In today’s episode we centre in on a seasoned investor who called upon Loo for his expert assistance in the Moreton Bay region. While the home itself had great bones, despite likely being older than the investor himself, that's just the beginning of this epic tale of uplift! Additionally, the selling situation was certainly an unusual one, which factored heavily into both the sale price and the $200,000 uplift it generated in less than five months. You don’t want to miss this story, especially if you’re concerned about missing out on the boom impacting Brisbane and its surrounding areas— there’s more to Moreton Bay than you may think.

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[00:16:07] On that Kallangur deal, we got $200,000 of equity. But if he had 10 Kallangurs, that's $2 million worth of growth. So it's kind of like, how do you get to that point? And that's one of the things that I really bring home for not only clients, but any investor really. It really is about net value of properties.

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 of Invest Like A Pro we’re chatting with founder and director of House Finder, Simon Loo. His latest inspiring tale features a seasoned investor, a $200,000 uplift that stunned Loo himself, and one of his favourite up-and-coming areas in Queensland that, despite the lack of goldmines and beaches, offers a golden shine all of its own.

Tyrone Shum:   

The client from this particular case study is an established investor who already had a large number of properties, and wanted to keep expanding his portfolio. Thanks to Loo, his knowledge of the Brisbane market, and superpower of hunting down great deals, the story is one for the ages.

Simon Loo:   

[00:00:53] I wanted to share this story because just the numbers surrounding this particular property and deal really brings home the fact of what we've been talking about in previous episodes. It's about finding good deals, it's about finding good deals in good areas, off markets, and distressed and all that kind of stuff. 

  

[00:01:32] He knew what he was looking for. He knew the numbers, he knew how to invest, he wasn't a newbie, by any means. 

  

[00:01:39] But the process and the strategy and also, the search criteria for the property, whether it's your first or 10th property, should more or less remain the same. When it comes to looking for the good deals, and all that kind of stuff. So, what he really wanted to buy was something that he could— especially in a booming market, like Brisbane— is to extract equity as quickly as possible, so that he could use that and just keep going and just keep buying and building his portfolio. 

  

[00:02:13] He also wanted a property that had really good cash flow. And this property definitely ticked that, which I'll expand on the numbers a little bit later on. And he also wanted the property to be pretty much low maintenance. Just a very simple house, brick, no real issues with it at all, like in terms of owning the property. 

  

[00:02:34] It's a very typical brief that we see or that we get exposed to in terms of these opportunities. So we went off and it took us about a month or so to come up with this house that we thought at the time was a pretty good deal. So to run you through some numbers, it was a four bedroom house, brick house, in a suburb called Kallangur, which is in Brisbane, about 30 kilometres north of Brisbane. 

[00:03:07] It was on about [a] 600 to 700 square metre block, I forgot exactly what the numbers [were]. But the seller was a very old couple that needed to move to a nursing home. But they needed to do it in a very specific timeframe. So because of that, their instructions to the selling agent was to sell it off market to an investor that would allow them to have the luxury of time to gather their things, move to the nursing home. Not your typical 30 day or 32 day settlement period.

Tyrone Shum:   

[00:03:47] So it's a longer settlement period that they were requesting.

Simon Loo:   

[00:03:51] They weren't necessarily requesting a longer one, but just a more flexible one. I think it settled around the 45 day mark anyway, so it wasn't super long, but they just wanted that easygoing, flexible kind of buyer. 

  

[00:04:09] I was approached to this property by a selling agent, a selling agent that we've done a lot of business with, and they know exactly how I work. And he told us, we could pick up this deal for $500,000 on the dot. And we know when we did the numbers at the time, this was in September 2021, okay, so about four or five months ago at the time recording. September 2021, we picked up this house for $500,000. 

[00:04:37] When we ran the comparables at that time, it was probably worth about the $570,000 mark, I would say. Conservatively, just looking at what maybe sold in August and early September as well. 

  

[00:04:53] We negotiated, got the $500,000 which the client was super happy with because we showed him that it was a great deal. And the property actually rented for $500 a week as well. Okay, so the cash flow was huge by residential property standards. It didn't require any renovations. The house was fine as is. That was basically the deal that we got ourselves into.

Tyrone Shum:  

[00:05:28] Paint the picture of what does this house look like? As you said, it sounds like an elderly couple who needed to move to a nursing home. So was the inside dated, or was it pretty much original fittings and original inside?

Simon Loo:   

[00:05:44] The house was actually fairly original, but it had been updated internally. It had a newish bathroom, a newish kitchen. But the layout and everything inside was fairly original. Now the owners, they were quite elderly, they actually lived in it from when the house was built. So the house was around about the 35 [to] 40 year old mark. 

  

[00:06:12] But when we did the building and pest, the visual inspections, it was a clean, complete clean bill of health. I was actually surprised that a house of that age, because we see a lot of these types of houses, because it's such a good quality. In fact, we went into the deal because we knew it was quite cheap, expecting maybe a few teething or cosmetic wear and tear maintenance type issues. But it was completely void of that, so it was a very clean house. 

 

[00:06:40] In fact, you know what, guys, I'm going to share the actual address with you guys. Because I've got nothing to hide and this particular buyer that I've got, I'm sure he'd be more than happy for me to use this as a case study to help educate others as well. The house is at 28 Cecily Street in Kallangur. So if you guys want to Google it and check it out, you're more than welcome to.

  

[00:07:06] Kallangur, Queensland. So 28 Cicely Street in Kallangur, Queensland. And again, it was fine. It's what we call a high set house. Which means it's a house basically built on stilts, and people park their cars underneath. There's a lot of storage and people build them out, build the underneath into extra rooms and rumpus rooms, and all that kind of stuff.

  

[00:07:28] It was on a pretty decent block, 600 to 700 square metres, I forgot the exact number, but a really large block. Really good part of Kallangur, walking distance to a lot of amenities. And so yeah, we picked up a good deal.

 

[00:07:45] The main reason why I really wanted to share this deal with the guys is because... so, we bought the house in September. Now, two weeks ago, in late January, the client actually went back to the bank and did a valuation on the property. The valuation came back at $700,000. 

  

[00:08:11] So, immediately— well, not immediately, but I would say within a four to five month mark, there was already... when you draw back down to 80% LVR, probably around about $150,000 of usable equity for this particular client to use to buy his next house. Which is what we're intending to do. 

Tyrone Shum:   

[00:08:31] When you think about it, that's almost like earning $30,000 a month without doing anything.

Simon Loo:   

[00:08:37] Exactly. We bought the house, it was positive cash flow. So it didn't cost my client any money to hold on to until this point. In fact, it made him a couple of hundred or so dollars a week. It didn't require any work at all. And we just bought it, we rented it out. And we pulled out the equity and now we're shopping for another one. 

 

[00:08:59] And this isn't an anomaly as well. We had another client come back to us a few days ago with a property we bought, I would say around about the August mark last year, this was a property in Crestmead. We paid $400,000 odd for it. And already we've stripped off $90,000 of equity from that property as well. 

[00:09:25] The lesson, I guess, with these kinds of properties and these examples is don't be afraid to ride a boom wave. Which is what obviously Brisbane is experiencing at the moment. I bang on about buying good deals, I bang on about off markets and distressed properties. But in times like these you could get the best of both worlds. That Kallangur property, we were probably about $70,000 [to] $80,000 below market value when we bought it, being off market and distressed. 

  

[00:10:00] In the past four to five months as well, Kallangur and that entire Moreton Bay region has also done leaps and bounds in terms of growth. So we basically get the best of both worlds. And that cash flow obviously is there to make a lot of sense as well, in terms of the holding cost. We're definitely not selling it, the buyer's definitely not selling it just yet. And we're just pulling out the equity and moving on to another.

Tyrone Shum:   

[00:10:27] My mouth is watering and saying to myself, 'Man, you should have sent this deal to me first'!

Simon Loo:   

[00:10:34] I'll send you my agreement. We'll talk about that later. But no, I understand for a lot of people out there that are investors, trying to find good deals in this market is extremely hard. But I will say that they're definitely out there. Off markets, distressed sellers. There's a lot of sellers that can't sell on market, even if they want to. 

[00:11:06] They might be caught up in some kind of legal trouble where they can't publicly be letting go of assets or whatever it might be. Or maybe it might be a personal factor, it might be like an embarrassment for them, whatever situation they're in, to let go of properties. And they're not willing to do that at the cost of losing a little bit of money. So they're definitely out there, guys. 

 

[00:11:27] I don't want people to feel like they're missing the boat or missing the train or they're getting too caught up in the whole FOMO type thing. Because the reality is professional investors— we'll talk about this maybe in another episode, but it's about being unemotional. It's about sticking to the strategies, sticking to the numbers, and just making sure we buy properties that work for your long term portfolio, your long term goals as well.

Tyrone Shum:   

[00:12:05] Fundamentally, let's take a step back. If this property did not rise in a booming market, which we're currently in by $200,000, even if you bought it with the fundamentals, just from our conversation here, it sounds like an excellent property for that. 

[00:12:18] And this is where I want to jump back into let's talk a little bit more firstly, about the background of the client, which we kind of touched on initially. Because he's also a professional investor, he doesn't have any emotion attached to it. Obviously, he went out to see you to get assistance, because he's coming from a buyer's agent point of view. 

[00:12:36] You're here, really, just to crunch the numbers, you're not here to buy an emotion, because that's what I would have done if I said this is a fantastic deal. Even though I know the fundamentals are good, I would have just gone, 'Yeah, I'll just take the deal.' And obviously hoped that things are going well. 

Coming up after the break, we’ll unveil the mystery investor’s name…

[00:13:32] He actually recently quit his job and pursued a career in the property industry. 

The demographics of the people looking to move into the Kallangur area…

[00:18:22] Most of the people buying properties in Kallangur, Petrie, North Lakes, Murrumba Downs, Mango Hill, like that entire sort of Moreton Bay pocket, are people looking for houses to live in. 

We hear some of the reasons why this area is such hot property.

[00:21:13] There are so many metrics that you can sort of dive into and look at. Most of the time, we kind of just look at some of the more macro stuff. 

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

Tyrone Shum:   

Loo paints a picture of the ingenious investor, illustrating his property experience and what he does for a crust.

Simon Loo:   

[00:13:26] He's definitely a professional investor. He's built up his portfolio while working his standard nine to five job. He actually recently quit his job and pursued a career in the property industry. Am I allowed to say names?

Tyrone Shum:   

[00:13:44] Yeah, yeah. Okay.

Simon Loo:   

[00:13:45] I'm more than happy to tell you guys that his name is Jyh, Jyh Kao. He's from a company called JD Capital. And he's a mortgage broker. And he's built that business off the back of being able to retire from his day job by accumulating properties that are very similar to the one that I just talked about. 

[00:14:13] He's got a bunch of properties in Queensland, in Logan, in areas that, back before this boom started, a lot of investors were quite... I would say, reluctant to jump into because of its sort of low economic status, low socioeconomic status sort of standpoint. We might expand on that as well in another episode. 

  

[00:14:40] He had accumulated, I think, off the top of my head, maybe seven or eight properties at the time when we bought this house. So he's extremely active in the market. And he's one of those investors that understands that numbers do the talking. 

  

[00:14:57] Obviously, we have to get the fundamentals right into terms of only sticking to major built up areas, good population demand, good infrastructure and government spending, a lot of jobs, multiple industries, good family friendly areas, all those kinds of boxes need to be ticked wherever you're buying. 

  

[00:15:15] But once you have those boxes ticked, you're free rein to buy wherever. Just like in Brisbane, there's a lot of investors that may be like, 'Oh, I want to buy in this area, I want to buy in this area, I want to buy in this area'. But at the end of the day, whichever area you're buying in, yes, there are markets within markets, but when the booms... they'll all eventually experience growth. 

  

[00:15:40] So really, what it comes down to is: When you get into these deals, how much do you pay? How much equity can you get from them? How much cash flow can you get from them? And how is that deal going to help you buy more deals? So that when Brisbane or Perth or Sydney or wherever it is starts booming, how much money you're exposed to, how much growth you're exposed to.

Simon Loo: 

[00:16:07] On that Kallangur deal, we got $200,000 of equity. But if he had 10 Kallangurs, that's $2 million worth of growth. So it's kind of like, how do you get to that point? And that's one of the things that I really bring home for not only clients, but any investor really. It really is about net value of properties, and how you get to that point that will determine how much money you make at the end of the day, really.

Tyrone Shum:   

[00:16:41] The message really is fundamentally, pick a good location, obviously, make sure that everything checks the box. But ultimately having multiple properties, not just one or two, but multiple of them, allows you to be able to ride the growth in any particular market. So that's a very, very good point that you've made there. 

  

[00:17:02] Now, I want to jump in and have a chat a little bit about Kallangur. Because I don't know the area well, and I know some listeners may or may not know. Why particularly that area? I guess let's talk a little bit about the demographics behind that one. 

Simon Loo:   

[00:17:16] Kallangur is about 30 to 40 minutes north of Brisbane. It's in an area called Moreton Bay. It's an area that's been hit pretty hard by investors, I would say over the past five to 10 years, I would say maybe around the three to five year mark. Previously, it was kind of like a flavour of the month type thing, especially for people chasing cash flow in Brisbane. 

  

[00:17:45] Now Kallangur itself at that point, had a bit of a... I wouldn't say bad reputation, but maybe like a lower socio economic reputation. And the reason why I have targeted this particular area is because it's currently going through— or it's well into going through— that process of gentrification. So it's becoming a much more owner occupier friendly, the demographics [are] completely changing. 

  

[00:18:22] Most of the people buying properties in Kallangur, Petrie, North Lakes, Murrumba Downs, Mango Hill, like that entire sort of Moreton Bay pocket, are people looking for houses to live in. They're no longer investors anymore. They're young families, they're professional couples, they're people relocating from Sydney and Melbourne. A massive thing that we're seeing moving into this area. 

 

[00:18:49] And they're moving into this area because not only does it have a lot of lifestyle characteristics, you've got your shops and schools and parks and a lot of waterway type, close to, reserves and creeks and rivers and actually Moreton Bay itself. But it's affordable. Very, very important. It's still affordable. And that affordability is driving people to that area. Especially when they're starting to get priced out of inner Brisbane areas. 

  

[00:18:49] The difference is— I mean, let's be honest— whether we're looking at $500,000 or even $700,000 for a three or four bedroom brick house on a 600 [to] 700 square metre block, within 35km of a major capital city is still affordable. Affordable in the sense that an average income earner or average income couple can get into without any dramas. 

  

[00:19:52] We talked about this in previous episodes in the sense that the $500,000 property we bought has a [much] higher percentage chance of becoming a million dollar property, because it's still affordable. Whereas if we're getting into some of the more expensive blue chip suburbs, if we get in at $1 million, it's harder for that property to become $2 million, which is double the value, same scenario. 

 

[00:20:21] So those are some of the reasons— along with a bunch of other ones which I won't get into now— why we are targeting or we have been targeting the Moreton Bay area, and many other parts of Brisbane as well.

Tyrone Shum:   

[00:20:32] Well, I mean, we do have time, Simon, it'd be great to just dive into some of this to be honest, because it just makes me think. If you just did a random search as a property investor, and you try to find properties around that half a million dollar mark, as we said it's affordable and metropolitan cities, whether it be in Brisbane, Melbourne... don't know about Sydney, don't know if you'll be able to find it. 

  

[00:20:56] So it kind of makes you think, wow, if you just did that kind of search, I wonder how many properties would probably pop up that would be suitable? And then you do your fundamental searches and check that, that would be feasible. Because then you go, 'Okay, there's actually still a lot of potentially out there a lot of properties, you've just got to find them, that's all it really comes down to.'

Simon Loo:   

[00:21:13] There are so many metrics that you can sort of dive into and look at. Most of the time, we kind of just look at some of the more macro stuff. Obviously, Sydney's not a great place to be buying. So even if you can buy something for $500,000 [or] $600,000, it's probably not a good play, in terms of how much growth you're going to experience. 

  

[00:21:35] One of the main things we focus on is what's happening in the area as well, in terms of infrastructure and government spending. A lot of listeners who might be familiar with the Moreton Bay area, they're putting a lot of money in to upgrade roads. We've recently had some new train stations there, obviously you've got the new university at Petrie. 

 

[00:22:07] Where it is at the moment, geographically, you're kind of in the middle of between Brisbane and the Sunshine Coast. And what we're currently seeing is a trend where the pockets between Sunshine Coast and Brisbane, and Brisbane and Gold Coast, are starting to close that gap. 

  

[00:22:25] Previously, it was kind of no man's land. But now it's starting to close because people are moving into these areas specifically, because they get to enjoy the lifestyle of both worlds. The relaxed beach holiday lifestyle of the Sunshine Coast, and the Gold Coast, but also in proximity to a major capital city like Brisbane, and all that has to offer. And if you have to work, obviously, you can commute to Brisbane for work. Or commute to the beach after work as well, potentially.

Tyrone Shum:   

[00:23:00] It's a fantastic location, it's central to a lot of things. Plus you have the lifestyle as well, not having to stress out about being too close to the city.

Simon Loo:   

[00:23:09] 100%. And look, I think the previous factor that I mentioned, that owner occupier appeal, and there's a couple of variables that come off that as well. But when we're seeing a large influx of owner occupiers replacing investors, that's a really solid sign for us as well. 

  

[00:23:32] However, I do need to make a distinction there. Because a lot of people when they buy investment properties, they want to buy in an area that's already established with a lot of owner occupiers. Now, the problem with that is, a lot of the data that you see is too old. A lot of the demographics data and all that kind of stuff is from, like, 2016. So that's completely not reflective of what's changing at the moment. 

 

[00:23:59] So, for investors out there, it's really important to be a little bit more astute about what's currently happening on the ground. Any data out there, all data, is based on history, is based on yesterday. So you have to look at it very carefully and not just rely purely on data to make decisions today as to what might happen tomorrow. 

  

[00:24:24] Because a lot of times, if you're, let's say, for example, buying in an area that's already heavily owner occupied, maybe a lot of the growth has gone already. Maybe you're a little bit too late into that area. Maybe you're buying into a price that's already inflated because a lot of that influx has already happened. So those are some of the things that we look at as well.

Tyrone Shum:   

[00:24:48] That's great. And that's really good insight, because you're on the ground. And on top of that, you're pretty much doing this full time anyway, so that's why you have that knowledge. Whereas as an investor, I'm not always on the ground seeing all these kinds of things, hence the reason why coming to you to actually get that information makes a huge difference given their investment edge and hoping to reduce the risks of actually making a challenging or a bad mistake, I guess you can say. 

  

[00:25:15] Because ultimately, yes, you can buy a property. But if it doesn't move, then you've had an opportunity lost to purchase something else that could be a better growth asset. So that's why these decisions are very, very important to speak with your team, not do this yourself, but to work with a team. Whether it be a property manager, buyer's agent, a mortgage broker. You work these things out together with them, because they will be able to give you guidance on their expertise on what's going to be best for your situation, too.

Simon Loo:   

[00:25:43] Not only that, it's about confidence. As an investor myself, if I didn't have a good property manager, didn't have a good solicitor, didn't have good trades on the ground 1,000 kilometres away, there'd been no way I'd have the confidence to build three or four properties, let alone the amount of properties I have now. 

 

[00:26:05] And it's a bit of a mindset thing as well, just having that peace of mind. Knowing that if something were to go wrong, you just pick up the phone, call whoever is part of your team that deals with that. And it's looked after. So it's not necessarily just buyer's agents, obviously, we have a role, but your mortgage broker or property managers, even the person that helps you with the insurance, or your depreciation. That's super important as well. So once you have that established team of people around you, it's just about finding the right deal, which is the hardest.

Thank you to buyer’s agent Simon Loo, our guest on this special episode of Invest Like A Pro presented by House Finder. 

Also, for being a loyal listener of the podcast, I’ve asked Simon to offer a free 1 hour strategy session normally valued at $500 to help you put together an actionable property plan.

To get your free strategy session, simply visit housefinder.com.au and fill out the contact form, or call Simon directly on 0415 626 342 and quote “Property Investory”.