Your Property Success Mentor - June 2015

You. Hello and welcome to our Call for June. Wow, hasn't this year flown? My goodness, we're almost at the end of financial year and well, things have changed since we spoke last. Look, I'm looking forward to hearing from you tonight and hearing how you're traveling as well, especially for those that have just joined the Ultimate Guide to Renovations last intake because you're pretty much done now. There's a lot coming up for tonight and I have a very special and announcement. We've secured what we think is a fantastic deal which is going to directly impact many of you on tonight's call. And of course, we'll be taking all of your questions and hearing from you. So settle in, make yourself comfortable and let's get ready to chat. Now these calls are exclusively for my mentoring students, the students of the Ultimate Guide to Renovation and my Investors Choice Mortgage diamond clients. If this is your first time on the call, a very warm welcome to you. Now don't be shy, please say hello. These calls generally take place on the last Thursday of every month and of course you will receive email reminders each month when the calls are approaching so you don't miss out. And as always, we also have a message line so you can actually leave us a recorded message. I think we even have one of those tonight as well. And with me as always, I have the co creator of the Ultimate Guide to Renovation, John Hubbard. Hi, John.

Hey, Jane. Hey everyone.

How you going?

Very good.

Freezing to death down here in Melbourne.

Yes.

Can't wait to get on a plane tomorrow. Somewhere warmer, I have to say. So tell me what has been happening with you busy this week? Busy.

Had some. I think I'll let everyone know that we bought another development site.

So that's two you've got underway at the moment.

So that's two we've got underway. One's at just coming out of the ground now. So they're just starting to do the foundation. They've done the basement. They're now doing the slab on. It's two side by side townhouses. Now the doing the slab on unit two and they're putting the posi struts, same as the box on the back down for. Yeah, down on the floor for unit one. So that's going away and then the, the other one's just about to be demolished. So it's next week it's getting demolished. The house. We bought it with the house on it, had plans and permits and so yeah, just been getting that organized and getting, you know, services cut off and all that. Kind of thing so we can get in there and knock it over. Oh, and doing some bit of negotiation with the. The neighbors because we had. We had to have an arborist report because there was trees in the neighbor's yard that came into our property. And so using machines to knock down the house and everything like that was going to mean we had to do all these things called lay these things called rumble boards, which are basically like big planks chained together so when the machines go over, they don't damage the roots of next door. And. And there was one particular tree that was causing problems because on the town planning, our garage, all the entrance to the garage and everything looked good. But when we came to do the building plans, it turned out that we could only because of our height restriction on the boundary, which was three meters, we've got a garage on the boundary and the tree protection zone, which was in front of the garage of the neighbour's tree, meant that we can only have an opening for a car to get through of 1.9 meters. So you, you know, which is door height. So minimum regulation is 2.1. So then we had to knock on next door and, and negotiate to get rid of the tree, which we successfully did.

Oh, good job.

And chucked in some goodies for her and.

Yeah, what kind of goodies do you get for a treat? Is it chocolate and wine or is it. Is it more than that?

No, it was just a wink and a smile, really.

No, it was good negotiating.

Yeah. We gave her. What do we give landscaping up to? A value of 500, we said. So we've removed the. Paid to remove the tree by qualified arborist, repairing anything as existing. If there's any, you know, ground level or any other, we'll have to take a fence panel out. And then we've. She's opted to have creeper grow up the wall and we're going to paint it a color of her choice and give her basically 500 bucks worth of landscaping.

Nice.

Yeah.

Now, look, I know, you know, a lot of the people on these calls and people who listen to this recorded are of renovators and we're all about, you know, the whole trident strategy, when we can enact it. And the middle strategy or prong on there is adding value and one of those is development. And I know there's a lot of people, even in the Ultimate Guide to Renovation who have looked at an additional twist to renovating property at the front and subdividing and building at the back. So I'm just going to ask you some questions off the cuff if that's okay with you.

Absolutely, go ahead.

I'm trying to catch it out, John. Now we can. Can we guys? So the difference between, you know, obviously been renovating for over 20 years and now you're into developing, what are the significant differences and things that you need to be aware of?

The planning. Planning is different. The actual, you know, the bits and bobs that go in there, the carpets, the floorboards, the, even the styling and the, and you know, renovating to the target market, all that's kind of the same. But what I found to be, I guess a learning curve is the amount of detail you have to give the builder up front. Because a lot of that I would have just, I would done. Would have done on the fly. So things like the tap heights, the, the heights for all the vanities and the shower rose heights and the exact position in the ceiling because I use the droppers with the shower roses and stuff like that.

So what do you have to give.

That to them up front because they detail every, literally every single thing before they start. So when they, and they've got plans and blow ups for absolutely everything. And a lot of that I would just be used to pointing. Okay, we get in there and have a look at the shower recess and myself and the plumber will go, all right, let's measure out and we'll divide it up and we'll stick it here and mark it and away you go. So a lot of that stuff has been an eye opener. Even things like the internal configuration of the wardrobes. You know, I had to draw all that out and, you know, put measurements and stuff on it.

Because I know that you're a great user of the quick quote calculator.

Yeah.

And you've used that for renovations and developments, etc. But just going through that process, I would have thought that you would have imagined, you know, what you needed. But this is taking the next step of saying, what do I need and where is it going to exactly go before we even start.

Yeah, that's right. So it's another level again, that's not.

Before you get, you know, you don't need that for the approval though, do you? This is just for the next stage.

This is literally just working with the builder. And because they, they're not like your average home builder, that they're a builder that works for developers and that's who we're dealing with. So they're used to having everything planned and they knock it over in short time frames and literally everything's planned like a military operation and as opposed to a builder that works with a homeowner which is will hold your hand through it and go to the store with you and choose the carpet and all that kind of stuff.

Now I'm going to preempt a that I'm sure people are going to want to ask about this and before we get into questions and answers a bit later, but people go to an architect, they get designs and then they go to a builder and they get the builder quote. Now you obviously a hands on project manager, but an architect can do the project management as well.

Absolutely.

And often we get queries on these calls about should you use an architect or is it a project manager or do you leave it to the builder or should I do it myself? Now some of the extraordinary costs I've seen architects supply to project management I think are insane. But I'm interested in your thoughts on that.

Yeah, so the architect particularly on higher end homes and when I was a tradesman I used to work a lot in the inner suburbs of Melbourne and for builders in places like Middle park and so on. We were doing multimillion dollar renovations and the architect was in effect the project manager on those jobs. And they were great because they could, they had given the vision in terms of the design and they knew all the detail and they coordinate those jobs really well. But you pay for that level of expertise. So I think particularly for what we're doing in renovating for profit, I would struggle to see that being a profitable model going down that road. Maybe, maybe it is.

I think the key was you said homeowners doing major home renovations.

Yeah, that's right. But project managers, as you've proven, they can be very viable, particularly if you're renovating interstate. The way I tend to think about it is I use draftsman and mainly because I spend a lot of time building the swipe file. So the swipe file is basically anytime I see an idea that I like, whether it be a bathroom kitchen design, a lay highlight window, it gets swiped and goes into my swipe phone. It's categorized in, in the bathrooms folder or the kitchens folder or whatever. And so by the time I get to a job and I'm looking at it and thinking, all right, how could I configure that? When I've decided on the layout, for instance, then I've got a whole stack of options in my swipe file that I'll then go to and say, oh well, that'd fit there, that'd fit there. And then I Will take that to a draftsman and then basically brainstorm with him of how we could implement, you know, what's on the swipe file. Not everything gets implemented.

But for those on the call, just put in the chat box if you've got a swipe file. I know that we recommend that you do this, and I've done this for our cosmetic renovations. You know, when my husband and I have gone and visited hundreds of properties, you know, you get those brochures or you might take some photos and, you know, I've seeing things like, you know, let's put some French doors in the hallway and just be able to segment the heating in one area, for instance, for heating a property or. And just adding a little bit of extra. And, you know, sometimes you go through them, you go, God, this looks really good. And I can see here some people have got the swipe files going, but I really encourage you guys to do it. And, you know, if you're not looking at properties, maybe just pull it out of magazines, et cetera, as well, because.

And I use Pinterest. Is that right?

Yeah, I use Pinterest to get things. Now, I've just got a message here to say someone's having trouble hearing us. And I know there's a lot of people responding to our questions, so I'm just wondering if anyone has any difficulty or not.

Yeah. Type in if you can't hear us.

You can't do that.

Yeah. Because you won't hear us.

Okay. All right. So. Oh, yeah. Like a disorganized mess of cool pictures on my hard drive. Does that count as a swipe file?

Yeah.

Yeah. You know, this is what you do in your holidays. You go and categorize it or put it up to Pinterest.

So, yeah, just started using Evernote, actually, which is I'm migrating everything across from folders on my hard drive to Evernote, which has been. It's really good because you can take photos with your phone with Evernote and you can tag. Tag it and away it goes. So it's nice and easy.

Yeah, I. Look, I just. I love the idea of the fact that someone's been bought before me and have tried and tested something and it works or doesn't work. You don't have to come up with everything yourself. So.

No, that's right. There's nothing worse than starting with a blank piece of paper to it.

Exactly.

You do your head in.

Exactly. So development. So you're going to have two on the. On the go. How. What. What kind of time periods are we.

Looking at here, the first one is actually contracted to finish in November. I'm just saying I'm. My confidence is starting to wait a little bit on that one whether you'll make it. It's annoying because if he doesn't make November and then we get pushed into December, it'll be too late. And you can.

The marketing.

Yeah, you can get really caught there in my experience because I've done it once before when you're trying to sell in December and the pressure's on you to sell because otherwise you're going to have to hold on to that property until the market kicks off again in March, in mid Feb. So I think Prop. I don't know yet. I'm still hoping that he'll get it done at least one of them and we can sell one of them in in November, but it might go through to mid February and the other one's going to be around Easter.

So. Okay. So just the first one though is two. Three bedroom, four bedroom.

Four bedroom. The first one. Both of them or it's kind of one of them story two on three. Yeah, one's a two story, one's a two story with a basement downstairs basement and the other one's just two side by sides, which is townhouses, which is two story and. Yeah, one in Camberwell and one. One in Canterbury. So both in, in good markets. Been seeing a little bit of growth there too, which has been nice. So we'll see though. But it's, it's a different game. That's, it's, it feels a lot riskier, I have to say. You don't kind of sleep quite as well at night.

You say you're braver. Braver person than I am.

Yeah, it was interesting. I mean we had that conversation the other day with the property professor and who's very.

Peter.

Yeah. And he's very much along the same lines as you too with the buy and hold. And he kind of said in his opinion was that the best way to invest in property is to buy and hold. And he said, but I'm. I can't do that because I can't sit still for five minutes.

Exactly. It's interesting. I was speaking to a lady today and she said, I'm reading your book and I consider us very conservative and low risk. She said, so we've only done one subdivision development and your definition of low risk is not the same as mine.

Yeah, absolutely.

And then I spoke to someone else and he said, you know, he'd been an architect and builder for High end architect and builder for 15 years. And he said, I find cosmetic renovations risky because the margins are so small and I'd much rather do, you know, a major structural renovation because that's where his comfort zone is. And it really, it struck me as the fact that, you know, your idea of low risk or my idea of low risk might be completely different.

Yeah.

And it's, you know, it's that I think that's what's so important in a lot of the courses, your Property Success System and in the Ultimate Guide to Renovation is that we start at that kind of the goals, but then we go into what's your risk profile and what's the risks associated with the different strategies that you might employ. It's important to know that. And yeah, your idea of risk and my idea of risk could be completely different.

Yeah, that's right.

Well, I know also that you've been doing some. Been pretty busy chatting to our beta testers for one of our new things that we're launching the next two weeks.

I can see a few here today. G', day, Ross. Yeah, that's been great. So we've got a new course on the way. You might have seen a survey that Jane sent out. Well, it'd be going on probably a month ago now, just asking what people wanted, help with what they wanted. And what came out of that was basically your property success club. So do you want to give a bit of a description of what, what that is?

Well, I guess we can. Or are we going to wait and give them all the information in the next.

Oh, no, I think we should tell them. I think we should.

Well, this is. Look, I'm really excited about this because, you know, as you know, we're all about trying to deliver value and content and we want to do it in an affordable way and we want to make sure that it is packed full of information that people can use. So, you know, we know that we have high end, you know, ultimate Guide to Renovation Courses and we have the book that people can pick up and start their property investing journey. But there was, there's, I guess, a kind of gap where some people aren't too sure whether they want to do a full course or, you know, they just wanted to have a kind of a trial and test really, isn't it? And the your Property Success Club. You know, we kind of surveyed people over the last year or so and we've got a lot of feedback from these calls and from email questions that we get regularly and Facebook and we really got an idea of like, the top 10 things that people want to know about. A lot about location, a lot about how to use specific, like websites, resources. Resources and things and things that are available that you may not know are available and how to use them. Also, you know a bit about renovation without going deep into a renovation course. So what we've done is we've created basically a monthly program. We've got courses that the course length varies from half an hour to an hour or so each month. It's a recorded educational piece that actually goes really deep into one specific topic. We've had our testers go through three of these and gosh, I've been watching these testimonials and the surveys have been coming back and every time I open my eyes, there's a smile on the face, you know, and. And we're really. We're really proud to do it. You know, we wanted to do something was, you know, less than, you know, or at least to start off with foundation members, less than $50 a month for people to be able to dive deep into education they need and be able to stop at any time they want.

So it's kind of a way to keep accountable too, isn't it? That was some of the feedback that came back. Is that the. They like the idea of just having a monthly, I guess, keep your toe in the water. Yeah, that's right. Keep you honest and a bit of a kick up the backside to remind you what you should be doing kind of thing. So just going deep on one little. One subject. Yeah. Just kind of keeps your head in the right space and allows you to implement. Because I think the problem and part of the feedback we got is people just get overwhelmed with the amount of information. It was part of the reason with the Ultimate Guide to Renovation, why we decided to go with the.

The weekly.

Yeah. Because you imagine if we. All those 12 modules come out once, people would just kill over. But. Yeah, so it'll be interesting. Interesting to see how it goes. The feedback so far has been amazing. So.

Yeah, so watch for that.

Yeah. And it's quite different than the other stuff as well. It's got, you know, it's got lots of elements from it, but it just goes a little bit deeper into. Into one particular subject.

Yeah. And we'll talk a bit later about what we've. We've tried to negotiate with. With RP Data as well.

Yeah.

Look, we had them in the office again today and asked them to give us something that other people haven't got. And we got a heads up on a product that's coming out next week. They're going to launch it and we will be the first to potentially able to have access to it. So we're still waiting for them to give us the big permission for that. So I can't wait to tell you about it. But thank you for all those people who told us that they're interested in hearing more. So we'll be pulling something together in the next week or so. Lots of things happening.

Yep, lots of things.

Well, I have to say I have had a very busy month. Thanks for asking.

I didn't get my cue card.

Sorry, I should write notes for you. I have to say everyone has probably seen what's been happening in the media and maybe following what I've been putting on the Investors Choice Mortgages Facebook page and on the your Property Success toolbox. But lenders have gone a little crazy. APRA has stepped in. They gave us a heads up in December that they weren't confident about the level of investor activity in their market and there's an expectation that growth in investor loans should be around 6% and it's over 10% and they needed to rein back in. So interesting information that I pulled today from the latest Residex report as well. And it showed that, you know, really there's been some extraordinary growth obviously in Sydney and Melbourne. And in actual fact, Sydney's property prices grew by on average $160,000 last year and Melbourne by 55,000. So we're talking about an 8% market growth in Melbourne and 16% in Sydney. So some extreme kind of measures and if you counter that against some of those resources states, you know, we've got some, some negative numbers that have come through from Darwin and from Perth. So, you know, there's, you know, Darwin fell by 4%. So it's really the problem is that the, the Reserve bank can't change interest rates based on two property markets. And although they are, you know, probably arguably the biggest property markets, they can't step in and you know, put interest rates up and try to, to dampen the flow. And hence apra, who are our kind of regulators, have stepped in and said enough's enough, we need to make some changes. So I guess some quite significant changes for us as investors that I think in particular we need to be aware of is some pulling back on loan to value ratios. So some lenders, for instance, ING pulled back in New South Wales to maximum loan to value ratio 80% and they've pulled back their maximum lend from 95% to 90%. In other places, WESTPAC had pulled negative gearing out of their calculator and CBA announced on Monday that as of this Saturday, they're pulling out negative gearing for loans over 90% LVRs. Bankwest has reduced their lending from 95% to 80% loan to value ratio. So these are significant issues when we're talking about looking at how much equity we might have to put into a property. But the thing that has created an extra 100 hours of work for myself and my brokers for the last two weeks has been actually going through and dealing with the changes in servicing. So Macquarie Bank, AMP NAB, St George, CBA, Adelaide bank changes on the 4th of July. All of these lenders are actually now taking other lenders debts not at actual interest rates, but at interest rates plus buffers. To give you an idea, let's just say you had a million dollars worth of debt with other lenders previously. The lender that you're going to to get this current loan with would say a million dollars at 4.5% interest only. You know, your repayment's $45,000 a year as of, you know, depending on the lender as of two weeks ago to two weeks in the future. What that has meant is that they go and say, well, you know, we're going to have a look at your debt, but you know, we're not taking $45,000 as your repayments. What we're going to do is we're going to take your actual repayments. And some lenders are then taking the balance, the million dollars and timesing that by 2.25, others are times by 1.25, others are taking it at principal and interest on all the repayments over 25 years. If you have interest only lines. So that $45,000 in your servicing calculator also can go to anywhere between 70 and $90,000. So your borrowing capacity is greatly reduced. So hence we've been out there doing.

Lots of reassessments, created a bit of work for you.

Yeah, and we know, well, we've bought into the plans that our clients have of growing portfolios. So we want to be aware of that. We've got some cash and some pre approvals in place at least for the next 90 days for them to be able to take some action if they want to. So some really significant changes. And you know, I think APRA has had to take some measures to cool the market and, you know, responsible lending. Over 52% of mortgages are written by mortgage brokers And I think responsible mortgage brokers usually would take into consideration buffering some risk for their clients by putting in, you know, a bit of a buffer of a line of credit or keeping their cash in offset accounts or fixing some of their loans and having plans for them. Some don't. And I guess, you know, to some degree this just forces the measure that, you know, there is some additional protection. We don't want to have happen what happened in the US and we don't want the capping of loan to value ratios like we've seen in New Zealand.

Will you adjust some of those buffers that you would have put in place now and, and be a little less conservative or will you keep the same kind of buffers that you recommend?

I mean, you know, me, I'm low risk and I'm always trying to anticipate the worst case scenario for clients anyhow. So, you know, I'm, I'm always, you know, we're always assessing, you know, current lending at 7 to 7.25 to 7.4% anyhow, in case rates go up. But you know, for me I think it's, it's still important to have those additional buffers in place. So, you know, so it's been really interesting. You know, it's, it's created a very busy period of time in the offices and in addition to that, you know, we've, we've been taking a lot of calls in the media, have been doing a lot of articles and answering a lot of questions for journalists on the, you know, is the, is the property bubble going to burst?

The B word.

So I think the more that you, the more that they say it is, I think it creates more worry for people. So, you know, there's questions on people's lips and you know, some degree, we've had some policy changes. There's been some significant changes in the last 15 years in the finance world. I think, you know, when Aussie came in and kind of undercut the banks and got some cheap money out there and made lending a bit more affordable, was, was pretty dramatic. And you know, when we saw some deregulation and now we've kind of, the GFC obviously created some angst and now we're seeing these APRA changes to policy and you know, good times, bad times, things change. So. But yeah, it's been a really interesting ride and you know, the reality is a lot of people took loans out when interest rates were seven and a half percent and you know, their borrowing capacity is probably back where it really was then. Anyhow, with all these changes. So, you know, for a lot of people who are, are looking at taking out a loan, it probably what their borrowing capacity was, you know, two or three years ago is probably where it is now and doesn't make that big a difference. And you know, we still got the, the RP data corelogic Pain and Gain report has just come out and it shows still, you know, over, you know, 40% of people who are selling their properties are selling them for double what they bought them for. So in Australia, you know, Australians are now saving more than they've ever sold saved before. And because a lot of people don't reduce their interest repayments when interest rates go down, being on principal and interest often and even interest only, they are paying more into their mortgages. So there's some statistics, I think that people are like a year ahead on their mortgage on average as well. So there's some really great fundamentals. And when you start looking at the bubbles that are occurred, the 2003, 2004 bubbles, and everyone was anticipating a huge drop. I think the biggest movement down was 3% after 16% growth. It's not that bad. It's an interesting time. And I think as property investors, we always teach and talk about being prepared for the changes that can be about. And I'm glad to know that we've got some measures in place for ourselves and people have been through the process, courses know how to do that with that risk minimization kind of tactics that we have. So.

Good.

Been busy.

Right.

And the, the, I was going to say the kids, the students in the Ultimate Guide to Renovation have just had module 12 as well. So we've.

Yeah. So they're done.

Yeah, that's it. Which is fabulous. Now, I know a lot of people aren't on the call because they feel guilty about not being a module four and they're 12 and they're actually, you know, maybe on module four and they're trying to keep their head down.

I've heard that too. Yeah. Don't want to face up to the call because I haven't done my module.

I know. So if you're listening to this recorded, we do not judge, we just, we know that you have access to the course material forever and you can come back to it every time you want. And as you've seen, or those that have been with us for a few years, we update it and do new things every time and add new value. And we often have a lot of our students from previous courses go through it again when it's when it comes out and relaunched, which we do twice a year, so it's pretty. It's pretty exciting having got everyone through the 12 weeks and, you know, the six for six course modules being very much on where to find a property and the last six on the actual renovation. And we've had some fabulous feedback. So if you're not up to module 12, don't worry, don't despair. It is there for you to be able to take the course and the material when you need it, as you need it. So please join us next month on the call if you haven't. If you haven't finished. So, all good? Well, rambling, shall we get going with some questions?

Why not? Does anyone have a question? Would you like to put your hand up?

Oh, look, I've got this whole thing. I have to do the whole, you know.

Oh, sorry, I've jumped the gun.

I've got housekeeping.

I forgot. I thought we'd done that already.

No, quick housekeeping. Look, if you're on your computer and having trouble and I don't know how to respond to someone who has told us that they can't hear our voices, other than maybe we can chat back and just say, check your audio. But if you are having trouble, you know this and you can't hear the call, then there is an option to call in on the telephone and the telephone number can be found in the sidebar under the Audio options drop down menu. And you can call that number from a landline, Skype mobile or wherever you want. Now go to the webinar. If you go the. Go to Webinar. Slide here. If you have a look at this. If you're on a PC when you ask a question and you've got a microphone and you're ready to talk to me, put your hand up and that tells me that you're ready to chat. Look, I do give priority to people who do have a microphone and can talk, so that I think it makes it a bit more interesting and I can get to the bottom of your question and we can have a bit of a to and fro and really get some specifics out there. If you don't have a microphone or you can't talk to me, then just put your question in the chat line and we will get to that. So, you know, don't feel that any question is silly. You know, I encourage you just to make an effort and engage or let us know how you've gone in, say, the Ultimate Guide to Renovation or where you are at the moment or where you're looking for properties. Look, these mentoring calls usually go for about an hour and a half and just in case there's lots of questions. So I think we were inundated last month and the month before there wasn't that many. So you can hear us rambling on for a while. Otherwise we'll call it a. An early night and everyone can go home.

Yeah, prefer you ask questions.

Yeah, we'd love that, wouldn't we? We're here, we've got the heater on, we're settled in. So please ask question. We want to make sure that no one misses out. So you know, if you, if you have a quick repeat follow up question, please ask it after your initial question and if you've got another question a bit later on, put your hand up again and we'll get onto it. And just lastly, a reminder that this isn't a tech support call, so I'm not very good at that stuff. If you are experiencing any problems with videos or downloads or access, I can't fix it now, please email my team@supportourpropertiesuccess.com and we will get onto it as soon as humanly possible.

So I can see Viv's got a hand up.

I love it, Viv.

There we go. I'm looking good.

Send audio PIN number to Viv. Ah, she's on the phone. So I think we sent her something. Do we send us something. So Viv, while we're trying to work out how to get you access. Okay, I'm going to give, I'm going to read it out. 102/ash is going to enable your unmuting. So that's 102, Viv. So we can chat to you. Let's see if you can talk to us now. I saw, I'm pretty sure I saw that Viv had.

Viv, you're there.

Oh, hi, how are you? Nope, can't hear it. Oh, Viv, you might have to type for us. I'm pretty sure I saw that Viv was at an exciting seminar this week. There's been a lot of property seminars going on around the country. Viv, do you want to put your question into the chat line and we'll see if we've got anyone else. So anyone else got a question whilst we're trying to.

Well, actually, while we wait for Viv, I'm going to fire up the message line.

Oh my goodness. Oh, I can see Viv's typing to us. She was at Property Women. Viv, do you have A question for us. Type away. Okay, message line. John, let's go with the radio. So this is the message line. You guys can call on 1376 111. Leave us a message, one message per question and we'll get to it.

And this message is from Cathy.

My name is Cathy Randazzo. My question is what do you think of off the plan purchases? I want to know if they're worth because obviously you get them cheaper and you lock in the rate but they're built in two years time. Yeah, there's some companies that obviously do that. Yeah. What do you think of that brand new apartment off the plan? Is that a good investment choice? Thank you, bye. This is a really good question, buying off the plan. I'm being asked it all the time and I know that there's some pretty impressive marketing campaigns that are going on especially in inner cities, Sydney, Brisbane and Melbourne that I'm seeing. I actually saw a statistic that said there'd been 85,000 apartments approved in the next seven years in Melbourne, which is a lot of apartments. So we know there's about 25,000 under construction at the moment. Look, it is a really interesting dilemma and I've talked to John Edwards about buying off the plan because in theory buying off the plan allows you to lock in today's price and buy at today's price in the future. So there's some great options available for people who are trying to do that. So let's just say you know, you're buying a $400,000 property for ease of maths. For me the capital growth in that area goes up by 10% a year. The $400,000 property next year is worth, you know, $440,000. So by the time you get to the end of next year it's settlement time. You've bought at 400,000, the value is 440. So you've created equity of $40,000. You know we talk about buying, making money when you buy. So that's an example of it. What does happen though is developers often price in the growth into the property market or into their property value. So you know, you might be in an area that has a median price for a two bedroom unit of $350,000. And this brand new one's to going being sold for $400,000. So the older units 350, arguably it is older and the newer units 400,000. But the issue with that is that they've actually already factored in to some degree some of the growth so, you know, you need to be aware of that being issue. People do make a lot of money in buying off the plan when there has, when there is growth and especially when, you know, there's been some opportunity. And I know I've had numerous clients in Darwin or in pretty much in every state that have been able to buy and buy well off the plan. And when it comes to the property being ready to settle that, they've got equity in it. I've also had clients that have had developers realise that there's so much equity in it that they've delayed till after the sunset clause that's in the off the plan contract. That means that they no longer have to sell you that property, so they might sell it to you for $400,000. The property is now worth 550. The sunset clause might be for three years. They wait until the fourth year till they get out of their sunset clause. All deals are off, they didn't complete it, the contract's over. You've waited three years and potentially not been in the market for three years waiting because you needed to make sure you had the borrowing capacity when this came about. And they've then gone and put the property straight back on the market for 550. So, you know, buying off the plan has its benefits. It also has some drawbacks. So some of the normal drawbacks that we talk about buying new properties is that for instance, all of a sudden 50 units become available at once to rent out of the potential 120 that are being sold, and some of them for owner occupiers. So the person who is, is the most desperate may accept a $375,000 sale price or rental, $375 a week, for instance, and you want to either sell yours at 420 or rent yours at 420 a week. So you kind of get to be subject to what the lowest common denominator is as well. You can't add a lot of value. It's hard to find something within a development that's distinguishable. So a lot of them are very, very similar. I've had clients in Gladstone, for instance, that had bought off the plan house and land packages. You know, they bought the property, value went up, it looked fabulous. And then all of a sudden the, the market went down and the property was worth less than what they had agreed to buy it for. So there's a risk associated. I personally, you know, through my property buying experience of always bought when I could afford it and in the best possible place that I could afford. And you know, we talk about taking action, you know, being kept out of the market for two years or three years or, you know, whatever however long it takes to build these properties has always been something that's been a deterrent for me as well. So, you know, just be aware of the fact that if you do commit to buy off the plan, then if interest rates do go up, potentially you can't afford to settle on that property if you've subsequently gone and bought something in the interim. So it really kind of keeps you out of the market unless you're in one of those very fortunate positions of having A a lot of equity and B a lot of borrowing capacity. So, you know, just, I know off the plans are kind of tempting and the marketing looks great. I've seen people give away holidays and cars and you name it for it and you know, I've, I've currently got clients buying off the plan. Some very high end properties as well, you know, well over a million dollars in boutique developments. But just be aware there are some risks and that you are committing to really settle as well. Some different states allow you to buy or purchase and, or nominee which allows you to in theory sell before you settle and potentially not have to pay double stamp duty. Other states require you to pay stamp duty if you do sell a property as a, you know, to someone else before you actually settle. So just be aware that there's, you know, different rules in different states as well. But buying off the plan, it can be a great opportunity. As I said. I've spoken to John Edwards about this from Residex many a time and, and he thinks that the risk involved means that the property should actually be worth less than what the comparable sales are in an area rather than more, which is what we often. So I know there's a lot of people attracted to new properties and depreciation benefits, but just be aware of the risks. So yeah, there you go.

Question from Viv. If you have a line of credit loc that has been paid out, will you still be able to keep access to it? Or if that's will they do you.

Need a whole new loan if you want to use it? Good question. Vivid lines of credit. Perfect. I think a really great lending strategy to be able to access equity and depending on the lender they might be 10 years interest only, 15 years interest only, 30 years interest only. Some of them allow you to capitalise on the interest only on the facility as well. So let's say you have a $100,000 facility and you've drawn 50,000. Then there are payment each month of $1,000 can be taken out of the remaining 50,000. So there's some really clever line of credits out there, there's others that pretend to be lines of credit. So I think Macquarie Bank's got one that's 10 years interest only, which is really just a 10 year interest only loan. Mostly they're at 0.15% more expensive than the traditional standard variable loan. They can't be fixed. So that's kind of a basic line of credit facility. What Viv is saying, let's say you have drawn previously $100,000 or got approval for a line of credit of one, like a big credit card, you only pay for what you use. So let's say you want to go and buy a $500,000 property with a 20% deposit, so that's $100,000. You then have to also front up the stamp duty. You might take that out of your line of credit, draw it down completely, and then over years you put the money back in, you might sell the property, make a profit, put the money back in and the line of credit goes back up to 100,000. Now, for most lenders, the line of credit, as I said, is a great big credit card. So you can draw down and top up as much as you want within that term that you've got the loan. Usually 30 years and usually 30 years interest only, so not such a big deal. So if you already have a line of credit and you've drawn it out and you've paid it back, you can draw it out payback as many times as you want. This is different to a standard variable loan. So let's just say that you got a top up of $100,000 as a standard variable loan and you used all that money for a deposit on investment property. You went and bought a property, renovated it, flipped it, made some Money, put the $100,000 back into the loan. Depending on the lender, if you put in the same amount that's owed, they actually do close the facility. So for instance, let me give you an example. St. George Bank. If you have less than one repayment, one monthly repayment as the loan balance, then they're more often likely to actually close that facility on you. So that's why I always say if you've got a standard variable loan and you're looking at paying it down, or you used it for personal debt, for non deductible debt, and you've got cash to now pay it down and draw out as deductible debt and use it for investment. So kind of repurposing the loan and showing those funds that have been reused, then it is possible that they could close the facility if you pay it down to the total amount. So just be aware of that line of credit though Viv, I doubt that you're going to have a problem with that. And I just suggest that check out with your broker or your lender and have a look at what the, the terms are on the line of credit. But usually it's, you know, it's just like a big credit card. Pay it off as you can.

Question from Ross. When doing a dot map, how or where do you find the suburb 10 year growth in one convenient spot? So that's past capital growth. Is there a website that lists this?

Ross, our spreadsheets. I just want to send you straight to. So module three. Where am I here?

Yeah, from memory. Ross is not in ultimate.

There you go. Okay, so Ross, let me think about this. So Ross, your property success system. In course three we talk about websites and where you can get information from. So at the back of the magazines, Australian Property Investor magazine, from your investment property magazine. You can actually go into the back of those magazines into the data bank section and what you'll see is a plethora of information. So where they've got quarterly 1 year, 3 year, 5 year and 10 year growth, that's where you can get the past capital growth for your dot map. So the dot map for those people who haven't seen the dot map technique. And Ross has had a chance of actually seeing the dot map technique without being the ultimate guide to renovation. Because he's been a beta tester for the your property success club. And that's our first module. Basically we talk about getting a map of the large area that you're looking at to try to find that ripple effect that's prevalent in the area. So we might take look at capital growth in the past 10 years and we say from 3 to 5% it is green and 5 to 6% it's blue and 6 to 7% it's yellow. And 7 to 8% it's orange and above 8% it's red. So I think we just got a picture there of what a dot map looks like. If you want to pull that across. Johnson, I put it on the screen so you can see it. So this is like a 5 kilometer zone and a 10 kilometer zone around Victoria. This is just a dot map exercise that comes out of the ultimate guide to Renovation. So you can kind of start seeing. Well, you know, and I think I've talked about previously when we were looking at purchasing a property in Sydney, we could see that Kensington, Ranwick and Maroubra, Kensington and Ranwick and Coogee all had median prices over a million dollars. And Kingsford had a median price around about 680. So we could see that those that couldn't afford in those premium kind of suburbs could. Would then flow over or that ripple effect into the next suburb. And then, you know, we bought in Kingsford. Median price there is now arguably 1.2. But I did see in the back of one of the magazines this month 1.5 million. So, you know, depends on who you speak to sometimes. And that's why we get data from different resources and that's why it's important, Ross, to actually list down where you get information from. So yeah, the dot map information. I had a mentoring student in the office on Monday. We were actually crawling all over the floor map. He came over from Perth, which is great. He was looking at buying in Melbourne, had really narrowed in on a couple of areas and we went through the spreadsheet, got a renovation and pulled out.

He's on his second dot map too and he's only, what is he, 25?

Yeah, he's not too old, so it's still great. And yeah, it was great. I love. It was fabulous. Crawling around, checking out the dot map, looking at, you know, where that ripple effect is. And it was a really interesting information. So, you know, often what we see is there's a lot of growth along the arterial infrastructure lines that. But start in the, in the inner city and move out. And then you also see the spokes of infrastructure as well. And I with the mentoring student Brisbane a couple of months ago, it was very easy to see, you know, that growth along with. Along those arterial roads leading to Brisbane as well as the inner city moving out to the middle suburbs. Yep. That's where your information from, Ross, in.

Terms of website, I can't think. Can you think of one that has it all the suburbs like it's listed in the magazine. Everyone's there's. I've never found a satisfactory answer to that question because ideally what you'd like us to have exactly what in the back of the magazines in digital form on some website?

Yeah, wouldn't that be nice?

But there just doesn't seem to be.

It doesn't seem. I just thinking invest smart investsmart.com. there always seem to be. I still have no idea doing this oh, here we go. Invest and property having a little look. They have some growth information and they always seem to be adding things on. So I just wanted to have a quick little. They have 12 and 24 month growth for the individual suburbs. So I'm not seeing 10 year there. But yeah, so it is a little frustrating unfortunately but that's the way of it. A bit of a manual hard work get the numbers.

There is some benefit to doing that too I reckon too just actually physically having to write down a number it cements it in your head and yeah the picture becomes clearer.

So with that dot map that was on the screen. So what I've seen people do and what I've seen quite a few of the preferring students do actually is potentially they might get a. So you can see there, give me a suburb there, what's near. So that red spurge is there.

Brunswick.

Brunswick. Brunswick. So that solid red is over 10% growth in the last 10 years. What they might do is get a red and color in the center of it with a black circle and show five year growth or three year growth and put that on the map as well. And often I often see numbers circles that represent the medium mice. So there's no point in going wow, you know the ripple effect maybe that we've got all these reds and yellows that are pushing in on Mary Menong Bloom. It hasn't really had the growth in Maramynong so it's going to take off if Maramyong's median price is 750,000 you're not going to go and start doing some detailed analysis on it if your borrowing capacity is 550. So you know, sometimes it's putting the numbers on. If you're going to put the growth on you can put some extra numbers on as well. And also I've seen people use the renovator report and put down a number ranking of what that suburbs so you know it's yours to make your own.

I think the. Some people get confused with the writing the other say three year growth or one year growth on two and then.

They start wondering what they're looking at.

Or reading that like the dot map. Whereas it's the. It's too short a time period, isn't it to really show you a trend.

Yeah and it's just. I mean some people do those shorter period of time just so that they get a feel for what's recently happened. So sometimes there's been some real growth in recent.

The last two or three years.

So they're just Trying to feel. Has the ripple effect really rippled on? So, yeah, some really good stuff there.

Any hands up?

Oh, come on, guys. I want a hand up. Okay, I may have to make. Out something. What was I going to say that I found particularly interesting? Now, I'm not an accountant. I'm going to put a huge disclaimer in place right up about this as a technique. But I can see some names on this webinar tonight. I'm sure it could be other people started working. We were going through some innovative strategies that he's been using. And he had a strategy in place. And this is kind of like for those relationships to come together. So let's say boy buys house, boy meets girl. Boy and girl decide that they want a home together.

It's a story as old as time itself.

I feel like a storyteller. But the original property was the gentleman's home, and he owns the property. And his $300,000 property is now worth $500,000. They have no cash, but they've got equity. They want to pull $100,000 out to go and use a deposit for a new home. And this is not unusual circumstance. I see this, in fact, finders investor choice mortgages all the time. And what will happen that $100,000 is. First of all, they're kind of set up as a this is my home forever. And they're dutiful. Mortgage broker, bank manager said you should be paying this loan off their original $300,000 property and maybe $250,000 loan. The loan's gone down to 200,000 or 150,000. And they've got this equity. So the maximum, if they do turn that first property into an investment property, the hundreds of tons is the maximum loan that they have interest deducted against and the extra hundred thousand that they pull out. The purpose of that in the icato is personal use to buy a new home. So the interest on the $100,000 is not deductible. So this is the concept that we all kind of get and understand Now. Victoria is a very interesting thing in place. Like, if I was married and I owned a property and in New South Wales, I wanted to sell that property to my husband, he'd be up for the 25,000 stamp duty. In Victoria, it's less than $100 to actually do a transfer between people who are married. So in theory, what very clever accountant was saying to me, so not an accountant account throwing this out there, have a chat to your accountants about. But he was saying that if husband Sold to wife the property and the wife bought the property at market value. She could have a maximum 90% loan, he could have the cash, he could then go be put into the new home. And maximum deductible debt is against the investment property and the minimum demands of the home.

And who, who places market value?

Well, it would have to go through the bank to get the loan.

Oh, okay. It's just the valuation, the bank val.

And the banks will take market Val rather than nudge, nudge, wink, let's do a deal. Yeah, banks are like that. So interesting. I thought that was interesting.

Yeah, that is really interesting.

So there you go, my latest little piece of interesting learning. Within the month there's a whole lot.

Of conversations around the dinner table about who wants to buy a house.

Let's move to Victoria. Okay, we've got a question from Sally.

Okay. In the suburb assessment sheets, module 2 for the capital cities, which numbers forward slash data can be used for units or is it all preloaded for houses? Yeah, unfortunately that's all houses.

That's the end of that. So essentially what Sally is referring to is in kind of a bit of a benefit that we created for the autumn intake 2015 for ultimate guided renovation students. We had got previous feedback, 2013, 2014 that you know, we won the research of where to get information from and then how to populate the spreadsheet. And we've given blank spreadsheets, people with everything from vacancy rates to yield to 3, 5 year, 10 year past growth to average rent, median age, population, median value of property. What else? Income levels, Census information, demographics, all of that kind of information. We've sent people out and given them the information of where to find that on the different websites that are usually free. And we got some feedback, some people falling over in those modules because it was all a bit too hard. So we went and pre populated some spreadsheets for the capital cities. I think we added Newcastle into.

Yeah, Newcastle's there.

And not all capital cities though at this stage. So we're still working on that. But yeah, and we update it once every launch period, but that has all been pre populated for houses. So sorry about that, Sam. Oh no, it is unfortunate.

Yeah.

You think we could try harder, don't wouldn't you? Yeah, Three and a half months to get the houses done.

It's an absolute mountain to climb putting getting all that data for an entire state together. So we, we did have to just cater for the majority unfortunately. So we know that a few people miss out, but.

Yep, but best we could Do. And we got a lot of information from our good friend Jacob Field from Ripe House, so into those spreadsheets as well. So, yeah, there's some really good value there. So there you go.

Yep. All right. No, hands up.

We don't have to make up questions again. Okay. Anyone have a question you want to put in the chat box?

Might be an early night.

Okay. Anything else we want to pick up on, John?

Well, you could talk a little bit more about the RP data.

The pain and gain.

No, the actual. The deal that we just spent the afternoon talking about, trying to get through. Yeah.

So, as people know, I'm a huge supporter of Residex and that's really probably. There's a couple of reasons for that. They take the only the resale value of property. So there's no new properties, house and land packages or developments that kind of clutter the data on comparable sales and price estimates. And they're the only reports that you can really buy that give the five and eight year predicted growth in the future. However, I'm all about getting as many resources and tools as possible. And RP Data, you know, I. For my access to Residex, I pay, well, let's just say many thousands of dollars to have that and make it available to my clients. But RP data, I think, is it 5,000 a year per state or something, consumer kind of product, if you want access to.

It's hideously expensive.

And there are deals out there where people have some monthly access and like ourselves, have been able to negotiate some of that. And we've gone back to RP Data and said, look, you know, we think that some of the products that you have and some of the data that you have is really valuable to our students. So things like RP Data get the information from the Real Estate Institute of Australia and within 24 hours of the sale, the information is up there. And we learned today that undisclosed auctions, as reported in newspapers, the agents to remove the property from Real Estate Institute of Australia have to actually put in an actual value.

They can't withhold the amount.

They can't withhold. So they. The Real Estate Institute of Australia. So basically, RP Data is getting some of those undisclosed auction information as well. And more importantly, what we've seen is over the last 18 months, most of the banks have gone to a system called Valex to get values valuations done when they're, you know, you're purchasing or refinancing a property. So for instance, we went to cba. What they often do is get an Automated value model done that is kind of say, you know, Jane reckons a house is worth $500,000. Let's just do a kind of an automatic automated modeling. And if it comes back within 0 to 10% of the price estimate of, of what Jane reckons, this is a green light. And we go, yeah, we accept her valuation. We do not need to send a valuer out there. Is it. If it's 10 to 15% of the valuation or there's a statistical kind of variation that they're concerned about, usually they would then order a curbside valuation and if it's more than that, they want a full valuation. So the great thing is that CBA actually uses the RP data AVMs. So now under this RP data model that we're looking at offering people, you can actually generate your own avm. So if you're looking at a property, you kind of go get the jump on what the value really is, because they'll estimate what the value is for you and they'll give you that statistical model to say, are we really in variance or not? And you have to remember that be it Residex or be it RP data, and when you've got people predicting what the price is of a property, it doesn't take into account the fact that there may have been major structural changes or renovations done on that property since it was last sold as well. So, you know, just, just be, just be aware that, you know, that information is out there. So RP data, you can create your own CMA, which is essentially a market report. So, you know, like the Residex reports that, that I would send out to, you know, our Golden Diamond Investors Choice clients, those Residex reports on a property or on a suburb or on a street, you can actually create your own report. So you can go in, you can say, you know, I'm looking at this property and I would like to have a look at the properties that have sold in the last six months that also have three bedrooms and two bathrooms and compare it against that. And I would also like to have a look at the properties on the market that are also three bedroom, two bathrooms. And I would like a rental appraisal as well for other three bedroom, two bathroom houses. And please give me the comparable sale.

Now and all within 500 meters of.

This property or within 500 meters or a kilometre, whatever you decide. So you're generating your own based on your own criteria and it's really exciting. So you have both the automated valuation, which the banks are using more often than not, and you're also creating your own report. So this is pretty exciting. We did one today for a suburb where we could actually have a look at what all three bedroom houses were selling for and had sold for the last 30 years. We got data back to if you want to.

Yeah, yeah. It's not how far it goes back, so interesting. So yeah, it's great. I mean I love that past sales data that you can have a look and see the history of an individual property and going into negotiations with that, armed with that, so much better.

So we're looking at, so we're getting national coverage for everyone who wants to buy into it.

If you're in Queensland, it's particularly good.

Because you get the name and address of the people who own the property. So yeah, so it's amazing data. We're trying to negotiate access to a marketing database as well that will give you non value or general information about who owns the property. So you or John, how would you use that data? If you, if you were looking at buying in an area, you've, you've done your dot map, you've, you've targeted a suburb, you know what you're after, you know what the median house looks like, it's a two bedroom, one bathroom carport. What would you do?

Well, in the past I've done stuff like letter drops or even door knocks to try and. Because I knew the streets that had the pricing disparity there and it was just a matter of trying to secure a property and you just go through that heartbreak of going to auction after auction and when eventually one comes up in that street that you want missing out. So I would do things like that. But the, the beauty of the, of that little tool in RP data is it brings up the names so you can search via the, via your, you know, whatever your criteria is the bedrooms that you want and in, in such and such a street and then it actually brings up the names of the people so you can send them a letter or send them potentially a give them a phone call and stuff like that, which is all completely legal.

And, and if they have a do not contact, if they're not on the do not contact register, please do not contact them. Yeah, you'll know that.

Yeah.

But yeah, so look, we're really, really excited to, you know, be able to offer this and yeah, this is where we are at the moment where we're looking at a price point at $97 a month for access with a minimum of three months commitment. So that's pretty exciting. And the we're also this extra product they're launching next week, the 4th of July, that's going to be available on the consumer website. We're going to try to see if we can convince them to add that in for us as well. So that is basically all this information online. And I've got this feeling that it will be the equivalent of an online price pin map. That is the past sale data for a suburb. But even the person who was taking us through the training today hadn't seen it because it's only just been announced internally to RP Data today. So we'll be negotiating our little socks off on that one for people who want it. So thank you guys who've sent an email through. We've been overwhelmed with people who are interested in taking that up.

Yeah, I'm really excited about it too.

So excited that we could, you know, get this as a really great price point.

And I had it a long time ago when I was looking all the time and I just couldn't justify the expense. But this is way lower than anything I was paying. So what it looks like will be.

Yeah, exactly, exactly. And I was talking to another mortgage broker the other day and he was saying, I'm paying over $5,000 for this. Where are you getting it from? So, you know, this is national access. This is not state access, it's national access as well. So. And as I said, you know, we're going to try to sweeten it even better by trying to negotiate that consumer product to be thrown in. And hopefully it's. They're not going to charge us a whole lot more for that, but it could be an option that's an add on. So there you go. Very exciting. We've got a question here.

Ross has got a question.

I'm going to ask this of you, John, because I'm pretty sure you're going to answer this one and I'm not.

Okay, go for it.

Hey, John, we ripped up the 1970s mosaic tile floor in the bathroom to expose the concrete which we are now going to tile over. But now we have little holes of in the concrete about five mil deep. Can we use a 300, 600 tile straight over the top or do we need to use a level compound?

I would think you could go over the top. I mean, it's a question for the, for the tiler. But often what they'll do is they'll use a bit of their tile adhesive and do a bit of a screed with it first. So they'll do that up to, you know, some guys will stick a little bit of sand with it and they can even do a, like up to 10 mil or even more if they've got to do a fall for a grate or something like that. So I would suspect that should be fine as long as there's not, you know, little grotty bits of tile stuck here, there, everywhere. You know, five mil lumps here and that kind of thing. I. I reckon that would be fine for a tile. I think you go over that with a bit of tile adhesive and a straight edge and then go straight over it now. Yeah, if it needs to be waterproofed, obviously waterproof first or waterproof after the screed, probably.

Great, Excellent. See, we can answer most questions here. Now, you referred to the fact of. Well, we had a bit of a chat earlier about project managing remotely and I shared with everyone a quick little Renault I did when a tenant moved out in March of this year. So I hired a project manager who pretty much rebuilt the entire bathroom in about 12 days. And the only thing that was left out of the quote that we overlooked was the fact that the ceiling hadn't been painted. So I spent a night painting the ceiling just before I ran the Sydney Community College course the next day. But tenants have moved out again of another property, and I'm going to take the opportunity to look at it. So just to share some numbers with you, I had an agent go through the property. Now, this is a tiny little, you know, less than 50 square meter workers. Terrace Cottage Terrace in, near Newtown in Sydney. And I bought that for 427, 500.

I've seen pictures of this. How wide is it?

Oh, like a room?

No, like from side to side. Is it less than 5 meters?

Yeah, I think it's like 4.3. I'm not gonna, I'm not gonna tell you numbers, but it's very small.

Yeah, it's quite.

And so downstairs is like the lounge, kitchen, bathroom, and then upstairs are two tiny little bedrooms. Well, one made double bedroom and another if you put the double bed in there, that's it kind of thing.

But it's been a great place. Is it your second place or your third place?

Let me think. 34th.

Yep, yep.

And so, and honestly, you know, we. We've done nothing to it. I threw a skylight in it to open up a bit of a light over the stairs. And, you know, no major cosmetic renovations other than, you know, every now and then fixing up the carpet and giving it a bit of a paint. So It's. So I had an agent go out and have a look at that. And last week, and with the view of I'd recent. I had about six years ago, had a attic conversion company go and have a look and quote about $35,000 to convert under the current ceiling, a new bedroom at the top. So it did mean that we had to lose a little bit of the smaller bedroom to make a stairway. Of interest, though. Six weeks construction to make that bedroom at the top, and only two weeks of that was required to have internal work. The rest was external work that they could access from outside, so it didn't disrupt the tenants anyhow. So we looked at that $35,000 seemed like a good idea to add a, you know, a bigger bedroom. So you kind of have two and a half bedrooms. And so sent the agent out and said, well, is it time to. To do this now? And he essentially came back and said, look, I think the price point of doing that now is somewhere between 50 and 60,000, and you'll probably add about $50,000 in value. So we're here for renovating for profit, guys. This is not good value for me. So we took that on the chin and went, fabulous. Means we don't have to go and lose, you know, keep people out of the property for another six weeks because it is now about to become empty. And so, you know, it's. I think one of the things, and I talk about this regularly, is that sometimes, you know, your diamonds are in your own backyard and you need to have a look at your current portfolio and see if you can use some, you know, some of your money to be able to develop that and add some value. You know, the rent would have gone up by about $80 a week. And so it was a long, long repay time frame to actually get your money back and not add value. Now if he'd come back and said, geez, this is going to push this up by $150,000, you know, I'd be. I'd be rushing to make some changes, but, you know, spending 50, 60,000 and getting 50, 60,000 in value back, you know, it's almost as bad as people doing pools where they spend 50,000 on a pool and get $20,000 back. So, you know, wasn't worth it. So did a quick assessment. Wasn't worth it. Move on. So we're going in where we're doing carpeting. So it costs about $2,000. Doing painting, it's about $3,000. Came back for the painting, internal painting job. My husband Said, geez, if we were in Sydney, we'd be doing that ourselves, wouldn't we? It hurts to pay money on things that, you know, you can do yourself, but we know that our, our time is worth more and we, we would definitely take a lot longer to do it. Going with antique white USA throughout the property, the old favorite. And ripping out the old purple and red kitchen and going with a boring white. And there's going to be a very small Caesar stone top going on the kitchen bench, which is probably only going to be about 2 meters long.

Oh yeah.

So very small little kitchen. Nice and quaint. Checked out the Renault save site and saw the great deals that are on there for the commercial. Harvey Norman.

Oh, nice. Okay, kitchen from Harvey Norman.

Yep. So jumped in there and had a look at that and also got a. Just appliances, sorry. The appliance packs that Viv's pulled together and so had a look at that. And so we're gonna have a chat to them. And I've got the guy who did the bathroom going to do the kitchen for me. So he's going in and quoting tomorrow. It was such an easy process of doing the bathroom. And when it's not emotional, it's not emotional.

Yeah, that's right.

So you know, he's, he sent through. Here's some pictures. Which, which tap did you want? The one on the left or the one on the right? And did you want a rounded sink or a square sink? And yeah, so you know, it. I found that I know people worry about renovating remotely and, you know, I don't think you need to be as concerned about that. Without doubt, if I was on site and managing trade by trade, I'd be negotiating and getting better prices and probably doing, you know, more myself. When I was starting out, I was doing more myself. But you know, that time versus value or cost we talk about often is really important to consider. But, you know, getting a project manager in and maybe paying a 10% premium and then a bit of a premium on the trades and having it all done within 15 days. 10, 15 days.

It saves so much time.

It does. So, you know, don't be so scared about buying. Not around the corner. If you do need to renovate the property. And remember, you don't necessarily have to renovate straight away as well. So, you know, I've had friends who have, you know, lived in Sydney and bought in Narrow mine and driven up and painted the house on the weekend and driven back kind of thing. So, you know, it is possible to do that. You do you do often get to a point with your renovations, you realize that you shouldn't be a painter. Yeah, which is where I am.

I think. It's the one thing that people always want to do and it's the one thing that they curse the most after the second or third kind of time.

So. So look, I just, you know, I'll keep you up to date on that, but that's just going to be another quick little, you know, rejuvenation, you know, whacking a, a new kitchen and a nice little appliance pack, cleaning up with painting and with carpet and, you know, it will be back on, on the market very soon and the rent is going to go up by a hundred and one hundred to one hundred and twenty dollars a week is what the agent has quoted. So, you know, really cute little place. And it's. Oh, the value, the. So 427,500. I bought it for around about 10 years ago and it is now, I think 9. 900 was what the agent had said. Every day of the week I get, you know, 850. But you know, if you want to put it on the market, don't even put it on the market. Just, just whisper it on the street and someone will come and snap it up. But so, yeah, it's doubled in value and done what it should do.

And that's the one that people told you you shouldn't be going near. Anywhere near.

Don't go anywhere near it. Yeah, it was close to, oh, what's that street in Redfern that people worry about? So anyhow, close to, to an area that people had concerns about. And, you know, it's doubled in value and done very nicely and always been rented and always had great tenants and have been there for long periods of time.

It's almost a disadvantage having that local knowledge sometimes, isn't it?

Isn't it? So sometimes that's why we talk about the numbers and getting the numbers right.

Viv says we have Harvey Norman Plumbing coming on board soon, too.

Oh, Viv's out there and negotiating for us all the time, which is great.

Keep Renaissance. That's great. Ross, got another question. Do you think there's still properties in Melbourne that have enough of a spread of values to make money with a flipping strategy now that the market is running so hot?

Oh, you've probably been looking around the market a lot more than me with your development deals have been assessing, but I've got clients that are buying at the moment with buyer's agents who've got Pre approvals. And let me just think the ones that I can think of, I know the market. I mean, Ross, there's no doubt the market is so hot. And, and you know, I'm finding that the clients with the buyer's agents are 70% of what buyer's agents actually have available, often not on the market. So, you know, people are going and looking at properties that the people don't want to have the neighbors come through and don't want a big sign out the front and don't want to go and do staging and clean up the house, you know, they've got a family and the kids are living there, etc. So, but, so I'm seeing a lot of those kind of sales coming through and why people using market ones. Yeah, why people are using buyer's agents. The, the idea of the flipping strategy is that, you know, you're buying because of the pricing disparity as well, but you're adding value normally in a structural renovation to be able to really have enough scope to make a profit there. And often, you know, as we've seen talking to John Edwards and some other experts, you know, that 750 plus purchase price. So, you know, I think it's, I think it's getting tougher because the market's so hot and there seems to be so much activity. We're going, you know, clearance rates are over 80% to some degree. I've seen people talk about, you know, these big bank changes and policy changes bringing back the demand. And you know, to be honest, in Sydney and Melbourne, I don't necessarily believe that's the case. I think that a lot of owner occupiers and even first home buyers have gone, God, it's too hot out there. The investors are the investors in the market. And if the investors do pull back in those areas, all of a sudden the homeowners are going to be back out there going, you know, here we are, and let's face it, 70% of all properties in Australia are owned by homeowners. So that is the biggest part of the market. And although there has been some growth in the investor market is still a small proportion in comparable in comparison to the entire market. So what are your thoughts on what you're seeing in the Melbourne market, John?

It seems to be, I mean, because we've got our two now and we won't be getting any more. I've kind of not watching it as closely as I was like six months ago. So it's probably moved a little bit from what I see but from just the bits and pieces that I've been reading, it seems to be some pockets in Melbourne are going ahead a lot faster than others. Whereas from what I gather and I. And again, I'm not across it really closely, but it seems to be more of a overall thing in Sydney and. And more pockets in Melbourne, from what I've read.

Yeah, but.

So there may be. There's some areas that aren't running as hot, but I think I've been looking in times where there's. The market's running hot and we've had to try and get off market kind of things, using some of the things I described before, door knocking and, you know, leaflets and all that kind of thing, and, you know, saying to people, all right, well, how about we get an independent valuation and. And we'll. We'll pay you that, and you won't have the hordes of people coming through the house and all that kind of stuff. You want to have the agents fees. So that's.

Auction fee.

Yeah, or the auction fee. So that's some of the ways we've tried to secure it. I. I think the thing with a flipping strategy, it all comes back to the numbers. If you can buy it at the right price, if you can secure a property at a figure, that will work. So if you're working backwards from the. What will it be worth when it's renovated, fully finished, and then working backwards from there and saying, all right, how much is the renovation going to cost? How much profit do I want in there, and what are all my fees going to be? So all the. Basically the costs, and then that really dictates what you need to buy that property for. So if you can buy that property for that amount and the figures stack up, then a flipping strategy will work, but it just becomes a harder task to find that property that you can get that figure.

So, yeah, I was speaking to someone tonight, actually, who had gone to a 6pm showing of a property in Essendon and she said it was almost impossible to get through the door. The number of people going through it, just like, you know, when it's advertised and it's on market, everyone's after it.

Isenden was there, the suburb that we picked.

Yeah, we did, didn't we? Yeah, when we did the tutorial on the dot map back in February.

Yeah, yep.

So, yeah, it's interesting. So, and I. Look, I spoke to a buyer's agent the other day and she said, oh, we're getting so many people with FOMO complex. And I said, FOMO Complex. Okay. I've been around property for a while. I've never heard of FOMO complex. And she said, fear of missing out. Yeah, these people are, they're so worried that they're going to miss out, that they're just, they're buying because A, they might be over looking, B, they're seeing the market move. And you know, I know that when the market's moving and it's hot and it's, you know, you seem to be missing out every week at auction and it just becomes demoralizing. We've all been through it, you know, it's, you know, that's why we have the support networks here, so you can share your pain. But you know, sometimes you need to step back and say, what is my buying criteria? I need to buy $600,000. I need to have a property that's a two bedroom, I can convert to a three bedroom under the current, you know, floor plan. I need to be in an area with, you know, 6% capital growth, 4% rental yield with less than 2% vacancy with some demand for the future and the population characteristics that I'm after and get really clear. That's why we spend so much time in getting clear with education around what your buying criteria is. Because at the end of the day you can come back to it and you go, okay, has this changed? Because sometimes it has to change because the market has moved and it's no longer available to you. Or you have to start looking at different suburbs.

You find you're trying to put a square peg in a round hole.

Yeah. And sometimes if your borrowing capacity is 500,000 doll and the three suburbs that you've chosen are now moved past that. There is a grieving process. Get on, get over it and come back and go, okay, so now I need to find the suburbs where I can afford and they may not be in that same city, you know, so, you know, I think that there's been a lot of talk and I've been saying to people for the last 20 months, you know, go to Brisbane. Sydney and Melbourne have taken off. There's still some growth there, but you know, there's going to be a few more legs in Brisbane. And we've seen Brisbane really, really move. I think that Brisbane, you know, we've always seen Sydney moves first, Melbourne moves next, Brisbane after that. The resource states do their own thing around what's happening. The resources, South Australia kind of tags along. Tazzy, you've just been to Hobart, you know, beautiful place to visit.

I did have a look in some real estate windows there. I was kind of. They're not that much cheaper.

Yeah.

In the middle of Hobart anyway.

Yeah. And I mean, so, you know, Tassie, you know, limps along as well. Canberra has its own kind of dynamic around what's happening with what political parties in and what's happening with government spending at the time as well. So, you know, there's all these different markets and when things start quietening down, they, they start quietening down quite quickly and they start quietening down usually from the outer suburbs, the inner middle suburbs, the inner suburbs. You know, it's not rocket science. We've seen this happened through the markets time and time again. And I was interesting. I was reading an article on affordability. I'm just going to pull up my, my newspaper here so I get the name right. Judith Sloan wrote an amazing article on affordability on the weekend Australian the June 13th to 14th, 2015. And she did some comparables against, you know, what happened when everyone was saying there was this property bubble that was going to happen that was happening around 2003 and the government actually commissioned a report on productivity on affordability. And by the time the report came out in March 2004, the bubble had deflated, nothing really had happened and life had moved on. And I think it's. There are cycles. We know that the market moves and I think that, as I said, I think in Sydney, my personal opinion is in Sydney and Melbourne that the homeowners are going to breathe a sigh of relief and get back into the market and we're not going to have so much of a dampening Brisbane to some degree. The investors have only really just state it started taking off there in the last 18 months or so. So there might be a bit more of an effect there. But, you know, I also think there's.

It just. There's never a perfect time, is there? Like you'll be looking. And I've been through a couple of these too, where you. You're looking in, the market's hot and you're thinking, oh, I just wish the market was dialed back a little bit and it was a little bit more sensible. And then it corrects a bit and then everyone stops selling. So there's no stock on the market. So now you just wish there was houses that you could actually have a crack at kind of thing. So the. There's. It never feels like there's a perfect time for me. There's always some kind of thorn in the side that's annoying you, annoying your purchase. But yeah, that's the way I take it.

And this, this FOMO complex, you know, the reason that I bring it back down to your buying criteria and being very clear about that, because a buying criteria falls out of your goal. So, you know, your 15 year plan, for instance, for having a, you know, $50,000 passive income, you know, your buying criteria is dictated by that. So you know, when you get to the, the auction and you know that your price points 500,000 and it hits over 500,000, you have to be very clear about is there still profit in there for me and am I just jumping in? Because, you know, sometimes people do get, you know, worn down by the process and it's, you know, look, I'm just going to get it because I want to get into the market and we're talking about hundreds of thousands of, of dollars here. We're not talking about, you know, buying lollies. So, you know, just, just bring it back down to is there still profit to be made? And you know, when, you know, Ross, we're talking about that disparity between unrenovated and renovated properties. Sometimes in a hot market that disparity can disappear because all of a sudden people can't afford the renovated and the unrenovated start going up in value. And that's why it's being very clear on understanding what that difference is and what those properties look like and being in that market and seeing what's happening. You agree?

I do.

I can see you nodding there.

Yeah, I agree. Silently.

Okay, guys, well, you know, we're almost at 9:30 here. I don't want to keep everyone, but if you've got some questions, please put them in. We will chat away and answer your questions, but other than that, it might be time for a wrap.

Yeah, I think so. No more hands up. Last chance, last call.

Well, for those people who haven't made it on tonight, remember that we do have that one 1300 number. And please leave your message if you can't make a live call and we will answer your questions. And you know, we really encourage those who are listening to this delay to, you know, try to get on to the live call if you can make it. Congratulations to our graduates from the Ultimate Guide to Renovation. I know that it's been 12 weeks of lots and lots of information and you've got access to that. And please use the courses and go back to them as many times as you want and know that we're always trying to improve things.

Yeah. And often hear that people come back and they said they Dropped out at module four or five and now they're going back and starting again at module two or three or something like that and going through now that they've in a better space or got the time or whatever the case may be.

Yeah.

And that's what's not unusual.

And get engaged on that private Facebook page if you're in the ultimate guide to renovation. You know, watch for the your property success club for the core for foundation members. They're going to come out in the next two weeks. Watch for the RP data offer that we're putting together and trying to convince them to add even extra things on that no one else has got out there. And yeah, you know, just keep active. And look, I really, I think that, you know, at the moment we've, we're all going through a bit of a turmoil time and you can read the media and get, you know, react to what you're reading about, you know, property bubbles and concerns and worries and. But you know, as you've seen, you know, we're low risk investors and we're trying to mitigate the risks associated with property investing at every turn. And we start with understanding, you know, strategies, buying criteria, how to buy, where to buy, what to buy. And that's why we put so much due diligence and effort into determining, you know, locating the right location, the right property in the right location and doing the demographic studies and all of those things. And as you've heard from John and I, you know, we buy when we can afford it in the best property places that we can afford rather than try to pick the market and you know, let, let media dictate what's happening in the market to us. So you know, please read the your property success toolbox that comes out around the 15th of every month. I try to give you an update of what's happening and give you access to a number of courses and not courses, sorry, material and resources that aren't normally available to the public. I found one today that the NAB has just released on their market confidence. So we're putting that in the next one. But yeah, we're always looking at adding things and hearing from you guys and getting feedback as well. So look, really appreciate your questions tonight. As I said, there's no such thing as a silly question. So you know, we'll cover anything that you have to throw at us. And you know, it's been, it's been great chatting.

Yep.

So all the best. Have a great month, everyone stay safe and be good.

See you next time. Bye.