Your Property Success Mentor Call July 30-07-2020 (Part 2)

Hello, and it's Jane Slagsmith here. Oh my goodness, what funny times we're in. Technology problems, interruptions, working from home. Well, I just thank you so many people who attended the Q and a call for July 2020. I did have a question come through and I did want to address that question, but I just wanted to finish off and make sure that we have got an ending to everything that we were discussing earlier. So if you have watched the first Q and a call for July 2020, you know that we talked about a lot of things around the market, but what I really wanted you to really concentrate on is that we have over the last 50 years just looked at said post these great market shocks or recessions. The market has come back within five years. We saw the indication that there's potentially going to be a peak to trough kind of experience that we will experience with the peak coming around 2025. But by the middle of next year will be the trough and the market will start moving again. And then we had a look at timing at the market compared to time in the market. And the reason I wanted to address that is that what although right at this moment, we know that there's jobs under pressure, we know there's rising unemployment, we know we've got a recession, we know that we're in a pandemic, let's face it. But this is going to be a short period of time when you're looking at the long term of your investment in the next 10, 15 and 20 years. So if you do have a safe job, if you do have a buffer, if you do have clean credit, are you prepared to purchase a property, then it might just be the right time for you. So I want to give you the pros and the cons of that. And that was why I wanted to sign off with looking at the market and looking at where we are going and how you could potentially take opportunity. Because yes, if the market's going down, then also there's opportunity to buy into the market a little bit lower as well. Now, I did get a question this week that I wanted to address. Now let me just read this out. It's from Diane and she says, diani, she says, look, I'm a member of your first house buyers Facebook group and we touched briefly on Facebook back when my husband and I were looking to move to the country and buy our first home. We currently rent and work in Melbourne and I've decided it would make more sense to try to buy somewhere within one hour's commute of our Workplaces which are both quite close to the cbd. Instead of moving to the country where I'd have to give up my job and start a freelance business. Now this is really important. One of the greatest assets that people have at the moment is their job. So giving it up and starting a new career or becoming self employed and trying to find clients is something that I would consider quite risky. So Diane is really taking the safer play here and she says, well, I'd like your advice on buying with an investor mindset. This home, it really resonates with me. We now know that it's not our forever home, which has stalled us in the past and we don't know where we want to settle down and that's why we have taken so long to buy. Our intention is still to move to the country one day, but we don't have a deadline for this and feel we just need to get into the property market and get started somewhere, even if it's not our dream home, so we can stop paying rent, paying off someone else's investment, and get some financial security. What are your online courses and tools you have that could help us? Okay, so let's just have a quick talk about this and I want to talk around the Financial Freedom Framework that I've talked about many a time as well, because I think when we're looking at the Financial Freedom Framework, it kind of gives us a way to start thinking about how we would consider purchasing a property and looking at that in the long term. So I'm just going to share my screen here and show you that because I think it's important that we consider the steps that are involved. So first and foremost I want you to think about that. See it now Diani's done the right thing here. She was looking 20, 30 years ahead. She's come back now, like, look, let's just take the next one to three years into account. So taking opportunity secured income or buying a property, getting into the market. So this is really good. But she knows this is not her forever home, so there's not that emotional link to it. Now, depending on what the vision is for this property is how you would then look at going to the next step. So Diani, if you're thinking, look, this is going to be one property that we are then going to use the leapfrog strategy to get into the next property by selling it. Then you don't have to take into account all of the investor type information that we, we look at like vacancy rates and percentage of renters. But what is important is to consider the ripple effect. Where's the next area of growth or an area of growth that you can afford that already has proven growth potential. So this is really good to get that clarity first because if you don't have that, it's really hard to then make the next step which is setting it up. And when you set it up, you know we're looking at what type of loan you're going to get. It's going to be different as an owner occupier that's going to become an investor in the future. As to being an owner occupier that will sell and buy another owner occupied property in the future. If you're only having this property to 1 to 3 to 5 years, why pay it off? Maybe you'd consider an interest only loan. If you are buying as a first home buyer and now it's not your forever home, you might be under the cap in Melbourne that you have to be under, which I think $650,000 to get into the market. So all of these things come into play. So it's important that you have that vision first for the property and you see how a lot of people who miss that then miss the next step. Now we're looking at source it. Source it is where should you buy? And when we're at this, I'm just going to bring up the information here. So this is the suburb selector software and let's just say that 650 is the price point you're up to. You're happy to go 30% below that. You don't want to be more than, let's say 30Ks in the CBD. But one hour could potentially be something like, you know, one hour for you could look very much like it was Geelong. Even so, you know, you might want to consider those kind of areas that have the affordability effect but will actually also let you get into the market that you can afford. So once you start looking at this, you might look in some of these areas and go dandy nong. I don't want to be out east, you know, I don't want to be out west. North's where I want to be. And for instance, you might choose Broadmeadows and say, you know, you'd go through here and you would choose the suburbs that fit your kind of time frame of getting to work as well. But what we want to do here is just get a feel for what does that suburb look like from an investment point of view. Now if you were going to buy this to Become an investment property in the future. Then things like this percentage of renters, really important number of properties sold per year. Now obviously last three months we haven't had a lot sold, but I'd be looking at least 40 to 50 being sold a year. I'd normally say 60, but I know that last quarter has really affected that. And once again, if you're going to be buying a property, considering it for an investment, the next factor is understanding what the vacancy rate is. So making sure that if you're going to let your property after you've owned it, that there's actually a demand for properties in the area. Get a feel for is there an oversupply of units there? Understand who your main demographic is in your typical property. So typical properties, three bedroom house, mum, dad and kids quite young trained. So this kind of gives you the information. So the location masterclass course, to answer your question, it's probably the most economical way to getting access to this kind of data. Now one of the modules that we in the module one, we talk about the ripple effect. Now just in case your vision is to sell this property and make this property a, you know, sell it in three to five years time, then the main market is going to be owner occupiers. So all that kind of rental information is not relevant. But what is relevant is this.net exercise. So this is where you get the past 10 year capital growth. You go and grab a Hemmer map and some dots, you come up with the legend and we actually are looking at. So this is one that I've put together for my mentoring students. But you know, this is the July data. So I've got a blue, green, red kind of traffic light system here. And what I'm doing is I'm trying to find now these suburbs that have had good growth, the reds and the yellows and are pushing onto the green. So you know, these suburbs here I can see reds, reds, reds, reds, yellows. So green, green, you know, these with the next ones that go up in value. So this is the kind of, you know, the ripple effect that I, when I talk about means that, you know, we're actually trying to anticipate those areas that are going to have the greater growth. Now we would normally say, you know, depending on your price point, you're looking for a 2% difference in growth from the suburb that's closest to the CBD to the next one. But 1% is fine. Also if you've got a shorter time span, like you're going to sell within three to five years. And in actual fact, you know, if you can afford it and you've got proven suburbs, then you would possibly just choose. If you had a borrowing capacity of $1.5 million, then you might just choose a suburb that has consistently had good growth over a period of time. But that's when I talk about the dot map. And for me it's important that you understand what you need. So Diane, you know, good job identifying. It's not a forever home now. Just identify if you want to keep it as an investment or not or you're going to sell it and it's the ripple effect that's going to get you that growth. So you know, we talked about the peak and the trough that is expected. The Melbourne market, you know, considering keeping your job and that buffer in place is fantastic. Not going and starting a new business and trying to get new clients in a town that no one knows. You planning for your forever home now is good. Just understand how does this property sit in that forever home plan? So I hope that answers your question for you. I think you're well on the path to, you know, securing something that is going to get you ahead and having that growth will mean that you might have 2, $300,000 extra to buy the next property which could be your forever home. So thank you so much for your question as always guys. You know, I really love the questions that you send through to me at the moment. You know, we're still coming live from home with all the technical issues and I'll talk to you in August on the last Thursday of the month and at 12:30. But in between I'm offering the Borrow My Brain series as well for people who just need a little bit more analysis. This is us. Just the strategies that calls that I do with my mentoring students or with my pre approved mortgage clients and looking at your particular situation and how I can add some value. There's been some really great guests over the last couple of weeks. One that I've just sent out this week is Adam. He's a first time buyer who really kind of stretched my brain. I have never looked at house and land packages and he wanted me to look through the design. So have a look over that. I think you might enjoy that one. Jack was buying from internationally so we had a conversation about how would you buy remotely, which is fantastic. Kim, I chatted to who had a particular property, wanted me to look at and had some concerns about the neighbors. I just think she had concerns about the wrong neighbors. And then we had Susie, which you've seen very actively in the your property Success club group. She fantastically found the property in the short time frame. She's done all the research. You know, Susie's been a student in the ultimate guide to renovation for the last two years. She renovated a property in a regional town to sell to get the money to buy her new her home. She's just done a magic renovation including painting the bench tops in the kitchen. Have a look at before and afters in the your Property Success club. I think she's just done a fantastic job and she has a home. Unfortunately tenants are moving in there now, but at least she and her husband have something to have as their own and start creating wealth for them. So as always guys, here is to your property success. I hope that you stay safe. Stay at home. Wear a mask. I've got a weird mask at the moment. Just for a bit of fun. My beard. Look after yourselves, look after your families, look after your jobs, look after your credit file. Because remember the banks are looking at that at the moment. And if it is the right time for you to do something then, you know, think, be brave. But also do the research and understand what the risks are because there will be opportunities coming your way. All the best for now and look after yourself. Bye.