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What does the word ‘decide’ mean?

‘cide’ means to cut off, kill. The word decide literally means that whatever option we choose, we are cutting off any other options.

Once we have ‘decided’, how do we go about accomplishing what we’ve decided to do?

  • Step 1. Decide your goal and work out what needs to take place for you to achieve it
  • Step 2. Take necessary actions
  • Step 3. Measure the progress (The hard cold numbers might look bad, but numbers don’t lie)
  • Step 4. Make necessary changes to your approach

That is how you achieve anything you ‘DECIDE‘ to do.

When we fail to achieve our goal, the excuse often is that we have tried everything we could.

That’s not possible. There is always another way, it just depends on how bad we want it and how decisive we are.

Master your PMP

To be a successful property investor, we need to master PMP.

No, this is not the project management professional certification.

The PMP here stands for 3 different types of systems we need to master.

  • Property Systems
  • Money Systems
  • People System

I have already covered the property systems in my blog before.

I have also discussed the importance of the people system in this article.

I outlined the pros and cons of different property investment strategies.

Each with their own unique characteristics and none being necessarily better than the other when it comes to creating wealth.

The property system is probably the one that most property investors are most familiar with and spent the majority of their time on.

Truth be told, it is the second system, your Money system, which determines if you will achieve your property investing goals.

After all, property investors are in the business of making money.

Property is the vehicle or asset class you as an investor have chosen to focus your efforts on.

Why is having a system important? A good system allows you to stay away from unnecessary distraction while you are investing, most people know how to make some money every now and then, but very few can stick to a system long enough to reap the real benefit.

Treat your property investment as a business

It’s critical that investors should treat their property investment as a business, right from the time they purchase their first property. i.e. they should start with a business owner’s mindset.

Why is this so critical?

Look around us, I think we could all agree that most of the people who are financially independent are business owners and there are few employees with strong financial discipline or people with exceptional talents with loyalty income.

Creating wealth and achieving financial independence has very little to do with what do you for a living. i.e. it has got very little tod with whether you are a business owner or an employee.

It has everything to do with your mindset.

In other words, you can be a business owner but still think and act like an employee or you can be an employee but think and act like a true business owner (employees with a business owner’s mindset).

All people who achieve financial independence have the business owner mindset regardless of what they do.

It is possible for an employee to think like a business owner when it comes to investments.

I have plenty of clients who are employees that love their job and are not inclined to leave it, yet the build wealth and achieve financial independence.

This happens because they treat their investments as a business with full financial accountability and build their own systems.

Without being too technical, below is a summary of what consists of the money system for your property investment business:

  • Capital Plan
    • How much money should you put into your property business now and in the future?
    • What other equity do you have available outside of your property business?
    • How much contingency buffer do you need for your risk appetite?
  • Cash Flow Plan
    • What is your current annual cash flow from existing properties?
    • what adjustment do you need if the existing cash flow is positive or negative?
    • what is going to be the cash flow impact of purchasing additional investment properties?
    • What could be the worst case scenario and how long can you last before you have to sell the properties?
    • What is the realistic number of properties you can purchase safely right now?
  • Finance Plan
    • Flexibility – ability to access more money by adding, increasing or changing your loan with ease
    • Risk Mitigation – protect yourself from interest rate movement and lender’s aggression during bad times
    • Suitability – there are few stages of finance an investor would go through over time, and there are suitable finance options for each stage
    • Lenders Policy – lenders policy can have a great impact on your finance options, and their policy is heavily influenced by the availability of funds, historical performance, and current market condition.

Every person has their own individual situation and therefore requires a tailor-made solution that can evolve with you over time.

“It is that in war the victorious strategist only seek battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory” – Sun Tzu (Art of War)

A well-defined Money System is a victory you can win before the battle, and it will make contesting the battle merely a formality.

Seeing is believing or is it?

Seeing is believing is true if you want to be a follower.

It totally makes sense. We won’t follow it until we believe it and we won’t believe until we see it.

But if you want to be a leader, you got to believe it first!

Now it doesn’t guarantee success on your first go, but it sure eliminates competition as no one else is even trying.

When Carl Benz invented the first gasoline engine, there was no petrol station yet. He believed it and succeeded

When the first bookstore in the world opened in France in 1545, reading glasses hadn’t become popular. Maybe they should’ve waited.

Jack Ma, the founder of the Chinese Alibaba, started Alibaba in 1998 when very few people in China knew about Internet back them. Maybe he should’ve waited too.

People always say what stands between success and failure is persistence, attitude, and hard work.

No doubt about it.

Maybe we should throw vision in there as well.


Break the kettles and sink the boats

There is an ancient Chinese saying that reads ‘Break the kettles and sink the boats’ and it comes from the Qin Dynasty.

In short, it refers to the battle order of a Chinese General to ford a river and destroys all means of re-crossing, thus committing its soldiers to fight to the end with no option to retreat.

Upon crossing the river, the general issued three days of food to each soldier.

Then the boats were sunk and the cooking kettles were destroyed.

The general told his soldiers “As you can see, there is no room for retreat!”

The only way that we can survive now is to take on the enemy and defeat them.  There is no other way for us to escape.

Set a goal, be committed, don’t think about turning back and be victorious!

They won in the end.

We have endless options and opportunities nowadays and what we often lack is the determination.

I am not talking about being reckless but being laser focused and committed.

Don’t think about turning back until you make it.

Life is amazing and we will find ways to go on with our lives without turning back.

How long does it take?

This post shouldn’t take your more than 2 minutes to read.

I have been developing an email course lately.

It’s a series of emails basically on my property investment journey and it covers pretty much all aspects of buying your first investment property and growing it.

I thought it would be useful to people who are new to property investment.

That’s a cheap plug right there. 🙂

I have the ideas because it was a summary of my own journey. Of course, I would have lots of ideas.

Now the challenge is that how do I write the emails/course so I don’t bore people? and how long should each email be?

I don’t want to write a war and peace. So I thought I would set a limit on the reading time.

Maximum 5 minutes sounds good because my research shows that average reading speed is 200 words per minute for a 12th grader.

So 1000 words is the limit.

We are often faced with this question in general. Is this too long, too short, too heavy, too formal? too this, too that?

This reminds me of an answer I would often hear on a technical conference call back in my days in IT.

“How long will it take to fix this issue?” – asked the manager

Answer from the engineers – “Well, how long is a piece of string? The time required depends on the complexity of the issue and resources required to resolve it. We will try our absolute best, however it takes however long it takes to solve the issue”.

Indeed, it all depends.

While we try to put a structure around it and endeavor to come up with a reasonable estimated timeframe to complete the task, it takes how long it takes eventually.

Whatever you are trying to accomplish in life.. have a vision, develop a strategy and figure out the tasks you need to complete in order to achieve your goals.

That’s all you can do, the rest takes however long it takes.

This post has 352 words and takes you less than 2 minutes to read.

I knew it!

How many times have you said this when someone tells you about an innovating business idea or a thriving business?

I said that quite a lot.

In fact, I said it just early this year when a friend of mine was telling me how he had made money in Bitcoin and I should’ve jumped in earlier. (no pun intended).

I looked into Bitcoin a couple of years and thought it was interesting and could be revolutionary.

I knew it but I didn’t do anything with it.

Knowing is actually quite different from taking actions.

Years ago, I knew Real estate was a slow but steady path to creating wealth, and I took action even though I didn’t know enough.

Looking back, I am glad that I took actions and now I am not saying that I knew it and I should’ve done it.

Knowing doesn’t mean much.

Doing counts.

Do you fit in?

Driving home today, I was listening to Seth Godin’s podcast and he told an interesting story about the U.S airforce in the 1950’s.

Here is the brief version.

In the 1950’s, the U.S airforce had a problem where the pilots were dying because they couldn’t control the planes. 

Lieutenant Gilbert Daniels was tasked to find out the root cause and make necessary changes to prevent the accidents.


What Daniels found was that the seat in the flight deck didn’t fit the pilots anymore. 


The design hadn’t been updated for over 30 years, however, the pilots had become taller and stronger over the years. 


Daniels decided to redefine what an average pilot was like in terms of the size and try to redesign the seat for the average pilot.


He sampled more than 4,000 pilots on 140 dimensions of size, including thumb length, crotch height, and the distance from a pilot’s eye to his ear, and then calculated the average for each of these dimensions.


It turns out no one fits the average. 


instead, Daniels pioneered the idea of the adjustable seat to make the seat accommodate the pilot. 

When it comes to humans, there is no average human being. We are all unique in our own ways.

Have you had the experience of fitting in or sometimes being told you don’t fit in the system?

At work, we are managed (usually not led) to meet the company standards and hit the performance targets.

At school, we were taught to obey the rules and pass the standardized academic tests so that we are all prepared for future employment and most of us end up being average.

As customers, we are also demanded by industrialism to fit in the system so it’s cheaper and more efficient to serve us the customers.

The banks are the same, they want to find the average customers who can perfectly fit in their scientifically calculated models and risk profiles.

Very little thought was put into finding the customized solutions to accommodate the customer’s unique situations and needs because that is not standard and therefore not very economical.

However we ‘average’ customers don’t want to be standardized. We want to be seen, heard and understood.

The U.S airforce pilots needed Lieutenant Gilbert Daniels.

You need someone like Lt. Gilbert Daniels for your finance.


What’s your ONE thing?

Years ago, when I was still an overseas student, I had a lot of priorities on my list.

Finishing my courses, finding a part-time job so I could feed myself and network to improve my language skills and learn the culture.

But I know the ONE thing that I absolutely had to get right was to get my permanent residency because I knew once that’s taken care of, everything else would become easier.

It’s not that other things weren’t important, I just knew that none of those would mean much if I couldn’t stay in this country.

Now I am a father of two young children and trying to juggle between family and work.

Young kids don’t always listen and I figured that the ONE thing I have to get right is their meal time.

Having their meals ready means everything else will fall into place.

I won’t have to rush back from the school to cook, I will have enough time to play with them and read them a book.

We all would like to think that we can multiple tasks and often enjoy the hustle and bustle of our busy lifies.

The reality is that we take on a lot of things and think we can do all of them well, but end up being good at nothing.

How many times you hear people say ‘Geez, I am so busy and I wish there were 25 hours a day’.

Think of your family, your relationship, your work and your business etc.

What is that ONE thing that you can do such that by doing so everything else becomes easier or unnecessary?

Have your end goal in mind and try to reverse engineer to figure out what’s your ONE thing.

Plan B or Audacity?

Which one is better?

Growing up, I have always been told by the older and wiser people that think twice before you do anything and always have a plan B.

Well, I thought I have always had a plan B for most of the adventures I embarked myself on.

Not really.

Below are just a few examples of my ‘recklessness’.

A) I came to Australia in 2003 as an overseas student. The tuition fee was $14,000 a year. (Still a boatload of money now, in my opinion).

What if I failed? What’s the plan B? There was none.

B) I only had $5,000 with me to cover the accommodation, food, and travel etc. for the whole year. I told my parents everything would be fine and that I would figure the money part out when I am here.

The truth has I had no idea what’s going to happen at the time. I had never worked in my life let alone overseas experience.

C) I changed my major halfway through my 2nd year in Uni. Why? I saw no future in what I was studying plus some other reasons.

That meant that I would waste some of the credits I had earned as they were not transferable to the new major, which means more money and time.

D) I earned myself an opportunity to work for IBM after graduation, however, that meant I had to have my permanent residency before I graduate. I found a TAFE course that, at the time, could give me enough ‘migration point’s based on the profession, however, it was a $20,000 course every night for 6 months.

I signed up for the course after thinking about it long and hard (5 minutes).

What was my plan B? again, none.

E) I invested in a multi-units development project on a single income with 2 kids.

Crazy! Risky! people say.

You might be horrified by now, thinking this man was crazy and indeed reckless.

Things turned out to be ok.

A) I successfully completed my Bachelor of Business Information System.

B) Found myself a part-time job selling computer parts within the first week of landing here.

C) Worked for IBM for 2 years under the ACS scholarship. – PAID!  yay!

D) My experiment with that TAFE course failed as Immigration changed their policy just before I finished the course.

E) My units are nearing completion

The most recent reckless act of mine is to quit my full time IT job after 12 years and be my own boss.

You guessed it. No plan B again.

There were other horrifying examples, but I won’t bore you with the details.

Audacity and plan (not plan B) are what you need to live your life fully and sometimes succeed.

It ain't rocket science

I have been looking for a rental for the last 4 weeks and I am a little astounded by the level of competition among the renters.

With the properties I inspected, if the rent was right around the median level, the competition was fierce; people would pre-fill the application and hand it in even before they walked out the property.

By law, you can’t apply for a property without inspecting it first.

On the other hand, the properties with slightly higher asking rent attracted a lot less interest despite their way more superior interior quality and ideal location.

It’s not absolutely necessary for me to move, so I wasn’t really frustrated that I didn’t get any properties.

Looking at it from a property investor’s perspective, what I witnessed over the last 4 weeks validated the theory of always investing in the medium priced residential property in the suburb where your finance allows.

It ain’t rocket science to figure out where to buy.

At the end of the day, it comes down to what YOU could buy instead of what other people think you ought to buy.  It’s not their money after all.

People pay median rent for the median-priced property. Those properties rarely have any issues appealing to the market.

While it’s definitely awesome to buy a spectacular place and live like a king or queen, it might not be a sound investment decision as a property like that often means you are paying a premium for the features that don’t necessarily appeal to the mass market, and therefore making it a less attractive investment option.

It’s an investment. Have your target market in mind when making the decision.




The power of 120 push-ups a day

Today is the 78th day since I started doing 100 pushups daily with the exception of a few days when I skipped as I simply ran out of time for that day.

I wasn’t sure if doing 100 pushups was achievable when I started as I could barely do 30 push-ups at the time.

I was weak, I know. Skinny fat as some people would say.

It wasn’t easy when I started. I would do 5 sets of 20 in the span of a day and I was still struggling.

No time for it? It’s ok. I would do 2 sets of 20 at work in the morning, go on with the day, then finish up the rest late at night when I was home.

It took a long time to finish 100 push-ups, however, it was 100 nonetheless.

My arms would be sore as hell the next day and in the past, that’s when I would give up thinking I need to give my muscle time to recover or whatever excuse I could come up with.

It was different this time around. I carried on and kept going daily.

So this is how I progressed over the last 78 days.

I didn’t plan this when I started, it’s just a natural progression as time went on.

  • 5 sets of 20 in a day
  • 4 sets of 25 in a day
  • 4 sets of 25 in an hour
  • 4 sets of 25 elevated push-ups in a day (Elevated push-ups)
  • 4 sets of 25 elevated push-ups in an hour
  • 4 sets of 30 elevated push-ups in 30 minutes
  • 4 sets of 30 elevated push-ups in 20 minutes

Now I can’t finish my day without doing push-ups. It has become my second nature.

I built strength, improved my posture and most importantly developed a healthy daily habit.

Start small, be consistent and make necessary changes along the way.

You will get there.



TELS 000 – This Is The Elmer Liu Show

Happy 2018!

I am so excited to start the new year by launching this podcast – The Elmer Liu Show, a show devoted to helping you become the wealthiest version of yourself through property.

I don’t want you to be rich. I want you to be wealthy! and not just in materialistic terms.

  • You are RICH when you make a ton of money by trading your time for money, however, the problem is that you might not have the chance to spend the money you make.
  • You are WEALTHY when you have full control of your time and can stop trading your time for money.

Most of us spend 70% of our adult life working full-time for someone else and people often say they wish they had more time with their families or could do things they are passionate about, however they can’t because they have to work to make the ends meet.

My ultimate goal in life is to be wealthy so that I can spend My time on MY terms, be with my loved ones and live life fully.  

In this episode, I will explain why you should subscribe to this show:

  1. Reason #1 – I am running this show as a platform for all of us to be able to build, run and grow a profitable and responsible property portfolio.
  2. Reason #2 You will have access to other successful property investors and hear about their stories.
  3. Reason #3 You could shortcut your research because I will be sharing my own stories about creating wealth in property with transparency.

Price vs Value

It’s a big news that London property price has been falling for the last 8 months. The report says the value has also been falling at the same time. 
Price is how much the buyer is willing to pay for the goods and services
Value is what the property is worth fundamentally regardless of what people might want to pay at the time. 
When it comes to property investment, the value is more relevant and more complicated.
Price is important when you buy, however, the underlying value is what creates wealth for us in the long run. 
The price fluctuates due to people’s perception of the market, overall economic condition and job security etc. 
The underlying value is determined by the fundamentals such as the population growth, infrastructure, and increase in the number of jobs locally etc.  
Focus on the fundamentals and act when the market conditions change to your favor. 
Don’t sit around and procrastinate.
Be prepared, bold and take action.

Why Invest? Why Bother?

When I was a little kid, my parents used to live a very frugal life.

Making the ends meet was never a problem for my parents, however they were very cautious with money and kept telling me how hard it was to make money.

My parents were both public servants and make a reasonably good living.

A close friend of our family tried to convince my parents to invest their spare money in shares or properties, however investing seemed too risky in my parents’ eyes.

‘Why give up the comfort to do something risky? What’s wrong with just saving the money in the bank?’ My dad would always dismiss the idea of investing with those two questions because no one is his circle

were able to give him a convincing answer.

Fast forward to 2017, both my parents and that close friend of theirs have retired, my parents still have the significant savings that they had been building their entire working life, however their close friend would have far more money on his book if he were to sell all his shares and properties.

My parents would also comment on how their savings don’t seem to be worth as much nowadays as they were 30 or even 10 years ago as they saw the expenses of living and property prices skyrocketing.

They haven’t done anything wrong.

They could’ve done it better, however.

Regardless of what my parents were telling me, I started investing as soon as I had my first paycheck.

I started with shares, sold them right before the GFC and then I bought my first house with the profit I made.

I always knew that I wanted to invest and now I will share with you the reasons why it is important to invest.

1) Protect the purchasing power of your money

Let’s say that your weekly grocery shopping budget is $100 in 2016 and you put aside $100 every month as your grocery budget for next year.

Fast forward to 2017, the same monthly grocery budget of $100 would only buy you $97 worth of food, goods and services.

So without investing, your $100 is only worth $97 a year later and has lost some purchasing power.


This is due to inflation, which is the general increase in the prices of goods and services over time.

Now, how do we keep the same purchasing power?

We have to come up with an investment that has the rate of return that equals to the rate of inflation.

The inflation rate in Australia in 2016 was 2.1%.

So the return on the investment needs to be 2.1% just to keep the same purchasing power.

We have to make our $100 in 2016 worth $102.1 in 2017 so we can put the same amount of food on the table to feed our families.

Sure, there are other ways to potentially combat the inflation.

For example, we could get a pay rise, but how many of us will get a yearly increase? and how much of raise would that be?

2) Grow your wealth

Most of us would not be happy with just being able to put the food on the table and pay the bills.

Some of us would like to get ahead of the inflation a little bit so that we could save some money to improve our living standards or retire a bit early.

Let’s say that you have $100 now and you have 3 options:

1) Put the $100 aside and do nothing with it
2) Save the $100 in a savings account that returns 1%
3) Invest the $100 actively and return is 6% a year

Let’s assume the inflation rate for the next 20 years is 1%, that is the prices of goods and services only goes up by 1% every year.

Below is what your purchasing power will look like in the year 2037.

Options 2017 Rate of Return Return in 2037 Inflation Cost of Living in 2037 Net Difference
A) Do Nothing $100 0% $100 1% $122.02 -$22
B) Savings Account $100 1% $122.02 1% $122.02 $0.00
C) Active Investment $100 6% $320.71 1% $122.02 $198.69

A) If you do nothing with the money, it will still be $100 in 2037, however the cost of living will have increased to $122.02.

B) If you put the $100 in a savings account, it will be worth $122.02 in 2037, so we maintain the purchasing power and can still buy the things we bought in 2017.

C) If you actively invest the $100, it will be worth $320.71 in 2037, so we could either spend more money to improve our standard of living OR spend the same amount of money on grocery and save up the difference for a holiday or even early retirement.

Numbers do not lie. Investing is the only way to create wealth.

3) We live our life everyday investing

‘An unexamined life is not worth living’ – As Socrates suggests.

I am not sure about you. I didn’t want to just show up to work, earn my money, retire and live the rest of my life on my superannuation.

That sounds like a plan, however it was never my plan.

I want to explore life as much as possible while I am still relatively young and the only way I could fund an early retirement is by investing the money I make from exchanging my time and talent.

The process of investing itself is a way of examining our lives whether you have noticed it or not.

Our life is about investing, we are all living it.

The definition of invest is to devote (one’s time, effort, or energy) to a particular undertaking with the expectation of a worthwhile result.

You invest time in your family when you spend time with your partner and your kids in exchange for a happy family.
You invest time and talent when you work for someone else in exchange for money.
You invest your time and emotion when you are sitting on the couch watching footy.

We are investing every single day of our life, there is nothing new about it.


See, investment is not a want, it’s a need.

It’s part of the human nature of constantly evolving. The world we are living in changes and evolves every day regardless of what we want to do.

Hopefully, you now have a better understanding of why it is important o invest and we will look at the reasons to invest in property tomorrow.

4 Reasons You Need To Smash Your Personal Debts This Summer

Years ago, I sold my car to raise money to buy my investment property.

My friends thought I was crazy because it was only a 2-year-old sports car and I was getting ‘benefits’ from the novated lease agreement I had with my work at the time.

Most importantly, they didn’t understand why I would give up on my joy to get into another debt.

I had no regret and knew I just did what needed to be done.

Get rid of the bad debt (personal debts) to get the good debt (mortgage) to buy properties to create wealth in future.

A recent research from Reserve Bank Australia shows that the overall personal debt is shrinking at its fastest rate in five years and people are getting more cautious about their level of personal debts partly due

to the increasing pressure on mortgage repayment, utility costs and slow growth in wages.

There are a number of reasons to minimize your personal debt:

It increases your overall borrowing power

Do you have multiple credit cards, however you don’t really use them?

I have had clients telling me that they have multiple credit cards, BUT the balance is zero so they could not understand why it would have any impact on their borrowing capacity when it comes to applying for their mortgages.

Simply put, a credit card is a loan, an unsecured loan against your credit whether or not you use the full limit.

Lenders will always calculate your credit card debt based on the card’s limit, instead of the actual balance regardless how much you use every month.

If you don’t need the credit cards, then reduce the limit, or even better, cancel them.

You will have a much better view of your personal finance

Having multiple personal debts such as credit cards, personal loans, and car loans makes it difficult to keep up with the repayments and the changes that your creditors might apply to your loans.

Over time, you are likely to lose track of the progress in terms of paying off the debt.

You might be forced to take on more personal debts because you can’t really save due to the existing ‘never-ending’ personal debts.

You will pay less for what you need and save more

Usually, you will be able to reduce your repayment significantly if you consolidate your short-term personal debts with your mortgage.

Consolidate your personal debts and take advantage of the low rates of your mortgage.

So you will be paying 5% rather than 10% for your personal debts in some cases.

Now, I am not encouraging you to use your mortgage to indulge yourself, however, it’s way cheaper if you HAVE to use the money.

You will pay less for what you truly need.

You take control of your financial future

Same with a lot of things in our life, one of the critical factors to being successful in anything is having the right mindset first.

By trying to consolidate all your personal debts and keep them to the absolute minimum, you have already shown commitment to better managing your finances.

It will motivate you to have an honest discussion with your family and loved ones and set the right priorities in your life.

It will take you out of your financial slump and position yourself to succeed financially in future.

Bottom Line

It’s time to sit down and have a closer look at what you owe and see if they are structured the best way possible.

You might very well be making 6 figure from your work, however, all the personal debts are like the holes in your bucket and you need to stop the leak.

I have written a post about reducing your personal debts by consolidating them. Head over here to find out more.

Too Much Debt? It's Not That Bad

Every quarter, the Reserve Bank conducts their review of household finance data in which they examine the ratio of Australian household debts and assets to disposable income.

The latest review was recently released and it shows that the household debt to income ratio was at the record high of 193.7% as of Jun 2017.

Unsurprisingly, most of the household debt is related to the housing debt.

Is this alarming?

This number looks alarming as the debt to income ratio shows that your debt could be 197 times more than what you actually earn.

Let’s examine other ratios also published by RBA and put this number in perspective.

Other facts

Other important ratios to consider as of June 2017

A) Household debt to assets ratio was at 20.7% and it has been falling since September 2011. This number means that your debt is 20% of your assets.

This number means that your debt is 20% of the value of your assets.

B) Housing Assets to income ratio was at the record high of 516%. This means your

In summary, both the value of our assets and the value of our liabilities have increased relative to our incomes.

Why has the debt to income ratio been increasing?

According to Philip Lowe, the governor of RBA, the reasons for the ratio to increase again over the past few years are as follows:

1. Lower interest rate
2. Slow growth in household income over the last 5 years
3. Some of our cities have become major global cities, and therefore more demand from overseas investors
4. Stronger population growth

Reasons 1,3 and 4 are strong indicators that the housing market will keep performing well because of the basic law of supply and demand.

Why has the housing price been increasing?

Governor Lowe summarized it for us in his speech.

We chose to borrow more for housing and this pushed up the average price of housing given the constraints on the supply side.

The supply of well-located housing and land in our cities has been constrained by a combination of zoning issues, geography and inadequate transport.

Another related factor was that our population was growing at a reasonable pace.

Adding to the picture, Australians consume more land per dwelling than is possible in many other countries, although this is changing, and many of us have chosen to live in a few large coastal cities.

Increased ability to borrow, more demand and constrained supply meant higher prices.

Is there a bubble?

So we saw marked increases in the ratios of housing prices and debt to household incomes up until the early 2000s.

At the time, there was much discussion as to whether these higher ratios were sustainable.

As things turned out, the higher ratios have been sustained for quite a while.

This largely reflects the choices we have made as a society regarding where and how we live (and how much at least some of us are prepared to spend to do so), urban planning and transport, and the nature of our financial system.

It is these choices that have underpinned the high level of housing prices.

So the changes that we have seen in these ratios are largely structural.


While it’s true that the increased debt puts pressure on all of us to keep up with the monthly repayment due to the slow growth in wages, the fundamentals of the housing market are still sound.

Looking long-term, financially, the key to creating wealth in property is your ability to manage cash flow.


9 Things I Have Learnt From My Property Development

Whether you are just starting out or have been in the game for a while.

You may have heard of other people making a decent profit out of building multiple units. 

I have always wanted to do a project ever since I started researching property investment and finally had a chance to take one on about 2 years ago. 

Here is a quick look at the project.


Apologies for the quality of the video.

I purchased the block about 2 years ago and started building 3 units in June 2017 after going through the lengthy process of getting the planning and building permits from the council.

In this post, I will share 9 things I have learned so far and hopefully, they will be useful to you.

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1. Understand why you want to do a project

Don’t do it because it looks fun, or it potentially generates instant growth. 

Make sure you review your overall property investment plan and understand what your goals are. 

Understand whether doing a project now will put you in a better financial position to continue to grow your portfolio. 

Comparing to the standard buy and hold strategy, starting a project requires a lot of working capital and it could take anywhere from 1 to 3 years to finish if there is a major delay. 

If you are just starting out, it’s better to build your foundation portfolio with a couple of residential properties that are medium priced and located in the metro area.


The reason for that is those type of properties are more likely to withstand any unforeseen changes in the economy. 

Also, you will be able to tap into the growth in those properties fund your development in future. 

For me, I had built my foundation portfolio before I purchased this block, however my borrowing capacity was hitting a bottleneck due to the overall debt I had accumulated over the years.


I had to do something to increase my income so the bank would continue to lend me for future purchases.

So the situation was pretty clear for me. 

I needed to manufacture growth and cash flow by doing a small development.

2. Pick the right structure

By structure, I mean the structure under which you are purchasing the property/site.

You could buy a property under your own name or under a trust name.


Most people will just buy under their names for a normal property, however, with a development, the structure could be different depending on your plan for the project. 

If you are planning to sell, you will be better off setting up a trust and purchasing the site under the trust.


There are a couple of tax benefits to you when you sell your units eventually. 

The downside to that is the trust is a separate entity and all the gains and losses while building and holding the units will be contained in the trust, and therefore you wouldn’t be able to claim negative gearing.


That could be a showstopper for a PAYG person. 

For me, I was still working full time as a PAYG employee at the time, so I needed the negative gearing benefit to offset the holding cost. 

I chose to buy under my personal name, and I was fine with it because my plan is to keep all 3 units as rental properties. 

This is not tax advice, it’s just a reminder for you to consider different options when deciding how to make your purchase.


Because once the transaction takes place, it’s going to be costly to change the structure. 

So this brings us to the next point.

3. Have an exit plan

Hopefully, you have an exit plan.


Just like how you should’ve formed a blueprint before you started investing in property. 

Ask yourself the question – what’s going to happen to my portfolio in 20 years? 

When do you want to stop investing, and what’s your desired outcome?


Are you selling some of your properties? or are you going to work as hard as you could to pay them all off and keep them as rentals? etc. etc. 

Now, with your project, you need to have an exit plan as well. Are you selling them straight away?

Or are you going to keep them for now and sell in 3 – 5 years time? 

Having the end goal in mind allows you to reverse engineer and work out what needs to be done now.


It also allows you to decide how you might want to build the project, whether they are going to be investment grade build or built with a higher level of finish to attract home buyers. 

If you plan to sell, you might want to engage a selling agent to sell your units off the plan.


If you plan to keep the properties as rentals, you could also engage a property manager to start the campaign towards the end of the construction.

4. Do Your Homework

Before you even talk about the price for a site, you need to find out what could be done on this block of land. 

Is it really a ‘gold mine’ or just a ‘lemon’?


The first question you need to ask is “What are the state and local planning policies & overlays that apply to the site?” 

Each local council has its own planning policy and you are only allowed to develop the site as per the policy. 

I started with the Victoria Planning Map website to check the zoning and overlay for my site. 

This website will tell you almost everything you need to do know about the site you are interested in. 

It will tell you the zoning, overlay and/or any restrictions or special requirements the local council might have on the site. 

Those requirements might significantly increase your build cost even though you get the block for a relatively low cost. 

You could then cross check with the local city council website to find out what those requirements mean. 

I will talk about this in details in another post.

5. How much should you pay for a site?


Property investment is essentially a business and should be treated as such. 

Taking on a project is like developing a product/service for your business to sell. 

For a product, you would research the market to figure out what’s selling in the market and for how much. 

Once you know the selling price for your end product, you would then subtract from it the costs such as labour cost, marketing cost, tax, your profit, and buffer etc. etc. 

Finally, you would have the figure you want to pay for the material (site) The same principle applies to buying a site for development. 

Start with your end product in mind, do your homework, figure out what’s selling in your selected area. 

Make sure you use recent and comparable sales data. 

By ‘recent’ and ‘comparable’, I mean:

  1. Recent: within the last three months, and
  2. Comparable: the same type of development, within the immediate vicinity (same street if possible.


You might have to broaden your search.


Just be aware that the further you go for comparable sales data, the less authoritative your data will be. 

If you can not support your figures with hard data, it is an indicator that you may have difficulty obtaining finance. 

Let’s say if you are looking to build 3 double story townhouses on the site, and they are selling for $500,000 each in your area. 

Now, the end value of your finished project will be around $1.5M. 

Let’s say the construction cost is around $700,000 for 3 such units, and the development cost is around $20,000 to get permits etc. 

Now, you do the math, how much would you pay for the land? 

That’s the simplified version, In real life, there is a lot more to consider in terms of cost before you could reach your budget, however you get the idea. 

I have included a cost model and a demo video walking you through it.

6. Site selection


When it comes to choosing the site, the only thing mattered to me is the numbers. 

Don’t be emotionally attached to those blue-ribbon suburban streets. 

Remember you are in this to create capital gain and/or generate cash flow. 

You are not buying your own home. 

You need to consider the hard facts like site orientation, the width of the driveway, how the existing property on the block is built and what’s on the nature strip etc. 

With a fee, a draftsman and a town planner can help you inspect the site, however you could also do some preliminary check yourself. 

I have built a quick site selection checklist.

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7. Approvals can take a long time

There are two approvals required before you can start building. 

You need the Planning permit and the Building permit from your local council. 

The process could be lengthy as it could take up to 12 months to obtain both approvals. 

One tip is to try to reach an agreement with the vendor to submit the planning application prior to the settlement. 

That means you could potentially get your planning permit as soon as the site is settled! 

I could’ve negotiated with the vendor, however, I didn’t and application process didn’t start until 2 months after the settlement. 

Lesson learnt for me.

8. Explore your finance options

There are a number of ways to fund a development depending on your circumstances. 

One thing I would like to point out, without being technical, is that make sure you talk to a qualified mortgage broker about your options. 

I applied for the construction loan from the same bank that funded my purchase of the block.


The result was less than ideal. 

I would’ve had to fund 50% of the development cost had I gone through them.


I took the same application to another lender and the result was much better. 

Different lenders value the development differently and look at your income sources with different views as well. 

Don’t be discouraged if you are knocked by one bank and think it’s the end of the world. 

Because you always have options.

9. Things can go wrong. Have some buffer

Like any projects, there are always variations. 

My development is no exception. 

Just when I thought I had done enough planning and covered all possible scenarios, I was still hit by unexpected delays. 

Once the construction began, I was told the soil was too moist, so the builder had to pour more concrete in to make sure the foundation is solid.

That was $10,000 unexpected. Ouch! 

Lucky they didn’t hit any rocks on the site, otherwise, I could be in a world of pain.


Make sure you have some buffer set aside for unexpected situations like this.


It’s an exciting and rewarding process to take on a development project.


Do your homework and treat it like a project that has a scope, implementation plan, back-out plan, deliverables and an exit plan. 

Understand your why. Why you want to do a project, and why now.


Make sure you review your exit plan and make the purchase under the appropriate structure to maximise your gain. 

Due diligence and feasibility analysis are two critical steps you can’t afford to miss.


Most importantly, treat your project as a business. Move on if the numbers do not stack up.

September Market Update

I recently attended a property and finance conference and had some very interesting discussions on the topics of where the market in Sydney and Melbourne heading, and what could potentially happen to the interest rate.

I will share my thoughts with you on those topics in details later on, but for now, I want to quickly share with you an interesting report presented by the analyst from CoreLogic.

There is a ton of information in it. Download the report here 

Enjoy! Speak soon.

5 Steps To Investing In Property Using Your Superannuation

Your superannuation is one of the most important, not to mention tax efficient, ways to save for life after your retirement. Unfortunately, almost half of Australians aged between 45 and 64 do not feel confident

they have adequate funds to do what they want in retirement. Having the right plans in place to manage and grow your super can make a significant difference to your retirement goals. For some, this includes managing their own super independently through a self-managed superannuation fund (SMSF).

An SMSF is your own personal super fund that gives you control to make the important decisions around how your super is invested. Managing your own super through an SMSF can be extremely rewarding, but they aren’t for everyone because they require your close attention and dedication. In this article, I will take you through the 5 steps of investing in property with your super.


First thing first, let’s address the elephant in the room, what is super borrowing? Simply put, it is a loan to your SMSF (Self-Managed Superannuation Fund) trustee to purchase an investment asset. By law, the trustee of a regulated superannuation fund, which includes SMSFs, can not borrow money. However, it does allow an SMSF trustee to borrow money to acquire certain kinds of assets, including residential investment property, provided that certain conditions are met.

One of these conditions is that any rights of the lender or other person against the SMSF trustee is limited to the asset acquired with the borrowed money. This is what is often referred to as a ‘limited recourse’ loan.

A Superannuation loan is a loan to your SMSF trustee for the purpose of financing or refinancing the acquisition of a residential investment property.

Let’s use the simple scenario below to illustrate the general process of super lending

James, 51 is an IT account manager, and his wife Grace, 49 a doctor, together have been contributing to standard industry superannuation funds for many years. They sought professional advice, and took all the necessary steps to set up their own SMSF called The Jamesgrace Super Fund – in doing so, they also choose to have a corporate trustee for their SMSF (Jamesgrace Pty Ltd) of which they will be the directors.

Step 1. Legal

James and Grace have set up a SMSF and chosen to have a corporate trustee for their SMSF (Jamesgrace design Pty Ltd) of which both of them will be the directors. They also set up a security holding trust, to which the vendor will transfer the legal title. The holding trust will become the legal owner of the property, while the SMSF is the beneficial owner and receives the rental income.

During the term of the loan, the legal title to the property is held by the trustee of their security trust – as required by superannuation law, while loan repayments are made by the SMSF itself.

Step 2. Understand if the numbers stack up

When considering whether to borrow against super to invest, it’s important to determine if the net investment returns are likely to exceed the after tax cost of borrowing. James and Grace have done their due diligence by gathering the available data about the property being considered for purchase, the loan and associated structuring costs (including the costs related to the SMSF arrangements).

James and Grace decided that they want to include residential property in their SMSF’s investment mix. So they sought legal advice regarding borrowings for their SMSF. They have $300,000 in cash in their SMSF and have found an investment property worth $500,000 which they would like to purchase.

As the directors of Jamesgrace Pty Ltd (the corporate trustee for their SMSF), James and Grace arrange to buy the property and use $175,000 in cash to make an initial payment for the property. The shortfall of $325,000 plus $25,000 in stamp duty and acquisition costs is funded by a ‘limited recourse’ loan, using the property as security.

Step 3. Apply for the loan

James and Grace arrange for a loan to be provided to their fund in order to cover this shortfall. The SMSF will initially qualify for the loan as the SMSF:
Meets the pre-purchase minimum net asset position of $200,000
Passes the liquidity test of at least 10% of total assets, after settlement. The SMSF will still have $125,000 remaining as liquid assets after the purchase has been completed.
Both James and Grace are also required to provide the lender with personal guarantees for this loan.

Step 4. Repay the loan

Income from the rent, other SMSF investments and James’ and Grace’s super contributions can all be used to repay the loan. In addition, James and Grace choose a variable interest rate loan option and link a 100% offset account to it. This means that every dollar their SMSF holds in the Offset Deposit Account effectively reduces the amount of interest the fund will pay on the loan.

Step 5. Paying off the debt

The super borrowing arrangement will end once the loan is paid off, and the title of the security will be transferred from the security holding trust to the SMSF.


Above are the very high level steps that you will need to go through to invest in property using your super, and this is only the tip of the iceberg as there are other tips and things you also need to consider to maximize your super borrowing. If you like this article, please visit my blog for more articles on creating wealth via property.

Residential Property Development – Feasibility Analysis

Now that you have completed the Due Diligence and selected the potential site for development.

At this point, you have pertinent information uncovered in the due diligence stage that provides significant information about your development: legal, planning and existing conditions.

What we need to do next is to quantify your profit to assess the feasibility of your intended project by using recent, comparable sales data. By this we mean:

  • Recent: within the last three months, and
  • Comparable: the same type of development, within the immediate vicinity (same street if possible)

You may have to broaden the scope of your data. Just be aware that the further you go for comparable sales data, the less authoritative your data will be.

No matter how optimistic you may be about your project, you must think like a valuer. You need to substantiate and source all figures, and be conservative.


Residential Property Development – Due Diligence

You might recall that I mentioned in my previous blog that there are generally two types of property investors:

  1. Passive Property Investor
  2. Active Property Investor

If you are a passive property investor like 80% of the investors, then you will probably follow the more conservative approach of buying and holding properties and waiting for the value of your properties to increase over time.

The buy and hold approach is a proven way of creating wealth long term and there is nothing wrong with it, however if you are in the 20% of the property investment population, you might want to take the matter into your own hands and manufacture the growth yourself.

Small residential property development is one way of expediting the wealth creation process and by small, I mean building four or less dwellings on one title because anything above four is treated as commercial development, which is an entirely different topic.


The Pursuit of The Best Rate

Most of us would have bought a car by now and what did you look for when buying a car? You might have gone through the process below:

  1. Decide what you are going to use the car for? family car? sports car? car for daily commute to and from work etc.?
  2. Determine your budget
  3. What are the desirable features you want from the car?
  4. What about the ownership cost? servicing cost? resale value?
  5. Is it reliable?


4 x B's to Building Wealth

Maybe you have been thinking about retirement and wondering how you are going to survive after retirement ? or maybe you have been actively planning for your retirement but not 100% sure what to do. The below 4 high level steps to creating wealth via property investment are what I believe would work for most of us.

Contrary to common belief, property investment isn’t so much about the brick and mortar, instead it’s more about have the appropriately structured finance to keep you going.  Don’t forget I can help you organize appropriate finance, which is critical to the success of your wealth creation journey.