Your Property Success Mentor Call May 27-05-2021

Hello? Hello, it's Jane here. We are a few minutes off our monthly call, so stay tuned, get your questions ready and I look forward to challenging you soon. It. Okay. Okay, guys, we're just a minute off, so hang tight, get your questions ready and we will be starting the May Q and A call very shortly. Hello. Hello, everyone. It is Jane. It is May. It is lockdown number five for Melbourne as declared about an hour ago. Well, wow, what a month we have had. There's so many things that have been happening. Federal budgets, state budgets, lockdowns. You know, there's so much information out there and, you know, I guess it's a chance for us to catch up and just regroup and have a look at what's actually happening out in the market and what is happening in your aspects of the world and how I can best serve you and answer your questions. And that is what this is all about. So please just type in and let me know where you are and if you can hear me, if we're coming through loud and clear. And yeah, if you're in Melbourne. Well, hang tight, guys. We're going to have to rush home and get our kids or packed up because we are back to remote schooling and working. So back to it. The things we have to do to keep everyone safe. Well, I have to say it's been a big month for me because I've had my vaccine so hit the big five zero last year, which qualified me for the vaccine. And although my festival of 50 continues for another six months, it also meant that, you know, I got an opportunity to get out there and get vaccinated. And I think at the moment that's pretty much the only thing that's going to be keeping us all together. Now have a look up in the top of the screen where we are at the moment. Thanks for letting me know that you can hear me. And for those of you who are in Melbourne, if you do click on those links that I've got up there, I can actually see your name pop up. So it'd be nice to actually share that with you now as we have been doing these Q and A calls the last eight years, monthly, you probably know by now there's a disclaimer that says, I'm not a real estate agent, accountant, financial planner. And all the information that I'm going to be sharing with you today is my observations of the world and from my personal experience. And please go and seek a professional around your specific needs. Having said that, I'm here to serve you and to give you the biggest benefit that I can. And you know, as always, I've got a bit of a wrap around what is happening in the market and what I'm seeing that's out there and occurring at the moment. It has been, as I said, a pretty big month since we spoke last and boy, within a month so many things change. So it has been interesting. But I'd like to know what's on your mind and whatever questions that you have and how I can best help you with those. Now we do have a question and thank you very much. It's great to see someone's actually pushed a question into Aza into the Live so that I can actually answered that for you today and I will definitely get around to doing that. And you know, for those of you who are here for the very first time and potentially made a donation to the Kids Help line to get access to the your Property Success Club. You know, I'm really, really excited in sharing that, you know, we've now actually raised $14,632 for the kids Helpline. You get access obviously to my youy Property Success Club. And for those who have joined previously, we also raised $10,716 for the Epilepsy foundation for supporting kids and families with epilepsy. So you know, it's fantastic that we've all we've just cracked $25,000 that we've been able to give to two very, very worthy charities, which is really exciting. Now I want to just check in to see if anyone else has any questions, but I'm going to go to Aza's question straight up and he says I'd love to hear more about to cover costings and estimates. Love the ARCA center cheat sheet but some real world experiences and maybe some other resources will find be very helpful. For me recently went through some underpinning and cut off drainworks and found it difficult. So as a this is a really interesting question especially in light of the fact that, you know, you know, my strategy obviously involves renovation and hence, you know, being part of the having done many, many renovations and still doing renovations. You know, I've only just finished a balcony addition improvement in one of my properties, a new roof in another property, a substantial renovation to a block of units of which I only had one of the 18. And you know, that's all happened in the last couple of months. And what I've found with any renovations is when you start digging in and doing things, other problems often come up. So you're often a detective in Trying to find out what the problem is, what the solution is in a cost effective way, but also trying to plan for that. And it's always a little bit hard. Now one of the things that you will have a look and I'm just going to share this with you so that you can see what this looks like. But as, as I mentioned, there is the ARCA Center Cost Guide. Now for those of you who are actually in the Ultimate Guide to Renovation, you'll find links to this, etc. Now I try to update them regularly, but every year they do change. Obviously. Now the cost guide itself, when you actually do download that, what you will actually see is please let me know if you can't hear me because I have turned my video off and in the past turned my sound off as well. But why I think this is really clever and why I like it a lot is that it actually gives you an estimate of the cost guides. Now you know, as I said, when you get involved with things like drainage and underpinning, it's interesting to actually see what an estimate is because after all, we don't always know what those costs can be. And what you often find as well is the costs do change from state to state. So when you're actually looking at some of the different costings and I'm going to show you how to do this, there is actually different state to state kind of numbers that you're looking at. But this is what I find is a really handy way to, to get some information so that you can just start doing your initial quotes, for instance, and when I'm thinking about doing quotes and I'm thinking about how I would actually get the information so that whilst I'm in my due diligence phase, I've got some good information to allow me to go and actually find out what, what the property renovation cost could be. Then, you know, I'm always looking for ways to actually find those numbers. So as you can see here, you know, it's really important. Well, I find it really important to be able to have a variety of places to be able to go and get those information because things do change and especially when you've got big federal announcements around home, building grants, et cetera, that is tying up a lot of the building. So it is important to be able to jump in and actually see what the relative. I'm just trying to pull up my quick quote calculator as well. But what the relative costs can be. So here we have stumping seven to $12,000 a house. Now Sometimes what I've found is that sometimes some of these kind of information that you see, they all actually create a large variation like 800 to $2,800 per meter squared. This is just insane when you think about it. It's a silly reference and it doesn't really service very well. So in some areas, when you're looking at a kitchen, 15 grand to $43,000, that's a huge range. So. So sometimes you do just need to start at the top and start getting some of these numbers and then going through and having a little bit of a look further on. And let me show you where I would get some additional information from. So what you might do is go to a site like Services Seeking. Now Services Seeking is where you can go and put in quotes and ask for quotes and people to come back and give you quotes, etc. There's two other sites here, Hive Pages and Airtasker. But the reason I like Services Seeking, if you get down all the way to the bottom, you can actually see that they have a number of price guides and you know, as variable as these can be, there's actually gives you quite a lot of information. So they're actually collating the information azza from all of the different providers and seeing all the quality quotes that are coming through. So the reason I like this is that it gets me down to a little bit further on what is actually happening in the area. Now the other thing that I really like about Services Seeking is they actually have this kind of heat map as well. So you can look at all services in Queensland for instance, and see what the overall cost is that you would expect to pay. Now it's interesting to see here, you know they're talking about financial year 2017, 2018, but it's showing this price point going up. So you know, we're starting to get a little bit of information here. So you can see here, if I chose for instance, painters and I looked at painters in Sydney versus painters in Queensland, they're more expensive in Queensland, a little bit cheaper in Victoria, South Australia. What have we got going on? No information for South Australia. Not enough. Once again, a little bit expensive in Western Australia. So this kind of just gives you a little bit of information. Now these price guides obviously are dated a little bit as well, but this is part of being a renovator, right? You're always trying to find additional information that can give you a heads up on what you need to be able to get to the bottom of the quotes before you actually start doing the Quotes. So the reason that I really like having multiple opportunities to get in and to find the information on the different costs is that it can be variable. One of the. So what we've done is we've started with that 10,000 foot view. So we've started with the view of. Okay, so what's it kind of like with the ARCA center cost report? We've kind of come down to seeking services and had a look at some of their price guides and there's other price guides out there and all you have to do obviously is jump in there and have a look at those. But then we can come down to the state level and we can have a look, start looking at what that is. And then once you actually know where you are, so you might be doing a renovation, for instance in, you know, orange or somewhere else maybe, then what you can do is go and have a look in the local newspaper. And a lot of the local newspapers are online these days and I know a lot of investors who are buying regionally often subscribe to the, the local paper and get that sent to them. In the capital cities, obviously in the capital cities like the Wentworth Courier in the eastern suburbs etc in Melbourne there's you know, a new little local paper as well in different suburbs. You know, if you look at the back there and just see who the local service providers are and give them a call and that's when the finger does the walking and you start getting an idea of, you know, three quotes, get them out there and do it. You can also use, and here's a little sneaky tip a lot of people don't do is their property manager. So your property manager obviously has a lot of trades that they recommend or they use regularly. So they've had a lot of opportunity to get quotes for some of their clients and they've seen the prices come in. So there's a very, you know, range of where you can get the information. Obviously if you're in the Ultimate Guide to renovation, then the Quick quote calculator in module 5 is your go to. I think there's probably 15 different tabs in there all laid out separately from landscaping to tiling to painting, et cetera. And you can start at the top level and take, you know, our estimate prices for like for instance, painting a three bedroom house down to the minutiae of the detail of how much for builders bog and how much for paint per litre, et cetera and paint brushes. So you can, you can budget it out for yourself and you can use that Quick Quote calculator also to manage the renovation, too. So many, many ways that you can actually look at and manage the different ways to get cost estimates for the prices. So I hope that has helped you with your question, Azza, because I think, you know, a lot of people sometimes get a little bit lost on how to find the information and get the best numbers. And, and I know that sometimes also you've got the opportunity to talk to builders and get quotes, but you really just want to have a guide to start with. And as we saw with those kind of architects, center, kitchen and bathroom guides, some of them can be quite extreme. So you need to actually get down to the real numbers so you can do your cost estimate to make sure there's money to be made. So hope that helps you. Okay, so we've got lots of people here talking to myself, which is always nice. We've got lots of people here. And we've got a question, I think, from Susie, and she says if you think a property is going to have some costly issues and you've held it for a while, do you think it's a good idea to sell and perhaps buy something else and start again with the Trident strategy? P.S. we are with seeking services as electricians. There you go. So that's Susie up in the Central Coast. So, Suzy, it's a really good question and I think for some of you, you've probably seen my webinar that I have run on portfolio killers and properties that no longer serve you to get you to the end goal of what you really want to achieve. And, you know, potential costs can come up that make the property turn very quickly from a great property into a questionable performer in your portfolio. Now, I've experienced this a bit. You know, we have a number of properties, obviously we have two units in our portfolio. One was on Bondi Beach. And for those of you in the Ultimate Guide to Renovation, you've probably seen that information in the case study. But that we, we moved in over winter and did a really quick little renovation. It was fantastic. Views of the beach in a small block of 8 units. But being close to the beach and being sustained susceptible to concrete cancer and being built on sand, etc, it was having, you know, numerous issues were coming up time and time again. And so we went out to find, you know, how the costings and to get the concrete cancer fixed on the rooftop and the leaks that were happening into the units above. And the initial quotes came back, you know, between 100 and 150,000 per unit in the block. And we had A chat to one of the other owners, whose father was a builder and had done some similar works. He said it was probably going to be somewhere between 2 to $300,000 per unit. We had a look at the works that were being done. They're all essentially structural. There was some painting and cosmetic. And when we had a chat to our property manager and said, you know, if we do spend this $250,000 on this work, how much of that will be added in value to the value of our property? And he said, probably about 80,000. So, as you know, I try to make $2 from every $1 I spend. So if I'm going to spend $250,000, I want to be making half a million dollars, right, not $80,000. So it really wasn't in the alignment to our goals of what that property was. Although I did plan on retiring there in the future. It was going to be a cost to sink, and it was going to set us back. And obviously there'd be a significant amount of time when the tenants would have to have, you know, some kind of rental compensation as well. So we sold that unit. Now we sold it with full disclosure, making sure that the people who were buying the unit knew what costs they're up for, and we sold it off market. Had the real estate agent actually just reach out to people in their database who were developers and people who knew about the real cost of. Of these things, because we don't want to get someone else into trouble, obviously. And it was purchased, and it was. I think we ended up negotiating. I think we actually sold it for like $200,000 less than what it was worth at the time or valued at the time, understanding what that cost would be. Actually, I think we shared in that $100,000 less, but we paid. We sold it for less than really what it was worth, anticipating that we were actually going to have to spend a lot more money. Now we're four or five years on from that now. They're still fighting over the works to be done, and the works have actually escalated even further past those initial estimates. So major issues. So, Suzy, if I was facing the dilemma of a property that potentially that you held, that had a lot of work to be done, then I would definitely be considering getting the work, having a look at that property and finding out how much that work would actually cost you to do and what the return would be. So that's, again, speaking to real estate agents and saying, you know, I am going to have to put in a retaining wall or I'M going to have to fix the roof or do the guttering or you know, waterproof, whatever it is and find out, you know, is there actually a cost uplift for it. Now overlay on that also how that property fits into your long term goal. So if this is an area that's going up by 7, 10, 15% a year and you know very quickly you can absorb that additional cost into it, it may be worthwhile for Your long term 10, 15 year hold plans to actually suck it up and pay for it and get the property to be maintenance free, manageable and okay for you to maintain that property into the future. So it really is a cost estimate of what you need to do. So I hope that helps and gives you a little bit of information around that. Now I'm just going to check to see if there's any more comments that I missed. All good. Okay. So if you do look at doing some renovations at the moment, just bear in mind that there has been obviously with the first home buyer grants and the new build grants and the renovation improvement grants, all of the things that have happened in the last year, there has been a real drain on the availability of builders and associated professionals and we've seen prices go up, we've seen extension for the home builder grants because they just can't get the properties completed in time or the renovations completed in time. So just know that there are works. I was speaking to one of my mentoring students just last week and they have purchased a property with view of doing a build at the back of the where the current established property is a house on the block and the builders are saying they're a year away from having availability to be able to assist. So you know, just bear in mind if you do have a strategy and you are trying to enact a strategy that does include renovation or building or subdivision, all of those things that we like to do to increase the value of the property by taking it to a higher and greater good and value, then it may actually take a while. So and with renovation, you know, there are some amazing opportunities I believe coming up for renovators. And if you have read my book, which I have here somewhere, you know, I've got a whole chapter in here on flipping properties and you know, I kind of give you a whole kind of thought around what flipping properties, the cost analysis that you have to do to do it. Now the biggest issue with flipping a properties, you're trying to do it in the same market. And if you're doing in the same market, you know, in A rising market or downturning market. So the price point doesn't change that much. You don't want to buy at the high, do a great renovation, and then the property is worth less just because of the growth. So, you know, when we say buying and selling in the same market, there's a shorter time frame. And that shorter time frame invariably means less than 12 months. And less than 12 months usually means that you're up for your full capital gains tax. Once again, if you're not an accountant, go and check with your accountant. But there are implications with that. However, there is this huge opportunity coming that I'm exploring with my mentoring students right at the moment in New South Wales, if they do bring in and endorse that stamp duty change so that you can delay the stamp duty on a property. So potentially Instead of paying $50,000 for the stamp duty, you might be paying, paying $5,000, the step duty up front and selling the property, which actually gives you a greater differential to make more of a profit. Or it allows you to actually go into a suburb where the pricing disparity between the renovated and unrenovated is a little bit less. So, you know, without any doubt, you definitely do need to be doing your due diligence and being in a suburb where you are looking at that pricing disparity still between the renovated and unrenovated properties. If you're in the Ultimate Guide to Renovation, go and check those modules out on how to do that. And I've done tutorials on how to do that in using RP data as well. But, you know, it's, it's definitely possible to anticipate that now. When I started talking about doing the flipping strategy with John Edwards when he had Residex, he was of the opinion that the minimum price point for a house would have to be about 650,000 to have enough of a spread for an unrenovated and renovated property to allow for 10% $60,000 spend on the property for a renovation and making the profit that you want to make. So that was like seven, eight years ago. That number, I feel now is closer to 850,000, 900,000. I know people are flipping properties at a smaller price point. I think those in New South Wales can do it at a lower price point. When we get into this stamp duty change in New South Wales, there is opportunity to be had. So it'd be really great to be able to anticipate that and look into it. So there is still a opportunities for renovating to add value in High vacancy scenarios. It's great to have a property that everyone wants to be in and wants to stay in as well. However, you know, as we know what's happening around Australia at the moment, there's some areas that are experiencing high vacancies. There's those areas that are close to universities that don't have the overseas students back and that's affecting the price point as well. So just be aware of of that. But I think there is some really great opportunities for renovation to still be a fantastic strategy in the future and a little twist that allows you to potentially make a higher profit or go into suburbs where there is a closer disparity between the renovated and unrenovated. Back to Susie, she says, by the way, to be clear, it's our regional Mildura property we're thinking of selling. It's springtime and getting another regional property instead at it. It has a dangerous tree and now it needs new guttering. And I don't feel Madura is the best regional area for capital growth. So the fundamentals of, you know, regional market and I think I might have even a little report that I can just share with you here. This is the latest RP data report around regional housing markets double compared to capital cities. Over the last year, regional markets have done 13%. Capital cities have done 6.4%. Let's be really clear about this. We're talking about the growth rate. So if you've got a million dollar property that's gone up by 6%, $60,000 and a $400,000 property that's gone up by 13%, we're talking about $45,000. You're still making more money in the city than you are in the region. So it's a percentage improvement. But geez, 13%. Fantastic. Would love that. Every day of the week there are areas that are doing well and areas that aren't doing well. The biggest performers in growth have been that Richmond Tweed kind of Byron area, Bunbury in Western Australia, Ballarat and the lowest vendor, oh, shortest days in the market. Ballarat, highest change in sales volumes. Bunbury. Okay, Growth, highest growth is that Richmond area and lowest growth is Bunbury, which is. That's why I thought it was a change, major change in the sales volume. So some good reasons to be in regional areas. There's also a report out this week that also indicates that there's opportunity for the bigger rental increases in regional areas. So just be aware of that. But if you're looking at Mildura, you know, get back to doing the research. As if you're going to buy the property and look at, you know, what are the fundamentals that are the drivers for that city and do they still hold based on why you bought it originally? And then, you know, find out from the real estate agents what's happening, find out from the council what's happening. Find out, you know, maybe the percentage of people who are moving to the area. The ABS obviously does a lot of those internal migration figures as well. So you can do your research like you would normally do as if you're buying the property to see if the property deserves to stay in your portfolio. So yeah, I hope that that helps you with your questions. And I think the other thing is, you know, when we have a look at, you know, things like what's happening in the market, there's a lot of information out there and as I said, there's been a really, you know, big, let me share my screen here. There's been a really big changes that have occurred over the last couple of weeks that we really need to be aware of and consider, you know, how is that going to affect us as we continue to look at the property market. So let's just have a look at what is happening and what has happening, has happened, you know. It's the 27th of May, 2021, right now, 1 o', clock. So two hours ago it was announced that Melbourne's gone into another shock. 7 day lockdown. Kids are coming home from school and remote learning again. You're not allowed out for more than 5 km, you can be out exercising only 2 hours a day, etc. Etc. Meeting one other person, blah, blah. So we're back into that. So what's happening? It's really interesting. I've been watching the Sydney and Melbourne markets and Sydney obviously didn't have the lockdown that Melbourne had. Brisbane didn't have the lockdown that Melbourne had. They hadn't had spot, you know, minor lockdowns and they definitely bounced back earlier. As of this weekend, auctions have to be online again so we won't be able to turn up and bid for properties. We've had great clearance rates across all of the capital cities. We know that there's been a lot of attention also in Hobart, Adelaide. Perth's market seems to be coming back finally, which is great to see, see. So, you know, we're starting to see the, the market returning. But what will this lockdown mean? Well, if it's just seven days and everything gets under control then I, I think it will just be a little blip if it's longer than that, there's going to be another loss of confidence and people are going to start wondering, you know, what's whether the Victorian government can control the pandemic here and if they can't, there'll be a loss of confidence. I believe in everything, investment in industry, business and obviously property as well. So let's just watch that. This might just be seen as a really great quick indicator that they have it under control and we just move on. Small blip. But for those people that are, you know, having personal kind of experiences that aren't positive, I spoke to someone yesterday, hairdresser yesterday, who said that she was doing someone's hair for their wedding this Saturday and they had their wedding postponed three times in 2020. They moved it to Valentine's Day. It was obviously then cancelled during that lockdown and they moved it to this weekend. So this is the fifth time they've rescheduled the wedding. I think personally there might be a little message in there that it may not be the right time for them. But hey, who knows? Now let's just have a quick little chat about the federal budget as well. There was a lot of things in there, but what was really interesting was the commitment or the recommitment to the first home buyers in the budget. And, you know, I spoke on a couple of podcasts and radio shows, et cetera, about this because I think there's this underlying optimism about the attention that. And the assistance, financial assistance that the first time buyers are getting, you know, through the family home guarantee, the new home guarantee, the first home super saver scheme with their, you know, tax incentives to put the savings into super. And on the surface, I think it kind of looks like a real confidence boost to low interest rates and getting people into the market. My concern is if people are looking at this and they're looking at this from a point of view that this is an opportunity for them to buy a property and they can get in quickly and buy that property and it's their home and it's going to be their home forever and they're going to build a family there and kind of like they're one and done, then I think on the surface this looks fantastic. But as we know, our parents, their parents, us, have built our wealth from being strategic and our home values going up. And my concern is that we're pushing a lot of young people out to house and land packages or brand new units off the plan units. And if this is just seen as a stepping stone for them to get to their long term goals, then I really think this would be a disservice. So if you do have first home buyers in your family or you work with and they're considering purchasing, get them to think strategically and get them to think strategically as an investor. And I have got first house buyers. I have got a website that I've set up specifically for first house buyers. You know, there's a guide, updated guide to the latest grants, etc. But if you go in here and have a look at these episodes, I've actually created an entire series of shows for the first time buyer that can go through and actually get all of their course questions answered about how they need to buy and think strategically. So do them a service, get them listening to this. I've also had the opportunity to speak to some wonderful first home buyers as well. So Adam and Adele and Amelia in my Borrow My Brain series that I ran last year as well. So get them in there, get them listening because there's an opportunity there and obviously, you know, if they would like us and investors choice mortgages to assist them with lending, I will give them a $495 first home buyers course, which I think is just fabulous because I know it will teach them everything they need to know. But on the surface this looks like a real stimulus. What's happening behind it? A. We could have a whole generation of first home buyers who have a home that doesn't become the foundation to their wealth of the future. We can have an increase of costs for renovations and works because all of the builders are tied up. We can have a delay in people being able to buy due to the quick rising of properties on the market and the prices associated with that. So there's all of these things that we need to be aware of that could affect the market. And remember, a lot of these first time buyer incentives, you know, they might be limited to a $475,000 purchase or 600 or 750 depending on where they are. And that is just well below what the medians are for those areas. Now. Victorian government gotta love them. They came up with some changes for stamp duty changes as well. And I've had a couple of my mentoring students were asking about how significant these are going to be. The realities as investors, we're not buying over the $2 million mark or the $1.8 million mark. I don't think it's going to have a significant difference. As a mortgage broker, I get to see people's incomes and bonuses and all of those things and the big end of town have definitely started to get their bonuses back and they're the people who we buying these. And I don't think that a small change in these land tax or stamp duty rates is going to change things very quickly anyhow. So interesting to see. So let's have a chat about the market and predictions too because you know, I know that people are really wondering what is going to happen in the market. Is it possible to continue this great growth that we've had? And I think the answer is we'll probably pull back on the growth, but it will continue to go up. So prices are the cheapest they'll ever be. And you know, if you've got plans of tapping into the market, then, you know, the sooner the better with strategic approach is my opinion. Now we know that the growth rate has went up in March the fastest since 1988. And we can see consistently over the last 12 months, you know, the capital cities have gone up by 8.2%, which is extraordinary when you think about it. And you know, almost weekly they're going up by what we potentially would have liked to have seen quarterly in past years. So we're really seeing some significant changes here. Now just remember these year to date changes, when we have a look at this and we look at the percentage growth, remember that Rule of 72 and the Rule of 72 essentially says that if you take the growth rate and divide it into 70, so 72 divided by 7, that will tell you how long it would take for your property to double in value. So anything that we're looking at here like a 9%, 10% growth rate, 10% means that it's going to take seven years to double in value. So you know, buying a Property now at 6, $700,000, you're looking at 1.2, $1.3 million within 10 years based on these growth rates. Will the growth rates continue is the question. And that's one of the things that I really want to have a look at. And I've been working with, we go to her and Todd White now they're the biggest valuers in Australia. Over 70% of all valuations that are done are done for refinancers and banks. They're not for sale. And these guys get to see that whole market turnover regularly. So with these guys having thousands of valuations done every month, I always go to Heron Todd White monthly report just to see what's happening, to give you an idea of what that looks like. Here we go. Heron Todd Wright monthly report. It does commercial as well and it also does the commercial residential, but residential real interest me. I always start with the clock to see, you know, what's happening in the market, peak of the market, all these country areas, bottom of the market still out there in regional Western Australia and everyone else is kind of moving up. Broome and Canberra have come into this rising market. So we've still got this rising market. But what I really like as well and you know, is that they'll go through, you know, a topic every single month. This month is all about first home buyers and where they could be buying. But they go through all the different regional areas and they have the experts in those areas actually give you some analysis on, you know, what's actually happening. So what they're seeing on the ground with the valuations that they are doing, this is incredible information and insight that you're actually getting like, you know, a month after they've actually been doing these valuations. So really up to date info. What I also like here is it just gives me a really quick little overview of what is happening in the market. So, you know, Sydney tightening demand for new houses, strong, you know, rising market for the stage of the property market. So this really gives you kind of like what is happening at the moment. It does units, it then retail, that's the other one it does. It also then goes by different regional areas. So Canberra is obviously not regional. So if you're from act, I apologize. But you know, so we've got the central coast here, Coffs Harbour, so we can see what's happening here on the east coast as well. Once again, you know, it goes through the units and looks at what's happening. If we go into the country, we can get some country, New South Wales areas, you know, what's happening in that market as well. So, you know, this is a really good resource to have. So when I'm, you know, looking at resources, this is one of my go to resources that tells me what is kind of happening in the market. Always trying to find out what's happening, right? If we actually have a look at some of the other reports that are available. CoreLogic gives you access to reports that come out weekly that tell you what's happening, clearance rates, et cetera. I always find it really interesting to have a look at how long it's taking for the properties to be on the market before they sell. So you can see 26 days in Sydney, that's so short, that's like a month from listing to sale. And if you Think about usually in an auction campaign, it's four to six weeks to have an auction campaign. So these, it indicates to me that, you know, there's a lot of properties selling before auction. So that's really interesting to look at as well. One of the other things that we just need to keep in mind and everyone is asking me is how much will the property prices go up? Now you might recall last month, last year, most of the major lenders were talking about property prices going down. So this is kind of interesting now that, you know, the lenders are coming out and saying the property prices are going up. But we can see here that, you know, this substantial kind of over 10%, you know, predictions for the house market in the major capital cities. So, you know, Anz has come out with that. Other banks have come and, you know, come out with very similar forecasts. They do see 20, 22 dropping down, but nothing too shameless. You know, we're still talking about Buy six, so, you know, some really good growth as well. Now, who do you get your information from? Oh, question, what's the price of the Heron? Todd White monthly report. It is free. Yeah, all of that for free. Get on it. This is interesting. This is like the last seven years and you can see here that someone's actually mapped out what the monthly price growth was and the annual growth in the property market. And when the Current affair and the 60 Minutes said there's going to be an absolute crash. And as you can see, if we just wait and listen to Current Affair or 60 Minutes to say there's going to be a crash, there's a boom afterwards. So, you know, this has been kind of interesting. I'd like to think that they're about to take, declare a crash again. But, you know, this is just a kind of, I guess a bit of a tongue in cheek graph that put up there. Only because there's so many people out there at the moment that are talking about, you know, where's the, where's the next boom area and where can I buy and how am I going to make money? And there's all of these questions that are going on and I know that as in investors, you know, we want to get in and we want to have confidence in our investments. But the reality is, you know, there's a lot of commentators out there that are talking the market up or talking the market down, depending on whether they've got a book they're selling on either, either direction or if they're trying to sell something to you. And the reality is you need to just be looking across the board at as many indicators and information as possible. So here's my thoughts on what is going to happen. As you know, you know, last year there was a period of indecision of what was going to happen post pandemic. You know, around September, you know, I really activated the people I was working with to start looking for property and they're, you know, securing really good quality properties on the up end of the growth curve. But will it be sustainable? And this is the question that everyone is asking and wondering about. And I think, you know, if you start looking at, and you know, taking into account the fact that Melbourne is going to have a one week lockdown and potentially not further after that, wouldn't it be nice to think that we're probably going to all be vaccinated by, let's be honest, probably end of first quarter 2022, and we're going to have an opportunity to reopen our borders at that time. When you think about that and you look at the crisis that's happening around the world and the number of people who are being affected by this pandemic and the deaths associated, Australia has really come out really well. I think the only other country that's done really, really well is New Zealand. And when we look at, when we look at that and we look at the economy and the population that can sustain a new economy, and we look at the government's incentives that they'll probably bring in place to bring entrepreneurs, business people and new money and immigrants to Australia, we will be seen as safety and sanctuary. So safety from the point of view as vaccine, we will be able to close down borders quickly as an island. And you know, other than what the Victorian government has done, we've pretty much had a really good handle on and what is happening with the dealing of this crisis. The other thing is we've got some of the commercial confidence indexes coming out and they've been the highest they've been for many, many years. People have been snappling away their savings, they have been getting boosts through jobkeeper, job seeker, through government incentives, through lower interest rates and saving the money. Because let's face it, we haven't all been away on holidays and you know, we're having this, this buildup of savings and what we've seen is people are starting to spend as well. So we're now having, you know, the spending happening which is driving our economy, which is fantastic to see. So there's all of these kind of opportunities when they open the Borders to new people coming in to Australia. Usually they have to live here and rent here. So six months to 12 months before they can then go and buy a property. So there may be a small lull. I doubt there'll be a backwards growth or property prices going down. There might be a lull in the growth which means the prices just keep going up slowly, not fast. But I believe that as soon as all of these first home buyers, the first time loan deposit scheme, the home, new home guarantee, all of these come in and finish maybe middle next year, we were then going to have the influx of new people coming into the market and then start buying in the market. So you know, I think there's a lot of optimism for this to be a sustained growth period. And if I just, you know, show you what this is one of the things that we were looking at yesterday. The 37 countries in the OECD, you know, over the last short period of time in the last year, they've had about a 6.7% increase in prices in their, in their properties. So this is really, really interesting to see that, you know, there has been growth across the world and especially in some of those countries that have been in and out of lockdown as well. So I think, you know, when we have a look at that, it's really interesting to see the opportunities there and let me have a look. So I've got a question here. Let's just jump on this for the moment. I want to get onto lending in a second because I have also just been to a number of mortgage client mortgage conferences and listen to what's happening. But I have a question here from Dean who says I'm a bit concerned my broker is refinancing and releasing equity for, for me to buy over in WA from our ppor. It's IP number seven. Why the hell is he suggesting to cross collateralize them for? He mentioned it was better than doing this than lmi. Doesn't make sense to me. Why does he want to cross? So Dean, it's a really, really good question. If you have one property and you're going to buy only one other property, then there is an argument to say cross collateralization is not really going to affect you. You're not a acquisitional property investor, you're not in the growth period of your portfolio growth and you're just going to buy the one and done. So one and done cross collateralized. Which essentially means that if you've got a $500,000 home, you've got a $500,000, purchase property you're going to purchase and purchase costs are about 6%. Okay, so let's, for the sake of me doing my numbers, make it 5%. But you're going to need around about $525,000, stamp duty, buying cost, et cetera. So what would normally happen is that you've got your $500,000 home, you might have a loan of $300,000, which is your non to deductible personal debt, and you go to your mortgage broker and they go, well, with an 80% LVR, you could actually borrow an extra hundred thousand dollars. So you go from 500,000 times 80%, which is 400,000 minus the loan. You already have $300,000 worth of equity there that you can contribute to this next purchase. And so if you're going to structure your lending separately, what you might then do is buy the next property worth $500,000 with a 90% loan, put in a 10% deposit $50,000, pay for your stamp duty and cost $25,000 and have a buffer of $25,000, which is always good to have just in case you have vacancies, lose your job, et cetera, or you could spend that on a renovation. So that is how I would set up the individual lending. Now what can happen, and if you were not an experienced investor like yourself buying number seven, what could happen is that, you know, your broker would say, look, let's be honest, you're not going to be doing anything else with this. This is a set and forget, you know, let's not make it too hard. Rather than paying the mortgage insurance on that 90% loan, let's just cross collateralize your properties. Now you've got a million dollars worth of properties. We need 525 here, you've got 300 there, that means there's $825,000 against the million dollars. It all works out quite nice. In that instance, my numbers didn't quite work out because it should have been like an 80% loan to value ratio. But they're essentially saying, let's just combine all your securities now if that's all you're ever going to do and it's going to pay down your home loan and you know, maybe renew your interest only period every now and then with your investment property with the same lender, because you can afford to do it for 10 years, which is usually the max with one lender. All well and good. However, what can happen is you have a property in Sydney and you have a property in Perth and they're both worth 500,000. Now the property in Sydney, fantastic. Goes up to $700,000. You made 200 grand. And the property in Perth goes down by $200,000. Now because they cross collateralized, in actual fact, the value of the entire properties that are secure, securitized together hasn't moved. So if you go back to the lender and go oh, can I have some more money? Because my property in Sydney's gone up, they then value the entire portfolio and go, well, in actual fact, nothing's changed. So you get caught. Now if you had it structured as I initially suggested, which is have them all separate, when the Sydney property goes up in value, yeah, you go back to the lender and go, I'd like to take out some equity, buy another investment or to, you know, renovate, get married, buy a car. Personal debt, investment debt, which we prefer but you're taking against this property. Now this property over here could actually be with a whole different lender. There's no relationship between these at all. So cross collateralisation. I think without knowing your specific circumstances, Dean, I would be asking your broker why the recommendation. I'd much rather pay the mortgage insurance but and let's face it, you can capitalise the mortgage insurance anyhow so you're not paying it out of your pocket and have the properties set up separately. So that would be my initial thoughts can take a little bit longer. Cause you're accessing the equity from one property and once that loan has been approved, you then have the pre approval to buy the next. But yeah, I'd be asking the questions and with looking at the Perth market, you know, it's done less than 2% over the last 10 years. It is so linked to the mining areas and although China has applied, you know, tariffs on beef and barley and wine and lobsters and blah, blah, blah, they haven't applied it on iron ore. There has been some reduction in the iron ore prices in recent weeks and there could be some subsequent issues associated with that. I think China has given us a great head start on becoming a better diversified economy without having everything going to that market because we've had to look at other markets for our produce, which means that, you know, we're diversified but diversifying your portfolio is a really great low risk strategy across different markets. However, by cross collateralizing it, you're kind of undermining, you know that the potential upside that you have from. So hope that helps you, assists with you with that question and with that I'm going to give you a little Bit of a heads up. Hope that is that what you're after, Dean? Hope that helps. I just want to have another quick mention of interest rates now. I talked about this last month. It's still relevant this month. You know, the RBA has come out and said there is a loyalty tax that is being charged on mortgage clients who have been loyal to the bank. And if you've been with them for more than eight years, then you know, you're definitely paying maybe a 0.4% interest, higher interest rate. Now this is really interesting and the reason that I think this is interesting is, you know, we in investors Twice mortgage in recent months have been going back to lenders and getting cheaper rates. I encourage you to ring your lender and say you're thinking about moving and what they can do for you. A lot of lenders like bank west for instance, have made the stand to say that they will give any existing client any new rate that they're offering their new clients. There is about to be a huge blow up, I believe, in the mortgage space. And that is because we're going to see, we're seeing a disparity and potentially antitrust, anti competition being put into place. So at the moment for some lenders, if you go into a branch, it'll take two to three days to get your loan approved. You go through a mortgage broker, it will take 20 to 30 days to get it approved. We have just seen that mortgage brokers have hit over 60% of all home loans written in Australia. There's a strong belief that that percentage will increase 72% in the UK for instance. And we're also seeing the banks doing a couple of sneaky things. One is that they are taking a very long time to release the people who are discharging loans and moving to another lender. So in one instance recently we were told for a client that we're refinancing for a better rate and equity release, that it would take 14 days for them to release the title so that those funds could go into their accounts with the new lender. And we got to day 45, so we're actually sending an invoice for the $50 a day that the client had to pay in extra interest for that period of time. So, you know, we're really seeing some, I guess, fun and games that are happening out there and it's interesting to see. But you know, go back to your broker. If you don't have a broker, come and check us out at Investors Choice. We'd love to help you. Investorschoice.com bookacall we're saving clients at the moment $5,000 a year plus over the next 20, 25, 30 years of their loans with negotiating some lower rates and even getting some cash back incentives. So there's some real great deals to be done out there. We've seen CBA in the last week put up their 4 and 5 year fixed rates. RBA is still saying that they're not going to be putting up rates until 2024. That does not mean that the banks may not do it. So we're starting to see some of those rates go up. But you know, we're still looking at three year rates within two and a half percent, et cetera. So there's some really great rates out there lower than current, current variable. They may not be in your interest. If you have plans to sell or release equity or build or be with a lender that needs a construction loan and you don't have a construction, you want a construction loan and with a lender who doesn't do it. So, you know, please speak to your bank but I would suggest you speak to a broker so they can look across the different market and see what's out there because there's some really good deals to be done. So yeah, don't delay. The interest rates are still low. There's some great fixed rates out there. Understand that fixed rates you can't have offset accounts against. And there's some real benefits with that. But without knowing your specifics, I can't recommend or suggest what you do. But I guess you know, my thoughts for what we've seen in the last month is that around the world the markets continue to bounce back. The markets in lockdown and those that have come out of lockdown. There's a small glitch that's happened obviously in Melbourne today that's hopefully only for the next seven days and we recover from that. And there's some better tightening of how they assist people who are in quarantine, in hotels so that we don't have these outbreaks continue. Once that's under control and the vaccine destinations continue and you know, we get back to a more bigger, better sense of normal. I think Australia will be seen as that century. We will see prices continue. But just keep in mind of, you know, why people are telling you what they're telling you and don't just depend on one person's opinion. I me go and do your own research and have a look across the market what's happening. But I think I've given You some tools that you can go to the Heron. Todd, why RP Data reports, you know they're all free and they give you an opportunity to see what's happening in the market. I love the herring Todd White free one because it is actually what the values are seeing on the ground every single month. So you're getting that, that update as well. So there's a lot of opportunity out there at the moment. I have, I'm seeing you know the market still some really good negotiation going on in properties in stock. Sydney, Melbourne, Geelong, Ballarat, Central, Coast, Brisbane. Where else have I been involved in recently? Sunshine coast and Gold coast still seeing people. It's a fast moving market but I'm still seeing some people being able to negotiate on what they're after. So there is opportunity out there. We may have as we're indicating at the moment a little slowing of the growth but the prices are still going up. So as long as the growth is over zero, prices still go up. There is an opportunity as Dean's doing at the moment, take equity out of your home and make a strategic property purchase. Just have that finance set up correctly and have everything set up correctly. So I'm still watching the rise of the regionals. Obviously they have had a fantastic time so far but the capital city's growth is now in the last three months come back and taken it out. But there is some predictions around rental returns being fantastic in the regional areas. So you know, let's just keep watching that. I'm not convinced that the market is going to completely change and we're going to see the biggest growth in the next 10 years in the regional areas and not in the capital cities. I do believe that people need to live and work where close to their work even if they are doing remote working a few days a week. And most of the people who have got the competence to be able to work from home and not have to see the boss and remind him or her of their standing so they're in mind when the next promotion comes along. Are usually within 35 to 45 year old age group which correlates to having high school kids. And not a lot of people are going to make move to the country at that stage of life when their kids are just going to high school. So I still am not convinced that the rise of the regionals is a long term thing that we're going to see. That's my thoughts guys. I hope I've served you answered your questions. Be active in that your property success club as well. We're really keen to encourage you to be there. Watch out for your emails too. I got a end of financial year amazing special coming up with my location masterclass. Can't wait to show you that over the next week or so. But yeah, if you're thinking about getting in and buying strategically, having access to the suburb selector software, having access to the systematic way to assess strategically where to buy and how to buy, I can't emphasize how much it served me, how much it served my students, my clients and my friends and family that I've seen use the strategic approach rather than a scatter gun approach when buying property. So that's it from me. I hope I have answered all your questions once again. I'll jump back in the club every now and then if you need any additional help. If you're watching this on replay. Sorry we missed you last Thursday of every month, 12:30. Look forward to seeing you next month and stay safe. Wash your hands, don't touch your face, stay inside room Victoria and we will see you soon. All the best and here's to your property success. Bye for now.