Borrow My Brain - Hilda

Hello, it's Jane Slacksmith here and welcome to Borrow My Brain. Now this conversation goes a little bit differently to what I expected. Hilda originally asked me to look at an opportunity for her in Western Sydney. She was looking at investing some money that was the result of selling her business premises in light of COVID 19. However, on a little bit more investigation and looking at her specific circumstances, I made some additional recommendations to her, which included not actually buying a property. And I think you might find this whole conversation a little bit interesting. We did tape on so many different topics, including remote working, digital nomads living overseas and working wherever they want and what's that mean to the property market in Australia? So lots and lots of interesting conversations. I hope you find it interesting too. And I think you might find a little bit of a twist in where this ended up of interest and the conversation around what's that mean to investing right now during the COVID 19 pandemic. So enjoy. Hello, it is Jane Slacksmith here and I have another wonderful guest with me today for the Borrow My Brain series. I have Hilda, who reached out recently and asked if she could borrow my brain. And Hilda, welcome. How are you?

Very good. I am well under the circumstances. I'm very well.

Now, you sent me a few notes on your situation at the moment. How about you give me a bit of a recap? It sounds like Covid has claimed not just lives, but businesses as well. And yours was one of those?

Yes, my business is vaccinations for travel. And in vaccinations for travel, where it's not traveling, it doesn't work. So we do have a few customers, but it's not a business going on at the moment. I saw my premises from the experience of Jacinta. Go hard, go early, otherwise you will miss it. I did the sign, I went hard. We nearly sold everything I could before everybody get panicked and no one buys anything. And we sold our premises, but we still went back from the new owner. And we expect that in six months, a year, we might be able to assume business.

So the plan at this stage was kind of sell down and consolidate and protect yourself from more downside, but also have the ability to keep the business and turn the business back on when it's needed.

When it's needed. The problem is the creditors. You can't stop buying creditors. You can delay, but you have to buy them. And that's why we sold everything and we were able to buy the majority of them. And we can just continue until the vaccine is found and until we can Start again.

Who knows, there might be opportunity in your business to administer the vaccine that the Prime Minister seems to have got.

For us, the new vaccine. Yes, we will be able to do that. We will be able to. We would like to help people, basically, but.

So tell me, you mentioned that you've invested in the past. Tell me a bit about your investment journey and your love of property.

I did start investing when I was 25 years old, finishing university, finishing my master degree in Peru in South America. And I bought the best place in Lima, Peru, and I left it there. I come to Australia for a holiday, a wonderful person that I love very much and I have a family here. And then I come. I have sold the properties in Peru to be able to invest here. And we have been investing for the last three years, basically, sometimes with success, sometimes very badly. Because unfortunately you plan the new country, the new expectations, the problems you might have, those are different. I learned with experience, sometimes just by knocking my head on bad properties. We have to sell a lot of properties. We have bought new properties as well. At the moment, we still got a portfolio. We are two bad apples in there. One of them in South Australia in Christie Downs and the other one in the United States in Michigan.

How long ago did you start investing?

Probably 35 years ago.

35 years ago in Australia?

No, in Australia, starting to invest 20 years ago.

Okay. And you said that you had bought a few and sold a few and every time you sold, you sold off often to buy a new home or a business. So they elevated value, allowed you to get to the next stage.

The increase in value help us. Yes, but sometimes you sell for a loss because unfortunately bad properties, they are not going to get better.

And from your experience, what have you seen as being a bad property? What hasn't worked?

Basically, the management of the rental. Management is very important. If you have a bad rental manager, the property will not perform no matter what you do. Even if it's the best property in the world. The rental manager will just get any tenant just to get it quick. And then you have. They lie to you. Sometimes they tell you that, oh, it's their first rental ever, they never rented. They are 50 years old and they never rented. And you have to rely on them. You have to trust the people you work with. Yeah, I noticed some, I don't know if I can mention, but some real.

Don't mention any names.

Some real estate people in particular lie more than other people and I just try to avoid them now. But I learned it with the time I invest in Broken Hill for example, in a good property. And they come when I invested in there were five real estates in the whole town. Now at the end of my investment in Rocking Hill was only one, no two, but one of them dedicated to other things and the one I use was very bad. It's just.

So your experience has been that it's the tenant management that has really been something that has been in your worst performers. So the importance of having a good professional doing the work for you and managing that property something that you've learned along the way. So I guess it's something we have to keep in mind for the. The next property purchase.

Yes, exactly. I did have good properties that the rental manor just make it worse and I have bad properties that rental money just make it better.

Wow, interesting perspective. I haven't heard that before. And you know it just comes down to everything in life really is how you do anything is how you do everything. And you know you. The importance of having the right person in the right seat, doing the right job is just so important. Like the right people on the bus in the right seats means that everything is kind of effortless and that's what we want. So now let's have a look to the future. Now you're looking down the track a number of years of where you want to be. If we look at your goal and what that timeframe is. Tell me a bit about that.

My goal is to be able to buy at least another two properties that could give me between 10 to 20,000 profit net depending on the property. Of course some of them we are talking about cash flow because if I buy.

When you say profit net you're saying per year they're making you money every year. Yes, a cash flow purchase purchase.

So normally I could buy out high the price at the moment because I do have a few amounts of money to do to buy the purchase outline. But the thing is there is a lot of uncertainty and the uncertainty I think happens in every part in the world. Not only in Australia because I have been talking to accountancy, I am an accountant so I have been talking to accountants in the United States and the uncertainty is killing them and it's all around, it's not only in particular states.

So if we look 20 years down the track, what does life look like for you?

20 years down the track I will be about 80 years. So it's very unlikely I'm going to be able to do what I can do to die renovating houses and be able to be on the go 747. Because problems happen anywhere. And if you are thinking about 247 means in other countries as well. United States is in the opposite hours of our. Sometimes I have to be at midnight typing scenes for them and asking questions because they are not in the time we are adults.

Imagine, having a property in the US has been quite a challenge as well. Has that been a successful investment for you?

It has been better than the ones in Australia.

Okay. Because by the numbers, how would you determine success? Has it gone up in value or it pays an income or the tenants are good in tenant management. Why is it success?

The tenant management has been a bit better, except for one of them that we sold.

Right?

Okay. Yeah. The tenant management was the main problem there. This one was in Cleveland Heights. And the tenant, the person who sold us the property, put the rental management at the same time because they have the facility to have everything in one shop. And the person who was the manager just didn't buy us the rent, the net rent. They replace this person and the new person just didn't visit the property. The property got a flat in the wintertime in the northern states. They break everything. And that was about $15,000 United States dollars to buy. So all the profit we got gone in one go.

And so with the property you still have in the US how much cash flow does that make you after cost per year?

I have at the moment we have a number of them and some of them more, some of them less. But you were talking about 4% return in the U.S. 4% is reasonable. Some people can get more. Some people who are in Tejas, for example, there is no tax. The county tax is almost nil, and that they can get more. But we didn't want to invest in.

So with the properties in the state they had, they're covering their own costs. Plus there's some income that's coming in that's accentuated. Is that income enough with your current income levels to cover your expenses? That does for your living expenses.

Oh, my living expenses. I am the kind of person who will never stop working. I will keep working forever until I can, basically. But I realized that physically you need to relax a little bit more when you get older. So it's just better to take it easy and consolidate just a few properties that will give you cash flow and don't have to spend every day concerned about silly things.

So what I wanted to ascertain is, is it a good time for you to invest if your business is currently in quarantine, let's say, and you don't have an income from that. I know that you've got a lump sum from your current properties that you've sold. You've got an income that's coming from the properties in the US I imagine. Is the property in South Australia paying for itself as well?

I got a few properties in Australia and all of them are giving us a little bit of cash flow.

Okay. And are they in growth areas as well? Are you getting cash?

The ones in Sydney are in a growth area. The ones in South Australia. One of them is doing well, the other one is doing very bad. And it's going to cost. I just got to die a quote $20,000 just to do the malicious damage.

Malicious damage from a tenant, by the tenant and your landlord's insurance going to help you with that.

We don't know for sure yet. I have to send all the paperwork which takes a long time to get because they ask for many, many little things just to avoid. If you don't get it, they don't buy. Okay, we don't know for sure.

So let's just have a look at. What I want to do is want to look at the future that you want.

I will keep investing. I will keep invest, but I want to just invest in the right place, invest with the right people.

So here's my thoughts on this. Let's just say that you're around 60 now without divulging your age too much. But in 20 years time you're going to be around 80. You're going to continue work whilst you can. You've got a business that is turned off at the moment that could turn on and could even have a huge flow in helping the government provide vaccinations to people who need them. Like someone's going to have to administer these. So imagine those people within the business have probably got the opportunity to do that. But for the next period of time, be it six months or 12 months, there is no active income coming in other than your current investment.

Yes, the banks don't care about their rental investment. They want a continuous buying slip.

And so if we look at what your living expenses are, so how much it costs you to live, what I want you to do after this call because I'm happy to have a look at the properties for you, but I'm just concerned that A, you may not need to invest and risk your nest egg to get further ahead and B, you know, speaking to a financial planner and having them help you map this out accurately is probably going to be a really good option. And I can afterwards refer you to a couple of those. But I think if you look at the age 70 and let's just take a 10 year plan or age 80 or 20 year plan or maybe somewhere between 15 years and we look at that and we go, well, what does life look like? Is my home paid off so I don't have to worry about that? Are my properties paying for themselves or are they not? Do I want to sell them what that looks like or are they bringing an income in? But what's my day to day living? You know, what's it cost to eat out and maybe go back to Peru and have a travel once every couple of years and do a few weekend trips so cost out what that life looks like. And then I would say let's have a look at the income. Because if you look at your current portfolio and say, you know, there's some properties in Sydney, there's some properties in South Australia, there's a couple in the U.S. you know, they're all moving towards a cash flow positive position. If they're cash flow positive and potentially have no growth in them, then all you're doing is making five to $10,000 a year on a number of properties. But if you could use that borrowing capacity or those funds to be in a better placed position, that's going to grow your portfolio, grow the growth and have hundreds of thousands of dollars of extra money for you that you created virtually out of thin air by being in the right place at the right time in the next 10, 15, 20 years, then having a cash flow strategy on top of that, maybe a granny flat or subdivision or whatever that is, and creating that money or short term, letting you know all of those kind of things can create the cash flow for a property in the right area if the demographic wants that. So I think the really important thing is especially where you're in this time at the moment where you should be keeping a buffer of cash to cover any costs. So find out what your current living expenses are and your current property expenses that you need to cover the shortfall. And I'd put in a buffer there also because it concerns me that you know, we are going to see and you've got properties in Sydney, you are going to see in Sydney a higher vacancy rate. We're already up around the 5% for a lot of the suburbs. So as that continues, you may find that you have to drop the rent or your tenants are going to move to somewhere that's cheaper. So get in place a mindset that you need a buffer to be able to cover for a number of those properties the whole mortgage and you haven't got the cash flow. So once you have that cash set aside that you need for the next year or 18 months or two years, depending on your kind of risk feeling, take that cash out of the money you have at the moment. I know you said you had some borrowing capacity. The lenders for self employed people do look at your last two years tax returns and they will assess your lending based on that. However, my concern for you would be, you know, if you aren't earning an income from there, getting lending now and you know, showing them the last two tax returns that doesn't actually represent what your income is now or for this year could get you into strife. So for this exercise I take the lending component out because I don't think you can legitimately kind of get lending now. And as you said, banks aren't just going to look at your rental income, they will look at your rental income but then they'll depending on the lender, they're only going to take 80% of it or 70% of it and they'll add on a lot of costs for it. So a lot of lenders also will only let you use maybe 50% of your normal income as rental income. So if you earn $100,000 and you have $100,000 in rental income, they'll only let you use $50,000 of that. Some lenders, if you have a rental yield over the mortgage rate or over 6% or over a certain percentage, they won't let you use that rental income over that point. So there's all of those kind of characteristics. But if we take that lump sum that you have and I think you indicate did you want to talk about how much that is that you're willing to invest at the moment?

Yes.

So how much you said that you.

Already have down my budget and I have allocated 160,000 for any eventuality of the tenants getting all of them lose their jobs. No one buys rent and then you have to buy for a year or two depending on how long this COVID 19 will happen. I have allocated that money aside and even in this pandemic I found a job, part time job, but I have to leave it because it was in the wrong time. But they were talks about the vaccine is going to come back and if it come back and I can't just leave the other company in the middle. So I have to be, I have to be able to work at least for a year there otherwise will Be harder will be the wrong thing to do for them.

And that's good. I mean you have to, you know. But I am able to stay true to you.

I am able to get part time jobs that will increase my income and might be taken by, in consideration by the banks because some of them, they need two years. Yeah.

If you have a part time or a casual job, it just depends on the lender. Some say with part time jobs they'll take one payslip, some require you to be in it for a year. So it just depends. But you know there are, it's a great action that you're taking to do that. Okay, so let's just fast forward to how much money after you take out the buffer are you willing to invest.

At the moment I am willing to invest $1 million.

Okay. So we've got a lot of money available and just you mentioned that you've already got properties in Sydney. So with the properties in Sydney, obviously you're over the land tax threshold now. So you're probably paying a lot in land tax.

Yes, yes we are.

And so the next property that you purchase will contribute to that and take away from your cash flow.

If I buy it into the superannuation fund, it would be a different treatment. If I budget. It depends on how do you structure it. I'm an accountant, I can structure it differently.

So I'm going to leave that to you. But just for anyone who's listening to this, just be mindful that if you are purchasing multiple properties in the same area, your land tax bill can add up. I know will increase.

Yeah, that's normally what happens. You have to buy it because that is the way we get our schools, our hospitals.

Exactly.

We really need it at the moment.

We do. Or you could minimize that by going into another growth capital city so you could diversify your exposure to one city. But I know that you've got some thoughts on where you want to consider purchasing and what. But I just, as the beginning of this exercise, I would look at how much you think that future lifestyle is going to cost you look at your current properties that you have and just work out if you really need to expose yourself to spending the full million dollars or if it maybe it's just, you know, a smaller property of 500,000 or whatever. Because I think that a lot of people, and I know when I start working with my mentoring students, a lot of people think that they're going to need 100, $150,000 a year to live off. And when we go and visualize what that future looks like and then we come back to the current reality and we cost it out. It's like 60 to 80 thousand dollars a year. So you may actually have your portfolio set up so that you've actually achieved the income that you want. So I think it's an important exercise and you as an accountant will be able to in actually looking at the future cost of in today's dollars in the future, et cetera. So you can work those numbers out. But I think it's really important because you may not need to make this next purchase. So let's just put that on the table as like an action station thing for you to take away. And so you've already located or have some thoughts on an area. Maybe I can have a look at that area for you and we can have a bit of a discussion about that. So tell me about where you thinking about buying and what your strategy is for that property.

Was thinking on the corridor where the new airport is going to be in Sydney because it's an area that has unfortunately a lot of land. So that means that it's going to be more supply than demand in the longer term and they are making too many units, which gives us an indication that it's not going to be the best area. At the moment, I think probably the only option I have is to sit tight for another six to 12 months before we actually know what is going to happen with the economy in the world and with the economy in Australia before we can actually move into buying anything. Because this has changed a lot of things. For example, everyone I know and myself, I can work with the computers anywhere in the world. So this will change the landscape of work and employment is one of the biggest indications of increasing prices in the longer term in the capital growth of any property. And this will probably free a lot of properties in areas that before were very expensive and they are going to lose value with the time. So we need to know how it's going to change that landscape first before you put the money in and lose it. Basically.

Yeah. And I think it's a really interesting conversation to have because if we look that you're investing for the long term, the next 10, 15, 20 years. So if you're investing for long term and we look at what has happened in the past, then we can look at. Actually I probably should just bring up. I've got a spreadsheet, Fiona. But if we look at post shocks in the past, economic shocks, it hasn't taken a long period of time for the economy to actually respond. But having said that, let me just.

As a whole, as a whole, it will, it will respond. We are all working towards getting Australia back and it will get back, but the landscape of properties will change.

Yeah. And I think this is. And tell me what you say, when you say the landscape of properties will change. Tell me what you mean by that.

Well, you are seeing at the moment the rents in the inner city, at least in Sydney, in the Mayo cities are going down. Yep. Because it's more supply. Airbnb is on the, on the market. So anyone can rent it and then the rents can go down. That people who are just getting very little for their investment or they are buying a lot of, getting a lot of the negative hearing, they are going to get tired of that and eventually they will sell. And once you get more supply, those properties in that particular area will become cheaper. But for me, the basic indication of a role in the future for any property is the employment in an area where is employment people will be able to live. Unless it's a lot of land, it's a lot of supply and it's a lot of units.

Yeah. Well, let me just, let me just share this with you. This is analysis that Peter Kalisis did, who's the chairman of the PIPPA Organization. And he actually looked at all of the stock market shocks over the last 50 years and five years post those shocks, he looked at what the growth was in the market. And even where we had Melbourne had a particularly bad spot during the 90s, it still recovered somewhat. And when we look over these five year periods after these shocks, there was still some movement in the market going up. And what's really interesting is that it doesn't happen in every city and in one time. So it's important to note that long term, we know post market and we know post epidemics that the market and the stock market and the performance has gone better. Now, I think that what's really important here to note is that although we know all of these things, to your point, what does that mean in the short term? Now if I talk about just the short term property market and I look at that, I do know that time in the market, rather than trying to time the market and get in when you can, is the mantra, you know, the longer you're in the market and keep in the market with a good quality property, that there's a typical property for the area, you know, you can set and forget it. And over a period of time, every single city in Australia has its day at one stage Darwin had, you know, the highest growth in any market. Next time it was Perth, Hobart, Adelaide, Canberra, Sydney, Melbourne. So we know that, that there is a cycle and we know the longer in the market, the better. My concern is, to your point, around the employment, so, you know, if you read like KPMG or McKinsey's or some of the reports about the remote working situation and how comfortable we're getting to that, and I just spoke to someone from New York who works in a corporate role and she's been told by her company that they're not expecting anyone to go back to work until 2021 in. So, you know, we need to have this expectation that there will be this remote work environment as we go forward. How does that change the way we invest is the question that we need to ask. So working from home, if we look at. Even if we look at like the floor plans of properties over the years, you know, in the 50s and 60s, it started to become popular. We had open plan. You walk past all the bedrooms into the living space and everyone came off the street all the way through the house. And there's a communal living area that didn't kind of manifest to its typical type of property build until the 70s and early 80s. So we know it kind of takes 20 years for the change in the way the properties work. If you're only investing for 10, 15, 20 years, you don't really have to have a nod to that as a huge design change. Having a property that's completely meshed for WI fi for your tenants tick, having potentially the capacity. I was speaking to a client in London yesterday. They're putting a summer house in the back of their property, which will be a gym or a separate office to work in because they want to have a working distance away from home. So I think we might see that granny flat type of construction become that type of addition to a property and when things get good, it turns into the granny flat. But what you need to make sure is if you're buying a property with that strategy in mind, then you have to be in an area where the granny flat demographic, there is a need from renters and a history of them demanding that type of property for in the future. If we look at the remote work situation and the digital nomad, so the digital nomads, you know, travel anywhere in the world, set up their laptop, work whenever they want. You know, they might be on a different time zone, but as long as they get the work done, the boss is happy. There's. There is definitely a swing towards the fact in my mind that we're going to be seeing more and more of the employers be open to that. But will the countries be open to that? And you know, I think what we will see is a more protectionism type arrangement for the borders. Everyone's not going to be willy nilly about letting anyone into their country. You know, even though we might have a vaccine in a couple of years time, I think there's still going to be a, first of all a real push for expert immigrants who can bring skills and knowledge into the country and boost up the economy as the baby boomers start leaving. And if you look at the US there's 8,000 baby boomers retiring every single day, taking their income out of the economy, taking their tax that they pay out of the economy. So I think there'll be a fight for the experienced immigrants, but that's not the digital nomad who's popping over to Bali and then they'll be off to South Africa and then over to Estonia. So I think that the digital nomad experience, although novel and interesting and I know a lot of them, it is still something that is quite unique. And I think the country border protection might close a bit of that down. In Australia, as you said, you know, the, it's the employment and it's the population that is actually driving prices. So if we pulled out 150,000 overseas immigrants in the next 12 to 18 months, before we turn that back on, we're definitely going to have the supply which has been growing and the demand get more aligned. There's going to be a meeting of that where it's kind of in an equilibrium rather than an oversupply supply or over demand situation. And as more and more of these units complete and come on, I think we're going to see a lot of pressure on those unit prices. And as you said, there's a lot of areas that are over developing in units. And we're also going to see a lot of questions about the ways the units have been built with all the cladding issues as well. So I still think that units are a bad investment. And so let's think about what happens when the borders do open and these experiences, talented people with expertise are welcomed into the country. Now if we have a look at the searches for properties from overseas people, they go into Australia and Canada to look at where they're going to move to. We have, you know, instability in Lebanon and in all of these places that people are looking at Australia as an island going, you know, if they protect their Borders. Well, we want their good economy, good government, stable. So I think that Australia will be an area of choice for immigration which will be really buoyant to the future of our property market. But I still think that there's going to be a period of time as you suggest where there's this uncertainty and there's this worry and it's what does this look like? So I don't think we need to change the typical type of property that we're buying. Good quality home, typical property for the area. Adding on the ability to, for your investment, maybe a granny flat for instance to improve the cash flow in those suburbs out near Badgery Creek where they are, you know, typical. The, you know, Blacktown Council, et cetera, all those councils there have been approving granny flats and it's kind of a typical extension and has been for a number of years. And the demographic seems that they are open to renting. You know, having someone in your backyard renting some suburbs, that's not going to suit. But in that area that you're looking at, I think it still has legs to it opportunity. But what would worry me in your specific circumstance is that you're, although you're going to get a part time job, you do have a huge exposure to the Sydney market, you do have a huge exposure to the property market as well. And although I know that you originally said, you know, I want to have a look at this suburb and see where to buy. I think your last comments about I think I might sit out for six months or 12 months and if the property market does come down, you know, maybe there is an opportunity to buy at the bottom or lower down and time the market somewhat. But I think from your situation you are creating that buffer for yourself. And as frustrating it may be of being out of the market and seeing opportunities come up, it would concern me that your huge nest egg that you have created and traded properties over the years to get to and now you've sold those premises from a point of view of protecting yourself, that you could potentially lose that by getting into a situation with the other properties that you own already or your current income. That could then mean that you have to sell the golden egg which could be this property. Does that make sense?

Yes, of course. Are you investing at the moment? Are you buying properties?

No, I stopped buying ages ago. I set my goal of what I wanted to buy and the portfolio that I needed for us to have financial security for the future and we achieved that quite early on and I stopped buying. I mean I speak to People buying properties, I don't know. I speak to 10, 15 people a week, and I do strategy calls with people and I'm participating in purchases with my mentoring students, you know, every month. But me personally investing, you know, we got to where we needed to be. So I don't see the need to invest actively in property because I've already got the ones that I need that are, you know, already doing what they're supposed to be doing to get me to where I want to be.

Okay, that's probably the goal. Just get to that point and that.

Might be where you are. That's why I really want you to think about what income you need, because you may already have enough. You know, maybe there's some portfolio killers in your portfolio that aren't getting you to where you want to be. And it's a time that you can start leisurely and casually reading them of the market and filling up, you know, your cash reserves. But, I mean, you're an accountant. You know, a lot of people overextend themselves and. Or they keep buying property without understanding what the goal is, and they get to a point where they're like, is this the end? Like, I didn't have the holiday that I wanted to have with my wife when we hit our 50th wedding anniversary. So I think it's really important to be very clear on what you're trying to achieve first and then work out how much that's going to cost and what you need to do to get there, because you actually might already be there.

It looks like I am there.

How's that sit with you? Does that feel uncomfortable or.

Well, it's the acceptance of this is it no more.

Which. And here's the thing, and I do have this conversation with people regularly. If you have that kind of. And you need to sit in this for the next few days and weeks and think about it. But if you do have that, and it's a wonderful revelation, thousands of people watching this will want to be in your position, right? Going, oh, okay, wouldn't it be nice if I was there? But no one rings the bell and says, oh, you're a millionaire. And no one rings the bell and goes, oh, financial freedom is going to be yours in 10 years time. You're on the right path. You kind of have to work that out for yourself. And what I find is people like buying property and people who have bought property and have been active investors like yourself, and let's face it, you know, you've bought in different states, you've bought in different countries. You know, you yourself know what has made a bad property and you know, the rental management and how that has affected you. Why choose more of that pain if you don't have to, if you're already there and if you do choose it, be very realistic about why you're choosing that path. It's not for you to get to your financial future or achieve the legacy for your kids or your grandkids that you wanted because you've already got that. It's because you just like doing it. And if it is a hobby, accept it's a hobby and go, you know. Well, I like buying properties and I like renovating them and I like the search and I like the haggling and the negotiation and I like to be able to add value to them and I like to be able to convert them into cash flow positive properties or you know, I like that, that then just recognize that it's a hobby and it's, it potentially can be a hobby that you can do well, that can make you money, but it doesn't have that need and the desperation of if I don't get this right, I'm going to die poor, you know.

No, it's not desperation. You're right. It's a matter of analyzing the situation. But I see it a little bit not like a hobby, but we investors are giving places for people to live.

Yes.

And a lot of them, they can't afford to buy a property and they, they want to have a place. And you see the streets of Sydney, Melbourne, everywhere, streets full of homeless people. So we need more investors. We need more people who will put their money and their wish to get better, provide a good home to these people who are on the streets.

I think it's a really noble want and need to help people and create that sanctuary and security.

That's what we are doing as investors, all of us.

I mean, I think I'm housing 27 renters at the moment and I feel very comfortable that, you know, we've checked in, people are okay, you know, we've done what we can at the moment. Some have got rental reductions, all of those kind of things. So I get that. But it's kind of like put your own face mask on first. So as long as you're making investment decisions that aren't going to put you on the street, and let's face it, that's in the future, you need to make that decision. But there's some really amazing things going on at the moment. I understand there's something like 1600 homeless people who have been put up in motels throughout Melbourne at the moment. Now, what is just mind boggling to me, and I know this is completely off the topic, but is that those 1600 people who never had an address to get a Centrelink check, they could never have fresh food because they didn't have a fridge to put it in. They had to be up and out of the homeless shelter by 7 o' clock every morning. They didn't always get a hot shower. These people now have somewhere to get a check. They got somewhere to get sent the doctor's prescriptions and see doctors and medical care. They can put milk in the fridge, they're having a hot shower. They don't have to be kicked out on the street. They're watching tv, they're engaging with life, they're turning. They don't have to. They've got help and support because they're in one place to be able to, you know, if they have a dependency on something, they can work on it. This is changing lives. That excites me and the government has extended that until March 2021 here in Melbourne. These are hotels and motels that are, are actually doing this. And so to your point, you know, I think there's a bigger conversation that can be had during this that says, well, how can we help those people? And even a bigger conversation says, well, what put them on the streets in the first place? So if it was unaffordable housing, that put them on the streets, mental health issues, families like, I'm very, very passionate about the fact that over 50% of all divorces are caused by monetary consumption and worries. So 50% of families are breaking up, kids are going to different homes. There's the breakdown and continuity of the family structure. You know, they may not have the most optimal home life. They end up on the streets or doing things they regret in crime or whatever that looks like. Being able to have people with financial security and understanding how do you do that and keeping families together, that should long term, intergenerationally make a major change as well.

So I think it will make Australia better.

Yeah, yeah. So I think people like us can have these conversations going. We love housing people and giving people the right for housing, but let's see how we can take that conversation to even higher level and see out of all of this pandemic pain what's working and what has happened and what are the benefits and the good things that we can take away and, and explore ourselves. Maybe there's an investment opportunity for like minded people to get together and create the kind of.

That could be amazing if we can do that. Because in some respect we already do it because all our tenants might be on the streets if they can't afford to buy that amount of money.

Exactly. And I spoke to someone the other day who said there was a sign up opposite her house and this is North Shore sign up Sydney that in a property that said something like fully furnished room, $250 a week. And she went to have a sticky beak because she's like what? And the agent said oh you know, they did a custom older style house and they did a custom build out the back. There's 18 units in here. There's. Of the 18 units, 14 of them are actually 25 to 35 year old women who you know have. And most of those have come out of marriages. Young women who've come out divorced and want to be working close to town, want to be really like minded people don't want to overspend, don't want to overthink the cleaning the house or the big unit. So I think there is this trend as well that's happening to smaller type of properties. But I still don't think that the unit market is a good investment. But it might be something that all of these units that no one wants to buy. Maybe there's something that could be done as a, you know, but you got.

A problem of badly might and that it wouldn't be immediately inspector because they. When we were in the United States the people the builders who were talking to, they told us as soon as the Chinese world came everything went down the girdle and they just, they do houses very quickly but they don't last.

Yeah. And I think. And that's something that would have to be thrown into the conversation but I think you know the housing commission and all the authorities and investigations and that the federal and state governments have on.

Has to be with regulation.

I think there's going to be some really interesting and exciting opportunities. So don't you feel that you have to heal to take it all on your own shoulders to accommodate all those people?

I understand, I understand that it's not only my problem and we are all helping anyway because we are giving applies to someone who can afford to buy their own property.

Exactly. And I feel your heart on this which is great. Like you know you're doing a good thing but I just don't want you to put yourself in a situation that compromises your family's future because of it.

Yes.

Because I know your original email you sent to me was let's have a look at this suburb, New Badgery Creek Airport and let's see if I should buy. But I think where we've come to through this whole conversation is that wait and see for yourself, you know, get yourself set up, but go and find out if you really need to.

No, you don't have to.

And part of that process is finding if there's some portfolio killers or some properties that are in the hope strategy. I hope they come good one day that maybe you can exit and actually just clean up your portfolio and put your research mine and your accounting mine and your property experience to effect there and clean it all up so that if opportunity does come, you can take a step forward confidently with the buffer of cash and knowing that you've done this, you know, in a really good way and considered way, yes, I really.

Need to sit down and start to investigate different options and see which ones will be the best to take on in the longer term. When you are working in your business, it's very hard to have the time. It's now when I have the time to do it.

It's a perfect time. It's a gift.

Thank you for your honest answer.

Interesting conversation where I actually talk you out of buying a property. But there you go, that's what borrow my brain is all about.

Oh well, you are honest and that is what matters really. Depending on the situation, depends on the person, depends on the stage of life too.

Absolutely. And look, if you do need assistance, remember financial planners can assist you. Not all of them have a lot of property experience, but finding a good financial planner could help you work through this as well. So get your numbers all lined up, understand the portfolio, see if you can identify some of the properties that will and won't get you to what your goals will be. And I really encourage you to find someone that you can then have that conversation with.

Yep. Thank you for that.

Well, it's been an absolute joy talking to you.

Well, it has been amazing for me as well. Admire your work and it's nice to be able to interchange ideas.

I really appreciate you reaching out and that's what borrow my brain is about. You know, if we can just give people a little bit of clarity at the moment and a little bit of course, direction sometimes if they need it. But there's big questions being asked and you know, I think the worst thing is people could be throwing away money at the moment and I do think there's opportunities to buy and. But it just depends on people's circumstances and making sure that they've got that buffer in place and that, you know, steady job and all of those things. So. But I really enjoyed the conversation. Thank you so much for your question.

Take care. Bye.