Interview by Tyrone Shum from Property Investory

Updated: Jan 26

"I realise that generating wealth passively has actually opened up my constraints around time, energy and money, that I can choose to pursue my own passions."

Listen to the Spotify podcasts here and here.



It is a great pleasure to be interviewed by Tyrone Shum from Property Investory.

I shared with him how I built from scratch a $5 million-plus property portfolio whilst managing funds in tune of $2 billion working in the Investment Management industry.

And now I have chosen to pursue my passion of helping others to make your hard-earned money work harder for you.

I have discussed my journey into property investment where I shared the best and worst moments of my investment career.


Podcast Transcript


Having achieved his own financial freedom, Rastogi now directs his energy into developing strategies to help others achieve theirs.

Vaibhav "Rasti" Rastogi:

I am a property strategist and a buyer's agent from Get RARE Properties. I help people achieve financial freedom by getting them into the right property for the right reasons. I'm a big fan of getting the right strategy, and it comes from my own financial background. I have been a fund manager of funds of $2 billion, and the key thing there was to get the right strategy. So, once we have the right strategy, then we can go for the right location and then the right property. And then, of course, if you can get it for the right price, that's a bonus.

So, I have used that strategy to build my own portfolio of $5 million-plus, which is a positively geared portfolio built up from scratch. I'm very proud of that. And I am now helping others to achieve something similar much better, much quicker and with much more ease.


Some people have the perception that a person who's achieved financial freedom can be found relaxing at the beach all day. But Rastogi shares with us the details on how he fills his day with intentional productivity.

Vaibhav "Rasti" Rastogi:

I'm actually huge on data, and I tend to capture a lot of data points through different sources, and I try to manipulate them, or rather contaminate them. And so, that's a desk job. But as you know, property is all about the people and the sentiment. So, I'm actually more on the road but not as much as I would like to be in these COVID confinements! It's all about zoom, phone and emails with my deep network of real estate agents, trying to understand and going through lots of media, lots of reports out there on the council; trying to go to the source of information, as in like, lots of statistical sites and economic forecast sites.


And coming from a research background, that's actually ingrained in my mindset that we have to do a lot of research. So, that's what I'm doing all the time, and then another part of it is understanding the client's stories. There's always a story behind the prospects of the clients. So, we're trying to get into it, understand what their 'why's' are—like, what are they trying to achieve?—and then how I can actually potentially help, by providing them with the kind of property portfolio which can lead them to the life that they really desire.

Like all of us, Rastogi has been affected by the pandemic, and he warns of the changing market, which could have a negative effect on those who are financially distressed.


Vaibhav "Rasti" Rastogi:

It's kind of an unprecedented event... that everything has been shut down. And there's a lot of worry. As we know, people are getting a bit worried about their jobs. The forecasts are not so… so positive as of now. So, to me, going to the ground, understanding what the local demographic is doing, seeing it firsthand with my own eyes is one part. But then there's a lot that you can actually leverage off other people. To me, it's not just a one-man show. It's just more about the team that you have on the ground. So the local real estate agents are the team that I actually rely on. They are the best people to know what's really going on in the local market.


But in terms of the market, I think it's a very, very special kind of... for the lack of a better word, environment—whereby the cash that buyers are actually taking has a lot of benefits in this time. Cash, which buyers are taking advantage of, from the people who are distressed about their jobs and who are looking for the deep bargains. Of course, they're not really available everywhere. We have to really go deep and dive into the transactions to find those deals.


But despite some vendors needing to sell at an undesirable price, it's not all bad.


Vaibhav "Rasti" Rastogi:

I work on the win-win situation, like I'm not really forcing anyone to sell a property at a much lower level of desired amount. I mean, they're not forced into it. It's just, we are giving an option. So, we, in a way, are actually helping them to get out of the deal or out of the property. We are actually helping them to move on with their lives, with or without their own property. So, it's not really a transaction with a gun to the head. They have all the choices.


To me, it's a lesson to my own clients and the community that actually talk about that. We have to be risk-aware all the time. We have to have the buffers… today we are enjoying the benefit of purchasing the distressed properties. But also, it gives us a very important lesson: that we don't find ourselves on the other side of the transaction when we are distressed, and we have to sell out of our transactions at an undesirable pricing. So, having that kind of buffer all the time, having that kind of a risk buffer is a key thing.


A Journey From India to Singapore to Australia


Growing up in India and being the only son, Rastogi had a lot of pressure on his shoulders to look after and provide for his mother—and from a young age, he has challenged himself to do just that.


Vaibhav "Rasti" Rastogi:

I grew up in a small town, near Delhi. It's a city named Meerut. I had been born and brought up over there and did my schooling. And it's a small town. But it's still not so small, because it was in proximity to the metro there. That actually gave me a lot of vision to aspire to have a bigger home over there. I've been brought up in a very humble, very God-fearing family. So, I have always learned to do the right thing.


Rastogi made it through school and moved into higher education.


Vaibhav "Rasti" Rastogi:

So, I did all my high schooling in Meerut and then moved to Lucknow to do architecture engineering for five years. And, at the age of 23, I moved to Singapore. So I was there in Singapore for about six years before I moved down to Australia in search of a much better lifestyle.


He made the most of his time in Singapore before considering the move to Australia.


Vaibhav "Rasti" Rastogi:

It was more of an opportunity there. Like, while I was doing architecture engineering, I had to change my gears, and I had to move to an IT career. That was the kind of the flavour, like everyone was jumping onto the bandwagon of IT with the interest of making bigger money. I jumped the bandwagon myself!


I'm a self-learned programmer. I learned programming and I had a job offer in IT before I actually finished my architecture degree. And from there, there was no turning back. I was working for a U.S.-based company in Delhi. And then, I got an offer to come to Singapore. So, that was the job which actually got me there, and I fell in love with the country.


But before Singapore, there was a life in India, and Rastogi had a lot of great influences to push him along on his journey.


Vaibhav "Rasti" Rastogi:

I'm actually born and brought up in a city near Delhi. So, it's not really a big metro like Delhi. Yeah, but I have always been exposed to cities like Delhi. So, the rest of my childhood... like we, we were a small family. I've got two siblings—two older sisters. But we were very close-knit with my older cousins. We spent all summer vacations together in different cities, following each other around. And it was great fun to be together. There was never a pressure of doing something in life; it was a very magical happy kind of thing. You're just enjoying the time together. So, it was the love.


And I guess, there were the inspirations as well, like, my uncles had been very well off, like engineers, doctors, defence personnel. And that actually helped me to think that if we do the right thing, then we can actually aspire to lead a good life later on. Compared to my father who actually just enjoyed life throughout and who gave me a good lesson that it's all about enjoying as well, not really stressing too much and living in the moment.


Rastogi's parents were the first motivators in his life for different reasons.


Vaibhav "Rasti" Rastogi:

My father was not really very educated, so he was chasing jobs here and there until he finally found something in which he worked for long hours, different shifts. And I think that took a toll on his health. He expired...he passed away a long time back. And that actually gave me a lot of, I guess, motivation to think about the family. Because back in India, being the only son, I had a huge responsibility on my shoulders to be able to deliver for my mother, especially.


So, my mother, on the other hand, is a very hardworking lady. She is the inspiration for my hard work, behaviour, and the culture that I have cultivated, because I've seen her working really hard. So, the background is that she started a boutique shop in her household itself. And that actually took a lot. Many hours of her time. Even her parenting. So, it was my elder sister who actually took care of me as a baby. I have a huge respect for my mother and my sister for that reason, and that actually has imbibed me with that kind of culture where I need to be hardworking enough to give back to other people or the community later on.


The events in Rastogi's life led him to where he is now. But it was something specific that really pushed him to move forward.


Vaibhav "Rasti" Rastogi:

Back home in India, when you're coming from a lower-middle-class family, it's the education that is key, which I realised early on. I was a very average, mediocre student until maybe Year 10. Until my uncle actually enquired about what's really going on in my life—what do I really want to be? And I'm really, really, really grateful for that. Maybe he doesn't remember that anymore. But actually, that made a great impression.


My one particular uncle had a lot of confidence in my ability. Because, you know, when you're the youngest in the family, you don't really care too much. You just play around. I was kind of a guy who was always playing cricket or flying kites in my childhood. Then all of a sudden, that was a moment that I was shaken up like, 'Okay, what do you mean by life, like, I'm enjoying it…' And then I realised that it's all about getting in the right mindset. That if you aspire to do something, if you put a goal to something, then it's a matter of just going and achieving it, and it's the sheer hard work that can get you there.


So, back home, it's either you become a doctor, or you become an engineer. And that's how it is over there. And it's so competitive. Like, if you really want to make above...or like, punch above your weight, you have to really qualify for these kinds of institutions where the seats are limited. So, the competition is very hard.


Rastogi stepped up and began to take on a lot of responsibility at a young age.

Vaibhav "Rasti" Rastogi:

I was actually getting up at 4 a.m. to study and then go to school. Back then, my mother was already running a business as a boutique. So, I was actually helping her later on to audit a few little things as an entrepreneur, real aspect, I guess. So, I felt that 24 hours was not enough, even while I was in Year 11 and 12. The reason I chose to go for engineering in particular, I think, is because I always had a knack for numbers. One of my uncles always used to give me riddles and puzzles. Us cousins, we still like them. When we meet, our better halves actually get bored to death because we always talk about puzzles and numbers, numerical riddles. And so I guess I like problem-solving, and I was actually pretty good at drawing as well. I used to make portraits, and that's how I actually chose to become an architect.


So, I went for my architecture engineering, which is a five-year degree course. And that was very logical for me to get that. Like, I really liked the number side of it, the problem solving, and using all of my creativity and skills holistically.


While he was still studying, Rastogi's life took a different turn.


Vaibhav "Rasti" Rastogi:

So, while I was doing architecture engineering, I realised that it would take me years to get myself settled there in terms of supporting my family. So, I moved into IT, and I self-learned IT programming. I let go of my degree of relevance to architecture, and instead decided to become an IT programmer. So, I had a job in that before I actually finished my architecture engineering degree! I was doing two things together then.


It was hard work, but well, it paid off. I had a much better job—actually, I was working as a full-time employee while I was doing full-time studies at the same time. And it landed me the job in Singapore.


Being a self-starter, Rastogi taught himself to become a programmer. He used those same self-learning skills which he practised in his youth to master the art of investing in the future.


Vaibhav "Rasti" Rastogi:

I started with programming. I'm a self-learned programmer. I actually picked up books on databases like 'Oracle' books, the whole set, from one of the libraries. Yeah, so, that was fun. It was very intriguing. And what I realised was that there were similarities there to what I was doing as an architect. I was putting the whole thing together, you know, as a concept. Like, what the building should be looking like and then trying to get into the finer details, eventually, as a conforming component, and that's what we were doing even though IT projects.


So, we had an evident understanding of what the goals of the project were and of the difficult constraints around it—like the time budget or the constraints of the project—and then eventually figuring out how we could work it together. And as we grew up in our career, we developed team dynamics as well. And so, I was able to use my architectural skills—not necessarily at the same level of creativity—but the whole thing around putting a concept first and then delivering was something which actually I was able to use in my IT programming as well.


Rastogi went on to expand his skill set by enrolling [to get a master's degree in] computer science at the National University of Singapore.


Vaibhav "Rasti" Rastogi:

I guess I have been very 'tuned' with the idea that we need to go for a formal education at the same time. So, I actually enrolled myself in one of the best universities, National University of Singapore. And I did master's of computer science over there as a part-timer. And I really loved it, because I was able to see not just practice what I was doing, or what I was learning on my own, or liking things on the project… but also how the industry is moving from the research perspective. So, it was great because I was able to get exposed to more large database sets and see how the whole industry was moving around that.


When Rastogi got married, he and his wife started to think seriously about their future and where they would settle and continue to build their life.


Vaibhav "Rasti" Rastogi:

While I was in the fourth year of my Singapore stay, I got married as well. And because it was a part-time master's that I was going through, once it was over, it was kind of a question of... 'Where do we really want to settle down?' And as you know, there's a national service that kids, the boys, have to go to in Singapore. And we were like, 'We love the country. We are okay with the temperature and everything and even the proximity to India. But do we really want to impose that kind of restriction on our second generation?' And the answer was 'No'.


And then the next question was, 'Okay, which country from here?' As a young couple, both in IT, we had all the places in the world that we could have actually migrated to. So, we were doing kind of a very systematic approach. We worked out all the different options. We worked out the different criteria that we'd be looking at. What were the weights for that? We did a bit of voting on each aspect and then came up with a cumulative score with a weighted-factor model, which I didn't really know what it was called earlier! It's all very process-driven.

Very process-oriented, very process-oriented, and I thank my wife for being on the same page, for being able to work in the same mentality or, I guess, with the same frequency. Of course, we differ, or we have different opinions—mostly, all the time! But the thing is that we have a congruent system that can lead us into a more systematic approach. And, of course, we believe our emotions as well. But that is just one of the other factors that we look at.


And so, we did quite a few countries, and Australia was a winner. And we applied for offshore residency from Singapore and had no issues. Then in 2005, we got approved, and by 2006, we were here.


Having the Right Strategy for Life, Business and Property Investments


Despite having no real savings to invest with, Rastogi's tenacity pushed him to make a start on his journey.


Vaibhav "Rasti" Rastogi:

My first property was actually back home in India, in Delhi. I was never a saver, so even the money that I had was actually spent on my marriage. So, I had nothing to start with. But then, I quickly realised that I had to have a plan for the future in terms of, 'We really need to invest'. But the problem was, there was no money to invest.


So, the idea was if we invested somewhere, then we would need to save for it. Because if there was a mortgage on our head, the mortgage money or the savings would go out of our budget first, and then we'd have to play around with the leftovers. So, on that note, we were able to invest something back home after doing a bit of research and listening to our family and friends over there. It...was good for some time, but then it didn't really work very well. I guess…too many distributors. And so, I was out of investing for some time.


But having said that, I was still investing in shares because I have realised that it's not what I earn that matters at all. What matters is what my earnings can earn for me. So, making the hard-earned money work harder for me was the key. So, I was actually doing a lot of research. As you know, I studied programming on my own. I started looking into how to go about investing my savings, and having that kind of mindset to save more to invest.


And so nothing happened, until 2007... We were on the crossroads. 'Okay, should we really go for our first home in Sydney here, or what should we be looking at?' And then I was like, 'Hold on... If I go for my investment or buy my own property, then I'll be stuck in the sense that I have to value my job… a lot more than otherwise'. And it made me think through what I really want in my life, in terms of my career, as well as what kind of life I would like to live and lead along with my family.


Rastogi was faced with a personal decision, which would eventually lead him a step closer to his financial freedom.


Vaibhav "Rasti" Rastogi:

It came to me that IT had been more of an accidental career. For me, it was a demand of the time in a country like India. But now I'm here in Sydney, in Australia, where opportunities are just all over the place. It's like, if you're good at it, there will be an opportunity for you to work on. So, that prompted me to think, 'What is my real value system?'


I realised that it's the investing and making money work harder for me that I should be looking at. And that actually made me quit my job in 2007 in IT. I was actually doing an excellent job there. I was working with a company called Evernote, which is a joint venture of Accenture and Microsoft, and I was doing a great job over there. Loved the company. Loved the job I was doing.


But then, I really wanted to think about what I actually wanted to do. So, I quit my job, and started preparing for GMAT, and went for my MBA. I wanted to go to the U.S. for my MBA, as in business school. But my wife was pregnant with our first child, so we had to really think through what we wanted to do. So, that made me choose to go to a local school here in Sydney—AGSM. I'm so proud to have made that decision. But at the same time, I was so keen to go to the U.S. So, later on in my exchange program, I chose to go to Chicago Booth Business School for my studies.


Things seemed to be heading in a good direction, but life took a turn once again.


Vaibhav "Rasti" Rastogi:

That's something that went very well. And I really wanted to get into finance, and money management, and getting industry experience in banking... but GFC happened in 2008. That actually put on so much pressure in terms of, 'What should I be doing? Should I really go back to the IT industry? Because now, I have no job, my wife is going for maternity leave. And we don't want to compromise on our lifestyle'. So, that was a hard year, like 2008 or 2009, because I was very much committed to making a switch. And because of the GFC, the jobs were tough to find, especially when I was making a career change.


So, in parallel, I started studying CFA, which is a Chartered Financial Analysis course. And it's a three-level program, which typically, people take six, seven years, sometimes more to complete. And I actually got it out in three years. So, the preparation for that exam alone got me that credibility, and the motivation that I really wanted to stick to my industry of choice, which was financial investments.


Because of my sheer persistence and consistency in my efforts, I was able to land a job in Westpac as an equities analyst. That's purely a research role and nothing to do with architecture, nothing to do with IT. But purely looking at the company's financials, making a call on whether it's a good company to buy or not. And, yeah, so from there, once I lent into the job...six months into it, I realised that... 'Okay, what do I do now?'


Conquering Your Goal With the Right Mindset


Rastogi spent six months working at Westpac as an equities analyst, and then the prospect of his children and their future entered his mind.


Vaibhav "Rasti" Rastogi:

I was still under financial pressure. And I didn't want to compromise on our first child as well, like in terms of the aspirations.


Tyrone Shum:

Of course. I mean, your first child is going to be something that you put a lot of love and care and financial support towards. And I think every parent does it as well. I remember my first child, we spent quite a lot of money, you know, getting the best of the best. But the second child...different story. But you don't know what you don't know. So you know, it's a lifestyle decision. But also, we try our best for our kids sake, as well, too.

So that's really, really interesting. You're in Westpac. And you started, I guess learning a little bit more about the financial side. At what stage did you decide to purchase your property in Australia? Did you buy a first home? Or did you start investing into property?

Vaibhav "Rasti" Rastogi:

Yeah, so that was the thing that I was talking about six months into my role. I saw that consistency of my paycheck. And I was looking at my bank balance, which was not there. And the question was like, 'Okay, 2010 already and my daughter is only two years old now. Do I really want to put my own property here instead of paying the rent? Do I really want to pay my mortgage?'

And then it struck me that it's a tough gig to work out—the affordability, livability of one property at the same time. And that made me realise, 'Okay, let me pick some books'. And I started reading about it. So, one of my favourite books is Rich Dad, Poor Dad. I'm sure everyone's heard of it. If not, go for it. If you've already read it, read it one more time. And that's where I actually learned the concept of asset and liability, not from the accounting perspective, but more from the personal growth perspective.

And I realised that I'm better off going for my investment compared to my first home, though I had nothing at that point of time, in terms of my deposit for either of them. But it was more about aspiration and having a plan. Because the good thing with my wife and me is like, we're just like a company, like a business.

People talk about the business strategy and the five-year planning. We used to talk about our own personal growth like 'Okay, where do we see ourselves in the next 10 years?' And in 2010, we started working out: Are we living in our own home or not? And we realised that we really want to be on the beach next to the water, good Waterview property and raising the kids over there. Yeah, so that was the aspiration that we had in 2010. And I kid you not, I am actually in the Northern Beaches now, next to the beach!


Tyrone Shum:

It came true!


Vaibhav "Rasti" Rastogi:

So, yeah, exactly. To me, it's more about what you put your mind on, your focus on. And the energy flows and law of attraction works. So, I got in touch with lots of good people out there who gave me that inspiration. I started going for different seminars. And I realised that education, when it comes to financial education—yes, I've been really educated from that point of view, you know, enduring the Masters in IT and an MBA—but when it comes to personal finance, it's an entirely different story.


I knew how to read accounting books or look at the growth potential of a company. But how do I put and apply those rules on me as a family? It's an entirely different ballgame.


Tyrone Shum:

And I think the biggest difference is that with a company, you have a group of people who know that they're aspiring towards that one big company goal and then getting paid to be there. Whereas the family, there's a lot of personal, emotional attachments behind it, you know. You're not all being paid to get a big house to do that and so forth. It's all about, you know, what does every one of us, individually, want as a family and as a group and trying to achieve that, so we can totally understand.


And I think the challenge we all face, you know, in any type of family is that everyone will have different opinions. You know, there might be one party who is more gung-ho to go and invest into property. There's another one who takes a step back and goes, 'Oh, I'm not sure about this and that', and you just got to try and come to some kind of compromise. And it's always that, you know: give and take.


Vaibhav "Rasti" Rastogi:

I'm actually okay for someone to make a very conscious decision or lack of decision, as long as it's done deliberately—as in consciously. The challenge that I find is that people have forgotten about themselves as the hero of their own life. We are just going through and leading life without really, I mean, it's a life which is controlling us, the things around us, which is controlling us, rather than us controlling the external factors.


So, it has come down to the mindset thing. And the mindset is the thing that I'm talking about; nobody can teach anyone. It's something that you live with. Of course, by coaching or mentoring, you can try to work it out, you know, for good or worse. But that is more conscious now, as compared to, you know, getting up early in the morning thinking through, what is your plan for the day, and then leading the day is one scenario versus, 'Get up, okay, now it's time to do this. Okay. Now it's time to do that'. You know, not really focusing on the end goals, rather.


Tyrone Shum:

Unfortunately, that's what happens a lot in life. You know, whenever there's something that you got to get onto, you just got to be reactive rather than maybe proactive and say, 'Okay, this is the goal that we're trying to achieve. These are the steps that we need to follow'. And you know, it's important to allocate time to do that as well.

All right. Well, I'd like to have a chat with you a little bit more about, Rasti, is to find out a little bit more about your property investing journey. You mentioned that you've got a portfolio of $5 million worth of property. How many properties do you have in that portfolio at this point in time?


Vaibhav "Rasti" Rastogi:

I've got 15 properties.


On the Matter of Opportunity Costs


With a portfolio that size, Rastogi has certainly seen his fair share of ups and downs during his journey. He remembers the worst moment in his investment career so far.


Vaibhav "Rasti" Rastogi:

This is probably my third property that I was looking at. So, this was interstate property. I knew that I had to go for an auction over the phone. I did all the research that I used to do like I am kind of a person who would build up a report first and then look at the property in much more detail, and then try to work out the pricing. And that's to plate it to me that this is the maximum price that I would pay for it.


And so, the lesson that I had, like on the day of the auction, was that I think I got too emotionally attached to the research process that I had been practising. And in the auction audience, there were a couple of buyer's agents who were very well, [acclaimed], accomplished buyer's agents. And I thought that they were bidding for the property, and they are in the game as well. So, there's something that probably I don't even know about the property.


So, I started doubting my own research. And I went with the flow emotionally, that if they are doing it for a client, adding a price point to it, I'm doing it for myself. If they can see the value as a local agent there, maybe I'm missing out on something. And I actually ended up buying the property on the higher side of my range. But I realised the kind of mindset that I had… Like [during] an auction, we have a few seconds to react on the bid, especially when you're doing it on the phone. It's not really easy.

And the lesson that I learned was not to get emotional about it. And yet somehow I'm still holding that property in my portfolio. But it always reminds me of the day of auction that I actually failed my own process then. I paid slightly more than what I should have paid. I should have been a happy loser on that auction rather than having a winner's remorse now.


Tyrone Shum:

Yeah, it's interesting. And we always look back on hindsight. I think that's really, really good that you've shared that with us because it's hard to sort of take the emotion out of it. Sometimes when you're looking at, especially this is your third property. It's not like you know, you've done 10, 15 transactions already. This is your third one. And it's, you know, you're still looking through that process.


So, the biggest learning lesson from that one is that instead of overpaying just slightly, like you said you did, if you had just let that one go, could you have missed an opportunity? Because, you know, potentially isn't that property that you currently hold a good property actually in your portfolio? Or, is it still sort of, you know, sitting flat at this point?


Vaibhav "Rasti" Rastogi:

The property has not really done too bad. But to your point, like when I'm saying 'yes' to a property, actually, I'm saying 'no' to another 10,000 properties as well. So, it's not so much about me saying yes to a property, but more about losing on the other 9,000, you know, 9,999 properties out there. So, to me, it's more about the opportunity cost, and it's not so much about the property that I was talking about.


It was more about me having a process and not following it till the end. I should have walked away at a percentage. Because I always look for bargains, like if there's a property for me, so maybe 93 cents in $1 or 94 cents in $1, I'm not really happy when I'm getting 90 cents in $1. So, that's where I'm coming from. I actually overpaid to my liking, of course, still under the market value from my own research. But I went through with the flow on that day, which I still remember very vividly.


On Seeing the Potential Value of Properties


There are many moments like this one in Rastogi's journey that he remembers vividly, including his aha moment, where seeing the value in the renovation strategy struck a chord in him and everything seemed to click into place.

Vaibhav "Rasti" Rastogi:

I'm talking about maybe my fifth property purchase. So, I did all the due diligence on a property which was unloved, demanding TLC—that's tender love and care. It was a deceased estate property in the Central Coast.


And what I realised was that I was actually a graduate of Cherie Barber, who talks about graduation. And what I learned from that course was until you do get your hands dirty, as in roll up your sleeves and do things on your own, it's hard to learn things just by reading or, you know, research that you have on the ground. And that actually led me to go into an unrenovated property that I can probably go and do my renovation.

And the 'aha' moment was that I was able to see the value from the strategy that I was trying to deploy that other bidders were not really thinking about. And what I realised is that it's the value for me that matters. That would actually define the maximum price I should be able to pay for the property as compared to what the market is doing. They might be on the wrong side of the equation. But it's their strategy; it's their perception of the value.


I need to think about my own value-added or the value perception, and then play the price accordingly. Because value is what you get, and price is what you pay. So, if there is a enough discount from that perspective, whatever threshold I would like to have, I'm more than happy to go. Sometimes that number could be a lot higher than what the market is really able to pay. So, in that scenario, I'm happy to pay over the market price just to win the property. Because I'd see the potential; I see the value that it will bring to me in my portfolio.


Tyrone Shum:

Gotcha. That's really interesting. So, I guess every deal is going to be different, because I'm also thinking this through as well. I've just been recently having a conversation with another colleague who is actually looking at different deals. And he told me that, you know, other people were coming into this particular deal in New South Wales, actually in Sydney, where every time people were looking at it, they make a loss on it, because there's no way that the structure could be made profitable, this particular deal.


But then, when he came in and structured it slightly differently, he actually returned a very, very profitable rate of return from the rest of the rental income. And, on top of that, the equity value after doing a certain renovation. So, I guess everybody comes in a slightly different perspective.


And I think a lot of people just don't really look at different angles. They probably just look at one angle and go, 'Okay, what's the rental income? What is the equity that we can potentially gain?' Whereas sometimes, you know, you might be looking at a particular property, but particularly, for development—I can talk from personal experiences that—if you look at a particular deal, there are so many different ways you can chop up the block. You can build this and do this and that with so many different potential opportunities. You just got to work out which one is going to be the best one.

And it sounds like that's what you did with the particular property that you purchased on your fifth one. And that's what I guess, obviously, what's going to work. Because if you don't have a plan or a goal, and you don't know exactly which direction you hit, it's pretty easy just to jump in and just buy any random property.


Vaibhav "Rasti" Rastogi:

Exactly right. And just to add on to that point is: I don't really think or take property just in isolation. To me, it's just like what I was doing in my share portfolio from our clients, which is asking what would that additional stock do in my portfolio that has a lot more weightage. Because it is not just about the return profile, but it's also about the risk profile. So, to me from the financial matrix of risk-adjusted return is the thing that I'm looking at. And that actually defines the mandate of, what should my next property be looking like?


So, I have a mandate. I have a strategy in place first that will define and guide me to the mandate for my next purchase. And then, that has more value for me from the strategy or from the portfolio perspective. And if having said that, I'm not really saying 'yes', or 'no' to other properties, which doesn't rely on that same regime. It's just that I would be looking for a lot more discount for me to get excited about that opportunity.


The Importance of Making Friends With Banks


Rastogi shares with us the strategy he used to build his portfolio of $5 million worth of property.


Vaibhav "Rasti" Rastogi:

What I learned early on in my investing career was that we have to really make banks our friends. Yes, capital growth matters, because that is actually making us rich. But we can't really chase capital growth all the time because there will be some ceiling hits through the journey. So, we have to be very mindful of what banks can lend us too, as in terms of what would be our serviceability to them.


So, the combination of having the right cash flow to suit the bank's criteria, as well as the capital growth as a combination, is what I actually look at to proceed.


So, when I was buying my fourth property, I think my broker told me that 'This is the last property, Rasti. Don't bother about the fifth property'. But when I did the same thing for the fifth property, I was like, 'Okay, one more property, last one'. And then probably, I was told the same thing on my 15th property. But this is the last one. It was my strategy that I have to stop after 15 properties. So, I actually gained 15th property three years ago. So, it's just like following my strategy, nothing more.

So, two things, cash flow and capital growth, are important. To me, the other thing, which is equity in the place is also essential, like how much discount I'm getting, because that will actually de-leverage my portfolio. So, having a combination of the three is the key thing from my perspective.


Tyrone Shum:

To be able to grow and to increase your portfolio, you were basically leapfrogging by pulling out the equity from each property that gained to invest into the next one. And with the cash flow that was funding the portfolio to service the properties that you had. That was basically how you're able to grow it like that.


Vaibhav "Rasti" Rastogi:

Yeah, exactly right. So, to me, it was more about having the right strategy first, then having the right location and then the right property. Price that we pay is very beyond tertiary actually, because now, if I look back on a few of my purchases, the property which I bought at about $400,000, four years ago, now it is valued at about $620,000. Now am I anxious about whether I paid $10,000 more or less when I was purchasing? No.


So, the idea is that as long as it's in the growth zone, something that will actually help me get my equity back and usually I can reuse it for my next purchase, are the things that I've been looking at. But having the corner of the eye looking at the long-term growth potential as well, because it's not just about growing the portfolio. We have to also be conscious of the later stages of consolidation and wrapping it up. So, having a strategy overall for the whole portfolio is the key thing as well.