26 Oct Rentvestor develops a portfolio – Jane Slack-Smith
A very successful investor and property renovator, Jane Slack-Smith is our feature guest this week. Jane talks about her early memories of growing up in a family of renters. How she initially trained as a mining engineer but started out as a rentvestor and how she built her portfolio.
Transcript:
Kevin: Our featured guest this week is Jane Slack-Smith.
Hi, Jane.
Jane: Hi, Kevin.
Kevin: I want to talk to you about your journey. We’ve spoken to you about many things about investing in property and more recently – and we’ll talk about it, too – The Ultimate Guide to Renovation. While we’ll talk about that in our chat, I want to get to know you a little bit better, Jane, and I want to know about your property journey because you came from a background that I wouldn’t have thought would ideally lead you into property.
Jane: Yes, I have had an interesting journey. That’s for sure.
Kevin: Tell me about it. Where did it all start? What was your first property, and how did you get into it?
Jane: I am a farm girl from Dubbo. My father was a farmer and worked on someone’s farm and managed that. Really, my parents were always hard workers and they always rented a farmhouse. It always came with the job.
My mother was a nurse and then became an interior decorator, so we got to see some of the fabulous homesteads and properties around Dubbo, all the way out to Broken Hill and down to Parkes, etc. So we had an opportunity to see these beautiful homes, which always fascinated me and I always thought it would be lovely to be an architect.
But as things were, to go to university and be the first in the family to attend university, I needed a scholarship. I was pretty good at math and science, and to everyone’s extreme shock and horror, I got a scholarship to study mining engineering.
Kevin: How did you fall into that?
Jane: Engineering came up on the math and science background, and I was taught from a very young age that education was a process that allowed you to learn how to learn and then it was up to you how you applied it. So, I wasn’t too caught up on what my degree was going to be; I just knew that the learning mechanism and what I could then apply to future careers was going to be what I could do. I had seen my mother change her career, so I wasn’t afraid of doing that.
My parents always rented, didn’t have their own home, so I’d never had a fear of renting. Later on in life, I became a “rentvestor” for ten years. But for me, I was given the opportunity to go to an exclusive boarding school in Sydney and get that education. I could see how the other half lived.
Engineering was a skill set that I knew fitted me, but more importantly, I got a scholarship. When they rang up and said, “Jane has a scholarship to study mining engineering,” first and foremost, my mum said, “You’ve got the wrong, Jane Slack-Smith,” and the school counselor said, “No girls from here do engineering.” It took a bit of convincing.
I turned up and studied mining engineering, and that first summer, I became the first female to work underground legally in the New South Wales coal mines and the guys went out on strike. It was an interesting experience.
Kevin: Congratulations on achieving that. Have you been able to use any of the skills you learned through that in what you’re doing now?
Jane: Absolutely. I spent the last ten years of that 18-year career as an explosives expert. I was doing risk assessments every day, and I did a thesis on risk assessments at university. I was looking at the consequences and likelihood of something going wrong and how to minimize that risk.
When I met my now husband, Todd, 18 years ago, he had seen someone do amazing property portfolio building in New Zealand, where he was from. And his father was a renovator who used to buy, do up the house, sell the house, and then upgrade the home, so he had really seen that in practice.
Basically, I then pulled my risk assessment skills together and said, “Well, if I only have $45,000, I need to make sure that this really important nest egg that I’ve saved everything for is going to make me money in the future.” So I was really dedicated to understanding the risks and doing the research.
Kevin: That’s a fascinating story. You mentioned earlier about your parents being full-time renters. They rented all of their lives, I think you said. What were the conversations like around the kitchen table? Did it relate to property at all? Where did you learn your skills?
Jane: No. Investment in property was not something that we ever discussed. Because they were doing it tough, there wasn’t a lot of extra money or savings, either. I can still remember when we did have extra money, I would spend it because that was just the way we did things.
I remember at one stage, back in the days of bank cards, my dad saying to my mum, “We’re going to have to be better at these credit cards. I’m cutting up your bank card.” We went into Grace Brothers in Dubbo, and the lady said, “Do you have your bank card?” My mom said, “No, I don’t have it with me at the moment but I memorized the number.”
Kevin: Is that right? And she got away with that?
Jane: Yes. It was back in the seventies. Everyone was friends.
They really worked very, very hard and all of the money went into providing us with a great education, and they made sacrifices for us to do that, for which I’m always grateful. But we didn’t grow up talking about how to invest at all, just how to be the best that we could be at what we wanted to work at.
Kevin: That’s a great start in life, too. Tell me about the first property you ever purchased, whether it was for yourself or as an investment.
Jane: Basically, I knew that we needed a methodology to get this right and research was going to be the key. My boyfriend at the time – he’s now my husband – Todd, he wanted to buy property, as well,
We were based in Melbourne, so we drew a circle around 10K of CBD Melbourne and we put all of the suburbs on the list. Then we wiped out three-quarters of them because we couldn’t afford them, and then we started doing some research on the suburbs that were left. We came down to Carlton, Fitzroy, and Collingwood.
We did amazing research on those three suburbs. We walked the streets, and we’d go to every open home. For every ten properties that we looked at an open home to buy, we’d go to one that was up for rent because we wanted to see what the competition was like as well, which is still a technique I teach my students today. It really gave you some insight into (a) if you wanted to employ that property manager and (b) what kind of quality of fixtures and fittings people were looking for.
We did all of this research, and within three months, we were within 2% to 3% predicting what the auction prices would be. We’d drive up and down this beautiful street in Carlton and we’d say, “One day, our end goal is to have a home here.”
Fortunately, what happened was a lady put two properties up for the one bill of sale but on two separate titles. Instead of saying $400,000 or $450,000, it went for $900,000, $950,000. The property was passed in, but we had the Residex report that showed us some comparable sales. We had the report on the property that said everything was going to fall down tomorrow. And we went in and started negotiating.
Meanwhile, some [7:56 inaudible] were out there saying, “These people are too young to buy a property; we’ll put $1,000 on their top bid, and let us have it.” To the credit of the real estate agent, they said no, and we negotiated those first two properties for $975,000.
I purchased my side for $425,000 and Todd had his for $450,000, and we did a renovation that cost me $50,000. I got a personal loan of $50,000. And nine months later, that $425,000 property was worth $700,000, so I pulled out equity, moved to Sydney, and did it again, and did it again and did it again. I never used anything more than that first $45,000 to secure property since then.
Kevin: Do you still flip properties, or do you hold them nowadays?
Jane: I never flipped.
Kevin: That first one was a flip, wasn’t it?
Jane: No, I just pulled the equity out.
Kevin: Sorry, I misheard you then. Well done.
Jane: They’re worth maybe $1.5 million or $1.7 million now, those two properties that we purchased for $945,000 11 years ago.
Kevin: That’s a big message – isn’t it? – about buy and hold.
Jane: Absolutely. I was reading an article recently about where we bought subsequent properties in Sydney – Kingsford in the eastern suburbs. When we looked at that area, we could see that Kensington and Randwick and Coogee were all in the $1 million price range. Kingsford, the poor cousin no one wanted to live in, was at $625,000. We went in and negotiated and bought a house there. The median price there is $1.7 million today.
That buy and hold, the growth, and being able to add equity straight away to be able to buy renovation was our technique for all of these properties. Push the rent up to help us pay for the difference between the cost and the income and pull out equity to buy the next property was the strategy the entire period of time.
Kevin: Do you have a mentor? Who guides you?
Jane: Look, I’ve had many mentors over the years. When I started my mortgage broking business, I got a mentor involved then who I still talk to 12 years later, now. But I find that sometimes the learning is right for a person for a couple of years and then I move on to a new mentor, so at the moment, I’m currently working through and interviewing three different people to be my next mentor.
I spent a lot of time in the States – flying backwards and forwards – to learn how to authentically educate people with really valued content, and that was something that back in 2012 with the Your Property Success education, I wanted to do it right and I couldn’t see anyone doing it in Australia, so I found a mentor overseas to learn that. That satisfied for a couple of years and then I moved on to the next mentor.
As you need things, I think you need to upgrade your skills and upgrade the people who are helping you to achieve your next level of what you want to do.
Kevin: Yes, a good mentor or a good coach will tell you the first thing they should want to do is to have their client outgrow them, really. It doesn’t mean that the mentor or the coach is deficient; it just means that you’ve grown, basically.
Jane: Absolutely. They’ve done their job.
I mentor a very small number of people each year, and I tell them, “If you come back for the following year, it means that I haven’t done my job.”
Kevin: That’s very true.
Jane: I think that it’s always important. I was very happy in a corporate role in the mining industry making lots of remember, but I remember I was sitting on the mine site somewhere between Mount Isa and Moranbah – I think I’ve been to every mine site in Australia – and we were waiting for a blast to go off.
These guys were saying to me, “How do you have so many properties?” I’m like, “We’re on the same income; how don’t you?” So I started teaching them the methodology of doing the research. It was at that point that I turned around and thought, “I really wanted to be able to help people buy properties, but I don’t want to be a real estate agent. I want to teach them what to do.”
Back then, in 2005, financial planners couldn’t help and mortgage brokers were the only ones who could actually legally get professionally indemnity insurance to protect their own assets and talk about property. I’ve always been a bit of a different mortgage broker because, for me, it’s about the property rather than the loan and understanding what the goals for the people are. Hence, that’s why the education came along in supporting that journey for them.
Kevin: It’s a bit like “Give them a fish, you’ll feed them for a day; give them a fishing rod and you’ll feed them for life.” Isn’t it?
Jane: Absolutely. I’m a big believer in that, and that’s how I’ve always educated myself, as well.
Kevin: It’s great to be coaching someone or working with someone and then all of a sudden, you see the penny drop and they understand about gearing. That’s really what it’s all about, isn’t it?
Jane: Absolutely. And I still go to courses. I see people stand up there and go, “I’m going to give you the one tip that’s going to make your investment in this course successful for you,” and they’ll talk to something about a tax variation, and you’re like, “What?” Then you realize people don’t know about the fact that they don’t have to wait to be into the financial year to get their tax refund on their property investments; they could get it every paycheck.
There are a lot of little things that you know that you kind of forget that you know, but when you share those with people and you see that “Oh my gosh, I don’t have to sell my home to pull out equity to buy an investment property,” that kind of “a-ha” moment, I live for those.
Kevin: You have so much to offer, Jane, and I always love talking to you. Just before I let you go, I want to ask you because The Ultimate Guide to Renovation is open. It opened a couple of days ago. Tell me what we can expect to see inside of that.
Jane: This is the complete culmination flagship of everything I’ve learned over the last 15 years of researching about properties. Unlike traditional renovation courses, it’s not all “Hammer and nails” and “Let’s get in and paint.”
It’s a 12-week online course – all video-based and downloadable. We work through the goals and the finance, but the first six modules are all about the importance of the location, because we know that unless people buy in the right place, there’s no point in renovating because you may not make money.
We’ve listened to our community over the last four years that we’ve offered this flagship course and the enrolment is twice a year. They’ve said, “It’s too hard going to 30 different websites and grabbing all of the information you tell us to do.” So I’m really proud to say we’ve just finalized software that we did for our students that allows them to analyze properties by putting in certain criteria and out comes all of the data for the properties across Australia. We’re always perfecting.
Just the private Facebook group, there are hundreds of people in there, the support they give each other, sharing costs on doing deals, putting up properties, and asking questions, it’s just an amazingly supportive group, and I’m really proud of having created it and being part of it. It’s something I’m really proud of.
Kevin: Here we are. The enrolments have opened up a great opportunity for you. Use the link on the home page at Real Estate Talk. That’ll take you straight. You can get all of the details there and you’ll see exactly what Jane has been talking about.
Jane, before I let you go, the bottom line: where do you see property investors go wrong?
Jane: I think it’s not educating themselves upfront. Often, it’s being simplistic with their purchases. “The property around the corner came up for sale, so I bought it,” or someone said that it’s really great to buy in a certain area so they believed that without understanding the research. I always look for multiple pieces of information from multiple parties to establish where to buy.
I have a very large property portfolio today that goes up by over $1 million last year while I was sleeping. I know that people can achieve that. I wrote that book – Two Properties, One Renovation, $1 Million in the Bank – because I know with just two well-placed properties, people can have that degree of freedom.
Understanding the importance of the location and the research, gathering information from as many areas as you can, and listening to podcasts like yours – I’ve been listening to your podcast for years – and you always pick up something, and that quest of always learning and applying that, I think, is probably where people can go right with property investing.
Kevin: Better look at where they go right because there are so many lessons we can learn from that.
Jane, I want to thank you so much. Congratulations on what you’re doing with The Ultimate Guide to Renovation – a reminder to click on that link on the home page at Real Estate Talk and all of the details are there for you – and also, all of your work through Your Property Success, too.
Jane Slack-Smith has been my special guest on the show. Thank you for your time, Jane.
Jane: Thank you.
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