1 00:00:10,400 --> 00:00:13,600 Speaker 1: Hello, and welcome to the Australians Money Puzzle Podcast. I'm 2 00:00:13,680 --> 00:00:17,040 Speaker 1: James Kirby. Welcome aboard everybody. My guest today is a 3 00:00:17,120 --> 00:00:20,080 Speaker 1: Nissa Cavallo of the Ida Property Group and she's been 4 00:00:20,120 --> 00:00:23,720 Speaker 1: on the show actually more than once, and the last 5 00:00:23,720 --> 00:00:26,799 Speaker 1: time we heard from her, I won't say a voice 6 00:00:26,800 --> 00:00:30,040 Speaker 1: in the wilderness, but she did outdime with some confidence 7 00:00:30,520 --> 00:00:33,720 Speaker 1: how Victorian property market, which she is an expert on, 8 00:00:34,120 --> 00:00:37,000 Speaker 1: she had seen it as a bargain. Basically, this is 9 00:00:37,040 --> 00:00:40,120 Speaker 1: when things were pretty pretty bleak and as you know 10 00:00:40,240 --> 00:00:44,599 Speaker 1: that Melbourne was the worst market for some time on 11 00:00:44,640 --> 00:00:47,839 Speaker 1: a national basis. Now most recently we see that basically 12 00:00:47,920 --> 00:00:51,160 Speaker 1: Melbourne prices have been rising at an annualized rate something 13 00:00:51,200 --> 00:00:54,320 Speaker 1: in the order of six percent and were probably gathering 14 00:00:54,400 --> 00:00:59,520 Speaker 1: pace through this period. So I've invited Anissa back on 15 00:00:59,560 --> 00:01:02,560 Speaker 1: the show to talk first of all about this area 16 00:01:02,600 --> 00:01:04,360 Speaker 1: because I think from a nation my point of view, 17 00:01:04,360 --> 00:01:07,880 Speaker 1: it's where everyone's looking as investors. But I also want 18 00:01:07,920 --> 00:01:10,840 Speaker 1: her she does have an interesting story which I haven't 19 00:01:10,880 --> 00:01:12,800 Speaker 1: put to you before for the simple reason I wanted 20 00:01:12,800 --> 00:01:15,160 Speaker 1: to put her to you as a property expert first 21 00:01:15,200 --> 00:01:17,960 Speaker 1: and foremost, But how she actually got into all this 22 00:01:18,160 --> 00:01:20,440 Speaker 1: is very interesting, which we talk about in the second 23 00:01:20,520 --> 00:01:23,040 Speaker 1: segment of the show. But first and foremost, and this 24 00:01:23,120 --> 00:01:26,720 Speaker 1: is Cavallo, try not You could almost gloase there if 25 00:01:26,720 --> 00:01:29,280 Speaker 1: you wished, but but they wouldn't come across on the podcast. 26 00:01:29,720 --> 00:01:34,039 Speaker 1: But thank you. I mean, let's say it was going 27 00:01:34,120 --> 00:01:35,880 Speaker 1: to happen, right, it was probably going to happen that 28 00:01:35,920 --> 00:01:38,640 Speaker 1: Melbourne would turn. I didn't think it would turn quick. 29 00:01:38,840 --> 00:01:41,399 Speaker 2: Absolutely well, firstly, thanks for having me back, James. I 30 00:01:41,440 --> 00:01:44,959 Speaker 2: appreciate it to glow. And look, I think in many 31 00:01:45,000 --> 00:01:47,360 Speaker 2: cases when you listen to economists, eventually, if you wait 32 00:01:47,400 --> 00:01:49,680 Speaker 2: long enough, what they say is correct. Right, But we 33 00:01:49,680 --> 00:01:52,040 Speaker 2: were talking about the next twelve months, so we did 34 00:01:52,040 --> 00:01:55,840 Speaker 2: get it right. The fundamentals are just there and we've 35 00:01:55,840 --> 00:01:59,720 Speaker 2: talked about it before. Population growth, we've got stronger wages growth. 36 00:02:00,120 --> 00:02:02,680 Speaker 2: The population growth hasn't really changed other than that little 37 00:02:02,680 --> 00:02:06,640 Speaker 2: period during COVID. There's just been so many positive characteristics 38 00:02:06,680 --> 00:02:09,560 Speaker 2: about Melbourne and the last five years in particular have 39 00:02:09,639 --> 00:02:11,960 Speaker 2: set us back ten And I know I've heard that 40 00:02:12,000 --> 00:02:14,000 Speaker 2: you've spoken about this a lot on the show, that 41 00:02:14,120 --> 00:02:16,359 Speaker 2: the numbers for the ten years is dire and that 42 00:02:16,760 --> 00:02:21,360 Speaker 2: presents an incredible opportunity for investors that are willing to 43 00:02:21,360 --> 00:02:24,160 Speaker 2: go against you, against the grain, which is really tricky. 44 00:02:24,280 --> 00:02:27,400 Speaker 2: So yeah, I was right. It's not surprising. I don't 45 00:02:27,440 --> 00:02:31,160 Speaker 2: think we're not celebrating it, right, We're not popping the champagne. 46 00:02:31,440 --> 00:02:34,440 Speaker 2: But the first indicators are certainly there. And it's a 47 00:02:34,480 --> 00:02:36,320 Speaker 2: bit of a relief, to be honest, for me, because 48 00:02:36,320 --> 00:02:38,280 Speaker 2: I'm highly exposed and a lot of my clients are. 49 00:02:39,040 --> 00:02:41,240 Speaker 1: I suppose, so you professionally put yourself out there. It 50 00:02:41,280 --> 00:02:44,240 Speaker 1: wasn't just a notion and you would have acted upon it, 51 00:02:44,280 --> 00:02:46,960 Speaker 1: so you wanted to see it happen. Look, well, take 52 00:02:47,000 --> 00:02:49,679 Speaker 1: it that it is happening. It's not shooting the lights out. 53 00:02:50,120 --> 00:02:53,640 Speaker 1: It's all it's doing so far, it would seem. And 54 00:02:53,720 --> 00:02:57,280 Speaker 1: Calendar twenty five is coming back to something like a 55 00:02:57,320 --> 00:03:00,239 Speaker 1: normal market what you would expect an Australian city. Five 56 00:03:00,280 --> 00:03:03,000 Speaker 1: minions should be ticking away at least six percent parannum. 57 00:03:03,520 --> 00:03:05,520 Speaker 1: So let's just take it down. Is the situation, and 58 00:03:05,560 --> 00:03:08,919 Speaker 1: that it could get better. Now, before we talk about 59 00:03:10,040 --> 00:03:12,840 Speaker 1: where and style and type of property that might be 60 00:03:12,840 --> 00:03:15,839 Speaker 1: attractive in the city, can you tell us I think 61 00:03:15,840 --> 00:03:21,360 Speaker 1: the tax the role of new taxes that were announced 62 00:03:21,400 --> 00:03:24,800 Speaker 1: by the Victorian State government at the very depth of, 63 00:03:24,880 --> 00:03:26,639 Speaker 1: you like, of the cycles, So when things were really 64 00:03:26,639 --> 00:03:28,560 Speaker 1: at their agrimace, they went and really sort of kicked 65 00:03:28,560 --> 00:03:31,160 Speaker 1: it in the head by adding new taxes, and they 66 00:03:31,240 --> 00:03:34,920 Speaker 1: got a lot of attention. Is that still a risk 67 00:03:35,280 --> 00:03:37,720 Speaker 1: from a broad point of view for people investing in 68 00:03:37,760 --> 00:03:38,360 Speaker 1: this market? 69 00:03:38,880 --> 00:03:43,000 Speaker 2: Well, as we've discussed, I think it presented an opportunity 70 00:03:43,040 --> 00:03:46,320 Speaker 2: because if you had a look at the true impact 71 00:03:46,440 --> 00:03:50,160 Speaker 2: on the majority of investors, I think it was it 72 00:03:50,320 --> 00:03:53,520 Speaker 2: was for majority investor property investors. It came to seven 73 00:03:53,600 --> 00:03:56,280 Speaker 2: hundred and fifty to nine hundred dollars extra a year 74 00:03:56,440 --> 00:03:59,440 Speaker 2: that was tax deductible, and if you consider where interest 75 00:03:59,560 --> 00:04:02,000 Speaker 2: rates have been in the past while property prices go up, 76 00:04:02,400 --> 00:04:06,000 Speaker 2: that's not really a massive financial disincentive to invest. So 77 00:04:06,080 --> 00:04:09,840 Speaker 2: for me and what we discussed was it was largely sentiment. 78 00:04:10,200 --> 00:04:12,160 Speaker 2: I mean, we could have been taxed twenty dollars and 79 00:04:12,200 --> 00:04:13,960 Speaker 2: we wouldn't have been happy with it because we felt 80 00:04:14,000 --> 00:04:16,040 Speaker 2: it wasn't our fault, right, Why are we tacked? 81 00:04:16,040 --> 00:04:18,400 Speaker 1: Why we So you're saying that the dollar terms, it 82 00:04:18,440 --> 00:04:21,880 Speaker 1: wasn't backbreaking, but it was, but it sure was in 83 00:04:21,960 --> 00:04:23,320 Speaker 1: terms of sentiment wasn't it. 84 00:04:23,800 --> 00:04:27,240 Speaker 2: I think that the sentiment was also partly because we thought, well, 85 00:04:27,240 --> 00:04:29,200 Speaker 2: what are they going to do next? We'd had enough 86 00:04:29,320 --> 00:04:33,679 Speaker 2: and interstate investors, Melbourne had a good run for many years. 87 00:04:33,920 --> 00:04:38,160 Speaker 2: We were relatively oversupplied in supplied in some areas, not 88 00:04:38,200 --> 00:04:41,640 Speaker 2: all areas, which isn't always a massive issue. But I 89 00:04:41,680 --> 00:04:44,200 Speaker 2: think that it had a good run. That we dealt 90 00:04:44,240 --> 00:04:47,200 Speaker 2: with COVID in a way that wasn't very popular, and 91 00:04:47,240 --> 00:04:49,479 Speaker 2: then it was like what else is this government going 92 00:04:49,560 --> 00:04:51,240 Speaker 2: to do? What else are they capable of? And it 93 00:04:51,279 --> 00:04:53,440 Speaker 2: was almost like I like to liken it to the 94 00:04:53,480 --> 00:04:57,760 Speaker 2: Carton Football Club, everybody almost really enjoyed the lot, you 95 00:04:57,760 --> 00:04:58,599 Speaker 2: know Melbourne. 96 00:05:00,839 --> 00:05:05,359 Speaker 1: Some Sydney siders enjoy seeing Melbourne's struggle in any fashion. 97 00:05:05,480 --> 00:05:08,480 Speaker 1: I don't tell that for a moment. We know that 98 00:05:08,560 --> 00:05:11,039 Speaker 1: we know that all too well. But let's rise above 99 00:05:11,080 --> 00:05:14,560 Speaker 1: all that as investors and look strictly at the numbers. 100 00:05:14,800 --> 00:05:18,960 Speaker 1: So I suppose what I'm asking you is that issue 101 00:05:19,040 --> 00:05:21,320 Speaker 1: that seem government are still in power in Victoria, right, 102 00:05:21,360 --> 00:05:22,920 Speaker 1: So is that risk still on the table? 103 00:05:23,520 --> 00:05:26,840 Speaker 2: Well, okay, okay, So I think that we've seen this 104 00:05:27,400 --> 00:05:30,600 Speaker 2: pan out now for a period of time and realized 105 00:05:30,720 --> 00:05:33,440 Speaker 2: that not a lot has happened. We haven't had this 106 00:05:33,680 --> 00:05:37,280 Speaker 2: huge despite what the media says, and even the headlines 107 00:05:37,320 --> 00:05:40,279 Speaker 2: of people are leaving Victoria and drives, it's simply untrue. 108 00:05:40,279 --> 00:05:42,719 Speaker 2: If you look at the ABS figures more people left 109 00:05:42,800 --> 00:05:46,159 Speaker 2: Queensland last year than Victoria and that's on a numbers basis, 110 00:05:46,160 --> 00:05:48,840 Speaker 2: so on a percentage basis, it's much greater. Right, So 111 00:05:49,480 --> 00:05:52,560 Speaker 2: I think we've got it. People are starting to see 112 00:05:52,960 --> 00:05:56,640 Speaker 2: the truth. There's not anything massive that's happened. We haven't 113 00:05:56,680 --> 00:06:00,440 Speaker 2: grown hugely, but we've also become incredibly a foe audible 114 00:06:00,560 --> 00:06:04,360 Speaker 2: and I know that whilst there are some talks about 115 00:06:04,839 --> 00:06:09,560 Speaker 2: some additional taxes on property in general, it seems that 116 00:06:09,640 --> 00:06:14,080 Speaker 2: the huge, the huge imposition to Victorians in particular, it 117 00:06:14,400 --> 00:06:17,200 Speaker 2: has stopped, right, So we're not not quite sure that 118 00:06:17,279 --> 00:06:19,160 Speaker 2: much more is coming. I think we've had We've watched 119 00:06:19,160 --> 00:06:22,120 Speaker 2: it play out a bit. There's also been other states 120 00:06:22,120 --> 00:06:25,400 Speaker 2: that have made very unpopular policy decisions, and you know 121 00:06:25,520 --> 00:06:28,600 Speaker 2: that just hasn't been as as widely publicized. 122 00:06:29,000 --> 00:06:31,440 Speaker 1: Actually, Hugh Robinson's The Financial Advisory based out of Brism 123 00:06:31,600 --> 00:06:33,120 Speaker 1: was on the show sometime ago and him at the 124 00:06:33,160 --> 00:06:34,840 Speaker 1: point that Land tax is actually and the way it's 125 00:06:34,880 --> 00:06:36,880 Speaker 1: going on the forward estimates inside the budgets of the 126 00:06:36,920 --> 00:06:39,360 Speaker 1: two states, land tax will be higher in Queensland than 127 00:06:39,400 --> 00:06:42,000 Speaker 1: it will be in Victoria, and so the Victoria might 128 00:06:42,040 --> 00:06:44,880 Speaker 1: have more taxes, but the one that really matters to 129 00:06:44,920 --> 00:06:47,359 Speaker 1: most people is land tax and it's heading to be 130 00:06:47,440 --> 00:06:50,040 Speaker 1: higher in Queensland. Okay, we've got those things on the table. 131 00:06:50,320 --> 00:06:53,640 Speaker 1: Where in the city of Melbourne are the bargains and 132 00:06:53,720 --> 00:06:57,159 Speaker 1: what are the type of properties that offer opportunity to 133 00:06:57,200 --> 00:06:57,800 Speaker 1: our listeners. 134 00:06:58,720 --> 00:07:02,880 Speaker 2: Well, my strong focus for most people that are trying 135 00:07:02,880 --> 00:07:05,960 Speaker 2: to increase wealth, right, not drawing down on their income, 136 00:07:06,000 --> 00:07:08,840 Speaker 2: but increasing wealth is capital growth and everyone's heard me 137 00:07:08,880 --> 00:07:10,400 Speaker 2: talk about that a lot. I think that's where the 138 00:07:10,440 --> 00:07:13,680 Speaker 2: magic is. You change your wealth position by through capital 139 00:07:13,720 --> 00:07:16,920 Speaker 2: growth with property yield after all the costs associated with 140 00:07:16,960 --> 00:07:19,480 Speaker 2: it rarely changes anything. Okay, it's a good way to 141 00:07:19,480 --> 00:07:21,840 Speaker 2: pay for the asset while it grows in value. So 142 00:07:21,920 --> 00:07:24,680 Speaker 2: my strong focus is how do we find there's nuggets 143 00:07:24,680 --> 00:07:28,560 Speaker 2: of growth. And you've said affordable anyway, and affordable is 144 00:07:28,560 --> 00:07:32,440 Speaker 2: actually a really important part of finding these nuggets. Those 145 00:07:32,520 --> 00:07:35,280 Speaker 2: areas that are less affordable that have bigger supply issues 146 00:07:35,320 --> 00:07:37,480 Speaker 2: have traditionally had a lot of volatility, so you've really 147 00:07:37,520 --> 00:07:40,400 Speaker 2: got to ride the wave. So I'm really looking for 148 00:07:40,400 --> 00:07:44,200 Speaker 2: those suburbs that are affordable because if you think about 149 00:07:44,240 --> 00:07:47,120 Speaker 2: it just logically, there's a much greater percentage of the 150 00:07:47,120 --> 00:07:50,120 Speaker 2: population that can afford it, so you've got more buyers. 151 00:07:50,200 --> 00:07:53,840 Speaker 2: You know, always so looking for affordability, and there's different 152 00:07:53,840 --> 00:07:56,320 Speaker 2: ways to do that. There's going into those sort of 153 00:07:56,360 --> 00:07:59,400 Speaker 2: those growth corridors, which I do like. Some of those 154 00:07:59,440 --> 00:08:02,440 Speaker 2: growth corridors that can sometimes appear like they've got a 155 00:08:02,440 --> 00:08:06,360 Speaker 2: lot of land available, also present the opportunity to build 156 00:08:06,400 --> 00:08:09,800 Speaker 2: more hospitals, to build more schools, to build better roads, 157 00:08:10,160 --> 00:08:12,480 Speaker 2: and so the Victorian State government has done a very 158 00:08:12,520 --> 00:08:15,280 Speaker 2: good job of building what we call employment clusters. We 159 00:08:15,360 --> 00:08:18,680 Speaker 2: don't build commuter suburbs where you have to commute to 160 00:08:18,680 --> 00:08:21,760 Speaker 2: get to work. I think it's something like seventy percent 161 00:08:21,840 --> 00:08:24,600 Speaker 2: of the people that live in the Melton that work 162 00:08:24,760 --> 00:08:29,320 Speaker 2: and live in melton Shire actually work locally. They don't commute, 163 00:08:29,320 --> 00:08:32,360 Speaker 2: which is a huge number of local workers. So I'm 164 00:08:32,440 --> 00:08:35,240 Speaker 2: looking for if I'm looking for growth corridors, I'm looking 165 00:08:35,240 --> 00:08:39,440 Speaker 2: for a lot of local employment. Could be southeast your Cranburns. 166 00:08:39,480 --> 00:08:41,960 Speaker 2: A lot of that is now getting quite expensive. And 167 00:08:42,000 --> 00:08:44,240 Speaker 2: I can tell you fifteen years ago people looked at 168 00:08:44,280 --> 00:08:46,760 Speaker 2: Cranburn and said it's all land, there's too much available, 169 00:08:46,760 --> 00:08:50,200 Speaker 2: and yet it's been an incredible performer against other inner 170 00:08:50,240 --> 00:08:51,120 Speaker 2: urban suburbs. 171 00:08:51,559 --> 00:08:53,800 Speaker 1: Of interesting straight away that when you're looking at the city, 172 00:08:53,880 --> 00:08:57,360 Speaker 1: you're looking at you were looking at middle to alto suburbs. 173 00:08:57,600 --> 00:08:59,880 Speaker 1: You didn't do you mention them first? 174 00:09:00,080 --> 00:09:01,120 Speaker 2: Yeah, I'm mentioning them first. 175 00:09:01,160 --> 00:09:03,920 Speaker 1: These are growth, these are new housing estates basically. 176 00:09:04,360 --> 00:09:06,720 Speaker 2: It sometimes new housing estates, sometimes we get a bit 177 00:09:06,720 --> 00:09:08,839 Speaker 2: closer to the suburb. Right now, I'm talking about new 178 00:09:08,840 --> 00:09:11,240 Speaker 2: housing estates. We've done a lot in Melton, a lot 179 00:09:11,240 --> 00:09:13,839 Speaker 2: in Deanside, a lot in Werribe. I mean, Weerriby is 180 00:09:13,840 --> 00:09:16,520 Speaker 2: an established area, but it has a few little infill 181 00:09:16,679 --> 00:09:19,400 Speaker 2: sites that we've invested in. So that's one way to 182 00:09:19,440 --> 00:09:21,600 Speaker 2: do it. And the good thing about that is that 183 00:09:21,640 --> 00:09:24,640 Speaker 2: you're getting the benefit of a lot of migration, a 184 00:09:24,640 --> 00:09:27,240 Speaker 2: lot of population growth, but a lot of a lot 185 00:09:27,440 --> 00:09:30,600 Speaker 2: of infrastructure growth. There are new jobs going in which 186 00:09:30,640 --> 00:09:33,559 Speaker 2: creates household income growth, which in the end is a 187 00:09:33,640 --> 00:09:36,080 Speaker 2: lead indicator for price growth. Right So I love that 188 00:09:36,600 --> 00:09:40,960 Speaker 2: then there's another way to find affordability, but without investing 189 00:09:41,000 --> 00:09:43,400 Speaker 2: in units and townhouses which are unlikely to give you 190 00:09:43,440 --> 00:09:45,920 Speaker 2: the same effects in terms of capital growth. Because we're 191 00:09:45,920 --> 00:09:48,440 Speaker 2: focusing on capital growth, we want as much land as possible, 192 00:09:48,679 --> 00:09:53,160 Speaker 2: and that's going to those regentrifying suburbs. You know, your Coburgs, 193 00:09:53,400 --> 00:09:57,800 Speaker 2: your sunshines going towards the Monash, further out from the Monash, 194 00:09:57,800 --> 00:10:00,640 Speaker 2: even your seafrets are very expensive now. But finding those 195 00:10:00,640 --> 00:10:04,600 Speaker 2: suburbs that are still a little affordable the problem is 196 00:10:05,080 --> 00:10:06,920 Speaker 2: one of the things that a lot of that in 197 00:10:07,480 --> 00:10:09,600 Speaker 2: my experience, that I've learned the hard way, and that 198 00:10:09,640 --> 00:10:12,760 Speaker 2: a lot of people don't take into consideration when they're investing, 199 00:10:12,880 --> 00:10:15,800 Speaker 2: is one thing, is this property doubling in ten years 200 00:10:15,920 --> 00:10:18,840 Speaker 2: or doing more right? Capital growth great, but you have 201 00:10:18,920 --> 00:10:21,720 Speaker 2: to be able to hold it, and the holding costs 202 00:10:21,760 --> 00:10:24,240 Speaker 2: is often the killer, just like cash flow in a business. 203 00:10:24,720 --> 00:10:27,360 Speaker 2: And if you are buying older properties, because you want 204 00:10:27,360 --> 00:10:29,839 Speaker 2: to spend seven hundred and fifty which is the average 205 00:10:30,000 --> 00:10:34,000 Speaker 2: investment price, so average investor in Australia will want to 206 00:10:34,000 --> 00:10:36,640 Speaker 2: spend about seven hundred and fifty to eight hundred. There's 207 00:10:36,679 --> 00:10:39,040 Speaker 2: not a lot of brand new, beautiful properties that you 208 00:10:39,040 --> 00:10:41,320 Speaker 2: can buy in the inner urban ring for that price. 209 00:10:41,600 --> 00:10:43,640 Speaker 2: So you're often if you're going in an urban, you're 210 00:10:43,640 --> 00:10:47,199 Speaker 2: often buying something that may may cost you a lot 211 00:10:47,240 --> 00:10:49,920 Speaker 2: in terms of you know, constantly doing it up, et cetera. 212 00:10:50,080 --> 00:10:52,040 Speaker 2: And often the yields can be a little bit lower, 213 00:10:52,360 --> 00:10:54,880 Speaker 2: and so if it's hard to cash flow and it's 214 00:10:54,880 --> 00:10:57,040 Speaker 2: hard to hold, then you may not be in a 215 00:10:57,120 --> 00:10:59,480 Speaker 2: position to hold it long term. So I've had a 216 00:10:59,480 --> 00:11:02,960 Speaker 2: lot of it's James that have purchased older properties. I 217 00:11:03,080 --> 00:11:05,120 Speaker 2: did it myself, It's what I used to do, and 218 00:11:05,120 --> 00:11:07,040 Speaker 2: they've just said, we just simply can't afford it because 219 00:11:07,040 --> 00:11:08,880 Speaker 2: every cent that we get from the tenant just goes 220 00:11:08,920 --> 00:11:11,080 Speaker 2: and in repairs. 221 00:11:10,760 --> 00:11:13,520 Speaker 1: Because he used our relatively low, very long. So the 222 00:11:13,559 --> 00:11:15,720 Speaker 1: red lincome is con considering what they've paid out and 223 00:11:15,760 --> 00:11:17,920 Speaker 1: come considering what the mortgage is, what's coming in is 224 00:11:17,960 --> 00:11:20,440 Speaker 1: relatively low. So they get caught in that sort of trap, 225 00:11:20,480 --> 00:11:24,199 Speaker 1: and that's more common in the inner city older style properties. 226 00:11:24,280 --> 00:11:29,200 Speaker 1: Is it, Yes, absolutely absolutely so. Are the only better 227 00:11:29,200 --> 00:11:31,680 Speaker 1: in the subject of the subverbs that you've mentioned, Is 228 00:11:31,720 --> 00:11:32,600 Speaker 1: the yield any better? 229 00:11:32,960 --> 00:11:36,199 Speaker 2: Well, they are. You can you can get something relatively new, 230 00:11:36,240 --> 00:11:38,320 Speaker 2: a couple of years old. We're often looking for something 231 00:11:38,440 --> 00:11:40,760 Speaker 2: no more than five years old if we can, right, 232 00:11:40,840 --> 00:11:43,400 Speaker 2: because we want as much as possible to just buy 233 00:11:43,440 --> 00:11:45,280 Speaker 2: this asset and get on with that day job and 234 00:11:45,320 --> 00:11:46,679 Speaker 2: let it go up in value. I just don't even 235 00:11:46,720 --> 00:11:48,200 Speaker 2: want to know about it, I say to some of 236 00:11:48,240 --> 00:11:50,719 Speaker 2: my clients. If my life depended on driving it to 237 00:11:50,760 --> 00:11:52,439 Speaker 2: some of my suburbs, I wouldn't even know where they are, 238 00:11:52,480 --> 00:11:54,200 Speaker 2: which is a good thing. I don't want to worry 239 00:11:54,240 --> 00:11:54,679 Speaker 2: about them. 240 00:11:54,720 --> 00:11:57,080 Speaker 1: Well, that's the Warren Buffett line. You know that he 241 00:11:57,120 --> 00:11:59,200 Speaker 1: should be able to go to the movies for the 242 00:11:59,280 --> 00:12:01,560 Speaker 1: afternoon care of what the share market is doing, if 243 00:12:01,559 --> 00:12:02,280 Speaker 1: he's made the right. 244 00:12:02,120 --> 00:12:05,360 Speaker 2: Decisions, Yes, exactly. Just let them do their thing without 245 00:12:05,440 --> 00:12:08,199 Speaker 2: me worrying about them. And so in some of these 246 00:12:08,200 --> 00:12:12,120 Speaker 2: suburbs you can still purchase things that aren't necessarily units. 247 00:12:12,320 --> 00:12:14,280 Speaker 2: If I am looking at a unit for a client, 248 00:12:14,400 --> 00:12:16,800 Speaker 2: I'll be looking for something that's on as much land 249 00:12:16,840 --> 00:12:22,800 Speaker 2: as possible, and obviously I will rely heavily on site 250 00:12:22,840 --> 00:12:26,319 Speaker 2: inspections and professional building inspections, et cetera to make sure 251 00:12:26,320 --> 00:12:29,240 Speaker 2: there's no underlying issue. But I'm always looking for as 252 00:12:29,320 --> 00:12:31,600 Speaker 2: much land as I can get, and also as much 253 00:12:31,720 --> 00:12:34,680 Speaker 2: house as I can get because you need to tenant it. 254 00:12:35,160 --> 00:12:37,280 Speaker 2: So some of these outer suburbs that have got, in 255 00:12:37,360 --> 00:12:42,280 Speaker 2: particular new hospitals, new infrastructure that is under construction, because 256 00:12:42,320 --> 00:12:44,680 Speaker 2: you know, a promise of a hospital could be twenty 257 00:12:44,760 --> 00:12:48,760 Speaker 2: years away, right, So I'm looking for a Footscray Sunshine 258 00:12:48,800 --> 00:12:52,240 Speaker 2: has got an existing hospital. Melton's Hospital has commenced, and I. 259 00:12:52,320 --> 00:12:55,600 Speaker 1: Just ask you, as an investor, is that just a 260 00:12:55,640 --> 00:12:57,480 Speaker 1: signal or is it literally that you will be able 261 00:12:57,559 --> 00:13:00,000 Speaker 1: to rent to people who work in those big areas, hops, 262 00:13:00,280 --> 00:13:00,640 Speaker 1: et cetera. 263 00:13:01,080 --> 00:13:04,959 Speaker 2: Yeah, I'm using hospital probably unfairly, but I love hospitals 264 00:13:05,000 --> 00:13:07,280 Speaker 2: because they create long term growth and they bring in 265 00:13:07,360 --> 00:13:10,120 Speaker 2: other professionals, and they're bringing in a relatively high income. 266 00:13:10,360 --> 00:13:12,840 Speaker 2: And if you're talking about so remember I said that 267 00:13:13,200 --> 00:13:17,160 Speaker 2: in our experience, the most important factor and characteristic for 268 00:13:17,240 --> 00:13:22,280 Speaker 2: future price growth in Australia globally is something family income growth, 269 00:13:22,320 --> 00:13:25,200 Speaker 2: household income growth. And if a new hospital is going 270 00:13:25,240 --> 00:13:28,000 Speaker 2: in then you're often particularly in these outer rings or 271 00:13:28,040 --> 00:13:30,640 Speaker 2: the inner urban ring, but right on the borders, you're 272 00:13:30,640 --> 00:13:35,640 Speaker 2: often increasing the employment the household employment income as a 273 00:13:35,679 --> 00:13:38,120 Speaker 2: result of having a lot of health workers. In some 274 00:13:38,200 --> 00:13:41,920 Speaker 2: of the suburbs we're looking at, there's new legal facilities 275 00:13:41,920 --> 00:13:44,240 Speaker 2: going in, new courts, et cetera, which is also a 276 00:13:44,280 --> 00:13:47,240 Speaker 2: great thing because what you're looking for is the sort 277 00:13:47,240 --> 00:13:49,520 Speaker 2: of infrastructure that is going to bring a lot of 278 00:13:49,520 --> 00:13:53,520 Speaker 2: employment and long term employment. Schools are wonderful because it 279 00:13:53,559 --> 00:13:56,440 Speaker 2: will bring people looking to house their children in a 280 00:13:56,440 --> 00:13:59,400 Speaker 2: good quality school, and certainly a good quality high school 281 00:13:59,600 --> 00:14:03,000 Speaker 2: can be unbelievable for a suburb. There are many suburbs 282 00:14:03,000 --> 00:14:04,960 Speaker 2: that people just buy or rent just to get their 283 00:14:05,000 --> 00:14:08,000 Speaker 2: children into these really great public schools. But it doesn't 284 00:14:08,000 --> 00:14:11,560 Speaker 2: necessarily create a lot of jobs, whereas there are other 285 00:14:11,600 --> 00:14:14,200 Speaker 2: types of infrastructure that will create a lot of jobs 286 00:14:14,280 --> 00:14:17,920 Speaker 2: and also entice other workers to come in and service 287 00:14:18,280 --> 00:14:20,760 Speaker 2: the local health workers, et cetera. So it's sort of 288 00:14:20,800 --> 00:14:22,600 Speaker 2: a you know, snipall effect. 289 00:14:22,480 --> 00:14:24,000 Speaker 1: Just something I really want to put to you, and 290 00:14:24,120 --> 00:14:26,360 Speaker 1: I mean, obviously I'm thinking is very strong and it's 291 00:14:26,360 --> 00:14:29,760 Speaker 1: interesting and it's interesting how you are looking. Obviously, it 292 00:14:29,760 --> 00:14:32,160 Speaker 1: turns out we're talking about city of Melbourne being a bargain, 293 00:14:32,200 --> 00:14:36,000 Speaker 1: so which areas. But your theme and you're largely could 294 00:14:36,000 --> 00:14:38,200 Speaker 1: be applied at any city. Let's come back in a moment. 295 00:14:38,240 --> 00:14:39,880 Speaker 1: I want to ask you about one thing that sort 296 00:14:39,880 --> 00:14:42,480 Speaker 1: of hangs over all that that just me threaten it 297 00:14:42,800 --> 00:14:54,280 Speaker 1: back in a moment. Hello, Welcome back to the Australians 298 00:14:54,320 --> 00:14:57,280 Speaker 1: Money Puzzle Podcast. James Kirby here with the Nisa Cavello. 299 00:14:57,560 --> 00:14:59,840 Speaker 1: We left you with a cliffhanger. What is it that 300 00:15:00,080 --> 00:15:06,200 Speaker 1: possibly go wrong with Anissa's concept of the opportunities? Can 301 00:15:06,200 --> 00:15:07,600 Speaker 1: I put words in you about and say, in any 302 00:15:07,600 --> 00:15:10,480 Speaker 1: city and it just happens to be Melbourne being the 303 00:15:10,480 --> 00:15:13,160 Speaker 1: one that you are expert in and from a nationwide 304 00:15:13,160 --> 00:15:16,640 Speaker 1: perspective is clearly the bargain state at the moment. But 305 00:15:16,840 --> 00:15:20,120 Speaker 1: you and you outline how you like these new areas, 306 00:15:20,160 --> 00:15:23,160 Speaker 1: new clusters, new growth developments, for they have new hospitals 307 00:15:23,160 --> 00:15:26,320 Speaker 1: and they have you're really focusing on houses and alone 308 00:15:26,320 --> 00:15:28,920 Speaker 1: houses with land. The only thing that I would from 309 00:15:28,960 --> 00:15:31,520 Speaker 1: an economic point of view, the challenge might be supply. 310 00:15:32,440 --> 00:15:36,760 Speaker 1: That scarcity isn't there and that Melbourne and Victoria actually 311 00:15:36,800 --> 00:15:40,280 Speaker 1: has the best supply in the country. There's a variety 312 00:15:40,280 --> 00:15:41,520 Speaker 1: of reasons for that, but the main one is that 313 00:15:41,560 --> 00:15:43,800 Speaker 1: you can keep building forever. There's no parks, lakes or 314 00:15:43,880 --> 00:15:45,680 Speaker 1: the ocean. To get in the way like other cities. 315 00:15:46,440 --> 00:15:48,560 Speaker 1: What do you say to that if I said to you, 316 00:15:48,600 --> 00:15:50,840 Speaker 1: I love your thinking. I'm ready, I've got my checkbook 317 00:15:50,960 --> 00:15:52,600 Speaker 1: half opened, but I'm worried about supply. 318 00:15:53,720 --> 00:15:58,720 Speaker 2: Well, we don't. I'm not only investing in these growth areas, 319 00:15:58,720 --> 00:16:00,080 Speaker 2: but it is an area that we do like. It 320 00:16:00,160 --> 00:16:01,960 Speaker 2: is one of our themes. Okay, just to say that, 321 00:16:02,040 --> 00:16:04,080 Speaker 2: just a bit clear, but if you looked at it, 322 00:16:04,080 --> 00:16:07,120 Speaker 2: I think I use the example before a Cranburn fifteen 323 00:16:07,160 --> 00:16:10,240 Speaker 2: years ago was just paddocks and many people said, why 324 00:16:10,400 --> 00:16:12,800 Speaker 2: would I invest there? There is so much supply. Now 325 00:16:12,840 --> 00:16:16,280 Speaker 2: there is nothing. And so often when you have these 326 00:16:16,360 --> 00:16:20,200 Speaker 2: large land supplies and you have these huge population growth 327 00:16:20,240 --> 00:16:22,120 Speaker 2: to go with it, it's the chicken and the egg. 328 00:16:22,360 --> 00:16:24,800 Speaker 2: Why are we getting the population growth? Because there is 329 00:16:25,280 --> 00:16:28,360 Speaker 2: job opportunity because there is land to build new roads, 330 00:16:28,400 --> 00:16:31,080 Speaker 2: There is land to build new hospitals and new schools, 331 00:16:31,320 --> 00:16:34,080 Speaker 2: so we are able, we have the capacity to build 332 00:16:34,080 --> 00:16:38,000 Speaker 2: these employment clusters which will then bring the population. So 333 00:16:38,080 --> 00:16:41,320 Speaker 2: that's one thing. Sometimes this presents opportunities. And sometimes when 334 00:16:41,360 --> 00:16:44,800 Speaker 2: you drive out to suburbs like towards Caroline Springs and 335 00:16:44,960 --> 00:16:47,200 Speaker 2: you go on the Western Ring Road, and then you 336 00:16:47,360 --> 00:16:49,000 Speaker 2: end up on the I've forgotten the name. I think 337 00:16:49,000 --> 00:16:54,200 Speaker 2: it's EMA, and just you go past vacant Land, huge 338 00:16:54,240 --> 00:16:57,000 Speaker 2: industrial estates in vacant Land. A lot of that is 339 00:16:57,040 --> 00:17:00,520 Speaker 2: not rezoned residential, a lot of it is commercial, and 340 00:17:00,600 --> 00:17:04,200 Speaker 2: so there are huge pockets of future employment in these areas, 341 00:17:04,240 --> 00:17:07,479 Speaker 2: which is exciting. So some of it is actually an 342 00:17:07,480 --> 00:17:11,400 Speaker 2: opportunity for Victoria because we have the land to create jobs, 343 00:17:11,680 --> 00:17:15,200 Speaker 2: to create employment clusters. The other thing that people don't 344 00:17:15,240 --> 00:17:18,280 Speaker 2: take into consideration is we've had a lag in building 345 00:17:18,680 --> 00:17:22,119 Speaker 2: approvals and construction, a massive lag, and yet our population 346 00:17:22,240 --> 00:17:26,000 Speaker 2: growth has accelerated, and so we are now way behind 347 00:17:26,040 --> 00:17:26,919 Speaker 2: where we need to be. 348 00:17:27,880 --> 00:17:31,040 Speaker 1: Okay, So it sounds like excepploint doesn't disturb you really 349 00:17:31,240 --> 00:17:33,840 Speaker 1: because you're coming in with a it's a more optimistic 350 00:17:33,920 --> 00:17:35,920 Speaker 1: view rather than saying no, we need a bit of serciosity, 351 00:17:35,920 --> 00:17:38,680 Speaker 1: forget the price. You're coming in a different point of view, really, 352 00:17:38,680 --> 00:17:41,520 Speaker 1: which is like top down. You're saying no, there's population growth, 353 00:17:41,560 --> 00:17:43,400 Speaker 1: so there's going to be literally new towns, and these 354 00:17:43,440 --> 00:17:46,280 Speaker 1: new towns the values will improve. And I suppose what's 355 00:17:46,280 --> 00:17:50,080 Speaker 1: interesting with your approaches that century level, Like you said 356 00:17:50,080 --> 00:17:53,600 Speaker 1: seven fifty, which is, if someone's listening in Sydney, what 357 00:17:53,680 --> 00:17:55,080 Speaker 1: can they buy for seven fifty I have? 358 00:17:55,640 --> 00:17:57,840 Speaker 2: Again, they're lucky, that's right. 359 00:17:57,720 --> 00:17:59,679 Speaker 1: Very little. There's something I wanted to bring in here, 360 00:18:00,280 --> 00:18:01,840 Speaker 1: which is we have lots of people on the show 361 00:18:01,920 --> 00:18:05,600 Speaker 1: and they're coming with different perspectives on property to us 362 00:18:05,640 --> 00:18:08,479 Speaker 1: just a little bit. I wanted to tell the listeners, 363 00:18:08,520 --> 00:18:10,520 Speaker 1: now that we know you know that we know your expertise, 364 00:18:10,560 --> 00:18:12,600 Speaker 1: now that we know what you have to see, it's 365 00:18:12,640 --> 00:18:15,919 Speaker 1: interesting how you started in property, and you might just 366 00:18:16,240 --> 00:18:18,119 Speaker 1: synopsize it for us as to how you got to 367 00:18:18,520 --> 00:18:22,000 Speaker 1: where you are, and just before you do in how 368 00:18:22,000 --> 00:18:23,320 Speaker 1: many properties are you running now? 369 00:18:24,520 --> 00:18:28,280 Speaker 2: So I'm under my peak. So and I hate answering 370 00:18:28,320 --> 00:18:30,760 Speaker 2: this question because I say all the time to media, 371 00:18:30,840 --> 00:18:33,359 Speaker 2: I don't want everybody to go up by seventeen properties. 372 00:18:33,800 --> 00:18:36,600 Speaker 2: I think it's ridiculous for most people. Right, yeah, I 373 00:18:36,640 --> 00:18:39,600 Speaker 2: think you know, two, three, four really good place properties 374 00:18:39,680 --> 00:18:41,280 Speaker 2: is all you need. But I'm in the industry, so 375 00:18:41,320 --> 00:18:44,240 Speaker 2: I buy and sell. I'm now under fifteen. I'm about 376 00:18:44,280 --> 00:18:46,439 Speaker 2: to start buying up again. So I've gone down and 377 00:18:46,480 --> 00:18:49,080 Speaker 2: I go up, and again I don't recommend other people 378 00:18:49,160 --> 00:18:51,680 Speaker 2: do that because the cost of transaction is so high with. 379 00:18:51,680 --> 00:18:54,040 Speaker 1: Property, you're in it all day long. You're a professionally, 380 00:18:54,119 --> 00:18:56,280 Speaker 1: it's right. So you're taking three or four properties for 381 00:18:56,320 --> 00:18:59,000 Speaker 1: the serious investor. It's interesting because we talked about stocks 382 00:18:59,000 --> 00:19:02,720 Speaker 1: and we see ten. If you're serious, ten to fifteen, 383 00:19:02,760 --> 00:19:04,760 Speaker 1: you should be able to name them, remember them and 384 00:19:04,800 --> 00:19:06,520 Speaker 1: know how much they are on the d If you've 385 00:19:06,600 --> 00:19:09,119 Speaker 1: got forty stuction, probably not able to do that. So 386 00:19:09,320 --> 00:19:11,840 Speaker 1: something similar with the properties had to concentrate. So tell 387 00:19:11,920 --> 00:19:13,719 Speaker 1: us how did you get to this point? How did 388 00:19:13,760 --> 00:19:14,560 Speaker 1: you get into property? 389 00:19:15,680 --> 00:19:17,720 Speaker 2: Well, it's a long I won't go back all the way, 390 00:19:17,800 --> 00:19:20,320 Speaker 2: but I bought property when I was very young, not 391 00:19:20,400 --> 00:19:22,800 Speaker 2: knowing what I was doing. I was in financial services 392 00:19:22,800 --> 00:19:25,040 Speaker 2: for many years. But I'm Italian and if you know 393 00:19:25,080 --> 00:19:27,760 Speaker 2: anything about Talian parents, they make you buy property or 394 00:19:27,800 --> 00:19:29,440 Speaker 2: you're not a good girl, right or a good boy. 395 00:19:29,560 --> 00:19:32,679 Speaker 2: So you do what you're told. You do what you're told, and. 396 00:19:32,600 --> 00:19:34,720 Speaker 1: So I thought, I think that. 397 00:19:36,680 --> 00:19:38,840 Speaker 2: It's a lot of helt. So I bought a couple 398 00:19:38,840 --> 00:19:41,600 Speaker 2: of properties, and I unfortunately listened to my parents. I 399 00:19:41,600 --> 00:19:43,399 Speaker 2: didn't do what I wanted to do because I wanted 400 00:19:43,400 --> 00:19:45,640 Speaker 2: to buy a property in footscram my mother said, oh, 401 00:19:45,680 --> 00:19:47,600 Speaker 2: no way, not Footscrad. This is in when I was 402 00:19:47,600 --> 00:19:50,320 Speaker 2: in my twenties and I'm nearly fifty and so, and 403 00:19:50,359 --> 00:19:52,480 Speaker 2: I wish I bought the property in Footscrad. Tell you what. 404 00:19:52,880 --> 00:19:54,879 Speaker 2: I bought an apartment in Sint Kilda and then I 405 00:19:54,920 --> 00:19:57,399 Speaker 2: bought a house with my brother and Cremawn Richmond. And 406 00:19:58,119 --> 00:20:01,480 Speaker 2: I eventually realized that I was working very hard. I 407 00:20:01,560 --> 00:20:04,640 Speaker 2: was virtually a single mum, and I was nowhere near 408 00:20:04,840 --> 00:20:07,520 Speaker 2: being able to replace my working income. So what I 409 00:20:07,560 --> 00:20:10,359 Speaker 2: wanted to do was sell these properties, increase my income 410 00:20:10,359 --> 00:20:12,639 Speaker 2: and have a bit of a break. I was absolutely exhausted, 411 00:20:13,080 --> 00:20:15,840 Speaker 2: and I worked out by going to sell them because 412 00:20:15,840 --> 00:20:17,840 Speaker 2: I just sort of left them and didn't think about them. 413 00:20:18,119 --> 00:20:21,119 Speaker 2: That these two properties had made me more money in 414 00:20:21,200 --> 00:20:23,879 Speaker 2: five years than Assex said my portfolio was going to 415 00:20:23,880 --> 00:20:26,520 Speaker 2: do in something like fifteen, right, And so I had 416 00:20:26,560 --> 00:20:29,120 Speaker 2: a light bulb moment and thought, I haven't even performed 417 00:20:29,160 --> 00:20:32,080 Speaker 2: wealth it compared to other property markets because I don't 418 00:20:32,080 --> 00:20:34,600 Speaker 2: know anything about it. So I set out to become 419 00:20:34,680 --> 00:20:37,840 Speaker 2: very serious about it. And I actually did work with 420 00:20:37,960 --> 00:20:41,320 Speaker 2: Louis Christopher from SQM Research, who's just a legend and 421 00:20:41,359 --> 00:20:43,560 Speaker 2: a knew end from the industry, and we built a 422 00:20:43,600 --> 00:20:47,560 Speaker 2: methodology to understand those suburbs most likely to outperform over 423 00:20:47,600 --> 00:20:50,679 Speaker 2: the long term. And I started to follow that and 424 00:20:50,720 --> 00:20:53,600 Speaker 2: in a very short period of time I did really well, 425 00:20:53,640 --> 00:20:56,040 Speaker 2: and I went to areas that The first place I 426 00:20:56,040 --> 00:20:59,040 Speaker 2: invested was Werribe And I can tell you twelve years 427 00:20:59,080 --> 00:21:01,480 Speaker 2: ago when I drive out to wear Abe and wind 428 00:21:01,520 --> 00:21:04,040 Speaker 2: and Veil, I thought, what am I doing, you know? 429 00:21:04,680 --> 00:21:08,240 Speaker 2: But I did yet that beyond the paddocks and thought, really, 430 00:21:08,280 --> 00:21:09,719 Speaker 2: where where are all the people? 431 00:21:09,800 --> 00:21:10,000 Speaker 1: You know? 432 00:21:11,280 --> 00:21:14,520 Speaker 2: But I listened, I said, because I'd been in financial services, 433 00:21:14,560 --> 00:21:17,159 Speaker 2: I built financial products. I understood how to listen to 434 00:21:17,200 --> 00:21:19,439 Speaker 2: the numbers and not listen to my heart. So I 435 00:21:19,480 --> 00:21:22,080 Speaker 2: did it. And the two these properties that I bought, 436 00:21:22,080 --> 00:21:24,840 Speaker 2: the first ones that I started with, performed a lot 437 00:21:24,880 --> 00:21:27,000 Speaker 2: better than the ones that I bought in urban and 438 00:21:27,160 --> 00:21:29,920 Speaker 2: they cost me less. It was easier to hold them, 439 00:21:30,320 --> 00:21:32,360 Speaker 2: you know, all of those things that I'm now teaching 440 00:21:32,400 --> 00:21:34,400 Speaker 2: my clients. I was able to get a second one 441 00:21:34,400 --> 00:21:37,200 Speaker 2: a year later and build my portfolio very quickly. 442 00:21:37,480 --> 00:21:39,680 Speaker 1: So you change your nature of risk. And the first 443 00:21:39,680 --> 00:21:44,640 Speaker 1: ones you went into well worn, established city suburbs where 444 00:21:44,720 --> 00:21:47,040 Speaker 1: you knew people lived there already, and you moved to 445 00:21:47,080 --> 00:21:48,639 Speaker 1: a different type of thing where you went to somewhere 446 00:21:48,640 --> 00:21:51,760 Speaker 1: you didn't know, yes, possibly had never been. And that's 447 00:21:51,760 --> 00:21:53,080 Speaker 1: been the case ever since, has it. 448 00:21:53,520 --> 00:21:56,760 Speaker 2: That has well? I held on to my older properties 449 00:21:56,760 --> 00:21:59,359 Speaker 2: for a while, and then my personal story is that 450 00:21:59,520 --> 00:22:02,200 Speaker 2: I had marriage breakdown and I had to start again. 451 00:22:02,440 --> 00:22:05,200 Speaker 2: That was about six years ago now, And this time 452 00:22:05,240 --> 00:22:08,439 Speaker 2: what I did was I got rid of I had nothing, 453 00:22:09,119 --> 00:22:12,400 Speaker 2: no old properties, and I just listened to the advice 454 00:22:12,440 --> 00:22:15,120 Speaker 2: that I gave my clients, because some of them had 455 00:22:15,320 --> 00:22:16,840 Speaker 2: got to the point where they were doing better than me, 456 00:22:17,240 --> 00:22:19,160 Speaker 2: and I thought, well, why don't I just listen to them? 457 00:22:19,440 --> 00:22:21,520 Speaker 2: And I actually took a little bit of risk and 458 00:22:21,560 --> 00:22:26,000 Speaker 2: I started to buy untitled land. So I put small 459 00:22:26,000 --> 00:22:30,320 Speaker 2: deposits towards untitled land, and in most cases, after twelve 460 00:22:30,400 --> 00:22:34,240 Speaker 2: months that land had appreciated significantly and I'd put ten 461 00:22:34,240 --> 00:22:36,280 Speaker 2: to fifteen thousand dollars down and made fifty to one 462 00:22:36,359 --> 00:22:36,920 Speaker 2: hundred grand. 463 00:22:37,840 --> 00:22:39,120 Speaker 1: What untitled land is. 464 00:22:39,720 --> 00:22:43,920 Speaker 2: So untitled land is where land has been approved for subdivision, 465 00:22:44,480 --> 00:22:47,840 Speaker 2: but it hasn't titled because the developer hasn't yet built 466 00:22:47,840 --> 00:22:51,080 Speaker 2: the roads, et cetera. So you can that developer is 467 00:22:51,119 --> 00:22:53,280 Speaker 2: only allowed to take a ten percent deposit as a 468 00:22:53,320 --> 00:22:56,320 Speaker 2: maximum on a piece of untitled land, and you can 469 00:22:56,359 --> 00:23:00,000 Speaker 2: often negotiate five percent. So I had paid small amounts 470 00:23:00,520 --> 00:23:03,239 Speaker 2: anything that I was getting in from my income. I 471 00:23:03,320 --> 00:23:06,359 Speaker 2: was putting towards taking massive risks. I don't recommend other 472 00:23:06,400 --> 00:23:10,040 Speaker 2: people do this, putting towards this untitled land in areas 473 00:23:10,040 --> 00:23:12,800 Speaker 2: in very strategic positions that I felt would perform well. 474 00:23:13,280 --> 00:23:15,800 Speaker 2: And you know, I did six in the first year, 475 00:23:15,840 --> 00:23:17,680 Speaker 2: and then did a few others in the second year 476 00:23:17,800 --> 00:23:20,520 Speaker 2: and built a portfolio very quickly, and luckily it all 477 00:23:20,560 --> 00:23:21,439 Speaker 2: went in my favor. 478 00:23:22,240 --> 00:23:25,399 Speaker 1: H I see, Okay, So that was and I presume 479 00:23:25,480 --> 00:23:27,439 Speaker 1: that was when you in terms of risk, that was 480 00:23:28,240 --> 00:23:31,520 Speaker 1: the most that was the most risk exposed activity compared 481 00:23:31,520 --> 00:23:32,240 Speaker 1: to what you do now. 482 00:23:32,680 --> 00:23:36,000 Speaker 2: Well, well, now I probably take a bit more relatively speaking, 483 00:23:36,119 --> 00:23:37,760 Speaker 2: you know, I'm probably not taking more risk because I'm 484 00:23:37,800 --> 00:23:40,280 Speaker 2: in a much better position. But I will do things 485 00:23:40,320 --> 00:23:43,760 Speaker 2: now where I'll test market So I, for example, am 486 00:23:43,800 --> 00:23:47,280 Speaker 2: trialing and NDIS property. I'm really I've got a lot 487 00:23:47,320 --> 00:23:49,440 Speaker 2: of clients that ask me about it, but I won't 488 00:23:49,440 --> 00:23:51,440 Speaker 2: allow a client to invest in something that I haven't 489 00:23:51,480 --> 00:23:54,080 Speaker 2: been prepared to invest in myself. So I want to 490 00:23:54,160 --> 00:23:55,960 Speaker 2: trial it. I want to work it out and then 491 00:23:56,000 --> 00:23:57,840 Speaker 2: come back and say, look, I found that too difficult, 492 00:23:57,880 --> 00:24:00,639 Speaker 2: don't bother, you know. And I'm aligned with some great 493 00:24:00,640 --> 00:24:03,119 Speaker 2: advisors on it. But so I'm testing that, and that 494 00:24:03,200 --> 00:24:04,680 Speaker 2: to me is a big risk. I see a lot 495 00:24:04,680 --> 00:24:07,920 Speaker 2: of risk in that type of really high yield property. 496 00:24:07,920 --> 00:24:11,639 Speaker 2: That's very specialized. It's a very small market. 497 00:24:11,960 --> 00:24:15,280 Speaker 1: It's very high regulation risk. There is the government team, 498 00:24:15,359 --> 00:24:17,959 Speaker 1: it is very high and there's a lot of intermediaries 499 00:24:18,000 --> 00:24:18,439 Speaker 1: in between. 500 00:24:19,000 --> 00:24:22,600 Speaker 2: Look, there's a lot of issues with oversupply with something 501 00:24:22,680 --> 00:24:25,359 Speaker 2: like that. When there's such high yields. There are a 502 00:24:25,359 --> 00:24:28,480 Speaker 2: lot of property spookers will say that we'll go out 503 00:24:28,520 --> 00:24:32,440 Speaker 2: and talk about the guaranteed returns and government backed, which 504 00:24:32,480 --> 00:24:34,920 Speaker 2: is actually not correct at all. There's nothing guaranteed. It's 505 00:24:34,920 --> 00:24:37,000 Speaker 2: not government back to the you, it's government back for 506 00:24:37,080 --> 00:24:40,280 Speaker 2: the tenant. And so there's a lot of misinformation out there. 507 00:24:40,320 --> 00:24:43,520 Speaker 2: And unfortunately, the property industry is not regulated like the 508 00:24:43,560 --> 00:24:46,600 Speaker 2: financial services industry, so you can get away with saying 509 00:24:46,640 --> 00:24:49,240 Speaker 2: a lot of things that aren't that can be misleading. 510 00:24:50,080 --> 00:24:52,359 Speaker 1: Okay, I think it's a really good point, and we 511 00:24:52,359 --> 00:24:54,040 Speaker 1: would take a break here of some questions I want 512 00:24:54,040 --> 00:24:57,520 Speaker 1: on Lissa to cover their property questions. Really interesting about 513 00:24:57,560 --> 00:25:00,960 Speaker 1: the NDIS property I didn't want. I didn't even know 514 00:25:01,000 --> 00:25:03,040 Speaker 1: we were going to bring that up in Nissa. Everything 515 00:25:03,080 --> 00:25:05,600 Speaker 1: I've read about them suggests don't go near them. But 516 00:25:05,680 --> 00:25:07,880 Speaker 1: that doesn't mean that you can't that you and Nissa 517 00:25:07,960 --> 00:25:09,919 Speaker 1: can navigate your way through it. But I would be 518 00:25:10,080 --> 00:25:13,600 Speaker 1: very careful for the inexperienced investor on that one. All right, 519 00:25:13,680 --> 00:25:27,639 Speaker 1: back in a moment. Hello, Welcome back to The Australian's 520 00:25:27,680 --> 00:25:30,320 Speaker 1: Money Puzzled podcast. I'm James Kirby talking to a Nissa 521 00:25:30,359 --> 00:25:34,879 Speaker 1: Cavallo regular on the show from the Ida EDA property group. Okay, 522 00:25:34,920 --> 00:25:37,000 Speaker 1: there is a question. It's very good. It's also very long. 523 00:25:37,000 --> 00:25:39,160 Speaker 1: From Michael. I'm going to just cut it in half 524 00:25:39,400 --> 00:25:42,080 Speaker 1: and hopefully it all makes sense, he says. My partner 525 00:25:42,080 --> 00:25:45,359 Speaker 1: and I bought our first home, a villa that'd be 526 00:25:45,400 --> 00:25:48,000 Speaker 1: a villa unit I imagine in Canberra at the height 527 00:25:48,320 --> 00:25:50,439 Speaker 1: of the previous peak, which is twenty twenty one. We're 528 00:25:50,480 --> 00:25:52,920 Speaker 1: at the point now of looking to upgrade to something bigger. 529 00:25:53,320 --> 00:25:55,480 Speaker 1: Thankfully don't need to sell our current home in order 530 00:25:55,520 --> 00:25:57,320 Speaker 1: to purchase the next one. The property is a good 531 00:25:57,359 --> 00:26:00,720 Speaker 1: asset in terms of quality, etcetera. But as a recent 532 00:26:00,720 --> 00:26:03,040 Speaker 1: guest suggested, you make your profit when you buy, and 533 00:26:03,080 --> 00:26:08,600 Speaker 1: we bought high. We're unsure what to do when we 534 00:26:08,640 --> 00:26:10,880 Speaker 1: buy our next home. Should we sell the old one 535 00:26:11,080 --> 00:26:15,600 Speaker 1: immediately and invest elsewhere? Perhaps? Okay, I'll stop it right there, 536 00:26:16,040 --> 00:26:17,560 Speaker 1: and I'd put it to it. And they said, this 537 00:26:17,600 --> 00:26:20,080 Speaker 1: is not advice, it's information only for all the Michaels 538 00:26:20,080 --> 00:26:23,879 Speaker 1: in the world. But I like what I like. My 539 00:26:23,960 --> 00:26:27,720 Speaker 1: imagination is captured by the essential feature of Michael's question 540 00:26:27,840 --> 00:26:30,399 Speaker 1: is when they bought Camber, they bought the top of 541 00:26:30,440 --> 00:26:34,320 Speaker 1: the cycle, and Camber really ran high there at one stage, 542 00:26:34,400 --> 00:26:36,879 Speaker 1: having done nothing for years. This happens in Australian cities. 543 00:26:36,880 --> 00:26:39,879 Speaker 1: Part really ran high recently having done nothing for years. 544 00:26:40,000 --> 00:26:42,960 Speaker 1: Melbourne has done nothing for years, and the earlier part 545 00:26:43,000 --> 00:26:46,119 Speaker 1: of our conversation suggests it will now run. How do 546 00:26:46,160 --> 00:26:47,800 Speaker 1: you get around that when you have a bit of 547 00:26:47,800 --> 00:26:50,560 Speaker 1: bad look at the very first property you buy because 548 00:26:50,560 --> 00:26:52,040 Speaker 1: it just happened to be top of the cycle. 549 00:26:52,600 --> 00:26:54,760 Speaker 2: Well, I was buying at the top of the cycle 550 00:26:54,800 --> 00:26:57,080 Speaker 2: two years ago with several clients, so I've done it. 551 00:26:57,200 --> 00:27:00,600 Speaker 2: My mantra is, don't try and time the markets. Economists 552 00:27:00,640 --> 00:27:02,919 Speaker 2: get it wrong all the time. Investment professionals get it 553 00:27:02,920 --> 00:27:05,439 Speaker 2: wrong all the time. So what hope do we have 554 00:27:05,520 --> 00:27:08,320 Speaker 2: of getting it right. There's a saying that we say 555 00:27:08,480 --> 00:27:11,240 Speaker 2: in the property that you'd never bought too high, you 556 00:27:11,359 --> 00:27:14,200 Speaker 2: just bought too soon. So hang in there, right, But 557 00:27:15,680 --> 00:27:18,800 Speaker 2: my only qualification of that is if you're in an 558 00:27:18,800 --> 00:27:21,159 Speaker 2: asset that you don't think is going to perform and recover, 559 00:27:21,680 --> 00:27:23,600 Speaker 2: and you're missing out on something that's going to do 560 00:27:23,680 --> 00:27:25,960 Speaker 2: a lot better for you than you, by all means, 561 00:27:26,000 --> 00:27:30,840 Speaker 2: get out of it. But I'm European. I'm a traditional 562 00:27:30,880 --> 00:27:34,040 Speaker 2: investor that likes to hold by and hold unless my 563 00:27:34,080 --> 00:27:37,320 Speaker 2: asset isn't performing. So I mean the risk is that 564 00:27:37,359 --> 00:27:39,919 Speaker 2: he gets out of it, and not just Michael, that 565 00:27:40,000 --> 00:27:42,240 Speaker 2: an investor gets out of it an asset at the 566 00:27:42,240 --> 00:27:43,960 Speaker 2: peak and then buys another one at the peak. You know, 567 00:27:44,040 --> 00:27:46,400 Speaker 2: if you're timing markets, if you're timed it wrong once, 568 00:27:46,440 --> 00:27:50,119 Speaker 2: you could time it wrong again, So potentially hanging that particularly, 569 00:27:50,119 --> 00:27:54,120 Speaker 2: as we've mentioned before, due to the transaction costs, James, 570 00:27:54,200 --> 00:27:56,760 Speaker 2: you know, they're so high that you really need to 571 00:27:56,800 --> 00:28:01,200 Speaker 2: make significant increases in property in particular in order not 572 00:28:01,320 --> 00:28:03,440 Speaker 2: to sell it a loss. And so I think you've 573 00:28:03,440 --> 00:28:05,280 Speaker 2: got to look at what is it likely to do 574 00:28:05,440 --> 00:28:08,199 Speaker 2: over the next five years. Is it worth hanging in 575 00:28:08,240 --> 00:28:11,600 Speaker 2: there or could I do so much better in another 576 00:28:11,680 --> 00:28:15,080 Speaker 2: asset and therefore risk a slight loss in sale. 577 00:28:15,640 --> 00:28:18,880 Speaker 1: Yes, okay, very good, Well, thank you for that answer it. 578 00:28:19,080 --> 00:28:21,200 Speaker 1: And I think it's it's a very good point in this. 579 00:28:21,359 --> 00:28:24,399 Speaker 1: And Meeks, I mean timing and share is a totally 580 00:28:24,400 --> 00:28:26,719 Speaker 1: different thing. In property. You have that thing that you 581 00:28:26,840 --> 00:28:30,600 Speaker 1: just cannot move in and out easily in the short 582 00:28:30,640 --> 00:28:32,560 Speaker 1: period of time. I mean, what do you think is 583 00:28:32,920 --> 00:28:36,760 Speaker 1: a question without notice like rock bottom shortest time cycle 584 00:28:36,840 --> 00:28:40,320 Speaker 1: someone should have an investment property for in any market, 585 00:28:40,320 --> 00:28:42,920 Speaker 1: all things being even, Look. 586 00:28:42,720 --> 00:28:47,440 Speaker 2: If somebody is if it's really underperforming, cut your losses. Right. 587 00:28:47,560 --> 00:28:49,640 Speaker 2: So I have had clients that have had it for 588 00:28:49,680 --> 00:28:52,920 Speaker 2: a year and to at least save on CGT, you'd 589 00:28:52,920 --> 00:28:55,440 Speaker 2: hang on to it for a year, right, Well, you 590 00:28:55,480 --> 00:28:58,120 Speaker 2: won't have any capital gains if it's really underperforming. But 591 00:28:58,240 --> 00:29:00,680 Speaker 2: let's say that it's underperforming in the sense that you 592 00:29:00,800 --> 00:29:02,520 Speaker 2: just can't afford it. You've got to get out of it. 593 00:29:02,560 --> 00:29:06,120 Speaker 2: Et cetera. But I would say that if you've got 594 00:29:06,120 --> 00:29:09,720 Speaker 2: the capacity to make six percent a year, hang in 595 00:29:09,760 --> 00:29:14,040 Speaker 2: there for a few years. You know, if you've got 596 00:29:14,120 --> 00:29:17,320 Speaker 2: the capacity to make a lot less than that three 597 00:29:17,360 --> 00:29:20,200 Speaker 2: percent four percent, then maybe cut your losses as soon 598 00:29:20,240 --> 00:29:23,280 Speaker 2: as possible. So I think it's not a timing issue, 599 00:29:23,280 --> 00:29:26,800 Speaker 2: it's a prospect issue. I mean, often clients are going 600 00:29:26,840 --> 00:29:29,080 Speaker 2: to units to tell me that, but I'm going to 601 00:29:29,080 --> 00:29:32,080 Speaker 2: get good yield and it'll cover the mortgage, right. But 602 00:29:32,200 --> 00:29:34,600 Speaker 2: if you if it's just covering the mortgage and you 603 00:29:35,040 --> 00:29:37,240 Speaker 2: and as a result of that, you're missing out on 604 00:29:37,320 --> 00:29:40,800 Speaker 2: potentially getting six to seven percent capital growth and another asset, 605 00:29:41,280 --> 00:29:42,959 Speaker 2: just forget about it, get out of it, cut your 606 00:29:42,960 --> 00:29:44,680 Speaker 2: losses and get into something that's going to make you 607 00:29:44,760 --> 00:29:47,040 Speaker 2: six to seven percent that will make up for the 608 00:29:47,040 --> 00:29:48,040 Speaker 2: loss in that one year. 609 00:29:48,880 --> 00:29:51,960 Speaker 1: Okay, and one in five mediourne apartments that salt in 610 00:29:52,000 --> 00:29:54,560 Speaker 1: the last year, so to the loss. So we know 611 00:29:54,600 --> 00:29:57,280 Speaker 1: who we're talking to. It's terrific. That is probably the 612 00:29:57,280 --> 00:29:59,080 Speaker 1: perfect place to leave it for the moment. And this 613 00:30:00,000 --> 00:30:01,640 Speaker 1: Thanks very much for coming on the show. 614 00:30:01,680 --> 00:30:03,760 Speaker 2: Pleasure James. Thank you very much for having me. 615 00:30:04,440 --> 00:30:06,440 Speaker 1: Great to have you on as always a Nissa Cavallo 616 00:30:06,520 --> 00:30:08,680 Speaker 1: there of the IDA property group. I hope you found 617 00:30:08,720 --> 00:30:11,280 Speaker 1: that interesting. It was only meant to be a show 618 00:30:11,400 --> 00:30:14,840 Speaker 1: that looked at whether Melbourne was well, we know, I 619 00:30:14,840 --> 00:30:17,640 Speaker 1: think it's ticking very nicely. What I wanted Danissa to 620 00:30:17,680 --> 00:30:19,800 Speaker 1: do was to talk about where the opportunities are in 621 00:30:19,800 --> 00:30:22,520 Speaker 1: their city. But she brought a lot more to the 622 00:30:22,560 --> 00:30:25,400 Speaker 1: table than that, which was really good. Okay, let's have 623 00:30:25,440 --> 00:30:28,120 Speaker 1: some more emails the money puzzle at the Australian dot 624 00:30:28,160 --> 00:30:30,120 Speaker 1: com dot au. Talk to you soon.