Our annual property update + Don’t believe the headlines + Sharing the mortgage load

Our annual property update + Don’t believe the headlines + Sharing the mortgage load

Highlights from this week:

  • One third of Aussie are willing to co-share
  • A GST ‘loop-hole’ revealed
  • Our annual property update
  • “Avoid panic” says one expert
  • Business guru impacts a property business


“Avoid panic” says one expert – Josh Masters

Kevin:  There’s always mixed reporting about the property market, but I think we have to understand that with every bit of bad news, there’s always some good news as well. But we also have to remember that bad news sells newspapers and sells stories. Unfortunately, a lot of what we read is believed and is seen to be the whole story.

I want to talk to Josh Masters from BuySide about this. Josh has written a number of articles, one of which we’re going to talk about now.

Good day, Josh. How are you?

Josh:  Good day, Kevin. I’m doing very well.

Kevin:  I was telling you prior to this interview about the conversation I’ve had with a number of elderly people at a conference I’ve just come away from today, and they’re concerned about the market. Unfortunately, a lot of the press we see is all doom and gloom, bad news, the market is plunging, and all this kind of stuff.

So, I can understand why they would be concerned, but we have to balance it up. There are a couple of reports that I know we’re going to talk about now that have just been released. Talk about those.

Josh:  Kevin, it’s important to note that the media feeds on hype, and the more they can go into an exaggerated viewpoint, the more papers they’re going to sell or placements they’re going to sell. I think recently, we’ve seen a lot of that come out. But to bring it back into perspective, there have been two great reports that CoreLogic have brought out recently, one around the volatility of the market and which price points really outperform versus others.

The graph that I pulled up was the fact that the cheapest margin in the price brackets actually shows the least volatility over time, which means if you want to preserve your capital, it’s often good to get into the cheaper end of the market. It doesn’t go up as high as some others do, but it also doesn’t dip, and it very rarely goes into negative territory.

On the flipside, we’re seeing some of the most expensive properties right now really suffering, and you have to ask why? But in history, it’s actually been some of the most expensive properties that have been the most volatile. So, in good times, they really go up by a lot, but in bad times, they actually fall into negative territory quite badly.

A lot of the media releases that we see these days, when you actually dig into where this negative territory is coming from, they’re actually highlighting the fact that it’s probably more so in the $3 million to $5 million price range. And that actually is reflected in CoreLogic data.

Kevin:  We’ll get a copy of that graph too, with CoreLogic’s permission, and we’ll put it into the transcript. This interview will be transcribed, so go down below and you’ll see the graph that Josh is talking about.

Mate, pull this into perspective for me – maybe relate it back to what happened around 1988, 1991, 1992, that era.

Josh:  Look, the property market, as much as people like to say it always goes up, it doesn’t. It does fall into negative territory. And it’s important to go back in time and look at the historical data and see where the dips have occurred. I think the second chart that we looked at with CoreLogic highlighted the declines in the market – for brief periods.

And if you look back far enough, you go back to 1992 when Hawke and Keating were in government – or at least Keating anyway – there was the recession that we had to have, as they said. And that was when we saw the greatest declines in the property market in Australia in the last 30 or 35 years, which actually totaled around 11.6%.

Kevin:  Yes, I think that was around 1988, 1991, something like that.

Josh:  You were saying you just got into real estate at that time, and you had to go and tell people that their houses were worth a lot less. And it would have been quite significant at that time, because this is just an average figure, 11.6%.

But it’s good to keep in perspective when people say “Oh, the markets are falling,” we see the stock market go up and down like a yoyo, but to think that the most decline in the market was 11.6% for property, it’s actually not too bad in retrospect.

When we look at the other periods in time as we go through from then until now, we see the average being probably around 6%. Now, that’s really important because when you look at today’s decline in the markets that have happened recently, we’re at probably 4.5% or 5%, let’s say, and people are wondering “Okay, how long is this going to keep going? Are prices going to start going up?”

It’s easy for us to get stuck in a mentality that this will go on forever. You read these newspaper reports and the sky is falling and it’s a bloodbath. But the reality is we’re probably reaching an average situation that the declines have reached in most other periods of time, and I expect to see some natural price growth coming back into the market.

We’re in winter now; maybe that will happen in spring. We don’t know what we’ll happen, we can just look at this data and say “Okay, what’s been the performance over time?”

Kevin:  Yes. The good news is that unemployment figures are quite good, inflation is quite good, interest rates are at record lows, and I think reflecting back to the last time the property market had a major drop was about 30 years ago.

Josh:  That’s right. And I highlighted in this article, there are a lot of negatives that you can play on out there – affordability, oversupply, etc. But this is Australia’s 27th recession-free year. Unemployment back in the recession in 1992 was around 10.7%; now it’s at 5.5%. We have low inflation, we have record low interest rates.

And what’s more, the banks are assessing us at around 7.25% before they even give us a loan in order to make sure that the economy is resilient enough when those rates do rise – and they will – to be able to afford it.

Kevin:  On balance, everything does look quite good. It’s not boom time, but it’s certainly not disaster time, either.

We’re going to put those two graphs that Josh has mentioned into the commentary below here. They come to us with the compliments of CoreLogic, and we thank them for allowing us to use them as well.

Josh, it’s always great talking to you, mate. Thank you so much for your time.

Josh:  My pleasure, Kevin. Thanks for having me.

One third of Aussie are willing to co-share – David Dawson

Kevin:  With housing affordability the way it is around Australia, no doubt people are looking at creative ways to get into the market. We’ve talked about that in the show in the past in terms of co-ownership, so I was interested to see the other day that there is now a dedicated website called Kohab that helps people do exactly this, share the cost of purchasing a property with other people. Joining me now is one of the co-founders of Kohab, David Dawson who is also the CEO.

David, thank you very much for your time. Interesting concept, this. Certainly not new, but it does actually bring with it a few areas that we need to be aware of before we jump into this.

David:  Co-ownership has been around, I think, for 260 years since tenants in common. So, it’s certainly not new, but more people are taking advantage of buying together, because as you said from the outset, affordability is beyond most people.

Kevin:  So, tenants in common, explain how that works.

David:  Tenants in common is one of the two traditional ways in which people in Australia will buy property – either that or joint tenants, traditionally. Tenants in common basically allows two, three, or four parties to buy together and essentially own a portion of an asset if they’d like.

So, couples, married couples, friends, it doesn’t really matter. Buying as tenants in common will own the asset in common as opposed to owning, and perhaps on their passing, joint tenancy goes straight to the next of kin.

Kevin:  And also, tenants in common were able to split the ownership in certain percentages.

David:  Yes, you can split it in any way you want. So, your property, the property portfolio identifier number basically just has a percentage following it once it’s registered with the land titles office based on the percentage of ownership. You need to make sure that you do do that, though.

Kevin:  One of the big benefits of this, of course, is deposit. Putting together a deposit is one of the hardest things. How do the banks look upon coownership? Are they fairly relaxed about it?

David:  43% I think is the latest number of tenants in common contracts that have more than one person on the title. So, they’re very used to looking at it. I think it comes down to making sure that when you do get a loan, you get a loan that ideally is only assessed on your ability to service your portion of the debt as opposed to your ability to service the whole debt, which is why structuring it the right way allows you to have a smaller deposit if you’re buying with someone else and then only be accountable for your portion.

Kevin:  If you had three co-owners in a property, it’s likely you’re probably going to have three different lenders, or do they normally go to the one lender?

David:  It’s easier to go to the one lender. It can be done, again, because essentially, the asset is split three ways, but the reality is banks don’t really like it, so it’s probably easier to go to the one lender.

Kevin:  Yes. I guess getting into this, the agreement that you would have upfront is very important. Many times, I’ve seen friendships come unstuck, even relationships come unstuck over the decisions that need to be made around property. So, setting that agreement in place is absolutely critical, I’d imagine, David.

David:  Yes, the first thing that we recommend before anyone buys anything, before they even start looking, is to really understand your expectations and the expectations of your co-buyer or co-buyers and really be clear on what that is. Because as you said, it’s a big purchase, and unless you’re clear and flexible and upfront about what you’re looking for, then it can end badly.

Kevin:  Yes, it’s a great way to turn a friend into an enemy by not getting your agreement straight. And as part of the agreement, having an exit plan or a strategy that you talk about upfront in the event that someone wants to sell?

David:  Yes. Again, as before, tenants in common, co-ownership has been around for centuries, but the reality is I would treat it as a business partnership as much as a home or an investment purchase. So, being clear on what happens if one person wants to leave the group, how that’s funded, how the other people buy in, or is there a sunset clause in there?

Co-ownership doesn’t have to be a forever thing, it can have a sunset clause of whatever period you want that basically says “Right, this is going to get me on the ladder, but at a certain point in time we’re going to all agree to sell the asset.” And that might be one person buying the other out, or it might be putting it on the open market for full sale.

Kevin:  Yes, co-ownership, of course, brings with it the sharing of all of the costs, and that agreement would come into play if someone doesn’t meet their own costs. The other people have the option to buy them out, David.

David:  Yes, that’s correct. The co-ownership agreement that we have on our site – which is kohab.com – basically is a master document which then once downloaded and reviewed, you can strike out the parts that don’t relate to your relationship or add others in there, but it’s a pretty comprehensive agreement and a good place to start.

Kevin:  Yes, I’ve checked the website out. There’s a lot of really good information in there, lots of tools to help you do this. As David just said, the agreement is there, all the information about even making it easier to get a loan and get the insurances that you need. The website is called Kohab.com.au. David Dawson has been my guest.

David, thank you very much for your time.

David:  Thanks so much for having me on. I appreciate it.

A GST ‘loop-hole’ revealed – Ian Rodrigues

Kevin:  We’re going to answer a question now about GST and development. We received an e-mail, and the gentleman doesn’t want us to mention his name, and that’s fine; we’re happy to do that, so we’ll just take it as noted. The person joining me to answer this question is Ian Rodrigues. Ian is pulled up on the side of the road somewhere. Ian is from Bishop Collins.

Good day, mate. How are you doing.

Ian:  Great, Kevin. Good to be here.

Kevin:  You’re traveling somewhere in the world, but anyway, I’ll just quickly read through this e-mail. This person writes “Our intention was to buy land, build townhouses, and sell for profit. Sales have been slow. We built the townhouses in 2013 and claimed the GST on the build. We have sold a couple of the townhouses and paid the GST on the sales. We have some townhouses left to sell and have not paid the GST claimed back yet on the townhouses that we still hold. These have been rented continuously since 2013 up until now.”

There are three questions for you, Ian, and I’ll give you the first one: “When or do we need to pay back the GST claimed?” Do you want me to give you all three questions firstly and then we’ll go back and answer them? Is that the best way?

Ian:  Let’s get them all in, yes.

Kevin:  Okay. The second question was “Do we still need to pay GST on the sales since they are now more then five years old?” And the third question: “If we keep holding them, can we claim the Div 40 depreciation on these considering we haven’t paid back the GST?”

Okay, first question: “When or do we need to pay back the GST claimed?”

Ian:  Really, to understand what’s going on here, GST has been around a while, but just to recap some of the very basic points, GST is built residential property, and residential property of itself is not GST-able, so it’s not a taxable supply. So, when you buy an existing house, it’s not a taxable supply, so GST doesn’t apply as a simple rule.

But GST applies to new residential property. So, if you’re building new residential property, as our questioner has said, he’s claimed back the GST, and of course, when he sells new residential property, he has a taxable supply and he pays the GST.

What’s happened to our gentleman here is he’s in that in-between phase. He set out with the intention of building, claiming GST, selling, paying GST, and now he’s ended up keeping some of them, presumably because of market conditions. He hasn’t been able to sell them so he rented them.

So, he has to deal with a GST adjustment event. At some point, he either needs to pay back the GST he claimed on those properties, on building them, and retain them as residential property. So, he needs to get advice from his accountant as to when that’s appropriate as to his intention has changed.

Kevin:  So, there’s no specified timeframe on that one?

Ian:  I don’t think there’s a timeframe, Kevin; it’s more about the intention of the person. So, if you no longer intend to sell them, then really… If he did the same deal with the intention of never selling them and buying them to rent, he should never have claimed the GST.

Kevin:  Okay. From what I can read here, it clearly is an indication that he does still want to sell them even though he’s got them rented.

Ian:  Correct. So, that’s okay; his intention is still to sell them at some point, either rented or vacant.

Now, an opportunity that arises with the way the GST legislation works is that once you’ve rented a residential property for five years, it’s no longer considered new residential premises, which means that at the end of five years… And you have to get your dates right here; it’s very specific about when these dates apply from. From when it’s first available for rent, I believe, is the correct date.

If he then sells it after that period, then his obligation to pay GST on the sale price has disappeared.

Kevin:  Okay, that probably answers his second question, doesn’t it? “Do we still need to pay GST on the sale since they’re five years old?”

Ian:  But to be clear, he does have to adjust the GST that he already claimed.

Kevin:  Yes, okay.

Ian:  So, he certainly doesn’t have a GST on the profit, on the value added, which when you think about it, on something that cost you $500,000 excluding GST and you’re selling for $800,000 including GST, it could be around $30,000 of GST net that he’s better off.

Multiply that by five townhouses or whatever you’re working on, and selling it a month or two the wrong side of that date could be a major problem. So, getting advice here about how these rules work is absolutely critical.

Kevin:  Third question – I don’t know if it still applies. “If we keep holding them, can we claim the Div 40 depreciation on these?”

Ian:  Again, if he’s built these properties and now earning income, I believe, yes, he should absolutely be claiming it. It gets really complicated for him here, because you’re entitled to claim these things, but when you sell it, you’re going to need to determine are you selling it for a capital gain? Has your purpose changed, or is it still an income account?

GST is one set of issues, Kevin. Claiming new construction allowance is pretty straightforward, but how he treats the profit on these sales is a major issue. Is it trading stock, is it for pure profit, or was it for capital gains?

This is where people need to get really good advice from their accountants, because the day one that you claim back GST, you really said “I’m setting out to make an income profit here.”

Kevin:  Yes. It’s all about the intent, isn’t it?

Ian:  Right at the beginning. So, even if it changes along the way, you now need to pay back the GST that you claimed and say “My intention has changed; it’s now capital.”

Kevin:  Yes, excellent.

Ian:  So, he has three sets of issues to deal with, and the fourth issue, of course, is what makes sense in the marketplace as a commercial transaction – “Should I be holding? Should I be selling?” – which is the most important decision. But him getting his three-way tax obligations right can add significant value or cost him a lot of money in tax.

Kevin:  Thank you very much, Ian. I appreciate you pulling up on the side of the road to talk to us and for answering that question as well. Thanks for your time, mate.

Ian:  Our pleasure. Thanks. Bye.

Our annual property update – Simon Pressley

Kevin:  At the end of the financial year as we kick into another financial year midway through this year, let’s have a look around Australia at what’s happening with the property markets? Our midyear market wrap with Simon Pressley from Propertyology.

Good day, Simon. How are you doing?

Simon:  Yes, really well, Kevin. The year is flying past.

Kevin:  Yes, isn’t it ever? Halfway through the year already. Incredible.

Let’s have a quick look around Australia. Do you want to pick, say, Sydney to start with?

Simon:  Yes. Over the last 12 months, it was just released in the last couple of days by CoreLogic, the dwelling value in greater Sydney has declined by 4.5%. I don’t think there would be too many people who would be greatly surprised by that. Whilst none of us like to see property markets declining, this sort of thing has probably been on the horizon for a couple of years in our big city.

There are parts of Sydney that have seen greater than that 4.5%, more between 7% and 8% where a combination of affordability or too much supply has had a bigger impact than the broader city.

Kevin:  It’s hardly a crash. Would you call it more a correction?

Simon:  You could call it a correction. I’m not totally easy with that word. It’s probably just more of a reflection of those who could afford to buy in Sydney had done so well before 2018, and there are very few buyers in Sydney who either can afford it or have the confidence to do so. That’s probably more of a reflection of what it is. But that’s creating some opportunities elsewhere.

Roughly 20,000 people left Sydney last year and migrated somewhere else, I’d suggest largely because of affordability. To date, Queensland has been the biggest beneficiary of that, but that doesn’t necessarily mean all of Brisbane. A large chunk of those 20,000 people leaving Sydney are seeking housing affordability also, which increases demand in places like South East Queensland.

Kevin:  Yes. We’ll deal with the regional markets separately, I think. Let’s take Brisbane as an example. South East Queensland, you’ve got the Gold Coast, Sunshine Coast as well. What’s your view on that in terms of what’s been going on, and where do you see it headed in the future?

Simon:  Yes, Brisbane… Most of the capital cities, actually, have had that 1% to 3% price growth over the last 12 months, which isn’t spectacular but is still heading in the right direction.

I think what investors need to be mindful of is each capital city has its own unique cycle. Sydney, Melbourne, and Canberra, their growth cycles are finished. Canberra hasn’t declined but its growth cycle is certainly over, and Melbourne has started to decline. Hobart is well and truly in the middle of its cycle; it’s been well publicized how well that market has done. But the other cities, Kevin, are yet to commence their growth cycle.

Perth appears to be stabilizing. Darwin has some horrendous problems there. We might get back on the show and talk about that at a later date, but it’s in all sorts of trouble. Adelaide and Brisbane, their growth cycle hasn’t commenced. I’d love to say that those two are going to boom. I don’t feel that way. But the positive thing is the growth cycles are ahead of us. It’s not doom and gloom everywhere.

Kevin:  You’re talking there about Brisbane. What about Gold Coast and Sunshine Coast while we’re staying in South East Queensland?

Simon:  Both Gold Coast and Sunshine Coast have actually performed better over the last four or five years than Queensland’s capital city, and that’s a direct reflection of their economy. There have been more infrastructure projects on both coasts. Part of the Gold Coast infrastructure projects have been related to the Commonwealth Games. There are no Commonwealth Games in the Sunshine Coast, but there just are more projects and it’s probably done a little bit more to promote its tourism than what Brisbane has.

I think that both the Coasts, their outlook is still healthy without being spectacular. I don’t foresee a boom on the horizon anywhere in South East Queensland. That’s not to say it doesn’t have really good fundamentals; a boom could happen, but booms happen for a reason, and the reasons that cause a boom aren’t evident at the moment.

Kevin:  The Melbourne market, we’ll skip down there. That’s still a very healthy market and predicted to be the biggest market in Australia.

Simon:  It is definitely a really big market. We’ve now had, however, seven consecutive months of price declines in Melbourne. They’re mild declines, so again, we’re not talking crash, it’s not doom and gloom, but it’s running out of steam.

And I think it’s important for someone looking to invest to recognize that when a growth cycle ends, it’s usually several years before the next growth cycle starts. So, if you’re an investor, always appreciate that Australia is a massive country, it’s always a good time to invest; the question is not when but where. And it’s never a good time, I feel, to invest in a market when a growth cycle has just finished, because you could be sitting on an asset that remains flat for many years.

Kevin:  You mentioned Darwin – and that is subject for another conversation, I guess – and Perth. It’s good to see Perth starting to emerge.

What about Adelaide? How do you feel about it?

Simon:  Look, Adelaide has always been that quiet market that never gets a lot of attention but it just chugs along and consistently does okay, doesn’t it? I can’t recall the last time Adelaide had a significant period of property price declines, and you have to go back a long way when Adelaide had a really strong couple of years as well. But it’s a very stable market.

We know that earlier this year, there was a change of government. I think it was 15 or 16 years or something that south Australia had the one state government. So, Adelaide is a “watch” for us. We have no reason that its continued mild price growth won’t continue for some time. Whether that actually gains pace, a lot is going to depend on some initiatives of the new state government.

Kevin:  What about some of the regions? I know you and I have spoken many times about how strong some of those regional markets are when you compare them with, say, the cap city markets. And it was an interesting conversation you and I had in a recent video where you looked at greater Sydney compared to, say, Ararat in Victoria.

Some of those regional areas are really quite healthy in terms of growth and return.

Simon:  Absolutely, there are. The regions will never get the positive attention that they deserve. Unfortunately, the only time the broader property media tend to talk about a regional market is when it has performed poorly. But there are a lot more city councils in regional Australia than there are in capital city markets.

If you’re looking to invest in 2018 or 2019, I’d suggest you take your focus away from all eight capital cities and start to understand the fundamentals of each of the regional markets. That doesn’t mean that every regional market is a good one, but it never means that every capital city is a good one either, does it, Kevin?

Kevin:  No, it doesn’t. That’s right.

Simon:  Learn the fundamentals. The affordability is the most exciting thing. Regional markets have always been affordable, so just picking it because it’s affordable doesn’t necessarily mean it’s a good decision. But develop an understanding of the individual economic profile of all those regional locations, and then you’ll get a greater appreciation of the wonderful opportunities.

We’ve been active in a number of regional markets, helping our investors for a good few years now. We anticipated that there will be a period of time when capital cities broadly will be underwhelming, and we’re here now.

Kevin:  Let’s move away from the markets and talk about some of the influences on the market. APRA has played a big part in that, and the economy as well, Simon.

Simon:  It has, and I’m not going to shy away from it; I’ve become increasingly angry with APRA. I know it’s well intended. It’s a reaction to some concerns that legislators had about Australia’s most expensive market and the big mortgages in Sydney. So, it was well intended but poorly executed. The changes affect the whole of Australia at a time when large parts of Australia actually needed a bit of a hand up. Instead, they got a big piece of four-by-two whacked around the ears.

If people around Australia other than Sydney and Melbourne have been saying for a few years “Where’s my growth? When are we going to get it?” well, the APRA intervention certainly did nothing to help that.

Well intended, but at the end of the day, money makes the world go around. Whether it’s the salaries that we earn or the money that we borrow, one way or the other, it still gets spent, and it’s that spending that creates confidence, creates jobs, creates wage growth. So, when you really tighten credit, the wage growth that we want, it’ll have the opposite effect in my opinion.

Investors need to be aware banks are still approving loans, though. They are profit-making machines, the biggest profit-making machines of all companies on the ASX and will always be that way. So, they want to lend money.

It just means if you are motivated and proactive about your financial future and you want to invest, instead of giving five or six bits of paper, you might need to give 15 or 16 bits of paper. But if you’re creditworthy, you will be approved.

Kevin:  Yes. Simon, a very interesting wrap there on the national property market. The takeaway for me was a comment you made earlier in this interview about the opportunities to invest in property. It’s not so much when but actually where you should be investing.

Simon:  Yes. Australia is an extremely diverse country. There are always opportunities. The world’s most famous investor Warren Buffet has many good quotes. One of them is “A time to be fearful is when everyone else is greedy, and the time to be greedy is when everyone else is fearful.”

So, here and now when there’s a lot of doom and gloom in the property media – that’s mostly on the back of what’s happening in Sydney and Melbourne – it’s actually the best time to be investing. It’s not the timing; it’s the location. Get that right and take advantage.

Kevin:  Yes, a great message. Thank you. Simon Pressley from Propertyology. Thanks again for your time.

Simon:  Thanks, Kevin.

Business guru impacts a property business – Mark Bouris

Kevin:  My next guest is Mark Bouris. You may recall that Mark was the host of Celebrity Apprentice Australia, also founded Wizard Home Loans, and is the executive chairman now of Yellow Brick Road. More recently, we’ve seen him on Channel 7’s news series The Mentor.

Now, when the first program went to air, it featured a struggling family business on the north side of Brisbane, which was then called Ubiquitous Realty. And in the promo for that show, which was the first in the series, as I said, Mark Bouris actually said that maybe it could be the worst real estate agency in Australia. Mark joins me to talk about that.

Good day, Mark. How are you?

Mark:  Good morning. I’m good, thank you.

Kevin:  That was a bit cruel, I thought. Was it justified?

Mark:  Well, it was at the time when I first looked at the iPad. On my iPad, I looked at their promo stuff. I was gobsmacked. I couldn’t believe it. To some extent, when I looked at their figures, I thought “My god, these guys are hopeless.” But that wasn’t the case once I got to know them.

Kevin:  Isn’t it funny that that is the case? I think in talking to Stephanie Wimpenny, who was the person most used in the series, such a lovely young person, but the reason they came up with the name Ubiquitous is a story in itself, isn’t it?

Mark:  I think that’s what floored me in the beginning, was the name. They heard the word spoken on one of the breakfast shows in the morning and they said “Well, that name sounds intelligent, why don’t I look it up and see what it means?” and then it means everywhere or in all places, and they decided that was a good name for them. That was my whole point.

When I first said this could be the worst real estate in Australia, it was because I looked at the promo stuff and there was Stephanie channeling Steve Irwin or Bindi Irwin, and I thought “Well, that’s crazy.” And then I saw the name Ubiquitous, and I thought “Oh my god, what sort of name is that?”

But once I got to meet them – and I got to meet Sharon and Eric and Kurtis and Stephanie as well – I started to get a good feeling about them and I thought “I can work with them, and I can turn them around,” which is what I hope I’ve done.

Kevin:  Yes. The mere fact that you had to look up the name probably tells you a lot about why you shouldn’t use it. It’s even a difficult name to spell.

But moving off that now, what did you find when you started to work with them? Was there anything out of the series that is demonstrating a common strand with these businesses that are struggling, Mark?

Mark:  There’s one common strand, and that’s structure. I think that combines with the importance of how a family interacts, so if it’s a family business, you need to have more structure than you ordinarily would have, because what happens is – particularly in their case – they operate out of home. So, you never know when you’re doing business and you never know when you’re being family. And they’re totally different dynamics, so you need to have a structure.

In that episode, one of the things I got them to do was actually do a video of themselves training themselves. And what I found out is they don’t have any idea about how to train, so what I’ve been able to do is organize training for them.

They need structure in their business about how they approach a customer, a client, someone they’re trying to list – how they approach them, how they talk with them, how they deal with them and then how when they open up the place for inspection, what they say on the day. And now they’re doing very well. They are very structured.

And by the way, Stephanie is a super bright young girl and really willing to learn. I quite enjoyed being with them, and I still talk to them every couple of weeks now by e-mail. And they still come back to me and ask questions and tell me how they’re going. They’re doing very well at the moment, too.

Kevin:  It’s a tremendous thing that you do in the series The Mentor itself, but I know that apart from the series, you do a lot of mentoring that we never get to hear about. What sparked the interest in this for you, Mark? Did it come from an early age?

Mark:  Not really so much in terms of mentoring, but one of the things I know about small business in Australia… I’ve had lots of small businesses, some successful, some weren’t, some became really big businesses, some just stayed small businesses. And I know the struggle.

I thought “I’ve got some time, what I’d like to do is actually try and pay it forward.” Because lots of people helped me in the past. In my view, the difference between my business that’s been successful, and other people like the Wimpennies or Stephanie and her family, the Lisches, not being as successful as my business was is because I had someone always to point me in the right direction. Let’s call it a mentor for want of a better word.

So, I thought “Okay, I’m going to start picking people out and I’m going to start mentoring them.” That’s what I did, and that was the basis of the show. I thought it would make a good television show. There are lots of Australians with small businesses in this country, and they’re all looking for someone to give them a hand.

I thought “How can I amplify my advice, scale it up? I can’t be doing one-on-ones all the time, I don’t have time for it.” And I thought the only way to do it is to have a TV show, and the TV show was a way of amplifying or scaling up the problems and scaling up the solutions.

Kevin:  I guess there’d also be a lot of learning in it for you as well, wouldn’t there?

Mark:  Every single time I go into a business and I see things that are really obvious, I give myself a tap on the shoulder, and sometimes an upper cut, and make sure I take that back to my own business and say “Okay, what are the fundamentals? Can we go back to the beginning?”

Because my businesses are pretty mature, but equally, I still have to keep going back every three or four months to the fundamentals to make sure that I’m doing the very things that I’m advocating to others. And you know what? In big businesses, we have as many problems as small businesses. Our fundamentals slip away very quickly.

Kevin:  Mark, it’s great talking to you. Thank you so much for giving us your time, and full marks to you for what you do with The Mentor. I think it’s a great series, and I know that Stephanie and her family are really reveling in that all the time.

You mentioned there about the training that you were able to organize for them is with another real estate agency almost in their area.

Mark:  Matt Lancashire, and Matt is one of the leading real estate sales guys in Queensland and in particular in Brisbane. Matt has been fantastic, and Matt has been giving me reports as to how Stephanie and Sharon are going. Particularly Stephanie has not missed a session, not one week. And he said she continually parlays back to him all the time about what she’s learning and keeps asking questions.

I’m very impressed, and I’m actually very thankful for him for doing that for them.

Kevin:  We all are. Mark, thank you so much for your time. It’s great talking to you. Thank you very much.

Mark:  You’re welcome. And go Moreton Bay Realty.

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