In this episode he explains how he went from not knowing how somebody could invest interstate to knowing a town he’d never been to like the back of his hand! Weighing up the chances of his corporate career helping him achieve his goal of financial freedom, he realised it wasn’t going to cut it, and gave his dream a crack instead. While it wasn’t all beer and Skittles along the way, it certainly paid off in the end— but not before he found out the importance of identifying his goals, and chipping away at them to get the chiseled six pack (of sorts) he’d always wanted.

Timestamps:
30:45 | The Stakeout
31:47 | Taking Chances
00:45 | Up, Up, and Away
09:15 | …Why?!
10:52 | Tangent Time
16:21 | All Roads Lead to Logan
21:52 | The Logan Bus
28:02 | $10M in 9 Years

Resources and Links:

[00:32:03] And what kind of prompted me to go forward and to go through with it was: I looked at my corporate job. I looked at my situation. And I'm like, 'I don't know if property investing can work. Maybe there's a 10 [to] 15% chance that this whole thing will actually pay off. No idea'. 

This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

I’m Tyrone Shum and in this episode, we’re back with the owner of Mortgage Channel, Michael Xia. Not one to be short on stories, he fills us in on the rest of his Newcastle property drama, and tells a tale of his first trip to Logan, Queensland. While many investors shy away from this area in the past, Xia made a decision and stuck to it, and is reaping its rewards.

Tyrone Shum:
We jump straight back into it by picking up where we left off last time. The last we heard from our investment superhero, he was taking on a mission involving his Newcastle property being plagued by vandals. With the neighbours already on the case, Xia and his dad took to the road to help out and hopefully catch the villians red-handed.

Michael Xia:   

[00:30:45] After a couple of times, what we actually realised [was] it was the kids that were living in that property before. And because they knew it was vacant, they would come in and then they would just trash the property for fun. And it got to the point where— because then we got the police involved— they went to the school and then everything. 

[00:31:07] But the final straw, when the police started to take it quite seriously, is they somehow got heaps of tyres, like car tyres, and they just all stacked it in the backyard. And the thinking behind it was they [were] going to light up the whole house.

Tyrone Shum:   

[00:31:23] Even though I'm laughing about this, that's crazy.

Michael Xia:   

[00:31:30] There was one time where the police almost caught them. The police saw them in there, jump over the back fence. The police obviously didn't give chase but I think the kids realised that, 'Oh, frick, they're onto us'. And then it kind of stopped after that. Thankfully, they didn't light it. 

Michael Xia: 

[00:31:47] But through that whole experience, the sleepless nights, you're going into property investing, not knowing if we could work. And then there was points of time where I was like, 'Frick, maybe I should just sell this property [to] not have to deal with the headache. I don't even know if this could work'. 

 

[00:32:03] And what kind of prompted me to go forward and to go through with it was: I looked at my corporate job. I looked at my situation. And I'm like, 'I don't know if property investing can work. Maybe there's a 10 [to] 15% chance that this whole thing will actually pay off. No idea'. 

  

[00:32:22] But then I looked at corporate and I looked at where my manager was [and] his lifestyle. And also what his salary [was] and what his day to day life was. And I'm like, 'Okay, I know 100% that that's not what I want'. So if it's 15 [to] 20% success rate compared to 0%, I'll just take the 15 [to] 20%. 

  

[00:32:43] So it was very, very difficult. I managed to kind of get through that. Thankfully, fingers crossed, the insurance came through. And funnily enough, after everything was repaired, and we got the insurance payout, we actually came out ahead and it ended up being a free renovation. It was worthwhile. But I can tell you during that time, and during the sleepless nights, it's not something that when you're first starting out that you wanted to go through. 

  

[00:33:12] The reason for sharing that story is everyone goes through that in your investment journey. For some people, maybe their first purchase is really difficult. They're dealing with maybe a dodgy agent, or they come across a tenant that trashes their property. 

Tyrone Shum:
Xia has seen this happen time and time again, including to his own clients.

[00:33:31] Some of my clients had this scenario where they invested in Brisbane. They held it for a couple of years, and then it just got too hard. And they sold in 2019 [or] 2020, just before the market moved. 

  

[00:33:45] Or, you know, in some instances, some people get lucky, they have a dream run. But then maybe for their third or fourth property, they come across it and they're like, 'Frick, this isn't for me', and then they stop it. But it's a numbers game. It will hit you no matter when. 

  

[00:33:59] So my kind of key advice is when you do go into property investing, don't think it's beers and Skittles. Don't think it's just money growing on trees and you're going to be rewarded forever. But be very clear of why you're doing it. Because at one point in your journey, you'll be tested. And it's going to be the reason why you're doing investment property. And what you want your future goal to be that will actually pull you through.

Tyrone Shum:   

While buying interstate isn’t unusual today, this wasn’t the case just six to seven years ago when Xia shifted his sights out of Sydney.

Michael Xia:    

[00:00:45] I had a lot of hesitations in terms of buying interstate. And I remember vividly going to Property Chat meetups. And I remember sitting across from a lady, and I think at the time, this would be 2014 [or] 2015. And she had three investment properties in Brisbane. And I was just blown away. I'm like, 'How do you even manage? How do you even look after properties in another state?' Because it was just so foreign to me. 

 

[00:01:12] I have to thank Rolf, my mortgage broker, [who] kind of pushed me to look outside my comfort zone. And how in terms of in my comfort zone I was and how much I wanted to and needed to touch and feel the property is: One of my properties is in Coffs Harbour. So it's about a five hour drive each way. I would rather jump in my car, do a 10 hour round trip to Coffs Harbour and back rather than jump on the plane and take a one hour plane flight to Brisbane.

Tyrone Shum:   

[00:01:45] I remember tha! And I was like, 'You must be a freak of nature to be able to do five hours and not even take a stop a lot of time and come back after a whole day'.

Michael Xia:   

[00:01:57] It was just a passing comment at the time from Rolf, actually. And it was like, 'Frick, you drive 10 hours to go and check on your renovation in Coffs Harbour, why don't you jump on a plane, come up to Brisbane, and then you're going to be there and back in a couple of hours? It's going to be a lot easier than what you're doing now'. I'm like, 'Oh, actually, yeah. Pretty good point'. 

  

[00:02:19] But up until then, it was just so foreign. And I still remember the story behind in terms of my first trip up to Brisbane. So up until then, [I] didn't fly interstate in Sydney. It was just something I didn't really do. And being a tightass Asian I booked Tiger to go up to Brisbane.

  

[00:02:39] I had no idea that Tiger made you check in 45 minutes before your flight. I just thought, Okay, you would go when the takeoff is and then you would jump on a flight. I just had no inclination of it. 

  

[00:02:54] And I turned up to the airport half an hour before my flight and Tiger's like, 'No. Sorry, you can't board'. And I'm like, 'The plane's right there'. And they're like, 'No, sorry, it's company policy'. 

 

[00:03:04] So me and my dad would fly out, because I was not very confident so I took my parents with me, took my dad with me. So we had to pay an extra $800 just to change flights. And the next flight was, like, four hours later. So I literally landed in Brisbane, had time to see one property— and it was an absolute crap deal— then had to jump on the flight back and then come back to Sydney. 

  

[00:03:28] So for the price of literally four air tickets— and also only seeing one property— that was my Brisbane when I came back. But the main difference is when I landed back in Sydney, it just gave me so much confidence. I'm like, 'Frick, I did something that I did not think I could do'. And then after that, I'm like, 'Okay, I think I can do this. I think I can buy interstate'.

Tyrone Shum:   

Once he knew he could do it, he was faced with the next question: Where? The process behind choosing the right location was a long one, but well worth it in the end.

Michael Xia:   

[00:04:42] There [were] a couple of different sources that I would use, and for anyone looking to buy interstate, starting out new, looking in a new area, then I will kind of follow this sequence. 

 

[00:04:52] I read a lot on Property Chat. And Property Chat is great. In the search function you can type in any suburb and there's literally 10 pages of people talking about any particular suburb. And as long as you go and read through all of that, you'll have a pretty good understanding in terms of what the dynamics of that certain area is. 

  

[00:05:13] And to give you an example, when I first started, for some reason, I was interested in investing in Wagga Wagga. [I'd] never been to Wagga Wagga in my life. But I could tell you the good pockets and the back pockets of Wagga Wagga just from reading Property Chat. 

 

[00:05:30] That was a similar approach that I took with Brisbane. And I remember having a map next to me, reading these posts, and every now and then someone would then say, 'Hey, look, this suburb: Don't buy in the street', and then I'd make a note on my map. [I'd] go back and then read and then make another note on my map. And then over time you formulated on particular suburbs, where to buy and then where not to buy.

  

[00:05:52] There were some really experienced investors that I started chatting to. And some of them just helped me immensely. There was a lady on the forums called Beanie Girl. And she helped me a lot because she was very experienced with the Logan area. And I remember reading her posts on Somersoft and just getting a lot of information on that. So she definitely helped me in terms of formulat[ing] my strategy in terms of purchasing in Brisbane. 

He flew up to Brisbane every two to four weeks, packing property searching into every second of his weekends away that he could. 

Michael Xia:  

[00:06:28] I can tell you right now, waking up at four [or] five o'clock in the morning on a Saturday, after you've worked for a week, jumping on a flight, driving around for a holiday, looking at open homes, coming back on the 3pm flight to come back to Sydney because I didn't want to pay for accommodation— there were times during that I was like, 'Frick, what the hell are you doing?'

  

[00:06:52] It was okay if you found a property. But most of those trips were fruitless. And I guess it was just really wanting to quit corporate and having that goal in mind that really kind of pushed you ahead. But yeah, 100% there [were] times during that period that I was questioning myself. And then on top of that, Brisbane, as you know, did absolutely nothing for the next five years. 

 

[00:08:12] It's almost like you put it in terms of the gym analogy where I've been going to the gym for six months, but where's my six pack? And it's like, 'I've bought two properties, and I've held them for three months, why am I not financially free?'

  

[00:08:28] It's funny to say that, but it is so true, and you don't see those results for a long time. And property is such a long term game that you don't ever know. Because, I mean, we can talk about capital growth, and that's kind of a separate topic, but you just do not know when properties will go up. So all of this time you think you're doing the right thing, but are you really? And that definitely plays on your mind over time.

Tyrone Shum:   

He was able to overcome this and keep going, but not before squeezing in one last side-splitting story.

Michael Xia:   

[00:09:15] On that first trip that we went up, we went to hire a car. Me and my dad went to the hire car place, I think it was called Alpha Cars or something. And the guy at the counter goes, 'Where’re you going to?' And I'm like, 'Logan'. And he just made this face and goes, 'Why the hell [are] you going there?' And I'm like, 'To buy properties.' And he was like, 'Are you serious? Property prices never go up there. That place is, like, the biggest dump ever'. And my dad's, like, pulling out my check being like 'Are you sure you want to do this?' 

 

[00:09:41] And then this was Logan, so we drove to Logan. I don't know really the area. I've only read up about it. And somehow the streets took us to Woodridge Station. And for those that know Logan, Woodridge Station is, like, the roughest part. And when I got there and I got out of the car I was like, 'Holy crap. What they say on the forums is actually kinda true'.

 

[00:10:30] After we drove around some of the other pockets were a bit better. But yeah, that was definitely. So that planted the doubt and the seed. So in terms of your question, kind of what overcame that, and how I stuck to the course— I think it was a lot of conversations that I had with other investors. 

Conversations with other investors have helped him out more than once. He uses these experiences to offer advice to those just starting out.

Michael Xia: 

[00:10:52] Who you speak to, and who you surround yourself with is so important. When I first got into property investing, I was just so excited by it. It was as if I had discovered sliced bread. So I would speak to anyone that would be willing to listen to me. So all my high school friends, whenever we had a catch up, I'd just give them lectures about property investing and then why it would work. And they were like, 'Frick, here we go again, Michael's going to go off on a tangent'. 

  

[00:11:20] And they were all telling me that I was going to start with what happened in the GFC in the US and I was bringing it to Australia. And they were all adamant I was going to go bankrupt. And of course when you're starting out that plays on your mind. Family [said], 'I don't know if it can work' and stuff like that. 

  

[00:11:37] But the thing that got me through that was going to Property Chat meetups, speaking to other investors, speaking to people that had come here before me. And I remember having a few conversations with people from the forums that had 20 [or] 30 [or] 40 properties, and some of the things that they said and some of the regrets that they had. 

  

[00:11:58] There [were] two things that kind of stuck out to me, which was a common theme, where a lot of investors reflected on their early stages. One of them was when they could buy, they didn't go hard enough. So maybe they bought one every couple of years. And when they look back, they were all like, 'Oh, frick, when I had that opportunity, I wish I bought a little bit more'. And speaking to my clients today that have bought in Brisbane, guess what's the number one that they say?

Tyrone Shum:   

[00:12:27] 'Wish I'd bought more'. If you bought in Sydney, you wish you bought more.

Michael Xia:   

[00:12:34] A lot of those people on the forums are talking about western Sydney. And I could kind of see what happened. So I held on to that belief: Maybe the same thing might happen in other markets. So that was one. 

 

[00:12:45] And the second one that they've said was: I sold too soon, or I sold when I should not have sold. So that kind of formulated [the thought that] okay, this is a long term game. I'm going to buy, I'm going to hold. No matter what's happening in the market, what other people are saying, I'm just going to hold for as long as I can. 

 

[00:13:03] And that was something that through all of those conversations that I have with the investors that came before me, those were the two things that stuck in my head. And I'm thankful for those conversations, because after holding for five [or] six [or] seven years, now I'm starting to see some of the fruits of that labour.

Tyrone Shum:   

His goals change as time goes by, and he remembers his first goal— or he tries to.

Michael Xia:   

[00:13:55] Touch football, aside from property investing, was my life. And all I wanted was to replace my work income, then I could just train and play touch football as much as I can. Which was $80,000 at the time, so that was my first goal. 

  

[00:14:13] And then it wasn't until I started my business that we got the passive income of the $80,000. But then it kind of grew from there. And then over time, you kind of develop your own goals and so on and so forth. Talking about goals, that's another thing. When you get into property investing, people ask you, 'Oh, what's your goal? What are you trying to achieve?' 

  

[00:14:32] And before getting into property investing, I didn't even know what goals were. It's like, yes, you would go to your job and your manager will set your KPIs and your goals for the year. But I would never set goals or even think of setting goals for myself. So it was just a very foreign concept. 

 

[00:14:52] Going through the whole investment journey, now I realise the importance of it. Because when something happens when you don't want to put your head or you think, 'Oh, why am I even doing this?' The thing that pulls you through is going to be that goal. 

 

[00:15:05] And, you know, goals have changed over time. My strongest burning goal was to quit corporate, to replace my work income and quit corporate. And I think that's why, in my first two years of investing, we went from those two properties to 14 properties in a space of two years. So from 2013 to 2015, and then that's when I quit corporate. 

  

[00:15:25] After that, I can honestly say that my goals have not had that same burning desire. And that's probably why in terms of, yes, the number has grown, but purely in terms of the speed or the meaningfulness of it, it's not quite there. But in saying that over time, you do come up with other goals like 36 by 36. Do I go to bed really wanting that 36? Not really. So I guess a piece of advice is to get a goal that's really burning. And if it's so meaningful to you, you will find ways to make it happen. 

 

Coming up after the break, we hear about what stopped him in his tracks— but not for long…

 

[00:19:04] But after that point, I then couldn't borrow any more. No bank would absolutely touch me beyond that point. And I love property, I loved everything there was about property and I wanted to continue buying. 

What keeps him coming back to Logan, and the staggering number of properties he holds there…

 

[00:24:42] In the back of my mind, part of me wanted to buy elsewhere. But every time I ran the numbers, it just kept pointing me towards Logan. 

 

He pinpoints the area of investing that gives him the biggest headache overall.

[00:28:46] I'll say this kind of like a caveat in terms of property investing, like everything has its pros and cons. 

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

 

Tyrone Shum:   

Xia elaborates on his property portfolio, jumping to 2013 when the market in western Sydney had started to go up and encouraged him to look further north.

Michael Xia:  

[00:16:21] I was starting to buy in Newcastle. And then within the space of a year [to] a year and a half, those markets started booming. 

  

[00:16:27] And then when I had completed my renovation, poured out my equity and I was ready to buy again, I could not get those same prices. And it was always hard to pay $300,000 [to] $400,000 for a house that you had paid just a year [to a] year and a half ago for $200,000. It just didn't make sense then. 

 

[00:16:46] But my other main hurdle at that point in time was borrowing capacity started becoming harder. Now, this was pre APRA, where borrowing capacity is so much easier than today. But even then, on the $70,000 [to] $80,000, there was only so much that I could do if I was going to buy properties with lower rental returns. Like 3% or 4% was not going to get me where I want it to go. 

  

[00:17:09] So the only area that I could find where it satisfied that you had to be close to a CBD. It was around the $300,000 to $400,000 mark, because that's where I could get the deposit for the purchases. And I needed something that gave me 6% or 7% rental return. And I looked everywhere in Australia, and the place that I kept pointing back towards was Logan. 

  

[00:17:33] Now I'm sure a lot of your listeners would know Logan today. But back then Logan was a dump. And it shouldn't have been, because it had all the characteristics. But back then people would laugh at you for buying in Logan, just like in 2012 [or] 2011 people would laugh at you for buying in Mt Druitt. It was exactly that same thinking. 

  

[00:17:53] But at least in Logan, not that it was a great area and somewhere I was dying to buy in, but at least it gave me the numbers that allowed me to continue buying my property portfolio. So from properties five to 14, I just continuously bought in Logan until I quit corporate.

Tyrone Shum:   

[00:18:13] Wow. I'm on the edge of my seat going, 'I want to know what's next'. And at one stage as well, too, you moved up to actually Queensland to be literally living there for how long again?

Michael Xia:   

[00:18:27] I moved up there for two or three years. And the main reason was to be close to my mentor. So at the end of 14 properties, to put it into perspective, this was like pre APRA. My work salary was like $80,000, and I had loans [of] about $3.3 million. You kind of talk about that today and it sounds crazy, but that's what the lending environment was like back then. 

[00:18:53] In saying that, you can still do a lot of the same things that you could do back then, as long as you follow the same philosophy. Not to kind of that scale, but it is definitely still possible today. 

  

[00:19:04] But after that point, I then couldn't borrow any more. No bank would absolutely touch me beyond that point. And I love property, I loved everything there was about property and I wanted to continue buying. And the goal was always to quit corporate. And after pondering for a long, long time in terms of what I should do in the property space, and I explored literally every single avenue under the sun, whether to be a real estate agent, I was even thinking of getting my builder's license. And this is coming from someone that has trouble changing a light bulb, so that's kind of how far of a stretch it was. 

  

[00:19:39] I thought about [it and] buyer's agent and that was really high on the list. And I finally landed on mortgage broking. And part of the reason for that is what Rolf had done for me. I could see the business model work, I could see that if you help your clients in the right way, they can build a large and very successful property portfolio. 

  

[00:19:41] So I begged Rolf to be my mentor. Luckily he said yes. And it was literally I finished on a Friday and on Monday, I was driving up in my car with all my belongings and then moving up to the Gold Coast.

Tyrone Shum:   

[00:20:16] Wow, that was such a drastic change. [What did] your parents and family and friends all say? Because I remember when we had that conversation, I was a bit shocked, going, 'What? You're off to Queensland?'

Michael Xia:   

[00:20:26] I left everything behind to chase a dream. And it was hard. For the first couple of years, I would live [in] Airbnb[s]. Just to save, and it didn't make it easier. It's a side story, but I had a very close friend, Steven Ryan, and we can chat about Steven Ryan. He's actually a very successful YouTuber now, he's got hundreds of thousands of subscribers. 

  

[00:20:51] He's no longer in the mortgage broking space, but we both entered mortgage broking at the same time. And we both lived at the same Airbnb, worked from Rolf's office. And for the first couple of years, it was almost kind of like your partner in crime in terms of building your mortgage broking business. 

  

[00:21:11] It was definitely hard, but also really rewarding. I think back to those times, very fond memories. But it also gave me that ability that being based on the Gold Coast, every single weekend, I would drive up to Logan to go up to open homes. And it was so funny back then, because when you first start out as a mortgage broker, I was literally known as... if you were from Sydney or Melbourne and you were an investor wanting to buy in Logan, then you'll use Michael as a mortgage broker. 

  

[00:21:41] Mainly because I had no other cut through in any other market. No experience as a mortgage broker, probably not very good as a mortgage broker. But in terms of that very, very small niche, I knew my stuff. 

  

[00:21:52] So literally for about a year and a half, every single weekend, I would have a client either from Melbourne or Sydney come up to Logan. I would meet them at the first property during the day and then we'd just go through a whole bunch of open homes. 

  

[00:22:06] And I did that for a lot of our clients in the early days. And there was even a nickname for it. Because at one point it became the Logan Bus. There was a time we would have, like, seven [or] eight investors come up and think of it back then when we would all go into an open home. And this is back when agents didn't see anyone in their open homes. And the smile on the agent's face when they had seven [or] eight investors all come in that were all financially able to buy the property. 

Tyrone Shum:   

[00:22:35] The agent must have loved you. Every single weekend. Yeah, there's that bus coming, it's the Logan bus.

  

[00:22:44] We have formed some really, really good friendships with some agents up there. They even came to our wedding and stuff like that. So it was a lot of fun during those times. 

Tyrone Shum:   

Although he loved his time in Queensland, something— or someone— was pulling him back to Sydney.

Michael Xia:   

[00:23:18] [What] brought [me] back to Sydney was love, actually. I met a girl. And she was in Sydney. And I precisely remember it was over Christmas. So over Christmas, I'd come spend time back with the family. I came back, we went on one date. And then after that I never left Sydney again. And then a couple of years later on, we got married. And now we're expecting our second baby in April. So it's been a good couple of years.

Tyrone Shum:   

[00:23:49] Congrats, congrats. The rest is history, as we all say.

Michael Xia:   

[00:23:54] In terms of the property front, what happened during those two years is when you start your business you can't buy for two years. And I remember specifically those two years [were] very hard. I'll be looking at all these great deals my clients are buying and you're just, like, itching at the teeth to purchase more properties. So that definitely fueled me to work harder in the business to get the income up so when I could do my second year's tax return, I could then start buying again. 

  

[00:24:21] And that's exactly what happened. After two years, we pulled out a whole bunch of equity from all the earlier 14 properties that we had. I then used that money and then continued to apply. And it was to the point where I was looking to buy properties again, and this would have been around 2017 [or] 2018. 

  

[00:24:42] In the back of my mind, part of me wanted to buy elsewhere. But every time I ran the numbers, it just kept pointing me towards Logan. And it got to the point where today we hold 25 properties in Logan. Every time I wanted to buy elsewhere, he just came back. For [a] period of time, you just could not beat $300,000 [to] $350,000 properties yielding 6%. And it was 25 [to] 30 kilometers to the CBD. 

  

[00:25:10] Even I was thinking, 'Why are prices so cheap? Why has it not gone up?' I'm buying today, even cheaper than my first couple of properties that I bought. And it just kept going for a number of years. And we just kept buying, kept buying. It got to the point [where] even my wife was like, 'Don't you have enough there? Like, we should be saving for our PPOR. But you keep wanting to buy these'.

  

[00:25:43] But that voice in my head said, 'You didn't go hard enough where you could have'. My belief for the area was just so strong. And from speaking to the agents from spending so much time on the ground there and you just had so much belief in the area. Thankfully in the last year, things have started to change. 

  

[00:26:05] So to put these into perspective, even a year ago, so in April 2021, we bought a three bedroom high set in Logan central for $247,000 at auction. It was a steal of a buy, don't get me wrong, it was a great purchase. But that property today, you're looking at anywhere between at least $400,000 to $450,000.

Tyrone Shum:   

While his Sydney, Coffs Harbour, and Newcastle properties have been doing well for a period of time, his Logan ventures are starting to catch up.

Michael Xia:   

[00:26:52] The bulk of the growth in the entire property portfolio across the 25 in Logan has really only been in the last year. So if I'd come on the podcast last year it would have been a very different conversation. Maybe that's why I haven't come on.

  

[00:27:16] It was difficult at that time, [for] everyone that did hold their properties for that period of time. People now today are like, 'Of course it would have gone up'. But for the people that did hold during that time, it was a continual joke. Whenever I spoke to clients, it was like, 'Oh, when is this ever going to do something?' So the fact that they have held on until today, I think kudos to everyone that did hold on.

Tyrone Shum:   

[00:28:02] So just to sort of get perspective, what is the value of the property portfolio worth right now?

Michael Xia:   

[00:28:08] At the moment, in total, we're looking at a touch over $26 million.

Tyrone Shum:   

[00:28:11] Wow, that's phenomenal. And how much did you purchase all those properties for in total?

Michael Xia:   

[00:28:17] Purchase price, a little bit under $16 million. So in the space of... I mean, not counting the two properties that are held. So prior to going on this investment journey, because we started with two, approximately you're looking at about $10 million there in about nine years.

Tyrone Shum:   

[00:28:35] Phenomenal, man. Congrats. That's fantastic. Now that you've got a lot of equity in it, I'm assuming you're going, 'Let's buy more!'

Michael Xia:   

[00:28:46] I'll say this kind of like a caveat in terms of property investing, like everything has its pros and cons. I will say the biggest headache in terms of holding properties is the property management. So I don't want people to go in with the notion that it's going to be easy, you're going to have no headaches, and you're just going to be buying a property and then a year later, it's going to give you $200,000 because that's not what it's like.

He approaches everything with great passion and enthusiasm, always taking the time to thank and acknowledge those who help him along the way.

Michael Xia:   

[00:29:09] The number of headaches that we have, the number of tenant issues, repairs, maintenance, properties needing to be leased out... it's just endless. I'm very lucky in that regard where my wife handles all of that. So since then, she's actually started her own property management company in Logan, just to look after our own properties. And I guess that's a benefit of having them all literally within a couple of suburbs of each other. But it is a lot of headache. 

  

[00:29:40] You do also have to think through whether it's feasible to manage all of these properties. When I was growing my property portfolio, [there's] another story where there was points in time where I had properties vacant for more than six months. And the truth of the matter is as bad as it was, I just forgot about that property. 

  

[00:30:07] It was in the back of my mind, but I was trying to run my business, trying to get that up and running, had these 14 properties in the background. I don't check my rental statements with a fine tooth [comb]. You would chase an agent and they'd be like, 'Yeah, it's happening, it's happening'. 

  

[00:30:23] And one month rolled into two, two into three, and before I knew it, it was vacant for six months. And just a lot of those things. That's what actually hurts the bottom dollar. If it wasn't for someone like my wife now actively going through the property portfolio, making sure the water rates, the water reimbursement is paid, that we're paying the council rates on time to get a discount— all of those things, if you don't have a good management for that, then property investing can be very costly to hold. 

  

[00:30:55] Overall, I'll be biased to say a mortgage broker is key to your team. But I'll actually say the most important person to your team is a good property manager. Especially if you're looking to hold a large property portfolio.

Tyrone Shum:   

[00:31:10] Does that mean then you've actually got people on the ground there, and you guys remotely manage the people to actually do the repairs, and maintenance and so forth?

Michael Xia:   

[00:31:17] We've got someone holding our keys, we've got a good team of trades. So if we ever need something, we've got someone to send. We know everything that's happening with our tenants, so that makes things a little bit easier. But that also comes from a lot of time and effort put into those properties. 

  

[00:31:35] At the moment now, I would even say that our properties in Logan are better well looked after than some of my properties in Sydney, like, I don't know what's going on with them. But we know exactly everything: when they're paying their bills, when their next lease is up, all of that we know exactly. 

  

[00:31:56] Obviously, it's not going to be feasible for everyone to be managing their own properties. And I wouldn't recommend that if you only have a couple of properties. But the key takeaway message is to get a really good property manager. And if they're not looking after your property portfolios, don't hesitate to move. That's what happened to me in my early days where it wasn't leased for six months, and I still believed the property manager that they'll find a tenant

Tyrone Shum:   

[00:32:20] Me too, I will admit to that. I had exactly the same thing. And I thought, 'Oh, this property agent will come through'. And I was so frustrated. In the end, I gave up and I just went to another one and I was so, so happy that I did because I was like, 'Why did I not do that three months ago?'

Michael Xia:   

[00:32:37] I've had this conversation with other investors, and they're like, 'After the renovation finishes we'll change agents'. That renovation's not going to finish.

 

[00:33:02] So to answer your question, in terms of where to from here: In the back of our mind, looking for that dream PPOR. That's definitely on the list. But being in Sydney, it's like you're looking at the Sydney property prices and being someone that likes to get good value, I just can't bring myself to at this point in time. 

Michael Xia’s story continues in the next episode of Property Investory. He shares the deal he defines as his worst, and for good reason…

 

[00:34:01] I just so wanted to hit this double digit. It was like this magical number for me. So I literally just bought any property off the street. 

 

How balancing work life and home life can be a tricky process…

 

[00:36:48] There were times when the property price wasn't going up, then there's a lot more pressure from the spouse to stop doing what I was doing.

He divulges where his latest purchases have been, which is a hop, skip, and a jump from his usual investment locations.

[00:40:30] I guess that kind of follows on. The main question that I get, when I speak to clients, is 'Where should I buy?' 

 

And that’s next time on Property Investory.