Passive Income from Commercial Property - Property Inc

Passive Income from Commercial Property

What You Will Learn

  • How to get started in Commercial Property
  • How to move from Negative Gearing to Passive Income
  • How to scale your commercial property portfolio
  • Understanding the numbers and how the banks view it
  • How to leverage your Residential Equity to get into Commercial Property
  • The power of the Commercial Lease
  • Asset Classes within Commercial Property
  • What to build into your lease.
  • Getting creative to bring in more cash flow
  • Understanding the Cap Rate
  • and much more

[ Podcast Transcription ]

Hi, I’m Melissa Fisher, and welcome to Profit Through Property podcast. And I’m here today with James Dawson. Now, James, I met you quite some years ago, and I believe it was when I actually did your course, which set me up for an amazing future in commercial property. Now I actually spend a little bit of time with you and we have discussed in depth some of the projects you do and how they’ve actually set you up for the lifestyle that was ultimately what you were doing this for.

And I know you’ve written books and you’ve done, you’ve done some fantastic courses and passed on a huge amount of information to many, many people that have actually been life changing and set people on a totally different trajectory with your knowledge and how you actually manage to get into and hold on to commercial property for passive income.

Now it’s not as everyone seems and this is where what I got out of your course way back then, um, changed my life. It changed the way I actually considered using commercial property for passive income, which is what we’re going to touch on today. So talk to me, James, and I’d love to know from you. First up is how you got into it, how you actually started thinking about commercial property the way you do, because it’s not how the general population actually sees it.

Yeah, well, I guess, um, I’m probably pretty much like every property investor that ever started, you know, when you, you know, sort of come out of school and think, okay, I want to be a property investor, or, you know, you’re in your 20s or 30s, and you suddenly think, gee, I better get some investments, you know, because I want to provide for myself later on, or just You know, be wealthier.

So started in residential like most people do and, you know, buying houses. I mean, started pretty young. I started about 18. So I was buying and renovating houses. And, you know, my first house I bought in Newcastle, I think was 17, 000. I mean, less than the stamp duty now, you know, so, but, you know, at the time, you know, interest rates were 14, 18%.

And, you know, it was, Okay. A lot of negativity around then as well, which, you know, people said, Oh, it must have been easy in those days. Well, you know, I reckon it’s actually easier now. But anyway, I was buying and renovating properties, um, working as the real estate agent, uh, property manager and, and in sales for a company and doing the renovations at night on the weekend.

But what I was finding was that. It was sort of, I was sort of chasing my tail, you know, I really couldn’t get the cashflow goals. I felt, I felt like I had to sell something all the time to actually get the cash, you know, out of the deals. And then basically stumbled across commercial property and how it was all sort of cashflow based.

It was essentially, my old boss said to me one day, and the real estate agency said, oh, I only buy stuff that’s cashflow positive. And I’ve never actually heard that before. And because everything was negative geared, everything was, you know. kicking the can for a couple of hundred dollars a week to support that property.

And then you get another property and you’d get the rents up and, you know, somehow it would all balance out. But just the first little property I bought in Carrington in Newcastle was suddenly, you know, three or 4, positive just in the first year. And then it went even better the next year. And I thought, wow, what am I doing?

I’m just going to focus on this. So that’s how it all started. Isn’t that interesting. So a couple of things I want to touch on there because a lot of people will look at, um, property investing and they instantly go to residential because they know what home is, you know, everyone’s lived in one aims to own their own homes and these sorts of things.

And, and once people get into their own home, there’s that natural. I’ll go and buy another residential property without even understanding how they’re going to make passive income. Like there’s this whole, the whole negative gearing and everything that goes with it. But there really isn’t a lot of thought behind what to do to end up with cash in the bank.

And it becomes that buy and sell way of being, which is not ideally, I mean, it’s great for a chunk of money, but it’s not ideally creating a lifestyle that you can. kick back and enjoy with money hitting the bank. So interesting. Um, where you started at the age you started at now, I’ve got to agree with you.

It’s easy to look back and say, Oh, wow. You only paid 17, 000 for that way back there, but you’ve got to understand the, the, the date that was and, and the value of money back then to, to what it is now. I mean, it’s very, very relative. So to be able to make. 3, 000 a year off it back then. Um, if we want to do the comparisons, that’s massive, that’s a massive change from trying to play around with residential property, because it’s what we know, um, to all of a sudden getting into things a little bit differently.

So for you, and again, I’ve had the luxury of spending time with you, um, but for you, what I… really got out of it was for you. This was lifestyle. This was about getting to a point where you can go and do what you want to do and enjoy the lifestyle you want whilst doing property investing and money’s hitting your bank month on month and allowing you to go surfing or trip over to Europe or whatever it is that you want to do.

So has that been successful for you? Oh, look, I think absolutely. I mean, I actually, when I was working that real estate agency, when I was really young, I thought, you know, I’m looking at the senior partner there and I thought, wow, it’s 40 years older than me, you know, and I thought, I can’t be there in 40 years time.

I just can’t be doing that. So then my goal sort of changed. I thought, well, it’s all about replacing my income. And I can’t really remember what my income was at that time, you know, from the real estate office, it might have been, it was probably pretty good income might’ve been 30, 40, 000 a year at the time.

And I just thought, well, if I can develop that amount of money. over and above all my payments and all my costs. Okay. I’m, I’m free and clear. I can leave this, you know, nine to five job and go and do my own thing. Now, of course, doing that, you know, also has problems. You know, when someone gets out of a job, you think, Oh, all my friends are working.

What am I doing? You know? So, um, you know, but I was just more deals. So yeah, essentially that was the driving force for me. It was really like, okay, I want to replace my income and then, um, you know, look at what other. Things I can do. And, you know, that had its challenges, you know, with, you know, banks and things like that, when I was trying to buy other properties, I was saying, Oh, what do you actually do?

And I said, well, I’m just doing this, this is what I’m doing. And, you know, I had to, yeah, that’s right. I mean, you know, I remember one bank manager saying, wow, well, it looks pretty good to me, you know, so that was supportive, but some bank managers weren’t, you know, so there was a few challenges there, but. I think anyone that’s in, in real estate investment or is it going to, you know, you’re always going to have financing, financing challenges.

So you’ve just got to push through that and keep your, your ultimate goal in, in view, basically. So you get there. Oh, absolutely. So when you first got into commercial property. Because I know there’s a lot of questions about getting into commercial property and, and you know, it sounds easy and all of these things.

When you first got into commercial property, what was the biggest challenge that you actually hit? The first biggest one that you had to actually get over to go, Oh yeah, this works. Well, the first biggest challenge was actually that first property because I was buying vacant and, and when, uh, you know, and it was sort of, and, and it was completely out of my comfort zone because naturally if you go and buy a little house or a little apartment, you just give it to the real estate agent and they lease it.

So the first thing was to find out, you know, what rental I could get for that property. And I rang a valuer and then asked my old boss and he said, Oh, that’s easy. Just go down the street, find out what the other shops are rented for. And then he helped me with that. And he said, this shop will get that. He said, put an ad in the Newcastle Morning Herald.

There was no internet then. And within a month, and I actually cleaned the place out. I think I hosed it out. It was an old butcher shop, hosed it out, got rid of the old pool room, cleaned the windows, put the full lease sign on the window. And then, you know, sort of sat back thinking, God, I hope this works, you know.

And within a, within a month or so, I had a, a tenant in there who was, um, manufacturing little fretwood stuff for, uh, Federation Houses. So he sort of, you know, pivoted on that shop, wasn’t a butcher shop anymore. And that was the biggest challenge. And then I thought, wow, okay, my payments are X, the rent’s this.

And then the valuer said to me, uh, months later, I think I was able to pull out about 90, 000 out of that deal. And he said, I said, how come it’s worth so much? He said, it’s simple. It’s based on the rent, James. That was the biggest thing I ever learned. You know, the first thing he said, the value of this is based on the rental income.

Simple as that. So I’m just going to, I want to stop there for a minute, because it is a key point when you’re looking at Commercial property versus residential property. And it’s something that I think a lot of people don’t understand. They, it’s, it, it is a different transition from, from working with residential property and understanding that.

And there’s an amount to understand to go over to commercial and understand where your income comes from and then what your value actually is based on. So for you to experience that property one way back then, um, had to totally change the way you saw commercial property in its entirety. Oh, absolutely.

Because, you know, with With your residential investing, and I love all, you know, all property, but, you know, I’d buy a little house, fix it all up, and then, you know, get a tenant in, and then every six months, that was the other thing, every six months, the tenants would be going out, there’d be repairs, and, and there was all emotion around that property, you know, I would buy it almost a little bit based on emotion, because you think, oh, I’d love this little cottage, I’m going to fix it up, get some nice tenants, and, you lovey dovey stuff, but whereas commercial, it was like, buy this, Get this income values based on that income, move on, do something else.

And the tenant signs a five year lease or a three year lease, something like that. And, and you think, wow, okay, no more in and outs every six months. No more little repairs because it’s in the lease that the tenant repairs stuff in, in a commercial. So. That just, it was like this sort of learning graph that just went like this in the first two years of me buying those commercials.

I’m going to say that was, and it’s quite interesting because listen, listening to you talk through that, that would almost have to be the biggest challenge going in because that the unknown and the, the, oh my lord, is this going to work? Am I going to get a tenant? What does it actually look like? So the challenge going in, but also one of the biggest successes too.

So learning that valuable piece of information about the value on property, um, based on the lease, um, would have to have been a total game changer. So how did you scale it though? Because it’s nice to say, ah, that’s great. We’ve turned a butcher shop, which again, I say is a big snippet of information that people need to listen to.

I’ve turned a butcher shop into something totally different because. If we think we have to replace it with the same, we’re very limited on, on what we’re going to look at from a tenancy perspective. Um, so there was quite a few steps that you made and, and, um, different ways of thinking and executing by, um, into that first property that set you up for success moving forward that many people won’t consider.

Yeah, I mean, what the other thing that sort of happened to was that I realized that, you know, when, when you’ve got a situation where it’s based on the numbers, pretty much, you know, you could easily get much more easily go to the bank and sort of say, look, if I buy this next property and one of the next ones I bought was in Potts Point in Sydney.

And I remember going to the bank and I said, look, you know, I can lease the ground floor for 40, 000 a year. And it’s got a couple of apartments above, maybe I could turn those into offices. And suddenly. The bank guy sort of said, well, let’s just look at the numbers on the paper, you know, and I remember buying this building in Potts Point for 310, 000.

And he said, well, that works based on the numbers that works. And he hadn’t even really looked at the building. Whereas if I was buying a terrace house down here, he’d be like, Oh, you know, okay, you’re buying a terrace house. Okay, great. You know, Get evaluation, do this, do that. I mean, of course, I had to get the other one, the POTS 0.

1 valued, but it was just that whole, um, idea that it was based on the numbers and you could move forward pretty much before you bought a deal and work out whether it’s going to work or not very quickly. So isn’t that interesting how the banks look at it quite differently? Something I want to touch on here.

So again, relationships. So your, your bank manager is starting to see things a little bit differently. Um, but for them to actually look at it from that perspective. And say, Oh, okay, that works. We’re happy to consider this. So as a lead in from a lending perspective, um, yet the LVR. So your, your LVR on a commercial loan is generally lower than what it is on a residential property.

That’s right. And look, I guess, like, actually, I reckon probably 90 percent of people that move into commercial. Already have some residential. So I was, you know, leveraging some of my residential to get into commercial and because they’re generally lending only around 70%. So in fact, you generally needed about, you know, 35 percent deposit because the time you allowed for your stamp duty and legal costs as well.

So, you know, you would basically scrape that together however you could because the goal was, you know, the carrot at the end was so good. Okay. Because you think, wow, if I buy this building pops point, you know, this is double the return of what my current, um, the current properties that I was looking in residential would provide.

So I thought I’ve got to get this property because this is putting me closer to my goal of getting this passive cashflow. And, um, you know, I was only, I guess I was about 30 then or something by that stage. And I was just sort of focused on that. I thought, well, I’ve got to buy this building because that’s going to put another 10 or 15, 000 towards my positive cashflow.

And so I was leveraging my other properties to get that 35 percent deposit. Understanding what was important to you as a driving force so that actually kept you going and not get hung up on. I don’t have a 35 percent deposit to put into this that that this is what I want to achieve and I need this I actually need this building to add to my passive income now has to have been a driving force for you to keep moving forward.

How many people don’t step into commercial property because they go well I don’t have a 35 percent deposit. And don’t give people what else they can, what else they can actually do. And, you know, the thing is too, when you’ve got your leases in place, a lease is, you know, such a powerful document that, you know, you can go back to the banks and, and, you know, what a lot of people were doing in those days.

So back in the 80s and 90s, we were banking with so many different banks, you know, you’d be with Westpac and then someone from Commonwealth would, you know, you’d talk to someone and they’d say, Oh, bring all your properties over here. It’s so good. We’re constantly moving around and probably a lot of people are still doing it now but all I would have to do is say here’s my commercial leases for my properties that I’ve got and they’d say okay you’ve got a three year lease and a five year lease and they’d look at that and it’s it’s such a powerful document they would you know base their their loan approvals on those documents.

So have a good consideration. I’ve got a interesting thought around this, the various different asset classes within commercial property. Now I know some people will lean more towards one than another. Do you invest in multiple asset classes? What are your preferences and why? Well, I’ve I think it’s, you know, I think a lot of people ask me that question, you know, all the time.

Oh, what should I get an industrial retail office, you know, or a hotel, something like that. And I think, you know, you sort of get a bit of an affinity for something. I mean, you know, I love it, love it all. But my, my current investments, you know, regional, small regional shopping centers, and, and a couple of little city, you know, properties that have got cafes and stuff like that in them.

So, um, So I haven’t been, you know, hugely invested in offices. Um, I’ve always preferred properties that, you know, were sort of perhaps a little bit rundown stuff that I could improve. So that’s where I’ve sort of ended up. Um, but I do love industrial. I haven’t got an industrial at the moment, but I see a lot of industrial sort of swapping over into that sort of retail mix and office mix as well, rather than just being full of panel beaters, you know.

So, um, I love it all, but I think it really depends Once people go out and start looking at deals, they’ll generally find what they have an affinity for. And then of course, the particular deal itself will, you know, make that decision for them generally. I’ve got to agree with that. And I think if people do, they, they tend to, yeah, you’re right.

Get an affinity for a particular asset class. And it doesn’t mean that’s the only thing they ever look at. And I’m sure, I’m sure driving around, um, you are enticed by many things that you actually see. But you do, you tend to lean into, to a particular asset class or, or industry base. Interesting, you talk about industrial, I mean, Damir, I love industrial.

Um, we definitely see the change in industrial space. Now that’s not the heavy industrial that it used to be. It’s not the dirty industrial that it used to be. I think some of this is based on a shortage within areas of specific zones, so they allow some lighter use in areas that are closer to residential or closer to a CBD to enable business growth to actually happen.

That comes down to knowing your area a little bit too and having those conversations around what’s possible. And definitely. Not being stuck in that it was a panel beta, it’ll always be a panel beta, giving consideration to well if a panel beta is no longer there or it didn’t work, what else can we actually use this for.

And I think that goes for everything. There’s been a lot said for office space, especially off the back of the last few years and is it needed the same as what it was, it is valuable the same as what it was. I think if you look at multiple uses for it, you can leverage it very, very differently. I’m seeing some people make some great money off office space at the moment, but they’re definitely doing things differently to, um, to how it, we used to actually, um, utilize office space years back.

What are some of the changes you’ve noticed? In asset classes in the industry since you’ve been doing it because you’ve been in this game for a little while now. Oh, look, I think, uh, yeah, we, let’s, you know, just touch you on, um, the industrial and I think Byron industrial states a fantastic example of the sort of pivoting.

Of, um, you know, people saying, well, look, I’ve got, you know, I’ve had a shop in town, for example, in Byron, and now a lot, you know, half my business is online, so I can get an industrial shed, you know, in a beautifully designed, you know, tilt, tilt build building, you know, with maybe six I’ve got six buildings in their cafe at the front, and I can have still have my bit of retail, but I’ve got my office and I’m only paying, you know, say 60 percent of the rent that I’m paying for in, you know, in town in Byron.

So, I’ve seen a hell of a lot of that happen. And, you know, if you went to the Byron Bay Industrial Estate today, you’d just be blown away by the You know, the, the things that you can eat, you can go to gymnasiums, you know, you can have an ice bath, you can do everything, you can get your car fixed, you know, so it’s, and there’s, you know, um, you know, the share offices, that’s been another big thing.

Particularly since the shutdowns, you know, they’ve come back to life big time because I think, you know, I like working from home, but I’ve got people around me here at home, you know, so, but some people hate it, you know, because they’re at home on their own. And, you know, they’re sort of sitting around there in their pajamas all day.

And, and they’re not talking to anyone. So, you know, that sort of, that sort of things really cranky up again now. The culture shift off the back of lockdowns and, and not being able to travel and things has been interesting to actually see how it’s unfolded. Um, but definitely noticing a big push through all, through all areas of business of people at least going into the office for a part of a week.

I think a lot said for that too, that interaction with people, it’s okay if you’ve got people around you at home, but if, and, and that is productive. Um, it’s not, not everyone can do that and not everyone enjoys doing that either. So seeing that good mix is perfectly ideal and definitely noticing it in the rental space for offices too and how they’re being used differently.

So shopping centers, which I love, right? Um, and it’s always been interesting seeing what you do with them. So Can you just give us a short explanation on what a shopping centre looks like from a regional perspective, and the sort of returns that you can generate off them? What you would, what you would suggest as far as, if we’re going to look at something, what are the uplifts?

What are some of the biggest uplifts from that perspective? Because I know speaking to some people, the minute you say shopping centre, they think of Westfield. Yes. Yeah. Not always like that though, is it? We don’t have to go in at a Westfield level to get into a shopping centre. No, absolutely. And I think, you know, the lockdowns absolutely prove that the small, um, you know, strip shops, like a neighbourhood shop, you know, that, um, that’s even not in a shopping centre, do very well.

We see, you know, someone can drive their car, park in front of the newsage and go into the newsage. Go home. So, whereas Westfield, of course, during the lockdown, we, you know, all that terrible situation where those centers were basically off limits. So centers like I’ve got, which is sort of, you know, in a, in a suburb like Sandstone Lakes Plaza in a suburb near Bribe Island, um, master plan suburb, you know, and it’s got the, you know, food, um, local grocer, the hair salon and childcare, um, you know, dance studio.

uh, gymnasium, those sort of things. They, you know, of course, at the start of the lockdowns, I thought, oh my God, what’s going to happen? But actually, we got more inquiry for a couple of vacancies that we had than, than ever before, because people said, well, I’m not going to go into a big centre. My business is still going.

And, you know, people can just drive up to those centres. So, I see, and you know, I see a lot of these centres all around, I’m, I’m not in the buying mode right at this moment, but I see so many little shopping centres that are a little bit run down that, you know, the owners are a little bit lazy and they just need a bit of a freshen up.

And it can really make a difference, particularly to keep the rents down to, you know, a nice level so people have got sustainable rents so they can make some money and you can make some money as well. I think that’s a key factor there, isn’t it? Being able to work with tenants. Yeah, because it’s got to work on both sides.

There’s no point in having rent that high going. Yay. This is great. My returns are fantastic. And yet it’s still vacant because not only is it affected your income stream, it’s also affected the value of the property to sit in there vacant as ideal. So, so that balance is really good. How, what, what tips would you give people for a tenant mix?

Because I know it’s something you do exceptionally well, um, and then that, that balance of, um, getting the right ones in at the right time. Yeah, I think that’s, um, there’s, there’s a lot of schools of thought, I guess. I mean, some little regional centres almost become medical centres. You know, they’ve got, you know, the doctor, the pathology, uh, the dentist, that sort of thing.

And I know a few people that have bought those and they perform very, very well, but it would also be nice if they had a little cafe or something like that, you know? So sometimes in those centers, you might have room in the car park. You could put, you know, uh, a container style cafe that’s open, you know, just during the weekdays.

So that’s an addition, but traditionally a good mix for a center is always, you know, a sort of supermarket. Um, a takeaway food, um, hair salon, you know, maybe a news, a news agent, maybe not so much anymore, but a chemist is great. Those sort of things that are sort of everyday needs that people, you know, just drive down the street and say, get my prescription, get some stuff for lunch, have a coffee, get my hair done, you know, and if I can drop the kids off at the childcare, that’s perfect as well.

And then I’ll go to the gym, you know, so. I think, um, you know, people, agents always talk about having, you know, your key tenant and, um, and they often say, oh, that’s, that’s the, uh, you know, the supermarket. But I think that’s sort of changing a bit too. Um, I’ve seen small centers that have a really big bakery cafe, you know, uh, tenancy that might take two or three shops and be absolutely cranky.

And that’s sort of the driver for that center. So it has changed a little bit. It’s a good tip that you make there, James, to give consideration to because if someone’s buying something with an amount of vacancy and they don’t have a, an anchor tenant per se, so that that one tenancy that’s considered the main tenant to look for what brings, brings that foot traffic.

Because like you’ve just mentioned, a big bakery, they do, people go there every day and it brings a lot of people in, which those other businesses can then market to and leverage off. And, and we look at what’s convenient for people. I think you’ve really got to understand it’s not just about what you would want, but it’s what people in that particular area find convenient.

So If it’s an area that’s big on fitness and, and health and all of these things, well, then you might want to incorporate that into, um, into your shopping center and encourage people to come along an amount said for being able to do that, though, because we want to make sure that tenancies work together.

Oh, absolutely. And that’s important when you’re doing your mix, you don’t want to, you know, put someone in, for example, I mean, we’ve got, uh, Local grocer tenant in, in the center, um, sandstone lakes, and they do coffee and food as well within, within the store. So it doesn’t preclude us from having another takeaway, but I probably, uh, they’ve got a seating area outside, you know, for a coffee shop and stuff.

And the particular location probably isn’t super recommendations. Strong for just a dedicated coffee shop. Um, so I’ve got to be a bit careful there. And I certainly he’s a great tenant and I’m on, he has a turnover rent that he’s paying as well, or will be paying. So, um, you know, any other tenant, I would have to consider him, you know, and sort of say, well, look, you know, I’ve got, I’m going to put a, uh, you know, let’s say a noodle shop in or something like that.

He’d be perfectly happy. But if I want to put a cafe in, he’s probably not going to be so happy. Okay. I mean, we want to look after our tenants because longevity is good. The longer that they’re there, the more stable they are, the longer they want to stay, the better that is for all of us. The last thing we want is that high turnover of tenancy in commercial property.

Yeah, absolutely. It is. It’s a very, very valid point. And I do, I mean, like I said, I love the way you give consideration to a lot of things and not necessarily caught up in the old ways or the old thought processes around what needs to be an anchor tenant, but you can’t go past looking after good tenancies.

You really can’t go past that because, again, the stability is what gives you your lifestyle. Okay, if you haven’t got high turnover, you get to go and do what you want to do and, and are very comfortable that your assets looked after, but their rent goes up every year too, doesn’t it? Oh, that’s right. I mean, look, um, at the moment, of course, you know, with people on CPI leases, you know, sort of feel a little bit sorry for them with the inflation because a lot of the rents in Queensland, I think 7 percent at the moment, um, which we can talk about a little example later on with one of my friends properties, but, um, most of my tenants, we’ve got them on three or 4 percent fixed.

And, um, then in commercial leases, of course, you’ve got a market review. So you do, um, you know, after a period of years, it might be three or five years, you have the ability to review that rent to market. Now that can go up and down, but sometimes I find that, um, if you have, I have had friends that have said, Oh, I’ve got 5 percent increases in my leases.

And then they get to the market review and they’ve actually got to reduce the rent because it’s sort of outstripped inflation. And it’s not, you know, it’s just not fair. So. The tenant can logically argue that the rent be reduced a little bit. But of course, the landlord has had the benefit of the high cash flow for the last three or four years.

So everyone’s sort of balancing out. It’s just a bit of a reset one way or the other. And there’s got to be fairness that comes into that. I know we’ve always looked at those. Fixed, um, annual increases that do work quite well. And if you are fair and reasonable about what they are, um, it works. And you don’t generally get that argument from any tenant as to say, I know I shouldn’t have to have a rental increase.

It’s a, this is now down to business and preference to the emotional attachment to the sort of property that we’re getting into. So those things start to make sense. So that three to four annual increase at the moment. Um, it’s quite fair and reasonable. I agree with you. CPI at the moment is challenging.

Um, and yet over the last few years, CPI would have been a very minimal increase for tenancy. So you’re right. It balances out. Eventually it gets to that point where we say, okay, where are we at? Where are the comparables? What’s fair and reasonable in the market again? And we, we go again. Um, so you do build a working relationship with your, with your tenants over a period of time, which again is why we want to look after them because they are our asset value.

Actually. More so than what, um, just the bricks and mortar actually are. Yeah, I mean, we’re always always doing things we sort of model that big centers a bit, you know, they always have their promotions arm and they’re doing things, you know, well, they’re basically spending the tenants money actually in those centers, but because the tenants are actually paying for those promotions, it’s in their lease, they’ve got to pay a certain amount, but Our tenants, they don’t have, we don’t charge them for promotion, but you know, we might spend some money on social media or put up some new flag signs or new signage at the shops.

But the best thing that we think that we do as landlords is keep the centres looking great. That’s the most simple. You know, because I’ve seen so many centres, it’ll be a landlord that’s had it for 20 years, and it’s just gone down and down and down and, you know, there’s, there’s pigeon crap everywhere, you know, the car park lines are all blurred and, you know, those sort of things are just so obvious and actually don’t cost a lot of money.

So we’re, we’re right on to that. We’re a bit squeaky clean like that. That’s fine. Yeah, of course they do because it looks good for them. It looks good for their business. They appreciate being looked after and for anyone else coming in, you drive around anywhere and you’ll notice when things look and feel good, you go, wow.

You know, the sides of the roads are all mowed nicely. This is really great. So the same, when you go into a shopping center like that, people will notice that it looks good. It feels good. And they’re more likely to drive in those other ones. That have got no lines left in the car parking and pigeon poo everywhere.

They’re the ones we look to buy. Yeah, absolutely. You know someone had enough. There’s no attention to it. There’s, there’s no drive to actually make this a good asset again. So, so they’re the ones that are worth having a conversation around and, and being able to look at something from an off market perspective.

Yeah, well I’m right in refurb now. That was a bit tired. And the amount of pigeons around the properties, you know, it’s mind boggling, you know, and it’s funny actually how tenants often don’t complain, you know, they don’t want to complain. So, you know, there’ll be sort of crap running down the walls and no one says anything, you know, so anyway, good thing to tidy up.

It is, it’s sad to think though, because I think after, you know, I guess they get into that. I don’t want to ask my rent will go up, you know, I don’t want to ask. So a lot of it will come down to how that’s been managed over a long period of time or I’m sick of asking said nothing ever happens. We’re going to be looking after tenants, and they feel good.

They’re very okay to say, Hey, thanks. That’s exciting. This is what’s happening. They’ll make recommendations. If you ever you have a vacancy, it’s a whole lot easier to fill it when you’ve got great tenants in there that talk well of the talk well of their treatment their leases and certainly the environment you’ve created.

So. Again, a lot comes off the back of, of having a, and maintaining a good asset for your tenants. And I do like the way that you actually incorporate that into it so it’s not an added cost for them. Yeah. One of the biggest challenges is it’s the add ons from a tenancy perspective that they’ll give consideration.

One thing I learned from residential Melissa with, you know, that’s sort of floating to my commercials that when I was renovating houses I remember. Um, a value are coming round to, you know, value the property. I was halfway through the renovation and he said, you’re in that crucial point where, you know, you can’t really get, get a good sale on this property because you’re not finished.

So you need the money to finish it, to make it look good. And he said, it’s always better to have properties that look good, you know, and it’s, it’s obvious, of course, you know, so don’t run around having a whole heap of half finished projects, you know, so it’s better to get them finished, get them and keep them looking good, simple.

And so one thing I like about commercial property is when we talk about renovations, and because a lot of people out there do renovations, I think a lot of people start with a renovator. So they’ll buy it, they’ll renovate it or sell it and they go, yay, this is great. And some people will do that for everyone a day.

They make businesses out of it. Other people will do it and go, yeah, that was great. I made some money out of it, but that was too much like hard work. So I don’t have the time for it and all of these things. But when we look at commercial property and renovations, it’s a little bit different, isn’t it?

We’re not out there spending the same amount of money, time, effort on creating the internal fit out, the extent of a renovation as you would with residential. But there are some very important key factors externally when we’re presenting a commercial property. Would that be fair to say? Oh, absolutely.

And what we’ve found is even getting, uh, and of course, in some leases, the first thing is, and a lot of leases, one of our childcare centres, every five years, they have to repaint, you know, in and out. So that’s often built into the lease. So it’s just a matter of reminding them that they’ve got to repaint and then they submit the colours to you and off you go.

But with the, um, the other 14 shops, and that’s it, we’ve got a childcare and 14 shops, I was very surprised How inexpensive it was compared to residential to get a shopping center painted, you know, it’s sort of, you know, I know, you know, getting a house painted in Byron Bay at the moment, you can spend 40, 000 just getting a house painted in and out, you know, it’s crazy.

But we get the whole exterior of our 14 shops painted for about 25 grand. I mean, okay, there’s spray painting it, but we plan to do it. You know, every five years and it’s a tilt build construction. It’s a, you know, it’s an easy surface to paint on. And, um, even the guy said to me, he said, these are easy jobs.

You know, we go around on the weekend and, um, and, you know, there’s nothing like a coat of paint to make, to make something look great. Absolutely. So there’s a, there’s a definite learning for people and that mindset change to going from residential over to commercial and the difference in a dollar spent and the effect that it actually has, because like you’ve just said, there’s nothing better than a coat of paint to freshen something up and make it look good.

You look at the basic things like signage access, not too many trees to block everything from a commercial. We’ll be looking at their business and, and how their business is presented now from the street and preference to the fancy things on the inside that costs a lot of money residentially. Um, I know we often joke about the, the renovation of a commercial property is a pressure washer, a broom and a spray, you know, a spray gun.

I mean, there’s a, there’s a lot of truth in it, but there’s no point in over capitalizing. No, that’s right. And I mean, look, you know, as long as the, if you do have a vacant tenancy, I mean, in that shopping set, we bought Sandstone Lakes, we only had four tenants out of 14 when we bought it. So, um, you know, if you do have a vacancy, you know, have the windows clean, paint it white inside, make sure the lights work, all that, because, uh, you know, you can always offer, offer incentives if you get the right tenant for a fit out.

You certainly don’t need to start what you can’t really start fitting out vacant shops. I mean, until you get a tenant. So, um, it’s basically just keeping it like a nice, clean, available space is the, um, is the thing to do. And I think once you’ve overcapitalized, it takes away your ability to offer things to a tenant from an incentive perspective.

You’ve already spent your money on things that weren’t necessary. You’re better off saving that and being able to offer some incentives to get them in. Because tenants are always looking for, um, that shift from one place to another or starting up a business, whatever the case may be. What can some of those incentives be that help them out, that start building that, that good relationship with them and get them, get them started in a space that’s conducive for them.

Thank you. So with all the experience that you’ve had and all of the people that you have actually, um, taken through your course and mentored and all of these things that have to be some standouts over the years for you, um, both on the, wow, that was an amazing outcome. And on the, well, that was a challenge, um, that we, that we had to navigate around.

Have you got a couple of examples you’d be happy to share? Well, one of, one of them, of course, is your deal. One of those, the deal that you did on the shops, that was fantastic. Um, you know, we probably don’t need to talk about that. But just, um, um, people in the course. That one of them stands out. Actually, I’ve got, I’ve got some notes here.

Um, young bread who bought a shopping center up in Bowen in Queensland. And, you know, he was a residential investor and found a shopping center. I think it had eight tenants and it was one, 1. 25 million for the eight shops, which I think, you know, I remember people chatting in my Facebook group on the private Facebook group.

They were saying, wow, you know, that’s just incredible. That’s the price of a, an apartment in Sydney, you know, and That was such a great deal for this guy was life changing because I think with his numbers on that, let’s say he put, I think he put about 400, 000 into that, that he was able to get from his residential properties.

And the net rent on that one, when he, when he bought it, and this is going back a couple of years, it was 140, 000 net that’s after outgoing. So that all the outgoings are paid and all he had to pay. from that 140 was his mortgage costs. And I just worked out this morning, even now, if he had 900, 000 mortgage at 5%, you know, given the rate increases, um, he’d be cashflow positive on that, but it sort of didn’t stop there because he had a bit of available space in the car park, which he perhaps could have put something else in and also could have started all those shops into eight separate.

Things and, and so, you know, eight separate properties and then sold those off. So it was just a fantastic deal that, that having that 95, 000, you know, you can imagine someone writing you a check every year for 95, 000 and say, okay, now I want to go and buy another one. And, you know, I’m actually not sure if he’s bought anymore.

And sometimes I say to people, you probably only need to do one deal, you know, maybe just do one deal. I mean, if he pays that off, he’s getting all the rent. You know, so that was a great deal. It’s interesting. I remember you, I remember those words when, when I first actually met with you, you know, you know, everything can change with just one deal and potentially that’s all you actually need to do.

I’ve got to say it gets a bit addictive though. And there’s no two ways about it. Well, knowing where to stop and, um, you know, and I’ve got another actually little case study, which is a cheaper property, which actually a good friend of mine bought. And This I don’t know if we can talk about it now but it’s an interesting one because he’s bought it at the land and everyone asked me this question, Melissa, you know, he’s bought it with the low interest rates, you know, so he’s bought this property 527 grand it’s a, an office in a nice building in Maroochydore, and been fully leased right through all the lockdown so he’s, he’s had a good run so he paid you know 527, 000 and he put He’s Um, 150k he had sitting, sitting around and he’s owned from a sale of a property in Sweden.

This is Frederick’s property. So he brought that 150k out here and he got a loan ANZ were offering these loans at 2. 9%. You know, so he got that. So his net income was 40, 000 are only 12. So he’s cashflow positive and rolling on. It’s been two years. He’s been banking that money. Everything’s been great. But now he’s loans going to go up to around 5%, uh, which is classic because everyone’s saying to me, Oh God, it’s all disaster.

It’s now 5%. But of course, his rent is now going up 7%. You know, with the, the latest CPI. So he’s still actually got at the end of the day with his rent going up, he’s still actually cash flow positive, nearly 23, 000 a year from that deal. And if you apply, now let’s say you put 150, 000 into the bank at the moment, you’d be, I think you can get maybe.

You maybe can get 4%, you know, for six months or something. I don’t know, you know, if you looked around, but he’s getting 22, 000 return on his 150, 000 that he invested. I told him that the other day and he got the calculator and he said, Oh my God, you’re right. He said, you know, the cash on cash return is unreal.

So And he was a, you know, a guy that really didn’t know anything about commercial property and just said, look, I just, I want to buy for cashflow. And so that was a great, um, a great thing. You know, we helped him get into that deal and checked it out a little bit for him. So it was just, you know, it was great for that someone who had that sort of challenge that just didn’t want to be anything that was going to be stressful or risky, you know, so it’s been great.

And there’s, there’s a lot said for that though, because, you know, we talk about. You will lean into various different asset classes and, and definitely locations as well. Some people are very metro orientated. Others are very comfortable going out regional and, and all of this, but it’s an individual thing, isn’t it?

Oh, absolutely. And I think, you know, the thing that’s happened with the lockdowns, like, just like the, you know, the lockdowns caused this crazy boom in Byron. Um. It’s not that if you get a residential boom in a regional area, it doesn’t immediately follow on. This is actually probably a big tip for people looking at the moment, you know, doesn’t immediately follow on that all commercial properties are suddenly going to jump up in value because it’s a bit of a slower process.

It’s sort of the commercial, you know, naturally, if you go to a regional area and all the residential properties have increased and more people have moved there slowly, but surely, You know, any vacancies would get filled in the, in the commercial properties and there’ll be more interest in those commercial properties.

So, A, the rents might go up and therefore the values will go up, but it’s a slower process. So it’s quite a good time to be looking regionally for commercial. There’s a big drive for regional too, I think off the back of people heading out of Metro and some of the lockdowns and challenges and all the rest of it, but, but as well as that lifestyle now, because they’re, they’re not all.

They’re not in the office all the time or they’re not in that workplace all the time, they can work from home, they can mix and match what they do, um, and work it in their favor that people are looking for lifestyle more so. So it’s increased that, that influx into regional areas, which in turn is now said, Hey, we need more businesses in here.

So there’s a little bit better demand for it, which is being supported quite well. So, of course, with that. You’re going to see the, um, the value sitting quite nicely. The risk is going to be lower, which is always, always nice to see. Um, funnily enough, I do, I listened to some of the deals that your students are doing.

And, you know, we say that starting position where people may be at a lower risk and what asset class do they lean into. Again, it’s what you’re comfortable with. It says generally what you know to start off with versus, oh my gosh, I have to go and find an industrial property that I know nothing about, or I have to go into a shopping center to make passive income.

It’s not the case, is it? Pretty much any commercial asset class done well. Yeah, yeah. I think, you know, I always talk about little busy hubs and it’s like Maroochydore, the, um, going back to that deal, that tenant is a, um, someone who operates in the worldwide digital space. I’m not quite sure what they do, but, um, Frederick is, has a similar business.

So, you know, he had this affinity With these guys. So, you know, he was Googling around saying, look, these guys are a worldwide company. They’re based in Maroochydore because apparently it’s got the fastest internet in Australia. It actually has the main cable coming from Asia, apparently. I’m not quite sure if that’s correct.

But, you know, um, that’s what we were told. And when, you know, I always recommend people go to check out the properties physically, of course, and, um, and Frederick bought this during lockdowns, but was able to get there. But, you know, it was flat out busy everywhere. It was right back from the Sunshine Plaza and there was people everywhere, even during the lockdowns.

So there’s all these busy little hubs, you know, so it might be an office block, but it’s a, it’s a busy little hub, all good mix of tenants, you know, that sort of thing. So each deal is individual. So when you’re looking at increasing now aside from just being able to annually increase our rents because if you get your lease sorted well that’s going to be one of the triggers that are in there that every year that the rent is going to go up x amount of percent or the CPI and that’s a big tick.

What are some of the other things that you suggest to people to actually look to be able to do to increase their rent from day one to get to those percentage returns that they’d like to achieve off a property? I’ve had one of my little niches was buying properties that had, say, a shop downstairs, a classic sort of terrace house property, you know, shop downstairs and an old flat above.

And sometimes, you know, some land at the back. So that’s always been a good one. That, you know, you could perhaps turn the apartment upstairs, you know, well, it’s, it’s finished being a flat now it’s an apartment. And, uh, you know, that could be a luxury Airbnb and, um, and, um, I’ve had some people in the course that have done that very successfully, you know, by building this chops at the bottom old apartments above thinking originally Airbnb route and, and, you know, had really great cash flow.

Um, and also looking for properties that have more land. So, you know, you perhaps could put a container of coffee shop at the, if it’s a small shopping center, or you might be able to build more at the back. Um, a couple of students have been very successful in the signage space, as you know, I know that you’ve done that yourself, uh, with the digital signage, and in fact, only look for properties that are on main roads.

Um, you know, and then they, they do their magic with the sign is going to the sign outdoor advertising companies or do it yourself. I know that you’ve done and have made really good money from that. I mean, a sign is basically another tenant that you’ve just created without doing anything really, you know, putting your finger on the pulse of it all.

Um. So those sort of things, I mean, I’ve had people that have leased out car parks at the back, you know, they formalized a car park, they put a boom gate in and realize that, you know, the tenants were only parking two cars in the spot that could take eight. And there was people up the street that say, oh, if I can lease a secure spot.

A hundred bucks a month or 200 bucks a month, whatever it is, um, you know, every dollar that comes in, you know, capitalizes out into extra cashflow and therefore extra value. So, um, trying to think of some other ones. There’s a million of them, but, but it’s, it’s interesting because This is a people got to start looking at what else can I do here, you know, what, what else can I do that improves what we’re offering and definitely, um, brings in another income because it actually adds that value to your overall asset.

And for those things like signage will add value back to tenancies. It’s generally something that is considered, you know, that circular thing where the tenant gains the you gain the the new tenancy coming in or the people in the signage everyone gain something out of it. But it’s what else we can walk away from a commercial property way too soon before we’ve actually maximized its potential.

I remember one deal that was in a country town and it was a classic shop that was a huge shop, some sort of clothing store, and they really only needed about half the space, you know, a big wide frontage. And, um, you know, that was able to be divided up and they were both happy because the guy kept his clothing store with less rent, but the overall rent increase was of course way more.

So, you know, then you’re able to rent another space out to someone else. Um, so there’s so many things that. I see people actually do walk away from leaving dollars on the table, you know, they just, they say, Oh, that’s not a deal or that’s untidy or, you know, or another one Melissa is going to look at a property where the person’s lease is about to finish, you know, and.

And let’s say it’s a hairdresser that’s been in there 10 years, but they’ve only got, say, six months to go on their list. And they go, Oh, no, I don’t want that because, you know, they’ve only got six months to go. Well, talk to them, you know, see if they’d sign up. If they’ve been there 10 years, they’re not likely to walk away from their customer now.

So go and have a chat with them. Isn’t it interesting? So personally for me, I I’m so risk factor is not the issue. I like vacancy because I know what a lease value is. And, and also know that we can create a great dynamic within tenants. If you’re prepared to take something on with a few vacancies and know that area will support the outcome.

How do you feel about people going into something that’s got vacancy on it? I think it’s sort of horses for courses and if you’ve got enough backing to buy it, and it’s really, I reckon, if someone spends a couple of days in a location looking around and talking to people, they’ll really get their finger on the pulse quite quickly as to what.

You know, a vacant space would rank for, and you know, it’s, it’s, and I go through that in the course a lot about working the numbers backwards because an agent might say to you, Oh, look, this is a shop that can get 600 a week, for example. But then when you look around for a couple of days, you find that every other shop in the streets, 400 a week.

Okay, redo your numbers, you know, redo your numbers at 400 a week. Plus maybe allowing 20, 000 to, to tart that place up. So it’s just, and then going in with an offer. Now, had this happened in Ballina recently, we were looking at a little, um, hair salon, another hair salon. And the owner wanted, I think, 600, 000.

We thought there was no way it was worth more than about 375, 000 on the current Rent. And, you know, the agent just about fell over and fainted when we suggested that. And, um, we went off and did something else. And months later, the agent rings me. He said, well, yes, it did sell for that.

And I knew that would happen. I said to Anthony, when we were looking and I said, Oh, hang on, you watch this. As soon as we make an offer, it’s, which was almost about half what they’re asking, you know, because we just work the numbers backwards. We said, well, hang on a minute, you’re saying this, but it’s not actually, it’s based on the numbers, all the emotion taken out of it came back and then, you know, blow me down.

Two months later, the guy said, Oh, yes, he ended up selling it for basically what you said. Anyway, it’s crazy. It’s true that you’ve got to be able to do those numbers. Commercial property is all about the numbers. I always suggest to people, if they can get their hands on a valuation, they’re great to read through and see how a value are.

What that end value is, and sometimes we like it, sometimes we don’t, sometimes we’ll see things from a different perspective to some valuers, but to read through those valuations as gold, because you’ll see the facts that they pull together and the numbers that they pull together to substantiate what an overall valuation is.

So a couple of things it allows you to do. is then say, well, what does my lease need to look like for me to get a good valuation and preference to what I’ve got? And then definitely what is this worth as it sits now? Because often you will see things on the market where they’re trying to sell potential, where they’re working out a value based on it being fully tenanted.

In fact, you’ve got three vacancies. So understanding it at that level. allows you to put an offer forward that potentially is half what they’re asking for, but it’s, but it’s substantiated. It’s, it’s, um, it’s an actual real, a more realistic value than what the, um, the vendor’s actually expecting. Do you, do you get to get in front of the vendor often?

Oh, not often. We had a little bit of a touch with the vendor, let’s say when we’re buying Sandstone Lakes Plaza, what was called something else then, but it was, you know, almost talking to the guy because we made such a low offer that he got annoyed, of course, but, um, but same thing, you know, we were basing that there was three tenants and we were just basing our offer on the rent from the three tenants because I thought, wow, this is going to take a long time to sort out.

So if I can get it for that. Fine. And I think a lot of people forget that when they’re looking at deals, you know, um, I spoke to someone the other day that was going to talk to the vendor at a property out at, um, UKI and same thing. We thought it was worth about half what they’re asking. And I said, Oh, wow.

You’re going to have to be careful here. You don’t offend them. So sometimes I try to avoid it. You know, I’d rather go through the agent. But the problem is with that, when you’re making, you know, perhaps a very low offer, a lot of the agents are so embarrassed to put it to it because they’re told the guy in the first place.

Oh, yes. Yeah, this is worth 600 grand when in reality, you know, the offers are coming in well below that and then they’ve got egg on their face. I mean, a good agent will just submit any offer, but you know, sometimes it’s tricky, you know, with those things. So I do urge people to work the numbers backwards and really demand that offers are getting submitted, you know.

And we always say too, so I mean, the legalities around it, if you put it in writing, they’re supposed to put it in front of the vendor irrelevant. Um, but I agree too, being able to substantiate how you’ve come up with that offer, um, takes the emotion out of it. Certainly, um, whatever the, the agent has said to the vendor, um, is certainly no longer relevant as these are the numbers.

It’s just, it is what it is. Yeah. I mean, you’re working on a cap rate, you know, let’s say if you went to Ballina today to buy a shop, you know, the cap rate is about 5%. So meaning, you know, for anyone listening, meaning that, you know, what an investor is expecting to get as a return, if they invest 300 grand, they’re expecting to get, um, what’s that, you know, 15, 000 year rent, you know, that’s what they’re expecting.

So it just works backwards to work out the value. And that cap rate is based on risk in the area and demand and, and on specific asset classes too. So if you were to look at industrial versus say office space is potentially a quite a different cap rate based on areas, isn’t it? Yeah, that’s right. And, um, that’s exactly right.

I mean, in, in Byron, that’s probably why I don’t have any industrial in Byron at the moment, because some of the, the cap rates are around 4%. And, you know, me as an investor, you know, if I, I would rather buy something somewhere else, it’s 8%, because I know that I’m going to pay about 5 percent for my money, you know, so at the moment, you know, so that’s how I work.

Whereas, You know, someone who wants to put all cash into a deal. That’s another scenario, of course, that they’re perhaps happy to buy something for 4 percent if they’re putting more cash in or, or, or cash. So it’s, you know, horses for courses. And I think it’s, you know, you look at, you look at the long term gains out of it as well.

Can I do something else to increase that from 4 percent to maybe a 7 or 8 percent in that area? What are those uplifts? Maybe there’s signage I can put there. Maybe there’s that coffee van or whatever it is we can put in the front. What is it? What else do I need to do to increase that return or am I buying an end of the line product?

What do you feel about end of the line products, James? Yeah, look, absolutely. Well, let’s say even, um, that property that Frederick bought in Maroochadoor, that’s basically an end of the line product, and, and one thing I sort of forgot to say about that one, you know, when we, when he got the valuation and checked the market rent, it was bang on, the valuer said, yes, this is the perfect rent for this, This property, which is very important.

It wasn’t too high or too low. I mean, if it was too, a little bit low, that’s great because that’s a little bit of an uplift you can get, but if it’s too high, of course, you’re paying too much for the property. So that’s super important. So I think if you’re buying, you know, just a sort of done deal property and you just want to get, you know, 6 percent net return, it’s obviously very important that, you know, you have a valuation and then everything stacks up that the rental amount is.

Correct for the market. And I think there’s absolutely nothing wrong with that. Um, it’s just depending what, you know, let’s say you’re a busy doctor or someone like that has got high income, they might just say, look, I’m just going to put a, you know, 500, 000 into this investment. I’m happy to get 6 percent return.

It’s on a 10 year lease. Forget about it. You know, classic examples like a Kentucky fried chicken store, you know, you’d probably never go near it. Forget about just click the rent, you know, perfect. Whereas people like you and I, we’re looking for little angles to, you know, buy something and increase it a little bit, you know, and, and to get it above the market because you’re manufacturing your own growth and equity.

So it’s, um, it’s just a different style of investing, I guess. And I guess it’s what it’s based on time and desire to actually do it for some people, they just want to find that that end of the line product that is secure. They don’t have to go in there that puts an amount of money in their bank that they’re very comfortable with.

There’s nothing wrong with that. If that’s, if that suits their, uh, their desires and needs at the time, there’s absolutely nothing wrong with it. It’s just making sure, like you’ve said, that they’ve done the research around the buy in price, the rental returns that they’re getting, um, and that’s backed with some good facts to ensure they’re going to the right.

Would you give them all of that though? Yeah, I mean, and I mean, there’s levels of activity, like someone like me, you know, we’re Quite and you, I know you are as well, you know, we’re very active investors, but, um, just in even harking back to Frederick still, when we went to the building, you know, it’s a strata title property, we said, Oh, this is grubby, that’s grubby, you know, needs this.

And we, and we found out that it had nearly 100, 000 in the sinking fund. So I said to Frederick, okay, you don’t have to do much work. You just got to send a couple of emails, you know, just ask. Get things painted, get this done, get that done. And suddenly it all got done, you know. So, um, and even on that strata property, he did find there was an uplift.

There was ability to put solar panels on the roof, you know, reducing the common air conditioning bill and all that type of stuff, which is money back in his pocket, more cashflow. Whereas, you know, people like us. I’m always hassling my managers, you know, we’re on the phone to our emails, not not hassling, but we’re saying, Oh, what can we do here?

You know, what can we do there? Have you done this? Have you done that? You know, so that sort of thing is, I guess it’s just various levels of how much time you’ve got and how, how active and perhaps aggressively investing you want to invest in you want to be. I think that people grow with that too after they’ve done one, maybe two, people will grow with that, they’ll either stick with what they’re doing, or they’ll start venturing out and getting a little bit more involved in, in different and different asset classes or what they can add on.

And so it is an individual thing. It’s, it’s very, very true. It’s a very individual thing. So question for you. With all the people you’ve worked with, and I know there’s been a lot of them, what is one of the most common things that you see as far as a trip up, if someone was doing this on their own, that mistake that they would make, that would see them either not stepping forward into a commercial property or doing something that was detrimental to their outcome?

What is the most common one? Oh, the biggest thing I, there’s two, there’s a couple of them. One of them is getting stuck, and probably not in any order of importance, but one of them I see a fair bit, and even recently, is people getting stuck on a particular deal, and say one industrial shed, or one shop or office, and they’re going, I’ve got to get this deal, I want to get this deal, and they’ve gone down the path.

Even to the point of, let’s say, spending a little bit of money on legal fees, you know, they’ve got someone to look at the contract and everything and, you know, and they’ve gone down that path so far that they think I have to complete this deal and quite often I’ll say, no, hang on a minute, this deals, this is looking bad, you know, and sometimes the other problem, which sort of leads on from that is they haven’t got a valuation early enough.

Um, because they either didn’t want to spend the money on the valuation or something’s happened, you know, and the valuations come in, you know, maybe 10 or 15 percent lower than the price of negotiated. And two things can happen from that. I mean, I would normally go back and say, well, let’s renegotiate if you still want the property, because let’s face it, Mr vendor, you’re probably not going to sell it to anyone else because the same thing’s going to happen again.

And that often works. Um, or, you know, they just sort of, um, Initially, when they’re looking at a deal is not doing the numbers correctly. So the agents say it’s worth 600k, for example, and, you know, if I did the numbers quickly, I might think, gee, this is really only about 520k, you know, and so they’re off on the wrong foot to start with, whereas, you know, I find that people lose momentum that way.

And that’s a big, big problem. You know, you really want to work out if a deal’s a good deal or it’s a dud. pretty quickly. So you can move on from it or do the deal, you know, and sometimes I’ve seen people spend three months on a, on a property deal and then they just go, Oh, bugger it. I’ll just go back and buy, buy a residential property.

You know, it’s interesting that you say that because yes, um, there’s a lot said for getting some assistance around those things because people don’t know what they don’t know. So stepping into a commercial property, if you don’t know how to do those numbers. You don’t know how to do them. Okay. So very quickly, you’re going to come on stuck with, with paying over the odds for something, especially at the moment we’re looking at some of the prices on commercial properties.

There’s a lot of potential being built into it. I’m an agents. I’m going to tell you what the actual value is. So if they don’t know, I’m very easy to overpay for it. Um, and definitely agree with that time spent on it. All of a sudden they’re emotionally invested instead of being strategic around what they’re actually doing.

Um, And I know, and I know based on doing, doing your work, which like I said was an actual, actual game changer for me, um, that you make sure that, that they understand this and they’re on point with the basics first and how to very quickly do those basic numbers to say, is this worth spending more time on or is there not?

I think is so, so important to, to understand those, just those six numbers first to say, does this even warrant looking at it further? Or not. Yeah. Because the more time you’ve spent on it, the more likely, especially people starting off, become emotionally involved, emotionally attached to this. Yeah. But then I don’t have to have it.

I just, I just have to. I think it’s, it’s interesting too, that even with the age, it’s, you know, I’d say that some people can take like 10 emails to get the information. I mean, obviously the ideal commercial probably to look at is someone gives you a proper information memorandum with everything on it.

And within 10 minutes, yes, I could pay this to the property. And, you know, that’s great. But a lot of the time, you know, agents, it’s like getting blood from a stone. So I just need, you know, tell me this, tell me that. And it takes a while, but there’s a, there’s a point to that where that can be a benefit because that could be a property that 20 people have inquired about.

And have me able to get the information from Joe blogs, the agent, and they’ve just left it alone. Whereas you and I might persevere and say, come on, we really need that information and we might be the ones that get a great deal, because you really want to put yourself in a position where you can say, say to the agent, look, okay, That deal does look like it’s worth that sort of money or, you know, obviously going to try something lower, or just say, look, that’s a joke.

That’s worth, we think it’s worth this. Is there any hope for us on this deal or not? Let’s, let’s walk away, you know, so you can quickly move on. And, and that’s the key to it all, you know, because the more deals you look at, the better you’re going to get at it. Oh, absolutely. And, and the reality is starting off, I think people should be going in saying, let’s just do those numbers.

Let’s look at it and see what I can find irrelevant to whether it actually is something that they’d go into, because being able to look at things for what they’re worth without the emotional attachment and being able to say, no, I think, um, makes for a better investor in the long run when we, um, or we have to, when we get to a point where you have to have it, it becomes quite challenging.

How many. Times do you see and sorry, just back to your point of we would persevere when I see an agent that is dragging their feet that drip feed you that they can’t give you the facts straight off. It’s instantly. I’ll buy through you because they are there. They’re generally not on top of things and they generally are lazy.

Most people won’t stick at it. So you’re not up against everybody else. Okay, so a good tip for everyone there, um, versus the very good commercial agents that say, here’s the IM, it’s all there for you, all the details, I’ll give you 24 hours to go over it, I’ll be on the phone chasing you, right? Those guys are doing the same to everyone else that’s looking too, so now you’re under a bit more pressure to start making decisions, and they will generally get the higher prices, whereas that agent that’s a little lazier, that doesn’t deliver, They’re not pulling the high prices.

Yeah, absolutely. And I think that’s the thing. You know, I’ve often pointed out, I remember I was dealing with an agent years ago that was God, it was painful, you know, to get the info out, but you know, I got a couple of good deals from him eventually. Um, there’s another point there actually too, you know, when someone does present a property, Really correctly on an information memorandum and had a friend by a big medical center.

And, you know, all the outcomes when everything was set out very neatly in that document. So everything was, all our decisions were based on that. And I can’t remember exactly what the numbers were. Let’s say she bought it at 7 percent net return based on those numbers. Well, during the due diligence period that you get with commercial, you know, you can basically hold that property for at least 21 days or 30 days, maybe longer.

During that period, the owner announced that he’d made a mistake with the numbers, and, um, you know, it made a difference in the purchase value of about 100, 000 when you deducted the extra outgoings that he’d missed out, and he was very honest, but he said, Oh, let’s just reduce the price by 20 grand, but I said, Oh, no, it makes a difference of 100 grand.

My friend who was buying, she said, how does that work? And I said, because you were buying based on the 7 percent return. Now the numbers are different. We just, we reworked the numbers, the owner agreed and took 100, 000 off that deal. So it’s, you know, it’s just numbers, everything’s numbers, numbers, numbers, you know, no emotion, no one has to argue, you know.

That demonstrates so clearly the power of those numbers and that this is what commercial property is about. It’s about the numbers. So for anyone that’s not, you know, a mathematician, don’t stress over it. There, there are, there are very easy calculations to do. And again, James is, I know this is something that you teach explicitly is how to understand those numbers and the sequence to run through them, because that’s all it is.

It’s there’s there’s nothing else attached to it but those numbers in that example very very clearly demonstrates that going back to our little friends the agents. Um, often we will see residential agents, trying to sell a commercial property because they’ve managed properties for a particular vendor, and they’ve had a lot of residential stuff but they had this these couple of commercial properties forever.

And they’ve got no idea a how to present it how to sell it how the numbers work how do you deal with that. Oh, that is, you know, it’s just sometimes ridiculous. They’ll, they will, they will apply their residential sales method to, you know, say selling a shop in Ballina or something. And you say, that’s, oh, it’s really nice looking shop, you know, and you said, man, I’m not cared about nice.

I just want to show me the least, you know, and sometimes, you know, they say, Oh, well, I don’t know. What are you talking about out gains? What do you mean? You know, it’s just incredible. You know what, what goes on, but same thing, you know, you can really have to sometimes educate them and say, look, these are the numbers I need.

Give me some comparison rents, you know. Um, and often in that situation, if I’m dealing with a residential agent, uh, and it’s an area that I don’t really know well, which is often the case, I’ll ring, try and ring a local valuer and say, can you tell me what the cap rates have been for the last, you know, three, three to six months and what the rents are in, in Johnson street or whatever it is.

And, um, and then you can go back to the agent and say, mate, this is why you’re wrong. You know, if he is wrong, you know, sometimes, of course, it goes the other way. They’ve completely mispriced the property too cheaply. And, you know, obviously, you’re not going to say anything about that. It’s just, you know, it’s, it’s, you’ve got to be patient, don’t you?

It’s not, it’s not like the residential game where it’s, you know, these are the comparables done, we’re in and we’ve got to get, we’ve got to get into that now. You’ve got to be a bit more patient, especially in those circumstances where you’re dealing with agents that aren’t commercial agents and don’t understand it, to be able to educate them somewhat around the process and how it works from a numbers perspective.

Yeah, because I mean, if they’re selling a normal residential property, you know, they, you know, you sign the contract exchange and settle in four weeks. Well, with commercial, of course, it’s completely different. You know, you agree to the price and terms, but then you go into that due diligence period where you can renegotiate, you know, it’s sort of a bit like buying a yacht, you know, you put it up on the slip.

If suddenly there’s something wrong with it, you say to the guy, I’m not going to buy it unless you take that off, you know. As simple as that. Well it’s funny you actually relate it back to that. It is kind of like a little bit of a test drive isn’t it? Yeah. So can you just… Blame due diligence was anyone that listening that is in the residential realm or not not well versed in commercial are going to go.

What is a due diligence period, what does it mean to me, you know, and then how do I get this so so can you just explain that a little bit. So when you’re initially negotiating a deal, so let’s say you agree to buy something, you know, for 600k and you know, you’ve paid a deposit might be 10, 000. You get your lawyer or suggest, obviously you’ve got to use a lawyer, but you know, your lawyer would suggest that, you know, we have a 30 day.

Due diligence period. Sometimes it can be longer, sometimes shorter. They often can be extended. And during that time, your lawyer is going to go hammer and tongs doing a lot of searches and a lot of, um, you know, getting information on that property that you perhaps haven’t already got. So, you know, it’s similar to, you know, residential, we’re making sure there’s not a highway going to go through it or power lines or something.

But not only that, he’s checking the lease out. You can be checking the tenant out, you know, be checking their financials, um, obviously getting a building inspection, those sort of things. So all through that 30 days, you’ve got quite a bit of stuff to do. But if you find things that are wrong, um, often, actually, I remember Jackie and Joe bought a building in, in Wagga.

And the owner ended up giving them about 60, 000 for repairs. He wasn’t even aware that it needed repairing. So it’s not, you know, that sort of thing. You know, he sort of, they sort of said, well, we can’t go ahead with the deal because of these issues. And he said, okay, you know, he’s so far down the track with these people.

He just thinks all I’ve got to do is reduce the price a bit and then I’ll get the deal done. So due diligence is extremely important. And, and you never want to be frightened about pulling out of a deal during due diligence, which I have done. Several times that, you know, and it does can cost you a little bit of money just in the legal fees and stuff, but it’s sometimes way better to pull out and move on to another one than to stick in that’s a dud.

Absolutely. A due diligence period is very, very important. And I like the way you’ve touched on that, not just for the information that you need to get an understanding around a property. It’s definitely very important for that. It allows you to reassess it while it’s no longer on the market. So touch the price.

Away from those decisions that have to be made instantly, which agents can be very good at pushing for at times as well. So it gives you that opportunity to be able to assess things and your lawyers and accountants and everyone else being able to assess things without that person behind you, but also the vendor gets invested in a sale.

So yeah, the deeper into due diligence it gets, the more invested they are in this has sold. Oh, that’s it. I find, I mean, you’ve got this time when you’re controlling that property. It’s, you know, it’s totally up to you whether you can, you know, whether you can buy it or not, basically. And, you know, the, the vendor was sitting back thinking, Oh, well, I’ve sold this property.

He hasn’t really heard anything from you, you know, week three due diligence. And then suddenly you hit them, your lawyer hits them with something saying, well, You know, for example, one property we were buying, um, the original owner still owed 473, 000 to the council. And that, that fee stuck with that for, that was a big shopping centre that stuck with that property.

So if we had settled without finding that out, we would have had an extra 400 grand on top of it. 2. 3 million purchase. Um, so, you know, that was a deal breaker. So, our lawyers went in hard and said to this guy, well, this has got to be paid immediately or it’s taken out. In fact, what it was, it was taken out of the settlement funds and we made sure it was paid.

So, But, you know, the importance of due diligence. That’s why sometimes some people say to me, I’m using a conveyance for my commercial purchase. And I think, look, there’s nothing wrong with conveyances, of course, but I think commercial is a bit more involved. You really need a commercial savvy lawyer to do those things for you.

Yeah, I totally agree with you there. Um, and a very good point you make there, because there’s nothing wrong with conveyances and they do a great job residentially. But there is, especially if you’re, if you’re coming into this new, because you’re not always going to know what questions to ask, what to look for.

You need someone that seriously understands that. And I know that step by step you take everyone through this and your course demonstrates that very clearly. It gives people a lot of that, um, upfront information to work with so they don’t get caught in those situations. Um, really interesting when you start looking at, you know, that starting position and, and the due diligence.

And I’ll save some states worse than others, but I’ll definitely refer to New South Wales here when you’re looking at something residentially, you can put an offer in and in a heartbeat, it’s pulled out from under you and someone else has taken it and you have your head isn’t hasn’t even stopped spinning before you’ve realized that the property is no longer yours.

This is a game changer though, isn’t it? Because this is a totally different situation where once you’ve taken it off the market and you’re in due diligence, no one else can actually pull that out from under you. And, um, and take over that property. Controlling that property, um, often, often, you know, the period of due diligence can get extended because, you know, often the vendor or their lawyer hasn’t provided information that you’ve asked for in a timely manner, you know, so you’re, you’re chasing something like a document about the, the grease trap, uh, approvals or renewals and they can’t find it.

And, and, you know, it’s, Often essential that you have these documents when you buy the property or when you settle because you’ll never get them, you know, once they’ve settled, they’ve gone. So sometimes I’ve pushed out due diligence to three months on a property, you know, so, you know, you’ve got control.

And the more, the more complex it is, the longer the timeframe that you actually need, the more unorganized the other side is with their paperwork, that more time. And again, because you’re dealing with things on a business level, not an emotional level, and they generally get it. They understand that there’s this complexity around it.

So we’ll extend due diligence timeframe. So three months, how invested is that vendor after three months of due diligence in that sale? So they’re so likely to negotiate well with you to actually keep that momentum going and have the sale complete. Oh, absolutely. And look, if there’s building problems like physical building problems, which are very often the case, you know, you suddenly say, well, look, this roof is, you know, completely rotten, you know, and it’s 60, 000 to replace, and they see the quote, you can send them the quote, and they go, Oh, my God, well, if I, if I keep this building, I’m going to have to fix that roof.

So I might as well I might as well give James 60 grand now or 40 grand or negotiate or something, and he can do it, you know, and I’ve seen that time and time again, where people have had a building for 30 years, and they haven’t done any of these repairs, and they’ve actually ended up having to pay for them at the end anyway.

Isn’t that interesting, James? So we would have to say that some of the things that people must get used to doing if they’re going to get into commercial property is communicating and being okay to say, hey, this is what it is. And I’m going to be releasing more videos here at fox. Because if you don’t put it forward, and you’re not prepared to speak to people, well, you’re not going to get the results that you want, are you?

No, that’s right. And it’s all being honest and upfront, you know, you’re not trying to pull the wool over their eyes, you’re just saying this is what it is, here’s my reports, you know, that’s it. That’s just gold. Tell me about the market trends. We see it all the time residentially. You’ll see the cycles that everyone talks about and the highs, the lows, the crashes, all of these things.

Do you see commercial property getting caught up in the same, in those same market trends? Well, I guess I’ve been, I was talking to someone the other day, Melissa, it’s been like the fourth sort of thing where, you know, interest rates have gone up or something sort of happened. So in my career, since I was 18, I guess, you know, I’m 65 now.

So it’s been like the fourth sort of thing. Oh, interest rates going up, up, up, blah, blah, blah. But the thing is with commercial. You know, you get this, the interest rates are going up because of high inflation. So, you know, rents are going up because of that. Um, so, you know, there’s that sort of buffering there, but commercial moves slower.

Like if residential property prices tank, it doesn’t really happen with commercial. It might have, it might slow down over a period of time, but the reason being because they’re driven by the leases. And, you know, you’ve got long leases, you know, and if someone’s just in there on a five year lease, and they’re on the correct rent, meaning not too high for them, not too low for their landlord, and they’ve got a sustainable business, they’re going to just sail on through that five years.

I mean, let’s face it, their life, their whole life’s business is in their, you know, their value of their business is for their whole life sort of thing. So they want to maintain it. So it’s sort of this sort of buffering situation. So at the moment, I’ll sort of see that. Um, cap rates on commercial property are going up slightly, meaning that, you know, people are expecting to get maybe 7 or 8 percent return on a regional property rather than buying something a year or so ago that was saying getting, you know, 6%, simply because they’re going to pay a little bit more for their money.

Um, that’s, you know, someone who’s borrowing, you know, obviously if you’re not borrowing, it’s different. So I, you know, I think well located properties. Uh, always going to be great. And that means it doesn’t have to be, you know, a major city to have a well located property. You could have a property in a tiny regional town, but you could be in the best little location in that tiny, tiny little town, rather than, you know, being somewhere that’s maybe a back street or something.

So, You know, every town, every market, really individual, um, but the other thing I see is the share market, you know, people have sort of had the wobbles with that. And I’ve got friends that are, you know, heavily invested in the share market and then they go, Oh, I’ve got to get out of this. I’m going to get back into property.

You know, so yeah, it’s, it’s interesting, but, you know, we’ve got a growing population and we need, you know, we need. Residential and commercial property. So, you know, any new resident area that goes up, always going to have a commercial component. Do you see anything new in the, in the, in the commercial sector at the moment?

So new trends that are happening, the new uses and specific asset classes, anything that’s a standout that you’re noticing over the last couple of years that, that is beneficial to anyone to know, to understand, to give consideration to? Thank you. Well, definitely. I mean, definitely there’s been, you know, I’ve always been promoting regional areas, you know, to get sort of slightly higher returns, but you know, this can be slightly higher risk for that.

But I think that risk factor has dropped now a fair bit because of the increase. Of interest in regional areas, as we discussed before, but also new style of properties like industrial properties that have got, you know, sort of automation and logistics and, you know, better facilities, things like that.

People are going for that. And I know you’ve done some with, you know, the residential component above sort of thing, which is a great, um, a lot of, uh, properties that have got energy efficient I mean, electricity is so expensive. So, you know, for example, we often offer our tenants, um, you know, so look, we’ll put solar panels on the roof just for you, you know, that sort of thing.

So if you’re looking at properties and you, you know, you’ve got two or three properties and one’s, one’s got a roof full of solar panels, that might be something you’d look at over the other properties. Another thing, uh, future proof buildings. So, um, you know, buildings that, Uh, easily adjustable. So it might be, it might be, you might be looking at an old building that’s three stories.

It hasn’t got a lift, but can you put a lift in there somewhere? And there’s all sorts of new styles of lifts, you know, that you can put in quite easily these days. And actually not that expensive. I got a price the other day for a single story lift. It was 60, 60 grand fully installed. And, um, I thought, wow, that was, it seemed pretty good.

Um, green buildings, you know, um, yeah. Different opportunities in the office space, which, you know, I guess people are looking at that now as people are slowly coming back in the office markets, you know, I’m, you know, I’m not completely across the office markets myself. But, you know, I’ve heard that that’s that’s a big thing.

They’re still saying that there’s a big shortage of industrial. So that’s probably something to look at, but one little warning with industrial is, you know, if you’re buying an area that’s got heaps of industrial land, obviously, you know, it can be a bit like musical chairs, you know, they show up another new building.

So, Fine if you’ve got a long lease, but if there’s, if there’s a whole heap of vacancies when your lease is coming due, someone might be able to offer those tenants a better deal. So, but if you’re buying an existing location that’s already full, that’s probably my preference for industrial at the moment.

Yeah, there’s an amount to give consideration to, especially when they’re opening up larger industrial. Allotments. And like I said, there’s an amount of opportunity there from a tenancy perspective, what will happen. There’s an amount of effort that needs to be put into that. And again, I think locality to residential and, and, and CBD is always a nice little player as well to give consideration to, but you’re right.

It’s at the moment is, um, is a big tick in, in a lot of areas because the variation in use. Like we spoke about earlier. It’s not just the heavy industrial stuff anymore. They’re allowing that lighter use and a more mixed use to go in. So, so there seems to be a greater demand and a greater need for it just based on price point because industrial land is cheaper than commercial.

So, yeah, absolutely. And the builds, you know, they do the tilt, tilt build buildings. Um, you know, really probably the cheapest, um, building you could probably build in Australia today is probably a tilt build construction, I’d say, um, time effective. Yeah. Yeah, the other thing that I think is important, which we’re doing, we’ve got, you know, you know, automation and car charges.

So if you’ve got a newer property that you’re looking at, that’s full of automatic, you know, sort of any sort of in house automation thing, it could be anything from the air conditioning or, you know, people have full security systems that are already built in when they come. So, you know, if you buy a property in the, Okay.

The tenants have got this whiz bang system of, you know, the air conditioning that’s more efficient and, and maybe underfloor heating and all that sort of things that if you’re looking at two buildings, you know, I would probably go for the one that’s got got the whiz bang gadgets, because that’s probably what the tenants will prefer.

It’s true that you say that when we’re looking at at any, and I’ll say any asset class here, it’s important to not just look at it for yourself, but look at the cost of operating for a tenant. I can vouch for this with the hospitality industry. Operating some buildings is expensive. And it’s coming in and they’ve got a solid lease and you’ve worked that out and it’s fair for all, but their operating costs are so expensive that it just makes it unviable for them to do business, then we need to give consideration to that.

So yes, if you’ve got an option of what one you’re going to go for, I’d certainly be looking at good technology and efficiency. These that are built in. Yeah. Um, to minimize the operating costs for tenants. ’cause they’re gonna love that and they will stick with you for a long time if it’s cheaper and more efficient to operate from your building than from one, you know, across the road or next door, um, that doesn’t have those things built in.

So it’s a very valid point to make and there’s a lot of cool stuff in this space at the moment. So James, I’m super excited to actually have your course up on our Property Inc platform. I’m very grateful because the difference you made in my life with your teachings, your knowledge, and everything, you know, um, was incredible.

So to see you still sharing that, um, I’m very, very grateful for, and I, I can’t wait to see the further impact that it has over many, many people’s lives. Now, what I’ve got to say to you guys listening to this is it is super cheap. It is insane to think that this is less than 5, 000 to actually squeeze everything out of James’s mind into a course that steps you from step one through to success in the commercial property realm.

Like I said, it’s changed how I look at commercial property from day one and I know the things that James teaches. So like I said, it’s an insane price to pay. for what you can actually get out of this. So just give consideration if you were going to go in and you were going to pay a project manager, you’re going to pay someone to actually undertake the process of getting you in and out of a commercial property successfully, what would that cost you?

Maybe for a really quick turnaround, maybe 20, 000, even a buyer’s agent, 15, 000, 20, 000. Right through to the hundreds of thousands of dollars for a project manager to see it through from start to finish. And you can learn everything James knows for less than 5, 000. That is absolutely crazy, isn’t it? So, and James question for you off the back of it, then just while we give consideration to that, what is the most costly, the most costly thing that someone could do or mistake that someone could make going into commercial property?

Absolutely is not getting educated about the numbers. It’s numbers driven. And if you don’t know the numbers, you’re just completely in the wrong position to start with. So that’s that’s number one, but number two, and it sort of certainly happened to me in the early days, not having That sort of group to talk to and other people to bounce things off that weren’t that didn’t have, you know, that we’re going to earn money from it, you know, so basically, um, being able to talk to other people and run some questions that, you know, past people, because when I started out, there was no internet, you know, it was all like, I just pick up the phone and try and ring someone, then you couldn’t get onto them, you know, and it was Just to ask a simple question.

And there’s no dumb questions in, in, you know, in anything, but when you’re starting out, if you haven’t got that, that basic knowledge, you can’t even start to look at a deal. And that just completely puts people off. And then they generally just go back to what they’re doing before. So they just can’t get to their goal because they just haven’t got the basics to start with.

But moreover from that, Once you get into a deal, there’s always gonna be little questions that you know, you perhaps haven’t picked up through my course, you know, haven’t been able to get maybe to that point in the course, you can just ask the questions in the group, and you’ll get the answers and you’ll be able to move forward with that deal or move on from that deal, whichever is better for you, you know, so it’s just super important, I can’t stress enough about the numbers.

One example was a lady who bought it coming to my course, but had bought something in Tasmania about two years before she entered the course. And as soon as she got into the course, she realized that she’d done the wrong thing, but, and, you know, just didn’t know what she was doing. She was told the price by an agent, bought a little shop and couldn’t figure out why it wasn’t cashflow positive when everything else in the area was, you know, And it was just simply not knowing the numbers so she really had to pivot out of that and do something else to, to get, to get ahead again.

We don’t want people learning from those sort of mistakes when they’ve got an opportunity like this where they can, they can have the support and the information behind them, get into it, be successful and then keep going. James, I cannot thank you enough for your time. We all know how precious and valuable time is, and I know that the reason behind doing this for you was lifestyle.

Um, we were just chatting about being off surfing and things like this, so you’ve created an incredible lifestyle for yourself out of what you actually teach people. So just a final parting word to everyone out there, um, on what, how this can impact their life, the difference it can actually make for them.

And the benefits off the back end. Oh, look, I think, uh, being a good landlord is one of the best businesses in the world. I mean, I’ve talked to a lot of people all over the place and they just say, look, you know, it’s not just collecting rent, you know, it’s really, it’s really providing. You know, income that’s separate from whatever you can physically go out and have to work to get.

That’s one point. But just the interaction with people, you know, through the process is a fantastic thing. And, you know, certainly someone like myself is sort of retired early, but then I thought, wow, this is a bit boring when you’re not sort of doing anything. It’s just a great business. You know, it’s really great business.

And if you, if you do choose to be creative, uh, in property, and it’s not saying you have to be, you can just be a passive investor, but if you want to be a little bit creative, you can certainly make some fantastic gains in, you know, in equity and cash flow. And, you know, basically, you know, be able to pat yourself on the back and say, listen, I’ve done this on my own.

I’ve, you know, I’ve taken an educator risk, uh, as an investor, and now I’m reaping the rewards. And, you know, as you know, with property, once you move on a few years, it’s amazing how much you can see rents to grow, you know, you know, one minute, you’re earning maybe 10, 000 a month and, you know, roll on 10 years time, it could be 80, 100, 000 a month coming in and rent.

It’s a, it’s just a game, total game changer. Um, it’s a lifestyle producer, isn’t it? We can create that time and lifestyle that you want. Yeah, well, I mean, I’m probably like you, I sort of offer renovating all sorts of other things that, you know, basically paid for by the, uh, you know, the rental income from the commercial stuff.

So, sort of renovating the commercial properties to, to help me renovate my other little properties that I love and right today at the moment we’re, We’re putting a brand new pond in here on the property. So I’ve got the excavators down there. So, so it’s a very good, I love what you do. You don’t call it work, do you?

So you do the lifestyle that you want and it allows you to go off and do what you want to do when you want to do it. It’s life by choice, really, isn’t it? Absolutely. And there’s a fantastic community of investors. That’s one of the big things, especially with Property Inc and, and, you know, the Facebook groups and all that.

There’s so many people that really love, uh, you know, property investing and are very happy to share their experiences. And, you know, in our group, we’ve got people that have got 60 and a hundred million dollars worth of property. And, and, you know, so it, and we’ve got people that are starting out with, you know, four or 500, 000 property.

So it’s just that whole gamut of people and it’s, it. It’s just a different number, you know, as, as an absolute credit to you as well. So yes, um, within the platforms, there are great communities of people that are prepared to share what they’ve learned, which says a lot because out there in the big wide world, when you’re not educated and you you’re not in amongst that, it’s very easy to get caught up in the wrong advice or the wrong piece of information.

That’s generally not by bad intention. It just happens. And if you don’t know any different, that’s the path that you head down and it’s not necessarily. the correct path or it’s not necessarily going to serve you well. So to be in amongst these communities, especially when you’ve got experienced people like that in there and people that have just learned themselves, they’re happy to share information.

They’re happy to help guide you along that way. If you’re prepared to ask the questions. That’s it. And there’s never, never a silly question. You know, we get so many questions and I love, I love answering them. We’re always involved in the groups and stuff. So it’s, um, it’s great. Keeps me engaged. And, um, I absolutely love it.

Someone said I was a little bit like, they felt I was going to end up like Mick Jagger. I’d still be, still be talking about it. 80 or whatever he is, you know, I probably will be. I was going to say, I don’t doubt that one little bit. I reckon you will be. And I look forward to the tips that you’re giving in another 20 years.

I’m sure that every bit is valuable. Thank you so much for your time today, James. Now we’re going to have, um, there’ll be notes and links in, in below this. For people to click on to, to get your course, to be able to sign up, to be able to get into the platform and start seeing what other people are talking about and all of the details that they actually need for doing that.

I’ve got to thank you so much for coming along and, and having a chat today and sharing everything that you do know. Um, I actually look forward to seeing the amount of people that lean into this and start making some difference in their life and, and having some positive impact off the back of what they learn from you.

It’s always exciting to see, and I know that within the platform, we have a huge amount happening there. It is so good to see the interaction. It’s so good to see, um, what people are actually doing. Like you said, like minded people are great to be around. There’s a lot to learn and benefit from that. Um, so thank you.

I look forward to chatting again because we will no doubt about it. I look forward to seeing the next little shopping center that you take on and certainly what’s happening within your group. So good luck with the pond. Yeah, thanks. I’ll go down and I’ll add on and go and check that out in a minute. But thanks so much.

It’s been great to chat and um, look forward to chatting soon. Awesome. Thank you so much. And like I said, guys, thank you for listening. We’ll put all the links and details that you need below so you can click on the links, get all the information and look forward to seeing you on the other side. Righto James, thank you very much.

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