Michael Xia is an award-winning mortgage broker by day— and, these days, by night as well! As the owner of Mortgage Channel, he’s highly regarded in his industry and among his peers, earning Choice Platinum Achiever for 5 years in a row (so far!). A property investment aficionado, he spends what spare time he can find searching for investment properties and the dream principal place of residence for his growing family. From purchasing his first property at just 21 years old to now owning 39 properties before even turning 38, Xia certainly knows his Logans from his lemons.
In this episode Xia shares the ups and downs from his young life and the beginning of his property journey
. Looking back fondly on his uni days (where he spent as little time at uni as possible) and a little less fondly on his early corporate career, Xia’s story is full of entertaining tangents that always end in wise words. His inspiring tale reminds us that it’s never too late to chase your dream, regardless of how many false starts you had in the beginning— and that when the unexpected happens, it’s never your first suspect.Timestamps:
00:56 | He Works Hard for the Money
04:04 | From Shanghai to Chinatown
08:51 | Pick Me, Pick Me!
12:55 | Want It, Gotta Have It
17:22 | It’s Never Too Late
20:30 | The Corporate Ladder Was Getting Unsteady
23:31 | 39 Properties by 39
27:52 | Setting His Sights on New Heights
29:42 | Get Your Tin Foil Hats Out
30:45 | The Stakeout
31:47 | Taking Chances
00:45 | Up, Up, and Away
09:15 | …Why?!
10:52 | Tangent Time
16:21 | All Roads Lead to Logan
21:52 | The Logan Bus
28:02 | $10M in 9 Years
33:55 | Don’t Rush It
36:48 | Harry Potter, Is That You?
38:50 | Pay Your Dues— It Pays Off
44:03 | The Emotional Rollercoaster
51:14 | 39 Properties? No Way
53:00 | Steven’s Dream
55:22 | I Can See Clearly Now
58:50 | Hard Work vs. Luck
Resources and Links:
[00:11:56] Even in high school, and then a little bit later in uni, my parents would be like, 'Look, save your dollars, when you can buy something, go and then buy something.' So that was always in the back of my mind. I would say it would be when I was 20 [or] 21. That's when I bought my first property. And it was the worst investment that I ever did.
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 Michael Xia, owner of Mortgage Channel. We’ll hear how he manages to run his company and buy 39 properties over a decade. How the surprising number of years it took to complete his degree, and we look back on the days when he had so much of a good thing he didn’t know what to do with it!
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He Works Hard For the Money
Xia has been investing for the last 10 to 15 years, but he’s only just getting started. A married man, father of one with another on the way, he manages to find time to run his company, spend time with his family, and fulfil his property dreams as he goes. However at the moment, much of his days are spent chained to a computer, approving loans!
[00:00:56] I think in the current climate, a lot of investors want to buy yesterday, just with how much the market is going up. So it's just wake up [at] seven [or] eight o'clock in the morning, I'm stuck at my desk probably until eight or nine o'clock in the evening. And then we just repeat that. And at the moment, we're working six and a half days a week. So it's pretty full on.
[00:01:16] That's full on, man. And you've got a family yourself as well. How do you juggle all that from home?
[00:01:21] It's hard. It's hard. I think one of the ways is to have a lot of support. So we do have help around our little one. My missus works from home too. So she helps in managing the property portfolio. So she assists from that side. But I think kind of the key consensus is there's not enough time in the day. And that's been the case for the past couple of years.
Xia grew up in Shanghai before moving to Australia when he was seven years old. His family chose to relocate to Sydney, where he grew up and has spent most of his life.
[00:02:19] I would say your typical Asian upbringing in Australia. So as a kid [I was] definitely pushed towards schooling academically. The idea was: Okay, get a good schooling, go to uni, find a good job, and have a family. I mean, that was basically kind of the life plan.
[00:02:42] And [I] followed pretty much a lot of that up until a couple of years into [working in the] corporate [world]. And then I just realised this wasn't for me. And funnily enough, we actually met when I was in my corporate role. So we knew each other way before even all of this property stuff started. Which I think is pretty interesting.
Xia and I have known each other for a long time, even pre-property investing! From a budding investor buddy to where he is now is a phenomenal story.
[00:03:24] When we first knew each other, property investing was an idea. It was, like, an inkling of something that can work. And I know over the last 10 years, we've caught up either on the podcast or just as friends. And I guess it's good now in 2022 to kind of reflect back on that 10 year journey and just kind of see how it’s unfolded.
From Shanghai to Chinatown
As he moved from Shanghai to Sydney at just seven years old, his memories from Shanghai are hazy, but he does remember snippets of his early childhood there.
[00:04:04] Just your typical childhood memories, playing with friends. I do remember that move from Shanghai to Sydney quite clearly. I remember first coming to this country, the language struggles, getting bullied somewhat at school mainly because you couldn't communicate.
[00:04:23] And when we moved to Sydney back then we actually moved to a suburb called Eastwood. So for those Sydney listeners, Eastwood is essentially Chinatown. One half is Korean and also one half is Chinese.
[00:04:35] But I can tell you in 1991 in our grade, there [were] only two Chinese students. And there was no Chinese store in Eastwood whatsoever. So you think of the Granny Smith Festival and kind of everything that that kind of holds, that was kind of Eastwood back then. It [was] completely different to what it is today. And coming to a new country, having to learn the language, that was definitely a struggle in the first couple of years. And I do remember that quite vividly.
He stayed in Eastwood throughout his childhood, where he went to Eastwood Primary until he finished his primary education. Before he knew it he was essentially working in a factory, but not the type you’d expect.
[00:05:47] Started there from year one, went all the way up to year six. And I was lucky enough in year six to get into James Ruse, which is one of the more academically gifted schools in Sydney.
[00:05:59] And from that environment of both from the teachers and also from parents, and also the peers, getting good grades at school was really the top of the goals lists. They call James Reese a UAI factory, you basically just go through, and then at the end of it, you get a good UAI.
[00:06:21] And I would say in terms of high school, that was really the only thing that you were kind of taught. And going to uni, it was just one of those things. I think some kids know what they want to do in life. But I had absolutely no idea. And just did not know what I wanted to do later in life. And I guess that's why I picked commerce for my undergrad in uni, mainly because it gave the broadest possibilities of getting a job.
[00:06:52] And the other thing I remember vividly is in high school, in terms of your day, your after hours school, in terms of what you're meant to do, it was very regimented. And when I went to uni, the lecturer didn't care if you didn't do your homework. They didn't care if you didn't go to the tutorial.
[00:07:12] So I think for the first two and a half years of my uni career, I probably only went to less than maybe 15 classes altogether. We have common friends around uni, and it was just, like, a continual joke that I would just never go to uni.
[00:07:33] And to put it into perspective, I did commerce, which is a three year degree— it took me eight and a half years to finish just because I failed so much. I kind of went from this ultra strict high school environment, where academically that was everything. And then when I went to uni, I just lost control.
[00:08:26] I didn't think a strict schooling can be good, but— I don't know if there's any kind of truth to it— but the number of people from our school that actually didn't do that well in uni, the percentage was actually quite high. Just because you came from this environment that there was so much pressure to perform, and suddenly, then you're let loose in uni and just don't know how to control yourself.
Pick Me, Pick Me!
He credits his casual job as his saving grace. While it started out as a casual role, he soon proved his worth and ended up having more money than he knew what to do with— at the time!
[00:08:51] I started off working in market research, [I] had a casual job there. And then what happened from casual was then the hours just started to increase. Basically, the team manager that was working in this market research company will go to all the students scheduled for the shifts, and the other students will be like, 'Oh, I've got assignments to do. I've got exams to study for.'
[00:09:15] And then they just kept asking me [if] I want[ed] more shifts, and every time I just put my hand up. So getting paid casually as, like, an 18 year old, going to uni and paying them to teach me whereas I was at work, I was learning about market research and getting paid for it. I was just like, 'Work is so much better than going to uni!' So I just spent all my time working.
[00:10:04] As an 18 year old, getting paid $150 [to] $200 for a workday, it's awesome. You felt like you had so much money that you just couldn't spend it if you wanted to.
He stayed at his first company, AC Nielsen, for seven years. When he was 25 he jumped to a rival market research company called Lightspeed, and stayed there until he was 30, when the property bug bit him hard.
[00:11:41] I guess the property journey starts off quite young for me. And I guess, coming from an Asian Chinese family, that notion of investing or buying a place is kind of instilled on you.
[00:11:54] I do remember even in high school, and then a little bit later in uni, my parents would be like, 'Look, save your dollars, when you can buy something, go and then buy something.' So that was always in the back of my mind. I would say it would be when I was 20 [or] 21. That's when I bought my first property. And it was the worst investment that I ever did.
[00:12:19] When I speak to clients now, I reflect back on that, and I share my story, just so that they don't rush in and then buy a property just as a whim. So kind of to paint that story: It was actually at a friend's party that we were playing poker one night. And one of my friends that has no background in property investing, knows nothing about it, but just goes, 'Hey, look, there's an off the plan being built across from Epping station. I think it's got really good potential. I'm thinking of buying something in that complex. Why don't you have a look at it?'
Want It, Gotta Have It
[00:12:55] Knowing nothing about property investing and thinking, 'Oh, actually, this might be a really good idea', I went the very next day, got shown through the showroom and I saw the sauna, the gym, the pool. And it was a very good sales technique. And I'm like, 'Man, I've got to get into this building'.
[00:13:13] So I basically turned around to the person on the spot there and asked him, 'What is the cheapest unit that I can buy to get into this complex?' And he goes, 'The bottom level studio, you can buy for $340,000'.
[00:13:29] And to put things into perspective, this would have been about 2002 [or] 2003. $340,000 back then in Sydney could have bought you a house in Blacktown. And then this was a 39 square metre shoebox in Epping. And lo and behold, I signed on the spot.
While he was quick to sign, he was also quick to forget, which led to some interesting discussions with his friends.
[00:13:53] Because it was off the plan, and they weren't going to build for the next two years, I just kind of parked it away. I didn't even think about it. The next time that it kind of came to fruition was when they were going, 'Hey, looks it's only about two or three months until settlement', which was two years later. And I do remember at the time, I of course hadn't saved the money for the deposit up until then. I was borrowing from friends just to pay for the deposit.
[00:14:16] And ever since holding that property, that property today if I had to sell it over almost 20 years [later], it's gone from about $340,000 to maybe $500,000 for [a] studio in Epping. It's very difficult to rent out, like if you go through Epping, there's just high rises after high rises. We've had to drop the rent continually. COVID hasn't helped in that regard. If I had put the same $340,000 in a house in, say, for instance, Western Sydney, that house would be worth easily $800,000 to $900,000.
[00:15:21] The key lesson I get from that is there's many units in Epping that have done phenomenally well. Houses have done phenomenally well. But the key part comes down to research. I bought at the top of the last Sydney cycle, for something that was way overpriced, did not do my research. And even to this day, like almost 20 years later, I'm paying the penalties for it. And it's like every quarter, they still increase the strata rates on us. It's, like, crazy for a studio, I think the strata is over, like, $1,500. It's a joke.
Despite his parents urging him to buy his first property, they weren’t exactly investors themselves. However, they weren’t novices when it came to property either.
[00:16:12] They [had] a traditional kind of mindset where the property is for where you live. So they moved from Eastwood, we bought a two bedroom unit. I think back then they paid, like, $100,000 for it. Then they sold it for, like, $130,000, to move into a duplex in Oatlands.
[00:16:31] And then they sold that. And each time they bought and sold, they literally bought and sold at the same price. And this was, like, you know, five [to] eight years later. And it's unfathomable to even speak about Sydney in that light, because everyone just thinks Sydney, a couple of years, and you'll double your money.
[00:16:48] But during those times, it wasn't like that. I mean, the interest rates were more than 10%. My parents didn't get the timing right, and each time that would almost buy at a peak and then sell at a low.
[00:17:07] Then we moved from Oatlands and then we moved to Glenwood after that. And again, they kind of bought a little bit higher. And, like, they always knew to buy properties. But it was a very different concept in terms of investing as we know investing today.
It’s Never Too Late
Xia’s parents may not have gotten the timing right in the beginning, but once they saw the results of their son’s hard work, they felt it was time to try again.
[00:17:22] When I did get into investing quite heavily, they also saw how it worked [and] the numbers behind it. So later in life, like in their 50s, then they started getting into property investing. They hold now more than 10 properties and have done very, very well from it.
[00:17:41] So it also shows from their journey that it's never too late to get started. I've got clients coming to me and saying, 'Hey, I'm in my 40s. Is it too late?' And I think to my parents, they were in their mid to late 50s and they still did very well out of it.
He was still working full-time in market research when he got into property investing, where every day reminded him how badly he wanted to complete his career transition.
[00:18:36] I bought that [first] property when I was quite young. And then it would have been four or five years later [that I left my corporate role]. And I was just not knowing what to do with money. But I'd be working a large number of hours, saving, putting into the bank account, and it would just slowly grow with time, not really knowing what to do.
[00:18:53] I then purchased a unit in Macquarie Park, an older red brick style of unit. This would have been 2010. And again, it was just by whim, it was no research whatsoever. Again, it was another friend— you can tell I was easily influenced back then! But his parents actually owned four units in that complex.
[00:19:17] And it was a funny story because every time I'd go and pick him up for touch footy training, he would give me a different address. He'd be like, 'Pick me up from unit 39'. Next time it would've been, like, unit 45. And then the following time was, like, unit 52.
[00:19:31] I was like, 'What the hell is going on? Are you going in between all of these units?' And he goes, 'Actually, my parents own all of these units and they just rent them out to uni students and they do pretty well from it'. And I was like, 'Oh, that's actually really interesting, that's a great idea'.
[00:19:46] And then just lo and behold, it would have been a couple of weeks after that conversation, two units came up for sale from the same owner. I went with Dad and we basically gave what the agent was asking for and then bought both those units. So my parents bought one and then I bought one.
[00:20:03] And being an older style unit in Macquarie, over time it's performed quite well. I'll put a kind of a caveat on that— since COVID, it hasn't done too well! But all units in Sydney haven't done too well. But up until then, it's been really, really good for us. So that was the extent of the research on the second one.
The Corporate Ladder Was Getting Unsteady
He’d spent close to 10 years in the corporate world when he started to feel the accumulation of its effects.
[00:20:30] Being young, I loved corporate, I loved going to work, learning, climbing the corporate ladder. But then I think everyone gets [to] a point in time where they start to get jaded. There's only so many nos, and so many 'Sorry, you're not going to get your bonus this year', that eventually it starts to take its toll.
[00:20:49] I will say it was probably about seven [or] eight years into corporate that I started to wonder, 'Hey, look, every year, I've been getting a 2% pay increase on my $70,000 [to] $80,000'. I was looking at where that would take me. And if I even fast forward that 10 [to] 20 years old like, 'Frick, this is not going to give me the lifestyle that I wanted'.
[00:20:52] And that was the tipping point for me to explore other options. So be it running your own business, be it investing in shares, be it investing in properties. And I never really knew what I wanted to do. And it was almost a lightbulb moment in that sense when I started to come across a number of property investors. There was one that stood out by miles ahead of the others, and as some of your listeners will know, he's called Nathan Birch.
[00:21:40] Back then, he would have been only 26 [or] 27. And he was posting these YouTube videos of him renovating these fire burnt places in Western Sydney for like $30,000, turning them into properties that would get positive rent. And he had 75 properties at that point in time.
[00:22:02] To be honest, I thought I was doing quite well with two properties! And I'm like, 'Great, this guy is younger than me with 75 properties. And he didn't even finish uni!' I'm like, 'What the frick!' And that sent me down a rabbit hole of just researching properties. And that was really the turning point.
[00:22:18] The more that I learnt, the more that my eyes were opened up. I was very fortunate to meet some people in my journey that have helped me immensely. One of them being my mortgage broker, Rolf, who mentored me. He basically then kind of opened up this world of possibilities in terms of 'Yes, if you buy the right types of properties, structure it in the right way, you can do quite well from it'. So I would say it would have been from the second property onwards when the light bulb moment switched for me.
39 Properties By 39
Now in his late 30s, Xia is reaping the rewards of his years of hard work and determination. He looks back on his philosophies and goals he’s achieved, and plots out a few more.
[00:23:31] That lightbulb moment, to put it specifically, happened in 2013. That's when I really got addicted to property investing, was living and breathing property investing. So in 2013, I had two investment properties. So fast forward nine years, 2022, me and my wife currently hold 39 properties.
[00:23:52] Awesome. How old are you now, if I may ask? We're not revealing too much?
[00:24:02] I'm turning 38 this year.
[00:24:05] That's awesome. It's almost like 39 properties when you're 38 or 39.
[00:24:10] The funniest thing was when I was starting out, I had this goal of being financially free by 33 because it rhymed. And then part of that was trying to buy 33 properties by 33. And that didn't eventuate, I didn't get that far.
[00:24:28] And then the next goal after that was 36 by 36. And I'll remember it was, like, one month before my birthday, and I was like, 'Frick, I have to buy a property'. And we finally did buy that property, so I hit 36 by 36. So now I've got a feel after that it's gonna be a lot easier.
Xia is never short of stories to tell, and while most of them are impactful and inspiring, some are more the stuff of investor nightmares.
[00:25:24] I will say that a lot of the character building situations happen early on in your investment journey. And also, if I'm working with new investors, looking to build their property portfolio, it's that early portion that's really important.
[00:25:44] Mainly because even when I was building the property portfolio, you'll see Nathan Birch with 75 properties, you'll see other people on Property Chat, which is another forum that I learnt so much from. A lot of the people that I met in my journey was through Property Chat, and they would have, you know, 20 [to] 30 properties. But in the back of my mind, I'm like, 'Of course you could do that, you were buying in western Sydney when the property prices were $150,000 to $100,000. Of course, you would do back then'.
[00:26:15] So early on, whenever you got a setback or something didn't quite go your way, then that would really affect you. So I'll give you an example of that. This would have been my fourth purchase, and to kind of put it into context, in 2013, [the] Sydney market was starting to go up.
[00:26:38] I still remember vividly going to Mount Druitt, going to auctions and for a three bedroom fibro shack— and it was punched in, auctioned off by the Housing Commission— they were selling for about $240,000. I even did building and pest [inspection] on all the auctions that I attended, which is something that I wouldn't do today because it's just throwing money down the drain in some instances. But I decided not to buy those because two months earlier those properties were selling for $210,000.
[00:27:15] Hindsight is a beautiful thing. Hindsight should have told me that that would have been the perfect time to buy. But I'm like, 'Hey, look, this is crazy. This is overheated. $30,000 in two months?! Where can it go from here?!'
Setting His Sights on New Heights
It was here that he moved away from looking in Mt Druitt and western Sydney, and focused his sights on the regions surrounding the city.
[00:27:35] I'll remember reading Property Chat, back then it was called Somersoft. And during that time when they analysed previous cycles, every time Sydney went up, a year or two later, the satellite cities went up. So your Newcastles and your Wollongongs would then start to go up after that.
[00:27:52] So I remember one weekend I'd drive up to Newcastle, then the next weekend I would drive down to Wollongong and I was just searching for properties. And the property market back then in Newcastle was so dead. It was like, you would go to an open home and it would just be so out of the blue for the agent to see someone from Sydney drive all the way to Newcastle to buy. And then I'm like, 'Why do you even want to buy here? It doesn't go up in Newcastle'.
[00:28:20] I bought two properties. One for $220,000. It was a three bedroom study on 600 square metres in Cardiff. And I also bought a two bedroom on 800 square metres in Gateshead for $195,000. So, incredibly cheap. To put it into perspective, I'll be honest, I don't know the prices of Newcastle very, very accurately right now, but they are around $700,000 to $800,000. That's when they've been selling for.
[00:28:50] The hard part of in terms of the setback that I experienced is a Cardiff property that I bought. It settled, and the settlement was really close to Christmas. So it would have been, like, a week out from Christmas. And this property needed work. It was in very, very poor condition. The tenant that was living in there before was a hoarder. So you literally needed to get a skip bin there just to fill it with all the rubbish and then remove it.
[00:29:24] So when I got the property it needed a lot of work. But because it was over Christmas, I could get no tradies in for a good month and a bit. And during that stage I was getting phone calls from the next door neighbour telling me that, 'Oh, someone's been trashing your property'.
Get Your Tin Foil Hats Out
As a landlord, those are the kinds of words that send shivers down your spine. Although he had no idea what he was in for, he wasn’t going to let anybody mess with what he’d worked so hard to earn.
[00:29:42] Every couple of days they would give me a call and go, 'All your windows just got smashed in'. Or, 'I heard someone breaking into your home'. And it was giving me sleepless nights. And I would go out to the property and each time I just see another $5,000 or $10,000 more worth of repairs. If you wanted to I could send you some photos of everything being punched in, but it was, like, crazy.
[00:30:05] And I didn't know who it was. And I mean, at one point, I thought it was a builder that I had hired. I thought he was doing a dodgy on me, because sometimes he would report the damages to me. I thought he was going to the property, smashing in some wars and going, 'Oh, Michael, your renovation bill just went up another $5,000'.
[00:30:24] Just so he could charge more. Well, that's crazy.
[00:30:26] And I'm like, 'What the hell is going on?' And then we drove up there, every time we got [a call] we'd drop our stuff, me and my dad. I would grab him in the car and then we'd drive out and things like that. We'd go to the neighbours, give them a box of beer and just go, 'Hey, look, can you please look out for this property? See if you can catch anyone'.
We jump straight back into it by picking up where we left off last time. The last we heard from our investment superhero, he was taking on a mission involving his Newcastle property being plagued by vandals. With the neighbours already on the case, Xia and his dad took to the road to help out and hopefully catch the villians red-handed.
[00:30:45] After a couple of times, what we actually realised [was] it was the kids that were living in that property before. And because they knew it was vacant, they would come in and then they would just trash the property for fun. And it got to the point where— because then we got the police involved— they went to the school and then everything.
[00:31:07] But the final straw, when the police started to take it quite seriously, is they somehow got heaps of tyres, like car tyres, and they just all stacked it in the backyard. And the thinking behind it was they [were] going to light up the whole house.
[00:31:23] Even though I'm laughing about this, that's crazy.
[00:31:30] There was one time where the police almost caught them. The police saw them in there, jump over the back fence. The police obviously didn't give chase but I think the kids realised that, 'Oh, frick, they're onto us'. And then it kind of stopped after that. Thankfully, they didn't light it.
[00:31:47] But through that whole experience, the sleepless nights, you're going into property investing, not knowing if we could work. And then there was points of time where I was like, 'Frick, maybe I should just sell this property [to] not have to deal with the headache. I don't even know if this could work'.
[00:32:03] And what kind of prompted me to go forward and to go through with it was: I looked at my corporate job. I looked at my situation. And I'm like, 'I don't know if property investing can work. Maybe there's a 10 [to] 15% chance that this whole thing will actually pay off. No idea'.
[00:32:22] But then I looked at corporate and I looked at where my manager was [and] his lifestyle. And also what his salary [was] and what his day to day life was. And I'm like, 'Okay, I know 100% that that's not what I want'. So if it's 15 [to] 20% success rate compared to 0%, I'll just take the 15 [to] 20%.
[00:32:43] So it was very, very difficult. I managed to kind of get through that. Thankfully, fingers crossed, the insurance came through. And funnily enough, after everything was repaired, and we got the insurance payout, we actually came out ahead and it ended up being a free renovation. It was worthwhile. But I can tell you during that time, and during the sleepless nights, it's not something that when you're first starting out that you wanted to go through.
[00:33:12] The reason for sharing that story is everyone goes through that in your investment journey. For some people, maybe their first purchase is really difficult. They're dealing with maybe a dodgy agent, or they come across a tenant that trashes their property.
Xia has seen this happen time and time again, including to his own clients.
[00:33:31] Some of my clients had this scenario where they invested in Brisbane. They held it for a couple of years, and then it just got too hard. And they sold in 2019 [or] 2020, just before the market moved.
[00:33:45] Or, you know, in some instances, some people get lucky, they have a dream run. But then maybe for their third or fourth property, they come across it and they're like, 'Frick, this isn't for me', and then they stop it. But it's a numbers game. It will hit you no matter when.
[00:33:59] So my kind of key advice is when you do go into property investing, don't think it's beers and Skittles. Don't think it's just money growing on trees and you're going to be rewarded forever. But be very clear of why you're doing it. Because at one point in your journey, you'll be tested. And it's going to be the reason why you're doing investment property. And what you want your future goal to be that will actually pull you through.
Up, Up, and Away
While buying interstate isn’t unusual today, this wasn’t the case just six to seven years ago when Xia shifted his sights out of Sydney.
[00:00:45] I had a lot of hesitations in terms of buying interstate. And I remember vividly going to Property Chat meetups. And I remember sitting across from a lady, and I think at the time, this would be 2014 [or] 2015. And she had three investment properties in Brisbane. And I was just blown away. I'm like, 'How do you even manage? How do you even look after properties in another state?' Because it was just so foreign to me.
[00:01:12] I have to thank Rolf, my mortgage broker, [who] kind of pushed me to look outside my comfort zone. And how in terms of in my comfort zone I was and how much I wanted to and needed to touch and feel the property is: One of my properties is in Coffs Harbour. So it's about a five hour drive each way. I would rather jump in my car, do a 10 hour round trip to Coffs Harbour and back rather than jump on the plane and take a one hour plane flight to Brisbane.
[00:01:45] I remember tha! And I was like, 'You must be a freak of nature to be able to do five hours and not even take a stop a lot of time and come back after a whole day'.
[00:01:57] It was just a passing comment at the time from Rolf, actually. And it was like, 'Frick, you drive 10 hours to go and check on your renovation in Coffs Harbour, why don't you jump on a plane, come up to Brisbane, and then you're going to be there and back in a couple of hours? It's going to be a lot easier than what you're doing now'. I'm like, 'Oh, actually, yeah. Pretty good point'.
[00:02:19] But up until then, it was just so foreign. And I still remember the story behind in terms of my first trip up to Brisbane. So up until then, [I] didn't fly interstate in Sydney. It was just something I didn't really do. And being a tightass Asian I booked Tiger to go up to Brisbane.
[00:02:39] I had no idea that Tiger made you check in 45 minutes before your flight. I just thought, Okay, you would go when the takeoff is and then you would jump on a flight. I just had no inclination of it.
[00:02:54] And I turned up to the airport half an hour before my flight and Tiger's like, 'No. Sorry, you can't board'. And I'm like, 'The plane's right there'. And they're like, 'No, sorry, it's company policy'.
[00:03:04] So me and my dad would fly out, because I was not very confident so I took my parents with me, took my dad with me. So we had to pay an extra $800 just to change flights. And the next flight was, like, four hours later. So I literally landed in Brisbane, had time to see one property— and it was an absolute crap deal— then had to jump on the flight back and then come back to Sydney.
[00:03:28] So for the price of literally four air tickets— and also only seeing one property— that was my Brisbane when I came back. But the main difference is when I landed back in Sydney, it just gave me so much confidence. I'm like, 'Frick, I did something that I did not think I could do'. And then after that, I'm like, 'Okay, I think I can do this. I think I can buy interstate'.
Once he knew he could do it, he was faced with the next question: Where? The process behind choosing the right location was a long one, but well worth it in the end.
[00:04:42] There [were] a couple of different sources that I would use, and for anyone looking to buy interstate, starting out new, looking in a new area, then I will kind of follow this sequence.
[00:04:52] I read a lot on Property Chat. And Property Chat is great. In the search function you can type in any suburb and there's literally 10 pages of people talking about any particular suburb. And as long as you go and read through all of that, you'll have a pretty good understanding in terms of what the dynamics of that certain area is.
[00:05:13] And to give you an example, when I first started, for some reason, I was interested in investing in Wagga Wagga. [I'd] never been to Wagga Wagga in my life. But I could tell you the good pockets and the back pockets of Wagga Wagga just from reading Property Chat.
[00:05:30] That was a similar approach that I took with Brisbane. And I remember having a map next to me, reading these posts, and every now and then someone would then say, 'Hey, look, this suburb: Don't buy in the street', and then I'd make a note on my map. [I'd] go back and then read and then make another note on my map. And then over time you formulated on particular suburbs, where to buy and then where not to buy.
[00:05:52] There were some really experienced investors that I started chatting to. And some of them just helped me immensely. There was a lady on the forums called Beanie Girl. And she helped me a lot because she was very experienced with the Logan area. And I remember reading her posts on Somersoft and just getting a lot of information on that. So she definitely helped me in terms of formulat[ing] my strategy in terms of purchasing in Brisbane.
He flew up to Brisbane every two to four weeks, packing property searching into every second of his weekends away that he could.
[00:06:28] I can tell you right now, waking up at four [or] five o'clock in the morning on a Saturday, after you've worked for a week, jumping on a flight, driving around for a holiday, looking at open homes, coming back on the 3pm flight to come back to Sydney because I didn't want to pay for accommodation— there were times during that I was like, 'Frick, what the hell are you doing?'
[00:06:52] It was okay if you found a property. But most of those trips were fruitless. And I guess it was just really wanting to quit corporate and having that goal in mind that really kind of pushed you ahead. But yeah, 100% there [were] times during that period that I was questioning myself. And then on top of that, Brisbane, as you know, did absolutely nothing for the next five years.
[00:08:12] It's almost like you put it in terms of the gym analogy where I've been going to the gym for six months, but where's my six pack? And it's like, 'I've bought two properties, and I've held them for three months, why am I not financially free?'
[00:08:28] It's funny to say that, but it is so true, and you don't see those results for a long time. And property is such a long term game that you don't ever know. Because, I mean, we can talk about capital growth, and that's kind of a separate topic, but you just do not know when properties will go up. So all of this time you think you're doing the right thing, but are you really? And that definitely plays on your mind over time.
He was able to overcome this and keep going, but not before squeezing in one last side-splitting story.
[00:09:15] On that first trip that we went up, we went to hire a car. Me and my dad went to the hire car place, I think it was called Alpha Cars or something. And the guy at the counter goes, 'Where’re you going to?' And I'm like, 'Logan'. And he just made this face and goes, 'Why the hell [are] you going there?' And I'm like, 'To buy properties.' And he was like, 'Are you serious? Property prices never go up there. That place is, like, the biggest dump ever'. And my dad's, like, pulling out my check being like 'Are you sure you want to do this?'
[00:09:41] And then this was Logan, so we drove to Logan. I don't know really the area. I've only read up about it. And somehow the streets took us to Woodridge Station. And for those that know Logan, Woodridge Station is, like, the roughest part. And when I got there and I got out of the car I was like, 'Holy crap. What they say on the forums is actually kinda true'.
[00:10:30] After we drove around some of the other pockets were a bit better. But yeah, that was definitely. So that planted the doubt and the seed. So in terms of your question, kind of what overcame that, and how I stuck to the course— I think it was a lot of conversations that I had with other investors.
Conversations with other investors have helped him out more than once. He uses these experiences to offer advice to those just starting out.
[00:10:52] Who you speak to, and who you surround yourself with is so important. When I first got into property investing, I was just so excited by it. It was as if I had discovered sliced bread. So I would speak to anyone that would be willing to listen to me. So all my high school friends, whenever we had a catch up, I'd just give them lectures about property investing and then why it would work. And they were like, 'Frick, here we go again, Michael's going to go off on a tangent'.
[00:11:20] And they were all telling me that I was going to start with what happened in the GFC in the US and I was bringing it to Australia. And they were all adamant I was going to go bankrupt. And of course when you're starting out that plays on your mind. Family [said], 'I don't know if it can work' and stuff like that.
[00:11:37] But the thing that got me through that was going to Property Chat meetups, speaking to other investors, speaking to people that had come here before me. And I remember having a few conversations with people from the forums that had 20 [or] 30 [or] 40 properties, and some of the things that they said and some of the regrets that they had.
[00:11:58] There [were] two things that kind of stuck out to me, which was a common theme, where a lot of investors reflected on their early stages. One of them was when they could buy, they didn't go hard enough. So maybe they bought one every couple of years. And when they look back, they were all like, 'Oh, frick, when I had that opportunity, I wish I bought a little bit more'. And speaking to my clients today that have bought in Brisbane, guess what's the number one that they say?
[00:12:27] 'Wish I'd bought more'. If you bought in Sydney, you wish you bought more.
[00:12:34] A lot of those people on the forums are talking about western Sydney. And I could kind of see what happened. So I held on to that belief: Maybe the same thing might happen in other markets. So that was one.
[00:12:45] And the second one that they've said was: I sold too soon, or I sold when I should not have sold. So that kind of formulated [the thought that] okay, this is a long term game. I'm going to buy, I'm going to hold. No matter what's happening in the market, what other people are saying, I'm just going to hold for as long as I can.
[00:13:03] And that was something that through all of those conversations that I have with the investors that came before me, those were the two things that stuck in my head. And I'm thankful for those conversations, because after holding for five [or] six [or] seven years, now I'm starting to see some of the fruits of that labour.
His goals change as time goes by, and he remembers his first goal— or he tries to.
[00:13:55] Touch football, aside from property investing, was my life. And all I wanted was to replace my work income, then I could just train and play touch football as much as I can. Which was $80,000 at the time, so that was my first goal.
[00:14:13] And then it wasn't until I started my business that we got the passive income of the $80,000. But then it kind of grew from there. And then over time, you kind of develop your own goals and so on and so forth. Talking about goals, that's another thing. When you get into property investing, people ask you, 'Oh, what's your goal? What are you trying to achieve?'
[00:14:32] And before getting into property investing, I didn't even know what goals were. It's like, yes, you would go to your job and your manager will set your KPIs and your goals for the year. But I would never set goals or even think of setting goals for myself. So it was just a very foreign concept.
[00:14:52] Going through the whole investment journey, now I realise the importance of it. Because when something happens when you don't want to put your head or you think, 'Oh, why am I even doing this?' The thing that pulls you through is going to be that goal.
[00:15:05] And, you know, goals have changed over time. My strongest burning goal was to quit corporate, to replace my work income and quit corporate. And I think that's why, in my first two years of investing, we went from those two properties to 14 properties in a space of two years. So from 2013 to 2015, and then that's when I quit corporate.
[00:15:25] After that, I can honestly say that my goals have not had that same burning desire. And that's probably why in terms of, yes, the number has grown, but purely in terms of the speed or the meaningfulness of it, it's not quite there. But in saying that over time, you do come up with other goals like 36 by 36. Do I go to bed really wanting that 36? Not really. So I guess a piece of advice is to get a goal that's really burning. And if it's so meaningful to you, you will find ways to make it happen.
All Roads Lead to Logan
Xia elaborates on his property portfolio, jumping to 2013 when the market in western Sydney had started to go up and encouraged him to look further north.
[00:16:21] I was starting to buy in Newcastle. And then within the space of a year [to] a year and a half, those markets started booming.
[00:16:27] And then when I had completed my renovation, poured out my equity and I was ready to buy again, I could not get those same prices. And it was always hard to pay $300,000 [to] $400,000 for a house that you had paid just a year [to a] year and a half ago for $200,000. It just didn't make sense then.
[00:16:46] But my other main hurdle at that point in time was borrowing capacity started becoming harder. Now, this was pre APRA, where borrowing capacity is so much easier than today. But even then, on the $70,000 [to] $80,000, there was only so much that I could do if I was going to buy properties with lower rental returns. Like 3% or 4% was not going to get me where I want it to go.
[00:17:09] So the only area that I could find where it satisfied that you had to be close to a CBD. It was around the $300,000 to $400,000 mark, because that's where I could get the deposit for the purchases. And I needed something that gave me 6% or 7% rental return. And I looked everywhere in Australia, and the place that I kept pointing back towards was Logan.
[00:17:33] Now I'm sure a lot of your listeners would know Logan today. But back then Logan was a dump. And it shouldn't have been, because it had all the characteristics. But back then people would laugh at you for buying in Logan, just like in 2012 [or] 2011 people would laugh at you for buying in Mt Druitt. It was exactly that same thinking.
[00:17:53] But at least in Logan, not that it was a great area and somewhere I was dying to buy in, but at least it gave me the numbers that allowed me to continue buying my property portfolio. So from properties five to 14, I just continuously bought in Logan until I quit corporate.
[00:18:13] Wow. I'm on the edge of my seat going, 'I want to know what's next'. And at one stage as well, too, you moved up to actually Queensland to be literally living there for how long again?
[00:18:27] I moved up there for two or three years. And the main reason was to be close to my mentor. So at the end of 14 properties, to put it into perspective, this was like pre APRA. My work salary was like $80,000, and I had loans [of] about $3.3 million. You kind of talk about that today and it sounds crazy, but that's what the lending environment was like back then.
[00:18:53] In saying that, you can still do a lot of the same things that you could do back then, as long as you follow the same philosophy. Not to kind of that scale, but it is definitely still possible today.
[00:19:04] But after that point, I then couldn't borrow any more. No bank would absolutely touch me beyond that point. And I love property, I loved everything there was about property and I wanted to continue buying. And the goal was always to quit corporate. And after pondering for a long, long time in terms of what I should do in the property space, and I explored literally every single avenue under the sun, whether to be a real estate agent, I was even thinking of getting my builder's license. And this is coming from someone that has trouble changing a light bulb, so that's kind of how far of a stretch it was.
[00:19:39] I thought about [it and] buyer's agent and that was really high on the list. And I finally landed on mortgage broking. And part of the reason for that is what Rolf had done for me. I could see the business model work, I could see that if you help your clients in the right way, they can build a large and very successful property portfolio.
[00:19:41] So I begged Rolf to be my mentor. Luckily he said yes. And it was literally I finished on a Friday and on Monday, I was driving up in my car with all my belongings and then moving up to the Gold Coast.
[00:20:16] Wow, that was such a drastic change. [What did] your parents and family and friends all say? Because I remember when we had that conversation, I was a bit shocked, going, 'What? You're off to Queensland?'
[00:20:26] I left everything behind to chase a dream. And it was hard. For the first couple of years, I would live [in] Airbnb[s]. Just to save, and it didn't make it easier. It's a side story, but I had a very close friend, Steven Ryan, and we can chat about Steven Ryan. He's actually a very successful YouTuber now, he's got hundreds of thousands of subscribers.
[00:20:51] He's no longer in the mortgage broking space, but we both entered mortgage broking at the same time. And we both lived at the same Airbnb, worked from Rolf's office. And for the first couple of years, it was almost kind of like your partner in crime in terms of building your mortgage broking business.
[00:21:11] It was definitely hard, but also really rewarding. I think back to those times, very fond memories. But it also gave me that ability that being based on the Gold Coast, every single weekend, I would drive up to Logan to go up to open homes. And it was so funny back then, because when you first start out as a mortgage broker, I was literally known as... if you were from Sydney or Melbourne and you were an investor wanting to buy in Logan, then you'll use Michael as a mortgage broker.
[00:21:41] Mainly because I had no other cut through in any other market. No experience as a mortgage broker, probably not very good as a mortgage broker. But in terms of that very, very small niche, I knew my stuff.
The Logan Bus
[00:21:52] So literally for about a year and a half, every single weekend, I would have a client either from Melbourne or Sydney come up to Logan. I would meet them at the first property during the day and then we'd just go through a whole bunch of open homes.
[00:22:06] And I did that for a lot of our clients in the early days. And there was even a nickname for it. Because at one point it became the Logan Bus. There was a time we would have, like, seven [or] eight investors come up and think of it back then when we would all go into an open home. And this is back when agents didn't see anyone in their open homes. And the smile on the agent's face when they had seven [or] eight investors all come in that were all financially able to buy the property.
[00:22:35] The agent must have loved you. Every single weekend. Yeah, there's that bus coming, it's the Logan bus.
[00:22:44] We have formed some really, really good friendships with some agents up there. They even came to our wedding and stuff like that. So it was a lot of fun during those times.
Although he loved his time in Queensland, something— or someone— was pulling him back to Sydney.
[00:23:18] [What] brought [me] back to Sydney was love, actually. I met a girl. And she was in Sydney. And I precisely remember it was over Christmas. So over Christmas, I'd come spend time back with the family. I came back, we went on one date. And then after that I never left Sydney again. And then a couple of years later on, we got married. And now we're expecting our second baby in April. So it's been a good couple of years.
[00:23:49] Congrats, congrats. The rest is history, as we all say.
[00:23:54] In terms of the property front, what happened during those two years is when you start your business you can't buy for two years. And I remember specifically those two years [were] very hard. I'll be looking at all these great deals my clients are buying and you're just, like, itching at the teeth to purchase more properties. So that definitely fueled me to work harder in the business to get the income up so when I could do my second year's tax return, I could then start buying again.
[00:24:21] And that's exactly what happened. After two years, we pulled out a whole bunch of equity from all the earlier 14 properties that we had. I then used that money and then continued to apply. And it was to the point where I was looking to buy properties again, and this would have been around 2017 [or] 2018.
[00:24:42] In the back of my mind, part of me wanted to buy elsewhere. But every time I ran the numbers, it just kept pointing me towards Logan. And it got to the point where today we hold 25 properties in Logan. Every time I wanted to buy elsewhere, he just came back. For [a] period of time, you just could not beat $300,000 [to] $350,000 properties yielding 6%. And it was 25 [to] 30 kilometers to the CBD.
[00:25:10] Even I was thinking, 'Why are prices so cheap? Why has it not gone up?' I'm buying today, even cheaper than my first couple of properties that I bought. And it just kept going for a number of years. And we just kept buying, kept buying. It got to the point [where] even my wife was like, 'Don't you have enough there? Like, we should be saving for our PPOR. But you keep wanting to buy these'.
[00:25:43] But that voice in my head said, 'You didn't go hard enough where you could have'. My belief for the area was just so strong. And from speaking to the agents from spending so much time on the ground there and you just had so much belief in the area. Thankfully in the last year, things have started to change.
[00:26:05] So to put these into perspective, even a year ago, so in April 2021, we bought a three bedroom high set in Logan central for $247,000 at auction. It was a steal of a buy, don't get me wrong, it was a great purchase. But that property today, you're looking at anywhere between at least $400,000 to $450,000.
While his Sydney, Coffs Harbour, and Newcastle properties have been doing well for a period of time, his Logan ventures are starting to catch up.
[00:26:52] The bulk of the growth in the entire property portfolio across the 25 in Logan has really only been in the last year. So if I'd come on the podcast last year it would have been a very different conversation. Maybe that's why I haven't come on.
[00:27:16] It was difficult at that time, [for] everyone that did hold their properties for that period of time. People now today are like, 'Of course it would have gone up'. But for the people that did hold during that time, it was a continual joke. Whenever I spoke to clients, it was like, 'Oh, when is this ever going to do something?' So the fact that they have held on until today, I think kudos to everyone that did hold on.
$10M in 9 Years
[00:28:02] So just to sort of get perspective, what is the value of the property portfolio worth right now?
[00:28:08] At the moment, in total, we're looking at a touch over $26 million.
[00:28:11] Wow, that's phenomenal. And how much did you purchase all those properties for in total?
[00:28:17] Purchase price, a little bit under $16 million. So in the space of... I mean, not counting the two properties that are held. So prior to going on this investment journey, because we started with two, approximately you're looking at about $10 million there in about nine years.
[00:28:35] Phenomenal, man. Congrats. That's fantastic. Now that you've got a lot of equity in it, I'm assuming you're going, 'Let's buy more!'
[00:28:46] I'll say this kind of like a caveat in terms of property investing, like everything has its pros and cons. I will say the biggest headache in terms of holding properties is the property management. So I don't want people to go in with the notion that it's going to be easy, you're going to have no headaches, and you're just going to be buying a property and then a year later, it's going to give you $200,000 because that's not what it's like.
He approaches everything with great passion and enthusiasm, always taking the time to thank and acknowledge those who help him along the way.
[00:29:09] The number of headaches that we have, the number of tenant issues, repairs, maintenance, properties needing to be leased out... it's just endless. I'm very lucky in that regard where my wife handles all of that. So since then, she's actually started her own property management company in Logan, just to look after our own properties. And I guess that's a benefit of having them all literally within a couple of suburbs of each other. But it is a lot of headache.
[00:29:40] You do also have to think through whether it's feasible to manage all of these properties. When I was growing my property portfolio, [there's] another story where there was points in time where I had properties vacant for more than six months. And the truth of the matter is as bad as it was, I just forgot about that property.
[00:30:07] It was in the back of my mind, but I was trying to run my business, trying to get that up and running, had these 14 properties in the background. I don't check my rental statements with a fine tooth [comb]. You would chase an agent and they'd be like, 'Yeah, it's happening, it's happening'.
[00:30:23] And one month rolled into two, two into three, and before I knew it, it was vacant for six months. And just a lot of those things. That's what actually hurts the bottom dollar. If it wasn't for someone like my wife now actively going through the property portfolio, making sure the water rates, the water reimbursement is paid, that we're paying the council rates on time to get a discount— all of those things, if you don't have a good management for that, then property investing can be very costly to hold.
[00:30:55] Overall, I'll be biased to say a mortgage broker is key to your team. But I'll actually say the most important person to your team is a good property manager. Especially if you're looking to hold a large property portfolio.
[00:31:10] Does that mean then you've actually got people on the ground there, and you guys remotely manage the people to actually do the repairs, and maintenance and so forth?
[00:31:17] We've got someone holding our keys, we've got a good team of trades. So if we ever need something, we've got someone to send. We know everything that's happening with our tenants, so that makes things a little bit easier. But that also comes from a lot of time and effort put into those properties.
[00:31:35] At the moment now, I would even say that our properties in Logan are better well looked after than some of my properties in Sydney, like, I don't know what's going on with them. But we know exactly everything: when they're paying their bills, when their next lease is up, all of that we know exactly.
[00:31:56] Obviously, it's not going to be feasible for everyone to be managing their own properties. And I wouldn't recommend that if you only have a couple of properties. But the key takeaway message is to get a really good property manager. And if they're not looking after your property portfolios, don't hesitate to move. That's what happened to me in my early days where it wasn't leased for six months, and I still believed the property manager that they'll find a tenant
[00:32:20] Me too, I will admit to that. I had exactly the same thing. And I thought, 'Oh, this property agent will come through'. And I was so frustrated. In the end, I gave up and I just went to another one and I was so, so happy that I did because I was like, 'Why did I not do that three months ago?'
[00:32:37] I've had this conversation with other investors, and they're like, 'After the renovation finishes we'll change agents'. That renovation's not going to finish.
[00:33:02] So to answer your question, in terms of where to from here: In the back of our mind, looking for that dream PPOR. That's definitely on the list. But being in Sydney, it's like you're looking at the Sydney property prices and being someone that likes to get good value, I just can't bring myself to at this point in time.
Xia is keeping his eyes on the market, looking out for an amazing deal that will help him find his dream principal place of residence. While he’s not likely to turn down any good investments that come his way, his main driver at the moment is the home he can move his family into. Luckily, he’s not feeling that sense of urgency, which has gotten him into trouble before.
[00:33:55] One of my worst deals I bought, funnily enough, was my 10th property. And why it was the worst [was] because I just so wanted to hit this double digit. It was like this magical number for me. So I literally just bought any property off the street.
[00:34:12] This was going back [to] 2014 [or] 2015. It was in Woodridge, I paid $373,000 for this fully renovated, high set, and the amount of issues that I have had with this property... like, even the bathtub wasn't plumbed in. You would turn on the tap, and the water would just go out from the bath. And we didn't even know. I've spent close to $50,000 [or] $70,000 just into that property.
[00:34:38] The main reason why I was mad was because I rushed it. I just really wanted to hit the goal. Whereas now, we're not desperately needing to buy a property. But if it's a really good deal, then yeah, we'll make it happen. So that's also made that our deals are a lot better now as opposed to kind of rush for it.
It’s important to remember that if somebody’s trying to pressure you into making a deal, no matter how desperate you may feel, that deal might not be the best one for you.
[00:35:32] It's so hard when you first start because you see the market getting away. Particularly even, say, for instance, in Logan. Prices are literally going up $10,000 a week. And it's just you feel that if you don't buy this one, there will never be another one.
[00:35:46] I certainly felt that when I was building my property portfolio. What helped me overcome that was actually through the mortgage broking business. Every single week, I see deals across my desk. And every single week, there are properties that I think are fricking amazing, and that I would buy myself.
[00:36:04] So that's kind of sated that desperation to then be needing to buy last week, because if there [were] no good deals, then we probably won't be in business anyway. So that's made me realise that a deal of a lifetime comes around once a week.
Harry Potter, Is That You?
Over the last couple of years, finding their PPOR has been a hot topic in the Xia household. It’s such a big discussion that it’s bigger than Xia’s office, but then again, that isn’t hard!
[00:36:48] There were times when the property price wasn't going up, then there's a lot more pressure from the spouse to stop doing what I was doing. In saying that, even to this day, we are quite frugal in terms of where we are. We are living in a two bedroom townhouse. It's nothing flash by any means. The office that I work from, the joke between the brokers is actually I work in a cupboard. Like, literally, a cupboard. It's a walk-in wardrobe that we knocked out. And it's about 1.5 by 1.5 metres, and I work from home.
[00:37:23] My wife, she'll just slide the lunch underneath the curtains every day. And I just stay in this cubicle writing loans. So by that, it's nothing flash, and we've paid our dues. But when we do buy that PPOR, I'll come back to you where we've got a good answer on that.
[00:37:43] I think when the market is right. I mean, people say Sydney goes up forever. But there [have] been times over the last five [to] seven years where Sydney has dipped, and it hasn't been crazy. Like, I'm not waiting for the market to crash to buy. But at least it's not silly. You're going to an auction for a property priced at a million and it goes for $1.5 million. Like, I just can't bring myself to buy in that market. So I think [I’ll] just wait and see.
[00:38:10] I think people will know when it's the right time for them. And it depends on your circumstances. It's lucky that my wife is understanding. But there will be other times when, like now, our second is coming in April, so very shortly, so there is definitely more pressure now. So, yeah, I'll let you know.
Pay Your Dues— It Pays Off
As a big believer in the ‘happy wife, happy life’ philosophy, he sees buying your PPOR as a lifestyle decision more than a timing decision.
[00:38:50] If it's purely financial, and you're looking to make money from that transaction, then I guess you just need to do your own research and decide whether buy[ing] in Sydney in 2022 is the right call or not. Or maybe you look elsewhere and think that maybe those areas give you better numbers.
[00:39:25] I am a believer of delayed gratification. You pay your dues. I believe that everyone has to sacrifice at one point in their life, whether you sacrifice when you're a little bit younger, and your later years [are] a little bit easier. Or in some instances you sacrifice much later in life and then there's not that many options. So that's kind of what I'm hearing, too, is pay your dues now and then later in life, you're going to then have a lot more options and choices.
The properties he owns are scattered up and down the New South Wales coast, but his latest ventures couldn’t be further from home.
[00:40:17] We've got 10 properties in New South Wales, and that's spread between Sydney and Newcastle and then also Coffs Harbour. And our recent purchases have actually been in Perth. So I guess that kind of follows on. The main question that I get, when I speak to clients, is 'Where should I buy?' So if it was me in 2022, looking at where the numbers are, I would look towards Perth.
[00:40:46] There's a whole bunch of reasons for that. Brisbane has had an amazing run in the last 12 months. It's hard to buy properties, in terms of what we were buying them for, to what they are now. But in saying that, if I had no holdings in Brisbane, I would not hesitate to buy in Brisbane. In the grand scheme of things, for $500,000 [or] $600,000 you can still buy within 30 kilometres of the CBD.
[00:41:10] And if you hold that until 2032 until the Olympics, I'm sure you'll do very well out of them. But in terms of every purchase that we're buying in Brisbane, now we're getting reamed by land tax, so it doesn't make sense there. So looking at where the other numbers make sense if we looked at Australia holistically, Sydney and Melbourne have had great runs over the last couple of years. [It's] hard to buy into those markets.
[00:41:33] Brisbane and Adelaide have followed each other in that sense. Adelaide's done very, very well too. Hobart has been an amazing performer for the last couple of years. So that's out of the picture. And Perth is starting to recover. Perth at the moment now feels like what Brisbane was like about 12 months ago. It's starting to bubble along.
[00:41:55] To put it into context, for about five years, the most loans that we did for property investors was by far and away Brisbane. But in the last three months that started to change, and we're doing a lot more purchases in Perth. On Friday, the Friday that just passed, on that one day, we had five properties settled in Perth. So a lot of investors [are] now moving towards it.
[00:42:21] You want to look at where it is on the property cycle, in the grand scheme of things prices haven't moved for about 13 [or] 14 years. Before, Perth vacancy rates [were] always an issue. Whereas now vacancy rates across Perth is, like, less than 1%. It's amazing.
[00:42:39] Rental yield, my first purchase in Perth, we picked up for $311,000 and it rents for $450 per week. So that's more than 7%. So a lot of those things are pointing towards Perth. But even just looking at yesterday and speaking to other investors on the ground, it is definitely starting to pick up. The amount of competition, everything that's going on in Perth is starting to get busier by the week. And I think when the borders open up in Perth, it's just going to even be a little bit harder to buy there.
The Emotional Rollercoaster
He finds the technical knowledge of property investing to be pretty straightforward, such as working out rental yields and the overall buying process. However, there’s one aspect that’s anything but cut and dry.
[00:44:03] It's the emotional side of things that's a lot harder. I've had clients where you're so set on buying a property, you think you buy that property, and it's going to be your ticket to financial freedom. And for one reason or another, maybe someone else offered a little bit more or when you do the building and pest it turned out to be really bad— it's those emotional rollercoaster letdowns that are so hard to get over.
[00:44:29] And what helps you get through that are those property books. So when people ask me, when they want to get into property investing, the books that they want to read are the property investment books. And yes, they do help you with the technical knowledge. And that's very important for when you start out, but the books that actually help you the most are the mindset books.
[00:44:53] And these are the books that actually Rolf geared me a little bit towards. So to answer your question in terms of books, I think that technical knowledge in terms of property investing in Australia, there's one book by Jane Somers. I think it's called More Wealth From Residential Property Investing in Australia.
[00:45:13] That book is phenomenal. That book was written 20 [to] 30 years ago. It talks about Sydney being unaffordable at $300,000. And it talks through the mechanics of buy and hold property investing in Australia and the theories behind it. So I read that book again last year. And even though the price brackets are different, it's as true today as what it was back then.
He admits that some of the advice in the book is a bit dated, but its overall premise holds up very well.
[00:45:37] She does, in the books, advise [you] to pay off your PPOR, which I think is a little bit different now. I mean, it's a lot harder to pay off a $2 million PPOR before you start investing. But if you skip past that, the overall theory of buy and hold, she breaks it down very, very well. So I'm a big fan [of] that book.
[00:45:56] In terms of technical knowledge, I think other good resources for that is Property Chat, and obviously, Property Investory podcast. That's always my go-to recommended podcast. And mainly just because you hear so many different stories. I believe there's many ways to skin a cat in property investing. Yes, I do buy and hold, I do some renovation. But I've come across so many clients that use other strategies, they specialise in that one strategy, and they just do it phenomenally well.
[00:46:28] I've got one client up in Brisbane that just develops within the five to 10 kilometre radius of Brisbane. And sometimes developing can be very hard, people don't make money from it. But he's got it down to a science, and he does it phenomenally well. So there's many ways to skin a cat in property investing.
[00:46:47] I think listening to other people's journeys, through your podcast, you take key bits from each story. And then you distill that, and then compare it to your own journey. Because everyone's experiences, knowledge, risk profiles are different. So I think when you take from everyone's stories, then you can then formulate that for yourself.
[00:47:17] The technical side of things I'll just quickly touch on in terms of the emotional and the self development books. There's one book that I highly recommend, and that's called Slight Edge. I don't know, have you come across it?
[00:47:32] I've read it! Jeff Olson, I love it. And I've listened to it multiple times. And that was actually through your recommendation when we've chatted multiple times ago. And every time I listened to it... I probably should let you say it!
[00:47:48] The background on the book for the listeners, Jeff Olson goes and studies a whole bunch of people and sees what are the differences between people that are very, very successful to the people that aren't very successful. And what are their habits? What are the things that they do that shaped them?
[00:48:09] He kind of boils it down to the two words of slight edge. And I won't spill too much about the book. But essentially, what it is, is it's your everyday, small actions that you do that shape in terms of your success.
[00:48:26] So in terms of success, it's not one thing that you instantly do, that you become ultra successful. And to reflect back in terms of the gym: It's not one session that you do, and you come back with a six pack. But if you do something consistently, do it every day, do it well for the next six to 12 months, over time, those small incremental sessions will then give you that result at the end. And the book just breaks it down in many, many examples. And it's very easy to understand.
[00:49:00] And similar to yourself, I remember when I was driving on the Gold Coast, going between Rolf's office and also my Airbnb, I just had that CD on repeat for, like, a year. I think it just ingrains you in terms of what you need to do to then be successful. So that book I highly recommend.
[00:49:18] And then there's some other ones, like, there's one other book called Personality Plus, and it just talks about people's personalities. You may think it's not related to property investing, but in terms of me working with people, dealing with agents, knowing people's personalities— that book has helped me immensely.
[00:49:37] So if you're negotiating with an agent, if you know what their personality is and what kind of triggers their emotions or their decision making process, then your negotiation game will be a lot better. So Personality Plus would be another one.
[00:49:52] And then yeah, there's just a whole bunch of classic[s], like Seven Habits of Successful People, Think and Grow Rich, there's a lot of these self help books. And I recommend everyone to just go kind of into that category when you're looking at books and just kind of picking through them. But if I had to give two books, I would definitely say Slight Edge, and then also Personality Plus.
39 Properties? No Way
Xia is a man with no regrets, and if he had the chance to go back 10 years, there’s nothing he would do differently. However, that isn’t the case for further back in his past.
[00:51:14] If I go back to the 10 years prior to that, it's almost like, 'How much more time do we have?' But I won't go into that. But to answer your question, I would say one would be to dream bigger. Some of the listeners may say, 'Oh, sitting on 39 properties, that's great'. But I can tell you too, as I was growing that property portfolio, looking to build my mortgage broking business, it just felt that it couldn't happen fast enough.
[00:51:46] And then also that in terms of getting a little bit impatient, trying to hit certain goals, and overall, in terms of where I am, and you can think of what the possibilities are— overall, I think that I haven't dreamt big enough, in terms of actually what's possible.
[00:52:11] Because if I said to myself when I first started and said, 'Hey, Michael, in nine to 10 years' time, you would be at 39 properties', I'll tell you, 'Frickin' go away, just get out. There's no chance'. When I was at my second property, I would have been happy with five or six properties. So to be where I am now, I would have told that Michael, when I was sitting on those two properties, to dream a little bit bigger.
[00:52:39] Now over time, yes, that dream has grown. But it is something that I'm continually still exercising myself in terms of okay, maybe there is more. And then there's bigger things out there. In the times that I do get a buzz is when I speak to other people that are going down this same journey. And they have even bigger goals.
[00:53:00] And to give you an example of that… we touched on Steven Ryan earlier, actually, where Steven Ryan, me and him started mortgage broking together, he quit broking after two years, went to travel the world and now runs a very successful YouTube channel. And his goals are wild. It's like literally [meeting] Elon Musk.
[00:53:23] So he's devised this whole thing where he's going to now uproot [and] move to the US, he's going to get enough capital coverage through his YouTube channel, to then go and then interview and then meet Elon Musk. His channel is basically on Tesla. So kind of big world dreams like that.
[00:53:40] And I think that we're only on this earth once. And if I see other people, it's most people's dreams and goals are not that big. Or because of everything that's happened in their life, they've made their dreams and goals match that. And it's so easy to do.
[00:54:03] I'm guilty of that too, particularly early on. Rolf used to say, 'Hey, Michael, you need to increase your income'. And I used to get very defensive, and I'd be like, 'Well work only gives me 2%, how can I increase it beyond $80,000?' And almost argue back at him.
[00:54:24] I have the same conversation with some of my clients now. I'm like, 'Look, you need to increase your income', and they say the same things. And I can completely understand where they're coming from. But it is hard. But once you get into that thinking and that mindset, it's almost there's just so many opportunities out there.
I Can See Clearly Now
His main property-related goal for the future is to find his dream principal place of residence, which aligns perfectly with his personal goals.
[00:55:22] I would say the big burning goal at the moment is a nice PPOR. And every year that passes, that PPOR, the vision of it gets a little bit nicer. And ultimately, it is to spend more time with the family. I share a common goal with a lot of people out there. Our second is due in April, and our first girl, Zoe, is already 18 months, and I've just watched her grow so quickly in front of my eyes. And if you look back on the 18 months, it's almost like, 'Frick, where has our baby gone?'
[00:56:06] I can tell you from experience, my kids are seven and five, ‘What has happened to my seven to eight years?’
[00:56:14] I want to set up things in a way through the business, through property investing, that I can be there with my children, and to see them grow up. I'm lucky in the sense that I can work from home. So that helps things. But also, I do want to be able to take them on holidays— when we can, when COVID finishes— to travel the world [and] experience things together.
[00:56:39] So that's kind of the next phase of life, what I'm aiming towards. Nice PPOR, to then we spend all of our time at home so I think that's very important. To be there with the kids, to grow the family, to spend time with them. I'll be brutally honest, is the 40th property going to give me that much more joy than the 39th?
[00:57:09] When I signed that contract, and you know you bought a good deal, and you made, you know, 10% on the way in, it does give you a bit of a buzz on that day, but it fades out very quickly. But being able to be the only dad at my daughter's swimming class, and to be able to take her there, I think for the next journey of our life, that will be the most important thing.
[00:58:07] I'm lucky in the sense that Jo gets to stay at home a bit more and then spend time with the kids, but because I'm so busy too, with property investing/mortgage broking, sometimes it's like I might not spend quality time with Zoe for a week. And already she's doing different things to last week. So I definitely want to be able to experience all of that.
Hard Work vs. Luck
[00:58:34] Well, you've shared an amazing, amazing story, Michael, and thank you so much for doing that. I guess the last question I usually ask the guest is how much of your success has been due to skill, intelligence and hard work? And how much of it has [been] because of luck?
[00:58:50] Don't get me wrong, I think luck is definitely an element. I was lucky enough to catch the back end of the Sydney wave. I was lucky enough to experience that in Newcastle, be around APRA when the lending was a little bit easier now to catch Brisbane. So don't get me wrong, luck has been an absolute key factor in it.
[00:59:17] But I've seen so many other people start their journey after me or start their journey during the same time as me. And whether they get lucky or not, it hasn't really affected the result as much. I think the key in all of that, that you said, I would have to say is hard work.
[00:59:37] We can go on for a lot longer in terms of the specifics that I think that affects someone's journey. But I think a lot of it is hard work because a lot of the time it won't be glamorous. Property investing won't be easy. But if you're willing to push through that, to continually show up, then over the long run, kind of the Slight Edge concepts, you will do well.
[01:00:07] I'll give you a story around this. In terms of clients, I've met many, many clients. And I can tell you that in terms of what they earnt, to their resources, to their levels of success in property investing— and I'm only talking about property investing here, because there's other definitions of success— it's not really dependent in terms of what they make or what they have. But it's about how long consistently, they can keep being interested in property investing.
[01:00:41] It's the same for my gym. I might get motivated to get more fit than I am. And a couple of weeks later then I've stopped. Funny story on that too is three weeks ago, I bought this program in terms of stretching online. Being desperate about getting healthy, you do silly things. But this program said that in a month, I could do my full splits.
[01:01:08] I've never heard that before!
[01:01:13] It was $17 plus an extra $8 for the added program. But it promised me that I could do my splits in a month. I can tell you four weeks later, I still can't do my splits. So why I kind of add this is part of the program is you have to do this thing every single night. For the first three days I did. After that, no. And now it's probably [that] I'm lucky to do it once per week. And that's similar to a lot of property investors.
[01:01:41] Unfortunate as it is, when they hear this podcast or when they read a book or they speak to a friend, they're super excited. And they're just all about property investing. And they might be about it for a month or two. And then after that, probably just on the backburner.
[01:01:58] Maybe they had a bad experience with an agent. Or maybe they spoke to a friend that dished property investing. And then after that, they don't really look into it. And maybe the next time they look into it was like a year and a half, but maybe then the market has gone and they're like, 'Oh, frick, I should have looked more into it'.
[01:02:16] That's actually— unfortunate as it is— the most common experience that I have with property investors. I have worked with a few that [are] not like that. Every single day for a continual period of time, for a number of years, they've looked at deals every day. They've spoken to agents, they've messaged me and [said], 'Is there anything that we can do to help me get into the property portfolio?'
[01:02:40] And those clients I have stuck at it every single day, explored all the opportunities, worked on becoming a better investor every single day for a number of years. Those are the people that have had very, very good results. When you break it down like that, it doesn't seem like rocket science. But to do it every single day is not an easy thing.
Thank you to Michael Xia, our guest on this episode of Property Investory.