is editor of Australian Property Investor Magazine, Australia's top selling property magazine. Pick it up at your newsagency or order online at www.apimagazine.com.au/metropole Buying property is in reality about buying time. That's the philosophy of Ed Chan, an Accountant of almost 30 years and a mad keen property investor.
In this interview originally published in API magazine, Eynas Brodie introduces readers to Ed – chairman and a founding partner of Chan & Naylor Accountants, as well as the co-author of four books and a long-term investor and developer of Sydney real estate, both commercial and residential.
This article was first published in Australian Property Investor Magazine and is copyright and reproduced with their permission.
Buying property is in reality about buying time. That's the philosophy of Ed Chan, an accountant of almost 30 years and a mad keen property investor.
Meet Ed Chan – chairman and a founding partner of Chan & Naylor Accountants. He's also the co-author of four books and a long-term investor and developer of Sydney real estate, both commercial and residential.
Ed's zeal for property and its ability to help people secure their financial future is the fuel that keeps him running through days that begin at 6.30am and keep him on the go until his head hits the pillow somewhere around 1am.
We managed to steal a few moments out of Ed's busy schedule for 'The Interview'.
What's your working background?
I worked for various chartered accountancy firms, including PKF Chartered Accountants, until the late eighties when I started Chan & Naylor. My involvement with property is simply as an investor.
Where were you born?
Rabaul, Papua New Guinea. My father was born there as well so I'm a second generation Australian. Papua New Guinea was part of Australia until they were granted independence in 1975. Anyone born in Papua New Guinea was born an Australian citizen.
Where do you live?
In Sydney.
How old are you?
Too old. Forty-eight. That went quickly; I still remember 25 like it was yesterday.
Do you have any children?
Yes, Amy 17, Ryan 14 and Mitchell 12.
Pets?
Yes, a very naughty but loveable black Labrador.
What was your first investment?
An apartment at Ryde next to Holy Cross College which I bought off my dad.
How did you get into property?
My uncle is Bernard Chan (since deceased) who was in BRW's wealthiest 200 men in Australia. He made his wealth through real estate. His children are now in BRW's 200 wealthiest families in Australia. His influence was what started me off in real estate.
Do you invest in other asset classes?
No, because no other asset class can get me the same level of leverage with very little risk.
What's the worst mistake you've ever made and why?
The years that I attended St Joseph's College (Joeys) the halfback in the First Fifteen rugby union team made the Australian Schoolboys side for two consecutive years, relegating me to the Second Fifteens. Any other year or any other school I would have been in the First Fifteens. So the worst mistake was being born in 1959.
The second mistake was selling some of my properties; not understanding what game I was playing and not knowing the rules of the game. I needed to understand that I was buying time and not real estate.
What's the best investment you've ever made and why?
My wife because she brings that balance to my life and naturally without her I wouldn't have my three children.
The best investment is the investment in knowledge. It shows the greatest returns.
What's your take on current market conditions?
We're seeing all the signs of the beginning of a classic upswing in the property cycle.
You'll only experience these conditions once every seven to ten years and you only get these opportunities seven to eight times in a lifetime.
How do you react when the market gets rocky?
Investing is a little like religion. It tests your faith every now and then. However, like religion, the ones with faith will have a heavenly experience.
If you're trading then the rocky markets do have an effect on your activities, but when you're buying time then the fluctuations in the market have little effect on you.
How is this affecting the way you invest?
If you understand that you're buying time and not real estate, it gives you the faith that over the long term the market will go up.
What advice do you wish you had when you first started out?
That trading isn't the same as investing.
Trading is a business and, like any business, is extremely risky because it relies on skill and timing.
When someone says to me that real estate or the stock market is no good because they lost money in it, my response is that "you only made a loss because you traded it".
It wasn't real estate or stocks and shares that were no good, it was the strategy of trading and their lack of skill and timing that caused the problem. If they'd held onto it long enough, it would have gone up.
Who is your role model?
My Uncle Bernard Chan. Not for his ability to build up a $220 million property portfolio from scratch and making the BRW's 200 richest men in Australia but for what he contributed back to the community.
What do you like to do in your spare time?
I spend it with family and friends, and spent 26 years playing competitive squash.
What kind of music do you like?
I'm a little old fashioned and like most music from the sixties and seventies. This annoys my wife as she thinks I'm caught in a time warp.
What's your favourite movie?
There's not one movie. I like most action movies and tend to stay away from "chick flicks", much to my wife's dismay.
What's your favourite food?
I like Chinese and Italian.
What are your bad habits?
I'm passionate about what I do. Perhaps my greatest challenge is to get the right balance.
I've just co-authored my fourth book called Balancing Act, which is about building a successful business.
What have been your greatest professional achievements?
I believe my work in developing best practice methodologies, which are now followed by over 700 accountancy firms throughout Australia, New Zealand and Canada and increasing by about 250 per year.
Chan & Naylor has a really good name in the marketplace through high levels of honesty and integrity and cutting edge innovative tax and wealth strategies and products.
The most wonderful feeling is when our Wealth for Life Plan literally changes people's lives, and it's especially rewarding when the penny drops and the light turns on and the clients' smiles are often accompanied with tears of joy and relief.
It's literally life changing and that's what keeps me passionate 'till my own lights are turned off.
I had always wanted to put all this knowledge and experience in my head down in a book, but the current workload meant that wasn't possible for quite a few years. I'm grateful to Tony Melvin's involvement and his dedication to getting this done, because we were able to produce not just one book but four books.
I'm extremely proud of that achievement and with Tony's input I was able to do it sooner rather than later.
What have been your greatest personal achievements?
A wonderful wife and children.
I finished a Business Degree and played competition squash at state level for 26 continuous years without a single year off until the knees gave way.
I would like to believe I've made a considerable contribution to the accounting industry and helped thousands of Australians create wealth with very little risk.
I've also created seven businesses in total that employ over a hundred people who are paid an income which support their families; all paying tax and contributing to Australia's economy.
I have a large property portfolio that provides accommodation to tenants and their families. The domino effect of property investment is incredible because it provides business to banks and real estate agents, tradesmen, mortgage brokers, valuers etcetera, who in turn hire people, who in turn pay taxes and support local businesses etcetera.
How many investment properties do you have in your portfolio and where are they?
I own either directly or indirectly around 45 investment properties. They're mostly located in Queensland and New South Wales.
What do you look for in an investment property?
It has to be well located with the ability to get the maximum loan-to-value ratio (LVR) of 80 per cent to 90 per cent. It has to have some scarcity value, such as water views, next to infrastructure like schools, shops, transport and so on.
It's not only location, location, location. Rather its micro location, micro location, micro location.
Describe an average day in the life of Ed Chan.
Well, it's extremely fast paced with a constant demand on my time.
It starts at around 6.30am and doesn't end to around 1am. Everybody wants my time and even when I go home the cheeky Labrador looks playfully up at me.
What's the secret to your success?
I think every successful person shares the same characteristics. Being so passionate about what you do that you'd do it for free. Being paid is a bonus. Love doing it and not seeing it as work.
I'm sometimes asked when I'll retire. I think the word 'retire' is often used by people who can't wait to stop what they're doing and replace it with what they want to do. If you're doing exactly what you want to do, than aren't you already retired?
Most successful people do exactly what they want to do and therefore are 'retired' from the day they started doing it. That's the reason why very successful people appear never to retire.
What keeps you awake at night?
Not brushing my teeth before going to bed.
Seriously, I hate letting people down.
If you could change one thing about yourself, what would it be?
I'd be better at finding a balance between the passion and the rest.
Where would you like to be in five years' time?
I would like to slow the pace down a little and do some travelling when the kids are older.
I'd like to see Chan & Naylor offices in every state of Australia so that we can bring the Wealth for Life Plan to every Australian who'd like to create wealth without risk or cash flow concerns.
I'd also like to see my children grow up to be well-rounded individuals and finding something that they can be passionate about. Life without passion is a life without direction and purpose.
What would you never do with your money?
I would never let it spoil my children, nor will I ever take it for granted.
My parents weren't rich and their sacrifices in sending me to a good private school and the working class upbringing won't be lost on my children.
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