Property Investory
Lianna Pan - Use Property Data To Buy 26 Properties
December 6, 2020
Lianna Pan is the successful Property Investor, Entrepreneur and retired Actuary who made a profit of $100,000 on her first property purchase in her first year of investing. Since then she has gone on to build a successful portfolio that is generating a six-figure passive income each year, as well as co-founding a successful business ‘Freedom Property Investors’, whose aim is to support a community of Investors in their journey to financial freedom.
In this episode, Pan, whose incredible research and analytical skills have enabled her to build an impressive portfolio holding over 26 properties so far, explains how she set and met her goal to retire her parents comfortably, retired from her own corporate career early to help people achieve their financial freedom, and she shares the simple trick to buying property right, giving you the tools to do the same.

Resources and Links:

Transcript:

Lianna Pan:
(23:59) Very quickly, I did the math and sort of realised that wasn't going to be it. And it was just quite a moment of, I guess, revelation. You’ve got to do something else. 

**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 speaking with Property Investor and retired Actuary Lianna Pan, whose incredible research and analytical skills have enabled her to build an impressive portfolio holding over 26 properties. Lianna explains how she retired from her corporate career early, shares the simple trick to buying property, giving you the tools to do the same. 

**END INTRO MUSIC**

**START BACKGROUND MUSIC**

Tyrone Shum:
Pan has spent the last decade setting herself goals and working toward creating financial freedom through her impressive portfolio. Now that she’s achieved just that, she’s working on some new goals. 

Lianna Pan:
(0:30) I've actually built a portfolio of about 26 properties now over the past 12 years, and retired myself from my corporate career as an actuary. And now with ‘Freedom Property Investors’, which I've co-founded with my business partner, Scott Kuru, we're helping a community, the community of investors, to do the same as well.

Tyrone Shum: 
It sounds like great work. So how does Pan spend her time day to day?

Lianna Pan:
(1:14) A typical day would look like, I mean, data plays a big part in my day. So I worked for example, I would have yesterday spent a lot of time learning about the budget and the implications that I have on the economy and the property markets, I'll do a fair bit of reading and research in a day.

(1:35) And then also, I have a research team that helps assist me with all of that stuff. So I work with them on a day to day basis. And negotiations are also a big part of my day as well, which is something I really enjoy. So, you know, to get fantastic deals for our members. Yeah, so that will probably be a typical day. 

Tyrone Shum: 
(1:58) That's amazing. And there's so much data, especially in this information overload. How do you pull this data together, and then go, ‘Okay, that's where we should be heading’?

Lianna Pan:  
(2:12) I'm actually extremely grateful for the career that I had as a data scientist. And it’s actually our whole job. And our training is about how to make sense of a lot of data and very complex data and how to actually understand and find patterns within that data. And using that to actually predict the future.

DATA SKILLS HAVE PLAYED A VITAL ROLE IN HER SUCCESS

(2:33) So I used to work for insurance companies, like, QBE and Almay, and so forth. And banks, such as Suncorp, and lots of financial institutions, and we were hired to do just that, to actually predict what is going to happen if for example, we do premium, we will be helping insurance companies set the right premiums for motor insurance or content insurance, for example. 

(3:06) So a lot of life modelling is involved. And understanding data is a big part of our role. So that skill set really has helped me enormously when you can apply that to any context and then decide to apply that to property.

Tyrone Shum:
Taking a step back, we discuss Pan’s upbringing and childhood experience. 

Lianna Pan:
(3:39) I was born in China, actually in the southern part of China, and I was in China until I was about 14. And then I came to Australia. And I came from a very, very humble beginning. My parents, just to tell you an interesting story, my parents when they first got married in China, they actually didn't have anywhere to live. 

(4:03) And so my grandparents took them in and built a room on top of my grandparents' really old house. So there was no permit, nothing like that. They just built like a makeshift room. And my parents thought it was gonna be temporary. But I ended up growing up there. I spent probably over 10 years there. And I had a great childhood. 

(4:30) I mean, my parents gave me everything they could but I didn't understand, you know, that was what poverty meant, until much later on in life. But that was our beginning. I still remember as a little toddler, I was playing in that room and running around in that room and I remember feeling that the building was shaking. One of my very clear childhood memories.

Tyrone Shum: 
(4:56) Wow. So you grew up and went to school in China as well. Which part of China in the south did you say?

Lianna Pan: 
(5:03) Fujian Province? Not far from Taiwan actually.

Tyrone Shum: 
(5:07) I know where that is. My parents have gone back there, my mother is originally from Quanzhou. So yeah, that's why I've been back there to visit and have a look into going back to those Provinces. It's just history because we like to find out where our background comes from, too. It's obviously changed a lot. And there's been, you know, so much growth there as well. Have you been back there since then?

Lianna Pan:
(5:30) Yeah, I've been back a few times. And the city that I grew up in is unrecognisable today. It’s just amazing how much can change in a short space of time in China.

Tyrone Shum:
(5:44) So much,  as I guess China has moved very, very fast in such a short period of time, it's grown exponentially, you know, with that kind of growth. So growing up in China, and also going to school, tell me a little bit more about your schooling, what was that like?

Lianna Pan:
(6:00) Yes, the thing with being in China, all the parents, they wanted the best for their children. And mine were no exception. So from a very, very young age, my mom, for example, really just taught me how you’ve got to really apply yourself and study hard. So I just remember that I was always studying as a little kid.

(6:26) And I was always a very good student, very well behaved and good student at school. So that's probably one of the biggest things, and I'm extremely grateful for my parents for instilling that sort of discipline in myself at a young age.

Tyrone Shum:  
Pan was well equipped with some great habits at a young age, which came in handy when she moved to Australia. 

Lianna Pan: 
(7:07) I went to high school in China. Then, obviously, halfway through that, I came to Australia and had to study a whole new language, and went to language school for about a year, before enrolling in the mainstream high school. So it was a very interesting and difficult time transitioning, but I guess it's the same thing most migrant children will go through. 

Tyrone Shum: 
(7:34) Do you know why? Why did your parents and your whole family migrate to Australia?

Lianna Pan:
(7:39) Yeah, so this goes back to how my parents really wanted to create a better financial future. And provide me with more opportunity as a single child, provide me with more opportunities in the future. So when I was seven, my parents made a really tough decision to send my dad out to Australia. They had to borrow money from friends and family to send him out.

LIANNA SAID GOODBYE TO HER DAD FOR SEVEN YEARS

(8:10) And basically, my dad worked extremely hard in Australia, we didn't see him for seven years. Like he didn't literally come back for seven years. And he would be working like three jobs, just to save up as much as he possibly could and send all the money home. So it was a very difficult, challenging time for our family. 

(8:30) And I always remember, like, you know, one of the things I always remember was that my dad would write letters home all the time. And so for seven long years, my father would write letters home all the time, like, every couple of days, we'd get a letter from him. And my mom would actually read it to herself first, but then read it to the whole family. 

(8:58) So that was kind of like a ritual for us, for me growing up, and I would often catch my mom every now and then just reading the letters, and crying to herself. So really, it was a tough time, especially for my parents, there was just so much sacrifice. Today, I can't imagine sacrificing so much, but this is something that I guess my parents generation goes through. 

HER PARENTS’ SACRIFICE FUELLED LIANNA’S MOTIVATION TO ACHIEVE FINANCIAL FREEDOM.

(9:27) And so I've always been very, very grateful for what they've done for me and from a very early age have really wanted to make them proud. So you know, by studying really hard and doing the best I could, and also getting on to a great career so that they don't have to worry about retirement, and finding ways in which I can create financial freedom for my parents and myself.

(9:59) Yep. So I set them up for retirement. That was a really big goal and motivation for me for the past 10-15 years. 

Tyrone Shum:
(10:08) Yeah. And you've definitely achieved that, you know, it's so great to hear that story. It's amazing what you’ve been able to achieve, and also what your parents have also been able to achieve for you. Maybe this would be sort of an ignorant question for me to ask about, but were there phones besides you? Did you ever get to talk to your father during the seven years?

Lianna Pan:  
(10:26) Yes, yes. If you remember, back in the 90s, there were no mobile phones or anything like that. And so every week or two weeks, my dad had to actually queue up at the local Telstra phone booth, just unimaginable these days, but the international phone calls used to be so expensive, that's why he used to write.

(10:51) And he would allow himself like, you know, a few minutes each week. And queue up, like all the other people that were doing similar things and just to talk to my family. So there was always a very emotional time. Like it was a special occasion, once a week that we get to talk to our dad.

Tyrone Shum:
(11:11) Yeah, it's heartbreaking for me just to hear that, I mean, it brings tears to my eyes. I can't imagine how your mom must have felt for quite a long time, you know, not to have your father with you side by side. But just to be able to talk, you know, that once a week or twice every two weeks or so it's, it's quite touching to be able to hear that story as well. 

Lianna Pan: 
(11:38) Yeah absolutely. And if you look at my parents today, they are still so in love after, what, 30 [or] 40 years of marriage. It's incredible. And because they've been through so much together that you know, I actually found that an incredibly strong bond. 

Tyrone Shum:  
After an inspiring sacrifice, the family eventually reconnected when she and her mum immigrated to Australia. 

Lianna Pan: 
(12:20) So I've always been in Sydney. Ever since I moved to Australia. I've always been in Sydney. So yeah, that's where my dad was. And he was working at a factory as well. So yeah, he was a boilermaker.

Tyrone Shum: 
(12:34) Oh, okay. Explain to me, I haven't heard boilermaker for a long, long time. But maybe some of the audience might never know what that is. But explain to people what kind of job is that?

Lianna Pan:
(12:45) It's like welding. So it's usually big steel works. I can't remember the factory that he used to work for a very long time in. And it was, like, big industrial buildings. Yeah, I can't really remember the name. But that's the work that he used to do. Lots of manual labour, like very heavy lifting, you know? So it was tough. It was tough. 

Tyrone Shum: 
(13:19) And mum, did she look after you, take you to school? And did she also go to work as well? 

Lianna Pan:
(13:25) Yeah, she used to work as well, and just sort of did whatever she could get. Whatever work she could get. And when I was 18 [or] 19. They started a little business, a convenience store. And they must have been in that business for more than 10 [or] 15 years. Just until before they retired.

Tyrone Shum:
Being a non-English speaker, to begin with, Pan struggled to find her feet in high school. 

Lianna Pan: 
(14:04) I think the transitioning cultural shock was the first part of it. But with my high school, I think that they have really good programmes for immigrant children. So they really took good care of us. So it made the transition easier.

LIANNA STUDIED HARD TO ACHIEVE TOP GRADES.

(14:27) And then it was just about again, how I wanted to do really well out of high school. So that academic learning was my main focus. I remember going to weekend schools to improve my learning. And I took up like four subjects when I was in year 10, for example.

(14:52) Year 12 subjects I did maths olympiad, physics olympiad, all that sort of stuff. Just trying to do the best I could. And I really got into it. And, you know, I had always been a very keen student and I felt that it was really rewarding for me as well to get into the habit of learning. It became a passion and a hobby.

Tyrone Shum: 
Pan took her academic strengths further and enrolled in a university degree, but going from high school to university level wasn't as effortless as she had imagined. 

Lianna Pan:  
(15:46) Yeah, it was an interesting transition. I think actuarial science was one of those things where you have to get like 99 or above just to get into that degree. So you came from an environment where you’re basically the top of your class all the time, to an environment where everybody was, like, really amazing. 

(16:06) So you're competing with that. And so that was a bit of a shock. That took time to transition. But also, because I was very competitive, it just really made me step up so at university, I also set myself a goal that I really wanted to get myself started on, you know, saving as much as I could, as well. So I was also working three part time jobs at university. 

STUDYING FULL TIME AND WORKING THREE JOBS, HOW DID SHE MANAGE IT ALL?

(16:37) And luckily, the university gave me a lot of opportunities. So I was working as a tutor, I was tutoring younger students, year one students and so forth. Because by that time, I had done a lot of uni work before coming into uni. Especially in the area of maths. So that that worked out really well for me. 

(16:57) And, you know, I was just saving as hard as I could, because I wanted to set myself up as quickly as possible and set my parents up. That was another thing my parents taught me is the discipline of saving. And that's something, again, I’m incredibly grateful for.

Tyrone Shum:
During her university days, Pan studied a full-time triple-degree and managed to work three jobs while doing it. She tells us a little about those jobs. 

Lianna Pan: 
(17:43) One was as a tutor. So at uni, you could tutor classes. So when I was in year two in uni, for example, I was tutoring year one students, and so forth. And so I did three degrees as well, which really helped. So that meant I could choose to do lots of different disciplines.

(18:06) I was tutoring some statistics, economics and math subjects at uni. And that really supported me because I could just easily go to one of my lectures and then finish my lecture or go to a tutoring class. So that was one. The other one was actually as IT support at the university library.

PAN GRABBED EVERY OPPORTUNITY SHE COULD TO BETTER HER FINANCIAL POSITION.

(18:25) And that really helped as well. So there were just quite a few tutoring jobs for different departments. And then also IT support. So it really helped because all my jobs were actually on campus. So it made things a lot easier, otherwise, it would have been pretty difficult. At one stage, I think in year two, I was doing about 60 hour weeks. And I wouldn't have been able to do that if it wasn't on campus. 

Tyrone Shum: 
(18:54) I was gonna say imagining the amount of travelling you would have to go from. That's phenomenal. I mean, how did you manage to fit three degrees in? You're amazing.

Lianna Pan: 
(19:08) Yeah. I was just basically a massive nerd.

Tyrone Shum: 
(19:16) Oh, you've done exceptionally well. How long were you at university for?

Lianna Pan: 
(19:22) Four years.

Tyrone Shum: 
(19:23) So wow, okay. Yeah, that's exceptional. I mean, I mostly hear of people doing double degrees in five years, you’ve managed to do three degrees in four years. So you're obviously you know, at that level, where you're able to install these things very quickly, and be able to put them through to memory.

Lianna Pan: 
(19:39) Oh, I cram a fair bit of stuff in. But you know, like a normal degree will give you maybe 12 contact hours or something. So you can actually do double or triple degrees, and that would just mean double, triple the contact hours. It’s hard. But you can still make things work through use of your time.

Tyrone Shum: 
After years of hard work, and coming out of university with plenty of options, Pan settled into a career as an Actuary. 

Lianna Pan: 
(20:31) Um, the actuary degree was the main thing I did. I did a finance degree and computer science and it really helped me because you made all these skills. An actuary degree is multidisciplinary. So the whole idea with training was basically statistician's, economists, and a whole lot of disciplines rolled into one. 

(20:55) And we need to have programming skills as well. So the more you know about this, the better equipped you for a career. So I started with QBE. It was my first job as a graduate. So I went straight into that from university, and then I’ve just been on the actuarial career ever since.

Tyrone Shum:
(21:17) Was there like a Graduate Programme? Or was that like a full time graduate role?

Lianna Pan:
(21:20) It was just a full time role. 

Tyrone Shum:
(21:22) Was it hard to actually get into work after you finished your studies? Because I guess the job market going back then to what, 10 [or] 20 years ago, was probably not great.

Lianna Pan:
(21:30) Yeah, it was pretty tough. I remember the time that they basically only really looked at applicants with a certain grade point average as well. So it was a tough job market. I think it is tougher now. Just because there's a lot of consolidation of the insurance companies and there's actually more supply. Like there's more graduates coming out. But it was tough, even back then. Yeah.

Tyrone Shum: 
(22:02) Which year was that when you graduated and went into QBE? 

Lianna Pan: 
(22:06) I think it was 2006 or 2007? I think it was just a year or so before the GFC. Yeah, yeah. But I was lucky. I got in before the GFC.

Tyrone Shum:  
(22:17) I’m just asking because I graduated probably about a few years before you in computer science. And even then, it was a struggle to try and get anything in IT, because you know, with the tech boom, and everything kind of changing, it was all impacted. And then I assume that the market was just you know, a bit buoyant at that time. That's fascinating. So you were working at QBE? How long did you stay there for?

Lianna Pan: 
(22:37) A couple of years? Yeah. And then I moved on to other insurance companies. And I just sort of moved between insurance companies and banks.

Tyrone Shum: 
(22:46) Yeah. So overall, how long did your career span within the actuary and cycle data science area?

Lianna Pan: 
(22:53) So about seven years? Between seven and eight years? Yeah.

**MUSIC BREAK**

Tyrone Shum:
Moving on to property, Pan shares the story of her first investment. 

Lianna Pan:  
(23:16) I started investing property in 2008, actually, in the middle of the GFC.

Tyrone Shum: 
(23:23) One year into the workforce?

Lianna Pan:
(23:24) Yep. Yeah, about a year. So I was just like, wanting to save enough. And at that point in time being an actuary as well, one of the things we actually learn is analysing all asset classes. That's just basically what we do with our learning. So I did that as well, because very quickly you kind of learn that  you can't save your way to financial freedom. 

SHE SOON REALIZED SHE NEEDED TO THINK OUTSIDE OF THE BOX

(23:48) If you do the projections, you know, superannuation wasn't enough, they’re just putting money aside and putting it into a deposit, that wasn't going to be enough. Very quickly, I did the math and sort of realised that wasn't going to be it. And it was just quite a moment of, I guess, revelation. You’ve got to do something else. 

(24:08) And because I was already in the world of assets and investments and stuff that really made me aware of all the options out there, I analysed all the different options, and property was hands down the best by far, from a numbers perspective. I'll get into that a little bit later. But yeah, that's that's basically what I thought, that I gotta save for my first deposit.

Tyrone Shum:  
(24:35) It's really interesting, because I think you're the first person to actually point that out. Like, you're very logical, you're data driven, and you've actually worked it all out. A lot of people just go, ‘I gotta get a property because it's my first time’. Or, ‘I gotta get a property because I need to plan for the future’, but you're able to analyse and see all the different asset classes, you know, from shares to businesses and so forth. 

(24:54) And I guess the power of having that knowledge was that you're driven by the data which you know, is obviously what's happened there. So looking at purchasing that first property in 2008 during the GFC, maybe just share with us a little bit of background. How did you find this first property? You know, where did you start? Because it was all new to you, wasn’t it?

Lianna Pan: 
(25:15) Yeah, the property it was new, the principles of the analytics behind it, which is actually a pricing, or like a prediction methodology, which are developed over the years and refined and perfected. That wasn't new to me, because it's just about applying the same principles, but to a different asset class. 

(25:42) And so what I was looking at, at the time, was just from historical data, you can see there are certain patterns in that data. And I knew that back in 2008, especially at the onset of GFC, it was a great time to invest. So one of the things you'll find in historical data, and not just in Australia, but overseas as well, is that every economic shock produces a property boom, or, there's a property boom that follows every economic shock. 

PAN USED HER DATA SKILLS TO DETERMINE IF AN INVESTMENT WOULD BE SUCCESSFUL.

(26:14) And I think, you know, if you look at our historical housing data, going back 100 years, it happens every single time. It happened right after the Spanish Flu in the 1900s, for example. There was a property boom after that, and I was like, ‘Wow, that was an amazing, amazing discovery’. And that was the right time to get into the property market. So I knew that it was the right time. And it was just about doing a lot of property research.

(26:44) And also just having the guts to make the first step right, knowing the numbers, knowing all that theory behind you, there's still a whole other piece of work, which is mindset, pushing yourself to do it. So I've had from day one, I thought to myself, look, I wanted to learn from people that already did it, and could really have the results that I wanted to achieve.

(27:10) And no offence to anyone of my, you know, parents or family or friends. But there was no one in my peer group or family that I could model from. And so I actually spent $10,000 of my hard earned savings and paid for a lot of mentoring and coaching. 

(27:30) Yeah, more one-on-one mentoring coaching rather than just attending courses and stuff, because I needed someone to sort of knock me over the head or like, bang my head against the wall and say, ‘Hey, you need to act, not just prepare to act.’

LIANNA HAD TO OVERCOME A LOT OF FEAR BEFORE SHE WAS ABLE TO COMMIT TO AN INVESTMENT. 

(27:45) And I remember conversations I had with my mentor after like, I passed up dozens of properties, even though I knew it was the right time to invest. But for some reason, I always managed to find reasons to not go ahead with one property because it wasn't perfect.

(28:01) And one of my mentors actually said to me, ‘Hey, Lianna, have you noticed that you're always looking for reasons not to buy? Have you ever thought about why you do it? It's like you’re asking a million questions, but a lot of them are not relevant and they don't tie into a big picture at all’. 

(28:21) And really got me thinking, it sort of hit me over the head and got me thinking that, wow, this is just my fear manifesting itself. And it was. I could be forgiven for feeling fear, because you just have to turn on the TV at that time in 2008.

(28:41) And it's just all doom and gloom, there was just no good news whatsoever. There were so many, so called foreign experts coming to our country and saying that we were going to face a property crash in Australia, you know, 30-40% drop, and even the cab driver was telling you not to invest, right? So you could be forgiven for feeling fearful. But the end of the story is like, you know, like Warren Buffett says, when everyone is fearful, be greedy. 

Tyrone Shum:
So faced with a lot of fear and apprehension, how and when did Pan eventually take the plunge? 

Lianna Pan: 
(29:21) Yeah, it was just after a lot of passing on opportunities, and my mentor really talking some sense into me. And if I had the opportunity today, I would have gone back and bought as much as I could afford. And I settled on that property, and really, fundamentally ticked all the boxes. So I just took that step to get onto that property journey and never look back.

Tyrone Shum: 
(29:49) Excellent. And what was that first property that you purchased?

Lianna Pan: 
(29:52) It was in Sydney. And so Sydney at that time happened to be one of the cities that was just perfect timing. I was considering Melbourne, but because I lived in Sydney I took advantage of that.

Tyrone Shum:
(30:09) Are you able to share with us the details of that first property? What was the property? Why that particular property? Can you give us a background story behind it?

Lianna Pan:
(30:18) It was just a property that ticked all the boxes in terms of the research, massive gentrification going through that area, lots of demographic change, population growth, demographic change, as well. And it was actually undergoing a lot of infrastructure. 

(30:38) So rejuvenation, which actually combined with gentrification, it was also a very undervalued suburb compared to all the surrounding suburbs. So it ticked a lot of boxes. And it just so happened, it was at a time when, you know, some developers were having to liquidate their properties, that was a brand new property just built, and that particular developer was having some cash flow issues, and probably not an uncommon problem during the GFC.

FROM $400,000 TO A MILLION.

(31:06) But it actually opened up the world of opportunities to negotiate some good discounts. So I got a little bit of a discount on that on the deal as well. So you know, everything really added up. Was it the perfect property? No, I didn't like the colour of the kitchen. You know, the aspect wasn't perfect, but who cares? That property, I paid $400,000 for that property. It was like a two bedroom townhouse or something. And today, it's worth over a million dollars.

**MUSIC BREAK**

Tyrone Shum: 
Within her property journey, Pan experienced a few ups and downs, along the way. She shares these challenging moments.

Lianna Pan:
(32:12) It is quite an interesting journey. So I think I was very disciplined, I was very cautious for the first few years. And then I wanted to try, you know, after a few years, I just wanted to try different strategies as well. So I tried to explore different paths, you know, renovation, subdivisions and developments.

(32:32) So I've actually tried all of that. And what I did was, like, I guess at one point I got sort of a little bit lazy, or a little bit cocky if you like, thinking, ‘Oh, well, I've got successes from my acquisition so far, you know, I should be able to just do that in other strategies’.

(32:51) You know, one thing I realised was that when I didn't spend as much time upfront, doing the research, and really understanding timing the market, the right location at the right time, and I just, you know, bought something which I thought, well, I can renovate and flip it quickly. 

PAN’S RENOVATION STRATEGY DIDN’T WORK OUT AS PLANNED. 

(33:12) I've got mentors and coaches in that space as well, who’re very good at that particular skill, but then not necessarily good at the bigger picture, understanding the research part of it. So even when you execute that strategy really well like in a renovation… so I did renovations, and made no money out of it, I did renovations and lost money.

(33:38) And, at the end of the day, the biggest lesson there was not buying the property at the right time, the right location. And another big mistake is actually flipping those properties. So not holding on to them for the long term thinking, you know, because a lot of people that are going to you probably have seen these coaching courses, there's so many coaching courses, which I actually went to at the time as well and actually follow their advice.

(34:06) So one of the things that we're saying is, it doesn't matter what market you're buying a property in, if you execute these values as strategies like renovations and developments, you always make money. That's not true. It is not true at all. It was just incredibly stressful because I was working full time as well. Oh, it was so stressful.

SHE WENT THROUGH MANY SLEEPLESS NIGHTS DURING THIS TIME. 

(34:28) And forget about 60 hours, you're basically working non stop, because you're working full time, then you got to work on your project, which will be renovations or developments or whatever they may be. And there's a lot of risks involved there as well. So, you know, what if the council doesn't approve what you proposed? And there was just so much of that going on and so many uncertainties and risks. 

Tyrone Shum:
Pan and I discuss the struggles she faced when trying out renovation strategies, and why certain strategies work better for her. 

Lianna Pan:
(34:53 audio part 1) I must have grown so much. Like so many sleepless nights. At the end of the day, the biggest lesson I learned each time is when I make money, it was always because I got the property at the right time, right? The right location, the right time. And when I lost money, it was not doing that research properly. You know, I've done all these strategies and in some cases, I've made money. 

(35:22) In some cases, I haven't made money. So those were probably, I would say, the interesting years, but I always look back on those years and say, ‘Well, I'm glad that I've done this’. I know what it's like to do all these different strategies. So I can see what strategy works for me, like someone who's a busy professional, who's got a lot going on in their life, and doesn't really have the time to actually spend doing active strata property strategy, so to speak.

(35:58) So what would it be like for people in that situation, to build a portfolio of properties that can give them the passive income, the financial freedom they want? So the strategy I come back to is to do research upfront and just find the property that is the right location, right time, to make sure that you maximise your chance of getting properties that will beat the average growth all the time, and build a portfolio from there. 

THE STRATEGY IS SIMPLE.

(36:26) And there's a lot of numbers and science behind it as well, you can basically build a portfolio and actually pay off all of your debt. So say you buy two properties, you can pay off if those two properties grow at above average rate, and then after 10 years or so, you can actually sell one property and use that to pay off the debt against the other property completely. 

(36:49) So the strategy is simply, you know, buy twice as many properties as you need, roughly, and then sell half of them off at the point where you were ready to consolidate and have the other half completely paid off and paying you a passive income.

Tyrone Shum: 
(37:05) Yeah, yeah. And that's a great strategy. And it's a simple strategy. I mean, anyone can follow it. It's just a matter of time. It's really interesting. I'm also curious about the renovation, the property development type of things. What kind of renovations did you do? And did you actually manage the trades? Or did you actually go into the renovations to manage trades? 

Lianna Pan:
(37:30) So with a renovation strategy it's about, you know, buying a property location. I chose locations where you can get a big gap between unrenovated and renovated properties. But as I said, even if you tick all your boxes, do everything right, if you think that the margin on renovations is typically 5-10%. Yeah, it's slim. And what if the property market slides by 5% over a 6-12 month period where you're doing this project? Well, then you lost all of your profit.

RENOVATION RISKS DON’T ALWAYS PAY OFF ACCORDING TO PAN.

Tyrone Shum:
(0:01) It's been very interesting to hear that. And I think, you know, renovations, development, is not for everyone. And, you know, you’ve got to start off with the foundations which is just, as you said, you know, buy a property that's under market value in the right location, do your research, and if you buy it right, you can pretty much hold on to those properties. And you don't have to really do anything.

Tyrone Shum:
We move on to discuss Lianna’s most memorable ‘aha’ moments where everything seemed to click into place for her. 

Lianna Pan: 
(0:47) There's a lot of ‘aha’ moments in my journey. I think one of the biggest aha moments that leads on from what I talked about before is that research is hugely important. Understanding the data. The property market is predictable, to a large extent.

(1:09) And understanding that is so incredibly important. So there are certain rules, certain rules that I've figured out over the years, for example, you know, you've got the long term growth rate for Australian property which is incredibly stable.

(1:25) It's about 6.8-7% all the time, whether you're 25 years [or] 30 years, I've even gone back 100 years, the hundred year average growth rate of Australian property is about 7%. Incredibly stable, and also, the property cycles, they are not in a straight line, otherwise it would be so predictable. 

(1:48) But actually, within the property cycle, the growth rate will be either above the trend line or below the trend line. And the idea is finding points below the trend line, but it's about to accelerate its growth rate to get above the trend line. 

(2:14) So you could call it a 70/30 rule, for example, property cycles spend 70% of their time in stagnation, sort of from going above the trend line to below the trend is a period of stagnation, and about 30% of their time in acceleration. So you want to actually get to that point in time to take advantage of the uplift of that 30%. I mean, the market is one part of it. 

(2:47) And then there are lots of cycles within Australia. So it's not one property cycle, there's so many property cycles, every city has its own property cycle. And so you can always find properties that are in the right point in cycle to take advantage of the growth. So like, research is a big ‘aha’ moment, just how important it is doesn't matter what strategy I implement.

KNOWING THE RIGHT RESEARCH IS INCREDIBLY IMPORTANT.

(3:15) So that's a huge one. And the other one is just the strategy that we talked about. So how do you get properties to pay themselves off. And that is a huge ‘aha’ moment for me, as well. And you actually don't need to put in more of your savings. You don't actually have to live on baked beans for 10 years of your financial freedom, it doesn't really need to affect your lifestyle.

Tyrone Shum:
(3:40) Yeah, well, this is really good that you pointed out those because it really leads into more talking about the strategies that you've done. And I really like it that you've hit on the point that you don't need to leave on baked beans to build a portfolio. 

(3:54) Maybe in your situation, what were you able to do, because as you said, 2008 was a great time to buy property. Did you buy lots of property around that time? Or did you actually just wait a bit to do that? Because, you know, it'd be interesting to know, how did you actually accelerate growth over the last 10 years?

Lianna Pan:
(4:13) Between 2008 and 2009, as I predicted there was going to be a property boom, and a property boom did come. So my first property that I bought for $400,000 grew by $100,000 in 12 months. 

YOU SHOULDN'T BE USING YOUR SAVINGS TO ACCUMULATE YOUR PORTFOLIO.

(4:27) So that gave me $100,000 of capital growth or equity. So the strategy is, you don't want to put all your savings continuously over the time period that you need to accumulate your portfolio, you're using the equity in your property to actually get your next properties. After about 12 months, because that's all the savings I got, I had about $50,000 which got me my first property but I didn't have any more after that.

(4:58) So that capital growth, a big chunk of capital growth from that first property allowed me to get into two or more properties the following year. And those properties again, same scenario, right location, right time, ticks all the boxes in terms of above average capital growth potential, and they were all positive cash flow as well. 

(5:19) This is, again, a very, very, very important thing. From day one, I bought properties that were cash flow positive. So they all were brand new properties, which meant that they will maximise your depreciation benefits and your tax return, tax refunds. Yeah, very important for someone like myself, for example. 

(5:39) And also they have very good rental yields to start with, so they will have positive cash flow, often before tax refunds, the tax refunds just add to that. So that's very important, because it's  good for borrowing capacity later on as well. So the banks can continue to lend you money if your property's doing really well, in terms of paying you to own it. Even if you’re paying 90% or 100% interest, you know, so that was one of the key rules that I stuck to. 

(6:13) And using those additional funds, like the additional cash flow on that property, not using that to fund your lifestyle, or putting that back into the property to help pay down that property or putting it towards another deposit for another property.

Tyrone Shum:
(6:28) And so you're able to pretty much leapfrog from one property to another without having to inject your own cash, you know, that way you can keep that cash to, I guess, live and you know, have a lifestyle that you want until your portfolio generates additional passive income as well.

Lianna Pan: 
(6:43) You don't need to inject more of your cash after maybe the first two or three properties, you should be able to pull out the equity from the properties themselves to keep going. I did both anyway, being Asian. Just wanted all the money into properties! So I did both.

Tyrone Shum:  
Thriving on accelerated growth, at what point did Pan decide to quit her 9-5 job and invest all of her time into property? 

Lianna Pan: 
(7:19) About five to six years into my investment journey. So 2013, I realised that I was actually getting more passive income for my property portfolio than I was for my day job. And at that point, I just realised, you know, what I could do, I could spend my time better, I could just do this full time. 

(7:41) Because you know, I can look at so many more opportunities. My big dream, like, as a data scientist, your big dream is always being able to do a lot of data analytics. And, by that point, I had truly really got the property bug, and really wanted to know everything, like the depths of property, and how you can make this so predictable. 

PAN THREW HERSELF INTO THE RESEARCH BEHIND PROPERTY MARKET PREDICTIONS.

(8:06) And my very accurate predictions are always always about that. So my big dream was to one day be able to be able to fund the purchase of a lot of data, and build a research team around me to do this full time. I'm glad to say that we were able to bring that to fruition. So, you know, that model just keeps getting refined and refined. But it's quite expensive to actually purchase and maintain a lot of data and to be able to do analytics on it.

Tyrone Shum:
(8:41) Yeah, and that's the thing, data is so key. It's like gold, you know, in our day and age at the moment, I mean, when we look at Google, Facebook, the amount of data that it may sell for advertisers is worth a lot of money, it's the same thing as property, you're able to get that data on it, and then you know, find the best value out of it.

(8:57) So I guess the question that pops into my head is, why do we not use technology to, you know, use your models, apply your models, and then spit out, I guess properties or answers to what we're doing rather than human interaction? Is it getting to that point that we would do that in future? Or is it going to be still human interaction?

Lianna Pan:
(9:19) So if you think about a lot of pricing algorithms these days in an insurance context or in a data analytics context does include AI (Artificial Intelligence) already. So just a simple example would be a feedback loop or automatic feedback loop. So we're getting the algorithms to pick up patterns in the data, live data, and feed it back and still refine the model in real time. 

(9:45) So that's been happening since about six or seven years ago now. So a lot of insurance companies already have that. So, what I will say is that even in an insurance context, that's why I actually do still exist today, you can never leave data, just to do its own thing like a black box, you put stuff into the black box, it comes out, you have no idea what it means.

WE STILL NEED PEOPLE LIKE LIANNA TO INTERPRET THE QUALITY OF DATA.

(10:12) And so you always have to apply a judgement layer to do that. So simple examples like data can help you identify it. So we have like 94 point checklist checkpoints that we go through when we identify a suburb with the potential for above average capital growth, for example.

(10:36) But that process, once that suburb comes out, we'll give them a score. In the suburbs with high scores, we actually look into. You always need to have on the ground knowledge, you need to know what you like and see and feel, as that’s a part of it. That part you can't remove, you can't completely rely on data. 

(10:58) So if you look at some of the companies out there who only produce data like results, predictions based on only looking at the data, you can often see that they leave a lot out, for example, if an area is going through a massive change by massive population growth, one of the things you'll see is that new developments or estates will come through. 

(11:29) And you might be forgiven for thinking what the median price point might look like when it's come out a lot, but what is happening is, a lot of the new sales are actually new properties, whereas sales which happened a few years ago are the older properties. So it's not comparing apples to apples.

Tyrone Shum:
(11:51) Yeah. And that also skews the property prices too, in that particular seller.

Lianna Pan:  
(11:55) Yeah. You’re thinking, ‘Wow, that that area has gone through massive growth’. But if you look into it, you might flag that area, and if you look into it, you realise, ‘Well, actually the mix of properties that gets sold all the time is actually different’. So just to give you a simple example. So there’s a lot of data cleaning, you can do. But with this type of data like this, it's very hard to clean up that.

Tyrone Shum:
Being equipped with so much knowledge around data is incredibly progressive for Pan. I ask her what the data is suggesting about the market around this time, with the current pandemic still in play. 

Lianna Pan: 
(13:17) I'll go so far as saying that the boom is happening, like it's starting now. So one part of our prediction methodology, which we call the Four Pillars of Prediction, one of the pillars is in fact studying external events that have profound impact on the market. So things like economic shocks or pandemics, a perfect example of that, and studying how that affects the market. So certain factors that have happened in the past, if it's happening again, the same thing will happen again, and that is exactly what's happening. 

A PROPERTY BOOM IS UPON US.

(13:59) So, during the GFC, what happened after the GFC is the government injected a lot of stimulus into the economy, and there was a lot of direct stimulus for the housing industry. So for example, they doubled the first homebuyers grant, an increase in grants to encourage people to buy brand new properties, therefore, stimulating the construction industry. 

(14:20) They fast tracked a lot of infrastructure projects. Doesn't that sound familiar to you? It's happening now. You know, they're listening. They're lending in the last few months, right? And we just got the budget two days ago, which is very, very exciting, because they've introduced more text cards. They've introduced an initiative to create more jobs. And they fast forward a whole bunch of infrastructure projects, as well. 

(14:48) And what is different this time is the scale of the stimulus. So back in 2008, the government spent about $10 billion and so far, this government has spent about $500 billion. It literally dwarfs what was happening in 2008. So can you imagine the magnitude of this boom? Yeah, anything I think the same thing is going to happen is just the scale for this time around is going to be bigger than the last time.

Tyrone Shum:
(15:20) And it sounds like they're trying to move it quickly, because there's still a lot of fear around the coronavirus pandemic that's still happening around people still staying at home. So I guess there's more and more people wanting to get their own property, you know, living somewhere that's stable.

Lianna Pan: 
(15:36) Yeah, absolutely. There's always a fear for times like these. People often lose faith in assets that are liquid, just because it can change so much like from the beginning of this year to the onset of the pandemic, for example, property market loss 30-40%, in a period of two or three weeks. And the same thing happened during the GFC. 

(16:00) During the GFC, the fair share market fell by 55%. And yet, around the same time, the property market fell across Australia only by 5%. So it's so much more stable and resilient against any economic shocks. So whenever economic shock happens, people lose facing the share market and take their money out, they want to invest it in safer assets. 

(16:24) And so, you know, if you are looking at superannuation, for example, it's quite an interesting area, people always transition phone shares to brick and mortar at times of crisis like this. And, you know, you can't blame them for doing that. Because imagine you're trying to retire in 2008. And suddenly, half of your retirement fund was gone.

Tyrone Shum:
(16:48) That’s the scary thing. Yeah, so that's why the people flocked to or moved into secure assets, such as physical assets like property, which is very, very common.

Lianna Pan:
(16:57) Yeah, they also got an interest rate down to the lowest it's ever been historically. So it's never been cheaper to borrow money. You also got like, government's just relaxing the lending policies again. And again, then as we just put out an announcement, on my birthday 24th of September, they announced that they're going to simplify a whole set of rules to make lending easier with the implications, the borrowing capacity for everybody will increase. 

(17:27) And the whole finance process will be a lot faster. And so that will just encourage even more people to do it, so they can afford to buy more now they can encourage more people into the property market. And they are the first ones to get the Home Builders Grant. 

THERE HAS NEVER BEEN A BETTER TIME TO BUY.

(17:44) And you've also got so many other incentives for first time buyers coming in. So like, for the first home buyer right now, it's never been a better time, because they get so much. We did the math across all cities and states, just to see how much the level of incentives they can get from each of the federal government, state government, and so forth. And it adds up to about $80,000-$100,000 of incentives that they can get to buy their first property. 

(18:20) How hard is it to save that much money for a first time buyer? Way too hard. All of a sudden, like before, you might have so many people who can afford to buy their first property, now all of a sudden, the floodgates open. So that's already happening the past couple months.

Tyrone Shum:
(18:36) Actually, yeah, I've spoken to a lot of buyers' agents, and they've said exactly the same thing. A lot of people going to open homes and buying property are mostly first time buyers. So we're starting to see a huge uplift and drive for that. It's fascinating. 

**MUSIC BREAK**

Tyrone Shum:
Pan and I move on from discussing the market to discussing her current motivations. Having achieved financial freedom, and having seen her parents retire comfortably, she has done what she initially set out to do. So what now? What is her ‘why’ moving forward? 

Lianna Pan:
(19:13) My why is a couple of reasons. One, I am a nerd. So I love data. And the data actually that I'm working with now, building a research team and just getting a deeper, deeper understanding of how to build you know, this perfect model that actually has real applications in life. 

(19:35) So that in itself is an extremely rewarding experience. There's nothing as satisfying as seeing your predictions coming true. Time and time again and really helping, not just me personally, but now members of the freedom community as well. 

(19:54) Now, I guess that brings us to the second part of it, which is that we want to help as many people as we can to achieve the same outcomes that we have been able to achieve for myself, my business partner, Scott Kuru, and all the members of the Freedom community. And also Alfred and the team, which is over 70 people strong today, all of these people are actually interested in building their own portfolio for following this same strategy. 

(20:23) So you kind of feel responsible and that's why you work extra hard, because you want to put your family and friends and then our team members savings into these properties, you want to make sure that you do the absolute best you can to make sure you pick the right properties. So that is driving us. And our mission with freedom is to help 10,000 families or individuals to achieve their own financial freedom in the next 5-10 years. 

(20:59) So that's been our big mission. I mean, after I quit my actual job, I did actually go travelling and go overseas and did the whole, you know, lifestyle thing, doing nothing, basically doing nothing. And it got boring pretty quickly.

Tyrone Shum:
(21:17) That’s what I hear a lot. So people when they say they've achieved financial freedom, it's more than life, you know, and they find something that's going to be purposeful. And that's what it sounds like you found your purpose now is to help others and achieve that. How far off are you from achieving the goal that you've set or the vision that you and your company set?

Lianna Pan: 
(21:36) We've got about 2000 members now in our community, which is growing, and it's growing really fast, even during the midst of Covid. And I think a lot of people are waking up, they understand that they have to take what the media is saying with a big grain of salt. And this is waking up to the fact that it is now a great opportunity window. 

(22:00) So that's why we're getting record numbers of members joining us which is, you know, amazing, because the bigger our community, the bigger and stronger our negotiation power is. So yeah, we're about 2000 members strong, and we'd be absolutely confident that we can grow this membership to about 10,000. 

THEIR GOAL IS NOW TO HELP THEIR COMMUNITY OF INVESTORS ACHIEVE THEIR OWN FINANCIAL FREEDOM.

(22:22) And helping them achieve. We'd like to be able to have that member going through the whole investment journey with us and to the point where they have achieved their financial freedom, you know, that whole journey will be incredibly gratifying for us.

Tyrone Shum:
(22:40) And, you know, especially when you join a community like yours, and implement action and get results, you know, it's a no brainer, you know, to be able to be part of something like that, especially if you surround yourself with the right mindset, because that's the hardest thing is finding the right community to be part of, and learning from them. And to have great mentors like yourself as well to be able to support and coach them through that process. 

Lianna Pan: 
(23:01) Yeah, I've definitely benefited from mentoring and coaching in my time. And also, I continue to have looked to mentors and coaches as well. And just that's incredibly important, because they help you. The biggest help they give is mindset. It’s actually just making sure that, for example, when you are in a state of fear, you can make good decisions. 

(23:29) And they can pull you out of that and they can point it out to you. So mindset is actually incredibly important. And that's actually what I spend, like I say every everybody should spend most of their time working on that mindset. And it's never ending. It's a never ending journey.

Tyrone Shum:
While on the subject, Pan shares her biggest motivators and inspirations who have helped her succeed in her personal journey. 

Lianna Pan:
(23:59) One of my biggest mentors that I've been listening to and following for many, many years now, is Tony Robbins. And I probably first looked at his material back in 2007 [or] 2008, as it was just when I was starting this journey, and that whole personal development space, it's just been a journey that I've embarked on more and more. 

(24:22) So I've been through all of his programmes with all of his books. And it's been incredibly helpful, because he can put it in terms of making yourself incredibly aware of some of the things that you're doing to yourself that you may not be consciously aware of. You know, they're driven by fear. They're not driven by anything logical and also one of the habits that I got into doing is setting yourself a goal. 

(24:56) So at least once a year, you set like a vision board with goals for different aspects of your life, and visualise that as much as you possibly read on a regular basis. So that was something that I really stuck on doing, and wouldn't have picked it up if I didn't come across mentors like Tony. And it's amazing what you do. You focus on the universe and manage to bring it to you. 

PAN SET HERSELF A GOAL AND DID NOT STOP UNTIL SHE ACHIEVED IT. 

(25:29) So you know, the more you focus on one thing, and this is a goal that I set for myself, it was completely non negotiable. The goal that I set for myself when I was 20, was that I wanted to retire from my career by the age of 30, having managed to find a way to build a passive income for myself and my family. And I achieved that, because I really focused on it and I was telling everybody about it. 

(25:57) And it was very funny because I was talking to someone, one of my old colleagues and he said, ‘Lianna, do you remember that you were telling us about it? Telling me about it?’ That point in time, I just imagine some people would just say, ‘Well, good luck to you’. But by speaking it out loud, it's like you're committing, you're holding yourself accountable.

Tyrone Shum:
Knowing everything that she does now, what would Pan say to her younger self if she could go back to 10 years ago? 

Lianna Pan:
(27:03) If I met myself 10 years ago, I would have probably just said, you know, take action, take more action, you know, don't procrastinate. And, like, it's a very interesting thing. I talk to investors all the time. And I'll say the same thing to myself, start earlier, if I could sign this thing earlier, if I could... And I talk to investors all the time. And I've never met an investor that told me I wish I started later in life.

(27:34) Everyone says I wish I had started earlier. I wish I didn't sell that property. I wish I could hold on to whatever, whatever that may be, or I wish I had a mentor earlier in my life. You know. So if I went back 10 years ago, I would have said those things. Yeah, absolutely.

Tyrone Shum:
(27:50) It's hindsight, we always reflect back and go, you know, wish we could change that because you don't know what you don't know, until you reach the point and destination. I guess I'm looking forward to five years. What are you most excited about in your journey? And I think you've kind of covered it, but I thought I'd still ask that question as well, unless it's any different to what you've talked about.

Lianna Pan: 
(28:10) That mission, which is the freedom mission, my business partner and our entire freedom team’s mission is to help. You know, we have amazing, incredibly amazing property coaches and strategists in our team today that have achieved, you know, incredible results for themselves, but who are also huge on helping others do the same. 

(28:36) So our mission, our team mission is actually to be able to bring that to fruition. If we can help 10,000 people or more, you know, to be on that journey to achieve their financial freedom, and to see that happen, you know, that transformation, and just asking them to pay that forward, as well. Imagine what a difference it could make. So that's been our biggest, huge goal and we’ve been incredibly happy already being on this journey.

Tyrone Shum:
(29:08) It gives your life so much more purpose. How did you come up with the number 10,000 by the way?

Lianna Pan:
(29:15) The goal was a number that we set, and we thought that it's like a big, big, big goal. And at the time we set it we kind of thought, ‘Oh, my God, that's such a huge number’. But you know, without having set those huge goals for yourself, things don't happen. And it's amazing when you do that, you know, a lot of things, a lot of opportunities you're not seeing before you're opening your eyes toward it.

Tyrone Shum: 
So how much of Pan’s success is due to skill, intelligence and hard work, and how much of it is based on luck?

Lianna Pan:
(30:00) I think I really like this saying, actually. This comes from Tony Robbins, and it’s that the more you focus on something, the more you work at it, and the harder you work, the luckier you get. And that goes back to the same thing you know, the more you hone in on something, the more your eyes will be open to things that you just never knew, your mind would have just overlooked before.

(30:26) A perfect example is like, if you go out and buy a car, and from the very next day, you suddenly notice that a lot of people are driving the same car and notice every car that is your car, right? If you haven't, if you are not aware of it in the first place, then you wouldn't be looking for it.

**OUTRO**

Tyrone Shum:
Thank you to Lianna Pan, our guest on this episode of Property Investory. 

If you want to hear more about her journey and get a copy of the episode guide on the website, head over to PropertyInvestory.com/guide.

This guide will give you the inside scoop on the little gold nuggets of wisdom all our guest's share from their backstory and all their overall strategies and philosophies. Plus, you’ll get a copy of their advice broken down and shared in a quick and easy-to-consume format!