Your Property Success | Ep 09: How To Find The Ripple Effect For Under $100 with Medine Simmons
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Ep 09: How To Find The Ripple Effect For Under $100 with Medine Simmons

What if you could pin point the next up and coming suburbs using nothing more than a wall map and some coloured dots….Sounds pretty good doesn’t it?

Today’s very special guest has developed a technique, which costs under $100, and you can do it at home yourself and best of all it’s designed to uncover the next up and coming suburbs set to grow!

And it’s called The Dot Map Technique

And today’s guest Medine Simmons is going to be showing all of us how to make one!

SHOW NOTES

  • How Medine got started in property investing [6:26]
  • Tips and tricks Medine used to locate her first property [9:50]
  • How Medine got to developing the Dotmap methodology [15:00]
  • How to drill down into a suburb and why growth patterns matter [16:58]
  • Lessons learned and mistakes to avoid while renovating your first proeprty [20:30]
  • How to get a good valuation on your property [21:35]
  • The biggest hurdle to avoid when in comes to property investing [25:09]
  • How doing your own research can help you overcome challenges in your property investing journey [28:15]
  • Why it’s important to stick to time tested methods of property investing and avoid all the marketing hype [33:25]
  • Why you need to write down your strategy and have a checklist [40:30]
  • Things and factors you should avoid in a suburb [42:45]
  • A step by step guide on how to do the Dotmap [46:52]
  • Why you need to look at the growth patterns in a suburb [50:25]
  • The Ripple Effect [58:13]
  • The Suburb Elimination process [1:02:50]
Time can heal the wounds but if you chose an area with low capital growth, that time can be a long time.
– Jane Slack-Smith
The good thing about property is that you can make little mistakes and as long as you’ve done all your finances properly, and you’re in a position to hold the property, it’s a forgiving thing.
– Medine Simmons
I wanted to work out where there was potential before I started drilling down into a suburb and really getting to know the suburb.
– Medine Simmons

RESOURCES AND LINKS

ALSO MENTIONED

 

TRANSCRIPT

Your Property Success Podcast Transcript

Episode 09: How To Find The Ripple Effect For Under $100 with Medine Simmons

John Blackman: Did you know with just two investment properties and one single renovation that you could put over a million dollars in the bank? It’s true and why stop there? Welcome to Your Property Success Podcast, the show that explores the practical steps to making your property investment dreams a reality.

And now here’s your host, a lady who once bought a dress in Town Hall Station rather than confess the fact that she was lost, Jane Slack-Smith.

Jane Slack-Smith: Oh my gosh. I’ve told you too many stories over the years. I don’t know where you guys are pulling these out of from. It’s true though. I don’t like people to know when I get lost and I had covered and you can always do with another dress.

John Hubbard: Yes. Well, now we have Google Maps so we don’t have to worry about that.

Jane: Yeah. No more dress shopping for me, thanks to Google Maps.

John: Yup.

Jane: A big welcome to you and Your Property Success Podcast Episode 9 and thank you for joining us today. We have a great podcast coming up and a fabulous guest, very very excited here. Now, imagine for a moment that you could pinpoint the next up and coming suburbs without the use of costly software, no fancy algorithms, or expensive subscriptions, instead, using more than a wall map and some coloured dots. Interested? It’s pretty good isn’t it? Well, today’s very special guest has developed this technique which costs under $100 and you can do it at home yourself and best of all is designed to uncover the ripple effect, the next up and coming suburbs set to grow and it’s called the –

John: Dotmap.

Jane: The Dotmap Technique. And today’s guest, Medine Simmons is going to be showing all of us how to make one.

John: Yes. The dotmap rocks. I love the dotmap [crosstalk]

Jane: [crosstalk]

John: But yeah, it’s dead easy to do, under a hundred bucks as you said and we often hear stories about people buying the wrong areas and buying the wrong property perhaps because they jump straight in or they take a tip from a friend –

Jane: — or a taxi driver.

John: So, you have a taxi driver one.

Jane: And the thing is those people who get burnt don’t try again. It’s like, “Look, I gave it a go and I don’t realise that if you build the solid foundations before making that purchase, then you’re setting yourself up for a successful purchase.” And for someone looking for the right suburb to invest in, what you’ll learn today will make a huge difference to how to approach this. So, let me tell me you about Medine. Medine Simmons is a very successful property investor, mortgage broker, educator, public speaker. However, it certainly didn’t start all that way. At 27, Medine was working 10+ hour days. She was in a corporate job. She was wrecking up huge credit card debts having a lot of fun but something forced her to change and amazingly from knowing at all from property, she was able to build a substantial property portfolio and developed the dotmap technique for tracking the ripple effect. And you know, she is a great friend of mine and a very savvy property investor who we can learn a lot from and apart from teaching us the dotmap technique, she will also be talking to us about the mistakes you should avoid when just starting out. She has promised us some insider tips on how to get a good valuaton for your property so you can extract more borrowing capacity for the next property, why it’s critical to do an trust your own reset, plus she’s going to share with us some practical tips on how to zero in on the right property and of course, a step-by-step guide on creating your very own dotmap for uncovering the ripple effect. So, don’t go anywhere. We have a huge show for you coming up with today’s fantastic guest, Madine Simmons.

 

Jane: Hello Medine and welcome.

Medine Simmons: Thank you Jane.

Jane: Now, I’d like to go over your personal journey today on your journey to property success in detail for the people who are listening because I know that I’ve listened to you speak about it a number of times and it always motivates me. And for those people who don’t know Medine, who are you Medine Simmons?

Medine: Okay. So, in my 20s, I was rat racer. I went off to work for 10 hours a day in the city and I earned some money and like all good little rat racer, I spent more than I earned and I wrecked up good credit card bills. I was really good at it and my salary went up and my expenses went up, and every year, my dad would slip me a little check around the time of grand old days when he wasn’t really focused on anything else. He would slip me a little check for help me with my credit card and that was my financial plan. That was really good.

Jane: So, dad was your financial plan eh?

Medine: Yeah.

Jane: I can relate to this story. Not dad being the financial plan but spending more than I earned.

Medine: That’s right, that’s right. Good little rep raisers.

Jane: So, how did it change?

Medine: Well, when I was 27 years old, unfortunately, my dad had a massive aneurysm and got brain damaged, so unfortunately, that little financial plan sadly came to an end and I realised at that point that I needed to do something for myself. So, that was when I started to look around and try and work out what other people were doing right and who could help teach me how to become financially stable because I realised dad got sick quite young. He was only 54 and luckily for him and for mum, he was in a good financial position and I saw what a big difference that made and I wanted to make sure then the grand old day age of 27 I decided that I needed to be in a better financial position. I couldn’t rely on anyone else to pay my credit card bill every year.

Jane: And did your parents accumulate the wealth or did they’ve given it –

Medine: They actually accumulated it through a business. So, when I looked to them to learn from them, I wasn’t really in a position to do that. I was working in corporate life and that wasn’t – I did own my business or have one on the side, and so, I started to look around to try and work out what other things I could. And then my mum is an Italian migrant and like most migrants to this country in the 1950s, they’re really interested in property. She was really interested in property. She hasn’t done anything but she was really interested in property and I looked at that group of people and just thought “how hard could it be?” These people come to the country, they can’t even speak English. Their education isn’t recognized here. They have families and they still manage to be well-known, infamous property investors making really good financial situations for themselves out of property investing. So, I started to look into it because I figured if they can’t do it, not that I don’t think that migrants are – not to make it – but with me with English and with education, I should be able to do this. It can’t be that hard, so I started to look around and that’s when I found some books and so on and I started reading and I started researching.

Jane: You and I, we met over 10 years ago, and my journey was so similar to you and I think that’s why we became really good friends. At 28, I kind of sat down with Rich Dad, Poor Dad and went “Oh, my gosh! Do I have a financial plan am I being mature with my financial future?” And when we started chatting, we had both kind of, I don’t know, if it’s stumbled upon but same property as a way of accumulating wealth and seeing how other people had accumulated wealth. So, for us, it was a real meeting of minds wasn’t it?

Medine: Well, that’s right. And 15 years ago –, there can be a little bit of sensationalism now in the media about property and 15 years ago there wasn’t so much. It was a little bit more low key which is actually what attracted me to property and I think it’s hard for people now when they think, oh, they’re going to get into property and it’s going to be glamorous and it’s just not. It’s much realistic to look at property as a steady, stable, quite boring really investment.

Jane: It’s kind of like that whole Warren Buffett you know. If it’s exciting, if your investing is exciting, you’re doing it wrong, right? It’s hard work. Get it right the first time and replicate. So, tell me, can you characterise, look over the last 10-15 years of your investing journey and just sum up your kind of property investing philosophy. Will you say what your strategy was and how you’ve been able to accumulate wealth and go onto to teach other people how to do it? What’s been your strategy?

Medine: So, I actually researched for a good 18 months reading books and so on talking to people and I – the very first property that I bought encapsulated my investing philosophy. What I did was I found an area, a suburb that had very good growth pattern. It had been overlooked a little bit. The prices weren’t going crazy and the other key thing was that properties in that area were, if they’ve been done up, they were selling for more than properties that weren’t done up. So, there was an opportunity to make money through renovation.

Jane: Which is a nice simple kind of summary of what we talked today is pricing disparity between renovated and non-renovated which is the done-ups selling for more than the non-done-ups.

Medine: Yes. And it’s certainly true in every suburb.

Jane: Yes.

Medine: Sometimes the not done-ups sell for more because people get inspired. So, I found a little suburb in Melbourne called Abbotsford. It’s about 5 km east of the city and I started looking around and I found an out of area agent. That’s another good little tip for people that often out of area agents don’t have their finger on the pulse as much when they’re selling a house and there could be an opportunity to get a little bargain and I bought this little terrace in Abbotsford and it was $225,000 which is hilarious now that’s 2-up 2-down terrace in Abbotsford and now they’re – if you get them for under a million dollars, you’re lucky. But it was $225,000 and I was like “Oh, yay! And I’m going to do a renovation. It’ll be fantastic.” And it had students living in there and when I looked through, I thought, “Oh, these groovy students, they’re sleeping in the middle of the room.” The bed was in the middle of the room. It wasn’t against the wall and when I got the builder through after I bought the property and told me about what needed to be done, he pointed out that the hard plaster, you know, those old-fashioned Victorian hard plaster in that bedroom that was actually coming away from the walls, so that student was sleeping in fear of his life thinking that the hard plaster is going to come down on his bedroom in the night, nothing to do with being groovy at all.

Jane: Is the key there – the comment Medine that you had the builder in after you bought the property?

Medine: Oh, yeah, you know.

Jane: Some of these things we learn along the way.

Medine: We learn these things along the way and also probably back then I wouldn’t have been so brasen. One of the things I love is to get a builder through first to give me an opinion. Those things you learn and you get more confident as you go on but the good thing about property is that you can make little mistakes and as long as you’ve done all of your finances properly and you’re in a position to hold the property, it’s a forgiving thing. Property is forgiving thing.

Jane: Because time in the market kind of heals the wounds.

Medine: That’s right. The market heals the wounds and time heals the wounds too. So, instead of it being a one month quick paint and carpet, I managed to do a few repairs obviously in this house and it became a two-month journey, but two months healed the problem. It worked out to be only, from memory, $1800 or $1500 problem. It wasn’t huge but it certainly needed to be addressed and it took time and an expert and blah-blah-blah.

Jane: So, if we – what I’m really interested in is that, and obviously, we’re going to get – later on, we’re going to talk about your strategies on how you locate properties now and do the suburb research because I think the methodology that you have developed and I have swiped and promote greatly as your content and teach it all over Australia is so compelling and exciting and such a great strategy. But when you first started with that first property in Abbotsford, you kind of said, there was some capital growth and the prices weren’t going ballistic, how did you actually target Abbotsford? How did you look at all the suburbs? I gather that you we’re looking in Melbourne and go, “Hey! Ta-da!”

Medine: Those early days before I even started property investing, that’s when I developed dotmaps because there is data available from researchers for 10-year growth and it’s available in a list of all of the different growth of the different suburbs and so I looked at this list –

Jane: And you used that all the way back then?

Medine: Sorry, what was that again?

Jane: You used that all the way back then with your first property. You knew that –

Medine: And would you believe it that in those first few years I threw them out.

Jane: Oh, really. What a great

Medine: Goodness. I didn’t realise what I had. Anyway

Jane: Well, you know, people send me theirs now when they’ve finished with them, so I’ve got a lot of dotmaps I’m going to start collecting. In actual fact, I got a card today from someone who has made cards out of the dotmaps.

Medine: So, cute.

Jane: I know. They’re becoming famous all over Australia. So, look, I want to get into the dotmaps with you and again I know you’re going to share this amazing and simple tool and it’s nice to know that you started with that as your methodology in your other research way back when you bought your first property and I think that the reason I love this is the technique, is that anyone can do it. It takes a bit of time, a bit of dedication, and then probably a bottle of wine sometimes to read between the dots but it gives you this great kind of short list of suburbs that you’re looking at and gives you the information that you need. So, as well as you kind of referred to this 10-year past growth, are the other tools in your toolbox that you use as well when you’re assessing a suburb?

Medine: Yes. So, I look at the 10-year growth and on the dotmap look at the growth patterns that the dotmap shows to me, so that forms the basis and then I drill down into a suburb that I’m interested in and that’s when I start to do the really intense work into what is the standard property in the area? What is the median price? Are properties available at median price or below? Because when you’re using the dotmap information, you’re relying on the median growth rate, so if the suburb’s gone crazy and all of the properties are selling above that anyway, it’s not a great suburb for me. And then, as we discussed before, opportunity for immediate capital benefit in that opportunity for immediately being able to do a little renovation or a little start up – am I allowed to say that in an interview?

Jane: I think you are, yeah.

Medine: Spit and polish, paint and carpet, and so on and increase the value of the property and also looking at the demographics of the area, the amenities in the area and so on, would I like to live there? But that takes a lot of time and effort. Each one of those suburbs, when you look into all of those things and feel comfortable that yes this is going to be a good growth area. This is going to be a good rental area that’s going to be easy to get renters because there’s nothing worse of course than paying a mortgage when you don’t have rent coming in and then I’m going to be able to get an immediate capital increase in this area. it’s a lot of work to work all those things out. I can say them in a minute here but actually doing that work takes a lot of time, so then I’m coming back to only wanting to do it in suburbs that have potential otherwise I’m wasting my time and that’s how the dotmap came into play. I wanted to work out where there was potential before I started really drilling down into a suburb and really getting to know a suburb.

Jane: And I think what you’ve just said is so important because there are so many people probably listening who’ve gone, “Yeah, you know what, I’ve read that in the magazines. I’ve heard it all before. I’ve have to look at a suburb that’s going up in value, maybe something with a bit of reno potential, maybe something that can rent, maybe something that’s got the demographics too. And as you said in a minute you can say all of that but the reality is that you’ve actually done it and built a multimillion dollar property portfolio. And for “I’ve heard it all before” kind of people, the really interesting thing about your journeying in property and as you started sharing with us your first property, is that you’ve subsequently been able to build a substantial portfolio, and now what, settling tomorrow in your dream home because of what you’ve been able to do. So, if we can go back to that first property that you did, you bought the property, then did you do the spit and polish and did it work for you?

Medine: I ended up spending – I had budgeted $25,000 and I ended up spending $30,000 because of this problem with the plaster. So, I blew the budget and I did paint, carpet, new blinds. It looked cute in the end and I got the furniture in to style the property which now is very normal but 15 years ago was unusual and it looked lovely and that’s when I got the valuer in because my strategy then was I going to have the property revalued. I was going to be able to draw down equity in the property and then do it again. Use that equity to buy another property which I think is your strategy that you call the –

Jane: The Trident Strategy.

Medine: Sorry?

Jane: The Trident Strategy.

Medine: The Trident Strategy, yes, thank you. So, I got the valuer in and he said, “Oh, how much did you pay for it? This is a great place?” And so, I told him $225,000 and he said, “How much did you spend on the reno?” And I said, “Oh, $30,000.” And so, he went away and he was young guy and just devastating.

Jane: I can see this coming. I can see what’s coming here.

Medine: The valuating came back of course for $255,000. For 225 I spent plus the 30 that I’ve spent on the reno, $225,000. I was devastated. I was 28 at that time and first property, even too shy to get a builder through beforehand. It’s pretty – it was devastating and I somehow, I don’t know where this happens for property investors. It is a journey for finding your strength I think. I was brave enough to get a second valuer through and each valuation, I remember, I was paying for in those days, the banks didn’t pay for them and it was $600, so I ended up another $600 after spending 30 already and being told that my property wasn’t any more than I’ve spent on it and I got a second valuer through. This time, I quietly stood in the corner. I didn’t speak to him. He must have thought I was quite rude and he had a proper look around the property which was great and then the next day the second valuation came back in for $320,000.

Jane: Ta-da!

Medine: And that’s unusual even today. Recently, I worked with someone. We had one valuation of $340,000 and then the same week another valuer for $400,000 at the same property.

Jane: It is interesting isn’t it? Thank you for sharing that because I think a lot of people, it’s easy to say, “I have a very large portfolio and I got it all right” but the reality is, most makes mistakes and learn from them and then apply them. I think the magic formula that you shared with us then is that the valuer plus a renovation does not equal new equity. You have to be able to create that formula yourself and it’s through manipulation of how you do the renovation that it’s fit for market and then you actually communicate that correctly to the valuer.

Medine: Well, that’s right. And since then, I developed a whole strategy – maybe I didn’t develop it, maybe you did and I followed it, I can’t remember. But—

Jane: We’ll call it ours.

Medine: Around getting a valuation – not influencing the valuer but helping the valuer to best value your property giving them information and so on that supports you.

Jane: So, if you think back to, obviously fantastic result on buying $225,000 doing a $30,000 renovation, having it revalued at $320,000 so you’ve created the equity and you knew that your strategy back then was that you’re going to use that equity to purchase subsequent properties, what things did you struggle with the most? What was the kind of trial and error of things you went through when you were beginning to build that portfolio?

Medine: The biggest trial absolutely is making that first leap of faith and believing in yourself and believing that all the education and research you’ve done has lead you to the right property and having the faith to say, “Yes, I’m buying this property, sign on the dotted line. Here’s this enormous big deposit, more money than I’ve ever spent on anything ever, and it’s not my family home and it’s not the new car that we desperately need. It’s a completely unknown area to me and I have to trust myself that this is the right thing to do” and that is absolutely hardest thing to do. As I was saying before, property is a forgiving thing. Time in the market heal the wounds but the biggest wound is that you never buy and you never invest and nothing that can heal that wound. I say it myself, how many times have you heard someone say, “Oh, I wish I bought back then.”

Jane: Absolutely. Look, in the money magazine that I was reading just this month, they had an incredible little graph that showed back in 1970, the median price for houses in Sydney was less than $20,000 and if they applied 5.5% return year on year, those houses wouldn’t be worth more than $250,000. We know the median house price in Sydney is well over $800,000. So, time in the market heals the wounds. However, in some suburbs, if you’ve chosen the wrong market and the capital growth is less than in areas that are going up, that time could be a long time to heal the wounds. And I know, I was reading just recently one property expert, she shared that she bought an off-the-plan property 16 years ago in Cairns that is now worth $11,000 more than it was then. Sometimes it’s easy to say time can heal the wounds if you make mistake in property but it’s how long would you want to wait? By targeting those suburbs that are right for growth, then you don’t have to wait that long.

Medine: Yes. That is a super wound for $11,000 increase. Yes, absolutely.

Jane: I know. I was surprised that such a prominent expert was willing to share that, so good on her. Now, I did want to pick up on, I guess, the thing that you said there that you got the valuation back and it wasn’t the $255,000. What was it that gave you the “hang on a moment?” this is not right. This should work better than this. Were you seeing other properties that had had the tart-up that were selling for more? Where was it that you went “Hey, this isn’t right?”

Medine: Exactly. So, that was it. It was trusing my own research which is pretty brave considering the valuers are supposed to be the experts in the market and here I was little 28-year-old first property investment thinking that my research was better than his. But I’ve used the dotmap, I’ve drilled down from – at that time, Abbotsford was surrounded by areas that were increasing in value quickly, Clifton Hill, Richmond, and it was in a little ___ [00:28:48] there that what wasn’t – hadn’t had those big jumps and I had drilled down into the suburb and found out they had a good capital growth pattern, nothing fantastic, and that they did have this renovation potential in people who are paying less for non-renovated property and more for a renovated property and they weren’t in those days glamorous renovations that you might have seen in some suburbs. They were just normal renovations and people were paying more, so I’ve done all that work for 18 months before I decided to take the leap of faith and that’s where my belief in my research came from. And so, that’s really important to educate yourself and do your own research and use all these tools that are available to you because people are going to __ [00:29:55] come into my property investing with the thought of challenging me but the result challenged me and you come across banks that challenge you and real estate agents that challenge you and tenants that challenge you and all sorts of people and you have to have a really solid base and knowledge to get through those trials.

Jane: I mean, it’s a really good point because you and I both know that there’s not many people who go onto buy second investment property and whatever reason it is for the millions that have investment properties, there is only what, 14,000 that have more than six. So, we know that potentially that initial disappointment that people go through of the valuer said no or the bank said no or I didn’t get the money I wanted or I can’t rent it out, this didn’t work for me at all or gosh, I didn’t realise I overpaid when the builder came in afterwards, he said that you got a lemon. All of those things I think stop people and the belief that you had in the numbers. The numbers don’t lie and you weren’t just depending on the capital growth of the past through the dotmaps. You had then targeted all those other things that you talked about – what the renters wanted, the demographic, what the growth was in the suburbs around it, the median capital growth and the selling price – that research, when you have all of those things come together in your toolbox of knowledge and research, it gives you the confidence to say, “Hey, this is not right. Maybe I have to go to different bank or different valuer or whatever but I know this should add up.”

Medine: That’s exactly right.

Jane: So, you then did it again I gather. Tell us, I gather this is a system now that starts really developing. You validated your research, so it happened again?

Medine: Yes. It happened again. So, that’s was where my idea of one property a year happened because when you’re working full time and you’ve got social commitments and family commitments and so on, it takes a lot of time to do this and another good reason to zero down into specific suburbs before spending all the time to research them because that time is short and that’s when my concept of one property a year came from but this takes up a lot of time and this takes a lot of effort but I’m sure I can manage one of these per year. So, that’s what I did for the next eight years and I properties then and just continually doing up one every year for nearly 10 years.

Jane: So, the one property a year which you now teach people how to do as well but you discovered the system, you’ve kind of perfected it. Can you tell me now what has it evolved into? So, how do you use it today? How are you teaching people, this is the process, if I was going to say, what are the three things that you would say? Okay, this is where you start and this is what you have to do.

Medine: This makes me sound so boring, but I just teach people everything we’ve just been discussing. I have not changed my thoughts on what is reliable, safe, successful, proven property investing in 15 years and that’s so boring. I’m not hip happening doing all these crazy property investing strategies at all. I just teach people exactly what we’ve been talking about. Find a good suburb, use your dotmaps, get a vision of it, drill down into the suburb, do all the research, build your confidence, and then do the Trident Strategy.

Jane: Well, it’s funny, I had someone approached me yesterday who has been very very successful in developing and shared some of his development stories with me and he said “Hey, I’ve got this amazing development. Do you want in on this? There’s money to be made in a short of period of time.” And I went back to him and said, “You know what, it’s not my strategy and I have to do a whole lot of research before I start it” and he came back and went, “That’s what I like about you Jane. When you get it right you stick to it.” And I was like, it can be boring but it’s around perfecting that technique and making it boring. Maybe that’s our goal, making investing for the people who are first starting and having that kind of trepidation and worry and fear is getting to the point of the confidence with the numbers and the research that the ultimate goal is your investing is boring because you get it right and you get it right and you get it right.

Medine: That’s right. And also sticking to boring helps you avoid some of the glamour of property investing often leads people into – can sometimes lead people into making purchases like off-the-plan in Cairns that had $11,000 growth in 10 years or whatever it was. When we drill down into what that is, she’s been getting money from the tenants but that’s not enough to cover the mortgage, so she has been putting in every month for 10 years to hold this property and have $11,000 growth, nobody wants that. And so, sticking to the very boring, I wouldn’t be able to invest in that property because it’s not my strategy and – but teach people to be boring because with the hype in the media at the moment around property, it seems like it might be really glamorous but it’s just not. It’s boring.

Jane: We’re going to have to come up with a whole new word for not saying boring otherwise people are just going to fall asleep listening to this. We’re just going say a sustained property investing strategy, okay?

Medine: When you look at the figures though, it’s not boring.

Jane: Your net worth goes up every year if you get it right. This is good. This is exciting.

Medine: It is property that is worth 14 years ago and bought it for $225,000 and now you don’t get much change out of a million dollars, now that’s pretty exciting.

Jane: Exactly. We’re going to be excited. Well, you’re teaching people this stuff and they’re achieving results using this approach, I guess the thing is, tell us about some of the research that you’re seeing people doing in getting the system right and following the methodology of meat and potato investing. What are you saying? Is it worth for you?

Medine: I’m very proud of one of my students who are now our little one year property club worked really well. They joined one month and within three months they have bought their first little investment property, so that was exciting and then last month they were on the cover of Australian Property Investor, so they’re my star students. So, they bought exactly that, they bought a little boring house in Coburg and they did a little renovation which really a paint and carpet, spit and polish and they made $68,000 in 16 days. So, from the time that they bought it, they did the renovation, they got it revalued that’s $68,000.

Jane: So, this success by just following the methodology, they got it right. So, for those people who are thinking about doing this and we’re going to get in to how to do the dotmap in a lot of detail soon but for those thinking about doing this, what are the kind of problems that they may want to avoid or what are some of the things that they could be hearing out there that are harmful to finding out how to invest in a right location?

Medine: Ah, gosh. Where do you start? I think it’s ignoring the marketing is the big thing. There’s a lot of marketing at the moment going on around larger developments in particular suburbs, both in Melbourne and Sydney and actually Brisbane as well I think is starting now to build hype around those suburbs and to my mind, those properties are proven and those suburbs may or not be good suburbs with solid historical growth and good research around those suburbs but you really need to do the research rather than just listening to the marketing hype around those peak development suburbs.

Jane: And how much does that depend on having strategy established first of all and knowing what you’re trying to achieve?

Medine: If you have a strategy in place, then you wouldn’t be able to buy-in one of those

Jane: You wouldn’t be tempted.

Medine: You wouldn’t be able to buy of those properties in one of those suburbs. Your strategy wouldn’t allow you to do it. You wouldn’t be able to tick off your list of this is what I need before I buy it.

Jane: So, your strategy obviously was find a little unloved property, add some value through renovating in a good growth area, perfect trident strategy, and access the equity to do it and do it again. So, having that strategy really clear in your mind, you’re not looking at a brand new off-the-plan, you’re not looking at an area where there are house and land packages where there is no past growth information that you can use to try to estimate future growth.

Medine: That’s right. And I think it’s really important that you said having that strategy in your mind, I don’t think that’s enough. You need to write down your strategy, you need to have a checklist and for the property, it has to have the growth history. It has to have the renovation potential. It has to have a public transport close by. Whatever it is, whatever is on your list of things it needs to have, the property need to tick those off and it needs to be in an actual checklist, so you can’t budget and say “Oh, this property has always been popular for rental. I’ll just buy here because it’s easy and there’s a big marketing campaign.” And it might tick one of your boxes but having an actual checklist, you can say that it hasn’t ticked the other 12 things that you want.

Jane: And I think that, I mean, I know in the Ultimate Guide to Renovation, we teach the students about having a buying criteria which is that checklist and so it’s so clear, once you have a buying criteria, you can do 90% of the research online for a property and not having to be out like I was in the beginning seeing 10 properties every Saturday going “Oh, wait a second, that doesn’t really tick this box, so it kind of stops all the extra work as well.”

Medine: That’s right. And you know dotmaps were developed originally to help with that because we were spending the whole weekend out, Saturday and Sunday, looking at properties to try and fit them all in, in different areas to try and get a feel for them. But you’re right, now with the internet, get a feel for the suburb. It’s not the same as being on the ground but you can certainly get a much better feel for the suburb and what sort of properties are available to help you drill down from a dotmap to what actually is in reality.

Jane: We keep talking about the dotmap as a technique and we’re going to get to it. It is an amazing visual methodology of looking for the next suburb hotspots, but I’m interested in your thoughts on what are the top things to avoid in suburbs. So, if you’re actually drilling down to a suburb, what are the kind of things that you would steer clear off?

Medine: Those suburbs that I mentioned before that have people who are, you got eager and inspired to buy, they’ll pay more for the unrenovated dump than they will for the nicely renovated property.

Jane: So, that pricing disparity is missing—

Medine: Sorry?

Jane: The pricing disparity is missing in the suburb.

Medine: Yeah, the pricing disparity is missing. I would avoid properties that are surrounded by a lot of open space because there’s no scarcity then. I like properties that are like suburbs that they’ve built all the houses already and there’s some scarcity and that creates upward price pressure.

Jane: So, we’re not talking about park lands or golf courses. We’re talking about an area that are developed or could develop down the track.

Medine: Yeah, that’s right, paddocks basically. So I wouldn’t buy around Melbourne’s fringe for capital growth but there is some close arena as well that are like that have had big light industrial areas and so on that are being developed. Those areas aren’t going to grow really quickly any time soon. And I avoid areas where I can’t gauge statistics. So, I really rely on the statistics but there are some areas, Docklands would be one of them where the statistic skill – we don’t have statistics long enough to even see a growth pattern. I know once the statistics come it’s not going to be great but we want to see some statistics for the growth pattern.

Jane: It’s interesting. I spoke to someone the other day overseas and she was saying she has a family member who had bought in with the Docklands in Melbourne numerous years ago and the property has gone back in value. So, it’s dropped in value since she bought and one of many units in a huge block of units that had no difference to any other unit in a block of units and was now older than all the new blocks of units that were going up and hence not the demand for the renters to be there and I said “Gosh, are they going to get rid of it?” And they said, “Well no, they’re going to try to wait it out in case it does go back in value.” But they’re really rich, so they can afford to keep it. And so, it’s costing them money every single year, it’s not going up in value and hasn’t for over five years. They are hedging a bit that it may go up in value in the future at some stage and it’s costing them a lot. It’s costing them in borrowing capacity, so it restricts what they can actually buy next time. It has so many big implications of holding a property that isn’t going anywhere. So, having something like this technique that allows you to avoid that straight up is magic because you’re not then covering up in years and going, “Well, I’m going to have sit through this until I can possibly make some money again.”

Medine: Yes. It is crazy. They could be using the money that they’re putting in to holding this property into another property three suburbs away that is going up in value every year and easily rented. It’s just crazy.

Jane: Well, it’s a detective journey. We know there’s work to be done. So, let’s talk about the process. You mentioned that you were looking for statistics. You spent 18 months before you actually purchased and pulling this together. You developed the dotmap back then but in actual fact all you did was you purchased the list of suburbs in the past 10-year growth. What was the thing that went, “Hey, I’m going to stick these suburbs up on a map.” Can you take me through what’s the step-by-step process that you go, how do I get a suburb onto a map? How does that work?

Medine: Sure. So, I buy my maps ___ [00:46:57] from Melways, I bought a wall map from Melways, and they do all the East Coast plus they do, I think, Adelaide as well. I don’t know about Western Australia. So, I get onto there, to Melways.com.au and buy a wall map from them and I buy a bunch of little dots and the dots represent different growth, different 10-year growth patterns. Then, it’s a matter of finding the information for the growth patterns. I looked at 10 years because that’s the longest actually that’s available. Everyone does 10-year growth pattern and interestingly, once you start looking, the different providers of information have startlingly different results in their 10-year growth. So, they say they have all the same source data but they can’t possibly because they get very different results. So, what I do is I go to the valuer general’s report at land.vic.gov.au and get the valuer general’s report. That information is directly from the State Revenue Office or the Office of State Revenue depending on which state you’re in. So, that information is solid reliable information that’s actually based on stamp duties and transfer process, so it’s really dependable information and that was important to me because I was looking for something to base my confidence on to invest in an area.

Jane: So, you went to the source data that they all say they’re using.

Medine: That’s right, that’s right. I went to the source.

Jane: And you’ve done dotmaps for other states. Where did you get that for the other areas that you’ve done?

Medine: So, that information I’ve bought in Melbourne and you can buy it also in Sydney but it’s a lot more expensive. Then, I looked for an alternative to Sydney __ exepnsive information and I bought the Residex reports for those states for Sydney, Brisbane, and I’ve done the like for Perth as well because again they’re really into their research and going back to this source data. I can’t explain why it’s different to—

Jane: What everyone else is saying.

Medine: Yeah, to other sources and I don’t, so you have to put a stake on the ground and say this is what I’m going to rely on. We’re very lucky in Victoria that we have the valuer general’s report for free, in the other states you have to pay. You cannot even get it in Brisbane but you can get in New South Wales but it was expensive the last time I looked.

Jane: And I think the thing is as long as you’re doing it consistently with the same information, that differential is really what you’re concentrating.

Medine: That’s right.

Jane: So, why 10-year growth? You said you’re trying to get as long as possible, what are you looking at? Why not one year? We’ve had some great growth across Australia in the last one year. I want to know why you don’t use one year.

Medine: Yeah. I wanted to look at growth patterns, so a history of growth and how that preceded, so rather than looking at, oh yeah there has been a spike in one-year growth to look at over 10 years how has these properties in this suburb grown and it’s been really in the last 10 years the most recent map is a really good illustration of that because in those 10 years or from 2003 through to 2013, we’ve had the lead up to the global financial crisis that was all growth, growth, growth, nothing could go wrong. Prices were going crazy and then the global financial crisis happened and absolutely nothing happened for four years. So, we’ve had good growth and then nothing. It’s a good example of why you want to include a nice big chunk of time in your research because if you just look at the last four years or five years, you’d think that nothing grew whereas if you capture those years before overall, things have grown over the last 10 years.

Jane: And I think the growth patterns that you’re talking about, we know that you can’t predict the future based on the past, but goodness, you’re going to have to, as you say, put a stake in the ground somewhere and say, “Okay, I’ve got what I’ve got and there are some really good economers out there who are paid the big bucks to spend all day doing this stuff and they even get it wrong but if I can have variable sources and put that information together at least by the conviction of your own methodology, you have confidence in what you’re creating.

Medine: Yeah, that’s right. That’s right.

Jane: So, if I just summarise that, you buy a big map, here’s a hint from all of our ultimate guide renovators who are doing this – hundreds of them are doing this at the moment, they buy a plaster-size map so that you can take the dots off and put it back on. Get some actual translucent dots so that you can read beneath them, so a lot of these maps you can’t read the suburbs once you put the dot over the top.

Medine: Interesting one.

Jane: Yeah. Some people are using even Post-It stickers that they are cutting up, interesting. I’ve seen so many dotmaps Medine. There are some great ones out there. Now, getting the valuer general or the statistical information from the last 10 years for the area that you’re area look at, and importantly, not just going “Uh, I’m pretty sure it should be the Western suburbs of Adelaide. I’m just going to dotmap this.” We’re talking we’d draw 5k, 10k, 20k circles around the CBD and we do all of it don’t we? So, we are not taking our previous misconceived ideas about where to buy. We’re actually doing clean slate and saying let’s look at the whole lot.

Medine: That’s right. It can be surprising once you get going on sticking the dots on. You get into a rhythm, and you actually, I think, learn as you go along. You’re sticking I never thought of the suburb and so on, and you don’t want to miss those just because you’ve decided that you’re going to only do the inner west or whatever.

Jane: And these dots, just to clarify, you’re going to say green is 5-6% per annum, maybe 2-3% per annum, and yellow is—

Medine: You can make up whatever you want in terms of your

Jane: Ranges for each map, each dot, colour.

Medine: But just remember to write them down and stick to them and sometimes that can be a little hard because you want more variation in a particular area but then you then it breaks down the usability of the whole map. So, you really want to stick to those ranges and be absolutely – even if it’s 0.1% out of a particular range, you go up to the next colour.

Jane: It’s interesting you said that. We have people doing Sydney and they’re coming back going “We’re using 0.1% ranges and it’s working.” I’m like, “Well, go a half a percent” and they came back and went “Wow, now the map is talking to me.” So, how does the map talk to you? What do you see? What are you seeing when you step back and you’ve got green, yellow, red, blue, orange – the oranges or the reds are saying that the growth is over 10% and the greens are saying the growth is less than 2%, you’re looking at the map, tell me what you see Medine?

Medine: So, what I’m looking for is areas to drill down because remember this is my first step of looking at where to buy, so I’m looking for possible areas that are going to be – that I’m going to drill down and get some good results in. So, what I’m looking for in the map and particularly this last map is particularly useful for this and particularly a map that should definitely be kept and not be thrown out. I’m looking for solid past growth over and you can check back over a few years even without doing dotmaps for a few years back. You can just check the growth for the years before over two or three maps to see that growth has been solid in that area and during the global financial crisis, we didn’t see a dip that didn’t stall because holding a property is hard enough once you have tenants and the cost of holding and so on and repairs and all that sort of stuff that goes with property investing. You want to see some, for me, growth year on year pretty steadily. So, that’s what I’m looking for – good, solid, dependable growth over 10 years and then preferably back two or three maps to see that that area is – I can depend on that growth. I’m not going to be holding it and thinking, “Oh no, I’ve just put in a new hot water system and I’ve had no growth this year. What is the point of this?”

Jane: So, for people who are doing their first map and don’t have previous maps, if they’re looking at a map in coloured dots, what tells them about the consistency or the proven growth there.

Medine: Well, it is a 10-year map, so there is that but if they haven’t done previous maps, they would need to then, I think, try some more research to look back and it’s pretty easy to do. You get onto one of the websites and buy a suburb report, and I think, I’m pretty sure Domain are giving them away for free at the moment.

Jane: Okay.

Medine: But you get onto one of the sites like Residex and buy a report and they give you the growth pattern over the 10 years and you can look back that way.

Jane: So, we then also look at the ripple effect. So, how do you see that on the map?

Medine: Yeah. So, I’m looking for an area where there is good growth, good solid growth and then I might look, so say, there’s a nice area of yellow on the map, with good medium growth on the map, I might look at that and I might look at—

Jane: I can tell you’re looking at your map at the moment of Melbourne aren’t you?

Medine: Yeah, I’m sorry.

Jane: Okay. So, what does median yellow – what does that represent number-wise your map?

Medine: On my map, that’s between 7% and 9%.

Jane: Okay, good.

Medine: So, a middle growth. In a yellow area, the value will double in 10 years. The value of your property will double in 10 years. So, I would look at a cluster of yellow and then maybe look at the greens surrounding it and particularly if there a couple of greens and then more yellows.

Jane: So tell me, greens are lower.

Medine: Greens are lower. I do mine like a traffic light, so green, yellow, orange, red. So greens are lower growth. There might be opportunities in those areas or those areas might be a little bit cheaper or may have more opportunities or might be a little bit overlooked compared to a yellow area that have had more solid growth but if they’re right next door, the ripple effect is that people looking in the yellow area who can’t find a property will start to look in a green area because the prices haven’t moved as much here.

Jane: What I’ve seen sometimes is like, for instance, Toorak might be a green area but its virtue is the fact that the price point is well over a million dollars. So, it’s important then to start really drilling down and finding out why the green areas are green isn’t it?

Medine: Yeah, absolutely, absolutely. You find true that suburbs tend to cluster together, so once you find – not always true but mostly if you find a $500,000 or $600,000 suburb, it’ll be surrounded by $700,000 and $400,000 suburb. They tend to step up, not jump up in terms of value, so that’s also useful. That phenomena is also useful when you’re looking at the dotmap and working out which areas are you going to drill down into because the drilling down is what takes the time.

Jane: And so, looking at your map that you’re staring at the moment of Melbourne, how would you start eliminating suburbs? Would you say, reds already taken off, so I’m not looking at red or is it the yellows with the greens next to it, so the greens is where I’m going to look and half of this green suburb is the median prices of what I want or it’s surrounded by light industrial – tell me, how are you eliminating suburbs from the dotmaps? Are you going from a hundred suburbs down to maybe the five that you’re really going to drill down into?

Medine: Yeah, when you first start, there’s no great way to do that. It’s just to start to do the research. So, if you find a cluster of 10 suburbs, my next step personally would be to look at what is the median price in that area, what is affordable for me and then that would be—

Jane: Great.

Medine: And you know, I’d start drilling down based on that and if you can get, say, three suburbs—it’s different for me now because I’ve been doing it for so long, I would only drill down into one suburb because it’s all I have to do, but back then realistically, can I afford here? Drilling down into three suburbs and that’s going to take you three weekends’ work or a month’s work and then hitting the ground and actually working out whether there are opportunities available there for you for the next month. It’s a long process.

Jane: Obviously, it’s not going to take you a month to work out what the median prices are. What are the other things that you’re looking at? I think we mentioned before some of the information about days in the market and demographics. How are you drilling down? Tell me the things that you’re looking at when you’re starting to do that research.

Medine: So then, the next thing I would look at would be the median property and what sort of property is in that median price. I would be looking on the internet to work it out, so okay, if the median price in this area is $500,00 what do I get for $500,000 in this property and typically there’ll be a cluster of type of properties, say, a three-bedroom one-bathroom brick veneer, a property that would be selling for around the $500,000 mark and that’s then I start drilling down into where are those properties, and that’s when I start, is there a renovation opportunity with that type of property? Are those properties close to public transport and I get out my checklist and I start to work down that way. Does that make sense?

Jane: Absolutely. And I think the really important thing there is, you know you’re buying criteria and your strategy to start with, which means that you want to create equity through renovation. You tick the box and go, wow, these suburbs that this ripple effect tells me that I should be looking at, tick and then you go, wow, I’ve been to mortgage broker and Medine tells me that I can afford aa $500,000 property and this the median price is $500,000 – tick. And then you get in and you type in $500,000 house in wherever it might be – Toowoomba, wherever it is. You type that in and all of a sudden pops us these, as you say, the three-bedroom one-bathroom brick veneer property and you’re looking at that and you’re going, “Okay, this is great but these are built in 1990. The typical house in this suburb is built in 1990, there’s not that much scope for me to put my renovation potential in there.” Then, you would say, “Okay, let’s move onto the next suburb or you might say, “There is enough in this suburb for me to consider keeping it on the list just because there is two or three on the Domain or realestate.com.au that have the potential to become the typical property with a bit of a smart up, so it might be older or whatever.

Medine: And look, there are some areas that’s stock available just goes up and down. A classic area for this at the moment in Melbourne is the inner west where it is exactly what you just described. There’s not much on the market that’s not – the median property in those areas is the three-bedroom one-bathroom workers’ cottage – or is it two-bedroom one-bathroom, I can’t remember, anyway, a little work for this cottage and there’s not really a lot of stock available. People just aren’t selling them but there’s a lot of development going on and people are knocking over the falling down workers’ cottages and putting two townhouses on it, so there’s quite a few of those available. I don’t think they necessarily have become the standard in that area and certainly in terms of charm and appeal, I think that the workers’ cottage definitely have the advantage. So, I would wait for a worker’s cottage but they’re just few and far between and you just have to have your alert on and just wait, see what happens.

Jane: That’s the on the websites.

Medine: suburbs decides to sell next autumn of whatever.

Jane: Okay. Well, you’ve given us a lot of information here. I guess one of the questions that people often ask me, is it time to buy now? Should we wait? Will this technique work now? Does the dotmap work now? Obviously, we’ve been through – there was some great growth in the beginning of the, I think people call them the naughties, doesn’t it? The beginning of the naughties and the 2000s and then we had a slow down and we’re back into growth. Can we still use the dotmap now? Is this technique still relevant?

Medine: It’s more relevant than ever. Given the fact that people have just come through the post global financial crisis years where there was very little growth and to keep us focused on it, a 10-year growth pattern and what is steady growth despite all odds, despite everything that happened in the global financial crisis, and using a map like this guides you through the difficulties of dealing with that as a property investor.

Jane: And especially if you’re strategy is a buy and hold strategy right? Your buy and hold strategy means that you want to be in the market possibly for 10 years, so looking back for the last 10 years and having the mindset of where are we going to be for the next 10 years it kind of solidifies it doesn’t it?

Medine: Yeah, absolutely, absolutely. It’s a very good way of looking at it.

Jane: And I think the thing is that you and I are interviewed regularly about – gosh, what I can say, granny flats, NRAS, and buying in America, what else have you seen recently? Dual Keys? The glamour stuff. Get rich quick kind of marketing. You’ve already shared some really great tips with us which is ignore the marketing and I’d go a step further and say, “ignore the media” often as well. But have you seen anyone seen do the get rich quick strategies? We’ve talked about the dotmap and doing some research and the work involved, can you circumvent that and create a whole portfolio and not just get it right maybe once?

Medine: Look, I have seen people do some of those strategies maybe once but the time tells all and at the end of 10 years and that there were quite a few investors including one of those investors who has got hundreds of properties or whatever and what they have achieved over the last 10 years and the boring buy and renovate and hold investor started with nothing, had a 10 million dollar portfolio and was worth 5 million, buying 200 properties – yah, yah, yah, glamour, glamour, glamour person, did have 120 properties or something, the net worth was 1.5 million. So, all that work and effort and the result, that’s just never good. So—

Jane: And I think there’s people—

Medine: When you prepare them to the buy and hold, it wins every time.

Jane: Exactly. And it’s interesting having, you know, I remember going to a Peter Spann seminar or something once, and he said, someone actually confronted him in one of the seminars when he was talking about all these renovation flips and said, “What would have happened if you’ve kept them?” And he went back and did the number s and never sold again. And I was speaking to one of the course participants the other day and she said that she was at one of those hypie run at the back of the room seminars and the guy on stage said, “Put your hand up if you’ve got one investment property.” And the older lady next to him put her hand up and “put your hand up if you’ve got two” and he went up and there was one guy left who had something like a hundred. And they said, “Hey, come up here and tell us about your story” and the guy was maxed out on LVR and was costing hundreds of thousands a year and he was holding on by the skin of his teeth but he was celebrated by the number of properties and they got to chat to the lady next door and her husband had passed away and left her a commercial property in the city that was returning a quarter of a million dollars a year net profit that was worth millions of dollars. And I think people concentrate on the number of properties rather than what the passive income it generates for you and the growth opportunities to allow to get to where you want to go with your goals.

Medine: Exactly.

Jane: And so Medine, I guess the real strategies that we’ve been through have told us you’ve come up with some amazing information. We’ve got little tips like look for the out-of-area selling agent who doesn’t really know the value of the property and do a tart-up or a spit and polish, and the valuer plus the renovation doesn’t always equal equity. You got to work for it. What else do have got here? The ripple effect is important, you’ve shared that amazing dotmap technique and then how you really narrow down and as I’ve said I’ve got hundreds of students at the moment doing the dotmap technique and I have people coming to my office with their dotmaps during a VIP day and we look at not just whether identifying for future purchases but we’re applying the dotmap to their current portfolio and saying which properties they should get rid of, so it has so many applications and I guess your personal story of the young girl depending on the dad for her financial plan to creating the research and the methodology and believing in yourself and getting that first property out of the way which is often the hardest and going on and building a portfolio that has allowed you to get to your dream home, which is settling on tomorrow, so I’m going to have let you go and do that. But you’ve shared so much and I know that you’re teaching yourself, now you’ve got a mortgage broker service and you’ve got the education One Property A Year. How do people get in contact with you if they want to learn more or even buy your dotmaps? Are you still selling your dotmaps?

Medine: Yeah, I’m still selling the dotmaps and you can get them on website. If you Google Medine Simmons or go to the medinesimmons.com.au or mfsimmons.com.au, it will lead you all to the same place and you’ll be able to find me.

Jane: The important thing is you get more value doing it yourself, so I would suggest people don’t always shortcut it but desperate times lead to desperate methods.

Medine: That’s right.

Jane: Medine Simmons, thank you so much for your time today. You shared some real gems with us and I’m so glad that we can through the dotmap technique, the strategy that has worked for you and created a huge portfolio for you and I really appreciate you sharing with all of our listeners.

Medine: No worries honey. I’ll talk to you soon. Bye.

Jane: Bye.

 

Jane: God it’s amazing how many people start in the rat race—

John: Yeah.

Jane: And some people don’t even know they’re in it you know.

John: Yeah, that’s right, that’s right.

Jane: It’s just like, it was what dad did or it was what mum did or it was what my friends do – go to school, maybe go to TAFE, maybe to University, get a job, and work-work-work until I retire.

John: Yeah. And I reckon most people have been there at some point, haven’t they? They’re racking up those credit card bills, that kind of thing.

Jane: Oh, absolutely.

John: Some people are still there, but it takes a while to smarten up and actually pay those bills off and try and reduce those debts.

Jane: Yeah. But it’s interesting, my very first job – when I got my very first paycheck, they actually also gave me a company credit card and they said you can use it for personal use as well. You just have to pay for it. I was like, “Oh, amazing! Oroton handbag!”  And I was like, “This is amazing! I didn’t have to give them cash!” I was having those moments and then about a year later, I went “Uh…” and I was supposed to pay for that.

John: Yeah, it doesn’t sound so good.

Jane: I had credit cards under control.

John: The thing with that debt too is it’s not – we talked about good debt and bad debt and leverageable debt and non- leverageable debt and credit card debt is non- leverageable.

Jane: We hate credit card debt. And a mortgage broker, I particularly hate the credit card debt because for every $5,000 limit that people have, they can borrow $20,000 less. So, I’ve had people, I’m reading their fact finder, and I’m like, why have you got a $50,000 limit credit card each month? And they’re like, “Oh, they just keep upping the limit?” I’m like, “Do you realise what this means to your borrowing capacity?” But I always made my credit card a debit card, so I need to have the cash there.

John: Yeah, I do that these days too. And I guess for someone just starting out with this kind of stuff, the idea of good debt and bad debt, can you just explain that? Like, a house versus car kind of thing.

Jane: Sure. It’s interesting, I was having a conversation with someone today about this and the thing is, good debt is actually creating you an asset base. So, you’re buying a property that’s going to up in value be it your home or your investment property or maybe it’s buying art. I grew up in the horse racing and I think a lot of people try to justify the fact that horses are a good investment, not necessarily so. But bad debt like credit card debt and the that people buy, the jet skis, the next set of shoes, all of those things they’re not adding asset value to you. And then you car, you drive it out of a showroom, you lose 10% of the value. Those are considered to be bad debt. They’re not adding to your net worth. I guess the thing about Medine though is that she had that kind of transformational moment where she went, “Hang on a second, this is not right. I don’t want to be working these hours, I’m not getting to where I want to be” and her dad’s illness obviously gave her a real awakening to the fact that she needed to create something for herself—

John: Yeah, do those things herself.

Jane: So she can protect herself too. Medine saw her dad get ill but she also saw that he had the financial resources behind him that made such a difference to not having to worry about money as well whilst he was concentrating on trying to get better and it gives you kind of that fragility of life.

John: Yeah, it gives it context doesn’t it? It’s not just kind of a big goal of being filthy rich. Actually, when it comes down to it, you need some money behind you too. I mean, in my case at the moment, I am helping out with my parents or elderly and I’ve seen exactly the same thing as Medine talked about. They’ve got private cover and the difference is care just if they ended at a public hospital ___ is quite stark So, you certainly think about yourself aging and what kind of situation you want yourself to be in and probably a good thing to have a few resources behind you.

Jane: Yup, I agree. So, I think that turning point for Medine was something that really resonated with me in her story. And she did, she had a huge turnaround.

John: Yeah. I mean, amazing story. From going from knowing about property to – and she developed that dotmap before she even started. Where that even come from, I don’t think we quite got to the bottom of it. Did she just wake up thinking about it or what. I think probably part of it was choosing the 10-year growth because it’s almost kind of counterintuitive in a way, wants to go for the last year or last three years—

Jane: Last year or last three years

John: –kind of thing to try and work out what the suburb is doing but she resisted that and went for the 10-year growth which is annual growth averaged over 10 years and that irons out those bumps and everything—

Jane: Variability due to economic changes or market changes.

John: Yeah. GFC and all that kind of stuff, yeah. And we talked to—

Jane: John Edwards.

John: Yeah, John Edwards from Residex. I remember about that very thing and he was saying, “Yeah, if you had a choice, you should use the 20-year growth.” So, she was right on track from the very start.

Jane: Oh, absolutely. She took action and she’s saying she probably didn’t do all the research that we would tell people that they have to do. building inspection.

John: Yeah, for the first time around she did pretty good.

Jane: But the fact of the matter is, she took action. She located a good suburb. She located a good property with obviously, opportunity for improvement through renovation in that suburb and she took action. And a lot of people, even if she made a few mistakes and went over budget just a little bit by $5,000 for her renovation, I talked to a lot of people and go “I’d rather not make a mistake, I don’t want to go backwards” where in actual fact, if you do nothing, you often are going backwards.

John: That’s the biggest mistake of all, yeah.

Jane: So, the fact that she took action, she did something, she then renovated. She painted, she carpted, she made those improvements, and then she had it revalued. She had that opportunity then to create equity for herself and move on.

John: And then she finished the property and gets the first valuer in which is a bit of a debacle and that’s—

Jane: You don’t know what you don’t know, right?

John: Yeah, that’s right. But isn’t that – like, I’ve seen that before too and I always think, it’s such lazy practice from a valuer to do just get the purchase cost and add the renovation cost—

Jane: And say, voila!

John: Yeah because ___ to say the renovation cost has added value at all in the first place.

Jane: Or the fact that they actually bought under market.

John: Yeah, that’s right. So, there’s no relation between those things and what the market will play for the property.

Jane: And you know, we’ve go the three-pronged strategy and the Trident Strategy, two of those prongs is renovate to add value and buy under the market. So, there are two opportunities there. When we renovate, we try to make at least $2 for every dollar we spend. So, straight away she has negotiated well because she has got the out-of-area agent, so she’s buying under market, she’s renovating well and adding value, and the valuer is not seeing that. So, she has lost, in theory, lost two of the value adds that she could have in the Trident Strategy, but having said that, go Medine forked out another $600 or so for new valuation and stepped back when the new valuer came in and said, “Tell me what it’s worth?” Just coming back to the dotmap technique itself, low cost to get into. In actual fact, I know people who have printed out maps themselves on their own computer—

John: Yeah, we could with sticky type a bunch of A4s to get if you wanted to.

Jane: Absolutely, easy.

John: It costs you nothing.

Jane: And we recommend to go to Mapworks in Essendon and Victoria or Map Centre in Parramatta only because they know our students and know you want but get Hema Map and start dotting. Now, for your dots, you can use, if you want, a highlighter but I’d recommend that you get your map plaster-sized first because you can—

John: –laminate it.

Jane: Yeah, laminate it, so you can actually write on it as well if you want to and buy the quarter-inch translucent dots not just the multicoloured pack.

John: You can see through them.

Jane: Yeah and start dotting.

John: And Jane, I’m going to stick a video up underneath the podcast page, so yourpropertysuccess.com.au/ep9 and there’ll be a video there of Jane going through the dotmap exercise.

Jane: Just in case you missed it from the podcast or you couldn’t visualise it, there’s a video as well.

John: There’s a video in there, yup.

Jane: So, I was looking recently at Your Investment Property Magazine and I was looking at the top 2017 predicted suburbs, so they had seven experts come together and they’ve put all their intellectual property and knowledge together across Australia and came up with the top hundred suburbs and I looked at the list that they came up with the top 100 and I compared it to the list that we came up with in the suburb hot spotting workshops and I think we did two in Sydney, two in Brisbane and three in Melbourne in 2016 and we did these dotmaps with our students on that day and I looked at all of the dotmaps and the suburbs that came up with the 2% increment of growth, so between 6% and 4%, so we’re looking at the suburbs that have had 6% growth and the neighbouring suburb with 4% growth. And all of ours have appeared on the list a year before, obviously, that 2017 list—

John: Got to love that.

Jane: –for Your Investment Property Top 100 Suburbs but we then filtered them even further further down to percentage of renters and yield and vacancies—

John: Yeah, which what Medine does. She starts with a dotmap because she doesn’t want to drill down and do all of that stuff before she’s got a shortlist and the dotmap gives her a shortlist. I guess it’s a probably good time to say it’s not ___ [01:22:51] we don’t just do the dotmap and buy the property but it’s the starting point and then you start the process of elimination further.

Jane: Absolutely. And you’re getting from maybe those 10 suburbs and the dotmap down to the three through the analysis that really – you did the demographic studies and looked at the amenities and the proximity to your public transport and infrastructure, low vacancies, and high tenant requirements, etc. etc., percentage of renters, and what the typical property is. I mean, there are all those filters

John: For her, it’s just ticking away through the checklist.

Jane: And you come up with a few suburbs and I know that our community particularly loves the dotmap. We have been teaching Medine’s technique for many years now.

John: ___ [01:23:28] about 5 years ago, yeah.

Jane: Medine knows that – with Medine’s permission. We actually had Leslie turn up to our September Sydney hot spotting workshop and she turned up with five dotmaps. So, she has done Sydney, Melbourne—

John: Blue Mountains I think.

Jane: Brisbane, Blue Mountains and New Castle and poor Leslie when she arrived, we’re like, “No, no. We told you, we would do the dotmap with you within the first 40 minutes because it’ll be groups of us doing it.” She said, “No, but I really wanted to show you how much I love it and I wanted to do it.”

John: made the other guys feel bad.

Jane: I know. And they’re all taking photos of New Castle and Blue Mountains, so she added a lot of value, and well, I think she’s probably a premium dot mapper.

John: Star dot mapper.

Jane: We love the dotmap technique. I love it. So, you can contact Medine or hear more about what she’s up to at www.medinesimmons.com.au and yeah, another amazing amazing episode today John. I’ve known Medine for years but it’s so lovely to hear the entire story and everything that she has done and came down from a simple, I guess, a change of life kind of experience that took her to developing a technique that has now become the foundation of her property portfolio and of many of our students. So, a fabulous take away. So, I hope that everyone has enjoyed today and with some trepidation, I worry about what’s coming next.

John: It’s now time for…

Jane: Suburbs Against the Clock.

John Blackman: Yes. It’s that time again where you get the chance to test your suburb knowledge while the entire nation holds its breath. Ladies and gentlemen, it’s time to play, Suburbs Against the Clock. The rules are simple. To play, all you have to do is answer a question about 10 suburbs in the city of your choice within 20 seconds. The lucky winner of Suburbs Against the Clock will win 1 year’s free access to Your Property Success Club. Your Property Success Club is an in-depth monthly master class which gives you the practical tools needed to grow your portfolio yourself without having to spend a fortune on expensive seminars or even leaving your own home. So, who do we have standing by to play Suburbs Against the Clock?

John: Hello Lisa.

Jane: Hi Lisa.

Lisa: Hi, how are you?

Jane: Good.

Lisa: Good. I have a fair advantage here.

Jane: Tell us.

Lisa: I’ve got my 12-week old baby with me. She’s listening very intently.

Jane: Oh my gosh. You know what, we are all for educating early but I think this is probably one of our youngest students ever, eh?

John: That’s awesome.

Jane: What’s her name Lisa.

Lisa: Aria.

Jane: Oh, wow. Beautiful.

John: So, where are you calling from Lisa?

Lisa: Melbourne.

John: Oh, Melbourne too. There you go.

Jane: Fabulous.

John: What stage are you at the moment Lisa on your property investing?

Lisa: We’re starting out. We’re looking to buy our first investment property. We are now home and we absolutely need to take the plunge and start this.

John: Great.

Jane: And have you been thinking about doing this for a while?

Lisa: Yes. We probably started about a year and a half ago researching, learning, and educating ourselves best we could. The last month has been interesting with the birth of the little one but getting there, getting there, and we’re just trying to get out heads back into the game I guess.

Jane: Good on you for getting back into it so soon.

John: Yeah, one of the big ones.

Lisa: Thanks.

John: Okay, so you’re clear on the rules Lisa, so you’ve got 10 suburbs to come up within 20 seconds.

Lisa: Okay.

John: And my question for you is, name 10 Melbourne suburbs that are outside 20 kilometres from the CBD.

Lisa: Craigieburn, Roxburgh Park, Greenvale, Attwood, Westmeadows, Broadmeadows, Maroondah, Middle Park – I’ve lost count

John: Eight.

Lisa: South Moorang, Greensborough.

John: Nine, ten. In 10 seconds!

Jane: Oh my gosh. You are so fast! That was fabulous. I’ve got 10 definitely.

John: The count is still going.

Lisa: Oh, awesome. Thank you.

Jane: That was amazing.

John: You could have got another 10 there.

Jane: We could’ve given you another question. Ten suburbs in 10 seconds rather than 10 suburbs in 20 seconds.

John: Maybe we should ask two questions from now on.

Jane: In actual fact, I reckon we’re going to have to put you as our grand champion of Suburbs Against the Clock. Everyone has to beat your 10-second time frame. Well Lisa, we’re going to get you access to a 12-month subscription to Your Property Success Club, so in the next 12 months, you’ll be getting one course a month to really give you all that information that you need to get you to that first property. So, we could get you to a whole lot sooner.

John: Plus the community, yeah. In the community, you can ask questions any time.

Lisa: Oh, that’s fantastic.

Jane: Oh, that’s just great. Well, there you go. Aria really helped out. You’re going to have to bring her along next time as well.

Lisa: Yeah, she’s my lucky charm.

Jane: Yeah, fabulous.

Lisa: Awesome. Thank you.

John: Alright, thanks Lisa. See yah.

Lisa: Fantastic. Thanks so much.

John: And if you would like to test your knowledge in the best suburb quiz in Australia, simple emailsupport@yourpropertysuccess.com.au and use the subject line Suburbs Against the Clock and you can also give us some suggestions for the questions.

Jane: And we’re getting some emails from people with suggestions, so keep them coming. Well John, that is it for today. A huge thank you to today’s fabulous guest, Medine Simmons. Now, if you’d like instant access to the transcript plus get access to some free training that video of me doing the dotmap , we have that for our community and all of the show notes and links to everything mentioned in today’s show. So, simply to www.yourpropertysuccess.com.au/ep9, that’s your property success dot com do A-U forward slash the letter E for echo, P for papa and the number nine. So that’s all for today, stay safe and as always, here’s to your property success.

John Blackman: Ladies and gentlemen, it’s important for you to understand that you need to take care in applying what you’ve heard on this podcast to your own personal circumstances. Every one’s situation is different. And while we go to great lengths to ensure that everything we share is accurate, the information in today’s podcast was based on personal experiences and opinions and is not intended to be specific to your circumstances. We are not real estate agents, financial planners, lawyers or accountants and are not liable for any loss, damage, or misunderstanding caused by reliance on any information provided or inferred. We highly recommend you seek out the services of a professional or mentor to help chart your own path to property success.

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