: Where Is Affordable Housing In Australia?

I’m passionate about affordable housing for two reasons. Firstly, I believe everyone deserves the right to live somewhere they feel safe and comfortable. I also know (from experience) that the current housing market is out of reach of most investors, not giving them the returns they need to get ahead, and it’s over-inflated with large family homes – the majority of which are almost empty! 

It makes no sense to me that people are sleeping rough, couch-surfing, or living out of their cars while there are thousands of empty bedrooms that Aussies continue to pay mortgages to own.

Find out more about my journey to becoming an affordable housing investor and advocate as I chat with‘s Tyrone Shum below.

Where Is Affordable Housing In Australia?

By Tyrone Shum,, August 26, 2020.

Chatting with Ian Ugarte – part-owner of Small Is The New Big, consultant and real estate advisor – we’ll follow his journey as he began work as a plumber after high school, his path leading him into teaching before taking on property investing full time and educate investors to create affordable housing.

His success attributed to a life-altering seminar on positive cash flow investing, you’ll discover how this marathon-running Master of the Universe (MOTU) grew up in a loving family (albeit with a chauvinistic mindset) whose support has propelled him to achieve his goals.

Hit play and learn how to know the difference between good and bad investment property, and be inspired to save for your own first deposit!


So what does he do in any given day?

My day can be very varied. And that’s the sort of person I am, I do different things, we’ve started many businesses over 22 years – 23 businesses in 23 years we’re up to.

For me a daily basis is getting up, we have a two-acre waterfront on the Sunshine Coast. Right now I’m sitting down by the river, looking out, talking to you. So I actually get up about 4:00 in the morning, enter a house for about 45 minutes. I will do a job somewhere between seven and thirty-six, depending on what my training is for a marathon. Come back, have a shower, get the kids to school – I’m one of those fathers who have dropped the kids off and then I’m in the office for two to three hours tops. And then the rest of the day, I take it pretty easy. So we’ve got an office that is full of staff that look after what we do and I’m very gracious that they’re there and my wife running the whole business.

I’m a light sleeper so I normally would try to get in bed by 8:30 pm when the kids go to bed. Obviously there are times where we’ve dropped certain projects underway or webinars that have got to run or teach some people some things, I might get to bed at 11 or 12 pm. So I can survive on four hours sleep for probably a month and then I’ll need to do what we call sleep bank and get back into the groove of just that running. So I do love my running and I do love my exercise. I don’t love it while I’m exercising, but I like the finish line when I’m done.

As a property investor, consultant and real estate adviser he also works with his wife Christine in their company Small Is The New Big, which helps create affordable housing opportunities in Australia.

My property title is what we call in my community the MOTU, or the Master Of The Universe. So I’m my own little he-man and I do like a bit of a laugh so that my community understands that most of the time, we’re out having a good time. Obviously the serious part of investing and how we can help out other people, not just ourselves and the community in general.

Passionate about running marathons, Ugarte got into it later in life when he was able to run with Cathy Freedom in New York.

So I’ve done currently nine marathons. I did my first at the age of 39. I am one of only a thousand people in the world that have completed the six world major marathons, which includes New York, Chicago, Tokyo, London, Boston and New York. There’s another one in there, six of them in total I have now done that. I’m actually going off and now doing the six continents and so started seven continents and now I’m on two. I’ve got three more continents left, I’m doing Antarctica in March late next year. I will also do South America and I’ve got to fit in an African and the African will be my finale I think, which we’ll be doing six marathons over seven days across some rock and desert. One of the hardest marathons in the world.

When we changed the way we were doing property and actually started to get to the point of success, that was probably in about 2009-2010 and I’d never really run more than 10 km at any one time. I’m sitting there in the lounge room and Robert Blake Estella was being interviewed and he had just started what they call the Indigenous Marathon Project. What he does is he goes into remote Aboriginal communities, he does their deadly run series where they take fire cat runs and from that, people apply to become part of the Indigenous Marathon Project over six months. They train them up to become marathon runners and end up going over to New York and completing the marathon. I listened to that story and I watched Running to America on the ABC. It’s an ABC documentary and every person that’s gone over since 2010 that’s usually a team of somewhere between seven to 15 people and has completed the marathon. They’re promoting the locals in the community and can actually show that they don’t have to be fit and healthy people, they have to be leaders in the community and often they do the marathon, they come back and they are absolute rock stars.

And the change of health we need – the amount of diabetes problems in remote communities and home is huge. Cathy Freeman, for those people that didn’t know, after winning the gold in Sydney had actually got type 2 diabetes. She went over in 2000 and 2012 to complete the marathon and that was the year that New York got called off, that was going to be my first marathon. I got to run around because I was supporting the Indigenous Marathon Project as a charity; I got to run around Central Park in New York with Cathy Freeman and was brought that day to Stella. I gather it made a photo, like until I get Alzheimer’s I’m going to remember that a long time. So that’s a long story but that’s how I got into running.

Growing up in the eastern suburbs of Sydney, he initially entered into the plumbing profession on completing high school.

I came from a good middle-class family. My parents are Spanish immigrants, came to Australia in 1970 – I was born in 1973. My dad became the first Australian qualified plumber that was a migrant, so he actually went through the TAFE course as the first person and he had a good skill set on being a boilermaker in Spain. I have an older brother who’s nine years older than me and a younger sister who’s seven years younger, so there was a fair distance between my sister and my brother; my brother became a plumber as well. When I got to the age of leaving school, I went to year 12 and I said to my dad, ‘I wouldn’t mind if I became a plumber because I don’t really want to go to university.’ My dad said, ‘Well as long as you finish year 12, I’m quite happy for you to become a plumber. It’s not what I want you to do. But you know if that’s what you want to do that’s fine and I didn’t really care.

With the instrumental aid of his parents, he then saved to buy his first property on a very small salary.

My first property investment was at the age of 19 and I was earning $222 a week in hand after-tax and my parents put a deposit down on a house across the road and ultimately it was meant for me to move into with my then first long term girlfriend. And so I lived at home, I worked with the business, I didn’t get paid any overtime whatsoever but my parents did put a deposit on a house for me and I was putting $200 out of my $222 of wage into that property. I still managed by the end of the year to save $800, so I was a handy little saver when it came to it.

Now I always wanted waterfront property and when it comes to waterfront property in Sydney, at the time water views was going to cost me $550 000 and that was around the Maroubra area. We think back at those times, $550 000 I would have mortgaged about 10 of them if we knew what to do because to buy something in Maroubra currently, I’d probably have to spend $3-3.5 million. But we took a week’s trip one day up toward Central Coast and we stopped at a place called Berowra Waters. We went into the shop by the wharf and the house was for sale for $230 000. Thought, ‘That’s cheap – waterfront property for $230 000, an hour away from Sydney. This has got to be something that we have to look at.’ So within a couple of weeks, we’ve actually moved into a property that was for sale. So that was my first negotiation in property really and all the deals that Christine and I have, I can honestly say that 100% of all the property deals we’ve done have never been a standard contract deal. We’ve never had a standard six-week contract or a standard term because we’ve always had some sort of condition in it. Now, this particular property we agreed to purchase as long as we could rent it for three months, to make sure that we could handle the area.

However, there turned out to be an issue with this property which would make living in it impractical for Ugarte.

This property was great which we had a three-month conditional clause in. We moved in on Saturday. I was a semi-professional soccer player, so I was in a semi-professional contract on Saturday we moved in; Sunday we went out. The first game of the season and tore my cruciate ligament and that was really the reason we didn’t end up purchasing that property because there were 89 steps to get from the bottom of the river all the way up to the top. So in the meantime, we found a property just across the bay which was for sale. It was the original guy who started Alcan Aluminium in Australia so this was his super-wealthy, holiday home and we negotiated on that at $230 000 and it was a double block. Now we couldn’t afford the block next door which he also owned, so like every ethnic family my father bought the block next door. And as Christine’s a true blue Australian, she is going, ‘What the hell is going on here? The in-laws are moving in next door! This is full-on.’

It was probably one of those first properties where we learnt a lot because the first thing we did was before we went in during our five-day cooling-off period, we got the council to come in and look at the property. It was an original fisherman’s shack and downstairs was a bar area and lounge room, upstairs has two bedrooms plus bathrooms, quite a small place. When the council came in the sort of dugout and excavated underneath and put a slab down, but it didn’t actually make the building high in code. So the council said to us, ‘Look we can’t make them have it or you can only really live upstairs.’ So we went back to the owners and we said, ‘It’s not legal. We need to renegotiate the price. We’ve had some pricing to actually jack the house up and get it back to its proper height so that we can live downstairs as well.’ And we negotiated about $20 000 off the purchase price and ended up in a position where it cost them $7 000 to jack the house up, get it to the right height and get going again. So it’s really great that we managed to negotiate fairly early on.

So, with his parents’ help, he paid down the debt and bought his first home in Berowra Waters.

The way that we got into that property was the original house that my parents put the deposit on across the road in East Lake, we sold that and the market had gone up in value and having paid down the debt a little bit, we ended up with $60 000 of deposit, which was after I paid my parents back with interest. It wasn’t one of those freebies that my parents donated money to me, they did help me and absolutely I love my parents to pieces. I guess I get really emotional at different stages, depending on who we’re talking about and I don’t hide that emotion and I’m very happy to show it. It’s the true essence of how I really feel about some of the things I talk about. They just work so hard – my dad is over the age of 70 and he works so hard. He just makes me feel so inadequate and I go and because I might be working with him for two or three days, it’s helping me out doing things and he puts me in shame. Honestly these days it’s just so amazing to watch him.

So East Lake we bought as an investment property basically and my parents put the deposit down. We then sold that property a few years later which gave us the deposit to be able to go up to Berowra Waters and buy our first home.

Before becoming a full-time property investor, Ugarte worked in plumbing where he was actually able to use his skills to compete for the Olympics of work skills.

I got to a point where when we first moved down there I was working with my father. I just had got my plumbing licence.

So essentially I moved down there and during my time as an apprentice plumber, I was a competitor in what they called at the time Well WorkSkills, which is now called WorldSkills, that’s a skill-based competition for all trades. You compete at the regional level, if you’re in regional, you go to a national level, if you’re in the national level you end up competing against other countries and you can win gold medals, like the Olympics. So it’ll be the skills Olympics that you’ll be attending. I won a silver medal at the Australian, so I didn’t get the gold, that wasn’t meant to be. Because of that though I made some really good contacts within NSW and having good hand skills is always a really good tool.

From plumbing, Ugarte diverted his career in a slightly different direction which allowed him to impart his knowledge to others.

Up until recently, I’ve always been a teacher, a realist. I only realised recently that I am a teacher. So I will always be the one teaching and one of the guys that were involved with WorldSkills said to me, ‘You know, we need some younger people coming in. Would you mind doing some part-time assignments, doing some part-timing at all?’

I literally probably only had my licence for a couple of weeks and I was probably one of the youngest teachers at the age of 24. I was doing some part-time work and essentially that lead up to me being able to do part-time work which paid for our meal. So that would pay for the mortgage, which meant that any work I did within our own businesses would go towards being able to live our life basically. So our mortgage was taken care of.

I then became a teacher in TAFE NSW, after doing some volunteer work in Cape York where we built a tourist shack and toilets for a local Aboriginal community that were doing tours to Waterfall; they needed somewhere where they could take the white people to and so they could go to bathroom Gruben in their community. I came back, got my TAFE NSW full-time teaching job and then became an acting headteacher in plumbing and a full-time teacher in plumbing and that was great.

Leaving no stone unturned, he then progressed within TAFE NSW before eventually beginning property investing full time.

Just out of the blue one day, starting to work on my motivations of doing the same thing over and over again – which is what you have to do with property, find your success, find your bread and butter, do it over and over again – and over a period of eight weeks, I just worked on doing the same thing. And that was answering emails at the same time of the day, making sure I answered phone calls at the same time of day, put in appointments at the same time of day.

Within eight weeks I actually applied for a job which was just a Pie in the Sky job, which was the assistant director of a business which was at 3IC of TAFE NSW Sydney Institute – and I got the job. So I took seven pay scale hits in one single leap when I walked into an office at the age of 36, with the nearest person to me being 20 years my senior. I fit in really well and I really had a great time.

And that was really my last job before I left New South Wales and became a full-time property at this time.

Jumping into property investing full time, Ugarte wasn’t fully prepared for what to buy in terms of gearing.

My father bought property at peaks twice and lost money on both of them and so I thought I’d just follow suit and do exactly the same. So we were the first of a young generation moving into that area and they had been holiday homes for a long time, mostly older people, and we were the first young couple to arrive. Within six months there was probably another six young couples that said, ‘You know, this is good value for money, I’m moving from Sydney up here full time,’ and the house next door was put up for sale.

An accountant brought it to us and about two years into him having that as a holiday house I rang him and said, ‘Listen we’re moving back to Sydney, I found a factory to do a factory conversion and I’m going to sell out and use that as a deposit for buying this factory’. He rings me back after five minutes and said, ‘You don’t need to sell it. What I want you to do is go and see the bank manager, refinance against Berowra Waters, that’s gone up in value, and put a deposit on over there. It’ll be cash flow neutral, you can still continue to stay at Berowra Waters and in the next few years you can develop for one in Botany.’

I said, ‘That’s a great idea, that’s the sort of accountant I want!’ It turns out what I thought was neutrally geared, it was neutrally geared as long as we only took into consideration the cost of the money that was on the mortgage of the factory. What I hadn’t counted on was that the money that we’d taken out of our own home was costing us money. So I’d never actually factored that in. So it was negatively geared by about $8 000 a year. Now we were struggling for money. So I said, ‘This is absolutely crazy. I’m struggling for money, obviously, I’m paying way too much tax. Even after negative gearing, I still haven’t got enough money. So what I need to do is go out and find another negative property, so I’ve got more money at the end of the year and then my tax problems have disappeared and I’ve got more money in the bank account.’

With this adversity, he learned to identify the difference between good and bad investment. He believes this is an issue many of his client’s experience as well.

So lo and behold, after only buying into seven different properties, we were at $36 000 in negative cash flow and at that point in time, I was on a $96 000 wage. So take some tax off that, were about $66 000, take the negative gearing of $36 000 off that, we were down to $30 000 and at the time we had three kids. Our breath was holding out for the end of the financial year so that we might get $10-12 000 back.

We never had any money. The only focus I had on money was how little we had in the bank account, not where it was actually going in and it’s something that we see a lot with the clients that we work with on a daily basis. They never actually stop enough to say, ‘Where am I spending my money and what is a good investment, as opposed to a bad investment?’ Now I know that there’s plenty of investors out there that say negative gearing is a good thing, but I will never, ever, ever negative gear again – unless I’m buying a property for a specific reason for a year or two, because I’m going to develop it into the future. But it makes no sense whatsoever to actually lose money on an investment when you can actually do strategies to get great capital growth properties, that will also return your cash flow. And that’s something that we’ve been able to master over the last few years.

There were several moments throughout Ugarte’s journey which make him feel like the world was out to get him. However, this helped him to learn an important personal lesson.

There’s always that one point in someone’s life when there’s a set of circumstances that puts you in a scenario of change and you don’t have any choice but to change because the bricks just hit you in the face. Well maybe not, but you’ve had the paper cut and it says, ‘Now we’re at the point where something has to change.’

We were sitting there in 2010, the major point turning point for me personally. So we’ve written a book, my wife and I, Small Is The New Big – Health, Wealth, Love and Happiness about the holistic way of looking at life, making small incremental changes to make a difference in the big scheme of things. In that book, I tell this story about sitting on the estuary of a place up in Coffs Harbour where we go on holidays every year and we would share it with another bunch of TAFE teachers, all of the plumbers. I’m sitting on the side of the street there and by stealth, one of my mate’s kids was about 8 years old at the time, came up out of the water, looked at me and said ‘You’re Jenny Craig’s biggest challenge now.’

Even though Ugarte took this as a little joke initially it really cut to his core.

So everyone laughed and I laughed, but it really cut to my core and I didn’t actually think that I was overweight. But every time I took a new job in NSW from part-time teacher to full-time teacher, I put on five kilos; then from full time to headteacher I put on five kilos; and from headteacher to assistant director of a business I put on five kilos. So I was essentially 16 kilos overweight for my size. Now I’m not a tall fella right. I’m quite short on soft one single five to three in the scale. And you know when you’re 16 kilos overweight at that sort of you know when you should be about 63 and you’re waiting for 16 more. That was you know that that was a huge impression on me that I thought I was actually I had all the excuses in the world you know I’d had two knee reconstructions you know. And I’d hit 30. And all that sort of stuff that went through my head that said. And they were all just excuses they’re all just crap that I fed my brain right.

So that kid has just given me the most honesty that anyone would ever give me. Sometimes with kids, we actually don’t give them the ability to be able to tell the truth and then we stop them from doing it. And when I wrote this and his mother read the story she says, ‘I’m so sorry.’ I said, ‘Do you not see how beneficial that was to me that your son did that? I have to be forever grateful for him saying that to me.’ Now that was one occurrence.

The second instance was relating to the job that he had been passionate about for so many years. Although it was an emotional time for him, it would prove to have a profound impact on his situation in the future.

Because I loved my job so much – now this is a problem when you love your job, it doesn’t really occur to you that your life is going up in a shambles because you just love turning up to work. As a teacher, I was turning up and doing something that I loved and I still love doing. So everything was great, I had a six week holiday at the end of the year, we’d gone away to Coffs Harbour this kid’s told me that I’m overweight. I go back, I turn up on the 27th of January 2010, one day after our anniversary. I walk up the stairs and into my office and I’ve got a new boss. And that new boss is the sort of guy that they put in a corner somewhere so they can’t do damage. The problem was it was in the corner of our plumbing licence. That new boss tore my world apart in two days.

And to this day, I’m still emotional about not being able to be able to secure myself in that position. $36 000 negative and then all of a sudden you go, ‘Holy crap, how do I get out?’ $694 was coming out of my pocket every Monday morning to pay for the negative gearing and so when I didn’t love my job, two days after that I went home, my wife saw how unhappy I was – and I was completely unhappy, the kids became unhappy and the pain and the gearing actually started to tear me apart. For the first time in 30 years of loving my job, I’m now in a position where I hate my job and I’m no longer passionate about it and I need to get out quick.

We were fortunate that we were in a position where someone had said, ‘Go and see these positive cash flow seminars,’ and eventually, we went to do that. For me, those two pivotal moments one month apart were the basis of change that I needed to have, the pain that I needed to have changed. Having worked at different levels, with different people on their own personal development and it’s something that I’m very passionate about, helping people move forward, I know that there are two styles of people. There are people that are lead by the carrot. So you know, when you’re talking about the donkey and putting a carrot in front of it, people are lead by what’s the goal, what’s out there I really want to achieve, that I want to get?

Then you’ve got the opposite and the only way to move some donkeys forward is by whipping them on the ass and making a move. And unfortunately for me, my makeup, motivations and attitude, I’m that style of person. So you have to whip me pretty hard and that pain was something that made a big difference, a massive difference, to our change in our evolution to where we sit today.

The game-changing moment that changed Ugarte’s way of thinking around his property investing journey occurred when he understood positive cash flow.

My a-ha moment came when I sat in a positive cash flow seminar. Two years earlier I’d been told, ‘Go and see the seminar, it’s amazing, you’ll be able to learn how to get positive gearing out of the property,’ and I said, ‘Don’t be stupid. Can’t you see this is like a pyramid building system? What they’ll do is they’ll get you in there, it’s a multi-levelled marketer. You’ll sign up and then someone signs up underneath you and the person on top gets all the money.’ And that was the ignorance that I was travelling with. After those two incidents had happened, I went to that same person that told me to go into positive cash flow property and he had left work, he no longer needed a job because he bought positive cash flow property. I said, ‘Show me what you got. I don’t understand how this works. Because I know the property, I know negative gearing and I know I can’t do positive gearing.’

He said, ‘These are all my properties, this is how much it cost me, how much it earns, and then at the end of the year I’ve got money left in the bank account.’ I went, ‘Are you serious?’ He goes, ‘Here are the figures, have a look at them.’ So I read them and said, ‘Beautiful. I have to go and see this person that you went to see and I want to make sure that I do the same thing.’ And so I sat through that seminar and I looked up there and I said ‘Wow, those figures are amazing, they’re unbelievable.’ They were obviously all success stories and I was convinced, straight away and I said, ‘I’ve got to do this. This is something I’ve got to do.’

With this understanding came the realisation that things needed to change.

So this is an interesting part of my makeup. I come from a European household, so having watched my parents growing up – and knowing that 80% of our makeup has been put into our brains by the age of six. I’m watching my parents operate, my dad earns the money, comes home, my mum does the cleaning, my mum looked after the kids; so I essentially grew into what we call a standard European chauvinist kid. So I married Christine and we’re well into marriage obviously now and I’m making all the decisions in the house. I turn up to this seminar and watch this lady speak and she’s amazing. I go to the back of the room and I sign my wife up to the program. I go back home and I say to my wife, ‘I’ve done something amazing for you, Christine. I’ve signed you up to this program. What I need you to do is learn it, come back to me once you’ve learned and then I’ll decide what we’re going to buy.’ And it’s so hilarious, that was the way I was.

I was smart enough to actually put myself on as a partner. I turned up at the boot camp and in that one day, probably halfway through the first day, I remember thinking to myself, ‘This is not something that you learn by proxy like you’ve got to make a serious attempt. You’ve just had two life-changing occurrences happen to you – someone called you fat and someone else has ruined your job. You need to make a change and it’s not going to happen by acting the way you used to act.’ So for me sitting in that seminar was a pivotal moment.

Now I’m just an add on to the fact that you might have some people agree that the universe sends you certain signals so that you get the message. And so I was obviously the European chauvinist in the family and making the decisions for my wife and all the rest of it. And so I have to stop now and say to the universe, ‘I get it.’ I understand the power of women and really, our business had really never taken off until I let Christine be in control of them.

They could get into that property for $8,000 using the first home buyers’ grant and stamp duty exemption and end up in the property, living there for about $100 a week whilst they rent out other parts of the property – which they can do as their first home. It doesn’t matter if you can’t do that. After living in it for six months to a year, they can then move out and turn that into a positive cash flow property of about $300 or $400 as their first home.

So what was it that held Ugarte back from investing in property initially?

I think the major problem with people that want to invest in property is that they go out and they see someone become successful and idolise them. You look at the Packers of the world and the Trumps of the world; I mean Trump is a very successful property investor, Branson when you look at Australia, you’ve got Ghana and you’ve got Chris Gray and you’ve got all these other investors and people go, ‘I just want to be exactly like them. I’m going to go out and do what Ian did – I’m not going to do any education whatsoever and I’m just going to buy property, because I know I’m going to be rich at one point in time.’ I absolutely agree that you will be rich if you bought property value and it was the worst deal you could possibly buy, as long as you could afford to hold it. Because in 10 years time we know that, on average, it’s going to double and 10 years from that it’s going to double again.

Now my main thing, my main mindset change was, there were two things. Firstly I needed education, because whilst we were out there buying negative geared property because the government for whatever reason promotes that it’s a good thing to do, we were never going right. All we were doing was just following the herd and it’s that classic case of there’s that saying that if you do follow the herd, eventually what happens is you just end up stepping in their poo. So that’s negative gearing, as far as I’m concerned. And the second part of that was that for the first time after hearing those two monumental times in my life around being told I’m overweight and also having a boss change, that I’ve actually never set a goal. I’d never ever written a goal down on paper to actually clarify what it really was. Previous to that, it was, ‘Now I’m going to be a millionaire,’ or ‘I’m going to be rich,’ or ‘I’m going to own a Porsche,’ or ‘I’m going to own whatever.’ There was never anything written down that had any meaning to it and that’s why there was never a ‘why’ in anything that I ever thought about.

He found his ‘why’ and overcame this obstacle when he set concrete goals for himself.

Interestingly enough, most people that want to invest in property want to do it so they can become rich. And having read a number of different books that we read, I picked out a quote recently that said, ‘Rich people have a lot of money and wealthy people have time to spend it.’ So I latched onto that and said, ‘Well OK, I want to be wealthy. I want to be in a position where I’m able to get up in the morning and choose what I want to do,’ which is to help other people.

Once I sat down and set our goals – Christine and I both set our goals – in all areas of our life. So for our wealth, health, our opportunities – the opportunity is what can come up for you – our love, our relationship and the evolution of who we want to be. So we’ve set those goals in those five areas and they were detailed, then we broke those tasks down. So I write things, Christine loves to put things on spreadsheets. We put it onto a PowerPoint and then we put it onto a screensaver on our computer. So we don’t have a TV at home, so when we’re sitting at our computer, in the background is actually rolling through a screensaver so we can actually see what our goals are flashing between our eyes. And our own unconscious mind is picking those up constantly, being able to put that through our filters and manage to put in the back of the brain.

Do you know what it’s like when you go out and buy a new car? It’s the new yellow sports car – no one’s got a new yellow sports car. You go into the dealership, pick up the yellow sports car, you drive out the door and all of a sudden you see ten of the same sports car and you’re now aware that they’re there. So when you write your goals down when the opportunity comes up all of a sudden you’re aware that it’s there and your brain just automatically goes, ‘I need that,’ and you don’t even know. You’re unconsciously achieving because you’ve consciously written something down.

Considering mentors and resources that he sought to aid him in his journey, Ugarte chose to join a property community in 2008.

So we were in there doing what we needed to do, learn what we had to learn. The first project that we went in to do actually lost us money, but by losing us money it taught us so much and there were a few components to losing money. Firstly it was that I still wasn’t detailed enough to do a proper, full due diligence feasibility, so I sort of guessed numbers and that wasn’t because of education, that’s because I lacked the education and I didn’t take the time to learn it. From that lost though, I probably picked the second hardest.

So another great interesting story, because this is really the leapfrog step that happened for us. I went into this project, we had a nine-month settlement on that, the GFC kicked in and all of sudden the lending tightened up. The lending tightened up in our nine-month settlement, so trying to get finance for that project was really difficult. And I remember with my dad, sitting at the Botany RSL, on the back of a serviette I did the feasibility – I said that I was going to spend $120,000 on the subdivision. Now as it turns out, the local inspector that inspected all the subdivisions towards the end of the project – and I’ll tell this story in a second – he said to me, ‘That’s probably the second hardest subdivision I’ve seen on the coast,’ it was up on the Central Coast in NSW. So I happened to pick a really difficult first subdivision, I shouldn’t have done that, but it taught me everything that I know now and it meant that I could go off and do my own thing. So I call it my property HECS fee, you know rather than going to university and end up with the $70,000 job, I actually paid for losing on that project but what it did for me in the future was earn me $200-400,000 on the next project that we did.

With this newfound form of education, he learned a valuable lesson.

That project was quite interesting because I was still in paid employment and we just had everything up against us. Everything worked in the wrong way, plus the fact that we were inexperienced. I’m sitting on the side it was a 110-metre long driveway, we had 16 neighbours around us, it was 25% grade one direction, 25% grade in the other direction. So it was quite a slow block that we had to dig 6 metres down to do a saw connection. We had to bring a hydrant main in from the street to get to the back block. It was a full-on subdivision, I learned so much. And the budget of $120,000 got spent just on the retaining walls on the site, not let alone the concrete, the excavation and everything with it. So I’m sitting on the side of this driveway one day, rain, clay, everything and the inspector had turned up and I was in tears – I was literally in tears, I was so down about it all. And he had a piece of paper in his hand and he was walking up the driveway, he saw me and he obviously saw that I wasn’t in a good state. I look back at it now and I know he folded the piece of paper and put it in his back pocket and he said, ‘What’s going on mate?’ and I said, ‘Oh man, this thing is absolutely killing me. I don’t know what to do, I don’t know where to go, it’s just really draining me.’

For whatever reason, sometimes in life people just come along and this inspector knows to me to be the nicest guy in the world. He absolutely poured his heart out. He looked at me and he said, ‘You know what mate? I see guys like me come along all the time. You’re young, you want to have a go at it, you do your first project, you lose money. Most of you disappear. Some of you hang around and you do the second project, you break even on the second project. And if you can go on and hang on to the third project, you guys do really, really well.’ He looked at me straight in the eye and he said to me, ‘I want you to do three projects.’ And with that, he turned and walked down the hill, got back in his car and drove away.

Now what I now know was that day, with all the rain that was going on I had clay spilling out onto the street and going into stormwater and I was trying to control it. He had actually come to give me an environmental fine for what we were doing accidentally on this site. But instead, he folded that piece of paper up, put it in his pocket, gave me the best advice that I had ever been given in property and walked away. And to this day I I wish I could find this guy because I can’t find him and I’d just love to hug him you know because he just did so much for me on that one day. That was amazing.

In building his property portfolio, Ugarte’s experience has also taught him to jump right in and try things firsthand.

We built up to the seven negative geared properties and we had to make a decision. What we did was we did our opportunity cost on it – and the opportunity cost is if we go along and refinance the property, how much money can we get out of it? Or if we go along and sell them, pay the tax, what have we got left? And whatever that amount is, one way or the other it’s an easy decision.

For us, the easy decision was that I needed to get out of work as quick as I possibly could because I hated my job. And so we looked at all of these properties and said, ‘What can I do with these properties? Not much.’ They were just standard, crappy properties. So the only thing we can do is sell those properties down, take the money and reinvest. We did that, sold down and ended up with about $369,000 in the bank account. Now $369,000 make most people go, ‘Wow, I wish I had that.’ The problem was that by doing various projects and negative gearing and buying crappy property off marketers and all the rest of it, we lost $300,000; so we should have had $669,000 but instead, we had $369,000. So we had to really quickly go off and find good properties that had good cash flow returns so that we could end up in a position of wealth and move forward from that.

When we talk about that advice that I just gave back then, my advice to people in general – especially when we’re working with clients – is go off and do a project in a price point that’s not going to hurt you. If you want to do a subdivision, don’t do what I did and do a subdivision that costs a lot of money. Go and do a subdivision in a little regional town where it might cost you $100,000 to buy the block. I know you will not make a lot of money out of it; I also know that if you lose the money you won’t lose a lot of money out of it. But the process of subdividing a block of land at $100,000 and subdividing a block of land at $2 million is no different – the process is exactly the same. So go out, try somewhere else and come back and try something bigger. And I always say if you go out and try a strategy – any strategy in property – for the first time, you come back and you break even, I’m ecstatic for you. Because what you’ve just learned is a small university degree that will earn you money from this day forward, forever. So if you make a profit, you should be going out for dinner for a few nights just to celebrate the fact that you made a profit out of the first time that you tried a strategy. Don’t be scared of trying it! Just go in and get stuck into it.

We bought a couple of positive cash flow properties. Some of them were manufactured already, so they were already set up, already cash flow positive and they were the times where you could go out and just buy it, straight up. But the major one we did was a Mascot development – it had a shop downstairs and a three-bedroom apartment upstairs and a two-bedroom behind. We were looking, ‘Should we buy a PPR in the area for about $700,000?’ But for $655,000, I bought a property that had the potential for earning income off an older Greek man who was advised to sell it because he wouldn’t get the pension, which was bad advice and he was receiving at the time $420 a week rent.

We decided to buy it, we didn’t want the tenants in there, they’d been there for a long time. We did some work to the property and we took the rent from $420 to $1,235, I think and that made about $27,000 positive cash flow property in Mascot, growing at the rate Sydney prices were growing at. So that was a real step into the market to say, ‘Wow, this really works.’ So having multiple and smaller spaces started to tweak something in my mind.

From there he began to investigate some different opportunities.

We followed the mining boom and bought mining properties. We do have exposure to mining and it was great while it was high, but when it’s down, it’s down. Currently, we’ve obviously got some negatively geared properties that aren’t sellable, that were positively geared properties. At the time working with clients, we also said if you’re going to go and buy a mining property, make sure you’ve got three metro properties to back it up. And whilst you’re getting cash flow, make sure you’re paying debt down as hard as you can because while you might have the $400,000 today and got cash flow $100,000, that could turn around very quickly; and it did. So for those people that paid down their debt on a property that was had a mortgage of $400,000, is now at a mortgage of $200,000 you obviously don’t need the same amount of cash flow to get yourself into a neutral position. Which is basically what we did.

But from there what had happened was that we started to investigate a number of different outcomes. So let’s talk about four years ago: we were on a roll, I was going to be the biggest property developer that you’d ever seen anywhere in the world, so money hungry or driven by the dollar. Then something happened for me very quickly overnight – it was literally getting out of bed one day and saying that I was very unhappy. I suffer from anxiety. When it comes to watching a dollar going in a downward direction, I will stare at the ceiling for eight hours every night and that anxiety lead me to a place where I said, ‘You know what, I’m doing socially what we’re really doing to actually benefit others,’ because I thought that money was going to make me happy. And what I didn’t realise was that it doesn’t make you happy; that happiness comes from a point of within yourself. And I had to really start working on it. Thankfully I’ve got some very beautiful people around me, including business life coaches and my wife.

So for me, that turning point was what am I doing here? What is my ‘why’, what can I really take effect on, how can I make a difference in this world? I started to look at the housing options that we were putting out to the market, I started to investigate more and more and I started to see that after the mining crash, we still needed to get positive cash flow. And we would have the same positive cash flow, but with my anxiety, I couldn’t handle the risk. I couldn’t possibly continue to invest in things that were going to be too risky.

This leads him to develop a completely different investment strategy, known as the high-income real estate system.

I stumbled across, with a couple of other investors, a strategy around what we now call the high-income real estate system (HI-RES), which is concentrating on smaller spaces, in particular, looking at executive rental, holiday rental short stay, what we call HMO – house and multiple occupations or a legal way to be able to do share houses – and more importantly, rooming houses and boarding houses. Now as soon as I say rooming houses and boarding houses, everyone in their mind automatically goes to the perception of, ‘OK, you’re dealing with drug dealers and criminals and bikies and pedophiles and you know, the decrepit part of society.’ That may have been the view in the 1960s, but I can tell you that since we started building rooming houses and boarding houses for ourselves and teaching people how to invest in them, we’ve got granite benchtops, we’ve got a self-contained unit and all we’re doing is building little flat tacks or studios which are in high demand in the marketplace.

Most people don’t realise this and I’ll give you some statistics. I’d work on the board member of the future housing task force, it’s an invitation position and there’s 12 of us on there. My specialty area is small spaces, rooming houses, boarding house across the country. So when it comes to the country I am the leading expert on knowing different policies and how they work in its umbrella; so the big picture scenario. Then we’ve got assistance in different states – we’ve been working with the Tasmanian Government and I’m very excited to say that the Tasmanian Government is an unbelievable, perfect storm right now. We’ve got a very good government, leading very well with bureaucrats that are listening to the politicians and we’ve sat in front and there’s actually a job title in Tasmania, he’s called the red tape coordinator. That’s his job title, so it’s almost beach master of the universe. So his job title is to sit there and say, ‘If you put a policy in front of me and I agree with it, I won’t even go to the government employees. I will go straight to the minister or show it to the minister. If the minister agrees with it, we’ll put it through parliament right away and we’ll get it approved within six weeks.’

We’ve been working with the Tasmanian Government now and we put a policy in front of them that they probably haven’t got to put in the next two to three months, it’s going to be put into the state-based policy. In Tasmania, right now on the housing waiting list of 3,700 people on the housing waiting list, 60% of them are single and 20% of them are couples. So you could say that 80% of that list only requires a studio and a one-bedroom apartment, yet the housing stock in the wage for the public housing is 80% of our housing stock are three, four and five-bedroom houses.

I thought that money was going to make me happy. And what I didn’t realise was that it doesn’t make you happy; that happiness comes from a point of within yourself.

So what’s happened in Australia is that we build the biggest house in the world at 246 square metres, we have two and a half people living in every house, whereas in 1881 we had five and a half people living in 35 square metres. In 1960, we had just under four people living in 85 square metres and now we’ve got 246 square meters, 2.5 people living in every house and we’ve got 12 million empty bedrooms tonight. So affordability was the point that I said, ‘How can I make a difference to what I do on a daily basis?’ Rather than going out and doing a project to make as much as possible money as I could, ‘How can I help out the community and their families?’

Then Ugarte experienced several ‘a-ha’ moments that forced him to see things in a different light, enabling him to see the bigger picture in terms of housing affordability.

I was standing on the stage and these two pivotal points happened to me, in succession again about a month apart. I was speaking at a homelessness conference about affordability, about housing stock and I’m standing on stage talking about how we shouldn’t be building big houses. I left that conference and went home to a 400 square metre, four-storey home and my bedroom alone was 100 square metres. And so I looked at Christine, I said, ‘This is crazy, Christine we cannot do this. Here I am, incongruent with what I am a specialist in.’ So we got rid of our property and we ended up buying the property that we are in now, which is two acres and we’ve got an 85 square metre two bedroom one bathroom home, where six of us lived in 85 square metres, as opposed to 400.

After a couple of weeks, as a plumber and builder by trade, I could have put an extra toilet in pretty quickly. But I decided not to because two weeks after moving into the place, I noticed that the family dynamics changed, that in the 400 square metre house we actually weren’t interacting – and it’s not that we’re dysfunctional. Australia has lost that sense of community and community comes from a sense of family, and no longer do we actually grow up in different houses. We’ve all got mini-mansions next to each other. You know, I remember growing up in my parent’s house in Eastlakes and the house next door was a cladded home, we were living in a spackled render home with arches and bars on the windows. Two completely different homes, two completely different cultures. But the lady next door was my auntie Carmel and she actually fed me every morning before I got to school. I didn’t realise until the age of 11 that the white chick next door was actually not really my blood auntie, she was just the lady next door. And this for me was what I decided from a social change I wanted to bring back into the community, I wanted to bring back the social aspect of who we are as a community and bring back affordability.

The way we do this is really quite simple. Remember we’ve got 12 million empty bedrooms; currently, the government can’t afford to put housing out to the community because they haven’t got any money. So they should be concentrating on people like you and I and your listeners, that have zero to six properties as investment properties and be able to convert those four bedrooms two bathroom crap houses into something that’s usable. Now I know this because all we do now is high res strategies on creating more functional living spaces within the one home. By doing that you’ve got this massive funnel of people that are looking for housing. The only reason a couple rents a four-bedroom house is they don’t have a choice to rent anything else.

For first home buyers, Ugarte demonstrates how they can get into the market – for $8,000! – again in keeping with his vision to

Now I can actually sell a first home buyer one of those properties for about $8,000 if they’ve got really good income and they can get a high LVR. They could get into that property for $8,000 using the first home buyers’ grant and stamp duty exemption and end up in the property, living there for about $100 a week whilst they rent out other parts of the property – which they can do as their first home. It doesn’t matter if you can’t do that. After living in it for six months to a year, they can then move out and turn that into a positive cash flow property of about $300 or $400 as their first home. And this is what the problem is with our marketplace, is that we’ve got developers building four-bedroom houses and Gen Y is wanting the end product instead of working their way up and we built and lived in a small home and worked our way up to a bigger home. Currently, we’ve actually downsized, we’re now actually living in 72 square metres and enjoying it and it’s glorious.

Today he is excited to be able to help those in need by putting his experience in property development to good use, providing homes and new opportunities to those without as well as making the great Australian dream attainable.

Currently, we have the biggest growth rate of homelessness in this country is a 55-year-old plus woman. These are the women that were told when they were younger, ‘Marry someone who has got a good job and you’ll be able to you’ll be looked after for life.’ They didn’t tell them, ‘It’s unlikely that you’ll like them in 30 years time.’ They’ve looked after a house for the last 30 years and their children have grown up, they get to a point of the financial settlement and they have very little. And that we have a huge amount of this demographic renting our rooms and they are brilliant tenants – they are the best tenants you can imagine. The other part of the problem with a 50 plus woman is she gets settled in, she gets her independence back, she gets a phone call from her 70-year-old parents and they say, ‘I don’t know how to look after dad anymore, you’re going to have to come and help me.’ And they really are in a crap sandwich and it’s an awful place to be.

But what I can say is that every morning I get up, I know that I’m making a difference and a change to that demographic. I’m making a change to 70-year-olds, making a change to Gen Ys. The reason we actually put the HI-RES program together was that Christine and I might be able to do 20, 30, 40 properties a year; in the end, we wouldn’t be actually making a dent in the market, which is why we did HI-RES. We know there’s a huge demand and if we can teach other people to do exactly the same, then we can get to the point where we can actually say in Australia that the great Australian dream of buying your own home is actually within reach, for every part of a generation. And that’s why we do what we do.

If you want to contact Ugarte to find out more about his strategy or get involved in his HI-RES program, you can connect with him via his website.

We’ve got a website like I said we run seven different businesses and our umbrella website is called You can click on a tab that says ‘Learn’ and that will take you to our program. You can watch a webinar, I do go around and do some state-based tools occasionally, we can put you on an email list and we do lots of free information. I’m a great believer that people can learn so much and as long as you keep on continuing to give education, then you’re in a good place. And for those people that want to come aboard and get a bit more information, get a bit more hand-holding, you can get it through


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