Off the Plan Archives - The Property Couch

Episode 259 | Q&A: A Tax-Saving Hack For An Offset Account, The Simplest Way to Keep Track of Your Properties and How To Distinguish “Emotional Value” from “Property Value”

By The Property Couch November 21, 2019 in Podcast, Q&A

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This Q&A session (brought to you by The Stig) features everything from the BEST benefit of an offset account that most folks don’t know about to build your own home from scratch. We tick off a few new topics and cover…

A Tax-Saving Hack For An Offset Account
How To Distinguish “Emotional Value” from “Property Value”
Why Building a “Forever Home” Is NOT The Same Thing As Investing
The Simplest Way to Keep Track of Your Properties
Property Software Solutions for Existing Property Investors
Multiple Offset Accounts: Why It’s Not Something We Recommend!

All four questions we answer today are listed in full further below — and a special mention to Brodie, Emily, Alan and Chris for contributing today’s epic Qs!! As always, if you want to be featured on a future Q&A, ask us your question here.

Free Resources Mentioned…

Property Investors Council of Australia (PICA)

The Questions Answered Today…

Question from Brodie on Building a New House

“Hi guys, love the insights I have gained and I feel you have saved me thousands. My question is around new property. I understand buying off the plan is a bad idea as an investment etc. however, my partner and I would like to buy a house for the next 10 or so years to raise a family and everything that comes with that. I am a building designer so I am a bit more bias towards building so my question is would building a house with an outlook to live in it for an extended period (10 years+) stack up to buying an existing property?”

Question from Emily on Property Investment Software

“Hi Ben & Bryce, I love your podcast and only recently discovered it since finishing your book. I’m currently up to Episode 70 and can’t get through them quick enough! I am 25 and just finished university in an accounting degree and now have 3 investment properties with a forth due very soon.

I have a question regarding property investment software I hope you can answer. I am wondering what software you recommend for keeping the administration side of your investment properties in check? From what I can see from my Google searches, many of the software packages already available in the market are for the DIY property manager, which advertises its features to do with the collection of rent, scheduling inspections and communications with the different types of tenants etc. However in my personal experience, hiring qualified property managers is the best/most reliable way to go, so these features are useless to me as this is already taken care of.

My question therefore is, is there any software available like MYOB or Xero tailored to property investing that we can input our property costs including regular maintenance, scheduled bills and buying costs. Ideally I would have a different ‘project’ or ‘account’ for each property so that in 30 years when/if I choose to sell, the cost bases for each property are easily worked out to determine the capital gains liability. I love your work and love listening to your podcast every day. Thank you for making such a huge difference to the lives of the little guys on the ground.

Question from Alan on Offset Accounts & Loan Structure

“Dear Ben & Bryce, big fan of your show. A question in terms of offset accounts. I have an offset account on my investment property. Currently, I am living at home and am looking to purchase the second investment property. I am wondering, do I need to set up another off-set account? I don’t want the loans to be inter-linked/cross collateralised. Your faithful listener, Alan.”

Question from Chris on Affording Offset Accounts

(We also went “Live” on Facebook when we answered Chris’s question! You can watch it here.)

“My current home loan is $350,000. Property value sits around $400,000. This is not our forever home and we bought to get on the ladder. We would like to buy our next “forever”” home in the next 4 years and rent out my current home. Current interest rate is 3.23% on a standard home loan, no offset with Bank SA. Current savings for me and my partner sits around $45,000, which currently earns us around $500 in interest a year in an online Rams saver account. That goes up around $20,000 a year with a goal of reaching $100,000 by 2022.

I spoke with my mortgage broker and he came up with the following change in home loan to add an offset: Bank SA, 3.28% interest (0.05%) higher with an annual fee of $395. With $45k in the offset that should work out to an annual saving of $905pa, I think.

Everyone tells me to get an offset but am I getting ahead of myself? I feel once I add on the annual fees and take into consideration, I won’t be making any interest on that 45K, I will actually be costing myself money on my current situation. Or can anyone recommend a better home loan that I should look into. I would love to have multiple offset accounts but they seem to have higher interest rates. If we add all our money in all accounts it would sit around $50K.”

Episode 258 | WARNING: The Unconscious Mental Triggers Property Spruikers Use To Trick You

By The Property Couch November 14, 2019 in Podcast

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Property investors who get seduced into Off the Plan and house and land packages are often seduced through a marketing process that targets universal, emotionally-driven mental triggers.

And after heaps of folks wrote in about last week’s episode where we spoke of the perils of investing in these types of properties, we’ve decided that today we’re going to lift the lid on what exactly these mental triggers are. So people can spot the spruiker from miles away! Because there’s a VERY big difference between marketing for marketing’s sake… and simply being sold into buying dodgy advice & dud properties.

Full disclosure: you will notice that some of these we actually do ourselves… and, yes, we’re being very explicit in this. The reason why we use them is simple… these tactics get people to take action. But getting people to take action on something that will ultimately help them… versus taking advantage of human psychology so people buy an asset or invest in bad advice that only the Spruiker will profit from…... well…… it’s about time we even the playing field here, don’t you think?

And folks… Property Spruikers do NOT want you to know this stuff. Full stop.

… ‘cos once you learn this stuff… you won’t be tricked quite so easily!

Free Stuff mentioned…

Last Webinar of The Year – How to Build a Property Portfolio in 2020!
Free Book– Make Money Simple Again
PICA Webinar with Bradley Beer
PICA Membership – Become a Member for $5
Like us on Facebook (even better… share our page!)

The Unconscious Mental Triggers

13:36 – Mental trigger #1
16:25 – Mental trigger #2
20:46 – Mental trigger #3
22:45 – Mental trigger #4
25:50 – Mental trigger #5
27:05 – Mental trigger #6
32:11 – Mental trigger #7
39:51 – Mental trigger #8

Episode 257 | The Exception To The Rule When It Comes To Off The Plan Properties & House And Land Packages

By The Property Couch November 7, 2019 in Podcast, Q&A

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Recently, ABC’s podcast The Money ran a very poignant episode on the financial risks of unregulated property investment advice (which we highly recommend you check out – details below folks)… which revealed the pitfalls of buying Off The Plan properties and getting snagged on the end of “one-stop-shop” spruiker seminars.

As well as interviewing two unlucky folks who learnt about investing in Off The Plan in the worst way possible, the episode also features a property ”sales person” … and the look from the other side… is… well… let’s just say we’ve got something to say about it!

‘Cos as you know folks, we hold a VERY strong view on these types of investments — and we’ve been very vocal about this since we first started croaking out this podcast — so why then … would we have an “an exception to the rule”???

Well… that’s where today’s episode comes in! ‘cos if you’re going to go there….. (and many of you STILL write to us about investing in Off the Plan properties AND House and Land packages.… then we want to make sure you stay FULLY informed.

AND we’re also going through a Q&A on this tackle this exact topic, so you might get the answer you happen to be pondering right now!

CLICK HERE to Listen to ABC’s The Money podcast episode — The financial risks of unregulated property investment advice

Other Free Resources Mentioned In This Episode

The Questions…

Question from Brittany

Hey guys! Absolutely love your podcast. Wanted to share something I found. The offer is – buy an off the plan apartment, and get a free Mazda 2. Reeks of a buyer beware scam! Is this even legal? I have never seen anything quite like it and had to share it with you guys.

Question from Alana

I have been listening to your podcast, I have invested in a house and land package in Tarniet, I will be owner occupier . I will be investing with a friend, therefore half the debt will be mine we will be investing around 450,000 total. There are proposed schools next door and a shopping mall and train station going in. Everything in your podcast leads to don’t buy a house and land package… have I stuffed this up already?

Question from Juan — Is It ALWAYS A No To Buy Off The Plan?

Hi guys, First of all – thanks for your great material! It’s great, ‘specially for someone like me who is new to Australia, understanding the way everything works here is gold. I have heard most of your podcasts and also done some research online and I wanted to ask a question around Off-the-plan investments that I still can’t understand. Everywhere people say it’s a big NO-NO. I understand the risks involved (delays, not seeing the finished product beforehand etc) but my wife and I have found an OTP property in a suburb we like (Bentleigh, within the Mckinnon School zone) and we think it’s a good place to live. The developer has done at least 3 different developments in the area all of which we like the finishes and have built it in perfect timing. I wanted to ask why would this be considered a really poor investment? Are OTP properties definitely a NO? I understand the case of Docklands and closer to the city suburbs where you had thousands of developments which made the price go down but in Bentleigh I don’t think this is the case. I have subscribed to locationscore.com.au and the score is relatively well considering that I will live in this property and it’s within my budget. I just wanted to get a sense of your thoughts around this as I am a true follower of your words of wisdom. Hopefully you have some words for me. Thanks in advance and keep up the excellent work of empowering people like me with information. Juan

Question from Phoebe

Hi Property Couch,

I have a question for you. My partner and I recently signed a contract for a 2 bedroom 2 bathroom apartment in Camp Hill, Brisbane. It is a brand new apartment building (small block – only 7 apartments). We plan on living in the apartment (for now but would like to rent it in the future – roughly 3-5 years time). The developer originally wanted $569k, dropped it down to $539k and we signed a contract for $529K. When applying for a home loan, the property was valued at the property $29,000 less than the purchase price. Their report considered market direction, volatility and segment conditions to be of medium to high risk. This is very concerning for us as first home buyers. We don’t know whether the banks are just being overly cautious. What are your thoughts on this? I know you mentioned in your very first podcast, if you are buying new, you are most likely paying too much. We think the apartment is really good quality and ticks a lot of our boxes. Help! Thanks for your time.

Episode 240 | Is Now The Right Time to Buy a High Rise Apartment? – ft. Bonus Q&A

By The Property Couch July 11, 2019 in Podcast, Q&A

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Folks, things sure have been heating up in the high rise apartment space recently and we MUST address a seriously important question, for property investors and home owners alike…

Should you be considering buying high rise apartments in the wake of some very high profile cases revealing significant issues??

We’re talking about the high-rise apartment evacuations that’ve been happening our main centres due to building defects — Opal Tower, Mascot Tower, LaCrosse apartments and Neo 200 —which have resulted in cracks to main structures, severe and unsafe water damage, FIRE (such as the cladding fire in Melbourne’s CBD) … all things that we can all agree are very problematic. Not to mention are also leaving a fair few folks homeless, out of pocket and fed up!

So, not only are you likely to struggle to get a return from high rise apartments, it’s evident that some (we’re definitely not saying all here) may pose a safety risk as well.

But if 1 in 5 wanting people are actually WANTING to live in apartments (which is up from 1 in 7 in the 1990s)…. it can definitely be argued that there IS a growing demand for one/two bedroom living… the question is… What should you be considering (and avoiding!) if you are wanting to invest in apartments?

And when it comes to high rise buildings, has the landscape well and truly changed?

… We’ve thrown in a Bonus Q & A to answer your specific apartment Q’s too, folks!!

House Keeping…!

We’re working on a brand new Podcast Picture (thumbnail) and we reckon we’ve got it down to two… can you please Tell Us Which One You Like Most – Option A … OR …. Option B (both on our Facebook Page)

Favour WANTED from Long term listeners (please!)….

Folks, we’re doing a shameless shout out for selfies!!! Yep.. this is the brief: if The Property Couch has changed you or the way you invest, or your money management or has helped you in any way, can you please record a selfie video of 60 seconds or less to let us know?? The reason we want these is to put the word out there, grow our community and ultimately help other folks avoid bad property decisions!!

Send Your Video Testimonial to info@thepropertycouch.com.au

Resources Mentioned…

New Facebook “Lives”

BEN ON STUDIO 10 Discussing Apartments(yes, he’s fully sitting in with the morning hosts!)
SUSAN ALBERT’s EPISODE – Episode 239 | From Working-Class to Multimillion Dollar Philanthropist: How This AFL Royalty Mastered The Art of Delayed Gratification – Chat with Susan Alberti

Bonus Q & A on Apartments

Question from Keren

What do I do with the apartment I bought prior to finding your podcast?? 😂😂😂

Question from Sabrina

I want to know if it’s worth buying an Off the Plan townhouse in Deanside (next to Caroline Springs in Melbourne) 3 bedroom townhouse, no body corp, under $390k

Question from Jake

Things to consider in regards to the sinking fund and if or how can the body corporate request to raise money from owners for certain issues?
Keep up the good work ✌️

Question from Rory

Have an old apartment built around 60’s. Bought it in December 2013 since then I’ve put in new carpet and vinyl. Should I get a deprecation schedule in it?

Question from Tania

What are some of the unexpected costs of buying/holding an apartment?

Question from Nicholas

How do you determine capital growth on an apartment if you are the second purchaser assuming that the original price has been inflated for developer costs and not an accurate figure?

Question from Sonya

With a budget of 700 to 800k. I would like to know if an apartment (not brand new) in Moonee Ponds is a better buy than a house on a 700sm size block in Glenroy, as a comparison apartment vs house. Thank you.

Question from Bryan

Is it safe to buy now in Brisbane apartments give lots of the newer builds have dropped 20% in price？Or do you think that is still overpriced？

Question from Laura

I want to know if it’s worth buying an apartment as an investment vs a house.

Question from Marah

Whether the ugly 60s / 70s brick monsters are a good investment how to protect yourself in an Opal tower situation…

P.S. Looking to get a free copy of Susan Alberti’s book, The Trailblazing Story of Susan Alberti – The Footy Lady? Click here and tell us which part of Susan’s story had the most impact on you! (ends on July 17th!)

Episode 239 | From Working-Class to Multimillion Dollar Philanthropist: How This AFL Royalty Mastered The Art of Delayed Gratification – Chat with Susan Alberti

By The Property Couch July 4, 2019 in Podcast

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What’s a footy oval and a VERY successful investor got in common?

… none other than one gutsy, 72-year-old woman… Susan Alberti!!

For the folks who aren’t quite into AFL like we are, Susan is not only Football Royalty down here in Melbourne — particularly when it comes to the AFL Western Bulldogs Football Club and opening up the sport to women players… but also, Susan has lived an EXTREMELY incredible life… she’s experienced everything from very humble beginnings, unspeakable tragedies, not being able to get a loan as a woman (yep), the heights of true accomplishment (see all of the positions she’s held here – ‘cos there’s more than a few!) and giving back in a way that is profound and unbelievably inspiring — all of which has been documented in The Trailblazing Story of Susan Alberti – The Footy Lady.

She is living proof that hard work, investing and delayed gratification pays off and is, of course, as respected as they come.

To give you an idea, not only is “Sue” one of Australia’s pre-eminent philanthropists, having donated millions of dollars to medical research and other charitable causes — when her only child, Danielle, was diagnosed with type 1 diabetes and later passed away due to the illness, Sue embarked on a global mission to find a cure, and is now Chair of the Susan Alberti Medical Research Foundation. And earlier, when her first husband was killed by a truck, Susan took over their construction business and discovered firsthand how to survive and prosper in what was very much a man’s world. Oh, and she’s also the 2018 Victorian of the Year, 2017 Melburnian of the Year and 2018 Victorian State Government Outstanding Contribution to Sport Award!

Basically… this woman has stared down adversity of all kinds and prevailed beyond doubt.

So, if you’re like us and are very excited to hear what this wise and wonderful woman has to say about investing and, indeed, life… then you MUST check this episode out, folks!

Also, special shout out to our listener Jill Stewart for suggesting such an awesome guest!! If you’ve got a guest idea yourself, feel free to let us know who you want to hear from HERE 🙂

As usual, there are a few resources today folks! So here goes…

Escape from the City on iView: https://iview.abc.net.au/show/escape-from-the-city
Ep. 55 – Investment savvy mortgage broker and why interest rate is not king?: Listen here
Money Hacks series: Join here
Ep. 238 – Money & Mental Health: Why there’s more to it than you think… Chat with John Mendoza Director of ConNetica: Listen here
Australia’s New Banking Code: https://www.ausbanking.org.au/campaigns/new-banking-code/

The Top Things We Talk About >>>

How exactly did Susan transform herself from humble beginnings to impressive wealth?
Where did her drive come from?
How did her first husband Angelo, look at life and work? Why?
What was the origin of their property story?
How did Susan and Angelo start their first 16-units development?
Where did her desire to learn come from?
How much did her “very own” property cost when she first bought it?
How did she get a loan when most lenders wouldn’t lend in only a woman’s name?
How much was she paying interest on the loan?
How quickly were they growing their development business?
When did they cross the threshold into financial wealth?
How did Susan balance grief and running a business?
Did she have any female peers?
What does she now think is “true” wealth?
How has mindset influenced her success?
When did she get really involved in the Western Bulldogs?
How long did it take to get women’s AFL over the line? How’d she do it?
Will there likely be a cure for type 1 diabetes?
What does Susan regret or would do differently? Why?

P.S. Looking to get a free copy of Susan Alberti’s book, The Trailblazing Story of Susan Alberti – The Footy Lady? Click here and tell us which part of Susan’s story had the most impact on you!

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