When and how to dump a dud property + The APRA type boom + Protection in a relationship bust up

When and how to dump a dud property + The APRA type boom + Protection in a relationship bust up

Highlights from this week:

  • How to protect your portfolio in a relationship break up
  • The pros and cons of the Victorian Government’s affordability scheme
  • How some auction buyers are paying more than they need to without even knowing it is happening
  • Perfecting the ‘dud property’ detector
  • What could be halting your portfolio growth and why it’s not your fault
  • Perfecting your auction bidding strategy
  • Traps for young players starting out


Traps for young players starting out – Shannon Davis

Kevin:  Shannon Davis from Metropole Property Strategists joins me. We talk about the restrictions that the banks are currently putting on lenders is probably one of the biggest concerns for property investors right now.

Shannon, as I read it, the banks are really toughening up, looking at where they’re lending, how big their books are going be. In fact, in some cases, some of the banks are saying they just simply won’t lend any more to property investors.

Shannon:  Yes. I was recently talking to an investor client of ours, and they got asked for a letter from his in-laws that they could live rent-free in their house in order for the loan to go through. That was the extent of how much. And this person was well capitalized and on dual income, so they’re really tightening it up. In some areas, it’s been referred to as an APRA-type boom in that the tightening up actually has the wrong effect on prices and making the demand even more.

Kevin:  Yes. There’re going to be a lot of very nervous developers, I would think, hearing the stories that I’m hearing out of places like Cairns where the banks are having their own valuations prior to settlement and they’re coming in so much under the purchase price.

Shannon:   It definitely makes it hard to complete if you have to afford an extra $20,000, $30,000, $40,000, $50,000 to make the settlement occur. There will be people walking away from deposits, I would think.

Kevin:  Shannon, I want to talk to you now about the common mistakes you see investors make in this market, and it probably changes because of some of the things we’re talking about – the way the banks are reacting, what APRA is doing and so on. But what are some of the common mistakes you see investors make?

Shannon:  I think people like to beat their chest in trying to have a quantity approach and try and buy ten properties, but what you’ll see is maybe those ten properties will be worth $3.7 million and the investor only has like $400,000 of equity in that portfolio.

Kevin:  Very high risk, isn’t it?

Shannon:  Yes, high risk. It’s not about how many properties you own; it’s that difference between the net debt and the market value, which gives you your equity, is what you’re worth.

Kevin:  Because without that equity you can’t gear either, can you?

Shannon:  You can’t buy again. You can’t extend your portfolio. It’s the difference, really, between a fast-moving portfolio and a slow-moving one. There are people who have used up their borrowing capacity with non-investment-grade properties and are just stuck in the mud, for want of a better term.

Kevin:  You must see a number of those? To help them out of it, they have to really sell down, get out of those bad properties?

Shannon:  And sometimes can’t afford to sell. There’s no market there or they owe more than what it’s worth now.

Kevin:  They need to make a loss, don’t they?

Shannon:  Definitely, and they can’t afford to crystalize that loss.

Kevin:  Wow.

Shannon:  That’s a real sad part. They would have been better off doing nothing than investing.

That’s where we get it wrong. We think that property is always going to go up, that each property is very much the same…

Kevin:  Well, they do if you buy well.

Shannon:  They do if you buy well, but there are going to be times in the market where we’re not booming and there are going to be times where we go sideways, and there can even be times where we’re going to contract. When you’ve been an experienced investor, you’ve seen all those times through.

Again, it’s long term, but let’s do our research. Let’s not take advice from people who are compromised, and by that I mean like selling agents. You shouldn’t be getting your investing advice by your selling agent because they have a different agenda to you.

You shouldn’t be getting advice from someone who’s going to bring out a list and say, “Any one of these properties will be your answer,” because they’re compromised to that list of properties and they’re probably getting a commission from that builder and developer.

These are the type of traps for young players that I’m talking about, where people are taking the advice from compromised people or the wrong types of people.

Kevin:  Didn’t really finish you talking about gearing, and we might do that next time we catch up because I think that’s a fascinating subject on its own – how you gear – because many people don’t understand the benefits of it. They have all this equity in a property but they don’t understand about gearing. We’ll talk about that.

Also lines of credit – and we have got about 60 seconds left. A line of credit and the importance of having the buffer for things that you’ve been talking about then.

Shannon:  Yes. And again, it comes back to the equity in your portfolio and a sophisticated broker probably giving you that access to that line of credit. That can help you with your contingencies, whether it’s emergency repairs or a slight loss of employment. Once it’s been extended to you, it’s very much up to your discretion of how it’s spent, and if it’s used wisely, it’s like this big credit card that’s not really costing you anything to have but can buy you time to get out of a bad scenario, such as loss of employment, emergency repairs, a tenant absconding from your property.

Kevin:  Thirty seconds. Sum it up for me.

Shannon:  Begin. That would be my first advice. Begin. You have got to grow your asset base wide if you want to have that delayed gratification in the end. Time your life, don’t time your market. Do things to your personal circumstances, not to what the headlines are saying around you. And finally, have a plan. If you want to execute that plan, get some expert advice.

Is this the answer to housing affordability? – Nerida Conisbee

Kevin:  Of course, one of the most popular topics when it comes to property is all about affordability. Interesting to see that in Victoria, the state government there have instigated a policy they’re calling Homes for Victorians, the government’s Housing Affordability package. To have a look at this and just unwrap it a little bit – pardon the pun there – Nerida Conisbee, who is the Chief Economist with the REA Group, joins me.

Nerida, how are you?

Nerida:  I’m well. Thanks for having me.

Kevin:  It’s a pleasure, as always. Tell me a little bit about this initiative. What are they doing?

Nerida:  They’re looking across a range of measures, so there are cuts to stamp duty for first-home buyers, there are taxes on vacant properties, and there’s also a kind of rent-to-buy scheme or a scheme where the government owns a proportion of the property that will allow people on lower incomes to get into the market.

Kevin:  What’s the early feedback on this, Nerida? Do you think it’s going to make much of a difference?

Nerida:  I think it’s great news. I think the Victorian government is certainly on the front foot in addressing affordability. When we look at affordability nationally, it’s not really a huge problem in Melbourne. I know people in Melbourne think it’s very expensive, but when we compare to what’s happening in Sydney, it’s vastly cheaper to buy in the Melbourne market and it’s actually not unaffordable for first-home buyers. The situation in Sydney is far more dire, and the fact that the New South Wales government haven’t released such a package is probably more problematic for them.

Kevin:  Yes. Already they’re starting to talk about it, though. There are a lot of ripples on the water about the fact that the state government in New South Wales may have to do something like this.

Nerida:  They really should. When we look at Victoria, Victoria has been building a lot of housing for quite some time – for decades – and it’s got to a situation where both the Victorian economy is growing very strongly and the New South Wales economy is growing very strongly, and New South Wales and particularly Sydney has really been caught out with the fact that there’s just not enough housing and it’s becoming unaffordable not just to buyers but also for renters.

Kevin: Danni Addison, Victorian CEO for the Urban Development Institute, is very much behind this, saying things like, while they’re cautiously optimistic, they’re going to see how the market responds. But they’ve certainly said that the government pulling the lever in this way is going to change the momentum of the housing market. Would you agree with that?

Nerida:  Yes, I think so. There’s a little bit of a view that some of the measures may lead to accelerated price growth, and I think that would be the case, but people in that sub-$600,000 price category where we do have a lot of first-home buyers and they are getting these cuts in stamp duty, it may lead to a bit more price growth than we really want to see.

But I think overall, the fact that the Victorian government has recognized the problem and has decided to do something and is actually looking at a range of measures is really positive, too, that they’re not just relying on one measure to increase affordability.

Kevin:  That’s probably where a lot of governments have gone wrong in the past, too. Interesting to note that re-investors are not going to be receiving any stamp duty concessions. Is that going to put a bit of a dampener on that reinvestment or investor market?

Nerida:  I don’t think so. I think there’s still enough housing available for everyone in Victoria. I think, though, this is really designed to help first-home buyers into the market and it’ll definitely help them. If you’re a first-home buyer and you can save $15,000, it makes a massive difference to your ability to buy. Trying to save $15,000 can take quite some time, and the government giving you that money and really helping with stamp duty is positive.

Kevin:  Very much so.  Nerida Conisbee from REA. Thank you so much for your time, Nerida.

Nerida:  Thanks for having me.


Perfecting the ‘dud property’ detector – Michael Yardney

Kevin:  If you’re a regular listener to the show, you’ll know that we talk all the time about having a strategy. But when can the strategy go wrong? Sometimes it does, sometimes you end up with a property in your portfolio that you don’t want to hold onto any longer. So how do you find out when you’ve got a dud, and then what do you do about it? When to sell, and when to hold a property? That’s the question I’m going to pose this week of Michael Yardney from Metropole Property Strategists.

Hi, Michael.

Michael:  Good morning, Kevin.

Kevin:  No doubt you’ve come across this in your own portfolio.

Michael:  I’ve come across it in my own portfolio, and definitely with lots of our clients, Kevin. It is a difficult question because there is so much time, effort, and money involved in buying, and emotion as well, that sometimes it’s hard to look at it subjectively. It’s something one has to do, though.

Kevin:  Yes, indeed. What are some of the questions that you ask yourself or you get your clients to ask themselves to determine whether or not it’s a dud and what they should do about it?

Michael:  A good question you should ask yourself is: is my property performing like I expected it to? Because that goes back to what you said in the beginning; you actually have to have a strategy, you have to have some expectations.

The next question I’d ask is: is the property outperforming the market? Maybe it’s just a lull in the market. In certain markets – in Western Australia, in Perth, for example – you probably wouldn’t have performed well because the general market is not doing well. But it doesn’t necessarily mean you have to sell up. So, how is it performing compared to the rest of the market?

The third question I’d ask myself is: if this property was on the market today, would I buy it again? I like asking: knowing what I know now, would I buy that same property?

I’d also then look at: is there anything I can do to improve my property’s return, maybe to make it more attractive?

And the last question I’d ask is: is this property likely to outperform in the long term? In other words, is there an opportunity cost in holding this property compared to something else? These questions are going to make sure that you own the right property, Kevin.

Kevin:  Looking at those last couple of questions, I want to look in detail at probably three, four, and five, but four and five, even if you do do something to improve it, number five – which is “Is it going to outperform the market?” – that’s probably the ultimate question, isn’t it?

Michael:  It is. In general, the performance of your property is going to be 80% related to its location and maybe 20% or so to the property itself. If you bought in the wrong location, in one of those isn’t going to do well in the long term – in other words, not in a capital city or not in the right locations in a capital city – it’s just going to be too hard in the long term, no matter how much you tart it up, pretty it up, what value you add, because that’ll give you a one-off improvement, but “Is it going to do well in the long term?” is a question I ask myself.

Kevin:  I said at the outset that we all make mistakes. In your experience, Michael, what are the things that make a property underperform?

Michael:  There are a couple of things. First of all, there’s timing – buying at the wrong time in the cycle or just holding it at the wrong time in the cycle. We know that every ten years or so – not that the cycle is exactly ten years – there are going to be three or four years when the market is flat, there will be a year or two when all properties drop a little bit in value, and then there will be a period of time when things go really well. So, is it the time in the cycle? If that’s the case, don’t worry, because if you have an investment-grade property, it’ll do okay.

Maybe it has underperformed because you paid too much, and that may mean you’re likely to have a few years of no capital growth. But again, if it’s the right location and the right property, it’s a one-off cost but you have yourself a good property.

As I said right at the beginning, the location is the most important. Some suburbs will underperform and others will do better – and they’re the ones you should be owning.

And then is it the property itself? Have you just chosen the wrong sort of property? Maybe one that doesn’t fit the location or one that just doesn’t have the attributes that make it investment-grade, Kevin.

Kevin:  We said in the outset about having a plan, a strategy. That’s so important. But another big mistake is if you have a plan and you find there’s something not quite right, not taking any action, not doing anything about it.

Michael:  What I commonly hear people say is “It’s not costing me anything; the cash flow is covering the mortgage.” And while it may not be costing you in cash flow, if you didn’t own a good property in the last couple of years, you’ve missed out on some of the best markets we’ve ever experienced in Melbourne or Sydney, so there’s a huge opportunity cost.

I explain it this way to clients. I say, “Do you own a business?” – because remember, property investment is like a business – and many of them do. I say, “Well, imagine if you did, and imagine if you had an employee and they came late to work, they played on Twitter and Facebook all day, and they went to lunch and came back and didn’t see the customers or the clients, what would you do?” They’d say, “We’d sack them.” And I’d say, “You probably have to do a performance review first because that’s what industrial relations requires.”

And this is what we’re doing with your portfolio, your property business. We’re doing a performance review. And if you can’t improve its performance, then what I would do is I would sack them. And you know, sometimes you have to pay a redundancy package.

And then the clients get it, Kevin. Because I say, “You pay a redundancy package, get rid of your bad employee, so that in the future you have a better employee who’s going to work even harder for you and make more money.” Then the penny drops.

Kevin:  That’s a great point, and a great way to describe it too.

So we’ve made the decision, we’re going to sell this lemon, this dud property. But what if it’s the wrong time to sell?

Michael:  Again, it’s all related to opportunity costs. That’s why I was saying that there’s a redundancy package in some ways. Yes, there will be some losses that you crystalize, some selling costs or some opportunity costs, but if you have a dud property and it’s not a good time today, when the market improves, in general what will happen is the investment-grade properties, the better properties will outperform your dud property, and the gap will only widen. So it never seems to get much better.

It’s a difficult decision to make. Sometimes you just have to bite the bullet and move on, Kevin.

Kevin:  Yes. Great comment, Michael. Thank you so much for your time. Michael Yardney from Metropole Property Strategists.

Thanks for your time, Michael.

Michael:  My pleasure, Kevin.

Why you could be paying too much at auction – Patrick Bright

Kevin:  I went to an auction yesterday. At one stage, I’m nearly sure that one of the bidders actually bid against themselves. They had placed a bid and they placed another one. According to my next guest, Patrick Bright, that’s a fairly common occurrence.

Good day, Patrick. How are you doing?

Patrick:  Morning, Kevin.

Kevin:  So you’ve seen this happen quite often where the highest bidder will actually bid against themselves?

Patrick:  It’s quite common, yes. It is. I’ve been bidding at auctions on behalf of clients for nearly two decades, and it’s a very common occurrence. I’m formerly an auctioneer myself, and I watched people do it when I was calling them, and I speak to many auctioneers and they say probably every second or third auction, they’re getting one or two people doing it.

Kevin:  Yes. I’ve been to many, many auctions. As an auctioneer, I’ve conducted a lot as well. It’s a very emotional state, isn’t it, for the bidder? And it’s quite easy to understand why when the auctioneer does call and give that high inference of sale, they’ll stick their hand up to make sure that are, in fact, the highest bidder.

Patrick:  Yes, they do. They lose track. They lose track of it. You are in an emotional state, and if people are very nervous and they don’t expect just how much pressure is on them until they’re actually bidding with their own money, in the moment, and they want this property. It’s different if you go and watch a few auctions, which I always recommend clients do and people do if they’re going to bid at one, but it’s just not the same when your own money is on the line.

Kevin:  Now, there’ll be a number of people listening now saying, “Well, the auctioneer should then turn around or someone should turn around and say, ‘No, I won’t take that bid because you’ve already done it.’” But they’re under no obligation to do that, Patrick, are they?

Patrick:  No. An auctioneer is under no obligation to tell you you’re bidding against yourself. And at the end of the day, they want the thing to flow, and if they pause and lose momentum by even thinking of doing that, it’s going to slow things up, and that’s not what they want to do. They want it to push on, and their interest, they’re representing the seller, so if you want to bid against yourself, who are they to stop you?

Kevin:  You said you’re an auctioneer, so you’ve obviously had this experience as the auctioneer where someone’s done this. What did you do?

Patrick:  We kept going. That’s what you’re trained to do. As an auctioneer, you’re under no obligation to tell anyone, and you’re being paid by the seller. The agent and the auctioneer are being paid by the seller, not the buyer. So they’re not there to represent the buyer. If the buyer isn’t confident in knowing what they’re doing, they should get their own professional representation to avoid that.

Kevin:  At any stage, if someone did that… Let’s play a bit of a hypothetical here now. You’re the auctioneer and I’ve just placed a bid against myself and then I realize that I’ve done it or someone whispered in my ear and said, “Hey, listen you. You’ve just bid against yourself,” have I got the ability to withdraw that bid?

Patrick:  You do. A buyer can withdraw his bid. They can withdraw a bid at any time prior to the fall of the hammer.

I have seen that happen on the odd occasion, where someone’s bid an incremental amount or realized they may have gone over their budget, and they’ve had a conversation with their partner, their spouse, and realized that they can’t back up that bid. Yes, I have seen people pull the agent to one side and say, “Hey, I’ve bid over my limit. I’ve been caught up in the emotion. I need to pull out of that.” And they will withdraw the bid.

I’ve also seen the agents have that conversation and then they have someone else to take over and keep going with it. It’s never ended up in a disaster – that I’ve seen – but it certainly can rock the momentum of an auction.

Kevin:  As a bidder, you bid on behalf of your clients. You’re in a situation where you’re in the auction. You probably are the highest bidder. You’re getting pressure from the agent, who’s probably whispering in your ear, and then the auctioneer is calling for you to either increase your bid or try and negotiate you up. How do you resist that?

Patrick:  Well, I simply say if we’re the highest bidder you’ve got no better offer, why would I bid against myself? And I just sit tight. You know, there’s no need to bid against yourself. They have it on the market, or even if it’s not on the market, they’ll be pressuring you when it’s not on the market more so than if it is, because once it’s on the market and hit the reserve, it’s a matter of it’ll be sold.

But prior to hitting the reserve, if you are the highest bidder and you’re short of the reserve, or what the vendor hopes to get, then they will put pressure on you, and you just have to sit tight.

Kevin:  Do you always use the same bidding strategy, or do you vary a bit – sometimes you might decide that you’re going to go straight to the price with the king hit bid? Do you have a strategy like that?

Patrick:  I do have various strategies. It depends on the mood and the amount of people bidding. One I did a couple of weeks ago, the property was really heavily under-quoted and there were literally 20-something people holding bidding cards. I knew where value would stack. We’d made a pre-auction offer that was rejected, and it was a sensible offer. I knew the reserve was going to be around there, and I knew that it’d probably sell for more than that anyway.

We opened with that bid straight off the bat. I looked around, and it basically knocked out three-quarters of the room that were there, of the crowd. They were just stood out. We then only had to play the auction out with about three other bidders.

That rocks people and that sends a message. Now, you have to be careful doing that, and you really need to know your values and numbers, because I’ve seen people do that and they make only one bid and no one else bids, and they’ve bought it.

Kevin:  You’re on pretty safe ground in a situation like the scenario you just gave us because you’d made that offer prior to auction. You were obviously prepared to pay for it and pay that figure for it. So you were one pretty safe ground, I would imagine.

Patrick:  Reasonably yes, but we know their numbers. We’ve done our research, and we’re confident of where value sits. If you’re going to make a strong opening bid, you really need to know your numbers, because I’ve seen people do this a number of times. They’ve been given a bit of advice – open strong, knock the competition out. They certainly did, and they paid a figure that no one else even made a bid against, and it was on the market with one bid. So that tells you that they’ve gone way too aggressive.

Kevin:  Do you ever get the chance nowadays to buy prior to auction, or do you find that most sellers are happy to go to auction, obviously to get that premium bid?

Patrick:  Yes. It moves around. It’s quite interesting. Quite a lot is actually selling before auction. You have to understand the clearance rates that are calculated – we’re sitting around 70% to 80% clearance rate is where the auction stats sit, just using Sydney as an example – that includes all sales prior to auction, sales on the day of the auction, and sales that happen within seven days of the auction.

The real clearance rates, on the day, at the auction, is probably closer to 50% if you calculate and take into account all the pre-auction sales so it’s quite a different figure. I would say, at the moment, at least a third, maybe even more, are going before auction.

Kevin:  Is that sign that the sellers or the agent lose their nerve?

Patrick:  No, it’s not. There are two reasons one sells before auction from my experience, and as you know, I was previously a sales agent as well. The reason people generally would take a deal before auction is because someone was offering a figure that we just didn’t think anybody else was going to get near at the auction, so we needed to take this money and run, because auctions are only ever going to get the second-highest price.

If you have somebody who’s offering $1 million before auction but you think that most of the market is sitting around the $900,000 or $950,000 mark, then you’re wise to take that million because you’re not going to see it on auction day. You might see it around $900,000 or $950,000 where the competition is. So that’s one reason.

The other reason is if the seller has already bought and rather than take the bird in the hand, it’s at a figure they’re comfortable with, it’s a figure that allows them to move on with their life and make their commitments of the next purchase they’ve made or you give them the settlement date they want.

One of the things I’m always looking for as the agent is has the seller bought? What’s their settlement date? Is that important to them? Can we give that to them? And then let’s talk about price, because price is important but it’s not as important in those circumstances as terms and timing.

Kevin:  Sometimes the auction does actually achieve that really big premium price, Patrick, doesn’t it?

Patrick:  Very. Here’s the thing. An auction is lotto outcome for the buyer and the seller. It really is, and you are playing a bit of a lotto game there. In my experience – and there are at least 40 auction weeks a year, and I’m doing anything from one to five a week, and I’ve been doing it for 18 years – to give an idea, my estimation is around about a third of the properties that sell at auction do get a very strong price that they probably would not have got had they just been stuck on the market with a price.

About a third of time, I think, they’re still around about fair money – pretty much within a few percent of what they would have got with a price guide – and about a third of time, we’re getting a below fair-market bargain.

Understand this: not everybody goes to an auction. Probably half of my clients who hire me, who have been looking on their own and they’re fed up with it, say to me, “I’m not interested in going to an auction, Patrick. We’ve been to three or four. We’re sick of wasting money on building reports. We’re sick of the disappointment. We’re sick of the under-quoting.” So they lose a percentage of the buyers.

But they don’t need everybody to get a sale. However, you have to understand that it’s not going to capture everybody in the market.

Kevin:  Patrick, we’ve going to have to go, mate, but I want to thank you once again for being with us. Patrick’s book, of course – look out for it – is The Insider’s Guide to Saving Thousands at Auction. A great read.

Patrick, thanks again for your time, mate.

Patrick:  Thanks, Kevin, as always.


 Asset protection in a bust up – Zaki Ameer

Kevin:  I don’t know how many times I’ve heard people talk about what happens when they have a divorce, especially those people who maybe get to later in life and they build a lot of equity in their maybe principal place of residence. They might even have a property portfolio.

I don’t know if you’re aware of it or not, but last year alone, there were 50,000 divorces granted in Australia. That’s roughly about 1000 every week, sadly making it one of the most common issues for Australian families that they must deal with.

Zaki Ameer, who is a real estate expert and founder of Dream Design Property, joins me on the line.

Zaki, this is something I guess people can’t really be prepared for, but maybe they should be. What’s your view on that?

Zaki:  Kevin, this is also from my own personal experience. Obviously, nobody gets married for a divorce. That’s the first reason. And then the other part is about de facto relationships, which are becoming more and more common, that maybe not as many people are getting married.

So it’s also important to know that family law rules apply if you’re in a de facto relationship. What that means is if two people are in a relationship, living together in the same household for more than two years, or immediately if your relationship is registered with Births, Deaths and Marriages, it would be very similar to getting married. That’s also an important part to know. It’s not only applicable to marriages.

Kevin:  Yes. Thank you for sharing that with us. I wasn’t going to necessarily raise that you’re speaking from personal experience, but I guess you carry into this topic a lot of that experience yourself that you can actually share some of the wisdom with us. What are some of the things that we should be aware of if we’re going into a breakup like this?

Zaki:  I think we need to just be prepared. As much as it’s tough to be aware that your relationship may break down or may not break down, we don’t want to be naïve. Some do suggest doing a prenuptial agreement, which is one way to avoid some of it, so that you are very clear. It’s like going into a business relationship or a partnership, so you’re aware of where you stand if the relationship does break down.

But I have to say that it’s not a very easy thing, it’s not an easy topic to discuss, because you’re emotionally in love and a prenuptial agreement is very contractual. Even if you don’t do that, I guess it’s just being self-aware that that may happen. And if it does happen, one of the things you want to make sure is that you want to be as professional as you can at a very emotional time.

Kevin:  Because at a time like this, I imagine it’s a matter of wanting to get even too, and probably the only thing you can do – two things, I guess. Maybe the kids and any assets that you might have.

Zaki:  Correct. You also want to be aware that even if it’s your husband or your wife who is staying at home and looking after the kids, or even if you don’t have kids, your husband or wife was supporting you in other ways, whether it’s taking care of the household, making sure the house is clean, making sure you have food on the table.

Many think “Yes, well, I bought these properties and I’m the one who is working in a job and it was my money, so I’m entitled to everything.” That’s actually not true, and I agree to that because obviously, your partner would have supported you in some sort of way to be able to accumulate these assets, so he or she would be getting a fair share of that.

Being aware of that and being okay with it rather than getting emotional and arguing about it is one way to look at it.

Kevin:  Yes. Is it possible during a time like this to really step back and try and differentiate between emotions and economics, Zaki?

Zaki:  I remember a recent interview when we’re making investment decisions. If you could do the same things with this, I think it would be I guess less painful. The same way you’re going to be buying an investment property, I always say do your best to look at it logically as opposed to emotionally. You’ll be much more successful in building a property portfolio.

So in the same manner, I think this is where you probably seek help, and the help in my opinion needs to come from a professional and someone you trust. It may be a family member. Unfortunately, that might not always be the best case because your family might be on your side and might be very emotional about it.

Seeking help from a lawyer. And I also have to warn with that when you do get legal advice you do want to go for a recommended solicitor from someone you trust who has an area of expertise in family law, because in divorce or even de facto breakups, nobody wins. It’s a lose-lose situation anyway. You just have to make sure that the person giving this advice has your best interest, and you want to avoid having to go to court.

My take on that is be professional about it, take your lawyer’s advice, and sometimes it’s okay to give up a bit more just to avoid the heartache of spending the next few years in the family courthouse looking at your partner.

Kevin:  Yes. Easy to say, but you do actually have to look at it very professionally and in a businesslike manner, because I think if you don’t make sure that the deal is more favorable to the other person, then there’s a possibility – and I’ve actually heard this happen – where they can come back and dispute any settlement, even years down the track.

Zaki:  I agree. Given I unfortunately had to go through this, it’s probably one of the most personal investigating matter in the sense that anything can be questioned. I’m not saying that people have intentions of wrongdoing, and that’s why you want to settle this matter very quickly, because some people have this assumption that just because I have a single bank account and it’s in my name, that money or those finances belong to me.

That may not be the case under family law, because like I mentioned before, if your partner assisted in some way of gaining those finances, even if it’s a bank account that’s in your name, he or she may be entitled to some of that money. So you don’t want to really be going through that exercise. You want to do your best to speak to someone professional who’s on your side, and settle that matter as fast as you can.

Kevin:  Yes. I guess to sum up, no one really ever goes into a relationship expecting that it’s going to turn sour, but you need to be prepared for the worst case scenario.

Zaki, that’s probably sufficient. I appreciate you giving us your time today and sharing your personal experience with us, and I’m sure that a lot of people will have gained some good knowledge out of this. Thank you very much for your time, Zaki.

Zaki:  Thank you, Kevin.

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