Aussie Firebug

Financial Independence Retire Early



Our guest today is Jayden Vecchio, a director, and co-founder for Red and Co who was awarded the 2016 FBAA Commercial Mortgage Broker of the Year award. You may know Jayden better as the co-host for the very successful ‘Rentvesting Podcast’ aimed at Gen X and Y Property Investors.


In this episode, we talk about Jaydens path to success coming into the finance world when the GFC hit in 2009 and the devastation that caused the finance sector in Sydney. We also chat about his journey with property investing, moving cities, starting a company as well as a podcast and many more things.


Show Notes



Aussie Firebug: Hi guys, welcome to another episode of the Aussie Firebug Podcast, the financial independence podcast for Australians where I interview clever people who have already reached are on their way to financial independence. Our guest today is Jayden Vecchio, a director and co-founder of Red & Co., who was awarded the 2016 F.B. AA commercial mortgage broker of the year. You may know Jayden better as the co-host of the very successful Rentvesting Podcast aimed at Gen X and Gen Y property investors. Welcome to the show Jayden.

Jayden: Right, thank you for having me. This is a lot of kind words there.

Aussie Firebug:[Chuckles] Yeah I hope I got everything right and pronounced everything nice–

Jayden: Nailed the pronunciation as well [Laughing]

Aussie Firebug: It’s an Italian last name, is it?

Jayden: Yeah, it means old which I’m not but you know, getting there. [Chuckles]

Aussie Firebug: What part in Australia you from mate?

Jayden: So I’m based in Brisbane in sunny Queensland, it was pretty hot today. And yeah, like you said, I’m the director of Red & Co. so we’re a property and financial services business and also yeah, lucky to co-host the Rentvesting Podcast so it’s similar to what you do like helping people with growing wealth really.

Aussie Firebug: Awesome, awesome stuff. So yes, sunny Brizzy, have you always lived there- grown up there your whole life or?

Jayden: Yes, so I grew up here, went to school here and then lived in Sydney for a couple of years where I think I got first involved in property down there which was obviously a fun way to do early in 2009/10 so when there was that big beautiful chunky first home owners’ grant, that was kind of just before– there was bit of a low off in Sydney when peaks in the market was pretty soft and then yeah, moved back to Brisbane a couple years ago and the family and that sort of stuff.

Aussie Firebug: Let’s dig into that just a little bit further. So you grew up in Brisbane and then you moved to Sydney in when– 2009? 

Jayden: Yeah and sort of– well actually, I moved down, I was with Macquarie bank at the time and my first day in Sydney was like in September 2008 which was fun yeah like literally like–

Aussie Firebug: So when the world was going down.

Jayden: — the first day I was like so happy, had my like little rolly bag, rolled into the office at 9:00 am and the office that was normally bustling and busy and like people on the phones and yelling and screaming, whatever, it was like dead quiet like you could hear a pin drop. Everyone was in a meeting room, myself like trembling like yeah, I’m so excited, it’s my first day at work and basically you know, 400 people got laid off that day in the mortgages department, they shut down their division like it was a crazy time to be in that area but I guess fortunately for me, I was very cheap labor because I was on Brisbane salary living in Sydney and I was pretty much a grad so there was no point making me redundant. I could stay on and do the work of a couple people and the more expensive people that got paid well, they were let go and it was very bit of a baptism of fire thing seeing you know, the highs and lows of property, obviously that was a bit of a tough time especially on the funding side but super interesting time to be around like you know.

Aussie Firebug: So that’s the really interesting to me because Australia didn’t really- well, from my perspective- get affected that much by the GFC so to hear like you know your perspective on that that 400 people were laid off, like that’s– I really didn’t think Australia caught it that hard. And you would have been in the thick of it working at a bank you know, as large as Macquarie is, how close was it to all falling over in Australia?

Jayden: All in the area, so Macquarie at that time got all their funds through securitization so what that means is it’s kind of like what happened in America where they bundle up thousands of mortgages together then they’d sell them to particularly investors who put money in them and they’d pay like a coupon so they pay investors to return their money just for example so effectively, that market stopped overnight because it relied on banks giving loans to each other and investors putting money in these loans and because of all the stuff that happened in America, basically that market was completely stopped so Macquarie being heavily, they were completely funded by securitization, they had no money overnight which meant they had to shut down their team like the money that they had out, they had to sort of work out how they could refinance that and get it back on balance sheet and the bank had to kind of pretty much buy back those loans more or less and there was nothing wrong with them. It wasn’t like in America where we’re giving people loans to someone in a trailer park, [chuckles], it was very different structures there because like you know in Australia, our loans are full recourse so if you take a mortgage out here and you decide you don’t want to pay it back one day, the bank will chase you and they’ll put defaults on you and they’ll make sure you pay it back whereas in America at the time- and I think it’s still a bit the case- you can take out a loan, you can decide one day you don’t want to pay it back and because they don’t recourse people, it’s literally just putting the keys in the mail and sending it back to the bank and leaving the house there. So like very different markets so it obviously wasn’t Armageddon like it was in the States but certainly for Macquarie who relied on those markets, they had no money to give and so they had no point of a mortgages sales team.

Aussie Firebug: Wow! So that’s the subprime like crisis thing, right? Like that was the name of it in the US, the Subprime or whatever–

Jayden: Yeah, in the US, they called it like the Great Depression, not the great depression, the called it different, obviously in Australia we call it the GFC, Global Financial Crisis.

Aussie Firebug: Yeah, but I thought like that there was subprime loans, I’m not an expert in that–

Jayden: Yeah so basically like in the States what they were doing was they were getting like big piles of loans and then basically on… So a bank would have a bunch of trash loans where they might be on– one thing they did a lot in the States were like these honeymoon rates so they might give you like a really cheap rate for three years, you know, it might be 2% but then it resets and it goes like 6% so then your payments go up like four times and then that’s basically– that whole subprime thing, all these rates reset at a similar time where people’s repayments went up and also backed up with the fact that Americans can walk away and say like “Later guys, thanks for the loan but no thanks.”

Aussie Firebug: Isn’t that bizarre?

Jayden: So crazy.

Aussie Firebug: Isn’t that absolutely ludicrous like so do they take a credit here or is their credit rating destroyed if they walk away from a loan? Like surely, there has to be some sort of–

Jayden: It might like affect your credit rating but from what I understand like you could walk away and it’s not like here where like they will chase you, they’ll take anything like your dog, your wife, like your pair of jeans like–

Aussie Firebug: [Chuckles] Hide your kids, hide your wife.

Jayden: Men! Like they won’t stop here whereas there, it sounds like- you know from my understanding- like you just leave the keys, you walk away, it’s the bank’s problem, not yours.

Aussie Firebug: Yeah, I’ve read about that as well but it just seems so bizarre to me that that they would let that happen like you could just roll the dice on anything you take, the riskiest investment ever and–

Jayden: And apparently like a lot of their lending standards were like– they got like a bit pissy on lending standards so they had to like lend a certain amount to different like demographic groups and like– it wasn’t like here where it’s like: well if you can’t afford it, you can’t get a loan. Like literally, the banks now, the way it’s regulated, unless you’re making a certain amount of income, if you’re over a certain age, you can’t get a loan like it can be tough in certain situations but I think fair probably because it’s going to help everyone else whereas they had a certain point for a Latino, for an African American, for whatever it is where you had to sort of sit in those profiles which you’re just like well, that’s crazy like it should just be based on merits not on whatever so yeah, a lot of craziness there and hopefully it doesn’t happen again but we’ll see.

Aussie Firebug: Yeah, fingers crossed mate. So, you’re obviously– well you’re a mortgage broker, you’re a director of Red & Co. so we’ll sort of skip to hear but that’s alright. Let’s go back a bit. So did you study finance at school or how did you get involved with finance? Did you know from an early age you wanted to go in there or?

Jayden: It was also one of those things like I studied business and IT at university, and actually started with IT–

Aussie Firebug: Go for IT!

Jayden: Yeah, mainframe and computer–

Aussie Firebug: Great, great, love it, love it.

Jayden: [Chuckles] But yeah, like sort of got towards the end of uni and I could always– maybe because of my family loved property, liked dealing with that sort of thing so I wanted to get in something property related, enjoyed finance, ended up getting that job from Macquarie and towards in almost like a grad program so that’s sort of how I got into the industry, through grad program, through university and got in that way but I think then I think then it was sort of like the mates that I had in Sydney that were heavily into property that liked it that I would spend Saturdays looking at open homes, going to auctions and just getting a good feel for the market down in Sydney and that’s really sort of what initially got me in and my first investment was down in Sydney in Alexandria, a unit down there.

Aussie Firebug: And so what year is this?

Jayden: Sort of like 2009, so I’d probably been in Sydney like a year or so and that’s when like I didn’t have a huge amount of savings but I was fortunate enough that the 1$4000 first home owners’ grant at that point and you could still get sort of 5% deposit loan so most of my deposit was probably the grant, like a bit of my own savings and managed to get into that property but my intention was always to– you had to live in it for six months to rent it out, to turn it into investment property and really like rentvest which is what it’s called now but I guess it’s what people did in those days– we were like: well, I don’t have to make the repayments myself. You can get tax advantages if I rent out the thing with [00:09:54] and everything else, I’ll just move out, rent it and live with a mate and that’s what I sort of did after six months, lived on a mate’s couch and became a landlord living on a couch. It just kind of worked out really well.

Aussie Firebug: That’s awesome. So what attracted you to property? You mentioned that– did you say your parents were property investors as well or you come from a sort of a family that–

Jayden: Yeah, I think I came from a family of property investors. I think also working in the mortgages team at Macquarie there, you’re kind of surrounded day by day with property and people buying stuff and investing and you just kind of get stuck in it a little bit so I sort of went that way and then the more saw it, the more I liked how it was kind of tangible when you could get across it and you can understand the suburb and you know some of them around and whether or not I was right.

Aussie Firebug: Yeah, and why did the same thing. I used the first time buyer’s grant but I did it originally and it was like close to twenty grand that I got–

Jayden: It was like twenty one, wasn’t it?

Aussie Firebug: Yeah, just over. I know it was like– thinking back now like such a lot of money that the government just gave me to go purchase a house and like yeah, I did the same thing like lived in it for six months but then rented it straight out and like it’s just crazy to think about how many years it would have taken me to save that much money and then you also factor in like I built to get that amount of money so then like stamp duty is nothing when you build a house and yeah so you’ve got to take these advantages when they’re available, right?

Jayden: Well, I reckon the thing that it’s easy to forget so I think mine was like fourteen grand, right, but like to actually earn 14 grand in my job net, you almost need to make 25-30 because then you get taxed and then you know, by the time it gets into your pocket and super comes off and everything else so yeah, I think like if the grants are there and it makes sense so like you’re not just buying property just because someone tells there’s a depreciation on these negative gearing benefits like you actually do the numbers and sit down and you know, the numbers make sense, I think you definitely grab with two hands.

Aussie Firebug: Yeah, so did you buy that investment property with an ultimate goal behind it or you just sort of had a bit of money, you’re working and you wanted to you know, make a smart investment? What was your strategy behind that first investment?

Jayden: So I reckon I was kind of lucky because a good mate of mine who was a director at Macquarie there had like ten or eleven properties at the time so he was kind of like taking me around showing me sort of the places like you know, it was kind of the next suburb along so it was like this Sydney city CBD, this red farm which was like a touch rough at that point, there’s like Alexandria which is kind of in between mascot and it was like the next suburb along that was pretty close the city, near a train line and like going through a bit that gentrification process like it was a bit industrial but still kind of cheap so I think like seeing him, seeing you know, what it’s like to have sort of 10-11-12 properties and just I like the idea of having some positive cash flow really and having someone sort of paying off my mortgage at the end of the day and obviously the tax benefits help as well. So yeah, I think like I went in there thinking that ultimately I wanted to build a portfolio and not have to work every day which you know, it’s like what you do, you know the fire piece, just becoming financially dependent and getting away from that sort of 9-5.

Aussie Firebug: Yeah, now I’m hearing you definitely. I think we spoke a bit about- you know before we started this podcast- like I don’t think anyone goes into property investing without you know, some sort of greater goal other than just owning the property and for a lot of people, it’s that replacing your income that you do. You trade your time for money and your full time job and you know, you imagine yourself one day sitting on top of this portfolio and it’s just working day and night for you and all you have to do is sort of you know, collect the rent every month and pay a few bills here and there and you can be off traveling or do doing whatever you want to do.

Jayden: Man, there’s a good quote. I think it’s Brian Tracy says- or maybe Jim Run- : You could work full time at your job and part time on your business and it’s kind of like that like you’ve got– obviously, your 9-5 pays the bills and it’s important in the short term but really, you’ve got to start building up your own business and you know for me, it was, I guess a property portfolio. For other people, it might be shares or funds, it can be different things but I guess yeah, that’s important to think about as well.

Aussie Firebug: Absolutely like I think– well it depends because– it’s funny because I quite like my job after that heaps of times but I always had in the back of my mind ever since discovered that financial independence was a thing that I’ve got to get there because then I have the choice because I know that I might like it now but I might not always like it and I went through a job change you know, the start of this year where I was in a really great job but then it sort of got a bit meh towards the end there, there was a change of management and I didn’t quite like what was going on so you know, even though it’s great now, it might not always be good and having that financial security knowing that you don’t actually have to go to work every day to survive I just think is you know, a freedom that everyone should experience at one time in their life.

Jayden: Yeah, so true.

Aussie Firebug: So great, so got the first property so did you study in Sydney– did you go to Sydney to study or you got the degree in Brisbane?

Jayden: I just finished in Brisbane and that’s when I sort of like I worked a bit in Brisbane then kind of got transferred down to Sydney. So yeah, like bought that first property, got a taste I was like this is awesome–

Aussie Firebug: And did you say it was cash flow positive?

Jayden: That one wasn’t but that was like the intention and this was when rates were like 6.5, like high 6’s, like the rates were kind of edging up because they obviously thought Australia’s economy was a bit even then. It was a bit weird. So I was actually going the other way. I sort of, like maybe within 12 months of buying that property, I thought I was ready to become like a property mogul so I borrowed a bit of money for my dad, got that property revalued and then bought another unit in Newtown which is sort of the next suburb along from Alexandria for like 330 and then sort of like scraped because the deposit could hardly service it but kind of did it like in a way that– like I can basically just scrape all my money together and even make the repayments. That really stretched me and that being in a time when interest rates were going up got me into like a bit of a pickle because the rates were going up and I’d sort of budgeted based on what the rates were when I got the loan but now it’s going up like it was starting to choke me like it got pretty uncomfortable?

Aussie Firebug: So that’s your third one started to choke you?

Jayden: It’s the second one. So the problem was like–

Aussie Firebug: But you were renting both of them, yeah?

Jayden: Well, so this was the problem. So like I’d rented out one of them, was living with my mate and then the second one that I bought, I thought I’d sort of like renovate and tidy up a bit before I either rent it or sell it so there was like two months basically that I didn’t rent it arm but to be perfectly fair like I didn’t really do my cash flow– I didn’t do any forecasting really so I kind of like backed the envelope like yes it will totally work, I’ll make repayments that’s fine but like in that time, the rates sort of went up by like 0.3% which then impacts across both properties, the rental doesn’t go up, my day to day salary doesn’t go up and so I just got into like a really bad situation where I was pretty much like living on credit cards, had to sell that property like I was in mortgage distress really but you kind of like manage it but it was still like– it was a good lesson in that if you’re going to make any financial decision, you really need to look before you leap and I hadn’t like I’d done my figures kind of like yeah, roughly, the repayments are these, the repayment is going to be that, the rent is going to be this, totally sweet but then as you know, you own a property, there’s insurance, there’s body corporate fees and it’s all different, you know there’s stamps you have to pay, there’s mortgage insurance I had to count the new one, a bunch of stuff that if I’d really probably thought about it- and plus like I was renovating so that would be like a grand for some paint and stuff and then it ended up costing like five which then like that you know hammers you when you’re pretty living a bit fine so–

Aussie Firebug: Especially it’s the guy that’s you know, your second year out of uni in Sydney, like one of the most expensive cities in the world like I’d imagine that the cash flow is you know, sort of limited to begin with. [Chuckles] 

Jayden: I was on like 50 or so– 55 then like so it’s the millionaire’s factory at Macquarie but it’s not like I was on a millionaire salary sort of thing and owning like two properties and only one’s rented like it was pretty tight.

Aussie Firebug: You were doing pretty well though. For someone who’s on 50k living in Sydney with two investment properties, that’s not bad.

Jayden: Yeah, I was pushing a bit but I guess I just hadn’t done my figures right and hadn’t done it right so if you’re going to do this sort of stuff like definitely model your numbers on a worst case scenario because–

Aussie Firebug: Yeah I always factor in a whole 2% rate increase last time I bought a property, that’s what I factored in but it’s actually gone down quite a bit since I bought although Commonwealth bank at the moment are upping their rates and they are upping rates for investors as you well know but that’s another story–

Jayden: Which is actually like interesting– I’ve done it for a couple clients and even some where like it’s not great tax-wise but its almost to the point where you’re paying almost a percent more for interest only as an investor at the moment compared to if you pay principal and interest, like you almost in some cases like a percent below what you’re paying so you can reduce your cost.

Aussie Firebug: Is that actually still for investors though? Can investors just say to the bank: Hey, I want to pay principal and interest and you’ll lower it for me?

Jayden: Yes, like the differential is huge. Like it’s up to a percent. Just because of like APRA and all these other banks and stuff–

Aussie Firebug: I didn’t know that there you go. I might be giving you a call after this podcast because I thought if its investor loan, they like know you’re paying a premium to be a property investor in today’s market which I agree with. I think that’s–  I’m slightly annoyed because I’m paying you know more than other people but I don’t mind it because if they can prevent all like– if that’s what they need to do to stop the crashing from happening, then like that’s what they need to do.

Jayden: Yeah, if it stops silliness, if it keeps the market a bit tempered, it makes sense but only because it’s you and only because there’s a few people, you know a couple hundred or more people listening, there’s a couple ways to get around that so like I said, yeah, like the interest surrounding the principal interest differential can be up to a percent; with some banks it might be 0.3-0.4-0.5 but even as investors pretty big. The other way you can do it with some banks, you can declare it as an unoccupied loan–

Aussie Firebug: Yes, and I actually have one of my investments I never told them it would turn into an investment so…

Jayden: Which tax-wise it doesn’t affect you because it just like the purpose of the loan was to buy an investment property, it’s an investor property that’s cool so that’s a good little life hack that you can use. Some banks will want you to verify no one like a rates notice or something but I think definitely like it’s a good little hack to get around that you can potentially just call up the bank, tell them to change it across and get it done.

Aussie Firebug: There you go. We might have saved my readers thousands of dollars, Jayden.

Jayden: Yeah dude, it’s that simple. Actually so another little life hack which you can do which I do for clients all the time, and you can try the CBA because they’ll do it on the spot. You just say like for example Sun Corp is doing like 3.79% variable for an occupied Payne islands at the moment so depending on interest friendly but you can just call and say like “Hey, I’ve got an offer to refinance, can I speak with your attention team?” And usually like in a phone call you can kind of arm wrestle them depending on how long you’ve had your loan for, you know 0.2-0.3-0.4% in just a phone call or like happy to help out people just to do that with their existing bank. It’s a good way that you don’t necessarily need to refinance because it’s a bit of hassle but you can still save on your rate and really, it’s money in your pocket–

Aussie Firebug: And heads up, heads up massively like if you’ve got a few properties and you know, you got a few hundred thousand dollars you know.

Jayden: Man, even if you’ve got one property like you know 0.1 on a million bucks is $1000, you know $500 a year on 500 grand like that’s your package fee, it’s pretty big. How hard do you have to work for $500 like that’s–

Aussie Firebug: Exactly and that’s so funny to imagine something like that because there was a comment on one of my blog articles the other day and it was like: Isn’t it funny like people, they won’t do stuff sometimes, they’ll be like I can’t be bothered doing that. Like I’ll give an example, we do like you know the credit cards sort of hack that I’ve spoken to you about–

Jayden: Love that by the way.

Aussie Firebug: I have a credit card. I go through a few credit cards you know every single year, I sign up and get the credit card bonus for a few different credit cards and every single dollar I spend, I try to spend on the credit card because if you’re going to spend a dollar, you might as well accrue it on the credit card to get the points and then you know, once you accrue so may thousand points, you start getting cash back rewards or you get cheap flights and you know what not so you might as well use them as long as you pay it back full every single month. So I was commenting on someone like I can’t remember, they said like people won’t do this because they’ll say I can’t be bothered signing up for it and then going through the whole hassle but if you work it out, literally it it’s like you sign up for a form online, the credit card comes in, you might have to go to the bank, I’ve spent no more than a few hours doing this whole credit card thing, right? No more than a few hours in my whole if you add up everything and it’s probably saved me one trip especially when we went overseas and I got the insurance with the credit card. I’m talking like two and a half grand, everything combined; cheap flights, insurance everything. Hell like if you work out how much people get paid per hour for them to earn two and a half grand and that’s after tax so they’ve got to like make three grand, are they seriously telling me they can’t be bothered like doing all this shit but then on the flip side, they can be bothered getting up out of bed, ripping themselves out of a nice warm bed at 7:00 in the morning and going to work for like $35-40 an hour? Do you know what I mean? Isn’t that so funny that mindset is completely like– they’re not willing to do something that’s going to save them a shit load of money that’s only going to take a few hours but it might take a little bit of things they’re not used too, that might be out of their comfort zone but they’ll do the same mundane stuff at their job for [00:25:28] money and they’re happy to do that, well they may not be happy but they do that.

Jayden: Arguing with a mate a little while ago. My whole principle was like you’ve got to sweat the small stuff a bit so he was like: oh, I don’t care about paying that $2 ATM fee, like I prefer to be comfortable. I was kind of a dick, I’m like show me your statement. Anyway we went through it, like he was paying like almost $200 a year just in those fees because like you know you go to a pub, it’s $5, you go to the wrong bank, it’s $2.50, you go to a show like at the movies it’s like $3.50 like it actually adds up and then $200 every ten years is two grand which sounds like something small but two grand here, two grand there, it actually adds up and then with the power of compounding, mate that’s like hundreds– it can really add up over time.

Aussie Firebug: I’ve been to known to run a kilometer to go to an ATM like a Commonwealth Bank ATM, I get teased by all my friends. I just refuse to pay that. Do you know if I’ve ever told this story on the podcast but the biggest like out of everything in my life, the one moment where I had to just cope something that I just couldn’t get out of was at a Boxster in Melbourne, we’re at the strip is and like the best man was like trying to get everyone money to get the guy a lap dance and I was like now worries, cool, but I’ve ran out of money, I need to get some more money out, went to the ATM, right? Yup, like prepare yourself. Guess how much you would think an ATM at a strippers would cost?

Jayden: I reckon like $4 is like almost half a drink so that feels expensive.

Aussie Firebug: Like 4-5 bucks is like your jaws on the floor, right?

Jayden: Yeah, that’s like half a drink so it’s–

Aussie Firebug: Twenty bucks. Twenty dollars.

Jayden: Really? You’re sure you weren’t drunk and it was two dollars?

Aussie Firebug: No, no, no because like it popped up on the screen and I was like– and I said to the guy, “Are you joking?” And he’s like, “It is what it is,” and I’m like, “Can I get a stamp? Can I just go to an ATM?” He’s like, “It’s going to be $25 to get back in,” so I was like uh huh they’ve done that deliberately like so you can’t get a stamp, yeah? Like you’ve got to pay the $25 to get in and I’m like “Mmh, okay.” Like I’m going to have to… like I can’t not do this but this is the last time I’m ever come into your establishment.

Jayden: [Chuckles] we’re done!

Aussie Firebug: Like yeah, so I just like coughed that on the chin and I was just like, oh this had better be the best lap dance ever–

Jayden: He has to be a very happy guy.

Aussie Firebug: Dude, the best man ended up like dropping like $1200 or something in the strip club that night. He was being silly, he was like lap dance for you, lap dance for you, so when I walked out of there you know a couple of hundred dollars like, “Hmm well, Smitty dropped so much more.” 

Jayden: Couldn’t have been that much money, [Chuckles]

Aussie Firebug: Yeah, probably going to be not as bad as him so anyway–

Jayden: Actually so just quickly finish up on that though. I got a sweet card, so not [00:28:27] Macquarie but Macquarie have like a debit card where I reckon their advert is, and I think [00:28:32], they’ll cover any ATM fee in Australia and it works on Apple Pay because I always like used to forget my wallet at the office and just go with my phone, and doesn’t have any fees so check that out because I think that actually cover that.

Aussie Firebug: So Macquarie, I’ll put that on the show notes, Macquarie card…

Jayden: Yes, it’s like a Macquarie debit card. I’m pretty certain, I’ll have to like to check but they cover like– it’s either all the major banks’ ATM fees or its every ATM in Australia. I’ll send you the email afterwards.

Aussie Firebug: There should be no such thing as an ATM fee, I don’t care what they say. It’s just bullshit, like oh, we’ve got to service the ATMs, like piss off. It’s 100% money grab. You know, bring on the bitcoin, I don’t want to hear about banks like I just want to decentralize, bring on the bitcoin and we can be done with your bullshit fees and just hoops that you have to jump through like no, catch you later! Anyway, so, I don’t even know where we were, back on topic. What were we talking about?

Jayden: Uh, we’re in properties, fees.

Aussie Firebug: Sorry, here’s one for you, I don’t know who asked this but I’m curious to know. So, you have the first one, you get the second one, you’re under a bit of stress, the banks probably should’ve like through your application figure that out but anyway, did you sell the second one?

Jayden: Yeah, I had to. So like at the time of application I’ll say, the intention was for both properties to be investment properties so like the banks, there was more income probably on there than what actually happens–

Aussie Firebug: Oh yes they thought you were going to get rents from the get go?

Jayden: Which was definitely my intention the whole time and there was a change of situation for the record obviously but yes, I think that’s kind of where I backed myself into a bit of a corner and then obviously that coupled with the rates going up, with not having a huge or any buffer realistically. Yeah, I had to sell that property unfortunately and lucky for me like the market– it wasn’t stagnant but it was starting to pick up so I–

Aussie Firebug: So when did you buy the second one, 2011?

Jayden: It seems like ten-ish, maybe eleven.

Aussie Firebug: And how quickly did you sell it?

Jayden: Like I reckon I sold it within like a month or two, like it was fairly quick.

Aussie Firebug: That quickly? Shit! I’m guessing the market didn’t recoup your buying cost and selling cost?

Jayden: So like I paid like 330 and I sold for 355 and then we were like oh you yeah you made money but then once you could like stamp duty, what I paid in LMI, yeah like I would have probably lost a bit of money, yeah I wouldn’t have broken even so that was not– but it was more like well, that’s a good way to…

Aussie Firebug: [Chuckles] you had a go, you had a go, didn’t pan out. You had a go and so then what happens then- what do your next move in investing?

Jayden: So then I sort of like took it easy for a bit, moved back to Brisbane, well actually [00:31:38] with my wife and bought a property in Miami on the Gold Coast. So again like that was like definitely one of those worst houses on the best street. It was like four hundred and thirty grand maybe. And this is one where like I will kind of spend thirty grand on it, fix it up and make it good enough to live in and then just live in it for a bit then probably move back to Brisbane eventually but then because we got a bit you know there was like the dreams of like this was going to be a family home and that sort of the stuff from thirty grand we went to spending like a hundred grand. Bit of deal creep there which again like should learnt my lesson the first time and actually budgeted and sort of stuck to a budget which again is not a good lesson where like you can easily just get in love with certain things in a property like I’m going to live in there like what’s spending another hundred dollars on a tap or what’s spending another two hundred dollars on a toilet or that’s right, the floors are only fifty dollars an extra square meter and that stuff just adds up and up and up. So again without properly– like we spent money, it was really beautiful but then around that time is when I wanted to start my own business so that I’ll probably want to get rid of some debt, consolidate and sell off so that one we sold and made back a mega profit like a wouldn’t say it was super lucrative but that was definitely one of those ones where like there was a lot of deal creep in there and I think if we’d stuck to our original budget, probably would have made a lot more money from it. But so like I think like that’s so American– I see it happen all the time, I reckon you would too where you know, if you’re investing in something, you need to remove your emotions and we got a bit emotional like oh it’s going to be the family home, we’re going to make it a bit nicer and buy the extra taps and spend the extra bits in here and we were completely like which wasn’t our objective so if it’s an investment, you need to stay objective like impartial opinion because otherwise you can go from thirty to a hundred grand and spend three times your budget and not end up with the right result.

Aussie Firebug: So all the other numbers isn’t it– like I tell people that all the time anyone that like even like family members and you know I got sisters that ask for advice sometimes, I’m like: if the numbers work then– if everything works on paper and you’re confident and you know you’ve budgeted for a 2% increase and you know all the factors, then pull the trigger for it but if you’re just sort of like on a hunch or like you know, I just I feel as though this suburb is going to like go well, like that’s not really investing, you know what I mean, like you want to do–

Jayden: Oh men! So like I had these like friends of mine, they recently put a property on a contract in a suburb where they’re paying like eighty grand over, probably a hundred grand over the median house price on a house that is below average. And I had to come to confession last week like here’s the comparable, here’s the facts like you’re actually paying over and they were like this is a family home, you don’t understand, we need a backup for [00:34:46] and this is the thing like you can just make the worst decisions if they’re emotional and if you’re not looking at the numbers. You need to like take a deep breath, there’s always another deal, there’s s always another property, there’s always another house, there’s always another investment. You don’t need to– like you’re not going to die if you don’t buy this one so just take a step back, take a deep breath and do the numbers.

Aussie Firebug: A family home, like if you want a family home that’s a little bit different I can understand you forking out some money like if there’s an emotional attachment okay but people need to separate buying a family home to live in to an investment and like I see it happen all the time as well where they try to do both. They try to do the family home but like and it’s going to be a good investment as well and it rarely works. It rarely works that way.

Jayden: Well so I reckon like you’ve heard it all the time like you make your money on the buy so like it doesn’t matter like how long you hold it or how well you do. Like if you’re overpaying by fifty- a hundred thousand dollars, like you’re just never make that back–

Aussie Firebug: You have to wait five years just to get it back, yeah. You’re right, some overpay because it’s their dream home. I’m more comfortable like if you really want it and you got the money and you’re okay, okay well then that’s like you know, go for it then if you really want to pay that much but if you’re buying it for an investment like there is no other– you’re buying it to make money like there is nothing else, it needs to make money. So cut any emotion out of it whatsoever; I like this one because it’s it looks pretty, no, does it make you more money? Like to the sums, is the cash flowing more? Is a predicted growth– have you looked at the population? Is it need public transport? You know, what are the major infrastructure developments going on in the area like that is where you should be looking. You shouldn’t be looking on cosmetic stuff. It’s got nothing to do with that, it’s all about the numbers when it comes to investing. I always get into arguments with people like about this all the time. If you’re buying to lie in, I don’t care about the numbers then. That’s your business and you do whatever you want with your money. But you buy an investment, it should be a 100% about the numbers and don’t try to mix the two because you will probably get a house that you don’t really love and an investment that isn’t really that great, you just get mediocre in both, and you won’t get either one that’s really good.

Jayden: So true.

Aussie Firebug: Let’s talk a bit the Rentvesting Podcast just for a second. So, I love it, listen to it, I listen from out here–

Jayden: Thanks man!

Aussie Firebug: Yeah, I definitely listen to it. I think it’s awesome what you’re doing. It’s probably like I don’t know… I’ve come across the rentvesting podcast even before you know you contacted me to come on air and like it’s– I don’t know too many other Australian podcasts out there that really speak on your financial independence side. I know there is like property chat I think or property talk on iTunes and a few other podcasts but it’s awesome you know, the more the merrier and I think it’s great for the podcast scene in Australia in this space. So just tell us a bit about the name Rentvesting, where did the name come from?

Jayden: Yeah man so it’s kind of like I came to realization early on that like I grew up– I’m assuming your parents might have been similar where they always like well you know, you buy a property, you live in it, you stay in a good job, you pay off your mortgage and then you finally retire at 65–

Aussie Firebug: Yeah, that’s, my life–

Jayden: Yeah, yeah I know it’s like the opposite [00:38:18] like it’s like yeah, you know you’ve got to work in that job, make sure it’s stable, be sensible, you can take you four weeks a year and I’m like that’s shit like it just doesn’t work like–

Aussie Firebug: I think that was every parent in Australia, every person that as born in 1960 says that to their kids.

Jayden: Like everyone says that like having lived in Sydney and seeing like where it was and where it is like it’s crazy expensive and even in Brisbane like if you want a nice house with some land, Melbourne is the same like you’re just further and further out so what’s the fun in living fifty k’s away at a city with a house and a mortgage if you’re aren’t sort of living the life. So the whole rentvesting thing is kind of like whoa, you can still invest, you can still live the life you want, you know, buy what you can afford and live where you want so that’s where it sort of came about. So yeah, like I think investing in property and in different assets is super critical but it doesn’t mean that you need to sacrifice your life to be paying off a mortgage so potentially look at renting or look at reducing some of those overheads so you can invest the surplus elsewhere and you know that might be different asset classes and helps you get into the market quicker and do lots of different things so that’s kind of where it came about and we talk about that, we talk about property in general and it’s similar to what you do like investing and helping the younger people like us because it’s stuff they don’t get taught school unfortunately and it’s stuff that like if you look online, there’s probably like some dubious sources so at least it’s impartial and you know it’s just in the name of education.

Aussie Firebug: Loving your work mate, loving the work and I completely agree like reinvesting is a strategy that me and my partner are currently using you know and like you said you rent where want to live and it makes so much more sense numbers-wise, and I’ll say it again, look at the numbers to rent a capital city like we’re renting in the country and it’s not quite as– like it’s very close renting and buying in the country is almost like on par with each other. It depends obviously where the interest rate goes and how much the house appreciates but it’s almost the same, a little bit cheaper to rentvest but in a capital city, it’d be a no brainer for me like an absolute no brainer. It is so much more cheaper to rent in Melbourne and Sydney than it will be to buy and start paying house repayments. So incredibly cheaper and like being able to sleep at night, being able to like you know, have the freedom to move around. The only reason that me and my partner would buy a house is when kids come on the scene, that’s it, because we want the stability that you’ve got to have with kids, you don’t want to be rooting houses you know every year with kids. At the moment, we’re young, we’ve got no cats, no dogs, you know not that much crap in the house like we’re living carefree a bit you know at the moment like we can bounce around if we chose to and travel and do whatever so owning a house isn’t really on my list of priorities and people always think you’re crazy when you say you know I’m renting so I’m in a pretty good job, I’m 28 now and you know people say like, “Why are you renting, like are you wasting your money?”

Jayden: Yeah there’s this huge stigma which like I reckon like rent money is not dead money because like you’re paying four- five hundred bucks a week but then the landlord is paying for you know, the body corporate, the insurance, all these other rates like it’s still expensive to own a property realistically.

Aussie Firebug: And if you buy a house you’re paying interest anyway so the interest is more than the rent which is true in Melbourne and Sydney, way more in Melbourne and Sydney then like you can’t tell me that rent money is dead money because the same thing can be said of interest, interest money is dead money as well, it’s the same bloody thing so people just don’t see it that way and I don’t know if you get it like when you are investing I don’t know if you still– it sounds like you own the house now but people just like they raise their eyebrow when they hear you’re renting–

Jayden: People definitely do and like I’ve got an eight-month old daughter so like we bought a house not long ago, sort of doing that it purely for stability as well but yeah before that like renting was great, like we were living in an apartment paying it was like say five hundred bucks a week but the mortgage repayments on that would have been eight hundred with like all the other body corporate, it had a pool and stuff like, it was fifteen grand a year like that’s amazing that we’re saving by not owning it and I could own property interstate or other places and diversify–

Aussie Firebug: People always say that as well, they’re like: well, what happens in thirty years and you don’t have a house and you know the person that’s paying more that owns a property, they’re going to own money when the house goes up it’s like yeah, that’s true but if you rentvest and you invest the surplus that you’re currently saving–

Jayden: Exactly, and in that scenario it’s $300 a week that I was saving that I could invest in funds or different things–

Aussie Firebug: Or another house, you can invest in another properties so of the market went up, your investment property went up also but you have that flexibility of not leaving at that one place, you have flexibility to bounce around and you know do whatever you want to do as a young person. So now, I’m all about that life, rentvesting is awesome. I actually wrote a post about it, I can put it in the show notes for people, big fan, big fan of that definitely.

Jayden: That’s right.

Aussie Firebug: Just before we move on, we didn’t get to the end. So you said you sold the other property, you had the one property. Please tell me that you were a part of the city property burn that happened between–

Jayden: Men! No, complete amateur.

Aussie Firebug: Don’t tell you missed out on it completely.

Jayden: Like so I bought my first property for like 330-is as well, it was around the same price point and I sold it for like 420 a couple of years later so like I made a bit of money but like it recently sold for like 600 grand so I like I think that’s where I got kind of– because I was starting my businesses, I was probably trying to be a bit conservative and probably should’ve expected it a bit more but yeah I think like that’s probably good: learning that property is long term asset–

Aussie Firebug: Seven to ten years, seven to ten years.

Jayden: Yeah, didn’t own it for that long, could’ve held it a bit longer, could’ve used fixed rates and probably other instruments to help like give myself a bit more stability but yeah like didn’t lose money but probably didn’t make as much as so could have but again, a good lesson I guess to the listeners out there.

Aussie Firebug: Well, like no one is predicting that anyway, you know you’d have to be a master analyst to see that burn coming, but oh well. You know, I can’t dwell like everyone could’ve bought bitcoins when they were ten cents and be millionaires by now so you can’t be too hard on yourself so that’s it so you sold the original one you bought and then now it’s just you know, you’re focusing on your business, are you?

Jayden: Yes, I’ve got five properties at the moment so I’ve sort of recouped a bit over the last years which has been cool so I’ve been involved in a couple of different small development projects. I like looking at adding value that way and just sort of format with those in Brisbane, there’s been a bit of rezoning so effectively they say like in Old Queensland like 800 square meters, they now should build three townhouses behind that Queensland or a couple of units behind that Queensland and then selling some and keeping some more just to keep the debt at probably like a sensible level.

Aussie Firebug: Yeah, yeah gotcha.

Jayden: So if I could keep everything now I would but it’s just more keeping the debt manageable because I don’t want to get back in that 2009/2010 situation where using my oven to heat my apartment which was kind of– [Chuckles]

Aussie Firebug: [Chuckles] Yeah well, you know, you can tell your kids that, daddy used to heat the apartment using the oven, that’s what he went through to give you this life. So are they all in Brisbane or you got joints all over the country or?

Jayden: Yes, so they’re all in Brisbane now so I sold it the two apartments in Sydney, sort of subsequent I sold the place on the Gold Coast so all this stuff is in Brisbane because I kind of really intimately understand the area, I know what’s going on there and get, and I still think like stuff in Brisbane is still fairly cheap compared to Sydney and Melbourne, I think I’ll still look at buying into sate, just it feels at the moment for what I’m looking for, Brisbane probably makes sense, yeah.

Aussie Firebug: Now, on your rentvesting website, you say you know the podcast unpacks the facts behind the property market, explains what’s really going on and where the market is heading. So being a property investor yourself with five properties at the moment, you bought another two, that’s seven that I’m counting so far if my math is correct, you got a bit of experience- dare I say- in the property market up in Breezy and you’re also director of a– it’s not just mortgage brokers but you can go into what Red & Co.  does in a second but I want to hear your opinion on the Brisbane market and then where you think you know, stuff is going in Australian general so if you were investing in property today, what would you be doing?

Jayden: Yeah, so I think like what you hear in the media, there’s a lot of hype so if you listen to– if you’re investing in shares and listen to what’s in the media, you probably want to jump off a bridge every other day and it’s similar in property; there’s always a bad report and there’s a good report and there’s a bad report so I think like you need to take an impartial and look at an independent view; what you sort of understand what you get. I think in Brisbane there’s probably certain pockets that are a bit over supplied which you probably read in Sydney and Melbourne and everywhere else and across Australia so if you’re buying an apartment say in Jam side or if you’re buying an apartment in Fortitude valley, like the rentals are getting a bit soft but it’s not devastating so you can still get them rented and you can still buy stuff of value. I think in Brisbane the opportunity probably is buying land so you know, an old house within sort of five to ten k’s to the city for under half a million bucks is possible, probably more sort of under 550 now but that’s where I think the value is in Brisbane so you can look at sort of suburbs in 10 K range, circle $550000 and those suckers will rent out sort of $500 dollars a week quite comfortably and you might buy six or seven hundred square meters for a block so I think that’s where there’s huge value in Brisbane because it’s still quite cheap here. Sydney and Melbourne, yeah they’re doing their own things I think and parts of a different different kettle of fish but yeah, I still think there’s this huge value and huge opportunity investing here but you just need to get a feel for potentially you know, if you’re going to look at investing, you’re from interstate, come and have a look, I’d be probably be wary of people selling stuff, [00:49:54] that sort of stuff, you know, do your own research, get your independent advice and make sure you’re making the right decisions.

Aussie Firebug: I know this is a pretty blanket statement, it’s very hard to sort of answer a bit: you deal with a lot of people getting loans for different properties and what not, commercial I’ve seen as well on the website, what do you think of the current state of Australia’s lending practices and where we’re at with the you know the bank’s loans and everything like that? Do you think we’re on the brink of a crash or I just wanted to hear your opinions on that?

Jayden: No so I reckon like the banks are still too conservative for there to be some crazy at US crash so like unless unemployment went to some crazy levels and people literally couldn’t afford their loans, I think in general the practice is a pretty prudent here because the banks you got to remember if you applied for a loan today although you might be paying say 4% on your interest rate or in the three’s potentially, the banks are more willing than based off 7.5% interest rates and on principle interest payments of 25 years so where you might be paying two grand a month now, they’re actually modeling it based on assuming your payments are at four and a half or five grand so they are a fairly conservative compared to in the States and previous practices. I think like it probably like would have to be a whole loan not going to fix like if there was a global recession it might have a knock on the [00:51:29] because it might affect you know exports and like there would have to be a whole lot of things to happen for that to occur. I think in general like if the US economy and the Eurozone still keep chugging along slowly and slowly, I couldn’t see there being a huge correctional, you know the bottom falling out of property also because it still fairly tightly held property here. There’s not a huge amount supply broadly speaking like there might be certain pockets of it but they’re still getting rented out and soaked up so it doesn’t feel like it’s going to be completely catastrophic. You know there might be areas in Sydney and Melbourne where they’ve had 100% growth over the last 5-6-7 years. If that comes of 10 or 15 percent, that shouldn’t be devastating because it’s come off such a high growth–

Aussie Firebug: Yeah, it’s gone back to them like you were just saying that it’s–

Jayden: Yeah just normal so I think like people that are saying it’s all doom and gloom, I think they always like I remember– what was his name? Steven King when I was in Sydney in 2009/2010 he was prophesying that the Sydney property market was going to fall out, he was an economists, you can still look him up, he’s a huge doom’s day guy, Steven King.

Aussie Firebug: Steven King, I’ll put it in the show notes.

Jayden: Yeah like he was saying back then the Sydney property market was going to crash and he actually sold his family home and then subsequent to that his family who would have gone up 100% in value and he probably could have retired and now he’s still like on Fox news and that sort of stuff so–

Aussie Firebug: It’s just so hard when I hear these people are– I don’t know what’s going to happen over– I’m the first one to say, I don’t know and I don’t actually think anyone knows what’s going to happen but all you can do is control what’s happening right now and make decisions based on the now and if something happens in the future, you try to mitigate the risk as best as you can but I just I think it’s crazy you know people trying to time the markets and you see it all the time like on the forums you know. Everyone preaches like don’t try to time the market! Don’t try to time the market but then you see everyone writing about like you should sell your property because it’s going to blow up, like that’s timing the market, stop trying to do that! Buy within your means now and then if something devastating happens well then you try to deal with whatever happens. Don’t buy beyond your means. Do your figures, do you numbers and if it looks good now, I would buy now.

Jayden: Yeah, have a buffer and then you know, if you can afford it now, if you can afford it with plus 2%, then you’re fine like you can ride that out. It’s like any market. It doesn’t matter if it’s shares, bitcoin, property; it’s all cycles. It goes up, it goes down like that’s just the nature of the market.

Aussie Firebug: Exactly, and you only lose if you sell when you’re down. You [00:54:25] lose any money, but it could crash to zero and if you notice how you start losing your money, you just have to wait till it goes back up because even everyone points to Japan, it’s been going down 20 years. Well, it’s creeping back up. I’m not saying that you want to be in that situation but I’m just– you only lose if you sell, that’s the point I try to make to a lot of people.

Jayden: Yeah.

Aussie Firebug: Anyway, Red & Co., why don’t you tell us a bit about that before we wrap up this broadcast?

Jayden: Yeah, so we’re a property services business so we’re a bit different in that we do like I’d say finance, look at the residential and commercial side, we do rental management sales so that’s cool because it kind of gives our landlords a bit more feedback and they kind of get that side of things. And the sales are just existing properties, it’s not off the plan or that sort of thing and yeah, that’s kind of the business. Help out a lot of investors and first time buyers and first time investors so that’s kind of why I started the Rentvesting podcast because like I said there’s like a lot of trash material out there that wasn’t impartial and I just wanted to sort of clear it up and just wanted to sort of clear it up and help people get a bit of a better education on this stuff because you just don’t learn financial independence at school, you learn to get a big mortgage and try and pay it off so just because the bank’s is going to lend you that money doesn’t mean you should take it.

Aussie Firebug: And what’s the best place that listeners can find yourself and Red & Co., where should they look for these?

Jayden: Yeah, so probably just google Red & Co. or Jayden Veccio or just Rentvesting Podcast, just google that, you’ll find it pretty easy.

Aussie Firebug: I’ll put some links in the show notes. Now, I always try to end with this question: the best advice to give someone at the moment trying to reach financial independence in today’s market?

Jayden: Oh men, I feel the most relevant thing is don’t sell early. [Chuckles] And don’t time the market like it’s just you know, have a plan, stick to it and think the longer term like I saw good thing when I was flying back the other day on becoming Warren Buffet and you know, his whole thing and why he’s done so well is he looks longer term, he sort of looks past the short term, the volatility, you know the five, the ten years, taking 20 or 30 of you and I think it’s the same with any investment. If you try to make money in six months and flip something and do that, like it’s going to be tough but you take the long term view, you won’t lose.

Aussie Firebug: I think that’s good advice, guys. Usually the long term unless you get financial stress or something; if you can hold something long enough like a good asset, usually builds you wealth over the long term. I’m going to wrap up now so you know, if you enjoy this podcast, want me to make more of them, make sure you drop me a comment in writing on iTunes, just search for Aussie Firebug on iTunes and you’ll find me, I’m also on SoundCloud at Show notes of this episode can be found on my website at Jayden, it’s been an absolute pleasure mate, thanks for coming on the show.

Jayden: Thanks for having me.


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