Our success story this week is a story about taking control of the sale of your own property. Shayle Woods shares her experience and has some tips on what to do and what not not to do if you decide to go it alone.
Today Shannon Davis has some more negotiation tips and outstanding advice if you don’t want to pay too much for your next property purchase.
Your investment journey is likely to be a long one, and as you grow your property portfolio over the next ten to fifteen years you’re likely to encounter some good economic times and some tough ones. Periods of low and high interest rates, booms in the property markets and some slumps as well. Today Michael Yardney reminds you to prepare for the worst, while hoping for the best – in other words maximise your upside while at the same time covering your downside.
Greville Pabst joins us to say that he is not concerned about the potential for an oversupply of units in Australia. He argues that we need to grow up and realise that we are “world cities” and the dynamic is changing.
Some time ago a couple of young entrepreneurs got together and created a buyers agency because they could see how the use of buyers agents was likely to be a growth industry given the overseas trends. Today we catch up with one half of the dynamic duo that makes up Cohen Handler to look at some market trends and we set out to bust some popular beliefs.
Also hear a great story of a young person’s journey to property ownership. There is a lot of talk about how difficult it is for your people to get a foot on the property ladder. Nicole Haddow might just have the answer.
Kevin: I love talking to buyer’s agents, because I see that buyer’s agents in Australia are really a great emerging trend. If you look overseas, in fact, some of the figures we’re going to share with you are staggering to me, and I’m sure they will be to you, too. About 80% of property buyers actually engage an agent to help them buy a property in America, but who pays the commission? This is the interesting thing.
I’m talking now to Simon Cohen is a partner in Cohen Handler. He and his good friend, founding partner and young entrepreneur, Ben Handler, started the agency some time ago, and it’s one of those great buyer’s agencies in Australia.
Good day, Simon. Thanks for your time.
Simon: My absolute pleasure. How are you?
Kevin: I’m fantastic, thank you. Simon, in the States, the commissions are a lot higher than they are in Australia. Who pays over there?
Simon: Typically, the commissions are around 6%, and the seller pays that, and it’s split between selling agent and buying agent – a bit of an interesting model, but all paid by the selling side.
Kevin: That is incredible – 6%. When you look at the average in Australia, it’s around about 2.5% to 3%. I know some agencies actually charge more than that, but that’s quite staggering, that figure.
Simon: Absolutely right.
Kevin: I want to talk to you about a couple of trends that you’re noticing and also help me dispel a myth. I commonly am asked whether there are good or bad times to sell and buy property in Australia. What’s your view on that?
Simon: Typically, everyone says springtime is the best time to buy – everything comes on the market then. I think definitely, over the past two years, we’ve seen that that hasn’t been the case. The markets across the Sydney and Melbourne markets have been dry, and there hasn’t been a lot of stock.
Personally, we found at Cohen Handler some of the best times to buy are December, January, and July, when most of the other buyers are out of the market and you actually are competing with fewer buyers.
Typically, if you’re looking to buy, always find the times where there are fewer people that you’re competing against, but most people do think that September, October, November is the time. But in the last couple of years, it hasn’t really been the case.
Kevin: It’s easier to take that general view, and I think, even, if you look at some of the micro-markets around Australia, too, you look at the Gold Coast, you wouldn’t buy a property on the Gold Coast, I wouldn’t have thought, in that Christmas period because that’s actually when most of the stock is actually on the market.
Simon: Absolutely, or in Palm Beach. You’ll pay a higher price because everyone falls in love with the glowing water, but if you buy in winter where it’s damp and miserable, you’re likely to get a better deal.
Kevin: Let’s look at a similar situation, whether or not you should buy in a seller’s market, because you’d assume that in a seller’s market, all the momentum is for the seller, not so much the buyer.
Simon: Yes. Look, it really depends. In every market, people have to buy and sell for different reasons. People have kids, they get married, they get divorced. Unfortunately, people pass away; that’s just life. If you know where to look and you work with the right people, there are always opportunities.
Sellers buy themselves in seller’s markets, so they have pressure to sell themselves. There are a whole number of reasons why you can get good opportunities. It’s just making sure you’re aware of them and you know where to look.
Kevin: When you’re looking around for clients, Simon, do you look for things like how long the property has been on the market, how negotiable these sellers might be, and even what their motivation is?
Simon: I think the first thing is what their motivation is. If we can figure out why they’re selling, and if we can try and match up terms that benefit them that might not necessarily mean paying more money, that’s an ultimate win for our clients, and also for them, if they’ve bought and now they want bridging finance or they need six months in the house and we can give them a long settlement. Those are really, really helpful things for us.
Kevin: The Internet, of course, has opened up real estate to a worldwide market, and we’re seeing a lot of interest coming from overseas. Technology like virtual reality – is that helping us sell properties in Australia to overseas buyers?
Simon: I think we’ve seen video and smartphone, being able to send our client photos and videos in real time straight away. We were one of the first companies to adopt the Google Glasses. Unfortunately, Google have had a few technical issues with those, but we’re always looking to adopt these new technologies to help people overseas see property as if they were looking through their own eyes when they were here, if that makes sense.
Absolutely, as technology gets better and as smartphones get quicker and pixels are greater, and all of that, it makes it a lot easier for people to buy sight unseen.
Kevin: Yes, indeed. Mate, it’s great talking to you. We are out of time, unfortunately, but I thank you. We’d love to have you back in the show in sometime in the future.
Simon Cohen from Cohen Handler has been my guest. Simon, thanks again for your time.
Simon: My absolute pleasure. Thank you.
Kevin: I guess one of the most common questions I’m asked from time to time is, “Do I really need a real estate agent?” I’m going to share a story with you now, someone who decided that she’d like to sell her property on her own. There are a number of ways for you to do that.
No stranger to our show, of course, Wendy McDonald – who we’ve spoken to on the show before – is from a website called PropertySuperStars.com.au. She helped Shayle Woods do just that, sell her own place.
Shayle joins me. Hi, Shayle.
Shayle: Good morning, Kevin.
Kevin: First of all, tell me, why did you decide to sell on your own?
Shayle: Cost was a real factor for us – and time. I have the time to do it and I believe I have the experience after having bought many properties over the last 30 years or so. So we decided to try doing it ourselves.
Kevin: As I mentioned in the intro, too, there are number of websites now that will help you do that, that have all the tools for you to do that. What were some of the lessons you learned along the way?
Shayle: On selling it myself?
Kevin: Yes, on selling it yourself.
Shayle: Research, research, research.
Kevin: Know what it’s worth, you mean?
Shayle: Know what it’s worth, know what the target market is, know what’s available on the market.
Kevin: Know your competition. Was it difficult for you to remove yourself from being the owner to being the seller? In other words, were you emotionally attached to the property and the price?
Shayle: No, not at all. I actually made the decision to be very open to the market, to what the real value on the market is. No, I made this as a financial and business decision.
Kevin: As I understand, the property is not yet sold; it’s still on the market. Tell me how it’s progressing and what sort of reaction are you getting from buyers?
Shayle: We’re getting a great reaction from buyers. We’ve only been on the market for about ten days. We’ve held two open homes so far, and we’ve had a fantastic response. We’ve done professional signs, and we’re considering doing an open home listing in the local paper, which also attracts a lot of people.
Kevin: How did you get the people to the open house? Was it through the website?
Shayle: It was through the website and the signs. We’re getting about 50/50 feedback on both. I had professional signs made with a photo of the house on the sign, and we have that out on the main road.
Kevin: Are you encouraging people to come in off the sign to you directly? Are you living in the property, or are you living away from the property?
Shayle: We’re living away from the property, but my phone number is on it, and we’re getting a great response just from people passing by.
Kevin: Are you picking up that people are thinking because it’s a private sale, they’ll probably get it a little bit less?
Shayle: Most people don’t even realize that it’s a private sale. In fact, most of the comments are am I an independent real estate agent? I always say, of course, “No, I’m not. I’m the owner.” It seems to give people more confidence, because they know that I’ve designed the house myself, that I’ve been there project managing it the whole way through, and because we build a quality product, I’m finding they’re mainly impressed.
Kevin: Are you keeping track of these people? How are you following up? Are you following up as you would imagine a real estate agent would?
Shayle: Yes, I am. I ring them within two days of them visiting the property. A lot of people are just starting out on their journey of looking for the right property to buy. Some have been ready, and some aren’t.
Kevin: Tell me about contracts and things like that. How have you overcome some of that? Because there are some things you have to be very careful when you’re selling a property.
Shayle: Yes, absolutely. It’s part of having a good team around you. We’ve used a particular company for our conveyancing solicitor for the last six or eight properties, so we’re very happy with them. I went to them first and had them draw the contract up.
They went through with me the order of signing a contract, so I have the contract there ready with me at the house every time I do an open home for anybody who is interested, so they can take it straight back to their solicitor first.
Kevin: As you can see, there is a lot of work. We are, unfortunately, out of time, Shayle, but I thank you.
I just want to mention here that, obviously, selling your home yourself is not an easy thing to do, you need to research it, as Shayle has said. It’s interesting, too, to note Shayle, I think it’s about 95% of people who actually attempt to sell their own place end up getting a real estate agent.
I’d like to come back and talk to you at the end of this process just to find out how it actually went for you, if you come back and join us then.
Shayle: That would be terrific, Kevin. Thank you.
Kevin: Wonderful. My guest has been Shayle Woods, and Shayle is selling her own property and doing it with the help of another regular guest on our show, Wendy Macdonald from PropertySuperStars.com.au. We will track this through. We’ll come back and let you know in the weeks ahead what exactly does happen as Shayle attempts to sell her property.
Kevin: Here’s some great advice from Michael Yardney, who wants to remind you to prepare for the worst while hoping for the best – in other words, maximize your upside while, at the same time, covering your downside.
Is that like covering your backside, Michael?
Michael: Kevin, I guess what I’m suggesting is that we have to design our property portfolio that can weather the inevitable storms that are going to come over the next years.
Kevin: It is a bit of a journey, isn’t it, rather than a destination?
Michael: To build your wealth to get to financial freedom, for most investors, takes a minimum of 15 years, and for many, even longer. During that time, you’re going to be working through a couple of property cycles, some high interest rate times, some low interest rate times, some times when the property market is flat.
I guess the question is, how do you weather it? What do you do? How do you protect yourself?
Kevin: How do you prepare, Michael?
Michael: I guess it starts off with the correct asset selection. What I’m suggesting is you have to have the properties that are strong – in other words, they keep growing in value – but also that are stable – they’re not going to fluctuate in value as much – which means, I believe, you have to invest in the big capital cities because that’s where they’re underpinned by multiple pillars of economic support and have the sort of property that appeals to a wide demographic, particularly of owner occupiers, because they keep buying things as the market keeps moving up and down.
Kevin: How important is it to diversify your portfolio?
Michael: Kevin, it’s important, as you build your portfolio, to protect yourself by having properties in various states, because each state is in a different stage of the cycle, and there will be some times when you’re thankful that it’s not in your home state because that’s the area where property values will increase, and you can go back to the bank and revalue those while leaving others alone.
Kevin: I guess it’s pretty important, too, Michael, when we’re considering this, to think about where you stand financially – in other words, not overcommitting yourself.
Michael: During boom times, it’s so easy to get carried away, borrow to the max, lower your loan-to-value ratios, not leave yourself with a buffer, and that’s when people get caught short. It happens every stage near the end of the cycle, when people are trying to do one more deal or just get in before the end, and you never know when that’s going to be, Kevin.
I agree with you. Don’t speculate, stick to tried and true strategies, and leave yourself with a bit of a financial buffer.
Kevin: Spend some time, too – I think, Michael, I’ve read enough of what you’ve written – making sure that you have that buffer and that you buy well.
Michael: You buy yourself not only a great property, but a financial buffer means you can buy yourself time. You can ride out the periods when you don’t have to go back to the bank for a while and say, “Please, can you revalue my portfolio.” You ride out the periods where the interest rates may go up or vacancies may be a bit longer, because those investors who can see themselves through from one period of the cycle to the next are the ones who are going to do well.
Kevin, the other big benefit of the buffer is you’re going to have some money available to hop into the market when the inevitable downturn occurs, and you’ll be able to get what seems like a bargain at the time when other people aren’t ready.
Kevin: I really enjoyed my time at the Wealth Retreat, Michael, on the Gold Coast recently, and one of the things that I learned from talking to the great number of people who are there is that they have a plan but they actually work on it. They’re very, very proactive with their strategy.
Michael: They’re thinking in advance, they’re thinking ahead, and I guess that’s what we’re talking about in this little chat, Kevin. As you started off saying, look forward to the upside, but prepare for the downside, because I read many years ago that King Solomon had inscribed in his ring the words “This too shall pass” to remind him not to be too overconfident when things were flourishing and not to be too despondent when things were bad.
Kevin: I guess you have to concentrate on not being negative but understanding that tough times do come, Michael.
Michael: That’s what Warren Buffett said: “Be fearful when others are greedy and be greedy when others are fearful.” The tough times are good times if you’re prepared.
Kevin: Great talking to you. Michael Yardney, from Metropole Property Strategies.
Michael: My pleasure, Kevin.
Kevin: You’ve heard of the saying that you’ll make money out of real estate when you buy, not necessarily when you sell. Well, it all comes down to your tactics as a buyer. How good are you at negotiation? I’m going to talk to a man who does it for a living now – buyers agent, Shannon Davis, from Metropole Properties in Brisbane.
Shannon, I’m just keen to talk to you about some of the tactics you use or some of the negotiation tips you might give someone.
Shannon: I think the first thing is have your due diligence in hand because that leads to confidence. The more prepared you are and the research that you’ve done, the more confident you’ll be in negotiating with the other side.
Kevin: You can spend too much time, though, on that area, can’t you?
Shannon: Oh, definitely. You don’t want to get to a point where it’s analysis paralysis. We definitely need to be prepared because that will lead to a better solution.
Kevin: Are there some strategic areas that you should always look into?
Shannon: Most importantly, comparable sales. I think one of the problems is people focus too much on the asking price, and they might try and shave some off. But if the price was set too high to begin with, you haven’t really saved yourself any money.
Do your own research on comparable sales and get some confidence about that because that’s where you know the value of the market.
Kevin: Is it always about getting the lowest price?
Shannon: Not necessarily. I’d rather get a wonderful property at a fair price, rather than a fair property at a wonderful price. What I mean by that is it’s the opportunity to have something that’s appreciating in your portfolio, so don’t always be a bargain hunter and miss out all the time.
Kevin: Due diligence, that’s the first one. What’s the second one?
Shannon: I think being credit-ready is a massive advantage. The amount of times that our buyers get put to the top of the pile because they’re pre-approved on finance is a huge thing.
It’s not always about money, but the conditions of the sale, the vendor motivation. Maybe they want to rent back. Maybe they want a short or a long settlement. The amount of times it comes down to not necessarily money, but more favorable conditions in the contract.
Kevin: I’ve heard that a few times, too. It’s not always about the amount of money you offer; it’s the conditions that are on the contract.
Shannon: Yes, definitely. Have an ear for that and to make it more presentable for the other side.
Kevin: So, credit ready. What’s the next one?
Shannon: Be prepared to walk away. I think if we get too emotional about a property, then that’s when you’re going to lead to mistakes. It’s no good buying a property and being so excited and so emotional about it that you’ve given the first five years capital growth to the other side.
Always, it’s disappointing, but be prepared to walk away. Often, when you do walk away, that’s when you’ll re engage the other side anyway.
Kevin: I guess it’s the old story, isn’t it, that there’s always another property?
Shannon: Exactly. I think it’s misconceived that the seller has all the power. They want a sale and they want our money, and we have to be prepared to walk away if at all possible.
Kevin: I guess, too, as part of that, you have to show that you’re not too anxious all the time and not responding so quickly, Shannon.
Shannon: There can be, again, that misconception of the seller having all the power, so we’re rushing back and we’re meeting their deadlines. Sometimes push back a little bit. The fact that they’re talking about another offer and things like that, it might be real, it may not be real, so you need to push back a little bit because we have a lot of power as the buyer.
Kevin: So don’t respond to that, but always remember that there is another property if you miss out anyway.
Shannon: Yes, definitely. There are always good opportunities in all sorts of markets. We can’t be too anxious to pounce.
Kevin: I guess the bottom line here, if we were to sum it up in one word, is take the high ground and make sure you stay there in the negotiations.
Shannon: Control what we can control – what we’re doing, not what they’re doing. If we miss out, we miss out. If we walk away, we walk away.
Kevin: Shannon Davis is from Metropole Properties in Brisbane. Shannon, thanks for your time.
Shannon: No worries, Kevin. Any time.
Kevin: Whether or not there is an oversupply of stock around Australia, particularly in the Melbourne market, which we have been hearing a lot – a lot of concern expressed about the number of units on the way through under construction or on the planning stages in Melbourne and also in Sydney.
Greville Pabst from WBP Property Group, who has joined us on the show on a number of occasions, isn’t that concerned. He sells out of the Melbourne market. I’m interested to get his take on this, too.
Greville, thanks for your time.
Greville: Thanks, Kevin.
Kevin: Now, let’s have a look at the number of units coming through. You don’t think that’s a problem in terms of oversupply and what it may do to the market?
Greville: Look, Kevin. I’d argue that Australia has not got an oversupply of apartments. I think it’s more of a cultural change and difference that has some people concerned.
If we look at Melbourne and Sydney, they’re now global cities, and if we compare Melbourne, for example, only about less than 10% of all dwelling stocks in Melbourne is apartments and units. Now if we compare that to New York, or London, or Hong Kong, up to 40% of all property in those cities are apartments, so I really think that in the major cities in Australia, we do still have some way to go.
Kevin: It’s a bit of a cultural change, this move to apartment-style living, which – you’re quite right is – in New York is fairly well ingrained. But in Australia, we still like to have that patch of dirt. We still like to have that bit of land that we can call home. That’s led us to probably less apartments and more homes, Greville.
Greville: That’s right. But there is a gravitation to the big village. Everybody now wants to live close to those inner-city areas of the capital cities, like Melbourne, Sydney, or Brisbane. That’s because lifestyle is now the big driver – it’s like a magnet – so accommodation needs to change to meet that demand.
Of course, the concern is about the supply, and there needs to be a balance. Developers want to create smaller living spaces and get as many apartments onto a site as they possibly can because that maximizes profit. But if you’re an investor, you know that if the apartment is too small, you know that the land is what appreciates and buildings, especially new ones depreciate. It’s important to have a balance in terms of the size.
Kevin: Listening to what you said earlier about how in Australia, we don’t have an oversupply, generally, across Australia, that could be the case. But I think if you look market to market, there could be some concerns. We’ve seen this in some markets.
Let’s take, for instance, the Gold Coast, where probably eight to ten years ago, we had a huge number of units coming through – so much so that developers stopped building. The market went into a slight decline, but we’re now finding that we need that stock to come back on.
It really does change from market to market and time to time, Greville.
Greville: Yes, it does. As you suggest, markets do tend to self-correct. But I’m concerned not so much about supply; I’m more concerned about the quality of the apartment and the design of the apartment. They’re the things that worry me more than supply.
I think if the quality and design are there, they’re more attractive to both investors and to owner occupiers. But if they’re too small and they’re cheap and nasty, then they’re going to appeal to a much narrower market.
Kevin: Though, the style of unit in Sydney and Melbourne needs to be different from that in New York, do you think?
Greville: I just think that there’s a tendency on the developers’ part to create smaller living spaces, and there’s a motive for that in terms of maximizing profit and getting as many apartments onto the site as possible.
But I think we have to understand who’s buying these apartments. Size does matter to owner-occupiers, particularly to downsizers, who really are a big player in this market. Downsizers are, of course, used to space. They’ve sold down their place out in the suburbs, kids have left the nest, and so they’re used to size. They want to have a reasonable size apartment when they do make that move.
Kevin: Greville, thanks very much for your time. Greville Pabst there from WBP Property Group. Thanks, mate.
Greville: Thanks, Kevin. Cheers.
Kevin: I want to play you a portion of an interview that I heard Clare Blake from 4BC do just recently where she spoke to a young person who was struggling to get into the market. Her name is Nicole Haddow, and she talks about what she had to do to do just that. There are some great lessons in this. That’s why I wanted to share it with you.
Here’s what she had to say to Claire.
Clare: You decided that you couldn’t really get the job you needed to get the house, so you made a few changes to how you live?
Nicole: Absolutely. I have a great job, but I had to do a couple of extra things to get myself over the line.
Clare: You say that you have a great job. Now according to Joe’s philosophy, you should be able to afford a house.
Nicole: Look, I think you need to be earning an incredible amount of money to comfortably live as a home owner these days, particularly if you’re single.
Clare: If you go off sick for a while, if you have problems… But now you’re talking about Melbourne, aren’t you? You’re talking about the Bayside suburbs, a little bit south of the city.
Nicole: Yes. I’m out of Bayside, Mordialloc.
Clare: Beautiful. On the water, fantastic.
Nicole: It’s a lovely spot.
Clare: It is. It is a fair way from town. Do you work in the city?
Nicole: I do. I work in Richmond, which is just a couple of Ks out of the CBD.
Clare: Tell us how you did it.
Nicole: Well, I moved home with my parents just before I turned 30. I did what I would refer to as a power save, so I gave up a lot of my social life and put away almost everything I earned.
Clare: Good practice for paying that mortgage off.
Nicole: It certainly was. It was really difficult because I have a really active social life, so I had to learn to say no to things.
Clare: Well, that’s one. What else did you do?
Nicole: I guess I had the luxury of being a journalist. I was still writing freelance features and generating an income while also working full time in digital media, so effectively doing two jobs for a while there. I wouldn’t advise that everyone go and get a second job, but having a double income does help.
I also looked in areas where there wasn’t an auction market, so places where you could still buy privately, which made a huge difference, because I found that auction prices were just making it impossible. You have to be a little bit careful.
I was also looking in January when not everybody is looking. I guess when people are selling at that time, you might be able to get something a little bit more affordable.
It was really just about looking in an area that maybe not everybody was thinking about. Not all of my friends were prepared to move 25 Ks out of town. I’m a long way from my family and friends, and initially, that was really difficult and I was quite isolated, but it gets easier.
Clare: The other thing that I know you mentioned in your article is that you bought with your head, not your heart, and that’s something that’s really difficult and encapsulated in your last response.
Nicole: It is. I’ve grown to love where I live. For me, it was an investment. I live in it at the moment, but if in time I want to rent it out and move closer to the city and make my lifestyle a little bit easier, that’s something that I might consider. But it was an investment first. It was not a glamorous decision, but it was one that I felt I had to make.
Clare: Is the feedback from the people who know that area making you feel comfortable that you will get some capital growth out of that over the next ten years or so?
Nicole: I think so. Even in the last year, some really great cafés have opened nearby. I’m really close to the beach. There’s a train station, good schools. I believe I’ve bought in a great area, and there are lots of young people doing what I’ve done. They can’t get in closer to town, so they’re coming to join me.
Clare: Thanks for the tips. I hope that it helps some other people.
Nicole: My pleasure.
Kevin: Yes, some very good lessons there.
Michael Yardney joins me. Michael, I know you’ve heard that interview. Some really great messages there from Nicole, aren’t there?
Michael: There are, and some great inspiration, Kevin.
Kevin: Yes. Let’s have a look at a few things. Michael, what message would you give your kids about what’s holding them back from getting into the market?
Michael: Well, clearly rising prices are one of the factors, and sure, they’re rising faster than wages for many people, so having a good job is important. But the other is having good money habits. Most Australians have got poor money habits. They spend more than they earn.
One of the rules that I’ve been trying to teach my kids is to spend less than you earn, to save some money, to invest it, keep reinvesting until you get a nest egg, a big enough deposit to start buying a property, Kevin.
Kevin: Of course, the temptations are great, Michael, aren’t they, with credit cards? You can just go to any store really and get credit. It’s so easy to get.
Michael: The store cards are a real trap because they say, “I’m not going to charge you interest or maybe not even repayments for two years.” But then all of a sudden, you get lumped with very, very high interest rates. That’s an issue, Kevin.
I think the other one is to have a long-term goal, a long-term vision, which Nicole clearly had also. She was prepared to give up some things in the short term to reach her long-term goals. That happens with entrepreneurs, with business people, with property investors, and also with home owners. Some good lessons from her there.
Kevin: Yes. It’s a great lesson, not just for young people, isn’t it? It’s for any age really.
Michael: That’s right.
Kevin: What else, Michael?
Michael: I guess the other is to have realistic expectations. I think a lot of young people want the property it took their parents 40 years to be able to have in the areas, the suburbs where sometimes even their parents can’t afford to buy, so start with realistic expectations.
The other lesson, I think, is sometimes you may have to share with somebody – a brother or sister, a friend, or a parent – to get into the property market. Having your parents on your side, either as business partners owning the property or guaranteeing the loans, is a way to get going, too, Kevin.
Kevin: What did you think about that idea of Nicole’s there where she looked at a particular area where she felt maybe she could get a bargain?
Michael: Kevin, that comes back to what I said a few moments ago – that she didn’t invest or buy in those areas of Melbourne that are the more expensive ones close to her work. She went out a bit further and had realistic expectations.
Kevin: Michael, you mentioned earlier about credit cards. What about credit history?
Michael: I think an important lesson to learn is you have to keep yourself a clean credit history. It’s too easy to sometimes forget to pay a bill, have it default, and those stay on your name for quite some time.
When you’re going to get a loan, your credit history is checked through an organization called Veda Advantage. We all have a personal credit file, and if you’ve had some black marks against it, that will work against you when you go for a loan.
Kevin: It would be worthwhile checking that credit file, Michael, would it?
Michael: It definitely is. You can go to MyCreditFile.com.au.
Another lesson is not to have too many credit cards, and actually cut back your credit cards a bit if you’re planning to buy a property. When the banks look at your serviceability, they take into account your assets, your income, and also your expenses, and they see a credit card limit – even if you’re disciplined and don’t use it – as a potential expense, and so cutting back your credit card limits or getting rid of a couple of extra cards that you may not need will make you more attractive to the banks.
Kevin: Some great advice there. I want to thank Nicole Haddow, Clare Blake, and also to 4BC for allowing us to use that earlier audio.
Michael Yardney, to you, thank you once again.
Michael: My pleasure, Kevin.