Property Investory Podcast with Zoran Solano Part 1

27 Jul 2017

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Inside this podcast from Property Investory you’ll hear about Zoran Solano’s property investing journey starting at a young age of 19 years old. He shares where he drew his inspirations from and how family impacted on his property investing strategy.

Furthermore Solano share’s a powerful ah-hah moment and gives his best advice on property investments throughout Australia.

You’ll learn all this and more in today’s podcast. So jump on in!

 

Audio transcript below;

Note: Property Investory Podcast is produced for the ear and designed to be heard, not read. We strongly encourage you to listen to the audio, which includes emotion and emphasis that’s not on the page. Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio before quoting in print.

Zoran Solano::
I bought my first property at 19, the property was an established house that had some value adding opportunity, and it was a lower budget style property…

Tyrone Shum:
On this episode we will delve into the world of a successful property buyer’s agent from Brisbane, who made his leap into the investing world, securing a real estate license at eighteen and purchase of a property at nineteen years old.

At age nineteen,  Zoran Solano had already bought an investment property. We will be learning about his journey to success and he will show you how it’s possible to build a property investment portfolio for yourself.

To begin with what do you do actually in any given day?

Zoran Solano:
My day can be very dynamic, because we do assist in that full circle of people owning property, I could have an initial consultation with someone , just this morning I had a call from someone who just had, has come across an inheritance and would like to now move forward in purchasing some investment properties to make the best of that. So sometimes it’s initial strategy and property investment strategy, inspecting property, negotiating a deal or coordinating some renovations to improve the performance of my client’s portfolio. So my day is very dynamic both in and out of the office.

Tyrone Shum:
Solano has grown up around the Property Investment industry and shows a real passion for it. He also prides on excellence with his approach to investing.

Zoran Solano:
I’m a long term player when it comes to property. I don’t think property is a get rich quick scheme, and I think that successful property development can be a really powerful thing in an investor’s portfolio. I think all, your have some diversification within your portfolio, but for me property is just such a, it’s a tangible asset, it’s a real asset that I know intimately. So for me, that’s the type of investor I am, is someone who likes to be hands on. I personally have a buy renovate hold, or buy develop hold strategy for my wealth creation.

Tyrone Shum:
Every pathway to property investment success is different. Solano’s story begins in his late teens in a place called Clayfields on Brisbane’s North side.

Zoran Solano:
So I graduated from Churchie, which is a Anglican Church grammar school here in Brisbane which gave me a really great platform to enter up into the family business when I completed that.

Tyrone Shum:
Yeah, fantastic. Did you go to high school and university as well in Brisbane?

Zoran Solano:
I stepped straight into the industry, having grown up around property through my teens I really learnt, in the workforce working and doing what we do in buyer’s agency and stepped straight into buyer’s agency when I finished school. In Queensland you can’t hold a real estate license until you’re 18 so I actually undertook all the credentials for my real estate license before my 18th birthday and on my 18th birthday submitted the paperwork to the office of fair trading and became an agent as quick as I possibly could, and that’s the legislation that we act under here in Queensland for what we do. So yes, straight into it and now, yeah nearly 10 years in the industry.

Tyrone Shum:
Wow, okay so you must have been one of the youngest real estate agents in the area? If you actually had, just turned 18, you must have been yeah, quite proud of that moment?  

Zoran Solano:
I would say for a long time I was probably the youngest buyer’s agent in Australia, I would say being 18 and being a fully fledged buyer’s agent searching, evaluating, negotiating, the full process of buying and property acquisition, so definitely. And I initially found that as a challenge, because a lot of people questioned my knowledge and ability given I was so young, but I think when they understood the extended knowledge that I had at that age and the experienced that I had already by growing up around Liz Willcox who is my mum and who is a very successful buyer’s agent in her own right, really gave me the piece of the puzzle that I needed to really start being a buyer’s agent and from there it’s just grown.

Tyrone Shum:
With a property investment background and experience of the industry seen through his mother, Liz Willcox, and her success in the field, Solano was able to rule the investment game and make a name for himself. While his mother was a key influencer in his transition into the industry, it was also his grandfather, a property investor who peaked his interest in real estate.

Zoran Solano:
My dad was the complete opposite, he would be the share so, on my dad’s side of the family, it was actually my grandfather, who was the keen property investor, typical story of an Italian migrant coming to Australia working in the sugarcane industry, the sugar cane fields in far North Queensland and obviously, it was a high paying job for the time but it was also a tough job as well. So, he worked in that industry for many years to save money and he put that money towards property investment here in Brisbane.

Tyrone Shum:
This is where Solano’s property buying story begins.

Zoran Solano:
Well look it really all started look, for as long as I can remember, especially on my dad’s side with my grandfather’s portfolio. Being, again being a typical old Italian guy he, liked to pick up the rent in cash every week or fortnight, used to undertake the maintenance of the, we had a couple of blocks of flats and apartments that he would used to, do the common area maintenance. So, for me when I was a young kid, I was pushing a lawnmower around a block of flats that my grandfather owned,. So that’s where really I think it all started for me and my interest around property, that, that this is possible. And so, my grandfather accumulated several properties through, over a number of years, and when he passed away those properties were then passed down for generations so to speak and yeah, so I think that’s where it really all started. Throughout my teenage years while I was in high school, I worked with my mum as a research assistant, so, going along to inspections and assisting her with her role as a buyer’s agent at a previous business. So then in 2008 we launched Hot Property Buyer’s Agency, so yeah that was coinciding with the same sort of time I finished high school. So having said, straight out of high school into the business, and yeah we’ve grown from there.

Tyrone Shum:
With influence from both his mother and grandfather, two people very close to him who have experience in property buying, Solano bought his first property at nineteen years of age.

Zoran Solano:
I bought my first property at 19, the property was an established house that had some value adding opportunity, and it was a lower budget style property. In fact, the first property I ever purchased was in Logan, Logan Lee, south of Brisbane. But I found that, as my knowledge changed, as my skills sophisticated and my strategy evolved, that property I knew fairly quickly within sort of 12 to 18 months, that that property wasn’t going to do what I wanted it to do for my portfolio. It didn’t have the consistency of capital growth, and it didn’t really have the opportunity that I wanted in my portfolio. So although that property did create a bit of capital gain for me to stick into my next property a couple of years later, it was something that I quickly identified after probably about 12 to 18 months as I mentioned, that it was no longer something that suited my investment strategy. So my strategy changed.

Tyrone Shum:
After realising he had purchased a property that was not really for him or what he wanted, he moved onto the next investment with a new strategy in mind.

Zoran Solano:
So basically, I undertook a renovation net property which did create a bit of equity for me, and time went on  where I was then looking to purchase another property with my partner and so at this stage I’m 21 and she’s 19, and we then purchased a property in Wavell Heights on Brisbane’s north side, about 8kms from the Brisbane CBD. Great property, great opportunity, so, what I really identified with my portfolio, the first property I purchased was a little bit of right place right time, I had the opportunity to buy it below market value, to purchase the property, but as my property investment knowledge changed and my strategy sophisticated dramatically over those few years, my focus really shifted to purchasing more quality blue chip location, closer to the Brisbane CBD. And that’s really, and that decision in my portfolio had made a massive, massive difference with where I am today, just 4 or 5 years later. So for me it was the best move I ever made, it’s one move a lot of investors don’t do enough of. They don’t review their portfolio and make a decision to divest with under performing property in order to expand the portfolio in a new direction. Sometimes, the opportunity costs if they were to sit on that property can really hurt the performance of their portfolios so.

Tyrone Shum:
With a new strategy in mind and a bit more experience, Solano confidently purchased more investment properties and established for himself quite an impressive investment portfolio.

Zoran Solano:
Personally I’ve got three investment properties which are currently in my portfolio, all of which have development upside which I plan on undertaking in the next few years to undertake the development to 5 properties that those 3 properties have the opportunity to be sub divided into 5. So that’s sort of where I’m at at the moment with my personal portfolio, but amongst certain entities that I control along with my family as well, we have several investment properties throughout the family trust that they also control, so yeah pretty established portfolio across the board, but still looking to grow. But also still looking to enjoy my 20’s as well so. For me, could definitely be up to more properties than what I currently have but I’ve chosen to enjoy a bit of balance in my life as well so. I’ve been lucky enough to do a fair bit of travel so.

Tyrone Shum:
Coming up after the break we’ll discuss some of Solano’s client’s worst investing moments and how you can learn from it.

Zoran Solano:
That’s often the lowest point of what I have to do with, unfortunately tell people that that property has not done what they wanted it to do.

Tyrone Shum:
And what this experienced investor is looking for next.

Zoran Solano:
I’m excited about the Brisbane market, to be really honest. I’ve got, I see a great opportunity, when you look at the meeting outside of Brisbane being half that of Sydney, that’s historic.

Tyrone Shum:
So far Solano has experienced quite a successful property investment career. However, with any property investment there is the risk of making the wrong decision or a bad investment, which he has witnessed with his clients.

Zoran Solano:
One thing that I do is I undertake a portfolio review for clients, whether they are existing clients or new clients who engage my services. And I had a couple who were in their late 50’s early 60’s, so approaching retirement approximately ten years ago they started investing in property and they purchased quite a few properties in a short period of time, and their strategy was really around quantity not quality. And what I mean by that is they purchased several low budget properties that fit within their serviceability within their capacity, which, involves, two units, sorry two town houses down in Logan, two properties out at Ipswich, one at Oakey, west of Toowoomba. So there were several properties within their portfolio.

When I reviewed their situation, what I found was in the years that they had owned that portfolio, it had no capital growth. In fact some of the properties had deteriorated due to a lack of maintenance, that those properties actually would cost them money to bring them up to a level that was worth what they had paid. So, and this is what I found, that these guys hadn’t used my services to purchase, hadn’t used the right property manager to manage their portfolio through the time of ownership, because it’s all well and good going out and purchasing, you could purchase the best property, in Australia, but if you don’t maintain it, you don’t manage it, you don’t look after it, it will deteriorate. And that’s exactly what happened. So unfortunately these people had an LVR, a loan to value ratio that was pretty much 100%. They had no equity, they’d heavily leveraged against these properties unfortunately, and they hadn’t really done anything. And that’s due to choosing to, I believe, the incorrect properties for their portfolio, and not realizing it sooner.

So that’s probably, when I do what I do and I see people who believe they have done the right thing, and they go out and buy an investment property or several investment properties, they don’t have a strategy, they don’t have a plan, they don’t review the plan and they don’t have the right guidance. And that’s often the lowest point of what I have to do with, unfortunately tell people that that property has not done what they wanted it to do. So yeah, that cost them a lot of time in what I have to do, unfortunately. But then the next process is obviously getting them back on the right path, to the right opportunity, to the right property to build their portfolio strong and secure. whether that means undertaking renovations to improve those properties’ performance within their portfolio, or divesting of under performing properties so.

Tyrone Shum:
When Solano began investing he was quite young, at the age of nineteen and learnt very quickly that he had to adapt his strategies in order to find success. In this instance he learnt the importance of a good portfolio and learning how to assess his own performance to avoid a bad investment.

Zoran Solano:
When I first bought my first property and my strategy then evolved because I reviewed it, that’s when I also identified that I needed to sell and so for me I’ve learnt, I learnt quite quickly for myself that that was very important to review your portfolio and monitor it’s performance, and also divest of underperforming properties, to, to realize opportunity costs., be conscious of opportunity costs if you are sitting in the wrong spot. I’ve learnt that lesson myself at the age of 19, 20, and now implementing that into people’s portfolios, that had doubled or tripled my age when they realized that. For me, the sooner, I can create a relationship with in an investor and the longer the relationship we can have, the more I can help them. So that’s one thing that I’ve learnt quite quickly.

Tyrone Shum:
After learning how to assess and improve the performance of his properties, Solano was able to experience much more success.

Zoran Solano:
There’s been a couple of, ‘aha’ moments for me because I’m constantly learning. we’re all constantly learning and getting better. And one thing that that happened to me was exactly that, reviewing my portfolio, divesting of bad properties, and that, that property that I purchased and then divested of, the first one, the second one I purchased has created the equity for me to buy my third property. So the equity as leverage against that first property is a bit of deposit. The third property I just recently purchased last year, I purchased, it has, it literally cost me $3000 cash to buy that property, everything else was used, my equity. So my portfolio is at a stage where you buy the right property , your portfolio grows itself, you leverage property, use your equity, especially in the growth stage of your portfolio which is where I am now, is growing that asset base. when you have a portfolio that builds itself,  you can still take those holidays. You can still have that time off, and. That was one of the big ‘aha’ moments for me, is when you realize that you’re going to work 9 to 5 creates you an income, whatever it might be per annum, but the leverage that you obtain when you obtain quality investment property and the income and growth that that creates is significant.

For me and my partner, it’s like we’ve got, five incomes in a, a two people family, really because those properties are creating that income. So that’s really what it’s about for me, that ‘aha’ moment. One thing that I find a lot of investors also don’t realize is they get so caught up with cash flow, they look at the weekly rent in and the cost of ownership out, but don’t remember the or don’t realize the capital growth. Because capital growth I feel, happens in the background a lot of the time, and people only realize that growth when they choose to sell or perhaps when they choose to revalue. So the capital growth and creating equity is something that’s happening every day, property prices are moving every day whether it’s up, down, sideways, for the right property in the right location, it should have that consistency. So yeah, that’s another ‘aha’ moment for me and what I encourage my clients to also consider is cash flow is one element of the equation, and it’s probably not the most important element.

Tyrone Shum:
With such great experiences from property investing and successfully buying for clients, Solano was thinking about other markets which interested him.

Zoran Solano:
I’m excited about the Brisbane market, to be really honest. I’ve got, I see a great opportunity, when you look at the meeting outside of Brisbane being half that of Sydney, that’s historic., we have really never seen the price differential between the Brisbane, Sydney market, so wide. And I think that creates a really strong value proposition in the Brisbane market, and that value proposition should be considered to investors as an opportunity to invest. Our rental yield is still really strong relative to interstate, and so, we’re still getting really strong rental deals, so that’s really positive for investors to consider as well.

But I think personally for me, I’m most excited about, where my own portfolio is going and the things that I’m doing, not only myself, but with my family, and also with our staff members as well., like one of the key fundamentals that we stand by is, we’re here to create wealth through our clients, and help them create wealth, but in turn,  we also create wealth by doing that., and obviously a difference in our business is to help people to purchase property, but it also helps us, and, we recently purchased one of our team, a great little investment property here in Brisbane, and yeah wherever we can, we like our staff to also do well so.

Tyrone Shum:
As a successful buyers agent with three investment properties to his name, there are many elements of his portfolio and services that would interest potential property investors.

Zoran Solano:
I think for everyone it’s something slightly different. The, I think the value in what we do is made up by all the little, one that we do, whether it’s initial strategy. Like I’ve had clients who, I’ve educated about a different strategy, and it’s a strategy that has saved them $20,000 $30,000, that’s invaluable to them. So some people got the value out of that element. But, I think it’s the accumulation of strategy, the guidance but also physically the time. The time that we take in the marketplace to do the searching, inspecting and evaluation of property and short listing properties. Because when you’re, especially interstate, we have a lot of interstate overseas, in time, those are the three key demographics that use our service, and especially when you’re any one of those people, you don’t have the time to search locations. You don’t have the time to research “is that flood affected” “is that a this property worse.

And at the end of the day the selling agent is there to sell the properties for the greatest and represent the seller. So buyers historically, have been left to their own devices and have to fend for themselves, it’s really buyer beware. So the value is in all of those little bits and pieces that come together for the full service, the negotiation not only on price, but on terms and conditions. It’s the research, it’s the, buying the right property that suits the right demographics for the area, but it’s also fill the contract. A Queensland contract process of purchasing properties is very different to Sydney and Melbourne. So in the process of buying is different. So having an intimate knowledge in how that process works to save time and money, because some people see the value in that, so this is where there is no really one specific person who would use our services. It’s anyone who wants to buy property, and wants to take it seriously.

Tyrone Shum:
So, inspired by this story and what Zoran Solano is excited about in his property journey, we will keep the conversation going in a future episode on Property Investory Podcast where we talk about how to apply the strategy,

Zoran Solano:
Currently if we look at right now, this moment in time, the Brisbane  property cycle with regards to growth and we are seeing a lot of unit and apartment  development which is also supplying that market.

Tyrone Shum:
To exploring the mindset of success

Zoran Solano:
I look at all those kind of opportunity cost everywhere in my life of ,how  can this  money work for me?

Tyrone Shum:
And to resources he recommends.

Zoran Solano:
I’m currently reading a book that’s not really property specific ,but I guess for me I’m always a fan of Biographies.

We’ll hear all that and more in a future episode of Property Investory. To get the full transcript and see the show notes visit our website at propertyinvestory.com.

Thanks for listening.

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