<\/p>\n
First Home Buyer to investor, upsize, downsize and finally retirement. It is a journey but like with very journey you must know the destination before you set out.<\/p>\n
Michael Yardney<\/strong><\/a> gives us the five property investing lessons you never want to forget.<\/p>\n As we prepare to enter Spring \u2013 one of the busiest real estate times of the year \u2013 we take stock of the market and give you an insight as to the market conditions, level of stock availability and how not to pay too much.<\/p>\n Louis Christopher<\/strong> from SQM Research says the measures taken by APRA in slowing investor demand are now having an impact on the market and it is likely the measures will slow the rate of dwelling price inflation recorded, rather than create a price correction.<\/p>\n Andrew Mirams<\/strong><\/a> \u2013 our finance expert \u2013 says the tighter banking restrictions are even further evidence that cross-collateralisation is a fatal investor mistake. He explains how and why it should be fixed.<\/p>\n If you need a new property manager, want to change property managers or\u00a0would just like to compare your current manager to alternative managers there is a new website that will help you do that. I will tell you about the site that will service investors nationwide.<\/p>\n <\/p>\n Kevin:\u00a0 <\/b>Louis Christopher from SQM Research says the measures taken by APRA in slowing investor demand are now having an impact on the market, and it\u2019s likely the measures will slow the rate of dwelling price inflation recorded rather than create price correction. He joins us.<\/p>\n Louis, I wonder if you\u2019d just explain a little bit more about your thinking behind that?<\/p>\n Louis:\u00a0 <\/b>Sure, Kevin. We know that what APRA has done via the major banks has had an impact upon the market. We know this because we are seeing in our stats \u2013 for example, the total listings number jump in July, which is a pretty abnormal time for that to happen \u2013 and we know through reports on the ground of mortgage brokers and real estate agents stating that a number of their potential buyers and borrowers have decided to leave the marketplace.<\/p>\n We think there is a bearing there, but it\u2019s very difficult to work out at this stage what the magnitude of this is going to be on the housing market, how much of an impact this is actually going to be on the housing market. We need to see more information come through. It\u2019s very early days yet.<\/p>\n The two major factors are that, number one, property investors need to put up more money as a deposit or as equity in order to secure the investment property, to get the loan to get the investment property, and two, interest rates have gone up for property investors. Historically, of course, we know whenever those two events have occurred it has slowed the market.<\/p>\n I think those measures on the top of it will continue to slow the market, but I don\u2019t think it will create a major correction. When it comes to the actual interest rate increase, it\u2019s effectively come out at about 25 basis points, or a quarter of a percent, which in itself shouldn\u2019t create a correction in marketplace. We need to see higher interest rates than that.<\/p>\n Secondly, of course, this is just one element of the market. Obviously, first-home buyers and owner-occupiers are still there, and indeed, the banks have actually loosened the purse strings a little for first-home buyers. While they\u2019ve actually announced a rate rise effectively for property investors, they\u2019ve lowered interest rates for first-home buyers.<\/p>\n Kevin:\u00a0 <\/b>I was really interested in your latest set of figures, too, to notice that the Melbourne listing numbers have actually fallen. It was interesting that the same day you released that, we noticed that the prices in Melbourne had increased. Is there anything you can draw from that?<\/p>\n Louis:\u00a0 <\/b>Overall, Melbourne has definitely recorded an improving property market where we\u2019ve definitely noticed more activity except for this month. As it\u2019s gone by, listings have actually started trending down, so it\u2019s becoming increasingly a seller\u2019s market.<\/p>\n But I don\u2019t think Melbourne is an actual state of a total property boom, not like what we\u2019ve been seeing in Sydney. The price growth rates have been hovering around the 8% to 10% mark per annum for Melbourne, whereas Sydney has been doing 15% to 20%. Definitely, Melbourne has been picking up.<\/p>\n Also know, too, the Reserve Bank of Australia, in its most recent update on monetary policy, left out the city of Melbourne in terms of discussing the housing boom. Whereas before, they were including Sydney and Melbourne, they now only just said Sydney.<\/p>\n Kevin:\u00a0 <\/b>Is that because they\u2019re not sure what\u2019s happening in Melbourne?<\/p>\n Louis:\u00a0 <\/b>I think so. I think that\u2019s the case. Calling it like it is, Kevin, Melbourne historically has been very difficult to call the numbers. Usually you see very inconsistent data coming out of the city of Melbourne when it comes to housing market information.<\/p>\n Kevin:\u00a0 <\/b>And listings around the rest of the country \u2013 apart from Hobart, where there was a just very small fall month to month \u2013 they\u2019re holding pretty well?<\/p>\n Louis:\u00a0 <\/b>They are. It was still an abnormal month in the sense that normally you see subdued listings activity just before springtime, but this month we recorded increases for all cities except for Hobart. That was a little abnormal, and just goes back to the point about whether the APRA initiatives are actually having an impact upon the market.<\/p>\n Kevin:\u00a0 <\/b>Louis, do you think that APRA\u2019s decision, then, to apply those changes across the country is the correct one?<\/p>\n Louis:\u00a0 <\/b>I don\u2019t. I think this is one of the failings of what APRA is doing. Macro-prudential tools have the opportunity to be very tactical in the sense that you can focus them very geographically. You can set policy, for example, just for the city of Sydney if you wanted to, but they\u2019re not doing that.<\/p>\n They have basically left it up to the banks to decide how they\u2019re going to meet their overall criteria, and what the banks are doing is applying policy changes basically everywhere. They\u2019re not just focusing on Sydney; they\u2019re doing it across the board.<\/p>\n I\u2019m not so sure whether that\u2019s something that the RBA wants to see. This is all about trying to contain the boom in Sydney, not trying to contain a national housing boom, of which there isn\u2019t any.<\/p>\n Kevin:\u00a0 <\/b>Well, Louis, I guess it\u2019s just a matter of wait and see. Thank you for joining us. Louis Christopher from SQM Research.<\/p>\n Thanks for your time, Louis.<\/p>\n Louis:\u00a0 <\/b>Thanks, Kevin.<\/p>\n Kevin:\u00a0 <\/b>According to our finance expert Andrew Mirams, from Intuitive Finance, now more than ever, with all the tightening of the rules by APRA, it\u2019s more important that you consider whether or not you should have all of your properties cross-collateralized. Andrew joins us.<\/p>\n Andrew, you\u2019re expressing some concern about this, and this is highlighting that?<\/p>\n Andrew:\u00a0 <\/b>Yes, it is, Kevin. Firstly, thanks for having me.<\/p>\n We\u2019re seeing the constant and ongoing debate about cross-collateralization and things like that. Whereas you have some people advocating it\u2019s okay, we\u2019re certainly an advocate of not having it.<\/p>\n At the moment, with the tightening of the rules, we\u2019ve had a couple of clients contact us \u2013 who weren\u2019t original clients \u2013 saying, \u201cI\u2019ve got all my loans linked, and my properties are linked at one lender. What can you do for us?\u201d<\/p>\n We\u2019re just finding that when standards tighten and things like that happen, there\u2019s certainly a case that having all your eggs in one basket is not the best thing for us. People need to be aware, and if they do have that situation, they need to start looking at taking some action.<\/p>\n Kevin:\u00a0 <\/b>What can they do if they are in that situation, Andrew?<\/p>\n Andrew:\u00a0 <\/b>The first thing is now more than ever, when the rules are tightening and thing are getting harder, is to seek professional advice. Certainly, what we do here at Intuitive Finance is specialize in the investor market. Find someone who can help to review your portfolio and see what you\u2019ve actually got in place. Then from there what can be done, talking about if there are lenders still out there that will give access to funds, and trying to unwind it.<\/p>\n It doesn\u2019t necessarily mean throwing the baby out with the bath water. You don\u2019t have to completely up stumps and move lenders. You can still retain your relationship with your lender. It\u2019s just a restructure within.<\/p>\n There are a few things you need to do, but certainly the first and the most important thing is seeking advice. The problem with seeking advice, Kevin, is when interest rates are low and times are good, people tend to get very complacent. Probably, it\u2019s been still a thing that people haven\u2019t addressed in the good times we\u2019ve just had, but hopefully that won\u2019t leave people short if we\u2019re about to experience a little bit of tougher times with our lenders and APRA and the regulations that they\u2019re wanting to enforce.<\/p>\n Kevin:\u00a0 <\/b>I guess this is a time to be proactive as opposed to reactive \u2013 in other words, not waiting for the banks to come to you, but get on the front foot and do something about it now?<\/p>\n Andrew:\u00a0 <\/b>No doubt. Absolutely. As with anything, you would much rather be in the driver\u2019s seat than being towed around. I think the more proactive and the sooner you address some of the things if there are some potential issues, the better.<\/p>\n Kevin:\u00a0 <\/b>One of the things that I wanted to revisit is we did a special video podcast recently, and at the conclusion of that, I asked you how people can make themselves more attractive to the banks. How can we do that?<\/p>\n Andrew:\u00a0 <\/b>The golden rule there was make sure you don\u2019t cross-collateralize or have your loans linked. The second thing we talked about was making sure you\u2019re seeking professional advice and getting a great team around you.<\/p>\n Make sure you have more than one lender. If you\u2019re a portfolio investor, and you\u2019re starting to grow your portfolio, you don\u2019t necessarily want all to be interlinked all to one bank. It doesn\u2019t even matter if you have all your loans not crossed, but having all your lending at one bank means that they still have the power. In times when it\u2019s a little bit tougher to get access to funds, being an existing customer is a little bit easier than being a new customer.<\/p>\n Certainly, just looking at making sure you have your right debt structures in place. What I mean by that is actually using your equity, making sure \u2013 if you\u2019re an investor \u2013 you have a line of credit and a buffer set up, so that if things do get a bit tougher and your tenant moves out, you\u2019re not actually having to fund it from your own income, that there are actual structures in place to help you and see you through.<\/p>\n The final thing, I think, is in low interest rates and when things are going well, we still get access to personal debt, credit cards, and personal loans, and in times when you\u2019re looking to access funds, if the credit rules are a little bit tougher, now\u2019s the time to look at eliminating those or certainly reducing them.<\/p>\n Those are a few tips that I think can help people.<\/p>\n Kevin:\u00a0 <\/b>And very good tips, too. Thanks for your timely warning as well. Andrew Mirams from Intuitive Finance who you can see as a regular contributor on RealEstateTalk.com.au, of course, or through his website, IntuitiveFinance.com.au.<\/p>\n Andrew, once again, thanks for your time.<\/p>\n Andrew:\u00a0 <\/b>My pleasure, Kevin. Thank you.<\/p>\n Kevin:<\/b>\u00a0 Wise investors know that you can always be learning lessons. You have to look back sometimes to learn the lessons of the past. With our property markets now in a more mature stage of the cycle, it seems appropriate that we should reflect back and look at some of those lessons that we\u2019ve learned over the last few years.<\/p>\n There\u2019s no better person to talk to about that than Michael Yardney from Metropole Property Strategists. No doubt you\u2019ve been looking a bit in the rear vision mirror, Michael?<\/p>\n Michael:<\/b>\u00a0 Yes I have, Kevin. I have learned a number of lessons along the way. Wouldn\u2019t it be nice to have known then what we know today?<\/p>\n Kevin:<\/b>\u00a0 Yes, it would be. What\u2019s the first lesson?<\/p>\n Michael:<\/b>\u00a0 I guess the first lesson is that neither booms nor busts last forever. During the boom stage of the property cycle, everyone is optimistic \u2013 they expect the good times to last forever \u2013 just like we lose our confidence in the downturn stage.<\/p>\n Currently, despite all the mixed messages in the media, people are still reasonably optimistic. It\u2019s just a thing that psychologists call recency bias. When you have lots of good news \u2013 like we\u2019ve been having in the property markets, particularly in Melbourne<\/a> and Sydney, for example \u2013 you feel good.<\/p>\n The other thing that tricks our minds is something called confirmation bias \u2013 you actually look for information to confirm your predetermined decision that the market is doing really well, and you tend to neglect the other bits.<\/p>\n The lesson is take advantage of property cycles as they occur, but be ready for the downturn. Be covered because this too shall pass.<\/p>\n Kevin:<\/b>\u00a0 Lesson number two?<\/p>\n Michael:<\/b>\u00a0 There\u2019s always going to be doomsayers. As long as I\u2019ve been investing \u2013 it\u2019s over 40 years now \u2013 I remember people saying that property prices are too high and the market is going to bust. Fear is a powerful emotion, and the media use it to grab our attention. Sadly, some people miss out on opportunities to develop their own financial freedom because they listen to the messages of those who want to deflate our financial dreams.<\/p>\n Yes, be cautious of this stage of the property cycle, but don\u2019t let fear take hold of your decisions.<\/p>\n Kevin:<\/b>\u00a0 Good. Lesson number three?<\/p>\n Michael:\u00a0<\/b> Follow a system. Therefore, don\u2019t let emotions \u2013 and fear is one of them, as is greed \u2013 drive your investment decisions.<\/p>\n To take the emotion out of it, get a system rather than speculate. This may be boring but it\u2019s profitable. Almost anyone can make money after the boom conditions of the last couple of years, but many investors without a system found themselves in financial trouble when the market turned down last time around.<\/p>\n I remember Warren Buffett clearly saying you find out who is swimming naked when the tide goes out. Kevin, the tide is going to go out in the future, so those who follow a system are less likely to be caught when conditions change.<\/p>\n Kevin:<\/b>\u00a0 Those people who do follow a system, Michael, have you noticed they\u2019re the sorts of people who treat it like a business?<\/p>\n Michael:<\/b>\u00a0 Clearly, they do, but they have a reason why the want to invest. In my opinion, it should be for capital growth, but everybody is in a different stage in their financial journey, so some want to invest for cash flow. But they should be investing rather than speculating.<\/p>\n I\u2019m seeing a lot of people currently fearing that they\u2019re missing out, so they\u2019re looking for the get-rich-quick, the fast money. They\u2019re looking to bypass the banks, they\u2019re looking to do things in a way that isn\u2019t going to work, I guess.<\/p>\n Another of Warren Buffett\u2019s good sayings to remember at this time is \u201cWealth is a transfer of money from the impatient to the patient.\u201d<\/p>\n Kevin:<\/b>\u00a0 That would align with your fourth lesson, wouldn\u2019t it, about the get rich quick schemes?<\/p>\n Michael:<\/b>\u00a0 Yes, it is. Only recently ASIC jumped down on a number of what they call \u201cproperty spruikers.\u201d There are some promoters out there who are promising unrealistic expectations, unrealistic returns. Remember, if it\u2019s too good to be true, it probably is \u2013 or it\u2019s at least definitely worth exploring more before you jump in.<\/p>\n Kevin:<\/b>\u00a0 In fact, on that point, we spoke to Ben Kingsley from PIPA about that on the show just last week.<\/p>\n Lesson number five, Michael?<\/p>\n Michael:<\/b>\u00a0 It\u2019s actually about property. That\u2019s what we\u2019re involved in. But I hear people getting involved for depreciation<\/a>, or for tax benefits, or for negative gearing. Really, what you have to understand is don\u2019t look at these glamorous financial or tax strategies; smart investors<\/a> buy well-located assets that are going to be in strong demand by a wide range of \u2013 generally \u2013 owner-occupiers.<\/p>\n In order words, to me, a good investment property is one that owner-occupiers always want, not one that tenants or investors are looking for. Then, buy that sort of property and hold it for the long term. That\u2019s likely to help you build your financial wealth, like a lot of others have.<\/p>\n So, despite being at a mature stage of the cycle, I know a lot of people who are today looking back very happily, having bought in 2007 and 2008 before the market slowed down then, or in 2002 or 2003 when, again, we had the peak of the market and things slowed down. They bought well-located properties, were able to ride the cycle, and today are sitting back looking very happy.<\/p>\n Kevin:<\/b>\u00a0 Very good, Michael. It\u2019s always good talking to you. You can catch up with Michael, of course, at his blog site: PropertyUpdate.com.au<\/p>\n Thanks, Michael.<\/p>\n Michael:<\/b>\u00a0 My pleasure, Kevin.<\/p>\n <\/p>\n Kevin: \u00a0 <\/b>It\u2019s quite timely that we should be talking right now to Cate Bakos, who is a buyer\u2019s agent out of Melbourne, talking about what\u2019s going to happen as we enter into spring. This is the last Saturday, of course, before spring, and it\u2019s a great time of year and a tremendous time to be out looking for property.<\/p>\n Cate Bakos joins me. Hi, Cate.<\/p>\n Cate:\u00a0 <\/b>Hi, Kevin. How are you doing?<\/p>\n Kevin: \u00a0 <\/b>I\u2019m well, thank you. Happy almost-spring to you.<\/p>\n Cate:\u00a0 <\/b>Yeah, almost. We\u2019re just about there.<\/p>\n Kevin: \u00a0 <\/b>Tell me about what\u2019s happening with stock levels. Does it change as we move from winter into spring?<\/p>\n Cate:\u00a0 <\/b>Yes, it sure does. The sheer number of listing alerts that are coming through on anyone\u2019s search engine alerts should be demonstrating that.<\/p>\n We\u2019ve had a reasonably tough winter. We have a stock shortage and, obviously, buyers who are out there feeling that they\u2019re hard-pressed to buy and get good value at the moment. But as we come into spring, our relative number of buyers to properties is dropping, and that\u2019s advantageous for buyers, because obviously, it\u2019s diluting the buyer pool. Perhaps that will take some of the heat off some of those crazy sales results we\u2019ve seen through July and August.<\/p>\n Kevin: \u00a0 <\/b>They did surprise me \u2013 particularly out of Sydney and Melbourne \u2013 when we\u2019re supposed to be going through not so much a lean time but one of the slowest times of the year. But it just seemed to gather pace and continue going.<\/p>\n Cate:\u00a0 <\/b>That\u2019s right. It\u2019s a combination of sentiment. We\u2019ve had a lot of media talk about records and crazy results. I think a lot of people have been feeling that if they don\u2019t do something now, the market will get even further away from their fingertips. So we\u2019ve seen some really desperate moves and some big stretches on the part of some of the buyers out there.<\/p>\n I don\u2019t think that that\u2019s actually the case this coming spring. I think they can not necessarily relax but look forward to enjoying a little bit of ease <\/b>on the pace of the market and the competition.<\/p>\n Kevin: \u00a0 <\/b>How would you describe the market at present? Is this a buyer\u2019s market or a seller\u2019s market?<\/p>\n Cate:\u00a0 <\/b>It\u2019s still most definitely a seller\u2019s market, and our auction clearance rates indicate that.<\/p>\n Kevin: \u00a0 <\/b>Any signs that that may change as we get further in towards the end of the year?<\/p>\n Cate:\u00a0 <\/b>I don\u2019t believe that we will see a buyer\u2019s market this year, Kevin \u2013 I don\u2019t even think that we\u2019ll see it in the next year \u2013 but I think we\u2019ll see not quite an intense seller\u2019s market. I think things will ease a little bit. I anticipate that our auction clearance rates may even get below 75 and even touch 70, certainly for certain segments of the market.<\/p>\n I know that you\u2019ve also addressed the APRA changes and how that\u2019s affecting parts of the market. We might well see typical investor stock \u2014 for example, apartments and townhouses \u2014 ease off a little bit, but I think that houses will still be going relatively strong. I just think that buyers are in for a little bit of a pleasant surprise compared to some of the hardships that they\u2019ve faced over the last couple of months.<\/p>\n Kevin: \u00a0 <\/b>That certainly will be a surprise to a lot of people, and probably a refreshing change, as well. You must have seen a lot of disappointed buyers in recent times \u2014 even you \u2014 going along to auctions and being outbid.<\/p>\n Cate:\u00a0 <\/b>Without a doubt. Trying to secure a property prior to auction is a lot harder. I\u2019ve put a lot of emphasis into chasing off-market opportunities, because my auction success percentage has dropped over this period, as well, and that\u2019s no surprise. It often does in winter, when things are really competitive. But I think buyers are in store for a little bit of a pleasant surprise. I certainly hope so, anyway.<\/p>\n Kevin: \u00a0 <\/b>When you\u2019re going to an auction, Cate \u2013 just give me a bit of an insight here \u2013 you obviously have a figure in your mind. How flexible are you about that, and do you set a limit underneath the figure that you\u2019d go to?<\/p>\n Cate:\u00a0 <\/b>I\u2019ll always appraise the property and give the client a really robust understanding of what I think it compares to, and then obviously, you\u2019re overlaying market sentiment. If you\u2019re in a really tough, really strong market, you do have to be prepared for the next sale to break the last record.<\/p>\n Having said that, we always set our maximum price before the auction so that we\u2019re not emotional when we\u2019re doing it, we\u2019re being sensible. I say to everyone if it\u2019s an investment purchase, you don\u2019t want to be breaking records \u2013 so maybe being prepared to stretch up to 3% from the top end value of where you think the property sits.<\/p>\n But if it\u2019s an owner-occupier property, we really have to overlay the buyer\u2019s sentiment around that particular property, as well. If it\u2019s a really tough brief and they have very specific criteria, and that property ticks most of the boxes or all of the boxes, then we have to understand what the implication is if we miss out on the property, how much longer they\u2019ll need to stay in the market and what that could do to the values in that segment.<\/p>\n Sometimes buyers will stretch maybe 5%. Generally speaking, I wouldn\u2019t be excited to see someone go beyond 5%, because that is quite a bit stretch, particularly when you\u2019re talking about a house towards maybe $1 million.<\/p>\n We obviously set every limit based on that particular client\u2019s situation and criteria, but yes, as I\u2019ve just said, you do need to be prepared to stretch a little bit in a seller\u2019s market.<\/p>\n Kevin: \u00a0 <\/b>Always good talking to you, Cate Bakos. Thank you so much for your time. Cate, of course, an independent buyer\u2019s agent working out of the Melbourne market, Cate Bakos Properties.<\/p>\n Cate, nice talking to you, and we\u2019ll catch you again soon.<\/p>\n Cate:\u00a0 <\/b>Thanks so much, Kevin.<\/p>\n <\/p>\n Kevin:<\/b>\u00a0 If you need a new property manager, maybe you want to have a look around to see if you\u2019re getting the best deal possible, or maybe you\u2019re a little unhappy with your existing property manager and think it\u2019s time to change, how do you go about doing that? There\u2019s a brand new website that\u2019s been set up, and I\u2019m going to talk to the man behind it right now. It\u2019s called Property Management Concierge. They help you go through this process. The man behind it is Tim Godden.<\/p>\n Tim, thanks for your time.<\/p>\n Tim:<\/b>\u00a0 No problems, Kevin. Thank you.<\/p>\n Kevin:<\/b>\u00a0 Tell me a little bit about your background and why you started Property Management Concierge.<\/p>\n Tim:<\/b>\u00a0 I\u2019ve been in real estate for over seven years now, and in that time, I\u2019ve worked with property managers, landlords, and investment property owners. We were servicing a lot of landlords\u2019 properties, and were constantly asked recommendations for other property managers because they either weren\u2019t happy or needed a new manager for their investment property.<\/p>\n Being in property management for a period of time, I really could see the difference between a brilliant property manager \u2013 someone who was actively servicing their landlords and trying to get the most out of the properties as possible in the way of financial returns \u2013 and comparing that to a property manager who was more just collecting the rent and ensuring that the property is maintained.<\/p>\n There is a really big difference, and that\u2019s where I saw this opportunity to be able to put property investors in touch with brilliant property managers and be able to find them brilliant property managers out in the marketplace.<\/p>\n Kevin:<\/b>\u00a0 I talk to you in a moment about how it actually works, but it\u2019s an interesting development. I guess it\u2019s on the back of what we\u2019re seeing in different industries, not just in real estate, but it\u2019s almost like disruption. We\u2019ve seen in recent years the growth in popularity of buyer\u2019s agents as the role of traditional agents had been split between working for the seller, which is traditionally what they do, but there was a need for someone to come in and work specifically with buyers. Is this how the whole thing has eventuated, Tim?<\/p>\n Tim:<\/b>\u00a0 Yes. We see ourselves almost like a mortgage broker service. We\u2019re a free service where investment property owners are able to compare offers from a number of property managers. They can even compare what another property manager believes they\u2019ll be able to achieve in rent from their property compared to what the tenants are currently paying.<\/p>\n You\u2019re exactly right; it had eventuated from that. We\u2019re completely obligation-free, and independent, as well, from any of the other agencies, servicing only the best interests of the property owner.<\/p>\n Kevin:<\/b>\u00a0 You said it\u2019s a free service to investors, so how are you making your money out of this?<\/p>\n Tim:<\/b>\u00a0 We\u2019re paid an industry-standard referral fee from the property management agency. Every property management agency we work with has exactly the same fee, so we have no preference for one or the other. It\u2019s completely independent from any agency, as I said. It\u2019s an industry-standard referral fee for referring them the business, which then allows us to make the service completely free to the property owner.<\/p>\n There\u2019s really nothing to lose from the property owner\u2019s point of view, simply just comparing property managers. Worst case scenario, they find a property manager that is able to gain them more rent for their property.<\/p>\n Kevin:<\/b>\u00a0 How unbiased will your referral be based on the fact that it\u2019s the agent who is paying your fee?<\/p>\n Tim:<\/b>\u00a0 It\u2019s unbiased because the fee is exactly the same no matter which agency we go to. The industry-standard referral fee, which is one week\u2019s rent. We\u2019ll advise the property owner of what the referral fee would be for each of the agencies. It\u2019s one week\u2019s rent, so depending on what the agency is able to rent the property out for is what our fee will be for that agency.<\/p>\n In a way, it\u2019s in our best interests to find an agency that will be able to achieve the best rest for the landlord, but at the same time, we are completely independent of any agency. We just want to find the best agency for the property investor.<\/p>\n Kevin:<\/b>\u00a0 Just tell me how it works from the investor\u2019s point of view. How do they hook into this service, and what can they expect to have happen?<\/p>\n Tim:<\/b>\u00a0 They can contact us either by:<\/p>\n We can go through a number of short questions with them that then uncover what their expectations are for a property manager and what\u2019s most important to them \u2013 whether it\u2019s the communication that\u2019s particularly important \u2013 or if they\u2019ve had any bad experiences with property managers in the past.<\/p>\n Once we\u2019ve uncovered that information, we shortlist property managers who are in a particular suburb. What we then do is interview the property managers on behalf of the property investor. We\u2019ll go through a number of questions with the property manager that allow us to make a recommendation to the property owner about which manager we think best suits them and their property.<\/p>\n We\u2019ll even go through the fee structure of the agency, and we are able to negotiate that with the agency, and give a clear comparison to the property owner regarding the fees of each agency. Some agencies charge their fees in different ways. Some may charge for routine inspections, while others don\u2019t charge for those. Just because the management fee may be less doesn\u2019t mean there won\u2019t be other fees elsewhere, so we make a clear comparison of that fee structure, as well.<\/p>\n Kevin:<\/b>\u00a0 Tim, once you actually make that appointment with the investor and they have their new property manager, do you then step away and all the contact is between that new rental manager and the investor, or do you stay in the loop?<\/p>\n Tim:<\/b>\u00a0 We stay in the loop for the process. Once we\u2019ve been appointed, we\u2019ll make the introduction, but then down the way as they proceed with that manager, we can be in constant contact with the property investor. We will obviously contact them to make sure their experience is as expected, is great, and if they do have any questions \u2013 whether it be legislation questions or any questions in relation to the management of their property \u2013 we\u2019re always available for them. We\u2019ll also check in with the property manager periodically, just to check that everything is running smoothly for the investor.<\/p>\n Again, this is all a completely free service for the investor. It\u2019s really just about having someone independent and away from the agency look over their property and make sure that everything is running smoothly and as intended.<\/p>\n Kevin:<\/b>\u00a0 Tim, all the best with the venture. The website is PropertyManagementConcierge.com.au<\/p>\n My guest has been Tim Godden. Tim, thanks for your time.<\/p>\n Tim:<\/b>\u00a0 No problems. Thanks very much, Kevin.<\/p>\n <\/p>\n Kevin:<\/b>\u00a0 My guest now is Paul Nugent from Wakelin Property Advisory, who we\u2019ve had the pleasure of speaking to on a number of occasions.<\/p>\n Paul, you\u2019ve been in the industry for a long time. You would have seen that progression from the first-time purchaser or first-home buyer right though to becoming an investor. What are some of the obstacles and challenges you see for people along the way?<\/p>\n Paul:<\/b>\u00a0 That\u2019s a really good point, Kevin. What seems to impede a lot of people from either venturing into investment property or from furthering their portfolios tends to be a lot of the white noise that\u2019s always out there in the marketplace and in the broader economic commentary.<\/p>\n Anyone who is prudent is going to take on board what is happening in the broader economy, however a lot of people are easily put off by comments that are made in terms of changes to legislation, waiting for interest rates to fall or to stabilize, or waiting for prices to come back \u2013 peripheral issues that really just create doubt in people\u2019s minds.<\/p>\n Kevin:<\/b>\u00a0 Everyone has an opinion, don\u2019t they? Everyone\u2019s an expert. Particularly family, I\u2019ve found.<\/p>\n Paul:<\/b>\u00a0 I think that\u2019s exactly right. I think it\u2019s those you meet around the barbeque who tend to create the greatest issues for investors. People are waiting for someone to ring the bell and tell them \u201cNow is the time to buy,\u201d or \u201cDon\u2019t buy now; you\u2019d be mad.\u201d Whereas, the reality of life is those who have been very successful buying property as an investment, they listen to others but they rely on their own counsel and they\u2019re not hindered in any way by all this talk. They\u2019re quite focused.<\/p>\n Kevin:<\/b>\u00a0 It\u2019s a very general statement I\u2019m going to make right now, but I\u2019m particularly impressed with this young generation and the fact that they do their due diligence but they are also very brave about venturing into this. They don\u2019t have the hesitation, I guess, of becoming a first-time purchaser. I\u2019ve even noticed some of them \u2013 and you might have, too \u2013 who prefer to buy an investment as their first property, as opposed to a principle place of residence.<\/p>\n Paul:<\/b>\u00a0 Yes, most certainly. That seems to sit very well with the younger generation \u2013 by that, we\u2019re probably thinking people in their 20s through to early 30s. I think it gives them that security of a foothold in the market, but by buying an investment property, they still have flexibility in terms of lifestyle, careers, travel, and what-have-you. It\u2019s not uncommon at all for first-time buyers to be purchasing an investment property rather than a home.<\/p>\n Kevin:<\/b>\u00a0 Let\u2019s talk about that difficult jump from having one investment property to actually buying your second and third. That seems to be a difficult transition for some people.<\/p>\n Paul:<\/b>\u00a0 Yes, it is, but I think that\u2019s more a mental block than anything else. What those investors that I know who\u2019ve entered into the marketplace and developed a portfolio over a number of years tend to do is assess their financial position every year. They look at their equity position in terms of what the property they\u2019ve already purchased might be worth, they look at any spare cash flow they might have \u2013 whether they have had a pay rise or have a new job \u2013 and reassess that affordability.<\/p>\n Even for people where those circumstances don\u2019t change greatly over any given twelve-month period, I\u2019ve noticed that over three to five years, those people are able to invariably come back into the market, make a second purchase, and then repeat the process. So every three to five years, it seems to be that with successful asset selection in the first place, growth seems to allow them to have the equity to be able to move further into the market and acquire more.<\/p>\n Kevin:<\/b>\u00a0 That\u2019s interesting. You\u2019re saying that foundation is absolutely critical to get that right.<\/p>\n Paul:<\/b>\u00a0 Absolutely, 100%.<\/p>\n Kevin:<\/b>\u00a0 What about those who are moving through life, they buy their first property, they might have another investment property, they have a large family home, and then they have to downsize because the family moves away. This is another critical stepping-stone.<\/p>\n Paul:<\/b>\u00a0 Absolutely. That\u2019s part of the life cycle of property, and it\u2019s creating opportunities for those who are moving up in the market to buy into family homes.<\/p>\n It is interesting as people are downsizing at a particular point, many of them are buying smaller properties that suit their needs better as the family requirements change, and some of those people are also buying an investment property on the side to have as a form of hedging, I suppose.<\/p>\n Kevin:<\/b>\u00a0 I\u2019ve seen a few people move through that stage, where the family have moved away and they have large homes. They\u2019ll actually sell that and think, \u201cI\u2019ll go and live in a unit now,\u201d and find that unit living is not really for them. What advice would you have for people at that stage of their life, Paul?<\/p>\n Paul:<\/b> \u00a0 Once again, I think it\u2019s doing your due diligence up front, Kevin, and being aware of what you\u2019re buying into. For most people, when they\u2019re buying a home they can broadly work out what they might enjoy about a given community \u2013 what the transport linkages are, who is living next door to them, and what\u2019s going on in the area. But it\u2019s very difficult for people who are buying into a unit to see what that community holds.<\/p>\n What I would often recommend for people who are wanting to make that move is to perhaps retain the family home, go and rent something for six to twelve months and see if you like it.<\/p>\n Kevin:<\/b>\u00a0 That\u2019s such good advice. I\u2019ve seen people who have committed to selling the family home because they know it\u2019s no longer going to suit them but rather than jump into a unit, they\u2019ll go and rent to find out, one, if they like that kind of lifestyle and if they like the area that they\u2019re moving into.<\/p>\n Paul:<\/b>\u00a0 Absolutely. If you\u2019re making that sort of radical change where you\u2019ve been in one location or home for a number of decades, it\u2019s quite a large move, and you want to make sure that the new spot you\u2019re going to holds the sort of attractions that you need.<\/p>\n Kevin:<\/b>\u00a0 Exactly, and that is such good advice, Paul. Thank you very much, Paul Nugent from Wakelin Property Advisory.<\/p>\n Thanks again for your time, Paul.<\/p>\n Paul:<\/b>\u00a0 A pleasure. Thank you very much, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":" First Home Buyer to investor, upsize, downsize and finally retirement. It is a journey but like with very journey you must know the destination before you set out. Michael Yardney gives us the five property investing lessons you never want to forget. As we…<\/p>\n","protected":false},"author":176692473,"featured_media":5521,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[24],"tags":[101],"class_list":["post-25238","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-shows","tag-podcast"],"yoast_head":"\nTranscripts:<\/h4>\n
Louis Christopher<\/h3>\n
<\/h3>\n
Andrew Mirams<\/h3>\n
<\/h3>\n
Michael Yardney<\/h3>\n
Cate Bakos<\/h3>\n
Tim Godden<\/h3>\n
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Paul Nugent<\/h3>\n