Property Hub - Investment Insights & Inspiration - Get Invested: How Andy Fernandes became 'on fire' for property investment

Episode Date: June 2, 2023

Becoming a successful property investor may seem like pipe dream, but Andy Fernandes believes investing is for everyone.  The property investor and property finance expert says building wealth through property isn't reserved only for the rich. You just need the right plan, and the right people, around you. Andy shares his insights, and story, on Get Invested. Andy is a borderless investor who has built a property portfolio across the country, and has transitioned to finance broking to overcome the multitude of lending hurdles in order to help people finance their property purchases the right way, and guide you them through the property finance process. Andy was an accountant for many years before starting his property investment journey in 2017. He realised that investing is his passion, and loves helping others discover what they can achieve with their investments. Enjoy the discussion! Know someone with an incredible property investment story? We want them to join us on Get Invested! Reach out to me personally at [e-mail]. Three easy ways to Get Invested right now: 1. Subscribe to this podcast now, if you haven’t already, and get the inspiration delivered to your podcast feed each week 2. Get a copy of my book, Get Invested, for FREE, and find out what it takes for you to invest in living more, working less. Go to: https://knowhowproperty.com.au/get-invested-free-ebook  3. Join the Get Invested community. Each month Bushy sends a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. Just visit bushymartin.com.au, scroll to the bottom of the page and sign up. About Get Invested, a Property Hub show Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Get Invested is part of the Property Hub podcast channel, your home for property investment insights, inspiration and stories from Australia’s top property experts, investors, leaders and analysts. Subscribe now on Apple Podcasts, Spotifyand Google Podcasts to get every Get Invested episode each week for free, and also get full access to RealtyTalk, Australia’s top online property show for red hot property investing news and insights direct from property industry leaders and influencers. Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, show producer Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media.  For business and partnership enquiries, send an email to: [e-mail] omnystudio.com/listener for privacy information.

The first step with investing is knowing what you can afford to buy. So there's two things to that. What can you afford to borrow? And what can you afford to hold? So on my website, I have a little investment forecasting tool that I use personally. It shows you if you bought a property worth $500,000 and, you know, a rental yield of 5%, how many properties can you afford to hold at the end of the day? Welcome to Get Invested on the Property Hub podcast channel.

the leading weekly show to help you unlock your full self-health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the best investors, experts, leaders and founders to find out what it takes to break free from the grind, discover freedom and live by design. Subscribe now and join me and get invested in the life you really want. Let's get started. Hi, Freedom Fighters. What challenges are you facing as you enter the property market or try and secure your next property? Have you been asking yourself, where do I start? Who do I trust? What can I afford? What approach and choices will lead me to achieve my goals in the safest, easiest and most affordable way? If this all sounds familiar,

then you're not alone and you're in the right place to overcome your fears and concerns. Because in today's episode of Your Property Hubs Get Invested, we continue our special grassroots investor series talking to hands-on investors who share their trials and tribulations and how they've managed to overcome them in order to achieve their lifestyle goals by investing in property. And while we're talking about this actual investor experience approach, if you or someone you know wants to share your unique property journey for the benefit of others here on Get Invested, just reach out to me personally at bushey at knowhowproperty.com.au. Now, as I stress repeatedly here on the show, property is a game of finance and an elite team sport where you're

not a player but the owner of your independent professional team and your key role is to manage your managers and ensure that they're all playing to your game strategy with your best interests in mind at all times. Unfortunately however when it comes to the critical importance of your finance structure and strategy to help you optimise your capacity while minimising your cost and risk there's a lot of difficult to deal with and below average performing banks and brokers amongst over 40 lenders, 2,000 different loan solutions and nearly 11,000 mortgage brokers. This critical finance importance yet poor underperformance is the reason why I actually became an investment savvy finance broker many years ago and it's the same reason why today's

special guest investor Andy Fernandez has done the same. Like me Andy's a borderless investor who has built a property portfolio across the country and has transitioned to finance broking to overcome the multitude of lending hurdles in order to help you to better finance your property purchases and to guide you through the entire property finance process. As you're going to hear, we've got a lot in common, so I know we're going to enjoy a great conversation today, so welcome and let's get invested, Andy. Hi, Bushy. Thanks so much for having me on your podcast.

It's great to be rubbing shoulders with both an investor and a finance broker, Andy, and you've been very generous in coming on. And while we're talking about it, I want to thank PK Gupta for introducing you. I've got a lot of time for PK. He's a really good operator in his own right. And any friend of PK's is a friend of mine, Andy. So welcome aboard. And to sort of kick things off, Andy, I'd love for you to start talking to us about

what you do differently. and most importantly, why you do what you do. Yeah, so, I mean, you could get finance from a bank and go out and buy a property, but then what's your long-term goal? What's the end goal and how are you going to get there? So at On5 Finance, I try and help budding investors or people, you know, who have invested for a while,

but they're looking to scale their investment portfolio. I help them with a bit of a plan and a bit of a strategy on how to get to their end goal. So it's not just about the next property, but it's how that next loan, how that next property fits into the overall end goal. So that's what we try and do here on Fire Finance. Yeah, I love it.

It's starting with the end in mind, as I often talk about. There's a lot of Australians who just don't take the time to think about exactly how they want to live and then work out how they're going to fund that lifestyle. I love the fact that finance, if you like, is the oil that lubricates the transaction. But unless you know where you're going, you could end up anywhere.

So sort of starting with that approach of getting some clarity around what that looks like and then giving them the tools to do that and then structuring the finance to help that is quite a rare commodity in the industry, Andy. So I love the fact that you're doing that. But sort of looking at where you are now and where you started, I'd love for you to take us back over your life journey so far and talk to us about where you've invested your time, your energy and your money over the years and why and how this has led you to what you're now doing. Yeah, so over the years I've found that the most useful thing

has been for me to invest in my own education. And, I mean, I hate to rephrase Joe Hockey here, but getting a good job and earning good income as bad as it sounds it is important you know to buy properties you need you need an income um and i've not only income it's also just educating yourself that's the main thing i've found whether it be upskilling yourself in your employment or just learning about property it can be you know through forums books there's so many um ways you can educate yourself and make a start that's the important thing to actually make a start after all of that yeah yeah absolutely agree now I know from you know some of the background work that

you were an accountant that transitioned to become a finance broker what what was it that one led you to be an accountant firstly and then what was then the reason for making that change from accounting to finance breaking it's actually a funny story because my um growing up in an Indian family in the Indian household my mom she encouraged me towards accounting the stereotypical role because she just said oh it's a safe job you won't have to deal with too many people you can just do your work and you know you can sort of get by and it was it was all right at the start I did it and I got good at it and I completed my uh my CPA qualification but at the end of it i just found myself much more interested in in investing and in accounting i could um you know

i did all these profit and loss statements and financials for the company but i couldn't see the end result of the you know the impact it had on people's lives and i think working as a mortgage broker i i can just see you know i helped a 60 year old person buy his home after his divorce And that was such a good feeling that, you know, this person has somewhere to live or helping people with their investment portfolios when they didn't have a plan or didn't think they could really achieve anything. So that really drives me, you know. So work is not just work. It's kind of, you know, you do what you love every day. So, yeah, that's the reason for me to transition.

Yeah, I love that. But to sort of move into accounting and to finance, probably to some degree, you've got to have some sort of a comfort or passion for numbers. Was that something that just came naturally to you from very early years and therefore it was a natural thing to go down that road? And in conjunction with that, what was your early relationship

with money and how has that influenced how you've approached life since? yeah i've always been someone who would uh analyze things i mean i i um i think my my wife actually caught me in the the cereal aisle examining two different cereals and checking out which one had more protein in it which one had more carbs and she was actually watching me for 20 minutes behind the side so yeah analysis has always been something i've kind of enjoyed doing but at the same time um i feel like it's important that's why to have a bit of a system that also stops you from over analyzing so that's what i learned later on in my property journey

um in terms of um how i started um you know my relationship with money i've kind of i wouldn't say frugal but i've been i've been wise with uh saving i've always been a saver i remember back in primary school i you know i would get a couple of dollars every every day for my lunch and i actually saved it up and i bought my grandmother a gold chain so i've always been a bit of a saver so that that's kind of helped but i feel like it's it's something you can't force on yourself like like a diet if you try too hard to to do like a temporary saving then you're just gonna end up blowing it up eventually so it needs to be a bit of a lifestyle too yeah that's a really good point um tell us uh if you look back on your life so far what's something unique or

interesting about you that you've never really said in public before i'm actually a west coast swing dancer i've been doing partner dancing uh it's called west coast swing i've been doing it for over 10 years, and I actually met my wife at West Coast Swing dance class. So there's something for those looking to meet others and learn a dance style. I love it. West Coast Swing, put some colour around that.

I've heard of swing, but not West Coast Swing. What's the difference? It's, you know, the West Coast of America, but you dance, it's a partner dance, but you do it to a lot of modern music, a lot of r&b and anything you hear on the radio these days so it's not the traditional bouncy kind of swing dancing it's very modern and um it's quite fun to you know good community good place to meet people rather than you know just going going out and uh getting drunk trying to meet people kind of thing and uh yeah thing to do are you still doing it now that we have a

two-year-old baby it's a bit uh it's a bit hard to make time but we we do walk around every now and then and we each take turn and try and go and get a bit of dancing yeah i love it there's something about dancing that uh just uh it's a joy for the soul i reckon i don't do it often enough but i yeah if i'm in a funk i'll often play put on some of my favorite music and dance around like an idiot in the kitchen and uh and only do it for a few minutes and i and i feel instantly better yeah it just puts a smile on the inside it's just also you know connecting with other people with partner dancing but also remembering different moves dance moves and it really um it's an exercise for your mind and body i think yeah yeah totally agree now if you sort of

look back over your life so so far andy uh what sort of challenging event in your life do you think has brought about your greatest learnings and best changes i think um the learning or the the biggest event that led me to to where i am today is back in 2015 when we were me and my then fiance we were looking to buy a home in sydney and in 2015 the property prices were in sydney were just going sky high and it was it was a crazy time to be as is now but at that time it was kind of the peak of the boom. And we were looking for a long time, unable to really afford anything. In the end, we got a pre-approval for around 1.25 million.

At that time, it was a lot for us to afford. I'm pretty sure even to this day, it's a big amount to spend on a home. And we were all happy to be buying our home in Sydney. and when we saw the mortgage broker i asked him what's what's interest only and he just vaguely brushed it aside and said that oh it's just something investors do to accumulate uh investment properties and they think they're getting ahead and i was just curious i was like oh i need to look into this a bit more what exactly is it um and then i didn't think much about it but i went away to a meditation camp for 10 days it's a place where you just meditate and don't don't talk to

anyone or whatever it was a great experience but i came back with a bit of clarity and i thought we're getting this massive loan that we can't afford we can't do it we can't afford this and so i started looking online a bit dejected like you know what can i what else can we do um and i came across um a book called the richest man in babylon now it's um it's an old a really old little book that you can find online and it it goes it's about a little some fables that talk about you know timeless money concepts of saving spending less than you earn saving the rest and investing it in something that makes more money and if you do it well enough other people will give you their money to go and invest um you know make more money for them so like like banks so

So I found that really eye-opening for me. And, you know, I thought that maybe there's a better way. Maybe we can invest a bit and buy something a little bit cheaper to live in and sort of invest the rest. I feel like that was a changing moment, a pivotal moment for me. And then I started educating myself by learning on different property forums, speaking to different investors. it's been a bit of a journey but i've just dived you know head first into it um and i would like to share what i've learned with others so that they don't make the mistakes that many can make because bushy you know there's a lot of information available online and in this day and age you can

it's easy to um it's an expensive decision to buy a property you know a 30 year loan so you want you want to get it as right as you can yeah 100 agree before i get you to unpack your your journey in a bit more detail around the property side you you mentioned meditation earlier and and doing a meditation retreat uh how uh beneficial has meditation been to your life in general and And I'd say giving yourself time to have that reflection, to really think about that $1.25 million home loan as example and going, no, that doesn't feel right to me. Just making the space to allow yourself that thinking

and feeling time. How important has it been, not only to that property exercise, but to your life generally? Yeah, I think everyone knows, you know, with all the media, easily available at every minute you know we are blasted with some or the other media um taking that 20 days of 10 days off in a meditation camp really um getting back to yourself your own mind and you know clearing out the clutter that's there it really helps some sort of meditation every day it can just be going to the gym but i feel like it really helps put the

focus on what's important to you and while it may sound like you know buying investment properties is sort of chasing money and that's kind of far from the whole meditation lifestyle but in reality we are trying to make time for ourselves so that's the biggest thing that you know that we can have biggest asset that we can have so trying to buy investment properties so you don't have to work well into your 70s and 80s in a job that you don't enjoy doing um you know that's that's what it's about for me that's what the investment journey is about yeah yeah love it love it now let's sort of dive full bore into your uh property journey then you talked about your switch from no we won't put a massive noose around our neck with a dirty great home loan and then and then be

on the treadmill for the next 20 years but I'd love to sort of get your thoughts around what were your initial fears and feelings of concern about investing in property before you decided to invest and and what helped you overcome this and other any other obstacles before you got into it yeah I mean as many people would have heard that Sydney always goes up and you know Sydney is a safe property market everywhere else around Australia doesn't doesn't do anything that kind everything so going out when i started in back when in 2017 when i decided to buy investment properties i'd saved up a bit of money but obviously not enough to buy investment properties in sydney so i had to look elsewhere and i thought what what being an accountant and a finance person

i was aware of my own finances so i knew the kind of rental yield that i need to hold a property so it's not just about buying a negative gig property and living on you know two minute noodles so I wanted something that at least looked after itself so I decided after read learning a lot online and from different people I looked at Queensland and I looked at some of the properties in Brisbane I was like okay well this is these properties are so much cheaper and the rental yields are much higher but then back then there was talk about how it always floods there there's always an excuse not to invest um and then family you know as much as they care about you they can hold you back sometimes my mom was like oh you should buy this apartment in marylands you'll do

so well so we actually went out and looked at properties in marylands and western sydney for properties that cost about 400 000 um two bedroom apartments um but i couldn't i wanted to buy something with a bit of land in it i didn't want to buy a two-bedroom generic apartment when there was a you know 10 other apartment buildings around here and i thought like you know this is i don't know if this will do any any good so i i went against those beliefs and i i decided to just take a stab at it and i bought a property in crest made for three hundred thousand six hundred square meter block um four bedroom house and i didn't buy the apartment but between 2017 and 19 that property actually started to go down in value and it was actually initially hard to rent out and

i was i really kicked myself i was like did i do the right thing did i make a mistake but you never know because it's it's a long-term game it's not necessarily the first two years so since then those properties, if you look at them now, properties in Crestmead are over 500,000. So I actually got a, I made a good buy in the end while two bedroom apartments in Maryland, they're still around the 400, 450 mark. So if I had to buy that, I would be on a, you know, 4% yield while interest rates are now, you know, around five and a half, 6%. And it would not be a good time while the rents in Crestmead have gone up my my yield is around seven percent now so it's pretty much paying for itself it's gone up in value by you know two hundred thousand so

yeah it was a bit of not listening to people who haven't done it but doing your own research and learning from people who have done what you're looking to achieve so that was my first lesson there. It's a really good one because most people, and again, there's a lot of pre-investors or first-time investors who have, as you say, Sydney always goes up. There's this perception that property values are going to always go up, but I guess I'm old and crusty enough to know that there's a bit of an S-curve process with most areas where you'll see it go up and then it'll actually come back 5% or 10% and then often flatline for a period before it goes through and next growth spurt, the key thing that I'm hearing there

is that while the property value is going back was a bit of a shock, you didn't react and then sell the property, which, you know, first-time investors, over 50% of them sell their property within the first five years, and a lot of it's because their expectations are wrong around what's likely to happen with property and haven't structured themselves well. What gave you the courage to go, well, okay, yes, the values are coming back a bit but but this is a long-term game i'm gonna i'm gonna stick to it

yeah if you look back at the history like every city has had its time in the sun and eventually you know it gets back to that time in the sun so it's not you know one market always going up or down it every place has its own cycle that eventually it catches up you just call it reversion to the mean so eventually it does pick up in relation to all the other markets and the the other aspect there is the risks so you need to know the risks involved you know so for instance if you're if the risk is the property values might go down in this area okay um so you've got to ask yourself like how would you mitigate this risk is it a mining town wherein you know it may never go back up yeah that's a big risk i'm not willing to take that

so i'll strike that up but is it a town that's you know full of people you know it will eventually catch up again okay that's um something that you know i could look at so um the other thing you could look at is your the yield that you require will this property cost you a lot to hold that's a risk it may cost you a lot the interest rates may go up so i bought a prop the properties i've purchased have always had six percent rental yields at the start because i've been i've been looking forward not looking forward to but i've been uh i i knew that you know at some point the interest rates will go up so i need to insulate myself against that so that's the risk and that's how you you mitigate it um so the risk might be bad tenants well you need to get your landlord

insurance you need to get a good property manager and buy in a pocket that has more owner occupiers you know things like that it's there's always a reason not to invest but i feel like if you you just do your risk analysis and mitigate it and just do something and get in. Absolutely. It's one of those games, like a lot of things, that you can do and it's important to invest in your knowledge. There's no question about it.

But there's no greater learning than actually doing it because that's when you're at the coalface, that's when you find out. Once you've got your first property in Queensland, talk us through where to from there. And what I'd particularly be interested in is if you could unpack what your criteria for, you've mentioned the 6% yield, what other criteria and the percentage of owner occupiers, what are the key things that you are looking for at that stage? And did it

change over time as you added to your portfolio in terms of the things that a property had to have before you were prepared to look at it seriously? Yeah, so firstly, I would like to touch on a point that i missed over there so with my first property that i purchased um i was uh you know i used my finances smartly so i'd saved up enough deposit for one property um and instead of using all my finances for as a deposit to buy in in crestmeat i used a parental guarantee so my my my mom already had some a lot of equity in her in her investment property in sydney so she guaranteed me 20 so that way i didn't have to pay any lmi or put down my own funds in that and look i'm not talking about you know using it to buy crypto here we're buying property in a place

where you know people want to live so you know it was a safe decision and my mom was happy to help me out with that so once i did that i had my own deposit to then buy a second property which i bought right away so i bought those two properties within a span of two months yeah yeah so in terms of the second property then i'm firstly i wanted to diversify i didn't want to buy in the same place my second criteria was i wanted to buy in a city that hasn't already boomed i don't know why but i had these ideas that you know okay i catch the next one not the not the train that's already gone the next train um kind of a thing so i looked at adelaide and um buy from everyone who had spoken to they said why are you buying here no offense to people in adelaide

but i'm an adelaidean by the way andy so it's okay i i do love adelaide i've been there and it's a beautiful little uh little town actually people call it a little town but i really like it there but so i bought in a suburb called smithfield now if you know this is in the the Elizabeth. So this was very close, not very close, but in the area, vicinity of the Holden plant, which was at that time shutting down. And there was so much hysteria about, oh, you know, it's just going to go down at least that late. It's just not going to go up again or whatever. But I didn't buy into that. I spoke to people who had invested there. And the reason I looked at it, the criteria was i got a yield of seven and a half percent straight up okay um the buy-in prices the

price that i bought for was 185 000 okay and this was a massive block of 700 square meters i did my research and i found a good pocket where you know i aligned with someone on the ground a property manager who knew knew the area well and so he pointed me to this little pocket where you only had owner occupied properties so um so one of the things he told me was look for a street where the houses are not subdivided you don't have too many semis so that there was one way of you know telling which one's a good street or not but um um so i i got that high yield of seven and a half percent i got into a city that hadn't yet boomed um house on land rather than apartment um and it was next to suburbs that had that were more expensive so i didn't buy in the the most expensive

suburb in that pocket one that was slightly more affordable so it had more room to catch up with the other suburbs so that was my my thinking there yep yep yeah and and has it performed that way how's it performed yeah i should have got to that yep so when i bought it was 185 000 you would struggle to find anything under around 350 000 now in that same area and when i purchased the rental yields was 7.2 percent or thereabouts and right now it's around 11 and a half percent so it has been it has been one of the best performers for me like not in dollar terms it doesn't sound like too much money but look it cost me around 35 000 to buy that property that's all it cost me and it's paying for itself and now it's even you know putting more money in my pocket

so it's a win i love it i love it okay so you were with the success of smithfield under the belt what was the what was the next step and and talk to me about how did your investment strategy change at all as you went through this process was there an evolution you were thinking around it yeah so i did so after buying the second property we took a bit of a break and did you know personal things like uh settling down all those kind of things and then around covet time you know when property was back in the news and we were kind of done with our with our home and all of that we looked at property again um and this time i came across a person named pk gupta and initially i was very suspicious about you know because there's a lot of gurus out there and property

He's largely unregulated where anyone can give you advice. So I watched some of his videos and I saw he came across a bit genuine to me. And I just dived in and I did his course and it actually gave me a system. So there were not too many, there were actually a few things that I already had right, that I was already doing right, but it clarified the whole process and removed the analysis paralysis that i would normally go through as someone who analyzes things a lot so gave me a bit more direction in the sense now my philosophy has changed previously it would be by what you can afford when you can afford so you need to be able to afford to not just buy it but hold it as well

exactly cash flowing but now it's not just by what you can afford when you can afford but also in the right market that's right to grow so there's an underlying demand and supply that i learned to um you know to read a bit more yeah and i know pk is a great data guy yeah are there any uh particular uh data sources that have really uh driven your decision making since then you're happy to share with yeah so um i do use a few different data sources um like dsr data we use um a lot of that um you know there's a lot of information available um on the census website and the abs website um sqm is a great one which shows you you know vacancy rates things like that um apart from that just realestate.com previously realestate.com used

to have a heat map that showed you yeah it did yeah i enjoyed that actually yeah yeah and then they got rid of that now but um that's a good one to realestate.com is a good one and i i always like to check out um you know which properties have been sitting on the market for long that's a little trick i use kind of uh i rearrange the order on realestate.com yes so do i yeah i do the same which properties have been sitting on the market for long and i try and get get in on those properties and you know put my bid in kind of thing love it love it so so you uh once you took the break can you talk to us about uh your you know what properties where and why uh yeah post so after after doing uh pk's course um i had a bit of clarity and uh the clear winners

in terms of demand and supply at that time were western australia and queensland but not just brisbane other parts of queensland too so i you know looking at all the data metrics they were all lining up the demand was there from a point of you know i i purchased the first property i looked at at that time a lot of people i mean rockingham is a bit of a hot spot right now where every man and his dog are jumping in but uh it was back then as well but it was just starting out but i looked one um you know lgf further out i looked at the mandira region for the south and i looked at a suburb called hall's head and um i saw there was less competition there um and i managed to purchase a property for 390 000 now this property is like you know a 700 square meter

block four bedroom but it is 800 meters from the water yeah and that's amazing value you could never like eastern uh states people from eastern states who would really know what i mean such good value um and it rents out for 500 actually last week i had the rents go up a bit so it was it you know 500 on a purchase price of 390 that's 6.4 percent yield right from the start and if you look at that suburb now you wouldn't find a four bedroom for less than 550 000 yeah yeah and this is this is um a little over a year later so i bought that in feb 2000 um 2021 22 sorry last year yep yep yeah right so that that's the that's your portfolio as it stands with that were there any other purchases over that one oh yeah so after buying that property i was a bit uh confident on

the data and i since i've already pulled out a lot of equity so we had our home refinanced and we um had a bit of equity sitting there which we use then um as a deposit to buy another property in perth in the suburb called huntingdale so i bought a um a three-bedder but it's got a lot of different living spaces that can be converted into another bedroom um and this one's in a suburb called huntingdale which is 20 kilometers from the city it's not it's not a flash you know area but it's just um good value i bought that for 360 2000 yeah and um it might look it hasn't been the best performer but right now the way the perth market is heating up early early days very early days yet uh yeah andy so uh the very smart purchases there so if you if you summed up your investment

strategy now in terms of what is your strategy where is it going to get you to and therefore what type of uh property strategy and financing strategy you're adopting that's going to get you be um my strategy has been more of a buy and hold um strategy i haven't been an active you know active in developing or doing too much to the property because i i focus on other things um you know just with my baby and my without family and things like spending time without family and also helping clients those kind of things so i haven't had the time to active be active with my investments but in future i do plan to um you know look into starting you know developing a little bit maybe starting with some subdivision because the blocks that i purchased all have

the potential um so yeah i haven't uh thought too much into the rest of it as yet because i'm still um i'm still increasing my asset base so i've still got equity and borrowing capacity to buy more properties with land. I think you make a really good point there because I often say to people what you invest in and how you invest should align with the amount of time you can dedicate to not only the initial exercise but the ongoing process. So if you don't have much time, then taking on a property development,

for example, would be high risk because if you don't have the time and you're then having to find the time, that's when you make mistakes. And, you know, I've often said, Andy, that, you know, if you're going to invest, you shouldn't be creating a second job when you do it. Part of investing is to actually give you time back ultimately down the track so you can put that energy into things that are really important to you like your family and your friends.

So I think you make a really good point there. Now sort of jumping to the future then, I'd love for you to share and perhaps paint a bit of a word picture for us of your life vision than what your ideal lifestyle looks like um a bit of a you know a cliched answer here but i think i'm really happy with where our lives are at the moment um having grown up in you know in in dubai and lived in in asia i feel like we are so lucky here in australia to have these opportunities that we do and uh i'm just really thankful for the way my life is right now and in future i do see myself someday cashing out of uh of sydney and moving to a regional town somewhere so buying

something half the price wherever that may be and sort of investing selling our investment properties um paying off the loan and whatever's left over probably you know buying some atfs or some you know vanilla shares that just pay dividends and i don't see myself completely retiring because i just like what i'm doing so i'd probably still be working but i think it'll just be such a bit of flexibility maybe maybe work overseas for a for a few months that kind of a thing yeah yeah and i love it and the in terms of where your portfolio is that and where it's projected to be that you have a sense of uh the sort of size of asset base that you are going to need to create to generate that lifestyle yeah so i'm looking at an asset base of four million is what

i'm aiming aiming to have um at the moment so we're working towards that and we we're getting there um but then we yeah we do have to sort of cash out and pay off the existing debt but the good thing about uh sort of most bad things with inflation but the couple of good things is that the loan size doesn't go up it stays the same so yeah exactly no exactly uh no i love that mate that's uh i really appreciate you sharing that if you if you look back so far uh and it's not this is not just related to property but what what's been your best and your worst investment and what what have you learned from each of those um i think the best investment not just um i mean property But just investing in educating myself, to be honest, the time that I invested in it at the time, I didn't really think that I didn't start with a big goal.

I started small, but just having the time to read and understand what what's involved in it that way. Now, when I when I speak to, you know, you may go to a professional, a mortgage broker or whoever, but you need to be across what what you're getting into. because it's a 30-year loan you're buying a high value high price asset you need to know what you're getting into more than others even if you get a buyer's agent the buyer's agent will find your property in a particular area but you need to decide if you want to buy in that particular area first so I think the saying that no one cares about you more than yourself that's that's an important thing so i've spent my time educating myself so i so that i can eventually have more time to spend with family yeah i love it love it so given the journey that you've gone on and you're

now through your uh breaking business helping other investors on their journeys what what do you believe are the keys to successful investment and why then andy well the key to successful investment i would say is firstly to to take a step and actually invest because um oftentimes we get bogged down with all the details and every all the information available and we just don't make a move i think we're also um i've been brought up you know to think that loans are bad you know you should not owe money to anyone and while that's that's good in in some senses But when it comes to investing, leveraging is actually a friend. So there's a good debt and a bad debt.

So if you buy, if you leverage and you buy a car, you're buying something that's going down in value. But if you're buying a house, something that people need to live in, that's good debt. So I don't think it's something to be afraid of. It's something that we need to understand the risks and mitigate the risks. and but it's important to take action yeah i totally agree yeah if you if you look at the

the qualities and character traits that separate great investors from the rest but what are they as you've experienced so far um i would say great investors have a system yeah and they've developed this system um you know to through their own experiences or through you know people that they've learned from yeah but they they take the action and they kind of um i'm sorry no it's good no you're absolutely spot on and i'm it's good to take the time to reflect uh and because you've you've had the experience yourself you've seen a lot of others that are going through the process uh you meant you've mentioned a couple of times during our discussion the analysis paralysis exercise and that can be

very dangerous because uh if you're risk averse and you're conservative and you're looking for excuse not to do anything uh if you do enough analysis you'll talk you talk yourself out of everything uh so i think you've hit the nail on the head yes you've got to use data you've got to use the right data but ultimately uh you've got to take some action and uh just as you've said a couple of times during the discussion so far uh you know i sense that you're almost a little bit of a contrarian and i think you know most of the successful investors in the world are contrarians they're they're swimming against the tide they're seeing seeing things that the the masses aren't and you know they are warren buffett is a classic contrarian and uh you know he's got a thousand

quotes around that very subject so i think you've summed up that up really well if uh but if you If you reflect back now on your journey so far, then, Andy, if you were starting out again, would you invest any differently? If I was starting out again, I think I would go a bit harder. I think everyone who looks back and, you know, they always think that, oh, I should have bought some more. So I feel like I am naturally a safe player. So I played it a bit too safe.

um my one of my regrets was when i bought my second property in adelaide i was looking at hobart at the same time um back in 2017 and um i didn't end up buying there because i thought it was it was an it was an island and it's better to be on the mainland in adelaide you know it's just it wasn't based in any data or anything else but just my fear so i feel like if i'd gotten gone a bit harder then um i would be a little bit ahead in my journey um but overall i feel i'm in a good place and um yeah taking action has been the best thing and investing in property i mean i got my my wife who's even more conservative than me but i remember the way i got her on board was um she asked me what i wanted for my birthday and i asked her for a couple of

investing books so she got the the barefoot investor is is what she what i what i asked her to get me and she read it before she gave it to me and then when she handed it to me she was like by the way you should read this book it's really good what are we going to do now kind of a thing so she was really on board um so yeah i was like yeah that's a good way to get family on board as and and that that another really important uh uh point there i think andy uh because i you you would talk to a lot of mom and dad investors i'm sure and and i don't know about you but in the years that i've been assisting investors in that regard unless both parties are on the same page it invariably ends in tears so it's really important i think for both partners to at least

have one party might be much more into it and go to a lot more depth than the other but if you're not having the conversations around what it means where it's leading to and at least having that basic information and understanding that's often where some of the uh self-sabotaging can occur so another brilliant point there so and that's a nice sort of segue because i what i'd love to do now andy is dive more into the the financing exercise and how important finance is uh to your success in property and to sort of set the scene for that what are the biggest mistakes that you've seen that people make around borrowing money to invest in property most people look at you know they're swayed by by things like depreciation benefits but they don't they

don't see the big picture as in you're you're buying an asset an overpriced asset like the other other houses in the same suburb might cost a couple of hundred thousand less than what you're paying but you're buying it because it has depreciation benefits of 50 000 over its life so people don't see the entire picture and they're lured by some of these things so it it means that they take out a massive debt for an asset that over the long term probably is okay but has not done anything great you know it hasn't grown as much as you could have and then you've you've used all your borrowing capacity on one asset rather than you know diversifying into different markets that could have grown could have grown a lot more and you know in investing it's always good to

diversify your risk as well 100 any other common mistakes that you see uh people making around the particular the financing aspect well you know there are different tiers of lenders and people sometimes stuck with just the big four, and they think that they can't, they can't borrow anymore, they're too afraid to go with the other lenders. Yes, some of the smaller lenders right now, you know, their interest rates are high. And borrowers probably just they're stuck on interest rates, more than anything else. But the borrowing capacity is also important, because, you know, the interest rates will change over the next year, the next few years, it'll go up, down, sideways, but it's enabling you to buy an asset right now. If you're able to get in,

buy an asset over the long term, the rents will go up as well. So don't focus so much on just the interest rates. Look at the overall package of how much you can borrow and what you can do with that. So what we do at OnFire Finance is also give people a bit of a plan in the sense you know you can buy a property worth say 500 000 but you need to try and target a rental yield of so and so so you know 500 say so you can keep buying the next one and you know you can manage to hold it that sort of a thing so people don't put that thought into the entire process yeah i 100 agree and i i've you know you're absolutely right for some reason that whether it be home buyers or investors they focus on rate and it's and i often say it's not right

It's reach that's important because, as you would know better than I, there's about a 55% variation across the different banks and lenders in terms of how much you borrow. Now, that's the difference between being able to get a loan for $500,000 and $750,000. and in terms of the asset base if you if you're you're you're securing a $800,000 property versus a $550,000 property and they both grow at similar rates over the long term you're going to be hundreds of thousands of dollars in front in terms of your nest egg at the end of the journey so 100% agree with you there it's focus on capacity your biggest asset as a borrower is the capacity So don't get suckered into going for the rate or the safety of the big four. There's 40-odd lenders out there, and they all have very different ways

of looking at borrowing capacity. The question that investors all need to be asking their brokers or the banks is, how much can I borrow? Because investment debt's tax deductible, so the difference – And if we're only talking, you know, a few small percentage points in relation to the rate, then the capacity has a much bigger impact, Andy. So you make a really important point in that regard. Yeah.

Just around that because, you know, you'll be seeing this, I'm sure, at the moment because with the rapid rise in rates and, you know, rules of thumb for every 1% increase in the rate, it reduces how much you can borrow on it for an average borrower around about $100,000. So we've seen 3.75% increase in rates. There's $375,000 less that the average borrower can get their hands on. What suggestions would you be making to potential investors at the moment in relation to optimising their borrowing capacity and overcoming that growing hurdle, actually?

Yeah, I would say, you know, at the end, it comes down to your income and expenses. So if you're already an investor, like, you know, have you checked your existing rents? You know, is there any room to increase that? There are also some. So the way lenders look at your expenses is there's something called household expenditure measure. So each lender has a different level of household expenditure measure. And there are some expenses such as private health insurance, private school fees, strata. These expenses are added on top of the household expenditure measure.

So, for instance, if a lender's HEM is $4,000, but you spend only your household expenditure per month is only $2,000, but you have private health insurance, private school fees of another, you know, $500. they're going to consider your expense to be $4,500 because they just take the minimum HEM plus they add all these extra expenses on. So reducing that, reducing your credit cards, those are big ones. And I'd also like to add that from the 1st of June, the HECS debts are going to increase by 7% this year.

So they don't charge you interest on HECS, but it's adjusted based on the inflation so for this year it's seven percent so if anyone has a hex debt there maybe you know if you're able to do consider paying it off um if you're looking to get a home loan because this also you know reduces your borrowing capacity but it all comes together so speak to a good mortgage broker and get a good idea of the entire picture of what what you know what's hindering you but i'd like to add to um to your listeners that property investing is for everyone so it's not it's not that you need the biggest amount of money to get into it as i did myself you know i just found found a way to found a market where i could afford to buy i did my

research i was still a bit you know i had my requirements but you know i bought interstate I use a family guarantee if that's available to you, not available to everyone. But there are ways you can still do it without having to eat two-minute noodles. Spot on. That's really good advice there. Now, something that I've seen is really inhibiting a lot

of ongoing property purchases, whether it's owner-occupiers or investors at the moment, is the 3% servicing buffer that APRA has imposed on all the banks. And while I acknowledge that it was really relevant when the cash rate was down at 0.1%, now that we've got rates back to where, you know, around where the long-term average is, what's your thoughts on the 3% and the appropriateness of the 3% servicing buffer and the impact that this is having on investors' capacity? Yeah, so I mean, it was appropriate at the time because interest rates were so low and the market was really hot, red hot, inflated. But right now, as everyone knows, it's too high.

So if the actual interest rate is 5% or 6%, for example, the lenders actually assess your borrowing ability at 9%. So there's not a lot you can buy at that rate. but some relief for refinancers at the moment. Lenders are in talks with APRA to be able to refinance home loans and investment loans, like for like, and they will reduce the buffer from 3% to 1%,

just for like, for like, refinance. So St. George has come out now and Westpac have come out and reduced their buffer rate to 1%. Resimac has also reduced theirs. So there are some options available and hopefully other lenders will come on board as well. And if you're stuck in a tight situation

and can't afford it, you might be able to refinance. But if you are stuck in that situation that's really tight, then it's not going to reduce anytime. The rates themselves are not going to reduce right now. So make sure you can at least hold on for a year.

Yeah, 100%. No, really, really good advice. And another good reason for listeners to be reaching out to a good investment-savvy mortgage broker like yourself because it's a moving feast when it comes to the way lenders approach. So it's not a set and concrete exercise. Banks are changing their policies almost every week.

So well worth asking the question. Sort of coming back to the investment exercise to round off the conversation on this, Andy, where do you think people need to start with investing and what are the initial steps they need to take if they're sitting here listening, going, yeah, I need to be doing something in the investment space? What are your thoughts around that? Well, I guess the first step with investing is knowing what you can afford to buy. So there's two things to that.

What can you afford to borrow and what can you afford to hold? So on my website, I have a little investment forecasting tool that I use personally. So you can put in all your expense income and it shows you if you bought a property worth $500,000 and a rental yield of 5%, how many properties can you afford to hold at the end of the day? Would you go in negative or would you have any cash left over? so those two things speak to someone who can give you a bit of a plan and help you maximize you know um what you can actually achieve with your current financial situation so not just the one property but the end goal and how you can get there someone who'll work with you on that um i feel like that's a good start um then researching areas uh you know there's so much data available

right now, and it's only going to increase the data-driven approach to property investing. You know, reach out to people like P.K. Gupta, who I've personally had great experience with. You know, speak to people who have done what you're looking to do and don't get stuck on fixed ideas such as, you know, I just need to buy in Sydney. Exactly.

Yeah, taking that borderless approach from a diversification perspective but an opportunity perspective is a really good one. Great thoughts there, Andy. Now, I'd like to sort of shift into what I affectionately refer to as the ambush fast-forward, Andy, or the bushfire lightning round where I ask you the four questions, I give you a blindfold and a cigarette, and we jump in. So to kick that off, what's your favourite quote and why?

Right. So someone once told me, like, if you want something really bad, you'll find a way. if you don't you'll find an excuse um that's that's one that uh that someone told me a while back and it's quite true you know i feel like um sometimes you don't want the things you don't want to do but uh and you subconsciously put it off and then you say oh i was just too busy or i just didn't get the time but really if you wanted to you would so i find that um a quote that's um true yeah it's a really good one uh moving into the literary field you've mentioned a couple

books during our discussion already but what's the top book that you'd recommend we read and why um i think the richest man in babylon which i which was the first little book that i read it's not really that big a book you could probably find the pdf online it's such an old one though it's an interesting read and it's more of a mindset change that it leaves you with um and as i've mentioned like it's not you're trying to save money and changing your financial habits it can't be like a diet you can't just force it on yourself and go hard it needs to be a mindset change so reading something like that might help you with it um if you have problems saving um money i feel like the barefoot investor has some good advice some of it is uh you know

he's very anti-property i was gonna say yeah my only critic i've read the book myself i've got a copy but my only criticism there is that because scott pape is a financial planner and financial advisor and therefore can't talk about property he actually pooh-poohs property and but my own belief is you need to have a diversified portfolio across property shares super the whole exercise so yeah the only negative out of that exercise i think is that he probably uh is slightly a bit too negative on the property side but there are some as you say some really good savings fundamentals uh in that book in terms of getting into good money habits so i think that side of it and having the the open conversations around the kitchen table and and whatnot there's some really

really good money habit stuff in in that exercise uh so no really good tip on that um yeah i would actually like to um to say like you know i'm not property investing i think is really safe and the I mean, as I mentioned before, my exit plan would involve investing in some vanilla shares because you don't have to deal with people too much, you know, so a little less headaches there, but property is the best vehicle to use other people's money to invest. You know, you can leverage safely and buy property and the bank's not going to chase you for their money back um as long as you keep making the repayments um you're good so that's a very unlike shares if you try and leverage into shares the value of the shares go down you're

going to get a call and that's going to be really margin call that's going to be really quick and they're going to sell off your shares so that's one of the main reasons why i favor property as an investment vehicle yeah yeah really good advice and i mean i've been there i've had a margin call I used to trade CFDs before I got into property many years ago, and that was a very scary rollercoaster ride. And I've done some numbers on this, Andy. In terms of bang for buck, property will potentially give you three and a half times the equity and asset-based opportunity

that you'll get in shares, even on a lower growth rate. So because you're using the bank's money to do it. And here's a really important point, I think, that people need to think about. And that is the fact that banks will still win 90% to 95% of the value of a property. And let's face it, banks are into making big profits, and they're never into losing money. The fact that the banks see property as a safe haven in that context is a pretty good indicator that is a pretty good place to be putting your money. So versus a margin line which might be 50% or 60% of the value

of the shares, from a risk perspective and a risk management perspective, it's giving you a pretty clear sign that property is a pretty safe place to be putting your hard-earned coin. So that's great. Now, next question on this one is, well, what's both the worst and the best piece of investment advice that you've ever received, Andy? um the worst would probably be uh from my mom to buy a two-bedroom apartment in marylands i'm glad i didn't do that i mean it was it wasn't that bad but it just yeah i'm glad i did

yeah the best advice was from someone on an uh on a property forum and she said buy what you can afford when you can afford and don't take it in the literal sense as in you know buy whatever do some more research but you know when you can afford as in we always look back and we think that oh i should have bought back then like you know even even now that the rates have gone up i'll tell you i probably can't qualify to buy the last property that i did you know if i try to buy it again i wouldn't be able to do it so i'm glad i did back then so that's why you know that's great advice i've been saying for a long time now it's it's never a matter of when because the best time is every time you can afford to and when i say afford it's not the purchase price it's the

ongoing holding cost that's the important piece there that you've already reinforced earlier but it's always about what and where so uh because time as you and i both know time is the the biggest shift on top of compounding that has an impact on the outcome for property so uh i'm certainly a big advocate of that uh final uh question in the ambush series what's a personal happy habit that you employ that's contributed most to your investment success today um personal habit that's helped me i think i just have an addictive personality to be honest so once i started reading about property i just kind of jumped into it and just kept reading like to a point my my wife was you know a bit like oh why is he researching she didn't want to talk to me

about property anymore the last two properties when i uh when i was you know looking to buy them i was like i'll check this one i'll check this one out at the dinner table and she was so sick of me so that's been uh that's a bit of a personality trait um that helps and also hinders sometimes i'm right with you there i yeah i call it property porn uh basically because i'm on my free time, I'm sitting there scrolling through realestate.com or domain.com and just constantly looking at properties. And it becomes a sort of a healthy addiction, but it's a fun addiction anyway. But I understand exactly what you're saying there. Awesome. I really enjoyed our great conversation today. As we sort of bring it to a close, what are your key takeaways and

actions that aspiring investors need to take Andy I'd like to just say that you know do your research and take action don't be bogged down you know into over analysis there are so many options available time will heal most things so just you know take some action love it absolutely beautifully said okay well and for those in the audience that have really resonated with your message today andy uh how can listeners find out more and get involved with you and perhaps tap into the uh property investment forecasting tool that you spoke about earlier yeah so you can uh check it out on my on my website on firefinance.com.au or you can look me up on instagram i'm trying to be a bit more active um andy fernandez on instagram or you know you'd find

my details on my website get in touch if you would like to have a chat and see you know what's possible with your current financial situation. Awesome, Andy. Look, really enjoyed our chat, mate. I think this will be the start of many more. So I'm really keen to keep the conversation going. And I want to thank you for being so generous with your time on the show today. Thanks for having me on Bushy. Thanks, Andy. Thanks for tuning in to Get Invested on the

Property Hub podcast channel, your home for property investment insights and inspiration. And don't leave yet until you've taken the next step towards living by design by getting my award-winning book get invested absolutely free when you sign up at knowhowproperty.com.au or bushymartin.com.au and finally make sure you subscribe to property hub to get your weekly dose of get invested inspiration along with every episode of realty talk australia's leading property show for red hot property investing news and insights direct from industry leaders and influencers remember to always get invested in your knowledge and i look forward to seeing you next time