his childhood, Kao also felt out of place.
Jyh Kao:
[6:23] I remember we first lived in Dee Why. At the time, there was like no Asians in that area. Even now, there's not as much Asians in the northern beaches. So, we kind of felt very foreign to the area and I remember going to school in the northern beaches — I was probably one of three or four Asian kids. So, I definitely felt a little bit out of place and then after primary school, my parents wanted me to get into a better school where there's a bit more Asian culture. So, they sent me to Killara High School. So, not too far from the Chatswood area.
[6:54] But to get into that school, you need to live in a local catchment and so they needed to find a way to get me there or move close to the area. But at the time, house prices were quite expensive in that North Shore area, even back then. So, we had a little townhouse in Dee Why [and] they ended up upgrading to a house in Freshwater. So, we lived there for about 15 years and to move into Killara, they ended up buying a house in Linfield.
[7:27] But they were originally going to sell that house in Freshwater in order to upgrade to Linfield. And at that time, I remember quite clearly, they had a really good family friend, and their family friend was a mortgage broker. And they actually gave them advice and said, 'Look, we can help you buy the property in Linfield if you rent out the Freshwater property'. So, they'd never had the intent of keeping Freshwater as an investment property. It was always just going to be sold and they would pay off their debt and go buy that new home for us to then go into the new school.
[7:59] So, I think it was from there that kind of sparked my interest in property because over the years, I saw how much house values were going up. So, that was kind of a backstory to my later property journey. But yeah, so that's basically the story. We ended up moving. So, we kept the Freshwater house and then we moved to Linfield, which was the worst house on a decent street. I remember at the time my mum just couldn't really afford to buy anything in the area. So, she just looked for the cheapest property. It was on a main highway. Very noisy house but it was the cheapest property that they could find at the time. I think it was around just under $400,000 for a three bedroom house in Linfield.
[8:37] So, yeah, that was an interesting move. So, we went there and then I think that completely changed my life because [it was a] completely different culture. A lot of new people. I saw a lot of Asians, like Killara High School in that year was basically 70% Asians. I was like going from a school of like no Asians to a school full of Asians, was just very interesting.
Tyrone Shum:
This move caused quite a large shock for him, but also left him with a sense of curiosity.
Jyh Kao:
[10:08] I started to notice a lot of different walks of life. Like you see different family households, you see some really, really wealthy people around the area, and also a lot of wealthy, I guess, kids coming from wealthy backgrounds. But I also noticed, there were also children coming from families that were also extremely hard working, like immigrant kind of backgrounds, too.
[10:31] So, I saw a lot of different dynamics and I was very curious. And I think from there, I just was very open to just seeing a lot of the how different people would, I guess, come from a different background. And it was a very good experience to be able to connect with a lot of different people from all walks of life.
Childhood Hobbies
Tyrone Shum:
Growing up on the northern beaches also left Kao with some adoring memories and good habits.
Jyh Kao:
[11:38] I think the good thing about living in the northern beaches is everyone's so sporty, and everyone's so active. So, one good habit that I developed as a kid was, I tried so many different sports. I did a lot of skateboarding, we did a lot of mountain biking, we had everyone always had scooters. So, we were always at the park on the weekend with the mates. I played soccer, I did taekwondo, and we even went to the scouts. So, yeah. So, [I] did a lot of different range of activities, which is really good because I didn't really do that much of that when I moved into the Linfield area.

Tyrone Shum:
In his later years of high school, Kao gained the motivation needed to get into university.
Jyh Kao:
[12:55] I was not too studious to be honest. I remember my early high school years, I just wasn’t great at studying or maybe a lot of the subjects just didn't interest me. So, I remember I just started getting my act together around year 11 and year 12 because I knew I had to get into university. I need to get a degree in order to get a good job. I was always told by my parents, you need to just go into a big company, and then you'll be set for life.
[13:25] I went okay, I better study hard then. So, year 11 [and] year 12 [I] study really hard. And after high school, I went to UNSW. So, University of New South Wales, and [I] studied a Bachelor of Commerce degree. So, I've always wanted to do business because I thought I just really was curious around economics, finance, and money. And I remember even in my early uni years, I even started like an ebay shop to try and sell things online.
[13:53] So, I was always kind of business minded, just wondering how people are making money. So, I decided to get into commerce and that's kind of led [me] down that path. But I didn't really know what to major in. I tried accounting [and] failed. [I] tried a little bit of finance. It was okay, [but a] bit complicated. And then I wanted to do something fun. So, I end up doing marketing. I majored in marketing and did a minor in finance and that was yeah, basically my tertiary study after high school.
Beginning of a Business
Tyrone Shum:
The ebay business that Kao developed was a clear sign of his entrepreneurial streak.
Jyh Kao:
[14:48] I remember, I think it was around, I can't remember what year was — 2012 [or] 2013. That's when like, e commerce started to get really big. And I remember, I was just shopping on ebay a lot and that's when you started to see globalization. You could start buying things from Asia at cheap prices and I just always thought if I buy something at a cheaper price, and then sell it in Australia for a higher margin, that sounds pretty smart. Sounds pretty cool.
[15:16] And at the time, I was dating a girl and we decided to go in on buying some stock from Asia on dresses. And so, we tried to sell dresses online [but] didn't do too well. So, we end up losing money. But we didn't put too much capital and there was only like, $1,000 each, so it wasn't too much. But at the time, $1,000 for someone in their early 20s is definitely a lot of money. So, it was scary, but I think it was a really good learning experience. Yeah, so that was totally enjoyable.
Tyrone Shum:
Out of all of the products available to sell online, Kao and his partner decided to sell dresses for a very simple reason.
Jyh Kao:
[16:01] At the time, my ex-girlfriend was really into dresses. And so, she just had this idea. She was like, 'Oh, what if we buy bulk stock?' And then so we just went to a wholesaler, and we just have a look at what options they had. And then they just had a range of different options. So, we thought, okay, well, let's just try a particular design or try a particular pattern, or style and then we just bought bulk.
[16:27] But one thing that we learned is that the sizing there is so different to here. So, we sold, we actually did make some good sales initially, but we had a lot of customer complaints because the sizing was completely off and it just didn't match what they were expecting. So that was a really quick learning, like, 'Oh, crap, we just ended up buying all this stock, which the sizing is just not correct or not advertised correctly'.
[16:49] And it's really hard to buy stuff overseas and be able to try it. So, that was one of the biggest learnings. But yeah, so we [were] just very naive, just decided to go into wholesale, because they said if you buy a minimum amount, we'll give it to you for a discounted rate. So, we thought okay, well, great. So, it's a good discount. Let's buy. Let's buy it and try it.
Tyrone Shum:
Although this was Kao’s first attempt at founding a business, he has held down jobs since he was 14.
Jyh Kao:
[18:15] I've always had a job and started off in a typical kind of retail job. So, I remember my first job was actually McDonald's. In the kitchen. So, I again, learned so much off just being in the workforce. Flipping burgers, I remember I was flipping, I was making like 12 burgers every two minutes.
[18:41] So, it's just mind boggling at the time because I was like earning. I remember very clearly, my first pay was $6.13 for an hour. And I was just calculating in my mind, I'm making 12 burgers every two [to] three minutes, and they're selling for what $5 each?
[19:11] So, I think just understanding or trying to understand how the numbers work was actually really intriguing for me. And I was just always wondered how businesses work? How do they make money? How do people become wealthy? It was just something I was always curious about and naturally being in these jobs I was exposed to a lot of the mechanics behind it.
Tyrone Shum:
He moved from flipping burgers to scooping ice-cream.
Jyh Kao:
[19:49] Then I worked for New Zealand Natural. So, scooping ice cream. So, a lot of retail there, food retail. And then I ended up going into another retailer selling appliances. So, I'm not sure if the listeners will remember Clive Peters, they actually went under. Clive Peters is like similar to Harvey Norman. But they were like more of a premium kind of retail at the time. So, that was where I learnt a lot of my sales experience and sales skill sets because we're just constantly trying to sell like larger goods, mostly white goods. So, I worked there for about two years while I was at uni. And actually, after that I then worked at Optus. So, the Optus retail store selling phone plants and phones.
Climbing the Corporate Ladder
Tyrone Shum:
Kao’s job at Optus helped him financially throughout his time at university, and it also kicked off his corporate career.
Jyh Kao:
[21:02] Because I was working at Optus retail for two and a half years, whilst I was studying my marketing degree. I found out that Optus were doing a graduate program and so, [it was] kind of [a] natural progression. I remember my manager at the time, he was like, 'Oh, why don't you just go to apply for the grad program? You've already got the retail experience, you know the products, you know the brand very well'. So, I was like, yeah that's a good stepping stone because I always wanted to get into [a] grad program.
[21:28] But it was quite hard to get into the larger banks, just because there's so much competition with new grads coming out. So, I did apply for your standard big four banks trying to get into those as a stepping stone but didn't get in. So, I applied for Optus, and I ended up getting into the grad program. So, that led to my career for 10 years at Optus and I had numerous amounts of roles at Optus, kind of moving [between] different departments. But yeah, so [I] ended up in some of their sales departments and I ended up in their corporate marketing, and also some digital marketing roles.
Tyrone Shum:
From his time working for Optus, he had one major takeaway.
Jyh Kao:
[22:38] I think the biggest learning for me was working with so many different people and different experiences, different skill sets and also different levels of the hierarchy. What I didn't realize was in such a large organization, I think we had 10,000 employees in the Sydney office alone. So, I was just suddenly exposed to so many people and what I realized was it's all about stakeholder management, because you're working with so many different groups and teams.
[23:07] And sometimes getting a task done can take forever, just because there's so much process and structure around things. And I was just always kind of baffled by how long it would take to get things done. Because you have to get approval from almost every level. So, it was very interesting to be honest. But yeah, lots of experiences around just how to work with people. I think that was the biggest learning.
Tyrone Shum:
Kao’s career at Optus came to an unplanned end.
Jyh Kao:
[3:24] Initially [it] was [a] long service leave but I kind of pointed out that I wanted to take a bit of a break. So, yeah, [I] took a bit [of a] long service leave and took an extended break. Kind of knowing at that point that I wasn't going to go back.

Watch and Learn
Tyrone Shum:
Kao’s parents had an influence on his interest in property and watching a deal they made was his first experience of an investment.
Jyh Kao:
[24:28] My first experience was actually witnessing my parents sell their Linfield home, because we, me and my brother lived in Linfield for another 10 to 15 years. So, we didn't move out at home to our late 20s. And I remember at the time, I said to my parents, 'look, I do want to move out because I just want to be a bit more independent'. And my parents’ kind of came to the conclusion that okay, well, if you and your brother [are] going to move out, it makes sense for them to sell that home.
[24:58] And then they were going to move back to Freshwater. And that's exactly what happened. So, when they sold that property in 2016, they sold it for three times the amount that they bought it for. And it's just incredible, right? Like, you can't save that much amount of money in 15 years. I think they bought it for $400,000 and they sold it for $1,600,000 in 2016. But in hindsight, I was like you guys kept it, you would have been double that amount.
[25:34] So, its hindsight is always an eye opener, isn't it? So, it was from that experience that I was like, just the power of leverage and wealth of property is incredible. Like, if we don't invest, then saving our way to wealth is going to take forever and we will most likely be working for the rest of our lives. So, that transaction got me thinking, 'Okay, well, how can I make my money work harder? I need to invest'.
Tyrone Shum:
From this realisation, Kao jumped into the world of property investment.
Jyh Kao:
[26:48] That same year I think, no actually a little bit early, I did buy an apartment in north Sydney and that intent was always to be an investment property. So, I bought a one bedroom apartment in north Sydney. At the time, I was seeing the Sydney market starting to climb very quickly. So, I wanted to get in and I've always had the goal of buying my first property.
[27:09] So, after my parents sold the Linfield home, I ended up moving into north Sydney and I actually came across a lady called Cherie Barber. So, she runs a reno course which I went to. [It was] a seminar and I just kind of fell in love with the aspect of being able to decorate a property and using that concept of getting more equity, getting evaluation after to improve the value of the building.
[27:38] So, I kind of apply what I learned on the north Sydney property. So, I always loved decorating kind of decor, home decor, and styling as well. So, you played around with the north Sydney property. [I] kind of made a few small cosmetic improvements to it, and then got a valuation afterwards and I was quite surprised by the valuation increase just from small changes. And then that's kind of how I started growing the property portfolio.

Tyrone Shum:
Although this investment got Kao started in property, in hindsight he thinks it was not the best purchase.
Jyh Kao:
[28:20] In everything I've learned, I always learned it is better to buy land, right? And not to buy in large apartment complexes. So, this one was exactly that. It was in a very large apartment complex. There are about 100 apartments in there and I can see right now [that] Strata is increasing. There's a lot of issues with the building. High turnover of renters as well, just because there's so many vacant buildings in that particular block.
[28:46] So, in hindsight, I look back I'm like, okay, that's what I've learnt is to try to go for higher land value. But at the time, I really didn't know much better. I just always thought you have to buy a blue chip. And I thought, okay, well, north Sydney is blue chip, there's always going to be [an] employment hub, there's always going to be demand close to the city. So, that's the main reason I bought, I didn't look anywhere else.
Tyrone Shum:
From this first investment, he has managed to build up an impressive property portfolio.
Jyh Kao:
[30:04] At the moment I'm holding, I'm about to settle on my seventh investment property. So, I've got two apartments in Sydney and three houses in Queensland and two houses in Perth, WA.
Hitting Roadblocks
Tyrone Shum:
Over his time investing, Kao has faced situations that he describes as ‘roadblocks’.
Jyh Kao:
[0:22] I would say the first one that I hit a roadblock was serviceability. So, income. [Being] able to borrow more money. My first broker that I used, I felt [that] they were very good at what they were doing because they were just able to give me the best product [and] the best rate at the time. But there wasn't much of a strategy around how to grow a property portfolio.
[0:47] I remember, we used to go to these property seminars and people used to have, like people quite young in their early 30s, talking about their large property portfolios. Multi Million dollar property portfolio and I was just always baffled how they did it. I still didn't understand how that all worked. So, I didn't know much about different lenders [and] how to structure as well. So, I kind of hit a roadblock around after my second property, because after that my broker just said, 'sorry, you can't borrow any more money'. And I just [was] kind of stuck. I was like, 'okay, well he said no'. So, I just kind of sat on the sidelines for about two to three years.
[1:25] And so, if I look at my portfolio, the first three purchases are always two years after each other. Yeah, because I didn't have much of a plan. I was kind of just finding my feet [and] trying to figure out okay, well, maybe I'm going to save a bit more money, then get for the deposit, then go into the next one. [I] didn't really know too much about structuring. It was really until I met Michael, to be honest. So, he was able to show me a plan on how to structure [and] how to use different lenders in the right order to actually grow your serviceability. And also buying the right types of properties, especially if they're cash flow positive, they actually will help you increase your serviceability.
[2:07] So, it was really when I got to, I think it was about three years ago where I started to aggressively accumulate a portfolio. Because I knew how to do it. I knew how to build a plan and that's essentially how I started JD Capital. Because he inspired me to become that strategic broker or partner to be able to help you grow your portfolio and not many brokers that I knew, knew how to do that at the time.
Tyrone Shum:
To overcome these roadblocks, Kao had to shift his mindset.
Jyh Kao:
[3:25] At first, when I got to property number two or three, I started realising I'm starting to take on quite a fair bit of debt. I've got a total debt of over one million. And then I think it's a mindset too. Like, you start to get afraid. You're like, oh, is this too much debt? What if I can't repay this? And so just getting comfortable and just thinking long term as well.
[3:46] Because when you start to understand how the economy works, how inflation and interest rates that ties into the whole macroeconomics, right? And so, understanding that, which is not something you just pick up straight away, you really need to experience and see what happens across the world to really experience that. So, I think when Covid came, that really was a big eye opener. You can just really start to see the amount of money being pumped into the market, from grants and from money being printed.
[4:19] You can start to see that the value of cash is getting smaller and smaller over time and so just connecting the dots of that with longer term goals, around how you can hold on to assets that appreciate in value, that really gave me some confidence around, okay, I am a long term investor, I am going to hold these properties for several decades. If that is the case, and the cash flow is strong enough to pay for these properties or hold the properties, then I'm not going to be concerned about the short term.
[4:49] So, the mindset was a huge thing for me. And also, one thing for me was just not being too worried about the short term interest rate because I remember at the time, we were comparing options around I can get more lending if we go with smaller lenders, but the interest rates were a bit higher. And at the time, I couldn't get my head around it. I was like, I don't really want to pay [a] high interest rate for that. But then when you tie back to your larger picture, if I can accumulate another two or three properties in the portfolio that are compounding at 5% to 6% per annum on that total asset base, that far outweighs the 0.5% increase in interest rates. So, I honestly think it's a mindset thing.
Understanding Equity
Tyrone Shum:
For him, another big ‘aha’ moment was understanding equity and the power that came with it.
Jyh Kao:
[6:45] I always thought you have to save a 20% deposit; I didn't even know about LMI back then. So, I didn't even know that was an option. I just thought 20% deposit is how much you're got to save and as you know, 20% on any house these days or even back then that's a lot of money for someone just fresh out of uni. [It is] basically your entire life savings.
[7:04] So, [it] took me a long time just to save up that initial deposit only because I always thought it was 20%. Then [I] kind of got into the luck of the Sydney boom during that time. So, when I mentioned I did that cosmetic renovation on North Sydney, I was quite surprised after that I got a valuation done. I think it went up by over $100,000. And that was an eye opener for me because I then saw the power of just being able to build equity from a very small cosmetic change. And I then went back to the bank and got an equity release out of that. So, that was the biggest aha moment. I was just like, wow. Just all this cash just got released and that would have taken me years to save.

Tyrone Shum:
In our previous conversation with Kao, we explored his property investment journey. Now, let’s delve into the strategies that he uses, including renovations.
Jyh Kao:
[8:53] I've only been able to do it on two properties so far, and the ones that are in Sydney only because of being in the physical location. I definitely do intend on renovating properties that I hold elsewhere and the main reason that I buy houses now is because I want to be able to add value and do improvements. What I realised with the apartments [is that] there's only limited things you can do. [You are] usually just limited to internal but I can tell you just from doing internal cosmetic renovations and what I did for North Sydney, and I've got another apartment in Brighton Le sands.
[9:29] So, [in] these two apartments I did some cosmetic reno's. The total renovation spend for both of them was around just under $10,000 each. So, basically what I did was complete revamp. So, fresh paints all out, new lighting fixtures — changed kind of the oyster light into downlights. LED down lights. [I] changed the blinds into venetian blinds or shutter blinds, [installed] floorboards — so, ripped out [the] old carpet and just put down those floating floorboards. [I] did some basic kitchen stuff — just changing fixtures, changing benchtop, splashbacks. Which are all DIY, most of it's all DIY through Bunnings.
[10:11] So, a lot of this stuff it's quite simple to do, or I could just outsource to like a, not even a builder, but you can just probably get like a tradesman to do a lot of the stuff. Yeah, so it won't cost you too much money. Whereas if you go pay a builder to do this stuff, it probably would cost like $30,000 [to] $40,000. So, around $10,000 all up, including labour for the spend and the property just transforms itself. Like if you look at the photos of some of the properties that I've been able to renovate — like really, really ugly apartments, and they're now looking quite modern inside. And from that I was able to increase not only the equity, but also increase the rent. So, that increases your cash flowing rental yield.
Tyrone Shum:
Another strategy that Kao sticks to is buying properties with good land value.
Jyh Kao:
[15:10] So, most of the houses I'm looking at have minimum of 500 to 600 square metres of land. Because I've worked that land value is what appreciates over time, fastest. So, we can see that houses have over performed compared to apartments. So, the first two properties I bought were apartments. So, now that I've got this learning, I've just really focusing on houses.
[15:33] And for areas, look, I'm not really too stuck on which area it is. Usually what I like to do is I kind of just like to research a particular area, and I just study it for a while. And I just look at the house prices in that area and see what neighbouring suburbs are doing too. Because one thing I like to look at is pricing disparity. If a particular house is cheaper than another house, particularly if it's unrenovated, let's say you could buy a four bedroom house in Chatswood, right? Let's just say $500,000, right? Unrenovated, but then you found the same house, four bedrooms, on the same street, that's worth $800,000.
[16:13] So, there's a $300,000 disparity there, right? Most likely, just because it's renovated. So, if I can go in, buy the house, do a renovation that's then going to give it a big uplift. So, for me, I'm not too hung [up] on the area, as long as we're the numbers work. Like if I can add value to it and if the rental income is covering more than the repayments of the property and the holding costs, then to me it makes sense because I'm going to hold that property for quite a long time.
Tyrone Shum:
These strategies allow for Kao to achieve his ‘why’ in property investment.
Jyh Kao:
[13:05] The why is really just to be financially independent and not have to worry about money. Yeah, for me, I remember seeing my parents work so hard. Like they were saving every single dollar and I can just see that they're so frugal, they'll never spend things on themselves. I remember comparing myself to other kids. Like they were able to go [and] always buy new toys or go out and family holidays and just do a lot.
[13:36] Whereas our family was just very, very focused on saving. And I just watched my parents save a lot of their money and they weren't very aggressive when investing. Besides the property that they bought in Linfield; they didn't invest in anything else. So, I always wanted to kind of take money off the table. I don't really have like a specific number that I need to target. It's just for me, I just want to be financially independent to the point where I don't have to really worry about money.
[14:07] And just being able to have freedom. And that doesn't mean to live a lavish lifestyle, it just means to, you know, maybe for a year I might want to take some time off and just go travel, explore the world, and not have to worry about working or have to worry about a boss knocking at my door saying come back to work.
Investing Interstate
Tyrone Shum:
In order to achieve his ‘why’, Kao also dares to do something that many investors won’t: investing interstate.
Jyh Kao:
[17:25] I remember at the time, like not many people I knew were buying interstate. Borderless investing wasn't really a big thing back then, people were worried that they're like, people kept telling you don't buy something you can't see. Don't buy sight unseen. I remember I had an argument [with] my dad because I wanted to buy in Queensland. He was telling me it would be such a bad investment. He's like, you can't see the property. What if there's something you need to go fix? And I just argued with him because I said, 'look, like the numbers work and let me try this'. And we just kept arguing back and forth about it.
[17:57] In the end, I said, 'I'm going to do what I'm going to do. It's my money. I'm going to make that decision. If it fails, it fails. I'll take ownership'. But the real trigger for me was, I just at that time, Sydney, it was moving quite a lot. And I just couldn't afford to get back into the Sydney market and I wanted some exposure. 

So, I was going to a lot of property seminars, and I ended up meeting a buyer's agent at the time and they were buying a lot in Queensland. So, I sat down with her and she kind of talked me through the rationale behind why they're buying in Queensland. Showing to me some of the purchases that they bought, some of the figures and I started to become a lot more comfortable.
[18:35] For me, the good thing was I wasn't really emotionally invested in the actual physical property itself. I knew talking to people that was the one learning that most people say is just you know, do not be emotionally invested in a property that you're not going to live in. So, I took that learning and just thought okay, well if the numbers work and the location seems to stack up. All of the criteria was kind of ticking all the boxes. 

Like it was not far from a capital city, [it] wasn't too far from the water, local amenities [and] schools, it ticked all the right boxes. I was thinking long term, how bad could it be? If it fails, how bad is it really going to be? So, yeah, I took that kind of leap of faith to decide and buy something interstate on which I'm really glad I did.
Tyrone Shum:
Kao bought this property sight unseen but still made some precautions.
Jyh Kao:
[19:29] We did a building and pest inspection. We took a lot of photos, so I was comfortable with it. But when it settled, we actually went over because I wanted to see what it was like and then I remember spending a good two days just cleaning the property because it was vacant for a while. So, the garden was really messy. I even bought my dad over so he can actually go see the property. I'm like dad, it's a physical property, you can now see the property. And then when he got there he is like okay, yeah, it's not too bad.
Tyrone Shum:
Although Kao’s dad had some concerns about the property, he still showed his support.
Jyh Kao:
[20:12] He loves doing gardening and all the house kind of stuff. So, he ended up bringing some tools and he had some, he had a good family friend that lives in Queensland. So, we ended up borrowing some tools off him for the garden. But yeah, we spent quite a lot of time just pulling out weeds and just mowing the lawn.
Tyrone Shum:
After cleaning up the property, it got rented out.
Jyh Kao:
[20:42] The vacancy rate at the time in Queensland was not as great as now. It was taking a bit longer to rent out. So, I think it took just over a month.
Building a Portfolio
Tyrone Shum:
The success of this investment egged on Kao to make a second purchase in Queensland but this time, with a little bit of help.
Jyh Kao:
[21:16] Simon did help us buy a property in Coalinga. I think he did a purchase price was $500,000 and we just got a valuation for that a couple of weeks ago, and it came back at $700,000, which is incredible. Like, I think [in] less than six months $200,000 in equity.
[21:42] Yeah, so that one's actually bought for Danica. So, Danica is my partner. So, she is starting to build a property portfolio. So, we have a combined portfolio of around 10 properties, but we have it in separate names. So, we kind of help each other out. So, she was wanting to look for a property and I just met Simon, and we started connecting. 

And then I said to Simon, 'We want to try and get back into the Queensland market, can you help us out?' And so, he was just looking around and he found us this really good deal. And our brief to him was kind of quite simple. We just want something that can hold long term, low maintenance, good cash flow and yeah, kind of a good location.
[22:22] So, he came to us with the Coalinga property. And I've seen a lot of my clients also buying around that Coalinga [and] Moreson Bay area. So, I could see there was a lot of growth. So, I knew the figures and the fundamentals were strong. So, it was a high set property, which is generally worth a little bit more because you've got the downstairs with the car space and then you've got the upstairs. So, it was a low maintenance, very well maintained. I think the couple that lived there were quite old and they were retiring and moving out.
[22:48] So, it was very well maintained for an older style building, and I think they even created a separate room downstairs. So, it's kind of like a little rumpus room. So, [a] really good layout. I think it would really attract families. So, we bought that for $500,000 off market, as well. And it ended up renting out for I think just a tad over $500 a week and it rented out very quickly. I remember the first inspection there was, I think 16 groups of people. Yeah, big demand and I was just quite surprised how quickly it rented out. [There was] just so much demand and [the] first week, first open inspection, there was three or four applications already.
A Second Investment Vehicle
Tyrone Shum:
As well as properties, Kao has also invested into a second business.
Jyh Kao:
[24:38] It was a really good opportunity that came by. So, when I was working at Optus, I feel like I had quite an entrepreneurial spirit. I've always wanted to get into business or do something business related and I was starting to get frustrated at work just because I didn't really like what I was doing in my job. And I just wanted to look at different avenues [and] different opportunities.
[25:02] And I thought, okay, what if I start a business, but still do that as a side hustle because I didn't want to just jump in and go all out and risk a nine to five [and] having a decent salary at the time. So, I thought, how can I leverage a decent salary that I was on to then invest that into another business or asset that gives me another income stream? So, I was quite into fitness at the time. So, I thought, okay, kind of toy with the idea of buying a gym, and I started looking into the cost of building a gym or buying a franchise.
[25:40] So, I looked at a few different options. I remember looking into Anytime Fitness, but I realised quite quickly, it's a very expensive business model for something like that. Because you're buying a lot of equipment, and you need a lot of maintenance, and over time, it wears out, right? So, you got to buy new equipment. So, you're constantly upgrading equipment. So, I went okay, that's too expensive. I remember looking into [it] at the time and the entry cost was more than $500,000 or $600,000. So, [it was] quite [an] expensive business to get in as a first business.
[26:11] And then a colleague of mine, his name's Peter. So, he also worked in marketing at Optus, and he owned an F45 franchise, while still working full time. And I was like, how is this guy doing it? Like he's runs a business and he's still working his full time job. This is the best of both worlds. I was like, this is amazing, and everyone knew him, he was very, like, famous for that. Everyone's like, yeah, this guy runs a gym and he's like a very fit guy. And so, I decided to set up a coffee [to] catch up with him and I just asked him how he does it, how's it possible, talk to me a little bit more about the business model. And I remember just the entry costs into F45 was quite low because there isn't too much equipment, it's more class based.
[26:59] So, it's really reliant on having members and the margins a bit higher because it's more around class training and hit training. So, I looked into the business model for that, I think the entry cost was around $150,000. So, much lower compared to an Anytime business. And then so I looked into the numbers, and it just really made sense and I really wanted to try it. So, I remember talking to Peter about it, and he said, 'look, if you're really interested, why don't we just go 50% [and] 50% into a franchise?' And I said, 'okay, that would be amazing. You've got the experience, you've run one, so you know what you're doing. I'll come in and help out and kind of do as much as I can whilst working full time'.
[27:44] And for a while, we kind of just sat on it for a little bit because there wasn't any F45 available for sale. Like they were already purchased and each territory kind of had their own. So, there just weren't any new ones to open up. So, I kind of just left it and then I remember very clearly I got a call just after New Year's Eve one day. And because I inquired about it on a F45 website online. And I put my expression of interest and this guy gave me a call. And he said, 'I'm looking to sell my F45 franchise in Chatswood'. And I was like, 'no way. I've been living around that area for so long. I know the area so well'. And he wanted to get out of the business because he wanted to get into real estate. So, it was yeah, it was very funny. So, I was just like, you know what, I would be really interested in this opportunity. And so, I had a chat to Peter, and we just moved very quickly on it. And that's kind of how it happened.
Tyrone Shum:
To be able to invest into this business, Kao used some savings and some equity from his properties.
Jyh Kao:
[29:25] We've had it for just over four years now. The first few years honestly, was very, very hard. Because one, we're both working full time. We're trying to earn a salary to cover our costs, operating costs. So, we hired trainers, we hired a manager to run it day to day. So, we were more focused on the operations or the management side of things. I was more looking after the financial side of things and kind of [the] back end. But it was very hard because we bought into a business that was underperforming. It was barely breaking even. The customer retention was really poor because it didn't really have a good reputation. I think this is because the previous owner wasn't very active in the business.
[30:10] So, when we took over and we had the keys handed over, on paper it looked really good. But then what we didn't realise was that there was a lot of unhappy clients, they wanted to cancel. And so basically on day one, we're just like, ‘crap, there's like 20 people that wanted to cancel’. But you don't see this on the financials, right? And so, we didn't know any of this and I guess we didn't know better to look for these signs, or maybe have asked better questions. So, this is a very good learning for businesses. You know, you need to look at different metrics, not just financials. Like customer retention is a really, really big one. Especially when the business is largely made of clients.
[30:51] So very quickly, our numbers just tanked because of a lot of unhappy clients and we really had to focus on changing the team because the trainers who work there just weren't really good. So, we had to rehire, re-staff the team, rebuild the reputation in Chatswood, and that takes a long time. It's not something that you can just build overnight. So, we focus a lot of our efforts on marketing, attracting new people into the gym, getting new trainers, and upskilling them.
[31:20] So, a lot of hard work and then unfortunately, we had Covid over the last year. So, it was hard honestly, just because gyms were hit quite hard, right? Because we couldn't open, we were very limited to running just outdoor style training that, you know, again, very limited to what you can do. So, for almost two years, we kind of just sat there. We couldn't really do too much with a gym. So, now that everything's kind of resumed normal trading, we're picking back up again.
Tyrone Shum:
Kao and his business partner have the goal to put in as much effort as possible and make their business a success.
Jyh Kao:
[33:34] I do want to give it a red hot crack. And now that we've kind of put Covid behind us — hopefully, fingers crossed — really try and just build it back up to where it used to be. Because we did at peak hit around, I think around 150 [or] 160 members, which is quite good for us for a small gym. So, [it] definitely has potential and I think if we look at what's been happening over the last few years, people do value their health and fitness a lot.
[33:57] So, I do truly believe people always have a place to go to a gym and they want to be able to train. And the great thing about F45 I find is that you build communities, you build friendships, and a lot of people are like the same faces you see every day, right? And so, it's kind of like having an accountability partner. So, I feel like it's a really, it's a really good type of business because you get to meet a lot of people. And you get to also help people, [it is] very similar to mortgage broking.
[34:23] We help them build their portfolios but in fitness, you kind of help someone build better health and fitness habits over time. So, it's definitely something I want to try and give it a red hot crack, try, and get it to the next level. For me, I'm really focused on just personal development and business. And I really want to try and excel on these areas. So yeah, hopefully we can try and get it to a new level over the next year or two.
Resources That Aid Success
Tyrone Shum:
In various aspects of life, Kao has achieved great success. Let’s take a look at what resources he used along his journey.
Jyh Kao:
[35:15] I think back then there weren't many, like, I remember years ago before the whole social media, there weren't that many podcasts. And there just wasn't as much resource. At the time, honestly, I didn't have that much, and I didn't read too much. So, it was more going to property seminars where I met people, and it was talking to other investors. That's where I got the most amount of knowledge.
[35:47] But in terms of like specific resources, I think over the last year or two, definitely me listening to a lot of podcasts. So, Property Investory has for sure 100% been really good. I've also been, I always came across Rich Dad, Poor Dad, which you probably would know, Robert Kiyosaki. His book just completely changed my mindset around money. You know, he talks a lot about [things] like liabilities and income and cash flow. He actually has another book called Cash Flow Quadrant, which I think is a very good book. Just understanding cash inflows and outflows, and how that can help you build wealth.
[36:22] So, that was a really a good read for me in terms of business, applying that to business and also personal investment. And then I watch a lot of YouTube as well. So yeah, I watch a lot of different stuff out there. But kind of sometimes you have to take a bit of a grain of salt, right, just because people are trying to sell you things, too. So, I think the best resource for me is talking to investors, other investors.
Tyrone Shum:
For Kao, he learns a lot from other people’s experiences and is very thankful for his mentor.
Jyh Kao:
[37:21] I'm very grateful that he agreed to take me on because I remember he was very busy and just about to have a baby as well. So, I think I was just really, really grateful that he actually agreed to [it] because it's definitely not easy working your own business and trying to mentor someone from scratch, too. So yeah, I just said to him at the time, 'I really want to try and get into mortgage broking'. And he has a really good network of people as well, because he's also a mentor, I think quite a lot of other new brokers.
[37:51] So, we've got a really good community that we all kind of leverage off each other. So, when I first started my mortgage broking business, I ended up moving into an office in a city with two other brokers. And so, we just everyday shared [our] learnings. I was able to listen to how they were talking to clients and just how they interact with people as well. So, that was a massive learning curve. That first year just really helped me just build up that business.
Get Uncomfortable
Tyrone Shum:
If Kao was able to speak to himself 10 years ago, he would pass on the lessons he learned from his own journey.
Jyh Kao:
[39:16] I would definitely say take more risks and be uncomfortable. I think I got too comfortable for many years, especially during my corporate years at Optus. Probably three years just being too comfortable in the same role. Right. That's three years of growth that I missed out on. So, yeah, I look back. I'm like, there were many years that I kind of think I just wasted just because I was too comfortable. I was happy, not happy but like content and you just didn't push yourself harder.
[39:45] And I think if you, I really do believe the more upfront work you do in the early stages, it's like the foundation, right? The more upfront work you do, it's going to compound into your later years. Same as investing, right? You have much larger compounding when you get to the later decades, same kind of concept. So, I think if I worked, not worked harder, but like if I took a bit more risk, put myself in uncomfortable positions, take calculated risks, then I would have probably been able to see a lot of different or more opportunities.
Tyrone Shum:
On the other side of the spectrum, Kao is very excited about his future.
Jyh Kao:
[40:37] I'm really excited to grow JD Capital. So, this year, or last year, we've actually been growing at a very, very fast rate and we've been able to connect with so many different people. A lot of people from different states as well. I personally have been travelling to Perth, and also Darwin recently because Danica, my partner, she works in defence. So, she travels around for work. So, I've had the pleasure to kind of move around Australia. And the great thing about that is I get to see more real estate, more opportunities.
[41:09] So, that's also kind of how I got into the Perth market. I was like Perth is actually quite an amazing area and it just opens up a lot of opportunities. So, I'm just really excited to travel a little bit more again, see more of Australia, meet more people, and help people build their wealth journey. Because I think wealth is a conversation that was, you know, traditionally quite a taboo subject but if we talk more openly about it, it can be an everyday conversation.
Take the Opportunity
Tyrone Shum:
When it comes to building success, Kao pushes the value of hard work and thinks that luck only has a small role to play.
Jyh Kao:
[42:08] I would say 80% hard work, and 20% luck. And the reason why I say 80% hard work is if you don't put in the work, it won't happen. So, it really has to come from your initiative to take action. And I find if you just take action, even if you make a mistake, if you consistently take action over time, you will end up getting further than not doing anything.
[42:33] 20% luck, I say that because there are so many factors we can't control, right? Like we don't know if the markets [are] going to go up or down. Like I bought into the city market not knowing it's going to keep booming. It boomed, which is great. Same as Queensland. I didn't expect Queensland was gonna go through such an incredible growth period last year. No one knew house prices are going to increase 22% last year, right. So, I think there was a bit of luck last year too, but it doesn't happen if you don't take the opportunity.
Tyrone Shum: 
Thank you to Jyh Kao, our guest on this episode of Property Investory.