In this episode, he takes us on a journey from the Philippines to Australia filled with stories of the ups-and-downs he faced right after university, when he moved here, and when the property bug bit him in 2016. Discover how the determination of one man from a Third World country turned his life around with property investing in the Land Down Under!

Timestamps:
00:01:17 | On Family and Data Analytics
00:03:08 | Life in the Philippines
00:07:39 | Manila in the '90s
00:09:38 | All in a Day's Work
00:12:34 | A Surprising Turn
00:16:06 | From Raves to Celebrity Fan Sites
00:20:43 | 'What Happens Next?'
00:21:55 | The Call of the Land Down Under

 |

00:01:19 | The Door to New Beginnings
00:04:59 | Hitting the Books and Showing Up
00:09:07 | Why Stop Now?
00:14:10 | In the Face of Fear
00:16:44 | From $515,000 to $2 Million
00:21:03 | Personal and Profound
00:23:52 | The Moment It Clicked
00:26:40 | A Driving Force to Be Reckoned With

Resources and Links:

[00:25:15] That was [a] good four or five years. And then since… after that, I focused on web analytics. So because I [was] already doing, delivering traffic, and I'm also analysing traffic—so I said, 'Why don't I just focus on analysing the data directly so I can advise the business or the team?' 

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 the founder of SuburbsFinder Gilbert Melgar. With 20 years of experience in the field of data analytics, he is no stranger to the relevance and power of data. His journey from the Philippines to Australia is filled with stories of the ups-and-downs when he moved here, and when the property bug bit him.

Tyrone Shum:   

A family man himself, Melgar keeps his daily priorities in check by balancing life and work.

Gilbert Melgar:   

[00:02:19] Well, I'm still working in the corporate world. My wife is an accountant. We have three girls—age three, seven and 10. So it's really a full, busy household. And typically a normal day: still working from home, still lucky enough to be able to do that while looking after the kids when they're not in school, and doing the regular job. But mostly, after that, really into looking at data in terms of property investments.

Tyrone Shum:  

[00:03:03] That's great. And what's your sort of background in the data space? Like, is this specific industries related to property? 

Gilbert Melgar:   

[00:03:11] It's a completely different space. I started doing search engine optimisation way back in 2002, even before SEO was a term. So I [was] making websites rank on Google, Yahoo, Bing, during that time, and then in relation to that, I'm analysing data as well. 

  

[00:03:36] So around 2006, I focus[ed] more on web analytics. So I started on making the websites rank on search engine[s], and then delivering traffic to the website, and then analysing those traffic. What are they clicking on? How can we generate more revenue for the business? So yeah, those are the data that I'm analysing.

Tyrone Shum:   

With a longing for the past, Melgar opens a window to how his life looked like in the Philippines before moving to Australia in 2011.

Gilbert Melgar:   

[00:04:21] [I was] born and raised in Manila, Philippines. So [I] have one sibling, mum and dad—[we were a] middle class family or working class family. And [I] graduated with a degree of... I don't know if you're gonna say I'm a 'numbers guy', but it just [so] happened that I was able to finish a Bachelor of Science in Mathematics.

Tyrone Shum:  

[00:04:57] Oh, awesome. Wow. Okay. I'll have to have delve into a little bit about that shortly. But Gilbert, I'm really curious, I guess, as you said, you grew up and [was] raised in Manila in [the] Philippines. And obviously, your parents are working class, as you said, are they still living in the Philippines at the moment, or…?

Gilbert Melgar:   

[00:05:15] They're still living in the Philippines. It's just me and my wife.

Tyrone Shum:   

Now as a father to three young children, Melgar welcomes the opportunity to reminisce about his own childhood. He shares fond memories of what it was like growing up in the Philippines—from attending classes at 7 o'clock in the morning to living with six people at a boarding school.

Gilbert Melgar:   

[00:05:34] It's just the way that you can freely play on the streets. You know everyone in the street, every kid on the street, you know them, the parents, you can just freely play at any time of the day [in] the street without getting hit by a car or being run over, or being taken by strangers and all. Because everyone knows everyone before, back in the day. 

[00:06:08] I think that's one of the most thing. And there's no... I would say there's no gadgets during that time. So you really get to spend most of your time outside the house.

[00:06:46] I do like sport[s]. And I used to play, also being [that the] Philippines [is] mostly influenced by Western countries, specifically America. So [the] number one sport there would be basketball. So everyone, everyone, during the school of the sport school activity, everyone's playing basketball, even the girls.

[00:07:33] Primary school was the new school that where we live in, but it just so happened that I was able to get accepted to a better school for secondary or during high school. That's why I moved away from my parents, because the commute thing is, during that time, [the] traffic [was] horrible back then. Even now, it got more worse. 

  

[00:08:04] So just travelling, because back then just travelling a 20-kilometre distance, it will take you a good... I'd say two hours to get there. 

  

[00:08:20] So class starts at 7 am. All the way to three o'clock. And then, yeah, so from where I lived, if I continued travelling, I need[ed] to wake up [at] five o'clock and then leave around 5:30 am to make it to the morning class at 7 am. 

  

[00:08:49] So what I did is, I just went to boarding school. So boarding school there is totally different here. Boarding school here is more expensive.

  

[00:09:00] Boarding school there is sort of like... there's six of you in one big room. It's like three double-decker beds or three bunk beds.

[00:09:34] It just so happened that the dorm that I was staying [in], [was] being managed by one of my grandmothers.

Tyrone Shum:   

As a young man in the throes of life, navigating growing pains and the hard work a student's day-to-day entailed, Melgar gives us a glimpse into his life as a student in Manila in the '90s.

Gilbert Melgar:   

[00:10:11] Most of the schools are in the metropolitan area. So we lived in a suburb area.

[00:10:30] So if you spend one hour and a half going to school, and then you spend another hour and now you have going home, so basically, three hours of your day just used to commute.

Tyrone Shum:  

[00:10:46]  That's right. It's almost like as though you're going to work? Because you think about it, you know? Exactly. Yeah, you probably have the same hours of work, except just started much earlier. You know, it sounds like a nine-to-five except you don't quite understand why. Why is the school system so long there or…?

Gilbert Melgar:   

[00:11:06] You have eight subjects, and each subject is an hour.

Tyrone Shum:  

[00:11:11] Wow, they really do push a lot of education, then I guess in that side, because it's very interesting, different. I guess countries and different colleges have a lot more emphasis on that. 

[00:11:25] I mean, in Australia, kids probably start at 9 a.m. and finish it 3 p.m., that's already more than enough for them. They get tired. So yeah, I mean, do you remember much of that? Or was it? Because many of you pretty much spent majority of your time at school, then. Did you go back on the weekends to see you friends…?

Gilbert Melgar:   

[00:11:42] Sometimes I go back on the weekends, but sometimes if I'm swamped with homeworks and all, sometimes I just don't, they're the ones who just visit me.

Tyrone Shum:  

[00:11:54] Yeah. And what were your parents doing?

Gilbert Melgar:   

[00:11:57] My dad used to be a sea farer. So he works on the cruise ships, and my dad used to be an admin clerk in one of the offices.

[00:12:14] Mum used to be an office clerk in admin.

Tyrone Shum:   

In deciding what undergraduate degree to take, Melgar was a forward thinker who ultimately considered which path would land him a good job after graduation.

Gilbert Melgar:   

[00:12:41] I really didn't like programming during that time. But it just so happened that during that time, I was thinking about 1997 [or] 2001. Everyone's talking about the Y2K bug during that time. It was talking about, 'Oh, what can I do? What type of job?' So I was like, 'Okay, I'll give programming a crack. So that at least when I graduate [in] 2001 at least I can get a job somewhere in IT'.

 

[00:13:17] But after graduating, it was hard getting a job. I was unemployed for a year during that time.

Tyrone Shum:  

[00:13:32]  Yeah. So you graduated back in 2000, did you say? 

Gilbert Melgar:   

[00:13:36]  Yeah, yep. 

Tyrone Shum:  

[00:13:38]  So how long was your course? 

Gilbert Melgar:   

[00:13:39] Four years, yeah. 

Tyrone Shum:   

He continues to share the name of his school and gives more insight on where his focus on his studies eventually led him.

Gilbert Melgar:   

[00:13:51] The University of St. Thomas or 'Santo Tomas' — that's the way we call it.

Tyrone Shum: 

[00:14:01] So by that time, were you still boarding around that area? Or did you go back home…?

Gilbert Melgar:   

[00:14:05] I just travel[led] during that time because the class there is more flexible enough.

Tyrone Shum:   

[00:14:15] What were you doing during that time? Did you do any part-time work as well? 

Gilbert Melgar:   

[00:14:20] [I] just focus[ed] on my studies during that time.

[00:14:28] Yeah, that's great. And when you finished your university degree, then you went out to look for a job—and as you said, you had graduated with mathematics—, did you start… Were you looking at going into computers initially?

Gilbert Melgar:   

[00:14:38] I went into [the] IT industry.

Tyrone Shum:  

With a degree in mathematics, Melgar faced his post-university years with determination to succeed. But that doesn't mean to say he didn't have his share of run-ins with challenges when he started looking for a job.

Gilbert Melgar:   

[00:14:54] My major [was] computer science. So that's why I [did] program right away. But I had an option or I had an opportunity to teach. [But I thought,] 'I don't think I'll last that long'.

[00:15:36] It was really a challenge during that time. But here's the thing, I guess you would be shocked when I tell you this. During that time, I didn't have a job. I was having a hard time getting, landing a gig. So instead of that, just… As for my savings for my parents too, I'll just put up a business or invest it somewhere while looking for a job. 

  

[00:16:08] And it just so happened that my friends invited me— because they were going to renovate their bar, and they want[ed] a silent investor. And yeah, that's where I put my money. And you'd be surprised the bar is not the typical pub, but it was a rave club.

  

[00:16:38] So I'm 21 [or] 22 during that time, part-owner of a rave club. So yeah, living the dream.

Tyrone Shum:  

[00:16:50] And what did you have to do being a part-owner? Did you need to do any sort of hands-on help? Or you just put your money in then and just let them, you know, run the blog? 

Gilbert Melgar:   

[00:16:59] We just put our money in there. Because as a silent buyer… there were actually nine major partners who's running the business, and each partner got their own silent partners. So [it's just] 18 of us, with just our group of friends. Pack is always cool.

Tyrone Shum:  

Melgar continues on and lifts the curtain on what opportunities opened up and the takeaways he learned from that business venture.

Gilbert Melgar:   

[00:17:33] It was actually good. It did go well, except for the... the place [was] always on the news because of the fights happening. And other not-so-good publicities during that time. But yeah, we learnt a lot of good things as well.

 

[00:18:10] The takeaway is if you're doing profit share, don't spend it right away; just save it. So instead of saving it [at the time], my profit shares just [went] to my tab.

Tyrone Shum: 

[00:18:27] [Laughs] Enjoying life; living it up. 

Gilbert Melgar:   

[00:18:30] Yep, yep.

Tyrone Shum: 

[00:18:31] But you're still young, which is… I think that was a thing that I think we all need to go through in order to be able to experience what it's like in life, because you only live that life once.

Gilbert Melgar:   

[00:18:40] And the good thing with that is I was able to meet a lot of interesting people, people who are running their own business, people who have a job in IT, people who have a good position in companies. And that's where I met a guy who [was] doing SEO during that time.

Tyrone Shum:  

While he was already a part-owner of a successful rave club, Melgar made sure not to pass up the chance to smartly use SEO to his advantage and generate more income on the side.

Gilbert Melgar:   

[00:19:30] It lasted for almost three years. So we really did a good run. And in the middle of that I met that guy doing SEO. But he didn't know that what he [was] doing [was] SEO because what he did during that time, he [was] making money out of making celebrity fan sites. [I was like,] 'How are you making money out of celebrity fan sites?'

  

[00:19:37] He showed me, 'I'm making money through being an affiliate'. All these pop-up ads during that time, right? So he was getting paid for that.

[00:20:20] It was easy, so easy to rank on certain keywords during that time. So that's how it all started. 'Okay, I think I can do that'. And me [having] a background on computer science, I did my own and created all the fan sites, did HTML in load pad and ran it. So all the celebrities that I can think of, I created fan sites [for]. Put in pop-ads. 

  

[00:20:53] I remember I made one of the most revenue-generating sites online during that time was [a] Paris Hilton website.

Tyrone Shum:  

Building up his experience and his connections with the rave club and his SEO-related work on celebrity fan sites, he soon ventured to start his corporate career.

Gilbert Melgar:   

[00:21:20] While the rave club [was] still on, so that's what I'm doing. 

  

[00:27:24] And after that, I decided, 'Okay, the fan sites are here. Since all [the people] I've met have connections in the corporate world, I reached out to them and [they] connected me, pointed me to the right people. [I] still went to the job interview and was lucky enough to finally start my corporate journey.

[00:22:20] I became an affiliate program specialist. So it was really in line to what I'm doing with the fan sites. So when I'm doing a fan sites, I'm sort of like the affiliate. So now the job that I got is the one in the middle—being the affiliate specialist or the program specialist, dealing with affiliates and dealing with the publishers.

[00:22:55] I did that for a year. And I said, 'Oh, okay'. And then one of my boss[ES] told me, 'We were opening up a role for an SEO. You want to give it a crack?' I said, 'Yeah, sure. Why not?' 

  

[00:23:13] And I [was] working for a back office. Our U.S. office was [the] back office in Manila. So that's where I got really trained well because the SEO competition during that time already in the U.S. [was] already, I would say, competitive. Because in 2000, e-commerce [was] already booming on there.

[00:23:53] They were already running their own AdSense, pay-per-click marketing, and all of this. They're running Google Analytics. Google Analytics was still new during that time.

Tyrone Shum:  

[00:24:07] Yeah, that's really interesting. And what kind of company was this?

Gilbert Melgar:   

[00:24:13] They were a direct reseller of Mac products. Apple.

Tyrone Shum:  

[00:24:19] Apple, Mac, or apple. Oh, wow. That would have been even better technology. So it's technology, and, you know, combine that with SEO sort of, you know, was ranking. Especially, I think at that point, other people have done a lot of reviews on YouTube as well, too.

Gilbert Melgar:   

[00:24:33] YouTube was still new during that day.

Tyrone Shum:  

[00:24:33]

Oh, yeah. So pretty much a lot of it was based on the website. So people were coming through the website to purchase Mac products…?

Gilbert Melgar:   

[00:24:46] When they type-in Mac, specifically Mac products or Mac laptops, we make the company website appear on the first, second, and third rank[s] [on] the organic search results in Google. And that's where the traffic comes in. That's where the revenue comes in.

Tyrone Shum:  

With all-hands-on-deck in his corporate career, Melgar's journey for the next few years in this space led him to work on different companies, learning more about data and web analytics.

Gilbert Melgar:   

[00:25:15] That was [a] good four or five years. And then since… after that, I focused on web analytics. So because I [was] already doing, delivering traffic, and I'm also analysing traffic—so I said, 'Why don't I just focus on analysing the data directly so I can advise the business or the team?' 

[00:25:42] This is where the revenue's coming in. This is where the traffic's coming in. This is how the users are behaving inside the website. This is how we should operate to increase more revenue.

Tyrone Shum:  

[00:25:54] Excellent. Wow, that is a cool role to be in because then you're not only taking the data you're able to recommend. And then I assume that they'll probably just hire more people to do the implementation. 

Gilbert Melgar:   

[00:26:03] Exactly, exactly. 

Tyrone Shum:  

[00:26:06] Yeah, that's so cool. And I guess were you in that same company for that period of time as well while you're analysing data or…?

Gilbert Melgar:   

[00:26:12] I just went there for, like, a year, and then I moved to different companies.

Tyrone Shum:  

As Melgar built his career in the corporate space in the Philippines, he found himself hearing the siren call of Australia.

Gilbert Melgar:   

[00:26:38] Because it just so happened that the client, when they moved here—the client that I was working for used to be based here in Sydney. So I just continued working for them as an offshore resource for a month. And then I started looking for a job here.

[00:27:08] I visited Australia prior to that for a client meeting, and I was like, 'Oh, okay, this looks like a really nice place to live in, especially when you're raising a family'. So my wife and I, [we were] just boyfriend-and-girlfriend during that time, said, 'We can try Australia'. And then we said, 'Okay, let's just give it a crack'. 

 

[00:27:37] We applied as independent, skilled migrant[s], and we submitted our papers and requirements. And after six months, we got the visa. And we didn't know that the visa that was given to us is already a permanent resident [visa].

  

[00:28:01] Because of our skill set.

  

[00:28:07] Because what we did [was] instead of me applying as the direct applicant, we decided [to make] her [to be] the main applicant. She's an accountant. And during that time, [being an] accountant [was] one of the in-demand [on the] lists [of] occupation.

Tyrone Shum:  

[00:28:29] Wow, congrats on that. That's exciting. So did you have a job lined up before you came to Australia?

Gilbert Melgar:   

[00:28:37] I just continued to work as an offshore resource for that. And then while I [was] working for them, so after work, I started looking for a job here. 

  

[00:28:50] So the petition was, I guess, we can say we're lucky that we didn't experience having a hard time getting a job here. Because when we got here, my wife actually, when we got here, after two days, she already had a job. Because she was working for a global company. So the one that they have [an] office here, once they found that she's moving here, they just offered her the job.

Tyrone Shum:   

[00:29:42] What was that transition like? Because it's a new country, new culture. Was it a shock to your system or you just went like it, 'Okay…'?

Gilbert Melgar:   

[00:29:51] It was a big shock to our system at first because first[ly], the weather is different. Second, we're used to talking American English, and in here, it's like [a] British accent or an Australian accent, [it's] still really hard to understand at first. Like, what are you saying? It's like eating their words, yeah. But now [I've] gotten used to it. And then everything closes early.

 

[00:30:29] And then I eventually got used to it and I realised 'Ah, this is a really nice place'.

The Door to New Beginnings

Tyrone Shum: 

Remembering the early days of his first time living in Australia, Melgar shares a bit on the differences he's found between the Land Down Under and his homeland—starting with what time shops usually close in the Philippines.

Gilbert Melgar:   

[00:00:13] Every day, any day, weekday, it's like 10pm or 11pm. Every day until midnight.

Tyrone Shum:    

[00:00:28] I think it's a very hard working culture in Asia, because I know it happens not just in the Philippines. But in say, for example, China and Hong Kong, they all close very late. And that's the lifestyle. Everyone seems to be out and about after work and school. Yeah, whereas here in Australia, as soon as shops close, everyone is all home and just wants to be at home. Maybe it's the cold weather at the moment? I don't know. [laughs]

[00:00:57] So you arrived here in 2011; your wife got a job as an accountant, which is fantastic. And then yourself, at what stage were you able to get full-time work so you could also support the family?

Gilbert Melgar:   

[00:01:10] After a month. Or two, right away. Yeah.

[00:01:20] I continued to work in the same industry. I had to step back for a bit. But I started again, as an role for SEO. Again, because I don't mind, as long as I [got] a job during that time. But I [was] still lucky because I [got] to do the same thing that I've been doing, [which is] SEO. 

  

[00:01:45] And then during that time, I was working for one of the major agencies or digital agencies here in Sydney. And then they realised… and I showed them that I [knew] more, other than SEO, and they gave me an opportunity. 'You can do this. You can do that. Try doing this.'

Tyrone Shum: 

Considering the high standard of living in Australia, Melgar and his wife opted to stay with their relatives when they first arrived. Little did they know, that would open the door to the beginnings of their property journey.

Gilbert Melgar:   

[00:02:22] We just stayed with my wife's distant relative — third cousins; we just stayed there for, like, a month. So they helped us stay here for a bit while you're looking for a place that you can live, where you guys will work.

[00:02:52] That's why, yeah, we're used to paying rent [once] a month here.

[00:03:25] So we went to one of my wife's distant cousin's birthday; we went to that event, and they were talking about property. And then we heard one of her cousins talking about investments and all, and we were just having conversations and listening to them. And they were below their 30s during that time, so that was 2015. And they already had 10 properties combined.

  

[00:04:02] I was like, 'How are they able to do that? And they're under their 30s?' That's the time that I became curious about it.

  

[00:04:12] 'What are we doing wrong?'

  

[00:04:21] Me being a 'data guy', doing the research, I started doing research about it, reading online. And [I] started asking them questions, how to… 'simple equity extract',  'equity… you reimburse that.' I was like, 'Well, hang on a sec. I don't even know those terms'. 

  

Tyrone Shum: 

Leaning in on his growing interest in this newfound pursuit, Melgar recognised the need to thoroughly educate himself if he wanted to succeed.

Gilbert Melgar:  

[00:04:44] I started putting time on it, learning by myself. And there are things that I can't really answer by just learning by myself, so what I did is, I enrolled myself to different property education courses. I would say, 'This is too much. I need to pay $5,000, but it's still, you know, education is education'. If I'm able to buy one property, and it will save me one, and I can repeat the process, then I guess $5,000 is worth it.

[00:05:44] Coming from a third world country, we don't really want our hard earnt money just to go to waste.

Tyrone Shum:  

[00:06:09] How long before you actually first came and went, you know, I'm going to buy a property? Because obviously, for immigrants to come across, you know, and get your permanent residence—I don't know if there's any specific rules around purchasing property and saving up the deposit and all that kind of stuff—what kind of timeframe did it take you to actually look at getting your first property?

Gilbert Melgar:   

[00:06:28] During that time, we already got our Australian citizenship. So we got it [in] 2015. And after starting really serious[ly] learning about property, 2016 was the first property that we purchased. Even if we only ha[d] a 10% deposit rate at that time, I was like 'Let's give it a crack, even at 10%. Let's just pay...' For us, my wife being an accountant, and me, we're both numbers people, [we] just see it as an opportunity cost.

[00:07:29] We bought [it] for $595,000. So we just saved, we were able to save 10% of that. And then of course, stamp duty and all. We even borrowed money [from] my mother-in- law, $20,000, to help us with the stamp duty and all. But we paid her back.

Tyrone Shum: 

Many people would have second-guessed themselves when buying their first property, but not Melgar.

Gilbert Melgar:   

[00:08:27] We bought the property in Elderslie, somewhere in [Sydney's] south west near [the] Oran Park [and] Narellan area. So we bought a four-bedroom, one-bath and two-garage on a 630 square metre lot. 

  

[00:08:48] And we [were] comparing that with another property there that was being sold for $550,000 during that time, but only a three-bedroom, one-bath, and two-garage on a 700 square [metre] block. So smaller house, but bigger block. 

 

[00:09:14] I was like, 'Let's just go for a four-bedder. We don't have to do anything there; four bedroom[s], we can rent it more'. And the reason why we bought in that area, at least [if the] worse comes to worst, we can live in there.

Tyrone Shum: 

[00:09:40] In actual fact, this first was your investment property. You didn't buy it to live in but; you bought it to rent it out?

Gilbert Melgar:   

[00:09:47] Yep, with the intention of whatever happens, [if] worse comes to worst, we really can't afford it, we can just move in there and live in it.

Tyrone Shum:  

[00:10:00] Okay, and I'm assuming that it was no problem to go to the bank and get a loan and set this all up?

Gilbert Melgar:   

[00:10:05] That's the first thing that we did. We made sure that before we made an offer, we got pre-approval first.

Tyrone Shum: 

Melgar didn't stop with the success of his first property purchase. He looked at the data in the area around New South Wales and Canberra—and soon, his sights were set on Queanbeyan.

Gilbert Melgar:   

[00:10:32] After that, it took us a good year to buy another one. But the good thing was that [in] 2016—I don't know if we're just lucky during that time, [or] it's because it's on the tail end of the property boom—, but the property ha[d] increased. And we were able to extract small equity from that.  

  

[00:11:04] Because we are in 90% LVR, and we were able to put in into 80% LVR. And we [were] able to buy an apartment unit—a two-bedroom apartment unit in regional area in Queanbeyan; it's in the border of New South Wales and Canberra. So we bought that for $195,000. And there's already a tenant paying $250.

  

[00:11:40] Positive cash flow. And it's really ugly. Part of the beauty. So the reason why is we had an intention to renovate it. By the time the tenant moved out, we renovated, me and my friend went there. So the friend that I was talking about, he's the guy who has 10 properties. So he helped me out. We stripped the whole place. 

[00:12:13] What I did is I bought a kitchen being sold [on] Gumtree. So those houses that are about to be demolished, so they're selling the kitchen, so we took it out, put it in the Thrifty truck, bring it all the way there. Had some chippie adjust it, break it in—new kitchen.

[00:13:06] When I was doing my research, looking at the numbers, during that time, Canberra already ha[d] a high rental or median rent, so people [were] going outside the Canberra area. So when I looked at it, 'Okay. The nearest would be Queanbeyan'. 

[00:13:35] And we wanted to buy in [the] ACT. But the problem [was] we want[ed] to buy a property that we can own it. Right. So we decided in New South Wales not ACT; I think [with] ACT, we can't really own it. It's still federal. So yeah, so [that's the] reason why. So I said, 'Let's just start with Queanbeyan'.

Tyrone Shum:  

[00:14:05] How many properties have you purchased over a period of time?

Gilbert Melgar:   

[00:14:09] Now we [were] able to buy five. But we sold that one, that apartment unit, because we already renovated it and then [made a] profit. And then we bought another one in Queanbeyan, the next one, a couple blocks away.

 

[00:14:27] It's a house on a 900 square [metre] block. That's the reason why we bought it; we'll develop it. And then [we] bought another property in the border of New South Wales and Victoria. So [we] bought two there. So now, we're left with fou

Tyrone Shum: 

With firm determination and a solid plan to develop the properties in his portfolio, Melgar faced his fears head-on.

Gilbert Melgar:   

[00:15:11] I guess the only fear that I had was when I was doing those reno things. If you're doing the project management yourself, sometimes you don't have any control with the tradies. 

[00:15:32] Because for me, buying a property, at the end of the day, if you buy a property, I think the worst thing that can happen is nothing. At the end of the day, five or 10 years from now, if worse comes to worst, it will not double the value, but at least it would have increased by 10% or 20%.

[00:16:23] [The] issue with tradies I guess that's it, but we'd finance… probably every investor who gets into their fourth one is going to have a hard time with their fifth one, especially with the tier-one vendors.

  

[00:16:48] But for now, we definitely have to step back. Because now we're in the process of developing two of our properties, because we bought them for the purpose of having multiple strategies, not just buy and hold. At least we can put in a granny flat, or at least we can subdivide, or at least we can develop them. So we learn all of those things as we go along the journey.

 

[00:17:56] [In] our situation that we have three dependents. That's the one that hold us back. Because we can, but with the property, with the asset type, or with the type of property that we want to buy, it will just end up buying the one that will not fit or the requirements. And we don't want to force it. We'd rather just wait than buy something that doesn't fit our requirements.

Tyrone Shum: 

Multiple strategies can work for different properties. The key lies in knowing which ones are worth holding on to and developing, and Melgar made sure he used the right strategy with his properties.

Gilbert Melgar:   

[00:18:52] Actually, all four of them are developable. But the two ones, we've already the one in Queanbeyan, so we bought that, that's a three-bedroom house on a 900 square [metre] block. 

  

[00:19:08] The reason why we bought that [is] because it's an R4 zone. So it's a high-density zone with a 15-metre height limit. So I was thinking, 'Okay, it was being sold for $500,000 during that time'. [I] spoke to the agent. [I] said I did my due diligence. And so, what can I do there? 

[00:19:32] And I said, 'Okay, don't sell to anyone. Instead of $500,000, I'm going to add $15,000 more, but you have to tell the vendor they have to make the decision by the end of the day'.

 

[00:19:44] The agent called me, 'They're happy to accept $15,000 more'. And so I continued doing my due diligence, and [in] 2019, we applied for a development application for a 24- room new generation boarding house. So it's 24 rooms. It's like studio apartments with ensuites. 

 

[00:20:19] So it's three level, not three. But because the ground floor is an in-ground porting for 14 car space, and the manager room is on that level, so 12 rooms on the second floor, and then another 12 rooms on the third floor.

Tyrone Shum:  

[00:20:38] Oh, wow. And how many parking spaces did you say it has? 

Gilbert Melgar:   

[00:20:40] 14.

Tyrone Shum:  

[00:20:42] Oh, how come only fourteen? Wouldn't they usually have a parking space for each?

Gilbert Melgar:   

[00:20:46] Because during that time, it's still under affordable housing policy. For every room, the requirement is 0.5 parking.

  

[00:21:04] It's an affordable housing policy.

 

[00:21:13] Prior to that it used to be 0.2.

[00:21:20] And then they increased. So I said, 'Okay, this is what we can do'. Yeah. And then it took us 20 months to get [it approved].

[00:21:35] A lot of back-and-forth, back-and-forth.

  

[00:21:40] Council was pretty supportive. Because for them, it's going to be the first in that area. And it willl also support the rental affordability crisis within that area.

Tyrone Shum:  

[00:22:02] So Gilbert, just curious, have you gone back and did a valuation on how much that property is now worth? Because if you've purchased it at that $515,000, how much do you think it would be worth now with the DA?

Gilbert Melgar:   

[00:22:12] Without the DA first, it just got revalued for $850,000. With a DA, because it's going to fall under commercial, so it's based on the revenue and then the cap rate. So it's valued at around $2 million.

Tyrone Shum:  

[00:22:37] Yeah. Excellent. Have you figured out the costs involved in actually building this? 

Gilbert Melgar:   

[00:22:43] Yeah, the costs involved—the build costs will be around $3 million or $3.5 million.

Tyrone Shum:  

[00:22:48] Wow. Three [million dollars] to build it? And how much would you say you could potentially rent it out for then for something like this?

Gilbert Melgar:   

[00:22:55] Each room will be rented around $320,000 to $350,000.

 

[00:23:11] So around $400,000 plus per annum.

Tyrone Shum:  

[00:23:18] Wow. Wow, that's fantastic. That's a very good return. I mean, especially [with] what you're going to have to do. But do you plan to keep it? Or are you planning to sell it?

Gilbert Melgar:   

[00:23:28] Well, we're still see[ing] if we can resolve the finance. But [the] exit strategy would be [to] sell it with the DA.

Tyrone Shum: 

With such a phenomenal achievement, Melgar is keen on the lessons he's learnt along the way, applying them on his next property project.

Gilbert Melgar:   

[00:23:45] What I've learnt is, if you really know what you're doing… you need to have a good team behind you, an architect, a town planner. And because we had the shadow issue complained by the neighbours, and we were able to get around with it a bit to design to comply.

[00:24:32] The second one is in regional Victoria. So that's our rooming house. So Victoria has a rooming house. So our application got approved in two days. It's pretty quick. Because Victoria has a pretty straightforward policy when it comes to that.

  

[00:24:55] As long as you comply, they've seen your requirements, they've seen your plan and all, they'll just stamp it and say, 'Okay, you can proceed to building permit now'. So that's where we are now, building permits. So now we're putting in seven micro apartments, so it's like a boarding house, but with ensuite, so it's like 35 square metres per room with their own ensuite and kitchenette. But they still have their shared facility like the dining [and] kitchen.

[00:25:46] That's what I realised. As an investor and as being a migrant moving here. When you move, you look right away for a safe and affordable accommodation. It just so happened that me and my wife moved here together. But I see most of the migrants, they move by themselves first. [They] leave the family there, either the wife or the husbands move here. And then they rent somewhere or even they do a share house, rent the room. 

  

[00:26:25] And once they get a job, saving up, that's when they get the family. So I guess, being on this space, or that's where we're focusing now, is I guess we're not just investing, in a way we're helping provide a safe and affordable accommodation.

Tyrone Shum: 

Now, looking back through the years, he highlights a huge a-ha moment that started it all and the personal motivation that continues to fuel his passion for property.

Gilbert Melgar:   

[00:27:09] I'm into data, so I was able to identify those locations using the research and all. So I'm on it is during the COVID times that... Okay. That's when I [said], 'Why don't I create something out of those spreadsheets that I've been using?' 

  

[00:27:34] Because before that we were able to help a couple of friends of ours. And it worked well for them. And they're also the ones who push[ed] us. 'Hey, guys, why don't you create something out of it?' 

[00:27:49] And being [from a] background of analytics and a bit of programming as well, that's how we created this tool or property research tool, [with the] name 'SuburbsFinder'. So that's how it all started. And now, we launched it around 2020. So now it's being used by mostly buyer's agents.

Tyrone Shum:  

[00:28:17] [chuckles] Because it saves a lot of time. 

[00:28:21] And I think that's a great thing that you've achieved, especially if you've already shown it to work in your own situation, and you've been able to apply it. And then [with] other people, you know, I think you've got a fantastic headstart to be able to assist with that. Because the biggest, I think, challenge is the time to spend [on] research. Yeah, because you need to do it. It's important. If you don't do it, it's not going to be…

Gilbert Melgar:   

[00:28:43] The thing is, I realised when I was doing those property courses, I paid $5,000. But they're gonna teach you what you need to do. 

 

[00:28:57] But there's one question, if you ask them, they're just gonna say, 'Do your own research'. If you ask them, 'So where's the perfect place to buy?' 'Do your own research'.

[00:29:23] There's no one-size-fits-all strategy. It all depends, I guess, on your personal circumstances, and [it's] based on your financial situation.

Tyrone Shum:  

[00:29:36] That's right. Yeah. And hence the reason why, you know, everyone has to do their own due diligence and research differently, because you're looking for a different criteria. And hence, you know, because we're all of us are time poor. We all use buyer's agents to be able to assist us to find it because we want to be able to move quickly on to the next deal.

Gilbert Melgar:   

[00:29:55] But not only buyer's agents, regular Mum and Dad investors are using it as well. But majority are the buyer's agents, because they're using it every day of their life.

Tyrone Shum:  

[00:30:06] Excellent. Well, congrats on that. That's really great to be able to hear that this came out of a need that everyone needs as well. And I think that's a great thing that you've done. 

Gilbert Melgar:   

[00:30:27] The driving force is coming from a middle class family from a third world country. And then being here, working your ass off, and then seeing, 'What's our life going to be like when we stop working?' Because you can only work until a certain age, we don't want to be dependent on the pension. And at the same time, we want to do something. Most importantly, I'd say we want to leave something for the kids as well. 

Tyrone Shum:   

[00:31:12] If you were to look back and see yourself 10 years ago, what do you think you would have said to him?

Gilbert Melgar:   

[00:31:34] You should have started investing more. [chuckles]

  

[00:31:46] I should have [got] myself financially literate right away. Because that's the thing, right? I mean, at an early age, I guess. The generation now they get paid more right away. But even if they get paid more, they spend more.

Tyrone Shum:   

[00:32:52] Looking forward to the future. What are you most excited about in your property journey? I know you're talking about those two developments. Is that sort of what you're going to be excited about?

Gilbert Melgar:   

[00:33:04] We'll just continue doing the process.

Tyrone Shum:   

[00:33:25] So how much of this success that you've achieved so far has been due to your skill, intelligence and hard work? And how much of it do you think has been attributed towards luck?

Gilbert Melgar:   

[00:33:42] It's a combination of everything, I'd say. It's hard to put in a percentage or breakdown, and all those, because everything is connected. I guess it all goes down to: What's your goal? If you really want to achieve something in life, you['ve] really got to work hard for it. Even if it's not property investing, whatever that is, whatever your passion is, if you really want to achieve something, or out of it, you've really got to work hard.

Thank you to Gilbert Melgar, our guest on this episode of Property Investory.