Your Property Success Mentor March 29-03-2018

Hello everybody. It is Jane Slacksmith here and John Hubbard. And welcome to our March Q and A mentor session. So I hope everyone is ready with your questions. There is a link to the guest profile, so if you wanted to come over and ask us a question directly, you can do that by going and clicking on that link. It's easiest if you do it and download the app on Belive tv but if you would rather be on your computer, you can do that too. Just make sure you have most up to date Chrome so we can hear you and speak to you and of course please put your questions in. Can you hear me? It's Jane here. Hopefully you can hear us.

If you can hear us, guys.

Hello, hello, hello. Let us know. It's about an eight second delay on here, so for those of you. Thanks Sang and Carolyn, let me 12:07 so five minutes. Me chatting with no sound. So let me tell you. So let me tell you what we.

Might do is just follow the images up Jane this time. So we'll go to the bottom and just talk to the image on the screen because it's a bit out of order. So maybe you want to start with Peter.

Sure. So the images are in order of people's last comments on Facebook. They're not chronological.

Yeah.

So. So guys, yes, you can hear us. Oh, thank you. And thank you for persisting with us. Hi, Carolyn. Hey. Saying great to hear you and see you. I think Saying nearly joined us when we had a chat yesterday.

What you just said there, Jane, was one of the most important things I ever heard you say.

I know, I'm not going to go over John's. John's pulling your leg. So guys, Capital growth month, a big epic month for us and pretty exciting. Now as you can see on the screen, we're down in the little corner here. I'm waving to you, but John's got our private Facebook group up there and what we've done is really concentrated on the importance of capital growth. So capital growth obviously is what is going to allow you to get your portfolio out of the market. So it allows you to have the wealth accumulation. So when you sell, you've got some equity that you can then live off, which is great. So cash flow helps you hold your portfolio whilst you build that wealth. So what we did is every Wednesday throughout March, I spoke to experts. So Peter Kalizas, Louis Christopher from SQM Research, Kylie Davis from RP Data, and Ben Kingsley from Empower wealth and co host of the powerpower podcast Property Couch. So I really encourage you to Go back and listen to those, just a few little excerpts of the importance of that. Peter actually has done some regression analysis recently and looked at the last 10 years and he looked at the capital growth of the major cities in the last 10 years. Now what was interesting, Sydney and Melbourne, no shop, top of the list, down the bottom of the list, we had Darwin. But then he went back from 10 to 20 years and looked at that timeframe and he found Darwin was at the top and Sydney and Melbourne's at the bottom. So it really shows the importance of being geographically agnostic, being across different markets, time in the market and time in the market. Now I'm just going to jump ahead because also during Capital Growth Month I had chats to some of our community members. Go and check out Lou Pilkington's discussion because she picks up on this and she talks about how one market went down for her in Orange, but the Central coast went up. So she actually has growth throughout her whole portfolio. So what Peter's talking about is really important. He also went back and looked at some of his predictions from his book in the last two years and pretty much they're on track.

The property versus shares, properties versus shares.

And he's going to do that again. So he's about to. I've got another book coming out, 2019, so he's doing the research on that now. Okay, so that was Peter. Then I had a chat to Louis.

No, I reckon this is Sarah. Did I see Sarah? Yeah.

So on the Friday of that first week I had a chat to Sarah. Now, Sarah is another member of our club and community. Fabulous story. And she calls us her insurance policy because in four years her property went up by 300,000 doll. And she was allowed, she allows her to sell that, pay off a home mortgage and live off one income. And that's really important because they have a really sick little girl.

Yes. And you might remember Sarah from the Pippilepsy Foundation. So that's where all of the proceeds are currently going for your probably success club. 100% of the membership fee.

So, yep, Be good to jump in and just see what we're up to there as well.

Yeah, we might. And I'll do it over here and pull it over.

Fabulous. And because I think we nearly cracked two and a half thousand, I plan to get up to 10,000 soon. So this is great. And you know, thank you to those that are contributing to the People Lepsy foundation through your subscription. I spoke to a lady yesterday and she said she had to move some money around, but she was able to commit $10 a month. So that's just fabulous. And it's usually $97 a month to get in. So at the moment, yeah, there's been.

Some great feedback and let us. Leave us a comment. If you do do that, leave us a comment because we get some great comments and we reply, yeah, when you make the donation. Yeah, when you make the donation, you can. Let's have a look here and see what we're up to. Bring that across.

Oh, we have cracked the 2,500. So that's fabulous. 59 donors. So this is around paying what you can afford. As little as $10, you know, five. I've had someone put in $500, I think.

Yeah.

And I put in $500. Start off with.

I reckon I'm always surprised because, I mean, everyone could just pay $10. But I guess it just shows the, the, the level of people we're attracting. They're all. Because mostly they're paying, you know, $50, $100 or more or they're making it a.

A monthly subscription.

Yeah.

And that just means that these guys have got those funds that they can, you know, know that they're coming in every month and that they can put towards supporting the people EPSY foundation and supporting other people as they become aware of their children getting epilepsy, but also supporting the hospitals in better diagnosis tools. And they have just done a big run last week, last Sunday to raise money and the Good Friday appeal. If you actually make a donation to the Good Friday appeal and you put in Pippilepsy foundation, they'll make sure that the funds go there. So that's a fabulous thing as well. The following week, we. After Sarah's story, we went and had a chat to Louis Christopher from SQM Research. Now, Louis, good friend of your property success. You know, we obviously make a huge investment in buying the data from SQM Research to update our suburb selector software every single month.

And he was a great podcast episode too. Just remind people of that if you had a chance. Go back and listen to that. It's got a great backstory of how he got into property in the first place. His grandparents were fleeced by some Gold coast property developer or.

Yeah, yeah.

And has made it his life mission to get the data transparent.

Yeah, it's amazing how many people's stories kind of start with that they've seen something go wrong. I know Tyrone Hyde from Washington Brown, very similar. So, yeah, so go and check out in itunes or what's the other thing?

Oh, there's A few Podbean your property.

Success podcast, go and check them out.

I think just google it.

12 episodes, 12 fabulous episodes. And so Louis actually shares some really interesting information about lead indicators of capital growth. So things around clearance rates and vacancy rates and changing income. In actual fact I did a bit of a demonstration also whilst I was chatting to Louis because he said oh this is another great thing that you can do. And so I went and and demonstrated it on screen. At the time while we were chatting he, he was like my remote remote. He was saying now move your your mouse here Jane.

So someone remote remoted.

They remote reminded me. I usually remote remote my husband on TV at night. So you know, change the channel Todd. But anyhow, so he remote remoted me. So have a look at that. So that's really interesting because lead indicators lagging occasions are one things but prediction is fabulous. So check that out. And then I had a chat that week to a couple of people. Now who's this one here? Oh it's Russell.

Russell, yeah, there he is.

So Russell, now Russell's on a farm. His dog attacked him halfway through the interview. Now we did do a test to make sure that he could call in whilst he was driving up the Hume highway. And someone in the middle of the interview came to buy an excavator at the same time. So it was a very exciting time for us all.

Some multitasker Russell I reckon.

Look how dry it is out there. Anyhow, so we had a bit of a chat to Russell. Now Russell, you've probably seen his story about you know, he took well we say 25 years. He said it would been closer to 30 years in worrying about buying property and doing something. His daughter was in London. She bought him the ultimate guide to renovation course they could do together. They used all of the location data to find a property and they bought a property in Preston. Then they, they finished the course with the renov renovation stuff. They did a renovation, cost about 8 grand, took about 10 days, added about 70k in value. But the fabulous story. So I bought it 640 and I think he had it revalued at 710 pretty much immediately after. But in three short years it's gone up to by another $200,000 at least. So it's now worth somewhere. We just did it at 1.1 million.

We did a more than that. I think it's almost three, so five. Yeah, it was 297 in three years and that's up over that now. Yeah, yeah.

So from 640 to about 1.1 from purchase price, but around 710 to 1.1. So yeah, about 400,000 in the four years.

Under four years. Yeah.

So once again, you know, we talk about, you know, going, choosing the right area and these guys are just nailing it. We're talking two, three, four years and really getting that growth.

And that's, that really correlates with what we've seen over time too. Like you see people do great renovations and like for Russell at that time, when he finished that renovation, had the reval done, he was just over the. That was life changing.

Yeah, yeah, yeah.

Which is huge. But now when you compare that to.

The amount of money that's made on.

The growth that 400k, you know, that's little, little Renault, big growth. So it just kind of puts that in perspective for you how important the.

Location and that was. And then, and someone contacted me the, the same day and said, hey, I'd love to have a chat too. So then I went on and had a chat to the lovely Rita. Now Rita, gosh, you know, I have a 10 year old child and Rita was talking about, I remember when you were pregnant. So I've known Rita for many a year. And the lovely story about Rita is that, you know, she's now very confident they have eight and nine investment properties and they've bought the dream home and very, very confident that she can sell down those properties, pay off the dream home and have hundreds of thousands of dollars and set herself up for retirement. But lovely thing is, John, that she introduced me to her two beautiful children too. In their early 20s, they're now in their early 30s and both of them have portfolios that can be sold down and pay off the home loan. Yeah, I mean that's just being part of that. She made me cry. Rita made me cry. In the middle of that. I was, I couldn't anyhow.

That was brilliant. Three for one.

Yeah, she's, she's fabulous. So the fact that we've changed lives and affected lives, but the growth that they've had in their portfolio and selecting the right properties, this has been amazing.

Yeah, that was insane. Like it was, it was double figures in the last year alone.

So, you know, she's a fabulous member of the community again and I encourage you to listen to that story. And then we jumped forward to our expert on Wednesday, had a chat to Kylie Davis from RP Data and we talked to her about, you know, the, their recent report that has just come out regarding, you know, things around, what indicators that they have seen immediately in the the last quarter and how they are going to affect the growth of different areas going forward in the future. So another really cool intro interview. You can see a quick little interview there I did with Viv from Renault Save. We had a chat about the new Ambassador card. So if you're new to the Ultimate Guide to renovation, in about 30 days you'll get your own renovation reno card and the Ambassador card saving on food and movies and all these extra things. I'm going to put it to you so at Easter. So I'm pretty excited about that. She explained to me how to use.

It and Viv's been a part of Ultimate Guide since the very start too.

So you can ask her a question in the club. And then someone asked me about the suburb selector software. They hadn't seen it so I just did a really quick little demonstration. If you are in the club, go ahead and check out the Ultimate Guider renovation in the members page.

Yeah and you'll see it now with the new dashboards too. When you're logging in, there's the opportunity to have a bit of a peep at it there too.

Oh perfect. So yes, for those of you who've seen they're going I can't get into my course, just go to YourPropertySuccess.com, click Login, you'll see a whole new dashboard and log in there and it's going to be a whole lot faster.

So yes, we have improved the speeds of the course pages. Yeah. Probably about twofold so far and a little bit more optimization on the way. But yeah, over time modules have built up and it tends to slow and those page loads can be a bit annoying. So hence the reason we took the time and revamped the whole thing. We've got rid of the timber background as you'll see on the. Which is probably.

It was a nice idea. It was a nice idea three, four years ago. So there's obviously I talked to RP Data and look, that was a really great chat with her. I really encourage you to go and have a listen to that as well. And it was really insightful about what the predictions algorithm that RP Data is working on. No secret, they bought Resex and have slowly been moving everything over to RP Data and so the prediction stuff from Resx is no longer there, the renovation report is no longer there.

I just kind of wish they had a bit of a like allowed those to keep on going before they brought out the new one. I know left with A bit of a gap there.

Well, about six months off their predictions algorithm, so. And just some really interesting things that RP Data or CoreLogic are doing in the States. She was sharing with me. One of the biggest clients in the States are insurance companies. So if there's a huge hurricane that goes through a town, for instance, and they know the path of the hurricane within an hour or two by looking at the CoreLogic data, they know exactly the houses within that path because of the street locations and they will automatically approve any insurance policy that comes in from those properties and then all be the ones within a damaged zone and they can do an auto prediction of the valuation of the properties and let them know how much they're prepared to give them. So, extraordinary use of big data when it comes to the property. Yeah, it's nice, interesting stuff. But yeah, so we go there through the housing report you can see there. And then I had a lovely chat. Well, been chatting to a lot of people actually, but had a really nice chat to Amanda, who also put her hand up and said, hey, I'd love to have a chat to you. Now, I've known and worked with Amanda for over 12 years and I remember when her son was heading off to uni and we purchased through the Investors Choice Mortgages, a unit for him to live in in Canberra. And then he came back to Sydney and he got a girlfriend and then he and his girlfriend, we purchased a unit for them. They've since gone over to London and young 20s, wanderlust, wonderlust and enjoying themselves. And that property has gone up by hundreds of thousands of dollars and now they can have a child in their early or late twenties and they then sell off that property and she can have the year off work and it's given her them the freedom to live where they want to live and be rent vestors for the last couple of years and capitalize on the equity. It's just a beautiful, beautiful story and it's been such. I've been so humbled to be part of the intergenerational change and not just that, but also Amanda's portfolio. So it's been some fabulous stories there and how growth has really helped these people.

It's good when the. The whole family's involved, isn't it?

Yeah. And then Gabrielle, now you might have seen Gabrielle's story in the club. Yep, he shared that. But he actually. Gosh, he was funny. He's actually done his final spreadsheet on.

He's not bad at a spreadsheet.

I thought I was A good spreadsheet. But he goes back and redo these spreadsheets. He's fabulous, dad. Has anyone seen the Gabrielle interview? Put your. Give me a thumbs up or a love sign or something. Let me know that you're.

You can use the search function. It's now in this. It is over here. Yep. Left hand column. If you put in Gabriel there, you should be able to pull up his old case study, which is. I think it's over four, three videos. Yeah. And it'll talk you through each one. But this is the. The revisit. Yep.

Didn't seem so. But Gabrielle, the great story, you know, he just targeted an area. He used RP Data professional through our subscription and, you know, optimize that completely. But one of the funniest things that he had in his spreadsheet was $5,000 in treats and cost of reports and things. But treats for the real estate agents and half of them didn't like chocolate, so he bought them deli mates. So he's got a whole line, a cost line on deli meats.

He took that to a whole.

Well, Diana, our cap customer, happiness manager was listening to that podcast yesterday and she went, is it really deli mates? Did I read it right on the captions. I'm like, yeah, it's deli mates. So, yeah, Gabriel. And look, he really intimately got to know the agents and you know, so.

Please, as we talk about. And we've had this conversation, I had this conversation with Gabriel quite a few times. But people don't appreciate that those guys are your front line troops. You know, those agents, those are really important relationships. And often people, if you contrast that to, to someone who doesn't appreciate that, you get someone going out to every open and they can barely speak to the agents because they, they just spice them that much. I know you're really out there because they're not going to call you when the property comes on the market. I know, it's. It's always terrible to be on the buyer side of the fence.

Yeah.

When you're on the seller side of the fence, you kind of, I think you get a little bit more balance.

I know. Well, he caught me up with one of his comments to see if it catches you up, because I double looked at him thinking that, that he was saying something that wasn't quite right. But then I had to rethink about it. So the comment went something like, not a lot of people like agents. And I was not too sure what he was saying there. So anyhow. But have a Have a listen. He and I had a bit of a joke about it afterwards. But actually I'm going to an open home tonight. It's a 6:30 champagne open.

Oh yeah.

So I was pretty excited about that.

Is that a.

Like I'm not even going to tell you where. More champagne for me. Hey guys, once again, please put any questions that you have into the panel here because we want to make sure we can answer your questions. We're here to answer your questions. We've had some questions come through the Facebook group.

Yeah. Do you want to go to go to that one or. We'll keep on going up. We've still got more lives to and yeah.

So it's been a big month then. Ben Kingsley, founder of Empower wealth, co host of Property Couch. He's pretty much everywhere. Great guy. Just opened offices in Sydney as well. He's the immediate past president of the Property Investors Professional Investment Professionals association of Australia. Peter Kleesus is the current president and so he. Ben really gave a lot of thought around lead indicators, lag indicators. We had some really interesting conversation. If you can't afford a house in an area that you really like, should you go to a townhouse? And that part of the conversation for me was really enlightening because, you know, he believes that, say the Sydney and Melbourne market are mature enough for that, but Brisbane's probably 15 years off. So you know those people and just some of the interesting aspects. And they're buying 30% properties a month.

Yeah. So they should know if you get a chance. There's a great video with Jane, Peter and Ben called the Money magazine property Shootout and that's on YouTube. So if you go to YouTube, type in your property success, go to that channel, watch that video. It's. It's very, very funny with the three of them having a bit of banter. But it's also they do three separate case studies so it's really actually quite valuable information Scene.

And who won? Sam, Can you have a chat tomorrow online? We've had one to go through.

First developed. Is the Facebook. I've got everything but there's just one, two and sometimes it's a roadblock.

Got some sound.

Oh, no.

Okay. One of the things that we can do, John, is just do a refresh. Refresh and just make sure that everyone's. And just to reload. Okay guys, just let us know if goes dropping in and out. Oh, all good again, thank you. Saying Patricia. Great. Sorry that we're. We're creating some of this angst for you. So yeah.

Hopefully it should be better. I was. Yep, you're right.

Yeah.

Yeah. Good. Yeah. So I was saying, Jane, that we've. We've had about 30 odd people through the beta testing of Location Master Class.

Yeah.

And really good feedback. So it's just. We're just picking up all those tiny little things that might have caused, you know, potentially a roadblock.

Yeah.

And often they're little things, but it's not until you get someone giving you that feedback in real time, it's actually actively looking for a property that you realize what. What all those little bits and pieces are. So it's excellent.

Thanks, Patricia.

We'll put that. And we're going to add that feedback back into Location Master Class for inside the Ultimate Guide to Renovation. The. The new standalone Ultimate Location Master Class. Basically the same thing. It's just we've. We've taken it out of the Ultimate Guide to Renovation to make available separately, mainly because this is something that you.

Don'T need to renovate to know where to. Have to know where to buy a property, do you?

Yeah, there's a whole group of people that aren't necessarily interested in the renovation component or perhaps they feel that they've got that covered and. Yeah. That they really need to know where to buy. Whether that's for buy, renovate and hold, or just to buy and hold.

And it's been kind of a labor of love because we know, we started in 2012 the Ultimate Guide to Renovation. We told people with a spreadsheet sheet where they needed to go to fill in information. And they said, oh, could you make it easier for us? So then we went and started filling it in for people and they said, oh, it'd be easy if you could search and say, like you can see here on the screen here, I want to buy something worth $600,000 in Sydney within 15 k's. Good luck with that. Back in 1970, maybe. But the. So we had, we did that. We created the suburbs like the software. And then people were saying, look, instead of going through the Ultimate Guide to Renovation, you know, the first six modules that really kind of nails how to buy, where to buy, pockets, potential. How did it get down to the demographics and the property and the search? Can we do it in a day? So we came up with a workshop. So we went Sydney, Melbourne, Brisbane for the last three years and doing that. And we had 10 people at a time. And then half of those people going, oh, I'm now going to go and take that to a buyer's agent. And the Buyer's agent goes, well, I don't really specialize in Kedron. How about you come and buy in my side of the town? I'm down in Logan. And so these people get like a bit of a confusion. Should I buy there? So now we've kind of said, all right, we will do it for you. We'll do a suburb selection. They're done for you service, you know, if you've got a purchase price over a certain amount in Capital City and buy and hold strategy. And as part of that, I went to have a look at the whole location, the location component. And we started saying, well, we could split this out. And we're working with our researchers and we're refining the process. I was like, well, this is a really great standalone product. We've kind of always said that we really wanted to help people understand where to buy. So.

And you heard from Russell's story. We've seen over and over again how this is the single best or single most help we can give to someone like you. Think of all the, all of the things. If we did nothing else. And we said, you can only tell them one thing, Jane, what would you tell them? It would be where to buy, where.

To buy, location, location, the importance of it. So that's why we did. And as Carolyn has just said, you know, $600,000 in Sydney, you're probably looking at a tent. I mean, a fancy tent, but you're probably right, Carolyn. And you know what's funny about that? I was just doing some research. 3D printing within one day for $10,000 can build a house. Okay, so you know, you. We might be looking at some very interesting alternatives, but.

Yeah, so maybe you could do that as part of the ultimate guide. Have module 13, you know, 3D print.

Your own print now with some designs. So that was all good. And. And what else? Oh, and then we have obviously a premium opportunity to take that done for you. And we, we will facilitate and concierge with buyer's agents and appoint them and interview them and help you the whole way out.

So that's been very exciting. It's been very exciting.

Big, full picture.

I love seeing the research. I mean, we obviously, we saw it each time we did the workshops in different cities. And it's cool to go back and look at what the predictions were at the end of the workshop and what they've become, because that's been. Had a very high success rate there. But the now we're seeing that week in, week out, seeing those results come through and seeing the pockets and it's awesome.

Yeah. And so it's been really exciting for us to see people, you know, take that information and you know, we kind of been teach the man to fish all through the way through to here's your fish. So you know, and we know there's a lot of people who are time poor who need that kind of assistance and confidence. So we're really excited about doing that.

That's the thing with that workshop is even though you learn the. It was definitely a big step up from the modules because you learn it in a day and you've got a, a short list of suburbs. We had to set the criteria around what would suit most people. So it was never specific to everyone, but it was just generally base around the median of the metro area. But this is really like, it's, it's every single part of your criteria that we're going.

Absolutely. And it's interesting, I mean I mentioned Lou before we interviewed Louis as part of Capital growth Month and she has, she's agnostic with her investing. She has something in Central coast and some in Orange. She had the meth lab when she became a tug to beta tester like.

Before she took up property investment.

She. Not her own. She bought a meth lab. You gotta listen to the story. Very cheap property, lots of work and you know, lots of family demands that blew the time frame and budget on that. But an interesting story, but Lou is a rent fester as well. Been multimillion dollar house beachfront for the last 10 years, paying nothing and investing elsewhere and you know, just an incredible story. So please jump in there and have a look as well because there's so much that we wanted to add to, you know, help help out our community. So you can see me dominating the feed in your property success club this month. But there's also been some interesting conversations about fans and lights and we've got some electricians, ex electricians in there answering some questions as well. So there's some really some great community chatting about as well. And it's, it's interesting that you know that you know, by the time I get him to answer some of these questions or John gets into, there's usually four or five other community members that have done it already. So. And you know, oh, here's Tracy. Tracy's was just sharing her latest rental information as well. We're waiting to see some of the costings and projects information on that. But we're really keen to have a chat to Tracy too. And I think that's oh and the most exciting thing is we've clicked over to 701 members in the club.

Oh, well.

So looking. Looking forward to adding more value. So, guys, if you've got any questions.

Type them in, please. I know we've got one question this week that's coming, so I might as well pull that one up.

Esther's got a couple of questions.

Yeah, I'm just trying to work it out.

So. So the first question, John, you might want to talk to this, because you've done this most recently. Do you employ someone to stage your properties? First of all, why would you stage a property? Yeah, do you employ someone to stage it? Or do you do it yourself?

Or do you do it yourself? So there's a couple of reasons you'd stage a property, and traditionally what it's been done for is the sale. So when you're selling a property that you have the stages come in, maybe you do a bit of repainting as well, and you dress it up and you try and create that dream lifestyle. So when you think about a buyer, it's really about the impression that you create in that kind of 10 to 15 minutes that they tour around through the front door and maybe back out the back door and then back out the front door. And that's really where the opportunity to make the sale and make the impression. So it's been proven over and over again that that makes. Does make a huge difference. And that's part. Part of. That's just because people really don't have the imagination, if you go into an empty room to imagine what it would look like if it was staged. But if you go in there and there's like six pillows and nice lamps.

And I could live here. I could live here. I can imagine myself having a drink there at the end of the day.

Yes, I think that's me. That's a. That's a upgrade in lifestyle.

And how much have you spent on that? Like, are we talking 20 grand or.

Are we talking at the low. Yeah, I've spent less than three grand at the higher end. I've spent on. On the really, you know, $2 million developments. About nine. So eight and nine. Yeah, eight, six, remember?

And. And I actually looked into doing it when I was getting the property revalued. So I had done a buy, renovation, hold strategy, and I wanted to make sure that the valuer was coming in and was going to get the best possible, you know, I guess experience of that property. Now value is, you know, they've been to uni for three Years they have to do comparable sales. But there's no question in my mind, walking through an empty property, that's just kind of like blah to geez, you know, this is, this is actually really finished quite nicely. Makes all the difference. It allowed us to take photos for rental as well. And in the end, by the time we almost got around to convincing a rental agent or rental staging company to let us use their product for 24 hours, the we'd rented the property and the tenants put their stuff in there, which is quite nice anyhow.

So I reckon, I don't think buyers are, you know, they are just as vulnerable to staging as we all are. Yeah, it's just good. You walk, it's. You walk into any room and it's all of your senses. It's the echo that comes from Doe furniture.

It's echo. That's what I hate. You're right. It's that empty. The footsteps that you hear and you're.

Like, yep, that feels like an old abandoned kind of shack. Whereas if you got it staged and you just walk in there going, oh.

Yeah, I could do that. Now the other thing is I was actually renting at one stage and one of the conditions of me renting this property was in Flemington in Melbourne, like in 97 was that the people could keep some of their furniture there. They'd actually gone overseas and I had no furniture. So I was quite happy with that. But at one stage, one of their mates turned up to take the lounge because they were staging their property for the weekend. So Esther, to answer your question, you can stage yourself. I had another mortgage client over the northern beaches of Sydney and he went and got all of his mates best furniture and furnished the property. And I kept telling, he was saying, it's been on the market, no one's buying, no one's buying. I'm like, go and furnish the place. And he did. And he was just like, I couldn't believe it. There was all these people putting in offers and because we'd actually created a picture for them.

So the only thing I would say about that staging yourself is I'd almost. Even if I had the furniture, it's the expertise that you. There's two parts to you hiring a stager. It's. They're an interior designer most of the time, the good ones, and you're hiring that expertise. So. And it's hard to appreciate what that trade craft brings to the table. So if you look in a room, and this often happens to me as I look in the room And I think, God, that room looks small. How are you gonna. How can you possibly stage that? So it really looks appealing to someone, you know, and by using the right furniture. So sometimes that might mean using vanities without a. Without a base, like with legs so you can see underneath them, or the right size bed. So using a double instead of a queen or whatever. And suddenly that room looks proportionate. And you only learn that through years of experience and the way you set out a room, too. So it's. There's almost like a composition value. If you think like a painting, there's a room has a composition as well. So paying for that, I think paying for that trade craft is very important. So I'd almost. All right, can you just tell me how to do it, where to set it out?

Y.

And then I'll go and buy the furniture? Because we considered this when we're doing flipping and then moved on to developer. Like, we could perhaps have a shipping container and buy all the furniture and would that be cheaper? But in the end, we. We decided against it because you don't what. What I find really valuable about them. And I used to get them in before I'd even done my. You know, when the place was gutted and we'd mark out on the floor before we'd done any of the electrics or anything like that. This is with the Renault, if there was a. If it was a full structure or not, where the furniture was going to go. So I knew where to place all the power points and all that kind of thing. So I'm not having a staged house where I've got a power lead running. Yeah, yeah, it looks terrible. So, yeah, I. I find that trade card very valuable.

Yeah, absolutely. And I think just the. It's about paying for the shortcuts with professionals, isn't it? Is that they know what they're doing.

Yeah, that's right.

And you're leveraging not the mistakes, but the knowledge. So, yes, you could do it yourself. Hiring a van and getting around and getting all the furniture and setting it up yourself and, you know, for two grand, might be well worth just getting expert to do it for you. And the other thing with staging is that there's some staging that's done so very well, I have to say. I go and have a look at the bins just to see if they're actually someone living there or not. I'm like, there's toothbrushes there. Just look.

Looks.

It just looks. I'm like, his house is this clean.

But anyhow, when you see those. Like, I've obviously seen a lot of campaigns over the years and analyzed a lot of suburbs, and whenever you see those really outlier sales. So we looked back at a sale the other day from 2010, and it was a. It was a 1.4 sale in a median of about 850. Double. Double front, as this is in Brunswick, actually pulled it up to have a look at, because they just. The configuration they had. But it was an extraordinary sale for the time. And. But. And often there is, like, over years, you do see these. These outlying sales come up, and they're always staged properties. Like, they're never unstaged property.

Yeah, exactly. It adds so much value.

Yeah. Well, you just. You're giving yourself a chance to have that headroom, but if you. You're almost eliminating the chance of the headroom if it's not staged. Yeah.

Now, Esther's got another question which is interesting, I think, around equity. And she says. What does she say? I haven't read everything. I should, but could you please explain what equity is and how can it affect your borrowing capacity? So, Esther, first of all, I'll explain what equity is, and then I'll explain what the assumption of what equity is. So equity is actually. I don't know what the legal definition is, but equity is actually an asset. So, you know, you might have equity in your bank account, which is money in your bank account. Bank account. And you might have emotional equity, which means capacity to have a relationship. Who knows? But equity is actually a capacity or an additional capacity to invest in something or, you know, to. That's a nice analogy, wasn't it?

I never heard that one.

No, I just made it up on the spot.

I'm just letting it bounce around in my head.

I know, how can I invest some emotional equity in my family over Easter eggs? But anyhow, so excellent time. Time. But so equity, actually, in the conversations, what we're mainly having when we're talking about property investing is around a traditional property that you already hold. So when we talk about the equity that you have, it might be that you have a home worth $500,000, and you have a loan of, let's say, $100,000. So in theory, a lot of people go, oh, I've got $400,000 in my home that I can spend and that. And to some degree, they have $400,000 of equity, but that's not the equity they have available. What the bank really wants is that you have some skin in the game, so they want you to maintain. Usually 20% of the value of the property as your skin in the game when you're making a purchase. That's why when we're talking about loan to value ratio, often we know that the banks are happy to loan you 80% of the value of the property. They want you to have 20% equity in the game or skin in the game. And if you've got less than that, maybe 10% deposit only, they're going to charge you a bit of inventory insurance money to protect themselves because they see you as a bit risky because you've got less skin in the game. They've got 90% of the funds in, you've got 10%. So when we're looking at how much equity you have, I know traditionally when Todd and I started investing, you know, nearly 20 years ago, we had the, I guess, assumption that you had to pay off your home first to then start saving to have a deposit or equity. So equity could be cash as well, to put into the next property. But the reality is that you might actually have, and many of do now, due to the wonderful capital growth that has been experienced over the last few years in the different markets, we have more equity available in our properties. So looking back, Esther, to that example, if you have your home worth $500,000 and you have an existing debt of 100,000, when the bank looks at, they want you to keep 20% or 100,000 in equity in the property. So they're actually going to only loan you $400,000. But hey, you've already used 100 of that up. So there's actually equity of $300,000 available to you. So the next part of your question is, geez, how does this affect my borrowing capacity? Well, you have to borrow that 300,000 and be able to have the capacity to hold the original residual loan that you have. So you have to have the capacity to have the $400,000 loan against your home, but then you also have to have the ability to borrow the funds for the new property. Now, now we're going to get a little complex here. I'm going to use another term, cross collateralization, very popular with lenders. For those of you who've heard me speak over the last 15 years, you know, we don't like this because basically it traps you. With one lender, it takes six to eight months for us as mortgage brokers to pull it apart. But what can happen is your whole portfolio might be constant in value. So, you know, might have a property in Sydney that goes up and a property in Perth or Port Hedland goes down, but overall it hasn't changed value. So if you've got a cross collateralized portfolio, you go to the bank and say, hey, my property in Sydney's gone up by 400,000, I want some equity to go and buy again. They go, no, your whole portfolio hasn't, so there's no money there for you if you have them separate and if you did like I do and have them with even separate lenders, you can go and take the money out of the Sydney property, forget the Perth property for a while. So it allows you to have the freedom of choice. Now if you're only going to buy one property ever, then arguably cross collateralizing, not such a big deal. And for those who aren't as astute as our clubbers and members here, know the importance of growth and location and aren't expecting, you know, one when they've bought properties around the corner from each other. So there's not going to be that differential of being in different markets, not such a big deal. But for those who are serious about building a portfolio, being agnostic in, in investing around different growth centers, then it is really important that you structure correctly. So what I would say to you in that instance, Esther, is you need, anything you borrow affects your borrowing capacity. You don't have to be with the same bank. Usually most people or I know what we do is keep most of our clients with their home, with one of the big banks so that they have the ability to have offset accounts and lines of credits and all of those great things. Often when you access the equity, you access the equity as a line of credit, which is like a big credit card, you only pay interest on what you use. So if you did access that $300,000 and you only needed 100,000 to purchase a property, you only pay interest on the 100,000. Banks. However, John, are being very difficult at the moment.

Yeah, they're not being too good, are they?

They're saying that they're easing on investors. And APRA's come back and said good job guys for pulling back on the investors. You can, you know, you've got some breathing space now. But what we're seeing is actually, and a couple of loans that we've submitted in the last week, the bank's policy says one thing which is choose any product you want. And from a strategic point of view, for some clients, a line of credit is good. If you can't manage your, your current finances, having access to a credit card with hundreds of thousands of dollars is not something that we're going to set up for you. But for those of you who astute, there are still lenders that are doing 25 years interest only. So that means you don't hit that five year wall of having to roll over to principal and interest. Anyhow, we selected a line of credit for one of these clients. The bank came back and said why we wanted to have the access when it was needed with a view of building a portfolio of investments. And they went, oh, we think it's really risky, we don't want to give it to you. So we then had to go in and really fight for to have that line of credit. And it's a product that you can tick a box on and there's no policy anywhere that says you can't have a line of credit and you have to explain it. But we spent two pages in explaining why and we obviously got it through. But just so you know that although on one hand the lenders might be saying one thing, on the other hand we are still seeing a tightening, we are expecting a further tightening around living expenses and we obviously the banks are going through a product commission at the moment and they are throwing, throwing things onto the poor mortgage brokers to look at them and not us. But you know, the reality is that things are a bit tough. But I hope that explains to you how to release equity and once you have released equity, how you can use it. But it does affect your borrowing capacity. And the good news is we would normally have you and your home and that initial access of equity in a big bank. But there are other lenders available at the moment that have an easier serviceability that is allowing you, if your, your bank says no to allow to borrow again. And I did an example last week.

Yeah, because I think you should talk about that. I mean there's a lot of people in that boat that have perhaps gone to a mortgage broker that doesn't specialize in investing or have gone directly to the bank and have had the kind of, you know. No, the computer says no, but there is. I mean you're getting people over the line every week that with the second tier and third tier.

Yeah, absolutely. And I mean there's some lenders that are not deposit taking authorities so don't necessarily come under a lot of the requirements of APRA and asic. And obviously we do our due diligence and make sure that we're putting people into a loan that they can afford with buffering of rates going up, et cetera. But the reality is that Most lenders looking at someone who might have a, let's just say a million dollar loan and paying 5% interest only. So $50,000 a year and they're saying no, we're going to assess this as a principal and interest loan over 25 years and hence we are going to include $85,000 as your repayment in the calculator and you can no longer buy. So there are lenders that are still allowing you to use their interest only. Existing debts, maybe their rates are a little bit higher. But as I said to someone the other day, overall, if you're paying, paying two and a half thousand dollars extra in interest a year and you can get a property that's going up by $50,000 a year, what's the cost benefit analysis? So the importance is buying in the right location, obviously. But so I did a quick analysis. Someone who had a $650,000 home, two $650,000 properties, was owned by another one. They needed a household income of $260,000 with a traditional bank to get that, another property worth 650,000. However, if they went with one of the lenders we were working with. So these are lenders like Liberty and pepper, etc. They only needed a household income of 140,000.

260 to 140.

Yeah. So huge difference. So the bank says no. There might be still ways, but I would, I would make sure that you work.

It's worth having extra conversation.

Have an extra conversation. But understand that rates will go up at some stage. You need to have that buffer in place space which we always talk about.

Yep. I thought what would be good to pull up, Jane? I don't know. I can't remember if we've done it recently, but the portfolio calculator, which is the obvious next step on from the equity. If you want to solo that for a second. Yeah. And just talk people through what it looks like when it comes to. Because obviously the next question is, okay, once you've bought your first investment property, how do you use that to buy your next investment property? But if you're standing at the start, how do you plan what that's going to look like? Like leading out in a few years time.

So this is the property portfolio calculator that's on the website investorschoice.com and I'll just put that into the agenda so you can see where that is. Even learning how to. There you go. So that's the investors choice portfolio calculator that you can see there. So what I wanted to do was just pull up that calculator and I've hidden it here. So I'm just going to pull this over and show you where it is. So if you have a look at this, I was talking to someone yesterday and saying, what is your desired income in the next 10 years? Now, I have to say 80% of people say $100,000. Another 15% say 75,000. Another 15% say 150,000. Now, I've come up with this 73,000 just by actually going through and saying, if I was going to have my basic costs covered, how much would I have to live on for you? And then I went through and said, oh, well, I want to have some buffers in place for some accommodation and all these extra things as well. So I added some buffers in. So this is how I came up with 73,000. Now, I ran this for a friend recently who said, I want to give up my job. How much do I need to live off for a year? And we did this for her. So you can change any of these things. But what's really interesting here is we're talking here around expected capital gain. So if you actually have a whole portfolio, sell the whole thing off. And we're talking investments here, not your home. You put the money in the bank, you earn 5%, you pay capital gains tax at your tax rate, and you invest in a place that over the period of time goes up in value on average 7% a year. And we have allowed for selling costs and paying back the loan we kept hit calculate here. It basically says, you know, that $73,300 in today's dollars in 10 years time based on inflation is about 93,000. And if we have a look at what that means as a money in the bank, you'd need 1.8 million in the bank returning at 5% to get you that 93,000. So go and play with this, it's fine. And if we had that 1.8 that we needed in the bank, how much of a portfolio would we need to have in 10 years time that we'd have to sell, pay capital gains tax, pay selling costs, et cetera. So we're talking about 4.2. Now here's where the clever bit comes in. And that is if what's 4.2 then worth now? So 2.17% growth. So basically, if you're buying $450,000 properties, you'd need five of those to have $2 million portfolio. And the interesting thing here is that you can go through and you can change things and you can say, well you know what if I had, if I did that over 15 years, how big would I need to have that portfolio? So over 15 years, you know, we've gone from a 2 point something million dollar portfolio down to a $1.4 million portfolio. Or you might say, gee, you know, I reckon that I can get 8% growth, you know, what does that mean to me in 10 years time if I can really be diligent about finding that area and then I get down to 1.8 from over 2 million. So you can have a play around and you can see how important and how quickly it can affect things.

Yeah, what I always take away from that is or two things actually. One is if you just ease that time out a little bit, how much easier it suddenly becomes. And it's that kind of turtle in the hair thing sometimes as you're racing to try and achieve miracles. Whereas if you actually just took a step back and took a long term play, you can do it quite comfortably without killing yourself.

And the thing I like about this, if you did actually go and say geez, there's no way in 10 years time or no way now I can have a $1.8 million portfolio. You could go back in and go well actually how much do I really just need to live off? If I could work two or three days, days a week for the extra stuff, if it's $50,000 that I actually need to live off and I make it a $50,000. So this covers all of my basic needs, my property portfolio that I'm working towards, then you know what, what kind of portfolio do I need to make that happen? So you can then start having a look and that go, well it's 1.2 million is two six hundred thousand dollar investment properties possible for me? So you can really start, you know, playing around with these figures and seeing what is possible and probable. And I think that, you know, as far as I'm concerned, you know, power is knowledge and just having that ability to you really helps. So let's, we've got Patricia, here's got a question.

Yeah, I'll show the question.

So Patricia says what can, what if I wanted to do real estate as my full time job? Oh Patricia, you're going to have to give us more detail there. If your job was to be real estate full time as a real estate.

Agent, then well that's pretty achievable.

There's about to be. And then oh actually 18th of March there has been incredible Changes to the national award, which means that there has to be a minimum payment made now to real estate agents. Can't be commission only. So all of those real estate agencies that had all those extra agents on that, we're selling to their family two or three properties a year and making nothing they have to put them on. I think it's a minimum of 45 or $50,000, which means there's going to be a lot of real estate agents who are going to be let go.

Yeah.

It also begs the question of, you know, what does that mean? But real estate agent, you could become a real estate agent. You become a buyer's agent and do a course. There is about to be a 600% increase in the amount of effort.

Patricia said no living off the income from property.

Okay, well, interesting. There's about to be a 600% increase in the amount of effort needed to become a real estate agent in New South Wales under the new proposed education requirements. And I know someone recently who did a real estate course. Become real estate agent in like three days. So it's going to be more like three years. So if you wanted to become one, do it quick. So, okay, so what if you wanted to do real estate as you're full time, so just live off the income of your property. So, Patricia, I think the interesting thing here around the calculator is that what it does actually is it actually allows you to play around a little bit with what that is. So what I've said here is if you've got a portfolio of a certain amount and you pay it all down and put the money in the bank, how much money in the bank do you need to live off? So I've said that you've got a 5% return on your money in the bank. Now you can actually take this and go, well, 50,000 is what I want to live off. What do I actually need in the bank? What do I actually have to earn for me to. Or what's my paid off portfolio going to be worth for me to be able to do that? Now, arguably, if you're in Queensland, you could get a 5% rental return. So if you had property portfolio worth 1.28 million and you had a rental return of 5%, then before all of your costs, you would get an income of $50,000. If you had 3%, however, you know, you need $2.1 million. Now, we're not taking into account what I allow is about 25% of on costs as well. So if I'm earning a $50,000 rental income, I say there's about 25%. So, you know, let's say about 12 and a half thousand dollars in costs for, what's that for Rental fees, strata fees, council fees, insurances, all of those additional things. So you have to allow for that and as a, you know, any income that you would allow for a tax as well. So you need to play around with this. But I think it's really important that if you did actually just say, hey, you know, I don't want to sell my portfolio down because I think it's really a really good. A good thing is to not sell a portfolio. If you've chosen the right areas and it's gone up in value, why sell?

When it comes to the exit strategy.

Exit strategy? Yeah. So what a lot of people would consider is saying selling some down so that you can have some. The income from the others that are going up in value rather than selling the lot. The, I guess the calculator gives you what is the norm, which is I'm going to sell my whole portfolio and get out.

Which even if regardless of what exit strategy you chose, is still a nice target to have because it gives you a target. Gives you something. Yeah.

So, so to, if you wanted to, you know, create yourself a income from your portfolio, then what you would have to do is obviously have it paid down. So you know that conversion from interest only to principal and interest or being more risk adverse would have your interest only loans as long as you could with the interest with the offset, the funds going in the offset. So you could pay them down at any time, but you have the cash available to you so that you can act on any immediate emergencies that you might have that you need. But the other thing that I think is really important is that you make sure that your portfolio, portfolio has the growth opportunity. So you can actually sell one or two of those and pay down the debt so that you can create the income that you want.

Yeah. Because for a lot of people it would be tempting to look at it and go, well, my only target really is that I just need to get properties with high yield. Right. So if I get high yielding properties and they pay me X amount each week, wouldn't that be a better strategy than, you know, getting something in the hope you're going to get capital growth and having a lower yield?

Well, the thing is about having the capital growth that it allows you to exit the portfolio. So if your theory is that you want to have a, say, a $50,000 passive income, in reality with the Cost, you probably need $75,000 of income to achieve that. So $75,000 worth of income is a lot to have from a lot of properties that are making maybe you know that and usually are at a lower price point. So lower socioeconomic, lower price point, higher yield. So they might be making a 5, 6, 10% yield even, you know, if you, if you've got some multiple income strategies around them. But often what they are by virtue of where they are is they don't necessarily have the growth. So whilst you have them, you might have the income, but when you do come to sell them, you actually have lost all of that income and you may not have the growth to actually put in a nest egg. So I think it's really important when you're looking at portfolio, it's actually balancing your portfolio overall. You can't always have growth, growth and yield together in a property. Although we believe with renovation and targeted properties and the Trident strategy, you can obviously improve your yield by improving your rent after you've done a renovation. But if you've got, you know, some growth portfolio properties and you have some of your portfolio properties overall, one actually nurtures the other so that overall you've got a portfolio that's going to assist you when it comes time to retire, but you also got a portfolio that's going to help you cash flow to keep it going. And when you get to that point, you go, I want to live full time, that's what I want. And that's what Patricia says. Exactly.

And in a way it's a little bit like delayed gratification, isn't it? You're delaying that passive income a little bit longer, but it's going to be more and it's going to be sustained.

Yeah, exactly. So I think, and I think that that thing about building the best portfolio that you can, so it's not going to ruin you in the meantime, but get you where you want to be in the long term term is how we would concentrate on that.

Yeah, great. Well, that's all the questions I've got for you, Jane. And what are we at?

Great.

Well, if you, if you took away Our probably 10 minutes with no audio.

And we chatted to ourselves for about an hour.

Yeah.

Well, look guys, if you've got any questions, please ask them now. Give us some, some thumbs up and some loving. If this is helping you once again, at the last Thursday of every month we do these Q and A calls. They are here for you. So you know, please send your questions through. Questionsourpropertysuccess.com or. I think one of the things that we found with the Facebook page is that we private group is that we've got so many people who've got questions. Their questions have been answered throughout the month, which is great. So we're going to ongoing give you updates and information about what's going on. As I said, the really exciting thing that we've got coming up after Easter is the launch of our location masterclass, which we're really excited about. Just as a heads up, I just did a review yesterday, I haven't even told you this, John. I did a review yesterday of the SQM data that's just come through this week, which is hot off the press, but ready for the ultimate guide to renovation students to go play with now. But I ran my own algorithm with my own filters on it.

Yeah.

And the good news is out of the 15,655 suburbs that we assess every month, and I keep a track of of in the last four months there's been 180 suburbs that I would consider that just get through my filter this month, 192.

Okay.

So there's more suburbs that are coming through. I even found one in Darwin. Really very exciting.

So I might just explain a little bit there because when, when you run that criteria each time you start off completely blind. So you say where are the suburbs right across Australia that match this criteria, which is a criteria that obviously you learn in club and learn in ultimate culture renovation. And then it brings you back the results from all over Australia, regardless of any other. These are prejudices or anything like that.

One of those filters is as simple as, you know, and I started with a low base here. As little as if there's less than 70 sales. Like I'm not even interested in that suburb for the month. You know, I really want to be able to target the suburbs that I want. So it does exclude some of those smaller suburbs, but it also excludes. I just don't waste my time and I don't want, you know, students of ours wasting their time.

But I need more efficiency.

I run this for our done for you student clients so that we can locate suburbs for them. And I don't want them looking in areas that are, you know, they're going to be sitting there every weekend going, there's nothing.

And it's also just an indicator that there's the market's healthy. So it's the turnover of the, the stock that makes the median go up and the meeting going up that makes the Capacity, capital growth. So you need to.

Well, I also ran something a bit interesting this month, too.

Oh, yeah.

I pulled out townhouses, semis and terraces. And I said of the suburbs throughout Australia, looking at the demographic information from Census 2016. By then applied my filters to the suburbs that are predominantly the predominant property is a semi townhouse. There was 40 of those. So there you go. Interesting stats. So lots of good information. Get in there, guys. If you're in Tugda, which is our horrible acronym for the Ultimate Guide to Renovation, or you are watching this and recording and you're one of our new location masterclass people, get in there, play around the suburb selector software. You know, lots of fun and we've had some great feedback and thank you so very, very much to all the beta testers.

Yeah, cheers, guys. Thank you everyone for amazing. And I think we've just about implemented every single one of those bits of feedback too.

I could believe it. John was making me pick up things yesterday. He said someone's just picked up something and said, you point to something that says 4.9, but you actually say 0.49.

Yeah.

I hope you find that. Does that have been in one video somewhere in the hundreds of hours?

I think that's the one we couldn't find.

If someone can find it for us, there's a book in it for you. Send a note to John. We want to know what video it is and what time tag because we've got the voiceover.

We just don't know which is aware it is.

Yeah, thank you for that feedback. But guys, as always, I really appreciate everyone being here once again, you know, we're in the private Facebook group throughout the month answering your questions, as is the amazing 701 people that we have in there at the moment. So there's experts and there's buyers, agents and there's electricians and there's plumbers and there's. There's decorators and obviously inexperienced and experienced renovators and property buyers and developers and, you know, really exciting stuff. So I urge you to jump in there, ask your questions in there and, you know, we're going to be here for you the last Thursday, 12 o' clock every month to answer your questions. And until then, here is to your property success.

See you next time.