Frank Raiti started property investing from a very young age, and has seen nothing but success both personally and in his professional capacity as a buyers’ agent advocate. Raiti tells us everything you need to know about investing and the endurance of the property market.
In this episode, we throw it back to the 80s and 90s. With no bike helmets and less parental supervision, the world was an oyster for young Raiti. He tells us about growing up in Sydney and the influences around him that started his extensive investment
history. With a background in finance, Raiti expresses the importance of prudent investment in this can’t miss episode!Timestamps:
1.06 | Starting Property Investment At 19
5.51 | Thanks Dad! Mentors in Raiti’s Investment Journey
10.40 | Half-Time Property News
13.26 | From Losing Out on Margin Lending to 9 Investment Properties
17.25 | Property Market Endures
20.10 | Born for Property Investment
0.57 | The Importance of Seeing Investments
7.41 | Everything and the Kitchen Sink!
14.35 | The Liberty of Property Investment
18.19 | Work Hard for What You Want
22.44 | The Best Advice Ever
25.37 | Making Your Own Luck
Resources and Links:
[11:45] I invested in my first property when I was 19 years old, and have been, you know, now coming up to 29 years investing in property. So it's a great passion of mine, I love it.
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 to Sydney-based head of an investment buyers agency Frank Raiti, whose 29 years investing in property lends him a unique expertise. We’ll explore his journey from a financial background into the business of being a buyers’ agent, and learn about the ins and outs of the property research he carries out.
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Starting Property Investment At 19
Starting his portfolio when he was just 19 years old, Raiti has extensive experience in property investment which lead to where he currently works as a buyers’ agent. So what does a typical day look like for him?
[1:06] It can range from anything, from prospecting for new clients, we have a lot of inbound leads come to us and [inquiries]. So following up on those and just having a chat to people and seeing what their strategy is. Why [do] they want to get in? Why are they looking to invest in property or by an occupier?
[01:26] Finding out a little bit about their story, having a casual chat, going on to managing current clients, sourcing properties for them based on the criteria in their brief, whether they be off market properties, pre market, on markets, or monitoring the property market and stock of what's out there.
[01:47] Obviously, that involves talking to a lot of real estate agents. And we have a lot of close relationships with real estate agents, so calling them in the relevant areas that we're looking to buy for our clients, going to inspections, taking videos, photos, all the applicable information that we can pass on to our clients, and explaining that to clients and whether we're recommending that property or not. And obviously, then getting into negotiation with real estate agents and trying to buy the best property for the best possible price for our clients.
Raiti grew up in Sydney and went to a public school in Homebush, which shaped his early years.
[2:50] I grew up in Strathfield, in the Strathfield area for anyone who knows that area. I went to Homebush Boys High School. So, [I was] a public school boy.Then went on to obviously do some study, post high school basically focusing on accounting and finance.
Raiti looks back fondly on his upbringing in Sydney, particularly remembering the simpler times before a lot of today’s technology.
[3:49] I went to high school, which finished in ‘91. So I went there from ‘86 to ‘91. So I suppose in the glory years of the ‘80s, as they call them. Fun times, no mobile phones and no Netflix and Foxtel and all these channels of choice but playing on the street with my mates, riding our bikes, no helmets, playing cricket on the street, touch football on the street. School was great. There's only happy memories to be honest with you.
He went to TAFE after his ‘glorious’ high school days, doing an advanced diploma in accounting but studying part time instead of full time so that he could get some work experience while he was studying.
[5:19] The HSC results came out and I wasn't aware of how to manipulate getting the best tertiary entrance rank as it was back then. So I did well. But because I did 2 unit subjects, and I applied for uni, not really wanting to go to uni, to be honest with you at that age.
[05:43] But it was like, ‘Okay, well, I've got to do something, I'm not going to be a builder or something like that’. My dad was a bank manager. There's plenty of jobs in accounting back in those days, the first three pages were all accounting jobs in the Sydney Morning Herald. ‘I'll apply for uni’. And the only prerequisite was a two unit maths which I did really well in but because I did only two unit subjects in all the rest, I [didn’t get] a high enough rank to get in.
[06:08] So me and my mate trotted off down to Sydney TAFE and just enrolled in an advanced diploma in accounting course. I made the decision, and this was quite an important decision at the time, like, the course was a two year full time course. But I made the decision to do a part time over four years, with the plan of coming out then going and getting a full time job, just starting at the bottom, starting with any company that would take me in some sort of accounting role. Starting as a junior [and] telling them that I've committed to study and coming out four years later with not only the advanced diploma, but four years work experience, as opposed to doing it two years full time, and coming out with everyone else with no work experience.
[06:53] So that's what I did. And that worked out well. I got a job with a large Australian insurance company and ended up working with them for seven and a half years. Post that diploma, I then obviously got into university and basically had a year exemption because I had this Advanced Diploma in accounting.
[07:14] So I did my Bachelor of Commerce majoring in accounting, and then went on and did my CPA. So [I've been] a certified practising accountant for the last 20 years. Actually, they sent me a little recognition pin this year.
Thanks Dad! Mentors in Raiti’s Investment Journey
Raiti credits his dad as a key influence for his early career in finance.
[7:55] Maybe it's in the blood. My dad worked for Westpac for 30 years. And it's funny with accounting, because the first thing people think is, ‘Ooh, you're a tax accountant. Can you do my tax?’ And I'm like, ‘No, I hate tax! I have an accountant for myself, who does my tax for me’. So it's quite interesting. There's also the chartered accounting and the auditing side of things. And I remember I did, going back to year 10, I did a weekend in a chartered accounting firm. And I didn't like that [and] I didn't like the audit side of things.
[08:30] So I went into, I suppose the commercial corporate side of accounting, and that's where my career took me. Later on, through the years, I became a chief financial officer for various companies. So, look, I'm very analytically minded. I like numbers. As a child, I used to play games with dice and things. And so I suppose I like numbers. It was always going to be an office job. Like I said, there was always… you know, every company needs accountants. And the other thing I liked about it is that the skill is transferable.
[09:05] I started off in insurance. People said, ‘Why did you choose insurance?’ I said, ‘I didn't choose it, it chose me, there was a job going, I applied’. When you were a junior looking to get taken on, you didn't have much choice, but I loved it. I loved the people I work with. And then from insurance, I broke out and went into various companies along the way. Every company needs accountants, and so I thought, ‘Well, I'm always going to be employed’.
He moved around and accomplished a lot during his career in finance, particularly with insurance, IT, sports, and hospitality companies.
[10:24] I never wanted to get into any particular field or industry, I suppose. Like, I started, as I mentioned, in insurance, and then I had a few small stints [of] two or three years with certain companies. I worked for a small Australian IT company that was listed on the ASX, I worked for a large American company [I] reported into. My bosses were in the US, and they were listed on the NASDAQ.
[10:57] I got into sport, I ended up the financial controller for the West Tigers NRL team from 2007 to 2012. Then I got into the hospitality industry and worked for the likes of Penrith RSL Club and the Blacktown Workers club group. So that's sort of the type of industries I [worked in].
[11:17] I had a small stint with Impulse Airlines, actually, I recall when Impulse got taken over by Qantas, so [I] was there sort of through that transition. So it was quite interesting. I've learnt something from each and every one of those industries and companies I've worked for. So that's been great.
**PROPERTY INVESTING JOURNEY**
Half-Time Property News
Once again following a suggestion from his dad, Raiti began investing during the 1990s, close to home.
[16:53] The story I tell people is [that] I started working, as I mentioned, in insurance, and that was probably when I started working there in ‘92 or ‘93. I was literally on $17,000 [per annum]. Now, at that time, that was the going rate for juniors, and it was more money than I'd ever earnt before. The only other job I'd had prior was working in Maccas, for a little bit of time there during school. So it was only $17,000.
[17:25] And then just one day out of the blue, my dad just came to me and said, ‘So what are you doing with all this money you're earning?’ And I said, ‘What do you mean, all this money?’ I said, ‘I'm earning $17,000 per annum!’ I laughed, and he said, ‘Have you thought about buying a property?”’And I said, ‘What? Not really’. Anyway, he just left it with me. He's very smart, my dad. And he just left it with me, just planted the seed. And I thought nothing of it.
[17:49] On Saturdays, I [went] and play[ed] soccer. And then about six weeks later, from memory, I came back to him and I basically just said to him, ‘So are we gonna buy this property or what?’ And he said, ‘Oh, so you do want to buy one, do you?’ And I said, ‘Yeah, yeah. Look, I'm not interested in going and doing inspections and looking at it’.
[18:06] So I'd go out and play soccer on Saturdays, and my mum and dad would go out and do inspections. And then basically, one day they came to me, I still remember I was playing soccer and they're screaming out from the sidelines, ‘We found one! We found one! Let’s wait until halftime’.
[18:23] So I went to look at it, it was a little small two bedroom unit in Croydon Park. We lived in Strathfield. So they didn't venture too far. It was a typical, ‘We know this area, let's just look around the surrounding suburbs, something that obviously [you] could afford’. And obviously my dad had done the sums, being a bank manager. ‘You can borrow this much, if you can get rental income of this much this will help service the loan’ at whatever the current interest rates were back in 1993. And we ended up buying this little two bedder for $83,500. [It] sounds cheap now. Yeah, so that's how it started. So my dad was… I still credit him planting that seed. And I took it from there, if you like.
His parents also dabbled with investing.
[19:21] I can't remember if it was before or after I purchased mine that they also purchased an investment property themselves. But then, like most people, they didn't go any further than one investment property and for whatever reason, I can't even recall now, they ended up selling that. So yeah, I was the one who then built on that and you know, went from one to two to three to the multiple I have today.
From Losing Out on Margin Lending to 9 Investment Properties
Raiti talks about his portfolio but also reflects on investing mistakes and challenges in the past.
[20:29] My current wife and I, we have nine properties. So that's eight investments, and obviously one principal place of residence.
[21:10] My worst investing moment was not property related, property listing related, [it] was more share related investment. I did dabble in shares there for a while. And I think before I even invested in property, I had some shares. So as I mentioned, my dad worked for Westpac. So I think from memory, I had about $3,000, probably the first $3,000 I earnt, he said, ‘Have you saved $3,000 yet? Buy some Westpac shares’.
[21:37] So I remember I had some Westpac shares early on, and he basically just said, ‘Just hold them, don't sell them. Tick the box for the dividend reinvestment plan. So don't take the money, let them reinvest. Through compounding growth, they'll buy more shares for you’.
[21:56] So I held Westpac shares for a long time, but then post that I ended up getting into,—and this was circa the dotcom boom, so I got caught up in that hype. Great lesson: don't try [to] get rich quick! I found out about this beautiful thing called margin lending. The bank will lend you money and you can leverage up and multiply your gains. And that's all well and good while the stock market's going up until something like the dotcom boom hits.
[22:27] I still remember, I was on a harbour cruise for work. And I got a phone call saying, ‘your LVR is a bit down, we need $20,000 odd in two days' time’. And at first I'm like, ‘Oh shit, okay’, wracking my brain where I'm going to find this $20,000. And obviously not wanting to sell any shares, which were obviously down at the time.
[22:52] Now, thankfully, being smart, I didn't leverage myself too much. And I knew that these margin calls were a possibility. And so I obviously had some savings set aside, so I was able to make the margin call from memory without selling any shares. But yeah, that was a great lesson in volatility, I suppose, as to how volatile that share market can get. And having been invested in property at that same time showed me just how resilient the property market is.
[23:25] One thing that I've learnt over the past 29 years of investing— and if we call a property cycle every 10 years, this is my third one now, my third cycle, if you like— I've just seen how resilient the property market is. Whether it is a dotcom boom, whether it's a GFC, whether it's threatened changes via an election of capital gains tax rules, or any old or negative gearing rules, I always like to throw that one up. Interest rate rises or decreases, you know, the market just keeps on keeping on, as they say.
[24:03] And as long as you have the patience to hold long term, I can only recommend property investing. You will do well. It's worked for me. As long as you're buying quality properties in quality locations, I might add.
Raiti also shares with us how he managed the complications of the property market during the pandemic.
[24:26] How could I forget about the pandemic? Like, nobody ever saw that coming. And then there was [the prediction that] the property market [was] going to drop 20 to 30%. What happened? It did the opposite.
[24:38] So, again, resilient. Post pandemic, there will be something else. I mean, that's not a property related thing. That's life. One thing I know is life throws us curve balls and you have to manage those, but there will be something else. And I'm sure the property market will be resilient to that as well.
Property Market Endures
Expanding on the resilience of the property market, Raiti gives us some important assurances that are critical to know when investing in property.
[25:22] That's the beauty of it. As long as you keep making your repayments, the bank isn't going to come knocking and say, ‘Hey, that LVR at 80% that we lent you, your property value has dropped. So your LVR is actually hovering above 90% now. And that's uncomfortable for us’.
[25:39] Because unlike the share market that gets valued every second that the share market is open, your property that you own or invested in doesn't. I know when things are good, I love reading these articles when they're saying how much money people are making overnight in their sleep. And I joke about that and say to the guys at work, ‘I made another $10,000 last night just from going to sleep!’
[26:09] But property doesn't get valued like that. It probably should be valued on an annual basis only. And [if] you keep making your monthly repayments on your loan, the bank is going to not worry about what value your property is, or what your loan to value ratio is.
When dealing with property on the other hand, Raiti has seen nothing but success due to his experience as a landlord.
[26:36] I must say, I have been pretty lucky in that regard. There's nothing that comes to mind where I've had a disaster, as such. You get some repairs and maintenance issues, with all this rain especially. There's tenants [that] have reported a leak. Other than that, what is it? A new hot water system, a new dishwasher, things like that.
[27:00] Tenants wise, I've always been of the mindset about looking after tenants. My number one thing is, if I look after the tenants, they’ll look after my property. Whenever tenants do report any issues, I've told my property managers upfront, ‘Get it fixed’. They keep me up to date, of course, we've had to send out a plumber, we've had to send out an electrician. But I don't want my tenants to be inconvenienced whatsoever.
[27:29] Like I said, it's their home. In regards to their living there, I want to look after them. I've never been too greedy or bullish on rents, if anything, $5, $10, or knowing what the market rent is, and sort of not being at the top end of that. Because I don't want to be in a situation where I'm upping the rent by so much and forcing people out and then I’m without rent for one or two weeks to chase an extra $10 or $20. [It] doesn't make mathematical sense to do that.
Born for Property Investment
Throughout his journey, Raiti has learned so much about investing in property, but it’s when he realized his great returns on his investments, he knew this was the right path for him.
[28:37] When I think back to buying that first property [for] $83,500 and I actually sold it 10 years later. And the only reason I sold it is because at the time, I was about to get married. So you know, I was looking for a deposit to buy a principal place of residence.
[29:00] And the thought there of using equity was sort of like… I can't recall to be honest, whether that notion was around or why the bank didn't tell me that etc or why my dad did it. It was sort of like, ‘If you want it, yes, if you've got some capital growth there, we sell it, we take that money and we use that for the deposit’.
[29:20] Because if I knew then what I [know] now, I probably wouldn't have sold it, to be honest with you. Because although I have nine properties now, I've probably bought and sold for various reasons over the years as I was educating myself, I suppose.
[29:35] That first property in Croydon Park, I bought it for $83,500, 10 years later [I] sold it for $180,000. Now I remember at the time the agent was telling me, ‘Wow, $180,000 is top dollar. Similar ones to this are only selling for $170,000’.
[29:48] And during that 10 years, I purchased the second one. It was actually a studio apartment. I remember I saw it in the Sydney Morning Herald one Saturday morning, a studio apartment in Ashfield. And I bought that for about $110,000 and sold that one— pretty much sold them both— to fund this principal place of residence. [I] sold that one for about $170,000 [to] $180,000 as well. So looking at that, I'm going, ‘Wow this Croydon Park property, I've just made $100,000 in 10 years for basically doing nothing. I didn't have to work for it’.
[30:21] And that was, I suppose, that aha moment where [I thought], ‘I've just made $100,000 here. I started 10 years ago, I was earning $17,000’. Who knows what I was earning 10 years later, probably $35,000, I don't know. And I've just made $100,000 for basically not doing anything. Just buying the thing, paying the interest, collecting the rent, [and] attending to a few repairs and maintenance’. And $100,000 was a lot of money back then, it was more money than I'd ever seen. So that was that moment that really got me going, ‘Wow, this property investing does really work’.
Beginning his property investments back in 1993, Raiti emphasises the importance of having an investment based mindset when considering your assets, even your principal place of residence.
[0:36] If I look at my portfolio of investments that I'm holding now, the earliest one goes back to 2007. I started in ‘93, built up some equity in those two [properties I bought], sold those to buy a principal place of residence. Obviously, buying the principal place of residence is a lifestyle thing. It is a life choice, [but] I still look at those as investments, I know, a lot of people say your principal place of residence is not an investment. To me, it is because it's the capital gains tax free investments as well. And if you buy a quality property in a quality location, obviously, depending on where you want to live, they will perform well as well.
[1:26] In my current portfolio, I have a unit actually, funnily enough in Gladesville, bought that back in 2007, before I even thought about living in Gladesville myself, and that one has well and truly doubled. If I look at it, now, I've had that for 15 years, actually, and, you know, that's increased 128%. And with an actual average annual growth rate of 8.6%. I've got a little spreadsheet here, by the way, I don't know all these numbers off the top of my head.
From 2011, Raiti went on to add an additional 8 properties to his portfolio in 6 years, even acquiring 3 properties in 4 months during 2015.
[2:03] The reason for that is I talked about life throwing you curveballs and [how it] gets in the way, I actually ended up getting divorced in 2009 and then remarried in 2013, met my current wife in 2012 and got married in 2013. So a couple of years into our marriage, I started educating my wife on investment property, she notably did already own a property herself. So we pooled our money together, we were both working in the corporate world earning good dollars, [and] had a bit of money there in equity to invest. So we went hard in 2015. And purchased three [properties] in four months, and then another in 2016, another in 2017. And well actually two in 2017, because we ended up purchasing this principal place of residence in 2017, as well, our second one because we moved from a previous one.
2015 was a big year for Raiti, as it also marked his first foray into interstate property investment.
[3:28] Started in New South Wales in, obviously, the Sydney Metro area. And then it was probably around that 2015. So with three, sorry, two of those three purchases in 2015 were actually in Queensland, two houses in Brisbane. Now, funny enough, around that time, mid 2015, people were saying, ‘Brisbane is overdue, it's the place to invest, the boom is about to happen there’. And, we know it didn't, it's happening now which I was fine with because I have this philosophy of I'd rather get in too early than too late to pick up that upswing. So I've held them for, you know, between six and seven years now. In that time, they were growing maybe 3, 4, 5 percent. If I look at them now, the average annual growth rate for one of them is 9%, the other one’s at 8.3%. So they've really taken off in the last couple of years, and hopefully still a couple more years to go.
[4:36] Or maybe a decade to go in Brisbane, as they play catch up to the rest. And I made the decision to invest in Brisbane, with the help of a buyer's agent, of course, basically, for a bit of diversification too. It wasn't about just the media saying Brisbane is about to boom, it was about ‘Okay, well, I've got enough in Sydney now’. And Sydney was becoming more and more expensive as it does, ‘let's go in and diversify into Brisbane’. So you've got two houses in Brisbane and also then went into Melbourne in 2017 and bought a house in Melbourne. So all in all, I've got here, five houses and four units, two houses in Brisbane, one house in Melbourne, and the rest, all the units are in Sydney and a couple of houses in Sydney as well.
Raiti shares some examples of what it means to invest in high value assets in the right areas can do for you.
[5:45] [My portfolio is] valued at, circa $14,000,000 at the moment, and that's across the nine properties, including my principal place of residence. If I split that out, the eight investments are probably worth around $11,000,000. And my principal place of residence has gone up to be worth around $3,000,000. Obviously they're bringing in rental income, yearly rental incomes, probably just under $300,000 per annum, obviously, that's gross, before interest repayments and associated fees with holding the properties.
[6:23] And that has given me… that was one of the reasons why I was able to leave the corporate world. When I left the Blacktown Workers Club group, I had been promoted from CFO to CEO. So it was a big decision to walk away from that, I think it was time for me, I'd had enough. And I needed a break and needed a change. So, the opportunity to follow my passion, but if it wasn't for the investment properties, and having been invested for such a long period of time, probably wouldn't have, I would have been probably too risk averse, that I've got to keep earning to do that. So it's definitely helped me in that respect. My wife and I are of very similar age, we're in our late 40s. It's this big decision now of the decision is ours as to when we want to pack it all in and retire and go travelling for most of the year, and things like that. But, that's probably when we hit 50 in a couple of years, another one of those lifestyle moments [where] I suppose that we'll sit down and go, when do we want to pull the plug on all of it?
Everything and the Kitchen Sink!
Raiti endorses a pragmatic approach to property investment, suggesting not to limit yourself to only buying houses.
[7:52] I love units to be honest with you. And I think it came down to affordability. And I listen to a lot of things and read a lot of property related things. And I always hear, and it's funny now with the advent of social media and Facebook, you get stuck into these forums and just watch what people are writing and somebody will throw up a question, ‘Should I buy a house or a unit’, and then these people start commenting, ‘Don't touch units, buy a house, buy land’. And that's all well and good for someone to say don't buy units but if you can't afford a house and you've only got a set budget as most people do, especially when they're starting out sometimes the best thing they can buy is only a unit and then there's the whole debate; buy a house in a regional area or interstate that might be the same price as a unit in Sydney for example.
[8:42] Now, with all the data available, I can show you where a unit in the eastern suburbs or the inner west or the northern beaches of Sydney has for the last 10, 15, 20 years outperformed the house in another state for example close to the city or in Western Sydney or northwestern Sydney or Central Coast or something like that. So it's quite interesting, units do grow in value, and they still have good rental yields on them. They're easy to rent. Yes, people go, ‘Oh, what about the strata?’ I say, ‘Well yes, there are strata fees but on a house you have repairs and maintenance’. And if anything, the repairs or maintenance on there is repairs and maintenance on the land, I own both I know. [Where] this tree is starting to overgrow and shadow the bedroom of the house you need to get some money to cut those trees back. I had a tree fall on the back shed in one of the houses in Brisbane in a storm. And for whatever reason the insurance didn't cover it. Luckily, it wasn't too much. The shed itself didn't get damaged. They just pay for the tree to be removed. And things like that. So I've got units where I literally haven't had to change a washer in a tap for five years. And then others were ‘Well, yeah, the dishwasher’s gone, the hot water system needs replacing‘, and things like that.
Raiti has seen first hand how maintenance issues can arise seemingly out of nowhere.
[10:21] It comes out of the blue, but then when you add it all up at the end, you go well, ‘If I was to divide that by four, that's a three grand per quarter, three grand, two grand per quarter strata bill’, basically, never the landlords insurance that comes with a house as well. Whereas, you still have landlords insurance for units, but the building is insured by the body corporate, by the strata. It's only [when] you're inside your tenancy that requires you to take out landlords insurance. So yeah, it does add up the repairs and maintenance. But, whether it's a unit or house, like I said, ‘When it rains, it pours’, so to speak, pun intended.
He shows us that you don’t need to spend big money adding value to your property if you keep sustained rental income and make pragmatic choices between tenants.
[11:58] They're rented and they're rented well, and they've always been rented. So, I have remembered one of the houses in Brisbane, where the tenants gave notice that they were moving out. So myself and the property manager said, ‘Look, you've got a wall here with that, I could get someone in within a week, two weeks’, well, we've got it on the market to lease really opened up, create that open floor plan between the kitchen and dining. So, I recall doing that, little things like adding an aircon split system here or there, I've done, but nothing too structural to be honest with you.
[12:41] My units still have the original bathrooms, that they have actually the one thing I did do, the Gladesville unit, when I bought it back in 2007, I bought it knowing that the kitchen would have to be ripped out immediately, which I did just to make it easier to lease. And I did that and that kitchen is still going strong and still looking... I wouldn't say it is as modern as ever. It doesn't have what everyone has now, the stone benchtops and things like that. I don't know how many rental properties have that. But it's got nice laminate benchtop white cupboards, stainless steel or brushed aluminium slimline handles, it looks good. It's always getting leased out, maybe down the track when I make the decision to consolidate, and sell and pay off some debt. Possibly, the houses in Brisbane in particular, are sitting on good sized blocks of land, that you could possibly even bulldoze the house. [Then] build something brand new, or whether I just sell it as is and let someone else pick up that upside. The choice is there, I suppose.
The Liberty of Property Investment
Taking us through why he has his property portfolio, Raiti presents to us the freedoms it has allowed him.
[14:05] Early retirement, I still remember my dad saying at 19, when we bought the first one, ‘You'll thank me when you're 40 with an ID’, and I'm like ‘40? That's a lifetime away.’ And here I am, nearly 50, I still remember it like it was yesterday. It's funny, my memory is still there. So that's a good thing. He was right and I thank him every day for it, look and that was always the goal to have the choice when I got to this age sometime between late 40s and 50s. To make the choice on my terms as to when to retire and to travel basically. And just having the lifestyle you want and the freedom to do what you want. Who knows I may keep working. I may not, I'm all about, as long as I'm happy and enjoying life, then we'll keep doing what we're doing. But I suppose it is about that choice.
[15:08] It was also about not relying on superannuation. Especially very early on when you're not… when you're only earning $17,000, you're not getting much super there. And I never worried about Super, I was like, ‘If I ever get any super, when I hit 65’, or whatever the year was, ‘Well, that'll just be a bonus’. Obviously, over your career, and as your salary increases, and you're in executive roles, you like saying, ‘Oh, there's a bit of super there now. That'll come in handy one day’, but you know, that's still 60, 65 [years old] before you can even touch that. So that'll be a bonus when it comes. So I wanted to be self funded, I didn't want to rely on the system, whether it be the pension or super. I wanted to have unencumbered rental income coming in to support me, my lifestyle and my retirement if you like.
[16:10] I've been quite lucky. And this is the thing, investing in property hasn't restricted me in any way, in regards to travelling and things like that. I always say that, although for a long part of the… especially the early years, the properties were negatively geared, in other words, I was making a loss on them, rent was always coming in, but it didn't restrict me in any way. And I suppose, luckily, I was employed for good companies with good jobs, and earning average to good salaries towards the end became very good. But they didn't, they didn't restrict me at all, property managers manage the properties, yes, you get an email, etc. And today, it's great, you can make a phone call from overseas, you can respond to an email, but it's not something I've had to keep an eye on and manage every day. So from that ease of investment, it's worked out really well. Look, I suppose that the plan is, I say to my wife, in a year we'll travel for three months, come home for three months, see friends and family, whatever, plan the next trip, travel again for three months and come back, whether that pans out. Even just the ability to go away somewhere for a couple of weeks is nice, actually, we got away for the first time, just this week, last week went up to Noosa. And it was funny, as a buyer's agent, it was like I was negotiating with a real estate agent, and we exchanged our property in my boardshorts, on the beach in Noosa. Literally! I said to the agent, I said, ‘You realise’, he said, ‘Are you still in Noosa?’ I said, ‘Yeah, I'm on the beach as we speak.’
Work Hard for What You Want
Explaining the importance of motivation when pursuing building a property portfolio, Raiti emphasises always thinking about the reasons you’re investing.
[18:42] We were talking to clients all the time, at Henderson, we're asking them what their strategy is. My wife and I don't have kids, but others obviously do. And they're looking, and [you] hear stories about how hard it is for future generations, current generations to go in to be able to afford property. So a lot of people are buying properties or investing in property, with the aim of holding them long term and obviously passing them on down to their kids. And giving them the headstart that they need. Now, as my wife keeps telling me, we don't have any kids. So she goes, ‘We're not leaving them to anyone, we're gonna spend them. We're gonna spend them.’ I said, ‘Well, we don't want to spend them too quickly. You know, we don't know how long we're going to go on for, hopefully a long time.’
[19:51] Back in the early 90s, there wasn't much there weren't many buyer's agents, I don't even know if they have buyer's agents in Australia. If they were around in the early 90s, the internet was starting to kick off, people didn't know if that was a real thing or not. And so there wasn't much freely available information. A lot of what I have learned especially in those 90s was through trial and error. Like I said, it's selling when I probably didn't need to sell, and they're all things, are all life lessons that you learn along the way.
Raiti credits his mentor and investment idol, with his unorthodox approach to property investment.
[20:25] Look in regards to a mentor resource if you like. I did come across, in 2015, Chris Gray, who's a prominent buyer's agent in the Eastern suburbs of Sydney. He has a different way of thinking, he was very similar to myself, he was an accountant. And he tells the story. I remember watching a YouTube video, it just sort of mesmerised me. He was an accountant working for Deloitte [and he] tells the story of how people were earning $100,000- $200,000 they're his colleagues, but they were blowing it and not investing any of it. So, coming back to the story, it's not about how much you earn, it's about how much of that you retain and can invest. [Chris] calls himself a contrarian, which is, he does the opposite to everybody. So, he tells the story, he bought half his portfolio in the GFC, while everyone was selling, he was snapping up properties. Very smart. I actually sat down with Chris and got in contact with him in 2015, my wife and I. I said to my wife, ‘We're gonna go and meet Chris Gray’, that's like, I keep watching, watching his stuff. So we went and met him and we engaged him as a buyer's agent, to buy us an apartment in the eastern suburbs. So even though we live in Sydney, Chris ended up buying one for us in Coogee, which I obviously still hold today. So that was one of those three in 2015, he ended up getting that off market for us, which was great. So that opened my eyes to the likes of off market properties. A lot of properties that the general public just don't see, because they do trade off market, obviously, in the last year of being a buyer's agent myself, I've really seen how prevalent that is. And for whatever reason, some vendors just like to do that.
[22:06] Having already watched Chris and talking to him, and then engaging him as a buyer's agent, [I’m] still friends with Chris, today. Chris has a book that I think he's only telling the story, where he used to use examples in the book of, a property, you buy a property for $500,000, he's had to change to a million dollars, just to make the examples relevant. But otherwise, his book that he gives away for free, mind you is still relevant and is just some great insights there. It talks about logic, and I love his story about how he went to get a loan, because he wanted to buy his own place. And I think this was back when he was living in the UK. He wanted to buy his own place by himself, and the bank wouldn’t lend him the money. So he said, ‘How about to buy a three bedroom house, and I rent out two of those bedrooms to my mates. So those bringing in some income’, and the bank said, ‘Yeah, we're fine with that, because you've got income coming in.’ So he couldn't buy a one bedroom, but he could buy three, because he'd rent out the other two bedrooms, bringing in income, and he was basically then living for free. Just great thinking and that contrarian thinking.
The Best Advice Ever
Sharing with us his mantra, Raiti talks about the best advice he’d ever received.
[24:19] It's actually again, coming from my dad. It's a quote that actually is relevant to a hell of a lot of things in life, ‘Never put off till tomorrow, what you can do today’, it's relevant in life, it's relevant in your jobs, in your career, and it's definitely relevant in property. A lot of people put off buying property or investing in property till tomorrow and then tomorrow comes and they put it off again and again. Now, the reason why is that they're just not decisive, not sure, lack of education, lack of information, I'm not sure. But definitely, never put off tomorrow, what you can do today. There's plenty of stories where, back in my corporate world where it'd be late at night and you know, I just want to go home. But I know I've got to finish this thing. And the question comes across your mind, I'll just do that tomorrow. But then I remember that quote, and I go, ‘No, I'll do it now’. And then, more often than not, tomorrow would come and something would happen. And I'd go, ‘You know what, I'm glad I finished that last night and not today, because I wouldn't have been able to get to it today’. So like I said, it works in your career, works in life that saying, and definitely works in property investing. as well. Don't put off till tomorrow, what you can do today.
Looking forward to the future, Raiti is excited for what comes next in his personal property journey.
[26:42] I think, in the next five years, it's just continuing, at least for the next two to three years. As I said, at 50, I'll sit down with my wife and go, ‘We've hit the big milestone now, what do we want to do?’ But just continuing to grow and learn. In my buyer's agency career, in regards to property investing, I've got the capacity, we've got the capacity today to purchase again, it's just a matter of, ‘Do I really, do we really need to’, like I said, the portfolio sitting at 14 million now, you know, that the LVR is down at 45%. We've got no children to leave it to. So how much do we really need in retirement? I think I'll just let what the eight investments and plus the house we live in, just keep doing what they're doing and growing, as you know, and doing what they do over the next three to five years. And see that out, and possibly get to a stage where then we'll sell as little property as possible, maybe sell one or two, that'll pay off the debt on all of them. And then we've just got unencumbered rental income coming in. So really just consolidating the portfolio, I think, is front of mind, I'm always on the lookout, though. It's part of my job. Now, it's a daily routine that when a good deal comes up. I love looking at property and buying properties as I say, so who knows, maybe there might be another purchase there, another unit or something in the east?
Making Your Own Luck
[ 30:02 ] Frank, you've achieved so much success, you know, you've been able to share your amazing story about your property investment journey, how much of this success is been due to your skill, intelligence and hard work and how much of it is due to luck?
[30:28] You’ve got to create your own luck, you gotta put yourself in the best position possible, to then be able to reap the rewards of whatever luck life throws at you. It's quite easy for people to say, ‘Oh, you invested in property, you got lucky, because Sydney boomed or Brisbane is now booming’, well, had I not invested, had I not had the intelligence to want to invest and understood what it could do for me, then the property market could have boomed 1,000% and had I not been invested in it, there would have been no luck, come my way. So, you have to make the decision to reap the rewards of luck. So, I would say, a combination of both [luck and skill], I was smart enough to invest in property at a very young age, I was able to do that, because I made the decision to live at home, not buy a car, save hard, people might ask how did you know. I can’t remember if I had a deposit back when I was 19.
[31:34] One thing that I was lucky enough to have [was] supportive parents who planted the seed, but not only that, they gave me a second mortgage, they put us up a second mortgage on their house, to be able to afford so that I could get a loan. So you could say that that is luck there. And, but that's how I got the start. My parents, with a guarantor, put up a second mortgage, I didn't really understand what it meant at the time. My dad worked in a bank, he said, ‘I can get a second mortgage on our house, and we can do it’, and I said, ‘Okay, whatever you say’. Look, I think it's all about being patient as well, I think the reason why people don't get up to four or five, six properties, you look at the stats from the ATO, and very few, I think there's 20,000, maybe 25,000 [people] or less, that have, six or more properties. Most people have one, after 3, 4, 5 years, it hasn't performed well and they get impatient, and they sell it. So they never get to that second property. Now, the first, second, third, and fourth are the hardest. But once you've got four, three, or four, and you're going through a nice growth phase, and they're all growing together, suddenly, that's what I call this snowball, and you've got a lot of equity there to be able to then go and purchase three properties in four months. You've got to have the income to support it, you have to be able to service it, equity is obviously one thing and servicing is the other. I suppose I was lucky that the woman I met and married was a very successful and corporate person. She's in HR in her own right. I was lucky. She already had a property herself. So look, there's obviously a bit of luck that comes in life but like I said, you’ve got to make your own luck as well. And you gotta put yourself in the best position property that you can.
Thank you to Frank Raiti, our guest on this episode of Property Investory.