Your Property Success Mentor Call - August 28-08-2015

And welcome to the Call for August. It is great to have you on the call and I really look forward to chatting with you tonight. I do hope you've got lots of questions. We've been very busy this month. We've had quite a few emailed in. Still not a lot on the phone line though, so please make sure that you use that. We have so much coming up for you tonight and of course we'll be taking all your questions and hearing from you a little bit later. So settle in and make yourself comfortable and get ready to chat. These calls are exclusively for my mentoring students, the students of the Ultimate Guide to Renovation and my Investors Choice Mortgages Diamonds clients. Tonight we do have some special guests as well. We've got the youe Property Success Club who are just getting a little bit of a taste of what this is all about at your Property Success mentor. So guys, you've got the opportunity in the next few webinars to join us and ask some questions. So whilst you're here, look around, have a chat, ask the questions that you can. Don't be shy. If this is your first call, everyone is very, very welcome and we're really excited to be here and answer any of the questions that you have to do with property. These calls generally take place on the last Thursday of every month and of course you're going to receive their email reminders beforehand. And as the time gets closer, a week out, a day out, an hour out, you're going to get some emails from me and you can always leave us a question on the recorded message line or email me@questionsourpropertysuccess.com. so that phone number is 1 376, 119. So if you can't make the call and you do want to ask me a question and explain in a little bit more detail, please ring that number, 1300-76-1019. It's there and it's waiting there for you. And you can always send the emails through to questionsourpropertysuccess.com so great to have you all here. Now as always, I have the co creator of the Ultimate Guide to Renovation with me this evening, John Hubbard. Hello John.

Hey Jane. Hey everyone.

Now some people don't know a lot about you and that might be their first call. And John and I have been working together for a few years now.

Yep, that's right.

And working with the Ultimate Guide to Renovation and some other wonderful products like the youe Property Success Club and some really great things that we've been putting together in the last couple of months.

Yes. Your Property Success Club being the last project that we've done together, which is great. And it's great to see the Facebook group kicking off too, and people participating.

I know. It's so good to see so many experienced people there and so many newbies as well.

Yeah. And there really is some experienced people in there, too, as part of. I was part of putting the. The testing of that together. And so I spoke to a lot of people and, you know, some guys have got five and eight properties and stuff like that. Yes. Yeah. And all of them had some really key learnings come out of that monthly content as well. So it's not just for people starting out, but if you are starting out, it's a really good basis to start from.

And like the renovator network that we have for the ultimate guide to Renovation, just having that community there and people to support you and ask questions is just so powerful, isn't it?

It is. And sometimes those things aren't. They seem silly when you get the answer to them because you just tend to, when you're learning, you put those roadblocks in front of yourself, or it might just be a little small thing that someone else can answer for you quite quickly and then you can keep moving so you don't get stuck.

Well, I know this week I've been, you know, putting. Putting my thoughts around the future and what we're doing for everyone within the club and the network, the diamond clients and gee, you know, sometimes you just hear something just small or read something and it just catches your attention. You go, whoa, that'd be pretty exciting. I can't wait to tell everyone about that. So we've got some pretty exciting. We've had a big month, so we've got some exciting things to tell people.

Yep. Big month.

What have you been up to, John?

Well, I've got two property developments on the go, as you know. So one of those is now up to the framing, which is great to see because the framing's the kind of fast bit. No, you always get a false sense of. What would you say, duration, when you get the framing done? Because it's. It's really probably only a third of the way through, but it's all still. I get excited each time. Each time I see the frame go.

Up and it's the first rule structure, isn't it? It is happening.

Yep. And looks like a house is a house. So that's that one and the other one that we've got on at the moment has just gone. Got through council, we got some amendments made to that one and we're probably a couple of weeks away from getting our quotes finalized on that one. We've got two. Two builders that we've narrowed it down to, so we're just going through the last stages of the quoting process and then that one will kick off hopefully in about four or five weeks.

And it's interesting, I've been playing around the RP data professional interface as well and we've been talking about how that can be used for people marketing properties or doing some. You know, when you find a suburb, sometimes a lot of what I hear is people say, I can't, there's no properties available. And it was amazing. You know, we were just trying to. With the thought that sometime you're going to be selling these developments and.

Yes.

And who might be after them, et cetera and marketing them. But from the other point of view, there's properties out there that people haven't got on the market, but they might be the right one for you. And sometimes just a door. Drop of a note in the mailbox.

Absolutely.

I was thinking about this the other day, how the opportunities around the three Ds of death, divorce and debt, thinking the next one could be door knocking, just knock to get the opportunity.

Well, it's funny the agent said about our. Because the first project that we've got going at the moment is a down. It's going to be a downsizer that buys it. They're going to come from the same suburb and it's an older demographic, maybe their last home, maybe it's, maybe not. So it's not necessarily the kind of last time before the retirement home, but it could be just the kids have gone to university, they've left and they just don't want the garden, don't want the maintenance, all that kind of stuff.

Sounds like me.

Yeah.

I don't have the kids at university, but I don't want the maintenance.

No, I don't want the maintenance either. That's why I live in a terrace. But yeah, so it is interesting. You can. The agents kind of said that the buyer is likely to probably come within a kilometer radius of the townhouses and.

That'S interesting, isn't it? Because you can do that, the RP data professional and actually look at properties within a kilometre and then you can look at properties that. If you know that. What's the average holding time for that area?

It's up there, it's around nine, I think, nine years.

So you look at people who've had a property for say seven plus to 11 years and you can direct market those people for looking to downgrade but want to stay in the same area.

Yeah. Chances are they'll be they'll be selling soon. Do you know what the average is across Australia? It must be.

It is nine.

It is nine.

So census, the last census came back with the average. Australians move every nine years.

Yep. I remember Ivanhoe, I think it was. Ivanhoe and Eaglemont were 13 or something like that and they were up the top or end. The top end of the across Australia.

Look, I was looking in the data bank of your investment property last. Last month and there was a property, there was a place there that had had a whole time of 20 years. Wow. Yeah, Obviously they love it.

Yeah, it must be a good place or a very small place.

Yeah, exactly. Which actually reminds me, exciting. I hope you guys had a chance to look at the your property success toolbox. That came out around the 15th of each month. But I found some really great new websites and one of those was that the Australian Property Investor magazine, you can actually get their data bank online. You just have to know the secret word.

Yeah.

So you actually have to buy.

The magazine isn't open sesame.

No, not open sesame, but it does.

Start with O. Yeah, but how's that? Because so many years we've been saying I wish the stuff in the back of the magazine you can get online. But now you can.

And so there you go, guys. Go and check it out. When you've got your copy of Australian Property Investor magazine, you can go and do the scan me, type it in your browser, put in the little magic word for the month and yeah, upper comes all the data, which is fabulous. One of the things that I kind of like about that is I used to run workshops and I've got 10 years worth of API magazines. I used to hand out the different years and go, okay, so what's the capital growth on the medium for, you know, Kingsford, for, you know, 2004 and 2008 and 2010, 2012 and everyone would have their own magazine. We kind of build up the information. But here's really easy because you can go in, you go in perfect issue. So you can actually pull up the information. So that's pretty exciting.

And tell me about your renovations. You've still got one going in Sydney, is it?

I do, I do. I think a lot of the times, you know, when I talk about the hours of renovation and you know, there's the repair, get in really quickly and do a bit of a cleanup job sometimes. Then you've got the refresh which just might, you know, be getting in and doing a bit of work and you know, maybe painting the.

Cleaning the paint.

Yeah, painting the bench tops and re enamelling or something. And then you've got the rejuvenation, which is really that cosmetic renovation that we talk about. And then we've got the rejuvenation with a twist, which is where you might change a two bedroom into a three bedroom. And we've got the restructure and we've got. I think the thing that a lot of people miss is the revamp of the current portfolio. And so this year two of our properties came up for rent. So I shared with you earlier in the year, one of the quick little renos that we did in a little unit, two bedroom unit. And this is a two bedroom terrace this time in Newtown. So some success. And I have to say we're always learning here. And I'm quite happy to say that I've made a bit, a few mistakes on this one, but it's always difficult. And we do get questions on these calls about renovating remotely. And I've got a great builder that I work with in Sydney who I trust implicitly, who rang me off Monday and said, I think we need to change the toilet seat as well. Like it goes down to that kind of detail of looking with the eye, of making sure that the first impressions are good.

Right. You didn't give him a budget of, you know, if you can spend more than $7 without having to ask me.

Yeah, no, you know, I didn't. I might have to do that, but. And he, you know, when you've got good people, you've got good people. And when the people put in their notice to leave, we were kind of in the middle of doing a lot of things and it was a bit difficult. And I contacted the builder who had helped me with the unit and he said, look, it's going to take me 10 days to get out there. So kind of, you know, where I'm used to doing 10 to 15 day Renault renovations, it's like, you know, it's okay, I can't get to Sydney, I'm in Melbourne, I can't get to Sydney to do this and organize this and I'll wait. And he came back after all his quotes three days later. So I've lost two weeks and said, look, yep, we can get the everything done, but there's a wait on the kitchens for six weeks at the moment I was like, really said, yeah, everyone in Sydney is doing kitchens. I was like, ah, so I'm back to trusty old Lanning. My, my builder has helped me out many times who wasn't available for the Renault earlier in the year and he jumped in and we had to wait for a week for him. So there's three weeks lost. And you know, that's obviously loss of money from your pocket. But also whilst your property is not available for ren claim the interest on it either. So you have to be aware of that. Anyhow, Lenny came, saved the day and his, his turnaround kitchen guy was two weeks. And I went and chose some really nice tiles at Bunnings and I used our Renault save card actually and got the entire, what is it, Harvey Norman commercial deal for like 1500 dollars for the dishwasher, the oven, the range hood, the stovetop builder's pack, everything. But it was Westinghouse. So I was really, I went for, I wanted to go for not the silver but the gold brand. So, yeah, I think I saved about $900 using that. So that was good. And yeah, so they just.

Kitchen. Was it a custom kitchen or was it custom kitchen? Yep.

And I also, we had, did all the electrical, electricals throughout the house. The entire house was repainted. The entire house was recarpeted and every door inside and outside has been removed and replaced and fixed up.

And where was the carpet? Was through Renault site as well?

No, I didn't, didn't end up going through them in the end. And I've, I've had. It's a bit of a contentious question actually, because when you're looking at putting carpet into rentals, everyone says don't, don't put wool in, you know, go for the acrylic. But I found that the last time it only lasted five years. So I've gone for an 80% wool this time in two of my properties. So I'm, you know, good waiting to see how that goes.

We'll see. Yeah.

And they've. So that was interesting. And. But here's the big thing. Okay. So the rent I allowed. So it's completely gut essentially of the kitchen. Actually, can I show you some before and after photos? Because I'm pretty proud of this kitchen. The guy who I bought it off 10 years ago did the kitchen himself, as you can tell. Right. Can anyone say that putting something in the chat line here, Tell me what color it is. I'm just making sure everyone's paying attention here. Okay. Ross is off to cook dinner. He Tells me what. Yes. So the original one was the pink one and you know, red. Yeah, crimson. That's a nicer way of putting it, Jane. And so yeah, the thing around that was I think he whacked it up himself and when Lenny the gone in said look, I think it's a bit wet. And when he pulled up that lino you can see there on the left, there was three lots of lino underneath. So. Yeah. And beside that oven was actually the hot water system. So I wanted to get that out of the kitchen and make the kitchen bigger. So there was.

Oh, that's on the left there.

Yeah. And behind the door, the first one. So I had that pulled out to the laundry. Yep. So basically, you know, got a really nice. And that was a white and satin kitchen. Custom made the kitchen. I'm waiting for the cost which I'll share with you guys. I got the bench top separately. I wanted to have the, the nice Caesar stone.

So it's done.

Yeah, it is stone. And I ended up, ended up getting the, the nice tiles from as I said, Bunnings. So yeah, pretty much all actually I went to Renault Exchange and got the beautiful tap. I fell in love with the tap. I know it says don't fall in love with the tap, but when you can get it 50% off and a beautiful tap to make it interesting. So yeah, really nice big deep drawers and things. So you know, went with the white. People can put their own colors on. As you can see the comparison of, you know, create a pink and purple kitchen for people to something with a lot of storage.

Nice and clean.

Yeah, easy.

And is it that how big a job was the tiling? Was that. Is it a timber wall or is it lather and plaster or.

It was, I can't tell you.

Do you remember when they gutted it?

I tell you what was interesting though, that. And you can see there's, there's a little bit of painting to be done above the cupboards at the moment. But that area there's about 8 inches from the roof. And this is kind of like the lean to out the back kitchen. You know, tiny little terrace. It's on 52 square meters right in Sydney.

But the 2.4 high ceilings, I'd say.

So the last 8 inches was not rendered. So it was like the guy had gone up to his reach and just went, okay, that's it. So we had, we had to do a lot of repairs. So as you can see this, I think the price that I budgeted for was 30,000 to a complete refit and do the whole property. And the rent was at 570 and it is now up for 700. Extraordinary rent change. So what's on the floor? It's a. It's just that, as I said, the.

Bunnings lino and over floorboards.

That was lino on the left. But what we've got now is the tiles.

Oh, sorry. Okay. And what was under the lino? Floorboards.

Three more lots of lino and then concrete.

And then concrete.

So it looked like the guy had actually done that himself too, apparently.

Yep.

So, yeah, So a bit of fun. Interesting. Choosing things and talking to your builder over the iPhone and getting them to send you through pictures of, you know, how does the carpet and the tiles look together? I'm hoping the vision I had in my mind worked. He did a great job with that. So I'll tell you exactly. I've got my little picture here of my, my Bunnings things, but it was a $47 square meter porcelain floor tile, sandstone, gray, semi polished, 600 by 300.

Yeah.

So and I wanted to have just a. It's the. The whole splashback is just a stacked little white Bunnings tile. So, you know, nice little combination and. Yeah, did nice. So the Caesar stone is ice snow. So we'll show you more and rent soon. So. Yes. So successful renovation in the sense that the rent has gone up considerably. We've got a value are coming in next week, so I expect that to go up quite considerably too. And I'll share that with you next time.

Did you get it before?

I did get it before.

Wonderful.

And got some quantity surveyor in there and actually I used capital claims, the quantity surveyors, because they actually will do a quantity survey for you, but they, after you've completed your works, they'll actually do a scrapping schedule for you for the same price, which is great. So I've got a whole scrapping schedule of writing off thousands of dollars that I can claim straight up. So remember that for your Renault's guys. So, yeah, just a little bit of show and tell. You know, simple. Should have taken 15 days, but didn't. So there's a bit of a loss there. Happy to say that I'm always ready to learn, but time is money and I had to put my efforts elsewhere at the time. So. All good. Got the right person doing the right job. So yes, that was pretty exciting. What else have I done? I have been awarded a prize from my aggregator as a mortgage broker and chief to platinum status. And they're taking me to LA for me to fulfill one of my lifetime dreams, which is to attend Disneyland University to learn about customer service. So I am just beside myself with excitement for that in October and you know, hopefully you see a whole new level of Disneyland customer service.

Is it actually in Disneyland?

It is, it is. And, and to the extent apparently in Orlando, they take you underneath. They've got I think 23,000 staff there, they take you underneath. And it's rules like no one from Never Never Land can ever be seen in Tomorrowland. So, you know, they can't cross the. Anyhow, it's going to be extraordinary. So can't wait to see that. And I went to a couple of lender updates about all this APRA ASIC changes and I know there's some real interesting stuff happening out there. Guys, I'm going to, I'm going to give you a quick wrap of the Jane version, the Jane simple version of what's going on. But essentially there's three mechanisms or three organizations that can control values of properties of money in the economy and that's the RBA and apra, who controls the banks and finance and asic, which is around consumer protection. So these guys usually operate in their own little bubble. And what has happened, there's been some collusion going on and the RBA has essentially has the opportunity to raise interest rates and lower them and control funds into the whole economy. And there's been considerable concern about property prices in Sydney and Melbourne. And however, they cannot change the entire economy's cash rate based on two capital cities. So, you know, we've got unemployment close to 6% and you know, we've got the mining expense, mining capitalization that we had during the expansion phase rather than the operation phase has come to an end. And manufacturing and service, et cetera, hasn't taken over from that. So the RBA really had its hands tied on what they could do to potentially cover what they saw as some significant price rises in those two centers. Apra on the other hand, sent a kind of message out in December last year saying, look guys, there's been an increase in investor lending and we're not too happy about it. Please concentrate on bringing that down. And they kind of sat back for a while and then around June they said we were serious about that and if you don't do something about it within the calendar year for your financial year, for your financial year, we will take action and require even higher capital reserves that you need to hold. So they've done a couple of things. The first one thing that they did was essentially send a message out to the deposit taking facilities which are the majority of lenders in the market and said, you guys have to be more responsible in how you're doing this. And we'll leave, won't be specific and give you specific things but we'll tell you some guidelines. But whatever it is, you have to bring the increase in investor lending under 10% as part of your mortgage book growth. And in New Zealand what happened was the equivalent kind of thing was very prescriptive and they went to Auckland and said there will be no loan to value ratios over 70% in Auckland. So to give you an idea, we've got guidelines, they have prescriptive requirements. So that was interesting. So the bank started looking at how they can do that. At the same time ASIC got involved under their responsible lending requirements and said essentially, you know, just because people have debt with other lenders, we want you to assess that at a higher rate in principal and interest over a remaining term minimum of 7.2% as well. So all of a sudden people's borrowing capacity went down. They also increased other things and said if your living expenses are too low, they increase living expenses. And there's a number of mechanisms in the back end that ASIC has had some control on changing regarding responsible lending. Now the good news with this guys is that they've looked ahead three, five years and said we've got a lot of new investors. Over 1.7 million property investors in Australia. Predominantly they have interest only loans. Mostly these interest only loans are five years. So at the end of five years time these interest only loans are going to roll to principal and interest. Most people who are investors also have a home. So they in five years time they're going to have their home repayments. If interest rates go up, not only will they have their home repayments, they're going to have these investment property repayments at a higher interest rate and principal and interest as well. What will happen in five years time loans will go to interest only to P and I in the majority and all of these investors are going to leave the market. That would cause a substantial rush out the door of the investors and we would talk properties devaluing quickly. So what they've done is they've looked ahead, anticipated these issues come back and they're making things more grounded now so we don't go through that experience. So on one hand it's good, on the other hand, oh my gosh, so painful. Every single day there's a policy change and what We've also seen is there's going to be. The second thing that APRA did is they put on capital requirements. So the four big banks and Macquarie bank who usually hold 16% against the mortgages, whereas the other banks are holding around 35%. They've had to increase the funds that they're holding up to about 25% which they believe will take their profits down from around 24% to 19%, which is when you think of the Australian stock exchange. There's 30% of the Australian Stock Exchange is the big four banks. So I was asked to be a guest speaker at the Australian Shareholders association on Friday in Melbourne about properties that are safe haven, which just happened to be the day that the share market went south. And so they were definitely asking the question, but you know, as opposed to 2008, 2009 when we had that shift downwards in the share market and a lot of people pulled their money out and put it into property, yields then were a lot higher and they're lower now because we've already been through some property growth and if you look across the state capital cities, houses around have a yield around 3.5%. So I don't think people are going to be rushing out to exit the market and into property. But these corresponding APRA and ASIC changes are definitely going to make it a little bit more difficult for them if they do. So all in all we end up with a better, more vibrant, sustained property market. We do have to go through some pain. There's going to be borrowing capacity changes. I know I've spoken to one of my mortgage clients who we had a Pre approval around 1.2 and soon as that pre approval is up and we have to go into the current policies, we're looking at about a $650,000 borrowing capacity. So that hurts, especially when they're looking for the home. You know, they spent three months looking at that higher price point and other things. We're going to see some changes still come through. MA bank today announced that they're putting up their interest rates by 0.41% for investors. So you know, they were seen as a bit of a safe haven. We we've got a list of investor friendly banks still who aren't under the APRA requirements. So we still have some of that. But what we're going to see is those interest rates go up. They're getting slammed with applications at the moment and they're just changing their requirements and I think rates, et cetera. AMP has completely left the market and have to because they're working on a calendar year so only had four months to bring their investor lending under 10% where everyone else has got till next July. Around about that. So you know, some really big changes, some interesting times. It just means as investors we have some great opportunity to look at alternative ways of doing things and potentially seeing people leave the market and leave opportunity there on the table for us. So you know, Warren Buffett says you know, be fearful when others are greedy and greedy when others are fearful. So I think it's time to start taking opportunities. So all in all very interesting month.

Yep. Interesting times.

Yeah. So what else can I tell you Pami? Lots of got a cough tonight. Lots of activity on the Facebook Renovator network. We had a bit of a rallying around one of our members during the week who had purchased, gone through all the due diligence and spent months using our tools and resources and step by step processes and located a suburb and a pocket of potential in the suburb and a property. And the valuation I think you bought it at 6:25 and the valuation came in 637. The valuation came in around 575. It was devastated. So I was devastated for him too. So I jumped on and did some help behind the scenes but everyone rallied around and gave some thoughts on things.

Lucky we've actually got some valuers on the on the Renovator network which is handy I know.

So one of my tips was that I see sometimes those curbside valuations the valuers assume it's a three bedroom but it's really four and that's exactly what happened. So it was fabulous to see that he got the valuation up and yesterday. So big celebration there. So I was really happy tenderhooks there for a while as we all are with our network if something goes wrong. But it's great to see the things going right. So people posting some really good. So pictures of some before and afters as well. So some good stuff.

Yeah. That's terrible when that happens and I've heard so many times that happening where people getting a really rubbish. I remember Medine Simmons telling the story about her first project.

Yeah.

Which could have put a halt on her whole property investing career. Now she's you know had has a successful portfolio but the very first valuation that she got on her very first project came in for less than she'd actually spent or yeah it was less by the time you take out all the costs than she actually spent on it and then she forked up and then I think in those days, 600 bucks she had to pay for another valuation or something.

It's very small.

And then, yep, she was good. She'd made whatever it was, 60 grand.

Yeah, I think, you know, it's. It's one of those things where you gotta think outside the box. And, you know, 52% of all mortgages are written by mortgage brokers in Australia. And I prediction is with all these changes, they're gonna be even more than that. And I think that's because, you know, there's so many policies, changes coming in daily. Like Macquarie bank has put up living expenses. If you earn over $100,000 without telling anyone, all of a sudden we had someone who had a, you know, positive $9,000 a month before the changes and all of a sudden -4,000amonth and was like, how can this happen? And, you know, how can we have a 13,000 differentials because all of the different buffers, etc. And then this living expenses. So I think we're going to see good brokers do more business for investors and thinking outside the box, not knowing.

The list of the good banks to go to.

Yeah. And just the policies, they are just changing so quickly. So all very good. And I think that's about it. I think that's a wrap. I've been rushed home tonight before the call and made a pom pom for where is Wally Outfit tomorrow it's book week here in Victoria. So, you know, multitasking as always. So, yeah, having a good time, Joel? I think it should be time we move on to getting some questions from other people. What do you reckon, John?

Yeah, we've got to do the housekeeping.

So quick. Housekeeping. If you are on the computer and they're having any problems, maybe you can't hear me. If you can't hear me, then you've probably missed the last 30 minutes of really exciting information. You can call in on the telephone and the telephone number is in the sidebar there. So just use your audio option, drop down menu and call in and you can call me landline, mobile, Skype, however you like to do that. Maybe is it Viber as well? Anyhow, if you're on the PC, it looks like this. So when you have a question, all you need to do is raise your hand by pressing the little hand icon in the sidebar menu. Now that's if you have a microphone and I really love chatting to people. If you have a question and you don't have a microphone, then just chat it in the. Put it in the Chat and we'll get to that. So just a repeating. So click on the hand button to notify me that you have a question and when it is your turn I will unmute your line and you'll hear a little message that says your line's unmuted. You can also ask questions by writing your questions. As I said, I do give priority to the spoken questions just because I can kind of flesh out a bit more of what you need from us and what your question is really about and a bit of background. So if you do have a microphone, please plug it in now. Ready to chat away. I think it's more engaging for everyone in the group to get to know each other a bit better and also your questions. And remember, there's no such thing as a silly question. We do usually try to wrap up around 9, 30, hour and a half but sometimes we go a bit over and we'll try to answer your questions and keep going as long as we can. So I, I don't think we've never missed a question yet, have we John?

I don't think so, no.

In the sense that sometimes we can't answer things, we find out information but.

We'Ve always got something at least I don't know.

I'll find out and get back to you. Look, this is not a tech support call. I'm not your person for tech support. So if you have some problems, do get on to supportourpropertysuccess.com and they all get around to fixing things at as quickly as possible. So let's have a chat and have a look at some questions. So has anyone got their hand up?

Let's have a look. Oh yeah, few. Caroline's got her hand up. I'll unmute your line there, Caroline and.

Hey Caroline, how are you going? Hello, can you hear me?

Got you loud and clear.

Excellent. Thank you so much. Thank you very much, Jane for your prompt communication with me over the past few days. It's been excellent. Thank you so much. Pleasure. Very quick question for you. I did put it into the chat as well. One of my biggest problems has actually been raising working capital to actually fund developments. I've done two first floor additions onto houses so far but have fundraising money really hard and as you were talking just tonight about all the changes, apron, ASIC and what have you, the banks being particularly difficult and basically pocketing a lot more money is what it sounds like to me. But do you have any raising capital whether to invest in an initial purchase or to develop? Yeah, a few questions A few answers and thoughts on that. As I said, there's some lenders that are still assessing your current debt and in particular your investment debt with other lenders at your actual repayments. So if you have got that servicing capacity, there are still lenders out. There is one answer. The other thing is if you kind of and some people kind of get to the top of their servicing capacity without any evapora or ASIC changes. So for people who are at that stage and as you suggested this can often happen in developments as well. The thing is, and someone said something to me this week that really made me think which is that at 1% per annum there's a lot of money out there. So if you could offer someone 12% per annum there might be some cash that you can do things with creatively. And yeah, and I think that from a there's a JV opportunities which I'm going to leave John to have a chat to because he's, he's recently gone down that path but from just, you know, everyday kind of where do you get the money? You know we've all heard of solicitors funds and solicitors having some funds or having ability to raise money from say their clients to potentially invest. So there are alternative sources, resources. I've spent a lot of time this week PAMI and been doing some this month and been doing some research into some crowdfunding opportunities. So I'm meeting with a few different companies who are either just received the ASIC approval or in the process of doing so because I think there's some really interesting opportunities out there. So I will definitely keep you posted about that because I think we're going to see more and more of that. There's been some smaller peer to peer lending that have kind of come onto the market in the last six months or so and these are usually 5 to $35,000 loans. So there is some kind of smaller amounts that can be found. I mean obviously we're not talking development stuff but I know people who've done their kitchen renovations on a credit card, got some points overseas but sometimes thinking outside the square, I think we're going to see some more opportunities especially around the recent lender changes. Carolyn but specifically going down the traditional route of some short term lending. John, you've kind of explored that yourself, haven't you with the developments?

Yeah, I've done that. And the kind of private finance, I mean there's a fair bit of the private finance goes on in development. So you have, you know, an equity partner who won't actually be hands on or in any way, but just puts money in, money out. And I guess the development's a nice, it's a nice clean transaction because you, you know, you, you buy it, you build the, whatever the development and then it sells and you know, within kind of a year and a half you've got a clean transaction where it sells. Most of that tends to happen on a, you know, 12 to 15%. So people might put in, you know, 100 grand and get 115 grand back in 12 months time, that kind of thing. And they normally have a charge or a caveat on the property itself. And what developers tend to do is they use that as their deposit. So they'll still go and front up to the bank for the next loan, but on their current property they'll have private finance in there and they're happy to pay that extra 5% or whatever just to get the. It's a bit less than that actually, just to get that cash flow. So they've got that working capital so they can use on the next one and. Yeah, so they use that capital for their deposit and then they purchase the next one and do the same thing again so they can move into the next deal quickly.

Yeah, and I think it's about being creative. I have a friend in the States who has a whole course on called getting the money. And obviously in the States, 2009 there was not a lot of money and banks closing down left, right and center and she was teaching people how to pull together basically a business plan to talk to their friends and family about getting money. Personally I'm not into getting money off friends and family. I'd rather have an arm's length transaction, but I think there's some opportunities and you've done some renovations and developments yourself, Caroline. So you've often probably have someone say here you talking about what you've done and going, gosh, you know, you want to invest with me. And they may not be a great JV partner, but they might be a good equity partner to have. So just make sure you have all the contracts in place and everyone knows what everyone's getting and that they don't have the right to choose the color scheme.

Yeah, that's right. Well, there's people out there that have got money and they want to invest it somewhere, but they haven't got the time or the inkling to, to be interested in the mechanics of how to renovate or how to develop.

Yeah. So I don't know. Does that help your question, Carolyn? It does. Thank you. What was this thing you called? Crowdfinance. Crowdfunding. So I was looking at a couple of these and one that I spoke to was called Domicom. And they're very unique in the world in what they're presenting at the moment. However, they. So people can invest, but unfortunately you can't invest borrowed money. So people who've got funds available in a line of credit, for instance, can't put the money up. I still haven't finished my due diligence on those guys. Alan Collar did a very interesting talk on the Qantas Business lounge, which you can actually go to and listen to, but. But the actual website itself is called Domocomm and it's D O M A C O M Domocomm. So, you know, some interesting. There's some interesting things out there, but I am speaking with another group and yeah, I think it's got a whole lot more legs. So watch this space. Carolyn, I'll let you know. Thank you very much. All the best. Lovely speaking to you.

Okay, who else got the hand up? Jacqueline.

Hey, Jacqueline, how are you going? Hello, Jacqueline, can you hear me? Maybe she's plugging her microphone in. John, what do you think?

Hmm, not looking good.

Say hi into the chat box if you can hear us and we can't hear you, or we'll come back to you. Okay. Well. Oh, I don't know. Shall we run to. To one of the other questions that we've got listed down here, John, where we're going to go? Oh, we're off.

Start from the top. One from Maggie.

Okay, my voice is going, so I'm going to make you read this.

All right. I better enlarge it so I can actually see it.

I was the one who got bifocals this month.

Yeah, I'm getting worse. Hi, Jane. With all the new units coming up in Brisbane CBD within 5-10km of my unit in Ashgrove, how do I work out what impact these thousands of units will have in terms of price and rental demand immediately in the next three years? Some sales agents and property managers don't think there will be much impact as the demographics are different and these units are more spacious in the local area than the local area. My selling agent is obviously conditioning me to sell at a loss, as I have about one. What is it?

1500 to 2000.

Okay. And will continue to reduce if rents increase. However, if rent falls, then I am negatively geared further. My unit is about eight years old and purchased from New Growth has been about 1% over the last seven to eight years.

Okay, so some interesting information there, Maggie. I guess the questions that you're asking are the right questions. And, you know, if we kind of went back in time eight years ago, before you bought this unit, you know, the questions you'd be asking is, what are the, you know, development potential, development risks that could be happening in this area? So, you know, what is happening with the councils and what they're approving to just see if there's a lot of potential influx coming onto the market. The facts that you've got a new unit that has some good depreciation is fabulous. And the fact that it's larger and fit for your market is, I think, more important. And what your agents are talking about, the demographics is very relevant in the sense that neighboring suburbs can have different demographics, especially when you're moving just from the real inner city to the next suburbs out. So you. So I think from what. And I'm just pulling up now, I've just purchased. I might just jump over here a Ashgrove. Yeah, let's do that. An Ashgrove Residex for you. So I'm just going to show my screen. Let me know, guys, if you can see my screen there. Yeah, Yep, perfect. So I've just. Just quickly purchased this Residex report. So this is Ashgrove, and I imagine that's the. Hopefully Maggie's on the line. Maggie, that's the. The suburb that we're talking about here. Maggie there. She might have her microphone plugged in anyhow, otherwise you'll be listening to this later, kicking herself. So this is the average growth that has been happening in the last couple of years. The number. So we can see that 2014 there was a lot more sales and the 500 to 600,000 is where the majority of the units are placed now. The next five years, the growth in the suburb is 1%, which is actually aligned to what the Brisbane growth is, as you can see there, around 1% for units, and the next eight years, 4%. So it really matches what's happening in Brisbane. It's not going to be the standout kind of suburb, I think. I mean, I've got a similar situation. That little terrace that I just showed you that I was Reno doing a reno and has about two and a half thousand units going up in Camperdown nearby. But the fact of the matter is that, you know, what your agents are talking about in that demographic is really relevant. So in Ashgrove, you know, your demographic could be a whole lot different. So let's just have a Look, I don't know what the neighboring suburbs are there, but the demographic here is that 13% live in units. So it's a relatively small part of the market. And I can also see that we've got about 28% renting. And the age range there predominantly are quite young. So, you know, 29% 0 to 19. So that would tell me that there's either a university or schools. A lot of schools, families around the area, a lot of people. Australian, 79%. So it's not a, you know, suburb where we've got a lot of immigration in and we've got, you know, a lot of people earn. What have we got here? Household income, 2,000 to $3,000. So, you know, quite a affluent kind of area as well. So, you know, that information gives me a bit of an insight into what is happening in the area and gives me a bit of an insight to the fact that, you know, of the 6300 dwellings, there's 1300 of them, you know, are units and there's 12,000 residents. So if we just looked at the other suburbs, I imagine that they're probably not as affluent. It's surprising that age demographic. But if your agent's saying that your units are bigger than the neighboring suburbs and those developments, then, you know, that's a good thing. You're. Because of that growth of 1% and 4% in the next eight years, there's not going to be a lot of growth there. And I hear your concerns about negative gearing. And the thing is, negative gearing is one of those things that assist you in your cash flow position, but it shouldn't be the reason why you actually invest. And having negative gearing or a property costing you $2,000 a year that was going up by $50,000 a year will. Would. Would not be such a big deal. But a property that's going up, you know, by $3,000 and it's costing you 2,000 might be something to start considering of whether. Whether your money could be used elsewhere better. So I wouldn't necessarily think that your selling agent should be talking to you about making a loss and definitely not making, you know, selling below what you purchased for. But, you know, if you just look at the units, so you bought it eight years ago. So we're back down here in. The median price around for units down here was around 275 and the median up here around 420. So there hasn't been a lot of growth either. And this is the important about, you know, knowing what your the predictions are and what potentially your suburb can do for you in the future. Because, you know, holding a property that doesn't really go up in value is not really going to get you to where you want to be. So I'd say I wouldn't. If your information is correct and the demographics are different, then it wouldn't necessarily concern me. What does concern me is the fact that there hasn't been a lot of growth, there doesn't plan to be a lot of growth, and the property could be costing you money. There might be some pressures on your rents also, if there is a lot of rental properties that come onto the market and they do get desperate and they. They start reducing the rent quite, quite considerably. So that would be my thoughts on that.

Good. Another written question from Jacqueline. My plan has been to continue moving into each home each 13 months. Principal, place of residence, missing an O there, PPO R each 30 months or unit.

I own my own home again.

Yep. And hopefully go forward from there. My concern is with this strategy that I may not be able to outrun the market. My only other option, as I said, is to find a JV partner and project manage renovations, which I've done for decades along with running businesses. So I have income and stay at home in my ppo. My questions are for the next property which I will need to find as soon as I have a contract. Yeah, I don't understand that bit. But what strategy do I employ in looking for this next property? Do I take rental return into account? I've always assumed my buyers will be owner occupiers. Or would I be better to buy, renovate and flip rental properties? Buying through a company entity so I can turn over several during the year. Having somewhere to live, even temporarily, needs to be factored in. Although not ideal, I would be prepared to store my house contents and move into each property with a few essentials for a while anyway.

Okay. Wow, Jacqueline, gosh, I hope you're on the line. I think I'd like to hear your question. All right, Jacqueline, did. Did you want to say anything if we open up the microphone or you able to have a chat to us?

I think it might have been Jaclyn. We tried before. We'll give her another go though.

Yeah. Okay. Well, I'm going to try to answer this. So. So just to summarise, guys, the questions here and I'll just give you back the screen. Jon, I think the thing is that. Just not sure if I just gave you back the screen or not. But anyhow, the thing is That I think that you've got some really good questions, and it really is is very conditional on your actual circumstances. So you've got some good questions. I'm just going to try to pull the question up here again. So your questions are you've got two options. One is for the next property, which you're going to find. What strategy do you employ? Do you take rental return into account, which is obviously buy, renovate and hold. And you also then say you assume that your buyers are owner occupiers, or are you better off to buy, renovate and flip through a company entity? Okay, Jacqueline. Oh, gosh, I wish I could chat to you because I'm a little confused on your question. So I'm going to talk about the two options and leave it to you to decide. But from what I'm hearing here, you've had a lot of experience in renovating and managing renovations, and you have a plan to create some equity for yourself and move into at some point the home that you want to stay in. So the whole idea is around creating that equity. And obviously, a buy, renovate and hold strategy is a strategy that's going to be one that's more aligned to having a little bit more difficulty in getting that equity out. So buy, renovate, hold, create some equity, get the equity out, purchase again. So your servicing capacity is going to be limited by that. And you're by the fact that you've already you're keeping a debt. So buy, renovate and sell. Obviously, if you had a $400,000 loan and $600,000 property, for instance, and sold it for $800,000, you're creating equity. And your loan amount each time is either staying the same or maybe increasing a little bit. So you're getting to a point where you're creating equity that's going to allow you to, in the future, get to the dream home, which I'm gathering is what you're referring to when you're talking about your end situation and upgrading your homes. The thing about the company entity, the reason that people do that when they're flipping is that they often have a corporate trustee and they're being taxed at the corporate rates. There are some issues associated with that you need to be aware of and talk to your solicitors and accountants about it because it does change for every state. But things like, for instance, you won't have a land tax threshold, so you'll be paying land tax. First up, obviously, if you're flipping a property and it's not your home that you're flipping, then if you're doing that quite quickly, as most flippers do, within three months or so, then with a cosmetic renovation, then they would be looking at paying 100% of the capital gains compared to 50% if you hold the property for over 12 months. Obviously, if you are flipping your home, buy, renovate and sell your home, there's no capital gains tax. However, if you get in the habit of doing that too many times, then, and the ATO hasn't been prescriptive on this, then you are in the business of pretty much buying and selling houses and you will be up for some capital gains tax and potentially GST and all the things that go along with it. So, you know, it's an interesting question of what do you do next? Jacqueline it really depends on A, your servicing ability and B, what you want to achieve. So if you're after quick cash to build up funds to be able to own your own home quickly, then potentially the flipping strategy could be the way that you build up cash to do that. However, obviously the flipping strategy, no coincidence, it's chapter 13 of my book Flips that Flop, is that you really have to know your numbers and get that right. And the fact that you've managed to, I gather, your own and other people's renovations for many years means that you understand how strategic you need to be with those renovations. But it all starts with finding that right property that you can flip. And as you you indicated correctly, when you are flipping, you are targeting owner occupiers. So you're looking at properties in the streets where the owner occupiers live. And obviously those in in my courses will know that, you know, using the census information, you can find the streets that the owner occupiers live in. So what is you it really comes down to what your goals are and how long you want to achieve those goals and pulling together a portfolio or the cash or the assets, they're allowing you to do that. So obviously if you're going to have to live somewhere at the same time that you're going to have to take that into consideration. And having lived in many dust filled properties I've renovated to save on rent, I know that there's a bit of a pain of that and I've only ever done cosmetic renovations, but I know with structural renovations you pretty much lose everything for quite a while, don't you John? You have to move out.

Yep. Well, we had the portaloo for a bathroom in the front yard. Yes. We had no backyard. It was being built on. And Then we used to go to the local baths for a shower each night thinking.

I say bar.

Oh, yeah. After the bar.

The things that you do. So, yeah, and we, we did something similar. We, we lived on microwave food for about four months until we had everything in place and had to walk next door to go to the bathroom. So, yes, it can be painful if you're living in the renovation, but it also saves you a lot of money. So, Jacqueline, I hope, please feel free to send me another follow up to this question if I kind of missed your answer because I wasn't very clear on what your question is. But I gather that you've got some choices, which is buy, renovate, sell, buy, renovate, flip. You know that your demographics different for each of those. Sorry. Buy, renovate, sell, buy, renovate, hold. And the fact is that depends on your own servicing ability, whether you can hold properties for a period of time. Time.

Yep. Great. Okay, next question's from Claire. Hi, Jane. I'm about to purchase my second investment property and would like to make sure I have my loan structured in a way to help me grow my portfolio. What are your suggestions? Should I use equity from. Should I use equity from my first investment?

Hey, Claire, how you going? Congratulations, you're onto your second investment property. Already that's happening. And you're right in asking these questions around loan structuring. Look, a couple of things to be aware of. You go into a bank and often the lenders will make it very, very easy for you and give you the money that you're after. But what they're often doing is cross collateralizing your two securities. And it's really important in my mind, as part of your risk minimization, is to have your property separated and do what you're talking about, which is accessing equity from one property to be able to use as a deposit and cover your costs and maybe even renovation costs, stamp duty, deposit and renovations for your second property. So, you know, understanding that you keep those separate is important. Look, the lender changes that we've seen in the last six weeks have been quite significant. And I have to say, you know, I've got six different lenders. My eight properties are with. And I'm glad that I've got different properties under different policies with different lenders rather than being, you know, the slave of one lender. So, you know, I think, and we've all heard the, you know, horror stories of someone's got a whole lot of properties that they've had an amazing discount with one lender, but things go A bit tough and the lender calls in the loans or converts them to principal and interest, etc. So I think it's really important that you understand the risks involved and do structure correctly. Sometimes you can't. There's buffers in place also. So westpac, for instance, buffers any lending that they have with them a bit higher. So when you go to one lender and they say you can't borrow any more, be aware that with another lender, or even splitting your loans between lenders, you often can. One of the things that happens, though, is say that you've got a $400,000 property and you've got a $300,000 loan. An 80% loan of the $400,000 property is going to get you to 320 and a 90% loan is going to get you to 360. And, and if you have an 80% loan, often just getting that extra money out, the $20,000 is going to be, no questions asked. I want the funds because it's an 80% loan to value ratio. But when you go to a 90% or over 80% loan to value ratio, and now all of a sudden you're up to the $60,000, which is more realistic of what you're going to need for a 10% deposit and closing costs for a property, then the lenders are going to make sure that you, they want to know a what the money's for, but they also want to make sure that you can service the debt for the subsequent property. And often they will want to run that based on responsible lending through their calculator. So if you're talking to a lender with a more conservative calculator, servicing calculator, then they might say no. So just be aware that the good old days you could ask for money and say it's for future investment and it's not with that particular lender, the lender would give you the money. Anyhow, these days they now need to see you actually service that subsequent debt. So. So there you go. So, yep, good question. And definitely wish you all the best in your second investment property stuff.

All right. Got one from Ross, actually, we might skip Ross. Ross, put your hand up and have a chat if you can. We'll skip down to Rob and come back to Ross.

We're not going to skip you forever, Ross.

Yeah, we'll come back to you. We just want to see if we'll get someone to have a chat here. No hands up at the moment. So the opportunity to stick your hand up and have A chance chat with Jane if you've so inclined. Hi Jane, hope you're well. This one's from Rob.

Great, thanks. That's nice.

The question I'd like you to share your insight is around what dollar value do you need to have invested in residential property market to approximately replace a salary of $100,000 a year? I see a calculator coming up.

I love this. I'm so excited.

Pre tax.

Yep.

I would equally be interested to hear your thoughts on what level of debt to equity equity would be needed in this scenario and how people typically go about achieving this. I. E. Do most people secure a line of credit and live off the line of credit or are there other strategies worth considering? I personally believe the ideal scenario would allow me to continue to transact in property, most likely in a more active participation sense than simply buy and hold change over to you.

Oh gosh, yes. Okay, so you're talking about how much do you need invested in the property market to have a pre tax income of $100,000 a year. And I'm just going to share my screen. The reason I'm really excited about this is that make sure everyone can see my screen there is that this calculator actually went live today. I'm so very proud, John. Anyhow, and I'd equally be interested to hear your thoughts on on what the debt to ratio to do in scenario typically achievement. Do they live off the line of credit? Okay, so we're talking exit strategy here. The ideal scenario will be allow you to transact in property in more active way. Okay so here's the thing. It lends the conversation to first and foremost rob of what your exit strategy is. And most people assume that an exit and the simplest exit strategy is a sell strategy. So you have a property portfolio worth 10 million bucks. Be nice and sell it all down. Pay off your loans, pay capital gains tax, pay the selling agent fees, et cetera. And then all of a sudden you know, you've got this money left over. Stick it in the bank, earn 5% per annum and live off it. So in theory that's one way. So $100,000 a year at 5%, you know, representing 5%. So you times it by 20. You need you know, know 2 million bucks in the bank to kind of achieve that. So that that's the kind of how much you need in the bank. But then there's things like inflation, etc. So let me show you my calculator and I'm going to run you through this as the basic exit Strategy and then we'll get to your exit strategy. So investorschoice.com guys, head to resources and you will find calculators or just head over here and you'll find calculators. Click on calculators. So the reason that this calculator I'm very proud of is a little bit difficult or different to what you may have seen before is that it is really hard to actually calculate what the capital gains tax is. So going forward and then coming back. So the calculator itself is why it's taken so long to create has basically, you know, been a mathematical nightmare, to be honest with you. So we've conquered it. So here you're talking about pre tax income of $100,000. Did I have a. How many years, how many years are we talking about, Rob? Let's talk about, let's call it 10, 10 years. Let's talk about maybe a house price, property price of $550,000. Now here's your question around LVR and the difference. And I love playing with this calculator. So I go backwards and forwards and I play with the growth and I play with the LVRs just to see the difference. So let's just have it at a 90% LVR, which is what most investors buy at trying to maximize their dollars. So keeping a buffer for themselves and just putting the minimum amount in and maximizing the loan amount. So the maximum loan that you can ever get get against a property for that property is usually the first loan you get. So maximising that 7% capital growth, inflation at 2.5%, let's project in the future that you'll get 5% if you put your money in the bank rather than the 3% we're seeing at the moment. And your tax rate is at $30,000. So if I hit the big calculate button here, 30%. 30%. So this tells me that to have a pre tax income of $100,000 in 10 years time, it's equivalent based on inflation of 128,000. So I'm going to need 2.5 million bucks in the bank. 2.5 million bucks in the bank assumes that simple exit strategy, which is I'm going to sell everything out. We then come back and say, well, what do we need in a portfolio to pay all our costs and sell everything off? If we started with a 90% loan to value ratio and then we, oh, hello, it's me, I'm saying hello, I've just, I've opened up the webcam, don't know how I did that. Yeah, I'm going to have to.

That's what Jane Slacksmith looks like. Everybody.

With my, what do you call them? Cans on my head. So if we look at what that equivalent of $2.5 million in the bank in 10 years time is going to be, it's a portfolio of $5.8 million. So that means that $5.8 million in 10 years time, with selling costs of 2.5% at your tax rate, paying all your loans off, you're going to end up with 2.5 in the bank. But we want to know what that means now. So 2.9 million in portfolio is what you need to achieve. Now with our property price of 550,000 means six properties. So let's have a play with this and say, well, in actual fact, Rob wanted to do it in 15 years. So we go and hit 15 years and we hit on, calculate and we come down again and we see what he is doing in 15 years. So he only needs four properties now to achieve that. And let's just say he's used all of our due diligence and found the next hotspot and he's got a growth of 8.5%. So how many properties is that? And we come down to three properties. So. So the simple thing about this is that I really like the fact that you can go in and change these around. But what I found really interesting is when I changed that loan to value ratio, Rob, which is what you're asking about, from 90% to 80%, it didn't really change much at all. And the interesting thing is it's only 10% of the original purchase price. So $1.3 million in portfolios. Let's say you've got a $500,000 property now. Now we're talking about maybe having $800,000 extra in property. That's going to get you to that. This is just a quick demonstration only. Disclaimer, disclaimer. Calculate it, but gives you kind of a guidelines of projecting to the future what you need or what you want and then bringing it back. I've got some other tabs here and the reason I've done this is every time I speak to people or mortgage clients and say, what's your desired income? They always say $100,000 a year. So I force people to go back a bit and have a look at their financial security because I think it's really important to actually work out how much you need. I was talking to one of my really good friends recently and she said, I want to take a year off work, but I don't think I can afford it. And I pulled up this calculator and did it with her and said, okay, let's see how much it really does cost you to live. Mia. It's all about risk minimization. So I make sure that we've got a bit of a buffer in there. It might be three months of accommodation costs or your whole basic costs, but it gives you an idea of how much your basic costs are to live off. Because the people that I speak to, they don't want to stop work per se. They want to still be engaged in an economy and making money. And it might be to be more active in property, like you suggest, Rob, or it might be to work two days a week, or it might be to make money on ebay, sales or something. So I've got that little financial security and then financial satisfaction. This is about having that extra little. The luxuries that we want. So how much more do we really need, you know, to make. Make life what we want it to be? So, you know, there's a lot there in education. There's a bit there in other. And so. And that number there is then transcribed into this one. So that's how that number comes up. So when you see that number there. So it, you know, I think it's. It's really important, and it's a really great question, Rob, about, you know, how much do you need and how many properties do you need? And I've always, you know, there's some really fabulous modeling tools out there, and the PIA summersoft software, the ultimate property calculator. That Excel, one that Patrick, one of our colleagues, friends of the. Your property success looks after. You know, there's some really great things, but, you know, they're so complicated, and I just wanted to. To calculate or create something that was a little bit simpler so people could just jump in and get some round numbers. Because I think when you're setting your goals, just knowing where to start is often a really hard place to go. So, you know, that is what is there on that resource or that calculator. And just so that, you know, don't forget that once you do know what you want to, you know, achieve, jump into the second calculator here, the Property plus calculator. I've shown this before, this fabulous. You know, what can you afford to buy and work in whatever your borrowing capacity is that your bank manager or broker has come up for you and work out what you can afford and this actually back ends into live data from Residex, tells you what the 12 month and 10 year growth is and then actually takes you straight to properties that are on the market at the moment. So, you know, this is a really great tool guys, and I hope you go and use it all the time. But just to finish off on Rob's question, one of the things that you said there or alluded to there, Rob, is that the exit strategy may not be to sell all of your portfolio. So you can play around with the portfolio calculator and kind of work out using the different tables, maybe sell down some of your properties to make them positive cash flow and still have them going up in value. I think it's a shame to work out an exit strategy that just is a complete sell up. But selling down some of your properties and freeing up some of your borrowing capacity or freeing up some equity that then will allow you to go and be more active in property, I think is a really good, great strategy. So, yep, hopefully I've answered that for you. But it's a, it's a question I get all the time is how many properties do I need now to get this income in a certain period of time. So I really encourage you guys. As I said, I launched it today. InvestorsChoice.com really proud of it because I think it really helps a lot of people get over the big question that they stumble on to start with is where am I heading?

That's great, thanks. A lot of work. Okay, Helen, I've now re entered the workforce after taking time off to move interstate and renovate a home. Still as a nurse, but only on a casual contract. There is not much chance of a permanent contract as the employer under contracts to allow for work fluctuations. But there is a lot of regular work. How long would I reasonably need to work before applying for a note mortgage? I have a deposit saved already.

Oh, Helen, I know someone. Who was it? Carolyn needs some money. So whilst you're waiting, maybe we can hook you up. Yeah, no, just joking guys. I don't do that look. Good question, Helen. And we have a lot of nurses that we talk to actually and it's you. When a lender looks at your capacity to borrow, they're looking at you through the goggles of risk. So if you looked at, you know, I'm a waitress and I'm casual or I might have one or two jobs, for instance, they would see that riskier than a nurse with qualifications. Not saying waitresses aren't qualified, but you know, formal qualifications that are recognised and seen as emergency services. So you know, your fireies, your police, your nurses, ambo offices, etc. Some lenders that are more traditional won't allow for the overtime that you do regular overtime. They just want to look at base and as you know, as nurses, different loading on different shifts, et cetera and shoe loading and uniform loading and all the extra things that those services get. So a lot of the lenders, there's a number of lenders that look at your total position. The one thing about nurses and teachers, et cetera, they are more of some of the professions I've seen, they are more mobile and there is a recognition that you can get work and there is work for you. So although when you are actually going to a bank, most banks want to see someone with a casual role for 12 months to be in that job. But if you have been a nurse previously and you haven't taken a lot of time up work, so you say you've taken some time off to move interstate and renovate. If it's not a substantial amount of time, they can actually just look at that and say, yep, that was part of you moving property. Your loan to value ratios are also going to play a role here. So if you're looking at buying a property with an 80% LVR, 20% deposit, the lenders don't have to go the mortgage insurers. So the actual credit assessors can actually assess, assess that application themselves rather than going to a mortgage insurer which is generally Genworth or qbe and then coming under their requirements which is, you know, you have to be 12 months casual employed. So really it depends on the lender and it depends on how much time you're out of work. If for people who are listening to this, who aren't nurses or in emergency services and are asking the same question about themselves under the fact that you're on a casual contract, then again, contractors can be treated in a number of ways. If they're paying your tax and they're paying your superannuation, then you're seen as an employee. If you're going through a contracting agency or you're actually invoicing them, you're seen as self employed. So even if the contracting agency is paying your tax and your super to kind of give you the presence of being a payg when the lender rings up and some of them do to say if you lost this contract, would they keep paying you a salary and they say no, then they would consider you self employed. And most lenders require two years of tax Returns for self employed people and usually what they do is they average them if there's no more than a 20% difference, if there is a 20% difference, they'll take the lower. So just be aware of that. There are some lenders. ANZ has always been more amenable to taking one year of tax returns if you have two years of ABN registration. CBA, bank of Melbourne and St George have recently come on board and said that they'll just look at one year but they have the right task for the second year, which can confuse things a lot, which means that they do look at the second year mostly. So I hope that helps. Helen. But essentially as a contract casual person and a nurse and an 80% LVR, I think there's a lot of lenders that would look at maybe a six month or even three months of you being in that role and giving you the funds so you've got a good opportunity to seek out the right lender.

Great. Oh, go back to Ross. It was a wrong Ross. I found out you jumped Ross in the meantime. Yeah, sorry Ross.

It wasn't Ross who was cooking dinner.

Case of mistaken identity. Yep. Hi, I'm looking at subscribing to Ripehouse or RP Data to help carry out my research. Had Ripe House for a short time on a monthly subscription, which is the same price as RP Data. In your opinion, which research tool would be best for someone who was starting their search? Ross.

Okay, Ross, I'm going to make the assumption. I gather you've been chatting away to both Ross's or just one Ross.

No, just one Ross and the wrong Ross. Not this Ross.

Is the other Ross online.

The other Ross that didn't ask the question is online, but Ross is.

Well, let's answer this Ross's question, which is Ross, the reason I asked that. I just wanted to see how new you were. If this is a complete, you know, I'm starting off and this is part of my beginning in understanding what my buying criteria is and what my strategy is going to be and where to buy and you're flexible where you want to buy and you're looking for some direction to answer any of those questions, then I'd say Ripe House is a perfect partner for you because you can actually go into the Ripe House tool and you can look under capital growth strategies or flipping strategies even, or cash flow strategies and they help you direct your inquiry to the suburbs that satisfy that. And then you can get into the detail onto where the unoccupiers are and where the Renters are and the percentage of units and houses and crime and geez, amazing stuff. Which is great. So it's really graphically based interpretation and analysis that allows you to get into that debt. Now if you're a really experienced investor and you've done your say, price pin map and you understand that you're going to look at the suburb of Essendon and that is your suburb and you want to be able to target three bedroom houses that have not sold in the last six years, which means might have renovation potential or so then RP data allows you to do that and it allows you to create, you know, territories around, you know, a kilometer around the local school or a kilometer around the. And you can freehand draw this around the train station, you know, because there might be a higher percentage that you've been able to identify yourself for people who travel to work by train. So and when properties come up, sales.

And all that, all that sales data too, you can pull up so and.

Rental comparisons, et cetera. So you can pull up valuations and you know, recent sales for the last six months and recent rentals and properties that are rent that on the market at the moment. So all of those kind of things and specific, you know, two bedroom, two bathroom on 800 square meters, you can be specific on your search. So you can get down to the actual property and interrogate that. And what we're doing in one of our tutorials the other day, John was, you know, we pulled up the, the map and we actually had a look around a specific property and we actually overlaid it with all the sales data of all the other properties in the area as well. So we could see what the neighbors were doing.

Yeah, and if they'd sold recently and all sorts of stuff like that. So it's. Yeah, I think of it as rental and sales data is the way I think about RP data. Whereas Ripe House is really a suburb. Well, it's a suburb selection and a suburb due diligence tool. Yeah. Which really helps you narrow down to where. And then once you've got the where it's nice to have the data too.

So I think it's, it's almost apples and oranges, Ross. And if I was going to do anything, I'd probably start with a Ripe House subscription and then go on to the RP data subscription because they both do different things and I think one helps you direct where to go and gives you a really great interrogation of the area and the other then allows you get down to the property and RP data Professional which is, you know, obviously the subscription that we offer gives you that extra professional analysis tools with the, you know. Well it is, it's what the value is in the real estate agency. So it gives you, it gives you the actual price of you looking at an actual property or come up with the automated valuation modeling price of that property as well. So it's different to the property value consumer RP data tool and it's different to what you'll see available on. Actually I'm on my website at the moment. Can I share a really cool. You guys see my website? My web. This has come out in the last week which is realestate.com au property and usually you needed to go into a property to get the interrogation information about the area itself. So let me pull up good old Kingsford. How often do I bring pull up Kingsford as a. Oh, there we go. Came up with Coburg. How do you know? Let me do that one more time. So what we're doing here is we're under property and it said enter information regarding the sold history. So it wants an actual address. Well this is new so obviously you rehearsed this one a lot. Well, let's find a suburb then a property within this suburb and go into the information. So this is, this is right. Here we go. So the interesting information here is it is biased. Sorry, it is still buy property. So you can put in any property that you're interested in. So we're looking at 1 Kingsford Avenue here, what it sold for recently listings. So it'll actually tell you if the property is on the market at the moment or not. So this one isn't recent sale data. But here's the really interesting stuff is that it gets down into some of the analysis tools about the area. So we get down into, you know, not just information about this house but some sale data and then some comparable properties in the area. So what are the other three bedroom houses sold for? Ones that are currently for sale and currently for rent. And then it gives us some neighboring information and some property information. So it tells us what the houses are selling for. It tells us how many sales there are and not just how many sales of houses in the area but how many sales of the three bedroom house that's comparable. So this is actually using some of that RP data.

They're pretty close too, aren't they? Those figures which would suggest that a three bedroom is pretty typical.

Yep, exactly. Exactly. The closest schools. And then we get down to you know, just I guess the next level of Information. So this is. This is funny. I saw like page 28 of the age they had. Oh, by the way, realestate.com has this new property information. So what you're going to see, and it's a really clever SEO tool on their behalf because every property in Australia is necessary. Now as soon as you put in a property address, it'll come up on a search criteria for this information. But it gives you some indication of what the property sold for in the past and some really, you know, another good tool of actually finding some information out about it.

So that's great.

Another cool tool.

Just one last thing I'd say about Jacob is each. I think it's every week. He doesn't. Yeah, yeah, sorry, yeah. Jacob from Ripe House, he does a different suburb on Ripe House, which is really interesting. Even if you don't buy the software, just watch his webinars because you'll find a lot out about the suburb.

Yeah, well, he just did. He did Adelaide last week and I was running a webinar last week and missed it. So I signed up so I could watch the recording, which is still in my inbox. And Ipswich, I think he had the mayor of Ipswich on and Terry Ryder the week before. And I had. I was actually chatting to Jacob from Ripe House today. Actually I was chatting to the RP Data guys today as well. But Jacob and the Money magazine that hits the stand tomorrow, he's. He's profiled in. So it's got the offer on the back page. So if you're looking for a Ripe House offer, I wouldn't be surprised on the back page of the Money magazine this, this month, there might be something for you to be go and have a look at. So, yeah, check that out.

Ross.

Different Ross.

Yep, Other Ross. All right, come back to here. And we've got Jean with her hand up. So I'll unmute Jean.

Jean's been great in putting comments in tonight. Hi, Jean, how are you going? Hi, Jane, how are you? I was just wondering, what are you thinking of the Melbourne market? They say that it's getting the same as Sydney. What's your opinion? Getting the same. What, like really going gangbusters? Oh, absolutely. We've seen some great grades in the Melbourne market in, you know, in the last year. And in actual fact, I'm just gonna pull up again. Goodness my. Your property. Here we are. My market. Wrap the your property success toolbox where, you know, I cover off a lot of what's been happening in the market. So RP Data puts together this Housing pack about what's been happening in the market over every month they put it out. So just subscribe to RP Data newsletter and this information will come up. But Melbourne has been going gangbusters. As with Sydney, it's actually over the long term outperformed some interesting stats. We know that population actually drives the markets and it's interesting to see that there's predictions by the year 2050 that Melbourne's going to be bigger than Sydney. If we look at that, it's an extraordinary opportunity for people to buy in Melbourne. Especially when we're looking at the median house price in Sydney is over a million dollars and the median house price in Melbourne is a lot less than that. So you know, this is the median price overall in Australia, 608,000. But let's just run down and have a look at. Oh, here we go. Here we can see the rental. They talk about rental yields in the different capital cities and we know that, you know, the rental yields have been less, less in the capital cities and you know, they're around about three and a half percent, which is, you know, not as great as they've always been. And let me just get to the Melbourne information here. But this is where you'd get that information from the chart packs they talk about that 10% of investors. So we've got Sydney 920 million as a past as the current house price and Melbourne $630,000. So we look over the last 10 years, houses in Melbourne have done 7.2% and houses in Sydney have done 5.9%. So I'm just showing you here, over the last 10 years, Melbourne has actually outperformed in the last 12 months. We've got houses in. Are we talking houses or units? Your question, Jean? Houses. My daughter's trying to buy at the moment, but she's getting a lot of underquoting and then when they go back, the real estates are under quoting. Yeah, my sister's trying to buy in the Melbourne market at the moment as well and feeling that pressure. But you kind of. I remember my husband Todd saying to me about four years ago, geez, look at the pricing disparity between Sydney and Melbourne. We should be buying in Melbourne and over the long term, which is as a long term buy and hold. As you can see, Melbourne has outperformed Sydney on that growth and they're doing, I believe, a little bit better on the rental yields as well. So it is hard to get into the market. And sometimes when we talk about the Trident strategy in the first prong of buying below the market. Sometimes there is three ways to make money through property but sometimes in a fast moving market, just by getting into the market and not missing out for six months and the property going up by $50,000 is a better way to go, especially if the property actually has those key characteristics of being able to add value to it and being in a good growth suburb. So I wouldn't say just the fact that the population demands that we're seeing in Melbourne now and into the future means that you could buy anywhere and make money. There's a lot of outer suburb areas with the house and land packages that I think aren't going to go as well as we're seeing some of Those, you know, 10K suburbs within 10Ks they have the opportunity. And we did a dot map a few three months ago on Melbourne, didn't we?

Yep.

And had a had and we talked to a lot of the Ultimate Guide renovation students are doing that regularly and just looking at the ripple effect and even Russell, you know, I talked to Russell who was one of our students last year who did a 16 day, $8,300 renovation and added $62,000.

Preston, wasn't it?

North Preston, Yeah. And that property's now gone up another 180,000, sorry, 160,000 in 18 months. So you know, having the fundamentals right is what you have to think about and not settling. So having the property that fits the market and what you're after, et cetera. So for your daughter, I know it's frustrating when you keep missing out out but sometimes it's. And I'd always try to buy in the best suburb but sometimes it might just mean to get, she might have to beat the pack and get to the suburb that's just one away from that, you know, that kind of ripple effect and yeah, that's what I was telling her. Yeah, I think, gosh, I've done, I've done a video on that recently, haven't I John, that we should send Jean's daughter to. But that understanding that if you, if you keep knocking your head up against the wall in the suburb that she's in and she's keep missing out and it's pushing her past her borrowing capacity. As those prices are going up, people are going to start moving into that next suburb. So I'd really force her to do a bit of analysis on the next area because the price might be lower, the median price to get in and as long as it still has the demographic fundamentals of what she's trying to achieve with that property. I think there's some really good options. But the investors have gone gangbusters with these lender changes and their pre approvals are going to be up within the next six weeks really. And once they are up, their borrowing capacities will be reduced. But what I'm seeing with my clients in Sydney is that all of a sudden my homeowner clients are saying, oh thank God, the investors have left. Now we can now upgrade our home because all of a sudden we still have, have they still have a home that's gone up in value by what, 22% or 19% in Sydney was 19.8, isn't it? 19.8% in Sydney. And if you apply that to the million dollar house In Sydney, a 19.8% capital growth, that is over $150,000 that the average house in Sydney has earned for its owners in the last year. Now that's more. Yeah, that's more than it's earning more than most people.

We're a working family, husband, wife and house.

Yeah, that's exactly husband, wife and house. We've got three wage earners in the family and the equivalent number for that in Melbourne is 70,000. So you know, I guess what I'm trying to say is that if we've got the population demand long term in Melbourne we have the, the overall long term, you know, 7.2% capital growth for houses and we know. So based on the rule of 72, this makes my maths really easy. 72 divided by 7.2, your house is going to double in value every 10 years. Right. So you know, we're looking at a house that was 10 years ago was 315,000, is now 630 today based on 7.2%. So I think don't let your daughter get frustrated, but she might just have to move to the next suburb.

You see that sometimes people get frustrated and they go out and get the house and land for, you know.

But I thought I was going to get 7.2%. Nothing's happened. It's because you don't have a unique property that's based on going up in value on the fundamentals that drive that growth. Jean, I hope that helps you out. Yeah, thanks Jane. Because she was looking in Lower Plenty and then in Diamond Creek. But I think like I said to her, you have to look at the ripple effect and tell me exactly are they for investment or living for the moment for own home? Okay. All right. So yeah, I mean the difference in characteristics there is and especially for people Buying maybe their first home. I really encourage her to tap into your brain and think of this as her first investment rather than her first home because this is where she has the opportunity in entering the property market of making the most wealth she ever has. Because that property could potentially be an investment property in the future. So think of that when it comes to finance. Maybe an interest only loan. Not with nab. Interest only nab. I think it's by a fluke of their software. The only lender that's actually made interest only loans on home owned loans as well as investment loans more expensive because they couldn't differentiate between owner occupied homes and investment loans. So another one of those quirks of the changes in the last six weeks. But she could have an interest only loan potentially against her home, home at home, owner interest rates because we're seeing disparity between investor and homeowner. And yeah, she set this up as her first. Think of it as a first investment and get her to do you know what her characteristics or requirements are based on her living there and commuting to work and kids and schools or whatever, but also understanding the difference between how the different suburbs might respond in the future and to growth. And she's got opportunities to grow some wealth there. Thanks Jane, very much, appreciate it. Okay, all the best.

Okay, I just realized we're at time. We've got a couple more questions we need to get through. Lorraine's got her hand up. Lorraine, are you there?

Hey, Lorraine.

Doesn'T seem to be.

Oh, does that say she's self muted? Maybe she can unmute herself.

There you go. Right.

Hello, how are you? Hey, good to hear from you. Thank you. I just had a question about the Heron Todd White report that you talk about quite a lot. Yes, there it is. I got mine up too, Jane. And they also do a property clock as well. Yes. And I have seen their July 2000. Now I was just wondering, looking to purchase, do you look at the bottom of the market or do you start looking at the rising market because it's sort of left the bottom and it's a bit more surety of it moving up. Yep. So you talk. One other quick question that'll go with this is when you are paying capital gains because you're selling after the 12 months. What date does the 12 months start from? Is it like contract date? I believe contract date. Okay. Yeah, I believe it's a contract date. Obviously check with your solicitor with that. But this is, I think this is what you're referring to, which is their kind of Market indicator report. Now, as I confessed earlier, I've got my first lot of bifocals at the moment. So I know this is a very small. But if you look down here, guys, it says stage of the property cycle. And this is kind of what Lorraine's talking about. So we have Sydney here at the peak. We have a rising to the peak for Melbourne, rising in Brisbane, bottom of the market in Adelaide, Perth declining. Hobart, start of recovery, Darwin at Canberra. Now the interesting question here and really getting to the guts of it, Lorraine, is is it time in the market or timing the market? And I think for new investors and for people starting out trying to pick a market and go, oh gosh, Brisbane's rising, so I should jump in. And then it takes you eight months to find a property and all of a sudden the peak and everyone's saying, oh gosh, you missed that one because you bought at the peak, didn't you? I think you can create for yourself a lot more angst than is necessary. And the other thing about that is that it really is the time in the market. So getting down to those fundamentals of what the market's about, know I bought in Sydney at, in a bottom of the market. I've bought in Sydney at the top of the market. I bought in Sydney when I could afford the best property I could afford based on my financials. So I wasn't, I wasn't looking around at the time. I wanted to have in demand property in an in demand area. You know, I had one property go up by 22% last year and make $200,000. I had another property go up by 17% and make $200,000 in 16 Sydney and properties in Melbourne that have gone up in value. And it's around. I think the question is, unless you're really experienced at this and you can get into the market quickly, by the time they've kind of put down this property clock. And the reason I look at Hare and Todd White is because for me, these guys are out every single day valuing. So this is last month's information that the valuers have pulled together. It's not three months months old sale data. So, you know, I think that this is really great to give you an indication what's happening. But I wouldn't be, I wouldn't be kind of trying to pick things. Like for instance, the start of the recovery in Hobart would not lead me to go, wow, I'm about to get a growth cycle in Hobart. So, you know, I wouldn't be, I'd Be aware of it because it might make it harder for you to transact in the sense of that. As we just spoke to Jane, there's a lot of properties going quickly. Be aware of that. But also be mindful of the fact that this is a long term plan for you and you're going to be in the market for the long term. To be honest, we know what happens. Sydney moves and Melbourne moves and then Brisbane moves. It's a cycle that happens repetitively every five to seven years. And we've had that cycle happening for many, many years. I mean, this is the third time I've been in this cycle watching this happen. And based on the median prices, the price growth that we have, you know, those larger cities have, you know, 7% of 600,000 is more than, you know, 8% of 200,000 in, you know, regional town in Hobart. So I just say don't try to, don't try to pick the market. Fair enough. Thank you very much. Okay, bye. Lorraine.

That's right.

Hey, just while we're on this report, John, I know that I had a question come through and who was it from? Oh, his name's not there. It was from a gentleman saying, can I apply this stuff, Jane, to buying a cattle farm in regional New South Wales? And you know what, I did a little bit of research, hence why I was so on the ball here. For Lorraine on a heron Todd work White Herring. Todd White's valuers are commercial valuers, they're rural valuers. They do warehouses and they obviously do residential as well and industrial when I'm talking about warehouses. But if you go to page 51 for instance, on the rural one, and I just, I'm sorry, I just don't have your name there who I was doing this research for. There's some really interesting information about, you know, cattle prices here based on farm prices, based on the cattle prices and what you're seeing in imported and exported markets. And however, the New South Wales market seemed to be mainly talking about more agricultural sugarcane, et cetera. But I just wanted to say, you know, here's some information about the cattle Australia and information, blah, blah. If you are trying to seek this information and buy properties, then I would, I can't honestly say that I could apply the Trident strategy to a cattle farm, but thank you for asking. And thinking that it could be buying below the market, adding value for maybe, you know, pasture improvement or something and then being in a growth area, I can't, I can't really put that framework around regional regional farms. But if you need to find some data, I wanted to give you somewhere to point you to and head out to that. Go to YourPropertySuccess.com go to the toolbox, download the latest toolbox and you'll get a link to Heron Todd White's valuation report.

Very good. Okay, we've got three more written questions and Carolyn's got a hand up. So let's try Carolyn first.

Carolyn back.

Yep.

Hello. Hello again. Thank you so much. Very quick question for you, which I hope is not too. There aren't too many variables to make it a question, but I just wondered if you were to assume that somebody who bought and flipped properties reinvested the cash they generated, how profitable relative to a buy and hold strategy is a buy and flip? How do they compare? Can you say that one more time? I'm just trying to understand which is the more profitable out of buy and flip or buy and sell. Look, I've built my entire portfolio around buying and holding and John's done multiple flips and now developments. And I think it is really a what your risk profile allows you to do. And it also is around where you think the money is, Carolyn. So you know you're not going to, with a buy now hold strategy, you're not going to get cash out immediately to go and have a lifestyle, but you could potentially with a flip, go and do a flip and pull out $30,000 and go to Bali for a year and then come back and do it again. If you had to buy and hold, you potentially could do a renovation or wait for the capital growth over a period of time, take out that equity. And if you take out that equity, it's borrowed money. The borrowed money, obviously you can't claim the income interest on that if you use it for personal uses. Going and living in Bali for a year. So it really is around what your long term goal is to achieve and what portfolio you need to have to be able to achieve that long term goal. Which one is more profitable? They both produce profit. Capital growth gives you long term profit with short term ability to access equity to do it again or potentially improve your properties or, or obviously have for personal use if you want to. But flipping allows you to have the cash more immediately. There are different strategies and they do have different outcomes and they both can get you to your long term goal. It's around mapping which ones are going to get you to that goal that you want to achieve and what your borrowing capacity is along the way. That allows you to either build a portfolio or Flip strategically making sure you know the cost so that you can, you know, continue to buy and make money along the way. So I hope that helps. Thank you. Okay.

A lot of flippers have the end goal of getting to buy and hold anyway, don't they? It's like.

Yeah.

And the other thing is, the other comment I'd make about that is that often those flips, particularly the, the popularized ones, are kind of 10, 15% profits, whereas you're losing 5% in the transaction. So.

Because stamp duty.

Yeah. And selling costs. Yeah. So there's not. And. Yep. So there's not a lot of fat in there if you. Not a lot of room to go wrong.

So, and I mean, we, when we interviewed John from Residex, John Edwards, he was. It was minimum flip viability was around 650 was the purchase price. And, you know, they were selling around 8, 850. And we talk about one 1.14%, kind of to make you 10 to 15% profit. And you really have to be adding a whole lot of value to be able to get there.

Yeah. And the higher you get in the market, the better that spread is. So you tend to see a lot more profitable or wealthy property investors that hold rather than sell. That's for sure. I have to say, if I was starting, you know, I think I'd go straight for the hold.

Yeah. And. But the thing is, not everyone can do that. And sometimes, you know, there's a lot of popular attention on TV of telling people that they can, you know, buy and sell, renovate, sell really quickly. The fact of the matter is you can just be aware of the fact that you do that, have that 100% capital gains tax at your taxable rate. But, you know, I've got clients and we've had students who've been very successful in flipping in the lower price points, you know, the 3, 4, 503 to $350,000 price points. But they're making 10 to $15,000 at a time.

Yeah.

And they know that. And you know, just by the sheer volume of being. Having to get the money out to buy the next property, you can only really do with the time frames. Two to three of those a year.

Yeah. And just the deal flow is really, really hard to get the, to find the next property and be able to move on to that, you know, so.

When you say deal flow, you're basically saying you're trying to finish off a job and sell it whilst you're finding the next one and doing it. Yeah.

Assuming that you've Got the money to do that and to get the next property. So yeah, I mean that's the thing, I think when I hear these people saying, oh, you can quit your job and start flipping tomorrow is that's a really tough thing to do. So you need to have the circumstances, right. Ideally a partner that's working equity in your property so you can use a line of credit so you're not having to go back to the bank because the bank's not interested in you if you've got multiple transactions.

Exactly. And knowing the numbers, go to my book guys, chapter 13. The numbers are there or go to the course that you're in.

Okay. Question from reader as we need to wrap wrap up. My partner and I own our home which is in both our names and we're about to purchase our first investment property. We're unsure if we should put our investment property in the name of a trust or individual names. We do not own a business and are not self employed.

The whole trust question, goodness, we get this a lot, don't we? Should we buy in trust?

And I'm not the second most controversial question after should I hold.

Yeah, I know and I always try to send you back to the person who is the expert on this, who knows you and what you're trying to achieve and that is your accountant or your financial planner. Because you know, I've got a couple of properties in trust with corporate trustees and they're all fancy pants hybrid discretionary trusts and I tried to get out of them last year and I was about $90,000 in stamp duty so I made the move not to. And unless you really are in a litigious industry where you could be sued, you know, I think you really have to weigh up the benefits of having a property, a long term whole property in a trust with a corporate trustee. There are less lenders that will be amenable to lending when you get a little bit more complicated. So just be aware that can have effect to the finance. What it does bring up though, Rita, is a really great question around. Should you, you be buying in individual names or. And I'm going to take that as you could buy with your partner with joint borrowing or you could be buying with one or the other of you buying. Now there is some benefits of buying individually. I know my husband and I, we bought individually until we had to buy together with the joint borrowing capacities. And there was benefits associated with that around the fact that we both had land tax exemptions individually before we came together and purchased. So we had more of an exemption by buying individually. So if your borrowing capacity allows you to, you might want to talk to your broker or to your bank about actually seeing if one or the other of you could buy the investment property in their own name. There are some definite benefits of buying in a trust and obviously, you know, unit trusts and discretionary trusts and family trusts and hybrid discretionary trusts and all of the entities, personal trustees and corporate trustees. There are so many different entities and you know, you've got certain groups selling blood trusts and the trust you can get in Adelaide and you know, land trust, all the different things. There are definite benefits and especially, you know, if you've got someone who, you know, you can have the discretion of allocating income to the low income earner at their tax rate. If you have a positively geared property or when you sell the property having the capital gains tax being taxed at the most effective way, there are benefits. So that's why I really do encourage you to speak to your accountant and financial planner about it.

Good property account?

Yeah, good property account. Not someone who's just going to sell you $2,000 kind of. I'll create you a trust and charge you $1,000 a year to do the tax on the trust and keep all the entities going. Someone who actually understands your circumstances and what fits what you need. Because I think it's a really tough question and I've been to so many seminars where they scare the pants off you with the fact that someone's going to trip over and take everything you've ever owned and I've never heard of.

Anyone and it's never one size fits all either.

So just be aware that there are opportunities. I think you actually have three opportunities here. One is consider trusts and the five or six trust entities, different entities that there are, consider buying in both names and consider buying in individual names if your serviceability can allow you to. Thanks Rita.

Great Jessica. I'm just starting out. I can only borrow $200,000 for now. I have my pre approval but are finding difficult to find a house I can renovate and revalue in a short time period. I have shortlisted Northern Adelaide, Tasmania and Regional. I'm not sure where to focus my time researching or should I save more money and wait until I can buy something in a higher price range range.

Good question, Jessica. Where would I go with this, John? I am thinking would I wait? I mean I always have the opinion to buy when you can afford it in the best possible place that you can afford. So time in the market as long as you're in a market that is moving upwards. So I wouldn't be going and buying regional tasks, for instance, because you can afford it, because you might just have a property that cost you $5,000 a year for the next 10 years and is still worth $250,000 in 10 years time. So you've actually had a net gain of nothing. So I would do, you know, if you borrow 200, so I don't know how much cash you contribute, and I'm assuming it might be an 80% or 90% LVR, so you're probably buying it maximum 250,000. So. So to look at areas that you can afford a $250,000 property and renovate and add some value. So we talk about a renovation, cosmetic renovation, around 10%. So you're needing about 20 grand to put in there. And we would expect that you would have, you know, increase the value of that property. So you're only going to be pulling out maybe 20 to 30,000 as well, depending on how successful your renovation is. So what you're doing using the renovation strategy, you have to find an area that has pricing disparity between the unrenovated and the renovated properties and at a price point of around $250,000. So, I mean, it's not easy, Jessica, but it is possible. I'd almost start, John, with the Terry Ryder report that he does on regional areas and growth predictions, because I think that you're possibly looking at those regional.

Areas and the sub. Yeah, it's probably going to be, I was going to say the Residex sub 500 renovators report too, but it's probably going to be metropolitan areas that it covers, isn't it?

And what we've seen in that Residex Renovators report, which does go through that pricing disparity, is it really is weighted towards more expensive properties because obviously they have a bigger range to have that weighting between the disparity as well. So, Jess, I think it's. I know I looked at some properties in Adelaide for someone recently, and I know that there's still some real affordable properties. So it might actually be buying the best property that you can buy and actually changing your criteria from a house to a unit. So I wouldn't be wiping out unit purchases. But at 250,000 for a unit, you know, don't be looking at units that don't fit the demographics. So don't be pulled towards the one bedrooms or the studios or those type of units. Look for the one that's different. Still Fits the demographic. So you know, if the demographic is that they're after and make sure that there is a demand for units in the area. So it's not the only unit. So we're looking, you know, maybe 20, 30% of the, of the market is units. And you know, if you're looking to buy, renovate and hold at least 30% of the market being renters, then, you know, it is a bit of a tough, tougher ask, but it's not impossible.

And you know, sometimes also it might, it might not be the renovate that's going to add the value. It might be some other, you know, thinking outside the box or finding a better and higher use, which it might be holding and getting plans or something like that. So you're not actually renovating because I guess if you're just looking at from that point of view and all, the only kind of measure or criteria you've got is the difference between unrenovated and renovated. It's going to be tough to find to find that, because it does get easier to find that the higher in the market you go.

And the other thing is if you do do this analysis and you come back and go, you know, for $250,000, I'm not going to have a property that I can put into my portfolio that gets my goals. And the timeframe then would be the decision that comes to let's wait and save some more or wait till your income goes up so that you can borrow some more to get a property that will get you there. So, you know, I'd be looking at first and foremost what your plans are for the future and what you're trying to do. And then look what you can do. I mean, I know you can get $90,000 units in cans, but we all know that depending on the exchange rate, cans is not always a good market. I think I read an article the other day, Margaret Lomas was saying that she was bought a unit in Cairns 15 years ago and it never ever went up in value and she still has it today. So don't chase where it's cheap just because it's cheap. Cheap can actually be expensive when it actually affects your long term strategy, your opportunity cost for the future and gobbles up your borrowing capacity. Last question.

Yep. Like you last, Gareth, I'm new to the group. Welcome, Gareth.

Hey, Gareth.

And I've been looking to buy my first investment property in Melbourne, but the prices are getting way too high for me. Do I keep on going further out in terms of distance from the CBD until I find a price range that suits. Or do I forget about Melbourne and start looking elsewhere like Ballarat, Bendigo, etc. Is there a minimum population size that you would factor into a location choice? I was going to start doing a dot map tech with Melbourne with a view to spending 470 to 530, but it doesn't look like I'll get anywhere with that type of money.

Very similar to my answers to Jean and to Jessica Gareth, it might just be that you need to change from your thoughts about having to have a house to maybe having a unit. So the dot map was going to give you that ripple effect of what's happening and give you an indication of where the next hot spot could possibly be. And in a hot market, I agree it is really difficult to get in and move. And I've spoken to a lot of people who have look at regional areas, you know, the Ballarat and Bendigos. But your analysis has to be as tailored and direct as it is, as if you were looking in a capital city. And I remember using, I was using Ripe House recently, I think, for Bendigo, for someone, and it was very, very clear that on one side of town there was where the only occupiers were. On the other side of town, or subsurbs really, there was where renters were. And some areas had better growth than others. So, you know, don't. Just because you're going regional doesn't mean that there is. There is not pockets of potential within those regional towns if that's what you decide to do. So potentially the answer is maybe go from house to unit and look at unit opportunities within CBD Melbourne. And I know things, you know, are moving quickly, but you obviously, as I said to Jessica, make sure that if you are buying a unit, you're not buying the only unit in the suburb. Just because it's cheap in the suburb that potentially has. Has that hotspot ripple effect kind of potential. But I know it can be tough and it really is around sometimes finding the diamond in the rough and creating something out of it. And that's really that second part of the Trident Strategies is creating the equity that you are after. So don't give up. And sometimes, and I know I talk to people a lot where they've done so much analysis on these products, properties and all these suburbs and then they realize that they can't afford there anymore and they have to start again. And there is a grieving process that goes, oh my God, I've gotten so much work. You've done that, John.

Yeah, absolutely. That hurts.

You've done, you go through all this work and you're out there and you're pounding the pavement and then you get this realization going, this is not going to happen. I need to move on, move on quickly and start doing the research again. So, you know, just don't tie yourself to the premise that the research that you've done is all the research, which is what you're doing. You're looking elsewhere, you're looking large regional once again. I wouldn't, I wouldn't be too, you know, reluctant to have a look at Terry Riders reports about some of those large regional towns. I did a webinar with Terry last year on Aubrey Wodonga. So, yeah, there you go. I hope.

All right, we've got one last question, Lara, and that's sorry I'm late, just got home. May I ask if the webinar has been recorded?

I'm from you. Yes, it is, Lara. So for those in the Ultimate Guide to Renovation, the Diamond Investors Choice Mortgage Clients, Etc, you have access to all the past webinars. And to our guests, we'll, we'll see what we can do for you.

Everyone on the call gets access to in the Ultimate Guide to Renovation. It's within the modules in the queue in the mentor section. And there's also for everyone else that's just part of mentor. There's also the recorded calls there, too. Yep.

Excellent. Okay, guys, well, I'm thinking we're going to have to say goodbye because once again we've run over time and I do have to go and get that where is Wally Outfit ready for bookweek. But it's been wonderful chatting to you all and I hope you've got a lot of value. Please use that, that phone in line if you can't, you know, be on, on the call and you know, make sure that you do leave leave a message for us and talk to us. I'm just going to wrap up here and I'll pull up my little notes and see if there's anything that I need to note. The next call is the end of next month. We're going to the last Thursday of the month as per normal. I think there might be a little bit of change next month. So please have a look at the change of the dates. The information will come through for you and please leave me a Message on the 1376, 119 as always, if you have any questions, send them through. Any support questions, make sure that you send the support@yourpropertysuccess.com the people on the Renovator Network or the your Property Success Club jump into your private Facebook pages and post your questions and introduce yourself and let us know what's on your mind. There's a whole group of very experienced people there that are there to help you and support you, as are those that are on this call. So thank you so much for for asking the questions and allowing us to talk to you. All the best everyone.