Module 4 Q&A Call - 10-12-2013

Good afternoon. Hello, it's Jane here and welcome to module 4. Q&A call. Just testing our audio. Can someone type in the question box that you can hear us, please?

Great.

And of course I have with me today my co creator of the Altamont Garden renovation. Hello, John.

Thank you.

Hey Jay.

Hey everyone. Well, this has been a pretty good week actually, isn't it? We've gone into module four, the right property for renovation, and found out how to go about choosing the right property to make a profit. So we've done a lot of work, module 1, 2 and 3. And in actual fact we've probably had a little less to do this week. It's more a bit of reading and preparation for when you start looking. So this week's module has been shorter and there are some shorter modules just depending on the topic. It's our intention to always give you every single thing that you need to be successful to really master that topic, but not bombard you with every possible piece of information out there. So we'll never give you extra information just for having out a module. There's no point in doing that. We know what you need. If there's something that we're missing that you think that might be required, let us know. But we want to give you things that are actionable now and not overwhelming. So therefore, each module has its own natural length and this one is a little bit shorter, especially after the last one.

Yeah, that's right. Well, it's not so much theory, it's about a bit of practical this time. So even though the text might be short, there's a lot of actions that need to be carried out.

Exactly, exactly. And I think that module two and three were really, for me, they're the things that people should be still going on with. Now we don't assume anyone's on a dot map or a price bin map straight up, but you now know what to do. So I guess that's where we are now. Look, I'm really looking forward to your questions this week and I just want to get some quick housekeeping out of the way first. If you're on your computer and you're experiencing any problems hearing us, or perhaps you can't hear us during the questions, there's an option to call on the telephone. The telephone number can be found in the sidebar under the audio options drop down menu. You can also call that number from a landline or a mobile, or if you have a Skype number like me, you could call in via Skype. When you have a question all you need to do is raise your hand. We're getting pretty good at that. People are finding that little hand icon in the sidebar. It is small and hard to see, but look, here we go. Someone's found the hand icon already. Fantastic. Yeah. So look. So it does just live in the little audio tab and everything there that you can need. If you have any questions, just type them in the question box and we'll do our best to answer them. When you do click on the hand button, it does notify me that you have a question. I will give preference to those who can jump online and have a question via audio. So we can have a bit of engagement. And I can really understand the use of real information rather than trying to respond to sometimes a hurried text whilst on a bus, as we found out last week during our webinar. Look, you can also write questions in the question box. Realise that people may not be able to talk for where loud, be they on the bus or at work or.

Wherever Someone said there wasn't a hand on the iPad. So maybe just type in that you've got a question and Wells is family.

Maybe she can tell us where it is.

Yeah, can you send us a screenshot of that, please? To our little presentation.

Just an email at support.

Yeah, just to supportOurPropertySuccess.com and as you.

Know, there's no silly questions, so I really encourage you to put up your hand, have a chat to me and John. We don't bite, do we? Well, not this week. As always, be sure that you're making good use of the Facebook group. I can see there's some questions on there. We've been on there this week and answered a few, but we'd love to see a lot more. And if you're having some trouble with your dot map or your ping map or some queries about the checklist, et cetera, just jump on there and put them there. Paste them up. We're all a bit of a community. We're here to help. Sure. No one's going to run away with your selected areas that you're doing analysis on. As you recall from week one, everyone's roles are different.

Price points. I think it's pointless trying to guard areas or anything like that. The more you share them, the more you learn.

In my experience, and I'd say this to my clients so regularly, is that when you actually have been through at least these first three modules that you've been through, that clarity of your buying criteria and your goal and what you'd like to use the property for lifetime comes along early in the week and I deal with people regularly get disappointed because they they've been gazumped or they've missed out at the option and they just thought this is the exact property they want. And you go through a period of kind of, you know, keeping yourself and what if, and what could I have done better? Or you know, you kind of spent more money, etc. But you know, you know, your numbers now and then module five will get even closer to that. But it's really important that you do realize that once you start this process and you have this criteria, it's so easy to actually go through lists and lists of properties and understand which work being much done. Okay, so this week you receive the tools that we use to identify the right property and work out the feasibility of a project using the four steps of property due diligence. Now, I'm pretty sure that most people who have inspected a property for renovation in the past possibly haven't been through this many checklists in actually working it out. And we talked to quite a few of the VIVA testers whilst we were going through the course and as you heard in some of their videos and testimonials, some of them had done 10, 11, 12 investments and renovations and then looked back and said, this just doesn't work for us. So it really didn't work. If we'd done all of this research, we wouldn't be in the situation that we're in today. So, you know, although some of your decisions aren't all bad, it could just mean that, you know, you could have made more money or there could have been a better opportunity out.

Yeah.

So, you know, one last thing, you know, tech support, we're not here for tech support. If you're having issues downloading things, videos, etc, etc, please email us@supportyourpopysuccess.com I think that this week you've got all the videos downloadable.

Yes. Yeah. And going backwards too. So yeah, they're downloadable. You can also pull those mp3 files into iTunes and it's got the artwork and the labeling there, so you know which module it's from and so on. So sitting on your iPhone or your smartphone and you can go for your walk or listen, go to the gym, walk wherever you are.

Oh good. Okay, so let's go and have a look through, I guess these four steps that we've kind of clicked off from the property inspection checklists this week. We've got. Step one is carrying out an Initial property inspection using the Property inspection Checklist. Now this is the inspection checklist that you use. When a property first comes on your radar, you organise an hour with the agent to go through the property and to decide whether or not it's a contender for further investigation. Now the property inspection checklist is not to be confused with the Open for Inspection checklist that we found in Module 3 Suburb Due Diligence. That Open for Inspection checklist is purely for recording the basic details of multiple properties for the purpose of market tracking and getting to know your suburb and to flag a potential property that you ask to spend more time with the agent to go through the property and then utilise the property inspection checklist. I think that sometimes that first hour, you know, when you're doing inspections, John, you know, sometimes you're running in, you're doing what, five to ten minute run throughs?

Yeah, sometimes I'll do three and four in a half an hour window because.

I'm just in and out and it helps. When you're in the one suburb, you're really targeting the suburb.

That's right. And mind you, I do. It's only if I'm kind of seeing an agent for a second time or third time in a day, which often I am. But I'll do that normally I'll stop in restaurant, have a couple of minutes, chat with the agent and make sure that I'm on there at the top of their list for when unrenovated properties.

Exactly. And I think that, you know, this is because when you're looking at properties and you get into one suburb and you're running through them all and you're looking at the high end ones that you're trying to renovate up to and you're looking at a couple of rentals and you're looking at predominantly properties that you can negotiate down or have opportunity to renovate, you know, you rush it through so quickly. This is really, you know, where you start spending time and going, okay, I'm going to print out this entire cheap piece if I'm going to spend the time and go through and get to know this copy and see what opportunity there is.

Yeah, so step one is the one where you ring up the agent and say, hey, once I see you've got this property, can I organise now to get through? And the other thing I always say is I want to go through by myself. Because what they tend to do with these type of inspections is they'll drum up as many people as they can because it's a Good use of their time. But also it creates that kind of impression that there's demand for the property. So they want to say, oh, well, you.

You better.

You know, you can see John over here. He wants to. He's obviously filling.

He's been here for an hour.

Yeah, that's right. So you better get in quick with an offer. So I always say to them, hey, I want access by myself. And I've actually done a bit. Someone has said, yeah, yeah, no worries. And then they say, oh, no. Well, this person wanted to come through, so I just want to do this one stone, so I'll come back later.

Give me another time.

Give me another time. Yeah. And again, it is an hour. But still at step one, you still want to be ditching a property at this point. So it's still really that. Is it in or out kind of phase. It's not much further than that.

I really find those checklists are really handy in the future because you might find that property comes on the market in a year's time and you can pull out quite a lengthy interrogation that you've done on the property and you could go back and have a look at what the other people have done and see if they made some money and learned some stuff. I know that I've done that on numerous occasions. Staple the flyer. Yeah, and just file it. So you've got a more intricate filing system than I do.

Sampling works. I see the bailers often do that. They just staple it to the thing and they just put it in soldiers, you know, a column saying what it's sold for and what it was sold for per square metre and that kind of thing. But whatever works for you. I tended to divvy up my suburbs into the groups that I find most similar. So that are around. Because I tend to think of suburbs of having pockets of medians rather than the overall median, particularly when I'm looking.

No, good point. Well, I guess that takes us on to the next one, which is the step two. And this is really where you start carrying out a full appraisal of the property, property's current and future renovation value, using the property appraisal checklist. It's really a comparative checklist, isn't it? So, you know, we're looking at nearby properties, you know, what level the property's been renovated to, but more importantly, what's its resale or revalue level. Because this is how we're going to determine if the renovation project is viable. You know, if there's that discrepancy that we need. So remember our formula. Is there any value minus the renovation costs, minus all the expenses and your profit margin is what you need to purchase the property at for it to be a viable renovation project. When you're doing that calculation, don't forget the profit margin because the profit margin is your money, isn't it? So there is a few occasions where you may sacrifice some profit margin. If you, for instance, know that it is about to go through huge growth or you know that you're going to get a huge rental yield from that property or you recognise that there could be some changing circumstances in zoning so there could be the growth led by that kind of twist. But we're all about renovating for profit here. So you need to look at the overall profit and 99% of the time that comes directly from the effort you put in in the renovation that you do.

Yeah.

The other thing is if you've done your two years or three years with comparable sales for your dot map or you'll have that data there re training anyway, it gets easier. The more you're going through the suburb.

The easier it gets to do those comparable stuff. Exactly. Because you've already built up your database and that's module three, that open for inspection checklist. You've started all that together already.

So sometimes that's just you literally physically been through the property.

Exactly. Okay, so then we get onto step four and step four is to carry out the full property due diligence using the property due diligence checklist. Now this checklist covers off some of just the compliance stuff, the council and legal requirements that you know should probably be done by your solicitor or your conveyancer in most cases. But things like zoning, things that could just hold you up, you just need to make sure that they have been checked. There has been occasion where some of these things haven't been checked. And although it might be someone else's responsibility, we want to definitely make sure that it all works. Now module four. So things that we covered just really quickly. Module four, the buying around the median. Why that was important. The five biggest hidden costs. Building and property inspections. Why we would use a professional property and building inspector. What are the low and no return items for some of the renovation things that you might consider doing. Recognising a property's potential renovation Twists turning an existing room into a bedroom. Buyer's objections, Identifying a desirable location. So I guess we should have a couple of questions about that or that was a shorter module. It covered a lot.

You think so it's got Depth. It does have depth, doesn't it?

Okay, well, we've got some questions coming through and I think we'll probably jump over to Ros.

We've got our speakers working this week. If someone could actually ask a question, it just please us so much.

Ros, you've got a question there. Are you able to answer it via microphone?

If you put your.

You on, have a go. She's on her iPad, so it may.

Or may not work. Let's see.

Hey, Ros, can you hear us?

Hello?

Yeah, we've got Roz. Ask us your question.

I have a couple questions. The first one was about step two, the property appraisal checklist. I just wasn't quite sure what you meant. On page seven, it says first purchase scenario, second purchase scenario.

Okay, so this is your conclusion. So let me just jump into this.

So that actually comes directly out of what I'm using day to day. Often what I'm doing there with the first purchase scenario and second purchase scenario is thinking about what offers I'm going to put forward. So potentially what terms. And also, even if there's potential for some kind of JV with the owner, I'm often thinking about that too, because I'll ask the. In finding out details about the vendor situation and talking to the agent occasionally, there's kind of someone that fits the bill for, you know, potentially to give you early access or potentially to do some kind of joint venture where you actually don't exchange. And we're kind of getting into more advanced territory here. But, yeah, so that's what I'm thinking about with that. But I would be thinking about, for the most part, I'd be forming your terms of your offers and putting in those multiple offers. That's what I'd be using.

Yeah, exactly. So rather than going down that advance route, some of those terms to the offers, which we haven't gone into, we're getting into some future models.

Yes, you are. You're up.

So things like. So let's talk about them. Rather than giving people a yes or no, kind of pushing them down a yes or no response. Here's my offer and expires at this time, you might actually put in a multiple offer, which could be, you know, there's longer settlement, but I will pay your asking price now, or it could be there'll be a shorter settlement, but I want a $20,000 discount. That could be, you know, a first or second option that you could consider, or even having access to some of the renovations. So does that make a bit more Sense.

Ros. Yep, yep, that's great. Yeah, well I've got that on the screen.

So Ros, ask us the next one.

The next one's about your Step 3 chart or sheet and where we have to write down quotes and things. I was just thinking at this stage it seems pretty difficult to get tradies to quote when you have an even bought the property. Was there some kind of cost estimator tool that was part of this course.

That we can use? Glad you asked.

Yeah. So the next module you're going to get a budget which we've been working furiously behind the scenes to get up, which has actually got some estimates built into the budget. So we'll talk about. Now's a good enough time to see that.

It's got a.

Essentially it's got a drop down on it which allows you to put in, it's called a spec column, a specification column. And what we've done is we've entered in all our prices that we've paid for items over the years and we've kept our budget spreadsheets and essentially put mine and Jane's budget spreadsheets together and made this super, super budget unlike anything.

You'Ve ever seen in the screen before.

And that way you can actually put in an item, say you need three of something and then actually use the drop down to select bargain price, which is, you know, what we've put in, and then a kind of a standard price, middle of the road price and then a retail price. So that can actually, you can work out estimates from that. But the other point I just wanted to make is that step three, the property evaluation checklist, it's on the screen now. Yes. You would normally at that stage put an offering unless it's prior to auction or there's other circumstances in your state that allow you to do that. I think for most states that's pretty doable. But essentially you wouldn't go to the effort of doing your quotes and doing the full property evaluation checklist unless you had a pretty good idea that you were going to buy that property.

Exactly. And this is, as John said, step one and step two get you a lot of that information. Step three, your offer is in first and you know that you're willing to put in all this extra time and effort before you go into this evaluation checklist. So if it's completely off the table, then it's not going to fly. You're not going to be able to spend five, six hours doing this. Five or six hours?

Yeah, probably. I mean we'll see now that we've got this check this budget up and running a whole lot quicker. Yeah, that's right.

Get all your numbers.

Yeah, yeah. And so just to kind of clarify there, those offers would be subject to something like ideally a due diligence. If you can make that try often an agent's going to kind of not let you anywhere near that when you.

Say that people don't know what you're talking about there. It's just a general catch all cause which is subject to my due diligence. Give me 14 days to make up the mind.

That's right. So it really gives you any hours you like or otherwise financing you'd be able to speak to that you could do it to your satisfaction.

Yeah, exactly. So if I'm adding the finance clause, I would definitely make a finance that's acceptable to you in terms of acceptable to you. Because if you can imagine you're putting in a finance clause that says give me seven days to get financed and the lender can turn around and say and you can try to use that to pull out or maybe you have been declined by the bank and the banker says, hey, here's some finances at 20% per annum. And you're like no, no, no, I don't want to pay 20% per annum. So you know, I think it's important that you do be very specific about your terms and your conditions that you do put in your contract. But specifically around the time to do your due diligence. This is going to take you a lot of time and effort and if you're serious about this, you know, go in for the offer first and get your time up and that it could be subject to finance at the moment. Banks are busily doing lots of different specials and fixing rates, et cetera. Some of them are taking eight days to pick up an application. So if you've got a seven day finance clause, don't expect to get a formal approval by then you're going to have to have an extension on that. So make sure you tic tac with your broker or your bank to make sure that you can get things done in the time frame.

Other things are like building approvals and stuff like that too, which can also go back. Like for instance, an offer subject to a DA or a building permit. Yeah, so that might be part of your multiple offers as well. When you've got your best offer gives you a long time to actually fully suss out whether it's going to work or not.

So does that help, Ross?

Yeah, I Just want to check the timing. So ideally you're saying we should put in a clause with one of our offers saying, subject to due diligence.

Is that what you're sort of saying?

And that's when you would do this really extensive form. Yeah.

So between step. So basically you've done in module three, you've done that first inspection and gone. Yeah, this is one I want to have a look at more. Step one property inspection checklist. You go and spend an hour and you go through the property. In actual fact, this doesn't need to have a lot of work or this is the kind of things that I could do here. This is what I need for this property. Can I replace or repair stuff? Then you go into the next stage and you go, oh, let's just see what the top end, you know, the renovated property is going to look like. So you get a new goal. Then you work backwards. Chandler that now has a fucking end value is going to be 500. The rent is going to cost me 50. The holding costs are going to cost me 15. I want to make 50. Now I need to buy it 385 or whatever that number works out to be. So you starting that working backwards and you go. Then you would go in and you've already done some work in that spreadsheet that you did last week. So you've got. What's the discounting that is in the suburb, if there's a 10% discounting on the asking price and the. The vendors asking for $400,000, then you might start. 10% is what they're accepting. So you might start at 12% below that. So now all of a sudden saying, well, here's my offer of $3.55 and they might market you. But this is how the things all combine together. Now, obviously we've discussed in a very hot market, there's not a lot of discounting, so it might be the asking price, but that's when you go in and you put in your offer. Now, your offer can include so many different. It would be nice to have a blanket offer that just says, hey, give me 14 days to work out if I want this property or not. What we've seen is most solicitors encourage their vendors not to have something as broad as that. So other terms you might put in are, this offer is subject to me having acceptable finance. Finance is acceptable to me to be approved for me at the time of 14 days. It might be subject to a person building inspection. It might be subject to the fact that you can get the vendors out in six weeks, the tenants out in six weeks. It might be subject to. I want the chandelier and the front gates. It could be subject to. I want to have access to my tradie's, reasonable access to get them into folks in the next six weeks between exchange and settlement. So you have so many different things that. And we kind of look up all that off in later modules. But there's so many things. But this is the kind of stage where you go, okay, here's my offer. Is it worth going to spend five, six hours to go and work up the quotes, you know, using the budget, work up some experience kind of costings and work out whether it's going to have legs or not. Because if you think if I can get this at 385, this is really going to fly and the men is sitting at 4:20, I wouldn't be going and spending five or six hours, four or five, whatever time it takes to do this in getting the research done if there's no way of you meeting in the middle. So that's why at this stage you put that offering first before you go and commit to doing all that extra work. Does that apply to the job?

Yeah. Yep, it does.

Excellent.

Two young ones.

Since we've got you here, I did.

Have one more quick question, if that's okay. This is more of a general question and I was just. If you're renovating to rent, so you're holding, you know, trying to build up a portfolio of properties, do you think it's better to target different suburbs for each property you acquire so that you diversify your portfolio rather than having all.

Your eggs in the one sub sort of basket or suburb. I think the question about diversification across geographical areas is a really good one. And I think it also backs up the question that you probably go through when you start building up your portfolio about diversification across different strategies or different types of properties. So renovation, renovate to rent. I mean, obviously you put the time and commitment and the effort into finding this property and doing the suburb due diligence. And you've probably got three to five suburbs that are on your watch list that you're looking at. The reality is most people can't rush out and buy one after the other copies anyhow. So you're probably doing subsequent analysis every year or two years so that when you have either the equity of the cash to make the purchases. I think for me personally, having too many properties in one suburb means that you're subject to the same economic Drivers, you're subject to the same property market. I can definitely tell you having properties in Wellington and New Zealand, Sydney, Melbourne and having properties in different markets. One's going up, the other one's usually stagnant and when the other one's going up, you know you've got some equity that you can pull out and potentially going to renovate the other coffee. We know that, you know the markets in Australia, you know, although everyone thinks that acts surprise when it happens over so many years. We've got proof that says Sydney market moves first, then Melbourne, then Brisbane. You know the numbers are there and the history's now so the market's moving up and up and pull some equity and then go and do a bit of a reno and make an existing property better in Melbourne. I know its value is going to go up even more so because of that compounding. So yeah, good question. I think that from my point of view diversification is really important. What do you think about that, Ros? Is that where you are at the moment?

Yeah, that's what I would have thought but I just wasn't sure because given how much effort. Yeah like you said, you do put into the subject due diligence and all that.

Money. Yeah, no, no it's not. And what you'll find, you'll find with your, I mean you may change your strategy as well. You know, you might be targeting for instance an older style eastern suburbs unit in Sydney that you can renovate and that price point could be quite a bit high. You know, two bedroom could be a $600,000 coffee and then you could from the same dot map that you've done, you could start looking at that, you know, in 18 months time and go oh, in actual fact, you know, some of these outer outers suburbs, inner ring suburbs, but outer suburbs and that kind of middle ring but not near the inner ring, they've got some opportunity. I can see there's a trickle effect happening here and there could be some really good opportunity around you know, the 4, $500,000 mark to buy a really old style house or sending and do something with that. So that dot, Mac, remember it's 10 year so it's not going to change considerably in a year but unless there's been a really hot moving market which we're seeing at the moment. So you know, I'd be updating that map in a year's time anyhow. But usually what we've seen the last few years, that hasn't really changed in the last three to four years. There hasn't been a lot of changes in that growth.

Do we know when those two new figures come out?

Different states come out at different times. So from the valley of General. Surveyor General. Different departments, different states. Thank you so much, Ros. I really appreciate your questions. Okay, let's jump on to another question. We've got Nigel here has a question. Nigel, are you able to chat with us? We'll see if we can open up your mic. Hi Nigel, are you there? He's typing.

Oh, we can hear you typing.

You're on.

The mic works, does it?

Yes it does. You're on.

No problem.

So, quick question.

What are your guys thoughts on. We thought you were going to type in. I don't have a mic yet. Sorry to interrupt.

I just realized I do have one here. That's right. Just quickly, what are your thoughts on using a buyer's agent in the renovation model? Is it a doable thing or is it something that most buyer's agents don't understand? The renovation model and the costs involved.

That you've got to get back and.

The profit margin because obviously from our end it would save a bucket load of time going through all these due diligence that we could put into better profit making activities.

Yeah, look, and I'm lazy.

Yeah, I know. And sometimes when you start seeing the mountain ahead of you, you're thinking, jeez, how can I shortcut this? And that's one of the reasons we.

Just did three months of due diligence in a certain area and realized at the end of it that we probably got it wrong.

I think we discussed this last week, didn't we?

We did, yeah. Briefly. It was the cessnock area that we were talking about. And we've realized after nine or ten weeks of constant visiting, we realized we'd probably pick the wrong area. And I'm one of these people that always prefers to pay someone that knows better than what I do.

Yeah, me too.

Even if it does reduce the profit a little bit. In my thoughts, if they're going to pick a better property, they're probably going.

To come out net even.

Yeah.

And I just want to check whilst I know that you're there. Can you hear Nigel's questions? Anyone? Yep. Good. I just didn't want to make sure that I was having a one sided conversation here. Everyone else, I think, Nigel, I was really actually happy after the discussion that we had last week or the answer I could give you last week around that Cessna analysis. Because on one hand I know how hard it is to let go when You've gone down a path and you put time and effort in and you're like, you know, this is it. This is where I'm going to be. I'm committed to buying this area. I'm going to climb it, God damn it, the property. And then you maybe you have some insight like this course and some of the analysis and the tools that you have now and you start going, oh, wait a second, have I wasted my time?

There goes three months.

There goes three months. And the reason I was really kind of happy that we had the opportunity to answer your question then was because a lot of people do just buy because they put so much time and effort into that area and they then reap the issues associated with that for years to come. And it's not been put back three months. It could be put back three to five years because that's right.

Yeah.

You don't have the.

I don't have a problem changing area.

Yeah, it's good. Good. So I kind of, I felt really sorry for you, but I was kind of really relieved that we could actually kind of give you some direction there because it's, you know, but you put three months in and now you're feeling, oh my God, I can't go through it again. So let me answer your question. With a lot of my clients, they engage buyer's agents. And you'll see at the bottom of the module this week there's a section on how to select a buyer's agent and work with the buyer's agent. Hand on heart, if I had, if I was out there buying properties again, I'd be getting a buyer's agent. And I deal with really fantastic buyer's agents almost on a daily basis who are out there assessing for clients. Now the thing that I see that is the successful way of using advise agent is to go to them with your buying criteria very, very clear. And having had some investigation yourself about the areas. So there's people who are actually on this Facebook, in the Facebook group who are doing this actively at the moment. So I encourage you to post this question up there and I'm sure that they'll share their experiences with, with you because I'm working with and in actual fact, my sister, who's on the Facebook group as well, has flown up today to look at a property that a buyer's agent had bought with her. And she was very, very specific about the renovation potential and the conversion of.

A three bedroom into a four bedroom.

House within certain suburbs. So that buyer agent had done that analysis on so many suburbs and could come back to her with growth and demographics and all those information. But in addition to that, also came back with a plan of what the renovation could look like and how much an estimate would cost. And so, yes, there are agents that do that. The issue that she then faced, and I'm sure she will be happy to share her experience with you, is that a lot of the rental agents then questioned the validity of conversion of rooms and said in this area, it's not an ensuite that's beneficial, it's a deck. So all of a sudden she got confused and she engaged a valuation company that meeting her on site this week that are actually going through a number of options with her and saying this is what value and rental return in our opinion for this area, this will add for the different options of renovation. So, yes, you can find the right person and you can really target the question and the query that you have from a buyer's agent point of view. But the work that you've done so far, don't discredit that. Use that.

That's not written off. We know that we learned a whole lot through the process.

Yeah, that's right. You learn each time you go through it. I've done exactly. Absolutely. It's very annoying, particularly when you've done three months in a suburb and you kind of see some data from another suburb and you kind of realise that you're in the wrong suburb. And a couple of guys that were testing the course did exactly the same thing. They said, well, you've caused me some work because now I realize I'm the wrong suburb.

Exactly. I was working with a client this week who was saying, you know, we were looking in a certain suburb in Sydney. We realized the market moved. We followed the trickle effect. We jumped out to outer suburb because we thought we'll be ahead of it and we've been priced out of the market there. And I'm saying, well, in actual fact, you've been moving with the market. You haven't actually been ahead of it. So when the market had started moving in other areas was the trigger that they found to then move to that area. And in actual fact, in the move three months beforehand, the data was older. They then went, you know what, we're in the wrong space. We need to be way ahead of this game. And they've started moving.

Nigel. I've actually started using a buyer's agent this year in Melbourne. The reason you just described. And so what I've done is I've still done my you know, module two and three, the suburb selection and the suburb due diligence. So. And then I've kind of said right here, suburbs that I want you to look in.

Okay.

Getting the advisers agent who specialises in those areas too is important. You're not just getting a.

That's right, yeah. And I'm still. So I have a pretty strict criteria.

So I guess it's the same with any brief. It all comes down to giving them a good brief.

Exactly.

And I found a little bit that it's taken some tweaking. We've had him now for four months. No, no, a bit less, probably. Three months. And just looking at four suburbs which are really good renovation suburbs. And then we can concentrate on a couple of other suburbs. So he's just responsible for those suburbs. I kind of thought it would be a little bit. I probably thought I could advocate a little bit more work for my. Than I thought I would. The way I kind of briefed him was that I'm really interested in what these properties are going to sell for at the resale level. And he kind of keeps on coming back with, oh, no, it's really good buying. Really good buying. And it's kind of been a process of education and saying it might be good buying, but if there's not that spreader values in the street, and if we can't sell at that 80% mark, then it's. It's not good buying for us because it doesn't stack up as a deal. So it's taking a bit of to and fro and he's getting better now. But I guess the point I guess I was making there was. There's never a point where you can abdicate the due diligence a whole lot. Yeah, but they can.

We've got no problem sitting down and coming up with the areas we want and the ideas and what ones work and then handing it over to find the actual properties. Yeah.

And do the inspections for you. I mean, you know, especially if you're.

Absolutely.

Yeah, that's the hard bit. I mean, I'm assuming you're not living in Cessnock. So you were driving.

No, we're in Sydney, so we were. I also think they bring a lot to the table with the negotiations, particularly if you're known in an area. Agents will tend to think that they'll hold out a little bit because they think you've got a little bit left in the kitty. Whereas your anonymous buyer's agent is negotiating for you. That's right.

Yeah.

That's.

And the other thing is, I mean, John, you mentioned previously that you stick around a bit and have a bit of a conversation to the agent. So the agent knows that you're in the market. But the reality is the 99% of buyers, they're in the market for three to six months and the agent then loses that relationship. But with buyer's agents, they have that, they have that ongoing.

They're there all the time.

Top of the food chain, really.

Yeah. So they know that they're going to look after them, they'll be back next year and they specialize in the same area. They're not going to be rushing off to. They're buyer's agents for the eastern suburbs of Brisbane or the northern suburbs of Adelaide. So they do specialise. So they do have those relationships. And I think that also with a good buyer's agent, they charge differently. You need to understand, I was just.

About to ask about standard fees. How do they typically work? See, some are fixed fee and some are based on percentages.

I think our one was 1.5 of the purchase price and then about 1000 bucks up front to engage them in the first place.

Okay, that's good.

I have seen prices between about $8,000 and $12,000 for properties under 500,000 and I've just had a client buy a $1.5 million property in Sydney and I think that cost 20. So. Okay. Different agents choose, charge different rates.

For us it's going to be about 15.

Yeah, about 15. So I mean, personally, I don't know how, how tax deductible is that? If I was an accountant I could answer that. Do you have an accountant on the call? Cost of acquiring an investment asset and.

The chance of getting something off market? I think, yeah, that's one of the good parts.

I reckon they're going to get a much better deal than us because they get access to all those off market deals a whole lot easier than what we would.

Yeah, and that's what we found because we're constantly trying to get those off market deals and we found that they tend to go to the buyer's agents first and then they come to us next. And that's after doing a lot, a lot of groundwork too.

And to me that that could save you a good five to ten grand anyway on that off market deal that pays for itself already, let alone the time benefit.

Yeah. And you can expand your search area a little bit too, so you're not having to physically get through and do the opensea. That's true. Or Suburbs.

That's another good point.

And you're usually limited to your weekend time frame, so the agents can organise times throughout the week to see these properties. But you know that deal I was talking about in Sydney, that was an off the market. The agent came with the client and agent came to the buyer's agent and said, these people want to sell. Have you got anyone who's interested? And, you know, that saved my client so much time and effort. She bought from overseas and she's based overseas. And so she was really dependent on that agent knowing specifically her criteria. And I spent quite a lot of time actually with her coming up with it. She actually took my suggestions a whole lot more detail than I'd ever seen before. But she took that photos of her current house in Canada and included that in the remit and said, this is the furniture I have that has to fit into this house and even a big picture of the wardrobes going. And yes, I do have this many clothes. I will need a lot of wardrobe space. So he was very, very clear on what she needed and she got exactly what she wanted. Really? Yeah, exactly.

Specific brief.

Exactly. That's what it comes down to. So, yes, be specific. Definitely not against using buyer's agents. I think we probably had a buyer's agent. We have a buyer's agent on the Facebook group who might make themselves known. And we also have a valuer on the Facebook group as well who's been very, very generous in their contribution.

Yeah, the only word of caution, I would say, is suburb selection. I would still be doing the suburb selection yourself. If they're suggesting suburbs, then going away and applying all those tools in Module 2 to those planning on doing in our budgets to your other suburbs.

Same thing happened yesterday. A client bought a property on the weekend and sent me some details for the finance yesterday and said, I'm not too sure if this is going ahead or not. The buyer's agent, you know, I'm working with this buyer's agent. So I contacted buyer's agent and said, I know what the strategy is for this client. Tell me how this fits in. Is this growth or yield? It seems like it's got an extraordinary yield, but it's outside of the suburbs that she kind of mentioned to you, give me some more about the growth. And then the three of us work together on making sure that it fits the client and the property thereafter. So I think when you're working with a good buyer's agent, asking them about what's the demographic, give me some ideas for capital growth. What have been the past sales? Get them to give you the past sale data. If they push back on any of that, they're probably not the buyer's agent.

You want to be working with.

After all, they're providing you with a service.

Did you mention that in this week's stuff there's some buyer's agent checklist questions.

In there Actually in this week. Let me just pull it up the actual course, there's. I'm going to make this so you can see it. So in the bonus section. Oh no, that's the agent, isn't it? Yeah, I do have a buyer's agent ebook. Let me track that down and add that maybe to the Facebook group.

Yeah, you could make up your own based on your own criteria. That's probably another checklist we could add.

That'd be good. Just some basics of things to like exactly what you said there. Make sure that you get a transaction history out of them.

Those sorts of things are good to know exactly.

And make sure most 70% of the market is homeowners. So you know, that's where most people, I mean I know as a mortgage broker, most of my competitors are working in the home owner market and don't understand the complexities of investor kind of finance. And it's the same with real estate agents and buyer's agents. That's where the most market is. So realise that that's where a lot of their skills are. So you're looking for an agent that either has property themselves or deals with investors. So ask them for referrals, look on the website for testimonials. You know, it's about having someone who's specific to what you need in an area that you want. And you know, as I said, there's a lot of buyers agents that I've worked with, some of them have access to so much data and information. There's others that have built their own models and have spent a lot of time modeling where they doing predictive kind of analysis on where to buy. So you know, you know, I'm speaking to these guys all the time. We're getting a studio set up. Aren't we going to grab a couple of these buyer's agents? And I tell you I did interview a buyer's agent who was looking in Newcastle and has in Brisbane recently and had a quick little five minute interview that I put up for my diamond client might try and track that down and pick that up as well. How about that?

Yeah, that'd be great.

Okay, well I'm gonna add those on do you have any questions? More questions. Michael helping me.

That's good.

At the moment.

That covers everything. We might go and start looking for some now.

Good idea.

Thank you.

Let us know how you go and make sure you put your questions. Thank you. All right, we have another question that's come through. Please make sure you put your questions through. Let's see if we've got any hands that are up at the moment. Nope, no hands at the moment. So Kelvin has sent a question through. Kelvin, would you like me to answer this? Can you speak at the moment? Hi Kelvin, are you available to have a chat? We can hear things on your microphone. Okay, I'm going to take you off mute. Maybe you're at work or somewhere. Kelvin, you've sent through a question. Are you happy for me to discuss this on the webinar? Maybe he's had to duck out. Thanks for watch. Well, whilst we wait for him.

Standard.

Okay, what we will do is we'll in general discuss the question because it's not from Colvin. It's not from Colvin. This is from someone completely different.

It also just happened to be called Calvin.

Yeah. And so one of the questions. And you've seen this a bit on the Facebook group too.

Yeah, this came up in testing with dot map. At the moment the, the ten year growth figures are quite compact. In other words, in the video in the module 2 in the dot map exercise there's quite a big spread of 10 year growth figures, you know, maybe 4 or 5%. But in the, at the moment, particularly in Sydney, it's quite, it's only a couple of percent and that's part of kiln especially. So he said did test with the dot map and he sent us a photo through and there were no values above 5%. Even the currently performing solids are showing 4.9% growth.

So he started with some white stickers for anything below 5, but his entire maps 5.

Dot map. So I guess the question that we got in the test group was should I change my growth then to 5 year growth or 2 year growth in order to have a more colorful map? I guess so what's the answer to that, John?

Well, I think there's kind of two answers to that. One answer is we recently interviewed John Edwards about his thoughts and where the market was going. And as soon as we've got all this done, we'll probably have some of those interviews and things that you guys can have a look at. But specifically what he said is where he saw the market going 2014 through to 2018. Was back to its normal levels that would show growth levels that averaged over 20 years. So ideally, you know, if you could get growth levels over 20 years that has a normalisation that allows for the ups and downs and the levels of economic changes in the world, et cetera, it'd be great. The reality is that we don't have 20 year growth figures that are easily accessible. Having said that, I did suggest to John that the Reservex reports did reflect 20 year growths and now they do. But they're paid reports and we're talking about, you know, using the information in the back of the magazines which generally show you the 10 year, 5 year, sometimes 8 year, 3 year and 12 month growth. I think you are really almost doing yourself a disservice by jumping in and just looking at the 5 year growth and even smaller time frames of 3 and 12 month growth because. Because they really don't allow for the wider range of changes and the normalisation or equalization of what the market does in the long term. So I would stick definitely to the 10 year growth. However, to get a little bit of colour up, we change the range. So you know, looking at the pictures. Kelvin, are you there yet? Maybe, maybe not. Just type in the question box if you are. Yes. Are you happy for us to show your photo? I was thinking about it. So what I. Yes. Okay. So what I would do is I would actually, Let me just grab this photo and put it up. I would be changing the, the actual ranges to reflect Maybe you know, 1% ranges or you know, if we're really getting some really tight numbers. I mean you've got numbers there that are like 29313s, two 8s, two 4s, two 6s. You know, if it's that tight, you might even bring it down to half percentile kind of numbers. I mean it doesn't mean you have to go and pull off all these stickers. You might just choose your new range and go and get some highlighters and just, you know, for anything that's between 2 and 2.5, make it green. Anything between, you know, 2.6 and 3, make it blue. To really, really give you, I guess some clarity of what's happening in these areas. Because there is some movement. I mean if we just look at, let me see if I can pull up my little spotlight. If we can look at some of these areas. You've got some areas out here that have got quite low numbers compared to what you're seeing in this range in here. So this is definitely, if you're going to say to me what's happening in the market? I'm only just seeing this for the first time. I would just. And this is how good the dot map is. You can pull up something in an area that you don't know, see it for the first time and try and start picking what's happening in the market. So there's definitely been movement here in the property growth in the last 10 years. There seems to have been a bit of a corridor come down here as well. Now that might as we can see here, look at that corridor. So access to employment. So you know we picked up the corridor before we picked up the road. So the infrastructure which goes to why we use infrastructure for.

One of the.

Criteria that we're looking for our suburbs as well. You've also got a bit of growth in some of the large areas but not so much down here, which is surprising I think especially with surroundings of these kind of suburbs. When you put the colours in this cog road seems unusually low just in that supporting especially because it's kind of beach front. It might have something to do with accessibility to the freeway. So you want to be looking at how many of these people actually drive to work or work around the area. Any conflicts that you have in this?

No, you often see the. You might see a lower growth closer to the city for instance because they've already had their growth. You know they have a lot of growth in the 2000s or 90s so you'll see a lot of growth. But I don't know that area.

This definitely seems low surround by high growth area. So you know why Enfield is so low would have me been doing a bit more figuring around that this and.

You know, so this is all about the ripple too. So it's those suburbs. So the ripple is. Or one of the big things about the ripple is people get price out of the suburb and then into the next suburb. That takes a while to happen. I remember when it came through the suburb that I live in, Melbourne, we saw the prices going up over maybe three, four years and then suddenly what happened was the everyone tipped into the unit market. So units and flats went up all of a sudden and then what happened is everyone tipped into the following suburbs. So then you had three, four, five years of really good growth in the following suburbs. But that whole thing took a while. So hence the 10 years instead of the 5 years.

Yep, exactly. I mean this just seems terribly low to me especially with the proximity to the motorway. So I'd be kind of looking at why this is so low. It might be that it is mainly industrial. It could be something as simple as that or a large. To have an entire suburb of housing commission. But you know, there might be something about that area or it might just be an opportunity that's been missed. So it could just be, you know, let's take away the map from this and just look at the numbers. It could just be that if you superimpose the purchase prices on there now, you could be looking at a $3 million property area median price compared to the 5, 600,000. It doesn't usually change that much with suburbs so close. But sometimes you see very, very high price suburbs that the growth is lower as well. Mainly because they don't turn over as well. But when they do turn over, there's a bit of. They don't turn over as quickly.

Probably just consistent.

Yeah. Anyhow, so thank you for sharing that with us. I hope that we gave you a bit of direction, Ed, because I know that we definitely have seen over the 10 years there hasn't been a lot of distribution. So I would encourage you not to change from the 10 year growth figures. But go and have a look at trying to make your criteria in each of those a little bit smaller so you can start picking it up. There we go. Okay, let's see if we have any other questions. What have we got going on here? Anyone got any other questions? See a couple of people in there who haven't raised their hand. All right, well, what we might do with.

Our.

Is there anything, John, that you want to add? You've been looking at properties this week. This is all about checklists and looking at properties and things. I think you're a king of using some of these checklists.

Yeah, I won't find any hard to get up to step three at the moment in the checklist because the problem we have at the moment is where we're looking. The market's quite hot. Everything's going to auction. It's very, very hard to get something off market. And even when you do, I've been going, I mentioned the other week on one of the calls, I've been going around doing the letter drops in people's letterboxes and handwritten letters saying, hey, I'm looking for a house in this area, thinking you're selling and you don't want to pay all the real estate agent fees. And I've got a couple of calls from that. But even their expectations are sky high.

So I've got.

They were worse than the agents in some cases. But anyway, we're getting. It takes time. So, yeah, you actually had someone who.

Was ringing up to give you a bit of a go. Overseas buyer who was taking off chimney.

Yeah, one of the neighbourhoods. I mean, it's changing. The face of the neighborhood is changing and the old house has been kind of a raise to new builds coming up and it's mainly an overseas environment. Chinese, Malaysian and Singapore as well. This one guy, who's obviously not happy about that changing demographics, actually rang me up and was going to give me a serve until he determined that I wasn't the demographic that he rang up to speak to.

Funny, isn't it?

Yeah, you do get some weird, wonderful calls when you give out the mobile number like that.

And I mean, the fact that you're out looking at copies professionally to do flips and, you know, even though you potentially could have the time to go through and do that step three, property evaluation, you're not willing to do it before you put them off or even.

No, no. So it ends up being the back of the envelope kind of thing. I mean, we've got it to the point now where we're pretty good if it's. If it's. For instance, we're looking at new builds at the moment too. So it's a new build. Our numbers are pretty well off.

They need to amount them up over.

Yeah. So the costs really don't change that much. And when I'm doing structural renovations, because I've done enough of them and I know my costings are now pretty solid and a lot of those things are going into our budget too.

You get the benefit of all those costings.

Yeah, that's right. I can't wait, being inside budget and because I kind of allow for the whole thing to be stripped back to frame anyway, so I'm kind of up at the same cost each time. There's not a whole lot that can go wrong because I'm doing a full structure and renovation anyway. Where it comes to really bite you is when you've got a close small margin and you doing, for instance, a cosmetic ventilation and then you find out it needs to be replaced or re stumped or something like that. And that can wipe out a place.

Absolutely. It's interesting, we've done a few interviews this week for magazines, etc. One was with Australian copy Investor, I think for the March edition. Gosh, they're so prepared, those guys from February. And we had some questions about the box at the back and the costs and valuations and I think, you know, as you said the box at the back, you kind of just tack it on and it's like 40 to 50 grand to do it. And it's how you fit it out, which is where the cost comes in, the high end finish compared to the other type of finishes. But, you know, you do build up a reservoir of information and knowledge, especially when you run around and got quotes so often. And it is important that you go back and update those because I know recently I was talking to some people in Sydney about painting and I said, oh, you can paint that for three and a half grand. They're like, we can't get it under five and a half to six now for center three bedroom house. So, you know, things do change. But I think that the important thing is that you go through this process and you know when you can activate any of these checklists and it just gives you the information so you're not wasting your time. But I think, I mean, Nigel, you've spent months out there looking at cesno and you know when you're going through these properties, were you applying checklists or I'm going to open up your mind just in case you still have chat. Were you applying checklists and going through, you know, reporting all this phone information or was it kind of an instance?

We did.

We had a checklist page that we brought out every single time and ticked.

Off certain things, such as what we thought it would sell for and whatnot.

We got that from another course that we'd recently done.

And what about the budgeting? Did you find that difficult to kind of anticipate? What, the cost of the round?

A little bit, yeah. Because this is the first then obviously it's a bit hard to. We can guesstimate fairly well, I guess, but not great. We know we're going to get that pretty wrong in the first one or two.

You don't need to now. That's the thing. Don't extend that anymore. Thanks, Nigel. I think that the budget. I had to pull out a few things I really, really loved about this course and I thought just stood out, apart from any other course that I've seen and done and whatever in the market. I think this budget is just going to be the absolute tool that people look at and go, oh my God, thank God. I'm not trying to get tradies here all the time, but I've actually got a tool now. It gives me some type of. Gives me an idea of how much.

Makes me the most nervous. Well, I'm just waiting. It's untested so. And there's a reason why no one else has ever done this before. Yeah, it takes a lot of work.

And then someone handy goes, oh, why don't you make an app out of that? Have you seen how hard it is with the Xor project?

But the other thing that we're doing with this budget is each time you do, we're going to. And as you say, Nigel, you're bound to get things wrong in the first couple of days and underestimate things. And you know, some things might come in under. Occasionally I'll have a. I'll find a tradesman that comes in thousands of dollars under the other tradesmen. I'll keep you around. Yeah, yeah. But you can go back and then, and then start to make your own rules of thumbs about. So work out what it cost, how many square meters were in it, and then divide the cost by the square meters and then you've got how much particular service will cost a square meter. It might be painting or roof cleaning or carpet or whatever. Yeah. So you can make it your own. So it means that that step three, that property evaluation checklist, it might not necessarily have to do every single thing on that, but you can just do the stuff that's new and then add in more rules of thumb from your past jobs and find that as you go.

I mean, before we had this wonderful budget, I was always using the ARPA Centre cost guides just because I needed to. I really wanted to have something that I could go to that I could use, that I knew that someone had some knowledge out there and I just didn't have the time to go and get all the quotes. And so that really helped me. And we've incorporated a lot of that information. But more so the on the ground information to make this budget include a lot of the cost, so you don't have to go through those kind of numbers. And I'll just give you an example of what that ARCA Centre cost guide look like because, you know, sometimes when you don't have the information at hand, and you guys are going to have that very soon, but if you don't have the information at hand, you are looking at where you can get information from. And I found this kind of cool. One of the things that's interesting here is it actually gives an estimate also of adjustments of prices based on the states that you're in. So there's actually additional costing. Can everyone see that ARCA center cost guide that I've got pulled up here? So you know this and you know, for Major renovations, new houses, what kind of percentages that you might look at. Thanks guys for answering that. And to repair and maintenance, I've used this cost guide restumping per block, Melbourne versus Brisbane. You can see in Brisbane it's a whole lot cheaper to rest up. And I've used this actual cost guide of the dollars per hour that a tradie will charge me to do everything from negotiating different prices to going back to a tradie who was working through an agent for a rental property of mine who quoted an obscene amount of money to do a bit of investigation and ended up saying, well, even at 60 bucks an hour, you really think it's going to take you 10 hours? And I went, ah, no. So you know, there's a lot of information that's available and we've tried to incorporate a lot of this into the budget and as John said, it's untried and untested.

Yeah, deal with us. We are going to make a, a pretty extensive tutorial on that in the next probably this week. So bear with us. We're kind of, we've been working up to the wire to get it ready and get it out there and there's a lot of moving parts. So yeah, you'll get some more information about exactly best ways to use it over the next few days.

Perfect. Okay, well, I think we've probably wrapped the questions up as well. If anyone has any last question, now is the time. Well, look, I think that I just want to encourage you, go to the Facebook page. If you do have any questions, post them there. There are so many experienced people there and there's actually quite a few people there that you'll be surprised by the backgrounds that they have and the experience that they have. So don't be shy. Harness the power of that group because that's what it's and people are so generous with their time and knowledge and experience in that area. Also, the audio recordings of this call and all future calls will be available on the Facebook group and in the bonus section on the website as well. The easiest way to find this in the Facebook group is just to search for webinar in the search box at the top right hand side of the Facebook page and then you can download the MP3 file. Remember that all the videos are also downloadable MP3 now for your itunes and to video by definition or not. I got NBN last night at my home. Yeah, turned it on, ready to go. Wait, you're a street away, Three houses.

Away, Three hours away. It's not three hours away.

You gotta move. So look, in the next few days, the recording of this call will be up in the bonus section of module 4. As always, if you ever have any information that you disclose on the call that you don't want to made public to this group and wanted a minute from recordings, please let us be. Make us aware of that very soon. Midnight tonight. Module 5 is out. Module 5 was designed to work out exactly how much your renovation will cost and then the steps needed to obtain finance. This is another extremely important module and I look forward to your questions next week. I'm pretty excited about it. As you know, we're working to be at the wire with the budget a few more hours than it this afternoon and it will be up by midnight, we promise. So be patient. And it's. Yeah, it's a really Great module. Module 5, module 12. 12 modules, the last module we had a question on Facebook will be out by the end of January.

The modules continue to come out each week and then we've got two more calls in January, in the future first half and then of course you're all back on the courts in March.

Yeah, yeah, we're not saying Merry Christmas yet anyhow, so. Yep, all good. It's been great to have you all around and please ask your questions, send them through. Let us know if you you've got some questions for any technical issues. Supportersuccess.com and until next week, here's to your property success.