1 00:00:10,080 --> 00:00:13,320 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,400 --> 00:00:16,720 Speaker 1: James Kirkby. Welcome aboard. I hope you enjoyed some of 3 00:00:16,760 --> 00:00:20,479 Speaker 1: the recent shows and recent guests we've had. You know, 4 00:00:20,880 --> 00:00:23,280 Speaker 1: every now and again someone comes on the show with 5 00:00:23,360 --> 00:00:26,960 Speaker 1: what we might call a blinding insight. And I actually 6 00:00:27,000 --> 00:00:31,200 Speaker 1: thought Tonyo Doherty in the last show and his point 7 00:00:31,240 --> 00:00:36,000 Speaker 1: that when you are selling a property or selling your house, 8 00:00:36,760 --> 00:00:39,479 Speaker 1: the secret is not that you're selling your house. The 9 00:00:39,560 --> 00:00:43,360 Speaker 1: secret is that someone is buying a home and that 10 00:00:43,479 --> 00:00:47,280 Speaker 1: is so so I think that's terrific insight into the 11 00:00:47,360 --> 00:00:50,559 Speaker 1: dynamics of it all and really told us something that 12 00:00:50,600 --> 00:00:54,319 Speaker 1: would be very useful in the future. In today's show, 13 00:00:54,320 --> 00:00:59,640 Speaker 1: I want to develop some of those fundamental issues aren't 14 00:01:00,440 --> 00:01:05,800 Speaker 1: and properties and flip it over actually and we'll have 15 00:01:05,800 --> 00:01:09,400 Speaker 1: a look at buying this time and buying a property, 16 00:01:09,520 --> 00:01:13,200 Speaker 1: buying investment properly. And the ideal guest for such an 17 00:01:13,240 --> 00:01:16,319 Speaker 1: exercise is someone who's been on the show before. Jared 18 00:01:16,440 --> 00:01:19,840 Speaker 1: McCabe of the Weightling Group. Hi, Jared, how are you on? 19 00:01:20,000 --> 00:01:21,560 Speaker 2: Very well? Jimes, thanks for having me on again. 20 00:01:21,959 --> 00:01:23,959 Speaker 1: Oh great to have you on. Haven't heard from you 21 00:01:24,040 --> 00:01:25,800 Speaker 1: for a while. People will be very keen to catch 22 00:01:25,880 --> 00:01:29,280 Speaker 1: up with where you're coming from on the market especially 23 00:01:29,680 --> 00:01:34,839 Speaker 1: it's interesting, you know, insights, insights of commentary, hard to find, 24 00:01:35,000 --> 00:01:37,880 Speaker 1: to be honest, hard to find in any field, particularly 25 00:01:37,920 --> 00:01:40,880 Speaker 1: hard to find a property. And I thought, as I say, 26 00:01:41,040 --> 00:01:44,600 Speaker 1: Tony had already from from McGrath's up in Brisbane, who 27 00:01:45,000 --> 00:01:47,680 Speaker 1: was very good on that issue of how you sell. 28 00:01:48,200 --> 00:01:51,080 Speaker 1: Now your expertise as a buyer's advocate is in how 29 00:01:51,160 --> 00:01:54,320 Speaker 1: you buy. And one thing I wanted to talk to 30 00:01:54,360 --> 00:01:58,720 Speaker 1: you about straight away is this issue about when you're 31 00:01:58,760 --> 00:02:01,240 Speaker 1: buying somewhere and everyone's gone through this, and it doesn't 32 00:02:01,280 --> 00:02:04,360 Speaker 1: matter if you the listener, are buying a first home, 33 00:02:05,360 --> 00:02:08,280 Speaker 1: a first apartment, if you're an investor and you're buying 34 00:02:08,280 --> 00:02:11,840 Speaker 1: your third property. Same as she comes up every time 35 00:02:12,960 --> 00:02:15,840 Speaker 1: you have to make compromises, the perfect property is not. 36 00:02:16,000 --> 00:02:19,200 Speaker 1: There some things you can compromise on and maybe some 37 00:02:19,280 --> 00:02:22,760 Speaker 1: things you can't. What can you compromise on, Jared. 38 00:02:22,880 --> 00:02:24,960 Speaker 2: There's a lot of things that you can compromise on. 39 00:02:25,000 --> 00:02:26,799 Speaker 2: There's not necessarily a lot of things that you should 40 00:02:26,840 --> 00:02:30,080 Speaker 2: compromise on. So I think the first question though, is 41 00:02:30,360 --> 00:02:33,400 Speaker 2: that you really need to determine what the purpose of 42 00:02:33,440 --> 00:02:36,920 Speaker 2: the purchase is, so and have a very clear understanding 43 00:02:36,960 --> 00:02:39,000 Speaker 2: as to what your objectives are and what you're looking 44 00:02:39,040 --> 00:02:42,200 Speaker 2: to gain out of the acquisition. So are you looking 45 00:02:42,240 --> 00:02:43,880 Speaker 2: to buy a home or are you looking to buy 46 00:02:43,880 --> 00:02:45,760 Speaker 2: an investment or are you looking to buy a lifestyle 47 00:02:45,760 --> 00:02:48,480 Speaker 2: property as a holiday destination, something on those lines, So 48 00:02:48,919 --> 00:02:51,680 Speaker 2: what's the reason for the purchase. And once you've got 49 00:02:51,680 --> 00:02:54,119 Speaker 2: an understanding as to what you're looking to achieve out 50 00:02:54,120 --> 00:02:56,400 Speaker 2: of that, you can then start to look at well, 51 00:02:56,520 --> 00:02:58,680 Speaker 2: perhaps I can compromise in certain areas, but there are 52 00:02:58,680 --> 00:03:01,080 Speaker 2: other areas where I really should. So if you're looking 53 00:03:01,120 --> 00:03:04,080 Speaker 2: to focus on capital growth because it's more of an investment, 54 00:03:04,120 --> 00:03:06,160 Speaker 2: or you're looking at more of a rental return, well, 55 00:03:06,160 --> 00:03:07,800 Speaker 2: then there's going to be aspects of a property that 56 00:03:07,840 --> 00:03:09,720 Speaker 2: you don't want to compromise on. And it's usually the 57 00:03:09,720 --> 00:03:13,160 Speaker 2: fundamentals around the things that you can't change about that property, 58 00:03:13,680 --> 00:03:16,280 Speaker 2: so that you can make improvements, and you can alter 59 00:03:16,400 --> 00:03:18,360 Speaker 2: things that perhaps aren't quite right, and that might be 60 00:03:18,360 --> 00:03:21,960 Speaker 2: as simple as paint, carpet, those sorts of things. But 61 00:03:22,080 --> 00:03:24,960 Speaker 2: things that you can't change about a property are the suburb, 62 00:03:25,040 --> 00:03:27,520 Speaker 2: the street that you're on the style of property, perhaps 63 00:03:27,560 --> 00:03:31,080 Speaker 2: that you've purchased, it's orientation and outlook that it might have, 64 00:03:31,360 --> 00:03:34,320 Speaker 2: or the adjoining uses that might be surrounding the property. 65 00:03:34,400 --> 00:03:36,440 Speaker 2: So those are the sorts of things that you probably 66 00:03:36,520 --> 00:03:39,560 Speaker 2: don't want to compromise on. But if you're looking at 67 00:03:39,560 --> 00:03:41,840 Speaker 2: it from a home point of view, then there might 68 00:03:41,880 --> 00:03:44,800 Speaker 2: be other reasons of why a certain property might be desirable, 69 00:03:44,840 --> 00:03:47,240 Speaker 2: and it may be particularly around Melbourne, there's a lot 70 00:03:47,280 --> 00:03:49,640 Speaker 2: of school zones that people are looking to try and 71 00:03:49,680 --> 00:03:50,520 Speaker 2: buy into. 72 00:03:50,520 --> 00:03:52,520 Speaker 1: To get inside this catchment, yes, to. 73 00:03:52,440 --> 00:03:55,160 Speaker 2: Get able to get children into that school. So in 74 00:03:55,240 --> 00:03:57,600 Speaker 2: order to get into that zone, you may need to 75 00:03:57,760 --> 00:04:00,720 Speaker 2: that's the priority, that's the objective of buy this property. 76 00:04:00,760 --> 00:04:02,760 Speaker 2: So there may be compromises that you might need to 77 00:04:02,800 --> 00:04:06,000 Speaker 2: make in terms of size of property or style of property, 78 00:04:06,360 --> 00:04:07,960 Speaker 2: or perhaps you need to be on a main road 79 00:04:08,000 --> 00:04:10,560 Speaker 2: in order to get in, which in a capital growth 80 00:04:10,760 --> 00:04:14,920 Speaker 2: investment focus you probably wouldn't do that. So understanding the objective, 81 00:04:14,960 --> 00:04:17,200 Speaker 2: I think is really important before you start worrying about 82 00:04:17,200 --> 00:04:18,160 Speaker 2: where you'll compromise. 83 00:04:18,800 --> 00:04:21,200 Speaker 1: So the compromises might be slightly different for the home 84 00:04:21,360 --> 00:04:26,720 Speaker 1: buyer and the investment residential property investor. So that's a 85 00:04:26,760 --> 00:04:31,039 Speaker 1: good example. The home buyer might make a compromise they 86 00:04:31,040 --> 00:04:33,560 Speaker 1: would never think of, never want to make. But if 87 00:04:33,600 --> 00:04:37,560 Speaker 1: there's certain aspects like access to a school inside a 88 00:04:37,600 --> 00:04:39,880 Speaker 1: catchment zone which is going to see thousands and thousands 89 00:04:39,920 --> 00:04:43,120 Speaker 1: of year a year, then hey, they're winning, all right. 90 00:04:43,200 --> 00:04:46,960 Speaker 1: That's a good example of the home buyer's compromise allowable compromise. 91 00:04:47,040 --> 00:04:51,520 Speaker 1: What about investors and the compromise is that they might 92 00:04:51,560 --> 00:04:54,000 Speaker 1: be able to make that aren't crucial though we might 93 00:04:54,040 --> 00:04:54,560 Speaker 1: think they are. 94 00:04:55,520 --> 00:04:57,720 Speaker 2: So you can look at things like moving and it's 95 00:04:57,760 --> 00:05:00,520 Speaker 2: a common term that we see around particularly and media 96 00:05:00,560 --> 00:05:03,560 Speaker 2: is around looking at bridesmaid suburbs where perhaps you might 97 00:05:03,640 --> 00:05:07,640 Speaker 2: be well, you can go to basically the suburb that 98 00:05:07,760 --> 00:05:09,680 Speaker 2: might be the next one out that might still have 99 00:05:09,760 --> 00:05:12,120 Speaker 2: a lot of attributes that the object or the suburb 100 00:05:12,200 --> 00:05:15,120 Speaker 2: that you were looking at still has, But by going 101 00:05:15,160 --> 00:05:17,320 Speaker 2: to the next suburb out you can still achieve all 102 00:05:17,320 --> 00:05:20,240 Speaker 2: of those objectives. There's still demands to be in that location. 103 00:05:20,560 --> 00:05:23,320 Speaker 2: Perhaps the land values are not quite as strong, so 104 00:05:23,600 --> 00:05:26,200 Speaker 2: if you and there's plenty of examples around that you 105 00:05:26,200 --> 00:05:28,599 Speaker 2: can use to do that. But by taking that step 106 00:05:28,640 --> 00:05:31,360 Speaker 2: for one suburb further out, the price has come down 107 00:05:31,360 --> 00:05:33,400 Speaker 2: a little bit, but you can still afford to get 108 00:05:33,440 --> 00:05:35,640 Speaker 2: a good quality house or a good quality apartment or 109 00:05:35,720 --> 00:05:38,839 Speaker 2: unit whatever you're looking to purchase in a nice, quiet street, 110 00:05:38,880 --> 00:05:40,640 Speaker 2: but that you make sure that it's still close to 111 00:05:40,680 --> 00:05:43,800 Speaker 2: public transport because the transport line still heads out through 112 00:05:43,839 --> 00:05:46,800 Speaker 2: that same suburb. It's still got good access to public 113 00:05:47,080 --> 00:05:50,600 Speaker 2: to a local village, it's still got good access to schools, 114 00:05:50,640 --> 00:05:52,600 Speaker 2: that sort of thing. So there can be ways in 115 00:05:52,720 --> 00:05:55,159 Speaker 2: means you can take that step out and still achieve 116 00:05:55,200 --> 00:05:59,520 Speaker 2: your objectives, but by compromising perhaps the suburb of not 117 00:05:59,520 --> 00:06:01,599 Speaker 2: being exactly where you thought you might need to be. 118 00:06:02,800 --> 00:06:06,800 Speaker 1: Right, Yes, okay, that's really interesting. So the different compromises 119 00:06:06,839 --> 00:06:10,800 Speaker 1: that are for the home buyer and for the investor, 120 00:06:11,120 --> 00:06:13,520 Speaker 1: And notice you talk about the compromises are very much 121 00:06:13,800 --> 00:06:20,240 Speaker 1: around property, physical issues, around location, etc. What about on 122 00:06:20,440 --> 00:06:23,680 Speaker 1: financing or on other issues like that? Are there also 123 00:06:24,400 --> 00:06:26,320 Speaker 1: compromises that a person could make. 124 00:06:26,520 --> 00:06:28,279 Speaker 2: You can look at whether or not. And again this 125 00:06:28,400 --> 00:06:31,200 Speaker 2: is probably more of a financial advisor type question than 126 00:06:31,240 --> 00:06:34,440 Speaker 2: a biased advocate properly advisor question, but it's probably you 127 00:06:34,440 --> 00:06:37,040 Speaker 2: can look at things like whether you pay principle and 128 00:06:37,120 --> 00:06:39,479 Speaker 2: interest or whether you only pay interest and there'll be 129 00:06:39,520 --> 00:06:42,039 Speaker 2: different philosophies and thoughts around that, but that might save 130 00:06:42,080 --> 00:06:45,080 Speaker 2: you some money. You can look at variable versus fixed 131 00:06:45,080 --> 00:06:47,279 Speaker 2: interest rates and there's ways and means to focus on that. 132 00:06:47,360 --> 00:06:50,680 Speaker 2: And again, depending upon what the expectation is around interest 133 00:06:50,720 --> 00:06:53,200 Speaker 2: rate movements, that may dictate your decision around that side 134 00:06:53,240 --> 00:06:54,880 Speaker 2: of things as well. So there's ways and means that 135 00:06:54,920 --> 00:06:57,880 Speaker 2: you can compromise or make alterations how much you want 136 00:06:57,920 --> 00:06:59,880 Speaker 2: to put down in terms of your deposit. You may 137 00:06:59,880 --> 00:07:01,320 Speaker 2: have gradic capacity, you might not. 138 00:07:02,080 --> 00:07:04,800 Speaker 1: Yes, right, okay. And we mentioned in the last show 139 00:07:04,800 --> 00:07:08,520 Speaker 1: about you Know buying that in fact it was all 140 00:07:08,520 --> 00:07:11,760 Speaker 1: about the focus was the mistakes perhaps that people make 141 00:07:11,800 --> 00:07:13,800 Speaker 1: when they have their own property and they're selling it 142 00:07:13,840 --> 00:07:17,720 Speaker 1: and they're thinking about being a seller, and they're thinking 143 00:07:17,920 --> 00:07:21,080 Speaker 1: all with this frame of mind about selling to someone 144 00:07:21,400 --> 00:07:24,480 Speaker 1: when in fact, you know, our previous guest suggested that 145 00:07:24,520 --> 00:07:26,080 Speaker 1: the sort of breakthrough is to look at it the 146 00:07:26,160 --> 00:07:29,960 Speaker 1: other way around. The buyer wants a home. You're trying 147 00:07:30,000 --> 00:07:35,400 Speaker 1: to win the argument with someone that this could be 148 00:07:35,480 --> 00:07:38,000 Speaker 1: their home. So that was the sort of real estate 149 00:07:38,040 --> 00:07:42,160 Speaker 1: agent seller's insight. Now from your point of view, you're 150 00:07:42,160 --> 00:07:46,160 Speaker 1: the buyer's advocate. So what tell me when people are 151 00:07:46,440 --> 00:07:50,680 Speaker 1: someone's standing beside you, you meet them first time, they're 152 00:07:50,720 --> 00:07:54,440 Speaker 1: saying we want to buy extra y. I presume there's 153 00:07:54,480 --> 00:08:00,200 Speaker 1: common mistakes you come upon at that point. Is the 154 00:08:00,200 --> 00:08:01,800 Speaker 1: anything you could tell us on that front? 155 00:08:02,200 --> 00:08:05,200 Speaker 2: There can be many mistakes around around those sorts at 156 00:08:05,200 --> 00:08:07,680 Speaker 2: that point in time, and it really Again I might 157 00:08:07,760 --> 00:08:09,640 Speaker 2: sound like a bit of a broken record here, James, 158 00:08:09,680 --> 00:08:12,000 Speaker 2: but I think the clear the conversation that we always 159 00:08:12,040 --> 00:08:14,320 Speaker 2: have at the start is trying to understand the objective 160 00:08:14,360 --> 00:08:16,680 Speaker 2: of the purchase, and everyone has different ones, and so 161 00:08:17,120 --> 00:08:18,840 Speaker 2: for a first time BUYO, as an instance, it might 162 00:08:18,880 --> 00:08:20,480 Speaker 2: be I need to get into the market, but this 163 00:08:20,520 --> 00:08:22,640 Speaker 2: is the first stage of my property journey, and I 164 00:08:22,640 --> 00:08:24,960 Speaker 2: want to take steps up the ladder. So they may 165 00:08:25,040 --> 00:08:27,320 Speaker 2: well have a mindset of, well, I just want to 166 00:08:27,360 --> 00:08:29,480 Speaker 2: get something. I want to get in. Whereas if you're 167 00:08:29,480 --> 00:08:31,280 Speaker 2: wanting to take steps up the ladder, there needs to 168 00:08:31,320 --> 00:08:34,160 Speaker 2: be other targets to hit in order to gain capital growth, 169 00:08:34,160 --> 00:08:36,640 Speaker 2: to build equity so that you can leverage off that 170 00:08:36,760 --> 00:08:39,800 Speaker 2: acquisition and take those steps up the ladder. So having 171 00:08:39,840 --> 00:08:41,640 Speaker 2: those sorts of conversations. 172 00:08:41,120 --> 00:08:42,319 Speaker 1: So if I said to you, I just want to 173 00:08:42,360 --> 00:08:46,040 Speaker 1: get in. You don't like that approach. Obviously it's too simple, 174 00:08:46,160 --> 00:08:46,320 Speaker 1: is it. 175 00:08:46,480 --> 00:08:48,600 Speaker 2: Yeah, it's too simple to just say I just want 176 00:08:48,640 --> 00:08:50,360 Speaker 2: to get into the market. I just need to get in. 177 00:08:50,440 --> 00:08:51,960 Speaker 2: It needs to be a lot more thought to it 178 00:08:52,040 --> 00:08:54,400 Speaker 2: than that around what you're looking to achieve out of that. 179 00:08:54,800 --> 00:08:58,560 Speaker 2: So and that conversation and that thought process is quite 180 00:08:58,600 --> 00:09:02,400 Speaker 2: often a conversation that first home buyers particularly have if 181 00:09:02,480 --> 00:09:04,800 Speaker 2: they've missed out on a number of properties. I'm sick 182 00:09:04,840 --> 00:09:07,840 Speaker 2: of missing out. I'm starting to get really down. I 183 00:09:08,000 --> 00:09:09,920 Speaker 2: just need to get into the market. And that's when 184 00:09:09,960 --> 00:09:13,640 Speaker 2: the risk of compromise probably becomes greatest, because it's not 185 00:09:13,720 --> 00:09:15,920 Speaker 2: a case of where should I compromise it. I just 186 00:09:16,040 --> 00:09:18,400 Speaker 2: need to get in, So I'll compromise anywhere in order 187 00:09:18,440 --> 00:09:20,520 Speaker 2: to just get into the market. And that's when people 188 00:09:20,559 --> 00:09:22,160 Speaker 2: start making mistakes. 189 00:09:22,120 --> 00:09:24,480 Speaker 1: That must be so common just now with such a 190 00:09:24,520 --> 00:09:26,880 Speaker 1: tape market. What sort of mistakes do they make? 191 00:09:26,920 --> 00:09:27,079 Speaker 2: Then? 192 00:09:27,200 --> 00:09:29,920 Speaker 1: So they say, Okay, I've been to three options, we 193 00:09:30,000 --> 00:09:32,600 Speaker 1: got wiped out each time, and I'm tired, and I'm 194 00:09:32,600 --> 00:09:34,600 Speaker 1: fed up a bit, and I want to just I 195 00:09:34,679 --> 00:09:36,559 Speaker 1: just want to get something that sort of ticks a 196 00:09:36,600 --> 00:09:39,199 Speaker 1: couple of basic boxes and then what do you say 197 00:09:39,240 --> 00:09:39,840 Speaker 1: to that person. 198 00:09:41,040 --> 00:09:43,720 Speaker 2: Some of the mistakes that they make are usually around 199 00:09:43,960 --> 00:09:47,200 Speaker 2: trying to focus on something that's lower priced in order 200 00:09:47,240 --> 00:09:50,200 Speaker 2: to make sure that they give. But usually that property 201 00:09:50,240 --> 00:09:52,920 Speaker 2: is lower priced for a reason, and you need to 202 00:09:52,920 --> 00:09:55,800 Speaker 2: be aware of what's made it compromised and why the 203 00:09:55,840 --> 00:09:58,840 Speaker 2: price point is a reduced level, so that you don't 204 00:09:58,880 --> 00:10:00,400 Speaker 2: make you don't make that stuck. 205 00:10:00,920 --> 00:10:02,480 Speaker 1: So people come to you and say, we want you 206 00:10:02,520 --> 00:10:05,280 Speaker 1: to help us buying number twenty two rare by Cuttings. 207 00:10:05,320 --> 00:10:07,720 Speaker 1: Does it happen that you see it? No, you shouldn't 208 00:10:07,720 --> 00:10:10,280 Speaker 1: be buying that. Yep, yeah you do. 209 00:10:10,480 --> 00:10:13,600 Speaker 2: Yeah, I've said, I've told many clients not to buy 210 00:10:13,679 --> 00:10:14,360 Speaker 2: certain properties. 211 00:10:14,360 --> 00:10:18,160 Speaker 1: Absolutely right, And then they go and then the whole 212 00:10:18,240 --> 00:10:20,320 Speaker 1: conversation begins a pressure I expect. 213 00:10:20,440 --> 00:10:22,520 Speaker 2: Yeah, it does, I mean, and it's important to be 214 00:10:22,520 --> 00:10:24,200 Speaker 2: able to say that. I mean, it's important to be 215 00:10:24,240 --> 00:10:25,800 Speaker 2: able to look at client in the eye and say, no, 216 00:10:25,920 --> 00:10:27,720 Speaker 2: look this is not the right property, and it's for 217 00:10:27,760 --> 00:10:30,080 Speaker 2: these and these reasons. Now it's not my decision at 218 00:10:30,080 --> 00:10:32,600 Speaker 2: the end of the day, but a client comes to 219 00:10:32,640 --> 00:10:34,440 Speaker 2: me and says, look, this is what I want to buy, 220 00:10:34,480 --> 00:10:36,880 Speaker 2: this is why I want to buy it. My role 221 00:10:37,160 --> 00:10:40,120 Speaker 2: initially is to point out the positives and the negatives 222 00:10:40,120 --> 00:10:42,080 Speaker 2: around the property so that if they do decide to 223 00:10:42,080 --> 00:10:45,280 Speaker 2: proceed with the purchase, they're doing it full informed. They've 224 00:10:45,280 --> 00:10:48,440 Speaker 2: got all of the information so that they can then say, Okay, well, 225 00:10:48,440 --> 00:10:51,560 Speaker 2: I am compromising here, but I understand it. I'm compromising here, 226 00:10:51,600 --> 00:10:54,120 Speaker 2: and I'm understanding why I'm compromising here in order to 227 00:10:54,160 --> 00:10:56,800 Speaker 2: achieve that original objective that we were discussing. 228 00:10:57,400 --> 00:10:59,880 Speaker 1: Does it happen more often with the horn by us 229 00:11:00,000 --> 00:11:01,559 Speaker 1: a pose to the investor. 230 00:11:02,559 --> 00:11:05,160 Speaker 2: Well, usually with the investor clients that we work with, 231 00:11:05,440 --> 00:11:08,600 Speaker 2: they're relying on us to determine the property that they 232 00:11:08,600 --> 00:11:10,920 Speaker 2: should purchase. So more so with the home buyers. They 233 00:11:11,280 --> 00:11:13,360 Speaker 2: home buyers obviously know what they do and don't like 234 00:11:13,400 --> 00:11:15,840 Speaker 2: and what they want to purchase and why. So yeah, 235 00:11:15,880 --> 00:11:17,960 Speaker 2: it's more a case of they can sometimes have rose 236 00:11:18,000 --> 00:11:21,280 Speaker 2: colored glasses on with certain properties, and once you point 237 00:11:21,320 --> 00:11:23,960 Speaker 2: out some of the perhaps flaws that are there, that 238 00:11:24,160 --> 00:11:26,480 Speaker 2: it starts to open them up and they realize that 239 00:11:26,480 --> 00:11:28,360 Speaker 2: perhaps it isn't the perfect property and then they may 240 00:11:28,400 --> 00:11:29,559 Speaker 2: need to look at alternatives. 241 00:11:30,280 --> 00:11:32,719 Speaker 1: The home buyer is more intense, I imagine on each 242 00:11:32,720 --> 00:11:34,559 Speaker 1: property because they have to imagine. 243 00:11:34,240 --> 00:11:37,960 Speaker 2: Far more emotional and because it's such a big decision, 244 00:11:37,960 --> 00:11:39,920 Speaker 2: and first home buy is probably even more so because 245 00:11:39,960 --> 00:11:41,880 Speaker 2: it's the first time they step into the market, so 246 00:11:42,320 --> 00:11:43,800 Speaker 2: it's a lot. You get a lot of enjoyment out 247 00:11:43,800 --> 00:11:45,520 Speaker 2: of working with first time was that can be tough 248 00:11:45,600 --> 00:11:48,439 Speaker 2: to work with because they don't necessarily know as much 249 00:11:48,480 --> 00:11:50,680 Speaker 2: as others, but you can get a lot of enjoyment 250 00:11:50,679 --> 00:11:51,720 Speaker 2: because it's such a big deal. 251 00:11:52,400 --> 00:11:55,240 Speaker 1: Yes, yeah, when they cook and getting them across the lane. Okay, 252 00:11:55,240 --> 00:11:57,040 Speaker 1: we'll taking sure a break. One or two things I 253 00:11:57,120 --> 00:11:59,560 Speaker 1: really want to talk to you about you've covered recently 254 00:12:00,080 --> 00:12:03,320 Speaker 1: and I think it would be really interesting for our listeners. 255 00:12:03,800 --> 00:12:07,120 Speaker 1: And one of obviously the big jump in moving in 256 00:12:07,240 --> 00:12:09,959 Speaker 1: investment property and moving to investment property and moving beyond 257 00:12:10,040 --> 00:12:12,440 Speaker 1: a single investment property, which is what the majority of 258 00:12:12,440 --> 00:12:16,120 Speaker 1: investors in Australia have, and also how to manage that property. 259 00:12:16,160 --> 00:12:27,839 Speaker 1: We'll be back in a moment. Hello, Welcome back to 260 00:12:27,920 --> 00:12:31,640 Speaker 1: the Australians Money Puzzle podcast. James Kirby. Here, I'm talking 261 00:12:31,800 --> 00:12:36,480 Speaker 1: to Jared McCabe of the Wakelan Group. Jared is a 262 00:12:36,520 --> 00:12:39,560 Speaker 1: buyer's advocate. He's been on the show fairly regularly over 263 00:12:39,600 --> 00:12:43,960 Speaker 1: the years, always interesting on the street, taking the pulse 264 00:12:44,040 --> 00:12:47,000 Speaker 1: basically of the market and really having a nuts and 265 00:12:47,040 --> 00:12:50,760 Speaker 1: bolts understanding of the dynamics of the market we're in. 266 00:12:51,760 --> 00:12:54,760 Speaker 1: I wanted to ask you about managing property. First of all, 267 00:12:55,280 --> 00:12:59,360 Speaker 1: it's interesting. So sometimes I think people in their innocence 268 00:12:59,400 --> 00:13:01,839 Speaker 1: think that if you have a property manager, what that 269 00:13:01,880 --> 00:13:06,200 Speaker 1: means is that you pay someone and they're managed the property. 270 00:13:07,040 --> 00:13:10,760 Speaker 1: In my experience, stock its property managers all the time. 271 00:13:11,200 --> 00:13:13,719 Speaker 1: If they're manager property, I mean it's I would say, 272 00:13:13,880 --> 00:13:16,880 Speaker 1: obviously as hard as actually being in there and doing 273 00:13:16,880 --> 00:13:19,280 Speaker 1: it without a manager. But it's by no means set 274 00:13:19,320 --> 00:13:20,120 Speaker 1: and forget, is it. 275 00:13:20,679 --> 00:13:23,440 Speaker 2: No, definitely not. And part of the role of owning 276 00:13:23,440 --> 00:13:26,360 Speaker 2: a property is then your role then is to manage 277 00:13:26,400 --> 00:13:28,160 Speaker 2: the property manager to make sure that you're getting a 278 00:13:28,200 --> 00:13:30,080 Speaker 2: level of service that you that you expect. 279 00:13:30,160 --> 00:13:32,600 Speaker 1: Yeah, what mistakes do people make in that regard? 280 00:13:33,160 --> 00:13:35,200 Speaker 2: Well, one of the bit there's a number, one of 281 00:13:35,200 --> 00:13:38,720 Speaker 2: the big ones is they something It can go both ways, 282 00:13:38,720 --> 00:13:41,360 Speaker 2: but people chase too much rent at different stages and 283 00:13:41,440 --> 00:13:45,800 Speaker 2: push too high, asking for significantly increased rental figures. And 284 00:13:45,840 --> 00:13:47,600 Speaker 2: you can have a property that can sit there vacant 285 00:13:47,600 --> 00:13:50,560 Speaker 2: for an extended period of time, and that extra twenty 286 00:13:50,559 --> 00:13:52,360 Speaker 2: to fifty dollars a week that you were chasing and 287 00:13:52,400 --> 00:13:55,000 Speaker 2: hoping to achieve when the property sits there vacant for 288 00:13:55,000 --> 00:13:57,719 Speaker 2: a number of weeks means that you've fullgone that anyway, 289 00:13:57,880 --> 00:14:00,160 Speaker 2: So that's a big one. I think people put too 290 00:14:00,240 --> 00:14:04,480 Speaker 2: much focus on property management fees at different stages too, 291 00:14:04,559 --> 00:14:07,000 Speaker 2: because if you've got the right property manager and they're 292 00:14:07,040 --> 00:14:09,640 Speaker 2: extremely experienced and they're looking after one of probably one 293 00:14:09,679 --> 00:14:12,480 Speaker 2: of your biggest investment assets going around, you want to 294 00:14:12,520 --> 00:14:14,240 Speaker 2: make sure that you're paying a reasonable rate to get 295 00:14:14,280 --> 00:14:16,839 Speaker 2: the best person there. And when you actually start running 296 00:14:16,840 --> 00:14:20,200 Speaker 2: the numbers on going from a seven percent to a 297 00:14:20,240 --> 00:14:21,880 Speaker 2: six and a half percent or six and a half 298 00:14:21,880 --> 00:14:25,040 Speaker 2: down to six whatever it might be, and it's over 299 00:14:25,080 --> 00:14:29,200 Speaker 2: the lifetime or the rate, it's actually not a significant amount. 300 00:14:29,240 --> 00:14:31,440 Speaker 2: And if you've got the right person looking after the property, 301 00:14:31,440 --> 00:14:33,320 Speaker 2: I think that's far more important to make sure that 302 00:14:33,360 --> 00:14:36,280 Speaker 2: your asset's being looked after and they're keeping in close 303 00:14:36,320 --> 00:14:38,600 Speaker 2: contact and working well with your tenant or your renter. 304 00:14:38,920 --> 00:14:40,640 Speaker 2: I think that makes a really big difference. 305 00:14:41,560 --> 00:14:45,120 Speaker 1: Tell me, is that number seven percent or so? Does 306 00:14:45,160 --> 00:14:46,840 Speaker 1: it change in different states. 307 00:14:47,520 --> 00:14:51,360 Speaker 2: I'm not sure. I mean it changes very dramatically in cities. 308 00:14:51,400 --> 00:14:54,680 Speaker 2: I mean property management fees can go from anywhere between 309 00:14:54,720 --> 00:14:58,200 Speaker 2: probably five percent up to there's i know some charge 310 00:14:58,240 --> 00:15:00,520 Speaker 2: over eight percent in terms of management fe So. 311 00:15:00,680 --> 00:15:04,200 Speaker 1: It sounds like you're saying the ease is not necessarily 312 00:15:04,240 --> 00:15:07,760 Speaker 1: worse than the five It's a question of quality of. 313 00:15:09,080 --> 00:15:10,840 Speaker 2: I think the bigger focus needs to be on the 314 00:15:10,880 --> 00:15:12,760 Speaker 2: manager and yet look once. And it's a bit like 315 00:15:12,800 --> 00:15:15,280 Speaker 2: when you buy the investment property in the first place, James, 316 00:15:15,320 --> 00:15:17,400 Speaker 2: the biggest thing needs to be on the asset selection 317 00:15:17,560 --> 00:15:20,280 Speaker 2: first and foremost. Then worry about the price you're going 318 00:15:20,280 --> 00:15:22,320 Speaker 2: to pay for it. So find the right property and 319 00:15:22,360 --> 00:15:24,760 Speaker 2: then worry about the price, find the right property manager, 320 00:15:25,000 --> 00:15:27,000 Speaker 2: then worry about the fee that you're going to pay them. 321 00:15:27,320 --> 00:15:30,280 Speaker 1: You're looking for property managers, the people or the brand, 322 00:15:30,360 --> 00:15:31,160 Speaker 1: because it seems to. 323 00:15:31,120 --> 00:15:32,640 Speaker 2: Me people always people. 324 00:15:32,880 --> 00:15:35,480 Speaker 1: Yeah, the individual press is so important out there, but 325 00:15:35,960 --> 00:15:38,240 Speaker 1: my experience sometimes you sign up someone the griefs, but 326 00:15:38,280 --> 00:15:40,120 Speaker 1: they leave, and that's. 327 00:15:39,920 --> 00:15:42,600 Speaker 2: A big issue with property management as an industry. It 328 00:15:42,640 --> 00:15:44,720 Speaker 2: can be a little bit that you don't there's not 329 00:15:44,760 --> 00:15:48,040 Speaker 2: a lot of property managers that are career property managers. 330 00:15:48,080 --> 00:15:49,840 Speaker 2: It can be a little transient, it can be a 331 00:15:49,880 --> 00:15:52,680 Speaker 2: career path to get into sales as well, so people 332 00:15:52,800 --> 00:15:55,640 Speaker 2: use they're not necessarily having it focused on this is 333 00:15:55,680 --> 00:15:57,680 Speaker 2: the career that I want to develop. And it's been 334 00:15:57,680 --> 00:16:01,080 Speaker 2: a really tough period over the particularly during the pandemic period. 335 00:16:01,120 --> 00:16:03,720 Speaker 2: Property managers had to deal with a huge amount of 336 00:16:03,800 --> 00:16:05,840 Speaker 2: issues and people were in really tight positions. 337 00:16:05,920 --> 00:16:08,160 Speaker 1: Yes, it must have been so difficulty. 338 00:16:08,160 --> 00:16:10,080 Speaker 2: Very difficult, and and a lot of times they weren't 339 00:16:10,080 --> 00:16:11,520 Speaker 2: able to get out and look at properties, and there 340 00:16:11,520 --> 00:16:14,960 Speaker 2: were people in financial difficulties, both landlords and tenants at 341 00:16:14,960 --> 00:16:17,520 Speaker 2: that point in time. So it's been a really tough 342 00:16:17,560 --> 00:16:19,760 Speaker 2: industry to be in. And I know from speaking to 343 00:16:20,160 --> 00:16:23,320 Speaker 2: owners of agencies and things, they've found it really difficult 344 00:16:23,360 --> 00:16:26,000 Speaker 2: to get good quality people to take up employment in 345 00:16:26,040 --> 00:16:28,200 Speaker 2: that industry as well, and there was a lot that 346 00:16:28,280 --> 00:16:30,400 Speaker 2: left the industry during that period because it was such 347 00:16:30,400 --> 00:16:33,560 Speaker 2: a tough time. So it's really so when you find 348 00:16:33,600 --> 00:16:36,160 Speaker 2: someone that's good at doing a good job, it's worth 349 00:16:36,200 --> 00:16:36,680 Speaker 2: paying them. 350 00:16:37,440 --> 00:16:40,120 Speaker 1: Yeah, I believe that it's like financial advisors and the 351 00:16:40,720 --> 00:16:44,280 Speaker 1: whole population the shrinking for different reasons. But I didn't 352 00:16:44,280 --> 00:16:46,520 Speaker 1: know that about property managers that it doesn't surprise me 353 00:16:46,600 --> 00:16:50,040 Speaker 1: because though it's a tough the reason the sandwich really 354 00:16:50,040 --> 00:16:52,920 Speaker 1: aren't you as a property manager. And as you see, 355 00:16:53,200 --> 00:16:55,480 Speaker 1: many people do it on their way to doing something else. 356 00:16:55,880 --> 00:16:59,120 Speaker 1: And the difficulty is that you expect a lot, but 357 00:16:59,200 --> 00:17:01,960 Speaker 1: really you can of it. You really have to be 358 00:17:02,040 --> 00:17:05,439 Speaker 1: realistic in what you could reasonably expect from someone on 359 00:17:05,520 --> 00:17:08,000 Speaker 1: the deal there on. For the value of the property. 360 00:17:08,600 --> 00:17:10,679 Speaker 1: I imagine you'd like to think, as always general, that 361 00:17:10,720 --> 00:17:12,600 Speaker 1: the higher the value of the property, the better they are. 362 00:17:12,640 --> 00:17:14,439 Speaker 1: But I don't know if that's I don't know if 363 00:17:14,440 --> 00:17:15,040 Speaker 1: that's true. 364 00:17:15,119 --> 00:17:17,760 Speaker 2: Not always the white case. Now it's definitely now, you're right, 365 00:17:17,840 --> 00:17:18,400 Speaker 2: definitely not. 366 00:17:18,840 --> 00:17:22,960 Speaker 1: Just one last thing on the segment, the move to 367 00:17:23,119 --> 00:17:26,720 Speaker 1: owning a second investment property. Many people, the vast majority, 368 00:17:26,760 --> 00:17:29,159 Speaker 1: I can't remember what the status, but it's something like 369 00:17:29,200 --> 00:17:33,360 Speaker 1: eighty percent of those who own investment property just hold one. 370 00:17:34,280 --> 00:17:37,840 Speaker 1: Holding more than one puts you in a totally different frame, 371 00:17:38,640 --> 00:17:43,280 Speaker 1: and holding several demands a completely different approach. Just tell 372 00:17:43,359 --> 00:17:46,280 Speaker 1: us about that, and about that big jump. I mean, 373 00:17:46,320 --> 00:17:48,920 Speaker 1: I don't want you to scare people, obviously, but tell 374 00:17:48,960 --> 00:17:50,919 Speaker 1: us the reality of making that jump. 375 00:17:51,760 --> 00:17:53,440 Speaker 2: Or even just what we were talking about in terms 376 00:17:53,480 --> 00:17:56,639 Speaker 2: of property management, you've potentially got because I mean we 377 00:17:56,760 --> 00:17:59,000 Speaker 2: talk about yeah, and not necessarily. I mean a lot 378 00:17:59,000 --> 00:18:01,159 Speaker 2: of people would like to use the same property manager 379 00:18:01,200 --> 00:18:03,480 Speaker 2: to manage both of their properties. But if you've gone 380 00:18:03,480 --> 00:18:05,720 Speaker 2: down a diversification path, and whether or not you own 381 00:18:05,760 --> 00:18:07,359 Speaker 2: another property on the other side of the city or 382 00:18:07,359 --> 00:18:10,040 Speaker 2: whether it's interstate, you've potentially then got as just as 383 00:18:10,040 --> 00:18:12,480 Speaker 2: a starting point, you've got two property managers to manage, 384 00:18:12,640 --> 00:18:15,160 Speaker 2: like we said, So there's that as a starting point. 385 00:18:15,160 --> 00:18:18,200 Speaker 2: But there's a lot of benefits too. Obviously, if you've selected, well, 386 00:18:18,200 --> 00:18:21,280 Speaker 2: you've got two properties building equity for you. It gives 387 00:18:21,320 --> 00:18:23,440 Speaker 2: you a degree of flexibility, and if there is some 388 00:18:23,520 --> 00:18:26,760 Speaker 2: financial uncertainty at some point in time, you can potentially 389 00:18:26,800 --> 00:18:29,639 Speaker 2: look to sell one to look after the other. It 390 00:18:29,720 --> 00:18:33,520 Speaker 2: can create extra equity by selling one to pay off 391 00:18:33,560 --> 00:18:36,280 Speaker 2: the other, and then you've got the income stream being 392 00:18:36,320 --> 00:18:39,840 Speaker 2: generated from that property to help with retirement. So there's 393 00:18:39,880 --> 00:18:42,919 Speaker 2: a lot of benefits. But yeah, there's you doubling or 394 00:18:42,920 --> 00:18:46,520 Speaker 2: tripling depending upon how much how many properties you own. 395 00:18:46,760 --> 00:18:49,639 Speaker 1: The risk is there, Yeah, the economies of scale aren't 396 00:18:49,720 --> 00:18:52,840 Speaker 1: really obvious on this one, because as you say, even 397 00:18:52,880 --> 00:18:55,320 Speaker 1: if you they're both managers, two different managers, probably on 398 00:18:55,400 --> 00:18:59,240 Speaker 1: different time cycles. Everything's the bills come in at different times. 399 00:18:59,320 --> 00:19:02,199 Speaker 1: Is there a sort of oft the shelf system that 400 00:19:02,320 --> 00:19:05,840 Speaker 1: people can use or spreadsheets or programs that are popular. 401 00:19:06,520 --> 00:19:09,080 Speaker 2: No, there's always standards and a lot of the property 402 00:19:09,119 --> 00:19:12,200 Speaker 2: managers have got their own software programs that they'll use 403 00:19:12,240 --> 00:19:16,000 Speaker 2: in terms of communication with investors, and so there's some 404 00:19:16,040 --> 00:19:18,360 Speaker 2: great apps and things that are coming through now too 405 00:19:18,160 --> 00:19:20,200 Speaker 2: to work with, so it keeps you up to date. 406 00:19:20,240 --> 00:19:21,960 Speaker 2: You can see when the rents come in those sorts 407 00:19:21,960 --> 00:19:24,199 Speaker 2: of things, so that works works really well, and it 408 00:19:24,240 --> 00:19:26,440 Speaker 2: gives you keeps it interactive and that sort of thing. 409 00:19:26,480 --> 00:19:28,680 Speaker 2: But that's that also goes back to that point we 410 00:19:28,720 --> 00:19:31,800 Speaker 2: said before about having the right property manager who's got 411 00:19:31,800 --> 00:19:35,119 Speaker 2: the right systems in place to support you as the 412 00:19:35,280 --> 00:19:37,320 Speaker 2: as the owner, to make sure that you're able to 413 00:19:37,560 --> 00:19:39,560 Speaker 2: keep everything up to date and up to standard to 414 00:19:39,600 --> 00:19:40,760 Speaker 2: maintain that property. 415 00:19:41,280 --> 00:19:44,240 Speaker 1: Are the apps from the from the managers or are 416 00:19:44,280 --> 00:19:45,960 Speaker 1: there apps that the investor can have. 417 00:19:46,359 --> 00:19:48,960 Speaker 2: No, it's usually the property managers that they've got and 418 00:19:49,000 --> 00:19:52,760 Speaker 2: different programs and software programs that they use, so you 419 00:19:52,840 --> 00:19:54,960 Speaker 2: usually have to work in with them. On that. I'm 420 00:19:54,960 --> 00:19:56,960 Speaker 2: sure there's there's different programs. 421 00:19:56,920 --> 00:19:59,600 Speaker 1: There's sounds like there's an opportunity out there. I'm sure 422 00:19:59,600 --> 00:20:02,399 Speaker 1: there are. Yes, I'm sure they'd come through or tell us. 423 00:20:02,400 --> 00:20:04,080 Speaker 1: How could you not have mentioned a B or C. 424 00:20:04,280 --> 00:20:06,600 Speaker 1: But let's hear from you folks if you have something, 425 00:20:06,960 --> 00:20:09,520 Speaker 1: let's add to the conversation. You know, the email the 426 00:20:09,560 --> 00:20:12,119 Speaker 1: Money Puzzle at the Australian dot com dot you. Okay, 427 00:20:12,119 --> 00:20:13,840 Speaker 1: we have some really good questions this week. I want 428 00:20:13,880 --> 00:20:16,199 Speaker 1: to get to their on property. We'll be back in 429 00:20:16,240 --> 00:20:33,000 Speaker 1: a moment. Hello, Welcome back to The Australian's Money Puzzle podcast, 430 00:20:33,080 --> 00:20:37,280 Speaker 1: James Kirby with Jared McCabe. Okay, now it's a very 431 00:20:37,280 --> 00:20:40,879 Speaker 1: interesting correspondence. This is John in a recent article in 432 00:20:40,920 --> 00:20:43,680 Speaker 1: The Australian. You that's me if you know what I mean. 433 00:20:44,160 --> 00:20:47,719 Speaker 1: Quote from a report from accountants about the tax office 434 00:20:47,720 --> 00:20:52,400 Speaker 1: being incredulous with valuation valuations being the same for three years. 435 00:20:53,040 --> 00:20:56,000 Speaker 1: These must be city based accountants with no knowledge of 436 00:20:56,080 --> 00:20:59,680 Speaker 1: country towns. My brothers self managed super fund had a 437 00:20:59,680 --> 00:21:02,439 Speaker 1: commerce building in a town where there were no sales 438 00:21:02,560 --> 00:21:06,680 Speaker 1: commercial buildings for five years. Valuation started at one point 439 00:21:06,680 --> 00:21:11,159 Speaker 1: eight million and it's steadily reduced in value as and 440 00:21:11,280 --> 00:21:15,000 Speaker 1: when sales of other buildings happened. A better building sold 441 00:21:15,040 --> 00:21:18,639 Speaker 1: nearby for one million. When my brother's building was sold, 442 00:21:18,640 --> 00:21:23,439 Speaker 1: it only chieve nine hundred koch. The valuation had been 443 00:21:23,480 --> 00:21:26,920 Speaker 1: the same for three years. There is another story of 444 00:21:27,040 --> 00:21:30,040 Speaker 1: declining country towns and declining values, and it would be 445 00:21:30,040 --> 00:21:32,440 Speaker 1: interesting to see how the ATO handles is. Gee, that's 446 00:21:32,440 --> 00:21:35,320 Speaker 1: really interesting. I was being facetious in the peace, and 447 00:21:35,359 --> 00:21:38,680 Speaker 1: definitely I was pointing out that the ATO, in one 448 00:21:38,720 --> 00:21:41,280 Speaker 1: of their sort of endless crackdowns in this area on 449 00:21:41,320 --> 00:21:45,440 Speaker 1: property investment, had warned about people putting the same valuation 450 00:21:45,600 --> 00:21:47,840 Speaker 1: each year. And I will concede, living in the middle 451 00:21:47,880 --> 00:21:50,720 Speaker 1: of a large city, that's not something I would be 452 00:21:50,760 --> 00:21:54,240 Speaker 1: familiar with, that the valuations don't change. But obviously it's 453 00:21:54,240 --> 00:21:56,600 Speaker 1: different stokes, different folks. 454 00:21:56,520 --> 00:21:59,080 Speaker 2: And I can speak from a loftime ago, James. My 455 00:21:59,520 --> 00:22:02,680 Speaker 2: career prior to getting into the buying service was as 456 00:22:02,680 --> 00:22:04,119 Speaker 2: a value That's what I used to do, and I 457 00:22:04,200 --> 00:22:07,280 Speaker 2: used to work in regional Victoria. So I know exactly 458 00:22:07,280 --> 00:22:10,520 Speaker 2: what John's talking about in terms of properties not moving 459 00:22:10,560 --> 00:22:13,920 Speaker 2: far and certainly in a lot of regional towns, not 460 00:22:14,000 --> 00:22:16,400 Speaker 2: just from a commercial sense, but from a residential sense too, 461 00:22:16,480 --> 00:22:18,440 Speaker 2: you can go through extended periods of time where there's 462 00:22:18,520 --> 00:22:20,879 Speaker 2: very limited sales evidence to be able to rely upon it. 463 00:22:21,359 --> 00:22:24,440 Speaker 2: And although there's been good market movement in a lot 464 00:22:24,440 --> 00:22:28,400 Speaker 2: of regional areas sort of pandemic and immediately post pandemic, 465 00:22:28,720 --> 00:22:31,560 Speaker 2: there's been a lot of reversions over the probably more 466 00:22:31,600 --> 00:22:34,280 Speaker 2: recent times too, where have left those regional areas or 467 00:22:34,359 --> 00:22:37,880 Speaker 2: those growth patterns haven't been sustainable because there hasn't been 468 00:22:37,920 --> 00:22:41,320 Speaker 2: the influx of population into those areas. So these absolutely 469 00:22:41,359 --> 00:22:44,240 Speaker 2: spot on in terms of they can very easily hold 470 00:22:44,280 --> 00:22:48,119 Speaker 2: it go backwards. In some regional locations, they can jump 471 00:22:48,160 --> 00:22:50,200 Speaker 2: significantly up too, though at different stages. 472 00:22:50,840 --> 00:22:54,200 Speaker 1: Sounds like the commercial property in the regional and locations 473 00:22:54,280 --> 00:22:59,640 Speaker 1: is a different story than the residential property. 474 00:22:58,359 --> 00:23:00,760 Speaker 2: Very much so. I mean it's the yields and things 475 00:23:00,760 --> 00:23:03,240 Speaker 2: on commercial property in regional areas are very different to 476 00:23:03,240 --> 00:23:05,600 Speaker 2: what they are in metropolitan areas as well. 477 00:23:05,960 --> 00:23:07,720 Speaker 1: Right, I see, Are they higher? 478 00:23:08,720 --> 00:23:11,400 Speaker 2: Yeah? Because they're a riskier asset, So there's typically it's 479 00:23:11,440 --> 00:23:14,040 Speaker 2: typically your yield is typically higher, yeah, of. 480 00:23:13,960 --> 00:23:17,520 Speaker 1: Course because because your your spectrum of potential tenants. 481 00:23:17,560 --> 00:23:21,080 Speaker 2: Correct commercial property. Without getting into the nitty gritty. But 482 00:23:21,160 --> 00:23:23,880 Speaker 2: commercial property is a lot in a lot of instances 483 00:23:23,920 --> 00:23:27,119 Speaker 2: heavily reliant on the lease that's in place, whereas residential property, 484 00:23:27,160 --> 00:23:29,720 Speaker 2: because the turnover is a lot greater, the least plays 485 00:23:29,720 --> 00:23:32,320 Speaker 2: a far less important role in the value of the property. 486 00:23:33,080 --> 00:23:36,359 Speaker 1: Right, Very interesting, Very interesting? Okay, just a quick one. 487 00:23:36,400 --> 00:23:39,639 Speaker 1: No value on valuations and valuers and all that. Are 488 00:23:39,640 --> 00:23:43,760 Speaker 1: they still crucial in the piece? And is that business 489 00:23:43,880 --> 00:23:45,480 Speaker 1: As a leman, I would have told you know, a 490 00:23:45,480 --> 00:23:47,080 Speaker 1: lot of the work they have valuablely used to do 491 00:23:47,119 --> 00:23:49,760 Speaker 1: can be done quite quickly with AI at this stage 492 00:23:49,840 --> 00:23:52,200 Speaker 1: or whatever. Is that the key. 493 00:23:52,000 --> 00:23:54,640 Speaker 2: Is becoming a bit like that? But I mean we 494 00:23:54,680 --> 00:23:58,880 Speaker 2: talk about valuing properties in our business, and valuing properties 495 00:23:59,240 --> 00:24:02,000 Speaker 2: are parts ofcience, and AI can do the science. I 496 00:24:02,000 --> 00:24:03,960 Speaker 2: don't think AI can do the art. And I think 497 00:24:04,000 --> 00:24:06,560 Speaker 2: there's a lot of human nature that needs to add 498 00:24:06,560 --> 00:24:09,040 Speaker 2: the art side of things to be able to interpret 499 00:24:09,040 --> 00:24:11,640 Speaker 2: things in different ways. So I still think that there's 500 00:24:11,640 --> 00:24:14,480 Speaker 2: absolutely a place for value. Is they need to be there. 501 00:24:14,520 --> 00:24:16,639 Speaker 2: It's a bit unfortunately. It can be a little bit 502 00:24:16,680 --> 00:24:19,080 Speaker 2: like property management too. It can be a thankless task. 503 00:24:19,920 --> 00:24:23,520 Speaker 1: Yes, And I noticed that the range that it's still 504 00:24:23,640 --> 00:24:26,120 Speaker 1: the case that people will put up prices on properties 505 00:24:26,119 --> 00:24:27,520 Speaker 1: and you will just look at it and you'll go, 506 00:24:27,640 --> 00:24:29,800 Speaker 1: that is just so far off. There's no way that 507 00:24:29,920 --> 00:24:31,600 Speaker 1: estimate is right. How does that still happen. 508 00:24:33,160 --> 00:24:35,680 Speaker 2: It's a very good question, and it happens. It does 509 00:24:35,720 --> 00:24:37,840 Speaker 2: happen a lot that there's no way that the property 510 00:24:37,880 --> 00:24:40,040 Speaker 2: is going to sell within that range. More often than 511 00:24:40,119 --> 00:24:42,159 Speaker 2: not it's on a conservative side, and more often than 512 00:24:42,200 --> 00:24:44,200 Speaker 2: not it's when the property is going to auction rather 513 00:24:44,240 --> 00:24:48,080 Speaker 2: than private sale. But it happens in reverse too. There's 514 00:24:48,080 --> 00:24:51,000 Speaker 2: properties that have been pitched, particularly on expressions of interest 515 00:24:51,080 --> 00:24:54,119 Speaker 2: or private sale, that are pitched far too high and 516 00:24:54,160 --> 00:24:55,840 Speaker 2: properties sit there for months and months. 517 00:24:56,200 --> 00:24:59,400 Speaker 1: The overest may well be where do you have expressions 518 00:24:59,400 --> 00:25:02,119 Speaker 1: of interest and properties that are seen to be in 519 00:25:02,119 --> 00:25:07,720 Speaker 1: some way special, and the underestimates on routine properties at auction. 520 00:25:08,320 --> 00:25:10,680 Speaker 2: It's the method of style, so that the auction process 521 00:25:10,960 --> 00:25:14,200 Speaker 2: you're trying to build and garner interest to create competition, 522 00:25:14,240 --> 00:25:16,639 Speaker 2: whereas the private style typically the price is more of 523 00:25:16,640 --> 00:25:19,720 Speaker 2: a target price, and so you work you're starting from 524 00:25:19,720 --> 00:25:21,840 Speaker 2: that and potentially having to work backwards. 525 00:25:22,200 --> 00:25:26,399 Speaker 1: That's really interesting. That's really interesting, okay, Paul. Final question, 526 00:25:26,480 --> 00:25:30,040 Speaker 1: A prominent economist is saying that lower deposits paid under 527 00:25:30,080 --> 00:25:35,600 Speaker 1: the home guarantee scheme would necessitate higher interest payments over 528 00:25:35,600 --> 00:25:39,359 Speaker 1: the life of the loan. Paul asks, if the taxpayer 529 00:25:39,440 --> 00:25:42,040 Speaker 1: is paying the other fifteen percent of the deposit, why 530 00:25:42,040 --> 00:25:45,000 Speaker 1: would the loan recipient be paying more? Perhaps I've misread 531 00:25:45,000 --> 00:25:48,240 Speaker 1: this article, Perhaps you have, Paul, and none of this 532 00:25:48,280 --> 00:25:51,760 Speaker 1: is advice information only, But you know those government guarantee 533 00:25:51,760 --> 00:25:55,919 Speaker 1: schemes they don't hand over, so as you know, the 534 00:25:56,000 --> 00:25:58,560 Speaker 1: new home loan guarantee scheme, which is now going to 535 00:25:58,560 --> 00:26:01,280 Speaker 1: be universal, basically that is it. There's no limited number 536 00:26:01,320 --> 00:26:04,879 Speaker 1: of places anyone can use the home loan guarantee scheme 537 00:26:04,960 --> 00:26:07,440 Speaker 1: buying a first home, which is very interesting dynamic in 538 00:26:07,480 --> 00:26:10,480 Speaker 1: the market. Now. The terms of that is that you 539 00:26:10,520 --> 00:26:14,119 Speaker 1: can have a five percent deposit and the government will 540 00:26:14,160 --> 00:26:17,919 Speaker 1: cover the twenty percent deposit by guaranteeing the fifteen percent 541 00:26:18,040 --> 00:26:21,600 Speaker 1: you don't have. They don't hand the bank the fifteen percent, 542 00:26:21,640 --> 00:26:24,359 Speaker 1: if I've got this right, Jarred. They're just saying that 543 00:26:24,880 --> 00:26:29,040 Speaker 1: should everything go awry in the future, they would guarantee 544 00:26:29,040 --> 00:26:31,439 Speaker 1: the bank that if it was necessary, they would stump 545 00:26:31,480 --> 00:26:34,560 Speaker 1: up that money if it was necessary, and ninety nine 546 00:26:34,560 --> 00:26:37,080 Speaker 1: times out of one hundred, it won't be necessary. So 547 00:26:37,240 --> 00:26:39,720 Speaker 1: in fact, what the flip side of this home guarantee 548 00:26:39,720 --> 00:26:41,160 Speaker 1: scheme is that we're going to have all these first 549 00:26:41,160 --> 00:26:44,160 Speaker 1: home buyers and they're actually on ninety five percent mortgages, 550 00:26:45,440 --> 00:26:49,280 Speaker 1: and that is why they have higher dollar payments. Have 551 00:26:49,400 --> 00:26:49,920 Speaker 1: I got that? 552 00:26:50,520 --> 00:26:53,160 Speaker 2: Yes, that's my understanding too. That's my understanding is that 553 00:26:53,520 --> 00:26:56,120 Speaker 2: instead of having a twenty percent deposit so you don't 554 00:26:56,119 --> 00:26:58,920 Speaker 2: have to pieland as mortgage insurance, you can have five 555 00:26:58,960 --> 00:27:01,960 Speaker 2: percent and the government will cover the lender's mortgage insurance 556 00:27:01,960 --> 00:27:04,480 Speaker 2: for that extra fifteen percent. But you've still got to 557 00:27:04,520 --> 00:27:07,000 Speaker 2: come up with that yourself. The banks, the government's not 558 00:27:07,000 --> 00:27:08,520 Speaker 2: giving you the extra fifteen percent. 559 00:27:09,200 --> 00:27:12,560 Speaker 1: Yeah, So in fact, ninety five percent of the value 560 00:27:12,560 --> 00:27:14,680 Speaker 1: of the house on the day you buy it is 561 00:27:14,960 --> 00:27:16,800 Speaker 1: you have only put down a five percent deposit, so 562 00:27:16,840 --> 00:27:19,560 Speaker 1: your mortgage covers ninety five percent, which means it's bigger, 563 00:27:19,680 --> 00:27:21,680 Speaker 1: much bigger than it might have been and will take 564 00:27:21,760 --> 00:27:25,560 Speaker 1: a lot longer to pay off. Maths would suggest have 565 00:27:25,600 --> 00:27:28,240 Speaker 1: you seen that there's a theory abroad obviously that this first, 566 00:27:28,520 --> 00:27:33,320 Speaker 1: this big scheme now signature scheme from the new government 567 00:27:34,000 --> 00:27:37,520 Speaker 1: will create intense competition at that level of the market 568 00:27:37,840 --> 00:27:40,280 Speaker 1: that's inside the scheme. And then if you're just schooll 569 00:27:40,560 --> 00:27:44,560 Speaker 1: tiny bit higher than where everybody is chasing, that that 570 00:27:44,720 --> 00:27:47,879 Speaker 1: scheme is better value. What do you think of that period. 571 00:27:47,600 --> 00:27:50,560 Speaker 2: Well, I mean the scheme's been in place for a while, 572 00:27:51,160 --> 00:27:53,720 Speaker 2: it has expanded further so rather than I think there 573 00:27:53,760 --> 00:27:55,720 Speaker 2: was a fifty thousand that it was limited. 574 00:27:55,400 --> 00:27:56,840 Speaker 1: To and now that's right places. 575 00:27:56,920 --> 00:27:59,600 Speaker 2: Yeah, and then obviously the I think the price limits 576 00:27:59,600 --> 00:28:01,600 Speaker 2: have bad going to be increased, and this all starts 577 00:28:01,640 --> 00:28:04,200 Speaker 2: as off first of January next year, is my understanding 578 00:28:04,240 --> 00:28:07,520 Speaker 2: twenty twenty six is from what I can remember. So look, 579 00:28:07,560 --> 00:28:10,040 Speaker 2: I think it will have a bit of an impact. 580 00:28:10,040 --> 00:28:11,680 Speaker 2: I don't think it's going to have as much of 581 00:28:11,720 --> 00:28:14,000 Speaker 2: an impact as what say, some of the previous ones 582 00:28:14,040 --> 00:28:16,680 Speaker 2: have had in that regard where there was a perhaps 583 00:28:16,720 --> 00:28:18,720 Speaker 2: a limit. I know at one stage that the limit 584 00:28:18,760 --> 00:28:21,080 Speaker 2: was six hundred thousand dollars and it was a hard limit, 585 00:28:21,119 --> 00:28:23,560 Speaker 2: and as soon as you paid six hundred and one 586 00:28:23,560 --> 00:28:27,159 Speaker 2: thousand dollars you were no longer entitled to any benefits. 587 00:28:27,560 --> 00:28:29,399 Speaker 2: And so there was I went to a number of 588 00:28:29,440 --> 00:28:32,240 Speaker 2: auctions and this was probably ten plus years ago, James, 589 00:28:32,240 --> 00:28:35,840 Speaker 2: but a number of auctions where the auction ran up 590 00:28:35,880 --> 00:28:38,080 Speaker 2: to six hundred and as soon. It was basically a 591 00:28:38,120 --> 00:28:40,000 Speaker 2: race to who could hit six hundred first and as 592 00:28:40,000 --> 00:28:42,400 Speaker 2: soon as an investor at the time, because investors were 593 00:28:42,480 --> 00:28:45,520 Speaker 2: quite active putting six poht one, but just stopped. 594 00:28:45,200 --> 00:28:48,480 Speaker 1: Dead because the investor knew that they were all. 595 00:28:49,040 --> 00:28:52,040 Speaker 2: That they wouldn't pay more because they were focus so 596 00:28:52,200 --> 00:28:54,520 Speaker 2: focused on the free money or whatever. So whether it 597 00:28:54,520 --> 00:28:56,280 Speaker 2: was a stamp duty exemption or whether it was a 598 00:28:56,320 --> 00:28:58,680 Speaker 2: twenty five thousand dollar cash bonus, whatever it was, at 599 00:28:58,680 --> 00:29:01,440 Speaker 2: the time, it well, I can't pay up. And we 600 00:29:01,480 --> 00:29:03,600 Speaker 2: had a lot of conversations at that point in time, 601 00:29:03,880 --> 00:29:06,520 Speaker 2: particularly with first home buyers in that because what we 602 00:29:06,520 --> 00:29:08,600 Speaker 2: were seeing was properties that were worth in the early 603 00:29:08,640 --> 00:29:11,520 Speaker 2: five hundreds were being run up to six hundred, and 604 00:29:11,600 --> 00:29:14,800 Speaker 2: properties that were worth six fifty to six eighty you 605 00:29:14,840 --> 00:29:16,959 Speaker 2: could pick up in the early six hundreds because there 606 00:29:17,000 --> 00:29:19,280 Speaker 2: wasn't the same level of competition, So you were better 607 00:29:19,360 --> 00:29:22,160 Speaker 2: off for going that little bit of extra free money, 608 00:29:22,200 --> 00:29:25,040 Speaker 2: so to speak, and buying a better property at a 609 00:29:25,120 --> 00:29:27,760 Speaker 2: cheaper price than you were paying above the odds for 610 00:29:27,760 --> 00:29:28,680 Speaker 2: this lesser quality. 611 00:29:29,360 --> 00:29:32,000 Speaker 1: But of course the person had to be to basically 612 00:29:32,040 --> 00:29:37,560 Speaker 1: give up forego that the grant. Yeah, that was obviously 613 00:29:37,600 --> 00:29:38,360 Speaker 1: going to happen again. 614 00:29:38,400 --> 00:29:40,600 Speaker 2: Now this is hard to get people's head around that, 615 00:29:40,680 --> 00:29:43,520 Speaker 2: but once they could, people could understand that it made sense. 616 00:29:44,160 --> 00:29:47,760 Speaker 1: Yeah, very interesting. So that's interesting folks that aspect that 617 00:29:47,800 --> 00:29:49,720 Speaker 1: if you were aware of these schemes, particularly the first 618 00:29:49,720 --> 00:29:53,120 Speaker 1: time guarantee scheme and the range that it has and 619 00:29:53,160 --> 00:29:55,360 Speaker 1: basically that first time buyer market. Take a look at 620 00:29:55,360 --> 00:29:58,479 Speaker 1: the tables because as Jared alulded to, it's laddered right, 621 00:29:58,520 --> 00:30:01,360 Speaker 1: so every state no cap on the number of places. 622 00:30:01,440 --> 00:30:03,920 Speaker 1: It's now a universal scheme, which means anyone who wants 623 00:30:03,960 --> 00:30:07,320 Speaker 1: to can put down five percent and that would allow 624 00:30:07,360 --> 00:30:09,760 Speaker 1: them to buy their first home. But there are limits 625 00:30:09,800 --> 00:30:12,640 Speaker 1: dollar limits, and they link their links with the values 626 00:30:12,640 --> 00:30:14,960 Speaker 1: in the states, so each state is different. Quite easy 627 00:30:14,960 --> 00:30:17,240 Speaker 1: to find out and have a look at, but once 628 00:30:17,280 --> 00:30:19,560 Speaker 1: you do, you'll get an idea of what the cutoff 629 00:30:19,600 --> 00:30:22,800 Speaker 1: point is for those type of buyers. And as you say, 630 00:30:23,040 --> 00:30:25,880 Speaker 1: if nothing else, Jared, the value is probably better just 631 00:30:25,920 --> 00:30:28,400 Speaker 1: above that limit in the state each time. 632 00:30:28,320 --> 00:30:30,400 Speaker 2: It can be. But obviously for some people too though 633 00:30:30,440 --> 00:30:32,320 Speaker 2: that it's in order to get up to that limit. 634 00:30:32,360 --> 00:30:35,040 Speaker 2: In the first instance, they needed that money, whereas if 635 00:30:35,040 --> 00:30:36,800 Speaker 2: they don't have that money then they might need to 636 00:30:36,800 --> 00:30:38,800 Speaker 2: be a lower right and so that you've got to 637 00:30:38,840 --> 00:30:41,680 Speaker 2: take all of that into consideration before making those decisions. 638 00:30:42,040 --> 00:30:44,120 Speaker 1: That's right. Well, that's called getting to know the market, 639 00:30:44,360 --> 00:30:46,480 Speaker 1: and the more you know, the better you will fare, 640 00:30:46,520 --> 00:30:48,880 Speaker 1: I imagine terrific. Hey, thanks Jared, love you to have 641 00:30:48,920 --> 00:30:49,640 Speaker 1: you on the show again. 642 00:30:50,000 --> 00:30:51,480 Speaker 2: Great to be Thanks very much, Jones. 643 00:30:52,120 --> 00:30:55,520 Speaker 1: That was Jared McCabe of the Weakland Property Advisory Group 644 00:30:55,600 --> 00:30:59,640 Speaker 1: buyer's advocate and always good on that issue of needless 645 00:30:59,640 --> 00:31:01,600 Speaker 1: to say, buying home. Some of the things I think 646 00:31:01,600 --> 00:31:05,480 Speaker 1: we cover there we haven't covered before. Very elementary, very useful. 647 00:31:05,520 --> 00:31:08,480 Speaker 1: I hope to you keep the emails rolling the money 648 00:31:08,520 --> 00:31:11,400 Speaker 1: puzzle at the Australian dot com dot au. Talk to 649 00:31:11,440 --> 00:31:11,800 Speaker 1: you soon.