520 | Should You Take Property Advice from a Financial Planner?

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• Get on Bus #1 (Listen to 50:45 for some background 😉)!
  In line with Helal’s question, work with Empower Wealth, our team of Qualified Property Investment Advisors (QPIA). Speak to an award-winning team today >>

• Leave us a Q for our next Q&A Day! Reach out to Bryce on Instagram or through our SpeakPipe. (And get a free Start & Build course if your Q is featured!) 

• Resources from Ben’s “What’s Making Property News”: 
  The Australian Financial Review: Buyers switch to apartments amid affordability crunch

• See Bryce’s life hack: How to put a bracelet on with one hand!  

• Guests & Episodes Mentioned: 
  • 001 | We Fix Bad Property Investment Advice 
  • 480 | How to FAIL to Retire on $2K Per Week 
  • 509 | Property Investing 2.0: Why Property Investors Must Think Like Small Business Owners 
  • 515 | The Truth About Negative Gearing & Capital Gains Tax (LIVE)  

Questions We Answer

Q1) Feedback on Episode 515 – Negative Gearing from Gabriel  

Hello, 

Firstly thanks so much for all the work you are doing for giving an alternative to some of the media rhetoric on this topic.  Can I offer a couple of points as constructive feedback after listening to the episode.  

While it provided a lot of good points to consider, I think there is an opportunity to rethink a couple.  

Firstly on the history of capital gains tax, while you said that it replaced existing arrangements, you failed to mention the important point that it is more generous that its predecessor and that there is scope for scaling it back. The AFR in their Fin podcast mentioned that CGT was worth $25B a year vs $2B for negative gearing. It was meant to encourage investment in businesses and instead turbo charged property.  

Secondly I find you calling property investors small business owners irritating, and if this is a sentiment shared by many others I wonder if it could be detrimental to the cause of changing the public opinion of ‘greedy investors’.  

While I own an investment property myself, I would never introduce myself as a ‘small business owner’ based on that. I own an asset that serves a great social purpose of housing Australians, but this is not a business where I create something new out of time, creativity and resources.  

The asset is already there, built by an actual business. It’s managed by another business – a property management agency and it’s maintained by other businesses like tradies.  

I don’t have an ABN and don’t need one. If I owned shares which ultimately give capital to listed businesses so they can invest and grow the economy, would I call myself a small business owner? 

Love your work (still!) 

Regards,
Gabriel 

 

Q2) Role of financial advisor in property investing from Helal 

Hi, I hope you are doing well.  

I have a question about the role of a financial advisor and the services that you provide. From what I understood from listening to the podcast is that the financial advisor cannot advise you to go looking, or advice about properties, is that correct?  

If not, what should we do? Do we go through a financial advisor first and then decide whether we want to go into property with them going with the financial advisor’s plan? 

Q3) How to fail to build from Trevor  

Hey Ben & Bryce, 

Just wanted to reach out and say Ep. 480. Guys! This is phe . nom . enal ! I can relate to some if not all of the “how to fail to build” points you raised here.

My true story goes a little something like this. I bought my first house and land package as a PPR just before the GFC hit and after living in it for a year, rented it out because I went off traveling the world in my mid 20s for the next 8/9 years.  

After the real estate agency secured what I thought was a good tenant, I gave them the flick and managed the property privately. Thought it was a great idea to save a few dollars on fees right. Those same tenants moved out 5 years later and I had to replace all the carpets, repaint the walls and replace some fans the kids had swung off of. Needless to say, the bond certainly didn’t cover this.  

I kept the bond and offered the tenants to pay the rest of the bill. Obviously, I heard crickets from them so had to pay the rest out of my own pocket. I had landlords insurance but this is a worst case insurance for me and I never use it to claim small things. It’s just for the “what if the house burns down”.  

You’d think I’d learn right? Wrong.  

I went and got another tenant, funny enough it was the family next door and they were moving out of that house because it was up for sale. I saw an opportunity to save on management fees again and 2 weeks’ rent the real estate would have charged for finding a new tenant. The new family moved in under a private agreement. Sweet as right? 

Nope. After trying to manage this house from a yacht somewhere in the Bahamas (which I worked on by the way, not owned) I found out while doing my own tax return one year that they had underpaid me rent. I had to send them emails and show them spreadsheets from afar of how much they were behind and it was more than 5 grand.  

I thought enough was enough and got a property manager to help sort them out and they did pay me what I was owed and all was fine. But do you know what the kicker is, well it’s not keeping up with what the rental market is doing. I.e. rents around my house had gone up and considerably, but because I was managing this house myself from afar I didn’t have the finger on the pulse.  

After all of this learning, let me tell you fellas… I have now learnt! I maintained a property manager for this house from then on. That lesson had taught me about property management and its importance. What it didn’t teach was having the right strategy in place, and so I sold that house at roughly the 10 year mark (insert palm in face emoji). 

I can wholeheartedly say that the net of the money I saved in management fees over the years was surely a net negative and as you can see to top it off I sold the property and paid commission to do so.  

I can’t bring myself to check the growth of that suburb and what the house would be worth now or even to check what its rental yield would be. For context I sold it in 2022. 

Final point I’ll make on this and for people who may hear this, I wish I got accredited professional help because my future self would have thanked me for it. My wife and I have now got that help through Empower Wealth and we are on a path of retribution.  

I am a dedicated listener to your podcast.  

Keep up the great work!
You guys are my Joe Rogan!
Cheers Trev. 

Timestamps  

• 0:00 – Should You Take Property Advice from a Financial Planner?     
• 1:29 – Footy banter and Trump’s win  
• 5:39 – Australia’s FIRST property AI is now LIVE 
• 9:35 – MoneySMARTS 2.0: Release webinar!  
• 11:33 – Empower Wealth is hiring a Chief Operating Officer  
• 14:39 – A heartwarming moment at the Tina Turner concert! Ruva, here’s a shoutout to you 😊  
• 17:48 – Mindset Minute: “Life is not for complaining about pain and sorrows; it’s about prioritising…”  
• 19:45 – Bryce’s 50th: Give the gift of sight! 
• 26:56 – Block Auctions: A reminder it’s not based on real property principles!   
• 29:51 – Q1) Negative gearing feedback & would I call myself a small business owner 
• 32:10 – The history of capital gains tax  
• 34:04 – What makes a small business?  
• 37:29 – The #1 overarching reason why the property investor narrative needs to change 
• 39:45 – Framing businesses: Vintage cars and social good 🚗 
• 43:19 – Negative gearing for… planes?!  
• 45:05 – Q2) Should you take property advice from a financial planner?    
• 46:13 – Residential properties aren’t a licensed product!  
• 50:45 – Bryce’s minibus analogy: Traditional financial planners vs. Investment-savvy financial planners 
• 54:33 – Why do QUALIFIED property investor advisors (QPIA) matter?  
• 58:43 – Reach out to us if you want to get on Bus #1!  
• 1:00:42 – Q3) How to fail to retire on $2K per week  
• 1:04:58 – Avoid touching the pot!  

And… 

• 1:05:50 – Thank you to today’s question-askers! Contact us to get your free Start & Build course 😊  
• 1:06:20 – Lifehack: Struggling to put a bracelet on with one hand? This hack is for you.  
• 1:08:50 – WMPN: Domain’s latest findings: Sydney units set to soar