95 – “Robert Kiyosaki Was Wrong”- Jay Harris

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  5. 95 – “Robert Kiyosaki Was Wrong”- Jay Harris

In this episode, one of my students, Jay Harris joined me as my special guest. He is the Founder and Managing Director of The Maintenance Boys, a repairs and maintenance solution for commercial facilities, and Managing Director of The Space Invaders, which offers renovation of office spaces.

Jay has a business mind and together with his wife, Katherine, they have built their own reno business and are now renovating their family home. We will also go over why Jay strongly believes Robert Kiyosaki was wrong for saying, “Your house is a liability, not an asset”.

Listen to Episode 95: “Robert Kiyosaki Was Wrong”- Jay Harris

Podcast: Download (Duration 31:04 — 42MB)

Episode Highlights

  • [00:00:29] An accomplished businessman who still saw the value of training for renovating
  • [00:04:38] Robert Kiyosaki was wrong
  • [00:05:34] The King of cool business names
  • [00:07:04] A really good lifestyle business
  • [00:08:08] Podcast’s one rule
  • [00:09:15] The value in training to be a renovator
  • [00:10:36] The bigger picture of doing renos
  • [00:13:29] How to add value to a property
  • [00:15:53] The reno project that went to the DA
  • [00:19:16] You’ve got to be in it to win it
  • [00:20:40] Little pocket rocket
  • [00:22:19] Playing the waiting game
  • [00:23:13] The benefits of doing other businesses while renovating
  • [00:25:08] The 3 biggest tips
  • [00:26:19] Global financial crisis
  • [00:27:07] There’s no such thing as an “off market” deal
  • [00:29:06] Get an agent that you can trust and has integrity

“Robert Kiyosaki Was Wrong”- Jay Harris

“My motto for investing in property or buying any property is I need to be able to add value to it. “

Well, hello, renovators! It’s Bernadette and today I’m talking with one of our students, Jay Harris. Jay and his wife, Katherine came into our Bootcamp a couple of years ago now. Jay is what you would call a serial entrepreneur. He has a business mind and he applies it to many areas of his life. It’s interesting to see that renovating is really just another business.

Even though in this episode we are talking about renovating his family home, that’s part of the process because it gives the leverage to be able to go and do other projects. It gives you access to equity in the form of cash to be able to go and do other projects. That’s one of the things that come out of this episode. The other one is the fact that he is already a very accomplished carpenter, shopfitter yet he saw the value in coming and doing some training on renovating for profit.

I have shared a few times around how often people who work in the industry, builders, traders, and so on think that they know it all, however, in renovating for profit, there is a different mindset and there are things that you need to understand. Unfortunately, that’s often not apparent in their field of vision and it takes someone quite intuitive to and I guess humble to realise that there’s more to learn in order to move forward powerfully.

The third thing that you will take away from this is the value of renovating as a couple. Jay and his wife, Katherine are very avid renovators. It’s something that brings richness to their lives. If you are lucky to have a partner that is as interested in it as you are, that is an incredible gift that if you’re not taking advantage of, you would do well to be able to capitalise on that.

Of course, I don’t miss an opportunity to get on my little soapbox about the whole thing of your family home not being an asset and there are loads more in this episode.

Before we get into the episode, I would like to remind you that we only got three weeks, three and a half weeks to our one-day conference, She Renovates Live. If you are able to attend, please jump in to our website and grab yourself a ticket. It is going to be a really lovely day in the beautiful Grounds of Alexandria with a lot of really amazing speakers. What I’m going to be speaking on is I’ve actually invited a representative from My Property Circles to come in because what I’m going to be talking about is how we’re going to be progressing with Joint Ventures in the future.

That’s one of the things I’ll be talking about because our collaboration with property circles has been life-changing in terms of joint ventures. And I’m really excited about what we have got to offer.

Remember that joint ventures aren’t just for people who don’t have a lot of money, it could be someone that wants to really diversify their portfolio down to a really granular level, or you might be just wanting to have a group of really savvy women to share the experience with.

We would love to see you. So grab your ticket and we’ll see you there on the 1st of November.

Bernadette Janson: Welcome, Jay.

Jay Harris: Hi! Thanks for having me.

Bernadette Janson: You’re very welcome. There’s a couple of reasons why Jay has come on the podcast but the first one is that I think it was Robert Kiyosaki who said that “Your family home is not an asset, it is a liability because it doesn’t put money in your pocket”. This is in the U.S. where they get their- is their interest tax deductible? On their family homes? So here in Australia, it’s on investment properties in traditional but I’m pretty sure that in the US, their family house’s interest tax is deductible. Anyhow, I always jump to an opportunity to prove him wrong.

Jay Harris: Beautiful.

Bernadette Janson: I really don’t agree with that, and I’m pretty sure you and I are on the same wavelength.

Jay Harris: We are on the same page. We’re not on Robert Kiyosaki’s page for this particular Redhawk case.

Bernadette Janson: Exactly! The other reason Jay is here is because Jay Is very established in the building industry. He has a business that does shop fitting.

Jay Harris: Yeah, we do. We used to do shop fitting in retail shops and restaurants and opted it out. We have pretty much changed our target market. We just do offer some renovations now as our target market. I just love creating cool work spaces for people. Up until Covid, people had to go to work 40 hours to 50 hours a week, so creating a cool place to go to work for clients was something that resonated with me so I threw off a thought for Space Invaders as our company.

Bernadette Janson: Beautiful. You’re also the king of cool business names, I just have to say. You also have a major company called the Maintenance Boys, which I thought was really good and now you got The Space Invaders, any others that I should know about?

Jay Harris: I had a really good business lesson a few years ago. I bought a cleaning business, I called it “Your Cleaning Crew”, I didn’t realise how much administration and time and how taxing that business would be with such low profit so that was a business lesson that I got out of pretty quickly after I put into it. The “Maintenance Boys, Your Cleaning Crew and The Space Invaders.

Bernadette Janson: Beautiful! So, the second point that is worth talking about is, do you have a trade?

Jay Harris: Carpentry license, yeah. I’ve done Certificate Four, which is the building construction certificate and I spent 2 years doing that as well. Then, probably about three quarters into doing that, I realised I didn’t necessarily want to be a residential builder for a client, I just wanted to do my own renovation and do my own stuff.

Business-wise, I was working for a food company at the time I was studying and I really liked the hours and I liked the flexibility. I drove up all around New South Wales with my surfboard in the back of the car, and kind of made my own times and days and made sure I fit it in with the clients needs but I thought “Hang on a second, I think I’m onto something new”. It is a really good lifestyle business that fits in with my surfing and actually making money and doing something I love.

Bernadette Janson: There is one rule about this podcast, you’re not allowed to talk about surfing, like never. One of my mentors, you know, James Schramko? He talks about surfing and I keep saying “Sorry, you’re gonna put me to sleep if you keep that up”.

Jay Harris: You’re just attracting so many men that are entrepreneurs who love surfing into your life.

Bernadette Janson: My husband is a surfer from way back. Well, we had to give up when he broke a rib about a decade ago so, yes, I understand the culture but that’s where it’s at.

Jay Harris: Yeah, I have surfing pictures behind me, let’s talk about that “Lifestyle your house with surfing pictures”.

Bernadette Janson: Sorry, I can’t show you but we’ve actually got surfboards on the wall, so we’ve gone an extra mile there.

Jay Harris: Love it, I’ve got surfboards in my wall as well.

Bernadette Janson: I’ll put them somewhere where I wouldn’t have to look at them so all is well. Anyhow, let’s get back to the point. Even though you have a lot of expertise, you still saw the value in training to be a renovator for profit. You used that renovation on your own home, and that’s what I want to go into today because a lot of people underestimate the value of a renovation on your own home. Certainly for me and I think for you too, we would use that equity that we’ve created to fund our entrepreneurial journey and our investment projects moving forward.

Jay Harris: It funds everything in life really. Honestly, it’s not just an entrepreneurial journey in our business that it’s helping, it’s helping our life as a family, helping us become not necessarily financially independent, but financially wealthy and a lot wealthier. I’m definitely a lot wealthier than I was before I bought a property and started renovating.

Bernadette Janson: And you don’t necessarily have to sell that home to actually realise that wealth that you can piggyback and build a portfolio at the back of the equity that you created.

Jay Harris: That’s right. My motto for investing in property or buying any property is a need to be able to add value to it. That’s the 100 percent to all. You never see me buy a completely renovated house unless I know I’m getting an absolute bargain. I’m looking at undervalued property for whatever reason: a mortgage in possession or someone desperate to sell it and I just happened to be in the right place at the right time. Otherwise, I’m looking for the worst house to destroy. I’m looking for the dump but the order lives on.

Bernadette Janson: I know, sometimes I feel guilty because when we sell our properties, we always get top dollar for them, we always get this price there is to get. Usually if we do a reno in a building that just moves the price of all the properties in the building up a level and I always feel sad for the person that buys it. I would think “I would love to tell you that you are absolutely doing the wrong thing”.

Jay Harris: Probably it’s not that they’re doing the wrong thing, it’s just that it’s a lot of effort, it’s a lot of knowledge and experience that they need to even just go through the process and it’s hard work and it’s stressful. For you and I, we know how to deal with that, what we’ve done during the hard times. We’ve had some really hard time getting our renovations done, dealing with approvals and council and trade, but there’s a bigger picture to all of it, so it’s worth the hard work.

Bernadette Janson: Absolutely and when I look at some things, like I would look at a school teacher and think “I don’t know how you do that”, no amount of money would hire me to homeschool my children. It’s just not my thing so I guess it’s the same thing. You’re right so I can blame our conscience because one of the last projects we sold was David’s apartment in Bundi, and a really lovely lady in her 70s had sold the family and bought that for herself and then she was going to buy another property elsewhere as an investment.

The agent told me the other day she had come to him and said she really loves it, but she’s thinking she might sell it because she just doesn’t spend enough time there. I thought my heart was in my mouth because I thought, one, you have paid a premium because it’s new, two, the market has changed since then. Anyhow, so tell me about your property.

Jay Harris: More of a long term thing with Bundi, I thought that’s always going to go up, right? You got to hang in there, got to stay in there for more than six months or for more than twelve months. Where do you want me to start from?

Bernadette Janson: If you want to tell us about the property, where it is, what it is, and then about the plan. What was your plan to add value?

Jay Harris: I’ve done renovations with my wife, Katherine. One of the reasons why Katherine and I connected with you was because we’ve talked so much potential in renovating houses and adding value to houses. It’s just something that we can’t stop thinking about. It’s like we’re always looking walking down the road and going to a restaurant on a local shopping mall, or there’s a real estate agent going to stop outside the front of the real estate and see what the property market is doing itself. This isn’t just any deal, so that’s just something that Katherine I love and are inspired by. We love renovating and creating and transforming crappy houses and making a beautiful home.

When we came into this full of renovating, we were just in between a three bedroom semi and a four bedroom semi in Bundi. The three bedrooms semi that we did just needed pretty much just a makeover so bought it at auction, really undervalued. We knew it was undervalued because the bank valued at more than what we paid for it at auction and we loved that.

Bernadette Janson: They don’t usually do that, did they do the valuation before you bought it?

Jay Harris: They did the valuation before we bought it, yes, so we knew how much we could borrow and really what it was. I spoke to five or six agents as well, different agents in the area. They all gave us what they thought it was worth and so we bought it, well, under that, which was great. .

We basically did a really cute little picket fence at the front that, cost about fifteen hundred dollars. We put a little garden and some grass up the front. We raised it and pulled up some pavers in the backyard and grass that put them first down. We painted the whole house for the whole thing. It’s kind of a half a house we fixed up all the skirtings in the corner internally, we repainted, we put some new lighting, and we saw the effect of the mood lighting. I loved that. There wasn’t a huge amount more than we did apart from that for that particular house, which was good and we were only there for two years. We were fortunate because that was in Bundi as well and that jumped up in price after we did some value to it.

We were then able to bunny hop into the next place around the corner, which was a four bedroom and two storey. That was a much bigger renovation because it was literally a poor old man made it out alive, so we bought that adoption as well. It was the same thing, it was really undervalued because it was such as, yeah, am I allowed to say it in this podcast?

Bernadette Janson: Well, that’s okay.

Jay Harris: Broken windows, broken glass at the back, and there were water leaks in the ceiling and all kinds of stuff. We went to counselling, got a DA to put a driveway in the front.

Bernadette Janson: I remember that.

Jay Harris: Yeah. So that was hell. It’s just part of renovating, sometimes you gotta go through some challenges in order to get the outcome you want and to add that value. A car parking space for someone to park their Range Rover in Bundi is probably worth quite a fair bit of money, so that was worthwhile.

We did a driveway, garden out the front, we had to ray points all the mortar in between the bricks because it was so old, like old semi bungalows, and so we even repainted everything. Then we painted everything, painted inside, outside and we did raise a lot of a feeling that was built up and all that had to pull all the ceilings out. We actually found in a few of the rooms we got another foot or so in ceiling height because they’d come in sometimes and built another ceiling underneath the existing ceiling. There were actually some times that we were pulling out two ceilings.

It was a messy job, that one, so I got a lot of help with that. It looks like that will go on for most going through walls of the dust, it was gross. We reached the end of the floor, skirting corners of a few new doors, redid the bathroom, redid the kitchen and we fixed the deck out the back, we put clear polycarbonates over the back deck to get the light through. Katherine did an amazing job with the garden and retesting everything. It’s like we basically touched every centimetre of the property.

Bernadette Janson: No structural changes?

Jay Harris: No, it was good in the sense that it was kind of a makeover. It wasn’t a real strike. It already had the two levels, and so that was very fortunate that it had enough space in terms of having four bedrooms and then adding the car base and having a backyard. And we put a little cute little fence down the side of the house and put an outdoor shower and two little things like that to give it that much page five.

Bernadette Janson: Have you had it revalued since you did it?

Jay Harris: Yeah. We’ve got the banks to revalue it and yes, it went up. We bought it for 1.75, we probably spent about 300 on it and the bank rebate is at 2.8.

Bernadette Janson: Oh, my gosh.

Jay Harris: It might have gone down due to Covid but it was unreal and I’m loving it.

Bernadette Janson: If you did that on a project, you would think you were seriously struck all but locked up. What I notice is that I talk to people every day in our community and they add enormous amounts onto their family home. It runs under the mat and nobody ever notices it and I believe that’s amazing. The great thing about it is not that you’ve done it in order to sell it but if you ever did need to, then you’d pay tax on that increase equity.

Jay Harris: Yeah, exactly. We are facing renovators and talking about projects that we’ve done but you gotta start. When you start with your first one, you might make 50 grand or 100 grand, and the second you might make 150 to 200 grand, the third one, you might make 3 or 4 hundred grand and so on. It’s one of those things with Australian property, you’ve got to be in it to win it.

Bernadette Janson: And you have to buy in good areas so that’s the other thing.

Jay Harris: A hundred percent and use the knowledge about renovating and reach out to people like us. You and I have been there and done it so we could help other people. There’s nothing I hate more than hearing about disaster stories of the people who bought property too high so there’s no way for them to value it. They bought the property at the peak of the market and they bought something that’s completely renovated so there’s nothing to renovate.

Bernadette Janson: It’s funny because I’m talking about good areas. We have a student who just did a project in Shortland in Newcastle. She bought the property for 285 and she did a quick and dirty makeover and sold it for 430. She cleaned 60 thousand in a couple of months. It’s such a great skill to have.

Jay Harris: It sure is and look at the opportunities you get from that. Within a 12 month period, she made 60 grand and got more equity begun. Yes. That’s half of the next level.

Bernadette: In actual fact, she doesn’t have a job anymore and that’s more than she was being paid when she did have a job. It really surprises me that some of the most unlikely people are really good at this. One look and you would think “No” but little pocket rocket.

Jay Harris: That’s so cool. Isn’t it isn’t it amazing how property and renovating properties can help in so many different areas of your life? You lose your job, thank God I did the renovation so I can live.

A job seeker or what not or you do probably have both, having that confidence that you’ve got the money behind you, it helps you sleep at night.

Bernadette Janson: Amazing. And so what’s next for you?

Jay Harris: Yeah, so we’re living up in Avoca on the Central Coast now. Beautiful little coastal town that I’ve been coming to for holidays for the last 30 years and we fixed the bullet and moved up. We moved up here just before Covid so that was kind of perfect timing “Thank you, thank you, Universe for looking after us”. We’ve just got our eye out for possibly doing something up here. We kind of got out in a particular area on the Central Coast. We’re just gonna play the waiting game for the moment. We’ll just wait for the right time and good opportunity when it arises. You do have to be patient in this game as well. Patience is a hard one for me. I like to get stuff done now, I want to do it now.

Bernadette Janson: Absolutely. Tell me when you’re doing your projects, do you do the carpentry elements yourself?

I do a little bit of it, but not much, only because for me to come out of my business and jump on approach on renovating my own thing for six weeks or eight weeks or three months. I just don’t see the value in that and kind of not supporting clients and serving clients. Now that I’ve got the office renovation business as well as a coaching and mentoring business that I’ve got going as well. I’m really busy but I obviously approach the project manager and all, my wife looks after all those kinds of elements. Also, I’ve got a good group of traders that I’ve been using for the business. They also helped me renovate the house as well so I’ve got a good network.

Bernadette Janson: It’s really interesting that you don’t have to have a builder’s licence to do commercial work, but you do need it for residential.

Jay Harris: Yes, not yet. We probably will have to get a licence in the next year or two but up until now, it hasn’t been required so we’ve been very grateful for that.

Bernadette Janson: I’m glad that you’ve taken that approach because so many people particularly traders cannot see the wood for the trees and they get stuck in doing the reno and neglect their business and just never turn out well. You’ve got to have that income going on the side so you keep up the serviceability.

Jay Harris: Totally. The business pays the mortgage and that gives us the opportunity to do the renovations. You got to keep the bank happy, keep them paid each month. Even if it is of interest only just make sure to take it.

Bernadette Janson: Yeah. So what would your tips be to someone considering doing a renovation on their own home? What would be the three biggest things you would say to them?

Jay Harris: You got to really research and know the market. You have to know what properties are worth, know what a three bedroom house is worth, know what a four bedroom house with a parked car is worth, know what a five bedroom house with a pool in it and a garage is worth. Just do your research and make sure you know the value of all the properties. Spend as long as you need to own domain and real estate.

Talk to a few agents in the area of the place that you want to buy, talk to three or four agents, do that research. You might get on one of the real estate agents, listen and buy a property off market, you never know they might find someone who has desperate needs. If you know the market, you’re ready to go and you’ve got your loan pre-approved. Obviously, I used to be a mortgage broker in a previous lifetime, so I knew how to get more mortgage and the money building. Yeah, in the 2000s and I’m actually going through the global financial crisis when I thought “I’m getting mortgages to pay for my home”. It’s really hard work and it’s not aligned with my values and what I want to do. I wanted to get out there and get on the phone and get my hands dirty.

I guess, the last crisis we had in the world maybe. So, just research, go and jump on those She Renovates Podcasts and get some free information. Go to the school of renovating, connect with Bernadette or connect with me if you want. I’d be happy to have a chat about something I love talking about. Do as much research about the area you want to buy and just make sure you’re buying something that’s undervalued and something that you can add value to.

Bernadette Janson:  Absolutely. It’s interesting because I have a lot of people say to me sometimes there’s no such thing as an “off market” deal. Then, just the other day I was talking to a student in Melbourne, and she and her daughter were on the podcast. They are a really good team. Her daughter and a partner were looking for a property in Woodend, which is a really nice suburb just outside of Melbourne. They couldn’t really find anything, everything was in the eight hundreds of renovators and they weren’t wanting to spend quite that much but they developed relationships with the local agents and one of them called them out on a couple of properties that they weren’t really right.

Then the other day, they picked up an absolute beauty, one that looks like it’s straight out of a storybook, a really gorgeous house, but overgrown and undervalued. As a result of that, they got that for just over six hundred thousand around that market. So I absolutely think that those relationships with your agents are what will hold you in good stead.

Jay Harris: Totally. It also helps with one of your property strategies to flip your house, having that relationship with an agent that’s going to look after you. Who is really gonna work and really work the database to help you sell your property after you’ve done your renovation as well. I know a couple of our properties that we’ve when we’ve gone to sell, we did put it on the market to go to auction, but we had a price in mind that we wanted. We ended up using the agents that managed to get the offer that we wanted before it went to auction. So having that relationship with an agent who is going to go to bat for you and help you try and buy a place before auction but doesn’t go out to the 20, 30, 40 people is really great.

Bernadette Janson: The other thing with the agents that you work with is you have to trust one another. Go and get someone you can trust otherwise you’re often second guessing. I know that if I ask my agent it’s the best that I can get, that if he says, yes, then it’s the truth. He takes his responsibility to his vendor very seriously.

I also know not to expect to be able to get away with insider information when he’s a selling agent because he’s got a responsibility to the vendor. And that’s really who you want to work with, someone that you can trust and has integrity. So until you get another project, it’s all about shop fitting.

Jay Harris Janson: It is, yes, office renovations and coaching and mentoring.

Bernadette Janson: Awesome. Well, that’s excellent. We will include your details in the show notes so if anyone wants to connect with you and can I suggest you give us some before and after (photos) so we can share your expertise with the listeners.

Thanks for coming on and helping me bring the message time that your family home is an asset.

Jay Harris: Thank you for having me, I really appreciate it.

Bernadette Janson: No worries. Take care.

Jay Harris: Cool. Thanks, Bernadette.

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