03 Jul 003 – From $60 to Multimillion $ Developer
Episode three we’re going to speak to Brendon Ansell, telling us about what makes a good property purchase.
Do you start with the end in mind? We’re going to take you through a few steps to determine what you need to look for when buying your first property.
About Brendon Ansell:
Brendon Ansell is the director of Velocity Property in Queensland. He’s a property developer that creates places people want to live in, he has a deep understanding of the market, demographic, how people think and changes within it. He targets inner city suburbs that have low-density build up and high-quality suburbs that he believes have long-term stability because he believes they have high owner occupied content. This is a great takeaway point for people who are trying to find specific suburbs and areas to buy in.
Brendon spent the early parts of his 20s playing cricket in Scotland and New Zealand and worked for HSBC in London. He always had a burning desire to get into property and started his own finance brokering business in 2004 and after seeing the good, bad and ugly of property, he decided it was his turn to have a go and try with property development in Hawthorne in Brisbane.
In this episode we cover:
- Top three picks on how to choose a suburb
- Why it’s critical to have the end in mind
- Why it’s important to educate yourself before you leap into the market
What’s the scariest thing you’ve ever done?
- Making choices out of necessity.
- I have a massive fear of heights, I climbed Mt Tibrogargen it took me 17 hours!
On property, how did you get into the market? What was your first property?
I’ve bought my first property while I was still working in London – it was in Brisbane. I bought it over the net, which I don’t recommend it’s extremely stressful. I was naive. I bought a townhouse in Logan for about $112k. Even then I had a good sense of timing and an awareness that I needed to get into the market quickly.
This was in 2000/2001. After the Sydney Olympics, Sydney was blaring at full steam, Brisbane usually runs 18 months to 2 years after Sydney. So then in 2002 – 2003 Brisbane kicked off, so my townhouse went from $110k to $160k in two years, I thought I was a property genius not realising everything else in the whole city went up too.
Did you have a criteria when buying?
Well it was within my budget, as I was earning money in London and working really hard saving every cent I could. So I knew what I could afford.
What would you say to people in regards to what you look for where buying?
Positive cash flow is what I look for. I didn’t buy or renovate a property and expect it to work out later. I have a belief system that you must stretch your bubble as hard as you can but ultimately you’ll always filter back to your skill level.
A good, hard year of research and building my knowledge prior to buying was also extremely important. Property is a complex game.
There are fundamentals to property like:
- Land appreciates
- Building depreciates
There are also micro markets and what’s happening locally in the community. You can’t find that through past data, you need to work and spend time in it.
If you’re not passionate about property and you don’t love it, it will be very difficult to spend the time researching.
“You get wealth in your spare time, what you do with your spare time is directly congruent to where you end up.”
What are some things you look at in an area on a macro level?
I study a lot on the macro side, I think it’s essential. There’s a much bigger, more connected world out there and we need to be conscious of it and aware of trends that we are seeing. In Brisbane, we specifically target areas that are boutique high-end inner city, that are very low density, opposed to areas that council’s allowing for rezoning, with construction everywhere.
Which comes back to your point of having a fundamental knowledge of the area and knowing the people that are going to rent there.
Ie. We just finished an eight pack of three bedrooms apartments in Bulimba, there are not a lot of three bedroom apartments for sale in Bulimba. The first two people that rented them out got full rent inside of a week. There’s an end result, as in other parts of the city, rent is dropping by 20-30% and still going down.
When you’re looking for developments, you have a clear vision. Do you think that goes the same for people buying investment properties?
Every investment should have an investment strategy. You need to have an end goal. If you’re jumping into an investment for the sole purpose of making money it means it’s not long term.
Ask yourself, who am I going to rent it to? If I need to sell, realise profit, is there a market there?
We’re currently targeting the empty nester space, so Baby Boomers. We’re going to see a large scale down sizing from houses to apartments, but they don’t want to go from a four bedrooms house down to a one bedroom apartment. They’ll do it in small stages and where there is storage space.
Example: Our development in Bulimba.
You’ve got to look at the lifestyle. People that have just come out of large houses don’t want to mow the lawn on the weekend. They want to be going to coffee and because they’re going out a lot they don’t want to be living with a big yard and having to mow the lawn.
They want to be close to facilities.
Storage room, wine cellars, because this is what they want.
Look for a suburb where there are big gaps between different products.
Big gaps between price points like in Bulimba is:
3 bedroom apartment: $750k
2 bedroom apartment: $590k
Other suburbs the houses and units are competing with each other if the pricing is similar, which creates an oversupply.
How important is it having a good team?
It’s essential. Another saying is, if you’re the smartest person in the team, you’re in serious trouble!
In the property game, when a lot of people start out, they think in terms of doing everything on their own. You can learn faster by surrounding yourself with the right people. A lot of people don’t want to spend the money learning or hiring the right people, but really it can make such a positive difference.
What are some things you would have told yourself before you started this journey?
Property is a slower asset, the key point to make is that we always tend to overestimate what we can achieve in the short term and underestimate what we can achieve in the long term.
Go easy on yourself in terms of the short term because it will probably be slow moving. Once you’re 10 to 15 years in, you’ll have enough knowledge to exceed. It depends on where you put your time, if you spend every day practising the guitar then you’ll get good at it, the same goes with property.
What makes have no fear when it comes to property?
To be a successful investor you have to have courage. There is a reason why two percent of the population hold most of the wealth. Depressions bring on billionaires, you might as well take advantage of the situation and buy high-quality assets in the down turn. It can be a great time to buy great assets, but all within reason. Then there are always exceptions to the norm, obviously.
Take away points from this episode:
- Education, and listing to experts. Ask questions from people who have done it before.
- Take a step back from the market. Like when Brendon purchased while the market had dropped, some may have thought it was crazy. Make your own decisions based on the education you have. Just because the newspapers say one thing doesn’t mean it’s the truth.