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Episode 088 | Q&A – Investing in Newly Developed Areas, Getting into the Property Market, Career as a Buyers Agent and more

Last week’s podcast had been quite an interesting one! We strongly recommend you to listen to it twice to make sure you don’t miss out on Dr Andrew Wilson’s outlook on the Australian Property Market. This week, we are going back to Question and Answer episode and Bryce Holdaway and Ben Kingsley will be discussing:

 

  • Question on a career as a property professional from Hayden: To the Property Couch, I have a couple of career questions to ask but firstly I just wanted to share my investment story so far and why I think what you are doing is so important. If I had your advice earlier, my circumstances would be much different. I am currently 25 years old; I began my investment journey when I was 17. My father suggested using the money I had saved for a car to use it instead to buy a house. This was in 2008 when the Rudd government was handing out the huge first home owner grants, when I had my first meeting with a mortgage broker (not even knowing what a group certificate was) they were suggesting I buy an off the plan unit. So put signed up for one in Frankston, Victoria from a company thinking they were giving me good property advice. This purchase eventually fell through due to the bank evaluation not coming through at the correct price. Then I signed up for another off the plan unit in Langwarrin, and after two years they had not even begun construction because the council was saying there was endangered fish in the creek near by. So I pulled out of that one and tried to purchase one in Carrum Downs 6 months later and this one fell through because the bank wanted 20% of the loan. Friends and family were telling me to give up by this point because of how upset I was getting, but I stuck with it and purchased one in Langwarrin. This time, a 2 bed 1 bath unit. This then turned out to be a very poorly built unit and eventually I received an insurance claim of $20,000 to fix the poorly built unit. After 4 years, this property has not delivered any growth at all and doesn’t look to in the near future either. Then I purchased a 1 bed 1 study 1 bath unit in a high rise in Ipswich, Queensland and this property has a lift, pool, spa, sauna, underground car park and a concierge.Even though I have made nearly every mistake you could make and still haven’t made a cent off property, I’m still obsessed with it and read and listen to every book and podcast and attended any event I can. I want to work in the industry to try to prevent this from happening to someone else but I’m not too sure what exactly I want to do. I was wondering if you would share some in-depth insights into mortgage broking and being a buyers agent. As much detail as you could would be helpful such as their daily tasks;
    (A) The pros and cons to each and how much they get paid?
    (B) And your thoughts on mortgage broking franchises or are you better starting off on your own?
  • Question on new developments from Brad: I realise that you guys are biased towards investing in established homes, usually with a short disclaimer on how you may have invested in new developments at some stage in your lives. In the interest of a more balanced argument, I feel it would be beneficial to offer someone in the industry who focuses on investing in new developments the chance to put their views forward. Just as there are good and bad established homes the same rings true for new or off the plan developments.
  • Question on next step in property investing from Damien: Love the podcast, learning so much each episode, feels like I’m completing a degree for free so thank you so much.
    I recently purchased my first property under market value (purchase price $420k, my banks value $540k) 3-bed townhouse on 452m2 in Kenmore, Brisbane. I had to use LMI ($18,000) due to only 5% deposit which basically brought my loan up to $420k. I want to continue to accumulate good properties. My financial decisions i.e lifestyle was poor in the past but over the last year I have turn that on its head. I have $20k in cash now and I’m wondering what would be your advice for my next move. I’m making sacrifices to get ahead. I live in the townhouse with 2 tenants getting 360 a week for cash flow. I have an interest in renovation also and I’m looking in the Ipswich area. Should I hold off or move again swiftly?
    Thank you for your help.
    Go the Lions 🙁
  • Question on cash flow from Ben: Hi guys, love the podcasts! I stumbled across one of your podcasts when I was searching for investor information and enjoyed it so much that I went back to the beginning and listened to every single one in the space of about 3 weeks! I’m 21 and working part time whilst also studying. I am planning and on track to have a 20% deposit on a 400k house saved up in the next 12 months. However, due to the nature of my work (personal trainer) my weekly pay can drastically vary (anywhere between $300 and $900 per week, with an average yearly earnings of around $25,000) and the fact that I will still be studying and unable to work full time to increase cash flow for the next few years, I visage that I would have next to no chance of being successful in getting a loan to match my deposit. I want to do whatever I can to get into the property market as soon as possible, but considering my circumstances and my end goal (early retirement on 100k+ per year) is there anything that I can do to get into the market sooner rather than later without substantially increasing my cash flow? Or should I just keep saving and wait it out until I have the cash flow to match my deposit?
  • Question on investing in newly developed areas or established suburbs from Stephen: Would you be better to build in an area with established housing nearing the end of its development life where you know the quality of the area. Or in a new development with no housing as yet but a big blueprint for long-term development? Would you get a bigger capital gain in the new area over time vs potentially small capital gain in established as the capital gain has already expired?

 

If you like this Q&A episode (Investing in Newly Developed Areas, Getting into the Property Market, Career as a Buyers Agent and more), 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/

Facebook Live Bonus Episode – Q&A

Thank you for coming to our Facebook Live event on 13th of Sept! We received a lot of great questions that night but unfortunately, time ran out and we couldn’t answer all of your questions. We really do appreciate you taking some time away from your busy life to listen to us so that is why we are recording a bonus episode (or as Ben called it Bonusisode) today to answer all the remaining questions!

 

And for your convenience, here’s the list of questions that we answered in this episode along with the order they are in. 🙂

 

ps: if you aren’t sure what we are talking about, check out our Facebook page! If you don’t have the book, you can get a copy here.

 

 

 

From Order Message
Chris Topher 1 (Time: 01:00) Assuming one has a portfolio of 5 investment properties and has entered the debt retirement phase, what does this actually look like? Is it a matter of spreading all excess cash flow evenly across the offset accounts against each loan until they are all cash flow positive or do you target the biggest loan and pay that out first (by matching the outstanding loan amount in the offset account) and move on to the next biggest loan? If these are all interest-only loans with the interest-only period ending for all 5 loans over the next 18-24 months how do you manage this, as it wouldn’t be affordable to any family budget for multiple loans to become principal and interest, so is it a case of constantly refinancing these loans and staggering the when they come out of their interest only period?
Adeline Teo 2 (Time: 03:17) What are your thoughts about having a property portfolio with a mixture of properties, some with good rental income and some with good growth potential but negative net income?
Ashish Isaac 3 (Time: 04:10) Hey guys love the podcast, and the book. I have a financial question to ask. I currently have a principal place of interest (paying P&I for the next 3 years, and I can’t change that as I have just fixed it unfortunately), now for example and using round figures, say if I have a saving of $25k, with a current monthly surplus of only $500 would I be better off to use my savings to pay of any agent fees (e.g. buyers agent, financial planners etc.) and with what’s left over use that as part of the surplus for the next 3 years until I can release more funds from my principle place of interest, or use all the savings to put it towards the deposit for my first investment property, this is to achieve retiring with $2000 per week hope this makes sense. thank you for all the information you have provided us this far, really appreciate it. cheers Ash
David-Anthony Gunter 4 (Time: 06:05) Love the podcast and book! A massive fan! I have a question about inconsistent bank valuations. I purchased a two (2) bedroom unit in Rosanna in Melbourne last year in November for $275,000. I purchased this through a Buyers Agent (not you guys….SORRY!!!….but I followed the principals I have learned in the podcast) The settlement was Feb 29 2016 and I had the property re-valued a week later by several banks. I had a valuation for $480,000….$330,000….$400,000 and $295,000!!!! Is this common???
Ryan Price 5 (Time: 08:27) Hi Guys.. 26 years old and Looking at purchasing my first property. Is it better to buy a 1st home (owner/occupy) or would it be better to buy an investment property first and continue renting (minimal rent as it’s the family home so handy for saving)
Samantha Rackley 6 (Time: 08:53) Thanks so much for your time tonight – great job! I am confused about the difference between capital growth and income (yield) returns? Is one more important than the other or should you look for a property that is high in both returns?
Evon Fung 7 (Time: 10:27) Hi guys, love the podcast and found the book really helpful. I’ve been using a great budgeting software for the last 10 years but I recall you mentioned something in one of your podcasts that you may have a software which can track budgeting. Is this available? (ps, will you be at the Property Buyer Expo in Sydney?)
Graeme Ash 8 (Time: 12:14) Big thanks to Jake and co recently for their help!
Quick Q:, With investment properties, is it work getting a regular valuation say every 2 years to check available equity for next property or rely on market comparable?
Jack Cole 9 (Time: 13:56) Love ya work boys! I’m 25, if I could change one thing in the world we live in, my very long term goal is to introduce property investing as a school subject in years 11 and 12. I’ve been lucky enough to have family who invest but not all kids are. What are your thoughts?
Jag Randhawa 10 (Time: 15:52) I am a passionate and always ready to learn individual. I have recently developed a keen interest in property market. Where do I start if I want to make a career out of it?? What sort of options do I have and what courses are must before I even think about stepping my foot in the market?? Really appreciate all the info u guys give out for free. It’s GOLD.
Jag Randhawa 11 (Time: 16:32) I am thinking about engaging a Buyers Agent once my strategy plan is build, but how can I make sure that my BA is not getting me into something that favors him more than me. By that I mean how can I make sure that he is choosing the right property for me only and not looking just to sell one??
Jaye Kershler 12 (Time: 18:11) On a high income for next 2 years would you buy a more expensive eg 600k property or a 450k property
Johnny Rambo Azzopardi 13 (Time: 19:13) Hello guys, do you think the Gold Coast will bring capital growth as the media and buyers agents would have you to believe in the mid to long term.
Leisa Caines 14 (Time: 20:53) If I had access to equity to buy a ‘cheap’ investment property now should I buy one now or wait 12mths to when I have more equity to buy a more expensive Investment property?
Maria Austin 15 (Time: 21:38) Hi Ben and Bryce, I can’t get my head around how you can keep leveraging equity out to purchase more properties without running out of borrowing capacity, assuming that you are only purchasing only blue chip properties that don’t quickly become positively geared. Surely at some point the banks will stop lending to you, even if you have the equity. p.S. Hi Ivise 🙂
Matt Bray 16 (Time: 24:14) Hi, my question is based on a first home buyer, how much would you recommend is needed for a first investment property and would i be better buying when i reach this sum or saving for a bigger deposit and buying a bigger investment ? thanks!
Micky Marafioti 17 (Time: 25:15) Do you have any thoughts on investment in Port Adelaide, in Adelaide. Recent times has seen it to be a semi low social economic area, but there is enormous residential and commercial developments occurring there at the moment.
Nat Bowden 18 (Time: 27:21) Gents what to do next? Own a townhouse as a ppor and will keep it as an investment going forward. Looking to buy a family home in 1-2 years. What to do? Save cash for this or buy an investment to leverage into the family ppor home?
Robert Thomas 19 (Time: 28:31) Hey guys – made it through the first 35 podcasts – great stuff. Where would you buy in Melbourne right now if you’re trying to stay under the first owner grant limit (<$600k)?
Chris 20 (Time: 29:45) Hi guys.
i’m looking forward to the Facebook event.
I have another question for you (number 4)
Is there any chance you can discuss in depth the process of buying a property through SMSF. ie the associated costs, required structure and minimum LVR.
Thanks
Chris
Maria Li 21 (Time: 31:00) Hi Ben and Bryce
I understand that the process of building a portfolio involves repeatedly taking equity out of existing properties to purchase more properties. I’ve heard multiple stories of investors being able to repeat this process every 1-2 years.
What I can’t wrap my head around is how an investor can take equity out of their properties every 1-2 years without falling short of lenders’ serviceability requirements.  Each time you take out equity, you are essentially taking out another loan, and the lender needs to know you have the income to service that loan. Unless you are buying only positive-geared properties (which most of us aren’t), surely at some point a lender would tell you that you’ve run out of income to service another equity release loan… I understand that part of the answer is that properties become positively geared over time, but that can take 5-10 years. Some of us would like to buy more than once every 5-10 years.
This is assuming all the loans in the portfolio are structured as interest-only loans with offset accounts, and that all spare cash is put into the offset accounts rather than paying off the loans. In the eyes of the lender, this means that all your loans are still at their maximum/initial balance. Theoretically a lender shouldn’t be willing to keep lending to someone who (on surface) never pays off their loans, and yet keeps taking out more loans…and yet that’s what is done by investors all the time!
What is the piece of the puzzle I’m missing?  Ben and Bryce – how does it work? As you know I’m a big fan of the podcast, keep up the great work!

 

Episode 080 | The Four ‘D’ words that equal a motivated seller!

One of the negotiation tips mentioned in previous episodes is to understand the vendor’s motivation to sell. Once you understood that, you would have a better idea on what to negotiate on and increase your chances of securing that property. But as always, this is easier said than done because how would you know if the real estate agent is clouding the truth? Hence why you need to make sure you are asking the right questions, in the right way and is capable of assessing the agent’s reaction to your questions.

 

In some cases, some vendors are extra motivated to sell and you can take advantage of this to help you boost your chances. So in today’s episode, Bryce and Ben will be discussing the four ‘D’ words that would indicate a very motivated seller. They will also be sharing some of the questions you need to ask to spot these situations, answers from real estate agents that you should look out for and negotiation tricks that you can use if the vendor’s motivation fall into these 4 categories. Start listening to find out more.

 

If you like this podcast: “The Four ‘D’ words that equal a motivated seller!”, don’t forget to rate us on 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/

 

Episode 078 | Ten Biggest Risks when Investing in Property in Australia

Investing in property is considered as a relatively safe investment class but as with other types of investments, there are some downfalls that you need to be aware of. So in this week’s podcast, Bryce Holdaway and Ben Kingsley will be sharing their ten biggest property investment risks.
Ep 78 - 10 Biggest property risks by The Property Couch 4

They will be unpacking this list from a macro point of view such as factors that are beyond an investor’s control down to a micro level. Bryce and Ben will also be discussing some risk mitigation strategy that investors can apply when building their property portfolio.

The first macro risk is General Market and Economic Risks. Although each one of us contributes to the country’s performance as a whole, individually, we still can’t influence it much (unless of course, you are a multi-billionaire). So, if a country is performing poorly for example, during the GFC period, some property market would be affected, and this would impose some degree of risk if you are a property investor. Economic activities in a state level also could be a risk because this affects employment rate in the area and hence, your potential tenants as well the value of the investment property.

Listen to the podcast to find out the other 9 property investment risks.

 

Some of the resources mentioned in this podcast:

  • Webinar Replay with Jane Slack-Smith and Peter Koulizos – Register here
  • Facebook Live Chat (September 13) – Join here
  • Vote for us for the Reader’s Choice Award – Vote here
  • Episode 5 – Asset selection – Listen here
  • Episode 31 – Checklist to getting a great property manager – Listen here
  • Episode 53 – The Money SMARTS System – Listen here

 

The Game of Property Investing

Learn to Play the Game of Property Investing Like a Pro!

We’re excited to be releasing this new educational video to further help you invest like a Professional.

In this video we set out to prove that not every property is created equal when it comes to investment and it’s our job to help you learn what makes for smarter investing!. We will highlight the factors and variables that expert property investors consider when selecting the right location and then the right property in this location. This research approach takes into consideration:
– Supply & Demand Variable
– Human Interest and Human Behaviour Influences
– The Practicality Test
– And more……

So what are you waiting for? Go ahead and register below and we’ll see you on the other side to teach you more about investing like a Pro!

 

Get Access to The Game of Property Investing Here!

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And if you have yet to subscribe to the podcast, you can subscribe here: Subscribe on iTunes | Subscribe on Android

 


Transcript:

Bryce: Hey there folks! I’m Bryce Holdaway, he’s Ben Kingsley and we are the hosts of The Property Couch which is the Insider’s Guide to Property Investing and today we want to show you how we helped people build portfolios for a passive income but it’s not just about investing on its own, there is so much to unpack Ben.

Ben: There is. It’s a game and there is a science to this game so what we’ve decided to do is we are going to show you how we play the Game of Property Investing. So you can see some cards behind us. We are going to talk to those cards and we are going to give you a bit of sneak peek in terms of how we play the Game of Property Investing aren’t we Bryce?

Bryce: We certainly are because we’ve got the view that searching is not researching. When it comes to residential real estate, there are no two properties that are the same. I always think that it’s like a fingerprint Ben, that even though there are subtle similarities they are always different. So just because you’ve lived in a property or just because you rent a property doesn’t necessary mean that you understand property. And we are going to make it a thing of the past Ben because once you’ve finished watching this video, hopefully, all of you would better understand a few things. Supply and demand and what else Ben?

Ben: Supply and demand, the practicality test, the human interest and human behaviour drivers, getting into the buyers’ psychology. We want to 10x your property investment results and we are going to show you how to do that. So why don’t we go back here?

Bryce: Alright.

Ben: So let’s take a quick look. Why do we do this Bryce? Why do we invest in property?

Bryce: Well ultimately it’s not to just impress our friends with how many properties we have. It’s to provide a passive income so that we can get two things back, our time and our experiences and that is what it’s all about.

Ben: It is. So we are talking about trying to create passive income. We are also trying to make sure that through research and through understanding the psychology of the buyer you can get an outperform result with your property investing. So, a little teaser here Bryce haven’t we? We just want to talk through this and then on the other side of this video we are going to unpack that in a greater capacity so that you can really get to see how two experts go about selecting the best location and the best property in those locations.

Bryce: That is very true Ben. So the number one point that we want to get through right here right now is very simple. The market is generally made up of owner occupiers and investors but the important thing for investors to understand is we want to be targeting properties that cater to this market here of the owner occupiers, not the investor market because quite simply, it is a numbers game. 70% of the market for any capital cities or any built up areas are generally made up of owner occupiers and roughly 30% is made up of investors. So it actually just makes sense to chase this sector of the market than this one Ben.

Ben: That’s right and all those people who listen to our podcast understand this because we take the time to educate you about the science that is property investing and this is no difference. When we get into the psychology, the human interest and human behaviour, we actually get to the next layer which is the practical reason why we invest and why they buy what they buy because they buy with their heart Bryce don’t they? They don’t buy with their head. So naturally they are the ones that are pushing the value higher. On the other side of this video, you would be able to see exactly how we go about doing this. Let’s give them a little teaser Bryce. Who are some of the players and what are some of the variables that we look at?

Bryce: For most people, the property is going to be driven by three variables. Economic activity, where am I going to earn my income. Human interest which is largely the things that people want to do on the weekend or the things that drive them to be in the suburb and human behaviour, are they time poor? Do they need to be close to the city, all those sorts of things? So economic activity, human interest and human behaviour.

Ben: That’s right and it also comes down to supply and demand. So there is a classic case of supply. If it’s in abundance, then technically prices won’t grow but if it is scarce, if there is some scarcity around what these people are looking to buy, ultimately you can find these nuggets of gold and get the best location and buy the best asset. That sort of links into this sort of concept. When we got these audiences, Bryce, if you want to jump out there, you can see basically, we’ve got different types of people looking to buy and connect. And they are trying to make decisions on the types of properties that they buy, the floor plans, the locations and the lifestyles drivers attached to that. So you can understand that there is lots of moving parts and on the other side, as I said before on this video, we are going to unpack it. We are going to see exactly how we put the Game of Property Investing together.

Bryce: So the question to you folks is this. Do you want to understand the Game of Property Investing? Because if you do, click on the link underneath here and we are going to take you to the next one. We are going to show you how all of this works, how it all comes together and if you can satisfy the practicality test, as Ben said before, chances are you will 10x your property investment results.

 

 

 

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