2016 - Page 5 of 7 - The Property Couch

064 | Case study: mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs

By The Property Couch May 19, 2016 in Case Study, Podcast, Q&A

It has been quite some time since our last case study so this time on The Property Couch, Bryce and Ben will be discussing one the case studies that we’ve received from our fellow listeners! Here’s what Tom wrote to us:

After listening to Episode 56 where you discussed various other case studies I thought I might write in to see if you were interested in discussing our situation. I’ll try and keep it short!

Basically, my partner Kirby (30yo) and I (32yo) are both teachers on a combined income of about $160k. 3 years ago we got the bug to do something with our money but weren’t exactly sure how. Our simple goal is to have choice whether to work or not. If we had no loans to service we imagine a passive income of $80-100k would be more than enough, and any more is a bonus!

We had a PPOR property valued at a tad over 300k with a mortgage of ~200k, limited other expenses and a disciplined approach to spending. Property sounded like a great avenue so we went about increasing our knowledge. Unfortunately our naivety led us to a property investment ‘education’ group where although we have learn a lot we have made what we think are two poor investment decisions. We overpaid for both to fatten the developer’s margins.

Our first was brought using the above equity in our PPOR and was a House and Land duplex in Dakabin, Qld for circa $500k. Although the yield is decent there were many costs that the property investment ‘education’ group failed to mention/understand that we have been left with, and there is little scarcity or owner occupier appeal to make growth a good prospect. We have always had tenants in both sides which has been great. We borrowed 90% on interest only terms.

About 18 months ago we signed another contract, this time on a 4 bed H & L in Doolandella, 18kms out of Brisbane for circa $400k. After a long land settlement this was completed yesterday and will be advertised for rent tomorrow. Looking at about a 4.9% yield. Again, this is on an interest only loan at 90%. Deposit and costs were paid from our savings – I know, huge mistake!

Right after we signed this contract we found your podcasts which have taught us that there are so many fundamental errors in our property selections, and if we had our time again would have purchased existing properties with scarcity and owner occupier appeal.

We have just had our first child and Kirby is now off work. We have a ~$45k buffer in our PPOR offset and somehow are still managing to save, even though Kirby is off work, although receiving maternity leave payments.

We use a credit card to pay for 95% of our spending, and repay at the end of every month to ensure no interest payments.

So, we are still very keen to use property as our investment vehicle and have learned so much in the last year but are now stuck as to our next step. We doubt we would have enough equity to purchase again now and the fact Kirby is off work will severely hamper our serviceability. She will return to work at the start of 2017.
Questions:

Do we sell both/one of our current properties? We’d like to keep if possible as I am a firm believer in buy and hold, although will they hamper us moving forward?
Where to from here?

Any information from you would be extremely appreciated. I’m sure there are a number of people who have used ‘property spruikers’ such as these to purchase less than ideal investments.

If you like this case study episode (Mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

63 | Q&A – What’s the next step to building a portfolio, size of the portfolio, IP or PPOR and diversifying wealth strategy

By The Property Couch May 12, 2016 in Podcast, Q&A

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It’s Q&A time again! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions!

Next step to building a portfolio question from Derrick: I was listening to your “tips for FHO’s” episode where you advised a gentleman to think about getting a one bedder in a desirable suburb (like Bondi) as his first place. Coincidentally I pretty much did that 4.5 years ago…buying a 1 bedroom unit in Woollahra. So you could say that I am that guy four years later! The only difference is that my apartment wasn’t part of an investment strategy at the time, I just liked the apartment! I am at the stage now that I want to get into property investing but at the same time I’m conscious about finding my second place of residence for my wife and I in about three years…preferably living in a similar area. So I’m trying to tackle two thoughts at once: how do I invest in my long term future while figuring out how to afford my next home? What should someone like myself be thinking? Should I be looking to invest and build more equity for our second place? Should I sit on our current property and save, while looking to use my current place of residency as a future investment property? Or is there another route? Thanks for your advice and thanks again for the show!

Size of portfolio question from Jason: Started to listen to podcast recently and love it keep up the good work. I just wanted your guys opinion on the ability to build large portfolios now in this current lending environment. I have heard you guys mention that you only need 4 to 5 properties to have a passive income and live into retirement but what if you want to have larger portfolio say of 10 or 20 properties is this achievable for people on average incomes like previously? Or has the APRA changes stopped this from occurring in the future?

Question on leverage from James: I’m 27 and looking to make a good go at property investing. I have recently sold my first investment property and now have a lot of capital from the sale. My investment now is a new property being finished in 12 months . My question is after selling down the 1st investment property, am I better off paying for the new one in full (using the rental income to service another investment property afterwards), or should I purchase a few more properties while i have a large sum off money and spreading the cash around to gain more houses for a larger passive income later down the line. Bearing in mind my age and goals. Thanks guys! and keep up the great work.

IP or PPOR question from Karla: Hey guys. I love the podcast and the sign offs too Ben! My question is, if you are renting and have the ability to purchase a property. Is it better to buy an investment property or a principle place of residence (IP or PPOR) first? Which would set you up better for the next step? It feels like a bit of “chicken or the egg”. I’d love to know hour thoughts! Keep up the good work and I can’t wait for footy season to hear your commentary!

Case study question from Deanna: I am 22 yrs old and am convinced of the benefits of property as along term wealth building strategy, for now I am trying to develop as much understanding as I can. My questions are as follows:
- Do you recommend that the first property that someone buys is for PPOR or can it sometimes be an IP? For example this may be relevant for young people currently living in Sydney who are renting but would also looking to be a border-less investor. In what/ if any scenarios do you think this could be a smart plan?
- What is your opinion of young people utilising the first home buyers grant. I understand that in majority of discussion that you advocate for established buildings rather than new dwellings, however when I read a case study you wrote for Money magazine the 20 something year old strategy included using the first home buyers grant for their first property (PPR).
- This is a broad question and may potentially be outside you scope of practice but I was wondering what your opinion was in diversifying wealth building strategies. For example do you observe in your successful clients that they are involved in property investment only or do they often also include other investments such as a share portfolio to their strategy.

References:

Money magazine – Special Real Estate Edition – Buy here
ABC News article: Who uses negative gearing in Australia? – Read here
RP Data: Weekly rents have continued to fall over the past year – Read here
2GB Ross Greenwood chat with Roger Montgomery – Listen here
Qantas in-flight radio: Alan Kohler chat with Bryce Holdaway – Listen Here

If you like this Q&A episode (Exiting a contract, crowdfunding, what’s the impact of global events on Australia Property Market and more), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

62 | Does the Great Australian Dream still exist?

By The Property Couch May 5, 2016 in Podcast

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What a week in the property industry!

It started off with ABC’s Four Corners Monday night segment called Home Truths. This episode focused on housing affordability and negative gearing and they’ve interviewed a few parties for this segment.

Following that, we have the Cash Rate announcement at 2:30 pm on Tuesday. As widely expected, the Reserve Bank of Australia has dropped the cash rate by 25 basis point to 1.75%. A few factors contributed to this decision but one of the main reason is the deflation recorded in the January – March 2016 CPI data. Although most economists have forecasted this movement, there aren’t many who talked about the changes that lenders would make. Would they pass on the full rate cut? What other changes would they implement following RBA’s decision? How will this affect the current mortgage holders?

Finally, on Tuesday night, we’ve got the 2016 Budget announcement by Scott Morrison. With so many speculations surrounding the negative gearing policy, what would the Government propose? Hence, this week on The Property Couch podcast, Bryce Holdaway and Ben Kingsley will be talking about all these discussions and how will it affect The Great Australian Dream. Tune it to start listening now!

Resources mentioned in this episode:

RBA May 2016 Cash rate announcement – Watch here
2016 Budget Announcement – Read here
ABC Four Corner’s segment on housing affordability – Watch here
ATO’s Taxation statistics 2013–14 – Read here

If you like this podcast: “Does the Great Australian Dream still exist?”, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts.

May 2016 RBA Cash Rate

By Ben Kingsley May 4, 2016 in Free Resources, RBA Announcement

Here’s Ben’s commentary and opinion on the RBA’s May 2016 cash rate announcement.

61 | Finding the right property education and renovation tips – Chat with Jane Slack-Smith

By The Property Couch April 28, 2016 in Podcast

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Listeners of The Property Couch would probably know our view on property renovation. If it’s a small project such as a fresh paint, we are all over it but if you are looking at renovating for profit, we always ask our listeners to proceed with caution because a renovation project can be quite daunting for the inexperience.

So this time, Bryce Holdaway and Ben Kingsley invite a close of friend of theirs and a fellow property expert especially when it comes to renovation, Jane Slack-Smith from Your Property Success to share some of her views and tips on property education and renovation! The three of them will be discussing about:

What are the different types of property education or seminar out there
How to ensure you are getting independent views from these seminars
What’s the right mindset when it comes to property renovation
Characteristics of a successful renovator
What considerations and risk that you need to look at prior to starting a renovation project
Property renovation tips for beginners

If you are interested in the 20 Essential Renovating for Profit Tips mentioned in this podcast, just fill in the form below and we’ll send it to you right away:

Free resources: 20 Essential renovating for profit tips

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60 | Building a portfolio through Rentvesting – Chat with Chris Gray

By The Property Couch April 21, 2016 in Podcast

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It’s Episode 60 and we’ve got a special guest on the show today! Bryce and Ben have invited Chris Gray, host of ‘Your Property Empire’, on Sky News Business Channel and CEO of Empire Property to talk about all things property.

Apart from being a property expert, Chris also manages his own property portfolio and is currently a rentvestor. In fact, he has been rentvesting for quite some time. So, drawing from his experience, the three of them will be discussing about:

How did he built his property portfolio through rentvesting
The considerations that an investor will need to think about if they decide to adopt this investment strategy
The required mindset for rentvestors
The scenarios where rentvesting is worth implementing
What kind of expectation you would get from family and friends
How to look at the numbers and ensure your cash flow is taken care of

They will also be discussing about the lessons learned along the way and what they think about the current Australian Property Market. If you are interested in the Capital Growth Break Even Calculator mentioned in this podcast, just fill in the form below and we’ll send it to you right away:

Capital Growth Break Even Calculator

You can also download a copy of Ben’s Money Magazine article here: Download here
If you like this podcast: “Building a portfolio through Rentvesting – Chat with Chris Gray”, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

59 | Rentvesting: What is it and who is it for?

By The Property Couch April 14, 2016 in Podcast

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As mentioned in the podcast, Bryce Holdaway and Ben Kingsley will be talking about Rentvesting today!

It’s not a common property investing strategy but it is gaining some momentum amongst Australian property investors. In fact, Ben was asked to write about this for the March 2016 Cover Story of Money Magazine.

If you would like a copy of this article, just fill in the form below and we’ll send it to you right away.

In this episode, our hosts will be explaining what this strategy is all about. The concept is fairly simple but it is important to note that rentvesting is NOT for everyone. You need to look at your numbers and make sure that it works for your cash flow position.

There a few other considerations that you’ll need to think about as well before jumping in such as how it’ll benefit your household’s circumstances and how comfortable you are with the concept of renting. Start listening to the podcast to find out more.

P.S. There’s also an update on the Negative Gearing debate at the end of the episode! 🙂

Resources mentioned:

Ben’s interview with 2GB Radio – Listen more
Fill in the form below to download Ben’s article on Rentvesting:

Money Magazine Cover Story – Rent and Invest / Rentvesting

By The Property Couch April 14, 2016 in Free Resources

Thank you for your interest in the Rentvesting article!

Just fill in the form below to start downloading the article.

For those of you who have stumbled on to this post, please do check out Episode 59 where Bryce & Ben discuss this investment strategy in detail.

58 | Will apartments value drop by 50%?

By The Property Couch April 7, 2016 in Podcast, Uncategorized

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In recent weeks, a few lenders have begin to tighten their terms and conditions on apartments in certain suburbs across Australia. Needless to say, some commentators are putting a blanket statement on the future of apartments and claims that they are looking rather bleak at the moment. However, how much impact will these changes have on apartments value and if so, will it affect all types of apartments?

Listeners that have followed this podcast since its inception would know about Bryce and Ben’s view on apartments. Whether it is a brand new one bedroom apartment in the city centre or an attractive off the plan deal, our hosts still prefer established apartments in great locations. As property investment advisor and buyer’s agents, they have advised hundreds of clients to invest in apartments so, are they worried about this lending restriction? Are they expecting a massive drop in apartments value and where are they seeing this happening? Listen to this podcast to find out more.

The article mentioned in this post:

Apartment lender AMP blacklists more than 140 suburbs – Read more

If you like this podcast: “Will apartments value drop by 50%?”, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

57 | The Headwinds are Coming

By The Property Couch March 31, 2016 in Podcast

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The whole idea for this podcast is to help others become successful property investors (or perhaps avoid them becoming unsuccessful property investors). But Bryce and Ben know that the more successful you become, the more likely you are to be criticised. Unfortunately, it is far easier for people to share their thoughts on what you are doing wrong and when something does turn up a little haywire, you would get the usual , “I told you so”.

Now, this is probably very different from the usual topics that we talk about in this podcast but Bryce and Ben have both gone through this journey. In fact, they are still facing these situations occasionally. So in this podcast, they are sharing some of their experiences and also some positive mental attitude tips that helped them along the way. To have a successful property portfolio, you’ll need to make sure you are ready for it and it’s not always about being financially ready. It’s also about having a strong mental attitude. In addition, they will also be sharing what they think are the traits of successful people as opposed to the unsuccessful ones.

Some of the motivational speakers mentioned in the podcast:

Zig Ziglar – more
Tim Ferris – more
Tom Panos & John McGrath – more
Trevor Hendy – more

If you like this podcast: “Investment savvy mortgage broker and why interest rate is not king?”, don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Free resources: 20 Essential renovating for profit tips

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