WEBVTT - Would we be better off with less landlords? 0:00:12.760 --> 0:00:16.000 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:16.079 --> 0:00:19.720 James Kirby, the editor at the Australian. Folks. My guest 0:00:19.720 --> 0:00:23.520 today is Anissa Cavallo and she has an exceptional story 0:00:23.600 --> 0:00:25.720 as a property investor and I want you to hear 0:00:25.760 --> 0:00:29.600 it and I think you'll find her very interesting as 0:00:29.760 --> 0:00:33.720 a guest. She started in the funds management world at 0:00:33.760 --> 0:00:36.639 Mercantile and Mutual. She worked for various operations. Q. I see, 0:00:36.680 --> 0:00:39.960 you'd know some of them. But at a certain point 0:00:40.200 --> 0:00:44.159 things changed and in some ways became very challenging for her, 0:00:44.840 --> 0:00:47.199 and she was divorced at one stage and ended up 0:00:47.240 --> 0:00:49.720 having to go back and live in her parents' house 0:00:49.800 --> 0:00:53.760 with her own kids in tow At that point she 0:00:54.000 --> 0:00:58.080 decided to get very serious about property investment and has 0:00:58.120 --> 0:01:01.160 since then and has become quite no since then for 0:01:01.240 --> 0:01:04.479 building a residential property empire of sorts. She has about 0:01:04.480 --> 0:01:07.840 fifteen investment properties, she tells me at the moment, and 0:01:07.840 --> 0:01:10.440 we're going to talk about a whole bunch of issues 0:01:10.800 --> 0:01:14.520 relating to property and her particular perspective on it. And 0:01:14.600 --> 0:01:16.479 mister Cavello, how are you welcome to the show. 0:01:17.080 --> 0:01:19.319 Oh, thank you for having me, James, it's a pleasure 0:01:19.360 --> 0:01:19.840 to be here. 0:01:20.280 --> 0:01:22.200 I'm great to have you on. The first thing that 0:01:22.319 --> 0:01:24.839 struck me, even in the course of introducing you there 0:01:25.480 --> 0:01:28.400 was that you have now built up a considerable property 0:01:28.400 --> 0:01:32.200 portfolio of about fifteen residential properties. That's a hell of 0:01:32.240 --> 0:01:34.039 a lot of properties. That's a hell of a lot 0:01:34.080 --> 0:01:36.800 of issues. Yes, and I imagine you have a considerable 0:01:36.800 --> 0:01:40.520 spreadsheet telling you all the various situations and the various 0:01:40.520 --> 0:01:43.080 incomings and outgoings with those. But one of the things 0:01:43.080 --> 0:01:47.440 that comes up all the time, perhaps not inside property investment, 0:01:47.520 --> 0:01:52.120 but in national debate, it's about people having multiple properties, 0:01:52.120 --> 0:01:55.520 and should people have multiple properties? And is it in 0:01:55.560 --> 0:01:58.480 some way a problem that people do. I don't know 0:01:59.040 --> 0:02:00.800 where you come from that. Well, what I might ask 0:02:00.840 --> 0:02:04.360 you is we often have people right into the show 0:02:04.400 --> 0:02:06.640 when they're starting to build and they have this target 0:02:06.680 --> 0:02:08.679 in my Is there a number that you think is 0:02:08.760 --> 0:02:12.280 ideal in terms of investment property ownership. 0:02:12.680 --> 0:02:15.960 I'm in pains whenever I'm interviewed or I have the 0:02:16.000 --> 0:02:18.160 privilege of being able to talk to the media about 0:02:18.200 --> 0:02:21.040 my journey, I'm at pains to tell people that I 0:02:21.080 --> 0:02:23.960 don't think people should buy fifteen properties, because you're quite right, 0:02:24.000 --> 0:02:25.639 fifteen properties fifteen headaches. 0:02:25.880 --> 0:02:26.120 Right. 0:02:26.560 --> 0:02:29.520 The only reason that I'm in that situation is because 0:02:29.520 --> 0:02:32.280 it's actually my industry, and so it's a lot easier 0:02:32.280 --> 0:02:35.240 for me to trade and move things around, and you'd 0:02:35.280 --> 0:02:38.919 expect me to have a larger portfolio than other people 0:02:38.960 --> 0:02:41.760 if this is indeed my expertise. Right. So is fifteen 0:02:41.800 --> 0:02:43.080 property right for everybody? 0:02:43.120 --> 0:02:43.160 Know? 0:02:43.480 --> 0:02:44.800 Is one right for everybody? 0:02:44.960 --> 0:02:45.040 Know? 0:02:45.360 --> 0:02:48.960 I say to people, for me buying property, the benefit 0:02:48.960 --> 0:02:51.840 of property, the really where you get the real goal 0:02:52.000 --> 0:02:54.520 out of property is two things, and I disagree with 0:02:54.560 --> 0:02:57.440 anybody that disagrees with me on this one. 0:02:57.880 --> 0:02:58.079 Right. 0:02:58.120 --> 0:03:01.600 It's leverage and capital growth. So it's where you can 0:03:01.639 --> 0:03:04.280 take a little bit of money that you've saved, and 0:03:04.320 --> 0:03:07.680 many of my clients take ten years to save fifty 0:03:07.720 --> 0:03:09.960 thousand dollars. If you put that in the stock market 0:03:10.280 --> 0:03:13.320 in ten years, it's not going to be worth very much, James, right, 0:03:13.680 --> 0:03:16.440 You take that fifty and you leverage it into five hundred, 0:03:16.480 --> 0:03:19.720 and you may indeed have a million dollars in ten years. 0:03:19.919 --> 0:03:22.440 So I'm at pains to explain to people that what's 0:03:22.480 --> 0:03:25.560 important in property is the benefits of leverage, and that 0:03:25.880 --> 0:03:28.919 couple with capital growth. Now, that doesn't mean you need 0:03:28.960 --> 0:03:31.560 fifteen properties and fifteen headaches. It means that you need 0:03:31.639 --> 0:03:36.320 to just buy one, two, three, really good quality properties 0:03:36.360 --> 0:03:39.240 at the right price that you can afford, and hang 0:03:39.280 --> 0:03:42.119 on to them for as long as you can. I'm Italian, 0:03:42.480 --> 0:03:45.520 do the European thing. Never sell, hang onto them, let 0:03:45.520 --> 0:03:46.880 the market do the work for you. 0:03:48.240 --> 0:03:50.960 Yes, it gets tougher as read school what, I'm sure, 0:03:50.960 --> 0:03:53.280 but just a couple of things there. So would you 0:03:53.440 --> 0:03:57.520 think we would be better or worse off if people 0:03:57.600 --> 0:04:00.600 didn't strive to have as many properties. We'd be better 0:04:00.600 --> 0:04:02.640 off with less land lords and other words. 0:04:02.880 --> 0:04:04.680 Yes, And this comes up all the time, and I 0:04:04.680 --> 0:04:07.440 find it really interesting actually that even through my journey, 0:04:07.480 --> 0:04:10.040 which was a tough one but very also very lucky, 0:04:10.080 --> 0:04:12.080 and I realized that I'm privileged. I was able to 0:04:12.120 --> 0:04:14.520 live with my parents, many people can't. I don't take 0:04:14.560 --> 0:04:17.440 any of that for granted, But I'm always fascinated by 0:04:17.480 --> 0:04:19.960 the people that are actually angry with me. You know, 0:04:20.080 --> 0:04:23.039 I've had comments saying that I'm responsible for the shortage 0:04:23.040 --> 0:04:25.880 of properties, But the reality is that we live in 0:04:25.920 --> 0:04:30.000 a society where everybody will never be able to afford property, 0:04:30.120 --> 0:04:33.160 and there are many other cultures first World countries where 0:04:33.600 --> 0:04:36.839 properties are much more expensive. And as economies get more 0:04:36.839 --> 0:04:41.520 developed and become more sophisticated and population skilled immigration grows, 0:04:41.920 --> 0:04:45.760 that gap between affordability gets it gets greater and greater, 0:04:46.480 --> 0:04:49.120 and so I think if it wasn't for people like 0:04:49.240 --> 0:04:52.640 us that were purchasing properties to make it more affordable 0:04:52.680 --> 0:04:55.200 for renters, we'd have even more homelessness. And you think 0:04:55.240 --> 0:04:59.080 about what even the RBA is saying with interest rates 0:04:59.120 --> 0:05:01.480 that the people that have and hardest hit with interest 0:05:01.560 --> 0:05:04.200 rates is actually it's the renters. Because there aren't enough 0:05:04.240 --> 0:05:08.440 people actually putting houses, buying investment properties for renters. We 0:05:08.480 --> 0:05:11.760 need to actually get the private sector, I think to 0:05:12.320 --> 0:05:15.120 solve the housing crisis, because we don't have enough money 0:05:15.120 --> 0:05:17.440 in the government to solve it. I think it's this 0:05:17.680 --> 0:05:21.320 utopian idea that everybody can afford a house is unrealistic. 0:05:21.720 --> 0:05:25.000 We we live in a capitalist society, and so the more 0:05:25.040 --> 0:05:28.039 people we can get purchasing properties and making them affordable 0:05:28.960 --> 0:05:31.120 for people that aren't in a position to purchase and 0:05:31.400 --> 0:05:33.839 maybe don't want to buy. I know lots of people 0:05:33.839 --> 0:05:36.520 that don't want to be an owner of a property 0:05:36.720 --> 0:05:38.720 I think is a good thing. It should be encouraged. 0:05:39.120 --> 0:05:43.080 Is there any one outstanding issue or measure that could 0:05:43.080 --> 0:05:48.160 be introduced that would acceleries that provision if you like 0:05:48.200 --> 0:05:49.680 supply of rented property. 0:05:50.839 --> 0:05:54.080 I think an obvious one is a stamp. Due to 0:05:54.160 --> 0:05:57.000 interest rates, etc. I think the market will do the 0:05:57.040 --> 0:06:01.880 work for us. I think that eventually. I think markets 0:06:01.920 --> 0:06:05.440 go through cycles. As you and I have discussed before, 0:06:05.560 --> 0:06:09.279 fundamentals in markets, and those fundamentals don't change. It's just 0:06:09.320 --> 0:06:13.200 the market gets driven by sentiment until times are good 0:06:13.320 --> 0:06:17.280 and then they remember the fundamentals. So no, I think 0:06:17.320 --> 0:06:21.640 that I think making it easier for investors to produce 0:06:21.960 --> 0:06:26.159 affordable properties would be helpful. And there's a myriad of 0:06:26.200 --> 0:06:28.880 things that would need to change, certainly making it more 0:06:28.880 --> 0:06:32.960 affordable to invest through stamp, duty, less taxes, etc. There 0:06:33.000 --> 0:06:35.440 are a lot of tax incentives for investors still though, 0:06:35.640 --> 0:06:38.279 and you know, I believe that as an investor, it 0:06:38.360 --> 0:06:42.000 is still very affordable to own property even with additional 0:06:42.200 --> 0:06:46.640 taxes in Victoria. But I think other things like really 0:06:47.360 --> 0:06:50.560 getting more people into the construction workforce, because one of 0:06:50.600 --> 0:06:52.680 the big issues at the moment is just is building 0:06:52.680 --> 0:06:56.800 houses fast enough? So really scaling up construction workers could 0:06:56.839 --> 0:06:58.800 be could make a huge difference as well. 0:06:58.880 --> 0:07:01.960 Yes, yes, you know one thing that I have to say, 0:07:01.960 --> 0:07:05.360 and I like a property. I'm always been a property investor, 0:07:05.680 --> 0:07:08.200 but I'm a diverse fied investor and I'm across all 0:07:08.360 --> 0:07:11.920 markets and one thing that strikes me there And I'm 0:07:11.920 --> 0:07:14.680 not saying you said this, but there was the sort 0:07:14.680 --> 0:07:17.880 of implication that you mentioned, like a property pays off 0:07:18.720 --> 0:07:22.840 and part of that big payoff is leverage. Right, sure, 0:07:23.120 --> 0:07:25.080 but I mean you can leaver, that is, you can 0:07:25.120 --> 0:07:27.680 take a loan on shares just as easily. In fact, 0:07:27.680 --> 0:07:30.040 you can negatively gear shares just as easily, and they're 0:07:30.040 --> 0:07:32.440 doing ten percent a year at the moment. So is 0:07:32.440 --> 0:07:35.440 there some part of property that makes you more confident 0:07:36.040 --> 0:07:39.320 that you personally feel more confident about property as an 0:07:39.360 --> 0:07:40.920 asset to leverage than shares. 0:07:41.280 --> 0:07:44.240 Yes, of course, because it's a real asset, right, It's tangible, 0:07:44.280 --> 0:07:46.600 so it's easier to leverage, and you can't leverage to 0:07:46.640 --> 0:07:48.880 the same extent and the cost of leverage is not 0:07:48.920 --> 0:07:50.000 as much for property. 0:07:50.040 --> 0:07:52.480 No, that's very true. Yeah, the banks won't go with you. 0:07:52.520 --> 0:07:55.239 No, that's right. And if you leverage a lot into 0:07:55.440 --> 0:07:58.240 shares it is excitingly expensive and you can get a 0:07:58.240 --> 0:08:00.920 margin call, whereas with a property, as long as you 0:08:01.000 --> 0:08:03.800 pay your loan back you never get a margin call. Right, 0:08:03.920 --> 0:08:07.000 nobody says sorry, the property is now worth fifty percent less. 0:08:07.200 --> 0:08:10.200 You lbr too high. You hours some money. So I 0:08:10.240 --> 0:08:12.480 think that because it's a real ass ish, it's a 0:08:12.560 --> 0:08:16.120 tangible asset, it's a lot easier to levery. Are there 0:08:16.160 --> 0:08:19.560 other reasons? I think the scarcity issue. You know, we're 0:08:19.600 --> 0:08:22.720 not making any more land we've got. I think one 0:08:22.760 --> 0:08:24.800 of the things that you and I have discussed, or 0:08:25.400 --> 0:08:27.560 a theme that comes up a lot, is are the 0:08:27.560 --> 0:08:31.400 fundamentals getting greater? Are there more reasons to invest, particularly 0:08:31.440 --> 0:08:36.320 in Australia, And as our population grows, as we encourage 0:08:36.320 --> 0:08:39.599 more skilled migration into Australia. I think that the fundamentals 0:08:39.600 --> 0:08:43.440 do get more compelling in Australia for property. I think 0:08:43.480 --> 0:08:45.960 that gap that is just going to get bigger and bigger. 0:08:46.080 --> 0:08:47.480 What we might do is take a short break and 0:08:47.480 --> 0:08:48.920 we'll be back in a moment and we'll have a 0:08:48.920 --> 0:08:53.480 look at where anissa Is thinks in terms of both style, 0:08:54.000 --> 0:08:58.240 structure and location of good property opportunities At the moment, 0:08:58.280 --> 0:09:00.680 and she will also give give us her five minutes 0:09:00.720 --> 0:09:05.160 worth on the terrors of investing in the state of 0:09:05.200 --> 0:09:08.200 Victoria at the moment, with with its with its rush 0:09:08.280 --> 0:09:11.200 of unexpected taxes, and it is a very live and 0:09:11.280 --> 0:09:13.920 real issue for investors in that state. Okay, back in 0:09:13.920 --> 0:09:25.320 the moment, Hello, welcome back to The Australian's Money Puzzle podcast. 0:09:25.360 --> 0:09:28.080 I'm James Kirby. Well that are at The Australian talking 0:09:28.120 --> 0:09:34.120 to Anissa Cavallo, property investor and property commentator. And Anissa 0:09:34.840 --> 0:09:37.320 would I always ask someone new on the show to 0:09:37.400 --> 0:09:40.000 do this because I think it's in terms of added value. 0:09:40.040 --> 0:09:43.800 Every listener wants to know, is there in terms of 0:09:44.280 --> 0:09:47.480 types of property that are good value out there at 0:09:47.520 --> 0:09:51.920 the moment, without talking about locations, what is there a 0:09:52.040 --> 0:09:54.760 type that you are particularly attracted to? Just now? 0:09:54.880 --> 0:09:58.080 Okay, so when we look but when I personally look 0:09:58.120 --> 0:10:00.800 for property, I look for when I go fundamental then 0:10:00.920 --> 0:10:03.600 and there's two parts to that. One part is what 0:10:03.640 --> 0:10:07.079 are the characteristics that are going to drive growth in 0:10:07.559 --> 0:10:10.800 property and what are the characteristics that are going to 0:10:10.840 --> 0:10:12.480 drive risk in property? 0:10:12.679 --> 0:10:12.880 Right? 0:10:13.520 --> 0:10:16.800 And I think particularly we talked about leverage, leveraging into 0:10:16.800 --> 0:10:19.040 property where you're leveraging into any asset, you want to 0:10:19.080 --> 0:10:22.040 reduce as much volatility and risk as possible, and so 0:10:22.080 --> 0:10:24.600 those two things have to come together. In financial services, 0:10:24.600 --> 0:10:26.160 we call it a risk adjusted return. 0:10:26.280 --> 0:10:26.520 Right. 0:10:27.240 --> 0:10:31.680 So what I'm looking for is I'm looking for understanding 0:10:31.720 --> 0:10:36.280 where are those pockets that are going to potentially experience 0:10:36.320 --> 0:10:39.520 the greatest capital growth. And I believe that when you're 0:10:39.520 --> 0:10:41.520 in property, if you really want to make some money 0:10:41.559 --> 0:10:43.680 in property, if you really want to change your wealth position, 0:10:43.720 --> 0:10:46.240 it's capital growth. It'll do it. It's never yield. It 0:10:46.320 --> 0:10:48.680 really is helpful to help you pay for the property 0:10:48.679 --> 0:10:50.280 while it goes up in value. And that's about it, 0:10:50.320 --> 0:10:52.880 because it's not really a yield play. So I'm looking 0:10:52.920 --> 0:10:55.480 for capital growth and what is that? And there's two 0:10:55.559 --> 0:10:59.679 things internationally that are very common in films. For a 0:10:59.720 --> 0:11:03.199 country is that drive growth, right, the drive property price growth. 0:11:03.200 --> 0:11:05.440 And one of those things is population growth. But it 0:11:05.480 --> 0:11:07.760 has to be the right sort of population growth and 0:11:07.920 --> 0:11:11.000 access to money. At the moment, we've got the right 0:11:11.040 --> 0:11:14.640 sort of population growth. Skilled immigration. And I won't tell 0:11:14.679 --> 0:11:16.880 you the stage because we won't give away our areas, 0:11:16.880 --> 0:11:20.000 but fifty percent of skilled immigrants go to one particular 0:11:20.080 --> 0:11:22.640 state in Australia. That's been a trend for a very 0:11:22.679 --> 0:11:27.120 long time now. And skilled immigration leads to something called 0:11:27.160 --> 0:11:29.720 family income growth. You've probably heard that term before, a 0:11:29.760 --> 0:11:33.000 household income growth. So where you've got households becoming wealthier, 0:11:33.360 --> 0:11:37.680 you generally have property price growth. Okay, So access to 0:11:37.720 --> 0:11:39.719 money and is another one. Right, So a lot of 0:11:39.760 --> 0:11:41.880 people say, we'll interest rates are so high, there's no 0:11:41.920 --> 0:11:45.479 access to money. But we've got massive participation in the workforce, 0:11:45.920 --> 0:11:48.560 we've got some wages increasing for the first time in 0:11:48.600 --> 0:11:51.800 a long time. When you compare it to other property 0:11:51.800 --> 0:11:53.680 markets where interest rates have actually been a lot higher 0:11:53.720 --> 0:11:56.559 and unemployment's been a lot higher, actually got pretty good 0:11:57.120 --> 0:11:57.959 access to money. 0:11:58.280 --> 0:12:01.160 That's interesting. I'll just pick up on two things there. 0:12:01.720 --> 0:12:04.480 Victoria is the skilled immigrant state, isn't it. I assume 0:12:04.559 --> 0:12:06.760 that they all come to and so you get that 0:12:06.960 --> 0:12:11.839 improved income here, but it's the weakest of the states. 0:12:11.960 --> 0:12:15.320 Just now, the numbers in Victoria defy the logic you're applying, 0:12:15.360 --> 0:12:17.800 but perhaps there's more to it. What's happening there. 0:12:18.000 --> 0:12:21.480 So we've got these extra taxes that we're paying because 0:12:21.679 --> 0:12:24.240 of how for many of us, a lot of the 0:12:24.240 --> 0:12:28.600 community feels at the government. State government mismanaged COVID and 0:12:28.800 --> 0:12:31.720 set us broke, and as a result, they're taxing in 0:12:31.720 --> 0:12:33.560 different areas to try and make some back some of 0:12:33.600 --> 0:12:35.680 that money. And I think a lot of it is 0:12:35.760 --> 0:12:38.280 anger and sentiment. But when you do the numbers, and 0:12:38.679 --> 0:12:42.000 I've done the numbers, the average cost to add investor 0:12:42.040 --> 0:12:46.080 to the average investor, the average additional annual cost is 0:12:46.160 --> 0:12:48.559 about one thousand dollars. Let's call it a thousand bucks, right, 0:12:49.120 --> 0:12:52.600 So one thousand dollars a year, which is taxed deductible 0:12:52.880 --> 0:12:58.160 not enough of a disincentive to continue affecting property markets 0:12:58.200 --> 0:13:02.480 when you've got these other true, really fundamental like skilled migration, 0:13:02.640 --> 0:13:06.360 population growth, the need for housing a shortage. We're building 0:13:06.440 --> 0:13:09.920 fifty thousand houses less than we should be annually at 0:13:09.920 --> 0:13:15.559 the moment in Victoria. So sentiment's actually a wonderful opportunity 0:13:15.559 --> 0:13:19.240 for people to take advantage of a market that's potentially 0:13:19.320 --> 0:13:20.199 well underpriced. 0:13:23.400 --> 0:13:25.720 Okay, So you see it as a moment in time 0:13:25.760 --> 0:13:31.440 basically where people have perhaps overreacted to the surprising position 0:13:31.520 --> 0:13:34.640 of taxes and perhaps the disposition of the particular state 0:13:34.640 --> 0:13:37.880 government just now about property around property and basically they 0:13:38.160 --> 0:13:40.319 seem to see it as something Yeah to trax, that's 0:13:40.320 --> 0:13:43.160 sill the investment point of view. So just back on one. 0:13:43.200 --> 0:13:46.640 Other things which didn't quite get was what type of 0:13:46.679 --> 0:13:50.760 property then, irrespective of location. If I say to you, hey, 0:13:50.840 --> 0:13:54.640 you're so experienced in property, you've bought fifteen properties yourself, 0:13:54.679 --> 0:13:58.040 at least I want to buy one. What type of 0:13:58.080 --> 0:14:00.680 property is dollar for a dollar the best value do 0:14:00.720 --> 0:14:01.560 you think just now? 0:14:02.440 --> 0:14:05.480 I would be houses, So I'm a very big one 0:14:05.520 --> 0:14:09.120 for houses, and there's a lot of history. We're don't 0:14:09.200 --> 0:14:12.959 to value air in Australia. We don't so in need Land, 0:14:13.000 --> 0:14:15.640 which is where the scarcity is right, and I'd be 0:14:15.640 --> 0:14:18.720 looking for growth suburbs where are these skilled migrants moving. 0:14:19.200 --> 0:14:21.880 And that's also for affordability. If you've got five million 0:14:21.920 --> 0:14:26.200 dollars to spend by all means buy in South Melbourne 0:14:26.320 --> 0:14:30.240 Middle Park, et cetera. But the average investa hasn't got 0:14:30.240 --> 0:14:32.680 that sort of amount of our average client doesn't have 0:14:32.720 --> 0:14:35.440 that to spend. So there are many areas that are 0:14:35.480 --> 0:14:38.080 just on the outskirts of in urban Melbourne that have 0:14:38.200 --> 0:14:42.240 got incredible infrastructure growth, hospital growth, a lot of job growth. 0:14:42.360 --> 0:14:44.720 Are the Maturance State government's actually been very good at 0:14:44.760 --> 0:14:49.720 creating employment clusters instead of creating a commuter suburbs where 0:14:50.040 --> 0:14:52.320 the suburb has to commute to go to it to 0:14:52.360 --> 0:14:55.480 get to work. There's a lot of local employment, so 0:14:55.520 --> 0:14:59.240 something like on average, seventy percent of the people that 0:14:59.320 --> 0:15:02.560 work full time I'm in Melshiam City Council actually live locally. 0:15:02.640 --> 0:15:05.240 They don't actually community and that's a great thing for 0:15:05.360 --> 0:15:09.640 local economy. So i'd be looking for local employment. I'd 0:15:09.680 --> 0:15:15.280 be looking for family income growth, skilled immigration, hospitals, education, 0:15:15.880 --> 0:15:18.520 that infrastructure that brings a community together. 0:15:19.680 --> 0:15:22.800 Really interesting answer. It strikes me you're a feeling you're 0:15:22.800 --> 0:15:26.800 a very statistically driven investor. I won't say top down, 0:15:26.840 --> 0:15:29.960 but more than most, you're very across the demographics that 0:15:30.000 --> 0:15:32.680 you're investing in and the economics that you're investing in, 0:15:33.160 --> 0:15:35.840 not just the particular property. That's really interesting and a 0:15:35.880 --> 0:15:38.120 really interesting view. Okay, folks, now we have some really 0:15:38.120 --> 0:15:40.640 good questions for Anissa, and we will be back in 0:15:40.680 --> 0:15:51.920 one moment. Hello, and welcome back to the Australians Money Puzzle. 0:15:51.960 --> 0:15:54.560 I'm James Kirby and I'm talking to Annisa Cavella of 0:15:54.880 --> 0:15:59.120 Eida Eda Property. She's the founder of that group and 0:15:59.600 --> 0:16:03.360 avery experienced investor, has some really good views, fresh views, 0:16:03.440 --> 0:16:06.920 I think on property investing. Great to have around the show. Okay, 0:16:07.480 --> 0:16:09.920 I have a few questions. You've seen them in advance. 0:16:10.200 --> 0:16:12.120 Let's just have a spin through them. I'll see how 0:16:12.160 --> 0:16:14.080 we go in this. I would be interested to hear 0:16:14.120 --> 0:16:16.880 your answers, obviously on the property. Some are more property 0:16:17.040 --> 0:16:20.440 centric than others. Lorraine, my husband and I are keen 0:16:20.480 --> 0:16:23.440 to get on the property ladder here in Australia. Our 0:16:23.480 --> 0:16:26.120 dilema is what do we do we have saved in 0:16:26.160 --> 0:16:30.600 every if individual advice Lorraine. Okay, it's it's information only 0:16:31.000 --> 0:16:33.160 to all the Lorraines out there, But in any event, 0:16:33.240 --> 0:16:35.920 I think we could safely say she they have saved 0:16:36.120 --> 0:16:38.080 a few hundred thousand dollars, but less than the price 0:16:38.080 --> 0:16:39.880 of an average house. Let's put it that way. They 0:16:39.880 --> 0:16:42.840 live in Sydney. They're debating between a house and an apartment, 0:16:43.320 --> 0:16:46.160 and they're debating between Sydney and Brisbane, which seems to 0:16:46.200 --> 0:16:49.600 me and if nothing else, they're wide open. They're wide 0:16:49.600 --> 0:16:54.080 open to what sort of property they will buy, even 0:16:54.120 --> 0:16:56.200 to the point of living in two different cities which 0:16:56.200 --> 0:16:58.640 are not a lot of people are. What would your 0:16:58.720 --> 0:16:59.760 broad observations be. 0:16:59.760 --> 0:17:03.560 To the okay disclaimer right, not knowing everything about Lorraine. 0:17:03.640 --> 0:17:04.840 And of course there's two. 0:17:04.800 --> 0:17:06.840 Reasons to buy property. One is to make as much 0:17:06.880 --> 0:17:08.520 money as you can out of it. One is to 0:17:09.119 --> 0:17:11.480 enjoy the property. I always say to client, so decide 0:17:11.480 --> 0:17:13.600 wire twenty when they do it. Okay, I'm going to 0:17:13.640 --> 0:17:15.520 assume that what Loraine and her husband want to do 0:17:15.640 --> 0:17:18.639 is make some money out of property. So I certainly 0:17:18.640 --> 0:17:22.639 wouldn't be purchasing an apartment. I'd be looking to purchase land, 0:17:23.119 --> 0:17:25.480 as much land as I can in a growth area, 0:17:25.520 --> 0:17:28.160 because there's no point buying land in Timbuktu, where nobody 0:17:28.160 --> 0:17:31.480 wants to live anyway, right, So buying in an area 0:17:31.560 --> 0:17:33.720 which gives me access to as much land as I 0:17:33.720 --> 0:17:37.120 can afford, in a growth area that has those attributes 0:17:37.160 --> 0:17:42.480 we discussed before, family income growth, skilled immigration, lots of infrastructure, growth, 0:17:42.600 --> 0:17:46.040 et cetera. I would also be I don't like timing 0:17:46.040 --> 0:17:48.360 the market, James. I believe that we don't. We never 0:17:48.400 --> 0:17:50.439 time it right. The economists get it wrong, per will 0:17:50.480 --> 0:17:53.280 weed to get it right. But I do believe that 0:17:53.320 --> 0:17:57.160 there are particular markets that are very sicklical and when 0:17:57.440 --> 0:18:00.199 and unless you buy right at the right time, ten 0:18:00.280 --> 0:18:02.880 years before you get your money back. So I would 0:18:02.920 --> 0:18:06.560 be looking at markets with less volatility, markets that tend 0:18:06.640 --> 0:18:08.280 to just have a little bit of volatility, but they're 0:18:08.280 --> 0:18:10.359 always trending up woods so it doesn't matter if you're 0:18:10.359 --> 0:18:12.720 by today. It might take you a year to get 0:18:12.720 --> 0:18:15.240 your money back, but it certainly won't take you five years. 0:18:15.080 --> 0:18:16.840 Right, So what would that elimoned? Then? 0:18:17.119 --> 0:18:19.719 I don't want to pay markets, but I certainly wouldn't 0:18:19.720 --> 0:18:22.360 be investing in Western Australia at the West Australia has 0:18:22.640 --> 0:18:25.640 a history of very strong volatility, and it doesn't mean 0:18:25.680 --> 0:18:27.919 that it doesn't have a bit more to go. But 0:18:28.000 --> 0:18:32.040 will it come back? Historically yes it will. It's red 0:18:32.080 --> 0:18:34.920 hot and very peaked to resources. Still it's a deeper 0:18:34.960 --> 0:18:36.760 market than it used to be, but it is still 0:18:36.880 --> 0:18:38.000 very peaked to resources. 0:18:38.080 --> 0:18:38.280 Right. 0:18:38.800 --> 0:18:43.800 Queensland is expensive. It's more expensive than Melbourne. It's never 0:18:43.840 --> 0:18:45.800 been like that before. We've got a bigger market, we've 0:18:45.840 --> 0:18:49.919 got a greater larger need for housing here where a 0:18:49.960 --> 0:18:52.679 shortage of housing is great, and yet it is currently 0:18:52.680 --> 0:18:55.359 more expensive. So I would be wondering whether it was 0:18:55.400 --> 0:18:58.080 getting to the top of a cycle. I don't see 0:18:58.119 --> 0:19:00.480 it as the same as certainly don't see the time 0:19:00.520 --> 0:19:03.399 as a Western Australia. If you're a Mark Thomas certainly 0:19:03.440 --> 0:19:07.240 wouldn't be investing there. You can afford New South Wales. 0:19:07.400 --> 0:19:09.440 I think New South Wales has a much smoother ride, 0:19:09.640 --> 0:19:12.199 a lot less volatility that I would be telling her 0:19:12.200 --> 0:19:15.840 to consider Victoria, and I want to I want to 0:19:15.880 --> 0:19:18.760 preface that with I don't just invest in Victoria. I 0:19:18.840 --> 0:19:21.399 just think Victoria is really good timing at the moment. 0:19:22.119 --> 0:19:25.600 Yeah, in terms of the investment clock, that is worth knowing. 0:19:25.600 --> 0:19:28.000 And I'm sure Lorraine is familiar that if she's listened 0:19:28.000 --> 0:19:31.199 to recent shows. It is very much a consensus just 0:19:31.240 --> 0:19:34.920 at this time that the Victoria market is is weaker 0:19:34.920 --> 0:19:36.960 than it should be and has an element of catching 0:19:37.000 --> 0:19:38.720 up to do. And if you believe in the reversion 0:19:38.760 --> 0:19:41.480 to the mean, which again is another sort of economic 0:19:41.600 --> 0:19:44.840 notion which I can I think that is probably backing 0:19:44.840 --> 0:19:48.639 on there. It is worth more than it's showing at 0:19:48.640 --> 0:19:51.760 the moment. Okay, two quick ones. One Imran, I've been 0:19:51.760 --> 0:19:55.040 looking for a financial advisor. I'm wondering about their minimum 0:19:55.080 --> 0:19:58.760 account size requirements. Look at Imran. The nature with financial 0:19:58.760 --> 0:20:02.119 advisors is that there are some that have a minimum. 0:20:02.200 --> 0:20:05.560 They want you to have whatever, a million, half a million. Generally, 0:20:05.560 --> 0:20:09.360 what they want is to be able to justify their 0:20:09.359 --> 0:20:13.080 time with you. Very roughly on average, they're charging four thousand, 0:20:13.160 --> 0:20:17.880 three hundred a year. Now if you reverse that and say, 0:20:17.960 --> 0:20:20.160 does it make sense for me to have to pay 0:20:20.200 --> 0:20:23.119 this person four thousand and three hundred a year, then 0:20:23.359 --> 0:20:27.080 that is that makes sense for you. Don't worry about 0:20:27.119 --> 0:20:29.760 whether you make sense for the advisor. The only thing 0:20:29.760 --> 0:20:32.440 I would say to you, which is tough, but it's true. 0:20:32.520 --> 0:20:34.760 If you have nothing, If you have no money and 0:20:34.840 --> 0:20:36.719 you don't look like you're going to make any an 0:20:36.760 --> 0:20:39.159 advisor is not going to spend much time with you. You 0:20:39.000 --> 0:20:42.199 may have a very valuable home, for instance, and you 0:20:42.280 --> 0:20:44.680 might have a good depension arrangement or something, but that's 0:20:44.680 --> 0:20:47.040 no good to an advisor. The advisors in the business 0:20:47.040 --> 0:20:50.720 of making money for you, and they want it to 0:20:50.840 --> 0:20:53.359 make sense for both of you that they share your time. 0:20:53.560 --> 0:20:55.280