Borrow My Brain - Vicky

Hello and welcome to Borrow My Brain. Well, today we speak to Vicki and Vicki feels like she's running out of time. She dipped her toe into the investment world 20 years ago and pulled out very quickly. She's been back in it. She's about to build duplexes, but she's only got 10 years to actually achieve everything that she wants to achieve so that she can retire. So is she on the right path or not? Well, I hope that you enjoy this conversation. A lot of questions were asked, a lot of answers were given. Given. And we even looked at maybe the opportunity of investing interstate in the future because she feels that she should actually buy outside the local area that she's living in because that's where all her investments are and she'd like to buy in a capital city. So we cover a lot of ground here with Vicki and I really enjoyed the conversation. I hope you do too. Hello and welcome to Borrow My Brain. Now, this is the next series. However, we're recording this still in Covid shutdown and countries across various degrees of lockdown at the moment. And I have to be honest with you, Vicki has applied to Borrow My Brain today, but I'm having a little bit of COVID fatigue, so I might only be able to lend to half of it, but we'll see where this ends up. Okay. Well, I'd love to welcome Vicki Alon. Hi, Vicki. How you going?

Good, thank you, Jane.

And where are you beaming in from?

From Lismore on the northern New South Wales of North coast of New South Wales.

Yeah. That's probably beautiful and warm up there.

Yeah, it is, it's lovely. It's like about 18 degrees today.

I can see you've been released from home lockdown. So you're at work and back to semi normal.

Yes. Yep. We haven't really stopped work here, to be honest.

No, for you.

Yeah. It makes life much easier to cope.

I can imagine. Well, look, tell me a little bit about your story and why you applied for Borrow My Brain. Give me a bit of a context of where you've come from and where you'd like to go.

Context. Well, we had probably. We had four kids and my hubby's job was a bit in and out in the early years, so. So we were late starting into investing and something we always wanted to do. We were also very scared of it a little bit. So many, many years ago. We got a little duplex at Ballinar and within about 15 months got freaked out because of expenses and sold it. Covered the cost. But after Capital gains tax, made $15 profit.

Wow. There you go. You made money in property. You're one of the successful ones. How long did you hold it for? 15 months.

15 months?

Yeah.

So then it took us another few years to go again. We bought a big old house that was a mortgagee repossession and we renovated that. That was probably in 2014. Did a bit of a reno, made some money on that. That was good that the property was too big for us. We do miss it. But it was. Yeah, worked out well. We did. We made probably 200,000 actually on it. And we kept our prior house and rented it. And those renters have been in there since. So now we went. Right, that's a successful thing. And we wanted to try and build some more of a portfolio so that if anything happened with other our jobs, we had some income but also some wealth to be able to retire earlier. So here we are six or seven years later. Really haven't gone a lot further forward. Just before we sold that big house, we bought a small house again in Ballina and have renovated it. It was a structural Renault that went a bit pear shape with expenses, but.

Because you got emotionally involved with it.

Or a little bit of that. Plus it was difficult to get any builders and tradies at the time. And this builder was referred to us and he was a really good builder, but he was really bad with figures. And we actually went ahead on a structural reno on a do and pay sort of basis. Not.

What'S do and pay?

Oh, well, it's like the project was there, but it wasn't a set contract, no set prices. There was a. We estimated around about 160,000, but we're expecting at least 20, possibly extras because you never know when you get into Reno's. But it ended up nearly going to 300,000.

Wow. Okay. So dual pay is kind of like. There's not a fixed quote, but it's kind of like an hourly rate. So this is what I would like done. And he said it'd be about 160, add on 10% for variances and rather than adding on another 100%. So did it change much from the original scope of work?

Yeah, it did. Possibly the scope was not detailed enough. So we had the plans, but then things like the retaining wall needed extending and he guesstimated for me it would be another 6,000. That ended up being another 20,000.

Yeah. Okay. So it's just little incremental things that just weren't completely scoped out in the beginning. We Wanted a two bedroom house and then we have a five bedroom house.

It wasn't that big of a. No. The new roof ended up being more complic. Complicated. And so then that added expenses on. Yeah, don't do roofs. I've learned that.

Yeah. So, so, and how did. So is that where you're living now?

Yes.

Okay. And the plan for that is the forever home. Is that the home or if.

Have you. No.

Could you recoup the expenses now and what it's. It's worth?

Yes. Yeah. So the plan for it was to do the reno and probably sell that to get more money to go again and get to the next one was hopefully going to be our forever house, which was going to be slightly out of town. And if we could actually even keep that one, we added a bedroom on and made it an actual granny flat. So it's three bedrooms plus a granny flat and it's in a area that is growing. So even with our budget going over, we still, if we sold it now, we would probably still make 50,000.

Okay, and do you think that's from the growth rather than the renovation?

It's from the growth. If we'd have stayed at the 160, we would have made all that extra as profit because that's what I expected it to be able to sell about the 800 with the Renault and knowing that the market was on the rise. But it's probably about 9 to 9:50 now, so it's covered its excess, thankfully.

Right, okay, so tell me, just all the properties that you have at the moment.

So now what we've got left with is the. That's you, right? You okay?

Yeah, yeah, I'm fine. I was having a little moment listening to my son talking in the background, going, going. I can hear that there's about to be an Xbox challenge going with a friend, you know, working from home. We deal with this. It must be morning free time, right? Yep, yep.

So we have that house that we've renovated in Balnor where we're living, and our old house which is rented and it's on a little bit, a small piece of land, about 15 acres. And then we have.

That's in Valena as well?

No, that's in Lismore actually.

But how far away?

It's like 20 minutes inland.

Yep. Okay. And that's renting out and paying for itself. Yes, Yep. Nice. All right. And the property you're in at the moment, you don't rent the granny flat out separately now, do you?

To our son and his fiance. Until their wedding, which has had to be postponed from COVID So yeah, they've been there for probably eight, 10 months maybe paying decent, almost proper rent. Almost.

So tell me, there's a block of land involved as well.

Yes. And now we've decided to go with this block of land and a duplex in Lenox Head, which is another 15 minutes down the road and has had a bit of explosion in prices. And had this block probably been ready six months ago, it would have been even better. But it won't actually settle, it hasn't registered yet and it's due to register in late September, early October. And then we've got plans for a duplex to go with a builder that's almost ready to go to council as soon as it comes out of registration. And the cost of the land was 415. The full build, which is turnkey, will be slightly under 800 for the both duplexes. The duplex and they should sell for about 8:50 each or rent for 7.50 each.

Okay, so tell me a little bit about how I can help you today.

Okay. So we have probably backed ourselves into a corner because the finance for the duplex is just. We only just got the finance through. I guess the original house that's rented that has the 15 acres. I keep going either side of the fence on whether to keep it or to sell it. And I'm suspecting to sell it will free things up and let us move forward. But also, what is the way forward? Because I keep chopping and changing there as well. Do we do a new duplex? Do we do a ppr? How do we. Because we've sort of, in seven years we haven't really gotten very far and the whole aim was to try and build a nest egg to retire on and our debts are huge.

Yep.

And I just, yeah, sort of got a bit lost I suppose, in where to from here to actually like everything seems to take two years longer than the plan. And is that my mismanagement or. I don't know, probably distraction or not a lack of a clear plan.

Yeah, lots of, lots of things. I think. You know, the fact that you had. When was that first purchase that you got rid of quite quickly?

2014. Oh no, the very first one. 99, 2000.

Okay. So it's kind of been a 20 year journey for you and.

Yeah.

And it's not uncommon for people to dip their toe in and go, oh, this is a bit scary. Usually I dip their toe in on the research and things and pull out before they purchase, rather than get into the purchase and go, oh, I don't know what this is all about, and then pull out. And what we know is it's time in the market that, you know, allows people to make money if you've got the right property in the right area. So that the fact that you kind of, you know, it took you 14 years to get back to what are we doing? You know, let's, let's go again, is not uncommon. So, you know, don't, don't feel like you, you know, you're Robinson Crusoe there. Like a lot of people go through that. Also don't feel like you're Robinson Crusoe in the renovation experience either. You know, you know, I had, I used to have this course, Ultimate Guide to Renovation, and there's so many people who were within that course going, gosh, I've been doing renovations for years and I thought I was successful. And it wasn't until I did like the quick quote calculator or some of the things that we were teaching in that they're like, I realize now it's probably the growth that made me look like a champion. It wasn't the renovation and that kind of blow out the scope of works and monitoring that is so vital. And you're about to go into a duplex build and you've had a building experience and you've moved from that hourly rate to a fixed price, which is great, which you need for the finance, let's face it. But you've learned some lessons from the other experience. So being on the builder and not just depending on the bank's valuations that come in it stage one and lock up and all of those things, to check everything's on track. You need to be mindful and keep project managing that as well and making sure that things are on track. So that's important. I did a little bit of research and saw that there was a lot of tradies who were kind of stuck on this side of the border and couldn't get to Queensland. So, you know, that might. Who knows what happens with the borders, but, you know, there might be the opportunity to tap into a labor force going forward that's going to assist the builder in getting his work done, maybe more economically as well. So what that looks like. But I think the really important thing is just having that clarity of goals of what you're doing, because I get the feeling that you've kind of jumped in. You know, there's a fear of, oh, my God, I've got like 10 years to go. And this is supposed to make us money. And at the moment, I've got this debt. Is the debt good debt? And you know, you are very geographically confined in where you are.

I know. That's what I'm worried about as well.

Whether that's you're going to end up, let's face it, you know, mid-2021, with four properties in the same area. And tell me your plan on the duplexes. You plan to sell one? Is it to live in the other one? No.

Okay, so Tim wants to. But I want to rent it.

So what's the plan with the current house?

We want to keep the duplex and the house in Ballinar as rentals and like not to live in either of them. But I don't know whether that's the wisest choice either.

So where are you thinking you might live?

We want to buy a house that's a little bit out of town.

It's all about Ballina, is what I'm hearing. Marcia, Marcia, Marcia, Marcia. Okay, so this is. Okay. All right, so let's fast forward 10 years, and assuming that you've got the stability of work and jobs, etcetera, what does, you know, the retirement look like for you?

Probably still in this area, northern New South Wales, and bit of volunteering, bit of traveling, having family around and close and just going to the gym or something, exercising every day, just, you know, living all that fabulous life.

Do you know how much that kind of lifestyle will cost you?

No, not really. I have done the figures a while ago, but obviously I've lost track of that as part of the goal. Yeah, gosh, good question.

I'm just going to share with you. I've got a hundred things here to share, but I've got here. So I did a little bit of research, but if you go into investorschoice.com and you go into the resources section here and just pull up the calculators. I've created a bit of a number of calculators that you can use at some stage. Should just pop up here. If you have a look at this portfolio calculator. I created this just to assist people in working out how many properties do you need in a time frame based on capital growth and all of those things to get to your goal. But if you come over here to these original tabs, this financial security and financial satisfaction, I'd encourage you to just go through and build up what you actually need. So I've built this as if you've already, you know, you still paying a mortgage, but you might say I'm going to have that completely paid off in 10 years time. So, you know, I don't actually need anything for this but I do need, you know, let's say, you know, 800 bucks a week and so just a month, sorry. And just go through, you know, the basics of what you think you're going to need. So this is just like a basic kind of thing. And what I've also done in here because being the good explosives engineer I was go back and just put in some potential buffers as well. So you've got a feeling for how much you're going to need. So this is like basic living costs and if you come over to the next section, it takes this kind of basic living cost and goes, well, you know, I don't want to just exist, I want to have a life. So put in the gym and put in the gifts and you know, Christmas, you're going to, you know, maybe have to plan for exactly all these little things that you want and then you can put in another amount of, you know, a buffer. Maybe it's just the buffer of, you know, total costs and it might come up to this type of number. Now my experience in working through this whole thing with my mentoring students is, you know, spoiler alert here. Most people think that they're going to need 100 to $150,000 to survive. And the reality is when we go through a visualization exercise, visualize what their life looks like, come back and cost it out that their dream life, and I'm talking, you know, this is the life that I really want. This is not a life of sacrifice. And this is what I've been working for all these years. It often runs between 60 to 80 thousand dollars are left home. You don't have schooling fees. You know, you might be helping out a little bit, you might be doing some courses, whatever that is. But that number, you know, that 60,000 and let's say a 10 year time frame, this then goes through, looks at your selling costs, assumes that you're going to sell all your properties at the end. And it says, well, $60,000 in 10 years time based on inflation is about 76,000. That means that I need to have 1.5 million in the bank. Now we'd like to think in 10 years time we'll be back to getting 5% return on our money. It might be the share market or wherever that is. But that kind of comes down to, you know, in that period of time based on, and I've said a 7% capital growth. So let's make it more conservative and say a 5% growth. Based on that, you kind of need like two and a half million dollars worth of property. Now that with a 5% growth will give you a portfolio in 10 years time of 4.2 million. That if you sell up, put it all in the bank, pay capital gains tax, pay selling fees, pay buying all those things, all the fees associated, is going to leave about 1.5 million in the bank for you to have the 5%. $76,000. And the reason I designed this is just to give you a little bit of a clue of what you need to be working for. So add up what you've got now, your portfolio and go, okay, so where do we sit at the moment with what we need? So, you know, you're about to end up with a $1.2 million duplex or not. The value of them is going to be $1.6 million. So the other two properties, do they add up to $900,000? You know, and you might look at this. Yeah, so there you go. So, and you might look at this number of 60,000 and go, yeah, right. And you might look at this number and you go, well, you know that 60,000 that I need for the lifestyle by in 10 years time, we're going to have 200,000 in our super, and our super should be earning 5 to 7%. So that's going to get me 10,000 a year. So actually I only need 5,50,000. So let's be realistic because I think a lot of people get so caught up with I need so many properties. And it concerns me that we haven't gone through to this goals, exercise and kind of worked out, you know, how far do we really need to go to be comfortable. So, you know, this kind of sits down and says, well, you know, maybe you only need 2.1. And we've got these duplexes at, you know, 1.6. Now this is assuming also that there is some lending against it. I've said there's like a 90% loan. It might be 80. Yeah. And let's assume that, you know, on average your properties are all worth, you know, 500, whatever that number is. Because this just says you need, you know, four properties. So I'm just calculating that out, but see how this just keeps coming down. Yeah. So this now then should give you a little bit of confidence. How do you feel about that?

Now that's actually really, really good because I think you could continue to just Review, look at it. Review and stay focused instead of chopping and changing what you have to do. You know, do I have to do this or that? It'll help keep me on track, I suppose. Yeah.

And I think it's almost a bit of relief also in the sense that, you know, we're gonna be okay. So how can I now, knowing that, tweak this a little bit and work out what I want. So I would, you know, my next step would naturally be, well, you know, look at the portfolio you have and look at the lending you have and go, do these properties deserve to stay in my portfolio? Right.

Yeah. And I think that's where I'm at with farm property. The 15 acres. Not sure. I don't know. I think it might need to get sold and I don't know how necessarily to confirm that in my brain.

Okay. So what I would do. So I've put up a couple of reports and things. So let me just pull those up so that we can have a look at what I've got here. So what I think. So let's just get some context. So pulling up my dot map, which just usually has areas in major regionals. So we're up here in. So I've got. I'm close. So your properties here at. You're living currently in Ballina.

Yep.

Your house is at Lenox Head.

It's at Lismore.

Oh, sorry, the one Lenox is going.

To be the duplex.

Okay. Right. So Lismore is the farm.

Yes.

Yep. And the old home is Ballina.

That's where we live now. Yep.

All right. The renovated flat. Yep. Farms, Lismore, they all at some stage became homes. Right?

Yeah.

And Lenox Head is where the duplexes are.

Correct.

Okay. So what I would do is just have a look around what is happening in Lismore and what kind of growth, etc.

Hardly any.

Yeah. So the question comes down to does this deserve to be in your portfolio and what is happening in this whole area to justify you holding the properties here? Because it might just be that, you know, wham, bam, this is like fantastic world happening. So what I did was I jumped over here into RP data and I thought, well, you know, one of the things that you would do is potentially do like a suburb report. So the Lismore is the area that we're looking for. And while this kind of generates the report, the other things I'd do is try to get a little bit of information about, you know, the area itself. So I'd go to The. I'd go to have a look at. So this is actually the whole council area. Let me just save this.

Let's begin in the council area.

Yeah, this is apple Matt.

Oh for the census.

Yeah. Okay, so let me go to the essay too. So I'm just trying to get a little bit of feel for what the story is. So you know, there's not a lot of families. There's 7,000 dwellings and if I get a feel for the average age about 41, most people are from here type of properties and we've got. Most people are in houses. So Lismore, you know the house is the most prevalent, three bedroom house, et cetera. Okay. So we're just getting a little feel for the area itself. Okay. Lismore here. So 600k is from Brisbane. I'm assuming we've got median house price of 349. We've got. House values have been going up, we've got days on the market have been coming down. So there's been a bit of activity since November last year. People were accepting a lot less than what they were putting the property on the market for. There's not a huge kind of scope between you know, median and upper quartile. So I'm just getting a feel for that. And then what I would do is I'd pull up Lismore and just get a concept of, you know, what is selling in, you know. So how many bedrooms do you have? Okay, so we want to go. I'm going to say houses just to check. Four bedrooms. There's still you know, people who want four bedroom properties and houses that have sold. So 1.81. So there's not in the last six months. I'm not saying houses on big blocks selling. How far out of town are you?

We're actually probably 9km to the centre of town. So it's right on the edge. It can go to the bottom of town in 10 minutes or the top of the other suburb at the edge of Canalville.

Yeah. So there's not a. And what I would try to do normally is just try to get you know, has there been other sales of like a property that's similar to just get the feeling for the appetite as well.

Yeah.

Now I am a member of hotspotting. Terry Wright is hotspotting and he has all of these different reports and it gives us an idea of what's happening in areas. So I just want to have a look here at what's happening in this whole Ballinar area to Get a feel for the optimism or the opportunity, the infrastructure, the spend. So let's get. So just keeping in mind that we've got Ballina and Lenox Head where your current properties are and this question mark over the house and the block as well. So we've got Ballina, typical property price. Not a lot of difference between the cost of units and houses, which is interesting. We've got low vacancy rates. There's a marina expanding. Who knew there's an in excess museum might have to come visit you. Ballina Coast School, 50 million big upgrade, a lot of infrastructure. Famous neighbour is Byron Bay with a median house of 1.3 500,000. A third of that is making Ballina look quite attractive.

Ours is in that east Ballina spot actually.

Yeah.

Okay, so that's seven something. It was for the.

Yep. So that gets us up a little bit higher but still a lot lower than the famous neighbor. Yes. Which is great. As I said Terry, writers reports are really the reason why I like this is they're geared around what is actually happening in the market. Hare and Todd White valuers, great valuers. They give great insights. I encourage you to go and have a look at their information as well because they will actually go through the regions and say what is happening in the market and what the appetite is. So we might just pull that up. So this is, you know, this is all appealing stuff. What I'm interested here is the long term growth. So we're getting 4 to 5%. So Lenox head, you know, 5% growth and that's definitely kind of fits into what we were looking at achieve here. So we're being realistic, not unrealistic, which is always good. The vacancy rates, the rental yields are fantastic. So this is all good. The difficulty with townhouses is it's somewhere between a house and a unit. So you're not always sure where the information is. But once again, you know, Ballina, Lenox Head, we're definitely getting the fact that there's been growth and there's growth potential in these areas. Sea change lifestyles now, future projects. I just want to have a look at what's happening. So we've got. Already got a commitment. Under construction. Under construction. Under construction. So it's this proposed, you know, until they actually do things, you never know. Proposed under construction. Woolies, Lennox Head. Okay, so it's opened.

Yeah, yeah.

So there's a lot of things here that are giving me some optimism about, you know, the market and, and what is happening. I might just pull up the. Where did I put this. I'll pull up the report. Just having a look at that Ballina report again. So the suburb report on Ballina was this one. And let me just have a look at Lismore and see what's happening around Lismore.

So I think Lismore's dying.

Yeah, I'm not seeing a lot of information around, you know, the. There's comparable sales so it's difficult to say whether you're going to make money or not. Prices are going up here as well.

There's currently a little bit of a bubble around people wanting that small acreage near the towns of, you know, Bowman, Lenox, Lismore. And it's sort of rippling out from the coast because those few acres, you know, near Byron Bay or the hinterland of Byron Bay and all of that have become, you know, 12 months ago you could probably buy them for 6 or 700,000 and now like 1.5. So people who want those little acreages. And that's where I think I started saying, well, we really need to look at selling that little farm because I think it's probably the peak time more desirable now. Yeah, peak time maybe.

I think it's a really good idea to look at the opportunities and the risks. And I think the risk is that you are going to be really highly impacted by any significant changes in the area. And the argument is there's an upside to that, which is everyone's happy and our prices are going up and there's all this demand. But you've got a real locality risk there. So if you can. And I think you said that post these duplexes you were open to other opportunities and maybe Brisbane or Sydney or somewhere. So I think that all of that is really good because it gives us an opportunity to have a look at what is actually happening in the market. And the other thing about that is it also gives us an opportunity to start talking about, well, where would you have your. Where is the greatest risk for you? And if you're saying, look, you know, we're seeing that proven kind of growth that we saw in Ballina and in Lenox Head, Lismore, it might just be that opportunity that you say, you know, it's not the typical property for the area. There is a bit of a demand at the moment where there's this kind of shift to land and lifestyle blocks. It is only 10 minutes from town. Like it's not like if people are going out and having to, you know, get the milk once a week, you know, you can pop in for milk So I think there's all of those kind of benefits and the growth that. And I'm not sure what that growth of Lenox Head has been over the last 10 years, but we can have a quick look at that. But you know, as I said, Herrington White has some really great monthly updates and let's just see if Lismore comes up. So Lismore here is approaching the bottom of the market. Yeah. In property. Now what I really like about these residential, so you can see I just did like a little find the information is that it actually does regional areas as well. Now the great thing about Herringtod White, they have thousands of valuers around the country every single month doing valuations for the banks and most of the valuations they do are not just for selling the properties, it's for the bank valuation. So they actually have a whole lot more data what's going on. So I really love reading these reports because it's not like the reports that you're going to get at maybe 2 to 3 months old from real estate or domain or RP data or whoever else. These are kind of like, you know what's happening on the ground. So you know the idea here, the area is resilient. If you can tick all the boxes for the lender, it's time to invest. Property investors with Lismore Casino are probably interested in rental return, some opportunities that require thought and persistence. So LEP's, the councils are really proactive the ability to subdivide 950 square meter blocks. So it sounds like there's opportunity in the area. So you're buying flats, etc. So they're talking about dual occupancies. So this whole story here they're talking about is, you know, uplift, renovation, you know, blocks and units, but it's a whole yield story. So if you look at your portfolio and you say, well, it's probably just paying for itself at the moment, your property in Lismore might be. Has a loan against it. Has it? Yes. So if it's a yield story and you're got a buffer of income and your properties that you currently have are paying for themselves and not costing you money and it sounds like, you know, you're just disposing of at least one of those duplexes after its build is going to make everything positive again. You've got some proven growth that we can see in two of these areas. In the Lismore area it seems to be like a yield story. And the yield story, you don't really need the yield to hold the portfolio at the moment for the next 10 years. My gut feel is that it's around the growth that's going to get you the dollars in the bank, that's going to get you the lifestyle that you want. So if you can substitute the borrowing capacity that you have against the Lismore farm, we call it a farm acreage, to put it somewhere else, that is going to get you more growth and diversified growth out of that Ballinar type area, then I think that's a good thing. The Ballinar area, though, it's looking really positive. Right. We've got all this infrastructure, we've got the flow on effect of the Byron factor. People can't afford that. It's like the ripple effect regionally, which is when you can't afford here, we move there. So we know that that's what people do. I like the. I think the upkeep of an acreage, you know, is there's always lots of work and rates and things. And maybe at this time in life that might be the property that you would dispose of. When you're thinking about what could I do? I think that let's just have a look at what's happening up at. Does that kind of make sense for you?

Yes, absolutely.

And yes, because I want to make sure that you're walking away with this with like, okay, I can need to go and talk to my accountant and my mortgage broker and my financial planner, but at least you've got a grounds of, well, what next and what can I do?

And that's yes. Yeah.

And the only other thing that I would just want to check out, which I didn't just then, was what that growth has been over the last 10 years. I've just chosen a random property because this is the only way I can see the growth. So over the last 10 years, Lismore's only done 1.8% growth. Right. This is not a growth story, it's a yield story. You know, it has had a 21% change in price over the last five years. But, you know, this is a. This is an area that you could probably, you know, divest of if you were looking at one area to divest of in.

Yes, that area.

I'm keen to have a look at Lenox Head though, from a statistics point of view because tell me, why the duplex? So you've gone from being scared 20 years ago in having a property to now building, which I was like, whoa. Your risk factor is, you know, you've grown so tell me just a bit about the duplex opportunity, how that came up and your thought process around it.

There has been quite a bit of growth in Lenox Head and this particular estate sells out whenever it opens the stage. So the block that we've got is in stage five and it sold out within six minutes of it opening on the thing and it's zoned three, I think. So there's already proven demand and proven growth for that type of property in that estate. And that's where the new Woolies went was in that bottom of that estate. And.

I'm just looking at like the census data. And let's keep in mind, this is 2016, right? So, you know, things can have changed since then. But what I'm finding, really, I'm really confident about here is there's actually this tendency towards townhouses. So a lot of those regional areas. When I hear of people, you know, purchasing or looking to purchase in an area, it then concerns me that the area that they're looking in, it seems like an opportunity because the flock are going there to buy and, you know, you can listen to real estate agents and go, the last section sold out in five minutes. You got to get in now. But are they creating the market or is there a proven market there? The fact that, you know, this 25% of the population are already living in like a townhouse semi, this is really good. And I imagine with the, you know, the stage 1, 2, 3, 4, which has possibly come on since 2016, this, this number next year, when they do the census in 2021 is going to be higher. So, yeah, so that's really good. So there's like a proven market. We don't really have the proven market for the lifestyle block. It is kind of like a lifestyle thing. But this is showing with some confidence that, you know, the area that you're looking in does have a market for it. So this is great. So I guess the next step that you really have to go into is I would encourage you to go through that little calculator and just work out how much you need and then work out how much you've got now, because you might just look at it and go, you know, I can keep the lismore acreage doing 2%, it's going to be worth, you know, 30 grand more in 10 years time. But, you know, no harm, no fail. I don't really need to put myself out there and buy anything else. Or you might look at it and go, you know what, there's $400,000 or whatever the number is in borrowing capacity there. If I could buy a $600,000 property in Brisbane and get 4% growth, what would that look like? Yeah, so I think you've got that opportunity. The current home that you have, you know, one of the good things about obviously, how long ago did you move out of the Lismore property? Can you claim it within the six year rule?

Ah, six years next week.

Time is a ticket. Can you move back in within the next week? Okay, so you know, I know that you can claim that. So you might then look at the current. I guess the saving grace is there hasn't been a huge amount of growth there. Yeah. How much? But don't get tax dictate any of your decisions. But from the point of view of the current property that you in you've done the renovation, I imagine it's quite done quite nicely. The extra cost didn't go into retaining walls, it kind of went into bathroom and granny flat. I like the idea that you have that income, that secondary income there too that allows you, you get. Having lived in a property with the granny flat out the bat, although it's a family member, it always concerns me of will the demographic of that area tolerate that type of living.

Like there's a lot of that in Ballina granny flats. Lots of it.

And family. A family in the front and like a young couple in the back.

Yeah. Or renters in granny flats. Like just, you know, younger people who want to live in Ballina and can't afford to buy. So there's lots of both of those options.

Perfect. Because it's okay when it's your son out the back, but when it's kind of like someone else at the back. So think of, you know, from the point of view of where you want to live. If this is doesn't fit into the Forever plan for you, then you might sit back and go, well, we've got maybe six years to make the plans of, you know, what the Forever home looks like as we're doing this. And it might be once you've done all of these exercises that you go through and you go, well in actual fact, if Valena and Lenox Head are going up by 5, 6% per year for the last 10 years and we've got pricing pressure from Byron, then we'd assume that there has been good growth and the fundamentals of the ripple effect and the infrastructure spending would increase the likelihood of replicating a similar type of growth. So we can't assume what happened in the past happens in the future, but we can look at what can happen. So you might actually just look at those two properties and say, well, in actual fact, do we need to sell the second duplex? If we get rid of the debt on the Lismore property, do we actually need to sell it? Is it a decision that we can make in the future? Could this be one of the properties that I live? Could this be the forever home for you at 65? You might go, well, we don't want to have a big house and when the family comes and the grandkids, we don't want to have too much room. You might have that kind of thought process. You get to have now the power of these choices. So it might not be, I'm going to use the $400,000 borrowing capacity from Lismore to go and spend buy in Brisbane. It might just be. Or in Sydney or Melbourne or whatever that looks like. Not in the same area. But what it might be, well, this is just, you know, if it's making you money and it's making you $5,000 a year, is the opportunity of getting out of that now and putting the cash that you have into a bit of a buffer so that you do have that. Because I get the feeling also when you said we're right up against our limit on this borrowing, there's some anxiety.

Around that Probably a little bit, yeah.

So just sit in that anxiety and go, well, if I had the extra cash from the sale of the acreage in the bank, how would I feel going forward? What if the building costs did blow out due to Covid or whatever? Can I cover that? Or is this going to create issues for me? Is it a good time to sell the acreage with the fact that there is people going, yeah, I'm kind of thinking sea change, tree change out of here. I need my own place. And this fits that model now. So thinking about all of these things, it may not be that the next purchase post the duplexes, will they cover their own costs if you rent them both out at 750 a week?

Yeah, yeah.

If you move into one and rent one out at 750 a week and you rent out the house and the granny flat, all your costs are covered.

Oh, yeah. Well and truly the house and the granny flat make more.

So it might just be, look, you know, maybe we can live in the duplex for a period of time. Maybe we stay in the house that we're in. Maybe we move into the granny flat. I don't know what that looks like. Maybe you can do that and plan for the forever Home and start looking around and having the borrowing capacity in your pocket. Just know that as we age the banks have less of a appetite to give us money.

Yes. Yeah, that's what I was aware of being now over 50, so it might.

Be like, you know, we're not in and we don't own in our portfolio at the moment, the forever home. So maybe there is the opportunity to say, well maybe we could purchase that and we were talking around that area. Then you could be thinking around that 6, $700,000 purchase price. Just give me an idea of what you think the acreage is worth.800 to 800. So one of the things that you potentially could do and talk to your mortgage broker about this or give us a call, we can have it just talk you through it. Depending on your lender, this is what can happen is you can have a thing called a product substitution. So you have another property worth $800,000 and let's say the loan that you've got against the original one is 400,000. They just move the loan from one to the other. So in the, the environment of we need to make sure you can still afford it. There is the, they will go through an assessment to make sure you can still afford it. But the fact that they've already assessed you at the fact that you can afford it, just put it into another property that you'd rather have.

Yeah.

You know, so that could be the process and it doesn't flag anything at the moment about your age because if you wait five years and you, and they're like, you know, really we're not going to really give you a 30 year loan on this. There could be some financial kind of strategies you can put in place to substitute one property out and the other in. And depending on the lender you may need to have a back to back settlement, find it at the same time as you sell. But some lenders allow you to kind of park the cash against the loan and using the cash as the asset that's securing the loan. You still have to make a mortgage, a repayment, but you can within a period of time, six months gives you six months to find the next property. So there are some clever strategies around that. But I just, I'm not convinced now seeing your portfolio and potentially what your cost of living could be, that you need to go and make another investment. I do like people having diversified opportunities. But the fact is you've already got some properties. The buying and selling costs are going to Eat into your opportunity. If you do plan to, you know, downsize and maybe keep the duplexes in the future, you still have the six years of capital gains tax, you know, not on the current property you're in. So you could do like a scheduled buy down and buy into the home you want to be in. Yeah, but if the bank has assessed you and let's face it, banks assess very conservatively that you can afford to hold all these.

Yes.

Then consider maybe if you've got the duplexes there and you can afford and they'll be subdivided so you can sell one off in the future, you do have a little bit of gold in the bag there that you could keep, potentially.

Yeah, yeah. Thanks, Jane.

Does that make sense?

Yeah, it does, it does, Yeah. And I think that's where the assessment needs for us to sit down and do all of that still. Like there's this little tug about getting a property in a major city and now being probably a good time. But we can't do anything until the duplex is done, which is probably 12 months in reality before it's finished and subdivided and ready to sell one, if that's what we decide to do.

Or unless you do like a property substitution with the. So that's something you could consider.

Yeah, too true.

And it might be that you do that and hold it, like hold it for 10 years in one of those cities and see the opportunity there. And I think the interesting thing is I did a. Let me think. Where did I put this? I did an assessment on. I utilized some of Peter Cleese's information and did a study of. What did I do all the census, all the data for the last 33 years.

Oh, wow.

Why not on. July, virtual presentation. 33 years of growth. Okay, let me have a look. What did I do here? Yeah, this is what I want to show you. Okay. So what I did is I looked at the last 33 years of capital growth based on all the city information from the Australian bureau statistics. And I was trying to work out if you were going to buy, where would you buy and what have been the cities that have had the best buying opportunities. And I looked at a five year time frame. So if you were going to buy between in the last five years, then the best cities read. So Hobart would have done 44% for you. Melbourne was second at 36. And then Sydney. If you had bought 10 years ago, where would you have the most growth? Sydney and then Melbourne and then Hobart. If you bought 15 years ago, where would it have been? Melbourne and then Hobart and then Sydney.

Wow, that's really interesting.

Getting a theme here, right?

Yeah.

20 years ago, we have Hobart, then Melbourne and then adelaide, and then 25 years ago, we have Melbourne, Sydney, Hobart, and then 30 years ago, we have Melbourne, Hobart, Brisbane. When I look at this and I'm, you know, I encouraged my sister to diversify, like, 10 years ago, and she's like, where do I diversify? I'm like, well, Brisbane's got to have something coming soon, right? It's got to be their turn. And Brisbane's just not ever got there. And so she's like, you told me to buy in Brisbane. I'm like, oh, it's coming, it's coming. So, you know, I look at this and I think, oh, gosh, you know, I'm a student of statistics. I look at the data, I try to understand what has happened in the past and learn from it and apply to the future. If I look at who's been number one and two the most, it's Melbourne.

Yeah.

If I look at Melbourne versus Sydney prices, I know that Melbourne is less. If I look at the statistical predictions on population growth, by 2030, Melbourne was going to be the biggest capital city in Australia. Now, I think from what I'm seeing now with the COVID and the immigration changes, this is just pushing this along one or two years because immigration will come back, you know, when the borders open internationally, and let's say by the end of 2021, it will come back. People will want to be in Australia as the, you know, a bubble. The economy is so much better than anywhere else that we've seen. You know, there's all of this information that's coming out to say that we're probably going to have an influx of immigration. So we look at Hobart as well, and, you know, not to be discredited, but, you know, this always just surprises me. I'm like, oh, my God. Really? Because, you know, it is a lifestyle choice. The Mona, you know, opportunity of Mona coming and creating Hobart as a live tourist hub has just been extraordinary. And we've seen that. You know, I think the Airbnb kind of market there, we saw investors move there. It was definitely in an area in the last five years where they moved. They are hurting now at the moment. So there's all these things. So I would still just tend if I was going to look at this and say, you know, I know Darwin had its day as well. You know, Canberra is going to withhold any real shock to the economy because of the nature of the employment there. But I look at this and I think if I'm going to kind of hedge my bets on the next five to 10 years on a known performer, what's it going to look like? And so this is, you know, just to give you a little bit of clarity about, you know, if you were going to say, I've got some borrowing capacity and I can park it for the next five to 10 years and I can live in the property I'm in now or choose to live into the duplex in a year's time, I don't have to make those choices. If I was going to sell and potentially look at an opportunity, where would I look? I'd be looking where the data shown us over the last 30 years that has the opportunity. And the good news is, for those who are looking to buy is that the predictions in the house price market has been that there's going to be up to a 10% drop in property costs across Australia property values based on the last lockdown. And, you know, I don't know when people are listening to this, so it could be, you know, in a year's time we might have another three lockdown falls. But based on the second lockdown that happened in Melbourne, you know, they're anticipating that the Melbourne property prices will drop to 15% as well. Now, put this in context, that over the last year, up until the COVID the property prices went up 15%. So they're really kind of only just returning to where they are. So it's not, it's not like people are going to be thrown onto the streets. We're kind of just experiencing it. But there could be an opportunity to buy for the astute buyer. So I think if you go back and have a look at the Borrowed My Brain series one, I had a chat to Jack and showed him some analysis on where to buy. He could buy anywhere in Australia. And we looked at an area in Melbourne. So there are. And I talked to Adele and we talked about where she was looking as a buyer, a first home buyer in Melbourne, but buying as that property to become an investment in the future and using a buyer's agent. So there's a couple of past borrow my brains that I think you get some benefit from this as well. But I think with some degree of optimism, you know, there's a lot of information that we have and we look at the past and we apply it to the future. The market will respond. The market always responds after recessions. We're officially in a recession, but it's the first time in nearly 30 years that we have had this experience. There's no doubt in my mind that there's people lives that are affected from unemployment. But you're obviously in the education space, your job's safe, you've got a buffer. You can cover your costs with your portfolio at the moment. So I'm comfortable giving you these insights. But check it all out with your financial planner and accountant. But I think if you did say, I kind of really want to make an investment rather than letting you just go willy nilly into the world and it's Brisbane's north of us and the closest capital city, maybe consider somewhere like Melbourne.

Yeah, that's good advice. Thank you very much.

So there you go. You got half my brain because I'm in Covid fatigue. But I hope that was enough to whisper.

Oh, it was awesome. And just, it also just got the perspective out of my own, you know, emotions attached to all the decisions. So that's been invaluable. Thank you, Jane.

But look, you know, you've worked really hard. You dipped your toe into the market. You didn't lose, you got out, you got back in. And you've got back in with, you know, some really great buys. And you know, you've learned a little bit with the renovation, et cetera, but you're going to take that to this development and take the learnings from the renovation to the development, even though it's like a new field and just, you know, monitor the costs, keep on top of the variances. You know, 20 grand here and 20 grand there as, you know, adds up and just be honest. But you've now got the flexibility of choice of not having to sell one or two. You might actually want to keep them and go through that goal scenario of how much that life will cost and just work out what you really have to do. Because you may not have to make as big a risk as you think you might have to make to get to where you want to be.

Yeah, that's so right. Thank you so much.

My pleasure. My pleasure. Well, you look after yourself and keep safe and wash your hands, wear a mask, don't get close to anyone and look after yourself. But I really appreciate your question and I'm glad I could help.

Thank you, Jane. Thank you so much.

Bye.