I renovated that up and that sort of leapfrogged
into the second property only about six months
later. I managed to get a, and I'm pretty
sure they a drive by evaluation. I don't know
how this happened because all the work I've
done was inside and they didn’t come in,
but they actually valued about six or eight
months later at 240,000 dollars.
This is Property Investory where we talk to
successful property investors, find out more
about their stories, mindset and strategy.
I’m Tyrone Shum and in this episode I’m
speaking with Bradley Beer, who started as
a second year uni student and the first employee
of a company he now owns called BMT Tax Depreciation
Quantity Surveyors. His also built a substantial
property portfolio all over NSW and Victoria.
Beer has been involved with BMT Tax Depreciation
Quantity Surveyors since its early stages,
joining the company as a quantity surveyor
19 years ago. Now as the Chief Executive Officer
he plays a few roles in the company.
I travel a fair bit so I’ve got a few roles
as a chief executive officer to obviously
report to a board and some investors that
are other people within the business and drive
the strategy of the business to deliver the
growth and the future of BMT effectively.
Now I maintain some relationships with a lot
of key alliances and clients probably the
face and name of this business, I’m known
as the guy that runs it and is involved in
it and I am a quantity surveyor and I have
done lots of depreciation schedules in my
time but I have an executive management team
and my job is to keep us as a team. And I
try to spend my time on making sure I’m
driving the strategy to continue this business
into its future and its growth and make sure
we deliver on deliver fantastic spaces for
our clients.
It’s diverse. I’ve also got my properties
to look after and I have good relationships
with different people especially through the
property and accounting industries all over
the country which is great and staff all over
the country and you know travelling and seeing
what happens in different areas of the country
is always fantastic but then getting back
and having this core fantastic team of a couple
hundred people that I work with and just to
see them grow and succeed is also very very
good.
From humble beginnings, Beer was born in a
country town to a family of four children.
I was born and grew up in a sort of a country
town in New South Wales called Taree, it’s
about four hours north of Sydney, one of four
children my parents. My parents still live
in Taree. My dad was an electrician and my
mum didn’t work she had four kids to look
after. I did my schooling there. I’m the
second and there are two boys and two girls.
Did my schooling there. I finished my HSC,
giving away my age, in about 1993. Thought
I’d like to go and do uni because I thought
that was probably a good idea. I started an
economics degree. I didn’t like it. I wish
I learnt a lot more about it now because it
would be very handy at my role to understand
that a little bit more sometimes. But I then
left university and went back to Taree, worked
there in a furniture shop for I don’t know
18 months or so. It was great, it was at Forster,
it was near the beach I could surf every afternoon.
Loved to surf whenever it was good or sometimes
the mornings. But you know selling furniture
and unloading furniture from trucks at six
foot seven, your back gets a bit sore after
a while. It was pretty hot in a tin shed with
furniture and it was time to go and use my
brain again. So I decided to go back and give
the university another go and I had a bit
of an interest in building so I thought the
structure management degree in Newcastle sounded
like a good idea. I thought I was going to
probably manage construction or something
like those lines.
It was after his return to uni when, through
some good timing and coincidence, Beer began
his current career only a year after BMT was
established.
I went and started the degree at Newcastle
uni in construction management which you come
out as a quantity surveyor but I actually
got my job at BMT partway through the second
year because one of the eventual partners
was one of my lecturers.
So I started with the guys in June of 1998.
The business had started just under 12 months
before the 7th of 97. So we just got not too
long ago been to our 20 year anniversary of
the starting point. Which is great. And I
was the first staff member and I became a
director and shareholder in 2002.
The original guys that started BMT, Brendan,
Matt, and Tom, nothing to hide about where
the name came from. Tom was one of my lecturers
at uni and they’d just started the business.
He was still lecturing at uni. There was Brendan
who just started working in the business and
Matt, who, they never really worked in the
business, helped set it up and they bought
him out a few years later. So I started to
come and do some quantity surveying depreciation
schedules, didn’t really know what a depreciation
schedule was by then because I was still pretty
early in uni because I needed some work experience
to finish my degree. So in order to get that
work experience, this was a way to get it
and I was actually going to get paid. It wasn’t
very much mind view because it was starting
business but it was something and it was a
way to start getting into the industry in
some way.
Over time, and through hard work and dedication,
Beer uncovered his passion and went on to
become a partner himself.
I wasn’t focused on getting a bit of experience
to start with. I didn’t get paid very much
at all because it was early days and it was
experience that you were probably prepared
to do for free in order to get your degree.
So the fact that I got paid something to me
was good and I think I spent a lot of time
working on the business at that early stage.
I don’t know it just became exciting. So
then they brought me in as a partner in 2002.
There was three of us. And I increased my
ownership over a few years and then those
original partners actually have exited the
business.
now in 2015 and I took on some more ownership,
I brought some of my executive team into some
ownership at that time as well, that have
been with me for you know 13 to 15 years between
the three of them or each. That is, not five
years each. So they’ve been with us for
most of the journey and they’re a very good
team around me.
We work together very well and we have some
other investors just come as investors and
invested in the business that has got some
experience across a range of other businesses
so out about a third of the business. And
the rest are spread between the investors
and the exact team.
And it was around the same time of Beer’s
promotion to a partner that he began his property
investing journey.
The first property I bought, and I’m just
thinking do I know when the settlement date
was exactly. It was about the same time. It
might have been. I think it was late in 2001
or it might have actually been early to mid-2002.
But it was actually right around exactly the
same time. So when it was a little, or not
so little. A four-bedroom house in a suburb
of Newcastle called Georgetown and it has
a very big shed at the back which was great.
I was very attracted to the shed and it looked
like the reason behind that. Like I think.
You know I’d already been doing some things
with BMT, you know I spent every day talking
to investors investing in property and thought
about making some money from it. And I started
to start to go and sort of you know after
a few years there we learnt how to do the
depreciation I started pretty early and educating
investors and people about depreciation which
was the only piece I knew how to do. But the
benefit of that is I was out in front of people
and able to learn about investing in property
and how did this work and how did people invest
in property and have multiple properties and
what
that meant.
So I saved some deposit. And I think the telling
time when one of my partners had been starting
to invest in property or they were just becoming
my partners. So you invest in some property
and I think that first property they actually
had gone to had a look at it and then you
know I was interested and keen to get the
property. I think one of them didn’t like
the big shed as an investment and I thought
well I like sheds because it was taking up
so much of the back yard I suppose and maybe
it wasn’t going to be great value but they
gave me probably a bit of a prod there and
said you should buy it Brad and so I ran through
and they actually negotiated it down for me
already even from I think 198000 it was listed
and I ended up buying it for 170000 dollars.
It’s a four-bedroom house. And it’s probably
worth about 600 to 650000 dollars now and
I still own it. The shed still exists.
He describes why this property was an interesting
purchase that allowed him to leapfrog to the
next one.
The house was an absolute crapper so I cannot
count the number of cockroaches that came
out of underneath the kitchen benches when
I pulled it apart. The carpet that I ripped
up was on top of another carpet and Lino and
I found newspapers underneath that from about
1914 I think. So you know it’s an old traditional
weatherboard house although someone had put
forever boards on the outside of it made it
look really horrible. It’s a four-bedroom
house they had a guy living in it that had
rented the rooms out because it’s not far
from the University of Newcastle and so I
kind of ripped apart the inside I remember.
Now I know it must have settled some time
up to you know early in the years because
I do remember in the middle of winter with
the bathroom completely ripped out. And you
know having to redo the floor in the bathroom
and the peers and put peers in which funnily
enough one of my mates from uni who knew a
bit more about construction helped me with
it. So I was working, uni-ing, and my dad
was an electrician I’d be crawling through
the ceiling at 11 o’clock at night helping
him to run the wires for electricity changes
and renovating the inside of it. You know
new kitchen new bathroom and painting the
inside of it. And then I really ran out of
money so that the outside stayed as it was.
The moral of that is that I guess it got straight
in and do some pretty hefty renovating because
the way to make some money out of that was
to make some equity growth and I’ll say
that it was not really livable. I renovated
that up and that sort of leapfrogged into
the second property only about six months
later. I managed to get a, and I’m pretty
sure they a drive-by evaluation. I don’t
know how this happened because all the work
I’ve done was inside and they didn’t come
in, but they actually valued about six or
eight months later at 240000 dollars. I was
just on the back of NSW properties moving
and they didn’t do much for a while after
that. But it leapfrogged me to give me that
little bit of equity to push into the second
property.
While his interest in property developed from
his career, his interest in construction began
at an earlier age.
I’d renovated a bit with my Dad on our house
over time and spent a lot of time in the garage
with my grandfather building things, fixing
things. and doing that sort of stuff.
But I grew up in a country town where there
was no push to do that.
I mean I came from a situation where my parents
and my grandparents for that matter bought
their house, paid it off over their life and
then there was this different thing that I
was working with these people and learnt that
maybe there’s a different way to do things.
And they are still in that house. I do own
the house next door, I do own what was my
grandmother’s house. But you know I don’t
know if I spent so much time out there I decided
that you know I needed to hold onto it or
what. But it’s you know come up and I thought
maybe we could do something with the house
next door. My grandma lived in the house next
door to my parents before she passed away
for a period of time which was kind of handy.
So she rented it, it was a proper commercial
transaction. But that wasn’t the reason
for buying it just happened at the same time.
His role in BMT and his family were also influential
in where he began and first developed his
investment portfolio. Since he knew the Newcastle
area and his hometown, he planted his seeds
there, eventually expanding interstate.
So because of that and I was sort of half-living
Sydney and in Newcastle where BMT started
out at Newcastle and then moved to Sydney
just after and then spread around the country
since. I knew that area, it was less expensive
to get into and I just kept buying in that
area and actually stayed renting up until
only a couple of years ago, for the rest of
life. So I’m the ultimate investor which
I’ll talk about later, but I kept buying
reef so you know I’ve got Georgetown, Mayfield,
some in Adam’s Town, Broadmeadow, Valentine,
Edgeworth, another suburb of Newcastle. I’ve
got a lot around these sort of areas in these
Newcastle suburbs not necessarily in the blue-chip
area so much, I do have Hamilton and New Lampton
which are bad areas around there. But I went
pretty hard most of them around that Newcastle
area. I’ve moved back a little bit to where
I grew up. I bought some around there. My
grandmother’s house is an old house that
yes I spent a lot of time working on but it’s
actually on three blocks of land that are
split as individual blocks which I might build
some houses on. And look I’m from Taree,
I’ve got a property in Taree. I’ve got
some properties in Old Bar which is a suburb
which is the beach area around Taree that
probably haven’t done as well as some of
the others, Wallabi Point and those sorts
of areas after that. So it’s a lot later
before I’ve gone into this. I’ve got one
around the Logan area.
I’ve got a couple in Victoria one in St
Kilda and another in a suburb not far from
the airport. And the last few years I only
actually own one property in Sydney and it’s
a house out west and then the other thing
I got a block of six units that I bought up
north, northeast of Brisbane only in the last
18 months or so.
Throughout this process, Beer has learnt about
the significance of financial balance to set
himself up for the future.
I think part of it’s been about the fact
that growth areas, the important fundamentals
about investing in a property is you’re
there to make some money out of it which comes
through capital growth and cash flow were
obviously manufactured actuaries through renovating
or developing. And being capital-light or
equity light at the start, I couldn’t go
and buy $500000 properties because I didn’t
have enough equity and it still kept that
way. And these ones also generally have returned
quite well I do believe fairly heavily in
the Hunter and the Newcastle areas still,
I still hold the properties I haven’t sold
so and the returns I get those because you
need the cash flow in order to keep going
because you know having everything being negative
or negatively geared or costing you money
to hold all the time you can run out essentially
if you’ve got you to know five or 10 properties
and a good salary then that’s OK. But once
you start getting beyond that you’ve got
to keep propping up all the time you’ve
run out of ability to finance property because
of a lack of cash flow generation. And the
end game is to get to this place and invest
with this property with enough cash flow to
actually support it not force you to go to
work to get it all the time for the rest of
your life. Well that’s no good either.
Although Beer has had many successes in his
investing career, he’s approached the tougher,
and slightly silver-lined moments as learning
opportunities and gained some valuable knowledge.
Look I think you know and I probably haven’t
touched on what probably the worst is yet.
I’ve made some mistakes. You know the good
thing about mistakes is I call them opportunities
to learn. And pretty early on, it was the
first foray into buying something in a different
area. It was out of Newcastle and it was actually
a block of land. And I think I went surfing
and bought it on the way home with my mate.
I still own it but still doesn’t have a
house on it. So I bought a block of land and
I look I had it’s not like I suddenly seen
that in the area on the way home we probably
had the intention to have a look but maybe
not to buy. And the problem with that is that
it’s in a new land area and a new land release
area was marketed pretty heavily. And I do
love the area, I went holidays there as a
kid. All the mistakes but you know it’s
like every time I go to Noosa I want to buy
something because I love it so much. And then
you look at a price and realize that you should
buy property that makes money so you can afford
to go on holidays where you want to go on
holidays and it might be a different place
each time. And this is probably that, I probably
looked at visions of having a house that I
could have a holiday home as well etc because
it’s near the river, near the water,a good
place to go fishing and close to good surfing
beaches I grew up around but it hasn’t been
a good investment because you know eventually
as they release more stages the value of that
probably moved up and then we had a GFC and
it probably moved it down and look it’s
worth more than I paid for it. But if I added
all the interest over the years and things
like that it was a bad investment.
And the thing it does is it ties up a little
bit of equity, the fact that I bought it and
I didn’t have to pay for it until it settled
in a period of time meaning it didn’t actually
slow me down much and I would have sold that
now if it did slow me down but it doesn’t
slow me down it never has actually badly stopped
me from doing anything, other than it’s
another bit of debt there that you know you’ve
got. and it didn’t stop from a cash flow
which led to me investing or that’s the
time you should move things on. I’ll probably
build on it one day or maybe one day I’ll
get bored of it and flick it. I’ve had it
for 15 years or so out I haven’t done it
yet.
So that’s probably my worst mistake, my
worst mistake is I actually own two of them.
Luckily, his overall experience has been successful,
and Beer has had been able to overcome investing
doubts to expand his portfolio.
It’s about finance and the importance of
understanding finance and how to finance properly
because finance and leverage is the way that
you’ll make the money out of the property
in the long term. Understanding how to control
the finance and how to control your risk through
finance to me is a fundamental major understanding
required in order to be successful and also
to cover risks. Jumping in and doing that
second property. I went and saved my 20 per
cent for the first one which took quite a
while and then I skimp on it. Whatever you
do to do that necessary to buy the crappiest
property that was in such a bad state you
know. It was pretty hard to make that decision
without that little bit of pride from my partners
who went it’s time Brad you’ve been saving
you know this works. Yes you know it was it’s
hard to take that chance especially the first
one the second one was a little bit easier.
Especially so soon. Third fourth fifth sixth
seventh I was buying and it is like once I
got to six or seven you know there was no
fear left.
