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The Olympic-sized property opportunity · The Money Puzzle

0:10
Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
0:13
Speaker 1: James Kirby. Welcome aboard, everybody. Welcome aboard to an increasingly
0:18
Speaker 1: lively and lucrative I think residential property investment market. And
0:23
Speaker 1: we've been saying this for some time that it was improving,
0:26
Speaker 1: it was coming and here we go. Lots of reports
0:29
Speaker 1: now you'll see talking about not just the fairly good
0:32
Speaker 1: returns in recent times, but strong prospects across the board.
0:36
Speaker 1: Now when you look at it more closely, it's the
0:39
Speaker 1: strongest prospects are actually outside the metropolitan cities of Sydney
0:44
Speaker 1: and Melbourne, and it is coming down again perhaps to Perth,
0:50
Speaker 1: Adelaide and Brisbane. However, folks, the big market, the market
0:54
Speaker 1: that's really got the volume and probably the outlook long
0:58
Speaker 1: term I think, and it's come up on the show
1:01
Speaker 1: regularly is Queensland, specifically Brisbane and the Gold Coast where
1:06
Speaker 1: we have a lot of action happening. And if you
1:09
Speaker 1: listened last week's show and Missa Cavello talking about how
1:13
Speaker 1: investors are now increasingly willing and it's increasingly easy to
1:16
Speaker 1: invest interstate. My guest today is an expert on the
1:21
Speaker 1: Queensland market, specifically Brisbane. He's based in Brisbane. I know
1:25
Speaker 1: him a long time. It's Sam Price of a Templeton.
1:28
Speaker 1: He's a buyer's advocate in the city. Well, you're doing
1:31
Speaker 1: your own thing for about fifteen years now, aren't you, Sam?
1:34
Speaker 2: I have Jan Yes, yep, doing my own thing. Had
1:36
Speaker 2: the property management for long time as well, and Tim
1:39
Speaker 2: planning before that, but just now it's purely buyas agency
1:42
Speaker 2: in buying throughout Southeast Queensland for mums and dad investors
1:46
Speaker 2: as well as a rocketpaths as well.
1:48
Speaker 1: The reason I mentioned that you're doing at fifteen years
1:50
Speaker 1: is that I want investors to know first of all,
1:53
Speaker 1: before we talk about the specific attractions of Queensland and
1:58
Speaker 1: certain issues that are happening there. Should find very interesting folks.
2:01
Speaker 1: You do need to know that hasn't always been so good,
2:04
Speaker 1: and there was a patch where Brisbane really had it
2:09
Speaker 1: hard as a property investment market due to floods that
2:13
Speaker 1: were quite devastating and spectacular really if you were ever
2:16
Speaker 1: in the city after those floods, and similarly another issue
2:21
Speaker 1: was overbuilding. So just cut to the chase. In terms
2:25
Speaker 1: of Queensland as a distinct market. To me, these are
2:28
Speaker 1: the distinct risks. There are those risks still in place.
2:32
Speaker 1: Has anything changed?
2:34
Speaker 2: The flooding is definitely still in place. So as we know,
2:36
Speaker 2: we had the big floods in twenty eleven in Brisbane,
2:39
Speaker 2: then another one only ten years later in twenty twenty two. Yeah,
2:42
Speaker 2: they were devastating in Brisbane. I think having two in
2:46
Speaker 2: close succession really taught us a big lesson. And although
2:50
Speaker 2: we can't change the flooding and the weather, of course,
2:53
Speaker 2: what we can do is build to accommodate the flooding.
2:56
Speaker 2: And so since that time, all the buildings that have
2:58
Speaker 2: been done that a flood affected, they've kind of taken
3:01
Speaker 2: that into account. So I think we've learned to live
3:05
Speaker 2: with it now, James. So their values have jumped back
3:08
Speaker 2: and people are not as concerned about it these days
3:11
Speaker 2: as they were. However, Brismoo City Council has been excellent
3:15
Speaker 2: in providing information to buyers. They have a like a
3:18
Speaker 2: flood report on every property within Brisbane City Council. They
3:21
Speaker 2: have a flood map as well, so when you're buying,
3:24
Speaker 2: always look at the flood map first of all, then
3:26
Speaker 2: look at the flood report and it will tell you
3:28
Speaker 2: how the different floods and how many meters of centimeters
3:31
Speaker 2: of water when over the property if it wasn't affected
3:34
Speaker 2: at all. So that's a staple check that you do
3:37
Speaker 2: forever property.
3:38
Speaker 1: Would you say that is a distinct feature of the
3:41
Speaker 1: Brisbane market as opposed to see Melbourne.
3:45
Speaker 2: I'm not sure about the flood search in Melbourne, but
3:47
Speaker 2: I know for Morton and Ipswich the Brismoo City Council
3:50
Speaker 2: flood mapping is excellent. It is quite conservative at the moment,
3:53
Speaker 2: like there's a lot of properties that are within the
3:56
Speaker 2: realms of being flood affected that I don't think ever
3:58
Speaker 2: will be, so there is quite a buffer on it. Yeah,
4:01
Speaker 2: but then we're only talking about if twenty percent of
4:04
Speaker 2: the not even twenty percent probably z it might be
4:06
Speaker 2: like ten percent of Brisbane.
4:07
Speaker 1: So it is a small it is, but it tends
4:10
Speaker 1: to be very attractive inner city zones by the river
4:14
Speaker 1: and where all the apartment blocks are too. It's worth
4:17
Speaker 1: listeners knowing. I can remember looking at a property in
4:21
Speaker 1: Brisbane in the Interpilly area after the floods, first floods
4:25
Speaker 1: and a lovely place on a park and then the
4:29
Speaker 1: really state agent said I must buy low Point out
4:31
Speaker 1: where the flood reached here. He put his hand up
4:35
Speaker 1: into the air, you know, about six ft high, speechless.
4:39
Speaker 1: I'll never forget it. So I want to start the
4:41
Speaker 1: show just by putting that on the table separately, that
4:44
Speaker 1: there was an overbuilding, apartment over building. What situation at
4:48
Speaker 1: the moment.
4:49
Speaker 2: Now we're in a start of you know, under supply
4:52
Speaker 2: for sure for apartments. I think we're back to ninety
4:54
Speaker 2: ninety levels of supply coming on line. So it's all
4:57
Speaker 2: that I was supplied the ninety nineties and the two thousand,
5:00
Speaker 2: since that's been all absorbed now and given the cost
5:02
Speaker 2: of construction the last you know, since COVID has been
5:04
Speaker 2: very high and escalating, it hasn't warranted developers to press
5:09
Speaker 2: the trigger on building the quick rise. Since COVID of
5:12
Speaker 2: property values, I think they've got to a stage now
5:14
Speaker 2: where it's economic to build units. Like if replacement of
5:18
Speaker 2: a two bad, two bathroom unit is in excess of
5:21
Speaker 2: you know, one one point two mil, well, now we've
5:23
Speaker 2: reached that point where the market will be happy to
5:25
Speaker 2: pay that. And therefore there's a lot of projects in
5:28
Speaker 2: the pipeline that can now go ahead, which so currently
5:33
Speaker 2: and under supply, everything's selling very quickly. Naturally in these times,
5:37
Speaker 2: they do over react sometimes and build too many. But
5:40
Speaker 2: given it takes three to five years for these buildings
5:43
Speaker 2: to get built, we're not going to see that for
5:45
Speaker 2: some time. But there are our pockets in Brisbane where
5:48
Speaker 2: you know, you could potentially see it. And even now
5:51
Speaker 2: I'm guarded about recommending clients buying those areas for the
5:55
Speaker 2: perceived you know, over building that could happen. They could have.
6:00
Speaker 1: Yes, it could happen. So in terms of investor activity
6:05
Speaker 1: in Brisbane, is it across the old dwellings or is
6:10
Speaker 1: there still a specific action in houses? Are they still
6:12
Speaker 1: within a price range for investors to get access.
6:15
Speaker 2: Yeah, I think a lot of there's two types in
6:16
Speaker 2: the vests. One is the one that wants to buy
6:18
Speaker 2: in Brisbane okay, and then there's for their own reasons
6:22
Speaker 2: and the you know they might live in Brisbane. A
6:24
Speaker 2: lot of people tend to buy where they live. Then
6:26
Speaker 2: you've got a lot of investors that deal with properly
6:29
Speaker 2: like a commodity, and they'll buy anywhere in Australia. They
6:31
Speaker 2: won't need the property and so forth, and those people
6:35
Speaker 2: kind of hunt around. They might be looking in Tansbula,
6:37
Speaker 2: Mackay or Melbourne or Sydney or Perth and so forth.
6:41
Speaker 2: But for the ones that are buying in Brisbane, it's
6:44
Speaker 2: more difficult. If the average buyer Australia wide buying the
6:46
Speaker 2: commodity product is really it's between five and seven hundred thousand,
6:50
Speaker 2: then if you apply that to Brisbane, stock is a
6:53
Speaker 2: bit tight. So you're looking at an inner or middle
6:56
Speaker 2: ring unit for that sort of money. And if we're
6:59
Speaker 2: looking for a house, we're having a look outside of
7:01
Speaker 2: Brisboo City Council into like Ipswich or Morton in areas
7:05
Speaker 2: like that. So yeah, there is a sweet spot in
7:09
Speaker 2: Brisbane for buying investment properties. I believe James which is
7:13
Speaker 2: not a house for five to seven hundred thousand. It's
7:15
Speaker 2: more a middle ring suburb house and land. But for
7:19
Speaker 2: that now you're paying like one point two one point three.
7:22
Speaker 2: But for that it's a six hundred square meter block.
7:25
Speaker 2: It's got a postal house on it, so built after
7:28
Speaker 2: nineteen forty six, which allows you to knock it down
7:30
Speaker 2: in the future. It's eight to ten kilometers from the city.
7:33
Speaker 2: It could be north, it could be south, it could
7:36
Speaker 2: be an area like Stafford heights, Kepera Michellton on the
7:39
Speaker 2: north side, or Macravad's Holland Park SoRs it on the
7:44
Speaker 2: south and that has lent themselves to a high land
7:47
Speaker 2: component of seventy percent of the value at least is
7:50
Speaker 2: in the land, good rent for return. We can knock
7:53
Speaker 2: it down in the future and rebuild, which is starting
7:55
Speaker 2: to happen, or we can renovate it, put on a
7:57
Speaker 2: deck and so forth. So that's kind of a sweet
8:00
Speaker 2: spot for house any right.
8:02
Speaker 1: Tell me compared to when you started in interest and
8:07
Speaker 1: activity in Greater Brisbane Compared to when you started.
8:11
Speaker 2: It's definitely picked up a lot of recent times. The
8:15
Speaker 2: last few years. It's more ouner occupiers that I'm seeing
8:18
Speaker 2: at open homes. The investors are still a little bit
8:20
Speaker 2: light on. I think the ones following the online social
8:24
Speaker 2: media buyas agents are flocking to the different areas throughout Australia.
8:28
Speaker 2: So the ones I'm seeing at the opens primarily owner
8:31
Speaker 2: occupiers and then probably local investors or people buying from
8:35
Speaker 2: into state that have plans to move up here on
8:37
Speaker 2: the short term or the long term.
8:39
Speaker 1: Okay, tell me, just for our listeners who would be
8:42
Speaker 1: considered who don't live in Brisbane, but would like to
8:45
Speaker 1: consider it and knowing that the fundamentals are so good,
8:49
Speaker 1: and knowing that the city has outpeaced the other two,
8:54
Speaker 1: the other the larger cities Sydney and midd some time,
8:57
Speaker 1: and that the forecasts that have just come out this
9:00
Speaker 1: week from SQM suggested that would continue. Knowing that what
9:07
Speaker 1: are the districts? Do you think investors should start looking
9:10
Speaker 1: in this city? You'd have to give us the entire
9:15
Speaker 1: post codelistic because it would take it away. But tell
9:18
Speaker 1: me just the years where you see there's particularly you know,
9:21
Speaker 1: good prospects.
9:23
Speaker 2: Yeah, I like for it's probably two one is the
9:25
Speaker 2: investment unit market, so that's sub a million dollars. So
9:30
Speaker 2: lately there's been good ones on the five K fringe
9:32
Speaker 2: of the city. For seven hundred to tw eighte hundred thousand,
9:35
Speaker 2: that's what you're paying for a solid walk up unit
9:38
Speaker 2: that's had some work done, it's got low body corporates,
9:42
Speaker 2: it's got a good sinking fun there's no lift, there's
9:44
Speaker 2: no pearl. It's a smaller complex of six to ten,
9:47
Speaker 2: six to fifteen. There's a sweet spot and they're kind
9:49
Speaker 2: of the five K ring from the CBD. Then you've
9:52
Speaker 2: got and that can be north to south as well.
9:54
Speaker 2: And then you've got the Middle Ring suburb by I mentioned,
9:57
Speaker 2: which is really it's over a mill now. It used
9:59
Speaker 2: to be like cheaper like everything, but now it's one
10:02
Speaker 2: two to one three for that eight to ten k house.
10:06
Speaker 2: So they're probably the two sweet spots. There's also in
10:08
Speaker 2: the city units. We bought one the other day at
10:10
Speaker 2: Kelvin Grove which is near Victoria Park where the Olympic
10:14
Speaker 2: Stadium is, and that was six ninety. It was a
10:16
Speaker 2: one better but in a small complex of eleven good
10:19
Speaker 2: rent return, good capital growth. Given its proximity to the
10:23
Speaker 2: Olympic Stadium as well, it was like three.
10:26
Speaker 1: Clicks something I really do want to pick up. We're
10:29
Speaker 1: going to take a break, but we've going to talk
10:30
Speaker 1: next about I suppose the big issue, the big theme
10:35
Speaker 1: for Brisbane property folks over the next decade, it's the Olympics,
10:39
Speaker 1: quite simply, and it's going to If Sydney in two
10:42
Speaker 1: thousand is anything to go by, we really have something
10:45
Speaker 1: to talk about. We'd be back in a moment. Hello,
10:55
Speaker 1: welcome back to the Australians Money Puzzled podcast. I'm talking
10:58
Speaker 1: to Sam Price of Templeton Property Group. He is a
11:03
Speaker 1: Brisbane based buyer's advocate and he has been in the
11:07
Speaker 1: market for some time. Sam. It's very easy, I suppose
11:12
Speaker 1: for the analyst to pot out a report and say
11:14
Speaker 1: Sydney Olympics, or at least Brisbane Olympics are coming. It's
11:17
Speaker 1: going to be a huge thing for the city. We
11:20
Speaker 1: have clear evidence that prior to the Olympics, in the
11:23
Speaker 1: run up there is strong residential property price patterns in
11:27
Speaker 1: many cities. Our nearest comparable city is Sydney, which was
11:32
Speaker 1: just twenty five years ago, the Sydney Olympics two thousand,
11:35
Speaker 1: where Sydney had a tremendous run up to two thousand
11:39
Speaker 1: and actually it lasted for a year or two longer,
11:41
Speaker 1: but it then had a real slump because Olympics were over,
11:46
Speaker 1: because there had been an element of prices being pulled forward.
11:50
Speaker 1: Tell me your view about Brisbane and what the Olympics
11:54
Speaker 1: might mean to it for investors.
11:56
Speaker 2: Good question, James. I think Brisbane's very different than Sydney.
12:00
Speaker 2: I know, I don't know exactly where Homebush is, but
12:03
Speaker 2: I know it's some distance from the CBD. Brisbane is
12:07
Speaker 2: very different. Like if you look at Victoria Park, which
12:09
Speaker 2: is where the stadium is going to be built. It's
12:12
Speaker 2: literally two kilometers north of the CBD, close and the
12:16
Speaker 2: spring Hill swimming Pool where it's going to get rendov
12:19
Speaker 2: it's going to get rebuilt is the Aquatic Center that's
12:22
Speaker 2: less than two kilometers and it's going to be a
12:24
Speaker 2: flyer from spring Hill to Hurston and it's going to
12:27
Speaker 2: be really integrated with the CBD. So this infrastructure they're
12:30
Speaker 2: building is not at a remote part of Brisbane. It's
12:33
Speaker 2: actually in the heart of the CBD where it's close
12:36
Speaker 2: to the hospital, close to the rail line. It's really
12:39
Speaker 2: going to change the dynamics of the city, not just
12:42
Speaker 2: for a short term, but will benefit from it from
12:45
Speaker 2: for decades after that as well.
12:47
Speaker 1: So how do you think that would be different then
12:49
Speaker 1: for investors? Do you think there is a I mean,
12:53
Speaker 1: I put it to you, do you really think Brisbane
12:56
Speaker 1: can escape that particular issue that will be a run
12:59
Speaker 1: up and then they'll hangover if you like, after the Olympics.
13:02
Speaker 2: Yeah, it's probably like a good wedding, James, the next
13:05
Speaker 2: morning you'll feel a bit tired and you wonder where
13:08
Speaker 2: the money went and things like that, and wasn't worth it,
13:10
Speaker 2: but so I think there will be a lull after
13:12
Speaker 2: it for a little time. There will be a big
13:13
Speaker 2: run up which people can capitalize on for the next
13:16
Speaker 2: seven years. There may be a little lull when we
13:19
Speaker 2: find our feet, but I think we'll find like even
13:21
Speaker 2: if we need thirty there's talking that we need thirty
13:23
Speaker 2: thousand trades people to help build all this infrastructure. I
13:27
Speaker 2: reckon a lot of them will move to Brisbane for
13:29
Speaker 2: the work, follow the money, but they end up staying
13:31
Speaker 2: here as well. But I think it's going to ramp
13:33
Speaker 2: up the population, build up the right infrastructure to set
13:37
Speaker 2: up for the future. There might be a little bit
13:39
Speaker 2: of a softening after that, but then I think it
13:41
Speaker 2: will just carry on its merry way with these new
13:44
Speaker 2: beautiful stadiums for the cricket and the AFL and football,
13:47
Speaker 2: and it'll be a great injection into the Brisbane economy
13:51
Speaker 2: that will benefit for many years.
13:53
Speaker 1: We've had a real debate on the show abou whether
13:55
Speaker 1: Brisbane's having just a moment in the sun if you like.
14:00
Speaker 1: The natural order of things is that prices should be
14:03
Speaker 1: Sydney first, Melbourne's second, Brisbane third, as it always was
14:06
Speaker 1: for who knows how long. Essentially, some people suggest structurally
14:10
Speaker 1: that might be different that actually it may never go
14:13
Speaker 1: back to that order. What do you think? I'm asking you,
14:15
Speaker 1: as a buyer's advocate putting that on the table for me.
14:19
Speaker 1: I'd fall off my chair if he says no. But
14:21
Speaker 1: what do you have to say now?
14:23
Speaker 2: I do think that I think Brisbane has its place.
14:25
Speaker 2: I don't think it Zebra. Sydney is just magnificent with
14:28
Speaker 2: the harbor and so forth the water. Melbourne has its
14:32
Speaker 2: character and its history that Brisbane can never compete with either.
14:36
Speaker 2: So I think Melbourne will you don't get it sacked
14:38
Speaker 2: together over the next decade and will pick up again.
14:41
Speaker 2: So it probably it's rightful place. But Brisbane will be
14:44
Speaker 2: at that younger brother that's kind of nipping at its heels,
14:47
Speaker 2: and that's setting up the infrastructure. And when people come
14:50
Speaker 2: up here like they did after COVID and experience just
14:53
Speaker 2: the weather even and the opportunities in Brisbane, they like
14:56
Speaker 2: what they see and feel. And the number of people
14:59
Speaker 2: that I've helped buy family homes up here and they
15:01
Speaker 2: haven't the bird up here with work because they've been
15:05
Speaker 2: brought up here for work, but they haven't known a
15:06
Speaker 2: lot of people and they've really done it for their
15:08
Speaker 2: family and for their future. So I think it has
15:11
Speaker 2: its place for that for sure.
15:13
Speaker 1: The flips out of this, of course, is that the
15:15
Speaker 1: prices have drifted up much higher. Unemployment rate's more or
15:18
Speaker 1: less the same in the two states. For nothing in
15:20
Speaker 1: it where was upart of time? The whole thing was,
15:22
Speaker 1: you know, you got a job in Melbourne, you couldn't
15:24
Speaker 1: get one in Queensland as easily. The flips out of that,
15:28
Speaker 1: of course, is that you're not getting the internal migration
15:30
Speaker 1: you used to. Basically, the person is sitting in the
15:33
Speaker 1: suburban bloc and who was ready to retire in the
15:36
Speaker 1: suburbs of the second biggest city they can't move to well,
15:41
Speaker 1: they certainly can't move as easily as they could. I
15:43
Speaker 1: mean that would be a drag on prices, would it not.
15:45
Speaker 1: In the fullness of time.
15:48
Speaker 2: It may well, James, Yeah, because the cost of buying
15:50
Speaker 2: and selling it is huge at the moment, and that's
15:52
Speaker 2: why I think stock levels so low everywhere, because the
15:55
Speaker 2: cost of stamp duty and so forth to such that
15:58
Speaker 2: we we're not as mobile, readily selling and buying as
16:01
Speaker 2: we used to be. I think that well, Melbourne will
16:04
Speaker 2: find its feet. I think there's a lot of investors
16:06
Speaker 2: buying in Melbourne at the moment, but whether that changes
16:10
Speaker 2: the dynamics of some suburbs that there's an influx of
16:13
Speaker 2: investors and you know, you're really mak your money without
16:15
Speaker 2: our occupiers. You know, when they come into an area
16:18
Speaker 2: or rejuvenate it, that's where you get the real growth.
16:20
Speaker 1: That you need, that heft in numbers to transform the
16:24
Speaker 1: investor Obviously, even though we have an obsurge of investor activity,
16:28
Speaker 1: they're not going to transform areas in and by themselves.
16:31
Speaker 1: That's a really good point. Okay, we have some very
16:33
Speaker 1: interesting issues we want to talk to Sam about in
16:37
Speaker 1: the next segment. Have some really good questions and have
16:39
Speaker 1: one on social media influencers, which I think you'll find fascinating, folks,
16:44
Speaker 1: because we've been thinking about them as sort of players
16:47
Speaker 1: in the share market, but they are emerging as players
16:50
Speaker 1: in the property market. We'll tell you all about that
16:52
Speaker 1: in a moment. Hello, Welcome back to The Australian's Money
17:08
Speaker 1: Puzzle podcast. I'm James Kirby with Sam Price.
17:12
Speaker 2: Sam.
17:13
Speaker 1: Yes, so in fact I was on I was actually
17:16
Speaker 1: speaking at an ASCIC whatever get together conference some time ago,
17:20
Speaker 1: and it was all about influencers, influencers that awkward term
17:26
Speaker 1: for social media players who build up a following, invariably
17:34
Speaker 1: with very light credentials, if any, in finance, suggesting how
17:39
Speaker 1: people can make money easily and fast, often suggesting how
17:42
Speaker 1: people can make money without even thinking or taking any risks,
17:46
Speaker 1: and of course that's impossible. But most of the focus
17:49
Speaker 1: has been in the share market, and to be fair,
17:51
Speaker 1: there's good influencers and bad influence. I want to talk
17:54
Speaker 1: about bad ones here. So what surprised me is I
17:58
Speaker 1: didn't really, I really didn't realize that the issue is
18:01
Speaker 1: just as alive in property, and only a few days
18:06
Speaker 1: ago it came to light in a very clear way.
18:09
Speaker 1: There has been a burst of you like of social
18:11
Speaker 1: media influencers in the property market suggesting that people like
18:14
Speaker 1: listeners to the show can get around lending limits, for instance,
18:18
Speaker 1: or LVR limits by creating trusts or family trusts or
18:24
Speaker 1: companies and then going to the bank that way, or
18:27
Speaker 1: going to lend us that way. Macquarie Bank surprised everyone
18:30
Speaker 1: by standing in a few days ago and saying forget it,
18:32
Speaker 1: no more of this, no more, We're closing this whole
18:36
Speaker 1: thing down of lending into companies and trusts. So that
18:40
Speaker 1: was hard evidence actually of both the influencers influence. But
18:45
Speaker 1: I want to ask you what do you think of
18:47
Speaker 1: that whole story and does it concern you?
18:50
Speaker 2: It does Jomes because of what I've learned in life
18:53
Speaker 2: is that sometimes the people that can best sell things
18:55
Speaker 2: and not the best to be listened to with. I
19:00
Speaker 2: tell people they should be, you know, be very careful
19:03
Speaker 2: who they take the advice from. When it's a social
19:06
Speaker 2: media of course, and I often think that the people
19:09
Speaker 2: that are following them can be can sometimes be quite
19:11
Speaker 2: easily led into areas where it is more you're risky
19:16
Speaker 2: than the otherwise would think. And a lot I know
19:18
Speaker 2: a lot of the markets buyers agents are putting people
19:20
Speaker 2: in throughout Australia. I don't think a long term hule,
19:23
Speaker 2: so you do have to treat it like a penny
19:26
Speaker 2: stock where you might jump in for a number of years,
19:28
Speaker 2: but then there is a time in the medium term
19:30
Speaker 2: you do have to sell to get out. They're not
19:33
Speaker 2: buying Hull forever. I think a property in Brisbane, like
19:36
Speaker 2: I think it was Charlie Munger or Warren Bofthet used
19:39
Speaker 2: to say, you want to buy a company or a
19:40
Speaker 2: property that you can put in your bottom drawer and
19:42
Speaker 2: figet about for ten years and pull it out and
19:44
Speaker 2: toust it off and it's in better shape that it
19:46
Speaker 2: was when it went in. And I think property in Sydney,
19:49
Speaker 2: some parts of Melbourne and Brisbane there's properties definitely like
19:53
Speaker 2: that I'd be happy to hold. But some of these
19:55
Speaker 2: other areas that are being sell throughout Australia, I'm a
19:58
Speaker 2: little bit a bit sus on whether they will be
20:00
Speaker 2: that good whole long term that I think you'd have
20:02
Speaker 2: to watch it closely and have an exit strategy for it.
20:05
Speaker 2: So it's a different type of investment completely.
20:08
Speaker 1: Do you think some of these buyers agents are in
20:11
Speaker 1: legue as such with the influencers.
20:14
Speaker 2: A lot of them are the influencers themselves. I think
20:16
Speaker 2: James as agents and they're selling their areas. You know,
20:20
Speaker 2: they normally have a particular patch where they like and
20:22
Speaker 2: they can rent that up and sometimes refer to pump
20:26
Speaker 2: and dump where they can actually change the market because
20:28
Speaker 2: they are literally are buying twenty to fifty per months,
20:31
Speaker 2: so you just have to be aware of that. In
20:33
Speaker 2: Brisbane at the moment, it's in these regional areas and
20:36
Speaker 2: pockets of Melbourne and towns will and down where they're
20:39
Speaker 2: actually changing the whole market with their attention.
20:42
Speaker 1: Yeah, that's really interesting. But let's just let's interrogate what
20:46
Speaker 1: mcquarie implied. They didn't like this, right, So what the
20:51
Speaker 1: influencers are seeing, and let's assume the very best case scenario.
20:55
Speaker 1: Let's assume the listener the reader of the influencer actually
20:59
Speaker 1: has a clue and actually does understand to some extent
21:03
Speaker 1: property market, and then they hear something they've never heard before,
21:06
Speaker 1: which is, you know, you can borrow more and you
21:10
Speaker 1: can be more active, and you can be a bigger
21:11
Speaker 1: investor if you'd go and examine family trust structures or
21:15
Speaker 1: company structures, because it gets around the borrowing limits that
21:19
Speaker 1: you've probably already reached if you are an active investor.
21:22
Speaker 1: What's wrong with that?
21:25
Speaker 2: I've always been told diversification is key, James. So I
21:28
Speaker 2: have to pull out all their money into super and
21:30
Speaker 2: put into a two properties that they'd be very concerned.
21:32
Speaker 2: I think you should have a mix of stock market
21:35
Speaker 2: investments and property. It should almost be fifty to fifty
21:37
Speaker 2: in the perfect world. So I'd be very concerned about
21:41
Speaker 2: pulling out all my money into super and putting into
21:43
Speaker 2: you know on black Oh.
21:45
Speaker 1: Absolutely, well, yeah, I'm not even thinking about taking money
21:47
Speaker 1: out of Super. But obviously this is an issue in
21:49
Speaker 1: that area.
21:50
Speaker 2: Yeah, yeah, but I would seek financial advice on that, James,
21:55
Speaker 2: be very careful. I look at the costs of maintaining
21:58
Speaker 2: that company structure or trust is very expensive per year.
22:01
Speaker 2: It is you also, if you're buying in trust, the
22:04
Speaker 2: ability to inject more money. I know with super you
22:07
Speaker 2: have to When people come to me to buy in
22:08
Speaker 2: a super fund, they need to get a certain return,
22:11
Speaker 2: which means we're often buying it an a an a
22:14
Speaker 2: area where we've got a lower land to value ratio.
22:18
Speaker 2: We're getting a higher rent.
22:19
Speaker 1: You mean to get a they have to get a
22:20
Speaker 1: higher running yield? Do they?
22:22
Speaker 2: Yeah, a higher yield to how to hus renovations to
22:25
Speaker 2: the property are the so all of a sudden, when
22:28
Speaker 2: they want couple of growth and I put them in
22:30
Speaker 2: one suburb, now we're looking at yield and something quite
22:32
Speaker 2: modern with an on sweat and paint and within ten
22:36
Speaker 2: years old, I'm buying in a different area where I
22:38
Speaker 2: can't guarantee the couple of growth that I could in
22:42
Speaker 2: that other area. So you're being restricted in what you buy.
22:45
Speaker 1: But back to the trust structure you were seeing, it's expensive.
22:48
Speaker 1: I imagine the other issue is that there are investors
22:54
Speaker 1: who may not realize that basically cut to the chase,
23:00
Speaker 1: they're not worthy enough to use these I mean, if
23:03
Speaker 1: they're that expensive, if they were that easy, everyone would
23:07
Speaker 1: have used them. There's reasons, isn't there that people don't
23:09
Speaker 1: use trust structures.
23:11
Speaker 2: She might do it if you've you know, for asset protection,
23:13
Speaker 2: if you work for yourself and you secure some money
23:16
Speaker 2: away and things like that, or ought to avoid land tax.
23:19
Speaker 2: You know, they might put each property in a different
23:21
Speaker 2: corporate structure to reduce the amalgamation of the land tax.
23:25
Speaker 2: But I think that the costs involve the in and outs.
23:28
Speaker 2: I think it's well worth some people considering. I think
23:31
Speaker 2: a lot of people that are sold on those ideas
23:34
Speaker 2: might not have the gun powder to actually, yeah, pull
23:37
Speaker 2: it off successfully.
23:38
Speaker 1: Yes, and of course immediately making it harder for themselves.
23:41
Speaker 1: The hurdle to success is higher because they've put it
23:44
Speaker 1: in a trust structure and there's all the fees attached
23:47
Speaker 1: to that and other limitations. Okay, very good. Also, now
23:50
Speaker 1: I want to just if you bear with me and
23:52
Speaker 1: stay with us. We have one or two questions from
23:55
Speaker 1: Ross or Uss. After listening to the podcast recently, I
23:59
Speaker 1: told I'd send you an idea. Last month I wrote
24:02
Speaker 1: to the Treasure Jim Chalmer's and I can confirm this
24:07
Speaker 1: idea is being considered by his policy team. How about that, folks, Okay,
24:11
Speaker 1: here's the idea negative gearing should only be available for
24:14
Speaker 1: long term rental properties. Yes, indeed, I don't not a
24:20
Speaker 1: bad idea, as negative gearing sort of proposes go in
24:24
Speaker 1: terms of trimming it. In terms of restricting it, there was,
24:28
Speaker 1: of course the two sixteen policy from the ALP that
24:31
Speaker 1: it would be restricted only to new properties, but most
24:34
Speaker 1: people don't want to negatively gear new properties, just broadly
24:38
Speaker 1: in principle. What do you think of Ross's idea?
24:42
Speaker 2: I think it has some merit. I think by the
24:44
Speaker 2: sands of that the government is looking at different options
24:46
Speaker 2: to tweat negative gearing and capital gains tax down the line,
24:50
Speaker 2: So I think it might happen, and that I think
24:53
Speaker 2: I can. How would that influence my buying decisions now?
24:55
Speaker 2: So i'd know I do in the best I want
24:58
Speaker 2: to go and have five or ten little investment properties
25:01
Speaker 2: throughout Australia or should we focus on one or two
25:04
Speaker 2: outside the family home of quality residential properties that set
25:08
Speaker 2: them up for the future. Because there's two different directions there.
25:11
Speaker 2: So I tend to think they might cap the number
25:13
Speaker 2: of properties you can have. Do we need ten or
25:15
Speaker 2: twenty investment properties each? Given the rental issues at all?
25:18
Speaker 2: So I think they definitely will look into that. Whether
25:21
Speaker 2: it's the negative gearing or the percentages or the capital
25:24
Speaker 2: gains tax, they will. I think it's inevitable.
25:29
Speaker 1: I think, to be honest with personally, I think it's CGT.
25:32
Speaker 1: They'll go first, but let's see, Okay. Final question from Grant.
25:36
Speaker 1: Thanks so much for the podcast. I love it. Hypothetically speaking,
25:40
Speaker 1: given the current stock market is at all times high,
25:44
Speaker 1: if you basically he says, you know, he's overexposed to shares.
25:49
Speaker 1: Shares have been very good. If you were starting again,
25:52
Speaker 1: how would you deploy them money today? This is this
25:55
Speaker 1: never advice, it's information for Grant and all the grants
25:58
Speaker 1: in the world. Diversification, as you said at the start, Sam,
26:03
Speaker 1: is always warranted. And in your world, I imagine people
26:08
Speaker 1: have too much property and that enough non property assets.
26:11
Speaker 1: But for someone who's had a very good run on
26:13
Speaker 1: the market, and the market has been very good for
26:15
Speaker 1: a few years, I would suggest to that someone that
26:19
Speaker 1: universal type to consider investment property.
26:23
Speaker 2: What do you think and I'd agree you would agree
26:26
Speaker 2: of course most people. But yeah, as I said, I
26:29
Speaker 2: like the fifty to fifty approach. People have a principal place,
26:31
Speaker 2: but then when that is well under control, using the
26:34
Speaker 2: equity and that property to buy an investment property. I
26:37
Speaker 2: do prefer a quality investment property. It still could be
26:41
Speaker 2: in inner city unit, but not an apartment of high
26:43
Speaker 2: rise it's a particular type of unit, or a townhouse,
26:46
Speaker 2: or getting the one as I said, you can put
26:49
Speaker 2: in the bottom drawer and keep it for ten or
26:51
Speaker 2: twenty years and well it'll be doing wonderfully when you
26:54
Speaker 2: pull it out. So I do like quality investment properties
26:57
Speaker 2: rather than playing it as a numbers game.
26:59
Speaker 1: James, Okay, very good, And of course, I mean the
27:01
Speaker 1: issue for folks is just to state the obvious. The
27:04
Speaker 1: hard part, of course, is using real property residential bricks
27:08
Speaker 1: and mortar as diversification is I completely supported. But the
27:13
Speaker 1: hard part is that the high entry costs, it's very
27:16
Speaker 1: hard to you'd love to go and buy six houses
27:19
Speaker 1: in six states or something. If there was six states
27:21
Speaker 1: you'd love to buy. You'd love to diversify your property,
27:23
Speaker 1: but it's very hard to do because it's a big
27:25
Speaker 1: ticket item. And as you could hear from Sam's earlier
27:28
Speaker 1: part of the show, the prices he was talking about
27:30
Speaker 1: even across the middle suburbs of Brisbane, they are considerable
27:33
Speaker 1: now compared to most people's diversified portfolios. But a point
27:38
Speaker 1: really worth thinking about. Sam Price, Templeton Group in Brisbane.
27:42
Speaker 1: Lovely to talk to you, Thanks for coming on the show.
27:44
Speaker 2: Thank you Jens, thanks for having me. Good to see
27:46
Speaker 2: you again.
27:47
Speaker 1: Great to have Sam there. I know him a long time.
27:49
Speaker 1: As I say, he's been through the ups and downs
27:51
Speaker 1: and now enjoying the ups of the Brisbane market, which
27:55
Speaker 1: looked like they're going to continue for some time. Okay,
27:58
Speaker 1: we have the ACIC Commission Alan Kirkland on the show
28:01
Speaker 1: later in the week. If you want to ask him anything.
28:04
Speaker 1: He's in charge of all consumer stuff at ACIK. Now
28:06
Speaker 1: it's your chance forty eight hours to do it. Until then.
28:09
Speaker 1: The money Puzzle at the Australian dot Com dot au
28:12
Speaker 1: is the address talked to you soon