<\/p>\n
Once again the annual International Demographia Housing Survey ranked Australia one of the most unaffordable places on earth. Sydney has been ranked the third most unaffordable major property market and Melbourne took sixth spot on the unaffordability index. In fact for more than a decade now international market analysts have been waiting for Australia\u2019s so called \u2018property bubble<\/a>\u2019 to burst. However most local economists are pretty confident that our housing markets are sheltered from any major overseas style collapse.\u00a0Michael Yardney<\/strong> tells us the 7 reasons he thinks prices will not collapse but in fact will continue to grow.<\/p>\n We ask finance broker Andrew Mirams<\/strong> if brokers can be financial planners as well? Hear what Andrew has to say about the \u201cone stop shop\u201d rationale vs. getting a good team around you.<\/p>\n Jane Slack Smith<\/strong> reveals why most renovations fail to make a profit and she shares her years of experience so you can avoid it from happening to you. We also tell you about a great new reno video series as well.<\/p>\n Talking about renovation, Brad Beer<\/strong> has some great news about how you can make money from removing asbestos from a property. Another reason not to fear properties with asbestos.<\/p>\n We have some compelling reasons why you shouldn\u2019t get a real estate agent to bid for you at auction.<\/p>\n Our own Kieran Clair<\/strong> won an award for his real estate reporting. In another life, Kieran was a property valuer and we get an interesting insight into how writing articles about real estate investing has changed how he sees property.<\/p>\n <\/p>\n Kevin<\/b>:\u00a0 There\u2019s so much talk about what is happening with property prices? Are they going to go up? Are they going to come down? Is it affordable? Michael Yardney has actually made the statement that he believes Australian property prices will remain where they are, if not climb even further.<\/p>\n He joins me. Michael, what are the reasons behind that statement?<\/p>\n Michael<\/b>:\u00a0 Kevin, I think it\u2019s the way we live and the way we\u2019re going to live. Property prices keep going up for two main reasons: supply and demand \u2013 in other words, our population is going to keep growing \u2013 and also affordability. By that, I don\u2019t mean cheap properties, but the fact that Australia is becoming and will remain a wealthy nation, and we\u2019re prepared to pay a premium to live there.<\/p>\n Kevin<\/b>:\u00a0 We\u2019re living largely in several major capital cities. Do you see that changing much?<\/p>\n Michael<\/b>:\u00a0 Kevin, that\u2019s one of the reasons prices are high. No, I don\u2019t see it changing much, and I can\u2019t see it decentralizing. One of the reason house prices are high in Australia is that, in general, we live in six major capital centers, and each of those other than Hobart actually boasts in excess of a million residents.<\/p>\n It\u2019s surprising. If you actually look at other countries, other than Japan and Hong Kong in the sample,<\/b> there\u2019s no other country as urbanized as us. The fact that we\u2019re dense and urbanized but in cities that are quite wide and big \u2013 big, big cities \u2013 spacious and expanding <\/b>is another reason our property values are high.<\/p>\n Kevin<\/b>:\u00a0 That expansion is really what the government has been trying to do \u2013 isn\u2019t it \u2013 trying to regionalize us by bringing in major infrastructure. Is that the answer?<\/p>\n Michael<\/b>:\u00a0 Kevin, what\u2019s happening is most people still want to live close to where the action is, close to the CBD. Interestingly, most of the economy in our country is now very much a knowledge-based and service, and IT industry. We\u2019re no longer a manufacturing country. We no longer live off the regional and rural Australia and the sheep\u2019s back. Our economy comes from the big capital cities.<\/p>\n Most of the jobs are close to the CBD. Most people don\u2019t want to commute that far, and so many of us are prepared to pay a premium to live close to where all the action is, where the jobs are, where the entertainment is, where the universities are, where lifestyle is.<\/p>\n Kevin<\/b>:\u00a0 Given that\u2019s the case, are we better off looking at smaller houses and having more infill?<\/p>\n Michael<\/b>:\u00a0 More and more of us are swapping backyards for balconies, and not necessarily smaller houses \u2013 maybe smaller lots. In Melbourne and Sydney, there are more townhouses being built.<\/p>\n It\u2019s happening a bit in Brisbane and Perth, as well, where the old houses are now past their use-by date. You pull them down and build two, three, or four townhouses where you have a modern spacious home on a compact lot. That\u2019s the way of living for a larger percentage of our people in the future, Kevin.<\/p>\n Kevin<\/b>:\u00a0 We\u2019re all getting richer, though, too. I\u2019ve heard you say that, as well, Michael.<\/p>\n Michael<\/b>:\u00a0 Well, the rich are getting richer, but in fact, all of Australia is getting richer. We\u2019re a wealthy nation, and every year when the World Wealth Report comes out, we come amongst the top. This year, again, we topped the world, and because of that, we can afford to pay a premium to live in these bigger properties \u2013 and Kevin, we have big homes, don\u2019t we?<\/p>\n Kevin<\/b>:\u00a0 We do, indeed. Well on that point, aren\u2019t we better off regionalizing more because we have so much land?<\/p>\n Michael<\/b>:\u00a0 That\u2019s what the government has been attempting to do: paying incentives for people to move there, moving industries \u2013 including their tax departments \u2013 out of various regional locations, but most of us don\u2019t want to live that way.<\/p>\n As our city matures, more and more of us want to live where the hustle and bustle is. We\u2019re not as much a country of living in big open spaces like we were before. We want to be where the action is.<\/p>\n Kevin<\/b>:\u00a0 What about that grand Australian dream of everyone owning a property? There are some great tax incentives offered now.<\/p>\n Michael<\/b>:\u00a0 All of us aspire to own a home, and in Australia the homeownership rates have really remained much the same. I remember when I first started investing, it was just over 70% about 40 years ago. People said by the turn of the decade, which was 15 years ago, ownership would drop to 50% because our kids would never be able to afford a home.<\/p>\n Interestingly, ownership rates have remained very much the same \u2013 just under 70%. If you look at property ownership rather than home ownership, a lot of young people are investors but still rent. It\u2019s in our blood, and the tax system encourages us. That\u2019s another reason why it\u2019s working so well and house prices are going to remain high, Kevin.<\/p>\n Kevin<\/b>:\u00a0 Compelling reasons there, Michael. Thank you so much for your time.<\/p>\n Michael Yardney from Metropole Property Strategists. Thanks, mate.<\/p>\n Michael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n Kevin:<\/b>\u00a0 There\u2019s a lot of talk in the market now about the viability of brokers. A lot of real estate agencies have been into brokerage for some time, but we\u2019re seeing them now open up into other areas \u2013 turning on your power, helping you move, even getting into insurance. Is this a good thing, the one-stop shop?<\/p>\n I\u2019m going to ask Andrew Mirams from Intuitive Finance to address this with me now and talk specifically about whether brokers can be financial planners. I\u2019ll open it up with that to start with. Andrew, is that a good idea?<\/p>\n Andrew:<\/b>\u00a0 Good day, Kevin. I\u2019m a little bit against that one-stop shop, I guess. Brokers are probably trying to now go into financial planning and even accounting and conveyancing, and things like that \u2013 more because a lot of those industries have probably tried to break into brokering.<\/p>\n I think there\u2019s a fair bit of evidence out there that neither of them has really worked that successfully. There are certainly some success stories out there. But the real issue I have with it is this. it depends how many brokers or how big your enterprise is, but if the brokers are trying to do the financial planning and the insurance as well as your loan and everything, is which part are they doing well?<\/p>\n Are they all doing just all of it okay, or are they doing a really good job? If they\u2019re doing a really good job, I would suggest they don\u2019t have too many clients, and how much exposure are they getting to all the different options and opportunities that there might be out there?<\/p>\n Kevin:<\/b>\u00a0 I guess you ask the question, too, whether they\u2019re doing it themselves or whether they setting up allegiances, which is in a way what some of the real estate companies have done. They\u2019ve set up allegiances with finance brokers. I know there are some that actually own the finance arm \u2013 as Ray White owned Loan Market, for instance \u2013but they trade as separate entities and tell you that never the twain shall meet. But it comes down, once again, to that one-stop shop rationale, doesn\u2019t it?<\/p>\n Andrew:<\/b>\u00a0 Yes. As a client, I would always ask myself, \u201cIf I\u2019m going there to get my mortgage and then they\u2019re doing my planning and they\u2019re doing my accounting, how impartial is the advice? Are they working together because they know that they\u2019re making X amount off me, or are they really doing the right thing for me?\u201d<\/p>\n There\u2019s no right or wrong answer. I\u2019m a really big believer in allegiances and having a really great network around you, and that\u2019s both as a client and also as a business person, as a broker. We have a great cache of financial planners, accountants, insurance brokers, buyer\u2019s agents, all around us so when any client comes in here, I can say, \u201cThis will be great. I think you should go and see them.\u201d<\/p>\n They\u2019re really happy. We sort of fit as the hub and we have all our spokes going out. We know we\u2019re referring them to really good people, that our clients are going to be really well looked after.<\/p>\n I quite like that philosophy a lot more than having everything in-house and the clients come in they think for a half-hour interview and three hours later, they\u2019re signing some insurance forms and they\u2019re not really sure what they\u2019re signing them for.<\/p>\n Kevin:<\/b>\u00a0 I guess it comes down to what you said there. It\u2019s making sure that you know the people you are dealing with, that your clients are going to be well looked after. It goes much more than any trail you might pick up or any income that you might get. It\u2019s to know you\u2019re going to end up with a very happy client at the end of it.<\/p>\n Andrew:<\/b>\u00a0 Absolutely. I would forgo all of that to make sure I\u2019ve got a happy client, because a happy client is going to recommend us again and again, and we\u2019re going to do more business that way.<\/p>\n I\u2019d much rather forgo all of that but have a happy client, because happy clients tell good stories. An unhappy client we tried to do everything for and mucked up, you end up losing all the business is the reality. You make one mistake on one of those entities if you\u2019re trying to do the planning, the accounting, and the brokering and you make one blue, you\u2019ll probably lose the total business.<\/p>\n I think, also, from risk management, there\u2019s a real issue you can lose clients if one of those entities makes a blue.<\/p>\n Kevin:<\/b>\u00a0 It comes down to all the smart investors I know \u2013 and we talk about it all the time on the show \u2013 have their own team around them. They have their own finance broker, their own insurance broker, their own real estate agents who they work with, so they\u2019ve effectively got their own team. They don\u2019t need that one-stop shop anyway, Andrew.<\/p>\n Andrew:<\/b>\u00a0 Absolutely. I\u2019m the same, Kevin. I have my own team around me, and our really strong clients and good investors have a really good team around them. They all work together but they\u2019re not intrinsically linked, so that if one of the team recommends one thing, there\u2019s quite an open dialogue in terms of saying, \u201cWhy are you recommending?\u201d and \u201cGive us the protocol.\u201d<\/p>\n From the client\u2019s perspective a good little test is \u201cWhy are you doing that?\u201d or \u201cWhy are you recommending that?\u201d Is it a good idea? Does that work? Go and talk to your accountant and come back to me and what I\u2019m recommending. I think that\u2019s a really good tasting mechanism for clients to be able to get a second opinion.<\/p>\n Kevin:<\/b>\u00a0 We\u2019d love to hear your opinion, too. Let us know through the website. What do you think? Have you got your own team? You might have a view on that. Maybe you\u2019ve had a wonderful experience with a one-stop shop. Let us know.<\/p>\n We\u2019d love to have your feedback through the show any time at Real Estate Talk. And make sure you catch up with Andrew and his team from Intuitive Finance at their featured channel on Real Estate Talk, as well.<\/p>\n Andrew, thanks for your time.<\/p>\n Andrew:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n <\/p>\n Kevin<\/b>:\u00a0 Earlier this month, on the 3rd<\/sup> of March actually, we treated you to a fantastic webinar with Jane Slack-Smith and some great ideas on renovation. By now, you will have also heard about the Ultimate Guide to Renovation. That\u2019s open right now, but it\u2019s only open for a limited period. I\u2019ll tell you more about that in just a moment.<\/p>\n Joining me once again, the lady behind the program, the mastermind behind this, Jane Slack-Smith. Good day, Jane.<\/p>\n Jane<\/b>:\u00a0 Hi Kevin.<\/p>\n Kevin<\/b>:\u00a0 Jane, these free videos that are running right now, tell me about what\u2019s inside these?<\/p>\n Jane<\/b>:\u00a0 There are four videos in the video series that we put out, and they\u2019re packed full of so much information. The first one for me is what I find so many people make mistakes with is buying the wrong property, so what I\u2019ve done in the first video is actually take people live through a property inspection.<\/p>\n Kevin<\/b>:\u00a0 We talked about that in that webinar, too. It\u2019s a great way to find out what are the right properties? Now, as we said there are four in the series. They\u2019re available right now. They\u2019re free. It\u2019s called www.FreeRenoVideo.com.au<\/a>.<\/p>\n A lot of very well intentioned renovators go wrong, Jane. Where do you see them go wrong?<\/p>\n Jane<\/b>:\u00a0 There are so many things that people can avoid. Really, the number one is probably just missing the facts that they\u2019re renovating the wrong property. You really need to have pricing disparity between the renovated and the unrenovated property.<\/p>\n An example of that, Kevin, is if you were looking at buying a property for $350,000, if the renovated property was worth $380,000, there\u2019s probably not a lot of room there for you to be making a profit. A lot of people see the opportunity with a rundown property and think they can probably fix it up with a lick of paint, where in actual fact, there\u2019s probably not money to be made there.<\/p>\n Kevin<\/b>:\u00a0 A fine line between adding value and over-capitalizing, which is what you\u2019re saying, isn\u2019t it?<\/p>\n Jane<\/b>:\u00a0 Absolutely. You can over-capitalize in other areas, as well. There are what I call the no- or low-return items. If you have to go and fix up the plumbing or the electricals, or if there are things that you haven\u2019t identified in your initial checklist, in your inspection, that then are going to cost you money, they\u2019re going to eat into your budget and they\u2019re going to cost you money and maybe not make a profit for you.<\/p>\n Kevin<\/b>:\u00a0 One of the other things I know you talk about, too, in these free videos is all about getting the right location. That\u2019s another big mistake people make.<\/p>\n Jane<\/b>:\u00a0 Absolutely. We spend a lot of time in the Ultimate Guide to Renovation looking at suburb due diligence and then actually selecting a suburb, as well. You\u2019re really looking at the right property in the right area that\u2019s right for renovation, and that to me is the key to successful renovation.<\/p>\n We can get into pretty color schemes and strategic renovations and wonderful solutions on innovative kitchen designs, etc., but really renovating the wrong property to start with, you\u2019re never going to make money.<\/p>\n Kevin<\/b>:\u00a0 Yes. Some of the things you\u2019re going to see inside the free video series are things like how to create a bathroom that looks great, how to make sure that you finish the property off well, and I also love the three most dangerous mistakes most people make when they\u2019re buying a property to renovate.<\/p>\n Jane<\/b>:\u00a0 Absolutely. We hear this all the time, Kevin, the fact that people get emotional about even their first property investment. They think about the color schemes or the things that they would like to do with the property themselves in their own home, and they make it an emotional buy, and that\u2019s just the number one wrong thing to do when you\u2019re buying a property.<\/p>\n Kevin<\/b>:\u00a0 If you\u2019re interested in renovation, perhaps you already own an investment property or your own home maybe, or you\u2019d like to start using property to make a profit, now build wealth through that, and you can do that by watching this video series. It\u2019s absolutely free. It\u2019s available for you now, but only for a limited time. The website is www.FreeRenoVideo.com.au<\/a>.<\/p>\n I have to mention, too, that the Ultimate Guide to Renovation, you can get a lot more information, too, by watching that series of videos, but the entry is open right now?<\/p>\nTranscripts:<\/h4>\n
Michael Yardney<\/h4>\n
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Andrew Mirams<\/h4>\n
Jane Slack-Smith<\/h4>\n