Your Property Success Mentor - July 2015

Hello, everyone, and welcome to the Call for July. Now, before we get started, I just want to make sure that you can hear me and that you can see my screen. So please just type in, yes, Jane, I can hear you and I can see your screen. John, we don't have anyone typing anything in. Hopefully they've got slow fingers tonight.

I might not have started it, probably.

Well, thank you, Gavin. We might be just talking to you tonight. Hopefully other people can hear us as well. Ah, here we go. Okay, well, look, it's great to have you on the call and I look forward to chatting to you all and I hope you have a lot of questions. John and I were just having a bit of a chat and we decided that there was less than a bit of a quorum. We might just have a masterclass and really reward the people who turn up on these live calls rather than listen to the recording.

Yeah, that's right.

So you'll have us to yourself and you can ask us anything. Well, within reason. So anyhow, I'm looking forward to chatting to you tonight. You know, there has been so much happen and we're six months into the year and it's been, it's pretty, pretty substantial. A lot's been happening in the finance front for investors at the moment. And I'm going to give you a peek at some of the new RP Data professional software that we have access to, which I am loving. And, and of course, we'll be talking, taking your questions, hearing from you. So look, settle in. Usually we will run this for about an hour and a half or till people stop asking questions. We can all go home early maybe. So look, these calls are exclusively for my mentoring students and the students of the Ultimate Guide to Renovation and my Investors Choice Mortgage diamond client. So welcome to each and every one of you and if it's your first time on the call, a very warm welcome to you. Don't be shy, please say hello and yeah, you know we're here to help. And please know that this is a nice, friendly environment and you can ask any questions there. Now, these calls do take place 8pm the last Thursday of every month, unless there's some great change. And I think we only have one of those a year usually, so you're not going to miss out. And please go back and listen to any recorded calls as well. If you do have any questions, you can leave us a message on the recorded message line or even email us@questionsourpropertysuccess.com now, as always, I have my co Creator of the Ultimate Guide to Renovation with me, John Hubbard. Hello, John. How are you?

Hey, Jane. Everyone.

Now, you've had a huge month this month.

I can only remember the last couple of days, actually. Do you ever get that when you're really busy?

You just can only call it Alzheimer's, don't they?

Yeah, it could be that, too. I've passed 40 now, so it's getting. It's all downhill from here.

Well, John, you've been doing something a little bit different. For those who've been listening, I know we've got a few new people on tonight. I can see Boone here is a first timer. And you might want to fill us in on what you're doing at the moment.

I've got two developments on the go, so it's been interesting week, actually, because they just seem to. All the disasters seem to coincide and you get them all in one day. And this morning was a bit like that. I wouldn't have known. I probably wouldn't have got out of bed if I knew what was going to happen today. So I was running around all day putting out fires. And one one property's got a. Has all this stuff now with the laws, and this is in Melbourne, but where your water would traditionally come out of your storm water. So the water that comes off your roof and down the downpipe and goes out normally into the curb and channel into the gutter in the street. And so now there's restrictions with all. Any discharge into the gutters. So what they make you do is they make you retain a certain amount of water on site. So you've got to run, you know, pipes and zigzag patterns underneath the front garden and all this kind of stuff. And then you've got to have a. Then they've got to go to various pits. And your last pit has to be the lowest point on the property. And if everything else floods, it will then flood over into the.

Oh, my gosh. I used to do this on mine sites.

Oh, did you? Okay.

Who knew that you were going to do some residential houses?

Yeah, yeah, yeah. Anyway, so it turned out no one had picked up. This was problem one of the day, mind you. No, no one had picked up that the. The garage was actually lower. Had a lower floor level than the bottom pit. Yeah. Which is on the front of it on the street. So it was kind of panic stations and we can't get. We're still at the stage of getting building quotes for this place. So we need all our engineering drawings finished and all this kind of Stuff. So anyway, eventually, so I was off to council and we worked it out and it turns out, unknown to the engineer and me and everyone else, that we can actually have an overflow pit that went into an easement which was at the back and just spilt straight out onto the ground, which is really, we thought was really unusual and the engineer had never heard about it before. So anyway, so we got around that one and then now you've actually purchased.

This development site with da plans in place, didn't you?

That's right. That's part of your strategy.

Yep.

So this one and the last one we bought with plans and permits in place and both of them we've just done minor changes, but not, not to the extent that they've slowed up anything. They've just been really minor stuff where we could see an obvious improvement to the layout or whatever. Yeah. And then. So the phone rings. What we found is on the other site, which they're building the. Or they're doing all the set out for. Or they're doing the preparation for the concrete. So they're digging the trenches and leveling the. For the slab on one of the units. And we found that the garage, which is supposed to have a meter walkway beside it and the house next door in between, the fence is only 500 wide at one point. So. Yeah, so the. What had happened is the. There'd been a survey that had been done quite a while ago in 2009, and the current survey wasn't correct. It was showing there'd been two fences built since that stage. And the. Yeah, yeah. So the. So the. Where this fence was in relation to the garage was narrowed right down to 500, you know, mil@ one point. So half a meter, which just kind of was stupid because you couldn't. There's no point having a 500 mil. We might as well have put the garage all the way to the. To the boundary. So anyway, we eventually worked out, we basically had to do our own survey and work out which measurements what was in the right place and what wasn't. So ended up sticking a tape measure over the neighbor's fence because we knew his house was in the right place. And then from there we could work out what had moved and it was his fence. So it's an awkward conversation that's going to be coming up with a neighbor shortly. So we built the garage. Yeah, we're going to build the garage in place anyway and then move the fence.

So I guess this is the thing with anything and I know that you've you know, you've been a renovator and flipper for over 20 years and now moved into developments and. And, you know, I've always been a renovator. Things come up, you can't anticipate.

No.

And a lot of the times, you know, you're, you're in that kind of immediate. You have to make a decision and make a call. And I recall this happening to us with one of the houses that we were renovating and I think I've shared it before, was that you're. You're often in so much in a problem solving point of view that you, you're solving the problem rather than asking for what. What's actually happening behind it. And I remember this case where we're in the middle of this renovation, this house, and the plumber came in and said, we've just found that the, the toilet and the laundry goes to ground. I'm like, oh, my God, who doesn't put a sewage system? And this is like a, you know, it had been student accommodation. The mind boggles. What was there? Thank God it was a sandy base.

But thank God it was students.

Yeah. And so we had to rip up all this concrete and put down the sewage line. You know, it's like eight grand later, which was not in the budget. You know, we had LA sewage line and we ended up living there for a while and we never used that outside toilet or the toilet in the laundry. And it was like, did we really need a second toilet? Was the whole conversation.

Yeah.

And we were in so much in the problem solving mode. We never actually stepped back and went, is this a problem?

Yeah, that's right.

So it's, it's, I guess it's a bit of a timely reminder that you sometimes have to. You always dealing with things. Nothing goes as anticipated. Old houses.

Yeah, absolutely. And it's the same. It's the same as renovation. I mean, the, the problems are slightly different with the development. It tends to be more around planning and council and civil engineering. Yeah. And that kind of thing. But as. Yeah. With, with the renovations, there's always. It's normally just the tradesmen kind of, you know, there's. There's at least a couple of fires to put out a week on a good week.

That's what makes it fun.

Yeah.

If it was easy, everyone would do it.

Yeah. Most of the time it's pretty enjoyable, I reckon. I like the idea of kind of having to make decisions fast and then. Yeah. You kind of live with the consequences.

Repent slow.

Yeah, that's right.

Well, we've, I've had a big.

What about you?

Well, I'm glad you asked. There's lots of things been happening here. Well, it's been a big, a big revamp renovation year for our household. A couple of our properties have come up for rent and we've taken an opportunity to do some quick little Renaults. So earlier in the year I shared a quick little bathroom Renault that I did on a unit over a couple of weeks in Sydney and another property in Sydney actually came up for vacancy recently and decided to do something with it.

And these are, these are ones you've done with a project manager, is that right?

Yeah. And I have to say that I, being the control freak, I'm going to say that I am with renovations and having project managed them all and down to the last dollar and negotiated out of everything and negotiated all the way down to making everything economical. It's so frustrating to actually relinquish that to a project manager and actually have someone else do it. And I'm saying take photos for me daily and send them through. So we did have a bit of a hiccup this week. So what I'm doing with this is a, it's a little tiny workers cottage in near Newtown in Sydney and like it's only on 50 square meter of area, kind of two bedroom up down terrace and it's going to be painted and completely carpeted and new tiles and a whole new K kitchen. So. And as Lenny, my builder has been pulling out the kitchen, he sends me photos going oh my God, look at the dodgy plumbing job. And he's sending him pictures of plumbing with the, the pipes. Don't you know we're going like a what, 60 mil to a 30 mil with holes and water going everywhere and it's been like that for years. So anyhow, been an interesting experience and I thought I'd get the value or in to value the property before the renovation and do it afterwards and see what we've done.

And did you pay for that yourself, the valuation?

Oh, I did it through a bank so I did it through an upfront free valuation we'd have access to. So that was great. Unfortunately the agent couldn't make the first appointment and the second appointment was for yesterday morning which was about an hour after the kitchen got pulled out. So the valuation says I've just valued this house without a kitchen. I reckon It'll cost 20 grand to do the kitchen. I'm like whoa. Well I can reckon I can do that for a Lot less than that, but anyhow. So, yeah, so I didn't get a true valuation, which was really disappointing. But that's okay, we're moving forward and so that's exciting. So a couple of weeks of a quick reno. In actual fact, this probably is going to be looking quite different. Very, very different in actual fact. So that'll be good. And at this stage they're talking about a rental increase by, of at least 80 bucks a week. So.

Nice. And any plastering or any, any, anything like that is there at all?

Pretty well according to Lenny, the, the, the build, every time he touches the wall it falls apart.

So imagine it's, is it solid brick or lather and plaster?

Solid brick, yep. And, but the person I bought it off back in, gosh, 2002, 2000, early 2003, they, they'd done a lot of home handyman jobs themselves. A bit of electrical was home work and the kitchen was built by themselves and it turns out that the frame for the back door was built by him with a few pieces of wood. So everything's been hanging together. But one of the photos from Lenny showed the fact that the rendering in the kitchen out the back goes to about five foot six and he reckons that's how high he could reach because there's about two foot afterwards it's not rented above. So, you know, all a bit of fun. I think probably one of the reasons I got it below the market value at the time, which is all good. So yeah, a bit of a revamp. Renault, which is lovely, nice. Loved seeing the transformations and obviously getting straight in and being able to do that and getting it back on the market pretty quickly is important. So that's pretty exciting. Been working with some great new clients and brainstorming some issues with other clients. I spoken to someone client about, about four weeks ago who was in a bit of spot of bother with a house in a mining town and brand new house land construction and had been renting for quite a significant amount of money and had been vacant for three months. So we had a bit of a phone session on strategies on what he could do to improve that and went through and talked about, you know, well, what are people after in this area.

And you know, straight for the target market.

Who's the target market and what are the needs and wants of the target market. So we kind of mapped out what the, who the target market was, which is generally a, you know, 20 to 30 year old male, single, who's flying fly out and works pretty hard during the week and wants to come home and relax. So we decided that someone would want to relax, would probably want to have Foxtel. So I suggested that he puts his hand in the pocket and pays for some Foxtel and covers that and advertises for that. And the real estate agent rang up and said, I cannot believe the difference. There's so many properties, rental properties on the market and we've gone from 90 clicks a week to a thousand. So he's like, the Foxtel got it rented really quickly and so very happy clients. So that was great that I could help with that.

Wouldn't it be good if Foxtel worked like that with all property?

I know. So that was really exciting. And lender changes, I guess I can't. Wow. Where do I start? I sent a communication out to the Investors Choice Mortgage clients yesterday with kind of an update of where everything is. And it's kind of. It's really difficult at the moment because every time you respond to one change, something else changes. And you kind of want to sit back and say, let's just wait till the dust settles and then take some action. But there's that moment in between where you think there's opportunity here to do something. And especially as an investor, as we see things changing, do you want to just outline the.

For people that haven't followed it from the start, the kind of major things that have happened?

Sure. So around December last year, apra, which are essentially the governing body for the banking sector, made a few comments around the fact that they weren't happy with the way that the lenders were dishing out money. And they felt that their money was pretty much pouring out so freely that they wanted to curb this back. And so they said, we're going to give you a chance to curb back your growth of investor lending as a percentage of your loan book. We prefer it to be 10%. Now, what that means is the major banks have very, very large loan books. So 10% growth they can kind of absorb where small lenders not so much, but it still means quite a significant change. So there was some kind of changes in May, we got, you know, a bit of a heads up. The big bank said, look, you know, we've been doing some pretty aggressive pricing, so any. At one stage, you know, I was getting 1.2% discounts for people borrowing over $750,000 off the standard variable rates. Anyhow, they came back and said, for investors, we're not, you know, we're going to kind of change that. So, you know, we kind of responded to that. A little bit. It was, it was nice. We've had two interest rate cuts this year. So you know, people were getting 4.2, 4.4, 4.5% variable rates. And then around end of May, beginning of June, the lenders decided that APRA was getting a little bit more antsy and about this and they decided to change servicing. So there was pretty much servicing changes overnight. So where we'd have, you know, an interest only, let's say a million dollar interest only loan where at 4.5% you'd be paying $45,000 in interest a year, that would be what you'd put into the mortgage broking calculator to say what your other debts are. And it changed to not taking your actual interest only repayments, but taking your loan limit at a buffer rate, depending on the lender, somewhere between 7 and 7.5% at principal and interest and sometimes over 25 years. So that $45,000 for existing debt then went to something equivalent to around about 78,000. So people's borrowing capacity dropped significantly. And so we kind of responded to that for a while. We had a few lenders that hadn't introduced that, so that was good. And then pretty much all of them did and then their timeframes blew out. So you know, to have someone with a seven day finance clause and we'd have a 15 day time period that it was taking Adelaide bank for instance, to pick up a loan. So you know, a lot of pressure and then what we've had in the last probably three days and to the this is how fast this is happening. I had a meeting with the national manager for Macquarie bank for Brokers on Friday afternoon and I said, are you following CBA and making all these changes to investor interest rates? They said absolutely not. And I got an SMS at 5:30 whilst he was on the way home on the train saying, I've just heard that we are tomorrow morning. They weren't really even keeping the big boys in the loop. Daily we're getting calls from the business development managers, from banks saying, look, I'm so sorry and had a devastated business development manager on Wednesday afternoon called me from AMP and saying, you know, we have obviously been in the investor market and we are now going to have to leave it. So the big difference is of all the lenders I see is amp, and that's predominantly because APRA has given everyone now that 10% growth restriction that they have to achieve by the end of their financial year and AMP unfortunately has an end of financial year in December So they have four months to do it and everyone else has 11 months. So they have completely pulled out of the investor market. They won't even do top ups for investors unless they've got a cross collateralized home and they're putting their interest rates up by 0.47% and all the other lenders are putting their interest rates up for investors by between 0.27 and 0.29 at the moment. So things have got a bit tough. I mean if we're being realistic, you know, we all kind of paid interest rates at 8.5% at some stage in the last 10 years and in the last two months we've had a half a percent reduction. So putting interest rates up by 0.27 is, you know, kind of losing one of those. But I think what we're going to see is some other changes. We've had some lenders like Westpac say that they're not going to go over 80% for investor loans. We've had ING and Bank west actually reduced their LVRs quite considerably as well and ING actually came back and said that they were not going to lend over 80% to any properties in New South Wales. So we've really got some lenders actually targeting that New South Wales market. Other lenders have pulled back on self managed super funds. So St. George is probably the biggest self managed super fund lender and they've pulled back to a 70% loan to value ratio and I expect to see Macquarie probably to do the same. And yeah, so that's a bit an A and piece pull out of self managed super funds completely. So you know, it's significant changes. However, as we know Warren Buffett tells us, where there's change, there's opportunity. And I think what I, you know, if anyone read my newsletter two weeks ago from your property success, I think there's some real amazing opportunities for people and I respected a client today actually who, who were saying I've got no borrowing capacity. I said well you're about to move. You thought about, rather than using your money towards this investment property, trading your home as an investment property and buying your home because the amazing discounts. I was talking to one lender today is doing 4.1% for owner occupied loans. So I think we're going to see some really incredible discounts and opportunities around people upgrading in their homes. And for that reason alone I think that's why we're not going to see significant reduction in that Sydney or Melbourne market. And I've been talking to commentators in New Zealand, where this. They're about eight months ahead of this for us than we are. RBA over there did something similar and reduced lending to 80% LVRS. And that Christchurch and Auckland market hasn't come off.

So. Yeah, I read something about that today too, about. There's a whole section of the majority now are rubbing their hands together thinking they've got rid of the investors out of the market, now they're going to go for it.

Well, I did a discovery call with a new inquiry to Investors Choice this morning and this gentleman saying, well, I just have to act now because I'm going to go into hibernation for a couple of years until the market responds. I'm like, no, no, no, this is when you should be pulling out your equity and getting ready to buy because everyone else is leaving the market because they're worried. This is where people make money. So I don't see the market coming off. And gee, I have to say that we're seeing just a lot of confidence with investors that are still, you know, they've prepared themselves for changes and ready to go.

Yep, yep.

So it's good fun.

Yeah. So I guess in. It's. It's really just affected your capacity, hasn't it? You can't, you can't get the same deals that you could. The interest rates are higher and just to summarise.

Yeah, look, just to summarise, the APRA has, has jurisdiction over deposit taking facilities and people who get their money from overseas or elsewhere have those restrictions. So we still have four or five lenders on our books at the moment that are not buffering the existing debts as the major lenders are, and who are obviously doing a lot of business and they're taking the opportunity as they can to expand their business. I think we're probably going to see some real blowouts on timeframes as lenders can't keep up with the kind of business that they're getting in the back office is taking a long time to do assessments and even, I mean, it's been embarrassing some of the conversations I've had to have with clients recently where, you know, bank of Melbourne St George just taking three and a half weeks to assess a loan application and people trying to buy properties as it's absurd. So, you know, on one hand you're kind of doing a full assessment for people and trying to find the right lender to suit their specific needs and policies that match their employment and you come up with this lender and then all of a sudden you say, well, in actual fact, we're going to have to go to the quickest lender, which is not really the right lender for you. The long term strategy, we're going to have to choose. You know, I think, I mean, it's great for mortgage brokers. I think that, you know, 52% of Australian loans are written through mortgage brokers and it's going to go to 60, 70% quickly because most people are going to find it very, very difficult for themselves to do assessments from bank to bank. So, you know, I think the cream will rise and it will be better service for people out there looking for loans.

Yep.

So, yeah, big, big month.

Yeah, big changes. I'm surprised that I'm kind of. When's the last time it moved this significantly or has it been directed in investors in this way in the past that you can recall?

Look, you know, there's been some significant changes to the lending over, you know, the years. There's been changes in the way that lending could be done and we had the Aussie home loans and those coming to the market. I think the next big change was, to me that I experienced was the gfc. And, you know, overnight, you know, we had a lot of business going to Macquarie bank in 2006, 2007, and they rang up and said, we no longer have, we're no longer open for business. And they closed overnight.

Yeah.

Remember all the load docs disappeared.

Oh, gosh, I know, yeah, I can imagine that would have been a big part of the Lodox throughout that market completely disappeared and so did a lot of the mortgage brokers writing them. So. But yeah, it was, that was probably the biggest change that we saw. And you know, I think it's like the property market, things go in cycles. Everyone's saying, look, we'll be back. And you know, speaking to amp, they're like, look, we'll be, we'll be back by December. We just have to toe the line for a bit and get those numbers under control. So, you know, I think, as I said, I think it's a great opportunity for people to take advantage of what's happening. So great time to talk about refinancing your home loan, that's for sure.

Yeah, that's right.

And I did assessment of my clients recently and I think having been in business for over 10 years, I looked at, did a Residex report for a lot of them at what they'd purchased the price property at and what it's valued at now. And here's the interesting thing. According to Call Logic. This week I had an embargo put on me that I wasn't allowed to divulge any of this information until it came out officially. But the median house price in Sydney went to a million dollars. So that's a median house price. That's not like the rich suburbs. That's median. So what that means is that for people living in Sydney, their house may have made more money than they did last year. You know, if you think like a 22% growth, some of them, you're talking about over 150 grand. So, you know, and the average investor, average male income is like 75,000 of females, 59. So, yeah, you know, we're talking about average more than the household income of the. The employed people was made by your home last year if you lived in Sydney. So, you know, those kind of numbers are significant. No wonder APRA was a bit worried, I guess. But I don't. I don't see that changing. So who's this? Lynette? Yeah, it's good to see the banks are throwing money around. Nice place to be. So, yeah. So it's. Look, it is an interesting market. I don't think as investors, I don't think we should be concerned. I just think we should, you know, change ourselves and. And go where the wind's going at the moment and see the opportunity and try to understand what it means to us. And I mean, as I've been saying since January, it's time to get equity out of your property and start stockpiling for. For when things are good. So it's coming.

Great. Good to know.

Shall we get into it and see if anyone's got a question?

Yeah, we better chat. Better do the housekeeping.

Yeah. Okay, guys, well, you've heard enough from us. Well, we've had some exciting months. I hope you have an exciting month, too. So we really keen to hear from you. So, first of all, the housekeeping look, if you've got a computer experiencing problems of hearing, is there anything. I know we had one person whose audio wasn't working has already left us this evening, listened to the recording, but you know, the phone number you can call in on that might help is found on the sidebar under the audio options dropdown menu. Obviously, if you can't hear it, you probably didn't hear that instruction either. So look at the screen. Look. You can call that number from landline, mobile, Skype, whatever. If you're on PC, it looks like this. So when you have a question, all you need to do is raise your hand. By pressing the hand icon. It's small, it can be hard to see. So clicking on the hand button will notify me that you have a question and I'll unmute your line. When I do unmute your line to take your question, you're going to get an automated message that says your line's unmuted. So, you know, I'm chatting to you and look, I prefer to speak to people so we can get to the bottom of your questions. Or, you know, you might want to share with something exciting that's happened to you this, this month and otherwise write your question into the box if you don't have a microphone and I'll get to those as well. What else do you want? Anything else? I think it's.

Don't think so. Not a tech support call?

No, it's not a tech support call. That's how I felt today on tech support. But I'm definitely not the tech support person. So anyhow, I'm hoping people have questions. I haven't seen any hands go up yet, but I can see we've got a few people on the line. So yeah, love to hear from you. We've got some recorded questions. I don't think we actually got a voice question this month. Did you?

No. Another month goes by with no voice message. I know there was one last month.

I'm going to persist on that. I'm going to keep up with that little software package and hopefully someone's going to leave me a voice line question at some stage.

Yeah, there is some email questions though to questions at your properties success.

Okay, so we've got one from. Who's that?

We've got one from Ross. I'm going to bring this over here so I can see it. Looking at subscribing to Ripe House or RP Data to help me carry out my research as Ripe House have now for a short time only a monthly subscription which is the same price as RP Data. Okay, so some kind of comparison. Yep. Okay, in your opinion, which research tool would be best for someone who is starting their search?

Well, firstly, let's talk about RP Data Professional because I'm pretty excited about that and we shot some really cool videos I think last week on it.

Yeah.

So RP Data Professional is different to RP Data Consumer version which just came.

Out at the same time. The timing wasn't great.

Well, RP Data, the consumer version, previously I know people were paying hundreds just for state access and their new property value.com is kind of a consumer version of RP Data Professional with a lot less functionality and actually I've got the prices here, I think they're $99 a month and they have three and six month subscriptions. Just as an incidental, John, I have been in negotiations with RP Data about how we can help people out if they did want to have that non premium, you know, the consumer version of the property value and we've got a discount for them. So watch for your emails. I'm going to announce that soon if people are keen. Just, you know, we want to be able to help people out who, who want that. But the RP Data professional obviously is only usually for real estate agents and mortgage brokers and people in property professionals and gosh, the functionality. I hope you've had a chance to have a look at my tutorials on it because I'm really impressed just being able to generate reports that you're after. And I spoke to someone on Tuesday who was after a. They're looking for three bedroom properties within a certain suburb and I could pull up comparables the last six months of sales and what were on the market at the moment. Even down to the streets he was looking in that he targeted down to based on the census information.

Yeah, it's extraordinary the amount of information you get. I mean I love the one you go and look at a property and then you've got the app and you stand outside and point the app at the neighbour's properties and it brings up all the prices of the.

I know I did that the other day and I'm sure my neighbor looked down and went, what are you doing? I'm like, I know how much your house is worth and what you pay for it. But you know, that aside, bit of fun but yeah, just driving along as the passenger driving along and just seeing the for sale, you know, past sale information.

Well, this is a nice neighborhood. Point the app out the window.

I know you're gonna have these people. It's like those Google things that drive along but anyhow. So Ross, back to your question. Very good question. And one of the other things about RP Data Professional and the reason that, you know, we're really pro of bringing this to you guys for the price that we've been able to do it because for other professionals what we've got.

For the monthly, it's a fraction of what.

Yeah, I know other property educators are charging two or three times as much of this for a monthly access. So you know, we're really excited as an opportunity. However, how is it different from Ripe House because we love the Ripe House information as well. And students of the Ultimate Guide to Renovation know that we have a really good relationship with Jacob from Ripe House and we use a lot of his data for some of our analysis. And I think the thing that you have to keep in mind about these two pieces of software is they're both very powerful, both around 97 bucks a month. But the right palace information helps you get to a suburb level. And when we talk about the ripple effect and understanding about the suburb information and some suburbs are better, Jacob's really been able to find or develop some algorithms that give you, you know, based on your strategy, be they cash flow growth or renovation and flipping, you know, that pricing disparity stuff, he's been able to really categorize that into that software as well as the differential between, you know, maybe what, two, three bedroom houses and, and give you some.

I think what I probably more analysis in the.

Yeah, and what I really love about it is that he's done the information around, you know, within 100 meters of a school, for instance, there's. He's done all this research to see that the prices are actually lower than, you know, past 100 meters from school. And they get to a point where they're 600 meters in school and they go down again. So he's applied that to the algorithm. So when they come up with a property and it says, what do we estimate the price is worth? And you see this. How far from the public transport and drops down 2% and how far from school and it might go up by 2%. You know, I like that complexity.

It's all from an investor's perspective.

Yeah. So from that point of view, getting down to that suburb level and that suburb interrogation and that analysis, a lot of it is intuitively built in. Whereas with RP data, it's really the raw data and it's up to you to do the analysis. And the territory maps, I love that territory map. You can develop your own territory with the RP data professional software and create a territory and maybe have a search of just two bedroom houses, for instance. And as they come on the market and as things happen, you know, you're alerted to them and you have watch lists and you can generate, you know, the automated valuation modeling which is the same as what the banks use. So, you know, you have a lot of information there as well. So I mean, if you have a chance to try them both, I really suggest you to, you know, do that.

But Jacob's also got all the demographic information which is the overlays which are really great.

And he's integrated some of that census information of where the owner occupiers live and investors as well. So you're really getting that income over. Yeah, all that kind of crime rates and public housing and all of that's actually applied to the suburb.

They are pretty complementary actually. There's not that much overlap between them.

No.

And I guess if you are just for a short period of time, you know, three, four months, whatever it is, that search period, it's, it's probably not such a silly idea to be using both of them.

Well, I don't think so. And I mean, you know I transfer myself back to 10 years ago when I started looking for property, 15 years ago, my God, time flies and started looking for property and you know, money is, it's kind of, I guess it's kind of relative but you know, I wasn't prepared to spend a lot of money but I probably took years longer because I wasn't prepared to spend the money and I wanted to work it out myself. But the tools weren't available then either. So I was generating my own spreadsheets and analysis and tools and trying to track things. But to track things you need time. So you know, between. I want to track over three to six months. Well, you lose the three to six.

Months whereas you'll pay one way or the other.

Yeah. So this software's already done the last three to six months and in actual fact the last 20 years for you of information and interrogation. So you know, maybe paying and as you said Pre approvals last three months. Most people take about three months to find something. So maybe 600 bucks over three months is not such a bad investment.

I mean it certainly gives you, it makes you so much like for instance the RP data stuff makes you so much more informed when you're bidding on a property because you can see it's past sales history. You can see what all the comparable sales and you're able to, you know, select a whole bunch of comparable sales, dive into the professional version, dive in and have a really good look at them and then decide yourself whether they're comparable or not. So you can end up getting pretty accurate with what your buy price is and then you can experiment with all of the different things by adding a bedroom and trying to work out what a resale price would be too. For instance, post renovation or adding a bedroom or whatever.

Well, look, I spoke to a client yesterday, a long term client who was really quite concerned about upcoming vacancy and what the agent was predicting the rent should be for his property. And we're talking once again mining town drop of 1400 to 400 bucks a week kind of rent. And I generated through RP Data a rental comparison and said, and he was saying well I don't know what I'm going to move agents so I don't know what agent to go to. And I pulled up the last six months of rental information and went well this is the agent that's got all the business in town and this guy doesn't. So you know, it's like oh, very interesting. And this is how long these properties have been advertised for and this is what they were first advertised for and this is what they ended up advertising for and this is what other three bedroom houses are now renting it. So you know, just having that kind of due diligence I think is really, really beneficial and it gives you the information that you need to make the decision as an investor to go forward and do things. So Ross, I hope, I hope you, I hope that helps. Ripe House RP Data Professional and remember with RP Data Professional the little tutorial I shot last week, they now have the iPad version and I asked them today if the Android was coming and they said yes, slowly change slowly. You want too much at once and that's fine.

Okay, you've got another question that got emailed in. What dollar value do you need to have invested in residential property market to approximately replace a salary of $100,000 a year pre tax? That is a second question.

Well Robert, I'm glad you asked this question because I did some numbers for you on it and I'm glad you emailed it in beforehand. So I'm itching to show you my new calculator that I'm going to put up on my website soon. So if you haven't been to invest in Choice.com you go and have a look at the calculator that's there now. I'm very proud of it. It's information's updated pretty much daily and it's back ended into Residex. So work out your borrowing capacity or throw in a borrowing capacity that's been given to you by your bank or mortgage broker and it will tell you where you can afford to buy with past growth information. So only calculator like it anywhere. Very proud. And there'll be a new one out there that I've been working on with. Well you've been helping me out with the design as well, John.

I just made it look pretty but yeah, it's awesome. Calculator.

Well, I think it comes back to this question, how much do I need? And I know there's some fantastic calculators out there, and I know there's people who make careers out of modeling this kind of stuff and what your portfolio should be like. But this is going to be a very simple calculator that you can get in and throw numbers in. So, Robert, what I did is I went in and threw some numbers in. And So I said $100,000 passive income in the next 10 years. So in 10 years time, you'd like to have that. I've made an estimate of a 7% capital growth over that period of time. I've said inflation's going to be two and a half percent. And I've made a blanket, I guess, assumption here is that, which I don't think clever investors do, but it's how a lot of investors think they need to exit the market, which is they get to a point and sell everything off and put the money in the bank and live off the money. Whereas I think, you know, strategically it would be sell off some of the properties, pay down a bit of the debt, have some income coming in while the rest of the properties are still going up in value. So if we wanted $100,000 today, based on inflation, it'd be equivalent of $128,000 in 10 years. And that if we were going to say that you needed to generate $128,000 in 10 years, then you'd have to have $2.5 million in the bank generating at a 5% return, $128,000. So what that means is if we take capital gains tax into account, the fact that you had started with a 90% loan and maybe you're on a tax rate of 30%, then in 10 years time, you'd need a portfolio of $5.8 million. If you sold it, you put paid your capital gains tax, paid your loans back, and paid your selling costs at 2 1/2% to the real estate agents, then you would end up with $2.5 million. Whack it in the bank, 5% return, 128,000. Now, what does that mean today in today's dollars? If I bring that back to, on average, over 10 years, a 7% growth. Well, what that $5.8 million in 10 years looks like today is $2.9 million. And $2.9 million is six $550,000 properties.

Okay.

However, Robert, you might say I'm a young man, 10 years is too soon. I want to do it in 15 years. So what's it look like in 15 years? Well, rather than a $2.9 million portfolio today, it would be just a $1.9 million portfolio which is four $550,000 properties.

That's a bit more achievable than six.

And maybe you want to work a bit longer, Robert, So what does 20 years look like? Well, 20 years means a $1.3 million property portfolio of around about three $550,000 properties today. And what if you wanted to be super, super, you know, keen and do it all in five years? Well, that would mean that you needed to have a five and a half million dollar property portfolio and that is 11 $550,000 properties.

Okay.

So I was able to do that in like 30 seconds on my new spiffy calculator, which hopefully August horses, birthdays tomorrow, birthday for all of us. Hopefully we have a present and you know, it's going to be, the calculator is going to be on the website so you can all do these quick little numbers rather than having to go into advanced modelling tools.

Great. Oh, Robert's got a second part to that question. I would equally be interested to hear your thoughts on what level of debt to equity would be needed in this scenario and how people typically go about achieving this. That is, do most people secure a line of credit and live off the line of credit or are there other strategies worth considering? I personally believe the ideal scenario would allow me to continue to transact in property, most likely in a more active participation sense than simply buy and hold.

Look, I think I know when you go to those shiny fun high fiving seminars, run to the back of the room kind of stuff, you're kind of set off. Yeah, we've all been there. That's my husband, Todd. He leaves within the first two minutes of those it all, you know, living off equity and you know, you can give up your job tomorrow and be a property developer or a flipper, you know, is often touted as an easy way of going forward and the reality is that it's not necessarily the case. So, you know, living off equity, as I alluded to, you know, a lot of people think they have to sell down their property portfolio and the reality is that you don't need to do that. You know, it might be selling down, maybe selling half your property portfolio and paying down to make the rest of it cash flow positive and get on with life. I don't know of many people, honestly, when I push them and I talk about their long term goals, who are prepared to stop work completely. People either want to do it on their terms two or three days a week or become self employed and pursued.

Their own thing or something they're more interested in. Yep.

So I don't think anyone really plans to stop work completely. I know there's probably a lot of people there at the moment on the webinar going, yes, I do.

Well, they do. And then like three months later they go, I'm sick of fishing now.

I know, look, I had a girlfriend who did that. You know, she sold a company and made a lot of money and went diving around the world for three months and came back and said, well, now I'm bored. Retirement was fun, now I'm back. So, you know, I think reality is that the active, energetic, interested people that I speak to every day who are successful are still active and energetic and wanting to contribute in some way. And hence, you know, it's nice to be able to have the extra money to help your family and have the special holidays and pay for the weddings and do all the things that you want. But you know, as you suggest, Robert, it's not necessarily selling everything up. So. Living off line of credit. The real key about living off a line of credit is knowing that this is personal debt. If you're living off a line of credit so you can't claim the interest on those monies that you take out. I'm not a tax person. Check with your accountant. I'm just saying generally. But the other thing that you need to be aware of with that whole living on the line of credit is that you actually need to have a job and an income to get the original line of credit. So I've spoken to people in the past who've kind of given up work and are ready to go on and start property investing and realise then that they can't get money. And that's obviously a great disappointment. So, you know, if you're going to set yourself up for this, and I wouldn't, I mean, as a mortgage broker, we're not allowed to write loans for people who we know aren't going to be working very soon. You have to have some capacity to make that repayment. So, and the banks want to make sure that they're giving you a 30 year loan and you have capacity to pay that over the 30 years. And they can only base that on, you know, your past employment and the fact that they believe you have future employment opportunities. So just be aware that if, if you were going to live off a line of credit. You need to have an income to get it. Same deal about a lot of people have homes at the moment. Like over 40% of people's homes are worth double what they bought them for. Doesn't mean that you can walk in and get that money out. You have to be able to afford to get that money out. The opportunity that you suggest also about becoming more involved and not just buy and hold is something that a lot of people really, I think, strive for. And the reality is that you do need to have the equity to do that. So I know from a purely flipping point of view, and flipping being that buy, renovate, sell or buy, develop, sell or buy and change the value of a property and sell it in a quite short time frame, to be able to do that without restriction is by far the easiest way to do it, is to do it with an unencumbered property, which means you need the cash. And that might mean that you build up the cash over a period of time, or you access money from your home, for instance, or other properties that you have with equity. But if you can imagine this having, let's say, $500,000 in equity, which could be that maybe you've accessed from your home, and obviously you have to have your job to be able to support that income. And being able to go and buy a $400,000 property, pay for it out of that $500,000, pay the stamp duty, do the renovation, and then sell it and not actually ever have a loan against that property and maybe sell it and make 50 grand and do that time and time again. Every time you do that, you're making 50 grand. But you had to start with that 500,000 to start with. So, you know, what you're kind of saying, Robert, is, you know, in the long term, to make that kind of replace your salary. It's whether you want to be passive or active. So a passive way of doing it is sell up, put the money in the bank and collect, you know, the interest to be active would be more along the lines of the second method, which is maybe sell up some crab the equity that you have and go and be an active investor and do the developments or do the, you know, buy, renovate, sell, or buy, develop, sell, buy, develop, sell half kind of strategy. So there you go. My thoughts.

Great answer.

Thank you.

And no one's got their hand up. So we can head off then, I reckon.

Goodness, that's great. Early night. Okay, I've got to have some questions here, guys. I can see there's lots of you online, maybe some written questions.

Who said that? It's Lorraine. Said while you were talking about this Price Finder as well as a ripe house, I'm wondering whether to use RP data.

Look, I haven't used Price Finder. Lorraine, I'm keen. Have you got a microphone? Are you keen to tell us about your experience with it at all?

Oh, there we go.

Hey, Lorraine, we're going to unmute you. Can you hear us? Yes. Hey, we can hear you. Yes. How are you going?

Good, good. I hate, I hate not having people ask questions.

I know, me too.

We have to talk.

Feel compelled to talk. Yeah.

Oh, yeah. Well, you know what, let's just ask. I tell you. I tell you what, Lorraine, I'm going to send you a book just for being the brave person that that asks a question tonight. Well, thank you. So tell me, so you've got Price Finder. How do you find Price Finder?

Okay, I love Price Finder.

Yes. What's it do?

I love Price Finder. Well, it does. State by state. All of Australia, it gives me. So if I see a house on realestate.com I can go into it in Price Finder, I can find the owner, I can find the last sale, I can find, see the size of a block of land. I can do an aerial, I mean a lot of stuff you can do this for free, but you know, you can. I can see in one place and I can see the things that have gone into council to get more developments done. Just that. I like that. And I've got rife house and I'm like, I'm tossing up and going, oh my gosh, should I do RP data or should I not?

I don't know. Well, look, what's so good about.

What's so good about RP Data?

Look, I got to say, the RP Data Professional access that we have is. It's kind of geared towards real estate agents and professionals. So it has. Look, I feel like I'm kind of getting a window into the secret world of real estate agents. But, you know, sometimes I wonder why they always sound so clever about the market and then, you know, get into RP Data Professional, it's like. And this is what you can tell your clients, you know, did you know that if you upgraded your three bedroom house to a four bedroom house, this is how many sold in the area? And it's very clever in what you can do. And I love the fact, I mean, I know as a student of ours yourself, You've seen the dot map techniques, you've seen the census map techniques, you've seen the price pin map and being able to say, well if I just use one of the examples we use in a tutorial about Essendon and here is the five straight that I'm interested in by putting a territorial kind of map around that and having that on your watch list when something happens in those five streets, you hear about it. So I really like, I really like that as a kind of a. It's almost like a Google alert on steroids or a real estate alert on steroids. And with their iPad version you're out and about looking at things and you go to one of your targeted three to five suburbs and up comes everything in the suburb and you can put your little iPad up to the. Or iPhone up to iPhone, up to the house and see what the house that you've just driven past is on the market for or what it's just sold for. So it's kind of like taking the tools in your pocket. It was potentially what I'm hearing price finder does and being able to apply them straight away. Okay, sounds really good. Then maybe I should do it. Well, you know, I, I'm honestly, I'm not into, you know, I want one of everything and never using them, but I know that you're an active user of all the tools so. And it's kind of, I mean I think another tool out there that we hear people talk about is in Real Estate Investor. And you know, I, there's a few little things in that that I've liked in the past and, and I think, you know, I think it back ended into. What did it back end into? Into the council development applications and things. And I've seen RP Data Professional do that too. You know, it talks about developments that are on the properties that you might be looking at or issues, et cetera. And even the, the beta, if you have a look at the tutorial where I have a look at the, the beta version, the video kind of. Well, I'm thinking geographical map, aerial map and you can actually see. One of the things I really liked about that is that you could see some movement in the suburbs and say, so in these five streets, for instance, how many houses here have sold in the last three years, five years and 10 years or 12 months, six months and 18 months. But from a real estate agents professional and you can see the tutorials actually on RP Data Professional. They and they're obviously geared towards real estate agents, but they, you so you think laterally, how you apply it. But one of the things they say is you can actually go through and.

Say.

What properties should have equity in them. So this is for real estate agents to find their next sale victim, basically. So they can go and knock on the door and do the drop and say, hey, by the way, you know, the house down the street got sold. Did you think?

And so statistically, they can tell when that house is likely to come back on the market.

Yeah. If you grab one of the back of the magazines and look in the data bank and it says, you know, this suburb, on average, the house is held every seven years. You can go into RP Data Professional and you can say, show me the houses that have sold, have not sold within the last, you know, six to 10 years. And you can target those if you're a developer, for instance, in the area going, you know, have you thought about moving? And you could do a door drop.

Yep.

So you can actually.

Is it easy to use? But Jane.

Yeah, look, seriously, I, I'm, I'm time. Poor Lorraine. So if I, if I can't pick it up and John says, okay, let's just quick do a tutorial because everyone wants to see how to use it. If I can't pick it up and do it quickly and it frustrates me, I dump it. So. So that's why. And I looked at their tutorials and you can go online and they have the, you know, they have a fabulous support group where. And very similar. Like you've seen Jacob on Ripe House. You know that chat. Chat's always there if you can't find something. He'll go, hey, I can see you've been. Or his, his team can go, I see you've been looking for a while and you have a chat to Jack and being like, what's been happening this week? It's like everyone's looking at Aubrey Wodonga. I'm like, really? What's happening in Aubrey? So, you know, you have that kind of insight from, from Ripehouse.

But I like the way Jacob does that. Takes out a different. I think he does them each week. He chooses a different property each week and then does his analysis on it.

But with RP data, they have their own tutorials. But, you know, we sat on the first tutorial and it took two hours, didn't it, John?

Yeah.

With them. And we're like, geez, we can cut this down to 15 minutes. So we did our own. So that's, that's why you have our. That's why you can have our tutorials. So yeah, that's the way it is. So, yeah, as I said, have a go because if you don't love it, then let us know. But I think it's a really good tool.

So have we only got it for three months?

No, you can have it for as long as you want. We just wanted to have a three month commitment for people to start with and then just so that we could put it all together and do the deal with RP Data and come to the market with something that was really, really reasonably priced and affordable because it.

Was kind of a group deal. So we promised them some numbers in order.

Yeah, we'll get that many.

We've got this many people.

Good. If you can sign up that many people in three months, we'll give it to you at a really crazy price. Like fine, that'd be great. So. And look.

Well, I think it's really great that you're doing these things for us.

Oh, thank you. Sometimes we wonder if, if other people are going to use the things as much as we enjoy using them. And then we speak to people like yourself and we know that you do, so it makes it all worthwhile. So thanks for letting us appreciate the.

Letters and appreciate the letters that you send out to us. I mean, everything, it's full of information. But can I ask one or two other quick things?

Go for it.

Just with the APARA thing that's going on, I've spoken to someone today and they've sort of said they reckon the next thing that may come out is that we won't be able to get equity out of our houses. That'll be the next thing that they'll stop out of our investments. Do you think that we'll come to that?

I think the way that they're going to restrict that is through LVRS. So, you know, you can only get up to 80% or they will restrict that through your servicing capacity. We're going to make it harder for you to get the money by making you jump more hurdles. So, you know, if you think about it, at the moment, most lenders are assessing interest rates at 7.2 to 7.4% and we know we're paying around 4.5%, but when interest rates were actually 8%, they were assessing them at 10, 10.5%. So, you know, to some degree we're in a. We're complaining because we can only remember six months ago. But the reality is we've all been through worse than this and our servicing capacity was a lot Lower previously. Restricting equity to some degree in the last year has been happening anyhow, where lenders have said if you're taking out more than 80%, we want to know what you're spending the money on. And we want this cash out policy and we want to be able to service any subsequent debt with it, with our calculator, make sure you can afford it as part of responsible lending. Although I would never say never. These things can happen. I think there's a few extra things along the way that may happen. I think they might actually start servicing investor debt higher than 7.2%. They might make it 7.7 or 7, you know, 8.2%. So I think they've got a few other avenues before they restrict equity. And I don't think it will be a will stop you getting equity out of your property. I just think they're going to make the hurdles a bit higher for you to jump through to be able to afford it.

So do you think then a lot of us are going to have to be able to have money partners or joint venture partners that have got, that are cashed up, ready to go?

Yeah, I think so.

Don't have to borrow like, you know. And then how do you find those people?

Look, to be honest, I reckon I will be out of a industry within the next five to 10 years. You've heard it here, first prediction. And I think the finance industry will be under a complete. There'll be a complete. What am I thinking about? What's the word? Just not distortion. What's the word? Complete change in the way that things will happen. And I think, you know, we're gonna get a lot more crowdfunding where people come together and they're gonna go, hey, you know, I've got 50 grand, I've got 10 grand. How about 10 of us get together and buy a $500,000 property and flip it. And I think you'll find a lot of forums that people will be able to do that kind of thing. And I think as someone who's, who's currently got a business around, you know, getting money for people, I think literally that kind of distortion in the market is something that any clever person should look at in any business that they're in and looking what the risks are and then the opportunities from it. And as you suggest, I think there will be some really creative thinking and some real amazing opportunities come out of it.

Kickstarter for property investments.

Yep, Heard it here first, but yeah, and we've definitely thrown around some really interesting ideas. John And I have what we'd love to do with our communities. But yeah, I think that take what you're thinking, which is maybe I need a money partner and completely explode that until where that could potentially go in the future. And I reckon we'll be there sooner than you can finish up the business plan for it.

There is some of those around now. There's different finance ones that you put in X amount and then there's. I can't remember the name of this place but we saw one recently and we spoke to them about our developments and they actually have their, they have insurance so they have a large insurer. They secured a big name insurer which kind of give them a lot of credibility and it was a little complicated the processes but I'm sure that'll get a lot easier in five years time.

Well, there's a couple in England and America that I looked at last year and approached them and said tell me how you work and when you're coming to Australia. And there's some changes in our banking regulations that are kind of needed and some that are happening this year that is allowing some of that to happen. But I think it's going to become more mainstream and if it's a really clever banks out there, then as far as I'm concerned, the clever banks are going to be saying, geez, what did Blockbuster miss five years ago? The little green machine at Woolworths where you can go get your video, you know. So I think the bank should be thinking about how they're going to facilitate this and give people more confidence in doing that kind of thing. So I think it's really exciting. I love it.

Oh, do you?

Yeah, I love it. I love change. As long as I'm on the cutting edge of it, Lorraine, if I'm left behind, I'd be really upset.

And you are.

And you are. And you are.

Well, I'm going to get you that book too. So thank you so very much for asking the first question. I'm glad we've got other questions here now too. You've motivated others to chat. Okay, bye. See you guys.

Yep. So we've got a couple there. I'll just make sure I've got. There we go. Lynette, how do you cope with putting a property on the market as the waiting is more stressful than the whole Reno? I'm settling on another property closer to the city next week and it's going to increase my heart rate again when I put it to the market.

Well, I have never sold so I'm going to throw this one to you, John, because you've been through the, the selling process.

Yeah, it is, it is. It's. We always sit at the, underneath the front window and we open a little bit so the people. This is at auction because it's all auctions where we're selling in Victoria and we have the, the window ajar a little bit so we can hear the auction as it's going on. And I must admit, you've got a pit, the adrenaline's going, you've got a, you know, hollow stomach and so it is nerve wracking and. Yeah. And the whole way through that kind of process when you're rushing to. Because often you have to choose your sale date miles in advance. So you get on the good weekends, you get the good auctioneers, all that kind of stuff. So inevitably you come to that last couple of weeks where it looks like an episode of the block where you're running around and you've got a thousand tradesmen on site and you don't know whether you're going to make it or not and all that kind of stuff. So it's all pretty stressful really.

But imagine having one on the market and about to settle on another within a week. So having to go at once, you're probably under extra pressure because I think the hardest thing having chatted to Flippers, is the fact that you find the property, you do your due diligence, you then get into the renovation and whilst you're getting to the end of the renovation, you're anticipating the next property. And if you're trying to minimise the hits on your credit file, you're potentially even trying to be super sneaky and use a portability loan so you can move the loan from one property to the other, which means back to back settlement.

So that same day, or a lot.

Of them the same day, I'd say 90% of the lenders are same day. If they do have portability, there's not.

Much can go wrong.

None at all. And I mean, imagine what that does to the mortgage broker. We're all feeling how you're feeling and, and I know even talking to a client on Monday who went to auction on Saturday, we're all on the journey with you, so you're not alone. And the fact of the matter is coping with those kind of things is you have to cope with it. If this is your strategy and what you're going to do and you're going to have to find a way of doing that flipping at the moment in I'm going to say structural renovation, flipping at the moment I would find particularly stressful because we know in Sydney and Melbourne, because we know we're at the height of the market there and timing can be changes very quickly. So you've bought a property, you might have a six month, you know, council process and renovation kind of stuff. Then if you are at the head of the market and I spoke to some clients during the week who are looking at doing something similar as a JV development, reno the house at the front and put villa at the back and you know, and just based on some zoning changes and you know, had another client a few weeks ago who's zoning changes in Perth where they were taking some opportunities like this. When the market changes, it can change drastically, quickly and you could be worth, you know, holding a property. So you need to have that plan B in place. But I, I mean I go into any deal having as you know, plan A, B and C and so, you know, if things go wrong, how can I get out? And usually that's a function of the type of property and the market and having the property fit for the market. So. Yeah.

So your exit strategy reduces your stress in your case.

Yes.

Yep.

Which is, although I don't plan to exit soon, if I have to exit soon, I'm not going to end up with a service student uni apartment. It's 20 square meters that only 5% of the population wants to buy. You know, I'm going to have the, the two bedroom unit that 40% of the population wants.

Yeah. And I guess you're not betting the farm in the first place either.

Having a bit of buffer in place to Lynette always helps just to ride it through so you don't have to accept something straight away.

The other thing about that was, Lynette, you seem to have conquered one of the hardest things about flipping and that is getting the deal flow. Because what I found is the time between deals is such a killer because it takes so long to find the right property that being able to line them up so you finish one renovation and start the next one is really quite hard. So I'd be interested to hear how you've gone about doing that.

Looks like Lynette's going to try a box at the back for the next one.

Oh good.

John is ready to come filming. What state are you in, Lynette? We want to have another a few box in the back case studies going on, don't we, John?

Absolutely.

So we've got a few going at the moment. Oh, she's in New Zealand. Definitely. He's definitely on the plane.

Yeah, that'll be all right. It's been a while.

No problem. My 7 year old son came in tonight and said dad, New Zealand's on the tv. And I said how do you know? He said, because they said fush and chops. I'm sorry Leonard, I had to say that. I'm married to a kiwi. What can I say? He was wearing his all black shirt all day today, Mike, 6, 7 year old, he was at home so his grandmother was happy.

He's got your son wearing the all black shirt.

Yeah, I've got the wallabyth one that I make him wear every other day. It's a tough house to live in, being an Anzac.

Yes. Okay, Gavin's got a question about business loans. What about business loans through a business banker? That's how we got some cash when we were unserviceable.

How does it differ from residential finance? Basically Gavin, did you get the business loan for a residential property or for a commercial property or was it an investment property?

Investment property.

Investment property. Look, some lenders, I don't know how much depth I should go into here. Sign up for the Money magazine newsletter because Effie Zahos did a fabulous talk about the difference in lending changes this week and one of them was around business banking and the percentage of business banking that the lenders have. I think more and more what you're going to find is that some of the people will go to business banking. It is higher interest rates so you might be looking at 1.5% to 2% higher. But obviously if you've done your financials and the deal's worth it, then six months with an extra 2% interest on 100 grand. We're talking, you know, what, a thousand dollars. So you know, make it relevant to what you're actually doing yourself and seeing if the numbers are there. But yeah, there is. Business banking hasn't pulled back at all. And it's definitely not business banking that the APRA has targeted. It is definitely investor residential lending. So you know, and business banking is a smaller percentage of the bankers incomes. So you know it could be a well being opportunity that you, you could see. So yeah.

He said, Kevin's just typed in there, we've, we crunched the numbers at paying hard money loans at 10%.

Yeah, well you know there's short term lending as well, you know. I know I was speaking to someone the other day who was saying that she was thinking about putting some of her own Money into short term lending that someone wanted. And you know, they were talking about paying her, I think 9% per annum. And I was saying, gosh, you know, that's good. A lot of people are charging 2 to 3% a month. So you know, obviously 10% through business banking is good, good money. And to be completely honest with you, you know, if you, if you did the numbers and let's just say my very first renovation, I bought 425, I did a $50,000 renovation and the revaluation nine months later was a $700,000 for that property. That $50,000 renovation budget that I had, if I got that, and I don't have a credit card this big, but if I went and paid 20% per annum on that $50,000, that to do that money, you know, 10% of $50,000. What? 5, 10 grand based on $275,000. You know, increase in value of a property is nothing. So you know, if the money, if it stacks up, and this is funny, you know, I talk to people every day and they're like, oh, can you do better than 4.23%? Like you're planning a $10 million property portfolio over the next 20 years and we're talking about the difference of, you know, 800 bucks a year in interest. So you know, if, if you have to pay a large amount of money to get the deal done, it all comes down to the numbers and the profitability at the end of the day. And as you say, 10%, geez, if you're going to make 100 grand, 10% might seem nothing at the end of the year.

Boone, thank you for your discussion on liquidity to fund investment. It was really interesting and very informative.

Thanks Boone, and welcome. I know this is his first call. It's good.

Yep. And Melody's got a question. What is the pay website where you can get listings for fire sales forward slash deceased estates?

Oh, let me think. Mdm, let me find it.

NMD data.

NMD data, is it? Let me have a quick look. You have to do some filling conversation while I look.

Alright, well, Lachlan's got quite a long question so we might pop into that one. What is the best way to get a property that is cross collateralized, uncrossed? He's got in brackets there. Sorry, I don't know the correct term. I have a principal place of residence approximately 470k with 15k remaining on the loan. And I have one investment property worth 420,000 with 420,000 owing it was bought for development, but the bank has cross collateralized my principal place of residence and then he's going in brackets. I know, I know. I did this prior to starting the course.

It's not your fault. They do it on purpose. Melanie. That website is www.envinelli. m for Mary, D for David. D for David. A for Apple. T for Tom. A for Apple. I did know my phonic Alphabet. So November.

You'Re gone already.

Okay, so nmddata.com au online website for foreclosures, deceased estates, and there is a small fee that you pay to be part of it.

Last little bit on the end of Lachlan is I am starting my search for my second property and don't want to get cross collateralized again.

Okay. What bank, I shouldn't ask, are you with? Okay, so Lachlan, this is, this is where you need to work these numbers out. So, so in an ideal world, before you started, what you may have done is you may have said, you may have gone and set up a line of credit against your home and created the funds that you needed to actually purchase the property that you purchased. Now, this $420,000 property, let's just assume that it was worth $420,000 when you purchased it. So you would have needed to have a 20% deposit, if we're being conservative, say $84,000. And, and you would have needed to cover stamp duty. And let's just say that's 16,000 to make my numbers nice. So it's $100,000 that you would have needed to purchase this property. So you would have had your $15,000 loan against your home. Now, you would not have increased that by $100,000. You would have kept that separate so that your $15,000, which is non deductible debt for your home, would maintain non deductible deductible debt. And the interest on that's not claimable. You would have created at a minimum $100,000, say line of credit or potentially a standard variable rate loan. And with that, you would have pulled that money out, put your 20% deposit down, $84,000. You would have ended up with, let me just do 420 times 0.8. It's hard to do these calculations on computer, $336,000 loan, and you would have had those standalone. So that's an ideal world. So to break that cross collateralization, that's essentially how you're going to end up. So you would end up with, let's say a 80% loan. Of $336,000 against property investment property number one. Which means that you need to be able to take funds out of your own home. The $100,000 for instance, to assign to that property or give that 20% deposit $84,000 into that property to pay it separate it. Now uncrossing cross collateralization can take up to four to six months depending on the lender. So don't go and put in an offer on. Okay, so it does take cba takes a lot longer than I find any other lenders. But you know, they, they do, they do create problems. And the problem is that you need to be able to think with the big picture in mind. So if you want to go and buy your second investment property, then obviously what you don't want is go back to Anz and say, hey, I now want to create, you know, I want to uncross these properties in ideally your $420,000 property at some stage would go up in value and 420,000 give you this divided by 0.8. So if it went up to $525,000, then the current 420 loan would represent 80% and you could just uncross your properties without having to move money around. But because that's not the case, and let's just assume you're going to buy another $420,000 property at an 80% loan to value ratio, then you'd need the first hundred thousand dollars to contribute to the first investment property and the second hundred thousand dollars to contribute to the second investment property. So if it was me, I'd also add in a bit of a buffer. So I would go back and I would keep your $15,000 as it is potentially p and I paying it off, you would have a $250,000 line of credit. The $100,000 you'd pull out straight away and put towards the first investment property and pay that $420,000 loan down to 20%. So you'd actually only put $84,000 in there and pay that down. Then you've got funds for your second property with a bit of a buffer. You could, depending on what your long term goals are and the income that you wanted to generate and the portfolio you wanted to grow. You might actually look at a 90% loan to value ratio and hence you only need the 10% deposit. That is $42,000. Same stamp duty around 16. So we're talking around 60 grand rather than 100 grand for your second property. Does that make sense?

I lost you after. Listen Carefully.

Okay.

No, it was good. That was good.

I wasn't asking. I was asking Lachlan. Did that make sense? That was Lachlan, wasn't it?

Yes, that's right.

That's awesome. Okay, so listen to this recording, okay, Because I know I went through this quickly.

Ross has got another question about a 90% LVR. If you get a 90% loan to value ratio, can the bank change this after you have the loan? So if you get a loan, I assume you get a loan in place with the 90% LVR. Can they reduce that after you have the loan?

Okay, so let me just think of scenario here, Ross. The scenario would be I'm buying a $500,000 property at a 90% loan to value ratio. So therefore, I've got a $450,000 loan and I'm now two years on. And let's just assume that the property has not moved in value and they come back and they go, you know what, Ross, I'm not really comfortable with 90%. I want you to make it 80%, put in another 50 grand. Is that your question? Otherwise, yes. Okay, good. Did I answer your first question, Ross, that you were after as well, around the difference in the yes? No, I didn't. Okay, well, I might have to get you on the microphone. This is the difference between Ripow and RP data. Okay, so let's go with the yes first and then we'll go back with the no. So I have only ever seen lenders do this in two scenarios where they come back and say, we're no longer comfortable. And one of them is in a situation that Lachlan just found himself in is when they're cross collateralized. And Lachlan goes back to Anz, for instance, and says, hey, I want to buy my next investment property. And they go, you know what, Lachlan, we're not really comfortable about this. We've got a lot of debt with you. And, you know, we've been so generous in the past. You can have your next loan, but your next loan would be principal and interest, or your next loan would be at an 80% loan to value ratio. Or, you know, we want to add in all the extra equity in your home as well, which they've essentially do when they cross collateralize. In that situation, when the bank has all of your banking, I have seen them say to people who've started to sell down properties, you know what? I know you're selling down properties and you're cashing up and you're about to retire, because you think you've got all this cash, but in actual fact, now that you're not working as much as we think you have been working, and we've assessed all your loans on the past, we'd like you to pay down some of the debt on your existing properties. I've seen them do that, I've seen CBA do that. And I've also had a very good friend of mine who was an accountant who her accounting firm had a fantastic deal with NAB and the deal was you could have a 90% loan to value ratio as an accountant and not pay mortgage insurance. And they rang her up and said, hi, I'm your new private banker and you know, we're happy to have your million dollar loan, but we're no longer happy to have it without mortgage insurance. And we want you to come up with a the other 10% deposit. She'd bought it two years previously, so we need $100,000 by the end of the month to reduce this because we're not prepared to have 90%, no LMI loans anymore. Of course she went a little bit worried and they said they made it a little bit worse too. And they said if you'd like, you could get your husband to ring us so that we could explain it to him. She's a director of an accounting firm. She was very impressed. So. And she was the only person on the loan as well. So it was her property anyhow. So she went through that and it was kind of like the conversation we had in the beginning, John, you try to solve the problem rather than see the issue. So she was like, how am I going to come up with 100,000? I've got these other properties and I have to move this money out. She had two options. I'm like, hey, let's cut back to it. The first option is you don't have to stay with this bank. Yes, you, you could move and yes, at the same loan amount and if you value the property is the same, you would have to pay mortgage insurance. But how about plan B, which is, let me do a Residex report for you because you've had this property in Sydney for two years and what's the likelihood it's gone up in value? Ta da. It had gone up in value. The current million dollar loan was actually at 78%. There was no need to put in extra money and the banker was just talking out of his nose.

So, you know, they probably tried it on and it worked for nine out of 10 people.

Yeah, could you imagine that? So Ross I haven't seen lenders do that unless A, you have a huge exposure to them and B, if they did have a, if they did have all of your lending or they had given you some special something in the beginning. So hopefully that answers your question. Now, Ross, I want to get back to the no answer. I didn't answer for you previously. Yep, properties should go up in value. Okay, can I put you on the mic so I can find out what your question really is? I'm going to try to open your microphone anyhow.

We're just forcing people to speak to us now.

Ross, have you got a microphone there?

Yes, I do.

Hi, Dustin.

Okay, now what did I not cover properly in the first question that you had?

Oh, it was just in reference to your very first comment. How are you guys by the way?

Good, Ross, good. And you?

Well, thanks. The only reason I didn't have you on microphone is because both Bridget and I are here and only one of us can hear you if I'm on a microphone.

Okay, we'll have to type our answers for Bridget as well.

I'll translate to her. Hey, yeah. So at the beginning you just. At the very, very beginning you were just saying something about that the marketplace is changing a little bit and it was a very hot market and that some people are backing out of the market because of that perceived pressure. But you made the comment that you think that that is actually presenting more opportunities or other opportunities. And I was just interested by what you meant in regards to that because obviously in Melbourne the market is extremely hot. I was just listening to another, I can't remember who it was. One of the top economists in Australia. He just predicted. He was the guy that predicted one of the few people that predicted the GSA few years before it happened. And he said that he reckons that the Melbourne and Sydney market will continue to be to be reasonably stable as far as growth is concerned for at least another couple years. But as you said, it is a very hot market, very hard to find deals. But are there genuinely still opportunities out there?

And look, I. And where are they?

Just show me the house.

Exactly. I'm glad you asked. I have a few myself. No. Can I sell you a property today? No, I don't sell properties. Okay, no. We'll talk. I guess what I was saying was there's people leaving the market. So I think we have had a very high. And we've seen this, that you know, we've got growth of investor loans has been extraordinary. And let's put it in perspective. We're talking less than 20%. We're talking, you know, first home buyers, buyers are less than 10% now. So you know, home buyers are still the majority of the market. But we've had growth in investor market. And when I say the investors are leaving the market, I think a lot of them are going to be forced to leave the market because of this curtailing of the way that lenders are assessing investor loans or they're scared the fact all of a sudden that they're paying a half a percent more on their investment loan than the home loan and they're thinking, oh look, I'm going to pull out now and wait until the market dies and then I'll be back in and I'll take the opportun when I can. In the meantime, hopefully my house goes up in value which is counteractive to the fact that they think the market's going to die. So when I say I think there's opportunity and why I personally believe Sydney and Melbourne and Brisbane to that extent are going to continue having growth and is first of all picking up on Brisbane.

Well.

You know, I don't ever pretend that I am an expert in property, in predicting crystal ball stuff and creating all these new and wonderful techniques because as far as I'm concerned everything's pretty much been done. And it's about perfecting what has been done successfully and applying that to now. And we know the property market moves and I'm not going to pretend I'm an expert when I say the Sydney market moves first and the Melbourne market then moves and then Brisbane moves because it happens every cycle. It's not not crystal ball, it's just what happens. And so you know, the fact that Sydney and Melbourne are at the peak of the market now and Brisbane's coming up, Brisbane I think is going to have some sustained growth because of affordability and you know, median house price in Melbourne and well, Sydney a million bucks compared to, you know, what, 550 in Brisbane. There's obviously some affordability issues and you can still pick up within 8Ks the CBD, a three bedroom house for you know, $500,000 in Brisbane, which is with, you know, a 5% rental return, you're not getting that rental return in Sydney or Melbourne, there's no doubt about that. So there's still some great suburbs at least. Exactly. And you know, there's some real and without doing something creative with, you know, in Brisbane raising the properties or putting a granny flat on or some kind of dual income thing. So, but so I think Brisbane's going to continue to have some growth because of the affordability and investors seeing that opportunity as well. Sydney and Melbourne. Every Monday I talk to very disappointed home seekers who are looking at upgrading their homes, going, we missed out on the two auctions we went to on the weekend and they're actively going, yee haw. The investors are leaving the market so we're in. And the people who have been waiting for the investors to cool or the investment market or investor driven markets to cool off are now back in. And so when I say there's opportunities and why I believe that the housing market still is sustainable in Sydney and Melbourne is not going to drop overnight is because the homeowners, the majority of those who are actually buying properties in the market are now going, thank goodness we're coming into spring, which is traditionally, you know, when people put their properties in the market. Anyhow, we're coming into spring and we're really geared up with an equity position. We've got the lowest interest rates ever and we're going to buy our dream home. So they're going to start driving that market up as well. So I think we'll be sitting here in 12 months time going geez, remember last year where Sydney median prices were only a million bucks bucks, you know, so those people who are waiting to wait it out, I think they, they're going to be waiting it out for quite a while. So yeah, so, so that comment around the fact that people are leaving the market but the market's still sustainable is the fact that I see there's going to be a change in the dynamic of who's buying. And, and I'm, I'm really, if you had a read of my Plan B newsletter last week, I really see that there's going to be some innovating, extra incentives for homeowners, interest rates and you know, I had a call from God who rang me today, let me think Westpac saying by the way, there's that fifteen hundred dollar rebate for owner occupiers and amp as well, you know, we really want your own occupier business. I mean they're trying to drive that part of the business because the investor business, they lose, they're losing. So banks are in the business of making money. When they lose one income stream, they're going to look at another. And I think, you know, strategically buying your home potentially as your next investment is, is possibly a very clever strategy.

Okay, that's actually, that was about what I was about to ask you was are the banks preferring the whole homeowner occupier type thing. And if you do that strategy where you're then buying within your PPR and then trying to renovate within it, which is of course a very hard lot of living standards.

Been there, done that six times. Yep.

But is that a more preferred method? I suppose from the bank's point of view, because you're living within it.

If it's your home. They are definitely. All I can say is they're definitely targeting the homeowner market at the moment for giving their lending to. So do they know that you're living in the property whilst you know there's no bathroom and kitchen? No. Do they really care? I don't think so.

Well, they. Unless. Unless you're going to get another loan from somewhere else that suggests you're not living in it or you're doing an investment in another place and to them I suppose it's still a ppr, isn't it?

Absolutely, absolutely. You know, they, they valued it when you bought it and the fact that you went and bought like, like my property, my very first property, you know, valued it, got the loan, got the property and had the builders come in. We had a six or three month building plan. I think it was four month building plan because we did two properties at once and the first rainy day they pulled out both kitchens. Kitchens. You have two houses beside each other and we're thinking at least we could have one kitchen for two months and then the next kitchen. No. So, you know, we lived, we lived on a microphone, microwave food for five months. So, you know, did the bank care and did they ever check? No, they never checked. Sorry, what was that? Ling cuisine.

Don't knock Ling cuisine.

Been there. Absolutely. At least we looked. Yeah, at least we look fit and healthy while you're renovating. Right. So especially the arm muscles after all that painting.

So John, just on a question for you.

Sure.

I suppose this is probably more of a renovators network question, but the box on the back thing that you do.

Yep.

How do we find out more information about that?

I can give you a rundown. It's in the Ultimate Guide to Renovation course. And actually there was a question earlier from. Who was it, Lynette, who said, will the box in the back work in New Zealand or do I need to change the plan? So basically what the box on the back is, it's just a cheap shortcut way to build an extension on the back of the property. And the reason it's, it's basically a glorified lean to And I don't know if you're familiar with the lean to, but it just has a roof that goes down on one roof that goes down on the angle off the back of the property. And used to be a lot of houses in the 60s and 70s that would add a kitchen onto the back of their property like that.

Oh yeah, yeah, yeah. I know exactly what they are.

Yeah.

So that's, that's the structural design of it. But it's a little bit cleverer than that because it uses things called posi struts, which are really high strength joists. Like a timber. It's got a. If you can imagine the timber, the frame and your walls built out of a studio. It's got like that top and bottom and then it's got like steel webbing in between and that allows it to. You can span a really long distance with that. So you use those basically and you build this box on the back which can span out kind of anywhere up to 10 meters without any walls in between or, you know, maybe maybe eight. You'd be getting some depth on when you get out to 10. And then what you do. So you don't see that, that the rake of the roof. So if you were looking at it from the side, so you see can, you can't kind of tell it to lean to. What you do is you build walls that conceal it that are in front of it. So it's like a kind of modern box, if you like, which you can do, you can make out of anything you like. You can do it in weatherboard or you can do it at a, you know, foam cladding and render it or whatever. So it has the appearance of a modern box. But it's, it's really just using the cheapest, simplest possible methods to get that space on, on the back.

I was going to say if you're.

Using, if you're using posi struts and foam cladding, rendering it, or even if you're using weatherboard, that sort of stuff, I mean, as a material cost, that can't be anywhere near 100 grand, can it? Is it really that much?

No, no. The only time it would go. The difficult thing about pricing the box on the back is that generally the way I've used them is by putting a kitchen in them and a fireplace in them and the whole bit.

So not just any fireplace. Tell them the type of fireplace. Beautiful. $6,000.

Oh, well, they look $6,000. No, it's typically around five grand. But it's. I mean it's the feature of the whole room. So that's the kind of thing I spend money on.

Butler's pantry.

Yeah, Butler's Pantry. Beautiful.

Great big glass.

Yeah. And then I put. Normally put an elevator, like a. A raised shelf that goes around it at kind of plinth level. I know there's a proper name for that, but that goes around the fireplace and shelves and. And lighting in the shelves and all that kind of stuff.

Stuff.

So it's. When you incorporate all that and the price of the kitchen and the butler's pantry, then you. You're kind of up there at 100 grand. But the actual, you know, the actual framing, it's. It's a lot cheaper, and it's going to vary from place to place a little bit, especially if there's any. Yeah. And depending on the fall of the land and that kind of thing. And you. The thing with it is you've got to choose the property that suits it. It doesn't. It's not suited to every property. For instance, if you've got a low ceiling in your existing house already because of the way it attaches, it means you're either going to have to step. Yeah. You're either going to have to step down or. Or. Yeah, you've got to step down, otherwise you're gonna have a really low ceiling. So it doesn't work for all properties. But as for working, Lynette, in New Zealand, it would. It'd be exactly the same. Your housing stock's not that different from ours, and. Yeah, it would definitely work in New Zealand.

Yeah.

Okay.

So then you'd use, obviously, all those other websites that you were talking about before Jane, in relation to trying to find properties, I suppose, Ripe House to create a pricing disparity between, I suppose, a property that doesn't have that extra one or two rooms or whatever you define the rooms to be compared to the property that you're buying and then trying to find that differential.

Absolutely. I mean, I know, John, when you were looking, God, years ago, when we first started, spoke in Essen, and you had a spreadsheet that you were doing, and you're looking at properties every single weekend, and you're categorising them renovated, unrenovated, and you're doing a costing per meter squared. Weren't you on those to try to pick up that.

I was just trying to work out what the. Yeah. What the. What was going on in the market and what the unrenovated places were selling for compared to the renovated places and the dated places. So I literally Went through everything on the market because I really wanted to know the market before it started flipping there, there. And. And using the resident. The. The thing I was going to mention too, is the Residex reports will really help you in that initial renovator. But so I literally go through every open and then I categorize it. I have, you know, a little template that I'd use and I categorize the property as unrenovated, dated or renovated. And then I would just track things like when it sold, you know, how many square meters was it, what did it sell for? And that would work out the kind of price that the unrenovated properties were selling for per square metre. That's the block size and then the dated properties and the renovated properties. And what actually came up after probably, I don't know, maybe four or five months of doing that is the unrenovated properties and the dated properties at that time. It might have changed in that market now, but were selling at the same kind of rate. So you get a property that had been renovated in the 70s or 80s and might be really solid, but just hideously decorated, you know, with wallpaper and, you know, carpets and the. And the different paint colors and whatever, and the kitchen, all the orange kitchens and all that kind of stuff, but really, the bones are really solid. But. And it would be selling for the same kind of rate as something that had all of the plaster hanging off and the roof caving in, because people just perceived it to have more value because it was, you know, unrenovated or it looked more unrenovated. So that was one of the things. But what I was going to say to you before, there's a couple of simple ones you can do. The first one is the suburb selection is obviously the really important one, choosing the suburbs that really suit renovation, because they all don't suit renovation. They don't have that gap between the unrenovated properties and the renovated properties in terms of that price disparity. So the renovator suburb, what it's called the top 100 suburb report.

Yep.

Renovators report from Residex, I think. What's that, Jane? About 200 bucks.

200 bucks?

Yeah.

There's a discount for ultimate guided renovation students.

Yeah. And that's a good place to start. It does. It favors suburbs with more streets because the way it ranks the reports is it's the suburbs with the most amount of streets that have got that spread of values that become the highest ranked suburbs. So you get suburbs. For instance, in Melbourne, it's suburbs like Kew and Camberwell and really big suburbs that tend to get up there as well. And it tends to favor higher price suburbs a little bit as well. Because you've got a natural spread of values between unrenovated and renovated the higher you go in the market.

Market.

So once you get over, you know, 800k kind of territory, it starts to expand a little bit. Just naturally you get that spread of a bigger spread of values in those neighborhoods. But once you've chosen the suburbs, there's some free. There's some free ways to do it if you've got the time. Things like price pin maps where you can go around and you know, you need three years of sales and a box of colored pins and a map. And you can often get your three years worth of sales from a real estate agent who's keen on flogging your property. I often used to say that before I started paying for RP data, I'd just say, oh, can you do me a favor and run me some sales? Sales reports of recent sales. And they go, yeah, no worries. How much would you like just the last three years, thanks. But they did. I had that done quite a few times. They do it for free and run off three. And the idea is then you go, because you've got all the prices, prices for all, you know, three years worth of data basically for that neighborhood or for that suburb. And then you can take colored pins and you can put them at 50 grand increments, depending on, you know, how low or high you are in the market or 100 grand increments and then just go and pin that on every sale on that map. And suddenly you start to see where the streets are, where they're all selling at one side of the street or one end of the street or the, that the gap where you can buy it, for instance, the $500,000 mark, which are yellow pins and you can sell right up at the red, which, you know, $900,000 and that kind of thing. So that's a, that's a heavily. It's a time consuming way to do it. Might take you a couple of nights to make the map, but it's cheap and it's effective.

Bridget's really good at the price pin maps, so that's okay.

Okay.

Red wine helps, I find.

Yeah, that's right.

Good to work as a team. Oh, thanks guys. I appreciate your time. I don't want to take up other people's question time, so I'll let them have a chance to Talk as well.

Thanks, Ross. Lovely to hear from you.

Cheers, Ross. See ya.

Cheers.

Now, Lynette shared with us the property that she's looking at. And I have to say, Lynette, I've been just having a look at pattoni My goodness, my. My mother in law. Whenever I visit, I seem to go past that area. But I'm thinking we're sharing this. We're going to expose the street name to everyone. So anyone buying New Zealand, stay away. Lynette, you actually got a microwave? We're just going to turn Ross off and we're going to see if Lynette's going to go with microphone. Lynette not sure she's going to try. Let's see if we could put her on speaker and all the way to New Zealand. Yep. Ross, you're off. Lynette.

Hey, Lynette.

It's late over there.

Midnight hour again.

Well, I'm glad you've decided to spend it with us this evening. So we've just pulled up this property that you're looking at. Gosh, you know, this whole going to tender is always very nerve wracking in itself, isn't is. So it's a very different market over there. So you've shared with us the address of this property you're looking at and wanting to know whether potentially it could be up for a box at the back kind of addition. So we'll put it over. So tell it, tell us you've recently done a renovation.

Yes.

And how'd you go?

It's two weeks on the market and I had a first offer tonight, but. But they were being pretty cheeky.

So make them work for it after the photos we've seen. So it is playing up a little bit. So it looks like a bit of a box, this whole property.

Yeah, I was going to say that it's kind of the box already.

Yeah. That's why I thought it might be a really good opportunity for the box on the back sort of thing.

And it looks like a flat backyard. They're only.

Good background.

Yeah, you're getting some lifestyle photos here. Are you seeing these photos coming up over the property as we're looking at them?

Oh.

No. Okay. Yes.

Yep. Good. All right. So I think it was around about image 17 there, John, that. Oh, look at this wallpaper. Oh, yeah. It's ripe for opportunity. I can see why you're loving this. So this is the back deck.

Yeah. So there's plenty of room there.

So it's a thing about room and tying into the current roof Height, and I think the roof height looks a little low.

Yeah, but what's. Do you know what the structure is? Is that a timber on the outside or is it rendered over? Because I know you guys have a lot of rendered over laths outside and so on. Do you know what the structure is, Lynette?

No, I don't think it's rendered. I think it's the concrete cladding type thing.

Oh, yeah. Okay. Ceiling height. Does it. Does it feel like it's quite.

To be honest, I haven't even been in it yet.

Okay. If they're normal sized doors, I'm guessing that's reasonably low. If that was kind of a 2.1 door, it looks to me like that's a 2.4 ceiling. Go back to the outside. The one thing that struck me with this place is because it is just straight up at the back. There's no. It's already got a parapet wall essentially, which is what we use on the sides of the box on the back is that you could literally just put. Run your rafters straight off that back wall. You use what's called a wailing plate, which is essentially a bit of timber that you nail across crossways across the back of the wall. And then you put your joist hangers on that. There we go. There. You put your joist hangers on that and away you go. And essentially you'd build another box which is pretty similar to what you got. What you got there. Yeah.

You'd have the box in the back and the box in the front.

At the front. Yeah. So, yeah. And the other thing. It's going to take us probably a while to get back to that facade photo, but. But there's surely some ways to pretty that up too, to un. Boxify that front with verandas or whatever. Yeah. So plenty of room. The other thing you might run into. And I'm not sure how your council processes work, but we often have. You have to have a certain amount of permeable land or the building envelope has to be a certain percentage of the blue.

Yeah. Coverage.

Yeah. So you might. One of the first things that I used to do when we're doing the box on the back or looking at places for the box in the back all the time would be to pace out the. The backyard and find out how much. How much space was there. But it looks like you've got tons of space, so I would think unless there's pretty severe restrictions there, you shouldn't have a problem going backwards.

You take the garage out, though. Yeah.

Yeah, I don't know. I haven't seen where it is in relation to the. Oh, okay. So it's right up to the side there. Yep. So I wonder if that's. If that was in Australia. I would guess that that's asbestos on that garage. The cladding given?

No, no. Most of the resource cladding here are the little tile like looking things.

Ah, okay. Yep.

Yeah, you can tell which ones they are, right.

While you're just looking at the photos. John, the question that I asked and I know there's some dynamics that are different, Lynette, in New Zealand, I. E. No stamp duty and capital gains tax, which makes this a whole lot nicer as an opportunity. But my. I can only see some of the images from the houses nearby as well. And my only concern potentially would be and with Petonian it looks like just having a look at the area, it looked like it was quite close to the water. There might be some over capitalization potentially for the box at the back. So the price range that we're looking at here, what's the price range within 50, 60 thousand dollars? The purchase price?

Yeah, well the RV's 370 so. So I'm not sure what the indication is of what they're after. I do know what they purchased for so I'm sort of going to stay within what they purchased in the RV.

Because my only thoughts would be and as I said, I've got limited knowledge of this area but I have looked around the hut area before for properties and things and I've only got one property in New Zealand. But the is that you may be over capitalizing with with the box at the back. It usually is almost like a premium add on and the price point is higher than that for beginning price. I'd almost suggest in Australia just because if you're going to flip you're going to have to have all those extra costs involved as well. But I wouldn't want to be going a lot over the median for the area and not creating the best property on the street. Does that make sense? So, so when I'm looking at a box in the back, it's. It's also looking at the entire the end numbers because if you're flipping and I know you know that's what you've done traditionally and I'm assuming that's you potentially doing here, if you're flipping, then creating the best property possible property out of the box may not necessarily mean that you're going to sell at the premium and get get all the money. Back that you think you may.

Oh, sorry. I'm going to keep this one if.

I can get it.

Oh good. And would there be a rental? You know, is the rental market there? Is it a. Oh, very much, yeah. And what kind of returns are the rents getting?

Oh, I can't even tell you that right now. It's too late in the evening.

I know it's midnight there, you poor thing. But one of the things that, I mean, you know, the box at the back, you know, we've talked about that previously. As you've seen in the Ultimate Guide to Renovation as a flipping strategy and as a hold strategy, creating that beautiful back area living space and converting those extra rooms in the beginning into extra in the beginning of the properties for extra bedrooms is fantastic. If there is the demand for the four bedroom houses in the area and you're creating a four bedroom house, for instance, so you know you're making it.

More market demand by doing it. Yeah, yeah. You're not just doing it because you want to do box on the back.

Exactly. So understand that demographic carefully of what the area has in it. I mean it's great that there's a rental demand, but understand whether it is actually for what you're looking at creating because often as renovators we see opportunity in the down and dusty kind of horrible house. And I actually just did an article today to go into Australian property Investor Machine magazine next month has asked the expert, is it great to buy the worst house and the best street? I was saying, well, you should really start with understanding if you've got the right suburb first. I think that sometimes it's going back and just remembering your buying criteria that we talk about up front in the course in understanding what you're trying to create then going through the methodology of what's the major demographic here? What's the median price? Am I over capitalizing to what the medium property? Am I going to get the rental return and is there demand for that type of property that I'm generating? I mean obviously it's a great location for the area and yeah, it looks like there's a lot of opportunity there. But just don't over capitalise by potentially trying to fit the box in the back strategy and if the market doesn't need that, does that make sense?

No, that's fine. My original strategy for that though is, is. Is just buying and just carry on renting it for some time. I'm waiting for that ripple effect to come from down. Come down from up north.

Yep, yep.

And I guess I Would love to convert New Zealand suburbs into the suburb selection thing that we've got, you know, that you've got, so that I can start working out the maps and things like that. But at the moment it's just a physical thing of going there every week and open homing the whole.

Or maybe if we can get enough students from New Zealand, we could start generating one of those spreadsheets for you.

Well, the dot maps will work exactly the same.

Oh, absolutely. Yeah. The dot maps and the price pin. So methodology obviously works anywhere. In actual fact, I had a. Will have a virtual assistants work for me many years in Philippines. And she read my book and was doing some, you know, work on copy on some of the courses and she said to me last year, you know, I've bought two properties in the Philippines since I've been working for you. Like what? And you know, the. I think the average income there's like $4 an hour or something. Mad. So, you know, the fact that she could use these tech. These kind of techniques in the Philippines and we've got people all over the world using them, obviously, but mainly they're developed for Australians because that's where we are. But we've got a lot Kiwis and. Yeah.

And it's no floor plans.

No. It's strange, isn't it? I was looking for a floor plan as well, but. Yeah, I hope that helps, Lynette. And thank you so much for hanging in there and being on. On late at night.

That's okay.

And we look forward to hearing about the. The sale of your property too.

Yeah, good luck.

I shall post pictures of this next one coming up.

Definitely, definitely. Keep us in. In the. Look, I think we've got a final question now. John, can I just. I know I'm. I know I'm not allowed to do this, which is kind of like we've been working on something, a surprise kind of competition.

Oh, okay.

It's gonna come out. So can I say something about it? Because I'm really excited. Right, okay. And for those people who are listening to the recording, I'm sorry if it's passed by the time that you've heard about it, but I was saying to John during the week, you know, because we. We've got an exciting new club coming up starting and next week that we're going to start telling you about. And I was saying, wouldn't it be really great to have an exciting competition around where we can actually go live and tell people how to assess properties? Like for instance, getting on and looking at the demographic information for Lynette and looking at the capital growth predictions and using all these free tools that we talk about to actually go, hey, is this worthwhile or not?

The properties on the market at the moment. Moment, yeah.

So we're going to have a competition, aren't we John? We're going to have to find out from someone legal who says if we can do this or not. But we're pretty excited about doing it. We're going to have a critique, a critique where we're going to get people to find the best investment property that they think that's on the market at the moment. And I'm going to choose a few.

Post it on the Facebook page and then Jane's going to run through all of them on a webinar.

You know what we should do? We should do the webinar next Thursday night.

That's a good idea.

Back it up. Okay. All right. Now we've got some work to do tomorrow, but yeah, so what your property success Facebook page. I'm going to put something up in the next few days and say, hey, post, I don't know, post. The property that you reckon is going to be. Money's no issue.

Yeah, it's complete fantasy. So you can choose any property you.

Want but you think it's going to be a great investment property and I'm going to choose a few of them and go through and show you how we'd use the free online websites that we use to do analysis and yeah, give away. I'm gonna give away something. I love giving away things and yeah, so that should be pretty good. In actual fact, we've got a question here from Kylie and I reckon that. Kylie, I'm hoping that you might find a property that you could probably post here.

Kylie, I'm a first time investor so this is all very new to me. I've been researching the northern suburbs of Brisbane which is within 5-10km of the CBD. I'm wondering what are your thoughts on population growth and employment to move the market along? I've been having trouble finding information on this.

Okay, Kylie, let me tell you what I would do. John talked about being sneaky and talking to real estate agents before you had access to RP data professional and asking them for past sale information. I think that there's nothing better than you can do is talk to the locals who have that expert knowledge and potentially even talking to the real estate agents and saying, hey, you're the. Let me think. Chermside Geebung Kedron agent Number one agent in the area, what's driving the market here and where the population coming from, etc. And if the agent in Kedron they're going to say well even Jibung, well people can't afford Kedron anymore so they've moved to Geebung.

And I've been there, really open to that too. I've done that a bunch of times and just said hey, I'm investor, I'm coming into this area, I'd love to pick your brain. Can I buy you a coffee? And then yeah, you do that with a whole bunch of agents and before they know it and you start, you know, cross checking what they're telling you and you're starting to build a picture.

And the other thing, if you were into the flipping market you could say I'm looking at buying and selling and all of a sudden the agent's going yippee. I've got, I've got a potential for two lots of commission. So look, the kind of on the ground, no cost fun way of doing this is ask the experts in the area and asking them what is the population growth and employment in the area? The really good thing, 5 to 10ks from the CBD of Brisbane. We're not talking about the fact that you're in Dubbo in New South Wales and potentially the Abattaw could close down. The local mine that's just started up could close down and all of a sudden the population and employment is going. I spoke to someone in Kalgoorlie today. 40 people were put off work from one of the mine sites on, on Tuesday and all of a sudden you know there, there's even more vacant houses in the area but you know that that kind of tenant is leaving. So we're not talking about the fact that you have that you see in regional areas that have only one market dominating and being what's driving population employment leaving the market. So you have got the integrity of the Brisbane Capital City market. And we're talking 5 to 10K. So we're talking what, 650 kind of median price point to 10K is out of about 500. So you know, you don't necessarily have to worry about that. But that's where the beauty of the dot map comes in. Because when you start dotting the capital growth in the last 10 years of those areas you start seeing that ripple effect in action and you start seeing that pricing pressure where you find that affordability does become an issue for people and they move into the next suburb. So if you're talking about your concerns about population growth and employment, I would be less concerned about that, but I would be more concerned about finding the opportunity of where the next kind of hotspot is, is. So, you know, you may not be pushing out to Banyo, for instance, or Caboolture, but you know, you're, you're looking at what happens after Chermside or you know, what happens as that market moves on. So that's where I'd be targeting it. And I know that, you know, I did a dot map review with a mentoring client end of last year and it was really interesting looking at her dot map because I could very much see that ripple effect going out concentrically from the city. But also ahead of that was along the infrastructure. And it was kind of like the spokes on the wheels were ahead of the concentric circle of the ripple effect. So what's driving population that drives growth and drives demand? Being along those major arterials that can get people into the city quickly is also a driving. I mean, all of my properties are next to hospitals and universities because I want the fallback position of having something I can rent because my strategy is buy and hold, buy, renovate and hold. But you know, I would be less concerned in your situation about the population growth and employment, but more interested in targeting what your where you can make the most money and the most profit, which is anticipating that next area that takes off. And I think the beauty of the Brisma market is, is A affordability B, the rental returns a lot better than the other capital cities that are moving at the moment. But also that you have the opportunity of we still have a ripple effect within 5 or 10ks that is within a price point that people can afford. 5 to 10ks of Sydney properties are over a million bucks. So I hope that helps Kylie. But I hope you find a property and I hope you posted on the Facebook your Property Property Success page when I put up that competition. It won't be a competition. It's only a critique, let's say not it's competition. John, just in case there's some legal thing that we don't know about.

Yeah, one last question about that. What's deemed the best? The house with the biggest profit or the house with the biggest return on investment?

You know what? I don't even know it will be the best. I think it'll be just down to my determination of the night of who've actually come up with.

I think the idea is you can do any strategy with whether it's flipping or holding or.

Yeah, or cash flow. And just explain. We'll probably have, I don't know, 30 words or less of why you think it's a really good opportunity. And what I'm going to look at is A from an opportunity of. Okay, let's just brainstorm this, John. A from potential growth opportunity. A, based on your strategy where you can maximize the money from the property that you select and B, how does it fit demographically into the market that you're choosing to buy? Set the strategy and I'll go live and pull up the information and websites that I use to find all that information out and show you how. I would do it really quickly to say, is this a go or no go and take three or five or something and run through next Thursday night. We'll have to book a time or.

We might just get all these people to put the properties up and then we'll go and buy them.

Yeah, we don't sell properties. We just buy the ones that you want. No, we won't do that.

Yeah, that is a good place. Property.

That's a good property. So anyhow, guys, I think that's our last question.

Yep.

Okay. And thank you so much for being involved this evening. It's great to see so much activity. As I said, send a question to question at your question or questions at your property success questionsourpropertysuccess.com because, you know, we love answering questions and helping you out and you've got some roadblock or something that you're stumbling over and you know, just a quick little, you know, jumping online and asking a question. Obviously, you know, we have hundreds of people who have access to this and I'd have to say that a significant amount of them listen to the recording rather than the live. And we love having people live. And if you can't be live, please get on and leave us a message on that phone number so that the 1376 triple one nine. And I'll put it down and we'll answer it this time next month. Yep, last Thursday of the month, 8pm So I don't know, do I have anything I have to sign off with, John?

No, that's it.

Well, watch the your Property Success Facebook page. Send an email out to let people know about it.

Yeah, we'll do that. Yep.

And yeah, really excited about the youe Property Success Club. And for those people who is kind of struggling on location information, heads up. It's a. It's. I'm really, really committed to finding something that's going to be affordable. And we've. We've really put six months into thinking about coming up with an alternative for people who don't need the fancy shiny stuff, but just want some solid answers quickly and give a monthly kind of assistance.

So, yeah, some good fundamentals.

Wait and watch for it. Okay, guys, have a great month, and here's to your property success.

See ya.