1 00:00:00,240 --> 00:00:04,400 Speaker 1: She's on the Money. She's on the Money. 2 00:00:12,640 --> 00:00:14,800 Speaker 2: Hello, and welcome to She Is on the Money, the 3 00:00:14,840 --> 00:00:17,080 Speaker 2: podcast for millennials who want financial freedom. 4 00:00:17,239 --> 00:00:18,120 Speaker 1: Today's episode of. 5 00:00:18,040 --> 00:00:20,120 Speaker 2: The show is brought to you by Upbank, the digital 6 00:00:20,160 --> 00:00:22,360 Speaker 2: bank designed to help you organize your money and simplify 7 00:00:22,400 --> 00:00:24,840 Speaker 2: your life. As regular listeners to the show would know, 8 00:00:24,960 --> 00:00:27,640 Speaker 2: my name is Georgia King, a twenty something with stacks 9 00:00:27,680 --> 00:00:28,639 Speaker 2: to learn when it comes. 10 00:00:28,440 --> 00:00:29,680 Speaker 1: To navigating cash. 11 00:00:29,800 --> 00:00:32,159 Speaker 2: To help me find some answers for the very last 12 00:00:32,200 --> 00:00:36,040 Speaker 2: episode of season two, we back soon, though, guys, don't worry. 13 00:00:36,200 --> 00:00:40,120 Speaker 2: I am joined as always by millennial money expert Miss Victoria. 14 00:00:39,720 --> 00:00:41,680 Speaker 3: To Fine Hello, Hello friends. 15 00:00:41,920 --> 00:00:43,839 Speaker 2: Now today on the show, we are going to be 16 00:00:43,880 --> 00:00:46,960 Speaker 2: talking about rent investing, which puts simply, is the choice 17 00:00:46,960 --> 00:00:50,000 Speaker 2: to invest in a property somewhere while renting somewhere else 18 00:00:50,360 --> 00:00:52,400 Speaker 2: instead of the more traditional trend of buying property is 19 00:00:52,400 --> 00:00:54,120 Speaker 2: your big investment and then living in it. Before we 20 00:00:54,200 --> 00:00:56,920 Speaker 2: do dive deep into today's topic, though, Victoria, let's chat 21 00:00:56,960 --> 00:00:58,920 Speaker 2: our own money wins, money confessions. 22 00:00:58,920 --> 00:00:59,960 Speaker 1: How did you go this week? 23 00:01:00,280 --> 00:01:04,160 Speaker 3: I have a money win that I am silly levels 24 00:01:04,200 --> 00:01:07,080 Speaker 3: of excited about it that no one else is going 25 00:01:07,120 --> 00:01:10,240 Speaker 3: to care about, So share with us on season one. 26 00:01:10,360 --> 00:01:12,600 Speaker 3: I talk to you guys about how much I love 27 00:01:12,680 --> 00:01:16,840 Speaker 3: my pantry and I have these beautiful containers. You've probably 28 00:01:16,840 --> 00:01:20,280 Speaker 3: seen the picture on our Facebook group. Have beautiful containers 29 00:01:20,400 --> 00:01:23,800 Speaker 3: really well, like I'm the queen. Yeah, look calm down, 30 00:01:25,240 --> 00:01:29,200 Speaker 3: i am the Queen of the spice rack. And recently 31 00:01:29,280 --> 00:01:31,560 Speaker 3: I have been looking to make sure that all my 32 00:01:31,640 --> 00:01:34,560 Speaker 3: oil bottles match, because that is not a sign of 33 00:01:34,600 --> 00:01:38,160 Speaker 3: having OCD at all. So I found some oil bottles 34 00:01:38,160 --> 00:01:40,680 Speaker 3: that I really like. They are beautiful, they are well designed, 35 00:01:40,680 --> 00:01:43,240 Speaker 3: but they are eighty dollars each on the internet and 36 00:01:43,280 --> 00:01:45,320 Speaker 3: I am not having it. It is not an option. 37 00:01:45,760 --> 00:01:48,480 Speaker 3: But I still really like the design of them. So 38 00:01:48,720 --> 00:01:51,720 Speaker 3: I went onto Ali Express this week and I have 39 00:01:51,920 --> 00:01:55,480 Speaker 3: ordered them all for fifteen dollars each instead of eighty 40 00:01:55,520 --> 00:01:57,800 Speaker 3: dollars per bttle. That's a pretty good deal. 41 00:01:57,840 --> 00:02:00,120 Speaker 1: Still seems expensive to me for an oil bottle, butt. 42 00:02:00,880 --> 00:02:03,720 Speaker 3: It is, it's a ridiculous amount. I bought six of them. 43 00:02:03,840 --> 00:02:07,480 Speaker 3: I will probably post photos once I've labeled them, and 44 00:02:07,880 --> 00:02:09,920 Speaker 3: for me, I feel like that's a money win. But 45 00:02:09,960 --> 00:02:12,079 Speaker 3: it also could be a money loss because I've never 46 00:02:12,200 --> 00:02:16,120 Speaker 3: ordered something off Ali Express, so who knows. It's Ali Express. 47 00:02:16,800 --> 00:02:19,920 Speaker 3: It looked good. It's just a website. They ship directly 48 00:02:19,960 --> 00:02:22,840 Speaker 3: from China, no judgment, But what if it doesn't arrive? 49 00:02:23,160 --> 00:02:26,520 Speaker 3: I might have a money loss for you next season anyway. 50 00:02:26,800 --> 00:02:29,320 Speaker 3: Oil bottles. I know no one's as excited about that 51 00:02:29,400 --> 00:02:31,480 Speaker 3: as me, but I don't particularly mind. 52 00:02:31,480 --> 00:02:33,359 Speaker 1: I think that means you're an adult now like that? 53 00:02:33,520 --> 00:02:33,760 Speaker 3: Does it? 54 00:02:34,480 --> 00:02:37,160 Speaker 2: Like when you're starting to be interested in homewares and 55 00:02:37,760 --> 00:02:39,280 Speaker 2: towels and oil bottles. 56 00:02:39,320 --> 00:02:41,799 Speaker 3: That's in vacuums. I'm looking for a vacuum right now? 57 00:02:41,960 --> 00:02:47,040 Speaker 3: Or recommendations welcome anyway? Exciting guys, if you are still 58 00:02:47,080 --> 00:02:49,440 Speaker 3: listening to the show after all of that, Georgia King, 59 00:02:49,520 --> 00:02:51,480 Speaker 3: do you have a money win or confession that you'd 60 00:02:51,600 --> 00:02:53,600 Speaker 3: like to share that isn't as dry as mine? 61 00:02:53,639 --> 00:02:55,560 Speaker 2: Mine is a win, and it's not a dry one. 62 00:02:56,160 --> 00:02:58,760 Speaker 2: I recently went to the Great Ocean Road with my 63 00:02:58,880 --> 00:03:00,079 Speaker 2: boyfriend for a little. 64 00:02:59,840 --> 00:03:04,120 Speaker 3: Bit dayeh, boy boy, and. 65 00:03:04,200 --> 00:03:07,640 Speaker 2: Instead of staying in a ritzy hotel, we decided to camp. 66 00:03:07,960 --> 00:03:10,960 Speaker 2: Found beautiful a free camp site in like the hinterland, 67 00:03:11,280 --> 00:03:14,040 Speaker 2: so gorgeous. Didn't spend a cent except for on food 68 00:03:14,080 --> 00:03:15,760 Speaker 2: and petrol and stuff like that, but. 69 00:03:15,720 --> 00:03:17,040 Speaker 1: Not on age, not on accommodation. 70 00:03:17,200 --> 00:03:18,799 Speaker 2: So we saved that and shout out to my friend 71 00:03:18,800 --> 00:03:20,960 Speaker 2: Lily Pope who recommended that to me. 72 00:03:21,200 --> 00:03:22,120 Speaker 1: So what a. 73 00:03:22,120 --> 00:03:24,720 Speaker 3: Delightful human being. I love it. 74 00:03:25,040 --> 00:03:27,400 Speaker 2: Okay, So now let's take a quick look at the 75 00:03:27,520 --> 00:03:30,440 Speaker 2: Facebook community, which was impressive, as it literally always is 76 00:03:30,520 --> 00:03:31,280 Speaker 2: week on week. 77 00:03:32,040 --> 00:03:33,600 Speaker 1: The witch post stood out. 78 00:03:33,520 --> 00:03:37,040 Speaker 3: To you, okay, So I have one from Rebecca, who 79 00:03:37,160 --> 00:03:40,800 Speaker 3: I love. It is hilarious. She says money win, but 80 00:03:40,840 --> 00:03:42,880 Speaker 3: I would really have thought it was funny if she 81 00:03:42,960 --> 00:03:45,720 Speaker 3: put like honey wind, because it totally is about honey, 82 00:03:45,760 --> 00:03:48,680 Speaker 3: and that's honey. Anyway, She said, my mum and I 83 00:03:48,720 --> 00:03:52,080 Speaker 3: have been beekeeping for about a year, and today, quite dramatically, 84 00:03:52,160 --> 00:03:54,920 Speaker 3: she found out she was allergic to bees. On the 85 00:03:54,960 --> 00:03:57,520 Speaker 3: plus side, she said, we sold our first two kilos 86 00:03:57,520 --> 00:04:00,200 Speaker 3: of honey to the nurses in emergency, therefore making our 87 00:04:00,240 --> 00:04:03,240 Speaker 3: first money win with our b slash honey business. And 88 00:04:03,360 --> 00:04:06,600 Speaker 3: she posted a really cute photo of her with two 89 00:04:06,800 --> 00:04:09,760 Speaker 3: jars of honey, but also a swollen shut eye, and 90 00:04:10,000 --> 00:04:13,640 Speaker 3: I feel like that's maybe a loss, but she also 91 00:04:13,720 --> 00:04:16,479 Speaker 3: made the first sale in her small business. So he's 92 00:04:16,640 --> 00:04:19,520 Speaker 3: to Rebecca and her honey business. I love it. What 93 00:04:19,640 --> 00:04:21,320 Speaker 3: have you got for me jk okay. 94 00:04:21,080 --> 00:04:23,440 Speaker 2: So mine is from a Sunky who has written in 95 00:04:23,560 --> 00:04:26,080 Speaker 2: money Win was paying near five dollars for a packet 96 00:04:26,080 --> 00:04:28,000 Speaker 2: of bliss balls and going through about two to three 97 00:04:28,000 --> 00:04:31,960 Speaker 2: packets a week. Me yops, we've all been there. Decided 98 00:04:32,000 --> 00:04:33,799 Speaker 2: to make these at home and it took me fifteen 99 00:04:33,800 --> 00:04:35,839 Speaker 2: minutes to make. They taste even more delicious than the 100 00:04:35,839 --> 00:04:39,160 Speaker 2: store board ones. They're plastic free, saving money, saving the environment. 101 00:04:39,279 --> 00:04:42,000 Speaker 2: They're also vegan friendly and healthy. She then posted the 102 00:04:42,000 --> 00:04:44,240 Speaker 2: recipe as well as a photo of some delicious looking 103 00:04:44,240 --> 00:04:45,240 Speaker 2: protein balls there as well. 104 00:04:45,360 --> 00:04:47,960 Speaker 3: Awesome Georgia dish used any emojis. 105 00:04:47,680 --> 00:04:49,520 Speaker 1: She did, Sorry, she used several emojis. 106 00:04:49,600 --> 00:04:52,039 Speaker 2: Let me just talk you through them. There were four 107 00:04:52,120 --> 00:04:54,320 Speaker 2: with the big teeth like a big grin. 108 00:04:54,600 --> 00:04:57,520 Speaker 3: Beautiful, beautiful, and they're important to visualize these exactly. 109 00:04:57,520 --> 00:04:59,520 Speaker 2: There's also two more of those and then a wink face. 110 00:04:59,560 --> 00:05:01,640 Speaker 2: I think quite small, so it might not be a 111 00:05:01,680 --> 00:05:02,360 Speaker 2: wink face, but I'm. 112 00:05:02,240 --> 00:05:04,000 Speaker 3: Appreciate it's go with a wing pase. Should we move 113 00:05:04,040 --> 00:05:07,120 Speaker 3: on V We should absolutely move on today's wild. 114 00:05:10,600 --> 00:05:13,839 Speaker 2: And now into the main part of today's show, rent Festing. Now, 115 00:05:13,880 --> 00:05:16,359 Speaker 2: it's no secret that the property market in Australia is 116 00:05:16,400 --> 00:05:18,560 Speaker 2: a tough cookie to craft, with the average home price 117 00:05:18,600 --> 00:05:21,160 Speaker 2: in Sydney just shy of one million dollars at nine 118 00:05:21,240 --> 00:05:24,000 Speaker 2: hundred and fifty five thousand dollars right now in Melbourne 119 00:05:24,000 --> 00:05:26,200 Speaker 2: the median price is seven hundred and thirty seven thousand, 120 00:05:26,200 --> 00:05:26,719 Speaker 2: which we're. 121 00:05:26,560 --> 00:05:28,560 Speaker 3: A little bit more reasonable down a low Melbourn a. 122 00:05:28,520 --> 00:05:31,279 Speaker 2: Little bit, still little bit. That still seems astronomical to me. 123 00:05:31,440 --> 00:05:34,200 Speaker 2: So even the millennials refusing Avalon toast and opting instead 124 00:05:34,240 --> 00:05:36,880 Speaker 2: for Bland Breckeys are battling to break in and the 125 00:05:36,920 --> 00:05:39,320 Speaker 2: old Australian dream of owning our own home seems like 126 00:05:39,320 --> 00:05:41,159 Speaker 2: it's only getting a further and further out of each 127 00:05:41,760 --> 00:05:45,280 Speaker 2: So what are our alternatives? Some say that rent festing 128 00:05:45,360 --> 00:05:47,440 Speaker 2: is the way to go, That is renting in the 129 00:05:47,440 --> 00:05:49,440 Speaker 2: suburb you want to live in while buying a home 130 00:05:49,480 --> 00:05:52,080 Speaker 2: in a more affordable location, perhaps a little further out, 131 00:05:52,120 --> 00:05:56,000 Speaker 2: and using that property as your investment Victoria. Firstly, is 132 00:05:56,080 --> 00:05:58,839 Speaker 2: rent festing something we should actually be considering? And why 133 00:05:58,839 --> 00:06:01,080 Speaker 2: do you think so many millennials are using this strategy 134 00:06:01,120 --> 00:06:02,440 Speaker 2: to break into the property market. 135 00:06:02,760 --> 00:06:06,120 Speaker 3: I love this strategy because I feel like everyone that 136 00:06:06,200 --> 00:06:08,600 Speaker 3: I talk to after we've had a really good discussion 137 00:06:08,640 --> 00:06:11,400 Speaker 3: about investment and they have decided that property is the 138 00:06:11,440 --> 00:06:15,560 Speaker 3: asset class they want to be investing in. Rentvesting allows 139 00:06:15,600 --> 00:06:19,000 Speaker 3: you to buy a property in a location that has 140 00:06:19,120 --> 00:06:22,640 Speaker 3: good capital growth, good rental yield and the ability to 141 00:06:22,720 --> 00:06:26,720 Speaker 3: create wealth while still living in an area that gives 142 00:06:26,760 --> 00:06:29,600 Speaker 3: you the lifestyle you want. So, for example, we live 143 00:06:29,680 --> 00:06:32,320 Speaker 3: here in Melbourne and I have a couple of clients 144 00:06:32,360 --> 00:06:35,359 Speaker 3: who live in apartments in Peran. They couldn't afford to 145 00:06:35,360 --> 00:06:37,760 Speaker 3: buy in Peran, so they've bought a little bit further out, 146 00:06:37,839 --> 00:06:41,120 Speaker 3: they rent those properties out and they still get the 147 00:06:41,120 --> 00:06:44,080 Speaker 3: lifestyle that they want at this point in time, and 148 00:06:44,120 --> 00:06:47,000 Speaker 3: a lot of the time, rent investing is a great 149 00:06:47,080 --> 00:06:50,080 Speaker 3: idea because it turns a property that you purchase from 150 00:06:50,160 --> 00:06:54,640 Speaker 3: an owner occupier asset to an investment asset, which means 151 00:06:54,680 --> 00:06:57,719 Speaker 3: you can now claim tax on that asset and it 152 00:06:57,760 --> 00:07:00,480 Speaker 3: becomes a little bit more of a sexy option when 153 00:07:00,520 --> 00:07:03,360 Speaker 3: it comes to returns. So whilst there are a whole 154 00:07:03,400 --> 00:07:06,359 Speaker 3: heap of different rules and regulations, such as living in 155 00:07:06,400 --> 00:07:08,479 Speaker 3: the asset for the first year so that you can 156 00:07:08,760 --> 00:07:11,480 Speaker 3: get some concessions on capital gains and then moving out. 157 00:07:11,520 --> 00:07:13,680 Speaker 3: There are a lot of moving parts to this, but 158 00:07:13,760 --> 00:07:16,800 Speaker 3: at the end of the day, rent vesting is essentially 159 00:07:16,840 --> 00:07:19,560 Speaker 3: where you purchase a property that you do not live 160 00:07:19,600 --> 00:07:23,320 Speaker 3: in that has a rental yield. You take that rental yield. 161 00:07:23,360 --> 00:07:25,520 Speaker 3: For example, if someone was paying you three hundred and 162 00:07:25,560 --> 00:07:29,240 Speaker 3: fifty dollars in rent each week at the property you own, 163 00:07:29,640 --> 00:07:32,360 Speaker 3: you then go and spend that three hundred and fifty 164 00:07:32,360 --> 00:07:35,360 Speaker 3: dollars on renting the apartment or property that you want 165 00:07:35,400 --> 00:07:37,120 Speaker 3: to live in the area that you want to live in, 166 00:07:37,520 --> 00:07:40,600 Speaker 3: and you then go and pay the mortgage. But you're 167 00:07:40,640 --> 00:07:44,480 Speaker 3: getting a tax deduction on that mortgage. Therefore you're able 168 00:07:44,520 --> 00:07:47,480 Speaker 3: to pay it off faster as well. So there's a 169 00:07:47,560 --> 00:07:50,920 Speaker 3: number of benefits to rent vesting that aren't just I'm 170 00:07:50,960 --> 00:07:53,760 Speaker 3: not living in the property, so there are tax benefits 171 00:07:53,760 --> 00:07:57,320 Speaker 3: associated with it, there are lifestyle benefits associated with it, 172 00:07:57,560 --> 00:08:00,600 Speaker 3: and also the ability to pay off a mortgagehag faster, 173 00:08:00,720 --> 00:08:04,200 Speaker 3: which to me is really important because it does two things. One, 174 00:08:04,280 --> 00:08:06,520 Speaker 3: getting out of debt is priority to me and making 175 00:08:06,600 --> 00:08:09,160 Speaker 3: sure that we don't have assets that cost us money. 176 00:08:09,560 --> 00:08:12,960 Speaker 3: But two, the faster we're paying off a mortgage, the 177 00:08:13,040 --> 00:08:16,280 Speaker 3: faster we have access to what is called equity, and 178 00:08:16,400 --> 00:08:20,880 Speaker 3: equity allows us to build other assets. So it allows 179 00:08:20,960 --> 00:08:23,880 Speaker 3: us to leverage to purchase another asset if that is 180 00:08:23,920 --> 00:08:25,000 Speaker 3: what we wish to do. 181 00:08:25,160 --> 00:08:26,960 Speaker 1: So would that be like buying another house, Well. 182 00:08:26,760 --> 00:08:29,280 Speaker 3: It could be buying another house, It could be you 183 00:08:29,440 --> 00:08:32,600 Speaker 3: purchasing a property because it is a really good asset 184 00:08:32,720 --> 00:08:36,280 Speaker 3: in a well diversified investment portfolio, so that you can 185 00:08:36,320 --> 00:08:38,400 Speaker 3: then go and buy some shares and you've got your 186 00:08:38,440 --> 00:08:40,880 Speaker 3: rent covered so that you're in a position where you 187 00:08:40,960 --> 00:08:43,640 Speaker 3: are making the most of the income that's coming in. 188 00:08:44,000 --> 00:08:46,880 Speaker 3: So rentvesting isn't for everyone, but it's a really good 189 00:08:46,920 --> 00:08:50,040 Speaker 3: conversation to have because now that we are in a 190 00:08:50,080 --> 00:08:52,439 Speaker 3: position where the average house price here in Melbourne is 191 00:08:52,480 --> 00:08:55,920 Speaker 3: seven hundred and thirty seven thousand dollars and in Sydney 192 00:08:55,960 --> 00:08:59,640 Speaker 3: it's nine hundred and fifty five thousand dollars, those numbers 193 00:08:59,679 --> 00:09:04,480 Speaker 3: are incredibly hard and very very unrealistic for most first 194 00:09:04,559 --> 00:09:07,800 Speaker 3: home buyers. So we need to look at other assets 195 00:09:07,880 --> 00:09:10,680 Speaker 3: that we can invest in in the interim before we 196 00:09:10,720 --> 00:09:14,040 Speaker 3: are actually able to buy our family home. The Australian 197 00:09:14,120 --> 00:09:18,240 Speaker 3: dream over the last fifty years, fifty plus years, let's 198 00:09:18,240 --> 00:09:21,880 Speaker 3: call it forever has always been to buy your family home, 199 00:09:22,240 --> 00:09:24,840 Speaker 3: live in it, pay it completely off, and that is 200 00:09:24,880 --> 00:09:28,199 Speaker 3: what we've all worked towards. But now it is not 201 00:09:28,320 --> 00:09:31,520 Speaker 3: financially viable for most of us to actually own the 202 00:09:31,559 --> 00:09:34,480 Speaker 3: property that we live in. So renvesting gives us the 203 00:09:34,559 --> 00:09:37,640 Speaker 3: ability to purchase a property that is going to help 204 00:09:37,720 --> 00:09:40,880 Speaker 3: us create future wealth while also giving us the ability 205 00:09:40,920 --> 00:09:43,319 Speaker 3: to live the lifestyle that we want to live right now, 206 00:09:43,600 --> 00:09:46,640 Speaker 3: because historically, let's call it, our parents were able to 207 00:09:46,640 --> 00:09:48,720 Speaker 3: buy a property that they could move into and afford 208 00:09:48,760 --> 00:09:51,880 Speaker 3: and pay off, whereas we don't have that grace. I 209 00:09:51,920 --> 00:09:53,880 Speaker 3: know if I look at myself, I live in the 210 00:09:53,920 --> 00:09:57,720 Speaker 3: inner eastern suburbs of Melbourne. The prices of properties there 211 00:09:57,760 --> 00:10:02,000 Speaker 3: are insane and there is abs no way that myself, 212 00:10:02,040 --> 00:10:04,400 Speaker 3: included as a first home buyer, will be able to 213 00:10:04,400 --> 00:10:07,719 Speaker 3: buy a property in that location and to have it 214 00:10:07,760 --> 00:10:10,640 Speaker 3: be my dream property. So I think that it is 215 00:10:10,679 --> 00:10:14,160 Speaker 3: a really important thing that we actually reiterate here is 216 00:10:14,200 --> 00:10:17,040 Speaker 3: that first home buyers are now not able to purchase 217 00:10:17,080 --> 00:10:19,600 Speaker 3: their dream property as their first property. 218 00:10:19,880 --> 00:10:22,080 Speaker 2: So we've spoken about using this strategy to get our 219 00:10:22,120 --> 00:10:23,320 Speaker 2: foot into the property market. 220 00:10:23,480 --> 00:10:23,800 Speaker 3: Door. 221 00:10:24,080 --> 00:10:26,560 Speaker 2: Would you say people are mainly using rent vesting as 222 00:10:26,640 --> 00:10:28,959 Speaker 2: a stepping stone to eventually getting their dream. 223 00:10:29,040 --> 00:10:30,880 Speaker 3: A lot of people talk about rent vesting because you 224 00:10:30,880 --> 00:10:33,400 Speaker 3: can get into property now. I think we really need 225 00:10:33,440 --> 00:10:36,200 Speaker 3: to be thinking about the long term strategy. And an 226 00:10:36,240 --> 00:10:38,960 Speaker 3: important thing when it comes to property for me is 227 00:10:39,000 --> 00:10:42,000 Speaker 3: that we take the emotion out of the investment. Too 228 00:10:42,120 --> 00:10:44,679 Speaker 3: often do I see people coming in to talk about 229 00:10:44,679 --> 00:10:46,920 Speaker 3: property with us and they're like, I really just want 230 00:10:46,960 --> 00:10:49,560 Speaker 3: to buy my perfect home, and it's like, okay, cool. 231 00:10:49,600 --> 00:10:52,400 Speaker 3: So this is an emotionally driven purchase, and to me, 232 00:10:52,679 --> 00:10:54,959 Speaker 3: we can't have that because you are going to make 233 00:10:55,000 --> 00:10:57,360 Speaker 3: a decision that is not going to be in the 234 00:10:57,360 --> 00:11:00,600 Speaker 3: best interests of long term you. Yes, you might get 235 00:11:00,600 --> 00:11:03,360 Speaker 3: your white picket fence and you might get the perfect 236 00:11:03,440 --> 00:11:07,120 Speaker 3: front door, but does that actually help you generate wealth 237 00:11:07,200 --> 00:11:10,480 Speaker 3: over the long term. So yes, some people are using 238 00:11:10,559 --> 00:11:13,320 Speaker 3: rent vesting as a way to get their foot in 239 00:11:13,400 --> 00:11:16,560 Speaker 3: the property market, or they are purchasing a lower value 240 00:11:16,559 --> 00:11:19,439 Speaker 3: property the property is increasing in value and then they 241 00:11:19,440 --> 00:11:22,280 Speaker 3: are either selling that property so that they are able 242 00:11:22,320 --> 00:11:25,400 Speaker 3: to then buy what we deem their dream home. Or 243 00:11:25,440 --> 00:11:28,360 Speaker 3: there are a lot of people who are purchasing properties 244 00:11:28,400 --> 00:11:31,440 Speaker 3: to rent vest They're paying interest only on their loans, 245 00:11:31,840 --> 00:11:35,200 Speaker 3: and they are purchasing more properties with the goal of 246 00:11:35,880 --> 00:11:39,720 Speaker 3: having the rental yield as an income source. So a 247 00:11:39,720 --> 00:11:41,920 Speaker 3: lot of people, and I'm not saying that this is 248 00:11:42,040 --> 00:11:44,320 Speaker 3: right or wrong. It is just a strategy that we 249 00:11:44,360 --> 00:11:46,640 Speaker 3: are having a chat about. A lot of people are 250 00:11:46,679 --> 00:11:50,440 Speaker 3: purchasing property with the intention of gaining the rental yield 251 00:11:50,640 --> 00:11:56,120 Speaker 3: and creating a property portfolio that sustains their that sustains 252 00:11:56,160 --> 00:11:59,440 Speaker 3: their living expenses, and that could happen for their entire life. 253 00:11:59,559 --> 00:12:03,160 Speaker 3: So they might create a property portfolio that returns enough 254 00:12:03,240 --> 00:12:05,800 Speaker 3: to pay off all of the mortgages or pay the 255 00:12:05,840 --> 00:12:08,679 Speaker 3: minimum on their interest only loans, as well as me 256 00:12:08,960 --> 00:12:12,320 Speaker 3: their daily and monthly money needs. So I think it's 257 00:12:12,320 --> 00:12:14,520 Speaker 3: important to see that there are a number of different 258 00:12:14,600 --> 00:12:17,839 Speaker 3: reasons we would rent vest but the reason we are 259 00:12:17,880 --> 00:12:20,480 Speaker 3: rent vesting is going to be personal to us. So 260 00:12:20,720 --> 00:12:23,240 Speaker 3: a good example of this is, let's use me as 261 00:12:23,280 --> 00:12:26,080 Speaker 3: an example. I would love to purchase in the area 262 00:12:26,120 --> 00:12:28,960 Speaker 3: that I live. I can't afford it, So I might 263 00:12:29,000 --> 00:12:31,560 Speaker 3: go and purchase a property in an area that I 264 00:12:31,600 --> 00:12:34,560 Speaker 3: can afford that I believe is going to have really 265 00:12:34,600 --> 00:12:38,040 Speaker 3: good capital growth, really good rental yield, I'm not purchasing 266 00:12:38,040 --> 00:12:40,280 Speaker 3: a property that I'm in love with. I'm purchasing a 267 00:12:40,320 --> 00:12:44,440 Speaker 3: property that is a good financial decision, and I am 268 00:12:44,559 --> 00:12:47,200 Speaker 3: waiting for that capital growth to kick in and me 269 00:12:47,360 --> 00:12:50,240 Speaker 3: to have an asset that enables me to purchase the 270 00:12:50,240 --> 00:12:52,559 Speaker 3: home that I would like. It is not the only 271 00:12:52,600 --> 00:12:55,720 Speaker 3: wealth creation strategy that exists. There are a lot of them, 272 00:12:56,240 --> 00:12:59,040 Speaker 3: but it is one that you can use to leverage it. 273 00:12:59,360 --> 00:13:01,640 Speaker 3: But it's not going to take twelve months. We know 274 00:13:01,720 --> 00:13:04,760 Speaker 3: that property takes about ten years to double in value. 275 00:13:05,160 --> 00:13:07,200 Speaker 3: So this, as much as it seems like a really 276 00:13:07,240 --> 00:13:09,520 Speaker 3: quick fix, because a lot of the articles and the 277 00:13:09,559 --> 00:13:12,720 Speaker 3: communications that are out there about rent vesting make it 278 00:13:12,760 --> 00:13:14,840 Speaker 3: seem as though you can get into your dream property 279 00:13:14,840 --> 00:13:18,520 Speaker 3: faster using rent vesting, it's actually a little bit of 280 00:13:18,559 --> 00:13:20,800 Speaker 3: a myth because you still have to wait for that 281 00:13:20,840 --> 00:13:23,680 Speaker 3: capital growth to happen. You still have to be paying 282 00:13:23,679 --> 00:13:26,480 Speaker 3: off a mortgage, you still have a really large financial 283 00:13:26,520 --> 00:13:29,640 Speaker 3: commitment that you need to consider whether is actually going 284 00:13:29,679 --> 00:13:31,840 Speaker 3: to help you create wealth in the way that you 285 00:13:31,880 --> 00:13:33,240 Speaker 3: want in the timeframe that you have. 286 00:13:33,480 --> 00:13:35,959 Speaker 2: So I'm rent vesting, Victoria. Can I just move into 287 00:13:36,040 --> 00:13:37,320 Speaker 2: that property whenever I want to? 288 00:13:37,480 --> 00:13:41,040 Speaker 3: Technically guess because legally you can kick your tenants out 289 00:13:41,400 --> 00:13:43,679 Speaker 3: and you can move in as the owner to become 290 00:13:43,760 --> 00:13:46,240 Speaker 3: owner occupier. There are a number of things that you 291 00:13:46,320 --> 00:13:49,600 Speaker 3: need to take into consideration when making that decision, though, Ye, 292 00:13:49,840 --> 00:13:52,839 Speaker 3: because if you switch from being an investment to an 293 00:13:52,880 --> 00:13:55,800 Speaker 3: owner occupier, you are now not able to claim it 294 00:13:55,840 --> 00:13:59,280 Speaker 3: on tax. Things are going to increase, and there is 295 00:13:59,320 --> 00:14:02,520 Speaker 3: a very large probability that you cannot afford to live 296 00:14:02,520 --> 00:14:06,160 Speaker 3: in that property. So I have clients where we have said, look, 297 00:14:06,240 --> 00:14:08,959 Speaker 3: you can buy the property that you really want to buy, 298 00:14:09,320 --> 00:14:12,120 Speaker 3: but you cannot move into it until you've paid a 299 00:14:12,160 --> 00:14:15,680 Speaker 3: specific amount off your mortgage, so that we have debt 300 00:14:15,720 --> 00:14:19,120 Speaker 3: repayments that are really manageable once you move in, So 301 00:14:19,280 --> 00:14:23,640 Speaker 3: more often than not, your debt repayments will increase because 302 00:14:23,640 --> 00:14:26,880 Speaker 3: you no longer get those tax deductions on that property 303 00:14:27,360 --> 00:14:28,000 Speaker 3: if you move in. 304 00:14:28,120 --> 00:14:30,440 Speaker 1: Now we all know that rent money is dead money. 305 00:14:30,560 --> 00:14:32,960 Speaker 2: No, we do not, g king, well, is that a 306 00:14:33,000 --> 00:14:33,800 Speaker 2: thing in this case? 307 00:14:33,880 --> 00:14:34,280 Speaker 3: Is it a thing? 308 00:14:34,320 --> 00:14:34,640 Speaker 1: Generally? 309 00:14:34,640 --> 00:14:38,119 Speaker 3: You need to stop saying things wildly inaccurate on this podcast. 310 00:14:38,640 --> 00:14:40,720 Speaker 1: Look, expert, well, I try to be. 311 00:14:41,040 --> 00:14:44,080 Speaker 3: You don't help me know, so I think that rent 312 00:14:44,080 --> 00:14:48,120 Speaker 3: money is dead money. Is such an outdated concept that 313 00:14:48,280 --> 00:14:51,760 Speaker 3: never existed to begin with. Like, paying rent to me 314 00:14:52,040 --> 00:14:54,960 Speaker 3: is paying for a lifestyle, and if that is of 315 00:14:55,040 --> 00:14:58,240 Speaker 3: value to you, then pay more on rent. I know 316 00:14:58,360 --> 00:15:00,400 Speaker 3: people and have clients who say, no, oh, I don't 317 00:15:00,440 --> 00:15:02,040 Speaker 3: really want to spend a lot on rent, so I'm 318 00:15:02,040 --> 00:15:04,240 Speaker 3: just going to rent this place. It does the job. 319 00:15:04,280 --> 00:15:06,920 Speaker 3: It's a place that I have that I live, and 320 00:15:07,120 --> 00:15:09,680 Speaker 3: I'm going to spend all my money on entertainment, Whereas 321 00:15:09,760 --> 00:15:12,280 Speaker 3: the opposite is true for a lot of my other clients, 322 00:15:12,320 --> 00:15:13,960 Speaker 3: where they say, no, I really want to have a 323 00:15:13,960 --> 00:15:16,880 Speaker 3: beautiful home that I love living in. I entertain at 324 00:15:16,880 --> 00:15:19,400 Speaker 3: home a lot, and that's their values. So it all 325 00:15:19,440 --> 00:15:22,800 Speaker 3: comes back to values. But rent money is not dead 326 00:15:22,880 --> 00:15:25,440 Speaker 3: money if you're getting something out of it, so if 327 00:15:25,480 --> 00:15:28,840 Speaker 3: you're getting the lifestyle that you want, or you're investing 328 00:15:28,880 --> 00:15:33,320 Speaker 3: your money elsewhere. So mortgages are really expensive, and I 329 00:15:33,400 --> 00:15:36,640 Speaker 3: won't be breaking any news here to you. Everybody knows that. 330 00:15:37,000 --> 00:15:39,560 Speaker 3: But more often than not, a mortgage is really expensive. 331 00:15:39,800 --> 00:15:42,560 Speaker 3: So to live in the property that you own can 332 00:15:42,680 --> 00:15:45,920 Speaker 3: often be just out of the question, especially in the 333 00:15:45,960 --> 00:15:49,120 Speaker 3: area that you want to live. So paying rent enables 334 00:15:49,160 --> 00:15:52,480 Speaker 3: you to invest the surplus cash that you have in 335 00:15:52,520 --> 00:15:55,960 Speaker 3: another place, so you can create wealth while you're paying 336 00:15:56,040 --> 00:15:58,320 Speaker 3: money to have a roof of your head. At the 337 00:15:58,440 --> 00:16:00,560 Speaker 3: end of the day, I think rent my is dead. 338 00:16:00,600 --> 00:16:03,440 Speaker 3: Money is a really terrible saying, because we all need 339 00:16:03,480 --> 00:16:06,880 Speaker 3: somewhere to live, literally, and paying rent is a part 340 00:16:06,880 --> 00:16:09,920 Speaker 3: of that. It is an essential. So it's like saying, oh, 341 00:16:10,120 --> 00:16:13,040 Speaker 3: spending money on food, what a waste? Like that's not 342 00:16:13,120 --> 00:16:15,000 Speaker 3: a thing that we can say because we all know 343 00:16:15,120 --> 00:16:16,920 Speaker 3: we need food. We all know that we need to 344 00:16:16,960 --> 00:16:20,080 Speaker 3: be paying money to have a roof over our heads. However, 345 00:16:20,560 --> 00:16:23,960 Speaker 3: we have the opportunity to choose how much that costs us, 346 00:16:24,320 --> 00:16:26,560 Speaker 3: and that comes down to our values. 347 00:16:26,920 --> 00:16:29,000 Speaker 2: So, as a millennial, if one of my values is 348 00:16:29,040 --> 00:16:31,320 Speaker 2: to have a property break into the market, would you 349 00:16:31,320 --> 00:16:32,760 Speaker 2: say this is the best way to do it. 350 00:16:32,760 --> 00:16:35,400 Speaker 3: It's not necessarily the best way to do it. But 351 00:16:35,480 --> 00:16:39,000 Speaker 3: if you are a millennial who says, well, you're just 352 00:16:39,040 --> 00:16:41,840 Speaker 3: a person who wants to get into the property market, 353 00:16:42,040 --> 00:16:44,640 Speaker 3: and you know that property is one hundred percent what 354 00:16:44,680 --> 00:16:46,960 Speaker 3: you want to purchase out of all the asset classes. 355 00:16:47,000 --> 00:16:48,760 Speaker 3: If you've done your research and you say no, it's 356 00:16:48,800 --> 00:16:52,400 Speaker 3: still want to invest in property and Victoria it's not emotional. 357 00:16:52,480 --> 00:16:55,000 Speaker 3: I just want to choose this. I'm here for it. 358 00:16:55,040 --> 00:16:57,000 Speaker 3: I think that it is a really great way for 359 00:16:57,080 --> 00:16:59,960 Speaker 3: people to purchase a property so that they can build wealth. 360 00:17:00,680 --> 00:17:04,760 Speaker 3: But again, I need to really reiterate buying property needs 361 00:17:04,800 --> 00:17:07,560 Speaker 3: to not be such an emotional decision. I can fall 362 00:17:07,600 --> 00:17:10,520 Speaker 3: in love with so many different properties, and it is 363 00:17:10,560 --> 00:17:13,040 Speaker 3: so easy to go through the domain website and be like, 364 00:17:13,040 --> 00:17:14,439 Speaker 3: oh my gosh, look at that one. It's got a 365 00:17:14,440 --> 00:17:17,439 Speaker 3: full God. It makes me so excited, I know, and 366 00:17:17,560 --> 00:17:20,479 Speaker 3: we really need to stop doing that, because it's not 367 00:17:20,520 --> 00:17:22,399 Speaker 3: that it's not going to happen. It's just that it 368 00:17:22,520 --> 00:17:25,960 Speaker 3: is unreasonable for us to be choosing an asset that's 369 00:17:26,000 --> 00:17:29,560 Speaker 3: meant to be generating us wealth if we're choosing it 370 00:17:29,600 --> 00:17:32,240 Speaker 3: based on face value. We need to be making sure 371 00:17:32,240 --> 00:17:34,760 Speaker 3: that the properties we buy are in areas that have 372 00:17:34,840 --> 00:17:38,320 Speaker 3: good capital growth, in areas that have good rental yield, 373 00:17:38,400 --> 00:17:41,880 Speaker 3: that have good infrastructure around them, so that we are 374 00:17:41,920 --> 00:17:45,600 Speaker 3: actually getting the growth that we need to create financial freedom. 375 00:17:45,840 --> 00:17:48,480 Speaker 3: It's really important here as well, Ge to mention that, 376 00:17:48,960 --> 00:17:52,439 Speaker 3: like every single other investment asset that we talk about, 377 00:17:52,720 --> 00:17:55,720 Speaker 3: property is not something that you purchase with the intention 378 00:17:55,880 --> 00:17:57,720 Speaker 3: of getting rid of in one or two years when 379 00:17:57,720 --> 00:18:00,560 Speaker 3: you find your dream home. If we are purchasing property, 380 00:18:00,600 --> 00:18:04,000 Speaker 3: we are choosing that asset for a minimum of ten years. 381 00:18:04,160 --> 00:18:06,159 Speaker 3: And if you don't want to commit to something for 382 00:18:06,240 --> 00:18:08,800 Speaker 3: ten years, you are not meant to be purchasing at 383 00:18:08,800 --> 00:18:11,359 Speaker 3: that point in time. Because there are so many things 384 00:18:11,359 --> 00:18:13,840 Speaker 3: that you need to take into consideration there. We need 385 00:18:13,880 --> 00:18:15,840 Speaker 3: to be talking about capital growth, We need to be 386 00:18:15,880 --> 00:18:18,200 Speaker 3: talking about rental yield. We need to be talking about 387 00:18:18,240 --> 00:18:20,879 Speaker 3: how much money you are spending on stamp duty and 388 00:18:20,920 --> 00:18:24,400 Speaker 3: transfer costs, and all of the fees and additional costs 389 00:18:24,440 --> 00:18:27,800 Speaker 3: associated with buying and selling property. For example, how much 390 00:18:27,840 --> 00:18:29,760 Speaker 3: are you going to pay your real estate agent? So 391 00:18:29,920 --> 00:18:33,000 Speaker 3: all of those need to be built into the actual 392 00:18:33,040 --> 00:18:37,439 Speaker 3: property price. And because property is such a tangible asset, 393 00:18:37,920 --> 00:18:41,080 Speaker 3: so many people forget this. So so many people will 394 00:18:41,080 --> 00:18:42,960 Speaker 3: turn around and say, well, I've made money on this 395 00:18:43,000 --> 00:18:45,600 Speaker 3: property because I purchased it for five hundred thousand dollars 396 00:18:45,600 --> 00:18:48,080 Speaker 3: and I sold it for seven hundred thousand dollars a 397 00:18:48,080 --> 00:18:50,399 Speaker 3: couple of years later, and you're fantastic. That sounds like 398 00:18:50,440 --> 00:18:53,119 Speaker 3: a great return. But what they didn't tell you was 399 00:18:53,160 --> 00:18:55,199 Speaker 3: how much they paid in stamp duty, how much that 400 00:18:55,280 --> 00:18:58,399 Speaker 3: kitchen and bathroom renovation costs them, how much all of 401 00:18:58,480 --> 00:19:02,320 Speaker 3: the additional things that they've added to the house actually cost. So, 402 00:19:02,359 --> 00:19:04,080 Speaker 3: when it came down to it, and I've done the 403 00:19:04,160 --> 00:19:06,879 Speaker 3: numbers before with clients where they've bought for five hundred 404 00:19:06,920 --> 00:19:09,440 Speaker 3: thousand dollars sold for seven hundred thousand dollars, but they've 405 00:19:09,440 --> 00:19:12,399 Speaker 3: actually only made ten or fifteen thousand dollars profit because 406 00:19:12,400 --> 00:19:15,520 Speaker 3: they've put so much money into the property to actually 407 00:19:15,560 --> 00:19:17,840 Speaker 3: get it to that stage. So we need to be 408 00:19:18,000 --> 00:19:21,760 Speaker 3: really cautious of where our money goes. It's not like 409 00:19:21,840 --> 00:19:24,679 Speaker 3: a share. A share doesn't cost us additional money. They 410 00:19:24,720 --> 00:19:27,680 Speaker 3: don't call up and say, hey, Victoria, SA, it's three 411 00:19:27,720 --> 00:19:32,119 Speaker 3: o tinto. I'm just wondering we've ruined our hot water system. 412 00:19:32,200 --> 00:19:35,159 Speaker 3: Could you throw us fifteen hundred dollars to fix that? 413 00:19:35,600 --> 00:19:38,919 Speaker 3: You don't have that when you are investing in shares. 414 00:19:39,280 --> 00:19:40,880 Speaker 3: So we need to make sure that when we are 415 00:19:40,920 --> 00:19:44,280 Speaker 3: buying property, we are taking into consideration all the additional 416 00:19:44,280 --> 00:19:46,639 Speaker 3: fees and charges that are going to be associated with that. 417 00:19:46,840 --> 00:19:47,280 Speaker 1: Alrighty B. 418 00:19:47,359 --> 00:19:50,320 Speaker 2: So it sounds like there are benefits of plenty to investing, 419 00:19:50,400 --> 00:19:51,520 Speaker 2: which I hadn't really heard. 420 00:19:51,320 --> 00:19:53,960 Speaker 3: Of apparently, so given the conversation we've had, yes. 421 00:19:53,960 --> 00:19:57,040 Speaker 2: Exactly, But are there any quants? 422 00:19:57,320 --> 00:19:59,560 Speaker 3: There are a few things that you need to take 423 00:19:59,600 --> 00:20:03,000 Speaker 3: into ca consideration here. So first things first, are you 424 00:20:03,040 --> 00:20:05,359 Speaker 3: buying property just because you feel like property is the 425 00:20:05,400 --> 00:20:08,600 Speaker 3: asset you should have without having taken into consideration any 426 00:20:08,640 --> 00:20:13,439 Speaker 3: other asset class that exists. A property, whilst rent vesting 427 00:20:13,480 --> 00:20:16,840 Speaker 3: sounds really sexy, is a mortgage that you have to 428 00:20:16,880 --> 00:20:19,480 Speaker 3: pay regardless of what is going on in the economy. 429 00:20:19,640 --> 00:20:22,920 Speaker 3: You have a mortgage payment that you are obligated to pay. 430 00:20:23,359 --> 00:20:26,320 Speaker 3: Unlike shares, where you can choose to just not contribute 431 00:20:26,320 --> 00:20:29,239 Speaker 3: that month, a mortgage needs to be paid and if 432 00:20:29,280 --> 00:20:31,119 Speaker 3: you don't pay it, the bank is coming for you. 433 00:20:31,400 --> 00:20:33,520 Speaker 3: So we need to remember that whilst this sounds like 434 00:20:33,560 --> 00:20:37,600 Speaker 3: an attractive opportunity, it is a financial responsibility that you 435 00:20:37,640 --> 00:20:41,320 Speaker 3: are taking on. Another one is buying an investment first, 436 00:20:41,560 --> 00:20:44,199 Speaker 3: so so many people are hung up on buying their 437 00:20:44,280 --> 00:20:47,239 Speaker 3: dream home and purchasing a property that they own and 438 00:20:47,240 --> 00:20:49,400 Speaker 3: that they get to live in. And if you are 439 00:20:49,440 --> 00:20:53,600 Speaker 3: purchasing an asset to rent vest you don't actually get 440 00:20:53,640 --> 00:20:55,439 Speaker 3: to do that. And whilst I don't think that's a 441 00:20:55,480 --> 00:20:58,960 Speaker 3: negative thing because I'm very pro renting. I think a 442 00:20:59,000 --> 00:21:02,200 Speaker 3: lot of people might say, but I'm sacrificing the goal 443 00:21:02,280 --> 00:21:05,440 Speaker 3: of living in the property that I own. Another thing 444 00:21:05,480 --> 00:21:07,919 Speaker 3: to add to that is that you can't make a 445 00:21:08,040 --> 00:21:11,040 Speaker 3: home that you rent your own. It's something that a 446 00:21:11,040 --> 00:21:12,919 Speaker 3: lot of my clients talk about. They're like, oh, but 447 00:21:12,960 --> 00:21:14,920 Speaker 3: I can't paint the walls, but I can't do this, 448 00:21:15,000 --> 00:21:17,679 Speaker 3: or I can't have a dog. And a lot of 449 00:21:17,680 --> 00:21:21,320 Speaker 3: that is changing. We're now seeing the rental industry actually 450 00:21:21,480 --> 00:21:24,199 Speaker 3: trying to keep up with us because they know that, 451 00:21:24,520 --> 00:21:28,720 Speaker 3: unlike thirty years ago, renting these days is far more 452 00:21:28,760 --> 00:21:32,040 Speaker 3: long term, so people are offering longer leases. There have 453 00:21:32,200 --> 00:21:34,919 Speaker 3: been rules passed here in Victoria that you are allowed 454 00:21:34,960 --> 00:21:37,600 Speaker 3: pets and that they can't be declined. And I think 455 00:21:37,640 --> 00:21:40,760 Speaker 3: that landlords are now being far more flexible if you 456 00:21:40,800 --> 00:21:42,919 Speaker 3: are a good tenant. For example, if you call up 457 00:21:42,960 --> 00:21:45,120 Speaker 3: and just say, hey, could I paint a wall? Could 458 00:21:45,160 --> 00:21:47,080 Speaker 3: I get permission to hang out? I think it is 459 00:21:47,200 --> 00:21:50,480 Speaker 3: really fair to ask those questions. However, if you don't 460 00:21:50,560 --> 00:21:52,600 Speaker 3: like the tiles in the kitchen, you don't get the 461 00:21:52,600 --> 00:21:55,840 Speaker 3: opportunity to change them. So I think it's important to 462 00:21:55,880 --> 00:21:58,119 Speaker 3: be if you're renting and you're going to choose to 463 00:21:58,200 --> 00:22:01,320 Speaker 3: rent for a long period of time, not picking a 464 00:22:01,359 --> 00:22:04,080 Speaker 3: property that you want to tinker around with, but picking 465 00:22:04,119 --> 00:22:08,160 Speaker 3: one that does meet your expectations is important. But being 466 00:22:08,160 --> 00:22:10,720 Speaker 3: aware it isn't your home, so you don't get the 467 00:22:10,760 --> 00:22:13,520 Speaker 3: opportunity to change it. For me, that's not enough of 468 00:22:13,520 --> 00:22:17,040 Speaker 3: a deterrent to change my decision. However, it is worthy 469 00:22:17,040 --> 00:22:20,160 Speaker 3: of note, it's worthy of having that conversation. And last, 470 00:22:20,160 --> 00:22:24,000 Speaker 3: but not least, Georgia, it's really important to remember that 471 00:22:24,320 --> 00:22:28,000 Speaker 3: just like every single other asset, there are ebbs and flows, 472 00:22:28,359 --> 00:22:31,400 Speaker 3: So the property market can increase in value as much 473 00:22:31,400 --> 00:22:34,200 Speaker 3: as it can decrease in value, and if we are 474 00:22:34,240 --> 00:22:38,040 Speaker 3: going to be committing to a long term financial responsibility, 475 00:22:38,320 --> 00:22:40,240 Speaker 3: we have to be in a financial position to be 476 00:22:40,240 --> 00:22:42,680 Speaker 3: able to ride that out. And that means if your 477 00:22:42,800 --> 00:22:45,880 Speaker 3: property is valued at less, being in a position where 478 00:22:45,880 --> 00:22:49,560 Speaker 3: you are not forced to sell is essential. So making 479 00:22:49,640 --> 00:22:52,200 Speaker 3: sure that you're talking to a good mortgage broker about 480 00:22:52,200 --> 00:22:55,439 Speaker 3: your serviceability and about how to purchase a property that 481 00:22:55,480 --> 00:22:59,040 Speaker 3: aligns with your goals but also your financial abilities is 482 00:22:59,119 --> 00:23:01,480 Speaker 3: really really important, and a broker is going to be 483 00:23:01,680 --> 00:23:04,600 Speaker 3: literally your best friend here when making sure that you 484 00:23:04,640 --> 00:23:07,200 Speaker 3: are making decisions that are in line with not only 485 00:23:07,240 --> 00:23:09,720 Speaker 3: your values, but your financial situation. 486 00:23:09,920 --> 00:23:11,560 Speaker 2: Do we need to be chatting to brokers if we 487 00:23:11,560 --> 00:23:12,399 Speaker 2: want to make this happen. 488 00:23:12,600 --> 00:23:15,639 Speaker 3: I am a very big believer in putting your money 489 00:23:15,760 --> 00:23:18,399 Speaker 3: in the hands of experts. I am not on the 490 00:23:18,440 --> 00:23:21,720 Speaker 3: page of just making decisions for yourself. Too often do 491 00:23:21,840 --> 00:23:25,280 Speaker 3: I see people going and getting loans that don't actually 492 00:23:25,320 --> 00:23:29,280 Speaker 3: benefit them, that are structured incorrectly, that don't have the 493 00:23:29,320 --> 00:23:33,119 Speaker 3: flexibility that my clients need. And more often than not, 494 00:23:33,320 --> 00:23:35,800 Speaker 3: when I do see a client that has finally realized 495 00:23:35,800 --> 00:23:38,480 Speaker 3: that they are actually locked into a fixed term that 496 00:23:38,600 --> 00:23:40,760 Speaker 3: I can't do a lot about for maybe one or 497 00:23:40,800 --> 00:23:43,480 Speaker 3: two years. So I think it's important to get a 498 00:23:43,520 --> 00:23:47,240 Speaker 3: professional on your side. A mortgage broker does this day in, 499 00:23:47,480 --> 00:23:50,359 Speaker 3: day out and make sure you are in the best 500 00:23:50,400 --> 00:23:53,440 Speaker 3: possible financial position. They will be able to weigh up 501 00:23:53,520 --> 00:23:55,280 Speaker 3: all of the pros and cons. They will be able 502 00:23:55,280 --> 00:23:57,919 Speaker 3: to make sure that you're not missing any of the fees, chargers, 503 00:23:57,960 --> 00:24:01,760 Speaker 3: stamp duty, anything included that you might miss Because you're 504 00:24:01,800 --> 00:24:04,560 Speaker 3: not a professional investor, you are not a professional property buyer. 505 00:24:04,920 --> 00:24:07,320 Speaker 3: Talk to someone who is and they will be able 506 00:24:07,359 --> 00:24:10,720 Speaker 3: to hold your hand through that process. And more importantly 507 00:24:10,800 --> 00:24:13,919 Speaker 3: here that service is free. It does not cost you 508 00:24:14,040 --> 00:24:17,399 Speaker 3: anything to see a broker. Because a broker gets paid 509 00:24:17,520 --> 00:24:20,359 Speaker 3: by the bank that they end up taking the loan 510 00:24:20,400 --> 00:24:23,800 Speaker 3: out with, it doesn't actually change that broker's decision to 511 00:24:23,920 --> 00:24:26,359 Speaker 3: go with a particular bank, unless you see a broker 512 00:24:26,400 --> 00:24:29,080 Speaker 3: who works for a bank, which I would discourage because 513 00:24:29,119 --> 00:24:32,080 Speaker 3: they don't have the ability to weigh up every opportunity 514 00:24:32,080 --> 00:24:34,400 Speaker 3: in the market for you, which I think is very, 515 00:24:34,520 --> 00:24:37,639 Speaker 3: very valuable. But seeing a broker, they are going to 516 00:24:37,680 --> 00:24:39,720 Speaker 3: be able to get the best possible deal for you 517 00:24:39,840 --> 00:24:42,439 Speaker 3: and put you in the safest possible position that you 518 00:24:42,440 --> 00:24:48,040 Speaker 3: can be. The world is a pretty strange place to 519 00:24:48,080 --> 00:24:50,680 Speaker 3: be at the moment, and social media and our Facebook 520 00:24:50,760 --> 00:24:54,879 Speaker 3: group are absolutely flooded with information about COVID nineteen. Our 521 00:24:54,920 --> 00:24:57,439 Speaker 3: number one priority, as it always has been, is to 522 00:24:57,480 --> 00:25:00,239 Speaker 3: protect the health of our team and our community, So 523 00:25:00,320 --> 00:25:02,679 Speaker 3: we made the decision this week to not record with 524 00:25:02,760 --> 00:25:06,159 Speaker 3: our Money Diarist in light of this ever evolving situation, 525 00:25:06,280 --> 00:25:09,879 Speaker 3: though we have recorded a COVID nineteen podcast that'll be 526 00:25:09,960 --> 00:25:13,720 Speaker 3: released later in the week. Whilst health is incredibly important 527 00:25:13,760 --> 00:25:17,000 Speaker 3: and we need to protect that fiercely. Finance and money 528 00:25:17,040 --> 00:25:20,600 Speaker 3: are so closely tied to what's going on, and whilst 529 00:25:20,640 --> 00:25:23,400 Speaker 3: there is so much going on in this world, feeling 530 00:25:23,440 --> 00:25:26,560 Speaker 3: financially prepared will hopefully help you feel a little bit 531 00:25:26,640 --> 00:25:29,239 Speaker 3: less stressed and a little bit more in control at 532 00:25:29,240 --> 00:25:31,800 Speaker 3: a time when not much is in our control at all. 533 00:25:32,119 --> 00:25:33,920 Speaker 3: So keep an eye out for that because it'll be 534 00:25:34,040 --> 00:25:36,919 Speaker 3: uploaded later in the week. But keeping in tradition of 535 00:25:36,960 --> 00:25:39,280 Speaker 3: our Shes on the Money podcast, we still have a 536 00:25:39,320 --> 00:25:41,720 Speaker 3: listener question, so let's jump into. 537 00:25:41,480 --> 00:25:46,080 Speaker 4: That, Hei Victoria. I've always wanted to purchase the property, 538 00:25:46,119 --> 00:25:48,240 Speaker 4: and of the last eighteen months, I've started to collect 539 00:25:48,240 --> 00:25:51,240 Speaker 4: a really great deposit. Just wondering if I rent vest 540 00:25:51,520 --> 00:25:53,919 Speaker 4: instead of living in the home I purchased, do I 541 00:25:54,000 --> 00:25:57,040 Speaker 4: need less of a deposit and what other costs do 542 00:25:57,119 --> 00:25:59,399 Speaker 4: I need to take into consideration? Thanks? 543 00:26:00,280 --> 00:26:01,679 Speaker 1: Where does she begin? Victoria? 544 00:26:01,720 --> 00:26:04,080 Speaker 3: So there are a lot that people just don't seem 545 00:26:04,119 --> 00:26:07,520 Speaker 3: to take into consideration when deciding to purchase a property. 546 00:26:07,840 --> 00:26:10,240 Speaker 3: And this is why I am a massive advocate once 547 00:26:10,280 --> 00:26:12,720 Speaker 3: again of having a good broker on your team, because 548 00:26:12,720 --> 00:26:14,800 Speaker 3: they're going to be able to outline all of those 549 00:26:14,840 --> 00:26:17,600 Speaker 3: fees in chargees for you. Yep. They actually have access 550 00:26:17,640 --> 00:26:21,080 Speaker 3: to really really wizard like calculators that can spit out 551 00:26:21,119 --> 00:26:23,600 Speaker 3: exactly what you're going to be up for if you 552 00:26:23,680 --> 00:26:27,359 Speaker 3: purchase specific properties, and I think that's incredibly valuable. But 553 00:26:27,720 --> 00:26:30,520 Speaker 3: something that applies to everybody, regardless of whether you are 554 00:26:30,680 --> 00:26:33,399 Speaker 3: rent vesting or buying the property of your dreams to 555 00:26:33,560 --> 00:26:36,920 Speaker 3: move into, is that you need a strong deposit. So 556 00:26:37,119 --> 00:26:40,439 Speaker 3: we always, always, always at Zella recommend that you have 557 00:26:40,520 --> 00:26:43,680 Speaker 3: about a twenty percent deposit because anything less than that 558 00:26:43,720 --> 00:26:46,040 Speaker 3: puts you at more risk. We're not saying that you 559 00:26:46,119 --> 00:26:48,600 Speaker 3: can't get a loan with less of a deposit. We 560 00:26:48,680 --> 00:26:51,240 Speaker 3: all know that that is not true. We can actually 561 00:26:51,280 --> 00:26:55,680 Speaker 3: access loans for five percent, it happens. We don't necessarily 562 00:26:55,720 --> 00:26:58,720 Speaker 3: get behind that, though, because if you only have a 563 00:26:58,760 --> 00:27:02,240 Speaker 3: five percent deposit, you're putting yourself at a lot of risk. 564 00:27:02,600 --> 00:27:06,560 Speaker 3: If the market declines and property prices decrease, you could 565 00:27:06,680 --> 00:27:09,800 Speaker 3: quite easily put yourself in a position where the debt 566 00:27:09,880 --> 00:27:13,479 Speaker 3: you owe on a property is higher than the actual 567 00:27:13,560 --> 00:27:16,000 Speaker 3: value of the property. So I would never want a 568 00:27:16,040 --> 00:27:18,520 Speaker 3: client to be in that position. And I think that 569 00:27:18,600 --> 00:27:21,920 Speaker 3: having a really strong deposit is essential. Having a strong 570 00:27:21,960 --> 00:27:25,560 Speaker 3: deposit also means you've really worked hard to get this property, 571 00:27:25,600 --> 00:27:28,280 Speaker 3: and you've taught yourself how to save and how to 572 00:27:28,359 --> 00:27:31,600 Speaker 3: allocate funds, so when you finally do get that mortgage, 573 00:27:31,640 --> 00:27:35,600 Speaker 3: it's not as painful to service that. So for everybody 574 00:27:35,640 --> 00:27:38,680 Speaker 3: that is getting a mortgage, I spoke before about additional 575 00:27:38,720 --> 00:27:42,560 Speaker 3: fees and charges. It's not just the total property purchase price. 576 00:27:42,600 --> 00:27:45,119 Speaker 3: For example, if you're spending five hundred thousand dollars on 577 00:27:45,160 --> 00:27:47,480 Speaker 3: a property, that is not all you are up for. 578 00:27:48,200 --> 00:27:50,840 Speaker 3: It's actually a percentage that you need. So the deposit 579 00:27:50,880 --> 00:27:53,760 Speaker 3: needs to be a percentage of the total cost of 580 00:27:53,840 --> 00:27:57,399 Speaker 3: the transaction, not just the property, and that includes a 581 00:27:57,440 --> 00:28:00,480 Speaker 3: whole heap of additional fees and charges above and beyond 582 00:28:00,480 --> 00:28:04,680 Speaker 3: that purchase price. For example, stamp duty, lender's mortgage insurance. 583 00:28:04,720 --> 00:28:09,320 Speaker 3: If you take it out, valuations, conveyances, pest inspections, the 584 00:28:09,400 --> 00:28:12,439 Speaker 3: list goes on. And that's why again I'm going to 585 00:28:12,440 --> 00:28:14,520 Speaker 3: reiterate having a broker on your team is going to 586 00:28:14,520 --> 00:28:16,840 Speaker 3: make sure that you are covered for this because I 587 00:28:16,960 --> 00:28:20,640 Speaker 3: have had clients that have been approved for mortgages, been 588 00:28:20,720 --> 00:28:23,080 Speaker 3: really excited about it, gone and put an offer in 589 00:28:23,119 --> 00:28:25,440 Speaker 3: on a property and then had to pull out because 590 00:28:25,440 --> 00:28:28,480 Speaker 3: they actually didn't have the funds to meet the transaction. 591 00:28:28,880 --> 00:28:31,280 Speaker 3: They had the funds to literally meet the value of 592 00:28:31,320 --> 00:28:33,679 Speaker 3: the property, but they didn't have the funds to make 593 00:28:33,720 --> 00:28:36,719 Speaker 3: sure that they could actually afford the property. If you 594 00:28:36,800 --> 00:28:39,239 Speaker 3: are a first time purchaser, which it sounds like our 595 00:28:39,280 --> 00:28:41,720 Speaker 3: listener is because she says she's been thinking about getting 596 00:28:41,760 --> 00:28:44,840 Speaker 3: into property, it's important to know that there are a 597 00:28:44,920 --> 00:28:48,239 Speaker 3: number of different concessions available to first home buyers if 598 00:28:48,280 --> 00:28:51,240 Speaker 3: they move into their property. These often, and whilst I 599 00:28:51,280 --> 00:28:55,960 Speaker 3: can't talk about every single state, these and everything does change, 600 00:28:56,080 --> 00:28:59,320 Speaker 3: these grants aren't available for first time investments. But as 601 00:28:59,320 --> 00:29:01,840 Speaker 3: it stands at the moment, if you're buying a property 602 00:29:01,880 --> 00:29:05,520 Speaker 3: here in Victoria, you can purchase an investment property and 603 00:29:05,600 --> 00:29:08,959 Speaker 3: still get the stamp duty concessions and concessions on your 604 00:29:09,000 --> 00:29:11,400 Speaker 3: first home that you move into later down the track. 605 00:29:11,720 --> 00:29:13,680 Speaker 3: It's not to say that they won't change the rules 606 00:29:14,040 --> 00:29:16,520 Speaker 3: right now. You could buy an investment property and then 607 00:29:16,600 --> 00:29:19,160 Speaker 3: also go and buy your first home and get a 608 00:29:19,160 --> 00:29:21,480 Speaker 3: whole heap of concessions on the home that you eventually 609 00:29:21,520 --> 00:29:23,840 Speaker 3: move into. Ye if you're not a first home buyer, 610 00:29:23,880 --> 00:29:26,680 Speaker 3: though everything else in terms of additional fees and charges 611 00:29:26,800 --> 00:29:29,520 Speaker 3: still relates to you. You are just in a position 612 00:29:29,560 --> 00:29:31,360 Speaker 3: where you might be able to use some of the 613 00:29:31,440 --> 00:29:35,000 Speaker 3: equity in your property to leverage getting into a property. 614 00:29:35,040 --> 00:29:37,600 Speaker 3: It just means you're pulling a deposit from somewhere else 615 00:29:38,000 --> 00:29:40,640 Speaker 3: rather than just saving up for it. Again, so I 616 00:29:40,640 --> 00:29:43,400 Speaker 3: think it's important to note that, yes, if you've got property, 617 00:29:43,440 --> 00:29:46,240 Speaker 3: it could be helpful, but it doesn't necessarily mean that 618 00:29:46,440 --> 00:29:48,920 Speaker 3: it's going to get you into your next home asap. 619 00:29:49,160 --> 00:29:50,920 Speaker 2: So would you say that the deposit would be the 620 00:29:50,920 --> 00:29:53,200 Speaker 2: main thing stopping people from getting into property. 621 00:29:53,040 --> 00:29:56,440 Speaker 3: No, sadly not. There are so many different hurdles that 622 00:29:56,560 --> 00:29:59,320 Speaker 3: I'm sorry, there are so many different hurdles that need 623 00:29:59,360 --> 00:30:02,080 Speaker 3: to be yumped over when getting into property. But I 624 00:30:02,200 --> 00:30:04,959 Speaker 3: believe that there are two main ones. Yes, you are correct. 625 00:30:05,120 --> 00:30:07,600 Speaker 3: The deposit is the number one thing that we actually 626 00:30:07,640 --> 00:30:10,440 Speaker 3: need to make Saving for it is really hard. But 627 00:30:10,520 --> 00:30:12,920 Speaker 3: once we have our deposit and we've got enough money 628 00:30:12,920 --> 00:30:15,959 Speaker 3: for all of the additional fees associated with that transaction, 629 00:30:16,360 --> 00:30:19,920 Speaker 3: their second, really big issue is actually being able to 630 00:30:19,960 --> 00:30:23,240 Speaker 3: service that loan. And it is so heartbreaking when I 631 00:30:23,320 --> 00:30:26,320 Speaker 3: have clients come to me that are on lower salaries 632 00:30:26,680 --> 00:30:29,640 Speaker 3: that say, hey, Victoria, I have worked my life away 633 00:30:29,960 --> 00:30:32,160 Speaker 3: to save for property. It has been my goal, and 634 00:30:32,200 --> 00:30:35,000 Speaker 3: I go, I am so here for this. Congratulations. They'll 635 00:30:35,000 --> 00:30:37,360 Speaker 3: have a two hundred and fifty thousand dollar deposit, they 636 00:30:37,360 --> 00:30:40,920 Speaker 3: will have saved epically like it is so impressive. But 637 00:30:41,000 --> 00:30:44,440 Speaker 3: then they earn sixty or seventy thousand dollars and the 638 00:30:44,440 --> 00:30:47,200 Speaker 3: property that they want to purchase because they've calculated that 639 00:30:47,280 --> 00:30:49,800 Speaker 3: two hundred and fifty thousand dollars is like one point 640 00:30:49,840 --> 00:30:52,959 Speaker 3: two million dollar property, you actually can't have that property 641 00:30:53,000 --> 00:30:57,400 Speaker 3: because you cannot on your income service that debt. So 642 00:30:57,520 --> 00:31:00,840 Speaker 3: being aware that you need to one save for the deposit, 643 00:31:01,000 --> 00:31:03,520 Speaker 3: but then two you also need to meet the criteria 644 00:31:03,600 --> 00:31:06,840 Speaker 3: of servicing that debt is really really important and it 645 00:31:06,880 --> 00:31:09,280 Speaker 3: can be the one thing that once you've gotten over 646 00:31:09,320 --> 00:31:11,800 Speaker 3: that you've been saving for that home deposit, it can 647 00:31:11,840 --> 00:31:14,160 Speaker 3: be the thing that gets you out of the game again. 648 00:31:17,600 --> 00:31:20,120 Speaker 2: That is all we have time for today, but before 649 00:31:20,120 --> 00:31:21,800 Speaker 2: we head off, we need to wrap the boring but 650 00:31:21,920 --> 00:31:24,880 Speaker 2: important stuff. But before we do that, there is also 651 00:31:24,920 --> 00:31:27,760 Speaker 2: some exciting news that some of you may already be across. 652 00:31:27,920 --> 00:31:30,880 Speaker 2: Victoria is writing the shehes on the Money book, which 653 00:31:30,880 --> 00:31:33,320 Speaker 2: is going to be our ultimate finance Bible, and honestly 654 00:31:33,360 --> 00:31:34,320 Speaker 2: I cannot. 655 00:31:33,960 --> 00:31:34,960 Speaker 3: Wait me either. 656 00:31:36,000 --> 00:31:38,040 Speaker 2: So that means that we'll be pressing pause on the 657 00:31:38,040 --> 00:31:40,880 Speaker 2: podcast for a little while, apologies, so that Victoria can 658 00:31:40,920 --> 00:31:44,120 Speaker 2: meet her deadline and make her publisher and us superly happy. 659 00:31:44,680 --> 00:31:46,960 Speaker 2: Rest assured, though, we will be back for a very 660 00:31:47,000 --> 00:31:49,920 Speaker 2: exciting season three very soon. If you do have any 661 00:31:49,960 --> 00:31:51,880 Speaker 2: episode of topics you'd like us to cover up, please 662 00:31:51,920 --> 00:31:53,560 Speaker 2: get in touch on the Facebook page. So we want 663 00:31:53,560 --> 00:31:55,520 Speaker 2: to make sure the content we're bringing you is relevant 664 00:31:55,520 --> 00:31:57,720 Speaker 2: and it's what you want to hear. Now, back to 665 00:31:57,720 --> 00:32:00,280 Speaker 2: the boring. The advice shed on Shoes on the Money 666 00:32:00,360 --> 00:32:03,560 Speaker 2: is general in nature and does not consider your individual circumstances. 667 00:32:03,840 --> 00:32:06,600 Speaker 2: She's on the money if it's purely for educational purposes 668 00:32:06,640 --> 00:32:08,760 Speaker 2: and should not be relied upon to make an investment 669 00:32:08,840 --> 00:32:12,800 Speaker 2: or financial decision and stressless, we promise. Victoria Devine is 670 00:32:12,840 --> 00:32:17,760 Speaker 2: an authorized representative of Consultant Financial Advisors Proprietary Limited ABN 671 00:32:17,760 --> 00:32:20,840 Speaker 2: sixty five six three seven three double nine five AFSL 672 00:32:20,960 --> 00:32:23,400 Speaker 2: two three oh three two three. And thank you, of 673 00:32:23,440 --> 00:32:25,640 Speaker 2: course to Ryan John for whipping our wild chat into 674 00:32:25,640 --> 00:32:26,080 Speaker 2: the podcast. 675 00:32:26,200 --> 00:32:29,479 Speaker 3: You guys, we would absolutely love it if in the 676 00:32:29,480 --> 00:32:32,320 Speaker 3: time that we are away, you still keep in contact 677 00:32:32,440 --> 00:32:35,360 Speaker 3: via our Facebook group where our community. You'll be there, 678 00:32:36,080 --> 00:32:38,680 Speaker 3: George will be there with bells on where our community 679 00:32:38,720 --> 00:32:41,760 Speaker 3: shares money, tips and tricks every single day, free of judgment. 680 00:32:42,000 --> 00:32:44,320 Speaker 3: So She's on the Money on Facebook and join us. 681 00:32:44,480 --> 00:32:47,160 Speaker 3: If Facebook's not your thing, find us on Instagram. We're 682 00:32:47,160 --> 00:32:48,800 Speaker 3: at She's on the Money a US. 683 00:32:49,040 --> 00:32:49,920 Speaker 2: See you next season. 684 00:32:50,000 --> 00:32:51,320 Speaker 3: Go see your friends.