Your Property Success Mentor Call February 22-01-2020

Hello clubbers, it is Jane and John here for our February 2020 Q&A session. And over to you, John. How you going?

Very well, thanks, Jane. Hey everyone. I will start with our mandatory disclaimer just to get that out of the way quickly. So like always, it's important for you and I stand you need to take care and applying what you hear on this call. Everyone's situation is different. While we go to great lengths to ensure everything we share is accurate, what you're about to hear is based on our personal experiences and opinions and is not intended to be specific to your circumstances. So in order for us to share this information openly in the way that we do, we just need to make the following disclaimer that we're not real estate agents, financial planners, lawyers or accountants and not liable for any loss, damage or misunderstanding caused by reliance on any of the information provided or inferred. And with that out of the way. How you going, Jane? How's your week been?

Oh, my goodness, it has been. Actually been a pretty busy month. Lots of things going on. I can't believe that we're just looking down the barrel of March already, which is just the from a property point of view, you know, the market is back and everyone's talking property, where we're in the process of doing so many things here at the moment. As some of you may know, I have been running a First Home Buyer show on the Learn with Jane's Legsmith Facebook page and we've been talking to a lot of first home buyers. Interesting thing though, John, the first home loan deposit scheme, which is that 5% deposit that gets people into a property without mortgage insurance and only available to 10,000 people. The first 3,000 places were allocated in the first week and now we're at the end of February. All of CBA and NAB's positions have been allocated, but the other 25 lenders still have positions left. So we've been talking to a lot of people who have looked at the first home loan deposit scheme and said, you know what, $600,000, it's not really going to get me a lot in the area they want to buy in or because there's specific caps. And so a lot of the people been talking to are actually not using that scheme, but still using the 5% deposit so they can get into the market now. So it's been a real, when we look at all the numbers that have been coming through owner occupiers and First Home buyers is where all the activity has been up since November but as you and I know, we're starting to see, you know, a lot of investors coming back into the market as well.

Yeah, it's interesting, isn't it? I've recently just bought my parents place on the market. It's in the forest and suburbs of Lilydale. And yeah, it's what downturn? You wouldn't guess it from just looking at the market out there. It's going like it was a couple of years back, same speed. And that's right out on the fringe.

You know, it's really, it's an interesting position to be in because we're working with a lot of people and a lot of our mentoring students who are purchasing or looking to buying at the moment. And I know one of the people we've been working with, you know, we set a price point at 950 in November which seemed quite achievable. And yesterday they put in an offer on a property for 1.15 and got knocked back. And you know, that's just how fast in Sydney that price movement has gone just in the last four months.

Yeah, yeah. And it's, it's not that long ago that we're having those conversations about, you know, is it the right time to buy? The market will never come back. A lot of people are sitting out terrified. And we were working with a group of people in your property success and buying like crazy in inner suburbs for in some cases 250 grand below market value from what it was, you know, six months earlier kind of thing.

I know one of the people we're working with here in Melbourne, they bought in May 2019 and by the time they settled the growth had paid them back their stamp duty. So you know, it's just amazing. It's interesting. I was writing an article for Money magazine this morning around first home buyers and I did some numbers of people who were looking at buying a $500,000 property and waiting to save the 20% deposit, 100 grand. So you know, saving for the next five, six, seven years, that $500,000 property, just with the 5% growth, it's more than likely to be about a $750,000 property. So if they were looking at the same type of property now, it'd be worth around a $350,000 property. So you know, it's kind of like you can wait that long in the market waiting to save a deposit or you can get into the market and start growing. But the equivalent $500,000 property now that they would be looking at buying in years time at $500,000 would be the $350,000 property today. So, you know, I think that first time buyers in particular and people who are looking at investing for the first time are often actually saving too much for too long and actually delaying their retirement and staying in the workforce because they're missing out on those growth cycles.

Yeah.

Now I'm going to show picture. We've had some really exciting news this month too. We made our first our target for the Pippilepsy Foundation. So all of those people who've come into the your property success club and made a donation to get into the club, thank you so very much. We've hit the target. It's been amazing. The money has gone to supporting this time the Royal Children's Hospital in Melbourne, but they support families with kids with epilepsy all over Australia and all of the hospitals. So, you know, kudos to you guys. Thank you so very much. Because I think, you know, we've done some amazing stuff here and we're so very proud and I know Heath and Sarah are as well. And little Piper, who we met, you know, I don't know, about 18 months old when she first had it first attack. And she's in this picture here, she's about three. She started school this year. So, you know, it's amazing how time flies.

Yeah, yeah, it's really great, isn't it? It's great that.

Yeah.

And it was a win, win for everyone. People were getting some really good fundamental advice from your property success club and obviously the, the $10,000. And look, some of those people donated that money without even getting into the club. So it was purely out of altruistic intentions.

Yeah, no, we're really proud of that. So thank you everyone. And I want to jump into, I guess a bit of a wrap on what is happening out there. This is the data that came out from CoreLogic in February. So since we spoke, just looking at the median dwelling prices. Remember this is dwelling prices, this is houses and units. But it's interesting to see in the three months, you know, up until January, Sydney's up by 5.6% is the best performing capital. What we can see here is that, you know, in the last 12 months we have, although we've had that downturn and since the peak, Sydney and Melbourne are still lower than they were there. You know, in the last 12 months we've got over 8% growth, 8 in Melbourne, 8% growth in Sydney. Hobart has done really well at 5% in the last five years. Hobart's been the winner here at 44%. And we've got. Adelaide and Brisbane just have not performed as we expected, even though there's some predictions that the Brisbane market may get underway. And I think the really interesting thing is that we can see that the market really responded very quickly. When we talk about peaks and troughs, you know, we really only experienced less than 20 months for most of these areas. So it's been a really, I guess, interesting cycle for people to look at because this time last year we were telling people to get into the market be. Here's that word. I always struggle with counter cyclical in their counter cyclical. So, you know, we want people to be out there and thinking about, you know, the market, etc. But the reality is that most people are fearful when everyone's saying, oh gosh, the market's going down. The market responded, responded greatly. You know, we've got, you know, the markets in Sydney, Melbourne are up by 8%, Brisbane 1%. You know, Adelaide in the last 12 months has held its own. Perth still behind, Darwin still behind. Hobet's doing well and, you know, not to be underestimated, it's Canberra, you know, always a quiet performer. And here it is the equivalent of what Sydney's been doing over the last five years. It's just one of those nutters that just keeps going. The regional areas, you know, obviously kind of keep a bit pegged on the Sydney and Melbourne market. You can see here, regional Tasmania is not doing as well as Hobart, the capital. Once again, West Australia and South Australia and Northern Territory not as great either. But it's interesting to see regional Northern Territory is actually performing much better than Darwin. Mind you, there's not a lot of properties in regional Northern Territory. So that's just looking at where we are now or where we've been. But there's also some data that was produced looking at forecasts that I put out into the club a couple of weeks ago. And this is what people, the experts were talking about with predictions in the next two years. So, you know, the Australian market overall doing 8 and 7%. So just as a mental note that, you know, when we talk about having a. Oh, I like that, I might do that again when we talk about having a 7% capital growth and the rule of 72, 72 divided by 7 is essentially 10. That's how long it will take for the properties to double in value. So we can see there, you know, Australia in the next two years doing 7 and 8%. And when we looked at the original data, there you know, Australia overall, you know, was doing 4%. You know, you divide that number into 72 to see what that overall growth can be. So it's interesting, you know, if we were on track, those properties people are buying now for 6, 7, $800,000 in Sydney and Melbourne could potentially be worth 1.2, 1.4, 1 point, you know, so it's double it in 10 years time. So interesting thing to remember however, we do know that markets go in cycle so it's not always going to be 7 or 8%. And bear in mind that we just have to very watchful of what is happening in the market but also, you know, apply the research and get the research done. Right. So once again another reason that we get in and do the research and we're such big, big advocates of the research process, John.

Yeah, certainly. And yet no substitute for the research and no substitute for then validating the research and getting your toes on soil and walking around and having those streets as well. I know some, sometimes you do some of that research and you get on the street and you go, oh, that's why, that's not what I thought.

Why is no one buying in this area? Oh, those burnt out car wrecks give me an indication there's a problem.

Yeah, that automatic gunfire is not what I was hoping for.

Now I have done a couple of interesting strategy calls with people this week with Investors Choice Mortgages. So once we understand people's borrowing capacity, people then get a call with me. And one of the things that has been coming up John, which I haven't seen as prevalent in previous years, is the quest to buy a property in a catchment zone for good schooling. Now we all know that we've talked about this as a criteria that we might think about where we're investing and in the location Masterclass workbook, John, we have the, my school website and some of the websites that we encourage people to check out those kind of data. And if you're a subscriber to RP Data then they talk about the catchment zones. In actual fact, their mobile app and their online app are actually different. Most of the information is the same but actually on the online app you actually get more information when you just search up properties on the catchment zone.

Only app that I've ever seen get worse. The RP app is the only app I've ever seen get worse. So much better.

I know we used to run our workshops and we'd go out and look at properties and you could actually like get your, your phone like this and you could run it as you drove down with the bus and it just pop up with the house prices on every house. We used to love that. I'm not monitoring the page. If people have any questions, please put your questions in.

Jane, I've got it up here.

Perfect. Actually, it should be coming through here as well. I'm not seeing that. So we're going to push on and answer some of the questions that have been in the club this month. But we did have one question that came through. John, I just want to talk about that very quickly. So the questions that I've been having with or the sessions I've been having with people around catchment zones and schooling. So one client in particular essentially said, here's the four schools and here's the catchment zones. Can you do an assessment for me and help me decide what suburb has the most growth potential? So you know, they'd already come down to the suburbs. Now the interesting thing is when I looked at the dot map and the ripple effect and I looked at the filters that we had around, you know, some of the things that we would consider to be important, typical properties, all that kind of stuff, number of sales, et cetera. And bear in mind I wasn't looking at percentage of renters or vacancy rate because it was owner occupied, but all of those filters came up in those four suburbs were actually in the short list that we had. The interesting conversation which different schools, different schools, different suburbs, different sides of Brisbane. The interesting thing and the conversation we had was should we buy now or should we wait? Because you know, the Brisbane market's not really doing anything and yeah, and there is a lot of expectation and you know, we just look at that, that picture again, you know, there is a lot of expectation that Brisbane is going to be like a real performer in the next two years. Now we've seen this kind of data before and they haven't really performed on it to be honest. But. But we hold hope what the experts are saying. But the interesting thing here was when I their price point was $600,000. So they could afford up to $600,000. Two of the suburbs were over that amount and two were under that amount, but close to the 600. Now my concern would be if they did wait until the kids actually got to high school or second kid got to high school or whatever, they'd actually be over their borrowing capacity. Borrowing capacity is not going anywhere but the prices are. So if you have to be in the catchment zone to go to a good school, so you're not paying 1520, 30 grand a year in private school fees, then buying now in that area, even if you can't move in now, and that was the case for one of the people, they couldn't move straight in. They had a commitment in a current property. I really put it forward to them that they should really consider buying now because if the market does move as it is anticipated to move, they, they're never going to be able to buy in that catchment zone.

Yeah. So your wages aren't going to keep up with that kind of capital growth.

Yeah. And as investors, you know, we can, we do have the luxury of, you know, I can no longer buy it, $600,000 in these three suburbs. I'm going to run the suburbs again, do the analysis. What's my new suburbs like? We have the ability to do that. But when you're so focused on the fact that there's four schools, he's four catchment zones. I've got to be buying you one of these. If you get priced out of that, you've got no chance to come back unless you get another job or, you know, win the lottery. So it's an interesting conversation. And the other person I spoke to as well, you know, it was all around the schooling and in a different type of conversation which was they needed the properties to make enough money for them to pay for the private schooling because the local area they're in school wasn't up to scratch. And we actually looked at how the property they currently have and what it had to perform at to allow them to pay for the school fees out of it. So equity growth. So, you know, you need $300,000 for the next 18 years. So let's plan that. So, yeah, it was an interesting exercise. So it just goes to show you how much of the data and the research that we're doing, we talk about it for investors but you know, I've obviously applied it for first home buyers recently, but for those who are home buyers and looking at where to buy with certain criteria as well, be it catchment zones or proximity to work or family or whatever, then it's really, you know, you can definitely use all of the tools and techniques that we talk to you about.

Yeah, easy to make about a poor decision there and not even realize that you've done it, you know, had the opportunity to do it go early, whereas the opportunity is completely gone in a couple years time.

Actually, John, I'm going to bring up something I've been working on, having shown you this, but when I was thinking about trying to explain the Buying process and the things that you had to do to first home buyers. It's exactly the same things that apply to home buyers or to investors. And I'm just going to show you this. So, you know, I came up with the Financial Freedom Framework, which is what it's called, which is, you know, you're in the middle of it and you need to see it. So you need to, you know, set your goals, understand what the property strategies that you want to achieve, understand what the property needs to do for you. You need to set it, which is understand how much it's going to cost you to purchase a property in the long run. Get your loan set up, decide on the loans you need, then you need to source it. You need to decide, you know, what reports or software or experts or courses you need to find the properties. Then you need to have the tools and get on the ground and do the assessments, et cetera. And then slamming the negotiation, get your legal team involved, get insurances done, you know, get your pest and building inspection, supersize it, you may want to renovate it at a granny flat, stash it, the property management, getting valuations done, making sure that you've got quantity surveying done, et cetera. Now this, this kind of seems like, you know, it takes a bit of effort.

Right?

Would you agree?

Yeah.

So I thought, why do people sometimes miss things and get it wrong? So I thought what I might do is just mind map out how many things people actually have to do to get this done.

Okay.

And this is what it looks like. So if you're looking at buying a property, you know, you need to work out your goals, you need to read books, attend seminars, go to magazines or podcasts and you know, go to Facebook live shows and newsletters. And you know, you need to, you understand your goals and your strategies. You might need a mentor to help you or software or read books will be able to do that. Just getting a deposit, working out, you know, getting a loan, the types of loans you have to work out, the, you know, the different types of things you have to consider when you're sourcing a property. There's so many things that people just miss if you miss one of these things, you know, we've talked to people about, you know, properties that haven't performed because they're in the wrong flood zone. And maybe they didn't have a contract review before they went into contract. Maybe they didn't have a pre inspection, inspect settlement inspection the day of settlement. And you know, half the things in the house they thought were There missing. And there's so many things. And I think the interesting thing is, you know, this is just one thing. This is buying a property. And the things you have to think of, the reality is, and I was looking at this, is that you've actually got this whole life going on buying investment properties just down here. You have to think of all the, you know, financial planners and super. And then you've got your health and your mental health and your family, your kids and all of the things, your career and work, all the things that you're supposed to be doing. This is just one aspect that actually takes up this much effort. So when people get overwhelmed and feeling like it's all too much, it's okay. We understand that because there is a lot of things that you need to consider. But the reality is that we're here to assist you and there's so many things that are available to actually just take you step by step through all of those processes so you don't miss them. But, you know, give yourself kudos to the fact that there is so many things and there are so many balls in the air. So, you know, just be aware and mindful of fact that, you know, this is all going on while you're trying to buy the properties. And there are a lot of things and we recognise that when we're trying to simplify them for you.

Yeah. And I hope you got a screenshot there if you wanted a to do list as well. Put it back up to people for a sec, Jane. Let them get a screenshot.

Okay. There you go. That's all, that's all the things that you need to know. And that was just, you know, just typing things in off the top of my head. Yeah, you know, it's just, just, just some of the things that you start looking at and it's like, wow. Yeah, it's like there's a thousand things there that I have to consider.

I like those too. They're a great way to plan things.

Out, let alone keeping up with every podcast and book and, you know, article and newsletter and things. I mean, you know, it takes a while, so I thought I'd show you that. Now, John, we do have a question for the month. So I'm going to read it out and whilst I read it out, I'm going to share. I don't think there's anything wrong in sharing this. No, I'm going to share if you can see that. The portfolio killer spreadsheet. Now, we had a question from Mitt, who sent this through at the Beginning of the month. So Mitt, sorry, we only run These Q&As once a month, so potentially there's a lot of other ways that you can get your answers quicker and that's through the club itself posting some questions. So MIT actually sent me through all of his financials as well to have a quick little look at which I'll. I won't post for everyone to see. But this is what he said. Hey Jane, I love watching your video training series. I was living in Perth, Western Australia from the year 2000 to 2017 and then moved overseas to reside in Kenya, East Africa. During my time there I was an auditor for work purposes and used the buyer's agency called to purchase three properties. My properties have not grown at all since 2011 and this is also attributed to the downturn in the Western Australian market. Currently I'm earning well in Kenya, paying down all my loans in order to clear debts on all the properties. I'm therefore considered a foreign resident for tax purposes for all my tax affairs. Any loans refinancing therefore are not easily done due to non lending by banks to foreigners. Please find attach my current loans, my portfolios. Let me know your thoughts on what I need to do and how I can go ahead in my property investing journey. My objective is financial freedom, which we all love. Just looking at the three properties that were purchased through the buyer's agent here, you know we've got overall purchase 1.4 million, so nine years that property journey started on and they're currently worth 1.5. So the good news here is that they've gone up a little bit 1% a year is, you know, obviously below in fate which in m circumstance he has been able to actually. Pay down his loans because of a good income. But you know, firstly I just want to talk to the fact, you know, John, we talk about this diversification, don't we?

Yeah, yeah, it's. What would you say there? It's not keeping up with that. I think that what's going for that is it was a forced form of saving is what I would say is what's going for that.

And I think the thing is when we talk about being geographically independent. What's the word I use? Geographically?

Agnostic.

Agnostic. It's some religious thing. You can buy the best possible place that you can afford to buy when you can afford to buy it. That really comes out down to, you know, not having all your eggs in one basket. Now, you know, I saw someone post in one of the Facebook property women groups the Other day she's got five properties in Darwin and wondering what to do. And you know, to hear that is just devastating. You know, buyer's agents and this is one of the reasons that we started that and the done done view service that we had was that people were going to buyer's agents and you were almost at the mercy of their capabilities if they only look after Perth, going to that one buyer's agent often you were just limited to Perth. And we don't have that service anymore, so don't inquire about it. But that's why we found it was important to find the suburbs first and then find a buyer's agent in those areas that actually have that special knowledge and relationships. Now there are some buyer's agents though that do do national work. So I'm not boohooing those, but I'm just saying, you know, be aware of the fact that when we talk about being geographically agnostic and buying the best possible property you can buy for the money that you have with the potential growth that you could potentially get from it, it may mean not buying your own backyard, which doesn't help Mitt much now. So Mitt, you know the really good thing about the position that you're in in is that you're earning a really good income. You're paying down the loans, you know, you've got some really good equity in there. I saw your calculations around, you know, how much equity is in there for an 80% and a 90% lend. The sad news for you is, as you rightly know, none of the lenders are doing refinancing to expats. So I spoke to Lisa, my senior broker this morning and said, is there any good news I can give to mit? And she went through and did a lot of research and the answer is no. Mitt, the problem is that refinancing is difficult. If you're a foreign based expat, you can get lending to purchase, but the problem for that is that you've got hundreds of thousands of dollars in equity that you could potentially use as deposits and costs for your purchase. And that's not going to be easily. Now if you are a expert listening to this, you really have to earn a lot of money to be able to afford lending. Because what the lenders do is they take your income and let's just say Your income is $100,000, £100,000 for instance, and they only take certain currencies. So they don't take the shilling, that is the currency in Kenya. So it Depends on what currency you're actually being paid in as well. They take your income, let's say £100,000, and they reduce it by 40% to start with. They shade it by 40%, some lenders 30%, most lenders 40%, those who will do this so that you start with an income of £60,000 and then they put it into an exchange calculator and then they tax it as if you're in Australia. So your income's down to like down about 40 grand by the time. So, you know, it is very, very hard for expats unless you're earning a significant amount of money. And you know, we do lending for expats, we've just recently done some for some people in London and America. But you know, that income level that you have to have because of the shading the banks put on it is extraordinary. And, you know, it's interesting. You know, I saw one of the lenders here with nab, they're very good with foreign investment, expat lending, they do do that, trading at 40%, et cetera. But they'll take income from Kuwait, but they won't take income from Kenya. So not a lot of good news. Work hard, pay those debts down. Potentially, if you've got the capacity to pay that amount of significant debt down, you might consider putting the money in the offset account and using that cash to buy your next property. But just as a word of warning to people, be aware of the fact that buying all of your properties in one place can actually make sure that you haven't got the diversification across the marketplaces because when some go up, the others go down. So thanks for your question, Mick, but sorry, we can't really help.

Miriam's just got a quick one there. Jane, just curious, why did you ditch the done for you service? It got cannibalized by the mentoring service. Miriam?

Yeah, good question, Miriam. So what we were, what we were doing essentially was coming up, doing all of the research and coming up with the suburbs for people to buy in. That was our done for you service. And then what we would find is that, you know, the market would start moving, they were getting frustrated, they couldn't find the properties or they couldn't get out there and actually find the properties, or they were kind of going to a buyer's agent anyhow and the buyer's agent would end up saying, oh, why don't you buy a two bedroom unit here because I know someone who's got this on the market at the moment. Or that's their area expertise. So they'd actually bypassed all of the suburb selection research that we do. And as you know, you know, the dot map takes three to five hours. And then the research of the suburbs, like the software putting that in and doing a suburb analysis can take another 10 hours if you do it well. So we're talking 15 hours of research that our team was putting in and we do that regularly. And then so we introduced the done done view service which was we would then go and find you a buyer's agent and we would manage that relationship. And it's. And we still have, we're still finishing off some of those clients now and it's been really rewarding because those people who've been able to purchase, have purchased, you know, with absolute clarity that they're in the right areas. So the ones that kind of followed the bouncing ball in the process when we introduced the mentoring last year, which was really around the fact if we could take a group of people and individually help curate them, direct, give them direction about where to buy and then empower them and assist them to buy so that they're not making mistakes and being there to second guest guests and help them through every step of the way, we'd be able to assist them to make their property selections better and they'll be able to replicate that in years to come and teach their family members as well rather than, you know, I know the suburbs for now and so.

And they get all of that data too. They get suburb lists and all of that kind of stuff.

Exactly, exactly. So, you know, so what we're doing with the mentoring this year, we've just welcomed a few new members in, is that we curate. There's a one on one vision exercise with me when we look at the future that you want to create, we work out how much that costs, we then work out how many properties you need. We come up with portfolio buying plan, we then have a finance session, we work out what the finance needs are to make things happen. If you've got current non performance in your portfolio, which John, we had spent a bit of time with a couple of people last year in trying to get non performers out of their portfolio before they could move on. And then you have a strategy session with me and we actually come up with a the suburbs for you. I jump in RP data, I select alerts for you. So you're getting alerts, you know, daily as properties are coming up on the market that suit your criteria. You come back when you've got the properties that you want we'll do a deal review, make sure it kind of works, you know, you curated the whole way through. And with access to the ultimate guide to renovation, access to the list of the suburbs, access to the digital dot maps that we create every month, access to the properties coming on the market. And John and I, who go through and make sure that the property and the deal stacks up or come up with negotiation strategies with you, we felt that we had a better control on making sure people got the outcome that they wanted and for that. And that's what we were always trying to do, just get people to the outcome that they wanted, which was a good quality property that they know how and can justify why they bought what they bought and replicated in the future. Hope that makes sense. But John, there is a. So that was the only question we had sent through to the question line. But I do have a couple of other questions that I think are worth having a chat about. I'm going to show this. So this is a question from Lars. So there's a little bit of misunderstanding about how to use the suburb selector software. So I just thought, you know, people were having those questions and more than happy to go through and just answer that. But Lars was saying he's trying to narrow down suburbs that he wants to do further analysis on and trying to compare one suburb over the other. He was looking at Boondel and Brighton and other suburbs are coming up and he was saying, why, you know, basically what's happening? Because I've done the dot map. So just as a heads up, you know, he was going through, looking at the dot map and let me just bring up the dot map that I've just generated for Queensland. So he's been through the manual dot map scenario. So he's gone through and he's looked at, you know, the areas that have come up with the 2% and the 1% growth. So he's generated that he's then gone through and he has jumped into the suburb selector software and he has put in his price point. So let's say it's 650,000. Very happy to go below that. Can't go above it. And 15, no, it's not 25k is the CBD. So Lars has gone through this prop, this exercise and he's gone. But wait a second. I've come up with these great suburbs, but they don't appear on the suburb selector software. So my dot map suburbs the 2% and the 1% increment over the last 10 years. So we're using data from last 10 years capital growth data, where are those suburbs? And the fact of the matter is that it may not be in his price point. So depends on the price point you put in. So this is just for instance, this is boondao. Where's his question? So he's saying, you know, I'm just not sure where those suburbs are and those suburbs aren't there because they're probably not in your price range. So yes, that's your first question. And then there was another question here. So we had a little bit further of a question which was about flooding zones. So yes, you need to go and work out where the flooding zones are and speak to the council. And his next question was, why don't I just use 1 year growth rather than 10 year growth? Do you want to have it? Do you want to talk to that?

Yeah, yeah. The short answer is it's to iron out all of the bumps in the market. So for instance, it's the first thing you need to explain is it's not 10 years consecutive growth because if you think of if it was growing at 5% a year, that'd be kind of 50% growth. So it's an average growth, it's a 12 month growth that is averaged 10 times. So it's averaged over that 10 year period. So that's the first thing. And that alone is just is smoothing up that number for us. But if you get a for instance a housing estate, like an infill development, for instance a golf course or something like that that gets built, that anomaly for one or two years will send your growth completely off the chart because you get all these new, smaller blocks coming on, brand new homes and completely skews the data. So that's an example, one example of data being skewed by a short term trend. So by taking it across 10 years, and we'd use 20 years if we could, that just irons out that data and gives us a much more consistent idea of that pricing pressure that's building that we're looking for.

And just picking up on that, when we are looking at that 10 year growth, what we are essentially doing, the reason that we've included in here the surrounding suburbs, this is almost like a dot map for you because what it's doing is it's saying, well, if there's suburbs that are closer in theory, we would expect to see their 10 year growth to be higher. So you can see here, we've got a 2 percenter here. So Virginia is close to the city and is pushing in on boondao so you'd expect this growth to go up and that's the kind of thing that we're looking for. So that's how that information comes through. That's why we use 10 year growth and that's the I guess idea behind it. If you've in the ultimate guide of renovation or the location master class, just go and revisit module two around that. Because this explains really clearly why we use 10 year growth and that dot map exercise and why it's so important. So Lars has also moved on and said if I'm comparing narrowing down to three suburbs, I should choose based on the 10 year growth. Yes. So if I'm comparing Springwood at 4.66 versus Tagum 4.008, should I select Tagum as there's more room for growth? Is this the right interpretation? And the answer to that is no, that's not the right interpretation at all. So you know, when we're looking at these areas and we're looking at the, the growth, for instance, what all this, the reason that we're looking at this 10 year growth is to give us an indication. So let's just find tagoom. Super cheap auto to go. So you know, here we are here. What we're kind of doing when we're doing this is we're looking at the fact that there's areas we're looking for this ripple effect. So from the CBD we've got these oranges which are 4.5% and we've got a pink here, that's you know, 5%. We've got this which is greater than 6% and all of these, you know, fours and fives and sixes at the last 10 year growth are actually pushing in on to goom here, 2.5% and boom, down 2 to 2.4%. So when we're looking at the ripple effect, what we're doing is going, well, when people can't afford this and the growth has gone up, which is an indicator of that, where are they going to buy next? And that's where we're getting this pushing in on these areas. So these two areas would then go on my hit list. Now what that means is that I select them and I'm not running them against which one had the higher growth in the past. Now what I'm looking at is let's have a look at the fundamentals of these suburbs. So the kind of things I'd be looking at here is the vacancy rate. So they're both under 3%. Fantastic. The yields. Well, look at that. There's almost a 1% higher yield here into goom than there is in Boondao. So for potentially, let's have a look at the purchase price. Medium price, 520. So for $30,000 difference in price point, you're actually getting an extra $70 a week in rent. This is something that's interesting to me now. One of the reasons that I'd be concerned here is there's 26% renters. So there's. We're not at that kind of 30% that we use as our figure. 26 is okay if you're in the right areas. There could be some areas that are above that, but 36%. So there's more renters here. So we've got a better rental yield, we've got more renters. Not a significant amount of public housing for me to worry about. Now here I've got 85 sales a year. So there's more than 60 sales a year. So there's properties coming on the market. I can see here there's a lot of semis. And so this here would tell me that semis, townhouses are the actual prevalent property. So now I could get confused in not buying the most obvious property. Now this is 2016 census. We're going to get new census data this year. I can hardly wait. But you know, this shows me that there's been a huge amount of development going on in this area and not so much in this area. So if I'm looking at this map and I'm going, wow, there's been all this area developed here, but not here, they're in the same council. Well, maybe there's actually an opportunity to buy something here and develop it in the future. So you're actually reading this data and going, oh, that's interesting, maybe there is something in this. The other kind of information that you're looking at is just get to know your demographic. Mum, dad, with kids, most prevalent demographic, three bedroom house. Want to buy the typical property. Units that, not that many units for me to worry about. You know, both of these suburbs are good. You know, they, they're coming up with the ripple effect. They're coming up in a price point that's, you know, very similar. There's less public housing here and a higher income, more public housing and a lower average income. Percentage of renters here a bit higher, you know. So I think that's how I would go about assessing those two suburbs. It's not about, oh, I should go with this because over the last 10 years it's had. Springwoods has had better growth than Tagum. You're looking at getting to those suburbs and then you're assessing them based on all of these other things. So I hope that answers your question, Lars. And yeah, good one. Before we finish up, I had another question too. Where is that? Curious. Let me have a look over here. Where'd you go? Here you are. Too many tabs. Oh, hi mum. How you going? Happy birthday for yesterday. Last week.

Yeah. Hi, Dennis.

Hi. Oh, here we go. Question from Miriam. Just wondering what are your thoughts about putting a cheaper dishwasher into a rental property? Amiga Glen vs. Amoreg expensive dishwasher. Our property manager has said that from the reviews he's seen that Omega sounds better than the Glem. A couple of reviews that I've seen of the Omega, however, mentioned leaks. All machines seem to be covered by two year warranty. The property doesn't currently have a dishwasher so we don't have to put one in. However, we're currently in the process of releasing the property and the lack of a dishwasher has been seen as a negative by potential tenants. It is a family house and majority of other rentals in the area have dishwashers. So that would have been my question, straight up. Go and have a look at comparable sales. Have a look at what other. Or you could go over and pray to the holy Spirit. I've got no idea what's going on there but you know, have a look at what your comparable sales and rental market looks like. If everyone else has got a dishwasher, there's families. My gut feel, Miriam, would be that you're probably going to take longer to to rent your property unless it has some better characteristics. If you don't have a dishwasher. Once again I just go and check out what the other people are using in your area. For the dishwasher brands. I've used Amiga in the past and Dishlex. I've used dish legs over the last 20 years and I bought them from Seconds World and had the person turn up and put it in. And I've never had a problem with Omega.

I've had Omega multiple times and they've been good.

And I think a lot of these are actually built in the same workshops.

From what I can understand, yeah, Amiga are the cheapest. Meg.

Yeah, so, and I mean I've for a while there I was putting Fisher and Paykel dishwashers and that's just because they have their own call out service. So I love that and that's what I've done in recent years. You know, you ring Fisher and Paykel, they'll go in. So here's an example. I had a, a rental property in Sydney and I had reporting of a leak and so I had the property manager send the plumber in to check it out. So he came back and said It'll be like $250 to fix the lake. I was like oh gosh, you know, I can actually pick up from Seconds World a new dishwasher, not a second one. Maybe the box got damaged. A new dish lakes or fisher and pikel for you know, 350. I wonder if it's worth actually sending the person out. So I asked for the details about what they were going to do to it. So she asked the plumber and the plumber said oh, I actually outsourced this to a subby and he said it's his intellectual property, he's not going to tell me what. But how do I know that they know what the problem is? How do they quote? And they said well no, they're not going to pass on what the issue is. But there's a leak and the tenants are still complaining about this leak. And so rather than go through the property manager and go through their people and continue this whole conversation, I rang Fisher and Paykel and they said look, it's a $60 call out fee for the first half hour and then it's like $30 for every half hour after that and then it's parts. And this guy came out. It's in a thousand fishermen and Prykall dishwashers, it's all in fixes. And he came in and said, oh, it's just a tiny little clip at the top. You put in a five dollar clip, 65 later they're gone. So when it came to maintenance there was actually a bit of a, you know, I probably spend a Pro $800 on the fish and pike but I actually had their on call specialist that I could call on and make sure that they could fix things. So interesting. But yeah, if I was you Miriam, I'd just go and check out what the others are actually using in the area. It comes down to maintenance. If you're going to have a dishwasher in there, then you know, renters rarely get all very excited about the brand unless it's very high caliber or unless you're in an area that's high caliber fixtures and fittings and you're putting in the dish lakes and they don't expect a dish like so it's more for the valuer as well. So there you go. Okay, so another question, unless we've got any other questions coming through, which I don't see happening at the moment, but I've got a question here from Akil. So let me just read this to you. Is it possible to find properties in Melbourne region that are under $450,000 and are mutually cash flow, assuming we can pay a deposit of 15%. And I said, interesting, are you looking for houses or units? And he's come back and said houses. Hi Jane. That looks difficult though. So it's possible to find mutually geared property in Melbourne region with 20% deposit and up to $600,000. Can you suggest some suburbs? And then good old Nicole, one of our original beta testers and client for over 15 years, she's come back and said with only a 15% deposit, I suspect any property would be negatively geared when you factor in all the costs. Haven't you proved wrong? I'm going live. Let me check this out. Okay, so first of all, let's just do a few little calculations on this so that we know exactly what we're doing. So this is how I would do this calculation. So originally he said 450,000. So $450,000 with a 15% deposit. So that means the loan is going to be 85% of that value. Now I know there's interest rates with threes in front of them at the moment and even twos, but let's just assume an interest only loan for a investment and I'm going to put in 4% to make it even worse than what other people are getting at three, three and a half. So this tells me there's about $15,300 for an interest only loan repayment. So note that. And then if we've got a $450,000 property and we've got a rental return in Melbourne of let's say 3%, then you're going to get 13 and a half thousand dollars in rent. The rent is 13 and a half, the interest is 15.3. So what that tells me is it's negatively geared. So that's how I would do that calculation. But bear in mind what I usually do with the rent is I times I find out what 25% of it is. So 3.3. And I would add that to my other cost because that just gives me enough room to 25% covers drug fees and council fees and property management fees and all insurance, all those other things. So I always mentally just add a Little bit. So if you've got 13 and a half in rent and 18 and a half in costs, this is negatively geared. We can run the same scenario. So your question, 600,000 with a 20% deposit. So that's an 880% loan. 480 let's times 4% again, interest is around $19,000. $600,000. Property with a 3% rental yield is 18. 18 so that's about 18 in rent. So just a little bit below. But remember, if we add on the extra costs of 18,000 times 25%, so 4,500 for costs to that original loan, which I've now since forgotten, you're about $5,000 behind. So we still are not positively geared. So that is going to not make this positive. Now there's ways that we know you can push up the rent. You can be in areas that have more rental yield or you can renovate or add value through maybe a granny flat. Not in Melbourne though because it's not legal, but you could add value to a property and push the rent up. So we've jumped in now and had a look at this in the suburb selector software. So 600,000 and we're always happy to go below and let's just say we're happy to be 25k in CBD. Are there properties $600,000 or below around the CBD that you can consider? So go back to this video and replay it slowly. But here's the secret list. So let's assume that we want to grab some, something that's a little bit closer to the city. This is how you would do that analysis. So broadmeadows idea, for instance, you know, these are all craigieburn. These are all areas that you know might come up on your list. So let's have a look at Broadmeadows. Now bear in mind we would have wanted to do a dot map on this first and foremost. So you would have had to go and have a look at the capital growth over the last 10 years that happened in Victoria. And you're going to start pulling out these areas. You're going to look at these areas up here and go, well we've got an orange here which is 8%. We've got some no nothings, some purples, at 4%, pushing it on broad mellows. It's already done sevens. So we've already got, you know, some really good growth that's occurred over here. So you know, this possibly means that you're not going to get the ripple effect that we were talking about that we would add to the list before we'd get to this list and then we'd get to Broadmeadows and we'd come over and we check out the rental yield. So 3.28 for the rental yield, median house price 555. So once again you can run those numbers. 555s with an 85 loan and 4% interest rate is going to get you to about $17,000. And as the cost and then if we looked at a 3.28, so $555,000 property with 3.28 is that 18,000 in rent and if I then added, worked out what 25%, so another four and a half. So if we were running at 17,000 was going to be our loan cost plus the four and we're at 18, 19, 20, 21, 22. So we're still about two grand in the hold. So not a lot. Depreciation might push that over the board for you, but that's how I would be doing those calculations if that's what is important to you, is working out, being mutually geared. Make sure you add on all those on costs. There you go. In five minutes or less. How can you answer those questions? Quick conversation. You're in here looking for property managers in Melbourne down Princeton way. Newest property manager seems to have a lot on her plate. Frustrations, people leaving industries, selling franchises. John, do you want to talk about some of the innovative property management that you've seen and you've been working with recently?

Yeah. Well, Joan, now I just have to say I do have to jump off in two minutes, so I'll be quick. But all of that industries in flux as a lot of industries are with the technology and AI and everything else coming online. Just think of what Uber has done to taxis, for instance. So all of these interconnected networks and so on. So it's certainly worth checking out some of the online property managers that are there at the moment. The company that I've been had a bit to do with is called Ubonda. And whilst the platform itself is online, the people are still obviously on the ground, but it works through an integrated network, which is pretty interesting. And yeah, obviously a little bit cheaper on the right side of things, pros and cons. But I guess the big pro is you have one property manager for your portfolio rather than multiple property managers and they rely on the networks that sit underneath, like the maintenance crews and all of that that have the local knowledge and so on. So, yeah, definitely worth checking out.

Great. Well, thanks for that, John. And I think the interesting thing there is that property management is an issue a lot of people are facing. I think we've got another question here from Sarah, who rented her tenants and moved out. They started 10 bucks above what they were getting, they're now 10 bucks below. They're in Geelong. And she's saying, you know, what do we do if we can't rent the property? And I would go back to the research, go and see what other properties that are renting at in the area look like. Maybe since you've done purchased the property and there may have been some improvements, maybe people are throwing in Foxtel or, you know, security or fences for dogs. I don't know what it is, but just see what people are talking about that might attract you. It's much better than take a hit and reduce the rent by $20 a week than wait six to eight weeks for your property to rent at the price that you want. So remember, it's always a year to get in, so usual for the tenancies before you can actually recover or change that. So don't hold out and be a bit headed about it. I think that can always be a bit of a problem. And just finishing up, John, we are going to be opening up enrollment soon for the ultimate garden renovation in the next six weeks. You might see some emails around that. Not planning on doing this again anytime soon. So, you know, if you're interested in ultimate guided renovation, please make sure that you go and jump on that and, you know, watch the videos again. We always make sure that we're giving a lot of value in the webinars and the videos and all the things that we do. We're looking forward to welcoming a new group of students through that we can take through and hold their hands and show them how to renovate. And just on that, I just been recorded on a renovation topic in a new podcast called Pizza and Property. So that was a bit of fun. Go and check it out. Pizza and Property podcast Renovating with the Renovation Queen. So that's the latest there. And, and I think that that John, you know, with the renovation even more so now and even the question that we just had, you know, it gives you the opportunity to push up the rent and increase the equity and manufacture equity really quickly in a property. And it doesn't matter where you are in the property market, you know, we talk about the Trident strategy and buying below the market by knowing the market. You know, renovating so that you can add equity and then in the long term having capital growth. So there's three ways you're making money. Your renovation, you know, it's still the flavor of the month. It has been for many, many years. And it's. What definitely one of the strategies that we believe that is giving people a real leg up in the market these days. So if you are interested in renovating, please watch your inbox because we'll be talking a lot about it in the next six weeks. All right.

Well, sorry, guys, I do have to jump off now. But thank you. And great to get your questions again. And we'll see you next month.

Okay, guys, real quick. Speak to you much. Have a great time. We'll speak soon. All the best. And as always, here's to your property success.