Lachlan Vidler is the director of Atlas Property Group and is an active investor. After completing his business degree he joined the Royal Australian Navy, serving for six years. During this time he also completed his masters in finance and decided to delve into management consulting, working with some huge global names. It was this switch in professions that ultimately led Vilder to see investing as a full-time job.
Join us in this episode of Property Investory
to hear how Vidler’s role as logistics warfare officer in the Navy, equipped him with the skills to rise in the world of property investing. You’ll learn how his unconventional childhood has shaped who he is today and given him the confidence to take on anything!Resources and Links:
Lachlan Vidler (00:00):
For somebody in property, whether you're a developer or an investor, you're dealing with people and their emotions. You sometimes have to deal with really time sensitive issues and those skills that the military teaches you are so invaluable in being able to deal with that and not go crazy pulling your hair out...overtime.
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 Lachlan Vidler, director of Atlas Property Group and an active investor with a wealth of knowledge. We hear about Vidler’s time in the Royal Australian Navy and how he made the switch to management consultant for some huge global names. We also learn how he used his skills gained in the Navy to succeed in property.
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Vidler started out his career as a warfare and logistics officer in the Navy, serving for six years. He then made the move into management consulting where he worked with some big global names and this would ultimately lead him into the property investing space.
Lachlan Vidler (00:23):
I'm the director of Atlas Property Group, which is an exclusive buyer's agency and today I spend most of my time running my buyer's agency as well as focusing on my own property portfolio.
A typical day for Vidler involves a lot of work surrounding his buyers agency. He considers this a full-time job in itself, especially since it is still in its early stages as it was founded in 2019.
Lachlan Vidler (01:05):
It takes a lot of time and effort and although my day varies depending on a number of factors, I’m usually chatting with clients and with agents, prospecting with future clients or future business partners and of course like any good job, lots of admin.
Lately I’ve been learning more about AI and the future of technology and how much it has assisted us but there’s just so much stuff that people don’t see behind the scenes, like admin… it’s always admin. Whether it’s chasing emails, filing paperwork or signing contracts, it just never stops. I think if I could have a full time assistant that could just focus on admin, they would be kept busy all of the time.
Lachlan Vidler (02:19):
I couldn't agree more. AI and technology has helped out so much to the point where we can sign almost all of our documents online. I wonder how much time we’re actually saving by having everything digital, but then it also creates more work because there’s so much more content. I'd love to have a personal assistant come in and be able to help out with the endless admin.
His upbringing differs from many as his parents were quite big in business. This meant that Vidler moved around a lot as a child, as often as his parents got new jobs.
Lachlan Vidler (03:37):
I think I ended up going to 10 primary schools before year five and that was in Sydney, Melbourne, Brisbane and Auckland, New Zealand. I went to a couple of those cities more than once as well.
Wow, how does that work? Does that mean that halfway through the school year you'd actually leave and move to another school?
Lachlan Vidler (04:15):
Yeah, sometimes I'd leave to go to Brisbane on a Friday and then I'd be starting school on the Monday in Melbourne or Sydney.
Vidler followed in his father’s footsteps unintentionally, which meant that he too moved around a lot for business and found it to be character building.
Lachlan Vidler (04:30):
He was in a senior management role in a number of different companies. Sometimes these moves were brought on by him getting a promotion or it might have been that he changed businesses. This was also the case with my mother. We were constantly moving for a lot of my early years and I look back at that time and think back to being that kid who was moving all the time and losing his friends.
You get a bit unhappy and sad about it, but it taught me so many great skills about being personable and how to be open to making new friendships and relationships. To be honest, it has probably helped out so much in the work that I do now.
Yeah, I can understand. I didn't move as much as you did, but I did move three times when I was in primary school, so I can relate to that. The change in stability was very confronting, but I guess in the bigger scheme of things it was a valuable experience. When I look back at it, I did make a lot of new friends and you learn to adapt extremely quickly to those different environments, especially when you're young. I don't know what it would be like for my kids now because any change for them, they just throw tantrums.
Lachlan Vidler (05:39):
I think a little bit of healthy resilience is great for kids. Yeah, I don’t think I would wish those 10 moves on anybody.
After years of moving around the country, Vidler’s family eventually decided to settle down. In the years to come Vidler would experience a similar lifestyle in the Navy.
Lachlan Vidler (06:00):
Although I hadn’t necessarily grown up in Sydney it was good to be back around family members and some of the friends I had had prior to leaving. A lot of people love Sydney, and I certainly love it too, so it was a great place to finally have the waters calm.
This change in lifestyle was brought on by a lull of sorts in the business world. Vidler’s parents had found roles that they were able to settle into and were less affected by the erratic nature of business.
Lachlan Vidler (06:44):
I think my parents had just gotten to the point where they said, ‘Not only are we sick of moving, but we’re sick of moving the kids’, and decided that it would be for the best to have some stability back in all of our lives.
Tyrone Shum (07:11):
I can totally understand from a parent's point of view as well because it is quite challenging moving with kids. I’ve moved a few times already with my kids and my child who's now six, has probably moved houses about four times in the last six years. Being a rent investor, sometimes places just decide that they want to sell the property so it's going to be a long term tenancy. So it’s those external impacts that move you around I guess. Did you jump straight into the workforce after high school or did you go the university route?
Lachlan Vidler (07:57):
I actually did both. When I joined the Navy at 18 years old, I was studying at the same time. I really enjoyed it and I was young so I was happy to be out there working also.
Why the Navy?
When it came time to enter the workforce after high school, joining the Navy just felt like the right choice for Vidler. The valuable lessons and skills that he had learnt as a child would aid him in this role.
Lachlan Vidler (08:25):
I never wanted to dig holes and knowing that would be something you were likely to do in the army, I knew it wasn’t for me. I didn't know whether I wanted to be a pilot or not and if you don't fly planes in the air force, what else are you going to do? After we settled down in Sydney I loved being by the water and I always enjoyed it when we would go to Queensland for holidays because we would spend all of our time at the beach. When I thought about these things the Navy made the most sense to me and so I jumped on that.
The application process for Vidler when joining the Navy didn’t largely differ from other regular jobs. However, because he was signing up to become an officer, it certainly made it a lengthier process.
Lachlan Vidler (09:09):
It’s like most jobs, you go in and you have an interview, you do an aptitude test which will give them an idea of what jobs you may or may not have the capacity to do. Then from the jobs that you get told you can do, you then pick the ones that you want to do further interviews for or further testing. This leads to more maths testing, more physics, more coordination, things like that. After this you keep interviewing like a normal job process, but because I was joining as an officer, I had to do my last interview in Canberra.
So a group of us got flown from Sydney down to Canberra and we sat on a board which had three Senior Navy officers in front of us. We were all 16, 17, 18 year old kids and they just drilled us with questions for an hour to an hour and a half. This was to understand what we were about, what we're motivated by, why we were looking to join the Navy and then you were either recommended or you weren't.
That must have been quite intimidating, especially at that age. I can see it being a completely different experience for 30 or 40 years olds, but when you’re that young it’s almost like you’ve got a roundtable of parents interrogating you.
Lachlan Vidler (10:32):
Oh, absolutely. But even chatting with you now, I sort of think back on it because it was so many years ago, I have to credit some of the ability to do that from moving around so much. I could go into a room, even at 17 or 18 years old and be able to talk with people that I didn't know and that might be 20 or 30 years older than me. Obviously you still feel uncomfortable, but I think I probably felt more comfortable than some of my peers who might not have had the opportunity to develop some of those skills as much as I had.
Yeah and it really does go to show because I think when you’re tested like that, considering you travelled so much at a young age, you realise just how much you’ve developed all of these great communication and social skills that really help you in the long term. Why did you choose to become an officer, considering it was a much more rigorous process?
Lachlan Vidler (11:29):
So in the military you've usually got two pathways, you join as an enlisted person or you join as an officer. Very broadly speaking, the most junior ranked officer is technically a higher rank than the most senior enlisted person. So you can imagine that you're going to have people like I was at 18 years old, who would technically have a higher rank than people who might be 40, 50 or 60 years old.
That's why the application process is a little bit more intense for officers, because they want to make sure that they're getting people who can lead or have the capacity to be able to learn how to do that, and have the ability to learn how to do it. So that's the main difference between an officer and an enlisted person.
The reason why I wanted to go down that pathway was because I always enjoyed leading in sports or at school. I always felt I could communicate quite well and speak to people and I liked being able to be someone who made decisions and wasn't necessarily someone who always had to follow as much. That’s a very simple explanation about the dynamics of rank in the military. But for me, that was why I made the decision to go down the officer pathway, as opposed to the enlisted pathway.
What skills did Vidler gain from the Navy?
Vidler explains that in order to become an officer in the Navy he needed to have completed a few criterias.
Lachlan Vidler (13:01):
Many people think of joining the military as a trade, but I could never have started that job in the Navy while I was still in high school. I didn’t officially join until after I finished the HSC.
Wow, there's so much involved in this. I've spoken to at least three people who I’ve had on the podcast, who have been in the military and they've had some amazing stories to tell. A lot of them have also been very successful in what they do because of the discipline they learnt in the training of the Navy or the army. You can see that it definitely impacted how they've been able to live their life as well, especially when getting involved in the property investing and developing space.
There's so many moving parts in their training and careers in the military that have helped them to be able to achieve the success that they've had. In most cases that I’ve seen they've actually been able to perform at a much higher level than most of us has, because I think that training is so intense that it helps you get those skills. Did you find that too when leaving the Navy?
Lachlan Vidler (14:32):
Yeah absolutely, but I want to make clear It’s certainly not like in the movies where we’re all trained like Navy SEALS. But when I look back on a lot of the training and a lot of the experiences that I had, I can trace so much of my success back to what I learned there. From my perspective, you're not always going 100% in the outside world or even in the military.
Something that the military is really good at training and teaching you how to do is when you have to turn on and raise your level of performance, or take on those really high levels of stress. You learn really great methods of dealing with [these high stress situations], how to break down problems, how to think up solutions. For me, I think those skills are probably the biggest things that I've taken away from my career in the Navy.
For somebody in property, whether you're a developer or an investor, you're dealing with people and their emotions. You sometimes have to deal with really time sensitive issues and those skills that the military teaches you are so invaluable in being able to deal with that and not go crazy pulling your hair out...overtime.
Becoming a logistics officer
Although Vidler enjoyed his time in the Navy and values the training and experiences he gained throughout, he always intended to leave at some stage.
Lachlan Vidler (16:01):
I originally joined as a maritime warfare officer and the easiest way to describe that role is they're the person who drives the ship, they don't physically have their hand on the wheel, they're the person standing behind that gives the directions to that person on where to go, things like that. So that was where I first started. I have a business degree from UNSW and I wanted to utilise that a little bit more.
Although I didn’t plan on leaving after six years, I knew that I wasn’t going to stay on for 30 or 40 years. I wanted to move into a role that was going to be able to give me better skills that were more transferable on the outside and so I became a logistics officer. I think most people will probably have an understanding of what this role entailed, but simply put it's dealing with all the moving parts on the ship.
This included food and fuel and moving the ships to different ports, all the logistical elements that go into that. So it was amazing for my planning skills and my problem solving skills and I had some great experiences while I was in this role. I deployed on two operations and I served on four different ships that were out of Sydney and out of Darwin.
I was doing a little bit of study for my finance masters and I was actually deployed in the Southeast Asia region. We were going through the South China Sea and it's a little bit of a contested area, it's still quite safe and everything's fine but there are a lot of ships from different countries up there that feel that they deserve the rights to some of the ocean.
Looking back, it’s interesting because I’m on that ship and in those kinds of situations and then I’d have to go back to my rack and do a bit of math study and deal with problems like how to work out the price of a bond or how to work out how to value a property. They’re such polar opposite experiences, one minute of the day to the other. So that's probably one of the big memories that sticks out for me.
That makes it really interesting. So you were concurrently getting your masters in finance at UNSW and serving in the Navy?
Lachlan Vidler (18:53):
I was in the tail end of my masters and I had a couple of subjects to go. I thought, ‘Oh, I'm going to be away for a while, do I wait and prolong the degree even more, or do I just try to do it while I’m out there?’. I'm glad that I did try to do it out there because it saved me a lot of time. It was certainly hard switching between Navy stuff to finance and investment stuff.
Oh I could imagine. So how long were you out on sea normally, because there'd be a proportion of time that you'd be back on land, and then the other time you'd be out on the water?
Lachlan Vidler (19:29):
It really depended on what was going on. So for one trip the ship was gone for months and months and months, but the ship is only as good as its people and people need food and things like that. So this is where my role as a logistics officer came into play because usually, from a Navy perspective, ships can actually go a lot longer than their people can. You often need to stop in different ports every few weeks because of things like food, to be able to resupply the ship. It really depended on that, but it was usually every two, three or four weeks. I think the longest I ever spent between ports was about six weeks and when we came in, we certainly needed some food then.
That's a long time to be out there. I'm assuming submarines and naval ships are very similar, or would they be a different thing altogether? When you're underwater it's quite hard to come back up all the time and dock. Are they about the same in between ports?
Lachlan Vidler (20:30):
I'll just have to speak a bit anecdotally because I was never on subs, but it's the same constraints, it's always about food and things like that. So in that regard submarines are the exact same, they've got to make port every so often as well to be able to resupply. But they have a much more stealthy role in the world, so they're set up so that they can do their role a little bit better than we can when we float on top of the water.
Day to day on the ship
Like any other job, Vidler’s day to day on the ship varied. He managed his day according to a number of factors, but focussed on his priorities.
Lachlan Vidler (21:12):
You might have to deal with contractors at the next port, for example, when you’re stopping at a port in Malaysia, you're going to need cranes, food, water and power. You'll then have some admin to follow up on or you may need to check in on your people and deal with any issues that they may have. You'll want to have a bit of chill out time after five or 6pm, around dinnertime to regain some sanity. I used to have to spend whole days on admin sometimes, or whole days preparing for the next port. It was always so different.
So it sounds like you were given set responsibilities and you were taught the skills on how to plan and manage and accomplish goals. But, you also had the freedom to get done what you needed to, without having a set routine everyday.
Lachlan Vidler (22:47):
Definitely, It was 100% like that. In the military there’s a saying, ‘the left and rights of Arc’, which means that the gap between the left and the right of an Ark is where each member of a group has their own positions and is responsible for. You weren't necessarily told how to do the things in that area of responsibility, but they'd say, ‘You just need to get them done’. You always had support and had someone you could talk to which was so invaluable, being able to bounce ideas off of people. I'm a big believer in collective thought and group thinking, I think you get such a better result. If you don't know the answer then you’re able to take on the thoughts of a team and we always had that.
Yeah, I love that. I'm the same I, I think having a collaborative approach is so important, especially in the kind of role that I’m in as a project manager. There's no way that I'd be able to come up with all of the solutions and that's why I have teams of people around me, like buyers agents, architects and so forth. To be able to tap off their expertise and then get the support to be able to come together and finalise the project and basically just guide them in the right direction. So when the internet was not as advanced as it is today, maybe 20 or so years ago, how did people in your position deal when out at sea?
Lachlan Vidler (24:28):
It was definitely not as good. You certainly cannot sit there on YouTube or Netflix and watch a show. Not at all. But there is the internet, but you get it from satellites. So as you're moving throughout the world, you'll get better reception and get worse reception. When we would leave the Australian coastal area, maybe a couple hundred nautical miles off the coast, you would notice that there was often a massive drop in connectivity. It always made it difficult, but it’s the nature of the beast.
You can do emails, that's usually fine but trying to get on the web to be able to see different things could be challenging, It's something that I think will always be an issue for boats everywhere. You could be on a cruise ship and you're going to have similar issues, but with technology going at the pace that it is, I don't think it'll be too long before we get to a point where people can at least exist somewhat happily with the connection.
I guess the reason why I asked that question is, is it a necessity to have that connection? Obviously we're connected by cable in the suburbs and mobile reception is fantastic here. It's like the norm, you click on something and instantly your message is sent off to wherever it is and you can get a response back just as quick. But when you're out on the water and acting as a logistics officer, you've got to plan for contractors and what not. Is it a necessity to be able to communicate this quickly? Or is it whenever you get close reception you just send a message or call somebody then?
Lachlan Vidler (26:09):
It's a mixed bag, there are phones all around the ship and most of the phones are for the internals of the ship, so you can call another phone, but you can't call out. But there are always a few phones that can dial out, that use the satellite connection. For example, someone that does logistics or maybe the ship's captain, might have a need to be able to speak with those people, so you could do it that way.
When it comes to the internet, It's more about keeping the crew happy, regarding their mental health. When you leave home, people just want to be able to chat with their friends and family and emails are not instantaneous. The crew members want to be able to get on their phone, for example, go on Facebook Messenger and be able to just have a chat with their loved ones. As I said, with technology improving the way it is, we can deliver a better service in that aspect and I think it will really help people dealing with the isolation of being away from home for so long.
Making the switch to management consulting
When leaving the Navy and finishing his masters in finance, Vidler ventured into management consulting. Similar to his role as a logistics officer in the Navy, this role had an unpredictable nature.
Lachlan Vidler (28:41):
Consulting was such a natural fit for me because you weren't doing the same job for 12, 18 or 24 months. There is a lot of variation and you get to meet such interesting people. Deloitte was the first company that I went to and it was such a great opportunity to get to work with them.
I interviewed a couple of times and they kept inviting me back for more interviews, so when I got the offer to join them I thought, ‘Deloitte is a global name and I'm about to go from being in the military, which has a bit of prestige about it and is respected, to then having my first job as a management consultant with such a big name. I couldn't pass that up, I had to jump at it.
So what exactly is a management consultant?
Lachlan Vidler (30:17):
My role as a management consultant is to help solve problems that some organisations, companies or the government are having. It may not even be a problem that they are having but something that they need help with or want to do better. So you obviously have a bit of expertise in the area that you deal with, but you end up being a jack of all trades, master of none, and you get really good at problem solving. You also become really good at dealing with people at a senior level within organisations because you're essentially there to help them solve their issues.
That's great. I'm really curious, what skills from the navy were you able to transfer across into management consulting? Or did you actually pick up these new skills while working at Deloitte and learn on the job?
Lachlan Vidler (31:25):
I was able to utilise skills that I had gained from the Navy but also learnt on the job at Deloitte. To me, problem solving is a pretty simple task, there are so many different methods and different frameworks but at the core of it, for example, problem solving is about breaking down a problem, working out the different parts, and then working on a solution for those parts, it's a pretty simple concept.
Coming out of the military, I had so many of those skills which was great, but then going to a company like Deloitte, they have their own frameworks, like intellectual property frameworks on how they like to deal with problems, or how they might want to present solutions to problems. So I took what I knew, I adapted it for working in business and just went from there.
Excellent, how long were you at Deloitte's for?
Lachlan Vidler (32:18):
I only had a short six month stint with them before I moved to my current company, Accenture, which is another really big name where I’m doing similar work. It’s been really interesting seeing the way different companies work, even when working within the same industry. But it's been such an interesting ride so far.
So you’re doing the same work at Accenture?
Lachlan Vidler (32:43):
Yes, doing management consulting and I do quite a bit of the same work with the government. I look at problems that they may have, break them down and help organisations be better, more efficient and more effective.
Vidler began his property journey with little knowledge of the industry and wanted to trust, not only the help of others but his own educated opinion. He saw investing as a way to get out of the rat race, so to speak.
Lachlan Vidler (00:12):
I've always loved the idea of investing and from a young age, I think I was probably 12 or 13, I made my very first investment in shares. That was definitely what stoked the fire. But, as I got a little bit older and I educated myself formally through university, as well as a huge amount of hours spent on the internet, reading blogs and different bits of educational material, I started to come around to the idea of property more.
The thing that really grabbed me about property was leverage and the ability to leverage more safely. You can do it with shares which is called margin lending, but because of how volatile shares are, you might have to pay that money back a lot quicker than expected.
In the current market during COVID people would have been hurt by margin lending, but with property you’re commonly leveraged through a bank. It's not often that the bank will ever say to you, ‘You need to pay back your loan today, or you need to top up 10s of thousands of dollars’.
So for me, that was such an eye opener and then being able to take something like $50,000 and invest in a $350,000 property and get the growth on the $350,000 instead of just the $50,000. To me, that was the cherry on top. I thought, ‘Is this some big life hack?’ ‘Am I seeing the world through some crystal ball that other people just can't see?’ So that was sort of how I decided to get into property.
When I first started out, I knew that I didn't know a lot and I think I was smart enough to know that I wasn't very smart about property yet and therefore needed to learn. But I also knew I didn't want to wait. So I actually used a buyer's agent for my first purchase and wanted someone that I gelled with and who understood me on a human to human basis.
My buyers agent presented me with potential properties and I then did due diligence on top of their due diligence, but being able to have that help on my first property taught knowledge about investing that I didn't know beforehand. That was when I also decided to get my masters in finance, which changed the way I looked at investing and money. I'm not afraid to say I had help with my first purchase.
He acquired his first property in Brisbane and credits this positive experience to not only his buyer’s agent but his own due diligence that he follows through within all of his purchases.
Lachlan Vidler (03:04):
It was a good experience, [but you have to remember] that you will always have bumps along any sort of property acquisition or property research journey. We figured out exactly what I was looking for, my price point and an investment that was not only going to grow, but something that was going to allow me to build sustainably. I couldn't be working on like 4% yields, or even 4.5% yields, especially with the lending, I needed to make sure that I was matched up with pretty close to neutral or a bit of positive growth.
So when those properties were being presented to me, I 100% made the buyers agents work. I looked at all their diligence and I was contacting agents in the area to validate every word that was on the pages of research to make sure that it was a good decision and that it was going to be right for me, which it turned out to be. It was a place up in Brisbane.
We got it for quite a bit under market value. I hate the term ‘market value’, I think it's a bit of a misnomer because the market is what people pay for it. But we got it for a price that was probably less than what it was potentially worth and it's been tenanted from week two of owning the property. It also had quite a good yield.
The last time I checked, it had an annualised growth of maybe 6–7%, so it's been quite strong. I think a lot of it was in the early stages, where by getting it at a good price, we caught up with that. It's been a great first property to hold, it's been low maintenance, has great tenants, great growth and sort of ticked everything.
That's fantastic. With this first property, did you actually go out and have a look at it before you purchased it? Or was it pretty much based on all the research?
Lachlan Vidler (05:02):
Not at the time, no. I committed to that property sight unseen. In saying that, we received a lot of reports about it to make sure that it was fine and did a lot of due diligence. We absolutely had it inspected quite a few times to make sure that it was all good and I did visit it later on. I didn't go inside, I just did a bit of a drive by when I was in Brisbane one weekend and it was exactly how it looked in the pictures. So I thought, that's a big win. I haven't been sold a dud here. But yeah, it was good.
With a growing portfolio, holding properties in both Brisbane and in the big hubs of regional New South Wales, Vidler is keen to see this expand.
Lachlan Vidler (05:40):
My partner and I have built up a great portfolio. But like a lot of people, we found our lending got capped out pretty quickly and we had a lot of cash and equity available to us. So we then transitioned and we've been doing that a little bit more recently, more so than acquiring property, we’ve jumped into property development, luxury property development.
Keeping a Clean Portfolio
Vidler and his partner made the decision to cull some of the properties they had acquired over their property investing journey. This was in preparation for their next venture.
Lachlan Vidler (06:20):
So we're down to about four now. We did a bit of a rebalance and looked at what wasn't performing. When we made the decision to explore other options we wanted to have a bit more firepower and ammunition behind us for that.
Absolutely, I love property development. That's something that I'm passionate about as well. So tell me a little bit more about this property development. What inspired you or got you motivated to jump down that path? You mentioned it's just lending? Was that something else or did you just actually want to start accelerating? Maybe growing your portfolio even further?
Lachlan Vidler (06:54):
Yeah, I think it was definitely being able to supercharge it. So the development we're currently involved in is a syndicated investment and so we’re working on it with a couple of other people. But that was more about being able to leverage it into a very, very high value lucrative development that we couldn't fund by ourselves. For us it was residential real estate and even commercial.
It's really good, you get good cash flow, good growth. In property development, you really want 13–15% annualised returns. I think anything higher and it's very risky and you're probably having someone sell you a pipe dream that's not going to come true. After fees it drops down considerably and then anything below that, you're not really being compensated for the risk you're taking on.
So for us it was being able to turn around and get that incredible growth in our investments or annualised growth. But over an 18 month timeline or a 24 month timeline, be able to pull it out and then go again.
Quick fix or Long Term Solution?
There are always ups and downs in property investing, even when you’re extremely cautious like Vidler. He tries to steer clear of buying properties that could potentially cause problems down the track, however, this one was unavoidable.
Lachlan Vidler (08:33):
At one of our properties that we bought and in the first six or seven months, every piece of maintenance you can possibly imagine occurred. I'm talking, at one point we had to get a bobcat out to dig up the backyard because part of the sewage pipe had, i don't know if rot is the right word, but it had separated away from one of the other sections of the sewage pipe. It was causing obvious issues with the sewerage.
The tradie that came out said to me ‘Mate, it’s gonna cost you but the best thing that we can do for you is to dig up the backyard, we'll weld it back together and we'll fit it and then it should be okay for the next 10–20 years. Or we can do a small fix and it could last 10 years but it could also last six months. So it's over to you on what you want to do’. We just decided to accept the upfront cost of a more long term fix. But yeah, I mean there are worse ones I can think of.
That one's pretty bad. I mean, you think about having to dig up a backyard and to pick up sewage. That's one of the worst things I can think of and I've also dealt with some maintenance issues. I've had a roof completely leak and had probably been leaking for years, but we only discovered it recently. We initially did the patch up but it didn't even last six months.
To be honest, I think it was about three months. I was waiting for the winter to pass before we did it, but I had to bite the bullet because it was just leaking so bad that we had to literally replace the whole roof. We actually just finished that about a week ago, so I'm like, finally, it's all done.
Lachlan Vidler (10:40):
That's great. I think one of the funniest moments we’ve had is at one of our properties where my partner's got some family in the area. Her family in this area have trade qualifications and things like that, so if we ever need something within their realm, they're often able and happy to just go and help us out. We'll either just pay the cost of the materials, but we won't pay for labour, something like that.
But in one of the properties, there was an old heater in the place and it wasn't really that old, it was more of just an old style. Anyway, there seemed to be an issue with it and the tenants ended up calling us to say, ‘Oh, it's not working’. So my partner got one of her family members to go out and check and they said, ‘Oh no it’s working. I don't know what happened? It must have just been a bad day or something when he tried to use it’.
That was that and then a couple of days later we got another call from the tenants saying that it wasn’t working. It turned out that the tenant had been calling the property manager quite a number of times as well. The real problem was that they just didn't know how to turn the heater on. So thankfully, we weren't sending out other paid tradies [for a non-existent issue]. But yeah, that turned into quite a funny moment when we found out that they just couldn't operate this heater.
Yeah, I've heard stories like that too. It's embarrassing, one investor told me that he had a tenant who didn't know how to turn on a light switch. A light switch. Literally, they sent the property manager out there and that night they said, ‘Okay, you flick them on, flick them off’.
Lachlan Vidler (12:19):
Oh, you wonder how some of these people survive in the world normally, don't you? It's so funny, some of the stories that you hear about in the property industry isn't it.
Although he has a bachelor's degree and a masters in finance, Vidler really started to get a feel for the industry when he came to understand how leverage works in property, compared to other industries. This was a game-changer for him.
Lachlan Vidler (13:25):
When I speak with some of my clients in my presentation, there's a slide that I put out and it's about a $50,000 investment. It shows the investment over 30 years, using statistics from the RBA and Vanguard for the share side and showing how much it changes. I think off the top of my head, just the value of the property alone over 30 years goes up to about $2.5 million on a $300,000 purchase versus shares, which have a higher return rate.
But when it's just a return on $50,000 instead of the $300,000, it only goes up to about three quarters of a million [as opposed to that 2.5 million]. It's just mind blowing and whenever I show clients that they are always gobsmacked, they can't believe it. I had a guy yesterday, who when he saw it, was literally speechless. He even said I'm speechless. I don't even know what to say to that because I didn't understand it.
I was going to say, what I love about property as well is that you get a physical asset. It's not like you're buying paper where something could go wrong, the company could go bust and you'd lose all that money.
Lachlan Vidler (15:06):
Absolutely and there are so many investors out there that want to be able to see something. You obviously get the backyard investors who only invest in their backyard, but even if you take that out to the people that are happy with that borderless investment model to get the most bang for their buck, they can still hop on a plane and do a drive by. That is such an invaluable thing to so many people. So I think you're right, having that tangible asset is just amazing.
Huge, huge. You really hit the nail on the head [when you said to compound that] $50,000 and invest it into a property, which is a growing asset worth about $2 million. So you work it out, how often can you actually make that kind of money without working? You know, the thing is that people [work their whole lives] and earning that much is not even possible.
Lachlan Vidler (15:53):
Exactly right. I mean, it's so true. I think the last time that I saw it, the median wage in Australia was a bit over $80,000 and even if you take that, over 30 years, people aren't going to be anywhere near that sort of return. You just buy one house and obviously that's not the solution, that's not going to give you proper long term wealth creation. But, if you just bought one house for $300,000 and you let it sit there, let time and compounding take their effects, you're going to end up with an amazing result.
Plus you will eventually pay that off and you've got yourself a free asset.
Lachlan Vidler (16:40):
Exactly right. That ‘over 30 years’ doesn't account for any value [added work] you do. Even if you just throw in a $10,000–$15,000 renovation on a kitchen and a bit of cosmetics on the outside, you can get 2–3% returns per dollar that you put in, it's incredible. Like you said, that’s just letting it sit there, you do nothing. That doesn't even account for the rent you take in either, that’s just purely the property value.
Matching Growth and Cash flow
Vidler believes that although some investors won’t admit it, their ideal world involves having a billion-dollar real estate empire. Although he doesn’t necessarily expect to achieve this, he is always aiming higher and higher.
Lachlan Vidler (17:35):
For me, it's been all about combining growth and cash flow. There's no point building a two or three property portfolio, if you're then going to be capped out for the next 10 years. [If you do this] you're going to get the growth that we just talked about and that's great [but you won’t be able to achieve anything close to what you may have desired.] I like Grant Cardone's philosophy that talks about the 10 times rule, where you imagine what you really want 10 times. Then, when you fall short, you're still well past what you ever needed or wanted. [This helps me in achieving my goals].
For me, It was really about matching growth and cash flow, so I had to make sure that we picked areas that were going to have great growth prospects. I would then look at it over the long term and think ‘What's it going to do over 10 years?’ We all want it to move in 18 months, or 2–3 years, sometimes no matter how good of a property picker you are, it's never going to happen.
You've just got to be a bit pragmatic and think, over five years maybe you’ll get the growth, [which will put you] in a phenomenal position, but you’ve got to be able to keep having the power to leverage through the bank or through other means. For most people, it's through the bank, to have to match cash flow. So I think that the lowest yield that I'll ever accept is probably at 4.5%.
Even then I'd have to be really stoked with the growth prospects because it's so much harder to increase your day to day income. I've found that the better way to do that is to match the income of the property so that it either pays for itself or comes pretty close to it. So yeah, I think for me, that's been that's been the strategy. It's been trying to balance the growth versus the cash flow.
Yeah, it's always a challenge. The question that I’m always asked is, ‘How do you find these kinds of growth properties’, because it's not something you can actually predict. You never know if things are going to move up 10 times or whatever it is, especially like what you see in the Sydney and Melbourne [market] boom. No one would have expected double that much in such a short period of time, you never know when to time it.
It’s the same thing with positive cash flow, that's a little bit easier because you can actually see, based on the rental income and its history, if it's a good positive cash flow investment. But, how do you go about doing that kind of research? Is there a specific kind of checklist or due diligence process that you undergo as well?
Lachlan Vidler (20:23):
There is, I mean, I think you hit the nail on the head though, you can never predict 100%. You look at all of the metrics and you make an educated assessment. Fortunately, property is quite forgiving and as I alluded to earlier, you might not get it in that first couple of years, but usually, you'll get a bit of protection on the back end, if you've bought in a somewhat educated manner.
But for me, I look top down. There are 15,500 suburbs in Australia and that includes Broken Hill, where I'd hazard a guess that over 30 years you're not going to get the best return as you would for harbourfront Sydney. But, you've got to be able to break it down.
How to Decide Which Areas to Invest in
With over 15,000 suburbs to choose from in Australia, Vidler determines which properties and in which areas to invest in by researching top down. Although it’s impossible to be completely certain about a suburb and the outcome of investing in it, he does share some of the processes he undertakes.
Lachlan Vidler (21:33):
There's so many property research companies out there that a lot of the listeners will be aware of and everyone takes into account different things. But I'm still trying to work out what I think are great drivers. I think that you're always trying to evolve and understand and after a few years, you might realise some things are not as important as other things. I think that when evaluating growth, it really comes down to some really common principles.
You're looking at supply and demand and you're looking at the reasons why somebody might want to live in an area. So I think when you're looking at that, you've got to look at the metrics that reflect something like that. So you're looking at what the suburb or the surrounding suburbs look like. Are there good amenities? Is there good transport? Does it have good livability to people? I've invested in places that I would never want to live, but I know that people do.
I can still understand that there is some sort of livability factor to the area and the list keeps going down, you know, is there employment? Is there some population growth? There is no crystal ball to work out what level is 100% right to dictate it, but to me, I look at those and see if there are some good trends. I then look at what some of the supply and demand characteristics are in a couple of the suburbs that I'm starting to identify and then I even look down into some of the streets.
Are we starting to see vacancy rates coming down? Are we seeing rents going up? What is it that's going on? What is it that is driving the changes in these areas? After that I sit back and again, look at it across a couple of different suburbs. You can't just look at one in isolation. I do it across states as well, I might look at five or 10 factors in a suburb in Brisbane, but then I'll compare the same 10 factors to a suburb in Victoria because I want to be able to try to compare apples to apples.
I want to be able to see if there are trends and as I have a finance background I like seeing things that I can try to quantify. I then think it comes down to a bit of common sense. Does it look like a property somebody would want to live in? Whether that's you or not, does it have a solid foundation which includes a couple of good bedrooms and a couple of bathrooms? Or, does it have some backyard for kids to want to be there?
Let a little bit of common sense come across over the top of your investing and then make a jump. Every time I invest my heart races, even still I think that it's exciting. It's nerve racking, you're never going to know how it turns out. But to me, when that happens, it's like sport, you get that adrenaline rush. You're a bit nervous, but you usually play better, I find that's the [case with] me.
Investing in Your Future
Although Vidler had interests in investing from a young age, he ultimately began building his property portfolio to ensure a better life for himself and his family.
Lachlan Vidler (25:23):
I've heard a lot of people within the property space say, 'Oh, that's not the true why, you’ve got to go deeper than that', but I I don't think it is. I think that is a perfectly reasonable response and for me, I want to be in a position where I work because I choose to not because I need to. That gives my family a better life as well because I could be at work more or less, depending on what's happening at the time.
I don't want to be stuck on the age pension when I reach the later years of my life, because I know that it's not enough. Unfortunately, so many of the listeners will have family members that are on it and know what a struggle it is. If that's your only source of [income], it's so difficult. I know that when I get into my 60s or 70s, the last thing that I want to be thinking about is, can I pay my rent and buy food?
Can I buy my grandkids a nice birthday present? Or can I take the family on a holiday overseas? So for me it was really all about wanting that better life for my family.
Vidler surrounds himself with a strong team, who he trusts to advise him and help him make the most logical decisions because you never know what biases people might have.
Lachlan Vidler (27:06):
When I think about who has mentored me on this journey I would say my broker, my accountant, my friends who have invested, people that I met and worked with in the Navy, it's my whole team. [I’ll never just take one person’s opinion as true or the right piece of advice]. Even your best friends are sometimes going to give you bad advice, not necessarily because they mean to, but just because of their own experience. It might not actually end up being true or right for you.
I've tried to surround myself with an overall great team and take all of their opinions on board. I'll often hear something from one and I'll go to the other and I won't ever say, ‘Oh, so and so said this’, but I'll say, ‘I've heard this recently, what's your experience?’ Then I validate it.
Oh no it's great. It's really true because the fact is, sometimes when people tell you something you don't believe at face value. It even happens with family members as well.
Lachlan Vidler (28:30):
Oh [it’s] the worst!
It's because you have that strong trust in them and you believe whatever they say. But the thing is, until you validate it, they might not have ever invested in property. Yet, they're telling you and giving you property advice. That's probably the worst.
Lachlan Vidler (28:43):
How many times would you be at a family barbecue, or around the dinner table and someone's got a story about property. Always! Whether it's about a bad investment, or a bad property manager that they're renting from, or whatever it is. Someone always has a story, someone always has a perspective, or thinks they know when [a certain] area is about to boom [and tells you], ‘You better get in there!’
But so often, it's never really validated. There's never really anything backing it and because, like you said, you trust your family and your friends, you're always inclined to believe them maybe a little bit more than you should. It's gotten so many people into trouble. I've [had chats with so] many people at my buyer's agency, who come and they say some cracking statements to me.
The first thing I say is, ‘So why do you think that?’ ‘How is it that you've gotten to that thought?’ They tell me and then I give them a pretty real, different perspective [which leaves them thinking], ‘Okay, that actually makes a lot more sense than what I thought beforehand’. So it's funny isn't it, there's always a story.
Absolutely. It's also important to back up these stories with evidence and facts because the thing is, we base a lot of our decisions on emotion. But if you take a step back and take that emotion away, you’re basing it on facts and figures and usually those things are the ones that will actually get you the best result. That's what I've learned anyway because I've made so many bad decisions as well, [listening to unsubstantiated claims]. Mostly because it's just so easy to go, I believe that story because I trust that person.
Lachlan Vidler (30:33):
Oh mate, I am a big believer in that. But you know, to me mistakes are good. You don't want to make really bad mistakes that are going to have a significant and detrimental impact on you later on. But, you’ve got to make some mistakes because it's the best way to learn a lesson, it's the fastest way to learn something. It then helps you to understand how you can change more than just one thing.
Maybe you went through the wrong bank, for example, but then you also learn a couple of other things from that mistake. I don't know, It could be that you had a bad broker. I don't think it's ever just one thing you learn, but the emotional buys, they get people all the time.
When it comes to self-education in property investing, Vidler relies on more contemporary means, rather than some of the more popular literature that may be slightly outdated.
Lachlan Vidler (31:36):
I reckon I've read every property book under the sun. Unfortunately, what I've worked out is that a lot of them were written in a time that doesn't necessarily reflect today's conditions. You’ve got people like Steve McKnight or Michael Yardney, who are talking about buying up property and then living off the home equity loans. A lot of that is just not possible these days. The theory behind a lot of what they say is great, but practically you can't apply it anymore.
So although I love reading their material and think it’s great, I think you should always expand your knowledge. By doing that and [taking into account your own experiences], you can work out what's true and what's not. You'll still pick up some things that are great, but I almost think that today, the best you can do is get out there and learn from people who have current experience in the market.
I think that at the moment there's not too many books that are better than doing those two things.
Times have changed and I think we all just need to learn to adapt to what the changing markets are. [Listening to] experts and people who have actually been there and done that and can adapt to these current market conditions, is so important. So I totally resonate with what you've said there.
Lachlan Vidler (33:02):
It's interesting because [on that note], I've just had a thought about the new Responsible Lending laws. With the changes that are going on with those laws, we might actually see a move back in the property space. Probably not to what it was 10 or 15 years ago, but I have a feeling that over the next couple of years with the easing of those laws, we might see some of those things coming back into play a little bit more.
A bit more borrowing and a bit more capacity to leverage yourself and some looser borrowing checks and criteria going on. But it'll just be important for everyone to make sure it works for their circumstance and to not put themselves in bad spots.
Managing a Business and his own Portfolio
With his buyers agency on the rise, yet still in its early stages, Vidler plans to dedicate most of his time and energy into building up his business.
Lachlan Vidler (35:25):
I'm so excited to be able to help other people create long term wealth, I think that's going to be so exciting. We’ve already got some great clients who have been really happy with our service and product. We just like chatting with each other, some of them just call me up to say, 'Hey, how are you going? What are you up to?' That sort of thing.
So I think for me, that'll be a really big focus for the next five years. Then I think I'll need to make sure that I don't let my own property journey suffer at the expense of the business. I'll have to make sure that I keep devoting time to finding properties myself, not just for clients. I also want to continue doing the developments, things like that. I want to keep ticking [my own boxes], not just helping out the great clients that we work with.
Tyrone Shum: (36:30)
So the last question for you Lachlan is, how much of your success is due to your skill, intelligence and hard work? How much of it do you think is because of luck?
Lachlan Vidler (36:38):
I don't know who it was that came up with the quote, ‘The harder you work, the more luck you have’. I think that's so true. I have never seen that more [in action] than working on my own business as well as working on my own property investing. You’ve got to educate yourself and have a bit of skill and a little bit of talent. But after a while, I think that things come to you because you're working hard.
It's not because you were in the right place at the right time. You were in the right place at the right time because you’d done the work prior to being there. But yeah, of course, it was 100% my own skill.
I actually resonate with you on that and I [wholeheartedly] agree. I think the harder you work, you’ve gotten to prepare yourself for the opportunities that come. If you're not prepared and the opportunity comes, unfortunately you can't take it. It’s like the saying ‘The teacher will appear when the student is ready’.
Lachlan Vidler (37:50):
I love that. You're so right. There's so many hard working people out there and they work hard, always waiting for their big break and it's not for a lack of trying but, you’ve got to make sure you're paying attention to all of the pieces. You’ve got to make sure that you're doing a bit of learning yourself, as you said, when the teacher comes you want to make sure that you're ready to be taught, not just that you want to be taught.
Thank you to Lachlan Vidler, our guest on this episode of Property Investory.
If you want to hear more about his journey and get a copy of this episode guide on the website head over to PropertyInvestory.com/guide
This guide will give you the inside scoop on the little gold nuggets of wisdom all our guest's share from their backstory and all their overall strategies and philosophies. Plus, you’ll get a copy of their advice broken down and shared in a quick and easy-to-consume format!
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