Hello and welcome to my 50th blog post! This blog has been up for 2 years and 2 months and although I have not been consistent with it, it’s cool to see how far it has come.
Anyway, I have a feeling this blog post is gonna be a long one… I’m going to cover everything about my purchase, including my actions, thinking patterns, habits, and the power of specificity in goal setting. Let’s get started!
The Deal
Investment Property #2
· Area: Rockingham LGA
· Configuration: 4/2/2
· Price: $400k
· Land: 650m^2
· Current Yield: 5.2% (with tenants paying well below market rent. Yield should be at around 5.75%)
Goal Setting & Manifestation
Reading your goals everyday
I’d like to begin with talking about goal setting because this is the most important pillar to investing or anything in life. The goal is defined with specificity with a date deadline. Once the goal has been defined I have no choice but to act accordingly towards its completion.
Below is my little card which I’ve stuck on my wall which I have no choice but to see it and read it everyday. Note that for my second card I’ve decided to put a little date at the top of when I set the intention out there of this upcoming goal/manifestation.
Specificity
When you ask God for something he boxes it up and ships it immediately. Most people have moved off of “Faith Street” before their gift is delivered. Remain on Faith Street, receive your gift. Remember God doesn’t ship packages to “I Doubt it Boulevard.” – Steve Harvey
Quite an awesome and funny little analogy haha. One thing I would like to add is that when you’re ordering something from Ebay or Amazon, you order the exact item you want. If I’m buying an iPhone case, I choose the exact the case with the exact colour, design, material & price which I want and am happy with. Delivery date – whether standard or express shipping, is an option of my choosing also. So, too, with your goals do you require this same level of specificity, so the universe, God, the infinite, or whatever you believe in delivers to you the exact thing which you are asking for.
My vision board, created (I think) around February or March.
All great books on success talk about the power of visualisation and feeling of the wish fulfilled. The more powerful the belief and the vividness of your visualisation, the greater the chance it will manifest into your reality. This essentially is the same concept as prayer which has been spoken about for millennia – the power of your belief.
I did not intend to bring spirituality into this post, however I think from my own personal experience it was an enormous pillar to the completion of my goal.
Manifestation
On the 3rd of June, after countless hours and sleepless nights studying the market (I even took a couple days annual leave on the lead up to the purchase haha), I made an offer on a 4/2/2 property which I really liked and had my PM inspect. The offer was accepted!!
Note that this offer was approximately market value, based on the recent suburb comparables. In this current climate, offering market value or slightly above I feel is necessary to even be in the conversation to be considered by the seller.
The contract was subject to:
· B&P – Structural
· Finance
For context, the chances of renegotiation of the price after the contract is signed is very low in WA, as their B&P clause only allows for negotiation to occur if structural defects are found, nothing else. (However, for example in QLD on the other hand, you can use anything in the B&P report to renegotiate the price, and terminate the contract if you are unhappy). So it looked near impossible for me to negotiate any further.
A week later my lender came back with the valuation and it’s come to be valued at $390,000.
The bank’s low valuation actually opened up the door to allow me to negotiate a lower price (as the contract was subject to finance). I had also anticipated the possibility of finances being a rocky road due to the current climate (with rising interest rates, etc.), therefore as soon as I signed the contract I completed the B&P immediately (although it is typically not necessary to complete this step until your finance is approved). My thought process was to do this because if such an event occurs and my finances fall through or I need more time than the agreed date to organise finances, then I can say to the agent/seller that I have demonstrated that I am a serious buyer by completing B&P ahead of time in the hopes of a prompt sale. I used this as one of my points of negotiation as I asked if the seller if they would be willing to ‘budge on the price’ to help accommodate to get the sale through. If the seller said yes, then I would try to do some back-and-forth negotiating with them.
However, I didn’t get to the stage of a back-and-forth negotiation. An hour later the REA called me and the seller had said that the seller was willing to drop the price by $22,500 – down to… $400,000!
Now with this I filled out a spreadsheet (provided by my broker) to challenge the valuation and make justifications on why my property should be worth more than the $390,000.
It is a bit of a gamble because if the second valuation firm values your property at a lower value, the lender will remain conservative choose the lower value over the higher one.
However, my valuation came through at exactly… you guessed it… $400,000!
“When you want something, all the universe conspires in helping you achieve it” – Paulo Coehlo, The Alchemist
3. The Process
Towards the earlier months of the year, it was my original intent to just use a Buyer’s Agent (BA) again for this purchase as I wanted to spend my time on other endeavors. However, for some reason I felt some urge to try to do this purchase all on my own without a BA for the following reasons:
1. Learning experience – This was the most important reason of all, even above reason 2 stated below. I believe that what I was to learn in the journey was going to be infinitely more valuable. As Robert Kiyosaki says, your mind is your greatest asset. So I was set to develop it.
2. Save $10-15k not using a BA. Rinse and repeat for life.
Also, I felt like I had learnt enough from my first property purchase. In Property Post #16 I cover my entire journey of purchasing my first property, ranging from all the learnings and especially all of my failures. I felt ready to take on this new challenge by building upon my failures from last time.
Below I’ll cover some of the main benefits I got out of not using a BA.
Navigating through the unknown
One of the greatest marks of an entrepreneur is their skills in navigating through unfamiliar territory, their ability to push forward through the unknown. They have great self-reliance, and are able to hold themselves accountable towards the completion of their personal goals.
These were the characteristics which I wanted to develop on my journey.
One of the practices I employed which I had read from the book “Think and Grow Rich” by Napoleon Hill is to ‘inquire within’. To put yourself in a silent place, void of distractions, and meditate… to allow thoughts to come to you.
Sounds funny, but I tried this multiple times and it has always delivered in my favour.
This always came in handy because on this road where no one is telling me what to do and I have no blueprint, then I’m faced with infinite options… I also don’t know a lot of things, so naturally I feel a lot of fear of the unknown. The thoughts of resistance which came to me were:
· This is one of the biggest investment decisions of my life, do I really have what it takes to do it on my own without a professional (BA) telling me if the house I am buying is a good investment?
· I know people who have bought without a BA… but they used a $6000 course. Can I even do this without the course??
· What if I make a mistake?
· What if I buy a lemon?
· What if the area I buy in is shit?
· People pay professionals for help… do I really think I can do this on my own?
· I don’t know if there are any differences in legislation between states? What if this bites me down the track?
· What if there is some unforeseen factor which destroys me?
These are the thoughts which come up often when I drop down to a state of fear and when I don’t know what to do. What added to this anxiety was the deadline of my goal. I had read this goal so many times I knew the deadline was looming and I had no choice but to make it happen. In a way, the written goal forced me to come up with ways, or try anything, to confront these fears and to bring clarity from the unknown.
This is where meditation comes in – I meditate to watch these feelings and see them for what they are… just feelings. Whether fear, anxiety, worry, stress… these are nothing more than just mere feelings which do not define me. These emotions are only just feelings … what action I decide to take in the face of these emotions are entirely up to my own will.
“Turning pro is like kicking a drug habit or stopping drinking. It’s a decision, a decision to which we must re-commit every day. Each day, the professional understands, he will wake up facing the same demons, the same Resistance, the same self-sabotage…The difference is that now he will not yield to those temptations. He will have mastered them, and he will continue to master them.” ― Steven Pressfield, Turning Pro
I really like this quote. It’s a daily battle – these elements of fear and anxiety are always there lurking in the background and I understand now that this will ALWAYS be there when I’m taking on new endeavors.
Once my emotions are in check, I can then allow my mind to sit in silence for a while. I have an intention for my ‘inquire within’ session. It is typically when I am stuck and don’t know what to do next, I will sit until something flashes in my mind and I’ll start writing stuff down.
(Photo example of what I’m able to get from one of my ‘meditative brainstorming sessions’)
When I don’t take the time to slow down and meditate that I am operating from my ‘anxious’ and ‘fearful’ state and it is a very low ‘vibration’… a suboptimal state of consciousness. I believe that you can tune into another more elevated ‘state of consciousness’ through meditation.
“No problem can be solved from the same consciousness that created it.” – Albert Einstein
“Tesla imagined and designed his inventions in his mind’s eye before building them in reality.”
The Funnel
“Most people are familiar with the phrase “Ready, aim, fire!”
The problem is that too many people spend their whole life aiming and not firing. They are always getting ready, trying to make things perfect. The quickest way to hit a target is to fire, see where it landed, and then adjust your aim accordingly.
Just keep firing and readjusting. Soon, you will hit the bullseye. “– Jack Canfield
One of my biggest ‘discoveries’ is the ‘funnel’. This is a concept I have thought of and have not previously read somewhere else.
For example, you know the cliché “do what you love and you’ll never work a day in your life”? When you hear of people who have been able to reach this level, its common for us to think ‘how do I find something I’m passionate about’? The answer is to try a lot of things until you find something you like. Just like when you’re at an ice cream store and are met with a hundred flavours to choose from – you can taste test a couple until you find one you like.
So then with this goal have I applied the concept of ‘the funnel’. I know some people may say it’s a waste of time, and that it’s much ‘easier’ to get the ‘blueprint’ from someone who’s already done it before or pay for a blueprint or something as they would say that I’m wasting my time. But that’s not how I see it.
1. I am practicing my ability to navigate through the unknown. It makes me self-reflect, practice self-awareness, and to assess whether I am moving towards the right direction.
2. All the other ideas and options I explore which don’t end up progressing towards is not wasted, as I believe it still benefits me as it gives me a wider depth of understanding (not only in the thing I was looking into, but also of how my own mind operates, thinking patterns, etc.)
It’s literally like brute-forcing your way through until you find the solution.
Here’s a little drawing I made to express what’s needed to be done to bring clarity when you’re in the unknown:
You just have to do ruthless action until the world ends up pooping out the solution for you on the other side of the funnel.
Another cool image which I found online to explain my journey:
In the beginning, there’ll be a lot of random lines (low resolution standing), but as you keep progressing forward, eventually your path forward will converge and a higher resolution image of where you stand will appear (and then you’ll know you’re on the right path).
Skills developed
How to buy interstate, sight unseen, without a BA
As mentioned in Property Post #16, a rough blueprint which I am aiming to achieve is to purchase 10 properties over 10 years. Then sell five, pay off the other 5, then have $80k/p.a passive income).
I know I will do 10+ property purchase transactions/deals in the future, so now understanding how to do it on my own will be such a big benefit for our future.
“Give a man a fish, you feed him for a day.
Teach a man how to fish, you feed him for life.”
Asking the right questions
“What you don’t know can hurt you”
This statement is very much related to the encounter with the unknown. When navigating through unfamiliar territory, it’s what you don’t know –a factor which you overlook– which can hurt you. When I reflect on my first property purchase, I can definitely say that I relate to this quote as there are many things which I could have improved on.
A skill which I have learnt throughout the process is the art of asking the right questions. It’s definitely easier said than done… How would I even come up with the right questions if I have limited scope and point of view of the thing I am trying to understand?
It’s quite difficult to explain how I was able to do it, the best I can say is that I had to do the ‘meditative brainstorming’. I just had to go into an empty room and sit there for an hour or two just trying to think of and brainstorm all the variables and possibilities which I may need to consider.
I’d make sure to prepare questions to members of my team and also other investors. Like Robert Kiyosaki said in Rich Dad Poor Dad; Rich Dad wasn’t the smartest person in the room and he didn’t have all the answers, that’s why he surrounded himself with brokers, lawyers, agents, and other specialized professionals who he can ask the question to. Examples of members of your team who you can ask questions to are:
· Mortgage Broker
· Solicitor
· Property Manager
· Real Estate Agent (although they are working on behalf of the seller, not you)
· Quantity Surveyor
Below is a picture of my pre-meeting notes prepared before taking an online call with one of my investor friends, who I consider to be a ‘mentor-figure’ to me. His name is Branden and he is a fellow investor with an impressive property portfolio and also a BA! I met him through the PropertyChat Forums and he was kind enough to give me some time to help me with some of the questions and concerns I had with trying to go at this property purchase myself for the first time.
I would set up my notes like this with whoever I meet with (whether it be with my solicitor, PM or mortgage broker).
Networking
To buy interstate without a BA required me to network with people on the ground in WA. Networking is one of the biggest keys to success and I really had to put myself out there which was definitely outside my comfort zone as an introvert. I reached out and interviewed 10+PMs and I reached out to 20+ Real Estate Agents. Again, we see the concept of the funnel play out here as well as ultimately I’ll only deal with one PM and one REA but to find the one you will work with you need to go through the process of the funnel.
Finances
I learnt a lot more about the finance game this time round with this second investment property purchase. Drawing equity/refinancing was something I was unfamiliar with and did not understand how it worked or what the process was. Seeing and understanding how it all works now has given me a much clearer understanding of how finances will work in the future when I am buying more properties.
Additionally, I am trying to ‘streamline’ and put systems in place to make my finances a lot cleaner. For e.g. – as suggested by Konrad Bobilak in his book ‘Aus Property finance made simple’, to set up multiple offset accs per IP. It makes it easier to track rental income.
Business Skills
Understanding finances, knowing how to network, creating systems and being able to individually navigate through the unknown I believe are pillars to creating your own business.
Knowing yourself
“This above all: To thine own self be true” – William Shakespeare
I had developed a better understanding of myself throughout the process. Everytime I would come across an obstacle, I’d be able to reflect on what my actions would be in response to the obstacle. Many times I would fail and then turn to Youtube or Netflix or any other form of distraction to rid myself of the uncomfortable feeling of not knowing how to approach an obstacle. I think it is very important to analyse how you react to certain situations and what thinking patterns are ‘programmed’ within you when faced against difficult situations so you can choose to change your behavior to a more productive one when difficulties come to you in the future. Although I did achieve my goal in the end, there are a lot of things I can improve on. I think the main one would be to journal more often. Instead of running away from my feelings, I should confront them and write them down which can help me process it for what it is… just a feeling. It won’t hurt me and what matters most in adverse situations is my response. I believe journaling more often to be more aware of my current state and reflect on how I have reacted will be extremely beneficial for me in the future.
“That which you need most can be found in the place you least want to look” – Carl Jung
5. Failures
· Running away temporarily – As mentioned above, it was not uncommon I would ‘run away’ from uncomfortable situations where I don’t know what to do. (By running away temporarily I mean like a couple hours or a day of running away).
· Eating comfort foods – I would snack a lot when I’m stressed haha
· Not enough rest – I’m all about working hard but sometimes I would burn out and not do anything for 1-3 days. In hindsight, if I were more aware of my state or gave myself the proper breaks to refresh, then I should be able to maintain a better consistency without burning out. (E.g. of when I’d burn out is doing 5 hours study a day during the weekday outside of my 9-5 hours).
6. Conclusion
Overall I am extremely happy of how this purchase went. Despite all the failures and room for improvement, I think I can see a significant difference in my approach, skills and mindset with this property as compared to property #1.
For now, I will probably wait a while before pulling the trigger on the next property so in the meantime I will get back to the drawing board and come up with my next plan.
Till next time, thanks for reading!
