Join us on this insightful episode of Property Investory.

Timestamps:
00:02:45 - Personal background

00:04:25 - A different kind of teaching 

00:06:20 - Learning with a purpose 

00:10:11 - A necessary first investment 

00:11:17 - Family relationships vs business relationships 

00:14:06 - Making the most of mistakes

[4:40 ]One of my interests is gentrification. One of the reasons is because I've lived it - I've lived in an area where nobody wanted to live, where it was only blue-collar, low-income workers. You fast-track 30 years, and now all the white-collar professionals, the hipsters, all want to move into this area.

 

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 Property Professor Peter Koulizos - author, lecturer, and avid property investor. We'll follow his journey from flipping houses after school in Adelaide, to teaching Year 3 in the New York Peninsula, all the way to now working as program director for the master of property at the University of Adelaide.

 

 

 

Having experience in both the theory and practice of the property market, connecting life and learning to help others is one of Koulizos’ greatest joys.  

 

[5:34] Before I was a university lecturer, I was a school teacher. So now what I have is, I have a passion for teaching and a passion for property. So being able to teach property, yeah, that's as good as it gets. It doesn't get any better than that. 

 

So, what does this fusion look like on an average day?

 

Peter Koulizos  

[1:31] So on a typical day, I'd have a class, there's obviously student inquiries before the class and student inquiries after the class. Unfortunately, there's marking, which I'm not a big fan of, but has to be done. Admin, but I mean, there's also, you know, flexibility, often I catch up with my students, just over coffee, not just about property, but also what their aspirations are not so much in creating worlds because I'm more about helping them find a career in property. 

 

Because most of my students are international students a long way from home, particularly now because of COVID-19. I think they appreciate speaking to somebody who's a bit more mature than they are, who's got some experience in life and property. So yeah, for me, it's again, keeping it real. It's not just about studying. It's also about the whole person.

 

 

Growing up, Koulizos found that being immersed in the property industry from an early age had a subconscious effect on his trajectory. 

 

Peter Koulizos 

[5:34] My father was a real estate agent, hence the interest in real estate. Now, you know, I didn't make a conscious decision to get into the real estate area. But I just think through a process of osmosis and sitting down at the dinner table and listening about property every day. Sometimes helping my dad, because he was an avid investor himself, sometimes helping dad with maybe, you know, taking rubbish to the dump or doing some jobs around some investment properties or properties. He used to be a big flipper, buy something, fix it up and sell it. And so that's how I got into property. 

 

[6:57] What kid wants to be on the back of a trailer at a dump throwing rubbish when it's 30 degrees when they could be out playing with their mates. But look, I never really found that a chore I don't know if enjoyed is the right word. But I didn't mind it.  I suppose most kids would love to be asked by their parents to help out because they will seem to be, you know, useful. And so, I enjoyed that bit. But generally speaking, childhood was good. I went to school at Underdown High School, which is a suburb, which is a school in the western suburbs of Adelaide. Yeah, I had a great time in school, had a great time at university, and am still having a great time at university.

 

Before Koulizos was a university lecturer, his students were quite a bit younger.

 

[8:13] So, straight from high school, I went to Teacher's College. Back then, you didn't have to go to university to be a teacher; you just went to Teacher's College. So I went to teachers college and got - back then it was just the Diploma and then three years - now you need a four-year degree to be a teacher.

[11:14] I got my first job out in the country of South Australia. So I had a contract for a year. And then I had some part-time positions for two years in the city. And then I got my first permanent job back out in the country on New York Peninsula in South Australia, stayed there for seven years, and then came back and taught in the city and a couple of different schools. 

 

[14:07] So I started off teaching the young ones like year three and year four, but most of the time, I was teaching year sixes and sevens. And I developed a great interest in financial literacy, especially when I came back to the city. So, I wrote a unit of work called money matters for kids, where I would teach kids about saving and investing and budgeting and finding your right career. And I tried to incorporate it in as many areas of the curriculum as I could. You know how you would have a school fair? Well, I would call it an enterprise fair because if the kids wanted to say set up a sausage sizzle, they had to give me a business plan. So how many sausages do you expect to sell? How much are the sausages going to cost you? Where are we going to get the barbecue from? How much are the guests gonna cost you? And then you know, come up with the bottom line, whether it was sausages, whether it was Yeah, cupcakes.

 

Still wanting to build on his passion for property investing, he continued to develop his knowledge during his teaching career. 

 

[8:15] When I was teaching, I also went back and did postgraduate qualifications in property and town planning. So, for me, your learning doesn't finish at the end of school or at the end of university because things change, things change.

 

[11:14] I realized that I had a big interest in real estate, both my wife and I did the Diploma in real estate or whatever the correct term was back then, just to have a better run because that's all you - I mean, you could do a degree, but I wasn't really interested in doing a degree in real estate back then. So, I did a diploma in real estate to get a better understanding of, in particular, the buying and selling process. And like I said, my wife did that as well. 

 

It wasn't until returning to his hometown that Koulizos realised he could forge his love of teaching and property into a new kind of role.

 

[12:20] Then, when I came back to Adelaide, I worked out that I wanted to get into adult education. I mean, there are still some things now that I miss about school teaching. But I also wanted to have the experience of teaching adults. So, I started at some places in Australia; they call it adult community education. So, you can go there to learn anything from how to start a business to playing the drums - aside from formal education, which is about finishing up with some sort of paper. So I started, I wrote some courses and started teaching there. And then I decided if anyone's going to take me seriously, in teaching property, I had a need for more than just a teaching degree. And so, it was then I went back to uni to study part-time to do a Graduate Diploma in property. And then I didn't master business and property. And then later on, I did a master's in Urban and Regional Planning.

 

Coming up after the break, we will delve into Peter Koulizos' property investment journey and when he first started putting his theory to the test…

 

[20:13] You can change many, many other things, you can, you know, make the house bigger, make the house smaller, knock down the house, you can make the block bigger by buying next door, you can make the block smaller by subdividing. But the one thing you cannot change is where it is. 

 

Tyrone Shum 

some of the realities of investing with others…

 

[23:06] Even though my brothers-in-law are very nice. Probably, they might be listening to this, who knows. But I just decided, I don't know if I'm a bit of a control freak, but I would prefer to do things on my own.

 

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

 

**PROPERTY INVESTING JOURNEY**

 

Koulizos' first investment was - perhaps like many of us - the family home. 

 

Peter Koulizos  

[20:13] So we bought our first house when I got my first permanent job in the country. And one of the reasons was because there was nothing to rent. And back then, as it is now, it cost just as much to rent a place as it did to buy a place you needed the deposit. So far as the weekly outflow was concerned, the mortgage repayment was about the same as the rent. So we bought a house there and had our first child out of the country. And then we bought our first investment in the first year, and we came back. We bought a group of units in the town we used to live in, and we still have them now. And one of the reasons is we had good cash flow, and we had the local knowledge, which is really important in property because the one thing you can't change in property is location. Local knowledge is really important. And so, we were comfortable with buying the group of units there. And then, yeah, that's where our investment journey started. 

 

Tyrone Shum 

At the beginning of Koulizos’ investment journey, not every property purchase was financially achievable alone. 

 

Peter Koulizos 

[21:35] The next one was a project, which was buying an old house on the big block. We got the planning approval to keep the house and build two at the back. We were in no position there to build. Because I didn't know anything about building, we needed big money back then. So, I said to my three brothers-in-law if we do this together, (and we're talking now in the 80s, right, so you couldn't go out for this price) Instead of you each giving me $6,000, I'll be able to give you your $6,000 back plus another $6,000. So, this was 100% return on equity, not 100% return on investment. But I didn't have any money. So, I asked one of my brothers-in-law to give me the 6 thousand dollars because I figured, you know, while I knew a bit about property, they had the money to put it together. And let's do something. And yeah, that's how I started. 

 

[23:07] Everyone got their $6,000 back. Okay, they got a $6,000 profit. So basically, we had to put in $24,000 for the deposit. Yeah, or the rest. Yeah, finish the project, pay off all the debts, I get that, and everyone gets their money back. Plus, they get that again, in profit.

While his group investing experiences have largely been positive, he wouldn't recommend it as a regular tactic.  

 

[23:06] We've generally done stuff on our own because when there's enough risk in investing anyway. But when you invest with other people, then you introduce business risk.  Even though they're the people you work with, you know whether it was my brother or my cousin - all lovely people and nice. Number one, they might not be the best person to do business with. Because they may not be business savvy, may not spend wisely, or they're really tight, and they won't spend at all. But the other reason is, even though the person you're investing in is really nice, you don't know much about their partner. And if it's a long-term project, you know, and things go wrong with the partnership of your friend or your relative, then you know that that puts some complexity into the project.  Then you might have to sell when you didn't really want to, or they are being influenced by their partner, which then puts pressure on you. 

 

So personally, I just find it's better for me and certainly easier to do projects on my own. But when I first started, I couldn't afford to do that. Yeah. So that people who are listening to this need to make up their own mind, just be aware that there are added risks when you do deals with other people.

 

Not all of Koulizos’ property investments have panned out perfectly, although he thinks that through every frustrating experience, he is continually learning. 

 

[26:48] Probably the worst was -for those people that know Adelaide, you've probably heard of Glenelg beach, which is the premier beach - Sydney's equivalent of Bondi. So, we had a property, just one straight back from the beach. And it was a group of 13 bedsitter units or studio apartments. And the location was fantastic. But the quality of tenants was awful. And it was going to be a long-term investment. But we only had it for six months; the market was going up, so we actually sold it at a profit, which was good. And now I see because it is so close to the beach, somebody's going to build some apartments on it, which is lovely. I'm sure they will make a mozza with it, but we don't regret selling because that was the best decision at the time under the circumstances. And so, that probably taught me a good lesson in local knowledge.

 

 So, it's not just about the suburb, but it's about where in particular in the suburbs. So which street Are you buying in? Which part of the street Are you buying in? And what type of property are you buying? Obviously, if I bought houses in Glenelg, I probably would have been better off as far as the quality of tenants was concerned. But you know, very small properties in poor condition, even though the land component was quite valuable. It didn't attract the best tenants. So that was a very interesting lesson.

 

For Koulizos, someone who understands the value of lifelong learning, these moments of realisation have helped him become a more savvy investor. 

 

[29:19] When I was doing my master's of urban regional planning. The reason I did it is because I wanted to learn more about it personally, not professionally, but personally so I could do more developments, but do it with an educated and informed mindset, rather than just hoping for the best. So, I cherry-picked the courses that I wanted to do. I said to myself, I don't need to do the whole masters, but I'll pull out when I stop enjoying it. I stopped enjoying it when I was writing my paper, but by then, it was too late. So, I just finished. I decided to write my paper and move on. However, the big lesson I learned was - and this is still true for anyone listening in - in Australia when you're looking at development. You're looking at the plans, whether they're developed by the Council or the state government, all of these plans are guidelines. So, where it says you need a minimum of 300 square meters per dwelling and a minimum of nine-meter frontage, that doesn't mean that if you have a block of land that's 290 square meters, they're gonna say no. Or, if it's eight and a half meters wide, they're gonna say no, because before then, I would look at sites and if it was just under whether it was area or frontage, I would just move on and look for the next one. 

 

But for me, that learning presented me with many more opportunities because it was the properties that were on the borderline that might get approved or may not that many people left alone. And more experienced developers were willing to risk it - now there's no guarantee, you know, you might buy. Let me do my math here on my head. You might buy an 870 square metre block, which allows you to cut it up into three 290 square metre allotments. But in the end, the Council says no, then what are you gonna do? So, when you purchase it, you are subject to council approval, or you may have worked out even if you can only get one there, you are still gonna make money. 

 

So, one thing that I teach in class is when you're doing a development - in particular, more so than a long-term investment - because time is quite forgiving in long-term property investment. But when you're doing a development - which has a short-term timeframe - you need to do a scenario analysis. What's the most probable outcome, what's the best outcome, but very importantly, what's the worst outcome, and if you're still making money in the worst outcome, you're in a pretty good position. 

 

Even though Koulizos has experienced so much success in both his professional life and personal property portfolio, he is proud to help contribute to the success of others. 

 

 [17:53] Well, I mean, thankfully, the kids that I had in my class that were taught money matters for kids, hopefully, you know, they picked up a few basic tips, and simple things like, make sure that you spend less than you earn, and make sure that you save some money. And investing is about some sort of sacrifice now for the benefit later. 

 

[19:03] That's one of the things that I'm thinking of doing when I retire, is I'll go back and volunteer in schools to teach them financial literacy. I mean, I don't know how much one person can do, but it's better than nothing. 

 

 

So inspired by Peter Koulizos' story, we'll keep the conversation going in a future episode of Property Investory. We'll talk about his strategy…

 

[28:32] The better the cash flow, the lower the quality of the tenant. If we're talking about residential property, commercial properties are a different story.

 

Keeping a cool head when circumstances change. 

 

[23:06] I had a development site in 2007 that I was going to build six on, and it was all good. And then the GFC came along and the bank said no, we're not gonna lend you money for six; we're only gonna lend you money for four.

 

And that's next time in a future episode of Property Investory.