Hello, and welcome to The Australian's Money Puzzle podcast. I'm James Kirkby, Wealth Editor at the Australian. Welcome aboard everybody. You know, one of the problems of being an investor, a property investor, in a share markets investor doesn't really matter, is that we're so focused on the details sometimes we actually lose sight of not so much the big picture.
Because we're probably across the big picture.
We know where rates are, we know where settings are on the global economy. But some of the things that we've always assumed, like when you go and buy a property, or you rent a property, or you go to sell a property, you'll assume you assume that it's all fair and square, and you assume that there are certain rules
that everybody follows. And that may not be the right thing anymore, because we have this sort of avalanche of scam and forgelan activity online which I know is taking a lot of time for readerstate agents now every day, and I want to talk about that a bit with our guest. Also, the assumption that we assume that everyone wants to buy a property. Everybody wants to buy a home, they want to own their home. We may not be right about that either. I want to look at these things.
I want to take a quick look at some of the issues in the market and some great questions. My guest is Kitty Parker. She's from Kitty and Miles Buyers Agents. She's a regular on the show, first time this year.
How are you kidding?
I'm good, James, how are you?
I'm good?
Thank you very much. Nice to have you on. I know we're both struggling through fairly warm days in both Sydney and Melbourne today, so it's nice to be in the studio, in the calm, cool studio. No, I prefer to be right now, let's put it that way. Tell me, I've come across this mostly from people who are in
the customers, if you like, our investors. But I did talk to your reader state agent recently and they were talking about how much time they were spending and worrying about the commonplace transactions that they were involved in because of online scams and fraud. Tell me what you're seeing in your world.
Yeah, definitely, I am seeing sales agents being a lot more shrewd when it comes to sending out, say, their trust account details for buyers. In particular, to pay their deposit. So that's one thing I'm seeing via both email and text message. I've had some sales agents say that their messages have been intercepted. It's beyond my scope as to how the scammers do that, but they intercept an email or message and tweak bank details, so an unwitting third part.
Typically a buyer paying a deposit thinks they're doing the right thing. They make their deposit payment, they share a transaction receipt. Everyone thinks it's fine, but lo and behold a few days later, when the funds are meant to show in the bank account, they don't show. So the scammers are getting a lot more technical. And it's predominantly cyber scams.
Yes, yeah, and in all is it in all sorts of it's actually in sales because that's where they real money is at. Presume rentals to that extent would be just mediocre as far as the scam is concerned. But you got big licks of money going through in proper transactions, often from people who are not used to dealing with big licks of money. It's in some ways it's like a personally hunting ground, isn't it.
It really is, because typically the buyer is sending a deposit to a new bank account, and they're sending a large deposit, so you know, this is a six figure deposit it and it's usually to someone that's not already in their address book, someone that they haven't sent money to before. So it's really ripe for these scammers to come in and intervene at that stage. Whereas a rent payment is usually a direct debit payment, so the agency controls the debt, Whereas this can be especially if you're
doing a bank transfer. I should say it's less when it's involving a check or deft payment. But this is a traditional bank transfer paying for the deposit for a property.
And that's the most common way.
Yes, still it still is in Sydney. It is becoming a lot more common to use deft payment systems, which is like a BP system. The most common one is auction pay and it becomes it's safer, it's more encrypted, it's a safer method, but that's still regulated and only allowed to be used at auction when the buyer is there in person. So yeah, so behind the scenes, if you're if you've had a pre auction offer accepted and you're sitting in your office and wanting to make your
bank transfer into the sales agency trust account. That's where the hackers come in. The scammers come in and they'll intercept text messages or more frequently emails. It's also happening with conveyancers. Conveyancers are seeing because at settlement, that same buyer will be transferring quite a large amount of money for settlement into a conveyances trust account. And that's another way the scam is a intervening.
So if I'm buying a property or I'm involved in a property transaction, doesn't matter as an investor or a rockypier, and you're on my side as an advocate, and it's such a responsibility of but you're If I ask you what's the best way to a void being scammed in real the state, what would you say to me?
I would say, any bank account details that you're provided via either text message or email, give the sender a quick call on the phone and reconfirm those digits. It's as simple as giving someone a quick call and saying, Okay, the BS and B I've got is one, two, three, four, five six and the account number and you just confirm that the number that you have received via email or text is in fact correct.
Yeah, such a good idea, killy, because while you're in the middle of property transactions, you're so fed up with signing forms you think it will never end in the but in fact it's probably just two times the deposit and the rest of the money. There's two big moments that you're exposed, and it's not that hard to call someone and do that. Great advice, Thank you very much, Right, Okay, I think that you've come upon in that area that our listeners should be aware.
Of, typically speaking as the real estate industry. As all industries become more digitally mastered, what tends to happen is the hackers come in. They'll try and intervene with emails in particular, So any email that you receive, whether it's your offer has been accepted, quickly transfer this amount of money to the following bank account before you miss out.
Things like that. So these scammers are really becoming aware of how the real estate space is becoming more digital and relying on digital communications and transactions in particular, and so they're stepping up and and intervening there. And I think the industry is just a little bit as most industries are. They're often playing catch up in the cyberspace. It takes scams to happen a little bit before then they'll come in and they'll say close off that loophole.
So unfortunately, we're seeing the scams occur first before we have anything really done, before.
The regulators catch up. Yes, nature of the Beast, isn't it? Yes? Yeah? Okay, very interesting. That's really interesting and worth hearing, folks. It's something that kind of comes up on the show fairly regularly, but I happened to herd. It's sort of articulated in
that fashion before just what's going on. But you can see in property investment and property transactions, as we said at the start, or all the large amounts of money being transferred between people who don't typically transfer large amounts of money to each other, the perfect area for scammers to move in. Okay, we'll take a short break and we'll be back in a moment with another issue that we want to bring.
You up to speed with.
Hello and welcome back to The Australian's Money Puzzle podcast. I'm James Kirby, well the edits. You're at The Australian talking to Kitty Parker, a Buyer's Advocate operating in Sydney but operating nationally for Kitty and Myers Buyer's Advocates, who has been on the show many times. Hey, Kitty, the other thing you were keen to bring up was that issue about whether gen Z even want to be homeowners. Do you have some compelling evidence that they don't, You know.
James, it's funny that you mentioned this. I wrote a blog post recently on this topic, and I started this blog post with the assumption that gen Z no longer want to be homeowners. And I'd spoken to a few gen Z and they seemed very disillusioned with the a housing affordability, especially in the capital cities.
Not so much that they believe they can't be Yeah, so.
They're very much given up on even the idea. So I had mistakenly assumed this to be the case. But then when you do a deep dive into data and you look at ABS data and domain data, it actually shows that gen Z that a good two thirds actually do still want to own their own home. They're just not sure how they're going to go about it and whether they will be able to But the dream actually is still alive even in that generation. They do want the security of being a homeowner and not just a
rent vestor. It's actually about having their own principal place of residence, being able to call their home their home.
It's interesting, I did it. I did you call it a blog? I still like to call it an article for The Australian some time ago, but that had been some weeks ago. On the bank of mom and Dad, always an interesting issue, but there was actually some real data which had been put together, and the part that caught my eye was the report said that it is now common. This is a Richard shellback at UBS Investment Bank,
so you know, pretty serious operator, pretty serious bank. Global Investment Bank did a survey and they found out that two hundred thousand dollars was a regular payment from parents to their children as opposed to their child right so to their offspring in terms of getting into the property market. And it was the first of hard numbers i'd seen hon it ever, and it just so happens that's a twenty percent deposit anyway on many properties in both of the
larger cities and the other cities increasingly. But that figured trouble you would you say that figure is reliable figure. Does it sound too high?
Too low?
Is that that's really interesting that you say that. I a sort of blog will say article, I just finished an article a couple of days ago that I'm about to publish where I dug into the mortgage space their data and found that sixty percent nationwide in Australia, sixty percent of first home buyers last year utilized the bank of mom and Dad sixty percent.
This is the majority, Yeah, the majority.
Yeah, So that certainly goes hand in hand with the data that you have. It's a substantial amount of first home buyers are really needing to leverage the assistance of their parents to eat, to get a foot in the door.
Yeah.
One of the interesting things that that work was that when they did this survey, they asked several thousand parents and whatever you wanted, however you want to call it, children of parents, adult children of parents, how much did they get from the Bank of moment, Dad and the UBS servey. One of the interesting insights, accidentally insights from it was that the parents get a bigger figure than the adult children gain. Wow, so in general the figure
was higher. They asked the parents, how much did you give Jack or Jill the figure was higher, but if they asked Jack or Jill, the figure was lowered. What does it tell you was I think it tells me that they are they'll take.
The money, but they're uncomfortable.
Yeah. I can imagine that, especially, you know the stereotype with gen Z. You know when you hear from gen x's and boomers, gen Z they're lazy. You know, they're bloodging, they're entitled, et cetera. I can imagine, you know, your pride is hit if you're if you're working twenty something, especially early thirty something, I can imagine it's really hard concept of of going to your parents and even asking for help, let alone accepting the help from your parents as a grown adult.
Yeah.
Yeah, I did an exercise in the course of that, and I looked at the first house I bought, which is still there, more or less unchanged, but it looks at things from the outside, and I just made the point. I did the numbers on the averages in the city and the salary at the time, and then the average
salaries now, and I mete out there. At the time, I was on a salary of fifty thousand a year, and I bought this house and today, if either of my children wanted to buy that house, they would have to be on a salary of three hundred and seventy one thousand, And I was for ever thirty and there's very few thirty year orows on three hundred and seventy one thousand. I mean the average is one hundred. It's three point seven times the average. So you can see
any way, they shouldn't be embarrassed. Why should they be embarrassed. The numbers are gone crazy and they're fortunate. The other thing I wonder, I bet you never come across this all the advisors and the lawyers say, oh, you should have a loan agreement, you know, with your children, and there should be stage payments and.
All this stuff.
I bet no one does that. I would say, no one. I bet it's very rare.
I've seen that. Yes, I've seen parents while they're dealing with their convincing solicitor as part of making the purchase kind of together with their offscring, setting up on the side that legal agreement regarding the loan and the repayments, etc. It's just a lot more lax than you know, obviously within an official lender. So the repayments are far less. Usually there's no interest, or if there's interest, it's just indexation.
You know, at the moment in indexation, you know, and interests is you know, only a little bit cheaper than interest. But usually it's it's very basic. But I have seen those documents drawn up.
I wonder how often if I wonder, even if you did it, I sounded terribly facialistic here. I wonder, even if you did it, like, how many people would actually follow through? H see, so you have all their writing, but how many people would actually follow through and say, Okay, you're in breach of the agreement.
Yeah, you basically have to take your child. You'd have to go legal. You'd have to get legal advice and take your child to court. And I don't think if a parent is willing to loan their offspring the funds for a property, I highly doubt that same parent would troll their child through court.
It's I think you're the quote.
I didn't guess you are the quote. I didn't get it. That piece very good. Yes, yes, I can see exactly where you comes from. And I think it's the case. Mind you listeners, if there's anyone out there who says no, that's not the case at all. You guys are too soft. Knuckle down. Do some agreements. Look the agreement I had to, well it worked. If you have had such an experience, please let us know the Money Puzzle at the Australian dot com dot au. Okay, well take a short break.
We have some very good questions and we'll be back with you in a moment. Hello and welcome back to The Australian's Money Puzzle podcast. I'm James Kirby talking to Kitty Parker. Now question here, Katy from Nathan. I'm considering moving abroad this year and if I do, I need to rent out my one bedroom apartment. I know everything you say on the podcast is general information, not advice. Thank you for reminding me of that, Nathan. Everything we
say it's general information not advice. But are you or your guest able to speak about the pros and cons of paying a property management company to look after this as opposed to doing it yourself. I'm aware of the added cost of using a property manager and recall you saying from experience that the one you can be given can at times be very Okay, thank you, Nathan.
With all sorts of property managers.
I had to fire property managers here.
And there along the line.
They're wildly different in their abilities. It's a tough job. Not everyone wants to do. Is there's an argument that they don't get very well rewarded for what is there really? You know, it's a tough gig property management, especially at that sort of where we say the lower end of
the residential ladder in one bedroom apartment. That's you know, that's the typical tot of thing that probably not many people want to manage, Nathan, compared to shall we say a fourteen million dollar you know, a luxury property on Sydney Harbor.
So kitty.
First of all, on property management, very roughly, what would the people expect to pay? It used to be something like seven to nine percent of the income. Is that more or less there?
It depends on the shape. Different states have different norms. So if you're in let's say you're in Sydney, you may get you may be able to negotiate around five percent five point five percent including GST. If you have more than one property, it might be even less than that. And then you go to areas such as say the Act. So in Canberra it can be eleven percent, fourteen percent, South Australia eight percent, eight point eight percent, and Queensland tends to be if you do if you get a
good negotiated deal, seven percent, So it does. It varies widely the management fee, but you can also negotiate not just the management fee, but all the say, the monthly incidental fees, things like an an monthly administration fee or an end of year report fee, or all the generic fees that they'll often tack into a managing agency agreement. It's really handy to negotiate those because every bit that you can reduce remove completely, that's saving you over the life of your property investment.
Okay, why on earth would Cameron be twice a year as Melbourne, the same people on the around in the same sort of city, with the same sort of numbers.
What said about it?
I'm actually not sure. And quite ironically, the rental yield in Canberra tends to be quite good. So not only they making more money purely because the weekly rental is higher, but they're taking a higher percentage.
So maybe it just competitive up there for a long time. Possibly competitive these days, that's for sure, the prices they have there now. But specifically to Nathan's question about are they worth it? Nathan, I couldn't see how else you could do it. To be honest, this isn't against no advice. Didn't mean this to be individual. All the Nathan's in the world, flying overseas to all the countries in the world, I would say, how on earth could you do it
with that one? Unless you've got some awfully good could probably want to be paid anyways.
I would say the same thing James, that when the going is good and your tenant is there and they're paying rent, I absolutely understand considering why would you pay an agent to manage it, But really you pay an agent to manage for when stuff goes hairy. So it's when the rent is in arrears, when you need to evictim or when a tenant decides they're leaving and you need to release a property and have open inspections and
things like that. So if you have a long term tenant in place, that's fine, as I say, but it's when things go a bit hairy or there's a change in circumstances. That's when if you're located overseas, you'd be really grateful to have a professional on the ground to be able to undertake all the necessary dirty work for you, so to speak.
Yeah, but even not necessarily even dramatic, but just the sheer routine nature of so many things. If you're overseas and time difference and everything else, I.
Think will be very difficult.
I think it will be very difficult to try and run things from another country. And in my experience, there's something you can't really put money on. But I have come across people who had investment properties and they were perfectly good investment properties, and they basically they gave it up. They packed it in and you say to them what happened, and they said it was too much work, just too much trouble, all that hassle.
Well that's the.
Idea of the outsourced property agent, that they are in charge of the hassle. By the way, One thing, listener is if you've never done it, it's not as simple as it's not as simple as you pay them and they never call you. Unfortunately they want you to make decisions, but at least it all comes through the one call,
so you don't have different people calling you. And some people have a practical thing where they just say to the property agent look, any item under X pick a number, two hundred dollars, one thousand dollars, doesn't matter.
Don't bother calling me.
So if someone says, oh, you know, the tap fell off the sink or something, we have to put it back on. It's going to cost two hundred dollars, you need to call me. Some people have arrangements like that, and they're probably very practical a lot of the time, unless you're really tight and you need to watch every penny. Okay, now, the final question talking about you mentioned you.
See different states with different norms.
Here's a we'll call it a question, though it is something of a complaint as well. Hey, folks, the prize regular listeners will not be surprised to know that this is to do with Victoria. Here we go, real question from Jane. All questions you read, obviously, but this is so hard evidence from the ground about what it's like to invest at the moment in Victoria, and one of the reasons perhaps that it's the state with the worst figures.
My brother owns a two bedroom house in Inner Melbourne, which was originally his home, has been rented out for a few years due to Victorian landlord rules. He recently had to pay two hundred and seventy dollars for a minimum standards ordit of the property. The report deemed his property to be non compliance based on the following issues see attached photos. This is a very thorough letter, folks from Jane.
Bathroom, bedroom, deck, arranda.
Various problems, mold in, silicone and grouse. You see that this is what we call getting down to brass tacks here in the money puzzle. So Jane says, he is being required to immediately rember these issues in order to comply. I consider these to be minor home maintenance issues which could be fixed with a lick of paint. She says. I appreciate these rules are intended to ensure quality rental housing, but none of the issues were ever raised by tenants.
My brother is now considering selling the property as he could make better use of the money elsewhere. Perhaps disincentivizing investment properties is the outcome the Victorian government seeking what are your thoughts on these rental rules? Yes, and she makes the point that my brother might have shocked around
for a more lax assessor. Yeah, okay, Well, I don't want to get into the particular details of that case or any case, but it would seem to be indisputable now that Victoria is the weakest property market in the country. It has the worst price performance, it has the worst defaults, it has the lowest investor activity, and it does coincide with a lot of taxes. There is now ten state taxes, two new ones come in on January the first, and
a lot of regulation. And it would seem that a real problem around the country is this lack of standardization. I mean, Kitty just talked about that you can pay twice as much for a property manager in Canberra as Sydney. Similarly, you could hit a whole pilot rules in Victoria that you don't get hit within other states and people. I think, Kitty, why wouldn't you arvertisee that that's the most natural thing in the world, you would think for investors to do.
That makes sense. If you're looking to purchase an investment property or hold an investment property, wouldn't you look for the state or the area where you're not only looking for growth and all those figures, but you want ease of holding and you want to minimize your you want to maximize your tax deductions and minimize your tax liabilities. But I also I also understand flipping the coin. I understand that, as you mentioned, the lack of regulation, the
standardized regulation in the country. Once you have the housing prices move where they've moved and we have a very tight rental market. I think it's highlighted the difficulties also for tenants. That tenants always had little quips here and there, but you definitely hear more so in the last few years that I feel there are times tenants are taken advantage of, and so I think in the nicest way, some regulation does enable a bit of a fairer playing field.
But I absolutely agree that having something standardized nationwide would make a lot more sense than having it divided between states.
It really would, Yeah, it really would. I mean, if you think about something like superannuation, it's so difficult anyway. Can you imagine if it was states, if every state had different rules and regulations. And that's what's going on now, and investors are shopping between the states, and they are voting with their wallets basically, and that they are exiting Victoria and they really have been in the last year
or two when we been covering that. And this is just another example of it I expect from Jane there, because the key line there obviously is she says that
her brother is now thinking of selling the property. You set the property into a market, that speaker, you wouldn't choose to sell a property just now in the state that has falling prices because you know, they have the whole sort of a spiral that can occur there if we don't have sort of sensible, standardized approach to property investing, which is I.
Think fair to all sides.
Okay, well, that would seem to be it for today. Kitty Parker, thank you very much for coming on the show. Great to talk to you again, first time this year. We'll have you again hopefully.
Through the year.
Thanks for having me.
James, lovely to have you as always. That was Kitty Parker, folks Buyer's advocate in Sydney, but operation operating nationwide. Let's have sport emails and by the way, correspondence like that from Jane that really good gives us an insight into what's going on.
They don't have to.
Be questions, obviously, questions are the main thing, but observations, comments, et cetera are genuinely welcome.
So let's have them.
The email is the money puzzle Atiaustralian dot com dot Au. Today's show was produced, as always very well, by Leah Samuel Glou Don't You Soon