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Send us a text Welcome to our podcast, where we bring you conversations with the brightest minds and top performers across various industries. And today, we have a very special guest joining us, Arjun Paliwal. Arjun is a highly successful entrepreneur and a leading expert in the Australian property market. He's the founder and Head of Research at InvestorKit, a data-driven buyer's agency that has helped numerous Australians build successful property investment portfolios. He's also the co-h...
Welcome to our podcast, where we bring you conversations with the brightest minds and top performers across various industries. And today, we have a very special guest joining us, Arjun Paliwal.
Arjun is a highly successful entrepreneur and a leading expert in the Australian property market. He's the founder and Head of Research at InvestorKit, a data-driven buyer's agency that has helped numerous Australians build successful property investment portfolios. He's also the co-host of the popular podcast, The Property Nerds, where he deep dives into Australia's hot and cold property markets, and the latest headlines and trends.
Arjun's exceptional work in the industry has been recognised through several accolades,, including Rising Star of the Year Winner at the REB Awards 2020, Buyer’s Agent of the Year Finalist at the REB Awards 2021 and 2022, and as Finalist at the 2021 and 2022 Young Entrepreneurs Awards.
Victor Lagos, a seasoned financial expert with years of experience working with clients to build wealth, shares his invaluable insights and strategies to help investors avoid common pitfalls that can kill their borrowing capacity. He draws from his own vast experience in the financial industry to provide practical advice and actionable tips.
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Victor Lagos - Lagos Financial
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Welcome to the Debt Financial Freedom Podcast. Everyone loves the benefits of money, but so many of us avoid the hard truths about saving and investing. We wrongly assume we don’t have enough time, capital or knowledge to be able to get to the point of having passive income streams, savings, or investments.The things we really need to know about money aren’t taught in schools. Spending less than you earn, maximising your income, budgeting, taxes, mortgages, investments and passive income - if you didn’t learn these things from your family, then you’re probably like most people who rely on credit cards, buy now, pay later and overdrafts. And then when you want to invest or buy property you will be wondering why you can’t get approval.But there is no judgment from me here - I was in exactly the same situation! Huge debt, poor financial habits and no assets to my name. Step by step I turned my situation around and now, as a certified mortgage broker for 16 years with several investment properties in my name, I’m here to help you go from debt to financial freedom. Because if I can do it, you can too.In this podcast, I will share tips, insights and strategies from my own journey and experience, as well as my clients and guest experts, who share my values and mission to help others create financial freedom. My goal in this podcast is to share raw, honest, transparent, and helpful stories that you can relate to, and that will inspire you to take control of your finances. The only ‘good’ debt is debt that brings you closer to financial freedom and I will show you exactly how to achieve this. Everything shared by me and my guests in this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation, or needs have been taken into consideration. I highly recommend you seek personal, financial, legal, taxation, and credit advice before you take action on what you heard on this podcast.
Victor Lagos: Welcome to the
Debt to Financial Freedom
Podcast. I'm your host Victor
Lagos and the founder of Lagos
Financial. I've been in the
finance and lending industry for
16 years, and I've personally
made financial mistakes and
learn from them. I started this
podcast to share stories and
lessons on my own journey, and
to share insights that may help
others on their journey. And I
interviewed people that I've
connected with that share the
same values and mission to help
others create financial freedom.
My goal this podcast is to share
raw, honest, transparent and
helpful stories that you can
relate to and inspires you to
take control of your finances
and only have debt that brings
you closer to financial freedom.
Everything on this podcast is
general in nature, and for
education purposes only. None of
your personal objectives,
financial situation or needs has
been taken into consideration. I
highly recommend you seek
personal financial, legal
taxation and credit advice
before you take any action on
what has been heard on this
podcast. Welcome to episode five
of the Debt to Financial Freedom
Podcast. I'm your host Victor
Lagos . Today I've got a special
guest. His name is Arjun
Paliwal. He's the founder and
head recent Head of Research at
InvestorKit. It's a data driven
buyer's agency helping a wide
range of Australians build
successful property investment
portfolios. He's also the co
host of the property nerds, but
the podcast that deep dives into
Australia's hot and cold
property markets, the latest
headlines and trends. Arjun
success has been recognized
through several accolades,
including Rising Star of the
Year at the REB awards in 2020,
buyer's agent of the year
finalist at the REB awards 2021
and 2022 and is a finalist at
the 2021 and 2022 young
entrepreneurs award. Welcome.
Arjun Paliwal: Thank you, Madam
well, and I still get a kick out
of having the word young on the
entrepreneur thing. So I don't
know how long I can hold that
title for but I'll take it. Oh,
you
Victor Lagos: told me you're 30
years old. I think it's still
pretty young. Yeah. Look,
Arjun Paliwal: It depends on who
you talk to yesterday, I was
fortunate to be at a Snoop Dogg
concert. And my good mate
brought his niece and nephew.
And they were 16 and 18. And so
having having them talk to me
about life and what they're
into, not into kind of made me
feel better,
Victor Lagos: You know? Did you
bring a property with him? Oh,
look, we talked
Arjun Paliwal: About some
property wasn't as much of the
talk. I think we talked about
universe No uni. We talked about
street smarts versus, you know,
study smarts and that sort of
stuff that you get into some
random conversations. We talked
about, you know, certain social
profiles. Are they cool? Not
cool. So that was pretty fun.
Victor Lagos: A bit. They're big
TikTok users.
Arjun Paliwal: Yeah, look, I
think I think everyone's
starting to get into it. Now.
Even I've turned a page and you
know, flipped a few scrolls up
and down and see what's
Victor Lagos: On that to get on
TikTok, I'm a bit afraid of
happening
going down that rabbit hole to
be honest. It's so much
information out there. YouTube
is already hard enough for me,
but I think TikTok's is another
game. Look, I just wanted to say
Joe Tucker was the to introduced
us. He was on episode two of the
podcast. I met Joe through Steve
Palise. From Palise Property,
who I work really closely with
how do you know Joe Tucker?
Arjun Paliwal: Oh, look, I'm Joe
has been someone who's been kind
enough to reach out over the
last couple of years on his
journey towards becoming a
buyer's agent and growing as a
buyer's agent. And I've just
been someone who wants to offer
tips insights to anyone who goes
on that journey. And that's been
our relationship to date. So
he's he's been a great guys
connected, and I've done my best
to share insights and thoughts
on what can help him whilst he's
on his journey. Awesome. And
yeah, that's been that's because
study to be buyer's agents at
around the same time. No, not at
all. I've been doing it for much
longer, so close to five years.
And so as a result, you get the
opportunity in my site to learn
from those who've been doing it
for 5-10 years and more, but
then also to help those in the
earlier parts of the journey. So
yeah,
Victor Lagos: Yeah, well, this
is why I started the show,
really, to help people on all
ends of the spectrum. There's a
lot of people out there that
want to get on the property
ladder, they want to grow their
property portfolio, want to
create passive income streams,
recurring income, you know,
build that wealth, but some of
them just don't know, you know,
where to start or what's
required? Or what are the some
of the lessons that can learn
from people like yourself, so
that they can get on sooner? And
I guess not talk themselves out
of it? You know, so, I really
wanted to ask you, I guess a
little bit about your personal
and professional story, like
what led you to be a property
investor, because you are one as
well and starting InvestorKit by
the agency,
Arjun Paliwal: Property
investor. It's a story that
changes sometimes depending on
you know, I guess what comes up
from the core memories, but the
first memory that always comes
up to me, is my dad and both for
good and bad reasons. So the
good reason is him having some
moves that he made in the
younger years being open to talk
about it and The dining table
discussions of what he'd gotten
word that is today, then the
second thing is, and I think the
more motivating factor was all
the places he'd drive by and
said, I could have bought that.
You know, that would have been
something I did. I went for
this, your mother said, No. But
I think I was also a bit of a
cop out because he didn't want
to end up taking action. And
some of the guys of that
generation love to blame the
other half. But from that aspect
of things, because of all his
moves he didn't take was
actually my biggest motivator to
take certain moves. And so he
actually was also a positive
influence and pushing me because
he kept bringing those stories,
not in a way to make me feel bad
for him. I'll go, Oh, Dad, I was
supposed to go, Well, hey, you
don't make that mistake. And
that's been a big philosophy of
mine. When I can, I will rather
than when it's good.
Victor Lagos: Yeah, like that.
Okay, what did your parents come
from originally? Indian by
background,
Arjun Paliwal: Born and brought
up there. And then they moved
over to New Zealand. So I was
born in New Zealand, through
them moving over. And from
there, I've been in Australia
now, coming close to 12 years or
13 years. Yeah, definitely have
Victor Lagos: That strong New
Zealand accent, I haven't asked
you to say the word six.
Arjun Paliwal: Look, I think why
doesn't come up as heavy. And
probably my my space of things
is, I had a bit of a confused
childhood in terms of accents
around the house. So I had my
dad who was obviously, Indian
was the first language but then
he's a very, he's very much a
chameleon, he'll go in and fit
in where he needs to fit in. So
trying to hear him say the bro
the mates and all that sort of
stuff was one confusing factor.
My mum was, you know, pretty
well spoken and didn't have too
heavy of an Indian accent. But
then my older brother he studied
in I think it was either a
British or American School in in
India. And then he moved over
when I think he was maybe nine
or 10. So as a result, he had a
kind of different way of
speaking. Then I had my Kiwi
friends, then I had my younger
brother who was a little bit
different. So just instead of
confusion, I just had the most,
I wouldn't call it normal, but
the most centered English
amongst your five accents. Yeah,
versus having different accents.
Victor Lagos: Yeah, it sounds
like you've got a pretty neutral
accent. So a little bit of South
African in there, too.
Arjun Paliwal: I can get that a
lot. I get that a lot. I get
that probably once every maybe
three to six months. I hear
someone in Africa. No, dude, but
I'd love to go there.
Victor Lagos: Yeah, it's also
similar because my mom in terms
of the accents at home, because
my mom's Filipino. So Filipinos
are so strong American accent.
Yeah. And then my dad, you know,
being from South America, he
still sounds like he just moved.
Arjun Paliwal: You know what,
that's really cool about over
the folks 3040 years later, who
still sound like they moved
here. It's epic. How they build
up their life and integrate into
society still get ahead. And
you're like,
Victor Lagos: How did you do
that? I can't figure it out.
Arjun Paliwal: Good on them.
Hats off. Yeah. Cool. Look,
Victor Lagos: The other question
because of the relevance of the
podcast, being debt to financial
freedom, I wanted to ask you,
what does financial freedom mean
to you?
Arjun Paliwal: Again, another
one that I think changes as the
thought or mood or memories come
to mind. But, you know, I think
financial freedom to me has just
been as simple as an ability to
make moves when you want to make
moves. And people I think often
put it too much with a sense of
like, I need to stop doing
something, I need to be able to
have time back. Most people who
get to financial freedom using
investing or business or
whatever it may be, had to have
gotten there with a sense of
work ethic, and or patience and
or resilience that allows them
to be so pushed, that they
probably can never switch off.
That's my gut feel for most that
I know have met and myself. And
so I've never kind of looked, I
mean, maybe I did in the past,
but not now as financial freedom
as the switch off or, you know,
take my time back and grab a
coconut and chill out someone if
that's you go for it. But I'd
rather look at it from a
perspective of just call it as
simple as making moves when you
want to make moves. And by
moves, it could be an
investment. Could be helping a
friend out could be traveling
could be whatever, but I say
moves more in the sense of a
very hard and fast decision. Not
so much a I want time back to
chill.
Victor Lagos: Yeah, it's just
giving them options that if they
want to do something they can
they don't have that restriction
to say, one day when I have the
money. Yeah, yeah, exactly. When
I have the time. Exactly. I can.
Yeah, because it's true. You
never really switch off. I mean,
you can but that's when you
start deteriorating. Right. So
that idea of retirement when
union sick Well,
Arjun Paliwal: It's a good
story, man. You made me think of
a story actually. A gentleman I
met in the bank. That was
previous career of mine, and I
was at Surry Hills Commonwealth
Bank. There was a branch that I
was managing. And a dude comes
in. He's like Maybe it's 60s and
still very young fit comes up to
me and says, what we're going
through his accounts, he's like,
Hey, I do this. I think he's in
the share trading space and
actually just just trading. And
when I spoke to him about what
he was getting up to, he said, I
look golf and a lot of it. And
he emphasized a lot of and I was
like, Why do you say it that
way? This is like, Oh, well,
I've got an interesting story to
share with you had four or five
mates of mine that would
regularly come golf, all in our
60s and 70s. And as time went
on, few guys stopped playing.
And then as the months of them
stopped playing, body
deteriorated, one mate passed
away, and then another mate
passed away. And then I was
trying to think of, you know,
the small thinking of my mind
was a certain disease or
something came up. But then the
most common thing, then all the
themes was just not stop playing
golf. Right. So the activity,
there was a big part of it. So
whether that's physical mental,
yeah, totally just the shutting
off later parts of life. Yeah,
have the best idea?
Victor Lagos: Yeah, well, look,
I think many people can, you
know, wouldn't probably know
someone that's been in a similar
situation, they watch their
parents deteriorate old age, and
whether they have financial
freedom or not. So I think it's
always good to have something
that you're working on working
towards being involved in and
keeping that mind going, keeping
the body moving. So for me, when
I look at financial freedom,
it's it is definitely about, you
know, having those options to
choose, make moves when you want
to move. But I have a theory
that if you can sort your
finances out where your income
that you're generating from, you
know, recurring income, not from
you having to work, and that's
enough to cover your expenses,
that you can then free yourself
from that burden of survival,
right, where I need to pay to
provide for my kids and whatnot.
And once you're there, or even
on the on the way there, because
if you know you're on a pathway
that you're already sort of in
that financial freedom mindset,
right? Let's say you do get that
to that point, you get to do
what you want to do without
having to work. But it doesn't
mean you won't work, it just
means you don't have to. So then
all of a sudden, you can work on
things that you you're
passionate about. Because people
really enjoy certain things. You
can ask anyone, whether it is
sport, like play cup, or whether
it's, you know, spending quality
time with their family, or
whether it's traveling, or more
importantly, like what's the
project, or passion that they
have to make the world better
than how they found it? You
know, because it's not like the
world is good. Like, don't get
me wrong, I believe that there's
a lot of positivity in this
world. But there are certain
things that need improvement, a
lot of things, right. But it's
going to come from the people,
it's not going to come from the
government, government will
always do their piece. But
people are going to come
together, collaborate and work
on, on on things together that
then make the world better. But
when you're in survival, you
lose that creativity, and that
focus to get things done,
because you're you're worried
about, you know, so that's,
that's where I think financial
freedom is so important, and why
I want to help more people get
to that.
Arjun Paliwal: Yeah, it's a good
point, I almost think of the
word that keeps coming up to
mind is outsource. So once you
get to a certain point, you're
outsourcing your survival to not
have to, you know, have that as
your main to do or your main
focus. And because that's just
taken care of. And then as you
start to climb up, you know, the
chain of successful ladder of
success, then you start ending
up outsourcing more parts of
your life, and you get that
focus and clarity of where you
want to put it, whether it be
for projects or whether it be
for other things.
Victor Lagos: Outsource Yeah.
Okay, so before I ask you more
about investigate, I wanted to
ask about property notes. So you
run this podcast with with your
wife, and she's the mortgage
broker,
Arjun Paliwal: right? Yeah. So
we run the property notes,
podcast, and where that I guess
journey started from or all came
to light was around us missing
part of property data and the
nerdiness of data for all the
people that love all the
numbers. And I feel like there
was this missing part where all
the podcasts were around a
concept, a tip, another person's
success, a strategy. And you
could have different podcasts
are different things, what you
Bible believing, but there
wasn't really a podcast out
there for the property numbers,
the Property Data Facts, what's
actually happening. You know,
that's where I felt, hey,
there's an opportunity here to
give people what they want on
what they might be missing. But
at the same time, it's what
we're very passionate about, and
where we know we can make a very
big difference. So that's been
great. I've been able to involve
a lot of my team in terms of
data scientists, research
analysts, Junior research
analysts, and myself as head of
research, producing a lot of
insights to be able to share
with people the truth and the
facts about the market. And the
end of the day. If you can
empower people to make better
decisions driven by data, then I
just feel that there'll be in a
position where they can reduce
risk to some extent.
Victor Lagos: Yeah, yeah, that
makes sense. Well, actually,
that leads me to my next
question, which was Um, I heard
that you have a monthly white
paper. So what is this white
paper? And how can the audience
access it?
Arjun Paliwal: Yeah, so research
papers, white papers, they've
been a big focus of us where you
want to get it from
InvestorKit.com. Today, you
jumping on the white papers tab
under our research section, I
think we're up to 13. Now were
released once a month, and to
give insights on how detailed
they are, they range between 40
to sometimes even 100 pages. And
they focus in on a particular
topic for that month, we try to
make it as timely as possible.
So whether it be the rental
crisis and putting that to light
or whether it be Australia's
housing fundamentals, whether it
be a certain market or region
review, or the most recent one
that's coming out is Australia's
infrastructure review, or the
boom, it's happening in
infrastructure. And the key here
is to zone in on a specific area
and or concept and really start
to unpack it. But with great
detail, actual data and
fundamentals. And why that's
become I guess, such a big
popular thing for us has been
that we want to put people in a
position where they can make the
best decisions, but also more
informed decisions. I think far
too often the decisions are
about the micro trend, a daily
index, or monthly trend and
change in performance and price.
And people get focused on the
outcome, or what the main core
logical raa said about the
outcome, without really
realizing how it gets there.
What drives it, what's important
to it, what are the different
factors to focus on. So we we
make a lot of free resources
like that by opening that up.
Now, that is, if not one of the
most passionate things we've
worked on. And I've personally
take immense pride in, because I
know that it can make a huge
difference. And it doesn't cost
anyone anything.
Victor Lagos: So if someone read
this white paper, and, you know,
they went hypothetic, they went
through 100 pages of that data.
Would that give them enough
guidance and structure to
decipher that data to make a
decision on what to buy? Where
to buy? What price to buy for
based on their particular
circumstances? Or is this where
it gives them enough to sort of
have an idea but they still need
the services of the buyer's
agency, for example?
Arjun Paliwal: Yeah, look, I
think the if I, if I magically
get a cookbook tomorrow, read it
and think I'm a world class
chef. Probably not right. But in
terms of, can I get a cookbook
and execute a deal? Execute a
meal and get better at it? Yeah,
totally. So I think people want
to be able to use that
information to guide a well
informed decision and then take
their own review of their
personal circumstances and make
the right one they can. But
look, we're professionals. When
it comes to executing property,
we purchased over 500
properties, our team has more
than 43 properties combined,
just between us. And then at the
same time, we've had close to a
billion dollars in transaction
experience from residential,
commercial and finance, right.
So going to look at all of this,
there's an immense experience to
be able to do that. But what
they do provide is actual
forecasts insights, almost
vision of the future before it
happens. And you know, you can
go back to research papers about
Australian housing fundamentals
and the under supply would be
in, you can go to research
papers, where we've talked about
the rental crisis and predicted
rental growth for 2022, before
it happened. And we can also go
through, you know, research
reports, like the white papers,
where we talk about the top five
regions in New South Wales for a
certain budget, of which four or
five were the top performing
regions. So when you start to
have that level of track record,
it's obviously getting a lot of
attraction. But at the same
time, it's enough info for
people to go hey, I'm cool, man.
But if you want help, it's
there.
Victor Lagos: Yeah, actually,
that was gonna let you sort of
touched on it, I was gonna ask
you, because you've been doing
it for five years, because
you've got, you know, 500 plus
clients on your books. And you
you've spent and invest a lot
into into data. Have you
unpacked the data from all your
past clients, and said, Okay,
look, this is what, what they
bought at the time, this is what
we said was going to happen
based on the data, we had this
what was right, this wasn't, and
then you start learning and
refine and say, Okay, I'm not
going to actually use that same
formula, because it didn't work
back then. Is that what you guys
did? That's the part
Arjun Paliwal: that is what it's
all about. Because at the end of
the day, this is people's lives,
people's finances, a big part of
what's going to help them unlock
a new level in their journey. So
if we don't reflect and just
take things for granted, and
assume that it's just business
and marketing. That's, that's
horrible, right. And so the
reflection has been the biggest
part, to give you some insights
on the outcomes of that
reflection. The first thing I'm
super proud of is that over the
last three years, we've
obviously seen a major property
boom. Now that property boom,
makes people immediately think,
Oh, well, you throw a dart
anywhere, and you'll be okay. To
some extent, yes. But in some
cities, they've wiped off most
of their boom results anyway.
Now, the second thing is, if you
think of that and go, Well,
everyone did okay. Well, guess
what we looked at the data. We
looked at the actual median
price changes for Australia, and
we compared it to the
valuations. that we did for
clients a year, two years, three
years post purchase. And since
this last three years of boom,
we've outperformed it on average
by 29%. So if you've got a
location that did 10%, our
averages did 12.9 to 13% or more
during that time period. So
that's been a very satisfying
thing to know that even whilst
the boom happened, you didn't
just get along with it, you
outperformed it. And then the
second big thing for us was
around the calls we've made, as
recent as I think, early Feb to
mid February listen to podcast
called going down memory lane.
And it was a screenshare, where
we went through articles and
things that we had featured in
across news.com AFR and other
areas, and actually made talks
about, hey, here's the six
trends we predict are going to
happen and 22. Here's the six
trends ahead for 23. And we're
able to track back actual data
on that screenshare and podcast
and show that they in fact did
happen. So the key here is that
we reflect on what went wrong,
what went right, keep improving.
big part of what we do involves
Big Data, data science, and also
a lot of back testing. And so
from that perspective that helps
us really get ahead.
Victor Lagos: Are you using any
AI to help you unpack large data
and turn it into?
Arjun Paliwal: Yeah, so some of
the most recent experiments
we've been working on has been
around looking at the last 10
years of growth year by year
across major regions top
performing courthouse low
performing quartiles, and taking
the viewpoint that if we were
using our scorecards and
weightings that are driven by
machine learning, and you know,
our principles, if we look back
and say, Hey, in 2012, if we'd
selected these top 30% of our
scores, where would that have
been in 2013, and 14, versus
what the markets produced? And
so far, we're actually
outperforming based on some of
our location metrics. We're
constantly tweaking to be able
to go back and say, Hey, how do
we keep improving that
correlation score. So we don't
have years of outliers and
continue to improve that. But
that's never going to stop.
Because you know, the way data
works is, there's what you
believe the weightings are, then
there's what ml believes from an
analysis of taking all of
various variables in there. But
we are getting better and better
from that correlation test. So
we're excited. Awesome.
Victor Lagos: Now, that's really
good. I think for anyone that's
listening, it sounds like,
there's gonna be a lot of value.
Even if you live, if you just
read the white paper, if you I'm
sure your website has got a lot
of information that can help
guide people that are on that
early part of their journey. Or
if you're a seasoned investor,
and you're wanting to keep
growing. But I do want to ask
you, what advice would you give
someone or a couple that are in
the early stage trying to save
for a deposit, and they want to
get onto the property ladder?
Arjun Paliwal: My biggest tip to
people would be to actually
realize how little the
investment is in comparison to
what you may think it is. So the
first part that comes to mind is
actually around the deposit
size. You know, people and I'm
sure in your world, you see this
all the time. There's an
assumption of 20% deposits.
There's assumptions of mortgage
insurance isn't a great thing.
There's assumptions of I can't
get any benefits for certain
stamp duty because of a certain
price point versus all the
horribly presented roles out
there. What's one saying 801
saying 1.51 saying only this for
new, very difficult, but now
it's getting easier and more
simpler. The main thing is when
you start to realize loan to
value ratios, deposits required
understanding mortgage insurance
concepts of compound growth, you
might look at it and sit down
and go wait, I was ready two
years ago. And that's where I
think the biggest tip is for
most families, is that if you
just take New South Wales, for
example, people are saving up to
$60,000 on stamp duty for a $1.5
million place. That is two to
four years depending on where
your savings rates are. So
imagine looking back and going,
I could have purchased property
two years ago, four years ago,
or I now no longer have to wait
for that. Where could prices be
234 years later. And so I think
from that aspect of things,
that's my biggest tip. And then
the final piece would be around
realizing that your backyard
isn't any better investment than
what's elsewhere. The key thing
I've realized and building a
portfolio of properties, is my
wife and I are across five
states. And with those five
states, we've come to realize
that at any given time, they're
all not doing the same thing. So
if you can protect yourself and
be like, hey, at any given year,
something's going well,
something's okay, something's
not going so well. And you've
got that diversity, then you're
able to look back and just go,
it's not even about what the
markets doing. It's just about
how many more flags can I plant?
And so when you start to realize
that you go, Hey, why am I so
confined in where I'm looking?
Now? Let's just spread our wings
and start seeing what's
elsewhere?
Victor Lagos: Yeah, I'm a big
advocate of that, too. So my
wife and I rent visitors. So we
rent we want to live which is in
eastern suburbs of Sydney. And
we buy what we can afford. And
using data using serves as a
buyer's agent. We own two
properties in different states.
And you're right, like one of
them might be performing better
than the other but so be it as
long as we can Hold on to these
properties over the long term,
they're definitely going to it's
going to be worthwhile that
compounded growth will be there.
And of course, the cashflow,
positive side of things is
always important. But look,
people need to have buffers,
right? We're gonna we're in an
environment at the moment where
rates are increasing every month
at the moment. So I guess, I
wanted to ask you like, what
would you say the best
opportunities are given the
current rate rises, and
inflation? And what strategies
can people take to protect
themselves during this period?
Arjun Paliwal: Yeah, it's a good
question. So the current
environment has pros and cons
for people. So I think the pros
is that when you are looking at
the environment, it's actually
not a forever environment. And
that's something that people are
really confused about are not
clear on. The last few cycles of
interest rate rises actually
just go back to history, they're
used as a mechanism to stop play
things like rampant inflation as
an example. They're not used as
a, this is the new norm. And we
sit here and 6% rates forever.
And so the key is, we all know
six to 7%, interest rates in
Australia, are going to hurt
people eventually, not
immediately. And not everyone.
But eventually. And so the idea
of the RBA is to go before it
does, hopefully spending habits
have cut back, inflation has cut
back. And as a result, we can
now turn down. So that's the
first part that you want to
understand the concept of it
all, which means that it's a
good time knowing that you're
able to purchase assets in an
environment where many people
aren't thinking like that
they're thinking that these
rates are forever rates. And
that's just how it works. And so
you can think of a long term
view, but make that short term
decision. Now, the cons of this
is dependent on your mindset and
how you analyze numbers. If you
are going on this journey where
I need to hit positive cash
flow, or cash flow is my core in
a desire in investing. Well,
firstly, you're probably going
to have a bad time investing in
the current market, because
you're going to have 20 options,
say in your budget, then you're
going to call 18 to 19 of them
because they don't meet cashflow
requirements. And then the one
that does may just meet it and
all it takes is one air con just
to get repairs, and then all of
a sudden now negative. And so
it's just a silly thing to
absolutely focus on in this
environment. And as a result,
what people will do is I'll just
jump in on one market, and
completely avoid the
fundamentals of money. Or number
two is they'll just pull back on
investing go don't for me, when
really you had the buffers, you
have the desire, you have the
goal, you have the savings
ability. So consider consider
those first, the markets just a
tool for you to just put money
in and let it sit there for the
long term. Whereas I think many
people will have that kind of
searching for something that
might not exist as much or
doesn't exist at all, and then
they just get paralyzed or make
bad decisions.
Victor Lagos: Yeah, that's a
good point. And for those who
don't know what it means, or
what we mean by buffers, it's
really just having a chunk of
cash, whether that's savings or
equity, that you've extracted
from one of your properties that
sits there as available money.
So that's there to cover the
shortfall or the amount you're
not able to cover from the rent
that you're collecting. So if
you can weather this period of
rate rises, by having those
buffers, then you're not going
to have to chip in money out of
pocket every month, every week,
or cut back on you your
lifestyle just to hold on to
this property. So it's not going
to add that pressure. And then
what's what's going to happen is
when inflation is, you know,
slows down and when the interest
rate environment starts to
stabilize, and the narrative
changes. Well, what's gonna
happen, demand will increase
what happens to prices?
Arjun Paliwal: Totally. And if
supply stays the way it is, then
you just kind of come running
into COVID 2.0. Yeah, of
property boom, because supply is
nowhere to be found. So
Victor Lagos: yeah, we've got
what how much people are now
coming to Australia with with
students coming back. China just
changed the rules around
university now needs to be face
to face so they can't complete
the degrees remotely like they
were you got skilled migrants
coming in. They all need places
to live. Right. Look what's
happening with the rental market
at the moment.
Arjun Paliwal: Yeah, the rental
demand is huge now. Contrary to
other professional opinions, I
don't think the migration is
going to impact property prices.
I think it'll impact rental
prices. And because I never want
to be one of those guys where
COVID shut down and I was like,
No, we'll be fine with no
migrants and then go COVID not
here anymore and migrants are in
all migrants are great part of
the journey has been a killer
because migrants are coming in.
No The truth is they don't
influence property buying in the
short term. If if you have
family members that came off a
plane and said give me my piece
of Sydney where are you at? Or
I'm coming to Brisbane neither
house there move away locals
it's my time. I cobalt that
doesn't happen a lot. I mean
most people coming in are
searching for community
searching for a place to see
Where their family may feel like
they like don't like searching
for jobs, opportunities. So I
think migration will probably do
two three things. One is help
some spending. Secondly is
probably increase unemployment
because more people looking for
jobs, not everyone comes in
searching on having a job. And
then the third thing is, don't
naturally increase rental
prices, because granite
Institute lease data, I think
was around 2018 19. This data
came out or just after it, but
they reviewed data to say that
four years was the typical time
on average, where people would
rent post moving in, so post
moving into Australia. So that
means there's probably a delayed
cycle, firstly, of that
migration activity in prices.
But no doubt, if a whole bunch
of people are coming to rent
rents go up, rents are also then
being questioned by homeowners
or renters versus buying a home.
And also investors are going to
be more attractive by the yields
and offer because the rents rise
and interest rates are probably
come down. So still an
influential impact. But now you
won't hear me saying migrations
come in prices are rising. I'll
be saying, Look, migration is
coming. Rents are rising. Yeah.
Victor Lagos: But look, I guess
what that's also doing, it's
having an impact on affordable
housing in Australia. Right. I
think I heard you mentioned.
Some markets consider, you know,
30% or less of your net income,
considered affordable housing,
others are closer to 40. With
the rates the way they are and
where they're going. We're
cracking over that 40% mark for
a lot of people, right?
Arjun Paliwal: Yeah, there's
going to be a lot of change in
that metric in house looking. I
mean, we run a white paper in
December 2021. It was called
overvalued, undervalued. And we
use a mortgage repayment to
income methodology, and try to
then attach it to prices to see
if prices would therefore have
to rise by X percent to equal
fair value, or fall by X percent
to equal fair value. If it was
on the fall equation. It was
overvalued. If it was on the
rise equation, it was
undervalued. And so I believe we
had 18 of 25 of Australia's
largest non capital regions be
undervalued in 2021, December,
that is now dropped to nine of
25. So pretty much half. So it
does mean firstly two things.
One is this still undervalued
location, so let's not assume
that you can't find undervalued
assets from an income to to rent
some repayments. But there is a
lot of overvalue there has
shifted, and meaning repayments
and rents for the average or
median how everyone looked at it
will be difficult, but naturally
is people who are okay above it,
people are below it. I want to
make a call and maybe something
more long term in Australia, I'm
not so much now on the overvalue
undervalue. I think that the 30%
is probably going to get thrown
out at some point in the future.
It's a global benchmark, but
it's not really a global
benchmark. So you know, what I
mean by that is there are many
countries, if you go across many
parts of Asia, it's normal to be
on 40%. And so I just think that
we might look at it differently
to go, hey, it's normal to pay a
lot more rent because we have
scarce housing, and that's how
it is. So I don't think 30% or
33% is a benchmark, we'll be
here forever.
Victor Lagos: And of course,
you're comparing global city
like Sydney or Melbourne, right.
But when you look at, you know,
other parts of Australia, we're
probably aren't that 30% or
below, right?
Arjun Paliwal: Yeah, look at
this many below. Some still a
lot with lots deliver, I think
there's variance in local
incomes. But there's also
variance and local prices,
right? Sometimes we think
because of Sydney's income being
high. As a result, it must be
okay for affordability. Not
really, it's actually worse off
even with higher incomes, just
because the prices are that much
higher. And so there are places
where people might have lower
incomes and still have greater
affordability. And that's the
relative concept that we look
at. And I think that's going to
be probably an opportunity for
many other cities to become more
attractive, because they're
attractive in the form of the
housing affordability, they're
now more attractive in the fact
that the globe is OK with
accepting work in different
locations. And then if we can
continue to stay visionary with
our infrastructure, our policies
and so forth, then it helps
create more cities. But the
problem we have in Australia
with that, it's just that
political terms are probably too
short, and they're probably too
volatile. And so no one can
really focus on big long term
stuff. And when they do they
probably get axed by the time
they're about to put it on the
market and make it happen. So,
Victor Lagos: Yeah, it happens a
lot. I mean, they had the
changes in Queensland with the
way they were going to charge
land tax based on your overall
holdings across Australia, a
Arjun Paliwal: Lot of knee jerk
thinking, Yes, that's strategy
doesn't seem to be a big thing
there. But when you do check out
the most recent white paper on
infrastructure booms, there's a
lot happening. It's huge amounts
of infrastructure. And I think
that's what people are going to
miss out on over the next couple
of years, not so much from our
this will now tenfold pricing,
but from analyzing it as part of
the decision making thing people
are just really thinking the
next 12 months and interest
rates winds that go down Windsor
come back up without realizing
that we're experiencing one of
the biggest jobs boom, and more
jobs are going to be coming up
after we go through this Up and
down, unemployment shift,
because of all the projects in
pipeline,
Victor Lagos: Sounds like it's
more opportunity than anything
else right now, just gotta get
the numbers, right? And get the
mindset right and get, obviously
the right team around you and
the right strategies to execute.
And obviously, you know, to
minimize your risks. So I have
one last question I want to ask
you, which is a little bit more
about your personal experience,
what lessons have you learned
along your personal investment
journey that you would have done
differently in hindsight?
Arjun Paliwal: Differently?
Definitely, this is a, this is a
tough one, I think that the
biggest learning I've had in
recent times has been the
importance of an asset base. And
people can sometimes go into
this world of perfection about a
property versus how much pool of
dollars you have to form an
asset base, I'll give you an
example. $2.5 million, growing
at 10% is 250. K $5 million,
growing at 5% is 250. K $10
million, growing at 2.5% is 250.
K. So see how life gets easier?
Now, the key there is that long
term averages in Australia is
between five and 8%. So if you
look at that 90% of all local
government areas, so pretty much
everywhere, did 5% or more in
compound growth over the last 20
years? So that city that you
think, Oh, what are the
fundamentals? What's driving it?
Is it really good with the jobs,
nine 90% of local government
areas, 20 years CoreLogic
achieve 5% or more. So whatever
you you may think you know about
property market, you probably
don't know a lot, considering so
many locations, you might be
easy to talk down to achieve
that. So when I realized that, I
realized that the game is just
about doing three things, a
building, the biggest asset base
at the fastest you can be is
making sure you don't stuff it
up and have cash to be able to
hold them through whatever
periods and then see is hold it
long enough and get rid of a
couple or earn enough to get rid
of the debt. So you don't have
to get rid of a couple. And
you're left over with a bunch of
assets, a lot of income, a lot
of diversity and little to no
risk. If you follow those three
principles. And life does get
easier, the more you own, it
doesn't get harder, it's harder
for those for the first. And
it's harder for those who think
small and think they can achieve
everything with two or three.
The truth is it just doesn't
happen. You need a lot of time
in the game to make two or three
properties massively achieve
your income goals. So that's
where I do think from a
perspective of learning, double
down on the asset base building,
if I can get it to 15 mil 20
mil, five mil whatever that
number is for you. It is easier
because of the long term
averages a 5% plus and you only
need to to hit your goal or
three to hit your goal. make
life easier.
Victor Lagos: Yeah, that's,
that's powerful. I think it's
important for people to have
that long term view and think
about growing that asset base,
but work within your means
what's possible. And if you want
to know what's actually
possible, talk to your mortgage
broker, connect with me, I can
run the numbers, what's your
borrowing capacity? What's your
buying power? How much equity
can you extract to grow the
portfolio? Because you need to
know what's possible, you might
have one idea, but until you
actually look at the numbers
might be a very different, you
know, answer there. But that's
what I'm here to do and help and
I'm sure your team, your
existing broker can help you as
well. So how can people find and
connect with you and the team
Arjun Paliwal: Where they can
get in touch by investor
kit.com? Today, you on their
website, we've got a load of
research papers as you pointed
out podcasts that we've got, and
also success stories. If you're
a first time investor seeing how
one decision made well can make
a difference. There's a video
there for you. If you're an
affluent investor who wants to
speak to someone or see
someone's journey, who's had
nine plus property purchases
with us, commercial residential
and see how you can gain a seven
figure income a seven figure
equity gain or six figure income
from property. There's also case
studies there. So take your time
through it, digest it all and if
it feels right for you reach out
and book a free free
consultation with our team.
Victor Lagos: Awesome. Thanks so
much. Thank you really glad to
meet you. Take it. Thanks,
everyone for listening. Stay
tuned for the next episode of
debt financial freedom.