The Property Couch | The Insider's Guide to Property Investing

Well, technically winter is already here. However, we will be talking about the Property Market in this episode and for all of you who are a fan of Game of Thrones, you’ve guessed it right. It’s not going to be a good news story. Now, you’ve heard us talking about the danger of high-density developments before but this time, we are hoping to solidify our message by sharing some numbers with you. It is not a secret that we’ve seen a whole lot more of high to medium density apartments coming into the market in the last 24 months and a lot more will be completing in the next 18 months. Below is the table that Bryce and Ben were talking about in the podcast.   Capital city # of Unit Sales Average Annual unit sales past 5 years Total New Units next 12 mths Total New Units next 24 mths Sydney 34,216 43,442 34,300 81,696 Melbourne 28,506 30,781 29,541 80,503 Brisbane 15,880 14,932 16,652 44,511 Adelaide 6,988 6,195 2,581 6,002 Perth 5,331 6,834 7,031 13,797 Hobart 1,026 1,005 201 442 Darwin 864 1,026 985 1,256 Canberra 3,384 3,929 811 2,922 Combined 96,195 108,144 92,102 231,129 * This data is an extract from CoreLogic’s article dated 16 May 2016 called ‘Record high unit construction increases settlement risk’. To read CoreLogic’s commentary, please click here. So how will this affect the Australian Property Market and its existing properties? Will there be a significant market correction and if so, should buyers stay off until this happens? Bryce and Ben will also be answering a question from Vlad: John Symond on 3AW predicted a 10-20% fall in property prices if Labour’s policy on negative gearing were to be implemented. Given the uncertainty, is it prudent to wait until after the election to make decisions about investing in property and to see, should labour win, what their sledgehammer will do to the market?   PS: We’ll also be holding a Live Q&A Event on Wednesday, 29th of June at 8:30 pm. Check out our Facebook page for more information! If you like this episode (Winter is coming and the air will be colder up high), 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/

Today’s episode starts with a recap on the AREC16 Conference (ps: Bryce refused to talk about AFL). Bryce and Ben also discussed about the possible impact of technology to the property market for example, what would happen if we don’t need to drive a car in the future anymore? Would car spots still be a considerations in asset selection? They then moved on to answering a couple of the listeners’ questions below. Thanks again for submitting your questions!:   * Asset selection question from James: Love the podcast! Just wondering if there’s a big difference between investing in a 2 bedroom house or a 3 bedroom house. Everyone is telling me ‘the more bedrooms the better’ however others have told me that for an investment it doesn’t matter. Thanks! * Next step question from Mat: My wife and I are on the move from Newcastle (Whitebridge) to Coffs Harbour on the NSW mid north coast. Our house in Whitebridge is our first home which we purchased in 2011 for 365k and is currectly valued at 490k. Ideally we would like to keep our house in Whitebridge as an investment property and look to buy in Coffs Harbour. The rental return will be $420 which comfortably covers the mortgage at interest only. I see the house as being a good investment grade property and ticks the boxes that you both talk about in the podcasts. What should we do? * Question on strata properties from Sarah: I’ve got a question about strata properties. We have two townhouses, one is in a smaller complex with 8 townhouses & the levies are reasonable, there is rarely any issues with maintenance etc. The other one (our first purchase!!) is in a complex with 30 townhouses/units, the units have lift access/underground parking & we’re paying about $985 a quarter in levies.We are constantly getting correspondence from the strata company with owners having maintenance issues, leaking toilets/tiles, graffiti removal, underground car park issues…. We’ve committed the property, it will give good growth & should be neutrally geared in the years to come (held for2yrs to date) so selling is out of the equation.Would love to hear your thoughts on strata, when is it a good idea, when is it a bad idea. Should I be religiously sending back votes for meetings etc? When I read the strata documents that require owners response, it’s all dutch to me, can you explain how to respond to things I can vote on & making sense of the minutes etc. Thanks guys, appreciate any advice you can give on strata. * Question on timing the market from Leighton: I’d love to hear Bryce and Ben’s thoughts on the property cycle and the part that it plays in investment decisions and how the cycle ties in with “timing the market”. It seems that different parts of the country operate in different phases of the cycle.   If you like this Q&A episode (How will technology impacts the property market, investing in strata properties and more), don’t forget to rate us at 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.

It has been quite some time since our last case study so this time on The Property Couch, Bryce and Ben will be discussing one the case studies that we’ve received from our fellow listeners! Here’s what Tom wrote to us:     After listening to Episode 56 where you discussed various other case studies I thought I might write in to see if you were interested in discussing our situation. I’ll try and keep it short! Basically, my partner Kirby (30yo) and I (32yo) are both teachers on a combined income of about $160k. 3 years ago we got the bug to do something with our money but weren’t exactly sure how. Our simple goal is to have choice whether to work or not. If we had no loans to service we imagine a passive income of $80-100k would be more than enough, and any more is a bonus! We had a PPOR property valued at a tad over 300k with a mortgage of ~200k, limited other expenses and a disciplined approach to spending. Property sounded like a great avenue so we went about increasing our knowledge. Unfortunately our naivety led us to a property investment ‘education’ group where although we have learn a lot we have made what we think are two poor investment decisions. We overpaid for both to fatten the developer’s margins. Our first was brought using the above equity in our PPOR and was a House and Land duplex in Dakabin, Qld for circa $500k. Although the yield is decent there were many costs that the property investment ‘education’ group failed to mention/understand that we have been left with, and there is little scarcity or owner occupier appeal to make growth a good prospect. We have always had tenants in both sides which has been great. We borrowed 90% on interest only terms. About 18 months ago we signed another contract, this time on a 4 bed H & L in Doolandella, 18kms out of Brisbane for circa $400k. After a long land settlement this was completed yesterday and will be advertised for rent tomorrow. Looking at about a 4.9% yield. Again, this is on an interest only loan at 90%. Deposit and costs were paid from our savings – I know, huge mistake! Right after we signed this contract we found your podcasts which have taught us that there are so many fundamental errors in our property selections, and if we had our time again would have purchased existing properties with scarcity and owner occupier appeal. We have just had our first child and Kirby is now off work. We have a ~$45k buffer in our PPOR offset and somehow are still managing to save, even though Kirby is off work, although receiving maternity leave payments. We use a credit card to pay for 95% of our spending, and repay at the end of every month to ensure no interest payments. So, we are still very keen to use property as our investment vehicle and have learned so much in the last year but are now stuck as to our next step. We doubt we would have enough equity to purchase again now and the fact Kirby is off work will severely hamper our serviceability. She will return to work at the start of 2017. Questions: * Do we sell both/one of our current properties? We’d like to keep if possible as I am a firm believer in buy and hold, although will they hamper us moving forward? * Where to from here? Any information from you would be extremely appreciated. I’m sure there are a number of people who have used ‘

It’s Q&A time again! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions! * Next step to building a portfolio question from Derrick: I was listening to your “tips for FHO’s” episode where you advised a gentleman to think about getting a one bedder in a desirable suburb (like Bondi) as his first place. Coincidentally I pretty much did that 4.5 years ago…buying a 1 bedroom unit in Woollahra. So you could say that I am that guy four years later! The only difference is that my apartment wasn’t part of an investment strategy at the time, I just liked the apartment! I am at the stage now that I want to get into property investing but at the same time I’m conscious about finding my second place of residence for my wife and I in about three years…preferably living in a similar area. So I’m trying to tackle two thoughts at once: how do I invest in my long term future while figuring out how to afford my next home? What should someone like myself be thinking? Should I be looking to invest and build more equity for our second place? Should I sit on our current property and save, while looking to use my current place of residency as a future investment property? Or is there another route? Thanks for your advice and thanks again for the show! * Size of portfolio question from Jason: Started to listen to podcast recently and love it keep up the good work. I just wanted your guys opinion on the ability to build large portfolios now in this current lending environment. I have heard you guys mention that you only need 4 to 5 properties to have a passive income and live into retirement but what if you want to have larger portfolio say of 10 or 20 properties is this achievable for people on average incomes like previously? Or has the APRA changes stopped this from occurring in the future? * Question on leverage from James: I’m 27 and looking to make a good go at property investing. I have recently sold my first investment property and now have a lot of capital from the sale. My investment now is a new property being finished in 12 months . My question is after selling down the 1st investment property, am I better off paying for the new one in full (using the rental income to service another investment property afterwards), or should I purchase a few more properties while i have a large sum off money and spreading the cash around to gain more houses for a larger passive income later down the line. Bearing in mind my age and goals. Thanks guys! and keep up the great work. * IP or PPOR question from Karla: Hey guys. I love the podcast and the sign offs too Ben! My question is, if you are renting and have the ability to purchase a property. Is it better to buy an investment property or a principle place of residence (IP or PPOR) first? Which would set you up better for the next step? It feels like a bit of “chicken or the egg”. I’d love to know hour thoughts! Keep up the good work and I can’t wait for footy season to hear your commentary! * Case study question from Deanna:  I am 22 yrs old and am convinced of the benefits of property as along term wealth building strategy, for now I am trying to develop as much understanding as I can. My questions are as follows: * Do you recommend that the first property that someone buys is for PPOR or can it sometimes be an IP? For example this may be relevant for young people currently living in Sydney who are renting but would also looking to be a border-less investor.

What a week in the property industry! It started off with ABC’s Four Corners Monday night segment called Home Truths. This episode focused on housing affordability and negative gearing and they’ve interviewed a few parties for this segment. Following that, we have the Cash Rate announcement at 2:30 pm on Tuesday. As widely expected, the Reserve Bank of Australia has dropped the cash rate by 25 basis point to 1.75%. A few factors contributed to this decision but one of the main reason is the deflation recorded in the January – March 2016 CPI data. Although most economists have forecasted this movement, there aren’t many who talked about the changes that lenders would make. Would they pass on the full rate cut? What other changes would they implement following RBA’s decision? How will this affect the current mortgage holders? Finally, on Tuesday night, we’ve got the 2016 Budget announcement by Scott Morrison. With so many speculations surrounding the negative gearing policy, what would the Government propose? Hence, this week on The Property Couch podcast, Bryce Holdaway and Ben Kingsley will be talking about all these discussions and how will it affect The Great Australian Dream. Tune it to start listening now! Resources mentioned in this episode: * RBA May 2016 Cash rate announcement – Watch here * 2016 Budget Announcement – Read here * ABC Four Corner’s segment on housing affordability – Watch here * ATO’s Taxation statistics 2013–14 – Read here   If you like this podcast: “Does the Great Australian Dream still exist?”, don’t forget to rate us at 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.

Listeners of The Property Couch would probably know our view on property renovation. If it’s a small project such as a fresh paint, we are all over it but if you are looking at renovating for profit, we always ask our listeners to proceed with caution because a renovation project can be quite daunting for the inexperience. So this time, Bryce Holdaway and Ben Kingsley invite a close of friend of theirs and a fellow property expert especially when it comes to renovation, Jane Slack-Smith from Your Property Success to share some of her views and tips on property education and renovation! The three of them will be discussing about: * What are the different types of property education or seminar out there * How to ensure you are getting independent views from these seminars * What’s the right mindset when it comes to property renovation * Characteristics of a successful renovator * What considerations and risk that you need to look at prior to starting a renovation project * Property renovation tips for beginners   If you are interested in the 20 Essential Renovating for Profit Tips mentioned in this podcast, just fill in the form below and we’ll send it to you right away:   Other links: * If you would like to be notified when Jane’s course is available, feel free to drop us a line here: info@thepropertycouch.com.au If you like this podcast: “Finding the right property education and property renovation tips – Chat with Jane Slack-Smith”, don’t forget to rate us at 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/

It’s Episode 60 and we’ve got a special guest on the show today! Bryce and Ben have invited Chris Gray, host of  ‘Your Property Empire’, on Sky News Business Channel and CEO of Empire Property to talk about all things property. Apart from being a property expert, Chris also manages his own property portfolio and is currently a rentvestor. In fact, he has been rentvesting for quite some time. So, drawing from his experience, the three of them will be discussing about: * How did he built his property portfolio through rentvesting * The considerations that an investor will need to think about if they decide to adopt this investment strategy * The required mindset for rentvestors * The scenarios where rentvesting is worth implementing * What kind of expectation you would get from family and friends * How to look at the numbers and ensure your cash flow is taken care of They will also be discussing about the lessons learned along the way and what they think about the current Australian Property Market. If you are interested in the Capital Growth Break Even Calculator mentioned in this podcast, just fill in the form below and we’ll send it to you right away:   You can also download a copy of Ben’s Money Magazine article here: Download here If you like this podcast: “Building a portfolio through Rentvesting – Chat with Chris Gray”, don’t forget to rate us at 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/

As mentioned in previous podcast, Bryce Holdaway and Ben Kingsley will be talking about Rentvesting today! It’s not a common property investing strategy but it is gaining some momentum amongst Australian property investors. In fact, Ben was asked to write about this for the March 2016 Cover Story of Money Magazine. If you would like a copy of this article, just fill in the form below and we’ll send it to you right away. In this episode, our hosts will be explaining what this strategy is all about. The concept is fairly simple but it is important to note that rentvesting is NOT for everyone. You need to look at your numbers and make sure that it works for your cash flow position. There a few other considerations that you’ll need to think about as well before jumping in such as how it’ll benefit your household’s circumstances and how comfortable are you with the concept of renting. Start listening to the podcast to find out more.   ps: They will also be giving an update on the Negative Gearing debate at the end of this podcast!

In recent weeks, a few lenders have begin to tighten their terms and conditions on apartments in certain suburbs across Australia. Needless to say, some commentators are putting a blanket statement on the future of apartments and claims that they are looking rather bleak at the moment. However, how much impact will these changes have on apartments value and if so, will it affect all types of apartments? Listeners that have followed this podcast since its inception would know about Bryce and Ben’s view on apartments. Whether it is a brand new one bedroom apartment in the city centre or an attractive off the plan deal, our hosts still prefer established apartments in great locations. As property investment advisor and buyer’s agents, they have advised hundreds of clients to invest in apartments so, are they worried about this lending restriction? Are they expecting a massive drop in apartments value and where are they seeing this happening? Listen to this podcast to find out more.   The article mentioned in this post: * Apartment lender AMP blacklists more than 140 suburbs – Read more   If you like this podcast: “Will apartments value drop by 50%?”, don’t forget to rate us at 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/

The whole idea for this podcast is to help others become successful property investors (or perhaps avoid them becoming unsuccessful property investors). But Bryce and Ben know that the more successful you become, the more likely you are to be criticised. Unfortunately, it is far easier for people to share their thoughts on what you are doing wrong and when something does turn up a little haywire, you would get the usual , “I told you so”. Now, this is probably very different from the usual topics that we talk about in this podcast but Bryce and Ben have both gone through this journey. In fact, they are still facing these situations occasionally. So in this podcast, they are sharing some of their experiences and also some positive mental attitude tips that helped them along the way. To have a successful property portfolio, you’ll need to make sure you are ready for it and it’s not always about being financially ready. It’s also about having a strong mental attitude. In addition, they will also be sharing what they think are the traits of successful people as opposed to the unsuccessful ones.   Some of the motivational speakers mentioned in the podcast: * Zig Ziglar – more * Tim Ferris – more * Tom Panos & John McGrath – more * Trevor Hendy – more   If you like this podcast: “Investment savvy mortgage broker and why interest rate is not king?”, don’t forget to rate us at 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/

It’s Q&A time! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions! * Exiting a contract question from Alex: Hi, Just looking for some advice as the more I listen to the podcast (and read your book), the more I think my first IP buy could be better. I’m currently on a defacto visa so can’t buy anything but new properties which led me to an off the plan development in Brisbane. While its marketed very well and made out to be a great buy, it goes against all you talk about- high rise, buying through a unqualified salesman, no room to improve, rental guarantee, and high strata. At the time it looked good but the more I understand what makes a good investment, the more I think I could do with the $40k deposit I put down. My question is, is there any way out of the contract that won’t cost me? It’s not due to be built for another 2 years so wondering if I could ask the developer to renege on the contract without penalty or even onsell it for cost price. I’ve started putting away some cash every week just in case it comes in undervalue but would rather not be in the position of ‘hoping’ this doesn’t happen. Would appreciate any advice to help! * Crowdfunding questions from Carol: I have heard people talking about “crowdfunding” being the next property investment strategy. What is “crowdfunding” and how will it work? * Ownership questions from Rob: What property ownership structure should investors use when buying an investment property? Individual, trust, company etc. Is there a need to balance tax advantages with long term asset protection on this issue? * Global events question from Cookie: I have an economy/finance related question and would like to hear your discussion on it. As we step into 2017, the market has been flooded with negative sentiment news. Lots of countries are under the water as oil and other commodity price plummet. China economy slowdown and share and currency tumbled. In the middle-east you have ISIS terrorist and European country have migration crisis. The central federal government around the world response to the crisis with more and more quantitative easing money printing. I feel like 2008 all over again and this time the crisis is on a global scale.The question I want to raise here is what will happen to the property market and banking policies if the crisis come in the near future? Few friend of mine thinking that the property price will go down like during the great depression. Am I best to wait until the crisis come and then purchase undervalued asset? But if there is a crisis and bank run, will interest rate raise to double digit and banks tighten the lending? What happen to my home loan if there is a bank fail? European central bank is doing negative interest rate already, will Australia heading to this direction one day? How should I position myself now so to be prepare for the day to come? * Case study question from Chris: Brief Bio – 33 yrs old. married with one child, live in Sydney, workfull time. have three properties. two in Townsville (both rented) building one in Melbourne currently. Currently renting in Sydney as units where we want to live sell for $800 k to $1 million. However we can rent and invest. We put all our money into our offset and pay out the credit card at the end of statement period. We also have a full functioningPAYG withholding variation in ...

The last time we did a podcast on finding a mortgage broker was in Episode 43. We’ve received a lot of feedback after that episode on what kind of questions the borrower should ask to determine if the broker they are speaking to is investment savvy and if there are any websites that sort of serve as a directory. So this time around, our hosts will be sharing a framework to help you understand the difference between a banker and an investment savvy mortgage broker. They will also be focusing on the differences between lenders and things to look out for between the lenders. Lastly, they’ll discuss the all time question on, “Why is interest rate NOT king?”.   Free resources: – Watch Ben on The Today Show here – Money Magazine’s March 2016 Cover Story – Money SMARTS System – Listen here   If you like this podcast: “Investment savvy mortgage broker and why interest rate is not king?”, don’t forget to rate us at 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/

It’s Q&A time! This week on The Property Couch, Bryce Holdaway and Ben Kingsley will be answering the questions below from our fellow listeners. Thanks again for submitting your questions! * Entry into the property investment market question from Aaron: Hi guys! could you possibly talk about entry into the property investment market? Specifically how much money you need? I have some money sitting in a term deposit but I have heard that you need more like $40,000 before you can even look at starting out. If that’s true, then I need to keep saving. But I keep thinking to myself “what if its better to start investing that money into cheaper property so that you can start investing sooner rather than later”. How much money should people have before starting? * Debt reduction questions from Marty: I have just finished the new book and found the content informative and practical. I do however find myself grasping for answers about debt pay down in the practical section. How does the graph move to a zero debt position on IOnly loans? I would like some more detail on this area as it’s probably the missing link for me in the whole process. In case study three a couple with surplus annual income of 36k Pays 1,000,000 in principle in 10 years with IO loans. The property selections are not high yielding so I’d expect the cash flow to be only just positive even at year 15. Am I missing something? * Debt reduction questions from Mitch: Hey guys. Love your podcasts and your book. Just a quick question about paying down debt to start receiving passive income. In your book you say to set up all loans to interest only, if I want to retire off passive income at the age of 40 how do I pay down debt without selling any properties and without access to my superannuation? * House and land packages question from Rob: Hi Guys, love the podcast – I’m an avid listener and after finding you, went back to Ep 1 and went through them all. I’m just about to place an order on the book… Fundamental Question: Is a house and land package always a bad investment, or are there situations it can work as an investment property?   If you like this Q&A episode (Entry into the property investment market, debt reduction and investing in house and land packages), don’t forget to rate us at 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/

By now, our listeners should understand the importance of good money management habits. It is the core of building a successful property investment portfolio and has been reiterated multiples times throughout this podcast. Since episode 3, as part of the Four Pillars of Mastery, Bryce and Ben have talked in various occasions about Cash Flow Management and the flow of money in your household. This includes where money comes from, types of spending and types of investments for your surplus. In episode 41, they talked about the moving parts of cash flow management otherwise known as the money and accumulation model. This model looks at variables and assumptions to consider when you’re modelling sophisticated money and wealth outcomes. On page 58 of the Armchair Guide to Property Investing, they introduced the money SMARTS system. It’s a money management system and the name stands for Surplus, Mindset, Application, Resources, Timelines and Strategy. The book provided an overall summary of each section and also some tips on how you can set up this account structure yourself. But we’ve received some feedback that our readers would like us to explain this little bit more so that is exactly what Bryce and Ben have done in this podcast. As an extension of the money SMARTS system, we are also sharing a “cheat sheet” on which account to use for different types of expenses. Just fill in your details below and we’ll send you the link to download it.       If you like this podcast: “The Money SMARTS System”, don’t forget to rate us at 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/

It’s our One Year Anniversary!!