EP. 1217 BUYING A PROPERTY AND NO MORTGAGE FOR THE FIRST 3 YEARS!? 😱

Could your future home be waiting for you, without the dread of immediate mortgage payments? Imagine the possibilities as we unravel the secrets to buying property off the plan, a savvy financial move that could have you owning real estate without the burden of a mortgage for a couple of years. In light of the recent tragic events at Bondi Junction, our conversation starts with a heartfelt tribute before shifting gears to a brighter topic. Our special guest, Billy, joins us to recount the success stories of clients who've navigated this path, offering hope and strategy to prospective buyers during challenging times.

As you lend an ear to our latest episode, you'll grasp how locking in today's prices can shield you from the unpredictability of tomorrow's market. Billy walks us through the journey of clients who've capitalized on this approach, highlighting how they've sidestepped mortgage payments until settlement and positioned themselves to potentially benefit from property value appreciation. If you're intrigued by the prospect of enhanced cash flow and improved borrowing capacity amid anticipated rate decreases, this episode is poised to guide you through an exciting investment opportunity that's capturing the attention of forward-thinking property buyers. Join us for a candid discussion that might just redefine your outlook on acquiring your next home or investment property.

Transcript

Speaker 1: 0:00

Buying a property and not having to pay the mortgage for two to three years. It sounds like a dream. How on earth could that be possible? Stay tuned, we're going to tell you more. I'm the ringleader, so let's go. Hey, good morning.

Speaker 2: 0:31

Good morning to the Bob. How are ya?

Speaker 1: 0:34

I'm really good. How are you?

Speaker 2: 0:36

Good, good, good. Shocking news over the weekend with Bondi Junction. Our hearts go out to everyone there and um, what an awful thing yeah, it's amazing to see how the community gets behind everyone.

Speaker 1: 0:52

You know those times but super sad and, yeah, anyone that's been affected you know our thoughts with you for sure respect.

Speaker 2: 1:00

my daughter went to school was in the same year as one of the girls that's passed, so hearts out to everyone. Hearts out to everyone.

Speaker 1: 1:09

Yeah, super sad. Hope everyone had a good weekend though outside of that. We've got a bit of an interesting one this morning.

Speaker 2: 1:17

Yeah. So this is I think a lot of people have missed this where there's an opportunity. Potentially, if rates are going to come down, which everyone thinks they are, there's an opportunity to buy a property, not have to actually pay the mortgage for a couple of years and then, on the other side, pick it up and hopefully the mortgage will be back to sort of regular levels. So tell us about it. What do we? How do people do it, billy?

Speaker 1: 1:48

well, it's almost a bit of a tale of the sale, this one, because I'll give you a real-life example, had a client called me a few weeks ago and said we're ready to buy our first property, but the timeline doesn't really match up. We don't want to move in straight away. So you could either buy something existing and have it rented out or you could look at something like this brand new. And they said, oh, we like the sound of brand new. Even better, that's two to three years away because we won't need to pay the mortgage. I said that's exactly right.

Speaker 1: 2:17

So these guys real life example are studying, doing some studies in wollongong and moving to moving and moving back to Sydney at the end of their studies. But right now I have a really good, healthy deposit ready to buy. But because they're sort of half in studies, half part-time work, they know their work down the line will move to full-time and that's kind of the point when they want to move back to Sydney and then effectively move into their property. So what they've looked at doing is buying a brand new of the plant. I'm going to show you where they bought. It's pretty close to home. This one, this is in the middle of dy, so Casa Del Mar, two-bedroom apartment and this building next door here is actually Novak HQ, so couldn't get much closer.

Speaker 2: 3:06

Right there, look at that. So how does that work? And I'll act like I don't know. I don't know. So you answer the questions. If the price goes up in two or three years when a off-the-plan's finished, do you pay the market price when it's finished or do you pay the price when you locked it in?

Speaker 1: 3:27

Yeah, the beauty of buying brand new at the time is you've paid today's price for tomorrow's property. So there's no change on price despite what happens with the market and when you're looking at the prospect of rates coming down. It'll ease people's cash flow. It will improve people's borrowing capacity. I think that's a really exciting time to try and take advantage of that. And two to three years, generally speaking, is a time frame where we start to see people build in some equity, a bit of capital growth. So you actually enjoy that on your 10% deposit, but it's for the full purchase price of your property. So if you buy for a million dollars and the market moves 10%, you made um 100 000 on your on your deposit, which is amazing do you have any repayments along the way if you buy something and you put down your 10?

Speaker 2: 4:21

no, you don't really no repayments until settlement so it sounds too good to be true, isn't it?

Speaker 1: 4:32

does sound too good to be true, but it's a. It's a really clever way of using your um, using your money, and particularly if you know you're going to move into the property down the line, um, it's a nice way to actually buy. You know, buy and know what you're getting at the end of, at the end of the um settlement, and then you can move in or rent it out. Obviously, brand new is always um a little bit lux, a little bit special. So if you do um rent it out, you know there's obviously um an advantage there as well and you've got another development as well yeah, not, you can almost see it on this map um is it on that card that you've got?

Speaker 2: 5:10

I think it's on there, isn't it?

Speaker 1: 5:13

no, I don't think it is, but um, down here just below meriton so meriton's the two tall buildings here and pretty much slotting in the school there there's another one um you're probably a little bit more skilled to tell us on that one, but correct me if I'm wrong. There's similar sort of entry-level price points.

Speaker 2: 5:29

One and two veterans and then also you've recently bought one for $198,000. How do you do that?

Speaker 1: 5:37

I did so we've also got the most affordable property on the Northern Beaches currently for sale, and there is still one or two more, so you can still get yourself in there as well if you know any friends or family. $198,000 commercial-grade storage vault, so 23 square metres, a little bit further up this hill, pushing towards the top of a Lambie Row French's Forest. And you're right, I've just bought one in my superannuation.

Speaker 2: 6:08

I've used some funds there to use as a deposit, and that's also about two years away, which is exciting If someone's say if you've just tuned in, we're talking about the opportunity where you can put down a 10% deposit to buy a property and not have to pay a mortgage for up to two or three years if you just tuned in. So on that, Billy, what happens if the developer does not build the building? Do I lose my deposit?

Speaker 1: 6:35

I think that's the biggest question we get. The answer is no. You don't lose your deposit. The deposit's held in trust, so it's not in the developer's back pocket, effectively being used to build the build as such.

Speaker 2: 6:51

But the developer doesn't get hold of the deposit that's right, sits in trust account.

Speaker 1: 6:56

So I think that's really that's a really big thing. That puts a lot of people's minds at ease to know that their money is actually, you know, safe. And of course, the developer doesn't want to help build the project either. I know everyone you know ask the question well, what happens if it doesn't get finished or what happens if it's delayed? It's in the builders at best interest to get in and out as quick as possible and, you know, do a really good job, particularly when they're a local company and they've got, you know, history or a track record with other projects. You've got to remember, guys, this is their bread and butter, that's their. You know their area of butter, that's their. You know their area of expertise, it's their business. So it would be like you guys turning up to work and and not doing anything for the day and just packing it.

Speaker 1: 7:40

You know, so it's I think it's, it's uh, you've got to remember that these guys make their living from that, from that as well now just headline stuff, billy, you get to see, I get to see the headline.

Speaker 2: 7:52

You know properties. So if we sell a block of 100 units or a block of 50 units or a block of 20 units, uh, or we sell storage units or we sell warehouses, we see the pull up, we have access to the data. Um, do you have people ever that, um, on the northern beaches that have sort of been bitten by it, or do you have people generally on the northern beaches that have been kissed by it? So and the reason I'm asking that is people that are watching today don't have the benefit of seeing how much those hundred people bought for. And if any of those hundred people bought and they sold, how much they sold for and did they make money or did they lose money? Um it, what? What is it a sad story for most of these pirates people? Is it a beautiful story for most of these people?

Speaker 1: 8:43

it's um. It's a brilliant question to ask the agent. Actually, as you're going through the um buying process, quite, quite often they're going to have some sales that have been done on a finished product that they can show you. So anything that I've ever bought, I've always, I've always asked that same question over the over the northern beaches. I do love the track record. That's what makes makes it so exciting for people that have bought storage units and held for three or four years combined in that building phase and then a couple of years after settlement. They've done in similar suburbs like Cromer, brookvale, worrywood, you know close to 30%, 40% on their money, which is astonishing that's performed as strong as the residential sector.

Speaker 2: 9:28

And I do have to say I find it's a great way for people to help their kids that, if they are one I've just recently sold that's a mum and dad fortunately it's been a good financial position to say little Johnny's going to buy something and we're going to help him. And then what they've done is they've helped with the deposit, they've put that down, then in, and then they know two or three years later their son will be earning more money, be able to be saving further towards that deposit so they can have a smaller mortgage. So it's good for that. And then what I've also noticed is people with super. They've got two or three years. They put that 10% down with their super and then they've got two or three years to pump up that super.

Speaker 2: 10:17

They're the types of buyers that we've been selling these projects to and I do have to say they've been unbelievably successful. So we do sell out entire buildings off the back of these 10 deposits, and the earlier you get in on a building, the better, uh, the more upshot you're going to get. Ie, if you're buying when it's almost finished, uh, you're not going to make as much too if you're buying before they've even knocked down the building.

Speaker 1: 10:55

So there's off-the-plan stages one, two, three and the earlier stage to get into stage one. Yeah. So I couldn't agree more with Luke Great opportunities, You've just got to look for them. And Lee said Belgal off-the-plan as well. Yeah, we've got 12 amazing apartments being finished there.

Speaker 2: 11:09

There's still a couple left um two bedrooms.

Speaker 1: 11:11

They, they, you know the perfect place to uh have a retirement.

Speaker 2: 11:15

Uh, what an amazing building that is um yeah, and before before we go, um something, I think people worry about the building, uh as well, but before we go I do have to say I feel very, very passionate about strata versus houses. I've been very old-fashioned in my approach of looking at property and I always look at long-term growth. Now, if you look at the last 10 years of houses, they have done on the northern beaches about a hundred and twenty, five hundred and twenty hundred thirty to a hundred and forty percent in capital growth. That's what, how much houses have gone up. So over ten years they've not only doubled but they've done even more than double. Now that's houses, that's data, that's all properties, all, all houses, all suburbs.

Speaker 2: 12:10

If you look at unit data, units over the last 10 years have only gone up 75% on average Curl Curl sorry Collaroy, narrabeen, dy, brookvale they've only gone up 75%. So there's been not only, they haven't doubled, they've only gone up 75. So there's been not any, they haven't doubled, they've only gone up 75. So million bucks, it's gone up 750 grand, whereas a house of them of a million, you know, in for two million bucks has done a lot more than double.

Speaker 2: 12:41

Where I'm going with this is I think there's been a staggering amount of capital growth in houses and underwhelming growth in apartments due to covid, and I believe there's going to be a huge catch-up because over the last 50 years strata's always performed in low stock suburbs as good as houses. So I'm calling it today watch out for the catch-up. I think there's going to be a lot of catch-up with units and I'm calling it today. I think now is it. If you're buying something like off the plan, 10% down, nothing to pay for two or three years when the projects finished, I think strata is a good investment to get into. I personally have done it lately, so I think it's good particularly brand-new and affordability is key units have the scope for growth.

Speaker 2: 13:29

That's, that's spot on spot, yeah, and I think the unit's going to do better. I think luke's right, because that whole affordability ability thing anyone could have bought a house, uh, and been a hero at a two percent interest rate, but now when the interest rates are almost triple, then people are saying, hang on a sec, maybe I do have to consider a really nice unit. So that affordability is really going to come in key. And these people renting again, we're going to buy it's cheaper, it's going to happen yeah, there you go.

Speaker 1: 13:57

I think that's the show that's the show.

Speaker 2: 14:00

put your 10 down, buy off the plan. But I do have to say, buy in an area where there's low supply. Do not buy in areas where there's 2,000 units, 6,000 units, 32,000 units, five years later, stick to suburbs where there's a low stock availability. Yeah, so I'm not a big fan of Parramatta, sorry.

Speaker 1: 14:23

The West.

Speaker 2: 14:23

Wars. Watch out for too much stock those suburbs. Just watch out for that because that's going to stunt capital growth. Love ya any help?

Speaker 1: 14:32

yeah, just call us will help.

Speaker 2: 14:36

See you guys take care. Thanks, billy.