26 Jul The power of two – Sana and Mona Ali
Property Twins Sana and Mona Ali have built a $5 million property portfolio before the age of 30 and also have their own mortgage broking business. In Kevin’s chat with the twins, he gets them to draw on their financial acumen and investment success to speak about how to start your property investment journey, advice for investing interstate, the key to developing a profitable strategy, how to bounce back from a bad investment and the questions to ask agents when purchasing a property.
Kevin: My next guest – who we’ve spoken to in the show in the past – two young investors who have built a very enviable portfolio, now worth well over $5 million. Of course, I’m referring to the Property Twins, Sana and Mona Ali.
Ladies, thank you very much for your time. Tell me, this passion for property, where did it come from?
Sana: Thanks, Kevin, for having us. We came to Australia in the year 2000, with the challenge of settling in a new country. We just saw a lot of friends and family living really good lives and acquiring their own homes.
That’s when we realized that property was a more tangible and secure investment that we could hold on to, and if we had the ability to buy more than one property, we would certainly do that when we could do that. That’s when we really got thinking that property would be one day our passion and something we were going to pursue.
Kevin: Has the power of two – two people – been somewhat of a help to you? Is that what you’d recommend for any young investors?
Sana: It definitely helps, being two people doing it together. But for us, we are siblings; there could be couples buying property. I’m not really sure if it would work so well with friends, so to speak.
Being two has been our strength, because we’ve been able to bounce off ideas and been able to bring the best to the table in terms of what strategy we’re going to follow and come up with different ideas at different points in time.
We do bring different personalities and strengths as well to the table, as well as our own backgrounds. Me, I have an IT background, and Mona has a tax background, so that really helps.
Kevin: And you obviously make allowance for each other. You head up those particular areas. Sana, you mentioned about a strategy. What is your strategy, and has it changed?
Sana: Our strategy is just keeping it simple and stupid. Buying where our cash flows work. We like properties don’t impact our lifestyle too much, so we have had minimal reliance on any negative gearing. The tax has just been icing on the cake for us. Our numbers or our cash flows must work for the properties.
We look for good fundamentals in the areas that we are looking at, so if there is any government spending, any infrastructure coming in, or private investors coming in the area – for example, if there are new Westfields or Costcos, or IKEAs coming in – as well as new train stations or roads. That really influences our decision, because when an area improves, that’s when you have owner-occupies attracted to the area and tenants alike.
For our personal strategy, all our properties have been within a kilometer of a train station or a shopping mall, and what that means is there’s always a future upside – in particular, if it’s a house – for future development purposes. That’s how we pick our assets. Yes, just keeping it really stupid and simple.
Kevin: Well, from what you’ve told me, obviously, you have no fear about investing interstate. How do you go about selecting good properties interstate? What process would you put in place, or suggest people put in place, for buying in another state?
Sana: We start off with researching the city to determine where there’s infrastructure going in, if there’s government and private spending happening. Once we’ve narrowed down on those fundamentals, we look at the price points and the rent we’d yield for various areas. If we do spot an area where there are higher-yielding properties than usual, then we focus on those particular areas.
We would suggest to people that they should really be flying up interstate to build rapport and relationships with local agents, because once you’ve met someone, you’re more likely to be able to have a conversation with them over the phone. They’ll know your intentions and what you’re looking for, and you’re more likely to be on their speed-dial, so to speak.
Once you’ve done that, you can look at purchasing over the phone, but you obviously need a team on the ground. That would include someone like a building and pest inspector, a property manager who can walk through the property for you if you do buy sight unseen.
And if those things don’t quite work for you, especially if you are starting out and still learning your ropes, you can always look at hiring a good buyer’s agent on the ground, a local buyer’s agent who knows the area and is able to negotiate and select the properties on your behalf.
Kevin: Yes, it’s all very good advice. Now, I mentioned at the opening that you have your own mortgage brokering business. That’s obviously helped you a lot, as well. What advice would you have for young people starting out? How can they work best with a mortgage broker to secure their future?
Mona: Kevin, our advice to anyone young starting out today would be to really look at what their goal is and where they see themselves financially over the next 5, 10, 20 years, and what lifestyle they really want.
When it comes to working with a mortgage broker, the thinking should always be big-picture-focused. Where are you heading? In our journey and experience, we found we were always thinking about our next deal and the one after that.
Start small, but also look at what your potential is. Your broker should be able to work out for you not only your current purchase but the one after that. Of course, that comes down to what resources are available to you and what are the current lending policies, which can always change. But having that clarity, you have more certainty about the direction that you’re going in.
Kevin: Help me now. Have you ever made a bad investment? And if so, how do you bounce back from that?
Mona: Bad investment-wise would be when we were starting out initially, we were really attracted to the First-Home Buyer’s Grant that was around at the time for brand-new properties, and we signed up for two off-the-plan apartments. We both put down $1000 each, or 0.25% deposit, at the time.
But fortunately for us, the valuations did not stack up in that case, and what that meant was we couldn’t complete the deal, so we had to pull out within the cooling-off period here in New South Wales. That would be the best lesson that we learned.
Sana: Just to call out, Kevin, also while talking about off-the-plan properties or new land releases, for example, I think people need to be really wary when registering for these properties, especially in the current volatile lending environment, where the property isn’t settling for the next 18 months. You don’t know what the lending will be like then. If you can afford it today doesn’t mean you will be able to do that and be able to settle that deal at that point in time.
So, we really caution buyers considering that. That was, I would say, not more of a mistake but more of a lesson for us, to not go in that direction.
Kevin: Yes, it was only today, I was talking to a reporter from the ABC who was telling me about a horror story of someone who had purchased an apartment with a rental guarantee, only to find out that the rent that was guaranteed was well above market. He has a problem coming up as soon as that rental guarantee runs out that the lease will fall back.
There are a lot of traps for unwary buyers or investors, aren’t there?
Mona: Correct. The First-Home Owner’s Grant is already factored in the price, and you’re already paying a premium. Just be careful what you’re getting into. Look at comparable sales, what’s happening in the area, and what’s the supply like?
Kevin: What are some of the questions that you ask real estate agents when you’re purchasing a property?
Sana: We ask a number of questions. These range from just asking about a particular property, for example, things like what’s the block size? What’s the street frontage? Is it on a high side or a low side? And f the property is in a strata complex, how many properties are there? Is it a high-density complex? What’s the strata like for that particular property?
Then also looking at the cost side of things: what is the potential rental return on the property? What are strata costs? What are the council and water rates? That enables us in doing our cash flows for each thing that we consider.
Kevin: When you’re looking at and asking some of those questions – and they’re great questions too, by the way – the answer to the question about “What is it likely to rent for?” how much due diligence do you put into that yourself? You’re not prepared, obviously, to just take the advice of one person.
Sana: Yes, we look at RealEstate.com.au or Domain.com.au, look at what the current properties are renting for in that particular complex if it’s a strata property, or what are comparable properties renting for at this point in time?
Mona: Kevin, also to add, it’s very important to qualify the sellers. Just how there could be buyers in the market who are not serious about buying, there could be sellers who are not so serious about selling.
You must ask how long has the property been on the market? Why are they really selling? What are the motivations? How flexible are they on the price? Can you purchase there prior to an open home? What conditions would be acceptable? For example, can you do a delayed settlement or a quick settlement to get a win-win outcome for yourself and the vendor?
Those are some of the key questions we ask.
Kevin: Very good advice. Tell me, just before I let you go, if you have any tips for us on negotiations, some that you’ve used in the past that have really helped you secure a good deal.
Mona: Negotiation, we would say look at what terms the vendor wants. Do they want to rent back the property from you? Do they want a larger deposit so that they can complete another deal? Should you offer a quicker settlement, or even a cash settlement if you have the ability to do so?
Sana: In terms of our own journey, we’ve always had clarity whenever we’ve gone and purchased a property, clarity on what will make a good investment property. So, when we have found that right opportunity, we have been willing to have a win-win situation, whether it would be from a price point of view or settlement point of view. And we haven’t shied away, say, from paying a little bit more – say $5000 or $10,000 – because over the long term, in the property investing world, that won’t amount to much, especially in a rising market.
You need to balance the negotiation side with what’s the upside? For example, if a market is rising, will you miss out on the opportunity? Will you come across a similar property? Making that quick decision is important.
Kevin: Ladies, it’s been fantastic talking to you. Thank you so much. If anyone wants to reach you or work with you, how can they do that?
Mona: We are contactable via phone on 1300-97-60-60 or we can be reached via e-mail, email@example.com.
Kevin: Property Twins, that’s the name of it. Is there a website as well that goes with that, Property Twins?
Mona: Yes, we can be found on Facebook or on our website, PropertytWins.com.au.
Kevin: Wonderful. Lovely talking to you, Sana and Mona. Thank you very much for your time.
Mona: Thank you.
Sana: Thanks, Kevin.