"Murphy’s Law does exist, so if you can, factor it in."
Tim’s real estate journey began as a qualified valuer in New Zealand before it transitioned into commercial real estate sales and residential property development. Tim has applied his skill set into experience with urban land development, subdivisions and residential construction for housing as well as medium density developments.
Tim holds a Bachelor of Arts, a Post Graduate Diploma BBS (Valuation, Property Management and Development), and Certificate III in Mortgage Lending and was also a member of the MFAA (Mortgage and Finance Association of Australia).
“I love the challenge of creating something out of nothing,” he says. Tim’s business has evolved into the integration of investment propertiesinto their core business forindustry professionals such as mortgage brokers, financial planners, real estate agents and accountants. This involvesa process of education for them and for their investing clients.
Born in Masterton, a small rural town of 20,000 in New Zealand’s Wairarapa region, Tim’s family’s business had been operating for over 100 years and was very well recognised locally as suppliers of furniture, flooring and carpet. Even while Tim was still at school, he was working in the family business.
One of the life lessons Tim’s father taught him is that “there’s money in the muck”. This referred to the hard or difficult work no one else wanted to do such as night work. These would often lead to new opportunities.
Tim helped his father with carpet-laying for many years, but sought a more academic path and enrolled in University while continuing his trade work to finance his education.
“I went to Massey University in my first year studying English Literature and History. I transferred for second year to Victoria University having decided to go to law school. But after four years there, I decided I could always employ a lawyer rather than be one. So I went back to my trade.The irony was that a top honours graduate starting in a law firm would be on $20,000 and I was earning $100,000 running a flooring contracting business and making good returns buying margin traded shares.”
Then the “Black Tuesday” share market crash came in October 1987. “That changed the whole world and changed my life. I was 23 and lost everything. So I joined a chap who was developing land and houses, and that’s when I made a conscious decision that property was the path forward for me.”
Tim recalls, “I then went back to university to complete a post-graduate business diploma and completed all my real estate development, valuation and property management studies and became a qualified valuer. Working for a valuation and real estate agency, we did valuations for the banks who were becoming mortgagees in possession. I then went into commercial sales and spent three years handling mortgagee sales for the banks, a fascinating and eye-opening experience. People had always believed property would never go down, but we were selling some buildings at ten cents in the dollar of the mortgage value!”
Tim also did quite well with his own property developments until he had a bad experience with a council resulting in multi-million dollar losses. He looks back on those days now as “an incredibly amazing time. I learnt a lot about adding value, applying my valuation principles and property and development skills even though it was not a happy ending.”
Still in New Zealand, by chance, a contact had suggested Sydney as an option as“the Olympics are coming up, and there’s a lot happening”. This became the next stage of the journey for Tim..
“I came to Australia in 2000 and became an Australian citizen in 2002. It was a rocky start, landing here knowing no one, and with a thick Kiwi accent, not knowing the difference between Woolloomooloo and “Woolloo-Moo-Where ?” I found it very hard initially, but then I saw an ad in the paper for someone who had a finance and property background. I then made another career change, moving into investment finance and did that for six years, settling over $150,000,000 in loans. The Sydney market was running very hot at that time.”
Tim saw a lot of growth in the Sydney market from 2000 to 2004 and then he received another unwanted education in the unforeseeable risks around property markets. It’s not just supply and demand and the usual market drivers; politics and legislation can have a significant impact on the market.As Tim painfully recalls, “a state government can just pass a law like Bob Carr’s exit tax out of the blue.”
As Tim continues “for those who’d been in the investment and development sector of the property market, it was the beginning of the end – we went from hero to zero. It was a tough one. It’s one of those moments where you know this is going to hurt, and it did. After thinking I’ve been through it all and seen it all, I never imagined a state premier could simply pass a law overnight – as governments are generally reluctant to intervene in the free market -bringing in an exit tax and basically derailing an entire market for many years to come.”
Tim’s path to success has had many steps and some are built from the hard-learned lessons of failure. He reflects his mother had always said that she had no idea where he got his faith, drive and intuition from.Tim’s view is that “if you get knocked down, you get back up again because if you don’t get up, you stay down”.
Another market force that Tim, like everyone else, had never experienced before, again intervened; a financial monster called the GFC, which he says was the modern equivalent of the 1929 recession. “I remember my mother said at the time, “I think this is going to be severe and far reaching for a very long time.” to which I replied, “God, I hope not, having recently moved interstate to Queensland to start a new business.”
Why Property had a baptism by fire and was born out of the GFC. Tim looks back and recounts, “I was contracting to a large Sydney property aggregator, taking them into the Queensland property market, but they went broke, leaving the business referral partners owing millions, including me. I then started helping the business referral partners and developers pick up the pieces. We put new, improved systems and processes in place and I thought about the mistakes I had seen others make in the past and about how could I improve and prevent them. So I built the Why Property business model based on those improvements, and on what I’ve learnt coming from a family business in a small rural town.”
The GFC was the third of Tim’s three bad knocks, and Tim hopes it’s the last. “There are always forces out there you can’t foresee,” he says. “It’s one of the lessons I’ve learnt. No matter who you are, there are bigger forces out there that you can’t plan for, that you don’t even know about, especially now we are integrated into a global economy”
Post GFC, Tim realised “the biggest flaw with the property aggregation model is security of payment for referral business partners, so he strategically aligned with developers and servicing referral partners under the Why Property model. “They all knew who I was, and what I did and that I would continue to help them with projects, by being clear open, and transparent.”
With that trust came another opportunity. Tim’s referral business partners would ask him to present directly to their clients -a great endorsement, as they knew their clients would be treated well.
Tim sees patterns emerging,and when researching property cycles, together with the different economic triggers in different markets,was always looking towards the future.
At the beginning of 2014 Tim moved back to Sydney. Sydney investors could “buy two Queensland investment properties for the price of one average Sydney investment property.”
In Tim’s current role, he’s managed to now “build momentum and credibility from what I was saying about various markets”. Leading property experts and credible media icons are now confirming Tim’s vison from almost three years ago. Business referral partners are now saying,‘Tim’s seen the unseen, and he’s positioning us well and getting us ready for the next 3 years.’ Even now Australia’s most conservative valuers are confirming everything I said two years ago.”
When Tim went back to New Zealand many people said, ‘We always thought you were a bit out there, but everything you’ve advocated in the past has come to fruition. You’re always well ahead of the market.’ “And that’s what I’ve always intuitively worked on” says Tim.
Tim’s current insights include the view that, “if someone had said to me you’d be recommending Gold Coast properties four years ago, I would’ve laughed. The fundamentals just weren’t there. But I’ll be out of Southeast Queensland by the Commonwealth Games in 2018 because the growth will have gone after a heated market run from 2016 – 2017”
Where does Tim see the next the next growth phase?“I believe that growth is going to come back from the correction in certain specific markets, so I’ll move on to those, liberating overly geared or exposed developers (or their administrators).”
Furthermore, Tim adds, “from there, you’re going to see Sydney’s apartment market fracture and a soft landing when interest rates start to rise in the mortgage belt in the short to medium term.”
Tim comments that “every month or so an indicator will pop up and I’ll put that aside for later, noting that something will happen and, as the indicator builds in momentum and intensity, the intuition starts going.”
For Tim, it’s always about watching indicators such as changes in credit and lending policies,“and then suddenly you notice the impact. The picture evolves over time as everything is dynamic and always in a state of flux.” In the meantime, he’s busy building new relationships, trust and confidence with people.
As well as having the insights from his research together with the knowledge& experience, Tim also says it’s imperative to be clear, open & transparent. Other hallmarks of hi approach are being informative as well as educational and believing in what he does. His strict policy is that he “won’t present a strategy, path, or idea unless it is based on the truth of today.”
In support of this, Tim vividly recalls a telling moment from his childhood business venture when selling chickens &eggs from his parents’ farm. A buyer commented “young man, you’re the best salesman I’ve ever met. What’s your secret?” to which Tim replied “Oh, I present truth well!”
That’s the underlying essence of Tim’s journey to date. As he happily quotes; “I’m a salesman. I’ve been in many sectors of the property market and, as anyone in business knows, you are always selling”
Now he’s been in Australia for 15 years, Tim describes himself as a “Kwozzie – a Kiwi-Aussie – best of both worlds. “That always brings a smile.” Tim happily notes
Tim is obviously enjoying what he’s doing now. “I love the people I work with and what I do. The whole process is really great because you’ve always creating something out of nothing. You’re changing people’s perceptions, motivating them to go into action and seeing it manifest is very rewarding. That creative process is awesome and that drives me, even when times are down.”
Currently there are three businesses in the office from which Tim operates – a legal business, a finance business, and Why Property.
“Why Property is effectively a property consultancy business.” explains Tim. “We’re not real estate agents. We work with a group of highly skilled experts within related industry professionals such as accountancy, financial planning, mortgage brokerage, legal services and also work in conjunction with real estate agents. So when I’m working with a developer on a project, I get called in to consult about where we should position a project with those industry professionals.”
Given all that experience, Tim has some sound advice for new start-ups. “My advice for people going into business for the first time is that Murphy’s Law does exist, so it’s wise to factor it in. Identify the downside, as well as the upside and, most of all, be realistic with your expectations. Always remember, there’s a guy out there called Murphy, and he’s not your friend.
On the positive side, you really need a strong, clear vision and to be passionate in your implementation. Be brave, be bold, and most importantly, be a shepherd, not a sheep.”
The people Tim most respects are in two different areas of life. Firstly, there’s a political figure; Nelson Mandela. Tim admires that he was “passionate about and true to his vision, bold and brave, and stuck to his cause.”
“The second person I really admire and respect is Steve Jobs. I believe he’s had more impact on humanity than Henry Ford, who really mobilised the population. Steve Jobs revolutionised many different industries through items such as the iPad, iPhone and iPod along with the impact he also had on the music industry, film animation and retail store layouts. If you look around today Steve Jobs’ influence is everywhere – could you now imagine life without an iPhone?”
To keep himself motivated, Tim uses a technique called creative visualisation, “I actually have several vision boards. As humans we are creative beings and we recall and respond better to pictures. So, whether it be a short or medium to long term vision, I find an image online or from a magazine that resonates and I place that image on the board. I focus on that image and imagine how I will feel when achieving that goal, and attract that result towards me.”
A wise man once told Tim: “Good is good, bad is good, all is good”. Tim took a long time to fully understand that, no matter what happens to you in life, as he quotes Oprah Winfrey, “we all take detours in our journey, yet end up where we are meant to be”. To stay motivated, even when something bad happens or Murphy’s Law strikes, Tim says it’s merely a correction putting him back onto the right path. He sums that up by saying “embrace failure, learn from it, because it’s good; wisdom is healed pain. At the end of the day, good is good, bad is good, all is good.”
Tim sums up by noting “be careful not to get intoxicated with your own success -sometimes it’s just pure luck and you can still make bad decisions. To quote Steve Jobs, ‘Sometimes the most important thing in life is not what we do, it’s what we do not do.’ And I totally get it -sometimes it’s better to do nothing, than to do something foolish or frivolous. Sometimes, doing nothing is the right choice.”
In the office, the preference is for direct support also rather than donating money to large organisations so every dollar ends up at the intended destination. “We appoint a judge each week who fines people in the office for their behaviour, and then several times a year give the funds to a good cause directly. We actually go into the community where it has a real and direct impact on the recipient’s life.”
- “Good is good, bad is good, all is good.”
- “Wisdom is healed pain”
- “Tim’s father taught him that “there’s money in the muck”, meaning the hard or difficult work that no one else wants to do.”
- “Sometimes it’s better to do nothing, than to do something foolish or frivolous. Sometimes, doing nothing is the right choice.”
- “My advice for people going into business for the first time is that Murphy’s Law does exist, so if you can, factor it in.”
Tim McCracken is very experienced in identifying growth locations and cycles in the Australian real estate investment market after twenty-seven years in the property industry in Australia, New Zealand and South East Asia. Today Tim helps Australian industry professionals and their investing clients to create growth investment strategies.