Episode 116 | Q&A – How does Guarantor Loan actually works, Fixing a Joint Venture, Investing in WA and more

It’s Question and Answer time!  Now, we answered a few questions in the last episode but realised that we wouldn’t be able to respond to all of your questions at this rate, so we will be doing a Facebook Live very soon. Stay tuned for that!

On another note, there’s an exciting announcement at the end of this episode so make sure you stick around. And here are the questions that we would be answering today:

 

  • Question on Guarantor Loan from Kate:

My partner and I earn a combined gross income of roughly $130,000 annually. We have a small amount of savings – about $5000 (remember we’re getting married). But really nowhere near the amount needed for a deposit on our first home. Listening to your episode about guarantors got me thinking. Is it possible to borrow the full amount for an invest-grade property in Newcastle? Do banks really loan 105% with interest only repayments so that we can continue putting money into an offset account? Or are we better to wait and rent and continue saving?

My parents have been lucky enough to own a home in Sydney that has enjoyed the crazy house price growth. Their home would be worth at least $1.5 million at the moment. How long would my parents need to be guarantors – would it be until we had saved 20% of the loan? Perhaps in our offset account? Or would it be until the full amount was paid down?

My dad is from the generation of debt is bad and avoids risks. If you thought this was a smart move, do you have any tips on how to explain the risk/benefits so that he can understand?

 

  • Question on “To Hold or Sell” from Warren: Hi ‘couchers’, thank you for your entertaining, informative, and thought-provoking podcasts. I’d like to know what your thoughts are on rescuing a situation where someone has an investment property they’ve had for 10 years that isn’t performing. Cut the losses and look to replace it, or hang onto it? (I bought this place at age 20 on apprentice wages, it was all I could afford) Thanks! (specifics: paid $195k, current market value $240k, current rent $270/wk)

 

  • Question on Property Investing in WA from Daniel:

My partner and I recently bought a duplex (2 bedrooms, 1 bathroom, 2 living rooms, 475 m2) in Spearwood for $400,000. We have $112,000 equity in the property and $73,000 cash in our offset. Our salaries are $50,000 p/a for my partner and $71,000 p/a for myself, and we do not plan to have children for another 5 years. There is an opportunity to buy the second duplex (also a 2 bedroom, 1 bathroom, with a small granny flat at the back) for $385,000. The site is zoned R40 on 950 m2 (we see a 4 property potential), 3 km from the new Port Coogee Marina, the North Coogee development estate and the potential South Fremantle Power Station development bringing 6,000 new high-density houses/apartments into the area. We are 300 m from the local shopping centre and 5 km from the satellite employment hub of Fremantle (Bryce’s old hood). It ticks all the lifestyle boxes bar being near a train station (it is currently challenging to access the freeway to the Perth CBD). My two part question is:

  1. I am currently weighing up the opportunity cost. What is your inference of Spearwood as a potential “wave rider” suburb piggy backing off the growth of the coastal development? Do you feel that it would have long-term, consistent capital growth or a short term upswing, followed by a flattening capital growth and thus be better to buy into a blue chip area?
  2. As a first time investor, would it be wise to buy the adjacent duplex and land bank the asset, then develop the land after we have acquired several more properties in our portfolio or focus on the subdivision straight off the bat?

 

  • Question on Joint Venture from Tristan:o

I am in a bit of a bind and require some help. I currently have 4 properties. PPOR, a house in country VIC (Nathalia) that my father rents, a house in Frankston (that’s had 10% growth in 5 months!) and the front house on a sub dived block in Seaford.

The last 2 properties were purchased with friends as tenants in common.

I wanted to try and get another property with just my wife and so (as my friend has changed his plans a bit) I spoke to a well-regarded mortgage broker and they told me that the banks have changed the rules and that now they take the full loan amounts of the split properties and only half the rent!?

This destroys my serviceability. I am now not sure what to do, my friend is moving interstate and will not be ready to buy again for 2 years. (which I think my turn into 5 years) and I am keen to keep purchasing.

Should I concentrate on paying down the debt on my PPOR (280k worth 750k) or look at selling one of the joint houses (to gain the serviceability)?

 

And here are Free Resources mentioned in today’s podcast:

 

 

If you like this Q&A episode (How does Guarantor Loan actually works, Fixing a Joint Venture, Investing in WA 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/

Episode 111 | Q&A – Borderless Investing, Loan Redraw, Suburb Demographic and more

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/

Episode 103 (Part 2) | Chat with Jan Somers, Housewife And Property Multimillionaire

As promised, here is the second part of the highly anticipated Episode featuring the incredibly humble housewife, author of 4 best selling property books, sophisticated property investor and a property educator extraordinaire, Jan Somers.

In this part, Bryce, Ben and Jan discuss the following areas:

  • The mistakes she made along the way – holiday homes, overcapitalising and more
  • Types of properties she likes to invest in
  • Her thoughts on borderless investing and if it is for everyone
  • Australia’s housing affordability issue and are we in one?
  • Ideas on renovating and adding value to your investment property
  • Most common questions she gets asked when it comes to property investment
  • Will property forever be a sound investment class
  • How she utilises the money she earns for good causes

We hope you would enjoy listening to her as much as we do. As mentioned in the first part, Jan is definitely a property educator that is worth listening to as her years of expertise and knowledge in property investing is absolute gold!

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 2), 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/

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

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/

Episode 098 | Unpacking Property Media Headlines – Chat with Jennifer Duke, Property Journalist and Review Editor of Domain

It’s the second week into the new year, and we’ve got yet another exciting and information-packed episode for you today. Joining Bryce and Ben on another online interview podcast is Property Journalist and Review Editor of Domain, Jennifer Duke (@JennieDuke). Today the duo and their special guest who “lives and breathes property” discuss Jen’s professional background and how she got into property journalism, the breadth of topics there are to discuss around property, as well as how being a property journalism shows you a more personal aspect of property investing. Further to this, they also discuss the following areas:

  • What motivated her to join journalism and to specialise in finance and property
  • How does she decipher all the media headlines and form an opinion on the property market
  • The controversy she faces in her career as a reporter
  • What is it like to write for Domain
  • Her most interesting and shocking story that she has reported on
  • How important it is to find credible and trustworthy sources for her articles when reporting to her readers
  • What the best and the most ostentatious properties she has ever seen are
  • The future of the newspaper in an ever-growing digital world

ps: Don’t forget to tag your friends for our  Episode 100 Giveaways! Only 2 more weeks to go!

If you like this podcast: “Unpacking Property Media Headlines – Chat with Jennifer Duke, Property Journalist and Review Editor of Domain”, don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. If you have any questions or ideas, feel free to drop us your thoughts here: http://www.thepropertycouch.com.au/topics/.

 

 

Case Study for Single 30-something Investor (How to Build a Property Portfolio to Retire on $2,000 a week in Passive Income)

Hi Couchers! The Case Study for Single 30-something Investor demonstration is finally here! We know some of you have been waiting for this one since our second Facebook Live back in September. Thank you for your patience and let’s not wait any longer, just fill in the form below and we’ll send you the link to start watching the Case Study Demonstration on How to Build a Property Portfolio to Retire on $2,000 a week in Passive Income for a Single 30-something!

 

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