{"id":11938,"date":"2017-06-05T03:00:04","date_gmt":"2017-06-04T17:00:04","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=11938"},"modified":"2017-06-05T03:00:04","modified_gmt":"2017-06-04T17:00:04","slug":"guaranteed-wealth-creation-michael-sloan","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/guaranteed-wealth-creation-michael-sloan\/","title":{"rendered":"Guaranteed wealth creation \u2013 Michael Sloan"},"content":{"rendered":"

Michelle called in with a question about renovation so we seek advice from Michael Sloan<\/strong>, the author of \u201cThe Formula To Successful Property Investing\u201d.\u00a0 He also talks about benefits of debt reduction.
\nTranscript:<\/strong>
\nKevin:<\/b>\u00a0 Michelle is on the line. G\u2019day, Michelle. How can we help you?
\nMichelle:<\/b>\u00a0 Hello, Kevin. I just have a question because I\u2019m renovating my bathroom. I have a small farmhouse, and I have a very, very small area \u2013 1.2 only \u2013 to put a vanity in. It originally had a single vanity basin. For resale, should I go to a double vanity?
\nKevin:<\/b>\u00a0 If it looks out of place and it\u2019s going to clutter, I would think it\u2019s not going to add a lot of value. Just be very, very careful when you\u2019re in those small spaces.
\nMichelle:<\/b>\u00a0 Thank you, Kevin. It\u2019s a bit tricky to know what to do.
\nKevin:<\/b>\u00a0 It is.
\nMichelle:<\/b>\u00a0 Thanks, Kevin.
\nKevin:<\/b>\u00a0 Good on you, and all the best with your renovations, too.
\nMichelle:<\/b>\u00a0 Thank you. Bye-bye.
\nKevin:<\/b>\u00a0 You have to be so careful with what you do about renovations.
\nI\u2019m talking now to Michael Sloan. Michael is the author of\u00a0The Formula to Successful Property Investing<\/i>.
\nA point that you make in the book, too, Michael is that you need to understand what the market really needs before you start doing your renovation.
\nMichael:<\/b>\u00a0 Yes, you have to have a look at how much you\u2019re spending and how much difference it\u2019s going to make. Sometimes you can spend $40,000 on a renovation and get an increase in value of $60,000 or $80,000, but other people, especially when they\u2019re trying to renovate for profit\u2026
\nI would say over the years, most people who I\u2019ve met who try to renovate property for profit haven\u2019t made any profit. But when you live in it, that\u2019s a perfect time to do the place up slowly and add value.
\nKevin:<\/b>\u00a0 Yes, we spend a fair bit of time talking about renovations, and we have a couple of really good renovation experts who will constantly tell us that they\u2019ve seen so many people coming to what looks like a very, very easy method of making money and they\u2019ll just lose money hand over fist.
\nI have to say that I\u2019m actually one of those people who have actually lost money through renovation because in the early stages, we didn\u2019t really know what we were doing. It just looked so easy \u2013 and it is so easy sometimes to buy a property and think \u201cI\u2019ll just turn this over.\u201d
\nMichael:<\/b>\u00a0 I did it myself a long time ago, with my first property I ever bought.
\nKevin:<\/b>\u00a0 Yes, there are some valuable lessons there.
\nI want to talk to you about something you wrote in your book, and that is the guaranteed wealth creation strategy. Tell me about that, because anything that has a guarantee on it, my ears prick up straight away.
\nMichael:<\/b>\u00a0 Yes, Kevin. This one is guaranteed because what I was talking about is debt reduction. It\u2019s something that doesn\u2019t get a lot of press, but paying down debt is a guaranteed way to create wealth.
\nThere are a lot of really good calculators \u2013 we have some on our website and there are some on other websites as well \u2013 where you can just throw around some figures and run some numbers to see how much money you\u2019re going to make just by $50 or $100 a week going into your mortgage.
\nMortgages are the biggest debts that people carry. That\u2019s why you have to be very careful buying a negative property. We\u2019ve talked about negative or positive properties before. People buy negative cash flow property that might cost them $100 or $200 a week, but what they don\u2019t do is look at the lost opportunity of what they could have done with that money.
\nHow much will that make you by putting it into your mortgage? Because that money is guaranteed wealth creation.
\nKevin:<\/b>\u00a0 It requires discipline, doesn\u2019t it? And it requires the plan and the focus for you to be able to do that.
\nMichael:<\/b>\u00a0 Sometimes you just have to get off your backside and do a bit of work as well. When I do presentations, I\u2019ll say to people \u201cWho would change banks for $11 a week, if they saved $11 a week?\u201d and no one will put their hand up.
\nBut $11 a week on an average mortgage could be 0.25% on your loan. Over the life of the loan, that will save you about $17,000. But if you leave your payment as it was before, it actually saves you about $40,000.
\nKevin:<\/b>\u00a0 Do you think we\u2019re lazy, or we just don\u2019t do the sums and work it out?
\nMichael:<\/b>\u00a0 Often, we don\u2019t do the sums. But take a week off work. It is a lot of trouble moving banks, so take a week off work if you need to.
\nWhat I say to people is call a couple of banks that you don\u2019t deal with and ask them to pitch for your business. When they give you the best rate, as long as the loan is equal, go back to your bank and tell them you want them to match it.
\nWhat they\u2019ll often do is stay within about 0.25% above what you have, because they don\u2019t think you\u2019ll bother moving for that much money. But if you do the sums, make sure you know how much it\u2019s worth to you, especially if you maintain the same payment because that\u2019s when it really turns into tens of thousands of dollars.
\nKevin:<\/b>\u00a0 Those small fish can be very, very sweet. As an example, a few years ago, we tried an exercise where we just opened a bank account and we thought \u201cWe\u2019ll just put $50 a week in.\u201d It\u2019s just an automatic payment; it just goes in. We just left it, didn\u2019t touch it. It was amazing how quickly that grew, and it became a substantial amount of money. Sometimes the small, sweet fish can really add up to be quite big.
\nMichael:<\/b>\u00a0 Yes, there are lots of small things you can do to save money on your mortgage. One of them is have a look at how much money your kids have in their bank, and what are they earning \u2013 a couple of percent interest? Even older children saving for a deposit to buy their own place might have a bit of money in there and they\u2019re getting next to no money and they\u2019re paying tax on it.
\nPut it in your offset account against your loan and pay your kids the interest rate you\u2019re paying on your home loan. It\u2019ll be two or three times what they\u2019re making.
\nKevin:<\/b>\u00a0 Great advice from Michael Sloane. Michael is the author of the book\u00a0The Formula to Successful Property Investing<\/i>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Michelle called in with a question about renovation so we seek advice from Michael Sloan, the author of \u201cThe Formula To Successful Property Investing\u201d.\u00a0 He also talks about benefits of debt reduction. Transcript: Kevin:\u00a0 Michelle is on the line. G\u2019day, Michelle. How can we help…<\/p>\n","protected":false},"author":176692471,"featured_media":11939,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,36,22,25],"tags":[101],"class_list":["post-11938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nGuaranteed wealth creation \u2013 Michael Sloan - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/guaranteed-wealth-creation-michael-sloan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Guaranteed wealth creation \u2013 Michael Sloan - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Michelle called in with a question about renovation so we seek advice from Michael Sloan, the author of \u201cThe Formula To Successful Property Investing\u201d.\u00a0 He also talks about benefits of debt reduction. 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