As markets across Australia favoured sellers throughout the pandemic, buyers can be forgiven for thinking snapping up a deal is like finding a needle in a haystack. Loo shares how this isn’t the case at all, and delves into the story of a happy client who scored a $450,000 property for a much smaller figure, proving that sometimes all it takes is a little digging. While sellers celebrated during 2020 and 2021, they certainly weren’t the only ones.

Timestamps:
00:54 | Nothing is Impossible
04:03 | It’s Who You Know
06:51 | The Deal With Eagleby
10:52 | It’s Not Always About the Money
21.12 | Bulletproof Properties
16:46 | Closing the Gap
20:43 | The Urban Sprawl Has Its Limits
22:58 | Avoiding Competition

Resources and Links:

[00:12:31] So I think these kinds of odd situations are still around, but they're actually a lot more often than you think. They happen a lot more often than you think, even in this crazy hot market. And sometimes it's just about digging a little bit deeper. 

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

 

I’m Tyrone Shum and in this episode of Invest Like A Pro we’re chatting with founder and director of House Finder, Simon Loo. He delves into the scorching Queensland market and reveals the numbers behind just how much the last 12 months has affected it. In amongst the craze he’s been able to use his powers for good, to find sizzling deals for his clients. 

Tyrone Shum:   

Despite the whirlwind of real estate in 2020, off market properties are still available. In a seller’s market, Loo puts his buyer's agent magic to work to help buyers purchase property into even the hottest locations.

Simon Loo:   

[00:00:54] We've absolutely been smashed, obviously, just across the boards with investors, wanting to get into particularly Brisbane, which as I'm sure you're aware, and all the listeners are aware that so it's incredibly hot at the moment. 

[00:01:08] But with that said, on the grapevine, or if you look at the Facebook groups, and what everyone is saying is that it's impossible to find properties, it's impossible to find good deals, it's impossible to find off market properties. But I guess I wanted to stress the importance of even in a crazy market that we're in at the moment that it's really still important to focus as an investor on the basic fundamentals of the numbers attached to any investment property. 

[00:01:45] There's a lot of FOMO happening, there's a lot of people that are getting super frustrated attending auctions and seeing stuff that's open that gets listed online and get sold within 30 minutes, let's say. Maybe like, a few hours. You know what I mean? Like, properties are just moving so quickly. And buyers are very frustrated. 

[00:02:08] But with that said, this isn't us trying to boast that we're getting these amazing deals or anything like that. You know that we are, but we're still getting so many off market and distressed opportunities, even in this crazy market that we're buying. In fact, of the last 30 properties we've bought, 29 of them have been off market and this was within Brisbane alone, I would say within 30 kms of Brisbane. 

[00:02:34] And not only do we get better deals by focusing on off markets, we also avoid competition, and it actually makes the buying process a lot easier. Because when you buy a property typically, you need to do at least a little bit of due diligence before you even secure it. This might involve an inspection, it might involve obviously analysing the suburb and the street and the property itself and all this kind of stuff, even if you're a super seasoned investor, you need to do that. 

[00:03:08] But if a property gets listed online, a lot of people don't even have the opportunity to even think about the process of whether it's a good deal or not, or how are they going to make an offer and put an offer in, or what the risks are involved in terms of buying this property. And by the time you've put all this info together, and you realise, 'Okay, cool, I'm ready to go, let's do it,' the property's gone. It's gone to another person that's maybe a family or whoever that's been looking in the market for several months, and they've kept missing out as well. 

 

[00:03:39] So, again, focusing on these off markets just give us a lot of time. Not a lot of time, but at least some time to digest and to realise 'Okay, cool, is it a good deal? Is it not?' Because even though properties are off market, they're not all good deals. Some off markets are literally just sellers being a bit cheeky, maybe, and trying to sell their property for a premium price but not pay for marketing. 

[00:04:03] So as buyer's agents, or investors even, it's important for us to go, 'Okay, cool, it's off market, which is great.' That's what it is. But is it actually a good property? A good deal, a good area? No flood zones? No bushfire zones? No power lines? All that kind of stuff. And logistically that's one of the other reasons why we still continue to try and focus more on the off market side of the properties. And they're definitely out there. It just comes down to who you talk to, and I guess the amount of relationships that you've got built up with selling.

 

[00:04:43] And like I said in previous episodes, there's two sides. Number one: A lot of agents, especially in this market, are looking to make a quick buck. They're looking to make quick commission. They don't want to do open homes and get smashed with 100 calls or a lot of shaky first home buyers, especially in finance issues at the moment that we're seeing a lot of. So if they can sell it to somebody like ourselves who has a great track record of being able to push contracts through relatively easily and ensures that the buying process is smooth as well, then sometimes— depending on the seller situation— they may lean towards giving us these opportunities, which obviously we analyse and pass on to our clients, for example. 

[00:05:31] And on the other side, even if it's a super, super hot market, there are always seller situations where they have to sell either super urgently or super quietly. So sometimes there's a separation or divorce issues, or personal dramas in people's lives that mean that they don't want to have a public sale. And again, if you're at the right place at the right time with the right offer, you can definitely use that to your advantage as well. But obviously, the main part of it is to get good deals.

Tyrone Shum:   

[00:06:08] Absolutely, for investors as well. So let's talk a little bit about maybe some of the examples that you've found in terms of off market deal or properties that you've been. Because it'd be interesting just to see what those kind of clients are actually picking up. I mean, it's fantastic that you've explained how market deals come about and the reasons behind it, and it makes absolute sense. Because if I was an agent, I probably don't want to go through that whole process. And you know that's a quick market, you want to be able to get them out. And ultimately, I guess that if they've got so much stock, they just want to turn it over rather than just list it and so forth. Well, let's jump into any of the that you've actually picked up in the last few.

Simon Loo:   

[00:06:51] So one example that I wanted to share was a property we bought in a suburb called Eagleby, which is in the Logan area, about 30 odd kilometres south of Brisbane. Now, this particular agent... actually first of all, I'll talk a little bit about Eagleby. So Eagleby, I would say about 12 to 18 months ago, was still pretty quiet. Similar to the whole kind of Logan area. It was still a bit of a sleeper. As I'm sure you and a lot of listeners know, Logan has had a bit of a reputation— or parts of Logan, there's 70 suburbs in Logan— but in this particular pocket of Logan, it's always had a bit of a lower socio economic kind of stigma. 

[00:07:34] But what's happened is over the past 12 or 18 months— similar with a lot of these sort of cheaper areas, so to speak— they've been absolutely smashed. With mostly owner occupiers. Because they're seeing what's happening in other parts of Brisbane, where it's moving up quite rapidly, and they're trying to get into an area that still ticks the boxes of being family friendly, suburban, quiet, good infrastructure, well connected services, all that kind of stuff, but still at an affordable price point. 

[00:08:04] So areas like Eagleby and Beenleigh and Crestmead and Marsden and all these kinds of pockets have actually just went absolutely nuts. We had a particular client with a  limited budget, I would say, of about $400,000. And he was looking for an investment property, obviously. And one of the agents that we deal with quite frequently in the Logan area, we actually approached them and said, 'Hey, what kind of sellers do you have that need to sell off market?' 

[00:08:46] So anyway told us about this property where the property actually had a tenant in the property that was a super long term tenant. And the tenant actually had a relationship with the owner, and the owner would only sell the property if the tenant could stay in the property. So he was not actually price driven to get the absolute highest price. He actually just wanted to ensure that wellbeing of the tenant or his friend was going to be looked after. So it was off market.

Tyrone Shum:   

[00:09:14] To be honest, that's excellent. I mean, I very rarely hear landlords or even owners who are selling property want to look after a tenant. So there must be some kind of goodwill there that this tenant has had looking after the property. So that's phenomenal.

Simon Loo:   

[00:09:26] Great tenant. They were obviously paying... I wouldn't say market rent, they were probably paying a slightly cheaper rent. But nonetheless, it gave us an opportunity to potentially buy a house where obviously my clients are all investors, they want to retain a good tenant anyway. 

[00:09:45] We looked at this property, it was a four bedroom, two bathroom two garage brick house, 600 square metre. Around about, I would say the 10 year old mark. Fairly sort of newish kind of house over in Eagleby. When we ran the comps— we closed this deal maybe around about a month ago, a month and a half ago now— and if you're looking at these kind of comparables, at the time, they were all selling for around about the $450,000 to maybe around the $500,000 mark. As the ones that are listed online, and they've had the professional photos, and they all look very sharp, and auction and open homes and all that kind of stuff. 

[00:10:27] So when the agent told me that we could buy the property at $385,000, I immediately was like, 'Okay, it's just ridiculous.' And previously, before this crazy market, I would sometimes question that with the agent. I'd be like, 'Okay, what's the situation? Why would they sell it so cheap?' 

[00:10:52] And it turns out, even though I did ask the question, like I kind of take the answer with a grain of salt to be honest, because if 50% is true, 50% would be a lie. He just told me exactly what I said. He's not looking to make absolutely top dollar, he just wants a quick and easy sale. He wants to make sure that the tenant's looked after. He's not going to be leaving anytime soon. And he's happy to let it go for that price because the seller worked out that if he sold it at $385,000, he would make his money on it. Not a significant amount, but enough so that he would be happy on it. And it would be a quick and easy sale. And obviously, the tenant could stay as well. 

[00:11:38] We put the property together, we sent it off to the client, he was obviously super excited. Like, they can buy this house for $385,000. And we showed him the comps that were selling for at least $450,000, almost identical type properties. Anyway, he went for it. I knew this particular buyer as well, he was very, very secure on the finance. So he wasn't going to stuff around on the finance extensions or anything like that. 

[00:12:03] Basically just picked up a great deal. Obviously, we've kept the tenant. I've even told the buyer— and he agreed as well— to not increase the rent. So even though it was, I think it was about $50 below market rent, just leave it. You got a great deal on the onset. We're not trying to do the wrong thing in terms of yes, it's settled, now it's time to jack up the rent and make things hard for the tenant. 

  

[00:12:31] So I think these kinds of odd situations are still around, but they're actually a lot more often than you think. They happen a lot more often than you think, even in this crazy hot market. And sometimes it's just about digging a little bit deeper. Like I said, if you trawl through real estate, you're just banging against brick walls at the moment. Unless you don't really care about market price. But as investors, I still think it's super important to expose yourself to these kinds of opportunities.

Coming up after the break, we discuss the differences between Brisbane’s market compared to Sydney and Melbourne’s…

[00:15:49] We have to remember that for the past, I would say, 10 years or so, unlike Sydney and Melbourne, that's obviously taking off. Brisbane has done nothing. 

He shares his thoughts on the effects the Olympics could have on the Queensland market…

[00:16:46] It's happening now. I mean, urban sprawl. Whichever way you look at it, I think the Olympics and things like that have certainly helped. 

We delve into another case study.

[00:21:37] We just bought this property last week over in an area called Redland Bay, which is about… I would say around about 30 odd kilometres south of Brisbane.

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

Tyrone Shum:   

Just 12 to 18 months ago, pre-pandemic, the average price point of a ‘bulletproof property’ in the Loganlea area was significantly lower. 

Simon Loo:   

[00:13:22] Loganlea, Eagleby, Waterfoot West, Britannia, Eden's Landing, Crestmead, Marsden, I remember literally 12 to 18 months ago we were buying four two two properties for around about the $300,000 to $350,000 mark. These were newer, like I'd say anywhere between sort of five to 15 year old type builds. Four two two, brick 600 square metre, this simple kind of what I call 'bulletproof' properties. Only so much can go wrong with them. And they're always, always consistently in demand. Not only from renters, but also from, if you were to sell it, from owner occupiers. 

[00:14:05] Because when owner occupiers buy properties, they tend not to look at the stuff that's super old, or maybe stuff that needs work. They want to buy something that they can see themselves moving into. Maybe a bit of teething issues here and there that they can fix up, but nothing too significant. 

  

[00:14:23] So, that's what I'm saying. I think one of the points that I've made in previous episodes was that some of these lower socio economic areas or what I consider 'ugly duckling' areas might not seem so attractive when the market's a bit quiet. It's hard to justify, 'Why would I buy in Eagleby when there's more premium suburbs?' So to speak. 

  

[00:14:47] But the fact that these houses literally 18 months ago, we could have bought one of these houses, let's say the Eagleby for a little bit over $300,000 and now they're all selling for around about the $500,000 mark. The percentage growth is so much higher than what you could have achieved closer into the city. But the difference is with these sort of more cheaper price point properties— from a financing perspective, from an affordability perspective, from a cash flow perspective— you could have accumulated several Eagleby type properties when the market was relatively quiet. And that would have exposed you to a lot of that growth, that percentage growth, probably more so than if you picked up two or three blue chips that were negatively geared. 

[00:15:36] I don't think this ship has sailed. I think we're still in sort of the beginning stages of the Brisbane boom overall. I feel like the past 12 months have been obviously absolutely crazy, as everyone I'm sure is aware. But at the same time, we have to remember that for the past, I would say, 10 years or so, unlike Sydney and Melbourne, that's obviously taking off. Brisbane has done nothing. So I think we're still in catch up mode, if that makes sense.

Tyrone Shum:   

[00:16:04] Yeah, it's really interesting that you mentioned that. And I do remember, you and I've gone through this phase 10 years ago, when we were back in the days when we were buying out in Western Sydney. Mt Druitt and Penrith and all those. And you go, 'Geez, those are the suburbs that you don't want to be in, because I know I wouldn't want to live in there.' And no disrespect to the people living out there, it's just a different way of... I guess it had a stigma back there. 

[00:16:28] But when I've gone out there not long ago, the whole area has changed dramatically. And that's because of all the things have been going on that have increased. And it's going to probably be the same thing as what's happened down in Logan as well, to be able to help increase that value. Because ultimately, it's affordable.

Simon Loo:   

[00:16:46] It's happening now. I mean, urban sprawl. Whichever way you look at it, I think the Olympics and things like that have certainly helped. So areas like Eagleby are literally bang on in between Brisbane and Gold Coast. The Olympics is actually helping the two cities merge. So all of that vacant lands in between— or I wouldn't say vacant land, but where it's not as built up, I guess— is starting to become quite sought after, well, it is actually becoming quite sought after. 

[00:17:19] And I think over time, we're going to see probably there's a lot people going to be commuting from Brisbane to Gold Coast and Gold Coast back to Brisbane, and the infrastructure and everything around it is going to allow that to happen a lot more quickly and a lot more smoothly. We're kind of seeing a bit of that transition as well.

Tyrone Shum:   

[00:17:42] And then to add to that, especially when we've had lockdowns across all of Australia, it's forced people to get used to working from home. So now the actual way people think about work is actually being to work from home. So therefore, it helps increase more people to be able to buy affordable places, and they go, 'What's the point of living so close to the city? There's no need. I don't need to travel to offices every day. I can live two hours, three hours out, and I'll go maybe once a week to the office.' It makes it very, very appealing to live further out. 

 

[00:18:09] And I'm the same. I've spoken to a lot of my colleagues I used to work with that was in the city. And they've moved literally two hours out of Sydney. And they go, 'Well, I don't mind driving two hours once a week to meet up with the rest of the team.' But we're doing everything literally virtually, just like how we're doing right now anyway, with our recordings. 

Simon Loo:   

[00:18:27] Just to add to that point, as well, I think it's what you're accustomed to, and what you grew up with, as well. Like, for example, like I grew up in Sydney, in the Hills area. And I remember it was, like, the biggest trek to go into the city. Every day for work or whatever. But now, commuting from the hills to the city is the new norm. 40 minutes or so on the train, 45 minutes on the train each way. And the new long trek would be one to two hours in Sydney, for example. 

[00:19:11] In the Gold Coast and Brisbane, I remember actually in my beginning investment days, I would obviously travel to Brisbane quite a lot to check out properties. I would actually book a flight from Sydney to the Gold Coast, because it was cheaper than booking a flight from Sydney to Brisbane. Since I needed a car anyway, while I was there, I would hire the car from Gold Coast and I would just drive up the M1. 

[00:19:37] Which always confused me in terms of why people didn't make this commute more frequently, because it was only around about 45 minutes obviously with the traffic to Brisbane City. And I saved a bit of money back then which was important, obviously when you're starting out. For a slightly longer commute, it sort of made that process a bit cheaper as well. 

  

[00:20:12] So I think over time, I guess my point is the commute from, let's say, Gold Coast to Brisbane, even from a working perspective, would be quite normal. Maybe 40 [to] 45 minutes, that could be the new norm in the long term future. Whereas right now, it might still be seen as unacceptable to Queenslanders.

Tyrone Shum:   

[00:20:36] Going down to South Australia, they complain that 10 [to] 15 minutes is already a long distance for them.

Simon Loo:   

[00:20:43] I'm not saying it's a good thing that there's obviously people out there who have to commute longer. But I think it will get to that point where urban sprawl and when areas become overpriced and people need to move out a bit further. But it also comes with a certain lifestyle, right? So obviously, living in the Gold Coast is completely different to living in Brisbane. And sometimes the trade off is yes, you might have to drive a bit longer to get to your work or school or whatever. But at the same time, you get to come home to amazing beaches and the whole sort of Gold Coast lifestyle as well. So give and take.

Tyrone Shum:   

[00:21:16] Yeah, I totally agree. And I think that's a fantastic point that you've made there. It's been really, really interesting to actually think about that. And now that you can actually look in hindsight— because we've been through both the Sydney markets and the Brisbane markets— it's very, very similar. And as you're saying, it's all catching up. You mentioned that you also had another case study that you wanted to share about as well, recently.

Simon Loo:   

[00:21:37] We just bought this property last week over in an area called Redland Bay, which is about… I would say around about 30 odd kilometres south of Brisbane. It's right near the ocean. Another off market deal, another actually four bedroom, two bathroom, two garage, brick house. This one's slightly larger block, I think it was around about 660 square metres, something like that. That's pretty standard house nonetheless. 

 

[00:24:09] Anyway, looking at all the comps, anything that's online at the moment is just getting absolutely smashed. They're all selling for around about the $690,000 [or] $680,000  mark for a relatively polished products. So what I mean by that is a house that doesn't need too much work. 

[00:22:28] So we spoke to this agent, we've done a few deals with this particular agent before. And he mentioned to us that there was a particular house that he could sell, again, off market, due to the seller circumstances. He actually didn't divulge what the seller circumstances were, unlike Eagleby, where they wanted to return the rental. But when he told us a price, we knew that it was a situation that was either private or they needed to sell it fairly urgently. So it's quite distressed. 

Avoiding Competition  

[00:22:58] We picked up this deal, it was $620,000 that we paid for this property. So it was, again, still a good deal. Most of these deals that we're getting is literally, I would say about 60% to 70% of it is literally just avoiding competition. Because there's been a few situations where we've negotiated an off market deal, we've negotiated the price, but at the very last second, the seller has a change of heart and decides to put the property on the market for one week only. Just to test it. 

[00:23:37] And let's say for example, you negotiate a house at $600,000 off market. They decided to put on market for a week, and it'd sell for $700,000. Which surprises both the seller and surprises the selling agent as well, but potentially to some degree. So sometimes, it's even a case of sellers maybe not even realising that if they were to chuck their property on market, that they could get a much higher price. So again, another sort of important aspect of trying to get access to some of these off markets is you not only beat that competition, but...

[00:24:21] the realisation of the seller. You know what I mean? Expectations, I guess, at the end of the day. But anyway, we picked up this deal. $620,000. We even get to do the building and pest, it's off market, which is why I'm telling you guys. Otherwise, I'd put the property at risk. So they're definitely out there. And we're buying quite a lot. I won't say the exact number, but we're buying quite a lot of these on a weekly basis all across Brisbane. North side, south side, inner Brisbane even. 

[00:24:58] To all investors out there, just stand your ground. Don't get too carried away, don't feel like you're going to miss out because you won't. Property is a long term journey. Whether you're not buying something today, you're going to be buying something maybe in three months, six months, 12 years. Or even if you buy something today, it's going to be another one soon. 

[00:25:16] So always wait for the right deal. Always make sure the numbers stack up. The worst thing you can do in any market is to overpay, and to buy something where it's very hard to come back from. Because not only does that stop you from progressing, it also affects you mentally. As in, 'I've lost money on this', or 'I haven't made money on this and so many years.' And that's the type of stuff where I see investors fall down on in terms of reaching their long term goals. Whether it's passive income or equity or whatever it is. So yeah, just stick to buy good deals.

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

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

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