In this episode, Kimberly discusses how rates are not the be-all and end-all they can appear to be, the strategies she uses to purchase and pay off properties, and gives some insight into how her children are following in her footsteps. We’ll hear about a client who purchased 10 properties in 3 years on a school teacher’s salary, how she turned around her first property which was costing her $8,000 a year, and what she hears 80% of the time when she meets young peoples’ parents when discussing property.

Timestamps:
02:08 | The Solution: Solution Based Lending
04:27 | Principal and Interest and Passive Income
06:53 | Everything is Not Roses When it Comes to Property
11:36 | Parents v. Prices
15:20 | Why Would You Stop?
18:12 | Purchasing Properties at the Pub
20:22 | Do Your Due Diligence
22:21 | Don’t be Afraid
24:21 | It’s Like a Holiday

Resources and Links:

[00:07:13] Everything is not roses when it comes to property. There was a lot of hard work in getting there. And a lot of fear, because we were not on a lot of income. But to get to this point and know the benefits, I would never have expected we would have ever gotten to this point where we could be paying down a property every few years.

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 continuing our discussion with mortgage broker and real estate agent Kimberly Linder, a mother of five who turned her passion for real estate into a business for herself and her husband. Tune in to discover how her hard work and perseverance has led her to become the founder of their one-stop property shop.

Tyrone Shum:  

With Linder being a broker herself, she knows where to find money to fund deals. But has that changed over the last decade along with changes in lending conditions?

Kimberly Linder:   

[00:00:16] We are in probably the tightest credit environment that we have ever been in. Now it's starting to soften, slowly. But just as an example of how much tighter we are, I have a really great client of mine who is a school teacher, she got divorced, she found herself in this situation where she [thought], 'What am I going to do?' And so we worked on a strategy. She wanted to own as many properties as she could. So we started working in maybe 2014. So she bought 10 properties between 2014 and 2017, on a school teacher's wage of about just under $100,000 a year. Now, back then those rates were about 6.6%. So nothing like the rates that we're enjoying now. If I had to build that portfolio now, from a lending perspective, with a major bank for the same client, who's earning a little bit more money, and rates are one third of the amount that she was paying back then, the maximum portfolio we could get her to would be three properties.

Linder shares the strategy that she is recommending clients at this point in time— while not stepping on any toes.

Kimberly Linder:  

[00:02:08] You need to look for a solution. And the solution is using a broker. Anybody that's using a bank to build their portfolio— nothing against banks, but they're not trained to create a solution. And they can offer their own products, they can't offer a solution. So the most important thing is solution based lending. So you have to look outside the square if you want to continue to grow.

Tyrone Shum:  

She goes on to discuss the common issues people run into at the point that they come to her to get lending.

Kimberly Linder:   

[00:02:44] They're very focused on rates. And they don't understand servicing capacity, and they don't understand how people can have such vast policies. So I guess it's educating people to think beyond the here and now at the advertised rate of 2%. And going beyond that to lenders that are going to service your loans on your actual repayments as opposed to service your loans on— and they still have margins, second tier lenders, but as all non conforming lenders— as opposed to being focused on a rate, you've got to look at what's your end result. Not what's the immediate date.

With their portfolio currently at 42 properties, Linder discloses whether her strategy has provided the family with enough income that she no longer needs to work.

Kimberly Linder:   

[00:04:27] If we went to our old strategy, which was an interest only strategy, then yes, we would. I think our properties return us just under a million dollars a year in income. So if we went to an interest only strategy, 100%. But the strategy that we're on at the moment, obviously the phase in our life, we're p&i on everything because we don't have any owner occupied debt. Principal and interest in everything plus additional repayments because we want to own as much as we can prior to retirement. So at the moment, pretty much the rent from our properties are 100% paying to be on principal and interest. So our rent is completely paying down our property for us now, plus returning a little bit of a passive income as well. 

She goes on to detail her strategy and defines what her current goals are.

Kimberly Linder:   

[00:05:33] We have a strategy now where we focus on a property. So everything's p&i, and then we focus on one property. So let's say we used to pay $600 a week on our mortgage. Because we don't need that money, we've been used to living without it, that $600 a week goes towards whichever property that we're paying off. And let's say we've paid three off in full, all of the rent that was coming in, because there's no debt. 

[00:06:02] So every couple of years now we're in a position where we can actually fully pay off a property. So that's the new strategy. And anybody that starts as an investor, their strategies are gonna change all the time, because her life is changing. So the one thing you've got to remember is as your portfolio is evolving, and your life, and your income, you have to revolve your strategies as well, so that you're getting the maximum results in different phases of your life.

Linder reveals whether she has done any calculations on how long it might take to pay down their entire portfolio.

Kimberly Linder:   

[00:06:53] I haven't. I should have. I worked out, within a couple of years, we should get to a point where it's basically one a year. It's a good position to be in and the thing is, a lot of hard work went into these properties. But it's easy now. Everything is not roses when it comes to property. There was a lot of hard work in getting there. And a lot of fear, because we were not on a lot of income. But to get to this point and know the benefits, I would never have expected we would have ever gotten to this point where we could be paying down a property every few years.

Linder’s strategy has evolved over time, and she reveals what she sees herself doing next, and if retirement is on the table.

Kimberly Linder:   

[00:08:04] It's very hard. My husband would have us retired if he could, but I just love what I do. And I'm a bit of a workaholic, and my husband calls me his weekend wife. I just love what I do. Because what I do now with my own business is share my story and help other people from a finance point of view to do what we've done. So it's... maybe 10 years. Maybe five!

[00:08:43] It's not work when you love what you do, is it. Like you, you're not working!

Tyrone Shum: 

With her eldest children now adults, Linder reveals if they share her passion for property, and her thoughts on young people getting into the market.

Kimberly Linder:   

[00:09:06] Well, this is a great story. So my 25 year old daughter, Georgia, she owned seven investments by the time she was 23. She's a broker as well. Same as her mum. She split up with her partner so she's only got four now, but she's still doing really well. And then our second daughter Chloe, who's 21, she's just about to hand over her second property. So I guess we have really taught our kids. My kids just think it's normal, that you buy property and you own a lot of property. They just think that's normal. And that's what everybody does. 

[00:09:51] And for any parents that listen that say 'Oh, no, don't worry about the finances, let us worry about that'— that is the number one thing I would recommend. Always talk to kids about what you're doing, why you're doing it, and where it's going to get them if they do things when they're young. Because they absorb so much, and they trust you. And I think that anybody that's invested in property, the number one thing that I will say is that, 'If I could have had my time over again, I would have bought more when I was younger'.

Coming up after the break, Linder shares what she hears other parents telling their children about property...

[00:12:01] I would say that I would hear that 80% of the time, that I have a meeting with a parent. And I think, 'Wow, if that's the message that you're conveying to your children, that's what they're going to believe'. 

Her lowest point in investing...

[00:16:04] Our very first investment we bought, we learned a lot, because it was the worst kind of investment. It barely grew. It was costing us $8,000 a year. So we learned very quickly from that first one 'this is not the kind of investment we want to do in the future'. 

She shares how important it is to have an end goal in mind...

[00:21:38] A lot of people, they just buy because their accountant said, 'Well, you've got a tax problem, buy an investment'. Well, what do you want from that investment? Because different investments are going to produce completely different outcomes. 

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

With the abundance of information available at our fingertips, does Linder see this as helpful or a hindrance to young people getting into the property market?

Kimberly Linder:   

[00:11:36] I think the number one deterrent for all young people at the moment is their own parents. The amount of times that I go to a meeting, and I hear parents say, 'We've really got to get into investing, we've really got to do something because we need to help our children. Prices are through the roof, they're never going to be able to get into the Sydney market'. I would say that I would hear that 80% of the time, that I have a meeting with a parent. And I think, 'Wow, if that's the message that you're conveying to your children, that's what they're going to believe'. 

[00:12:14] Now as a broker, even say, particularly right now, you've got a $25,000 stimulus being thrown at you for a first home, you've got a $10,000 first home buyers grant, you're getting your stamp duty paid for, you can get onto a scheme where you can get a 95% lend and the government will guarantee your 20%. So no mortgage insurance. So there is so much information where they have at their fingertips. 

[00:12:44] The major reason they're not jumping is because the parents are saying, 'Oh, no, it's too unaffordable, you simply can't'. We are also in a rate environment that we have never seen historically, money's cheap, affordability is high. So me buying property or when you probably bought your first property, it was a lot harder than it is now. I'm writing these loans, so I do know that. So I think that kids need to ask the questions of 'How can I do it?', as opposed to listening to 'You can't do it'. 

[00:13:20] And a thing that I've seen a lot, and I guess, we're also teaching a lot of our clients is if you're a young person, and you can't get out of your head or need to live in the eastern suburbs, because that's where I grew up, or I need live here— rent where you want to live, and get into the market anyway. It doesn't matter if you don't own the property or if it's not an owner occupier. As long as you're in the market, buy an investment. My eldest daughter had four investments, and then she bought her owner occupied home. So sometimes I think in this industry, when prices are going up so quickly, you just need to change the strategy a little bit, you have to think a little bit outside the square, and you need to speak to people that may be able to give you the guidance of how to do and what to do.

Turning to mindset, Linder shares if she had any mentors or resources that helped her along the way.

Kimberly Linder:   

[00:15:20] I would say just listening to my dad and knowing that there's this opportunity in the property market that they missed so significantly, it was such a big conversation. I think that I just decided I wanted to do it, my husband was on board. So we would start doing a lot of renos, because he's very handy. So we would do that, we would say, 'Wow, we've fixed this property and look at the equity uplift we've got'. 

[00:16:00] So it just became something that we did once... or actually no, our very first investment we bought, we learned a lot, because it was the worst kind of investment. It barely grew. It was costing us $8,000 a year. So we learned very quickly from that first one 'this is not the kind of investment we want to do in the future'. So when we got on track with how we could build, and we were of the mindset, 'if something wasn't costing us anything, we were never limited to how much we could own'. So once we sort of started to see that things worked, we thought, 'Well, why would you stop?' 

Linder elaborates on the properties they bought early on that were generating revenue, and the strategy they stuck to.

Kimberly Linder:   

[00:16:51] We never built a granny flat, we just bought properties. So whether it was house and granny flat, or whether it was a duplex, we just bought. We stayed very solid to a strategy of 'buy it— if it does not have two income streams, walk away'. If we could create those two income streams, I mean, we certainly didn't have the money to be putting granny flats in the back, although that's an awesome strategy. 

[00:17:17] And then it evolved from that where we needed the tax kicks in terms of depreciation. So we've built a lot of that kind of property, but not only that kind of property, because as we've grown, our strategies have grown. So we then sought out a lot of higher capital growth areas, the bigger home, and things like that. But you start with the cookie cutter stuff where you know that you've got a very low vacancy rate. If you've got a low vacancy rate, you're never gonna have to worry about whether or not you're going to get the rent. And the only time that property hurts anybody is when it starts costing you money. So if you can avoid that hurt, you're on the right track. 

Linder discusses the hard work put into their properties, and how holding one property has helped her daughter immensely.

Kimberly Linder:   

[00:18:12] We've purchased properties at a pub at auction that have literally been, like, uninhabitable, and Jason's done all the hard work on those. And so just get them up to a spec and either sell them and make the money or hold them, which I would always say— if there's not a reason to sell, don't. Because it's a long term strategy, the longer the hold, the better you're going to be. 

[00:18:46] So we would increase the equity, borrow against that equity. That was our next deposit to go. Which is exactly what I've taught my children. I was actually discussing this with my daughter Chloe yesterday, we worked out her equity value. She bought in Geelong at the very bottom of the market, bought land, held, it was unregistered, by the time it registered, she'd made $90,000, which gave her the deposit to then do the build. And then she's bought in another area in the Hunter Valley at the moment, which we've already seen an upswing there as well. So we worked out she's got about $160,000 worth of equity in the two properties that she's bought. She signed her first contract when she was 18. And she wouldn't have even earned that much money yet in her young life. So this is the power of equity. If you can produce the deposit from what you do, you don't have to keep failing to get to that next property.

She shares the best piece of advice she’s received throughout her property investing journey.

Kimberly Linder: 

[00:20:22] Do your due diligence. That would be my best advice. And it would be the advice that I would give to anybody, because anybody can tell you anything. But you need to know and you need to be sure yourself. And as you talked about technology, the most critical things that you need to look at with property is one, what is the vacancy rate? You can Google what is the vacancy rate of any suburb and have that information in three seconds. If you've got a low vacancy rate, well then you are assured that we shouldn't have any troubles with renters. What is the median price of any suburb? Then, you know, straight away, am I overpaying? What are my comparables? 

[00:21:08] So all of this is all on realestate.com, basically. So we have information on tap, so it's not hard. And it's very basic information that you need to know prior to making that decision. And I think the other thing is, where do you want to finish? You want to know where you're going to finish before you start. And I think if that is clear to you before you begin, then you're on the right track in terms of a strategy. 

[00:21:38] A lot of people, they just buy because their accountant said, 'Well, you've got a tax problem, buy an investment'. Well, what do you want from that investment? Because different investments are going to produce completely different outcomes. So I think if you know what your endgame is, you know, where to then start. And obviously, that's going to change, but it's important to know is this long term, is it short term, what do I want to achieve from this transaction?

If Linder could go back in time and meet herself 10 years ago, what would she say to her?

Kimberly Linder:   

[00:22:21] Look at the bottom line, always look at the bottom line. Don't be afraid of debt. Look at what's coming out of your pocket. Don't be afraid of the big numbers. Because the main thing that matters is, what is the cost to you? And what are you going to do if you can't provide that? I think that's what I would say to myself 10 years ago,

Tyrone Shum:   

Did Linder see the possibility of debt as a property stopper?

Kimberly Linder:   

[00:22:58] No, I love debt. Debt has been my vehicle to make money. I've never been afraid of debt. It's always been the most important thing to understand how I'm going to pay for it. And then if I can make somebody else pay for it, that's even better.

Jumping forward into the future, Linder reveals where she sees herself in five years’ time.

Kimberly Linder:   

[00:23:33] I think we'll continue on the development path. My husband and I will just continue to hold our properties. There's no reason at this stage to sell, they're all performing well, doing what we hoped they would. I think we'll just continue, we both love that sourcing land, finding the next opportunity. So we'll do it as a development and work with our kids to help grow them, keep growing their portfolios, as well as our clients and our business. 

With how much Linder loves sourcing land, she reveals whether it’s her or her husband who takes the lead in the development space.

Kimberly Linder:   

[00:24:21] He does a lot more of it now. But predominantly, it was me that did all of that in the beginning. But the finance side of things is massive for me, that takes a whole lot of time up. So he's more involved in that. But we do a lot of it together. So we do a lot of trips together too. And that's actually like a holiday. We love it. I guess we're probably joint now. He does a lot of land acquisition and things like that for our own business as well as our own portfolio.

Lastly, Linder shares her thoughts on whether she thinks her success can be boiled down to hard work, skill, intelligence or luck, or possibly a combination of these.

Kimberly Linder:   

[00:25:57] The one thing that I want to say is that I feel that the harder I work, the luckier I got. So if you want the results, you’ve got to put in the time. It doesn't just happen, and you've just got to move, just go.

Thank you to Kimberly Linder, our guest on this episode of Property Investory.