#5: Before We Were Experts - Rookie Property Moves Exposed

[00:00:11] Melbourne will be hot throughout the day reaching a high of 38 degrees with a late change and possible thunder in the evening with a forecast low of 17 degrees. First time, second time, third and final time, it's sold!

[00:00:35] Hello Melbourne! I'm Lisa Parker and together with Cate we are bringing you a dose of our property market in detail. I'm Cate Bakos. Lisa and I are both buyer's agents who work on opposite sides of the Melbourne market and we've clocked up over 40 years between us in the property industry. Join us each fortnight to hear some exciting stories from our coalface, market trends and some juicy auction updates. This collaboration has been a long time coming. We hope you enjoy.

[00:01:08] Well hello to all of our loyal listeners and our new listeners. It's a joy to be back in the studio. And today, Lisa and I have a bit of a doozy to share. We want to chat about buying our own properties prior to being buyer's agents. We made a few mistakes and we did some silly things and we got away with a few things that, you know, sometimes catch buyers out. And of course, we have our own war stories to tell. So today it's a bit of a bear all, isn't it?

[00:01:35] Yeah, it's going to be really interesting. I don't know about you, but when I started, I tried a lot of different things. The reason why I did that was because I was actually looking for the glory of all property investment strategies. You know, I was looking for that perfect strategy that ticked every single box. And so I went on a real mission and tried so many different strategies in the hunt for perfection. So yeah, I bought a lot of different types of properties.

[00:02:03] So it's going to be really exciting just digging into that and just talking about how it went, what went right, what went wrong. So, and I think from memory, you and I actually purchased our first properties at roughly the same age. I think from memory. I was just about to ask you that, but I think so, because we've got a lot of twin moments in our history. We sure do. Yeah. From memory, I think I was 21 when I bought my first property. Yeah, I was too. It was actually an unintentional purchase, believe it or not. All right.

[00:02:33] Let's hear about it. Yeah. Super intentional. I want to hear about said unintentional purchase at 21. Let's do it. I was renting in South Melbourne at the time. I was saving money. My history with property is just hilarious because I was kind of groomed, if you will, to be into property by many, many, many people in my life. First of all, my parents, and then followed up by two boyfriends. One that I had when I was about 16 to 18.

[00:03:00] And then the next one that I had when I was about 19 to 20. And they were both really into property and it subconsciously got into my brain. And I think the thing that really sparked my interest was just seeing in particular one of them, their lives really changed quite dramatically. He decided to become a property developer and he was doing two packs, three packs, and then a six pack before we ended our relationship.

[00:03:26] What I found really inspiring about him was that he had this real can-do energy about him and he'd hack everything. So we were dropping off bottles of whiskey down to the key people in council as way of drives. Yeah, because you could do that back then. Taking people out for lunch. Like it was just crazy. We were demolishing the house by putting ads up in what we used to use, which was the trading post, which was a newspaper.

[00:03:53] And people would come and buy the windows for a hundred bucks or a door for 20 bucks. And so we'd scrap everything. It was just crazy, but it was so inspirational and I loved every minute of it. It was quite diverse. I moved on with my life, forgot all about it, but obviously it stayed a part of my life. And the next guy that I dated, he actually was a funny kind of guy in the sense that he'd blow all of his money every now and again.

[00:04:18] So he'd save like crazy and then he'd become a little bit self-destructive and just blow his money at the casino. So to stop himself from doing that, he'd buy houses. Oh, cool. Forced savings. I love it. For blowing his money. And so he'd accumulated, you know, four or five properties or something like that. And that must have stuck with me as well, even though I didn't really pay too much attention to it because I had some savings and I decided to move out of South Melbourne.

[00:04:48] I wanted to move down on the peninsula because I wanted to be by the beach. It was a very peaceful place for me. And I was driving down the PN highway. A thought popped into my head and said, why don't you buy a place instead of rent one? And the other side of my head said, that's a great idea, Lisa. And so instead of looking at rental inspections, I got into a sales agent's car in my little cutoff jeans and singlet top and my thongs with my girlfriend. We're both, I don't know, 19 or 20.

[00:05:15] And he drove us around and looked at six properties. Where were they? They were all in Seaford. I wanted to be near the beach. So they're all in Seaford. And we pulled up at the front of the last one. I said, I'm not even getting out of the car. I don't like it. I'm not interested. He goes, no, no, you're going to like it. Trust me, get out of the car. He's literally opening the car door and trying to pull me out of the car. And I'm like, fine. So I begrudgingly got out of the car, opened the front door and went, oh, wow, this is nice.

[00:05:45] And then every single bedroom and room I walked into, I went, oh, wow, this is nice. And walked out the front of the house, did a calculation in my head as to what all of my outgoings were going to be, what the rent would be if I wasn't living in it and determined that it was going to pay for itself. And I went back to the office and offered on the property. That is so amazing. And so young. It's a bit crazy. It's great. I know.

[00:06:14] That purchase allowed me to make several more purchases. But what it also did was it allowed me to start my career and my business as a buyer's advocate because I had equity to back me up if I needed it. And so it was actually a saving grace many times in my life. But I did do things that I would never do today. Okay. I'm going to come back to them. That's incredible. My little segue into this, you're a fraction younger than me.

[00:06:45] And my second property was in Seaford. Mm-hmm. And I have a feeling we both lived in Seaford in these early purchases at the same time. That would be crazy. I literally... Which is mind blowing. I just got goosebumps. I've only just thought about that. Wow. And the house that we ended up buying, when I say we, I was married to my first husband

[00:07:10] and we were just very, very different in terms of our goals and particularly our attitudes towards property, which is a bit of a sad thing to say. But he's a lovely, lovely guy. But nothing shows up your differences like a renovation project. And I was so driven. You know, I wanted to get a property portfolio happening at a young age. I wanted to value add. I wanted to buy a property with a land to asset ratio close to 100.

[00:07:39] I think I actually managed to buy 110% land to asset ratio because it was more valuable when the house was knocked over. That's how bad this house was. And you did that. And I didn't knock it over. Yeah, 100%. And my mum stood in the street crying saying she can't come in. His mum and dad were very cool. And, you know, they're like, tell us when we can pick up a paintbrush. And I think he just thought I was insane. It was in Mitchell Street. And you would, you know, see if we didn't start out.

[00:08:08] Mitchell Street's a great spot. He walked to the station, Woolworths, everything. It was great. And it was a really big day block. It was super deep and big enough to put units on if we wanted to. So I remember the ad and the house was $97,000. And the little newspaper black and white ad had this sad little photo of this disgusting house. And the line header on it was the house is free. And it was. I just paid land value.

[00:08:37] I remember just thinking, let's go for a ride. And if we can get something within, I think my number was 200 metres from the coast, from the beach, this walking distance to station. If we can do all of that for under $100,000, we're buying it. And that was the criteria. And at the time, I don't even think I talked about pre-privileged. Like I was just naughty. And did what I said I'd do. Got in the car, went for a drive, saw a couple. This one was gross, but it was so well located. We bought it.

[00:09:06] I don't think he got any say in it. And we moved in and we had mates over and did all kinds of, you know, illegal things to this house. And I just started thinking about it. Had a mate who had a little brother who was doing a plumbing apprenticeship. And I think he was like, maybe still in first year or second year apprentice. And I called him and said, oh, you know, we want to put in an ensuite. Like, oh yeah, no. Can I see your plan? Like, no, no, no plan.

[00:09:33] I've bought a shower base and got this thing at an auction yard and blah, blah, blah. You know, we're just going to have a crack. So we had like a legal plumbing and sewerage and everything. It was just all wrong. I even got a mate who was still not finished with his electrical apprenticeship. So I'm not endorsing any of this by any means, but we squeezed out over a year of living in this house and then sold it for a huge profit. Not because of the work that we'd done. We sold it because Seaford did really well at the time and it was great block.

[00:10:03] So it was good timing on your behalf more than you. You didn't analyze the market and choose a location based on growth drivers. You went with your heart. You wanted to be by the coast, which is what I did. Yeah. I think when anyone is really engrossed in property and I certainly was, I wasn't by any means, I wasn't on a property professional. I was a graduate chemist. But you intuitively know when an area is on the move. There was no doubt about that.

[00:10:30] My first property was in Mordialic and I was watching that gentrified rate of knots and I couldn't have bought what I wanted to buy in Mordialloc for anywhere near that price. And so then I had a look at Aspendale and that wouldn't have worked. So I checked out Chelsea, that wouldn't have worked. And then I looked at Bombay and I go, Carum, it was still dicey. Seaford, bang, yes, let's do it. So, you know, by intuition and just trial and error, I was looking at price points. Did I think that Seaford would catch on?

[00:10:58] I thought that it was imminent, but not necessarily that rapid. Seaford and it just goes to show while something's still a bit of an ugly duckling, that's when it can really pivot. If you wait until it's popular and it's got all of the cafes, you've waited too long. And that was exactly where it was at the time. And I'm sure you'll concur. When you bought in Seaford, there weren't trendy places to go there. They were just nice places. Oh no, it was a case. I mean, I was quite young. All my friends still lived quite close to the city.

[00:11:25] And I lived so far away from the city that it was literally a massive decision for me to decide whether or not to bother driving into the city to meet my friends for a night out or not, because it was a long drive. But unlike you, I was not yet consciously into property. I think I had picked things up from being around people who were into property, but I wasn't

[00:11:51] at this stage scouring realestate.com every single night for four hours and doing up business plans on different properties, which is what happened in my next chapter. And so this was completely a case of I'm going to move and go and find some rentals. And I just decided on the day that I was going to buy something. So within probably five hours of deciding that I was going to buy something, I did buy something.

[00:12:18] And that wasn't the only time in the history of me buying homes that I've actually made a decision that quickly on property either. So yeah, so you are a little bit different in that. To summarize from your purchase in CFED, what would you say were the things that you did then that you wouldn't recommend buyers do now?

[00:12:45] And what would you say accidentally went right? And what things went right by design? Great question. The things that went right by design is I knew that I needed a big block with an invaluable house for it to deliver capital growth. I'd already joined those dots because of the mistake that I'd made prior to that. And it's a long story. I'll do the short version. I bought an off the plan townhouse in Mordialloc.

[00:13:13] And I met a girl at work who spent exactly the same amount of coin as I did on my townhouse. She bought a house, albeit on a busy road, but it was on a big full block. And I remember thinking, well, I don't really love the location. She's near a roundabout. She's on a main road. Her property very quickly outpaced mine. And it was really evident why that happened because I had a 200 and something square meter allotment.

[00:13:39] And she was sitting on like 700 square meters and her house wasn't all that valuable. And she added value. Mine was 10 K and brand new. So I worked that out. I wanted to do what she did in a street that I liked even more. The things that went right by accident, I didn't get any pre-approval and it fell into place. And I was very lucky because at the time I still had Mordialik. And I also was working two jobs.

[00:14:08] I was a hard worker. My husband didn't have the same personal attributes. So, you know, that could have gone really pear because he wasn't pulling two jobs at all. In fact, for a large portion of it, he was still at uni. So I was fortunate that I could support both as a very young person. Can I ask if you did a subject to finance on your contract? No.

[00:14:37] No, I was like cash buyer because, you know, I was just throwing it all around because I knew how to make my contract powerful. I was invincible. I was 22. Oh, my gosh. Yeah, I was an idiot. I was very lucky because if a value had walked through that property, I would have been in deep doodos. Okay. Because it wouldn't have been defined as habitable. It was pretty rugged and it had, the kitchen was not reliable and it had squatters in it. Okay.

[00:15:03] So we had to get all the carpets out and some floorboards because you can imagine what squatters with no bathroom facilities do. It was gross. I was actually going to ask if there were any smells because that's what I was picturing smells as you described it. Yeah. We decided to sand the floors and lacquer them and paint the walls and the ceilings and put in, you know, new curtains to get rid of the smell. And my goodness, it does. Like if nothing else gets rid of a smell, putting on, you know, paint and lacquer certainly does.

[00:15:31] And I learned how to, how to sand floors and why I should never, ever do that job ever again. It's worth the money you pay a professional to do it because it's backbreaking and horrible. And by the time you learn how to work the machine, you spend all your money on, you know, sand belts. Anyway, it was, it was such a great learning experience for us. And we bought so many things secondhand and, you know, the things that we got away with, we got really lucky.

[00:15:55] The stuff that I would never, ever let my child do is own electricals and own plumbing, not just from a compliance point of view, but from a safety point of view. I think about the near misses that we probably had, you know, it was ridiculous. We had a sinkhole in the backyard that the car almost sunk into. I mean, this house was really rough. The stuff that, that we got away with or the thing, the good fortune. I remember gearing up to start the Renaults on day one of ownership.

[00:16:22] So, you know, took off a long weekend and wanted to just get cracking on ripping everything out so that we could live in it ASAP because every night that we could live there, we could get rent on our other place. And I was driven on a shoestring budget. So I remember driving past and scoping it out thinking, all right, I'll make a list of all the things we need to do. And it was literally the day before settlement. Here's me. I haven't done a pre-settlement inspection because my theory is the house is hideous. It can't get any worse.

[00:16:50] What we didn't realize is vendor had decided to use the old carport as a bit of a skip for his own stuff. So I did this drive by and went, hang on a second. That's not an empty carport. That's not looking like it looked when I last visited this property and made an offer on it. It was chock full of junk from other properties. And so in a panic, I rang my solicitor on the morning of settlement and said, oh, my gosh, I can't. And back then you didn't have a smartphone, couldn't take a photo.

[00:17:19] So he said, well, I need a photograph. So we had photos of the empty garage. Well, I didn't have any of the full garage. So went and bought one of those little throwaway cameras and then had to pay the express surcharge at the local Ampelman drive this. You can't imagine. Back in the day, he didn't have scans and phones and all that kind of stuff. So he was able to delay settlement. He said to me, get a quote for how much it will cost to get rid of this stuff. And I can't remember what it was, but, you know, let's say it was $2,000, whatever, a thousand.

[00:17:48] He then slapped that on the vendor and said, we're withholding funds. I had to put some money in the same trust account. It was hard. I was skinned. But we got that resolved. He came by, cleaned up all his stuff because he didn't want to have to pay for the removals to, you know, to deal with it. That was a lucky escape. You were lucky. I wasn't aware of that. Yeah. I didn't realize I had those rights. So when I said to him, what do you mean withholding? And he said, well, you know, section blah, blah, blah of the act. And all he had to do was let me know when did you do final inspection? I'm like, oh, whoops. Lots of things I did badly.

[00:18:19] Another thing that I did really badly was got the finance across the line, got the line docs and left them on the fridge. Okay. You know, you've got to sign them and send them back. Send them back. You know, I was just an irresponsible 22-year-old buying a house. Well, you just didn't know the process, did you? Yeah. Yeah. And I was very, very lucky that I had a confiancer who rang me up, told me off like I was their child. And, you know, she yelled at me and gave me the timeline.

[00:18:46] And then I had to go and buy an express post envelope because the self-addressed one that she'd packed with the stamp on it was normal mail. And I'd left it sitting on the fridge. Yeah. It was definitely a time that I look back on and smile. I can't recall the settlement period I denied it, but knowing how stupid I was, it was probably 30 days. Property can be so forgiving and people can accidentally end up with so much good fortune and a lot of upside.

[00:19:14] But by the same token, people can end up in a real mess and you just never know which way it's going to go. Yes. For me, with my purchase, when we approached settlement, I was not aware of the additional costs that would be included, like the disbursements and the adjustments and all of the calculations that happened outside of the purchase price minus the deposit you've paid, et cetera, et cetera.

[00:19:38] And so as we approached settlement, two days before settlement, I became aware that I was $500 short and I didn't have any more money. And so I rang my mum and asked her for $500 and she said no. Right. We've got that in common. Keep going. So I had to ring a friend and ask a friend for $500 to settle on the property. Right. I ended up getting a personal loan. Okay. One of those quick turnaround.

[00:20:09] Yeah. Wow. So we really are twinning in so many ways. And a question for you, looking back, how do you feel about your parents for saying no? I think in that moment, I don't think for that purpose it was the right decision. I think mum could have helped me in that moment.

[00:20:27] I really admire mum's protective of her money, which I think is admirable and she doesn't lend money to people, which I also think is a really important thing because things can really go awry when you lend other people money. And my philosophy is, is that I would never lend somebody money that I wasn't prepared to lose. And if I wasn't prepared to lose the friendship, because often relationships sour when there is conflicts over money. So I really admire mum for that.

[00:20:56] But in that situation where I was buying a house and I am her daughter, I do think she could have just given me the $500 or lent it to me. She didn't. I borrowed it from a friend. I moved forward. It's all good. Yeah. Well done you. And you know, they're the things we have to navigate. What would you do? If it was Gab? If Gab, yeah. Gab's $500 short. I mean, she would never be $500 short because she's got you as a mum. She's always $500 short. Always. But what would you do?

[00:21:26] She's gone off without you. She's bought a house and then all of a sudden she's settling and she's $500 short. She's $1,000 short. I have to try really hard to imagine this scenario because the reality is that I've gone the other way. Gab at the moment has just clicked $20,000 in savings and I'm so insanely proud of her. She's 19. She got a $5,000 special gift from her orma when she passed away. And we made a decision.

[00:21:56] Gab will say that she was part of the decision because she was, but she had a lot of guidance because she was young. We invested her money in shares. So we bought into an ETF that had, you know, a slightly higher level of risk because she's young and she could sustain a longer runway. And she's done really well with her shares and she's consistently put a slice of her income. She was working at Booster. Now she works at Baker's Delight.

[00:22:19] And so she's been harvesting money off, you know, from her income and putting it in, especially over holidays when they make a lot. So she's got $20,000. And the deal that I've always talked to her about is I'll match her dollar for dollar and pay her stamps if she's buying an investment. Obviously, if she's buying a home, you know, the stamp duty won't come into it and I'll be guiding her and matching her dollar for dollar. So she's got a pretty attractive gig. Would I let it fall over for 500 bucks? Hell no, because right now I'm on the hook for 20 grand.

[00:22:49] But if she did something herself, this is a really good question because, you know, one day Xander's going to get here and you'll be wondering too. Like if she ran off and bought, you know, a high rise thing with special levies that are completely disagreeable. You'd let it fall over. I would too. I'd talk to her about how to get out of the contract, but ultimately it's her decision. And if she was saying, no, I've gone and proceed with it. I think I'd just set up an arrangement.

[00:23:15] If she was $500 short, I admire what your mum did and the parameters that she places around lending money. And yes, I'm always prepared to lose what I lend, but I would pave out a repayment schedule and probably seek some security. You know, big girl, big loan. What would you take? Nikes? A phone? $500. Something that I could turn into $500. Yeah. So it'd be a collection of things. Yeah.

[00:23:48] We'd love to hear how some of our tips are helping you on your property journey. If you'd like to get in touch with us, jump onto our website, themelbournepropertyhour.com.au. You can either leave us a written message or you can record it as a message. Let us know what you'd like to hear more of and tell us a little bit about some of your successes. If you're enjoying the show, please tell your friends and click the follow button on your preferred podcast platform.

[00:24:12] I've always admired this about you. You have the most warm and encouraging nurturing side, and then you've equally got this very tough side where you have really, you know, which I think is just, it's wonderful because your kid doesn't, you're not giving everything to your child where they think everything comes easy.

[00:24:41] You're actually teaching them how to earn money, how to look after their money, how to use the money wisely, and you're setting parameters around what you will and won't do. You're not just funding her lifestyle and, you know, you love her so much. Well, thank you. You're just going to fund the lifestyle, you know? Yeah. Well, I want her to learn about credit and in particular responsible credit so that she's a good friend and a good person and a good borrower.

[00:25:10] I put Gab on stop credit when she was very young and, you know, people laugh about it, but it's real. We had a deal going many years ago before she was old enough to get a job. And so her pocket money, you know, we had a list of chores, but one of the best paying rates that was on offer was for her to play with my hair and give me a head and a shoulder rub because that's my thing at night. I would pay serious money for that. And so I had her on a schedule and it was pretty good, but, you know, she can get lazy like any kids can.

[00:25:40] And this one time she really needed money to buy something, I think it was clothing from memory and it was, you know, I had no time for head rub. She needed it then and there. She was going out to somewhere important. And she did this deal with me and said, if I can have the dress now, I'll give you X number of hours of head rub over the next whatever. And so I said, yep, that's fair. So I gave her the credit and she didn't repay it.

[00:26:06] She abused it and I put her on stop credit and I explained how stop credit works. And so you can't just be good the next day and it's lifted. Tell that to a bankrupt. They have six years where they can't do anything. So I put Gab on stop for a year and it was painful because it was at an age where she really did rely on getting cash advances every now and then. Yeah. Okay. Interesting.

[00:26:30] I wonder if social media is going to blow up now with Kate Bakos is paying her child to massage her hair. What kind of a buyer's advocate is Kate Bakos? Yes. It was a good rate at the time. It was way better than what she would have got if she was, you know, at an age where she was working. It was good. So second purchase, that was a big diversion but interesting conversation, money and children.

[00:26:57] So second purchase, what did we do right? What did we do wrong? What was your second purchase? Well, that one was my second and the Seaford one. My third one, oh gosh. It was in a moment of anger that I said, okay, we're selling Seaford and buying Mount Eliza. Okay. Because I cannot bear these tasks of yours not getting done.

[00:27:25] So that was a, you know, domestic argument between me and my first husband, unfortunately. I'd gone away on a business trip and I'd done my bit and he had to put skirting boards down. Sounds ridiculous, doesn't it? Skirting boards. Who has, who tips the house upside down and buys a different house because of skirting boards? It was me and I had the house sold. Like I came home from work, saw they went down. He was still at work.

[00:27:52] I walked around to the local real estate agent, knew a guy there that I'd gone to school with, listed the house, had it sold the next day. Who was it? Who was the guy? The guy who sold it? Yeah. Oh, he's a lovely fellow called Ben and he wasn't in real estate for very long but he was a sweetheart. I knew I could trust him and he didn't have to work for the listing because the trust was already there. I just knew what it was worth, knew what I wanted and he delivered. Yeah. I was wondering, back in the day, Rob Austin was one of the predominant, from LJ Hooker,

[00:28:22] he was one of the predominant real estate agents in the area back then. So, I thought, oh, I wonder if it's one of the old timers that are still around. Not that Rob Austin is but Luke Lawler is, for example. Right. This was a little shop front in that Seaford little row of shops and something like MPRE, I think, Mornington Peninsula Real Estate. Oh, yes. I remember that. Rainbow Colours. Yeah. So, got a solution to my problem very quickly, had a bundle of cash and I'd made the decision,

[00:28:48] okay, let's go and buy a house that needs no work because I didn't want to be living in a job site and I'd married someone that didn't want to be working on a project. So, we bought a really beautiful house and broke up shortly after it settled, which was really painful. It's a very, very short tenure. What did I do right? What did I do wrong? The most wrong thing was assuming a new house could fix my marriage. I was growing up by this stage. Yeah, that was tough. Really tough.

[00:29:16] And so, the purchase itself was a good purchase. Nothing was risky. You had a bit of knowledge under your belt at this stage. You probably had finance approved. You're going to tell me you didn't, aren't you? You know what? No, I'll tell you a bit about me. So, the move to Seaford was actually, it wasn't so much me wanting to build an empire and have a big portfolio.

[00:29:42] For whatever reason at that young age, I wanted to have no debt and a home, like a roof over my head. And so, just so then I could have a choice. And part of that was probably stemming from the fact that I didn't like being a chemist and I didn't really know what I wanted to do when I grew up. But I did know that I didn't want to be bound to a mortgage.

[00:30:07] So, by the time we sold Seaford, it had just under $20,000 worth of debt on it. And we got a great price for it. So, out of all of the properties that I bought and sold, because I stopped selling them after a while, once you clue onto this game, you buy and hold and you make better decisions. But at the time, flipping Seaford effectively delivered a really good amount of equity and capital growth. And we had cash in our hand.

[00:30:34] And I knew we were both working full-time by then. We didn't need a loan. So, I didn't even bother. I didn't talk to anyone in banking, which was very, very naive and bullish, really. Probably should have. And truth be told, if I was buying the house for the right reasons, we could have borrowed more and gone harder and got an even better house. But we had this beautiful house. There's no doubt about it. We got lucky with that. I don't remember getting a contract review. I don't remember doing final inspection.

[00:31:02] And we moved in and these vendors had a manual with all of their changes, all of their permits. They were the perfect vendors. Little card on the bench saying, we hope you enjoy this happy home that we've created, blah, blah, blah. Sadly, my mojo was different to their mojo and it just didn't go so well for us. But yeah, I was very lucky. With that purchase because the stakes were a little higher. We did have to take on a mortgage.

[00:31:29] The thing I did badly, thing I did wrong from a lending point of view was fixed the loan for five years. Okay. And then it was at the time where interest rates were very low from memory. Yeah. Yeah. They went up over the short period of time that we had the property and we had to pay economic break costs when we got out of that loan. Okay.

[00:31:52] And they were a bit eye-watering at the time, but divorces can be expensive and it's just a cost of getting out of a situation that you tend to suck up. So, my first purchase really launched me onto this career trajectory because three months after purchasing and settling on that property, I got the itch. And I knew that my ex-boyfriend had accumulated four or five or six properties. And so, I was like, well, I've got nothing better to do.

[00:32:22] I may as well do that too. And so, I started my career in real estate because I wanted to learn how to do it. I didn't know how to do it. And so, I started as a cadet as a sales agent and I went to my boss after being there for about four months and sat down with him and I said, I need your advice on something. And I've got a house. I want to buy another house. How do I do it? And he didn't know, which was a shock to me.

[00:32:50] If you think back to then, back that many years ago, real estate agents weren't as well educated or as savvy as they are today. They were salespeople. They'd pick you up in your car. They'd drive you to houses until you like, like the level of sophistication today compared to back then is vastly different. Very different. Level of service, however, different story. Like they would drive you around. Yeah.

[00:33:16] Back then, real estate agents would have a tiny studio apartment in St Kilda and they'd write in the newspaper, great investment. So essentially anything that an owner-occupier didn't want, the title was always great investment. That's the level of education or understanding that sales agents had back then. So I was really disappointed because he wasn't my answer and I wasn't really sure where to go next.

[00:33:42] But it then launched me into a search which landed me a consulting position, which I did at night time after I clocked off from real estate during the day, where I worked for a financial planning company in their property department as a sales consultant. And I started with them and did very, very well and they offered me a full-time job.

[00:34:05] And so I left my sales cadet role in real estate and moved full-time into the financial planning company, into their property division. And that's where I really accelerated in regards to my learning. The problem was, was that I was getting a lot of education outside of the workplace. And that meant that I began to uncover their lies, their clever marketing.

[00:34:31] And I was very, very naive and, you know, wanted to do a great job. And I was a very honest person and had a lot of integrity. And it was a conflict when I was sitting at the boardroom table at our monthly, our weekly sales meeting and people were lying about things. And I was like, oh, hang on a sec. I did some research on that and here's what I found.

[00:34:52] And I wasn't trying to undermine anybody, but unfortunately it just, you know, that wasn't the right thing to do because it was undermining the whole sales proposition. Because people were basically boosting up rental amounts that were incorrect. They were making statements that were incorrect in terms of places being growth corridors. And what they meant by growth corridor, and this still happens today, is that there's a lot of empty land.

[00:35:19] And so there's going to be a lot of development. So essentially what they were doing is selling house and land packages. And so what I did for my second investment property is I did a deal with my boss where he would retain my commission and give me a discount on a house and land package that our clients were purchasing. And so I flew up to Queensland and I got taken around in a car by our sales consultant up there.

[00:35:47] And she took me to a number of estates. It was all very confusing. I had no idea where I was. And essentially we stood on the side of the road where there was a massive big block of land with all trees in it. And she'd say, your property will be somewhere down there. Right. And it didn't feel 100% comfortable. My first purchase felt really comfortable. My second purchase did not feel comfortable. It didn't sit right with me.

[00:36:14] I didn't recognise that as intuition at the time. And so I moved forward with it in any event. And that property stayed stagnant and didn't grow in value for an incredible amount of time. I ended up selling it. I'm not sure if I sold it at a loss or I ended up breaking even. But I sold it and I watched the area for a long time afterwards. It has actually grown. If I had have held it till now, it would have eventually done well.

[00:36:44] But it would have been at the cost of buying other properties. Of course. And so I did sell it after holding it for about eight years. And it still didn't grow for another good seven or eight years after that. It really didn't. It was a really poor performer. And so there were a lot of mistakes there. First of all, just purchasing a house and land package and just not understanding the risks. And the fact that quite often, you know, it can work well.

[00:37:13] And I do know people who make a great living and have a great portfolio out of strategically purchasing house and land packages. But there's a very specific way that they do it that makes it work for them. I didn't realise that with a house and land package, quite often in the first few years, you're upside down in equity. And that what you've paid for the land and the house, depending on what stage of the development you've got into, what you've paid is often more than what you can sell it for.

[00:37:39] In those first two years, depending, there's a lot of circumstances that would depend on whether or not that's the case. That was certainly the case for me. And even with the multiple staged releases after me, the area stayed stagnant for a really, really long time. So, I think that there are ways to make money out of house and land, but I do think there are risks associated with a brand new house and land purchase.

[00:38:03] And I don't think purchasing for the depreciation aspect is a good strategy in and of itself. And I would always question when somebody's saying a growth corridor, I would ask them to define what they mean by a growth corridor. I think that's amazing advice and probably great advice for us to wrap this up on. And just, you know, quite quick little side note.

[00:38:32] I remember when you were talking about not feeling good, that, you know, feeling in the pit of your gut. We both run on intuition a lot. And I remember being introduced to someone when I asked a guy at work about his investment portfolio. Oh yeah, I've got this amazing group and they're called the whatever club. And he linked me up with someone and I called this guy and his name was Dana and he picked me up in a really old BMW and drove me all around the northern suburbs, which at the time I didn't understand.

[00:38:59] So, we're checking out things in Pascoe Vale and Oak Park and Glenroy. And they were all developments. And I just had a really uncomfortable feeling. It was, you know, taking me back to the Morty Allick off the plan days and the lots were smaller and higher density. And I trusted that feeling in the pit of my gut and bailed out of all of that, probably annoyed Dino because he'd spent an hour with me. But I think it's so important that we don't listen to all of the hype and that we ask some

[00:39:28] good questions because the word growth corridor was used a lot that day as well. And, you know, salespeople who aren't, who are trying to sell you something and they're not working for, you know, a fee to give you advice. They're working off a stock list. There often is a catch. Not every single time, but so often. And the other thing about buying new is your land to asset ratio is very low.

[00:39:54] So, when your land is worth less than what your dwelling is worth, you've already got a problem then and there, at least for the first few years. Yeah. And that's ultimately what made that area grow in value was when eventually the houses had depreciated so much that the land had started to go up in value. What a great learning. Yes. Well, it was a fun adventure that it was a nice trip down memory lane. So, thanks for sharing your stories.

[00:40:22] And it's amazing to find the many more twinning moments that you and I have both had. Just thinking that. Yeah. Loved your stories. My goodness. What good boyfriends. Great influence. First boyfriends. Yes. I was really lucky. Well, thanks so much for today, Kate. And looking forward to catching up in a fortnight. Likewise. Thank you for joining us on today's episode of the Melbourne Property Hour.

[00:40:50] We hope you've enjoyed the show and we look forward to you joining us next time.