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Episode 180 | Building A Portfolio in a Changing Market – LIVE Q & A in Melbourne

The Australian property market collapsing. Housing market under the pump. Melbourne’s property downfall. House sales hit new low…

… folks, with headlines like these, we may as well call it a day, bid you farewell in a foreign language like old times, and exchange the ol’ investor returns for an earlier-than-planned retirement!

Wait, why would we say such a thing?

Well, you might’ve noticed — the market’s corrected and it’s making a LOT of folks out there nervous! And why shouldn’t it?

You don’t want to fork out the big bucks (probably the most you’ve ever spent) on a property that’s going to end in little-to-no return come market crash, right? Not to mention, you don’t want this said “investment” to wind up in an economic tsunami, which by the way, WILL happen when life follows the fate of a catchy news headline.

So… is that what’s really what’s happening here? Is the market seriously “bottoming out”… because, as far as we see it folks, we’re sitting pretty happy where we are!

BUT for the record folks, there ARE things you need to keep in mind come a market correction (whether you’re a current investor or just getting started)… so, what do you need to know?

We shared all of the exclusive hacks and current market news in our Melbourne LIVE Podcast last week… and we’re bringing the love to you right now!

 

Before we get into what you can expect out of today’s show, just a few quick shout-outs…

Are you coming to see us at the Melbourne Property Buyer’s Expo??

GET YOUR FREE TICKET NOW – Listener Discount Code: COUCH

Yep, if you want to learn heaps more about property investing, meet us and leave your wallet at home (in other words: spend ZERO money)… you should come and see us at the Melbourne Property Buyers Expo!

  • Saturday, 12:30 PM – Ben on How to achieve financial peace with five properties or less!
  • Saturday, 2:30 PM – The Property Couch with Greville Prabst, Executive Chairman of WBP Property Group and Judge on Nine Network’s The Block.
  • Sunday, 10:00 AM – Special Length Masterclass – Ben and Bryce with Special Guest to talk about Buying your First Home / Investment Property
  • Sunday, 12:30 PM – Bryce on 7 Ways to Build a Property Portfolio in a Changing Market
  • >> Learn more about each of the session here!

And…

 

Property Investors Council of Australia (PICA) is COMING TO YOU. Well, provided you live in Melbourne or Sydney! Meet and Greet includes a Q&A Session followed by a brief networking session. And old mate (and Chair of PICA) Ben Kingsley will be hosting!

Meet and Greet Sydney
Thursday 12 July 6:45PM – 8:30PM
GET FREE SYDNEY TICKET: PICA’s Meet and Greet

Meet and Greet Melbourne
Thursday 19 July 6:00PM – 8:00PM
GET FREE MELBOURNE TICKET: PICA’s Meet and Greet

 

BACK TO TODAY’S SHOW… What’s behind the headlines??

 

 

 

Episode 168 | Q & A on What % of your Income should you Spend, Borderless Investing and Smart Money Management Tips

It’s our favourite day of the month folks… Q & A Day!!!

And we’re covering quite a bit in a short & sweet amount of time today— including AN EXCLUSIVE ANNOUNCEMENT for our Couch listeners!!! (As it so happens, this was dropped with, “Yeah, go on, let’s tell ‘em” and a nod of the head… so an absolute scoop.)

Not only that, but also we answer 3 solid questions, thanks to the legends who leave us a SpeakPipe voicemail message (remember: we prioritise your Q if you do this too)!

But back to today’s episode — if you want to know what we think of investing in Hobart, and down in good ol’ Tassy in general (it’s been getting a bit of attention from a fair few property investors), OR you want to find out if now’s the time to invest in Perth … tune in.

But 100% TUNE IN if you’re keen to get on top of your Money SMARTS — we give you a rough rule of thumb for the amount of income you should allocate to your spending habits ie. How much you should spend on Bills, Living and Lifestyle and your Loan/s!!

 

The Q’s we’re answering are:

 

Question about investing in Perth vs Melbourne from David:

Good morning Ben, Bryce & The Stig,

I’m a keen Property Couch listener and thank you for your time generously sharing all your knowledge — it’s much appreciated. Just about myself, specifically: I’m a property investor with 3 properties — 2 in Perth, one in Brisbane. I’m a medical specialist with a good income and I’m looking to go again. I have a 900K pre-approval and looking at either Perth or Melbourne through a Buyers Agent. Clearly the Buyers Agent have biases… the Perth guy things Melbourne is a terrible place to Invest and the Melbourne guy thinks Perth is a terrible place to invest. If you had 900K, you wanted to go now and are a Buy and Hold investor that lines up with your ideas around a good quality growth asset, what would you do?
Thanks very much & come on the Dockers!

 

Question about Money Management Habits from Nerida:

What percentage of my income should be allocated to living and lifestyle account, primary account and payments account?

 

Question about investing in Tasmania from Stuart:

Hey guys, I just wanted to get your opinion on whether you’re focusing your attention on Tasmania? The reason for that question is I was just on a work trip to Tasmania last week, and there was a lot of commentary on the radio about shortage of supply in rental accommodation; even talk of people living in tents. I didn’t really get full across it … but something to do with legislation taking a long time to release land or planning approvals taking a long time, so bureaucracy essentially. I just wondered if any of this shortage of supply means your Buyers Agents were looking a little more closely at Tasmania, certainly on Hobart … I’m not sure whether somewhere like Launceston comes into that. But yeah, really interested in your take on what’s going on in Tasmania at the moment, especially people looking to make an investment entry sub- $500,000 as places like Melbourne and Syd make that harder to achieve. Interested on your opinion. Thanks very much!

 

P.S. The webinar we mention:

Webinar: Property Hotspots & How To Find Them: CLICK HERE to Watch

 

Episode 167 | When you SHOULDN’T use a Buyers Agent?

Alright, folks! Let’s bring on Episode 167!!

Today is all about Buyers Agents… and when you SHOULDN’T use one!

Yep — it might seem a bit strange considering Bryce is one… but we’re going there! And why? Well, we’ve received a couple of questions recently about the cost of a Buyers Agent, and whether or not this represents value for money

So, how much (in $$) is a reasonable Buyers Agent fee? — and WHY exactly do they charge what they do?

More importantly, how can you tell if you’re dealing with a Spruiker?

 

… just a heads up before we jot down the 2 questions we’ll be answering Folks, the 2nd question is particularly long, so if you can’t catch everything Bryce says on the podcast, we’ve got you covered below 🙂

So, the questions that came in are:

 

1st Question:
“Good afternoon Team. I have organised an interview with a Buyers Agent and they told me what I should do, which has been in line with the fundamentals of The Property Couch. But the bottom line is it’s $15,000 for them to find my first investment house! I wanted to think about the best way forward, and ever since they keep ringing, and picking on my FOMO, which has since turned me off using them. What I want to know is, what risk do Buyers Agents hold and are accountable for? Because as far as I can see, they don’t hold any risk in regard to a return on the investment I am left with. Should people place an act against its members to ensure a warranty or guarantee in place to hold these business accountable?”

 

2nd Question:
“Hi Ben. I have a question on using Buyers Agents. I am genuinely considering using a Buyers Agent; but the cost is much higher than other property professionals. I think that if the price was affordable, very few people would fall prey of the spruikers. Here’s what I mean: solicitors are equally important partners in buying a property and they are appropriately trained and their role is important — it’s actually mandatory to use a solicitor or a conveyancer and yet they don’t take advantage of the fact that you can’t buy property without them. Most charge around $2000 — and one can pay even less with conveyancers — I’ve used conveyancers twice in Victoria and paid $770. They arranged settlement, made sure your bank doesn’t delay to settle, they advise me on the contract, their fee is NO WHERE NEAR that of a Buyers Agent. BA charge around 10K when buying a $450,000 house, this is more than 3% — that’s a very high price to pay for financial advice. The other important person for a property investor is a building and pest inspector — and yet they are nowhere near what a BA charges… $100 will get you a building and pest inspection. Another important person — around $600 will get you tax information from an accountant so one can have a clearer picture on how one’s decision will affect one’s position, one can see whether they can afford the investment, they can also do the tax … and yet they charge nowhere near the BAs. Financial Advisors are equally important. They charge about $700 – $2000 their fees are around 1% of investment, the rate charge for investments in SMSF is also around 1%. This includes financial advice, assistance with selecting, usually investing in shares, which can be more risky than property. This is why I think BAs are overpriced and are very good at instilling fear in property investors when they fall into the hands of Spruikers.

The irony of this that the equity they normally use to buy an IP is usually from their home, which they bought themselves. I think that if a BA charged around $2,000 more people would use them and spruikers would be out of business. I’m also aware that some BA provide financial and strategy advice and, therefore, feel as if they should charge more. I don’t think most of them are qualified financial advisors, but they charge more than financial advisors. To be fair to them, they don’t call themselves as financial advisors but, rather strategists, which is the additional serving to source a property. I don’t think mum and dad need a strategy plan every time they buy a property, and yet they pay for this every time they buy a property through a BA. And the ones I have spoken to say they charge so much because they don’t only do sourcing. Financial Advice can be done once, and one can pay, say, $1000 – $2,000 session for the planning, formulation of the strategy and the sourcing … be not more than $2,000, which is less than a lot of property investment professionals. I think the high cost of BAs and the fear in which they instill in investors make those who can’t afford their exuberant price fall into the advice of spruikers.

I’ve identified a region I want to buy in Adelaide and want someone who can view properties for me and buy for me. I’ve already seen a Financial Planner and strategist and what is remaining is the property. I’ve done my adequate research, I’ve contacted a BA and the average price is $10 – $15K and I fail to find justification in this fee. I know that a provider of this service can charge whatever they want as someone on the other side of the transaction is willing to pay that much.

My question is: I wanted to ask you as a Financial Advisor whether you find Buyers Agents fees reasonable?

Episode 165 | Royal Commission’s Role in the Lending Sector and Q&A on Improving Loan Serviceability, Sell v Hold Strategy and Investing in Shares

Just a heads up, folks: we’re tackling a couple of serious topics today!

Because, not only are we diving into the world of the Banking Royal Commission (and what they do), we’re also answering a few voicemail messages about how to best service your loan, what to look out for if you considering investing in shares and having a crack at the million dollar question: should you sell or hold??

Yep, Ben will be donning on his Chair of PICA hat to address some of these topics, especially when it comes to choosing your mortgage broker wisely and making sure, as property investors our assets and financial wellbeing are well protected!

 

As part of this, we will be dropping the “F” word… Fraud.

It should go without saying, DON’T go there… but if you find yourself taking dodgy advice, you could find yourself in boiling water too. And remember — for the folks that haven’t signed up yet — you can get an individual Membership of PICA for as little as $5 to lobby government regulations and help us get rid of the “bad eggs” and spruikers responsible!

 

So, let’s jump into the SpeakPipe Q’s:

Question from Nick (from New Zealand) about Selling or Holding a House and Land Package:

I purchased a house and land package in Landsdale, Perth in 2012. It’s next to the parks, next to the school; it’s a beautiful place with nice places around it — should I play the long game and hold onto it? Or should I look at selling it & placing my money elsewhere? It’s cash flow neutral, so it’s not costing me anything. It’s rented out, I’m paying the debt down through my own cash flow… the only other thing is, I’m at university so if I sell it, I won’t be able to get another place — I wouldn’t be able to get a mortgage — for 2 years until I graduate. I know it’s a million dollar question — but should I sell it or hold it?

 

Question from Will about serviceability concerns with current lending regulations:

We’ve got a current portfolio of currently 3 properties, looking to buy our 4th and final property in late 2018. I’m a little bit concerned about serviceability since the new APRA rules? have been brought in with the big banks. I was wondering if there were any practical things we could do to improve our serviceability? The second part to the question: Is there anything we can do to increase serviceability with second-tier lenders and third tier lenders?

 

Question about shares from Jamie:

Through your podcast, Rich Dad, Poor Dad. In the book, it talks about using shares to raise a deposit to purchase property. I was wondering if you were aware of any podcasts or books or any other resources that are similar to your own podcast but talk about trading shares? It’s something that is less tangible than property and I have a harder time understanding it.

 

p.s. Make sure to check out PICA’s website: www.pica.asn.au

p.p.s. And the video that we talked about is called, Becoming Warren Buffet.

 

Episode 148 | Q&A WITH TWO GUESTS! Why We Support Movember, Where is Australia’s Best Performing Markets and What You Should Be Buying Now

Alright, folks …. This is a jam-packed episode!! 2 GUESTS, Q & A and some big announcements! So, where do we start?

First up … We have reached our Movember target of $10,000 big ones! A massive shout out to those who have donated, and a little reminder for those who haven’t done so yet: Donate $25 or more and get a FREE book! If we hit $11,000 Bryce will do his own Webinar TOO!!

(Ben’s webinar is coming up soon! You can access his Principle and Interest versus Interest Only Webinar AND his Working Out Your Retirement Shortfall Webinar by Downloading our Money SMARTS SYSTEM here.)

 

Speaking of Movember, our first guest is Sam Gledhill. He’s the Global Action Plan (GAP) Program Manager at Movember and he has some seriously interesting (not to mention seriously important) stuff to share with you! With a background in nuclear medicine technology — having been with the Foundation since 2012 and now responsible for the overall investments in Testicular Cancer — Sam will explain exactly why your donation is, literally, lifesaving.

 

Secondly, it’s Q&A day AND we have another guest! Not only are we answering your voicemail messages, but also we’ve bought LocationScore’s director (and data nutcase), Jeremy Sheppard, back to The Couch! This time Jeremy will to tell you the supply and demand for each State and Territory, including the one showing the highest potential for capital growth.

 

Here’s a snapshot on what we’ll be chatting about today:

 

First Voicemail (SpeakPipe) from “Anonymous”:

“I’m thinking of using a Buyers Agent to secure an investment property. I’m curious to know if I need to give them a Letter of Authority or a Power of Attorney, or both. Can you please explain the difference, and how I can use them? Thanks!”

 

Second Voicemail (SpeakPipe) from Stuart:

“Hi guys, great podcast. I’ve spent the last year listening to your podcast trying to get as many tips and advice about my property investment journey, which I’ll hopefully embark on very soon. Bit of a ‘spanner in the works’ though — I’d always envisioned starting out with maybe a 1 bedroom, around $300,000 – $400,000, maybe as a borderless investor (I currently live in Victoria). But our current house that we owner-occupy is looking a bit too small for us … my wife has proposed the question that we look at buying a bigger property. So the key to the question is, What are your thoughts on your first rental property actually being the one you currently occupy? I know you guys like detail, so I’ll shoot through to this: Currently it’s a 3 bedroom, 2 bathroom property in Chelsea, Victoria about 17 – 20 minutes from the train station and the beach. We bought it for about $505,000 in 2013, we owe $467,000 on it, we pay interest-only — about $1500 a month — and I think it’s worth about $650,000. So I’m really interested to know: what are your thoughts on a 3bd, 2bath house in Chelsea becoming our first rental investment? It’s not really what I’d mapped out listening to your podcast, but we’d probably have to buy a bigger, 4bd in Chelsea/Bonbeach area & I just want to see if this is a viable option in your opinion? I look forward to hearing your thoughts! Thanks!”

 

Third Voicemail (SpeakPipe) from Nicole:

“I’m from Canberra, woo! Looking at buying our 3rd property (1 PPOR and 2 IP). We’re looking at investing in a 1 br unit, which is 41 sqm in an old 1970s building, 5 km from CBD. It’s in Canberra, I’m aware of the land tax). $200,000 property with a $300 week yield. Husband can renovate it, which I think out ways the land tax issue. Question about banks’ lending money to under 50sqm. There seems to be banks that will lend these days, but going forward if we were to sell this — say in 20 years’ time, if we do sell it — do you think the banks are going to change their lending criteria on smaller places, considering most people, moving forward, will be living in small places? I guess I’m concerned that it’s going to be hard to sell in the future? What are your thoughts on this?”

 

Fourth Voicemail (SpeakPipe) from Nicole:

“My wife and I have about $180K to invest — we’re looking at buying our first home in Brisbane. Trying to choose between paying, which in our eyes is a premium, about the $600K mark for an older 3 bedroom home somewhere closer to the CBD like Moorooka or the convenient location of Mount Gravatt. Or: Paying early to mid $500K and getting a bigger, 4 bedroom home somewhere further away like Underwood or Springwood and using $120K of our deposit, leaving us about $60K towards our next property down the line. Again, it’s our first home, and we don’t plan on living in it forever. We just want to use this purchase as a stepping stone to our next property. To sum it up: Buying a property closer to the city, which will use up most of our deposit, versus by a home further away, leaving us with a good amount of money to jump into the market again down the line. Would love to know what you think.  I know that you say it’s good to be close to the city as a rule of thumb; but I am worried that this will prolong our next purchase considerably. Thanks guys.”

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