463 | Property Managers: Are They Worth It?!

And Ben Kingsley , chair of Property Investors Council of Australia and a back to back winner of the Property Investment Advisor of the Year Award , and both are partners of the multi-award winning Empower Well . Co-creators of Moor , the Freelife Style Design Act , as well as bestselling authors of the Armchair Guide to Property Investing and Make Money Simple Again .

Stay tuned as they bring you the Insiders Guide to Property Finance and Money Management .

Sure , one of our loyal listeners , one of our loyal clients , was distressed .

After the absolute cheap shot he has slipped into the start of today's podcast episode , go Lions . And that was from David Lay and I went yeah , cheeky , he's hoping it backfires on him and he comes back and says assume Brisbane win .

Perhaps you could say at the start of next podcast that you have been inundated with feedback from the podcast community who have unequivocally called a foul on his poor behaviour or been expected from a PICE supporter . There you go , ben , who was expected .

Right , you've got to love that week because it doesn't come around very often for a lot of teams , as you would well .

But , to the credit to the team , well done guys , they deserved it in the end , finished top of the ladder , won the most games . They do like to win by small margins though , and that's not good for the ticker , but it was no , it was just a wonderful experience to be there and so , yeah , certainly a bucket list memory for me .

We talk about , you know , on this pod we talk about experiences and you know how valuable they are versus versus anything else . So I can tell you that , yep , one of my . You know I had two bucket lists for the Kline with Football Club . One is winner premiership whilst I was alive , because it took a while .

Yeah , I'd seen a lot of losing grand finals in the 70s and also the 80s . So that was that and I said , all right , well , now I want to set myself a new goal , which was to attend a grand final that we actually would win . So we won , obviously , 2010 .

I didn't go to that game or and or and all the replay but in 2011 , paid the big bucks to go along to to watch us again Jalong and we're something like 23 points up in the second quarter . I'm thinking this is good , the Kline would chance going out . They said this could be a bucket list moment . Guess what ?

Obviously , jalong got the chocolates , so that was off the list .

So you know , actually Latrobe financial , who are major sponsor of the Kline with Football Club , I'm going to ask the Corrie and the team there for allowing me to live out one of my bucket list dreams , because it was extraordinary and quite amazing . So thank you very much .

And , of course , panthers three in a row yeah , incredible .

I just want to pause and just anyone who's hearing this to come on , because we're going to talk about how you've been impacted by interest rates . We're going to talk about how you've navigated that through , going to talk about some of the anxieties and the fears that you have .

And I found out yesterday , ben , that one of our team , amanda , has agreed to put her hand up . She's got an incredible story that she's going to share in the summer series .

And here's what I want to say to some of our listeners she took a long time to think about whether she would come on , because I've asked her from a long way back and so the thought and the I guess the think time that's gone into that , because the story is a good one to share .

So I tell that story because I want to invoke the same emotion from anyone who's listening to this who might think , oh , I'd like to , but I don't want to go on . I can assure you Amanda's pushing through a comfort zone to come on . So I just want to shout out to you , particularly the ladies . We want to hear from you .

We get an above average amount of males who put their hands up , which we love their stories too . But , ladies , this is the shout out for you Come on , come on to our summer series . So if you go to thepropertycouchcomau forward , slash my story , leave your details .

We'll reach out to you because we're starting to get prepped for the summer series , which is always amazing and the angles and the stories and the insights that we get are incredible and also been just a little a little whisper , if you like that we've got a new course that we're about to release .

So we get a lot of people who've read our book and then they want to deeper dive into how the case studies at the back of the book actually came to fruition . So we actually have lifted the bonnet . We've actually gone through it .

So each case study has about 25 to 30 minutes worth of incredible detail on how that's actually done , what it was like back in 2016 , adjusted to present time as well , what the changes are in between . So what you would need to do so if you've ever wanted to retire on $2,000 per week .

Stay tuned , we are going to give you some more details on how you can get access to that course that we only launch it once , ben , and then , once it's launched , we just focus on the intake of the students and we don't keep launching it throughout the year , so keep an eye out for that .

All right , we've got a big show to get into today , ben , my mindset minute theme is I went to the Tony Robbins Unleashed the Power Within event in Sydney a couple of weeks ago , ben , and I really loved it . And here's I've been to . I've been to America a few times before the pandemic . One of the times Tony was a speaker , so I knew what to expect .

I knew the energy in the room , but I booked a ticket back in 2020 and I just kept getting rolled because of , because of COVID and , yes , I did do the fire walk . And it is incredible how you get 9,000 people to do a fire walk , ben , without injuries and get it done . It's a beautiful metaphor for life . And here was the amazing part .

I had a whole bunch of property couch listeners come up to me and say good day and I got to hear some stories and I got to share it with my wife as well . So it was a really great thing . But here's what I want to share today and I might share a few things as we go over the next few weeks .

But Tony talks about two master skills for an extraordinary life and it's the number . One is the science of achievement , and I think a lot of people on this podcast would really get that right . The science of achievement , because you don't listen to the property couch unless you're an achiever .

And there's a science , and we've hopefully broken down with the science of $2,000 a week looks like . But the second one is the art of fulfillment . So achievement has rules , right , it's a science . If you follow some basic rules for your money , you'll have more of it . If you follow those rules for getting fit , you'll have a fit and healthy body .

If you do it for business , same deal , right . So , simply put , if you do the right things , then you'll get the results . So that's why it's the science . But here's the bit that really I took a bit of reflection time over the last couple of weeks is around the fulfillment being an art .

You said it's considered an art because it's different for everybody and , just like art , you might look at a piece of art and love it . I might look at a piece of art and hate it , and vice versa . But he says fulfillment is about two things growth and giving back . And I've reflected on that .

For me and you , ben , it's like you and I get energised with this podcast and we still get energised some eight years later . And I'm on this because we get to grow , because we have to keep challenging ourselves each week to deliver something of value to our audience . So that's where the growth piece comes and everything that we bring to it .

But it's also for a lot of people . They take all the advice and they go and implement it and we may never physically experience them at all in our in our worlds , but they send us a note or send us a tweet or something on Instagram and say , hey , look , I implemented all these things and I've had all these positive results .

So we , we , we get that through what we do here and it and it sort of helps put some language around why we really love what we do here , ben , because we do get the art of fulfillment around that growth and giving back .

So here's what he said success without fulfillment is the ultimate failure , because there's a bunch of really rich people who are miserable , right . And he talked about the Robin Williams story , Ben , and I thought it was interesting and I think this is more complex .

But if we just stay at the , at the headline level , here's a guy who had Academy Awards and Oscars and Comedy Awards and Tony and all these sorts of things and yet sadly it took his life , and perhaps because the art of fulfillment wasn't there . So if you go back to , success without fulfillment is the ultimate failure .

I wonder if people could reflect on that for the rest of the week , because once you get that 2000 bucks a week , you spend your whole time getting to 2000 bucks . When you get there , you'll go oh , is that it ? So it's enjoying those little things along the way where you actually do get to grow and you do actually get to give back .

So I had a wonderful time , Ben , lots of wonderful insights and certainly helped me grow over the period of four days across 50 hours .

Would you consider removing the property manager as part of this ? This would save us $50 a week and potentially bring it round to being cash flow neutral . Bear in mind that we live a literal stone's throw away from our investment property and I have some friends who are plumbers and electricity etc .

Just interested on your thoughts of whether that would be considered almost like taking on a second job . Thanks .

I want to double click on the important message here and that is do whatever you can to hold onto your properties . I've been on that message now for a couple of months and I want to keep saying to people because we are definitely seeing in the data that a few people are tapping out of their investment property .

So we'll be talking more about that over the coming weeks , but in broad terms , there's enough evidence out there isn't there , Bryce ? In terms of why you wouldn't versus why you would . So I thought obviously it's a great segue to unpack some of those messages . So why don't you lead us off ?

Well , the pro is really simple you save money , okay , and in the current environment , at 50 bucks a week , that that's a significant amount of coin . Right , that will certainly help offset some of the costs .

But then , when we go down the cons side , you might find that this is a little imbalanced and and we're going to talk through some stuff that is totally not exhaustive . Yeah , so a couple of things , all right . So let's kick this off as a con . Well , you got to market and find good tenants , right ?

So this could put your occupancy rate at risk , right , because you know the question is do you have a database of tenants , like the property managers that social media networks , and so being able to find a tenant ? Because here's , here's what the person saying it's down the road , assuming I've got a tenant , they pay the rent on time .

Why do I need a property manager . Well , that's because life doesn't work in a spreadsheet , because life happens and you got to do other things around it as well .

So and here's , here's another truth Some tenants become skeptical of private arrangements , so they'd actually prefer the distance that's created through having an arrangement , and you've got to be proactive to attract tenants , because it's not just attracting a person , it's attracting a number of people and then being able to be skilled at working out which one is the

best one to have , whilst also being aware that these people have histories that could suggest that , at face value , they look like a great tenant , but they may have had a history with the previous property , that the professional property manager has access to the databases , which could give you a bit of insight as to what they are as as a tenant .

So so , first of all , then , marketing and finding tenants is is something that property managers do really well . You got to ask yourself do you really want to do that yourself ?

You know , real estate comms and domain comms and so forth . But that's a good segue into assessing the quality of a tenant , right , you know you've got to , you've got to have a good understanding .

You know , ultimately , these people are going to be living in your asset and and it's going to be really important in terms of just how well you can interview them , asking them the right questions , doing the due diligence process that's needed in terms of making sure that this is a reliable person or persons who are going to pay the rent , take care of the

property and have safe and quiet enjoyment of the of the property that you're providing . And I think you know this is the biggest one , bryce . And if you go back to your buckets point of view , I think you know those people who self manage and love doing the work . I promise you they won't love doing the work .

When they've got a difficult tenant , they'll fall into bucket number three real quick Once they experience a professional or difficult tenant in terms of that takes up a lot of their time as part of that process .

So there's really there is very much that increased risk of poor tenant quality and I think that's that to me , is is is one of the big three you know that we're going to be talking about .

Like I just want to make sure I'm complying , because if you get that wrong , the fines are serious , and so being able to stay abreast of those changes is it's one thing to be able to read it and understand it , but then it's it's the ability to apply it when it matters .

Been , because even all you know , when we've interviewed some of the incredible guests that we've had over this podcast and they've taken us through all the legislation changes , in some cases over 120 pieces , like you know , I promise you I don't remember them all and I have to make sure that I go back and fine tune at the time of needing to make the decision .

So I reckon this is a massive one that you wouldn't want to underestimate 100% .

This is why , also , property managers are very selective about the properties that they manage because of the minimum standard requirements that are now in place , especially here in Victoria right , where , if you don't you know , if you sign off on that as a property manager , you're potentially liable in terms of you know , providing unsafe living arrangements or you know

not meeting those standards . So it is a you know , a web of compliance and legalities attached to that , not only also contracts . How well was the contract written ? You know ?

You know what sort of contract forms are you using , Because if you're going to do this on a handshake , what sort of recourse do you have If you do get a difficult tenant who doesn't pay ? So yet , you're right in terms of poor tenant quality and also risk of legal issues .

They're two of the big three in my mind in terms of why I would outsource this and I'm happy to pay for that service .

Let's have just , let's just break it down what were some of the basic tasks and then what's some of the rest ? So , basic tasks okay , a couple of maintenance requests tenancy , which we've just talked about , keeping the tenant ledger up to date . Ideally , automate that . So , okay , there's your basics .

All right , let's riff off just a handful of the rest , ben . Emergency maintenance requests , periodic inspections what about late payments ? What about if someone's moving in or moving out ? Inspections of Viction challenges , preparing a tenancy agreement , collecting and lodging bond payments . Paperwork say no more there . What if it goes wrong ?

You got to manage the dispute . You got to manage the tenancy breach . You got to issue termination notices . You got to appear before a tribunal or a court . You got to make insurance . Do you want more Right ? So , folks , it's not something that you want to go into lightly . But , ben , also availability .

Now , also , if you're actually doing your gainful work and you know you've got a critical deadline on a project or you're in a critical meeting and people are trying to contact you like who's going to actually manage it on your end ? And for me that's the challenge of what happens when you're not around in terms of how that plays out .

So that's that availability risk and then your tenants going to say , well , you're never contactable . It's always difficult and the relationship starts to tether and potentially break down between you and your tenants . So I just find that you know great property managers always have 24 seven contact availability .

They have really clear understanding in terms of what the rights and obligations of the tenants are straight off the bat . Now , make no mistake , there are some pretty basic property managers out there .

You want to be dealing with really experienced property management business who potentially specializing the space as well , or just have great people with lots of experience . Once you find those types of property managers , you want to hold on to them because they're worth their weight and goal .

to others , I think it's you know , it's just human nature . So you know , if I have to do all this work myself , do I really want to do , I really want to double that work or triple that work if I actually buy one or two more properties ? So I get .

The context of this question is for probably for a short period of time , whilst we're trying to peg back some costs here , but ultimately it's not like interest rates are going to drop significantly quickly , so it'll be for a longer period of time .

So in that case it may it may create an emotional response to you wanting to go again if you're thinking about doing that again . So don't have it limiting your portfolio growth .

Anyway , moving along , landlord insurance is this is the other big story here right , obviously , the two big risks that we need to focus in on , other than obviously making sure that our tenant has safe and quiet enjoyment , is the risk of damage to the property and also unpaid rent .

Now , if you look at your landlord insurance policies that's why defense is a big thing for us A lot of those policies may not necessarily pay out in the event that you self manage your property , so it really is an important one there as well .

Because having a professional involved could help minimize certain risks like poor tenant selection , rental losses , tenant damage and maintenance of repair issues , as property managers often find themselves offering a 24 seven service .

They can also get on top of incidents at the rent , at the rental that can lead to claims escalation , and be able to get someone on site quickly to act to prevent further loss , for example , putting a tarp on a roof , something or water into the roof when it was damaged during the storm .

We understand managing rental can be complex , especially in terms of legal obligations requirement , and we believe a great property manager is worth away . So it's not impossible to get landlord insurance , but in a lot of cases it's very difficult at best . So a couple of other things we can rip through here .

Ben , obviously the cost is deductible , so you're getting a rebate . There's a bit of fool's gold that could be there , because will you measure vacancy in days or weeks ? Most do it yourself , do it measure it in weeks , right ? So ? And the days tick away when you're not connected to the right network .

So , painters and contractors and handyman and you know to your point earlier , you know work commitments you're not as responsive to the call out , so it's just really establishing whether your time is worth it . So , so , just be careful on fool's gold .

And then I guess , finally , and this is the point we'll talk about in another question later on , ben , you're running a small business . You got to treat it like that .

I mean , ultimately , there are costs associated with running your small business , but you want the best for your small business and so the same way in which you might be running a different type of small business , whereas there's coffee shop order , you've got suppliers , you've got wholesalers , you've got accountants who are helping you in that particular process , so we

would say that it's a professional service and we should put our hand up here . We don't own any property management businesses . We don't receive any funds from any property management businesses . We just know that they are excellent in terms of being able to organize yourself and , as we've said , over my journey I've had a couple of ordinary runs .

I quickly move on from them and then we obviously get once . We get our good ones , we stick with them for a long period of time and we also want to remind them to keep up to date with all of the best practices that they're doing .

So we always like to still make sure that they're doing their job and with obviously increased compliance costs and also these new regulations that are coming out , there is additional costs . So those fees have gone up over the course of the last few years . So also be mindful of that . But I can't read to Bryce's point .

If I summarize this for me simply if it is a money thing , I really want to factor that into my overall management of my small business in terms of how I'm pulling that together .

So if someone still wants to make the argument that they still want to self-manage , maybe another way of doing it is if you do find a really great tenant through a property manager and they are down the road and you over time form a relationship with that particular tenant and they're happy to stay , maybe , maybe that might be the only time where you can say ,

well , if I'm not getting that longer term value from my property manager . But I promise you I would not do it from day one .

And personally and Bryce and I are very clear on this and we're very clear on this to all of our customers that we don't want to see our clients self-managing their properties- so I guess , in summary then , sean , if it was absolutely critical for you to hold the property , yeah , maybe .

Is there a way to get them as an investment deduction when they transfer to an investment property , and how can I leverage that ?

But what's interesting , I've reached out to our good friends at BMT , spoke to Brad about this and what's interesting is if it's not available for rent at the time that you make the incur , the expense , then it's not a deductible expense because it would be considered secondhand . Get your head around that .

You've paid for it as the principal place of residence owner . It's brand new to you when you put it in , but as soon as you lay it down the track , flick it over to an investment property , those brand new items would be considered secondhand . So it's interesting , ben . So a little caveat here .

I'll just put a little asterisk Make sure you check with your accountant . Don't take advice from us . It's just a guide , all that sort of stuff . But I did reach out to the experts here , ben .

What they wanted to do was , once you take ownership of the property , any of the fixtures and fittings and the improvements that have been done aren't deductible , other than , obviously , the broad right down costs of the overall asset over the time period of that . So that was interesting for me in terms of fixtures and fittings .

Then I thought , well , okay , well , if it is my home that I'm currently living in , but I'm upgrading to my next home and I want to turn down into an investment property , but I've done a little bit of Renault and I'm thinking , well , I did own it , so maybe it should be something that might have a deductibility attached to it .

But again , I was wrong in terms of looking at the legislation .

What it's clearly showing to your point , bryce , is the trigger point is that it's available for rent , and so if you're moving from your principal place to residence and you've done a nice little recitchen refurb and a bathroom refurb and so forth , unfortunately that's not going to be deductible in terms of the fixtures and fittings as part of that particular those

works .

So what you want to be doing is potentially have your first phase of tenant coming in and then , if you've got plans to do some refits and so forth , because you're obviously the sequencing is right where you've had tenants in there , you weren't living in there and then you basically , even if that tenant goes out , you can do some of that structural and more

important work if you want to upgrade the value of that investment property . And then ultimately , the way I understand the legislation , that makes it very clear that that is new investment in and that is fully depreciable as part of that particular story .

But to Bryce's point , just double check with your accountant but it sort of makes it pretty clear so disappointing that you aren't able to have those write-downs of the fixtures and fittings in the period that you , let's say , you renovated three years ago and you're moving out . You just don't get those on the fixtures and fittings .

They also won't be able to claim depreciation deductions during this time as it's not income producing Investors . Here's the crucial para . Investors are encouraged to wait until they have vacated the property and it becomes income producing before installing any new plant and equipment assets to ensure they don't miss out on these deductions .

Hopefully that really summarizes your question , edward , and for a lot of people that might be an aha moment thinking oh that can something I bought that I paid for be considered secondhand when I move out and put it on to the investment markets ? Because it's all about the timing of when these items are brand new .

So thanks to Brad for yourself with that question . Next question is from Sean Ben . This is about your very favorite topic money management with business and a partner using the more platform . Let's have a little listen to the question now from Sean .

So I use my individual tax returns , averaged to trust distributions and that's what I've done for my income . However , with the debts , I've got a few debts in the business .

I was just wondering whether I need to put that credit card debt in the mall portal and then how to separate the expenses , because obviously I've got business expenses and whatnot and what to add and what not to add . It was a query . The question was my partner and I do our banking separately .

We derive our income separately , but then we kind of put a joint budget to kind of cover groceries , car expenses and any expenses that is a joint expense .

I'm just trying to figure out whether to just kind of do a separate portion for me and just kind of figure it out that way or just really get her involved and bring her on to the mall portal and really nut down and kind of do it together . Any advice would be amazing . Thank you All right .

So what we need to understand is the reason why it's so important that we treat household income versus business income is all got to do with the tax treatments and working out gross incomes and net incomes in terms of what we're able to spend , because obviously this is about cash flow management .

Now we do know that , from a business point of view , that there are business taxes and so companies pay tax and they pay tax between , say , 25 and 30% on the earnings that they make . So we are trying to separate those earnings out .

So we say to anyone who's running as a sole trader , or the sole trader , in terms of your business activities , can be woven into one , because effectively the income that's left over is your profit .

But in terms of if you're running a small company or a small business in other ways , or a partnership , we want you to separate out all of your expenses from your business , from your personal activities , and then that way you're going to get a truer sense in terms of what is your cash flow into the household Now the same .

If you've got trusts , if you've got distributions coming in from those trusts as well , we want to see that is income coming in after tax in terms of what coming into the household as well . That is where you'll get the best value out of the platform because ultimately , more is about household wealth creation and passive wealth creation .

So that's whether that be through investing in property , through investing in shares or other accumulating assets . So hopefully that gives you a good summary in terms of why we have to separate that out to get a clearer understanding of true cash flow into the household , and then that trapping , that surplus , and then how we can put that surplus to work .

If you're getting business income , or we want to know what's declared on your tax return , if you're getting dividends and imputation credit , we want to know how that actually ends up in the household , not being flowed through more as a calculation to work out the bottom line .

So if you want to get better at that , maybe a look at a couple of your last two years tax returns as part of that , which is obviously what Sean was alluding to there .

In terms of the second part of the question , a lot of people may not realize this , but the more platform whether you be on the cloud web browser service or the mobile service you can actually have a secondary account holder , ie your partner , wife , husband , partner , whatever that is they can get access to a single platform , so you can both be working off the

same particular platform , and that's that's a little bit unique . Not too many of these sort of money management platforms or personal financial applications and that type of thing have that functionality . We do , because obviously a lot of the households that we look after are mum and dads or couples with dual income , so we want to put those things together .

So my advice to people is if you want to run more and you want to see everything globally , that's the best way to do it , where the primary user introduces access to a secondary user all through a secure means to be able to do that .

Now , if you do want to separate out your financial affairs and you want to keep separate things , well , then the other option is you can create two platforms so you can create two different independent accounts and all you're technically doing there is , when you load your assets in , you just basically put your ownership at 50% and you put your debt values at

whatever the proportion of the debt that you hold is . It just means a little bit more work . So that's why I'm a big fan of couples working together in terms of organizing their finances .

But look , if you're in a new relationship , I get it and you know , and you know you may be still saving up for a deposit for a house , but you're not formally in a strong relationship out of what it is . Setting up two independent platforms can work .

You just need to obviously separate out the assets , a portion to the interest that you hold and obviously any debts associated with that as well .

But there is an opportunity if you know , if you are fresh in a relationship or you just trying to work this out , the provisioning is wonderful . If one person is nervous that someone's overspending to the to the tune of someone else , which is why you kept it separately .

There's a lot of checks and balances along the way that you can do to make sure that you are on the same page and it doesn't . If you know , ben , we'd like to think that we married or in a relationship , a long term relationship with people who have similar money habits to us , and I think the chances are .

The Yang and Yang suggests that there's a few disparities , but there are clear ways that people can merge have transparency , have conversations around that so that they don't have to feel insecure or anxious about . I feel like it'd be a great idea on paper to merge our stuff , but how would that work in reality ?

Sometimes that's very personal and you know . But if you don't have that connection , we know that relationships that have money difficulties it's the third biggest reason why most households break up . So we want households to actually have conversations around money . It's a big part of how we set up , you know , in terms of the money management portion of our show .

So I'm highly encouraged of that . But if you again , if you're in an early relationship and you're running independent credit cards in the earlier stages , then you're probably better off having two separate accounts . But then what we want to see is emerging of those two as you get more serious in your relationship and we would love to see you run off .

One credit card because it just makes life so much easier , and one debit card , because the whole idea of setting up your 12 month , you know your money smarts and forecasting the spending you're going to do over the next 12 months is you put everything down and so just do what you said you were going to do .

You know , and as a couple , that will mean you'll trap more surplus , and if you trap more surplus , you're likely to create enough wealth that will supplement you in retirement , and that's the point here . I mean the whole idea of getting building these habits and building those routine . Routines are all about that .

Now , if you're worried about setting up two separate accounts and then moving into one later on but you want to keep all that historical data , I've got some super exciting news price .

We have been working behind the scenes for the last seven months and in terms of really building out the true sophistication of the platform as well , and so shortly and I'm hoping it's before Christmas we will be able to announce some incredibly powerful new features that will be coming into the , into the more platform , which will allow you because we love the

power have historical information , because when we can see progress being made , that's likely to continue to keep reinforcing those habits and those actions .

So we are going to bring in a feature called as updates and that will allow you to potentially move from your old spreadsheets , bring all of that historical data into the platform and then start to see all your insights in there . So a little sneak peek for our , for our TPC community . I think it's really important for them to understand that .

Remember , it's free to use . It always will be .

We've made that complete commitment to you in terms of the money , smarts and the basic platform will always be free to use , and we've got some exciting new sort of tools and features that are that are currently in development at the moment , which will be launching over the course of the next three to six months . And we are not done .

We've got huge plans in terms of what we're going to be building out for our community to be able to use this , this basically lifestyle by design platform .

If it sort of sounds like it's just by the by on the product . No , it is a major focus for us because we see it as a everyone's walking around with their phone , ben .

So if we can find a way to get their money management simplified and simple and transparent and easier and trapping more surplus because your income is your greatest wealth creation tool so if you can trap more of it and put it into assets . So so I just wanted to build that folks .

If you just go to the product features list , you'll be surprised in terms of just how sophisticated it currently is . So if you're thinking you know , well , I'm OK , but the whole idea here is we're on a mission to simplify how you have to do all this stuff , to take all the friction out , to get all the value .

So , if you can , you know it's like getting fit by sitting on a couch , if we can nail that . That you know . That's the product vision . It's basically telling you when you need to do things so you can actually get the best value out of it .

And obviously part of that is you know , is what we're moving towards in terms of all this functionality behind the scenes that's just going to allow for these rich insights and these nudges that the smart assistant that's built into the platform is going to deliver to you . So you know , if you think about a personal assistant for money management , that's .

That's the , that's the roadmap that we're on .

Ben Didn't want us to say his surname , so this person is Greg B and just wanted to give us some observation around his journey as a property investor , which supports some of the conversations that you and I have around the perspective from the property investor . So let's have a little listen .

I'm gonna read this one out , because it was an email that was sent to me . Hi , bryson , ben , I've been loving the WIDGE series and listening with interest to some of the conversations .

Your show and others that all landlords are rich , heartless bastards in brackets excuse the language who are just taking advantage of the rental crisis , and wanted to add our own recent experience to try and provide some balance .

We have a property in the northeast of Adelaide that has come up for a lease renewal and we were presented with two options slash recommendations from our property manager to consider option one , in line with what has been unprecedented rental increases in brackets .

Well , at least in the 20 years I've been investing in closed brackets in the area , apply what they called a modest increase of $30 per week to the current rent .

Option number two not renew with this tenant and place the property on the market with no changes to the property other than an outgoing clean at current market rental rates , which would see us attain somewhere between wait for it $130 to $150 per week increase .

Now , to put that into perspective , option one a $30 per week increase , would be the biggest increase we have ever applied to this property in the 18 years we have owned it . Historically , we've only ever applied increases of five to 15 bucks per week , even when re-letting to the market and in brackets across the COVID .

We applied $0 for no other reason than it felt the right thing to do closed brackets . So to apply a $30 increase would have been huge , let alone attain $100 plus . So what did we do , I hear you ask . Well , for us it was a no brainer .

We have a great tenant who has been in the property for over seven years , treats it as if it's her own In brackets . She is a single middle-aged lady who initially had her daughters at home with her but is now there alone , closed bracket , and who would struggle to find an equivalent rental in this market if we did not renew .

So it was an easy decision for us to offer renewal of 20 bucks per week still large in our eyes , but we felt fair in brackets , which we signed up within a couple of hours .

We did this despite seeing , since October 2019 , our interest costs on this property go up 116% in brackets $11,200 per annum whilst only passing along 4% in brackets $780 per annum Rental increase to our tenants over that same period .

Yes , we could have tried to recruit more from our existing tenant and not renewing and grabbing one of the many people who we know would be queuing up to secure a property like ours .

However , the combination of it just not passing the sleep tax test I like that , ben , that's one of your guests so well put recently as the right thing to do in knowing this is a long-term play where we have built up our buffers in brackets , in parts thanks to your teachings , closed brackets over the years that allow us to write out this period , do the

right thing by our tenant and still be on our path to being self-funded retirees in five to 10 years . Hang in , ben , I'm almost there . Anyway , sorry this has become such a long email , but I felt the need to share and confirm what you've been saying over the last few months . Not all property owners are bastards .

Many of us are genuinely playing the balancing game of trying to set ourselves up to be comfortable in brackets , not outrageously rich In retirement without being a financial burden on society . We're also very aware that at the end of the day , there is a person slash family , calling our property home . That needs to be treated respectfully as well .

I hope that helps what you're doing . Thanks , keep up the good work and , of course , go the crows . Greg B interesting .

Yeah , there are tenants who are doing it super tough at the moment , but what we're also seeing is a really strong narrative that's sort of driving this story that mum and dad property investors and that they don't have low incomes . The only reason why they have low incomes is because they get the negative gearing benefit , which reduces their income .

That's reported through the ATO . And so , yeah , we've been treated as an ATM machine politically . The politicians think it's easier to come after our money , but the unfortunate consequences of that is that increases the cost of us holding those particular properties and ultimately , that means that we do have to pass on some of those costs .

And that's why the narrative we are gonna be talking about in terms of small business owners because that's what we are .

And so if the narrative around mum and dad property investors is becoming toxic and the whole idea of being greedy property investors is becoming toxic , let's just remind people of the tens of billions of dollars that's invested by these small business owners that provide critical infrastructure , ie accommodation , shelter , infrastructure for over 2.4 million people .

You know , 2.4 million dwellings across this country are being offered by these property investors , these small business owners .

And so , bryce , we're gonna talk more about the results from the PIPA survey , but I just wanted to highlight one of the questions that was in the survey , because I think this brings it home at the moment that these small businesses are super challenged in a lot of respects .

Now , in Greg B's case and I know in my personal case , my interest costs have gone up through the roof , but I've been respectful , and Bryce also , you're saying the same thing . So now , in terms of , here's the question if your costs have increased , how much have you passed on to your tenants to recover those increased costs for those out-of-pocket expenses ?

55% , and Greg B is in this case said less than 10% . So they've recovered less than 10% . So , in other words , 90% of the cost that they're born on that property is being borne by them in terms of finding that out of their own budget . And then a further 27% between 15 and 25% . So a quick math sort of says to you around that sort of 82, .

83% of small business owners are effectively only passing on up to 25% of the increased cost that they've experienced . Now , that's extraordinary . I mean , if we were treated like other small businesses around the country , we would have politicians saying this is not right , we've got to fix this . We've got to fix this problem .

But that's the reality that we're dealing with at the moment in terms of a lot of small business owners . These mum and dad property investors have had to subsidize their rents to maintain and hold on to their property , but they are passing on a lot of that in terms of subsidizing rent for their current tenants .

But I guess to the point that you just raised and to the point that we're trying to create on this podcast , is that property investors are no different . They're small business owners who are absorbing costs and overwhelmingly , based on that survey you've just described anecdotally what Greg Bees just shared there .

They disproportionately , very disproportionately , passing those on . So I just thought there's obviously no question there . It's just an observation , ben , but I think it's worth sharing with our community that that is just one story and I'm sure we'd have a whole ton of people being able to write in and send me an email with a similar story .

So hey look , and Greg is a wonderful human . He's put his heart first and said what's the best interest of a tenant who I've had for seven years ? And they're a person , they're not a thing , they're a person and that's how I'm gonna treat them . So well done , greg on that .

And , mate , you are definitely going to be on your way to success because I know your portfolio intimately . So well done , great questions . Just wanna say thanks to those folks who have contributed today . I think there's obviously some really good insights . I wanna encourage each and every one of you .

If you have cost to living questions , you have something to do with interest rates . You have any question that you've got to your portfolio . If you go to thepropertycouchcomau , there is a little widget there . It's called Speak Piper Ciello . It's on the side and everyone's done Zoom calls and Teams calls .

So everyone's used to speaking on computer now , ben , so it shouldn't be intimidating to anyone .

So if you've got a question that's specific to you that you think that we would answer that is generic , that will benefit the community , because I get a lot of questions , ben , that are so super narrow and specifically for the person and we wanna be able to answer your question in a way that it benefits all the people listening at the same time .

So if you've got a question that you think is specific to others as well that you wanna answer , please go leave those and we will read those out in an upcoming episode of the podcast as I pivot to my life hack today , ben . My most favorite social media platform is , without a Doubt , youtube . I spend a lot of time on YouTube .

I think it's the greatest gift to all of us that we can go and learn something from someone on YouTube . I even watched MrBeast with the kids , ben , because I'm learning something from him too . Let me promise you , the guys are jugging on when it comes to YouTube . But there is a say .

Quite often there's videos that come to the feed that I wanna watch later , when I'm waiting for at the entire restaurant or some waiting for my order to come through , or I'm waiting to pick up the kids , or something like that .

So I just wanna remind folks that there's a feature where you can save it to watch later , where you can go back later and some of you might go oh yeah , no worries .

Well , you can actually create other playlists too , because sometimes I find a video that's in a particular category , like investing , or I might see something that comes up that our peers are doing . I put it into a peers so you can put them into all these folders so later on .

So just a reminder , folks , that there is a watch later and you can re-put that into another folder as well , to get a little more specific as well as easily removing them later . So that's my life hack today , ben . If you're a YouTube consumer , like I am , make sure you use the playlist where you're seeing a video . It's super easy .

Watch it later , get back to it when you can . Are you a big on YouTube , ben ? On your phone or just on your desktop ?

I put the phone on the dashboard there and I can basically watch whilst I'm rowing , yeah , and so , yeah , I'm watching a hell of a lot of AI stuff and also a bit of classic Warren Buffett essay stuff at the moment and sort of some of that fundamental stuff . So , no , I love it , it's . You know .

I don't spend a lot of time sitting there watching YouTube on the television . It's my go to , you know , and it's learning what I like , so I don't mind the algorithms giving me the latest stuff on chat , gpt and all of the AI and smart assistant stuff which I'm deep diving into at the moment .

I sat in co-chair of speaking with property counsel of Australia . So , look , some of the key takeaways I got from . You know , presenting at that particular inquiry was just one of , I suppose , the lack of understanding and the depth of knowledge that you know most of the politicians have around this situation .

It's really clear that you would have recency bias , and a general bias is if all you're hearing from the tenancy associations , who are very well funded , who are obviously lobbying government all the time , you hear how about this case study , this person just had a $120 increase , this person just had a $60 increase and this person was treated like this and this

property's minimum standards were like this . It was really refreshing . This was potentially . We had a couple of great property managers talk about the challenges that they're facing with the minimum standards , that there's lots of great properties out there but they don't meet minimum standards because they're very old and so they're not being let .

And the property managers are saying we could let a lot more properties out there if you would just reduce the minimum standards from the current levels that they are . These are safe properties that you can enjoy quite a bit , but they don't meet the modern standards .

So that's another example of where you know we're desperate for stock here in Victoria , that everyone knows that Victoria is the worst place to invest in Australia at the moment and that's only going to get worse with the current situation . So , yeah , we did a lot of lobbying in a round . You know what's needed .

We've given those recommendations and I do have the transcript from that . So we might sort of also put a you know sort of a link to in the show notes to that transcript there was . It was live broadcast as well . So I'm seeing whether I can get a copy of that video as well . So I'll keep you posted .

But yeah , we're , you know we're , I'm wearing my pick a hat . I'm doing a lot of lobbying .

I now want to , I'm trying to get representation and a presentation at the federal inquiry that's being led by the Greens , because there's just a lot of misinformation in there and I think one of the big takeaways that I had for the you know these , these ministers and members of parliament , was that it is a case by case basis .

In terms of what we just heard from Greg B that you know his costs have gone up $11,000 , but he's only put the rent up $20 a week and so unfortunately for some people they have to put the rent up as high as they can get it to maintain their asset , otherwise they could be selling at a loss .

We also know the incredible costs to buy property high stamp duties and a high exit fees as well . So you know , just that is the context , and I I just feel , like you know , as I said , that a lot of the narrative has been very much on the renter side and giving renters more power and more rights .

But the consequences , the unintended consequences , and the risk is , if we don't see more investors coming into the market , there's going to be less stock for for those tenants and those renters to be able to choose from . So that's super concerning from where I sit .

You run a strong economy and it just throws off tax receipts and then that money is then able to obviously be , you know , reinvested back into the critical infrastructure and the services and so forth that we need . What we've got here in Victoria is record levels of debt and we've got the highest level of debt per capita .

So , you know , when you put it into actual people terms and what's even worse about that , from a per capita level , we've got basically double the next state .

So in other words , for each person in in in Victoria , I think we've got about $27,000 worth of debt and the , the lit , you know , the one underneath that is something like $13,000 or something on those lines . So the problem with this is that we've we've ultimately got to pay for it . I think we're paying about $12 million a week in interest , you know .

So that's interest costs , so that's money that we can't spend on further infrastructure or further services and the like . So now I've been obviously very critical of the economic management and unfortunately that means Victoria is going to have some difficult and , you know , challenging times ahead to try and get that debt under control .

And so there's obviously ways in which they'll do that . They'll reduce the number of public servants and government workers , but they're also going to have to reduce their spend . But they're also going to have to tax us more in Victoria , and that's what we've seen , you know , land taxes going up .

There's another 600,000 people who are going to experience land tax in Victoria where , effectively , land tax kicks in at $30,000 , $50,000 fresh off . So you can understand my problem , but unfortunately Dan Andrews isn't going to be held accountable for that .

He's going off into retirement and that's why I'm disappointed in terms of the leadership that he's shown through the State of Victoria .

So , as I said before , folks , we love it when you the podcast for the people , when you actually get your questions . We want to hear your voice and hopefully we've given them the insights that you were hoping for , mate , and for those of you who are watching on YouTube , you've obviously see what Ben's about to do . For those of you , that audio he is now .

He did say before he's wearing his picker hat , but he's not . He's actually wearing his Magpies hat . So , uh , he's wearing his Primeus Primeus . So last time we have to talk about this for a while , Ben , but until next week .

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