Tuan Duong is the Principal and Founder of Duo Tax Quantity Surveyors. Having learned early in his investment career the benefits of tax depreciation in property, his passion now is to educate property investors of that same power through his business.
What's in the Episode:
Join us in today’s episode where I’ll be speaking to Duong about his early life and motivations, including his parents encouragement to invest in property. We learn about the Queensland investment
blunder he regrets, the best advice he’s ever received in his journey, and much much more!
Resources and Links:
[00:10:11] ‘If I'm getting this sort of value, and I can't believe how many people don't even know about this’. And I thought, ‘Well, I've got to help others do it. Yeah, why not? Let's unlock the secret to thousands of other investors based in Western Sydney, and probably based all over Australia, like I was, that don't know about this’.
This is Property Investory where we talk to successful property investors to find out more about their stories, mindset and strategies.
I’m Tyrone Shum and in this episode we’re speaking with successful investor and founder of Duo Tax Quantity Surveyors, Tuan Duong. After being unsure of his path early in life, his parents persuaded him into the world of property which led to him purchasing his first property at the young age of 24. Join us as we uncover the story behind his success!
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Tuan Duong started as a self-described ‘one man band’ back in 2015 and encountered bumps along the road, but is now living a very different life thanks to his business skills, and advice from those closest to him.
[00:00:27] I'm the principal and founder of Duo Tax Quantity Surveyors, which is a property tax depreciation expert firm, we specialise purely on advising on property tax depreciation for property investors who want to maximise the amount of tax deductions possible from their investment property. And that's where my journey comes in. I found a lot of value in this, and hence, it's my now lifelong pursuit to help others unlock these tax deductions that I wasn't aware of a long, long time ago.
So what does a typical day look like for him?
[00:01:27] The company has grown from a one man band—I was literally a one man band when I started this business five years ago. And so when you start out, I was mostly looking after trying to grow the business in the sense of sales. Also, the technical know-how.
[00:01:45] I was very limited in what I knew about depreciation, when I had started it was quite a new thing to me, as much as I knew the fundamentals of it, but being able to implement technical data into a system that could be replicated to our customers, in a very big scale, I had to grow the business from there with limited resources in terms of trying to build Excel spreadsheets. And then so the next day would be to find more sales to sustain some traction in terms of financial growth.
DUONG IS ALWAYS AIMING FOR GROWTH IN HIS BUSINESS.
[00:02:23] And so that was my day-to-day running of the business when I first started. And then it became looking for stuff here and there when I could afford it. But nowadays, we've got a sort of sales support team that helps clients and customers get the most out of what our product offers. So that means I'm training staff in terms of sales, but also technical. And I'm also always trying to bring onboard new staff to join our business, as I'm always trying to be in a growth phase, we're very much in a growth phase of our business.
[00:03:00] And so always looking for ways to build efficiencies as well into our day-to-day activities. And so that forms most of my day to day, so relatively different to what it was five years ago. But I guess that's the journey of every business owner, evolving to somebody that you're doing the things that you love to do. And the things that you can't do or you find too hard, like bookkeeping, you outsource that. Thank God for that!
To get to know Duong on a deeper level, I ask him to delve into his personal history, starting with where he grew up.
[00:04:14] I'm a second generation Australian. Mum and Dad had left Vietnam by boat back in 1984. And so by 1986, they had made their way to Australia, and settled here. And I was born in Auburn, back in 1986, which brings me to 34 years young this year. I grew up most of my life in Cabramatta, which is one of the western suburbs of Sydney.
[00:04:48] And so through there, I went to school at a local Catholic school, and I then eventually moved further out west to a suburb called Bonnyrigg where I schooled at another Catholic high school, and that was my journey. And then from there sort of got brought up in the Western Sydney area. I saw a lot of geographical change, for one, but also the economy just thrived from stride to stride over the course of 30 years before I moved down to the area where I'm based now, in the Inner West of Sydney.
DUONG HAS ALWAYS BASED HIMSELF IN THE WESTERN SYDNEY AREA.
Duong has remained in the Western Sydney area throughout his life, both personally and professionally.
[00:06:31] But certainly it grew and taught me a lot about the demographic of that area that’s ever changing. And I think still today I'm very associated with Western Sydney; I'm in the running for the Western Sydney awards for Business Excellence for two categories. So I'm very much aware of what it is and what's happening in that area, especially with things like the airport, and the ever changing demographic, and it's just expanding at an increasingly rapid rate. And to be honest, I invest in that area for that very reason. I hold property in the West of Sydney.
He describes his life throughout high school and into his years at university.
[00:06:44] In high school, I very much had an interest in business and economics studies, that was where I was very much interested in trying to grow myself and understand that side of things. And the reason for that is my mum and dad being first generation here, they are Vietnamese, they ended up starting up Vietnamese restaurants for themselves. So they were always working for themselves for most of my young life.
[00:07:19] And so I really looked up to them for that, which meant that going from there, I ended up moving into uni. Once I finished school, I went to study finance and mathematics, which was something I thought that I would have interest in, but not to be. And then the funny thing about that is, I hear now the first pick is not always the end pick. And I ended up dropping out of university to work with Mum. And so I said, you know what, I wasn't excited about uni.
‘THE FIRST PICK IS NOT ALWAYS THE END PICK’
[00:07:53] I went to work with Mum at our family restaurant for a short period when we started doing fit outs. And that's where I came across someone that was undertaking construction or project management of our fit out. And I said, ‘what are you studying?’ He said to me, ‘Construction management’. And so I thought, ‘Oh, this is amazing. I can't believe the diversity in his role, and how much of an interesting role he had to play in the fit out and construction process of that’.
This was a pivotal moment for Duong.
[00:08:25] And I thought, ‘Well, you know what, that’s something I wouldn't mind doing’. So I took that up as my journey to go into construction management. And that's where I sort of got my background to become a quantity surveyor, because part of that degree allows you to be a quantity surveyor. And I had, I would say, limited interest in quantity surveying—it wasn't the most exciting subject at uni.
[00:08:46] But what I found at a later stage throughout life is when I came across investing in property, which my mum and dad always sort of pushed me towards, and thank God you know, it’s always someone that gives you a shove in the back and says, ‘you’ve got to get going, you can't be spending your money at the club, at the pub or whatever it might be having a good time with your friends, it can only take you so far.’
DUONG IS GRATEFUL FOR HIS PARENTS PUSHING HIM INTO SAVING FOR PROPERTY.
[00:09:11] So that's when I started investing in property and my accountant said to me, ‘Well Tuan, investing in property means you should be able to claim depreciation. And that means going to see a quantity surveyor to help you get the most out of your rental property and claim some depreciation’. I said, ‘Well, I studied quantity surveying in school’. And he said, ’Well, no, you've got to actually go see a qualified quantity surveyor that's got the expertise in providing this type of advice that gives me, the accountant, a report to say this is how much you can claim in depreciation, which then in turn is a tax deduction’.
[00:09:47] And that was lowering my taxable income each financial year up to 40 years on my brand new townhouse that I bought, and for me it was like, ‘This is a no brainer’. I can't believe how much value I was getting out of it. I mean, I was on a basic $60,000 income 10 years ago, when I graduated, I thought, ‘I've got this rental property. I've got a $15,000 tax deduction in the first year’. And it was like a $6,000, $7,000 refund.
[00:10:16] I just could not believe it. And then that was a no brainer. Like, ‘If I'm getting this sort of value, and I can't believe how many people don't even know about this’. And I thought, ‘Well, I've got to go help others do it. Yeah, why not? Let's unlock the secret to thousands of other investors based in Western Sydney, and probably based all over Australia, like I was, that don't know about this’. It's been rewarding to meet that many people that I'm able to help.
**PROPERTY INVESTING JOURNEY**
Duong started on the construction side of things before he eventually came around to investing.
[00:11:29] University... didn’t quite finish. I ended up working with Mum where she was constructing a new restaurant, this was an age of probably, I think I would have been 21 [or] 22 at that time. Then I went to a four year degree to study construction. I graduated, I worked in construction for five years or four years post grad, I had a couple of years under my belt while I was studying as well.
AFTER DROPPING OUT OF UNI, DUONG WORKED WITH HIS MUM BEFORE DECIDING ONCE AGAIN TO STUDY. THIS TIME HE WENT INTO CONSTRUCTION.
[00:11:54] So that's where I was in construction, but I wasn't on the quantity surveying side and quantity surveying is, in the traditional sense, being a building economist. And that means that quantity surveyors understand the metrics of construction when it comes to dollars and cents. They're like the accountants of the construction world.
[00:12:14] So they're independently advising the bank, the Council, the tax office, on what exactly is the construction cost for its certain type of building. Every nut and bolt, working out square metres of concrete, plasterboard, the labour, manpower required, and what that means in terms of dollars and cents for a construction project. And that's what a quantity surveyor would do to provide that independent advice, whether you are a developer or whatnot.
He considered putting his money towards his biggest passion at the time, until a talk with his family changed everything.
[00:12:39] So when I was growing up, I was doing construction, civil construction, that was building roads, bridges, that sort of work, post grad. And after about four years, it was in that period where I worked with Mum to get into the construction degree. But then while I was working, I then saved up enough money to buy my first investment property.
[00:13:01] Of course, at that time, I'm such a big passionate person when it comes to cars and things like that. But Mum and Dad said, ‘No, this is not the way. You've got to grow wealth’. And the way to grow wealth—from what they knew, because they were first generation settlers, migrants—they knew that in Australia, property just had its merits when it came to wanting to build wealth. They didn't know about shares, I never really got inspired or really educated about shares and how to buy shares and where to put your money, but property was one of those things and it still is today.
[00:13:38] I've seen lots of migrants and their children go ahead and buy property and even their parents are buying property. Like my parents, they didn't have a lot of money to buy a property or invest in property, but they knew that, and it's something that they always wanted for their kids.
Duong describes when he first moved into investing in property with help from his parents.
[00:13:53] So my first investment property, they chipped in a bit, and I chipped in a bit to buy my first rental property. And that's when it became evident to me that this is something you need to do, you need to have. So once I organised the report, bought a property organiser report, it was a no brainer.
[00:14:11] I decided that you know what, this is really important. Like, I can't believe how much value this adds. So then I… to be honest with you, it's not that easy starting out. You always have a bit of an ooh and aah moment, ‘Should I? Could I? What if?’ Every year as a professional, as most people out there listening know, in your professional career, if you're in that career, you've always got this opportunity to increase your wealth by, you know, that pay rise and that little bit more.
[00:14:42] And that always helped keep me back. It always kept me back from having that drive to leave work and say, ‘You know what, I need to take initiative here and start my business if I'm really driven to do so’.
When he quit his job in construction engineering, he began to work harder than ever.
DUONG TOOK A LEAP OF FAITH AND QUIT HIS JOB IN ORDER TO PUT EVERYTHING INTO HIS BUSINESS.
[00:14:55] And so that was at the age of, I would say, 26, I think it was 25 [or] 26, that I bought my property, my first property at 25 [or] 26, which was about $400,000. And it was a Western Suburbs townhouse. It was brand new. And then from there, it took me about two and a half years to really say, ‘You know what, I'm gonna do it’. And so I had a big holiday one time with a couple of mates, came back and said, ‘That's it, I've got to leave’.
[00:15:22] And I was at a good place in my career, but two years of oohing and aahing, you know, wondering, I put that curiosity to rest. And I took that leap of faith, and I decided to fly solo, as they say, and never looked back. But once I started though, I resigned from my construction engineering role. I then went into a quantity surveying firm. And there I actually said to them, ‘Look, I'm going to work for you for free. I just want to work, I just want experience’.
[00:15:56] And so I worked there for a period of, I think, just over 12 months. And I worked for two other employers at the same time. So I was employed in three different jobs in three different quantity surveying jobs. I work for someone on the weekdays, I work for another person, like doing contract work, on the weeknights, and on the weekends, I would be out doing inspection for tax depreciation with one other employer. So I was keen, to say the least. So that's where after 12 months, I said, ‘You know what, I really am eager to start.’
Duong remembers the time he was just starting out in his business, when he was working from the study in his parents house.
[00:16:23] The market was so hot back in 2015. I knew I just had to get out there and meet investors. I didn’t know how. I did what they call a survey, I decided to do a bit of a bit of R&D [research and development], if you can call it that. I asked my personal accountant, who was a guy sort of local to me in Canley Heights. I said, ‘Would you refer me to clients if I started doing tax depreciation?’ He said, ‘Of course I would’. And that was, for me, enough for me to say, ‘I'm gonna give it a crack’.
[00:17:05] So that's how it started for me. And that was back, five years ago, so I would have been 28 when I started. So there were a few years there of oohing and aahing, and then about 14 months of career work inside a couple of quantity surveying firms. And then that's when I started, at the age of 28, to start my business. Now, my business was not all that glorious, it was started in my parents’ house. So they had a little study and that's where I sort of started up.
ALL YOU NEED TO START UP IS A TELEPHONE.
[00:17:40] And I'm sure a lot of people can resonate when they're listening to this podcast, working from home thinking, ‘Wow, this is exactly the type of office you can start in.’ You don't need anything more special than this. You just need a telephone. And I remember I created a business card. And I designed it myself, because I was quite savvy with AutoCAD and being able to use Adobe software.
[00:18:02] So I created a business card, I thought it was quite, you know, beautiful. And I said, ‘I need a landline and make it look professional’. So I said to my mum, ‘Mum, do you need that fax line that we have at home?’ And she goes, ‘No, no, it's all yours, you can go for it.’
With that, Duong was up and running.
[00:18:15] So I switched that backslide to a landline. And then I put it into the card. And that became my landline for the business and with my phone number as well. And then off I went into some networking events that some friends told me about and I just started selling. You wouldn't believe when you start, the amount of people that you don't know will give you a chance in life. There are so many of them out there that are just willing to give you a chance, if you can just be honest with them.
[00:18:46] I don't know everything, but I’m making a start. And it's a very important thing. Because you know, it's always that fear of like, ‘Oh, am I good enough? Do I really know what I'm doing?’ Just start, you know, and people will have faith in you. And you will make mistakes, you know, there's going to be reports that don't seem quite right. And the accountant has to come back and tell you this is not right. I've had a lot of that feedback over the years, and even today, I prepare reports.
[00:19:13] And there's always someone critiquing my reports that are really, really interested in the way it looks or the way it presents. And they say, ‘Oh, would be nice if you had this, if we had that’. And so it's an ever changing process, and you're always growing and that's what helps perfect what you do. And when you only do tax depreciation, you become really, really good at it, especially on the scale that we do it now.
Duong’s personality and characteristics helped him advance in his career.
[00:20:05] I think it's very suited to my characteristics, because I've never been a salesman. I've been a technician all my life when it comes to construction, cost estimation, working as an engineer… and so having to provide a product that you don't have to truly dig deep to sell, it almost sells itself, it's so natural for my character. And so I felt inclined that this is something that I could actually confidently do without much trouble.
DUONG BELIEVES IN THE VALUE OF HIS PRODUCT, THEREFORE IT IS EASY FOR HIM TO SELL.
[00:20:38] And today, as much as I train staff to sell, I tell them, ‘You don't need to sell yourself, it's almost like you just tell them—inform them—of how much value you can offer them in terms of a product. And that will resonate through to them, and it should sell itself in that regard’. So it's not like you're gonna have to sell pens. So very different to a Jordan Belfort sort of spec of sales.
He had a very hardworking family. I asked him where his drive came from, seeing as in his parents’ generation people, especially immigrants, weren’t as well-educated as they are today.
[00:22:34] I wrote an article about this not long ago, especially for some of the awards that we've been finalists and listed for. It talks about where the drive came from, and it resonates with me, because when my parents came here, education was so limited. The only thing that they know is what others are doing. And when I look at my closest aunties and uncles, they were all trying to save money, buy property.
[00:23:06] And for Mum and Dad, it wasn't actually buying property, they bought a rental property years ago. And I think it was back in the early 2000s. And they had not done very well out of that rental property. So if anything, it was probably a little bit discouraging for them on that first rental property they had ever bought. And of course, interest rates are high, and all those sort of things that factored into it, it wasn't going their way, and then came 2008 [or] 2009, interest rates started to drop.
[00:23:34] And this is where my mum and dad said, ‘Well, you know, let's start buying property for our kids.’ So their business was successful to some extent, but not enough for them to have a thriving portfolio of properties. But it was always a passion for them, because they knew that everyone else was doing it, so there must be something with this that people are doing, that they're doing right.
Duong’s parents took the plunge, and helped his sister do the same.
[00:23:58] And it could come down to where she bought. I mean, it wasn't the best, or most glamorous suburb that she bought her first rental property. But when she bought, she helped my sister with the first property that my sister bought, it was in a thriving area, known as Canley Heights. And at that time, interest rates were low. And it was just a great place to start. And I think that's when, for us, we were surrounded by talks of property.
DUONG WAS IMMERSED IN THE WORLD OF PROPERTY.
[00:24:27] Everyone's talking about property in late 2000, you know, close to 2010. And when I bought my first property in 2010, that's when it became a thing, and it just sort of was filling our space when it came to it, and friends were buying, you know, and I think it's all to do with the affordability of property, too, being interest rates were lower than usual. And of course, the flexibility of banks, I think at that time was vastly different to the era before that. So in terms of background, it wasn't something that we had a lot of experience in.
Despite his lack of experience, Duong kept it up and found that the more he invested the easier it became.
[00:25:09] But for me, it's been a bit of a learning curve and being able to meet people, even like yourself, Tyrone, that helps, because then you start listening to people. I had a lot of people in our family that were mortgage brokers, our family had a few establishments in businesses there. And it was always resonating about property and how easy it is to lend money at that time. And it only got easier, if anything, for the most part, right. And that's where my journey started.
He shares his thoughts and experiences when it comes to renting versus buying.
[00:26:05] I've got this mentality of Mum and Dad, who, as much as they rented when they first settled in Australia, from there, they've always bought the houses they live in. They’ve always bought and had this idealism of ‘renting is bad’. But there's always an economy for both. But based on that ideology, I realised that for myself, now, when I buy, even my own businesses, I buy the property premises that I occupy the spacing.
[00:26:35] So it's almost ingrained in us that it's the way we should be, and now, every time I move out of an office, this is our third office that we've grown into, we've bought every office that that we've occupied, and all because I've got this stigma that you need to owner occupy the premises. And now we accumulate these commercial properties in the process. Not a bad thing at all.
Duong bought his first property at the age of 24.
[00:27:37] The first property wasn't through a buyer's agent, I wasn't that fortunate. It was sort of like, ‘We know the area’. It's always that, isn’t it? Your property when you start out, you buy somewhere where you're comfortable. And you think there's real good aspects to it. And there's a real opportunity for capital growth.
[00:27:53] You think this is a thriving area. The demand was crazy in the area of Canley Heights. I'm not sure the listeners know where Canley Heights is. But definitely, it's a very Asian centric community similar to Cabramatta. But it's a little bit more upmarket, in terms of, it has a little bit more space, not as dense, but really thriving restaurants at that time. If you go there today it's just impossible to drive through Canley Vale Road. It's a thriving, thriving little area.
[00:28:28] And so it ticked all the boxes for us, because we were so familiar with the area we knew it was getting busy, had great restaurants, people wanted to be there, daytime, evenings. And so it was just an amazing place to invest in. So I bought the first investment property in Canley Heights back in 2010. And that's when I started having to delve into, you know, what are things that you can claim, what are the things you can't claim, expenses, what's depreciable.
THE BEST ADVICE HE EVER RECEIVED WAS TO GET AN ACCOUNTANT.
[00:29:00] And that's the advice I started getting with an accountant, it was the first time I ever had to engage an accountant. Years before that I used to get my accounting mate to sit next to me and try to tick and flick some boxes on my e-tax, and try to do a tax return. But I think at that stage, once you invest in your first property, that's when it's such good value. And thank God that I did, and obviously through the advice of Mum and Dad, and even my sister who had bought a property the year before, and she said, ‘Look, you need to go see an accountant’. So I did. And that was the best advice ever.
He expands on how this advice has helped him thrive.
[00:29:31] For me it's a no brainer, whatever that $150 or $250 worth of tax expense, on seeing a tax agent, it provided immense value because then you learn about depreciation, you learned about council rates, you learned about what you can claim on water rates, usage, and things like that. So, things like that. I was very blessed to start that journey. And from 2010 I didn't buy any more property until 2015 when I started my business, and I wasn't very savvy and obviously in that five years I understood capital growth and then I refinanced my house, and my first rental property to buy my second.
[00:30:09] And this is where I have to sort of slow down to explain that the second property I bought was through a more of a project marketing company, I bought an apartment in Queensland. And now looking back, it's probably one of my downfalls of investing in property. And I was taken to a property seminar, and I was sold a dream. I'm sure many people out there can resonate with this. And so I made a bit of a mistake where I bought that property in 2015. And I sold that property in 2019. At a bit of a loss.
[00:30:48] I sold it for exactly what I bought it for, but of course, there's things like stamp duty that you have to consider, and holding costs over the three years. And that took a couple years to build, but by the time it was built, it was something I just didn't want to let go of. And for other people that bought in the same premises that I knew, they were all about the hold and hold, and see where it goes. But it wasn't for me. For me, I thought, you know what, it's equity that I could release.
SYDNEY HAS ALL THE RIGHT INGREDIENTS FOR GROWTH.
[00:31:18] And I could do better things with. And I ended up doing exactly that. And you've got to make that call sometimes, I think, when you're investing in property, and sort of sitting and holding seems to be easy to do, but truth be told, that money can always be better spent elsewhere. And that's exactly what I did. And I now have a couple of investment properties which I ended up buying in 2019, out West, in areas like Austral, and Jordan Springs, I really truly believe in these areas, because Sydney has all the right recipe for growth.
[00:31:53] And the demand for property and the demand for land in Sydney I feel is ever changing. And out of just the last 12 months, I've seen, I think more than 10% growth in just these areas. And it's taken me almost a year to build growth. And my first investment property was brand new. And so I had this stigma that I want to buy a brand new because of the low maintenance. And in my position of being a business owner, I don't want to be dealing with problems such as you know, mechanical, or whatever it might be, drainage issues.
[00:32:30] So I've just bought brand new properties from the get go. And they seem to be very, very good in terms of having to spend time on it. And having a property manager to manage it without any sort of intervention from me, which is fantastic for me. And having that growth of 12 to 15% over the last 12 months has been amazing. Probably a little bit exaggerated because of, you know, the builders grant now. And everybody's demanding properties that are brand new, especially house and land. It's just crazy.
[00:32:59] But that's not a bad thing. You know, people want to get ahead in these western regions. I grew up out west in Cecil Hills. That’s where I ended up living with Mum and Dad for the latter part of my life being with them. I grew up in Cecil Hills, which is sort of surrounded by Badgerys Creek, Austral. And that's the reason why I've invested there because I really believe that that community around there, they are all about that house and land, owning your own home dream.
[00:33:27] And areas where people are owner occupiers, I think are great for investment because people aspire to live there. And so there's people that want to rent there, they're willing to pay rent to be there. So that's what I found. And for what is a strange economy I finished construction on one of my premises in just this year, around mid-year. And I was able to get tenants there in the first couple of weeks after an occupation certificate was received, which means despite the economic conditions, it's still got huge demand, which is great.
As a young and inexperienced investor, Duong was sold a pipe dream by a project marketing company. His second investment was an apartment in Queensland, pre construction, and unfortunately he had to sell it four years later at a loss.
(0:18) It's probably one of the most significant ones for me. Yeah, it probably was one of my worst investment choices. And because of, you know, purely not being educated, and being sold a dream, you know, directly through this project marketing company, and not knowing what else to do. Probably 2013 [or] 14 maybe, that's when I first put my interest in, before they started construction in 2015 [or] 2016. So 2014 was when I made that decision, but at that time, the property market, if you remember, Tyrone, was really on top, it was right at its peak.
EVERYWHERE YOU TURNED PEOPLE WERE TALKING ABOUT PROPERTY
(1:09) Everywhere you turned people were talking about property. I was receiving emails and letters and everything from everyone, agents, buyer's agents, you know, like, should I buy brand new in sort of small boutique type apartments or units or townhouses? Or should I be buying these dense apartments in sort of Houston, which is where I bought, I bought an apartment in Houston, and it had all the right attributes from what they would sell.
(1:37) But over time, I realised that, you know what, in that amount of time, from 2014-2018, there would have been so many opportunities that I've missed out, and that's the opportunity cost of making the wrong decision and not being educated or informed. And I think I wish I had known about things, like the Property Investory Podcast, at that time, you know, there were those independent places where you could get advice, and not have to make that mistake. Being educated about that, jumping on property chat was something I've only done in the last few years.
(2:14) And I wish I had known about it much earlier, because everybody on there would talk about it, it was a thing, like people are selling, you know, the dream, and it was the BS dream, you know, and it was very painful because of how much I knew I had to forego with making that decision. And so it's a very big learning curve, that there are places like this where you can learn where to make good choices, and obviously not telling anyone how to make a choice, but gathering as much information as you can, before you make those decisions and go down the wrong road.
Duong tells us about his portfolio and the method behind his location choices.
(3:47) At the current time, I have six properties, all based in Sydney. It's a mixture of commercial and residential, something I just came across because of the necessity of my pathway. But I've been so fortunate with that, investing in commercial properties, because when I had first started the business, my first office was a rental office out of my accountants office, he sub-leased a room and you wouldn't believe it, but I was paying $75 a week for a room in Canley Heights to operate my business.
DUONG WAS FORTUNATE IN FINDING PEOPLE WHO OFFERED TO HELP.
(4:31) So very lean, but very fortunate, to come across people that will allow that and you know, you've gotta start somewhere, it wasn't the most glamorous office, you know, it had a few bug issues. But you know, that's where you start and from there, once we had to vacate that premises based on size and we were growing at that time, I bought my first commercial property in Newington which is based in Sydney and at that time I paid $440,000 for that. And you will be hard pressed to find something that's 10 years old for that price today, that's about 150 square metres.
(5:07) But I was very fortunate to start our office there, our first office, we moved in to do a beautiful renovation. And we've moved out there again, only recently, to move into another office in Homebush, which we're situated in now, which is a beautiful Technology Park next to DFO here in Sydney. But that's where we're based and so you know, it's a mixture of things, buying property for your own purpose, and I've always had that impression that if I bought something, it's my philosophy to ask, 'Would I want to live there myself?'
(5:41) And the answer is yes. If I wanted to go to Jordan Springs, if I wanted to go to Austral, I would actually want to live in these areas. If I want to go to Canley Heights, I'd love to live in those areas. And the same goes for work. Where do I want to work? I think, you know, being in the city is very expensive to buy property there, it's a great place but it's not necessary. People aren't so critical about where you're based these days. And having an office in homebush allows all of my staff who come over from all sorts of areas from Sydney, we congregate here in Homebush, which is where our head office is.
(6:15) And it's a convenient place now that we've got the Westconnex, we've got great tunnelling everywhere, I'm losing track of the amount of tunnels in Sydney and out, but it just means that it adds value to your property because it's reachable, attainable, you can get there. And so it has all the right boxes ticked for what a commercial property should do, and I've always aspired to being in these areas myself. It's a very beautiful sort of precinct we're in now.
DUONG BELIEVES IN BUYING ONLY WHERE YOU WOULD WANT TO LIVE YOURSELF.
(6:45) So yeah, I'm a big believer that you should buy where you would want to be if you believe that it's a great property. And I guess that's a very common thing. Because, you know, even a lot of people I know, I've got clients in Guilford in Sydney. And when I look at their 10 [or] 15 [or] 20 property portfolio, they're all around Guilford. So it's crazy, right? They grow up in Guilford, they buy in Guilford, and they just do so well for themselves, and it's amazing.
Moving on, Duong talks us through one of his pivotal investments in Canley Heights which put everything into perspective for him.
(8:35) I bought that property for $400,000. It's probably worth double that now, the duplex I bought. And so for me, that was an aha moment, like, 'Oh, my God', you know, seeing that purchase. And then I guess, when you first purchase it, you don't think a lot you think, 'Okay, well, I'm new to this, I'm not well versed at this'. But as time goes on, seeing that capital growth, and how little it costs to maintain a property, it's almost self explanatory that, 'Hey, this is a really good vehicle for you to drive wealth'.
(9:10) And that's when it hit me, 'Well, this is it, this is what I've got to do. This is what I've got to aspire to do'. And so, as time went on, I just stopped buying the cars, and I stopped buying the flashy, nice things and started going out less and then realised that, you know, saving money is going to take me a long way. And that's when I decided three or four years later that you know, you gotta keep going. There's other people out there that keep going and you start to learn. Your mortgage broker says, 'Well, you can do this'. And they open up this whole window of opportunity for you to say, it doesn't have to stop. It's not just one property.
A HUGE PERCENTAGE OF AUSTRALIANS ONLY EVER INVEST IN ONE PROPERTY.
(9:44) Because, you know, I would think you could only afford one, you know, and I think the majority of Australian investors today, I think it's a massive percentage of people, they actually only have one investment property throughout their whole life. And so having an opportunity to buy more, it didn't seem realistic, but then as I went through life, it made me think, 'Okay, well, you can have more than one, you can have two, you know, three'. And now I've seen other clients that do it, and I think, 'Wow, amazing'.
(10:19) Not that we get it very often, we don't get a lot of clients that are returned customers that come by depreciation schedules for the second, third, fourth time. But there are people out there that do have that. And so it's definitely possible, you know, and it's nice to see other people doing it because it helps you break through, you know, when you see other people in some pattern, you think, 'Well, you know what, if they can do it, I can do it too'. And that's a great mentality to have, I think.
Duong goes on to explain his strategy and the motivations behind his investment career.
(12:15) Capital growth is important, because you know, gaining capital is what you want to do in life to free yourself, at some stage for retirement. And so now at a mature stage in investing in property, and being a business owner, and obviously, at the age of 34, I'm starting to think about the future, right? So future planning. And for me, property is a vehicle that's going to help me grow wealth, and eventually I see it as a way to build a portfolio.
(12:43) And hopefully I can pay down debt. If I can help over time to debt-recycle my properties, and use and leverage property to start paying each other off, and have these properties that hopefully, at some stage at the retirement age of 65 [or] 67, I have a couple of unencumbered properties that will be the vehicle of retirement for me and not have to rely on the pension and things like that.
HIS MOTIVATION IS TO BE FREE IN HIS RETIREMENT.
(13:08) I wanted to be self-sustaining, and eventually have a vehicle of 3 [or] 4 [or] 5 [or] 6 properties, hopefully unencumbered, and they will then be the vehicle to help me through my retirement phase of life. So really, for me, that's the driving factor. That's the reason why I do it. It's great, because I get to understand it, I talk to a lot of people, day in, day out about property, we've got buyer's agents that work with us, we've got sales agents, real estate professionals.
(13:37) We've got tax agents that work with us, and they're always talking about it, about this vehicle. And so for me, it's a no brainer. If it works for tens of thousands of people, it must work. So for me, it's a continuous ongoing process of learning about property. Where's a good place to buy? You know, where should I invest my money? How am I going to do that at the most accelerated rate with a balance of being able to lend as well?
(14:03) Because now with, you know, tightening restrictions on lending, we've got to balance it out in terms of, you know, cash flow, and having that positive cash flow throughout all your properties to not sort of subject yourself to, I guess, being sort of lent out and not being able to borrow more money to continue your journey. So it's really important.
Aside from buying newly built properties that he could see himself inhabiting, what other strategies has Duong implemented to get where he is today?
(14:49) For me, you know, there are areas for example, where I've bought in towards Jordan Springs or in Austral. There are properties that are like Austral, you're trying to buy a property that is probably one of the most affordable ones in the area, things like Liverpool, you know, you've got good suburbs like Milton Grange, you know, Leppington, Cecil Hills, Elizabeth Hills, these are really well to do suburbs, you know, we're talking, you know, averages are $1.2 million to $1.3 million south.
(15:29) And if you're talking about driving from these great suburbs, 5-10 minutes to get to Austral, which is a thriving subdivision area, which is just full of new developments. And you think, 'Well, maybe there's an oversupply'. But then you look at the pricing implied, if they're starting around $500,000-$600,000, you think, 'Well, it has all that room to grow'. And for me, if I have that leverage to grow that much, similar to things like Kellyville, you know, Kellyville is a surrounding suburb to those areas, up in the Northwest region.
(16:00) And if you can sort of leverage off that with cheaper, affordable lots there, you want to do that, because it's got that room to get to that $1.2 million or $1.1 million price range. And that's where you want to be in 5-10 years time. So this is where my philosophy is trying to identify suburbs that are really well to do, people aspire to living there, checking out the vacancy rates, making sure that there's a high owner-occupier rate there, if most people are owner occupier there, then you want to be around these suburbs.
FOCUS ON THE SUBURBS WITH HIGH OWNER-OCCUPIER RATES.
(16:34) And that, for me, is really critical. And that's why, you know, I've chosen some of the suburbs I have. And to balance that off with, I also like to invest in places where I think, you know, because I think rental yields are really important. So having that positive cash flow is important. And for what I realised when I first purchased a commercial property is that it drives so much yield, you know, as much as I bought the premises in my personal, he was renting from the company, the company was renting the property off my trust.
(17:08) And that would allow me to yield strong cash flow, because the amount of yield you get in commercial is crazy. I mean, for a $400,000 office, you could get something like $45,000 worth of rent a year. And that's what I'm getting at this stage now that I've rented out the old office and with the new tenants, which is amazing, which is exactly what you want to do, you want to be heavily positive, geared where you can.
(17:34) And not everyone is able to do that, because the price of housing in Sydney is maybe expensive, but there are pockets like I've seen thousands of my clients do. A lot of our clients are now moving out of Sydney, they're not buying in Sydney any more than buying in good places like Tasmania, with strong growth attributes, they're buying in places that are sort of South and Southeast and even North, the Kippa-ring area in Queensland, and then they're buying in these areas because of positive cash flow.
(18:01) So it's a good balance between capital growth, what you can afford, and not sort of, you know, shooting yourself in the foot, but balancing out with these cheaper properties that have good positive growth, and also have good sort of positive yield. So you know, you get some strong rental yield in these areas, make sure that you're going to get good returns, to then help you sustain more properties, because that's what it's all about. So having I think a good team is really important to do.
Being more relaxed in his younger years, Duong eventually realised he wanted to get serious about his life and investment career. He shares the resources he utilised to improve his success.
(20:26) I started my journey out of business because of purely wanting to start a business in property. I think, for me, that ignition came from people like Napoleon Hill, I'm not sure if people know. But 'Think and Grow Rich' was a really important fundamental for me. Because I didn't have that mindset. I was very blase about life. Ten or more so years ago, I was very casual about how things should be, how I wanted to set my life to be.
(21:01) And so then when you start taking an interest in yourself and realise that, 'You know what, I can't be like this, I've got to do something for myself'. And I want to have a purpose not just in my personal career, but you know, spiritually as well, like you want more from yourself. And then you listen to these people like Napoleon Hill and talk about these things, it is amazing, because it can transform you as a person. So those places are a great place to start, especially if you're someone like me that found it very difficult to break through and find out your calling.
(21:37) And I did find that very tricky. So people like Napoleon Hill, Les Brown is an amazing speaker, I love Les Brown, because he's just awesome value and awesome energy. And having those people when you start out is amazing. But as you progress, I think as a property investor, when I started becoming a business owner and a good property investor, I needed to leverage off knowledge, people with good information. And the best way I found to do that was to go to places where they would educate you.
CHOOSING YOUR RESOURCES WISELY IS IMPORTANT.
(22:12) So not going to these project marketing type environments, but more so going to, you know, accounting firms, they would host property events. And if you could go to these types of venues and events, you learn a lot, because all the information that you can gather from these places, they are very objective. And it's straight to the point, very informational. They're talking about the latest market data, what's happening in Perth, Sydney, Melbourne, what suburbs are great.
(22:49) And they tell you about the fundamentals, I remember going to one where you know, I went in there and you know, as a Vietnamese person, I understand the Melbourne market and the Vietnamese Melbourne market very well. And they were doing an event in the city from a property expert, but also an accounting expert. They were talking about their own journeys and why they liked buying in places like Sunshine, Footscray. And they are well to do suburbs, and had you bought those properties two or three years ago, when I was in the seminars, you would also do very well.
(23:21) So for me, it's having a very good team that's around you, that gives you the advice you want and you need. And it's always very objective advice, you know, unbiased, and having that team of, you know, legal mortgage brokers that want the best for you. And that's where you want to reach out to as many people as you can to get the right advice. And where do you find these great mortgage brokers, the ones that partner up with these accounting firms, these property experts, and they go to places and then educate and all they do is educate.
(23:53) And that's where I've learned a lot of my lessons, is that I go to places and I never sell, I never want to sell anything I do, all I do is I educate people about legislation. This is what the legislation or the tax rulings allow you to do as a property investor. And if I can interpret it to you and make you a better property investor, you trust me to do what is right for you. And I think that's really important that everybody out there as property investors, find that for themselves, go out there, run the same journey, go through the same journey of finding a great team to surround them.
(25:22) So along your journey as well, do you have any particular mentors that you actually worked with over this period of time?
(25:31) In terms of business wise, I haven't had a lot of mentors, and I am very much a person that wings things. It's strange enough to say, but I've always had people advise me, I've got a great group of mates that are in business, and they become my mentors, per se. And there's a lot of people that are ahead of me that have been running their businesses, but I've started just going on my own journey. And, you know, I've tried to go down that path of mentors, but it's not something for me, because I think that I don't know what's best, and nobody knows what's best for you. Right? When it comes to mentorship.
(26:15) But, you know, I think people mentor you in their own way, you don't have to exactly have one mentor, or have someone ongoing, but you know, catching up with someone, they become a mentor, you learn so much from them. And that same goes for me when it comes to property investing. The best mentors are the people that are doing it themselves, they're living the dream, right?
(26:36) They're there, they're getting into this, they're in there, they're stuck into it, they're always trying to leverage the next property, find out what to do, and so I have a host of people around me, there's a quite a few people around me that invest in property and have a diversified portfolio. And I'm always talking to them about what they are doing in their lending side of things, their legal side of things, their structures, tax accountants? Having these people as friends, or just people with a really common interest in property, and that might be tax related or legal related, they will help you a great deal.
‘KNOWLEDGE IS POWER’ APPLIES TO PROPERTY TOO.
(27:20) And so, for me, it's being able to meet clients on a day to day basis. And then like people who are my clients, they're teaching me more about property than I am telling them about property. And that for me means that I can leverage off the knowledge, and having more knowledge is more power, as you say, Tyrone, so for me, that's really important.
(27:41) And the same thing goes when you are looking for people that you're trying to walk, you know, this journey, there is no better thing to do than to go find someone that's already walked that journey, the one that you want to take. And not to say that that's the right journey, but having an understanding of what they're going through, it gives you a great sort of baseline as to where you should go and how you should, and what sort of journey you want to take.
(28:08) So I think these events and these places of gathering are a bit hard these days, but you know, it is all online, online is a great place to start. And of course, like if anyone wants to reach out I'm more than happy to share some of these places I go to as an advisor but I go there as a property investor as well.
(28:27) And I get to listen, and I'm always learning about you know, the statistics of where people are buying, you know, what percentage of vacancy rate is in this suburb at this time, what makes it the best suburb, and like there's nothing in it for these guys. Well to do sort of property buyers agents or accountants and they live in that you know, living that dream and that journey and I'm just getting value out of it and I'm more than happy to share it with you guys out there who might be interested.
In retrospect, what would Duong say to himself if he could go back ten years?
(29:12) One thing that I was always very conscious about, and subconsciously always thinking about was you know, I was always concerned about what everybody was worried about with me. Like everyone wants to know, 'Okay, Tuan, are you doing well enough? Are you doing this enough?' There was a lot of pressure, there's always pressure in growing up, you know, thinking, 'Are you doing the right things? Ticking the right boxes in life?'
(29:35) So I think if I could go back to a 10 year younger me, I would tell him, 'Just care less, worry about your own journey and stop looking elsewhere. Focus on the road ahead and doing what you love the most'. And fortunately for me, I got to see that, 10 years ago at 24 [or] 25, by the time I was 26, and worrying about my own thing, living my own life, I then came across things that I thought I was passionate about, that resonated with me. And that's tax depreciation.
TAX DEPRECIATION ISN'T JUST ABOUT THE LUMP SUM.
(30:12) As basic as it sounds, it just resonated with me, it's something that I couldn't believe how much value it added to my life. Imagine you're talking about a $6,000 refund. It's not about that, you know, it's not about this lump sum, it's about what $6,000 means for somebody, that's more than $100 a week, in a year. I mean, having $100 extra a week, every year is going to drive massive differences in people's lives, whether it's to pay bills, whether it's to save for the next investment property for the next deposit.
(30:48) Whether it's to, you know, splurge and take your family on a holiday, I mean, that's the power of what I do, if I can help people unlock that knowledge of, 'Wow, I've got this extra money I can go so much further with it in my personal life, family life, financially'. Great, that's what it should mean for you. And that's the power of what the ATO is providing here. And if I can share this with more investors, and this is where I go on talks, and I share on, you know, properties, sort of investing seminars and talk about depreciation, and people can resonate, and that's great. I'm doing my part.
Equipped with the knowledge he has now, what's on the cards for Duong in the future?
(31:37) So the next five years, we're on a very interesting journey. Duo Tax Quantity Surveyors is now going to expand to also do Property Valuation. So the business is going to take them to that sort of avenue. And so we're going to do property valuations as a Duo Tax arm. And so that's another very interesting part of our business that we're going to be looking into.
(32:04) But on top of that, what I want to do personally, for my investing journey is start to look at how to not really expand my portfolio, I think I've got this idea that with some planning involved, if I can start paying down some of these debts over time, in the next five years to consolidate some of that debt, and look at, you know, longer term vision of trying to reduce debt, and then we can really be able to scale the rate closer to that retirement sort of goal. And that to me is important.
IT’S NOT JUST ABOUT ACCRUING LOTS AND LOTS OF PROPERTIES.
(32:45) And so it's not always about accruing lots and lots of lots of properties. For me, I have something that's manageable, properties that I think are going to perform well, and has a good balance of debt to sort of loan, and for me, I want that balance to have that passive income, that rental income that I'm getting from all these properties, by reducing some of that debt, but also have some of that capital growth opportunity.
(33:16) If I could, I would then expand my portfolio within reason and manage that cash flow. So it doesn't affect my lending too much. So that's for me in the next five years is going to be really critical. So not so much about expansion, but I think some debt consolidation for me, and I'm sure everyone has their own journey. But for me, that's where I'm sitting. I sound like an old man already.
Duong has a well thought out plan for the future, but has he always had a plan? I ask how much of his success is due to skill, intelligence and hard work, and how much is down to luck.
(34:20) I think there's always a degree of fortune, and luck, per se, but I think you know, I was very fortunate to have met, or been a part of, I think at that time, the fitting out of my mum's restaurant. I think I was very lucky to come across someone like that, to then say, 'Oh, you know what, like construction is where I want to be, I want to be construction'.
(34:48) And so part of that, I love numbers, and falling into construction, I was in estimating. And I was estimating to price work for you know for projects and road works or bridges and things like that. So it's very interesting. But then as I evolved, and I was more well versed, I realised that you know, property was so important as an arm. And here I am, had a construction degree experience in construction, and then applying that into property to drive wealth.
(35:22) I thought it was just, it was beautiful, like, I couldn't believe there was property tax, and now construction, all entangled into one providing advice on all fronts. And it's been a blessing. And when it comes to skill, you know what, being an engineer, you don't have a choice but to be very good at spreadsheets and crunching numbers. So I was, you know, being in the construction engineering role it was natural to me to develop the tax depreciation software internally.
HIS BUSINESS WAS DEVELOPED THROUGH PERSONAL SKILL.
(35:55) So it's all developed in house here at Duo Tax Quantity Surveyors, I was blessed to be able to prepare that, you know, I had the skill set to start a business out of it. I was a spreadsheet master. So my CRM here, and Duo Tax was built on spreadsheets through Google Sheets, with five or six employees using the same software. So it wasn't until probably the last three years, I was using that for a couple of years before the system just shut it off, it just didn't work anymore.
(36:27) Google had to call me and say, 'Hey, you're running a business out of a Google Sheet. I think this is not built for you'. And so we've gone on to then develop other software, things like Salesforce to be implemented into our office. And so you know, it's part of a journey, right? You're always learning and to me, yes, there is a degree of luck.
(36:46) Everybody needs a degree of fortune and luck. But the rest, unfortunately, sorry to say, listeners, but yeah, if you want something so bad, you've got to work for it. And it's all hard work. And the amount of cold calling and door to door sales I've had to do to accountants, and real estate agents is what was really important to get me ahead, because it's, you know, if you want things to grow that fast, you just got to go and get it.
(37:25) But one of the things I always preach in the office is, if you do the things that others don't, you'll achieve the things that others won't, I think it's very important. So you're going to do something very special, unique and do the hard yards, I think, and that's what I really put it down to, doing the things that others don't is that you search, you know, and you search and you ask, and if you don't ask, the answer is always, always no.
YOU’LL BE SURPRISED AT THE AMOUNT OF STRANGERS WHO WILL HELP YOU OUT IN LIFE.
(37:52) So it's very important to go out there and learn, whether it's business or investing. If you don't ask you don't know. And it's always good to ask. I find that now, there's more people out there that are willing to help versus the people that you already know that will help you. So go out there and find those people. There are great people out there that you don't know yet. And they will give everything to you to help you get ahead.
Thank you so much to Tuan Duong for taking the time to speak with me on Property Investory.
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