When finance goes horribly wrong + Investors who should not be in property + Garden Gnomes are worth more than you think

When finance goes horribly wrong + Investors who should not be in property + Garden Gnomes are worth more than you think

Highlights from this week:

  • When to buy property from a lifestyle or life-span point of view might be a better idea than trying to ‘time the market’.
  • We talk to someone from a very successful family investment company that specialises in commercial/industrial property. A great insight and some good tips.
  • Why finance pre-approval and approved finance are not the same thing and how some investors come unstuck by not knowing.
  • A data business model that enables everyday Australians to invest in locations other than where they live.
  • Did you know that the little guys in the garden can be earning you some money at tax time?


Time your buying around lifestyle – Shannon Davis

Kevin:  Many people, when they’re looking at property investment, will agonize over timing: when’s the best time to do it? That’s from a market point of view, but an interesting perspective: maybe you should look at it from your lifestyle point of view. Joining me to talk about that, Shannon Davis, buyer’s agent from Brisbane with Metropole.
Shannon, are you quite often confronted with this – people getting confused about trying to time the market as opposed to timing when it’s going to suit them best?
Shannon:  Yes, I think so. Probably the number one question that we get asked is “How’s the market going, and is it a good time to buy?” I think for a couple of reasons, it’s probably the wrong perspective. If you’re just looking to see is it a great time to maximize capital growth and get it absolutely right in its point of timing, you’re probably going to be disappointed.
Property is a long-term hold, and if you want your money back in the first five years, it’s probably not the asset class to be investing in. But also, it’s more important about what your particular circumstances are like.
Kevin:  Do you think this comes about because people tend to still think of property as a short-term hold? If you’re going to look at it as a long term, then you will take into account your family situation, your financial situation as opposed to try to get into the property market, make a quick profit, and get out, Shannon.
Shannon:  Oh, definitely. I think when people are looking to do those speculative type of things and sell in the short term for a nice quick dollar, that’s probably when I’m least comfortable with the property market. I’m thinking that people are being greedy and therefore, I’m a little bit fearful of those type of circumstances.
I think if you have a deposit saved and your circumstances aren’t going to change as far as jobs or pregnancies or retirement, and you can service it, then it’s a good time for you to extend your asset base.
Kevin:  How do you counsel someone when they come to you and they say something like “Well, Shannon, I’m just trying to work out when is the best time for me to buy a property and which area should I be buying in because it’s going to give me the best capital growth?” What’s the first thing you say to them?
Shannon:  Just caution that hot-spotting mentality. I think it’s not like shares where you can get in and out in a day. I think this property you could be settled with for five to ten years especially if it travels south capital growth wise. There are always black-swan events or X-type factors such as GFC or Asian Financial Crisis or a credit squeeze that we’re not always [2:36 inaudible] and it can happen out of the blue and all of sudden you’re in with a long-term hold into a property that you might not want to be in because you had the wrong mentality at the start.
Kevin:  You could be frozen from… I think you called them black swan events; I’ve never heard them called that before. But you could be paralyzed by that if you’re not careful, couldn’t you, from fear?
Shannon:  Oh, definitely. Then you spend so much time on the sidelines that you’ve missed a lot of capital growth thinking that you’re going to pinch a bargain in the inevitable crash. The Australian property market has never had that much severe contractions before, so it’s probably a false economy to be waiting for that.
Kevin:  So, Shannon, are you saying that any time is a good time to buy?
Shannon:  No, not necessarily, Kevin. I think when property comes away from its fundamentals, then you’re probably heading into a dangerous territory. By that, I mean that yield is very important and as the capital growth skyrockets up, you start to get some yields that are probably not sustainable for the investor.
If they’ve had such good period of capital growth and yields starting to show 2% or low 3%, I think that’s an area that to watch out for, because you’re going to need a bigger deposit, you’re going to need to pick up the gap between the tenant and the taxman and yourself more, and any interest rate rise will further complicate that.
I think they are the times where I’m not looking to extend a portfolio when market has had such great capital growth previously.
Kevin:  How often are you reviewing your own personal portfolio and how often do you think someone should review theirs, Shannon? Does it vary?
Shannon:  I think if you had an auction outside your house every day for 30 days, you’d get some widely different prices there, so it’s not like a share market where you want to check the paper every day, but I think it needs to be regular.
For myself and my own personal portfolio, I spend five days a year, every year in the same month just reviewing my portfolio, looking at LVRs, looking at my buffer for contingency, and just seeing what capital growth is up in there and what improvements need to be made and look to make decisions based on that.
Kevin:  When you take those five days out, are you counseled by someone? Do you do this on your own?
Shannon:  I get some appraisals and sometimes even bank evaluations if I’m really serious about extending my portfolio and look to see which properties are starting to bring maybe a diminishing return.
By that, I mean if you compare it to the median in the area, it might have been a while since you’ve done a renovation or a refurbishment and you’re starting to see that your rents may be dropping or vacancies being longer, or perhaps tenants and the references of the tenants aren’t as good as you like. That’s when it’s an area that it might need some improvement offered, just to get that property back up to scratch.
Kevin:  Good talking to you. Shannon Davis from Metropole. He’s a buyer’s agent in Brisbane. Shannon, thanks for your time.
Shannon:  No worries, Kevin. Any time.

Garden Gnomes are worth their weight in deductions – Brad Beer

Kevin:  I’ve often wondered with depreciation schedules, what items are commonly missed? Are there any? I thought we might just give you a bit of a reminder now. Brad Beer joins me from BMT Tax Depreciation.
Good day, Brad.
Brad:  Hi, Kevin. How are you today?
Kevin:  Good, mate. You heard that introduction. I’m just interested to know if there are any items that are maybe commonly missed when people are claiming depreciation that you’ve noticed, Brad.
Brad:  We’ll talk about some of those items, but the biggest thing is making sure that everything gets looked after and done properly. When we do these things, we go to site to identify things and make sure we maximize those deductions.
I guess some of the things that are missed are things like garbage bins, sometimes exhaust fans. Free-standing garden shreds are an item that you claim as plant and equipment that are often missed, and things like in pools and spas, the pumps and things. Unusual things like garden gnomes are depreciable or other unusual garden statues.
Kevin:  Really?
Brad:  Yes.
Kevin:  Garden gnomes. Is that right?
Brad:  They’re a loose item, and if they’re just sitting there as an item of what’s seen as plant that’s helping to produce income because this person rented your property because it has really nice garden gnomes in the yard, then it’s seen as a plant and equipment item and it’s claimable.
Kevin:  It’s probably fair to say that in most cases, if you were to do a proper site inspection, you’d always find something that was missed, Brad. Is that a fair comment?
Brad:  We always suggest a site inspection of the property, and it’s not just about missing items, but that’s one of the benefits of making sure it is done properly. Making sure that we identify everything that’s on site that we can claim as quickly as possible. Making sure that they’re legitimate things that we do claim is important because they all add up. Some of those things aren’t worth heaps of money, but a couple of hundred dollars here, a couple of hundred dollars here all add up to more deductions in those early years.
At that site inspection, also it’s important to make sure when we are estimating that construction cost of the building, even if we do have the plans, we get to really have a good look at the type of construction that’s there. If there’s anything special about it in any way, it’s a good opportunity to pick that up.
If there’s been any renovations done to the property, especially if they’re done by a… Because if you did renovations, you’d remember what you did and say, “I put in a new kitchen and bathroom.” But someone else may have put a new kitchen in there ten years ago, and when go to site, we’ll identify that that’s the case. We look at that kitchen and go “That’s not a 30-year-old kitchen; it’s a 10-year-old kitchen.” It just means that more things get picked up that are claimable.
And it’s not only those plant and equipment items, but it’s everything within that property. When you go through trained with an eye to look for the right things and be thorough, you end up finding more things and therefore that results in higher deductions and obviously, therefore, better cash flow for the property owner.
Kevin:  Yes. Good property investors are constantly tweaking their properties to make sure they’re getting maximum return out of them. How often should they have a site inspection? In other words, there might be other things that we just forget to tell our accountant about. How often should we get you back to review the depreciation schedule?
Brad:  Once we do it once for you, other work that you do, you just need to make sure to keep those receipts and update in the future. We don’t normally need to come back unless you do a major renovation and we need to split up those items between that building and plant and equipment.
We launched a portal to manage your depreciation called MyBMT only just in the last couple of months. Now, as you do something, if we’ve already done that depreciation schedule, you can add these items and adjust it and write these things off. It’s a very simple process. Either you can actually put the information yourself or we can have a look at it and put some cost expertise, or if there’s enough work, we can organize that inspection to have it looked at again.
Kevin:  That schedule you mentioned there on your website, anyone who’s had a depreciation schedule done by BMT Tax Depreciation, will they automatically be there or do we have to do something to get on there, Brad?
Brad:  MyBMT is something that has a login that you’d need to join. Whenever someone buys a depreciation schedule from us now, obviously, we offer a login to that, and they get to see transparency through the process of what’s happening with that depreciation schedule, firstly.
They can invite their accountant in, so their accountant can see that. The accountant can see all the schedules of all their clients in the same place under their login. Then in the future, as you update things, it updates that depreciation schedule for those future years.
You can look at whichever year you want to, one year at a time. Very much a simplistic tool where you’ll never need to go looking for a file. If you have a whole lot of properties or the accountant has lots of properties with lots of clients, they’ll be able to log in and as long as the client said, “Yes, you can see it,” Then they can get transparency and updated numbers each year, which has been a dream for a long time.
It’s what we call a live depreciation schedule, and this is the result of lots of IT time put into what is really a live document going forward as opposed to one document that as you change things, does change.
Kevin:  BMT Tax Depreciation. There’s a button on the homepage at Real Estate Talk and also the BMT channel as well. Lots of great content there. I can just see all those people now with garden gnomes racing out to get that organized, Brad. Good on you, mate.
Brad:  Absolutely. Thanks, Kevin. Great to be here.

Commercial/Industrial opportunities – Annabelle Chapple 

Kevin:  When it comes to investing, there are all different types of investing with property. We’re going to focus in this talk on commercial industrial investment, which is something we don’t do a lot of and we should do more of it.
I met recently a young lady whose company does this exclusively. Annabelle Chapple joins me. She is the asset manager for Ashdown Property Group.
Annabelle, thank you so much for your time.
Annabelle:  Thank you for having me, Kevin.
Kevin:   Tell me about your company. I mentioned in the introduction there that you specialize in commercial industrial investment. Is that exclusively in that area?
Annabelle:  Yes, ideally. We have a CBD building that my grandfather bought quite early on in the piece and also, another building in the valley, but otherwise my grandfather has always been of the mindset that he’d like properties that he can hose out.
Kevin:  All right. That was the criteria.
Annabelle:  Yes, that’s the criteria. To give a bit of background on how we came about, it really was through my grandfather Cliff Ashdown – he is still with us, so he’s still alive and kicking – and [1:09 inaudible] Ashdown. They’re both still very much involved. They built an auto parts business, so it was really grit and sweat and tears that they made that quite a big business and sold that, and it was through that capital that we went in to it to property investment.
My father – Nick Carter – had worked in property for many years. He also owns his own property management business, which he’s just starting to step away from. And my husband is the Queensland head of capital transactions at Savills. So, I have very much a property family.
I’m relatively new to this role, however I think that sort of outsider view is helping me view it from the top down.
Kevin:  It sounds to me like you were born into it, and the conversations around your table must be all about property.
Annabelle:  They are, and I resisted it for a long time as an ex-TV journo. I’ve been in that industry for about five years before I came in to this one. It was probably inevitable from everyone else’s point of view, but I’m really surprised how much I’m enjoying it.
Property, as you know, has so many moving parts; it’s not a one size fits all approach. So, I’m really enjoying tackling it and trying to figure out the best way to get tenants and solve all the issues that come up with all kinds of real estate.
Kevin:  Talking about cycles there for a moment, is this a good time to be considering commercial industrial investment?
Annabelle:  I think that if you’re a long-term investor, you should always be considering investing in the commercial industrial investment market. And if you’re a believer in Brisbane as a growth city and Asia-Pacific, the demand for commercial real estate should always be stable – with some ups and downs, as any investment market has.
Kevin:  We’re all very familiar with the property cycle in residential. Is it similar in commercial industrial?
Annabelle:  In some ways, yes, because the availability will always drive that investment demand, so interest rates at all-time lows is assisting with demand. That’s still relatively easy to obtain if there is sufficient equity in each transaction. So it is the same as residential real estate, or similar, in that sense.
Kevin:  Yes, there’s a lot less emotion in industrial commercial. You don’t get caught up in the emotion. It’s all about the return, isn’t it?
Annabelle:  Yes, absolutely. It’s a funny market at the moment. There are a lot of unoccupieds flooding the market. So, as owners of warehouses, we’re struggling in some instances to find tenants because they’re happy to go and buy their own. It’s being mimicked in the CBD as well where the tenant is king in this market, so people are willing to do anything to attract them and to keep them.
Kevin:  Because it’s based on return, is it more difficult to secure funding for commercial industrial property?
Annabelle:  Yes, it is. The commercial risk is higher. For example, if you borrowing to buy an industrial property and your tenant leaves, your down time could be anywhere from a week to an entire year or longer, so it can hurt cash flow. Whereas in residential, for example, it’s obviously much easier to secure a tenant because they need to live somewhere.
Kevin:  What would be your suggestion for someone wanting to start building a commercial portfolio? You mentioned there that astute investors – and I agree with you – should always be looking at these sorts of opportunities. For someone who’s in residential now, deeply into residential, and they think “Well, I’d like to broaden it,” where should they start?
Annabelle:  Firstly, I’m the third generation, so I can’t really talk about the financial side because I’m very lucky to come in to that with my family. But in terms of starting, in terms of knowledge, it’s starting with what you know: is there a retail shop or an office or an industrial property that you drive past regularly or visit regularly that you’ve always liked and always felt that it was good real estate? That’s a great place to start. What you know is the base, and that’s one that my grandfather Cliff pushes.
Another one is commercial agents also generally have a lot of knowledge on the market, so just start a conversation. Just go and inspect a property you might be interested in and start a relationship with the agent. They will want to share their market reports and research with you.
There’s so much information out there and a lot of transparency also in the Australian market, so if you’re interested, you can get right amongst it.
Kevin:  Yes, it comes out of education doesn’t it? I was going to ask you about the relationship with the agent. You touched on it there. It becomes very important. Obviously, over the years, you would have watched your father, your grandfather as well, build relationships with agents. Do you find that they have the core agents they work with who will refer to them?
Annabelle:  Yes and no. It sort of chops and changes. My dad is very much the leader in maintaining relationships with agents and he believes in being very fair. He was an agent once himself – that’s how he started out – so he believes in not really sticking to the same guy all the time. He believes in picking the best guy for the job, which I think is a great thing to do, and it also gives you a lot of perspective on your assets. You might get three different agents giving you their advice, and then you make a decision from there.
I personally like getting in touch with the agents now that I’m doing this day to day and tapping into their advice, and I’ve found them so willing to come forward with their help. But I suppose keeping it to a limited group; you don’t want to have 50 agents on your call books. It would get a bit exhausting.
So, if you have your favorite group of industrial guys, your favorite group of commercial, and get their three opinions on your properties, then you’d be in pretty good hands.
Kevin:  I would imagine from listening to you in the conversations that you and I have had off air that you have a fairly healthy portfolio within the property group. Are you constantly looking at that, reassessing it, maybe trimming off from the bottom, or do you have a strategy of buy and hold?
Annabelle:  Yes, that’s interesting. That’s essentially why I’ve come on in the role. My dad was doing this asset management side of the business for free while he was also running his own property management business, managing properties for other clients as well. So I’ve come in because dad is over 60 – I probably shouldn’t be telling you that – and he is wanting to retire and have a few more weekends at the beach. So, I’ve taken on the role of taking the helm and going “What needs to be cut away? Or what can we do in small ways to make this property more attractive?”
Simply, in the building I’m in, 150 Edward Street in the CBD in Brisbane, I work out of this office and it’s the CBD building we own. And I’ve done tiny things, like changing soaps in the bathrooms and putting diffusers in, which are those scented things in the bathroom. Tenants have already noticed it.
So, you can look at the macro, but it’s really important to also look at the micro, and I think that’s where my family is really relieved that I’m here because there’s a massive list of things I could do to each property. It’s everything down from how the fences operate to whether the shed has columns in the center, to when you come into the CBD, what the toilets are like.
Kevin:  You’re obviously on a massive learning curve. It’s been fantastic talking to you, Annabelle. I wish you every success with your future and what you’re doing with the company. Thank you for spending some time with us today and sharing a bit of that knowledge. It’s been great talking to you.
Annabelle:  Thank you, Kevin. Really great talking to you and really enjoying your podcast. It helps me get a great understanding across the market as well, so thanks so much.
Kevin:  Thank you.

Research you can trust – Simon Pressley

Kevin:  As we all know, research is the key when it comes to putting together a good property portfolio. I guess one of the things that technology has helped us with in recent times is being able to get access to a lot more information through the Internet.
Interesting to note that Propertyology – which is a company we tell you about in the show – has just named as Queensland finalist in the prestigious 2017 Telstra Business Awards because of what they’re doing with technology. The man behind Propertyology joins me, Simon Pressley.
Simon, congratulations on getting to the finals.
Simon:  Thank you very much, Kevin. It’s something that the entire Propertyology team is very, very proud of. It’s years of hard work trying to revolutionize – I suppose – how people go about investing in property.
Kevin:  Technology or the Internet has allowed businesses like yours to flourish, and I know you spend a lot of time looking at the data that’s on the site. Interesting to note that you say 95% of your clients don’t reside in their home city. So there’s a lot of investing going on outside, Simon. I read into that?
Simon:  It would be correct to say that our business wouldn’t exist. We wouldn’t be able to do without technology, certainly in its current form. Gone are the days where the way we bought property was get Saturday’s paper, I look at what properties were listed for open home, and then spend a few hours driving around and going through things. We can still do that, of course, but you’re really narrowing your focus and you’re not taking advantage of technology.
Just to put some context around how important technology is to Propertyology’s business, in the 2016 calendar year, Kevin, we bought roughly a hundred properties and none of those were in our own home city of Brisbane – none – and 95% of the clients who we bought those properties for lived in Brisbane either.
Kevin:   You’re looking at properties all over Australia. I know you look at a lot of regional areas as well. As the person who’s guiding a lot of other people as to where they should be buying it, at what point do you get your feet on the ground, Simon?
Simon:  It’s a big-picture analysis from our office here in Brisbane. We see Australia as a property market in a similar way a share investor has a massive stock exchange. They don’t narrow their focus to companies that have a head office in the city they happen to live in themselves.
We have a very similar way of analyzing that, and that’s a lot of economic data, property data, infrastructure projects, what different industries are doing, and that sort of thing. Several times throughout a year, we’ll give a location a green light. That’s using technology to gather information and interpret information, and then we physically fly to whichever town or city that is, whether it’s a capital city or a regional city.
We will live there for a week, we’ll meet face-to-face with mayors, with town planners, economic development managers, we drive down every street, so we’re gathering a lot more information then at a local level. We’re plotting all this, and then back in their home city of Brisbane, we can pinpoint an individual property on a specific street and make sure we buy it at the right price.
We could do none of that if there wasn’t for technology.
Kevin:  How often are you reassessing this data? Is it an ongoing exercise, Simon?
Simon:  It is. Researching market is our core business. The average person who might buy an investment property will do that process once every seven or eight years, at best. It’s our profession; we’re doing it every day.
You’re right earlier what you said, Kevin, about there being so much information on the Internet, but there’s a big difference between jumping on the Internet for a couple of hours and reading a whole heap of articles about property and actually researching.
How do you know whether the quality of the content is [4:02 inaudible] or whether there is a vested interest in a particular comment that’s been made? And what don’t you know? What was it in the article that you haven’t heard of yet?
It’s a big wide world, the Internet, but you need to know what’s the really important information and where to get it from.
Kevin:  What are you reading into the data that you are picking up on and that you’re analyzing in terms of the regional areas compared to the city areas, say, in the next 12 months or so, Simon?
Simon:  It depends which sort of data we’re looking at. There’s the property-specific data, which is what we refer to as “rear-vision mirror” stuff – changes in median property values, for example, or vacancy rates. That’s interesting but it’s behind us, so it’s “rear-vision mirror” stuff.
There’s the economic data, which is often a precursor to what a property market might do next. So, whether it’s regions or capitals or cities, we have a keen interest in things like growth in jobs, growth in wages, and what’s in the housing supply pipeline. A market might be undersupplied or in equilibrium now, but there might be a lot of extra approvals in a market that technology gives us some insight as to how that city might look in years to come, so it could be an oversupply.
Information comes in all different sources. It’s not always data; there is information which might be in a government report or an industry body’s report that’s describing something that could be good or bad for that market in years to come.
Kevin:  Simon, great talking to you, mate. Simon is a regular guest on our show. You’ll hear him from time to time. He even gives us some good insights as to what areas he’s currently looking at as well. Propertyology.com.au.
Simon, once again, just in closing out, congratulations on being named as the Queensland finalist in the 2017 Telstra Business Awards. All the best. We’ll watch that, and we’ll talk to you when you win it.
Simon:  We’re one of five, so we’re a 20% chance. But there’s something like 425,000 businesses in Queensland, so we consider it a win to be coming this far. Thank you for the comment.
Kevin:  Excellent, mate. Congratulations and we’ll talk to you again soon. Thanks, Simon.
Simon:  Good on you. Thanks, Kevin.
Knowing when your finance is OK – Andrew Mirams 
Kevin:  It’s such a confusing issue for buyers sometimes to understand exactly where they are with their finance approval or their finance request when they’re going to buy a home. Andrew Mirams from Intuitive Finance joins me to talk about pre-approval versus subject to finance.
Good day, Andrew. Nice to have you on the show again.
Andrew:  Hi, Kevin. Yes, great to be with you.
Kevin:  Now explain to me the difference: what is the process, and how can buyers get caught out with this issue?
Andrew:  Yes, those are a great couple of questions and ones that often get very confusing where people talk about approvals subject to finance and then a pre-approval. This also varies across state to state, where in Victoria and Queensland you can negotiate terms and have subject to finance or pre-approvals, whereas in New South Wales, let’s say, once you exchange there’s no subject to.
I guess the key difference between the two is often someone who will negotiate subject to finance probably hasn’t done their finance approvals in advance. They’re walking down the street and they see a property and they go, “Oh that looks okay,” and all of a sudden, they find themselves in negotiations. Or they’ve had the thought about property or finance and then something comes at in the last minute and they think, “Hey I’d like to be involved,” but they haven’t done any of their due diligence with their finance. Are they applicable? Can they borrow? Can I borrow that amount? What terms, etc.?
If we look on the other side with a pre-approval, that’s where we’ve already done most of that due diligence. So, there’s been some work done on what a comfortable borrowing capacity is, what sort of purchase price you can target, what type of LVT – are you looking at 60%, 70%, 80%, or beyond that? Are you looking at principal-and-interest payments or interest-only payments and the rate differentials between all of that?
There’s a lot more due diligence going in to it with a pre-approval, and you know they’re all subject to just the property being acceptable and an evaluation being performed, that it’s fairly reliable that you can proceed with that purchase.
Kevin:  So, in the event of someone going to bid at an auction, they have to go all the way through. The bank has to be quite clear about which property you’ve going to be bidding on.
I always think that a pre-approval is where someone sits down and they look at you as an individual, your income, and your ability to repay a loan. But then to go one step further, they then have to verify that you’re not paying too much for the property. Is that a fair assessment, Andrew?
Andrew:  Yes, it is. Probably 999 out of 1000 that go to auction, they’re bought on the market. So, if it’s in competition, the market dictates a property’s value, and unless that’s really run out of control – and there are circumstances where that can happen – a valuation will generally come in on and around that number that’s being competed at auction.
Where you have a private sale, and even if the property is on the market and it’s negotiated off market, that’s where you can sometimes get some differentials between a valuation and what a property’s actual value is or what a client has paid for it.
But yes, you’ve done most of your due diligence. If it’s for an investment let’s say, as long as the numbers in rent return are within those boundaries that are set with your pre-approval, you can reliably proceed at an auction or with a purchase.
Kevin:  I guess most buyers would want to put themselves in the strongest negotiating position, which is really where they don’t have to have any conditions on the contract. It can just be a cash unconditional contract.
How often in your experience, does that actually happen, though, Andrew?
Andrew:  What you find, Kevin, with a pre-approval, it actually allows a lot of our buyers to negotiate. If you have two contracts sitting on your table to sell your property, Kevin, both at the same price, but one’s happy to go unconditional and one’s happy to sit conditional subject to finance – because still, things can go wrong with that one – which contract are you going to choose?
Kevin:  Yes, what are you going to do?
Andrew:  You’re going to take the unconditional every day, aren’t you?
Kevin:  Yes, it’s like a bird in the hand, isn’t it?
Andrew:  Absolutely. And this is where it’s a great tool to be able to negotiate. You can negotiate your terms. You might be able to negotiate a slightly lower purchase price. In that circumstance you might be able to negotiate $490,000 as the purchase price unconditional versus the $500,000 over there but there’s no guarantee. If that falls over, it’s very hard to get that other purchaser back in the market.
So, like you said, a bird in the hand is better than the one in the bush, Kevin. So, that’s where it can be a great tool knowing that you are pre-approved within those limitations.
Kevin:  Yes. Just getting off the subject a little bit, but helping once again with negotiation, we talked there about finance and how powerful that can be if you have your finance in place. Time of settlement, is that varying much around Australia in terms of how quickly someone can settle if all the finance is right?
Andrew:  Yes. Settlement can happen, if you’re paying cash, as short as seven days if everything can be done within that time. That’s probably unusual. We’ve been involved with some that have done 14 or 21 days with getting loan documents out and back, etc.
Fairly traditional in Queensland is a 30-day settlement. Everything is negotiable but that would be the norm in Queensland. In New South Wales, the norm would be a 42-day or a 6-week settlement. And in Victoria, it ranges everywhere from 30, 60, 90, we’ve had a 12-month settlement, 180 days, so six month settlements, all sorts of things.
There seems to be a lot more flexibility in settlement terms in Victoria than probably the other couple of states. It’s not to say that they can’t be negotiated; everything in life is negotiable, Kevin.
Kevin:  Absolutely, mate. It certainly is.
Andrew, it’s always great talking to you, mate. Thank you very much. Andrew Mirams, of course, from Intuitive Finance. And we had a really good look there at pre-approval versus subject to finance. We also took you in to some settlement periods as well.
Andrew, great talking to you, mate. We’ll catch up again real soon.
Andrew:  My pleasure, Kevin. Have a great day.

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