Discover how Beer turned a cockroach-infested shed for $170,000 into a liveable space currently worth $600,000, how he leapfrogged into his next property from there and why controlling your risk through finance is vital to attaining wealth through property investing.

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I renovated that up and that sort of leapfrogged into the second property only about six months later. I managed to get a, and I'm pretty sure they a drive by evaluation. I don't know how this happened because all the work I've done was inside and they didn’t come in, but they actually valued about six or eight months later at 240,000 dollars.

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

I’m Tyrone Shum and in this episode I’m speaking with Bradley Beer, who started as a second year uni student and the first employee of a company he now owns called BMT Tax Depreciation Quantity Surveyors. His also built a substantial property portfolio all over NSW and Victoria.

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Beer has been involved with BMT Tax Depreciation Quantity Surveyors since its early stages, joining the company as a quantity surveyor 19 years ago. Now as the Chief Executive Officer he plays a few roles in the company.

[00:01:21] I travel a fair bit so I've got a few roles as a chief executive officer to obviously report to a board and some investors that are other people within the business and drive the strategy of the business to deliver the growth and the future of BMT effectively. Now I maintain some relationships with a lot of key alliances and clients probably the face and name of this business, I’m known as the guy that runs it and is involved in it and I am a quantity surveyor and I have done lots of depreciation schedules in my time but I have an executive management team and my job is to keep us as a team. And I try to spend my time on making sure I'm driving the strategy to continue this business into its future and its growth and make sure we deliver on deliver fantastic spaces for our clients. 

[00:02:38] It's diverse. I've also got my properties to look after and I have good relationships with different people especially through the property and accounting industries all over the country which is great and staff all over the country and you know travelling and seeing what happens in different areas of the country is always fantastic but then getting back and having this core fantastic team of a couple hundred people that I work with and just to see them grow and succeed is also very very good. 

From humble beginnings, Beer was born in a country town to a family of four children.

[00:03:29] I was born and grew up in a sort of a country town in New South Wales called Taree, it's about four hours north of Sydney, one of one of four children my parents. My parents still live in Taree. My dad was an electrician  and my mum didn't work she had four kids to look after. I did my my schooling there. I'm the second and there's two boys and two girls. Did my schooling there. I finished my HSC, giving away my age, in about 1993. Thought I'd like to go and do uni because I thought that was probably a good idea. I started an economics degree. I didn't like it. I wish I learnt a lot more about it now because it would be very handy at my role to understand that a little bit more sometimes. But I then left university and went back to Taree, worked there in a furniture shop for I don't know 18 months or so. It was great, it was at Forster, it was near the beach I could surf every afternoon. Loved to surf whenever it was good or sometimes the mornings. But you know selling furniture and unloading furniture from trucks at six foot seven, your back gets a bit sore after a while. It was pretty hot in a tin shed with furniture and it was time to go and use my brain again. So I decided to go back and give the university another go and I had a bit of an interest in building so I thought the structure management degree in Newcastle sounded like a good idea. I thought I was going to probably manage construction or something like those lines. 

It was after his return to uni when, through some good timing and coincidence, Beer began his current career only a year after BMT was established.

[00:05:07] I went and started the degree at Newcastle uni in construction management which you come out as a quantity surveyor but I actually got my job at BMT partway through the second year because one of the eventual partners was one of my lecturers. 

[00:09:50] So I started with the guys in June of 1998. The business had started just under 12 months before the 7th of 97. So we just got not too long ago been to our 20 year anniversary of the starting point. Which is great. And I was the first staff member and I became a director and shareholder in 2002.

[00:05:41] The original guys that started BMT, Brendan, Matt, and Tom, nothing to hide about where the name came from. Tom was one of my lecturers at uni and they’d just started the business. He was still lecturing at uni. There was Brendan who just started working in the business and Matt, who, they never really worked in the business, helped set it up and they bought him out a few years later. So I started to come and do some quantity surveying depreciation schedules, didn't really know what a depreciation schedule was by then because I was still pretty early in uni because I needed some work experience to finish my degree. So in order to get that work experience this was a way to get it and I was actually going to get paid. It wasn't very much mind view because it was starting business but it was something and it was a way to start getting into the industry in some way. 

Over time, and through hard work and dedication, Beer uncovered his passion and went on to become a partner himself.

[00:10:44] I wasn't focused on getting a bit of experience to start with. I didn't get paid very much at all because it was early days and it was experience that you were probably prepared to do for free in order to get your degree. So the fact that I got paid something to me was good and I think I spent a lot of time working on the business at that early stage. I don't know it just became exciting. So then they brought me in as a partner 2002. There was the three of us. And I increased my ownership over a few years and then those original partners actually have exited the business. 

[00:11:21] now in 2015 and I took on some more ownership, I brought some of my executive team into some ownership at that time as well, that have been with me for you know 13 to 15 years between the three of them or each. That is, not five years each. So they've been with us for most of the journey and they're a very good team around me. 

[00:11:46] We work together very well and we have some other other investors just come as investors and invested in the business that have got some experience across a range of other businesses so out about a third of the business. And the rest are spread between the investors and the exact team. 

And it was around the same time of Beer’s promotion to a partner that he began his property investing journey.

[00:16:23] The first property I bought, and I'm just thinking do I know when the settlement date was exactly. It was about the same time. It might have been. I think it was late in 2001 or it might have actually been early to mid 2002. But it was actually right around exactly the same time. So when it was a little, or not so little. A four bedroom house in a suburb of Newcastle called Georgetown and it has a very big shed at the back which was great. I was very attracted to the shed and it looked like the reason behind that. Like I think. You know I'd already been doing some things with BMT, you know I spent every day talking to investors investing in property and thought about making some money from it. And I started to starting to go and sort of you know after a few years there we learnt how to do the depreciation I started pretty early and educating investors and people about depreciation which was the only piece I knew how to do. But the benefit of that is I was out in front of people and able to learn about investing in property and how did this work and how did people invest in property and have multiple properties and what that meant. 

[00:17:45] So I saved some deposit. And I think the telling time when one of my partners had been starting to invest in property or they were just becoming  my partners. So you invest in some property and I think that first property they actually had gone to had a look at it and then you know I was interested and keen to get the property. I think one of them didn't like the big shed as an investment and I thought well I like sheds, because it was taking up so much of the back yard I suppose and maybe it wasn't going to be great value but they gave me probably a bit of a prod there and said you should buy it Brad and so I ran through and they actually negotiated it down for me already even from I think 198000 it was listed and I ended up buying it for 170000 dollars. It's a four bedroom house. And it's probably worth about 600 to 650000 dollars now and I still own it. The shed still exists. 

He describes why this property was an interesting purchase that allowed him to leapfrog to the next one.

[00:19:08] The house was an absolute crapper so I cannot count the number of cockroaches that came out of underneath the kitchen benches when I pulled it apart. The carpet that I ripped up was on top of another carpet and Lino and I found newspapers underneath that from about 1914 I think. So you know it's an old traditional weatherboard house although someone had put forever boards on the outside of it made it look really horrible. It's a four bedroom house they had a guy living in it that had rented the rooms out because it's not far from University of Newcastle and so I kind of ripped apart the inside I remember. Now I know it must have settled some time up to you know early in the yearish because I do remember in the middle of winter with the bathroom completely ripped out. And you know having to redo the floor in the bathroom and the peers and put peers in which funnily enough one of my mates from uni who knew a bit more about construction helped me with it. So I was working, uni-ing, and my dad was a electrician I'd be crawling through the ceiling at 11 o'clock at night helping him to run the wires for electricity changes and renovating the inside of it. You know new kitchen new bathroom and painting the inside of it. And then I really ran out of money so that the outside stayed as it was. 

[00:20:53] The moral of that is that I guess it was get straight in and do some pretty hefty renovating because the way to make some money out of that was to make some equity growth and I'll say that it was not really livable. I renovated that up and that sort of leapfrogged into the second property only about six months later. I managed to get a, and I'm pretty sure they a drive by evaluation. I don't know how this happened because all the work I've done was inside and they didn’t come in, but they actually valued about six or eight months later at 240000 dollars. I was just on the back of NSW properties moving and they didn't do much for a while after that. But it leapfrogged me to give me that little bit of equity to push into the second property. 

While his interest in property developed from his career, his interest in construction began at an earlier age.

Bradley Beer
[00:05:07] I'd renovated a bit with my Dad on our house over time and spent a lot of time in the garage with my grandfather building things, fixing things. and doing that sort of stuff.

 [00:13:52] But I grew up in a country town where there was no push to do that.

[00:17:45] I mean I came from a situation where my parents and my grandparents for that matter bought their house, paid it off over their life and then there was this different thing that I was working with these people and learnt that maybe there's a different way to do things.

 [00:15:22] And they are they are still in that house. I do own the house next door, I do own what was my grandmother's house. But you know I don't know if I spent so much time out there I decided that you know I needed to hold onto it or what. But it's you know come up and I thought maybe we could do something with the house next door. My grandma lived in the house next door to my parents before she passed away for a period of time which was kind of handy. So she rented it, it was a proper commercial transaction. But that wasn't the reason for buying it it just happened at the same time. 

His role in BMT and his family were also influential in where he began and first developed his investment portfolio. Since he knew the Newcastle area and his hometown, he planted his seeds there, eventually expanding interstate.

[00:23:18] So because of that and  I was sort of half living Sydney and in Newcastle where BMT started out at Newcastle and then moved to Sydney just after and then spread around the country since. I knew that area, it was less expensive to get into and I just kept buying in that area andI actually stayed renting up until only a couple of years ago ,for the rest of life. So I'm the ultimate rentvestor which I’ll talk about later, but I kept buying reef so you know I've got Georgetown, Mayfield, some in Adam’s Town, Broadmeadow, Valentine, Edgeworth, another suburb of Newcastle. I've got a lot around these sort of areas in these Newcastle suburbs not necessarily in the blue chip area so much, I do have Hamilton and New Lampton which are bad areas around there. But I went pretty hard most of them around that Newcastle area. I've moved back a little bit to where I grew up. I bought some around there. My grandmother's house is an old house that yes I spent a lot of time working on but it's actually on three blocks of land that are split as individual blocks which I might build some houses on. And look I'm from Taree, I've got property in Taree. I've got some properties in Old Bar which is a suburb which is the beach area around Taree that probably haven't done as well as some of the others, Wallabi Point and those sorts of areas after that. So it's a lot later before I've gone into this. I've got one around the Logan area. 

[00:24:49] I've got a couple in Victoria one in St Kilda and another in a suburb not far from the airport. And the last few years I only actually own one property in Sydney and it's a house out west and then the other thing I got a block of six units that I bought up north, northeast of Brisbane only in the last 18 months or so. 

Throughout this process, Beer has learnt about the significance of financial balance to set himself up for the future.

 [00:25:27] I think part of it's been about the fact that growth areas, the important fundamentals about investing in a property is you're there to make some money out of it which comes through capital growth and cash flow were obviously manufactured actuaries through renovating or developing. And being capital light or equity light at the start, I couldn't go and buy $500000 properties because I didn't have enough equity and its still kept that way. And these ones also generally have returned quite well I do believe fairly heavily in the Hunter and the Newcastle areas still, I still hold the properties I haven't sold so and the returns I get those because you need the cash flow in order to keep going because you know having everything being negative or negatively geared or costing you money to hold all the time you can run out essentially if you've got you know five or 10 properties and a good salary then that's OK. But once you start getting beyond that you've got to keep propping up all the time you're run out of ability to finance property because of a lack of cash flow generation. And the end game is to get to this place and invest with this property with enough cash flow to actually support it not force you to go to work to get it all the time for the rest of your life. Well that's no good either. 

Although Beer has had many successes in his investing career, he’s approached the tougher, and slightly silver-lined moments as learning opportunities and gained some valuable knowledge.

[00:27:14] Look I think you know and I probably haven't touched on what probably the worst is yet. I've made some mistakes. You know the good thing about mistakes is I call them opportunities to learn. And pretty early on, it was the first foray into buying something in a different area. It was out of Newcastle and it was actually a block of land. And I think I went surfing and bought it on the way home with my mate. 

 [00:27:47] I still own it but still doesn’t have a house on it. So I bought a block of land and I look I had it's not like I suddenly seen that in the area on the way home we probably had the intention to have a look but maybe not to buy. And the problem with that is that it's in a new land area and a new land release area was marketed pretty heavily. And I do love the area, I went holidays there as a kid. All the mistakes but you know it's like every time I go to Noosa I want to buy something because I love it so much. And then you look at a price and realize that you should buy property that makes money so you can afford to go on holidays where you want to go on holidays and it might be a different place each time. And this is probably that, I probably looked at visions of having a house that I could have a holiday home as well etc because it’s near the river, near the water,a good  place to go fishing and close to good surfing beaches I grew up around but it hasn't been a good investment because you know eventually as they release more stages the value of that probably moved up and then we had a GFC and it probably moved it down and look it's worth more than I paid for it. But if I added all the interest over the years and things like that it was a bad investment. 

[00:29:04] And the thing it does is it ties up a little bit of equity, the fact that I bought it and I didn't have to pay for it until it settled in a period of time meaning it didn't actually slow me down much and I would have sold that now if it did slow me down but it doesn't slow me down it never has actually badly stopped me from doing anything, other than it's another bit of debt there that you know you've got. and it didn't stop from a cash flow which led to me investing or that's the time you should move things on. I'll probably build on it one day or maybe one day I'll get bored of it and flick it. I've had it for 15 years or so out I haven't done it yet. 

[00:29:39] So that's probably my worst mistake, my worst mistake is I actually own two of them. 

Luckily, his overall experience has been successful, and Beer has had been able to overcome investing doubts to expand his portfolio.

 [00:31:05] It's about finance and the importance of understanding finance and how to finance properly because that finance and leverage is the way that you’ll make the money out of property in the long term. Understanding how to control the finance and how to control your risk through finance to me is a fundamental major understanding required in order to be successful and also to cover risks. Jumping in and doing that second property. I went and saved my 20 percent for the first one which took quite a while and then I skimp on it. Whatever you do to do that necessary to buy the crappiest property that was in such a bad state you know. It was pretty hard to make that decision without that little bit of pride from my partners who went it's time Brad you've been saving you know this works. Yes you know it was it's hard to take that chance especially the first one the second one was a little bit easier. Especially so soon. Third fourth fifth sixth seventh I was buying and it is like once I got to six or seven you know there was no fear left. 

Tyrone Shum: 

So what held Beer back from initially investing into property?

 [00:00:24] There's a few things that you could sort of do and there probably are the simple things that most of us have a problem with. Getting finance again is always potentially a problem when the mortgage insurer doesn't want to mortgage you any more!

Oh really! Wow, tell us about how that happened!

I think if you get to that stage you're probably at a stage where it's not necessary; but my mentality of making sure I always borrow as much cash as possible so I can keep going, means that if you don't have the cash you can't renovate, you can't put the next deposit on, etc. There's points there where you can get slow and when banks clamp on lending money, all those type of things do make it a little bit harder. I got through those things, you can work around those things. I mean the numbers are the numbers right? So if it's a bit hard to get the money, you've got to make sure you get the money, you've got to find the property that you can afford to buy with what you can borrow. In the same time with growing a property portfolio, I've had a fairly main intricate part in driving a business from the first staff member to 200 staff completely organically, to be by far the largest depreciation business in the country. In between that, I've got married, I've had two kids and I've got a third on the way. You know, time!

 [00:01:56] Time is a big factor.

 [00:01:58] But in saying that I’m been married for 12 years and my kids are one and two. So I didn't have kids till I was a little bit older and my wife traveled with me a lot and so she's very supportive of the things that we were doing. And there's times where she was getting in and renovating and having some fun. I'd come home and research and she’d have paint all over her!

So the things that held me back at time was the ability to get finance and I guess not being scared - if you'd learn enough about the risks and how to cover them, the risks are not as bad in some respects. But you've got to do that and then you've got to make you of jump in and go again. But once you get a fair few under the belt, it becomes a bit easier.

With this experience also comes further knowledge from other resources.

[00:02:57] For the whole time I’m at property investment seminars, I'm at real estate and accounting groups, things that they've put on. I'm educating on depreciation and I'm listening to everybody else at the same time and picking up tips. 

The information he learned from these resources was valuable advice that he extracted from many different people.

[00:03:30] My business partners who originally gave me that bit of a prod, they were sort of going to seminars as well and learning. And we’d talk about it all the time. The best thing was the three of us independently having these discussions, learning from what we'd done was fantastic.

I wouldn't say there was one particular mentor that I worked with, but I think sometimes it's a good thing to do with a lot of people, to go to one property seminar and I guess one benefit is I've gone to them and I haven't had to pay every time because I'm a speaker. I listen to the rest. I pick up pieces out of all of those and really develop my own strategy on how to do that, because I think one thing that's important to those is about the transparency and disclosure about what they're doing, firstly. What is in it for them? Are they just educating? Is there a particular product they're pushing? I would ask all those questions of myself before I listen to one in particular and I also think that no one has every answer exactly right and what's right for you might be something that's a combination of all those. To me, I think I'm a combination of the different people I spent time with over time. And anyone that has invested in property that I talk to that I can learn something from, I'm still very open to do that now because I don't think it's one, I think it's a number.

When considering books which he would recommend to read to aid you in your property journey, Beer advises to first gauge that the author knows what they’re talking about.

 [00:05:15] The best piece of advice almost in the books to me is every book on property investing you can find and you should read them all. I read a number of them, I actually did my final work at university on depreciation and tax legislation changes in Australia and New Zealand. As part of that process, I think I bought every property investment book that existed, just about. But I would say reading whatever is there, preferably by authors who have actually done it and still hold it and understand that; actually pulling pieces out of all of those to formulate what suits you and your situation.

What I do with a property investing book these days is I'd probably pick it up, just flick straight to the depreciation section and find out whether they know what they're talking about and probably judge the rest of the book based on that. If they're not experts at it, if they're going to write something about it, they should get the expert’s advice on the right stuff. Because if they can't do that, I don't believe anything else! Maybe that's a good place to start, with something that you do have a good understanding in - what you know about - find their opinion on that and what they have to write about that. I mean that could be a good gauge, because that's how I do it because I am an expert in that area. You write something wrong in there, I'm going to question everything else you write.

[00:06:46] You should be able to get the right advice around that because it is a specialist area. Now you do need around you as an investor your expert team of people that do things like the appropriate accounting, the good quality surveys on appreciation of course and these people that write these books also need that around them. They need the experts in these areas and should give people advice in those books appropriately.

Beer’s property investing strategy has evolved as his situation has changed over time, however the underlying principle has always been manufacturing equity.

[00:08:21] Especially in early days, I needed to grow some capital base or some equity in order to continue to invest into property. So I would buy things, you know you're looking at the not so good house in the better street, or the even worse house in a not so good street near the street with the good houses, because they're able to be bought sometimes. But I'd be looking for places where I could manufacture some equity and you find these old places where you've got some massive laundry out the back that isn't really that necessary these days, where I can turn two bedroom houses into three bedroom houses, do kitchens and bathrooms if I can. Or even simpler renovations and make these properties better to live in, look nice, spend some dollars, get in, revalue the property, refinance the property, rent the property out and get out again. When I say get out, I hold the properties. I'm not a flipper. I think the costs on the way in and out often make that really hard to do.

And look, capital growth happens over time if you choose the area that's got some growth so it's not just about manufacturing the equity, it's also about buying something that has the opportunity to grow into the future at the same time. Produce the cash flow on the way at the same time as well. So I've got a lot of individual houses on blocks; I then went looking into things where I could do some development. I've built some houses on the rear of houses, I've got a couple more I've got to just get my act into gear and build on the back of houses. So they have been DA’d, my DA has nearly run out, which I had to get started so I could still build them. 

I just finished building, me and a partner, a block of 12 units about a few months ago which we’ve retained half of them each, on a couple of houses that I think I bought about 10 years ago with him. But we bought them from a developer in sort of late GFC, where we're sort of forced to develop where the house is actually stacked as OK investments. And the benefit is that it could be potentially developed later and we actually went through and did that.

So the strategy has changed into things that probably have built up. And really, that once again is manufacturing equity through small development, it's just been done on a bigger scale as the time's gone on.

With Beer’s expertise in depreciation, it has also helped him to grow his portfolio. However even the depreciation guy doesn’t believe in buying a property based solely on that.

[00:11:25] I think depreciation is one of the things in the cash flow that's required in order for you to be successful out of property - you need the cash flow, you need somewhere to write the deductions off. It's not, ‘I’ll buy this property because it's got depreciation,’ and that's coming from the depreciation guy who'd like you to do depreciation schedules, of course. But to me it's a cash flow piece. Now what am I going to do? I'm going to assess it as part of that decision, not make my decision based on that. But what it does is it gives me some tax deductions on the way through, deductions in old properties still, new different properties different amounts, federal budget changes might change it a bit, etc.

But there’s tax deductions that so many investors don't take advantage of properly firstly and as a renovator, there's quite a substantial additional amount of tax deductions in scrapping when you renovate. So you buy, you're in it for a period of time and then you rip all these things out, potentially it may have some value. You might get some quite substantial deductions for the things that you throw away - you put the new things in, you start to depreciate the new things over time. Depreciation guy is one of the experts beside you that's necessary. I mean when you crunch the numbers at the start on what you're buying and why you're buying it, depreciation is one of those numbers you should know before then. So many people buy depreciation schedule off and median times about 10 months after settlement. That to me shows a lack of crunching numbers a lot of the time because you should have known and when they're calling us and saying, ‘I need one of your thingys because my accountant said so,’ it makes me concerned about the investor.

[00:13:05] It’s too late.

[00:13:06] Well it’s not too late. But you should have known about this through your education, reading the books, working out and crunching your numbers before you bought it, is my opinion.

With this obvious lack of education and understanding about depreciation in the market, Beer believes it is important to make a start. There’s even an app to help you out!

 [00:13:50] They don't need to actually do the schedule and some of them do this, just not as many as should, but you can very easily get an indication of how much those deductions are going to be before you go do the property. We will provide an estimate of how much deduction we expect for free. So in crunching your numbers - and we've got a calculator on the website that's also an app that people can use - but after that you’ve used that, it's come up with a number and you want a bit of a second check, just send us the photos and we will have a look at what you've done on the calculator and just have our own look at it and give an indication of what the numbers potentially should be. Every investor before they buy something should probably have done that.

And then in crunching those numbers, we built another app called Prop Count that actually helps you to crunch the rest of those numbers as well. Once again, that one's free. It's actually attached to a different business that we own called homesales.com. But you can just go into the App Store and get Prop Count and it’ll crunch the numbers for you and drag some of those depreciation numbers in there.

To summarise, it’s all about ensuring that it’s done beforehand.

[00:15:26] Make sure it's done. Make sure it's done properly on your properties. Don't think your accountant just looks after it. Make sure it's done properly, the accountant we work with most of the time. But the key point is to get an estimate before you do it so you know what the numbers are going to look like, have an understanding sometimes - and you don't have to this - an understanding of what it actually means to you and cash flow, what it actually means so you can actually crunch these numbers. Make sure it's done. Make sure it's done before you renovate, update it after you renovate. You can update these things automatically sometimes online through our things these days. But just make sure it's done, because once you've done it as an investor the first time, you don't have to do it again next year or anything, it’s only f you renovate or change things that things change. So the key points are there. There's a certain number that's claimable each year, make sure you're getting it, we help to sort out the rest of it.

To gain insight into the changes to the federal budget regarding depreciation in the market, Beer explains it.

[00:16:45] So in the federal budget in May, it was just passed through the House of Reps. yesterday actually, I was listening to the very interesting question time and reading time. It's actually not passed as legislation yet but my suggestion would be that it will be through the House of Reps, it has to go to the Senate which we expect to happen not too far away before the end of the year we should see the final. But what I expect that final to look like is the fact that if you buy a second hand property now, your planned equipment - which is the things like carpets, hot water services, stoves, blinds and curtains - will no longer be able to depreciate in a second hand property that's bought after that date.

Prior to that, you did get some deductions out of those in the future you won't. What you still get is the claim against the structure of the buildings which is 2.5% of the construction cost, based on the construction date of the building as to whether or not you can claim that it. It does mean a bit of a lesser deduction for people that are buying second hand properties and some really old properties that used to get deductions won't get some deductions. But I guess the fundamental changes to me are about an integrity issue, but they go well beyond that because a second hand stove that's only 12 months old should get a deduction for the rest of its effective life, because that's how it's all based on; but politicians tend to do things a little bit differently to what really should be done and what is normal sometimes, would be my latest opinion.

However I think the fundamental things for an investor with those changes, is that if you get an estimate of how much deduction there might be for a particular property which doesn't cost you anything to do, you know what those numbers are, those numbers might be a bit less. And when you're crunching that cash flow, it's a different number that it cost you to hold that property each week. Worrying about what the changes are as the investor, well learn enough to know that a second hand property is going to get less than it would in the past. Then get a number from us and put it into cash flows and you'll be able to actually see what that number really is. To me the changes are it doesn't really change. It changes the number for an investor but it doesn't change the mentality of what you should do as an investor regarding depreciation schedules.

So what personal habits have contributed to Beer’s personal success?

[00:20:15] Sometimes you're not very good at the habits you should be good at and the habits that I did have and still do have that you sometimes get slack out of, just making sure that you are finance ready. One of the key things in property is finance, or to me almost other than you’ve got to find the right property and those things, your ability to control the finances and be ready with finance so you can jump on the deals when they're ready. If you're thinking about it, if you’re going to invest in property you don't have a frivolous system for money. Don't even bother looking, almost.

Being finance ready is something that's a major key necessity and as soon as you are ready, once you have your team of professionals around you, I have my solicitor, I go, ‘I asked for a contract, he expects the contract there to see it, etc. and to look at that and sit and run through it, if there's anything I need to know about that contract.’ Finance ready is probably almost the number one; continually learning and educating is number two; and your team around you to help you with the expert parts that you need would be probably number three.

If he met his past self from 10 years ago, what would he say?

[00:21:39] I think you know 10 years ago, heavily into my property interesting journey, heavily into my business - I almost say 20 years ago, I’d say read some more books, learn some more and apply across the board some of those things that I've learnt since. Don't have fear, that would be probably be the other thing. There was definitely those times where you had a bit of fear about what you're going to do. Yes, you need to be controlled but don't make stupid decisions. But read more books, learn about the risks and learn how to cover them. And it can be done in investing in property and I still try to do that now.

Now Beer is most excited about the opportunities that are being presented by a more modern way of thinking, such as the concept of rent-vesting.

[00:22:35] The fact that I hold a lot of properties and part of the strategy has been to hold them because of growth and look, I wouldn't say the next five years, there’s a lot of areas that are going to have the best growth forever. But I can look at my portfolio and I know what sort of growth I need on different properties to cover any shortfall that might be on that particular property. But most of my properties have pretty good cash flow now, because I’ve owned them for periods of time and made them better.

I mean I should be pretty excited about the fact that I actually hold the property and it's got some potential for growth. But even if I look back and said I didn't own the amount of property I do, I think that what’s exciting to me in this country Australia, there's always opportunity. Housing is more expensive now and it's harder to get into the market and the place you want to live, but rent-vesting is a very valid opportunity for you to actually get into markets in this country. And it can be done, you've just got to once again buy the book, read, learn and help, so you can actually get into that property ladder. So there's always opportunities, whether it's for me or for someone else.

Talking of rent-vesting, Beer has had ample experience of using the concept himself. And it’s obviously paid off!

[00:23:50] When I say the greatest rent-vestors, the fact is I've got a large portfolio of properties and I didn't buy one to live in until the last two years. It definitely wasn't because I couldn't afford to, it was because I could rent a fantastic property in a fantastic spot and go and buy five others for the value of that type of things, or whatever the number is. I was getting three times as much rent out of those properties than what I was paying for the place I was renting. I had tax deductibility of the interest on those properties, I had ability to renovate, pull out equity and do other things and grow this portfolio. If I had went and bought a house or a place to live in, it would have slowed me down substantially for a number of years because of cash flow reasons and non-deductible debt. And I chose to keep doing that and when you get into a more expensive property to rent, its returns are usually quite ordinary, bad. 

[00:25:00] And someone who has seen their city off the back of looking for the tax deduction. They're looking for the growth and in properties I've rented, I've seen that they haven't made a lot of money out of those from a great perspective. But I couldn't have bought it, or it could have been only the one and all my eggs are in one basket. I also think the top end, look at the GFC type worlds when it hurts the top end, it sort of hurts the hardest and probably hurts for longest. The lower mid to lower end of the market people still have to live somewhere and if you can't afford the really expensive one, you're left with one slightly cheaper. So I haven't had a real problem over that whole time across the whole portfolio with lack of ability to rent them out. With a really expensive property where no one can afford it, it’s going to be harder to do that. So I've been renting those while growing a portfolio on the side.

[00:25:51] That's great. 

[00:25:52] And it's a great way to grow equity.

If you would like to connect with Beer and learn more from him about depreciation or anything you’ve heard in this episode, you can reach out to him through his website or email.

[00:26:33] The website’s pretty easy, www.bmtqs.com.au and my mobile number may not be on there, but it's not hidden. You can get to my email address to send me emails and ask questions. Love to look at the depreciation schedules obviously, but you know I don’t mind talking to investors every now and again about investing. It’s good fun. So it’s easy to find me there, Google my name and you’ll find me pretty easy as well.

Thank you to Bradley Beer, our guest on this episode of Property Investory.