Your Property Success Mentor Call June 27-06-2019

Hello, everyone. It is Jane and John here and welcome to our Q and A call for the month. It is 12:30 on the dot. It is the last Thursday of June. And so that means that we are here and going to answer your questions for the next, oh, I don't know, hour or so. John, I'm going to hand it over to you quickly and then we'll get going.

Yes. Let's get the disclaimer out of the way. It's important for you to take care and applying what you learn on today's call. Everyone's situation is different. While we go to great lengths to ensure that everything we share is accurate, what you're about to hear is based on our personal experiences and opinions and not intended to be specific to your circumstances. So for an order for us to share this information openly, we just need to make the following disclaimer that we're not real estate agents, financial planners, lawyers or accountants and are not liable for any loss, damage or misunderstanding caused by reliance on any of the information provided or inferred. And with that, Jane, did you know that nearly half the year is out of the way?

I can't. I'm still getting over Easter.

I know I'm still getting over Christmas.

I think Australians are quite unique. You know, I've seen Christmas parties creep forward to like the second last week of November and it's kind of like as soon as the first Christmas party hits from there till, you know, February is completely, I don't know, is it cricket season? I don't know. Everyone just checks out. So.

Yeah.

Even have six months left.

Yeah. But I, I like these, I use these milestones, you know, when you get half the halfway point of the year, I think to myself, okay, have I done the stuff I said I was going to do in January? And it's good, it's good just to have those, I guess, times that you check back in and you go, well, am I going to let another, you know, half a year slip away until I do that? Particularly when it comes to, yeah. Getting the next property. So it's always a good, good reminder for me to go, ah, better get moving. The year's slipping away from us.

I know. And I think the thing is also, you know, it's been, it's been really interesting for us this year because we've done so many things as well. And, and so it's, you know, there's so many things that are going on. So it's really, it's been an exciting year. So we, well, we better tell for those people who are new to the club, welcome. This is usually a call that we have every month and we've been doing them Now, John, what? Five years?

2013.

Wow. So there you go. So we've been doing them for nearly six years. There's 12 a year. And I know a lot of people who join the club and welcome, if you're new this month, that they go through and they listen to a lot of the. The old recordings. These calls are for the Investors Choice Mortgages, diamond clients and also for the Ultimate Guide to Renovation Students and obviously our club and Location Masterclass students as well as our mentoring students. So welcome everyone and if this is your first time, then I hope that we can live up to the expect. And just a separate thing, John, for a lot of people who've been joining the club, they have been making a donation to the Pipilepsy foundation and recently we had in the Pipilepsy from Sarah and Heath Crawford. They sent us a lovely, lovely letter, which I might show you a little bit later. But, yeah, we're well over eight and a half thousand dollars now that have been donated from our members to the Epilepsy foundation, which has been very successful in achieving their $100,000 target and getting the resources that were needed at the Royal Children's Hospital to assist kids with epilepsy. So fantastic cause and thank you so many people for being part of that.

Yeah, so true.

Now, if you do have a question or anything, there is a link above this video. So look up there where it says guest link. Get your video and your microphone going and if you're on your computer, just click the link. If you're on a mobile device, as per the instructions, download the app and then click the link and you can come on and we can see your pretty face and have a chat. But we've got a few questions as well.

If you're driving, probably best not to come on via video link.

And we've got a message. Raoul, who says, hi, Jane, hi back at you. Thank you. Now, John, we have had a really exciting time since we spoke to everyone last. We headed up to the Gold coast and stayed at the QT Hotel. I don't know if we got any pretty pictures there, but we had a fantastic time with our mentoring students and we had two full days where we went pretty deep on some pretty advanced techniques and tactics. To give you an idea, you know, some of those mentoring students have had and built portfolios. Some of them aren't quite doing what they had thought they should do. Some have had great success with them and just want to make sure that they get the next one right. We have a person in the group called a property virgin and she's over 50 and doing her first investment property. So we're working with people who are after their first properties and those who are adding to their portfolio. So it's a diverse group, isn't it John? But such a really lovely group of people.

People, yeah, it's terrific. It's terrific to go to one, assemble a group of people like that together who are all motivated, all willing to help each other, who are vulnerable, willing to share the mistakes that they've made in the past, but at the same time are really serious about gaining traction with the next decisions that they make. So to give you the setting, it was a, it was a great. The Gold coast in a high rise building with the. The glass side to the. In a boardroom kind of style where we're sitting around the table and we spent a lot of time on the, the first day diving and going really deep into some stuff that is almost impossible to share in other forums. You really need it to be in person when you drill down into some of these techniques. It's largely the, the same subject matter, but it's just, you know, you have the ability in person to drill down because you can take questions and really flesh it out. So the first, first day really concentrated around, particularly around the deals and the discounted properties that are available at the moment. How to do that property due diligence and the steps that we show in, for instance, the Ultimate Guide to Renovation, where you're doing the four steps of property due diligence. So we dived right deep down into that and then jumped on the bus and went out for a bit of a ride to look at the Gold coast, which I really interesting, Jane, because that was the first time for me having a look at Gold coast suburbs. And it's obviously coming from Melbourne. My reference point is always Melbourne, even though I've had properties in New South Wales, but an interesting place and I guess it just reinforced that every market is different and has its own characteristics, but the same underlying principles apply.

Yeah, I think so. And you know, the thing that found really interesting about that, especially when we got on the bus and went and had a look at the market, is that, you know, there's a lot of demand up there in the Gold Coast. There always has been a lot of demand in the Gold coast and you know, there has also been a lot of apartment blocks that have been built and we were very fortunate having one of our mentoring students who's actually quite involved with the surface Paradise Tourism Board council and hospitality in that area. So we really got. She ran a bit of an insight into the area which, you know, we got to see some things that most people would not normally get to see. So it really gave us a really good context of what was happening up there. And when we jumped on the bus, we went to also have a look at a townhouse as well as a house. Now we usually look at houses and do our property inspection checklist with a house so that we can run through and have a look at a property that's most typical for what people are going to be buying when they're out buying by themselves. We also had a few. John, what would you say a few laughs of some of the videos that some of our mentoring students had sent through to us, videoing their own property inspections that they had been doing and being part of before they put in offers during the month before. So we went through some of those and discussed those. But the interesting thing when looking at the townhouse is we actually got quite interested when the agents started throwing out some of the numbers around what was happening in the area. And John, we've discussed this before, it kind of became a bit of a fur feed that colored the property itself, didn't it?

Yeah. The first thing, particularly for a southern Mexican audience with the definition around townhouse. These were essentially what we would call flats in Victoria. They were, even though they were two story, it was essentially a complex of how many. They're all low level, two level.

So they're all one level shared.

So there were one levels, weren't they?

Yeah, and they were at least 40 on that facility. And we were looking at something like number 90. And all we did was drive through these roadways and it was like a little development and you. And they're all 15 years old or so, but you're driving around, every single one looks exactly the same. So you really kind of had a bit of a. Yeah, and some of.

Them had a little bit of work done. But essentially you can tell that every single structure is the same. Some of them are in different states of repair. But yeah, it was interesting that we got in. The agent who was very pleased to have, you know, 10, 11 people walk through the front door. We'd have pre arranged, of course with, with him, told us about the possibilities for the property as an investment. And one of the things that he said immediately was this configuration of the properties in this estate. Has this extra room and you have the ability to stick up a wall here and turn it from a two bed into a three bedder. And then of course we all lit up with that and started exploring the possibilities there. So the immediate questions were, okay, well, how much does that push up the rent? How much does it push up the value of the property? And we all lit up and we went down that line. And it was an interesting process just to play that out and see where it led.

And I think the thing around that, John, was as you said, you know, everyone's kind of looking. Nothing felt unique. It didn't feel like as we were driving in, we could make any real difference to set this property apart. And we grabbed on with both hands the fact that, you know, this two bedroom with a study could become a three bedroom and at that high price point and you could make maybe 20 or $30,000 in equity by doing that quite quickly. And further justification came about when we asked people what else is unique? It's like, well, this one doesn't have a shared wall on both sides. It's actually, you know, got a little bit of parkland behind it. It's got, it's at the end of the block, it's got the visitors parks here. And it was almost like watching a justification of getting the square into the round hole. And it was interesting when it came down to it, the reality is that this property was not typical for the area at all. The resale value and the growth that potentially had been in the area and potentially could come in the future, just there wasn't any proof that there had been past growth. And if you had bought previously that the properties had gone up in value and being one of many, there wasn't a lot that you could prove. Again, the property was being rented. Arguably you get a five and a half percent rental yield. So anyone in Sydney and Melbourne, that sounds amazing. It's possible up there with other properties without having to go to townhouses. But John, I think the really interesting thing here is that we look at suburbs and obviously for our mentors, mentoring students, we go through, you know, over eight and a half thousand suburbs for the month. We pull out the ones that fit, you know, just four of our filters. And there's only 140 or so suburbs across all of Australia that do that. There was six of those in the Gold coast, so we had a look at a couple of those. So this was one of those property in one of those suburbs. But it wasn't the typical property. A three bedroom House was the typical property. And the problem we see people go to is they find a great area and they find they can't afford in the great area. And so they choose another property type in the, in that area that all the research they've done doesn't actually validate. So it wasn't an area for the townhouse or for a unit.

And as the so many of those properties, non typical property for the area for that estate of 140 or whatever, there was houses, extremely typical. All of them are exactly the same thing essentially. So you had one that sells for a low price, that's the comparable sale for all of them, you know what I mean? So you're only as good as your last sale in, in that environment. And we're making the comparison that it's the same thing with house and land packages on the fringe of town. And the next estate comes online and then you've got a whole 3,000 new houses that are competing for your tenant and your resale value. Same with high rise apartments. You know, one, one apartment within that block sets the, the price at least for the whole floor. If not, you know, the whole building. It's, it's always that over supply problems. You're not protecting yourself from that which is just a fundamental of supply and demand, isn't it?

Absolutely. And you know, it's interesting too, you know, on the Friday night we had a beautiful dinner on the rooftop of one of our students penthouses as you do in the Gold Coast. And just watching like looking at the Gold coast skyline and all of those blocks of units, it's extraordinary. But she showed us an incredible video of a timeline of the Gold coast from when there was no buildings there to where it is today and the plans for the future of what's going on up there. And there's some extraordinary stuff that's happening. So it was all good. Oh, hi Daniel, how you going? I'm so glad that you made it to our Facebook live. It's hard during the day sometimes, isn't it? Now John, the other thing that I wanted to mention that I found really insightful and I think, you know, talking to the students afterwards, it was actually there was so many things, but one of the things that we did was when we looked at the house property and we went through the house and the house wasn't something that was investable and was a little unique and interesting, but we had a look at how we would actually put the offer together for the vendor. And as John said, you know, we obviously not going to spend two hours on two or three hours like we did, they are doing this. But, you know, we went through a really interesting exercise to get to understand the vendor. So obviously, first of all, we spoke to the agent and asked the agent about the vendor. Now, a lot of people don't do this and a lot of agents won't give you the information, but it's gold when they do. So, you know, why is the vendor selling? Is one of the most important questions you should ask. And it gives you an idea of whether there's some urgency around the sale as well. Now, before we went to the property, we also pulled up RP data on our phones so we could actually have, you know, as we were going, so we could actually go through and have a look at some of the information around the property. Now, RP data, if you've got access to RP data, guys, I just want to remind you that you actually have access to the app as well with your same lot, so login details. And I've had the RP data people out here this week telling me all about everything that they do. So I'm just going to. I don't know where these addresses are coming up. I don't know what this address is in Hawthorne or why I was looking at it. But when you actually start pulling up the data, okay, this is a real online tutorial here. You're going to see some extra stuff that they've act. They've actually started adding here that is unique and that is this trend analysis for what's happening in the actual suburb. Now, you don't get this on the website, so this is pretty cool. And they also go through and they tell you now what schools are in the catchment area. So I'm hoping you can see that, too. This is on the app. Get some extra data here on the app. And when you get down to this kind of trend analysis, you can go through and you can have a look at, say, let's say view all trends. You can have a look and you can actually start putting your finger where you want things to go. So this is the medium value. What's the median value?

Just tuned in. Everything is okay, Everything.

Jay's just doing a tutorial online. Hawthorne values have gone from 2.2 million down to 1.8 over the last year. Or you could put over the last five years, what have they done? So you can see in real context what's happened over the last five years. So this is really cool, you know, vendor discounting, remember median density, medium vendor discounting is one of the ways that you can help you do your discounting analysis on. You know, if most of these vendors are doing 6%, then you might start 10% below the asking price. Now, this is really interesting. So when we had a look at this property and we had a look at the vendor, and we went into RP data proper as well, and we could see that they have actually had the Property listed for 230 days. So if you've seen some of our techniques around how to find properties at a discount, then one of the techniques was looking at properties on the market over a certain period of time and targeting those so they had been on the market. We asked the agent about it. The agent said, said that they had recently just changed agencies to them. We had a look at the name of the original agent, and it was Purple Bricks. Now, Purple Bricks is usually someone who doesn't want to spend a lot of money, is trying to do it themselves, get it a bit cheaper, yada, yada, yada. So we started building up a little bit of. What would you call it, John?

Building up a picture. And you can make some assumptions from that about the vendor's situation or the vendor's motivation. And if you think of as you always say, Jane, typical campaign, on average 40 days, a faster campaign will be in the 20s. And then this one, we saw it had gone from a. I think it had gone between two bricks and mortar agencies, Jane. And then to the purple bricks after that. Yeah, yeah. So there would probably. You could make some assumptions in there that the vendor wasn't willing to meet the market, and you could potentially make an assumption that maybe they've been, I guess, realization was starting to set in perhaps, or, you know, the reality just filter was beginning to wear off, you'd think after that period of time.

And the agent had told us that they'd already bought a piece of land elsewhere they wanted to build. So we, I mean, getting this information on one hand and this vendor profile is interesting, but we actually took it a deeper level with our mentoring students. And, you know, we looked at the fears, desires, you know, the worries, the opportunities for this vendor. We actually mapped out an entire offer plan based on what were the terms that they wanted, which is possibly a really quick sale, maybe at a little less than that they want to pay, which is in our interest, or. And maybe the deposit release as opposed to we'll pay you what you want, but, you know, we want a nice day, you know, vacant possession, to be able to do renovations during that period of time. So we actually, by doing that we could come up with a really incredible buyer profile and negotiation plan. And this is things that, you know, you've kind of got a little bit of each of these available to you, but it's putting it all together and I think that was a really powerful exercise. So I hope you guys can pick up a little bit from that. But you know, understanding the vendor, their motivation and then planning a negotiation plan, I think it's module 8 in the ultimate Guide to Renovation when we do negotiations. John?

I was going to say six.

I think you're right, I think it is six.

But I guess what you're doing there, just to emphasize what you said is the, you never want to be negotiating just around prompts price. You know, it's the, you always want to try and bring terms into it. So, so it gives you scope. Then you can negotiate on a couple of things simultaneously. So at the most basic level you could put it around the terms, the settlement terms, the length of the terms, for instance. But if you know more things about the vendor, there's other, and, and perhaps even the condition of the property, you can bring other things onto the table. Then you can add or remove as part of the negotiation process to get the property for the price you want on the terms the vendor wants. And I guess where we back at the start of the call when we talked about the four step property inspection process, when you're going through and doing that suburb due diligence and going through all of the open for inspections on the market, that's the time to ask these leading questions to the agent before to get all that vendor information. Before you get into the, hey, the agent marks you down as an interested party. Before that stage, you've got opportunity to ask the agent questions while they've still got the guard down these questions about the vendor just casually. And we went through one of the properties and, and everyone had kind of asked their questions of the agent and I was, I was just having a bit of a casual conversation and we gleaned there was David was the other guy present. And we gleaned so much about that vendor in the space of probably two and a half minutes. And the agent certainly didn't feel like he was sharing anything that he shouldn't have. And so we knew that the vendor had already bought another property. It was a rural property. She wanted to sign the building contract. So we could say from that, okay, well she needs a deposit and she needed to. And the price that she previously listed the property at and then we could make a whole bunch of other assumptions, you know, from the RP data and and so on about that vendor. So that gives you as a, as a buyer, gives you a hell of a lot of power. Knowledge is power. Going into that negotiation, you can set up a really good deal.

Absolutely. So guys, bit of teaching content there. I hope you got a lot out of it. And as John said, you know, we took 11 people away with us for the mentoring. We've got our next mentoring weekend in September 21st here in Melbourne. Fantastic. And we're just opening up for a couple more applications for people to join us in the mentoring as well because we are obviously one on one. So if you are interested, send us an email, put one on one in the subject line and we'll get on the phone and have a chat to you regarding your application and see if it works for you. So, John, few questions I've got. Oh, I've got a quick question here from Daniel on Facebook says, did you happen to look@realestate.com au search site and see the changes? Okay, so let me just share with you my screen and tell you exactly what Daniel is referring to. I think so, John, this is one of the issues that we often face with the Internet and recommending different sites to people. As you may remember, we used to have this tab up here. Tell me if I'm writing your questions here regarding buy rent and sold and share accommodation and things. We used to have an invest tab up there. That was fantastic.

Yeah.

And which we all loved greatly. The invest tab has gone however, and I was talking to one of the mentoring students, Kristen, she's like, I can't believe it. Even when I check putting it invest, it doesn't work anymore. But what I've noticed today is it goes from invest to neighborhoods. And in neighborhoods you start picking up some information. Now this might be something that they're just testing at the moment. So once again, there's no link to here. So here's some secret information for you. What I did notice is that if you're looking for a three bedroom house worth 550, they're actually kind of helping you out here with a price guide. So they're actually coming up with areas that you might be able to afford and then you could go into that area and get some information. So my thoughts would be this is probably just a test at the moment. You know, when we talk about going through and working out, you know, what's the difference between a two bedroom and a three bedroom house? For instance, or what the median price is. This is giving that to you. So there's some, still some really good information here. Years ago, John, we used to talk about the average demand in the market. So the visits per property that were going on in the area compared. They got rid of that. Nice to see it's back again. A little bit of the demographics etc and similar price point properties. So that's. I'm hoping that. Yep, got a. Yep, you're onto a chain and I got a big wink. Fantastic. Give us some love. Send us some love hearts there Daniel. But yeah, that's my way of working around that. So there was the Invest tab up there. It's no longer working but it is redirecting, redirecting to neighborhoods. So that is where I reckon you guys are going to be able to find the information. So hope that helps.

Yes, you're on to it, says Daniel. And he's happy to be on the show for the first time too.

Okay, so we've got a question here from someone else on Facebook. Do you want to read that one out? Yeah.

He says it's in regards to searching for properties, especially regarding off market ones. Would you be able to advise if buying off market properties is common? Would you also have any tips on how to approach agents to discuss off market properties?

Okay, so some really good questions there, Ralph. So just going to bring up my screen. So buying properties and the concept of buying off market is often something that you hear buyer's agents talk about. So buyer's agents will say, you know, we work for the buyer and we're out there in the market every day and the agents know that know us and we have a relationship with them and hence we have the opportunity to discuss with them properties that haven't quite come on the market. Or maybe vendors who don't want to do a six week campaign with the nosy neighbors coming through and having a look at property. So you know there's this always dangle that buyer's agents use going there's a secret market out there and, and I'm not saying it doesn't exist, but there's a secret market out there and you know we have access because we have the conversation with the agents about it. Now Raoul, I'm not sure what you have access to through our products etc. But one of the things that we talk about in the Ultimate Guide to Renovation is we actually have a template to give agents to say this is specifically my buying criteria. I'm really looking just looked at sunshine. So I'm really keen to be buying in your sunshine Sunshine west idea. And I'm looking for a three bedroom house on the typical six to 800 square meter block with potential the opportunity for rear access for a granny flat. I don't know whatever your buying criteria is. So, you know, giving that specifically to an agent now when the market's running really, really hot, agents are less willing to, you know, spend the time going through like, you know, who's all the people on my list that I could be selling for because they open the house up at its sales but when the times are a little bit slower, which we're definitely seeing at the moment. And I was doing a bit of a PUL check yesterday and seeing what agents were saying and there's they were talking around, you know, had there been an uplift in the market post the election and people, agents all over Australia were commenting on what was happening in their areas and I was interesting to see the most positive agent I could see in all of Australia was in Geelong saying it's extraordinary. I'm getting 20 or 30 people through properties now and before the election I wasn't getting hardly anyone. So you know, the rest of the market, you know, are quite subdued. So agents take that buying criteria list and when something comes up, could be off the market, they could give you a call. Getting to know the agents when you're inspecting the properties, be respectful and having those conversations can always help. So that's one way of doing it. John, do you want to add anything to that?

Yeah, on your last point, they're getting to know the agents on the inspection. I've just found that invaluable. And so if I was doing due diligence on a suburb, on a new suburb, I typically camp out there for, you know, two to three months going through everything on the market, getting to know it really well before I'm you know, putting big dollars on the line there. And this in, in my case it was particularly rating to flipping and then developing. And what I've found is that there's obviously a spectrum of agents and how hard they work but typically the minimum amount of work to do for an agent is to go through the inspection list from Thursday night, on Saturday, on a Tuesday or Monday and to call everyone who's been through the property and said hey John, saw you went through 123 Smith Street. Any interest in the property kind of thing. So that's the minimum work that an agent will do. Just by the virtue of your going through all of those properties on the market, you're having those conversations with virtually every real estate agent in that area and you're building their relationship. Because one of the immediate follow up questions, if you say I'm not interested in that property, they go, okay, well what kind of property are you interested in? And they're essentially taking your criteria down so they can get the selling agent fee. So typically within an agency you have a listing agent fee and a selling agent fee. And if I refer a lead to another person in my team, I'll get the selling agent fee and you have the listing agent fee. Who's the person who has the relationship with the vendor? Hopefully that makes sense. But so it's just by virtue of building those relationships means that you have an opportunity to get that agent criteria in front of it. And if you present as a really professional buyer and you say, Mr. Agent, I'm looking in these pockets of the suburb between these streets for a three bedroom weatherboard house for this price range. And if you have something that comes up that is in that sweet spot, I'm ready to go immediately. I know the prices, I'm a professional buyer and I can make a really fast decision and take that property off your hands. And those are the kind of conversations that you're able to, to have off the back of those open for inspections.

Absolutely. And I'm just going to share with you also on RP data. So Raoul, you might actually have access to RP data. One of the other things that we do is we have watch lists. So you can see here at the Moment I have 210,401 properties across Australia that I have on my watch list. And in the last week I've had 43 properties come up from my watch list and to date we've had 1255 listed and 2081 sold. Now this is something that I do for the mentoring students and looking at the properties within the suburbs that are on our list of like 140 this month so that we can actually give them a list of all the properties in those suburbs that are on the market. So but this is the watch list and what I want to show you is how you would get into that. So what did we, we used Sunshine, didn't we Sunshine when we were just looking there in Victoria earlier. So what you're looking for for properties off the market is when you're talking to the agent, you know you want them that someone's had to put their hand up and say to the agent, I'm thinking about selling. And you then have to have A process of them going on the market or having the conversation about how much you're going to charge and all of these kind of things. So the person who's thinking about buying has gone down a few steps, but you might be able to get in front of them beforehand. So here you can see there's 5,135 properties in Sunshine. Now, let's just say, rally, you're after the typical property and we go through that in the course on how to find this information. Census, three bedroom houses, the typical land size. And let's just say that we've gone to SQM data and we've got the typical land size information. We show you guys how to do it. Six to 800 square meters. Now, out of those 5135 properties in Sunshine in Victoria, 380 are actually properties that are what you're after. Now, how many of those are on the market at the moment?

4.

So you might look at these four properties and go, fantastic, these are on the market. But hey, you know, there's 376 here that you potentially could want to live in or have. Now what you can do here is to select all. And so what I've done here is I've selected every one of those properties and I can add them to my watch list. So now when any one of those properties is listed, you're automatically told that the property is on the market. Fantastic. Right. So you can be first in there first week. But hey, it gets even better. How about you go to. And remember, we're trying to hack this for you, to show you how to use this, which is a real estate agent and mortgage broking website. We're trying to show you how to use this tool to be a savvy investor with analysis. So if you go to this finance tab, which is typically for people like me with mortgages, mortgage broking businesses, and you go down here to finance, you might go down here and have a look at those that have got the high equity, which is people who've owned the property for a long period of time. So out of the 380 people who have actually got the typical property that you want, 18 of them have owned this property for over between six and eight years. Now you might have a look at these 18 properties and let's just say we go to this one, 3 Ernest street, sunshine, and you have a look at it and you go, yeah, they bought it in 2011. Typical kind of little property, 2011, you know, it was eight years ago in the last 10 years it's gone up by 8%. So I'd be expecting this property to be, you know, at least that kind of value above it now, blah, blah, blah. Now if I all of a sudden came down here and found that it's a house for rent, all of a sudden I know that this property. Hey John, it's like I planned this, right? This property is actually a rental property. So this person's own this property for a long period of time. They've renting the property out at 350 a week. Now the best possible scenario that you can see here is, you know, 27th of June 2019 listed for rent. So it's vacant at the moment. So now all of a sudden you have a person who's owned the property for a long period of time. The typical property you want to buy and it's actually available to rent and you could go back to them and say, well you know, at the moment I'm actually looking to buy in this area and you could potentially, you know, try to get information from the, the agent so we know who the agent is that around who the owner is so that you can contact them and say I'm interested in buying in the area. Is that something that we could discuss? So there you have it, Raoul. That is like our top secret information that we share with very few people other than the hundreds that are going to end up watching this. But that's a really great way for doing this. So I'm hoping that that helps. And what I've just described to you in a few seconds has allowed people in our group to go and door drops for properties that they want to buy and occupiers in those properties and actually get people go. You wouldn't believe this. I was going to list it next week. So there's some extraordinary opportunities there. And buying below the market and buying properties off the market, this is something that, you know, don't undervalue that. Thank you so much. Love the idea. Yay.

He just said he's wondering if providing all of that information to the agent gives them leverage over us. Brow I. The way I look at that is the agent's really never got leverage over, over me. I'm, I'm, I know exactly the criteria that that property needs to meet for me to purchase it. And it's an investment criteria which I'm the only person who's really the expert in that field. They might be an expert even in that area or may not be, but there's no trickery. That's going to make me buy that property. So I'm never worried about leverage. If you're talking about do you show your hand too early when it comes to the negotiation? I don't think so. I think each negotiation you're doing with the vendor and the way I'm trying to present to the agent is similar to what a relationship that they would have with a buyer's agent. So Instead of a B2C, a business to consumer relationship, it's really like a B2B relationship. So we're both property professionals. We don't need to do a dance around all of the, you know, figures or play any games. This is the range I'm looking in and this is the price that'll work for me. And if you can deliver me a property that sits in that sweet spot spot, I'll make a decision on it pretty quickly. And I certainly won't go telling him about all of the ways I'm going to construct that offer and the clever ways that I'm going to present that offer to the vendor. But the initial conversation is this is what I'm looking for in this range. Give me a property and I'll make a decision on it within, you know, 48 hours, typically.

Absolutely. John. We just have a quick follow up question, I think from Daniel saying it doesn't look like there's a lot of information. All the information that we used to have on a suburb is no longer there on realestate.com I can definitely see the heat maps have gone, but you'll notice that they have actually broken. When you get into the neighborhoods, they've broken them down by introduction, location, price, et cetera. What's kind of cool here is one of the things that they have done in homes is they're actually telling you what the typical type of property looks like as well. So, you know, sometimes we talk to people about what the typical type of property is. They're giving you a little bit of a heads up there, Eaglemont. Turns out we've got to spare 2 million. You could spend it there. So there you go.

Nice suburb, isn't it?

Cool.

I've got a couple of written questions here, Jane, if you'd like me to run into those.

Let's do that.

Yep. So this one, I've got a bunch here actually from Susie. So what I'll do is I'll just pick them off one at a time and we might loop back and come back around to the other ones and make sure we've got the other guys too. But the first one relates to modulate in the Ultimate Guide to Renovation, and it's about using whites for the kitchen. So we talk a lot about using neutral colors. And she says, however, in the. In the live renovation, you also show a bench top being painted in a dark gray color to a matte stone looking. It's a granite look that's quite dark. So I'd like to clarify exactly what James means when she says neutral or white in the kitchen.

Yeah. So, Susie, what I'm trying to say there is keep it clean and don't be offensive to anyone. So, for instance, in my first renovation, and probably, I'd have to say probably one of the biggest mistakes I made but didn't actually come to fruition and create a lot of problems down the track was I made a purple feature wall in my kitchen. Now, you either love it or you hate it. Now, you know, if you're going to have. If the house is going to have every single thing that you want as a renter and there's a purple feature for, well, you might get over it. But, you know, the fact of the matter is it took us like four coats of white to paint over that again and make it better in the future. And so when you're actually renovating your property, I always say keep the color schemes neutral. So, you know, you might have the, you know, the light green looking splashback, not the splashbacks that you see these days that actually have a picture of someone's beachside holiday, you know, behind the glass. So try not to make it specific. So, yes, you know, when we talk about white and white and light, the wall colors are white, not, you know, ghost white, but, you know, a little off white. But you're not creating a lot of color. Let them do that with their fixtures and fittings that they want to put on top, you know, the lamps or whatever in the area. So actually painting and creating either a stone bench top or creating a darker type bench top, I find them easier from a maintenance point of view to cover up the scratches that people are going to leave on the bench tops. White bench tops, I think create. You see too many scratches and hence you're going to have to replace it sooner. Now, John, correct me if I'm wrong, but I think Susie's in the process of trying to prepare a property to renovate, to sell that she's previously owned and was a rental. And it's in a bit disrepair. So in that mindset, you're not really thinking about, you know, how much maintenance you're going to have to pay in the future for the rent or the rental people. So you're trying to create a little bit of wow as well, but you definitely don't want to be creating so much well that it becomes, becomes something that the people aren't going to like and therefore walk out. Because a lot of people aren't clever enough to see that, you know, a bench top can be repainted or the purple wall could go quite easily if you're selling. So if you're selling neutral colors.

Yeah, she's got a, actually a follow up point there and she says on the advice, the agent in the area told me that light gray tones are in vogue in that area.

Good. And vogue is nice. If you're creating a property to sell right now and every single person loves gray, go for it. If you're creating a property you're renovating for the long term, vogue could be gray this year, it could be blue next week, it could be purple the week after or the month or year after you're not renovating for the current trends. So for instance, I use Antique White USA or Chalk White USA in most of the properties that I have clean color. You know, I might use half strength in, in dark hallways, I might use like hog's breath or hog's breath hogs as a little accent down, you know, on the skirting boards. But everything's neutral. Now whenever I go and visit one of my properties under the skirting board in the kitchen, here's a little tip for you. Very exciting. You can get rid of that, that kick board there. And I usually have a little tiny of Chalk White USA and a brush. So if I go and do a property inspection and there's a couple of marks somewhere, I can do a quick little brush job. I don't have to be carrying around paint and everything on planes and stuff with me. So knowing the one color that you always have and knowing that you can pick, you know, fix it up quickly if you need to. Always handy as well. But look, the agent's telling you it's in vogue. I would, I would be not trying to go down what the agent's recommending.

Yeah, I wouldn't. Horses for courses. I think the agent can give you good supporting information. But the yardstick we always use is what's, what's appropriate for the area. So what, what are you renovating up to? So if you know what the, the houses in that area, what standard they are at the price you're trying to get, then that's, that's Your benchmark. And that'll also inform the style choices. Because the style choices and what's appealing to a demographic or a target market in the northern suburbs of Melbourne is very different. Or let's say the inner northern suburbs. Melbourne is very different to the outer northern suburbs or the inner suburbs of the eastern suburbs. So they're different demographics, different style in those houses. And so that's why you're always using those comparable sales at the renovated level as your benchmark and the neutral. And I guess the caveat to that is within that demographic, you're trying to appeal to the broadest possible audience. And neutral is always a very, very safe way to do that. The next question, Jane is around.

I'm just going to be potentially rude here as well. Okay. All right. So here's one of the things I think that Susie's talking about. A property in Mildura.

Yep.

Right. Yeah. Is it Mildura?

I haven't seen that. I'm just. I'm just saying yes, because you told me. Let's. Let me have a look, though.

So I've just gone in here to RP data, and I'm looking at the number of properties sold in Mildura in the last 12 months. So there's around 600, let's say 650 properties that have been sold. Now, if you have a look at the number of real estate agents in Mildura, you might find that probably even do it here. You might find that there's actually like, I don't know, six, eight kind of agencies in the area, and each one of those is going to have, you know, maybe four or five agents. So you might be having, say, 20 agents. So a lot of these. What I'm trying to say is there's a lot of these agents and agencies that you're talking to. Often what you find is that they might actually be selling, I don't know, two to three properties a month or even a quarter. Like, they're not selling hundreds of properties. So often when you talk to agents, they're talking about Gray is in vogue. Now, they could be taking it from the latest Home Beautiful magazine, or they could be taking it from the fact that they spoke to an interior decorator who told them that in Sydney or Melbourne when they were there for lunch the week before. Or they could be talking about it from their own experience, which could be.

That's what I've got in my house.

Yeah, exactly.

I've had an agent say that to me so many times. Yeah, I've done it in my house.

Exactly. So this does not mean it's in vogue just because they've done it. So I think the, I think the thing is that with the agents and their advice and opinions, ask them what houses have you sold recently with that invoke gray color scheme because I'd love to have a look what they did and then go on to RP data and have a look, get onto RP data and have a look at recently sold properties. You know, it will tell you exactly what they're looking like inside. So. And as you just saw, the RP data, if you're part of our community, we can offer it to you for 150amonth and you don't need to take an annual subscription. You can turn it on and off per month. So we know that you don't always need it. So there you go.

Yeah, and there's a, there's a couple of follow up questions in it which I think are going to lead us along a similar line with the what are you renovating up to? And I'll read them out in a second, but they're around the tiles and floorboards and that kind of thing. I guess the place and this, you might have done this already, Susie, but for, I guess for everyone's benefit is the place where you're starting the framework in which you think about this, isn't it? At the product level, the framework where you start from is what are you renovating up to and what's the property worth now today and what's the difference between those two prices? So if I was to spend, there's a difference of, let's say, you know, $40,000 between what your property could sell for as is and what properties at the Sevens and the Eights in the street could sell for realistically. So you're not trying to do the eights and the nines and the tens, which are the outliers, but sevens and the eights in the streets which are renovated, what are they selling for compared to the current market value of your property? So not what you paid for it, the current market value, what you could sell it for with a reasonable degree of certainty right now. And then you've got to go, okay, well the properties at the Sevens and the eights, what do they look like? What are their features? Do they have stone tops? Do they have tiles in the kitchen? Do they have floorboards throughout? So that kind of addresses a lot of the questions we're about to go through in a sec. And then you need to make the call on how much would it cost you to renovate up to that level to those properties that you've got proof have sold for. And that might leave you in a scenario where you say, okay, if I was to try and renovate to that level, it's going to cost me, let's say, $60,000 and there's only $80,000 difference. Or it's going to cost me 40, it's going to cost me $20,000, only $30,000 difference, which is probably a more likely scenario. Or you might say that, no, it would cost me $20,000. And I can clearly see that there's 40,000 different dollars difference that I could get every day of the week. And in that case, then you've got a set renovation budget of $20,000. And your decisions are then made within that context. Okay, because I have to. I've got $20,000. Where do I allocate that budget to get me up to that renovated level? So that'll inform a lot of the choices around, you know, stone and laminate or tiles and floorboards. All of those choices will drop out of. Starting from that framework.

Yeah, it's a good point, John. And just the other thing, you know, once again, I'm looking at RP data. I'm not sure if you have access or not, but this suburb report here, what John's talking about here is the suburb report that would come up, say, from Mildura. And what it's going to do is give you an idea of, you know, what's happening in Mildura, how many dwellings there are, et cetera, how many new listings that there have been in the last 12 months, blah, blah. And of those, 160 are currently listed. So it's quite a dynamic little market. Now, if I look at this information here, this is in particular what I want you to have a look at. This is the lower quartile. So when John's talking about a range from one to 10, we're talking about, you know, between two and a half here, seven and a half here, and 10 up here. So, you know, if the property here is in the bottom 25 percentile, so your property's down here at 225. Ask yourself, if I can spend 10% of that 20 grand and make $2 for every $40 grand, is that too? Is that 40 on top of this? Two hundred and sixty five going to believe below this number or this number? And quite clearly it is. So if your property is based down here, then we would have a look at this and we'd say, okay, so there's capacity there to add some value. If your property is more like this. So we've got 30,000, we need to add 60 on top of that. So we add 60 on top of that, we're at 350. So this is getting closer to the fact that you may not quite be making $2 back for every dollar, but this is where I would be going to have a look at whether there's the capacity in that suburb to do the renovation. So that's this suburb report. Once again, you know, it's RP data and that will give you that information.

Yep. Great.

You're reading me a question or I'm just staring at your picture?

No, I just thought we might just. A couple minutes silence just to see how that goes.

Yeah, tell us what you think. You know.

The third option is we have a concrete slab with no floorboards. Currently flooring is ruined and old loose planks and outdated tiles in the kitchen and laundry. Should we choose new loose planks or tiling? The budget is similar for both. So I would link that straight back just to that. Typical. What are you renovating up to? So what are those properties that are selling at the renovated level selling for? And with the. With the caveat that you need to work out that budget and sometimes it can be a little chicken in the egg. You have to start that process and run through some of those costings in the quick quote calculator to work that out. But that's the kind of decisions I'm making before I'm even deciding to do that renovation. Module8 you mentioned. And we might go to another question after this one. There's two more which we can loop back to. But in module 8 you mentioned to get glass splashback tiles rather than glass splashback as it's cheaper. However, is there a reason you suggest glass tiles over ceramic or porcelain tiles, white or aluminium? I think that links again back to that, you know, what are you renovating up to?

So, Susie, it's around that standard. So as John said, you know, if I have a look at Mildura and if you go into Mildura, you're looking at houses and you're looking at recent sale history. Here's some recent properties that have sold in this area. And you know, I would. Okay, this is a really cheap one. So let's just go to one that's, you know, looks kind of. So they're all kind of brickish kind of houses. Some of them sold for not a lot of money. But you know, if we go to a typical type of house and have a look at whatever is typical in the area. This will allow you to go through the pictures of this property and just say, well, what is typical? Do they want to have those type of tiles? Do they, you know, are they looking for tiles or looking for four floorboards? What, what is getting a price premium in that property? Is there tiles in the bathroom, sorry, in the bedrooms or like you find in Queensland, or is it carpet? So this gives you a bit of a feeling of what is happening. Now the reason that I talk about glass tiles is that often what you find in a property is that people are upgrading the kitchen to, you know, obviously look nice and be modern and once again, color schemes that aren't going to offend anyone. Now what is a. Has been, I would have to say for the last 15 years a standard, a design standard has been the glass splashback. It looks nice, it's easy to clean. You know, it is just a good look. Now what I have found when I was doing glass, custom glass splashback purchases is that they're actually quite expensive. You know, it's, it's an expensive thing to buy if you're buying it custom. And hence the. What I talk about in, in Ultimate Guide to renovation module 8 is how you can save some money. So little glass, you know, Australian standard heat resistant glass tiles, you can actually get the entire kitchen usually consistently tiled for the same price as the custom splashback. Now what you might have seen in one of the case studies that we did where we did that renovation on the property, where you saw the video of the painting of the bench top, there's a glass splashback in that property. Now it was not a custom splashback and you'll see that there's actually a line where we had to actually put two of the splash packs together. It was cheaper to buy that way. Bunnings and Ikea are now selling a standard size glass splashback. If it fits what you're after. Fantastic.

And for that market, that was totally appropriate for that market because you look, this was like a sub $300,000 property. So that, that was an. Most of those properties would have had tile splashbacks. So having a line which potentially is a borrower. Objection. In that market was a step up from tiles.

Yeah, yeah. So it's like, you know, putting a Caesar stone kitchen into Mildura. You're going to completely over capitalize. It's not necessary. You might get the wow factor but you're not going to get your money back for it. So we're just trying to Give you some design features that you can get the wow effect without the cost. And it might just be that you can just get a standard piece of glass from Bunnings, splashback from Bunnings or Ikea or one of the other sources that is cheap and cheaper but a custom made splash pack is expensive.

Yep. Great. Oh good. All right, let me grab this one. I'll just make sure I can see who it's from first. It's from Sharon. Oh, is this the one you might have answered already, Jane, about the insurances? No. No. Okay. So hi Jane, this is from Sharon. Thank you dearly for your training emails. Appreciate everything you do. You talk about insurances. What are the main ones to invest in when renovating or building? So what insurances does Sharon need when renovating or building? Really exciting to be working with you. Thank you for all the support and encouragement and helping me move forward. Thank you Sharon.

Yeah Sharon, a couple of insurances that you need. Obviously there's things like builders warranty insurance for renovating. Now your builder, if you're working with a builder, will usually get this. Every state has a different requirement as to the number of value of the renovations, if it is needed or not. If you're managing the whole renovation yourself and having five or six trades and it gets over, for instance, $10,000 and $10,000 is the number that you need for Queensland, then you're going to have to take that builder's warranty insurance out and that kind of, you know, protects you against, protects the homeowner or the property owner against issues that could arise in the future. And it is kind of difficult with that type of insurance because for every other state it's kind of like, you know, if you need to go back within say the six years of the builder's warranty insurance and say to the builder, look, you need to come back and redo the shower recess because the waterproofing isn't working, which has happened to a property of mine. I could use the builder's warranty insurance for that. And they came back and fixed it. Now the only reason they won't fix it is due to them dying, death or destitution in the sense that they've lost their business. So in that case it goes to the insurance company and something works out. It all works out in different ways in different states. Queensland, for instance, the insurance company actually goes after the builder as well. So be aware that there is different builders warranty insurance requirements for renovating. The other thing that you really should be mindful of as well and check with your insurer is that if your property is vacant during your renovation which typically they are a lot of the insurers will not actually cover the contents or the building insurance. So some. Some cover just the building and won't do the content. So for instance if you've got all your white goods in the property and they're stolen by some tradie's part time person you picked up for the day to do some labouring out the back over the weekend, you're not covered. So be very mindful if the property is actually vacant for a period of time you need to check with your insurer to make sure that you're covered as well. John, do you have some thoughts on you recently done some construction on developments? Have you got any thoughts on actually building as opposed to renovating? Extra insurances?

Honestly I cannot remember we got all.

The necessary insurance by your building, all that kind of stuff.

Yeah you definitely need all that and I we've got a list I can't remember the what I do each time as I start as I go back and refer to our list. Yeah so I don't have to carry it around in my head. But yeah I. Everything you said I would have. Yeah sorry. I was looking at the next question around broad lum meter of carpet but I haven't got much to add to the insurance thing. Jay, I would go back and add.

A broad loom meter of carpet so I'll let you take that one. Thanks Sharon.

Susie, got the follow up question was carpet quotes have been quite expensive. You mentioned module 8 the ultimate guide to renovation which is the case study about Fowl's auction house and the carpet was $25 per broad loom metre and $20 per broadloom metre to lay. I was quoted in a different way by a local carpet person at a hundred thousand dollars per square meter. Sorry $130 per square actually it says laying per lineal meter. All right. Yeah, yeah so you've just got to work out the difference. So the, the they'll sometimes you'll get a local guy does it per square meter as well because most people understand square meters so it's just you know, width by height let's say and then you've got a square meter. Broad loom meter is 3.66. I actually just looked it up before to make sure that I remember it. So you obviously can do that conversion between the two just so you're looking at apples. With apples the linear meter is going to depend on the width width of the roll and I suspect that's going to be 3.6 or 4.2. But again so that's just really just going to be a mathematics equation of just comparing those different ones. But it is annoying that they don't do it all in the one. Yeah. Use the one equation. It'd be much easier if they did. But yeah I think that 25 abroad the meter is a good as a good price if you can get it for in and around there with $20 delay that's really good. I think we were up on the developments closer to 45 and about $30 delay from memory somewhere in around there.

So just confirming that their broadloom is the same as linear but not the same as square meter.

Yeah, well 3.3.66 would suggest that the rolls 3.6 long. So when he's saying linear that it is broad loom. Yep.

So wide. Wide.

Yes, wide.

Okay, good. Now we have a question here. Not sure who from on the Facebook page I have my on a property in Newcomb, Geelong. Is it worth renovating until I can afford to develop it or is that a waste of time? Sorry, maybe how long is a piece of stream? Well I pull out my trusty Apidata report and let's check it out. So Newcomb in Geelong, great area comes up on our list every now and then.

John.

Okay, so hopefully we've got the typical type of property. How many are selling there? So we're selling around about 75 a year. All right, so this is what I would be doing here and just checking out is what is your property currently worth? So we could come up with a just type in for me. Do you actually have access to RP data? And if, if you don't and you're happy to share the address, let me know and I'll send you a do just a valuation and show you where this might fit for you specifically to help with your answer. But if you do and let's just say that your valuation or comes up with the auto valuation on RP data at say $400,000 and your agent says yeah, we were going get $400,000 then I would be looking at this and saying, you know, if I could spend $40,000 and make $2 back for everyone for 80, what does my property need to look like? Now you can see it's going to have to be over the median and you can see here that it's going to have to be somewhere around a property that looks at if we're Going to scale it from 1 to 1070 to 80% of the values of what we're seeing in the area. So it's at a high end. It's like an 8 out of 1010 on the street. So this is kind of interesting. If your property is now worth somewhere out 450 and we're saying we need to add $100,000 to the 450 to see if it's worth renovating, that doesn't really work out for me because it has to get up to 550. So what I would do also is I would jump over into Newcomb as well and I would then look like we did before at the sales history report or the sales history of current properties that are similar to yours. It might be a two bedroom property, might be a three bedroom property. But that is how I would work out as a basic gut feel. What I would do. The next thing that I would do is I would go to SQM research and verify that there is actually developments going on. So if you had, if I was doing a deal review for you and you're saying hey, I'm about to buy this property and I'm buying it for development opportunities in the future and I'm really excited about this and it's you know, the typical size property and let's just see what the typical size property looks like. Typical size property between 550 and 750 square meters. This is going to be really fantastic. You know I'm all over it and I look at this and I don't see any dots down here. Which means the 200 square meter block blocks, the 300 square meter blocks and the 400 square meter blocks do not exist. I would be thinking there is no chance that this guy's going to make any money out of doing a development because there's no demand at this stage for it. Now if you just look hover over these, what you often find is the addresses of the property. So you've got 154 Ormond Street. So this is showing me that these are actually 2209. These are actually properties that 2126 that have been subdivided. Okay guys, this is gold. I'm going to tell you how you can do a basic, not even back of the envelope but really high level. Can I make money out of this? Let's say you buy the typical property here at 600 square meters. Now it's telling me that the typical property here at 600 square meters is around about $788 per square meter. Can you see that? Yeah. All right, so this is like kind of the price of what this property is. So if I kind of, you know, looked at my calculator and I was looking down here and this is like $500 per square meter. It's 650 square meters and it's $500. This is what this property is selling for. These properties up here, they're 898 per square meter and 600 square meters, they're selling about 500. So we're seeing, you know, there's a range in Here between the 600 and 700 square meter properties that are selling, you know, between that 350, $500,000 property. Now as you get down here and these properties and the typical kind of size you might say is in here around 300 square meters, that's 1260-1474. So we're looking now at 300 square meters at 1400, let's say square meter. So this is around 420. So you can see the smaller the block, the value of per square meter goes up. So this gives me some confidence that if you were going to subdivide and you've got a property that's kind of like this size now and you were looking at, you know, putting, buying a property that and subdividing it and it's going to be 300. So you're buying at 600 square meters, you're buying at that $500,000 price point and you're then making two 300 square meter blocks and you're selling it 420 each. Boom, boom. Money to be made.

Yeah.

Does that make sense? There you go. What I want. So that's just trying to give you some ideas about how you can use, and this is a free tool, how you can use some of these free tools to actually get what you the information you want. So when I hear people going, oh, I'm holding out for the subdivision, I kind of get a little bit worried. But I would just quickly, whenever I'm doing deal reviews, I'm quickly jumping in and going, can I validate their first assumption? So first of all, if your property just jumping back, if your property's worth whatever I said it was worth, something small, if your property was worth that smaller amount that we Talked about and 400 and you could do the renovation, then there's opportunity. But if it was going to be a higher price point, there may not be the opportunity there. So check that out.

I think it's always the subdivision thing has Great appeal to a lot of people and they often buy properties. So it can become almost a red herring in the suburb selection search or the property due diligence side as well. Because the. We're looking for capital growth suburbs and the best pockets within those suburbs. And we're looking at the demographic and how they get the work and then this thing gets thrown into the mix. Well, oh, but this property might have. It's big enough to have subdivision potential, but it's not maybe in the best area, you know what I mean? I guess the currency of that subdivision is only relevant if it meets the due diligence for subdivision otherwise really has no currency whatsoever. And all you've really done is sallied the search for a really good, you know, area and really good property. So you gotta be. You gotta be careful with those things that I guess creep into the mix and poison the data a little bit, for want of a better word. Now, I've got one last one from Susie about her renovation in Mildura. So modulate in the Ultimate Guide to Renovation states all white walls speaks about white gloss enamel around the window frames. We have real timber with an oak type stain around the windows. So that's the architraves, which I think has character. But will this perhaps interfere with the timber, white timber blinds, or do you think it will modernize the place by painting all the architraves around the doors and the windows?

You know, I wonder if that property I just looked at Mildura, where that was all had the wooden look, is that property?

Could be. I can tell you the practical thought around that from the having. Having painted. Having painted, yeah, I've, I've done that before where we've. Where you. We've gone into a place and it wasn't typical for the area. It was very dated in that it was timber. Timber stain on the architraves and the skirts. And it's a horrible job to sand all of those because they're not. You've got to get them back. You need to key. You need to get some key because often they've got a film over the top. And so all of those have to be sanded back before you can then prime. And then you've got to do about four coats of paint and. And it's not. You certainly wouldn't take it on unless you were sure it was going to add value to the property. But I guess that applies to everything we've talked about in relation to the feedback around those decisions around what to do and what not to do. But yeah, there's a lot of work that goes into it when you're in the selling property game that I was in. And again with the caveat that it needs to be viable, as in $2 for every dollar you spend. Shiny cells. So if you can use high gloss and I always say go with enamel over acrylic, even though the painter will try and convince you to use acrylic so he can wash his brushes out with the tap at the end of the day and, and go home quicker. But acrylic is always more shiny. Enamel is. Sorry, enamel is always more shiny than acrylic. Even though acrylics made some, you know, it's been a whole lot better than it used to be. So shiny cells, we love shiny. But again, a lot of work in what you just described, then make sure it's worth it. Otherwise you're going to be doing a whole bunch of work and you know, going home with painting your hair every day and you want to know there's a good reason for that at the other end.

Yeah, exactly. I just reinforce what John has said. I having done quite a bit of painting and never wanting to do it again, if you do get it wrong, there's a lot of sanding back to get it right again. It is a decision that you don't go back on once you have done this. So if the, and we've just looked at a property in Mildura that did have that wood look, if that is the look that people are after, you know, please go with what we, you know, every caveat Susie, on every module that we talk about is talking about renovating to your target market. So it's about being very conscious and aware of what they want. Now we give you recommendations such as use white color scheme or neutral color scheme, use carpet in the bedrooms and tiles or polished floorboards in the rest of the house. That is an overview of the typical type of properties in Queensland. Having tiles in the bedroom is not uncommon. You know, having for instance wooden look properties in some of these towns, like the wooden features are actually quite sought after. So I don't want you to put anything above the fact of what the typical person is actually after in the area. And you find that out by looking at what's the sales have been now. There's been 600 sales for the last 12 months in Mildura. I would be going through those and looking at, you know, I think yours is a three bedroom house look, four bedroom house. Looking at what the other four bedroom houses have and look like and Just seeing there because I mean as you know, I still think there's some doubts around Ren whether a full renovation was really needed when we spoke months ago because. Or was it just the agent talking about it? Because I think there is the potential there with the way that the tenants left the property that you do need to do some work. I just question whether it has to be the full gambit. So once again please defer back to what is typical. Maybe that would look is, you know, what people are after. I know some places in the Blue Mountains, you know, it's highly sought after. I wouldn't be painting over it but from a maintenance point of view it is always something that is easier with the enamel kind of high use areas like skirting boards etc and window frames. So just check it out but don't do a whole lot of extra work. It's not gonna. I doubt it's gonna add a whole lot of value to the property and the sale price. So that would be my thoughts on it. I can see here Daniel's just come back around that property in Geelong and It was worth 450. So you know, just keeping that in mind if it was worth 450, gee, you know, if you could get with it 15.

He's also declared his love for you, Jane. Did you see that?

I love you, Jane.

We love you too, Daniel.

It's funny how many people I've spoken to this week who say I've been stalking you for years, Jan. I think that's kind of a bit weird, but thanks for that. The at 450. Like if you could find properties that were worth, let me think. Oh a 480. So we're not looking at the top. We're not looking at the top here. We're looking at this seven or eight kind of thing. If you could find properties that were worth 480 and you only you found this property. Or you could negotiate a property down to 450 and do a $15,000 renovation adding $30,000 worth of value and get it up to 480. That's okay. But typically we find that most people have to spend about 10% of the value of the property to get it up to the, you know, that kind of seven or eight quartile up here. So you know, if you found the perfect property or you were master negotiator and you got it down in price and you could renovate and get it up in value with a very little spent, it may be still worth it. But just looking at the big numbers, not the individual property. I know Daniel's one of our Diamond Mortgage clients, so I imagine I'll be doing a deal review on this at some stage, Daniel. But when I look at the actual property that you send me, what I'll be doing is I'll be having a look to see if there is that capacity to do that quite briefly, but showing you how to do that so that you can actually test it out because there might be the capacity to do a deal of a century and pick up a property that's already renovated and worth 480 that is, is being bought for 450. So hopefully I can, yeah, I can clarify that. So there you go.

Got a couple more. Jade, I know we've only got a few minutes ago, but Paul's got a question. How long do you go with an interest only loan until you switch to principal and interest? I mean you've got to pay it back sometime, right?

Yeah, well, the banks want you to pay it back. Right. In context of how most investors work, most investors would like to pay down their non deductible debt, which is their home loan first and that means that they want to concentrate every spare dollar that they have in paying down the home loan or putting it in an offset against their home loan, which is a little bit of a different strategy but still with a very similar result. Now most investors, they are looking at making sure that the investment property is going up in value, adding value or however you are doing that, buying below the market, going up in value over time and they don't necessarily have to put in dollars that could be allocated to non deductible debt into that property. Hence having an extended interest only period is fantastic. Now there's not a lot of lenders doing 10 years interest only at the moment. We've done a couple, we've got a couple of lenders that we put some of our investor clients into that are still doing interest only for 10 years because they have a 10 year plan to sell the property after that period of time and there's no point in paying it down and restricting your access to the money in that period of time. Technically, yes, you should be paying off your interest only loan at some stage. Most lenders have a five year interest only period now. It used to be in the good old days, pre, apra, ASIC and all the changes that you could actually just send in an email saying, hey, can you roll my five year interest only loan over to another five years interest only. Some lenders up until recently even Lenders like WESTPAC were doing that for unoccupied, so for investment loans. But now what we're under responsible lending more and more, what the lender lenders are requiring us to do is actually do a whole new assessment. Now unfortunately, you probably got your loan like three, five, eight years ago and the way that they were servicing debt back then was the actual interest rate with a little bit added on top and then they've changed it to adding, going to a 7.25% change. So assessment rate. So even though you might be paying 4% interest, they're actually assessing the rate as if it was 7.25. And even though you're paying interest only on all your other loans, they're assessing all your other loans at principal and interest 7.25. So we found people who might be paying interest of maybe $40,000 a year when put those into the servicing calculators. Now with all the new servicing changes, it's more like $90,000 a year that they assess that you're paying because they think at some stage you're going to have to go down to principal and interest. So a long way, a long story short, but APRA came out two weeks ago and said that they think that lending is now too restrictive and they're recommending that There is a 2.5% cap put on the actual rate you're paying. So if you're paying 4%, they're going to assess your loan at 6.5%. So this is better. Now, Westpac came out as the first lender last Wednesday and said, yep, we are going to now assess the at 6.5% for all owner occupied P and I loans. And then by the weekend APRA had racked them over the knuckles saying that was just a recommendation, we didn't actually say you could do it. So they've reversed that on Monday. Yesterday, Wednesday bank west came out and said, bugger them, we're going to do it anyhow. So we are going to see over the, I think there's a six weeks consultation period. So we're about three weeks into that now. We're going to see in the next three weeks, I believe more of the lenders going that way. WESTPAC went out as a first starter and got caned, but it got good PR for three days, but unfortunately it was only for a small part of their market. So answering your question, Paul, interest only is usually five years. Yes, the bank want you to pay it back. The reality is most investors like to refinance after five years. And get another interest only period. Potentially with the new lender no negotiating a new rate so that they can concentrate on paying their non deductible debt down. And that's how it works.

Very good. Right. So lucky last is Cheryl and Cheryl's got a question about a property in Darwin. So she said I'm one of those who have to sell for 120 less than I paid for. Needs a new roof. $30,000. 22 bathroom Renault and there's paint inside I can do when I get home in two weeks somebody is offering 375 for it and we'll spend $80,000 on it. Should I sell it to them or as in. Or is in or is there any value in me doing it? I don't think Darwin. Darwin property I assume will give me $2 for every $1 I spend. The lady wants to keep it for a principal place of residence. Have you got any solutions for this situation? I can't work out the figures there. Let's have a look there. I think that's another property Jane. So she says it gets worse. I have a unit in Palmerston I bought for 400,000 six years ago and we'd be lucky to get 240 for it. Now it's rented to DHA at 370 a week.

Okay so Darwin we're looking at Darwin.

So we haven't got the top figure there but she does say it's. There's an offer on the table for 375 and she says that it's 120 less than she paid for it. So assume it's 594.95 that she paid for it.

So if it is it has to be a house.

Yeah I think so. It needs a new roof and a.

Roof that she's fixing. So it has to be a house. So she's.

It's already less than. Than she paid for it though it seems that there wouldn't be too much case for a renovation would there?

Like no. I. The only reason that I would renovate. So she's if.

Yeah if you're getting. Yeah. Yeah.

Okay so if they're buying it. Okay so once again so you said 120 plus 375. So 495 is what she purchased it for.

Yeah.

And now she's going to add an extra $80,000 on top of that to renovate.

Well she said somebody's. Somebody's offering to do that and saying I assume that what's happened is someone's put in an offer and said, I'll give you 375because I've got to spend $80,000 in the renovation. That's the way I read that.

Okay.

I don't think there's some kind of special deal going on there where a buyer is going to come in and do that.

So I think so she's. Does she need to spend 80 grand on it though?

Yeah. And if it's 120 less than she paid for it already, what, what kind of scenario would, would prompt you to do a renovation in the first place? I guess where my mind went to, if, if it was derelict and a small renovation would, would lessen the losses that you're going to take on it, then that would be an argument for that. But I guess if it's, if you're starting from the point of view that you're cutting your losses, it's. It's hard to see a scenario where you'd sink more money in.

Yeah, exactly. It's interesting here that this is not pulling up the houses. But look, I, I would doubt if it needs a new roof and it becomes a buyer objection, then that would concern me that, you know, you won't. You need to get the roof on to make it sell. If you, the renovations themselves on the bathrooms, I doubt you're going to get $2 back for every job dollar that you spend. Because the reality is that if 375 is what's being offered because they saying, look, I need to spend 80 grand on it, you potentially spend 80 grand on it as well. Or you could spend the 30 grand on it and make it a property that is not. Hasn't got a significant buyer objection to it.

Yeah, yeah.

My thoughts would be you've already put into this property quite a significant amount of money. I wouldn't be putting any additional funds if you have to sell. I mean, obviously if you can hold the property and there's some, you know, life at the end of the tunnel, but if you have to sell, I, I would not be looking at spending extra money on it. And I think the renovations on the bathrooms, you have to go through and have a look what typical properties in that area are trying to sell. For now, I've just been looking on Apitar and Darwin. Everything in Darwin as a suburb is coming up as a unit. So I'm assuming that you. The suburb that the house is in is actually another name. But I would be going into RP data, I'd be looking at that suburb and I'd be looking at the properties that have sold in that suburb and look at the standard that they are and what they're selling for. Now we do know Darwin has had a significant, significant price reduction. So the fact that you know, you're not alone, lots of people who bought in Darwin and on the back of all the gas lines and everything have had those issues. But you know, if we were Talking to you 10 years ago, you would have been, you know, the genius of the Australian property market because you bought in Darwin whilst all that work was going on and the market was going through the roof. So you know that timing is important but once again you know, putting in an entire investment strategy around maybe one significant infrastructure change or account, government announcement etc and not having that full diversity of a multi industry can, can be an issue. But I guess the, the good thing about this is that you know that you're asking the right questions and I wouldn't be wasting a significant amount of money on doing the full renovation and I'd only be maybe considering the renovation or the on the roof if it's a buyer objection now or if it's.

Just a serious like if it, if it's affecting the habitability of the property. So the thing that roof, it's a total no return item. It doesn't add any value. Having a roof on your house, that's an expectation that every incomer buyer has that the house will have a roof and it functions and, and rain doesn't get in. So it adds no perceived value whatsoever to the property. It's purely an expense. And so even if it's functional and it just doesn't look nice or something like that, that's where you would be thinking along the lines of because whatever money you spend on doesn't make any money back at its own. Right. But if it gets it over the line as well as making it kind of habitable or sellable, then yeah, that's where you'd be going. Yep.

And just picking up what John just said about making it sellable, it might be that you're in the position at the moment and no one is buying anything and you have to sell then if you do have to sell, you know, hopefully that your loan is less than $375,000 and you know them by them offering you, you 80 grand off the property value that they're hoping to get the property for. So you know, if you bought for 120 more, you're selling for quite a significant amount less. If you could do the renovations yourself and you know, try to get the value back. It would be great. But for $80,000, you know, $30,000 on a roof, if you've only got kind of $10,000 left to make up that $80,000, you're not going to get two bathroom renovations and everything done in that. But if you do have to sell and let's just say your loan's $400,000, then be aware that you're going to have to put an extra $25,000 in on top of that 375 that you get to the bank to pay back your loan as well. So if you do have to sell, It sounds like you're remote as well. She says she's going back within two weeks or something to get up. I can do when I, I could paint inside when I get home in two weeks. So potentially you live in the area. I, I would still be very mindful. The fact of doing a renovation of that extent and the time that it takes and the fact that there may not be people in the market looking around at the market and yes, it could be a really good deal for them. It might actually be something that, you know, there may not be another person come along despite the fact you do a renovation in six months time. So, you know, I know the market up there is very, very slow. So you just have to find out and speak to the agent. You know, other if I did do this renovation, would I be able to, you know, what would that be? You know, sell for 440, for instance, and find out what they say. But yeah, it really concerns me that you could be spending a lot of money on this and maybe not getting the value back.

Yeah, Compounding. Compounding your problems. Yep.

Cool. Anything else, John?

No, that's it from our list that it's been mailed in. So if you've got a question, you can't make the call, call questions@your propertysuccess.com and that'll get them onto our list and we'll read them out in the call. You can watch them on the recording.

Absolutely. And you know, if you're watching this as a recording, please put a question down below and we'll get to it whenever we see it when we get notified, usually within 24 hours. I'm usually in the Facebook group every 24 hours to check up and see what value I can add. So without any more to say, I hope everyone enjoys the school holidays if you've got kids, and I hope everyone has a restful time if you're going to be heading overseas. Or off on holidays and have lots of fun. And as from us, we will talk to you on the last Thursday of the month in July at 12:30. But until then, here is to your property. Success. Bye.