Bushy Martin is an investor, author, podcast host, and the Founder of KnowHow Property Finance. With over 35 years in the property industry, Bushy is passionate about empowering individuals to enhance their lives through strategic real estate investments.
In this episode, Bushy is continuing his deep dive into the world of investment real estate. He’ll explain the key distinctions between buying as an investor compared to buying as an owner occupier, and explore the essential do’s and don’ts when it comes to investing in property. Plus, Bushy shares his top tip for anyone looking to get into the world of investment.
This episode is part two of our two-part chat with Bushy. Check out our last episode to hear how Bushy first broke into the world of investment, and the services he provides at KnowHow Property Finance.
the information contained in this podcast is general in nature and is not to be taken as financial or personal advice.
It does not consider your objectives, financial situation or needs.
You should consider whether this information is suitable for you and your personal circumstances before acting on it.
Hi and welcome to the home Run your guide to buying the first home in Australia.
On the show.
I’ll walk you through the home buying process from every angle we cover the steps to take the pitfalls to avoid and the answers to all your questions you’ve been dying to ask.
No matter what stage you’re at, you’ll learn everything you need to know about buying your first home.
I’m your host, Michael Nasser, and I’m a mortgage broker at Lendstreet, and I really love helping people buy their first home.
Thanks for joining me for Part Two of my conversation with Bushy Martin, the investor author, podcast host, and founder of Know How Property Finance.
In today’s episode, we continue our conversation about buying your first home as an investment property.
Bushy will talk about how buying an investment property early can help secure your future.
He’ll also share some recent success stories he’s seen and Bushy, and I will explore another popular topic.
Rent vesting, Let’s dive in.
So why might someone want to buy their first home as an investment?
Everyone needs to get invested Michael to secure their future and the old theory.
And I’ve done the numbers on this.
Buying your own home, paying it off, and relying on super is gonna leave most Australians in penny-pinching poverty when they try and stop working.
You’re probably aware of these, the latest a BS figures that confirm that over 73% of retirees over the age of 65 are surviving on just an average of $15,300 a year, Michael.
And that’s 295 bucks a week.
Mate, we know about you that can cover our grocery bill.
So in my view, you all need to invest over 54% of Australians.
Wealth is in property, so it’s telling you that it’s a pretty good place to to, stick your money.
So there are two situations where I think it’s appropriate for first-timers to invest is one.
If you just can’t afford the cost of a home.
If the the cost of the the the mortgage and all the other costs are just gonna be unaffordable and you’re gonna be living on toast and two minute noodles, then that’s a good time to consider rent vesting as an investor.
Because, as I mentioned, the tenant and the tax office are gonna cover at least 90% of the cost of holding the property.
And if you’re structured it well, 100% the other exercises those who bought their first home.
And once their equity grows and their income increases, then that’s the time to invest.
But the key here is not to blow it all on red at the casino on your first home purchase.
If you’ve maxed yourself out, you’ve borrowed 95% on the home and you’ve maxed out your borrowing capacity.
Well, it’s gonna be 10 to 15 years before you’re gonna be in a position to cover it.
And that’s a long time to put yourself out of securing your future Long-term.
Yeah, and I like the fact that you made the distinction that a first-time investor can be purchasing it as their first home purchase or they.
It’s the first time they’re deciding to buy an investment property so they might already have an own occupier.
And I guess this is what we’re speaking to is the home buying process any different when you’re planning to invest than it is for an own occupier?
You mentioned it already.
A lot of home buyers really buy with their heart, not their head.
So there’s a much more motion involved in that property purchase, whereas an investor really needs to let the numbers do the talking and it’s very data driven and data verified.
So where a owner-occupier focuses just on the property, the successful investors get the principles, the process, and the people right first.
And then the property falls out of the end of it rather than starting with the property and then trying to work out how you can do the rest.
So as an investor taking that strategic approach, you start to look at a top-down scarcity approach to the property you’re gonna buy.
So you look at the macro, the M, and the micro of the region, the area and the property, and the three key things that you’re looking for and an investor that an owner occupier isn’t, what I like to refer as the three eyes of growth.
And they are new infrastructure, new industry, and strong and growing income.
So it’s infrastructure, industry, and incomes.
If you’re looking at those and there is new committed infrastructure coming in, there’s a diversity of growing industries and the strong and growing incomes.
Then you can be very confident that properties in that location are going to increase in value, and people are gonna be able to afford to keep paying more for them as they grow.
So the key here, though, whether you’re an owner-occupier or an investor, as I say, I don’t think there’s much difference here is to buy an investment grade home that has owner-occupier appeal.
So a lot of investors just buy units and townhouses because I think they’re for investment.
But what they’re doing by doing that is excluding 70% of property purchasers who are owner-occupiers.
So one of the things that we really hot on with the investors we help is to make sure it’s still got owner-occupier appeal.
So it’s look good from the street the kitchens, the bathrooms, the areas have got to be a very attractive.
And that means that at some point when you do sell the property, you still got the opportunity to attract the largest portion of emotionally driven buyers.
And they are owner-occupiers at the other end.
It’s almost like you need to take the best of both worlds.
You need to think as an investor and as an occupier, and look at the good points and I guess, merge them together to create the ultimate purchase experience.
I guess so.
That’s the sweet spot.
Spot on absolutely spot on.
When we take it back to your your first investment property that you mentioned earlier on you mentioned that was a road that was built.
Now, were you aware that road was being built at the time of the purchase?
Or was that something that just happened Later on?
We heard about it, and we we it sort of influenced our thinking.
But we I wasn’t that educated at that point.
Michael, while we be straight up that educational knowledge grew.
I’m an avid reader, so, you know, I read everything I could get my hands on property investment.
And I’m sure the tools weren’t the same as what they are now.
I mean, now there are online portals, and there are lots more tools that can assist you back.
Then I’m I’m sure that it was a little bit harder to access information.
This is back in the days of brick phones and very little Internet.
So, so I just spoke to everyone.
I I’m one of and my wife and I we don’t know.
We’ll keep asking until we find out.
So, we’re very curious.
We would make sure we surrounded ourselves with people much smarter than what we are.
And we still do, By the way, as your knowledge grows, your comfort grows and the risk with juices, because you you need to know what you can and can’t do.
In the early days, we just didn’t know what we didn’t know.
You know, if we’re talking about some of the biggest mistakes that I see investors make is they try and DIY that first property.
I tried to do it myself.
I didn’t really trust anyone, Michael, but I I made mistakes that I didn’t even know I was making at that time,
We’ll definitely touch on those a little bit later, too.
So I think that’s actually gonna be the next question there.
Because I I think we need to get a little bit deeper into some tips here for some first-home buyers when they’re looking to buy an investment property as their first home.
What would be the biggest mistake that you see that first home buyers make when they’re buying their first home as an investment property?
A yeah, with cash on it.
But focusing on the property, not the numbers.
So, what I see in a lot of people buying property, whether it’s investors or occupiers, they the first thing they do is start scrolling through domain and realestate.com.au
Looking at the property to get excited, I think that’s the last thing you should do.
You need to get the strategy, your finance capability, the affordability all in place.
First to determine what your affordable spend is, And then, once you’ve established that, spend look at what’s the highest growth area around the country, not just in your backyard around the country, that’s going to give you that affordable growth that’s gonna be sustainable to achieve those results.
So focusing on the property, not the numbers, is the first mistake and not being DIY.
As you would know, Michael property is an team sport, and it’s very much a game of finance.
So the finance structure and the strategy is absolutely critical to how much you can borrow, what the cost of those borrowings are, and what the risk is attached to it.
And, as I say, successful investors get the principles, process, and people right before they even consider property.
And probably the other thing that I see a lot of investors do, particularly first-timers, is they chase the hotspots and then just buy anything that they can grab in that area, whether it be a unit or apartment.
I think that’s the wrong way around.
Hotspots pretty soon become not spots because by the time everyone’s talking about it, everyone’s piling into it, and the race has already been run rather than determine well, what can I afford to purchase in terms of my achievable spend and then around the country?
Where can I find a three or four-bedroom home that’s got those three eyes attached to it that’s gonna perform well, so that’s probably the major mistakes that I see first investors make.
And investors, too, by the way.
Yeah, well, I, I imagine it’s definitely mistakes can happen at any point.
And those three eyes there is infrastructure, income and industry.
spot on spot on so new and community.
And so we’re not talking about infrastructure.
I’m talking about roads, rail.
We’re talking about rezoning because that can significantly change and and create opportunities for gentrification.
Industries is about having that diversity of the industry, so it’s not a one-horse town.
The little things like you know, I wouldn’t invest in an area that had under 25,000 population because you need the critical mass I wouldn’t buy in an area that had more than 30% of investors in that location, because that dilutes the the growth as well.
And then the incomes.
You need strong and growing incomes in that area because if it’s got the first two eyes, but No-one can afford to keep spending more, that’s going to bring the the Yeah.
Yeah, and I guess this might lead to some of your biggest tips for anyone thinking about buying their first investment property.
What would they be?
Well, as we’ve touched on already, I think property is an elite team sport, and you’re not even a player.
As an investor, you own your team, so your only role is to manage your managers.
So make sure that you increase your knowledge enough to know enough about what they’re doing.
But then make sure you’ve got the best possible player on each.
If we use the sporting analogy, Michael, and if you in Sydney, it’s rugby or or I’m gonna use the swans example.
You wouldn’t be up against the Sydney Swans on your own.
You just wouldn’t do it.
You get the best possible players in each individual position on the ground, make sure that they’re all playing to your strategy, and then you’re gonna kick the goals and win the game.
So and the three key players, I think that you need to establish first and get this right is one.
Do your reading so you’ve increased your knowledge and some great books out there, but then make sure you’ve got a investment property strategist on your team who can and put some real shape around this exercise to start, make sure you’re working with an accountant who specialises in property because there’s a lot of nuances in tax lines around property and the average tax accountant just isn’t gonna know them.
And then, of course, from a capacity perspective, have an investment savvy mortgage broker on the team.
So you’re actually building it all on a paper first?
And you know what it all looks like before you actually even start making offers on property so that that would be my biggest tip
And that initial account that you first spoke to, they were obviously property savvy.
And were you lucky to have found that, or how How did you come about finding that first account?
Because they seem to have really set you off in the right direction.
I’d heard that he invested in property, and he’s a a very strong property investor himself.
I’ve just reached out and had a chat, and then we and we just we aligned it.
It just felt right.
He’s not only good at what he does, he invests in property, but it sort of personal personality.
Fit was right, which is also an important part of it.
By the way, you know, one thing I would say to everyone is it doesn’t matter how good someone is.
If it doesn’t feel right with them, just keep looking.
I agree with that.
It’s definitely more than just the transaction that you’re looking to conduct.
It’s the whole experience that person may provide you, and and that connection piece, I think, is a critical part of that.
Do you have any success stories that you could share from your time helping people purchasing investment properties?
So, yeah, I’ve got a few, but there’s one that’s probably relevant given what we’ve been talking about around the rents piece in particular, and I’m gonna call him Tobes.
I won’t give his full name because he doesn’t like to.
Yeah, we respect that tobes, he’s a He was a and he is still a winery seller.
Hand on a fairly modest salary he was renting with his mates, cos he’s a he’s a surf.
He was renting with his mates.
It was only costing him 100 bucks a week to live because there was, I think, three or four in this in this place they were living in.
He was actually going to build his first home because there was a new subdivision again.
This is down on Ding Beach and it it was a new subdivision.
So he was lining up to buy a block of land.
Someone suggested he have a chat to me, and I sat down and said, OK, well, this is what you can do.
If you’re gonna build your first home, why don’t you also consider what it looks like?
Just like my account did for me if you were a rent investor and again, I wasn’t using those terms, But I was saying, OK, well, if you invest rather than by looking.
So we did the numbers and it became self-evidenthat doing it as an investment property was a go and what I’ve seen him and a and a number of others do, by the way is to because it was his first home and there was a pretty significant first home buyers grant available at the time, particularly when you’re building a property.
He made the decision to build the property, live in it for six months, and he got a couple of mates in to help pay the mortgage.
So the other spare bedroom they were, they were just paying board money, basically.
And then once he fulfilled the requirements on the first time buyers grant.
He then moved out and then turned it into an investment property.
So he he’s done really well, mate.
So if we we look at him where he’s at today, he went on to build three properties.
Portfolio is now worth 2.5 million.
He’s still boarding, by the way.
His rent’s only gone up to 200 bucks a week, so it’s pretty cheaply.
He’s managed to pay off one of those properties.
He keeps about 15 grand a year of his tax in his pocket and not the tax office.
All his properties are now positive cash flow, and he’s accumulated over 350 grand in savings over that time.
So and the properties collectively are producing a passive income of about 100 and 20 grand a year, and he still managed to serve and fish because that’s what he likes to do, in his time off.
So he’s one of those guys that once he got it he’s just run with it now in his mid-thirties.
I reckon he’s still single, so he hasn’t gotten married yet.
But he’s loving the life.
So yeah, he’s a He’s a really good example of what you can do, turning your first home as an investment property into an opportunity to very well.
And I think so much of what we do today.
Lifestyle is a critical thing, and we were chatting before we started.
You know, recording and that lifestyle component of setting things up is, and that’s where passive income just ticks the brief, I guess, massively, it’s it allows you to live the life you want to live, and now more and more people are are sort of, you know, leaning towards that.
And property is the perfect vehicle if you do it in the correct manner, as you’ve explained with that scenario, too, so that just illustrates that point.
totally agree, totally agree.
So we generally close off our interview with two questions.
The first one is what’s your number one tip for first home buyers trying to get into the market today, whether it’s an owner occupier or an investment property purchase?
Well, I guess given what we’ve talked about, it would be treat your first home as an investment.
So you purchase a property that’s investment grade, but still has an owner-occupier appeal.
That would be my absolute tip.
And then, where possible, buying an area that’s got the free eyes working for you because whether you’re living in it or whether you’re renting it out, it’s gonna grow significantly in value compared to other areas that don’t enjoy those benefits.
Yeah, And I might add to that because I think the point that you raised that was really great was having your A grade team alongside you in that journey.
I think that will make a massive difference for you.
So I think that’s definitely something from from my perspective, that I resonated with greatly.
The second one is, if you were a first home buyer and you had a million dollars to buy, where would you buy?
OK, well, I’m I’m going to I’m gonna ask that in two ways, I’m gonna talk about what I would buy and probably what I wouldn’t buy.
So if I was a first home buyer and I have a lazy $1 million.
And gee whiz, if you’re lucky, lucky First home buyer, I would be looking for the highest long-term growth location from the, you know, nearly 11 million properties in the country.
I’d certainly be focusing on areas that have those three eyes of growth that we’ve spoken about.
I’d be looking to buy a four four bedroom home in a very tightly held suburb that had all those lifestyle amenities attached to it.
And if you apply that template across the nation right now, where would I buy?
There’s a a few locations, actually, south of Perth presents really good value, as we currently speak.
There are areas in and around Geelong in Victoria that are gonna have very long-term benefits and I.
I had the privilege of interviewing Bernard Salt’s demographer So Kirchner recently, and he was a big proponent of the Long-term benefits of Geelong.
There’d also be pockets in southeast Queensland, given the flow-on effect in the Build-up to the Olympic Games in 2032 in your patch in the in New South Wales, patch regional hubs like the Hunter Valley.
Given the standard duty concessions and everything that people can take advantage of there as a first home buyer are well worth considering.
So that’s the areas I I would buy in.
What I wouldn’t be buying, though, is units or apartments in close-to-city locations where there is heaps of them.
So there’s, you know, no scarcity, and they have no land content, so that’s what I’d be avoiding.
I love that response, and I appreciate the fact that you’ve actually given some areas to look into.
Just, I guess, as a extension of that, if someone obviously we we don’t recommend people DIY.
But we know invariably that people will from time to time.
So if someone is considering DIY and they may do that to start with before they seek professional help, what sort of sort of tools would one sort of be going to or what would you recommend that they start on just to get an idea on these type of factors?
And is there one particular place, whole bunch?
Whole bunch but, again, I would be reading or listening to as many podcasts as I could get my eyes and ears into.
I mean, some of the there’s a whole bunch of books, but the old classic of Rich Dad.
Poor Dad is a is a great great book.
Still, that gives you the philosophy of what you need to be doing.
So that’s a as a general exercise.
Anything by Noel Whitaker coz he’s Australian, and he he’s an accountant as well and a very active person investor.
So he starts to help you shape around what you should be doing and why you should be doing it structurally and and otherwise.
So they are a really good from that perspective, giving a very self gratulation plug The Freedom Formula, which is the book that I’ve written that’s won the Australian Business Book Awards a couple a few years back.
That takes you through step by step, the processes that have been successful for Sonya and I and a bunch of clients that we’ve helped over the years.
So that will be good.
And then, then there’s so much free information on the Web these days.
Once you’ve got all that clear and you’re confident around what you’re doing, then you can join the dots between a lot of free information you can get from real estate Investor domain realestate.com. There’s just a bunch.
The Heron Todd White National property clock is definitely worth tapping into these.
These are all absolutely free resources that people can jump on and look at right now and you’ll start threading the needle in terms of what feels right, in the context of where you need to go.
But but investing in your knowledge, I, I can’t emphasise how important that is as your knowledge increases, Then your fear drops, and then the risks also decline because you’ve got a much better handle on what you should be doing.
Yeah, you’re mitigating them a lot more.
And I and I like the fact that you didn’t start with domain and real estate, which is probably where most people would default go-to.
It’s more the education piece, obviously, and and some background, you know, information and contextual information that gets you off in the right direction.
And and it’s only after that that you look at the more common, and where people think to go to first.
So I think that’s that’s great.
Yeah, I I I.
I keep saying that property is the last thing you actually look at, Michael.
So even when you’re starting to look at you go macro.
First, you work out your spend and then go from state to suburb to street to property because 80% of the growth comes from the location, not from the property itself.
So getting that clear in your head right up front is really important.
That’s why that there’s that term location, location, location, I I.
I imagine so, it’s a pretty critical component.
Thank you so much for joining us today on the show Bushy.
We really appreciate your time.
Where can our listeners find you if they want to learn more?
Yeah, well, there’s a couple of things I’m gonna suggest there for those that are are looking for that inspiration and the information to, help their knowledge then, like yourself, we offer the property hub podcast, both realty talk show and get invested.
We get to interview all of the interested leaders in the game.
You can find those at bushymartin.com.au forward slash podcasts, and you can subscribe to those and just listen to them every week.
For those that are really serious about the investment piece.
I’ve actually done a podcast series that summarises my book to freedom formula.
So if you just jump on know how property.com.au forward slash property wealth Then that’s a seven-part series that you can just pop in your ears and it’ll give you the way to go.
So you know, that’s our We call it our boot camp podcast series for that for those that are readers, we also give my get invested book away for free.
So if you want to get a copy of that, just jump on know-how.
property.com.au forward slash get invested free eBook and that’s yours to grab.
Now, if you want a hard copy, then you just pay for postage.
And then the final thing, if you want to take it to the next level, is we also do a monthly what we call the Freedom Flight Programme, which are actually live interactive webinars.
And there’s a two-way exercise where I take you through the why, what and how of property investment.
So if you’re looking for those again, knowhowproperty.com.au forward slash freedom fighters.
You can tap into that as well.
And we’ll have those links in the show notes as well.
So if anyone wants to jump on any of those or or with any of those, please feel free to look at the show notes and you can find the links to those respective tools because there are heaps of them and it sounds like they’re gonna be quite informative based on your experience and what we’ve been speaking about.
I’m sure there’s a lot of gold in there that are gold little gold nuggets that people can access.
So, thank you so much.
Again, Bushy for joining me on the show.
I really appreciate your time and your insights as it’s been awesome.
Thank you so much.
And And congratulations to you, Michael.
I think what you’re doing is fantastic in opening people’s eyes to the opportunities they have in property and helping them on that really important journey.
So keep up the great work.
I appreciate it.
You’ve been listening to the home run your guide for buying your first home in Australia.
This podcast was produced by Lendstreet.
Lendstreet is a mortgage broker and home loan specialist that helps first home buyers find the right loan to meet their needs.
We know applying for a loan can be overwhelming and complex, so we help guide and support first-home buyers through the process from start to finish.
To find out more, head to our website lendstreet.com.au
We’ve also put a link in the show notes to make sure you don’t miss an episode of the home run.
Be sure to subscribe to or follow the show in your podcast app, and while you’re there, please leave us a five-star review.
It really helps others find the show.
I’m Michael Nasser and we’ll be back next episode, covering another step on the journey to owning your first home.