Your Property Success Mentor Call March 23 - 03 - 2016

Hello, and a very big welcome to everyone. Now, just before we start, as you know here at your Property Success, we love to spread the word about low risk, no nonsense property investment to as many everyday Australians as possible. And so often these calls contain some really great content and questions that we'd love to be able to share with other people, which is why we record the calls and reserve the right to share the content, download the track. So by participating in this call, you are acknowledging this and if for some reason you'd prefer not to be included on a recording, we just ask that you contact our office within 24 hours and we'll edit you out. And as always, John and myself are not real estate agents or, gosh, what are accountants or financial planners.

The information, don't play them on tv.

The information available here in the calls is for your purposes only, not specific to your general situation. And I think that's pretty much a disclaimer out of the way, isn't it? Yeah, we're here to help. Well, welcome to everyone. This is our third mentor call for 2016 and a really big welcome to our new family members in the Ultimate Guide to Renovation who joined us over the last week. John, it's been pretty exciting, hasn't it?

Yeah, absolutely. And this is a bit out of the ordinary this week because of Easter, having it during the day like this, normally on the last Thursday of every month. But yeah, welcome aboard anyway and settle in.

Absolutely. So it's good to see so many of you have made it today as well. And look, you know, the new year has brought a lot of activity for us and the new group of people in the Ultimate Guide to Renovation. We jumped on a call with them on Tuesday night and had a really great little session with them, which was fabulous. Now, just to make sure that we have no technology problems, can you please put into your chat box that you can see hear us. So just say, yes, I can see your screen and yes, I can hear you. Wonderful. There's Mark, our go to guy, isn't he? Julie, We've got so many people here. Good. Okay, so these calls are the calls that do happen, usually 8pm the last Thursday of every month. So make sure that's in your diary. We will give you notice. A week out, a day out and an hour out. And it's exclusively for my mentoring students. The students are the ultimate guide to renovation. The your property Success mentor subscribers, and of course my investors Choice Mortgages diamond clients. So we are here to help and these calls are all about you and helping you out and if you can't make a call, you can always leave us a message on the message line 130076190 or you can email us a question questionsourpropertysuccess.com but before we get into the questions formally, once again I would like to introduce the person sitting next to is the co creator of the Ultimate Guide to Renovation and your Property Success Club. Hello to John.

Hello Jane. Hello everyone.

Well John, big month this month.

Yeah. Another enrollment's open for the Ultimate Guide to Renovation. Another fresh group of people in which is awesome.

It's so good to see some of the connections or stories that they're sharing. Also on the Renovator network, the private Facebook group and listening to what people's goals are and what they want to do. So it's pretty good.

And I feel like I've talked to. I don't know about you Jane, but I feel like I've talked to a lot of people this launch as well. So it's been good to hear what people are up to and that kind of thing.

Well just I guess what we have been up to, obviously our focus has been on that and as John said, we have been chatting to a lot of people but we mixed things up a little bit this time. We had some bit different webinars that we ran and we had the property.

Challenge which with Kaz from Everyday Property Investing.

Yeah, that was just really exciting. And we had so many people actually put properties up. I think I went to over 70 properties. I've commented on all of them on the Facebook pages. But we pulled up about 10 and went through them and had a look and one of those funny little properties. Actually the gentleman who won the Ultimate Guide to Renovation of posting one of those properties actually put up a funny property as well and it was sold after that webinar and it was such a rundown, ugly looking thing and apparently it got a $150,000 premium just because Beyonce had danced out front of it once. So it was funny. And then the actual iPad competition that we ran as well, we had over, well, goodness. I reviewed over 270 questions that people put in as the biggest challenge that they had, which really gave us a really interesting insight. I mean, what would you say would be the top five categories, John? That pulled out top of my head.

I'd probably say costs, cost of renovation. That's a big one for people.

And being ripped off by tradies.

Yeah, trades.

Yes, trades was a big one too.

Yeah, trades don't get A good rap.

Do they really?

No. And then we had said the over capitalization.

Yeah, yeah. How do you know if you make money?

And how do you find the right property and right location? And I think there's also. There was a few questions that were around design specific things which really. Which is actually where one of the winner came from Claudine and won her iPad and the course. But it was around the fact, you know, how clever do you have to be about the design? And it really takes us back to the question that most people think when renovating that you have to consider the design where in actual fact it starts with your property and your strategy, the suburb and the street and. And so, you know, I hope that everyone was able to capture those. Those webinars.

Yeah, that was the lady. She was, she was really interested in carrying out a renovation and she was keen on the whole Scandinavian style of renovation and all that.

Oh yeah, that was Anna, wasn't it? Yeah. So that was interesting. Yeah. So, and, and she.

But those questions are so helpful to other people, aren't they? Particularly when you're starting out and learning well.

And the feedback we got from those webinars was great and I'm so glad that you guys could. Well, I hope you guys got to be on them. Most of them were live and non recorded, so that was good. What else can I tell you? The things were a bit different. So as John said, we feel like we've spoken to so many people this month because we really have spoken to so many people this month through email and through webinars and through, you know, ring ringing up and speaking to people as well. So it's been great. And you know, once again welcome. A really, really big welcome to the Ultimate Guide to renovation students for 2016. So you are, you're more than welcome into our family and make sure that you get into that renovator network, private Facebook group and. And have a post your questions and once a month we'll be on the group call and we'll be answering them here to you personally as well. Now John, what have you been doing as well as all these things this month?

Well, the development's been ticking along there. I'll come back to those in a minute. But I guess one of the things that came to mind immediately was we've been working on changing some of the spreadsheets in the course to be online. So have an online basically become software instead of spreadsheets. So you'll see that in the next couple of weeks that we'll be Updating in particular the module 2. I know everyone is who just started the course is already in module two but there will be some updates that come to that over the next couple of weeks. We do swap out the location masterclass spreadsheets every month when the new data comes in. So that is updating. But probably what you're going to see is instead of having the spreadsheet for each of the capital cities is there will be now one link which will lead off to an online version which you can just select your capital city from the, from the dropdown. And the other interesting thing about those, the online version that we're working on, we're just kind of, we've got it working, got it functioning. We're just making it look pretty at the moment.

It's design. Yeah, that's right.

Is that you can select past months as well. So you can actually go back from when we started it which is, you know, whatever six months ago and, and have a look at what the numbers look like then. So that's an interesting comparison to make. And one of the things we did recently in that workshop, Jane was we did a dot map exercise from 10 years ago and adopt map exercise from today and, and compared the. The difference. So it's always an interesting comparison to make, isn't it?

Yeah, no, it's great. And I really well talking about the location, the hot spotting workshops we, we are planning to run Sydney, Melbourne and Brisbane, aren't we?

Yes, that's right. Because, because so many people emailed after the Melbourne one and said when are you coming to Brisbane? When are you coming to Sydney?

So no, so we're going to be doing those. No more than 12 people, very small.

Saved all your names for people that ask for that and we'll give you a yell in the next while.

Okay, so good. And the developments, you've been focused. You've almost finished both of your developments.

Yeah, I reckon one of them is probably about seven weeks and the other one's about eight weeks away. So we're into the good stuff. We're into the plasterboard on, on one and the, the new ones rapidly. They're at rough out with the electrical at the moment. So they'll be plasterboard in a couple of weeks and then you're into the kind of finishing stuff. So I've been collecting lights and doing all that kind of stuff which is the nice bits, you know when you, when you. We made all that. Yeah, we made all those decisions but it's nice. Made all those decisions, you know Months and months ago. But one of the interesting things is, and throughout the past calls as we've gone through this, the builder that's. It's been a tale of two builders. One of the builders has been less than ideal and very, very slow. And I reckon we're going to probably run, oh, at least six months over the job in the end, which is a lot of holding costs. The saving grace has been that the market is in the suburb that we're in has risen within that time. But you can never. We would certainly have never done our numbers on that. It just happens to have been the case.

So growth.

Yeah. So in a way, we've been a little bit lucky that way. And we can say now that we made the wrong decision with choosing that builder. And then on the second development, it's just been the opposite. These guys have just been fantastic. And I don't know if you remember, Jane, but way back, you know, probably even a year ago, I was discussing how. How much up front this is the, the first builder, how much up front they. They needed everything. Like I was saying, we're doing the placement of, you know, so Holder Heights.

Yeah, yeah, yeah.

Which is normally something that I would walk through and do with the, the plumber and that kind of thing. And it seemed like. And because it was the, the first time in development, I thought, oh, well, this is the level of detail that they do up front kind of thing. But some of it seemed like it was just too much, that it was actually more work to do it that way than it would be just to do it on the job. And what I found with the second guys is there's certainly no lack of planning. They do a lot, a lot of planning around everything. But for instance, yesterday I went in with the carpenter and we just marked, literally physically marked out the location of the tower rail holder, the location of the toilet roll holder, the, the. And all that kind of thing on the job. And we did it in about like both units in, I don't know, 20, 20 minutes, really. And the contrast of that was crazy because we'd had to go through all of these iterations and endless emails and all this, and I think about three meetings. And sometimes you just don't need to do that stuff. It's just there's easier. And I think people get probably stuck in ways of doing things that aren't necessarily the best, best use of your time, you know?

Absolutely, absolutely. Oh, I see a couple of people here who were at our Melbourne Master class who were saying, I want to Do Sydney too. Good. Yeah, well, it was pretty cool. Yeah.

So what about you?

No, that's it.

I've.

All I've done is. I think all I've been doing is Ultima garden renovation. I can't. I can't think of life before it, to be honest. It's just been.

And there may be life after it. Well, you've got Easter, so you can wind down a bit over.

I. I don't know. Is it long enough?

The.

I have to say I've written a lot of articles, I feel in the last little while and I've got a. A big one to get out to Money magazine for Tuesday.

But saw the one that you did for was that API for Caring API.

Which was a lot of fun and that. But yeah, so there's a lot of interest going on and. And I've been to quite a few economic forums and listening to what's happening in the market. So I was at one yesterday and Hans Kroener, who's the chief economist for St. George bank, bit of a character actually he gave a bit of a chat about where he sees the, the. Well, the world economy and everything else. Unfortunately, if you're in Japan, he reckons that's just crap and you're in Japan pretty much it is a declining population and because they don't believe in immigrants and everything, there's a lot of reason, reasons why that that economy which is now running at negative interest rates. So you put 100 grand into the bank and in 10 years time pull out 90 grand. So, you know, it's just, it's mad that's happening there. China had a really interesting perspective on China which was. There's been a lot of discussion around the fact that their growth has come back, but there's so, so much going on there that, you know, it's still a. Still that movement from the dirty manufacturing to cleaner, cleaner manufacturing, et cetera and changing and transition in their area. They don't have casinos there, they don't have gambling, they have the stock market and pretty much the entire. All the politicians encouraged everyone to jump into the stock market and they run the stock market a little bit differently to what we did. And they had a bit of blip in the beginning of the year and seem to be recovering. And the government's now reducing the amount of money that Chinese can take out of China to $50,000, which I think is interesting. But you know, how that affects our market, who knows? But. So that was kind of interesting. American, strongest, biggest or the biggest Economy in the world is just going gangbusters. Employment's up and interest rates have just moved up again, which is good. So if something does happen, they have the capacity to move them down. And we're at, you know, cash rate at 2% and we've got a lot of capacity to move it down. And the RBA put out a statement to Glenn Stevens just this week regarding, you know, the fact that the economy's in a good place and our unemployment has come down. So Europe still in a bit of trouble, I think. What is it, 26, 28 countries that have fought for the last 500 years are trying to get together and agree on ways forward. And you know, it looks like England might be pulling out of that. So watch, watch the European space. But you know, we're as Australians, you know, we've, I guess we've, we're, we'll wait and see what the election has to say. But there seems to be a lot of that, that tax stuff on capital gains tax and changes to negative gearing off the table pre election and it looks like there's some really interesting things that are going to come out. But I don't know, our unemployment's down at the moment. We're moving from a, you know, mining to a service kind of base transition. So a lot of increase in jobs around the service industries, tourism and health. So that's a really, really positive. Australian dollar has obviously dropped and we're around about 74% and you know, we're in budget deficit but we're still a lot better off than most other countries with the debts that they have. So all in all, pretty good. Funny thing is I'm seeing a lot of pullback at the moment and people, you know, I think soon as an election's announced, people kind of want to wait and see what's happening. I'm not too sure what, what they're waiting for, but it's interesting to see that's going on. Obviously, you know, around the traps there's still those inner city apartments, there's still a complete oversupply of apartments in, in Melbourne and, but you know, there's incredibly also Victoria's just taken over Queensland as the biggest internal domestic kind of migration and tourism destination. So there's a huge amount of activity here. I had a chat to Eliza Owen from Residex to see, you know, what they saw happening and looking at the RP data, CoreLogic information and obviously the Sydney markets come back a bit. Was reading one of the reports from Terry Ryder and there's Still I think he had 22 suburbs within Sydney that still had rising steadily and you know, markets, a lot of those were over the million plus mark but there was still some of those that were out near Camden and Blackheath, Blue Mountains that had some potential. We're also looking at the. Which is great and you know talking to Jacob from Ripe House, you know about his price pin prediction reports so that he puts out every month and Morayfield still appearing but there's some Sunshine coast and Gold coast and once again Geelong, a couple of special suburbs in Geelongham here and some areas in Newcastle. So some interesting things afoot. It would seem that interest rates, there's some people are thinking there might be an October rate reduction in interest rates but most are thinking that there won't be any rise at least until past June next year. So interest rates are under control for a while. God, for someone who hasn't done anything, I'm. Yeah, it sounds like you've done a bit lending. Let me just give you a quick little update on lending. One of the big banks was fined last month and I think again another one yesterday, one and a half million dollars for not putting in more stringent living cost requirements in their serviceability. So serviceability might just toughen a little bit more. And at the conference I was at yesterday they were talking to the point that we might have to get clients budgets down to you know, how much you spend on Foxtel a month data, which is just insane. And another big issue that ASIC is taking on and or APRA in particular taking on over the banking and their worries about, you know, responsible lending is having to justify why a mortgage broker would be putting a home loan on interest only rather than principal and interest. And you know that's going to be a big change. Yeah, well the thing is if you tick a box it was probably one of five selections that you tick. But one would be potentially that you know, buying a new property and covering the initial costs and having a new home. You need to have a higher cash flow so you might have the first five years interest only. Another might be that you wanted to build up a cash buffer to invest further. Another might be that you wanted to build up a cash buffer for security reasons in the future. So I mean, you know, I really like the idea of having interest only on your home if the home is going to be a stepping stone rather than, you know, the grandkids go back there in 30 years time. If you think about it, home loan is for 30 years. Census tells us that Although we plan to live, when we buy a property, we plan to live there for a long time. On average, we move every nine years and it's not to year 20 in the repayment period of a loan that you're actually paying more principal off than interest. So if you can build yourself up a cash buffer in an offset account and have that kind of risk reduction in place for yourself, then I think it's a really great way and the lowest risk way that you can actually look after yourself. So interesting, interesting things of work.

Yep. We used interest only on our place when we bought it.

I've always had interest only on everything, so. And I just think that the benefit of the offset account and actually I saw, I was chatting to Effie and I saw she wrote about this also in the Money magazine. She's the editor of Money magazine, around the fact that, you know, Australians have built up so much in their offset accounts, be they principal interest or interest only loans they have against the homes, we're well protected against any reductions or costs, et cetera. So all good. So, yeah, that's been pretty exciting. I guess we better get on to housekeeping. We've got so many people here, which is nice. And I know we've got a few questions and I'm sure people have got some thoughts as well, but the boring kind of housekeeping stuff.

Let me just find it again. I just moved it out of the way. There you go.

Okay, so let me read this because I do forget. Look, if you are on the computer and you're experiencing hearing anything, perhaps you can't hear a question, then you can actually call in on the telephone line. And I did this the other day because I had a bit a, of, of a problem with my audio. So not a big deal. Call in the number, put in the conference call and you know, it's all good. So the telephone number can be found in the sidebar under the audio options drop down. You can ring from a landline, mobile or Skype. When you do have a question, I do ask you raise your hand if you have a microphone. You can do that by pressing the little hand icon in the sidebar menu. It's quite small and hard to see, but click on the hand button and that will notify me that you have a question. Have a microphone and I'll unmute your line. When I do unmute your line, you'll hear a message to say your line's unmuted and you're on. So make sure that, you know, you get involved and you do Ask questions. You can also ask by putting your question into the chat box in the control panel and I'll be able to see these questions. However, I do love chatting to people. So, you know, I can then get an idea of really what's going on and we can have a bit of a banter about it and I think it's more engaging for the group. So just remember there is no such thing as a silly question. And especially for the new people to the call, I really encourage you to make the effort and get involved with the process. We're here to help and we'll take questions on anything. I know, John. Often we hear from people who've jumped into the ultimate guide of renovation that whilst they're eagerly waiting for the next module to be released, and these guys just got module two today, but they jump in and listen to the past calls. They feel like they've got. They've heard us for years because they've listened to over two years worth of past calls. So what, two hours a call often.

And they get reminded of something you said.

Yeah. Which is weird. So, yeah, you've probably been chatting more or hearing more of us than we've been hearing of you guys. But we. So we're here to help on these calls. Ask your question. Put your hand up. We try to make sure no one misses out. We will be running the call for an hour and a half today. And yeah, basically. Lastly, our support line, supportourpropertysuccess.com is where you post or send any technical issues. I am not the right person to speak to. If you got a problem with the videos or downloads, you know we can't fix them here and then. And I know there was a few postings on the Renovator network about some issues the other day. We don't get into there every hour of the day. So getting to support and we'll have some. I feel fix it straight away. No need to put anything up there. And that's about it. Yeah. So I think it's over to seeing if anyone's got their hands up and we'll ask some questions.

All right, let me have a look here. Oh, yeah, few hands up.

Hey, Gabriel, I know, I know that you've sent us through some information as well.

Yeah, I just downloaded some stuff from.

Hey, Gabrielle, can you hear us?

Hi, Jack.

Hey, Gabrielle.

Now, seems that you've sent through some information as well. Do you want to give us an idea of what's happening in your life and how we can help?

No problem. So I Love the course, by the way. It's been great.

You joined us last November, September, didn't you?

Last September would have been about a year ago, but I didn't start until three months ago.

Great.

Because life just got away.

It's interesting. We see a lot of that actually. Sometimes people join and then they just get to it when they got time or they go through the modules and then actually go back and slowly go through one by one. But yep.

Okay.

Basically, to give you the low down, basically we were looking for properties and we've been a bit more active the past month. So we kind of did a lot of data search, but we just put in an offer which was accepted for this property, which is very exciting. We kind of knew the agent earlier and he pretty much notified us 30 minutes after he spoke with the ownership. I guess notice as soon as they got the contract. I think it was an hour after the real estate got the contract. We got it as well.

Yeah.

Saw the property four hours later. So it was all kind of. It wasn't even advertised.

Right. That's great. And that's just knocking on the doors of the real estate agents just to share with other people and letting them know specifically what you're buying criteria with was. Is that how you built up that relationship?

Yes, that's right. I did throw in a box of chocolates as well for some of them.

Nice.

Help them remember me.

Nice.

So basically we bought the property and before we went in there wasn't much data on the exact property. So we kind of looked at Residex as well as RP data report and during the period we're just trying to ascertain whether it's still a viable kind of option for the property. Originally when we looked at the Residex reports, it said it was a four bedroom house and we kind of based our offer based on a four bedroom. Subsequently we found out it was a three bedroom house and we didn't have the data at the time because it moved so quickly. So I guess this core is trying to ascertain the viability of continuing on just from a numbers perspective and also trying to gauge from the audience where they would renovate. I've got some photos, but not a lot. And I was hurried during the pest report, so I don't have all the photos I would like, but I thought it might be interesting for everyone just to kind of look through it. Love feedback.

So you've dropboxed this so I can see this, some of the information. So how about we bring that over?

Can we Share these pictures here, Gabriel?

Yeah, you could share all of it.

Okay.

So with you're looking at the photos.

There we go. It's a nice place to start.

It's a three bedroom place. That's the view from the front brick bottom. I think it's. I'm not too sure what the. I think it's just the cladding. On top of that there's no designated parking. So if you keep pressing. That's kind of just a few from the front. There was a crack that we noticed which we were concerned with and the building and pest just found it out. But I haven't read the report, but he did give me an on the site briefing of what he thought was happening.

Were you able to go to site with the inspection or.

Yes, I was able to go to the site as well as take photos. So I was there for two hours as well at the same time.

And what did the inspector say about that? I mean it looks like some movement there rather than that cracking going straight down, vertical down the bricks, which is always more of a concern.

Yeah. So if you look at the photos, I labeled it at number 18.

Okay.

That's the last. If you kind of click on there.

I've only got up to 17.

Okay. Maybe I haven't updated yet.

I missed that one.

So basically, let me see if I could share it. Just make it a bit more. Wait a moment. Send you a link in the chat box.

So we might just go through the rest of the photos while we can have a look at. Bring that up.

Yep, that sounds great.

They marketed it as a four bedroom, but it's really a three bedroom. Was there any kind of commentary around that?

No, because the property hasn't been sold in 40 years. The owner originally built it, so I'm not too sure why it was different on the Residex kind of reports to what it is. So maybe they did a room conversion or may they did it in extension at the back. Maybe they roommate out because of that.

Okay, great. So here's photo 18 coming over.

Yeah, it's downloading.

Oh, downloading.

It's upside down on Dropbox.

Excellent. Okay, and the. Here we go. We're just bringing that over. Sure. It's upside down. I think it's underneath.

Oh, I see. So I had it up.

Yeah.

New from underneath. I think it is upstairs.

Oh, I see you've got some Rio exposed there. Yep, yep.

Yeah, I think how they concreted it now there's concrete cancer, but it's just under kind of the balcony kind of area. So I'm still trying to work out a costing. So we're getting a builder, a few builders to know how much it would cost.

Cost to rip out and fix or cost to just repair or. Both.

Both. But it doesn't seem like they could kind of rip out. They could just fix, which is okay, apart from having to do possibly as and that kind of thing. But I'm kind of hoping for a reduction of price.

Okay, so let's have a look at the rest of the photos as we go through. We just.

So where we're at at the moment, just to clarify, this is under. You've got this. Under offer this property, but you've still got a little bit of time if you decide you want to go a different way. For instance, you've still got time to pull out of the deal if you.

Yeah, okay. That's right.

Great.

Excellent.

So that's the front of the property area.

Okay. Down view from the house. Oh, water. Water looks like a lake. Living area. Okay. Nice. Yeah.

So the living area is when you first enter the house, right?

Yep. Yep. So there's an opportunity for improvement there. Yep.

And fireplace.

Yep.

There's not many kind of electrical points that has to be changed.

And we've got.

That's the. I called it the first one, but it's the first spot.

Yep.

It's got a built in wardrobe and this dining room.

This is paneled as well, is it?

Yes, paneled. I put a black square for the owner. Accidentally took a photo off.

Oh, okay. You're protecting someone's identity. Nice of you. Okay, next one. What have we got here, John? Kitchen. Oh, opportunity for improvement there too. Maybe just even painting.

Yep.

You can do on that. Okay.

Yep, that's right.

Just watch those bench tops. They can be asbestos sometimes in those bench tops.

Okay.

Orange ones. Yep. Oh, yeah. Yeah.

Bedroom.

That's another bedroom.

Yep, Bedroom.

Those are kind of the main ones I had inside. I didn't get a chance to get the bathroom before being hurried out by the pest building and pest inspector. What is that area?

Is that a back. Is that access to the garage at the back?

Yes. Right on the top left of the screen.

Yeah.

They kind of got it out kind of arrangement.

Okay.

And so is that green, the paneling, is that some kind of retaining wall or.

I believe so.

Yep. So maybe it's. Oh, yeah, it's. Perhaps it's sleepers in a. In some steel uprights. Yeah. Okay.

And did the builder include that on his inspection report? Something around the retaining wall at all?

I haven't read it yet. It just came out okay 10 minutes ago.

Okay. Yep, perfect.

And that's just going out to the back.

Looks fine.

A big lean to out the back. Yeah, your gut is a little.

Gutters are moved a bit. They seem to be running out. What's going on there? Okay.

Yeah, the front lip of the gutters just. It's just had a bit of work over time. For instance, probably had a few things falling it and whatever else, but you could probably stick some new clips on that gutter and get it, get it going again without having to replace it. And that inside that box that we're looking at at the back there, which is not unlike a box on the back, is it? What's the ceiling height like? Is it a reasonable ceiling height in there?

I didn't measure that section, but the rest of the house I think it's 2.6 meters.

Remember, did it seem lower though when you walked out to that back area?

Not noticeably.

Let's have a look at the plan that you've kindly drawn up as well. Good job.

This is all from yesterday, so it's all quite good.

Well, look. Yeah, we definitely want to help you out and working out whether you should be going ahead with it or not. So let's have a look. We walk in the porch. That's a porch area and that's.

So that back area was out here. Outdoor dining. Is that where it was?

Yeah, with the retaining walls.

One bedroom, two bedroom, one bedroom two. And dining. And outdoor dining.

Yeah. So with the photos kind of went from when you. If you start at the front of the house, move left to the. So you saw the lounge, you saw bedroom three there on the left. You walked to the dining area, you saw the kitchen, then you saw the two bedrooms. And then you walk to the outside of the house. So that was the movement.

So the kitchen actually looks out onto the backyard, doesn't it? Bedroom one and the kitchen are those two back? Yeah. And the outdoor dining is actually to the air. It's not actually the enclosed room. The lean to room is bedroom one or the flat back at is the kitchen area.

So is bedroom one, kitchen all under that roof line we're looking at there?

Yes, it is.

Okay, great.

Excellent.

Bedroom would be on the left. So really I didn't take a photo. Yeah.

The existing house is kind of where I'm running my mouse through there. It's kind of. The existing house really encompasses the bedroom and the. The entrance dining room. Yeah. The lounge as well. Yeah. Okay. So it's basically the lounge and bedroom two are under that tile roof line. So two rooms deep.

Okay, good. Okay, so three rooms built ins, bathroom, extra toilet, extra laundry, separate.

Yeah. So the bathroom, I don't have a picture of it, but basically it's a bath tub. They're in. If you're walking in the room, it's on the left, the bathtub and on the right there's a shower recess. So it's one of those shower recesses where it's one kind of complete kind of section. So it doesn't have kind of a new flooring. The toilet's there.

So I've got some. So your questions here, Gabrielle, why? First of all, the information that I've got here. So it's a three bedroom house in a suburb in New South Wales. The house is 57 years old. Last time it was sold was 40 years ago. It's on 650 square meters of land. So can you tell me, is the three bedroom house the characteristic target market kind of property for the area?

Yeah, most of the houses, the most houses are three bedrooms.

Perfect. So you go into census to find that information. So we know that although this is under offer, it's still confidential. So we're being not mentioning the address or the area. So I'm just going to use the data that you've sent me rather than me pull this up and do it live like I normally would. Now do you want to tell us what you've offered and what the estimates are that you've seen and how you've come up with your offer amount?

Yeah, so we came up with an offer of 460. The reason why we kind of went there was real basing it on a four bedroom house, which is is the available information that we had from Residex at the time. If you pull up number one Residex report in the Dropbox. Residex report kind of valued at 550,000.

Yep. See that?

So that was the original information that we had and that street rating of 9 10. So we kind of saw that and went, oh, they actually wanted 460. Originally we were saying 440 and then the owner wanted 460 and there was a daughter involved that also wanted to buy the property and she was able to offer 450 for the property, their daughter and they were all in the room. Yes. So she could have chosen to sell to us or a family member.

Wow.

So the daughter jumped in at last minute and wanted it for 450 and they were in discussion and the real estate agent was really working towards our favour and he said if you offer 460, the family have agreed to accept it.

Okay, so tell me this. So I'm looking here on the street rating here. This property is rated as a 9 compared to other properties in the street. Now we can only see a little bit of the property next door to it. Is it a nine, is it one of the better properties in the street, or is it further down where you're seeing that 3, 4 where your offer is based around that 450 to 460 mark?

Yeah, when I looked at the rest of the street, it seemed like the resalex report was a bit off. The reason why most of the other ones seem from the outside a lot better in terms of street front. Most of the other ones are brick, complete bricks and seem newer than this one. So this is where I thought the Residex report might not have been as accurate.

So this is why with Residex they ask you to give a street rating based on the rest of the street so that it can be customised. So if you came back with a rating of 4, then that value estimate would have come back at 468. So that's when you send in your requests as a Diamond Investors Choice client, you send in your request to us and we generate the report and we say, you know, what kind of, what is the standard of the property compared to the rest of the street? That's where you have the ability to change that and that's where it can change up before we request and purchase that report for you. So the fact, so that's why that range is there, so you can go, look, it's not a nine. I walked up and down the street and it's actually a three to four. So that's where that property value would come back at. And if you can see up here as well, it says, look, we're not just going to use one test to the market of what the property is worth, we're going to use a couple of tests. So test one is based on comparable sales. So other nine out of tens in the street, what are they selling at? 565 based on this? Sorry, the nine out of tens is a 558 based on sales in the local area. So just not the street. 9 out of 10 is 565the value based on the median value of the properties in the in the immediate area. So they're saying in this immediate area, the actual median is around 450. And they're saying the value based on the dwelling values per square meter. So if your property is 556, 656 meters squared. So that's when they start comparing that. So that kind of says that's how they came up with their estimate and that's how you might go. Ah, in actual fact, once I bring that, that estimate down to maybe a three or a four or a four or five, that would bring down their estimate as well. So you know what you're using the thing for. But this also gives us an idea in the median values in the area is around 453. So what we would then want to know is, you know, what is the next. What's the comparables of the renovated and unrenovated. So we've clarified that most people want a three bedroom property, which is great target market. You did mention that on the street there was a lot of brick properties. So is this kind of weatherboard, or sidling, whatever you want to call it, is that characteristic for the area or are you buying something that's not characteristic?

I know it is characteristic of the suburb district. Like the house on the left, yellow one.

And on the right. Yep.

And on the right there are quite a few brick, just fully brick ones.

Okay, great.

And have you had a chance to go through open for inspections for properties at the renovated level or the level you'd hope to renovate up to?

Yeah, I have a few in the area.

And what are they, what are they selling for?

They're selling for the 550 to 600 kind of mark.

Okay, good.

And they're three bidders.

Yep, three bidders.

And they're not brick.

It kind of varies. It's kind of. Some are similar to this, some of them are kind of brick. There's not too many kind of ring.

So the ones that were similar to this, they're selling around the 550 to 600 mark.

Yes, that's right. Renovated.

Now, can you just give me an overall strategy here? You're buying to hold or buying to sell.

So we decided to buy, hold and rent out. The five and eight year predicted growth in the area was 6%. So that matched our criteria.

Great.

We're wanting a rental yield of over 4.4%. So this passes that. So the area is 4.5%. And just based on our numbers, it's 4.3% for this property, which you can.

Bring up obviously with the renovation.

Yes, and that's what we're hoping. We were hoping to spend kind of 20 to 40,000, so less than advised. 10% on the property?

Yep.

And have you been through the quick. Have you used the quick quote calculator on this?

No, not yet. This was all yesterday.

This is the first thing that. This is how my mind works through this. And this is how with the ultimate guide of renovation that step by step process have the strategy. So it's a buy and hold target the area based on your goals. So the goals in module one that people go through is what are we trying to achieve and what's the strategy? So what you're trying to achieve allows you to come up with your buying criteria of what kind of growth that you need for the timeframe to reach your goals and how to help you hold the property in the interim, which is the yield. So you've got the growth over 6%, you've got the yield of 4.4%. You know that you want to spend, you know, maximum of 10% of the value of the property on the renovation. So we work through, you know, module two, you go in that suburb selection. So you found the suburb. Module 3 is getting into that suburb due diligence. Where we get down into the street, is it the street where the renters want to live versus the owner occupiers? So you want to rent this property out. Have you got access to. Well, you could go to that census tutorial or for those people who have got the. We'll be getting in the next couple of days, the access the new people in Ultimate Guider renovation, the Ripe House. Ripe House customized. You can see where the renters versus the owner occupiers are. So do that. And then you get through module 4, module inspections, etc. But module 5 will get you through to that quick quote calculator and the benefit of that, and I suggest, you know, as you're getting some of these quotes for your patio and the replacement of that and you know what you need to do in the kitchen and bathroom and obviously the front needs to be addressed. And when we look at the front of the property, you know, she's ugly and it can be pretty quite nicely. So you know that prettying up of that as well and checking out what you need to do with the shed fences and whatever. But put everything into the quick quote calculator and then you can work out if you can get everything done that you want to do within that budget because, you know, 20 to $40,000 or 20, you're doubling it, right? 20 to get to 40,000. So you want to be a lot more specific about that. So make sure you Use tool quickly to pull. Pull that up and we've got the fit property for the market. So we've already been through that due diligence. I can see here this suburb statistics that you've pulled over the median price. The number of sold. The number of sold per year is that or quarter or per year.

So it doesn't have a lot. I've got a few suburbs in my.

And so you've got some. Is this the suburb that we're talking about now?

Yes, that's right.

Well so 5 years 9% growth is insane. That's fabulous. So the only other areas I've seen like that are up around Scarborough and Queensland at the moment around that.

This is past growth.

Oh sorry, that's past. There you go. 6% three bedroom median. So this is the median for the three bedrooms, the 419. So did you grab, did you get this from suburbview.com?

That'S right.

Perfect. So suburb view under the reports in the three year rental yield that information will come up median rent. So 420. We've got rental yield over four and a half. Vacancy rates less than 1%. That's fabulous. So tightly held area both for sales and for renting. So this is really good discounting. Gives you an idea of how much you can get in under the market. So obviously you've done your negotiation days on the market means they move in quick when they do come on the market. Wow. Lots of schools in the area. Not a lot of public housing. Not a big suburb. Lots of families which is probably represented.

In the number of sales. You'd think.

Yeah. Median weekly income, medium rent, ages, age group. So this is percentage for the suburbs. So mainly. So an older. Older. Well it's pretty well spread across the population, isn't it?

Yep.

So children under make up 17%. Okay. And so this is why you probably. What's the proximity to the school from here or one of the schools right across the road?

Right across the mumbling school is right across the road but you can hear the bell. But they don't take up your parking spot in front of the property.

Perfect. Because that's one of the things in that sweet spot that Jacob looks at is, you know, within 100 meters of the school there's you. The prices are usually lower but then they're up to 500 meters. They're, they're higher. So it's. And that's because of schools.

But not too close.

Yeah, don't. Don't want to be too close. So. So you've already checked out that parking issues etc and we've got, you know, mainly tradies in the area and most people drive. So you've got a car park and facility.

Got a garage out the back. Can you park in the garage? Is it a.

It's a garage. You can possibly park at the back at the time there was a nice boat at the back.

So there is like a. There's a rear lane access or something. Is there.

There's a driveway that's fairly steep, goes.

All the way through.

Okay, I can see that. All right, so that's good. So we cater for that need. Not many people catch the bus so we don't have to worry about where the bus stops are. 87% of houses. Perfect. 72%. So the only other thing, percentage of renters. Did you manage to pull that?

I think percentage of renters in that particular area is 25% from memory.

Okay. A little lower than what we would usually say, 30%. But I think that might be mitigated by the fact that you actually have less than 1% vacancy, which is nice. And that yield. John, I don't know where those rest of those reports are. How do I pull up those reports? You had a couple of other reports there. So you've pulled up an RP data report and so an unrenovated property in the area. So they estimated it at 3 80, 350 to 414. Which kind of picks up on that three bedroom average, doesn't it? That came through on your other. Okay. But you've offered 460. So let's go down. It's got no car parks associated with that either, which is interesting. And is there anything else in the next report after that? So typical kind of size.

I put in those statistics, I guess this wasn't the original data that I had because it was based on four bedroom. It was originally valued at 594,000 when we made the offer. So when we kind of put in a three bedroom it significantly reduced. And I just did that today.

Yep. No, that's fine. And you know, I guess the thing here is that I just want to pick up on this for people who have got, who are our students and we have the opportunity as Gabriel took it up to access RP data professional, I guess. Joel, should we tell people about that next week, send something out as an offer? Yes, let's do that. But here you can see, you can jump into RP data, into the tutorials that I've done and I'll show you how to do this. But basically what Gabriel has done is he's pulled up the unrenovated property by just saying it is as is when he's putting his criteria. Now, see this number here, fsd. And when we look at the renovated property, fsd, I just want to bring your attention to this as the forecast. Oh, my God, I can't read that standard deviation. Now this RP Data Professional is the auto valuation tool that the big banks like CBA use for their desktop valuation. And when, when this FSD is actually under 10, they will actually accept the value within the range that you give. So 350 to 414. So if Gabriel's mortgage broker was putting in the loan and said, we're going to pay 410 for this, then he would come back and say, yep, no problem, pretty much. Or because he's going to pay 460 for it, he'll come back and say, hey, let's just go out and do a valuation and have a look at this. Obviously they haven't included the car parks in it. There's not a second toilet. It should be one and a half, you know, so there's some, some reasons why, you know, you would validate this, but this statistical interpretation here is really interesting and that's how you would read that.

So mind if I just pick up on how what he's done there with the. Just for people who haven't seen it. And actually in the resources section in the Ultimate Guide to Renovation, Jane's done tutorials on how to do this. But basically you can go in and with the automatic valuation and you can tweak, you can say it's just for modeling purposes and you can actually tweak what the house might be. So I figured this is what you've done here, Gabrielle, is you've picked modeling and then you've gone and selected all the things that make it unrenovated and below average and all that kind of stuff. And then you've hit the valuation for that and then you've done the opposite to that and said, right, it is renovated and it is at the, towards the top of the value in the street and so on. And that way you can spit out two valuations and there's just a way you can cheat and go, right, what's it going to be worth when I renovate it? And that's a good place. Obviously then we always say, you know, you start from that end valuation, work backwards, how much the renovation is going to cost, how much profit you want and that's what you've got to buy the property for.

We're going to keep talking to you, Gabrielle, because no one's put their hand up as yet. So other questions. So we're going to keep adding some value here for you until we get some more questions in. But we've got, we've got quite a decent number of people on the, on the call. So guys, if you've got any questions, please put your hand up. Otherwise we get to see Gabrielle's whole product assessment done here. But so Gabrielle, I think from a big picture point of view, what you've done is you validated here some of that capacity for the renovation potential. I really encourage you. I mean, this here itself is a little bit of a concern. But if we run back through the Residex report, we get to see here that around that three to four in the street that you think it's worth is probably where your offer is. So this is why I really think it's worthwhile to have a look at a number of reports and then have a look at the comparables as well. So in the rest of this Residex report, which I'm sure you haven't put there, it will actually go through and give you all the comparables with the other three bedroom, 650 square meter area. So you can actually make sure that.

Have a good look at them individually and then mark them whether they're comparable or inferior or superior.

Yeah, as it like a value will do. Make sure that you're not, you're not offering too much. But if we just think about this, you know, if you're buying here at 460 and they're saying the, you know, the best in the street, 660, but there's a big jump between the best in the street and 9. What we would usually want to be doing is buying around, you know, the 1, 2 mark and renovating up to just above the median, you know, the seven, eight, sevens and eights. If you thought about that, there's a bit of capacity to do that here, but at 460 and you know, if you got away with a $20,000 Renault, then you know, you'd be getting up to the 480s without any profit in there for you kind of thing. So I'm not too sure whether there's actually that pricing disparity in this street for you to be able to generate that much of a difference to make the money. I mean, definitely not for a flip, but would you have some thoughts on that, John?

No, well, yeah, I would want to be going through those renovated what you're renovating up to. And the number of sales is probably a little bit of a catch there. Yeah. Normally speaking, I would like to be going through those properties and having a good look at exactly what they've got. Those ones that are the seven and the eights in the street and then going, well, if, if I've only got a budget, if I've started from the, from the, from the invalu and work backwards and I know that my budget is going to have to be 20 grand or less, is that enough to get it up to that value?

So let's just say you're trying to get up to a seven, so you could be alright, but there's not a lot in here, but let's say 7, 4, 8, 5. And it's going to cost you 20 grand. So you know, you'd back down to 465 and there's not a lot if you're buying at 460 to make, make money on. If you could get it straight up to, you know, 660. And it'd be interesting to see how many properties are actually in each one of these as well. Like each category.

Yeah. Because that's the other thing when there's not a lot of sales is these, these numbers can get skewed pretty quick.

Yeah. How many, how many houses are there in the street? Gut feel. Is it a big street?

I would say it's a fairly long street. I would say, I don't know, 50 more than that. Yeah.

So we're talking about somewhere between five and eight properties in each of these categories is the way that this is broken up. So that's good. So it's not like there's only, you know, 10 properties in the street, which means there's one selling at 660 and one selling at 329.

And can I just ask with your offer, what did you make it subject to?

I didn't make it subject to bank evaluation at the time because we wanted to get it through. We did say subject to building in pests. Yeah. It wasn't very clear because of how quick it was. Even the agent didn't have two copies of the contract at the time, but it had to be validated.

Did you go through our offer document when you made.

I spoke to and she made another suggestion. She said it's probably better not to do that in the current market. Where I was looking at. I. I didn't quite agree with that based on the Course, but I think I've learned from that now because one.

Of the things is, I mean you've got your offer and your offers accepted and if you had no conditions to get out, then you'd be all you've got now is to get out of this is your pest and building inspection. So you know, and there is one argument that says the more conditions you put in your offer, the less attractive it's going to make it to the, to the owner. So you might want to put in a 5% deposit, you might want 10 day, you know, cooling off period, you might want the chandelier included, you might want to have a delayed settlement, you might want to have a conditional pest and building inspection, you may have your offer expire Tomorrow afternoon at 5:30, you might buy. It's always nice to try and have.

Multiple things, things to negotiate around at the same time.

And that way if they do come back and they say no, we don't want this, and we're like, well how about if we give you a 10% deposit or we release the deposit or you know, so then you've got things to negotiate around as well. Because I mean, hopefully from when you get a chance to read this pest and building report, you know, your out can be the fact that, you know, the patio, the cost of fixing the patio is going to be so great that you're not interested in going forward, if that, you know, once you do your quick quote calculator, the rest of the comparable studies that we've suggested that you do in the time frame, you've got seven days, haven't you?

Yeah, I've got five.

Five days. Okay, so.

Or you change your offer.

Or you change your offer. Yeah, so there's, there's a, there's a couple of things that you can do here. But do the rest of that analysis I would suggest to verify that yes, you do want to, you know, this is the right property and just I'd encourage you to find out how much of a renovation you want to do and how much it's going to cost. Because if it is going to be 40 grand and we're talking about, you know, you're all in for 500 plus a $25,000 stamp duty it's already cost you and holding costs for six weeks, you know, you're already into it for about 530 and you want to be making a profit on this. Right. So it does have, it does have capacity to be renovated obviously. So to be updated, is there capacity to making money? Is now the question that you're asking.

Yes. I also said number three, like other people listening can also ask me questions too.

Yeah. Does anyone have any thoughts want to put in the chat box? We can even open up and we can have a little conversation if you have some thoughts or questions you want to ask Anyone here? Because we want to take you through the process and this is a really great little case study to take you to.

Absolutely. And thank you for sharing it with everyone too, Gabrielle.

Yeah. And the fact that you're in the middle of cooling off and you know, we can help you. We can help you ask the right questions rather than you going in because, you know, the fact of the matter is there's some good stats here. You know, there's some good information that's being provided that shows things like the fact that you've found your future growth, you know, 6%. You've got your. It's under the. The cost you wanted to spend. You know, it's got the rental yield that you want. You've got capacity for renovation. It's a typical property for the area. You know, it satisfies a lot of the ticks. We just got to get it through the rest. So everyone's being really quiet. Anyone? We can have people put their hands up. Anyone want to put their hand. Oh, here we go. Zane. Zane, do you have a question regarding this property? We'll just ask him. Well, I'm mute. Zane. And have a chat. Hey, Zane, how are you going?

Hi, Jane. Good, thanks. How are you?

Did you have a question around this case study?

Yeah, I did. It was actually just in relation to one of the points that John just called out. I guess I'm fairly new to this and just about just commencing the course. But you mentioned as far as the offer is concerned, that potentially the offer could be changed in relation to that. Does that mean that you could come back in at a lower offer or does that mean that. What were you referring to there particularly?

Yeah, so what we do. And you'll reach this in module 5. I always. To look at Jane, when I say that, just I think it's module four or module five. No, it's. Module five is we've got a structure around the way we present the offers and what high level. What we're always trying to do is give ourselves as much room to get out or change the offer as possible. So the best form of that. And this will change slightly from state to date. State is subject to due diligence, which basically gives you any out. Any out you want, any out you.

Want, which is a condition you add into your written offer, which is what Gabrielle's solicitor suggested he didn't do.

Yeah. So what that gives you is the chance one, to just get in and get the property secured. So you've got basically the first dibs, if you like, at getting the property and then you can get in and do a full due diligence. So there's nothing wrong with putting in an offer and not knowing absolutely everything about it. Yeah. You get in there, you do the, the comparable sales, you work out how much renovation is going to cost and then if it comes back and, and you do work out that, hey, there's not where, where I need to renovate it up to and I need to do X, I need to spend X amount of on the renovation, which means I'm going to get little to no profit. Then the way you can rectify that is just to lower your offer and say, right, it's worth, to me, this property is worth X amount of money. Otherwise, as an investment, it doesn't work. So, yeah, absolutely, you can change your offer.

Gabrielle, do you have access to Ripe House?

I do. Just before that, it might be interesting for those who are kind of listening is I sent also the document for the renovated RP data when you kind of put much better as well.

Yeah. Does that answer your question there about that offer?

Yeah, yeah, I think it does. And just to sort of confirm, just so I've got the right understanding there. So, in relation to this particular case study, where an offer has been made, but obviously not subject to due diligence, but building in pest, does that mean that this offer in this instance could still be lowered?

It could, because based on building and pest, the pest report has come back and said that the cracking and the concrete cancer in the patio is going to require 15,000 thousand dollars worth of work. And Gabrielle could go back and say, hey, my offer's now 445 and they can accept it or not.

And I don't think they would get much. The reason you do due diligence is so that you can't get caught out with any legalese on the other part. So it just gives you really a blank, a blank check. Whereas sometimes with finance, I don't know, you'd know if this has actually happened. But the warning always is, oh, well, they can go and find your finance or whatever, you know, so they've got a way out of it.

So he's the. And this is why we're kind of specific about these offer conditions. You know one of them. I know I've got a friend who always includes. Subject to approval from my solicitor. So if everything else fails, the solicitor can say no. And solicitors don't have to justify themselves. I remember an offer I put in on a house in Just, if anyone knows, Neutral Bay in Sydney, it comes straight off the. The Harbour Bridge. You turn right and you're not even hitting the big pubs there, whatever it's called, the Oaks. It's right on the first kind of street to the right and it was around three houses from the corner and they accepted the offer. And we had the pest and building inspection done and the real estate agent insisted on coming on the pest and building inspection. I tried to, as much as possible, keeping it out of it. And the pest and building inspection, the only condition we had, hence why you guys are learning from all the conditions we have, we put in properties. The only condition we had was subject to pest and building inspection and finance, and we had the finance approved. And the pest and building inspection came back and there was something in there about evidence of past termites, which every single inspection I've ever had done in Sydney has come back with. So not active termites, but past termites. And we went back to the agent because we put in another three offers that, that, that week and we decided not to go ahead with this one just due to the proximity to everything and, and there was better opportunities elsewhere. And he said, no, no, I walked around with the building inspection. There's nothing, Inspector, there's nothing wrong with it, you know, he told me there was nothing wrong with it. And this is why you want to keep these people separate. Right? You. You want to do inspections by yourself and with your builder, by yourself. Anyhow, we came back and said, oh, look, there's evidence of past lives and we're just so scared we're not going to go ahead. And they say, well, it's a clause in your contract so you can get out, but otherwise, if we didn't have anything really, and he probably could have.

Yeah, you're a little bit on shaky ground there, weren't you? Yeah.

And just. And on the other hand, you know, sometimes you might have. The agent might say, oh, someone's already done a pest and building inspection, I can get it for you. And you may be half the cost, which always sounds kind of cool, but it goes through the agent's hands at that stage, so they see what's in it as well, so. Or I've got a mate who does this. Do you want me to organize it for you, you know, keep it all separate.

So one of the really easy ways to do with pest and building is to say, right, I've gone away and I've got a quote on all of these items in the pest and building inspection. It's going to cost $37,000, five, you know, whatever more. And that's what I'd like to take off the offer. Yeah.

So things like, you know, subject to my own due diligence is exactly what Gabriel's doing now. His due diligence or whether this is a go ahead at or not subject to finance. So the valuer came back and said that this Property is worth 414. And Gabriel had done a formal had exchange contracts on it and it was, you know, there's no offers in it and the valuer said it's 414 automatic valuation. Yeah or no, no, if they came back and said, you know, it's only worth 430, then Gabriel might have a 90% loan against 430. But the difference between the 430 and the 460 that he's offered, he has to find front up for himself because the bank will only go to the maximum what their valuer has actually valued the property at. So that's why you include the bank valuation and that's why in the finance clause it's like it's subject to finance, it's acceptable to me. So you know, if the bank comes back and says, yeah, it comes back and says no, we're not going to give you the money that you want. The vendor can turn around and set up 20%, I'll give it to you. So you know, you see what I'm saying. So that's why, you know, we'd always include those kind of terms in as well. So. But in a fast moving market sometimes you just need to have a, you know, have enough time to do your own due diligence and get out. But yeah, anyhow, Zane, thanks for your question. Really good clarification.

Thank you.

So Gabriel, RP data, not RP data, Ripe out. If you jump into Ripe House and you actually find this property on the market at the moment, you'll see it down the bottom section of the area. So you'll have access to the full Ripe House software that actually we've just done a deal with Jacob for the full access to Ripe House for our students as well. Maybe you can put that in out next week as well as the IP data one because it's insanely cheap.

Yeah, he's Done a good deal and.

In actual fact he doesn't do it monthly anymore. So. Yeah, anyhow, but this is for the full access to RP data. Pull up that property and you can go through and it will actually do an automatic comparable for you about what they think. So it's on the market at this at the moment based on distance from schools in their sweet spot stuff based on other properties, we think it's worth X. So that'd be an interesting exercise for you to do as well.

Yep.

Can I check with that Jane? That has to be listed, does it it in realestate.com or domain to show up on Ripe House?

Yeah, the Ripe House information is scraped from sales data from many different sources. So. Yes. So if this is unlisted at this stage it probably won't appear.

Yes, it doesn't appear.

So for other people though, when you're doing your due diligence, make sure you use that tool and if you want them to have a second look at it for you, I understand that Britain Jacob will go through and just verify those details for you.

They are amazing like that actually.

Yeah, they're really hands on, aren't they? So. Yes, Mark, good point. Anyhow, so I don't know, Gabrielle, I hope we've given you enough information to run with but I think this incorporates so many questions that so many people have. You know, what to put in your letter of offer, how to, you know, make your see how your buying criteria applies to the property, where's the pricing disparity, what kind of tools and reports you can use? I mean we pretty much covered so many different components of that of it, which is a great example. But I think one of the. Okay, has anyone else got their hand up for a moment? Wow, this is great. One of the things, I just wanted to show this on the actual hand drawn. Oh yeah, let's have a go hand drawn thing. Some of the opportunities maybe for the renovation itself. And let's just have a quick little look at that because I know that you were interested in seeing what other people online. No trace you're there. You've always got some good ideas here, Julie, about what people can do with floor plans. So anyone want to. Oh, Mags, put a hand up? Maybe Mag's going to have a chat. Hey Mags, have you got a. Oh, microphone maybe? Yes. Mags, have you got a thought about what could happen to this floor plan or something? You know what, I was just sending you a message. I have to leave but I just wanted to confirm that real Estate agents don't. They can't insist on being at the Peston building. I didn't know that. And I got caught out with something similar where they insisted and told me that they have to be there for the Peston Building. And I really felt that it influenced the outcome of the report. Well, I mean, John, you've done a lot more of these recently than me, but they probably have to be physically present to let you in and secure of security of the property, et cetera. But actually walking through with you and with the private conversations going on, if they're not going to give you that space to be able to do that, I'd leave.

Yeah, yeah. When we go through and do our due diligence, we always make it clear that we want to be there by ourselves with our people, no other, you know, buyers or anything like that. So it's a private inspection.

So we have four checklists, Mags, in the Ultimate Guide to Renovation. You know, the initial one where you kind of running through the house and having a look, I think it's down to like the fourth one is when you're really getting in with your people and you've negotiated an extra hour to go through this and really make sure that your quick quote calculator, you know, you've got everything covered in that and etc.

Which might be the way to handle them, to say, look, it's going to take two hours. You know, you can stay the whole time, but I want the house to myself.

Exactly. Okay. Yeah. Oh, I'll live and learn. Yep. Well, okay.

I'll be.

I'll be better equipped the next time. Thank you, guys. Thanks, Mags. All the best. Have a happy Easter. You too. I cut her off. Okay, so has anyone got any thoughts here about the floor plan or what they can do? So what we're just summarizing. You walk in the porch area, up the stairs, nice little drawing. I like the toilet drawings the best, I gotta say. I looked at that and go, what is that room? But I realized it was a toilet. Nice work, Gab. So we got the lounge here. So obviously there was that kind of paneling, the fireplace. We had that smaller bedroom with the mirrored doors which you can easily replace. The doors often get someone just quote the doors because I think that mirrors always date things. We've got the bathroom, the dining room here, which just seems like this odd little fill in space, which is interesting. So this would have been the structural wall because this is what was taken out to put in, which is now.

Being moved around A bit, I assume where dining and. Yeah, you assume there must have been a kitchen in there at some point at the back of the house.

Yeah.

Before they put. So I imagine hard up against the laundry. The original kitchen would have been something like that.

Yeah. So we've got here. So this, this seems a little strange. That was where the photo, the guy with his face was passed out. But yeah. So we've got the second bedroom and the first bedroom with the walk in wardrobes and a little linen press which is convenient on the outside. Nice big bedroom. Bedroom one which is in the new section.

Yeah.

You know there is retaining walls, et cetera. I've seen a lot of people spend a lot of money and waste a lot of money in fixing these up. And that's why I just asked if the building inspection included that information on that back retaining wall. Because I have heard this one here in particular is a. You know, you could spend a lot of money on fixing this up. You don't want all this dirt and everything coming down in this section. So I just. I'd just be particularly interested to make sure that's structurally okay. And the back of the house. These areas often where you've got those kind of retaining walls and you get down in here, just make sure there's enough drainage get away. Because they can get, can't they, John? Get really damp and especially if you've got some of this kind of, you know, this gut has fallen and you know, as John said, you maybe clip it up a little bit. What is this downpipe? You've got two downpipes here. So I just want to make sure.

Actually that's your stink pipe there.

Here's the downpipe here.

Then you can see one there. Yeah.

So I just want to make sure this is not too wet and you might just. When you're walking around that first bedroom. This is bedroom one. Bedroom one. Just make sure there's no damp. I know this is kind of like a. It's nice floorboards here, but just make sure you can't smell any damp etc as well. I'd be kind of looking and interested in that and just making sure that you didn't have any of those kind of issues, essentially.

So good things to mention to your inspector too. Just, you know, can you pay special attention to. I mean they should know this stuff but it never hurts just to remind them. One of the things that I'd be looking at there is also the cross flow underneath the house. There's adequate ventilation.

That means that there's enough Space underneath the house, between, like the dirt floor and the house itself. To. To have air underneath.

Yeah, you can get air traveling through underneath.

So this is that dining panel dining room into the kitchen. That's here. So. Yeah, that's the kitchen wall there. So.

So my initial feeling, I mean, there's a couple of things you can kind of almost rule out immediately. One's structural renovation because it's buffered by the. Yeah, it's already got a box in the back and you can't go out further beyond that and you've just essentially replacing a box that's already there. But my only question around that, what that existing extension, whether that you had adequate ceiling height. But I assume if you've been in it, Gabrielle, you. You would know if it was.

Yeah.

Too low.

Just that one there is the ceiling. So that doesn't look too.

Yeah, it looks good. Yeah, you'd assume that that window's at least over. Over a meter and. Yeah, so that looks pretty good from a. It's always tempting to look at a floor plan and go, oh, I could make it better by doing this and by doing that. But the starting point always has to be how much you've got to spend. So I would look at that and I immediately want to change the.

This whole area.

Yeah, that's right.

And it seems like a strange corridor here and access, etc. But once again, you know, we pull back to this report and we have a look at the report somewhere or other here. I'm really bad at running Apple and I. Nope, not that one. I think it's here. Is this it?

Yep. Just grab it there. Yep.

Ah, there it is. We have a look at these reports and we have a look at, you know, in particular what these comparables are in the street. Definitely doesn't justify a structural renovation at all. And you know, regardless of what price point you almost buy it at, you know, you'd have to be buying down here and going right up here to be able to justify that.

And structural renovation doesn't always mean you're adding something onto the back too. That structural renovation is basically anything that requires council approval. So if you're pulling out load bearing walls, for instance, by definition that's a.

Structural renovation and some councils require you to get approval for that. So. But yeah, so there is capacity to do a lot of work in the property itself, whether it's justifiable, whether it's.

Capacity to add value or not.

Exactly. So I'm so glad that you put it up. Sally's got Some thoughts here. Everyone's got some thoughts here. So Tracy says, yeah, let's bring up the plan here.

So Mark's got the first one. What does Mark say?

Oh, here we go.

Make bed one. Living and dividing bed one. Let's have a look at bed one. Oh, yep.

Yeah.

I mean, always tempted. Even though there's views at the front there. It's. The convention is to have your living areas at the back and have you. And have your bedrooms at the front together. So you're not walking through your living areas, but. Yep. So that's a good, good point. And you've got the kitchen there, so you would. It'd be nice to have. So you haven't got a zone.

They talk about zoning the house off so the living areas from the quiet areas.

Yep. Tracy says seems very disjointed, but I have nothing inclined to keep the living spaces together. Yeah, exactly. Same.

And Mark, again, make a hallway in bedroom two and make a dining a new bedroom hallway into. Yep. So what Mark's saying here is that you could actually make a hallway here. So straight down here. This could be the hallway and this could be like the dining area. And this is not the walkway into the kitchen. Just making this into the bedroom too, by closing this off. And this would be the new dining area. So then you've kind of got the kitchen, dining separate. But there's an opportunity to do that. Sal says I would change the front lounge to bedroom one. Yep. And that's keeping that kind of bedroom at the front kind of theory. And then open up the dining room, an old bedroom one, to an open. Big open area. So, yeah, opening up this. This whole area up and having a big open living area. So that's kind of that zoning again, Julie a resident valuer.

No, I don't think Julie's a value. Julie, you a valuer? I don't reckon. Not sure you change much at all.

Nope.

To what value? Yep. Agree that the dining room is very strange. So could take away and make bathroom bigger, lounge way too big. And could do bedroom and then open up bedroom one as living dining.

Yeah. Dining rooms change, make the bathroom bigger, lounge way too big. Could be. Yep, exactly. So, as you can see, Gabrielle, lots of opportunities and thank you everyone for contributing. But lots of opportunities to add value and to do some different things there. But is there profit to be made? That's the question that you've got the next three days to find out about. Right.

That's right.

Well, look, I hope we've helped you out and added Some value.

Good on you. If you're having conditions on your offer too.

Yeah, good on you. Exactly so and I really appreciate you sharing that with us. And as you can see guys, if no one asks lots of questions, someone gets lots of value. And hopefully people who are listening to this kind of case study in the future will see kind of the process that we've worked through all the way from the goal to the strategy to the buying criteria to the suburb selection, the suburb due diligence and down to the property and is there capacity to add value. So you know really. And conditions to put in, etc. So we've really covered a lot of things. So fabulous. Thanks a lot Gabriel for sharing.

Thanks Gabriel.

Thank you so much.

Okay, all the best. Let us know how you go. Okay.

Yeah, keep us posted.

Sounds great. Okay.

So. Yeah.

Okay.

Hands up.

Anyone got a hands up?

No, I reckon we've exhausted all hands up. All the comments are around the house too.

That's great. Well guys, we're gonna, gonna wrap up and let everyone get on with buying some Easter eggs for Easter. But if you're listening to this as a recorded message, I hope you enjoyed your Easter. And how about anyone has a final question or thought or anything? Okay, no problem. Well look, the next call is going to be.

Hang on. Mark. Mark.

Mark. Snuck in.

Well done. Hey Mark.

Hi guys. How you going? Yeah, good. That's good. I don't know if this is a quick question. Probably is when I was just been going through the second module. You talk about yield as in the calculation of the value of the property divided by the rent. How do you calculate it when you've had the house for a while? For example, let's say I bought it for 400, but now it's worth 600. The rent hasn't changed much. Is my yield in that case going down, Do I need to recalculate my yield based on my current value or.

Current value or original value?

Yeah, look, in theory it really should be the current value and. And it's one of those everyone has a different opinion. But if you kind of look at maybe there's a case study here of the people who are buying in Muranbah and they're buying in country mining town, mining specific economy. And they're getting insane 10, 15% yields on the property prices when they started buying them. And this is when the mediums were around 4, 500 and then they moved up to 6 and 7 and 8 and 9 and 10 and you know, a million dollars. There was some very Expensive properties. It was like Port Hedland. Exactly. Same thing. And the property magazines were still talking about these insane yields, but the yields were based on what the medians were, what, not what the medians had become. So you know, when I look at the yield of my property, my properties at the time, it is based on the current value. But over time what often happens is when your properties go up in value and I find when they hit around about $800,000, your yields drop quite significantly. They go from the, you know, maybe the capital city average of 4% down to 2 and a half percent. So you know, when you're kind of looking at your long term portfolio, you need to include that in your kind of estimates of, you know, holding costs as well.

Is that because rent just kind of caps out at a certain point you don't have a big market for really expensive rentals.

It's because things, what usually happens is the rental yields go up and you know, there's been, there's demand, people want to live in the area, the rental yields go up, they attract investors. So investors get into the area so they're pushing the prices up. So the rental yields kind of then drop down. And what you, what you kind of see is like there's a timing lag in the market. But usually, and if you've got a good property manager, your rents should be going up to being reviewed annually anyhow when the rental review's up. But your rents should be going up at least with inflation every year. But they should be market comparable and.

I know kind of 2 to 3%.

Yeah. And we had a Defence House DHA property in our portfolio in, you know, Manly in Sydney to a nice area. And it's one of the things that I really liked about dha. They have, you know, people either like them or hate them. They have a higher rental management fee but you know, you get the place repainted and recarpeted at the end of the lease, which we had done recently. And they also pay for all the costs of new ovens and whatever. But one of the things they do do is they actually send a valuer out every single year to value the rent. So of other three bedroom houses in the area, not the median rent but other three bedroom houses in the area. So one of the ways that you know, Mark, you've got a portfolio, one of the things that you can do is go through and have a look at the, if you've seen that report, have you seen the report on suburbview.com no. Suburbview.com. let's pull that up. John, on Suburbview they have a really great little report tool. Do you want to give us a postcode that might.

Let's just do South Yarra. I don't even know what the postcard is.

I don't think you've spelled that right. We prove again that we're not good at spelling suburb. We got it again John. We've got another. Oh, they come. Okay, Suburb view. So you go to the property reports tab on the top right and let's put in South Yarra.

Yep.

And search now over on the right hand side. Should come up soon. There's the rental yields report. The three month rental yields report.

Don't ask us why this one's the best but it always just seems to be.

This is John. John tells me this is the best. And I've been telling everyone. Now we know. So if you go into here, if we go down, is it a house or a unit?

Two bed units.

Okay, so we, so if we go down here and we can just go to the apartment or unit. So different states call them different things but you know we've got a two bedroom median price around 644 here. So I'm not too sure what the. Look, I would be going with a unit apartment rather than just apartment because there's only four, three, two listings here. But we're talking about 176. So majority of the sales are in the that two bedroom unit. So looks to me like the typical type of property. The average rental yield that they're quoting for two bedroom units is around 4.2% is the median. So that's what we want to look at the middle number rather than the average. So around 4.2 and the median rent 520. So this is a really quick way that you can actually jump in and have a look of what the typical numbers for that for your suburbs are. Does that help?

Yeah, that's interesting.

And one of the other things, I've got a property in Darlington. I convinced my best friend to buy the property three doors down when it came up for sale. And her dad had quite a few properties out western Sydney and he had an agent that he trusted. And when my rents were going up to the 520s, 530s, 540s, her, her dad's agent still had hers down at 460. 450. 460 because that was pretty good rent out the west, you know and you know it's a bit difficult for them to get in to do open houses etc as well. And yeah, just. Just be aware that if you're doing your rental manager's review that, you know, your rental manager is being proactive in suggesting what rent should be and putting rents up, etc as well.

The other awesome thing this page is good for Suburb View is the median per bedroom. Used to be. I don't think it's the only one anymore, but it used to be the only place that had that median per bedroom for free. Yep. So if you wanted to renovate, you know, from a two to a three, you could kind of do a bit of an estimate there.

There's not a lot of.

No, not. Not a very good example.

South Yarra only because as we know there's a lot of units. So let's just pull up my old favorite. Although people get used to it once they get an ultimate guide of renovation, which is Kingsford, because I know there's houses there and we went into reports, but it still came up as 2032. Just going to do it again. Just so we can demonstrate what John's talking about here. For those of you who haven't seen our webinars where we've done assessments, this hasn't come up here either. Strange. This is always in here.

Well, so might be losing that data.

Maybe that rent information. You know what it might even be? It might be over different months. It might start coming up. Yeah, they might. We might need to check out the different month information. I know we were running this the other day and they were coming up very clearly all the information was coming up. So might just be that there's an anomaly coming through with the recent sales data. So it's something to watch. Might go and check that out and have a chat to the guys. So. Yeah, but that's where I would go through and be looking at what the different rents are for the different types of properties, Mark. So hope that helps. But yeah, the rental yield is usually based on the value, current value. And the problem is obviously that your. So if you had like a $500,000 property with a 5% yield and you renovated it up to a $600,000 property, in theory, you should still have a 5% yield. Right. So your rent goes up. Does that make sense? If you held a property for a long period of time, what happens is you get a little bit complacent and your rent doesn't necessarily go up with the value of the property. So it's not a don't. If you're looking at it now and going, you Know, what are my current portfolio doing? Don't knock yourself around too much because we're all guilty of taking our eye off our current portfolio and looking for the next big thing and potentially not managing the managers in being proactive in pushing the rent up or finding out what you need to do with the property to be able to get the rents up.

What about the concern about bumping up the rent and losing your tenants?

Yeah, that's. Yeah, I do. And I go through the conversation regularly with my agents when I do reviews with them and say, you know, what's. Can you just scope out with the current tenant what they'll, you know, be. Be good for? So, you know, you know, the agents, you know, the owner's looking to putting up the rents. 20 bucks a week. Would you stay on kind of thing just to make, to see before actually just issuing. We're putting the rent up by $20 a week because I want to see, you know, if I'm going to be up for the relenting fee, the vacancy fee, the cleanup fee, invariably that you have to pay as well by going up and going through the property and maybe retouching paints or whatever.

Waiting for a bigger, bigger rise.

Exactly. So it might just be the fact that you make that decision yourself and not push the rents up. But if the market has moved up considerably and I look at people's fact finders all the time and I can see that their rents haven't moved in years and maybe the fear of losing a tenant and having to get in and clean things up, that could cost you, let's say $2,000 for the fact that the rent's actually $100 less a week could be a big worry. So yeah, be worried about the. That.

Tracey's just typed in here. Our current Renault as shown in the renovator network. Two bedroom unit, previously very under rented at 215 per week. Market is about 280 to 300. We currently have it advertised for 400 a week and have two inspections booked for this afternoon.

So the market, when you say the market's 280 to 300. Traffic grace, is that the property, the rental market and your renovation is going to Command an extra $100 a week or is that the value of the property?

Sounds like it's what the average one rent.

It's the rent or the value. No rent. So she's. Well guys, get in and have a look at the. It is the rent. So get in and have a look at that. That the renovation that Tracy's done as well because it's pretty fabulous. She chose not to go with all the color schemes that everyone suggested for her and it still looks, still looks pretty amazing. So. Yeah, Trace, keep us posted in the Renovator network. What's going on there?

Great result though, isn't it?

Yeah. Good job. Okay, thanks, Mark. Appreciate your question.

Yeah, thanks again.

Bye.

Thanks, Matt.

So, guys, as we're saying, this is, this is for those that are, that are new. This is the ultimate guided renovation that's new to the ultimate guided renovation or to these calls. We are live the last Thursday 8pm every month and we'll be chatting to you. Ask your questions, send the questions through to Support your property success.com or there is also a phone number that I always forget.

Let's go back and find out pretty quick.

11300 number that we have that we always forget. So 1376 1019. Give us a call. Leave a message there. We love chatting to you. Make sure your microphone's working and send your questions through. Gabrielle, I really appreciate you sharing that case study with us today. I'm sure it's going to add a lot of value to people and we look forward in the Renovator Network hearing what you do within your if you're going to go ahead with the property purchase or not. And I guess that's, that's about it. But thank you so much for your contributions and make sure you make the most use of the community that we have here. We've got some amazing people within our private Facebook groups and you know, we're here to help. So looking forward to speaking to you next month and and over and out and have a very, very happy Easter. And here is to your property success.

See Yes.