'15 properties in 10 years: How I did it' Smart Property Investment Podcast

Listen to the Spotify podcast here, or the iTunes podcast here.

In this episode of The Smart Investment Property,
host Phil Tarrant is joined by investor Rasti Vaibhav
who details his journey from his first property
acquisition right up to property #15.

Rasti talks about some of the more unconventional methods he used to purchase his first investment and how he plans to retire when his portfolio hits a value of around $9 million.

With properties stretching from Blacktown to the Central Coast, and all the way up to Queensland, Rasti shares the tips and tricks that have allowed him to live his best life.

Podcast Transcript

Phil Tarrant:
Joining me in the studio, Rasti Vaibhav. Rasti, how you going there, mate? 

Rasti Vaibhav:
I’m very well thank you.

Phil Tarrant:
So first time on the Smart Property Investment Show but long term listener. Have you tuned into this before, have you?

Rasti Vaibhav:
Yes, I have. I'm a big fan of your podcast series.

Phil Tarrant:
Okay, that's cool. And property investing, what's the backstory? How’d you end up with property investing?

Rasti Vaibhav:
I have always been passionate about properties. I’ve always wanted to be an architect and actually I turned into an architect. So passion for properties just because of its tangible nature like you can touch and feel it. It's a great combination of science and arts, the engineering part of it and also the artistic part of it that you can touch and feel and even live in it. So properties has always been my passion and so has been investing. So I really want the hard earned money to work harder and no better way in Australia to make properties’ and investing passion in property investing.

Phil Tarrant:
Yeah, it's a good point. Property as an asset class. One of the great empowering mechanisms of property investment is that you can leverage which isn't often available in other asset classes. Point number two, the fact that we have this great thing called negative gearing in Australia which allows you to claim tax deductions on certain parts of property investing so you are a business person. And for a lot of people that come to Australia or sometimes gobsmacked by that particular taxation set up and the fact is it is an empowerment for Australian property. 

Where's home originally for you, Rasti? How did you arrive in Australia?

Rasti Vaibhav:
I grew up in India, moved to Singapore for a few years and then moved to Australia in search of better work-life balance.

Phil Tarrant:
Yeah, sounds pretty good. And did you study abroad or did you start here in Australia?

Rasti Vaibhav:
So I studied all over actually, in India as an architect and then did my Masters and Computer Science in Singapore. And then did my MBA from AGSM Sydney as well as a Chicago Booth business school in the US.

Phil Tarrant:
Oh, okay. So, an architect becomes a computer science and a business degree. Living in Singapore, that's a big shift from india. Did you go there just for the purpose of studying?

Rasti Vaibhav:
No. I actually went there for a job there.

And then realizing that having a formal education is key, we don't really have to go and work out our own way of how things work. We can actually go and work with an expert or get into a school basically to learn from the experts and then take it from there. That actually has been my mindset all the while and to answer you, I was there for six years from 2000 to 2006.

Phil Tarrant:
Okay, wow. And then straight from Singapore to Australia to do your MBA, did you say?

Rasti Vaibhav:
No, I moved here as a skilled migrant in 2006. Worked for a couple of years in the IT industry, I was actually leading one of the business units here in Australia. For my passion to make money work harder, and because I was investing on the sidelines (again, with the same mindset of learning and doing it in the best way), I chose to go for MBA in finance degree, and then the rest is history.

Phil Tarrant:
So you clicked in some big degrees along the way. So you arrive in Australia, for a job as a computer scientist doing computer type stuff, IT. How far through that journey in a new job, living and working in Australia did you start investing in property? When was the first time you were like “oh property investing, what’s this?”

Rasti Vaibhav:
I'm always a big fan of having a clarity of the end goal, like where I really want to end up. And first of all, the question was basically, should I really be investing or buying my own home or should I be really investing in myself? In 2007, I decided to invest in myself. So I actually went for a full time MBA. So quitting my job, letting my wife support the family, and then I was so much focused on my studies, full time MBA, not really easy, and then just coincided with the GFC as well. So it wasn't really good timing from our perspective, but then I was supported with CFA, which is a designation that helps you manage money. So long story short, when I actually started working with Westpac as Equities Analyst, that was a time when I had capacity to to borrow money. And then the question I had was: should I really go for my own home or an investment property? The end goal is about having the money for retirement as well as our own home, but I still decided to go with the path of investment first.

Phil Tarrant:
So you finished your MBA and then got a job at Westpac doing stuff to do with money. So how long did you have your feet on the desk at that job in Westpac? When did you start pondering these questions: “do I buy a home to live in or do I start investing in property?” Where were you getting your information at that point in time?

Rasti Vaibhav:
I'm a big fan of studying and listening to all sorts of webinars and workshops and podcasts and what not. I was actually there only for six months, wasn't really collecting enough money in my paycheck but then because of being strategic, thinking about the long term, the thought has always been there, early on. But having said that, I was actually investing in share market and mutual funds.

Phil Tarrant:
Okay, so you decided to start investing in Australian real estate. Let's get into that because that's what I know most of our listeners want to know: what you bought, where you bought them and that sort of stuff.

Rasti Vaibhav:
As you mentioned before, like it's all about the leverage. So yes, I was in love with the share market, that's what I was doing in my full time job. But then with leverage in properties, as we know, 10% can get you the whole exposure that got me thinking. The first question was: “Should I really be buying my own home or investing?”. Investment was the option that I picked with regards to my first property purchase. I was still new in the market and wondered how I would go about researching? Believe it or not? I actually spent about 14 months learning about the Australian market on how investing works here. What are the pitfalls or the challenges, what are long term implications of any decision? And that was the reason why I was able to make the right calls at that point of time. Then, of course if I look back I would have certainly done things differently.

Phil Tarrant:
Differently? Well, we're getting to that. So we'll talk about your first property just so I'm aware of it now. How many properties in your portfolio? Today? 

Rasti Vaibhav:
I got 15.

Phil Tarrant:
Okay. 15 properties, okay, so we'll get through all that. But tell us about numbers. So you spent 18 months getting the confidence to actually take action and invest in property so your first one. I imagine where was it? What was it? How much did you spend?

Rasti Vaibhav:
It was 14 months by the way.  So yeah, because the architect in me really wanted to design something. So the passion of designing and owning the home emotionally, I was attached to it. My first property was in 2011. People were really challenging why I'm actually going for investment property at that point of time. People coming out of GFC that lost, I guess, momentum of property investing, I believe. So I actually looked around. Being a Sydneysider I really wanted to remain close to Sydney. So I actually went to Newcastle. So I actually went to buy a piece of land over there in our upcoming state over there called The Sanctuary in Fletcher. I think we did well, because it was more of a homeowner occupied society. They had their own restrictions which actually disallowed the builders to or or even, I guess, selling agents to sell off the plan properties over there. So those were the considerations that we made and got into it.

Phil Tarrant:
So you bought a block of land and then you built your own property on that. Yeah, that's right. And how much did you end up spending on all of that

Rasti Vaibhav:
All up it was, including the interest payments and what not, cost us $440,000.

Phil Tarrant:
Okay. Do you still have the property now? 

Rasti Vaibhav:
Yes, I do. Yeah. 

Phil Tarrant:
What's the valuation you're getting on?

Rasti Vaibhav:
It's coming out to about $680 - 685k.

Phil Tarrant:
Right. I'll ask you at the end of it. Whether or not you do that is different because I think you might have or what was after your Newcastle Property? 

Rasti Vaibhav:
So then it was more around like what should I be doing? Like really had much borrowing capacity? Then, we went for off-the-plan unit Campbelltown. 

Phil Tarrant:
okay. Off-the-plan in Campbelltown. How much do you pay for it? 

Rasti Vaibhav:
$335k 

Phil Tarrant:
And what do you think that's worth today? 

Rasti Vaibhav:
Close to $510k or so.

Phil Tarrant:
All right. What was the next property? 

Rasti Vaibhav:
Then by the time I actually realized that okay, I should not be going for new properties. I should be doing my own research and start looking for the bargains out there. And that was a time I actually learned a fair bit because by that time, Aldi had actually exhausted all my borrowing capacity and the cash, I could actually gather I had to rely a lot on the equity things. I don't I'm not really too proud of just mentioning it to the audience here. I didn't really have much money when I actually went for our first property. I had to actually borrow against my credit card. 

Because I was having a lot of conviction and I had the risk buffer there that I could actually support it. Would I really recommend it to anyone? Probably NO.

Phil Tarrant:
Yeah, pouring a 21% bar on your credit card. 

Rasti Vaibhav:
That point of time it was 90k. So it was around four credit cards that actually used line of credit. 

Well, having said that,it's about 0% balance transfer rates, which I was actually just referring to you. Well, yeah, I've got to be organized to do that. As long as you know what you're doing and you're systematic and disciplined with your numbers, you should be alright. So that's my take.

Phil Tarrant:
So that was when you first probably eventually paid off once you built it, you refinanced it. Yeah.

Rasti Vaibhav:
So it was easy, like 90k came out very quickly within when the property was built, paid off very quickly.

Phil Tarrant:
Hats off to you for following a particular strategy. I'm probably not the business given recommendations, but I'd urge caution for a lot of investors you can get in a pathway to try and use credit cards for deposits. It can be done and no doubt about it. One of the good stories I've heard is a lot of stories where you gotta be so organized to actually play that effectively.

Rasti Vaibhav:
I won't recommend it to anyone, by the way.

Phil Tarrant:
Having said that, But this you know, experience is one thing but you know, it can be quite a risky enterprise. Okay, so the third property after your Campbelltown off-the-plan purchase, what did you buy?

Rasti Vaibhav:
I bought one existing home. 

I saw this little suburb called Dharruk. And now because there were no emotions anymore after these two purchases, I realized that the best way to make money is to buy well and not really pay a premium. 

Phil Tarrant:
Yeah, how much did you pay? And what is the value now?

Rasti Vaibhav:
So this property was listed at $360+k, but my valuations said it to be around $410k. And we bought it for $386k. And today that place is worth $770k. 

Phil Tarrant:
Not bad. 

We're talking about, if you know most of, you will know Mount Druitt it's not just for your geography: St. Mary's you got places like Dharrukk, Whalan, what else you got out there Blacktown, these are sort of all surrounding areas, which have all done well I know a lot of investors who bought at that particular time who have done exceptional even know might not be some of the most prestigious back then suburbs in Sydney, it was sort of lower sort of socio economic for quite a few but it has commissioned stuff out there. But this is very, very well up there. And maybe to talk about that I grew up that way. So I'm a proud Westie through and through. So after Dharrukk, where was next for Rasti?

Rasti Vaibhav:
So by the time I actually have learned about how we can actually add more value and renovation was one of the easiest ways that I thought that I can actually apply. So I started looking for renovation projects. So I went to Central Coast, in the suburb called Halekulani, which is next to Budgewoi.

Phil Tarrant:
It is cool. Right on the lake. So when was that? 2015. So you want to run a Block? How far from the water was it? So what did you buy? How much was it? And how much work needed to be done on it?

Rasti Vaibhav:
We bought it for $308,000. So we went with a simple strategy of only putting 10% and we just actually went by and smacked on $30,800. Okay. So we were constrained by the budget as a rule, not that we didn't really have much money then. We were following the strategy of 10% advocated by Renovation Queen: Cherie Barber. How to take it is that for any renovation, we should not really be over capitalizing and going beyond 10%, as the marginal return just goes down after that.

Phil Tarrant:
So what did you do for this particular runner?

Rasti Vaibhav:
What we did was basically renovated the bathroom and we did the kitchen, of course, new flooring, new lick of paint. And of course, the backyard was pretty huge, more of a jungle over there. So we cleaned up as well. And just by paint and everything like and putting a driveway actually made a lot of difference.

Phil Tarrant:
Huge difference.

Rasti Vaibhav:
So whatever we couldn't really do ourselves was outsourced. So me and my nephew, thanks to him, we used to go out there over the weekends. The hard yards, you know, like straight from Friday afternoon we used to go straight to the Central Coast. Come back on Monday morning.

Phil Tarrant:
Did you give him some money in his back pocket?

Rasti Vaibhav:
Yeah. We worked together.

Phil Tarrant:
Have you ever sold a property? 

Rasti Vaibhav:
No

Phil Tarrant:
Okay. All right.

Rasti Vaibhav:
All of the property that I have, had been bought with the intent of holding forever.

Phil Tarrant:
And was it a three bedroom house? Yeah. And today, what do you think that's worth?

Rasti Vaibhav:
By that time, we realized that we won't be able to borrow anymore. So the intent of doing the property was basically renovation adding value as well as putting a granny flat. Okay, so the next thing that we did was basically putting a granny flat there. So it basically bumped up the cash flow. It started giving about 21 to 22k every year since then, in pocket, but it seemed out the other properties that we had on more of a negative gear, so that actually balanced it out. Yep. So that I can go to the bank again. So to answer you, we spent about $340 to buy and renovate and then another $140 for the granny.

Phil Tarrant:
Yeah, that's a decent granny flat for $140 grand.

Rasti Vaibhav:
Yeah, I'm including everything like the driveway and the whole thing around and that's a pretty good one. It actually rents for more than what the front house is. So giving us a very good pocket money every week. The next door properties are actually selling around 750 With that kind of potential.

Phil Tarrant:
Okay, great. So you've done well, that's it. So this is a buy a block, renovated with a purpose of also putting the granny flat on to increase the cash flow on it. Okay, so what was after the Central Coast Budgewoi property?

Rasti Vaibhav:
Yeah. Then we had to start looking a bit more interstate. Went to Queensland. We bought a few over there, came back and did regional areas in New South Wales. So we went to the local LGA. It was again a big block: a 950 square meter block with the potential to add granny flats. Okay, which we actually ended up adding there as well.

And then after Loganlea, we actually started buying a few over there. 

Phil Tarrant:
And not a lot has happened since but now things are starting to spark in Brisbane. Yeah, no?

Rasti Vaibhav:
Look, for me, the way I was looking at it is more of like, we don't really want every player in the team to go and start scoring and like for me those properties were more of a defensive play. Yeah. So for example, in 2017 to 2019, when NSW properties weren't really doing too good. These QLD properties were actually holding very well and giving us the confidence that it's all about diversification and their time will come. This is exactly what we're seeing now.

Phil Tarrant:
Yeah. Okay. And then so you said you in regional after that, so what locations Yeah,

Rasti Vaibhav:
Yeah. So we continued to buy over there and around Brisbane. So for example, Ipswich, Logan, then a few and Moreton Bay as well. Then came back here, did bit regional and Goulburn on the way to Canberra from Sydney. 

So it's a pretty small, three bedroom home. Next to the housing commission area we saw earlier there really was about $250 to $260k. We paid only $210k. 

Phil Tarrant:
So the idea was basically to build up to a particular level. 

Rasti Vaibhav:
Yes, what I was following was a strategy of building a portfolio up to $5 million. So it was not really driven by the number of properties, but rather the safe or diverse portfolio for 5 million as a strategy and stop there. So by the end of 2017, the last quarter we bought three properties in Moreton Bay and Ipswich. 

Phil Tarrant:
So right now the portfolio is worth about 5 million bucks you reckon?

Rasti Vaibhav:
It has grown a bit since I stopped in 2017. So yeah, three, four years not really didn't really happen. But overall, it was pretty much sustainable and growing. We all know that the property market is not straight. It's cyclical. And on average long term, it actually still grows. Yeah, so as long as you can take the dips, sustain it, we should be alright. 

Phil Tarrant:
Yeah, and how much debt on the portfolio at the moment. 

Rasti Vaibhav:
Because I stopped buying, the average is actually coming down by almost every year. Yeah, roughly. I think it's about less than 70% now.

Phil Tarrant:
You know, and it's actually not a bad strategy. I pay for everything on my credit card, quite a bit as frequent flyer points. I can use it much at the moment and for upgrades in the state but so that's it no more buying a property you said you finish when you wanted to be you haven't done any subsequent to that.

Rasti Vaibhav:
Not yet. But other things given that where I am now, I don't really mind speeding it up. I stopped letting time do its magic. I don't mind getting into bit more active strategies. So I've been studying them. I've been working on it. Almost got into a project as well. Just didn't really happen just yet. But I'm very patient in terms of timing.

Phil Tarrant:
One of the great things is that as long as you build out a good portfolio starting with you can hold it you don't need to be too concerned. How do you go and sort of manage portfolios with properties in all different locations? 

Rasti Vaibhav:
Surely, I'd really, really take property management and other stakeholders very seriously because this is my business now as a $5 million portfolio business. So I do really take care of the tenants and the properties as well as the property managers. So whenever I have properties, I actually choose them and put efforts to find the right property manager. Yeah. And it's it's more about the relationship with them because at the end of the day, if it's a very personable relationship, they actually bargain more and look after you well and the portfolio itself now sort of 60s mid 60s 70% LVR on sort of five mil vowel with a said from a tax point of view, taxation point of view, pre tax is a possibly good or is about unusually good. I haven't been too worried about which way it is. But to answer your question, it's actually positive now, okay. Yeah.

Phil Tarrant:
So they're already putting money into your back pocket, which is I guess, you got to do something with that money. But um, so pretty much how about mortgages to give us a sense for the type of lenders you have as part of this portfolio? I think you said it was 15 properties the same lender or were different lenders or have you structured things?

Rasti Vaibhav:
As you know, feel like there's a bit of strategy as well to go out and borrow money as well. And the basic rule or unsaid rule that I actually learned about is to diversify your loan exposure as well so that you don't really become used to have basically bargaining power, so never to cross collateralize a typical mistake that I see people making and having a limit of exposure, probably probing as well. So you would take about 1.3 1.4 MLS, probably the maximum I would go with one. 

Actually, it's more of a process now like it's the end of the month, like I do have my tools and checklist and to look at what's really going on with my insurances with my property managers and right so, it becomes more systematic like you get used to it like I do, how because of my background in it in some models as well and taking the lead gives me a bit more explanation as well of where that cash was going. So I'm a big fan of extrapolating things that have lots of assumption sets as well. Yeah. So that I know what if scenarios as well, because the biggest thing is, it is not so much so about getting excited about building wealth. It's also about how do we go about protecting? Yeah, because so for example, like what has happened because of COVID. Like lots of people actually went and bought a lot of units just because they could see in the history, there are positive cash flow yielding properties and just go and buy but you know, it's like a risk insurance that seems to be wasting your money in insurance until you realize what you really need.

I don't know anyone who could point to insurance when something happens. They think that there's evidence so it's not a small portfolio by any means.

Phil Tarrant:
Are you pretty satisfied with where you're at?

Rasti Vaibhav:
Well, I certainly will be doing things differently. And the way I look at it is like, when the analogy that I talked about is like building a tower. The good thing that actually had in my mind was the clarity of how all the power would be looking like what sort of, I guess, we got to actually be expecting out of it. So I knew what the end building was looking like. I would actually speed it up earlier with some examples of going with my emotional way of looking at it and buying, you know, like buying a piece of land and designing on mine and getting emotionally attached to it and looking at numbers on almost a weekly basis. Versus now, if I look back, I would have taken a break more easily and easily myself in terms of what's really going on like less anxiety, and probably buying a lot more properties, which had that kind of potential to do something later on. So the best thing as well as we know that it's more about that time in the market as well as, what grows we can actually manufacture something similar to a couple of properties. I did put granny flat, that was more of active development, or the active side of things. But for my issue properties I was more interested in just buying property rather than I guess, having that kind of leverage.

Phil Tarrant:
And certainly when you get to the point where you're out you can look back and say oh, I should have done this at the other end. Don't worry everyone, everyone says the same. He said Do you have one any particular asset in the portfolio which is the jewel of the crown where you think you can really extrapolate a lot more value into the future?

Rasti Vaibhav:
So this probably goes on like I think that's pretty much a gentleman over there in terms of the value that it has given to us as a portfolio diversification as well as the value we can do with this property we have not touched it at all. Like we thought that this tenant is paying rent to us. Let them pay. Once you get the support, they will go and go and renovate and probably put a new fix later on. But then they're paying rent on time, and it has gone into production by itself already. And the key thing is buying the right.

Phil Tarrant:
Oh, it sounds like you're playing bushes that you saw doubling in the share. Markets. You're investing in Bitcoin or doing stuff.

Rasti Vaibhav:
Well, I'm a firm believer that if I don't understand, I don't want to do anything about it. So property investing Yes, people say that. You're putting a lot of eggs in one basket because I'm almost fully invested in properties. But what I do say is that I'm actually watching this basket very closely, saying diversification for the sake of diversification is not diversification. That's more about getting into the unknown like I'm still to see or hear anyone who understands the basics of the fundamentals of Bitcoin as an example. Yes, people are making money so there are others who go comfortably and sleep through the night.

Phil Tarrant:
Well, you know, you're staying to your own course. 

So what's the next step for you? Is it more property investing, but what are we going to see in the future?

Rasti Vaibhav:
Sure. I've built this system of going to the property. I guess the research on the region from my research background from what I was doing equities research, I use a lot of data points from the council sites and infrastructure and population and what not. And that has been the key for my success in investing. It is the confidence part of it. Now what I'm actually doing is taking this and packaging it as a service as a buyer's agent and offering it to other people.

Phil Tarrant:
That's cool. You'll have fun doing that. Once people get the bargains, they get obsessed by it.

Rasti Vaibhav:
Suddenly it's a bug as well. The whole reason for me to switch from IT to the banking sector was more from the viewpoint that “How can we make money work harder?” I was very much comfortable earlier as a professional in the IT sector. But the idea was: “How can I go and help other people as well?” So there was that motivation and emotion to help because I'm coming from a very humble background where I've seen my parents struggle. What I really want to do with my services is to help people appreciate the longevity in the strategy part of it. So I really want to work as a strategist for people showing the power of properties and how wealth can be generated in this sector. 

This is the thing that actually brought me back from what I was doing earlier. I was actually a portfolio manager managing $2 billion for my clients. But doing what I'm doing now actually gives me an opportunity to serve them directly. 

Phil Tarrant:
And where in India is home?

Rasti Vaibhav:
North India, a city near New Delhi, by the name of Meerut.

Phil Tarrant:
Okay and how is the family back in India? With COVID and everything?

Rasti Vaibhav:
It’s tough out there. It’s really tough. It's very depressing to dial back home and learn about some neighbor or relative. The challenge with us is that we are pretty big families out there. So luckily my mom has survived COVID, but you still have to be very careful.

Phil Tarrant:
And no doubt, everyone's probably very proud of the work you've done coming out in Australia and building wealth like this in property. It's a good story.

Rasti Vaibhav:
Thank you so much. All I really want to help is basically other people to do something similar. Probably not spending too many hours away from the family members. For me, I spent a lot of hours, a lot of days, traveling around. And the main takeaway would be to leverage the experts in the industry, rather than doing it on your own.

Phil Tarrant:
Yeah,so getting support assistance from those who can do it for you would be a lot better.

Hope you enjoyed that everyone. I really enjoyed that chat. We'll keep connected with Rasti. See, see how he goes, as he embarks on further career in property investment. 

Meet the Founder

Rasti Vaibhav is a licensed independent buyer’s agent, property wealth strategist and long-term property investor, who specialises in helping home buyers and investors buy the right property at the right price. Read more about the Founder, Rasti Vaibhav, here.

Listen to the Spotify podcast here, or the iTunes podcast here.