Property Investory
Giles Hills - Small Town Farm Boy to Successful Sydney Investor.
December 20, 2020
Giles Hill is a successful property investor and entrepreneur whose business focuses on assisting clients in all aspects of property from renovation strategies to long term buy and hold. Originally brought up in a small English village with very little, Hill found a taste for the finer things in life as a young man, and realised half way through studying to be a teacher that he could make money faster through property investment.
Join us in this episode as we learn how Hill, despite a lack of support, climbed his way from farm life in England to investing in property overseas. We learn what sparked his motivations to pursue property, how he got extremely lucky on his first investment as a young man, and what happened when his luck turned the other way.

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Transcript:
Giles Hill:
(14:58) What happened to me is because I didn't really have very much as a child, I kind of created this yearning for nice things, you know, I just fell in love with beautiful cars or nice things in life.

**INTRO MUSIC**

Tyrone Shum:
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 property investor Giles Hill, wh has renovated and developed properties for more than three decades. He shares how he bought his first investment property as a student for over three times the cost of his parent’s house, how he managed to live there rent-free, and much much more. 

**END INTRO MUSIC**

**START BACKGROUND MUSIC**

Tyrone Shum:
Being a family orientated guy, Hill spends a lot of his time on the domestic side of things, since he has the time and freedom.   

Giles Hill 
(00:40): Currently, I focus on property and family life, which I'm very fortunate to do so. In my property business, I help others achieve wealth through property investments and I have quite a clear strategy, which has worked for myself. I’d like to help and assist others to achieve similar success.

(01:09): A typical day for me is pretty relaxed, you know, I like to start the morning with a walk or swim or a little bit of yoga, I spend some time with my kids and get them off to school and I probably do some household chores. I'm the person most responsible for running my house as my wife has a very busy job. Once that's done, my day typically involves meeting prospective clients, potentially looking at properties or checking to see how development projects are progressing. 

(01:41): I'm also meeting with my referral network and the people who I get most of my business with, who I work with in my virtual team.


Hill is Grateful for the Time he can Spend With his Family

Tyrone Shum:
(01:49): That's great. It sounds like you've got a very relaxed family life, with work based around that. Is that how you initially designed your business? So that it was based around that kind of lifestyle?

Giles Hill:
(02:02): It was probably not that strategically planned. I think it's just something which has changed as life has changed. You know, I had children later in life than a lot of people and I hadn't really planned what that would look like going forward. But I've been fortunate to be able to adapt the way I live to suit how I want to live and how I want to spend time with my family.

Tyrone Shum:
(02:23): That's great. Can I ask how old your kids are?

Giles Hill:
(02:28): My son's birthday was this week, he's just turned 12 and my daughter's birthday is next week and she turns 10.

Tyrone Shum:
Hill grew up in a very small and traditional village in the middle of England where everyone knew everyone. He experienced a simple country lifestyle.

Giles Hill:
(03:17): I went to my junior school or primary school locally to where I was. It was a tiny little school, like one of those little ‘Peppa Pig’ sort of schools. I remember there were 53 children in the school in total and that included kindergarten up to the age my son is now, which is high school. There were 11 children in my year and I was the only boy.

Tyrone Shum:
(04:01): That would have been quite interesting. So, did that change over time?

Giles Hill:
(04:08): Shortly after I started high school, my parents actually relocated us to another part of England, to Cornwall. So for people who aren't familiar with England, if you look at the map of England, Cornwall is right down in the left hand bottom corner, that big toe. But that little village school had an interesting education system for many years. Prior to when my sister started to go to that school, It had been run by a Headmistress who had a little house next to the school.

His Early Education was Very Traditional

(04:37): It was very classical in its approach within and the school itself was just divided into two big classrooms. That headmistress retired after probably 50 years and she was quite a strict disciplinarian. We then had a new teacher come in who was kind of funky, this would have been in the late 60s [or] early 70s. The new headmistress had a completely different approach to how children should learn, she was a kind of a free spirit. 

(04:37): We were pretty much left to our own devices, doing what we wanted to do and learning as we went, but unfortunately, I don't think we learned that much. It became a bit of a challenge by the time we went to high school and we were classed or streamed with children who had perhaps had a more stringent or structured primary school education. So I think it was a little bit of a challenge to catch up again after that.

Tyrone Shum:
(05:29): Was the move from your original town to Cornwall a big change for you? Because as you said it was a much smaller town to begin with.

Giles Hill:
(05:38): It was interesting, because we went from being in a little village to being in a much more remote place. It was a big life change, as far as, in that village in the midlands, we were like most of the other families. But, when we went to live in the middle of nowhere in deepest, darkest Cornwall, we were very remote. My parents bought an old house with about an acre of land, so a fair chunk of land. 

Hill’s Parents Moved to a Remote Part of England and Began to Live off the Land

(06:06): They basically took on a lifestyle of self sufficiency. So they didn't go to work, we didn't have very much money and we didn't go on holidays. But we were self sufficient, as far as growing our own vegetables and having goats, ducks and chickens to contend with. 

Tyrone Shum:
(06:22): That is so cool. You think about that now, where everything is so modernised, everything's so industrialised, we get our food straight away from the supermarket. But going back to a time when we actually had to farm our own food, grow it and so forth, it makes you really appreciate how long things do take. At the moment I'm even growing some carrots and some tomatoes in the backyard and you're just so used to picking it up off the shelf in the supermarket.

(06:47): You realise that there are so many different seasons, the timing and so forth. You learn to appreciate life a lot more. I think that is something that we all miss. We kind of go, 'Oh, I really want that fresh, organic lifestyle back'.

Giles Hill:
(06:58): Yeah it's funny, we have a little vegetable patch here at our house in Sydney, which is a lot of fun. I think it's great for the kids to see that. But there's a flip side. I think as a kid we went into being in a remote state of living which was lacking in interaction with other people. I don't think it was the best way to go and I think as you get a little bit older, you just want to be with other people and you want to get out of that situation. So I probably left home as soon as I could after that to try to go and explore the big wide world.

Tyrone Shum:
In hopes of escaping the rat race, seeking more space and a much quieter and humble existence, Hill’s parent’s made the decision to move. 

Giles Hill:
(07:47): They grew up in Leicester, like post-war Leicester. Our village was 10 miles or 16 kilometres outside of the city of Leicester. But they just felt that there was a massive amount of change and they didn't like what they saw going on. It was a time of major growth within the UK.

Tyrone Shum:
(08:20): I’ve heard a lot of stories from past guests on the show, who talk about the reasons why they’ve moved. In some cases they had moved six times in two or three years with their parents due to their jobs. This is a little bit of a different perspective in life to be able to see why they moved. It’s so interesting [to see that they just wanted a] fresh change. Are your parents still alive at this point in time?

Giles Hill:
(08:44): They're still alive and interestingly, that property which they would have bought maybe 45–46 years ago, needed a lot of work on it and they never went back to employed work. They just worked on their own land and on the renovation of that home. I started to learn and became somewhat curious about property construction at that stage because I had to help my dad with the renovation and work on the house. In fact, they're still working on that house today. A never ending project.

Tyrone Shum:
(09:27): At what stage did you actually leave the nest, I guess you could say, and start to explore the big world?

Giles Hill:
(09:47): It was a little bit unfortunate. So when we moved from Leicester to Cornwall, we were at an age where I just missed out on doing what was then called, the 11+. They used to stream children and if you were successful in the 11+ test, then you would go to a grammar school or a more academically focused school. If you weren't successful, then you went to a school which had more technical or vocational centred courses. 

(10:14): I didn't take the test because in Leicester, where I was schooling at the time, they'd already abolished it. They moved to a new way of working, which was comprehensive education. But in the county of Cornwall, they were still operating in that older model. I was at the secondary school in Leicester for one term and so they wrote me nice reports because they didn't really know me. I'd only been there for the term but consequently, people read that and thought I was a bright kid. 

Hill was put Into Grammar School, However he Didn’t Feel  it was the Right Place for Him

(10:41): They put me in the grammar school, which obviously was much to the delight of my parents and my grandmother. People thought that was quite prestigious. However, it probably wasn't the best place for me because academics were not my strength. Also, because of that slightly disjointed primary school education I'd received where you essentially taught yourself, I just struggled. 

(11:04): I [definitely] struggled in that school. I would have been better off in a more technical school. The only subjects which I excelled in were woodwork, metalwork, technical drawing and ceramics. So I had a strong aptitude in those subjects. On the other hand, I struggled with maths, physics, chemistry, Latin and the other subjects which we had to do within the academic framework for the grammar school.

Tyrone Shum:
After finishing high school, Hill’s pursued a higher education. Although he admitted to struggling with a more academically centered curriculum, he followed the herd, so to speak, and followed that same academic basis.

Giles Hill:
(12:29): It was called A levels. I did biology and chemistry and you weren't allowed to be a part-time student, so I had to fill in the time. That's when I started to do ceramics and some of the more technical drawing type subjects which I excelled at. At the end of that period I wasn't quite sure what I wanted to do. Unfortunately, my father’s view, according to the way he and my mother worked, was to do as little work as possible, which is why they decided to get out of the work life, and go and sit on a piece of land growing vegetables in Cornwall.

His Parents Weren't the Most Supportive of His Education 

(13:22): My parents didn't have any mentors or anyone else close to us. We had no cousins, no friends or anyone else to really give me much influence in life. So consequently, I also perhaps grew up thinking that taking the easy option or doing as little as possible was a good thing. I think my dad told me to tell the career’s teacher that I wanted to get paid as much money as possible for doing as little as possible, which didn't go down particularly well with my teacher.

Tyrone Shum:
Hill didn't receive much of a push from his father to carry on his education, so he took matters into his own hands.

Giles Hill:
(13:51): When I was doing my A levels I met a teacher there who was teaching the ceramics or pottery class, which is one of the classes I did to fill in my timetable. They seemed to have a pretty cushy life. It was only a young guy, but he was enjoying what he was doing. He was teaching kids who were at school because they chose to be at school. They had moved into those years of school where you were there by choice.

(14:16): He was finishing school at four o'clock every day and going for a surf. He had like 12 [or] 14 weeks of holidays a year and that seemed to have some appeal. So I left college and I went to do a four year degree to strive to be a school teacher—it was a Bachelor of Education Honours Degree—I did it in the city of Plymouth, which is also in the Southwest part of England. I did that for four years.

Tyrone Shum:
(14:47): Nice. So the appeal of having a very cruisy life where you could just finish up work at four, go for a surf and stuff like that, were you able to still achieve that as a teacher?

Giles Hill:
(14:56): Well I did it. What happened to me is because I didn't really have very much as a child, I kind of created this yearning for nice things. I just fell in love with beautiful cars or nice things in life, nice homes and just luxury things, I think they just had a massive appeal to me. 

(15:24): What happened was, when I was doing my degree, which was four years, each of those years you went into a school and you’d teach for three or four weeks. Or, in the final year you'd spend a term in a secondary school teaching and it was a really, very powerful learning experience. There's so many different things that you learn from that exercise. One of the things I did identify was that the teachers who I respected the most who were helping me learn, were typically teachers who had perhaps gone outside of the educational network, because there were teachers who’d go from school, to college and back into school. 

(15:59): Then there are those teachers who went from school, into the industry, and then back into school and these guys just seemed to have more life skills and much more interest. Some of them said to me, ‘Go and do something, go travel the world or get some skills and then come back into teaching, it's not a bad thing to do’. So that was part of the reason. Also, teachers historically were not particularly well paid. 

His Colleagues Ended up Being Great Mentors and Pushed Him to Explore His Options Before Settling Into a Career

(16:19): They’re still not paid well enough, proportionate to the amount of training they do, and the importance of the job which they fulfil. But at the end of my four years, I decided to work and I went to try and earn some money. I joined a company which took on eight trainee sales people, they only recruited graduates who were on a graduate sales training programme. That was really exciting because it was closer to London, which was a more exciting part of England than the Southwest, where I'd obviously grown up and where I'd been studying.

(16:53): So I embarked on that career and I just loved it. I loved the camaraderie of the team environment, I enjoyed visiting business owners and talking about how technology or telephone systems, new types of technology could support their business. I had a lot of success, not relative to my experience. 

Tyrone Shum:
Hill decided to move into a totally different direction from what he had previously studied.

Giles Hill:
(17:40): It was an interesting time in telecommunications because for many, many years telecommunications had been state owned. So it was called ‘British Telecom’ and this was at the time when the market was liberalised and competition was introduced, back in the mid 80s.

(17:55): It was interesting, a lot of people were using old technologies. All of a sudden there were new technologies being brought into the country. I was one of the sales people running around to small businesses and showing them illustrations of the benefits that they could achieve by updating their technology, it was a lot of fun.

Tyrone Shum:
(18:13): That is a lot of fun. So what are some examples on how technology has changed so much? I remember the days when we had our home phones, nowadays we're just all mobile [users].

Giles Hill:  
(18:27): Historically, they'd had old fashioned technology, whereby it was a little telephone exchange located in the business. There would be someone there who was the switchboard operator and basically if you wanted to speak to the manager or director, they'd be putting out a plug from the telephone line and connecting it to the cable which went to his office. It was that old. They then became a little bit more sophisticated, where they'd be flicking switches to connect them.

(18:50): With this new technology, it allowed people to very quickly just transfer calls within a business environment. It's kind of cool that there was just such a significant change from what had been in place for many, many years. All of a sudden [this] significant change [was made]. Yeah, this was really the start of the kind of dotcom boom, as far as technology was concerned.

Tyrone Shum:
(19:12): Yeah, that is phenomenally fascinating. I mean, I've just remembered watching movies and stuff like that, where they have the switch operator. Ladies were usually just sitting there pulling plugs and plugging things in. Then obviously, their role becomes kind of redundant after a while when we replace it with switches, you know, the physical devices that just do it automatically. So they wouldn't have to be retrained to do something else. Or they may, you know, become redundant and have to go and upskill on something else.

Giles Hill:
(19:36): Yeah, I think there's always other opportunities and we still had a switchboard operator, it was just that they maybe had a headset and they could use a keyboard as opposed to plugging things in and out. It was just like they couldn't believe it. They could see if someone was on the phone or not just by looking at this device, whereas before, they'd have to call it and then they had no status of what someone's busyness was. 

(20:03): If they couldn't find the person or they weren't in the office, they could just page into the warehouse or something saying, ‘Call here for Dick Jones’, and he could go to any phone and pick it up. People were like, ‘Wow, this is incredible. This is going to save our business so much time and improve our efficiency significantly’. So it was kind of fun to do that. The great thing about it was that it just seemed like I'd been a student for four years.

Hill Used to get £2000 per Year From the Government

(20:26): I used to get £2000 a year as a government grant because my parents didn't work and that was like the maximum bump you could get. That's what I'd live on. I remember, it wasn't all that long after that, I had some success in selling, I'm getting £2,000 a month in a paycheck. It just seemed like there was all the money in the world and I treated myself to a couple of things, some of which I still have today, just celebrating that success. But other than that, you know, I was a saver, I just never had access to any money to spend. That's probably what started me thinking about buying a property.

Tyrone Shum:
So how long was Hill working in sales before he decided to move into the property space?

Giles Hill:
(21:25): I kind of progressed to more complex sales or more senior roles. Ultimately when I came to Australia, I was running a team of 120 salespeople across Australia, so I moved into sales management. I worked in telecommunications, slashing sales for 25 years.

Tyrone Shum:
Although Hill had developed an interest in construction due to his parents' constant renovating of their home in Cornwall, he had no real influence to get involved in property investing until he began his higher education.

Giles Hill:
(22:01): I think the first time that something kind of stuck with me was when I was in Plymouth. We went into rented accommodation to study and I moved into a house. It was an old terraced house which would have been three storey, but it had been converted into a four storey by utilising the loft space. There were 10 students in this place, some were sharing rooms and there was a couple who had their own room. Most of us shared, I don't know how I managed that. They had a couple of different kitchens, and a little bit of space around those communal areas. 

Hill got the Inspiration for His First Investment From His Student Landlord

(22:57): We used to call these building crackers because the [relatively young] guy who owned it used to wear these trousers which had the material which was called a crimperlean. You could hear him as he walked around the house and he’d only just bought this house and decorated it the year before.

(23:20): So he converted it into student accommodation and I got on with him. I was always curious and I always just talked to people. I was interested [in the fact] that he was a young guy and he had a nice car. That was probably what attracted me to him as well, just out of interest. He was just explaining that he had bought this house and he just bought a second house and was doing the same thing.

(23:43): So he was buying houses and letting them to students, which gave him guaranteed rent. In fact, the rent that I paid went directly to him. So you know, his rental income was guaranteed. He just kind of explained to me that we, the students, were buying him these properties. My early investing in the UK was slightly different to what it has been in Australia since I've been here. The rent you could collect would exceed the cost of the loan to hold that property.

Tyrone Shum:
(24:17): So that was quite common in the UK?

Giles Hill:
(24:19): Yeah, it was fairly easy to do that with just the ratio between the cost of the rent collected and the cost of the property, it made it much more favourable. That just kind of struck a chord with me that this guy was doing that. Fast forward, I don't know maybe four or five years, I completed my course, enrolled in this sales job as a trainee sales guy and [myself and the other graduates who came on board] started to have some success. We kicked some goals and got some good results.

(24:51): Then people started to look to buy property. I mean, this is in the mid 80s, there was still very much a mindset or a blueprint that you go to school, you get a job, you buy a car, you buy a house or get married and have kids. It’s much more flexible, much, much more of an open perspective on the opportunities of today. They were still very much like that. 

(25:17): It was just a natural progression for those people. Once they got a little bit of savings behind them. Their parents or whoever was influencing them would be saying, ‘Yeah, you've got some money, don't waste it on a car, a depreciating asset, go and buy yourself some bricks and mortar’. So like the other guys I worked with, most of the people went out and they bought like one bedroom apartments or whatever they could afford, new developments or nice properties for themselves.

Hill did Things a Little Differently to His Peers

(25:44):  I think what resonates with the guy from Plymouth is that I decided to go and buy a house. So I bought a four bedroom house as opposed to a one bedroom apartment and I rented the other three bedrooms out to two guys I worked with. We had a lot of fun living in that house and I was living there for nothing basically, because the rent that I was collecting was covering my mortgage.

(26:09): I guess that's probably how I started it. A couple years down the track or maybe not even that long, I got a little bit tired of the sharing and I went and rented myself a one bedroom flat just around the corner.

Tyrone Shum:
(26:25): Have you kept that property?

Giles Hill:
(26:28): Yeah I kept it. I bought it in 1990 and kept it for 13 years, then when I sold it at 14 years, it had more than doubled in value in that time. When I bought it, it did feel like a bit of a gutsy move. It was like £92,000 at the time and that was probably three times the value of my parents house. It was a lot of money, but it was the right thing to do.

Tyrone Shum:
(26:58): Oh absolutely. I mean, it sounded like it was a great start to your property journey, to be able to find a property like that and rent it out to your mates and live there for almost nothing. It makes absolute sense and you guys had the time of your life as well.

Giles Hill:
(27:11): Yeah, we even did a little thing back in the day, which was quite funny. I actually had a phone system installed there, because I was in the phone system business. I then got one of the technicians to install it on the weekend, so this house had like 10 different telephones in it.

(27:29): So everyone had a phone in their room. We could call between each other and even used to print out a bill because it was a system which had been designed to go to the hotel, so everyone could use the phone. Everyone got their own fair slice of the bill and we had a lot of fun making calls from room to room. 

Tyrone Shum:
Hill clearly had a lot of fun during his years as a young investor, but what spurred his move to Australia and how did he manage the properties between the two countries? 

Giles Hill:
(28:01): I came out here in 2000, so nearly 20 years ago now. I'd been working in telecommunications, and I'd moved to work for a global company, which was based in the City of London. Again, this was a lot of fun and fortunately it was well paid. So I was able to invest in other properties in the UK. I bought a couple of units in London, which again, it's almost like as soon as you saved up enough money for a deposit, you could buy another property netted out, it was pretty much cash flow neutral. 

(28:39): Unfortunately, I don't remember it being particularly strategically done. I just happened to be buying in—and I often encourage investors not to do this—I was buying close to where I lived because I was lazy and it was easy. But that also taught me the lessons of how important that area is and buying in areas which are in high demand. Yet, scarcity of supply is always going to drive the prices up more readily than in other areas. I actually came to this training in 2000. 

It was a Girl who Eventuated His Move to Australia

(29:13): I started dating an Australian girl in London and she was due to come back. The industry which I worked in changed massively, I worked for a company for five years before that, which used to be called ‘Worldcom’, it’s called ‘Horizon’ now and is the world's largest telecommunications company. So you know, when I started working for them in London, there were 75 people in the business and then five years later, there were like 3000-4000 people. Culturally massive, massive change and it didn't suit me so much. 

(29:40): I quite like to be innovative and creative in the way in which I operated as a sales guy. I didn't care for the structure and the rules and regulations as much as when it was a smaller business, so it just seemed like a good time to have a change of scenery. It was an easy option for me, having not travelled extensively on my own, to come back with this girl to Australia and check it out. So we lived here in March 2000 [or] 2001, and yeah I just fell in love with this place as soon as I got here.

Tyrone Shum:
Having purchased properties in England before moving here to Australia, Hill’s investment journey is a little different to most. I pick his brain about his current portfolio, learning some interesting facts about his strategies.

Giles Hill:
(0:18) I’ve probably purchased around 12 or 13 properties for myself in my property journey. It’s more about the lessons that you’ve learnt, because I don't hold many of them, I've sold them. And, you know, one of the things which would have been great would have been to hold some of these. Yeah.

(0:39) But the reality is, quite often you do really need to release the capital, you know, as you and your listeners will know, it comes down to serviceability. And sometimes you just need to access that capital. So, yeah, there's a couple of them which would be really nice to still own. But they were kind of all parts of where it’s led me to today. Also, I bought properties on a number of occasions based on a lifestyle perspective, and they didn't perform as well as investments because obviously, that wasn't the primary purpose. 

LIKE SO MANY YOUNG INVESTORS, HILL BOUGHT WITH HIS HEART AND NOT HIS HEAD.

(1:10) Had I known what I know today, I would have been much more strategic in my property acquisitions, because you can actually achieve the best of both worlds in many circumstances. When I was buying for home, I was buying purely with my heart, and with no real consideration for the investment potential of that home.

Tyrone Shum:
Having bought and sold so many properties, Hill has the opportunity to reflect on his moments of the past.

Giles Hill:
(2:03) When I look at what I know today, it's so much, and it all just comes from experience, they say it's the good experiences, the bad experiences. I just operated with no real strategy, with no real data or evidence to back what I was doing. I was just lucky sometimes and even luckier others, but really there was nothing there in terms of strategy. And that's one of the things. Financially, I could have potentially been more productive if I followed a strategy.

Tyrone Shum:
So what about his worst investment moments? Hill has had his fair share.

Giles Hill:
(03:14) That first property which we talked about, the four bedroom house which I had for 13 years, there was a period where I had a tenant there, and he just stopped paying the rent.

(3:27) And then he’d pay some dribs and drabs. He was having a tough time. I think it was probably self managed or the agency didn't do much about it, really. It was difficult, the guy had been there a long time and he’d paid his rent. And I spoke to him, I tried to see if we could come to some sort of arrangement, and then finally, you know, he moved out and one of the neighbours let me know that that had happened. But when he left the house was full of stuff.

Tyrone Shum:
(4:06) I don’t understand though, he was obviously going through a tough time. 

Giles Hill:  
(4:09) I don't know what happened. I think they were a big family. It was a four bedroom house. I think maybe he went through a separation or something. Obviously a tough time. But when they left, the house was absolutely full of rubbish and furniture and all sorts of stuff. I mean I had to hire a skip and go down there and clear it all out. So that was a bit bit of a bit of a challenge.

Tyrone Shum:  
(4:31) Yeah, I could imagine. I guess it’s hard when people leave those kinds of things. Was this in the UK or was this in Sydney when that happened? 

Giles Hill:
(4:38) That was the UK, that was the first house that I bought that one. Yeah, in Berkshire in England back in 1992.

**MUSIC BREAK**

Giles Hill: 
(5:20) One thing again, and it's only been more recently I’ve really started to understand, is the fluctuations in the market and when is a good time and when is not a good time, and also how to really ensure that you get the best possible sale price for that asset. You know, I just probably gave it to a local agent, I didn't spend sufficient time really to understand what the market value was or who the best agent might have been. Yeah, it was just that kind of knee jerk reaction. 

IN HINDSIGHT HILL WOULD HAVE SPENT MORE TIME AND ATTENTION ON THE PROPERTY.

(05:48): Yeah, it might have been better to renovate it and sell it or to style it, there might have been something that I could have done, which would have further increased the return on that investment, but yeah, I just had to see the back of it.

Tyrone Shum:
Hill couldn't wait to wash his hands with that property after having learned his lesson. So did he have any ‘aha’ moments, or realisations which made his life easier in his future investing career?

Giles Hill:
(6:18) So I've been in Australia for 20 years. But nine years ago, I was back in the UK for nine months, my wife is Swedish, and we wanted to be close to her family in Sweden. So we tried the UK. Fortunately, we were able to come back to Australia, which is great. But whilst I was there, I wanted to get involved in doing a property project as that was at the time when I decided that property was my future. 

AFTER YEARS OF WORKING THE TELECOM INDUSTRY HILL DECIDED PROPERTY WAS THE ANSWER. 

Tyrone Shum:
After years spent working in the telecommunications industry, Hill realised that property investing was the way forward. 

Giles Hill:
(6:42) It was after my 25 years of telco sales. So I got to England, we rented a house there and I looked for a project. I just wanted to get stuck into something. I had two babies and a wife at home. I just can't sit still. And I bought a property. So it's kind of interesting, I knew that I was better off to be closer to the centre of London, because the property market is just so much stronger. And every month, these companies—that one I used was Saville’s—they were an auction house, and they carried a book, and they’d just go to a massive auction, and they’d sell those properties. 

(7:22) And I bought a property, it was a terrace house in Twickenham, which was in need of renovation. And I bought that at auction, and it was £400,000. And what happens is, once you've bought it, you have a 20 day settlement period. So it all happens pretty quick. And within that period, I was able to get the keys and to go and check it out. I thought, ‘Well, I'll get around there, see if I can get a few local builders around, or get a few local estate agents around so I can start to understand what to do to this house, to make sure it suits the local demographic’.

HILL HAD BOUGHT THE PROPERTY FOR LESS THAN WHAT IT WAS WORTH.

(7:54) And I met a real estate agent who came around. And he told me how well I'd done on my purchase. I knew I had bought it for less than I expected to pay. And he said he could sell it for more. And I said, ‘Really at the end of the day, it's a money making exercise. Once I get my keys , you know, it’s gonna take me a month to line up my builder and to get my drawings done for my loft conversion, whatever is required. Take it for that length of time, if you can sell it, if you have a go, that's up to you’.

(8:26) And the great thing in the UK is, the real estate agent covers your marketing fees. So I had nothing to lose. I was like, ‘Yeah, I'm gonna be in there working out what we're gonna do with it. If you want to, you can sell it then yeah, give it your best shot. Doesn't matter to me’. Anyway, after the date settled, I gave him a set of keys. And within a week, he sold it for £100,000 more than I bought it for, which was back then was probably about $160,000.

(8:54) And then, you know, obviously I had to take that because it was such a phenomenal result, it's the easiest money to ever be made. But on the flip side, I was a little bit disappointed because it had taken away this opportunity for me to get my hands dirty and get back into a project. Then consequently I went and bought another property not far away in the suburb of Barns in Southwest London. And this was another terraced house, but this terraced house had been divided into two, so it had a ground floor apartment or unit, and then one on the first floor. And I bought the one on the first floor. 

WITH A LOT OF POTENTIAL, HILL FIGURED THIS ONE WAS IN THE BAG. 

(9:30) I knew that I could do a loft conversion to increase the size of it and modernise it. And I bought it and I started to get the work done. And it was gonna be beautiful. It was a lovely, lovely old house and there was a great renovation. I got a good builder and then it came time to sell that property. And it wouldn't sell. It was just before—I started to sell it before it was finished—just to see what level of interest there was. 

(9:56) And what happened is that, and I fell foul of this, is that the property was on a lease, it's just the lease between the ground floor flat and the first fall flat, but it has a lease, because it's a share of the freehold, which is the land that the property is built on. And I knew that, but I didn't think much about it. But what had happened is, the lease which was on there only had like 25 years left to run. And in the UK, anyone who was looking to buy that, who was going to go to a bank to borrow money, or to a lender to borrow money to buy, a lender wouldn't lend money.

(10:28) Because if it's got less than 50 years left on the lease, they won't lend the money. Because I bought it in cash, I took all my money when we sold up in Sydney when we went back there, so I had enough cash to buy it. I hadn't foreseen that problem. And I hadn't asked myself why it hadn't sold before. I just thought I'd got myself a good deal. So you’d think it would be easy enough to sort out. But unfortunately, the lady who lived on the lower level was very difficult to deal with. But ultimately, we had to do a new lease, where it becomes a 99 year lease. And then that property can be financed so money can be borrowed against it to buy it. 

Tyrone Shum:  
(11:08) Did it take long to get that because I mean, I've never heard of a 99 year lease before, I know it happens commercially. Because I know that big buildings and stuff like that they usually leased the land from you know, commercials and big businesses and so forth. 

Giles Hill:
(11:25) Yes, it's a little bit like, I mean, I've got a development going on at the moment, it's a little bit like this similar thing where you have two houses, and if they've got a shared driveway, and it's on a strata, it’s the same sort of principle as that, because you've got something which, you know, potentially, the condition of one can impact the other or the value of the other, or there's areas which are shared, like this house, obviously, they sit on the same piece of land. And they also have like a shared front door and hallway. 

(11:53) So it's just a case of managing that. Yeah. For any future incidental issue that might appear. But that was a big learning curve.

Tyrone Shum:  
(12:03): How long did that process take to get that lease set up and then finally, you know, to barely get refinancing?

Giles Hill:  
(12:08) Well it probably took about three months to get that problem resolved. But the lady downstairs was quite a shrewd operator, and she would only really enter into a new lease if she got an extra piece of land from the yard. So yeah, it was a big big learning curve on that property. That's probably one of my worst investing moments. Because what also compounded, the problem with that property was that then it was sold in a declining market, which was unfortunate. 

(12:43): And then I was back in Australia then and the solicitor who dealt with the sale, he took the money, I gave him some details, he was meant to put it into a holding account, like an international holding account. But he didn't, he paid it into the account. And he converted it into Australian dollars, which wasn't what he was supposed to do, because the exchange rate was very volatile at the time, and had major problems. And then the bank reversed the transaction, but it devalued then and then it was sat in a holding pattern. And I had to wait and decide.

MORE AND MORE ISSUES ARISED WHEN DEALING WITH THE AFTERMATH OF THE PURCHASE.

(13:12) And it was probably one of the most stressful moments in my life. Because every day it was like either losing or making money, but I lost a fair bit. But then I just had to be done with it. It's just two completely different experiences in these nine months, one was just the easiest opportunity. The second was like the most challenging opportunity.


Tyrone Shum:
Hill explains his movements between the UK and Australia during that time and how he managed the property from overseas.

Giles Hill:  
(13:54) I was there [in the UK] for about nine months, and then I went back and that's when this sale was going through. So I was stuck over here at that time, and you've got the timezone challenge dealing with banks who don't really, you don't feel they really, really care. And everything you own is tied up in this transaction.

Tyrone Shum:  
(14:12) Yeah, that is a bit of a nightmare by the sounds of it. What was the reason for going back to the UK for that short period of time?

Giles Hill:  
(14:20) So we sold a property here and we went back with a view to maybe living closer to my wife's family in Sweden. I don't want to be in Sweden, because I don't speak Swedish and it's colder than England. So that's why we went there because it's obviously much closer and in the same time zone. 

Tyrone Shum:  
(14:40) And then eventually you both decided to come back to Australia and then settled back down in Australia for the rest of your life?

Giles Hill:  
(14:46) Yeah. My wife came out here in 2001. We met here, but her family were always expecting her to return, and then after our children were born, since they were a close family, it was difficult to have that distance between them. But now everyone's worked out the way it is. And that's accepted. And we, unfortunately, due to COVID, we’ve not gone this year, but we go back as regularly as we possibly can.

Tyrone Shum:  
Moving back to Australia and away from family support was challenging for Hill and his wife, but their vision for success was strong. Hill talks us through the strategies he used to build his portfolio after their return to Australia. 

Giles Hill:
(15:51): So what was becoming apparent to me really, was that, you know, the best ways to create wealth through property or to create or build equity is to buy properties in locations which are going to outperform the averages. So the location, you can basically do the heavy lifting. The way I see it is you need to buy in an area where there's a strong demand for people who want to live there. And also some scarcity of stock. So there are the two things. 

(16:21): A lot of people look at the supply and demand and they get a little bit starry eyed by the demand side of things. And you can illustrate an area has got massive growth happening in that area, or forecasted growth is fairly strong. But if there's no limitation in the stock or supply of property there, then obviously that that demand can be satisfied quite easily. So the important thing is to have demand, but also scarcity.

(16:48): And probably the third major fact there is that demand for property ideally needs to be from people who have access to capital, you know, have your high disposable income, because they're the ones who can go, ‘Yeah, I'm having it’. And that's what obviously ultimately drives the house prices up or property price up in a particular area. I could see that that's where my first hand experience of buying those properties in London, for example. 

(17:19) They outperformed that four bedroom house, which was further out of London, and that's because it's a more dynamic location. And that's why now, for me, and for my clients that I work with, my focus is really to be in the middle of Sydney and Melbourne in areas where your aspirational, professional people want to live. And there's a limited amount of stock. So they have to compete for that. And certainly also in areas where they can't carve up land for more subdivisions or build more homes, and they can't build high rises in those areas, either. 

AFTER A ROCKY START, HILL IS NOW CONFIDENT PURCHASING PROPERTY IN THE RIGHT AREA. 

(17:53) You know, that means that there's going to be consistent demand. So that became a cornerstone of my investment strategy: buying in the right location that's going to outperform the averages, and holding it for a long period of time. So unfortunately I didn't hold all of my properties for a long period of time. But my strategy where there was a structure, I just rolled one into another, made into another, and ultimately ended up where I am today. 

(18:17) So that's one part of it. The other part of it is that I've got a big focus on what I now call or refer to as manufacturing equity. So it's having an asset in that right location, but also by having an asset, where we can increase the value of that asset by doing something to it. So it could be as simple as a renovation, but my focus is probably more on developing it. So typically, my choice is to buy older houses on bigger blocks.

(18:48): And that gives the option to perhaps put another house on the back of the block, or perhaps knock it down and put three or four townhouses, you know.

Tyrone Shum:  
Hill and I are discussing the strategy he refers to as manufacturing equity, where he increases equity to gain extra cash flow, in order to leapfrog into the next investment opportunity. 

Giles Hill:  
(19:41) I explained this to people so you know, what drives house price growth? It’s people's market sentiment and people's access to capital. People who've got more money, that spend more money on buying homes. But the two drivers or what creates that access to capital are interest rates which are as low as it can go, which is what's driven that last boom which you've talked about, really.

(20:01) So people can get more money for the same salary, then they're going to spend more. And the other one is wages, growth and wages. Growth has been low in Australia for a long time. And when we come out of that, hopefully not too long, when we come out of COVID, there isn't gonna be a lot of wage growth. As unemployment grows, then, yeah, wage growth is going to be non-existent or be minimal. So again, picking that location where the potential future buyers are, people who are who are more likely to benefit from wage growth, again, is advantageous, and is going to support that growth.

WHEN WE COME OUT OF COVID THERE ISN'T GOING TO BE A LOT OF WAGE GROWTH.

(20:37) But what I say to people is, regardless, if we even if we go through a period of very little growth over the next 10 years, then at least make sure you position your investment property in a location that when things get back to normal, and there is more growth, then there’s the opportunity to take advantage of it. But in the meantime, obviously, we've got that opportunity to manufacture equity, as you alluded to then. What I like to do is, and I'm quite simplistic, the type of clients I work with, we're not particularly looking for rental income, we're looking to build an asset base for the future.

(21:14) So I'm not talking to people who perhaps want to give up their day job. It's about people who enjoy their day job, and they recognise that yes, that's stuff that funds their lifestyle, but once they're going to work, operating behind them is this investment strategy, which is going to give them an asset base for the future. So when they choose to transition to retirement, they've got options, whether they hold on to them, they sell them, transition them to high yield investments, doesn't really matter. What you want to do is just about building that asset base. 

(21:46) Yeah, my focus there is not on quantity, although much more on quality, and the quality of the asset, and obviously, the proportion of equity holding it is the key.

**MUSIC BREAK**

Tyrone Shum:
Hill shares the details of how himself and his family ended up in their current residence after he became a stay-at-home dad.

Giles Hill:
(22:36) So I worked for 25 years in IT telecommunications, and when my children were born, when my son was born, I took some time out of work, and I was tired of corporate by that point. And it was refreshing to take a step back. My wife is younger, and she was more excited and more ambitious about her career at that time.

(22:56) So it seemed like a great opportunity for her to go back to work following her maternity leave, and I became a stay at home kind of dad. And because I can't sit still, and can't watch baby TV all day, I also started to do cosmetic renovation. So my first half of it, we moved from Sydney, I moved to a property in Rose Bay, and it was when my kids were small. I renovated the property. And then I sold that property just prior to going back to the UK. I did a couple of different projects in the UK. And when we came back, I wanted to look for another property project. 

(23:32) A lot of our friends had talked about the Northern Beaches being a great place to live. That’s the Northern Beaches of Sydney. Prior to a trip back to Europe for nine months, we'd been living in the eastern suburbs, which is a great part of Sydney. But I could see that what I heard from the Northern Beaches was going to be a great place for kids. So when we returned, we rented a place in North Manly to see if we liked it, knowing that if we didn't, if it didn't work out, we could go back to to what we knew. 

(24:05) But soon as we got here, it just felt like being on holiday. There's something about being placed on the Northern Beaches which just has this really relaxed feel, it felt a bit like going to Queensland to me. And so we went here and I looked for a project. So I wanted something to do to get stuck into it. I bought a house in the suburb of North Curl Curl, which was an older house, like a weatherboard type of cottage, which I could see had the opportunity to completely renovate, it had some quite solid bones for a property of that era. But there was the opportunity to work on that. So we bought that house and moved into it. 

(24:43) And I did an extensive renovation on this property. And it's interesting because it was on two levels and the lower level was like a little self contained granny flat, and the four of us lived in there for 12 months which you could never do because of the age they are now, but because the kids were little, they're like toddlers, it was all quite exciting and fun to have the bunk bed and everyone squeezed in this little room. And I did this house as a developer as an owner builder. So I worked on it, you know, day in, day out, in fact it was a quite a challenge, because if I'd known what I do now, I would never have started, it was a little bit like one of those grand designs shows where everything seems to go wrong very quickly. 

(25:27) And the stuff off IKEA, bad advice and bad trades and all those different things that go wrong, when your family is living in one room, it puts a lot of pressure on you to try and get it done. And then we were able to move up into the new part of the house. And then I've renovated the lower part of the house. And the original idea was that then that would be sold. And that we would move on to my next projects. But we loved living there. So we kept it, which was great, but obviously that ties up a lot of capital.

HILL AND HIS FAMILY DECIDED TO STAY IN THE PROPERTY THEY ORIGINALLY INTENDED TO SELL. 

(25:57): And what happened then is, I had a friend of mine who worked as a financial planning business, and at the time they'd asked me what I was going to do next and would I be interested in helping their clients with with property investment, on selling properties and just helping assist them with their investment property portfolios? And that's what led me into working in what I do today.

Tyrone Shum:
We move on to discuss Hill’s current development project, and the strategy he’s implementing this time around. 

Giles Hill:
(26:32) So I don't have a big portfolio. So most of my properties which I’ve purchased have all rolled into this one property which I'm sitting in now, which is a beautiful house. And probably five years ago, or six years ago, I bought a property which is not that far away in the suburb of Colloroy. And I bought a 1200 square metre block, which at the time, I had a development application approval. But it was actually a deferred approval, DA, which is again something which was quite naive and I didn't understand fully at the time, which means it's a DA subject to certain conditions. But I bought it anyway.

(27:12) A 1200 square meter block with an approval for two dwellings on it. And it had an old house on it, which had a tenant in who had been there for many years. And until this year, it’s been tenanted. And this really is a great illustration of the kind of strategy which I employ. Predominantly I buy in Melbourne, because it's a much lower cost of entry for my clients. But that property has gone up in value, probably $500,000 [or] $600,000 without doing anything. And now obviously, I have the opportunity to manufacture the equity. So we're currently under construction. And we're putting two dwellings onto that block. That'd be like two luxury homes valued at probably $2 million each.

(27:56) And ultimately, they'll be at $4 million dollars worth of property. It'll have two and a half million dollars worth of debt, and one and a half million dollars worth of equity.

Tyrone Shum:  Equity, Yeah that is a very nice move.

Giles Hill:  
(28:08) And that's all done with borrowed money. 

Tyrone Shum:
(28:07) Yeah, that's right.

Giles Hill:  
So yeah, the return on that...I mean, you’re putting in 20% of the build costs, but predominantly it’s done with borrowed money. So the return on capital is massive.

Tyrone Shum:  
(28:25) Yeah, absolutely.

Giles Hill:
(28:26) So that's the kind of model. And obviously, again, you touched on this a little bit before, and this is what I love about the Melbourne sites is, we can buy a property for an investor, we can do the due diligence for development, and they can hold it for four or five, as many years as they like. But at the point where we decide to turn it from one older house into three or four townhouses, there's just a massive equity gain, they can make half a million dollars on that. They'll make money on it because of the growth, because it will perform as well as anywhere else will, better than anywhere else, it will outperform the average capital growth, whether or not there is any.

(28:58) But post development they’ve just got all those options, because then it goes to have a strong cash flow positive investment. But we know it's in an area which is going to be great, it's always going to continue to grow. So the best thing is to hold those properties, take advantage of the depreciation allowances, and set yourself up for your retirement. But again, if you want to go again, you've got options. If you've got three or four separate titles, maybe you want to sell two or sell one or keep all four. It just gives you lots and lots of options. 

Tyrone Shum:
In his more recent investment years, Hill has adopted the attitude that a simple strategy is a successful one.

Giles Hill:
(29:39) I really do think that, and it's been through 30 years of investing and learning and it's great now because there's so much content available, which you probably know wasn't available when I started. But we put all that together and there's so many different strategies, so many different things that people talk about, but when you boil it down, you can actually make it quite simple and straightforward. It doesn't have to be that complicated.

(30:02) People talk to me about, ‘Oh, is it risky?’ No, it doesn't even have to be high risk if you stick to two proven tried and tested ways of investing and stick to those fundamentals. Yeah, it will work.

Tyrone Shum:
We find out what other advice Hill recommends to achieve the kind of success he has now.

Giles Hill:
(30:42) I think the access to the data you get, I mean, people refer to it as RP data, I think, and the subscription I have is PriceFinder. But also, obviously, realestate.com.au and domain.com.au, you've got access to so much information about your suburb street properties. And that for me is invaluable. So I do very detailed feasibilities of properties to buy to develop for my clients, and it's having access to all that information, which is not my own, you know, I can look at a house on the same street, I can see exactly how much it sold for, I can see exactly how much the offspring sold for or is rented for.

(31:21): Yeah, and I know my bill costs, I know my council fees, I know my consultancy fees, and I can use all that. But if I could only base it on my own experience it'd be very limited. Having access to every property, you know, ones I've looked at, which I haven't bought, or have been unsuccessful, I just still chase them, you know, buying in the same suburbs. And that data just is, it’s invaluable to see that. So I think diligence is key. And learning to look at properties and really ask yourself why you shouldn't buy them. It's very easy to say, ‘Yeah, I want to buy something’.

(31:58) And it's very easy to get that cognitive bias. But is that just your positive affirmations? You start reading stuff and start convincing yourself that something is great. And that this area is going to be brilliant. And you really have to do the complete opposite, and try and convince yourself why you shouldn't. Why you shouldn't buy it. And that's where that data can provide a lot of information.

YOU SHOULD BE ASKING YOURSELF ‘WHY SHOULDN’T YOU BUY IT?’

Giles Hill:  
(32:29) And unfortunately, in Australia, it's just such an expensive mistake because of the stamp duty implications and buying and selling costs. I say this to people all the time. You’ve got to get it right, and it's great, because the type of clients I deal with, typically can see the value. But what you pay for someone like me who’s buyer's agent, it's just like the best money, it's the same. 

(32:57) You know, people will spend that money when they sell that property to a real estate agent. It'll have absolutely no impact on the success of that investment. They might have had it for 10 years. But the right advice at the outset. Yeah, that's just the best money you could spend. It could be half a million or a million in 10 [or] 15 years. 

HIRING A GOOD BUYER'S AGENT IS THE BEST MONEY YOU CAN SPEND.

Tyrone Shum: 
With a wealth of knowledge behind him now, what would Hill say if he met his younger self ten years ago?

Giles Hill:  
(33:30) I think I'd tell myself, ‘Just don't worry Giles, you've got this’. Because the main things I've done in this period was obviously building this house, and also going into business. And it's easy to get caught up or stressed or worried about things. But you know, I'm sorted now, so I don't need to let the little things worry me. And I guess the other two things it probably would have been nice to tell myself is to follow my gut. 

(34:03) Because your gut instinct is very, very powerful. And I have been in a business situation where part of me knew it wasn't right, but I continued to proceed with it. And also to support that as well, just documenting things. I was involved in a business relationship, which I failed to document sufficiently, I was perhaps a little bit over trusting, a little bit over optimistic and neglected to focus on the details. So that would be good advice to myself.

FOLLOW YOUR GUT.

(34:47) I get a little bit excitable sometimes. There's other things on that that I think are really interesting. I have in mind if I had to say something to myself 30 years ago, which probably would have made a big difference, would have been to seek the support of others. I think it might go back to the way I was brought up. We didn't have any interaction with other people. My parents, they never borrowed things from people, never helped other people with other things. No sharing or support or creating a network.

(35:14) It makes you very independent. Like you can do anything yourself. And it created a very strong, you know, DIY or do it yourself attitude or mindset, which on the one hand is really good because it gives you confidence to take things on, it gives you curiosity to understand things. So, you know, I'm thankful for that. But what I lacked was recognising the benefit of you know, seeking a mentor to help me. I think one of the biggest things I've learned, one of the biggest lessons I'll give to my kids, is that you don't have to learn all the lessons yourself.

THERE’S NO SHAME IN SEEKING SUPPORT FROM OTHERS. 

(35:47) You know, I spent 30 years learning lessons, which, yeah, a lot of other people have had to learn exactly the same lessons. But if I’d spent a little bit of money, and learned from somebody else I could have fast tracked my own success. The other ones if I'd known it 30 years ago would be to outsource stuff. You don't have to do it all yourself, focus on what you're really good at. And yeah, pay for good advice and good support in those other areas.

Tyrone Shum: 
So how much of Hill’s success is down to skill, hard work and intelligence, and how much is down to luck?

Giles Hill:  
(36:36) I think there's an element of skill, I think through experience and practice, you can become what you do. So I think the skill is ongoing. And I think you benefit from the skills that have developed. Intelligence? I wouldn't paint myself as being intelligent, I'm not academically gifted, I'm gonna struggle with my kids maths homework when it gets to high school. The luck. I think there's a lot of luck. You know, I feel very fortunate, you know, obviously, to be where I am today. 

(37:08): And obviously I'm lucky that I was born in England as opposed to other parts of the world when that happened. I think there's a saying, I think it was Arnold Palmer the golfer, it was like, ‘The more I practice, the luckier I get’. And I feel life is like that. So I think that, you know, Perhaps is not only hard work, because you can just do the same thing religiously. The more adventurous you are, the more curious you are, the more you experience, the greater opportunity you’ll have to be lucky. And then obviously, you have to capitalise on that luck. 

(37:40): So yeah, I'd say luck plays a fair part. But you have to make yourself be lucky by putting yourself in positions where that might happen. 

**OUTRO**

Tyrone Shum:
Thank you to Giles Hill, our guest on this episode of Property Investory.