Your Property Success Mentor Call - October 06-11-2015

Hello everyone and welcome to the youe Property Success Mentor call. Now, just before we get started, as you know, we here at your Property Success love to spread the word about low risk, no nonsense property investment to as many everyday Australians as possible. And so often these calls contain some really great content and questions that would be extremely helpful to other people, which is why we record the calls and reserve the right to share the content down the track. So by participating in this call, you are acknowledging this and if for some reason you'd prefer not to be included on a recording, we just ask that you contact our office within 24 hours and we can edit you out. Anyhow, thank you so very much for being so understanding and patient because I know this call is a little bit late and we're not doing it on the last Thursday of the month. You may have heard that I was really, really sick last week and you wouldn't have been able to hear me. I had no voice and I couldn't hear. So I've recover been a epic month and so appreciate your understanding. Now, a huge welcome back to all of the new Ultimate Guide to Renovation students who this week have just had module seven released. How time flies. Gosh, there's only 12 modules in all, so I imagine a lot of you are getting through that at a fast pace. I know I've spoken to a lot of you as well and you're having a few issues on getting time to go to the modules. Look, the great thing about this is you have lifetime access to these guys, so you can go back whenever you want them. And we know that often a lot of our students do go back and go through with every new intake of students so you can go back and review it as many times as you want. So take your time, but just make sure that you understand that that information is there for you to go to as much as you want. And hello to our fantastic community as well. So I can't wait to talk to all of you tonight. We have a lot of you on the call at the moment and you know, if you haven't introduced yourself the Ultimate Guide to Renovation Students, get onto that private Renovator Network page. There's so much conversation going on there. And Shar, introduce yourself, tell us about yourself. Ask any questions. So don't delay in doing that. Now these monthly calls are exclusively for my mentoring students, the students of the Ultimate Guide to Renovation, my youy Property Success Mentor subscribers, and my Investors Choice Mortgages diamond clients. So if this is your first time on the call and I know we have quite a few first timers here tonight. A very warm welcome to you. Now don't be shy, please say hello. Now you may have had the opportunity to listen to some of the past calls so you know that we're friendly and we'll take any call and we'll do our best to answer any questions. Now these calls usually take place on the last Thursday of every month at 8pm and last for about an hour and a half. Of course, you will receive email reminders each month, a week before and as the calls are approaching so you don't miss out. And if you can't make the call, you can always leave us a message on the message line which is 1300, 119. Or you can email me a question@questionsourpropertysuccess.com au now remember that number 1376,119. I think we've only ever had one or two people use it, but we keep it there just in case someone wants to use it at some stage. Now before we get straight into your questions, I should introduce the person sitting next to me here especially to our new students as he's been hiding behind the scenes and you don't often see him. It took me a bit to get this photo. In actual case, it's serial renovator and co creator of the Ultimate Guide to Renovation, John Hubbard. Hey, John, how you going?

Hey Jane, everyone.

Been a big month for you as well.

Yes. I didn't get to go to where you got to go, but yeah, I've just been busy with doing the development project that I've got on at the moment and that seems to be keeping me pretty busy.

So tell us, where are we up to? So for those people who are new to the call, John, gosh, you know, over 20 years of experience as a renovator, flipper, structural, cosmetic renov, Been on the tools yourself and moved into development in the last two years.

Having a go at development. Yeah, this is the first, this is the first one. Although we're kind of taking on two at once. Two development projects at once. I'll bring it across. Here's my show and tell for today.

Wow, that has definitely progressed over the.

Yeah, it's coming along, isn't it?

Over the months we've seen it from a hole in the ground.

Yeah. So it's got the, the bricks are up now. Actually it's got the, all the roofs on now. That's probably about a week and a half ago. And the bricks went up really quick. They're all little, they're 50 millimeter face bricks. So they all get washed down with acid and they'll look very nice. And all the fascia and the guttering there, they run that all in one go. Now that's all color bond. So they've just got a machine that goes around and on site. Yeah.

Wow, that's impressive.

And puts that all on. So it's not like a timber fascia there. It's all the color bond. All the same color.

Nice. And tell me, just for those who aren't aware, this is a kind of within 10ks of CBD Melbourne and you're creating almost a downsize, upscale downsizer to two properties at once.

So it's a one into two, it's a side by side. So where you can see that the bricks, where the bricks end there, that's just unit two. And yeah, it's in Canterbury which is a kind of blue chip suburb in Melbourne and we just happened to get this block. They took them three years to try and get it through planning permission. We bought it with plans and permits and made a few changes which took us another kind of six months through council but eventually got it all through. And, and yeah. So the market there is downsizer. The agents are telling us that the, the buyer will probably come within 5, within a 500 meter radius of the property.

Isn't that amazing? So it's important to have those marketing boards out front looking pretty smish.

Yes, that's right. And so all of the, all of the styling and everything, it's not too, it's. It's a modern place inside but just not too modern. So it's kind of contemporary light.

So I guess one of the things. And I'd love to, I know you're probably going to market them what February, March 2016. And I've been working with the marketing company for a lot as well. But they've created some incredible images of what the products will look like post.

Yes. Which was used for the. Yeah. So there's some renders and so on. So you hit the artist impressions which are amazing these days. Unfortunately I've gotten with me tonight.

But to the extent where there's like reflections of the windows of lights inside on kind of thing.

That's incredible. Yeah, it's extraordinary. It's. It's really hard to tell sometimes whether they're actually real photos or not. So I'll bring some of those next time. We've just done those for the other development that we've got going because we're going to sell off the plane or try and sell off the plane with that one. But whereas this one, it's just a better one to take to market because of the local buyer. But yeah, those, those things are extraordinary, those renders that they do now. And also they do all the virtual staging and stuff now too. So they do the. Which is extraordinary. I don't know if you've seen that, but it's very hard to tell. That place is not really furnished.

You know, it's a good thing especially when we talk about. And you'll see in the later Ultimate Guide and renovation modules we talk about staging properties especially for those structural renovations for flipping.

Yeah. Which is already. It's also good for your fear valuer as well, which I've just done recently. Another valuer, Doc. And they're getting a bit fancier now too with the pictures and so on.

And Donna, he's got a question. She loves your windows. Are they wood or aluminum?

They're timber and they're from. It'll come to me as soon as I leave. After the call.

We'll get back to you.

Donna. Yeah, they're out furniture galley there. I can't think of what they're called at the moment, but they're timid. They'll be painted white and that was a council restriction so they wouldn't allow us to have aluminum windows at the front. So at the back we've got big stackers. Basically everything you'll see in Module 9 of Ultimate Guide to Renovation, it's in here. All the same tricks I've been using for years and years. Unlikely to change anytime soon. But yeah, at the front they're timber. So in behind those they'll have big shears that will come down from the ceiling. There's kind of a formal lounge area and a big quite high ceilings in there. So formal lounge area into the immediate right hand side and yeah, she is from the ceiling quite a large cornice. Almost like a. It's. It's a large cornice but it's not like a classical cornice. It's like a. More of a deco modern cornice which is. Which projects out onto the ceiling a little bit and, and then in behind that there's a bit of a shadow line and that's where the. The kind of the floor to ceiling shears run across and stuff like that. So it's all done up to look very smart and upmarket which is all just styling. It doesn't necessarily cost that much more. You know, it's just the technique of how you Dress it up.

It's interesting. We were having a conversation earlier today about customer service and it's the little things that people don't notice, which is often the important things. And John was sharing that. His builder keeps saying, no one's going to buy a property based on, you know, these tiny little things that you're doing. But sometimes it's just that overall impression.

It is all those little things add up. Yeah, there's lots of little things like that. Like we use a, a mirror, splashback in a dark, dark gray.

Yep.

And just the, the lights, the way there's just nearly everything that's used has got some little accent in it that's used somewhere else. So when you look in the color, the, the color palette is just really in sync. Yeah, but you wouldn't know that. You just walk in and you think.

And this is right.

Emotionally it looks, you know, good and it's got a good feeling about it, but you wouldn't know all the little elements that go to make that up.

80S got a question here and asks the difference between brick veneer and double brick.

Well, from a developer point of view, double bricks going to cost you more. But yeah, so yeah, I mean, double brick certainly, you know, the older houses, like if you had an old federation house or even a Victorian house, they're often double brick. But yeah, it's pretty rare to get a, to build in double brick these days.

And so we've got an underground car park there. Is there a lift?

Yeah, there's a lift in that one. So it's a slightly different configuration. The one on the left. So yeah, you got the one. The. Gonna go back. There we go. So that's the one on the right. No lift in that one, but it's got a nicer formal lounge. So we've got a double sided fireplace. As soon as you walk in the front door that you can kind of see from the formal lounge into the, the casual lounge, main lounge out the back. Whereas the, the other property slightly more compromised in this section here. So that's the, it's going back on me again. Give it a go.

And guys, you might be thinking, geez, two stories and car park. And we're all talking about a lift, but we're talking about a plus million sale price for both of these.

Yeah, these, these are high ones each, each one of them. And it's that thing where it's, it's.

In the market really, isn't it?

Yeah, that's right. But it's, it's kind of when you're high in the market, too. It's. It's kind of the. The bottom of the market and the top of the market tend to flap a lot. So you roll the dice and on a good day, you know, it could get up more than one, you know, even into the twos. But then again, if the market changes you, you might just break even kind of thing. So you roll the dice when you're playing it at that level because. Yeah, it's almost, I think of it, almost like a seesaw and the ends of the seesaw flaps the most, you know.

Well, we're on the journey with you, so it's been exciting. I know you've had a few problems along the way as well. Did you want to share any?

Yeah, I mean, over the problems, I.

Think as a developer or renovator or property investor, it's always about acknowledging the problem and looking for a solution or working out what the cause of the problem is often, isn't it?

Yeah, that's right. It's. There's always things that come up. It's just you, as with renovation, it's. It's kind of no different in that way. You're always putting out fires. But in this case, we had a. The. There was a plan kind of seems to be missing in the engineering, which is a roof drainage plan, and the builders have just gone ahead and put. Put in some. Some box cutters and. And so on without. I'm speaking technical jargon here, but without rain heads, which are the thing that the box is. Yeah. So it doesn't flow back into the house. And. Yeah, so we've now. And then the plumbers come along and said, oh, I'm not signing off on that because it's, you know, not within the Victorian building regulations and so on. So now we've had to go back and get the engineer to do some more drawings and have to cut into what couple of the eaves at the back to install rain heads and all this kind of stuff. So then. Then the builder gets to have delays, so it gives you a delay notice. And.

And I guess the problem with this is that it really impacts a timeline, especially when you're gearing towards post Christmas before Easter. You know, you have to be really careful around timelines and marketing too, don't you?

It is. It's surprising. And, and I found this when I was flipping houses as well. It's surprising how fewer dates to sell a house line up. Well in and around holidays and, you know, in Melbourne we have got Cup Day and Grand final and all that kind of stuff as well. But to get a solid kind of four week, yeah, four to six week campaign and then, yeah, go to auction kind of thing, it's hard to, you know, navigate around all those dates. So it ends up being a couple of weekends in particular that everyone's keen to get in. So if you want the good agents and the good auctioneers and that kind of thing, you really gotta lock these things in early. So this thing blows out two weeks. It does affect us quite badly at the other end. And the main thing is you don't want to be, you never want to be stuck selling something, you know, for Easter is not too bad. It just breaks the campaign. So what we would do then is we'd have to start the campaign after Easter in order to give it the best campaign possible. So we potentially could, you know, a two week delay and this could be a delay in a month in selling. But I think the worst one is where I've been caught out in the past has been on the wrong side of Christmas. So you go to auction in too late in December or virtually in December.

And it passes in and it passes.

In and then you're stuck negotiating with everyone knowing that the market's not going to come back on until February. And so you're in a really bad negotiation position there. You're really over a barrel.

And I guess the reason we're sharing these kind of personal experiences with you guys is that people don't often talk about the mistakes and the problems and things that you need to be aware of behind the scenes. But when you're actively doing these things, everything, constantly, something's always cropping up that you, you were either a detective pre purchase in trying to uncover or post purchase. And potentially during renovation you're trying to solve. So you know, by just sharing some of our experiences and what's going on with what we're doing month to month, we just try to, you know, maybe put something in the back of your mind when you're potentially trying to sell something or you're coming up against the problem. You can see the way that we work through some solutions.

Yep. Now you've got some show and tell too.

Oh, I've got really exciting show and tell. So while you were working through your problems, I was enjoying myself. So as you can see here, I, I was in Disneyland. So as I mentioned with you, last month I won Australia's Mortgage Broker of the Year. I was voted Australia's Mortgage Broker of the Year was the second time I won it. So I was, you know, obviously you're.

Going to give someone else a go at some stage.

Well, I, you know what, I gave a five year break because I didn't really, I thought it wasn't fair. And the year before last I won runner up without even knowing they, they sent me a plaque and I didn't even know I was up for it. So that was pretty nice. So yeah, I'll be back in another five years and get people to maybe vote for me. But yeah, I'm very happy for other people to share it around. But my aggregator, so an aggregator for those who don't know, there's now 55% of all mortgages in Australia are done by mortgage brokers. And with the APRA changes and the ASIC changes, it's increasing the soar prediction today being 70% just for the fact that people need someone who's across all these policy changes and up to date with their building their portfolios and their lending so they see that that's going to grow. Anyhow, there's about 10 aggregators in Australia, about 13,000 mortgage brokers and obviously the Westpacs of the world don't want to deal with 13,000 individual agreements. So people aggregate through an aggregator and they go forth and, and negotiate the way that brokers work with the banks. Anyhow, my aggregator had a award for their top brokers and as a celebration they flew us all to LA for three days. And I'm not one for really hanging out with mortgage brokers, I've got to be honest with you.

Even in Disneyland.

No, well, you know, all they talk about is lending and I'm interested in so many other things. So it wasn't until they told me that a part of this trip was actually a day at Disney Institute learning about customer service that I really tweaked up on this and was just absolutely delighted and I'm a fan of Disney and I was there for my first trip in 2005 when it was their 50th anniversary and now it's the 60th anniversary. And I just, I've read How to Think Like Walt recently and just, you know, just I love reading about people who are adding value to other people's lives and have mastered their discipline. And my bucket list was to attend Disney Institute. So when they said that we had a day there, well, this was absolutely down the line for me. But what I wanted to share with you in particular and especially there's, you know, we've had in our office where John and Diana and I had a real session today about the customer service learning that I had and how we can apply it to even further delighting you guys was because we want you to go out there and tell other people about us and, you know, increase our community and knowledge and obviously affect the wealth of everyday Australians. But I just wanted to look at the next photo because this kind of typifies Disney and his attention to detail. And there's three quick examples I want to share. One was he used to get a hot dog. Not often. I think he's a bit of a healthy man, other than the fact he smoke a lot, but get a hot dog and he would walk and look at things. And when he stopped eating the hot dog, if there wasn't a bin within 10ft for him to put his wrapper in, the next day, there'd be a bin there. So he's always anticipating the needs of his customer. And this is kind of like the detail that you don't notice. So this is in Main Street. It's just in a little portico and has red and white lights. And at night, and anyone who's been to Disneyland, 9:30, they have fireworks every single night. And so it's quite an event. But the lights come on and it's quite beautiful. And this little portico fluctuates around the light. So red, white, red, white, red, white, red, white. But of course, at some point there's going to be either two whites or two reds together. And if you can see way back there in the back corner, there's one light that's half painted red and half painted white. So the attention to detail here is around what is the experience and what is the optimum experience? And how can we not have in someone's mind there's something missing here or there's something wrong. And you know, when I look at renovations or I inspect properties, and I've often said this, you know, you walk into the property and if it looks right and that subliminal kind of unconscious rightness of the palette that you just discussed, John. But you know, you walk into the bathroom and someone's had a go at tiling, you start then looking at the other problems.

What else is wrong? Yeah.

And you know, and you start then considering and doubting what you're seeing. And so this, this is just one typifies the experience of the Disney experience of they've thought meticulously about everything down to that back corner light not being a double up. And. And I just thought that that was fabulous. And one of the Other things he did back in 57 when he was creating Disneyland was he wanted people to have the experience that when they walked away they could show the photos their friends and family who obviously wanted to see it in themselves. But to do that he contacted Kodak and at that time in subsequent years, 5% of all photos in America were actually taken at Disneyland. And he said to Kodak, how can I create the best experience so that amateur photographers can have the best photos so that they can show their friends and family? And Kodak came back and said if you have a contrast of green and red and you've got so much grass here, then we suggest you put some red accents on all of your buildings. And as you'll see in Main street, every building has red on it. So the photos pop in color. So just that attention. So anyhow, pardon me back to my, my cold, but that was just fabulous look. Went to next photo. Went to visit Paramount Studios and met some celebrities. That was pretty exciting. Okay, well they'll look alikes but I went back for a second kiss anyhow, so we had a really great time there and I've been a little busy. What have we got next there? John at home.

Speaking of your attention to detail renovating.

So for those who might have listened to the last call, I recent I've been I've done two renovations of existing properties this year and one involved spent about $33,000 and within four weeks the same valuer came back and valued at $100,000 more. So we can't say capital growth where it had effect of that. It was a real quick little cleanup of the property. But here's one closer to home. I have a 8 year old son who wanted a themed bedroom of Lego and we weren't going to wallpaper. So what I did is I actually went and bought some gift wrapping paper and I'll show you the next photo. Oh here's my, my Lego man thing that I made for him as well. So you can pull them off and put them on. I'm pretty impressed with that. But bought some gift wrapping paper, ironed it and stuck it up on the wall with removable tabs and there you go. I've been doing some wallpapering. So that's my renovation attempt for the month. So you probably won't see this in any other renovation course anywhere. Lego gift wrapping. And out today, the latest Money magazine. Guys, so there's my smiling face on the front cover. Now the reason I wanted to bring this up for you is always trying to get You a little bit ahead of the game of information and things that are out. So I was asked to actually do two things in this One was obviously where I'd spend my $10,000 and you can read that the magazine, I think it hits the stores on Monday. But I was also asked to find locations, specifically mention and show people locations where they could buy a property for less than $50 a week. So you know me, spread out, run out the spreadsheets, put out. Residex had a chat to Jacob from Ripe House and I grabbed his Sweet Spot report that we talked about last month and I looked at the 10 suburbs that he selected there. And of those I then generated Residex reports and looked at predictive growth over five and eight years. And I wanted to have something that was affordable, so I wanted something under $350,000 purchase price. And then I selected a number of suburbs. I went then and looked at the streets that he had specifically highlighted in the Sweet spot report. And these are the streets that Jacobs found that drive the growth within that suburb and are priced up to 20% better than the other properties in the suburb. And I overlaid the purchase the Residex renovator report for those suburbs and had a look at the streets that lined up and came down to specific streets which then obviously I could come down to specific houses on the market at the moment. So for those drumroll who want to be ahead of the game, the two areas that I actually highlighted was North Aubrey and Morrowfield in Queensland. So one of the things that I liked about Morrowfield actually is that, and we are talking, we're not talking 5, 10K CBD, we're talking 35K CBD is they have predicted growth of 9% for the next 5 and 8 years and the purchase price is under the $300,000 mark. And big Block's ability to renovate and some real opportunity there.

So okay, and a newer suburb or.

A no older established suburb infrastructure, there's a lot of things going on out there, you know, there's some rezoning, etc. So there's some real opportunities. So just wanted to give you guys a bit of head up. I know North Aubrey, I spoke to someone subsequently who's been looking in the area and lives in the area about the streets and she's like absolutely nailed the streets as to where to buy, but as per that Sweet spot report. But yeah, it was, it was really interesting to see what they were talking about and how it is to actually find the properties there. So there's probably Less available.

I love doing what you just described there, getting the reports from different sources and then overlaying them and trying to see where the overlap is and yeah, that's a great way of doing things. Ben's just got a question here, Jane, do you think that 5 plus year growth rate is too far out to call, especially after eight years?

Yeah, Ben, a really great question and I think the thing is it's all crystal ball and you know, I leave nothing to chance. So as John said, you know, I wouldn't rely on one data source. So you know that sweet spot report from Jacob is pulls from Terry Rider's hotspotting report. I know that the only place that I can get that predictive growth is from the Residex reports and hence why I use them. But.

And you can also compare it to the renovator report, to the predicted growth report too. Just comparing those two reports is good.

But it is really hard because you know, no one anticipated the GFC for instance, but no one anticipated a 22% growth in Sydney last year either. So you know, really the thing is that they are comparing every suburb with like, with like criteria. So even if you know if the rest of Brisbane is predicted to do 3% and this is predicted to do 9% if Sydney, if sorry, rest of Brisbane comes back 2% and this comes back 2%, you're still ahead of the game. And a lot of the analysis that they do behind the scenes to anticipate what that growth is, you know, they're not dot mapping like we teach in our your property success club and into the ultimate guide to renovation and your property success system. But what they are doing is they are looking at information from the past and applying it. And I think there's if you do sign up for the on the House or Residex monthly newsletter, there's some really interesting data there and analysis by Eliza, who's the new John Edwards of analysis around what has happened in the past and the suburbs that have been predicted in the past. So I've shared on a couple of the social media sites the Sydney graph that showed with the little video that showed over the last 20 years where the growth was and you can see as the cycles happen. It's like I'd like to say with some mirrors and some smoke that we're geniuses with our portfolio growth, but Sydney moves the blue chip area, areas of Sydney move the outer ring of Sydney or the middle ring of Sydney moves. Melbourne starts the, you know, middle ring of Melbourne goes the outer ring of, of Sydney goes off, the outer ring of Melbourne goes off and then Brisbane starts. It's, it's kind of every five to seven years it happens. And it's amazing because you read in the media, it's like Sydney's happened, Sydney's moving. What's going to happen next? I'm like, guys, secret Melbourne, you know.

So the other thing that I like like, which is the kind of the underrated tab in the spreadsheet that we've got in the suburb selection in module 2 is just the second tab which compares the suburb to its neighbors with all the core data. Because I find that really helpful because if you see one of these prediction reports and it's got a suburb, you can just pop it in there and have a look at next to its neighbors and compare it on all those criteria, you know, past capital growth and yield and vacancy rates and stock on the market and all that kind of stuff. And just try and work out why they're predicting that. Is there pressures coming from the other suburbs? Why is this one the next one to go?

Exactly. And I think, I mean that I think is the real key to all of this is actually looking at it and going, what is happening? What's that flow on effect and what's the ripple effect? So Ben, great question. Can you go hand on heart, is anyone going to guarantee you 9% return in my field? Well, no, but when you pull together all the information and do a bit of that analysis yourself and get into the data, then it is going to start pulling that through and I might just jump over John, if that's okay, to my computer. Because as John said in the Ultimate Guide to Renovation, you know, we took everyone's comments last year about, we gave them spreadsheets with 35 columns and said, here's where you go and find all this information. And we've tried to make it easier and easier as we have proceeded with the course and continually improving custom delight. Disney would be proud of us. But you'll find in module 2, the location master spreadsheets were updated on Monday. So we got the latest information there for you. And I'm just playing at the moment, John, with putting it online.

So this is kind of what this is ugly. You're really seeing under the bonnet here.

This happened today, to be honest. So, you know, just check out what we're doing here. So this is essentially pulling this information and saying, hey look, you know, I'm happy to go 50% below the $650,000 purchase and 10% above it. So I Reckon I can negotiate down and I want to be within 10ks of the CBD of Brisbane. And what pops up is, you know, some, some information regarding, you know, the distance, the postcode and the median value. So you might go, hey look, you know, cherm site, I want to check that out a bit further and take it forward. And this is kind of automating that spreadsheet that we spoke about in the masterclass for those who are a member of the Ultimate Guide to Renovation and, and here's Chermside. But here are those neighboring suburbs and you know, you look at this and go okay, Chermside, last quarter, Last year's done 6% but check this out, 21% in Stafford Heights. You know what's happened in the last 10 years? Well, in actual fact we've had 5% Stafford Heights and 5% at Chermside.

So then the first thing you get on and look where Stafford Heights is in the map in relation to it. Exactly. Is it on the city side of it? What's going on there?

And so this gives you. Okay, so then we go through the rental data. So Ben. And as we said, you know, it's not about. So this is the top kind of criteria. I would look at some growth and as I said I don't usually look at anything less than 10 year growth for the dot map because I think it's all, you know, you can have those variabilities of what goes on the market but you know, when you're comparing.

It to your neighbors, it's kind of nice to see where that 10 year growth has come from.

Exactly.

So you can see has it all come in the last three years or has it come in the last one year or what's the.

And actually I had an investors choice discovery call with a gentleman yesterday. He was saying that he's. And we talked about what his goal was and what his strategy was and it was around cash flow. He wanted to have a portfolio paid for itself within 10 years. And he said hence that's why I'm going to Brisbane because most of the yield in Brisbane is five and a half percent, which it is. But he was actually targeting Kedron. And I said well Kedron's actually moved up in value and I doubt that the, the rental yield has. And here it is here at 4.3%. So it shows you how if you look overview of a big city and then you have to go macro is fine, but then you go micro down to that suburb view and then the street view how important it is and in actual fact, for $600,000, for 4.3%, you may actually get something in Melbourne that could do better with that, better growth characteristics because Kedron's already moved. So let's just say we want to take this a little bit further. We want to take Kedron and Chermside a little bit further to our next slide over information.

These are really your short lists now. So these are the, this is the.

Beautiful ones and this is where we get into that real data of, you know, sales per month. So obviously if there's only a couple of sales per month, if you're going to be putting your entire effort into purchasing here, you got to be aware that you're probably up against some stiff competition. And you know, once again, some information regarding two bedroom and three bedroom, what the difference in the median is. So if you could do, you know, a twist between converting a two bedroom to a three bedroom, you'd look at this and go, not so much money in it. There might be some more in the rental, but check out this three bedroom to four bedroom. Wow. There's some money in that.

Yeah.

And these numbers here, that just means that it's not statistically relevant. So, you know, we try to do as much as we can for you, but the reality is sometimes the stats don't always come through.

Yeah. And this will no doubt change. I mean, this is the first day we've actually got it online. But so if you've got any ideas of how you think, think it would present well, like even if it's on different pages or any ideas at all, we're open to supportourpropertysuccess.com so we're pulling.

Some information here from Ripe House. Jacob's been really kind in giving us that. So as you can see, that's where a lot of this comes from. And just down to some of the demographics we've already we pulled through from census as well. So you get a feel for, you know, that percentage of renters as well. So, you know, will be pushing this up to have the right numbers in there. But, you know, this just gives you an idea of what we've been working on and behind the scenes to make things prettier.

Next time you see, it'll look a bit more pretty.

It'll look great. And I just wanted to pull this up as well. This is the latest Residex numbers for what's been happening in the market. And I think, you know, from a point of view of checking out where we're currently sitting, you know, Australia's now hit a median value house value of over $500,000 of interest here is that 10 years. So the average Australian capital growth has been 4.7%. Sydney has done 7% in the last 10 years. Melbourne's done over 7%. And here's little Brisbane back here at 4%. We've got Adelaide at 4%, we've got Hobart at 3%, we've got Perth at 4%. So when we're looking at. And he's last year 21% in Sydney. So it's interesting to see at the moment there's a lot of commentary around, you know, the Sydney markets come off. We've had clearance rates go from 80% down to around the 60s, et cetera. But there's some discussion around property experts at the moment that Melbourne still has a way to go. And if you, if you look at this long term, we can see that Sydney's had quite a bit of growth and maybe there is some still upside in Melbourne. So I know a lot of my mortgage clients are looking in Brisbane and affordability is a part of that as well. But you know, from a growth characteristic there's some real. There seems to be a bit of settlement around Melbourne still. Be aware here. We talked about that rental return, 3.3% in Sydney, 3.3%. We're looking at Hobart, 5%, Darwin, 5%, Brisbane close to the 5. Adelaide around four and a half.

So, you know, that's low across the whole of Melbourne, isn't it? Three.

Yeah. And that's what houses are doing. And obviously if we just go down a little bit, units perform better against the yield and a lot of that's to do with affordability, etc. Melbourne, you know, we're over here at 4.3%. So interesting information and what else can I tell you later? Also in the month, let's just jump straight into the APRA changes. You heard it here first. I predicted last month that everyone's getting all caught up with the APRA changes and servicing. But. But the biggest thing that was probably going to come through is the banks were going to have to. The four big banks and Macquarie bank were told to increase their capital against their mortgages from 18% up to 25% or most lenders. All the other lenders are around about 32%. So they've always been having to carry more. So the banks had to raise some money. So they raised some money and created, went out to the market. But they've also done that by increasing the interest rates across the board. So this is what the big four banks have done. So it's interesting to see. So what we had last month was most in. Most banks increased their investor loans by 0.25%. And in addition to that, across all lending, the banks have increased their interest rates as well.

We were screaming for the rooftops for.

Hey, you heard it here. Early in the year, I think I sent an email to every Investors Choice mortgage client going, you have equity. Get it now, be warned. So, yeah, let's continue that conversation if you want to have it, guys. But one of the things I read about APRA today is that they're going to get a little bit more stringent. So if you're kind of sitting back going, I'm going to wait till things settle down, you. You may want to like, it was better. Yeah. And I mean, you know, Melbourne Cup. How good was the Melbourne Cup? Having been a girl who grew up on the horse stud, I. It makes me cry every year. And you know, what I love about it is that there's a story behind every winner.

Yeah.

So it was a great story about Michelle and her brother Stevie, a great story about the owners, you know, the $50,000 horse, et cetera. But the thing is, there's 24 horses and any one of those horses could have had. Any winner could have had that amazing story. And the reason I bring up Melbourne cup, because it was the day RBA met, they decided to keep interest rates on. On hold. But one of the interesting things was the report that came out around it and there was some upside, you know, around, gee, we think the economy's doing a bit better and there's some downside around the inflation marks. And it was like they were in two minds, like, what are we going to do? What are we going to do? I doubt we're going to see any interest rate changes in December. RBA does not meet in January, so February, they may have had a good Christmas and think about what they're going to do, but we're not going to see much until early next year. There might just be, you know, we have some, I don't know, some effect of employment figures or something that come out in December. There might be something that generates the market to go down, but at this stage, one of the things we've seen is Westpac was the first to move with increasing their variable rates. They've just announced they're increasing their fixed rates and I'm having conversations with people at the moment about fixing, potential of fixing. I think three years might be A bit soon. If we interest rates come down, they take a while to go back up. You may be cost neutral after three years, but five years potentially is five years at, you know, 4.7% might just be a bet that you want to have. So if anyone's interested, I've got an ebook on where can I post that? I'll put that somewhere ebook if you're interested on fixed rates and some of the things you should know because if you're going to sell there could be some exit fees that you need to be aware of. So yeah, so that's about me for the month. Big changes. There's been some really exciting information I'm going to pull together for this month's Toolbox newsletter. So make sure you see it. A lot of good resources and reports that have been out. So yep, pick up your copy of Money magazine and have a read and yeah, hope you guys can use the information ahead of the game.

Great, great info.

All right, well we better get on to some questions. What do you reckon?

Yeah, why not? Let's have a look at, see if any hands are up. We've got a couple ones that have been sent in. Oh, you're probably going to need to do all the housekeeping first, don't we?

Yeah, let's do housekeeping especially for those people that, that aren't. That are new. So just to let you know guys, if you have a question and you're on the computer experiencing any problems etc and you can't hear the call, well, you've probably just sat through 40 minutes of sile but the telephone number that you can call in on is one of the options in the drop down menu. Call for Milan Line Mobile Skype. If you have a PC, your PC should look something like this and when you have a question please raise your hand by pressing the little hand icon. This indicates to me that you have a microphone and I'm going to unmute your line and take your question. Now don't be scared, I know I speak to people all between these calls and they say, oh, I was too scared to talk. I'd much rather chat to you and answer your question then let it go and you miss out on answering question if you don't have a microphone. No fear, we will get to your questions. I much prefer talking to people but write them in the chat box and I will respond as I can. It's easier for me to have a chat to you. So remember there's no such thing as a silly question. I really encourage you to make the effort to ask the questions. If you have access to the previous calls, get in and listen to them because you can see, you know, know we really, we take, we take anything and see what we can do with it. As I said, the calls usually finish around 9:30. Take an hour and a half and just for the sake of the group, if you do have a second question, do a quick follow up but I'll come back to you. Raise your hand again. So I really want to make sure that no one misses out. We did have a bit of a marathon last month, didn't we? It was two hours and we had to stop it with hundreds still on board. So yeah, we're going to do our best but 9:30 is usually catching off. Look, just as a reminder also this is not a tech support call and if you are having problems with videos or downloads or logging in, if you're having problems logging in, clear your cache. Guys, not 80% of our login questions are the fact that you've got your cache needs to be cleared. And once you do that, Google how to clear your cache in Firefox or, or whatever because we often can log in when you can't using your logins just to check them for you. So clear that cache. But yeah, look, if you do have a tech issue, please you know, email us at support at your property. We are here and we'll do all we can to fix your problem. Anyhow, been a big month since we spoke to the people in Ultimate Guide to Renovation. They've moved on to module seven. So I just wanted to touch on the fact John that you guys have got into module five and I have to say if you haven't downloaded the quick quote calculator, we've got professionals in the industry have been through this course and have said that they would have paid $2,500 just for that calculator. It's got 20,000 DOL years worth of IP of of all the costs that John and I have been through and renovations and you've used it for your development, even costing it out and managing it. And look, it's an extraordinary tool. I don't want you to overlook it and I know often the videos are really engaging and exciting and interesting and you kind of see the bonus and go ho hum. But you know, get in there and you may not be ready to renovate or even do.

You can add to it too. One of the things that I was doing particularly years ago when I was making that tool which looked was a far nowhere near the Version it is now, but I used to just go to Bunnings and get the prices on things and just add them, you know, write them down and add them in. So when I'd come to it, I had a baseline to work off.

So. Yeah, so there you go. You know, don't miss out. The masterclass spreadsheet's been updated. We're actively looking, trying to update those monthly for you.

Yeah, and getting easier. Hence, we're going away from. Eventually we'll see. We'll get it working properly, but we'll go to the online version of it, maybe incorporate it somehow into the module.

So. Yep. Anyhow, over to you guys. We've got any questions. We are here to talk to you. I can see. Well, we've got one hand up, which is good. Great. Let's see if Gareth wants to have a chat to us. Hey, Gareth. How are you going? Hey, Gareth. We can hear you typing in the background, but we can see that you're not paying attention. Hey, Gareth. Hello, Gareth. Okay, we might come back to Gareth. How about we pull one of these questions from our email? Or have we got someone else that you want to.

I'll have a quick look here. Yep. Kylie.

Kylie, I don't think Kylie's asked us a question before. Hey, Kylie, how are you going? Welcome to the call. Thank you. I'm well, thanks. How are you both? Well, better now.

Good.

Kylie, I have a question about finding a builder to do a building inspection in Brisbane. How do you suggest that I find. Look, I think one of the real important things around and the big mistakes that I see people making and getting those inspections done and getting a building or pest inspection done is actually speaking to the selling real estate agent and saying, can you recommend someone? Because obviously it's in their interest to recommend someone that they know and might be on their, what would I say, say, pay list when they're doing other things around the office that might give them a favorable report. So having that independent inspector is really important. A couple of things you can do if you're in the Renovator network or in the your property Success club. Private Facebook pages. Get in there and ask other people. We often have people within the pages looking for, gosh, what have we seen this week? Some builders in Brisbane. Actually, I think it was one of the questions, but might have been you, Kylie. But they were looking for rental managers, et cetera. So a lot of people in those groups share. If you're not within those private Facebook groups, then one of the things that you can do And I listened to an interesting podcast today with a property manager who said it's amazing how many people are looking at purchasing a property or looking at investing in an area. And don't call the local property manager and say, what's happening? What kind of properties are people after, et cetera. Because obviously that property manager would be interested in managing your property going forward. So potentially what you could do is go to another agency that's not involved in the sale and speak to the property manager. So, you know, referrals would be my number one second source through a property manager. And. And John, have you got some thoughts?

No. What's the archicentrecenter? They're expensive, but sometimes you can get. The guys that work for archicentre often work for themselves as well. So sometimes you can meet them through on the first or second occasion through an Archie Centre and perhaps get them to do some stuff for you individually. But the thing with Archie Centre is they give you the guarantee, so it's quite expensive. Whereas. Whereas I found you can get building inspections off guys if they don't. As long as they don't have to put their name on the list, sign on it. Yeah. So they don't have to sign off on it. And so with all the indemnity and all that that comes with it. But you can get a really solid building inspection. But they're just, you can't hold them to it.

Just in case anyone missed that tip. What John is saying, instead of spending 500 bucks on a written building inspection, walking through with the building inspector without a written report, you might get it for 350.

Yeah, we paid 250.

250. So especially if you're doing a lot of inspection. So write that down. Just saved 250. But yeah, that's, that's an incredible resource because let's face it, they're not. If you ever read a pest inspection, they always say disclaimer, disclaimer, yeah, I'm never going to come back and help you.

And the thing is, you can't. You never really are a 100% because there's always what happens behind in the.

Roof and the walls.

Yeah, you can't drill into every wall and. And so there's always a chance that there can be something, but you'll pick up the main things and often the things that are quite obvious that, I mean, they're obvious to a building inspector and I'm pretty experienced obviously with structural renovations, but there's still stuff that I get in building inspection Every time there's still stuff that the guy picks up that I miss.

Look, I had a building inspection done of a house I bought and the inspector got up into the roof cavity and came down, first of all, laughing, because there'd been some damage to one of the tiles and they'd actually put the tile in upside down. So the water was running straight into the roof. And I was wondering who was the clever plumber. But secondly, there's evidence of a fire, electrical fire that had happened and the house had been cleaned out of any evidence, but there was still that soot in the roof. So we could then go and do some specific checks on the electricals and make sure they're up to standard. And I think we've got a really good tip here from Saren, who says she actually asks the sellers agents to refer a pest and building inspection company and then she takes them off the list to ring. So nice. Nice job, Zara. I really like that. And Hayden actually said that he's got a copy of my book. So for adding some value there, Sarah, including your address. And we'll send you a copy of my book. Maybe you've got a book too. Maybe use it for Christmas. Guys, it's a great present.

Give it away.

Okay, So I hope that helps you, Kylie. Yeah, thanks very much. It does. Okay, all the best. Let us know how you go with with your inspections. I will, thanks. Okay, bye. Bye.

See ya. Ok, let's have a look back up here. Gareth, we'll give you another go.

Hey, Gareth. Gareth, you're on.

Gareth. No, we better turn Gareth off.

Where?

He's dropping on his lounge room conversation.

Turn the TV down. Okay, who else do we have here?

Got one?

Another hand up?

No, I don't think so. Oh, here we go.

Up a bit further.

There we go. Who's that?

80.

80. There we go.

80. I'm unmuting your line. How you going? 80. Hey, can you hear me? We hear you loud and clear. Oh, good. Thank you. Yeah, I have a question here regarding purchasing a house at IS at Salisbury Brisbane. My husband has been looking at it and this is quite reasonable. Within our budget for Salisbury, 400 plus. But it's an older one with 311 and 311 just means one bathroom. So I am a bit concerned about bathroom. What do you reckon? Should we renovate? Should we add a bathroom or does more people. It's near university. So is one bathroom sufficient for the demands of the people there? Okay, so I think the first thing that I would do straight up is I would go and check out realestate.com and see what, what the typical properties are. So let me. So basically what I've done here is I've just gone straight into realestate.com and I've said hey, show me Salisbury. So hopefully I've spelt the name right.

Still waiting to come up there. Yep, there you go.

Salisbury. So Salisbury, is that how we spell it? 4107? Yes. Okay, so without doing too much analysis here, what I would be doing is going through having a look at the different properties that are for sale. So this is taking a little bit of time. So we've got a four bedroom, one bathroom, two carport. So your purchase price is around the 400. These look like newer places. That looks a unit 372. Four bedrooms. No, I think it's an older one, it's an older home. So this is a three bedroom, one bathroom. So what I'm trying to do here is I'm trying to look at what comparable properties would be. So you said around the 400 mark. So this is 600. So it might have more finishes. Three bedroom, one bathroom. It looks to me that very rarely until you're under a higher. Well here's a three bedroom, two bathroom, four car park which is obviously a driveway. Four bedrooms, two bathrooms. So if you, it would two bedrooms, one bathroom. I would, I would hesitate to say that if. And this is a newer style property and that's apartment. So if we're looking at the houses once again over 799, that's not a comparable three bedroom, one bathroom. Look, that's the one you just passed that one. Okay, no one look at this address but that's what it is. Okay. Six bedroom, three bathrooms, four bedrooms, two bathrooms. Four bedrooms, three bathrooms, four bedrooms, three bathrooms. So these are newer type properties. So look, this is the kind of analysis that, that I would do 80 and just go through and get a feel for what is typical. So you know, I'd be looking at what other houses have. So I'd be looking, you know, maybe refining my search to houses. Obviously we've got a slow Internet connection. This is what happens when you have NBN guys. It gets slower for some reason but I just find out what is typical for the area. So if I was seeing that most of these properties in that price range were around having a two bedrooms, two bathrooms. Sorry, it would concern me that, that you were having the one bathroom. But you know, just having a quick look here, I don't see anything that actually typifies that that is not what is normal.

Suburb view might give you a good snapshot.

So let's just maybe it's going to be a faster website for us too. So Suburb View and I think we had 4,107. Salisbury. But this is this properties of the market at the moment. So this kind of gives you a feel for what currently is on the market and obviously we could reduce that but we've got a lot of. We've got three bedrooms, two bedrooms, three bedrooms, four bedrooms. I'd possibly also get into the census data for Salisbury and just clarify that three bedrooms is what is typical for the area.

Looks pretty even, doesn't it?

Yeah it doesn't look like three bedroom is not uncommon common for the area and when I mentioned that census. So if we get into census data we go into quick stats. And we look at salisbury. How do I spell that? S a l I s s a l I s bre queensland s l a. And so what I'm looking in here is what kind of the average dwelling looks like. So I just go here into dwellings and I can see that 92% are occupied which is always handy. Separate house, 93% of houses. So you're not buying a unit at a townhouse. So you've got a fit for market here. Look at this. 1200 properties, 3 bedroom and 5004 bedroom. So that 3 bedroom is dead set on what the demographic is indicating to us that they want. So that's great.

And we've got a percentage of renters.

Let's just go down and have a look at the renters. So we've got 29.6% of renters so we often use around that 30% mark as you know what the percentage of renters. So make sure you've got enough in the market to have as an open market. If you're looking at is it buy and hold that you're doing or is it buy reno sell. Yes, buy and hold and yeah, yeah so from that point of view, yeah that seems to me that your three bedroom is on the mark and as I said you know you'd run back here to have a look down this section and have a look that you know, know how many of these three bedroom properties. So I then go to suburbview.com and.

I'd potentially do the three month yield one that pulls up.

Yeah, let's have a, let's have a look at that and I just, if I just had a look at the three bedroom houses here. So I'm just trying to take all the rest of these off, kind of running a mouse looking at one computer doing the other. And, and if I run that one.

So this is assuming that you've arrived at the suburb through a process in the first place, mind you.

Yeah, this is the right suburb for you.

Yep.

Just not letting me run this separately. So. But see how I just went through and chose the three bedroom houses there. So I've chosen just the three bedroom ones that have come come up. So this information on the left tells me you've got three bedroom, one bathroom, three bedroom one bathroom, three bedroom two, three bedroom one, three bedroom one, three bedroom 1, three bedroom 2, three bedroom 1, three bedroom 1. I wouldn't be too worried about buying a three bedroom one bedroom place and I wouldn't necessarily be concerned about putting my time and effort and money into the second bathroom. Right, okay. Because I'm thinking of mainly renting to students and I'm just thinking, thinking would that attract more people if it's too bathroom for convenience? You know, potentially. I mean most of my properties are next to universities and hospitals and my fallback position is always if I have to, can I actually rent to the students and is this the kind of property that they'll want? And you know, one of the things that it's not working for me tonight. One of the things that we look at is that you know what is typical for the area. So I'd get out and do a couple of inspections of rental properties as well. Unfortunately we're talking about the end of the university year so you're not necessarily going to have the, I guess the, you know, people, the properties on the market at the moment that are rental properties for students because people usually buy those around December and January and then January, February is where the students, you know, start to want to look at them. But there are some exceptions. So I'd get out there and just have a look. I wouldn't necessarily think that you might miss out by having, without having that second bedroom because I know, second bathroom, sorry.

The students will probably turn it into a bedroom anyway.

I know. And they won't clean it from experience, just so you know. But this gives you an idea of the current housings over the last three months as well. So what the typical price range and median and rent is for those three bedroom houses. So all I did was get into suburbview.com and look at their reports and look at that three year yield report just to get a feel for, you know, what the market's doing and what's being Asked on the market. Thank you very much. It's very, very useful. My pleasure. Thanks. Very good. Thank you.

Okay, let's have a look.

No questions. Good. Get an early night.

Yeah. Good.

I think we've got some in chat. Do we?

Yep. I'm just going to bring the screen back. Let me see.

Now. I did have a question last week that I will come back to last month for those who are asking, I wonder if Robert is online tonight. Robert asked me a question regarding a podcast that he'd been listening to. We got Robert there at all.

I'll have a look.

Put your hand up, Robert, if you're online. Otherwise I'm going to answer your question and hopefully you can listen to it later. Gosh, we've got so many people. This is great. Robert, I'm going to open your line.

Hopefully it's all right, Robert.

Hey, Robert, how are you? Maybe Robert doesn't have a microphone.

No, not looking good.

Okay, Robert, I'm going to answer your question anyhow. So as we say here, if we don't know the answer, we'll go research and we'll try to find out some information for you. Robert had a question last month, so listen to the search September call and he'd been listening to a podcast, property Couch and he told me actually John, it was podcast number 31. So I listened to 31 and then I listened to 31. Part two in an hour of my life had gone by and I learned so many things about good property management. But it turns out that had nothing to do with the question that he asked and was actually podcast 30. So at the 18 minute mark there's a conversation with our good friend, the property professor, Peter King. And it was around the percentage of land value that you would consider for purchasing in with and the podcast, great little podcast. And one of the things that Peter said was buying a house. He always looks at having 70% of the value of the property is actually the land value. So that's the kind of information that you'd get through rates, notices, etc. And depending on the state, you can access that information from the council. I've actually run councils and asked for what the land value is for specific properties but and that's what the rates is. Rates are often unimproved value means this the land value, what it's based on. So he was saying 70%. It was interesting that that number came down to around 60% if there was an older style period property on there that you probably pay a little bit more for. And the Important thing is understanding that a $500,000 or the example they use is a $500,000 property in Toorak is actually worth more than a $500,000 greenfield Melton New house and land package. So it's a function of the percentage of the property that is actually land. Because the reasoning behind this guys, is that land goes up in value and the property depreciates, hence why we have depreciation schedules. It's like your car, you drive it out, out of the showroom and it starts losing value straight away. And that's just due to age. Land goes up in value and we've seen that that's what capital growth is about. So the numbers that they were quoting and the one in particular that Robert asked about was that the fact that they had said if you're buying a unit, he looks for 30% the value of the total land value or 30% of the value is actually based on the land value. So 70% would be the build. So obviously there's more building. The fact of that you have multi levels on a block of units usually, hence the word block, but that you would have less land value as a percentage of your overall purchase price. Now if we look at inner city Sydney, Melbourne, Brisbane and the large 17, 20, 70 story buildings that happen there, their percentages of land value are closer to like 10 to 15% than that 30%. So a 30% land value on a unit means that you're looking at potentially an 8 to 12 unit block, a 3 to 4 levels, an older style 70 to 80's block, where we're not talking that the it's brand new, we're not talking the majority of the expense is the actual construction on the site. We're talking it has a larger land value. So Robert, I couldn't answer your question. I think it's the first time in two or three years that I haven't been able to answer a question online. But I did the research, I listened to all those podcasts, you've answered it now and yeah, so I just wanted to acknowledge the fact that yep, we missed a question, did some research and came back. But that's how that land value works. It is difficult to find out the land value of a block, but once again this could be part of your investigation that goes into the body corporate minutes because obviously they've got rates, notices, etc. And their insurance is based on the property value overall and you can make an estimate based on the size of your unit as compared to the rest of the units. Because that information is usually in the cost contract on the percentage of space. So you can do that calculation. So hope that helps. But yeah, tick that off the list. It really bugged me for the last six weeks that I hadn't been able to answer that. So there you go.

So Maya's got a question. It's actually two part. You might struggle with the second part, but I'll tell you anyway. First part is, please let me know if Logan in Queensland is a good place to invest. And the second part is around your census, this dot map. She's just asking how to do that now. She's had some trouble doing that, which I think is probably going to be too hard for you to go through because it's such a complicated thing live. But can you pick up on any of that?

Is Sabia on, on the call tonight? Because she can. If she doesn't have a microphone, we can just.

We'll give her a go.

No, that's Sabbath. Is that the same person? We just got a spelling mistake.

Well, perhaps.

Okay, Sabina or Sabia, let us know if that's you. Just put in the chat box, put.

Your hand up and we'll know.

What I'm going to do is answer the first part of the question. Is Logan a good place to invest? Well, the quick and easy answer is yes and no. And the reason why is that it really comes down to your individual requirements. So, you know, we go through this time and time again. And Sabina, I hope I've got your name right, but if you're in the ultimate guide of Renovation or your property success system, you'll know that the first modules we really dedicate to understanding what your goals are and the time frame to achieve those goals. And from that comes your property investing strategy. So, you know, if you can go to the investorschoice.com au website, pull out, go to the resources, the calculator, the property portfolio planner. I've really put a lot of work into creating that quick and easy calculator for you so you can see the value of the portfolio that you may need to achieve the goals that you want. As a passive income goal, Logan may be an area that suits you, but what it comes down to achieve the goals, we're looking at growth to get you to your goal. So the property goes up in value but also yield. That helps you pay for the property whilst you're getting to that end point, which might be 5, 10, 15, 20 years time. Now, there's been a lot of information about Logan over many years and I know some property experts have been predicting it for over 7, 8 years and as you can imagine with mortgage fact finders, I get to see a lot of people's portfolios and I've seen Logan do nothing for a very long time. But Logan has definitely been on the hit list for the last 18 months and we've definitely had a lot of people around here looking in that area. Logan itself is surrounded by a number of other areas and I've seen some people dot map that and look at anticipating that needs and in actual fact, if you're a student of tagta, one of the, one of the tutorials I think John that I did for RP Data Professional actually goes into that Logan area and looks around that area. But the interesting thing is I was looking at my Money magazine that came in the mail today and the other property person who was asked to comment on property and purchasing under $600,000 was Margaret Lomas.

So I noticed you cut out of the picture when you took a photo.

Well, I was trying to make the picture of me look bigger. So she's got half a face. I've given Margaret half the acknowledgement there, but I'll give her due. A Jew is needed and that is that she's actually picked Logan as the area to invest in.

So.

So understand the demographics and understand the drivers of the area. Price point is below $300,000. Working class, outer suburb of Brisbane. It definitely has some growth. I believe there's been some infrastructure changes there. So you know, get in there and do that research. And I just showed you that quick demonstration of the online version of the location spreadsheet. If you have access, Ultimate Guide to Renovation that module too. Jump in there and look at the information around Logan on what's happened. But really Sabina, it comes back to what you need. Now I mentioned earlier that I spoke to someone and his whole methodology was around or strategy was around yield. So he wanted to keep his portfolio, not sell his portfolio, have some growth. But yield was important to get to a cash flow neutral position between for a certain period in a certain period of time. So I'd go in and check out the yield there, the predicted growth. But it really comes down to what your needs are.

Great.

And just as a Sabina, did she mention anything in chat?

No.

Okay, so it might be Sabina, might be Sabia. But the other question that you have on actually targeting the information on census data, so what she's referring to here guys is I did a tutorial, spent. Oh my gosh, when the 2011 census came out 2006. I'd done a tutorial on how it is possible to map using the census data and we jumped into census earlier and I went to quick stats. There's an area there called table builder and you can go there and you can pull up a specific suburb and you can say what is the location, what is the home ownership of people on census night. And what it does is it gives you an idea on street by street where the owner occupiers live and where the renters live.

So different colours for the owner occupiers and the renters.

Yeah, and the really important thing about this, and you know we talk about the importance of understanding strategy before you look for a property. If you were going to do a flip, buy, renovate, sell, buy, subdivide, sell, buy, do anything and sell, what you're usually doing is you're targeting the owner occupiers so you want to be in the streets where the owner occupiers want to live. You have a better chance of selling to that market. And if you're going to buy and rent the property out then you want to be in the streets where the renters want to live. So you're really targeting that demographic to a micro analysis of location in the suburb. So the important thing around that is that the census data allows you to pull that up. Now people who are an ultimate guide of renovation got 3 months free access to renovation ripe house and that ripe house data actually pulls from that census information. So you can very clearly see in the suburbs where the owner occupiers are and where the renters are. So if you have access to that.

Overlays all the other bits and pieces too like income levels and all that.

Stuff and percentage renters and yield, all of that. So you can go to the source and those tutorials that I have in your property success system and in which you need.

Because it's virtually in bubble. I mean I see you have to go back to the video tutorial.

Oh my gosh, I try to do that again for you. Now choosing which axis the X and Y is, you get it mixed up and you go back. So I go back to the tutorial whenever I have to do it myself. So yeah, I would suggest that you go and check out that tutorial speeder Lorraine. Lorraine, lovely to speak to Lorraine. I know Lorraine's out there looking at properties all the time. Lorraine, how you going? She's got a hand up, looking good.

I'll try try her here. That's a Lot.

Okay. She's got a few. Hello, Lorraine. Oh, I was just talking to myself.

Sorry about that.

That's okay. You can talk to us now. I was just going to ask a question. I have a two story house that has three 80s, you know, the 80s art arches.

Yeah, yeah.

In the front. And I'm just wondering what you could do to disguise them or make it look more modern. John, I think this is a question for you.

Yeah. Potentially, it depends how much meat is at the top of the arch at the thinnest point, right in the middle of the arch, up the top and what kind of what weights above it if they're load bearing or is it, you know, is there another story above it or what kind of. Because sometimes you can just simply stick a lintel in. So what they do is they just knock out a couple of courses of bricks and then they put a great big kind of steel lintel in and then they brick that all up and as soon as it's dry then they just knock all the bricks out from underneath it and you can square it up that way and. Yeah, and particularly if you're rendering, you can, you don't even have to be that, you know, clean about the way you do the bricks. But. So that's one way of doing it.

So two stories probably load bearing. Yeah.

Which you can still do a lintel. It's really. I'd have to see it. But it's often it's that distance from the, from the top of the arch to whatever else is it's going to interfere with. So if there's, you know, for instance, if there's bearers or floor joists or anything that could interfere with that directly above it kind of thing. So there might be some constriction around how you do that. Or if it's a massive arch, I assume it won't be. But if it's an arch that's really tall, then the other way is to do it, you know, put the lintel down lower and brick down to the lintel. So you don't, you don't always have to go to the highest point and then bring the square up to that or the square opening up to that. You could go down a little bit there too. So.

Which is interesting. My husband's done something internal to our property like that where we had a, the 1980s renovation between the lounge room and the next room that had that arch in it. And he actually went through and actually put that lintel in and bricked up in between and then boarded it over and you would never know. But it's a nice square in now done. And it. It's. It's more modern and fit for purpose. But what it allowed us to do is put doors in there. So in winter we can close off that room and as someone, we can open it up. But.

Well, you remember in, in module 8, in the ultimate garden renovation, we do one internally where it was just. Which are mainly just normally ply the way that they made those just with supply. So it just the cosmetic renovations. Yeah. And I think the plaster. 300 bucks, 3 or 400 bucks to plaster it up. But. Yeah, a little bit harder. A little bit harder with the brick. But. And what are the. What are the bricks like? Are they. Are they. Are they like brown brick? Are they ugly old bricks? Because if you've got an arch, you've probably got ugly bricks to go with it, have you?

No, no. She says they're beautiful bricks.

Yeah. There, we've lost her.

I don't really want to do that. You know, that's hard work, what you said.

Yeah, potentially. Yeah. But it does lift it, though, because that arch definitely is a certain look and it does data property. But the other thing is often around where I live, you often see those, you know, the three arches out the front and they're a brown brick place or something like that. And if you can get rid of that arch and square it up and render even just the facility facade, that can make a huge difference to the. And often there's a balcony that goes with that particular style and by getting rid of some of those banisters or pillars in the. In the balcony, you can. Yeah, and putting something modern there, like glass or whatever, you can, you know, do a bit of a facelift that way as well.

And Lorraine, it's all around the intent as well. Like if this is a. An investment property or a home, you might be happy to spend a little bit more on your home. Whereas if it's going to cost you $5,000, put lintels in etc and do all the work for an investment property that might be better used money elsewhere. So it's around understanding whether there's actually a need for it as well. We do talk about the importance of street appeal and that first impression. But if this is for you personally, then you can have a crack at anything. But if it's around an investment property or potentially getting the value of a property From a valuer, a 5,000 spend may well be worth actually the 20 or $30,000 potential modernisation that creates that property from that street appeal. But what you'd want to do is you'd want to look at the entire street facade and landscaping and approach that. Whoever's going to value that property is going to look at and have a look at that total picture as well. That house in that street is the only one with the arches. So it probably a quote from a bricky.

Bricky will tell you pretty quick how much it'll cost you and whether it's doable or not. It's probably slightly easier than. I mean they, they'll do it pretty quick. It only takes them a couple of hours to get the lintel in and they just come back the next day and brick it up. So it's actually not that big a job. If it can be done. If it can be done, that is.

Disclaimer. Hey, all the best. Lovely to speak to you. Thank you. Bye.

Okay, another question from Maggie here. I'm planning on renovating my principal place of residence and would like to add a room or extension to the back of the house us. Would your box on the back be in one of the modules in your property Success Club soon? So obviously Maggie's in your property Success club. Further this I'd like to scale down or retire in a year or two and would need to either pay down my debt to live on the cash flow or increase income. Would this extension require private certification? Certification or through the council? Thank you for your time and your wonderful education.

Oh, few questions. Right. Wrapped into there. So the box at the back isn't part of the your property Success Club, Maggie. So for those who don't know, we've got a monthly affordable, consumable way that people can get education that haven't either.

Deep dive under one topic at a time.

Yeah. So the ultimate guide to renovations, obviously our premium course, we run that twice a year within one module that might be on structural renovations. There are four or five to 10 small videos, five to 10, 15 minutes each. And sometimes what we do is we deep dive into one of those. So for instance in module 2 and 3 where we talk about suburb selection, your property Success Club Module 1 is all about the dot map and there's a whole hour tutorial there around the dot map and you know, subsequent, subsequent. Your property Success club modules include, well, that census information. So get that tutorial, websites, renovation and you know, so we, we take one topic and we really dive down deep. So for people in the ultimate guide of Renovation, some really good little reviews, but a deep dive into specific topics. But we don't go into that box at the back. It is, it's a structural renov technique that is. Well, John's kind of modified it from some of the commercial property techniques that he's used or he's seen use and applied it to his flips that he's done. So but just in so we can add some value to Maggie, that's, you know, doing that box at the back or doing, you know, a structural renovation on your home. We have had people in the course who have seen it as a potential opportunity to do a lower cost structural renovation and add some value to their home. And sometimes when we push them back and said, well, in actual fact, is this over capitalizing for your area? If you pretended your home was an investment property, would you go and spend 100 to $140,000 in opening up the back and putting in the kitchen, the butler's pantry, the lounge room, dining room, big open plan to the back? And in actual fact, often it does come in over capitalizing.

It's a trap, isn't it? Because you can look at a property and you go, oh, I know what I can do to this. And you could see how you can renovate it and look at, make it look really good, but doesn't always necessarily have the capacity to add the value.

And for your home that just might be fine. This might be the forever house and you just want to create that lifestyle and that's fine. You're happy to take that extra cost on the chin. So it was interesting. I was speaking to a builder today. It does alterations and has had a business for 15 years doing that in Sydney. And, and he had mentioned that, you know, the average cost of a renovation that he does or alteration for property is $300,000. But they're all homeowners, they're not for investors. And it's about double what I would consider in that price range that you would spend.

Yeah, I have a heart attack when.

I hear, I know people pay for a renovation and look, I've seen people spend 800,000 on a renovation for an older style property. And you know, it's a choice that you make and it's sometimes it is for lifestyle and it's the forever home and you create the home that you want to have and price is an issue. But if you do really consider, like we really try to get you to consider your home as probably an asset that's underutilized and not working for you, I really encourage you, Maggie, to go through and consider, you know, in module two and three, you're going to get into a bit more analysis and websites and information and you will in your.

Property success club in the club.

And what you'll find from that, if you haven't got up to that stage as yet, is that we really force you to think about looking at potential areas and suburbs and doing that due diligence. But you can apply that to your current portfolio and your home because often when I talk to people about buying their first home or their subsequent home, but doing and I did some, I did this analysis for the HIA Home show once a few years ago and chose three suburbs that had a similar median price point. And just by looking at the Residex predicted prices, within eight years, one area would have had an extra hundred thousand dollars than the other areas. So you can actually make your home create wealth for you. So don't underestimate using some of these investor techniques in assessing whether you could potentially be over accounting capitalizing.

So and the looking at the other comparable properties at the renovated level is, is the way you do that to work out what you need to renovate up to and then working out how much the renovation will cost then, then you kind of know, you know, know what you need to come in under in order to not over capitalize. And the other question she's got there, sorry is would the extension certification. Yeah. Require certification through council and the answer is it re it depends. Depending on the size of the block, it might not require a DA or planning permission, but it will require a building permit. So from a registered builder.

Now Maggie, just in context, you do say further information that you'd like to scale down or retire in a year or two. So you've got some immediate needs in an immediate time frame and you'd like to either pay down your debt to live on the cash flow or increase your income. Well, I think everyone would like to retire in a year or two, wouldn't they? And you kind of nailed it. You either have to pay down debt or increase your income to be able to service the current debt you have. So with that in mind, I would just encourage you to consider that if you're doing a substantial renovation to your home and going to spend hundreds of thousands of dollars on it, then that's obviously going to increase your debt unless you have the cash to do that. So that might actually fly in the face of what you're trying to achieve. So put your home renovation in context of what your long term plan is as well and yeah, go from there.

Hayden.

Ah, Hayden, my helper who generously donated his book to Saren. Hey Hayden, how are you going?

Good, how are you?

Good, good. I think you're going to be our last question for the night, so see what we can do for you.

Okay, no worries. I've got a lending question. I'm looking at going into buying an investment property with my brother in law and we were looking at buying and then probably flipping, but now it's probably more buy and hold for an extended period, we don't know how long. I'm just wondering what effect could a loan that I have with him have on subsequent loans that I may want to have or may look at getting by myself.

Hey look, this is a really, really good question because a lot of people due to affordability do purchase with friends or siblings or parents even and don't necessarily understand the implications that has. And often I speak to parents who are trying to help out their kids and saying, well, we're happy to help fund what the kids are doing, but we also want to grow our portfolio. And what does happen to is the lenders assess your total position. So one of the key things that you have to understand when you actually go into a loan with anyone, be they maybe your partner, your wife or brother in law or friend or parent, is that you can't take a loan with a different lender each. So there's one title over that property and that one title has to go to one lender. So so often when I speak to people about this in Investor's Choice, they go, oh, my brother's going to get his own money and I'm going to get mine and we're going to buy this house together. If you're actually securing that money against that one security rather than individual assets you own separately, then you're borrowing together. So if you've got both your names on the title, both your names have to be on the loan. And sometimes if your husband and wife, they do allow that husband and wife to be a guarantor. So potentially essentially one of you is the main borrower. But for non related, immediate related parties or de factos, you do both have to be borrowers. And what you're doing is guaranteeing that if the other one defaults, you're going to cover their debt. So the important thing to note about that is let's just say that you have $600,000 debt. Mentally you're both paying off $300,000 repayments per month, but the reality is that you're actually guaranteeing the full $600,000 so, Hayden, if you then go to buy, you know, meet the love of your life and want to buy your first home together, then what the lenders are going to do is they're going to look at that full $600,000 debt. They're going to attribute it all to you because you've guaranteed the whole lot. But here's the real pain, is that they actually only give you 50% of the rent. So they go, hey, there's two people own this. You only get 50% of the rent. We're only going to put that in to your borrowing capacity calculator and we're going to discount it by 80%. But you have actually guaranteed the full loan. So the important thing to note, and is a great question to ask before you even go into this, and a lot of people don't, is that it will affect your ongoing borrowing capacity. Now, there are a couple of lenders that acknowledge this. So cba, for instance, if all of the loans and subsequent loans are with cba, they're happy to only take your portion of the debt. So from a borrowing capacity point of view, having said that, APRA changes in last six weeks, policy changes are changing all the time, but they've been one of the few lenders that have allowed you to do that. And the other lender was amp. So Amp was actually very bullish on this. So what they would allow you to do is if you could prove that the other person had enough of an income to pay their proportion of it, which often was just one pay slip, they'd actually just take your 50% of the debt and the 50% of the rent, which was great. Unfortunately, with the APRA changes, Amp actually pulled out of the entire investment market six weeks ago. Until they come back in, which we're expecting to be either December or February. Until they come back in, AMP is off the list. But CBA has been a little lenient, but all the lending has to be with them.

Okay, so then if I was to. Then if we were to buy a couple of properties, then. Then we wouldn't have that problem, I suppose, because we were both.

Exactly, exactly.

Yeah.

So if you continue to buy together, they'd be continuing looking at the total debt that you have together and the incomes that you have individually and the rent, the total rental income.

Yeah, but we have to buy together.

Okay, yeah.

Great.

Good question. Thank you.

Thank you.

Bye.

Great. Well, I think that's it. There's no more hands up, no more written questions.

Fabulous. I think we're going to finish on time. John.

Yeah.

One does never cease. Well guys. Oh, wait a sec, there's a quick question. Let's see if we can actually pull, pull that last person up.

Let's say a hand go up. Oh, there we go.

Someone's brave at the last moment. Moment. We've got engine.

Hello? Not too much.

Maybe not. He's on the phone.

Can you hear me now?

Yeah, gotcha. Hello.

Gotcha.

There we go. I'm a first time caller guys, so I'm glad to be part of the community.

Oh, welcome, welcome.

Well done, you got in.

Thank you. Look, I'll try to keep it quick because I know you're good.

We normally go late anyway.

That's good. My question is I'm planning on building a granny flat in back of my investment property and I just don't know which way to go about it. In terms of finance. Is it possible to. If I do an owner builder, I can probably get it done much cheaper. But if I go for a builder I might be able to finance the whole deal. I just want to know which way would be the best way to go about it. Should I leverage my money or should I get it? Would I be able to get it cheap? Should I go the cheaper option and do it myself?

Tell me, do you have the cash to be able to do it yourself or will you need lending regardless of the option?

Well, I do have the cash to do it myself. I don't have the time, that's my concern. But if I can leverage it, I don't mind doing that because obviously I'm planning on holding it long term and I'll now get my money back for it. So yeah, I mean, I think you.

Probably answered your own question. If you don't have the time to do owner builder and get the qualifications and manage it and go through that process, then it might be something that you can't do. But just so you know that when you, when lenders are looking at lending, they're looking at you as a risk and they're looking at what you're doing or the property as a risk. So they're doing a risk assessment against each. If you're actually doing a construction loan, you could get a construction loan against a fixed price builder's concept contract up to a 90% loan to value ratio. If you're looking at owner builder, we're looking around at 50, 60% loan to value ratio with lenders that may consider it. You're really minimising the number of lenders that you can go to and you're having to contribute a lot of the cash, you may not be able to get that leveraging ability to borrow. Having said that, if you did have the cash to do the owner builder yourself and the time to do it, then potentially you would do the build and then go to the lender with a completed property and say now do a valuation for me and I want to borrow to 90% of the total value of the property. So that's another way around it. Just be aware that you know, whereabouts are you looking at doing the granny flat engine? What suburb?

Blacktown.

Okay, okay. So I was going to say if you're looking at Blacktown, I have facilitated a lot of loans for clients in Blacktown for granny flats. You know a very open council to the granny flat concept. And I have to say of all the granny flats I've done throughout Australia it's probably 80% have been done in from a funding point of view have been done in Blacktown. But one of the things if you are considering the granny flat option guys is that if you're the first in the suburb, the lenders require the valuer who's an independent valuer that is employed by them to find three comparable sales. So if you did go down the strategy which was try to get funding either part post granny flat construction or for the granny flat construction, they're going to want to know that they're actually taking on an asset that if they do need to resell is kind of typical for the area. And one of the ways, one of the hurdles they do to check that is has there been three recent sales. So the same goes if you're buying a 10 bedroom house and it's only the 10 bedroom house in the area, there could be some associated issues with it. So engine if you don't have the time, you're probably not going to do owner builder. Understand the loan to value ratio is less for owner builder. But if you're looking at doing the fixed price building contract you can possibly get up to 90% or even 95% including mortgage insurance with some lenders or if you're with an existing lender. So yeah.

Is it possible to go halfway if you do like say this slab and certain parts of it then give it to a builder?

No, because of the builders warranty insurance.

Yeah. So builders warranty insurance they often won't take on, they won't give you builders warranty insurance on someone else's work. And especially if you own a builder and haven't done it before, it's a risk to Them.

Okay. Okay, wonderful.

Okay.

Okay.

All the best. Let us know how you go next month.

Bye, Anderson.

Will do. Okay, see you later. Bye.

Looks like there's been some questions that we missed in the chat box.

A couple of late ones and a couple that I just missed altogether. So, Carlo has a question. Hello. I'm about to settle on a property that is already a tenant in place who is wishing to stay. What typically happens to an existing rental contract when the property is sold to a new owner? Also, would the property manager charge a letting fee?

Hey, okay, so good question, Carlo. Unless you've specifically put into the contract of sale requirements, when you actually put in your offer that you wanted vacant possession, you pretty much take the property as is. So if there's someone with a 12 month lease, then you've got 12 months basically of their lease. Now, depending on the different states, you can give notice and it might be, depending on the state, three months or two months for that person to exit the property. And if you're going to sell a property then you might need to think that well ahead of time.

Sometimes you can bribe the tenant too.

Yeah, we tried to do that recently with a property that we were selling, our very first property in Bondi beach. And, and we tried to get the tenant to not stay, but they essentially said, pay for my rent somewhere else. I'm like, no, not really. So we wanted to go in there and do a quick reno, tidy and stage the property. And they said, hey, I've got two months left on my contract on my thing. No.

Wouldn't budge.

No. But good question, Carlo. The property manager will not charge you a new letting fee because the letter fee has been already paid and that person is in place. So you do inherit the property manager. Having said that, property managers, guys, it's one of the least reviewed things that you really should be reviewing. Is your property manager doing what they should do. Go and interview this new property manager, Carlo, because although you inherit them, it doesn't mean that you have to. So you could change property managers based on by notification and you could engage a new property manager and they would do everything to get rid of the old one. So you don't even have to contact them. So you know, it doesn't come down to the charges of what a property manager charges. It comes down to are they the right person and do they manage your property properly?

Yeah, I couldn't agree more. I inherited a property manager once and I stuck with them. And when I eventually got rid of them because I was just probably too lazy to actually do it, it was just night and day. The new person was just so much.

Better and just little things like regular inspections rather than once every 12 months. You know, it's just so important to keep on top of that stuff.

So, property manager Lisa, how does Ripe House go about deciding which areas are considered blue chip within an area?

Lisa? Oh my gosh. There is this really complicated algorithm that Jacob is continually updating on how he looks at cold areas and blue chip areas. But essentially what he does is he looks at the last, and I'm going to say 20 years, but the last lot of sale days data over a period of time from the, from that suburb. And he applies growth kind of characteristics and looks at the growth within the different, different areas. And then he applies things like proximity to schools and infrastructure and shopping centers. And the blue chip areas are usually those areas. And he's also got a gentrification area. So the gentrification area is the one that's kind of going through a rapid growth improvement that's atypical to what's happening in the rest of the suburb. And the blue chip areas are those areas or, you know, if you get a copy of your sweet spot report, it's those streets that are actually driving the growth and usually of a higher value. So, but look, if you have any questions about a Ripe house, obviously Ultimate Guide to Renovation guys, you've got a customized version for 3 months access. Get on that chat line. Anna and Jacob and all the support crew there are actively happy to answer any questions for you. And just as an update for those people, look to your mailbox also, Ultimate Guide to Renovation. The Reno save card will be heading your way very, very soon.

Yep, that's right. Stacey's been too busy renoing. She's too tired to even ask her questions now. But it looks like she's got lots of stories from her renovation. So Stacy, jump on the call next month because we'll get you on and, and we'd love to hear about your renovation.

Well, Stacy, if you recall, a few months ago, came to us with three quotes for stumping and we, we tried to save us some money there. So, yeah, really keen to hear all her Renault's included. Restumping and rewiring and everything. Secondhand kitchen, new plaster, lovely. Can't wait. We, we might case study you, Stacy. So start pulling your numbers together because we can't wait to see.

Yeah, that sounds great. Po. We're in Sydney is still affordable for a good house, for flipping with good profit and how to approach the banks for a loan for doing this project.

Look Po, the numbers are the key for flipping and if you're in the ultimate guide of renovation in module nine, we'll get into the kind of structural renovation and the numbers around it. We did interview John Edwards from Residex a few years ago and we talked about price points to. To get profit and and he was saying look, it really was a minimum purchase price around $650,000. If we look at Sydney, the median house price is a million dollars anyhow. But the.

It wasn't then.

No, it wasn't there. The flipping strategy is, is one that's the key to success and profitability is the numbers and what you will find is that it's a disparity between the renovated and the unrenovated properties that is in a specific suburb that will dictate if there's a profit for you to be made and obviously at a lower price point. So if we're looking at a 3 $400,000 price point the disparity between renovated and unrenovated is usually a lot less and hence why it's achievable in the higher price points. So you know, you often be looking at a higher price point. And the other thing is that at the lower price points it's usually a structural renovation that's in a general generate the amount of profitability that you need to cover your capital gains tax and cover your buying costs and selling costs and make a profit.

So you know, typically because you're creating a higher and better use. So you're changing the, the nature of the dwelling either by adding a big open plan or adding a bedroom or something going up. Yeah. Or something that is literally making it a higher like putting it up into.

Next bracket so it's harder to do that in the lower price point. So so targeting an area that's still affordable and good for, for house flipping what you would be targeting and your research would be around looking at suburbs and I don't Everyone has a different affordability price that comes down to your own borrowing capacity as well and what you consider to be affordable. I let me think of the people that I have funded doing flips recently. I the only people in Sydney that I have done mortgages for who've been doing flips have been doing high end second property builds and subdivisions or community title but subdivisions more often and we're talking well over the 1.5 million purchase price and spending you know, 6 to 700 on the second build and see selling and making quite A large profit. So that's not affordable for most of us mere mortals. But so it would really come down to you doing your research around where the pricing disparities in the suburbs and.

Sometimes there's other ways of creating that higher and better use without actually renovating. So it might be getting council permits to build out the back, whether it's a battle axe or a corner block or something like that and selling without actually doing any renovating one of your.

Projects, projects you purchased with someone's DAs in place.

Two now we've bought with DAs in place and we know that they've made three to four hundred grand on those deals just and they haven't done anything apart from sit on it for that, whatever it took to get the permits through. And they've just approached an architect that's got a track record in the area which you can look at council minutes of the ward meetings to find out that and have a look who the architects are doing the developments. So you get a good local architect that's used to dealing with council and the area and get them to design a typical place for what's in demand. And yeah, you're going to drop whatever 20 odd grand to do that but you know it's probably the cost of a renovation and you're going to make a lot of. So you'll find the ROI and that might be way, way higher than doing trying to do a cosmetic renovation and copying all the selling costs and all that kind of stuff.

Yeah, I spoke to someone in the last couple of days who has is just in the process of selling a property and that they put a DA, got a DA for seven units on and it cost them 60,000 to do all the architecture plans and all the building stuff. So but they look to make $100,000 profit. So after all those costs without lifting a hammer po just the second part of that question, how do you get a loan for this project? Look, lending for flips is difficult and as we've seen the banking requirements get more stringent and more stringent. Just be aware that banks are kind of in the game of long term customers. So you're buying, renovating, selling within a three to six month period. You're building up a profile on your credit report that has an inquiry for a loan, a loan that is then terminated and you're repeating that experience and you know, just simple things. I know that I had a loan decline for a client that completely came out of the blue blue last year because they had 14 inquiries on their, on their credit file that was over a five period, five year period. And NAB had a policy that if there was 14 inquiries, more than 14 inquiries over five years, that they'd automatically decline at any LVR. And this is a loan valuation at 80%. So just know that banks have their credit scoring and their credit scoring based on your credit file. And by applying for lending, be it the dishwasher at Harvey Norman or be it the mobile phone or the Netflix or whatever it is that you're getting credit for, inquiries for, that is considered to be a credit inquiry on your credit file. So if you're in the business almost of flipping, you're going to have these ongoing inquiries and banks won't want to do business with you. So you need to protect that. And one of the innovative. There's a couple of innovative finance strategies that I have for flippers. One is if you've got a current property with a large amount of equity, equity, purchase the property and do the renovation with the equity. Don't take a loan out against this property that you've got. However, a lot of people don't have that full amount of equity available to them. So a second strategy is there's some lenders. Look, CBA is probably the best for this in that. And these are larger lenders that have term deposit facilities. So you could actually substitute the property as an asset, asset for a term deposit and then move that loan to the term deposit after you sell the property and move it then again to the next property that you purchase. Most lenders require back to back settlement for that. But often cba, as I said, did allow us to do that using a term deposit. So you didn't need a back to back settlement, which just means you're paying the loan off. But there's no asset other than being secured by that term deposit. But other lenders like nab, for instance, when they do move the security to the term deposit, actually do a full reapplication assessment of your borrowing capacity. So lending changes are changing daily at the moment. But just be aware that if you are flipping and you're continually doing this, it will affect your credit file.

Yeah.

And the guys that are doing that all the time tend to do it with the line of credit. Hey, they've got a big whack of equity and they just pull it out like a big credit card. And the bank never even sees it.

No. So they're buying an unencumbered property essentially, which is great because they've got cash and they walk in and go, I'll give you cash tomorrow. 400,000. And I know it's on the market for 440, but we can do this deal and there's no finance approval required. So it's a great negotiating tool too.

Yeah, yeah. Owen's got a question. New to this webinar and looking for first investment property.

Great.

How do you buy a property in a different state? Is it easy to do this? Could you please let me know the general process on how to do this? This will help me expand my choices since I'm currently only looking at my own state.

Hey look, Owen, really good question. And I think you've kind of, you've really seen some opportunity there that a lot of people miss. They look, often people just look in their own suburb where they live. So the fact that you're considering outside your suburb into the current state and then another state is great, especially for your first investment property. And you know, although we say don't try to time the market and people who kind of chase the market often get left behind from an affordability point of view. Like if you're in Sydney and want to buy a house, then obviously a million dollar purchase price is kind of difficult. So looking into state based on affordability or potential growth or even yield opportunities that you can't get in your current state is good. Look, you can do the research yourself and if you're a member of the ultimate guide to renovation or your property success club, you'll see that dot map techniques and getting in and understanding the spreadsheets that we talk about and doing the analysis and understanding the kind of information and analysis you need to do. 90% of that can be done online by yourself, anywhere, anyplace. It's the final 10% of the inspections. Now you could engage a buyer's agent and buyer's agents typically are about $10,000. Now, 60% of all the properties that buyer's agents actually have on are aware of and are made aware of by real estate agents often aren't actually advertised for sale. So often you can actually see properties that other people or your competitors aren't seeing in areas. But don't engage a buyer's agent without doing your own due diligence first and understanding what suburbs. So if you go to a buyer's agent and say I'm happy to buy anything in Brisbane worth $500,000, well, you're pretty much going to get anything in Brisbane with $500,000 if you're specific and you've done your research and say look to get to My long term goal, I require to have a 6% future capital growth. I need a 4.7% year. You know, I want to target an area that has over 30% renters and I want to have the opportunity to add a bedroom to the floor plan. Be specific and get them to do the work for you. And you know, I know. So $10,000 is kind of what a buyer's agent would charge you. There's usually an engagement fee, about two and a half thousand dollars. For my investors Choice diamond clients, I've been negotiated $1,000 off most buyer's agents in my most states for you. But just be aware that they often have availability of properties that most people don't see. They're very good negotiators. They're working for you, not for the vendor. And often you can actually rather than wait six months and do all the research yourself and try to fly up and do the inspections, etc. Often you could conclude the transaction with six weeks. And if you're in a high capital growth area, that $10,000 might, might be what the property ends up costing you extra in six months time.

Yep. It's got to have a. Know your criteria, don't you?

Yeah. Buying criteria.

Yeah.

And you have to know your goals and strategy first.

Archive has got a question and this is lucky last. Not a false alarm. One question about changing an investment property from a principal place of residence which is Approximately valued at 1 million, and my current property portfolio is 700,000. What are the main things to consider?

Want to change an investment property to a home valued at a million dollars and your current home is worth 700,000. So I'm imagining you're going to turn that into an investment property. And what are the main things to consider? Okay, so there's a six year rule ATO has around capital gains tax and what you can claim and not claim. So as a home, when you sell a property property, you pay capital gains tax and you pay it at 100% if you sell it within 12 months of purchasing and you pay it at 50% if you sell it after 12 months. Now that's for an investment property. There's no capital gains tax as yet against your home. You can only actually claim a home for sale once every six years. And you actually, although you might be living in the new property, you sell the old one. You can't then go and claim the capital gains tax on the new one if you sell within six years. The really important thing about this is knowing the value of the property. So the most important thing that you need to consider here is things like what the value of the property is when you move in and when you move out. So your accountant will want to know that. So the easiest thing to do arcade is go in and get a valuer to value the property for you so that you actually have that point of what the value is for both of the properties when they change the that ownership from owner occupied to investment or investment to owner occupied. If you're looking. So this is just a lender question, a lending component of that question. If you're actually looking to do subsequent lending, potentially your rental return might be better on the million dollar property than on the investment property that is $700,000. Having said that, I know with my current portfolio when the property value goes over about $800,000, your yield goes from about 4.5%, 5% down to 3.5%. So you need to look at this in context of your own specific numbers. But if you are looking at doing subsequent lending, then you potentially want to get that lending secured while you have the higher rent against the million dollar property than the $700,000 property. So just structure those things. So things you might consider, speak to your accountant, they'll talk about what the value of the properties are at the time of changeover. Just get that done. So you know it. So there's no estimates.

And yeah, just got a second part to the question with the APRA changes, does this also restrict lending on your principal place of residence so your own home when you have a medium sized investment portfolio?

Yeah. So okay, for the APRA changes and for guys who aren't aware of the APRA changes, go back to the last two webinars because we've covered that. And look, these changes are just happening all the time. As we know, APRA zanna get more and more difficult. But essentially APRA and asic ASIC under Responsible lending has essentially put some criteria in place as well around living expenses being increased. But the biggest significant difference that you're referring to here is if you have any investment debt or any other debt, then in the past, let's just say you had a million dollars worth of debt across a full portfolio over a number of different lenders and you're currently paying 4.5% interest only, your repayments would be $45,000 a year. And your mortgage broker would put that into the calculator and say okay, so, so other debts $45,000 a year. What has happened with the APRA changes is there's been Kind of like a minimum repayment that has to be considered. And this is around the fact that APRA said, look, in five years time when interest rates go back to the average of 7 to 7.5%, how are all these people going to pay for this? And at five years time, most interest only loans become principal and interest loans. We expect you to go on and assess your any other debts at 7% minimum. So for instance, CBA does 6.2%, NAV does 7.4, blah blah. So different lenders, but they're all above 7%. And we want you to assess those rates at principal and interest. So a principal and interest loan at 7% over a million dollar portfolio is not a $45,000 current repayment schedule. It's closer to a $70,000 current payment reschedule. So that is what's going to reduce your borrowing capacity. So if you've currently got any other deb investment and you're looking at doing future lending, all additional debts that with or without that current lender will be assessed at a higher rate. The last lenders that were doing the actual repayments were Liberty First Mac and Home Loans Limited were using a Pepper product. They've all now changed in the last two weeks and everyone's assessing at that higher rate. So yes, the APRA changes will affect your borrowing capacity.

Great. And that's it.

Okay, well, I guess we're out of time. Half an hour over again. But at least we've, we've answered everyone's question. I'm glad we've been able to talk you guys through it. You know this recording will be up within 24 hours. Next month we're going to be doing our the Last Call November last Thursday at 8pm December schedule will be a bit different because we don't want to be on New Year's Eve. But look, thank you so much for your questions. Once again, remember that 1300 number because. Well, I can't remember what it is, but I know it exists. The 1300 number. If you don't, can't make the call. Love to Hear your voice. 1300-76-119. Leave us a message, we'll play your call and answer you. Otherwise, get onto questionsourpropertysuccess.com. send us your questions beforehand. We love to hear from you. By the time we speak to you Next time, the Ultimate Guide to Renovation Students will be at the end of the call course. Yeah, which is fabulous. I know that you're going to love the box at the back module. 9, 7 8, 9, 10. With all of the information. And that value is stuff. There's so much great stuff coming for you. Watch for your mailbox in the next week or so for the renovation save discount card that you have access to for 12 months.

Yeah. And get the Masters membership with that. That's awesome.

Oh, yeah. Masters discounts. So. Which is really great. And what else? Check out the location Masterclass stuff in module two.

Yep.

And yeah.

Yeah. Module two bonus section for the updated spreadsheets.

Thank you so much for your contributions. If you are new, you know, we're not scary, ask us questions. We're here to help. And as always, guys, all the best for your property success this month.

Sam.