Unlocking Property Wealth - The Keys to Success - Special Edition with TY

In this special edition of "Ten with Ty," the tables are turned when host, Tyron Hyde, CEO of Washington Brown, is interviewed by property expert, Hotspotting's Terry Ryder. 

The pair delve into the intricacies of property investment. Terry places Tyron under the spotlight, extracting invaluable insights about his property investment journey, strategies, and philosophies. The conversation traverses Tyron's first investment, his strategic approach to buying properties, and the lessons learned from his investment experiences.

Throughout the episode, Tyrone emphasises the importance of buying when the market is less competitive, highlighting the concept of being counter-cyclical in property investments. The duo also explores common investment mistakes, including the dangers of buying new property without adequate research, and the under appreciated value of advisory teams and resources like RP Data. Tyron's philosophy of not following the crowd is a compelling narrative throughout the discussion.

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Key Takeaways:

• Strategic Buying: Tyron stresses purchasing property during market downturns when competition is low, as advised by Harry Triguboff.
• Investment Philosophy: Emphasises the importance of independent research, not following herd mentality, and understanding property cycles to make informed decisions.
• First Investment Insights: Details on Tyron’s first property investment in Sydney's Balmain and its eventual significant return.
• Common Mistakes: Highlighting the frequent errors new investors make, such as inadequate research and relying solely on advice from profit-motivated sellers.
• Holistic Approach: Importance of building a solid team, including mortgage brokers, accountants, and using tools like RP Data for informed investment decisions.

Notable Quotes:

1. "I'd rather buy when no one's at an auction than when there's a hundred people at an auction." – Tyron Hyde
2. "Never ever borrow money for shares. If you can't own the share outright, don't buy it.” – Tyron Hyde
3. "Independent advice on where to buy is key." – Tyron Hyde
4. "The richest people in Australia, they're waiting for a property fund to go broke and then say, bang, we'll buy it." – Tyron Hyde
5. "Don't assume your property is always going to go up." – Tyron Hyde

Resources:

• Washington Brown - The Property Depreciation Experts
• RP Data - A crucial tool recommended for property valuation and comparable sales analysis
• SQM Research - Essential for property market reports and heat mapping potential investments
• Hotspotting - Finding Tomorrow's Hotspots Today

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Tyron Hyde is the CEO of Washington Brown Quantity Surveyors

Chapters

• 1:20 Q1: Your Best Investment
• 3:42 Q2: Strategy for Property Investing
• 5:15 Q3: Philosophy for Property Investing
• 8:04 Q4: What Holds People Back
• 9:58 Q5: The Importance of Advice and Information
• 13:06 Q6: Advice to 25-yr-old Self
• 15:32 Q7: Past Investment Mistakes
• 17:46 Q8: Portfolio Mix
• 19:56 Q9: Property Myths and Misconceptions

Transcript

Ten with Ty - Special Edition.
Transcript

00:01
Tyron Hyde: In this special edition of Ten with Ty.
Terry Ryder: “So, Tyron Hyde, Washington Brown.”
Tyron Hyde: Hotspotting’s Terry Ryder puts me under the microscope.
Terry Ryder: “So, do you have a basic philosophy that underpins your property investment?”
Tyron Hyde: “Yes, I like to buy when other people aren’t.”
Tyron Hyde: Find out my biggest tip when it comes to buying property.
Tyron Hyde: “Independent advice on where to buy is key.”
Tyron Hyde: It’s all coming up on Ten with Ty, the Special Edition.

00:31: Tyron Hyde
Hi, I’m Tyron Hyde, the CEO of Washington Brown, the property depreciation expert. Now, I’m a qualified quantity surveyor and also a best-selling author who’s helped hundreds of thousands of property investors over the years pay less tax through depreciation. I’m also an avid investor, which is why I created the podcast series Ten with Ty, where I ask the smartest people I know the same ten questions to unlock the keys to their success and hopefully leave a playable for my family and your family, too, about investing.

0:00:58 Tyron Hyde: Now, this podcast is general in nature and not specific to your financial circumstances. We always recommend you sit down with an accountant or financial planner before making any investment decisions. Now let’s get on with the show.

0:01:20 Terry Ryder: So, Tyron Hyde, Washington Brown, you know a lot about depreciation for property investment. I think you more broadly in your own right, you’ve been a property investor for most of your adult life. Do you remember the first one, what it was, where it was?

0:01:36 Tyron Hyde: I certainly do. Yeah, I certainly do. Hi, Terry. Thanks for having me on. It’s probably one of the best investments I ever made, believe it or not. It was in Balmain. It was a two-bedroom, two-bathroom, one car space. I paid 249,000 for it. But the thing was, I was actually the quantity surveyor on the project on behalf of the bank. When you borrow as a developer $10 million to dual development, the bank just doesn’t give you $10 million.

0:02:01 Tyron Hyde: They’ll say they want an independent valuation of the overall project and they’ll want an independent valuation of the construction cost, which is what me, as a Quantity Surveyor, used to do. So we’d go out every month and pay the certify the amount of work done on that progress on that project on behalf of the bank. Problem was, the builder went broke. And so at that time, before he went broke, I put $1,000 down on this apartment as a holding deposit.

0:02:28 Tyron Hyde: The builder went broke, and it took like three or four years to finish the project, and I helped project manage the job to completion. By the time it finished, there was enough equity in that. There was enough equity in that from the 240 that I didn’t have to put any more money in. So I only put $1,000 down and I borrowed the full amount because they base it upon the new purchase of the new valuation.

0:02:47 Tyron Hyde: So when I sold it in 2001, it already went up to about 500,000. And so that $1,000 turned into like $250,000. So the return on equity or return on investment, ROI, was huge. So if you look at it purely from that point of view, it turned out to be one of my best investments ever.

0:03:06 Terry Ryder: Yeah. What would it be worth today?

0:03:09 Tyron Hyde: 1.5. But that if we look at it from another point of view, you know, people say probably doubles every seven years or seven to ten years. So that was 2002. So it’s, well, so it would have been 500 to 1 million to 2 million. So 1.5 wouldn’t have been bad. But, you know, I don’t regret selling it because whenever I’ve sold a property, I put it into another property, into a bigger and better property, and I put that money into a two-bedroom unit in Bondi that’s for about 860, and sold that recently for 6 million. So that wasn’t a bad investment either.

0:03:41 Terry Ryder: Yeah. That’s a good segue into my next question, which is about your basic strategy with property investment. Is it? Some people try to trade their way to success, what you’ve just described, buy something, sell it for a profit, buy something better?

0:03:56 Tyron Hyde: Yeah.

0:03:56 Terry Ryder: Is that the way to go? Or should people just buy good asset, keep them and accumulate a portfolio?

0:04:01 Tyron Hyde: For me personally, I’ve been more of a trader because I’m in property. I’ve been able to see deals that other people might not be able to see. For instance, I’ll give an example. Once I was at a trade show and there was 200 people lining up in the morning to come and see a property expo, right? I thought, this is crazy. This is the peak of the market. So that next day I sold, the next week I put about three on the market, the ones that weren’t that good. Because when things are really booming, it’s a good time to get rid of some of the shitty stock that you might have. Right.

0:04:36 Tyron Hyde: Because that’s when you want to get rid of that stuff. When times are good, things sell, but when times are bad, sometimes it’s harder to get rid of the not so good stock for the average person. Look, I believe their strategy should be to accumulate and hold would be the easiest way. Because the problem is with trading properties is that there’s a lot of entry and exit costs. You know, it can be at up to, like 10% of the purchase price, of the purchase price.

0:05:07 Tyron Hyde: Getting in with stamp duty, buyers agencies, selling costs, marketing costs. So that’s something to be very wary of.

0:05:14 Terry Ryder: Yeah. So do you have a basic philosophy that underpins your property investment?

0:05:20 Tyron Hyde: Yes, I like to buy when other people aren’t. So that’d be my number one thing that I’ve learned over my life is that probably goes in cycles and ignore the media. There will always be a bad time, like, there will always be a good time, but there will always be a bad time. And I’d rather buy when no one’s at an auction, then when there’s a hundred people at an auction. Now, that’s hard to sit in the moment, because at the moment I’m like, if I was to buy something, I’m not looking to buy the moment, but if I was, it’d be, like, pretty tough in Sydney because I still.

0:05:47 Tyron Hyde: It’s going through a bit of a boom again. Like, there was an auction yesterday in Sydney in Paddington, where an unrenovated semi sold for $9 million. In Paddington, unrenovated semi sold for $9 million. Right. One half million over reserve. So that top end is really going bananas, you’d know more about that than me. So at the moment, it’d be really hard in Sydney because I can’t see that property prices will come back a bit, you know, I’m pretty much Sydney focused because that’s where I live.

0:06:14 Tyron Hyde: But I just find it hard to believe that property’s gonna come back at the moment with, with, you know, migration, where it’s, where it’s going. You’ve got building starts at 10%, 20% down on year on year. Right. So we’re not building enough, Terry. That’s the problem at the moment. Supply is clearly the problem in this market.

0:06:29 Terry Ryder: Yeah, well, the shortages of everything that matter in real estate. We’re not building enough. There’s not enough listings and properties for sale. There’s not enough rental properties available for tenants.

0:06:39 Tyron Hyde: Yep.

0:06:40 Terry Ryder: And that’s putting that constant upward pressure on prices and rents.

0:06:44 Tyron Hyde: Yep, yep. I got an Uber here today, and I asked him, I said, oh, where do you live? And he said, Alexandria. I said, all right. He goes, but I’m moving. I said, why are you moving? He said, well, they’re charging me dollar 600 a week rent for a one-bedder. They’ve just put it up to 850 rent for a one-bedder. In Alexandria. I’m like, how do people live? It’s pretty tough.

0:07:04 Terry Ryder: I know. And unfortunately, the politicians don’t seem to have any solutions to the rental shortage which they created. But what you’re speaking to with what you said earlier is about being countercyclical with your approach. I think far too many people getting the property investment has herd animals following the herd into, stampeding into a boom, perhaps. And it seems to me that’s the antithesis of good investment strategy.

0:07:32 Tyron Hyde: Let me tell you a story, okay?

0:07:34 Terry Ryder: Okay.

0:07:36 Tyron Hyde: One of my clients is Harry Triguboff, who’s the richest man in Australia, worth 26 billion. He said to me, at lunch one time, he said, Tyron, do you want to know the secret to my success? Not going to say no, am I? Yes. Harry, what’s the secret to your success? He said, Tyron, when times are bad, I buy land. By the time I get development approval, times are good again. So simple. Why didn’t I think of that. Helps having $26 billion, though. 

0:08:04 Terry Ryder: It seems to me that one of the problems that why so few people. Now we’re talking about the 1%. And that refers to the fact that of the two point something million Australians who own an investment property, only, well, less than 1% actually own five or more, 90% own just one or two. Why do you think that is? What’s holding people back from being more successful with something that so many Australians are passionate about?

0:08:29 Tyron Hyde: I guess the easy answer is money. But I think in reality, I think a lot of people get burnt on first time. I think a lot of people make mistakes in their first early investments. And I see it all the time because we analyze a lot of properties, what the original sale price was and what the new sale price was, and we find that so many people for ten years, it’s just flatlined because they’re bought into maybe a house and land package off a property spruiker, and it’s just flatlined for ten years. They haven’t made any money, unfortunately. Then you see, bang, they sell it after ten years. That’s when the growth starts to happen. Now, a lot of people that are selling those type of stock, they tell their clients they’ve got to hold it for ten years. You know why that is, Terry?

0:09:08 Tyron Hyde: Because it takes ten years for them to get to what it’s actually worth, right? And, and sadly, if that happens, you, um, you know, you can, you’re not going to go back into the market. Because you’re geared so much in property, a 10% variance in price can wipe you out. Like if you, if you bought a, say, a $500,000 property you put in 50k, goes back 10%, you’ve lost everything, plus you’ve lost your stamp duty. So you’ve actually probably lost more than 200% of your initial investment.

0:09:33 Tyron Hyde: And it’s not unusual that property can go down 10%. There’s a myth that property always goes up. Complete myth. It goes up and down, you know, of course.

0:09:42 Terry Ryder: So the fundamental importance of getting the first one right and getting it wrong is what holds so many.

0:09:47 Tyron Hyde: Yes. Because then once people get it, if they get the first one right, then they can take equity and kind of accumulate more properties. But if you make this big mistake at the beginning, it’s really hard to recover.

0:09:57 Terry Ryder: Would you agree with this, that one of the reasons why people do make mistakes with their first one is there’s a reluctance to spend money on advice and information?

0:10:06 Tyron Hyde: Yes, look, I would agree with that. I guess the interesting, these days, I guess there’s a lot more buyer’s agents that have hopefully a network of people that can help them and research them. But I think the basic starting point for everyone that ever wants to buy property should be RP Data. They should have access to comparable sales to see that what they’re paying is what it’s worth.

0:10:28 Tyron Hyde: And my advice to someone would be to buy a property that’s generally ten years old. Right. The reason is you can actually see what the other comparables are around that time for ten years for a ten-year-old property. So you can test, see the real market value of what it’s worth yourself. I had Chris Graham on my podcast recently, and he insists, he’s a successful buyer’s agent. He insists on every one of his clients getting a valuation before they buy that property. He’s like, you get a valuation for a car, but you’re going to spend a million bucks on a property. You don’t want to even spend $600 on a valuation report.

0:11:00 Tyron Hyde: It makes sense. So getting that information is key to getting that first successful investment. So for me, a no-brainer for an investor would be to have access to comparable sales via RP data.

0:11:12 Terry Ryder: So spending money on information.

0:11:14 Tyron Hyde: Absolutely.

0:11:15 Terry Ryder: Spending money on perhaps advice from a good accountant. Make sure you’re buying in the right structure. 

0:11:21 Tyron Hyde: Yeah. And spending money on a Terry Ryder Hotspotting report. Now, I’m not just saying that because you’re sitting here. What I would do if I was an investor, I would get your reports. I’d get SQM reports, right? Maybe some RP Data reports and heat map them and see what areas you all agree are the new hotspot, right. If you, all three of you are saying, go and buy in Yamba, I’m thinking Yamba’s pretty good because you guys, that’s what you do. Independent advice on where to buy is key.

0:11:48 Tyron Hyde: Ten with Ty is brought to you by Washington Brown, the property depreciation experts.

0:11:54 Terry Ryder: So what we often say to people is build your team before you build your portfolio. Is there a philosophy that you would agree with?

0:11:59 Tyron Hyde: It’s good in theory. However, if you’re a first-time investor, right. And you don’t have any properties at all, you’re not going to get a lot of airtime from going to an accountant, to a property manager. That’s where your buyer’s agency comes in, who’s referring 20 people a month to these people. But yes, obviously, once you get it, once you have a portfolio, having a team is vital. Like for starters, a mortgage broker’s unbelievably important. Getting access to funds is vital.

0:12:30 Terry Ryder: Yeah. So accountant, mortgage broker, quantity surveyor.

0:12:34 Tyron Hyde: Quantity surveyor. Lawyer. Independent legal advice is very important. Financial planner or accountant? Financial planner. But there’s, but again, data, property data. That’s, that would be my starting point. I never look at, I never buy a property without looking at RP Data. And seeing RP Data gives you an evaluation of what the medium value for that property is. Once you’re in there, it’ll say, okay, this is a low-end range, high-end range. This is where you should be paying, or the middle range.That’s pretty key.

0:13:06 Terry Ryder: Okay, so Tyron, if you go back in time, what advice would you give to the 25-year-old you starting out perhaps with property investment?

0:13:16 Tyron Hyde: So I guess along the lines of what Harry said, do the opposite of. Well, my strategy is tended to be, do the opposite of what everyone else is doing to make money. So definitely don’t follow the crowd. Like when I see in the newspapers for months that, oh my God, properties are going over 20% over reserve and stuff like that. I’m just, ah, I’ll just wait, thanks. So sometimes the best advice will be to do nothing in investing. If you ask me, sit back and wait.

0:13:45 Tyron Hyde: It is a myth, this myth of it’s time in the market. It’s timing in the market. All the successful people I’ve ever met in my life sit back, wait for bad times, pounce with money. So cash is king.

0:13:57 Terry Ryder: That’s a very interesting philosophy because it’s quite the opposite of what so many people preach. So many people say it’s not timing in the market. It’s time IN the market.

0:14:05 Tyron Hyde: The real money. Actually, it’s both probably. Absolutely, the real money that I’ve seen. The huge wealth, like the richest people in Australia, they’re not sitting there going, I want to buy a bank share with a 6% dividend. They’re waiting for a property fund to go broke and then say, bang, we’ll buy it. Thanks. They are with cash and I’ve seen it many times. So that is my strategy. But if you sit back, do nothing, wait, because, you know, following the crowd is not an ideal investment strategy.

0:14:35 Terry Ryder: In 2023 and 2024, we’re seeing, have been seeing a lot of people piling into the Perth market very much doing what you’re suggesting people shouldn’t do. Competing crazily for property. Properties are selling within days of being listed well above the listing price. Not doing the usual due diligence. Building and pest inspection. Seems people are stampeding as part of a herd, setting themselves up for problems down the track.

0:15:03 Tyron Hyde: So nothing really dramatically changed five years ago. That market was still sitting there for a long time, dormant, wasn’t it? Right. Why weren’t people buying then? Like, that was when you should have been buying, not now when everyone’s thinking, oh, Perth’s, you know, gotta catch up. So, yeah, that’s a, that’s an interesting market over there. Look, I don’t know that market that well, but I’ve started reading some other buyers agencies say, yeah, you’ve missed the boat already on this Perth market. So time will tell.

0:15:30 Terry Ryder: Yeah, I think so. So what major mistake have you made in the past with your investments that you would urge younger people not to repeat as they get into property investment?

0:15:42 Tyron Hyde: Yeah, absolutely. Well, my major mistakes is not about property. Twice in my life I lost the GDP of a small African nation. I was so heavily geared into shares. That one was when the tech crash happened in 2007 and the other one was in the GFC. I don’t know what year it was, but tech crash and GFC and, you know, I’d borrowed a bucket load of money and, you know, you had 30% gearing, so I had 70% debt, 30% equity, and then when the stock market goes down 30%, which can happen like that, all gone.

0:16:23 Tyron Hyde: And unless you. So I made the decision not to buffer it up, I decided to sell down. And. And the only advice I say, my advice number one, is to anyone. I always say this on my podcast. Ten with Ty podcast is never ever borrow money for shares. If you can’t own that. You can’t own the share outright. Don’t buy it. Right. That’s my number one advice to anyone. And the problem with the gearing or the leveraged share portfolio wasn’t that they’re bad stocks. But what happens is when margin loans start occurring, you have to just pull out. And so some of these good stocks, people were just getting margin called and you just have to sell to the point. Some of these stocks were trading below their asset base. But that’s what can happen in the stock market. It can be very fickle.

0:17:14 Terry Ryder: Yeah. What about the real estate market? What advice mistakes you’ve made in the past that you would urge people not to repeat?

0:17:21 Tyron Hyde: I worked out. I’ve bought 21 properties in my life and I don’t regret one of them, to be honest. I bought a property in Cairns that wasn’t. That was. Still wasn’t the best performer just because I thought it was cheap. That probably was the worst investment I made in Cairns, but still made money. Still made solid 6% return, but it didn’t actually go up in capital value. But I just thought, oh, it’s cheap. Cheap doesn’t mean best, does it?

0:17:46 Terry Ryder: What have you bought? Has it always been houses on land or has it been units and townhouses in the mix as well?

0:17:51 Tyron Hyde: Units, houses, offices, warehouse. But mainly. Mainly units. Mainly units. And successfully with units. And the house I’m living in right now is probably the best one. It’s beautiful. 

0:18:10 Terry Ryder: So mainly attached dwellings.

0:18:12 Tyron Hyde: Yep, yep, yep. There’s a couple I’ve got in Brisbane that are freestanding, but mainly they’ve been attached dwellings. Yep.

0:18:18 Terry Ryder: That’s interesting because so many people are completely wedded to the idea you got to buy houses on land because they show better capital growth over time than units. You haven’t found that?

0:18:29 Tyron Hyde: No. But the difference is the units that I’ve bought in, I always looked at the land ratio. Right. So the unit that went, one of the best investments was a unit Bondi. It was a big block and it had three units on it. So I went, well, the land value, if this place got knocked down. I’m buying this for land value. So you’ve got to have a high ratio of land to the purchase price. I’ve never bought a unit in a block of 500. They’ve always been low rise. Maximum was 20 was with the first one in Balmain, but, yeah. So there’s got to be a high land component in order for that to work.

0:19:05 Terry Ryder: Okay. Because what I think we’re seeing in recent times in the market right across the country is a shift in that dominant paradigm about people preferring houses on land versus apartments for capital growth. We’re seeing more and more people opting for attached dwellings, for lifestyle reasons, for affordability reasons, all sorts of reasons, all sorts of different buying cohorts, young people, downsizers, migrants from overseas.

0:19:31 Terry Ryder: And I think that there’s a shift in the market that we’re going to see much better capital growth from apartments.

0:19:36 Tyron Hyde: And I think some of these integrated developments really help that. You know, when you see a Woolworths down the bottom of apartment block, you speak to those people. They love it. They love going down to the Woolworths on the ground level, then up, get the lift up, you know, and having like Meriton’s buildings, childcare centres in their places and, you know, shopping centres within the little community.

0:19:55 Terry Ryder: Yeah. So real estate is full of myths and misconceptions. What are some of the bigger ones that do you think people should be aware of and avoid falling prey to?

0:20:04 Tyron Hyde: Well, the first one is that property always goes up. It doesn’t. It doesn’t. It goes up if you buy well and timing it well and that property will always double in seven years is another myth sometimes perpetuated by people, funnily enough, selling you property, Terry. So I think you’ve just really got to be aware of that, don’t assume your property is always going to go up. Certainly my experience, sadly, as I said before, we see a lot of clients where we look at what the original selling price was, what they bought it for, and they probably bought it at a good time, like ten years after, so.

0:20:44 Tyron Hyde: But then it might start going up then. But the person that originally bought it, ten years of no growth, and obviously they’d probably be paying out more interest than they’re getting in rent, plus the stamp duty, plus their selling costs. Lost a bomb.

0:20:55 Terry Ryder: Yeah. So what mistakes did those people make? They bought the wrong property at the wrong time?

0:21:00 Tyron Hyde: They didn’t do the research. They didn’t do their research. They probably relied on someone too much who held their hand all the way. Sometimes if you’re getting your hand held totally by someone getting paid $50,000 to sell you property, generally speaking, it’s not going to be the best investment. I’d always ask, how much are you making in selling me this property? It should be disclosed, right?

0:21:25 Terry Ryder: Yeah. So we’re talking about new property.

0:21:28 Tyron Hyde: House and land packages, can be house and land packages. Yep. Stuff like that.

0:21:31 Terry Ryder: Okay. All right. Well, Tyron, thank you.

0:21:35 Tyron Hyde: Thank you, Terry. It’s been fun.

0:21:36 Terry Ryder: It has.

0:21:42 Tyron Hyde: If you own an investment property, then Washington Brown can help you pay less tax with an-ATO compliant depreciation schedule. Visit washingtonbrown.com.au to pay less tax today.