In this episode Loo centres in on a unique property in Griffin, Queensland, ripe for renovation— by the right person unafraid of a little challenge. Luckily, Loo had just the savvy investor in mind. We’ll hear all about just how quirky this property was before they got to it, how the sale nearly didn’t even happen in the first place, and how certain renovation ideas should always be in the no-go pile. While a jetty may look nice by the beach, it has no place in a home!

Timestamps:
00:50 | A Different Brief
03:48 | The Uniqueness Begins
05:45 | There Was a What in the Where?
09:12 | Build Relationships With Your Builders
11:18 | Skirting the Issue
16:39 | The Market’s Mind
03:36 | The Solution
07:43 | The Big Question
10:10 | Loo’s Top Tips

Resources and Links:

[00:00:34] So in the space of... I'd say a little bit over six months, [he'd] paid $525,000, put in, let's say, $25,000 worth of reno, bringing that up to about $550,000. Plus stamp [duty], your buying costs, your selling costs. He's walking away with about $200,000 ish of gross profit. 

This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.

 

I’m Tyrone Shum and in this episode of Invest Like A Pro we’re chatting with founder and director of House Finder, Simon Loo. He shares a fascinating case study featuring a one-of-a-kind property in Griffin, Queensland that started off with mystical murals and unconnected bedroom plumbing fixtures, making it a strong contender for a rags to riches renovation tale.

Tyrone Shum:   

Business has been booming for Loo, who discovered a eccentric property in the Moreton Bay area that couldn’t be passed up. With the property being in a league of its own, its listing price was shocking as well. This combination made it a great match for seasoned investors, and he had just the one in mind.

Simon Loo:   

[00:00:50] He was at a point where he couldn't actually borrow any more money. So he's got a large portfolio of properties. And he has a lot of equity. So he has a lot of cash that was available to buyers.

  

[00:01:04] So he reached out to us and said, 'Simon, the goal that I wanted to achieve is to buy a property that we can flip immediately'. So it wasn't a standard buy and hold type property, it was just a property where he could buy, maybe spend a bit of money and then resell it in a very short amount of time. And then hopefully repeat that process. In an ideal world, obviously, money is to be made.

  

[00:01:28] We get a lot of opportunities from agents where they require a cash buyer. A cash buyer basically means no finance condition, but also means that they need to settle within a very short amount of time. So,  we were told about this property in a suburb called Griffin, which is north of Brisbane, in the Moreton Bay area. This was in October 2021. So October last year.

  

[00:02:01] It was a four bedroom, two bathroom, two garage house. Brick, about 15 [to] 20 years old. Massive block, it was like 800 square metres or something like that. And when I saw what we could buy it for, I was in shock.

  

[00:02:19] The agent started saying [it should sell for] about $550,000 at the time. Which was already a good deal, considering all the standard four [bedroom], two [bathroom], two [garages] on 500 square metre odd blocks were selling for about $650,000 ish, even.

  

[00:02:37] I was a bit kind of cautious, a bit skeptical. I sent one of my guys out to have a look at the property, and it became apparent as to why.

  

[00:02:52] The seller that was living in the property was clearly a drug affected individual. They had the paraphernalia out in the open for all to see. He was obviously quite an interesting character in himself. And the house was very interesting to say the least.

  

[00:03:24] So, what had happened is this guy that owned it for several years since he bought it, over the years had decided to renovate the property himself. Now, I could only assume that for most of the renovations, he was not in perhaps a normal state of mind, I guess.

Simon Loo: 

[00:03:48] So to give you some examples: He painted some of the walls himself. And the paint wasn't a standard colour, or even an out there rich kind of colour. But they were kind of like murals or paintings [that were] quite abstract, of probably what he was thinking at the time. So that was in several rooms.  

  

[00:04:17] It appeared that he tried to do some of the flooring himself. So there were these laminate tiles that you'd normally click together and have those skirting boards and all that kind of stuff. But it looks like he just glued these skirting boards on to the tiled floors. I don't know why he would want to do that because the tiled floors were fine! But they were just extremely bad.

  

[00:04:43] Think of like a really sort of rundown jetty that that you see by the beach. And you get those kind of wooden planks in the jetty where it's like a little bit up and down and gaps everywhere. It kind of had that feel to it.

Tyrone Shum:   

[00:05:02] I could have got[ten] my kids in there to help out.

Simon Loo:   

[00:05:06] It was a very interesting place. And to be honest, when I saw it, I thought, 'This isn't even rundown. It's not dilapidated. It's like an artist's house'. You know what I mean? Very creative. But it definitely didn't work, obviously. I think it would appeal to almost nobody.

 

[00:05:28] And again, some of the carpets... for whatever reason when he laid the carpets, it was normal carpet that you would normally have in any room. But it was laid down to the edges, just without the edges down. So it's kind of like a rug, like a massive rug that was just covering the concrete floors.

Simon Loo:  

[00:05:45] Actually, one of the more bizarre things was that there was a toilet that's just was glued to one of the bedrooms. It wasn't connected to any plumbing or anything. When we checked it out, it didn't seem that it was used at the time. But it was definitely there. And I don't know whether it was for convenience sake or whatever, but yeah, anyway, it was just there in the corner.

Tyrone Shum:   

[00:06:14] Maybe he had an intention to turn a part of his bedroom into an ensuite, but he forgot to put the walls up for whatever reason.

Simon Loo:   

[00:06:20] The walls, the plumbing, the waterproofing, the tiling... basically everything except a toilet bowl.

Tyrone Shum:   

[00:06:27] Maybe it was a cheap option for a chair.

Simon Loo:   

[00:06:29] It had a cistern as well.

  

[00:06:30] So, we went into the property and was like... look, obviously, despite all of these elements, I think most of it was pretty cosmetic. It wasn't like a deal breaker. The house was structurally fine. The walls needed repainting anyway. So it was just a case of removing the— luckily, when these laminate pieces were glued onto the floor, they could be removed easily and it didn't affect the tiles underneath. And carpets to re-lay some carpets in some rooms wasn't going to be an expensive exercise.

  

[00:067:16] So we negotiated with the agent. And look, I don't exactly know why the seller needed to sell. But I could only assume that he wasn't in the best mental state of mind. So we ended up doing a deal at $525,000. This was in October 2021. Which was a really good deal, especially for the block size.

Tyrone Shum:   

[00:07:41] And it was cash as well, too, from what you said.

Simon Loo:   

[00:07:44] It was cash, yes. So this particular buyer, he couldn't get... the seller didn't want to agree to any finance agreements or anything like that. He did allow us to do a building and pest [inspection] because he was adamant that there [were] no issues with the house structurally, which turned out to be true.

  

[00:08:06] Anyway, [we] got the deal done. And we got our builders in, did the full quote, and the total reno came out to be around about the $20,000 to $25,000 mark. There are a few extra things that needed to be done. This house had a massive outdoor deck area that needed re-staining and just refurbishing. Obviously [on] 800 square metres, there's a lot of yard everywhere. So there's quite a bit of yard work that went in.

 

[00:08:34] We repainted, we redid the carpets, we did some upgrades in the kitchen and light fixtures and little things like that, just to spruce it up a bit. So we did all of these. It didn't take very long because our builders at the time were quite efficient. They got the quotes in, they basically started work within a week. And within about two [to] three weeks, it was all completed.

Tyrone Shum:  

[00:09:00] How much was it again? About $20,000?

Simon Loo:   

[00:09:02] It was about $20,000 to $25,000.

Tyrone Shum:   

[00:09:05] That is phenomenal. That's a very, very good, very, very low cost to be able to actually update and do those kind of things.

Simon Loo:   

[00:09:12] We've done a few of these already, like me personally with my properties and a few of my clients. I've done quite a lot of renos over time.

 

[00:09:14] And one of the things that I always talk about [with] renos is do what's necessary. Don't go over the top. You're not living in it. As long as it's fresh and clean and tidy, you can definitely reno on a budget. You hear all the time people doing renos for next to nothing. It's definitely achievable.

 

[00:09:43] But having good trades is super important as well. I'll be upfront and say that the trades that we use [are] not the absolute cheapest, right? But with trades, especially in this current climate, you really get what you pay for.

 

[00:09:58] And it's not about going with the most expensive, but going with the most honest. And, I guess, a person that understands your objective, a builder that understand your objective is super important.

  

[00:10:11] So, when we did this reno, the builder knew that we were going to flip it, we were going to sell it. Usually when you go talk to a builder, they give you a quote, an itemised quote of every little thing that they're going to do.

  

[00:10:27] But anyone who's done any renovations will know that as you do the renovation, things will come up. Little things. Things that you can just quickly [do]. Literally, it could take a handyman or a builder an extra five minutes [or] 10 minutes [or] half an hour to fix this little thing. But if they don't, then it's just going to look pretty bad.

  

[00:10:48] [It causes] delays. And then you do the inspection. And you get another builder out or the same builder or same tradesman out again, and there's going to be extra charges and all this kind of stuff.

  

[00:11:00] So this builder knew that we were going to flip it, and yes, he quoted what he quoted. But as part of the job, I think he also did a lot of extra things that [weren't] necessarily on the quote. But it ultimately made the house a lot more appealing.  

Simon Loo:  

[00:11:18] One of the examples would be the kitchen cabinets that were on the floor. It was kind of on the floor, but it didn't have the edge that you would normally see between the floor itself and the start of the cabinet.

Tyrone Shum:   

[00:11:37] Oh, the skirting boards!

Simon Loo:   

[00:11:39] The skirting bit, yeah. It was just like a gap. So it wasn't like a massive job for him to just add that on. It didn't cost him too much money, either. I mean, he didn't end up charging for these kind of extra little things. But even if he did, it would have been no issue because these are the little things when you sell a house, it makes a massive difference to the overall perception of the property.

Tyrone Shum:   

[00:12:08] Absolutely. And what I can see is that the beauty about working with your builder that you've been working with across your properties and client properties, is that he knows it's gonna be returned business. So for him, it's like, 'Okay, I'm happy to just do these little tasks for you. Because I know the next job that you're gonna give me, it'll be pretty quick'.

 

[00:12:26] Because the challenge in this market, as everyone knows, is getting trades in that you can trust and deliver on time. Delay after delay [is] costly, because you've got holding costs and all that. And hence it's great that you guys can get amazing builders to be able to help you like that very quickly. Because to turn something around like that, for that kind of price is phenomenal, in my opinion anyway. Because I've dealt with trades before, and...

Simon Loo:   

[00:12:51] They can get a bit hairy from time to time.

Tyrone Shum:   

[00:12:55] That's right.

Simon Loo:   

[00:12:57] Having good trades is definitely super important. And look, I've known these guys for about 10 years. Ever since I started investing, I started working with these guys. It's just a very thorough understanding of what I'm looking for, the level of finish that I'm after. And obviously what the objectives are at the end of the day.

 

[00:013:17] So it's at a point where I don't ever need to physically be there. They keep updating me with pictures and and things like that kitchen thing. 'Oh, we fixed this today as well, just so you know, because there was a gap there', blah, blah blah. So just having that trust and finding someone with that integrity, I guess, is super super important. And it trumps getting the best price several times over.

  

[00:13:46] I always compare trades to, like, dentists. If you're going to negotiate and drill down on the price as hard as you can, it's going to be painful for you.

  

[00:14:02] So if you go to a dentist and you're trying to negotiate on their doing a root canal or whatever, while they're doing it they're probably going to make you feel a bit of pain if they agree to a price! Similar to trades.

  

[00:14:14] But like I said, it's not about getting ripped off, it's not about going with the most expensive. I think the character of the people behind the trade is actually sometimes more important than getting the best price.

  

[00:14:25] So anyway! We did the reno, everything came back good. There were a few little surprises here and there. A few more items, shall we say, [were] found in the backyard, like under the decking area. But overall it came out just like a standard four bedroom house that was very presentable and was appealing to a lot of owner occupiers.

 

[00:14:50] So now here comes the flipping part. So it was all done and dusted. This buyer that we had was actually kind of umming and ahhing for a number of weeks about whether he should just put the property up for rent, because it turned out to be a really good property.

  

[00:15:07] 800 square metres in Griffin is exceedingly rare. Most of the houses in this suburb are your standards that are even 300 or 400 or 500 square metres. So to get 800 square metres of land is definitely a rarity.

Tyrone Shum:   

[00:15:29] Can I ask about this house? Is it actually on stilts? Or is it actually built on a concrete slab? Like, because typically in Queensland, a lot of Queenslanders are built up high. I don't know about Northern Queensland too much, because I'm not very much familiar with that. But this type of house, does it look something like another house in, like, New South Wales, or is it typical on stilts?

Simon Loo:   

[00:15:50] It's a four bedroom brick house on a slab. About 20 years old.

Tyrone Shum:   

[00:15:55] That's not old at all! Oh, wow. So built in 2000.

Simon Loo:   

[00:16:00] I mean, they're a dime a dozen in these parts. But back in the day, about 20 years ago, I think a lot of these builder groups came in and put up, like, your housing projects. A Housing Commission.

  

[00:16:16] It's kind of just like standard Masterton Home type set-up. But this one just happened to be on a massive block of land. So, there was nothing wrong with the house at all. In fact, it was like a tank, this house, just a very single storey brick on slab type property. Obviously, the inside was really interesting.

Coming up after the break, we reveal the staggering final sale price…

[00:17:02] He decided to forge ahead with his original plan and just sell everything. And in June 2022, about a month ago, he actually sold the property. 

How tackling a property that others don’t want to can give you the Midas touch…

[00:02:03] And looking at the house as well, it wasn't ideal. A lot of people would see the condition of that house, given its circumstances, or the owner's circumstances, and they might be a little bit afraid to tackle something like that. 

He reveals the question on everybody’s lips, and gives his highly-anticipated answer.

[00:08:06] I'm getting asked this question every day, pretty much now by existing clients, by new clients, everybody. And I can only comment on what I'm seeing on the ground. 

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

Tyrone Shum:   

The owner of the property was unsure about whether he should sell it or rent it out, until ultimately the market made the choice for him.

[00:16:39] So, anyway, we kind of figured out that at that particular point, Brisbane, as I'm sure everyone is aware by now, was starting to... it's achieved quite a bit of growth over the last three or so years. And it was kind of at the cusp of... people spoke about interest rates going up and all that kind of stuff. So anyway, he decided to forge ahead with his original plan and just sell everything. And in June 2022, about a month ago, he actually sold the property and he sold it for $800,000.

Tyrone Shum:   

[00:00:33] Wow. 

Simon Loo:   

[00:00:34] So in the space of... I'd say a little bit over six months, [he'd] paid $525,000, put in, let's say, $25,000 worth of reno, bringing that up to about $550,000. Plus stamp [duty], your buying costs, your selling costs. He's walking away with about $200,000 ish of gross profit. 

  

[00:01:01] I think that's a very good case of a couple of things. Number one, we definitely nabbed a good deal on the way in. But we also bought in an area that was right at the moment, going through a lot of organic growth. It was getting smashed with a lot of owner occupiers, a lot of first home buyers [were] in that particular Griffin pocket as well. 

 

[00:01:24] I actually know two people that have moved from Sydney to that particular area [of] Mango Hill, Murrumba Downs, so sort of Griffin ish type area to live. 

  

[00:01:36] So let's say 50% below market value, 50% growth. And that's, I think, what's contributed to the outcome. Which is great. I mean, a couple of hundred thousand profit. He didn't do any of the renovation himself. He just went with a builder, and said yes, and all this kind of stuff. I think it was definitely a good outcome. 

  

[00:02:03] And looking at the house as well, it wasn't ideal. A lot of people would see the condition of that house, given its circumstances, or the owner's circumstances, and they might be a little bit afraid to tackle something like that. 

  

[00:02:22] But once you've done this a while, and you think, 'Yes, the walls are all over the shop, there's random paintings everywhere'. But if you're going to repaint the whole thing, anyway, who cares? 

Tyrone Shum:   

[00:02:32] No one's gonna know. 

Simon Loo:   

[00:02:33] Exactly. Just repaint the whole house in one neutral colour. [It's the] same with floors. The people that are gonna look at a room and go, 'Oh, wow'. Even if there [were] no carpets. But I know to re-carpet three rooms costs around $1,200, including the removal of whatever existing carpet there was. So there's a cost to everything. 

 

[00:02:58] And when you look past the emotional shock of seeing a house that's in a pretty bad state, and you realise, 'Oh, you know what? It's actually not that bad', it just helps you move forward and just look at it. 'Okay, the exercise for the purpose of this property is to make money. If I can do that, taking into account the price, the issues that it potentially has, and there's a good case for it, then forge ahead'. There's no reason why you wouldn't, it wouldn't stack up.

Tyrone Shum:   

[00:03:36] This is what I love about this particular case study. It's because when you think about it, we as property investors— and I guess if you look also from a business perspective— we're coming into trying to solve a problem here, and we're trying to offer a solution that is going to be appealing to what the market wants. 

 

[00:03:53] Obviously a problem is going to be bad. That's why it's called a problem. If you take the emotional side out of it and go, 'Okay, how can you turn this to something that's going to be generating income or generating a great return?' Then if you look past that, and you know the right people to be able to help, then you've got your opportunity there, filling the gap in the market to come out with excellent outcome. Which is what's happened here. And I'm just like, 'Wow, I wish I could snap that one up too'.

Simon Loo:   

[00:04:19] Well, there's more out there. Interestingly, we're on to [the] next property already with this particular client. So he's obviously got the cash. He's like, 'You know what, Simon? That opportunity was great. Let's do it again'. 

  

[00:04:29] So we're looking at a property again in Brisbane. I won't name suburbs or anything as yet, because this one is not a done deal. But this house also has a very interesting background, which I might talk about in the next episode, maybe further down the track once it's all done. 

  

[00:04:47] But it's actually quite unfortunate. This one is like... the seller is [the] three sons of the mum who's living in the property. And clearly their relationship is extremely bad between the mum and the three sons, and [the] three sons are trying to force the mum to leave the property, the house, to sell the property for obviously some kind of financial gain. 

  

[00:05:19] So these scenarios, as left field as they are or they can be— sometimes you just need to expose yourself to these situations that you can potentially get a property that is not like a polished house you find on Domain or realestate.com.au, and the situation behind that might be dire. But potentially, if there is a good opportunity there, then it's definitely worth going for. 

  

[00:06:02] And I want to stress as well, at this point, it's not about taking advantage of people who are in not great situations. Clearly, they're selling it with a level of urgency, or maybe the condition of the house lends itself to a certain price point. So you're kind of just at the right place at the right time, which enables you to pick up these deals.  

 

[00:06:33] I guess the lesson there is like I've said in previous episodes, it's just about being unemotional, sticking to numbers, seeing past the situation, seeing past even some of the physical aspects of the property that may be negative. Depending on price, depending on the numbers attached. 

  

[00:06:51] And also, focusing on areas where there is a healthy, healthy demand of owner occupiers is super important. Whether you buy it, whether you rent it, whether you sell it— your target market, if they're predominantly people, young families, professionals wanting to live in it, you will never be without a tenant, or without someone wanting to pay money for it. 

  

[00:07:21] I'm gonna go as far as to say, as well, that the prices of that particular area, even though they may drop a little bit, it's not going to be a situation where it's going to be catastrophic. You know what I mean? So that's been my experience anyway, with dealing with a lot of these types of houses.

Tyrone Shum:   

[00:07:43] I want to pose one question. We're currently in mid 2022, when we're recording this particular episode. The market has slightly changed. Interest rates have been going up, inflation has been going up, there's been a lot of talk about certain things. How do you think this has also impacted the market in your opinion? There's no right or wrong answer here. But it's just interesting to see your point of view.

Simon Loo:   

[00:08:06] I'm getting asked this question every day, pretty much now by existing clients, by new clients, everybody. And I can only comment on what I'm seeing on the ground. And what's happening on the ground at the moment is the fear, or the uncertainty that's largely media-driven.  

  

[00:08:25] It's really affecting, I would say, the $2 million plus market. So whether you're in Sydney, Melbourne, Brisbane, Perth, it doesn't matter. Anywhere that's expensive, above $2 million, is where it's starting to take a little bit of a hit. In some areas, taking a big hit. 

  

[00:08:44] And the reason is quite simple. People are being more risk averse. Before, they might have been happy to take out a bigger loan to buy a house, but now they're not. Investors are now looking for high cash flow. So they're erring towards more affordable housing options.  

  

[00:09:09] When I built my initial portfolio about 10 years ago now, I was paying about 6% interest rates as an average with the properties we were buying. And back then, when I was in areas like Brisbane, when I was buying in Brisbane, the market was absolutely dead. There [were] very few investors around, very little competition, especially with a lot of the distressed properties that we focus on. 

  

[00:09:38] But the challenge, even the 6% interest rates was the problem back then. The upside that we had was that it was quite easy to borrow money. And I think we're starting to transition back to that. Because over the past few years, if the interest rates were extremely low, it was very difficult for lending criterias and all that, it was extremely tight. So people couldn't build large portfolios easily. 

Simon Loo:  

[00:10:10] I always say this: Just stick to the numbers. Stick to the basic fundamentals. Property is a long term game. And also focus on areas where it's less likely to affect prices from an inflation perspective, or from a bad economy perspective. Because housing, at the end of the day, is a necessity. So in the right areas, you're always going to have a demand for affordable housing from both a rental perspective, from both buying perspective. It's really the high end stuff that tends to be a little bit wobbly. 

  

[00:10:47] So that's kind of my take at the moment on the ground. Stick to more affordable stuff, keep an eye on cash flow. This is a bit of an interesting thing as well, because during COVID, savings were astronomical. So people saved a lot of money. And I'm noticing that the appetite for property isn't gone. Especially with what I do. Obviously I run a business and I have a lot of people, I see the activity from 12 months [or] six months ago versus now hasn't dropped off. 

  

[00:11:17] I'm having, like I said, a lot of these types of conversations to explain what's happening on the ground with inflation and interest rates, and all that kind of stuff. But generally speaking, people are still very keen to build portfolios to achieve long term wealth, passive income. That's still the goal. If anything, COVID has reinforced the importance of not relying on a single income or a job that can be gone instantly. 

  

[00:11:46] So I think there's upsides and downsides. But like I always say, stick to the numbers, stick to the fundamentals. Don't gamble. When I say gamble, don't follow, like, 'Oh, where's the next hot spot?'

  

[00:11:59] And, you know, 'Everyone's doing this now. I'm going to do that as well'. That rarely works out. So that's kind of what I'm seeing.

Tyrone Shum:   

[00:12:07] Yeah, you've gotta be in the market to follow it as well. It's really interesting, because I remember you and I had this conversation about... not exactly the same, but two years ago when COVID happened. And we were all worried about what was going to happen. And then guess what happened after that, a few months later? Curious to see what happens here.

Simon Loo:   

[00:12:25] At the start at COVID was the best time to be buying.

Tyrone Shum:   

[00:12:28] Oh, yeah. Everyone will say that.

Simon Loo:   

[00:12:30] We had a few pies. We were busy at that point as well. And I think naturally, when all these lockdowns started happening, people were scared. 'What's going to happen in the next six months [to] 12 months? I'm just gonna sit on the sidelines'. 

  

[00:12:45] And look, that was probably a sensible thing to do. Nobody knew. But I guess if your mindset was just consistently moving forward over a 10 or 15 year period, you also expose yourself to these opportunities where these global events happened. And at the time, they seemed like a terrible idea to get into the market. But it turned out to be like an amazing thing turned on.

  

[00:13:10] It could happen on the flip side as well. You could buy something, and then unfortunately, it might take a hit. But there are ways to mitigate that. Like, we talked about affordable housing areas, good cash flow, basic fundamentals like sticking to capital cities, and high population growth and demand areas, jobs and infrastructure government spending, like all that...

  

[00:13:34] Ultimately tie in to the fact that areas like Sydney, Melbourne and Brisbane [are] extremely unlikely to experience like a massive crash, where prices just halve, or anything like that. So that's what I try to stick to.

Tyrone Shum:   

[00:13:51] Me too. I think we both understand the fundamentals. And that's the key thing, it's understanding. Once you get those principles right, it's just a matter of holding on to it. And buying the right property. Not the right time. Timing can be crucial, and also important, but buying the right property and making sure that you stick to those fundamentals, which is exactly right. You make your money when you go in to buy, not when you've actually bought it. 

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

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

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