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Episode 306 | The Game of Loans: How To Find & Finance An Investment Property

How do property investors Find and Finance their investment properties?

Let’s face it: Asset Selection (aka finding the property) and Borrowing Power (aka financing the property) are two of our Four Pillars of Mastery for a reason… they’re crucial!

So with this in mind, how do property investors make sure they get these two things right?

Well, that’s where today’s episode comes in. We’re unpacking heaps of listener questions on these two topics so you get the insider’s guide into what to buy and how to set up your loan structure and strategy correctly!

We’ve dubbed it “The Game of Loans” and we think there’s quite a few takeaways in here, and even a few bits of gold we’ve never discussed before…

Listen now so you can learn how to find and finance your assets!

 

Free Stuff

 

The Questions

Question about “Investing in Victoria During COVID-19” from Trav:
Hi, gents, just a quick one. I haven’t yet mustered up the courage to do any investment in property. I’m looking to do my first one, hopefully within the next six months. And just want to get your views on the current environment here in Victoria. And if you think it’s a good time to invest in Victoria, the area that I’m looking at is Chelsea, down by the beach there, close to train line three bedroom, townhouse, one bathroom, own title, nobody corporate in a secure, parking area. I tick all those boxes that you guys talk about. I have low debt, zero debt effectively. I own my own property. I’m in a secure government style job around the 120K Mark and regular high-rises, and I’m quite a good money manager, yet to do the last little part of my structure. And that is obviously getting in touch with a good savvy mortgage broker rather who’s savvy around investments. So I just, your thoughts on that and let me know, keep up the good work and I hope to hear from you, sir. Bye.

 

Question about “Closer In And Smaller or Further Out And Bigger” from Violet:
Hi, Bryce and Ben we’ve been conditionally approved for our first home to the value of $750,000. We live in the North Eastern suburbs of Melbourne way. Wondering whether we should buy a two bedroom property with the potential to add an extra bedroom, which definitely needs a little bit of work, but we can get in for, you know, under $600,000 we believe, or if we should max out budget right up to the $750,000 and get a house that needs very little work and already has three bedrooms, which would be the best option here?

 

Question From Tom:
Hi Bryce and Ben, I’d just like to ask a question regarding timing on principal and interest payments on an investment property. We currently have four investment properties, which are all interest only payments. We still plan to purchase another one or two properties in the future. We’ve recently just refinanced our investment properties to take that to maximum borrowing. And we drew the equity to purchase our primary place of residence. That primary place of residence has an offset account. The old wages and our rental income goes into. I’d just like to know at what time do the investment properties turn from interest only to principal and interest repayments? Thank you.

 

Question From Shashank:
Hi Ben and Bryce, my name is Shashank Pande, and I’m based in Adelaide. I’ve been a regular listener of your podcast and would like to thank you for the amazing knowledge share and experience share that you do for the wider community. My question relates to auctions and my question is about the feasibility of an auction, from a seller’s perspective, in getting the best price for the seller, because it’s predicated on the reserve price for the seller, which is the lowest price that the seller would sell the property for and not on finding the highest bidder for the property. So I just wanted to get your views on whether an auction is the best for the seller to sell a house. Thanks, Bye.

 

 

 

 

 

Episode 291 | The Property Loophole: Recognising A Pipe Dream From The Real Deal

The Property “Loophole”… is it a myth?!

If you’re interested in investing in property, at some point or another you’re probably going to run into someone who tells you about some “secret loophole” – whether it be about property, tax, SMSFs… you name it – that you can use to, ahh, exploit the system.

Well, folks… let’s just call it out, shall we?

Because there’s a MASSIVE difference between a Pipe Dream and the Real Deal. And we can assure you, the price you’ll pay if you get the two wrong is no small fee!!

Here’s the deal… during the week we reached out to folks on our Facebook Page and asked them what questions they had on their mind right now… and we received some eye-opening comments that made us go…

“Whoa. Hang on a sec…”

And so, of course, this episode was born!

You can check out the exact questions further below, but here’s a quick scope on what we cover:

 

The Free Stuff

 

 

The Questions

Question about Buying Off The Plan from Angivin:
Guys we are very clear that you aren’t fans of buying Off The Plan, however can you please provide insight when this strategy has/could work please? 

 

Question about The Pipe Dream & Its Consequences from Kieren:
Is turning your super into a SMSF to borrow and build property a good idea? My mate at work got sold the pipe dream by his brother in law to do this. He tells me he is building dual key units and that it’s eventually going to net him $300,000 per year based on rental growth forecasts! I have told him this is not believable. Turns out his brother in law who convinced him to do this is getting $60k in kickbacks and is going to split it with him. He also tells me his interest rate is 5.7% because apparently no one lends to trusts cheaper than this? He also pays some bird $3k per year who will “sort any issues he has” on top of the property manager. And there is a snake “finance broker (as he referred to it)” in there somewhere who I reckon stitched him up on the interest rate. What happens when all this falls over and the money you put into your super each year doesn’t keep up with repayments? There is a $25k limit on how much super you can put in without big tax $$ so what then?

 

Question about How Much of A Buffer You Need from Toui
Hi TPC team, loving the Money SMARTS system! Question: when you talk about 3 to 6 months of living expenses, do you typically recommend that calculation on Essential spend? Or both Essential and Discretionary?

 

Question about The Pros & Cons Of Interest Only Versus Principle and Interest from Matthew
Hey guys! What is your opinion on the pros and cons of paying interest only vs principle? I am learning the ins and outs and have seen people succeed in either.

 

Question about The COVID-19 Recovery Across Specific States from Adam
Do you think any state will emerge from the covid storm quicker or better off than other states? And if so, will this translate in their property prices?

 

Question about Mortgage Payments On First Investment Property from Shannon
Suggestions on looking into P&I loan for first investment property if little difference in mortgage payment compared to interest only+ offset?

 

 

 

 

 

Episode 290 | Why Job Security Does NOT Equal Income Security… And Why You Must Know The Difference Before the Next “X-Factor” Event Catches You Out

If there’s one thing COVID-19 has taught us, it’s this… “Job Security is Everything”. But if we think about it… is it really?!

Sure, the global pandemic – the “X-factor” event – caught quite a few of us (well all of us, really) off guard… but it became quickly obvious that life was interrupted for folks at VERY diverse levels.

Cue: Income Security.

Yep, Income Security looks and feels a whole lot different than just having a job to show up to. In fact, we vouch for the fact that it is the #1 Most Important Thing to focus your energy on if you want financial peace… EVEN during the most uncertain of times. ‘Cos now that a real-world “X-Factor” event has indeed struck, folks are left in in two distinct camps – 1.) folks who can take advantage when opportunity strikes… and, 2.) folks who MUST learn from what’s just happened!!

So, today we are diving deep on how to create a Passive Income WITHOUT having to buy heaps of properties, sacrifice your weekends knocking down walls or live off two-noodles for the rest of your life (who on earth wants to do that?!)

And while we still maintain that the “Best Time to Buy” is when your cashflows allow… we’re going to let you in on the little known tip about the 2020’s that you might not know about (hint: great news if you want to invest in property 😉!)

We reckon’ this episode will help to set you up, stay the course and, ultimately, end up with that income security that’ll see you through any of life’s curveballs!

 

Psst…. Wanna learn EXACTLY How You Can Build A Multimillion-Dollar Property Portfolio That Creates $2,000 A Week In Passive Income???

Introducing The Property Couch’s FIRST EVER Online Course….

START & BUILD – Click Here For Limited-Time “Launch Offer” Incl. Huge Discount and Exclusive Bonuses!

Looking for the link? https://thepropertycouch.com.au/startandbuild

 

Free Stuff Mentioned

 

What we cover in today’s episode:

 

P.S. Yeww, footy’s back!

P.P.S. Your Start and Build Online Course: https://thepropertycouch.com.au/startandbuild

 

 

And of course..

If you’re worried about your finances or if you have no clarity on your cash flow position, we strongly recommend you to organise your finances now. It’s more important than ever to have a clear view, down to the exact cent, on how much you’re spending each month and how much surplus you’ve got. If you don’t know it, then log in to your Money SMARTS Platform here and update the numbers.

Don’t have an account yet? Create your free access below and we’ll also send you an e-copy of the instruction manual which is also our best-seller book, Make Money Simple Again. Just fill in the form below and we’ll email it to you right away.

 

 

 

 

Episode 289 | Why McDonald’s and Churches Know More About Land Value Than Anyone Else

What do McDonald’s and Churches have in common?

For starters, they understand what underpins property prices! And not only are we about to dive deep on this in today’s Q& A, we’re also going to tell you exactly why property is a different beast to other economic market’s across the country!

‘Cos here’s the deal folks…

… we got some very, ahh, ‘unedited’ feedback from Ryan about eight weeks ago — which was obviously right in the height of COVID-19 fear.  And instead of running away from this stuff, we’re going to tackle it head on. Maybe you might have similar thoughts in the back of your mind too!? So make sure to check it out.

 

And of course,  as AFL supporters, we cannot forget about the Big Freeze!

Although there are a bit of disruptions on the AFL schedule, Big Freeze 6 is still going ahead! Founded in 2014, FightMND was established with the purpose of finding effective treatments and ultimately a cure for Motor Neurone Disease. Here’s the link to the Big Freeze!! Donate here >.

 

On top of that, we’re also answering a who bunch of listener questions, like…

  • How to extend or refinance interest only periods
  • Understanding Demographics and Median Income
  • Selling Your Current Property To Afford A New (and better) Property
  • Recognising variances in data estimates and actual purchase price
  • How The Wealth Effect effects the economy

 

Question from Declan about extending or refinancing interest only periods
G’day Ivise, Ben and Bryce? Declan here, just push through the 300 odd episodes. Read both your books, trialled LocationScore, joined the Facebook group, PICA and set up Money SMARTS in the last seven and a half weeks. I can’t believe how much free content you guys have pushed out. It’s honestly been a sliding doors moment in my young investing career. My question for you is relatively simple: as a 23-year-old with a partner, rentvesting is essentially the only way we can get into an A or B-level grade property where we live. The missing piece from the last 300 episodes, in my point of view, has been discussion around extending or refinancing interest only periods. I was wondering if you could unpack a bit of a framework on the best way to prepare your financial situation so that a lender will consider extending your interest only period as having an extra one, two or three years on higher can be the difference between letting out your first property at a cashflow loss compared to being neutrally geared, which is, in my opinion, than Nirvana as a Young Bloke. P.S Go the Swans.

 

Question from Adam on Understanding Demographics and Median Income

Hi guys, how you going? My name is Adam and I love the podcast! I only found it about a week ago. By Day 3, I’d already ordered and read the book, by Day 5, I’d already recommended to about a dozen people and I’m just chewing through the backlog of the podcast. I’m currently on the Sunshine Coast and I’m looking to harvest equity and investment property I have in Adelaide to purchase a PPR while I’m working here because the rent to lifestyle ratio isn’t working in my favour. When I’m laying down the suburb demographics, you say aim for suburbs that are round about at a 35-medium age with an increasing median income. How do you account for the fact that retirees are either there to downsize or buy through their assets, pay for the premium lifestyle, and so drive up the median age, drive up the prices, but drive down the income? Thanks again, hope to hear answer from you. Have a great one.

 

Question from Antares Selling Your Property To Afford The Next Property

Hi guys. Just wondering your thoughts on our situation. We’re looking at buying a waterfront property on the central coast under $2 million and potentially holding our existing home, which is almost paid off and renting it and looking at selling it to maybe next year. It’s a lot to hold. It’s probably a 40% of our income if we didn’t have a renter. And also would it be better make to buy and sell the same market? Just when your thoughts on that guys. Thanks.

 

Question about variances in data estimates and actual purchase price from Jonny

Hi hopefully Bryce or Ben, I’m writing to you guys as I have a question and I’m desperate for an answer… I am in the cooling off period of my first home. The house is in Sturt, Adelaide. The property is 720m^2. Core logic data suggests the property is worth 485k. My offer of $490K has been accepted. With all this uncertainty around COVID-19, have I paid too much? Or should I go ahead with the sale. Currently tenanted at $360 per week until July. I am borrowing 90 percent. Is it just too risky as it’s my first investment? Or because I’m planning to hold for long term is it still a good idea? Hopefully someone can pls get back to me. Thank you in advance. Johnny.

 

 

Episode 288 | How He Survived Multiple Recessions & Why He Still Believes in Property, Even During a Pandemic – Chat with Peter Koulizos, Chair of PIPA

Did you know that “Property Professor” Peter Koulizos INVESTED during multiple Australian recessions? And now, in the wake of COVID-19 he is STILL adamant that property is a safe bet!

So, what can we learn from one of Australia’s leading property experts who’s actually lived through The 70’s Recession, The 80’s Recession, The 90’s Recession and The GFC?? What can we take away from someone who invested in almost all of them?!

Today, we’re welcoming back Peter K, no stranger to The Couch! As well as being none other than the Property Professor as the Program Director of the Master of Property at The University of Adelaide, he is also the Chair of Property Investment Professionals of Australia (PIPA) and widely regarded for his insights into the Australian property market; including everything from gentrification to property development!

And aside from hearing how on earth he survived all of those economic upheavals, we’re ticking off these three key points (more on what’s covered in this ep further down)…

  1. Pete’s take on COVID-19 and how it compares to Australia’s Recessions and The GFC
  2. Peter Top 5 Things he’d say to his 20 something self BEFORE buying his first property (we’re excited for this one!!!)
  3. The new PIPA/PICA survey results 😊

With #3, Peter and Ben are also unpacking the brand-new results from the recent PICA & PIPA Sentiment Survey that just went out… so we can all see how current and aspiring property investors are feeling about the property market since COVID-19 entered our lives. And the results are kinda surprising!

 

Free Stuff…

 

What we Cover in Today’s Episode…

  • How does the COVID-19 property market stack up to during previous Australian Recessions + The GFC?
  • How does the typical “Australian Aspiration” differ from other counties? And why is this critical in shaping the future of our property market?
  • Property Transactions vs Property Prices: What’s Happening Now?
  • Safe strategies to increase immigration and help Australia’s economy
  • What property sector will be most affected by COVID-19?
  • What is the Government proposing in order to stimulate the property market?
  • Which commercial properties are likely to survive the pandemic?
  • How many new dwellings should we be building per year? (minimum)
  • What 5 things would Peter’s tell his 20-something self BEFORE buying his first property? (check out our tips here)
  • Why Your First Home Shouldn’t Be Your Dream Home!
  • How old was Peter when he moved into his forever home?
  • How To Use Someone Else’s Hindsight To Make Better Investment Decisions
  • How can you help your kids get on the ladder while still investing yourself?
  • How many Australian property investors still think it’s a good time to invest?
  • How many investors are currently affected by financial hardship based on the PICA & PIPA sentiment survey??

 

 

 

 

 

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