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Dale Alcock's Property Investment Tips (Transcript)

Dale Alcock shares his story on how he went from apprentice bricklayer to the Managing Director of Australia's leading construction, property and finance company. Plus, hear Dale share his tips on how he found success through property and how you can too.
 

Transcript: Dale Alcock's Property Investment Story

Announcer: Recently the managing director of the Alcock Brown-Neaves Group, Dale Alcock, presented his property business and property investment tips. This video showcases in two parts these topics. In the first half of the video, Dale outlines his business success story, and in the second half of the video, he outlines his property investment tips. We trust that you get value and information from this presentation.

Dale: My presentation is probably going to go for about 30 or 40 minutes. I'm going to cover a brief ABN Group history and in the process, you'll learn a little bit about Garry Brown-Neaves and myself. I’m going to cover why we commenced Investor Assist and also some learnings and tips about investing in property. And then most importantly, at the end of that piece, he'll come back up. And please, fire out any questions you might have around property investment or anything more generally than that. So let's go.

Two bricklayers in suits. We started out as a two bricklayers. Garry Brown-Neaves, he says he's the more good looking younger version, taller. That, he's deluded. He's this smaller, more elderly gentleman on your right hand side. So the two partners in the ABN Group. So I'm going to tell you a little bit of background and then talk to you around how we got together and so forth.

Garry left school at the age of 14. He was attending Scarborough Senior High School. The last six months of school, he played truant. He had a view that he wanted to become a professional surfer, and was arriving home just in time to get truancy notes out of the letter box before his mum got home from work. He survived another six months of work until the principal of the senior high school knocked on the Brown-Neaves home by night and said, "Mr. and Mrs. Brown-Neaves, it might come as a shock for you but your son hasn't been attending school for the last six months. And we would suggest on that basis, he leaves."

So he did. He was 14. As I said, wanted to become probably a professional bum/surfer. He's dad was a brickey. Had other ideas. He said, "Garry, look, it might come as a shock to you, but tomorrow morning you are going to start laying bricks or come and do some laboring in the team." So Garry actually started in the building industry with absolutely no desire and passion to be a builder. But very soon he worked out that the more bricks that he laid, the more money than he earned. And I'll come back to his journey in property a little bit later on.

But he actually started a couple of building companies early on. One was with his brother, Laurie. Didn't really work too well. The two brothers didn't get on that well. And the next one was with his wife, Di Brown-Neaves. Garry’s a very imaginative sort of character. G&D Brown-Neaves was the name of the business. And he basically was building homes, trying to sell homes, build them, trying to do everything and it sort of wasn't working.

And in 1978, he got together with a guy called John Webb. John Webb was a sales consultant for a very new startup company in Perth called Peter Stannard Homes. And today, we know very much about Peter Stannard Homes as a very long lived building company in Perth. But John Webb rung Garry Brown-Neaves up early in the morning, about 2 o’clock in the morning one Sunday morning and said, "Garry, I've just bought one of your homes. It's a great home. But you're a useless sales person. You know, I'm a good seller, you're a good builder. Why don't the two of us get together?" So from that early morning, drunk conversation, you might say, from one of the partners, that's how Webb & Brown-Neaves started in 1978.

My journey, a little bit different. And at this point, I just want to welcome the Kellerberrin folk. Now, in the room, hands up who has either lived in, been to Kellerberrin, has relatives from there, come on. Was born there, put your hands up. There you go. Welcome to the Kellerberrin people. Now, for any of you that… They're always around me, I tell you. The Kellerberrin people are my greatest supporters.

I grew up in Kellerberrin, a small Wheatbelt town about 200 kilometers east of here. Just a great place to grow up. My journey was a little bit different. I did pretty well at school, went to Kellerberrin Senior High, than Northam High School. Sixty miles down the road was my year 11 and 12. I did pretty well as a school boy. I had done well enough to qualify to study architecture at U.W.A. So that was one of the thoughts that I had.

But the other thought that I had was that I wanted to become a bricklayer. And interesting, the career guidance officer at Northam High School said, "Look, you've got rocks in your head if you think that becoming a bricklayer is a great idea." I speak to mum and dad, they said, "Look, you've got the grades. Why don't you go on?" And I said, "Look, I can always go to uni later. But will you take me on as an apprentice?" And the rest, as they say, is history. And I reckon all these years later, it would be really cool to catch up with my career guidance officer from Northam and just ask him where his own career went and… That would be pretty cool.

So yeah, that was a great start. So really, in a small country town, my dad was a builder, my grandfather was a builder. Immigrated from the U.K., set up a small building company in Kellerberrin. So whilst my trade was bricklaying, I was really doing a bit of everything. Carpentry, where we would basically dig the footings, lay the concrete, take the home right away through if it was a new home, or a lot of the work we did was renovation. So it was a sort of an apprenticeship in building.

So by the time I was 23, I'd actually pretty well qualified for my builders registration. I'd done all of that by correspondence and then come down to Perth to complete it. And two of the subjects weren’t available by correspondence. I’d met my now wife, Jan. She was a South Perth girl. I thought, look, if I move to Perth, pick those subjects up, maybe get a job with a company in Perth. That would be a way to go. Get my registration done, go back up in the bush and ultimately take over the family business. So that was a sort of my path that I was on.

And we're driving down south one Saturday morning. I used to do a lot of cycle touring and bushwalking stuff. So Jan was driving the car and I was looking in the west of the train, the situation back then, this was before the digital age, it was a big section in the West. And I was flicking through there and there was an ad for a company called Webb & Brown-Neaves for a two-way operator. And again, old technology before the digital age, we used to have in supervisors cars a two-way radio, a base station in the builders office. So basically that job was coordinating materials out to the sites. So I applied for this job. I'd heard a little bit about Webb & Brown-Neaves. They’d started, as I said, in 1978. This was around 1983 and they’d gained a good reputation. Built a few homes, quality homes, won some design awards, industry awards, that sort of thing.

So I applied for the job. I was interviewed. Three people interviewed me. The accountant, the estimating manager and the admin manager, which wasn't too bad for a… I had three people interviewed me for the lowest job in the company and it was only a staff of 18 people in the business at the time. So it was really interesting. A really interesting outtake out of that was about culture. They weren't just going to take anyone on for, you might say, the lowest job in the place. They really wanted to make sure they had the right fit of people.

So I was successful in getting that job. And for the next two years, I worked at Webb & Brown. Worked six days a week, twelve hours a day for the princely sum of about $17,000, which was pretty cool. I didn't know anything different. I'd worked for a family business where anything went at any time. It really didn't matter. And so that was cool. After a couple of years, I went to Garry and said, "Garry, I would really go to supervising now." I'd moved through to doing estimating to become Garry Brown-Neaves right-hand man. And I said, "Look, I'd like to go supervising." He said, "No. Look, you're too valuable." Valuable? I'm $17,000. I was pretty valuable, I guess. And no, stay at what you're doing. You're too valuable.

I said, "Well, maybe I need a pay rise. You know, a little bit more wouldn't go astry." And he said no to that as well. So politely we parted company and I did the next most logical and sensible thing. Jen and I did the overseas trip. We went off to Europe. We went to England and we bought a couple of push bikes in London. And over the next four months, we rode 3,500 miles through England South, down through South Wales, across Ireland, around Ireland, through Northern Ireland, back through Scotland down the east coast. And we're still married, by the way, after this. Garry maintains to this day that the only reason we bought push bikes and did it is that he didn't pay us enough, leading up to that point so we could actually do it properly. And he's probably quite correct.

Anyone, by the way, ridden a push bike more for than a day in succession here? Yeah. Anyone done it for a week? Anyone done it for about four months? Well, let me tell you, your back side doesn't easily go back onto a bike seat each morning. Generally speaking, we'd ride, or at least I would, I'd ride for a couple of kilometers with my back side off the seat, gingerly putting it back down until eventually you go… You’ve got to spend about six hours on this thing so just suck it up and get on with it. So good fun.

Anyway, came back, went back up to the bush, we're married and basically got on with things. But around June 1986, I got a phone call. Five o’clock in the morning I was up, getting ready to go to work. John Webb, the guy who’d rung Garry in 1978, drunk 2 o’clock in the morning about getting into business, rang us and he said, a bit of an amateur psychologist, John, and he said, "Middle of winter, cold, wet, miserable day, you are no doubt going to go and try and build something in this. Why don't you come to talk to us about a business idea?"

So if you could imagine, I was 24, these guys paid me $17,000 a year. It wasn't much going on. No. Thanks, John. Everything's fine. So left it six months and it was early December, early mid-December… The opposite, summer, Wheatbelt, 42-degree day. John was on the job again, 5 o’clock in the morning, rings up, says, "It's going to be 42 degrees today. It's going to be hot, dusty, fly-blown. I guess you're going to go and try to build something today. There's a better way. Come and talk to us." Jan said, "Who's that on the phone?" I said, "Don't worry, it's John. I'll get rid of him." And in the end, we decided, "Look, let's go to Perth, check it out, and we'll say no, and we'll get on with life and that will be it." So that was December '86. And in January '87, we started Dale Alcock Home. So that's sort of how it came to being. So today, all these years later, they're the companies that exist in the group. And I'll give you just a quick intro to where Webb & Brown-Neaves was at the end of 1986.

They were building around about 80 homes a year. They had a turnover of $5 million. They employed probably around about 25-30 people. In the first year of Dale Alcock Homes, we went out and sold 200 homes with an initial staff of six people. So we quadrupled the size of the business. For me, I was 25, never run a business before, so it was pretty exciting times. Those original six people that started with us, the shortest time that anyone was with us was some 16 years, and the longest journey for one of this six people was 25 years. So we were all able to grow together, and just a wonderful story.

But just to run through, very quickly, top line Homebuyers Centre, Celebration Homes, Dale Alcock Homes, APG, Webb & Brown. That's how they sit in the West Australian market. Our book ins, home buyers, first homeowner entry in, Webb & Brown at the upper end of the market. Next line our Home Improvement business, Dale Alcock South West, Resolve Finance, our finance broking business, Boutique Homes, it's a Melbourne business. It's sort of in a market segment very similar to Dale Alcock Homes and APG, then our ABN Developments business, Ceiling Solutions, our ceiling fixing business.

The Maker, the cabinet making business. Where today, every 38 minutes, a house-load of cabinets is produced. Investor Assist, we'll talk about a bit more. Bluebay Home Loans, a mortgage manager where we create home loans. PACT Construction, commercial construction business. Boeing Plumbing, a plumbing company. Concretus, concrete line. ABN Realty, real estate business. ABN Training, we're to date, since 2004 we’ve trained 800 apprentices. We currently have 300 apprentices in training. Axiom Conveyancing, the settlement agency, and Hi-Point Roofing. So over that period from 1987 commencing through to now, we've really moved from being one home builder, if you like, to a property financing construction group. And I'll run through the numbers a little bit later on.

And that's sort of what it looks like. It's a bit of a mess. And Garry Brown-Neaves, if he was here, would describe the journey that Webb & Brown chose to go on in 1978 as, "John and I got together to build some quality homes with reputation, referrals coming through and build again for our clients." And they wanted to build 60 or 80 homes a year. So Garry then says, over here, "I don't know what went wrong." I said, "Well, it's pretty good going wrong. Actually, it's not too bad it's nothing to get really upset about, Garry."

So here we were, 1987 and Dale Alcock Homes commenced. About 18 months after commencing, John Webb resigned. So as you can imagine, for me as a 26-year-old, under 27, at that point there were only two partners in the business. John Webb had left, Garry Brown-Neaves and myself, both builders. I had lost the guy that was more the marketing and sales and driver within the business. So the guy that I’d really learned a lot of. We took on another partner called Trevor Young, a guy who was passionate about cars and money. I'll talk about passion a little bit later on. Not a great mix for a building company director when your sole business is housing. He lasted about another 15 months with us, and then following that, he departed which left Garry and myself as equal partners within the business.

Trevor Young left the business and bought a small kit shop in town. eFx models, boats, planes, that sort of thing. We thought he was a little tapped out after being a successful home building salesperson, he'd sold cars in his life. But he died a couple of years ago of cancer. But in the interim, he turned that small kit shop into a business called Biante Model Cars, an online business. If you look it up, it’s B-I-A-N-T-E. When he died, at the point when he died he had a massive collection of Australian motor sport memorabilia. All the Brock’s, Moffat, Bond’s cars, a big residential property portfolio here, property in Hong Kong, and factories in Asia and in China predominantly producing this perfect replica cars. It's a great success story beyond our own success story in that if your passion's not aligned in what you're doing, go and pursue your passion. And if you put all of the energy and enthusiasm into it, and you're smart enough and savvy enough, you'll make a success. So he really did that.

So on we went. And our journey from there, and as I said, at the end of '86, 80 homes a year, $5 million turnover, '91 Homebuyers Centre, '92 Ceiling Solutions. By '93, we were up to a 1,000 homes a year, turnover $50 million a year. In '95, we took over a company in Bunbury or joined with a company in Bunbury called GJ Construction, created Dale Alcock Home South West. We started in '97. APG Homes was originally called Australasian Property Group. We had offices in Jakarta and Singapore until the Asian economic meltdown and we came flying back to Perth, shut those offices down and redirected that into the affordable two-story market in Perth.

In '99, we started our finance broking business and Resolve Finance this year is Australia's number one finance broking business, which has been voted by industry peers. And this year, we’ll do around about $859,000,000 of home loans through Resolve Finance. In 2002, we started Celebration Homes. We wrote a business plan on an A4 sheet of paper with 10 bullet points, and we still got that today. And it more tells us about what we don't want to do more than what we do or want to do. So it keeps us very disciplined and aligned.

2004, a busy year. We started our training operations, the Maker Kitchen, PACT Construction, Hi-Point Roofing and Concretus. 2006, our turnover was up to $500 million. 2006, we bought a business called TR Homes, transportable homes business. Sold it earlier this year because the market had really left that regional resource construction sort of space. 2007, we started the mortgage management business. Anyone guess what happened in 2008?

Yeah. If we went to Deloitte or KPMG and said, "When's the best time to start a mortgage management business?" It probably wouldn't have been 2007. They would've say, "Don't do it. Things are overheated. It's going to go south." Absolutely in hindsight the best time to have done it. Because what happened in this period going forward from 2008, all the big banks stayed away from the low deposit, high L.V.R. lending space, which is exactly what we need for the Homebuyers Centre and affordable housing and getting people into homes. So since 2007 when we started it, we've created over 2,000 home loans that are unique products to this group and our customers. So we put 2,000 people into homes when no other builder in the country or lending institution’s been able to do it.

We appointed our first and only, thus far, C.E.O. in 2008. It might come as some surprise that that whole journey through here and creating this group, we didn't have a head office, we didn't have a C.E.O., we didn't have a C.F.O. So all of these individual businesses that I'm mentioning are their own operating entity, with their own target market, location and complete management. And Damian Eves, we appointed in 2008. Happens to be a really big guy. So if you going to appoint a C.E.O. late in your journey, get a big guy. How heavy is he? Quite a bit. A hundred and…? No! His brother-in-law, too, by the way. On a good day, he's about 115, 118 kilos and he's a big boy.

But he also started with me as a Sales Administrator at Dale Alcock Homes. He then becomes Sales Admin Manager. He went and sorted out Dale Alcock Improvement when it wasn't running well. He was our inaugural General Manager at Celebration Homes so he had a really long journey in the Group and he's a fabulous guy. And then in 2009, we started out conveyancing business. 2011, Investor Assist.

And just to give you a very quick snapshot of where we are today. The Group turns over about $1.1 billion in revenue each year. We have 1,800 employees including 300 apprentices, over 4,000 homes completed this year, we'll sell around about 5,000. In Western Australia, an interesting phenomenon, we just have in about two weeks ago, have our millionth home in Perth. So that would mean over that time since 1978, we've produced 6% of the homes in Western Australia. So probably twice the Greater Bunbury, Dunsborough, Australind, Capel area. So if you look at that greater area and the double it, that gives you some feel for the number of homes. About 60,000 homes, it would represent.

Our vision, our company vision, "We are the leading construction, property and finance group." Doesn't mean to say we have to be the biggest, but we want to lead. Our strategic competitive advantage, why we play the game – we play the game to win by creating win-win outcome. So in other words, our costumers win, we win. Our trades win, we win. It's about win-win outcomes. We don't want to be in business for a loss-win or a win-loss. It's not a sustainable way to be in business. And that might seem a pretty simple philosophy. But I have to say in housing and in the building industry, that is a pretty unique position to have.

Along the way core values. I spoke about the one in red. It's always going to be red. It's passion. This is our D.N.A., our D.N.A. for the Group. What makes us different to our competitors? First one is leadership. And few people here is, as I said, from Kellerberrin but for the rest of you… Most of us have driven on a country road in the middle of summer, on a gravel road, yeah? Where would you rather drive? If there are two cars on a gravel road in summer, in front or behind? If you get that wrong, leave now. Okay. So we drive in front. We drive in front because we choose to drive in front. Not because we're the biggest in each of those entities, but the best thing to do is lead. If you're the car in front, you have the clear direction. You drive on the road at the appropriate position, at the speed that is safe to do so.

If you're the car behind, if you're the company behind, you have to put up with all the rubbish that's getting blown up in your face from the competitor in front of you. You can only go as fast as the competitor in front of you. One of the most dangerous things to do is overtake the car in front of you on the gravel road. Same way if you're over obsessed by the leader in front of you and try and overtake them, you can come in absolute gutter. So we'd rather be the car in front.

Best example I can give to you there is when we moved to Melbourne in 2008, we took over a business called Boutique Homes who was doing six or eight homes a month. It was probably about the 47th largest building company in Melbourne. Quite small. Today, it's actually about number 6 in Melbourne. We had 38 staff. We have about 250 staff in Melbourne today. But we took a totally different marketing slant to the business there where all of our competitors were doing things entirely differently.

Relentless. We've got to be relentless. We don't take anything for granted. Excellence. We build a lot of homes but we build home loans as well, so that's got to be spot on. Authentic. We've got to be genuine. Say as we do, do as we say. But at the end of the day, we've got to have fun. Very quickly. 2006. Given that we've essentially got two major shareholders and directors we’ve established our own foundation. This has moved on a bit since then, since early this year. But our total giving since 2006 equals around about $7.8 million. And a percentage of our pre-tax profits from the Group goes into our foundation each year and we have a lot of fun distributing it. And that's just a few things that we get involved in. Beyond the giving, we do some sort of a staff engagement stuff as well.

So that's our journey. It's very much a journey where, as I say, two bricklayers, two bricklayers in suits. We got together and away we went. So Garry and I have both learnt on the job. We've repeated and grown what worked and we've very much tried not to repeat and eliminate what hasn't worked. Interesting though, and I'll get back to Garry's story, that we've both entered the property market very early. For Garry, as I said, left school at 14. By the time he was 16, his father and Garry toiled for the first block of land that he purchased. By the time he was 19, he actually went and as part shares with his brothers and sisters in five acres of land in Kingsborough. By the time he was 21, he built his first duplex. He says it's still standing. We haven't been seen the photos. He says at the time, he didn't know anything much about building a duplex. So we'd love to actually see the photos.

For me and my wife Jan, our journey at the age of 23. So prior to getting involved in starting the business… So I was a bricklayer, just moved to Perth as I say. We bought a property called 92 Teague Street in Vic Park. It’s 1,012 square meters for $53,000. We lived there, we moved out, we rented it, we renovated it. We had two daughters there. We subdivided it. We exited. We derived $450,000 out of it in 1990, less costs and that funded our move to Cottesloe.

We bought a block of land there and that cost us a $148,000. A lady who was a cat lover had 24 cats in the house. House was condemned. Someone had put an offer on it, the offer had fallen through and we're able to come through and pick it up. We built a home on it, and in 2001, we sold it for $750,000, and we moved to 7 Hawkstone Street. 591 square meters cost us $785,000. Built a nice home. Early this year, we sold it for $4.3 million. Now we're living on the beachfront. So that's three moves in 30 years. Personal wealth through steady property investment beyond business success. So in other words, those moves were about the right property moves and getting in early and so forth.

So you’ll probably argue that being a builder gives us a head start. And whilst that might be true, my first move as a 23-year-old bricklayer was not as I am standing up here before of you as a successful business person. And in actual fact, when Jan and I sat at the front of 92 Teague Street, I looked at it and I said it's an absolute mess. She looked at it and said, "Well, are we going to commit to this and get on with it, or are we going to just keep looking?" So in actual fact, I put credit down to Jan for saying, you know, "Are we going to get on with it? There's work to do here." But this thing has got the bones of something that we can turn around. So by the time we left… And we actually had that home fully renovated and two in the backyard, it was a very successful journey that set us on the right path.

So why property? You're in control of it. No one takes a cut or derives fees along the way, except the government and agents, you might say. There's no corrupt C.E.O., no poor public company corporate moves, or dry wells that are going to eliminate your value overnight as can happen with stocks. And I do invest in a few shares and I can tell you this week that a drill hole in the Carnavon Basin, that one of those companies was drilling for came up dry, and the shares went from 37 cents to four cents. So I would've thought you can invest in a lot of property before you are going to find that's going to occur.

And so for the pundits that want to really push stock market investment, we've got reasonable advisors these days. But for us, we continue to invest in property. And we might be held by those people that are very smart to say we’re very overweight in property. I say if we know it, we'll continue to be very overweight in property because it hasn't done us too badly thus far. So property might not provide you stellar short-term returns, but it will provide you solid growth over the medium to long-term.

With property, you've all heard, "The secret is location, location, location." And whilst good location is certainly very important, in my opinion, it's all about time, time, time. Ensure that you’re never over-geared. Be conservative. If you're conservative, you choose when to buy, and most importantly, you choose when to sell. You're in control.

Over the years, I've had many examples of property where we’ve purchased in average locations and they've turned out to be great investments. And the time that we’ve held these properties, and often it's been broad acre land, it's allowed areas around it to come up to the doorstep for us. In other words, other developments have occurred that have actually changed the landscape and changed the area that we've invested in that has led to greater demand for that property.

And around Perth, there is some really interesting examples. The old West Coast Highway. If you look to West Coast Highway up around Trigg-Waterman North Beach, if you turn the clock back 20-30 years, nobody wanted to live on there. If you go along there today, you'll still see some of those old weekender surfy shacks, etc. The odd one still remains there on million-dollar properties.

But when it was West Coast Drive, no one wanted to be there. Sorry, West Coast Highway. No one wanted to be there. When it became West Coast Drive, and Marmion Av went through, then it all changed. And we fell in love with the Coast and we haven't left the desire to live near the Coast ever since. So that's just one example, a major example that I'll give you where what was a really second rate area in Perth has become one of the prime and prestige areas to be.

But a funny thing with investing is that everyone wants to buy low and sell high. The trouble with that is that I've never, in investing in shares, bought absolutely at the lowest point and sold out at the peak. And a funny thing in all the people that I've come across is that I don't meet other people that have done that either. So I'll put it to you that the same applies absolutely in property. Do your research. The when, the where, and the what. Make your move knowing that you'll never pick the absolute best time to buy and sell. Look at your return over the medium turn. Be knowledgeable, that if you sell close to the peak and you're going to reinvest, you're also going to reinvest into a market that is hot. So sometimes if you're looking over the medium term, getting out when it's a medium market and buying back in and being opportunistic in a medium market is not a bad place to be.

When selling property, always take the first offer you receive seriously. I've always looked at offers that we get as being the first offer as worth dealing with. Even if it appears to be a long way away. You may as well get into process, you mat as well get engaged in it. If you go to an auction, I'll get engaged in the process in the middle there somewhere. I'm not going to come in at the end and try and secure the property. You've got to get a feel for it, you've got to get in the zone, you've got to understand it and understand where it's going. And I think it's the same thing when I look the first offers that come along. Work it up, work with it. It may not come off. But in a flat market, you may not know when your next one is coming. So work with your first one and it could be the best one.

Also too, be happy that in selling your property, that you've received fair value. But also that you might have left something on the table for someone else. Now, I don't know about you but I've heard that one time and time again. And it's almost, you might say, justification when you sell something, "I've left something on the table for someone else." That's a pretty cool thing to do because it actually means that the cycle's working. It's going around. And don't worry, don’t worry. You've made your decision, Don't second guess it, don't think about it again. Move forward. But I always look at them and think if it's fair value for me and someone else's got fair value out of it, the wheel turns. And that's a really important thing.

So whilst I've done very well out of property and property investment and continue to do so, not all have been successful. And some have been absolute shockers. But as my ex-partner, Trevor Young, the man who went off and made lots of money out of Biante said, "To be successful in life, you only have to be right 51% of the time." So it gives you a fair bit of scope for failure. So we continue to do. So I've had some absolute shockers.

And my learnings are to be aware of exotics. What I call exotics. If you know what you're good at and you know your territory, be careful of straying too far from that. So properties, locations, types that are out of your normal band. And I'll give you some examples. I don't mind sharing. I'll show you my vulnerability now. You're going to see what a really crap job I've done of investing.

End of 2007, November 2007, so we did something really smart in 2007. We started a mortgage management business. I did something really dumb. I bought a canal block at Port Coogee for close to $3 million. And I don't own a boat, by the way. So that was really exotic. It was really stupid. I get horribly seasick, in fact. Too much time spent in the bush. So the smarter thing about that or the really dumb thing was it’s a front-facing north block with the rear into the south-western as well. So despite that, so when the market does return, it will be difficult to sell anyway. But it's probably currently worth south of $2 million. Okay? And I've continued to pay land tax on it and council rates that are probably around $200,000-$300,000 a year. Okay, so that's a shocker. That's a really bad one.

Hope Town, or as I now call it Hopeless Town. No one here from Hope Town, is there? Because there's not a lot of hope down there anymore. We bought land in Hope Town when BHP, the Great Australian used to be, until they joined bloody Billiton and they were running a nickel mine at Ravensthorpe, right? Yeah. And then one day, they woke up and decided they didn't want to mine nickel in Ravensthorpe. But one of us had bought six blocks of land in Hope Town. So it's now Hopeless Town.

Bunbury. We bought some CBD properties in Bunbury to build some apartments and mixed-use sites. Fortunately, I won't put that down as my idea. It was Graham Teede's idea. He's now retired as a partner, and part of a parting gift, he took those as part of the settlement. So he's now dealing with getting those out of his own portfolio.

Karratha. Karratha, wow. What a great place to invest. We bought some land off LandCorp. We’ve paid the highest prices for it, in the absolute peak of the booming activity in Karratha. And we built 41 homes in Karratha. And we still own a lot of those homes. Fortunately, Pete's rented them all out so we're getting a return out of them. But I'll get back to you with when we can sell them. Okay? It'll be in another cycle. It won't be in this one.

And dear old Mandurah, the Mandurah Marina. We own lots of land in the Mandurah Marina. We could be building apartments down there for quite some time. But anyway, we continue to pay the land tax on those and the countcil fees and all that. So that's just the snapshot. There are others, but I thought you'd just like the spread of those ones.

So the shockers are as a result of not applying my normal disciplines and rules. You get emotional. You get swept along with the hype. You believe, the polite way of saying this is, you believe in someone else's promotion. That's the politest way I can put it. And you overshoot the runway. With the shockers, you make poorly informed decisions that lack your fundamental investment principles and disciplines. Emotion and sentiment rules.

When we've purchased multiple lots in areas, if we're acquiring land, often our disciplines are there in the first purchases. But as we tend to acquire more and get over-confident, those disciplines can wane. So what can start out as a really good investment, by the time we've acquired more properties, it can look average. So we've really got to keep on our discipline. So good investment decisions in property are as much about time in the market as they are about timing. And so don't just rush an investment decision. Understand and research a region, a location, a market and a product type.

And I'll very quickly give you an example to tease this out. Northeast metropolitan area is an expanding corridor with lots of opportunity for expansion. The region's well serviced, with proximity to the airport. Ample schooling options, great shopping offerings and with the maturing of Ellenbrook Town Centre, a range of employment and recreational options. Perhaps the only piece of infrastructure missing is the train line. But we're not going to talk about that because Mr. Barnett might have some stooges in the room. From the market perspective, the median house price is around $500,000 for a four-bedroom, two-bathroom home. The median rent is around $525-$530 per week mark. All this data is now available from portals such as realestate.com.

Generally, demand is strong for rentals in this area. Real estate transactions are steady month to month. So now, we have a region and a market that looks desirable from a property investment viewpoint. The next step is to research the offerings and see whether we can attain a location that has a typical infrastructure of the region with a product type that would be sought after by the market for under the median price, house price. Therefore, providing the investor with an opportunity for equity from day one. At the moment, this can be achieved at Whiteman Edge, Aveley and Ellenbrook, in that general area.

Purchase a block of land at sub-400 square meters, and with one of our Investor Assist range, a panorama or Vienna home, you're away. So hence start with a region, then a market, followed by location, and then a product type. So you have to gain the knowledge, what I call the knowledge. Timing by itself won't help you if you haven't spent time in the market.

Another key is to stick to a simple system. And mine is where, when and what. Simply, I'm in a good position to have proven experience in mum's and dad's residential housing. I understand it, I have knowledge of it, and of the locations. I understand the product type and who's buying. Most importantly, I understand the timing. The when. And I know where we are in the cycle. I know Perth Metropolitan, I know South West and I now know Melbourne. And also, what I’ve learned is to avoid the exotics. So from a personal point of view and a business perspective, my success has come from sticking to what I know and building off this. Hence, our businesses development is into the South West and into Melbourne.

I just want to spend the last few minutes running through and talking very quickly about Investor Assist. At the end of 2011, as I said, we launched Investor Assist. For many years, I’d experienced property spruikers, sharks and charlatans hungry for fee-generating. Greedy, selfish operators, they were. They weren't overly concerned about advice that we're giving. They weren't concerned about the lack of transparency, kickbacks, non-disclosed fees that they charged, etc., etc. We've seen them all. Many of them came in from Queensland. Always beware the Queenslander spruiking property. There's something wrong. So that's probably another tip I hadn't written down. But let's put it there. My view was that the ABN Group, as a leading construction, finance and property group should be able to do better than that.

So through Investor Assist, we now provide specialist education, resources, finance property management and service solutions. Importantly, as I mentioned before, we have our own specialist mortgage broking, and mortgage management businesses available to service our clients. These two companies provide valuable service to our businesses. Resolve, as I said, it's just been awarded Broker of the Year nationally. Bluebay is the mortgage originator. And the mandate is to come up with innovative housing mortgage products to make ownership, home ownership more available. By Resolve, property investors have ability to see what is the best and most appropriate finance product for them to help them get into property investment. And even though these companies, I should say, are under our ownership, they still have to follow stringent lending criteria. And from time to time, we'll say no to an investor looking to borrow money.

And unless you're a budding Garry Brown-Neaves, where he was back in prior 1978, he's going along and lying a lots of bricks and backing himself in, with a confidence to back it up, I think you need to make sure you're not putting yourself on the edge. And I’d suggest you listen to the banks and bide your time before you rush into property investment with a skinny buffer. So take the conservative approach. You don't have the luxury of calling the shots yourself when the market goes against you. So be aware of that.

I might add that also Resolve Finance runs a program we like to call My Home Plan, which helps get a deposit together for people to make sure that they can do it in a manner that is very conservative. If you buy from Investor Assist, the other proposition is that you pay no more than if you're buying direct from one of our regular building companies, which is far different to some of the other investment schemes and so forth that are around.

We're not advisers. We don't set ourselves up to be advisers. If you need accounting, valuation and legal advice, you pay and it's independent of us, as it should be. Frankly, if a residential property investment doesn't stack up with us, my suggestion would be not to do it. Because I think we have proven, that with the scale we operated at and the history, that if we can't make it work, then you can go down the road. And if it does work, I think you'd have to be concerned.

Today, we offer investment opportunities in Metropolitan Perth, South West and in Melbourne. These are the locations that we understand and worked through and that's why we’ve invested there. As I said before, this year we'll build over 4,000 homes. We know what sells and where in these markets. And through Investor Assist, you can benefit from our own on-going experience, knowing what are the best sellers in the best locations.

Announcer: If you’d like more information on how to invest in property, visit the Investor Assist website on InvestorAssist.com.au or give us a call on 9200 7200 to book a property investment analysis with a property investment specialist.

43 min 7 seconds

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