Welcome to the Finance Show with Joe . He's Joe , I'm just some schmo . Today we're going to be talking about interest rate cuts . They're actually happening . When are they happening , we don't know . But also , we have a happy introduction to make with David .
Dave's been with . It's Simple now since July , july , correct . Tell us a little bit about yourself . Why it's Simple . You could have gone anywhere else , but you chose us scumbags .
Yeah , good question . He asks himself that every day or some late nights , yeah uh .
So a bit of background on myself . I'm into property investing so I've bought a few properties in my lifetime . I've been working prior to it , simple within finance for four or so years , covering business finance and asset finance .
Never had a business loan , never had a car loan , had multiple mortgages , so always had an idea of becoming a mortgage broker , but I guess the opportunity never really presented itself . And then I needed a home loan . Well , it's quite an interesting story .
I need to just jump in a little bit here . So David initially came to us as a client . He wasn't expecting to become a broker or anything like that . You found the property . Is that right ?
Correct . So I got a pre-approval with a previous lender . I won't mention their name . I already had one property with this lender and , like everyone else , probably about six to eight months ago I was looking to buy in Perth . Yep , sounds about right .
Yeah .
So I flew up there , actually for four days , just to scope the North Coast , south Coast , just get a little bit of an idea and also have a little mini holiday . I'd never been to Perth before , wanted to see what it was all about . Had a look at a few open homes , realized I needed a higher pre-approval , so called them for a second time .
They gave me a higher pre-approval , flew back to Sydney , kept watching the market , made a few offers , missed out on I'm going to say four properties because I just went for much higher for what I offered . And then on the fifth property , all the stars aligned . The agent was really helpful . As soon as the property went up within an hour , I made an offer .
I knew the suburb , I knew it was a good buy . We exchanged contract of sale and then obviously I sent that contract of sale to my lender . And then that's when things became a little bit tricky and became stressful , very , very , very stressful .
Went to shit , as we like to say yeah , that was a lesson learned .
A couple hours later the lender calls me or the manager of the team , and she said that they firstly she apologized . She told me that my application was going to be a decline and the reason for that is because the BDM that calculated my borrowing capacity didn't factor in one of my existing mortgages on another property .
It's a pretty basic mistake to make , but it was made and unfortunately , under their policy , I didn't service and you had exchanged contracts to sell already , correct . The real estate agent was calling me every few hours .
So when I bought I mean Perth's still a very hot property market and at the time when I bought , the listing would go up on a Friday and Monday it was off . The listing was off . Crazy , yeah right . So the agent obviously had a lot of offers . She had a lot of interest . She said you know , look , I need to know , do you have the finance ready ?
So it's complicated . Yeah , essentially I had to . It's not simple .
It wasn't simple , no , so I had to stall her a little bit and just say look , technically I do , I just don't know what lender it's going to be with In theory .
In theory .
Essentially called up a friend of mine and he referred me to . It's Simple . We jumped on a Zoom call at maybe I'm going to say 10 pm till midnight because I only had five days to put a deposit down . I wasn't sleeping . Essentially , I really wanted that particular property . Let's fast forward . What eight months now that property has gone up ?
90 or so grand , probably even more . How much ? Did you buy for $550,000 .
Jesus . So that's gone up to $640 . That's a 20% gain , correct . That's 18% gain . That's absolutely amazing , correct . So you picked well .
I did , I did very well . It's four minutes from the beach , four minutes from the marina , shops , schools , ticked all the boxes .
This is the thing about brokers . Brokers are somewhat self-employed . They're incentive-based individuals . There's a lot of things behind it . They need their approvals to happen . Somebody working at a bank- .
It doesn't matter , they're not invested .
They don't have skin in the game .
The particular BDM I was speaking to from that lender sounded very young . I could tell in their voice they were young , they weren't really invested , they weren't necessarily switched on , and that's exactly . Yeah , they had no skin in the game . So what are you ?
telling our clients now , when it comes to pre-approvals .
Don't make the mistake I made , obviously engaging your brokers . There's so many benefits , right , because you're exploring multiple lenders , you're getting the choice of the best product for your specific scenario or the goal you're trying to achieve .
You kind of honed in on something . You called it a product . A lot of clients don't really understand this , but some banks like self-employed people . Some banks like it if you're a teacher . Some banks like it if you're a police officer . Some banks like it if you're a teacher . Some banks like it if you're a police officer .
Some banks like it if you're a professional , you're a doctor , you're in the medical field . Some like it if you've got a low deposit . They're like yeah , we'll take you on . We're more than happy to . And it's really good that you highlighted that , because two things number . One some banks don't like Perth at all .
But then the other thing is what do the banks have against Perth ? I've got some more stories about that later . On the other side of it , I might have my savings with Macquarie , but as a self-employed individual and this isn't a bad mouth , macquarie but their policies aren't great for self-employed individuals .
If I'm self-employed , the banks I'm going to are anz , cba , um , bankwest . You know that because they're the ones that are going to get the most out of my income and give me the highest borrowing capacity . Yeah , for your particular scenario , the original lender that you went with you know prior to contacting us .
They're a good bank , they're a reputable , reputable bank , but they just don't have appetite for certain things . Which lender did you end up with ? I ended upwest , yeah , so even though he didn't end up with one reputable lender , it's not like he went to a second or a third tier reputable lender . It's Bankwest . It's Bankwest , owned by Commonwealth Bank .
Everyone knows it . You know they might not have branches in New South Wales anymore , but they're all in WA .
How have you found it working with lenders and understanding different policies ?
and I imagine you'd learn a little bit of . Something is like where you might even like , think to purchase , like I'm getting a lot of clients and thinking about buying in kellyville . What's going on there , correct , correct , yeah , or people are selling in a certain suburb and , you know , putting moving that money elsewhere .
We've been hearing about perth perth , perth , perth , perth , for the last 15 episodes that we've done . Um , you posted something the other day and I mentioned it on the last episode , but Perth's growing a thousand bucks a day , so how long have you held your property now ?
initially made the offer in March , settled in April , six months yeah , six months , ninety thousand dollars .
Yeah , that's not a bad . That's 500 bucks a day . 600 bucks a day , you know , that's , that's pretty effing good . And that was the last valuation . The last valuation we did was a month ago , correct , so it so it's probably gone up since then too .
Yeah , correct , and I think it's at the end of its cycle . Yeah , surely it can't keep going like this .
I think and this brings us to our topic of the day about interest rates cuts Once that starts coming down . I think Sydney and , in particular , victoria . I really think Victoria is about to boom .
Well , they've got supply now , yeah , and they're actually because the biggest complaint that we've been having in sydney is that , um , like , construction has been delayed for correct one reason or another whereas victoria , obviously they still have their own issues with their , with their councils , but it's been better there , like they're building way more properties there
compared to supply and also you've got like fewer , uh foreign investors uh going there , because again what we were talking about post-covidCOVID like just with the taxes and stuff like that , like less incentive to invest in Victoria . So it's good for owner-occupiers basically in Victoria , right , which is why you think that it might boom .
Am I in the right direction there ?
Yeah , 100% , because Victoria has always been the international hub . You know Sydney is an international hub , like people know Australia for Sydney , for sydney , they're not for the hub of bridge opera house . I think it's the capitals . Did you see that video that some guy was asking a bunch of americans what's the capital of australia ?
And like sydney , that everyone thought sydney . One lady screamed out is it india ? I was . I was just like , wow , like india . The average american iq is like 98 or something .
It's's not very high . Their geography is shocking . It's absolutely shocking .
But everyone says Sydney , Nobody says Melbourne . But when people move to Australia , a lot of Melbourne actually gets the majority of the expats . A lot of people actually move down there . That's because it's more of a city . Sydney is a city but it's not .
It's turning into like a megalopolis type of thing , like with Tokyo , where it's like this big spread Because you can drive an hour and still not leave Sydney , which is crazy I don't think many cities are like that so .
one office in Oran Park , new office in Barangaroo .
Oh , yeah , yeah .
Another office , not another office , but I've got referral partners up in Bella Vista so in one day I could drive from illawong to camden to bella vista , to the city and home . That could be like eight hours of driving done in one day , just to you know . See all these clients and everything , and I have not left sydney . They've spoken about the um .
They want three major cities in within sydney . They want paramatta , sydney and then macarthur , was it or something ?
yeah , like that campbell town area they're trying to trying to boost it up , which is , I mean , like the oran park stuff . That's why all that stuff's going up . They're trying I mean they've been trying to do that with paramount for ages yeah , paramount looks like the city , if you , if you weren't paying attention , you look out the train window .
You're like , oh , have I arrived yeah , I'm at town hall now , but yeah , back to the topic interest rates as early as next month , as late as early next year .
So there's been a drop there's been a lot of talks and , as you mentioned , um , the reason why a lot of people have left melbourne is because the investors or people , anyone that invested there they're not actually costly , then it's too costly . They introduced a new land tax , um , rent isn't covering the repayments and they're going okay .
If I pull out now , I I'm going to be able to take my money from here , I might be able to reinvest it in Queensland and my money will start growing again .
Or Perth , as it seems . Yeah , yeah , I think .
Melbourne or Victoria . From an investor's standpoint it's going to be a long-term investment . It's declining , right ? Yeah , depending on the suburb that you buy . In Victoria they're actually seeing negative growth . So if you buy now , there's a chance it's going to continue that negative growth .
But two years , three years , five years , surely it's going to come good , right ?
The population of Melbourne CBD , like itself , is actually higher than Sydney CBD .
Oh yeah , I would hate to live in Sydney CBD , like specifically right in there .
No , no . But I'm not talking about like the CBD , like just Melbourne itself . I'm talking about like greater Melbourne area is like 5.8 mil and then greater Sydney area is like 5.3 million . It does eventually have to start growing because you can't just keep building and building and building .
Well , you can , but not at that rate Like it will sprawl and anything that's in the city is just going to increase in value because , okay , they've put a high-rise up , then they might put another high-rise up , everything . Eventually they're going to run out of high-rises to put up . Eventually there's not enough space .
They're going to start introducing height limits and those sorts of things and they're going to say enough's , enough , we're capping this now and that's when it's going to start booming .
And I think that's actually going to happen sooner than later , because I reckon we're still at that period and also this is an uneducated opinion , yeah , but like , are we not still in that period where we kind of need like there's been more calls for more density and more high-rises and stuff ?
No , Melbourne itself is already dense and melbourne has a lot of old buildings ? Yeah , okay so because melbourne was the major city of australia previously , you got a lot of heritage , a lot of um yeah , european inspired buildings down there . Yeah , we knocked all those down in sydney you can't touch those . You can't touch those over there .
So it's um , it's going to be very interesting . Um , I've been doing a lot of work in melbourne recently . There's a lot of savvy investors down there . Yeah , I just think the interest rates and the introduction of that new um investor tax correct has hurt individuals .
But to me that also says that if you're , if you're pre-prepared now and you're able to withstand that , that you're probably going to be able to benefit in the long run correct .
You could find a buy If there's less competitors . When you go to an open home and you put an offering , you might be able to negotiate a lower price than advertised . So I think there's definitely going to be opportunities like that . And , vic , it just depends , like you said , how long they're going to hold it for . In the long term it has to come back .
Employment's great , they have .
Yeah , I guess that's the only thing that's really got against it .
Aside from that great , very livable city .
It's one in the top ten in the world . Is it ahead ?
of .
Sydney . I know they're like neck and neck .
When I was down there the other day , a suburb called Keelaw . Have you heard of Keelaw ?
No .
It's 15 , 20 minutes outside of the CBD , Keelaw . So when you land you're around Tullamarine , essendon , all those sorts of things . Keelaw is a suburb , just I want to say west of so around about that area .
Yeah , it's around about that area .
Okay , and townhouses . And , mind you , this is 15 minutes to the city , like Melbourne CBD on the highway . Townhouses have gone for like 800K , extremely affordable . Man you can't find . How far do you have to go before you can get a townhouse for 800 000 in in new south wales ? Past paramount , definitely way past paramount .
Yeah , you , penrith , even in oran park you'd be struggling so david and I were looking the other day our properties in oran park and what did we find ?
we found for a house . A house is over a mil .
It's one sitting around 1.2 now and this park , which is not near anything like , except for campbell town yeah , pretty much and but original , like that's gone up .
I think they've gone up quite significantly 10 a year . We have a client right now who bought an apartment in oran park . They bought for 550 000 I want to say 18 months ago . It is valued today at $735,000 for an apartment .
So to anyone listening to this podcast look at those pockets , look at where you think it's going to boom and where people are talking about it's going to boom the new airport , badgerys Creek , that's going to open in two years .
Correct , that's creating a lot of buzz . There's a lot of desirability around that Leppington , oren Park , norellon , camden area , whereas you looked at Liverpool or Kisoola for an example and it doesn't seem people are willing to buy or pay as much compared to Oren Park . I don't know if it's just because of the future development .
I think people are thinking of what that suburb's going to or has become so far and is going to become that they're willing to set themselves up there long term .
Yeah .
I think it's also because it's like new , like the literal everything is new , people like it , it's shiny , it's nice , the power lines are underground .
It just looks clean when you drive through . There's lots of nice trees and parks and lakes and all that sort of stuff .
Yeah , exactly , it's .
very family friendly .
Like my family lives in and around the Liverpool Fairfield area but like I know that there's not the greatest reputation , so I'm sure that's playing into the fact that , like people don't want to pay over a million dollars to live in Liverpool or potentially Just psychology .
You say that , but Chester Hill is part of the Liverpool area code .
Yeah , I imagine it would be . It's not far from it .
Chester Hill's gone up in the last year 22% .
Yeah , fairfield , I think it would be in Fairfield , yeah , fairfield .
But it's right next door . But , that's 22% . That is an outrageous amount of growth .
It's the third best performing suburb in New South Wales .
You're kidding , yeah , oh , no , I'm not kidding , but you know the reason why they allowed people to be able to build CDC duplexes , ah , okay For the uninformed , so for the uninformed . Previously there was DA and there was CDC . Now DA is a development application that you need to submit . Now the problem is with DA NIMBYs can get involved .
What are NIMBYs Not in my backyard ? The DA needs to be advertised . The plans need to be lodged onto the council portal and people have the opportunity to protest . I don't like this . I don't like that . This is going to affect my facade . I don't like the height limit , those sorts of things .
Cdc is a complying development certificate , which means if you comply with all of the rules of the council , you can literally start building . You lodge the application with CDC . Eight weeks later you've got your certificate , you can start the construction , and Chester Hill started to allow it .
That's the reason why it boomed so much , because people saw the opportunity . If I buy this house for $900,000 , it's got 16 meters of frontage , which is one of the key things of CDC . It's got 16 meters of frontage . That means I could fit one house here , one house there , two keys , strata title .
One's going to be 120 and the other one will be 120A or something like that . It's going to be a strata title , but then I've got two dwellings , I've got two forms of rental income and then I've got two properties that are appreciating , not just one . And that's why Chester Hill is performing so well , because he underperformed for so many years .
Because Chester Hill was in an area that people thought was undesirable . There were a lot of houses there that were going for cheap , but once they brought in this new rule they were like wait a second If for cheap .
But once they brought in this new rule they were like wait a second if I , if I buy this property cheap , I'll buy four , let's say back in the day , because dave dave and I are the same age .
Just to let all the listeners know , back 15 years ago , yeah , if you told someone you bought a house in chester hill for 1.3 million , they would throw a brick at your head what are you doing ? they were worth 400 500k back then . Yeah , they were , they were cheap , they were cheap houses .
But what you could do , oh , 400k , 500k , okay , perfect , I'll go put a CDC application in . It's going to cost me 150,000 per site to build this beautiful duplex . And then , all of a sudden , I could sell one for , you know , 650 . I could sell the other one for 650 . I've made 300 grand on each one .
So , Dave , where are you seeing the opportunities around Australia at the moment ?
For my next investment . Yeah , like I said , wa is done , just way too hot . It's going to be at the end of its cycle now , okay . So I'm thinking Queensland , either regional Queensland , yeah , and I've also got my eye on Victoria . Yeah , I think Victoria . For me it's a little bit too early .
I'm used to buying a property and having pretty immediate growth , first property southwest Sydney , second in Gold Coast , third in Perth . So all those purchases have immediately grown in value .
Tell me about southwest Sydney . Where did you buy that ?
So that was my first home . That was in Leppington where I had a reduced stamp duty , so it wasn't a complete exemption from stamp duty . So I bought that in 20s end of 2017 , settled early 2018 , held that property for three years , got great growth . So I bought it for 700 and sold it for uh , just under a mil wow , in three years .
Yeah , and the reason I decided to sell that property is because the yield was just terrible , let's say , valued at $1 million , renting for $520 a week . I just thought you know what it's gone up in value . I can pull some cash out here and I can use it to buy other properties elsewhere .
Gold Coast property bought it for $670 , renting it for $830 a week currently . So the difference in yield and it's had a growth over the last two years as well so I don't want to put my money somewhere where I'm not going to get that immediate growth . Like I said , perth's done . I don't think it's , even if it's still going up month on month .
I mean , no one knows where the end is , but that's a bit of a gamble you take . If you buy something for 700 grand at the moment in perth , where's it going to end up ? Is it going to end up at 730 , 750 ? Is that worth it ? I could take that 700 grand elsewhere , let's say , you know , earlier on in the cycle and it's going to hit 850 , 900 , like .
I don't know an exact suburb yet , but I'd say regional queensland . Um would be on my radar for more immediate growth and then maybe further down the line somewhere in victoria that's awesome , man .
Um how , how much time do you spend researching property ?
when I , when I'm ready to go . So when i've've got the equity or pre-approval , I won't go to a lender again for a pre-approval , it'll be via one of our brokers . I'm very obsessed . I'll spend every hour of the day I'll check to see what's been listed , what's selling , I'll set up alerts . I'll go on forums online .
I'll try and gather as much information as possible . I'm just yeah , it usually takes me around two , three months to actually narrow it down , um , from when I have that pre-approval and we'll have the funds ready to go to actually purchasing some uh something . But I'm very , very obsessive , so I'll just gather as much information as possible and just compare it .
Run the numbers , you know , run the figures and just compare with you know other suburbs , because you really have to narrow it down . Once you know the state , okay , then you know you might know the city and then you want to look at each suburb within that city and you know , look at the yield , vacancy rate . What's the growth been like in the past ?
Is that a reflection of the future ? What is going to be accelerator of growth ? Walking score , is it near the water ? Education , hospitals , schools , shopping centres , all those sorts of factors that you need to take into play , and you're not going to know that just by looking at ads on realestatecomau right every single one of those photos is extra contrast .
Every agent writes the same thing . Great investment opportunity , you know , near the shops , near the cafe , near a school , cool .
That doesn't mean it's going to be a good investment for me I actually really like the fact that you flew out to Perth to get a feel .
Yeah , I wanted to because I spoke to a few agents before going there and one of the agents said the north coast is a little bit nicer lower crime rate , just a nicer coastline than the south coast .
So I essentially went from Perth CBD all the way up to Yanchep , so I explored that , from Perth CBD all the way up to Yanchep , so I explored that whole coastline . And then on the following day I went from Perth CBD down to Mandura or Hall's Head and just got a general feel for the suburbs along that whole coastline and from there I went .
I did establish yeah , north Coast was the choice for me . And then just driving back from Butler and we stopped in for a coffee along the way and I saw a beautiful marina just completely found it by chance called Mindari Marina .
I thought , wow , if I could buy a property close to this , it's got the beaches , it's got the marina , it's got all the shopping centres , the schools etc . That would be a great buy . So that's where I ended up buying . There's a few things to grasp there .
Invest in places where people want to live . There's walking score A real estate agent . I've met with a thousand real estate agents in my life . Not once has a real estate agent actually brought met with a thousand real estate agents in my life . Not once has a real estate agent actually brought up walking school .
To me they'll say oh , there's lots of little cafes around , where's the cafe ?
20 minute drive it's a 20 minute drive , you know oh , there's a Jiminy here .
Oh , where is it ? It's a 15 minute drive . I'm like , come on , man , like they're always trying to sell you , and the reason for that is real estate agents make their money on the commission , they make it on the sale and they get their listings and they just want to sell the property .
They're acting for the vendor . Have you used a buyer's agent before ?
No , not yet .
Really I'm not that busy . Okay , I'm not that time poor , not yet . At least You've got to start working harder .
This guy gets emails from me . No , he gets phone calls from me at 10 pm and he's like have you looked at this ?
this and this and he's like are you seriously still going to go to sleep ?
I actually want to touch on one last thing . So perth boomed , seriously boomed , because interest rates were so high , because people at the lower end of the market couldn't buy anything . In sydney you work in pre-approvals . You've seen it time and time again if somebody's earning a hundred thousand dollar a year salary , what can they borrow ? 550 grand tops ?
not gonna get you anything . Yeah , with the majors , you know .
But you can still go buy something out in wa and because that was occurring , that's why wa was spiking so much . That's why I was growing at a,000 a day . Do you think , once interest rates drop , that Sydney is going to boom again ? Or Melbourne is going to boom again because people are going to have that opportunity to buy in those ?
locations again ? Absolutely yeah , I think people will look to buy local If they have more borrowing capacity , then they're not necessarily going to look interstate . It depends on what they're looking to do as well why they're not necessarily going to look into state . It depends on what they're looking to do as well , why they're looking to buy Owner-occupiers .
I'd assume more owner-occupiers are going to be active in the Sydney market once rates drop , because they can now borrow $200,000 , $300,000 , $400,000 more than they could with rates sitting at mid-sixes , right . So I think we're in for another boom in sydney .
Um , if I personally , if I was looking to buy in sydney and I had a pre-approval ready to go , um , I'd be pretty strategic .
I'd look to get in before we hit that little boom yeah because I said , I think as soon as the rates go down , all buyers are going to start flooding the market and for those that there'll be initial price drops .
But all buyers are going to start flooding the market and for those there'll be initial price drops , but then they're just going to go straight up . I think it'll be like a couple of months of relief .
If a rate drop happens before Christmas , just imagine how many people are going to be turning up to open homes .
Yeah , it's going to be insane .
The competition is going to be fierce and prices are going to go high , so I'm thinking that they might drop the rates , because we spoke about the retail quarter and retail spending is all the way down . I don't know . Has anyone been to a shopping centre recently ? No , they're dead .
I was at Westfield Miranda the other day Rainy day , so perfect day for people to be out shopping or that sort of stuff . No one there's no one in the shopping center . No one's spending money . The issue with that is there's commercial tenants in there and those commercial tenants need to pay rent as well .
And if they're not making budget , what ends up happening ? They start shutting down . And those massive and I'm talking those massive shopping centers , guess who they're owed by ? Guess who funds them ? A lot of the banks .
So they , the banks , could actually end up having landlords defaulting on them because they can no longer afford to pay the debts , because they're not getting the rental income , because they don't have enough tenants in . So , it's not only the mums and dads that are affected , it's also , you know , the big retail giants and the large manufacturers .
So I think , I genuinely believe , we are going to have a rate cut just before Christmas , because they need that Christmas boom .
Even just in consumer spending , let alone property .
Yeah , but they need the consumer that's where I'm starting . It starts with the consumer spending , because as soon as the consumer spending starts happening , you're not having businesses shut down . In Miranda , westfields or Bondi Junction , I think I was walking past Camilla .
No , not Camilla , but one of those girl shops like the popular ones , sass and Bite that's the one I was thinking about Closed down , oh damn Closed down in Miranda Bummer , you know .
No , but like I'm just saying , like it's , it's not something that yeah , um , small businesses and retail businesses are feeling it . Yeah , even near me in roselle , uh , on darling street , as you go into roselle , there's about five uh shop fronts that have just vacated , yeah , yeah . So think about this okay , the landlord ?
yeah , they . They're trying to get the rent . Why are they trying to get the rent ? Because they owe the bank money . If they default , okay , the bank might be able to resell the asset , but the bank still has debt . The bank is borrowing that money from the reserve bank or they're borrowing it from somewhere else . The world works on debt . Who's making money ?
Who can lend it ? That's all it is . And there implications if they don't start reducing the rates . And I think you're right when you say that , like , get in now if you've got a pre-approval , because it's going to get fucking hot yeah , don't wait .
Yeah . Yeah , the rates aren't good now , but that's why it's a good time to buy exactly , I won't be saying the same . The complete opposite . Once the rates drop , goodbye now the rates low .
When's the next best time to purchase ? It's today . It's an appreciating asset . Anything , anything with land on it . What happens ? It goes up , it goes up . There's only so much land on earth . There's only so much land near the Sydney CBD . There's only so much near Parramatta . There's only so much near Perth CBD .
That's it . People want to live in Australia . It's very clear .
It's just like you say that now You're like , yeah , we're going to say the same thing when rates are down . Yeah , I am going to say it Because it's true , because the government retirement age is 67 . The pension is shit . Your superannuation okay , it might be worth something now , but it might not be worth something by the time you retire .
Set yourself up for life . Get in early 18 to 25 . How old were you when you bought your first property ? 27 . When you bought your first property ? 27 , 27 . Okay , get in early . Get in in your 20s , because by the time you're 40 you sit in there . You're probably gonna have seven properties by the end of next year .
Um , knowing this guy and the way that he hunts and everything he's probably gonna have , you know , a strong property portfolio by then . Okay , by the time you're 40 , what happens ? Oh , guess what ? Your back hurts . Hey , you can actually take time off , work and recover .
The unfortunate part is , so like we've got stats for this , so like in in 1981 , 55% of Australians aged 25 to 29 owned a home . That's dropped now to 35% . Yeah , so it is rougher .
So you're gonna have to find ways to work around that , or just be more open to buying interstate as an investment or for your first property , I . Or just be more open to buying interstate as an investment or for your first property .
I don't think people understand how equity ? Works , correct , like broadly speaking , because people are like but what's the point in buying this when I can't ? Why would I ?
buy in Queensland . I don't know anything about Queensland . I've been there twice . Everyone wears thongs , I don't know . Or they walk through the mall barefoot . Do I really want to buy there ? That was literally how I used to think in my 20s . I thought why would I ever want to buy interstate ? I don't visit Queensland frequent enough .
What happens with a tenant ? How do I know they're taking care of the place ? How will I manage it ? You just find a good property manager and they'll go out . They'll do inspections . They'll take photos for you . You chase them up for updates . If anything's fixed , you know they'll go out . They'll do inspections . They'll take photos for you .
You chase them up for updates . If anything's fixed , you make sure you know . If anything's broken , you make sure it's fixed . So be more open is my advice to people in purchasing in other states . Yeah , because if it's more affordable and that's it matches , you know it's going to be a way in for you to build equity over the next few years ?
Yeah , because it's what Joe said . The whole world operates on debt . Who's got the money to then lend money ? The way that you get the money is to put it into equity , and then you can access that later when you need it to purchase another property , maybe the house you want to live in . So that's generally how it will work .
So don't think about it in a way . It's like I don't want to buy in Queensland because I'm not going to live in it .
Yeah , be more open-minded to other states . I've never had an issue with a tenant in any of my properties . If something's broken , the agent will let me know . They'll send a tradie in there to get a few quotes and I'll make a decision from there .
Okay , good , you brought up agent . This is a massive segue , but if you are renting a property , I'm going to give you some very sound advice . Don't rent it cash . If you are expecting to grow your equity , refinance and use that equity to purchase more property , don't rent your properties with cash .
I promise you you will regret it and it will be 900 times harder to purchase more property . Don't rent your properties with cash . I promise you you will regret it and it will be 900 times harder and more difficult to get you an approval if you collect cash .
I'm sensing some frustration .
Oh man .
I'm sensing some logs have been like yeah , yeah , I keep trying to explain it .
I keep trying . Okay , yeah , cash is great . Fantastic , get the cash . There's two things about debt . Okay , there's two things about debt . Number one the bank needs to see money going in . And number two you need to pay tax to borrow more .
If you're trying to hide as much tax as possible and do these ones and do that one , guess what's going to happen when you want to buy a house ? You're going to get shit .
You're going to get a horrible interest rate , you're going to have no borrowing capacity .
You're not going to be able to go to a major bank . Some people just don't want to listen . They just believe oh no , no , no , I'm going to do it this way , I'm going to do it that way .
But then when push comes to shove and it doesn't work that way , correct ? They're also better protected if they have a property manager , because the property manager knows the landlord legislation back to front . Yeah , and they . They're that you know third party that can just step in and just take care of any issues for you . What ? Why would you , you know ?
Why would you run the risk of having an agreement with someone you know their living situation might change , they might start falling behind on payments . Do you want to be the one having that conversation ? Personally , myself I wouldn't , but some people want to run that risk .
Yeah , it's not wise , so Dave what are the goals for the next 12 ?
months For me . Yeah , I'd like to purchase two more properties in the next 12 months 12 to 14 months and just learn as much as I can as a mortgage broker and help people achieve their investment goals . Really , that's fantastic man .
That's fantastic , as always . That is definitely some schmo . My name is Joe . If you need any assistance with your investment needs , you can contact Dave directly or you can visit wwwitsimplecomau . As always , my name is Joe and thank you for tuning in . Is that what I finished with ? Yeah , we can tune in . I'm very tuned in .