Plus, find out how well-versed he is in doing his due diligence and in knowing the top tips and tricks when it comes to navigating the property industry.

Timestamps:
00:00 | Dedicated to Data
05:48 | Growth Areas
09:03 | Busy with Businesses
16:49 | If You Can’t Beat ‘Em, Join ‘Em
18:48 | Technology
22:28 | Cooperating
26:34 | Turning Point
35:52 | Now and Then

Resources and Links:

[00:18:48] So if you look at that, exclusively real estate agents were our customers. And as real estate agents were competing [against] each other, you would start generating very bespoke reports. And the first one was the comparable market analysis.

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 back with Joe Rossi, the National Sales Manager for National Property Group. He explains the history behind the companies he’s worked in, the introduction of pricing information to the market, and the method he used to get a small company snapping at the heels of the industry giants.

Rossi is passionate about developing training programs to help property professionals gain insights into their business and investment decisions. As a property data systems and software specialist, he has a wealth of knowledge to share from the good stories to the not-so-good.

Joe Rossi:   

[00:00:00] I think the worst deal was buying off the plan in Balmain. They were two storey apartments. And a lot of stuff wasn't... like, the settlement, the handover, and then the ongoing problems we had with that particular block. 

  

[00:00:20] And [we] basically said, 'We've had enough of this place, let's sell it and get out'. And we usually would hold longer, remember I said I like to hold. And if you're gonna make a lot of money, that's how you make money, you look at the growth over a period of time, and we'll get to what data and how you work that stuff out. You hold in Sydney, you need five years, right? Whereas that property, we probably flipped after two and a half years. Purely because it was just too much trouble with maintenance and things like that. 

  

[00:01:01] It could have been fine. But that was... we were always buying all the properties. 'Let's buy off the plan. Just do it. We'll hold it. And then when the market goes again, we'll sell it and make money', and we ended up doing it probably... we still made money. It wasn't a loss. But not the sort of investment that we would have liked, the return that we would have liked. That's probably the worst. 

  

[00:01:28] The best was the little... well, I tell you what, the Port Macquarie unit, I just invested in that, held, and I've still got it 15 years later. And it's been positively geared for the last five years. Regular tenants, barely any maintenance on it. It's been the perfect investment and just sits there, my little superannuation sitting there and off it goes. So I'd like a few more of those, that's for sure.

Tyrone Shum:   

[00:02:04] You would have fundamental capital growth in there as well.

Joe Rossi:   

[00:02:07] That's exactly right. We bought under $100,000 for a lovely two bedroom unit walking distance to the beach.

Tyrone Shum:   

Having done a lot in terms of property over the years, he’s well-versed in doing his due diligence and knowing the top tips and tricks.

Joe Rossi:   

[00:03:06] One is being present on the market. So you need, first of all, I had good contacts with real estate agents, where I was looking. I always drove around the suburbs. So these are physical aspects of thinking about where. 

  

[00:03:31] Now, sometimes if you're going interstate to invest, you might not be able to do that. And that comes back to now, how do you work out what to buy before you actually go interstate? Because I was about to invest in Logan in Queensland as an example, because that was a big growing area. It was a real working class, housing commission area that's starting to change because the rail that went down there. 

  

[00:03:59] So they're the things that when I say be present in the market is just understand what's going on in the suburb. 

  

[00:04:06] And then I was fortunate, I've worked 25 years with my competitor now is which is Core Logic. And I was able to gain... obviously, I had access to data all through my working life. 

 

[00:04:22] So what I always did was, one, look at the capital growth in an area. So I always took a helicopter view of a suburb. What does that mean? Is a suburb transacting? How many are transacting? What's been the growth over, say, to five to 10 years depending on your investment cycle? And what type of properties are transacting and turning over? 

  

[00:04:56] So all of these platforms— and I'll give a plug to National Property Group— gives you that insight on one report. So whether it's a neighbourhood report, or whether you do a sales history report, all of those, or you use the map and see where those transactions are. 

  

[00:05:14] So all of them give you that insight. And so you can jump from one suburb, to another suburb to another postcode to another LGA really quite quickly, trying to work out where they invest. 

He looked in the south inner city areas, but decided that buying a house surrounded by apartments wasn’t for him.

Joe Rossi: 

[00:05:48] Because I thought, well, the houses may not grow, but units are going up all over the place there. So hey, if you plan on developing units, perfect.

  

[00:06:02] And as people like my kids push out to those areas, because that's where they can afford to buy, so I see those as growth areas. Belmore, for instance, very... as the migrant kids, the Lebanese community, those sorts of communities that went in those areas, say, 20 years ago, their kids are quite well off now. So they want to live next to Mum and Dad. 

  

[00:06:33] So you look at those areas and say, 'Well, they're my growth areas'. And then I look at the stats and see whether that's panning out. Are we seeing flatlining? And maybe you'll take a risk. Or is it as you growing over those periods? So that's that helicopter view of the suburb that I take.

  

[00:07:03] So if I'm finding properties now, I'm using that days on market on that property. We all know that the longer the days on the market, the more desperate the vendor gets. 

  

[00:07:15] There's usually two reasons why properties are not selling. First reason is price. The second reason is price.

  

[00:07:30] Because you can sell anything anywhere in any condition if the price is right. So the longer they stay on the market, the bigger the fall, and we see that in the stats. Because the stints that I've had working so closely with real estate is the stories that they tell. And then we turn around and collaborate those stories with the data and you'll see a property come on the market, the agent's overpriced [it]. And you can tell that by looking at the sales and the sales history, and you think, 'Oh, that doesn't sound quite right'. And you'll see the prices starting to fall. And you'll get passed in at auction at week four.

  

[00:08:19] And then it hits the right price.

Tyrone Shum:   

After setting up Rest with its co-founder and making his way into data, there seems to be a piece of the puzzle missing. As an open book, Rossi puts the pieces together.

Joe Rossi:   

[00:09:03] So basically, I sold out as I said, for that paltry amount which is killing me every day in my life. You know how people have regrets? I've only got one or two regrets: Having four children— no, no, I'm joking!— and selling too cheaply. 

  

[00:09:20] But anyway, it was a recession that we had to have. 1994. I had two years restraint of trade. So I just did sales work and things like that. And my restraint of trade out of property management finished. And I found a company called Micro Development that did trust accounting software, because that was in my DNA by then. So I worked for them for a year and a half and they got bought out by RP Data.

  

[00:10:00] I knew I could help them, I knew that they needed help in New South Wales, because they were a Queensland based company. And so this is before RP Data came along. So I ran their software division in New South Wales, selling to real estate agents and running the teams there. 

  

[00:10:17] And they got bought out. And I went into the software division of RP Data, because what they were trying to do is own the desktop. So they had data, but they didn't have the trust accounting side.

  

[00:10:37] So I ran that for four or five years, until they sold that off. And I came across to the data side, mainly because I had the experience of setting up databases and understanding data and how, where the uses were. 

  

[00:10:55] So I was then Sales Manager for New South Wales. That was that opportunity, and then I got a national position. And then on it went. 

  

[00:11:07] I started thinking that I'd have a rest from sales. So I became the trainer, national training. So I did the internal and external training. I had a team of 10 trainers and customer success managers in there. So that data and working with data and training data was always what I enjoyed and what I loved. 

Tyrone Shum:
When National Property Group came along, CoreLogic got taken over by a large private equity group.

Joe Rossi: 

[00:11:43] So RP Data got taken over by Macquarie Group, Macquarie Group listed again, compulsory buyout, sold to CoreLogic, CoreLogic then got bought out by private equity. 

  

[00:11:55] And that private equity changed the culture to the point where it wasn't a culture of innovation anymore. It was a culture of just buy companies and see which ones actually floated. And it just wasn't fitting for me anymore. 

  

[00:12:11] And so I thought I was going to retire, and then National Property Group just interest[ed] me, it was really perplexing. How could I get a small company snapping at the heels of these big behemoth companies? Annoy the hell out of them! What we're going to do is annoy the hell out of them. A nice, simple product with good data. And not getting too sophisticated on it. 

  

[00:12:42] Because if you look at the investor groups like that you're involved in, Tyrone, what do they want? They want this historical data, they want to be able to find a property for starters, that's in their zone.

Tyrone Shum:  

He gives the background information on the major players in the industry.

Joe Rossi:   

[00:13:33] So 1994, you saw RP Data started by two Queenslanders in based out of Cairns. Interesting background, those two Italians. Once again, bloody Italians, you can't get rid of them! But they owned a concreting business.

  

[00:14:01] But what happened was that it was concrete mixing, they deliver[ed] wet concrete. And Pioneer and Boral came into the market and they colluded. And it was the first prosecution of the new price colluding laws. How interesting is this? 

  

[00:14:22] So they won the case, the two brothers, or the one brother. And he went off to the States looking for a business to buy and he looked at a company called First American and they did property data over there. 

  

[00:14:40] So he basically licensed the platform and brought it over here, which was the first platform that delivered data via modem. You can imagine real estate agents sharing their fax machine. Remember when modems first came in? You shared your fax machine. 

  

[00:15:04] This was in 1994. It wasn't internet based. It was basically dumb terminal based, text based data coming through. We were selling floppy disks and delivering updates once a month. They had it online delivering updates in real time.

[00:16:03] So basically, RP Data [were] real big innovators. They were the first with mapping. They were the first to go online with pictures. They had people walking the streets taking photos before Google took their street views. So you could see the front photos.

Tyrone Shum:   

This was in 2004, when digital cameras were gaining popularity. Then in 2006, Price Finder came along and used council records.

Joe Rossi:   

[00:16:49] Another Queensland based company. Basically coming out of the Ray White organisation. So Ray White, Tom White being a nephew of the Ray White family funding a real estate. You can imagine how that happened, right?

   

[00:17:14] Council records. The VG government didn't start giving us feeds until 2001.

  

[00:17:35] Council records had the transactions and the owners. Remember I was talking about the films? They were doing that, they were doing the microfiche, but delivering via modem, having updates basically daily. We used to type up, we used to give it to them on a monthly basis. So we were a month out.

Tyrone Shum:   

[00:17:59] How did that impact your business?

Joe Rossi:   

[00:18:01] They basically stole our database, and I gave up.

  

[00:18:09] You can't beat them, go and join them. That's basically what I did.

Coming up after the break, he explains the role of photography in real estate…

Joe Rossi:   

[00:20:36] We had teams of people that were paid per photograph.

All about love/hate relationships within the industry…

Joe Rossi:   

[00:25:41] Valuers hate RP Data, they hate NPG.

He reveals a little about his future plans.

Joe Rossi:   

[00:31:34] As an example, we just signed a deal for DA applications.

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

—-> INSERT NEW National Property Data Advert (Ask Tyrone)

Tyrone Shum:  

Because he had so many different roles and found that technology and its usage evolved, these aspects helped him in his journey.

Joe Rossi:   

[00:18:48] So if you look at that, exclusively real estate agents were our customers. And as real estate agents were competing [against] each other, you would start generating very bespoke reports. And the first one was the comparable market analysis.

  

[00:19:11] Very bespoke. Real estate agents would bring them along and show them to prospective vendors to manage their price expectations.

Tyrone Shum:   

[00:19:21] And was that report previously available to agents prior to CoreLogic or RP Data being available? 

Joe Rossi:   

[00:19:29] No. 

Tyrone Shum:   

[00:19:30] So basically, agents never really had this additional tool, they must have just gone in, buy… 

Joe Rossi:   

[00:19:34] Lists. Come in with a bit of paper. This is what I think, this is what I think. 

  

[00:19:40] The first agent that came into my place to sell a property, he measured the rooms and did a square metreage, which the US still use quite a bit. Price per square metre.

[00:20:06] It works when you've got large markets in the US where basically every house is the same. And then it's [figuring out] which house is bigger or smaller.

  

[00:20:36] We had teams of people that were paid per photograph. They'd just go out in the streets. And then we'd have teams inside straightening photos up and matching the number. 

 

[00:20:54] The hardest thing was matching the property, because if you imagine they had books, and if they just got one number out, all the photos were out in the street.

 

[00:21:04] So it was a big project. Insane. But this guy who started RP Data was quite revolutionary. And so he was first with a CMA, first with a photography, first with the mapping. Which, again, I'm going to give NPG a bit of a plug, because they were there around '98 [or] '99 now, as the New South Wales players, our competitors, with a map, with photos, at the same time. 

  

[00:21:38] Now, their photos came from their realtor magazines. So that was their physical magazines, and then bringing that into a database. So in New South Wales, NPG have had these things as long as RP Data and had the mapping almost as long as well.

Tyrone Shum:   

In the 1960s, National Property Group was a cooperative of real estate agents who got together to share their listings.

Joe Rossi:   

[00:22:28] Because back then, buyers were very rare. Lots of listings, no buyers. So they basically had a system called multi list and they would have books.

  

[00:22:51] So the cooperative then became not only a listing engine, it was also an advocacy, it had membership, and they would get together and network and do those things, and they would share their listings. In other words, 'Hey, I've got a listing, have you got any buyers?' So an agent down the road would have an open listing, and you would sell someone else's listing. 

  

[00:23:18] So you could actually start up as an agent, and not have one listing and still make a buck by selling other people's listings. And it was that type of environment where you'd share commission.

Tyrone Shum:
Much like how video killed the radio star, the internet had a similar effect on real estate listings.

 

[00:23:30] As the internet came along, and realestate.com[.au] and Domain [came along], it just wiped that whole process out. Just like digital versus newspaper has wiped out. It happened sooner in real estate.

 

[00:23:47] But they had all this data, so they developed the platform, which was Red Square. And Red Square was sold exclusively to their membership. So doing a CMA, being able to do the history, all the things that we've just spoken about, you could do within Red Square, but it was only New South Wales based.

  

[00:24:15] And unfortunately, when you've got this corralling, the investment wasn't there to move it into other areas, to move it into national. So if you look at RP Data, one of the biggest RP Data moves was to move into the banks and valuations that the banks use. 

  

[00:24:32] And I'm gonna come back to the spread of data and the spread outside of real estate into the finance area. And the bank suddenly realised that they could save...

 

[00:24:56] a shitload of money with valuers by doing the primary valuation on a desktop via the data. And hence the genesis of the auto valuation model. The AVM. 

  

[00:25:13] So, the AVM is just an algorithm that compares like for like, and spits out a number that can be quite accurate, and can be a great guide. So the banks use that AVM before real estate agents because the real estate agents and valuers were threatened by the AVM.

  

[00:25:41] Valuers hate RP Data, they hate NPG. But they use it. It's a love hate relationship, because they use the data to do the valuations as well.

  

[00:26:03] But the industries turned the valuation industry on its head. Absolutely on its head. So banks using it suddenly turned around and said, 'If banks can use it, well, hang on. Developers can use it. And general investors should be using it'. So you've got this whole ecosystem of data now being available to everybody.

Tyrone Shum:   

[00:26:34] Wow, that's a really interesting backstory and history. And then how did that cooperative become National Property Group? Where did that turn? Because initially it was only New South Wales data?

Joe Rossi:   

[00:26:48] I think one of the problems that they experienced was losing their membership. And then you had some key people inside the AC group that understood the value of the data. We have Don Harb, that's been here for 20 years as an example, and seen this growth through. And he saw the value. And he wanted investment in the data, and the cooperative couldn't. So Gary came along and said, 'Look, I'll buy the data business off you'.

  

[00:27:32] Now, he has since bought the EAC model over as well, in the business, because it's got a really good forms engine that we're trying to expand nationally as well. 

  

[00:27:44] But essentially, Gary's investment allowed us to go into Queensland, into Victoria, and we've just signed the deal with Tasmania. And I think we've just been recently approved with South Australia. 

  

[00:28:01] So suddenly, we're national. And we can now do those national franchise deals, which we couldn't do before. And when I said snapping at the heels of CoreLogic, and Price Finder, I really believe that when you look at, say, Price Finder and what they're doing, their focus is on the listing portal, because they're owned by Domain. 

  

[00:28:25] When you look at CoreLogic, their focus is on the banks, because that's where most of the revenue come in. So we can really fit really nicely with a pure focus on the data and real estate industry, developers and investors. And it suits us really well. That's where we see ourselves fit really well.

  

[00:29:07] Do I need this or do I [not] need this? Why don't I have this access? 

  

[00:29:13] So we're going to stay with the philosophy of one platform, make it simple, and give you as much data as you can and need to do either your investment or development. That's what you want to do. You want to be able to find it, analyse it, [unintelligible] if you're developing, or hold and invest.

Tyrone Shum:   

EAC originally stood for Estate Agents Cooperative, but now that it’s no longer a cooperative, the initialism now stands for Estate Agents Community.

Joe Rossi:   

[00:30:00] They are our ears and eyes. They provide a lot of data to us. So as an example, we talked about the valuer general. And that's really bland data. But where the richness of the data comes from is from the agents listing when they sell the property. So suddenly, if you look at our data now, we've got all this history of photographs of the property. But not just the front door, you walk in and you see the bathroom and the kitchen and you see the backyard. That's all coming from agents. You get the rich descriptors of it. So that is the CMI, the current market information.

[00:31:13] You can scroll through the photos, but you can't search on the floor plan. So just identifying. That's our next project, just use a bit of AI. Because you can always identify what a floor plan looks like. It's not that hard. So that's the next nice thing that we've put in. 

 

[00:31:34] As an example, we just signed a deal for DA applications. So if you've got [a property] and you know there's a DA application on that property, that's sometimes good, right? Or maybe that DA was three years ago, consummated, and they've renovated, for as a developer, it's probably too much. They've over capitalised on the property.

  

[00:32:14] Just simply the map alone saves the developer an enormous amount of time. Because the developer's looking for position. The developer is looking [and thinking], 'Is it flat land? Or is it on a hillside? Because we have contours'. So if you know how to read a contour map, if they're close together, you know it's on a cliff. 

 

[00:32:37] So that makes your decision. Or maybe it's on top of the hill, and it might have a view. So it's even more desirable, right? So all of these things are data points that I can do from my desk, get a whole lot of the analys[ing] and research done before I get in the car and then do the drive. 

  

[00:32:57] So I think finding properties is [about] excluding properties quickly. And getting that shortlist down. That's the bit that takes a lot of time is the exclusion part.

Tyrone Shum:   

[00:33:54] If you met yourself, say 10 years ago, what do you think you would have said to him?

Joe Rossi:   

[00:33:57] Be bolder. I'm so conservative, it's not funny. Just be bolder.

  

[00:34:09] Obviously, within your finances and your capacity and all those sorts of things. I've got to be really careful. I don't recommend to anyone. I present to a lot of these forums and people will come up in the meet and greets, and the tea and coffee moments and they ask me, 'Should I do this? Should I do that?' Unless I know their personal circumstances, I just can't recommend it. 

  

[00:34:36] But for me, I always say be a little bit bolder. Because I could have probably stretched out a little bit further and made even more. Because we're in it to make money.

  

[00:34:52] I'd love to leave a legacy for my children as well. There's nothing wrong with that. And investing and making money and passive income is so good. I can retire early if I want to, because of the passive income that we're built. So absolutely be a bit bolder when you've got the chance.

  

[00:35:26] I'm already a Mum and Dad bank. My first two boys have already dipped their toe[s] in and bought property. So that's what we want to do.

Tyrone Shum:   

Looking forward to the future, Rossi has exciting plans for both his personal life and his career.

Joe Rossi:   

[00:35:52] I think my work life is get this business national and get a rhythm and a cadence of revenue and making sales. That's what it's been missing because of the cooperative. It's almost coming into a public service, Tyrone. 

 

[00:36:14] 'That's a $300,000 deal. Why aren't we concentrating [on that]?' 

  

[00:36:18] That excites me and just building the team and training the team involved in that. That's my work.

  

[00:36:27] My personal life, I've got my project that I'm right in the middle of it, we're at the stage of... I'm using Pinterest and taking photos now of how I want the place to look. So that internal space. And I'm driving around looking at granny flats. So that's the development side. I'm really excited about that. And that's going to give me the means to buy my rural property that's not going to be an investment. It's going to be a hobby. Just that tree change.

  

[00:37:11] We're keen gardeners, so we want a tree change where we've got a bit more space. So that's for me, over the next couple of years anyway.

  

[00:37:29] We're doing a cycling trip in New Zealand. The Otago rail trail. I'm looking forward to that as well.

Tyrone Shum:   

[00:38:32] You've achieved quite a lot of success, not only in your personal life, but also your work career and so forth. And you've got a really, really good experience in your career there. How much of that success has been due to your skill, intelligence and hard work? And how much do you think has been through luck?

Joe Rossi:   

[00:38:50] I think in respects of starting that business, that was happenchance. Sliding doors moment, make a decision. But I think the rest is that drive of wanting to do something. And I'm always a 'What's next?' [type of person].

  

[00:39:23] I treat everything I do as my own personal business. So while I'm here, and while I was at RP Data, and then CoreLogic, it was always my business division or my business that I'm trying to work. And I think that plays into it. 

  

[00:39:41] As far as intelligence goes, who knows how smart people are? I've seen what I thought were really dumb people be really successful. I don't play on intelligence. It's luck, it's hard work and attitude, really. And I think attitude and what's next is how I recruit people as well.

[00:40:49] You can be successful and treat people quite well. Make them work. Make them work hard. That doesn't mean you treat them badly, though. That's what leadership is.

Thank you to Joe Rossi, our guest on this episode of Property Investory.