Lakhwinder Singh’s Words of Wisdom—3 Simple Rules, Best Advice and More.

Transcript:
Lakhwinder Singh:

So, the best advice or best quote that I read is, which stuck with me is what we feel doing the most is usually what we most need to do. So in my day to day life, if I feel like doing something, then I do it anyway. Because I know that's where the growth [is] gonna come from.

**INTRO MUSIC**

Tyrone Shum:

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

I’m Tyrone Shum and in this episode we’re back with the ex-baker Lakhwinder Singh, and the general manager of Iconic Property Services. Landing in Australia with nothing but $1800 to his name, Singh now owns eight properties, unboxing his three simple rules for managing the property market and his personal secret to maintaining a strong mentality.

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Baby Steps

Tyrone Shum:

The most important lesson one can learn when studying success is this: if you want something, you have to risk something. Singh is no exception, sharing the stress he felt when he began investing.

Lakhwinder Singh:

I started to, obviously learn about property in 2013, when I got the book to 13, and 14, and I put my first deposit down in 14, which didn't really work out for me, I went to, I mean, when I was researching the property market, there's a, I was looking for options, like where we're gonna get the information and seminars were quite popular at the time.

You know, I'm going to seminars, and I went to one of the seminars at (indiscernible) CA. He says: ‘I will call this broker speaker developer’. And I went to his seminar, and he promoted off the plan townhouse. So yeah, because reading through books and getting some initial knowledge, I thought that's probably not a good idea.

But then my budget was quite low, like 393-80. So that's all I could afford at the time. So I said, Okay, let's go ahead with it. And I paid that deposit. And so long story short, that turned out to be, I couldn't, I couldn't buy that property.

Because he, I think he had like a turn, he only needed like, 20 people, because he was building our own 20 townhouses. And I was not one of the top ones. So after a year, he said, I might have to give you a deposit back. Because, I mean, we can't get you [to] get your townhouse.

So I felt like that was kind of, you know, one of the lowest moments for me. It was quite stressful for First of all, to lose that growth that could have happened in that one year. I did some calculations, that was, like, more like a 50 to $60,000 growth in that 14 to 15 2015. Around that time. Yes.

And that was, that was, that was one opportunity cost. And other than that, that just a stress going through this process, like waiting for the deposit, you're not even sure if you're gonna get it back. And you don't know who to approach to get it back. So that was one of the I would say lowest moments, or that that happened in starting on my journey.

Tyrone Shum:

Yet despite the anxieties he felt, Singh persevered. After all, he was prepared to take the risk.

Lakhwinder Singh:

I always…whenever I'm in a situation like that I look for what is the other [and] what is the alternative. And there was no other alternative to invest in something else. Because property is the only thing where you can get that leverage, you can multiply your terms, you have the control your investment, and, and all these things, I knew I have to go back to property, I need to keep pushing myself because that's, that's the only asset class where you can track 3040 years of history.

And it's all, you know, you can easily say there's a six to 7% compounding growth in those 40 years, you can even track back up to 100 years. So. So that's why I have a lot of faith in property investments. So I just kept pushing myself. Yes, backing myself.

So I took some time off, I thought, there is a bit of a gap. So I need to bridge that gap. I need to learn about contracts and all that properly and stuff. So again, I went back to that, you know, that daily ritual thing. So I had, I was making my list even at that time. So I put that on my list, like I need to learn more contracts, property growth areas and all that stuff.

And I started, you know, expanding my knowledge, and that took me another maybe six months to be confident again. And that's when I put my first deposit. I ended up buying a property in [the] Campbelltown area. So yeah, so that was $500,000 property. More. So yeah, I bought it in 2015, settled [it] in 16.

A Nice Starting Property

Tyrone Shum:

For Singh, finding his first property was no easy feat. Investing on a baker’s salary proved challenging but with an unwavering mindset, it was in no way impossible.

Lakhwinder Singh:

Just looking into the market, so being In the market the whole time searching for properties and [at the] same time you, you're not expanding your knowledge, you know what to say no to will will, will give you that benefit. So that's where I ended up.

I mean, it wasn't easy to find a property under $500,000, even at that time in 2015, and 2015. So I landed on this property. It was like a 474 kind of property. And then I made some upgrades, and it ended up buying for $500,000.

Yes, it's a house, three bedroom, two bathroom, double garage on 400 meter square land.

Yes. So that was mainly for investment. I moved there for some time to get those incentives. So yeah, so it was mainly for investment. I didn't really, I didn't really put you know that that fancy benchtop or anything like anything like that. I kept it very simple, because I was clear that it's gonna be [an] investment later down the track.

Tyrone Shum:

Having now got one property under his belt, Singh was not ready to retire. With his borrowing power on the edge, he was ready to double his work if that was what it took.

Lakhwinder Singh:

When I was actually buying that property, I spoke to my broker and my broker said, ‘Your boring power is pretty much on the edge. So you need to do something about it,’. And I said, ‘Okay, that's interesting’. So I said, ‘Okay, I might want to start doing a second job,’. So while that property was under construction, [the] loan wasn't approved, yet, I started doing a second job.

So that actually took my income from $70,000 to maybe around $100,000. I was pretty much doing two full time jobs at the time. And my broker looked at the numbers, and he said, ‘okay, we can actually get you the next property’. And we also have that, you know, equity buildup in your property.

So I said, ‘okay, let's do that’. So I ended up buying [a] second property right after that, as I bought my first property. And as we were settling on that second property, we did the numbers again, and I still have more equity. And I also had some cash saved up from doing two jobs. So I pretty much bought three properties within that, in that one year in 2016.

Hitting the Ground Running

Tyrone Shum:

3 properties now locked under his belt and juggling 2 full-time jobs effortlessly, Singh was unstoppable.

Lakhwinder Singh:

The first one was in New South Wales and second, and third was in Brisbane.

Since then, I have [had a] total of seven properties. I actually have eight. And I sold one of those.

So, I think that was the aha moment when I bought three properties. So I went from 2015, having no property and to the 16, buying three properties. And I looked back and said, Is it really, really real, like, I have three properties. So that was kind of an aha moment, I thought, I probably have to wait for some time now before doing any more [to] buy more and more properties and might need to figure this out properly.

Before I go on, on [to the] next purchase. And then another aha moment came when I bought two properties, just before COVID. And those properties actually doubled, within almost doubled in that two years time. And one was actually a renovation deal, where we bought the property pretty much on the land value. So around 800 Sorry, $180,000. That was the land value. And we pretty much paid 180 for that.

And that property, when it was renovated in a couple of months, it was almost 50% up [in] a couple of months.

Yep, yep, yep, yeah. And yeah, so that was one property and there's another one that I bought during…just before COVID was in South Australia, I bought in a self managed Super Fund.

So my plan was to hold that property for maybe 10 years, and then maybe buy something else. But that property also, like, almost doubled, like 80% growth within two years.

Singh’s Strategy for Success

Tyrone Shum:

Having solidified himself as a successful property investor, Singh uncovers the evolution of his strategy when it comes to managing his property deals.

Lakhwinder Singh:

When I started, I didn't have any strategy, or just going by whatever I read in the books, and whatever I learnt from other people. But as I read the, the Steve McKnight book, and that 11 second solution that he had, like, I mean, if you need to buy more property, you need to have some sort of, you know, filter to filter down locations, or properties, because otherwise, there's 1000s of properties, 1000s of suburbs.

So you need to have a set of rules that you can apply to find those properties. So that way, you're not spending hours and hours and days researching, because you can easily paralyze yourself with all the information that we have. So I thought I have to come up with some sort of strategy. And inspired by [the] 11 second solution from Steve McKnight, I created my own set of rules that I now used to buy my properties and my clients properties.

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Tyrone Shum:

Coming up after the break, Singh imparts an important lesson for listeners: the three simple rules to find a good market…

Lakhwinder Singh:

I have three simple rules to find a good market. So [the] first one…

Tyrone Shum:

The importance of building a strong portfolio, and the value it can add to ones’ employability…

Lakhwinder Singh:

The main reason to build a portfolio is just to have options.

Tyrone Shum:

Some words of wisdom he learned through his experiences that stuck with him across time…

Lakhwinder Singh:

The best advice or best quote that I read is, which stuck with me is what we feel doing the most is usually what we most need to do.

Tyrone Shum:

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

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A 3-Ingredient Recipe to a Good Market

Tyrone Shum:

Though there is no exact recipe for success, Singh is fairly confident in his strategy for finding a good market.

Lakhwinder Singh:

I have three simple rules to find a good market. So [the] first one is I spent some time on market selection. So when I'm going into doing a market selection, I look for high demand, low supply areas. So if supply is, if demand is high, supply is low, and is expected to stay low, that means there's a pressure for growth.

[00:12:47] And so that's what I look for when I'm looking for a market to invest in. That's the main reason why I generally make videos and things like that. And then I generally recommend staying away from apartments and house and land packages in the regional or city ranges, because there is no you know, there's a, there's no supply pressure there.

So that's the first rule that I apply. That's for market selection. And the second rule is for Property selection. So I do Property selection, so I look for land to asset ratio. So when we're buying a house, I like to stay close to, you know, 70%, that is a ratio, that means 70% of our money should go toward buying the land, and 30% should go toward buying the building part.

So, that means we [are] buying established houses in good locations where land is more valuable. Yes. So that's for the houses. And for the units, I am a little bit flexible. So let's, let's go with 60 and 40.

So 60% percent of your money should go towards buying the land portion, how you work out land value, we can always look for the lands recently sold land in the area, and then we can work on meter square, you know, right, for the for that price, and then we can multiply that by your land. And you can come up with some sort of number.

And the third one, which is diversification. So, obviously, every market can be in [a] different cycle. So you want to take advantage of different market cycles. So I would always say you need to diversify your portfolio first on the basis of location. So that means you bind in different locations.

So if one of your properties is not growing, because that market is, you know, stagnating for some time, then the other property should be growing if it's in a different market. So you should diversify on the basis of location. And at the same time, you should also look for diversifying on the basis of strategy.

So you don't want to buy similar types of properties every time you want to buy, maybe some properties purely for buy and hold and some property you can buy maybe slightly newer maybe. He's 10 years old, 15 years old, where you can get that depreciation, so you can get that tax back.

And you also want to have some properties that need some renovation, or that have potential to some, you know, subdivide. So that's where you are always busy with your portfolio, you whenever you, if you don't have the growth, if the growth is not happening, you can manufacture that growth by doing valuation or subdividing.

The 4th Ingredient: a Portfolio

Tyrone Shum:

While these 3 rules can help us when looking into the property market and navigating the research, Singh suggests on how to build a strong portfolio.

Lakhwinder Singh:

The main reason to build a portfolio is just to have options. So when I'm in my next, my next plan is to take this portfolio to 10 million valuation. So at the moment it is more around 4.5 to 5 million. So I wanted to take eight to 10 million, which will be like a big leap. And I want to do that in like five years. So a portion of it will come from maybe growth in my portfolio. And I might buy a few more properties as well.

So the first thing I want to do is take you to [a] 10 million valuation. And then I can start a second phase where I can might, where I might do maybe a bit of subdivision or maybe we will have a development. Or maybe I sell a portion of the portfolio and move that money into maybe big commercial properties. So that's the, like, medium term plan for me.

So I'm, I'm actually doing renovations at the moment. So we are not in my property is a client's property. So we're doing an activation, we're also talking about doing subdivision, and there is some I'm partnering with someone else who does developments. So um, at the moment, I'm just partnering with the right people who can help me with those kinds of stuff. But I haven't actually started doing it for myself yet.

Yeah, so it's pretty much when I mean, in five years time when I will be ready then I will be going really hard on documents and things like that. But at the moment, I think my portfolio has again, I mean a lot of value by applying those rules that I talked about.

And that's why I am still even with my clients that I'm serving at the moment, we're pretty much building the initial phase where we [are] just buying those properties, and not doing much with the property and just holding for now. And then we'll move on to that subdivision and renovation and Bergman phase later.

Wise Words

Tyrone Shum:

From nothing but $1800 and the immigrant dream to 8 of his own properties, Singh imparts his best advice to those who are curious on how he managed to succeed from so little.

Lakhwinder Singh:

I would say what we feel doing the most, usually what we say gives me that's okay.

Because if you're very comfortable, if you're very comfortable with what you're doing, if you go back to my job that I was doing, working as a biker, I was very comfortable there. And if I just kept doing that, there was no growth there.

So that's why I use that monitor to learn about property investment. And because I knew I didn't have to think about it. So I knew I wasn't grown, when I was comfortable, I needed to come out of that comfort zone to do something and build something.

And because it worked for me, so that's why I always notice why that quote stuck with me, I think.

A Message to Singh Jr.

Tyrone Shum:

Thankfully, Singh’s wisdom does not end here as he looks back to what he would say to himself 10 years ago.

Lakhwinder Singh:

I would have said to myself that I mean, start investing early on. So if you can, if you can, I mean, if you don't have the money to invest, or if you don't have the knowledge to invest, just start with something, because investing is a habit. So you need to grow that habit.

For example, what I'm doing with my son at the moment is [that] he's seven years old. And he's already investing his money, he got like, $100, at the moment, and he invested that money with it within my company. And he, every month or two months that he invests, he gets that $5 extra, so he knows his money is growing.

And he learnt investing and compounding and he also learnt one important lesson of patience to ensure you need to patiently wait for the investment to grow. So that's, I would advise myself to start as early as possible.

Next five years on my portfolio side of it, I'm excited to grow it to that level, that 10 million kind of level. And then I'm also excited to go into that phase where I can take action, and execute those plans that I have, which is to build a certain level of, you know, cashflow, [a] certain level of positive cash cash flow that's striving for.

So that's [why] I think I'm quite excited about that. The same time. I believe I'm really excited to look at my business goals as well. And just [a] combination of those that's keeping me excited at the moment.

A Lesson on Luck

Tyrone Shum:

No doubt you'll reach those goals, because as you said, most of this is as a habit, once you develop that habit, everything just continues to flow on. So I think you'll achieve that quite well. And how much of your success like Minda that you believe has been due to your skill and intelligence work? And how much of it do you think has been due to luck?

Lakhwinder Singh:

I believe luck is when opportunity meets preparation. So I'm not, I'm not at all superstitious, so I have no place for luck in my dictionary. I think success comes with a growth mindset, and at the same time taking action.

And you can leverage skills and intelligence from other people. But you need to have that mindset in order to grow. So I don't think luck has any place in my life. Yeah,

**OUTRO**

Tyrone Shum:

Thank you to Lakhwinder Singh, our guest on this episode of Property Investory.