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404 | What do Inflation, Interest Rates & Broccoli have to do with Property?!

With higher interest rates and tighter budgets on the forecast, some folks have been left wondering… 

How does lifting interest rates – when everything is already so expensive – actually help with inflation??” 

And for today’s episode – what do interest rates and inflation have to broccoli and property?! 

 

To answer this, we’re holding a special 101-crash course in inflation to explain why the Reserve Bank of Australia has taken its course of action and Ben dovetails it all together to demystify how it impacts and interacts with the Australian property market.  

And since it’s a massive Q&A Day, we’ve got tons more inflation-themed questions from folks probably wondering the same things as you! We’re unpacking… 

  • Debt to income ratios (aka. the tool banks use to assess your credit worthiness): how can you restructure your debt to best benefit you?  
  •  And for investors wanting to release equity – beware! We’ve recently been hearing certain tax schemes that can reduce your 20-year loan to …4 years?!  

 

Tune in now folks, this episode has tons of gold on inflation to help you get through these rate hikes.

 

Free Stuff Mentioned… 

  • Fill out PIPA’s 2022 Sentiment Survey: Folks, this year’s Sentiment Survey by the Property Investment Professionals of Australia (PIPA) is perhaps one of the most important ones we’ve had yet! Let us know your experiences as an individual in the property market and have your voice heard. Complete the survey here.  
  • BingeGuide to Property, Finance & Money Management – Download here  
  • FREE eBook – Make Money Simple Again  
  • FREE Book (Just pay for shipping!)– The Armchair Guide to Property Investing  
  • Introducing moorr: our newest evolution of the MyWealth Portal! Check it out here.  
  • Let us know how we’re doing! We want to know if we’re doing the right thing. Leave us a review here and let us know your thoughts.  
  • Watch the RBA’s August Announcement here: Hear the Reserve Bank of Australia’s newest cash rate here.  
  • Send us a question: Be featured in our next Q&A episode! Send us a Question via the SpeakPipe widget here.   

 

Want to work with Bryce & Ben’s Award-Winning Team? 

 

Here’s some of the gold we cover… 

  • 0:00 – A preview of today 😊  
  • 2:00 – The Sentiment Survey + tons of other free resources here!!  
  • 6:38 – 4 Golden Statements that Charlie Chaplin gave us…  
  • 8:52 – Q1) Inflation, Interest rates & Broccoli 
  • 10:11 – Inflation 101: Key concepts to understand!  
  • 12:21 – Was inflation imported into Australia???  
  • 12:59 – THIS is what happens if inflation gets out of control… 
  • 13:52 – So why has RBA taken this course of action??  
  • 15:14 – It’s about creating B_f_e_s  
  • 16:34 – Why Australia’s culture + housing system will ensure we will prevail!  
  • 18:14 – It’s because of these that lettuce and broccoli is expensive!  
  • 20:10 – The Reserve Bank of Australia’s 2 Goals  
  • 21:10 – Q2) Withdrawing Equity and Offset Mechanics 
  • 22:14 – Let’s be clear! This is a finable Tax Scheme!!  
  • 24:24 – Beware of people selling this theory… 
  • 26:20 – Folks, we see so many people make these mistakes!!  
  • 29:12 –How we would solve this…  
  • 31:30 – Going Liquid: Listen to this for options for releasing your equity!  
  • 35:10 – Q3) When Should I buy again? 
  • 37:40 – Should Ben (The question-asker) buy local?? Go through this thought process folks!  
  • 39:30 – The Commuter Belt Reset  
  • 40:04 – Why this question is really about Cost vs. Benefit!!  
  • 41:24 – How do CFOs, CEOs, Paper Planning and this question relate??  
  • 44:02 – Q4) Debt to Income (DTI) ratio  
  • 44:45 – What is DTI (and why does it matter??)  
  • 44:52 – How investors restructure debt  
  • 46:37 – How do lenders calculate your borrowing power??  
  • 48:47 – What happens when your DTI exceeds 6…  
  • 50:05 – The role of Loan to Value Ratios! 
  • 51:40 – Getting a lender who isn’t DTI certified – this is the catch!! 😮  
  • 54:28 – Make sure you unpack these numbers behind the DTI Scare News…  
  • 55:35 – Why new estates have high DTIs!  
  • 58:40 – How to change your DTI + get through this high-interest rate period!  
  • 1:01:40 – Have trouble managing discretionary and non-discretionary spending? Why not try moorr!  
  • 1:02:12 – Does that mean all property prices will drop?!  
  • 1:03:38 – Be a part of Q&A sessions! Send us a SpeakPipe here.  

And… 

  • 1:04:46 – Sticky fingers? Closed a tab by accident? Use this shortcut!  
  • 1:06:18 – How does property interact with inflation??  
  • 1:09:11 – What this means for property owners… 

 

401 | How Old is Too Old?! Refinancing, Retiring Debt & Starting Later in Life

We recently hosted our first webinar in nearly 2 years and — WOW what a time! With nearly 1.4K attendees, we shared tons of investing gold and received so many fantastic questions that we couldn’t NOT turn them into a Q&A session today 😉

That’s why today we’re answering one of the most common Qs we received:

 

How old is TOO old to start investing?!?”  

 

Like…how do Offset, Interest-Only & Principal Interest Only accounts work (in practical terms) to help you retire your debt? What are the fundamentals of Amortisation (we promise it’s not as scary as it sounds) and when are you too old to refinance a loan??  

We’re answering how you can use all of this to best position yourself for retirement, plus…

For single parents, Ben provides his #1 piece of advice to for building wealth into your retirement and we dive into diversification and buying the same suburb.  

So much to unpack, digest, and replay time and time again. Start streaming now for some evergreen content folks!!  

 

Questions We Answer…

Q1) Vaughan Nicholson on A question regarding retiring debt: 

I understand how filling up your offset account for your PPOR saves you a lot of interest and once offset is full you are only paying principal. 

The plan is then to increase money in offset account linked to investment property (IO loan) – I get that when that offset account is full then you are paying no interest on the loan. 

But what does that actually mean practically for an IO loan? Wouldn’t the bank still require the minimum repayment per month, irrespective of how much is in offset? Once you’ve filled your offsets, do you ever actually pay off the loan? Do you then switch to P&I as you’d be paying no interest? 

Thanks 

Q2) Stewart Cameron on Oldest age to reset to a 30 year loan 

[I’m] interested to know what the oldest age is that you can re finance to a 30-year loan? Assuming there is an age you hit where you can’t physically pay back the remaining debt…
If you’re in your 40’s will they still extend it out that long? 

Q3) Linoy John on Buying two properties in the same suburb 

Hi Bryce,
This question is for you as you were from Leeming. I have 2 properties in Willetton – 1PPOR & 1IP. Have I made a bad choice in purchasing a second time in the same suburb?
 

Q4) Stephen Moore on Investing for Single Parents 

At 47, renting and an income of 120000. Is it possible to be in the game to create wealth for a retirement? I don’t own a principal place but have savings of 180k.
Cheers, single dad 

 Some Listener Encouragement  

Hi Ben and Bryce.
My name is Arron, I was the one who purchased a Brunswick apartment in 2014, and contacted you with questions, then my story became Property Couch’s very first case study, in Episode 15!

I thank you both for the wisdom that you teach. 8 years on, I am still your regular listener, and I am still holding on that Brunswick apartment for cash flow. Although I have added one more townhouse into my portfolio 5 years ago.

 

Free Stuff Mentioned… 

 

Here’s some of the gold we cover… 

  • 0:00 – A snapshot of this week’s episode  
  • 1:58- If you’re new here, listen to this!!!  
  • 4:12 – How can you make your life matter? (Bryce’s Epiphany!)  
  • 9:34 – Q1) A question regarding retiring debt 
  • 10:26 – Amortisation: Let’s Break Down This Scary Word  
  • 13:30 – So, how often is interest calculated???  
  • 14:41 – Simple vs. Compounding Interest: How you can pay off your loan quicker!  
  • 16:30 – A Practical Guide to Offsets, Interest-Only & Principal Interest Only! 
  • 18:30 – When you would or wouldn’t use your offset to pay off your loan… 
  • 20:50 – Let’s Summarise!  
  • 21:54 – How can you place yourself in the best position for retirement?  
  • 23:59 – The Backstory to Q2 (Paying more interest…could actually be a good thing?!?)  
  • 26:59 – Q2) Oldest age to reset to a 30-year loan 
  • 27:23 – THIS is when you should be worried!! 
  • 28:04 – How lenders typically analyse older refinancing loans…  
  • 29:47 – Use this 1 thing to manage this minefield folks!
  • 31:10 – Our Answer: How old is too old to start investing??  
  • 32:26 – Q3) Buying two properties in the same suburb 
  • 33:04 – Let’s assess her Asset Selection 
  • 34:07 – How can you work in Diversification??  
  • 35:51 – Has she made a bad choice by buying in the same suburb?  
  • 36:53 – Refresher Class: The Fundamentals of Asset Selection!  
  • 38:59 – Q4) Investing for Single Parents 
  • 40:09 – Ben’s #1 Recommendation 
  • 43:37 – Why it’s so important to seek professional advice!  
  • 44:50 – Listener Encouragement: Arron – from our very first Case Study – is back!  

And… 

  • 45:45 – Why do we promote buying established properties? (This is a REAL message we received) 
  • 49:50 – Anxious about rising interest rates? Tune in here for a deep dive into the 2021 Census Data to allay those fears!  
  • 56:05 – Folks, remember these are actually amazing times for investors!!  
  • 57:14 – Mortgage Jail: Why is it happening?
  • 59:18 – Our Key Message for investing in today’s environment!  

 

394 | Do you NEED to choose between Lifestyle & Wealth?! – Q&A

It’s been a while since we’ve said this (which makes it even more exciting!!)…

Ben reckons he’s found his new FAVOURITE QUESTION!!!!  

That’s because this question is something EVERYONE can relate to: Do I need to choose between building wealth or living the lifestyle you want?!  

Folks, this is the type of thing that we deal with on an everyday basis!

We’re using our years of battle-hardened experience and razor-sharp knowledge to outline what this question essentially boils down to, revealing how thousands of our clients have overcome this dilemma, and recommending just one thing that can clear all the rocks and rubble on anyone’s investing pathway, making the journey more akin to a walk in the park.  

Plus we’re covering loads more territory including…

  • How does our $2k weekly passive income goal tie in with Super?!  
  • And we’re talking Equity – should it be used to refinance or kept for the rainy days?! Is there a catch all solution to this?! And given today’s rising interest rate market, is now a good time to be making this move?
  • We also reveal some of our biggest Do’s and Don’ts when renovating and share our top resources to help you get the best bang for your buck.  

So if you’re ready for lots of evergreen wisdom, tune in now folks! 🛠️️👷  

 

Questions we Answer

Bernie Blyth on How to hold properties with higher cashflow drain 

Hello Bryce & Ben. 

This is Benny from Bayside in Melbourne. Firstly, a quick thanks for the value-added content you bring.

My question today is about how to adjust one’s portfolio in response to maintaining a healthy cashflow. My wife and I live in Metro in Melbourne and have 3 kids between 10 and 16. We’re happy in our own home and have 2 investment properties. Now first, the 2-bedroom unit, we bought in 2006 has double in value and is now positively geared to a degree. 

In 2014 we bought a tiny but old 1950s brick house in one of Melbourne’s baysides suburbs, which is a land bank. On the positive side, it’s experienced capital growth in the interim and is situated on a block of land that has redevelopment potential such as a subdivision.  

On the challenging side though, it’s still negatively geared and being an older property, it doesn’t rent for anywhere near as much as the recently developed properties around it and even though we both work, we have the cost of 2 kids in private schools simultaneously for the next six years combined with the prospect of rising interest rates, we are considering our next moves in terms of balancing property growth, cash flow and lifestyle. 

In general, what options would you recommend for consideration?  

Jake on – Pulling out equity and purchasing another 

Good day Guys, Jake here. 

Chasing an answer for this question that’s been sitting on my mind for a little bit. So my partner and I have recently refinanced a house in the Southeast Suburbs and fortunately we’ve found that there’s a bit of equity in there which is good.   

Now, what are your thoughts on pulling out essentially every bit of equity in the property to then purchase another one given that interest rates are going up and then might be a little bit of a plateau or even a slight decline in the property market. I’d love to hear your answer. 

It’s probably pretty straight forward but yeah, I though it would be a good one to myself and probably a lot of other people who’ve purchased in that pre-pandemic period so I’ll wait for the answer and appreciate the feedback and also go the tikes and hopefully onwards and upwards you gain for this season. 

Cheers guys!
Bye 

Adam Lett on Planning include Super? 

Morning Ben, Bryce and team. 

My name is Adam and I’m a long time listener of your show. My question relates to the plane of 3 to 4 quality investment properties to derive an income of $2000 a week in retirement. I’m working towards this goal. 

My question more specifically is how is this plan ties in or (dove tails in?) with an individual superannuation balance? 

By this I mean, if I or an individual had a healthy super balance of a million dollars plus is the $2000 a week on top of the super? Really like to hear your thoughts on this, keep up the good work. 

 

Laura Turner on Resources to help with renovating 

Hello, I’m Laura, I’m from Melbourne. 

My partner and I own our own home and we’ve just purchased our first investment property which we have nearly finished renovating. 

We purchased an old house, 3 bed, 1 bath, and we’ve turned it into 3 bed, 2 bath, with a walk-in room and we’ve updated everything to be within this century. I’m a conveyancer. My partner’s a carpenter and our plan moving forward is to keep purchasing property to renovate as this is something we both really enjoy, plus we see it as a quick way to grow our equity. 

What I don’t really understand is how to work out all of the figures. 

This current house that we have renovated ended costing a lot more than we anticipated. I haven’t had it valued yet as we are not finished but I am crossing all of my fingers that we haven’t over capitalised and that we will walk right with some kind of profit and then nothing is certain however,I am wondering if there’s someway you can recommend where I can go to learn how to find the right houses to renovate, how to calculate cost and what the end valuation is likely going to be. 

Any courses, tools or calculators you can recommend we use before we can go ahead and purchase our next property would be super helpful. Thank you! 

 

Free Stuff Mentioned… 

 

Our Renovation Resources recommendations! 

 

Here’s some of the gold we cover… 

  • 1:15 – Ask us a question on our Speak Pipe for a chance to win our Start & Build Course!
  • 1:50 – So…how’s Labour going?  
  • 3:22 – Folks, the REALER you are the less….?  
  • 4:44 – Q1) How to hold properties with higher cashflow drain 
  • 6:35 – It’s really a question around C____  
  • 8:11 – THIS is what most of our clients do!  
  • 10:25 – The 1 thing that everyone needs in situations like these is… 
  • 11:39 – Getting wealthy and STAYING wealthy are 2 very different things folks!  
  • 14:46 – Couples that come to us often have THIS problem  
  • 18:12 – The Compounding Effect – why you should hold!  
  • 19:31 – Q2) Pulling out equity and purchasing another 
  • 20:49 – Ben’s Warning!  
  • 23:13 – Make sure you have these foundations down!  
  • 24:38 – If you release your equity now, you’ll get less… 
  • 25:00 – For all our listeners: NOW is a good time to do these things 
  • 26:20 –The 3 best equity release strategies!  
  • 28:35 – The 3 steps to go from here (If you need one, why not check us out? 😊) 
  • 32:22 – A shoutout for our clients!  
  • 33:07 – Q3) Planning include Super? 
  • 36:50 – Check out these examples too! 
  • 37:14 – Q4) Resources to help with renovating 
  • 38:18 – Why shows like “The Block” don’t WORK!  
  • 40:10 – The minimal rule of thumb for renovating 
  • 41:07 – THIS is where you’ll get the most bang for buck…  
  • 42:46 – How much should you spend on your specs?  
  • 43:17 – For repeat renovators, be careful about this exemption!  
  • 44:03 – Bryce’s top 3 considerations  
  • 45:45 – Why Renovating to hold is a better strategy…. 
  • 46:54 – How to test the asset’s location!  
  • 47:54 – Reno resources we recommend!  

And… 

  • 49:40 – Find your phone…from your watch?! (For you Apple Users)  
  • 51:03 – There’s a developing Building Supply challenge… 

 

392 | “Don’t land the plane during a storm”: Should you change investment plans?! – Q&A

We repeat! Do NOT land the plane during a storm!! 

What do we mean by this…?  

Well, in our minds, changing your investment plan due to changing circumstances is kinda like planning a flight and lifting off the runway…

And then hitting stormy weather.

Should you try and land the plan in the middle of the storm?!? 

You’ll have to tune in to the episode to find out what we think!! Since it’s a Q&A of course we’re flying this plane over looooads more ground like… 

Advice for a 16-year-old property investor?! (It’s fantastic to hear folks are having money conversations around the dinner table!)   

Residential vs commercial capital gains tax: where do they differ and how can you make more gains without being taxed like crazy!  

Putting property in a trust…or your name?! And what do Ben and Bryce do with their property portfolio?  

Plus Ben and Bryce share their top 5 favourite books (well Bryce sneaks in a 6th one 😉) and why they reckon you should give it a go too!!  

Read Ben and Bryce’s book list and the full list of questions below! 👇 

So if you’re ready, strap in cos we’ve got something for everyone in this episode!!  

 

Questions we Answer

Bee on Buying in a Trust or Your Own Name 

Hi Guys, it’s Bee here. We have family trust set up and (weaved?)a few of our investment property in them. We’ve recently gone to a buyers agent and they have mentioned that if it was them, they would forget about the family trust and bond in their own names to take advantage of the land tax threshold. Just wondering could please explain this further. 

 

Anthony on What advice would you give your daughter? 

Good day boys, Anthony from Adelaide here. 

Well done on the show, you’re doing a cracking job it’s really impressive. I’ve been a longtime listener first time caller. I went back and listened to episodes 1 to 20 as you suggest it’s pretty well captures all the errors of my property investing. Wrong areas, Spruikers, oh dear anyway I guess investing is nonlinear I’m pretty sure next time I’ll invest with you blokes. 

My question is, we are family who loves property investing, we talk about it all the time, we have our principal place of residence, we own that out right, we have three investment properties working on our 4th and my daughter would like to get into property, she’s 16 1/2, she’s at school, she got a part time job, she saved up about 12 grand so far, so in about a year she’ll have 20 grand. 

My question is, what would you suggest she buys? And what kind of structure would work? So i guess really, if it was your daughter what advice would you give her? 

Thanks boys 

 

Mark Seaton on CGT on Commercial same as CGT on residential
 

Hi Guys! Mark is my name and I live in the Southwest Town Country (WA?) 

I’ve been listening to your podcast for a couple of years. I haven’t got a everything in place although I do have a PPR and 2 rental properties. One rental property is a fixer upper at the moment which I bought at the start of COVID.

My wife and I have a business and we’ve just purchased a commercial property. I am not sure if this is in your wheelhouse or not but listening to your podcast for the last year, you’ve had people talk about tax and capital gains on residential properties.  Is Capital Gains when you fit out a commercial property, the same?

Do you have to keep all of these records and when you sell you property is the fit out cost come off or is that totally separate due to the fact that it’s a business as opposed to a building?

Just like your thoughts on that if it’s even in your wheelhouse. Anyways, thanks guys! 

 

Patrick on Circumstances when you would change your plan 

Hi Bryce and Ben. 

It’s Patrick here from the Sunshine Coast. I’ve a question around sticking to your plan vs. changing your plan. 

Essentially I would like to know what are some special events that might cause you  to change your investment plan or are you always better off sticking to the plan for the long term? 

For example, there might be a wide range of things like the property doesn’t grow as much as you would have thought or the yield is lower or there’s damage to the property or the holding cost increased significantly? 

I would just love to hear you guys have some discussions around navigating that choice to either stick to your plan or change your plan when things don’t work out the way you would like. Thanks! 

 

Sophie on Updated Books we Recommend 

Hi Ben & Bryce, Sophie here, loyal listener.

I listened to your podcast previously when you mentioned about books that you recommend.We’ve got some holidays coming up and I was hoping that you could give me a bit of arefresher as to what some of the books are that you recommend.Either property wise or maybe some other (shilady shibumshee?) you’ve been reading recently.Thanks very much love the Podcast. Bye bye.

 

Bryce and Ben’s UPDATED Top 5-ish Book Lists:

Bryce’s List:  

Ben’s List:  

 

Free Stuff Mentioned… 

 

Here’s some of the gold we cover… 

  • 0:38 – An Election & a Footy Match: Two big results in one weekend?! (Ben’s very happy with one of them 😉)  
  • 1:28 – If you’re a new listener or a seasoned listener, listen to this! 
  • 5:44 – Warren Buffett’s wealth was actually built from… 
  • 11:05 – Some advice for those thinking of investing now  
  • 13:30 – A shoutout to the ladies (We want to hear from YOU!)  
  • 14:12 – Q1 – Buying in a Trust or Your Own Name (The Pros!)  
  • 18:42 – The Cons! 
  • 20:00 – Let’s Clarify; we do not have Property in our… 
  • 24:47 – Q2 – What advice would you give your daughter? 
  • 26:50 – A couple of options… 
  • 29:35 – The types + structures we recommend!  
  • 34:15 – Q3 – CGT on Commercial same as CGT on residential?  
  • 37:42 – Breaking it down with an equivalent scenario  
  • 39:48 – CGT on Commercial: What’s different?  
  • 43:58 – Q4 – Circumstances when you would change your plan 
  • 45:00 – When you SHOULDN’T change plans (Doing these will halt your wealth…)  
  • 46:58 – Plans should include S___ testing!  
  • 47:42 – Should you land the plane during the strorm?!  
  • 48:57 – Your first strategy should be… 
  • 50:20 – We don’t usually do this but folks if you need help, check us out! 
  • 54:50 – Q5 – Books we’d recommend!  
  • 55:40 – Bryce’s top 5 booklist (*he may sneak an extra one in later 😉)  
  • 1:00:38 – Ben’s favourite 5 books (+ one lecture series)  

And… 

 

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