UnStuck Your Property Portfolio

Evening, everyone. Welcome. Welcome to a master class on this Tuesday evening. All right, Mike, check what we'll say in the chat. If you could just let me know. Can you hear me? Loud and clear.

Are we online?

I think we are. Hope we are. There we go. We've got a couple coming through. Thank you, everyone. It's just always good to check. We've had some Zoom updates recently and I just want to make sure that we're coming through nicely there now. Now, Aaron, something.

Something big happened last. From last masterclass to this one.

I was going to say happy New Financial Year.

Yeah, that's right, New Financial year. A little bit geeky on the finance Masterclass, right?

Well, I think when you work in finance, you celebrate this just as hard as you celebrate New Year's, don't you?

Was it like, did our properties become profitable? Did we. Did we make some goals? Are we. Are we excited for the new one? Or is it just the calendar year? Maybe it's just a calendar year. Get one in before Christmas. One for Santa Claus.

See, I like the way Australia does it. It's quite unique. Right. Other parts of the world don't do financial year in the same way, but this little mid year, I love the way this sets us up to go. Like, can I buy one more property before the end of the calendar year? Like, I love that sentiment. On the other hand, it's slightly terrifying that half the year is over already. All right, so just in the chat, I'd love to know, though, you can see on Aaron's beautiful screen here, we've got unstuck. Not to be confused with other words. Right? Unstuck. Right. We're talking about how we're going to unstuck your property portfolio in here. I'm curious, in the chat, is anyone feeling a bit stuck with the current state of their portfolio at the moment? Anyone a bit locked up? We got a few. And for all of you that are answering yes, in here, where do you feel particularly stuck would be the thing. I would love to know, is it you're not sure what move to make next? Is it a finance thing? We've got some borrowing capacity, Aaron. They are in the right room.

Yeah, Yeah. I like the one where we can predict where we will might be stuck. Right.

Can't tell you the amount of times. Actually, I can. It's three distinct times in the building of my portfolio that I felt very stuck. But we'll dig into that. We'll dig into that soon. But I'd love to know, from your point of View. Aaron, how many times have you felt stuck in your own portfolio?

A few times. There's even a couple of scenarios I might bring out about myself, especially around where I house the office and the staff that felt a little stuck but found a way through and away.

All right, we've got some. I'm just going to crawl through these answers while we let a few stragglers in as they pile in. But thank you everyone for coming and being on time. Borrowing powers definitely just. I'll feed this through to you. Aaron answered. Lee, I don't know if you can see in the chat as I can. We've got a large number of people here that are saying borrowing power is the main constraint. We've got another person in here that's saying structure, right? So ownership structures is coming up a little bit here on reasons we might get stuck.

I got a little, little sneak preview. I've got a different take on structures tonight to throw into the mix.

Well, guys, for those of you that have responded and said you are a little bit stuck, I think you're in the right room. I think we're going to cover some things tonight that are going to make a big difference. So, Aaron, why don't I hand over to you now? The people are here and they want to know more. Why don't we kick off this presentation? Yeah, let's do it.

Cool. Press the right button. Did it come through? Here we go. Need to start off with a general advice. Disclosure information provided in this presentation is under General Advice. Any advice contained in this material has been prepared without taking into account your objectives, financial situation and needs. Before acting on any of this advice, you should consider the appropriateness of the advice having regarded to these matters. You got some English on that, Charlie?

I was gonna say, I love how formally you presented that. Guys, I'm gonna, I'm gonna paint it up here. It's like me and Aaron are gonna talk about some potentially very spicy ways to unstuck your portfolio tonight. But the thing we don't have is your specifics in your situation. So we might say something that is potentially very opportunistic and lucrative to you. But without knowing your situation, if you were to act on this without getting advice, you could actually do yourself damage. So everything we're gonna say tonight, just sprinkle a little grain of salt. You like something you hear, please, please, please make sure you follow up with the right people like the strategic Mortgage broker team and other professionals so that they can check that that's right for you. So don't go and act on anything you see in this masterclass tonight alone without speaking to people who are properly qualified to know your situation and give you specific advice. So I think that's a really important thing. Now, if you would like to talk with someone on the Strategic Mortgage Brokers team tonight or after this webinar, I'll put a link in the chat now where you can actually book in and have a spot with one of the guys to check if anything we speak about is appropriate for your situation. So I think I've covered that pretty well. Aaron, can I say one more thing? I know I'm supposed to say this, but I'm just going to say if you're on this webinar and you do act without getting advice and you lose your money, you deserve it, right? Should lose you. It's ridiculous.

All right, let's keep going to encourage people. It's great. All right, so who, who are we, Charlie? Who are we? Who are we? We're just gonna two guys chatting on some borrowing capacity stuff going through here.

Well, just a couple of guys hanging out. But more, more specifically, I think we should give some context to this, Aaron, because it's like, absolutely. When we hear who are we? I often think, well, why should you listen to us? And I'll go first and then I'll kick over you because I'd hate to follow up with your accreditations on this. But me, I'm just a really passionate property investor. So I myself have bought, oh, built with the help of Aaron and the Strategic Mortgage Brokers team have built a property portfolio worth over $10 million. Now, now I can tell you that I have been stuck many times across this journey only to have again, really good team around me that were able to show me things I didn't necessarily understand and get it unstuck. So I'm a passionate investor. Built a property portfolio of 10 mil and still going, as you can probably see from that now. Aaron, who are you?

Well, I'm Aaron. I run Strategic Mortgage Brokers. I help people like you, Charlie, get the runs on the board like you have and from the last financial year, because we were talking about financial year things, this just at the beginning. Over the last 12 months, we've helped over $150 million worth of home loans for investors get through. So that is about 15 times as much as what your portfolio is there.

Could I ask a question on that, Aaron? How many people do you have coming to you that think they're stuck, that weren't stuck in that 150 million in the last 12 months.

Huge amount of people that feel like they're stuck before they have a conversation with us. One of the things that we find is that people find. They spend five to ten minutes with myself or the broking team here, and they find out probably in five to 10 minutes what they were dying to know for the last 20 years.

It's such a big point. And it's like not to. How can I put this? Throw shade on your industry? But it's like, I think mortgage brokers often get treated like they're a commodity, like they're all the same.

But it's both. Both. Karina, my business partner and I, we spoke to a couple of brokers, probably a few, a few weeks ago, and they said in the last half an hour that we talked about some of the structures and strategies we have. They. They learned. They learned to be able to take that away and help other. Help more people, which is what we're here for. We'd like to help everyone ourselves. Right. But we have to. We have to share sometimes.

Let's do it. Let's dig in.

Yeah. Cool. All right. Well, tonight, want to start off a little video? I'm not sure how the sound's going to come through, but here is a little video from Facebook. No sound.

It's probably a good thing. Looks like a kid screaming in the water.

Yeah. Okay. Interesting.

I love that kid.

So what you're hearing, if you were wanting the sound as a screaming kid holding onto a rope, didn't know how deep it was and was freaking out.

Well, let me guess. The kid holding onto the rope is most property investors who think they're stuck. Yeah.

And the mum. That or the parent comes in, puts their foot down on the ground, actually finds out it's not as deep as you think.

I love the metaphor here, Aaron. I love it.

There you go.

Cool.

So with that in mind, tonight's game plan, what we're gonna talk about is that we're gonna address three, three major topics on unstuck in your property portfolio. Lending is a large topic. I have to emphasize this as much. So a lot of the comments that I get on any of the advertising, emails and things that we send out is. Lending is a large topic by itself, not just what type of property you're gonna buy next, what rental income it gets on there. Who's the buyer's agent gonna help you? The property investment company, the financial planner, the anyone. All those things are important. But lending is big, big topic. So what? We're not going to go through tonight. We're not going to talk about the types of properties you should buy, the type of who you should talk to and anything like that. We're going to talk about how the lending can work with any of the properties. It could be a commercial, it could be a land house package, it could be off the plan, it could be anything, all those ones where you may or may not have any interest in those properties. But we can talk about the lending on it. So we're going to really stick towards the lending. We're going to talk about some of the scenarios and actual client scenarios that we have. They'll be done in a de identified way. We wanted to not look at theory, we want to look at actual practice like we've been talking about recently. So that's the game plan. 3, 3 major topics only lending and how the lending can work with any type of property that we go after.

Let's get into it and I'm sure we'll have time for some Q and A at the end. If anyone does want to ask some specific questions.

That's it. And the biggest way to unstuck your property portfolio ready for it? You need to speak to an investment investment specialized broker first. We can look at talking about your goals, getting in front of the type of property you want to buy, understand what the borrowing capacity is going to happen to that, understand where the deposits are going, get the lender nuances, what the different doors to the bank that we can open, understand what your target of borrowing is. So if you want to go and talk to a bank, talk to a buyer's agent and an accountant, talk to a financial planner. They're all going to charge you money, but a lot of them are going to ask you what your borrowing capacity is first. So it's very, very important to talk to an investment specialized broker first when you're going to create a property portfolio.

True that. I learned that the hard way, Aaron. I really did. I'm not sure if I ever told you this, but you were actually my second broker. I don't want you. I don't want you to. Yeah, know, right. It's a bombshell to drop on this thing. The first broker I had, as much as he was a lovely guy. Right. It became very clear to me that he was a fish out of water when it became the investing thing. Now again, really nice guy. I don't want to paint him as a guy that didn't do it, but he was quite buddied up with people at Anz and When I started to ask questions about other banks, he very quickly like, oh, he shut it up. So it's, it's amazes me to this day how many brokers just get comfortable with a couple of lenders and then they don't ever really go outside that sphere and in turn are never able to like provide the really, the really big opportunity with borrowing capacity when it comes. So I think everyone on this call, you just got to be so careful. You have the right broker because if the one you are with doesn't have access to a full panel of lenders or know the policies, you can end up stuck right away just because of their limited knowledge base. Right, they're limited, no knowing of how to play the game.

The, the other one is that there's usually two sets or even three sets of policies with the same bank. So hit us up later if you want to know more.

All right, let's do it.

All right, first topic, I've called it strategic consolidation. So we have three steps, acquiring property, the now situation and the consolidated situation. So to explain a little bit more, we've got our stick figure man here. He's got a few properties a bit, bit messy, but he's so relieved that he's got through the acquisition. Acquisitions have a whole range of different things that are problematic. Financial clauses, timing issues, bank valuations. There might even be, if you buy in an established property, you might even find that the rent is under what it's supposed to be. But when you buy it and you change tenant, your rent's going to go up, so your whole borrowing capacity changes. You can see the improvement potential of the property. So whether it's a big three bedroom house which you can convert into four, a small renovation granny flat. We've also found with acquiring properties, sometimes you might get a poor valuation from the condition of the property or its timing in the market. Lenders may not be conducive to your turnaround time. So the lender you want at the ninja rate that you want may not be the one that you get to acquire the property with. Or if you've come to the now situation, you might have acquired the property with the wrong lenders first via the wrong broker. So that's just something that sometimes gets out of the scope of the lender. The lender actually has to be happy with you and have to be happy with the property. And if they're not happy with the property, that's where people get a little bit confused about how can we get through and then we just get through and then we've got to get through the next step into the now situation.

All right, could we break this one down a little bit?

Yeah.

All right. So strategic consolidation is like strategy number one of like unstucking your portfolio. Now, I just want to walk through this for the benefit of myself, but hopefully anyone else on the call that really wants to understand this as we're going through the acquisition phase of our portfolio. So for everyone on this call, this is for people that maybe have one, two, three or more investment properties. You may have bought a property and taken a loan resimac that you don't particularly love. Not that I would ever name any bank that I haven't been particularly happy with. Now you might be getting to a point where you've bought that property. Maybe it was a year ago, maybe it was two years ago. Now you're going for your next property, but really you need to deal with refinancing your current properties so that you're actually able to unlock borrowing capacity. Because as you mentioned, maybe rents have gone up, maybe valuations have gone up and a valuation on that property might unlock some borrowing capacity or might unlock some new income, but there's a variety of things of making sure that your current properties are on the right loans to set you up for more maximised borrowing power. Is that correct?

And give you the picture behind that. Charlie, if you go to the now situation, we've got our little stick figure in gold. He's increased his income. The greenhouse has increased his value, increased the valuation. The blue house has increased the rental income. The red house has had no change, poor old red house. And the black house has had a small completed renovation, which has increased the value. So what you did when you acquired the property has now changed to the now situation. Time might have passed. Interests, interests, valuations, rents, all that stuff has changed. Maybe even a partner. So all those little effects in all of that aspects was going to change how we assess your overall portfolio. You might be able to now get better servicing. We get time back. So we're not under contracts to be able to change and refinance. We are able to that. We're able to undo the dirty word the banks do directly, which is cross securitize. So if you go to the bank, if you've been able to go direct to the bank, they probably cross securitized all your properties together. And now, now we get time to look at your situation and uncross it to be able to get it into the next picture, which is a thumbs up guy. And we're consolidated.

All right, can I ask a question on this? Let's say someone bought their last property and they bought it with lmi. And then, okay, so they got a property, maybe it was on a 90% loan or something like that. If someone bought a property and then they got another valuation, maybe the valuations come in a little bit higher with a different lender. And now all of a sudden the lvr is on 80% because they've had a little 10% boost in valuation here. Would that help someone unlock some borrowing power here? Because they've no longer got that LMLI loan on their book type thing?

So I suppose yes and no. So no, because you've just got back to 80%, so that's where no LMI is. And if you were able to have the valuation that got us to 70, we could release as a low cost.

The theory works. You just gotta be a bit higher.

Up or we can go repay LMI and get up to 90 again. So it depends on what the outcome you're trying to achieve there. So not many people want to pay LMI twice, but if there's a need and an opportunity in the marketplace that they see in front of them, that they want to prepare for. We've seen people want to go after the 90s again. But it all comes down to what your goals are.

Okay, all right, another one here. Let's say you refinance your loans and you were able to get a lower rate. So maybe you were on seven and you got it down to six and a half by swapping lenders, because your interest payments will have gone down. That will have actually opened up some borrowing power as well. Potentially it does.

And even, even with, with most of the major banks at the moment, between 60 and 70 is 1 interest rate, 70 to 80 is a slightly higher, and 80 to 90 is even higher. So even just the act of having your Property go from 90 to 80, staying with the same bank and providing them the updated valuation and your rates drop down will unlock borrowing capacity, even using some of the refinancial buffers of 1% and all those other that we can refinance and get some cash out will help us get access to equity utilizing the policies and things that are out there.

Can I throw a spicy one at you now?

Oh, spicy one, Go for it.

All right, let's pretend we're going to use our man in the middle. We're going to say he's got four properties and let's pretend. And guys, this is the part where I'm going to say something and you do not act on this without getting proper financial advice. I'm going to caution this again. Let's say two of those properties are in trusts and two of those are in our personal name. Is there any advantage, let's say, of refinancing the ones in a trust per se to pay off more debt in your personal name so that potentially there's less debt in your personal name, but you've siloed the debt in these trusts over here while remaining, you know, neutrally geared, we'll call it in this example. Would that unlock potentially more borrowing power?

It can. And it comes down to how we set up the lending structure in the first place. If you've used equity from your own home or an investment property that's in your own name name and had it separated into a split and the property in the Trust had an 80% loan and you had 20% plus the costs on your own personally owned property, having a revaluation of the properties in a trust is going to allow you to do the equity release to pay back the loan split that's in your own name and it may even release some equity to help prepay and forecast invest costs of the trust as well. Which means that we're getting the equity back out. We may still refinance it back to 80% because times past income the value has gone up, but we've been able to pay back that 20% plus costs on our personal ledger and our trust is self sufficient, then we're able to then repay that debt, reborrow that debt and tidy that up and go again as our borrowing capacity allows us. So that's where we need to get all the splits in order. So we take an equity from a personal name, we've now repaid it from the one that's in the trust. Similar if we've got properties in our own name, if it's our owner occupied, we're trying to extinguish the debt and we want the investments to stay ourselves. We can reorientate the lending splits and then optimize interest rates and things from there.

It just it mine. It almost bends my mind a little bit just to think that it's like just refinancing your existing portfolio using updated valuations or any little maneuvers like this to move what structure things in. That in itself could be enough to unlock the next level for someone.

It really could be absolutely. We had a client message us post the first RBA rate reduction of 0.25% and it's back on a a couple of masterclasses ago. 0.25% reduction in rate usually gets about 2 to 5% extra borrowing capacity, but she was able to ring up the lender not only get the 0.25 but get a 0.6% on top. So around that around nearly a 1% reduction nearly opened up 10% extra borrowing capacity without even changing the There you go, that's easy.

Borrowing power unlocked right there. That's it. So we got a question from Suzanne in here and I'm just going to ask this one because I did bring up the topic of lmi. Now guys, if you do ask a question that's slightly off topic, I'll save it till the end and come back to it. But please do put your questions in the chat because I will make sure we answer them. But Suzanne's asked would you recommend always buy with a 20% deposit and avoid LMI, or do you believe paying LMI if you don't have the 20% may be worth it in the long run with being able to buy that next property? Yeah.

So the idea around LMI is to help you retain cash or use the limited cash you have to be able to get into property. So LMI in the early days makes perfect sense because you've got to hold on to some cash post the purchase. There's no point entering your bank account into a property where you can pay a few grand in LMI and still have maybe a vacancy period or a small repair or anything like that. When you have property and you have equity in a property, it can be another choice to get the 20% plus costs from one property and an 80% loan on another property and avoid LMI that way. But if you have a limited amount of equity that you can release from one property and then you want to go out and buy more property and and do the multiplication factor across a few properties, LMI can come back into the equation to help you get to that 90% lending mark or even higher. There are some banks that are offering 95% investor rates, professional discounts, all that sort of stuff there as well. To be able to get into multiple properties versus one depends on it. We'd have to understand your goal of what you want to do with property if you want to go fast. Sometimes high LVRs are what you need or loan to value ratios. And if you are wanting to grow at a steady pace, we can then utilize equity in a place where we don't need lmi. It really comes down to Your goal.

Geez, that's such a. It sounds like a politically correct answer. I. I'm gonna. I'm gonna offer an opinion on this one as well. I think this is a. Let's say your goal is to get to 10 properties and then you're done. If you're at nine and you have to use LMI to get to your 10th, I'm like, all right, I get it. Right? Cause I think LMI really does hamper future borrowing. Like, you are taking more today at the sacrifice of tomorrow. If anyone else is out there and they're getting their portfolio to a stage where they're like, I could only get things with lmi, I would actually say that's a sign. You probably need to speak to a broker and potentially an accountant and really work out what the strategy is for funding your deposits. Because I think there's a real danger of using LMI too early, and then you end up in a situation where you are stuck and potentially have to undo a lot of that or refinance it later. So I think it's like a last resort, but I actually think it's a warning signal. Right. Because that would mean potentially you haven't got the right properties, you're potentially not in the right structures. Like, there's a lot of things that go with that where LMI might actually be the warning signal, in my opinion. I don't know if you share that view, Aaron, but it's like, it's one that stands out to me for someone trying to grow a substantial portfolio.

Well, I suppose we haven't have to not be afraid of lmi, and I suppose in the early days it can be a good kickstarter to get that growth. And then later on, maybe it's not worthwhile too much and could be that warning signal that you were mentioning. I think we all should be looking for warning signals in our portfolio because if we're not looking for the warning signals, we're not going to be considering the upside either in its own context.

Well, I also just believe that most people aren't in this to buy one property. I think most people want to get to a stage like mine or further than that. And to do that, you need to be thinking about not just the next property, but the one after. So if you're in this chat and you find yourself in a stuck position and you haven't worked with your broker to go, not only how do I get to the next one, but the one after, and you haven't plotted that one out, then I Will put this link in the chat again. I think it's very worth speaking to someone at the Strategic Mortgage Brokers team and having them put together a bit of a game plan on that. So that would be a big one. And guys, I can see the questions rolling in now, which I absolutely love. We'll do some Q and A at the end, but I'm mindful of time. Aaron, let's roll through to our next slide.

So the next one I've called strategic repayment or opportunity. So the strategic repayment. I've got two little topics here. One is the selling of a property for the next opportunity and the repayment of debt. So the, the, the thing with repayment with, with selling a property you need to know what the outcome is that you're trying to achieve when you sell a property. Especially around the lending. We've had so many cl they go, I'll just sell everything and they go off. We don't hear from them. They sell everything and it didn't do anything to their borrowing capacity. So if you sell, you need to know what that net effect is going to be on your borrowing capacity to your goal. You need to hold onto your properties tight enough that you don't lose them, but loose enough so that you can get the benefit of the sale for the bigger opportunity. You can utilize selling to get bigger deposits and different securities along the way. And there are some areas of your investments that you can't get access to equity like self managed super funds don't allow equity. So the only way to get access to the equity is to sell it. And then the other really interesting one is the locked equity. So a lot of people said that their borrowing capacity was either going to get capped out or they were getting to that point. That can be considered what we call locked equity. So we're repaying the portfolio, but the portfolio is growing. We just can't get access to the equity. Our income won't let it. So sale can be a nice little way to be able to unlock equity. So we can trap equity in trusts by having too much property and trust. We can trap equity in super funds because we've got too much growth going on there. And we can trap equity in our own name because we just can't get access to it with income. So that's the selling part.

So much to unpack in this. Do you think investors have a bias not to sell property? Like just in the chat. Just let me know if you hate the idea of actually having to sell one of your investment properties. I'LL put my hand up and say that I do the effort that goes into buying them, selling them just like really doesn't rub me the right way really doesn't However I have sold numerous properties along the way and it has been a very very good decision. So I had a property I'll leave the suburb out of this but I'll say it was somewhere in New South Wales just because I don't want some people to buy in these areas based on my opinion no one should buy in any area based on my opinion just for reference there But Aaron, this is what blew my mind is we had a place in New South Wales I think you remember the one, the first one. Now what I couldn't believe is I had about $500,000 worth of debt and a bit of a deposit in on that property right but this property was in on my own name in the selling of that I couldn't believe that I actually opened up borrowing for a million plus when we started to look at trusts right and this is the thing that was like mind bending to me is because I had bought a property in my own name and then sold that then looked to buy in a trust in that example with your guidance and an accountant's guidance and a lawyer and all the stuff he's meant to speak to, you know do you do your research guys? Good cover up there Aaron. Nicely covered. So you guys I don't want to get in trouble on this one but I couldn't believe that it was the whole idea of like I was a little bit stuck but then you sell a property that's worth was worth about 700 had about a 500 in loan but then that actually opened up 1.2 plus of borrowing that actually meant for selling this property I could double the volume inside my portfolio so selling a property at the right time can just be such a huge win for borrowing capacity. Such a huge win totally.

And that's what we're taking an angle on like there is always those things why should I be paid stamp duty, cgt all that stuff again but it's a really.

Yeah I'm watching the comments but guys listen to the maths It's a really good decision.

And non performing assets obviously comes into it the repayment of debt is a really interesting one so we've unpacked it on a few masterclasses that bad debts hold you down and you to reduce it to just your mortgages if as as able but it's really interesting how how debts can hold you down so you might, we all know the car loans, personal loans, tax debts, business stuff that there are some real needs for business debts like in, in tradie style businesses with leases and things like that, which we need to accommodate. And there are lenders that do that quite well. We sometimes want to hold onto the credit card but we can hold onto it right up until the end, until it stops us getting an opportunity that our goals predict. And then we've got the non deductible deductible debt. So that's that big topic like we've got our owner occupied debt that holds us down. I think our analysis is if you were paying a thousand dollars a week in rent in my local suburb where the office is in western Sydney, I think it was like a $850,000 mortgage. If you're paying a thousand dollars a week in repayments, you are only getting a $650,000 loan. And then on the calculator the thousand dollars a week in rent is considered at a thousand but the mortgage repayment was considered at fifteen hundred dollars a week in rent. So even though you're paying a thousand, it was really, it's wild when you get those non deductible debts. So reducing the non deductible debt in your own name and then over time reducing the debt in your own name and mathematically for borrowing capacity, putting more and more as, as I see bigger and bigger portfolios, they're putting more and more into trusts and they're reducing their personal deb liabilities as they go along to continue to manage their borrowing capacity from there.

Yeah, I'm absolutely for it now. I give people some warning signs like if you have four or more investment properties and they're all in your personal name, I would suggest slow you down. That's going to potentially, potentially I don't know there. And again I would suggest you probably would want to speak to someone at the Strategic Mortgage Brokers team. And what I would really look for for everyone out there is like let's say you've got a property and we're just going to use round numbers. Let's say you got a property worth $1 million in your personal name. If you were to sell that and it was going to open up $2 million worth of borrowing, right? That that's the type of lever you're looking for. It's like, okay, that's the type of thing that's really going to get you unstuck. But if you had that million dollar of property and you sold it and it only opened a million dollars of borrowing. Well then you know better off, right? So this is where you want to work with someone to understand well if I did this, does it actually unlock substantially more size in my portfolio? Because there's no point as many people pointed out, I'm going to pay cgt, I'm going to have to pay stamp duty or a buyer's agent fee again I'm going to have to the fees of setting up a trust or whatever it is. So you really want to be sure that there's enough in that with speaking to the professionals so that you can make sure that that is a really good move for you in the unlocking of the portfolio. And I shared before in my circumstance here like this was a level unlocker in the ability that allowed me to, you know, I think it got me to my seventh or eighth property after that which was a big thing that allowed me to press on. And again some really clever people in this chat have just pointed out that you might have a non performing property or you might have a property that's had some wins but maybe the future doesn't look as good for and it might be a good time to make an exit on that as well. I can't tell you if that's true or not, but they're the type of things you would want to be thinking about and looking at in your plan here if you really want to unlock this thing and set up for the next run of growth.

And it's also converting like what's understanding your exit in stuff as well. Like we do it all the time. Easier exit to convert into a different type of portfolio is your exit to retire and how that looks for you too. And if you can get ahead of that and when you're building a portfolio, if you can get ahead of it one, two or three properties ahead and the moves that you make and that's where the borrowing capacity is always. It always leads back to borrowing capacity.

Okay, is there any other points here around strategic repayment here Aaron, or is this mostly centered around if someone was to in an example again they had a couple of properties, maybe there's one that they wish to sell or move around here. But with strategic repayments, is there anything else?

I wanted to give a quick example on the strategic repayments. We recently did a self managed super fund purchase for a client and super funds don't necessarily affect their personal borrowing capacity land but in this case we had to look at their personal land to be able to get the. The lending lending to work and we had some, we had some personal debts there that actually affected him getting the property. So we had to get those paid off to be able to keep investing. So we look at those things and we give headwinds on what we need to be coming after. And then unstucking your trapped equity because you've got too much property and things. Having that ability to refinance equity, release and sell down at the same time can, as you said, be the, be the game changer. And we got numbers and numbers of clients that have done those in simultaneous effort as well.

I still hate doing it, but it does work. All right, let's move on to our next strategy here.

Okay, so I want to talk about strategic structures so everyone might think we're talking about how we're going to own it in trust and get unlimited borrowing capacity and all that other stuff. But I want to talk about a little bit differently where we need to have our borrowing structure correct. So this is about making sure that we've got our home loan splits set up the right way. So we might have our owner occupied split. It has its own BSP account number. We have our investment equity split that we've thrown to the trust and it's got its own BSP account number. We've got our, our, our, our trust structure that's got its own BSPIN account now, same with the smsf. So we've got all these little splits all over the place about what equity's gone to which property we might have our owner occupied, have three equity splits to go to three different properties that we have to be able to help our accountant manage properly. And we can actually do that by creating the right home loan splits when we apply for the loan. So we refinance, we might have someone coming off a fixed rate and has a variable rate. So we'll refinance that as the owner occupied into one split and then we'll release the three splits for three different properties. So we which ones are owner occupied, which ones are investment, which ones, which home loan splits on which properties have been able to used for the purchases like the 20% plus cost for the next property. What, what we have to remember too is that the money we use from an owner occupied property may not be all owner occupied debt. It's, it's what we use the money for. So where we release equity, it's what we use it for, investment or owner occupied. And also with the investment loans, it's so important to get the investment lending splits right these days because the ATO is coming down on property investors and they're about to get feeds of all the investment loans from all the banks to make sure that your deductions are valid. So all the banks are now reporting the investment loans like the property managers are reporting what they're paying and getting in as rent. So it's really important to get our home investment structures correct so that we don't get asked, we need an audit. So that's where I'm thinking with the borrowing structures is that we get our splits. Right.

Well, let's cover this in a few ways because I think this can be a pretty confusing topic. Right. So for example, let's just start with loan splits that you've mentioned here, Aaron. So I'm going to make this really simple. Let's pretend someone's got a PPR they live in and they got one investment property, right? Now if I take equity out of my home that I live in and I use that to invest, that's a tax deduction, that's a tax deductible debt. Even though it's on the house I live in, that split out loan is good debt. Now of the reverse of that, if I was going to borrow money out, so maybe I've bought an investment property 10 years ago, it's got a heap equity in it, I borrow that equity out and then I buy a house that I'm going to live in, that's non deductible debt. So the way that those splits have been done, so there's going to be in both examples there two loans on these houses, but due to the use of the loan and what it's being used for, would decide what the splits are, where they're being done.

Correct.

So if that's being set up incorrectly or done poorly through previous loan engagements, which even I will admit myself, I've made some not so great decisions in, you know, trying to make a speedy acquisition. At some point you want to come through and clean all of this stuff up, right? Okay.

So that's where the, the whole masterclass comes back to getting your consolidation going as well.

Right. So that's the. When we talk about loan splits. So if someone's got like three loan splits on things, can they fix that all up and put it into an. Is there a way to like refinance this to your point of your number one slide strategic re refinancing that they can clean this stuff up and make sure it's properly labeled and allocated or how does one even approach this?

So the big thing is to Know what loan split is for what. So the biggest tip I can provide everyone tonight, free tips. You can log into your Internet banking, you can go into the settings and you can nickname your loans. So if for me, I've got, I've got a mortgage, I've got an owner occupied loan, so I'll call that owner occupied, my next split might be owner occupied equity for 1, 2, 3 fake street and then I know when I get to the end of the tax year, which we're at, I can download that statement, I can go to the investment properties loan, I can download that statement, Away we go. So that's knowing where it is. If you've got a bit of a messy loan split structure, it's all about going through it, which loans are secured to which ones, which ones are for which properties. And we can usually backtrack that through with your, your tax returns to your how you've got the loan structured and how you've nicknamed them. And then we can tidy up where we can, and then we can structure out where we need to structure out. Especially if you've been cross securitized, that's a big thing that we need to go through and re split out because in those cases we don't know what the owner occupied property or the investment property is done to buy your owner occupied or investment. So it's a bit confused.

Do you find in a lot of cases you mentioned in the last year you've done over 150mil of borrowing for investors, which by the way, that's just awesome. Do you find for a lot of people, Right. What they're actually missing is this whole refinancing restructuring step. Even though they might not be actively going after a acquisition right now, what they really need to be doing is this refinancing work. So when they do want to go after an acquisition, they're in a much better position to do so. Right. Because that feels like it's a missing thing. It seems for many of us in the acquisition space particularly, it's like we're just running around trying to buy the next property where for many of us, and I suspect many on this call, the step they need to take first is to actually clean up the whole way their portfolio is financed so they can make a future movement.

That's right.

So.

Acquisitions are messy. So it's all you need to breathe it sometimes to just get the borrowing structure right. Most people that I find where we're refinancing a house, they might go, I've already had the owner occupied mortgage for 20 years. Why do I need to move it back to a 30 year? Or what is the impact on my borrowing capacity if I don't, if I do. And one of the things, it's like those people don't want the, want the debt, they just want to provide for their family. So it is one of those things where we get fearful of debt at 30 years and interest only, principal and interest, all that stuff. But determined by your goals is what we need to structure it into. Whether it's one or two splits, making it easy for the accountant so we don't get charged too much there, making sure that the ATO is protected from where we've got our right structures for the right assets. And yeah, we need to look at refinancing. And I think it's also a bit of incumbency on the mortgage broking industry industry too is that we all get a little bit pooped once we've acquired that. When we pick up the phone to the client, we're all happy about their property portfolio, but then we forget into the ether what's going on and we have to get up the phone and pick it up and consolidate this thing so that you can go further.

Yeah. Again, I think this is such a necessary step and I hope many people in this chat have been thinking about the idea of, well, hey, when's the last time I had my portfolio checked to make sure everything is on the right structures so I can keep going. So I'll put the link in the chat again guys, if anyone on this call wants to speak to someone on the SMB team about making sure that all of their properties are actually set up so they can keep acquiring or for whatever their goal is, then I highly recommend it. Now the next thing I want to go over here is we've got strategic structures here and I can see quite a number of questions in the chat about. But when we talk structures is like, is this personal name, is this trusts? Like trust seems to be a very hot topic now again, we don't. Some people are asking questions about, you know, when would I start investing in trusts rather than using my own or my own name. Guys, that, that's a very specific question to you and that's a great example of where you should definitely book in with the SMBT SMB team so they can answer that specifically. Right. So if you've got that type of individualized question, I think that's a great one to cover with someone where they can go over your situation. Because what applies to one Definitely won't apply for all. Now the second thing I want to go here Aaron is that structures can absolutely, like I know from firsthand experience, unlock immense borrowing power. Right. Which is one of the things I know many people are here for today. So I'd love it if you could just speak into the idea of like using different structures, whether it's trusts or businesses or personal names to unlock capacity.

Was that to whom much is given, much is required to whom gets the power? The quote anyway I really butchered that quote. The power of a trust can't be misused, stuff like that.

So was it with great power becomes great. That's it, responsibility. Isn't that Spiderman?

Yeah, something like that. Oh, I got it butchered. So with ownership structure number two is about personal name, SMSF and trust structures. So I'm going to talk about it from a lending point of view. Tax and other things that may be coming down the, down the pipeline. Can't comment on too much tonight but can have a conversation with anyone that wants that ownership structure. Have a plan if, if you're going to go into structures with your own name, self managed super funds and trusts and things don't, don't just come to the broker with a property and say I'm going to put this in the trust. Come, come before you find the property and let's get your borrowing capacities done, let's get the headwinds done because if we, we might be able to assess you with a million dollars worth of borrowing capacity and that's it, that's all you have right now. And if you put that in your own name you might be stuck. And if you've got a million dollars worth of borrowing capacity and you don't have property in the horizon and we understand what the gap is of what you need to achieve, whether it's a passive income, legacy play, helping the kids, having a comfortable retirement, getting to a $10 million worth of property portfolio when you only have 2 or 3 million worth of personal borrowing capacity, you've got some property in super and that's got another couple of million dollars worth of borrowing capacity. So having a conversation about what your borrowing capacity is, getting your borrowing capacity done in your own name in a trust and in SMSF can really help us guide a conversation and understand where we need to go. And the really cool thing about trust and SMSF is the last two master classes. If anyone needed them, you can ping us and we can send them to you. You can, we can unpack that a little bit more trust and smsf, we've done a whole few sessions on that. But the biggest problem I find with people looking at trust structures and SMSF and personal names is people just tend to focus on one area and I don't know, I don't believe it. Like most people are putting so much property in their own names they get stuck. Some people are only focusing on super and super is only getting 12% of your income and needs, needs larger deposits. So people are growing slowly in that area. People are using SMSF after they build up their own personal name to too much. People aren't looking at trust structures and other entity ownership structures in a controlled way for, for borrowing, capacity management, getting the advice from tax, getting the advice from everyone else to be able to push you into the right direction. So if you build each area personal SMSF and trusts, instead of focusing on one, you, you'll be able to have a big portfolio versus just being capped out.

I think the simple way to look at it is if you've got two investors and one can only invest in their own name and the other one's allowed to use a variety of structures. The what I have seen and observed is the person that is willing to use a variety of structures is able to go much further due to the way these structures offer different advantages with lending and what can be reviewed with the banks. Now I think the topic of trusts actually gets quite overdone. I think people really want to paint it as like, you know, some secret rich structure that you know, gets done in that way and that makes all the difference. But I think in its simplest form it's just different structures have different advantages and also different consequences. And someone that only uses their personal name will be at a disadvantage versus someone that's willing to use a variety of structures. But you really want to cover that with an accountant or a broker. So I would say on this chat is a thing that I would just go, okay, you know, we're looking for signals here. So again, if you know LMI is all the only way you can acquire a property, I think that's a signal that you probably need to speak to other brokers and really look at what your plan is to get to the next two or three properties. Now if you're someone where all the properties you currently have, whether that's 1, 2 or 3, are in your own name and you're really unsure, it's like, well, should I be using trusts? When should I be using trusts? Is that appropriate for me? Maybe it's a company for me, maybe I'm self employed. Maybe I should buy it in my business. Maybe I'm self employed. Maybe I should do a SMSF and because I work from. Right. All those individualized questions, that's the stuff you really want to get in the nitty gritty with, with someone on the SMB team because they're going to be able to take you through the pros and cons and the things that have with that. So I love some of these questions that are coming through. Guys, it's very hard to answer everyone's specific circumstance when we're trying to speak general to serve as many of you as you can. But if any thought like that has come up where you basically like, well, I'm not sure what structure I'm in. I'm not sure if all my properties are in the right setups with the right finance or I'm not sure how my loan splits are done and what are the consequences of what's going to be tax deductible and non tax deductible. Then you're the person that should book a call. You're the person that should get on with the SMB team because they're going to be able to give you huge, huge clarity on that and I can see as well. And sorry to be a mic, Aaron, but Karina, you do an excellent job in the chat of posting the other resources to people so that we don't have to find the links later. So there are also links in the chat if anyone wants to check out the Nitty Gritty of trusts. We've done a whole masterclass on that. Or if anyone wants to do the Nitty Gritty on smsf, then we have a whole masterclass on that as well. So tonight we're thinking about borrowing capacity and we're really leaning into like again, many of you will be sitting there with an easy win in refinancing, I suspect. Right. Others you're going to be stuck and potentially you've got to pick which one of your children you have to sell. I mean properties you have to sell. I wouldn't at all think of your properties like children. You wouldn't do that. Some of you I can see considering selling your ppr, which you know that's like your first child. Right. That's an important one. Right. So again getting that right advice. And then thirdly is the whole structures and loan splits. Right. I love that we've covered things that are a bit unique here and I hate it when I get on a webinar and they just Say just pay off your credit card debt and then you have more borrowing power. No, everyone knows that. Right? It's like this is the more nuanced stuff that could make a really, really big thing.

Come on, we've got to tell people to go on their netbank and rename their loan splits. Like I haven't heard a webinar tell that for a while and some properties and Spider man quiz and stuff.

Now the last. Yeah, we've got quite a few Q A stuff here and I'm mindful of time as well.

Do you want to go the quick, the quick one on asset structure is that you need to look at your lending before you go off the asset because people might go after things like you. If you look at commercial lower LVRs, net rent that might attract you rooming houses, NDIs if, if they ever build all the NDIs, lower LVR, higher income. So some of these things are harder to get into. So. So I would say I would talk lending not asset first. So. And then when we know what asset we can match the lending to you well in advance. That's what I wanted to mention about asset structure.

There you go.

I can talk about questions if you like. I'm more speed that up. Let's get the questions.

Let's do some Q and A right forward on these slides here and again we've got some. Thank you Karina for covering this one here. So this I'm going to go from. This is from Job and he's gone. Is this a. Is it good to start with a structure if I don't have any property and want a PPR later? So I think someone's asking is should I be using trusts or buying things in different structures if I don't have any property and I want to buy a PPR later. Okay. Do you have, do you have an opinion on that one? Aaron?

We assume they have a deposit to be able to start in property. So can, can you get to your end goal now or do we need to build up other assets before you get to your. Your PPO are do you need to purchase in trusts or not? Well that comes to like what type of PPO property do you want? Like let's, let's deal with the goal that you have. Like is it 1 million, is it 2 million, is it $3 million property. Property that you want to live in and, and how will property help you bolster your equity and play to go along that structure and then with some, with some collaboration with an accountant, maybe your structure is good. Because it might help you diversify the income from buying and selling properties. But it's, it's all about what is property going to get you to get you to that goal of ppo. So if you have a, have a deposit now, maybe you need a bit more to get to the ideal PPO are you want. So having that understanding of where do you want to live and then backtracking from there.

Can I share a personal experience? I actually bought a PBR which you guys obviously helped me with here like last month. So I'm finally after being a Renfesta going to move in and be. What is it? I'm going to be a NIMBY now I've decided. Nimby? Yeah. I'm going to get really involved. You know you got to get obsessed with your law. Obsessed as your nimby. Right. That's what you're going to do.

You're going to have the lines. The lines.

Well, I would just say one of the things that I was thinking a lot about right. Is if you know you're going to want a PPR later, you know you're going to want to buy your PPR in your personal name because of like you're living in it that you don't have to pay land tax, the capital gains discount. Like if you are going to play that game, that's where you want to structure it. I intentionally thought a lot about making sure I have enough borrowing power in my personal name and did utilize trusts before that to make sure that was so. But I couldn't have done that without you guys helping me. Right. Obviously you guys being able to set up to do so is there. But that's a great example where being forward thinking in the last three or four purchases so we could do that. We're so relevant. So for those of you that are running a rent Vesta strategy. I did personally I'm not going to say if that's right or wrong for everyone but that is a consideration you want to take if you want to be a homeowner at a later date is making sure you do save borrowing power in that structure so that you can make that move. Because let's pretend I got there and I could only buy in a trust. Well now I'm paying land tax every year on the house I live in. Right. Which would not be ideal. Would be a big consequence of getting that one wrong. So really great question. I hope that helps you think about it at a point. Obviously everyone's circumstances on when you know they might really want A house to live in now before they invest or later. Certainly a consideration in that point. That's right. All right, let's have a little look at some other questions here. Is it too late to get borrowing in a trust if I've already capped out in my own name? If so, at what point?

Hmm, that's a very common one. Because if you've got too much property in your own name, that can start to make you stuck even if you're considering trusting companies or whatever's relevant for you. So.

But wouldn't this be a right for your number two strategic sale?

Yeah, strategic sale. There you go. Unlock the uncapped equity in your own name so you can have borrowing capacity to go into the next one. I'll give you the equation of what happens when you look at purchasing a property in a trust. It's based on your personal borrowing capacity plus the asset, plus the rent, minus the debt that comes along with the trust. They put it all together. Especially if you're borrowing for a, say, a single occupancy residential property or residential property in general. So trusts don't allow you to exclude your own personal situation. There's only one type of lending that excludes your own personal situation and that's called lease doc. And it's in the commercial space and you have to put a bigger deposit in to be able to do it. So strategic selling could be on the cards to help you go further. Bit like your example.

So to repeat that back. I bought too many properties in my own name. I'm now capped out on lending. The way potentially forward might be selling one or two of the ones in my own name. Take some wins. But then buying new ones in trusts and then opening it up in that way could, in certain circumstances, air quotes be the strategy.

Well, you could take, you could take Brendan's comment there, Charlie, that he's highlighted for you. You could just earn more money.

I was saving that for later.

Oh, you say.

Thank you for the comments.

Earn more money. That's another way to unlock your personal borrowing capacity.

We've got another question in here from. I'm gonna butcher this. I'm gonna go with Nick. And impacts on converting investment loans from P and I to interest only on borrowing capacity.

Right.

Because I think it's a really good one. A lot of investors get interest only loans, but I know that can have an effect on things. Can you just speak into the difference? And if we're only talking through the lens of maximizing borrowing power, how should someone think about it? Yeah.

So Principal and interest loans do get more borrowing capacity slightly than interest only loans. So the banks are judging your loan terms based on the remaining principal and interest debt. So that is where if you take a 30 year mortgage and you have a 10 year interest only loan which a lot of banks are promoting themselves for, your borrowing capacity is done on a remaining principal and interest debt. So that will change your borrowing capacity. Then if it was judged on a 30 year mortgage. The ways that you can change your thoughts on interest only is that interest only is really good for ownership structures, not so good for cost wise, not so good for smsf. But investment, when you've got your own or occupied mortgage and you've got an investment property, it can be a bit of a game changer to help you get rid of that non deductible debt and also help your trust be a little bit more profitable too. So interest only is a really cool thing if you can get it. I don't think it affects your borrowing capacity as much as it used to. When it came out 2018, 2019, that will going to go on remaining principal and interest terms which is what the banks came out with. Because we had too much of the market in Australia as interest only and that was risky for investors. We went into a period where they were charging a lot more for invest interest only investor loans at the moment at that time and even to the point we're seeing nearly 1 or 2% differences and then when we got to about now we're only seeing about maybe 0.1 0.2% change which has decreased the effect of interest now yeah, it's hugely.

Different guys that used to be much more substantial. So see this is where knowing someone who's in the game can shed some light. Because I remember when we looked at this maybe four or five years ago, Aaron, this was was a substantial difference where we actually changed the loans to principal and interest for that reason.

The change to principal and interest from interest only is simple, it's a tick of a pen. But when you're changing from principal and interest to interest only, it is a short form or even a long form application to do it because it's judged on your income assessment. But we do a lot of principal and interest to interest only adjustments as we strategically consolidate people's portfolios.

There you go, next question. Here we've got can I sell a property that I own to a trust, our own to increase borrowing capacity. So someone's asking, maybe they've got a great property, they're like I don't want to sell this thing, could I move it to a trust knowing full well that they will have to pay stamp duty again? So that is one of the costs that comes with doing that. So I can see this as another question. I'll just mention this. If you move a property from your personal name into a trust, you have to pay stamp duty and then the costs of the trust set up. Is that correct, Aaron?

Correct. And maybe capital gains in your personal name along the way too.

Okay, so there could be some expensive moves in doing this, but it could be worth it.

But it could be.

The point of the question, would it actually increase someone's borrowing capacity?

Well, on if, if we're working with a property that's running profitably, absolutely, we could. We, we don't get told or recommended from people too much to be able to move properties from personal name to trust, but we do do it. We just accommodate the extra lending and it can absolutely free up your borrowing capacity a bit more. As long as you've judged that property correctly and you're not holding onto it too tightly that it's not the right property to do this type of transaction.

There you go. You want to be sure it's a winner if you're going to do that.

Correct.

You really would. All right, next one here. Now, Todd has mentioned in here, I feel like I am stuck at getting the next property. Jess has got the finances sor in a trust, but I just can't seem to get the property. Is that, is this something you guys can help with Todd, in that circumstance? Absolutely. I've put a link in the chat as I have many times here. If you want to grab a spot with the SMB team, they will be able to direct you and make a good decision in that. I've got a question from Ben in here is like, what are the costs of a trust? Do you want to cover that one?

Yeah. So we're not accountants. We can't do the trust set up here.

General.

General spectrum noting we don't do them any. Anywhere between 1500 and $3000 and it could even go higher depending on how much customization you want to do.

Yeah. So I think that's a pretty good range. I just also want people to know it's an annual thing, not a one off. Like your setup costs might be that but then you've got compliance and accounting fees ongoingly. So they certainly aren't free. They do have some advantages. But this is where it's one of the cons of trusts is the costs that's right. I'm scanning through the questions here. So Brendan's got a question in here is do, do the either of you see value in selling a PPO to buy more investment properties? What are the risks around this?

You need a place to live. I. If you're willing to do it and there's enough equity and the, the current PPO loan is under control, mathematically, it could go down the, down the line. Pretty, pretty cool. It could be the unlocker that you need for extra deposits and things without needing to have an ever increasing income. The, the, the personal comment I've got for my PPO are, is that I'm in an area where rentals are harder to get and I live a kilometer away from. Well, not even that. Probably a few hundred meters away from the kids school so they can walk to the school and then there's like five schools around. So I've got a joy piece that I do like to have the principal place of residence. I know it caps me out, but I've got a life piece. But also with ppoi. If you've got purely maths. Absolutely. If there's a controlled loan on it and lots of equity that you can get. Yeah, absolutely. It could be, it could be a game changer. But we'd have to have a little individual chat on that one then. Bren.

Yeah, Brennan. That's such a loaded question. I love it, but it's loaded. I think what I found for most people, right, is that rent vesting by the numbers works. I think when anyone runs the numbers, it looks really attractive and transparently it's like it's worked for me in a very large way. I think where it gets challenging is where Aaron's mentioned some really important topics here about like, like the suburbs you want to live in may not have a lot of rentals, so then you may have to buy. Right. Or you might want the security piece. I know many of us with this, with young kids and our kids are in schools and they have friends and things like that. The idea of having to move around a lot doesn't sound so advantageous. So they're the life considerations that you really got to throw into this that kind of like taint the maths, if you will. So that is such a personalized thing you've got to look at can be a huge advantage. I also know some people that have done incredibly well out of this strategy. Right. Because they rent in areas where it would be incredibly expensive to buy and it would actually knock them out of the game. So that would be something worth considering there. But there's a lot of people you want to speak to to make sure that that's the right thing for you and your family or whatever you're getting up to in that way.

Absolutely. Consider it through the lens of joy as well.

All right, so we got another question here from kiplesh. I think buying a property in a trust can unlock unlimiting borrowing capacity provided each property pays for itself completely. Is that true? I'm going to say kinda. Right. We actually covered this in our smsf, sorry, not SMS of our trusts Masterclass, so you might want to check that one out there. But Aaron, how do you feel about that comment?

So I can see where people can get that opinion that it is unlimited borrowing capacity, but do you have unlimited deposits? Do you have unlimited funds for accountants? And will all banks that you want to get unlimited borrowing for be available to do unlimited properties?

That's where it kind of comes undone, right? It's like, it sounds good in theory, but it's like when you really look at the deposit requirements and the upkeep requirements and all the rest of it, it's like it's not true.

And the cash flow as well. So I would, I would say with unlimited borrowing, I would say that may the. The comment that I get a little bit taken down on, I did get taken down a little bit on our ads recently was I don't think there is a borrowing capacity cap. It's all about the decision the investor wants to do. The ability to generate deposits and the ability to manage your cash flow. And if any of any of the other issues come in there, what should I do? Well, that's a decision to make. Should I choose a PPO over an investment? Well, that's number one. It's about the decision you want to make so we can get substantial portfolios with ownership structure in check and in line. And we have a right sequence of lenders to be able to go to, to be able to get that kicked off.

Sound. I think it's good in theory, but there's a lot more to it, as I said there. So, guys, we've got a couple of more questions here. We won't actually be able to answer them because they are personalized. So, Arash and Cassandra, I would say to the both of you, it's very worth speaking to someone on the SMB team because it sounds like you've got some very specific circumstances there about properties and building an smsf. So I won't cover these ones here, but please do speak to someone on the team. All right, we've got one more in here. I'll do this one as the last one. Negative gearing still has a role to play in some strategies. Some do really well. Buying your personal name for investment for this reason versus you using trusts. What are your thoughts?

100%. It's like the cliche topics out there is that you shouldn't invest for a tax strategy, but the tax strategy can be a nice little cream and cake on the top. Right. So most properties these days, if you're borrowing 80% or more or using 20% from one property and 80% from another property, are probably going to run negative where the interest rates are at the moment. It's not like back in Covid days where we can make everything positive. So if it can be a really cool strategy to have lots of property in your own name. I was talking to a business owner where they were happy to pay tax on $100,000 salary. They could buy a property, that property could throw off ten grand tax deductions. That means they, they're, they're, they're paying tax on 90 grand, not 100, but they were happy to pay tax on 100. So now they could probably draw another 10 grand out of their business. So they're paying themselves 110, but they're still only paying tax on 100. So there's a whole range of different thinking around there about you don't have to do ownership structures and you don't have to do smsf. Everyone has their own goals and borrowing in your own name to build up some wealth and build up some things to be able to maybe have an easier way to. You pay your capital gains, you pay your things and you'd be able to buy your own principal place. That could be a great little thing. Or you, you have ownership in your own name and you have a whole range of different outcomes that you can make. So don't, don't invest for a tax outcome. Have tax as a bonus to you making a good investment.

Yeah, I love that. It's a really good way to think about it. I think it also paints an important thing when it comes to this game is like there's just many ways to do it. It like I'm sure there's someone out there that's made their fortune just negative gearing. I'm sure there's someone out there that's just made their fortune in positive gearing. I'm sure there's someone out there that's done it with commercial or trusts or whatever it is Right But I think what's important is to be intentional about your circumstances and your situation and get after it like it's that is the big thing here Now I'll say a massive thank you for putting this all together Aaron like big big thanks of bearing the content and of course like again just the nuance of understanding the lending environment so you can help the people on this call I'll give one last shout out for anyone that does want to grab a call with the SMB team. I'll make sure the link is in the chat. A few people have also asked for the recording we will make sure that we do create a recording and send it out or have it on the page with the other recordings there so you will be able to grab a copy of this but other than that I'll say a big thank you to everyone and I'll just say to everyone have a fantastic evening so whoo.

Thanks guys.