Investing in Commercial Property: The Next Big Opportunity

In an electrifying episode of "Ten with Ty," Washington Brown CEO, Tyron Hyde, interviews Helen Tarrant, the so-called "queen of commercial property," to unpack the burgeoning interest in commercial real estate. Helen shares her journey from law school and beauty boss to dominating the commercial property market. Her story is a beacon for aspiring investors and a compelling narrative for those interested in the transition into commercial property.

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The episode taps into the rising prospects of commercial property investment compared to the residential market, highlighting upcoming market trends and investment opportunities. Tyron and Helen delve into the practicalities and strategies employed in commercial investment, providing listeners with essential knowledge on maximising returns, the nuances of specific real estate segments, and practical advice for portfolio management. This episode is rich with insights, making it a must-listen for anyone looking to enhance their investment strategies.

Key Takeaways:

• Helen believes commercial property will outperform residential real estate in terms of capital growth over the next few years.
• She emphasises the transition of residential investors towards commercial properties for better cash flow and sustainable portfolios.
• The importance of financial literacy is underscored, especially for young investors aiming to start their first investment ventures.
• Facilities like childcare centres are highlighted for their significant uplift potential when appropriately managed and refurbished.
• There is untapped value in properties perceived as problematic if approached with the right strategy, making expertise critical in converting such challenges into profitable opportunities.

Resources:

• Helen Tarrant's Website: helentarrant.com
• Unikorn's Website: unikorn.com.au 
• Books by Helen Tarrant:
  • "Cashed up with Commercial Property"
  • "Secrets of Property Millionaires" (co-authored with Tyron Hyde)
• Washington Brown website: washingtonbrown.com.au

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Tyron Hyde is the CEO of Washington Brown Quantity Surveyors

Transcript

0:00:00 Tyron Hyde: Is commercial property the new black? According to Helen Tarrant, it’s the next big thing.

0:00:05 Helen Tarrant: These investors are going to see the next two to three years that commercial property is going to have better capital growth than residential. The floodgates are going to open and people are going to be throwing themselves into commercial property.

0:00:16 Tyron Hyde: From child migrant to law student and beauty boss. This tiger mum now plays in the big league and she wants your kids investing before they hit Year 10.

0:00:26 Helen Tarrant: I’m an Asian parent. I’ll be telling them at 12 that they need to get $20,000 through their YouTube channels and through them working to accumulate that and that by the time they’re 15 or 16, they should be putting that into property already.

0:00:39 Tyron Hyde: It’s bold, it’s fierce, and it’s Ten with Ty. 

0:00:41 Tyron Hyde: Hi, I’m Tyron Hyde, the CEO of Washington Brown, the property depreciation expert. Now, I’m a qualified quantity surveyor and best-selling author who’s helped hundreds of thousands of property investors over the years pay less tax through depreciation. I’m also an avid investor, which is why I created the podcast series Ten with Ty, where I ask the smartest people I know the same 10 questions to unlock the keys to their success and hopefully leave a playbook for my family, and your family too, about investing. Now this podcast is general in nature and not specific to your financial circumstances. We always recommend you sit down with an accountant or financial planner before making any investment decisions. Now let’s get on with the show. 

0:01:34 Tyron Hyde: Hello and welcome to Ten with Ty. If you’ve ever thought about investing in commercial property, then today’s episode is just for you. My guest is Helen Tarrant. She’s the queen of commercial property, a buyer’s agent who’s closed over a thousand commercial property deals. She knows the pros and cons, the pitfalls and the massive potential. She wrote a book called Cashed up with Commercial Property, is a co-author of this book with me, Secrets of Property Millionaires. In fact, our chapters are next to each other. Welcome to Ten with Ty, Helen.

Helen Tarrant: Nice to be here.

0:02:02 Tyron Hyde: Thank you. Thanks for coming. Now let’s start from the beginning. You were doing a law degree and also running a couple of salons at the same time. Now that’s not a normal hop, skip and a jump to become a commercial buyer's property agent. What was the progression? How did this happen?

0:02:17 Helen Tarrant: Well, if you’re Asian, that’s pretty normal, but it’s, and the only reason for that is like there is like, a select handful of professions. You can only go into so, you know, it’s like law is one of them. And my. I always say the same to my parents, I always said that, you know, you guys are really, really smart because why have multiple children when you can have one child that fulfilled all your needs and dreams and hopes? You know, I think the reason that I was a beauty, I became a beauty therapist was because my mother said to me, oh, you know, in Australia, everyone’s really practical. You have to have a trade. And I was like, okay, so what do I do as a trade? So, and then Dad said, well, you know, I never got to go to university. And you know, I was on the train one day and I saw this girl with all the law books and I thought, oh, her parents must be so proud of her. And I thought, well, I better go to law school. So I had to go to law school and have a trade at the same time. So they didn’t set the bar very high, did they?

0:03:22 Tyron Hyde: But what made you want to invest in commercial property? What was the first step?

0:03:26 Helen Tarrant: I went and did some residential education because like all good Asian children, you knew you were going to have to help your parents retire, that you were their entire plan, you were their entire retirement plan, and that that freight train was coming whether you liked it or not. And when you’re an only child, you could just see it coming. And whether you like it or not, you were going to have to be part of it. So I was trying to invest in residential, and my parents were one of those people that worked really, really hard. And then at 55 woke up and said we didn’t even know what retirement is. I think this is to illustrate how non, like financial literate they were, like, how financial illiterate they were. Like only like maybe six months ago when I was going away for a while, I gave Dad some money and said, look, Dad, put this money into your offset account. And he says to me, what’s an offset account? And I was like, I can’t believe you have a daughter like me who. And you have no idea what an offset account is, right? So this is how financially illiterate my parents were. They knew how to work hard. They just didn’t know how to make their money grow. And at 55, I couldn’t see a way of getting them into retirement within three to five years. So I needed a solution and I looked everywhere and commercial property was that solution.

0:04:42 Tyron Hyde: So what, you helped them buy their first, you put the commercial property into their super fund or how did that work?

0:04:47 Helen Tarrant: I did actually, after I did some of my own. So I challenged myself. So I went and bought a property in Sydney, in North Sydney for 360,000. So that was my first property in 2012. And the reason I started that was because I worked in a salon. I was a beauty therapist. I knew I made rent every single week no matter what happened, right? And Bill, who was a dotty old owner of ours, would come in every week and collect rent from the hairdresser, from myself, beauty therapist, from the, the, the apartment upstairs. And then he will go fishing. And I thought, well, his life is pretty good. So, you know, what did you do, Bill? Oh, I bought this property originally was for my daughter. She decided not to continue as a hairdresser. You know, I rented it out. This is his whole entitlement plan. One building was his whole retirement plan. And I thought, hey, you know what, maybe that’s a way I can get my parents to retire. So I got into commercial property, started looking. There was no education, nothing. The only book I could read on commercial property was from Dolf De Roos. And that was about the US and this was back in 2010.

0:05:54 Helen Tarrant: So, there was no education on commercial property. So it’s a lot like there’s no education on commercial property. So but I kept looking and I found this property in North Sydney and it was 360,000 and it was 8.6% yield. And I was like, something’s wrong, something’s wrong. Because residential, they teach you that, you know, this is your gross, this is your negative, this is your break-even point. This is wrong. Like you’re so positive cash flow, what is wrong with the deal, right? And you don’t know until you’ve done the deal. So I was just like, just do the deal. I just do the deal. Who cares? Just do the deal. Let’s see if it works, right? You got to give it a go. Like I’ve always been the person, just give it a go, jump out the plane and then figure out the rest. You know, you’re either going to die or you’re going to work out the way. So for me, I bought that property.

0:06:38 Helen Tarrant: That property delivered $20,000 in passive income every single year for nine years we held it, and we sold it for a million fifty thousand after Covid. So that is, that is the essence of commercial property. And once I started buying the first one, I thought, hey, you know what, I’m just going to challenge myself. I’m going to replace $50,000 of my income with passive income from equity that I’ve got from my residential property. Let’s see if we can do it. So I did it. I went out and for 12 months, I went and found three properties, bought it, and replaced $50,000 in passive income. That’s after expenses, after mortgage, everything else. So I thought, okay, I can do it, someone else can do it. Get the course, create a course. Start teaching people how to do it. Because I started then noticing people making all these little mistakes. So 2016, became an educator, still the only educator on the market that gives free education and information on commercial property in droves. Like, you know, YouTube channels people can shoot through, hours of content, free webinars, all of this stuff, right, on commercial property. And became a buyer’s agent in 2017 because just my clients said, well, help us buy some properties that you’ve been teaching us to do. And that’s. That’s how the journey came about.

0:07:52 Tyron Hyde: But I’ve actually got a. My mother used to say, me, Ty, I’ve got a bone to pick with you. And I’d like to say that to you too, Helen. I’ve got a bone to pick with you because you’ve educated too many people. 8.6% yield. You know, last night on your webinar, you’re showing deals at three and a half percent. Now, you’ve created too much competition. You should have been quiet so we could still get those good deals. Well, how do you. How do you respond to that, Helen?

0:08:12 Helen Tarrant: It's absolutely the correct question. Because I think all my competitors hate it when I have education, because I’m educating them to look for better deals than what they can present them. And I think that the market got ruined by residential investors coming in with a residential mindset. So I educated them. They understood, okay, we need to look for higher yields. But then they took back their residential mindset and they brought it into commercial and said, oh, okay, well, it’s okay if the market is doing 7% and I will just pay 6 1/2% for that property. I’ll pay a little bit more because ultimately it’s going to grow in the back. It’s going to go right. So what ruined it was not the education, but the investors coming in and thinking, I can accept a lower yield because I’ve come from a growth background rather than a cashflow background. So as a result, when one buyer starts buying something at a lower return and a higher price, it starts to set a new benchmark, and then everybody else comes in, has to do that. And then you have to undercut the market again at 6%.

0:09:21 Helen Tarrant: So it actually started a bit of a, I think it’s a residential push. It started a, a bit of a waterfall effect. So I’m actually hoping that with more education, investors can take a stand and say, hey, you know what, I’m not paying 6% for that. The right yield is 6 and a half percent and I’m only going to pay 6 and a half percent. I believe that if there’s enough investors who say I’m not going to pay 6% in this area, then we can actually work towards bringing the yields back up in commercial property.

0:09:50 Tyron Hyde: What I don’t get. Last night you’re showing some deals of childcare centers on this webinar at 3 1/2% yield. Why would you buy a commercial property on a 3 1/2% yield? I know they had a long lease and I know there’s great depreciation on commercial property. But still, I think I look at that and go, well, I just put my money in a Commonwealth Bank CMT account and get 5%. Why would I take the risk at 3 1/2% yield?

0:10:15 Helen Tarrant: And wealth preservation. So one of the things about commercial property, if you look at the history of commercial property, where it came from, is that most people use commercial property as wealth preservation and generational wealth. So when you. So my question to you is if you were going to pass on in 20 years time, 30 and hopefully you don’t, but say 50 years time, would you rather leave your child with a property that is negative or gives them 2% return on every million or would you like to leave your children with a property that gives them 6 to 8% return on every million? But that’s the key question. 6-8 percent. But that requires you. But knowing also when you pass on that that property will last a lifetime of your children, that it’s not going to have a vacancy, it’s not going to have that volatility where your child is forced to sell, that you’re essentially passing on guaranteed income and retirement to your children for the span of their lifetime.

0:11:19 Tyron Hyde: But I could pass on that million dollars at 5% in the CMT account.

0:11:22 Helen Tarrant: But your child could. Your children could also go and spend that tomorrow. But the childcare, they wouldn’t.

0:11:28 Tyron Hyde: All right, let’s switch gears. On this webinar last night, it was pretty fascinating. You’re pumped for this year for commercial property, you’re saying a 20% increase. You’re predicting a 20% increase. Over the next 12 months. What are you seeing out there? Why are you saying that?

0:11:43 Helen Tarrant: There isn’t enough returns in the market full stop in investments right now. But commercial offers the one single thing that investors are looking for that I believe that we’re faced with aging investors. So investors coming into the market aren’t 20, 30 year olds at the moment. Right? They are coming in, but not in the same droves they did back 10 years ago. Back 10 years ago, the drove of people coming in, in that was a lot more. Now there’s less. Most investors are now in their mid-30s to that mid-50s range. Right. So what happens in that range is you can’t afford negative gearing like you, you really can’t. You want to increase your portfolio, your wealth, but you can’t afford to be negative. What you need to do is build a portfolio that is self-sustaining. And commercial property offers your portfolio from day one that is self-sustaining. And that’s why the residential investors who’ve spent 10, 20 years building a portfolio now has equity is going to shift gears to, into commercial and by self-sustaining portfolios. Now one of the other really, really interesting things that’s happened in this market that people haven’t seen and I’m willing to bet on this and I will have this conversation in two to three years time.

0:12:53 Helen Tarrant: Commercial property hasn’t even gone nuts yet. Right. Right now we’re seeing the, we’re seeing the next level from the first, the early adopters. The early adopters came in 2016-2019. That’s where the early adopters came in. Right after, during COVID people came in, but they came in at like the gold rush. They kind of like. It was good, let’s just buy something, right? They didn’t know. Right now we’re seeing serious investors who are going, okay, we’re early stages, we’re going to be buying in. We’re strategically buying in. Now these investors are going to see the next two to three years a commercial property is going to have better capital growth than residential. Once that’s been established and, and there’s transparency, the floodgates are going to open and people are going to be throwing themselves into commercial property. And because what’s happened is, last 10 years we’ve had no transparency. The problem with commercial properties, there’s no transparency. You can’t tell a listing that they’re listing a property for $5 million. And you look at Google history or RP Data, whatever you have, two years ago that property was 2 mil. How did it become 5 mil? You had no idea that during the time they got a new tenant, they gutted the premise. They did all sorts of things and now it’s worth 5 mil. There’s no idea why and how you can’t track capital growth. The other myth in the market is also that during COVID and all of the economic conditions, people was going to do fire sales of commercial property and all of these high interest rates were going to be putting pressure and people were going to liquidate. It didn’t happen. We’ve had three rounds of it. It didn’t happen. The market will show in the next two years or three years is the stability of commercial property. But this, the capital growth that commercial will continue to demonstrate that will outstrip residential will now create a frenzy even more in the next few years. So this is a great buying opportunity.

0:14:47 Tyron Hyde: When you say commercial, you’re talking office, warehouse and retail or you just talking. A lot of people just say commercial. That’s offices. Are you saying the whole gamut there or?

0:14:55 Helen Tarrant: It’s everything. So your warehouses, your retail, your office space, we do all of that here at Unikorn, transact across the whole of Australia, but also some of your mixed tendencies. So your, your commercial with your. So you might have office space above residental, residential at the back. Sometimes those can be repurposed. You could have warehouse with showrooms, you can have retail below and office space above. So the whole thing like childcare, for example. But co-living is not a commercial property. People get this wrong. Co-living is not a commercial property. Boarding houses are not commercial property.

0:15:28 Tyron Hyde: From the bank’s point of view. They treat them as commercial property though? And only lend you 70%?

0:15:33 Helen Tarrant: No. So they treat them under the commercial banner, but they’re not assessed the same as commercial property. So they’re part of the commercial division. And what they treat. How they treat boarding houses and co-living is they treat them like AirBnBs. So you need to demonstrate two years of your income. Yeah. Whereas in commercial you just show them the lease. 

0:15:55 Tyron Hyde: What’s your favourite? What’s your go to? What’s your favourite commercial? Resi, warehouses or what’s your favorite?

0:16:02 Helen Tarrant: My absolute favourite is taking on someone else’s headache and sorting it out and creating that uplift. That’s what I do personally. That’s what I do for some of our big syndication deals. What I love about it is the expertise that it requires and very few people. We’re probably one of the only companies out there that can actually do this is look at everything that people just typically go, here’s a dump. We have issues everywhere with this property. How do you sort it out? And that’s my absolute favourite because I know the gains you could get for that.

0:16:35 Tyron Hyde: Yeah, yeah. Now, but if I’m a first-time investor, so I want to buy a million-dollar commercial property, right. How much money do I need to put, cash, to put to make that deal happen?

0:16:46 Helen Tarrant: So if you’re in your own business, you need, you may only need about 20%, so 200k plus expenses. So maybe 250. If you are topped out on the other end or you have lots of residential and you have business loans and everything else and you can’t service anymore, then you probably need somewhere around 350 to 400k. So the bank can give you a 70%, up to 70% LVR on a property without looking at you for servicing.

0:17:12 Tyron Hyde: Right, right. Fair enough. All right, one final question before we get into my world famous Ten with Ty questions. Helen. These super changes that are about to happen, okay with revaluing up $3 million. Revalue taxing on unrealised gains. Are you seeing clients wanting to sell property, realise assets now or is there any changes you’re seeing in regards to that?

0:17:34 Helen Tarrant: I don’t think it’s really sunk in yet with our clients. I think it’s going to take a good 12 to 18 months before that sinks in. I don’t think it’s going to create a massive sell. Most clients coming into the commercial space aren’t looking for those quick wins. They’re looking for that stability of income. And look, you know, the taxation of that could be treated as a next-generation problem, right?

0:17:56 Tyron Hyde: Yeah, true, true. I’ll tell you what I think is going to happen. I think valuers are going to get a lot more work, right. And it’s going to be handy to have a handy valuer because obviously, you know, if you’re taxing down realised gains and they’ve been valued lower, well then the unrealised gains aren’t as high, are they?

0:18:12 Helen Tarrant: Yes. Yeah, that’s right. That’s right. You’d have to start bribing your friends who are valuers.

0:18:17 Tyron Hyde: If you like this podcast, don’t forget to subscribe. And if you do and you leave a comment, send me an email to tyron@washingtonbrown.com.au and I’ll send you a couple of my books, for free. 

0:18:31 Tyron Hyde: You ready to play Ten with Ty, Helen? So Helen, what was your best investment?

0:18:34 Helen Tarrant: Best investment? Childcare centre, rundown childcare centre in Townsville.

0:18:39 Tyron Hyde: What Tell us a bit about it.

0:18:42 Helen Tarrant: I was on, not compliant property. The tenant had been there for 20 or so years, bought that for about 400,000, did a refurb. Like I found out things like leaking sand pits and how hot surfaces don’t work. Some edges and footings, sailcloth. I learned all of these new things about compliance of childcare centres. You know, air cons, all of these specific things very much to, to childcare centres. Anyway, refurbish things like rebuild a sandpit and things like that. Then got the tenant on the 10-year lease, sold that property for about 730,000 within 12 months.

0:19:25 Tyron Hyde: Cool. So what I’m guessing here is you like, you’re making a bit of money out of people’s hurt. Like this is where, and I agree, like, pain is where a bit of profit is sometimes. Right?

0:19:33 Helen Tarrant: I like to look at the really messy properties because I can see there is value, but it takes a particular skill set. So normally people have run down their properties. I’ve had clients who I’ve given them a 9% yielding property and three, five years later they come back and go, here you go, can you help me sell it? It’s half empty. And I, and I’m like, what did you do? And I’ve worked with them for six or nine months bringing that property back to full tenancy, doing all the works they didn’t do, didn’t want to do, bringing it back up and they’re selling it. So it does take a skill set. It’s not hurt, it’s ignorance and just let it be because they don’t understand. In commercial property there’s a tipping point. If you don’t do work at that tipping point, then everything starts to come crashing down.

0:20:15 Tyron Hyde: Is there one particular deal that you’ve done on behalf of someone else that you went, wow, that was a cracker. I wish I kept it myself?

0:20:21 Helen Tarrant: Yes, absolutely. I did it as a syndication. I wish I got into it. I made our clients 40% return on their money within two years plus distributions on top.

0:20:31 Tyron Hyde: Cool.

0:20:32 Helen Tarrant: So it was one of those deals that all the funds rejected. So the small funds looked at, it was a $7 million deal. Our clients came together to buy that deal. And it was an international fertiliser company. So they had 8,000 square meters under roof on like 20 thousand square meters of property and they had 18 months to go on their lease. So on a national company, on such a big deal, like if they were to leave the repurposing, it will be huge, right? So I came in, I looked at the deal and I said, look, the tenant will renew. The tenant will renew as sure as I stand here. But they may not renew for five years. They might renew for three. They had, their leases were like amendments upon amendments upon amendments. Was such a messy lease. So we bought that deal, we restructured the lease. We got on well with the tenant. We bought it at just about $7 million, at about 600,000 in terms of net rent. So about an 8%, roughly, return.

0:21:26 Helen Tarrant: So it was phenomenal. And this was two years ago. This was two years ago we bought this and then the. So our clients got like 7% returns after all the costs and everything, returns on that money. And then we negotiated the lease. We took, you know, thanks to friends of the valuer, kind of, we took the rent from 600,000 to 795,000 within two years, got them to sign a five-year lease, then sold that property immediately for 9.275 million.

0:21:54 Tyron Hyde: Wow. Now this is one of your syndications, was it?

0:21:56 Helen Tarrant: This is one of our syndications.

0:21:57 Tyron Hyde: You want to briefly run. I know this is not supposed to be an ad for Unikorn, even though you’ve got your big ad there on the side, but tell us a bit, a little bit about how these syndications work.

0:22:05 Helen Tarrant: Okay, so syndications is really trying to get to the higher end where the profit margin, where you get the three trifectas, which is capital growth, cash flow and security. We get to all three of them at the top level. That’s where the institutions and the family offices buy. But they’re all 20 mil plus deals, right? And, but they have all of those things in that, those deals. So you get your high yields above sevens. You get your really government, national, international tenants and you get your security in the fact that they can’t really move anywhere else. So you get the high quality, you got the land component, taking all of those, breaking them down to unit sized levels of 2 to 5 or 400,000, clients that come in buy a unit in them. That deal is put in together. As an investor, pod people, as a pod work together, we have asset managers and myself, we drive the deals to uplift the deal or to renew leases. And then at the end, we look to sell it within a two-to-five-year period, depending on the project. And in the meantime, the client gets cash flow, and they get the uplift at the end. So best of both worlds. Great for those people who can’t afford to buy bigger properties but still wants that gain.

0:23:09 Tyron Hyde: All right, Question number two, what’s been your worst investment, Helen?

0:23:13 Helen Tarrant: So my worst investment has been I bought a vacant property hoping to put a medical tenant in there. I think at the time I was, I was very new to an area and an agent. So I trusted the wrong agent on the ground. And it was an 18-month period. I could not get the tenant. And we had about four rounds of tenants that looked at the property, didn’t want to pay the rent, even though we offered to refurbish and do all of that, in the end we sold it to an owner-occupier. We made the money we bought it for plus our stamp duty back, but we didn’t make our gains. We didn’t get the exponential 40% gain that we typically do for an uplift, but because. And I wasted two years of my time because of utilising the wrong people on the ground.

0:23:58 Tyron Hyde: And what’s some common traps that you can tell investors out there to avoid? I saw you on a webinar. You went through this contract with a fine-tooth comb. It was really cool. But what are some of the common traps that you see novice investors in commercial property make?

0:24:15 Helen Tarrant: Buying the wrong yield, buying the wrong returns, looking at it as a transaction rather than building a portfolio. Here at Unikorn, we build portfolios, we don’t help people buy properties. The thing is, I had this thing illustrates. I’ll show you a story. I had someone who called me and wanted a strategy session. So I booked in a strategy session off our webinar and it was a gentleman that lives in Campbelltown in Sydney and he had a friend in the ACT and they said, we’ve been to a few of your webinars and now we’re going to buy a commercial property. All right? When someone says, I’ve been to a few of your webinars and now I know all the knowledge that I know to buy commercial property, that’s already a red flag. So I said, that’s great. What are you going to buy? We just want your opinion on this. Okay, don’t want to engage us as buyer’s agent. Don’t want to. We just want your opinion on this. That’s fine. What are you going to buy? There is a NAB and Bendigo bank in Mount Gambia that we want to buy for two and a half million dollars. So I say to them, oh, sorry, no, not Mount Gambia, Mount Barker. In Mount Barker in South Australia and in Adelaide that we want to buy. And I said, firstly, have you been to Mount Barker? No, haven’t been to Mount Barker. Do you know where it is? Yes, it’s about 30, 40Ks out of Adelaide. So okay, so what’s the yield on this price? It’s seven and a half percent and that’s what I’m going to buy. How long’s the lease? It expires next year. So I’m like, how do you know the tenant is going to renew? Oh, well, the agent thinks it’s most likely going to renew. Okay, great. So you are a novice commercial property investor. You’re not going to, you’ve been to a few webinars and you’re going to sink two and a half million dollars into a place you’ve never been to, don’t know, just looked on Google Maps. Just because it has a tenant that, the bank tenant and that the agent said is most likely going to renew, that’s got red flags. So into everything, right?

0:26:14 Helen Tarrant: So I said to him, okay, let me break this down to you. You think Mount Barker is like a Camden in Sydney, right? Just out of Sydney? He’s like, yes. I said, no, Mount Barker is not like a Camden, it’s like a regional town. Driving between Sydney to Canberra where your friend is at the moment, he’s like, oh, okay. That’s number one, number two, never negotiated with a bank. Do you know that banks at the moment are actually pulling out and signing shorter and shorter leases? No. You know that just for 7 1/2% yield that, when they vacate, being a regional area, the supply of tenants is about 10% of what a metro city would be. So to get another tenant to replace the same rent as the bank will probably be highly unlikely considering they’ve been there for so long. Don’t know that right now. I said to him, the true way of really doing that is not at 7.5%. If you were my client, I would never put you into a property like that, especially your first time and wanting to spend two and a half million. I would be looking at buying that property at a 9% yield because it’s regional and it’s got a bank tenant, there’s a risk that they won’t renew. And plus, the other rents might come in low. I would be buying that at 9%, working through and negotiating by giving them incentives and extra reserve, which could take six months with a bank we’ve negotiated with a bank. We know how long it’s taken to get a new lease, get a new lease and then selling that back onto the market for a 7% yield when I have a new three- or five-year lease.

0:27:51 Helen Tarrant: I said that’s the game, not the game of buying that as a set and forget at 7.5%, because what you’re going to find is the bank will play hardball and you’re the little person, they’re the big person, they’ll play hardball, you’ll cave in, your rents will drop, and it ends up being a 6% yielding property in Mount Barker. And you’ve just lost 500,000 on the value of that property.

0:28:10 Tyron Hyde: Also, a lot of those regional banks are purpose-built. They’re pretty unique buildings that kind of, are made for banks. Right. Then you also got the safes involved as well. There’s got to be removed, etc, right? Yeah. Now we’ve done a little bit of work on that.

0:28:22 Helen Tarrant: Yeah. So that’s the pitfall, like being people who've been to a few webinars think, okay, great, I can now go and buy. What does someone say to me? You pay for it either way. Just whether you pay for it in real education, paying a professional, or you’re paying for it in education by fucking it up.

0:28:38 Tyron Hyde: Yeah, like when you say a deal, say it’s on a five plus five lease and it’s coming to. You’re in the fourth year of the five, first term of that lease. Right. Why would anyone buy that? To me it’s like, well, the reason that the guy’s selling is he knows the tenant’s going to leave. Right. That is my number one red flag with commercial. Is that right?

0:28:58 Helen Tarrant: Not always. I think the thing is, a lot of this is another thing that comes down to it, is a lot of people who are commercial property investors want to sell. And they go, I’m going to sell. That’s it. Put it on the market. That’s it. Right. They never spent time tidying up that property. If they had spent three months tidying, like going back to the tenant to renegotiate the rent or the lease, giving them some intent to get them on a longer lease, looking at all their pest and building issues and tidy all of them up, they can get a property, the pricing could go up by 20%. But they don’t actually do that. It becomes a trigger-happy scenario. Like I spoke to a client who wants to sell her property because she goes, oh, I think it’s a dud. And I’m like, how do you know? Have you tried leasing it out? Have you tried selling it? Have you tried tidying up that property so that you can give the best option to sell and you like no, I said, but you’re telling me you want to do residential flips. Why don’t you first start out with doing your commercial, like you’ve got a property here, tidy up the lease, go and get a new tenant and then sell it. Right.

0:29:58 Helen Tarrant: So I think the, what happens in those stages is that when you’re talking about, you know, people are on that expiring lease term and everything else is that it was a trigger-happy decision to sell rather than a conscious decision to sell. And if you’re a savvy investor, you could actually be picking up a really great deal because knowing that most people will walk away from that deal. 

0:30:22 Tyron Hyde: Question number three. What has been the most valuable investment advice you’ve ever received?

0:30:25 Helen Tarrant: Tell them, look at the property of what it could be rather than what it is now. So what it is, is, most people see now, all they want is now. Right. But if you could take a property from good to great, then that should be your journey of property ownership. Not that you want to buy great now you could go to an auction house and buy great now, but you’ll get 3%. That’s what they’re paying for. They’re paying for great.

0:30:48 Helen Tarrant: You, but you could buy good for 5%, make it 7% in the great and then sell it for 3%. But that’s the good-to-great journey.

0:30:58 Tyron Hyde: Yeah, I like that. I like that. All right, question number four. What’s your ideal portfolio mix?

0:31:03 Helen Tarrant: My ideal portfolio mix has our three fundamental strategies, which is cash flow, growth and uplift. So you got to have cash flow, you’ve got to anchor cash flow, and that will probably be somewhere sitting about 40 to 50% growth will probably sit somewhere around 20 to 30% with 20% to 30% of uplift.

0:31:21 Tyron Hyde: Right. But in different assets, classes or you’re.

0:31:24 Helen Tarrant: Just talking all different, different types of assets. Oh, across Australia. Across Australia. So because there’s certain things that will only work in different states and won’t work in the other states. So things that work in ACT won’t work in Melbourne, things that work in Brisbane, won’t work in Adelaide. So very, very specific to the area.

0:31:42 Tyron Hyde: But what about shares, crypto or you’re just purely, are you purely commercial?

0:31:45 Helen Tarrant: If this is, this is what you’re asking me about, the portfolio, I thought that was just around property. But if it was a diverse portfolio, definitely I think that, you know, people should be having 20 to 30% of their, their investments in other forms. So whether it’s shares trading, investing in businesses that grow are really key. And also, also in your trading something liquid, right? Because you never know, you might find a really, really great deal that you need to liquidate. Yeah.

0:32:18 Tyron Hyde: All right, question number five. If you, you’ve got a couple of kids now, if one of, when one of them turns 20 and they come to you and say, mum, I’ve got $20,000, how should I invest it? What would you tell your child?

0:32:30 Helen Tarrant: I’m an Asian parent. I’ll be telling them at 12 that they need to get $20,000 through their YouTube channels and through them working to accumulate that and that by the time they’re 15 or 60, they should be putting that into property already. Right. Mine is already featured in my YouTube videos turning up to inspections. And I was telling my son, who’s 11, I said to him, look, you got to learn these things. I already made him sit into one of my seminars. I said, you got to learn these things because one day you’re going to be doing this as part of the business.

0:33:01 Tyron Hyde: I love it. You make me laugh. I love this. Last night you were saying some kids take their, some parents take their kids to Disneyland or whatever. I take them on inspections to Mount Gambia.

0:33:10 Helen Tarrant: Yes, I have. I have taken them to inspections in Mount Gambia. Yes, definitely, yeah.

0:33:19 Tyron Hyde: Do you own an investment property? Washington Brown has helped over 250,000 property investors pay less tax with a depreciation schedule. Visit washingtonbrown.com.au to pay less tax today. 

0:33:29 Tyron Hyde: Question number six. Now you’ve just turned 50, you’ve got no money and you’ve inherited $500,000. How would you tell someone to invest that $500,000? And you’re not allowed to say, put into one of your syndications.

0:33:49 Helen Tarrant: I would say to them, take 250,000, buy something that is going to give you a cash flow base that’s going to give you some money for you to live on, right? Then take the 250,000 that you’ve got spare and put it into an uplift property where you can make 250 into 400k. Grow that over the next 3 to 5 years until you get a pile of a million dollars in cash. Divide that million dollars by 500k into a set and forget, continue to build with your 500k. You’ve got a 10-year horizon. You can shorten that into seven years, but you’ve got to really plan for 10 years. And if you do that, you can retire within those 10 years between 100-250,000 in passive income with that.

0:34:28 Tyron Hyde: Is that a common scenario of, a client comes to you at the moment, like with the elderly generation, says, I’ve just got this money, what do I do with it? Does that happen all the time?

0:34:34 Helen Tarrant: I build portfolios all the time. My clients come to me and go, this is what I have. I said, great, you know what my specialty is? Dump on top of me everything you have, right? Everything you have. And tell me where you want to go. And my brain just goes bang, here, here, here, move these pieces, start doing this. Here’s your pathway. Implement, implement, implement. And you’ll get there because there’s a few levers you’ve got to pull at any one time.

0:34:59 Helen Tarrant: But if someone comes to me and says, I’ve got 50k and I want $500,000 in passive income, you in 10 years, I’m going to say, no, that doesn’t work, right? But if they’re a doctor who says, I’ve got 500k, I can, I’ve got equity of 2 mil that I could access to in the next couple of years and I want to retire with a million dollars in passive income in 10 years time. I’m like, that’s absolutely doable. I can actually craft out a strategy and a blueprint for you to do that.

0:35:25 Tyron Hyde: What’s the. Do you have to turn, like with commercial. Because obviously you need a fair bit of equity, right? Do you have to turn a lot of people away in your business?

0:35:34 Helen Tarrant: I actually don’t think so. I actually think that, that what I’ve learned from syndication and raising money and we’ve raised $18 million in the last two months, right, on our syndication. So is that there’s so much money out there for the right deals. So much money like, like it’s not, it’s the deals, right? If you were young and in your 20s and you had zero money, if I had no money tomorrow, my knowledge would be all I need to get back up, right? All I have to do is put the deal together and then pitch. It’s all about pitching and getting people, investors into the deal. Have a carried interest in the deal and you’ll be back on your feet, right? So you actually don’t need money. You need knowledge. The knowledge. Because there’s so many people in their 50s. Like I’ve got clients with doctors, surgeons, pharmacists who are so busy, right? They just can’t, they can’t, they don’t have time, right? And we say to them, here’s a really great deal to do X, Y, Z. This is why. Okay, all right, just do it. Right. Or this is the rest of the, just give me 10 minutes of your time and I’ll show you what it is and that’s it. There’s so many busy people that have cash that are ready to invest. You just got to bring them the right deal. And if you’re young and have no money, that’s the way you get started.

0:36:43 Tyron Hyde: Interesting. All right, question number seven. If you could go back in time, what would you tell your 20-year-old self about investing?

0:36:49 Helen Tarrant: Buy more properties, buy industrial properties because Covid’s about to hit and that’s going to change the trajectory of industrial properties.

0:36:56 Tyron Hyde: Yes, yes. Has that changed? Is that maxed out, do you think?

0:37:00 Helen Tarrant: I think it’s pretty. It’s probably six months to go at the peak. Till the peak.

0:37:04 Tyron Hyde: Fair enough. I guess the other thing interesting, I think you touched on it last night in the webinar was in relation to construction costs. Right. And it’s really, it’s getting hard and I was listening to a big builder the other day called Watpac. I don’t know if you heard of them, but they’re saying that with Trump’s tariffs, steel and aluminium, they can’t price, they’re struggling to price jobs because they don’t know what’s going to happen in that, in regards to the tariffs on those things. So, this, when I was younger, when I was starting as a quantity surveyor, there used to be a thing called Rise and Fall contracts. Right. So you would say, okay, well we’re price, we’re allowing $2,000 a ton for steal. If it goes up to 3,000. Well, the contract needs to move with that and I think that might come back into play, particularly with what’s happening in America.

0:37:46 Helen Tarrant: I think so. Well, I’ve had and this is why properties have become so, so much part of some of the family offices and also the high net-worth allocation of wealth, wealth spending, is that some of them are in the E-commerce business and some of them like I’ve had because I mix a little bit in the, you know, whole VC world and the more the higher end and they have, they said like when Trump signed the things coming out of China was going to get that, you know that, that tariff. Right. They had $120 million on a boat coming into the U.S. they had to turn away and go back to China. It was cheaper for them to dump that than it was for them to bring it onshore. And they could not afford to make another order because they just didn’t know, with the write of his pen, he could wipe out the entire wealth. Where is that wealth going to go? They’re going to put that into real property where they can touch, feel it. Right. So this is why some of these shifts are going to come into property that we’re not expecting.

0:38:43 Tyron Hyde: Interesting. All right, question number eight. What legacy do you want to leave your family or your community, Helen?

0:38:49 Helen Tarrant: I came to Australia at probably the lowest end of the, of the spectrum. Right. First-generation migrant. My mother has $70 on her. We struggle to put food on the table. I want to leave this world at the top tier. Right. Travelled all the way through. So I understand how. Not because of the money, but because I know what I want to know, experience what it is like, but I want that. My legacy here in Australia is to raise the financial literacy level of every Australian so they actually have a conscious understanding of what it takes to retire and have the lot and have a planning and have a blueprint of what they need to get to retirement and what they can do post-retirement comfortably. Right. And for some people that’s travelling to Europe on first-class every year, for some people that’s just a trip to Thailand on, you know, in May, whatever the holiday specials are, it doesn’t really matter what it is. Right. As long as they know, conscious and building towards it. So don’t wake up at 65 and say, I’m going to retire next year. How, what am I going to live on? I don’t know, $20,000 a year, who knows? So that’s my passion. In terms of legacy to my children. What I’m going to leave them is when they are old enough, I’m Asian. We don’t leave them with anything. We give it to them while we’re alive. Right. So we do. By the time they are adults, they will have digital assets they can do whatever they want with. And that’s, you know, that may be, you know, knowing how to speak in front of cameras, have their own YouTube channel. Have they be able to do all the meet, navigate AI, all of this stuff they’re going to be able to put together. So if they wanted to become a digital nomad and go off-grid and do all this and build businesses, they can. If they want to become an architect and sit behind the desk for nine to nine, that’s fine, whatever they want. But I will give them enough digital assets to get them started and then the rest is up to them.

0:40:40 Tyron Hyde: Are they showing any interest in property or they’re too young.

0:40:44 Helen Tarrant: I’m an Asian Mother, they don’t get a choice.

0:40:48 Tyron Hyde: I’m going to call you Tiger Mum I think.

0:40:49 Helen Tarrant: I actually don’t care what results they get at school. I’m just like we would expect you to be. I expect you to be starting your own business. So it’s like it doesn’t matter if you fail at school. So it doesn’t matter about that math test. But you know what? We’re going to watch this video. How Mr. Beast did his, how Mr Beast became Mr. Beast.

0:41:11 Tyron Hyde: Very good, Very good. All right, we’re getting to the end. Number nine. What does success look like to you, Helen? For me, you look pretty successful. But what does success look like to you?

0:41:19 Helen Tarrant: I think it’s really interesting, success. What success means to me is actually being treated equal and being able to have, being able, playing on equal playing ground. Okay. So that is something I’ll be fighting for in every space of my career. I was never the chosen one. Never the chosen one, was never chosen to be on stage. Never chosen to be, to, you know, run this business. Never chosen to be. I was never the chosen one for, for, let’s say a client. Like I’m. The thing is, commercial property is a male-dominated industry. It’s a white male-dominated industry. So I’m an Asian female, right. To be an Asian female playing in a white male-dominated industry, you have to outperform, outlast, do better than everyone else. And you’re never the chosen one. And you have to be okay with that. That they’re always going to look at you, look at someone else and go, you know what, I might go with them. And then that’s okay, right? So you have to fight harder and do better. On stage. That’s, you know, like that necessarily. They won’t choose you because you’re the Asian female. Right. But that’s okay. Just create your own stage. Right? So to be able to have an equal playing field would be a really, really great success. To be, say, hey, you know, recognise that the things you’ve done, the hard work you’ve done and to be able to, to, you know, open that floodgate, would be really, really good.

0:42:39 Helen Tarrant: I would love the association of commercial property and Helen Tarrant. So that’s what success looks like to me. When someone thinks of commercial property they think of Helen Tarrant, that’s what I’m working towards. And I guess to build lasting memories and experiences with my family.

0:42:52 Tyron Hyde: So question number 10, Helen. Now the reason I started this podcast was because I saw my father lose all his money in fact, it was in a commercial property deal, funnily enough. And so that’s what this podcast is about. So, Warren Buffett is quoted as saying, rule number one to investing, never lose money. Rule number two, never forget rule number one. Helen, how do we never lose money as investors?

0:43:14 Helen Tarrant: I’m going to counter that with another saying. Alex Hormozi said, if you want to make $100 million, you have to lose $10 million. If you want to make a billion dollars, you have to make, you have to lose 100 million to start with. It’s the education, the price you pay for education. Right. That you have to lose. Right. So, um, so I guess my answer to that is you can’t. If you live your life avoiding losing money, you would never, never play in the big leagues. You have to take a gamble and say, win or lose, I’m doing this and what is my worst-case scenario? So we’re running Wealth Hacking Life, right? That’s $100,000 to put the ads, people in the room. What’s the worst-case scenario? It could be a complete flop. You guys could show up, we could not have the sales in the room. We could not have people show up. You could just reflect really badly on me. I could lose $100,000. That’s the worst-case scenario, right? What’s the best-case scenario? That it’s a defining brand. We kicked off something we love, being there with all the other speakers. Everyone learned something and this is something that is a good thing that we can continue on for years to come and build on it. Right. Is the upside better than the downside? If you don’t have a 100K, probably not, but. But the upside for me is a hell of a lot better. And every time I think of the upside versus the downside. Like when we put our latest indication together, we bet the farm, I bet the entire company and everything else I had, everything I had onto that deal. Right. We settled that deal five minutes to five on the day. The vendor was going to pull the deal because he was such a dick about it, he wouldn’t give us. The bank called him personally and said, we will settle it first thing in the morning. And he says no. Really? If the bank personally calls you and say, hey mate, we just don’t have capacity today to settle $20 million, right, today, we’ll do it first thing in the morning. To say no, that’s like pretty bad. Pretty bad, right? So that’s what the kind of vendors we’re dealing with the whole time. But it was a great deal and you know, I could have lost a lot of money in that. I could have lost a lot of investor money in that, you know, like, but now, you know, like ever since that deal, like deals are now flowing to us, people calling us because hey, got this great deal, right? Do you want to put it together? So we’ve now, you know, one, we’ve done it, we’ve defined a reputation and we’re moving up now.

0:45:45 Tyron Hyde: Now Helen, there’s always a bonus question on Ten with Ty because all the other questions are on the website. So it’s not that hard. The bonus question to you is why would I buy into an unlisted fund when I can buy something like Centuria Office fund, which is obviously on the stock market, which is trading at $1.24, has a net tangible asset backing of $1.74 and a yield of 8.6%. The other advantage of buying something on the stock market is  I can easily sell out when I want to. Whereas an unlisted fund, it’s a lot harder.

0:46:15 Helen Tarrant: It’s mostly to do with association. Right. In this modern era of people investing, people want to know, like and trust. So they want to know that they participated in a development of a building. They want to go, that we’re part of that deal. That particular deal, a charter and hall is, you are one of 10,000. In an unlisted property deal, you’re one of 10 of 20, one of 50. Right. So it’s a personal connection to the deal, to the person that’s doing it. Right. The returns ultimately is better because, if you take it as a long stretch over a five or six-year deal, because the uplift at the end, if you have the skill set is better, whereas you will get the steady income. Steady income is great for people who retire. But remember, a proportion of our generation is not looking to retire. They’re looking to level up. And a Charter Hall is not going to level them up. Right. It’s going to keep them at level. Right. If you’re in your 60s and you’re retiring and you just want a 6, 8% return after tax and stuff, that’s great. But if you’re in your 30s and 40s and you want the exponential jump to putting something for 300k and get 500k back, a Charter Hall isn’t going to do it for you.

0:47:23 Tyron Hyde: I’d argue that it could because these, these, some of these funds have been hammered so much that, you know, Centuria Office fund used to trade at like four bucks and now $1.24, it could come back. And obviously, that’s why it’s gone down so low is because people feel like the offices, you know, Covid hit and it got hammered, right? But people will go back to work. And the other thing about those funds is like what we talked about before, they’re not building any more offices. Centuria Office fund put on their annual reports, there’s no more office supply coming onto the market in two years time. So it will be absorbed which will then increase the price, the share price. I would have thought, you would hope.

0:47:57 Helen Tarrant: You hope, right? Because this is the thing. It’s the calculator returns versus banking on hope and prayer, right? It’s the residential versus commercial argument coming back to that. Because residential people buy high hoping that because of historic growth they’re going to get future growth, right? That’s, that’s the way it goes. But in, in the commercial space it’s like okay, well they’re not building anymore for two years, but what’s going to happen after that, right? It’s like 10 years ago people forgot that every second warehouse in Sydney was vacant. Ten years ago, people couldn’t build enough office spaces to fill this, to fill demand. In Melbourne today there, it’s a waste, it’s a ghost town, right? So we tend to forget. So you know like and the other thing is control and relatability is like yes, you can be in Centuria, but do you. How much control do you have and the direction they’re going to take on their management board?

0:48:48 Tyron Hyde: You don’t. Don’t have any. But you do have a diversified portfolio across many different states of, 15 different buildings. So you are limiting your risk there as well though.

0:48:54 Helen Tarrant: Again you could do that by investing in different properties and different deals, right? And again it is about the capital uplift that you get versus stability. Right? And they’re two different, different things. If someone is a developer versus someone who wants to buy set-and-forget, they’re two different mindsets.

0:49:13 Tyron Hyde: Totally. And we can talk about this at the upcoming Wealth Summit Hacking event. Would you like to. So just for those out there, I’m speaking at one of Helen’s gigs soon. This is June. What’s the date today? June 3rd. So it is the first event.

0:49:27 Helen Tarrant: First event’s 15th of June in Brisbane, followed by Melbourne on the 17th and the 21st in Sydney. So the Wealth Hacking Event is bringing together a collection of people in the world creation space to uplift you to the next level. We’ll have professionals there like Tyron yourself. We’ll have people talking about asset protection as well as all the things to do with trading, property and levelling up to the next level in terms of your wealth creation journey.

0:49:53 Tyron Hyde: Firstly, thanks for coming on. But where can people reach out and contact you, Helen, and need help if they need a commercial property?

0:49:59 Helen Tarrant: So helentarrant.com you can find a lot of information about myself. Unikorn.com au so unikorn with a K. unikorn.com.au unicorn with a K is a great place to be able to put in some details on our website and find us there.

0:50:13 Tyron Hyde: Where’d the name Unikorn come from with a K?

0:50:16 Helen Tarrant: I woke up one day and says I’m going to call my company Unikorn and I’m going to call it with a K. And the reason for that is I’ve always just done that. Just woke up and go, yep, this is what I’m going to do it. So Unikorn. The reason for that is every client comes in the door, their dream property is a 10% yielding property to a national tenant with development potential under a million dollars in Sydney. That’s not achievable. It’s never going to be achievable. It’s unicorn. So that’s why I decided to call the company Unikorn. The idea is build a unicorn portfolio rather than look for the unicorn and spelt it with a K because we’re in the era of people having one-word businesses with an unusual letter. So hey, why not? The C was taken. Make it a K.

0:50:52 Tyron Hyde: Love it. Love it. Well, I’ve loved this. I could talk commercial property with you for about a week, I reckon, and I will at this wealth hacking summit. So thank you for coming on Ten with Ty. I’ve really enjoyed it. You’re a wealth of knowledge and thanks again.

0:51:05 Helen Tarrant: Thank you.

0:51:07 Tyron Hyde: Ten with Ty is brought to you by Washington Brown, the property depreciation experts.