Case study Archives - Page 10 of 12

082 | Q&A – Great tenants vs higher rents, Investing in property overseas, Managing leverage and more

By The Property Couch September 22, 2016 in Podcast, Q&A, Real life stories

Subscribe On Itunes Subscribe On Android

It has been 3 weeks since our last Question and Answers episode, so it’s about time for another one! Thank you again for sending in your questions.

For today’s podcast, we will be answering these questions:

Question on tenants vs rents from Mark: Is it better to keep a great tenant on a lower rental, than push for a great rental return and gamble with the quality of new tenants (and subsequent vacancy in between.)

Question on exit strategy from Tom: Hi, I would like to hear more about exit strategies when time is not on my side. I have just turned 50, with my youngest child in yr 12 and eldest living in eastern states. My principal place of residence (PPOR) is paid off (value $1.1M) and I have 2 investment properties with a combined value of $1m. But an investment loan of $1.2m. The reason for the negative Equity is that I have been capitalising. The investment interest whilst I directed all rental income into paying off my PPOR. So now I need to know what is next. My goal is to retire or work reduced hours in and on a corporate role by age 55. I am presently in a well-paid job paying about $220k and have about $270k in super, which I am contributing up to the max.$35k pa. I can’t get my headspace around what to do next. any suggestions would be appreciated.

Question on investing in property overseas from Sean: Would be great to hear your thoughts about investing in property overseas as part of a portfolio, particularly NZ. There’s some “wave rider” type activity gaining momentum around Auckland, which has become a heated market it seems.

Question on career in property investing:Hi Ben & Bryce, Firstly I would like to say you guys are doing an awesome job with the podcast. Have been listening from the start and as a born and bread Victorian now living in NSW I love the footy talk!!!!I would also like to congratulate you on your book “The Armchair Guide to Property Investing“. I will be handing it out to numerous friends and family as I believe it is gold when starting out and not knowing which direction to go.So some background on my situation. I started educating myself 2 years ago with every property podcasts/book I could find and now believe I have the foundations for property investing going forward with the right team around me (coach, broker, accountant, solicitor & acquisitions team).We moved to the Hunter Valley to set ourselves up to give us more “choices” in the future. I am currently on a high income of $140k as a coal miner but to be honest, my heart isn’t in it anymore and I don’t enjoy my work (except the pay each fortnight).The reason for reaching out to you guys is because we currently have a 3 year plan (possibly shorter) to move back to the Geelong area to be closer to our family and also closer to Melbourne because we live and breathe AFL. By then we plan to have 2-3 good capital growth properties in our portfolio in major cities utilising the high income (currently in process of acquiring property in Brisbane as I write this email).By the end of 2016 my goal is to complete a Diploma of Finance and Mortgage Broking Management because I believe that everything revolves around finance in creating wealth through property. I am also working towards 1-2 weeks work experience with my property acquisitions team to see how everything operates on the ground.
My question to you guys is what else would you recommend I do over the next few years in preparation to help transition into the property investing line of work (educating others to create wealth or something down that path).

Question on paying down debt or invest from Ian: Good afternoon gents, thank you for sharing your wisdom. I’m 40/67 episodes so far and still loving the insight. A question for your podcast: Getting rid of debt 1st vs investing 1st: As a health practitioner with approximately 5K of discretionary income/month would you recommend chipping away at approximately $35K of bad debt mixed between high and low interest accounts and then seeking professional aid such as yours to become a 1st time rentvestor or seek out assistance and attempt to send that bad debit into some sort of mortgage? Love your work and your banter.

Question on Property Investment Advisor or Buyers Agent first from Paul: Hey Guys, Love the podcasts and your book. Great help for us newbs. I have just started my journey into the world of property investing. After listening to you guys plus reading your book I have taken my first step and started meeting with mortgage brokers to get an understanding of where I stand financially. One of the brokers I meet with was from your team at Empower Wealth. He was great and very professional. My question to you guys is once I have my finances ready to go do I need to be looking to meet with a property adviser or a buyers agent next? Your advice on this would be great. Keep up the great work!

If you like this Q&A episode (Good tenants vs higher rents, Investing in property overseas, Managing leverage and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

Facebook Live Bonus Episode – Q&A

By The Property Couch September 16, 2016 in Free Resources, Podcast, Q&A

Thank you for coming to our Facebook Live event on 13th of Sept! We received a lot of great questions that night but unfortunately, time ran out and we couldn’t answer all of your questions. We really do appreciate you taking some time away from your busy life to listen to us so that is why we are recording a bonus episode (or as Ben called it Bonusisode) today to answer all the remaining questions!

And for your convenience, here’s the list of questions that we answered in this episode along with the order they are in. 🙂

ps: if you aren’t sure what we are talking about, check out our Facebook page! If you don’t have the book, you can get a copy here.

From	Order	Message
Chris Topher	1 (Time: 01:00)	Assuming one has a portfolio of 5 investment properties and has entered the debt retirement phase, what does this actually look like? Is it a matter of spreading all excess cash flow evenly across the offset accounts against each loan until they are all cash flow positive or do you target the biggest loan and pay that out first (by matching the outstanding loan amount in the offset account) and move on to the next biggest loan? If these are all interest-only loans with the interest-only period ending for all 5 loans over the next 18-24 months how do you manage this, as it wouldn’t be affordable to any family budget for multiple loans to become principal and interest, so is it a case of constantly refinancing these loans and staggering the when they come out of their interest only period?
Adeline Teo	2 (Time: 03:17)	What are your thoughts about having a property portfolio with a mixture of properties, some with good rental income and some with good growth potential but negative net income?
Ashish Isaac	3 (Time: 04:10)	Hey guys love the podcast, and the book. I have a financial question to ask. I currently have a principal place of interest (paying P&I for the next 3 years, and I can’t change that as I have just fixed it unfortunately), now for example and using round figures, say if I have a saving of $25k, with a current monthly surplus of only $500 would I be better off to use my savings to pay of any agent fees (e.g. buyers agent, financial planners etc.) and with what’s left over use that as part of the surplus for the next 3 years until I can release more funds from my principle place of interest, or use all the savings to put it towards the deposit for my first investment property, this is to achieve retiring with $2000 per week hope this makes sense. thank you for all the information you have provided us this far, really appreciate it. cheers Ash
David-Anthony Gunter	4 (Time: 06:05)	Love the podcast and book! A massive fan! I have a question about inconsistent bank valuations. I purchased a two (2) bedroom unit in Rosanna in Melbourne last year in November for $275,000. I purchased this through a Buyers Agent (not you guys….SORRY!!!….but I followed the principals I have learned in the podcast) The settlement was Feb 29 2016 and I had the property re-valued a week later by several banks. I had a valuation for $480,000….$330,000….$400,000 and $295,000!!!! Is this common???
Ryan Price	5 (Time: 08:27)	Hi Guys.. 26 years old and Looking at purchasing my first property. Is it better to buy a 1st home (owner/occupy) or would it be better to buy an investment property first and continue renting (minimal rent as it’s the family home so handy for saving)
Samantha Rackley	6 (Time: 08:53)	Thanks so much for your time tonight – great job! I am confused about the difference between capital growth and income (yield) returns? Is one more important than the other or should you look for a property that is high in both returns?
Evon Fung	7 (Time: 10:27)	Hi guys, love the podcast and found the book really helpful. I’ve been using a great budgeting software for the last 10 years but I recall you mentioned something in one of your podcasts that you may have a software which can track budgeting. Is this available? (ps, will you be at the Property Buyer Expo in Sydney?)
Graeme Ash	8 (Time: 12:14)	Big thanks to Jake and co recently for their help! Quick Q:, With investment properties, is it work getting a regular valuation say every 2 years to check available equity for next property or rely on market comparable?
Jack Cole	9 (Time: 13:56)	Love ya work boys! I’m 25, if I could change one thing in the world we live in, my very long term goal is to introduce property investing as a school subject in years 11 and 12. I’ve been lucky enough to have family who invest but not all kids are. What are your thoughts?
Jag Randhawa	10 (Time: 15:52)	I am a passionate and always ready to learn individual. I have recently developed a keen interest in property market. Where do I start if I want to make a career out of it?? What sort of options do I have and what courses are must before I even think about stepping my foot in the market?? Really appreciate all the info u guys give out for free. It’s GOLD.
Jag Randhawa	11 (Time: 16:32)	I am thinking about engaging a Buyers Agent once my strategy plan is build, but how can I make sure that my BA is not getting me into something that favors him more than me. By that I mean how can I make sure that he is choosing the right property for me only and not looking just to sell one??
Jaye Kershler	12 (Time: 18:11)	On a high income for next 2 years would you buy a more expensive eg 600k property or a 450k property
Johnny Rambo Azzopardi	13 (Time: 19:13)	Hello guys, do you think the Gold Coast will bring capital growth as the media and buyers agents would have you to believe in the mid to long term.
Leisa Caines	14 (Time: 20:53)	If I had access to equity to buy a ‘cheap’ investment property now should I buy one now or wait 12mths to when I have more equity to buy a more expensive Investment property?
Maria Austin	15 (Time: 21:38)	Hi Ben and Bryce, I can’t get my head around how you can keep leveraging equity out to purchase more properties without running out of borrowing capacity, assuming that you are only purchasing only blue chip properties that don’t quickly become positively geared. Surely at some point the banks will stop lending to you, even if you have the equity. p.S. Hi Ivise 🙂
Matt Bray	16 (Time: 24:14)	Hi, my question is based on a first home buyer, how much would you recommend is needed for a first investment property and would i be better buying when i reach this sum or saving for a bigger deposit and buying a bigger investment ? thanks!
Micky Marafioti	17 (Time: 25:15)	Do you have any thoughts on investment in Port Adelaide, in Adelaide. Recent times has seen it to be a semi low social economic area, but there is enormous residential and commercial developments occurring there at the moment.
Nat Bowden	18 (Time: 27:21)	Gents what to do next? Own a townhouse as a ppor and will keep it as an investment going forward. Looking to buy a family home in 1-2 years. What to do? Save cash for this or buy an investment to leverage into the family ppor home?
Robert Thomas	19 (Time: 28:31)	Hey guys – made it through the first 35 podcasts – great stuff. Where would you buy in Melbourne right now if you’re trying to stay under the first owner grant limit (<$600k)?
Chris	20 (Time: 29:45)	Hi guys. i’m looking forward to the Facebook event. I have another question for you (number 4) Is there any chance you can discuss in depth the process of buying a property through SMSF. ie the associated costs, required structure and minimum LVR. Thanks Chris
Maria Li	21 (Time: 31:00)	Hi Ben and Bryce I understand that the process of building a portfolio involves repeatedly taking equity out of existing properties to purchase more properties. I’ve heard multiple stories of investors being able to repeat this process every 1-2 years. What I can’t wrap my head around is how an investor can take equity out of their properties every 1-2 years without falling short of lenders’ serviceability requirements. Each time you take out equity, you are essentially taking out another loan, and the lender needs to know you have the income to service that loan. Unless you are buying only positive-geared properties (which most of us aren’t), surely at some point a lender would tell you that you’ve run out of income to service another equity release loan… I understand that part of the answer is that properties become positively geared over time, but that can take 5-10 years. Some of us would like to buy more than once every 5-10 years. This is assuming all the loans in the portfolio are structured as interest-only loans with offset accounts, and that all spare cash is put into the offset accounts rather than paying off the loans. In the eyes of the lender, this means that all your loans are still at their maximum/initial balance. Theoretically a lender shouldn’t be willing to keep lending to someone who (on surface) never pays off their loans, and yet keeps taking out more loans…and yet that’s what is done by investors all the time! What is the piece of the puzzle I’m missing? Ben and Bryce – how does it work? As you know I’m a big fan of the podcast, keep up the great work!

064 | Case study: mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs

By The Property Couch May 19, 2016 in Case Study, Podcast, Q&A

It has been quite some time since our last case study so this time on The Property Couch, Bryce and Ben will be discussing one the case studies that we’ve received from our fellow listeners! Here’s what Tom wrote to us:

After listening to Episode 56 where you discussed various other case studies I thought I might write in to see if you were interested in discussing our situation. I’ll try and keep it short!

Basically, my partner Kirby (30yo) and I (32yo) are both teachers on a combined income of about $160k. 3 years ago we got the bug to do something with our money but weren’t exactly sure how. Our simple goal is to have choice whether to work or not. If we had no loans to service we imagine a passive income of $80-100k would be more than enough, and any more is a bonus!

We had a PPOR property valued at a tad over 300k with a mortgage of ~200k, limited other expenses and a disciplined approach to spending. Property sounded like a great avenue so we went about increasing our knowledge. Unfortunately our naivety led us to a property investment ‘education’ group where although we have learn a lot we have made what we think are two poor investment decisions. We overpaid for both to fatten the developer’s margins.

Our first was brought using the above equity in our PPOR and was a House and Land duplex in Dakabin, Qld for circa $500k. Although the yield is decent there were many costs that the property investment ‘education’ group failed to mention/understand that we have been left with, and there is little scarcity or owner occupier appeal to make growth a good prospect. We have always had tenants in both sides which has been great. We borrowed 90% on interest only terms.

About 18 months ago we signed another contract, this time on a 4 bed H & L in Doolandella, 18kms out of Brisbane for circa $400k. After a long land settlement this was completed yesterday and will be advertised for rent tomorrow. Looking at about a 4.9% yield. Again, this is on an interest only loan at 90%. Deposit and costs were paid from our savings – I know, huge mistake!

Right after we signed this contract we found your podcasts which have taught us that there are so many fundamental errors in our property selections, and if we had our time again would have purchased existing properties with scarcity and owner occupier appeal.

We have just had our first child and Kirby is now off work. We have a ~$45k buffer in our PPOR offset and somehow are still managing to save, even though Kirby is off work, although receiving maternity leave payments.

We use a credit card to pay for 95% of our spending, and repay at the end of every month to ensure no interest payments.

So, we are still very keen to use property as our investment vehicle and have learned so much in the last year but are now stuck as to our next step. We doubt we would have enough equity to purchase again now and the fact Kirby is off work will severely hamper our serviceability. She will return to work at the start of 2017.
Questions:

Do we sell both/one of our current properties? We’d like to keep if possible as I am a firm believer in buy and hold, although will they hamper us moving forward?
Where to from here?

Any information from you would be extremely appreciated. I’m sure there are a number of people who have used ‘property spruikers’ such as these to purchase less than ideal investments.

If you like this case study episode (Mid 30s couple, combined income of $150k p.a, existing PPOR and two IPs), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

63 | Q&A – What’s the next step to building a portfolio, size of the portfolio, IP or PPOR and diversifying wealth strategy

By The Property Couch May 12, 2016 in Podcast, Q&A

Subscribe On Itunes Subscribe On Android

It’s Q&A time again! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions!

Next step to building a portfolio question from Derrick: I was listening to your “tips for FHO’s” episode where you advised a gentleman to think about getting a one bedder in a desirable suburb (like Bondi) as his first place. Coincidentally I pretty much did that 4.5 years ago…buying a 1 bedroom unit in Woollahra. So you could say that I am that guy four years later! The only difference is that my apartment wasn’t part of an investment strategy at the time, I just liked the apartment! I am at the stage now that I want to get into property investing but at the same time I’m conscious about finding my second place of residence for my wife and I in about three years…preferably living in a similar area. So I’m trying to tackle two thoughts at once: how do I invest in my long term future while figuring out how to afford my next home? What should someone like myself be thinking? Should I be looking to invest and build more equity for our second place? Should I sit on our current property and save, while looking to use my current place of residency as a future investment property? Or is there another route? Thanks for your advice and thanks again for the show!

Size of portfolio question from Jason: Started to listen to podcast recently and love it keep up the good work. I just wanted your guys opinion on the ability to build large portfolios now in this current lending environment. I have heard you guys mention that you only need 4 to 5 properties to have a passive income and live into retirement but what if you want to have larger portfolio say of 10 or 20 properties is this achievable for people on average incomes like previously? Or has the APRA changes stopped this from occurring in the future?

Question on leverage from James: I’m 27 and looking to make a good go at property investing. I have recently sold my first investment property and now have a lot of capital from the sale. My investment now is a new property being finished in 12 months . My question is after selling down the 1st investment property, am I better off paying for the new one in full (using the rental income to service another investment property afterwards), or should I purchase a few more properties while i have a large sum off money and spreading the cash around to gain more houses for a larger passive income later down the line. Bearing in mind my age and goals. Thanks guys! and keep up the great work.

IP or PPOR question from Karla: Hey guys. I love the podcast and the sign offs too Ben! My question is, if you are renting and have the ability to purchase a property. Is it better to buy an investment property or a principle place of residence (IP or PPOR) first? Which would set you up better for the next step? It feels like a bit of “chicken or the egg”. I’d love to know hour thoughts! Keep up the good work and I can’t wait for footy season to hear your commentary!

Case study question from Deanna: I am 22 yrs old and am convinced of the benefits of property as along term wealth building strategy, for now I am trying to develop as much understanding as I can. My questions are as follows:
- Do you recommend that the first property that someone buys is for PPOR or can it sometimes be an IP? For example this may be relevant for young people currently living in Sydney who are renting but would also looking to be a border-less investor. In what/ if any scenarios do you think this could be a smart plan?
- What is your opinion of young people utilising the first home buyers grant. I understand that in majority of discussion that you advocate for established buildings rather than new dwellings, however when I read a case study you wrote for Money magazine the 20 something year old strategy included using the first home buyers grant for their first property (PPR).
- This is a broad question and may potentially be outside you scope of practice but I was wondering what your opinion was in diversifying wealth building strategies. For example do you observe in your successful clients that they are involved in property investment only or do they often also include other investments such as a share portfolio to their strategy.

References:

Money magazine – Special Real Estate Edition – Buy here
ABC News article: Who uses negative gearing in Australia? – Read here
RP Data: Weekly rents have continued to fall over the past year – Read here
2GB Ross Greenwood chat with Roger Montgomery – Listen here
Qantas in-flight radio: Alan Kohler chat with Bryce Holdaway – Listen Here

If you like this Q&A episode (Exiting a contract, crowdfunding, what’s the impact of global events on Australia Property Market and more), don’t forget to rate us at our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

59 | Rentvesting: What is it and who is it for?

By The Property Couch April 14, 2016 in Podcast

Subscribe On Itunes Subscribe On Android

As mentioned in the podcast, Bryce Holdaway and Ben Kingsley will be talking about Rentvesting today!

It’s not a common property investing strategy but it is gaining some momentum amongst Australian property investors. In fact, Ben was asked to write about this for the March 2016 Cover Story of Money Magazine.

If you would like a copy of this article, just fill in the form below and we’ll send it to you right away.

In this episode, our hosts will be explaining what this strategy is all about. The concept is fairly simple but it is important to note that rentvesting is NOT for everyone. You need to look at your numbers and make sure that it works for your cash flow position.

There a few other considerations that you’ll need to think about as well before jumping in such as how it’ll benefit your household’s circumstances and how comfortable you are with the concept of renting. Start listening to the podcast to find out more.

P.S. There’s also an update on the Negative Gearing debate at the end of the episode! 🙂

Resources mentioned:

Ben’s interview with 2GB Radio – Listen more
Fill in the form below to download Ben’s article on Rentvesting:

Instagram

Free Resources

Footer

MONEY SMARTS SYSTEM