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496 | Don’t Sell the Goose That Lays the Golden Egg

 

In Episode 496, we’re back with a jam-packed Q&A Day!

Discover everything you need to know before investing in Victoria, from understanding the state’s “blowout budgets” to navigating the biggest risks that make buying in Melbourne a “2030 conversation.”

We also break down why the buy-and-hold strategy still works, even for single investors with lower incomes. (After all, would you sell the goose that lays the golden egg?)

Plus, learn why housing shouldn’t be linked to income and hear real data from a listener on his journey to a $1M passive income.

Tune in now for a jam-packed episode! 🚀 🚀

 

Free Stuff Mentioned

 

 

Questions We Answer:

Q1) Advice on Purchasing in Victora from Georgia  

Hi Ben and Bryce, my name is Georgia.

I want to say thanks very much for your work on the podcast. I really enjoy listening to it and find a very educational.

My husband and I currently live on the Gold Coast. We have been living in our principal place of residence, which is a house we bought about a year and ½ ago.

We also own an investment property on the Gold Coast, which we bought in 2018 and it was originally our principal place of residence but since we moved to our house, we now have that as an investment property.

We had really good returns from both properties over the last few years so we’re looking at releasing some equity from investment unit and then purchasing another property potentially in Melbourne.

Seems like Melbourne properties are in high demand at the moment. I’ve heard your advice on buying in Melbourne or Sydney if you possibly can so I think it would be along a good long-term investment and potential growth would be positive.

Possibly looking at the western suburbs because I say I’m a bit more affordable and I think that’ll be a popular area going forward. I know Victoria’s had some changes to tenancy laws so I was wondering what we should be aware of if we’re thinking of purchasing in Victoria?

I know there’s a lot of extra costs and compliance requirements so what would be your advice and recommendations of things to be aware of if we were looking at purchasing the property in Victoria for investment purposes?

Thanks again for your work. Keep doing what you’re doing.

Q2) Selling Options from Justin

Maybe start to talk more about the option of selling. Your podcast seems to advocate for a buy & hold, retire debt strategy.

Every podcast talks about buying a property, then cash out equity when the property grows in value to go again; however, this is not always achievable when someone has reached their serviceability cap.

As such, I think the option of selling to access equity to redeploy into another investment should also be talked about as a valid option to grow wealth.

You always mention that most investor stop at one or two investment properties, but I think this is more due to restricted lending to an individual more so than ones’ willingness to achieve more.

As a general lay person, I know enough to be dangerous but I can’t see how someone on a median income of 67k that own their own PPOR with half a mil to a mil mortgage would be able to service enough debt to afford more than 1 or 2 investment properties.

Q3) Buying a property to Assist in Purchasing Dream Home from Ruva

Hey Ben and Bryce love the podcast. You guys rock. My question is around rent-vesting. Apologies if this is already been answered or rather basic, but I’m struggling to connect the dots and understand the end game of this strategy in real terms.

How can buying a property or properties at lower value points and in areas of lower demand in bulk assist purchasing your dream home outright mortgage free and a blue chip suburb in 10 to 15 years time as I hear a lot on Youtube.

If values continue to rise across the country with a ripple effect from major centres outwards, won’t blue chip location simply remain at a map much higher value to those cheap and cheerful investments in mount random? May you please outline how this works in practice?

Are rent-vestors assuming that investing elsewhere will outperform their dream locations to then a mass enough equity to buy a dream home outright in the future? What does this actually look like?

Thank you so much.You guys are amazing. Love the podcast. We tune in and you bring so much value to the community. We appreciate it. Thank you

Listener Comment: Real life data you may find useful from Dean

Hi guys, I am 43 and have been investing in property for over 20 years now, my strategy has been to buy & hold, some of the properties I have owned have been cosmetically renovated and others structurally renovated over the years, my properties are located in Melb, Sydney, Brisbane & a couple in USA.

I currently own 12 properties. I work full time in a banking role and recently have other business interests outside of property.

I have run my property investment portfolio as a business over this time, and on a monthly basis i maintain a spreadsheet where I update my assets, liabilities & cash flow position.

The data is a real life example of the buy & hold strategy and could be of interest to you & your listeners.

Basically it shows the slow burn of building the first million net (17 years), however then jumps rapidly as the exposure to the market grows and the property market does the heavy lifting; $1m – $2m (10 months), $2m – $3m (27 months), $3m – $4m (38 months), $4m – $5m (9 months).

I’m not looking to be interviewed or my full name used, however thought this data might be useful as a real-life example of what you consistently talk to.

Regards,
Dean

 

Timestamps

  • 0:00 – Don’t Sell the Goose That Lays the Golden Egg 
  • 1:29 – Collingwood’s cooked it? 😉  
  • 3:57 – PICA Webinar Replay! 
  • 5:05 – Mindset Minute: “If you don’t change the direction you’re going, you’ll wind up where you’re headed!” 
  • 5:49 Q1) Advice on Purchasing in Victora from Georgia   
  • 8:02 – What to know before you invest in VIC  
  • 9:20 – The Greatest Risks to Investors  
  • 11:10 – Why does Melbourne look better in the long-term?  
  • 15:33 – Why buying in Victoria should be a “2030 conversation”  
  • 16:40 – Record level of debts & blow out budgets 
  • 19:28 – Will incentives for investors come back? 
  • 21:19 – Q2) Selling Options from Justin   
  • 22:37 – Folks, 60-80% return in months is NOT the norm!  
  • 28:30 – The BIG shift from passive to active investing  
  • 30:13 – “What if I don’t have 30 years left to invest?”  
  • 32:47 – Why sell the goose that lays the golden egg?  
  • 33:50 – You don’t have to be debt-free at retirement. Here’s why. 
  • 39:14 – Q3) Buying a property to Assist in Purchasing Dream Home from Ruva   
  • 40:51 – Why housing shouldn’t be linked to incomes 
  • 43:19 – What is modern Rentvesting?  
  • 45:02 – This is when property becomes a game of probability  
  • 46:26 – Blue Chip suburbs & long-term commitments  
  • 51:56 – Listener Comment: Real-life data from Dean   

And… 

  • 55:41 – Lifehack: Apple name drop in a flash ⚡ 
  • 56:58 – WMPN: 144 days for building approvals?!  
  • 59:47 – We’ve got an amazing guest incoming… 

 

272 | Q & A: The Unspoken Truth About Growth Corridors & Picking The Right Property Investment Strategy

How many times have you heard something along these lines…?

“This suburb’s a growth corridor…”

“There’s heaps of development happening here… it’s the next growth corridor.”

“With all the new public transport networks, job opportunities and shops coming in, this place is absolutely a growth corridor… full of investment potential.”

With all this buzzword talk, it’s would appear that all us property investors need to do is hunt down the next “growth corridor”, invest in it before it really kicks off, and then sit pretty for the rest of our lives …

BUT. Folks, there is a massive problem with this! An unspoken truth about growth corridors that trips up a lot of investors out there. Sure, some “growth corridors” might indeed grow in value, but there is a huge misconception out there that we want to clear up today.

So, in our first Q&A of 2020, we’re diving deep on this unspoken truth and we’re also going to answer your questions about how to pick the right investment strategy… ‘cos guess what? While a whole lot of you folks know the fundamentals of property investing, you don’t necessarily know how to apply these to your own situation and goals!

 

Here’s a 30,000-foot view of what we’ll cover … 🚀

 

Resources Mentioned

 

The Questions

03:26 – Question from Jack on Bris vs Melb and differing opinions:

Hi there guys, first up I just want to stay that I’ve just tuned into your podcast and I’m absolutely loving it! I’m going to be buying a couple of your books too they seem to have a lot of great reviews and, yeah, I’m really excited to read them.

Fellas, I’m looking at starting my property investment journey in December 2020. Now, I’m following a couple of investors – one guy’s currently investing up in Brisbane. And this other guy I follow as well stays purely local, mainly Melbourne. He’s explained to me about the growth corridors – how they’re not really growth corridors – Packenham, Windenvale, Tarneit. I’ve gone and had a look and they don’t average as much as I thought they would. Nice places, but yeah. I can’t afford to invest in Melbourne itself and the different to the two is – the one up on Brisbane is getting people starting up around the $500 mark. And the other guy who invests only in Victoria says start out somewhere like Bendigo or Ballarat. He doesn’t think Geelong’s got good growth. Yeah, I’m hesitant to go to Bendigo and Ballarat as they are inland, but I’m hesitant that my judgement’s being clouded. I’ve always grown up in coastal places – always lived near the coast and love the coast. If you guys could give me your opinion that would be fantastic

 

13:18 – Question from Nick on Investing as an Expat:

Hi Bryce and Ben, my name is Nick. I’m calling all the way from Switzerland, although originally from the northern beaches in Sydney. My wife and I are both from the northern beaches, but we have been working here in Europe for the past 3 years and we are looking to buy our first property back in Australia. We’re keeping an open mind and looking all over the country – so not necessarily in Sydney.

We have a general question about what type of strategy we should be looking for being non-residents for tax purposes but Australian nationals, taking into account we can’t take advantage of first home owners grants, or negative gearing as we have no income back in Australia. Originally, we were considering purchasing an apartment with potentially 5-6% rental yield with the idea of having a high yielding property so one that can be potentially positively geared. What are your thoughts on this?

 

20:03 – Question from Nikii on upgrading PPOR now or later based on economic forecast:

Hi it’s currently June 27 2019, currently my husband and I purchased a 3 bed 2.5 bathroom 2 garage, 243sq townhouse, freehold in prime real estate in Hawthorne, Brisbane. We have been provided by market experts that we could get $830 – $850K  from the sale of our property. We’re currently wanting to upgrade to live in a better area. Would we be best with the economic forecast over the next couple of years to keep that property as an IP before upgrading to a property just in the very low millions.

 

26:03 – 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 continue selling the Darwin 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.

 

31:40 – Question from Scott on what to do with money in the bank:

Hi guys, Scott* here, I’ve been on board following the podcast at April 2015 and have loved the journey. Almost five years in and I thought it was finally time to hit you guys up for some advice!

My wife Teresa* and I live in regional WA with our two kids aged 7 and 9. Both of us work full time for a state government department and we currently earn $270k gross per year combined. We own two properties in our hometown Perth. Our first home in Bibra Lake (shout out to Bryce!) which is valued at 430k with 350k owing. Our other property is a 1940s weatherboard cottage 5kms from the city with owner-occupier appeal, valued at 630k with 500k owing. So our total LVR is about 80%. Both loans are interest only and both properties have reliable tenants in them, paying $350 and $410 a week respectively.

We aren’t big spenders, and have no personal, car or HELP loans. Due to this, and the fact that our employer has heavily subsidised our rent whilst we’ve lived regionally, we’ve quietly amassed savings of $320k which currently sit in an offset account. We intend on staying in the bush for at least another 2 years before heading back to the big smoke, and in this we anticipate the $320k we have will grow by $75k each year in which we don’t do anything with it. However, I’m sensing there’s a huge opportunity cost here if we leave things any longer! Any advice as to what our next move should be would be very much appreciated. Keep up the stellar work.

 

39:30 – Question from David on Subdividing Parent’s Land:

Hey Ben and Bryce, Really been enjoying the podcast. I’ve got a bit of a unique question. At the moment I live with my parents and I am in my mid-20s, and I’m looking to subdivide a bit of their land as housing pricing are a bit too expensive for a single income. I was wondering if I classify for the First Home Buyers Grant if I build on their land and whether the actual certificate of title transfer needs to come onto my name, or can it remain in their name? Cheers, David.

 

Quote of the Episode

“An informed investor is a smart investor.”

 

Last Week’s Download:

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255 | How Australia’s Best Property Investors Think, Act and Invest

Have you ever wondered how you stack up against Australia’s most astute property investors?

It’s human nature to want to know how you compare against others… even more so when these folks have something in common with you… and ESPECIALLY if they possess a trait you admire AND have achieved something you yourself are aiming for!

So, guess what? Today we’re unpacking what some of Australia’s best and most experienced property investors are…

1.      Currently thinking

2.      Currently doing

3.      Currently approaching their investment strategy!

And to do all this, we’re drilling down to the exact answers given on the most recent Property Investment Professionals of Australia’s (PIPA) Property Investment Sentiment Survey 2019! This reveals the mood, confidence and key trends of existing and aspiring property investors all across the country.

The question is… how do you compare???

 

Free Resources Mentioned

 

Today’s insights…

 

 

 

 

253 | Top Tips For First Home Buyers

It can be a rough ride when you’re just starting your home ownership journey — and trying to get your foot up on the property ladder is, let’s be honest… really hard!

So today’s episode is all about helping our “Firstie” folks! That’s right… our very First Home Buyers!!! And we’re going Q&A style so we can stretch out the ol’ helping hand to our Firsties, and our Mums & Dads of Firsties, and haul all of them up on the ladder with us!!

And if you’re scratching your head thinking, “I’m not a first home buyer, or even a parent, family member or friend of one…” — no probs. You’ll learn what it’s REALLY like to face today’s property market for the first time… and you might just pick up some tips that you can actually use on your own journey… or just pick up some nuggets of new gold and file these away for when you want to impress someone with your property and homeownership knowledge. (Suss below for a summary of what we’re discussing and the exact questions we answer in today’s episode.)

 

You’ll learn Top Tips, like these…

  • How Much Of A Deposit is Enough? (seriously.)
  • The First Home Buyer Scheme
  • The Best Way To Get Ready For A Mortgage
  • Credit Scores
  • Higher Yielding Properties vs. Capital Growth Properties
  • How A Single Woman Can Get On The Property Ladder

 

Free Stuff Mentioned + Extra Support…

 

The Exact Questions Answered in Today’s Show…

Question from Jake

So we have bought a lemon!!! We have purchased a lemon, it’s been fantastic as it’s high yielding and we have a low income as I’m still studying. But I’m about to graduate and are unsure if we should move the money into a more balanced property, or if the cost of selling etc, will just lose too much money? The struggle is even when I graduated we will both be on fairly low incomes so, is a high cash flow possibility a benefit for us? Thanks for your time. I love the podcast, I’ve read the book and I’m excited for what the future holds!

 

Question from Joel

Hi Bryce, Ben and Stiggy. I am currently studying at university and working two jobs (48hrs a week) to support my partner and newborn and have been utilising the First Home Super Saver Scheme (FHSS). I’ve used this for two reasons one for the salary sacrifice tax saving, but to also reduce my taxable income to minimise my Help/HECS Debt repayments whilst studying. I’m saving $750 into the scheme per month, and have approximately $10k in total at the moment.

Because The Liberal Party introduced the new first home loan scheme at the last election, I have been worried that they would wind up the FHSS before I could access my savings, essentially locking it into my superfund. This would set me back in savings by 3-5 years. Do you have any insight into this?  I understand that your advice is general in nature, and isn’t directed to my personal standings, but would you be utilising the FHSS if you were a first home buyer? Thanks, Joel

 

Question from Tom

Hi Guys, Love the podcast, found it recently and have already gone through 70 episodes (bit of a way to go!). I’m currently in the process of purchasing a PPR for $550k. I’ve saved around 15% as a deposit but will be using a parental guarantee as collateral to free up my deposit amount for a value-add renovation and as my buffer going forward. My mortgage broker has suggested a P&I loan with an offset account, but has suggested an interest only loan isn’t possible with a parental guarantee as the bank likes the debt paid down to release the second (parental) mortgage. Is this the case? Can the guarantee be released on money in an offset, or is the only option waiting for debt pay down till the release at which point the loan is refit to an IO loan?

 

Question from Kelsey

Hey, just wanted to flying the flag for young females. I’m a new first homeowner. I’m 28 and a primary school teacher, and bought a two bed unit (1960s) in East Sydney (20 mins from CBD, 15 from the beach) in June. I paid $520,000 (negotiated from $549,000) and plan to rent it out and live closer to work in the CBD after January – I’m living here for the first 6 months to avoid stamp duty and do a little cosmetic work on the place. To save for the 15% deposit, I’ve always worked my regular job, and weekend work or afternoon work alongside it. Man, it has been hard work clocking up the hours and saving, especially in an expensive city and wanting to enjoy life on the weekends with my friends as well.

However, a weekly savings plan, and just always living a pretty simple lifestyle below my weekly earnings got me here. On top of that, I just competed my Masters of Education, which also has taken a bit of money and time – and tracking the property market takes a fair bit of time investment! Additionally, I’ve travelled overseas every year for the last 3 years to volunteer teach in countries like India, Indonesia and Fiji so I haven’t been too strict in saving everything I earn. Basically, I wanted to show that even a young single female can be a homeowner in the current 2019 property market. It took more than money, but great friends with advice, a lot of courage to just jump in and do it, and of course the invaluable help from your podcast. The reassurance I felt from listening was invaluable.The journey so far feels surreal as for so long media has banged on that’s its impossible. It’s definitely hard, but doable. Thanks again, Kelsey

 

Question from Ryan

I am 23 with roughly $36,000 in the bank. I will start full time work in my graduate role at the start of 2020 and am hoping to buy my first investment property within the year. What is the best way to get ready for my first mortgage? Should I get a credit card to improve my credit history as I have never required one to date or are there any other recommendations to make your case more appealing to the banks? How long in advance of a purchase should I contact a mortgage broker and would it be beneficial to start a discussion with them before I am ready to purchase? Thanks for all the great content, I’m about half way through all of the podcasts and have found them incredibly beneficial.

 

Question from Lisa

Hey Guys. First of all I would like to say how thankful I am for you taking the time to make the show and share your wealth of knowledge. A friend of mine had turned me onto your podcast and I can easily say without it I would have already made a horrible investment mistake!

I’m working my way through your episodes and am still quite far behind. My husband and I started saving a bit late in life but wound up with $50K in the savings. I am very conscious of preparing for our future now and want to use property investment as a means to do it. Not that long ago I listened to one of your episodes where you had mentioned getting started with $50K. Is that still possible now? I have a completely open mind to investing and there are areas where you can still get properties at lower prices that can provide some growth.

My question to you is: in this day and age now, can you only get started when you have over $100K for the deposit? Or is it still possible to start with around $50K?

 

P.S. Got more First Home Buyer Questions? Let us know here.

P.P.S. Got any other Questions for us? Let us know here.

 

 

 

 

195 | Property Bubble or Property Balloon?

Folks, no doubt you’re aware there’s been a shift in the property market.

House prices have dropped. This weekend’s Auction Clearance Rates here in Melbourne were below 50%. So it’s obvious that Sydney and Melbourne have come off their peak.

And back in Episode 66 (over 2 years ago now), we warned you that Winter was Coming… Well, let’s just say “Winter is Here”.

So where’s the good news? And what is a Property Balloon? 

Today we’re going to go “up in clouds” to see the 30,000ft view of the marketplace. We’re going to flashback to the last boom and show you what went down. We’re going to tell you how the correction’s playing out on the demand side and the supply side.

And we’re going to share with you The Big Switch.

So if you’re interested in the minor issues, the headwinds and the potential solution for the current property market… we’ve got over an hour of gold coming your way!

 

Folks, if think your cash flow story might need improving, don’t forget to take advantage of our free Money S.M.A.R.T.S Platform!

And, don’t forget our loyal listeners are able to Get 20% off our new book – Make Money Simple Again 🙂

 

Here’s what you’re in for…

 

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