Your Property Success Mentor Call January 28-01-2021

Hello. Hello, everyone. It is Jane Slacksmith here coming from my home. I think this will be the final your Property Success Club that will be filmed in my house. Because the big moves are that we will be moving back to the office very soon, which is exciting. Well, it is January. It is 2021. Oh my goodness, what an incredible time it has been for us over the last year. And I wanted to take this time reset and regroup with everyone. So if you're there at the moment, please let me know you're there. I'm going to try to jump in over the club and make sure that people can hear me and see me. Let me know if you're there and let me know if I'm coming through loud and clear. As I said, it's really very exciting at the moment to have everyone back at work and those that can actually get back into the offices. Been a really challenging couple of months and it's exciting to be able to, I guess, get back to the new norm. But things aren't always going to be completely normal because we have all of the changes that we've been through. So some really positive information and I just wanted to start off with making sure that everyone understands that, you know, normally John is here to do the disclaimer, but I have that job today. So I just want to make sure that you know that all the information that is shared today is done so with the precursor that you need to speak to your own professionals and get their own professional advice as to your circumstances. So this is for a guide only. I'm a real estate agent, accountant or financial planner. But I'm here to use some of my experience and that of my students to be. Be able to add some value to. So if you have any questions, please let me know if I'm coming through loud and clear. Let me know if you are. Let me know where you are and you know what your. Where you are located. And so I'd love to hear if there's people about. So without further ado, you know, I wanted to cover, obviously, you know that views are getting better because of things that we. For editorial RBA announcement that there is an expected 30% lift in property values in the next three years. That is properties are going to go up by 10% per annum over the next three years. Now, this is an extraordinary measure or comment that has come out from the RBA and I find that it's really interesting that they have put that out there so publicly due to freedom of information. There was a request to find out why they believe that and they came back to say that there's a whole optimism around the fact that people don't believe that interest rates will go up over that three year period. And there's also optimism around the fact that there's a belief that that unemployment numbers will improve, that is there'll be more jobs out there. Now we've seen that over the last few months, which is great. We know that Australians have been saving more than they've ever saved before. So before we get into things, if you actually have a question, please, you know, type in down the bottom underneath in comments if you have a question. If I'm coming through loud and clear, let me know. Give me a thumbs up because you know, I know that most people watch this quite on replay and I wanted to be able to add some value to the start of 2021. So my comments about, you know, the 10% per annum over the next three years rising property values is just the fact that we need to look at history and we need to look at the current situation and what all of that means. So we look at history. We know that from the pain and gain reports that RP data puts out every quarter or so that it is predominantly houses that go up in value more than units. And we also know that it is predominantly those in capital cities rather than regional areas. So if you're going to try to hedge your bets, you probably aim for a house in the capital city, albeit as we've been talking about for the last four or five years here, the satellite cities which are the feature cities into those capital cities. So the Geelongs, the Ballarats, the Newcastles, the Wollongongs and to some extent Sunshine coast and Gold coast as well. So those are the type of indications that I would put the precursor down to making sure that you definitely have a strategic plan of where to buy now. There's also been a lot of commentary about buying in Perth. Now if we look at Perth, Perth has not gone up in value so many years and without a shadow of a doubt the Perth economy is linked predominantly to the mining of economy and we know that there has been improvement in the iron ore prices over recent months etc. That has been perpetuating that enthusiasm. However, here is my thoughts and I don't think you'll probably hear this in a quarantine. Putin associated with had to relocate all of their families to Western Australia from Tasmania and Queensland and Victoria because they weren't sure if they'll be able to get back and see their families with all the quarantining and what was going on. So there's actually been, I believe, a move to Western Australia and some of those to Perth itself and some of the regional areas that has been generated by these flying, fly out miners that just to be able to keep their job and their income have had to move their families there. So I think there might be a double whammy of surprise kind of underlying support for the property market that's been seen in that Perth market. I still have grave concerns around that market being associated so closely to the mining industry and also being associated with any of the fallout if we do go into a trade war with China. So for those of you who are looking to the west and looking for opportunities, as you know, I'm a low risk investor and will always give you low risk advice. And my thoughts on that is that it is still an economy that is based solely on that mining foundation and that mining foundation could be changed quite quickly. So be aware of that now. Also be aware if for instance, China does stop buying our iron ore and buys it from someone else, then the person who's going to be selling it to them will no longer possibly be able to fulfill their orders and Australia can step in and cover that off. So there could be a, you know, a potential coverage there or buffer. But I still think there's some significant issues that we need to be aware of now. As I said, please let me know, type in the comments if you can hear me and see me, if I'm coming through loud and strong and if not, we might have to start again. Some other thoughts for the month. So, you know, I think that as we've seen, the property market has definitely taken off and taken well into its stride. I was speaking to a property manager up in the Sunshine coast recently who told me that they're getting 100 applications per property that they're putting up and people are offering to pay 3, 6, 12 months in advance and higher than the asking price to secure. And when I asked whether this was kind of the remote working possibility that was the Brisbane people moving to the Sunshine coast and commuting maybe one to two days a week, it was definite in saying it was people moving from Sydney and Brisbane, sorry, Sydney and Melbourne who were moving up there. So I think there's been an opportunity for some people to take that city change, move to Queensland. Obviously you've got a higher buying power that is available to you up there with the median house prices being quite significantly lower than they are in Sydney and Melbourne. So at the moment we have Sydney at a million as a median house price. Melbourne sitting at seven in Canberra and then we're down around five. 70 is where we're looking in Brisbane. So you know, there is a market and I previously went to, I had protected in September we saw the green shoots, you know, they started acting and we've had, you know, a number of them buy really well and settle properties in the last two months. One even last Friday. And you know, buying really well priced properties with opportunities to add cash flow as well or renovate to add equity quickly. So there are opportunities out there. However, the market is really, really hot. I reviewed a couple of properties for one of my Dunview clients this week that the buyer's agent had sent through for me to have a look at to see if I should pass them on to the client. And I have to say, you know, just watching the videos from the buyer's agent and seeing these properties in Sydney full of people and they were almost like shoulder to shoulder trying to get through the doors and assess these properties really gave me a real clear view of how much these properties in demand. And I noticed from my mentoring students the price estimates that some of the agents were giving and the properties going 1 to $200,000 above really indicates how much enthusiasm there is in the Sydney market. Now the Victorian market is responding as well, but slower. We're probably six weeks behind what's happening in the Sydney market. However, just reviewing four of the properties one of my mentoring students presented yesterday of properties that they had found that were identifying the suburbs that I'd set for them. Really good properties coming on the market. There's still low stock but that is responding quite quickly and that that had been waiting for the Christmas period to stop before they bring the properties on the market. According to the buyer's agents and the buyers out there, you know, the time is coming. So we know that the Gold coast and Sunshine coast has really been taken off. I was speaking to a potential mortgage client the other day who has significant insight into one of the councils up on the coast and the gentrification of the urban areas. And there's a significant amount of money that is being sent, spent up there to, you know, generate certain real livability to some of those areas. So the money's being spent by the government. They're putting a lot of resources into those urban areas and making them attractive. So you know, there's a lot of positive to those regional areas as well. There's an opportunity for us to really take 2021 and look at our goals and look at what we can achieve. And it's really important for us to concentrate on where we're getting to now. One of the first steps that we always take with the mentoring students is trying to consider what the best way forward is for them to achieve their future dreams and their future plans and goals. One of the things that I think that is really missing with a lot of the investors that I speak to is understanding what your long term plan is. Now, I know that this could be considered a little bit out there, but I fully believe that if you can concentrate on where you want to go and you understand where you are in your current reality and understand what that gap is, and understand that there's tension between those two points, then you are actually going to attract yourself to the goal that you set. Now, one of the exercises that we do when we start onboarding new mentoring students is if we go through and we look at what your future life would be like if you had everything that you wanted to have. So I really encourage you to just take the time to spend. I know we're coming to the end of January, but the month has gone so fast and the year will go so fast and five years will go so fast, and then 10 years and 15 years and you really could miss out on helping yourself plan the future that you want. So I encourage you to take some time and just close your eyes and concentrate on what you could visualize as the perfect life that you would want. Now, I want you to completely experience this in understanding who you're going to be hanging out with, where you're going to be spending your time, what choices you get to make about where you travel. So once we're assuming the borders will be lifted, but how often do you want to go overseas? How often do you want to have weekends away? How often do you want to have brunch on the weekend? How often you are going to spend time with your family or be able to give them gifts. So think about what that future life looks like, because I think if you really start visualizing what that looks like, then you can spend some time in understanding what the cost of that life is going to be. So I really encourage you, just take 10 minutes, close your eyes, take some deep breaths, and consider what that future looks like for you and really step into it and embrace it. And then what I want you to do is just come back and set where you are right now. And it's like having just happened to have it here, an elastic band so if you think about having an elastic band and you're setting this goal that you want and you're setting the current reality that you currently have, every single time that you have created that in your mind and you know where you are and where you want to go, you're creating this creative tension that is actually going to allow you to draw yourself to the future that you want. Now I know this sounds all woo woo. I know people who do this and do it very effectively and have been able to create the future that they want. And it is hard to sometimes step yourself out of the reality of day to day life and you know, kids going back to school, going back to work, you know, maybe finding a new job, just the minutiae of the things that we are involved in in day to day life. And I really encourage you to step out of it and go and have a look at the future that you really want to achieve. Now once you've done that, I want you to come back and cost out what that is. So how much all of those things are going to cost. And I think you might actually be surprised about what that is because a lot of people believe that they need three, four, five properties to get to the goals that they want. And the reality that they may be able to do that in a timeline that allows super to also be added into the income that they could be getting. Or if you want to do it by the time you're 40 or 45, for instance, where super doesn't come into the play, it may not be as many properties that you think you need. Now obviously, you know, RBA believes if you buy in good areas and unemployment doesn't increase, that we're going to have the opportunity in the next small window of years to have a really increasing capital growth period. But you know, we're thinking about the long term when we invest in our properties. So if you're thinking about that 10, 15, 20 year time frame, you know, yes, it's nice to have a little bit of a boost in the beginning. And you know, in the article that I wrote for Canstar yesterday talked about the fact that if you in the median house price of, you know, a million dollars in Sydney based on, you know, a 10% growth year on year, you're kind of looking at making $330,000 in three years with a well placed property purchase. So just consider the fact that you may not need as many properties or as much as you thought that you're going to need, but you should have yourself a goal that is set. So if no one has any questions, I'm just going to continue on this vein because I think it's really important that we are aware of what is possible for ourselves and what we should be really setting ourselves for the future. Now, when we go through this exercise with mentoring students, we then go and do the gap analysis. Now, the gap analysis is getting your current portfolio and having a look at how you think it's going to perform. And the reasons that you potentially bought your properties in the beginning may not be the reasons that you have your properties today. So you may have bought them for cash flow, or you may have bought them for growth, or you may have bought them thinking that there was going to be a mining boom or some type of industry that led salvation in one of these towns that you have properties in. Just be aware of the fact that the reason you bought the properties back in the day may not actually be relevant today. And you might have some portfolio killers in your portfolio that are eating up your borrowing capacity and restricting you getting into a better quality property. Now, I know that there's a lot of. I know that there's a lot of properties out there at the moment that are coming onto the market. I know there's a lot of optimism and I know that there's a lot of people who are really keen to pursue the getting into the market. But I have to say, once again, put on the low risk kind of filter and understand that if you have some kind of query over your job, then you need to be able to have a secure employment, you need to have a buffer in place. Don't risk the farm just to get into the market, because we really want to make sure that people are making the right decisions and doing it from a position of financial security. Now, I've had the opportunity over the last couple of weeks, whilst we've been inundated with mortgage clients, to actually jump on the phone and do the discovery calls with a lot of new people looking at purchasing properties. And it's really interesting to hear their stories about how Covid has affected their income and how they feel that they're placed in going forward and their investment strategies. I have to say it is probably the most optimistic time I have heard people speak about buying properties in so very long, which is really, really exciting. And I think that the more that we have the RBA and some of the media leading with these positive stories, there's going to be more optimism. Now, will that actually generate its own uptick in the property prices? Potentially, but it's really important that we look at this and we consider that if you still apply some of those Trident strategies that we talk about, so buy below the market. Now that's the only part of the strategy that you may have to give up on when you have to buy a property in a fast moving market. So you may not always be able to buy below the market but understand what the market is and then add value. So take that property to a higher and better good and goal. So that's through renovation in my strategy. Some people do that by adding equity in subdividing, developing or granny flat for instance and then buying and this is like a non negotiable buying an area with some good capital growth opportunities. So I think that there's all of these upsides that we can consider and I think that when we look at the upsides that yes, getting to the market as soon as possible, because I think that's really important. But also when you are in the market, be very mindful of the fact that there's going to be this fear of missing out. There's going to be agents as we've seen in Sydney that are under quoting in their price points and you have to be really mindful of the fact that you still need to be making strategic decisions in buying in an area. Now we have a question I think from Christy and she's saying hi Jane, just wondering what your opinion is on buying a property near three or four blocks back from a main road. Just the main road in town, not a highway or anything. When there's no wind you can just hear the traffic. But wondering if it would be a buyer adversity when selling. Hey, you know, this is a really good question because you know, often what we find is, and when we're trying to kind of minimize our risks is we're trying to look at what the risk could be in not getting tenants and what could the risk be in not being able to sell the property in the future. And I think you know, one of the locations, obviously one of the biggest issues and I think noise pollution is paramount and a major consideration. Now there are some areas where people are quite happy to have noise pollution because that is just part of the environment they're in. But it sounds like this property that you're talking about is in a country town and not on a highway, but there's a busy road a couple of blocks away and you can hear that background noise. I don't think background noise from what you describing in that distance would actually make such a big difference I think that you just need to be aware of listening to what people are saying in the property and what the agents say. I try to. Potentially, if there was a property for rent in the same area, going to an open inspection and just listening to what people are saying and if you hear people say, gosh, can you hear that noise? Then that would concern me. And that's why whenever I go and look at properties to buy, for at least every 10 that I look to buy, I'll go to one of the rental open homes just to hear what the tenants potentially want and to gauge how good the rental agent may be for being a future agent for me. So I don't think that that buyer objection would be such significant, but I would really check it out and even ask the rental managers from a different rental company to the one that's trying to sell the property, if you were going to rent here, did they see that being an issue? Now obviously the ways that you can minimise the buyer objections are having the typical property, making sure it's in an area the renters want to be, maybe being close to public transport, or if it's a family oriented area with lots of young kids being close, but not too close to the school, and just being aware of what kind of objections they can be. And you often don't hear that when you're doing open homes for buying. But the big tip is go and have a look at some of the open homes rent and see what people are saying. Just be like a secret squirrel and hanging around for those questions because I think that's always a really good way to understand what the buyer objections could be or the renter objections as well. But yeah, I don't think from what I'm hearing three to four blocks back and just with a slight background noise would actually make such a big deal. So thank you for your question though and if you have a follow up, please let me know. Be more than happy to answer that. I think the other thing that we need to be aware of in the current market is that there is going to be a lot more people buying than there is going to be properties coming on the market. And so we just have to be mindful that the decisions that we make now potentially the overspend could be covered up with time, but the reality is that you don't want to overspend. So please understand what the comparable sales are, but also understand that with the comparable sales, often what you're getting with the data, RP data, Australian property monitors, et cetera, the data is actually an sqm. Research even is coming from the agents who are declaring what the sale price has been because usually it takes three months or so to get through the settlement data from the different agencies in the different states. Now, the issue with this is that the data that you're looking at is the declared sale price. So some of the agents are not going to put in prices that are too low or prices are not going to make them look good for the next potential seller who they're trying to sign up. So a lot of that information is manipulated and it really is not until later on that you're getting the right information. So I've always said follow one set of information and it's the pattern and the trend that you're looking at rather than the actual numbers. So if they're saying you can buy this for 670, you then need to go and get the past sale information for the last couple of months and see what the actual sale prices are going to be. Because you don't want to be in a market where you've got old data and you might be in a suburb that you can't afford. And the number one mistake people then make is they've done all the research to get to a really good suburb and then what happens? They go, well, I can't afford a house, I'll just buy a unit here. And maybe the unit is not the typical property. And you know, to Kristi's point, thanks, Christie. Who said, what's that? Buyer or renter? Objection. Well, if it's not the typical property, then most people don't want it. So you then fall into the fact that you've potentially got a property that won't be rented and when you come to sell it, it's going to be really difficult to sell. So just be aware that checking the comparable sale prices is important, but look at the trends from your particular data source rather than the specific numbers and then verify them with the recent sale data. And if you don't have access to some of the recent sale data, then ask an agent and just ask them to print out the last six months of sales of three and four bedroom houses in the suburb that you're looking in now. If they want your business, it's not going to take them very long to actually generate that. And if you have RP data through our agreement with RP data, then all you need to do is just go into the tab for your suburb and click on houses, for instance, three and four bedroom and they'll actually go through and give you the last six months data and you just have to be able to click on that and download it, which will give you the information that you want. You can download it to Excel and then go through and interrogate the information even further and look at the properties. So I think there's a lot of information out there at the moment. But with a really fast moving market, be aware that what's being quoted as the median for some of these suburbs may be too low and it may not be within your price range. So I really encourage you to get out into the market now. If you have any other questions, please send them through. I'm here to help. One of the other things that I'm seeing at the moment, particularly in Sydney, and I have to admit I have never seen this happen before and that is that agents have had properties available to auction at a particular date, so the 13th of February and they've said we've had so much interest, we're now going to do it this weekend. And so we're getting more and more of these auctions being brought forward. Now this can create havoc, especially if you don't have your finance organized. So I really encourage you, if you are considering buying a property, please at least speak to your broker and get, or speak to us if you'd like, investors choice. But just get your borrowing capacity and the lender that you're going to go to assessed and try to get that pre approval done sooner rather than later. Now there's some lenders that over the last few months their timeframes have just blown out terribly. Like anz was taking 30 days to pick up an application, now they're taking 30 days to pick up an application. And they look at the application, they have questions, they're going to go back to the broker, they're going to ask those questions to be answered and then you go to the bottom of the queue. So just be aware that it's really more important than ever to be able to get in early and get that borrowing capacity done so that you know exactly what you can do with which lender and your mortgage broker has all of your data on file and ready to submit. Which I guess begs the question is how relevant is getting a pre approval these days? And one of the issues that we have and comes up time and time again is that lenders, it takes lenders a lot to do a full pre approval assessment. And more and more lenders are not doing it, they're just doing a cursory, you know, the information that you've given us and what you think your pay is and all of the information that we have. Yes, you could have a borrowing capacity of a certain amount. The reality is that when you actually provide them with the contract of sale and hopefully in your offer to the vendor, you've put in seven business days to be able to get the loan approved, which means your finance is acceptable to you and a pest and building inspection, then you need to have that time for that lender to fully assess your application. And as you can tell, if you've got lenders that are taking 10, 20 or 30 days to actually assess an application from when that contract of sale sent in, then you could be outside the scope. So I really encourage you to be mortgage ready and be pre approved as much as possible, knowing that they could still come back and ask you questions because they're not giving full approvals or full assessments for pre approvals these days. So I've also had a few people inquire about refinancing and just be aware that refinancing in all honesty, can take two to three months. If you have a cross collateralized property, it can take longer. But if you think that you might be ready to start looking for properties and you want to trigger that off by getting a refinance, capitalising on the uplift in the property price that you have and accessing some equity to buy again, then some of the worst conversations that we're having at the moment with people who are finding their ideal property but aren't mortgage ready to make an offer and they're going to have to let it slip. So I just really want to encourage you that if you are considering getting out there in the market at the moment, please make sure that you are mortgage ready. If you would like our assistance, obviously we'd be delighted to help you. You can book a time to speak to either myself or Lisa, which is investorschoice.com au bookacall and we're also talking a lot to first home buyers at the moment. So, you know, I launched the First Home Buyer show last year to really encourage First Home buyers to utilise all of the government incentives so that they could then go forth and, you know, buy their first home strategically and use that as a stepping stone to their financial security. And we've been really being able to help a lot of First Home buyers think like that, which has been great. And if you want some of those resources, just head over to firsthousebuyer.com where you can actually get access to my updated first home loan deposit schemes and grants and concessions since January 2021, which includes all Victorian New South Wales and Northern Territory budget updates as well. Because first home buyers getting a lot of incentives and first time buyers were definitely the biggest part of the market in December last year and it's good to see that they're out and active and even finding now that it's actually cheaper for them to buy a home with the interest rates rather than pay rent. So, you know, there's a lot of things that upside at the moment in the market and there's a lot of incentives that are being offered and I think the home builder grant as well, although it's been reduced to $15,000 for 2021, there was a huge upsurge and I think I was reading 76,000 people took it up last year. Sounds like a lot, doesn't it? But I was pretty sure 76,000 took it up last year and there's been a huge increase in those people who are using that to build their own homes or substantially renovate. So although it has been reduced, it's still on the table for people who are considering that, which is great to see as well. So as you can tell, there's a lot of incentives out there, there's a lot of activity. I still really encourage you to be mindful of the fact that you're investing for the long term. And although there's a lot of talk about some of these areas and the improvement that is possible in the areas that some of them are still linked to the MIN industry and there is a lot of cloud over that Chinese trade agreement and where that goes. But you know, it's been a very vibrant period of time and I know that a lot of people are getting ready to buy in 2021. You know, they've got through quite unscathed with employment concerns in 2020. The vaccine is on its way, there's optimism around that and there's still a lot of upside to the market. So we really didn't see a significant fall last year in the market as was anticipated. We saw a stabilization and mainly due to the fact that most people lockdown, there was low supply. But what we're anticipating going forward in 2021 is a very, very vibrant market. The best interest duty mortgage requirements came in in January. So expect your mortgage brokers to be asking even more questions about your long term, the next two to 10 years and suggesting lenders that are in your best interest, which they should always be doing anyhow. But also there's some query about the potential easing of the responsible lending legislation that came in a few years ago and that is anticipated to be discussed in March. I personally don't think you're going to see lenders really pull back and let you self assess your own ability to lend. We've definitely seen some insane interest rates below 2%, fixed rates in some instances for owner occupiers with large amounts of equity and principal and interest loans. The reality is though, that there is a lot of really good interest rates that we haven't seen ever before. There's some interesting fixed rates that are being offered as well and there is a anticipation that rates won't go up in the next three years. So all in all, the market seems to be very buoyant. I still would caution you to be mindful of buying strategically in the best areas that you can and just take some time before the year really cracks on to spend some time thinking about, as I said, what you want to achieve in the long term. Because I know that until you actually set that destination, it can seem so far away. And as we've seen, time can go within a blink of an eye. And if you know what you're working towards and you make that choice to work towards it, and you know that is a goal and you reinforce it, then you will be achieving well on the path to achieving that goal. And just understand where you are right now and how far and what you have to do to get to the goal because you might actually be closer than you think. And often when I go through this exercise with my mentoring clients, that's what we find. And for many of them, that relief itself is something that's really important. So as I said, I've spent a lot of time having these discussions over the last few months with people and those that are setting that destination and setting exactly what they want to achieve, are pleasantly surprised when they achieve it. And I have to admit, it doesn't surprise me because I've just seen this happen so many times. But it all starts with setting those goals. And so that's kind of my thoughts for the month. And how I would like to support you is continue to encourage you to be mindful of where you buy, be mindful of the portfolio killers that may be in your portfolio already that you might need to address. And also just be observant of what's happening in the market and understand some of the figures that you're seeing may be a little old and dated, so you should be doing some real research into comparable sales that are more immediate so that you can really be mindful of the office you need to be putting in. So if no one else has any questions, I'm going to let you all get back to your day. But I really encourage you to make some effort over the next few days to spend some time thinking about the future you want. Write it down, solidify it, and understand some of the steps that are going to get you there. Because you might be closer than you think and you might just need one or two properties to actually let you achieve that financial security that you want in the time frame that you are aiming for. So thank you so much. Thank you for my one question today. I'm so glad that everyone's feeling very confident and not needing extra support at the moment, but do know that we're here to support you. The last Thursday of every month at 12.30, I'll be answering your questions. If you want to send the questions through beforehand, please do. And if you wanted to have one of those inquiries with myself or Lisa, Mortgage broker, please do. Investorschoice.com bookacall and we're really keen to be able to support you during this time. I know there's been a lot of uncertainty and need for clarity and I think, you know, we've really turned the corner now and there's opportunities to be had and you just have to apply those filters that we discussed time and time again into your property purchases. Anyhow, guys, it has been a pleasure chatting to you in January 2021 and I look forward to talking to you next month back in the office. And as always, until then, here is to your property success. Speak to you soon by.