In this episode of 'Invest Like A Pro', we discover how Loo always finds a way to sail through the perfect storm and emerge on sandy shores in the inevitable albeit seasonal doom and gloom that occurs in the property market. With a proven track record of success, he has constantly shown himself resilient with bulletproof properties he and his clients choose over the years. However, this time, he divulges the story of how he and his client washed up in Rockingham, WA—where there was $100,000 to be made in less than 2 months—and how they still came out stronger in the end.

Timestamps:
00:28 | The Perfect Storm
02:28 | Building Relationships— And Portfolios
06:44 | And the Winner Is…
10:43 | The Property Therapist
12:00 | Time to Relax… Or Is It?
13:47 | Make it Meaningful
14:54 | It’s Getting Rocky in Rocky
22:10 | Getting Excited About Equity

Resources and Links:

[00:19:54] We paid $480,000 for it in December 2022. [It was the] 10th of December specifically. And [on the] 27th of January, we did a valuation on the property, or the broker did a valuation of the property. And it came back at $580,000.

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 of Invest Like A Pro we’re chatting with founder of House Finder, Simon Loo. While some are focused on doom and gloom in the property market, Loo always finds a way to sail through the perfect storm and emerge on sandy shores. This time, he and his client washed up in Rockingham, where there was $100,000 to be made in less than 2 months.

Tyrone Shum:   

Always focused on the positives, Loo remains largely unaffected by changes in the market. This is likely because of the bulletproof properties he and his clients choose, which have proven to be seemingly resistant to the raging seas of the market. 

Simon Loo:   

[00:00:28] I think it's got a lot to do with the markets we operate in, the affordable housing stuff that we talk about quite a lot. During these times of inflation and interest rate rises, we find these areas tend to pick up. [They're] affordable. 

  

[00:00:47] I think the locations need to be very bang on though, for that perfect storm, shall we say, to happen. They need to be built up areas, large population, large population growth. So these areas, like what we're seeing in Perth and Brissie are experiencing quite a big demand. [For] investors and owner-occupiers alike. 

  

[00:01:12] But other than that [I've] just been flat out, getting deals, talking to lots of buyers. I think at the start of the year— I've been doing this for several years now— we always find there's quite a lot of excitement. Everyone sets all these goals for the new year and all that kind of stuff. 

  

[00:01:33] So while others go on break up until the 26th of January, which is fairly normal in Australia, we've just been flat out. [It's] part of the job, I guess, you just have to work with what your clients or what people have time off, so yeah, it's been pretty insane.

Tyrone Shum:   

[00:01:54] It sounds like a lot of new year's resolutions that came off this year. So that's excellent to hear.

Simon Loo:   

[00:01:59] Hopefully it transpires to actual results. Like, for a lot of people, you know how everyone goes through the 'New year, new me' thing? Similarly with, like, gym memberships, apparently they go through a massive spike.

Tyrone Shum:   

[00:02:12] January and February, and then after that, you start to plateau.

Simon Loo:   

[00:02:17] Daylight savings come back. If you're in the eastern states with daylight savings changes, that's when everyone goes back to default. Default zombie mode until October.

Tyrone Shum:   

[00:02:28] Exactly. So funny. All right, well, today, we've got an interesting one that we wanted to share with the audience, it's actually a deal with a client that's been with you have purchased numerous properties. Maybe let's paint the picture of the client's background, and maybe talk a little bit about his portfolio. Because he seems to be continuously buying a lot of properties from yourself, and also building a portfolio. So let's give a bit of background about him.

Simon Loo:   

[00:02:54] This guy is quite a long term client of ours, we're pretty much mates now to be honest. A lot of these relationships after a couple of properties, add a few catch ups as well, face to face, or at the pub, or the coffee shop, or whatever. 

  

[00:03:13] Anyway, he's down to eight properties to date, [and] we've been responsible for five of those properties. So over the past literally probably three or four years now we've been working with him, he's just been buying these properties one after the other. 

  

[00:03:30] And it's interesting, because our job is always to find these deals, where [they're] off market, below market, that type of thing, to pull up equity from. And a lot of cash flow. And obviously we've been successful with him with each of these properties. 

  

[00:03:51] And it's one of those things where I think investors and clients, they look at that, and when they experience, say, a $100,000 equity pool within a really short time of buying, I think they've maybe... I don't know, they start to look at different options, as well. 

  

[00:04:11] So a lot of the times instead of going, 'Oh, you know, what? This works, we should just keep doing this for literally 10 properties, build up a big portfolio and sell down a few and create passive income', this particular client after every deal, he'll go off and listen to maybe some other person with a different strategy or maybe get sucked into a development opportunity or something like this. 

  

[00:04:42] So, we always have these D&M type of conversations a few months after we pull out amazing equity from these houses. And the conversation is always aligned about how he's going to achieve his long term passive income goal. And he's like, 'Simon, I've been reading up about this opportunity, and it's a development site in some random local town' or something like this, whatever it is. And I've always have to kind of steer him back on course. 

 

[00:05:15] 'You buy these houses, you're making a lot of equity and the cash flow's really good. Some of the earlier ones we bought have pretty much doubled in value. Just stay the course, get yourself to a point where you've got a lot of passive income, and you're not working anymore'. He's still currently working nine to five. 'And [get] enough equity to actually properly fund, like, a proper development site, if that's the path you want to go down'. 

  

[00:05:46] Or if you want to get into commercial. We find the $1 million or $2 million or below type properties in commercial to be quite a lot more risky. Do commercial properly, get a site with, like, multi tenants, and, like, an IGA anchor tenant or something like that that's really going to give you a proper yield and proper security. 

  

[00:06:11] But yeah, it's interesting how, I think, because property is such a long term game, people do get sidetracked. And in Australia in particular, property is, you know, everyone talks about it, everyone thinks they know about it, whether you own property or not. And you're at the barbecue on Sunday, or if you're at work with your colleagues, and it's always you hear all these things. And it's really easy to become, 'Oh, maybe I should be doing this instead', or, 'Maybe what I'm doing is not the best'. But at the end of the day, I think results speak for themselves.

Tyrone Shum:   

[00:06:44] We can't compare, that's the issue that we see here. [It] is that if you're at a barbecue, and somebody's saying, 'Oh, I'm doing this and this and this', and then they are doing something that sounds more glamorous. They get to talk to them ourselves and say, look, there may be other issues that they're not revealing, because not everyone wants to show all the bad stuff when they're talking at a barbecue no one wants to be in a doom and gloom.

Simon Loo:   

[00:07:05] Exactly. Not even doom and gloom, I think property is, I think, for a lot of people, it is a competition. And it's not necessarily a competition as in, like how much I have. But a lot of the competition surrounds the whole how glamorous the locations or the property they own are, or maybe the type of property they own. So you hear a lot of people talk about buying into, like, a brand new development in the heart of, like, Sydney or something. And as we've all established, house and land and off the plan units are a terrible, terrible idea. 

  

[00:07:42] People invest for different reasons. And unfortunately, a lot of people invest with the shorter mentality in mind. What we do is not glamorous, but it actually makes a lot of money.

Tyrone Shum:   

[00:07:59] And it's fact, you've got to stick to fact, because it's very easy to be caught into the glamour and showing how good it looks and stuff, but if it's not making money, then why would you do that? So you've got to ask the question. 

  

[00:08:05] So tell us a little bit about this particular client. You've had really good meaningful conversations with him. And he's trying to stay the course. But what's his background? What industry is he [in]?

Simon Loo:   

[00:08:05] I won't say his name, but he's based in Queensland. He's got the family, [he's a] regular guy, really. He's a decent income earner, I will say that. He's a consultant in, I believe, the IT industry. So he earns a good amount of money, which has obviously helped him finance and build a portfolio of properties. 

  

[00:08:27] But I think for him, his goal was always to get to passive income. And he actually listens to this podcast, he will probably know who [he is, he] listens to these podcasts. And he just likes to absorb as much as he can, rightly or wrongly, because as you are aware, in our industry, there are a lot of spruikers and people out there trying to sell an agenda. 

  

[00:09:26] So, I think it's good to expand your horizons and pick up different strategies and see what people are doing. But I think equally as important, it's really important to stick to your goals. Or stick to whatever strategy you're working towards your goal, especially if it's working for you. 

 

[00:09:45] So, the conversations I have with him are always about... it always starts off as, like, 'Oh, wow, we got this equity out of his house. It's amazing'. And then, 'Oh, Simon, I'm actually thinking about doing this and that' and something completely different. It's staring right in your face, with this deal that I'll talk about in a minute, we literally made $100,000, like, free money in the past 50 or 60 days or something like that. And I'm like, 'Why would you sway from that? Like, what's the point? Like, what's better out there that's less risky?' 

  

[00:10:24] Because this house, also, I mean, the yield was huge as well. Like, not huge by WA standards, but in terms of, like, what it provides. It's good cash flow, solid house, all that kind of stuff, growth fundamentals. And I think it's a bit of a sort of motivational thing. 

Simon Loo:  

[00:10:43] And I like to see myself as a bit of a therapist sometimes, a property therapist. I have these conversations a lot with my clients, they'll always come back to me and say, 'We've done a few of these deals, thank you, Simon, we made a lot of money, but I'm also doing this now'. And I'm like, 'What's the point? What's the reason?'

  

[00:11:03] This guy [is a] great guy, really sort of positive, really energetic, obviously a family man who looks after his kids and stuff. But he just wants to achieve passive income. So he's actually almost there. Honestly, if he sold some of these houses— because I was recently sent his equity position on all these houses. And he's got... [I'm] just adding up quickly, here, I'm looking at the screen— he's probably got about $2 million plus worth of equity in all his properties at the moment.

Tyrone Shum:   

[00:11:37] So it's only been about three to four years since he's been buying more properties with you. That's amazing.

Simon Loo:   

[00:11:44] $2 million worth of equity, like, he could easily consolidate a bunch of debt there. Just sell off a few, have literally four or five houses just fully offset or fully paid off. And there's your $2,000 [to] $2,500 a week of passive income. 

Coming up after the break, we discuss the pros and cons of early retirement…

[00:13:47] I think at that point when you're not chasing a paycheck, the stuff that you do from there on out is just more meaningful to you.

How the Perth and Sydney markets aren’t so far apart after all…

[00:17:50] Even a decade ago, like if you had to live near the beaches in the northern beaches.

He dishes the details on the equity uplift.

[00:22:26] So I think that's exactly what happened, he got super excited. He's like, 'Let me see if I can get this on paper so I can pull out the equity'.

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

With nearly $2 million in equity, Loo’s client could easily pack up and call it a day. While some people would retire to a tropical locale with a drink in hand, they’ve got other plans.

Simon Loo:   

[00:12:00] But it's interesting. Like, even I knew this when I was building my portfolio. He's at a point now where he's kind of towards the tail end of building that initial portfolio. And people think, 'Oh, you know what, great, I'm just gonna sit there and do nothing now'.

Tyrone Shum:   

[00:12:16] Most people don't usually do that. Six months of doing that, you can get bored, I can tell you, that's what happens.

Simon Loo:   

[00:12:26] I did nothing for about three months, and I got incredibly bored. It's actually not boredom. It's actually like, the lessons you learn and the confidence you get, the new normal, I guess you can put it, of owning a dozen properties, or whatever it is, you just kind of think, 'There's so much opportunity from here on'. You've been opportunistic for the past 10 years [or] five years, whatever it is to get yourself to that point where you finally can say, 'I can quit my job'. 

 

[00:12:56] And it's like, quitting your job or not working is not as appealing, is never as appealing when you get to that point. All you're thinking is like, 'Maybe I should start a business now. Maybe I should buy more of these houses'. 

  

[00:13:11] I've always dreamt of maybe working for like a charity, actually being there at the at the front line, maybe in a disadvantaged country or something like that.

Tyrone Shum:   

[00:13:31] You want to do something that will impact, I guess, you know, give back to society. Because you've obviously got yourself to a financial position that you can do whatever. And when people get to that stage, I think having some time off is important, which is really important. But I think a lot of people want to actually do something that's greater than just sit around.

Simon Loo:   

[00:13:47] I think at that point when you're not chasing a paycheck, the stuff that you do from there on out is just more meaningful to you. And I think that ultimately creates more happiness, because really, that's the goal. Whatever you're doing, or whatever you're not doing, the goal— in my eyes, anyway— is to be happy. 

  

[00:14:07] But happiness means different things for different people, obviously. So, I think just not being burdened by the fact that you spend your days making ends meet, or in terms of, like, putting food on the table and paying bills and things like that, it kind of sets you free a little bit. But anyway, we're on a bit of a tangent.

Tyrone Shum:   

[00:14:27] It's important because the thing is is this is ultimately what your client wants to achieve. And we're talking about it in the sense that he is already going to be there very soon. And I guess once he gets to that point, what's he going to do next? 

  

[00:14:40] But what's important is to understand that the whole process that he's been going through is leading to that stage, and I think a lot of people miss that because they just want to get to that point, but they forget about the journey. The journey is to actually be enjoyed, not to just get to the point and go, 'Yep, I'm financially free now. What do I do next?'

Simon Loo:   

[00:14:54] I had this discussion with him, with this particular client, literally two days ago. And at the end of the conversation he was like, 'You know what, you're right, Simon. We'll do another two properties with you'. So here we go. I can't complain, obviously, he knows I run a business so it's good for me. But hopefully we can just keep replicating these equity pulls. 

  

[00:14:55] So this particular house [in] Rockingham, I think everyone knows about Rockingham by now. It's been one of those areas that's been talked about quite a lot in the past, I'd say, 12 to 18 months. And surrounds. Rockingham is not just the Rockingham suburb itself, but there's a tonne of area right from Rocky down to Dawesville, even, which is quite far south, that's getting hit hard at the moment. 

  

[00:15:49] And it's been hit hard because there's just a lot of people moving there. Comparatively, if you look at where Rocky is, from, like, a social economic standpoint, it has always been considered, like, a bit of a low socio area. But the fact that it's currently changing, or has been changing rapidly, is where a lot of the growth that we're seeing is happening.

  

[00:16:17] Similar to all the other stuff that we do, we kind of go to where people are starting to move to, to live in. We're finding Rocky and these areas, from a balance of a lifestyle/being close to the city perspective, it's pretty attractive at the moment. So that's currently why it's going through a bit of a bit of a boom.

Tyrone Shum:   

[00:16:44] And affordability as well. And that's what we saw back in Queensland, when the prices were at a very affordable price, people were moving in droves. And then as soon as that starts to go up a little bit, obviously, as investors we make money from that. But at the same time, I guess it starts to balance out and become sort of the next sort of medium suburb that's, I guess, not as affordable as it used to be. But it's still owner occupied very much in that, and I'm seeing a lot of these things happen as you're saying with these suburbs.

Simon Loo:   

[00:16:44] Absolutely. And I think, like, just Rocky in particular, obviously, you've got the beaches there. You can get four bed houses, if you're paying retail for them, near the beach, decent houses are around about the $500,000 [to] $550,000 ish mark for, like, a four bed, two bath, two garage, brick house, that type of setup. 

  

[00:17:31] And obviously, proximity to Perth is not that far either. So if you look at all the capital cities in Australia, including the smaller ones, like, you just can't achieve that anymore, like, being like close to the beach, being that close to the city for $400,000 or $500,000, even $600,000.

Tyrone Shum:   

[00:17:47] Like a decade ago for us in Sydney or more.

Simon Loo:   

[00:17:50] Even a decade ago, like if you had to live near the beaches in the northern beaches. I remember maybe 15 years ago Dee Why was considered like a pretty low socio area in the northern beaches. And obviously now it's completely different, you know, it's, it's completely flipped on its head, it's a very sort of premium expensive area now. 

  

[00:18:13] Similar with if you look back even 20 [or] 30 years ago, like Maroubra was considered like the heart of the low socio. But now, to get into Maroubra, like, you've gotta be doing pretty well in your life. 

  

[00:18:30] So it's funny how the times change, but the fundamentals don't. Physically, the reason why Maroubra and Dee Why went so crazy was geographically, how can you beat it? Right near the beaches, really good lifestyle, you're close to the city— not Dee Why, but Maroubra. But yeah, over time, that's the kind of stuff that gentrifies really quickly.

Tyrone Shum:   

[00:18:54] And that's what we're seeing in WA at the moment with Rockingham.

Simon Loo:   

[00:18:59] This house, off market as per normal, I think it's crucial nowadays. Like, honestly, there should be no excuse, especially in this sort of weird market.

  

[00:19:16] It's a little bit different in Rocky because the demand is still there. But the amount of people, like, fighting over houses, we're not really seeing that kind of activity anymore.

  

[00:19:31] Getting good deals should be like normal now, if that makes sense. 

  

[00:19:35] So off market, it's a four bed, two bath, two garage house, 600 square metre block, so decent sized block. This house is closer to the points, if you know Rockingham. It's closer to where the Esplanade is and all that kind of stuff. So it's quite a good location. 

  

[00:19:54] We paid $480,000 for it in December 2022. [It was the] 10th of December specifically. And [on the] 27th of January, we did a valuation on the property, or the broker did a valuation of the property. And it came back at $580,000.

  

[00:20:16] So in the space of, what is it, 40 [or] 50 days, there was $100,000 uplift, like equity pull. 

  

[00:20:27] And this was after it settled. Because I'm sure some listeners are aware that sometimes if you get a bank valuation before a property settles, it can come back a lot higher, especially if it's like a computer generated valuation, what we call a desktop valuation. 

  

[00:20:46] But this one was like, it was all settled, it was all done and dusted. And the bank, like, such a short timeframe, that was actually surprising to me that the bank would be like, 'Hey, this house was settled literally a month or two ago, here's a completely new valuation of $580,000'. So obviously, it was great.

Tyrone Shum:   

[00:21:06] I just don't understand this. Why did the bank provide a valuation? Was it requested? 

Simon Loo:   

[00:21:10] It was definitely requested.

Tyrone Shum:   

[00:21:12] Because usually they don't provide a valuation until after three months, until the property sort of settled. Because obviously [the] market changes. So that's quite surprising, you know, like, 50 [or] 60 days, that's less than three months. Why were they able to get another valuation that soon?

Simon Loo:   

[00:21:29] I actually [am not] aware, sorry, of the specifics of how this valuation came about. But I do know that we just noticed that especially towards around mid January, that there were a few... after we bought that house, there were a few very, very similar houses that popped up as sold for a significantly higher amount of money. So I think that's what prompted [it]. 

 

[00:21:57] And I love doing this, like, when we buy a property for a client, like, a month later, I'll send them a quick message with a link to a property that literally just sold like down the street.

Tyrone Shum:   

[00:22:07] Just to show comparables. 

Simon Loo:   

[00:22:10] 'We paid $480,000 for this, this one sold for $580,000', just to get them excited.

Tyrone Shum:   

[00:22:17] It's important, though, because I think I'd be very, very pleased to hear that as well, too. Then it'd be like, 'Okay, what I do next?' Equity pull and then move on to the next property.

Simon Loo:   

[00:22:26] So I think that's exactly what happened, he got super excited. He's like, 'Let me see if I can get this on paper so I can pull out the equity'. I mean, this isn't his first property, this is his eighth property. So he knows the drill. And the broker— who appears actually regularly on your podcast as well— he sort of made it happen. 

  

[00:22:47] And yeah, here we are, we've gotten this amazing amount of equity out [in] such a short amount of time. So that's kind of why I'm always questioning why people will have the need to kind of think, 'What else is out there?' That type of thing. 

  

[00:23:04] And I think I know why, but, like, to be honest with you, these houses are pretty dry. But they're pretty boring. But boring works. And you almost want boring.

Tyrone Shum:   

[00:23:17] Tell me about it. I mean, I do not want more headaches, seriously, like, because I've run development too. And I do finance and all that and [the] amount of headaches, I kinda just wish I'd done what this guy is doing. Because it's just so boring. It gives me free time to be able to do other things then. And the less headaches [the better]. 

  

[00:23:32] I'm not saying that development is not good. I'm just saying that we all want a stress free headache-less life when it comes to these kinds of things. If you can just build a portfolio and keep it simple, the KISS principle, then I think everyone probably will enjoy it. But we as human nature just want something new all the time. That's how we're wired.

Simon Loo:   

[00:23:51] It's not a bad attitude to have, like, to challenge yourself sometimes. But I think you need to be in a position to mitigate risk as well. I feel like a lot of people get ahead of themselves with property being such a long-term game. 

  

[00:24:02] It's natural for people to just expect something new, something different. But we love this boring stuff, like, this house is a single storey brick house, four beds, two bath, two garage, everyone's seen a million of them. 

  

[00:24:16] We even focus specifically on single storey houses because we find the double storey houses tend to have more maintenance and also they appeal to a less wider audience when it comes to renting out. So obviously if you're an older couple you can't rent the two storey house because you've got stairs and things like that. 

  

[00:24:36] So these [are] stock standard, almost tank like properties. The house is standard looking, just brick all the way around, like, backyard, grass. That's it, that's all you need. 

  

[00:24:49] So anyway, bought it, rented it out. We paid $480,000, it rents for about $540 a week. So decent cash flow, not spectacular, but decent. Decent enough to keep it as a good house. But yeah, the silver lining was definitely the valuation.

Tyrone Shum:   

[00:25:07] And the equity uplift in that one there. How long did it take to rent that place out? Was it straight after you settled? Or did you guys already have a tenant? Did it take long to rent it out?

Simon Loo:   

[00:25:18] It was straight after we settled, pretty much. I think it took, like, maybe two or three weeks. It was during a time that the rental market is not the best. We find that December, actually, maybe from, like, the 10th of December onwards right up until the 26th of January, Australia Day, this period is always the hardest to find a tenant.

Tyrone Shum:   

[00:25:45] Everyone's on holidays. 

Simon Loo:   

[00:25:47] No one's moving around this time, everyone's thinking about holidays and things like that. 

  

[00:25:53] And interestingly, as well, if you're buying a property, this is the best time to buy. Because obviously all the buyers have gone off [and] got away, they're thinking about having fun. But people are still getting divorced, people are still losing their jobs, people are still in situations where they have to sell a property urgently.

  

[00:26:11] And I just want to stress as well, it's not about taking advantage of these situations. We don't, like, target people, 'Oh yes, this guy's just got a divorce, let's go after him'. I mean, these houses, a lot of them just need to sell urgently. And if there's just not a lot of competition on the ground, then, as a buyer, as an investor, you need to be ready for these deals to come through.

  

[00:26:37] So, [it's a] solid house, solid property, and now...

  

[00:26:40] ...the guy that we're working with, he's going to be using this equity to buy more houses, and hopefully continue the journey.

Tyrone Shum:   

[00:26:53] Fantastic. Well, that's been a really, really interesting story. And thank you so much for sharing that, Simon. I think this one definitely tops off for one of the fastest ones I've heard as well.

Simon Loo:   

[00:27:04] Honestly, it's even surprising to me. Normally, like you said, the three months to six months timeframe is more standard. But to see it happen so quickly is definitely something worth talking about.

Tyrone Shum:   

[00:27:22] Have you had a chat quick chat to him to find out what he wants to do now with this equity pool?

Simon Loo:   

[00:27:25] A couple of days ago. He was talking about doing all these other things and I think talking about getting into commercial and things like that. And I'm like, 'Look, there's time and a place for it. We just made $100,000 in two months'. Let's say for the rest of the year, there's  obviously six times two month periods. We do that every time, that's $600,000 of free equity on these houses. I'm not saying it happens every time all the time. But if it's not broke, don't fix it. That was the message.

Thank you to buyer’s agent Simon Loo, our guest on this special episode of Invest Like A Pro presented by House Finder. 

Also, for being a loyal listener of the podcast, I’ve asked Simon to offer a free 1-hour strategy session normally valued at $500 to help you put together an actionable property plan.

To get your free strategy session, simply visit housefinder.com.au and fill out the contact form, or call Simon directly on 0415 626 342 and quote “Property Investory”.