Andrew G's Biog

From: Mike .

Hi Folks,

Firstly, thanks Robert and Les for your replies to the Forum Hall
of Fame post.

As promised, the following Looooooooong post is a collection of
comments from Andrew G's postings up to Sept 2000. Of course, his
views may have changed since then, so contact him on his website
for further clarifications. I'm sure he won't mind your feedback.

Although, this should be a biog there weren't many biographical
details in his posts. It seems he is married and has a young
daughter. Is now self-employed and living in Sydney. That's all I
know about this mystery man. After putting his collection of
thoughts together, however, it is apparent that he is very
passionate about property investment. He also seems equally
passionate about educating others. Is it just me, or does he
strike you as being capable of delivering a ripper seminar?
That's enough from me. I'll let you be the judge. Enjoy!

Andrew, I'm going to say some property expressions and I'd like
you to say the first thing that comes to mind, okay? Here we

Negative Gearing

Andrew: You are talking to the wrong guy about negative gearing.
Can't sell me on that one I'm afraid, Mike.

I don't want to pay $30-40 each week for some future return, I
want to get $30-40 a week NOW. I want a pay rise every time I
buy. You don't make a profit giving money to the bank.

Buy and Hold

Andrew: I think buying to hold forever is bullshit. Have you ever
lived in a 30 year old home that has seen at least 10 tenants go
through it. It becomes a huge drain on your cash, houses fall
apart. Houses are a depreciating commodity and that should be

Also I would be very nervous basing my retirement income on 2-3
properties that were coming up for 25-30 years old. If one of
three properties has a major problem every second year and is
therefore say cash neutral for that year then your expected
income needs to be reduced by 15% pa. in your planning.

Capital Growth

Andrew: I don't sit around waiting for capital growth. When
selecting property I assume no capital growth and then ask the
question, is this deal worth it? I don't like punting on future
possibilities. When there is growth that is a wonderful bonus.


Andrew: Equity is great but the real thing for me is cash flow. I
found some units recently with a yield of 14% so to some extent I
don't care about equity (don't get me wrong I will still hit them
for all I can). The only indicator I use is the viability of the

Cash Flow

Andrew: I love what positive cash flow can do for people and the
freedom it can bring. The beauty of it is that if you you are
forced to stop work, all your properties are cash positive. They
will never eat you alive.

I guess I have been greatly influenced by Rich Dad mentality.
Cashflow is all important to me.


Andrew: I have a mentor who keeps on reminding me that most
people don't make money so to do what they do will mean you will
get what they get. This, for me, is one of the most powerful
driving statements I have ever heard. Very threatening but so
true, life is never comfortable after it sinks in. Even my mother
thinks I've lost the plot "what do you mean you don't want a
JOB" "Oh you can't make money doing that, I know such
and such who....." You get the picture.

To find mentors you will have to move in different circles but as
a general rule they don't like an "empty glass to fill with
knowledge" they are inspired by someone having a real go and
not quite getting it right. That is my experience anyway. The
easy way to pick up a mentor/s is through books and tapes.

I just model successful investors and take their advice. I know
where I want to be financially. I just look at what people in
that position are doing with their money and do the same. There
is no need to reinvent the wheel.

All the investors I model say that you make your money when you
buy not when you sell. I have learnt that lesson from about
$10,000 worth of books, seminars and lunches with good investors.


Andrew: I know I'm not a tax expert so I pay someone who is. I
know I have nothing to sweat on when audited (I like to assume I
will be audited sometime, this way I don't get tempted to
"hope" I won't get caught or I'm right or I'll get away
with it or it's close enough.)


Andrew: Avoiding tax is a crime and I wouldn't do it. However I
am very interested in reducing my tax burden. Making a profit and
being taxed is not a great situation to be in, making a profit
and not being taxed is a great situation to be in. This is not a
big deal as tax is not that difficult to reduce to near zero.

Mortgage Broker

Andrew: It is their job to know what is available out there and
from my experience they are generally pretty good at it. They are
not bogged down to one institution and they get paid when you get
the loan you want, which helps motivate them. They cost you no
more than running around thousands of institutions as you still
pay the application fee anyway.


Andrew: No matter who you lend through they will always ask
affordability questions.... at the end of the day they want to
get their money back. However, affordability is not the main
concern for all lenders. Capital protection is often a major

Dig around (and trust me you won't have to go too deep) and you
will find people who will lend you 75% even 80% LTV with no
financials. And the good news is that at $250K this should be
pretty easy (they sweat a little over $350K if they don't know
you but you can get around this easy enough). Look at 80% LTV
they have every chance of getting all their money and interest
back quite easily. Private money lenders will give you the money
much quicker than retail lenders but at a higher rate (1-1.5%
more). Are you happy with this avenue?

Retail lenders and brokers will always give you hell. They are
set up for the millions of middle class borrowers out there who
don't want to do anything too complicated. I am happy to inform
you that you are now moving away from them. A little scary at
first but suddenly the investment world opens up for you and you
don't notice.

If you shop where the middle class shop you will get middle class
products and results. Where you want to be will determine where
you do your shopping. Where does you broker shop for his money?

Fixed Interest Rates

Andrew: I love knowing my costs and so I love long term fixed
interest (and I don't just mean 5 years). Having said that, a
friend of mine is a mortgage broker (always a good friend to
have, Mike) and they have worked out that for the last 20 years
even if you had fixed your rate at the best possible time you
would still have come out worse off than sticking to the
variable. And yes this does cover the fun and games in the 80's.

I really believe it is purely fear of the unknown that pushes
people into fixed rates (I know I'll cop some flack over that

Property Cycle

Andrew: I know this is contrary to popular thought at the present
but to invest in property expecting that the "property
cycle" will make you money is dangerous. I have seen too
many people lose money this way. The theory has holes in it and
heaps of people have fallen through them. You may disagree with
me, who is right? You can (and people have) make and lose money
with every investing technique out there.

The Share Market

Andrew: The share market does nothing for me. I love leverage so
real estate, futures and currencies are for me. I don't trade
anything under an expected 50% return. What I love about property
is that if done correctly you know your profit going in and it is
easy. In the financial markets you are competing on a much bigger
stage against much bigger money and people with much better
information. You are expecting the market to move favorably for
you to make money (much like the way most people invest in
property), and I don't like "hoping" I will make money.

Investment Companies

Andrew: Everyone down the line gets paid very well. I have worked
for one of these companies and I was paid $5000 per deal. $10,000
to $15,000 of commissions came from every sale and you and I both
know where that money was coming from. I would never recommend
anyone invest with one of these groups.


Andrew: Personally I go to auctions to see it pass in. Then
strike a deal. I'm not into competing for a property, why pay
$10K or even 1K more just because some other guy half wants it? I
want to buy equity so I'm looking for motivated vendors. You
don't tend to find them at auctions.


Andrew: I personally hate renovations as they all so often suck
up cash and that really upsets me. I would want to see a minimum
of $2 back for every $1 spent on the place, including the
interest paid. I like in and out very quickly with little stress
(and for me renovations and trades people = stress).

Value Adding

Andrew: Price is very important (10% below valuation minimum).
Then I do some "value adding" to the property, but not
the usual bathroom/kitchen type stuff. My favorite one I'm happy
to share is cable TV, it costs $10pw I add $20pw to the rent.
There are so many little things you can do like this that cost
you NOTHING. What is even better is that the tenant then stays
much longer.


Andrew: I looked into them but found the legals too much of a
headache to deal with and thus made the selling process a little
more difficult. As a result I have taken the Lease Option path
which is much more simple and more common (used in so many other
areas it isn't funny. Eg Radio Rentals whole business is based on


Andrew: I like families with 2 little kids. Do you remember what
this is like? (I only have one fantastic little girl so I don't
yet) They have a good job with regular income but can not save a
cent to save their lives, and it only gets worse as the kids grow
up. They want a home to settle in, so I give them a home not just
a rental property. They are my best tenants and I love them...and
I like to look after them. It just so happens I also make some
money along the way.

Lease Options

Andrew: I like to get a tenant hooked on the property, and then
sell it to them. Do some value adding to get long-term tenants
then bump up the rent and offer them $10pw credit towards buying
the house. That's only $5200 over ten years, which is nothing
when you consider that you now have no vacancy and no agent's
commissions to pay (why do you need them anymore?). They start to
feel like they own it so they really look after it and don't
consider moving.

Do you have a long-term tenant? Do you want one? Offer $20pw
credit for a 5-year lease with annual rental reviews. They pay
for all minor repairs and credit is lost if they make late
payments. This is a forced saving for them so really you are
helping them out, they may never save a deposit on their own. Now
you are their friend not the "bloody tight assed
landlord" or worse still the faceless person behind the
"wanker agent". You can tack most of this credit money
onto the price anyway.

I want all my deals to be win/win. I want to make a profit but I
don't want to rob the poor tenant blind. I want them tell all
their friends how great a deal they are on and send them on to me
for their own place.

Blocks of Units

Andrew: Wherever you invest make sure you know the market inside
out. You need to be able to walk into a place and know what it is
worth (meaning what the val will come in at). I expect a
well-discounted price when buying blocks of units and a healthy
cash flow. Have you considered buying in bulk to get a discount?
Blocks of flats are easier to get than houses at a great price
and no you don't need heaps of cash to get them. Last week I
found a block of 14 town houses, block of 6 flats and 3 houses
all with a 12% rental yield. I know where my money is going.

I had an agent the other day telling me she would never invest in
units. Why? I asked. Well with one house you have one headache
but with multiple units you have many headaches. That was it.
With one house vacant you have 100% vacancy but with one unit
vacant you may only have 10% vacant. Well I guess that is why in
5 years she will be still running around selling houses and I
will be financially free.

No Money Down

Andrew: The key to great internal returns is all in the
structuring. I don't like money in the deal (comes from starting
with none I guess, it helps you really focus on what you are
after). I very rarely borrow against one property for another,
each deal must make sense on its own.

The Deal

Andrew: In a nutshell I want under valued RE with a positive cash
flow. It should already be 10% below market value before we start
the discounting dance. I would be looking for properties with
rental yields of around 10% or higher. I assume an interest rate
of 10% on borrowed funds and expect rent to cover it. I don't
want to put my money into the deal so I can..

a) have a very high rate of return. My starting figure is 50% and
my favorite is infinity (and yes this is very possible with no
money down). I figure at this rate I'm doing OK. I'm not going to
argue 50%, it happens all the time.

b) do as many deals as I can find.

The stamp duty can be avoided/reduced in the buying process and
is not influenced if you trade or hold the property.

It is easy to pick up $5-10K a deal with very little work from
properties with +ve cash flow and profit margin at the back end.
This is the kind of stuff my web page is dedicated to. I hope to
have it up and running soon. ( )

Where do I find Deals returning 50% ?

According to the Australian Bureau of Stats....."There was
also a group of 'reluctant investors' - with 7% of investors
stating that their properties were being rented because they
wanted to sell, but were unable to find a buyer." Now that
is something you don't read in many books. As I said earlier, I'm
looking for motivated vendors.

Shopping for cash flow in very different to Capital Gain, it is
quite boring really. Suddenly you go house hunting with a
calculator not your crystal ball. The agents I work with love
this approach...they don't have to go on with the usual BS about
the properties they now just give me the numbers and we work from


Andrew: Many people want to believe that high returns are risky,
however done well high returns often offer the lowest risk
profile. If you have no money in the deal what is the risk?


Andrew: Mike, I've never put a syndicate together but I have
taken on partners to finance a deal (better a piece of the cake
than none at all). But still these were easy to sell as the deals
were good (meaning the profit was built into the deal).

Tough Questions


What is the asking price?
What will it sell for?
How much will it value at?
What is the rental yield?
What is your motivation for the purchase?
What is their motivation for the sale?
Does an auction act in your favour?

Is it a good deal? If the deal is any good the money will be
Are you getting a substantial discount?
What is your exit strategy?
Would you be banking on Capital Gain to bail you out? I hope not.

What are the advantages to selling?
What will it free you up to do?
How do you see a longer settlement helping you?

What would you like in the deal (in a perfect world)?
What do you need? Know what you need and ask for it, if you don't
ask for it you won't get it.
What are you trying to achieve? By when? Knowing where you are
going is vital to knowing how to get there.
How much cash are you prepared to put into a deal?
How much cash are you prepared to invest over all?
What return do you want on that money?
Will that be enough to get you where you want to be?

Better still what is your return on investment if you have
nothing in the deal? (Excellent is the answer, that's what the E
stands for on the calculator in case you didn't know)

What does the seller need?
When do they need it and why? (Perhaps they have a problem you
can solve.)
Why does the deal make sense? Does it make sense at $3.5m?
Why is there a 16% difference in price range?

What is so good about the deal? That is the main question. If
it's a good deal the money will be there, every time.

What are you looking for (that age old question)?

Where are you prepared to look for a 12% yield? What size town or
suburbs won't you invest in? I have found a property that was
tenanted at 20% yield...would you invest in this property or
would it depend? How many deals like this could you do this year?

Where have you been looking? What is the best yield you have
found? I suspect that if you have found 10% then in that same
area is a few 12% yields there. If you haven't found 10% then you
are not searching hard enough.

How positive do you want/need it to be? I could find you 30
properties this week that have a positive cash flow, would you
buy all of them? If you can define what you are after then you
will know it when you see it and you will know where to start

You will ALWAYS find what you look for. How many agents have you
told in the last 2 weeks that you are in the market for another
property? Tell them what you are after then let them do the

I know I can sound like a complete bastard but I'm just trying to
help. The hard questions will always give you the best results.

As Jan says, the deal of a lifetime comes up about every month.
Don't bust yourself over any one. PLEASE DON'T DO ANYTHING
STUPID. If you are buying for emotional reasons I can't help you,
you will be in the game for the wrong reasons. Answer the above
questions as just a starter.

You should know everything in advance. All costs MUST be known in
advance. Keep cool, even if you don't buy you will make money.
You will be so ready for the next one you will really kick a
goal. One very important rule in the whole game is "if you
don't know who the fool in the market is, it's usually you."
This one will save you thousands.

Sorry, Mike, gone on a bit too much.

Robert Kyosaki

Andrew: I went to his 2-day financial intelligence course last
year (in Sydney), which was not US based. Robert is all about
changing the nature of your income from earned income to passive
income. Not being dependent on a JOB (Just Over Broke) to

His quote in Sydney was "neg gearing is crazy...why would
you go into an investment where you know you are going to lose


Andrew: I'm a big fan of the Kyosaki books and games. I recommend
them to everyone as the best starting point, without that
knowledge you won't succeed.

You should read Paul Clitheroe's book "Making Money" as
a guide to what NOT to do. I'm sure if you follow his advice you
will never have any real money, sure you will retire on better $$
than most (not that this is an achievement) but your standard of
living will drop after you stop working and you will be 60+. It
just isn't the plan for me so consequently I think it is to be
avoided at all costs. How good these books are depends on where
you are going. Paul's book, for example is really popular with
people who want to make some "retail" investments and
get rich slow (as he says).

I read 1-2 books a week so I could go on for quite some time.
Your local library is one of the best-kept secrets. James Rohan
(US speaker) says there is enough there to make you rich. And he
is pretty close to right.


Andrew: I think tapes and seminars are great. Seminars can be
quite expensive but I have never felt that I wasted my money on
them (but make sure of the content first some of them are just
plain dodgy).

The Kyosaki Sydney seminar was really quite expensive for me. It
has cost me a very high paying job and a house. However I have no
question that I will see the money back plus some this year. In
simple terms, his message was to build businesses and buy assets
through your businesses.

To be honest I hated the message. Building businesses is an idea
that scared me to death but after examining it it makes so much
sense and I don't know what I was thinking before. I have been
working on this since then.

Best Website

Andrew: is by far the best of the US web
sites I have found. Many of the contributors have their own
pages, however, creonline has them all together. There are
various other lease/option pages but they don't teach much more
than that site.

I recommend this site to everyone it will totally change the way
you look at real estate. The "how to" articles are
fantastic reading...but be careful you may have to change
everything you do now.

The Future

Andrew: I'm currently setting up a web site to deal with all
these ideas. A forum to discuss all these creative ideas in
Australia is needed so I'm on it. I hope to have a few courses to
sell, teaching different approaches to RE and an advice/Q&A
section. It will be fantastic to have even just 20 people all
rubbing brain cells together, just imagine what we could all come
up with. ( )

I am also writing a book that teaches how to lease/option in
Australia. I hope to have it out in a month.

Final Thoughts

Andrew: at the risk of sounding like a crabby old school master
" Not good enough.... try again...What are you looking

Start with no money and a HUGE desire to invest heavily. Be
totally committed to NOT working for money but working for
knowledge and assets. Decide to be rich and do something about it
everyday. Think beyond what "everyone else" is doing
but remember there is nothing new under the sun.

If you are investing with the attitude of "well we will see
where we end up" then anything sounds good. However if you
want X dollars in X years then you know what is the minimum
return you will accept. I need a minimum of 50% on my money...any
less and it is not going to hit my goal. The only way I can
guarantee this is to get it in cash flow from day 1. If I am
waiting for growth in 5 years time then I will never get there. I
want it now so I can compound it every year. Do you realise that
$10,000 compounded at 50% becomes $1,200,000 in just 12 years. If
you start with $30,000 it only takes 9 years.

This is why I worry about cash flow. The return on my money is
sacred and not to be influenced by possibilities.

Is that enough for now, Mike? I need to go to bed.

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Reply: 1
From: Jeremy Laws

Cash flow pays bills, but capital growth makes you wealthy. Especially in this country. The each serve specific purposes.
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Andrew G%27s Biog

Reply: 2
From: Simon St John

Amazing. Thanks for this from a newie!

I was reading a US book that was based on positive cashflow strategies. In fact, it didn't even contemplate negative gearing. Before I picked up this book, I just assumes NG was "the way".

I am still stumped as to how you can buy to be positive without putting down a whopping deposit so the loan payments are less than the rent.

Can anyone spell out the bleeding obvious to put me on track?

Is the answer in lease/options - what is this?

Help anyone for a push in the right direction!
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Andrew G%27s Biog

Reply: 2.1
From: Sim' Hampel

Try looking in cities other than Sydney or Melbourne. Cashflow +ve property on 100%+ lends are available almost everywhere else - if you look in the right spots.

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Andrew G%27s Biog

Reply: 2.1.1
From: Simon St John

Thanks for that Sim. You can tell I'm a Melbourneite!
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Andrew G%27s Biog

Reply: 2.2
From: Glenn Mott


I would suggest that what they are alluding to is that if, say you find a property for $150,000 that you can get a bank to value at $190,000 or more (this is another story!) and it is returning more money in rent per year than your purchase price multiplied by the current interest rate divided by 100, you would have on your hands a property that you costs you nothing to get into and ongoing will only cost you whatever the council rates are per year.

Props like this one may be thin on the ground at the moment, but in a couple of years time the papers will be littered with them every weekend once all the current property "experts" are starting to bleed because they bought over-priced properties in the heat of a boom, have a property manager take 15-20% of their rental income each year and get hit for rates/insurance/repairs continually. Their will also be a big shift in the psychology of these property investors as they will no longer feel wealthy and begin to make decisions accordingly.


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Andrew G%27s Biog

Reply: 2.2.1
From: Sergey Golovin

Thanks Mike, great post, very educational.

I did read his book and it was excellent, still love it.

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Reply: 3
From: Alan Hill


Thanks very much for putting all that together......

Some real gems in there and it's obviously taken you some time.

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Reply: 3.1
From: Jeremy Laws

Just be aware of what you may be losing by only buying for positive gearing. Simon esp, your real gains are made through cap growth, which here esp. are from 'negative gearing'as its called. (really low downpayment on low yield/high capital growth properties)
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Andrew G%27s Biog

Reply: 3.1.1
From: Simon St John

Hi Jeremy

I am getting the impression that each property will suggest, through analysis, how best top treat it. NG, PG, LO etc. It make sense to me to have a strategy that takes the product and finance/package it according to it's own characteristics.

Thanks for your post.

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