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198 | Nine Ways to Navigate the Credit Crunch

By The Property Couch November 15, 2018 in Podcast

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Folks, if you’re playing the long-term game in property investing, you’ve got to know how to navigate the credit crunch!

And what do we mean by this??

… You MUST build financial muscle in order to succeed at the game of lending! Because folks you can NOT save your way to a passive income. You just can’t.

What you need is access to credit and an ability to optimise this credit so that it works in your absolute best interest.

But of course, there’s an elephant in the room here, isn’t there??

The lending landscape has changed, folks! This can be seen from APRA’s lending restrictions all the way to the banks feeling the pressure following the Royal Commission — both of which are just the tip of the iceberg property investors are now facing when it comes to accessing finance.

So. Here we are at the messy middle…… how can YOU cut through these challenges and still get the lending results you need??

Well, we’ve got 9 Tips up our sleeve to help you do just this folks!!!

Before we kick off the key learnings, here’s a couple of reminders from today’s episode…

1. Have you got a copy of Make Money Simple Again yet?

Grab a copy with 20% Discount here! Just use this coupon code: TPC20

Not ready to buy the book yet? No worries! Just download the Free Chapter here and check it out. 😉

2. Looking for the Facebook Group? Click here to join!

What’s the very first thing you need to do??
What are the three loans the banks can only offer you?
How can Long Term Resets help you buy an investment property without sacrificing the family budget?
If you’ve got a few “chinks in your credit armor”, what do you need to do to increase your chances at accessing finances?
Why shouldn’t you be shopping on rate alone?
How can automation help you?
What will happen if lending restrictions move to extremes?
What will change following the latest Royal Commission?
How can you make your loan repayments lower?
Why do Mortgage Brokers often have higher volumes of lending than banks? Is this something to be worried about?
How do you increase your borrowing power?
What are the questions you should ask the person who is organising your lending?
How can thousands of dollars be saved just by looking at the percentage of loan-to-value ratio?
What are you sacrificing if you go Principle and Interest?
Is Lenders Mortgage Insurance the worst thing for a property investor?
What’s the difference between borrowing capacity and borrowing strategy?
What information of yours is being shared to lenders?
How can you avoid poor loan structure?
Cash flow vs borrowing power – what should you focus on?

190 | Q & A – Addressing Media Alarmists, Investing in Your 50s and The Truth About Lenders Mortgage Insurance…

By The Property Couch September 20, 2018 in Podcast, Q&A

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If you’ve heard the latest media reports, folks, you might have reason to believe the property market is all bricks and slaughter… but is that really the case?

Today on the Couch, we’re addressing media alarmists — the recent noise shouting out alarm that they’ll be a total housing crash in Australia! So… is there any truth to the gloom and doom?

PLUS, we’re deep-diving into investing later in life and what this really looks like for people in their fifties, including the ramifications of investing in property can have on pension allowances.

And, of course, Lenders Mortgage Insurance… let’s run the basics, and work out when too much is WAY too much!

Before we kick off the Qs… guess what??

If you want the 30% discount on our new book Make Money Simple Again you need to join our waitlist BEFORE 11:59PM TOMORROW (Friday 21^st September 2018)

Yes, this is a limited-time only discount, folks!

>> CLICK HERE to Get 30% Discount of our New Book

And before we jump into the questions, here are some recommendations from Stiggy to help you go through this episode:

Winter is here! If you’re worried about the recent media attention on the market, go back to Episode 66 (Winter is coming and the air will be colder up high) to find out what properties we think would be affected first. And of course, while you’re on the trip down memory lane, don’t miss out Ep 37 on all thing Scarcity.

Do you want the recording from on the VIC Residential Tenancies Act Amendments? PICA will be sending out the slides AND the replay to their members next week. Not a member yet? Click here to join.

(Spoiler Alert) And finally… Here’s the link to the Granny Flat that we’ve chat about on today’s show. Make sure you consult a qualified and experienced Financial Planner before making any investment decisions folks! 🙂

Alrightey, let’s get to today’s questions!

Question about Investing in Your 50s from Darren

Me and my wife made a mistake late in life. We bought a house and sold it back in 2000, so we’re not first home buyers. We’re 50, looking forward to getting on the property train and have a good income of about $180K per year. We have about 4.5K in disposable income that we can put into property. Given everything I’ve heard from you guys, how could a couple, now 50, with that available cash, make their way through to give themselves a passive income by mid-60s, earning $80 – $100K per year in passive income. We were thinking of buying a house for around $450K, perhaps on the north side of Brisbane, around Petrie and Kallangura area, and we could smash out as much as we could in a year and a half, build up some equity and buy then move onto the 2nd house with a maybe a bit of renovation between. So my question is: how do people of our age group get onto the property ladder and make this happen for ourselves?

Question from Steph the “Serial Coucher”

We’re looking at purchase a home from my father in law over a period of time. Essentially, he is an asset rich, cash poor retiree who is living fortnight-to-fortnight on the pension. Yes, it’s certainly an emotional driver, but the asset does stack up. So my question is: how does something like this work? Can you acquire traditional financing, or is it a specialty class of financing? And what specialist should we look to engage? I want to get as much info as possible before even bringing up the subject with him. Thanks guys!

Question about Lenders Mortgage Insurance from Alasdair

I’m looking to increase my portfolio from 2 Investment Properties (IP) to 3IPs, and possibly a 4th. I’m sitting at around about 90% when I get my loans. I read somewhere that around the $1million mark it gets difficult. And I’ve heard that the global portfolio is impossible to get it over $2.5 mil. Can you speak to that idea?

164 | Q&A – How to Avoid Poor Loan Structure

By The Property Couch March 22, 2018 in Podcast

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It’s Q & A Day, folks!!

Off the back of last night’s webinar, “7 Deadly Sins of Building a Property Portfolio” we’ve got plenty of questions leftover that we reckon are going to help you with ALL THINGS LOANS and INVESTMENT LENDING!!!

Before it kicks off though … we’ve got a BIG announcement (well, big news for Bryce!!)… so make sure you keep an ear out!

So, we’ve got SIX questions to get through, which will help you in avoiding poor loan structure and more importantly, your planning stage of building a property portfolio!

Question from Mark:

I have a PPR mortgaged at the moment, as does my girlfriend. We wish in the future to turn both into investment properties and buy a further property to live in long term. Should we be spending money doing any works to the properties that we currently live in? Or should we spend the bare minimum and save every cent for our “together” house?

Question from Laudy:

I thought they’d changed the PPR loans and didn’t allow interest only loans anymore — how can this be done?

Question from Dean

Can you use equity in your investment properties to wipe out your PPR mortgage?

Question from Chris:

I understand the concept of “tapping into property 1’s equity” but HOW do we do it? Is a Line of Credit an appropriate method? Is this with the same bank or a different bank? Thanks guys, appreciate the help!

Question from Matt:

In the case studies it shows the debt on investment properties being paid off over time. When do you switch from IO to P&I? Should you refinance after 5 years to extend IO period as long as possible or switch to P&I when your cash flow allows?

Question from Shanki:

Regarding loan structure, can I use the equity from 1 property to pay the deposit for 2 separate investment properties? Is it similar to collateral?

p.s. Here are all the links for today’s podcast!

Wants to join Bryce in his new TV Show, Escape from the City? Click here to apply for the spot!
Here’s the link to Bryce’s Mindset Minute Article: Read the article here
Interested in Ben’s webinar on the Impact of Interest Only Lending? Watch it here.

099 | Q&A – Tips For Investing Late In Life, Selling Your Home, Fixing A Downward Portfolio Spiral and more

By The Property Couch January 19, 2017 in Podcast, Q&A

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As Bryce puts it today, we’ve made it to “99, not out!” and with just 1 episode to go before the big 1-0-0, we’re back to provide you with another Q&A Session. In today’s episode, Bryce and Ben give advice on whether to sell your home, tips for investing later on in life, what to do when your property portfolio is falling into a downward spiral, and more. Today’s questions are from the following listeners:

Fernando on whether or not to sell his home: My wife and I moved from SYD to MELB four years ago without not even knowing where its north was. We rented an apartment in the beautiful East Melbourne for a year as we wanted to enjoy this beautiful city life style but also knowing that we needed to buy a property after that time so we were not building someone else’s future. So we bought “with our hearts” a 3 beds, 2 bath, studio + man cave OLD house out in Donvale with the “vision” of slowly renovate it while starting a family, be surrounded by green, live the Australian dream and on top of that, generate a good growth on the property in a medium term. We love the area BUT… Now, after 2 kids, our cash flow is quite dry and we need to do something about it (classic isn’t it).

Our first bet is to sell as Donvale is not a good suburb from a rent perspective (Yield), put whatever money we can make from the sell – We bought at 520K, the median is 650K and we’ve been slowly renovating a few things, but again, without enough cash to finish it, we are not expecting making a huge profit – into an investment property and then became “Rentvestors”, we wouldn’t mind to sacrifice moving out to a suburb where rent is half what our current mortgage is. In our raw calculations, in 3 – 5 years we could be saving enough to buy the second investment property.

I believe the best things Australia has to offer are for free (parks, security, culture, etc.), so for now, not living in the suburb we’d prefer is not such a big deal when thinking on our medium-long term goals which are given to our kids the best that we possible can and start a passive income strategy for our future ASAP. On the other hand, if we keep the property, we’d need to put a considerable amount of cash on top of the rent in order to pay the mortgage, so our savings wouldn’t be enough to think in buying a good investment property any soon. We will regret not keeping this property… I can guarantee you that but we don’t see any other immediate solution.

Monique on whether or not to sell her home: Taken your advice, but what now? Given the projected apartment oversupply, should we sell our inner suburbs 1bdr flat to put towards our next home? Or is it still a good investment worth holding on to?

James on interest only loans:Part 1: 2 years ago my wife and I purchased a property 5km from the Brisbane CBD for $530,000. Unfortunately we only spoke to 1 bank, didn’t seek advice and fixed the whole loan for 3 years at 5.05% so have no offset and no way of paying more off the loan than prescribed fortnightly payment amount. After listening to your podcasts and just starting to read your book just this week, we have since found a decent mortgage broker and are considering refinancing and setting up the money smarts structure. We are considering an interest only loan, as discussed in your podcast, to give us the flexibility to purchase another property over the next 2-3 years, but currently we are getting conflicting advice from our financial planner who is against interest only and our mortgage broker who is telling us ‘cash is king’ in your offset account and we should consider it. The idea is to pay the same amount as we are paying now with our P&I loan but go onto interest only 100% variable (4.3% int rate) and let the cash stack up in the offset. What are your thoughts on this?

Ronie on investing late in life: Hi Guys, Loving the podcasts. Only started a month ago and am devouring them. Ben, I don’t know if you’ve been told this before, but when I’m listening to you, I can’t help but associate your voice to radio celeb Fitzy. Anyway, my question is, how to start in the property investment after 40. We are self employed, and although have a few savings, is not near enough the 20% asked for a deposit. We don’t even have our own house. Should we work towards that first? Thank you guys!

Lyell on the next steps to take in fixing his property portfolio: : I bought my first property at 22 in Kalgoorlie WA. I know i know, mining towns are dangerous. We bought that property is 2010 and have see no capital growth what so ever. Property was bought in 2005 for $197k and we purchased it for $340k in 2010. Not a bad profit for the previous owners. As soon as we bought it, growth stopped. We are however getting 7% gross yield (leased at $460pw). We then bought a house on a big block in Ballajura in the north eastern suburbs of Perth. We bought that for $450k in 2014. Unfortunately that house has dropped by around 7%. We now love in this home. But we leased it at $435pw. We are now at 90% LVR. Both properties are 3 x 2’s with the Perth property on 760sqm. This house was bought for $128K in 1998 prior to us. Very disheartening for a young couple. Could i get a rough idea on what you would do in the situation (in a completely general sense)?
Also, could you guys discuss ways to get yourselves out of sticky situations like this? I think a lot of people will be feeling this kind of pinch right now (especially WA).

If you like this Q&A episode (Tips For Investing Late In Life, Selling Your Home, Fixing A Downward Portfolio Spiral 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/

097 | Q&A – Mechanics of LMI, Purchasing Foreclosed Property, Stretching Your Investing Budget and more

By The Property Couch January 5, 2017 in Podcast, Q&A

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First thing’s first, Happy New Year everyone! And what an exciting new year we have for you all here on The Property Couch. We’ll let Bryce and Ben fill you in on what’s to come, but for now we thought we’d kick the new year off with a fresh Q&A session. In today’s episode, Bryce and Ben answer the following 7 questions which are:

Volks on Mechanics of Lenders Mortgage Insurance (LMI): I have a quick question, how would you tackle this situation. I’m 33 yo and married with 2 young kids with plans for #3 in the future. I’m currently rent vesting (I have subsidised housing thanks to my career) with one investment property in Warner north of Brisbane. (I bought this before I started to listed to your podcast) I have bought off the plan and in hindsight now, armed with the information provided by your podcast and other books on investment property, I would have steered away from that investment and bought based on location. Hopefully this property will do some heavy lifting in the future.

My question is in reference to LMI and loan to value ratio (LVR). Is the LMI attached to a loan dissipate over time as our LVR approaches the 80% sweet spot or does it remain until the whole loan is paid off? And, given I’ve saved up a good cash reserve, would it make sense to pay just enough to make my LVR 80%?

Jamie on Purchasing foreclosed property direct from banks: Hi Guys, I’m a long time listener of the podcast and have currently just completed your book. I have a question regarding whether you have previously ever purchased foreclosed property direct from the banks. I have located numerous websites regarding this with some requesting membership’s fees to access the information. Are there ways to retrieve this information yourself and can you expect to purchase this property for under market value and if so how much can this process differ from a typical purchase.

Bohdi on whether to buy comfortably within budget or stretching to the end of your limit: Hey Guys, Came across the podcast a few weeks ago and have binged a year and a half worth of episodes in 3 weeks. Addictive stuff! My now wife and I recently got married and are now looking to get ourselves into property.

We live in Manly in Sydney, have a good double income and a considerable deposit saved and are now trying to decide the best property approach for us. The maternity leave at my wife’s work is fantastic so we are not expecting any dip in salary income as begin to have children. In the long term our goal is to have a few investment properties wherever it makes sense to buy in Australia and then a PPOR in or around Manly.

My question to you: With our income we could probably get a loan of up to $1.5M and still be able to comfortably live. But in your experience, should we start by purchasing an investment property that’s well within our means – e.g. something for around the $700,000 – $900,000 mark and continue to rent in Manly OR should we try to stretch ourselves and buy a property at out upper limit that we live in for now and then think about additional investment properties later on? If we were to buy something a bit cheaper in an area that made sense, I’d imagine we’d be able to continue renting and then buy a second more affordable investment property as equity grows in the property and we continue to save. In other words, are we better to aim for a number of cheaper properties that we gain a small amount of capital growth or one more expensive property that might achieve large capital growth as it’s off a larger base?

Any thoughts/words of advice would be much appreciated as we’re undecided what to do next?

Mike on offset accounts: Love the podcast! Got on board at Episode 69, been back to the start and nearly caught up again. I get excited about driving anywhere now because of your podcast. My question is: do you attach an offset account to each loan, or can you have one offset account attached to multiple investment loans? What makes more sense?

Tim on what to ask a Property Advisor: Apologies if you’ve already covered these and I haven’t got to it yet but I’d love to hear more about the following:
- If looking at a suburb/property that’s historically gone up 10% per annum vs a suburb that’s gone up 7% per annum, you could either conclude that the first is a better performing suburb and assume it will continue to be, or that the second is good value and has room for capital growth. I would love to get your thoughts on how to think about these two very different conclusions that you could draw from the same data. I’ve heard you mention the term regression analysis before and am curious if you’ve done any research into this.
- It’s common to see managed bond/stock funds apply their strategy to historic data to demonstrate what it would have done had you invested 3 years ago, do you guys or other property advisors do the same thing with the principles that you apply and what kind of questions should people be asking their property advisor to validate that their approach is likely to be a successful one?

Mitch on Strategy and Building out a Portfolio: I am currently in the early stages of talking to your mortgage brokers and buyers agent team about my next investment property early next year. My question to you revolves around strategy and building out a portfolio. I am 25 and bought my first investment property with little/no knowledge just over 2 years ago. Luckily I bought a 2 bedroom 1970’s unit (1 of 12) in Hove, Adelaide and so far it has done really well. Historically its capital growth has been 8.5% and yield 5.4%. I understand that this probably won’t continue into the future but feel we did well.

When designing plans and giving the buyers agent team a clear brief my partner and I are beginning to assess whether we chase capital gains property, a cash cow or a mix. Currently our cash flow is strong (minimum 2k surplus per month) but this could deteriorate slightly as circumstances change. I’m curious to know again the rough numbers you guys work off when considering these options ie. What capital gains % do you chase and what yield % do you chase for both types of property.

We are leaning towards a more capital gains focused property as with age on our side rental yields can catch up later, but we want to make sure we can easily manage the repayments so we don’t want to get stuck not being able to live life.

Amber on realistic estimates of holding costs for Investment Properties: I wonder whether holding costs for an investment property after tax of 2% of purchase price is still realistic estimate in the current market? I read your article which was written in 2014 on how to invest without affecting family budget where you used this value.

If you like this Q&A episode (Mechanics of LMI, Purchasing Foreclosed Property, Stretching Your Investing Budget 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/

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