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Live Questions and Answer Chat on Property Investing – June 2016

The Property Couch podcast is all about helping others avoid making bad property investment mistakes and sharing the insiders guide to property investing. That is why on the 29th of June 2016, Bryce and Ben decides to hold a Live Questions and Answers Chat on Property Investing so that we can interact directly with our fellow listeners. Thank you to all of you who have joined in and if you would like to watch a replay of this, here’s a recording on Youtube:

List of questions Answered:

  1. Will Sederino: My question is about claiming depreciation on an existing property that has been renovated. We are about to purchase a property (using Empower Wealth’s Buyer Agents) that has recently been renovated by the previous owner and wonder whether we can claim depreciation on this renovation even though it was not us that completed it. My gut feel is that we would be able to? Is this correct?
  2. Mitch Scholard: G’day fellas, wondering your thoughts on which capital city will see the best capital growth over the next 5 years.
  3. Luke Stirton: Does development and renovation provide the secret to accelerated gains in today’s increasingly harder market to get ahead?
  4. Angela Cerasi: Hi guys, I am new to property investing and am currently in my research phase. Have listened to all your podcasts and enjoyed them immensely! I have 2 questions. (1) If a potential investment property is to have owner occupier appeal, then won’t you be competing with owner/occupiers when it comes to buying? From what I understand this means you could be competing with emotional buyers who could push the price up. I don’t think renovating is for me, so I would be buying a place that would be pretty much ready to be lived in by tenants. I of course want to find an area which is gentrifying, but wouldn’t owner/occupiers who are looking for a great buy also be looking for this too? (2) If a buyers agent takes a fixed fee, how much time would they generally dedicate to finding your property? Do you come to them with the city/suburb in mind or do they come to you with those details based on your personal situation? Do they keep looking for you until a property is successfully purchased? I appreciate that all buyer’s agents would differ but maybe you can give me an idea of how it works?”
  5. Maria Li: Can you do a PAYG withholding variation the first year that you own investment property (based on projected cash flows) or do you have to wait a year so that you can base future withholding variations on the previous year?
  6. Leisa Caines: Hi Bryce & Ben, love the podcast & your book. Hear you talk about finding an investment savvy mortgage broker but where do you find one? I’m in North west area in Sydney
  7. Brad McCreadie: Would you buy now or wait to see what happens to apartment prices in Briz. Looking at a 2 bedroom as owner occupy initially but then to use as investment.
  8. Karl Frank: Hi Guys. What will be the impact to the housing market if Labour win the next election and implement their changes to the Capital Gains Tax as it relates to investment properties?
  9. Mark Rogal: If Labour win the election, negative gearing and CGT changes won’t kick in until mid-2017. In your opinion, what is the most likely scenario for prices of established homes between now and July 2017? Thanks for the great insights! Cheers!
  10. George Kallinikos: I was wondering what is a suitable time frame is to wait it out during a period of experiencing little to no growth. I have owned a one bedroom apartment in a Melbourne blue chip location of Hawthorn since 2008 and it has barely kept up with inflation. This has left me disillusioned during a period where Melbourne overall has seen incredible growth. I understand exit / repurchase costs but also realise that the opportunity cost of this investment has been quite high. What are your thoughts?
  11. Bradden Mitchell: GDay Bryce & Ben. Does an investment grade property have to be over $500K ?
  12. Jack Killalea: If there is a significant price correction in the CBD apartment market over the next 2-3 years, will these apartments become potentially good investments or because they lack scarcity they will always be fundamentally not investment grade?
  13. Geoff Smith: Hey guys just a quick question, how does it work with using parents equity from their homes. How does the loan get structured or would it be used as a line of credit against there property?
  14. Graeme Ash: Hello Couchers, Great Show 🙂 Quick question – with banks only lending 60% for loans, do you think it is better to go for the biggest, blue chip, investment grade, growth asset you can afford using all your super or go for a cheaper property so your 40% does wipe you out and you can start saving for property 2.
  15. Felix Tjandrawibawa: What’s the best way to estimate capital growth for a suburb? Are you guys looking at historical growth (if so – how long do you guys look for?)?
  16. Rachel Hubbard: Hey guys. I’m now in a position to buy my next investment property. However my financial goal is to pay off my ppor in the next 5-10 years. Given that property investment is a long term strategy, do you suggest buying another investment property in an attempt to gain equity and sell in 5-10 years to pay off my ppor? Or given the high costs involved in buying/selling, should I look to invest in other ways to achieve this goal?
  17. Alex Hill: Are all house and land packages dud investments? In 2013 I bought land in North Lakes QLD and built a lowest house. I spent about $50K over median price for the area, trying to maintain some owner-occupier resale appeal. It’s currently cash flow neutral but I’m concerned there will never be any growth, and I’ll now struggle to accumulate a deposit for a second investment property. What are your thoughts?
  18. Amy Hambin: When building an investment property is yield calculated on land and construction costs or the first valuation on completion?
  19. Daniel Stocks: Hi guys, do you often come across clients who’s properties come in at less than purchase price when applying for finance?
  20. Sam Hockey: Hey guys, am I better off looking at an investment property towards the upper end of my lending capacity ($800k) to get into the better areas of Brisbane or looking further out for something around $400k to setup my next investment property purchase sooner? Love the podcast I’ve just finished it for the 2nd time around!!
  21. Richard Bristoe: Hi Bryce and Ben, I just want to ask what are your thoughts on Brexit, and how it will affect the Australian property market in the short and long term?
  22. Mitch Scholard: Would love your thoughts on the Sunshine Coast, I feel like it has great owner occupier appeal but not sure it has the income to keep property prices increasing.
  23. Daniel Stocks: If looking for properties interstate in unfamiliar areas, what advice can you give for narrowing down investment grade suburbs?
  24. Tammy Nguyen: What are your thoughts on the Logan area in Brisbane?
  25. Sam Hockey: How much does a Buyers Agent cost?
  26. Gaz Slater: How long do you wait for a city that’s nearing the bottom of its cycle before buying. Eg Perth.

 

Episode 066 | Winter is coming and the air will be colder up high

Well, technically winter is already here. However, we will be talking about the Property Market in this episode and for all of you who are a fan of Game of Thrones, you’ve guessed it right. It’s not going to be a good news story.

Now, you’ve heard us talking about the danger of high-density developments before but this time, we are hoping to solidify our message by sharing some numbers with you. It is not a secret that we’ve seen a whole lot more of high to medium density apartments coming into the market in the last 24 months and a lot more will be completing in the next 18 months. Below is the table that Bryce and Ben were talking about in the podcast.

 

Capital city # of Unit Sales Average Annual unit sales past 5 years Total New Units next 12 mths Total New Units next 24 mths
Sydney 34,216 43,442 34,300 81,696
Melbourne 28,506 30,781 29,541 80,503
Brisbane 15,880 14,932 16,652 44,511
Adelaide 6,988 6,195 2,581 6,002
Perth 5,331 6,834 7,031 13,797
Hobart 1,026 1,005 201 442
Darwin 864 1,026 985 1,256
Canberra 3,384 3,929 811 2,922
Combined 96,195 108,144 92,102 231,129

* This data is an extract from CoreLogic’s article dated 16 May 2016 called ‘Record high unit construction increases settlement risk’. To read CoreLogic’s commentary, please click here.

So how will this affect the Australian Property Market and its existing properties? Will there be a significant market correction and if so, should buyers stay off until this happens? Bryce and Ben will also be answering a question from Vlad:

John Symond on 3AW predicted a 10-20% fall in property prices if Labour’s policy on negative gearing were to be implemented. Given the uncertainty, is it prudent to wait until after the election to make decisions about investing in property and to see, should labour win, what their sledgehammer will do to the market?

 

PS: We’ll also be holding a Live Q&A Event on Wednesday, 29th of June at 8:30 pm. Check out our Facebook page for more information!

If you like this episode (Winter is coming and the air will be colder up high), don’t forget to rate us on 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/

Episode 62 | Does the Great Australian Dream still exist?

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.

Episode 056 | Q&A – Exiting a contract, crowdfunding, what’s the impact of global events on Australia Property Market and more

It’s Q&A time! 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!

  • Exiting a contract question from Alex: Hi, Just looking for some advice as the more I listen to the podcast (and read your book), the more I think my first IP buy could be better. I’m currently on a defacto visa so can’t buy anything but new properties which led me to an off the plan development in Brisbane. While its marketed very well and made out to be a great buy, it goes against all you talk about- high rise, buying through a unqualified salesman, no room to improve, rental guarantee, and high strata. At the time it looked good but the more I understand what makes a good investment, the more I think I could do with the $40k deposit I put down. My question is, is there any way out of the contract that won’t cost me? It’s not due to be built for another 2 years so wondering if I could ask the developer to renege on the contract without penalty or even onsell it for cost price. I’ve started putting away some cash every week just in case it comes in undervalue but would rather not be in the position of ‘hoping’ this doesn’t happen. Would appreciate any advice to help!
  • Crowdfunding questions from Carol: I have heard people talking about “crowdfunding” being the next property investment strategy. What is “crowdfunding” and how will it work?
  • Ownership questions from Rob: What property ownership structure should investors use when buying an investment property? Individual, trust, company etc. Is there a need to balance tax advantages with long term asset protection on this issue?
  • Global events question from Cookie: I have an economy/finance related question and would like to hear your discussion on it. As we step into 2017, the market has been flooded with negative sentiment news. Lots of countries are under the water as oil and other commodity price plummet. China economy slowdown and share and currency tumbled. In the middle-east you have ISIS terrorist and European country have migration crisis. The central federal government around the world response to the crisis with more and more quantitative easing money printing. I feel like 2008 all over again and this time the crisis is on a global scale.The question I want to raise here is what will happen to the property market and banking policies if the crisis come in the near future? Few friend of mine thinking that the property price will go down like during the great depression. Am I best to wait until the crisis come and then purchase undervalued asset? But if there is a crisis and bank run, will interest rate raise to double digit and banks tighten the lending? What happen to my home loan if there is a bank fail? European central bank is doing negative interest rate already, will Australia heading to this direction one day? How should I position myself now so to be prepare for the day to come?
  • Case study question from Chris: Brief Bio – 33 yrs old. married with one child, live in Sydney, workfull time. have three properties. two in Townsville (both rented) building one in Melbourne currently. Currently renting in Sydney as units where we want to live sell for $800 k to $1 million. However we can rent and invest. We put all our money into our offset and pay out the credit card at the end of statement period. We also have a full functioningPAYG withholding variation in place.
    • Question 1 – with the house I am building in Melbourne. Will I ever be able to claim back the GST I have paid in the build contract?
    • Question 2 – With one of my properties in Townsville I am concerned that our body corporate fees are way to high. We pay over $5k pa for fees. No lift, no pool in complex and it is a three story masonry construct building. How do I compare if this is the going rate in our market?

 

References:

 

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/

Episode 035 | What does the PIPA Annual Investor Sentiment Survey means?

In this podcast episode, Bryce and Ben will be explaining the recently released 2015 PIPA Annual Investor Sentiment Survey and help our listeners in understanding what the report means to property investors and the industry itself. Some of the key insights of the report include the impact of APRA’s regulation on residential real estate, overall sentiment on how the market is performing and where it is heading, where does most investors get their property investment advice from, which state capital provides the best potential for investment and more.

Bryce and Ben will also be spending the first half of the podcast discussing about this week’s change in lender’s interest rates on residential properties and the logic behind this decision. Listen to the podcast now to learn more.

 

Free resources mentioned in this podcast:

 

If you like this episode (What does the PIPA Annual Investor Sentiment Survey means) , 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/

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