On today’s episode, CEO of Bridge to Bricks John Comino joins the series for the first time to share his advice on old versus new property investments and some tips on being a top-down investor.
John Comino, thanks so much for joining the Carpool series with Soho. Great to be here. Thanks Trent. Heard you're a killer on the karaoke, as well. Absolutely. Yeah, you know when you've got a voice like this and a face for radio, you know. Outside of karaoke. You are also the CEO of Bridge to Bricks, buyer's agency. So yeah, tell me a little bit more. I'm intrigued. Yeah, look, I'm a chartered accountant and I had a change of career about two years ago. So I run Bridge to Bricks which is a Sydney-based property buyers agency. Kind of cover all of Sydney and people engage me to help them find, assess and negotiate properties for them. So, you know about two-thirds of what I buy is off the market. Yep. And we assess them and negotiate them so that you don't buy a money pit and you're not overpaying. And we sort of we buy all across Sydney; North, South, East and West but I guess most of my deals, not by design, are probably in the Lower North Shore. Yeah. New versus old. It's bit of a, sometimes, a bit of a heated debate, I kind of feel. What are the advantages of new versus old, or what do you like to invest in? Yeah, look I've bought both but I target old, and so if you're an investor, it's got to be old. A couple of reasons. The first reason is that you can manufacture your own upside, so you can renovate it, you can make it look new, you can make it look a million bucks. But the main reason is back to this idea that, kind of, land as value. So when you're buying real estate, two things are happening. The firstly the land is appreciating and the building is depreciating. So you want to buy something where the building is already depreciated, really. So you want to limit that downward pressure on the price. So all you've got is the land appreciating and a rental stream. So if you can eliminate the downside to that depreciation, that's how you win. A lot of people who bought Off The Plan never had capital growth in, sort of, five to ten years, but that's why, there was all this downward pressure on the price. Gotcha. You're a macro investor. What is that? It's a bit of a, I don't know, interesting kind of title. But what does that actually mean? And what's the philosophy around it? Well, I don't call myself a macro investor, but it's true that I'm a like a top-down guy. So I'm looking at the big themes. So for a top-down investor, I'm looking at kind of three things to get my head around. One is, you've got to understand why real estate works. Why people get wealthy out of real estate and what types of properties they own. So first thing's the why. And the why is sort of that there's a lot of reasons why central banks and that sort of thing, that they ensure that the property prices go up. I mean all the- we're awash with debt in the world, you know. There's debt everywhere and the asset that's holding all the debt together is generally real estate. So if we let the real estate go down in value the debt goes down in value and the banks aren't worth anything. So that's why they always want real estate to go up. So second thing is, you know, when is the right time to buy and that's the other part of being a top-down guy and I think one of the mistakes people make is that because real estate is always expensive, they're always saying ‘oh you know, there's going to be a crash around the corner, now's not the right time' but real estate's always expensive and so I've got a couple of different ways of looking at whether or not a property's expensive. One of them is pricing real estate in gold which is a little bit unique. But the way I look at it is, real estate's not that expensive at the moment compared to say, the early 00's. The (third) thing is, you know, where to buy. So that's the other top-down approach, where to buy. You're kind of looking at demographics. And you're also looking at infrastructure and those sorts of things. I mean I'm the most boring investor out there. I want to invest in tried-and-true places, but I'm aware of where the new investments are going and, yeah, that's sort of, those three things, why, if it's expensive, and where to buy. Make me a top-down investor, I guess.
