1 00:00:07,133 --> 00:00:10,453 Speaker 1: You're listening to the Saturday Morning with Jack team podcast 2 00:00:10,613 --> 00:00:12,733 Speaker 1: from Newstalks. They'd be a. 3 00:00:12,813 --> 00:00:15,333 Speaker 2: Quarter to eleven non news talks. They'd be our money man. 4 00:00:15,453 --> 00:00:16,533 Speaker 2: Ed mcnut is in the house. 5 00:00:16,573 --> 00:00:17,933 Speaker 3: Go to Ed, get a jack. 6 00:00:18,093 --> 00:00:19,653 Speaker 2: I know a lot of people have been looking at 7 00:00:19,693 --> 00:00:22,613 Speaker 2: the OCI, keeping an eye on interest rates and thinking, oh, 8 00:00:22,973 --> 00:00:25,253 Speaker 2: maybe if the property market is going to start turning 9 00:00:25,293 --> 00:00:28,173 Speaker 2: sometime soon, it could be time to look at an 10 00:00:28,173 --> 00:00:30,973 Speaker 2: investment property. Do you reckon? That is a phenomenon that's 11 00:00:31,053 --> 00:00:31,893 Speaker 2: occurring right now. 12 00:00:32,813 --> 00:00:34,613 Speaker 3: I think there are a lot of people thinking about it, 13 00:00:34,693 --> 00:00:37,053 Speaker 3: and one of the reasons is because of that interplay 14 00:00:37,093 --> 00:00:40,253 Speaker 3: between interest rates and house prices. I think a lot 15 00:00:40,253 --> 00:00:43,173 Speaker 3: of people are saying, well, if interest rates are really 16 00:00:43,253 --> 00:00:46,853 Speaker 3: going to start plumbitting over the next year, maybe I 17 00:00:46,933 --> 00:00:49,573 Speaker 3: need to get in now, because then house prices might 18 00:00:49,613 --> 00:00:52,933 Speaker 3: go up. But then a really interesting question is, well, 19 00:00:52,973 --> 00:00:56,533 Speaker 3: if I'm the average news elender, how many investment properties? 20 00:00:56,773 --> 00:00:59,013 Speaker 3: If I want to buy rental properties, how many could 21 00:00:59,013 --> 00:01:01,813 Speaker 3: I potentially buy? And the trouble is, it's no use 22 00:01:01,853 --> 00:01:04,973 Speaker 3: looking at people who started investing twenty years ago or 23 00:01:05,053 --> 00:01:08,373 Speaker 3: thirty years ago and now own ten investment properties. For 24 00:01:08,493 --> 00:01:11,693 Speaker 3: five investment properties because the banks have changed all of 25 00:01:11,733 --> 00:01:15,653 Speaker 3: their lending rules. Twenty years ago, the Reserve Bank didn't 26 00:01:15,653 --> 00:01:19,373 Speaker 3: have LVR restrictions, they didn't have DTL restrictions. But of 27 00:01:19,373 --> 00:01:22,693 Speaker 3: course house prices are much more expensive these days, and 28 00:01:22,773 --> 00:01:25,093 Speaker 3: so this will kick started a little bit of a journey. 29 00:01:25,093 --> 00:01:29,053 Speaker 3: It's an interesting story where I started looking at people 30 00:01:29,053 --> 00:01:33,573 Speaker 3: who compete in Microsoft Excel competitions, because this is a 31 00:01:33,613 --> 00:01:36,813 Speaker 3: real thing, jackets, and it's an e sport these. 32 00:01:36,733 --> 00:01:38,213 Speaker 2: Days, and they're crazy how good they. 33 00:01:38,133 --> 00:01:41,693 Speaker 3: Are, ah and the good users. There are a number 34 00:01:41,733 --> 00:01:45,773 Speaker 3: of New Zealanders who actually do quite well in these competitions. 35 00:01:45,853 --> 00:01:48,573 Speaker 3: So I called one up and I said, well, could 36 00:01:48,653 --> 00:01:51,373 Speaker 3: you build their spreadsheet to kind of answer this based 37 00:01:51,373 --> 00:01:55,173 Speaker 3: on today's lending policy, all of the rules, today's house prices, 38 00:01:55,333 --> 00:01:58,333 Speaker 3: and of course house prices are getting more expensive, incomes 39 00:01:58,333 --> 00:02:00,373 Speaker 3: going up, all of these sorts of things. How many 40 00:02:00,413 --> 00:02:04,333 Speaker 3: investment properties could someone, say, earning eighty grand a year, 41 00:02:04,493 --> 00:02:06,893 Speaker 3: or a couple earning eighty grand a year, e how 42 00:02:06,893 --> 00:02:09,693 Speaker 3: many investment properties could they buy over the next fifteen years. 43 00:02:09,693 --> 00:02:12,293 Speaker 3: And it's quite fascinating. The answer is two to three 44 00:02:12,373 --> 00:02:16,973 Speaker 3: pretty comfortably over the next fifteen years. And the average income. 45 00:02:17,093 --> 00:02:19,533 Speaker 3: Average household income is about one hundred and sixty k 46 00:02:19,653 --> 00:02:21,573 Speaker 3: in Auckland, so that'd be pretty reasonable. 47 00:02:21,733 --> 00:02:23,733 Speaker 2: So I mean, okay, so just break us down a 48 00:02:23,773 --> 00:02:25,573 Speaker 2: couple of things. So is that assuming that they own 49 00:02:25,653 --> 00:02:26,693 Speaker 2: their house already. 50 00:02:27,613 --> 00:02:30,333 Speaker 3: Yeah, assuming you've got a house already, right, and that 51 00:02:30,413 --> 00:02:34,133 Speaker 3: you're not mortgaged totally up to the eyeballs. Right, if 52 00:02:34,173 --> 00:02:36,373 Speaker 3: you had the average house in New Zealand, which medium 53 00:02:36,373 --> 00:02:39,573 Speaker 3: sale price is seven hundred and seventy k, average mortgage 54 00:02:39,573 --> 00:02:41,973 Speaker 3: is actually quite surprisingly low. Jack, three hundred and nine 55 00:02:42,053 --> 00:02:44,173 Speaker 3: k is the average mortgage, right, And if you're on 56 00:02:44,253 --> 00:02:47,293 Speaker 3: the average household income in New Zealand two to three properties, 57 00:02:47,533 --> 00:02:50,053 Speaker 3: if your income's higher but higher than that, if your 58 00:02:50,093 --> 00:02:52,293 Speaker 3: mortgage is larger, then that number would be a little 59 00:02:52,333 --> 00:02:53,333 Speaker 3: bit smaller, right. 60 00:02:53,413 --> 00:02:56,773 Speaker 2: So, and that's presuming that the investment properties are the 61 00:02:57,293 --> 00:02:58,973 Speaker 2: average house price as well. 62 00:02:59,173 --> 00:03:01,773 Speaker 3: Well. In this case, I've actually gone for a slightly 63 00:03:01,813 --> 00:03:05,453 Speaker 3: lower figure. I'm starting out with the house past being 64 00:03:05,493 --> 00:03:07,853 Speaker 3: about five hundred fifty k, which would be a good 65 00:03:08,013 --> 00:03:12,133 Speaker 3: entry level investment property. Just bearing in mind that typically 66 00:03:12,413 --> 00:03:15,773 Speaker 3: property investors won't buy the average house price. They'll typically 67 00:03:16,253 --> 00:03:18,933 Speaker 3: buy something a little bit on the more affordable. 68 00:03:18,453 --> 00:03:22,573 Speaker 2: Side, right, okay, yeah, yeah, so and often if you know, 69 00:03:22,813 --> 00:03:26,213 Speaker 2: in our cities we're seeing much more intensification and things 70 00:03:26,293 --> 00:03:29,773 Speaker 2: that could mean a townhouse, an apartment something like that 71 00:03:29,813 --> 00:03:30,173 Speaker 2: as well. 72 00:03:30,853 --> 00:03:31,093 Speaker 3: Yeah. 73 00:03:31,173 --> 00:03:34,333 Speaker 2: Absolutely, Yeah, so that's quite interesting. I think, you know, 74 00:03:34,493 --> 00:03:36,253 Speaker 2: if you if you were to just ask a lot 75 00:03:36,253 --> 00:03:38,053 Speaker 2: of people, you know, pick some random person off the 76 00:03:38,093 --> 00:03:40,933 Speaker 2: street and said, looking at the average numbers across the board, 77 00:03:41,693 --> 00:03:44,813 Speaker 2: how many investment properties could you potentially invest in with 78 00:03:44,853 --> 00:03:46,813 Speaker 2: the settings as they are, I don't think people would 79 00:03:46,813 --> 00:03:48,253 Speaker 2: have said two to three. I think that would have 80 00:03:48,293 --> 00:03:49,813 Speaker 2: come as a bit of a surprise. But of course 81 00:03:49,853 --> 00:03:53,973 Speaker 2: that does take some financial and budgeting discipline. 82 00:03:53,573 --> 00:03:57,013 Speaker 3: Right, oh, absolutely, And it's assuming you doing the right 83 00:03:57,053 --> 00:03:59,653 Speaker 3: things at the right time, that you know you're not 84 00:03:59,733 --> 00:04:03,453 Speaker 3: having anythra baby than you already are right now. Because 85 00:04:03,493 --> 00:04:06,613 Speaker 3: if you're taking maternity or opportunity leave, that decrease is 86 00:04:06,613 --> 00:04:09,613 Speaker 3: your income. If you're taking out an extra higher purchase 87 00:04:09,653 --> 00:04:12,453 Speaker 3: at Harvey normatal bias the t set, that means you've 88 00:04:12,453 --> 00:04:14,973 Speaker 3: got more debt that's going to bring that number down slightly. 89 00:04:15,213 --> 00:04:16,973 Speaker 3: So there's a lot of assumptions in it, but it's 90 00:04:17,013 --> 00:04:20,253 Speaker 3: a pretty good ballpark to say well, what could I 91 00:04:20,453 --> 00:04:24,533 Speaker 3: actually do? And the other thing that's really difficult to forecast, 92 00:04:24,653 --> 00:04:26,533 Speaker 3: or had been in the past, was that if you 93 00:04:26,613 --> 00:04:30,813 Speaker 3: buy investment property over time, the house value is likely 94 00:04:30,853 --> 00:04:33,093 Speaker 3: to go up. On top of that, the rental income 95 00:04:33,173 --> 00:04:35,613 Speaker 3: is likely to go up, and those things help you 96 00:04:35,653 --> 00:04:39,413 Speaker 3: then purchase your next investment property, right, and so because 97 00:04:39,453 --> 00:04:42,653 Speaker 3: you get that compounding effect the more properties you own, 98 00:04:43,453 --> 00:04:45,413 Speaker 3: that in the past has been hard to see. 99 00:04:46,213 --> 00:04:47,893 Speaker 2: That's fascinating. How would you go in one of those 100 00:04:47,933 --> 00:04:50,173 Speaker 2: Excel competitions you can eat well? 101 00:04:50,253 --> 00:04:53,133 Speaker 3: To be honest, Jack, I have met in the match 102 00:04:53,173 --> 00:04:57,613 Speaker 3: with these guys. They are absolutely extraordinary. I would not 103 00:04:57,773 --> 00:04:59,893 Speaker 3: do too well. But one thing I have been doing 104 00:04:59,933 --> 00:05:02,173 Speaker 3: to get better is I talk a lot to my 105 00:05:02,253 --> 00:05:04,693 Speaker 3: new friend chat gpt to get it to right me 106 00:05:04,853 --> 00:05:05,973 Speaker 3: complex formulas. 107 00:05:07,013 --> 00:05:07,853 Speaker 1: That's very good. 108 00:05:08,133 --> 00:05:10,413 Speaker 2: I hadn't thought about using chat GPT for that. That's 109 00:05:10,533 --> 00:05:13,653 Speaker 2: very that's very smart. That's coming. Yeah. I can only 110 00:05:13,613 --> 00:05:17,093 Speaker 2: ever remember about two or three formulas when I'm using Excel, 111 00:05:17,173 --> 00:05:18,773 Speaker 2: you know, I always have to then go and google 112 00:05:18,773 --> 00:05:20,693 Speaker 2: it either, by which time I sort of defeated the 113 00:05:20,693 --> 00:05:24,053 Speaker 2: purpose of you know, using being efficient by having by 114 00:05:24,053 --> 00:05:26,613 Speaker 2: having a sweadsheet. But yeah, that's a great idea. 115 00:05:27,453 --> 00:05:29,653 Speaker 3: Yeah, go and use your chet GPT. Soon you'll be 116 00:05:29,733 --> 00:05:31,333 Speaker 3: one of these competitions as well. Cha. 117 00:05:31,453 --> 00:05:33,853 Speaker 2: I'm not too sure about that, but yeah, Hey, thank 118 00:05:33,893 --> 00:05:35,293 Speaker 2: you so much and you have a great weekend. 119 00:05:35,973 --> 00:05:36,613 Speaker 3: See you, Jack. 120 00:05:36,773 --> 00:05:38,493 Speaker 2: That is our money man ed McKnight. 121 00:05:39,093 --> 00:05:42,173 Speaker 1: For more from Saturday Morning with Jack Tame, listen live 122 00:05:42,293 --> 00:05:45,093 Speaker 1: to News talks ' B from nine am Saturday, or 123 00:05:45,173 --> 00:05:47,093 Speaker 1: follow the podcast on iHeartRadio.