Property Hub - Investment Insights & Inspiration - Get Invested: John Lindeman on the art of property performance prediction

Starting point is 00:00:00 An incredibly important part of that is to be buying in an area where there's a lot of growth potential. So you need to know, well, why is this area good to be buying in? What's going to happen? How do you know that? Well, you can look at this, what I call the three P's, which are properties, purchasing power, and population. 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.

Starting point is 00:00:49 Let's get started. Hi, Proud Inviters. Are you a property investor or interested in investing in property and you want to achieve better results? Well, as I've mentioned many times before, sustainable success in property rather than one-hit wonders or overnight sensations resulting from the luck of the dice or chancing on the right property at the right time, revolves around your skills to read and interpret property trends and conditions, along with the ability to remain calm and collected in the face of

Starting point is 00:01:18 what can at first appear to be unpredictable and unexpected turns of events that cause the unsuspecting masses to panic and make reactive knee-jerk short-term decisions that often have long-term and unforeseen consequences or worse still many become panicked and paralyzed like rabbits in the headlights and do nothing because of the fear factory fiction being perpetrated by the mainstream media and end up as nothing more than roadkill on the side of the highway to financial freedom. So how do we ignore the noise and be able to step back from the instant cut and thrust of constant conflicting opinions on what's supposedly happening as well as what's supposedly going to happen in the wonderful dynamic world of property that actually has

Starting point is 00:02:03 more twists and turns and possible combinations than a Rubik's Cube, which out of interest is about 43 quintillion. Now that's 43 million, million, million, or 43 with 18 zeros after it. Now clearly, it isn't simple nor easy. Yet some investors defy the odds and are consistently able to read the tea leaves and achieve reliable, repeatable results. So what really separates the sustainably successful and the best investors from the rest? Is it just dumb luck or is there more to it? Well, in my humble opinion, it's a combination of an analytical approach that revolves around interpreting the right data mixed with a big dollop of worldly wisdom that can only be accumulated over decades of watching and observing changing property conditions

Starting point is 00:02:56 alongside macro and microeconomic factors, and most importantly, resulting human behaviours. in other words you need to be part analyst part economist part profit and part psychologist all wrapped in the rare and most valued quality of all and that's humility you need to become a sage where lived experience and accumulated wisdom always trumps oversimplified single indicator mind models or a ai algorithms which become the latest trend because rational intelligence developed over decades creates intuitive awareness that drives informed decision making. There's just no shortcut to this. Expertise and outperformance in anything takes time. Patience, persistence, and artful reflection are key ingredients of sustainable success.

Starting point is 00:03:51 Or as Tolstoy beautifully summed it up, the two most powerful warriors are patience and time. So remember, great achievements take time and there is no overnight success. And no one encapsulates all of these rare qualities more than today's very special guest, John Linderman. He's going to give us a sneak peek into the rarefied era of his property expertise and to share his enlightened insights. For anyone who's been involved in property for any length of time, John is a revered and respected as one of Australia's leading property market analysts.

Starting point is 00:04:25 With over 20 years of experience researching the nature and dynamics of the housing market at major data analysts, John's renowned as the property market researcher that property experts go to for all of their Australian housing marketing sites. He's authored two landmark bestselling must-read books for property investors, being Mastering the Australian Housing Market and Unlocking the Property Market, and along with his innovative property research firm Property Power Partners. He provides presentations, commission reports and other research services on the nature and direction of the residential property market for property industry leaders and investors alike. So to help you better understand and

Starting point is 00:05:07 interpret dynamic property conditions in order to make much more informed and better decisions that will ultimately help you to achieve sustainable outperformance results, I'm really excited to spend some time with one of my virtual mentors and an industry living legend. So welcome, and let's get invested, John. Hi there, Bushy, and thanks for that wonderful introduction, and it's great to be here. Well, this is a bit of another one of my bucket list moments. John, I've been a big admirer and a follower of your work for a long time now, and as I just mentioned then in the introduction not only do I admire the quality of your research and the

Starting point is 00:05:48 work you do but the humility that you bring to that is a is a very rare quality in this day and age mate so um and I know that's going to become very evident to those who haven't had the pleasure of listening to you before today's chat so um mate um when I get ahead of myself uh I guess for those who haven't uh been exposed to your words of wisdom in the past can you sort of kick things off, John, by just giving us a bit of a rundown on what you do differently and, as importantly, why you do what you do. Well, what I do differently, I guess, is that I research the property market full-time, and I've been doing that for a long, long period, over 20 years, as you mentioned. We do a lot of on-the-ground research, do a lot of travelling around Australia,

Starting point is 00:06:32 not always to holiday spots, but actually areas where we think there is growth potential. lots of presentations i went to the southern highlands last week brisbane and next week i'm off to perth and then a few weeks after that to melbourne and then another workshop in sydney so we're on the go all the time because even though i've been involved in property investing a long long time uh some people call me a guru others say he's the the godfather of property investing i'm not sure if that's a compliment but um you know you can always learn more and the best way of doing that is by having a look to see what's actually going on yeah beautifully said because there's certainly a big trend towards desktop data these days and the i think over reliance on

Starting point is 00:07:21 ai but nothing beats boots on the ground that hands-on experience to be able to interpret what it really means and to to add those insights so we'll get into that later but i guess where i'd like to start now or if we can is to circle back and to get you to take us briefly through a bit of a reader's digest of your journey so far in terms of you know what you've invested your time energy money in over the years and why and how this has actually led you to what you're now doing today. I guess it all started when I was about 20 and I'd moved to Melbourne I'm actually from Sydney but at the time I'd moved to Melbourne and after a few years there I discovered all my friends were starting to buy property get their first home and nearly all of them were buying

Starting point is 00:08:08 three-bedroom homes in the outer suburbs of Melbourne and being from Sydney at the time I looked at what was happening in the market in Sydney and I thought actually it's more about excuse me older terrace style properties that have got the most growth potential and I thought why don't we buy one because they're still pretty affordable and renovate that rather than live in property you know as such which was quite a an unusual thing to do my friends laughed at me but we rented about two doors up from the property that we started to renovate and I learned a lot about renovating a little you know all the difficulties of that but what happened was a very unexpected thing and that was that my property doubled in price over the next

Starting point is 00:08:55 four years it was in Hawthorne in Melbourne and their properties didn't go up much at all so I thought wow I've hit the jackpot here I know exactly what to do I'll do it again so we sold the property and then we did the same thing again only this time in the bayside area of Melbourne around Mentone and it didn't go up at all and the property prices actually went backwards we did a renovation and we lost money and so you know my journey very early on when I was in my 20s I realized that I didn't really know anything about the property market I'd lost money heavily on the second deal. And I thought, I've got to find out what's, you know,

Starting point is 00:09:37 how the property market actually works. And so that's when the journey really started, going to boot camps, workshops, you know, all sorts of different types of events where people were telling me about how the property market worked. So it started then and it's still going on right now. Yeah, awesome. So a couple of things I wouldn't mind zeroing in on there. you said all your mates were getting into property before you jumped into your first one.

Starting point is 00:10:03 Why were they doing that? And I know it's going back a long time, John, but can you remember what your thinking was at the time? Were there anything that you were thinking, gee, I'm not sure about this? Or what was it that actually got you to jump across the line? And then as a flow on from that, I wouldn't mind just sort of expanding on why the first property did well versus the second and one didn't on the basis of the accumulated knowledge that you've put together since then? Well, I think at that time it was possible to buy a property. You know, when you were fairly young, it's a lot harder now.

Starting point is 00:10:39 So I guess we were lucky in that regard that we could actually buy a property. But the reason we chose Hawthorne instead of an outer suburban area was because we had no intention of starting a family. We thought it's just the two of us. and we can actually you know spend time renovating and the reason I took that approach was because my brother was a builder and my brother-in-law was a surveyor building surveyor and so they sort of showed me that you can actually make money out of doing stuff with property you know

Starting point is 00:11:10 you can manufacture that equity so I thought about it rather differently I guess to my friends and the reason it went up a lot in in value was because terrace houses became very fashionable and everybody wanted to buy one and live in one and it was about that time you know so that was when tourist houses sort of mean instead of being old old eyesores became fashionable properties to live in and they went up a lot in price and that didn't happen in the second area that we bought in which was around Mentone because there was no such change in in buyer demand yeah okay now well I'd love for you to sort of thread the needle a bit more for us in terms of you know you had those kind of experiences you started to do a bit more research and

Starting point is 00:11:55 reading and everything else how did that lead you into the analyst the property analyst field can you sort of sort of paint out the territory for us and yeah we go of course so what happened I went to lots of these boot camps and workshops and and free events and I realized that all these people were telling me a lot about the property market but they weren't actually explaining to me how it worked and how you could benefit as an investor. And that's really the one thing I wanted to learn. I thought, well, if no one's going to be able to tell me this, I've got to go and find it out for myself. I'd finished my studies and I joined the Australian Bureau of Statistics and I was there for five years and I discovered a thing called trend analysis, which was making a lot of

Starting point is 00:12:44 people very wealthy because what they were doing was using the ABS data to trend things forward, like price of gold or commodities or shares and using this to actually work out what was likely to happen. And I thought, well, if you can do that with other commodities and other assets, why can't you do that with property as well? And so I started studying this and I discovered that the property market actually works just like any other commodity according to the laws of supply and demand.

Starting point is 00:13:14 And once I made that discovery, I thought, this is it. I've worked at it, you know, how to do it, how to make money out of property. So that became my main aim from then on until now to, you know, be successful in investing in property. Yeah, I love that. So relating that to your own experience, then after Mentone, were you applying what you were learning through that trend analysis back into your own investment?

Starting point is 00:13:41 Can you sort of paint the territory out for us a bit more in that regard and where that got you to? Well, we moved back to Sydney, and I think I became a bit too smart because I thought I understand how it all works now, and so I'm going to buy a house and not just get the market-driven growth but also we're going to renovate this property. Now, it was entirely the wrong type of property. It was in Sydney in the northern beaches.

Starting point is 00:14:06 It had been converted into three units, and I decided to convert it back to a normal house, which was a rather big house. It had three bedrooms and about four or five bedrooms. but although we were able to do that it was completely the wrong type of property for the area it was all young families and people with kids who didn't want a large house like that and so you know again I learned from a mistake that when you're going to do something like a renovation you've got to renovate to the most popular type of property and not away from it so that was a big lesson I learned the next property after that I did a much more sensible

Starting point is 00:14:45 renovation and I did about three or four renovations in turn each time learning more not just about renovation but about what sort of renovation to do in any area. Yeah awesome we might sort of dive into some of that as we as we move on but it's something that I always like to put guests on the spot with John is to get to share something unique or interesting about you that you've never actually shared publicly before what have you got for us? What I've never shared? Well, I think, well, what would it be? I guess the main thing is that when I wrote my two books on property,

Starting point is 00:15:27 the property market, and then I went back to the publishers and said, look, I'd like to write another one. And they said, look, you've written two books on property investing. Why don't you do one on personal development? And that really threw me. and I thought I don't you know I've never really thought about personal development in that way so what I've been doing is sort of structuring how you can better use your time and and analyze why you're doing certain things and I've never talked about this before but so the next book might not

Starting point is 00:15:59 be about property at all but more about how to get things done that you really want to get done in in your own personal life. I love that John because I've got my own philosophy on this and and that is that I think sustainable success lies at the intersection of self, health and wealth, and they're like three legs of a stool. And self being what you think, what your expectations, attitudes, beliefs are that lead into the happy habits that you develop through your health that build the patience

Starting point is 00:16:30 and persistence that then combined helps you achieve wealth in however you decide to define that. And if you don't have the self and the health in play, then you can self-sabotage yourself without even knowing it's going on so without you expressly thinking about it i think the personal development book would be a great compliment to the awesome property books that you've already written in that context so i can't wait to see it mate um we'll keep an eye out for that do you have a working title at this stage or is it a bit early in the piece um well it's it's going to be called signs of life and the idea being that it

Starting point is 00:17:07 points you in different you know what are the signs of life it's a double meaning of the word signs and the publishers seem happy with that so but you know writing books is something I love writing I love presenting it's what I enjoy doing and so I just think it's another aspect of doing what what I like doing and maybe you know providing some good information along the way to other people yeah yeah having been through the writing experience so i often say that it's been the the best personal development course i've done myself in writing the book because it really forces you to think hard about what you actually do believe and and communicate that in a way that's going to be meaningful to others so it's a it's a great process just sitting

Starting point is 00:17:51 down and and uh really uh fighting with yourself to to really uh be able to download key information that is going to be useful to others, mate. So I can't wait to get a copy, mate. I want to put myself on the list right here right now to get a copy of that book. Mate, what I'd love to dive into now is to sort of get you to unpack what challenging event in your life, and it doesn't have to be property-based but can be right

Starting point is 00:18:21 across the board, what challenging event has brought about your greatest learnings and your best changes as you reflect on them? I think the challenging event was really that second property purchase. You know, I've had a few more since then, but that was really the realisation that I thought I was, you know, smarty pants and I knew everything and I really didn't know anything at all about the property market. And at the time it was a lot harder to know exactly what was going on.

Starting point is 00:18:52 I mean, these days we've got all this information available at our fingertips and it's really easy to get listings, sales data, you know, prices, whatever you need. But at that time it was much more difficult. And so I thought I'm never going to be able to work this out. And it took a long time for me to go through and just stick with it. And I think that what I learned from that was to persevere. You know, if you really believe in something, keep on sticking at it.

Starting point is 00:19:20 Yeah, I think that's a really good lesson because particularly in property uh you know you would have heard the stats more often than i have and i think it's an abs that actually i think uh over 54 percent of first-time investors uh sell a property within the first five years never to return the unfortunate part about that is it's it's probably more about them than it is about the property and uh to ignore the learning opportunity that comes out of some of those things is a is a great waste because it's it's those instances that that teach us the most and prepare us better for what lies ahead. So love that.

Starting point is 00:19:57 One of the other things I like to get, you know, special guests like yourself to share with us is, and again, if you can reflect back, what was your investment strategy when you first started and how has this evolved and changed over time and why? Well, that's a very interesting question. And I think what I learnt was that a lot of the, you know, the sort of boot camps, workshops I went to early on were saying, you've got to get 10 properties

Starting point is 00:20:27 in 10 years and all this sort of thing. And I could see that there was a real fatal flaw with that because it's not about how many properties you own, or it's not even about the equity you have in them. It's about what stage of your property investing journey or your investing journey generally that you're at. So when you start off, you know, you might say, well, I haven't got much I've only got a small deposit but what you can do if you're buying an area that's got a lot of growth potential then you can use the bank's money you borrow that at say six percent and you're getting 12 percent growth that means you're actually using the borrowed money to make money for yourself and that's the first lesson I learned is that when you start out it's about getting as

Starting point is 00:21:11 much growth is shorter period of time as you possibly can I'm at the stage of my investing life now where I don't really need to get more capital growth and it's not because I don't you know I'm not greedy or anything but it's just I'm just going to end up leaving it to my kids or grandkids anyway what I'm after is cash flow so at my stage of property investing I'm looking at buying and owning properties that have got high cash flow and I'm doing so we know I haven't got any debt on those properties so the rent income is actually my cash flow and that's you know as I see property investing is a journey where you start off with borrowing as much as you can safely, but you end up where you don't owe anything at all, but you're buying in areas and owning

Starting point is 00:21:56 properties which have got the highest cashflow potential. Absolutely. Again, there's a bit of a misnomer, I think, amongst a lot of investors that the idea is just purely to buy and keep buying properties, pay off the debt and live off the rent. As you and I know, the sorts of properties that grow aren't always the best yielding properties so there needs to be a transition in your thinking as you go from growth to cash flow and that means different types of properties in different entities in different structures that's going to give you that tax effective income stream and potentially even a rationalization of the portfolio as you get in as you shift from that that growth to cash flow component so maybe a discussion for another day

Starting point is 00:22:40 john might be to sort of dive into that a little bit because uh it's certainly an area that i i don't see a lot of people talking about it is that transition phase uh when when you're switching across because if that's not very delicately handled uh then you can end up giving a lot of it back to the the tax office uh at your expense and uh therefore hamstringing what the ongoing lifestyle as a result of that remaining and residual income that you've created actually transpires. So one question I would like to dive in there as well, if I may, is in the context of these spruikers that talk about 10 properties in 10 years and all the other hoo-ha that goes with it, is how much is enough for you? Because I don't know about you, John, but I'm in a very

Starting point is 00:23:30 similar stage of the exercise and my wife Sonia and I have sat down and worked out exactly how much we need to sustain the lifestyle that we enjoy and and we're certainly not uh you know elaborate with that we live pretty simply uh but it's it's not a massive number and uh if you've done the right things then it that it gives you your time back to be doing things like I'm doing today and that's enjoying a great conversation with you where does that sit from your perspective yeah I think it's all about the difference between income and wealth that, you know, you work to get an income and that takes up all your time. But when you've invested successfully and you've got a lot of wealth, you don't need

Starting point is 00:24:11 to spend much time on maintaining that wealth at all. And for me and my partner, it's just simply, you know, do we have enough to enjoy a simple lifestyle? You know, we don't go out very often. When we do travel, it's for work. So that's all, you know, we like to go to nice areas, but sometimes we have to go to areas where there's growth potential and find out why. But it's all about maintaining a lifestyle that's active and healthy and that having enough wealth gives you the freedom to do that. And I think that's really the important thing about the difference between the two.

Starting point is 00:24:45 And you should be, when you're, you know, working hard for someone and making money, think about, well, what will I do after this? You know, I can't be doing this all my life and I need to start looking at accumulating wealth that's going to look after me when I get older. Yeah, beautifully said. I'd love to sort of touch on the subject as well because it sounds to me like you're already living your ideal lifestyle and the ongoing education and research into property and where it's heading sounds like something you're going to continue to do for a long time yet. a couple of obvious questions is that the case and uh if if that's so yeah because i i guess one of the the things i hear a lot of people talking about is that once i hit the the magic number that's it i'm going to sit on the beach and drink my heaters for the rest of my days uh you and i both know that uh you don't remain very happy doing that for very long because life has no

Starting point is 00:25:47 purpose so where does that sit in your context yeah i think the idea of having that enough wealth it gives you the freedom to do what what you really want to do um but it's knowing what it is that you want to do that's that's the hard thing uh and and for us it's very much doing what we do right now you know i love doing podcasts and blogs talking about the property market and you know we're completely independent we don't sell property or anything like that so we're not trying to you know make money out of the information we provide directly it's all there because of stuff that we've learned over the years or that i've learned um so it's very much about sharing the knowledge and and being able to pass it on because i think well i can do what i'm doing

Starting point is 00:26:32 now and i can still present and i can still do podcasts and blogs but you know i don't know how much longer i've got i'd like to be able to share as much of that as i possibly can yeah i'm exactly or the same position as you, as long as my voice holds out and the voice is one of the things that generally doesn't fail us over the years. In fact, voice gets better as we age, I keep getting told. So I think there's a pretty good roadway ahead for both of us in that respect, John.

Starting point is 00:26:59 But if we sort of reflect back on your journey so far, and you might have touched on this already, but what do you consider to be both your best and your worst investment and what have you learned from each of those um well i think i've covered a few of my worst investments um and i mean at the time when i started a lot of my friends were buying gold and and shares and things like that and i dabbled in those but never didn't really lose any money but i never really made any either in it because i didn't really understand what i was doing and so i've stuck with property because i i do understand how the market works and

Starting point is 00:27:39 how you can, you know, avoid making those big mistakes. So I think that, you know, the biggest mistakes were buying the wrong type of property at the wrong time. And, you know, that's something I've learned a lot from. And I still see people doing that, you know, going into areas and buying, it might be the right time to buy, but they buy the wrong type of property or they pay too much for it. So I'd say, you know, whatever you do with property investing, always make sure that you've got the right advice from the right people before you jump in and start making decisions. Totally agree.

Starting point is 00:28:13 What about on the flip side? What's been the best investment and what have you learned from that? I think the best investments have been applying the rules and the laws, you know, that I've learned, looking at areas where there's going to be a sudden increase in buyer demand or rental demand and buying in those areas. And it's not really that hard to do. I mean, one example was in the Riverina town of Hay where the company,

Starting point is 00:28:42 Auscott, the cotton farming cooperative, was going to build a cotton gin and they needed 160 workers to do that. Now, I had a look at Hay. There were no rental vacancies and very few properties on the market. So I figured that if 160 families were going to move into an area like that, rent demand would escalate and then, of course, rents would rise and then more investors would move in. That's exactly what occurred and it's the best result I've ever had

Starting point is 00:29:10 and property prices doubled in seven months. And you wouldn't think that was possible, but they did. They went from $100,000 to $200,000 in the space of seven months and the rental yield was over 10%, so the property was paying for itself. So they're the sorts of results you can get if you, you know, apply the logic of supply and demand to property. Love that. Absolutely love that.

Starting point is 00:29:35 And, again, you're doing the research ahead of the curve to pick up on that, which we might dive into a little bit later. But if we sort of reflect back on where you've come to and where you're at, if you were starting out again, John, what would you invest in differently, if anything? Well, I'd like to start earlier than I did. Probably you'll say if I could start over again, I think, you know, one of the things is that we tend to be influenced by our parents a lot.

Starting point is 00:30:06 My parents grew up during the Great Depression and the Second World War and they said debt is bad, you know, don't borrow money, it's all bad debt. And it took me a long time to realise that there is such a thing as good debt and that is the money you borrow from the bank to buy a property can be good debt if you're only paying 6% interest and you're getting double that in return on growth and rent, then that's a good way of being in debt. And I think that's a lesson, you know, I should have hopefully learned a lot earlier.

Starting point is 00:30:40 It would be great if I could have, but it was one that came to me rather slowly. Yeah, very well said. Well, I want to sort of dive now into your area of expertise around the whole analysis piece and sort of kick that off. You've done some great work when I was sort of Google stalking some of the recent work you've done and some of the past work you've done, I'd love for you to sort of set the tone for us by sort of unpacking briefly what you consider to be the seven

Starting point is 00:31:09 deadly mistakes property investors make and how we can avoid them. The seven deadly mistakes. Well, I guess the first one would be don't buy with your heart instead of your head. This is a mistake many people make, especially when they go on holiday and they see a beautiful little cottage by the sea and they think oh you know we could buy that we could go here on holidays and we could rent it out at other times your airbnb it and it'll go up in price we could even you know sell it for great profit later what they have made the mistake of doing is they're using their heart instead of their head it could be an area where property prices are about to crash there's no rent demand you don't really know unless you do the research so the first one is

Starting point is 00:31:54 always look at the numbers you know buy with your head not with your heart the second one i think is the one we see very often is fear of missing out and people jumping in buying a property because everyone else is you know we've got to get get in quicker we'll miss out and a lot of booms uh you know end that way when people jump in they all start buying you get a lot of price growth and then the whole thing just suddenly stops and can even go backwards so avoid the temptation to buy just because everyone else is i always say you know it's best listen to the experts who say don't buy when other people are buying that's when you sell um do the opposite um the third one is i think is also very common is listening to gossip hearsay news newspaper headlines which tell you

Starting point is 00:32:42 there's certain areas about to boom or that the market's about to crash or whatever you know don't listen to the headlines and don't don't listen to the the gossip and the hearsay that you might here in the office because it's not informed information. Always do the research yourself properly. And another thing is that the property market is pretty much unregulated. And that means that a lot of people can operate in the market with impunity and make all sorts of claims that they can't do with other assets like shares. So what it means is that there are people out there who I call wolves in sheep's clothing. They'll tell you, you know, buy in this area and you'll double your money in a few years you'll get massive rent returns you know population growth

Starting point is 00:33:26 is imminent those sorts of people are usually making money out of selling you a property so what what happens you go to an event at the end of the event you know there's a rush to the back of the room where they're going to you know sell a few exclusive off-market properties to you and you can be sure that they're going to be making a lot of money out of those transactions so you You know, always it's quite easy to do these days. You just research people's bona fides. You can go in and Google their names and see if they've been investigated by ASIC or, you know, what their track record actually is.

Starting point is 00:33:59 And I always recommend people do that before taking any advice from anyone, especially and even myself. You know, you're quite welcome. Go ahead, Google my name and see what comes up because I don't have, you know, that sort of issue. but there are a lot of people out there who do and you need to know who they are. The other problem is people might buy a property

Starting point is 00:34:24 and this is a mistake I made, which is the wrong type for the area. Or they renovate to a property, you know, they might renovate to a four bedroom property in an area where most of the people want to live in three bedroom properties. So, you know, always make sure you're renovating to the right type of demand

Starting point is 00:34:43 or buying a property that's going to be in demand rather than the other way around. And I think I'm up to five, so there's two to go. Another big mistake people make is paying too much for a property. So never buy a property unless you've got a really good idea what it's worth. Now, there's lots of free information sites out there powered by the major data providers, which are CoreLogic and PropTrack. And you can go to their sites and you can get a free estimate

Starting point is 00:35:13 of what a property is worth. you can look at how much it's gone up in value over the last few years there's a wealth of data that's available and it's all free and it would make sure you don't end up paying too much for a property the last mistake is one that it's also very common and that is selling at the wrong time there's nothing worse you can do than if you've been sitting there for 10 years waiting for a property to grow in price and to sell and then to find it doubling in value over the next year so always make sure you know what is the growth potential because you don't want to be selling just before the growth starts and selling at the wrong time is you know a very very big mistake

Starting point is 00:35:55 that a lot of people make because they give up and they miss out on the growth just just before it occurs absolutely i've seen that time and time again unfortunately uh i want to sort of jump to the flip side of the spectrum on that if i can john and get you to unpack for us what you believe to be the keys to successful investment and why? I think the key is at the start to use leveraging as much as you possibly can. Now, that means borrowing as much as you safely can, but an incredibly important part of that is to be buying

Starting point is 00:36:30 in an area where there's a lot of growth potential. So you need to know, well, why is this area good to be buying in? What's going to happen? How do you know that? well you can look at this what i call the three p's which are properties purchasing power and population and so you look at what's happening at the moment in that market if there's only a few properties listed for sale but the sales are really high and again you get that you know just

Starting point is 00:36:57 go to a major listing site and all this information is provided now for you so if there's only a few properties for sale and that number is declining the number of sales is increasing that means that it's got imminent growth potential and then you look at well who's buying in that area what type of people and households are they and if they say they're older people who are you know downsizing they're cashed up that means they've got high purchasing power if they're first-time buyers with interest rates rising they've probably got far less purchasing power so you know you can work out the potential just by looking at the type of households in the area and the last thing is the actual change in population so if you're buying in an area where the people are moving

Starting point is 00:37:42 in let's say again if they're older people downsizing is it the sort of area that people are likely to move to or what sort of you know households are moving into an area and is that increasing or decreasing so using a simple analytics to get a much better idea of what the growth potential is for a market where you should be buying and where you shouldn't Beautifully said. Sort of translating from that then, in your experience both personally and working with others, what are the qualities and key character traits that separate great investors

Starting point is 00:38:16 from the rest, do you think? I think the great investors are those who, well, firstly, they're not scared to ask questions. You know, they don't believe they know it all, which is something I learnt that I didn't know at all. and you can rely on there are mentors and experts out there with good information. So I think that's one of the secrets is never be scared to ask

Starting point is 00:38:40 and always go to the experts and find out what they can tell you. I think that's really the key to success. And the second thing is to do your own research and be really sure about an area's potential before you make any decision to buy a property. Yeah, absolutely spot on. and opinion is very cheap, but data doesn't lie if you're looking at the right information.

Starting point is 00:39:04 Now, I sort of just want to touch on your books because they are, you know, sort of timeless tomes in that regard, Mastering the Australian Housing Market and Unlocking the Property Market. I'd love for you, because I really, you know, encourage people to grab copies of those books to increase their awareness of the framework that they should be looking at property with moving forward.

Starting point is 00:39:29 why did you write them what are the key messages in those books and and who's best suited to write them read them john um well the first book which is mastering the australian housing market i wrote that in 2010 um and just in terms of talking about the discipline in writing a book um when wiley's asked me to to write that book uh i was about to go on an overseas holiday to to europe and the deadline was the day i got back so i spent most of my time on that holiday writing the you know the contents of the book um much to my partner's annoyance i just sat on the eiffel tower and everything um but you know that's that's what it does teach you is discipline you if you're going to meet a deadline you've got to put in the the time to to do it um but the

Starting point is 00:40:19 main reason it was because i wrote that it was just after the gfc the global financial crisis and um i was at resodex the head of research at resodex and when that crisis occurred a number of the major lenders came to me and said um john we're really concerned that housing prices could actually fall now they'd never considered this before they thought they just keep going up and suddenly what happened in america where housing prices in some areas crashed by 40 they thought that happens here we're in big trouble um because we've been lending you know 80 percent um lvr that means 80 of the value of a property is is borrowed money um so i said can you start working out for us what are the main indicators how you can work out where the prices are likely to fall and so i

Starting point is 00:41:10 looked at all the you know sales listings rental vacancies all the different indicators that are out there and then came back to them and said yep you know i think i've worked it out this is how you can tell where housing prices are likely to fall over the next couple of years um which they gratefully use to their advantage but i then thought hang on you can turn that around the other way and you can actually say well if i can work out where housing prices are going to fall I can conversely say well which areas have got the greatest growth potential over the next year or two and I thought at that point that's what I need to put into a book to explain exactly how and where you can find these sorts of areas by using data that's freely available and so that was the

Starting point is 00:41:54 end result was that book and who is it meant for well really anybody who's interested in how the property market works if they're thinking I might become a property investor then this is the you know the right book for you i wrote it as i said 13 years ago um while these have come back and said can you do a post-covid version we need you to update it um but i don't really you know feel too inclined to do that i think it's still relevant in its current format because the rules of the market don't change they're still pretty much the same and they'll always be valid yeah it's absolutely spot on there are some sort of timeless principles that create a bit of a framework and a lens that allows you to look at what's happening you know i'm not probably

Starting point is 00:42:38 assuming that uh your seven steps to success course uh that you've developed which is also a great ready record for people to really upskill themselves and in that regard can start to lead down that pathway uh you're able or happy to share some of the key elements of the seven steps of success exercise uh that's going to help us get better results in both our current and future property investments john um well what that that's it's an online login course that people can buy if they wish but um it really encapsulates all of the the tips the tricks the techniques the templates the checklists the questionnaires everything that i'd learned to develop over 40 years of you know investing in property so putting all that together into one course saying well this

Starting point is 00:43:27 these are the different tools you can use and also videos explaining how to use them so that's really what the course is all about and and the these tools and techniques and so on show you how the market works where to buy what to buy you know when to buy how to narrow down your search how much to pay for a property and even things like how to negotiate with agents and so on and then how to know the right time to sell. So it covers all of those. But what we do is a lot of that information we provide in blogs and podcasts on a regular basis.

Starting point is 00:44:03 So a lot of that information, I think I did one with you a little while ago about the slingshot effect, Bushy. Yes. Great tip. People, and all of that's available, that's on our website. So a lot of the information, you know, I share quite willingly to say, look, this is how the market works. and this is how you can benefit.

Starting point is 00:44:24 Yeah, I love it. Now, you've also got an e-book that probably encapsulates a lot of that, summarises your best tips and tricks for property buyers. Can you give us a quick taste tester on some of the key learnings that flow out of that one? I think the main learning from that is all about timing rather than time in the market and the importance of buying in an area where you've got huge or strong growth potential rather than buying

Starting point is 00:44:50 for long-term growth because, you know, the market over long periods of time it goes up an average of about 7% per annum, that's including inflation, but that's not really enough to get you, you know, where you want to be. So what I always recommend is let's buy in areas where you've got really good, strong, imminent growth potential and then after that growth has ended you can then sell and do it all over again. You're going to be much better off.

Starting point is 00:45:17 So they're the sorts of things that I show people how to do. Yeah, I love it. Well, again, I'd love for you to just give us a glimpse under the hood of what you believe are those things that do suggest that an area is about to experience some imminent growth potential. What are some of them? I think when you look at what's happening right now, for example, we've got 400,000 overseas arrivals coming into Australia.

Starting point is 00:45:43 they're heading into certain areas which are mainly our big capital cities they're nearly all renters so I think you know the biggest dynamic you can see occurring right now is a massive increase in rent demand rents are going to go up and no matter what state governments try to do to regulate you know rent increases they're still going to go up and it means that yields will go up so rental yields of the amount the return you get from rent that's going to increase so i can see that these are the sorts of areas that probably languished most during the covid years like the inner urban unit markets i think they've got huge growth potential over the next you know a few years and then leading on from that when these

Starting point is 00:46:26 people that have come here after a few years i want to buy their first properties we're likely to see another huge housing boom in terms of first-time buyers so that could be you know three or four years away, but I think that'll be the next big boom and it could be the biggest one of all, you know, going based on the number of people that are coming into Australia. Yeah, I love that. I just sort of did a bit of reading around some of your thoughts on that on your website in terms of the setting to get suburbs

Starting point is 00:46:55 with the highest long-term growth potential and your commentary around the prospect that we are and could be heading for our biggest property market boom ever. And so would you be happy to share a couple of tidbits around where the sleepers are and where they're set to boom as a result of that? Yeah, well, there's a number of sleepers, I think, that is set to boom. And we look at a population, one third of our people are aged 55 and over and they're getting close to retirement, probably thinking about downsizing and maybe relocating. so we've got a lot of people who are planning to move over the next few years and i'll probably move to you know coastal holiday type recreational areas so i think that that's one of the biggest

Starting point is 00:47:47 areas for growth potential when you look at um and this is one of the ones i picked in 2022 was sussex inlet new south wales uh that went up from 600 000 to 230 000 growth in one year and that was one of my predictions that I made publicly these sorts of areas have still got huge growth potential so I'd say that you know one of the secrets I can share with you now is when you look at those sorts of coastal holiday areas and they're all around Australia from around Harvey Bay, the Sunshine Coast, Gold Coast, northern New South Wales, the southern coastal cities of New South Wales, East Gippsland in Victoria. We look at South Australia, the three peninsulas, you know, the Fleurieu, York and Eyre Peninsula all have got huge growth potential as

Starting point is 00:48:37 people move there in retirement, not too far away from capital cities, but they're going to be, having a lot of spending ability because they'll be selling homes worth up to $2 million and maybe putting $600,000 tax-free into their super, and they're still going to have well over a million dollars so that you know there's a lot of growth potential just in those markets alone 100% agree the sort of cashed up boomers as as they move through into lifestyle decisions I heard recently and again you'd be more over this than I would John but I think about 25% of purchases in recent times in some of those regions are cash purchases by people in that sort of over 60 bracket so which doesn't have the issues around lending money and borrowing capacity that a lot

Starting point is 00:49:29 of other younger property purchasers are experiencing does that line up with your thoughts very much so and it's also the case that they're not employed you know they're retiring so they're not looking for for work i mean they might get a you know part-time job just just for the something to do but they're not reliant on income for the um so they're not going to be move into areas where there are job opportunities so it all it all combines and i think you can see a lot of growth potential in fact i'm sure of it that a lot of these areas um and even when people get older like in in areas i looked at um there is all around coastal australia where there's a sussex internet is another good example in a very high median age but people even though they're

Starting point is 00:50:15 getting to the point where they need assistance they don't want to move again they've made new friends and they've decided this is where we're going to stay so a different type of accommodation again but um if this is going to go on for probably another 10 years i'd say before that that growth boom that the boomers have caused will will come to an end totally agree and i think you make a really good point that they'd rather stay where they are because i've established their network so we're seeing uh you know i had the pleasure of interviewing simon kirschner I've been at Saltzoff's side of the demographer recently and he talked about, you know, one of the biggest booms

Starting point is 00:50:51 of renovation are putting lifts into properties to make them more accessible and more durable and give them longevity. So it's sort of all reinforced the excellent points you've made there, John. John, sort of bringing this all to a logical head then in the context of what you've been sharing with us, what actions should aspiring and existing property investors

Starting point is 00:51:13 be taking right now as you see it given that there is still a dearth of negativity floating through the media and paralyzing people into doing nothing? I think the first thing is you know get informed find out as much as you can about how the property market works you don't have to make any commitments we've got a website called lindermanreports.com.au and you can go there and get lots of free information about how the market works and how you might be able to invest safely in future you know and there are many other sites as well as um you know bushy's own podcast channels which which provide huge amounts of valuable information i'd say get informed as much as you can before you do anything um and before you make any decisions that's

Starting point is 00:52:01 probably my my main word would be find out as much as you can yeah nothing greater than knowledge because it reduces fear it gives you comfort and clarity so uh but but again there's a lot of people in this day and age who are outsourcing the responsibility for that to others because they just don't want to make the time uh and and and potentially to their own detriment i think is a consequence of that and i think you know there's there's no better information than than what you produce on your websites to really give people clarity so that they are making decisions based on all of the right information, not just on gut feel or intuition, as you mentioned earlier.

Starting point is 00:52:42 John, I'd love to sort of transition now into what I affectionately refer to as the ambush round, which are the, you know, the fast four questions that every guest gets to answer and you get issued with the blindfold and the cigarette before we do that. John, to kick that off, what's your favourite quote and why? I think my favourite quote, it's a Chinese one, and it's even the longest journey begins with a single step.

Starting point is 00:53:09 And I think it's my favourite quote because it exemplifies the idea that you take action. It doesn't matter how small it is, just start doing something and you'll find that each step becomes easier. And so the further you go, the easier that journey becomes. But, you know, take that first step. Timeless classic and it's all about action, doesn't it? How much knowledge we take in and knowledge is important,

Starting point is 00:53:31 And as we've discussed, if you don't do anything with that knowledge, you're going nowhere. So, no, that's a really good one. Now let's turn back to the literary field. On top of your two great books, what's the top book that you'd recommend we read and why? I think the book I got the most value out of, and I think others could as well, is Stephen Covey's

Starting point is 00:53:54 The Seven Habits of Highly Successful People. that really gives you a roadmap on how to you know live not just daily but the rest of your life to a plan and a purpose it's a great book very easy these seven steps are you know not difficult and one example that really stuck with me was he talks about the clock and the compass and he says we're all you know governed by the clock we have timetables we go to work we do this we do that meetings and so on um and we forget about the compass which is the real meaning of why were you here what what are we why are we doing this stuff um having directions in your life and a purpose in your life and he says you should devote much more to the compass activities rather than

Starting point is 00:54:41 the clock activities and i think what i've added to that is one more which is to have also have an anchor you know be anchored in the present remember that you can you can't change the past and you You don't know really what the future's holding for you, but you can do something about your life right now and that's have an anchor, be anchored in the present. Yeah, I love that. I'm a big fan of Stephen Covey's work. When that book first came out,

Starting point is 00:55:08 and I'm probably displaying my vintage a little bit now, but I brought the, there's almost like a follow facts version, a diary that enabled you to actually turn the book into living action. And I followed that with great discipline for a number of years, it made a big difference to the results that I was achieving at that stage. And as you say, it all comes back to the compass and the why

Starting point is 00:55:31 and the purpose that's behind what you're doing as the key value alignment driver to make sure that you're staying on course. So, yeah, great words of wisdom there. I want to sort of switch back into the investment arena for a minute and get you to share with us what you consider to be both the worst and the best piece of investment advice that you've ever received, John. I think the worst was probably from my parents, which is they, you know, said all debt is bad debt

Starting point is 00:55:59 and they were quite convinced, you know, it was get a house, you buy a house and pay it off as soon as you can, get rid of that debt. So that, and that was really bad advice because, and even in terms of when you're starting out, you're much better off renting a place and buying an investment property, which is what I did because the returns from that investment property

Starting point is 00:56:21 would be far greater than if you buy a property to live in. So I'd even say that was, you know, bad advice. I love my parents and have the greatest respect for them, but they weren't really great on property investing. On the flip side, what's been the best piece of investment advice that you've ever received? I think it was when I worked at the Bureau of Statistics and there was a trend analysis expert there

Starting point is 00:56:49 And he's taught me the value of looking at trends, saying, you know, you cannot beat trend analysis in terms of working out what's going to happen. You know, you negate a lot of the guesswork and sort of opinions, all of that, because you're looking at numbers and which way they're moving. So I think that the best advice was look at the trends to see what's happening and what's likely to happen in future. Beautifully said. I'm going to go a little bit on tangent here because there's a lot of talk at the moment of the value of data, but we're almost buried in data now. John, there's so much free information that's available through the internet that a lot of people are sort

Starting point is 00:57:33 of getting themselves confused over which data is actually relevant to helping them make the right decisions. Now, if you're a capital growth investor in the early stage of your journey, can you give us some thoughts on what are the key bits of data that we need to, and you mentioned the three Ps obviously, but are there any additional sources and or pieces of data that we should be focusing on to help us make those good decisions and ignore some of the other?

Starting point is 00:58:02 Yeah. Sorry, I grimaced then because my cat just decided to make an entrance once again. He's out of the picture now. The key pieces of data, I think really the two basic pieces of data you should be looking at are listings, and that is simply the number of houses or units that are for sale in an area, and then track those, which you can do quite easily by going to, say, realestate.com.au or domain, and just seeing are they moving up or down.

Starting point is 00:58:32 And then the same site will give you the number of sales that have occurred, So you can look back and say, well, are the number of sales increasing or decreasing? There are two simple pieces of data. If sales are going up and listings are going down, that means that prices are highly likely to rise in future. But having said that, data can tell you what's going to happen, where and when, but it can't tell you why. And one of the lessons I learned was in looking at, and we've developed our own database that

Starting point is 00:59:04 tracks all of these indicators and it was coming up with this little town called curry and it said that curry the number of listings had dropped dramatically and it was going to boom now curry is on king island which is in bass strait in between victoria and tasmania couldn't work out why is the number of listings fallen so much it's going to boom so we got on a plane or two planes actually one to Melbourne and one to King Island, to have a look. And what we discovered was that there were two real estate agents in Currie and one hadn't paid their bill and so realestate.com.au said, right, we're taking all your listings off the site.

Starting point is 00:59:46 And so the number of listings, you know, on realestate.com for Currie suddenly halved and that's all it was. So, you know, checking to see, well, why has that change occurred? it can actually mislead you yeah there you go well there's the danger of data in some sense in an area like that was such a small sample uh the results can can uh and so concentrated might make things look very different to what's underlying so again boots on the ground you took the the action of jumping on a plane and walking the streets and talking to people i think there's there's the compliment between the data indicators and on the on the ground exercise that really

Starting point is 01:00:29 investors are serious about what they're doing need to bring together because if you're relying on one or the other you're missing out on a big chunk of the pie so some great advice there last exercise in the in the fast forward john can you share with us a a rewarding ritual or daily discipline that you employ that's contributed most to your investment success um well i think the the one thing that's contributed most is to you make a list of all the things excuse me all the the things you need to do that day and then you do the things that you least want to do first so get all those things out of the way that you really don't want to do and are most likely to put off until the next day and then put them off again so you know

Starting point is 01:01:17 Get rid of the things you don't want to do but you really need to first and make that a daily ritual and say, right, now I'll get rid of those and then I can enjoy the rest of my day doing the things I really want to do and not the other way around because otherwise I'll end up getting put off again and again. I love that because that's often the choice between the important and the urgent because the urgent things, they feel more appealing, but it means that you're not pushing the big rocks into the jar

Starting point is 01:01:46 on letting the sand fill the cracks. And what happens if you pour the sand in first, of course, then the important stuff never gets a look in. So some great thoughts there. But, Ben, an awesome conversation, John. I feel like we're only just scratching the surface. So I'm hopeful that we'll be able to continue the conversation moving forward to sort of dive into various aspects

Starting point is 01:02:09 of the exercise, both here on Get Invested and Realty Talk as times transpire. But if I can get you to summarise what we've talked about today, what are the key takeaways and must-do actions that aspiring and existing investors need to take? I think the first thing is, you know, get as much information as you can and then start taking action to do something about it, get involved in the property market. and you know even if you're a startup investor and you think well I haven't got a lot of money or I can't borrow much it doesn't really matter there are areas in Australia is such a huge continent there's always investment opportunities and we can look at areas such as Wyala in South Australia you can buy a house there for 200,000 and get nine percent yield has it got growth

Starting point is 01:03:01 potential well if it does and that's a great investment so you can start with you know not a lot of money at all but make that start and remember too the other thing about timing the market is that it's really important to buy in areas that have got good imminent growth potential not buying for you know long slow periods of growth but you want to make that money as quickly as you possibly can and there's lots of ways you can do that which we explain on our website as well how to help you do that yeah i love that john well but for those in the audience like myself who have really resonated with what you shared with us today uh and you've touched on this already but uh how can listeners find out more and get more involved with your job

Starting point is 01:03:44 well our website is lindeman reports that's l-i-n-d-e-m-a-n reports all one word dot com dot au there's lots of blogs videos there's a heap of information we've got a free newsletter you can subscribe to as well um and also we're going to make a special offer should i mention that now bushy perfect timing yeah you've been john so yeah no please share it with us right what we've what i'm doing is offering anybody who would like to take advantage of my time half an hour of my time with a free telephone consultancy no obligation there's no sell you can just ask me your most pressing questions about your current investments or whether you think you might be investing or is it worthwhile to do that whatever the questions are i'm happy to answer them in a

Starting point is 01:04:32 half hour telephone conversation with you and we can do that you can book your time by going to lindemanreports.com.au and looking up free consultation and booking in a mutual convenient time but i'm sure bushy will provide a link to the that site as well absolutely will and and i'll do that just after i book my session in with you john because we're actually taste testing a number of destinations around the country at the moment looking for our sort of forever destination for the next 10 years or so so I'll be taking advantage of that and I'm really going to encourage everyone listening to the show to take advantage of that it's very rare that you get an opportunity to talk personally to someone with the wealth and wisdom of experience in property

Starting point is 01:05:24 that John brings to the table you normally pay hundreds if not thousands of dollars for the level and depth of expertise you're able to share in that direction, John. So that's an extremely generous offer. And I'll be very surprised if there's not a lot of people that are beating down the doors to share that time with you, mate. So look, it's been a really good conversation. I'm hoping this is going to be the start of many, as I've mentioned before. So I really want to thank you for being so generous and humble in your approach, John. It's a real rarity in this day and age to find people who are not only good at what they do but have a humility that goes with it and the genuine care that comes across in everything you do in helping people to better secure their own futures. John, so thanks again and let's keep the conversation going.

Starting point is 01:06:22 Yeah, it's been a pleasure. And to everyone that's listening and watching, I wish you all the best of success with your own investing. Thank you, John. 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

Starting point is 01:07:02 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.

Property Hub - Investment Insights & Inspiration - Get Invested: John Lindeman on the art of property performance prediction

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