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Episode 237 | Q&A: Barefoot Investor or Money Smarts – What’s the difference, Loan Structure for Rentvestors, Pros & Cons of Buying a Company Title Property and more!

Folks, we’ve got your voicemail messages… and, yep, today we’re giving you our reply!

‘Cos it’s out favourite day of the month… Q&A Day where we answer YOUR SpeakPipe Questions! And, we’ve gotta admit… a few of you folks have asked us about “The Elephant in The Room”… aka… a certain Barefoot Investor and how Scott Pape’s money management differs from our Money SMARTS system. Oh, and of course, there’s also some contrasting views on property as a long term investment as well… which, as you likely know, is something we’re pretty keen on…

So let’s tackle the answer, shall we??

Before we get into your questions, here’s the resources mentioned today…

Question from David on the Barefoot Investor…

Hey guys, Dave here. Today I wanted to talk about the Elephant in The Room… or at least the bear in the room. I have just finished listening to the Barefoot Investor audiobook — and it’s safe to say I’m am a little bit confused. While Scott’s money management method seems to align with yourselves, “Mojo” and “Fire Extinguishers” are a far cry from Money SMARTS. And then came a bomb shell… “Property Investing is a Dud Investment” and, yes, as he suggested, my eye was twitching.

Scott had some pretty negative things to say about property, particularly over the long term. Mainly because the last 24 years has been an economic outlie, given the negative gearing benefits and large pop growth due to baby boomers, suggesting that “doubling in 7 – 10 years” rule, which of course is a rule of thumb, over the next 40 years would be near-on impossible. Then he counteracted his whole argument with compelling evidence of strong long term growth in bonds, shares and index funds. Now, don’t get me wrong, I took some really good nuggets out of his book, but the differences between your method and his are STARKLY different. I mean, he doesn’t even suggest putting money in offsets. Can you please help me decipher this book? Thanks guys, love your work.

Question from Shane on buying a unit in a company trust…

Hi guys, my name’s Shane. Am just wondering about buying a unit in Sydney under a company title. Could you please explain any pros and cons for this type of unit. I’m looking to rent it out for 5 years then move into it myself and keep it for the long term. I appreciate any advice you can give my and thanks very much! Bye.

Question from Aaron on Bank Structure as a Rentvestor…

Hi Ben and Bryce, my name’s Aron, absolutely love your podcast. I binge-listened to 220-odd episodes in 3 months when I first found out about it. I just have a question here in regards to structuring your bank accounts. We rentvest. I understand if it’s a PPOR, you’d want all income coming in to that offset account, but because we rentvest, do you have just one bank account where all the rent and all the mortgages come out from, or do you have a separate bank account for each property, where the rent and subsequent mortgage comes out of, didn’t manage to hear anything about structural bank accts in any of the podcasts, so apologies if I’ve missed it and you have discussed it. But I don’t think I’ve heard anything about it so very interested to hear your response on that, especially if you do end up having 5/10 properties. Look forward to hearing it on the podcast at some stage. You guys are absolute legends! Cheers.

Question from Craig on selling a property at a loss or wait to recoup loses…

Good afternoon The Property Couch, my name’s Craig and I have a question. My partner and I currently own 3 investment properties between us. 2 of these properties are performing quite well, in terms of growth and low upkeep. The third investment property in Darwin was originally bought as a PPOR and is not performing well as an IP. The market is at the 32% downturn and is unlikely to recover any time soon. My question is… Should we sell the property at a loss and still walk away with about $30,000 to reinvest into a new or existing investment, OR should we hang onto this investment long term with the intent of recuperating our losses, even though this property costs us about $8K a year? Thank you for your time.

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