Passing on interest rates to tenants. Updating property plans. The future of price growth and…  

Restructuring your mortgage (is Line of Credit still the best?!)   

Yep.  Folks, we’re back with another ultra-packed Q&A session that’s all about being smart with your money in an unpredictable market.   

 Here’s a teaser of what else we cover… 

• How can landlords offset these extra costs from rising interest rates?!  
• The #1 biggest indicator that it’s time to update your property plan 
• Why housing prices WON’T stagnant and housing prices will STILL grow – even given today’s market!  
• The Veblen Effect: What it is and why it’s important in today’s market cycle!  
• Where most of Australia’s growth actually came from (aka. A short history lesson)  
• The Role of Income Growth, Immigration and Inheritance  
• What are Quasi Lines of Credit?! (are they a good idea??)  
• The markets Ben is (and isn’t) worried about in this market cycle, plus  
• Tons more gold!!  

It’s another massive episode folks, give it a listen to get the facts and cut through the noise! 

 

Questions We Answer…

Question 1: Janet on When should you update your plan? 

Hi Ben and Bryce, 

My husband and I are big fans of the podcast. 

We have learned so much listening to the both of you over the years. 

We’ve actually been to your team Empower Wealth in North Melbourne for financial planning and property investment advice and that was before our honeymoon. 

Now we have 1 child (14 months old) and 2 properties in, one principal place of residence and 1 investment. This was all factored in by your team as part of our lifestyle by design plan. 

There is a component to the plan which is to get our 3rd property in a few years time as investment towards our retirement plan. 

However, with the changing market, I’m starting to wonder if its time to bring things forward or we stick to the plan. 

So my question is once you’ve got a property investment and a retirement plan set up, how often would you recommend getting this revised and looked into? 

I would love to hear from you two and keep up the good work on the podcast. 

 

Question 2: Adam on Can you pass on interest rate rises to tenants quickly? 

Hi Boys, 

Love the show and thanks for all the tips and all the advice that you provide each week. 

My wife and I have 3 investment properties and given the market is a bit softening at the moment and there’s a lot of uncertainty out there, we think it’s really good time to try to buy again. So we can get a loan at the moment our broker confirmed to us that we can borrow at the moment. 

However, when I run our numbers on next year in  about 12 months time, our 3 properties that we do have at the moment are currently on the fix rate and we fix them at about 2% interest and all 3 come off their fix periods in about 12 months time. 

So if we did buy again now by fourth place, when the loan repayments we’ve got on the other 3 next year did it at fixed period, that’s more than $2000 a month extra in mortgage repayment will be up for so we’ll be in trouble if we borrow again right now so we’re a bit in a snag. 

I’m just curious in your thoughts, I think you’ve mentioned before in your show that the Australian economy, I think is about, $40B in residential loans that fixed at the moment with low interest rates  in the last few years and they’re all gonna be coming off fixed periods next year. 

So there’s gonna be a lot of people, lots of household all of a sudden have to find material amounts of money each month in extra loan repayments. For those who are investors like us, we can just wanna try to pass on a lot of these costs to our tenants and raise the rents that they are paying given there already is rental crisis across the country.  How do you see this playing out in the economy. 

If you have a lot of landlords all of a sudden wanting to put the rents up substantially because interest rates have blown up and loan repayments are higher, do you think we’ll be able to recover some this cost through increasing the rents at all?
 

Question 3: Michael on Interest Rates, Borrowing Capacities and long term impact on price growth 

Good day Ben and Bryce. 

Hope you’re both well. 

Ben, condolences on the loss to Sydney, mate.  I know that’s probably a tough one. 

My question to you both is regarding to the overall pricing of housing and I know it’s broad question but with regards to the correlation between interest rates and the impact it have on borrowing capacity. 

I know there’s been peaks and troughs over the last 30 years but I’ve seen over time you know a gradual decrease on the amounts that we pay on the interest rates therefore our borrowing capacity increased. 

My question to you is that now that we’ve reached the bottom point where we’re on our way up, do you foresee that having a long term impact on the increase in housing value? 

I know there’s other factors in play but as far as borrowing capacity goes, I can see that there is quite a strong link in interest rates and the borrowing capacity. 

Just curious to get your thoughts on that and what’s the impact it will have. 

Thanks. 

 

Question 4: Karen on Borrowing Strategy – what is the optimal review? 

Hi Bryce and Ben, 

My name is Karen and I have a question about refinancing a principle place of residence and investment properties. We currently have a loan of credits on our principle place of residence.  

We used this loan of credit to purchase 3 investment properties and these 3 investment properties are all with different lenders. With the current interest rate rises and some of these loans coming off fixed interest, we are now wanting to refinance some of those. 

Our mortgage broker, this is my question for you, our mortgage broker is suggesting because of our age which we are 51 and 52 respectively, we have high disposable income because our children are all over 18 and that we combine all of our loan in to one big facility with AMP and have it split in to various splits and so our home loan on PNI and then the various investment properties as interest only. 

I’m really concerned with this approach because it goes against everything that I’ve listened to in your podcast today and I’m would just be really interested to hear what you have to say on the next approach. 

So basically the splits for the investment properties would be interest only and our principle place of residence P&I and she’s saying that this is the only way forward for us to be able to refinance the whole lot. 

Ideally, I’d like to keep the line of credit. 

I like the flexibility of it and I’d like to keep the investment properties with loans separate to our home. 

Free Stuff Mentioned… 

• Want to be on The Couch? We’re calling all potential 2022/23 Summer Series Guests! If you’d like to share your story, reach out to Stig here (We’d love to hear from you!!).
• Take the quiz to see where you sit on our “7 Grades of Financial Wellbeing” scale.  
• Free, money management platform: Start getting more out of your finances with Moorr, our proven money management system.   
• Watch Ben’s newest educational series called “How to Beat the Banks (and get the best deals!)” here.  
• Free eBook: Download our best-selling book, Make Money Simple Again here.  
• Read CoreLogic’s Report: “The Long Game – 30 years of housing values”  
• Read the article from Ben’s “What’s Making Property News” on the top #10 most successful celebrity investors here. 
• Episodes mentioned in the show:  
  Episode 008 | Investment Stock vs. Investment Grade 
  Episode 016 (Part 1) | The 5 Essential Steps to Property Investing in Australia 
  Episode 016 (Part 2) | The 5 Essential Steps to Property Investing in Australia 
  Episode 261 | How to Hack Your Habits to Make You a Better Money Manager – Chat with James Clear 

 

Want to work with Bryce & Ben’s Award-Winning Team? 

• a roadmap to $2k per week passive income? >> Start a conversation with our Qualified Property Investment Advisors…  
• buying an investment-grade property in an investment-grade suburb? >> Start a conversation with our independent and experienced Buyers Agents… 
• set up or review of your borrowing strategy? >> Start a conversation with our Investment Savvy Mortgage Brokers… 
• your defence implementation? >> Start a conversation with our Financial Planners… 
• maximising your tax refund? >> Start a conversation with our Investment Savvy Tax Accountants… 

 

Here’s some of the gold we cover… 

• 0:00 – What we’ve got in store for you… 
• 1:18 – Folks, this is how you can get a free Start & Build Course! 
• 2:53 – Negative things happen. Negative mindsets make it…. 
• 5:19 – Question 1: When should you update your plan? 
• 6:56 – How you can tell it’s time to change!  
• 7:38 – And this is WHY you’d want to bring it forward!  
• 9:20 – 97% of the time this what you’ll be doing…  
• 11:21 – THIS is where they sit on our “7 Grades of Financial Wellbeing” scale (Don’t know what this is? Take the quiz here!)  
• 12:46 – Question 2: Can you pass on interest rate rises to tenants quickly?  
• 14:42 – We haven’t seen this for the last 3 years… 
• 15:44 – When are we going to see the 3 big tranches?! 
• 16:15 – Rents will be going up…  
• 18:34 – How Adam can offset costs!  
• 20:41 – Legislation that property owners should consider!  
• 22:47 – THIS is a good rule of thumb for measuring costs and profit… 
• 25:38 – Want to future forecast your modelling? Try Moorr, our online money management platform and it’s forecasting feature: MoneySTRETCH.  
• 27:48 – Question 3: Interest Rates, Borrowing Capacities and long-term impact on price growth 
• 28:57 – Most of this growth has to do with Australia’s lowering cost of M___!  
• 29:40 – Income growth, affordability & interest rates  
• 31:36 – Ben’s predictions for wage and population growth! (THIS will always push growth)  
• 32:38 -These are the markets Ben’s worried about… 
• 32:55 – The Role of Inheritance and Immigration 
• 34:51 – Recap: What were the “Roaring 20s”?  
• 35:17 – Why housing values WON’T stagnant! 
• 36:14 – This is why price growth will continue! 
• 38:40 – If you haven’t check out THIS amazing chart (bottom of page 1) from CoreLogic… 
• 39:17 – The Veblen Effect 
• 41:40 – Question 4: Borrowing Strategy – what is the optimal review? 
• 44:21 – Who is AMP?  
• 45:19 – Why you don’t really need a line of credit… 
• 46:08 – Some other great options!  
• 47:06 – What Ben does with HIS line of credit!!  
• 47:23 – Why there’s still opportunity for older aged Australians… 
• 49:51 – What is a Quasi Lines of Credit?!  
• 50:34 – If you want more on How to Beat the Banks, check out Ben’s newest educational series here.  
• 51:17 – Leave us a Question on our Speak Pipe – it’s never been more important!  
• And… 
• 51:50 – Did you know, the body of the Apple phone is actually pretty cool. Here’s why… 
• 54:12 – The Top #10 Most Successful Celebrity Investors 
• 57:22 – Honourable mentions for the women…