Your Property Success Mentor Call January 29 - 01 - 2016

You.

Hello and a very big welcome. Now, just before we start, as you know, we here at your Property Successful spread the word about low risk, no nonsense property investment to as many everyday Australians as possible. And so often these calls contain some really great content and questions that would be extremely helpful to other people, which is why we record the calls and reserve the right to share the content down the track. So by participating in this call, you are acknowledging this and if for some reason you prefer not to be included on a recording, we can just ask us and we can cut you out. But we need to know within about 24 hours. Oh, guys. Well, I see that we've got a lot of people online here and please just say hello in the chat box. I just want to make sure that you can hear us and see our screen. Well, this is really exciting because it is the first mentor call for 2016 and what an exciting year we have coming up for property investors. There is lots of opportunity, of course, a big welcome to you if this is your very first time on the call. And please don't be shy, speak up and say hello and ask me a question. And to all of you who are from the Ultimate Guide to Renovation, welcome. Congratulations. I know you've just finished module 12 and for those who have done all of the modules, I'd love to hear from you tonight. And for those of you who are still catching up, it's okay. You have lifetime access, so, you know, let us know what your questions are and where you're up to and what your plans are for 2016. And those of you in the youe Property Success Club, please introduce yourself too. Say hi and tell us a little about yourself. Look, I'm really looking forward to hearing some of your plans and goals for this year. So please be ready to share those tonight and I'll be telling you a bit about some of the exciting new things that we have coming up for you this year too. It is great to be back with you and I'm looking forward to sharing some really valuable information with you tonight. Now, these monthly calls are exclusively for my mentoring students, the students of the Ultimate Guide to Renovation, my youy Property Success Mentor subscribers, and my Investors Choice Morgan Mortgages diamond clients. And if it is your first time, make sure that you jump in and say hello. Because these calls only take once take place once a month on the last Thursday of every month. So you will get a lot of reminders a week out before the call so you can put it in your diary and on the day and the day before as well because we really don't want you missing out. And if you can't make a call, you can always leave us a message on the message line 1300-76-119 or you can email us at questionsourpropertysuccess.com but before we get straight into the questions tonight, I should introduce the person sitting next to me. As always, I have John, the co creator of the Ultimate Guide to Renovation. So. Hello, John.

Hello, John. Hello, everyone.

Oh, my goodness, John. What a big year it was in 2015.

Yeah. Yeah. I still kind of feel tired, actually. I feel like I need a coffee before. Yeah, 2016.

I know. It's a bit like that, isn't it? I think. I think last year we were so caught up with what was going on in the market and the marketplace and property and it's kind of January started and I thought we might have a little bit of downtime.

But no, straight back into it.

Straight back into it.

No, it's all good, though. Exciting year coming up. I know. Some good. Some news. I'm looking forward to sharing some of the news tonight too.

I don't know, are you going to give it all away?

I think we should, really.

Okay. Well, I've got to say we've been locked away for the last couple of weeks with our team here and trying to plan some pretty special stuff. So we're pretty excited about it.

I'll drop an obscure clue. It has something to do with young talent time.

Oh, now I am excited. Well, tell us about your Christmas. How was your break? How did the 2015. Good.

The whole family thing, as you do between two families on Christmas Day and then Boxing Day we went. If you might remember from the December call, I was doing some work on site over Christmas so we went to site and installed some boundary walls. So we used a foam panel fence system with some big steel beams that go in the ground and then there's the 75 mil thick foam panels that go in and then get rendered over. So I did that. Excuse me, between Christmas and New Year's and there was a couple of hot days in there.

So why are you using foam?

It's just a lot faster and cheaper than using brick and rendering it. And we wanted that rendered look, you know, the European courtyard kind of look. And so the renderer got. He's just putting his last coat on. Hopefully he had a bit of rain this week, so hopefully Monday or Tuesday he'll finish that off. But it comes out. You would not tell the difference between it and A block or brick rendered wall. And it's got nice sharp because it has angles, aluminium angles underneath the render and looks really good. But his hard work wasn't used to been on the tool, so it knocked me around a bit.

What about price? Is it kind of comparative?

Yeah, it's. It is. It's pretty, pretty competitive. Like, probably, I would say by the time you take into the footings and everything of a brick wall, it's probably about half the price of having a brick wall and, and super fast to. To put up.

Okay, well, it sounds like you, you got busy.

Yes.

I hope you had some time to downtime as well.

Yeah, well, the job ran over. It's supposed to take, I, I remember saying in the December core, two or three days, and it took, I think, six days. In the end.

It's always longer than you expect, especially with the heat that you had.

Yeah. Or the heat was.

How does the Styrofoam last compared as a product?

It's a Styrofoam panel, but over the top of it, it's got fiberglass mesh. Like a full coat of fiberglass mesh, which imagine is like a great big sheet of fiberglass, tight, really a little grid kind of pattern. And. And then it gets an acrylic render over that. And. Well, it gets. That's the way it comes to you. And it gets another three coats applied and over the. And they tape you tape over the.

It doesn't really matter what's underneath after you've put everything else on top.

It's bulletproof. Yeah.

Oh, great.

Really, really strong. So. No, it's good.

Did I hear a. A rumor that development number two is going to probably go to market before development number one?

It might finish? Well, it's already on. It's already on the market. It's selling off plans. So with development two is already on the market, but I think it'll actually finish before development one.

It's amazing.

It's. Yeah, it's a kind of a tale of two builders.

So what's the. What's the time frame that you've allowed for both developments?

Well, we were supposed to finish originally in the contract. We're supposed to finish the first development in 2015 in December. So we're looking to bring it on the market about now. Realistically now it's not going to go on the market till April. I would say that's the first development, and I would say the other one will probably finish about May.

Okay.

Yeah.

Fabulous. And the delays caused by.

On the first one there Was delays from the start through, you probably remember through the previous calls. Yes, they hit gas and water and all sorts of stuff and, and then just the, the, the builder, it's a kind of a family outfit. The builder had a hip replacement that didn't go wrong. He was taking care of the job and then his son kind of took over kind of and you know, they do things differently and all that kind of stuff so you know, it just. Everything that could have taken a long time has taken a long time and.

Well, we're coming to market soon so. We got any pretty pictures?

Not tonight, no, I should have. Look, I might, while you're answering one of those in depth questions, I might email myself a few pictures and I'll format.

Oh good, good, good. Excellent.

Now what about yourself now no New Zealand this year for you?

No New Zealand every second year. So we were, we could keep the winter clothes in their boxes rather than head off to a cold New Zealand winter as, as we do. But yeah, an actual fact. Stayed in Melbourne and had a quiet one. Everyone else left Melbourne so we played tourists, had a fabulous time, set the boys off to the Boxing Day cricket and my 8 year old son Max is now a avid cricket player so I've been teaching him how to bowl which has been exciting and, and I realized that at the age of eight I probably, you know, I did the, I was responsible for, you know, helping out obviously my husband Todd did too. The, the walking, crawling, all the major milestones and we forgot to teach him how to tie his shoelaces. So you know, couple of minutes on The Sesame Street, YouTube. We did shoelaces yesterday, the day before school started. So school started today and I think parents around Australia are, you know, breathing a sigh of relief. It's been a hot summer. But yeah, no, it was a really great break and we actually for the first time in 10 years closed the office between Christmas and New Year. Shock horror. I know. And so that was, that was lovely for the whole team to, to do that and yeah, it came back in force. I don't know. A lot of these solicitors don't start to mid year and I had someone email me and say that they don't start until the 27th of January. It's like everyone took January off. Yeah, Gosh, we've got, it's a strange.

Thing, you have the group of people that take, you know, go off the first couple of weeks of January and then, you know, come back for the last two weeks or the last week and then there's another Group of people that just work straight through and then they leave at about, you know. You know. Yeah, that's right.

It's strange, isn't it? Well, I gotta say we had.

So I'm just motioning for Jane to turn the fan back on my boiling in here.

We had about five settlements in the first week of Investors Choice Mortgages and we have been steadily talking to mortgage clients. So I can, I can say my kind of monitor of what's happening in the property market often is what the, what's the interest in mortgages? Because usually people start talking about getting a mortgage and getting pre approval and they've got three months then to find something and then they, they find something. It's a six week settlement and then the market reports that something sold. So we're usually, we're usually four to five months ahead of what's happening in the market. And I have to say it's not slowing down. I haven't have never had such a busy January ever. And you know, it's, it's fabulous because I often have conversations with people in January and they come, they ring me up and they go, oh, I've just been to Noosa, Port Douglas, the Gold coast and I want to buy. It's kind of like, you know, holiday money. You wouldn't think, you wouldn't think of spending $7 on a. Well, not seven. $12 on a beer in France is nothing. Whereas if someone here wanted, you know, 12 bucks for schooner, you'd go, what the.

I still do that though. It doesn't matter.

Holiday money.

Yeah, I'm looking. Oh no, we could get a.

Just don't use holiday money for buying properties. So anyhow. So yeah, so we haven't had any of those. So everyone's come back and, and yeah, it's been, it's been fabulous. But yeah, we've also welcomed a new member to our team who I see is on the call tonight, which is great. Hey Ray.

Yep.

And that was one of your.

That was the reference to Young Talent Time. So you probably remember before Christmas we're advertising for a new position for someone to help us out with all the content and videos and stuff that we're making around here. And with a view to starting a web TV or actually what's turned into a TV show. Yeah. So we're going to do a pilot for a TV show and the Young Talent Time is Ray actually was a director of Young talent time for 15 years amongst a whole kind of massive back, back catalog of jobs that he did.

But yes. Very, very lucky to have him. Board.

Yeah.

That's excited about working with him.

So why, why are you doing a TV pilot?

Why am I? Well, look, I can see that we're not getting a frenzy of support here. If anyone's excited about actually seeing a TV show from us, let us know in the chat because we're getting pretty excited about it. I guess the thing is that in today's world, people want quick, easy information and they want to be entertained, but they also want to be educated. And every single week we talk to people in the ultimate guide of renovation or clients who have just got these amazing stories of life transformational for moments and how property and property investing in the right way has actually given them the opportunity to do something new or get closer to their goals and aspirations. And even last week I spoke to one of our students who joined us in 2014 and she has now used what she's learned in the course and made an entire business out of running other people's renovations. So she did six last year. So, you know, it's just completely, not just transformed, you know, her life, but her family's life. And yeah, she's, she's now one of the proud business owners in Australia, so. Which is exciting. So, yeah, I guess the TV show, the idea is that we get an opportunity to really fulfill our dream of reaching everyday Australians and effecting change in their wealth potential through residential property. So.

And with a bit of luck, it's going to be pretty fun to watch.

I know every time we sit down and talk about some of the concepts, they get more and more interesting. So we've had to dial it back a bit where some of our more outlandish ideas are down for special events, special features. But yeah, guys, watch for this April.

May watch this space. You might see Jane Sacksmith on your screens before.

So anyhow, it's all very exciting and more, more things as well.

Yep. Now I'll let you reveal this one.

Well, we. You may have seen a call out last year in. We had an invitation out to invite people to a dot map evening and.

Yeah, with Medine Simmons.

Yeah, Medine Simmons, the, the, the girl behind the dots who developed the dot map and a good friend of us, ours. And it was overwhelming. We, we had so many people there and it was so nice. People flew in from Interstate and we are so nice to see faces. And one of the things I guess I take for granted is you guys see me all the time and I speak to a lot of people on the phone or over the Internet, but we don't get a chance face to face to say hi and, you know, share a. Share a chat. And so, yeah, what came from that night was everyone said, when are you doing this again? We really want to get together and talk to you and learn more face to face. So we're putting on a suburbs Hotspots for 2016 workshop on the Saturday, 20 February, over the weekend for a day and hopefully we might send some information out about that tomorrow. Do you think?

Yes, yeah, we'll get an email out that. But it's good because it's, it'll give us a chance not only to go through all of the, the modules, you know, module two and module three from the Ultimate Guide to Renovation and primarily where we go through all those free tools and everything that we use, but we're also going to buy a bunch of reports too from Jacob and from Ripe out, from Residex and, and everyone else and kind of pull it all together and try and just nail Melbourne.

Well, we want, we want people to be able to walk away with knowing how to do the dot map, having actually participated in doing. And we're going to use Melbourne as the example here and come down to a suburb. In actual fact, I think we're even going to grab a bus and go out and inspect property on the market at the moment, so you can see what we would look for when we get down to the property level. But the thing is, it doesn't exclude people from other states because the methodology is exactly the same and we will be working through buying criteria. In actual fact, I was looking at some of the information yesterday and I'm really excited. I was pulling out different reports and looking at how we can get down very quickly within one day from a dot map of an entire capital city to pretty much a property. And yeah, I gotta say, it's gonna be fabulous. Really exciting. So hopefully you guys can come join us. This is going to be a small group of people because we want to make sure that John and I are there for you.

Yeah, 10 to 12 people.

Yeah. So anyhow, so very, very exciting. So watch for that and if you're interested, make sure you reply back. And in actual fact, it got us kind of thinking about the hotspots of 2016 and opportunity that lies ahead. Because I think a lot of people think that when they read a bit of doom and gloom and it's back to the new year and you've got to deal with Christmas, credit card debt, everything seems a bit hard. But the Reality is, every time I say things like your property's worth more than it's ever been worth before, the lenders are really open to lending money and interest rates are low. Please act now. You've got a few months to do this and this is 2015, January. If you listen to the calls where I say please act now or in actual fact, the interesting thing is that market to some degree is slowing in some of the capital cities in Sydney and Melbourne and it gives you opportunity where people take that pause to be able to jump in and take the opportunity with both hands. And I think 2016 is definitely going to be the year of opportunity for those people apprised and ready to go. So yes, we're very, very excited about that. So anyhow, I guess the year ahead is going to be interesting. And next Wednesday, Thursday night, we're going to run a webinar. We've got Ben Kingsley actually from Empower. We've asked him to maybe twist. We might be able to twist his arm I think because I know he has an incredible research tool that he uses for his buyer's agents to locate properties. So hopefully we can get an opportunity to see some of that. And Jacob from Ripe House as well.

Yep, that's a good combination because I like Jacob's new features too in Ripe House. So that's.

I know. Well, we just finished filming some tutorials on the Ripe House features, didn't we? And they were. It's. Yeah, it's amazing what you can do with the research tools that are out there today. And I had a quick chat to Eliza Owen from Residex today and talked about a few hotspots and she's just put out a number of hotspots that or areas to look at. But it was interesting she reflected that it was kind of due to affordability and the spill, spillover effect from Sydney and Brisbane's growth. But she still thinks that, you know, if you had the money, buying in Sydney would be the long term asset buy. So comes down to affordability again, doesn't it? So anyhow, it is all very exciting and for all of those you who saying, I'm really interested in doing dot mats with you and I want to be part of the workshop.

So.

Well, we were going to send you all the information tomorrow and yep, so we'll be doing this location masterclass. We'll be using Melbourne's example. You can take that information away and obviously dot like crazy your capital city and you never know, we might come to a capital city near you in months.

To come.

So we have it.

Success. Yep.

So, yeah, anyhow, so. But yeah, this is a once off for now, so we are pretty excited. And what else can I tell you? Nothing. I don't think. I think it's been a. It's been a big year in 2015. It took a few days to get over it and I decided not to set New Year's resolutions this year.

No, normally I'm going to say I've.

Set myself a word.

What's your word?

My word is compass. Okay, so I'll tell you about that. So I was listening to a doctor, Dr. Fox, and he was saying.

So you're gonna say Dr. Seuss.

No, Dr. Fox. And he was saying things like, you know, people make these resolutions and they're really specific and get disappointed when they don't achieve them. But if you have a word that kind of, I guess, epitophiz. Is that a word pedifies. No is the epitome.

Encompasses.

Yeah, kind of encompasses everything that you want to achieve, then. Then that's probably going to give you more of a reference. So my word is compass. Am I on track to achieve what I wanted to achieve for myself and my community this year? So every decision of saying yes or no to the interviews that I'm regularly asked to do or the time that I have to spend somewhere is am I on track? Is the compass pointing in the right direction for this action so I can be very determined on what we're going to achieve. Funnily enough, Dr. Foxes was pirate last year because he wanted to be open to new adventures. So is this what a pirate would do? Was what he'd asked himself every time something came across his desk. So I'm just not as scary as that. I'm going with compass.

Yeah, I might board this ship in the open sea. Is it a pirate?

Black sails comes to mind. But anyhow. Okay, well, we better get on with this and open the lines up because I know there's a lot of you here and I'm sure you've got a lot of questions. So some quick housekeeping tonight. If you are on your computer and you're experiencing problems hearing, well, you've probably signed off by now, but if you're still around, you can call in on the telephone. And the telephone number can be found in the sidebar under the audio options drop down menu. You can call that number from a landline, mobile or Skype. If you do have a question. And we really encourage you all to get involved, all you need to do is raise Your hand by pressing the little hand icon in the sidebar menu. It is small and hard to see, but we've had people using iPads on buses who've put their hands up and had a bit of a chat to us. So we know it works. Just click the hand button, it will notify me that you have a question and when it's your turn, I'll unmute your line. When I do unmute your line, you will hear a little message that says your line's being unmuted so you know that I'm talking to you. And look, you can ask questions also by writing your questions into the question box at the bottom of the control panel in the chat area. And I will get to these if we have time available. But I do give priority to the spoken questions. So make sure that you've got your microphone turned on. And it's because it's really a lot easier for me to understand your situation and probably get to the crux of your question. And once I do that, I can actually add a whole lot more value. And it's more interesting I think, if we get to chat to people. Don't you, John?

Yep.

Get bored talking to each other all the time. So there's no such thing as a silly question. And I really encourage you to make the effort to engage in that process because you know, we're here for you and you get access to us, you know, once a month to ask questions. The calls usually go for an hour and a half, so around about 9:30 we'll be looking to wrap up. I don't think we ever made it before 10, but we'll try. I just ask you if you do have a few questions, ask one and maybe one quick follow up question and let everyone else have a question and come back later. So if we have time, we just want to make sure that no one misses out. If you're listening to this as a recording, I just want to make sure that you know that we do have that one, 300 number and the email address that you can contact us on so that if you feel that you can't make the next call, you know, please send us a question.

Yeah. Questionsourpropertysuccess.com so lastly, just a reminder, it's.

Not a technical support call, so if you've got any problems with videos not downloading, I'm not the right person to help you. So we do have a team@supportourpropertysuccess.com please email the team and we'll get Back to you as soon as possible. And yeah, that's about it. So questions? We are going to look for people with their hands up and see if we have any questions this evening.

Gabrielle.

Perfect.

Let's have a look.

Hey Gabrielle, how are you? Oh, we're going to try your audio. We can't quite hear you.

There is a little exclamation mark next to her name. So I might just mute and try Farnaz instead.

Farnaz.

Sorry if I've pronounced your name wrong.

Hey Farnaz. Hello. Hi.

Hey, how are you going?

Can you guys hear me?

Yeah.

Awesome.

Thank you. I'll be quick with my question. I'm all for buying and holding and renovating, but I'm more interested in a strategy that would work for you if you're already a high income earner and not able to really take time out to do kind of renovations yourself. And I'm hoping that because I know a lot of investors, they buy brand new because of the depreciation and all the tax benefits. But I'm just wondering what your thoughts are around that strategy.

So can I just clarify, it's around should you buy brand new if you're busy and don't have a lot of time and can't renovate yourself?

That's right, yes. I mean in terms of the time that you're putting in, obviously I'm on a very high tax bracket so I need to make sure that it's worth my time taking time out to do the Renner as opposed to just doing my day job and then buying something on the side.

Yep, absolutely. Actually, it's funny, I was talking to the ex CEO of a very, very large, well known mortgage broking company recently and he said one of the first things that he said to his office manager was unless I can make $400 an hour doing a task, you do it. So coffee, picking up laundry and everything, I thought, oh, that's an interesting way of looking at it. So look, I respect what you're saying and I think there's two questions here and the first one is if you're too busy to A find a property or B, renovate a property yourself, what do you do? And C, the next question is if you are time poor, then should you buy new? And I think the assumption is that if you are in a high tax bracket and maybe you're looking at maybe some negative gearing and legal tax minimization that can assist you whilst creating wealth with a property that goes up in value, that there is some tax benefits Obviously associated with the depreciation on newer properties. The I think the risk that you could fall into here is one that I see often when I'm reading clients, fact finders and looking at them with view of getting lending for them is that they've bought properties maybe off the plan units or house and land packages where they haven't actually done the house and land construction themselves. They've kind of bought from a developer who's been selling that as a package and the developers kind of making the margin profit and not the person who's ending up with the property. And I think that it's almost a false economy because if the property doesn't go up in value and doesn't have the characteristics to go up in value, making $2 to get $1 back is never going to get you ahead. And the negative gearing component of that type of strategy is something that's one part of the big picture. The big picture is buying the $500,000 property that in seven to 10 years time is worth a million dollars and you've created half a million dollars worth of equity. And that's the big picture goal of it being fortunate enough to be able to cash flow. The negative gearing is fantastic and it sometimes is something that you just do, knowing what the big picture is. That brings me back to does a new property necessarily have the growth potential to be able to create that value? And I don't think there's any doubt that new properties, some new properties can do that. But I think you need to be very wary. You know, I know that the market reports as part of the Residex quarterly reports are coming out next Friday and they always give what the oversupply or under supply of properties are in any given state. And it's really that supply of properties and usually the new properties where the oversupply is, which is where the risk is. So if you look around, you know, Brisbane, Sydney, Melbourne at the moment, there's a lot of development, there's a lot of inner city properties. And we try to kid ourselves that we've heard the, you know, that be wary of these. But the reality is, you know, I spoke to a lady last year and she was lamenting the fact that they had this beautiful house in Kew in blue chip area in Melbourne. They bought an investment property which was a house and land package in Point Cook, which is out western Melbourne. Other house and land packages came onto the market. They were newer, the tenants were not really loyal to one house over another. So the next house that was Newer and nicer. At the end of the tenancy they moved to, people got a bit desperate and reduced the rent which then became their market rent that they had to accept. And they in the end, because they couldn't rent the place out, they ended up moving from their beautiful home to this property out in Point Cook and rented their home out because it was the economic advantage. But she said, so we've learned our lesson. So now we're not going to buy over 20Ks out of town and we're not going to buy house and land, we're going to buy inner city units. And so she's trading one strategy that is fraught with not having that capital growth potential based on oversupply and based on, you know, the potential of not having growth because it's not the population demand there or the income demand that you also need, the income growth that you need to build a suburb and you know, moving from a house to a unit and out of town to inner town. In actual fact, the same risk is.

There that just swapped over supply of land for oversupply of units.

Yeah, exactly. So I think you need to be very, very careful when you, when you make that consideration. There are, you know, some very nice, you know, high end development opportunities that, that people do take advantage of. But often when you're going into that high end development opportunity or brand new, you know, unit in a boutique kind of development, we're talking over 750 to a million dollars. And then you know, we're talking, your yield usually comes down from you know, maybe a four, three and a half percent rental yield down to maybe a 2% rental yield. So it's going to cost you a lot more money as well. So the out of your pocket each month. So you kind of need to be very savvy in buying new. The reason that John and I are just such, I guess, God advocates of the renovation and the older style property is the fact that there is that scarcity of land associated with the typical three bedroom house in 10 to 15.

K's and the, well, why don't you paint that scenario? How would you do something like that if you weren't going to, for instance, look for the property yourself or do the renovation yourself.

And I think this is one of the things that I find with some of our students is even Ultimate Guide to Renovation Students. They get to module 2 and module 3 and module 4 and see the real effort required in finding the right property in the right area that has the right characteristics to suit their buying criteria. And the Mere fact that they've been through that buying criteria allows them to know what the property needs to look like and the characteristics. And then it is too hard. And that's why we've kind of got a bit of a bonus there in the module that says now if you need to engage a buyer's agent, then, you know, these are the questions you ask and this is what you do. But the fact that you've actually gone to a buyer's agent. So just to be clear, a real estate agent represents the needs of the seller and a buyer's agent represents your needs. And they're usually engaged for $1,500 to $2,500 as an engagement fee. But the success fee of actually achieving a property purchase for properties over $500,000 is somewhere between $8,000 and $13,000. So a buyer's agent, if you went to a buyer's agent and said, I've got $400,000 and I want to buy in Brisbane, then they're going to get your $400,000 property in Brisbane. If you went to a buyer's agent and said, my buying criteria is the purchase price is $400,000. I want to have renovation potential, but I don't want to kick the tenant out now. I don't want to have to do the renovation now, but if I could change a three bedroom house under the same roof line to a four bedroom house, that'd be great. I want the property to be characteristic of the area. So if the majority of people are living in three bedroom houses, that's what I want it to be. I want to have 15Ks from the city perhaps. Yeah, my rental yield be 4%. I want to have the vacancy rate less than 2%. I want to have predicted growth for the area of over 7%. So once you have that buying criteria nailed and then you give that to the agent, that's what they're going to go look for. They're not going to go look for the low open slather. So buyer's agents can do that. Also, buyer's agents can recommend, and so can real estate agents recommend project managers who can actually manage a renovation for you so late last year? Well, I actually did two renovations last year. So if anyone's read my book, one of my strategies, the revamp and that's, you know, often when as a property investor you get to maybe the, the top of your, your borrowing capacity, you can't borrow anymore. You know, look at your current portfolio and see what you can do. And one of My or two of my properties came up for, for lease last year. I took the opportunity to jump into both of them and do quick reno. And they're both in Sydney. I'm based in Melbourne. My, my builder managed the renovation for one of them. And you may pay a bit of a premium to have someone manage a renovation. My sister had someone manage actually a project manager manager renovation for her it was a $30,000 renovation. They charged $3,000. You know, $3,000 to get a renovation done. Well worth it.

Yeah, absolutely.

And the other thing is that, you know, the renovation I did in Little Darlington, 52 square meter block of land, like tiny little workers terrace opposite the rail yard, Everly Rail yards. And we had the valuation done beforehand and six weeks later the same value I came out into the valuation after and it went up by $100,000 and I spent $33,000 including, including all the management fees. And I also had my real estate agent and I was using McGrath's who recommended a number of tradies and she actually coordinated them free. So you know, I wouldn't be far. So sorry. So concerned about not being able to be hands on because I think you can engage professionals who can assist you in doing that. And the other thing is, you know, just I spoke to someone the other day about the benefits of maybe spending $10,000 for a buyer's agent. And honestly, if, you know, I put my hand on heart and say when I was started investing over 15 years ago, if someone had asked me $10,000 to, to buy a property for me, I would have said that's half my deposit, you know, I'm out of here. And so I understand that thinking and, but I spent 12 months on researching, pounding the pavement, locating areas, finding the property, engaging and negotiating and purchasing my first property. As the market was moving up in 2015, I had a lot of clients looking for themselves in Sydney and Melbourne and the market moved within the six months that it took them to find a property, $50,000. So it would have been well worth spending the 10,000 to be in a property within six weeks. And I know if someone said to me now, Jane, 10 years ago what I know now, Jane, give me $100,000 and I'll build you a $10 million property portfolio. Is that all you want?

Money well spent.

So does that help you finders? Yeah.

That's awesome.

It's really good to see your perspective on it. I appreciate it.

Yeah. But I just, I mean, you know, you've got the opportunity and you know, the Borrowing ability behind you. Just don't squander it on. Have you investment properties yet?

I do, yeah. So I purchased a land and house package close to the CBD actually in Brisbane City and that's finished and rented out. But I was just thinking about the next one.

Maybe mix it up a bit and maybe think geographically spread your risk as well so that go to the states. Because we're seeing now, you know, some of the states are slowing down, capital cities are slowing down, and others still got a few legs in them. So the thing about having properties spread across the states is there's some financial benefits such as land tax is state by state.

Land tax bill this week, didn't you?

I got a shocker of a land tax bill this week. I got an $8,500 land tax bill which they allow you to pay in three installments over six weeks. And that's just another. That's another cost on a completely different topic, but another cost of holding a property. Like an. On cost of holding a property, I usually allow 25% of my weekly rent. That goes into covering the costs of everything if I annualize it. And land tax, the thresholds are different in every state. If you are buying in a company trust structure, buying in a company actually negates any of the land tax threshold. So you straight away you're paying the land tax. So just be aware of that when your accountant talks to you about fancy structures. And if you can buy often, if you've got a partner and you're both in the same similar economic position, often you can minimise your tax exposure by actually buying individually in names and having a different tax threshold. So my husband and I, we purchased independently until we had to combine our borrowing capacity to purchase together. And it minimised the exposure to the land tax as well. So. Interesting. Yeah. So just geographically think about spreading your risk so that when one market goes up, the other goes down. Same with lenders. You know, eight different properties I have and six different lenders. So, you know, it's. I'm. I'm a very low risk about spreading the risk and being aware of what's going on. Sure.

Awesome. Thank you so much.

Hey, my pleasure.

Okay.

Gabrielle's Gabrielle. Maybe he's on mobile. Gabrielle. Oh, we'll give him a go.

Let's try.

Hey, Gabrielle. Gabriel.

No, not looking good.

It might get you to type your question in.

Yeah, LJ's got a question. He's at work so he can't call in. Can you please say how much it may cost? To put in a separate. To put in separate services to a granny flat. A separate driveway. Don't need a separate title.

Oh, I have done finance for a lot of granny flats I have to admit and I can't recall I couldn't give you a breakdown of cost by cost for services. Imagine you're in New South Wales and you do have to have those separate.

Services we've got for, for one of the developments I seem to remember we've got about six for services.

6,000? Yeah but that would be.

No, that's literally connecting up the services at the front. It's not the plumbing that runs into the house. The plumber takes it from the edge of the property in.

I don't know the. I could bring up some contracts I guess but I don't know the specific breakdown. Just as I guess a general comment on the cost of granny flats when Keneally changed that.

The premier of New South Wales.

Yeah. In 2009. Way back then when the, when that dual occupancy granny flat legislation was introduced, we saw granny flats. Well I was financing granny flats at 80 to 90,000 for that, you know that 60 square meter, one bedroom kind of granny flat configuration. And the contracts that I've seen Now are around 120. So there has been some price movement in that and which is interesting because the building costs for people who've been, we've been doing construction costs for haven't increased that much and the tradies costs haven't increased over time. So there is opportunity, people taking opportunity out there. The highest price granny flat I've ever seen was $180,000 and that was up at Port Hedland and they had to build it and, and actually truck it up to Port Heddle and build it out of Perth. So but granny flats is. It is. Have you got a property you want to put a granny flat on or are you looking at a property at the moment or.

Title? So I'm assuming it's a no.

So yeah, the granny flat legislation would be that it's two units and one title. Just. Do you want to aljo answer that?

He might be busy with his headphone in trying to look busy at work.

Okay. He's going I can't do anything right now. Okay.

So I guess the separate driveway means you're going to need to get a crossover and I assume you're able to get that through council and so on.

Crossover the curb.

Yeah, Yep. So yeah you might be dropping another, you know, five, five to six by the time you get that driveway in depending on what it is, whether it's.

Concrete or just one of the things I would suggest that you do before going down subdivision route or even the granny flat route is just get a feel for the area. Blacktown in Sydney is probably one of the most liberal council. Liberal as in not Labour liberal, but liberal as in thinking councils when it comes to that granny flat legislation. And that's where I've seen and been participated in a lot of those constructions. But one of the things I kind of worry about is if the typical property for the area is an 800 square metre block and you're creating two 400 square metre kind of living spaces, will the people in the three bedroom house at the front of the block be happy and comfortable renting at what you almost expect is going to be the same rent as the three bedroom 800 metre square block next door and have someone typically young, tradie or you know, single person in the. In their backyard. So just think about, I know from a cash flow point of view and I've got got clients doing, you know, 12% rental yields with the granny flats. I just think it's it as, as I said, you know, we're five years into this experience now. A lot of the problems that I saw initially in getting finance for these was that there wasn't the comparable sales but we're getting more and more of those but. And there's a lot going on also around the Hunter Valley. I know. Oh, who's that lady? I can't remember her name. I work with up there by his agent who does a lot of, a lot of the granny flat.

I know she's on Kaz's podcast quite often.

Yeah, Gosh, I speak to her regularly but anyhow. And so this is the January hangover head capping here. Yeah. So just be aware that you may be creating a new living environment for people that is atypical, which may create problems in finding tenants and potentially could create problems in selling in the future. However, if you're getting a 10% rental yield, you may decide to hold it for the future and may not be such a big deal. Anyhow, follow up when you've got a chance to put your head up from your.

Hayden's got a question. I'll unmute. Hayden.

Hey Hayden. Hi guys, how are you? Good, great, thank you.

Good, good. We actually spoke last month.

Yeah.

And yeah, we're looking in Melbourne but since then we're sort of starting to look interstate, possibly looking for some higher growth prospects. Yes, one of the areas we're looking at is somewhere that you've spoken about and I've seen a hotspot spotting report is Murrayfield in Queensland.

Yes. Yeah.

So just as somewhere to start looking, I suppose. But I know it's got a 9% predicted growth over the next five years. Now I've done a dot map and look at this masterclass spreadsheets and council websites. I just can't seem to validate why it is 9% predicted growth and just wondering if you've got any thoughts on where to look or sort of how.

Do you sort of verify someone else's data? There you go.

Hayden, are you Ultimate Guide to Renovation? Yep. Yes, yes, I thought so, yeah.

Look, I think the thing is about this is asking the questions is the right thing to do because there is so much information and just reading one report and going into an area and believing someone's information is the wrong thing to do. It is all about going down to like the primary source and the primary document and that's what I try to get to as much as possible. But the reality is that, you know, when there's 14,000 suburbs in Australia, there's only so much research you can do. I think the key criteria that makes an area outperform other areas, things like, and to some degree I'm talking about Morrow Field here with, with what we've seen there is that the larger acreage blocks have been subdivided. There's been development of the major big Woolworths and the major kind of shopping centers and groups that have moved into that area. So they have a lot of obviously economists working on where the population's going to go. So a lot of it's around that supply and demand. So the population drivers, a lot of it's around the infrastructure. So the better roads and developments that are happening and the quicker trains that are getting people into town as well. I know that I've spoken to two or three people in the last 10 days who are really excited about buying a home rather than an investment property. But they want to think as an investor and buy as an investor around the Sunshine coast just because of the new hospital that's starting up there and I think it's going to be finished by the end of 2016. So all of those kind of characteristics and I know the guys at residential Hazardex and you know they have so many researchers there who are ringing real estate agents and talking about days on market and clearances and what's happening and you know what the prospects and they ring the and I know Jacob from Ripe House. He rings the local chemist and news agent and asks them what's happening, you know, so I know the people that we're kind of getting the information from are doing the research on the ground, but I wouldn't ever ask. Take one source of data like you're saying is about, you know, how do you collaborate that information? And you know, I know that just looking at really quickly, you know, I had a quick look at a dot map for Brisbane last week and I was looking around and I was looking for those 2 percentile kind of differentials between the capital growth over the last 10 years. And I'm going to pronounce this really badly, but Angora, Angora near Andali, Anderley and Angora I'm going to call it. But it starts with an E. Thinking goat now. And Anderley came up and so I quickly went in and purchased some suburb reports for those areas and they had that 7 to 8% growth as well. Now they're closer to the city, they have a higher price point to get in, but they also had the infrastructure around them and an established infrastructure as well. That kind of piqued my interest and had me thinking, oh well this is where I would like to go do some more reading. And that's really the power of that dot map that you've done. You can move from city to city really quickly but it gives you that overall look and you go, hey, this is interesting. There's an area here that hasn't had the growth that all the surrounding areas have had.

Yeah, that's right. And one of the other things Madine looks for the Medine Simmons, who invented that dot map, she likes to see, she likes to compare her dot maps from year to year and she likes to see some solid growth in the suburb in the previous years as well. So that it's not an underperforming suburb. Yeah, so it has had some solid growth, just not the growth of its neighbors kind of thing. And then yeah, assuming that those neighboring suburbs are going to reach a tipping point where people start to get priced down and their only option is to move next door, which is still a comparably good suburb. It's not a huge step down.

Yeah, well, I was looking at the Sydney. You know, I use Kingsford, one of the places that I had purchased in Sydney as an example in many of my tutorials. So a lot of people here are familiar with the Kingsford story. But I was looking at that yesterday and it, it was from a dot net point of view it had outperformed all those surrounding suburbs. But in 2006 when we were looking, it was the underperform performer. So looking at that differential in that timeframe is interesting. And one of the land tax bills that I got this week was showing that one block of land, gosh, I think it's 270 square meters. One block of land in three years has gone. The land value has gone from 650 to a million dollars in three years. So you know, locating the. I just can never over emphasize that importance of spending the time like you're doing, going and locating that area. And that one of the fun things that Ton and I have been doing since we kind of on Monday went hey, let's do a location hotspots 2016 masterclass was I pulled out and I may be one of the only people here who has this the API magazines from 2006 and actually had a look at the growth. And one of the exercises we're going to do in this master class together is we're going to have some people do the 10 year past growth from now and people doing the 10 year past growth from 10 years ago. So we've got that 20 year span. So we can see that movement. Because I know talking to the founder of Residex, John Edwards, he believes that long term 20 year growth gives you a better perspective. But Getting access to 20 year growth is really hard to do.

It does cost a lot of money, doesn't it?

It does cost a lot of money. So Hayden, what you're asking is right, which is, you know why, why Morrowfield? And it might be that flow on effect and that pricing effect and that growth effect from the other suburbs. It might be that infrastructure change. It can be the rezoning that we've seen happening up there. We've seen those major, what do they call it like in America, the Walmarts, they call them the superstores. Yeah, the superstores kind of move into an area, you know, when Costco deserves that there's enough population to generate some business. You gotta start thinking that there's probably gonna be some.

Yeah. An interesting thing Ben Kingsley was saying was he loves income, doesn't he? He's always looking at the income level.

And it's the income increasing in an area so that kind of aspirational can.

Afford and also which ripe house is very good for. That's great for pulling up suburbs with and looking at the income and look at the incomes. Yep.

And doing comparison now too is a new feature of the suburbs next door. So I guess the answer to your question is that keep asking the questions and keep looking to validate your answers. And a lot of it is around that demand. The population movement, the income movement, the infrastructure and the surrounding ripple effect.

Yeah, cool, Nice one. One thing you did mention there with the rezoning, can you artificial growth. If they're turning acre blocks, two acre blocks, whatever size, to smaller blocks and then all of a sudden these blocks are worth more than the existing. If they put new houses on them, they're worth more than the existing houses. So you're going to see growth but the existing houses aren't sort of moving in.

It's only a particular type of stock that's moving and I think that's something.

I'm sort of worried about.

Yep, that's a good.

Yeah, it's good observation and it's one of the reasons that, and there's a lot of research facilities that can give you information on growth past and present and trends, et cetera. Residex Australian property monitors RP data and the reason that I often go to Residex first is that they only use resale value of secondhand stock and they're comparing same size areas.

It has to have sold before.

It has to have sold before so they won't take the new development. So often when you see like say in Melbourne you might see Melton or Tarneet and they've got this huge kind of growth or in actual fact it's artificially almost driven by the developers who are turned into. They used to be really old daggy fibros that were selling for 150,000 each and now they're, you know, three bedroom McMansions that are selling for $400,000 each. And it's like, wow, there's so much growth. Well the reality is there's new properties. So in two parts there's opportunity getting in before the rezoning. And I know I've got a client over in Perth at the moment and he ended up buying in at a premium over the market price to be in an area before it rezoned. And then there was all this doubt whether the rezoning is going to go ahead. It was a real risk and now it's just happened and now we're just fund his. The house, three bedroom house is building on the back. So often, often that anticipation of, of that rezoning there is, there is risk associated with it. But if you've got that acre block that was selling for 800,000 that is now four house blocks that are selling for 400. That 400 each. Well, Yahoo to you.

Well, it means you're gonna have to have a different strategy to take advantage of it. Yeah, it's, it's true actually, because the, I remember looking years ago and north, this was in Melbourne and North Balwan was coming up on all the indicators of just having extraordinary pricing disparity between like spread of values in the street and until it went on the ground, I didn't actually work out what was going on. It was that all these old kind of 1920s to 1950s houses were being bulldozed and they were building these huge two story French provincials that were being sold to foreign investors. And that's where the money was. The disparity was, it was the difference between what it was selling for. And they're selling at about 900, the, the existing stock and then they're pushing it over. And then these things were selling for two and a half, you know, up to two and a half million at the time.

Wow.

But so there was absolutely no mileage at all in buying an old house and renovating it. So the spread of values or the pricing disparity meant nothing to renovators whatsoever. But you'd look at the data alone and you'd think, wow, that looks impressive. But until you actually look on the ground and see it's subdivision or it's knockovers or whatever, you don't know what's. And in that case, you might take, you might drop a percentage in predicted growth and go in a suburban and play it a little bit safer.

Yeah, absolutely. Yep.

Definitely. Wow. Lots of information there. Thank you.

Pleasure.

Thanks. Aid. Okay, thanks. Farhad has a question which is kind of not, not dissimilar to a couple we've had already. Can you please elaborate about subdivision tonight? What factors should be considered the do's and don'ts.

Subdivision. Okay. If you have a property that you're looking at subdividing already as opposed to buying a property that you plan to subdivide is a little different. Often if you've got a property already, then you know, you might have some equity in that property and you might have the ability to, you know, a higher equity ownership that kind of gives you a little bit more benefit when it comes to lending to build on the back. Different councils and different states have different rulings over subdivision. So for instance, I have a client who does a lot of buying an old house and building a property on the back and subdividing and the councils that she's Working in around that shire area in Sydney have real. Really prescriptive on the fact that he.

Does have a property you have to.

Build first and then you. You then subdivide. So you're changing the title out, titles out and there's the whole making the lenders aware that you're changing the titles at that stage.

Subdivision is almost the formality that comes at the end once your building approval really takes care of the. That says that yes, they'll let you do it and then the actual subdivision takes place after the buildings are complete.

Yeah. Whereas in Perth this client that I was saying that was waiting out the rezoning, they subdivide first. There's. So he's subdividing first and then building on the back. So we have to go through and separating the title and with his current lending etc. Etc. If you. So if you have a property. If you have a property that you're going to. And you know, I did one for a client recently in Bathurst and we had to get essentially funding for four units on one title and then they subdivided after most lenders pulled back and wouldn't go over three units on one title. So finding a lender that would do four was difficult. So it depends on A what you want to do and B how you pull it off. One of the things I would give you a bit of a heads up to is go to sqmresearch.com and they actually have a coefficient graph there that is fabulous. Because what it does for a specific area and I see that you have actually put in a. You have. Where are you here?

Well, where you do that I would just say the first step is go to council and have a look at those zones. Yeah, yeah. Because you'll find that some zones you, you know, for instance if I think of some of the eastern suburbs in Melbourne, if It's under a 700 meter block, you can't subdivide it. It's single often.

Yeah.

Has to remain single dwelling and yeah, there's all sorts of rules there. But most of the time now that he's got 1079. Yeah. So you'd assume unless you've got a particularly strict council, you should be able to subdivide that.

Okay. So I might just grab the screen John, if you want to show my screen. So one of the things that worries me about subdivision when you're actually doing. Where's my name? Ah, there I am in the middle. Okay. So I'm just going to show my screen now. Hopefully you guys can see that. So what I've done is I've gone into SQM research as you can see here. And I've just typed in a suburb, Vanoa in Queensland. And this is kind of like, I'm pretty sure this is not how you're supposed to use this curve, but this is how I use this curve is I have a look at the solve property data that is coming up there for the last 12 months. So what this tells me that between 500 and 750 square meter blocks are the standard here. And if you actually go over hover over here, it would actually tell you the address. So you can actually check out comparables as well. So as John said, if you're going to buy in an area and buying with mine of subdivision, speaking to the council first and understanding what their requirements are and they might be things about having 12 meters frontage and you know there can be real specific things. Exactly. So you across that then I would go here and I just really practice.

Sorry just really practical things like making sure that things run downhill because as a proverbial saying, sewage does not run IPO. That's right.

So making services easy, etc. So on that specific block that you're looking at, but this tells me here that 500 to 750 square metre blocks are kind of the standard. And you've just typed in Farhad that you've got 1079 squ. So you might be this one up here. No, I can see that's not your address, but do you know what I mean? So actually then converting a block. There you go, very, very sensitive screen. But actually then converting a block into two smaller blocks that are going to sit between that six and 700 block.

Maybe 500 corner block as well.

Yeah, 500 is kind of fit for the market. Whereas if we were looking at this and the standard blocks are 5 and 750 square meters and you were saying, I want to have a, you know, I'm going to subdivide my 700 square meter block and we're talking about, you know, 350 square meter blocks. They're not here. I'm not, I'm not seeing anyone selling those. So all of a sudden you're putting yourself into a risky area. The fact that you know your block is big enough, it's got a three bedroom house on it already, it's a corner block. It sounds like it's prime for subsdavision. And a lot of our students in Ultimate Guided Renovation have kind of looked at adding this kind of twist to the strategy, which is renovate the house at the front, improve the cash flow, get some money in and fund with that renovation equity, increase the build at the back. So actually putting in that new block and new property at the back or.

Just get the plans and not build it.

Tell us about that, John, because I think often we think that we have to build, but yeah, where's the money?

This is what we've bought. We've bought from people that have done exactly that. They've literally all they've done is got the plan through and you know, it takes a couple of years but it doesn't cost you much money. You know, you've got change from, you know, 25 grand and then you, you're able to put basically a couple, well, depending on where you are, but let's say, you know, tens if not hundreds of thousands of dollars onto the resale value because you're selling it with plans. Because the developer's got certainty, just comes in, doesn't have to battle with council, council buys it will pay that premium because he's not going to have those holding costs of a year or two years or his council can be a nightmare and everyone and the market can change. Yeah, absolutely, yeah.

There's a risk associated and the person at the front end gets the benefit.

So, yeah, it's quite a low money kind of strategy if you buy and in that situation it's the same rules apply. You need to make sure that the product that you're going to be selling to the developer has legs because he'll do his due diligence and he'll go, right, what are the other, other three bedroom units in the area that I'm going to be competing against when I sell? And if there's no other three bedroom units and he's going to go now, I'll walk away from that one and go to the next opportunity.

Absolutely. So, so yeah, I think that, I think there's this sounds like you've got some, some definite opportunity to, to I guess look at that block as a subdivision potential. If the three bedroom property is the typical for the area, then you make sure what you're building on the back is the same typical type property as well. So unless some people who subdivide want the fancy home at the back for themselves and they're putting the five bedroom house at the back and the three bedroom one at the front and that's just fine because it's your own occupied decision, I would suggest that you would put Some investor goggles on when you do that though. But make sure that it is still fit for what. What the demographic wants. So if I just show my screen again and you're still up.

Yep.

Jump into abs. So I'm just jumping into the census information here. I am I in census information. Just get the right. So what I'm looking for here is running off the wrong place here. 4217. So I'm just jumping in here to have some look at this typical information for this suburb. So what I want to see is that most people are in houses. So we've got dwelling structure. 54% of people in this area are in units, which is probably the highest I've ever seen of a suburb up in Queensland. And the typical property is a two bedroom. Now this would be reflective of a unit. So potentially with your subdivisions you might be. You might just have, I guess the consideration of the fact that the majority of the market are either in a semi detached kind of terrace townhouse or in a unit. So the type of property that you want to build should probably cater to what most people are after. 43% are renting in the area. So an interesting area obviously near Nerang Broadbeach. So we're down near surface paradise here. So I mentioned something specific. So that's kind of reflective of what you'd expect. There is a lot of property commentators out there at the moment who are talking about talking up the. The Gold coast and also talking up.

That's why we had such a high percentage of renters there or.

Yeah, and also the Sunshine Coast. So there's some real areas that have been. I'm just typing your address into Google. Google Google Maps. So see if I can pull it up. So you've said, can you have a look at Google Maps? Please explain on the actual block if it is not too much to ask. Okay, so let's see what we've got here. So obviously you've got this block here. You're on the corner. It looks like a main road. I'm not too sure how that would affect. Looks like a very main road, how that would affect the council approval. It'd be interesting to see if it's.

Probably more likely to be a positive for council but a negative for buyers, renters.

So I'm just moving to Google Earth. Zooming right in. You could wave at us. Do you want to wave in that house? So, okay, so the house is kind of skewed at the site. Skewed at the moment looks like it might need A new roof, maybe not. So what we've got here, John, is I gather you're going to try to cut this block in half and then obviously the access is going to have to come here through the back of the block because you don't have a lot of side access if you keep this house in play.

And it's Queensland. Look at all the pools.

I know. So I imagine it looks like you can get an equal. Equal property. It's a rental property. Okay. So look, I mean I'm no expert in subdivision but you know, go to your local council, ask them what. And speak to the town planner there because they're often, well, they're often bored and no one usually talks to them. So I find they're very handy to have a chat to. But find out what they think and if there has been other developments, what are you thinking about putting in? So it looks here that someone's already split a block here. Are you thinking about putting in a house or units? It's near the school. Okay, so. Okay, but I'm not a small house, three bedroom. So similar to I guess what these guys have done on this small block here. So there does seem to be one. There's another smaller block one. Yeah, see lot 2A. These are probably units or something. Look, go the council. That would be the best thing you could do. Farhad, I hope we've given you enough direction.

Google Maps.

Unfortunately no. But I think that for you asking the questions first, you own a property and you're seeing some opportunity maybe maintaining the house at the front and renovating it, creating some equity and using that equity to help you with the subdivision could be one way of going about it. But that SQM information that I shared with you, I think for me just making sure that the property you're creating is fit for the market as well is important. And I would just be quite aware here that the houses are. It's only 30% of the population and it is that two bedroom kind of property that's characteristic. So you just have to do your own research and speak to the, I'd say real estate agents as well about, you know, what's in demand and whether, whether that would be a sensible decision. So I hope that helps.

All right, let's have a look up here.

I was just going to show you because I think it's just going to come up here when I was talking to Eliza Owen from Residex. From Residex, if you go to onthehouse.com she's got a property news top 10 cities to watch and she's got a high level of Queenslanders available appearing on this list too. So we've got City of Gosford, City of Lake Macquarie, City of Newcastle, City of Shell Harbour, City of Whittlesea, Brisbane, City of Logan, Hobart, Gold coast and Sunshine Coast. So we kind of touched on Gold coast and Sunshine Coast. I see a question, Gabrielle's questions come up and one of the things that he's asked is you've been looking at Wollongong and what in terms of capital growth I'm thinking about for Wollongong and you're looking at areas like Dabto and Shell Harbour. So it was a. When I saw your question I recalled this article Gabrielle and I think this is kind of interesting and indicative of you know, I guess some growth potentials that they've highlighted. So Wollongong and Newcastle. I think the interesting thing that I learned here was that there's a lot of rehoming being considered for the Syrian refugees and so for Wollongong and Newcastle and when I spoke to Eliza a bit further about this one of the things that she mentioned was that, that that these, a lot of these areas, the Gold coast, the Sunshine coast, the Shell Harbours, the Wollongongs, the Newcastles, et cetera, Gosfords are all having the affordability flow on effect from the Sydney and Brisbane markets. So it's interesting that flow on effect which is on a macro scale really the ripple effect is happening for us and I think affordability is a unique characteristic of that ripple effect that that is going to affect us more and more going forward. And here's just the comment, the fact that it is a spillover effect and they have excellent educational and medical facilities I think that from that point of view areas to watch. This is an interesting top spot. I might pull some of these in for our webinar actually next Thursday night. How about that if you guys are interested. The other question you have there, and I might have to get back to you on this Gabrielle is how do you search for properties who have granny flats with RP data now from memory I don't think you can actually put in like you can to domain and real estate and real estate investor.

I think that is a job for.

Google Maps actually which is you can put in like a little search criteria word that says granny flats and they come up. So I will, I will talk to RRP data and I'll get back to you on that. Gosh, second time I've been stumped in three years and questions I have to get back to you. And yeah, that's good. I'm liking it. Okay, and your third question, Would you always avoid converting a second living room into a bedroom if the area has it? Usually I understand a second living area can be good for families but may give more rental return for another bedroom. What are your thoughts? Would you always avoid converting it?

If so, she's saying the area would normally have a second living area so you'd avoid converting into a bedroom.

It's a really good question because it really gets to the guts of what we teach Gabrielle. So kudos to you and it can be referenced to pretty much anything we've covered tonight, which is how do you minimize your risk as an investor and how do you maximize your return? Now often what we were seeing with a lot of the opportunities in renovating and with a twist is adding another bedroom into the same floor plan and creating the three bedroom unit or the three bedroom house under a two bedroom floor plan where the three bedroom is characteristic of the area. So there's the opportunity because you're creating that equity. So you might cost you $5,000, but you've added a $50,000 value because it's now a three bedroom type of property. Property. And I'm simplifying that. And if you've been through the course, you know, you know what I'm referring to the things like you have to make sure there's comparables and et cetera. You can't just create a five bedroom unit where there's never any five bedroom units in Mossman, for instance. However, what you're, you're alluding to here is that in this area it is typical to have a second living area. So if you're actually getting rid of the second living area, then are you actually creating or creating risk for yourself? And I think the answer there is yes. If you are walking, beating the streets and walking these properties and having a look and they all have the second living area. And when you're reading the real estate agents descriptions and they're saying, and we have the second living area or the second living area overlooks and all the family room and the formal down the formal lounge room and the family room, you know, if they're marketing properties like that and we look into the census information and we see that the census information is telling us that they are the typical family, household is a family and they are after a three bedroom house and you're reading that two bedroom, two living rooms are standard, then I wouldn't be getting rid of that second Living room. So you need to be aware of what the local conditions are. Now, having said all that, if all of a sudden they were putting in a nursing teaching hospital or a school or a TAFE or something and there was going to be a demand for rental properties that weren't for families and you're anticipating that demand and you're making that type of renovation to chase the demand. We're not talking about building a four bedroom house, we're talking about creating four bedrooms out of a three bedroom house. Then you can actually retrofit that quite easily later on when you came to sell or if your rental market to university students did die down and you had to then remarket to the families, then you can retrofit that renovation quite quickly and easily. So you see how, you know, it's not a typical answer where I'm saying it's a big mistake. The thing is there could be opportunity that you could anticipate that gets you into the market, that gets you that rental yield. But you're still in a good growth area. You've still got the underlining drivers of having that fit for property, for the demographic for the area and you can retrofit later. Does that make sense?

It does. Yep.

Good. Okay.

Great.

Great. Gabrielle says great. I think I answered the right end. Hello, We've got some show and tell. That's not you, John. I was gonna say you changed. You had a bad Christmas.

Oh yeah.

You put on twenties.

I feel like. No, that's gonna. And I can see Chris Young is on the, on the line too. Chris Young's used gunner Gunners, my trusty handyman that I've used for years and years who helped helps me with jobs like this. So I just thought I'd pull up the show and tell and just show you this wonderful foam fence.

Ah, go back.

Always does that to me. So it starts off like this. You put the steel things in the, in the ground and they're just like a U shape and they screw together. They tech screw together. They go about 600 into the ground and with concrete so they don't go anywhere. And then next you slide in this big foam or two fan panels. So you put a sleeper down down below just to keep the, the dirt and the moisture out of it. And if you're going to, you can't retain anything with them because they're not structural. The actual panels themselves and you can see at the edge of the panel there, it's just got a rebate and that just slots into the, the, the C shape. Of the pole and. Or the channel. And when that's rendered, then the renderer puts some tape over those joins and he renders straight over that. So, yeah, it's just a really, really basic fast fence. And you can see there then gets taped and all over, which you can't see underneath that render is already a full sheet of. Of the same kind of fiberglass mesh.

Yep.

And then that brick wall will get rendered as well. It'll get sanded, cement rendered, and then some acrylic render over the top of that. And then that's getting there. That's still got.

Imagine it's a whole lot easier to render the foam than the brick wall, though.

Yeah, that's right. Yeah. Because it's got all the angles in the holes. You can't really tell there, but it's. Yeah, it hasn't actually got them exposed, but underneath that render, there's an angle that runs across there. Actually. It's not on yet. It's not on yet. So. Yeah.

And the end result.

Yeah, good. Yeah, Still a coat to go, but. Yeah, that's it.

And nice French doors opening out to that living space.

Yeah. So there are some bi folds there.

Lovely.

So that's that. Excellent. Okay, Annabelle's got her hand up. I'll give Annabelle a shot.

Hey, Annabelle, how you going?

Hi, Jane. It's actually Richard.

Hello, Richard.

I've had a sex change.

I suppose you got a deep voice. But, hey, how about we help you?

Well, firstly, thanks guys for putting the webinar. It's much appreciated.

Pleasure.

I'm looking to purchase block of land in Brooklyn, and that's Brooklyn Melbourne. And I was just. I guess I was interested in your opinion on Brooklyn purchasing the land so that we can actually build four units on townhouses.

Okay, so tell me. Tell me about Brooklyn.

Brooklyn's inner west.

That's correct. Yeah.

Yeah.

So it's probably about 12 minutes away on the Western Freeway from the CBD.

Well, I'm forcing you to tell me about Brooklyn because I did a bit of analysis yesterday on Melbourne and went, gee, check out Brooklyn, and started looking at Brooklyn. So I'm interested in your thoughts.

What do you know? What do you know?

Yeah, you tell me what you know and I'll tell you. I'll share you my information.

What made you choose Brooklyn?

Well, I met somebody at a conference, actually, and they put me forward to some guy who's been doing some developments there. So it's kind of like a sort of isolated little suburb between industrial parks, and there's been a Lot of sort of developments going on there on the quiets and converting blocks of land to three or four townhouses and it doesn't, you know, there's no shopping centre center there as such and there's no rail, there's in the next suburb but it does have easy access to the Western Freeway and like I say, 12 minutes into the CBD. So my concern is there is a lot of development going on at the.

Moment.

Which is not such a bad thing if there is the demand for that. So I'll just grab that screen. Thanks, John. So I, as I said, I actually did. I purchased a couple of reports yesterday on Brooklyn to get an idea because once again I was doing my dot map and I wanted to look at what was happening in the area because it seemed to me that there was a lot of surrounding areas that we've seen that growth in and that inner west corridor of Melbourne you may have heard me talk about before. I think there's a unique opportunity long term for. I'm going to invent a term here. I'm going to call it. What am I going to call it? I'm going to call it the growth. The growth sandwich which is, I was.

Going to say infill growth growth or something.

Oh no, we're going. Growth sandwich. We're going to have a growth sandwich here with a ripple effect source. So we've got that ripple effect coming out from the Yarravilles and those surrounding areas that we've seen some really nice growth in. And we then have the big new development areas that we kind of talked about, the Tarneet and the Melton and the great big western population growth corridor that Bernard Salt from KPMG talks about which is those great big house and land packages. And I think from an affordability point of view we've got people out there that in 10 years time who are commuting to the city and they're getting better jobs and their income's improving. They have that aspirational I want to live in Sunshine west. And they're putting that sandwich into that growth area. And so that's why I started doing a little bit of interrogation yesterday and Brooklyn came up on my agenda. So I bought this report and I was looking at what has been happening over the last few years now. It's actually had quite nice growth over the last 10 years, 9% over the last 10 years. So this is not a flash in the pan. No, this is not a new area. That's, you know. Hey, you know, as you said, Johnny come lately. But you know, what we've seen is we've seen that the sales have started to improve as well, the number of houses that are coming through. So we are getting, you know, around 35 sales a year now as an investor. 35 sales a year or 36 sales, you know, three or so a month, you might be up for some competition in the area. So this would be one of the things that I was looking at that.

Affects capital growth real fast too.

Yeah, exactly. But what was interesting was that, you know, the price point was a lot lower. But then I got really disappointed when I came here and had a look at the growth. So the growth was actually potential growth as predicted in this area was actually quite low. So you know, but it is what they're predicting for Melbourne. Now. I don't necessarily think this is such a bad thing in the sense that if you're doing what you're talking about and creating something new, then this is not the typical type of property. And if you're creating.

Forcing the equity in your case, yeah.

You forcing or creating that equity. And the houses, it seemed to me, it was interesting that units were the same kind of price as the houses in the sense of the majority of the sales, there are more sales and there was better growth. So I think that's once again that affordability argument. So if you were trying to manufacture the growth and now, you know, everyone here is going to be looking in Brooklyn but manufacturing the growth, that doing it through the units almost seems better. And from an affordability point of view and a rental yield point of view, I think that you've got some real characteristics. So you know, to me it really piqued my interest. And you know, the other thing here is you have a look at the number of houses to units not so different. It is a small area and when I did jump in in and do a Google search, as you said, it did have a large industrial side to it and that's when I started pulling up other reports. So I was like, okay, you know what's happening in Footscray? I just wanted to get a feel for the growth characteristics that were predicted there a lot higher, similar suburb. I was like, oh, okay. If I was going to go size.

Of footscray, what's the size of Footscray?

So we had seven houses on the market. Seven properties on the market in, in, yes. And. But we've got 80 listed in Footscray and they are a higher price point and 13,000. So you know, so that's. I was doing that type of analysis, you know, West Footscray, then I pulled up Yarraville and then Kingsville also came up. But it was a lot more from memory when I was looking at a.

Lot more industrial, a bit smaller as well I think.

So it had some really nice growth predictions coming through and nice growth once again. So it was once again smaller, but it was just in this tiny little area. So you know, and there's only eight properties on the market. So you know, we don't want to as investors narrow ourselves just to one suburb that sells only two properties a month. So you have to kind of bear that in mind as well. Having said that, John and I are always working on innovative new things that we're looking at. And we've been using RP Data Professional recently to target one of the searches for those guys who've got the subscription to RP Data Professional. If you go through and you're looking at an area and you do a finance, because it's not for us generally.

It'S not really for property investors, it's.

For real estate agents, it's for mortgage brokers and real estate agents. So if you go to that finance tab, what you can do is you can actually say, okay, so this is around if I was a mortgage broker unlike. So I'm a mortgage broker that deals with people across Australia. But a lot of mortgage brokers have their little shop in one suburb and that's all they deal with and real estate agents as well. And so from that point of view they've created this tool that allows your mortgage broker or your real estate agent to go into the area and say, tell me all the properties that you can go to the back of API magazine and it will tell you in a specific suburb what the average hold period is for an area. So it might say eight years. Now census tells us typically it's nine years, but it might be eight years for instance, in a particular area. You then go in the RP Data Professional in that Finance tab and do a study that says show me all the properties that haven't sold for eight years. So you know that if it's in an area of growth, they've got a lot of equity. And then if you can find out if they're owner occupied or investors and it's an investment property, you could then possibly contact the owner and say, hey, I noticed you've got a property In Brooklyn that's 1,000 square meters that I can fit my four units on. I'm interested in buying. Are you interested in selling you know, or you've had it for so many years, for instance. So. So there's opportunity.

Often they're statistically more likely to come on the market because they've been yet getting up to that average hold period.

I'm not necessarily saying just because there's eight properties that could be on the market at the moment and three sell a month that you'd go, not worth my time. That's the opportunity that you can look at as an investor and go, hey, how can I buy the property that I want?

How can I make a difference? I guess so that my units, my townhouses stick out.

Exactly, exactly making that difference. And that's, you know, there's so many things that go into that from the architect and the builder and the aspect and the current location and all of those things. But just starting with once again with the town planner at the local council and even asking them for reference or referral or who's been building nice townhouses in the area and getting some details from them and they'll often know architects that are used to dealing with that council and that council's provisions as well. And they sometimes having it rather than.

You know, you can actually get that off the council websites a lot of the time too because they have, when they do the DAs or the applications, you can see which architects submitted them.

So yeah, that's how I would get in and do. But yeah. Interesting you came up with the area.

Yeah, well, it is a kind of interesting area in relation to where it's positioned to the cbd.

I think so, yeah. And the growth sandwich point of view as well.

And the growth sandwich.

And the growth sandwich.

Every investor likes a growth sandwich.

Yeah, we all want growth sandwiches. Great. Well, thank you, Annabelle. Richard.

Yes.

Do you want a quick. Did you have a quick follow up?

I just, I haven't researched it yet but there's a predicted toll road going that way, so. Toll freeway. I think it runs parallel with the Western Freeway.

Okay.

I was just wondering if you guys knew anything about it.

No.

If that would affect that area.

I'm still recovering from the fact that we're not getting the road that we wanted to skirting around the back of Carlton. So. Yeah, no, I, I have to say I have, I'm not across that at the moment, so. But once again the, the long term Melbourne plans and the infrastructure plans are in the public domain. I remember being quite excited about two years ago finding that the. They're not called RTA here. What are they called? Yeah, RTA. I thought I was stuck in Sydney. But the RTA, they actually put out their 20, I think it was 10 or 20 year infrastructure plans where the roads were going to go.

Go.

Vic Roads. There you go.

I lived in New South Wales. Yeah, there are.

Yeah, yeah. So yeah, Vic Roads. They actually Google the Vic Roads infrastructure plans they actually had the map of and the years that they plan to put roads in. Obviously it all comes down to governments and funding and all that kind of stuff, but it's interesting to see where they plan to go. So, and, and I know that a lot of experts, even, you know, we're chatting to Ben from Empower the other day and he was talking about, you know, the, the, the difference that a fast train could make. Well, I mean, you know, I was, I lived in Melbourne the first time 15 years ago and everyone was talking about the, the fast train to Ballarat and Bendigo or wherever. So, you know, we kind of have to once again it's. Don't buy based on that long term plan, but have it as a, as a nice consideration of the infrastructure that can affect the property value due to accessibility.

Yep.

Thank you, Richard. Okay, bye.

Well, thank you, Jane and thanks, John.

Bye. Thank you. See ya. Okay, now Lorraine's been waiting very patiently down here.

Oh, Lorraine, my gosh. Lorraine's been with us for years. She's always doing great things. Lorraine, Happy New Year.

Hopefully that works. Hey, Lorraine.

Oh.

Oh, it's not looking good.

Oh, oh, microphone's gone green. I think she's plugged it in. Hello, Lorraine.

Hello. Hey, how are you, Jane and John?

Great. And yourself? Yeah, very well. What big things are you doing in 2016?

Lots, I hope. But I just wanted to have a quick chat about the experience I just had recently and maybe what you guys might have done differently because we found a house that we could reno and sell. It had a $100,000 disparity from, you know, the buy price to the sale price on inspection with the agent. The agent said, oh, look, you'll get this for about 250. She just said that to us. And there was a bit of termite damage. I was, well, previous termite damage. I was a little bit nervous about that. So I thought, you know what, before I go in and put any offers in, you know, I thought I'll go and do a pest and build. I shouldn't have done that. But anyway, I did it. We spent the money and whilst that was getting done, she sort of said, oh, look, I've had an offer of 220. So then we went back and said, oh, okay, well, we've had the pest inspection done. You know, we'll play up a bit to that. And we went in at 225. Both of those were not back. And she then told me that someone offered 230. So, you know, we went in with two other offers at two different price points with different conditions. And then she just said, look, you know what? The man doesn't know what he wants now. He thinks he wants 270 to 300. I was quite annoyed because, you know, we spent the money on the inspection knowing that we could have got it for 250. And, you know, we were happy to pay 250, but on her telling us that other people, you know, put in low office, I thought, you know, damn it, I'll start low too.

Yeah. I just.

It was very disappointing. And, you know, a week and a half later, actually was ongoing for a few weeks, very poor communication with this lady. And my daughter's a real estate agent. And I sort of said to her.

You know, what do I do?

And she said, go to the principal.

I said, but she is the principal, Dorian.

All right.

It just gets better and better. Yeah.

And like, even after a week and a half, and I said to her, keep me, you know, informed of what happens or whatever. Nothing for a week and a half. I thought, oh, damn it, I'll ring her today. And she just went, nothing. The bloke doesn't know what he's doing now. And I just said, you know, I'm quite annoyed. The fact that we spent hundreds of dollars doing an inspection and this man's changed his mind. And I actually thought that was illegal to do now. But anyway, she got cranky when I questioned it.

I don't. You don't know, really, the conversation. And often people, the agents are trying.

To get an offer on the table.

Pretty quick, get offers in. So you don't know when we saying it's illegal because, you know, you can take your property off the market. But I'm analyzing. Let John answer this, but I'm going to just say one question is sometimes when you get into that bidding war and that price negotiation and the next person puts a little bit in and it's just a little bit more. And it's just a little bit more. What sometimes you can miss is the profit squeeze that's going on. So you originally saw a 320, you know, $100,000 profit if you had bought it, you know, 220, was it?

Yeah, well, I mean, with everything, you know, from buying to selling, there was cost involved, but there was $100,000 from the buy price to the sale price, obviously with cost involved, you know. Yeah, yeah, yeah. For a short time.

Spray.

Yeah.

And from going from 220 to 270, there's a $50,000 squeeze on that profit. So sometimes you can lose sight of that when you're in that negotiating war. But, John, you've got some thoughts on.

No, I've been in this situation, too.

How you might deal with it together.

It's. It's really. There's. I don't think there's any solid solutions. I'll tell you the way I approach it, just so I avoid this happening, because exactly the same happened to me several times is one I try and really lock them down to. I'm not putting in a bid until I get some kind of. I always try and get them, the vendor, to put something on the table first. Now, that might only work, you know, 15% of the time, but that's normally the first thing I try because there's a kind of old rule of negotiation that the first person who puts the number on the table loses because you would know where they are. They could be all over the field. You know, they might be $50,000 lower than what you would be willing to pay. You just don't know. So you always try and get someone to put their number down first. The other thing is, other things that I've done is tried to get them to meet me at the estate, like get the vendor and the agent in the same room at the real estate agent's office to put the offer in there, if they're really serious about taking an offer, which is often before auction, in my case, to get them there and try and negotiate with them in person at the time. And the last one I would mention is that nearly always. Now I will do. I won't do my pest and building until I've got an offer, which is. So I put my offer in subject to pest and building and also finance or actually do subject to due diligence so I can really get out of it for any. Any reason kind of possible if, you know, if the wind changes and we have to get out, we can get out kind of thing. So that's. There's a couple of points anyway.

Yeah. And you've been through our checklists. You know, you don't really want to pull money out and put it on the table until you're confident that you're actually in negotiations.

So I was trusting the lady Jane and you know, she. And I wanted to quickly get it off the market because it was over the Christmas break and New Year's break and I'm like, oh, if I go in. Yeah, this is, you know, you never know.

I mean, it might have worked and you wouldn't even be thinking about this.

Yeah, exactly. And I think that the thing is I would not ever go in without a pest and building inspection just because it's just one of my, you know, the things that I just need to be comfortable of. And especially if you're doing an inspection and you see, see evidence, then you've obviously got a legitimate concern and you don't want to be risking hundreds of thousands of dollars not knowing. It's also a good negotiation tool, fabulous negotiating tool. And. But the thing is that sometimes this just happens. Honestly, Lorraine, it happens and you have to kind of just accept it and move on. And it is part of the, I guess the negotiating dance that you go through, which is you need to be comfortable that you're buying something that's going to fit your needs at the price that you want it to be. So part of that due diligence is that pest and building inspection, but you also want to get it off the market. So, you know, you can get properties off the market by, you know, putting in an offer and cash if it's accepted. But if they're not going to accept that, then obviously you're still in negotiation phase. Then that just really comes down to the integrity of the real estate agent you're also dealing with. With. Which makes it difficult.

Yeah. Or the vendor could have been a lunatic as well. You never quite know and you never know what the motivation is of the agent.

To put it nicely, John, a lunatic. I often have clients with pre approvals who find this perfect property and it's fabulous and it turns out to be a deceased estate and all of a sudden someone gets coal fee and, and one brother doesn't want to sell it because it was dad's house. And, and you know, and everyone else is going, hey, we didn't ever put any money into it, so why don't we plug it for anything we can get? So, you know, there's. That often happens in those scenarios as well. So you can, and you can see, you can, you know, you know, usually it's a deceased estate and you see how many people are actually on the contract and walk away if there's more than three. No, I'm just joking. But you know, sometimes you can protect yourself from those things. But if there's $100,000 to be made, you know, it's definitely worth fighting for. Unfortunately, it was a $500, you know, kind of cost of having one of those things done. And it has to go down to part of the wear and tear of being a property investor. But I'm glad you did it. But it also teaches us for the next time of, you know, not necessarily trusting the age of, but being aware and understanding. The agent does work for the other party. The other party could be a lunatic. The agent might just be playing the game of finding out what's going on. But I think I saw you also had a question on the renovator network that you had a property earlier and you had done your numbers but you'd forgotten about capital gains tax, which is fabulous that you had got to that point when you had been doing your numbers. Because it's really important that if you are thinking of flipping, you don't forget that big cost that can happen at the end. And if you sell within 12 months, it's 100% tax on the capital gain. And most people who flip do want to sell within 12 months. It's 50% after that 12 month period. So well done going through the checklist and making sure that you had all the costs and the profit worked out.

It was a good phone call to the accountant who explained it to me very quickly.

Yeah, yeah, well, so when I saw it on Facebook, you know, do your numbers, I thought I'd have to pay twice.

Jane. I'm thinking we had to do personal tax, capital gains tax.

Yeah.

And anyway, so it was all good.

It's all good. Yeah.

No, it's fun because yeah, properties are coming and we're seeing them all the time now.

And that's just it. I think when you, until you know what your buying criteria is and what you specifically are looking at, when you take that veil off, that's kind of like every property is a property I could buy. And all of a sudden you're specific. The deal of a century literally can come across every single week. And you're just like, oh my God, there's another one.

And that's just the come in like.

Waves, paid the money, move on. It's all good.

And be very clear of your area because I did that too.

Yes.

It just makes it so much easier. So thank you very much.

My pleasure. All the best. Thanks guys. Bye.

Okay, let's have a look. We're getting close to time and I think. I'm not sure these. There's a Couple of hands up, but they've got little exclamation marks, which I think means that they won't be able to talk. Let's just try engine.

We're going to try. We see engine is on a phone. So Engine.

Hey, guys.

How are you? Good.

Fabulous. Happy New Year.

Happy New Year to you guys.

How may we help you?

Okay, my question is, I know the way doing change the kitchen and the bathroom, the way it adds value. How does it work when you put a deck behind the house, how does that work with adding value to the property?

Yep. Engin, just out of interest, did we talk last month about your landscaping?

No, no, that's not me.

Okay, Wasn't you? All right, look, when we talk about bang for your buck and from a cosmetic renovation and adding value, you know, and trying to almost fill that gap of pricing disparity, which is the difference between unrenovated and renovated houses, to create that profit for yourself, you're looking about creating value. And the bang for the buck is usually on the street appeal. It's on the kitchen and bathroom. It's on those kind of big communal areas. Now, we just had a look at that corner block in Queensland, and John made the observation of, you can tell it's Queensland because of all the pools. Now, if we were looking at that in. In Hobart or a block in Melbourne, we wouldn't see that many pools. And it really comes down to. Although it was kind of a throwaway comment, it's really specific to your question, which is, you know, will the deck add value? Because I know the kitchen and bathroom will. But the deck may add value in Queensland, but it may not add value in Hobart, and it's around being in Blacktown. Well, it's about being fit for that market. So. So if that outdoor living space is characteristic of what your target market is and you're looking to sell or to rent the property out.

No, to rent.

Okay. So if you're looking at renting the property out, sometimes it's nice to have that little bit extra. Whereas when I'm thinking a little bit extra, I'm thinking like two shower heads and a shower. I'm not thinking about a $5,000 deck. So. So.

But sometimes a deck can transform a room. The room that's inside. For instance, if you can put a double door in or a slider, it can really make it. Configuration. Configuration.

Yeah.

So.

And I know that's what I'm doing. Yeah, it's going to be. We're going to put a sliding door, and it's just going to really open up the backspace of the, of the.

House and that's creating that, that living area again. And you know, you often want, especially when, you know, for the valuer, if you're going to revalue and try to pull equity as well as the people potential tenant, you want people to walk into the property and that sometimes that little extra feature is the thing that's like, darling, we just have to have this, you know, either rent it or buy it. And I know I put in one of the properties that I had and you've probably seen in courses because I use my properties often in pictures, but put in some fixed bookcases in a hallway and the number of people who walked in to rent the property in this one went, oh my God, I've always wanted to have, you know, bookcases. And it was a silly little thing. It was a really wide hallway. It looked kind of weird. And we thought, well, we've got room to do this. And it creates extra storage in an air in a, an older style house that doesn't have a lot of storage. And it was, it was a real personal touch. Yeah, it was, it was a real kind of showcase. It didn't cost a lot of money. If you're going to create this almost additional room by bringing the outside in and it is a feature that you're seeing on other properties that are renovated, then you have to make the decision that whether it's a selling point for the potential renter that's going to say, yep, I'm never going to move. I love this. I'll pay the market price or a little bit more for it. Or if you're making the decision that says I'm going to spend, spend five, six thousand dollars on it.

Well, potentially, potentially this there's cheaper. And I'll give you some good budget ideas for how to do the deck in a minute.

But if you, if you're going to. Let's throw a number. Give me a number.

Oh, let's say, you know, 4,000.

4. If you're going to do $4,000 on the deck and it's not going to add value like we know you can spend 50,000 on a pool that is not going to add 50,000 in value. So you, sometimes you come back and you make that decision which is, is it a selling point that you just have to have that makes it either unique to make someone really want the property or is it something that you're doing to add equity to and sometimes you have to make that decision based on what you're seeing in other properties in the area and even talking to the real estate agent. So as you know, as you know, I say for every 10 properties that you go to to buy, go to at least one that's renovated to the standard that you want to renovate, but go to one that's up for rent as well to that renovated standard and speak to the agent to say, hey, I'm looking at listing my property. So they're really going to be interested in talking to you because they're going to get some business. But I'm interested in maybe putting a deck on. Are you seeing people want decks and asking them the questions as well? And it allows you to vet the agents.

I'm more concerned about the valuation is you're going to add that extra value by putting that over the actual rental potential rental return.

So if it is around adding value, I would speak to some of the agents and ask them what they think. You know, if I was looking at selling this and I thought of putting an extra deck on, would I get a lot of. Get more money for it? But also go and have a look at the open for inspections and see what people want.

What's the main property?

John's got some thoughts on something?

No. Well, I would just think if you're the deck, like every other thing that you're going to do in the renovation, you're going to have a basically a set budget that you're going to have to use to make money or not. So if you start with the. And work backwards and look at what the resale properties are in that neighborhood. So the comparable properties at the renovated level. Do you understand what I mean by the. That.

Yeah, I do.

Yeah. Great. So if you, if, if that's your starting point and let's. Yeah, let's say that's 500 and then you work backwards from there and you work out that the renovation is going to or you want say let's say a 10% profit and then you do your costings on what you think you needed to. To do to the renovation to bring that up to that kind of median or slightly above the median kind of standard of property in that area. And then, so you've got a set budget there. And if you go over that budget, then it starts coming off your profit or you start going over that resale level that you've established at the top. The danger always is the longer the renovation goes on and the more ideas you think to put in the renovation that ends amount or that end value that you originally come up with tends to creep up, but in reality it doesn't actually creep up. All that does is your, your profit creeps down. Yeah. So I, I would, so I would have my set budget, so I would know that I've only got 25 to spend on this renovation. And then I'd say right for the, for my 25 grand, one, can I get this property up to, to that 500 level? And two, what decisions do I have to make as in what areas of the property am I going to concentrate on?

And, and you are renovating. If you are doing this for a revaluation, creating equity property, you are doing it also to influence the valuers perception. So one of the things that I like doing in properties that I have is putting in skylights. And you couldn't necessarily go home and spend $1500 on a skylight and I'm going to get $1500 back. But the ambience, the look and the feel of the property by having a light area compared to that kind of closed in dark area to me is worth it. Because a valuer walks in and goes this is nice and light and airy. Which is what that deck opening into that living area would do. I would assume so sometimes it's creating the atmosphere that has the value Go. When I'm comparing this to other three bedroom properties in the area, how does this compare? Well, this is superior and hence if I look at the last three sales of other three bedroom houses in the areas that have had a renovation done in the last 12 to months, to 18 months, how does this compare? It's imperial and they sold for 550. This is 575.

Yeah.

I think it sort of answers my question. So it's not a direct if I spend 10,000? No, because I've been getting quotes for it and if I am, it's actually coming back a lot more expensive than I anticipated. And unfortunately I've sort of jumped the queue a bit by there was an existing correct staircase and I've just knocked that out and now I've got no option but to put a deck in.

Yeah.

Okay, well that helps.

I might be able to help you a little bit. I'll give you a couple of tips that, that I do even on hiring properties. One is I don't build out of Merbu or hardwood. I build out of treated pine which will shave, you know, at least a third of your timber costs off pretty well straight away.

Does that have the, does it have the durability the, the pine?

No, not as, not as hardwood will. But I mean you're still talking, you know, over a decade or, or more. And, and I find even with Merbu you're going to be staining every couple of years anyway. There's a really good product. And also if you go to a, if you don't use the, the 70 or 80 mil board and you go to say a 110 or a 140, so the wider board you will get a more higher end look than just the standard deck. So once it's stained and the stain's the real secret to this. But if you use a wider board and then stain you can really have a nice looking deck which is going to be fine for you could stick tenants in there for 10 years, come back and stain it and sell the house and it would still be perfectly fine. You know the Decker looked good as you know, assuming that it was well built. And the product that I used to stain it is made by a crowd called ecodex which I think is E C O D E X. It's a product called Quantum Quantum. We'll have a look and it's, it's a MERB stain and it's, I've had a crack at all the different oils and stuff on the market over the years I reckon and this is by far the, the best. So Quantum by ecodex in a merboost stain and it, and it comes up really good and I'm, I'm using these on you know, higher end developments as well.

Well, I'm taking notes.

You might have it, you might have experience with this. Do they put, do they have to dig a footing into the ground like a meter deep for it to be structural?

Yeah, well, it's going to depend on your soil, going to depend on your soar report. So even if you've got a reasonable soil report, you would still normally go 600 in or not 600 footing is traditionally you're gonna have to go into your clay put it that way. You have to be down into the clay and I imagine you're gonna have to be at least kind of 5 or 600. The, the other way you can do a deck. You don't necessarily depending on your soil report that's, that's what informs how deep your holes have to be. But the other way you can do it that's quite cheap and fast is you, you can pour pads first which is normally 300 mil of concrete at the bottom of the hole and then you can do your Stumps in treated pine and literally they just run their strings and they just cut the stumps off to the height they need to be. And what it means is when you've got a couple of chippies, they can put a deck up in a couple of days. So the first day you come and pour the concrete in the holes and the second day you come along and build all the, the, the deck in one go. You don't have to stick your stumps in wet concrete and then go away.

But so can I, can I, can I put the post on a concrete slab?

No. Staircase was unlikely. Okay. It's unlikely. Yeah. Yeah. Decking. I've had a few registered builder to.

Build it and council approval.

Yeah.

Because I had a few quests from carpenter and they've come back and said you can actually put it on a concrete slab. So no one's actually mentioned anything about.

Doing stumps going into the ground. Okay. So I imagine is it, is the slab close to ground level? So what are they talking about? Just battening straight over the top of the slab and doing it that way. So it's not actually an elevated decking, is that what you're saying?

It is an elevator. It's about 1.1.4 meters elevated.

And is the slab, is the slab also elevated?

No, no slabs onto the ground.

Okay.

Similar to like a driveway.

Yeah. I mean, look, I, I would have thought if they, if they're willing to sign off on that and they reckon you can go straight off the slab, then great. That's going to save you a lot of mucking about.

That's not normal.

So carpenter's got the, that got the say in what to do structural or do I.

You'll have to have a register. It'll have to be. Sorry, where are you again? You in Victoria?

I'm in Sydney Black.

Yeah. Okay. In Victoria you have to get a, a building permit for a deck. And well, there's certain things that you need to. Well, that's actually not quite true, but there's certain things like re stumping, building a deck, re roofing that have to be done by a registered builder or someone who has a limited building certificate. Now I'm not sure what the rules are in New South Wales, but I'm pretty sure that you're going to have to have someone sign off on that deck. So that's either going to be a, a builder or a carpenter with some form of qualification that can sign off on it. Who's, who's, what's the word? Who's recognized to be able to sign off on. On that type of. Of job. So you just need to check that. Otherwise it might be a company that says oh well if you go own a builder then you don't need me to sign off on it. That's the. That would be normally the other option.

Okay.

Unless it was the other. What I thought you were going to say was because often you have say like let's say a patio patio or something like that, which. And it might be at ground level or it might be 2 or 300 off ground level. And then often what you'll do is you'll literally just put battens and nail them straight into the concrete with concrete nails and then you'll run your decking over the top of that. So your decking is really just sitting slap on top of your slab. So that's quite common and it's a really easy way to clean up an old concrete patio. But I've not seen stumps going down onto a concrete slab before for a deck. It sounds a little unusual to me.

Okay. That's what a few people have told me.

Yeah.

So I just wondering if the guys that told me you can. Whether they know what they're doing or that I just. Because it's come back there's a lot of price variances where a few of them come back at 12,000, someone's come back at 10,000, then I'm getting a quote for 7,000 and I'm figuring, I'm trying to figure out what must be. Why is it that it's about 2.5 meters by 6 meters really about 1.4.

Meters off the ground, 1.4 off the ground. It does seem expensive. I would get some quotes for treated pine and see how much that affects your price. It saves not only on the material but on the labor cost because they can shoot it down with a coil gun rather than have to. To pre drill and screw all the holes which is a laborious task to have to do. So. Yeah, I would definitely get some. Some quotes for treated pine.

I've just been trying to find out about complying developments with Blacktown Council while we've been talking.

Yeah.

But I think you know, have a chat to them because some sometimes I know in New South Wales like I worked in well did it did Renault in Randwick Council and they had a complying development that. That said that I could have three skylights without getting, you know, any council approvals. So of a certain size. So that's what I did. So sometimes each council has specific complying development. So I'd speak to them first and find out what they require you to do.

Yeah.

And then find out if the people who are doing the quotes are going to have the necessary qualifications.

Yeah. You'd assume it wouldn't need planning. It's going to be a building issue.

So my concern is because I've already knocked out the staircase and I have to put something there. If the deck comes out to be over budget, what should I do?

I would buy one of those pre made staircases and plug it in there. That's where I'd be heading. Or just get a chippy nose, knock one up. But yeah, you would probably go down that route rather than go and do a concrete one or brick one again.

Yeah. Okay.

Okay. All the best.

Thank you very much, guys.

Not a problem.

Got one more person there. Who's Dimitri? Let's see if we can talk to Dimitri. And I've just got a quick question for Margaret. Saying, do you have to pay capital gains tax if you flip a renovated property after a year? I'm referring to a primary residence, Margaret. In Australia, the fabulous New Zealand is. Capital gains tax is not applicable on primary residences. So home and hose. And in actual fact, one of my secret 2016 strategies is how to. I think there's opportunities for people to use their home strategic to renovate over a number of years and upgrade and upsell and make some money.

Great. Dimitri, can you hear us?

Yes.

Can you hear me?

Hey.

Gotcha.

Hey.

Happy New Year.

Thank you.

You too.

I've got something.

Really?

It's a little bit broad, so I apologize up front. Bit what broad? The question.

What did you think he said?

I heard that he said something rude. I was going to say. Oh, my gosh. Get ready to mute.

No, I know it's late, but. Yeah, I'm still keeping up.

Yeah, you're good.

You're good.

Go for it.

So I'm just trying to work out what would you advise to do if you'd say you had something up to, let's say, 700k to spend, which one of the three capital cities you'd be looking at at the moment. If you'd consider if your priority was look up capital growth within the next three, five years and if we could drill down to maybe a handful of suburbs that you. You consider that have good growth potential.

$60 million question. Hey, John. Well, I can tell you there's a great suburb 2016 hotspot class coming up at the end of next month and.

A webinar next Thursday.

That's why I'm doing a lot of research on that at the moment in where to spend the money. And I have to say my, my gut feel is always that population is going to drive demand and economy is going to drive demand and being a low risk investor I'm always looking for not the easy answer but the return on money that I'm going to get long term. Three to five years is not that long term. So you have to anticipate the fact that we're coming off a property cycle so there is going to be opportunity because there's going to be less frenzy people looking but there is also going to be a slowdown of growth. So depends on what you're trying to achieve in that say five year period. I still honestly believe that the Sydney and Melbourne market drives the Australian property markets and we've seen that tested time and time again over the different cycles. A quality property that's fit for the market. So you know we're not talking one bedroom units in Rush Cutters Bay but a property that is a quality market property in a quality area and $700,000. If you're looking in Sydney you're possibly looking at either high quality two bedroom eastern suburbs unit or even inner west or you're looking to townhouses in blue chip areas in Melbourne within you know, five to eight K's or you're looking at once again maybe townhouses in Brisbane or and I don't Brisbane hasn't generally always had the growth that the Sydney and Melbourne market has. Melbourne has outperformed over the long term growth wise to Sydney and its median price is still lower than SYDNEY and by 2050 they're saying which is outside your five year time frame is saying that the population. Melbourne's going to be the biggest city in Australia. So, so from that point of view I think, and I've got properties in both cities but I think that from that point of view Melbourne probably has a few more extra legs or time in the market for the rest of this cycle if you have such a short period of time. So I'd possibly. Well I'm doing research now and looking at hotspots for Melbourne so I'd possibly be looking within that 10 to 12 range and maybe looking at that growth sandwich that we talked out of the west. But there's still some areas up in the north that Pasco Vale and up there that you might be able to get an older style townhouse that you could do some work with. But yeah, I don't know. Does that help at all?

Well, yeah, as I said the question is a little bit broad so I didn't expect obviously anything concrete but broad answer.

I think I did good. I gave your name, I gave you names in suburbs. You did give me one.

I appreciate that. It's just I was thinking for some reason and that's slightly different to what you said, I was thinking houses in Brisbane within 10, 12k radius. But you seem to suggest that maybe that's at least today they talk more about it than they actually will be performing in the next whatever three, five years.

I think one of the things Brisbane has for it is affordability. So I think the capital growth is possibly going to be driven by affordability and people being priced out of the Sydney and Melbourne market and looking for maybe a lifestyle change. But the undermining thing that's going to affect that is the economy there and employment and there, you know, you have to be able to be near an area that has that employment drivers and we have seen the back off of the, the resource industry in Queensland and you know, so I'm not, I'm not completely convinced that affordability alone is going to drive the Brisbane market like some other properties. Commentators are saying that it will. I still think that Brisbane, you know from a, from a good place to buy with some steady growth potential is it in, you know, less than 5, $600,000 is. There's some great opportunities to be had there and you know, so I still like that area. But if you were saying look I've got $700,000 and I want the best blue chip thing I could buy with the most growth. I think we'll probably, we have seen a shortening of the property cycles only be three to four years before the Sydney and Melbourne market respond after any downturn. And I'm not, I personally not completely sure that we're actually in the downturn of the Sydney market yet but I think there's still going to be some, some growth there and you potentially if you've got a five year plan you still, you could have some growth at the back end as well and you know, you could be in blue chip area.

Okay, all right, thank you.

Okay, thanks Dimitri. Tune in to next Thursday night. We'll have some more thoughts on that. I'll get some more experts involved.

Definitely will because I'm trying to collect all that information. The next decision I need to make, I kind of want to be not certain but confident.

Absolutely. Well it's all about the information, you know, how important the location is and As I said that Angora. Angora, Annalee area, Engenhara. Anyone know how to pronounce it? Like anyhow, that area I'm. I'm kind of looking at, at the moment as well. So yeah, I think there's definitely some highlight spots that my dot mapping is, has highlighted in the, in the last couple of weeks that I'm investigating further.

Okay, thanks Dimitri. We might see ya. Take a question from Matt as the lucky last. He says headphones on with sleeping children. So can't talk. Do you combine the dot map exercise and do you do all your research for houses and units independent of each other?

An easy answer for us to answer. Hey John.

To finish off with.

Yep, yes, yes we do. So as we kind of saw when we were talking earlier about Brooklyn and we can see that the houses and the unit anticipated growth is different and that's exactly the same with past growth. They're completely different asset classes. They have different demographics and when I say demographics I mean the typical type of person who wants to live there or own that type of property. So they do have different growth drivers and therefore we would see different growth associated with units and houses. That's not to say that some somewhat they're not associated. So if an area gentrifies and goes up in value and the houses start going up in value that the units will be dragged along as well. That, that's, that could happen. However, what I am saying is that if I'm doing a dot map I'll be doing it for houses and then I'd be doing it for units and.

Something to watch out for on Ripe House sometimes because he mixes the data on some of those.

Yeah, that's right. Right. So yeah, you have to, have to watch for both of those. So.

Well, I reckon that's about it. People are just kind of really wanting to go to bed now I think because it's quarter past ten.

Oh, well, there we go. Alrighty. Well let me wrap up and we'll go from there. John's going to pull up my notes that I have to, to read out and look intelligent. But anyhow, well, I'm just going to wrap up and just go for it. Which essentially is goodbye. No, look guys, I know the people from the ultimate guide of Renovation who were part of our one week enrollment last September. Congratulations on finishing or having the whole 12 available modules to you now once again, the Renovator Network, the your property success club. For those of you who've joined us as a special treat tonight, you know, put your questions into into the club and into the network. You know there's people there to answer your questions and, and John and I jump in there and then and can answer what we can. But you know, it's a great resource for you in between these calls and don't be scared, don't be shy and if you're listening to this as a recorded message, you know we're friendly, you know we can, we will try to answer anything. We've done much, we've given it a go over the last three years. So you know, I think that the thing is that no question is silly. We really want your engagement and we really want you to be part of of it. We've got a really exciting year ahead. As I said next Thursday night, which is the 4th of February, we will be having an 8pm webinar with some property experts and we'll be talking about hotspots because that's what everyone wants to know about. And we're going to have a look back at 2015 too and see what the drivers has been. So I think that's important. Really excited about having this location masterclass. Can't wait to sit down with 10 or 12 people and you just, just hang out with you for a whole day and just make sure that you know what you're doing with locating the properties because I think this will be the key to 2016 and where you buy and how you buy and Yeah, a TV show coming up. Ray on board. And we're going to be opening enrollments in the Ultimate Guide to Renovation in March. No. Yes, March.

March.

Yeah. So for a week only again we're going to grab some, some people in and take, help help them all out. So some new information in in the Ultimate Guide to Renovation when that comes.

About, a few more updates.

So really exciting. So once again it is, it's. I really value you guys and you being part of our, your property success community and I think it's really important the contribution that you make and for everyone who asks a question, I know there's people sitting out there who have I haven't asked a question but I hope that we go somewhat in helping answering question that might be in your mind. So once again thank you so much for your contribution this evening and I look forward to the year ahead with you. All the best for now.

See ya, Sam.