Can’t believe it has been 11 weeks since our last Q&A! We’ve got quite a line-up of great guests on the show for the past couple of months so for today’s podcast, we will be doing a Q&A instead. Thanks for sending in your question and Bryce and Ben will be answering questions from:
- Bernard on Borderless Investing: I love your show; it’s really given me a different perspective from some other property educators, and it’s one of these differences which gives rise to the following issue. You speak a lot about being a borderless investor and buying quality assets in those locations where the market is in the right stage of the cycle. At the moment, this might mean Brisbane or Hobart or Adelaide or wherever. That’s all good. You are also clear that Sydney and Melbourne are the places which will grow most long term. That’s all good too. If I’m only going to buy 4-5 properties to secure my retirement though, as you advocate in your book, I certainly want to be buying the best long-term performers that I can. I know that done well, I can make good money doing this in smaller markets, but long term I wouldn’t expect to do as well as in the larger metropolises.
If I was buying ten houses, I could carry some weaker assets, but with four it’s obviously vital to get them right. How would you advise someone who already owned a couple of (hopefully!) well-selected properties in Brisbane or Adelaide or wherever who was able to re-invest? Should they hold off, build up a bit of equity and increase their cash buffer before looking at Sydney or Melbourne when the heat has come off there? Or would you suggest buying again and taking the risk that they will never get into the larger markets?
- Alisdair on Loan Redraw Facilities: Can we have a finance expert tax expert come on the podcast? I have a loan where I have paid in extra to the redraw, not offset. I had a strategy to break the loan and refix for a few reasons. The rate is significantly lower. I’m hoping I can claim the break fees as a cost, reducing their effect. Also I want to pay my interest out of the redraw. Can this be done? I feel the break fees are permitted, but the part where I pay interest from the redraw seems an impossible dream due to a mixed purpose loan affect and that the ATO considers it tax avoidance. Any guidance in this matter?
- Lakhwinder on Location Research: I have been listening to your podcasts while driving, thank you so much for such a priceless info you share with us. I recently started my property investment journey bought new house in Western Sydney to get government benefits and bought two investment properties in Loganlea after rezoning, after listening to your podcasts I realised I didn’t apply most of the filters you guys talked about. Both my properties are over the median price of suburb. Both are over 6% yield so not that painful to hold.
First investment property 3bed 2 bath 2 living areas 800msq with pool for $400k. Second 4beds 2baths 800msqr $380k. Westen Sydney property (owner occupier)did great, bought in end of 2014
By June 2016 property revalued at $150k more without landscaping done.I know you guys talked about Brisbane few times but it will be great to listen what you think about logan area and recent rezoning of Loganlea. Questions:- is it ok pay higher price for the properties (houses)that fall within the high-medium density or residential core for a future land bank?
- Clayton on buying off the plan properties: Hi, I would LOVE to get your opinion on buying off the plan properties and what to look out for. This course of action has been put forward by a mortgage broker/real estate developer in Brisbane who will benefit from both the commission on the mortgage and the property itself (they have openly disclosed this). The property will be an investment and NOT my PPR. Love the show and keep up the good work.
If you like this Q&A episode (Borderless Investing, Loan Redraw, Suburb Demographic 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://www.thepropertycouch.com.au/topics/
We are extremely excited here on The Property Couch this week to announce the long-awaited meeting with our special guest today, JAN SOMERS (as we’re sure you would agree)! With a successful property portfolio spanning over 40 years with countless properties within the country, Jan is an inspirational, property-investing mogul who we all could learn a lot from. As we gained so much gold from the hour-long chat, we’ve had to split the episode into two! In this first part, Bryce Holdaway and Ben Kingsley discuss the following areas with Jan:
- What got her into property investing back in 1972 and how did she build her portfolio since then
- Her mentor in life and her outlook in education and continuous learning
- Her point of view and experience on negative gearing
- How did she structure her loans and what kind of loan strategy does she have for her portfolio
- Tips on improving your borrowing power
- What motivated her to write her books, Building Wealth
- Having the right mindset as an investor
And so much more! As Jan is someone who has a continuous passion and drive for property investing, this is definitely a 2-part episode you will not want to miss. Her journey through property investing is definitely a story worth listening to and reading up on so make sure you tune in.
Here’s the link to her books and the PIA Investor software: Click here.
And as always, if you like this episode (Chat with Jan Somers, Housewife And Property Multimillionaire – Part 1), 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://www.thepropertycouch.com.au/topics/
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://www.thepropertycouch.com.au/topics/
As Christmas is a time for giving, we thought today’s special Christmas episode should be none other than a Q&A session! Topics covered today include debt-retirement and refinancing loans, how to go about upgrading your PPOR (Principle Place of Residence), whether it’s worth paying for a financial planner and more. (And click here for your free The Property Couch Christmas Pack!) Today’s questions are from the following listeners:
- Chris on debt-retirement and refinancing loans: Hi there, was hoping you could ‘unpack’ the ‘reality of’ the following finance-related scenario for me. I understand there is an “accumulation phase” where the investor actively accumulates as many quality, appreciating assets as required/wanted before transitioning to a “debt-reduction” or debt-retirement phase in the property investment journey. I was hoping you could spend some time describing what this debt-retirement phase actually looks like, assuming the investor has between 3-5 investment properties all on interest-only terms.
Changing all of these to principal & interest at the same time would probably be too strenuous on the budget, so is it a case of paying off the largest investment loan on principal & interest terms while refinancing the remaining loans as interest-only for another 3-5 years and start knocking off the balance of the largest loan? Or is it a case of building up the offset account of each loan evenly so that you end up paying less interest across all of the loans until you are in a position to pay the loan back in full?
But in this scenario the banks will eventually put you on a principal & interest payment unless you refinance again to an interest only loan, so how do you juggle at least 5 investment loans potentially all coming off their interest-only terms within 12-18 months of each other, while you’re trying to retire the debt without blowing the family budget? ($150+ principal payment across 5 loans = $750 a week which would destroy most family budgets).
Is it a case of focusing on one property at a time until the rent covers the principal + interest payments, before moving onto the next property or is it a case of continually refinancing to interest-only loans and building up the offset accounts? Is it better to focus on the largest loan first or distribute funds evenly across all loans? How do you actually go about entering the ‘debt-retirement’ phase on a portfolio of 5 investment properties (assuming all currently interest-only repayments with separate offset accounts but the interest-only period is expiring for all 5 loans over the next couple of years). This does not take into account the PPOR but we can ignore that part of the equation for the above scenario.
- Bill on upgrading PPOR: My question is…I have paid off PPOR (home loan account closed) and would like to upgrade PPOR. What advice/suggestions do you have regarding using ex-PPOR as investment or sell off ex-PPOR to pay down new PPOR debt and then buying an investment property?
- Anonymous on investing in a Financial Planner: G’day, I have a question that I think a lot of listeners would relate to and something you guys have not covered thus far.Firstly about me. I am 32 and have recently developed a passion to enhance my knowledge of residential property investment. I am in the Army and have a young family on my income alone. I earn 106k per annum gross. I bought my PPR in 2012 in Sydney which is valued at circa $8800k currently. Since I started my learning, using you guys as my guides, I have done the following.
- Analysed our cash flows for a month to understand where our money is going.
- Gotten rid of all non-deductible debt i.e. credit cards, pers loans etc.
- Bought our first investment. A two Bedroom apartment near Penrith. It’s walking distance to the station and five minutes from the train station, Nepean hospital and UWS. I also rolled our car loans into the investment. The place is currently leased with a 4.2 % yield.
- Manage our money to allocate spendings for myself and my wife similar to your model you advise with regards to offset and spendings accounts.
I also have a broker and accountant and also use a buyer agent. So my question:
I recently sought advice from a financial planner. After an interview, he sent me a proposal and plan which also outlines his fees. His fees were $500 per month with monthly payments that would be ongoing for a period of a few years. If cash flow management is essential and using surplus cash flows to reinvest is a key step, then how is 500 per month going out enabling this? Isn’t this counter to one of your pillars of mastery? If I had a large income and a large portfolio, then this would be manageable. But I don’t. Are all financial planners this expensive? I can see the value of buyers agent’s fees but I can’t see the value in planners for myself.
- Andrew on when would be the best time to invest in property: I’m 26, my wife is 25 (DINKS), we live in Brisbane and our combined income is $150k. We’ve almost finished paying off our wedding (ouch) but are now planning for the future and want to get ahead before kids come along. We don’t own a house (currently renting), however we’re strong savers and would be in a position to buy in approximately 12 months. The issue is, our plan is to move to Adelaide in 2018 to allow my wife to study Dental Hygiene (limited college options in Qld). Would we be best to buy a house/IP right before we move to SA and rentvest? (and drop to a single income of $100k), or wait until she graduates (2 year degree) and look to invest then? Neither of us want to sit still for 2 years, but we’re reluctant to buy right before dropping to a single income.
- Julia on Buying a home: I have only recently discovered your podcast and it’s awesome. Thanks so much for sharing your knowledge. I know your advice is ‘location first’ – I’m torn between two properties. A run down 1970s one bed room unit in Neutral Bay (ground floor) vs 10 year old amazing one bed room unit in Marrickville (top floor). Both similar price with similar strata. Neutral bay property needs everything renovated but has structural limitations. Marrickville unit has an amazing balcony that has a green leafy view and makes you feel like you’re at a holiday resort. I know Neutral Bay is blue chip suburb but would you consider Marrickville as a suburb with a potential high growth over next 5 years? This is my first property and I’m planning to live there for next 2 years then potentially rent it out. Any advice?
If you like this Q&A episode (Investing in a Financial Planner, Upgrading your PPOR, Loan Strategy to Build your Portfolio 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://www.thepropertycouch.com.au/topics/
After two weeks of Donald Trump-related episode, we think it’s time to get back to our listeners and answer some questions! But before that, Bryce and Ben kickstarted today’s episode with a quick update on interest rates and which directions we might be heading to in the next few months. And for today’s episode, they will be answering questions from:
- Cody on First home buyers – I recently listened to episode 87. Listening to the content of first home buyers not being able to get into the market unless prices fell 30%. What is your moral standing on this? Are you okay with our kids getting locked out? Do you consider yourselves and like-minded people responsible for aiding in driving competition and prices? Do you think there should be any assistant to our kids from a government policy standpoint to own their homes? Look forward to hearing your thoughts.
- Tom on Overseas Investing – Hi guys, just listened to the latest podcast…thanks for the shout out to London, where I have just moved to from Australia. I have 2 IPs in Inner West Sydney and thinking I will be sitting on them to let them grow for a few years until I get back…London property is just ridiculously unaffordable! Would be interested in your thoughts on investing in overseas properties in countries such as NZ or the UK, from Australia, or vice versa and the process involved to purchase and manage. Enjoy what you guys are doing, and I think it’s the best podcast on IP in Australia. Thanks, Tom.
- Steve on Overseas Investing – Hi Guys, loving the podcast. In footy terms, you’re both ‘up and about.’ Question for Podcast: Investing in Property Overseas. You talk of ‘borderless investing‘, but that’s only Australia. Is it a bit un-diversified to put all one’s eggs in the ‘Australian Property Market’, just like a Pommy would be putting all of theirs in the UK market, or a Yankee putting them all in the U.S of A? You guys have read Kiyosaki, you must have dreamed of following the world’s market cycles like a real ‘world’ investor. My question is ‘Where can Aussies buy overseas?’ I know an Aussie buyers agent buying in the US for clients at the moment, and you hear of the Chinese buying here. Why aren’t we buying China? Thanks, Boys!
- Brett on Setting up an Offset Account – Hi guys, love the podcast, after meeting with a very respected investment mortgage broker, they suggested switching my PPR loan to interest only to help build savings for an investment deposit in an offset account. I couldn’t work out why this would be better than putting my money into the PPR loan to increase equity then drawing it out when there is enough. The money I draw out would be tax deductible on the interest, whereas the money I save in an offset, if I draw this out for an investment, this would keep my PPR loan higher and thus not tax deductible on the interest. Can you guys please discuss this as I am starting to lose respect for this particular broker. Thanks
- Nicole on Canberra as the next Investment Spot – Hi guys. Love the show particularly being a Victorian, I love the sports chat at the start 🙂 However, I am now in Canberra and would love it if you could incorporate a bit more of our ‘different’ city into your commentary. It does not fit the usual capital city, but it is nonetheless. Also, can you tell me where you got Bernard Salt’s population predictions? I would love to see them in more detail. Many thanks and I look forward to the next show.
- Question 6 from Kieran on whether it’s ever too late to invest – Hi guys, I’m loving the wealth of knowledge you guys put out each week. As a 31-year-old who never really considered what I could be doing now to build for their future it is inspiring to see how accumulative action over time can have such a great impact and how accessible it is to anyone with the right knowledge, advisors and drive to succeed.
My wife and I recently met with your team at Empower Wealth and are now on savings track to secure our first investment property. Bring on the Rentvesting! My question, however, is related to my parent’s situation. I am wondering if it is every too late to help fund your retirement?
My parents are 63 and while they have worked hard all their life, they’ve had a couple of investments turn bad which has them worried about how they will fund their retirement. They currently pay P+I monthly with approx $220k left to pay off on a property valued at approx $550K. As I understand it, they have calculated that if they work for another 5 years they will be able to pay off the balance of their PPR using the superannuation they have accumulated. That will leave them with the house owned outright but only the pension to live on.
I am sure there any many approaching retirements and facing the prospect of having to keep working longer than they hoped or unsure what kind of lifestyle they will have when the do retire. What options are there for someone in their position when it becomes harder to get approved for a mortgage due to their age? Is it ever too late to get involved in property investing to create a passive income?
NOTE: Here’s the video that Bryce mentioned in the podcast > Investing in A Granny Flat
If you like this Q&A episode (Affordability for First Home Buyers, Overseas Investment, Is it ever too Late to Invest 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://www.thepropertycouch.com.au/topics/
Last week’s podcast had been quite an interesting one! We strongly recommend you to listen to it twice to make sure you don’t miss out on Dr Andrew Wilson’s outlook on the Australian Property Market. This week, we are going back to Question and Answer episode and Bryce Holdaway and Ben Kingsley will be discussing:
- Question on a career as a property professional from Hayden: To the Property Couch, I have a couple of career questions to ask but firstly I just wanted to share my investment story so far and why I think what you are doing is so important. If I had your advice earlier, my circumstances would be much different. I am currently 25 years old; I began my investment journey when I was 17. My father suggested using the money I had saved for a car to use it instead to buy a house. This was in 2008 when the Rudd government was handing out the huge first home owner grants, when I had my first meeting with a mortgage broker (not even knowing what a group certificate was) they were suggesting I buy an off the plan unit. So put signed up for one in Frankston, Victoria from a company thinking they were giving me good property advice. This purchase eventually fell through due to the bank evaluation not coming through at the correct price. Then I signed up for another off the plan unit in Langwarrin, and after two years they had not even begun construction because the council was saying there was endangered fish in the creek near by. So I pulled out of that one and tried to purchase one in Carrum Downs 6 months later and this one fell through because the bank wanted 20% of the loan. Friends and family were telling me to give up by this point because of how upset I was getting, but I stuck with it and purchased one in Langwarrin. This time, a 2 bed 1 bath unit. This then turned out to be a very poorly built unit and eventually I received an insurance claim of $20,000 to fix the poorly built unit. After 4 years, this property has not delivered any growth at all and doesn’t look to in the near future either. Then I purchased a 1 bed 1 study 1 bath unit in a high rise in Ipswich, Queensland and this property has a lift, pool, spa, sauna, underground car park and a concierge.Even though I have made nearly every mistake you could make and still haven’t made a cent off property, I’m still obsessed with it and read and listen to every book and podcast and attended any event I can. I want to work in the industry to try to prevent this from happening to someone else but I’m not too sure what exactly I want to do. I was wondering if you would share some in-depth insights into mortgage broking and being a buyers agent. As much detail as you could would be helpful such as their daily tasks;
(A) The pros and cons to each and how much they get paid?
(B) And your thoughts on mortgage broking franchises or are you better starting off on your own?
- Question on new developments from Brad: I realise that you guys are biased towards investing in established homes, usually with a short disclaimer on how you may have invested in new developments at some stage in your lives. In the interest of a more balanced argument, I feel it would be beneficial to offer someone in the industry who focuses on investing in new developments the chance to put their views forward. Just as there are good and bad established homes the same rings true for new or off the plan developments.
- Question on next step in property investing from Damien: Love the podcast, learning so much each episode, feels like I’m completing a degree for free so thank you so much.
I recently purchased my first property under market value (purchase price $420k, my banks value $540k) 3-bed townhouse on 452m2 in Kenmore, Brisbane. I had to use LMI ($18,000) due to only 5% deposit which basically brought my loan up to $420k. I want to continue to accumulate good properties. My financial decisions i.e lifestyle was poor in the past but over the last year I have turn that on its head. I have $20k in cash now and I’m wondering what would be your advice for my next move. I’m making sacrifices to get ahead. I live in the townhouse with 2 tenants getting 360 a week for cash flow. I have an interest in renovation also and I’m looking in the Ipswich area. Should I hold off or move again swiftly?
Thank you for your help.
Go the Lions 🙁
- Question on cash flow from Ben: Hi guys, love the podcasts! I stumbled across one of your podcasts when I was searching for investor information and enjoyed it so much that I went back to the beginning and listened to every single one in the space of about 3 weeks! I’m 21 and working part time whilst also studying. I am planning and on track to have a 20% deposit on a 400k house saved up in the next 12 months. However, due to the nature of my work (personal trainer) my weekly pay can drastically vary (anywhere between $300 and $900 per week, with an average yearly earnings of around $25,000) and the fact that I will still be studying and unable to work full time to increase cash flow for the next few years, I visage that I would have next to no chance of being successful in getting a loan to match my deposit. I want to do whatever I can to get into the property market as soon as possible, but considering my circumstances and my end goal (early retirement on 100k+ per year) is there anything that I can do to get into the market sooner rather than later without substantially increasing my cash flow? Or should I just keep saving and wait it out until I have the cash flow to match my deposit?
- Question on investing in newly developed areas or established suburbs from Stephen: Would you be better to build in an area with established housing nearing the end of its development life where you know the quality of the area. Or in a new development with no housing as yet but a big blueprint for long-term development? Would you get a bigger capital gain in the new area over time vs potentially small capital gain in established as the capital gain has already expired?
If you like this Q&A episode (Investing in Newly Developed Areas, Getting into the Property Market, Career as a Buyers Agent 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://www.thepropertycouch.com.au/topics/