Your Property Success Mentor Call August 31-08-2017

Hey, and welcome, everyone. On a Thursday night. We're just about to get going, but just before I do, I just have to do our mandatory disclaimer that it's important for you to understand that you need to take care in applying what you'll hear on this call to your own personal circumstances. Everyone's situation is different and all the information in tonight's call is based on our personal experiences and opinions. It's not intended to be specific to your circumstances. So not real estate agents, financial planners, lawyers or accountants, and are not liable for any loss, damage or misunderstanding caused by reliance on any of the information provided or inferred. And the other thing is, we also routinely record these calls and reserve the right to share the content down the track. So by participating in the call, you're acknowledging this, and if for some reason you prefer not to be included on a recording, we just ask that you contact our office on 1-300-963-646. It's 1-300-963-646 within 24 hours. And I shall edit you out of the recording. And with that all out of the way, I'll turn up the wonderful Jane Slacksmith. Mike, you're on, Jane.

Hey, everyone. How you going? And welcome to the August 2017 Mentor Call. It's so wonderful to have you here tonight. Now, I hope you're not as chilly as we are here in Melbourne, but in other parts of the country, we know that there's going to be sunshine. John and I are going to be hitting the. Well, I was going to say airwaves, but we're doing that now. We're hitting the airplanes tomorrow to head up to Brisbane for our hot spotting workshop. And we're here at 24 up there and we've hit a top of 14 down here in Melbourne this week. So we're looking forward to it.

Absolutely.

So I know that there's so many questions and a lot of people have been asking and really getting involved in the Facebook group. There's a lot of buzz, a lot of energy and gosh, there's so much to catch up on since Renault Fest, where we met so many of you face to face. You finally forced us out of our shell and being the shy, obliging types, we came out and we did it with a bang. So it was so lovely to see so many of you there. And I hope you see some P of yourself a little bit later as well. And I could tell you that we're going to catch up with some of you tomorrow night, too. We're having a little bit of a meetup at Royal on the park in Brisbane, Alice Street. So we're having our hotspotting workshop there. We've got 10 or 12 people coming along to that on Saturday. So a full day of finding the short list of suburbs, which should be really exciting. I can't wait to do that. That's going to be great. There's always so much change between the times we do it and we go to the workshop.

It is. That's a good thing. About the catch up the night before too. I know I haven't been introduced yet. Jane, just chime in here.

And this is John. Hello, John.

Hi everyone. The putting those maps up on the wall from the previous workshops. That's always great. The night before and catching up. So, yeah, Royal on the park in Brisbane.

6.30Pm, 6.30, 7:30, go to the bar, get yourself a drink, come up, come see us. And we'll have nothing too formal. I'll have a bit of chat about the dot mats, but yeah, just more of a chance to say hi, catch up. Seems you've pushed us out of our comfort zone where we're just gonna roll with it. And for those of you in Melbourne, we'll be doing the same on the 8th in September, the Friday night before the Melbourne hotspotting workshop, which is in one week's time. So Stanford, two places left for Melbourne.

If you're interested in coming along too.

Oh, fabulous. Well, I really can't wait to see what's happening in Melbourne as well because, yeah, I love walking away with those suburbs and then start looking at what's on the market anyhow. So look, guys, I know that some of you, this might just be your first call and welcome to your Property Success Club ultimate guide to Renovation. Don't be shy, speak up, say hello. We're all pretty friendly. You can ask any question, no matter how new you are or advanced, we will throw it to John and myself and usually one of us can come up with something. And as always, hello to everyone who is inside the club. Make yourself known to everyone in the Facebook group. I know that some people don't like Facebook, but hey, we've got a lot of people who go in on a pseudonym and have a private accountant know. Not even their friends know, but just so they can join the club because we just have so much fun and.

They'Re the people who have got renovation in their name.

Yeah, there's a hint. So now look, these monthly calls are exclusively for my mentoring students. The students of the ultimate guide to Renovation the youe Property Success Mentoring subscribers and of course my Investors Choice Mortgage diamond clients and your Property Success Club members. So you know these take place on the last Thursday of every month. And of course you will receive email reminders each month when the calls are approaching so you don't miss out. You know we will actually record the calls. They're usually up within 24 hours but we say 48 hours. Give us a bit of it time and in actual fact do you remember one of the calls we did last year where the whole call broke down and they didn't record it. Gotowebinar didn't help us out and we stayed back to midnight and re recorded the call because we had the questions. We just didn't want people to miss out. What a nightmare. So yes, we're pretty dedicated to trying all the time. Anyhow, I make good notes. Look, if you can't make a call, not a big deal. We do have a message line and it's 13761019 or 1376 1019. John, did you check it this week? You didn't check it.

The Sound of Tumbleweeds I was going.

To say no one has sent us a message in 18 months. They're either on the line or they send an email. But hey, to questionsourpropertysuccess.com that's your alternative one one nine. But before we get into your questions, I'm going to reintroduce the person next to me because he hasn't been able to stay quiet. John Hubbard, the co creator of the youe Property Success podcast. The your Property Success Club Ultimate Guide and Renovation. Oh we've ended up new things we're.

Doing now together which we haven't got names for you.

We don't even have names where we should have some names come up.

So done for you.

Okay. So John, how are you?

Welcome.

Good. It's hard to believe that I think it's just the way the dates have fallen. It's hard to believe we haven't had a call since Renault Fest but great. I'm looking forward to having a look through those pics and you know, might see yourself. Yeah, but that was great.

Look, it was good. What's your news for the month? What have you been up to?

That's it. A Rentto Fest was my highlight for the. For the. For the year basically.

I told you guys it's a big deal for us. In actual fact we had so many people wanting us to do again. It looks like we may actually be taking on the road next year.

Yeah, Australian tour. Yeah, it was great. It was really, really great. And you know we all left with a big, big buzz, didn't we after the catching up with. It was just amazing. We stood in the corner there before it started in, in the far corner and just watched everyone file in and.

In actual fact John came up to me and said oh my God, they turned up.

Yeah, it was great. It was a really great event. So good to catch up with people that you've known, you know, known for years and years online and yeah, what a. Just a fantastic experience. So it'd be great if we could do it interstate and get other people that couldn't come down to Melbourne for that to join us as well. Because I know there's a, you know a huge, A lot of people based in New South Wales, a lot of people based in Queensland and all over the country.

It was all about for us, celebration. The community, the community and connections. And we managed to in the end having like $20,000 worth of giveaways that we gave away on the day and we had just so many beautiful connections made. You know there was. We had an opportunity knocks board where people could put up what they're after in help or assistance and what they can offer and the connections that were made there. I still heal here every week of what people are doing. And here's Mark saying it was awesome. I know Mark, we loved it too. And I couldn't sleep that night. I was so excited. In actual fact we didn't sleep the night before because we were still working at 2, 3 o' clock in the morning. Yeah, I'm still recovering now but it was so great. 170 people turned up and I thought.

It was a bit more than that. I thought it was like 180. I know you always remember the figures but I thought it was 180 something.

I just seemed like a mass room of smiling faces short changing it. Oh my gosh. Anything more than three and I'll talk to them, you know. And that's just me and my friend and Shadow.

It was a. Yeah, it was an impressive amount.

It was lovely and you know, it's such a great group. In actual fact in one stage I tripped over about seven people sitting on the stairs and they said, oh, we put an opportunity knock up saying we wanted to meet up for people from the Central coast and we're just getting together and we're going to have our own meetup up there. So people were doing that. Know there was some JV partners found for developments on the day. I know, I saw some people were saying, you know, I'm. I don't have much to offer, but I'm a tile. I can teach you to tile, but I need someone to help me about some due diligence and stuff.

And it was, look, just explain opportunity knocks in case you went there.

Yeah, okay, so opportunity knocks. And you know what? I think I'd like to make this an online thing. Now, I'm not going to throw this on our project board yet, John, but it's in my head, basically. It's, you know, how sometimes you have a stumbling block that if you could get over that one thing, then your oyster opens up and the world's there for you to grab and opportunities kind of unfold. And, you know, sometimes it just comes down to one opportunity. It might be one connection with a person, it might be one piece of information. It might be a money partner. You know, they're the money partner and you go out and find the property. It might just be someone to keep you accountable to your goals. And, you know, there's so many things and, you know, there's. So we had this opportunity, so people put up that one thing, you know, I am looking for. And. And this is what you need to have, you know, to assist me with this. Maybe some experience in building granny flats, maybe some experience in, you know, renovating. Maybe some experience. Or, or could you pick me up and drive me around Brisbane was what someone wanted to know, get to know the suburbs. I know there was someone there who owned a property in Adelaide and was in a subdivide and wanted to speak to someone who had subdivision experience. So, you know, everyone put all of these things up and they said, and this is what I can offer in return. So in some instances, you know, people saying, I'm a decorator or I'm an accountant or, you know, I've done granny flats or look, I've got nothing to offer here, but I build websites. And actual fact, one lady came up and said that she was in a. She had met up with someone who was going to build her a website and she was going to teach her about development. She's done quite a few. So, you know, there was so many connections. And, you know, we, we. Yeah, it was just so lovely to see it. And that was what, you know, I don't know. We. We're not really good. Where was our first. First big event.

But it was a huge success unlike.

Any other Property event I have ever been to in the last, what, 20 years I've been going to them. So, you know, I just, I loved it.

Opportunity Knox in particular, which I think that was my highlight for the day. Just how many people and how involved that got everyone and talking with each other.

And we just pinned them up during the breaks and people were SMSing each other, organizing to meet up.

And the other thing was pretty funny that you might be pretty glad you missed was Christina the mc, getting everyone to stand up and getting one person to put their hand up. And then we played some 80s music and then everyone in the group had to follow the person with their hand up. So everyone was roaring with laughter at that. But then the twist was that she said, all right, the person with their hand up can point to the next person now they're the leader.

Well, you know what? I really like what she did. She said you had to come up with your best dance moves that were renovation, renovation motivated. We had people painting the tiles. We had the sand on, sand off, stacking tiles. We had ceiling painting going on. It was hilarious. So lots of fun. We should probably redo it.

Who was it that said, I think it was Lou that came up during the case studies and she said, gee, I'm glad up here. Who was it that said, gee, I'm glad I'm up here?

And I don't know exactly Paul Russell who turned up. We put him up on the panel and he said, I thought it was just going to be a few people, there's thousands. So look, it's so nice. And anyhow, we had a good time. And what else have you been doing.

This done for you? So if you weren't at Renovas, you probably wouldn't have heard of this. But we've been trialing this thing, which is, you know, has a long history.

Another thing that you guys forced us into doing, actually, it was finally, stop teaching me how to do it and can you just find me somewhere to buy?

Yeah, I mean, how long have we introduced the workshops to try and make it a little bit easier to get through the whole process of, you know, what is three, four modules in the ultimate guide to Renovation in one day? So that's the workshop. But even, you know, people that come to the workshop say, is there some way you can just do it for us? So we've got the system now and we've got the suburb selector software down pat and it's been, you know, all the data is loaded into the back end through an API and it's automatic and all the rest of it. And so it was just a natural progression really. So we've, we've trialled it up. We've got three people going through right now and another one probably.

I see someone that's on the call tonight who's. He's on it.

Yep, yep. And yeah, we're just working through the process and it's certainly on the, it's more just on the customer side of things and making sure we present it in a way that's understandable and all that kind of stuff. But the actual, you know, the process of finding the suburb we've got down pat because we've done it hundreds of times now.

We're sort of saying to John, you know, I can, I can get someone's buying criteria and within an hour I can get down to the street level and the properties and on the market or tag the ones they should be buying. It's like, you know, there you go. We actually know the process of doing this.

Yeah. It's kind of almost a shame not to share it, isn't it?

So we'll see, we'll see how we've got to, we're going to do. We've got five people coming in.

Yeah, that might be a special offer to if.

Refine the process and then yeah, maybe.

Pop an email through I think would be the best. Pop an email through to support YourPropertySuccess.com if you're interested in coming through the, the first batch. We're not advertising it anywhere. We did it as a giveaway, as a golden ticket at Renault Fest. Just as I said, just to iron out the kinks on the first way through. There's certainly no kinks to iron out in terms of the suburb selection process so nothing to worry about there but just to get our processes in place and yeah, we could probably accommodate one or two more. Yeah. But that'll be all for now before we actually release it as a product.

Yeah, we're really excited because these, the, these, the first ones that we're working with, they're going to get the full on love and experience. Oh yeah. So we've got, as John said, with one giving away and a few, a few clients that have come on board and yeah, we're really excited about jumping in once they've got those borrowing capacities done and settled and finding where to buy for them. So it's going to be good fun.

It's going to be fun. Good. What about you?

I have been working with the suburbs Lecture software and Refining that even further. So really some really good stuff. We've been working very closely with Louis Christopher and his team at SQM Research. So that information in the suburbs Alexa software is updated monthly and we've got a lot of the data down to the suburb level. They've never got data down to the suburb level before. So there has been a huge amount of work has been going on behind the scenes and I'm very excited to say that Ballarat and Bendigo and Geelong have been added onto our regional areas as well as Sunshine Coast, Wollongong, Newcastle and Gold Coast.

It is just mind boggling how much data goes into, you know, particularly you just. We just go through and select a couple of suburbs but there's a whole.

The back end of it with the filtering process. Yep. I think I've, I've seen double many, many a night in, in doing the analysis and getting all the 16, the censure, the census data in there. I've added in a few extra things. So you know one of the things that I like to look at just to get to know the suburb and get to know the people in the suburb is to find out the percentage of people, well of those who are being educated, percentage university, percentage of primary school and secondary school because it can give you a bit of indication of where you might want to locate that property around schools as well if there's a high percentage of mum, dads and kids.

Yeah. And what's good about now is we used to have to add, you know, plus four years to that, you know, because the census data was old but now we've got brand new census data.

That's fabulous.

Great, great time for property nerds.

Yeah, absolutely. Oh there's Emily saying she loved Little Liberty that which was one of the decorators that was on our panel. So we had three beautiful show and tell. Yeah. Can we do Chantel from Reno Fest? I'd love to see some photos. You might see yourself there, Emily. But yeah, it was. Oh gosh, it was fun. It was. Oh there they are. So that's Sarah and Amy and had mental blank.

Sarah, Amy. I can't remember either. That's terrible. I must have written her name about a thousand times.

I know, I know. That's right. Okay, we'll come back to that but.

Type in if you if.

Yeah, it's a beautiful decorators that came along and shared with us their. Ah, so there's the dot maps. So some of the students also brought along the.

Nicole. It was Nicole.

Nicole. Perfect. Well good job. Simon brought along their dot maps for people to have a look at. And this is what I love about our community, is that everyone is so abundant in how they share. We know that everyone's buying criteria is different and different and. Which means that what you're after is not what I'm after. So the fact that someone's done a dot map, they're like, they're not being.

You know, what's the one on the right? Is that Adelaide? Is it Adelaide?

Yep, possibly. So. So, yeah. And, you know, we've recently had people in the club share. We've got Perth and Adelaide and Canberra and, you know, there's so many maps in there at the moment. Actual fact I might show you one a little later. Wilma, who I think's on the call, might share with us her map because she. She just couldn't even wait until she got her map in the mail. And here we've got. So here's, you know, lovely group of people, as you say, great day. And there's Viv from Renault Save.

Hey. The girls.

The food shots.

Food was good.

We had some Instagram events, Instagram photos as well. Actually. One complaint we had. When I had one complaint, it was just really about the food. They said today. Is this all that was? Everyone else thought it was pretty wonderful. Look at these little yogurts. Anyhow, food shots. There we go.

Let's go back. I'll have a look.

I think there's back of Emily's head. So there's some dot mats and you can see past there. The opportunity knocks.

Yeah, I think there's a shot of. There you go.

Opportunity knocks. So there's. Everyone's walking around and taking photos of those. So, yes, really great connections there. And there's Chris.

Chris, Sing out if you see yourself.

Yeah. These girls came across from Adelaide. So I think Simon, I think, actually drove from South Australia. There was actually three people who drove from South Australia, which Pretty impressive. We had a lot of people obviously fly down from Brisbane and Canberra and Sydney and drive from, you know, as far up as Albury, etc. Okay, so these are. We're taking some photos. Lots of chats, lots of connecting. There's Lee.

Cool.

So there you go. Great day. There's Christina having a bit of a.

She's about to torture somebody.

Oh, my gosh. So there you go. It went on and on. So it was a really great day. We had. We had a lot of fun. And yeah, it's. I don't know, it was a bit of a downer after it Wasn't Simon.

Sorry. I'm sorry.

Yeah, I'm good.

Yeah. No, well, it was good. We. A couple of people caught up afterwards and we went and. Yep. Had a drink. Drink and put our feet up and thought, well, did that just happen?

In actual fact, that was the last day I had a drink.

Oh, was it? You've been in a detox.

I'm on day 24 of 28. Day detox.

Good for you.

And there's. So I had.

Does it get any easier after day?

It does in actual fact, after day three. But I went to Sydney, went to the rugby and I saw, I think the worst 40 minutes of Australian football ever.

That was the Wallabies.

It was freezing cold. We had one backpack between us and we just passed every five minutes between my husband and my son and myself. The last time Todd and I went to the. The rugby was 15 years ago.

Yeah. And which is when they were good.

Yeah.

Yeah.

So it was a, you know, let's take the nine year old along to his first. All Blacks versus Wallabies. They were in the All Blacks outfit. I was in the Wallabies.

I feel sorry for you because I've watched it. I'm a rugby tragic. I've watched it for 15 years and I've never turned off a game before. That game.

You turned it off? Yep. It was like. It was like a whole new team in the second half. And I was thinking, this is fantastic. And then they told us that All Blacks played the reserves in the second half. I mean, 56 up.

Give them a run.

Yeah, why not next week? Having said that. Yeah. Dunedin, the house of pain. They. She's now got a roof, so. Not as cold, but, you know, did you see that? It was all the All Blacks and there's this tiny little group of Wallaby supporters in the background. I thought, oh, gosh, you'd have to.

Be keen to show performance.

And then there's the poor Paul. Cricket is first time he ever got beaten by Bangladesh. Nathan Lyon, who my husband's just painted and he's just had his painting submitted as a finalist for the Black Swan Portrait Award in Perth. So hopefully he might win that. We get to go over and bring Nathan with us and spend some time in Perth. But in November. But yeah, so it was. So I had the rugby and then last weekend Todd had a sculpture at one of the exhibitions in Ballarat. So he headed up to Ballarat to that. And now we've got the workshop and the meat and I still have no alcohol.

Oh, really?

I can't even have. So no sugar, no gluten, no flour, no caffeine, no alcohol, any kind. Nothing. I can't even have a carbonated water. It's a water, it's Ayurvedic, so it's Indian based. And apparently I'm going to be very, very healthy. You can rebuild your liver in 26 days, apparently. So I've got two days away before.

I hope you're taking before and after shots.

Not on my liver. So there you go. Lived through the detox. Enough about me. Got a holiday coming up in the end of September, which I'm looking forward to. Week in Port Douglas, my, I think my 12th trip. It's my go to place. I got married there. We ran away and took 10 people with us and had a week of fun in Port Douglas. So heading back, I just want to see some sun personally.

Yeah.

So, well, let's move on, shall we?

Great.

Because hopefully you guys have had a great month as well and haven't come down with the. The flu which is plaguing the rest of Australia.

It's amazing.

And just some housekeeping, which I've been prompted to. To mention here on the slide. But if you're having any. Have you got any questions to ask, please just raise your hand and the little thing is just above the audio tab and you notify me when that is up and I'll unmute your line. Look, I do prefer to get the spoken question, so make sure your microphone's on and working because it's easy for me to understand the depth of your question. And if you can't do that, please just write a question in the chat box and you'll see the chat box there that you can put messages into and I can see it, the rest of the group can't, so, you know, you don't have to. You will read them out and get to it. So that's it. Once again, it's not a tech support call, so if you are having any issues, supportourpropertysuccess.com and the lovely Diana, the queen of customer happiness.

Customer Happiness manager.

And I hear in the other office, all she does is laugh and enjoy talking to people.

If you're ever unhappy, just call the Customer Happiness manager.

But without any further ado, let's have a chat and dive into your questions. I'm really keen to get on to what your questions are this evening.

Great. Stick your hands up, guys.

I can see Sky's got lots of questions written there, so he might see if Sky's Got a microphone?

Put your hand up there, sky, if you've got a microphone, might be easy to get through some of those questions. There you go. Wonderful.

I saw a hand pop. Hey, Sky, I can see you're furiously typing in some questions there. How are you tonight?

Hi, Jane and Will.

Thank you. And you.

Hi, John.

Hey, Scott. Welcome.

So tell us what's going on in your world.

All my world. My funding has come through thanks to the wonderful Lisa Butler.

Yeah.

And I've got a lot more than my previous, you know, foray into one of the big four banks. And it actually turned my strategy on its head because I've got more money than what I actually need.

I had a chat to her last week saying, how are we going with Sky? And she said, oh, we've got some good news for her.

Absolutely.

So tell me, what's your thoughts?

Okay, my thoughts are Melbourne is just becoming a very large city. A second Sydney at such an incredible rack. I'm feeling the urge to go and hang out with some trees and some sheep and look for my first investment property with the idea of relocating there myself, myself, five, 10 years down the track. So I'm about 15 years out of, you know, retirement. So I'm hoping I can, you know, somewhere walk that fine line between an investment property that will eventually become, you know, a retirement place for me, but knowing very well that it doesn't, you know, need to get all messed up emotionally and just, just based on, you know, my personal preferences. So I've got some extra. Yeah, yeah, yeah, I'm very aware of that. I'm not actually that fussed on where I live. As long as it's clean and functional.

And sky having that, that kind of delineation between, you know, it's, it's a non emotional decision, you know, to some degree you're knowing that you want to live there in the future and it's an area that you want to, you know, occupy is one tick, but then looking at the property with the goggles of the investor is another. And you know, I've been a mortgage broker for 12 years now and I've started talking to people who have started with a very similar idea of where you are right now. And it's amazing. They'll come back in three to five years and just go, you know what? Life has turned on its head and we're off overseas or the kids now have won a scholarship here or. And you know, that that big plan for the property they purchased has changed completely. So, you know, going into it, knowing first and foremost, that it's a tree change purchase. But then looking at those larger regional areas with Those growth dynamics, etc. Fabulous.

Yep, yep. And I'm very aware that, you know, things may change. It's just that I may not financially be able to get to my next property, which is why I'm implementing it now. But because I've got extra money to work with this week, I've started researching and looking at the potential of putting a granny flat on the back of the property to offset some of my holding costs, which I'm kind of guesstimating will be about $100 a week.

Fabulous. And look, I saw you post that question in the club about people who have done some. The grinning flat. And I did have a discovery call actually just last week with a lady who has done this in the Central Coast. And in actual fact, if you go back through the Facebook page, the youe Property Success Club, there's a recent renovation that was posted up where the lady had. I'm just having a mental blank. It's not a good night tonight. So we've got Jeff here. Anyhow, Denny has done the renovation of the house at the front and then put the granny flat on the back. And, you know, they're very open with the numbers that they had. So the granny flat. Do you want me to have a chance? I'll just pull up the screen so you can have a look. But they bought the property for $375,000, and then they spent the $40,000 on the renovation itself. And am I blind?

I just cannot see you.

No, I'm not there. That's just weird, isn't it? And so I'm logged in as myself. I did log in as you.

You logged in as me?

Yeah. Okay, so that's interesting. But anyhow, so. But the. The Facebook page. So, yeah, so she did that. That renovation, and she put the granny flat on the back of the cost. $150,000. So I've seen since 2009 when the granny flats and we started funding granny flat constructions, they started around 90,000 and pushed up to $110,000. Not unusual. Now the prices that I'm seeing in contracts and that rents for $400 a week. So, you know, it's really. I guess that's the kind of. The kind of. What you could potentially do. But we did speak to a couple of people who were. We spoke to a lady a few months ago who was talking about the excessive kind of costs of pest and building inspections in Daylesford and I think she was charged with, charged like $1,200 as opposed to what we'd expect around 5, 600 Castle Main was it. And so some of the trades out there and just getting the right people to build that kind of thing can be difficult as well. But more and more we're seeing, you know, almost prefab for any flats being constructed now very quickly. So. But that's, that's great that you kind of allowed yourself to open up. And first and foremost, you know, a lot of people do go to the big four banks and get that borrowing capacity. There's been some significant changes in the last month and you know, this is August now, but two weeks ago St. George announced that they're now doing their servicing over a 20 year loan period where it used to be 30 years. And if you just think about it, if that's a 10 year interest only loan on a million dollar property, you've got a million dollars to pay back in principle in the following 10 years, $100,000 a year. So it's, you know, it makes it really hard for people to get funding and hence, you know, why looking outside the big four banks and some of the other lenders who have different servicing models can get you more money and open up these things. But I think looking at granny flats, my concerns would be that you need to make sure that it's kind of characteristic of the area. So you're not going into a smaller regional area where you're the first granny flat kind of going in. There has to be a demand for it. So you know, find, find out in those areas and imagine are you looking like what Ballarat, Bendigo, where are you?

Ballarat?

Yep, Ballarat. So, and I guess the thing is that, you know, looking at Ballarat, looking at maybe council approvals of people who have done granny flats, the, where they are, there's a specific location that might be near a new hospital or new university or they might, there might actually be where there's a higher percentage of renters, so just get some characteristics of those suburbs, etc.

But for a couple of reasons. It's not only for establishing that there's demand there for the product so that, you know, you're not going to have no one to rent it out or to sell it to whatever you're doing, but also just that there's precedent for the council. When you go to the council and say, hey, I want to build a granny flat, you want to know that the, the council wants to know that there's Precedent.

Yeah, exactly. And so. And you want to protect your back as well. And, you know, when you're designing the granny flat, keep in mind that if you are going to live there in the future, you're going to have someone living in your backyard. Or it might just be your own little artist studio or, you know, recording studio or Potter studio or something, so, you know, making it a bit flexible in its design as well. So it can cater to those kind of things because you might just find that someone would just rent it out for their. To be their own studio or something rather than live there.

Yeah.

I spoke to a real estate agent yesterday and he gave me, you know, a little bit of information saying that, you know, yes, there are, you know, quite a number of granny flats in different suburbs and they have different usage. So in, you know, the more affluent suburbs, they're used for retreats or more for, you know, little cottages for guests staying or even elderly parents. But in, you know, the less affluent areas, they are rented out.

Yep, absolutely. And obviously there's that Airbnb as well.

Yes, exactly.

Yep. Some good strategies around that for cash flow.

Absolutely. I mean, we rented a place in Ballarat on the weekend and it was just a little, cute little cottage. Having said that, it's a three bedroom cottage which I could comfortably have lived in. And I think it was like 150 a night with $30 with all the extra costs they do with the servicing. But, you know, that was just a really comfortable, nice little property. It was on a main road, but it was quiet. And obviously they're getting, you know, five, six hundred dollars a week just in extra income. It's fabulous. So, but, you know, really good, really good opportunity and we look forward to working with you also and helping you out with that.

Oh, thank you. Hopefully it'll be soon. I just asked Lisa for, you know, a few days while I, you know, try and gather information so that I can be a little bit more solid.

In, you know, what my strategy, buying criteria. Absolutely, absolutely.

Now, Skye, I see you had another question in there. Sorry to interrupt.

No, please, go ahead, John. Want to pick your brains?

Okay. You know.

Weather board. Yeah. Do you want to ask that? Go ahead.

Oh, just because I'm considering Ballarat, the estate agent said, you know, old Ballarat is, you know, the, the areas to buy in. So old Ballarat means the typical, you know, predominantly rundown, weatherboard, you know, three bedroom, own single level houses. So I'm, I'm fine with that, except for that's out of my experience and you can go in and do all your due diligence, but then, you know, I'm worried that I'm going to find, you know, toxic hidden nasties, you know, like old lead paint, asbestos and aspects like that, then blow the budget out.

Yeah, good question. So what are we talking here? Is this, what's the age of the suburb? Are these Victorian and Federation or is it a. Yes, they are 50s or 60s. Yep. Okay. So they're. Yeah, they're quite old. So the danger is that they've had a renovation, you know, maybe anytime after the 1940s and up to the 1980s, and they could have had some asbestos in a laundry or bathroom or sometimes in some cases even in a living room or dining room.

Yeah.

Okay. Well, I'll tell you what I like about weatherboards as opposed to brick veneer. And that is they're very flexible. You can, if they sink or if they need restumping or anything like that, it's amazing how you can fix them up so they're, they're very pliable and flexible. I bought one and it had the ridge line, which is the. You imagine the line that goes across the top of the roof doing the hand actions chain.

Doing hand actions. Just in case you're wondering, it had.

You looked at it and it looked like a house of horrors and had a great big U shape in the, in the middle of the roof. So you literally looked at this really roof going crossways to the, the way you looked at it had a great big U in the middle of it. And we got under there and stumped it up. All the roof coming, came back up straight again. So it went from being the Adams family house.

You couldn't do that with a brick veneer.

No, you can't do that with a brick veneer and you can't do that with a solid brick. So they are, from that point of view, they're pretty robust. What you can do with them as far as asbestos goes, which is, you know, probably one of the worst things you could come across. Obviously, you know, don't, don't be moving it yourself and. Yeah, years ago I used, we used to talk about ways of protecting yourself to do it. These days, it's just not worth even bothering with that. Just pay for a crew. You can get quotes in advance of that. It's often less than you might think. And particularly if it's visible and puts other people off. Sometimes it could even be in your favor that, you know, you Pay, you know, 4, 5, 6, whatever it is, depending on how Much asbestos you got. It's normally the sheds that, that, you know, you have big long sheds out the back of properties where there's a lot of asbestos, you know, and typically.

They'Re the ones that have had the damage. So they had the exposed asbestos as well. Someone's, you know, knocked a hole in the garage, you know, wall whilst they'll.

You can see it.

Yeah. Or something.

Which is great for property inspections because it scares everyone else off.

It's terrible for valuations because the valuers come back and say, oh, there's a risk warning and the banks don't want to fund it.

Yeah, okay. Yep. The other one is that you need to, when you're getting inspection, have a look in your roof because sometimes what they. A lot of those plat. Not, not in your case because you've, you're talking about Victorians, but in the kind of mid century properties where they had asbestos roofs right up until the 70s, like instead of corrugated irons, corrugated asbestos. A lot of people replace those roofs when, you know, asbestos. The awareness picked up on asbestos but, but when they took them off, they didn't necessarily take them off very well and you ended up with a lot of fibres in the ceiling, in the roof. And that's one of the things you really want to look for when you're doing. It's unlikely that's the case with your one. But still when you're getting your building inspector in getting to get his torch and have a really good look in the roof, make sure there's no fibers dropped down from an asbestos roof.

Okay.

And we do worry about a lot about that down south, but up in Brisbane there's probably hardly a renovation that that's done in Brisbane that there's no asbestos removal. That's, you know, that is also a part and parcel of it. And yes, it does add a bit of extra cost on it, but you know that people who are putting on en suites or expanding bathrooms and things, it's not uncommon for that to come about. So, you know, and there's a lot of people in the club as well on the Facebook page that have had that kind of experience. So don't let these things worry you. It's just about how it's just a cost that you have to take into account. Well, lovely speaking to you, Skye. We look forward to chatting to you next week.

Thank you so much. Appreciate your help from Jane.

Pleasure.

Speak soon. See ya.

Thank you.

I just want to touch on something there. Obviously sky was very glad to hear sky say that she wasn't going to make it an emotional purchase. Maybe it's worth talking because we've had this a lot over the years, people coming and talking about the. Which is not the case of sky. Just, I need to point out, but I want to buy an investment property and I also want to have it as a holiday home.

Yeah, yeah.

Just.

Can you just talk people through the danger of that dual thinking?

Just don't do it. Yeah. Can I just say that? Oh, look, it's funny, I. For many years I must have been the only mortgage broker that worked in January because I used to get all these calls and everyone had been on holidays and they've come back and they've gone, oh my gosh, compared to Sydney, Melbourne, you know, Noosa is so cheap or Port Douglas is so cheap or down at the bay and oh my gosh, I can pick up the bed, you know, two bedroom place for unit for 200,000. I'm in. And everyone, everyone in Genuine wants to buy a holiday house and cling a little bit onto that holiday feeling, which is where I'm going to be in October.

Right.

I mean, cling a little bit onto Port Douglas. But the fact of the matter is, is that they're not always a. It is an emotional buy and it's not always an astute decision. And yes, if you're at that stage in life where that is a very important thing to you to have that holiday retreat for yourselves, don't kid yourself that it is a money making venture, it is an emotional decision and allocate your money for it. But it's when that gray line comes about and I'm sounding pretty harsh here, but it's when the gray line, it's like, oh, I'm going to buy an investment property and I'll be able to holiday in it as well. And people who do that often take it to the best holidays. So they take it for the Christmas and Easters and they don't have it on the market for that period of time, which is the high season. Or they buy the property and there's a couple of people in the club who've just talked about this recently and they've both bought emotionally, incidentally, properties in Melbourne, down in Mount Martha and down further, and both of them, for different reasons are looking at selling, but both acknowledged that it was an emotional buy and knowing that, it's like buying a boat. They say the best day you buy a boat is the day you buy it and the day you sell it. Yeah, it's kind of like I think I find that with the conversations I have with people post holiday house it's like I lost a lot of money on this and I didn't really spend the time there. If it's gonna cost you six grand a year to, you know the difference between maybe the rent and the interest payments, you could get a really good holiday house in Port Douglas. A million dollar house for a thousand bucks a week.

Yeah.

For the time somewhere else. So just I guess take into account that it's an emotional decision. If it's an emotional decision, go full in. Don't kid yourself. If it's an investment decision, put on your investment goggles, start talking about what is going to create me wealth. What are the economic drivers for the areas where can I buy for the money that I have and if it's a long term, this is a tree change, sea change that I would like to have myself and I'm going to put it my super fund maybe and somehow do the conversion was post retirement. Speak to your accountant about that. I've got no idea how that works. But you know, if that's your decision then understand you may have 5, 10, 15, 20 years of you know, wearing the cost and it's not going to be creating your wealth whereas you could be in a property that could create your wealth that could give you a whole better retirement.

So yeah, it's easy, easy thing to do, isn't it? It reminds me of my brother in law one of the way, you know, I'm just thinking about the way you justify those decisions. So you start saying oh we'll use it as an investment property. So you're really justifying a.

And the whole family can use it anytime they want.

Yeah, my brother in law did that. He said he justified buying a new set of golf clubs because he was going to have the other ones cut down and given to the wife.

Oh nice. Yeah, yeah, yeah, I hear that. I was speaking to a guy the other day, I was at a conference and he said he walked in to get headphones for his iPad or something from the Apple store and he walked past this small little imac thing. Is it imacs the small ones?

IPad mini? Oh yes, yeah, Mac Pro or something.

And he walked in and said so small. And he looked at it and he said and he was just looking at going how can I justify a fourth laptop? And the guy, the salesman came over and just nudged him in the shoulder and went, you know it's so small you can mail it. And he said that was all he needed to know he bought it. He said, I'm never going to mail this thing. But that's all he had to say. So. Yeah, you convince yourself to anything.

Yep.

G'.

Day. Shelly's got her hand up. Let's have a look at. Hey, Shelly.

Hey, Shelly. It was either a deep breath might.

Have caught her by surprise.

I think her husband went, you're on. Hey, Shelly, can you hear us?

Yes. Hey, you're not Shelly. No, I'm not Shelly.

You're an imposter. Would you like to ask Shelly's question.

And tell us who you are? Look, I suppose our question is what's the benefit of the interest only loan? We hear a lot about it and you can use it to offset other liabilities, but if you don't have any other liabilities, is it something we should still look at?

So as a rent vestor, yes, this is a conversation that I'm struggling with at the moment. And it's a. And I had a conversation with a discovery call for a mortgage client today about this. And I said to him, if you had asked me this question six months ago, I would have given you the standard answer that I would have, I've given for the last 12 years, which is, you know, interest only allows you to, you know, if you, let's just say you had. So for those people who have a home and you have deductible debt, non deductible debt against your home, so you might have a $400,000 home and a $200,000 mortgage against it, then it makes sense to have an interest only loan on your investment property and put any extra funds that you have in paying down your home mortgage. That's kind of like the traditional approach. One step up from that is, well, look, you know, most people live in their home for nine years if in and sell, even though they don't plan to. So if this home, you know, if you could actually improve your life a bit by having the cash flow and only paying interest only on your home loan and say interest only on your investment property and having an offset account and all the extra money goes into the offset account, then the maximum loan that you have will never change. So for instance, for the same $400,000 property that in 10 years time could be 6, 7, $800,000, the loan's still $200,000. And if you did move out and made an investment property, you have the maximum loan of $200,000 against it that could be then deducted. So there's those kind of benefits now the way the offset account works, which is different from a redraw account, is when you have an offset account, it is just a pure saving account. It doesn't go into your loan. So you know, having a $200,000 loan with $50,000 in a savings account that just happens to be offsetting it for an interest only loan means that your 200 every single day the bank goes, what's the loan amount? 200,000. What's the amount in the offset? 50,000. What are we charging interest on today? 150,000. So in theory, if you had an interest only loan and over the 10 year period you had say the $200,000, you filled up the offset account to $200,000, you pay no interest. Now the difference against having a redraw facility is you're actually putting the money into the redraw and you're paying or you're paying the loan down. So over that 10 year period, your $200,000 loan is paid off and you end up with no cash. Whereas the lower risk option is in the end of the, and this is the same for rent vesting. At the end of that 10 year period you've got this $200,000 loan and you've got $200,000 worth in cash. So in case of things go wrong or the banks pull the servicing and you can't borrow money anymore, you actually have the cash and cash is king and cash gives you power. So you could pull that $200,000 out, no questions asked, it's your money and your savings, your loan goes back up up to 200,000 that you pay interest against each month, but you've got that cash for the flexibility. So as a rent fester, same deal, if you don't have non deductible debt or personal debt, your investment property, that maximum loan that you have is the maximum loan that you can deduct your interest against. So it kind of makes sense from I guess a tax performance or minimization kind of strategy around being able to claim the maximum you can against the interest, but I would still put the funds against the offset there. So you're getting the benefit because you're actually getting, let's just say you're paying 4.5% interest rate, then you'd have to earn 6% in the bank and pay tax to get the same 4.5%. And if you put your money into the bank now, you're probably going to get 2.5%. So you're actually better off money wise. In my opinion to have the money in the offset account. But the reason in the last six months that that conversation has changed is because of the lending. I'm going to take a breath soon because the lending has changed and the banks have got a whole lot tighter. So what they've done is they've gone, you know, APRA has said to the banks on 1st of September, come tomorrow, all bets are off the table. Banks aren't going to be. Banks are going to be charged, you know, penalties if they hadn't bought the amount of investor loans below a certain threshold. You know, most of the banks were over 40% and they really worked hard to discourage investment lending. And what they've done is they've made the servicing a lot difficult. So, you know, to curtail there, that didn't really work. They pushed up the investment loan interest rates didn't really work. They pushed up interest rates on interest only loans as well, not just for investors but for principal places of residence. So all of a sudden we've got this whole disparity up to 0.8% difference between a principal and interest loan and an interest only loan. So all of a sudden the conversations we're having, well, is it actually better for me to pay maybe down the $5,000 a year on principal and interest as opposed to maybe paying an extra $7,000 in interest? And that is the conversation that is more important at this time. And I went to a mortgage breakfast for CBA Diamond Mortgage Brokers last week and I was saying, if you really wanted to help us out with a calculator, that would be a really cool calculator to have because in some people's circumstances it really, you know, and what their portfolio plans are of growing the portfolio, needing the cash flow to put into the next deal or the renovation, it makes sense to have interest only. And it's so much easier to go from principal and. Sorry, from interest only to principal and interest. It's a phone call to say, can you convert me to principal and interest? Because the banks want you to pay the loans down. But here's the quandary here, is that what the banks are now doing is they're putting this kind of requirement, and we're seeing this almost weekly with some of our mortgage clients is they're saying, yeah, we'll approve the loan for you. We don't think they can quite afford it. So we insist that they pay principal and interest, which is a higher repayment. Right. It doesn't make sense. So we want to put, essentially they're putting People into a worse circumstance because they don't want the interest only loan. And so I find it completely, I've argued black and blue, but completely mind numbing. But that's what's happening at the moment is a lot of lenders are saying, we're happy to approve the loan, but it has to be principal and interest because we think that, you know, the people could be putting themselves in a little bit of difficulty.

So do loans ever go the other way from principal and interest to interest.

Only with a full application? So, yes, they can phone call from interest only, principal and interest. They want you to pay more, pay it down. But. But if you want to go back to reducing those payments, unless, I mean, obviously the banks have a very, very good back office set up for people who are in distress financially and they can delay your payments and halve them and do things. So if you're in absolute financial distress, they will come to the party because they do not want to put you out of property. So, you know, if you are in pain and feeling financially crunched and you may not be making the payment, get straight on the phone because they will come up with a plan for you. Much better than you missing a pay. But it's a fabulous question because Shelly Strat, whoever we're talking to, but it's a really good question because rentvestors, I think the conversation is, I still believe that cash is king and if you can keep stockpiling your cash, even as an offset account against your investment property, and it's better than putting the money in the bank as far as I'm concerned. So. So I think that's a good strategy. But the second conversation, which is a new conversation, is, is it worth that extra interest rate that you're going to be paying?

Thank you very much.

Does that help?

Yes. Yeah. Can you please just give us your name before you take off? So I'm Ricky.

And I'm back. So I'm back.

Sorry, have you got a question too, Shelley? Thanks, Ricky.

And tell us. I mean, you know, I was a rentvestor for 10 years and it's a new concept for a lot of people and people who are on the call who may not know what it means. Tell us what that means to you and what's it look like in your life.

Oh, look, we're kind of new to rentvest because we did have our own home and we had another investment property. But at the moment, because we moved states, it was more convenient for us to rent and be in an area where we wanted to live where we couldn't exactly buy because the prices had shot up here in Melbourne quite significantly. So for us it gives us lifestyles, good schools, close to everything that we need and want. But we don't want to miss out by not owning a home or homes.

Exactly. And I. And so you do plan to buy a home in the future, but just for the moment this is convenient for the lifestyle that you want. Yeah.

Now kids are about to go into high school in the next couple of years, so we want to stay in this area.

Yep.

Buy what we want straight away. We do still want to live here, but we don't want to not buy.

And I think that having that long term plan and understanding how your investment property is going to get you there is a great thing. And if you are going to buy your own home, then you're going to want a cash deposit. And if you, if your investment properties haven't got that equity or your borrowing capacity is kind of curtailed when the right property comes along. That's why I'd suggest maybe, you know, not paying down your loan and considering that cost benefit analysis. But it is an individual, case by case kind of opportunity to investigate. And that is, you know, just do the calculation around what's the extra interest rate, what's it going to cost us to do this as opposed to what extra amount we have to pay off every year. And if we actually put that money that we're paying off into an offset account and we were saving that money against it, you know, what would be the absolute cost benefit analysis? So do that calculation. And as I said, it'd be easy if someone came up with a calculator for us. If I had some time I would. But that's a calculation you need to kind of do. And you know, did you guys. We would have been about three months ago now. We did the new Rules of Investing for 2017 webinar. Did you guys hear that webinar that we did. We talked about rent vesting and home hopping shopping and yet the state of the market. So one of the things that I kind of made a big prediction about was that with affordability and the people similar to yourselves who want to be near good schools, et cetera, and in the catchment zones, but can't necessarily afford it. I said I thought there was going to be a huge opportunity for developers to come in and almost build those New York style apartments that were bigger, that allowed for a family of three or four to live in them and have the developments that they would hold for Renting rather than selling them. And today Mirvac's come out and said that that's exactly what they're about to start doing. Three months ahead of the pack here John. But they're actually now trying to get a fund together of investors and self managed super funds to start funding this long term hold developed to rent. And I believe that, I haven't said this but I believe that they'll probably be targeting those demographics with the bigger profitability to rent out. So I think more and more people like yourselves will be in that situation and they'll have a plethora of properties to choose from.

Great, thank you.

Okay, bye Ricky. Bye Shelley. Thanks, bye.

Great. Now Mark here, the second part of this question is interesting but I'm going to read the first part so I can get to the second part.

You just trashed your question, Mark. Just in case you're wondering maybe you should go to his microphone so he could, he can make it more interesting.

Yeah, put your hand up Mark, if you're. You got your mic there.

And.

No good so far. Okay, good. So Mark says a lot of real estate agents don't mention. Now this is in relation to granny flats. A lot of real estate agents don't mention the amount of room required to construct a granny flat. Most councils require 3 meters off the back fence and 900 meters from side fences. Maximum size of 60 square meters Living area which would relate to the, the dwelling itself excluding garages and verandas. And then he followed up with a. Something which I don't quite understand which says Mr. Fluffy reports are another big thing that we have found too. So Mark, if you could just let us know.

I, I am. You just wanted to get to the Mr. Fluffy bit, didn't you? Really?

That was why I bumped his question up.

Everyone's patiently waiting. Okay Mark, tell us first of all what state that you're talking about because I know there's different requirements. I remember a client coming to me and saying I've got this buyer's agent who's buying me this property and they specialise green flats here.

I've got his hand up.

Good on you mate. And she said and they've found this property for me and they're converting this garage. And I said look, I've been through the New South Wales planning rules. This garage doesn't comply. She said absolutely. They said they can do it. And the buyer's agent who was also getting the fee for the, the, the granny flat said bought the property went oh you know what our granny flat Teams come in and you can't do it. I was like, no. And so they had to then go and build next to it.

They might have needed a Mr. Fluffy report. Let's find out.

Hey, Mark, tell us all about Mr. Fluffy.

Mr. Fluffy.

Mr. Fluffy is the loose fill asbestos. Not very long ago now, now we've found in the place that we're actually renovating at the moment, we came across this when we're actually going through the process of buying the property and our actual solicitors brought it up because they've got a property elsewhere that actually is under that same heading that the loose fil. Asbestos that went through in that big hype of having the insulation done as cheap as chips ended up costing people a lot of money. The government put in a proposal that they actually could buy your property off you or they could demolish the property and leave you with the land.

Okay.

So if you buy a. This is in New South Wales. And if you bought one of these properties now, the actual government incentive has finished. It finished in July. So if you get caught out with one of these properties, you basically left high and dry and either have to demolish the property itself and keep the land, or yeah, you basically. You're left in the lurch, end up with a lemon.

Mark, are you talking about the loose fill asbestos? Are you talking about insulation? Yeah. And when did that go in? You're not talking about the stuff, the 2008, 2009 kind of insulation thing, are you?

Or you.

When did it actually go in?

No, it's pre. That.

Yeah. When all the rest of asbestos was a. Was in full swing.

Yeah.

Yeah.

They had had a big insulation run there for a while and luckily hearing we're from Goulburn, luckily for us here, and never really made it here, but the back end of Canberra, around Hume.

Okay.

Of all the reports. And that tends to have a fair bit. There's a fair bit around Hornsby in Sydney.

Yep.

So, yeah, we haven't come across a lot, but we found a.

Off.

Found out a reasonable amount of information off our solicitor.

Wow.

Inspection. You'd find that if you had a building inspection and they got up in the roof, they'd be able to tell you that.

Yeah. And hopefully they'd be able to take.

Off the power points to a degree they can. If you've got a good. If you've got a good building and pest inspector and you mention it to them, when they go up, they will be able to give you an indication on whether there's spores and that going up through your beams.

Right.

But generally you've got to get an independent inspection.

Okay, yeah, yeah, well, it's. I've never come across that, so that's very interesting.

Yeah, well, as I said with the place that we're doing at the moment, it was brought up to us during the purchase and yeah, it can be potential of hundreds of thousands of dollars.

So watch out for the Mr. Fluffy reports is the word for Mark. Yeah, it's good, good. Heads up. Thank you.

And your other point, it sounds like you've got a bit of experience with granny flats too, Mark.

Well, we've got a place down the coast that we're actually looking at granny flat on. So we've got a place down Lake Illawarra and we went through the Shell Harbour Council and spoke to them and got a bit of insight there.

And.

It'S the same here for Goulburn and that. So, yeah, if you're going to buy a place, you've got to make sure you've got ample room off your back fence, 3 meters off the back fence. So you're planning on having enough room for the front house to have a little bit of yard and you want a little bit of yard for the back house. A good size backyard is very, very handy.

And one of the things we tell people to do is make contact with the council and, you know, they're a wealth of information. Did you find that when you spoke to them?

Absolutely, yes, yes.

And they're so forthcoming with the info too. It's like no one's ever talked to them. Whenever we've called them up, I think.

Sometimes they get a bad rap. The, the. I've, I've used those pre application meetings so many times to get plans through and I've probably said this a million times on the calls, but we would go, we'd organize a pre application meeting and take our plans in and the first set of plans would literally be, you know, you know, drawings on, on a bit of brown paper or something. And then we'd just say, would this work? Would you accept this? You know, and then we'd say, listen, we don't want to build anything that, that's, you know, non compliant. So you just tell us what we need to build and we'll, we'll build that. And then we go away, draw it up, bring it back. And then they'd say, yep, yep, that's pretty well it. But you just need to do this. We go away, come back and then we'd actually lodge the, the plans with them at the pre application meeting. So we'd get them to inspect them again, basically tell them that we're going to get approval and then they would just, we'd leave them with them and lodge the plan. So.

Good tactic.

Yep.

And with, with the granny flats, the good thing is that you can get a speedy Pre approval with 14 days.

Okay.

As opposed to a proper building.

So.

Which is very handy.

Yeah.

If it's complying. And you know, you've got that, you know there's three types of granny flats under that Keneally 2009 granny flat kind of ruling. But you know, it can be on top or the attached to the back of the house. But, but traditionally it's the separate granny flat. Separate thing that's 60 square meters and that can usually be one or two bedrooms. But just knowing, as you said, you know, what the fundamentals are to make them complying, it's a tick of the box, 14 day approval through the council. So there's, you know, if you can do complying and I just know, you know, some of the renovations we did, we went in Kingsford, the house, we went to the Randwick Council and said, what's complying for skylights? And they said they can't be more than one square meter. One meter square. And they have to be, you know, a meter and a half off the roof line or off the gutter line and hence. And you can't have more than three. And that's exactly what we did. We just, we put in the three that complied.

It's so much better way than drawing something out of it because what most people do is they do the opposite. They just draw whatever they feel like and then they take it to council and the council goes, no, you can't.

Have that or you can come in.

And they fight for like eight months.

Yeah, exactly. So we did, you know, we did it. There's a complying and as soon as you do complying, it's nothing, it's a tick and flick.

Yeah.

So there's a bit of a tip but councils. Yeah, no, that's really good. Thank you so much for sharing that, Mark.

No, that's fine, thank you.

Are we going to get a heads up from seeing you in the Facebook page sharing your purchase down south?

Not so much the one down south at the moment, but the one we're actually doing in Goulburn here. We'll do some before and after for you.

Yeah, yep. Look forward to seeing them. No worries. Bye. Bye.

See you.

Home of the Golden Yurts, which I have no idea what you're talking about in gold.

What's a yurt?

It's like the round, you know.

No, you know, the hand thing again?

Yeah, you know, traditional kind of round tent from.

Oh, Mongolia.

Mongolia, yeah.

I've got a friend. I just had a text from her, just back from her trip to Mongolia. She's with Rio Tinto. She's over there every two months in Europe.

Like to ride my motorbike to Mongolia one day. Now, Neil has got a question. We've gone through module 11 and the ultimate Guide to Renovation and have a question about releasing equity from a current home loan in order to finance a deposit on an investment property. The question is to access equity from a current home loan. What are the differences between using a line of credit and splitting the current loan? What are the benefits and downsides to both line of credit and loan splitting options? Thanks in advance for your expert opinion.

I guess that's for me.

I'll take this.

Let me. Neela. Thank you for your question. Is Neela on the call? Yes, she is. Let's just open, see, Neela, do you want to put your hand up? If you've got a microphone, put your hand up because I just want a little bit of definition around what your definition of splitting the current loan is. I might just see if Neela's got the hand up. Do you want to.

Yeah. There you go.

Perfect.

Just in case.

Hey, Neela. Hey. Is that the right.

Hi, Jane.

It's an unusual name. So I'm assuming that you're the Neela who.

Yes, I am.

So, Neela, what do you mean by splitting the current loan?

So if you've got a current home and you've got equity in that home, they talk about loan split, like splitting the loan of your current loan split as opposed to then getting another loan, which is a line of credit loan.

Okay, so essentially the loan split terminology is kind of like, Where am I going to go with.

With this?

No idea.

I'm going to. I'm going to start at the top, let's just say. Because I'm going to make my. My numbers easy. Let's just say you've got a million dollar property and you've got a, you know, a $500,000 loan. And at an 80% loan to value ratio, the amount of equity you have available is a million dollars times 80%. 800,000. But you've already chewed up $500,000 as your home loan. So you've got $300,000 that you can have. And when they talk about splitting a loan, it's making that extra or that new $300,000 a separate loan, not increasing the first loan all the way up to 800,000. So the first definition is should you split the loan or just throw the amount on top? If you throw the amount on top, the problem there is that and the purpose of the new funds is for deductible, that is investment debt. The interest on the $500,000 loan is not deductible because it's for personal debt. And the interest on the $300,000 loan is deductible because it's for investment debt. So that's when they talk about splitting the loan or just making it one big loan. Why? We'd suggest that splitting the loan is good. But if you do split the loan, the new loan that you create in this example of $300,000 could be a number of different types of loans. So you could have a standard variable loan, which is traditionally what you possibly have against your home. You could have a line of credit or you could have a fixed loan. So it's two kind of different questions. One is the question around splitting, which is yes, separate your deductible and non deductible debt. Good idea. But once you split, what kind of loan are you going to have? Now traditionally. And I actually just had a conversation with a lady today and she was saying, I think I made a mistake with my loan, but I'm about to settle, what can I do? And we talked about her long term goals and what she wanted to achieve. And she only needed two more properties to achieve that. And she therefore needed the equity to use as a deposit and for the stamp duty for those two properties. But when she went to the bank, she said, I want to buy this next property. And they said, look, let's split the loan. You've got your current loan and you need 150,000, for argument's sake, for the next purchase, let's just get the $150,000 out for the next purchase. And what they didn't do is look at her long term goal. And she actually needed another 150,000 for the purchase after that. So it would have been better for her to take out the full $300,000 now because we know that lending's tighter and potentially she couldn't go back to her original bank and get that $150,000 out after she's got the next investment property because servicing so tight. So you need to think when you're structuring first and foremost how Much of that split that you want. So I would say get as much as you can from the property that you have whilst you can afford it, because you may not be able to get it in the future. And so split that loan. And then what type of loan do you want? Well, if you're doing a one and done, you know, I've got one investment property and that's it. I'm not doing any more. I need $150,000 to cover the deposit, the costs, and maybe some bit of renovation and a little bit of a buffer in case, you know, I have a vacancy or whatever. All I need is $150,000 and you're pretty much going to use all that. Then getting a standard variable loan and pulling all of that out makes complete sense. And. And standard variable loans are usually 0.15% less than line of credits. Line of credits are usually a little bit more, so 0.15% more, so 4.5% compared to 4.65%, for instance. But the thing about a line of credit is it's like a great big credit card. So let's just say in that previous example, this lady needed the 150,000 for this purchase, but she had a line of credit for $300,000. She only pays interest on the 150,000 that she's used. The other 150,000 sits there unused, not paying any interest on it, but it's there for her to use in the future. So lines of credits I find really flexible. I believe that they allow you to have the ability to, I guess, have future funds that you can use and a bit of a backup as well. When there was the credit crunch during the gfc, one of the concerns I had to my mortgage clients was that I could see overseas in America, unused line of credit. So unused facilities were being completely negated. Like the banks are saying, you've got 150 that you haven't used, you haven't ever used it, we're taking it off you, no questions asked. And I was worried that that would happen here. So at that period of time, I was actually getting the full $300,000 for my client as a standard variable. And as the conversation we had a little bit earlier about the rent vesting and the interest there, I actually put the extra 150 that was unused in the offset account against an offset account's your savings account. The bank can't touch it. It's your savings account 150,000, the offset account against the $300,000. So that you're only paying 150 interest on 150,000. So the cost benefit was there. But if they tried to call in the loan, the loan was completely drawn to 300,000.

Okay, so you borrowed the extra amount anyway. But instead of leaving that as a line of credit, you put that in your offset account.

So it was a standard variable loan with an offset account and that was.

Isolated there and it's paying you.

They never did that. So we went back to lines of credit. What's happened in the last six months with this investment centric reduction plan bank apra, ASIC conspiracy is the lines of credit which used to be 25 years interest only, no question asked. Fabulous. We all love that. And I'd be very happy to pay a 0.15% more for that because what we've got right at the moment is I've got clients that a can't afford to borrow any more money. In actual fact, if their current lending goes through the current servicing calculator of the current bank they're with, the bank would not even get them the loans that they currently have. But their loans are about to fall over into principal and interest loans because it's five years and they want to renew them and had planned to renew them every five years with another interest only period. They no longer can get the loans and the full application that the banks now need with their new servicing. So if they'd had an interest only line of credit for 25 years, that was never going to be a question. So they have that protection. So you know, when I set up my loans, for instance, I just made them, I didn't care that they were a little bit more expensive. I just had all lines of credit because I didn't want to think about paying principal down for a very long time. And but what has happened in the last two months is the banks, most of the banks have come back and said lines of credits are now 5 years and 10 years in term and then they'll go to principal and interest. So there's only two, two or three lenders now that have got those lines of credits for the 25 years still.

So if you were coming up. So APRA sucks.

Lorraine. Yes, I agree.

We'll give it back, we'll give this call this question back to you in a second.

Is this what you're after?

Exactly.

You're asking all the questions I want, John.

If someone was coming up to the end of a line of credit, what are their options then? Do they have to jump banks?

Yeah. And that's the issue is that with the crunch on the servicing capabilities for people at the moment, they would have to jump banks because they're most likely, unless they have serviced very, very comfortably, most likely their lendings come back. And just to give you an idea, I ran, Lisa and I were running some examples recently around how things have changed for mum, dad and the kids and what income they needed to be able to buy an investment property. And you know, the household income of, you know, buying the $700,000 home had gone from like $120,000 early 2016 to closer to 170,000 now. So that was how much more income you have for the same loan that you could have got early 20, 18 months ago. So that's how considerable the changes have been. So a lot of people are going back to the bank going, oh, the interest only period's up. You said you're going to go penile, can I have another five years? And they're like, you no longer can afford the loan you've got. And it's like, okay, let's just keep it quiet. We'll go to principal and interest and then you go to all the other lenders. So most of it, we've almost got one servicing calculator across all the banks at the moment because, because they're pulling negative gearing, they're assessing it say 7.2, 7.4%, which is not the 3 or 3 or 4 or 5% you're paying. So they're allowing for the fact that rates could go up. They're not taking in account, maybe bonuses or casual rates and not taking in account negative gearing. They might be, if you loan over $100,000, they might be loading your living expenses even though. So this is what's happening now. There's some lenders like Liberty Peppa Home Loans who provides lending through those that aren't deposit taking facilities and have escaped to some degree APRA's requirements. And so they were still assessing current debts at current rates. So if you're paying 4.5% interest only on a hundred thousand dollars loan, then you're only paying $4,500 a year, whereas all the other lenders are assessing at 25 years principal and interest seven. So they're assessing it, you know, $8,000 a year. So you take that to a million dollars. You know, they're saying one lender saying you've got cost of $45,000, the other lender's saying you've got costs of $80,000. So these three lenders though APRA has just kind of hit a shot across the bow and said for these lenders that are being funded by the major banks, we're going to start putting some restrictions on you as well. So we've seen them get inundated with loan applications. They've started pulling back and said you're a professional investor, if you have two proper. So the next property, your interest rate's going up by half a percent more. So it's a money grab as far as I can see. But the question is, if you've got an, if you're up for your interest only period, speak to your broker, not your bank. Get them to run the scenarios about what you can do with your current lender. Maybe there's other lenders that you could qualify for and go to another interest only period. Try to get the longest interest only period. You can see if you've got CBA loan, if you're in net bank, you can pretty much, if you've got an investment property, you can almost request your interest only extension up to the 10 year maximum very easily. They still haven't kind of, I don't know if it's an IT glitch or what, but you could, or you can ring and ask them about it. You know, extending that interest only period for, you know, home loans, for instance, with Westpac they have a risk, you know, you only have a certain period of time that you can have your interest only for. You can have longer for interest only because they like people paying the home off. So Neila, your question is how do I access equity for my next property? Good question. Yes, split the loans, keep the investment debt and the non investment debt separate, keep them split and then decide how you want that split. So you can have the split as a line of credit, you can have it as a standard variable or you can have it as a fixed loan if you wanted. So you pull out all the money and fix it. You can't have offset accounts with fixed loans. But, but make sure that whatever amount that you're pulling out, don't just think about the next property, think about the one after that and just get the maximum equity that you can now and that will give you the buffer and maybe a little bit more freedom and flexibility in the future.

Yeah, that's perfect, thank you. I was just touching on a couple of things you said with serviceability, if you have. I know we've talked about having all your. With one bank or you know, like they want to try and tie you in. I think one of the modules you were talking about that if you, if you're going, say you have one investment property and you have say another one you want to, you want to get with the same loan, the same bank lender, sorry, if they have a limit, like do they, do they end up like if just say it goes to say 1.5 million or something combined by two properties, does their services then become higher for that? Like if just say your loan was say from 750 to a million, it's a certain serviceability. If it goes above a million, do they then add on extra servicing factors?

Do you know if they do that? It's a good question. Their assessment can be harder. So for instance, for Liberty, you can't have, they just have a hard and fast rule that you can't have more than $2 million lending with them. So they don't make it harder, they just say you can't. And we've taken a couple of clients who had to get the extra equity out and get the interest only terms. We've gone and we've had a present, well, not present, we have had to present the application to their risk board takes an extra 10 days and it's $1,000 for something for them to assess it to go over the $2 million. So, so some lenders have like a buffer, the big banks don't. They're happy to give you as much money as possible, but what they will do is they'll make it harder. So they might actually make, you know, they've got this kind of credit rating or credit scoring facility within the lenders which is really a black box. And even, you know, the senior managers don't really know what goes into the box and how they rate you. And I know there's some things we've played around with applications where, where we might get an online to try out with this past servicing and it comes back and says no. And we've got maybe the wife who's got the higher income of $100,000, who's been in a job for four months and the husband on $60,000 and spending his job for 10 years. And we make the husband the number one applicant and it passes because of the tenure of the job. So we kind of. And if you only have a mobile phone, you don't have a landline, there's an extra point off. So there's all these funny things. And we've tried to kind of hack the system to try to find out many times what makes it go and what makes it doesn't and that's kind of, you know, it's funny because sometimes we talk to people who've gone, like the bank said, no, like, well, let's just see if we can repackage this a little bit and it can get through. So it's that internal scoring that they give you as well. You know, if you're over a certain amount of debt asset ratio, they might score you a bit harsher. Or if they term you as rental reliant, as in the fact that you earn $80,000 a year, but you earn $60,000 on top of that from rent, they might say, gee, your servicing is really rental reliant, and hence you get some negative scoring there or more harsher assessment. So other than that liberty kind of limit that I'm very aware of, I know that things do go on the microscope a little bit further, and especially if all the lending's with one lender. So that's why I say, I mean, that's why my lending's with different lenders. And I've moved it around specifically because I don't want to be on their kind of up against their risk committee at some stage where they're going, oh, you know, there's a million dollars, one and a half million dollars worth of lending here.

Yeah.

And really quickly, something touched on about interest only loans and principal and interest loans before, and you were saying, now the differences probably up to 0.85%. And you're kind of thinking, is it worth it? What's a difference that would be acceptable? Like, what's a good difference that, you know, like that you would say, yep, go for interest only as opposed to principal and interest.

You know, once again, that's why I really want to have this calculator because it really comes down to your personal situation. Like if you're just, if you're building, if you're actively building your portfolio, regardless, you know, having the money in your pocket is, is a really good thing to have. And like, you know, I spoke to a lady yesterday who was looking to do a development on back of her property. Then she's got the ability to make a million dollars out of this. And she was saying, I just don't know where I'm going to get the funds. I was saying, well, you can get private funding for like, well, 3, 4% a month, 36% a year. You know, if, if that interest is going to still make you money, it's well worth it. You know, so it really comes back to your, your circumstances. And you know, there is the variability. I was speaking to someone today who was saying that their home, their fixed home loan was 3.88. So they just fixed for three years. They'd been offered by St. George 4.16% for their, their standard variable against the non fixed home loan and 4.19% for the investment. So there was about 0.03% difference for the investment but they were both principal and interest and so it's kind of that interest only gap. I think it's a thing that needs to really be modelled to show the long term benefit to your portfolio plans rather than just that short term, you know, what the cost is going to be.

Yeah, great. Thank you so much for all your opinions. That's great.

My pleasure. No problem. See you. Neela, thanks for sending a question in. Lorraine said.

Thanks John.

Oh, Lorraine said eight weeks ago they did, they requested an extra five years interest only and it was easy peasy back then. So two weeks ago? No, last Friday. St. George, George, Westpac and all that group, they change things. So. Yep.

Great. Well, Christina's been waiting patiently. I'm hoping to have 100k to use a deposit.

Great.

Am I better to buy two cheaper investment properties or one high priced property?

Ooh, Christina, good question. Let's put, put your hand up if you're about. I love having a chat.

So we won't unmute your line unless we can see your hand up there.

Hands there?

Yeah, beautiful. There we go.

Hey Christina, how you going? Hello. Well, whilst Christina might be getting her microphone organized, let me. Her hand's probably up. Can you hear me? Yes, we got you. Hi, how you going? Well, thank you. So whereabouts are you? What kind of areas are you looking at, having to decide between? So I'm in Queensland so I was looking around Brisbane, potentially regional areas as well, such as Toowoomba or Ipswich for cheaper areas. So don't know whether to go in cheaper regional areas. We can get something for around the 350mark and buy two properties like that or to go something a little bit higher and maybe the 600 and buy in the Brisbane area. Just not sure whether to reduce the risk maybe by buying two properties using the formula or just to buy one good property.

Great question.

Yeah, look, this is a really good question and it's really interesting that you say, you know, you potentially can reduce the risk by buying two properties in different areas that you know, might have geographically apart but might have different economy drivers because you know, when one goes up, the other goes down. And you know, to be honest, I think that possibly is the riskier way to do it. And the reason why is that, you know, if you're kind of once again it comes down to this suburb due diligence and the due diligence that you're doing. But for instance, you know, with $100,000 as a deposit then at an 80% loan to value ratio that $500,000 mark and if you can get, you know, if you still got the ability to do a 10% deposit or potentially go up to a million. So that $600,000 purchase price, I was just doing some prep for the hotspotting workshop this weekend and that median around 680 in Brissy is that's getting you well within 15Ks. And commutability, infrastructure, transport, where people want to live, where the population demands are.

The big city drivers.

Yeah. So you're getting within that area whereas when you were getting down to that 350 mark and you're pushing out to those kind of regional areas, there is going to be a flow on effect affordability wise. And it's really interesting, I speak to people in Sydney and they go 1.2, $1.1 million median price depending on who you follow, sqm or rp data. But we've got these median prices in Sydney and they're all packing up, they can't afford to live there. They're moving into the country and know because it's so expensive. And then I have conversations, people in Brisbane go, all my friends, it's so expensive in Brisbane now they're moving into the country, you know, they're going to the Sunshine Coast. And so it is so relative and but the thing is around that $350,000 price point, if the predicted growth for that area is 10%, you can make $35,000 a year. Whereas you know, if you're talking about that $600,000, you know, property and you've got 7% growth, then it's $42,000 a year.

So you're leveraging a much higher number.

Yeah. So you could, you can almost accept a smaller growth rate. However, finding a 10% growth in those regional areas would be exceptional as well. So you really would have to have those economic drivers that are amazing. You're going to get the cash flow, you're going to get some good yields. But mind you, we're talking about four and a half to five and a half a half percent yields in Brisbane. Whereas Sydney's doing 2.8%, Melbourne's doing 2.4%. Interest rates are somewhere between 4. So you're already in a better cash flow position. I almost think that when I talk about geographically diversifying, I'm talking about geographically diversifying your portfolio based on the fact that you're going to be in multiple cities in the bed, best possible place you can afford in, when you can afford it. And you know, for me that's, that's looking at the $600,000 price point and saying where, where in Australia could I actually get the best growth for this suburb for this price point where I'm going to, you know, try to minimize as much as possible my cash flow position. So I'm going to have as much yield as I can. But I'd definitely be considering having the higher, better located proximity growth driver property with and maybe, maybe big, maybe sacrificing a little bit of growth but having the growth applying to a higher price point. Yeah, excellent, wonderful. Because yeah, I've got a 30 year timeline as well. Oh good. So yeah, I've got my side as well. Perfect. Oh that's great. So you've got time on your side. Just don't be like those people go look, I've got time to make mistakes. It can come back. Get in there and make every single year count and have that growth working for you. So follow the methodology that we talk about in the suburb selection. Get down, do the dot. Have you done your dot map? Yes, I have. Ah, perfect. So do your dot map, you know, come up with those suburbs if you want to buy extra reports, you know and to see what other experts are talking about. Get into the suburb selector software and put in those suburbs, look at the drivers, start getting into the suburbs. Use even the census tutorial I created on how to use the table builder and find out where the renters want to be. And then you could even get some prediction reports that link that we've got to Residex so that you can actually not buy the whole $250 report for 200 suburbs that don't fit your profile. But go into the one that say I've got $600,000 in Brisbane, so go in there and get that. So may cost you 50, 60 or $80 depending on how many suburbs there are.

It's money well spent when you're searching for a suburb.

Yeah. And then get in and find out where in the suburb to buy. I mean it's essentially exactly this process that we follow. We follow it in the workshop, we follow it for that done for you method that we do for the clients that we got coming in it's exactly, you know, what we do for others and do for ourselves is exactly this process and it's getting down to that typical property in the best street that you can afford in the best area and let time make you rich. Excellent. Well, that's great advice. Thank you very much. All the best.

See you, Christina.

Thank you.

It's funny, we were talking on the webinar the other day about. It almost seems fussy when you're going through that suburb selection process and you. And it's incremental things. So you're 30% rent is here. You're, you know, more than 10 sales a month here you want to see 3%, 3% vacancy. So you've got equilibrium. Yeah, all those little things but. And there's a bunch of, you know, there's another 25 of those or something. But all of those little things add up and when you think about it, you're comparing that to a suburb next door that hasn't got all of those things. It's only got 11 of those things and this one's only got 15. 15 of those.

Yeah, absolutely.

So you're really stacking the odds in your favour by doing all these little incremental things that all add up.

And it's interesting, you know, Brisbane had 2.3% overall. Brisbane had 2.3% growth last year. And you know the suburbs that we selected all outperformed that in the last workshop and one of them did 9%. So that extra, extra 7%. Winham.

Winam. Winham.

Extra 7%. That's insane. When we talk about 1% making you over 10 years, $250,000. If Christina's got 30 years up a sleeve having every single one of those years. And guys, if you haven't done it already. I know I talk about creating calculators. I do like doing them. I just haven't done the principal and interest, interest only one yet, but I did create one on investorschoice.com head over to the portfolio calculator and just have a look at. Put in your long term goal in 30 years. I want a passive income of. And just see if it's realistic now of what the portfolio that you need to have.

Cindy says, ah, Wynnum is actually the suburb I was looking at.

Aha. Winner, winner, chicken dinner. Oh, actually I was looking, I was looking at the dot map today and looking at the suburbs near Wynnum that's got that kind of pricing pressure from the coast towards the city and from the city in.

So Simon, you've got your Hand up. I almost forgot you good on you. Sorry, Danny, do you finish?

Oh, I'm happy to finish, but yes, you're in. You're looking at those kind of pricing pressures there, so you're on the right track. Christina.

Simon.

Hello.

How are you?

How are you?

Good. We had a chat today.

Ah, how you going? Simon? You're the person who drove over from South Australia to the Renault Fest, right?

I flew.

Are you flew? Someone. Someone drove a carriage?

Yeah, I think someone drove from all Adelaide direction.

Yep.

Gotta love it.

Yeah, I was in. I'm in the Southeast, so. Yeah. Yeah. So I talked to John today and so he recommended talking to you a bit more tonight. I probably had a few questions. I'm not sure if we've got time for them all. Yeah. So we're just in the process of buying a first property. In fact, settlement is actually tomorrow.

Oh, my God. How so Congratulations.

Thank you.

You.

I just sort of wish I'd found out about the. Your property success club just a little bit early because we were sort of already had signed before I really found out about the club and started doing all that sort of research. So I'm not. We're not. Well, I'm not 100% sure if I've done the right thing or not. So. Still in the process of working that out and I guess we'll find out eventually. I guess one of the things was being able to get my partner, Lenora a bit more on board with the whole process and moving forward using equity. It's probably still in a couple of years down the track, but I need to be able to convince her about the plan moving forward and also I guess in the short term working out what I can do with the new property to get that equity out of it. And where do I go from there? Since we started in Mount Gambier, you know, is it possible to continue or do we need to move on to a bigger city, you know, which I'm prepared to do if that needs to be done.

And I guess the thing is that, you know, you've got a link to the property. Fabulous. Can we pull this up on screen?

Yes.

I guess no one can actually gazump you at this stage. Right. The thing is with the, I guess the process and understanding the process, one of the questions that you kind of mentioned is the bringing your partner on board. And it is so common and you're not alone and you probably find a lot of people within the club going, yep, I hear what you're saying. And the thing is that it's not like they're trying to pull you down or they're trying to be naysayers or negative about the situation. There's just that fundamental protection of the family nest egg, the building wealth for the family, and there's risk associated with it. We've heard all the terrible stories. I'm trying to bring up the family and create some security. Are we putting that at risk? That at risk? And I guess one of the things that for me, the only answer to all of that is a methodology and kind of a proven step by step process that you can show someone and go, go look, if I can show you how that every step of the way we can minimize the risk on this and we can buy a property that people want to live in. And here's the numbers to substantiate this and buy in an area that has growth drivers. And this is what this means. You know, it's around an economy that's thriving. And look, I don't know, I've had a few clients in Mount Gambier. I don't know the economic model around Mount Gambier, but I grew up in Dubbo and you know those large regional areas which are kind of like the feeder for all of those smaller areas in the area, you know, it's where the people from the land retire to, you know, the big city of Mount Gambier or the big city of Dubbo. It's kind of those, you know, it's where everyone goes into see the stock and station agent or the cattle sales are or whatever those drivers are. As long as it's not that single kind of industry. Whereas the abattoir closes down, you know, she's all over for the town. You know, it's not such a bad thing. So I know there's like some growth potential there, but it's around finding the typical property that people want or creating that. If you've got a property that doesn't necessarily fit into the bounds, but you want to be where they want to be. So if you've already got an established property and there's not much you can do about it, and just assuming that it is wrong. And this is for everyone on the call, this is not commenting on you, Simon. You have that decision where it's like there is the buying in and selling costs. Did you want to sell or did you want to substitute it, Move it, Move your loan to another property, or can you do something to this property to make it more attractive? Which could just be furnishing it. Could it be Foxtel, could it be, you know, is it an area where the, there's families and kids close to schools and they want to have fences or security, you know, whatever it is, there might be something that can just make this property a little bit better. Or you know, is it this, the street appeal from the front where people fall in love when they walk up to up the street because they don't want to see, you know, a brick facade. They want to see a rendered nice property with the rose bushes out the front. I don't know. So, but it's kind of like looking at what they want to see. So you know, don't, don't worry too much about this property in the sense, you know, you've got some, you've got some good learner now and you know, some things that you can do with this property to maximize it and create the equity, make it rentable so you don't have the vacancy rates. But I think the bigger question is bringing someone on board who may not be convinced of what the methodology is. Give her a copy of my book for Christmas. But it's kind of like following through that if you get one right. It's a slow way to wealth. It's about solidifying it, not running out and buying 10 properties. It's getting the right one first, sitting in that loan, making sure that the cash flow doesn't affect negatively your, your family with sacrifices they're not prepared to make. Then look where the equity's grown, be it manufactured by you through renovation or development or granny flats or whatever it is, and then accessing that and buying the next one. And it's a step by step process where you can actually show them the process and how it will work. And at any time you can stop, but this is the plan. And I think that kind of conversation is a lot more conducive to we're just going to do it or it might just be the look, I think it's going to cost me 150 bucks a week to do this. You know, if we can for the next six months put $150 a week away without too much affecting our lifestyle, can we then have that conversation in six months time? And I think that kind of, you know, as you can tell, John and I aren't alpha aggressive people and we're low risk people. So you know, it's around that bringing people on and taking them through the process and sharing that kind of the whole experience with them and, and having a bit of fun of looking at the pretty Pictures online and saving them to Pinterest or whatever it is, but, you know, getting the family involved with. Hey, you know, what do you think you could do with this floor plan? Or, you know, let's get the dots and the kids out for the dot mapping exercise.

Yeah, gotta get them to join in.

But we've got your pictures up here. You might want to talk us through it if we.

What? I was just gonna. Yeah, I was gonna say, Simon, it's almost like, I mean, you've got your. Your hand now. You've bought this property. And I know you would have preferred to run into the ultimate guide or your property success club first, but you're almost starting from module four now. So all of that stuff where you look at how much value you can add to a property or how much equity is available to get out of it is basically from the module 4 onwards. So you can look at your property that you own and they're exactly the same way. Way as you would if you were looking at a property to purchase. So you can look at the comparable sales at the renovated level. You can look how much work needs to be done and then from those, and then work backwards to work out, okay, where am I at the risk of over capitalizing here? Or can I spend, you know, 5, 6, 7, $8,000 and that's going to bump me up into another category, potentially get more rent? All of those same calculations that you would do when you're assessing a property and doing a feasibility the first time around. You can, you can do to this property and then you just. And then you'd be guided by the numbers. So it might be the case that. No, you can't. It's. It's. There isn't really room to do more than a good cleanup or it might be the case that. Yeah, there is. You can see the house down the street, which is very similar. Same number of bedrooms, you know, brick as well. It's. It's getting more rent because it's got whatever. We saw one. Remember, we looked at one suburb and it was all gazebos at the back.

Every.

Every single house had gazebo at the back.

That was with Emily.

Yeah, it was.

That was the typical property somewhere up Milton T way.

Yeah. Yep. Yeah. Do you want to talk us through it? I'll.

I'll.

Yeah. Yeah. So it. When we looked at it, obviously, preferably it would have been empty when we looked at it, but actually had tenants in it. When, when I first drove past it, I didn't think there was anyone in, In It. But then when we actually inquired, they said they'll take us through, but there are tenants. So it was clean inside, but the tenants, it almost looked like they'd moved from a four bedroom into a three bedroom. They just had a lot of stuff. I mean it was tidy but it was just, you know, a bit cramped. So it was kind of hard. But I guess going by these photos, you can sort of tell it's, you know, it's pretty decent inside, doesn't really need a lot of work. You know, I've sort of looked at it and thought, well, I can just do these few small things and it's just going to lift it that little bit just to modernize it just a little bit.

Yeah.

And so it's tenanted until May next year. So. And it's. And the cash flow is positive. You know, I think the year it's about 13.

Well, you'd be one of the few people in Australia who's getting that with just one property on one time. So congratulations.

Yeah, absolutely. So I guess of. Yeah, we sort of realized that, you know, we can't do anything on the inside, you know, for a good year we won't do anything until they're out. Or even talking to John today, he said, you know, maybe don't even, you know, don't even kick them out after that year. Maybe let them stay in. I think you were saying, you know, bird in the hands with two in the bush or something. So then I sort of think, well, you know, there is plenty I can do outside. I'm, you know, I'm a landscaper by trade, so I certainly look at the front and I look at looking, improving the street appeal, which, you know, I can just stand there and easily see exactly what I need to do and what it's going to cost me and how much I think it's going to lift it in value. I mean, for a start, I'd take out those two big pines at the front because I'm pretty sure they're filling the gutters with crap. Yeah. And it would open the front up a lot.

Yep.

Then you. There's two bedroom windows there that they're shading, which you wouldn't even be able to see out of really. So I'd take those out and then I guess one of the questions was, I think originally I looked at it and thought straight away, while I'd render that, I'd cut, cut the window seals and, you know, flatten them off. I think I'd seen you, Jane, in one of your Videos do that. But then after a while I thought, well, I've only got so much that I can play with for a renovation. I have compared it to other houses in the street and my price mark was trying to lift it to 200,000. So I thought, well, I can only spend so much before I'm not really going to get much back. Yeah, so I can. And so then I thought, well, maybe I don't have to render. Maybe I can just paint, you know, paint that timber work the. Paint the eaves and the posts and the, the window surrounds and that might, that just might, you know, lift it enough and then do a bit of work in the garden. Yeah, yeah. So I just, I wasn't quite sure on that either.

Yeah, you're doing it the right way by looking at those other comparable properties at the renovated level on the street. That'll tell you whether you've got the money to renovate it or not or how much you've got there. And I would say if it's a close run thing, just hang on for a bit. Don't spend the money now if you've got tenants in there. But if you can see that there's a gap there. If the house down the road at the comparable property at the renovated level is 50, 60, $70,000 more, then that would suggest you have got the money. And then you're looking at, as Jane always says, the typical property. What is the typical property and what do they want? What are the people, people in that area want? Is it the gazebo at the back, Is it the rendered facade or are they all exposed brick? So it might be that you don't need to do that. It might be that, you know, for instance, you can paint up the timber work and potentially even spray the roof again, if that's something that's normal in that neighborhood.

Put a carport in. It's what, it's what they want, you know, and. But don't spend the money unless it's going to get it returned. So as John said, you know, you've got now module four, you know, and module five around that pricing. You know, you can price up the works, but if there's no pricing disparity, then you've got the great yield and that could be the yielding property in your portfolio and the next one could be the growth one.

Yeah, and occasionally people have been dead keen to get in there for a renovation. We've seen this from time to time and done the renovation where there wasn't a huge margin in it and they're probably a little bit more motivated by actually getting in there and getting their hands. Yeah. And then had trucks, trouble getting it tenanted again afterwards. And really the gains that they'd made in the renovation that almost lost in the. In the vacancy. Yeah.

And the cost to hold it. But there's nothing objectional about that property at all. You know, the kitchen, bathroom, everything looks really functional. Obviously the tenants are in there. We've got a long lace. You know, we've got lovely polished floorboards. So, you know, and as a landscaper, as John says, you know, he was a tradie. Whenever. When you're. Give me a quote.

Yeah.

When you're a hammer, everything looks like a nail.

So as a landscaper, you look in landscaping straight away, it may not be, you know, the expense you need to pay. I mean, what you're saying makes sense, but once you start pulling that picture out and looking around and even doing the Google look around the other properties in the area, we find that so easy, so very quickly able to go, oh, well, all the properties look the same. They've all got pencil pines.

Now, Simon had a good question today, Jane, and I said, well, you've got to get on the call and ask that of.

Oh, my goodness, now I'm nervous, Jane. Yeah.

So you're getting a good. The question was, I'm going to ask it for you, so I'll save you the trouble. The question is you're getting a good yield.

Yeah.

What does he do with the extra rent? Where does he put the money?

Where do you put the money? Oh, my gosh.

Well, not only the extra. Yeah. Not only the extra from the rent or from the extra yield, also the extra savings that, you know, we were. We had been putting into a deposit. Deposit. Yeah. Now what can we do with the extra that we have left over from our income? Because we both work full time. So. Yeah, I guess. Are we putting it onto the loan, paying that house down quicker or we looking to stack up another deposit to pay off, like stamp duty on the next purchase, whenever that may be, or.

Yeah. Or what. I think, as I kind of said before, you know, if you put your money in the bank now, you're probably getting 2.5% and then you're paying tax on it. So you're probably ending up with like one and a half percent of your funds as opposed to if you had it in an offset account, not paying down the mortgage, not in a redraw, but you had it in an offset account. And let's just say your loan's 150 now, and you're putting that extra 50 bucks a week in and your savings of maybe 500amonth. A month or whatever it is, and building up the offset. You're building up up your deposit or your renovation budget for this property. So you're building up that cash reserve. And effectively, if you've got $150,000 loan, and let's just say you've got $10,000 in your offset account, then you're only paying interest on the 140,000. So really, you're saving yourself. And let's just say your interest rate is 4.5%. You're saving yourself or you're earning 4.5% on the $10,000 as opposed to putting it in the bank and paying tax, which if you were earning 4.5%, you'd have to. After tax, you'd have to kind of earn 6%. So there's nowhere you can put your money today in a savings account and then get 6%, unless you've got millions of dollars outside my ball range, but millions of dollars to put into a savings account. So in my mind, that's one option. The other thing is, do you pay it down and start paying a little bit of the principal off, which a lot of people, we talked about the benefits maybe from an interest rate, it's not going to have such a big difference to you on such a smaller loan amount, but it's money that you don't get or a longer period of time that you have to save to get to your next property at these lower price points with the huge amount of yield that you're getting, often you don't have the growth potential. And that means that you have to save the equity to buy the next property rather than pull equity out of the property. Property that you've got now. So unless you're willing to wait, you know, five, 10 years for the next property, I'd say start being a squirrel and squirreling away the funds into an offset account.

Yep.

Yeah. Now we're happy to certainly do that. And that's originally where we did want an offset to start with, but then we went with the. Where we went with St. George, basically because we had a family member working for them and they said, go with us.

We.

Because, you know, you know, a family member works for the bank, you get certain fees off of it.

Yep.

Yeah, so we did that. But I'm thinking that may not be. May not have been, you know, much of a. Much of a point, really. You know, I Probably would have rather going somewhere else and having the offset.

So St. George has offset accounts. St. George has offset account accounts. So if you've serviced with St. George, it might just, I mean, I know you're settling tomorrow, but it might just be a post settlement conversation that you have with them saying you gave me your basic loan or you gave me your portfolio loan. In actual fact, I wanted the offset at loan. Can I just move this to the higher fee paying loan? So it might just be the $395 a year annual fee that you pay or whatever it is, is. But what often happens with the big banks is they have tiers. So if the loan's under 150 grand, you may not qualify for the professional package which has the free offset. You may have to pay for that. So just find out, depending on the loan amount you have, just find out what the difference is. But I think putting those funds, unless you've got somewhere else to invest, putting those funds away in the offset could really benefit it. The issue of putting it into the redraw is that if you ever, and it may not be, speak to your accountant about this because it may not be an issue for you because you're in a unique position because you know your only debt that you have is investment debt. Like, you know what we spoke previously about rentvesting with Ricky and she, Shelley was, is that if you do have your funds in the redraw, what happens if you have a $200,000 loan, home loan, and you put your $50,000 into the redraw and then you pull it out, then the $50,000, the loan's contaminated with $50,000 worth of deductible debt and 150,000 of non deductible debt. Whereas if you've put the loan in, if you put redraw into your investment property and the only other reason that you'd use that money in the future is for an investment, then it's all investment debt. So you're kind of moving the loan up and down for investment debt. So speak to your accountant about it because it may not be such a big deal with the loan that you have. And I'm only saying this in the reference to the fact that if your loan is less than 150,000, they may make it a very expensive standard variable rate for you that makes it not worth.

Yeah, I think that might have been the situation we were in because it is under. It's more like 120,000.

Okay. So that might be the case. You don't qualify for that kind of free offset professional package thing. So have a chat to your accountant just about the fact that, you know, if you put money in the redraw and pull it out, if you're not pulling out for your home, but you're pulling it out for a future home purchase, but you're pulling it out for a investment, you know, that 200 or $120,000 loan can go up and down and it's all for investment. So it's all okay.

Yeah.

Okay. All right.

Would it be worth booking a call with you, Jane, next week as well to go over any extra stuff like that or pretty, right?

Yep.

More than happy. More than happy to do it.

Right. All right, Good day.

Thanks a lot, Simon. Thank you.

Thank you very much.

I'm going to tell you something interesting happened to me today. Sure.

You had a chat with a guy named Simon as well?

No, I had a chat with my husband and he said, you're not going to believe what just happened. I had a chat to our rental manager and you know, six months ago when they did the inspection, they came back and said, oh, there's three people in the property. And Todd said, are they tenants? Because if they're tenants, they have to be on the lease. And they asked the guy on the lease and he said, oh no, no, no, they're just visiting. So when they went, we're organizing the inspection the next week, they sent a letter off and the tenants rang up and said, oh no, we sublet off the guy who doesn't live here. And it's a bargain because we're getting it 680 a week including water, and we're getting 580 a week and it's a unit and the landlords pay the water.

Okay.

So. And we're going fine because he didn't renew his. We sent him a thing to say, do you want to renew your lease? And we didn't get anything back. And we've just signed them up at 6:80 a week and they don't even.

Have to move his tenants.

Yeah.

Fantastic.

So we put him on the blacklist of McGrath. We couldn't put him on the blacklist for references in the future because he's been paying the rent.

Yeah.

So, yeah, so I think a lot of people are kind of having that with the Airbnb situation as well. But yeah, he squished three people into a two bedroom little apartment and happy days. And they were very happy to pay the 680 that they were getting. A bargain because he'd done a great sales pitch because they were getting water included and unless they're running some kind of laundry I don't know about, we're all okay now.

We were about to wrap up, but I see Mark's got his hand up, so.

Mark, so much for our one hour calls. We've never been able to do that, have we? Hey, Mark, how you going?

Hi, guys. Yeah, I'm good.

You?

Thank.

Thank you.

I just wanted to quickly let you know, last month we spoke about the property that my dad was selling. Yeah. How'd you go on the market? Yes, it sold on the weekend.

Oh, congratulations.

At auction. They got the auction finished right. On 700,000. Oh, I guess like a nice round figure.

So remind me of the numbers and what we talked about.

I think we talked about. About hoping to get about 660.

We pulled up some comparable.

Yeah, we went through the.

Yeah, you sent me a report, Jane. I can't remember who it was from, but it actually said estimated price was. Yeah, that. That they estimated 712.

Nice.

Or 714, which I thought was. Was very high, but anyway, there was. There was plenty of demand on the day.

Fantastic.

That's what we like about auctions. Get the juices going.

It's great.

That's such auction. Thank you for sharing that. And how was the auction experience itself?

Yeah, it was a bit nerve wracking, but it was okay. The person who ended up buying it put in an opening bid of 620, which scared all the first time it was off because there's 600,000.

Yep.

Yeah, I remember listening to that in one of your podcasts. Yeah, yeah, one of the. So, yeah, but then the auctioneer came inside because nobody put in any bids after the 6:20.

Yep.

Auctioneer did a whole big spiel, came inside, spoke to us for 5 minutes, 10 minutes, and let his staff, the Ray White staff, go out and sort of talk to the six kind of people who were. They thought would potentially put in a bid. And that seemed to work because he came back out and the auction kicked off and it went all up to 700. So it was a good result.

Oh, that is so good sometimes. That's right. Well, I'm glad we could help you out and give you a bit of confidence to push it a bit higher and hang out for it too. But that's good news. Actually, we've got someone on the Facebook group who's. I've just had a conversation with her yesterday. Her mum's trying to sell a property as well. So I'VE sent her a couple of RPG data evaluations too.

There is nothing better when you're sitting in the room like sitting in the house and we do it, we, we have our typically sit with the back to the window with the window open so I can listen with my ear out of the window. The auction going on and there is nothing better when the price is running away and you're sitting inside and you know, just turning over. Tick, tick, tick.

I've never had that experience.

I only had it once and you know what?

So it has a sale.

I haven't even had it. No, I haven't even had it properly because I've auctioned bunch of places now. But the actual only good, the best auction of all, which is like 50% better than all of the other auctions was when we were doing a workshop.

In.

Brisbane and I actually couldn't be at the auction and it ran away and unfortunately I never got to experience it.

But anyway, you were on the phone. Yeah, he popped out for a break going oh, I've sold it. That's right, the last amount. Oh that's. Thank you much so, so much for giving us feedback on that Mark because it's nice to get a bit of closure on what's been happening as well. Yeah, thank you, thank you. See you later.

Well, I reckon that's it Jane. No more hands up, no more questions in chat.

Good. Well let's say goodbye to everyone. Look guys, it's been great chatting to you and I'm sorry we've run over again and for those of you, I think I've got a 5:30 taxi tomorrow morning get my flight to Brisbane but hopefully we're going to catch up with some of you tomorrow night at Royal and the Park, Alice street in Brisbane for six for a bit of a quick little meetup to say hi and looking forward to hanging out with more of you this Saturday and next Sunday in Brisbane and Melbourne for our hotspotting workshops. And yeah, really, really excited. We've got a great month ahead. We're really buckling down and helping sky and some others out on their, their suburb selection and process which is going to be lots and lots of fun. So I hope you guys have enjoyed, enjoyed this call and you know, please, you know, if you are one of those people who were facing a few challenges with maybe unsupportive partners, you might want to lock them in the car and drive them to Brisbane and. Yeah, and, and listen to the call. That's what I was going. So my husband hates it when. When we go for drives, like, now I've got everyone locked in the car. I want to talk to you.

He's like, something I want to talk about.

I know. So I had. I had an hour and a half to Ballarat last Friday night. I was like, what's everyone grateful for this week? It's like, no. So anyhow. But hopefully you're not struggling with that. But if you are, you know, share as much information as you can, and once again, you know, get in and get involved in the your property success Facebook group. It's a great group, sharing so much information, and we love being part of it and love having you being part of it as well. And as always, here is to your property success.

See ya.