Jarrad Mahon is the managing director of Investors Edge Real Estate. He had a difficult start to his young adult life, receiving bad grades at school and being told he was unable to take the tertiary entrance exams. However, with his family by his side, he made a quick turn around towards success and was able to choose any university course. From there, he went on to become an engineer but eventually, he transitioned into property investment.
Mahon has found success from the start of his property investment
journey and in this episode, he will share how he made an $85,000 profit from his first deal. As well as this, hear about the value of a good property manager and the experience that changed his world outlook.Timestamps:
1:00 | Smashing the Property Market
7:35 | Fuelling Your Dream
11:11 | Process of Elimination
17:30 | Falling Down the Rabbit Hole
22:42 | Jumping in Full Time
25:20 | The Value of Equity
28:44 | Bad Investing Moments
1:20 | Bouncing Back
5:59 | Invest Into High Quality
9:00 | Investing Criteria
13:20 | Different Mentors for Different Stages
15:12 | Be a Man of Value
18:42 | Combining Luck and Skill
Resources and Links:
[8:05] A property manager can make a massive difference as to preventing stress and improving your returns and making the whole experience good and I think it's actually the biggest difference that has people go from one property to many properties.
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 talking to the managing director of Investors Edge Real Estate, Jarrad Mahon. He has found success from the start of his property investment journey and will share how he made an $85,000 profit from his first deal. As well as hear about how a good property manager experience changed his world outlook.
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Smashing the Property Market
Mahon has been building up Investors Edge Real Estate since 2008 and now, he and his team are smashing the property game in Perth.
[0:26] We're a Perth based property management and investment agency and we're looking after about 850 properties across the whole of Perth. So, we're in 200 odd suburbs and I've got a really great team of 15 staff that allows me to focus on selling properties for our clients.
[0:45] So, I don't have any sort of day-to -day involvement in the property management side but I obviously oversee it and make sure we're delivering a high level of service. And when our clients decide to more discuss strategy and whether it's the right time, I spend half my time talking clients out of selling because I really make sure they've got a good reason to and if they've got a sound investment and all the fundamentals are looking good, and it's heading the right direction, why would you get out when the Perth markets got some very good years ahead.
If the Perth property market is expected to have some good years ahead, why do investors want to sell their properties?
[2:56] I guess, in Perth, many investors have been through a pretty rough time over the last four or five years. So, they haven't seen the growth up until recently and they had their rental prices dropped by a fair bit too. So, they weren't getting the ongoing rental returns that they used to be. Thankfully, rental prices are now back at where they were four years ago. So, we just hit the mark this month at $480 per week average [or] median.
[3:26] And they're quite scarred from going through that roller coaster of having the market dip. So, as soon as it gets back to a price where they're above where they previously were at, many of them just think okay now it's my point to move on. But they haven't, they're not used to thinking longer term. They, you see it time and time again that investors get out right when the markets about to boom.
 So, the reasons are different and I make sure that if they're going to sell and then buy again in the same market or they want to upgrade their home, then that's a really great reason to I think. If they've had an underperforming asset and it's likely to not turn around and do good things over the next 10 years, then I think that's a good reason to potentially sell now when they can. You know, when a market's soft it's hard to sell a property that's on a busy road or in the direct flight path or has some big negatives to it and those negatives might have affected the growth and rentability during the softer times.
As well as guiding his clients in the right direction, Mahon also spends his time producing a podcast.
[1:26] I also have a podcast Perth Property Insider, and that keeps me busy. I love putting episodes together and as you know from running a podcast, I use it to get really great guests on that I want to learn from as well as all my listeners.
[1:45] So, I have a lot of fun doing that and I've kind of set things up to have a really great work life balance. So, I take Fridays off to spend with my three year old daughter and we go to gymnastics and have daddy daughter day we call it. So, it's really great to be able to choose where I spend my time now and it's not all about making money or working.
For Mahon, quality time with his family is important and is how he chooses to start his day.
[5:06] I get up and spend the mornings with my daughter. So, we go for a walk around the block with the dog. She walks the dog and I make sure they both don't run off the path. We go to the playground and go to the cafe and I usually get into work at about 9:30am [to] 10am. And I just cherish that time again.
[5:29] And then Fridays we spend together. On the weekends, its been lots of family. I tend to do two or three hours of home opens on a Saturday and condense that together. And I enjoy the break up because she still sleeps during the day, from 12pm to 3pm.
[5:47] Not looking forward to when those naps stop, Tyrone. It will be different. So, we're hanging on to it and trying to keep the routine. But then we go out for breakfast on a Sunday usually. And we used to travel a lot. So, in her first year of being alive, we went to Bali a few times and did a lot of down south trips and stuff but obviously that was a lot harder with Covid.
[6:16] So, now that things are opening up again, we've got a trip booked to go to New Zealand in [the] end of May. So, my dad's family's from there and they've never met Lexie, our daughter, or my wife. So, I think it's going to be a really great meaningful trip for us to go and get some, reconnect with family that they've never met. So, yeah, looking forward to that.
Although Mahon’s dad is from New Zealand, that is not where he grew up.
[9:45] My dad was over on a holiday and met my mum on Rottnest Island and then he never went back. So, they started a family here and they were in a working class suburb of Greenwood, which is in Perth, Western Australia. And my dad, he had his own business as a civil engineer and I just remember him working crazy hours. And he definitely loved what he did and he was trying to get ahead and I can see how he was trying to do all of that for the family.
[10:19] But the impression and what I was left with [is that] he wasn't around much and that's why I'm trying to spend so much time with my daughter and to have her feel my presence. So, that's been really, a really big inspiration but I know he was trying to do it for the family but it also affected us all because he wasn't there.
Fuelling Your Dream
Mahon’s upbringing is what initially fuelled him to live a life like he does now.
[11:10] My parents did seem to struggle with money as well and didn't seem to be very good at saving things and you know, a lot of that burning desire that I now have, sort of comes from those experiences where I'd be at school and I've got a Vegemite sandwich and an apple and my friends can buy lunch every day at the canteen. You know, simple things but when you're six or seven years old, it sticks with you.
[11:40] So, I went to a public primary school and high school in Greenwood. So, my whole world was in Greenwood and for the first 11 years, I never really enjoyed school much and I'd get distracted by trying to impress girls and clowning around with my friends. And it just school wasn't really for me, even though I had a reasonable aptitude for it but I just never really found my groove.
[12:05] So, in year 11 I was told that my grades weren't good enough to do tertiary entrance exams and I had to take that report card home to my parents. And my parents didn't really know how bad things were going and my dad lost his mind and was kind of like, well, I work hard and send you to school. And you're not, he expects me to work hard and so he marched me down to the school and demanded that they put me in the top subjects to do all of the higher qualifying professions.
[12:47] So, I felt an immense pressure at that time to perform and the school agreed and on the proviso that if I got to a B grades or better at the end of the first term, they would allow me to stay in those subjects. It was pretty daunting because I hadn't done the work and got the grades to, you know, that point. And I ended up sort of forcing myself to focus and study for four to five hours each night and I learnt the benefit of hard work and that it was possible to turn it around.
As well as seeing the reward of his hard work, Mahon found motivation another way.
[13:21] I started to get a real buzz from beating all the smart, nerdy kids. I just found the competition in it. They were like, shocked that who's this guy that's been the back of the class clown for 11 years is now beating us at getting the top grades in the class. So, that really fuelled me on [and] gave me the motivation at that time because I still wasn't really enjoying the subjects or anything.
[13:50] So, I actually went on to receive Dux of the school, which so in an 18 month turnaround was like they said it was the biggest turnaround the school had ever seen when they were giving me the award. So, that was a pretty proud moment.
His dad was also very proud of the way that he turned his grades around.
[15:21] He was exceptionally proud and you know, but I was still really trying to prove myself to them. And a lot of the things I did probably for the next 10 years was out of that, you know, trying to gain approval for their acceptance and for them to be proud of me. So, it took me quite a while to get out of that pattern to be honest, Tyrone. Lots of personal development.
Process of Elimination
After receiving Dux of the school, Mahon had the freedom to choose any university course he desired.
[16:09] I had the grades to get into pretty much any course that I could have gone and done doctor, being a doctor, or being a dentist, or being an accountant. They were kind of all the things that my parents wanted me to be and with my dad being an engineer, I kind of didn't choose my course by what I necessarily loved or wanted to do. I just did the process of elimination.
[16:30] So I was like, nah, I can't handle the sight of blood. So, I won't be a doctor. I don't want to look in people's mouths all day. So, forget the dentistry. You know, I don't like, I can't imagine numbers [and] that being an accountant full time. It's just too boring for me. So, I landed on engineering, not because it was my absolute love but because I had the grades for it.
[16:53] I kind of wanted to make use of the grades and it was the thing that I liked the most of everything. So, and I think there was a bit of that me trying to prove myself and following [in] my dad's footsteps of him being an engineer too. So, for want of knowing what else to do, that's what I did.
Despite him not having an absolute love for engineering, people seemed to love Mahon as an engineer.
[17:30] I ended up doing electrical engineering and once I graduated, I went and did a grad program with our sort of main utility power supplier here in Perth. And that was a fabulous experience because they were, they transferred you around every six months to the different business sectors and we were in a boom time then. So, the level of projects that we got to work on were just massive because they didn't have anyone else to do the work.
[17:57] So, I was going in as a graduate and managing multi million dollar projects and having a great time. And I ended up being very successful and awarded during that period, too. So, I could have stayed in engineering and I had a different way of going about things.
[18:19] So, like, whenever I ran a project, I used to get everyone together and connected for a big lunch and get them all on the same page. And when I was designing stuff, I'd go and chat to the guys that are actually in the field that would have to install it and get their input. And then I'd go chat to the senior engineer, the old grey guy and get his input on how this should be designed. And then I'd speak to the commissioning guy. Basically just went and cheated my way through a project, but in the real world that's how you create something that people want.
This management style worked great for Mahon because why would you change something when it’s working?
[19:17] That's what taught me a lot and that sort of pattern has stayed with me because when it came to then the jobs being issued, the site guys taking one look at it decided to prioritise my job over everyone else's because it was the way that they wanted it to be. The senior engineers were like ‘Jarrad, this design is the best thing we've ever seen and yes, it was because it was inspired by you’. It was a recipe for the fast track.
[19:48] And then one of my moments before I ended up leaving engineering, I pulled off this massive project and the CEO came up to my lunch because I've pulled the project in so far under cost. They said, 'Jarrad, you can organise a big soiree, you can spend what you want'. And so, I invited everyone from the project, we were down at the Indiana Tea House overlooking the ocean. I had custom pens created, thanking them for working on that project and the CEO was like, this is the best run project, the best under budget, the best event that we've ever had and so that was my departing moment.
Mahon was on a career high after this project, so he had mixed feelings about leaving the engineering field.
[20:46] I didn't close the door straight away to it but I wanted to go and I was doing pretty well in property and I'd sort of made more in one deal than I probably made two or three times the annual salary. So, I thought if I go and focus on property full time and what could I do with all my time spent on property?
Falling Down the Rabbit Hole
At only 16 years old, Mahon took an interest in property and while immersing himself in information, he fell down a rabbit hole.
[21:21] I was given the book Rich Dad, Poor Dad, which I know many people had as their turning point. But I got it when I was 16 and I did change my whole thinking on what was possible and I tried to follow rich dad's advice instead of my poor dad. So, I related to the kid in that and it was like Alice discovering a wonderland.
[21:48] You know, I just went so deep into it and even when I was at university, I'd spend my time reading more property books and going to property seminars and other things than I did studying. My grades probably suffered a bit but I still ended up graduating with first class honours, thankfully. But that was very hard work as well.
After reading countless property books, Mahon joined the market when he was a fresh university graduate.
[23:03] I didn't have the money at the time. So, I ended up partnering with my parents and how that came about is I wrote a little business plan to buy a property, renovate it and sell. And I was trying to get a partner to go in, a money partner to go in with me for it.
[23:24] So, I took this little business plan around to the neighbours in my street that I knew quite well and yeah, it was interesting because I had, one of my next door neighbours put their hand up and say, 'Jarrad, I'll be your money partner'. So, my parents were then like, show me what is in this business plan Jarrad. Like, what on earth have you put in here? And then they read it and they didn't realise how serious and keen I'd been on property all these years.
[23:54] And they're like, wow, you've actually given this a lot of thought and it's something that you really want to do. And I had more, I had like the idea, like enough of an idea to get started. But it was the burning desire and the motivation that kind of everyone was seeing in me. So, they ended up agreeing to go partners with me and we actually ended up doing quite a few subsequent deals together.
To find a property for Mahon’s first investment, it was a family effort.
[24:31] What we ended up doing is I dropped, I, we were obviously more driven by what we could afford and my parents had never invested in property at all. So, there was a big learning curve for them too. They had paid off their house by that stage but had no real desire to invest and hadn't gone into any of that space.
[24:53] So, they put up the money and I dropped my brother off. So, we organised our finance, obviously. And we had a pretty limited budget still because it was what they felt comfortable with. And we selected some suburbs in Perth more based on what we could afford. And I would drop my brother off who was five years younger than me and on his bike, and his mandate was to drop some flyers in houses that looked really bad from the street and needed a renovation.
[25:27] And my flyer was really basic, on our inkjet printer that said, 'want to sell your property? I'll buy it fast. [I'm] ready to go. Call me for a quick answer'. It was really simple and it was how we ended up buying our first two properties, actually. So, it does work and that was in a hot market.
[25:48] So, when people want to get out, they just. One of the sellers called us and they'd already left the house. And they were like, we've already moved interstate. What will you pay us for it? So, with my parents, we worked out a bit of a budget for the renovation and on this first one, we came up with a $30,000 budget and we worked backwards from that renovated selling price in the area and we factored in a 15% profit.
[26:17] So, being an engineer, I love my spreadsheet and we did, I did this in a pretty thought out way. So, we came up with the amount to offer which was $189,000 and I thought I'll make it a bit of a round, not around number but a bit of a, an odd number so that they think we've really calculated it out and it was accepted.
[26:42] So, I was really blown away and not sure what to do next. And once the property was settled, we spent countless hours after work and on the weekends for around four months renovating this house and it was like blood, sweat and tears into this thing. And I had my younger brother along with us and it was, looking back on it, it was [a] really great time to spend as a family. Like, myself and my younger brother learned so many great skills that have stuck with us. Like with painting and landscaping and all the things. We worked out what we can do and what we don't want to do.
Jumping in Full Time
This first investment property was a massive effort but it did show Mahon that committing to property full time was possible.
[27:27] It was bloody hard work and some of the best times and we ended up spending $33,000. So, we were pretty tight on our budget, which was good. And we did a lot to the property. So, we completely gutted it [and] did like a new kitchen, new bathroom, painting, rendering to the front and restored the roof and did new carpets, blinds and landscaping.
[27:47] So, it was a lot that we did and it did take a lot of time. So, our profit at the end of that one was $85,000 four months later. So, it was big money for me at the time. Even splitting that 50% 50%. My first year salary as an engineer was $55,000. So, I nearly made as much in the four months as I did in the whole year.
[28:22] We bought it for $189,000. Yep. And the bank value that interestingly enough, I think for $220,000 or $230,000. So, we'd made, we bought pretty well and then adding a value definitely helped and we ended up. So, it was valued at $320,000 on completion of our val of our renovation and we rented it out for $380 per week. So, it was decently, you know, decent profit and decent upside on the rental.
Mahon used the equity from this first project to take on a second.
[29:01] We used that then for our second little project, which was in another affordable area. Armadale, which is the lower socio economic, sort of one of the lowest price suburbs in Perth. It's moved up a fair bit. I used to be pretty worried, you know, going there and working on the weekends and stuff. It's pretty rough.
[29:38] Like shopping trolleys around everywhere and you chat to the neighbours and I was like, oh, geez, like have I made a mistake buying this one? So, that second one we ended up selling and we didn't make as much profit. I think we made $42,000 off the top of my head. But it was a shorter time period and we didn't do as much.
[29:59] So, we employed a lot more trades and factored that into the costing and it was still nice to turn it over. And once learning a bit more about the area and the street, we kind of thought [it] doesn't make sense to keep this one and put up with the other headaches that might come from around that area.
The Value of Equity
At this point in time, Mahon was fairly new to property investment. So, how did he know about equity and how to use it?
[30:42] There was no podcasts. I would go into the Perth library and they had a lot of investing books. So, none of the other libraries around Perth had them and I would try anywhere I could find to get a book and it was a lot of the American authors that had a lot of these concepts.
[31:34] So, I was pretty, as I said, Alice down the rabbit hole in Wonderland. Any book I could find I would just consume and get ideas from. I'm probably not the most creative person myself and I know that now. So, in business and property, I love getting ideas from other people and it takes me back to my job as an engineer where I went and got all the ideas from everyone else. So, that's kind of what I've done well.
Mahon went on to continue investing in properties however after an unfortunate business situation, he had to sell his portfolio and start from scratch.
[0:51] I kind of went on to then do some subdividing and we retained and built the house. And that was a lot more lucrative. And potentially, I should have just stuck with that one recipe because what we did on one of our next projects, after doing quite a few renos. I kind of was, I'm always looking to the next thing and I wanted to try out a number of different scenarios.
[1:19] So, we purchased this property in High Wycombe for $350,000 and we spent, I think about $200,000 on the build at the rear. We renovated the front and we, I think our total outlay was about $650,000. And we made around $185,000 over the 12 to 14 months of doing that. So, it was a much better gain and we ended up with a new property that was on the rear and an older one on the front.
[1:55] And at that time, I ended up also selling that property because I've always had a bit of an interplay between my properties and my business. And so starting out the business, I sold some properties to put some money in and then I also had a moment where I bought my business partner out in 2015.
[2:20] So, I sold some properties to, or I actually sold all of my properties in 2015 to buy her out. I was never expecting to have to do that. We had one disagreement, and it was our first disagreement and we ended up, she ended up wanting to leave the business. So, it was a real shock at the time to have to come up with $1,500,000.
Bad Investing Moments
Having to come up with $1,500,000 quickly was a shock for Mahon but this was not his first time being shocked when it comes to property.
[3:49] I want to go back to one of these first ones because we, I'm feeling the emotions come up already, like. So, I was 24 and at the time, I had four properties and each of my properties were just being managed so, so bad[ly]. I was having issues with all of them and it can really grind you down as an investor when you've got vacant properties and you've got tenants that are damaging things. And I had tenants move out owing lots of money and rent and badly damaging that property as well.
[4:24] So, I was really second guessing whether this is all worth it at that time. And I had to continuously follow up on my property managers and find out what was happening and they took ages to get back to me and they were just useless. So, I asked to see the tenancy application of that one that had skipped town and damaged the place and upon looking at it, like it's almost like the manager never even screened it as well.
[4:49] I can tell they should never have even been approved in the first place. And you have that, you want to have that trust and you don't, you're paying for a service and you don't want to have to manage your manager as I like to say but it was so frustrating. So, I really didn't feel like I was getting the service I deserved and they didn't care about my assets or my returns. So, in the end, that was a big inspiration for me also in starting Investors Edge Real Estate. So, what can come from a really dark period can be a really positive inspiration too.
This story sparked the inspiration for Mahon’s business, but it is not finished yet.
[5:29] We were told by the tenants that their son had died and they had to move out suddenly and they had lots of hospital bills and I felt absolutely horrible with the whole situation and I agreed to excuse them of what was owing and the bond was released to them. And while I was around doing all the fix ups begrudgingly on the house, and they'd really left it in a horrible state.
[5:54] So, I was around on the weekends trying to save money because I wouldn't get it back from them. And I was talking to the next door neighbour, who was the gossip Queen of the street. You know, she knew everything that was going on. So, I told them about how bad is it that the tenant's child died. And she was like, oh, that's news to me but yeah, that's really bad. And, you know, we both couldn't believe it had happened and we had that sort of moment.
[6:23] And then a few weeks later, I got a call from her telling me that the past tenants were actually back collecting some mail at the front mailbox and their son was alive and well and running around the front yard. So, God, I really lost my faith in humanity as well for a while there. And I was, that made me question whether it's all worth it. And question everything my property managers were doing, to even have me place tenants in a property like that. So, that was probably one of my worst times.
When we last spoke to Mahon, he was telling the unbelievable story of a tenant going to the extreme to avoid some fees. Now, let’s hear how he bounced back from the situation.
[8:56] I was doing a renovation project. One of them at the time and I had a really experienced investor named Denise around to give me some advice on what to do and I got all of her trades and contacts and stuff to do the renovation. So, she really helped out and I knew that she used to be a property manager and she'd done many more renovations and was really a seasoned investor to tell. She helped me see that there is this profit that is possible, like she had grown a very decent portfolio and kind of just showed me, gave me hope again.
[9:34] So, I was, she was going in and troubleshooting and trying to fix other businesses' rental portfolios. So, she was a bit disillusioned with the property management industry herself and by that stage, she was just going in and fixing up people's businesses for them. So, we became really good friends and she ended up asking me if I'd be interested in starting a property management focused agency.
[10:04] And I'd never even given the idea thought to be honest and I tried to change manager a few times and didn't find the right ones. And no one had sort of that investment mindset that I wanted and everyone was, property management back then was like a back of office thing where the sales agents were the stars of the office and the property management was neglected and it would have pretty inexperienced juniors and it just wasn't given the attention or the focus that it is today by the property management specialists that we sort of now have.
[10:41] So, it was her idea to start Investors Edge Real Estate and I came up with that name I think when I was in the shower. That was in part, what I was, I was already on leave from a engineering job and not knowing exactly what I was going to do. I wanted to do property full time and I thought, well, if I can help other people with their investing and go through their learning cycles and give them the kind of property management service that I wanted, that was really my main inspiration. And I thought, if I can be in property all day and I love it this much, then that was a big, massive turning point for me.
Of course, starting any business is going to be difficult but Mahon underestimated just how hard it would be.
[11:23] I had no business experience and I had no experience as a real estate agent and there was massive learning curves and it took a really long time to get traction. But we, I went and met up with a lot of the investors I knew and I put it out on the Somersoft Property Investment Forums, used to organise meetups so that I could find out how other investors were successful and also speak to them about what they were wanting from their property managers.
[12:01] So, similar to my job as an engineer, I just went around asking everyone what would you want in a service? And what things would make you choose someone as a property manager? And why would you leave your existing one? I basically then just designed or engineered the service, based on everyone else's feedback and we've continued to do that every year. We survey our clients and I love reading every single survey and going deep into their frustrations and their ideas for how I can improve the business. And then we go back and tell them all the things we've done that they suggested and they love that too.
[12:38] So, that's sort of iterative, you know, just giving people what they want and using their ideas. And I had a lot of, I did the same with sort of business coaches and other people that I surrounded ourselves with to make the business a success. So, yeah 14 years on now, we are one of the most awarded property managers in Australia and we're one of the most highly rated on Google in Perth. So, it's, I pinch myself like that I'm in a job I love, we're helping so many investors get ahead and improve their lives. And like, that's a big part of my why's to why I come to work now.
Invest Into High Quality
Since finding his groove in property investment, Mahon values the strategy of investing for quality, not quantity.
[14:25] I was more about buying quantity of properties previously and I was also about trying to force appreciation of value through renovation and building. I was often very impatient with my whole approach to investing and very short term focused. So, I often think if I went back and just bought, instead of buying multiple properties, bought the higher quality property and had a longer term focus to things and let compounding do its work, that I might be a hell of a lot better off because I wouldn't have paid as many taxes, I wouldn't have put so much effort into that adding value and actively being in property.
[15:19] And yes, I learned a lot and it got me where I am today but, so I don't regret it. But also, I now lean more towards evidence based selection of properties and buying the higher quality of property that you can afford and letting compounding do its work over the long term. And so, I'm more thinking about a forever hold and does this property, is this going to be a great legacy to leave to my kids? And do I see this property doubling and tripling in the next 20 to 30 years? And that's more how I'm approaching my investing these days.
Mahon even used this strategy when buying his family home.
[17:47] We went about choosing our home that way, recently and that's done very well over the last, so we bought in, it was in December 2020. So, quite recently and in the 18 or how many months has it been?
[18:11] About 18 months. So, next door just sold for $350,000 odd higher than what we paid and it was, it's proven to be a really great selection and did 20 odd percent in over a year. And part of that choice was I wanted to put the hat on as an investor when choosing the family home and not approach it separately.
[18:39] So, we got our daughter in to a really great school but there's the proven history of performance in this suburb and it's more of a steady, growth performer. Not, it doesn't go through crazy levels of growth and then have nothing for 10 years. It's more of a steady, good, longer term performer.
When looking for his family home, Mahon was thinking like an investor and had made a list of criterias.
[19:28] I went really deep into formulating an ideal criteria over the last few years. Again, not creating all these ideas myself but getting stuck into other people's books and other people's podcasts and take some ideas from them and some ideas from them and some ideas from them. Then I've got my ideal criteria. Now all my clients use that for overlaying on their purchases too.
[19:54] So, I did a lot of research studies as well as to what different quality school makes compared to a non-quality school catchment. Like when suburbs are even next to each other and typically, in that case, in Perth, it's made like around a 2% difference in the average annual growth rate over time. So, when you also look at other factors like I did another study into what difference does being next to the coastal water or water give to the suburb? And that also equated to around 2% difference as well in the average annual growth rate.
[20:33] And this is all kind of reflected when you look back at the past growth rates of an area and if those things haven't changed, then it's more than likely that it's going to benefit the area and growth moving forward as well. So, I'm more trying to focus on those ideal criteria that that are going to give growth in the future. And it can be adopted at the lower end budgets as well as the upper end budgets to choose between suburbs.
Although a 2% growth rate may sound small, overtime it can be a substantial difference.
[21:27] Over 30 years on a $500,000 purchase, the difference at 2% is $1,100,000. So, yeah, once I got that and then when you combine that with thinking on a forever hold, getting that extra incremental one or two percent, imagine applying that across a whole portfolio. You know, that's where life changing wealth is made.
Different Mentors for Different Stages
Mahon has had multiple mentors throughout the different stages of his property investment journey.
[22:20] I looked at my Audible account the other day and I've read [or] listened to 330 odd books. At different stages, I've had different mentors that I can't, that get me to a certain place and then I feel like I'm not, I've got a diminishing return from them. So, I usually find that I'm with a mentor or a coach for like one or two years.
[22:44] These days, I think running the podcast is just, I end up speaking to the people I interview for 30 to 60 minutes before doing the recording and picking their brains and that's my favourite way to get access to great thinkers in this space. So, it's hard to pinpoint to anyone but it's all together in my mixing bowl.
He mentioned that he has a habit of listening to a lot of audio books. He has listened to over 300, so what books stood out to him?
[23:24] My favourite one is the Wealthy Gardener. And I don't think many Australians know about it, but it covers like the sort of the internal journey towards wealth and the principles for success. And it's told with an engaging story. So, it's part fiction story and part nonfiction, where he lays out the principles. And I'm so obsessed with this book that I listened to it when I'm going to sleep each night.
[23:54] So, I've read it four or five times. And I just find that the narrator to be very calming too. So, I'm really tapping into my subconscious as I'm going to sleep. You can't listen to a book if it excites you when you're going to sleep. So, I'm now, I've now listened to it enough that it's calming.
Be a Man of Value
As well as lessons from all of the books that he’s read, Mahon has been taught lessons from the people in his life.
[24:41] I don't know who told me, it might have even been my business partner but when we were having our difficult times and early on, I was really just trying to prove myself and become a success. And I think it was Denise that said to me, try not to become a man of success but a man of value. And it was Albert Einstein that originally said it.
[25:04] And that's just, I don't know if it was Denise that told me but that stuck with me and it's really helped me in my darkest times when the markets been down or I've had difficult things to do. If I can just be a value to other people and then I will receive the worth what I'm worth. And yeah, that's really changed my life.
[25:49] There's so many dimensions to it. You know, being of value to others can have many dimensions. Like, it's not and it can be applied from the discussion you have with your barista in the morning to the client that you're helping that day, to your friends and everything.
With all of the lessons that Mahon has learned over the years, he has some advice of his own.
[26:28] Just hang in there. That the roller coaster will all be worth it and everything moves in cycles. So, I didn't understand just how important the cycles were to business and investing. And especially in Perth, I didn't appreciate that we were, because we had one of the biggest booms in history, I didn't appreciate that we would have to have had one of the bigger corrections to in history.
[26:56] And the next five years is going to be so different to the last five and I can already see that we're going to have our time in the sun ahead. And I'm just so glad that I've stuck in there because now I'm getting the rewards and I'm getting that the roller coaster is coming back up and the cycles turning around again and Perth, it's still been forgotten a bit, you know. And we're now the lowest priced capital city in Australia,
[27:30] We've got the lowest but we've got the best fundamentals. So, we've got the lowest unemployment, we've got the highest surplus to our government budget. I don't know if you saw like there's $8 billion surplus and $4 billion coming from GST. We've had one of the safest Covid periods even though we've had, locked everyone out of our state for good reason. And you also look at our rental yields. They're the highest in Australia of any capital, when you combine that with affordability.
[28:02] The last couple of months, we've seen a lot of investors coming that were planning to buy in Brisbane. Now Brisbane has become overpriced and their floods have put a lot of people off. Yeah, we're seeing that wave move over here now and it's been coming for a long time, but it seems to finally be here. And I still think there's a lot of value buying for investors and that's why I'm still buying here personally as well.
Combining Luck and Skill
[29:30] So, Jarrad, how much of your success of your whole property journey that you've been through right now, how much of your success is due to intelligence, skill and hard work? And how much do you think is because of luck?
[29:42] Good question. I think probably initially my success was more from the hard work and the burning desire to create a better life for myself. But after 14 years in the business of property I've developed, probably a lot of more experience and skills to draw on. So, I think it's a combination.
[30:17] But then when you say luck as well, if I didn't meet my previous business partner Denise, I wouldn't have Investors Edge and I wouldn't be in the position that I am to help so many other investors and I also met my wife when she was acting as a settlement agent and she was on one of many sales. So, I was chatting to her over the phone and I looked her up on Facebook and she was single and next time when we were coordinating the settlement I asked her to catch up for coffee and uh, that's all she wrote. So, eleven years later we're still together and have a beautiful daughter. So, if there's not luck in meeting those two key partnerships that I've had, I have to pinch myself and thank myself for being that lucky too.
Thank you to Jarrad Mahon, our guest on this episode of Property Investory.