Sort Your Property Out: And Build Your Future
By John Pidgeon and Glen James
()
About this ebook
A handbook for investing in property in a smart and strategic way
There’s so much more to investing in property than having a double-digit property portfolio. Whether you’re a home buyer, a beginner, or a seasoned investor, Sort Your Property Out will revolutionise the way you think about property. When it comes to building lifelong financial security, property investing is about being creative and being prepared. In Sort Your Property Out, you’ll learn exactly what you need to know — and what you need to do — to buy well in today’s markets around Australia.
Inside, author John Pidgeon, co-host of the my millennial money and my millennial property podcasts (and a property investor and coach for over 25 years), will show you how to hone your investor mindset. You’ll discover actionable, step-by-step guidance on how to build a strategic portfolio. Ultimately, you’ll learn how to buy what’s right for you today — and how to set smart, realistic goals for tomorrow.
Sort Your Property Out: And Build Your Future will help you:
- Get your head around finance: understand loans, grants, schemes, and taxes, and use smart strategies for putting together that essential deposit.
- Choose the right property: learn the pros and cons of different property types and the signs that you’re looking at a hotspot (or a not-spot!).
- Buy successfully: get valuable tips for making a successful offer and securing your ideal property, through private treaty or at auction.
- Use advanced strategies for growing a diverse, sustainable portfolio: learn about rentvesting, joint ventures, residential property development, and more.
Sort Your Property Out is a comprehensive guide for buying property and building an investment portfolio in a responsible, sustainable way. Through its unique 8-Point Property Plan, worksheets, resources, and real-world investor profiles, you’ll get the skills and knowledge you need to build your future through property.
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Sort Your Property Out - John Pidgeon
First published in 2024 by John Wiley & Sons Australia, Ltd
Level 4, 600 Bourke St, Melbourne, Victoria 3000, Australia
© UrbanGhetto Pty Ltd and ISR (S.A.) Pty Ltd, 2024
The moral rights of the author have been asserted
ISBN: 978-1-394-22237-7
Logo of National Library of Australia.All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.
Cover design by Jess Pearson
Cover design concept by www.askjasonknight.com
House icons: © Sathaporn/Adobe Stock. Part opener illustration: © Chorna_L/Adobe Stock. P168: Cap icon: © nadiinko/Adobe Stock. P203: Photo: © contrastwerkstatt/Adobe Stock. P311 and P316: © Visual Generation/Adobe Stock.
Disclaimer
The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.
We acknowledge the Traditional Custodians of the land on which we reside, and pay respects to their Elders past, present and emerging.
We extend that respect to Aboriginal and Torres Strait Islander peoples who may read this book.
foreword by Glen James
I don't think I've met anyone who lives and breathes property quite like John Pidgeon. At least once a year we record an episode on the This Is Money (formerly my millennial money) podcast where we battle the old (but fun) argument of shares vs property. I sit in the shares camp and every year John attempts (note: attempts) to win me over with his property arguments. We never quite reach a conclusion, but one thing I can attest to is John's passion for property.
I can't think of anyone who is better positioned to write a book on the subject — and here it is! This book is an essential resource for home buyers, beginners and seasoned investors. John provides insights and actionable advice that will revolutionise your approach, and importantly, help you achieve your goals.
A photograph of Glen James and John Pidgeon.Me and my mate John
Every year we run a listener census to better understand who is listening to us and to ensure we are providing the value that our audience is seeking. Without fail, every year, first-home buying or buying an investment property appear in the top five goals.
But — you probably don't need me to tell you this — property markets across Australia have completely changed in recent years. In order to buy or invest well, you need to stay educated and skilled so you can be agile in your approach. John encourages everyone to be smart, strategic and creative with their plans, and over and over his clients have proven his guidance to be invaluable.
When I ran my financial advice business around the corner from where John runs Solvere Wealth, I referred clients to him who had specific property goals. He was my property go-to, because his skill and 25 years of experience made him the perfect coach for anyone looking to build wealth through property as a part of their overall plans. There was no risk of my clients being treated poorly. This was a big concern for me.
Many members of the This Is Money community have booked a clarity call with John, where essentially they have an hour of his time to bounce plans and ideas off him to help in their decision-making. Many of these home buyers or investors have been stewing on an issue for months, and a one-hour conversation with John resolves tonnes of analysis paralysis, stalling and indecision. John has a way of cutting through the noise to get to the centre of what's really going on so you can set your course to take the next step without fear or concern.
John is about smart, steady and long-term wealth creation that can be done sustainably. He will talk you through the foundations of property buying and investing that you need to build on: goals, habits, risks, mindset and the strong financial foundations you need to carry out your plans well. Success in any endeavour requires clarity of purpose and the discipline to follow through, and home buying or property investing are no exceptions. By understanding the importance of setting realistic and achievable goals, adopting good habits and cultivating the right mindset, you will be well on your way to building a profitable and sustainable property portfolio.
Again and again, I hear John asking property buyers: ‘What's your strategy?’ He understands that making a move without a clear idea of what you're trying to achieve is pointless and creates a mess rather than lead to mastery. In this book he'll challenge you to build a solid strategy, with in-built, actionable steps to get it done.
He'll also challenge you to think outside the box around how you buy and invest. He's a big advocate for avenues like rentvesting, joint ventures, parental guarantees, maximising government grants and schemes, and adjusting your expectations for the kind of properties you buy. This creative thinking has become essential to get into property because we can't buy property like our parents did — times have changed.
A key area many first-time investors want to explore is how to build a portfolio. What, when and how do you buy your first, second or third property? Do you buy your home first, or wait a few years? As you delve deeper into this book, John will give you the tools and opportunities to craft your own portfolio, in a way that aligns with your goals. He also understands that many people consider flipping their first home to an investment to get into the market, and he'll share some guidance on how to do this well.
Another speciality of John's has been development — something more advanced investors may want to get a taste of. If buying land, subdividing, and developing it is something you crave, then take any tips and advice you can from John. He's carried out projects like this several times and has plenty of experience to share.
And no property book would be complete without the info you need to know when a property is worth a bid or offer! He'll share what top-quality property looks like, how to win at auction (even if you've never done it before) and how to make an offer.
This book is a treasure-trove of knowledge, experience and wisdom that will undoubtedly become an essential reference for anyone interested in property. Whether you are just starting out or have years of experience under your belt, this comprehensive guide will equip you with the tools, strategies and mindset to achieve your property goals and create lasting wealth.
Embark on this journey with John as your guide and witness the transformation of your property investing dreams into reality. The future is yours to create, and with the insights and expertise contained within these pages, you will be well on your way to forging a prosperous and fulfilling life as a successful property investor.
Glen James
Founder and host of This Is Money podcast
Author of Sort Your Money Out and Get Invested and co-author of Sort Your Career Out and Make More Money
introduction
So, you want to get into property — welcome! Well done. You're focusing on your education, which is key to buying and investing in property well. You might be looking to buy your first home, looking to get into property investing, or you could be keen to move into more advanced investing strategies. This book is designed to be a comprehensive guide to property without the unnecessary get-rich-quick marketing (fun fact: you don't need to buy 15 properties by next year). I'm all about building wealth through property in a non-greedy, smart, strategic and prepared way.
Property is an exciting space, but it's also evolving, so you need to stay on the pulse, educating yourself so you make decisions that keep you in line with your goals. Because you will face ever-changing property markets, the whirls of media speculation, changing interest rates, new government legislation and shifting lending requirements, you need to be prepared. You need knowledge, cash buffers and the right strategy to suit your wealth goals. It's all too easy to get excited about property, and begin building a portfolio, only to realise you weren't prepared to weather the conditions ahead. Then the risks become reality! It is high time we focus on building wealth through property in a sustainable, smart and strategic way.
But why listen to me? Great question — let me introduce myself properly.
Who am I?
My name is John Pidgeon. I grew up on a farm in country Victoria, Australia, and I'm a property investor and coach, husband and father with a passion for health and fitness. I've built my property portfolio over 25 years, and I spend my days coaching clients to build portfolios in line with their goals, showing them how property investing can be the way they get there. I live on the Central Coast of NSW, love running, cycling and swimming, and have a passion for property. I've built two businesses in the industry (Solvere Wealth, providing property and finance coaching, and Envisage Property, a buyer's agency service).
A photograph of John Pidgeon.Glen James (hey, Glen) asked me to consider becoming a co-host of the This Is Money podcast he wanted to start back in 2018. Glen was operating his financial advice business just around the corner, and often had clients who needed property guidance. We decided to give it a good go for 12 months, unsure of how it would all play out. It went well. We've since created the This Is Property (formerly my millennial property) podcast, co-hosted by the wonderful Emily Wallace, to keep property lovers educated and informed, and to provide a community to grow with.
What does my portfolio look like?
In terms of my own property portfolio, I've bought and sold properties in Melbourne, Sydney, Brisbane, Adelaide, Minyip (where I grew up) and Horsham (VIC), Tamworth and the Central Coast (NSW). Across these locations, I've bought apartments, houses, I've knocked down and built duplexes, bought land to develop, and more recently, built our family home. Some of these purchases have been made as part of joint ventures and others have been individual purchases currently totalling a portfolio value of over $6 million.
Why property?
I love property for the same reasons all property enthusiasts do — it's an interesting space with opportunities to create wealth. It’s always been clear to me — everyone needs a property, either to rent or to buy. There's always something happening — you'll never be bored. It's a great industry to be a part of because to invest well you must get educated, stay on target with your strategy and build strong due diligence practices. The rewards for this are absolutely worth it on the other side.
Before you read this book, you must understand that there isn't just one big property market — there are thousands across the country. They all behave in different ways, and as you invest, you're watching, assessing and acting when the time is right for you. It's an industry full of change and growth, and the need to be smart and strategic has never been stronger than now.
How this book is structured
This book is structured to cover the theoretical and practical aspects you need to know to navigate property well. There are ‘action steps’ throughout for you to write down your thoughts and ideas, and graphs to help illustrate how things work, as well as downloads and resources at the end of each chapter.
There are four parts, each focusing on different aspects of property.
Part I focuses on your foundations. This is about your goals, habits and mindset. We'll touch on how to understand your risk tolerance and how property can add to your wealth. I'll explain why I think the ‘Great Australian Dream’ is a fallacy, and what home ownership can look like in our context. I'll share my 8-point plan for investing in property, which will become the cornerstone of how you invest. And I'll give you guidance as to the professional team you need around you.
Part II focuses on the finer details. We dig into how lending works when buying property, and how to set it up in line with your goals and strategy. I'll outline the government schemes and grants you should check out to help get you into the market. We'll also dive into the land of tax, walking through how that works at a high level, so you're prepared.
Part III focuses on how to get on the property ladder. These chapters will provide the practical knowledge and skills you need to find the right property for you, whether it's your dream home or an investment property. I'll outline the due diligence you need to do to find quality properties, and share the ins and outs of placing a successful offer on a property through private treaty or a winning bid at auction. I’ll also help you find your own hotspots and notspots.
Part IV focuses on investing in residential properties. I'll demonstrate how to set up a long-term property investing plan and give you a solid base for understanding more advanced investing options like developments (for those who really want to get their hands dirty).
There will be a number of investor profiles throughout the chapters from members of the This Is Money and Solvere Wealth communities to demonstrate how others have achieved their goals within the property space. I'm sure that you will find these case studies enlightening as they give you tangible examples of what's possible out in the wild.
Alright, enough with the chit-chat — let's go.
An illustration of a building.how to get what you want
1
knowing your targets + learning how to get there
tl;dr
Know your overarching life goals (short- and long-term), as these set the course for your wealth-creation plans.
Sustainable habits achieve your goals.
Focus on transitioning from active income to passive income.
Understand your risk appetite — an inherent part of property buying and investing.
Having a growth mindset is the healthiest way to achieve your goals.
Strong financial foundations are critical to your success.
The best time to plant a tree was 20 years ago. The second-best time is now.
Chinese Proverb
Before you rush out there and start buying properties, you need to set your direction.
In this chapter, we're going to explore the foundations to your first-home buying and property investing success. I want to equip you to be smart, prepared, realistic and ready to buy well.
It all starts with goals
Having goals for your life overall is crucial to set your property compass. Goals are your target; property is the means to your target. These goals need to be authentic to you and realistic as to what you can handle. You need to understand what you value, set up goals and habits, and you're off.
But to do that, you need to answer a question I ask all my clients:
What does success look like to you?
Your answer to this will be unique. You need to consider your career; your family and friends; the lifestyle you want to live; any travelling you'd like to do; other investments, such as shares; your health, hobbies or activities you enjoy. What are the priorities in your life? What practical and financial things do you need to establish? Where does property fit on that landscape?
It's important to get these goals down on paper, because you're 42 per cent more likely to achieve them when you do.¹ Very soon you're going to write down your goals, so be ready.
Habits get results
So, why haven't you already achieved your goals? One word: habits.
To give yourself the best chance of achieving your goals, you must create daily or weekly habits that relate to achieving your goal. For example, if you want cleaner teeth, then the obvious habit is to clean your teeth twice daily. The goal of gaining cleaner teeth will occur naturally. This takes the focus off the seemingly unachievable goal and focuses it on the steps you need to take to achieve the goal. If your habits are a) related to your goals and b) manageable (sustainable), your goals will be achieved.
Eli Goldratt's theory of constraints states that there are usually only a few factors or ‘constraints’ creating obstacles in the way of success.² It's the same when it comes to property — usually we're held back only by a few constraints. Typically, these come down to a lack of certain skills, knowledge or qualities. Tackle those areas by getting educated or equipped and the floodgates open! Build your habits around not only the things you know you do well, but also the areas you need to improve to push through any obstacles.
I also believe the 80 / 20 rule applies: 80 per cent of the reasons that are holding you back from achieving your goal are inside yourself. Only 20 per cent of the reasons you are not achieving your goal are external to you. Always start with yourself.
What one skill or trait, if you developed and did it in an excellent fashion, would have the greatest positive impact on your life?
A major focus in my own life is health and fitness. I've always had a passion for AFL (I do property and finance coaching in that industry), and previously, I was a physical education teacher and personal trainer. I train every day and prioritise healthy eating. But how does that relate to property? Because by being healthy and strong physically, I make healthy and strong decisions. I'm able to remain strategy-centred, impartial and pace myself.
An illustration lists the top seven habits of property buyers. 1. protecting and supporting their own health. 2. continually educating themselves. 3. connecting regularly with professionals supporting their purchases. 4. keeping their expenses lean. 5. forecasting in line with their strategy regularly. 6. building on cash buffers each week. 7. maintaining a healthy mindset.Having a health-centric approach to life has also taught me that great health isn't achieved overnight. A thousand individual decisions create great health (deciding to do that 30-minute run in the morning; choosing the healthier lunch; getting to sleep earlier), and they all compound over time to create an overall healthier lifestyle.
This same pattern applies to buying your own home or investing in property. Saving that little bit extra towards your deposit each week; sourcing that next great property professional for your team; researching that next property, one piece of data at a time — these compound to help you build wealth for your future.
Tips for creating goals
When considering your goals, ensure you use the following formula:
Be specific
Describe your goal in detail. What will it look like when you have it? What will you say to yourself? How will you be feeling?
Make it measurable
How will you know when you have it? What's the intended result?
Give it a deadline
Ensure you have a date for this goal to be achieved by.
Create habits
Each goal must have at least two habits that are daily or at least weekly. This whole exercise is just as much about habits as it is about goals.
Your wealth magnets: active and passive income
So why does wealth matter in your life? Having wealth at your disposal gives you the resources to live the lifestyle you want. Whether you're aiming to retire early, reduce working hours, or tap out and enjoy travel — it's up to you.
Wealth typically begins with some form of income, but it's important to understand the difference between active income and passive income. Active income requires action on your part; for example, an income from employment requires you to be at work to earn. Passive income is generated with little to no action required on your part, and this is some of the best wealth-creation income you can aim for.
What sources of income are adding to your overall wealth? For most people, the immediate answer is employment — your job! But this is an active income stream. What happens if you don't work? What happens if, as you age, you cannot work? You don't get paid and your wealth creation doesn't continue. So, you need to consider what other forms of wealth creation you have at your disposal, particularly passive income streams. That's where property can play an important role.
action steps
Wealth magnets
Which wealth magnets below do you currently have, and which do you want to explore more or develop? Mark them below.
Replacing active income
Let's say your plan is to retire in ten years. If the average lifespan is around 80 years old, you'll need to replace your employment income once you retire. You need to use this time now to develop your wealth to a point where you have a target amount of wealth supporting you each year, potentially for 20, 30 or even 40 years. That's a decent amount of time!
If you're serious about building wealth, you'll be looking to replace your active income streams with passive income streams. Think about what your long-term wealth goal is. Personally, when I first began in property, my goal was to build a portfolio valued at $2 million. My rationale was that, if this portfolio was growing by 5 per cent per annum (realistic), then my wealth would be growing by $100 000 per annum. This figure has changed over time, but it's where I started. I want you to think about what that figure would be for you — you may not know the answer right now, but start thinking. Essentially, you'll reverse engineer the process and set up a plan that achieves this goal.
Think about how much per week you'd need to support yourself financially. Let's run an example using some round figures to keep it simple:
Weekly financial needs when active income stops: $1000 / week
This equates to $52 000 / year
Potential years from date of retirement: 30 years
Target wealth goal: $1 560 000
This is a basic example, but it gives you a sense for how to start forward planning.
Stay active
The most important thing in your wealth creation is to stay active. I've been investing in property since 1999, but there were six years when I wasn't actively building wealth with my portfolio — something I now regret. The performance of my portfolio in that timeframe shows my lack of action. Stay active and engaged in building wealth. You'll see better results.
action steps
The three-step process
The goal-setting process that I'd encourage you to use is a simple three-step process.
Step 1
Brainstorm and write your goals down under three subject headings: Be, Do, Have.
Write down the first thing that comes to mind when you ask:
What do I want to be?
What do I want to do?
What do I want to have?
Do this for at least ten minutes. Most people find it easy to write down a handful of goals in two to three minutes and then they get stuck. If you do get stuck, ask yourself ‘what else do I want to be, do or have?’ Something will come to you. Here are some life categories you can contemplate as prompts.
Do not let your logical mind get in the way. Like a true brainstorm, do not edit your ideas as you write. Do write down whatever comes. There is time for editing and making it achievable later. For now, let your mind go free!