In this episode, Bates will share the travelling stories that shaped his worldview, including exploring the beauty of countries such as India and Egypt. As well as this, learn how to find success without a university degree, and a common investing mistake involving supply and demand issues.

Timestamps:
2:04 | Reaching Dreams
5:15 | Living a Nomad Life
7:33 | Creating a New Life
9:17 | Experiencing Other Countries
11:55 | Coming Home
14:51 | Founding a Business
17:45 | The First Step
18:43 | Learning From Others
26:52 | Finding Success

Resources and Links:

[23:16] That career advice that, I think it's lacking out there for a lot of people. It forces people to go to uni and then just get professional jobs. And it's not about following purpose and passion.

 

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 Chris Bates, founder of Wealthful.

He will share the travelling stories that shaped his worldview, including exploring the beauty of countries such as India and Egypt. As well as this, learn how to find success without a university degree, and a common investing mistake involving supply and demand issues.

 

 

 

Wealthful is a mortgage broking business with the goal to help young families build financial wealth and allow them to live a fulfilling life.

 

[0:49] It's been going for about eight years. Fortunately, it's been going really well, especially in the last few years. We've been able to grow [a] pretty big team and we've sort of grown into one of the bigger, sort of smaller boutique mortgage brokers out there.

 

[1:02] All [of] our clients are sort of young couples [in their] 30s [and] 40s, you know, families, etc. And they're mainly doing one of three things. [They are] either buying their first home. Maybe they've left it a little bit later, and they're thinking about doing a big upgrade or a renovation. They're sort of having that dilemma on what to do first and how to make it happen.

 

[1:22] Or they're a little bit further in the line, they've got a happy home, and they're like, 'Okay, let's, how do we sort of do things for our retirement?' And so, generally, that's sort of what we do. Our average loan is much higher than most brokers. It's probably the, one to 1.5 per client, whereas most brokers are sort of that sub a million mark. And, yeah, that's a bit about us.

 

 

With his business performing so well, Bates is smashing his professional goals. As well as this, he is also reaching dreams in his personal life.

 

[0:38] [I’m] married to my wife Melanie [and] I got a couple of young kids under two. Two under two at the moment.

 

[1:46] I probably can't say that anymore. She had a second birthday on Tuesday. So, I shouldn't, I need to change my lingo. Two under two and one month.

 

Bates considers himself to be extremely lucky to have two children — One girl and one boy.

 

[2:13] My daughter's amazing. I've always wanted to be a dad and so when that moment happened, you know, I did want a daughter first as well. And we're very lucky to have that. I think it's so special. She's amazing. I just, that's what we, you know, yeah.

 

[2:27] It's hard to sort of put into words what it means to be a dad. And yeah, she's at this age now where she's sort of communicating. And she's talking back and she's, you know, telling us what she wants, which is an interesting sort of step from not being able to have those conversations.

 

Evidently Bates’s family is a massive priority in his life. This means that he has a short work week.

 

[3:05] I run a pretty tight, because we've got a pretty decent sized business in terms of clients, and we have a lot of clients coming to us. So, I at the moment, just due to family commitments and what I value, I run a, you know, basically [I am] only working around 30 odd hours a week. I run nine to four, four days and [I] have Friday mornings off.

 

[3:27] But what am I doing on those hours, is my role is to do the strategy for clients. So, I will do, like today, [I will make] probably five to ten calls of new clients who come to us, and we're really talking through what's happened in their past, where they want to head, what are they doing with their current properties, what are their challenges. And then we come up with a bit of a plan on what's the next best move. Then we'll get documents from them [and] the team will make it happen from a loan point of view once we've done the strategy.

 

[3:53] So, all day, every day, I'm just talking to people. I'm producing content, making podcasts, writing posts on LinkedIn, touching base with existing clients when they're, you know, [have] changes in their situation, what are they going to do next? And so my role in the business is just really to find the clients, though mainly is producing content or relationships that people refer to us.

 

[4:16] And to do their strategy. To figure out what's the next best move. We don't buy a property, we [are] massive believers in quality buyer’s agents. We've got an, as soon as I hear of someone who's good that's not in our network, I'll go and suss them out and potentially add them. But we refer to individual buyer's agents in individual pockets all over the country. So, not one company, we took over 20 in Sydney, for example.

 

On the days that Bates does not work, he spends quality time with his family.

 

[4:56] We're massive believers, not believers, but massive lovers of nature and travel and exploring. Usually, one weekend a month we're going somewhere, obviously only in Australia [for the] last couple of years. But we use it, we are massive lovers of travel and nature. So, if we're not travelling, we're going out hiking and walking. We just, you know, the best things in life are free to be honest. It's just sort of being out and about and we're very fortunate we live up in the northern beaches, so we're surrounded by water and nature.

Bates was born in Melbourne, but he and his family moved due to his father’s job.

 

[6:46] We moved to Newcastle because he was in the Air Force, and it has the big RAF base. He ended up leaving the Air Force and we ended up just staying in Newcastle. Yeah, for all my teenage years.

 

[7:24] I went to Lambton High in Newcastle, and I never really connected with schooling. I would do well, [I got] fine results, but the actual schooling process and sitting down and learning things, I didn't. And so, I had a very different type of brain.

 

[7:07] I think I had always a brain that was, I was very fortunate that I was good with numbers. [I'm] not just not being arrogant, I sort of was. School was not really a challenge for me, per se, especially in those numbers subjects.

 

After finishing high school, Bates followed the expected path and went to university.

 

[7:51] I sort of went to uni for a year. I studied commerce.

 

[7:41] I was always did well financially, well not financially, but in results. But it was never a typical sort of, you know, straight A student [that was] just loving studying. I wanted that real life world experience more, I guess, then those days.

 

[9:09] So, I didn't really want to do that study. I wanted to get out and work. So, I got an apprenticeship as an accountant. I guess you'd call it a traineeship. And I was doing uni part-time, but I could, even after a year of being, I was sort of well ahead of where I should be.

 

[9:26] And I was doing things that people were doing it for five or six years in that accounting practice were doing. And I was like, look, if I'm gonna be doing this in another five or six years, I'm going to be setting myself insane. So, I moved to Sydney because I thought, well, maybe I want to become a funds management, and I want to become an investment banker. So, I got a job at Platinum.

 

[9:42] But then after 6 [to] 12 months in the administration, sort of investor services side and making friends with lots of traders and the investment bankers there, I could see that a lot of them were extremely stressed and extremely unhappy and [they] were working stupid hours and they didn't really have much meaning. And so, I didn't feel like I want to be an investment banker, I guess. And then I met a financial advisor and thought, you know what, this could be a better direction for me. And so, I moved to London and became a financial adviser.

 

 

After watching his sister successfully create a life in London, Bates knew that he could do the same.

 

[10:27] I was only 20 at the time and so I thought, ‘Look, go and experience’. I knew that I could potentially get a job over there as well. I made a few inquiries, and I was like, yeah, this will be fine.

 

[10:39] I can, the benchmarks of financial advice are really quite low in terms of the study requirements. It's something that's improved over the last 10 years. But this is back to 2007. So, I made a financial advisor.

 

[12:42] You can become an advisor after a month [in London]. Pretty scary, to be honest and you could do that in Australia, up until recently. They've just finally increased the standards to a degree in Australia but back in the 2000s, I guess you'd call it, it was very low. And after a month, I was out there advising people and it was pretty, pretty scary.

 

[13:06] And that's where I actually got kicked out of the first bank. I was their top advisor in the area because I could see what, I actually got access to data that I could see the whole bank was mis-selling products. And I raised it, and we had arguments with a boss. And I thought, you know what? The grass is greener, I'll go to another bank. And [I] went to another bank and so it was pretty much exactly the same.

 

[13:26] Years later, all that bad advice actually came out and the banks got into a lot of trouble over it. But I could see it firsthand because I could see what I was doing versus the rest of the country and say, 'look, this is they're just mis-selling products'. And so yeah, [I] made a real sort of, that first five years in advice, I was very conflicted. Because I was very passionate about helping people [and] making sure we're doing the right thing, but I could see the industry was heading in the wrong direction, and it wasn't giving great advice to be honest.

 

While he was in London, Bates took advantage of his ability to travel.

 

[11:14] We did lots of travelling and [I] had an amazing group of friends that were probably all around 10 [to] 15 years older than me to be honest. And yeah, I'm still very close to a lot of those friends now. It was such a special time and I think it was also interesting to do at such an early age. It made me become very independent, [my] friends allowed me to mature a little bit faster. I, just in terms of networks.

 

[11:42] And yeah, seeing the world and especially travel does that. It sort of makes you understand the world on a bigger level.

 

[14:18] We went to sort of Shemini, sort of skiing. We went to obviously all your Berlin's and your Prague and all those sorts of cute little towns. Paris, we used to go to Paris quite a bit because you know, [you can] just jump on the Eurostar and straight down, you know, food you've never tasted before. I mean, the travelling that really sort of resonates with me is the travelling that we did after London.

 

[14:41] It's the places like India and Africa [and] Egypt. Obviously, Egypt is in Africa. Now they're probably the holidays that I really love the most. You know, Sri Lanka. You know, where we're just looking at nature to be honest and getting to really be a part of the community and etc. So, we really just go and look at wildlife.

 

Travelling to those countries played a big role in shaping Bates’s worldview.

 

[15:35] You do come back a lot more grateful. You won't whinge about the things that you used to whinge about. You see things that aren't fair, and you see things that are tough for people, but you also see happiness. They can be, you know, people are very happy around the world with very little and it's not the other things that make people happy. And you actually form really close connections with the people you're travelling with, or people, etc.

 

[15:59] So, I just think it makes you a lot more grounded and you understand what really matters in life a lot more after visiting these places. But there's so much beauty in these places as well. Yeah, maybe they're crowded but, you know, India is absolutely stunning. Especially when you get up into places like the mountains. Africa is just unbelievable in terms of wildlife, etc.

 

[16:18] And so, I mean yes, you've definitely got the issues with populations and standard of living, but then you've also got beautiful countries in these places as well and beautiful people. So, I find a lot more benefits going to places like that, then I would going to say New York or London or a major city. And that's obviously really just a carbon copy of each other, in some sense.

After living and working in London for four years, Bates decided to come back to his roots in Melbourne.

 

[17:49] My grandfather wasn't very well at the time and that was one of the reasons why I came back. I was like, if I don't go now and something happens, then I'll regret it. And it was what turned out that way unfortunately, a couple years later he did pass away. But I spent two years living in Melbourne and seeing him every week.

 

[18:07] And was that after living in London and living in Sydney for a bit, I hadn't scratched that itch to be honest. I still wanted to sort of see a different part of Australia and so, living in Melbourne for a couple of years. It's been also great, because I mean, my Nana's still there and my dad’s still there. So, I know Melbourne really well and I do visit them quite often. And so, we've got lots of clients who are buying in Melbourne, and I can really guide them on that journey as well, because I know the city really well.

 

When he came back to Melbourne, Bates continued to work as a financial adviser.

 

[18:42] I still work as a financial advisor in 2011, and I joined a practice that was offering quite cookie cutter advice. So, it was a type of business and then I thought, 'look, I'm not sure if this is really for me anymore, I need to get into a better practice'. And that's when I took a bit of a turn, I went from working with a lot of older clients [in their] 50s, 60s, 70s [and] 80s. That's traditionally where most financial advice is driven, to help people retire, basically. And I joined a company that really worked with [people in their] 30s and 40s, and that was Property Planning Australia. They're quite well known in the mortgage broking industry [and] they're based in Melbourne.

 

[19:20] And I joined as a financial advisor within that business. And after about 12 [to] 18 months, I was like generating a lot of new clients for the business in different ways. And I also wanted to control the conversation around the mortgages and the advice around that, rather than just the insurance and super and other things. And we were doing joint meetings with mortgage brokers, and I thought, 'You know what? I just want to become a mortgage broker. I just want to be the one person driving that rather than the conversation going in a different direction than I think it should'.

 

[19:55] And so, I became a broker then. So, I was working as a financial advisor and a broker. You know, we kept our financial advice and started kept doing that till 2020, it is only a couple of years ago. But in parallel, we were growing ourselves as mortgage brokers. And we now work with lots of financial advisors. We kind of carved out a niche in [the] financial advice world, where people had seen that we became brokers and had seen our success. And we really just focus 100% on the property discussion with young clients and so a lot of financial advisors were referring to us and, so they still refer to us now. Because they know we understand what quality advice is and how to work with them.

 

Bates founded Wealthful in July of 2014.

 

[20:48] We're coming up to eight years now and it wasn't called, it was called Canopy Private. I was a little bit torn whether I wanted to work with a lot of wealth management clients still, or just go for that younger clientele. And then we shifted to Wealthful I'm not exactly sure, maybe 12 [to] 18 months into business.

 

[21:12] I, it was at an interesting point in time in the business where I was very passionate around wealth [and] moving into the right direction. I was frustrated with [the] wealth management industry, because it was all around numbers and making money and profit and it lost the whole meaning of what it's all about, and that's actually true wealth whilst it's in many forms. Whether it's health or family or relationships or experiences or purpose, etc.

 

[21:37] And so it was just really a play on that to talk more about true wealth. And make people really understand they are wealthy, and this goes back to those travel discussions. It's all about your mindset or your perception of what's wealth. And so that's where it sort of came from, sort of mindful wealth and to think about it in those terms. But yeah, it still is a bit misunderstood to be honest.

 

[22:01] I think people when they see the word wealth, they think naturally to money. It's hard for people to make that brain switch.

 

 

Coming up after the break, we hear about Bates’s first investment property…

 

[24:33] We bought a house in Melbourne a few years ago.

 

He shares common mistakes made when investing…

 

[25:47] We know exactly what doesn't work through looking at all that they've done over the years.

 

We’ll learn how to identify low risk and long term investments…

 

[4:44] I do a lot of reading around sort of how cities form, I'll track every development, etc.

 

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

 

 

For his first investment property, Bates stuck to an area inside of his comfort zone.

 

[24:18] [It] was about four or five years ago. I used to do a lot of shares all through my 20s. I had margin loans and there's a lot into the sort of the business to start-up and travelling etc. But we bought a house in Melbourne a few years ago. Yeah, it was a tough market. It was sort of 2015 [or 20]16 and was when the business could have the income to do it. And yeah, it was just sort of house in the north of Melbourne.

 

This property became a principal place of residence for Bates and his family.

 

[24:55] We did live in it. So, we got sort of six years sort of tax free exemption. The idea was if we did stay in Melbourne, then we could sort of renovate it and live in it. But if we decide to leave Melbourne and move to Sydney, then we will buy a house in Sydney, for example, and keep it as an investment and we still got it down there now.

 

A property investment journey can be viewed as a learning curve. Bates takes away the lessons learnt from his clients.

 

[25:36] I think that the learnings is out there, through all the clients. We speak to over 700 new clients last year, and then if you multiply that over the years. We know exactly what doesn't work through looking at all that they've done over the years. For us, fortunately I haven't gone and bought down the quantity strategy, or just focused on getting properties.

 

[25:57] We made a, we bought that, then we bought another house, and we've done a big reno on that, and then our next decision will be another block of land and do a build on that. And so, we've always believed in the quality over quantity strategy. And we're very fortunate as well — We bought up in the northern beaches in Sydney pre Covid, and so that's done very well for us, as well.

 

[26:17] But what works for clients is buying in aspirational parts of capital cities, where there's higher incomes, and buying assets that they would really love as a family. Things that are in scarce supply and things that they're willing to go into a lot of depth for. And that’s the stuff that's gone up a lot in Brisbane in the last 12 months. [It] is the stuff that's gone up a lot in Sydney and it’s [the] stuff that continues to go well in Melbourne. And that's what we follow ourselves and that's what we would recommend our clients to do.

 

Bates has noticed a common investing mistake, involving supply and demand.

 

[27:11] I think it's all comes down to simply thinking about things from a demand and supply [view] and really going back to. I know that sounds so basic, everyone's like, 'Yeah, no, I get it, I get it'. But a lot of people don't apply it, right? So, if you think about things, what doesn't work for a lot of people is apartments, for example, and definitely high density, etc. The reason is supply. And secondly, the demands not, you can just keep on building more of them and the problem is that demand is always not the greatest of demand.

 

[27:38] You know, high income families don't want to be raising their kids in high density apartments, they want to be buying houses, etc. So, you have a demand issue, but you also have a supply issue. The same thing is when you might say, 'Well, I'll buy a house in the outer suburbs', for example of capital cities. Well, yeah okay, maybe supply is limited, not always because there's Greenfield estates, but then also the demands not that strong. The higher incomes generally gravitate towards closer to the city, where there's greater lifestyle, when they start doing better.

 

[28:06] So yeah, you might have a supply restriction in some sense, but demand, income growth sort of there, etc. That's why we don't really believe in sort of the quantity strategy and playing in those more affordable markets. So, generally, a lot of new property hasn't worked for really anybody. Now people have got lucky with off the plan purchases at the start of a boom, and then have sold their [property] off the plan. You know, it may be just that settlement, etc. But very few, that doesn't work.

 

[28:33] We very much rarely see even people doing duplexes and things like that was fine. A lot of people buy the land too expensive, they overspend on the build, and then the market shifts over that timeframe to get it done. We haven't seen much success in that space. So, it's really the people have come to us, and they've got the most lots of properties. To be honest, they're the ones who usually are in the biggest mess, and we usually have to unwind their portfolios. There was even one yesterday, he's had to unwind it and he bought a house in New Farm in Brisbane two years ago, that house he paid $1,800,000, it's probably worth over $3,000,000 now.

 

[29:10] So, he had eight properties I think it was, seven or eight, he's gone down to still got two of them. But then he shifted his borrowing capacity into a quality asset and that's where he's made all his money. Through a simple decision and buying a quality asset and so, the people we've seen do the best, is the people who have just gone and carefully just bought a quality asset and kept it. And focus on that rather than trying to buy as many properties.

 

Since Covid-19 and people beginning to work from home, the issue of supply and demand has shifted.

 

[30:20] I think prior to Covid, there was a real pressure that time was the most important thing for people, and they had to get back to their house as quick as they can and they didn't want to spend an hour on the train twice a day, five days a week. And so absolutely, they'll pay a premium to reduce their commute time right. Covid shifted that and so what it does, it did it created people to look at areas that are great lifestyle, but are a bit further away, and the train stations didn't matter as much.

 

[30:46] So, what it is is shifted demand obviously to pure lifestyle locations, like the Byron's and Sunshine Coast, etc, but it also moved it to the sister cities. You know, the north of Wollongong, the central coast, the Mornington, Geelong. But it moved to the premium parts of those markets because if people said they're going to leave the inner ring of Sydney, they wanted the premium end of the Central Coast. So, places like Avoca went up a lot there and Thirroul in Wollongong. You know, the real nice pockets in these lifestyle.

 

[31:15] Not everything in these locations went up anywhere near as much as the premium end. That's definitely what happened is you will find people willing to space is more important, obviously, because they are working from home and so they, before they would want to hug the train lines but now, they're willing to go a little bit further and maybe it's a double leg commute and they allow a bus to the train station they're willing to look at.

 

[31:40] So, places like in the upper north shore of Sydney like St. Ives and things like that, they became much more desirable because it's a great place to live but commute was holding it back before. Where we are is exactly the same. Commute people are willing to commute from further and so, I do think quality sort of shifted because the commute wasn't as important to drive whether people were moving there as much.

 

Bates does not think that this is going to change.

 

[0:32] I don't think it's going back. I think top talent are demanding flexibility, they've had a taste of it and if they are going to apply for a job, they're going to make sure that that's a part of their terms and maybe the [people in their] 20s and 30s, they're going to want to be in the city to get those promotions and things like that. But a lot of the top talent in that 30 to 35 plus range, they're going to want flexibility. So, then the whole company is going to have to offer etc. And so, the return to work thing, I think is potentially in some form, but I don't think it's going back to five days.

 

[1:02] So, we are sort of pro places that are commutable to the city. You got to remember as well though, is that the places close to city will always be super desirable because a lot of jobs, especially business owners, they don't want to be working from home a lot. And so, a lot of execs, they need to be on the ground. A lot of positions, they can't just work from home, they need to be out in construction, for example. And if one party, even if it's the husband or the wife has a job that requires maybe they're in the hospitals or something like that right, they can't work from home, then that the commute problem starts again.

 

[1:39] So, you also find that the inner rings properties will always do really well. A lot of people do like that city vibe, and that city in and out. Especially people who aren't from Australia. They've grown up in smaller places all around the world and they say, 'If I'm going to live in Sydney, I'm going to live in the action'. So, when migration kicks off, again, is you'll find that a lot of people from around the world are more than happy to have a bigger two bedroom apartment or a three bed apartment somewhere in a lifestyle location around the capital city, around Sydney in particular. Because they, you know, their friends and families come and visit from around the world, they want to be in the action and they're more than happy to live in a smaller space.

 

[2:22] So, we're definitely for inner ring property still. And we do think that as the city gets bigger [and] busier, and the roads get busier, and the public transport gets busier as well, the pressure cooker, especially if populations in Sydney, for example go from five million, to six million, to seven million, to eight million over time, those commutes become harder and that then puts pressure again back on the inner ring. So, you've got to be gutsy to say the inner rings gonna die. I'd say the inner ring is going to be super strong. So will the lifestyle hubs and so will the bigger houses in the lifestyle hubs in the middle and outer ring.

 

After hearing about common investing mistakes, let's look towards the flip side. Bates shares one of his ‘aha’ realisations.

 

[4:43] Look, I think it's [that] I do a lot of reading around sort of how cities form, I'll track every development, etc. And I think once people understand how a city is going to grow, and how you've got little sanctuaries and nimbyism in capital cities and heritage overlays, etc. You can start to really formulate that these pockets will be great longer term, and they've got lower risk because they're likely to be offering the same lifestyle benefits long term. And as the city gets bigger and more places get knocked down and rebuilt, these sanctuaries become even more desirable.

 

[5:16] So, I think that it's just really through those constant sorts of research and understanding how the city is going to grow, you can then form, apply that in really any city to be honest. You know, you could say, 'Well, where do people in this city that are doing well financially, where do they want to live? You know, why do they want to live there? What's the reasons?'. It's the type of housing, the lifestyle benefits, it's the bigger blocks, it's that heritage overlays, etc. And so, you want to be in these parts of the market, no matter where you're investing, rather than the more affordable part of the market.

 

 

We’ll continue to explore Chris Bates' journey in a future episode of Property Investory. We’ll hear about his strategy…

 

[10:11] I think the hot buy and hold strategy is the best strategy.

 

The resources that Bates used to kick off his own property investment journey…

 

[6:25] I really love Pete Wargent. Pete is a very smart chap who really understands a lot around property and does a lot of research. And so, I'd say his blogs was definitely a key part of the picture.

 

The best advice that Bates has received…

 

[22:07] Go out and see the world and invest in yourself and invest in your knowledge. And just really have a crack at it and believe in yourself.

And that’s next time on Property Investory.