Your Property Success Mentor Call November 30-11-2018

Hello everyone, it is Jane here for the November Q and A call. So hopefully there's a lot of you that are able to attend this live because this is a very special day because we're welcoming a whole new group of Ultimate Guide to Renovation students into the club and into our community, which is so very exciting. So I hope that those of you who have been in the club before have had a look around and I've had a look at what's been going on and I'm just waiting for John to join us. But essentially these calls are done every single month now. Usually they're done on the last Thursday of the month at 12:30. We just wanted to push this a little bit so that those people who are in the course have had the opportunity to look at module one and module two and just have a bit of a play around so that they can get in and see what questions they might have so that we can assist you and get you over any problems. Now, disclaimer at the front of this. We are not real estate agents, we are not financial planners. You know, we're not accountants. We can only give you some experienced information from our own experiences. However, we have been doing these calls for over five years, every single month. So when you jump into the Ultimate Guide of Renovation or into the your Property Success Club itself, you'll see recordings of all of these calls, or you'll actually see them for the last year that are here in Facebook. And we've got a few things to tell you about, but it's been a really exciting month and you know, I just want to let you know that these calls will be recorded, et cetera. If you do have a question that you don't want to have answered personally here, then please let us know and we will do what we can in removing that from recordings. But as to date, everyone's here and open to share. So we have a number of people who have sent through questions and we have a number of things to share with you as well, which is all very exciting and I just wanted to, I guess let you know that we've got a lot of things that are happening this month and a lot of things that have happened. So if you have any questions, I really would love you to actually put the questions into the chat. And whilst we wait for, for John to come along or just say hi, I would love to see. I've said we've got at least 10 people there who are watching this live. I know that a lot of more of you will watch this in Recording. Now this month has been a huge month and I guess you have to. Oh, we've got some nice little comments here. Hi Jay, nice to see you. Nice to see you too. These and I think I've got Jamie who is in the lobby. I don't see at this time stage her video that's on Then maybe she is going to join us with the video a little bit later with a question. But hang in there, Jamie, about 10 minutes, we'll get to questions. Now what I want to do is introduce the co creator of the Ultimate Guide to Renovation as well, John Hubbard. Hey, John, how you going?

I'm well, how are you?

Oh, don't hear you.

Can you hear me?

Okay, I can't hear John.

Okay, take me off for a sec.

I might let John to everyone, let me know that you can hear me. Type it in. And we will wait for John's audio to kick in so that we can have a chat to him. But for now let's just push on. So as I said, you know, we're here to answer your questions every single month. There's pretty much nothing that we won't give an attempt to or have a, an opportunity to chat to you about where John, we can hear both of you. It must have been me that we couldn't hear. There you go. So the. And I'll just let John know that we can hear him. Good to hear you. Thanks for letting me know that. Now Ultimate Guided Renovation has been, you know, a lot of our focus for this month. And once a year, you know, we do a major enrollments and we share a lot of our experiences and that of our students with the Ultimate Guide to Renovation and a lot of the success stories and what you might have seen in the last month, which has been very exciting, hasn't it John, that we've been able to actually share a lot of stories of of past students and the successes that they've had in the Ultimate Guide to Renovation.

Yeah, it's been great. I guess that's the benefit of having a course that's now been running five years as you start to generate a lot of these stories. And yeah, it's been really fun over the last four weeks in particular to put some of those together and put those out there. A lot of really good feedback too. But I think it's one of the things I loved when I was starting out and I think you like this too, is hearing stories from other people that are just that little bit ahead of you or perhaps doing perhaps they're sideways of you and doing a strategy that you'd like to do but you haven't done yet. And hearing their experiences, those stories are really, really helpful. I think when you're starting out, it's a great way to transfer knowledge.

Absolutely. I think the other thing is that there's an opportunity for people to be able to see what others have done and actually see, you know, the potential path forward. And I really encourage you that are here, it's that you can go and go through the Facebook club page and actually see some of the things that people are doing and, you know, reach out to them. Because one of the key things that we've done in setting up this entire your ultimate guide to renovation and this community is that you've got each other to actually depend upon. So, you know, please go in there and have a look. Now, John, what have you been up to for the month?

Well, mainly to do with. Now I have to check, Jane. I was a little bit late in unfortunately, because we had some wi fi issues over here in the other part of the building. But have you done the disclaimer is the important part.

I did tell people that we weren't real estate agents and.

No, I just as boring as it is, we do have to do it. So in order for us to share the information openly in the way that we do, we need to say we're not real estate agents. Financial planners, lawyers or accountants are not liable for any loss, damage or misunderstanding caused by reliance on any of the information provided or inferred. And because everyone's situation is different, we go to great lengths to share, you know, to make sure what we share is accurate. But what you are about to hear is based on our personal experience and opinions. So sorry to have to drop that in at this stage of the call, but we do have to do that just so we can, you know, share openly and tick the box for our legal people before we can handle.

Well, I'll tell you what, I'll tell you what. This has been very interesting and I think that I'm getting feedback here. John, is that happening to you?

No, it's not happening to me. It might cancel itself out after a while, but it sounds fine from my end.

So one of the things that has really happened in the last month which I really want to talk about is this Royal commission into banking and I think if anyone's actually been watching what's happening in the last week, it has been completely self serving by the larger lenders. I just want to touch on this and I want to touch on a couple of other things because I feel really quite strongly about this. Now obviously I'm a mortgage broker and from some point of view you might think that I have a biased opinion on this. But I did become a mortgage broker back in 2005 because I believed that people had the right to have a choice and that I didn't believe that going into a bank was always going to give people the right option. Now, the CEO of CBA came out on Monday and essentially said that he believes that a fee for service would be a great model rather than the commissions that mortgage brokers usually earn. So, so you know, mortgage brokers earn a commission on the loan that's set up and they earn a commission ongoing, a small commission trailing to look after their clients. So when I spoke to one of the leading economists for one of the banks in a recent weeks, they indicated that they actually keep a measure what the interest rates are. Interest rates are if there was no mortgage brokers and there's a one and a half percent difference. So if anyone remembers way back when an Aussie John came into the market, he knew that he could buy money for a whole lot cheaper and sell it at a smaller margin than the banks were. It changed the way that the market worked. If there goes back to a. For the work, most people will go into the banks and they'll go into the big banks. And the big banks want this obviously because they get to have the majority of the market. Now since the APRA and ASIC changes in 2015, which has reduced servicing and made things tighter, the regional banks and the non deposit taking facilities have actually blossomed. So where the big banks have said you can't get a loan, there are so many other lenders that have said yes you can. So these other lenders, so the choice that you have as a consumer have actually been able to develop their products better, reduce their interest rates, increase the number of different services they can provide to you and they have blossomed. What will happen if it goes back to the banks which have the bricks and mortar? These other lenders will be removed from the market and you will no longer have a choice. This really, really concerns me and I think that the implic are that we have the banks on one hand saying there should be a fee for service. Now, confidentially, just between us, you know, as a mortgage broker, it used to cost us $1,300 or $1,275 just to write a loan, any loan, regardless of just like a normal loan that was based on the fact that.

What do you mean by the cost?

Sorry. So the cost of actually writing a loan. So the cost of doing the calls, the legwork, the runaround, the paying for the services and paying for everything we need to pay for to be able to lodge loans and process loans and then following the loan through to settlement used to take 17 hours and cost around about $1,275. Now it's now taking us 27 hours, based on all the changes in regulations for us to write a loan. So that would be maybe $1,700 to write a loan. I personally, when I was starting investing. I don't know about you, John, if someone said you could go to a broker and it's going to cost you, let's just say $2,000, the broker makes 200 bucks off it alone, it's going to cost you $2,000 to write to go to a broker and get a good loan. Or you can just walk in the street and get the same thing off the bank. I imagine most people would walk into the street and not pay the $2,000, right? Yeah, yeah. So here's the thing. It's not until 10, 15, 20 years later that people realize that that choice may have cost them 50 grand, 100 grand. Even if they realize by not going to a broker and getting the right finance set up for their strategy that will allow them to get to their portfolio goals or an interest rate that's been negotiated for them that's below what they're actually paying, they're not going to even realize that. So this, you know, fee for service plays into the hands of the, the lenders because it allows them to push people back into the bricks and mortar stores, gets rid of their competition. And the fact of the matter is, even without the Royal Commission, the banks are going to be able to put that interest rate up 1 1/2% because there's no breakers creating the business. But it also. So there's a less choice. So anyhow, push for the month and my thoughts about what's happening and what's happening, the Royal Commission, the banks are going to win either way. Most of the banks own the aggregators and the aggregators, the ones that actually help mortgage brokers. So even if the Royal Commission says no, you know, we're not going to go fee for service and we're going to keep the current model. The banks actually own the mortgage brokers aggregation services anyhow, so they're making money. And the way that by pushing the interest rates up and you know, Having to employ more people which are going to put the rates up and their costs up even higher. So it's not in your interest. People know that brokers are working no.

Such thing as bad publicity. They'll be able to come out the other side with some new changes that suit them either way.

Exactly. It's a win.

Win.

Unbelievable. Yeah. Is there anything that, Jane, you might find that you're. I don't know where the position of your speakers are where you're hear, but you may, if you're using your speakers, you want to interface them away from the microphone. That's what will be causing that feedback there.

Okay. Okay. Let's hope that gets better.

Yeah, it's good at the moment anyway.

Anything that's tickled your fancy this month, John?

No, the stories have been really great. Been talking to a lot of people. We had a on the phone since people Join and just, you know, finding out where people are at in their journey. A lot of people at the moment. It's funny, we've got a real mixture in the Ultimate Guide. One thing that I think sets your property success community in general apart from, you know, possibly many other communities is we've got a lot of experienced investors already here. We did a recent survey and over you'd know the number. Jane, is it 57 or 67? One of those. It was well over 50% anyway, already had two investment properties and not only one, but two investment properties, which is really surprising to us at the time. And that kind of plays out in a lot of these conversations I've been having is a lot of the conversations at the moment, particularly given the subject matter you've just talked about with the APRA changes in the banks is around. What do we do now? So in some cases, some people might have one or two properties in their portfolio that perhaps they didn't buy with the same knowledge that they now have. And they're in a position where they're going, okay, so what are our options? Do we renovate one? Do we sell one? So we've got the borrowing capacity back to go again using the knowledge that we now have. So yeah, I've been having a lot of those conversations, which are an interesting and slightly different conversation that perhaps we're having a few years ago where it was all around, okay, how do I get into my first investment property?

Absolutely. And I think the thing is that we're seeing more and more that we are having a lot of people who have got a number of investment properties and they're facing these issues but just as much as we've got a lot of first home buyers as well who are sitting back and going, gosh, this is my first property, I want to get it right. And I don't. I know that this property is probably going to be a property that I'm going to have for the long term as an investment. So. So lots of, lots of different people and welcome to you all. Please get in there and tell us where you're from and tell us a bit about yourself and tell us about your projects and what you've done and what you want to do. Because we really, you know, we're here as a club to help you out. We've got over a thousand members now in that, that club as well, so lots of people to help out. Now I do have Jamie here. I'm just going to see if Jamie has her microphone or her hey Jamie, can you hear me? Hey Jamie, are you there? Jamie might have just clicked the link to actually join the show. So anyhow, we'll let her go. Now I do have Susie here. Susie, I'm going to bring you up and let's see if Susie would like to ask us a question.

John.

Hey, Susie, how you going?

Hi. I'm good. I'm not that great with technology. I've got.

Oh well, please ask away.

Okay. Actually one of the questions I had was because I don't want to novelize this for us, but how do we get to you as for. Because I remember when you joined the course, it was one on one. I know there's good question and answers but how do we get to talk to you about our personal situation? Because I'm right in the planning at the moment and what's happening. So I kind of need a little bit of guidance there. Yeah, that was one of my questions because I thought it was a one. I think I might have misread it. I went back over. I've been up all night actually studying and sort of planning for this. So how do we get to talk to you about the strategy which I've got in mind but I want to make sure I'm on the right course. That's the first question. And what else?

First of all, there's a number of things. Some people have got us a special bonus ability to have a strategy call. So I'm not sure if you were in that group of people or not. There was a special offer that came out. We also have a chance to have a finance and strategy call around about week eight, after you've also gone through the course and got through to kind of the renovation stage. So you've got through the majority of the course. You have the opportunity obviously to ask questions here on the Facebook page. So I'm usually in here every second day or so and we'll answer some questions as they come up or point you in the right direction of who might be able to answer your questions. And I realize that there's often a lot of queries around your own personal situation. So we want to get you over those hurdles. But obviously with hundreds of people, I can't, you know, spend an hour with everyone. So, you know, we really kind of make sure that we can target when you need that assistance, when you require it. Does that make sense?

Yeah, it does because I've actually sent. And I did questions asked. I never got any answers. So I wondered if there's a big time lapse there with those questions or I'm just thinking.

In front of us, we're about to go through those. But since you're on the call, I mean, this is the place to ask the questions. This is the best time to ask the questions and they tend to be better than the written questions as well. So what we do is we get all of those questions. And I'm sorry if someone missed replying to you during the week. It's been a pretty busy week, obviously with the enrolments opening. But yeah, this is exactly the process for asking those questions, submitting them via the questions that you'll probably suggest. And then if you can't make the call, we'll read them out on the call. But best of all is to do exactly what you're doing now and ask them in person because then we can. Jane's got a chance to really get to the bottom of those questions.

Yeah, no, that's great. Well, one I. The ones I actually sent, I've sort of now through Facebook, the community, like with the dot map. So what size map, you know, how big does it have to be? Because never doing it before, I didn't want to get the wrong size map. Fine, you know, but anyway, I've got through that my map's coming today, so I'm happy about that.

If you've got any technical questions like relating to the where something is in the content or what kind of map support at your success is available every single day of the week. And you've also got our phone number of the office, so you can always get support that way too. If it's like a technical, you know, where do I buy the map? Or my link's not working, or where's my login? Because that's. Use that support this question time. So we can, you know, try and leverage our time as wisely as possible on tech support, which both myself and Jane are completely hopeless at any rate. And yeah. So stuff like that, feel free to call our office anytime and also mail support at your property. Success.

One of the questions, Suzy, was. One of the questions was, what dots do I need and what size dots do I need? And this always comes up. And essentially these are the dots that come out from the Map world or mapworks. And you can see here that these dots are the quarter inch dots.

Yeah, that's what I want.

Yeah, the translucent quarter inch dots. So this is how we do our dots. We've got lots of dots, as you can see. This is how we do our dots when we do dot mapping. But they're the ones. And the Hema map, he m. A map is usually the best map to get. However, I did notice, John, that there was someone on Facebook today who mentioned that they had a very long talk. I'll tell you who it is in a second. Very long talk with one of our mates at one of these stores. And they have recommended a different type of map for those that are mapping here. Oh, is it you, Suzy? Yes, it is you, Suzy.

I've been everywhere.

It's a different type of map for the central coast and north and Newcastle. And the only question. Sorry, John.

No, I was just saying I didn't know that.

And so the only thing that I would say about that is that when you have those very large areas, often it's going to be too difficult to have the individual suburbs come up very clearly. And I know that you said in this one that they recommended the quarter inch. I recommend the quarter inch, but I think they recommend. Yeah, this is the quarter inch, which is this one. Yeah, so it's. And if they say there's a. So it's 120 of these dots. You've got plenty of dots, trust me.

Yeah, yeah. I didn't realize it was per color because I said, oh, maybe I need to order two packets. And he said, oh, no, there's heaps in there. And I said, 120 is not a lot if I'm doing two maps. And he said, no, they're 120 per color. And I went, oh, okay. So he said it should be plenty. But yeah, the one with the central coast, that was my concern, Jane. That's exactly what I was thinking. If it's A wide area. But he was explaining, he actually opened it and he said on the back of the map there was a lot more concentrated areas of what I was looking for. So it seemed to be suitable. But I actually have changed my mind and gone for a more concentrated Brisbane map. So that'll be. Yeah, because after doing sort of research on the side, just, you know, and even getting that hotspot, you know, with what was that three hotspot, the top five. Yeah, yeah, I sort of. And I was up looking at that last night, go look at this one, look at this one. But anyway, it's going ahead of myself.

But really good point, Susie. And one that I would encourage people to do, and you've come to this to yourself, is that doing the dot math exercise as an exercise, particularly in one of the capital cities is what I would recommend that you start with. And the reason that I say that is that it gives you the opportunity to see, see that ripple effect take occurrence when you're looking at the central coast or you're looking at Tamworth or you know, you're looking at a smaller area, you're not actually getting the effect of the ripple effect. So I really want people to kind of do the dot map exercise so that they can get the experience and try to target an area that you know is affordable for them and gives them the opportunity to learn the techniques as well. But you know, for instance, you know people who are dotting dubbo, there's north, south, east, west Dubbo. Right. It's not going to give you the ripple effect. And in that respect, when we talk about come up with your short list. So ripple effects, reports, magazines. I've got the latest. Well, not the one out today, the one out last month, Money magazine had top 200 suburbs to look at. You come up with a short list and then you jump into the suburb selector software and in the suburbs selector software you say, I can afford up to $600,000 in Brisbane and all the suburbs come up and then you compare that against shortlist and go, oh, okay, I choose Kedron. Okay, I choose Red Hill. And so you're actually applying your shortlist to this so you don't have to look at all of those suburbs and then you go through and do your analysis, which you'll learn in the rest of module three, but it kind of gives you the short list. Now that's not to say that you don't have to have the magazines, you don't have to have the reports, you don't have to have the Ripple effect. You go straight to the suburbs. Lecture software and say, I can afford $600,000 in Brisbane. Compare the suburbs and you bring them all up and you compare them all. It's just about getting to the short list, first of all. So I want everyone to realise that you don't necessarily need all the reports that we recommend. You don't need to go and buy the magazines. You can come up with the list and it just takes a bit more time to get to the short list. Go straight to the suburbs. Like software. I think John's playing the Facebook page. So the. So does that make sense?

Yes, it does and it's very good. So, okay, what's your next question?

Give me your next one.

Well, number one, one thing that I learned from just all that was I didn't even know there was an office to call. So that was really good. Is there a number on the. On the Facebook or is this how to. Like what is the title to actually get the number if ever I should have a question.

John wants to be put up back up on screen. He's going to have a chat to us. John, you had something to say there then.

I was just going to. I'll paste it into the Facebook chat for you. But it's. You probably know it off by heart. Jane, what is it? 1300.

Oh, there we go.

Yep.

96. 36.

Yeah, that's.

What was that?

Sorry, 13. 96. 36. 46. 36, 46. But you know, we've got the support. Support, obviously, as John said@your propertysuccess.com and we gather the questions on the questions or underneath these life posting to say we're going to go live on, you know, when we're going to do it so that we can gather those questions. And I know that, John, I've just, I've got the list of questions that we've got. You know, we've got Mihos and Anita and Toby and Amanda and Cherie and Sharon that have all kind of sent questions in that we have written that we're going to get around to as well. But Susie, do you have a. Do you have another question for us?

I do. One of the things. And I'm so glad I listened to my listener today. Am I echoing? Yeah. I wonder if. I'm on the laptop. So I don't know if that's the problem.

That's better.

Yeah. So one of the things I'm looking at. Is it okay if I sort of say a little bit about personally and why I've got The question out we're actually looking at buying some because we're renting here at the moment and we've only got the property Mildura which I mentioned the other week. We're looking at buying something off the plan here to actually have something to either live in or invest. So I'm going through pre approval process. So that's a double edged question because number one I wanted to ask you if buying off the plan in the Gosford area which is really booming, new hospital, new infrastructure, huge amounts of activity and a high growth area but we thought it would either be just a stepping stone to have something to. But we only need 5% deposit on that until next year when it's complete anyway. But obviously pre approval is not going.

To be.

That's not going to be relevant to that particular purchase. But I wanted to feel out make sure what we could borrow and that. So that was going to be okay. But after listening to module 3 I thought I'm so glad I've listened to this. You mentioned about you know you can hit the credit file and you can have credit scoring issues if you go for the wrong lender. So I'm going through a broker at the moment and I'm thinking oh you're a broker, maybe I should be. I don't know if I should be going through you. That's another question, you know because today, literally today I'm supposed to be signing. It's been Newcastle Permanent that they've gone with and they said they'd restructure it if it wasn't a home owner occupier because I said I don't know if I want it as an investment or if I want it to live in but I wanted something on the coast because this is where we want to be established. So anyways we're going through that process. So I was concerned thinking well what does that mean I hit the credit file or credit scoring if it's the wrong. I mean is it once you apply and you don't even go through does that what issue, what did you mean by that? I guess that was my first favorite.

I'm going to write down a couple of things so I don't forget. So first of all I've got the credit score question. The next one is broker, the next one is off the plan and is there a third, fourth one. Okay, so let me, let me start with. I'm going to take on broker to start with. Your broker has done a lot of work for you. Stick with your broker unless you have concerns that they're not acting in your, in your interest or potentially, you know, it's, it's not having heard what you've heard, it's not working out for you. So I would say they've done the work, they've made the investor put the time in. Please stick to your current broker if you feel confident in what they're proposing. The next thing is I think that if your broker, if you've gone to your broker and you've asked for your broker for an approval in principle then they will make an application like you said to Newcastle Permanent for you to have this approval in principle set up so that you can purchase a property. Now if you have also told your broker that in actual fact you're looking to do an off the plan purchase and the off the plan purchase is not going to settle for what, six months or so, is that right? A year. Then the broker is probably not doing you a service in getting you a pre approval. Now the broker can do 80 to 90% of assessment to make sure that you will be approved when a loan comes about or when there has been a loan, you've found a property and it's that last 10% where they're getting the banks to actually say yeah, we're all okay with this. If you're doing a pre approval for an off the plan your pre approval only lasts for three months so it's hitting your credit file for no real reason. Now the only reason that the broker who knows that you're doing an off the plan that doesn't settle for 12 months would be doing a pre approval if they're not confident that the bank would actually prove your proposal. Now so if you've got an actual, so if you've got an actual property in mind that you want to have.

Yes, they don't know that they don't apply this statement. But we've been looking at this. I found one we really really like. We haven't, we've got it on reserve. But my thinking since during this course was the pre approval, especially now I was thinking all night, tell my husband as he's getting up I'm going to bed. But I said, you know, Brisbane for me that's where I don't know, it just sits right with me. And I was looking through it and I thought well why can't I. And that was one of the questions and I had why can't I get a pre approval to get something there while and do the 5 to percent deposit here? Because I've got a year before I need to take care of it. I don't know if that's moving too fast, but I feel.

There'S implications. Without knowing your financial situation, I'm going to make some thoughts that you need to have validated by your broker. But first and foremost, if you are going to make a commitment to purchase a property off the plan in one year's time, then let's assume that the Royal Commission makes all of these changes and interest rates go up and servicing gets harder. Unless you have the capacity to with confidence say to your broker, look, let's assume interest rates go up by 1% and I can borrow 10% less than what they say I can. Now you need them to do those numbers for you so you can go, I can still fulfill my contractual obligation of completing that purchase in 12 months time. The problem with people who sign up with off the plans is that they usually know that they have to do that, which now keeps you out of the market for the next 12 months just in case something goes wrong. So if you've made that commitment to go to the off the plan purchase, then what happens is that you have, unless you have a very high income and a lot of funds to complete a subsequent purchase beforehand, then you could actually run the risk of defaulting on that off the plan purchase in the future. So that is a concern. So what I would say is if you're now thinking, gee, I've got a pre approval set up for the next three months, Brisbane is the area that I want to target. I accept it's going to take a credit hit on my credit score. But now we're moving into this regime of positive credit reporting. What that means is that people who see that I've had a credit hit will see that the loan has gone ahead or not gone ahead and it will affect a credit score. And we're in this kind of time of flux when the lenders are still working out whether you know, how they report on this and how they change their credit score to report on it. But the important thing to know is that it will hit your credit file and if you don't use it, there's no real point of having it if all you're going to do is off the plan in 12 months time. So I would have the broker run me through all the numbers to go, am I able to commit in 12 months time if my borrowing capacity reduces by 10% and interest goes up by 1% just to make sure there's enough a buffer? And they say yes, then say, well what if I Purchase now a $500,000 property in Brisbane and can I after that and assuming in Brisbane a 3.3.5% rental return after that, will I still be able to complete the off the plan? Now if they come back and say yes, yes, based on today's circumstances, there's no reason to see that that's not the case, then I would say go for it. But with the off the plan purchase, it really is just kind of screwing up your credit file. If you know that you're not going to be purchasing within a year and that's the only thing that you're going to do. Does that make sense?

Again, that's really good advice. That's really good. So I'll talk to. Now that I've sort of got all that in my head, I can talk to the broker about it today before I even put it.

Don't sign anything until you know.

Yes, exactly. Thank you for that. So that.

John, did you have anything you wanted to add to that? Any thoughts at all?

Not really, Jane. The only thing I would say is when it comes down to the choices, I know you mentioned a couple of places there, Brisbane and so on, just I would like to think that that choice is the end point of having gone through the module two suburb selection, suburb due diligence process. That's the only thing I would add in there. We have some people that buy the course sometimes and launch into a property very quickly and buying the course is no substitute for doing the modules is what I would say there.

Absolutely. When it comes to the off the plan as well, then I would really suggest that you do, even if it's your home or investment, do the research about that suburb and just because there's a lot of developers developing there and there's a good deal because let's face it, a lot of developers are at the moment ending up with a lot of stock. It may not mean that it is actually investment savvy area. So apply the criteria and you might find with the development of a unit it's not even the typical type of property for the area. Now having said that, the typical type of property from the area came from 2016 census and you know, we're out in 2018 now. So there may have been a substantial change in what the typical property is with the advent of a lot of units going in the area. So be cautious but be aware that you might not be building buying the typical property for the area either.

Yeah, cool.

Okay. Well Susie, what I'm going to do, I've got a couple of people here with questions. I'm going to. If you still got some questions, let us know and we'll come back to you. Have you still got some more questions? And we'll come back to you.

I do. Thank you. Thanks for that.

All right, head in there. Now. I've got really funny. I had Kate on there whose video John was working, but it was working from her car. So I saw her driving along the road. So I'm not sure if Kate actually was actually just listening or I think she pulled over. But I've got Marjorie here. Now Marjorie doesn't have a camera, but she says she might have audio. Marjorie, can you hear us? Hey, Marjorie. No, not Marjorie, Jamie. Jamie. Marjorie Banks. Jamie. Jamie can hear us. Okay, Jamie, I might get you to type your question in.

Question here from Sharon. Dave.

Yeah. Well, I've got Kate back here. Can I bring Kate up? Kate's gone again. She's knocked herself out. Okay, I'll wait for Kate to bring herself up. Do you want to ask Sharon's question?

No, my biggest question is where can I source cheap quality materials for our renovation?

Okay. Do you want to have, do you want to take that one?

Yeah, sure. We just had a, it's. We just had a webinar on this recently actually. And one of the distinctions we made there is when it comes to cheap, there's cheap and nasty and then there's the, I guess the generic brands versus the, the high price brands where you're really paying for that brand name. So when I just think of the fixtures and fittings, for instance, because there's also other ways that you can resource your material effectively, which aren't just the fixtures and fittings. It might be in the case of the timber and you know, buying things secondhand and all sorts of other ways to do that. But where I do it for my renovations and developments is using those generic brands from the importers. Now in different states, it's different places, but a lot of the times, sometimes you'll see them as ebay stores or in Melbourne there's a crowd that I'll use called Bathrooms Direct, a couple of other places like that that I use. But they have very like taps that exactly as you would find in say Reiss. And when you put them up side by side, they're virtually identical. The mechanism very, very similar. So that's where I would tend to go for fixtures and fittings to direct importers, mainly from China, but have got a good quality product. So it's not the cheapest of the cheap, but typically it's kind of 40 to 50% less or more likely 40%, but it's still a good quality product. The other places that we like to go are just places like ebay and Gumtree and all of that kind of thing. And trying to use where possible, particularly if it's a rental. And depending on where it sits in the market, using secondhand items and often that can mean giving them a lick of paint, like we did in the case study with Jane. That's another question that's coming up actually in painting and resurfacing bench tops and all of that kind of thing. So that's another way that you can save money. There's also and depending on whether you're using a builder or you're doing the work yourself, you can also save a lot of money by shopping around for your even your timber, say your 4x2 or your 90 by 45 that you use for your walls and all of that kind of thing. There's a big difference in what you'll pay a meter for that. You know, that can be anywhere from 3 bucks through to 6 bucks just for 4x2 alone kind of thing. So lots I think you can save money and do it cost effectively at basically every level of the renovation. But the rule of thumb that I have there, if you're doing it and you're going to be selling it on in particular, is, you know, don't go the cheap and nasty. You don't want to be putting stuff in other people's homes that you wouldn't have in your own home. That's my personal opinion. And also if it's a rental property, it's going to be stuff that you're going to be responsible for maintaining over time too. So you don't want to create a rod for your own back and put in stuff that you're going to have to come back to, which kind of leads into the next question a little bit too. Jane from Cherie I might just go straight into that, if that's okay with you.

Sure, let's do that. Yeah, no problem.

She said. I wondered how well the bath and shower and tile paint wears over the years, especially with tenants. Same goes for the painted laminate kitchen bench tops. They look good when they're brand new, but I imagine they look pretty shabby after a couple of years of being a rental property. And I might just add just a little bit to that off the back of the previous question before handing over to you. But the way I often think about that is, I agree, it's not going to last as long as putting in a new, for instance, laminate top. In my experience, it'll last. In my experience, there's a kind of cycle that happens, you know, and it might be every four years or it might be every six years, but there comes a time in the lifespan of the rental property where you've got to go back and give it a good spruce up again. And my experiences have been that it's certainly adequate for that length of time versus laminate top. You might get an extra maybe two, three, even five years or more through a laminate top. But generally speaking, they're going to get scratched up or at the very least dated in that amount of time. And it would make again, depending where you sit in the market, it would often make more sense just to go in there and resurface that and get another five years out of it than it would going in and just replacing the whole thing. And I think the area where we see people get stuck often is they tend to be perfectionists before the actual event of getting the property to make money. So either whether that means making the profit in the initial renovation or that means spending the money in an effective way so they can get that property, generating money and providing income to accomplish. And then you can always go back as part of the maintenance regime and update fixtures and fittings if you would like to. But I think there's a little bit of a cooking the books that comes into almost letting yourself off the hook a little bit. Sometimes what we see is people, I'm not going to do that, therefore I'm going to blow the budget. And budget goes out the window. And I think once you start doing that, yeah. You don't really serve the goal you set out to achieve.

Yeah. And look, there has been a bit of a conversation going on, John, in the clubbers in the club regarding that kind of the painting of the bench tops and the tiles and the bath, et cetera. And there has been people who've had really good experiences and people who haven't had good experiences. So. And I think the application is important. I know with the bench tops, you know, getting the right prep done is really important as well. So there's things like that. The other thing is that you could actually get someone to do it for you. So, you know, there is an opportunity for you to actually have someone come and re enamel the bathtub for you. So you're not actually doing the painting yourself. So you know that you've got the confidence and the guarantee to have it done. But as John said, you know, usually with rental properties you are improving some of those fixtures and finishes regularly anyhow, like more regularly than you would with your home. Because, you know, I know with some of my properties I've got like four or five people living in the property. I know the bathroom is going to need to have, have, be completely redone every five to seven years, not every 10 years. So, you know, I know that that kind of wear and tear affects it as well. But I also know usually my tenants stay for at least two years. And at that two year mark, that's where you can go in and do a touch up or do an improvement. And you know, one of the tips that I have just from a painting point of view, the kickboards underneath the kitchen cabinets, they're usually removable. I usually keep a small little tin of antique white or you know, chalk white usa, whatever the colors is that you have underneath there with a little paintbrush. So, you know, when I'm doing maybe my, you know, six monthly inspection with the agent, if there's something there that just needs a little bit of a touch up, I touch it up. So, you know, it means that I can fly into Sydney without paint or going to Bunnings and go and actually, you know, go and see a property and do a few touch ups. And that might just be the case of what might need to be done is that you spend a little bit of time doing a few touch ups when you're doing those inspections as well.

Yeah.

So yeah, that's my thoughts. Another question, John. Yeah, the next one is Kate back again. I might bring Kate up and see what, see if she can. She's sitting there patiently in a car. Hey Kate, how you going? Oh, nope, she's gone again. Maybe she's just listening, who knows? But. Okay, John, next question.

Yeah, Amanda's got a question I'd like to know. Get an understanding of how much the box in the back would cost to construct. Do you have any figures on this, Amanda? It does vary. It's kind of hard to put figures out on it. But I'll build it up bit by bit and then you can take away what best suits you. But basically the actual construction of the box itself is inexpensive in terms of the, you know, if you think from the top down, the roofing material, the, the, you've got posi struts is what to give us a big span. And then you've got the framing material and the flooring material and either the subsource slab now that in time and, and to get it to lock up, if you whatever your cladding choice is on the outside, whether that be weatherboard or foam and render, you know, that can range from say 45 to 60 grand to actually just get that box locked up. So that's a pretty, pretty solid. Well, that's a pretty fixed cost. It doesn't change that much. The variables there are things like, you know, how much the sub4 costs but once or how much all the choice of cladding on the outside, for instance render will cost more than a foam rendered wall or even a blue board rendered wall will cost more than weatherboards. But once you're out of the ground, putting that aside that the costs don't change too much there where the costs start to vary quite a bit is the choices that you make on the inside. So for instance, in the one that's shown in module nine, which you get to in the ultimate guide, that has a butler's pantry, a kitchen with an island bench which is full length, 3 meter long and has a gas fireplace, it has a shelf that runs at, you know, about maybe 600 high all the way around that fireplace to the walls. It has shelves with built in lighting underneath that. So there's a fair bit of extras that have gone into that particular one I think that came out actually I can't remember what they came out at now, but it will depend on what level of finish. For instance, the kitchen in that particular one there was just, I think it was about $6,000 in cabinetry. But a lot of people will pay well over $10,000 to have that same amount of cabinetry. But the way that it's done in that renovation is it's essentially flat pack that it comes out flat packed from China. It's assembled in a factory in Melbourne. Then we get it delivered assembled. And the reason that we can use those flat packs or fixed size kitchens is the butler's pantry. We just shift the wall on the butler's pantry to basically fill that space, you know, so that's a way we reduce the cost. And again, so that's what people would be paying, you know, for a home renovation maybe, you know, $20,000 for a kitchen we're doing for well under 10. So that's where the costs start to vary there. Can't hear you there, Jane.

Yeah, no, they're great points, John. And I think the thing is that the box on the back, you know, we've had students in the past have gone, oh my goodness, I've just had a 250, $50,000 quote coming from an architect to put something similar on the back of my home. Could I apply this to my home? And if you're looking at that kind of sub 100 and then the completion for under 150,000 to a nice level, then that's you're saving $100,000. So don't just think about this for investment properties, think about it for your home as well. Be strategic about how you can add value to your home. Because we had, if I think of even Sarah and Heath Crawford who are in our community and, you know, sending our thoughts to them at the moment, they've got little Piper back in icu, but they only had a certain amount of money and they use that money to renovate their home so they could create equity so they could then go and buy an investment property. So there's different ways and strategies around all this. So, yeah, I agree it will vary.

But I guess the other thing is it's the lowest cost form of extension that I'm aware of and I'm certainly not locked into it. If there was another, if you know of another form, please tell me and I'll use that. But the idea is that extensions can be expensive because of the way they tie into the roof line of the existing property. So if you've got, say a pitched roof and then you're marrying in another extension into that, there's all sorts of tying in that has to happen with that roof. Now, the idea of the box is it doesn't work on every property. It only works on a percentage of properties. And the golden rule is it needs to have a typically, not always the case, but typically, if it's a roof that if you've got the ceiling height of 3 meters and you've got a back wall like this, and you've got a typical roof that comes down like that, then that ceiling height needs to be about 3 meters. Now, that'll change if it's got a big flat wall that goes right up into the air, because it doesn't really matter because you're tying them straight into the wall with the box. But the way it normally works is it you've got the frame, let's say it's three meters tall, ceiling on the current property. And then our box comes in and the posi strut, which is basically the ceiling member which spans right out, it sits on the top of the wall of your old property. And that's how it works. So it's a very simple. So Rather than tying into the roof and doing this big complicated thing, it just comes in and it sits on top of the. Your old wall. So hence the reason you need 3 meters because by the time you've got that posi strap running out, you lose that space. So you end up with like 2-670-27. Once you get below 27 with a big wide space. So you've got a 10 meter big box there. If you've got a ceiling height of 2.4, it feels very small, like one of those 80s, you know, renovations. They feel horrible because they're wide and long, but they've got a really low ceiling height. So as a rule, we don't want to go.

We're going to get those blueprints in module 9 for the box on the back.

Much easier to look at than me explain, that's for sure.

Now we've got Jamie back again. I know Jamie's listening to me, but she's also listening to someone else. She's on screen. We're bringing her up. We've got questions coming in fast all over the place at the moment. Hey, Jamie.

Hello, hello, can you hear me now?

Sorry. Yay.

I'm home with my little lady. Who's got the chicken pops?

Hi, how are you going?

My question was about. My question was about the grandfathering clause that I know that's sort of hypothetical at this point, but if you know about. We had a block of land that we're going to build on and when that grandfather clause would kick in, if it was had to be constructed by then. Yeah, I was just wondering what to do. It's funny because we sold that block of land yesterday and just exchanged on a new house today. So, I mean, it's fine, but I'm still, I know, crazy. But because of what you've shown in the location master class, I was like, no, not going to work, so let's get rid of it. But I'm still curious to know the answer.

Goosebumps. Now we're making people sell properties and.

We didn't, we made money on it. So, I mean, it's, it's good.

Good. Well, look, Jamie, I saw your question posted in the club and I rang two accountants about it saying I've got this question and this hypothetical what happens when grandfathering comes in? And yesterday I was actually in Sydney speaking at the Institute of Public Accountants and I put this question to them and they said, well, we're going to ask you similar questions. So the answer to your question, your question was if I have a block of land, you know, and I. So under the. I'm going to start from the beginning. So last year, well, earlier in the year when the market was booming, the Labor Party came out and said one of our platforms if we get reelected is that we will grant, we will change negative gearing. And so there will only be negative gearing on new properties. And there wasn't much more detail around it. They also said they changed rulings to capital gains tax. So there isn't a opportunity to make a. So at the moment, capital gains tax, if you sell within 12 months, you have to pay based on your tax rate, 100% of the capital gains, which is where a lot of flippers buy, renovate and sell. People get caught out on the tax component. If you wait for 12 months, you pay only 50, you only get 50% of the capital gain. And what the government was saying, or not the government, sorry, the Labor Party was saying, if they get into government, is there actually going to make the benefit to us when we sell that property even less? So a couple of changes. Now we've got a couple of questions coming through on the Facebook page. And saying what is grandfathering? And grandfathering is essentially the concept that if you as an investor now have an investment property. So I bought a property in 2001 for $425,000. That property is now worth $1 million. There is a capital gain of $575,000 that I have made during that period of time if I'm going to sell that property. And a very simplistic way of looking at this, if I'm going to sell that property, I'm going to be taxed at my marginal tax rate. And let's just assume it's 30% my marginal tax rate for the 50% of that gain. So 50% of the 575,000 is going to be what I get taxed on. So essentially what that means is that I'm going to have to pay 30% of that 270 grand or whatever it is, and that is going to be my cost. So grandfathering is that I get to have a bit of a tax tax break post. And I understand the latest date the election can be called is May 11, and understanding that the Victorian labor government has a landslide election win last week, that we're assuming the Labor Party will get in unless people rise up and go against this, but that when they get in, they saying that, hey, if you bought a property after May 11, then if you sell that property, there is no Capital gains tax benefit, you're going to have to pay at 100%, $575,000. At your tax rate, you're going to have to pay all that capital gains. That's what we assume. Now, what Jamie's question is, is if I have a block of land and my intention is to build on it, do I actually have a capital gains tax on the purchase of the block of land to May 11, or do I have it till the property has been completed? Like, when is only the land grandfathered and we look at the land value when we bought it and the land value when we sell it, or is it land value plus the thing? The answer is no one knows. And the difficulty with this grandfathering and the negative gearing changes being proposed, the property market has declined in the major capital cities by 5 to 10%, depending on who you read. And with that decline comes the fact that the reason that the labor government was putting this in place to kind of, you know, bring back the investor spend and the property prices going up may not necessarily be there, but they've made this promise and they have. And I know two people who've gone and spoken to shorten about this, and he has categorically said, we are not going to move on this position. Now, the reality is 80% of people who own an investment property earn less than $80,000. They are policemen, they are nurses, they are construction workers. They are regular people who are actually the majority of the voters for the Labor Party. So they're actually doing a disincentive to creating wealth for the majority of their members. So I think that has to be re looked at. I think there is a big issue associated with this. But unfortunately, I have to say, Jamie, that there is no answer and no one has an answer to this at this moment. So there is all of those questions that are in play.

I thought if somebody would know, you might. So thank you.

I did speak to a lot of people on your behalf in preparation for the call, and everyone's like, nut do you know? And I was on the Property Couch podcast this week, and Ben Kingsley said to me, what do you think the implications will be if this goes ahead on renovations? Do you think we can actually claim negative gearing on the renovations? Who knows? We've got no idea. There is absolutely no detail around it other than we're going to get rid of it. So it brings me to my other bit of something that I want to share with people for this month. So I've already talked about the royal commission, but this is where I honestly see the market in the next six months. We have December, January, February, March, April, May. So we have six months before we have this election. Now, we know that December, Christmas parties, January recovering from Christmas. Australians pretty much check out now. We're at the moment trying to settle some loans for the clients and try to find solicitors that are open on the 7th of January, and there is none across Australia. So we know that even if you want to buy a property, it's going to be hard for you to buy a property in the next six weeks. But most of the people check out. So then we have February, March, April and then May. What I'm predicting is that as soon as the election is called, and we know the government's just called an early budget to show how great they are in surplus, we know that everyone's in campaign mode, the election will be called when it is called. People are going to wake up in February and they're going to say, hey, we've got February, March, April and potentially May. We've got four months to get into the property market before negative gearing could be gone. And if that occurs, we are going to see the market start going up again. So for people who are currently thinking the market's kind of stagnant, I may not do something that's wait a year. I can tell you two things are going to happen out of the Royal commission. It's going to be tougher to get lending. The most that you can borrow is now and we're going to have a resurgence of the market where there's chaos at the moment and people going, oh, should we buy? We're going to actually have buying opportunities. Clearance rates are below 50%. Over 50% of people are not selling their property every week going, how am I going to sell this property? This is the opportunity you have to get in and get a great deal. And I can't tell you enough. In actual fact, you know, John, you and I this morning had a bit of a thought process on how can we get people in the next six months into property so as fast as possible and into the right properties so that they're set up for life. And I think this is one of the things that we're going to have to spend the next couple of weeks on working out how we can help people do that.

Well, I think you have. We've bought our house, so thank you.

We got one win. And this is what I was talking to all the accountants about yesterday. Guys, go out and talk to your clients. They're going to come to you in June and go, you know, what am I going to do? And you usually had this conversation going, you know, oh, get a property with negative gearing. You know, they're going to miss it. Have a conversation now and teach them about, you know, the research that you've done. Jamie, you know, about the locations and the information we talk about, you know, in the module 2 and module 3 and ultimate guide of Renovation and Location Masterclass. Get them targeted in good quality suburbs, in good quality streets and suburbs, the typical property, and then set them up and this is the time act now. There you go. That's my conversation over. But I'm glad that you've taken action. Good job.

Thank you.

Okay, well, I'll let you go, Jane. Thank you. Your little one gets better soon.

Yes, she will.

She'll be fine.

Thanks.

Okay, bye.

Bye.

I just had one thing there. I've got a question from Toby that I'm hoping to hit in a sec. I love buying houses in December. December is an awesome time to buy houses, providing this stock. I've sold houses and I've bought houses. Way better to buy a house because if you're, you've got a property that negotiated or something like that and your prospects are there, the market is not going to come back on to February. You're in a, you're over a barrel basically in the negotiation game as a vendor in December when you're running up to the 20th or the 22nd or the 23rd, closer you get to Christmas, the harder it gets. You're holding onto a property you're highly motivated to sell. So some of the best deals we've got has been in December, particularly running up to mid late December. The vendor is going okay. I've got that pressure of having to hold the property for another month to six weeks before I'm going to get some decent competition again. So great time to buy.

Absolutely. Can't agree more. And I've got a question here also, you know, post May, what do you reckon is going to happen with the property market and the property prices? I'm going to, whilst we go to the next question, I'm going to bring up Louis Christopher's boom and bust report that came out on the 15th of November. Now he's actually looked into at this and he's also modelled what happens if labor gets in. So I'll bring that up to give you some context as well. So I did see your question and yeah, someone else on Facebook said with grandfathering on existing land, you May have to get a valuation on the land before you build. Absolutely. That usually happens as part of the construction and the bank process. But it's another good reminder, John, that if people are actually moving out of their home and converting it into investment property, you should be getting a valuation when the change of use of the property occurs because that's how capital gains tax is calculated. So I hear a lot of people who talk about, and I think we've got a question here about home hopping. We've got a lot of people who talk about, you know, starting with a home and then moving it into being an investment property when it changes that use. And if you're using the six year rule and all of the different things and tax strategies and as you heard the disclaimer in the front, we're not accountants, hence why we asked all these questions of accountants. But if you're doing that, you need to be getting a valuation done when the property changes its purpose or its usage. So great. Thanks for putting that comment there in Facebook as well. John, do you have that question there regarding home hopping?

I think the home hopping one's coming up, but I've got this one from Toby. Now you might need your pen and paper, but you might have it in front of you already, Jane. But I'm currently in the market to purchase my first investment home Pre approval for $590,000. My parents being the guarantor on the loan. I have about 45,000 in savings, so that's terrific savings there. And my plan is to use some of these savings to renovate the property I purchased over the first while living in it. So I get a stamp duty concession, then potentially revalue after the renovation, hopefully have some equity to gain and start renting out or to go again and then start renting out. Currently living in Eltham, I have a few properties on my radar in the Eltham area. Also looked at cloud. Just wondering what you thought of these areas. The properties I'm looking at are around the 600,000 mark. Both three bedroom house units being the original house on the original block. There is newer houses behind. So subdivided medium house price for three bedroom in both areas around 750. So I think that's the reason those 600 properties are coming up that are subdivided on recent sales above 800 close by. Both properties. Okay. So I see huge potential. I'm a tradesperson, quite handy doing a lot of the tasks. What do you think my plan, do you think that can succeed?

So many questions. I love it. Okay, well I Am going to jump straight in and try and share my screen and you can see yourself hopefully there, John. Okay, let's just check out Eltham. Can you see my screen on Eltham? So what I've done is I've just gone into SQM research and I want to understand first and foremost, Toby, about what the typical type of property is there. Now if I pulled this up and I saw the typical type of property, 7 to 900 square meters, and there was none of these.

Selling smaller blocks there, James, because it's a little bit small and I'll put yourself as thumbnail. It's the other way around.

You can't see me.

Yep, that's it. Okay.

Let'S see if I can make it even bigger. So what I'm saying here for Eltham, if I actually saw, you know, so seven to even a thousand square meters is kind of like the typical block. And your. If I didn't see any subdivided blocks here. So if I look over here and say 2/5, 59, 6, 36, these are all subdivided blocks. So I've got a feeling of what blocks and what areas have been subdivided. If I wasn't seeing any of these, I would really question your decision about subdivision. I am seeing these and I'm seeing the subdivisions are between 200 and 500 square meters. So this bears in mind to say, yep, Eltham has a median house price of 6, 750. Your borrowing capacity gets you to 590. So you're looking at purchasing some of these subdivided properties that are three bedrooms. Now the only comment I'm going to make about one of the questions you had there is buy a three bedroom house or three bedroom unit, please. If you do look in an area and you consider the area and you consider that the area is, you know, worthwhile for your investment and you've done all of that research and then all of a sudden you turn around and you go, oh, in actual fact, I can't buy a house, I'm going to buy a unit. It might just be that a unit is not the typical property for that area and you're actually creating a bit of a rod for your own back. So you can see here I'm just jumping into the ultimate guide of renovation. I'm jumping into the suburb selector software. I want to get a really quick look at what's happening here and what the typical property is. So it is three bedroom house and there's 5,900 houses and there's only 470 units. So you know, when you said in your question, shall I have a 3 bedroom house vs unit? Please be aware that the units are not the typical property and you could be doing yourself a disservice by just assuming that it is. What I'm going to do now is I'm going to jump into Eltham here in the RP data professional. So you can see this. Now if you don't have access to that, please contact the office. You can get monthly access rather than annual access like a lot of other or you could go direct to them. So three bedroom house. Now you're telling me that you are looking at this from a subdivision point of view and we've got here in SQM research that from between 200 to kind of 500 is subdivision. So I would be looking in here from three bedroom houses, 200 to $500,000. And what I'm hearing from your question is people are buying the older property at the front, at the buying a property, they're subdividing it and building a new one on the back and selling new one off. And you're seeing the opportunity on the properties at the front. Now interestingly what we're seeing here is of that 5,900 houses in Eltham there is only 143 of those that are within this kind of block size and three bedroom houses. So 143 all up, not on, not on the market, not having sold all up and over. Look at the sales history in the last six months there's only three that have actually sold in the last six months. Now some of these are over your expectations and some are below. So let's just have a look at these. So this might be what the unrenovated property looks like. Looks kind of cute to me. Doesn't look unrenovated, it looks like it's been painted. Old kitchen, nice aspect, new bathroom. So they spent the money on the bathroom and we have smaller residents. And if I look down here sometimes what it will also do is it'll give me an idea that the property has been subdivided in the past. So this was on the market for 550 to 590. It did sell for 550. It wasn't rented before, it was unoccupied and it is definitely on a smaller block. It's on 429 square meters. So this to me looks like. How would you call that John? Would, would you call it a semi renovated, not completely done?

Yeah, I, I can't, I can't see it that well. It's a good bit of a delay, but it looks, it looks like it's been updated. Yeah.

Okay, so we've go into the next property and let's just have a look what the next property looks like. This one looks like it could also. It could almost be. Let me think, it's a newer door. Yeah. This one looks like it could be the new build, John. It's almost like a box on the back there.

Yeah. Okay. Fortunately a little bit small, but the inside certainly looks pretty nice, isn't it?

You've got a garage underneath with no driveway to it. Perplexing but interesting.

I think that's an original one that's just been renovated. It's kind of hard to tell.

It's definitely at the back of the block.

Yeah.

So this is March 2014. I've got a photo on the screen now and that indicates that it kind of looked the Same back in March 2014 as to what we've got here, except they just moved that whole decking piece. May 2018. So this does look like, as you say, the older style property. And that sold for 724. I think we got there 726 and then we've got something around the 817 mark. Now the reason I'm doing this, Toby, is I'm trying to validate your assumption that if you buy at your purchase price around 600 on this size block and you renovate it, you could potentially sell it for 800,000. So this is definitely the older style property. We've got that kind of lean to at the back with the down lights have been put in. But some interesting LED lighting, newer style flooring and kitchens. It's potentially just looking at this flooring here, John. I don't know if you can see this well, but it looks like it's older flooring. Probably it might have been patched. It doesn't look like it's been improved.

No, it looks like a bulk. Well, I can't really tell either, but it looks like it might be a bulky line. But it looks like original boards. Yeah.

Yeah. And looks like a new kitchen. They're trying to match the, the bench top to the floorboards. And let's check out the bathroom. Yeah. Once again I think this looks like an updated bathroom. So we're still at 2018 here. Got a nice looking residence and I'll see if we've got anything older. August 2018. Hope no one has epilepsy.

And.

Doesn'T seem to be anything older here in picture wise. So. So what I would say to this is that there is not a lot of evidence in sales, Toby, to support being able to make a general assumption that an unrenovated property or somewhat renovated property could get up to an 800,000. And we are looking at these older style properties that have been renovated. These sale prices here, here to me the 7 and 800,000 indicate that they have been renovated and this 550 somewhat renovated. But I couldn't make that call based on just three properties. So if we look at what's on the market at the moment, there might be some opportunity there for you as well. So, you know, there is something but it is well over your purchase price or your borrowing capacity. But if there was four or five of these properties around 556, 600 and you know, the same kind of amount around the renovated kind of price range, it would give me more confidence to say to you that yes, there is ability to be able to make some money on what your, your strategies. I just want to come down here too and one of the other things here, look at this. 12% of people in Eltham are actually renters. This is a huge. I actually, I've never seen anything that low before, John. Have you?

No, not that cool, no. But yeah, it would make sense for where it is and the type of suburb it is too.

High weekly income, John. We've got obviously low vacancies, there's a low number of properties that are being rented, there is some evidence of subdivision but they're just isn't enough information to, you know, put everything on the line, I reckon.

Yeah, I would say that the. And Jane's done a really great quick run through there with the benefit of her experience. But in the ultimate guide you've got that four checklist system which you go through and generate the comparable sales at the, you know, similar inferior and superior properties. And I think there's no shortcut to actually going through and doing that. And it should become really clear after you go through those steps. And we've all got a tendency to cook the books a little bit in this area and think, well I can renovate a property that's going to set street records, but I think you're in pretty unsafe territory when you start thinking that way you want to. John Edwards always used to tell us, Jane, you want to be around the 7 and the 8 in the street, not do the 10 because the nines and the tens, they can be a complete anomaly. You don't know what the market was doing that week or whether you had two bidders that were really at each other and would buy it at any cost. So nines and the tens, think of those as an anomaly. If you think of a street and the sale price goes from 1 to 10, that's the scale or the spectrum you want to be selling or revaluing at the sevens and eights, that's where you're sitting value level and trying to buy at the, you know, the three fives.

And John, that kind of brings me to. There's a question here from Vijay that is. Hi. In a resident report, what do you think is the most useful report that can be used by students? Now one of the things that we say, John, in the beginning of module 2 and 3 is that we are always keeping everything up to date. So you might see in a video the suburbs lecture software that we used to have. In the video we might have had the difference of pricing between three bedroom and two bedroom properties or we had crime rating as that information became less full of integrity. Yeah, truthful. We've actually removed that out of the suburb selector software. Now one of the things. And we're getting rid of this little video this week, but we did have a video in there around the renovator report from Residex which we knew and loved. And we also had a Resx predictions report speaking to the people who bought resx, which is CoreLogic, they hadn't been updating their predictions reports for three to five months and hence why we no longer recommend that you get the ResX reports. CoreLogic has been working on an algorithm to do a predictions report. Soon as that report is up, we will let you know. But if you do go into the modules, in particular into the ultimate guide to renovation resources, we're adding up things all the time and I'll just once again jump over to this, but we're adding up reports all the time. Where else? Where am I? You can see here under reports reports. We've got the Terry Rider hot spotting report and we're going to put a location score report in there very soon because you know, we want you to be able to to see exactly, you know, what we've got and what's available for you and the best reports at the moment that we think you should use. As I said, you don't have to buy all of the reports. These are just ones things are going to get you to that shortlist BJ really quickly. So from a Residex point of view, I wouldn't be buying Residex report right at the moment. RP Data has a number of reports. The hot spotting reports using Location Score, the boom and bust report from SQM Research, I think are all great reports that allow you to start targeting suburbs. And just a, just a quick, quick mention to those people who got a, a free Terry Rider Top 5 Hot Spotting Report. We've had some sad news today, John. Someone's taken advantage of the system. Terry said to me people were going to cheat this and they'll use numerous the code that you give them numerous times. I said no, they won't. Well, someone has in the last 24 hours has used that, that discount code for the one report that we've purchased on your behalf. And they a number of reports. Hence we are back to the drawing board in trying to work out how everyone else can get a report without someone mucking up the system. So we'll get back to you with how to do that. But those top five regional and city reports from Hotspotting I think are fantastic. They're going to give you infrastructure and lots of information as well to help you come up with some of the suburbs on your shortlist. John, shall we try Kate again? Let's just see if Kate's going to work out.

We've got.

Hey Kate, are you there? Hey, Kate. We can see something that she's recording for us. I don't know what it is. Nope, she's still there in her car. She's now moved.

Maybe see if you can get them to wave in the waiting area if they want to be on it. Doesn't look like the camera's ready.

Yeah.

I've got a question from Anita here though. Jane. So I read your book, the Revised Investor's Guide. Sit around the five rules. Are you saying we should look into all five or now this was out of the new rules webinar around all those strategies around grandfathering and so on or pick one that is best suited to our current financial situation. I'm interested in home hopping. What are your thoughts on undertaking just this strategy alone?

Wow, Anita, lots of questions. One of the things that we talked about in the new rules and some of the strategies, you know, we had home hopping and we had rent vesting and we have so many different things that might suit you. It's not about doing them all. It's about finding the one that suits you and suits what you need to do to get you to the goals and the time frame that you want. So that's the really important thing around what you need to do. So from my point of view, it's around you being able to work out where you want to be by the time that you want to retire. So I just send the time and the destination and then once you've got those set, it's about then working out the strategy that can work for you. Now, the reason that I love home hopping, and we had a question in the club a few days ago as well about home hopping, is that it's essentially the technique that we all know and love. Anyhow, we buy a home. Census tells us that we usually move every nine years, even though we think we're going to live there forever. And then what we do is we move to the next property. Now we buy the home, often thinking this is going to be the home forever. We start paying principal and interest, paying it down, getting to a bit of cash flow crisis sometimes or not. And then we get to a point where we go, oh, we should sell, we want a job, move or whatever, downsize, and we sell the property. Now, even under the proposed capital gains tax changes that labor has put out, your home is not going to be affected. So. So we believe. So in that sense, what happens is when you buy a home and you sell a home, if you had that same example we had before, from like 425 to $1 million, you don't have to pay capital gains tax on that $575,000 that you have made. So from a home hopping point of view, there's a couple of ways that this allows you to work within the system that is currently the environment we live in. One is lenders love lending to homeowners. So you might find that you're going to have a cheaper interest rate as a homeowner and you may even find that you have, you know, easier servicing as a homeowner. So to buy your home, currently using the strategies that we talk about in the location masterclass, targeting the right area to buy, targeting the right suburbs and maybe the suburb that has pricing disparity between renovated and unrenovated. And we've just been through an exercise for Toby on saying how you could do that. So potentially buying in that area allows you to use your savvy investor techniques and strategies and living in the property. Now, I can't recommend that you then sell that property, move to the next one, sell that property and move to the next one. Because the, the ATO at some stage is probably going to say to you, geez, I think you're in the business of buying, selling houses, and we're going to treat you like a professional property investor and apply GST and you have no capital gains tax exemptions and all those things. The ATO will not tell you how many properties you can do before they choose to make that call. But they will at some stage. I'm not an accountant. Speak to your accountant about it. They might say you could get away with two or three. I can't say that. But in theory, if you bought this home in a great area, renovation potential, you added equity, you pulled that equity out to buy your next home, kept this property as an investment property. You've got your income going up from the rent. You bought the next home using the same techniques to buy the next home. You're actually using the same lending strategy about buying a home to your for your investment. So in technically, if you had two different lenders here, this lender here thinks you're pulling out money from your home and may keep your home as a home loan and a lower interest rate. I'm not telling you to do that. I'm just saying that may be what they assume. The reality is that this becomes an investment property. You will have to start paying investment interest rates. But if you did that with one lender who didn't know about the second lender, for instance, some people do lots of different things, then you potentially could have 2 home loan interest rates. I don't think it's worth the risk of doing that personally, but that could be something that someone does. So you have this property, you pull the money out of this property being your original home, it goes to an investment loan and typically interest only. And keeping it interest only, it's the reason why you'd set it up as interest only. You pull that money out to buy your new home. The purpose is for personal use. So that extra 50, 60,000 you've pulled out to buy this property with this deposit is non deductible debt because you've used it to buy your home. This loan is deductible debt because it's now an investment property. The new loan that you take out to fill out the rest of this purchase is non deductible debt because it's a home. And you could do it again and replicate. Leave a series of investment properties behind you as you upgrade your home. And at one stage you're going to get to the home that you want to have, potentially sell off the other properties and pay it down. The whole story. That's essentially home hopping. John.

Yeah, it's good. It's really good. It's a terrific strategy, isn't it? And it's worked for so many people over so many years. And yeah, I often think I've got a few friends that have just done so well doing exactly that. You only need a couple of homes really to do it. But each time they get into a better area, better property, get in there and renovate it again and then, and then the same again. And they're in such a good position now and I think of other friends that have pursued some of the shinier strategies which we won't name. And it's a bit like a case of the tortoise and the hare. And in some cases we've got the slow and steady wins the race and someone chasing the, you know, these shiny strategies is really not moving on from the position they started in after a lot of years of chasing their tail. So love, love hopping. Fantastic. Very safe and proven to work over and over again.

Another question.

Yes. So got a question from Annie here. She says. Sorry, is it? Yes, it is. Yep. So how do I work out if the banks will lend us money for an investment property? Should we purchase our first property by self managing our superannuation? I honestly don't know where to begin. Is this something you can help me with? My husband and I are 48. We have two young children, 16 and 10. I need to set this up for a secure future no matter what the future looks like.

Annie, Annie, I relate to you. I turned 48 last week. I have an 11 year old and I understand that kind of times running out because we talk to a lot of people a lot of the time, don't we John, who are, you know, 50 or 60 going oh my gosh, have I left it too late? And what are the steps that I need to take? So we understand your pain, don't we?

Yep.

So look Annie, there's a couple of ways that I can direct you in helping you here. First and foremost I would say that you need to get your borrowing capacity done and you can contact us@investorschoice.com and set up a time with my senior broker Lisa and she can run you through some of the thoughts around this and we can do a fact find and do a 20 page personal lending plan for you. And once you've done that, you and I will jump on the phone and we will go through a bit of a strategy based on your borrowing capacity. So that's one way that we can do it. Just a heads up, what has happened in the last couple of years is when people hit a servicing threshold on their borrowing, they have self managed super fund lending as a kind of, well, this is what we can do next because what essentially has been able to happen is that self managed super fund lending, basically they say you want to borrow $400,000, you have $20,000 in rent coming in, you have $25,000 in interest going out, but you also have 10% of your income coming in $10,000 a year. Therefore, within the, the eco cycle ecosystem of self managed super fund, you can pay for this loan. It's all good, we'll give it to you. They don't care that you've got 15 credit cards. They don't care you've got five investment properties. They don't care that you're paying off the plan purchase for a car or for off the plan purchase for a car or for anything else. They don't look at your personal situation other than the fact that you have a job and that you're regularly getting in that 10% of the super. So essentially that has been, you know, in the last three to five years where we've, we've been able to hit, help people continue to purchase when they've hit that, that limit. The only thing that I say, if you listen to this, to this, and you're not, it's Anna, isn't it? You're not Anna and Annie, sorry. And you're not and you've got a number of properties, you need to have diversification within your investment strategy so you may not go out and buy another investment property and self managed super fund. Just as a little aside there because I can see we've got a lot of people listening and I know we'll have a lot more who will watch this on replay. But the important thing about that is that lending has changed so much and even in the last week, two weeks, we've had CBA and Bank west pull out of self managed super fund lending. Last month we had Westpac pull out anz the larger lenders, Macquarie Bankers just pulled out amps pulled out amp Macquarie Bank I think, you know, had some of the best self managed super fund lending. They also had individual offset accounts, they no longer do those. So we've got some lenders like Liberty, they're still doing self managed super fund lending. So it is still possible. But what we've seen over the years is it's gone from like an 80% LBR down to a 70% LBR if you want interest only and there's a lot more criteria around it. The lenders are leaving this space. So if you are considering self Managed super fund lending at some stage it may be the opportunity for you to have that conversation now with your broker or as I said contact us@investorschoice.com and we can have that conversation with you. So it might just suit you any to get that out of the way and get that lock and loaded so that you've got that under control. And it might just be in your personal circumstances, you don't necessarily have the deposit or the funds to purchase in your own name. Usually they say it's, it's not economical to set up your own self managed super fund if you have less than $150,000 in it. Lenders also have all of these other requirements that you need to have at least 10% of the value of the fund post the property purchase in cash so that you can cover things off. So there's a number of things there that you need to be aware of. Borrowing your own name and, or borrowing even a company. And once again an accountant can't give you recommendations of that is an option. And I think the thing is that it sounds to me that you are delaying purchasing decisions based on I'm going to get it wrong and I'm going to buy in the wrong entity and really it's taking action and doing the research to buy in the right area and buying the right property which is where you should be spending your time and energy. So regardless of whether you buy in a self managed super fund or if you buy in your own name and we can quickly answer those questions for you or your broker or your bank can by doing a fact finder doing personal lending plan, we can work out what would work for you and then you can make the decision to move forward. But I think for a lot of people that I speak to, they get caught up with the mechanics of the making the wrong decision and they're spending too much time on the wrong questions. And the question is, you know, should I be doing this now? Can I afford to do this now? Does it work into my long term plan and what's the right property to be purchasing? So that's my thoughts on that, Annie. I hope that has assisted you.

Yeah, very good. All right. We normally go to questions keep on coming, we'll make sure we get to them. But I think this might be the last one Jane. But if you've got one more.

I just know Teresa keeps saying that she's sending questions through to us and.

Through questions I probably should say that sending them through to the questions address once the call has started is probably not going to work.

I do have Eileen on hand who's saying no, it hasn't come through. I've checked everyone's emails. Teresa, you're going to have to just post it I think here below this video and we'll get straight to it.

Yep. Just as a rule going forward though, posting them through after the webinar starts makes it a bit hard for us to gather them together after on the call. But I've got a question here from Andre. Besides affordability, when deciding on your criteria or the suburb search distance from the CBD, how do you decide on distance? 20Ks, 30Ks, 40Ks?

Oh, Andre, tough question. Okay, aside from affordability, so if I was looking at the suburb selector software and I was saying I can afford $600,000, where should I buy? In theory you could go to the drop down menu and go all cities and it'll give you an indication of what $600,000 is going to buy you at what distance from the cbd. Now the reason I am delaying my answer here is the fact that there's. I do a lot of research on what have been the trends of the past and then I read a lot of other economists and property experts and their reports on what they believe have been the trends of the past as well. So I'm going to talk about the trends of the past. Typically people want to live close to where they work. Typically people work in the central business district. And you know, when we look at Sydney, we've got a number of those. We've got Parramatta, Northwest, North Sydney and Sydney as central business, central business districts. When Badgery Creek comes along, there's going to be potentially another area as well. So. But most cities have one. Melbourne, we have Melbourne, cbd, Brisbane, we have Brisbane, cbd, Adelaide, Perth, Darwin, Canberra. So typically what you find is that ripple effect. You know, people are starting and going, I can't afford $600,000 anymore with these suburbs. I go out 10, 20, 30, 40 kilometers out to what I can afford. My concern and, and you're saying apart from affordability, where should I buy? My concern is you're looking at 25ks out, 25ks out in Melbourne for a $600,000 purchase. You're actually looking at like 10ks out in Brisbane. So should you be buying in Brisbane at 10ks or should you be buying at, in Melbourne at 25ks for that same six hundred thousand dollar question. So I'm hoping I'm answering your question Andre. Type in and let me know. I can see your comments coming up. But so the thing is that, that I would say is then you have to look at the macroeconomics and the drivers of the cities that you can afford to buy. So 25ks from Melbourne versus, you know, 10ks from Brisbane. So that's one aspect that I would look at. The second aspect is due to affordability issues, what we're starting to see is this infill that is happening typically. So we're now seeing the bigger blocks like we saw with what Toby was talking about, you know, larger blocks where people are subdividing. They might be building townhouses or a smaller, a three bedroom house on the back of the block as well. So we're all. We're also this kind of changing of the mantle where the houses that were within 10 kilometers that you now no longer can afford, potentially within, you know, 15km of CBD Melbourne, you could afford a townhouse. And there's now more and more townhouses. Now as the data comes through, we're looking at the 2006 census data that says townhouses aren't the typical type of property in Canterbury. But as we get to 2018, 2019, we're going to start seeing this infill and they are going to become, you know, the typical type of property because more and more people are going to say, I want to live closer to the city, but I can't afford it. And is there a townhouse available for developers are going to see this need. John, you've developed townhouses yourself, haven't you, in these areas?

Yeah, it has. I guess the one thing I would say about it is it tends to. Those shifts tend to take a fair bit of time. So sometimes people worry a fair bit about the Census data being 3 years old or 4 years old. Most of the time it's. I think it's pretty relevant right up until the point probably where it changes. So I wouldn't get too worried about that. But yeah, you definitely just think of the time that building permits take to go through. There's always a kind of couple of years delay. So I guess if you're worried about that, you can always get on the ground and compare it to from what you're seeing on the ground. And the other thing is if you're talking about subdivision and things like that, you need to. The biggest hurdle you're going to have is the time it takes to get through council. So you want to see that there's precedent in the street because that's essentially how council approves things. So either based on their zoning Laws about, you know, how many dwellings can be put on a particular block size and also precedent, and that even affects you when you're doing renovation. You know, how far do the. How far, how big is the other footprints of the buildings in your street, for instance? That's precedent and that's what will affect your approvals and so on as well.

Absolutely. I'm just changing my screen here at the moment, John, Just the other thing there, you know, do you have some thoughts there on the, you know, what's it look like as a. A 25 kilometer Melbourne purchase compared to a 10 kilometer Brisbane purchase?

Yeah, the old rule, I mean, probably would have been the same thing when you started, Jay. But the old rule, and I used to believe this very literally, that it was the closer to the CBD as you could possibly get. And one of the things that I, I learned in our search, as we were looking at one property, actually we drove past it the other day and I showed it to you, Jane, in and it was very close to the cbd, like a K and a half to the CBD or two K's from the cbd. And we ended up missing out on that property. And we bought in Brunswick and Brunswick had a period of growth there as the ripple effect ran through it and completely outdid the property that you would have got in Collingwood, even though the proximity to CBD was a lot closer. So it's a good. It's one of those rules of thumb. I think the closer to the CBD you can afford, the better. But it's not necessarily what would tip it over when it comes down to your process of elimination in your short list of suburbs. It's one of the factors that goes into the mix, but it's not a factor that would just trump all of the other factors, like evidence of pricing pressure, a high percentage of renters, low vacancy rates, a good turnover of sales. Even when you're coming down to that real fine list and you're looking at things like household income and percentage of housing commission and things like that.

All.

Of those things come into the mix. And I think distance from CBD is just one of those. But I think at the extreme ends, if you take it to the extreme, you don't want to be right in the centre of the CBD amongst the tall buildings, and you don't want to be right out on the edge of the Green Acre, what we call Green Acre suburbs, where there's availability of land, where developments are going to come online and be competitors to either your resale or your renters, because we know that renters have got no loyalty. They'll jump into the next shiny property, which is probably going to be priced pretty competitively to yours and be brand new. So definitely don't want to be out there on the outskirts either. But what we see is some of those factors with pricing disparity, they tend to be spokes. So you have. Traditionally we think of the ripple effect coming up from the cbd, but there's also the spokes that come out as well. And that could be rivers, that could be be freeways, it could be coastline. There's a lot of other factors that come into it that you have to take into account in combination with distance from cbd.

Absolutely. And I think the thing about it is, and Andre says yes, we've answered his question, but the thing about it is what you believe is going to get you to your goals within the timeframes that you want to achieve those goals. So, you know, the 2 or 3% growth that could be predicted, for instance, in Brisbane in the next few years versus the negative growth that you might get in Melbourne, but then potentially 5 to 7% in years 3 and 4 could actually outweigh within the timeframe that you want to work in. So just be aware of that. John, a couple of questions are coming through on Facebook. Not sure if you can see those.

But where do you get the census data and what is the typical property?

Okay, so I moved out of my screen completely. I'm going to jump once again to my screen and share that. So what we have here is the suburb selector software and I could run this. As I just mentioned, Andre, you could go from all cities and you can put in your price range. I'm just doing this so that we can have a look at this. There's another question there, John, around distances that I don't fully understand. If the person wants to put that in a little bit further, but we've got Adelaide here. We're 10ks or so out from Adelaide. To get within that 600 price range, we might choose lots of Adelaide areas that are in that price range. If you. We go to Brisbane and we ch. We choose, you know, Chermside west, for instance, in Brisbane and we have a look at this.

You know what I think that question is from Andre about the difference between the cities is. I think we've often made a comment about what a certain buy price, let's say, you know, a million dollars will buy you, how close that will get you to the CBD in Melbourne. For instance, compared to Sydney. So I think that's probably what that relates to Jane.

Oh, okay. All right. So have we answered that?

I think so. What's the example you normally use with Sydney? Like the, the 30 kilometer out one. We used to use an example there. I can't remember what it's called now. Sydney suburb. And we used to say that, you know, that used to be a 15 kilometer or 10 kilometers. Yeah, Bankstown.

Yeah, Bankstown is now like you have to go 30ks out to get a property under a million dollars, a house under a million dollars now. So you know, you, over a period of five years, you've kind of moved from Paddington to Bankstown to get something under a million dollars. So this is, I'm just showing you here on my screen where we're getting this typical information from. If you are asking what, where do you get it from in the census data? Let me just show you how to do that. So go into census, go into the census data or you can just come here into the quick stats and put in your suburbs. So I'm going to put in whatever I just had up there, Chermside, and I might bring up Chermside West Queensland, go. I'm in the 2016 data and when I get down here. It will show me lots of information around incomes, etc. But it will also show me that 92% of the properties are houses. It will show me that 54% of the properties are three bedroom houses and it will show me that 20% are rented. So hopefully you can see what that typical property is there from sensors. So we're looking at a three bedroom house. And then we could go over to SQM research which we used earlier and I showed you that earlier how I just use in SQM research what the typical type of size block. And that's when I then put that into the RP data. I know it's a three bedroom house and what the typical type of property is. So hopefully that gives you an idea of where you can actually find all of the data that you can put in to say this is the typical property which is going to, you know, minimize my cost. And the way that you do that is in SQM reset, you go to. The property tab, you write in champside west and up will come and so I've just hacked this system. Essentially this is just a buy price coefficient curve that Louis has set up and I've just used this to go, well look, you know, he said over the last 12 months, what are the typical properties that are selling and I can see here that they're between, you know, 550 and 750 square meters. So now I know in termside west we've got 92% of people want a house, the majority want a three bedroom house and they are buying on, you know, that kind of 550 to 750 square meter block size. So hopefully that helps you with your question. And John, anything else there? Now Teresa has a question and I'm just looking to see if she's posted it at all. Can you see Theresa's questions being posted anywhere? Because I know that she's been trying to send it through.

I can't see.

I've got GM here. I'm just going to see if GM has a question. Jim, have you got a question? Oh, we've got, I think there's an attempt in audio here. John. Hi Jim. Maybe they've just clicked on the link. Not sure that. Hello? Eating lunch? Nope, we'll leave it. Okay now I wanted to share my screen and just take people through one more thing here John, that you may not be aware of in Facebook and what I've done to try to help you out a bit further. You can see here I put a little announcement up that says hey, check out units on the left hand side. If you come over here on the left hand side, what I usually try to do is try to put put all the conversations that might be categorized together in the one area. So there's a lot of conversations going on regarding dot maps as you can see. And so to make this an easier way for you to actually see what people are asking, you know, where do I find the maps? You know, how do I use dot maps with flipping? What's the 2% rule? You know, what size map do you use? Where do you get the table 10 year growth data from your investment property magazine doesn't have it. Yes it does. It's under annual growth. It just doesn't say 10 years. There's other questions here about how to use the suburb selector software should you stage a property. All of our Q and A calls are here. Some people have shared some great reports and as they come up we put them in there. Case studies, there's so many case studies. People who've been doing some great case studies and sharing their property information. So just go in here and have a look around in this section which is the unit section here on the left hand side because I think that there's, we're trying to make it really easy for you guys to Actually find information. So please go and check that out.

Also got the search function as well.

Yep, use the search function and it will help you as well. Okay, I see that we do have a question that has come through John. And here it is. Which might be one of our final questions. Do you have a strategy to flip and rent out? That's two strategies. Flip and rent out. Okay, we'll have to think about this one. When researching suburbs to invest and buy in, what percentage is too low for renters in a suburb? Okay, whoever's reading that, writing that in, can you just. If you're flipping a property, you're buying, renovating and selling. And if you're keeping a property, buy, renovate and rent out.

So there is a mistake. You know, I think it's actually renovate and rent out.

Okay, all right, well, I'm going to answer both questions then. Give you, give you, give you everyone the benefit. Okay, so if you're going to. Got another question here. Just come up. If you're going to buy, renovate and hold, then often what I do is when I'm doing my research. So every month the SQM research data populates into the suburb selection software data. You're going to get access to that information straight away. I have the raw data, I check out the raw data, I come up and do analysis on it. And one of the things I do is I put through my first five or six kind of filters into that information. Now when I do that, I am looking at a number of things. Now, although I say, you know, I want 30%, 28, 30% renters in a suburb before I. Yep, you do mean buy, renovate and rent out. Good. So if I'm looking at 28 to 30% renters in the suburb, I do know personally that there's some suburbs that may go down as low as say 24% renters overall in the suburb. But there are pockets that are doing 30% rental, rental numbers in the suburb. So when I run my first filter, I actually go down to 24% because I know if I get into, and I know I can do this really quickly, but I can get into a suburb. I can actually find in a suburb that might overall have 24% that there are pockets of 30% in there and the suburb has some good criteria to it. So when I run mine, I go all the way down to 24. If you're going to buy, renovate and hold this property, as you indicated, you want to be in the pockets of potential of areas that renters want to live in and I'm looking at 28, 30% and above anything lower than that, it just doesn't sit right because the numbers show that over 70% of people own their own home over 30% rent and in actual fact that number's coming increasing a little bit more. So I could be moving my 30% to 32% in the next couple of years due to all the affordability issues. But what I want to do is I want to be in those pockets potential where the renters want to be. So I personally go a lot further down because I know I can get into the pockets potential that are 30% within some of those suburbs and I don't want to lose that opportunity. But if you're starting out and you're doing this, I would set it maybe at 28%. I wouldn't go more than 70% of renters in the suburb because you do want to have people who are taking pride in their properties. They're gentrifying the area, they're making it better, they're putting the money in and they're investing in the area and that's normally the owner occupier. So I wouldn't go over 70% but so 28 to 70% would be where I would be limiting my rental filters when I start doing my analysis. So I hope that helps you. And I've got. Okay, we've now pushed through the two hour march on. We always say we'll never leave a question unheard but there's one more question here I've got. What would be the best place to read about projected capital growths over the next five to eight years in our capitals. The issue that we have at the moment is that the only report that really was coming out on this was the Residex predictions report. That Residex predictions report since CoreLogic has purchased Residex is no longer viable or valid and hence until CoreLogic comes out with their predictions report I would be hesitant in saying what what area to a report that would give you a growth potential. Now what does exist is the boom and bust report that we have available to us from Louis Christopher sqm and it goes through suburb by suburb and and actually gives you an indication of where they sit believing what the potential could be in the future of how much growth that suburb would have. They don't give specific numbers, they just give it in relation to each other. Location score has gone back over their predictions over the last five years and they've outperformed the market on what they have said that Location score predictions can actually give you to going to a growth subject. Once again they're not going to say you're going to get 5 to 8% which is what the residential reports used to do. They're going to give you an indication of this area is an area that has growth potential. So there's those kind of areas that you can get that information from. There is when we're looking at predictions there's also the ability to consider, consider looking at what is potential for you in your own analysis. So you might read the Terry Riders hot spotting report for instance and it says the train line between Melbourne and Brisbane is going to give a whole lot of growth within a lot of country towns including parks etc, Toowoomba as it goes through. And you're going to read those cyber reports and do your own kind of prediction analysis. But as for finding something that just gives you the opportunity to have what we used to have, the 5 to 8%, we don't have that anymore. So it's a real shame, isn't it John?

As a reference point, one of the interesting things when we did have it, John used to say that it was his least favorite report because people would buy properties on face value without doing the analysis. And he actually intended it as a report more to be a bit of a starting point, you know, maybe a list of suburbs to start from and then as an initial list and then start to do your due diligence from there. So but yeah, it's certainly a shame to see it gone, but it was never really a replacement for doing the due diligence anyway. So what you're always doing is you're taking a bit from here and a bit from there and you're bringing that together in a big kind of melting pot and applying that to your own criteria in your own situation and there really isn't another replacement for that.

Okay, I'm just going to pull up the SQM research emails that I've got coming out here and whilst you're talking and you're on, you're there and I'm going to try to find this report that came out around the 15th around what sqm research was saying is happening in the market. So while I just find that. Give me a couple of moments, I. Okay, here we go. Bring this up on screen. Okay, hopefully you guys can see that. Okay, so what we've got here is some predictions around the SQM research report. I might just. And I'll show you where you can get that from as well. But what Louis has done here is he's actually looked at data, different scenarios. So he's got a base case here that essentially is the cash rate is unchanged, the economy just slows down, Australian dollar is sitting here. Labor government gets in in May, as you will notice, the labor government getting in is 3 of 3 of the actual scenarios. We've got interest rates go up a little bit and the RBA still doesn't put the rates up. So this is that potentially the Royal Commission findings, etc, a little bit extra cost. We've got interest rates going up by 0.5% and then we've got the scenario one and unchanged interest rates and the Liberals whole government. Now what's interesting here as we have a look at the market there is if the interest rates go up, then the interest rates go up and we've got the Australian dollar constant, etc. If we just run through, I don't know, Brisbane and we say nothing, you know, we get the labor government in, there's a 2, there's a chance of a 2% decline to a 2% plus. If the labor government gets in and interest rates go up a little bit, there's still no real change. And if the interest rates go up by 0.5%, sorry, if the interest rates go down by 0.5% here, so we have an actual cut that could be potential because of what we see in the economy and maybe we have some slowing of unemployments and all these kind of things, then if this goes up we've got the, a more buoyant situation. Even if the labor government comes in and they put in the negative gearing changes and then we've got, you know, what happens to the Liberal government comes in which is kind of a little bit better than if we have a rate increase and negative gearing changes. So this is kind of interesting and this is really gives us some indication of what is happening over the market. As you can see, you know, if even if we don't have a rate decrease, we've still got potentially a downside of 10% reductions in Melbourne and Sydney, which are the majority of the markets, and 2% reduction in Brisbane. The, the interesting Domain report that came out yesterday indicated that they believe that Sydney's halfway through the decline and is ready to start increasing again in 2020. The most that we've seen these market cycles change has been between nine months and 24 months. So two years of maybe decline before we start seeing the market move up again. So that kind of bears in line with that. There's another report that's out that saying that compared this decline to the past declines that it's been steeper than the past, but they still believe it will bottom out by a maximum 20% discount. So, you know, everyone's got an opinion on this. And the difficulty with this, John, is that no one, no one really has the, the right answer. And you know, we're all just playing around the edges. We know that the markets go up, we know that the markets are go down. We can't predict reliably what will happen, but we know that there is a cycle. We're in the middle of a cycle at the moment. We have some upside for Hobart and for Adelaide and for Brisbane and hopefully the Perth and Darwin market may actually come in by the end of 2019 and start performing as well. That's my thought.

I think that's what always puts the good old trident strategy up the top of the pecking order for me is that we don't really have to worry about it too much. We're investing in 10 to 15 year time frames. We're going to be in good shape because what we're doing is choosing of all the properties or all the suburbs I should say, that we can afford for our price point is we're choosing the suburbs that have got the most ticks and the most boxes and we know that they're statistically set up to outperform all the other suburbs at the same price point over that time frame that we're investing in that 10 to 15 years. So it actually works in our favor because we're buying when people are scared and we're buying at a good price. And times like this are great when you're using a trading strategy.

Absolutely. It's times like this when the transference of money occurs, when the uneducated lose money, the educated and savvy start making money. And as I said, I think you've got six months to do this in guys, and I think it's really important. I spoke to a gentleman just last weekend at a birthday party and he said to me, oh, we're so glad we've sold our four investment properties in Melbourne because we've heard there's a downturn coming. And I was like, you're young, why have you sold everything? And he's like, well, there's a downturn coming. I said, when did you plan to sell them? Like 10 to 15 years when we're going to retire. And these properties were in blue chip areas. And he's like, so we feel so safe now. And I was like, oh my goodness, he's lost. You know, there's a 24 month kind of change, we're six months in in Melbourne. You know, even if it goes that long, you've really kind of lost your whole long term investment opportunities. And I think that's the really sad thing. There's a lot of people worrying now from a cash flow point of view. You might have a legitimate concern where you to manage your cash flow may need to get rid of a property because you're moving from interest only to principal and interest and it could cost you 26% more. But please, you know, use the suburbs Lecture software, use Location Masterclass. Understand what this implication can be for you in the long term because I think it's really important that you understand your options and what you're doing. That's my thoughts there. Now a couple of people want to know where to get the boom and bust report. If you go to SQM research and it is here, I think it's still on the low price of $59. If you click there, you'll be able to go to the boom and bust report and you'll be able to purchase that port report for yourself. But it's a, I don't know how much it is at the moment. I think it's yeah, still 50, 59.95. So, so go in there and check it out because I think it's a really great thing that you can do that gives you some predictions and yet that will get you some comparisons over the capital cities as well. Oh my gosh, someone's just snuck in a last question if possible. Woohoo. Look at that. It's so big, it's got rid of your.

All right, is there amount of time lending? One started. We're in our late 60s, early 60s, but income is good. And then another question, how will downturn affect you in the middle of your renovation and prices are going down? Because wouldn't that affect your profit as it's now going against the 7% growth, average growth. So sneaky. A couple of last questions in there, Jane.

I think there's like four in there. I read. Okay, let me understand this. So the first question we have there.

John, is amount of time needed between buying properties.

Okay, all right. Is there amount of time needed?

So I think that's speaking to the equity question and the finance. So how soon before you could tap the equity to borrow again? I guess the question.

Okay, so if you're renovating, usually what happens. Most of the lenders won't let you do a refund finance within six months of purchasing a property. Some you can get to three months. Especially, you know, your broker has that conversation around the fact there's been a significant renovation or change, but usually they'll accept that they need six months. So three to six months. So it's not a buy. Renovate 10 days later, let's get a refinance. That could be difficult. It could be you've got a current property within your portfolio, you renovate it and then you refinance whenever you want to. So there's that opportunity. So buying between properties, essentially, it's really up to you when you can afford it. And as long as you've got a buffer in place so that you make sure if something goes wrong, you know, you've got some cash to cover vacancies, et cetera. So, for instance, at the moment I have a. Which I've shared previously, I've got a unit in eastern suburbs in Sydney. There's a significant works being done. Over $1.1 million of work's being done on this property. As I was driving through the city yesterday, after speaking at the Institute of Public Accountants, I drove past to check out what was going on. At the same time, received an email from my agent saying, look, you know, this has been delayed a few weeks. Your tenant is having a baby, you know, post Christmas. The windows and the improvements are not going to be done by then. She's really concerned about having a baby in this dusty environment and hence, you know, they're putting in the notice and fair enough, there's a situation there and she needs to look after her health and her baby's health. And so this really brings up an issue that we've now got two months of this property that we won't be able to rent out because. Because no one's going to want to rent a property whilst it's covered in scaffolding and it's got works being done to it. So that's the reality of it. But we have a buffer in place that allows us to cover that during that period of time. Now, obviously there's, you know, if it wasn't a baby involved, we potentially, we cover moving the lady and her husband to another property for the two weeks that the window work is going to be done. And there's all these innovative things that we could do so that we do because they love the unit, they want to stay there, but at this stage that's not the case. So having these buffers in place are really important. So if it's the first property you're buying, I usually say sit in it for six months and just make sure that the cash flow coming in and coming out is actually what you expected. If you have some concerns after you access the equity, you might fix your rates, but you wouldn't want to fix your rates beforehand because you may have to break those rates to go to a lender where you have the same servicing. And this is why working with an investor savvy mortgage broker is really important and why we talk to our clients about what are your plans for this. Because if you it's not uncommon that someone comes to us at Investors Choice and they've got a property and they've fixed the rates because they're worried about rates going up and then their broker or their bank hadn't done subsequent analysis to say, well, when you pull out this equity, can you still service your loan with a current bank that you're with? If the answer is no, you have to break this interest rate at a cost. If you paid mortgage insurance, there may have to be a new mortgage insurance payment and then you move to a new lender with potentially more mortgage insurance and new costs. So you have to think ahead of what your strategies and have the right finance set up. So if your plan is to buy a property access equity, make sure that you're with the lender that's going to allow you to access that equity and has the policies to allow you to do it. So that's really important as well.

Is there an age limit? When do banks.

So if you're in your late 50s and early 60s, then it's really important that you understand that the banks are going to look at you and say, am I going to give a 60 year old a 30? A 30 year old? I think John's on the Facebook page again, so I'm just going to turn his sound off. So you're going to give a 30 year loan and the reality is a 60 year old person at 90, paying that loan off is going to be difficult. What we do with our clients is make sure that we have enough notes in place for the credit assessor to pick it up and go, oh, they have an exit strategy in place. Now your exit strategy might be, I own my home, I'm accessing equity to buy an investment property. We plan on keeping this for 10 to 15 years and then we plan on paying off that debt and paying down the loans. So that's an exit strategy that most lenders are happy for. Most lenders are not happy with I'm going to be giving a 55 year old a 30 year loan against their home at a 90% loan to value ratio. They don't want to end up on current current Affair. So that's, that's what concerns them and that's what you have to understand. So they might come back to you and they might say look, we're happy to give you a 20 year loan but it has to be principal and interest on that home. So different lenders have different policies. As I said, you can contact us in the message choice. You can work with a savvy mortgage broker who will go and find out the policies. Ask these questions before you put an application in so you know and you're comfortable with it. And another question there, John, I think.

Last part three is how will a downturn affect you if you're in the middle of a renovation and prices are going down, wouldn't that affect the profit as it's now going against the 7% average capital growth rate? I might start off that, Jane, and I know you'll be able to finish it. But the idea if you're buying, renovating and holding, it's, it's a different story from buying, renovating and selling the worst. The thing you always fear is when you buy, renovating and selling or even developing is getting caught right on that tipping point of the market changing. So if, because potentially that could wipe out any value you create in that renovation, let's say you've had added 10.