.png)
The Finance Show With Joe
Welcome to the Finance Show with Joe hosted by It’s Simple founder, Joseph Daoud. We chat about the financial issues facing ordinary Australians from managing the cost-of-living to investment strategies in order to help you make more informed financial decisions.
Join us as we discuss finance, mortgages and home buying in Australia!
Follow us on our pages;
www.itssimple.com.au
Instagram: @itssimplefinance
Instagram: @thefinanceshowwithjoe
Linkedin: www.linkedin.com/company/itssimple
The Finance Show With Joe
Navigating the Real Estate Market in Victoria and NSW, Interest Rate Cuts, and Key Investment Strategies
What happens when a property investor decides to switch sides and become a mortgage broker? David shares his compelling journey on our latest episode of the Finance Show. Discover how a miscalculation by a lender nearly derailed his property purchase plans in Perth and how It's Simple saved the day. David's experience underscores the importance of motivated brokers and the art of matching clients with the right lender, illustrating how diverse bank offerings can meet specific customer needs.
Ever wonder where the real estate market is headed? With construction delays and tax changes, Victoria emerges as a hotspot for owner-occupiers, while Sydney's urban sprawl and developments near the new Badgerys Creek airport present unique opportunities. We examine how local council regulations and upcoming infrastructure projects can serve as key indicators for savvy property investors.
Follow us for more property news and mortgage advice!
▸Website - https://itssimple.com.au
▸Instagram - https://www.instagram.com/itssimplefinance/
▸Facebook - https://www.facebook.com/itssimplefinance/
▸LinkedIn - https://www.linkedin.com/company/itssimple/
Welcome to the Finance Show with Joe. He's Joe, I'm just some schmo. Today we're going to be talking about interest rate cuts. They're actually happening. When are they happening, we don't know. But also, we have a happy introduction to make with David.
Speaker 2:Dave's been with. It's Simple now since July, july, correct. Tell us a little bit about yourself. Why it's Simple. You could have gone anywhere else, but you chose us scumbags.
Speaker 1:Yeah, good question. He asks himself that every day or some late nights, yeah uh.
Speaker 3:So a bit of background on myself. I'm into property investing so I've bought a few properties in my lifetime. I've been working prior to it, simple within finance for four or so years, covering business finance and asset finance. Never had a business loan, never had a car loan, had multiple mortgages, so always had an idea of becoming a mortgage broker, but I guess the opportunity never really presented itself. And then I needed a home loan. Well, it's quite an interesting story.
Speaker 2:I need to just jump in a little bit here. So David initially came to us as a client. He wasn't expecting to become a broker or anything like that. You found the property. Is that right?
Speaker 3:Correct. So I got a pre-approval with a previous lender. I won't mention their name. I already had one property with this lender and, like everyone else, probably about six to eight months ago I was looking to buy in Perth. Yep, sounds about right.
Speaker 1:Yeah.
Speaker 3:So I flew up there, actually for four days, just to scope the North Coast, south Coast, just get a little bit of an idea and also have a little mini holiday. I'd never been to Perth before, wanted to see what it was all about. Had a look at a few open homes, realized I needed a higher pre-approval, so called them for a second time. They gave me a higher pre-approval, flew back to Sydney, kept watching the market, made a few offers, missed out on I'm going to say four properties because I just went for much higher for what I offered. And then on the fifth property, all the stars aligned. The agent was really helpful. As soon as the property went up within an hour, I made an offer. I knew the suburb, I knew it was a good buy. We exchanged contract of sale and then obviously I sent that contract of sale to my lender. And then that's when things became a little bit tricky and became stressful, very, very, very stressful.
Speaker 2:Went to shit, as we like to say yeah, that was a lesson learned.
Speaker 3:A couple hours later the lender calls me or the manager of the team, and she said that they firstly she apologized. She told me that my application was going to be a decline and the reason for that is because the BDM that calculated my borrowing capacity didn't factor in one of my existing mortgages on another property. It's a pretty basic mistake to make, but it was made and unfortunately, under their policy, I didn't service and you had exchanged contracts to sell already, correct. The real estate agent was calling me every few hours. So when I bought I mean Perth's still a very hot property market and at the time when I bought, the listing would go up on a Friday and Monday it was off. The listing was off. Crazy, yeah right. So the agent obviously had a lot of offers. She had a lot of interest. She said you know, look, I need to know, do you have the finance ready?
Speaker 1:So it's complicated. Yeah, essentially I had to. It's not simple.
Speaker 3:It wasn't simple, no, so I had to stall her a little bit and just say look, technically I do, I just don't know what lender it's going to be with In theory.
Speaker 1:In theory.
Speaker 3:Essentially called up a friend of mine and he referred me to. It's Simple. We jumped on a Zoom call at maybe I'm going to say 10 pm till midnight because I only had five days to put a deposit down. I wasn't sleeping. Essentially, I really wanted that particular property. Let's fast forward. What eight months now that property has gone up? 90 or so grand, probably even more. How much? Did you buy for $550,000.
Speaker 2:Jesus. So that's gone up to $640. That's a 20% gain, correct. That's 18% gain. That's absolutely amazing, correct. So you picked well.
Speaker 3:I did, I did very well. It's four minutes from the beach, four minutes from the marina, shops, schools, ticked all the boxes.
Speaker 2:This is the thing about brokers. Brokers are somewhat self-employed. They're incentive-based individuals. There's a lot of things behind it. They need their approvals to happen. Somebody working at a bank-.
Speaker 1:It doesn't matter, they're not invested.
Speaker 2:They don't have skin in the game.
Speaker 3:The particular BDM I was speaking to from that lender sounded very young. I could tell in their voice they were young, they weren't really invested, they weren't necessarily switched on, and that's exactly. Yeah, they had no skin in the game. So what are you?
Speaker 2:telling our clients now, when it comes to pre-approvals.
Speaker 3:Don't make the mistake I made, obviously engaging your brokers. There's so many benefits, right, because you're exploring multiple lenders, you're getting the choice of the best product for your specific scenario or the goal you're trying to achieve.
Speaker 2:You kind of honed in on something. You called it a product. A lot of clients don't really understand this, but some banks like self-employed people. Some banks like it if you're a teacher. Some banks like it if you're a police officer. Some banks like it if you're a teacher. Some banks like it if you're a police officer. Some banks like it if you're a professional, you're a doctor, you're in the medical field. Some like it if you've got a low deposit. They're like yeah, we'll take you on. We're more than happy to.
Speaker 2:And it's really good that you highlighted that, because two things number. One some banks don't like Perth at all. But then the other thing is what do the banks have against Perth? I've got some more stories about that later. On the other side of it, I might have my savings with Macquarie, but as a self-employed individual and this isn't a bad mouth, macquarie but their policies aren't great for self-employed individuals.
Speaker 2:If I'm self-employed, the banks I'm going to are anz, cba, um, bankwest. You know that because they're the ones that are going to get the most out of my income and give me the highest borrowing capacity. Yeah, for your particular scenario, the original lender that you went with you know prior to contacting us. They're a good bank, they're a reputable, reputable bank, but they just don't have appetite for certain things. Which lender did you end up with? I ended upwest, yeah, so even though he didn't end up with one reputable lender, it's not like he went to a second or a third tier reputable lender. It's Bankwest. It's Bankwest, owned by Commonwealth Bank. Everyone knows it. You know they might not have branches in New South Wales anymore, but they're all in WA.
Speaker 1:How have you found it working with lenders and understanding different policies?
Speaker 3:and I imagine you'd learn a little bit of. Something is like where you might even like, think to purchase, like I'm getting a lot of clients and thinking about buying in kellyville. What's going on there, correct, correct, yeah, or people are selling in a certain suburb and, you know, putting moving that money elsewhere.
Speaker 2:We've been hearing about perth perth, perth, perth, perth, for the last 15 episodes that we've done. Um, you posted something the other day and I mentioned it on the last episode, but Perth's growing a thousand bucks a day, so how long have you held your property now?
Speaker 3:initially made the offer in March, settled in April, six months yeah, six months, ninety thousand dollars.
Speaker 2:Yeah, that's not a bad. That's 500 bucks a day. 600 bucks a day, you know, that's, that's pretty effing good. And that was the last valuation. The last valuation we did was a month ago, correct, so it so it's probably gone up since then too.
Speaker 3:Yeah, correct, and I think it's at the end of its cycle. Yeah, surely it can't keep going like this.
Speaker 2:I think and this brings us to our topic of the day about interest rates cuts Once that starts coming down. I think Sydney and, in particular, victoria. I really think Victoria is about to boom.
Speaker 1:Well, they've got supply now, yeah, and they're actually because the biggest complaint that we've been having in sydney is that, um, like, construction has been delayed for correct one reason or another whereas victoria, obviously they still have their own issues with their, with their councils, but it's been better there, like they're building way more properties there compared to supply and also you've got like fewer, uh foreign investors uh going there, because again what we were talking about post-covidCOVID like just with the taxes and stuff like that, like less incentive to invest in Victoria. So it's good for owner-occupiers basically in Victoria, right, which is why you think that it might boom. Am I in the right direction there?
Speaker 2:Yeah, 100%, because Victoria has always been the international hub. You know Sydney is an international hub, like people know Australia for Sydney, for sydney, they're not for the hub of bridge opera house. I think it's the capitals. Did you see that video that some guy was asking a bunch of americans what's the capital of australia? And like sydney, that everyone thought sydney. One lady screamed out is it india? I was. I was just like, wow, like india. The average american iq is like 98 or something.
Speaker 1:It's's not very high. Their geography is shocking. It's absolutely shocking.
Speaker 2:But everyone says Sydney, Nobody says Melbourne. But when people move to Australia, a lot of Melbourne actually gets the majority of the expats. A lot of people actually move down there. That's because it's more of a city. Sydney is a city but it's not.
Speaker 1:It's turning into like a megalopolis type of thing, like with Tokyo, where it's like this big spread Because you can drive an hour and still not leave Sydney, which is crazy I don't think many cities are like that so.
Speaker 2:one office in Oran Park, new office in Barangaroo.
Speaker 1:Oh, yeah, yeah.
Speaker 2:Another office, not another office, but I've got referral partners up in Bella Vista so in one day I could drive from illawong to camden to bella vista, to the city and home. That could be like eight hours of driving done in one day, just to you know. See all these clients and everything, and I have not left sydney. They've spoken about the um. They want three major cities in within sydney. They want paramatta, sydney and then macarthur, was it or something?
Speaker 1:yeah, like that campbell town area they're trying to trying to boost it up, which is, I mean, like the oran park stuff. That's why all that stuff's going up. They're trying I mean they've been trying to do that with paramount for ages yeah, paramount looks like the city, if you, if you weren't paying attention, you look out the train window.
Speaker 2:You're like, oh, have I arrived yeah, I'm at town hall now, but yeah, back to the topic interest rates as early as next month, as late as early next year.
Speaker 2:So there's been a drop there's been a lot of talks and, as you mentioned, um, the reason why a lot of people have left melbourne is because the investors or people, anyone that invested there they're not actually costly, then it's too costly. They introduced a new land tax, um, rent isn't covering the repayments and they're going okay. If I pull out now, I I'm going to be able to take my money from here, I might be able to reinvest it in Queensland and my money will start growing again.
Speaker 1:Or Perth, as it seems. Yeah, yeah, I think.
Speaker 3:Melbourne or Victoria. From an investor's standpoint it's going to be a long-term investment. It's declining, right? Yeah, depending on the suburb that you buy. In Victoria they're actually seeing negative growth. So if you buy now, there's a chance it's going to continue that negative growth. But two years, three years, five years, surely it's going to come good, right?
Speaker 2:The population of Melbourne CBD, like itself, is actually higher than Sydney CBD.
Speaker 1:Oh yeah, I would hate to live in Sydney CBD, like specifically right in there.
Speaker 2:No, no. But I'm not talking about like the CBD, like just Melbourne itself. I'm talking about like greater Melbourne area is like 5.8 mil and then greater Sydney area is like 5.3 million. It does eventually have to start growing because you can't just keep building and building and building. Well, you can, but not at that rate Like it will sprawl and anything that's in the city is just going to increase in value because, okay, they've put a high-rise up, then they might put another high-rise up, everything. Eventually they're going to run out of high-rises to put up. Eventually there's not enough space. They're going to start introducing height limits and those sorts of things and they're going to say enough's, enough, we're capping this now and that's when it's going to start booming.
Speaker 1:And I think that's actually going to happen sooner than later, because I reckon we're still at that period and also this is an uneducated opinion, yeah, but like, are we not still in that period where we kind of need like there's been more calls for more density and more high-rises and stuff?
Speaker 2:No, Melbourne itself is already dense and melbourne has a lot of old buildings? Yeah, okay so because melbourne was the major city of australia previously, you got a lot of heritage, a lot of um yeah, european inspired buildings down there. Yeah, we knocked all those down in sydney you can't touch those.
Speaker 2:You can't touch those over there. So it's um, it's going to be very interesting. Um, I've been doing a lot of work in melbourne recently. There's a lot of savvy investors down there. Yeah, I just think the interest rates and the introduction of that new um investor tax correct has hurt individuals. But to me that also says that if you're, if you're pre-prepared now and you're able to withstand that, that you're probably going to be able to benefit in the long run correct.
Speaker 3:You could find a buy If there's less competitors. When you go to an open home and you put an offering, you might be able to negotiate a lower price than advertised. So I think there's definitely going to be opportunities like that. And, vic, it just depends, like you said, how long they're going to hold it for. In the long term it has to come back. Employment's great, they have.
Speaker 1:Yeah, I guess that's the only thing that's really got against it.
Speaker 3:Aside from that great, very livable city.
Speaker 1:It's one in the top ten in the world. Is it ahead?
Speaker 2:of.
Speaker 1:Sydney. I know they're like neck and neck.
Speaker 2:When I was down there the other day, a suburb called Keelaw. Have you heard of Keelaw?
Speaker 3:No.
Speaker 2:It's 15, 20 minutes outside of the CBD, Keelaw. So when you land you're around Tullamarine, essendon, all those sorts of things. Keelaw is a suburb, just I want to say west of so around about that area.
Speaker 3:Yeah, it's around about that area.
Speaker 2:Okay, and townhouses. And, mind you, this is 15 minutes to the city, like Melbourne CBD on the highway. Townhouses have gone for like 800K, extremely affordable. Man you can't find. How far do you have to go before you can get a townhouse for 800 000 in in new south wales? Past paramount, definitely way past paramount. Yeah, you, penrith, even in oran park you'd be struggling so david and I were looking the other day our properties in oran park and what did we find?
Speaker 3:we found for a house. A house is over a mil.
Speaker 1:It's one sitting around 1.2 now and this park, which is not near anything like, except for campbell town yeah, pretty much and but original, like that's gone up.
Speaker 2:I think they've gone up quite significantly 10 a year. We have a client right now who bought an apartment in oran park. They bought for 550 000 I want to say 18 months ago. It is valued today at $735,000 for an apartment. So to anyone listening to this podcast look at those pockets, look at where you think it's going to boom and where people are talking about it's going to boom the new airport, badgerys Creek, that's going to open in two years.
Speaker 3:Correct, that's creating a lot of buzz. There's a lot of desirability around that Leppington, oren Park, norellon, camden area, whereas you looked at Liverpool or Kisoola for an example and it doesn't seem people are willing to buy or pay as much compared to Oren Park. I don't know if it's just because of the future development. I think people are thinking of what that suburb's going to or has become so far and is going to become that they're willing to set themselves up there long term.
Speaker 2:Yeah.
Speaker 1:I think it's also because it's like new, like the literal everything is new, people like it, it's shiny, it's nice, the power lines are underground.
Speaker 3:It just looks clean when you drive through. There's lots of nice trees and parks and lakes and all that sort of stuff.
Speaker 1:Yeah, exactly, it's.
Speaker 3:very family friendly.
Speaker 1:Like my family lives in and around the Liverpool Fairfield area but like I know that there's not the greatest reputation, so I'm sure that's playing into the fact that, like people don't want to pay over a million dollars to live in Liverpool or potentially Just psychology.
Speaker 2:You say that, but Chester Hill is part of the Liverpool area code.
Speaker 1:Yeah, I imagine it would be. It's not far from it.
Speaker 2:Chester Hill's gone up in the last year 22%.
Speaker 1:Yeah, fairfield, I think it would be in Fairfield, yeah, fairfield.
Speaker 2:But it's right next door. But, that's 22%. That is an outrageous amount of growth.
Speaker 1:It's the third best performing suburb in New South Wales.
Speaker 2:You're kidding, yeah, oh, no, I'm not kidding, but you know the reason why they allowed people to be able to build CDC duplexes, ah, okay For the uninformed, so for the uninformed.
Speaker 2:Previously there was DA and there was CDC. Now DA is a development application that you need to submit. Now the problem is with DA NIMBYs can get involved. What are NIMBYs Not in my backyard? The DA needs to be advertised. The plans need to be lodged onto the council portal and people have the opportunity to protest.
Speaker 2:I don't like this. I don't like that. This is going to affect my facade. I don't like the height limit, those sorts of things. Cdc is a complying development certificate, which means if you comply with all of the rules of the council, you can literally start building. You lodge the application with CDC. Eight weeks later you've got your certificate, you can start the construction, and Chester Hill started to allow it. That's the reason why it boomed so much, because people saw the opportunity.
Speaker 2:If I buy this house for $900,000, it's got 16 meters of frontage, which is one of the key things of CDC. It's got 16 meters of frontage. That means I could fit one house here, one house there, two keys, strata title. One's going to be 120 and the other one will be 120A or something like that. It's going to be a strata title, but then I've got two dwellings, I've got two forms of rental income and then I've got two properties that are appreciating, not just one.
Speaker 2:And that's why Chester Hill is performing so well, because he underperformed for so many years. Because Chester Hill was in an area that people thought was undesirable. There were a lot of houses there that were going for cheap, but once they brought in this new rule they were like wait a second If for cheap. But once they brought in this new rule they were like wait a second if I, if I buy this property cheap, I'll buy four, let's say back in the day, because dave dave and I are the same age. Just to let all the listeners know, back 15 years ago, yeah, if you told someone you bought a house in chester hill for 1.3 million, they would throw a brick at your head what are you doing?
Speaker 2:they were worth 400 500k back then. Yeah, they were, they were cheap, they were cheap houses. But what you could do, oh, 400k, 500k, okay, perfect, I'll go put a CDC application in. It's going to cost me 150,000 per site to build this beautiful duplex. And then, all of a sudden, I could sell one for, you know, 650. I could sell the other one for 650. I've made 300 grand on each one. So, Dave, where are you seeing the opportunities around Australia at the moment?
Speaker 3:For my next investment. Yeah, like I said, wa is done, just way too hot. It's going to be at the end of its cycle now, okay. So I'm thinking Queensland, either regional Queensland, yeah, and I've also got my eye on Victoria. Yeah, I think Victoria. For me it's a little bit too early. I'm used to buying a property and having pretty immediate growth, first property southwest Sydney, second in Gold Coast, third in Perth. So all those purchases have immediately grown in value.
Speaker 2:Tell me about southwest Sydney. Where did you buy that?
Speaker 3:So that was my first home. That was in Leppington where I had a reduced stamp duty, so it wasn't a complete exemption from stamp duty. So I bought that in 20s end of 2017, settled early 2018, held that property for three years, got great growth. So I bought it for 700 and sold it for uh, just under a mil wow, in three years. Yeah, and the reason I decided to sell that property is because the yield was just terrible, let's say, valued at $1 million, renting for $520 a week. I just thought you know what it's gone up in value. I can pull some cash out here and I can use it to buy other properties elsewhere. Gold Coast property bought it for $670, renting it for $830 a week currently. So the difference in yield and it's had a growth over the last two years as well so I don't want to put my money somewhere where I'm not going to get that immediate growth.
Speaker 3:Like I said, perth's done. I don't think it's, even if it's still going up month on month. I mean, no one knows where the end is, but that's a bit of a gamble you take. If you buy something for 700 grand at the moment in perth, where's it going to end up? Is it going to end up at 730, 750? Is that worth it? I could take that 700 grand elsewhere, let's say, you know, earlier on in the cycle and it's going to hit 850, 900, like. I don't know an exact suburb yet, but I'd say regional queensland. Um would be on my radar for more immediate growth and then maybe further down the line somewhere in victoria that's awesome, man.
Speaker 2:Um how, how much time do you spend researching property?
Speaker 3:when I, when I'm ready to go. So when i've've got the equity or pre-approval, I won't go to a lender again for a pre-approval, it'll be via one of our brokers. I'm very obsessed. I'll spend every hour of the day I'll check to see what's been listed, what's selling, I'll set up alerts. I'll go on forums online. I'll try and gather as much information as possible. I'm just yeah, it usually takes me around two, three months to actually narrow it down, um, from when I have that pre-approval and we'll have the funds ready to go to actually purchasing some uh something. But I'm very, very obsessive, so I'll just gather as much information as possible and just compare it.
Speaker 3:Run the numbers, you know, run the figures and just compare with you know other suburbs, because you really have to narrow it down. Once you know the state, okay, then you know you might know the city and then you want to look at each suburb within that city and you know, look at the yield, vacancy rate. What's the growth been like in the past? Is that a reflection of the future? What is going to be accelerator of growth? Walking score, is it near the water? Education, hospitals, schools, shopping centres, all those sorts of factors that you need to take into play, and you're not going to know that just by looking at ads on realestatecomau right every single one of those photos is extra contrast.
Speaker 3:Every agent writes the same thing. Great investment opportunity, you know, near the shops, near the cafe, near a school, cool.
Speaker 2:That doesn't mean it's going to be a good investment for me I actually really like the fact that you flew out to Perth to get a feel.
Speaker 3:Yeah, I wanted to because I spoke to a few agents before going there and one of the agents said the north coast is a little bit nicer lower crime rate, just a nicer coastline than the south coast. So I essentially went from Perth CBD all the way up to Yanchep, so I explored that, from Perth CBD all the way up to Yanchep, so I explored that whole coastline. And then on the following day I went from Perth CBD down to Mandura or Hall's Head and just got a general feel for the suburbs along that whole coastline and from there I went. I did establish yeah, north Coast was the choice for me. And then just driving back from Butler and we stopped in for a coffee along the way and I saw a beautiful marina just completely found it by chance called Mindari Marina. I thought, wow, if I could buy a property close to this, it's got the beaches, it's got the marina, it's got all the shopping centres, the schools etc. That would be a great buy. So that's where I ended up buying. There's a few things to grasp there.
Speaker 2:Invest in places where people want to live. There's walking score A real estate agent. I've met with a thousand real estate agents in my life. Not once has a real estate agent actually brought met with a thousand real estate agents in my life. Not once has a real estate agent actually brought up walking school. To me they'll say oh, there's lots of little cafes around, where's the cafe?
Speaker 3:20 minute drive it's a 20 minute drive, you know oh, there's a Jiminy here.
Speaker 2:Oh, where is it? It's a 15 minute drive. I'm like, come on, man, like they're always trying to sell you, and the reason for that is real estate agents make their money on the commission, they make it on the sale and they get their listings and they just want to sell the property.
Speaker 3:They're acting for the vendor. Have you used a buyer's agent before?
Speaker 1:No, not yet.
Speaker 3:Really I'm not that busy. Okay, I'm not that time poor, not yet. At least You've got to start working harder.
Speaker 2:This guy gets emails from me. No, he gets phone calls from me at 10 pm and he's like have you looked at this?
Speaker 1:this and this and he's like are you seriously still going to go to sleep?
Speaker 2:I actually want to touch on one last thing. So perth boomed, seriously boomed, because interest rates were so high, because people at the lower end of the market couldn't buy anything. In sydney you work in pre-approvals. You've seen it time and time again if somebody's earning a hundred thousand dollar a year salary, what can they borrow? 550 grand tops?
Speaker 3:not gonna get you anything. Yeah, with the majors, you know.
Speaker 2:But you can still go buy something out in wa and because that was occurring, that's why wa was spiking so much. That's why I was growing at a,000 a day. Do you think, once interest rates drop, that Sydney is going to boom again? Or Melbourne is going to boom again because people are going to have that opportunity to buy in those?
Speaker 3:locations again? Absolutely yeah, I think people will look to buy local If they have more borrowing capacity, then they're not necessarily going to look interstate. It depends on what they're looking to do as well why they're not necessarily going to look into state. It depends on what they're looking to do as well, why they're looking to buy Owner-occupiers. I'd assume more owner-occupiers are going to be active in the Sydney market once rates drop, because they can now borrow $200,000, $300,000, $400,000 more than they could with rates sitting at mid-sixes, right. So I think we're in for another boom in sydney. Um, if I personally, if I was looking to buy in sydney and I had a pre-approval ready to go, um, I'd be pretty strategic.
Speaker 1:I'd look to get in before we hit that little boom yeah because I said, I think as soon as the rates go down, all buyers are going to start flooding the market and for those that there'll be initial price drops. But all buyers are going to start flooding the market and for those there'll be initial price drops, but then they're just going to go straight up. I think it'll be like a couple of months of relief.
Speaker 3:If a rate drop happens before Christmas, just imagine how many people are going to be turning up to open homes.
Speaker 1:Yeah, it's going to be insane.
Speaker 2:The competition is going to be fierce and prices are going to go high, so I'm thinking that they might drop the rates, because we spoke about the retail quarter and retail spending is all the way down. I don't know. Has anyone been to a shopping centre recently? No, they're dead. I was at Westfield Miranda the other day Rainy day, so perfect day for people to be out shopping or that sort of stuff.
Speaker 2:No one there's no one in the shopping center. No one's spending money. The issue with that is there's commercial tenants in there and those commercial tenants need to pay rent as well. And if they're not making budget, what ends up happening? They start shutting down. And those massive and I'm talking those massive shopping centers, guess who they're owed by? Guess who funds them? A lot of the banks. So they, the banks, could actually end up having landlords defaulting on them because they can no longer afford to pay the debts, because they're not getting the rental income, because they don't have enough tenants in.
Speaker 2:So, it's not only the mums and dads that are affected, it's also, you know, the big retail giants and the large manufacturers. So I think, I genuinely believe, we are going to have a rate cut just before Christmas, because they need that Christmas boom.
Speaker 1:Even just in consumer spending, let alone property.
Speaker 2:Yeah, but they need the consumer that's where I'm starting. It starts with the consumer spending, because as soon as the consumer spending starts happening, you're not having businesses shut down. In Miranda, westfields or Bondi Junction, I think I was walking past Camilla. No, not Camilla, but one of those girl shops like the popular ones, sass and Bite that's the one I was thinking about Closed down, oh damn Closed down in Miranda Bummer, you know.
Speaker 3:No, but like I'm just saying, like it's, it's not something that yeah, um, small businesses and retail businesses are feeling it. Yeah, even near me in roselle, uh, on darling street, as you go into roselle, there's about five uh shop fronts that have just vacated, yeah, yeah. So think about this okay, the landlord?
Speaker 2:yeah, they. They're trying to get the rent. Why are they trying to get the rent? Because they owe the bank money. If they default, okay, the bank might be able to resell the asset, but the bank still has debt. The bank is borrowing that money from the reserve bank or they're borrowing it from somewhere else. The world works on debt. Who's making money? Who can lend it? That's all it is. And there implications if they don't start reducing the rates. And I think you're right when you say that, like, get in now if you've got a pre-approval, because it's going to get fucking hot yeah, don't wait.
Speaker 1:Yeah. Yeah, the rates aren't good now, but that's why it's a good time to buy exactly, I won't be saying the same. The complete opposite. Once the rates drop, goodbye now the rates low.
Speaker 2:When's the next best time to purchase? It's today. It's an appreciating asset. Anything, anything with land on it. What happens? It goes up, it goes up. There's only so much land on earth. There's only so much land near the Sydney CBD. There's only so much near Parramatta. There's only so much near Perth CBD.
Speaker 1:That's it. People want to live in Australia. It's very clear.
Speaker 2:It's just like you say that now You're like, yeah, we're going to say the same thing when rates are down. Yeah, I am going to say it Because it's true, because the government retirement age is 67. The pension is shit. Your superannuation okay, it might be worth something now, but it might not be worth something by the time you retire. Set yourself up for life. Get in early 18 to 25. How old were you when you bought your first property? 27. When you bought your first property? 27, 27. Okay, get in early. Get in in your 20s, because by the time you're 40 you sit in there. You're probably gonna have seven properties by the end of next year. Um, knowing this guy and the way that he hunts and everything he's probably gonna have, you know, a strong property portfolio by then. Okay, by the time you're 40, what happens? Oh, guess what? Your back hurts. Hey, you can actually take time off, work and recover.
Speaker 1:The unfortunate part is, so like we've got stats for this, so like in in 1981, 55% of Australians aged 25 to 29 owned a home. That's dropped now to 35%. Yeah, so it is rougher.
Speaker 3:So you're gonna have to find ways to work around that, or just be more open to buying interstate as an investment or for your first property, I. Or just be more open to buying interstate as an investment or for your first property.
Speaker 1:I don't think people understand how equity? Works, correct, like broadly speaking, because people are like but what's the point in buying this when I can't? Why would I?
Speaker 3:buy in Queensland.
Speaker 3:I don't know anything about Queensland. I've been there twice. Everyone wears thongs, I don't know. Or they walk through the mall barefoot. Do I really want to buy there? That was literally how I used to think in my 20s. I thought why would I ever want to buy interstate? I don't visit Queensland frequent enough. What happens with a tenant? How do I know they're taking care of the place? How will I manage it? You just find a good property manager and they'll go out. They'll do inspections. They'll take photos for you. You chase them up for updates. If anything's fixed, you know they'll go out. They'll do inspections. They'll take photos for you. You chase them up for updates. If anything's fixed, you make sure you know. If anything's broken, you make sure it's fixed. So be more open is my advice to people in purchasing in other states. Yeah, because if it's more affordable and that's it matches, you know it's going to be a way in for you to build equity over the next few years?
Speaker 1:Yeah, because it's what Joe said. The whole world operates on debt. Who's got the money to then lend money? The way that you get the money is to put it into equity, and then you can access that later when you need it to purchase another property, maybe the house you want to live in. So that's generally how it will work. So don't think about it in a way. It's like I don't want to buy in Queensland because I'm not going to live in it.
Speaker 3:Yeah, be more open-minded to other states. I've never had an issue with a tenant in any of my properties. If something's broken, the agent will let me know. They'll send a tradie in there to get a few quotes and I'll make a decision from there.
Speaker 2:Okay, good, you brought up agent. This is a massive segue, but if you are renting a property, I'm going to give you some very sound advice. Don't rent it cash. If you are expecting to grow your equity, refinance and use that equity to purchase more property, don't rent your properties with cash. I promise you you will regret it and it will be 900 times harder to purchase more property. Don't rent your properties with cash. I promise you you will regret it and it will be 900 times harder and more difficult to get you an approval if you collect cash.
Speaker 3:I'm sensing some frustration.
Speaker 2:Oh man.
Speaker 1:I'm sensing some logs have been like yeah, yeah, I keep trying to explain it.
Speaker 2:I keep trying. Okay, yeah, cash is great. Fantastic, get the cash. There's two things about debt. Okay, there's two things about debt. Number one the bank needs to see money going in. And number two you need to pay tax to borrow more. If you're trying to hide as much tax as possible and do these ones and do that one, guess what's going to happen when you want to buy a house? You're going to get shit.
Speaker 1:You're going to get a horrible interest rate, you're going to have no borrowing capacity.
Speaker 2:You're not going to be able to go to a major bank. Some people just don't want to listen. They just believe oh no, no, no, I'm going to do it this way, I'm going to do it that way.
Speaker 3:But then when push comes to shove and it doesn't work that way, correct? They're also better protected if they have a property manager, because the property manager knows the landlord legislation back to front. Yeah, and they. They're that you know third party that can just step in and just take care of any issues for you. What? Why would you, you know? Why would you run the risk of having an agreement with someone you know their living situation might change, they might start falling behind on payments. Do you want to be the one having that conversation? Personally, myself I wouldn't, but some people want to run that risk.
Speaker 2:Yeah, it's not wise, so Dave what are the goals for the next 12?
Speaker 3:months For me. Yeah, I'd like to purchase two more properties in the next 12 months 12 to 14 months and just learn as much as I can as a mortgage broker and help people achieve their investment goals. Really, that's fantastic man.
Speaker 2:That's fantastic, as always. That is definitely some schmo. My name is Joe. If you need any assistance with your investment needs, you can contact Dave directly or you can visit wwwitsimplecomau. As always, my name is Joe and thank you for tuning in. Is that what I finished with? Yeah, we can tune in. I'm very tuned in.
.png)