Your Property Success Mentor Call - September 02-10-2015

Hello and welcome to this month's mentor call. And of course, it's a very special occasion tonight, and this only happens twice a year. And tonight is the very first call for all of the new members of the Ultimate Guide to Renovation 2015. So a huge welcome to you all and it's fantastic to have you here as part of the community. I can't wait to talk to you and hear your stories and I hope you have a lot of questions for me tonight. So get them ready. It's very exciting that we are up and running again and we have had a full year together, or we're going to have a full year together. Of these monthly calls, they're usually on the last Thursday of the month, one exception being this time. And at 8pm they usually try to wrap around 9:30. So we're going to get to know each other very well over the next 12 months. Now, the whole idea behind running this program in this way is so you can literally shortcut years and years off your journey by learning from my experiences and the experiences of other people within the group. Now, the best way to get that knowledge from me and the Renovator Network members is to ask questions. There is absolutely not the time for you to be shy. This is your future we are talking about. So push yourself a little bit. That's why you're here and we really want to help you work towards your goals and we can all do it it together. Now, if you haven't introduced yourself on the Facebook page, the Renovator Network, please do so. This group of students has been very quiet in the last week, and you might see that our alumni are very keen to connect with you and pitch in and start helping you. So, you know, go ahead, make their day and mine and say hi and tell us about yourself and even go to the module 1 posting and share your goals there, because I really want to see what you want to achieve. Now, I know some of you are novices, but some of you are more experienced. And for you, I really encourage you to listen with open ears and allow yourself to be teachable. I really encourage you throughout this entire course to be open and be prepared to approach things maybe a little bit differently than you have in the past. And of course, everything that you learn here is useless unless you put it into action. It's not enough just to know how to do something, you have to also then put into action. And that's why we have the course that starts one step at a time with completing the exercises one after the other. So you can put one foot in front of the other and the other before you know it, you'll be halfway up the mountain. So look, guys, this is not a spectator sport and I'm really not here just as entertainment. There is work to be done and you're the only person that can ultimately do that work. However, I am here to make it a little easy and as easy as humanly possible and support you every step of that journey. And we honestly believe that this is the most highly valued and effective course of its kind in Australia right now. So let's talk about what we have coming up because it's going to be great. Now for those in the Ultimate Guide to renovation, the next 12 weeks for you are extra special as modules will be released weekly and you're going to be learning about how to find the right suburb, find the right property, negotiate effectively to achieve the best deal and then how to finance the deal. You're also going to learn about cosmetic renovations, structural renovations. You are going to hear words, phrases and lingo that you have never heard before and then most importantly, the process of how to do it again and again to build long term wealth. So you have all of that to look forward to. Now. These monthly calls are exclusively for my mentoring clients, the students of the Ultimate Guide to Renovation, the subscribers to youo Property Success Mentor, and my Investors Choice Mortgages diamond clients. So if this is your first time on the call, a very warm welcome to you. Don't be shy. Please say hello. These calls look, as I said, they generally take place on the last Thursday of every month and I'm going to send you email reminders to let you know when they're approaching. Usually a week out and a day out so you won't miss out. And if you can't make the call, then leave me a message on my message line. That's 1376 1119. So that's 130076 1119. Or you can always email me@questionsourpropertysuccess.com I've had some already emailed to me this week, so that is fabulous. Now before we get onto the questions, I should introduce the person sitting next to me here, especially to our new students as he's been hiding behind the scenes in recent weeks. And he is serial renovator and co creator of the Ultimate Guide to Renovation, John Hubb. Hello John.

Hey Jane. Hey everyone.

Well, John, you know, for those new people, they haven't met you before, do you want to give us a little bit of a rundown of of who you are.

Yeah.

It's that time again, isn't it? Yeah. Now I am conscious of the fact that we've done this, what, five times now?

Yes.

And the course I've got to make sure I'd say it the right, you know, the same way, the same. They go back and listen. Yeah, that's right. Can't make it up. So I've been renovating for about, you know, since I was, I did an apprenticeship as I was still 15, just before I turned 16 in solid plastering and then from there got my first investment property in 19, what was it, 1999, and then renovated that and kind of went on from there. And then basically in 2010 I'd completed a renovation on my own place and it was a strategic renovation. We did a box on the back with a pop up roof basically and I kind of did the numbers on it and I realized that I'd made more money on that renovation than I had in my last, in my job in the last kind of two years. And I thought, well, I might have a go at that full time. So that, that kind of led me into doing kind of property full time. And so now I'm doing some developing. It's kind of led on to some developing. So I've got a couple of townhouses on the go at the moment, but kind of all, all through that path I, I used to, you know, work alongside the builders and you know, the tradies and do their laboring for them and all that kind of thing because I was really keen to learn all the, the bits and pieces. So got, got a bit of experience across all the trades really.

And you obviously have a lot of video editing, producing, copying experience as well.

Yes. So I'm the one pressing the buttons here. So you can see there, for instance, that I neglected to forward the slide. Yeah, yeah. So the job that I.

Thanks Jackie for the heads up.

Yeah, the job that I quit was in video production. So I gave up being a tradesman probably about 12 years ago and went into a bit longer now probably 15 years ago and went into video production, which I was working in for years. So this is a good combination of things for me. It's, it's the two passions, the video production and the, and the property.

And we first met a number of years ago when you attended one of my courses and put our heads together and thought it'd be an easy thing to, you know, video a few Renaults.

I think I probably said that. Did I?

I don't know who's to blame. But here we are.

Yeah, yeah, that was it. I stumbled across. I think I actually it might have even been Medine that I heard first. And you guys, Medine Simmons, the mortgage broker and you guys were doing a course together at the time and went along and really liked your methodology and kind of. Yes, everything since there. We did a video together and yeah, one thing led to another actually. You came out and had a look at a project I was doing, didn't you? That was you and Todd.

Yeah. So I guess the interesting thing also is that for people who are new to these calls, we kind of do a bit of a wrap up of what we've been up to. And you know, if you're like me when you buy courses and I have to say I've. Well, gosh, you know, I love learning new things. I'm very curious and I like putting things into place and implementing material and I've signed up for a few courses this month. But I always jump in and look at the backlog of calls because I think you can learn so much. And I think for those people in the Ultimate Guide to Renovation and even the diamond members of Investors Choice Mortgages, you guys have got access to over two years worth of calls there. And if you have been listening, you've probably heard that John in recent months has moved on to developing and I think you could give us an update and maybe some pretty pictures too, John.

Yeah, so it's. We've got two on at the moment. One is just a patch of ground. It's. There's nothing there yet. And the other one is actually it's two. Both of them are two townhouses side by side. It's the first. Basically our first crack at development, which has been a bit of a learning curve. It's getting easier. The second one was definitely easier than the first one. And a lot of similarities to the renovation because I was doing structural renovations. So a lot of that side is the. Basically the same and the, you know, the fit out and all that kind of stuff doesn't really change much. It's more in the due diligence and the feasibility and that kind of stuff. And council, lots of council. And so one's up to one of the two townhouses. One, the right hand side one's been framed actually. I'll bring it over.

Oh gosh, that's big change since last month.

Yeah. So yes, they get the framing up pretty quick. And then the one over here that you can't see on the left hand side, that's got all the steel up in place and it's. It's about to start framing there. It's running a bit behind. And it's one of the many learning lessons that's come out of this, is that the contract with the builder needs to be a bit tighter. So we've just signed a second contract for the new development and Same builder? No, different builder. We got two. Two quotes again. So we got three quotes the first time, but an additional two quotes off completely new builders, and we've signed with one. And. But there's penalty clauses in the. In the contract. So if they. Yeah. If they finish early, they get. They get some extra cash a week, but if they finish late, then they pay us a whole lot more.

Good incentive. I know that a lot of people kind of try to put that incentive into real estate agents if they sell their property. But it'd be interesting if you put in a. If you don't get me in my reserve, you can get. Get penalized, isn't it?

Yeah.

Don't. Don't do what you have to do on auction day. And what else has been going on?

That's been it really, apart from this, obviously, the opening enrollments for the ultimate go to renovation, which always catches us out, doesn't it?

We know it happens in March and September, and then all of a sudden we sit there in the beginning of September and go, oh, oops. We add some great content out there. And I tell you what's been really interesting that I found this time with the Ultimate Guide to Renovation is the insane amount of comments that we've got. The 25,000 sessions or something of the videos.

Yeah, well, I can't remember what it was, but on average it was. You know, we're getting thousands and thousands of people watching them each day. So a huge amount of ingo. Lots of comments under the page and lots of conversations that you were in. I know, I know.

I feel like I've chatted to half of the Australian property investors.

Yeah.

In the world.

But I mean, people. The feedback was just great. People love that. Even though, you know, there's. The majority of those people won't be joining us for the ultimate kind of renovation. And that's fine. They might come back at a different.

They love the content that they got.

That's right. Yeah.

Something to go forward with.

Yep.

And what have you been doing? What have I been doing? Oh, well, I've been. I've done two little revamp renovations this year. And so living in Melbourne and having both of those done in Sydney, I had project managers kind of run them both and I just tried to find a video on my phone actually. I make the guys there kind of give me a bit of an update with photos sent through photos and my roofer sent through a video with music in the background going, here's your before and here's your after. It was fabulous. I don't think it was Raining Men was the soundtrack, but it could have been something like that. And it was really, it was really thoughtful. So I was pretty impressed with that. So yeah, that was sensational result. In actual fact, it's a little terrace now, 52 square meters.

This is the Newtown.

This is in Newtown. Yeah, Opposite Carriage Works. And I ran a Facebook competition about three years ago to do the color scheme in the front. And so it's purple and grey. Investors choice mortgage is green before we change to orange. So yeah, 52 square meters. To put it in perspective, you know, I bought that first property for $425,000 in Melbourne that I did that renovation on and then you know, Access the equity went and bought the next property and was, you know, 1860, built three story, you know, prime location, Melbourne property for 425,000, went to Sydney and bought this tiny workers cottage hobble on 52 square meters for $427,500. So you know, that was the kind of pricing discrepancy between Sydney and Melbourne at that time and hasn't changed all that much to be honest. And so I did a renovation, I planned on spending around about 28,000. And in the end Lenny, my trusty builder up there, so if you want to Find Lenny is mycarpenter.com you know, I really trust. You need to really trust someone or I do when I have them managing everything externally and to the extent. And he goes, oh Jane, you know, the shower curtain looks like crap. I'm gonna go and get your new shower curtain at Bunnings. When I'm there next I'm like, oh good, thanks Lainey. And he was the one who said, oh look, I'm really worried about your gutter. I, you know, I drive past once a year and I say it's dirty and I clean it out. Don't even ask him to do. He's come up with the fact that there's a few problems and then get someone in to have a look at it and found a local guy who sent me the video. So I spent, you know, bit more money on doing some maintenance just to make sure that I didn't have some of the drainage problems that some of the other terraces there have. So ended up spending $33,000. The really exciting thing was that I did the got a valuer in pre doing the renovation who came in and said it was worth 820,000. And I got a audit evaluation as soon as we'd finished and it came in at $920,000. And I would normally say, you know, I'd like to be able to manipulate this and have a valuer who didn't see the property beforehand. So they were really, you know, they weren't just going, oh, they've spent this.

Much money and adding that to the title. How much have you spent?

It was a CBRE valuer. And I know we have people in our renovator network who are valuers, but cbre and it's the same valuer. So she came out and had a look in the beginning and I obviously wasn't there, so couldn't influence our valuer and came out at the end as well. And so she was the same person, said, Not $100,000 in the last six weeks it's been added by that 33,000 you spent. So three bucks for every dollar it's rented now at 650, so an extra $80 a week. I decided to bring the rent down and just get it rented. So get people in there as quick as possible. Had a few applications that I ended up declining because there was characteristics that weren't really right for renters. And the other big news is that for the first time ever, we've sold a property.

Yeah.

So one of the eight in the portfolio has been sold down. They're. And I think this is actually I've written a couple articles for magazines recently about this, which is especially in this time of lender changing and pressures on reducing borrowing capacities and people can't buy again, often with what they thought they could buy. It's kind of looking at your existing property, your home maybe, or your portfolio and seeing what you can do. So we kind of were looking at our portfolio and at that time some structural issues came up on this unit that we had. And the body corporate for the last two years has been arguing about these structural issues. And it's come down to being quite a substantial amount per unit to do the changes and the works that need to be done. And when we spoke to the real estate agent about, you know, if we're going to spend this much money on this unit, how much is going to be added in value? And, you know, the numbers are somewhere around, you know, if we spend $300,000, what are we, what is going to be an increase in value? And you said maybe 100,000. And the choice of spending 300 and to have it return 100 when you're used to spending 100 and getting 300 back is extraordinary. So we looked at some growth characteristics, we looked at the portfolio and said it's time to sell. So sold it down. So pretty exciting times. Very nerve wracking. Having not gone through the sale process before, I'm a buy and hold value, blue chip kind of investor.

How did you choose your agent?

Oh, well, I left all of that to Todd. So he, he went through and did a lot of analysis and it was interesting seeing how the agents pitch themselves. They really are very professional with their brochures and their community work with kids and cricket games and things. Everyone seemed to be playing with kids. But you know, just getting those references of the priority sales and the people, what they'd done and how they do it and keeping you up to date and all of that kind of information and you know, what it came down to was the agents being aware of the issues associated and some strategies and thoughts on how they can present those in a positive light to people. Because obviously we didn't want to hide anything. And the agent we went with also had three people on their books that were developers and could see issues and assess potential value in the future and they were the ones that they targeted. So, you know, came and had a look at the property and made some offers very quickly. So it was really good.

Great.

So yeah, so what else do I have in my notes there about what I've been up to. Look, if you're interested in what's happening in the lender changes, the APRA stuff, I went into a lot of depth in the last call last month, but actually, I don't know. John, did you hear my Everyday Property podcast yet? It was stimulating with Kaz.

I'm sure it was.

I know you listen to podcasts all the time. You're gonna have to listen to that one. But it's quite extensive on the lender changes. So, you know, go to Everyday Property podcast and Karen Young and have a listen to that was last week. And I guess the, the big thing about that has been that it's really prompted me, especially with my mortgage broking clients, to try to look at different strategies for them to continue investing and continuing to be able to invest in good quality properties and not, you know, have to take a big hit on their or change Their property investing strategy considerably. So one of the things I was actively looking at was crowdfunding for real estate. And John, you and I went off and met quite a few groups last week.

This is really exciting. I can't believe. Why hasn't anyone thought of this before? But I don't know, is it. Look, I guess you need to explain what it is, but is it up and running in other countries?

Yeah. So I've been following it in England in particular and in the US for about the last 18 months. And essentially the idea of crowdfunding is the ability for. It's almost like a real estate investing trust. The ability for a group of people to come together with the funds that they have and put it towards a property and purchase the property. And I listened with interest on.

And the advantage just. If you were to take that through, if you could have, let's say if you did an example of one property and say five people went into it, what's the benefits of that?

Well, let's just say that you've got a line of credit available at the moment on your home for 50 to 100,000. The idea was to use that money as a 10, 20% deposit to buy a $450,000 property. All of a sudden your borrowing capacity with the lender changes has gone to $200,000 and you're like, oh my goodness, do I really want to buy a $200,000 property? One of the main advantages is that you still have the ability to buy into a 500 plus property with others. The other advantage is you're minimizing the risk to some degree because with a lot of these funding platforms you can get in with a minimum of $2,000. So you could have.

And you can also get out, which I reckon is the.

Yeah, which is exactly. And it was interesting. You could get out without, you know, the people who go in, obviously they're sharing stamp duty etc and cost but the people who buy off the people who are in there don't have to pay the stamp duty again, which is interesting.

So it's actually instead of having a fourth of a property, you actually have units in the property and then you can on sell the units to another person can come in and buy your units in that property. So it's a fascinating.

And they're valuing it usually well the different groups valued at different times. But you know, every, the first, first case, the, the first year and then every two years afterwards and usually they, well, one group kept the property for five years and the other Group was based on what the, basically the shareholders agreed to in the beginning. But there's, in December we should know what the federal government's going to do. The legislation changed in New Zealand a little while ago and there's some really, some really exciting things. So I don't know, watch 2016 guys, because we're, we're actively looking at solutions for you and it's, it's, it's really, I think it's going to be really interesting to see what we can do to really, you know, make this an opportunity for us all to get together. And we don't necessarily have to be what's considered now a sophisticated investor with, you know, millions of dollars worth of assets and a $250,000, which is really who usually gets into these great big syndicates. And it's not like the real estate investment trust where your solicitor kind of brings together 15 of his clients to go and buy and usually commercial property. And that's what you often see with these property investment trusts. So, yeah, so speaking to the president of Crowdfunding Australia, speaking to a number of these real estate crowdfunding portals and one of them actually I had heard on Qantas business, Alan Koller invested in it. So, you know, and the really exciting thing is that, you know, if there is a property that is on this portal and it kind of fits the bill and we're kind of trying to put some thoughts together on how we put our filtering process on how to locate a property for that to give some analysis for people. There's an opportunity for people to get in there quickly and you know, the money's raised quickly. So you're in there and it's a cash purchase.

You call it a book, don't they? So they have an open book and then they invite people to, to join and then. So that can happen within hours.

Absolutely. And so, you know, instead of having to have a seven day finance clause, people walk in and go, here's your 500,000. And I mentioned you can invest in a million dollar property because I mean, often, you know, talking to John Edwards from Residex, you know, he talks about the fact for flipping a property, the minimum kind of buy price is 650. And that's expensive for a lot of people, but especially if you want to flip. So one of these groups, we've floated that idea of flipping properties as well and they're quite open to it because they're open to, you know, it's exciting times, Brave new world. Yeah. And that's just it this at the moment, you know, 20 kind of normal investors can be involved in, in one of these kind of groups and there can be funding as well. And I think it'd be great for.

If someone, you know, maybe on a single income or something like that and their choices are to buy a, you know, a unit or a flat further out in the suburbs where they're not going to get the growth or going into a high growth property with potentially some yield as well with one or two or however many other people. That's a pretty good solution, isn't it?

Exactly. And I mean we talked to someone who had found a property and he, his mum, his sister and his brother all put in the money through their self managed super funds and purchased the property. Someone else has done it to put their mum in. So I think. And the good thing is that once this kind of legislation happens in December, which as soon as the spring session of federal government goes through and pushes this through, it's going to be open to all of us basically. So. And really exciting times and, and yeah, so we're talking to a few people and I don't know, John, what do you reckon? Something. Watch this space.

Yeah, yeah, I think it's really exciting. I mean, obviously you need to still apply all of the same due diligence you would if you were buying it yourself. But yeah, I mean that's what you're going to learn here.

Yeah. So exciting times. And I've been writing some articles for, Participating for some magazines at the moment and you know, there's a lot of questions that are being asked about, you know, what's happening in the market and the property bubble and should you rent or buy your first property first. So some really, you know, there's really some thought provoking things coming out in upcoming magazines that, well, I've been involved with. But I've just got my latest edition of Australian Property Property Investor and your Investment Property and Money magazine have hit the desk this week. So I'll be doing my reviews of those and they'll be in the toolbox at about the 15th.

So all very exciting questions coming in already. Cornelius, how long does my membership last? Now assume you're talking about the mentor, the calls. So if you've just joined the Ultimate Guide to renovation, you've got 12, 11 more calls to look forward to. So 12 in total.

And after that instead of being on live, you can listen to them the day after because they'll be up on the portal 24 hours later.

Yeah, that's right.

So you get access to. To them.

Yeah. And likewise, if you're a gold or diamond or you're just. You've purchased the mentor calls, you will also get access to all the back catalog as well.

So good fun. And any other questions you want to pick up there?

Not yet, no.

I think we'll leave those ones.

Come back to those ones. Can anyone be a part of the crowdfunding group.

At the moment? There are some limitations, but the. The general answer is, is yes, you can. The limitations at the moment is around that number that you can be involved with. But there is one group that has an unlimited number. But as I said, that legislation in the next four months is going to be pushed through and it is really quite exciting. And we're talking to the president of the Crowdfunding Australia and just getting some more legalities around it. The good thing about the groups that we've been speaking to, they've got the ASIC approval and they've got all the licenses in place and they're creating really impressive technical portals that allow you to get in there. Look, the biggest risk is the fact that this is new and if you did need liquidity, unlike shares, where you can kind of share sell straight away, you can only sell to people on that portal. And obviously, if you owned a property yourself, you could sell your property. It would take a while, but it's interesting how they run the model and to be able to invest in a property for little $2,000. I see a big future ahead, John, where we'll be investing with our students.

In their portfolio, tossing around ideas of how we could do it. And we could go and find a property and say, right, who's in with us?

Yeah, let's go. So, yeah, maybe we'll just go and find the properties and apply our due diligence. What do you think, guys? Should we do that? Everyone throwing two grand. We can buy up a. Well, we can have.

We can just have real case studies. Every ultimate budget renovation.

I know. Okay, we've got lots of yeses. That's it, John. We're going to 2016. We're going to rock this place and just go buy lots of properties without. With our friends.

Yeah, cool.

Okay, so let's just get all this painful housekeeping out of the way. Look, if you are on the computer and experiencing problems hearing, maybe. Well, you, you've obviously just sat through 20 minutes of silence, so we can't really help you. But I should type in here, if you can't hear me, you know, call in a telephone number. In the sidebar under the audio option. So you can call in from a mobile landline. Skype. We have people on the bus listening to us often, don't we? Doing these webinars, which is amazing. And look, if you have a PC, this is what this looks like. When you have a question, all you need to do is raise your hand by pressing the little hand icon in the sidebar menu. It's small and kind of hard to see. Now if you click that, it tells me you've got a question and I'm going to unmute your line. And when I unmute your line, you're going to hear this automated voice that says, hey, your line is unmuted. And then you know you're on. So you can ask questions by writing questions as well in the box at the bottom of the control panel. And I'll try to get to these if we have time available. But I really do give priority to the spoken question because I really just like a chat, to be honest. But it's a lot easier for me to understand your question fully and get to the bottom of it. So, you know, if we can have a chat real time, I think it's a bit more engaging and you don't just hear us speaking. So anything that. Well, we haven't, we haven't been stumped yet. But you know, any question touch on. I know tonight could be the night after three years, so there's no such thing as a silly question. I really do encourage you to make the effort to engage in the process. The mentor calls typically go for up to an hour and a half. Look, I do ask for the sake of the group that you limit yourself to one question and maybe one quick follow up question and then everyone's had a go, come on back and ask more. Of course, after you've asked your question, if you don't feel that I've fully answered it, hit me up again with the next one. So I don't want to have anyone miss out on this. And if you're on the call, last Thursday night we went for two hours as part of the ultimate guide to Renovation ended the enrollment period. So you know we're here to help. You got technical question or a trader question? I'm sure John can help out with those. He's always good and jumping in with that. Thank goodness. And yeah, lastly, you know this isn't a tech support call because if you do are having any problems logging on and videos or downloading, I'm probably not the right person and this is not the right environment to try to fix it. So, but please, you know, we want to get onto it as soon as possible. So just send me an email@supportourpropertysuccess.com and we'll get onto it as soon as possible. So I guess before we start tonight, we've kind of combined our new students, the Ultimate Guide to Renovation, the investors Choice diamond people, the subscribers, and you know, the thing about this is that I know that the students have been through the first module now of the Ultimate Guide to Renovation. And we have talked about goals and there's been a workbook that, you know, a little workbook guide to download some information. And I think it's a really good refresher for a lot of the past students listening to this. And I know a lot of the past students, every time we have an intake, kind of go through the modules again and, you know, everything gets updated, which is really exciting. But the really interesting thing about module one and the goals is that every time we sit here and go, we have to do something about goals. John says to me, but it's, you know, it sounds boring. People don't want to hear about goals. They want to hear about, you know, how much is enough and where am I going to get to and, and, you know, the real important things about setting this up for you with your goals. And I had a call today with a new student and I'm going to call it tagta, which is the Ultimate Guide to Renovation as a shortcut. And he was saying, you know, I need to understand my borrowing capacity, and so I can understand what I can do. And it's kind of like, like starting with, you know, putting the horse before the cart. If you understand what your goals are and how much that you're trying to achieve, you can then back calculate what your property portfolio needs to look like. And once you understand what your property portfolio needs to look like, you get a feeling for what kind of strategy that you might be able to employ. Maybe a buy and hold, you know, a buy, renovate, sell, maybe buy, renovate, hold, maybe a twist, which might include some subdivision or development. So your timeframe for your goals and the goal itself is really important. And I just want to jump back on to. I might swap over, have a look at my screen. But I just want to show you this quick little calculator that I've developed because I just, I have so many people ask me, you know, what, what the, how many properties they need, and they do get a little bit confused about this. So I Just want show you the calculator that I have developed. Hopefully it's going to pop up on your screen in a second. And you can see here if you just go to calculators. So calculators. So there's two calculators here. First of all, let's just have a look at the portfolio calculator. Go to the third tab and knock yourself out and have a bit of fun with this. And this is really, you know, how many people properties do I need? So what I really wanted to do here is give you an idea of, you know, put in your numbers. You know, I want a $50,000 passive income in 15 years and you know, I think I can afford $450,000 and if I put the money in the bank, I'd get a 5% return. I want a 90% loan to value ratio. I'm expecting 6% capital growth, selling costs, my tax rate, inflation hit calculate and it tells you really quickly I need three properties to reach my goal. Now it goes through and says, you know, $50,000 now is worth $72,000 in 15 years based on inflation. And this means you need 1.48 million in the bank. And that's equivalent to a portfolio of 2.6 that if you sell and pay your capital gains tax is a 1.4 million in the bank. So 2.6 million in 15 years. Bringing that back to today is $949,000 portfolio today. Okay, three properties. Well, we've said 450 here, so you know, it's just over three properties. So if we said $500,000 properties and we hit calculate, you can see here two properties. And maybe this is where the fun bit is. What if you can find a place that's doing 11% return? You only need one property. But what if you really pick a dud in the wrong location and you only get a third 3% return? 6 properties. So this really gives you an idea of how important it is this location by just jumping in here and seeing what the capital growth effects can be in your portfolio and how big your portfolio needs to be. Now I really encourage you as part of that goal setting is kind of getting a feeling of how much can I afford as well. And whenever I speak to people, obviously I wrote a book. Your property success. Two properties. One renovation. A million dollars in the bank. Well, this is it. Million dollars in the bank at 5% gives you $50,000 15 year frame. How many properties do you need based on the long term growth predictions? Two properties. The thing is A lot of people I speak to say that they want $100,000 income. And I encourage you to go back after you've had a bit of fun there and have a look at this financial security stuff. And this just gives you an idea of how much do you really need. I had a chat to a girlfriend recently and she said, I'm burnt out. I want to take a year off, but I have no idea. I have enough money in the bank, bank for me to live off. I'm like, well, let's just jump onto the calculator and have a chat. So we jumped on the calculator, we threw in the numbers for her and said, look, for me, I'm always about low risk. Let's put some buffers in place. Maybe you need three months of your accommodation costs paid for or all your costs. What do you need to live off? Maybe it is $56,000, and that's okay. That just means that in a period of time you might. Now you'd need a million dollars in the bank to be able to achieve that. Now, the real reality is that basic costs, they only get us so far and you might want a little bit extra. So throw in the little bit extras. But I guess what I'm trying to show you here is, you know, this is where this 73,300 keeps popping up from. If you jump over here and you look at what you really need, you might be surprised. And a lot of people I speak to, you know, they're a lot like myself in the fact that, that we don't hit a certain age and a certain portfolio size and go, okay, well, that's enough. I'm going to check out now. I mean, goodness, I'm only 45 in a month's time, I've got a whole lot of living to do. So it's really important to look at your portfolio. And this does say, this is based on the premise that you're selling your portfolio down. You don't have to sell the whole portfolio down, but you don't have to give up work completely either. So maybe you don't want to spend five days a week at work. Maybe two days is enough, or, you know, two days working, you know, on what you want to do, generating an income elsewhere. So, you know, this, this whole calculator doesn't mean property's going to be your only income, but it can be.

It gives you a target, doesn't it? It gives you a set target to start with, which is the important thing, because you need those, those metrics or the hard numbers.

Exactly. And, and that's what, you know, I really, I want people to be able to, to see and to play with because you know, it's important to be able to look at this information and go, you know, what can I do? Put it in context for me now I want to know how far I can go with this. And if you want to just go and play with the second calculator too. This is a bit of fun. Don't trust any of the calculators on the, on the web that give you, you know, how much can I afford based on all the numbers that are pre populated because everyone's situation is really different. But you know, borrowing capacity, if you're borrowing capacity calculators. Yeah, it's just difficult, difficult. But I mean I'm really proud of coming up with this calc too. So you know, let's say that you're buying in Queensland and you want to buy around, I don't know, Deception Bay. Something that's hit my radar a bit, you know, how much can I afford? What this does is it comes up and it gives you all the suburbs in that area but it gives you the last 12 years, 12 month and 10 year growth as well. And cleverly enough back ends into on the house which is Residex, old Residex, who owns Residex now and gives you properties that are on the market at the moment. So I'm really kind of trying to, you know, get you guys ahead of the game and get you all the tools that you need to make that assessment. So when you're going through that goals, goals session, have, have some fun with it and yeah, just you know, go and find out how many properties you need go and you know, speak to, obviously can speak to us, but speak to your mortgage broker or online calculator or your bank and have a chat about borrowing capacity and put that in there and work out what you can do now and what your plan is and that's really going to give you some context as well. So you know, all good fun. We've just hit module two which is. I spoke to a few people today and they've already ordered their dot maps and waiting for them on Monday which is really exciting and you know, that's really about the suburb selection and getting a feel for it. And I know that if you jump in and Google it, not Google it, jump into the renovator network, you'll see that some people have done some really innovative online maps. But we still love the old school, don't we? John?

Yes, I like the old school in particular because it's that whole hand brain thing that happens when you do something manually. It just takes a, it's a second kind of way to get it into the brain. And it's nice because you can look at it after you finish with a glass of wine and look at all the capital growth, suburbs and walk past it in the hallway every time you.

Exactly. Actually I will. Can I jump? Can I have the screen back again one more time? The only reason I want to do that is that I also the dot map, just people who are asking and there's been a bit of conversation about it and sometimes there's a little bit of confusion about, you know, what you do and where you get the information from. So one of the things that I raved about last month I'm very excited about. Buy your copy of API magazine and as I said, I've just got the November edition here now buy the magazine. There is a data bank. Go to the data bank and they'll ask you for a code. Put your code in and what this will do is it will come up with, with the 10 year growth. So you've obviously got the magazine you can go through by hand. But you know, if you've got some actual areas that you are targeting. Well, let's bring up Kingsford. I always look at Kingsford last 10 year growth 8.4%. Last 12 month growth 19.8. Now what we're trying to do is we're trying to get the longest time period possible and someone in the network this week said that I think Price finder was doing eight, had an 18 year old year, 18 year past growth information. I convinced John Edwards a few years ago to put 20 year growth in their annual supplement for the Residex report which comes out in September, because you know, the longer kind of time frame you have, the better context you have about what is happening in an area. You know, three months and 12 months, it's too short and even three years I find, you know, you've got those foibles of GFC and little blips that happen on the economy. Most of the property markets around a five to seven year kind of cycle. So you want to get more than one cycle in your analysis. So get your dot maps, get your dots, your translucent dots are the best. Find out what kind of range you're looking at. It might be between 2 and 3% is green, 3 and 4% is yellow, 4 and 5 is orange.

Nadine likes the traffic lights, doesn't she? So growth is hot.

Yeah, over 10 is red.

Yeah.

And if you're finding like in Sydney over the last 10 years, you know, you might, you, you might have been able to go 2 to 4% in Brisbane, but you're looking at maybe 2 and a half to 3% sometimes in, in Sydney.

Well, it's funny, the first course that we ran, the ultimate guide to renovation, the we had to reduce the increments because Sydney was absolutely flat, wasn't it?

Exactly.

Been flat for a year, so. And then suddenly course two and course three, that started to really open up because Sydney started to move and.

Good question, Lisa. When I say 10 year growth, that means year on year, the growth over the 10 years. So, you know, we're looking at kind of like the cumulative, the compounding effect of that growth. So one year growth obviously is the growth over the one year. Three year growth is, you know, 18% over the three, that, over those three years. So over 10 years we're talking 8.4%. Now the interesting thing is, arguably over the last hundred years, the growth has been around about 7.2%. And the interesting thing about that is that if we look at the rule of 72 and you've got 72 and you divide the growth into 72, it gives you an idea of how long it takes to double the value of your property. So if I'm looking at 10% growth, 72 divided by 10%, my property will double in value every 7.2 years. If I have 7.2 72 divided by 7.2, it will take 10 years for me to double in value. So that's often the number that people talk about. As you can see here, you know, Kingsford's sitting at 8.4% 72 divided by 8.4. Ooh, just happened to have a calculator here. 72 divided by 8.4 allows me to see that, you know, that property should have doubled in value in 8.5 years, which is great. You know, I bought, bought a house in Kingsford for 6, 20, and it's now, gosh, what is that? It's around about 1.3 at the moment. So, you know, yay, the theory works. So.

Yeah, but this is great. I mean, we used to get this all out of the back of the magazines and copied in our spreadsheets for years and years. So this is amazing.

This is great. So thank you, API, very happy. Make sure you buy the magazine and yeah, yeah, go and jump in and get your back copies as well so that you can get the Code names, numbers out of those and look at other markets. So I used to. Well, the course that John came along to, I had 10 years worth of property investor, Australian Property investor magazines at that stage, it was about five years ago, six years ago. And well, I think they're just having their 18th birthday actually. But those magazines, I scattered them around the room to all the people in the room and we went through manually and actually mapped where these, you know, what has been happening into these, these areas with, you know, stock on market and vacancy over the years. And it was an incredible thing to see, but very, very manual. Yeah, you can do this a whole lot quicker now.

So now do you want to just explain the ten year. Because inevitably people go, oh, why are we using 10 year, why don't we. Because the market's been moving really fast. Why don't we use one year or three year?

I thought I did that. Yeah, but not, not good enough. Okay, okay, so they're still going to.

Want to use one year.

Don't use one year. So three month data, one year data, three year data. If we look at a property cycle that goes from five, five to seven years typically in Australia, usually starts with Sydney, goes to Melbourne, moves on to Brisbane, you know, Perth does its own thing, Northern Territory, who knows South Australia, Langels behind and then Tassie kind of, you know, remembers to catch up. So that's kind of what happens. And having gone through three of these cycles, you get a feel for it. And it's amazing how everyone seems surprised when Sydney moves. It's like, oh, Melbourne's going to go next. The thing is that the shorter focus that you put on your analysis of a suburb or an area, it really can limit yourself. If you've got a whole new development that has just happened in an area, then obviously in the short term that could push up property prices. But it may not be representative of the fact of the size of the blocks that is actually normal over that entire area. So when we look at the long term, 10 years, 18 years, 20 years, as long as you can get.

And obviously John Edwards talks about only using 20 years. That's what he uses. He won't even use 10 year.

Yeah, so as I said, the 18 year and the 20 year data you pay for through $200 kind of reports or monthly subscriptions. But the back of the magazines is where you can get that 10 year data. Some of the magazines also, they talk about annual growth and they don't actually say 10 years, they just say annual growth. In actual fact, that is the 10 year growth. So go to the front of the data banks and they do an explanation of what the columns are. I mean as you'll see, ultimate guide of renovation students in module three and four we really do a lot of analysis and give you spreadsheets of, you know, what kind of data that you need and where you get it from. And yeah, we'll get into this whole lot more coming on. But I just want to make it.

Just asked are those figures for houses only? So I think that's about the API. I think units are there as well. Or is it only house data?

This one I chose between. I chose houses.

Yes. So there is units available there in the back of the.

So you can actually choose to be aware that stock on market and asking price and vacancies actually comes from sqm and they have an interesting way of. Let me have a look. No, Australian property monitors is asking price. Market watch is from. Let's have a look here. Australian property monitors stock and market is from SQM and vacancies from sqm. So sqm sometimes their postcodes and naming of suburbs do not actually match up. So just be aware of that.

Margaret's just got a question on that. What would you consider to be good growth over 10 years? So what's a good 10 year growth figure?

Look Margaret, this really comes back to what your goals are and what you want to achieve. I. I'm always looking for areas that outperform the neighboring areas and have growth that allow me to double the portfolio value within 10 years. So that means a minimum of 7%. Now I look at a lot of data and I've just done some analysis for Money magazine for their November issue. I don't know, I sent it in today, so I guess December issue maybe. And it there are areas that have got predictions of 9% capital growth in the next five years and eight years that I've pulled out from the Residex information. There's areas that are predicted to do a lot better than that. But on general, a lot of the data I'm seeing at the moment is like the 3 to 5%. That just means that it could take you longer to get to your goals or you have to be more strategic about adding some value to improve your cash flow while you're going to wait for a longer period to get to what that end passive income is that you want.

But it does, it can change pretty quick. As we're saying just since the start of this course that 10 year growth figure was all the way although all grouped really tightly together and around the 4 or 5% from memory I think in Sydney and now there's quite a big spread. Those dot maps have got a lot more color.

Yeah, absolutely. Which is great. And. Oh, I was just going to say that I think I'm not sharing my screen anymore.

Do you want me to bring.

No, but I was just going to say that you'll see that a lot of people have kind of worked the Google map system with their dotting and I like the idea of sitting down, grab a bottle of wine, take a few hours, get the kids involved, pay them a few cents each for going rates. 20 cents a dot at the moment is a dot. And you know I also, I've seen, I've seen maps and when people sometimes turn up for mentoring things they, they bring out their, their maps and they're actually got multiple dots on a suburb so they might also have media. So you might have a blue dot.

I put little arrows.

Arrows.

So I look at the five year as well and then if it's gone up and over the last five years I'll put an arrow up or if it's.

I know my sister who I think has dotted Sydney, Melbourne, Brisbane since she's born in all those places. She also colors in the center of the dots for the medium price because it's no point if she can't afford it.

Yes, yes.

So you know she has that and some people have vacancy rates on there and I've seen some people do three and five year dots as well.

People are doing yield so you're just.

Going to get dotty with it. Guys.

Ready to take calls?

Yeah, I'm absolutely.

Jack's had his hand up for a while here so let's give Jack a try.

Hey Jack, I'm unmuting your line now. Hey Jack, how are you going?

Good, how are you Jay and hello Joel.

Hey Jack, how are you going?

How can we help tonight.

Jay? I've got a property under contract currently in it switch. It's actually a unit block of four units on the one title. My intention was to subdivide the four units into four individual titles and then on sell them. In the meantime obviously I'm going to do some renovation and looking forward to studying some of the reno tips coming up and doing a bit of renos and on sale them probably within two to three years I would say.

Nice. Yeah.

Just want to get your thoughts on.

First of all.

Any tips on subdivision especially on strata title subdivision and any watch outs. And second of all actually I just Had a look at the growth characteristics while you guys talking about the 10 years of Ipswich, which was only 3.8%.

So that's past growth. Remember you're looking at past growth, not future predicted growth.

Yeah. So obviously its past growth in the last 10 years isn't that fresh for the area at the moment. But because I'm going to be adding some value in hopefully through the process of subdivision and on sale to add a bit of margin into the profit. But just also in general, second question is the, the ongoing growth characteristic for Ipswich in general. Just want to get your thoughts on that.

I can feel the Residex report coming on. Do you want me to swap over?

Yeah, something. It's like I prepared this earlier but actually I have to say Jack, as part of the article that I was writing, I did a little bit of research on Ipswich and I was interested to see that there were different areas of Ipswich. There was even Ipswich and I don't know, normal Ipswich. So let's just have a look at. This is the data that you've probably looking at the past data for Ipswich. So this is what units have generally have gone from over the last 10 years from 170,000 to 200,000. So we're not talking double your money obviously. So average growth over the last 10 years is 2.5%. So it hasn't had the growth characteristics that you would normally say was something that's driving, you know, driving that market. There has been a lot of of Ipswich conversations and Toowoomba conversations I've been part of in the last 18 months. So I know there's a lot of been a bit of activity there as well. What's interesting here is we look at East Ipswich Residex, you know, they go through and they speak to real estate agents and local businesses and they look at infrastructure plans and all of those things and they make predictions and really they're the only people that you can buy these prediction, you know, or get these prediction reports off, you know, generally. So, you know, they're saying that nothing's going to happen in the next five years and if I jump over to I'm pretty sure I've got another one here. This is main Ipswich. So main Ipswich, you know, we have a look at this. We've got its price point 5 years, 10 years ago is 240 up to 250. So it seems to have been a little bit more expensive. It once again hasn't done a lot 1.1% over the last 10 years. And we look at Its predictions.

Yeah, sorry, disturbed. This property I've got is actually in Eastern Heights, which is the next suburb just next to Ipswich. And it's actually a, it's currently a house, but it's just when it was built in the 60s, it was built as a block of four attached properties. So it's actually currently classified as a house, but it is rented as four units individually at the moment. Right? Yeah, yeah.

Okay, let's check out Eastern Heights live information here. Jack, just for you.

While you're doing that, Carlo's got a question. How much importance do you place on the prediction suburb reports from Residex? And based on your experience, how accurate are they?

Yeah, look what I've done in the past, Carlo, is I've kind of tracked the information. So I tracked CBA and what they said said prices were going to be Australian property monitors, BIS Shrapnel, RP Data and Residex. So I did this back in 2007 and I tracked them year on year. And I have to say that I've always an Australian property council, they were always very, very optimistic and bio shrapnel were always the most negative and Residex was always very small tolerance of error on what the prices were. And I know when we went to gfc, you know, John Edwards came out and said that he believed that I think it was the median price was going to be 850 within six months and everyone boo hooed him when, you know, there'd been a tumble or quietening in the market during the gfc and what do you know, you know, six months later, that's what it was. So, you know, I put a lot of credibility.

He's the only one really been putting his name on the line, you know, year in, year out for, you know, all of these years with predicted growth. There's is, there's like one other person that does it, isn't it? Does anyone else do it?

Well, I get, you know, the Sunday report, the Sunday papers, you know, they did the spring and autumn kind of big pullout that you can get and the APM Australian property monitors do a prediction there. So I grabbed those and I've got 10 years worth of those as well. Unfortunately my husband kicked them out of the house. They're in the office now. I think my PA is about to kick them out of the office. So I'm gonna have to find a holding set. But you know, I use those as well to have a look. But you know, I do put a lot of credibility into it because, you know, I, I think it's important to see where growth has come from and that's okay. So I can see where growth is coming from. But the other thing is that I, I want to make sure that. So sorry, I lost my transfer for surrounding suburbs. But the thing is that you can't really crystal ball the future and we can only take all the information and look at it in context of putting it into our toolbox. So that's why we're looking at, with the ripple effect of the dot map and we're looking at vacancies and plans for infrastructure. Now this is just another tool. So this is not 100% of what I would, hand on heart, go, I'm going to go and invest just based on this. But it's indicative and know we use those tools and we weight them accordingly. So.

And sometimes they can be thrown, can't they? Like for instance, the renovator report which looks at the spread of values in the street tends to favor higher priced suburbs. And because it's, it's ranked on how many of those streets there are in a suburb. So how many streets have that spread of values from the bottom of the, the bottom price in the street to the top price in the street. It also favors suburbs with more streets. So if you've got a larger suburb with more streets, it will favor that as well. So yeah, you've got to take it into account with all the other things you're doing.

Exactly. And your strategy, if your strategy is to buy, renovate and sell capital growth is not really what you're looking at at all because you're usually trying to do that within a short period of time. But look, let's just have a quick little look here at Eastern Heights. If this is technically considered a house. The interesting thing here is that the house's predicted growth in next five years, 4% next eight years, 7% per annum. So obviously from year five to year eight, they're expecting a little bit more growth in the area. Now I know you're turning this into a unit and this is kind of playing with numbers here, but the growth for units is a lot less. So that kind of gives me a feeling there that if I was going to look at what the typical type of property is in that area and we can go through SQM research and have a look at that, but if we're going to look at what the typical type of property was, then the typical type of properties I would suggest is not a unit in the area.

Yes, it's houses.

Yeah. So if you're there is some 4,305. So there is some risk of what you're actually doing in potentially. Let me just have a look at this. What you're doing in converting it in adding value and making it to a higher value is is there the demand for the units? So find out if there is the demand for the unit. So get in and have a look at, you know there's stock on market on that API site. There's also get an idea at the back of the magazines, you know they talk about the turnover per month. You know, if the turnover per month's really small then you know we, you potentially have some issues associated with what's happening in that area and that conversion. The really good thing about you know what you're trying to do and the strata, doing the strata struttering of the units, the subdivision of the place is that you are creating a higher value by putting some work and some effort in. So you know, I mean I looked at doing something like this up in the central coast of New South Wales at one stage and the fire rating requirements actually required me to put a whole new floor in between the, you know, it was two story between the units and a lot of fire doors. So it was a huge expense that we had to look at. But you know, if I, if I look at this in the postcode of. What's your postcode for 305? 4305. And I'm just on the SQM research it kind of gives you an idea of what the typical properties are in that area. So if I look in here, you know I've got the three bedroom houses is very typical and if I look at stock on the market it will also tell me, you know, how many units compared to houses. So the purple is units and the blue is houses. So I can see that in a very attached, not typical to have units in the area. So just be aware of the risks that you run into by having, by doing that conversion it might be renovating that house to a higher purpose could be get you further along. So what you really want to understand is what the pricing disparity between the unrenovated and the renovated houses are and just find out if there is, if there is a demand for the, the properties in the area. The vacancy rates for units are going to give you an indication of whether they're taken up really quickly as well. And this is the Overall vacancy rate 1.9%. We usually talk about 3% being an equilibrium in the market but this is across all of the markets. So I'd just be doing some more analysis, getting to the unit section of the data bank at the back of the magazines and find out. Great.

Okay. Okay. All right. Thank you very much.

Okay. All the best. Bye.

We got lots of written questions to get through, but Brooke has had a hand up.

Karen's got a warning for Jack. Let's see what Karen says up there. Warning for Jack. Jack needs to watch out for firewalling in older buildings too. Yeah, speak to the council and find out what their requirements are there.

Brooke.

Hey, Brooke, how are you going? Brooke, I think you wrote a question too. Hi, Jen.

John. How are you?

Good. You wrote us a question earlier, didn't you?

It's better to say it though, isn't it?

I'm really hoping the two of you might be able to adjudicate a belly tense situation in my household.

Oh, no, we're going to get involved in a domestic here, Jay.

Now, I did. I did actually prepare something. I did prepare something earlier for you too. I think. It was Waylon, wasn't it? Yeah, it was. Do you want me to quickly describe. Give us the story. Yeah, sure. My partner and I bought a. It was our first investment property. Bought a house in Wayland, which is in Western Sydney, New South Wales. Three bed bathroom, pretty standard. And it's on a Fairly large block, 817 square meters. We purchased it in July last year. Didn't do too much work on it, so I haven't spent too much there. But the suburb has seen a 22% year on year increase. So we've kind of had some. We've gone from the buy and hold to what do we do now? And we've had a look at some of the forecasting and it's predicting that the suburb will go from boom to neutral in the next three to six months. So we've got on one side of the ring, my partner, who wants to sell now, realize the capital gain and potentially go again where we might be able to buy something a little bit more in value. Whereas me, I'm concerned we might be leaving money on the table as we could potentially do something for a Renault or a granny flat. So, yeah, I was just wondering what your thoughts were. Okay, so can you just tell me again what your price point was that you purchased at 870? I think 369. 369. And what have you had a recent valuation around that we haven't? No. Okay. And when was that? The reports will say about 22% in July last year. So I'm looking at. Can you see my screen Residex reports? Yes, I can. Yep. Perfect. So it validates exactly what you've said, which, which is good. We're not lying here. So last three years, 20, 20%. So there's been something incredible. That western corridor around Sydney, there's been some. Some good growth. Interestingly though, when I look at the predicted growth, that is. And another good thing is, is that that 3 to 400 is where the majority of the market is. So that's kind of like the. Might just mute you for a second, Brooke. I think someone's cooking. That's where the majority of the sale data is. But pushing up a little bit into the next groove. But what we've got here is some predictions of minus 1% and 1% over the next five to eight years. And I think the. So the risk associated with that is this is one number and one implication. So what I would do to find out and kind of answer the question once and for all, what you need to be doing in this area is should you buy and hold or not, or capitalise on the growth that you've had? If you've got 20% growth, there might be 60, $70,000 in it for you. And if there's not going to be much movement in the next five to eight years, what you have to wait up is this property in your portfolio going to get you to your goals? I think that's the importance of this module. One is really, if you know what your goal is and if you know that your goal is to have three investment properties that need to be in an area that's doing 6% capital growth with a 5% rental yield, so you can afford to keep them over the next 10 years. You go back and have a look at your portfolio and you start say, if it's not costing you anything, it's easy to just go, oh, I'm just going to let it go. But the reality of this is that it could be costing you opportunity, which means having that $360,000 or that mortgage in another area that is going to go up in value. My real concern with just accepting properties that aren't costing you anything is that they might actually be costing you time and you're getting to your goal sooner. So there has been some good growth here. This surprises me, this minus 1 to 1% mainly because I believe that what's happening in that western Sydney area, the Badger Creek kind of building, is going to fuel a lot of growth there. I'm not too sure how far Wayland is away from there. But I have had clients that have done granny flats and improved the cash flow. But the reality is, even if you're making 200 bucks a week, right, positively geared property, and you're making 10 grand a year off a property for the next 10 years, it's making you that money and you're paying tax on it. But if your property's not going up in value and it's still going to be worth $400,000 in 10 years time, then if you did have to sell it and get rid of of it, it hasn't done anything really for you other than get you that small amount of cash flow. So it could be costing you opportunity. So if you're limited by borrowing capacity to go and buy somewhere else, then really pull. Don't go with this alone, but do your research on what the predictions are for that kind of property and what the pricing disparity is between the unrenovated and renovated. Because maybe talking to Jacob Field from Ripe House, the founder of Ripe House, he's done some analysis over the last five years looking at all the suburbs in Australia and what streets in each suburb do better than the others. And he's created this kind of sweet spot formula. And you know, it's 250 meters, not closer to a school, 1200 meters from shopping centers, not further away, and 1000 meters from public transport. So where those streets kind of intersect with that infrastructure. And he's put over a filter of, you know, crime and percentage renters and the typical property for the area and all those things. And he's created this kind of filter that allows you to see if there is, if the streets are worth more than other streets in the area. So your street might outperform the other streets. There are streets that are better off. And you know, we're getting to module three and four. We're going to really help you target into that and you get access to that Ripe House software as well, so you can do your own analysis. I wouldn't be selling just based on this, but it does concern me. Unless you've got a lot of money, you know, to go and keep investing elsewhere. I'd look at this and say, is there the pricing disparity that a renovation could actually add the value to this property?

Sometimes that can be as simple as just going through the open for inspections for the other comparable properties at the renovated level.

Yeah, yeah, I've had a bit of a look. Yeah, no, that is so. Thank you. That is so much to Think about, I really appreciate it. No, that's fine. And look, just get a feel for it might be time to cash out. One of you might be right. It might be time to cash out. Which is always a horrible thing to say. Me, I haven't sold in 10 years up until last week. But sometimes you have to look at your portfolio and if you can't keep buying, it forces you to look at your portfolio and just say, okay, so what is my goal? Does this property get me to my goal? If it doesn't get me to my goal, how much is it going to cost me to get out and get into the next property? Can I afford that? Can I afford not to do it? And the really lovely thing about having your goals and coming back with the property investing strategy that it gives you is that from there you get down to your buying criteria so you can be very specific and say, okay. For me to get to my goal, I need three properties. I need the rental return to be 5%, I need the capital growth to be 6%. I need the ability to have a corner block so I can subdivide. I need the ability to renovate up using a 10% of the value of the property to add at least $2 for every dollar I spend. So if you're very specific about that, 90% of every property that you can look at on the web you can discard and you can just focus on the things that are going to give you value so you're not flibbery jibbity around every week and looking at everything and you can go to your current property portfolio and go, does it stack up? Thank you so much, that was fantastic. Okay, Rook, all the best. Look forward to seeing you making some comments in the network.

Right, Barry. Hello, Jane. I have a question about the tax implications when setting up a business to do house renovation flips. At the start, my wife is already in a high tax bracket and I'm currently working in construction earnings around 54k a year. I'll be working on the Renault's full time once everything is set up. Any details for structuring our new business? To minimise any tax the wife would be liable for would be greatly appreciated, Barry.

Well, Barry, I'm not a tax accountant, I have to tell you, so I can't comment on how the best way for you to set up the business is I guess just some general comments from being a mortgage broker and looking at people that, that I look at their finances regularly, is that if you are setting up a business and you're setting this up as a company, then you're going to have directors of the company and any directors of the company's, you know, incomes, et cetera and information. They're going to be used as guarantors for the investment. If you are just setting up this company and the pure business mode for this company is property and property flipping and property sales, etc. Then you're going to have, in the eyes of a lender, you're going to have to have two years of financials. There's only one bank that only takes one year of financials. They still require you have had your ABN registered for two years and that's Anz. Now cba, Macquarie do say that they have just changed policies to say they would. And bank of Melbourne St George, they will look at one year but in my experience they've always asked for the second year. So ANZ does only ask for those one years of financials, but you do have to be registered for two years. Anyone who is a director is pretty much guaranteeing the loan anyhow. Be aware that buying and selling quickly and getting lending against it. So I'm assuming you're not using all the cash, you know, great big line of credit against your house or a lot of cash that you have and you are going to lend against the properties that you're buying. You are going to be hitting your credit file time and time again and you know, lenders are in the business of lending to make money and you're going to affect your credit score and different lenders have different ways of looking at credit scores. And you know, I had one client last year who had 14 hits on their credit file. They bought a lot of properties, they refinanced them, they, you know, got a dishwasher at Harvey Norman or something, something. And NAB bank said as soon as the number hits 14, we decline the loan regardless of the fact that it was all legitimate and they could afford the loan. So just be aware that the way that you are doing this might actually affect how you can borrow. And if you do give up your job then you may not be able to borrow money for some years ahead. So great to set up the business with the end in mind of what you're doing. But it might have to be a step by step process. But please speak to your accountant about this. There's so many implications on, on, you know, how you set it up and the different corporate trustees and everything.

Not all accountants are equal as well. There's guys that are really good on property and other guys that really, you know, aren't.

No. ITP probably does normal mum and dad stuff and aren't going to be be suggesting how you can set up businesses and trusts.

Yeah.

So thanks for your question, Barry. Hope I helped.

Swire's got a question further to your talk about Australian Bureau of Statistics having information on census data by topic location on census night, home ownership, proportion of homeownership.

She was listening.

Yeah. Map giving information on street where homeowner renters housing commission. This is not available on the site. Can this be accessed in different ways? Please let me know as I cannot find the information as it was highlighted in your talks.

Oh, you have a lot to look forward to. I think it's module three.

Yep.

I've got the tutorial on how to do it.

Yeah, well, they're getting the Ripe House stuff too, which pulls a lot of the same data.

So, Sebiyeh, a great question. 2006 census information, it was really easy to actually just go through and select where was everyone sitting and did they own their home on census night and. And you could come up with a heat map that showed specifically streets where the owner occupiers and the renters were. Now it's a little bit harder. And I have to say, after three months, I think it was 18 phone calls and emails to census after the 2011 stats came out, I worked out how you could do exactly the same way. So honestly, I did not give up and I think that's the only way persistence actually allowed me to find out how to do it. I've created that tutorial for you. It is in module three, you will get access to when we get to that suburb due diligence module on that. And you'll get access to Ripe House as well. And Ripe House has been able to pull some of that data in as well. So you actually see specifically street by street where the owner occupiers are and where the renters are. And guys, if you're wondering why this is a relevant question, it's around the fact that if your strategy is to buy, renovate and sell, sell, you're usually doing a structural renovation, aren't you, John?

Typically, yep.

And you've done this many a time. Who are you selling to?

Homeowners.

And homeowners are owner occupiers. So you want to be in the streets where they want to live. People like living near the people like them. Right. So if you want to buy, renovate and rent, or just buy and rent and maybe renovate later or have the Opportunity to renovate or the person you sell it to renovates, whatever. Even if renovation is not your strategy, buy and rent the property to someone else, then you're looking for where the renters want to be. So for instance when I did my analysis on Kingsford in the beginning I could see there was a large area where the renters wanted to be and they were about 500 meters away from the hub of where the public transport was and they were close to the shops, etc. And that's the streets that I looked to buying. You can get down to this street level which is so exciting. And as I mentioned before with the Ripe House sweet spots report that Jacob has come up with hotspotting Terry RIP actually down to that street level and looking at properties on the market at the moment and I've as part of this analysis that I've just done, I've put in the renovator report from Residex over the top to look at the pricing disparity to actually come up with the streets to buy in and you can set up alerts for that. So lot of good things coming ahead but know that it's. Yeah, it's module three. Look for it.

Good. Margaret's got a hand up.

Oh I love it when people put their hands up. Hey Margaret, how are you guys going? Margaret's got a hand up twice. Maybe you heard that the other Margaret has her microphone on.

The real Margaret. Hey.

Margaret says good but we can't hear you. Margaret, do you have a microphone? Okay, type your question. Margaret. Oh, it's a different Margaret. They both have double barrel names like me. They're different Margaret. Mac.

Ok, might not have the.

Okay, find your microphone and put your hand up again.

Marlo, we'll come back to you.

And who else?

Roshan's got a question.

I think we had a chat to Roshan. Roshan. Hey, you have a question? Roshan.

Yes. Can you hear me?

Gotcha.

Yeah. Hi Jen and hi John. Hey Roshan. I have is. I have an investment property in Rowan Melbourne. It's a three bedroom and two bathroom property but it doesn't have a garage. So I'm wondering whether by adding the garage whether it'll increase the value. Good question.

Okay, so tell me. It's Rowville. Did you say? Okay, I'm going to. I tell you the easiest way to do this.

Yep.

Is I'm just going to show my screen again. I think it's paused. Okay, so I would go to, you know, domainrealestate.com and I'd find out what other properties look like. So we're looking at Rowville.

Yes.

And we don't want any other properties and we want houses.

Yep.

Three bedroom. Three bedroom.

Okay, so let's have a look at houses in rowville. We've got 49 matches. So this is what I would do really quickly is I'd go through and see does everyone else have a garage? Well, these guys have two, these guys have three. These guys have one. These guys have one, These guys have two, These guys have two. So I would say if I did the census report on this area. So let's just click into. These all look pretty new, don't they? Two, two, two, two. Okay. How many do you have?

None.

None. Well, I'd say that you could probably see that the typical property in this area. I'm just going to come down to the investment tab down here. So I just want to have a quick look at what three bedroom houses look like in Rowville. So I'm just going through to the property tab on realestate.com and have a look at what we're looking at here. Three bedroom houses, 624 bedroom houses, 700. And we've got couples. They might give us the details here or otherwise we might have to get into sensitive. So we've got the details on the people that are living there. So majority of people are people, family people, family area. We're getting a real big idea of family. I'm not seeing a lot of train stations around here.

Roeville doesn't have a train station.

Okay. So we don't have. So what you know, very quickly you're picking up here is let's have a look at the investment insights is that it's an area that people, people and I'd validate this with census data. Usually drive to work. I'm going to get something that asks me to sign up for a survey. So I'm looking at Rowville here. I'm looking at the annual growth and I want to have a look down at three bedrooms, three bedroom houses. No, it's just showing me units. Okay. So basically what I would say is what we would be getting here is that it would be typical in Rowville to actually have a garage. Now will it add value? I'd be having a look at and having a chat to the local real estate agents but I would be having a look at if there is any properties that don't have a garage, what the kind of pricing disparity is and how much are you looking at spending on it. As well. Because if you're looking at spending $30,000 and it's not going to add that much value, then, you know, it's maybe not something that you need to do. But what you might want to do is try to get a feeling for if you're trying to, you know, if it's not renting and you're wondering why it's not renting, it could be the only property in the area that you know doesn't have a garage.

So Glenn's beat new to sensors. He's saying it's 2.1 motor vehicles.

Go Glenn. Glenn's into census too. So there's 2.1 motor vehicles per person per dwelling in Rowville. And look at this, 94% are houses. Majority of them are four bedroom or more. So three to four bedroom, 43% okay. And rented only 12%. So I would say my minimum for renting would be around 30% for a sub and household composition. Dwellings, mediums and here we go. Majority of people have cars. So I would say adding a garage would possibly be something that's on your radar. But have a look at what the expense is going to be and have a look at what the value is going to be. The value might be that your property hasn't rented for a period of time and this is the objection that renters have. Or the value might be that it's not going to cost you that much but it's going to add a lot of value to the property and just get a feeling from the local agents about what that could be.

Okay, cool.

Okay, thank you very much.

In terms of prediction for if I want to get the equity out of this property now, the banks only will lend up to 80%. Is that right?

No, that's not right. Some banks like bank west have said we're only going to do 80% in New South Wales. So some have been prescriptive on areas and others have been prescriptive on postcodes. But what bank are you with at the moment?

I'm with a couple of banks. One of them is with the boq.

Okay. They don't deal with brokers. So I don't know what bank of Queensland's policies are, but getting 90%. A lot of them are doing 90% including mortgage insurance at the moment rather than 90% plus mortgage insurance. Some lenders are still doing 95% including mortgage insurance. There's some of the third tier lenders are still doing 95% plus mortgage insurance. But there has been, there has been some changes and be aware of that. But you know, 80% in Roville, I would definitely be looking at it. I don't see that at all. I know that Cameron here saying the bank of Queensland is tight because he uses them. But.

Used to bank with him.

He used to bank with him. He's moved. So they might be prescriptive. But if you refinance elsewhere, just be aware that if you have paid mortgage insurance elsewhere you might be up for paying it again. So you know, that's a bit of a pain. But if there's an opportunity to grab extra cash and you know, looking at the median values here, you know, 10%, you know, maybe $770,000 is going to get you a deposit and stamp duty and a bit of a reno on a new property then it might be well worth looking at it.

Yeah. And there's prediction that the market will dropped by 2016. So do you think I should wait till the market drops?

What? Oh, you've got me lost here. Why would you wait for the market to drop? To pull out equity. So if your property goes.

No, no, not to pull out equity. To buy another property to do renovation.

I got to be honest with you Roshan. I am not a timing in the market kind of person. I'm a time in the market person. So to me it's more important to actually have a property in the market in an area that's potentially going up in value rather than trying to predict what's happening. I had a client in 2006 who was in a wait to the Sydney market dived before she bought a property and she's still waiting. The house price in Sydney has just hit over a million dollars. If you think about that, it's had a 19% correct growth in the last 12 months. That's $150,000 people who own houses in Sydney made last year. And that's more than what most people took home themselves. Yeah, I mean this is mad. So you know, don't try to. I really suggest, don't try to play the market. You know, some experienced investors can do that. If you go to the Heron Todd White newsletter, you know I talk about in my toolbox monthly toolbox every month. You know, it's the place to go. They've got thousands of of valuers out there every single month looking at properties and valuing them. And rather than waiting for three months for stats, the back of the magazines and old stats, you're getting the last month's worth of information and relevance. If you go all the way down to page 60 you'll be able to see where the different markets are up to. So some markets are moving up and some are going down, etc. And some are flattening. If you wanted to time the market, go to there and see, you know, where the measure of where the markets are. But you know, I wouldn't, I wouldn't be playing the game. I'd be getting in and, you know, start starting stunning, getting that time in the market.

All right, thank you very much, Dan. Thanks, John. Thank you.

Bye.

Radio Lots to get through. Sarah Hi, Jane. My question is about buying in a trust structure. My understanding is lenders only accept income that the trust generates, I. E. Not your work wage. Therefore it seems that you have to buy, have to, have to buy investment property unit with cash. If we wanted to have the trust account on the title. The question is looking at asset protection.

Look, Sarah, look, I do a lot of loans for clients who've got trust structures. I've got a trust structure for two of my properties. For me, you know, I had one of those fancy hybrid discretionary trusts with corporate trustee, not a family unit discretionary trust. And only two lenders lend to that structure. So by actually having a property in that structure, I kind of made life hard for myself. I can't refinance anywhere else. Be aware of Asset protection is important. I know there's a lot of property educators at the moment talking about get yourself into trust. If you're not in a litigious occupation, then asset protection may not be the reason you do it. Maybe you're looking at trusts from a point of view of being able to disperse units or income, etc. Be aware of the positives and negatives. If you do need the asset protection or the ability to give income to the low income earner, for instance, that's a good thing. Make sure you talk to your accountant about it. They're the experts. I'm not an accountant, but when I do write mortgages for people, as I suggested earlier, you've got guarantors for the trust, which are the directors of the trustee and those guarantors, their incomes come into play. So no, if you're buying in a trust structure, you're not buying cash out of the you don't have to have all cash there, you can actually buy and they do look at your wage. So you might be talking about some strange trust structure, but it's not one that I've seen. And I've got a lot of clients who buy interest structures. So speak to your accountant and just Find out the specifics about that. But Sarah, your salary should definitely be included. Just be sure, be aware that negative gearing is usually quarantined in that trust and be aware that if there is land tax exemptions in the state that you're buying in, then company usually doesn't get those. So there's implications.

Ben's got a question about bank valuations. If you get a bank valuation that you aren't happy with, do you consider and or get a VAL from another lender and if it's below 80% loan to value ratio and a higher val, do you move the finance over to them?

Look, valuations are really hard at the moment. It's a really hot market and.

I.

Often speak to people and they say, oh look, the house down the street sold for this and therefore my house is worth this. And we could do a whole structure and strategy based on buying, pulling out equity and then going and buying something else based on having that equity and the valuation come back low. So, you know, a lot of the time I actually order upfront valuations so that we're very clear on what is happening. I've had clients buy at auction and if they had a conditional approval and everything is aligned and the value goes out and comes back and says, look, this just doesn't value up to what the auction result is, which is really unusual. But I have seen this in the last six months and the bank says, well, you're going to front up with more money or what are you going to do? There's someone actually in the renovator network who had this actual situation happen and I gave them some suggestions that they could take to their broker to work around it. But one of the things is very quickly moving to another lender. If mortgage insurance is not involved, moving to another lender is painless and usually doesn't cost a lot. And at the moment, if it's a home that you're moving, there's insane discounts for owner occupiers and rebates and you know, et cetera on the market. But as for valuations, cash is king. If you've done a renovation and you really think that it's worth more, if you bought a property and you know it's worth more, please, you know, don't accept just what one lender said says, make sure that your broker's out there and fighting for you. And yes, I would definitely consider another lender.

Margaret is back. We think we've fixed the microphone problems. Hello, Margaret.

Hey Margaret. Maybe the other microphone to Margaret to Max here. Hey, Margaret. Oh, that's a different Margaret.

Oh, it's the wrong Margaret. Okay, sorry. You're not the wrong Margaret, but you're not the Margaret we thought you were.

Okay, we've got a question here from Kathy.

Okay. I own my own home, which we renovated nine years ago. Since then, a few cracks have appeared, and I would like to know how important you think it is to fix these floors before valuation in order to borrow for investing. Will cosmetic changes make a big difference to our borrowing ability?

Oh, I definitely think so. You know, I get clients that say, oh, look, we've half finished the kitchen, but we want to. We want to be ready to buy when we see something so can get a valuation, and that can really. The valuer looks at it and says, isn't it cost another ten grand to fix this? And they mark down the valuation based on it. Perception is everything. Let's be straight about this. Valuers go to uni for four years, and they do most of their research beforehand. They're looking at comparable prices, and they're really validating the information when they walk through the door. I know we've got a few valuers online tonight, so. So correct me if I'm wrong here, guys, but, you know, the thing about it is it all is about perception. And I know when I walk through a property and I see a crack or I see some, you know, dodgy tiling or something else is wrong.

Yeah.

It makes me want to look at the wobbly fence and what, you know, have they got metal tracks or plastic tracks on their kitchen? You know, I want to see where else things are not going right. One of the things I do look for is when I walk into a property and there's that smell of fresh paint, I wonder what they've been covering up, especially if it's only in one room. So if you've got some cracks, I definitely suggest that improve it. Put your best foot forward. This valuation is a make or break, especially if that's what you're dependent on in equity to move out, move on to the next property. So make it look as good as you can. Kathy, first impressions count, just like we do when we go to church.

Yeah. And when you get further into the ultimate guide to renovation, there's actually a template that we use to. To give to the valuers, too. Where we do. We do all the comp sales and do all their work for them and try and not influence them, but just give them a hand.

Yeah.

Okay, hang on. No, we've got Hayden Here, let's have a chat to Hayden. Hayden there.

Hey Hayden.

Yes I am.

Hello, how are you? I think I spoke to you today.

Well you did, yeah, actually you did.

How can we help?

Yeah, so as we sort of spoke about today, part of my strategy will be to go in with the JV and then we'll be buy subdivide, sell the back block, then give the front house front cosmetic Renault and then sell that as well. As we spoke about about you're saying that an owner occupier would be the one I'd be looking at to selling the land to. I'm just wondering how do I tell if there's a demand for land in an area besides sort of just talking to a real estate agent? Not sure is there any.

Yeah, good question. I have access to RP data professional and when I go into it certain suburb it allows me to look at vacant land sales and land available that's available for sale. So you know, and that's kind of a paid service where you can actually do that analysis that gives you a representation of that kind of information. How do you know? I mean, God, the best ways as you say, drive around first of all and get your eyeball on the suburb and get to know that suburb intimately and just see if there is vacant lands. If there's subdivisions as we spoke about, you know, if 800 square meter block is the general size of the block and you're cutting it into two obviously council approvals etc. And you've got two 400 square meter blocks and 400 is half than what everyone else has got, then it's probably unusual and might be harder to sell. But if you're looking at 1600, 1400, 1200 square meter block and you're cutting it in two and you're creating blocks that are similar type size to the standard block then that's going to be easier to sell. The reason I said it was probably you're probably going to sell it to an owner occupier rather than an investor days that most of the money in those kind of sub divisions and John, you can comment on this and doing it is, is made in that subdivision. So most investors or developers really want to be in at the front where they're making what the 15 to 20% is it?

Yeah, at the. Well yes, there's a lot of people making more out of just subdividing and getting the permits at the moment than they are actually out of, out of developing itself because it's. Yeah it's There's a premium to, to. For a developer or developer will pay a premium to buy a property that has that planning permission all the way through because it saves them, you know, maybe 12, 18 months.

Yeah, I suppose that sort of leads to another question was if I was going to look at say subdividing a block that was, was larger potentially into say three, four lots, what would a developer be looking for? I suppose is more directed for you just on. But like, like obviously developers not going to buy one block of land. I mean, you know, they're not going to buy the back block, I wouldn't have thought. But if it was two or three, like what's sort of the minimum that a developer would sort of be looking at?

They're going to do, they're going to do their due diligence on it and work out if there's demand there as in the same way that you would look if there's demand from owner, occupiers, etc. If you're going to do a buy, renovate and sell a house, for instance, the developer will come in the same way and look, okay, what are we creating? We're creating three townhouses. Who's going to buy them? Is there demand here? What are they selling for? How many do I need to get on the block to make it viable? And depending where it is in suburbs with a lower median price, the development game tends to be how many can we get in on the block. So can we force the fourth one on? Can we force the fifth one on? Because that's where they make their, their money and the multiples there. When the land value is lower. When the land value is higher, it's not, not such an issue. But it's, it's a different kind of space because not as many developers work in those areas with higher land value because the getting the permits through is a lot higher. Harder too, so the permit longer and stuff like that. So I'd be looking for is there, is there a history of other developments like that in the area and maybe just talking to a few, like I'm never above just pulling up outside of a building site and having a chat with people, whether it be the builder or developer or whatever.

Yeah, okay, yeah, that's a good idea actually. Yep, I suppose. Yeah. So the areas I am sort of, well, the area, I don't have an area in mind yet. But what I'm sort of thinking is yeah, an area where there are lots of subdivisions occurring where they are maybe putting turning 800 square meter blocks into two, four hundreds. But there, I suppose there's quite a lot of them in the area. So there's a. I suppose you can see there's a demand that people will want to live on a. Happy to live on a smaller block if it's lower maintenance or. Yeah, you know, whatever.

There's different. So different suburbs will have a different demographic that's in demand. So where we're developing at the moment, it's a. The demand is from downsizers. So they want to stay in the suburb. Often they don't want to move within kind of 500 meters and there's nowhere for them to go. They just want to stay in their suburb where all the services are, where all their friends are that they've been around for 50 years. And, and yeah, that's. That's where the demand is. But if you go out to one of the outer suburbs where the guy I work with, Scott, did his last one, that the demand there is all new home buyers. So it's entry. Entry level.

Yeah.

Okay. So, yeah, it'll change from suburb to suburb, but yeah, I mean, agents would be a really. I mean, a really easy way to go. If you find out who's selling all the developments. For instance, if you get on real estate or domain and just have a look at all whatever you think your end product's gonna be, have a look who's selling them, and then go and talk to the agents. And what you probably find is agents tend to specialize or the smart ones tend to specialize in certain areas. Like there's a couple in the area that I work. There's three or four guys that have just got that whole thing sewn up in terms of townhouses.

Yeah.

Okay.

All right.

Yeah.

I've obviously got a bit more research to do and all that. So it's just sort of thoughts, I.

Suppose, at the moment, you're going down a good track.

Hayden, can you see my screen? It's the moment I can.

Yes.

Yep. Sold prices. If you go into SQM research, they've recently just added under sold prices this coefficient curve. And what it does is it actually puts all the sold properties as a per square meter price per square meter. But the interesting thing is it actually gives you an idea of what the size of the blocks are. And if you scroll over them, you can get the addresses. But it gives you an idea that, you know, at the, you know, this is 6, 7, 800 square meters is kind of general for Ipswich. So to get the kind of general size as well, you Might want to use that as a bit of a tool.

Yeah. And I reckon that's one of the best what you're talking about there with getting plans and permits. I just think that's one of the best strategies going around for. Particularly if, you know, you haven't got the flipping as we're talking about. Tends to work better in the higher price suburbs, you know, 650 plus and I mean in Sydney I don't even think that would be. I think, you know, given the medians, you know, whatever. Yeah, a million. So it's, it's a way to really add substantial value or high and better use without a lot of cash that you have to pour in because you know, maybe for. Depending on how many there is, anywhere from kind of 15 to 25 grand might get you all of your permits and everything done. Done and dusted.

Yeah, yeah, exactly. And that was sort of what I was thinking. I was sort of looking down the whole subdivision path before I started looking at renovation and sort of evolving into trying to use both.

Yep. Yeah. And sometimes it is like renovating that front one and then. Yeah. And then the back. Yeah, they're all good.

But we've got a question here. I know people have to go 6:30. You'll never make it to 9:30, do we? Yes, we do. Record the calls within 24 hours. You will have them on your portal guys. So you can listen to them if you need to go. So you're not going to be miss out because I just saw.

Right squeeze Mike in here. Yep.

Hey Mike.

Hey Mike.

Hey, Mike.

Hi guys. A new member to the the renovation network. Welcome Mike. I'm in, I'm in Perth and given the market in Perth at the moment is really flat, I was sort of.

Wondering where.

Start to look for renovation options. So I want to buy, renovate and hold. So look for renovation options in Perth or go and look at other markets. Any opinion on that?

Look, it's really tough, especially when the media reports that the market is stagnant and there's nothing happening. But as I said, I, I've always bought when I could afford to buy and not tried to time the market. The fundamentals of making money. And if you go back to my trident strategy of trying to buy below the market, well, when the market's not hot, you have a better chance obviously doing that adding value through the renovation which the key is going to be that pricing disparity between renovated and unrenovated areas. The third one is good capital growth predictions. This still, if you're looking to a 10 to 15 year kind of timeframe for your goals. Just looking in the next two to three, four years of stagnant market or the fact that the mining boom has come off. And I was speaking to some execs from the mining industry yesterday and they're saying it's still pretty tough And I think 70% of geologists are underemployed at the moment and things are harsh. But then you go and read something like Terry Rider's infrastructure report and look at all the infrastructure that's actually the plans and the works that are coming up, I guess what I'm saying. And a lot about what's happening in the economy and the effect of the lower dollar and what that's doing to stimulation. There's so much value that can still be found in Perth and I've got clients over there at the moment. In actual fact, one of the sweet spot report is it Mandurah. Mandurah in Perth. Mandurah, Mandurah.

That's where I live.

Oh, good on you. There's some sweet spot suburbs I can share with streets. But you know, that really came up, you know, Terry Rider and Ripe House came up with that as one of the areas in Western Australia that is one of their ten sweet speeches. Sweet spots areas in Australia. So just finding out what that possible gain could be and more importantly that pricing disparity between renovated and unrenovated. Don't paint the whole market with the brush. That is in effect in all the media that you're reading about Perth, there's people over there buying and making money. I know there's some councils over there that are going through some zoning changes as well and people who are buying in with anticipating those zoning changes to make money. So I guess, you know, my thoughts are that if you are committed to, you've obviously got one property in Perth. You know, I'm all about kind of diversification geographically and minimizing your risk and being in different markets and that might mean that there's a better market for you in, you know, regional Victoria or Queensland, Brisbane or somewhere else if that's, you know, for you to go and have a look at as well. But you know, just because people are saying that the market hasn't moved, you know, I've made money buying in markets that haven't moved. So, you know, don't, don't give up is what I'm saying. Do your research and don't just, don't just, you know, say no to Perth.

Yeah. Because my Thoughts are that I would prefer to do my first renovation somewhere close and then diversify. I've got properties in other states so not adverse to going to other locations, but the first renovation I would prefer to try and do close to home or close to home anyway.

Yeah, well, I just. You want me to find. I can't find it straight away, but that sweet spot report that was done with. With Ripe House and I think you can get it through Money magazine, the. The last Money magazine, the back page. You can.

Perhaps Mike could put his. If you want to post. Pop your email in there, Mike, and we might be able to send you something. Yeah, yeah, that'd be great. Thanks.

No problem.

No worries. Okay, let's try and run through these ones. Reza. I'll just. Sorry about that. Where am I? There we go. Reza. I live in Melbourne and looking for a property in Melbourne to buy. I find it very hard to buy anything since every property sells so much higher than what it's worth. So what do you recommend for this market?

Sometimes, yeah, residential. Once you get through that kind of dot map exercise and we've had years of students doing this and predicting the next area that's gone up in value, sometimes the area started to go up in value whilst you're looking at it and it's moving beyond you. And maybe there's two things that you might need to do. One is go to the next area. So go a little further out or highlight an area that may have some major changes, might be some infrastructure announcements, etc. That haven't completely been capitalized on as yet. But the other thing is, and there's a little danger in this, it might be moving from a house to a unit purchase. And I've had to talk to a lot of first home or first property buyers now rather than first home buyers. So they're looking at buying investment properties before a home. And you know, buying a unit doesn't mean if you're looking in one area and all of a sudden you can't afford. So let's say you're looking at in reservoir in Melbourne and all of a sudden you can't afford the houses in reservoir and you think, okay, I'm going to get a unit instead. I like reservoir. You really can't do that. You need to go back to the fundamentals of your research and start again because the units in reservoir have a completely different dynamic and different research you need to do about them. So you know, it might be that there's. And we just saw an example there where 94% of the people in an area lived in houses. So the danger there would be, oh look, I can't afford a house, I'm going to get a unit here inst. Well, you know, only 6% of the whole population want to live in units in that area. So be aware of the risks associated in just going from a house to a unit in the same suburb. So you might be looking at different suburbs and it might just be. And there is a little bit of grieving time that comes up when you realize that you've done all this research strategies. Yeah. I mean you did this, didn't you with Essendon, wasn't it?

Yeah, I've done, yeah. Changed suburbs, changed strategies, done a bunch of time. But yeah, sometimes you, you just got to cut your losses and go again.

Because you're not going to spend hundreds of thousand dollars.

Don't put a square peg in a round hole.

No. So, you know, I know it can be disappointing. The really good, the dot map exercise is going to give you an idea of how to kind of leapfrog where the activity is and where the movement is at the moment in the market and anticipate the next hotspot and usually that is, you know, going out in the ring. So it might be that, you know, you're moving out in the suburbs than what you're currently looking at. But if your decision does come back to that house unit kind of question, just be aware of that risk.

And here's a question. When looking at properties, rents are not necessarily advertised, particularly for owner occupied. What's the best source of rental appraisal information for number crunching at home?

I mean as I said, I have a paid service RP data professional that gives me a rental appraisal and Residex also gives me a rental appraisal on properties. So if you have not got access or you don't pay for that kind of activity research then to get that kind of information at home. Once again, if you go to the back of the magazines, the data bank, you're going to find rental yield and standard rents. If you go to realestate.com property and you actually put a property in there, it will come up with and even you know, go into a certain area like I just did, remember what was the area I went to who knows with with real estate Roeville and looked into a property and you can see how those, those two tabs there that allowed me to get insights for and those graphs there on rental unit, you can choose one bedroom, two bedroom, three bedroom houses or units and actually get the rental yield per bedrooms which is always really handy. So if you're trying to get that kind of information, I would go there. Another area place that I would go to is suburbview.com go to their reports section and for whatever reason go to their three month yield section and up will come what one, two, three bedroom houses are renting and selling for or units. So you can get a feel for what that is. Another source of data I also go to essentially the rental bond board for each state government institutions doing fantastic research, not telling you about it, they usually come up with a great quarterly report that will break down per bedroom what the rent is as well. If you think about it, they're the bond board, they're getting the bonds, they're getting it from the renters for the owner occupiers. If you really wanted to have a marketer selling assessment, you're probably going to have to have a paid report which would be one of the RP Data Professional or Residex.

Residex. Yep. Margaret, Excuse me. We're considering renovations for our house for a future sale two or three years away. It's late 70s, double brick cereal walls, large house, three king sized bedrooms, large office, wine room, enormous pantry plus formal lounge, enormous open plan.

Sold. I mean it's just a one room.

We want to update it as well as make it better for pre sale so better for themselves and, and also for pre sale we're considering changing the aluminum window frames to black powder coat instead of white we install we are installing double glazing as the windows are no longer compliant with the thickness etc. And sliding doors to the patios, etc. Also considering rendering. Not sure if you would recommend this or the black frames. Would this be enough to update the exterior?

Margaret, what suburb is this in? Whereabouts are you? John, do you want to have a comment on this?

Sure, yeah. I mean the first thing that occurs to me is just kind of the never renovate to your own tastes. And I'm not saying that you are here but that's always the big bad guy to watch out for. So when you're considering these things, whether it's you know, black window frames or all that kind of stuff, it's I guess the no man's land that you live in a little bit when you're going to be living in it for two or three years. And this is often the thing that you hear about when people are buying an investment property but they also want to stay in it as a holiday house and it's Then, well, is it your holiday house or is it your investment property kind of thing? So that's the first thing that occurred to me here is you're renovating for yourself because it's, it's fine to renovate your own taste. If it's your home, you're going to be living in it for years and you want it the way you like it, there's nothing wrong with that. But if you're renovating to suit the market needs, then your own taste really don't come into it. And the idea is that you need to be spending the minimum amount of money to spend to add the maximum amount of value. And that's according to the, really the mainstream tastes of the target demographic, whoever that target demographic is in your area, whether they be, you know, older people with, you know, kids that are at university age or their younger families or whoever that demographic is. And that, and that's how you tailor your renovation. So the bathrooms will be different, you know, the styling will be different. All those kind of things will come into play.

And look, you know, I'm just going to share my screen again. I've just had a quick little. Tell me if you can see my screen, Margaret. So I've just basically pulled up Davenport and three bedroom, not king size but three bedroom houses and to just get an idea of what others are doing. So as John said, you know, when you're looking at renovating, one of the best sources of information that you can get is go and see what everyone else is doing and, and what's selling. And it doesn't look to me like anything. He's powder coated, John. I'm seeing wooden frames mainly, but nice view. I like Davenport.

Yeah. So I mean I'd. One person I was speaking to was changing the, the roof tiles from tiles to Colorbond because he didn't like, you know, terracotta roof tiles. And it was like you had a look at the street and nearly every house had terracotta rooftops. Why are you going to drop ten grand on a. It's not adding to your profit, you know.

Yeah, I mean, gosh, I've got to say the, the cost of replacing all the windows in a property, unless there really is a significant problem. And it doesn't look to me like, you know, just looking at this, that everyone has powder coated kind of window, window frames. So I just, yeah, I'd be kind of wondering.

Worth looking into. Yeah, we, we talk about things in terms of low return and, and high return items and in some cases there's no return items, like for instance, replacing your stumps is a no return item. It doesn't any add any value to the property, but it's got to be done because you know you're not going to walk into a renovated house when the. When the floorboards are smack against the dirt kind of thing. So that's a no return item. But a high return item would be something like, you know, resurfacing a bench top on the kitchen or you know, the light fittings and the painting and stuff like that. Really high return because they're low cost to do. But they had a huge amount of value to the property and it's all about the perceived value. So how much you spend on it. The market doesn't really care how much you spend on it. They are looking at what they think it's worth. What their perception of the value of the house.

Yeah, I mean it looks to me like some of these areas have got patios, et cetera. So there might be some real value in that. But yeah, I'd be thinking. Thinking more about whether. Putting all my money into the aluminum frames. If they're. I mean, you say that they're not compliant. If they're not compliant, then obviously you're going to have to do something. But yeah.

Not compliant with what though?

I don't know. Is there a standard on client?

If you're doing a new one, you'd have to have the glass compliant. But if you're selling an existing house, then there's no compliance issue. Unless there's something I don't know about, but I wouldn't think so. Cornelius has got a question. Hopefully we.

I think I entered that.

Have you. Okay.

Can we download the webinar? Yep. No, no, but you can listen to it.

You can listen to it. Yeah, but we host it on YouTube privately and inside the membership pages. But there's not a download button. The reason all of our other videos are downloadable and that's not is because of YouTube. And the reason we use YouTube is because as like tonight, we've gone to hours and to for us to put a video up there. It would never even be able to play because just the link to that video. So YouTube makes it play nicely. Robert, I heard an idea in a podcast about lowest acceptable land value price. The idea was that it's the land which goes up in price. Ignoring the Renault. They said 60 to 70% was the lowest they'd go for a house for houses and 30 to 45% for apartments. What do you think? Think of this as another gate to go through for a particular property choice. Do you understand that?

No. Okay. Okay. So they're talking about how they buy a property, and they're buying a property based on the land value. So obviously you can get information regarding land value from rates, notices, etc. And what they're saying is that, that houses have more land value than units. So houses, they want to. If they're looking at the land value, the land value has to represent 70% of the value of the property, and units would be 40% of the value of the property. I'm gonna have to think about this. It's an interesting question, Robert. What I might, might do might be.

Homework for next week.

Yeah. I might take this offline and answer it in the network. But I think what they're saying is that houses go, sorry, land goes up in value. And there's no doubt about, you know that in my mind. However, having said that and having interviewed John Edwards, he's talking about units have outperformed the market in some areas. So, you know, land for me, you know, you can't, you can't replicate land, you can't get more land, but you can keep putting units up and up and up. And what I think they're saying here is that they want to have at least 70% of the value of a purchase that you're making for houses to be that land value. So the house value is only 30%. So it's really, I guess, saying that even if you renovate the property that you're not going to add much value, which I completely disagree with. So, Robert, let me have a think about that. I am going to. I think this is the first time we've had to take this offline and have a look, John, or something. But I'm going to send me. If you can send me the link to the podcast. I'll have a link and I'll have a look at that and get into more detail and come back to you.

But yes, Lorraine just followed up on the downloading. She said you can download from YouTube. So that might mean that you can click on the little YouTube icon and go to. Straight through to you YouTube instead of where it's embedded on our membership portal and you might be able to download it perhaps somewhere there.

Robert, you're answering in the chat box there. Do you. Can you tell me what. Can you just type in what the podcast is or direct me towards it and I'll get to the bottom of it for you? Rose.

Rose, I have a property which has.

Three more questions, guys. So I'll answer these and we'll get, we'll let you guys home.

Which I've held for seven years and increased 50% in value. I feel it is not good enough. So plan to sell it. Do you think I should sell now then use all of the profit to invest into a new property or just continue holding, then buy another one but with much, much smaller budget?

Okay, so it's gone up in value. You've had it for seven years. Years. So in theory, you know, I would expect it to be closer to almost, you know, doubling in value between 7 and 10 years with good growth. So it hasn't really had a good growth characteristics as yet and you feel that it's not good enough to, not good enough to hold in your portfolio. So you're going to sell it. Do you think you should sell it now and use all the profits to invest in a new one? Look, Rose, I think there's probably going to have to be a lot more research done. You know, sometimes you buy in an area and, you know, you look back and I speak to people all the time and go, God, I wish I didn't sell. Nothing happened for years and all of a sudden it took off. So you might just be really at the outer hotspot area that everything is rushing towards and as soon as you sell it you're going to kick yourself because it does 20% the next year. So you really need to be doing, doing that future analysis on that property or that area and seeing is there infrastructure plans, is there some changes in the area? Go to the council and ask them and have a look at are they getting more developments than they have before or applications, etc. The town planners and the councils are a great resource of getting information from. Just because it hasn't moved doesn't mean that you're going to have to suck up the purchase price and the selling prices and the purchase price for a new property. If there is some equity in there, you might want to, and you're still in two minds about whether this property has some potential for growth, then what you might want to do is take the equity out of that property so it has gone up in value and go and buy something else. I think that this really comes down to a bit more research on your part on whether that property is going up in value enough in the future, if there's some predictions or if it's just holding you back with your borrowing capacity and it's best to get it out of your portfolio.

Lorraine. Hi Jane and John, I just thought I'd ask you about the interviews that you have done with Jan Summers and the lady from Tasmania. Will they be available sometime soon?

Oh John, da da da da. Call them podcasts. We're doing it. Yes, we did interview Jen Summers. Oh my gosh, our idol really, isn't she?

Yeah, absolutely.

And the lady from Tassie, the, the low income earner who's built up a very large portfolio. Yes, I, you know it comes up every month and I say I have to go and convince her to get on online and do that interview. But John and I are working hard on putting together some podcasts and some.

Other great guests too.

Gosh, we have some wonderful people that we've interviewed. So yes we are doing that and by the end of the year you will see something. Lorraine, we're still working on so many different things.

We're getting some help at HQ here so things are going to move a bit faster.

Yeah, yeah, absolutely. So watch seek.

Hi Jane, I'm looking at buying property in Melton. This is Indica. I'm looking at buying property in Melton Victoria to renovate and sell in 18 months. Do you think Melton has potential to grow?

Do I think Melton has potential to grow? Well I did just download Milton when I saw your question pop up there. So let me just see what is happening in Melton. So I'm going to share my. Am I sharing my screen?

I think we forgot to bring it back.

Okay, show my screen. Let's see showing screen. So I'm going to show you this suburb report Melton once again. Okay so let's have a look what's happened in Melton. So 170 to 245 in the last 10 years. We've had three and a half percent growth over the last 10 years. Houses, we've got house sales most of them within the 2 to 300 price point so you know over 120. So quite significant. That is the price point where people in the last 12 months have been buying and this is the growth for the next one to the next five years is 1% and 8%. I would suggest that Melton and this is kind of a bit weird because that Melton Western growth population area is where everyone's talking about population going in the future. But I think they've been talking about it for so long the developers have got in there and completely you know build it out to some degree and, and there is predictions here of not a lot of growth. So you are hearing Correctly my worry would be in that area that there's a lot of new properties and buying new means that you don't have the opportunity to add value or distinguish your property. And it's the same as buying off the plan in a great big block of apartments or any block of apartments. You know, if the person has to, there's a desk person in the area that has to sell, then all of a sudden that sale price becomes your sale price and they have to rent and they want to drop their rent to get it rented quickly, then that's your now comparable rental price. And just be careful like we saw in Point Cook at one stage, that a lot of the developments, new developments out there, they seem to be going for the same price, which is good. And there wasn't a lot of increase in value but they're actually selling them on smaller blocks of land. And you know, you kind of have to be really careful.

Not apples with apples.

Yeah, compare apples with apples. But look, just looking at this information and top down this tells me that Melton's got not got a lot to go movement. So if I was you, I'd be doing a bit more research out there if I was going to buy. And once again you're buying, renovating, selling. So capital growth is not that important to you Indica. So you know the pricing disparity is. So you're looking at older style properties and going out and visiting the renovated properties and just seeing what they're selling for and making sure that you've got that pricing disparity. So buy, renovate, sell. You know you're going to get this in in future modules. But usually a structural renovation, structural renovations under about a $650,000 price point are difficult. We just looked at the price point up there between you know that three to four hundred thousand. So sorry, two to three hundred thousand. So you're probably using 40% of the value of the property, let's say $300,000 property, 40%. We're looking about, you know, one hundred and twenty, four hundred and twenty. You need to in costs to doing a structural and you need to be selling around 180 to make money, a bit of a profit and pay your capital gains tax and everything. So there's not a lot of margin in there for mistakes and you really going to. We're talking about you buying around 300 and selling around about 500 to make a profit. So you're looking for extraordinary pricing disparity. So just be aware of that. It's going to Be tough.

Eileen. I bought a property in Rathworth, Hunter Valley. The price higher. Higher than the median price. I just want to sell the property and buy another one. What should I do? Wrathworth.

Okay, so you've told me you just want to sell the properties. It sounds like you've got now. I wouldn't be selling just because that.

Actually it might be R A W. Where are we?

Got it. Yep. I wouldn't be selling a property just because it's these reports that I'm generating. These sub ed reports usually cost $90. So just generating these, get the tab tomorrow. But I wouldn't be selling just because you've bought over in a higher price range. So don't let that govern your decision completely. Because experienced investors can buy over the median or can buy over the month, but they know that they're doing it where inexperienced investors don't. So just understand why you bought for more. Did you pay too much? Which is a different thing to buying higher than the median. I like buying at the median or around the median because I want to have the typical type of people and the most demand for my property to rent or sell if I have to sell it quickly. So just, just because you know you've bought above the median doesn't mean that you've made a mistake. And I, you know, the cost of buying and selling properties is not to be taken lightly. So I'm just looking here at Rathworth. You know, it's gone up in value $100,000 in the last 10 years. So 2.7% hasn't done a lot the price points, you know, around that four, look, nine properties. Nine, 10, 20, 30, 40 properties in the last 12 months. So there's not a lot of sales. And the growth in the next five to eight years, 2 to 4% compared to Sydney. So let's be realistic here. We're not talking about 2 to 9%. We're talking Sydney's predicted to do 3% in the next five years and this area is predicted to do 2% and a lot smaller price point. So look, I wouldn't be selling just. But the fact that you've paid paid more than the median. But if that property deserves to be more than median and you're getting a great return for it, then it could be well worth keeping in your portfolio. But you probably need to do some more research around that and work out if why you bought it is still relevant and does it get you to your goals and you to what you want to achieve. So if it doesn't stack up, then you might seriously consider it. But don't take selling a property and just looking at these kind of reports as it doesn't work. Let's get out of it. You're going to have to look at the total costs of getting into a new property and your borrowing capacity may have changed with the lender changes that have come about with the ASIC and APRA changes since June 2015. So just be aware that just because you could afford a $300,000 loan when you took this property, you may not be able to buy or borrow that again. So just be aware of that.

Radio comes with a couple of people throwing in some last minute questions.

Oh my gosh.

Joey, with the goal of being buying below the market, do you buy properties by private sale or auction? Do you have auction strategies? I'll just let me take the auction strategies. I, I like auction strategies and all sorts of things. I consider that sport. I know Jane is less taken with being too tricky that way, but when you get to module.

Five.

Five. Yes, the right.

No, that's budget, six negotiations.

It's five or six. You're going to find it in there somewhere. Yeah, there's a whole section on auction strategies and entertaining videos. You'll see some very entertaining option strategies in there. Yep.

And look, buying below the market. It is one of my three ways in the strategy of making money and buying a property, you know, and, and not just to having plan A to make money. I have plan A, B and C. So. So buying private sale versus auction. What's easier? Buying below the market? Well, if it's private sale, then you don't have that entertainment sport type characteristic that John's talking about. And you possibly with private sale, have a better opportunity to buy below the market. But you can also put in offers before auction and if you're using a buyer's agent, they often have properties or even if you go directly to a real estate agent, they often, often have people who want to sell their property who don't want to market it and put it up for neighbors to go through. So often there's actually properties in private sales. So if you. I talk to buyer's agents all the time and they say about 20 to 30% of all of their properties that they end up finding for clients are actually private, not private sales, but off market. So.

All right, I think we can take one more and this is the very like.

Okay.

Cameron, Hello.

Hi, Cameron.

Oh, hello. How are you going? Can you hear me?

I was just whispering to John. Yeah, I Can hear you, can you hear me?

No problems at all. Thanks very much guys for putting this on.

Pleasure. Next month it just gets better. How can we help?

My question's a little bit of a convoluted one. Sorry for that time of night too, but I purchased a property a little while ago at a mortgagee auction. Did all the prep work and worked out what we're going to do beforehand. Costed it all out and we've been thrown a bit of a spinner in the council now regards to ceiling height in a part of the house, not code. And I'm just wondering if we. Well, if we should keep the original idea and spend the extra money and lift the ceiling height or whether or not we should keep the building in the same configuration it is at the moment. Because what we had intended to do is move the kitchen to the center of the house, use the Scott in basically a storeroom at the moment, open it up into more of an open plan and use where the kitchen was to generate a fourth bedroom under the existing roof space. So we're converting it from a. A three bed into a four bed. So that changes in the area at $75 extra a week for that extra bedroom.

Nice.

Yep. And it changes the three bedroom which is around the 273,000 to around the four bedroom which is about 336,000.

Great.

So to do it we're going to be incurring the cost of actually lifting the roof. Now I had actually planned to recover the roof, like rip the existing iron off and re roof it because it's a little bit old and tattered. So that was in the original budget, but. So there's not too much there. But it's mainly the framing of the new roof and a little bit of the wall, if you know what I mean. So we're just not sure which way we should do it. Whether or not we.

How big is the area with a low roof? Sorry, say again, how big is it? One room that this roof is not too.

What it essentially was was a removable house that was put there in 82. And what they did at the time was they covered in the veranda area on an old Queensland type house.

Yep, yep.

So the main house is 2.7 high, but the veranda area starts at 2.4 and goes down to 2.2.

Yeah.

So what council have now said that that's okay for the kitchen, but for the dining room which is in that 2.4 to 2.2 and for the front bedroom which is in the 2.4 to 2.2. It no longer meets their requirements. So they were happy for it to be there in 82. But if we do the property now, they're going to want it at the 2.4 all the way through.

Are you on a. Is it concrete out there or is it Stubbs.

No, it's on a elevated slab. Oh, sorry, elevate. Yeah. Elevated hardwood.

Because I know it's. Either way is going to be messy, but potentially you might be able to drop the floor in that section.

Yeah, we thought about it, we thought that. But we kind of went with the idea that if we've got to do anything, we might as well keep the floor level and lift the roof. For the only reason that. For the flow, what we're going to do from the kitchen area into the dining room, that's going to flow from one room to another.

No, I'd agree. It'd be much better to keep the floor if you could. And you can do that by lifting the veranda. It doesn't affect any. It's not under the eave or anything like that, the veranda.

Because we'll be. It's a skillion roof. The area that we're looking at lifting and we'd be putting it up, we'll be changing. Instead of having it like a skillion roof, it'll be more of an angled roof. So it would start at the. We'd actually pitch that roof up to the existing pitch and then angle that roof up and we could. We could incorporate that when we did the re roofing anyway, it's more the extra cost to reframe it. So we're looking at probably an extra $25,000 in building works.

Yeah.

Anytime you touch roof, particularly when you're tying in with existing, is expensive.

Yeah. We've got to put new members all the way through. So it's a little bit. Yeah, it's just taking a little bit of a hit to the budget. What it will essentially do is put it into that category that you were talking about in your book and that of not getting the dollar return that you would normally look at for a.

That three bedroom to four bedroom differential. That 25,000 additional works chews that up very quickly, doesn't it?

It does pretty well. It does. The only saving grace with this property is it was a mortgagee sale, so we picked it up for 216,000. When the meeting sale for the existing house is 273 and the median for a four bedroom is 336.

Yeah. If you bought it at the median, it's kind of like you get into as a renovator, you get into the solution mode, drop the floor or raise the ceiling and pay the money. Where in actual fact, you ask the question is, does that still get me to the goal of making the money that I thought I was going to make? So if you were Talking around that 260, 70 that you purchased it at, I'd say you've probably gobbled up, doubled up all of your profit. So you would go ahead. So if you bought it at the mortgagee sale at the 216, there's still profit in it for you. But are you willing to accept less? Because I know how hard it is to find mortgagee sales. You know, is it still worthwhile in doing this? Are you still going to make a profit out of it?

Yeah, looking good before obviously not having to spend that extra 20, 25. But yeah, I don't know. And that's, I guess that's the million dollar question, isn't it?

Yeah, it's going to come back to those numbers. Yeah.

And yeah, exactly, you're going to have to, I mean the rent returns great. You're going to get a better rental return, which is good. And it sounds like it's a buy and hold anyhow. So making that kind of investment now you've kind of. And this is the really good thing about the Trident Strategies. If you hadn't been able to buy below the market and you're just concentrating on renovating or growth, for instance, then you lose part of the way that you can make the money. So the fact that you've done that, you've actually built yourself in the buffer to cover these problems and costs. So to one degree, hats off to you. Doing the research and getting below the market. Fabulous. And seeing the twist under the current roof line where you're not doing that structural renovation. Unfortunately, you've been pushed into doing a structural renovation renovation. And you know, council, when council says, council says unfortunately. So, you know, I think you're going to have to just make sure, just check with your. Just do the numbers again and go, okay, if I'm going to have to suck this in, I can't think of any building way of getting it cheaper than the 25. Is there any?

No. Unless the only other thing that I thought of, you change the roofing material. So if you use something like a clip block or the builders refer to it as decking, which is where you've got sort of have a corrugated roof, it's got a flat and then a ridge and then a flat and then a ridge.

So you can get a lower pitch.

Yeah, you can run that at about one degree, particularly over, so it almost looks flat. I'm not sure how much that'll save you. You might be able to get 100 mil out of it maybe. I don't know.

Yeah, it's not so much that it gets to the point where. Where. Okay, if you've got to lift it the 200 mil, you might as well lift it at 400.

I was wondering if you could do. If that's the case. You're absolutely right. I was wondering if you might be able to do it and not have to tie in with the other roof if you could still come out strong.

No, that's the unfortunate thing because it would actually. What they've got at the moment is corrugated iron on it and the corrugated iron sitting at about 2 degrees, which is not quite good anyway.

Yeah, no, it's not.

It's not to code really the way it is, but to make that alteration and lift it at all would put it basically flat.

Yeah, yeah, yeah.

So Cameron, I think you're going to have to do the numbers and just work out if it's worth it or not. And thank goodness that you had a bit of buffer built in.

Not a problem. I guess you win some, you lose some.

Well, you know, you were really on the right track of this and thank God you had the buffer. So you probably, you know, you'll look back at this and know that you've saved yourself.

Yep, not a problem. Thanks very much guys. Thanks for the advice.

Okay, bye.

Right, we've run really late tonight but we've had lots of nice comments coming in the rain. Love you guys. Keep on doing more for this course. Such great value. Thanks. And Donna, thank you Jane. And John, my first mentor call. Certainly worth listening. I've learned so much in the last two hours. Look forward to getting my teeth into the next module.

Guys, please get into the Renovator network, those guys who are new to ultimate guided renovation and ask your questions. Be prepared for next month. End of the month we're going to be talking last Thursday of the month, 8pm Send your questions in. We've got a 1300 line that would really love you to. If you can't be there then please call in and leave me a message and we can play you talking to me. So. So look, just once again be active. Get in there. I really appreciate everyone's contribution tonight. As you can see, we're going to hang out here as long as we possibly can to give you as much value. I understand. Well, we've got hundreds of people here listening, but it's going to be up within 24 hours to the portal so that you can watch it on YouTube. So thank you and all the best.

See ya.