Episode 2 of The First Home Buyers Show - Being a First Home Buyer at 51

Someone who is used to handling the pressures of large scale events such as running the styling for people like Pink and Adele and Stevie Nicks could look at buying her first home and absolutely handling that with ease. But our guest today, well, let's just say it wasn't as easy as she thought. And in actual fact, you. There were things all along the way that created a little bit of angst, including scary termites. So without further ado, let's get those credits rolling so that we can have a chat to you and tell you all about Emma's adventure.

It's the first home buyers show where first home buyers go to watch their wealth grow. And here's your host, Jane Slack Smith. Hello.

Hello. And Emma, welcome to the show. How are you today?

I'm great. Thank you for having me on.

Well, thank you for joining us. Now for those of you who caught episode one, we talked about the framework that is necessary to be used when we are looking at buying a home. So we talked. So let me just bring that up in case you forget. But remember we talked about the fact that it is really important to be able to consider the entire framework when you're looking at a property. So you need to have the vision, so you need to see it, you need to set it up. So we're talking about budgeting and loans. We then need to source the property, find out where to find it, then we need to slam it. So negotiation, pest and building inspections and obviously settling the property. And. And then we get to move on. Now, Emma, gosh. What? Four weeks ago you bought your first home.

Yes, I know. Four weeks ago we became first home buyers for the first time at 50 plus.

Oh my goodness. Okay, so I wasn't going to declare your age at all, but you've gone there. So, you know, it's all up for everyone now. So tell me this. You know when you bought, when you started thinking about buying your first property, you know, 50 plus first home, it's a big deal, right? Why did it take so long?

Well, we, we were what I would call serial long term renters. I'm married, we have no kids. We have a lifestyle that means that we can work from anywhere. We both work for ourselves, my husband and I. So we found that we used to live in Sydney. We're now somewhere else, which we'll get to. But we found that we couldn't afford to buy in Sydney. We could rent in areas that we wanted to live in, but we never thought we would be able to buy. So we just kind of didn't bother.

And I guess the thing is here that, you know, full disclosure, I've known you for like over 15 years now and Emma is an amazing person. You know, she is a stylist. Go to her website, mypersonalstylist.com As I said, you've had an amazing background as personal styling for properties, personal stylist for people and personal stylist for events. Like I said, Adele and Pink. Now I engaged Emma or a few years ago to come in and have a look at my wardrobe. And I have to say it was a scary experience. You know, I don't get scared with many things. Buying a property for me, not a big deal. And Emma came in and was fearless in looking through my wardrobe. I think Emma, we ended up with a pile that was quite large that had to go.

Oh, a big mountain, I would say.

But when it came to buying your first home, it, you know, we've talked about this before. It was something that was completely off the table for you for so long. So when we talk about the visioning and the having a vision to buy a home, there was a couple of reasons why that wasn't in your kind of future. When you and Ian started renting, why was that?

Well, we, we had what I would call patchy income. I was in the corporate sector for a while. Ian has always pretty much been freelance. So we have, you know, we had periods where sometimes we had stable income, sometimes we didn't. So we didn't think we were actually a good risk profile for a lender. So that was one thing that, that just kind of keep popping up in our minds. So we just on that basis and an affordability basis just kind of went. It's all too hard. We're just not even going to think about it. You know, we're just going to have our lifestyle rent where we want to. You know, we rented beautiful places. We lived at Castle Cove in Sydney, in Willoughby in East R. Yeah, pool. Yeah, exactly. Pool, beautiful gardens, you know, beautiful entertaining spaces. We could never afford to buy that kind of thing.

Yeah. And I think, you know what's really interesting about your story and your journey to becoming a first time buyer, which we'll get to, which only kind of got onto your radar in the last 12 months is that, you know, when we think about, you know, did owning your first home come into plans? You know, both of you, as you said, you've got cyclic employment. So it's not full time, you're both self employed. You know, Ian is front of stage manager bands and events and bands he toured with sneaky sound system for many, many years. When they're not touring, he has to go find another gig. Right, so your income was patchy and as you said, lenders weren't looking at that. So how did that affect your savings? Was that something that you kind of gave up on saving or was it when money was in the bank, you spent it?

Well, there were lots of times where, you know, not so much, oh, there's money in the bank, let's, you know, buy expensive things or go on holiday. There's, it was, there's money in the bank, let's get all the bills paid. Because you don't know when the next lot of money is going to come in. So they're savings. When we thought of something that seemed like such a massive obstacle, it wasn't even. We didn't even make a plan or try necessarily hard to find extra bits of money to put away in savings towards a home because we had just pretty much discounted that altogether.

And I think the interesting thing is, you know, a lot of people, when I talk to first home buyers, you know, there might be 25, 30, 35, and they're like, getting the deposit together is so hard. And I know previously we've been through this, the GFC and then we went through APRA and ASIC and the banks prescriptive lending kind of scenarios as well. A lot of people who've kind of tapped in again, how much can I borrow and how much do I need, probably aren't up to date with the fact that things do change. And it's really important to check in with that because at the moment lenders are, there's a number of lenders that are happy to take a 5% deposit, for instance. And when the first home loan deposit scheme comes in, the first 2020, only a 5% deposit can get people into property without mortgage insurance because the government's going to back that. But for you, when you kind of check in, you go, no, can't do it. Income won't be taken. It kind of takes everything off the table and you just get on with life, right?

Pretty much, yeah.

So tell me, what kind of was the turning point for you recently? Like, I know you've rented one property you were in for like 14 years. You know, you, you, as you said, you're serial renters and good renters. So what was the turning point when all of a sudden this came on the table as a possibility for you?

Well, I would say so in the last two years. Yeah, since 2017, we've moved four times.

Wow.

The last one, thank goodness, into our own home. But it was getting to the point where even though we were good tenants, we just had a run of bad luck where we had chosen beautiful properties to live in. The property managers always came through and said, if only every tenant was like you. This is so immaculate and it looks beautiful and so on. We had one property the owner wanted to move back in, the next one, they wanted to sell. The next one, they just said, well, we, you know, we want to do some renovations and we're going to put the rent up more than double because we're going to do substantial renovations. And so we just found ourselves having to look for the next thing. So that it was. That was the crunch point where family members started saying to us, guys, this is ridiculous. You really need some stability. You need to be in your own home.

So, you know, I guess when we talk about that kind of, you know, it's time to move on and it's time to set yourself up. What was the. And we move on to the next stage for you, which is kind of like, let's set it up. What were the things that you had to consider about what you needed to do to start looking for a property?

Well, we had an opportunity to access some finance that was non bank finance through family, which is so privileged and so, you know, amazing. However, that was. That wasn't a blank check. That was a limited amount. So we had to then sit down and really think about where we wanted to live. We have. So Ian has restrictions around where he needs to be close to an airport because he's constantly going away on tour and on trips. So we couldn't, you know, delightful as it would be to be out in the country somewhere and have, you know, idyllic country lifestyle, that wasn't practical. I have more flexibility in my work. So we had to look at all the things that went into, well, where do we want to live? Where can we afford to live? Where what has the infrastructure that we need that is going to tip us over from renting into buying. And once we kind of put that all down on paper, I'm queen of spreadsheets. So I got out and did a massive spreadsheet on all the different variables.

Yeah. And with this kind of spreadsheeting, like, tell me the wide net that you started to cast, you had a certain amount of money. So the purchase price was around what?

Well, we had ideally 500 was the cap. We did actually end up going a little bit over that but we could have probably gone up to about 550. So that was our limit, which, as you know, particularly in the Sydney market, pretty much not a whole lot.

Yeah. And I think in Sydney at the moment, you have to go 50 kilometres out of Sydney to have a median house price of under a million dollars. So, you know, 500, $550,000. So you're looking maybe south coast, Blue Mountain, Central coast, Newcastle. Is that one of the areas?

Yeah, we cast a very wide net when we were very first looking because we just went in these early stages. I just want to see what's out there. I want to see what's, you know, within, I guess probably an hour of an airport or an hour and a half of a, you know, a major train station or somewhere, the transport, and I want to see what you actually get for your money in those sorts of areas. So, yes, we cast that wide net, you know, quite maybe probably three hours out of Sydney all the way around.

How did you feel when you kind of found what your money could buy for you.

In the very early stages? Quite disheartened because I have champagne tastes and we had a beer budget and.

You'D lived in beautiful properties, right, for the last 20 years.

Yeah, absolutely. So that was a serious mental readjustment because I had to say to myself, and, and with the urging of my husband, who kept saying to me, babe, you're gonna need to lower your expectations. Yeah.

And so, you know, I guess the, the thing is you're looking at properties that you previously, and I mean, as a real estate stylist as well, you know, you were looking at multimillion dollar properties in Sydney, you're living in gorgeous properties, and then all of a sudden you're looking at something that needs a little bit of work and your hours out of town. And I guess that, that mindset shift is something that, you know, I regularly speak to people about when we're talking about how much can I afford as a first home buyer. And I don't want to live in the whoop, whoops. But I guess that mental kind of shift, and I'm interested in understanding how you made that shift. But it also comes down to this is not always the forever home. Right.

That's true. And that, that was part of my considerations. And again, with, with a, again, as I said, champagne taste, beer budget. So I kept picking these glamorous properties that were well over our budget and I would show them to Ian, my husband, and he would go, what are you doing? You just, you're Just setting yourself up for failure because you're looking at things that you can't afford and then you're going to be disappointed because you can't afford it. So stop doing that. Let's reset the priorities. Let's look at the must haves, the nice to haves and the kind of, you know, that'd be, that'd be good or something would be really bad. So let's, you know, get the rule them out and rule them in type criteria.

This is really important in that kind of source it component of working out what you can do. First of all, in setit you understand what your price point is. But this criteria is so important because if you have an absolute plethora of things to look at, nothing's really going to satisfy you because you actually haven't defined what you need. What were some of the must items that you needed? Obviously proximity to airport, transport, etc. But what were the things that were really important to you guys when you sat down and started to think about it?

We wanted to have minimum three bedrooms because I work from home, so I have one whole bedroom is a dedicated office. I don't have anything else in that. So we wanted obviously a master bedroom, a spare room and an office. So that was our must have. I wasn't considering anything under three bedrooms. So then that kind of reset our pricing and our areas because we had to look at what were the three bedroom options that we could afford in areas we would consider.

We were definitely looking for a house.

Well, at first, no. So the first maybe month or so we had units on the list because we've always lived in houses. But we kind of thought, well, we could get a bigger, more modern unit for less money. And we looked at a few and one even made it quite high up on our short list. But then when we went back and I read a lot of your materials and I went back to your book and I went back to some of the strategies and I just went, well, that's actually not going to be the right value or longer term strategy for us having a unit.

And just tell me, you know that unit component as well. You know when we also talk about looking at what you can afford and you know, the price point and the three bedrooms and it was going to be a house. You know, when you then started getting the definition, did you then start finding locations? Fell off and it actually became easy to go, okay, so this is now the area we're going to start looking in. Are you still looking in Wollongong and Blue Mountains at that stage, or have we moved north?

No, no, sorry. By that stage, we had pretty much settled on the central coast. Ian has family on the central coast. So there were personal reasons. There was also. It ticked all the boxes in terms of infrastructure available and travel distance to an airport. We had considered the Hunter Valley, and it just turned out that, you know, there were things that were nice and affordable and fit our criteria there. But the travel thing eventually knocked that, obviously. So we settled on the central coast.

And you've got an area within the central coast. So you started looking at properties. What were you finding? What were the kind of, I'm out there trudging every Saturday. I'm online at night. What was that experience like for you?

At first it was exciting because it was, wow, we've got the opportunity to do something we've never done before and to look at things from a different perspective. When you're looking at properties to rent, you're looking at it through a different lens than you are when you're looking at properties to buy. So at first, that was exciting. But after probably the first two months where it was every Saturday and every Wednesday was physically looking, and then every other day in between was looking online and discussing and having arguments and, you know, having, you know, looking at other people getting things that we thought were quite interesting, so that then it got kind of demoralizing.

And so how do you push through that?

Well, I think you have to. That, again, is another kind of one of those reset points. Yeah. Where you just say, okay, are our. You know, go back. Go back to those criteria. Are the criteria. Right. So are we looking at things now that we've had and we've looked at enough things? Are we looking at the things that. Are our needs still the same? Are these still our criteria, or have they changed based on what we've seen that was out there? And one of those major things that had to change was. Was price. I was looking at things that were just out of our budget.

Did you find the market moving at that time as well?

The market was moving down, which is the reason I was looking at things that were out of our budget, because I knew that I would be able to negotiate a lower price than the advertised sale price. But at that moment, it wasn't shifting enough that I. That I was feeling that I could get enough below that would fit into my budget. So I had to bring my price bracket down.

And I think this is a really important point, Emmy, and thank you for sharing, I guess, that reset moment, because a lot of people that I speak to, they, you know, there is that enthusiasm. You're out there, you've got money, you've been pre approved by the bank, you've got the cash almost, you know, in your pocket. You're seeing your friends and family and other people who are, you know, seemingly all set up and happy and. And it is a slog that sourcing the property. Having the criteria gets you a defined kind of list of what you need to look at. Having the suburbs set up as well. So you've got that kind of laser focus of where you need to concentrate. But in a moving market, now you've talked about beginning of 2019, the market started going down in the central coast. We're a little bit further on in the market now and the market's going up. There is an expectation that has to be reset sometimes within the moving markets, but in any market, so it's important to take a step back, especially when you get demoralized and go, this is an investment. It might not be where I live for life, but this is an investment for life that if I get this right, is going to set me up for the next 10, 20, 30, 40 years. And so I think it's really important. And the biggest mistake I hear people make at this stage is when they're in the source it segment of the framework and they're moving through that is, you know, this property would do. I've kind of had enough. You know, I've been out every weekend, I've done, you know, my time on the ground. It shouldn't be this hard. And that's when they start talking about, well, you know, I could settle for this, it'll be okay. And I think the fact that you stopped and you reset and even when you start finding yourself arguing like, I know you mentioned that, you know, you put up properties and Ian would shoot you down. I know when Todd and I were looking at properties and we were looking at investment properties, it got to the stage where he would actually get a V and a banana. When we were driving around for inspections on Saturdays because we were like so focused and we had every half an hour scheduled and we're going to one direction, going to the next direction, running in, having a look, running notes, taking photos, etc. Getting into the next place, I just had sugar lows and we'd start arguing about directions. So the littlest things can become really big. And I think that reset, where we sit back and go, okay, brief, if we're going to miss one of these inspections, we've missed the inspection, but we are good people, we don't need to fight about this. We're looking for a long term property for our future together. So the fact that you did that is really important and it's something that I'd really encourage other first home buyers that are listening at the moment. And kind of at that point where you might be looking for properties, take a lesson from Emma and stop and reset. You might need to reevaluate your criteria. Sometimes I speak to people who for instance would say I'm looking for a $750,000 three bedroom house within 15ks of Sydney CBD. I'm like cool, you can get that back in 1983, we're talking time travel here. Criteria. You need to have expectations that are realistic. So you did that. And finally, let's move on to the slammet. You found a property that satisfied criteria. Tell us about that property and what you thought when you first saw it and what you did to inspect the property. Property.

Well, I, I'm going to wind it back just a fraction there. I actually found two. So two made it onto my, to my top two. I, my, my short list I was keeping very short. So there were three on the list. Third one dropped off. Two made it into my top two. The one I really, really loved and was getting a bit emotionally attached to, trying not to, but was getting a bit emotionally attached to the owner. It was way higher than I had the money for. So it was on the market for 639 and I had preferably 500 but maximum cap of 550. And it had been on the market for a long time and I kept going to the open and I was the only one there at the open for weeks and weeks and weeks and weeks.

So give it to me.

I know I got the contract. I went through the contract, I had.

A good look at that.

There were some issues with it. There was asbestos there, there was, it was in a bushfire zone, it was in a flood prone zone, et cetera, et cetera. But I still loved it. And I kept saying to the agent, you know, is she going to budge the owner on the price? And the agent just kept saying this is a very emotional sale, she doesn't want to sell. This property had been on the market, off the market, on the market, off the market. So absolutely not. She set the price ridiculously high. I don't even believe it's worth that. But she really doesn't want to sell it. So she's made it out of reach. Pretty much. And I said, well, I can see that because there's no one here looking at it. Yeah. So at the end of the day, I had to make the hard decision that said, this is not the property for me I have to take. I'm putting too much energy in something that at the end of the day is not going to work out.

Yep.

I have to go to number two on my list. And that was something, again, met pretty much most of the criteria. We did want something that we could put our own stamp on and, and do a little bit of work to and add some value. So this one ticked all those boxes. It was probably in a better suburb than the one I really loved. The suburb we ended up in is a suburb that has quite a wide, it's quite a big suburb and it has quite a wide range of prices, but it has a lot of very, very high end properties and acreages that are well into the 2 million plus mark.

Right. So there's a real difference, so, real difference in what you would see in the suburb. So were you able to get what would be considered the typical property that would allow you to, in the future, if you're going to make it into an investment, you know, make sure that you've got the majority of the market that would want to rent it?

Yeah. So we, this suburb has different kind of pockets of it. So we've ended up in an area that is median to older families, so kind of primary school kids through to high school kids with a smattering of older, you know, couples with kids who've left home. So that gives us an opportunity to sell to different areas of that market in the future.

Absolutely. And I think the really important thing there is the fact that when you have a suburb that has that disparity of prices, it's important to make sure that you're looking like, for, like. So I talk to a lot of people, obviously, and teach around renovation and we talk about pricing disparity and looking at, you know, what the renovated property looks like compared to the unrenovated property. And in theory you could go, there's a $2 million property here and a $500,000 property. Wow. You know, but the reality is you have to be comparing the three bedroom 1960 built weather board on 600 to 800 square meters with another three bedrooms. So not the brand new townhouse McMansion that's been built down the road. For the people coming in, the good news about that is the people who can't afford those bigger properties often like the ripple effect we see from suburb to suburb go, well, there has to be other pockets here that we can put our own stamp on the property or we could create our own type of McMansion here so, you know, at a cheaper price point, so you start getting that development or the infill and the pressure on the other sections of the market as well. So it lends to giving you a price uplift on having those higher priced properties in the area, which is great. And then tell us about the negotiation. How did you go after that?

Well, we. This property again, had been on the market for well over the standard number of days on market for the suburb. So to me, that, that was a leverage point in my mind. Yep. The owner was recently divorced, so it was not, I wouldn't call it a forced sale, but it was a sale that kind of had to happen because he wanted to move on. Obviously they wanted to divide the proceeds of the property and both move on. So it wasn't someone that was just going, oh, we'll put it on the market and maybe it'll sell and if it doesn't, we'll take it off. Yep. So again, that was a leverage point. But the thought of negotiating with a, you know, seasoned expert, an agent who does this every single day of their life, who knows all the tricks in the book and all the strategies and all the psychological, you know, leverage points to get a buyer to do what he wants was daunting. Yeah.

Did you expect that? When you're going through the entire process up to that point where you've like finally found the property, you know, imagine the agents always being very friendly and nice and accommodating and sweet and you had a little bit more experience, exposure to agents because you had, you know, styled for properties previously, so you had a little insight, but they're not working for you. Right.

And that's the thing you've really got to keep in mind. And it's so easy to fall into that trap when the agent is being all pally with you and talking about things and trying to kind of distract you, I guess, a little bit. Obviously they're very good at building rapport and hitting all those psychological triggers. And sometimes, you know, if you, if you're kind of in a weak moment or you know, you've, as you said, you've got low blood sugar or you're a bit tired or it, it's very easy to kind of go, oh, this guy's on my side and working for me. And then reality kicks in and you go, Hang on a minute. He's working for the vendor. Yeah.

And he gets paid more the more that he gets the property sold for?

Of course.

Of course. So tell me this. How did the negotiations start? Did you talk about other people interested? Did you ask the questions around? How many contracts were out, what would buy it? How did you go about finding out what the price would be that you would set?

I had actually done that all the way through. So this one was in our contention list for at least four weeks. And I'd been to every open, and because I wanted to see who else was there, you know, I was asking questions. I was having a better, you know, a harder, deeper poke around than that first look where you walk in and everything seems wonderful. So while he was distracted with other people, I was poking around, you know, looking at things because it was in my serious consideration point framework by that time. So that's how I found out that the owner was recently divorced and, you know, had to move and so on.

The kind of what would buy it. How did you start?

I said to him, you know, have how many off? I didn't say, have you had any offers? I said, how many offers have you had? Because it was. It's very easy, you know, just, have you had any offers? It's kind of easy for them to go, oh, yeah, yeah, yeah, we've had a few. How many have you had? And I said, and what sort of prices were they offering? You know, I. I played the card a little. I didn't want him to know that I was a complete novice at this. Yeah. But I also wanted to play a little bit dumb into. I knew what I could ask him, what he could tell me and what he couldn't tell me. But I pushed the boundaries a bit in, you know, asking kind of cheekier questions than I possibly should have. Sometimes that worked, sometimes that didn't.

And when you got to the price, you agreed on the price. I guess you had a feeling of relief. Was it all over then?

No.

What happened?

Well, I did actually have some leverage because I had, according to a. An expert in property. I know who recommended getting inspections done. I decided never forget. Absolutely. So the. The pest in building inspection that I had and that we were recommended to this person by someone else who'd used them and had, you know, good experience. I checked out their credentials online, so I was comfortable with them. So the guy that we had came out, he. He pointed out a lot of things. We kind of already knew. There were some bits and pieces of work that needed to be Done. But one of the big surprises that I wasn't expecting at all, although I hear is quite common in this particular area is termites. And that's a word that just, you know, makes your blood run cold.

Yeah. And so were these live termites or evidence of past termite activity?

That they were live termites not in the structure but in the garden. So there were two locations in this, on the, on the property, on the land where there were live active termites and.

Correct, those two locations in between was a house. Correct, yeah.

Okay.

So this then became what? A I'm going to walk away or a oh my God, what do I do next?

Probably both of those things. Oh my God, what do I do? Oh my God, I'm going to walk away. So I, because we had a bit.

Of a chat at that stage on your next steps, didn't we? Around trying to understand what the cost of remediation could be and potentially using that for a bit of a negotiation tool. And how does that work?

Well, I, I actually engaged a second inspection because of course that, that just all the horror stories I'd read and heard about termites just made me, you know, freak out and I'm very, very risk averse. So that, that was just not going to happen. To the point that everyone around me, my family, my friends were going, oh for God's sake, you know, just get over it. I said, no, this is a, this is a big, big deal. So I said, I'm going to pay another $500 or whatever it was, 400 and something for another specialized termite guy to come and have a look. And I said to him, I want you to use the, all the top of the range specialist equipment. I know there's still no guarantees, but I want you to use all the equipment you have at your disposal to check for me that there aren't termites in the structure and that there's no evidence of that. So I made, and I followed him around and said, right, check that bit. No, check that bit. No, look at that. Why is that thing beeping like that? And got a thorough report.

And did that give you confidence?

It gave me confidence that there were no termites active in the structure, but it reinforced that if I wanted to purchase this property, I was going to have to do something about the termites that were on the grounds to avoid them getting into the structure. So what did that look like? Well, that was, that was my leverage point with the agent. So I rang the agent and I said, I said this is this termite's been found in two. Not just one, but two locations. And two different types of species of termites have been found. They're active. This is. This is a deal breaker. This deal is potentially off the table if we don't come to an agreement on this, because I don't need that kind of headache. So the agent went away and told the owner. And the owner, well, the owner said he wasn't aware of this. I have to actually take it at face value. I don't think he was aware of this. You wouldn't have been unless you'd really had a good close look at these particular trees where they were. And the agent. So I. I said, this is. This is my expectation around price reduction so that I can deal with this problem. I'm prepared to go ahead, but I'm not prepared to go ahead at the initial price that we had discussed or agreed upon.

Okay, so the termites are on the table. We're starting to leverage them. What happen?

So then the agent went back to the owner. I'd done quite a comprehensive. I'd taken extracts out of my pest and building report. I'd phoned up half a dozen, you know, pest management people to find out how these could be dealt with. I got quotes on what was involved to do that. So I'd put together a summary of my research and an extract out of the pest report that indicated the risk level of not doing something and what, you know, the pest inspector thought needed to be done. And I sent that to the agent and I said, you need to go and discuss this with the owner because this is serious and he needs to come back to me with, you know, we need to agree now to bring the price down so that I can deal with this. So they did that. They came back with, not initially. They came back and said where, yes, we're concerned about it, but we don't think it's a big. As big a concern as you do, and therefore, we're not going to meet your price reduction amount that you've asked for. Yep.

So that's when negotiating started again.

Well, that's where negotiation nearly fell over. Because at that point I was just starting to think this is all just getting too hard. You know, there's other options that I could be looking at that don't require this. I'm setting myself up potentially for risk, and that makes me uncomfortable. So I. So I said, okay, well, you come back to me with what you propose as the solution to this, and otherwise, the deals, you know, otherwise I'm walking away. And I think that freaked them out a bit.

I think that, you know, they wanted to sell, you wanted to buy. There was something that came up. Now, usually the thing that comes up is price and then negotiations around price. But it's really interesting here that the negotiation became around, you know, you'd gone over the price negotiation, but then it became around something else. And it's almost like, you know, there's a theory around the fact that you've already committed so much to this that if you had to go back and start again, that it would just be a whole lot more painful than pushing on. And in actual fact, this theory is similar to what happens when people are gambling. It's almost like, oh, it's, you know, I've upped $2,000 and I've lost a hundred bucks. That's okay, I can move on. It doesn't mean that much. But if you're down 500 bucks and you then lose $100, you kind of committed to keep going down to try to recover it. And there's a Nobel prize given to the guy who came up with this theory, which I'll remember. The prospect theory, I think it's called. But it's almost like this happens in negotiation as well. And when you buy a property, on average, we buy properties once every 10 to 13 years in Australia. This is the first property you've ever purchased. Now, you might be a good negotiator in trying to get people behind the scenes in concerts to do what you.

Want them to do.

But when it comes to this emotional purchase almost requires a professional negotiator to go up head to head with someone who is doing this day in, day out.

Absolutely. If I had known there was something, you know, someone like that out there that I could engage at that point, I would have, you know, I would have pretty much taken a big chunk of money and thrown it at that person and said, you step in.

Well, look, it makes me think what I might do is, you know, one of our experts in the first house buyer Facebook group. And if you want access to that, type in remind and we'll remind you when we're coming live for the show again. But we'll also send you a copy of the first time buyers grant and access to the group. But let me just let you see this. So the first house buyer group, what I might do is one of our experts, Scott from hello House. He's a professional negotiator and I had him come down to my mentor weekend in Melbourne recently and talked to My do a masterclass with the mentors and just the what agents say and what they mean and why they say it. As you said, there's a psychology behind it. And to have a professional go up and negotiate on your behalf is something that most people do don't even consider. So I might get Scott on the show next week and we'll talk about that. But if anyone has a conversation, you know, has a question about negotiation, jump into the first house buyer Facebook group and you know, ask Scott a question about it. Because I think this is where things can fall over and especially when you invested like as you said, you know, this is like two years in the making almost of oh wow, we could think about this week. You know, we need to save and then or we've got some money and where we going to buy and all the criteria and you get down to the negotiation, you get down to the house, you finally think you got it and everything seems to fall over. Getting a negotiator in up front could actually be an absolute game changer and takes the stress off you. Like you've done a lot of work already, so that's good. So let's wrap this up. Tell me what then happened. Tell me about the happy news that all came to resolution.

Okay, so we were managed to resolve everything satisfactorily. The deal was done, we moved forward and I had a very expensive bottle of champagne in the fridge waiting for settlement day which came and we had a few little minor issues there that were. Yeah, that at the last minute we're just not what my nerves needed. But anyway, we got over that. That's a story for another day. We got over that and settlement came and we settled. We did a bit of cosmetic renovations again. I did some painting of the kitchen and a bit of judging up on there that I saw in one of your videos. So that made a huge difference to how that looked. We moved in. We've been here. Well, we moved in on the 26th of September, so not even a month yet.

So tell me this, does it feel different? You lived in a house for 14 years. Does it feel any different having your own home?

Oh, so different. So different. I guess maybe not on a day to day basis because you get up and you go to the kitchen and you make your coffee and you do whatever you do and I go into my office so that the machinations are the same, but it's those little moments and it wasn't until we, Ian and I were putting up some artwork and we have a lot of Beautiful artwork that we just haven't. We've had in storage because we haven't been able to put up as renters. And we turned around and looked at each other and just went, oh, wow, we can put things wherever we want them.

You're giving me goosebumps. I think it's almost like I could compare it to the fact to getting married. I didn't think getting married was going to be such a big deal. You make a commitment. In our case, we bought a house, had a child and they went, oh, she'll get married. I didn't expect it to feel so different, but it just felt more secure. There was something that was a little bit different about it that you can't put your finger on. And I think when I talk to people who've been renters and then have a home, and even the fact that you can plan to stash it and move on to the next property, once you create some wealth where you are just whilst you're in your home, it does make a difference. It has that kind of extra little security blanket, doesn't it?

Oh, absolutely, yeah. It's definitely that. That psychological difference between this is someone else's that we live in and this is ours.

So tell me this. If you're going to give, like, three tips to first home buyers out there who are sitting there going, oh, my gosh, you know, she rented for almost 30 years. You know, she never thought she's going to have a house. She then didn't think she was going to be able to afford what she was going to afford. And then she kind of got wrapped up in all of these inspections and then got caught up in. In this kind of termite terror? What would be the advice that you would give to first home buyers who are just starting out and thinking about using, as you did, using some strategic approaches about finding a property that could potentially then be stashed away in the future.

I would say you've got to get your criteria right first. Know what you're looking for, because otherwise you waste so much time looking at things and maybe in the first week or so, keep that quite loose and just see what's out there. But once you've got a feel for what's out there, really sit down and nail down that criteria, because that will save you a ton of time and a ton of emotional what ifs. Because you can go back to the criteria and go, my heart says yes, but the criteria says no.

Yeah, good point.

So define the criteria. I think be prepared. You know, look at Things through a slightly different lens. The buyer and the agent have gone to a lot of trouble to present and this is something I learned from Styling Properties many years ago. They've gone to a lot of trouble to present something the way they want you to see it. But you've got to see it through your own lens. Are we going to be right here? Is if it's an investment property, are the tenants going to fit here? Is it going to be easy for someone to slot in? So don't just take it at face value and that that applies to, you know, look for opportunities but also look for, you know, what are going to be the problems down the track.

And you know. Yeah. And I guess the other thing is that it's important to realize that there probably is going to be a problem at some stage as well.

Yeah. That's life.

So, Em, some parting words. We really appreciate you sharing your first homebuyer story with us. So excited that you're about to hit that month anniversary. Hopefully that champagne can be popped. And I guess it's been a long time coming. So congratulations on the journey, being persistent, diligent and putting all of those things that you've learned over the years into play. But thank you so very much for sharing with us.

My pleasure. And I would say to anyone out there, you don't know what's possible until you look and find out.

So I'm going to put Emma's details mypersonalstylist.com in the comments below. If you're watching at the moment, please say hi, let us know that you're there and give us some questions. Put reminders in the comments below as well. And if you do have any issues, I'm just going to put this on the bottom of the page. If you have any issues in putting comments in, we'd love to see your smiling face and answer some questions for you. So we can see your face if you click on those links or put that in there. It allows us to do that. But Emma is an incredible stylist, a personal stylist. As I said, she's been through my wardrobe a number of times, which is quite scary for me. And you know, she does amazing events and styling, you know, amazing rock stars events as well, as well as, you know, being a marketing genius and brand specialist. So Emma, I really, you know, someone who is so confident in other areas of your life. I'm so glad that you persisted and showed the confidence and got some clarity and got your first time stashed away. Post 50.

Thank you.

Okay, we Will speak soon. Thanks, Em. Okay, guys, well, I want to just move on to a couple of questions that we have had this week as well. So, you know, often I get questions and you've been putting a lot of questions in the chat from the the episode last week. So, you know, thank you so very much for doing that. Now there's two questions in particular that I thought were resounding and I wanted to be able to pick those up for you and discuss them. Now they are going to involve a lot more information. So I'm going to jump over into. Let me just pull this up into the first house buyer Facebook group and if you want to know how to get there, I will put a link in the chat so you can but get over there answer questions so we know who you are. And we've had to ask a number of people to leave who've been trying to sell other people houses in there. So you're not going to have people in there doing that kind of thing. It is full of experts. We do have a number of experts in there that can answer your questions around money management, conveyancing, the pest and building inspections, as I said, negotiation as well. Obviously I can be in there and assist you with questions around finance and mortgages and sourcing properties. But there's a number of experts in there. Please ask questions. Please tell us what your biggest issue is. We're doing a bit of a poll at the moment and it's interesting to see that a lot of people are talking about, you know, just getting their deposit together, what they can afford or where to look. So let us know what your issues are and we'll bring on, you know, experts. If you'd love to be a guest, I would love to have you on the show. We're very fortunate to have Emma this week who has shared her entire first home buying story with us, which was years in the making. But I really loved helping who are just starting out or maybe stuck on one of the first few segments of our framework. I'll show you our framework again so that we can just be familiar with that. So our framework, as you can see, we know around the vision and setting out what you can plan to do and just having a vision for the next year is so very important. Then looking at what you can do to get everything set up, mortgages, your budget, what can you afford now, what can you afford while you live there, what can you afford when you move out? I'm very clear on this. I think we have a very amazing opportunity for people to Buy a house. Buy an established house and create real wealth for themselves using all the first home grants and deposit schemes and concessions that are available at the moment. Then the source of understanding where you can buy. So we're continuing this conversation over in the first House Buyer group. First House Buyer, not first time buyer because we want to make sure you buy a house that has proven over year over year that will outperform units and outperform new properties so that you can then slam it and stash it and create yourself real wealth. Now I want to, I'm just going to share with you my screen because I, I want to show you the. Here we go. Some of the questions that we have had coming through as well. So this is a question and I think it's a really important question and it is around the fact that Emily is a little confused at the moment about what she's up to and this is the question that she posed which was hi Jane, I'm up to the build stage of my house but looking to make the best out of my scenario having to live in it for 12 months and renting out the rooms. Now Emily is in Victoria So it's a 12 month requirement for her to live in the property, be established or new so that she can qualify for stamp duty, concessions etc. And once again put remind in the comments below and we will allow you to or not allow you. We will send you a copy of the first Home buyers grants and concessions for all states and territories of Australia. Look, she wants to smash down her repayments while she's there and start looking for her next property. So she definitely is part of the, you know, create the equity and then move on. I've also started my own business as well as working full time to help further smash down the repayments. At this point in my time the interest rate is 0%. I've locked it into a two year first home buyer's loan. Now this after looking at the Hume bank that she is with is actually not a fixed two year first home buyer's loan. It is actually just a honeymoon loan. So for the time first, first two years you get a reduced rate. Now she has an offset account that's associated with this loan and she's been able to fill up the offset account which has allowed her to effectively pay 0 interest. The offset account is against the land purchase because she still hasn't built the property. She says at the current point in my time my loan is at 3:30 for the house because she's also buying the House I'm building in the same area where there's other properties with less features that are selling between 456,500 and recently a property sold for 505,000. So, you know, she's obviously purchasing this property. As you can see, she has the property here that she bought the land for 156,000. So 156. And she's bought the property for 238 the house. So that's 3, 9, 4, $3,394,500. So $400,000 has been her build cost. And as I say, no, I don't recommend, you know, new properties because obviously they're obviously often in new development areas. You can't put your own mark on them. There's a lot of SEO issues associated with the fact that when the most desperate person in your block of units or in that house division decides to sell at a discount, that then becomes your comparable price, but it does allow you to obviously build at a lower price than what properties are being on sold for. Now, she bought this land a while ago and the good news about that is that in that period of time, the property prices have gone up as well. Her total cost around $400,000 and the $500,000 is where the sale point is. So she's got $100,000 of equity. So fantastic to start with. So her questions are, is it all possible and what can she do? Now, I called up the Office of State Revenue because she was talking about renting out rooms to help smash down these repayments, just to see if there was any issues associated with doing that. Now, the Office of State Revenue in Victoria, when I rang them, said there is no issues if you decide to rent out the rooms privately or have borders as well, but you have to live in that property for 12 months. Now, if you are actually going to have people living in your property, you need to check out in that state or territory what your requirements are to have bonds in place, what your requirements are to have lease agreements in place and declaring that income on your tax return. So make sure you talk to your accountant and make sure it is something that's profitable for you. Now, what's really interesting around this is the fact that she's trying to smash down her repayments as she is so she can move on and buy her first investment property. Now, I don't necessarily think that this is a fantastic strategy in paying off the loan. So let me get to that in a moment. The other thing is that properties so she's already got some fantastic equity here and the properties are renting at 4:30 to 4:50 a week. So we're talking about a really healthy return on money as well. So if you think 430, this is how you do the calculation. Let me bring up my little calculator. Hopefully you can see that. No, you can't. But the 430 as the rent times 52, so that's 22,360. And let's just say the property is valued at 500,000 because that's what the comparable sales are. That's a rental return of around 4.5%. Now the good thing about that is most interest rates at the moment are below 4%. So that means that your rent is actually higher than that cost. But here's the thing, if we had rent of around 430 a week, I would normally say allow between 20 to 30% of that for costs. So another $90 a week for costs. Now what that means is that the costs could be the insurance, they could be the council fees. When you rent the property out, it's going to be your property management fee. So just be aware of the fact that that there are additional costs as well. Now I'm just going to move on to the next question here before I go back to Emily's because we've got Simone here who's a first time buyer. She's buying an existing home. She's trying to be really creative about her positive cash flow. She's allowed, she wants to live in the house for six to 12 months. Then she's going to move back in with her parents. Yay. Then she's going to rent the house out to a good family and she so she can become financially independent. She'll be getting doing our renovation course to help to build wealth and freedom. But in the six month gap of the 12 months I'm tossing up to also get someone in to help pay off the mortgage. But then I don't want to have to find someone else and wary of sharing a place with someone who's a nutcase. I'll be salary sacrificing my mortgage. If I can please get some advice, that'd be great. I live in Tassie and planning to live it for some six to 12 months, then rent the whole house out. Hopefully maybe do the self contained box in the back which is something we teach in the Ultimate Guide to Renovation. Thanks so much to be helped. Jam Love listening to the replay. Oh, the house is costing $220,000 Love House prices. And Tassie, it would need some cosmetic work. Fantastic. Because you can then go and do one of our frameworks which is supersize it renovation. And then my first home will be nearly paid off. I find another one and do it and rent it and move on. Okay. She's an assistant nurse, so this is an interesting strategy too. So I rang the Office of State Revenue in Tasmania. Now, in Tasmania, the only way you can get stamp duty, concessions or any benefits is it is a new property. So that is a tick for her. The center save us some money and they only have to live in it for six months. And while she's living in it for the six months, it is possible to also rent out the rooms. Once again, very similar to what we talked about with Emily. She wanted to rent out the rooms to help us smash down the mortgage, as does Simone. She was looking for positive cash flow techniques. She can smash a mortgage off, pay it down so that she can then have it fully paid off and then she can move on and look for the next one. Now here's the thing. I don't believe in either of these circumstances where people are keeping the property that actually paying for a loan that you're paying down is in your best interest. Now I'm going to go over into the first house buyer group. I'm going to run a session in there regarding this tomorrow. Please go over into the first house buyers Facebook group because I really want to explain this to you and I'm aware that we're going over time today. But one of the things that I think is really important is when you buy a property and Even with a 5% deposit and you know you've got a 95% loan, maybe $475,000, your wealth is actually associated with the equity or the funds that you have. Now we want to teach you how to buy in a very good growth area so this $500,000 goes up in value. But a lot of people who are first home buyers don't know any different. And when they turn up to a bank or a mortgage broker who's not looking at your long term needs, they talk to you about a principal and interest loan and paying the loan down. And that's exactly what Simone and Emily are both talking about. Whereas I believe that when you're using these properties as a stepping stone and creating an investment property out of them, you need to be using something more advanced and that's an offset account. And the offset account is where all your cash goes in. But I'm going to explain to you fully how this works. Because as you property goes up in value, you actually have your account go up in value as well. And this is the key. If you are going to convert this into investment property and you are going to pay your loan down, then the tax deductibility or interest against that property is going to reduce obviously as well. But if you then want to pull that money out and the future and use those funds for you to be able to have as an investment property, sorry, as another home in the future, what can then happen is that you will find that this property will, or the funds that you pull out will not be deductible. So you're pulling property money out of an investment property and buying for the purpose of a home and those funds will not be deductible. So there's issues around this and I think that in the instance of what Emily and Simone are doing, great concepts around getting someone in to assist you and getting extra funds. However, I do challenge you around paying that loan down. So I'm going to go and set a time over in the first house buyers group. I will get over there and I will answer your questions as well because I think it's really important for us to consider what is possible and what is going to be something that is going to allow you to execute this strategy. Often what happens is that I find that people go in and they potentially will purchase a property or purchase something that is just around getting the lending set up for this purchase without thinking long term and without thinking what they can do to actually make their lending flexible enough to work for them. So, you know, really interesting in that respect and I really think that we should be looking at the long term with what you're doing because if you did need to move your mortgage to another lender, what can happen is, is that you have to refinance and if you refinance, you have to pay mortgage insurance again. And if you're lucky enough to be on the first home loan deposit scheme, refinancing could actually prevent you from accessing that scheme again and means that you will have to pay mortgage insurance. So lots of pressure and lots of problems there. So I just want to make sure that you're aware of that, that you see the potential and that you understand what is available for you. So that is. Well, we're coming to an end right at the moment. I want to create for you a little bit of a speedy recap. Where is my speedy recap? Oh, I can't Even find my speedy recap. Maybe that's it. But I really would like you to understand the importance of being able to purchase a property strategically. So head over to the first home buy first house buyers group, and we will have that conversation very, very soon. So let's do a speedy recap. Oh, my gosh. We have covered so much today. So first and foremost, we had a chat, if you don't remember, with Emma. Now, Emma was a first home buyer. And Emma has recently built her first home at the ripe old age of 51 because she had given up with the fact that she would ever be able to buy a property. Now, due to a certain windfall and bank of mum and dad coming in to assist, they were given the opportunity within the last couple of years to consider buying a property. And they looked everywhere around Sydney and then they started to get laser focused, which is what you do when you have a vision, get laser focused of what you want to achieve in the next year or three years. Because remember, this house is not forever. They got laser focused and they looked at what they wanted to achieve next. They moved on to setting a criteria. So once they knew what they wanted to achieve, they then had with laser focus, a criteria. Now, it took a little while to get that criteria. A lot of frustrations around what they could afford and when they needed to look. But they got rid of the areas they couldn't afford. They decided on buying a house and they needed three bedrooms. So being crystal clear on that and on their price point point got them to the area of the central coast. Once they got to that area, they then looked at their money management and what they needed to do to be able to afford a property going forward. Then they looked at sourcing the property. So this is inspections. Now, inspections is always fun when you start, but it can get really demoralizing. And a can of V always helped me on inspections. But the reality is that if you're constantly looking down day in and day out, and you're finding things that you can't afford or there's not much on the market, it can be demoralizing. And this is where people settle. And to Emma and Ian's credit, they stopped, they regrouped and realized that their price point was a bit too high. In the suburbs, they're looking and they changed their areas. So this is sometimes what you have to do. And there's a little bit of a grieving period that comes with it. There is so much mindset that's actually associated with buying this first property or any property. So once they then had sourced that property, they moved on and they had done their inspections and they got to the point where they had almost negotiated the deal, they got the price agreed, everything seemed fine. I stepped in at that stage and insisted on a pest and building inspection. And thank goodness they found live active termites. And these termites were active. There was in two points of the property. So this is where it really involved understanding whether it's a walk away or a leveraging situation where they could actually look at the cost of dealing with these termites and have that taken off the price of the property. They persisted, they looked at what needed to be done, they spoke to the owner and then they negotiated. And the negotiation at that time became really, really painful as well. Now this is where a lot of people would just give up. But the tenacity and the drive of Emma and Ian kept them going and they finally settled their property and they're about to enjoy their four week anniversary of being in the property. So this is the speedy recap of the first home buyer show and the interview with Emma. And it just goes to show you the journey of going from hey, I'd like to buy a house to actually settling on the property. Property is one that's fraught with a number of decisions, can be fraught with a lot of frustrations. But if you follow the process, understand what to do every segment of the way, and that's what we're here to help you with, then you will absolutely slam this and you will have a potential investment property in the future that renters want to rent and buyers want to buy when it comes time for you to sell. So that's it. That is the first home buyer show for this this week. I hope you have enjoyed it and I hope that you enjoy the future shows as well. Please put remind below so that I can tell you when the next show is on. If you'd like to be a guest, please let us know that you'd like to be a guest because we would love to have you on the show, hear about your journey. But more in particular, I'm here to help. So if you want some one on one help, here we are. So without further ado, I would love you to comment and let us know if you're enjoying the show. Tell other people about it. And that is the first homebuyer show number two. And we're wrapping up all the best. Have a great week and I'll speak to you soon.

Bye. And that's it for this week's first Home Buyer show. And Jane will be back next time with more tips, tricks, resources and interviews.

See you then.