Victor Lagos: 0:03 Welcome to the Debt to Financial Freedom Podcast. I'm your host Victor Lagos and the founder of Lagos Financial. I've been in the finance and lending industry for 16 years, and I've personally made financial mistakes and learn from them. I started this podcast to share stories and lessons on my own journey, and to share insights that may help others on their journey. And I interviewed people that I've connected with that share the same values and mission to help others create financial freedom. My goal this podcast is to share raw, honest, transparent and helpful stories that you can relate to and inspires you to take control of your finances and only have debt that brings you closer to financial freedom. Everything on this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation or needs has been taken into consideration. I highly recommend you seek personal financial, legal taxation and credit advice before you take any action on what has been heard on this podcast. Welcome to episode five of the Debt to Financial Freedom Podcast. I'm your host Victor Lagos . Today I've got a special guest. His name is Arjun Paliwal. He's the founder and head recent Head of Research at InvestorKit. It's a data driven buyer's agency helping a wide range of Australians build successful property investment portfolios. He's also the co host of the property nerds, but the podcast that deep dives into Australia's hot and cold property markets, the latest headlines and trends. Arjun success has been recognized through several accolades, including Rising Star of the Year at the REB awards in 2020, buyer's agent of the year finalist at the REB awards 2021 and 2022 and is a finalist at the 2021 and 2022 young entrepreneurs award. Welcome. Arjun Paliwal: 1:59 Thank you, Madam well, and I still get a kick out of having the word young on the entrepreneur thing. So I don't know how long I can hold that title for but I'll take it. Oh, you Victor Lagos: 2:07 told me you're 30 years old. I think it's still pretty young. Yeah. Look, Arjun Paliwal: 2:10 It depends on who you talk to yesterday, I was fortunate to be at a Snoop Dogg concert. And my good mate brought his niece and nephew. And they were 16 and 18. And so having having them talk to me about life and what they're into, not into kind of made me feel better, Victor Lagos: 2:26 You know? Did you bring a property with him? Oh, look, we talked Arjun Paliwal: 2:29 About some property wasn't as much of the talk. I think we talked about universe No uni. We talked about street smarts versus, you know, study smarts and that sort of stuff that you get into some random conversations. We talked about, you know, certain social profiles. Are they cool? Not cool. So that was pretty fun. Victor Lagos: 2:47 A bit. They're big TikTok users. Arjun Paliwal: 2:49 Yeah, look, I think I think everyone's starting to get into it. Now. Even I've turned a page and you know, flipped a few scrolls up and down and see what's Victor Lagos: 2:56 On that to get on TikTok, I'm a bit afraid of happening going down that rabbit hole to be honest. It's so much information out there. YouTube is already hard enough for me, but I think TikTok's is another game. Look, I just wanted to say Joe Tucker was the to introduced us. He was on episode two of the podcast. I met Joe through Steve Palise. From Palise Property, who I work really closely with how do you know Joe Tucker? Arjun Paliwal: 3:16 Oh, look, I'm Joe has been someone who's been kind enough to reach out over the last couple of years on his journey towards becoming a buyer's agent and growing as a buyer's agent. And I've just been someone who wants to offer tips insights to anyone who goes on that journey. And that's been our relationship to date. So he's he's been a great guys connected, and I've done my best to share insights and thoughts on what can help him whilst he's on his journey. Awesome. And yeah, that's been that's because study to be buyer's agents at around the same time. No, not at all. I've been doing it for much longer, so close to five years. And so as a result, you get the opportunity in my site to learn from those who've been doing it for 5-10 years and more, but then also to help those in the earlier parts of the journey. So yeah, Victor Lagos: 4:03 Yeah, well, this is why I started the show, really, to help people on all ends of the spectrum. There's a lot of people out there that want to get on the property ladder, they want to grow their property portfolio, want to create passive income streams, recurring income, you know, build that wealth, but some of them just don't know, you know, where to start or what's required? Or what are the some of the lessons that can learn from people like yourself, so that they can get on sooner? And I guess not talk themselves out of it? You know, so, I really wanted to ask you, I guess a little bit about your personal and professional story, like what led you to be a property investor, because you are one as well and starting InvestorKit by the agency, Arjun Paliwal: 4:40 Property investor. It's a story that changes sometimes depending on you know, I guess what comes up from the core memories, but the first memory that always comes up to me, is my dad and both for good and bad reasons. So the good reason is him having some moves that he made in the younger years being open to talk about it and The dining table discussions of what he'd gotten word that is today, then the second thing is, and I think the more motivating factor was all the places he'd drive by and said, I could have bought that. You know, that would have been something I did. I went for this, your mother said, No. But I think I was also a bit of a cop out because he didn't want to end up taking action. And some of the guys of that generation love to blame the other half. But from that aspect of things, because of all his moves he didn't take was actually my biggest motivator to take certain moves. And so he actually was also a positive influence and pushing me because he kept bringing those stories, not in a way to make me feel bad for him. I'll go, Oh, Dad, I was supposed to go, Well, hey, you don't make that mistake. And that's been a big philosophy of mine. When I can, I will rather than when it's good. Victor Lagos: 5:52 Yeah, like that. Okay, what did your parents come from originally? Indian by background, Arjun Paliwal: 5:57 Born and brought up there. And then they moved over to New Zealand. So I was born in New Zealand, through them moving over. And from there, I've been in Australia now, coming close to 12 years or 13 years. Yeah, definitely have Victor Lagos: 6:09 That strong New Zealand accent, I haven't asked you to say the word six. Arjun Paliwal: 6:13 Look, I think why doesn't come up as heavy. And probably my my space of things is, I had a bit of a confused childhood in terms of accents around the house. So I had my dad who was obviously, Indian was the first language but then he's a very, he's very much a chameleon, he'll go in and fit in where he needs to fit in. So trying to hear him say the bro the mates and all that sort of stuff was one confusing factor. My mum was, you know, pretty well spoken and didn't have too heavy of an Indian accent. But then my older brother he studied in I think it was either a British or American School in in India. And then he moved over when I think he was maybe nine or 10. So as a result, he had a kind of different way of speaking. Then I had my Kiwi friends, then I had my younger brother who was a little bit different. So just instead of confusion, I just had the most, I wouldn't call it normal, but the most centered English amongst your five accents. Yeah, versus having different accents. Victor Lagos: 7:10 Yeah, it sounds like you've got a pretty neutral accent. So a little bit of South African in there, too. Arjun Paliwal: 7:15 I can get that a lot. I get that a lot. I get that probably once every maybe three to six months. I hear someone in Africa. No, dude, but I'd love to go there. Victor Lagos: 7:26 Yeah, it's also similar because my mom in terms of the accents at home, because my mom's Filipino. So Filipinos are so strong American accent. Yeah. And then my dad, you know, being from South America, he still sounds like he just moved. Arjun Paliwal: 7:40 You know what, that's really cool about over the folks 3040 years later, who still sound like they moved here. It's epic. How they build up their life and integrate into society still get ahead. And you're like, Victor Lagos: 7:52 How did you do that? I can't figure it out. Arjun Paliwal: 7:55 Good on them. Hats off. Yeah. Cool. Look, Victor Lagos: 7:59 The other question because of the relevance of the podcast, being debt to financial freedom, I wanted to ask you, what does financial freedom mean to you? Arjun Paliwal: 8:07 Again, another one that I think changes as the thought or mood or memories come to mind. But, you know, I think financial freedom to me has just been as simple as an ability to make moves when you want to make moves. And people I think often put it too much with a sense of like, I need to stop doing something, I need to be able to have time back. Most people who get to financial freedom using investing or business or whatever it may be, had to have gotten there with a sense of work ethic, and or patience and or resilience that allows them to be so pushed, that they probably can never switch off. That's my gut feel for most that I know have met and myself. And so I've never kind of looked, I mean, maybe I did in the past, but not now as financial freedom as the switch off or, you know, take my time back and grab a coconut and chill out someone if that's you go for it. But I'd rather look at it from a perspective of just call it as simple as making moves when you want to make moves. And by moves, it could be an investment. Could be helping a friend out could be traveling could be whatever, but I say moves more in the sense of a very hard and fast decision. Not so much a I want time back to chill. Victor Lagos: 9:24 Yeah, it's just giving them options that if they want to do something they can they don't have that restriction to say, one day when I have the money. Yeah, yeah, exactly. When I have the time. Exactly. I can. Yeah, because it's true. You never really switch off. I mean, you can but that's when you start deteriorating. Right. So that idea of retirement when union sick Well, Arjun Paliwal: 9:45 It's a good story, man. You made me think of a story actually. A gentleman I met in the bank. That was previous career of mine, and I was at Surry Hills Commonwealth Bank. There was a branch that I was managing. And a dude comes in. He's like Maybe it's 60s and still very young fit comes up to me and says, what we're going through his accounts, he's like, Hey, I do this. I think he's in the share trading space and actually just just trading. And when I spoke to him about what he was getting up to, he said, I look golf and a lot of it. And he emphasized a lot of and I was like, Why do you say it that way? This is like, Oh, well, I've got an interesting story to share with you had four or five mates of mine that would regularly come golf, all in our 60s and 70s. And as time went on, few guys stopped playing. And then as the months of them stopped playing, body deteriorated, one mate passed away, and then another mate passed away. And then I was trying to think of, you know, the small thinking of my mind was a certain disease or something came up. But then the most common thing, then all the themes was just not stop playing golf. Right. So the activity, there was a big part of it. So whether that's physical mental, yeah, totally just the shutting off later parts of life. Yeah, have the best idea? Victor Lagos: 10:57 Yeah, well, look, I think many people can, you know, wouldn't probably know someone that's been in a similar situation, they watch their parents deteriorate old age, and whether they have financial freedom or not. So I think it's always good to have something that you're working on working towards being involved in and keeping that mind going, keeping the body moving. So for me, when I look at financial freedom, it's it is definitely about, you know, having those options to choose, make moves when you want to move. But I have a theory that if you can sort your finances out where your income that you're generating from, you know, recurring income, not from you having to work, and that's enough to cover your expenses, that you can then free yourself from that burden of survival, right, where I need to pay to provide for my kids and whatnot. And once you're there, or even on the on the way there, because if you know you're on a pathway that you're already sort of in that financial freedom mindset, right? Let's say you do get that to that point, you get to do what you want to do without having to work. But it doesn't mean you won't work, it just means you don't have to. So then all of a sudden, you can work on things that you you're passionate about. Because people really enjoy certain things. You can ask anyone, whether it is sport, like play cup, or whether it's, you know, spending quality time with their family, or whether it's traveling, or more importantly, like what's the project, or passion that they have to make the world better than how they found it? You know, because it's not like the world is good. Like, don't get me wrong, I believe that there's a lot of positivity in this world. But there are certain things that need improvement, a lot of things, right. But it's going to come from the people, it's not going to come from the government, government will always do their piece. But people are going to come together, collaborate and work on, on on things together that then make the world better. But when you're in survival, you lose that creativity, and that focus to get things done, because you're you're worried about, you know, so that's, that's where I think financial freedom is so important, and why I want to help more people get to that. Arjun Paliwal: 13:03 Yeah, it's a good point, I almost think of the word that keeps coming up to mind is outsource. So once you get to a certain point, you're outsourcing your survival to not have to, you know, have that as your main to do or your main focus. And because that's just taken care of. And then as you start to climb up, you know, the chain of successful ladder of success, then you start ending up outsourcing more parts of your life, and you get that focus and clarity of where you want to put it, whether it be for projects or whether it be for other things. Victor Lagos: 13:30 Outsource Yeah. Okay, so before I ask you more about investigate, I wanted to ask about property notes. So you run this podcast with with your wife, and she's the mortgage broker, Arjun Paliwal: 13:42 right? Yeah. So we run the property notes, podcast, and where that I guess journey started from or all came to light was around us missing part of property data and the nerdiness of data for all the people that love all the numbers. And I feel like there was this missing part where all the podcasts were around a concept, a tip, another person's success, a strategy. And you could have different podcasts are different things, what you Bible believing, but there wasn't really a podcast out there for the property numbers, the Property Data Facts, what's actually happening. You know, that's where I felt, hey, there's an opportunity here to give people what they want on what they might be missing. But at the same time, it's what we're very passionate about, and where we know we can make a very big difference. So that's been great. I've been able to involve a lot of my team in terms of data scientists, research analysts, Junior research analysts, and myself as head of research, producing a lot of insights to be able to share with people the truth and the facts about the market. And the end of the day. If you can empower people to make better decisions driven by data, then I just feel that there'll be in a position where they can reduce risk to some extent. Victor Lagos: 14:56 Yeah, yeah, that makes sense. Well, actually, that leads me to my next question, which was Um, I heard that you have a monthly white paper. So what is this white paper? And how can the audience access it? Arjun Paliwal: 15:07 Yeah, so research papers, white papers, they've been a big focus of us where you want to get it from InvestorKit.com. Today, you jumping on the white papers tab under our research section, I think we're up to 13. Now were released once a month, and to give insights on how detailed they are, they range between 40 to sometimes even 100 pages. And they focus in on a particular topic for that month, we try to make it as timely as possible. So whether it be the rental crisis and putting that to light or whether it be Australia's housing fundamentals, whether it be a certain market or region review, or the most recent one that's coming out is Australia's infrastructure review, or the boom, it's happening in infrastructure. And the key here is to zone in on a specific area and or concept and really start to unpack it. But with great detail, actual data and fundamentals. And why that's become I guess, such a big popular thing for us has been that we want to put people in a position where they can make the best decisions, but also more informed decisions. I think far too often the decisions are about the micro trend, a daily index, or monthly trend and change in performance and price. And people get focused on the outcome, or what the main core logical raa said about the outcome, without really realizing how it gets there. What drives it, what's important to it, what are the different factors to focus on. So we we make a lot of free resources like that by opening that up. Now, that is, if not one of the most passionate things we've worked on. And I've personally take immense pride in, because I know that it can make a huge difference. And it doesn't cost anyone anything. Victor Lagos: 16:43 So if someone read this white paper, and, you know, they went hypothetic, they went through 100 pages of that data. Would that give them enough guidance and structure to decipher that data to make a decision on what to buy? Where to buy? What price to buy for based on their particular circumstances? Or is this where it gives them enough to sort of have an idea but they still need the services of the buyer's agency, for example? Arjun Paliwal: 17:09 Yeah, look, I think the if I, if I magically get a cookbook tomorrow, read it and think I'm a world class chef. Probably not right. But in terms of, can I get a cookbook and execute a deal? Execute a meal and get better at it? Yeah, totally. So I think people want to be able to use that information to guide a well informed decision and then take their own review of their personal circumstances and make the right one they can. But look, we're professionals. When it comes to executing property, we purchased over 500 properties, our team has more than 43 properties combined, just between us. And then at the same time, we've had close to a billion dollars in transaction experience from residential, commercial and finance, right. So going to look at all of this, there's an immense experience to be able to do that. But what they do provide is actual forecasts insights, almost vision of the future before it happens. And you know, you can go back to research papers about Australian housing fundamentals and the under supply would be in, you can go to research papers, where we've talked about the rental crisis and predicted rental growth for 2022, before it happened. And we can also go through, you know, research reports, like the white papers, where we talk about the top five regions in New South Wales for a certain budget, of which four or five were the top performing regions. So when you start to have that level of track record, it's obviously getting a lot of attraction. But at the same time, it's enough info for people to go hey, I'm cool, man. But if you want help, it's there. Victor Lagos: 18:34 Yeah, actually, that was gonna let you sort of touched on it, I was gonna ask you, because you've been doing it for five years, because you've got, you know, 500 plus clients on your books. And you you've spent and invest a lot into into data. Have you unpacked the data from all your past clients, and said, Okay, look, this is what, what they bought at the time, this is what we said was going to happen based on the data, we had this what was right, this wasn't, and then you start learning and refine and say, Okay, I'm not going to actually use that same formula, because it didn't work back then. Is that what you guys did? That's the part Arjun Paliwal: 19:09 that is what it's all about. Because at the end of the day, this is people's lives, people's finances, a big part of what's going to help them unlock a new level in their journey. So if we don't reflect and just take things for granted, and assume that it's just business and marketing. That's, that's horrible, right. And so the reflection has been the biggest part, to give you some insights on the outcomes of that reflection. The first thing I'm super proud of is that over the last three years, we've obviously seen a major property boom. Now that property boom, makes people immediately think, Oh, well, you throw a dart anywhere, and you'll be okay. To some extent, yes. But in some cities, they've wiped off most of their boom results anyway. Now, the second thing is, if you think of that and go, Well, everyone did okay. Well, guess what we looked at the data. We looked at the actual median price changes for Australia, and we compared it to the valuations. that we did for clients a year, two years, three years post purchase. And since this last three years of boom, we've outperformed it on average by 29%. So if you've got a location that did 10%, our averages did 12.9 to 13% or more during that time period. So that's been a very satisfying thing to know that even whilst the boom happened, you didn't just get along with it, you outperformed it. And then the second big thing for us was around the calls we've made, as recent as I think, early Feb to mid February listen to podcast called going down memory lane. And it was a screenshare, where we went through articles and things that we had featured in across news.com AFR and other areas, and actually made talks about, hey, here's the six trends we predict are going to happen and 22. Here's the six trends ahead for 23. And we're able to track back actual data on that screenshare and podcast and show that they in fact did happen. So the key here is that we reflect on what went wrong, what went right, keep improving. big part of what we do involves Big Data, data science, and also a lot of back testing. And so from that perspective that helps us really get ahead. Victor Lagos: 21:05 Are you using any AI to help you unpack large data and turn it into? Arjun Paliwal: 21:10 Yeah, so some of the most recent experiments we've been working on has been around looking at the last 10 years of growth year by year across major regions top performing courthouse low performing quartiles, and taking the viewpoint that if we were using our scorecards and weightings that are driven by machine learning, and you know, our principles, if we look back and say, Hey, in 2012, if we'd selected these top 30% of our scores, where would that have been in 2013, and 14, versus what the markets produced? And so far, we're actually outperforming based on some of our location metrics. We're constantly tweaking to be able to go back and say, Hey, how do we keep improving that correlation score. So we don't have years of outliers and continue to improve that. But that's never going to stop. Because you know, the way data works is, there's what you believe the weightings are, then there's what ml believes from an analysis of taking all of various variables in there. But we are getting better and better from that correlation test. So we're excited. Awesome. Victor Lagos: 22:09 Now, that's really good. I think for anyone that's listening, it sounds like, there's gonna be a lot of value. Even if you live, if you just read the white paper, if you I'm sure your website has got a lot of information that can help guide people that are on that early part of their journey. Or if you're a seasoned investor, and you're wanting to keep growing. But I do want to ask you, what advice would you give someone or a couple that are in the early stage trying to save for a deposit, and they want to get onto the property ladder? Arjun Paliwal: 22:37 My biggest tip to people would be to actually realize how little the investment is in comparison to what you may think it is. So the first part that comes to mind is actually around the deposit size. You know, people and I'm sure in your world, you see this all the time. There's an assumption of 20% deposits. There's assumptions of mortgage insurance isn't a great thing. There's assumptions of I can't get any benefits for certain stamp duty because of a certain price point versus all the horribly presented roles out there. What's one saying 801 saying 1.51 saying only this for new, very difficult, but now it's getting easier and more simpler. The main thing is when you start to realize loan to value ratios, deposits required understanding mortgage insurance concepts of compound growth, you might look at it and sit down and go wait, I was ready two years ago. And that's where I think the biggest tip is for most families, is that if you just take New South Wales, for example, people are saving up to $60,000 on stamp duty for a $1.5 million place. That is two to four years depending on where your savings rates are. So imagine looking back and going, I could have purchased property two years ago, four years ago, or I now no longer have to wait for that. Where could prices be 234 years later. And so I think from that aspect of things, that's my biggest tip. And then the final piece would be around realizing that your backyard isn't any better investment than what's elsewhere. The key thing I've realized and building a portfolio of properties, is my wife and I are across five states. And with those five states, we've come to realize that at any given time, they're all not doing the same thing. So if you can protect yourself and be like, hey, at any given year, something's going well, something's okay, something's not going so well. And you've got that diversity, then you're able to look back and just go, it's not even about what the markets doing. It's just about how many more flags can I plant? And so when you start to realize that you go, Hey, why am I so confined in where I'm looking? Now? Let's just spread our wings and start seeing what's elsewhere? Victor Lagos: 24:40 Yeah, I'm a big advocate of that, too. So my wife and I rent visitors. So we rent we want to live which is in eastern suburbs of Sydney. And we buy what we can afford. And using data using serves as a buyer's agent. We own two properties in different states. And you're right, like one of them might be performing better than the other but so be it as long as we can Hold on to these properties over the long term, they're definitely going to it's going to be worthwhile that compounded growth will be there. And of course, the cashflow, positive side of things is always important. But look, people need to have buffers, right? We're gonna we're in an environment at the moment where rates are increasing every month at the moment. So I guess, I wanted to ask you like, what would you say the best opportunities are given the current rate rises, and inflation? And what strategies can people take to protect themselves during this period? Arjun Paliwal: 25:31 Yeah, it's a good question. So the current environment has pros and cons for people. So I think the pros is that when you are looking at the environment, it's actually not a forever environment. And that's something that people are really confused about are not clear on. The last few cycles of interest rate rises actually just go back to history, they're used as a mechanism to stop play things like rampant inflation as an example. They're not used as a, this is the new norm. And we sit here and 6% rates forever. And so the key is, we all know six to 7%, interest rates in Australia, are going to hurt people eventually, not immediately. And not everyone. But eventually. And so the idea of the RBA is to go before it does, hopefully spending habits have cut back, inflation has cut back. And as a result, we can now turn down. So that's the first part that you want to understand the concept of it all, which means that it's a good time knowing that you're able to purchase assets in an environment where many people aren't thinking like that they're thinking that these rates are forever rates. And that's just how it works. And so you can think of a long term view, but make that short term decision. Now, the cons of this is dependent on your mindset and how you analyze numbers. If you are going on this journey where I need to hit positive cash flow, or cash flow is my core in a desire in investing. Well, firstly, you're probably going to have a bad time investing in the current market, because you're going to have 20 options, say in your budget, then you're going to call 18 to 19 of them because they don't meet cashflow requirements. And then the one that does may just meet it and all it takes is one air con just to get repairs, and then all of a sudden now negative. And so it's just a silly thing to absolutely focus on in this environment. And as a result, what people will do is I'll just jump in on one market, and completely avoid the fundamentals of money. Or number two is they'll just pull back on investing go don't for me, when really you had the buffers, you have the desire, you have the goal, you have the savings ability. So consider consider those first, the markets just a tool for you to just put money in and let it sit there for the long term. Whereas I think many people will have that kind of searching for something that might not exist as much or doesn't exist at all, and then they just get paralyzed or make bad decisions. Victor Lagos: 27:50 Yeah, that's a good point. And for those who don't know what it means, or what we mean by buffers, it's really just having a chunk of cash, whether that's savings or equity, that you've extracted from one of your properties that sits there as available money. So that's there to cover the shortfall or the amount you're not able to cover from the rent that you're collecting. So if you can weather this period of rate rises, by having those buffers, then you're not going to have to chip in money out of pocket every month, every week, or cut back on you your lifestyle just to hold on to this property. So it's not going to add that pressure. And then what's what's going to happen is when inflation is, you know, slows down and when the interest rate environment starts to stabilize, and the narrative changes. Well, what's gonna happen, demand will increase what happens to prices? Arjun Paliwal: 28:42 Totally. And if supply stays the way it is, then you just kind of come running into COVID 2.0. Yeah, of property boom, because supply is nowhere to be found. So Victor Lagos: 28:51 yeah, we've got what how much people are now coming to Australia with with students coming back. China just changed the rules around university now needs to be face to face so they can't complete the degrees remotely like they were you got skilled migrants coming in. They all need places to live. Right. Look what's happening with the rental market at the moment. Arjun Paliwal: 29:11 Yeah, the rental demand is huge now. Contrary to other professional opinions, I don't think the migration is going to impact property prices. I think it'll impact rental prices. And because I never want to be one of those guys where COVID shut down and I was like, No, we'll be fine with no migrants and then go COVID not here anymore and migrants are in all migrants are great part of the journey has been a killer because migrants are coming in. No The truth is they don't influence property buying in the short term. If if you have family members that came off a plane and said give me my piece of Sydney where are you at? Or I'm coming to Brisbane neither house there move away locals it's my time. I cobalt that doesn't happen a lot. I mean most people coming in are searching for community searching for a place to see Where their family may feel like they like don't like searching for jobs, opportunities. So I think migration will probably do two three things. One is help some spending. Secondly is probably increase unemployment because more people looking for jobs, not everyone comes in searching on having a job. And then the third thing is, don't naturally increase rental prices, because granite Institute lease data, I think was around 2018 19. This data came out or just after it, but they reviewed data to say that four years was the typical time on average, where people would rent post moving in, so post moving into Australia. So that means there's probably a delayed cycle, firstly, of that migration activity in prices. But no doubt, if a whole bunch of people are coming to rent rents go up, rents are also then being questioned by homeowners or renters versus buying a home. And also investors are going to be more attractive by the yields and offer because the rents rise and interest rates are probably come down. So still an influential impact. But now you won't hear me saying migrations come in prices are rising. I'll be saying, Look, migration is coming. Rents are rising. Yeah. Victor Lagos: 31:02 But look, I guess what that's also doing, it's having an impact on affordable housing in Australia. Right. I think I heard you mentioned. Some markets consider, you know, 30% or less of your net income, considered affordable housing, others are closer to 40. With the rates the way they are and where they're going. We're cracking over that 40% mark for a lot of people, right? Arjun Paliwal: 31:25 Yeah, there's going to be a lot of change in that metric in house looking. I mean, we run a white paper in December 2021. It was called overvalued, undervalued. And we use a mortgage repayment to income methodology, and try to then attach it to prices to see if prices would therefore have to rise by X percent to equal fair value, or fall by X percent to equal fair value. If it was on the fall equation. It was overvalued. If it was on the rise equation, it was undervalued. And so I believe we had 18 of 25 of Australia's largest non capital regions be undervalued in 2021, December, that is now dropped to nine of 25. So pretty much half. So it does mean firstly two things. One is this still undervalued location, so let's not assume that you can't find undervalued assets from an income to to rent some repayments. But there is a lot of overvalue there has shifted, and meaning repayments and rents for the average or median how everyone looked at it will be difficult, but naturally is people who are okay above it, people are below it. I want to make a call and maybe something more long term in Australia, I'm not so much now on the overvalue undervalue. I think that the 30% is probably going to get thrown out at some point in the future. It's a global benchmark, but it's not really a global benchmark. So you know, what I mean by that is there are many countries, if you go across many parts of Asia, it's normal to be on 40%. And so I just think that we might look at it differently to go, hey, it's normal to pay a lot more rent because we have scarce housing, and that's how it is. So I don't think 30% or 33% is a benchmark, we'll be here forever. Victor Lagos: 33:04 And of course, you're comparing global city like Sydney or Melbourne, right. But when you look at, you know, other parts of Australia, we're probably aren't that 30% or below, right? Arjun Paliwal: 33:14 Yeah, look at this many below. Some still a lot with lots deliver, I think there's variance in local incomes. But there's also variance and local prices, right? Sometimes we think because of Sydney's income being high. As a result, it must be okay for affordability. Not really, it's actually worse off even with higher incomes, just because the prices are that much higher. And so there are places where people might have lower incomes and still have greater affordability. And that's the relative concept that we look at. And I think that's going to be probably an opportunity for many other cities to become more attractive, because they're attractive in the form of the housing affordability, they're now more attractive in the fact that the globe is OK with accepting work in different locations. And then if we can continue to stay visionary with our infrastructure, our policies and so forth, then it helps create more cities. But the problem we have in Australia with that, it's just that political terms are probably too short, and they're probably too volatile. And so no one can really focus on big long term stuff. And when they do they probably get axed by the time they're about to put it on the market and make it happen. So, Victor Lagos: 34:18 Yeah, it happens a lot. I mean, they had the changes in Queensland with the way they were going to charge land tax based on your overall holdings across Australia, a Arjun Paliwal: 34:28 Lot of knee jerk thinking, Yes, that's strategy doesn't seem to be a big thing there. But when you do check out the most recent white paper on infrastructure booms, there's a lot happening. It's huge amounts of infrastructure. And I think that's what people are going to miss out on over the next couple of years, not so much from our this will now tenfold pricing, but from analyzing it as part of the decision making thing people are just really thinking the next 12 months and interest rates winds that go down Windsor come back up without realizing that we're experiencing one of the biggest jobs boom, and more jobs are going to be coming up after we go through this Up and down, unemployment shift, because of all the projects in pipeline, Victor Lagos: 35:04 Sounds like it's more opportunity than anything else right now, just gotta get the numbers, right? And get the mindset right and get, obviously the right team around you and the right strategies to execute. And obviously, you know, to minimize your risks. So I have one last question I want to ask you, which is a little bit more about your personal experience, what lessons have you learned along your personal investment journey that you would have done differently in hindsight? Arjun Paliwal: 35:34 Differently? Definitely, this is a, this is a tough one, I think that the biggest learning I've had in recent times has been the importance of an asset base. And people can sometimes go into this world of perfection about a property versus how much pool of dollars you have to form an asset base, I'll give you an example. $2.5 million, growing at 10% is 250. K $5 million, growing at 5% is 250. K $10 million, growing at 2.5% is 250. K. So see how life gets easier? Now, the key there is that long term averages in Australia is between five and 8%. So if you look at that 90% of all local government areas, so pretty much everywhere, did 5% or more in compound growth over the last 20 years? So that city that you think, Oh, what are the fundamentals? What's driving it? Is it really good with the jobs, nine 90% of local government areas, 20 years CoreLogic achieve 5% or more. So whatever you you may think you know about property market, you probably don't know a lot, considering so many locations, you might be easy to talk down to achieve that. So when I realized that, I realized that the game is just about doing three things, a building, the biggest asset base at the fastest you can be is making sure you don't stuff it up and have cash to be able to hold them through whatever periods and then see is hold it long enough and get rid of a couple or earn enough to get rid of the debt. So you don't have to get rid of a couple. And you're left over with a bunch of assets, a lot of income, a lot of diversity and little to no risk. If you follow those three principles. And life does get easier, the more you own, it doesn't get harder, it's harder for those for the first. And it's harder for those who think small and think they can achieve everything with two or three. The truth is it just doesn't happen. You need a lot of time in the game to make two or three properties massively achieve your income goals. So that's where I do think from a perspective of learning, double down on the asset base building, if I can get it to 15 mil 20 mil, five mil whatever that number is for you. It is easier because of the long term averages a 5% plus and you only need to to hit your goal or three to hit your goal. make life easier. Victor Lagos: 37:49 Yeah, that's, that's powerful. I think it's important for people to have that long term view and think about growing that asset base, but work within your means what's possible. And if you want to know what's actually possible, talk to your mortgage broker, connect with me, I can run the numbers, what's your borrowing capacity? What's your buying power? How much equity can you extract to grow the portfolio? Because you need to know what's possible, you might have one idea, but until you actually look at the numbers might be a very different, you know, answer there. But that's what I'm here to do and help and I'm sure your team, your existing broker can help you as well. So how can people find and connect with you and the team Arjun Paliwal: 38:29 Where they can get in touch by investor kit.com? Today, you on their website, we've got a load of research papers as you pointed out podcasts that we've got, and also success stories. If you're a first time investor seeing how one decision made well can make a difference. There's a video there for you. If you're an affluent investor who wants to speak to someone or see someone's journey, who's had nine plus property purchases with us, commercial residential and see how you can gain a seven figure income a seven figure equity gain or six figure income from property. There's also case studies there. So take your time through it, digest it all and if it feels right for you reach out and book a free free consultation with our team. Victor Lagos: 39:05 Awesome. Thanks so much. Thank you really glad to meet you. Take it. Thanks, everyone for listening. Stay tuned for the next episode of debt financial freedom.