John:  Hey, alrighty and welcome to Custodian podcast.  We’re with the amazing Jennifer Fordham-Leppitsch, or as I call her JFL because she calls me JLF; and I love this lady.  She’s absolutely one of the most positive energies I’ve ever met, and a successful Custodian.  Today we’re talking 10 questions, 10 properties, 10 years.  Wow, has it been 10 years Jen, how about that?

Jen:  It’s amazing, I can’t believe I’ve been anywhere for 10 years! (Laughs)

John:  It’s crazy isn’t it.  Look firstly, you know, I wanted to get it out to our clients and our listeners.  How does a Psychiatric Nurse move into selling beer; move into now building a portfolio of 10 properties?  What’s the motivator behind it all and what’s been the driver behind it all?

Jen:  The driver behind it all was, I’ve always really loved property, and I bought my first property in Perth and then my parents did and they sold it when I went back to Melbourne in 1987 and I always knew there was something about property.  So that was my driving force.  I tried to do a vendors term agreement with them but I didn’t know what it was in those days.  So I knew there was something about property, but I just didn’t know what it was John.

John:  So something you’ve always been comfortable with, so something would you say, is in your parents’ blood/DNA, or was it just something that you’ve been comfortable with?

Jen:  Ah no, it was definitely in DNA.  Dad had two properties in South Melbourne, the old golf spa(?) building, which is a beautiful national trust building and he built a property there.  We had a property down at Main Ridge and at 32 we lost absolutely everything.  So that became my driving force, to make sure I accumulated enough wealth to help Mum and Dad and also I just believed in property.

John:  That’s really interesting.  So tell me, let’s talk about how you started out and how at…how they lost everything, and what were the lessons and how did those two roads collide, so to speak?  Because a lot of people I speak to, if their parents have had a bad experience, it puts them off property.

Jen:  Look, I can totally understand that.  Mine was slightly different as I was very aware of Dad and what Dad’s businesses were doing and the two properties in South Melbourne were very similar to what happened to people in 2008.  He was caught up in high interests rates of 19-20% and had valuations on both of the properties, then they were revalued by the bank as being commercial properties and they said, you know, we now value you them at, let’s say at 4 million, you owe us 7, we’d like the 3 thanks.

John:  Wow, yeah so got caught in, I suppose the wrong sector of property, but a lot of people put property in the same sector.  So how did you start out?  What were the first things you did?  You said you ventured with vendor finance.  What was the strategy you employed at the start?

Jen:  For me it lead from there, because when this all happened I was still renting a lovely home.  I’ve always been a believer, you know you earn good money, you live how you want to live, and I think the real catalyst for me starting build wealth through property, was Mum and Dad having to lose theirs and I would have loved to buy their home in Beaumaris, but I hadn’t set myself up to do that.  So from that moment on, I decided that was when I was going to start to build a property portfolio.

John:  Right, right, so that was the starting, and how did you start?  What did you do?  What were the first things you did?

Jen:  The first thing we did was that the property we were renting in Patterson Lake, Hans and myself, my husband, he wasn’t at that stage.  It was brand new and we were renting and it came on the market for sale so we decided to buy that.  We didn’t know what stamp duty was at the time and the lady said we owe more money for stamp duty.  So that was our first property, and that was a great investment and probably within 6 or 12 months we bought our first investment property through a financial planner in St Kilda Road.  I can’t think of the name of it but he told us that Mildura was the growth capital of Australia.

John:  Ha, ha, really?  Well they make good oranges down there, don’t they?  No doubt about that. Um, so what were the early mistakes?  What did you do wrong?  You had the desire, but what happened wrong?  What do you think in hindsight?

Jen:  So, so many mistakes but learn from them, and that’s the main thing when you’re starting out and you’ve got enough time.  Firstly I was paying principle and interest, I bought a regional townhouse and I didn’t understand the power of equity and leverage.

John:  Yeah, yeah, three really good points.  And just to highlight that:  principle and interest as opposed to interest only, equity and leverage and then getting into a regional market.  They are 3 things that compound on each other, and puts you in a position that really does stunt your ability to grow.  So let’s fast forward, 10 years, 10 properties.  Um wow, first or all, congratulations, you are now in an elite group, I could tell you, it’s a fraction of a fraction of a fraction of 1 percent of all Australians, so a huge congratulations.  When you started 10 years ago, did you have the desire to build a portfolio of 10 properties or has it sort of evolved as you have gone on?

Jen:  It’s become addictive as I have worked here.  No, seriously.  Let’s go back to Simon, and he did a presentation in the Bentleigh office.  I first went and saw you with my Dad and I was really impressed.  I learnt about land and growth and, you know, houses depreciate.  Then I went and saw Simon and Simon was doing a whiteboard presentation when he said “you know something like only 1.8 or 2% of people in Australia have got 4 properties or more”.  That was my first goal.

John:  Yeah, just to get to 3 or 4 or multiple properties, because it puts you in a limited band with.  There must have been times where you had doubt and you wanted to chuck it in, or give it up, all that sort of thing, because you’ve done it through very tough times.  You’ve gone through GST, you’ve got property in various states, floods, interest rates up/down, you know, all that sort of thing, income up/down, uncertainty, you know, you’ve really had to deal with it all.  There must have been times when you thought it’s all too hard.  You know what’s been the testing times for you?

Jen:  I think all of those things there, but because you surround yourself in a company and also my clients John.  I made a commitment in my mind to them when I started building a portfolio and I started working with them back in 2007/2008, but I really wanted to see it through to the end.  I can’t say there has ever been a time when I have wanted to give up, no.   No never.

John:  What’s been the hardest challenge, do you think?

Jen:  Um, I think it’s been dealing with the banks.  I find that really, really stresses me out.

John:  Yeah, well all of us, and I suppose, you know, what we’ve learnt is that they change the rules and they make them a bit obscure – valuations, finance, costs, not passing on things and it is a slog isn’t it?  It really is hard that we have to do that.  What, would you do anything different, do you think?

Jen:  I don’t think so.  I went along with the philosophy to buy what I could when I could afford to.  And whether that was…you know people sort of said to me “how could you buy Sydney and Redbank Plains in the same breath, you know, in the same week”.  And I said, well that’s what my borrowing capacity was.  I had enough to do one property in Sydney and then I could pick up something, you know 350-360,000. That’s what I did.  So would I do anything differently – I don’t think so John.  I think that I’m really happy with where my portfolio is now.  Would I have liked to have started 10 years earlier?  Absolutely.

John:  Yeah, and I suppose, you know, seeing the little seed inside that, the reverse of that question, “What would you do differently?” is the other point is that you used your borrowing capacity when it was available.  That’s really interesting because I think, as you said, one of the challenges is finance and how the rules change significantly so whenever the rules have swung in your favour, you’ve jumped on it.  What’s the one coaching habit that you’ve seen, you know, clients that have limited their success.  You know, you must have now dealt with more than a thousand clients who have built many thousands of properties, some of them very successful but many of them just sitting on their hands, sitting on equity, lots of things.  What’s the one thing that you dwell on at night and think to yourself about clients “if only they had a specific habit that successful clients have got.”  What do you think it is?

Jen:  I think it’s looking past what’s happening in the portfolio at the moment, living in the now and not being about to visualise 15 years down the track, what does it look like, or 10 years down the track.  Getting so caught up in the moment, perhaps lack of growth in a property (we’ve all had that before) and instead of doing something when they have the equity there to do it, just saying “oh no, I’m just going to wait for growth in that property”.

John:  Yeah that’s really interesting.  That’s an Australianism – I’m just going to wait and see what happens, or she’ll be right, yeah.  On that note, how did you overcome those thoughts yourself?

Jen:  I work with Custodian, I work for a company that (and this is not an ad for Custodian), but I work for a company that actually cares.

John:  Yeah.

Jen:  And what I’m doing, I’m going through with hundreds of other people and I’ve seen so much success if only people give it time.

John:  You know that’s interesting because I sit and listen to you myself.  I think about your journey and my own journey on a different scale as well and I have the same thoughts at various stages as well.  And if you ask me the questions that I asked you, which I was thinking as you were mentioning it.  You know, I was thinking “how would I answer this myself”.  I’d say that you actually have to manage your environment around you to create that positivity and it’s a very, very important factor to stay focused on the big picture rather than to get caught up in the day to day detail of it all.  And that’s so true, particularly as most of the things you read in the newspapers are focused on the negative.  You know, they are trying to create fear so it’s a really interesting point.  Well Jen, I want to say “thank you so much for being on our Custodian podcast and congratulations on 10 properties in 10 years and in 10 years from now, I don’t want to being saying in 20 years, I want to be saying in 30 years because we need to be compounding from here”.  So congratulations to you, Hans and the kids, you’ve created a great legacy.  You’ve been fantastic for us in Victoria and the clients, and staff, everyone just loves you, so thanks so much for your energy and your input.  Cheers.

Jen:  Thanks John.