Latest / The Money Puzzle / How to pick a suburb ripe for booming house prices

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How to pick a suburb ripe for booming house prices · The Money Puzzle

• 0:11
  Speaker 1: Hi. I'm Julianne Sprague, Wealth editor at The Australian. I'm
• 0:14
  Speaker 1: filling in for James Kirby today, who is on a
• 0:17
  Speaker 1: very well deserved break and today we want to get
• 0:20
  Speaker 1: stuck into how you can pick the right spot for
• 0:23
  Speaker 1: an investment property. You might want to buy an investment
• 0:26
  Speaker 1: property or add to your existing portfolio, but how do
• 0:30
  Speaker 1: you get the spot that will deliver you the maximum return.
• 0:33
  Speaker 1: You might think that there's a city that you want
• 0:35
  Speaker 1: to invest in, maybe it's a city that you live in,
• 0:37
  Speaker 1: but how do you get the right suburb the best suburb.
• 0:40
  Speaker 1: My guest today is Ben Kingsley. So Ben is the
• 0:43
  Speaker 1: chair of the Property Investors Council of Australia and he
• 0:46
  Speaker 1: has more than twenty five years of investing experience advising
• 0:50
  Speaker 1: people in property markets. He's also the co author of
• 0:54
  Speaker 1: two books with his fellow empower Wealth business partner Bryce Holdaway,
• 0:58
  Speaker 1: and together they host the Property Couch podcast. But today
• 1:02
  Speaker 1: Ben Kingsley is joining us right here on the Money
• 1:05
  Speaker 1: Puzzle to share his top property investing tips. Ben, thank
• 1:08
  Speaker 1: you so much for joining us on the Money Puzzle.
• 1:10
  Speaker 2: Delighted to be here, Julianne.
• 1:12
  Speaker 1: We wanted to have a chat to you because you've
• 1:13
  Speaker 1: got a lot of experience in this area. All of
• 1:16
  Speaker 1: the stories we are putting together at the moment appointing
• 1:19
  Speaker 1: to property growth over the next twelve months. It just
• 1:22
  Speaker 1: seems that things have aligned, the property prices will go up,
• 1:26
  Speaker 1: but not all property markets are created equal, and within
• 1:30
  Speaker 1: those there are little subsections. So I want to ask you, Ben,
• 1:33
  Speaker 1: how do you determine where is the best place to
• 1:37
  Speaker 1: buy an investment property? What are the fundamentals you look to?
• 1:40
  Speaker 2: Yeah, so how long have we got? But we'll start
• 1:43
  Speaker 2: with the big ones. So absolutely there are markets within markets.
• 1:47
  Speaker 3: That is proven to be true that different property cycles
• 1:51
  Speaker 3: can occur in different markets, and there are different reasons
• 1:54
  Speaker 3: behind why those particular activities happen. So we break it
• 1:58
  Speaker 3: down into if you think about short term usually what
• 2:02
  Speaker 3: you're talking about there is the sentiment, and you're also
• 2:06
  Speaker 3: looking at demand and supply, so you're looking at certain
• 2:10
  Speaker 3: variables that will determine, you know, whether a market is
• 2:15
  Speaker 3: in balance, in equilibrium, or whether it's out of balance.
• 2:18
  Speaker 3: And of course you know in terms of a shortage
• 2:21
  Speaker 3: of supply does put pressure on capital growth over time.
• 2:25
  Speaker 3: So supply is the enemy of capital growth is often
• 2:28
  Speaker 3: what you would say, and so when you're thinking about
• 2:31
  Speaker 3: it in the short term, you're looking for those variables,
• 2:33
  Speaker 3: so things like auction clearance rates, days.
• 2:37
  Speaker 2: On market, stock on market, and if your.
• 2:40
  Speaker 3: Days on market is coming down, that means that there's
• 2:43
  Speaker 3: obviously a.
• 2:44
  Speaker 2: Body of demand that's there.
• 2:46
  Speaker 3: And so and then on the supply side, you're looking
• 2:48
  Speaker 3: at things like what is the you know, the future
• 2:51
  Speaker 3: building approvals and what commencement have started, and so then
• 2:55
  Speaker 3: you start to think about, you know, those markets in
• 2:58
  Speaker 3: terms of well, if I've got a lot of vacant
• 3:00
  Speaker 3: land around me, then potentially there is risk that there
• 3:03
  Speaker 3: will be future over supply and that might taper my
• 3:06
  Speaker 3: future capital growth. So short term, it's very much a
• 3:09
  Speaker 3: story of supply and demand and looking for those markets
• 3:12
  Speaker 3: where you know there might be an inbalance between.
• 3:15
  Speaker 2: Supply and demand.
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  Speaker 3: And then over the medium to longer term, it's absolutely
• 3:19
  Speaker 3: got everything to do with economic activity. And so what
• 3:22
  Speaker 3: I mean by that is the economic activity is going
• 3:26
  Speaker 3: to drive that population story.
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  Speaker 2: So if you think about a thriving city that needs.
• 3:32
  Speaker 3: Workers, those workers will arrive that would put pressure on
• 3:35
  Speaker 3: housing both from a rental point of view, but also
• 3:38
  Speaker 3: potentially from a future purchasing point of view. And so
• 3:41
  Speaker 3: that's why we see the capital growth in our major
• 3:44
  Speaker 3: capital centers usually performing quite strongly during times of economic
• 3:50
  Speaker 3: growth and strong population growth into those centers, and of
• 3:53
  Speaker 3: course we see the reverse when you know, if you're
• 3:56
  Speaker 3: as old as I am, you will know that during
• 3:59
  Speaker 3: the sort of John Kurrent era, and we had some
• 4:02
  Speaker 3: failures in Melbourne in terms of the economic situation, we
• 4:05
  Speaker 3: had a lot of debt and the economy wasn't performing
• 4:07
  Speaker 3: very well and we see a lot of migration up
• 4:10
  Speaker 3: into Queensland, and the property markets suffered quite considerably during
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  Speaker 3: that time because you know, we also had pyramid building
• 4:18
  Speaker 3: society and some banks failing, so it wasn't a good time.
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  Speaker 3: So we do know that if there's no jobs here,
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  Speaker 3: we're not going to necessarily move that population here, and
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  Speaker 3: that's not necessarily going to then bode well for that
• 4:30
  Speaker 3: population story and that demand story.
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  Speaker 1: If we look at the information at the moment, though,
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  Speaker 1: it does seem we have a supply issue. There's just
• 4:38
  Speaker 1: not enough supply of housing across the country that's fed
• 4:42
  Speaker 1: into things. You know, we had thirteen interest rate rises
• 4:46
  Speaker 1: and property prices didn't fall as a result, it didn't
• 4:49
  Speaker 1: do what typically property markets have done. And now we're
• 4:51
  Speaker 1: in an easy cycle again, given how much property markets
• 4:57
  Speaker 1: have risen and how much they are anticipated to keep going.
• 5:00
  Speaker 1: What are the risks though for investors? How do you
• 5:02
  Speaker 1: make sure you're not sort of getting caught out here
• 5:04
  Speaker 1: and you're buying right at the top.
• 5:05
  Speaker 3: That is a great question, and let's unpack. You know,
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  Speaker 3: traditionally you are right, higher interest rate thirteen rate rises,
• 5:13
  Speaker 3: you would normally see a correction in the market. But
• 5:15
  Speaker 3: what we also saw during that time was the immigration program,
• 5:20
  Speaker 3: which delivered over sort of six hundred and seven hundred
• 5:22
  Speaker 3: thousand people, and over the sort of last two or
• 5:24
  Speaker 3: three years, we've got a minion extra people in this country.
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  Speaker 3: So that along with record low unemployment or record high employment,
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  Speaker 3: also meant that people could continue on with making their
• 5:36
  Speaker 3: plans for their lives, so buying their homes and so forth.
• 5:39
  Speaker 3: So that's why we can sort of say, okay, we
• 5:42
  Speaker 3: can make a case as to why property didn't normally
• 5:45
  Speaker 3: do what it normally does.
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  Speaker 2: If those arrivals.
• 5:48
  Speaker 3: Didn't come, and if unemployment had risen higher, then we
• 5:51
  Speaker 3: wouldn't have seen any sort of price growth during that
• 5:54
  Speaker 3: higher cost of doing business when it comes to the.
• 5:57
  Speaker 2: Mortgages we have on our properties.
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  Speaker 3: So let's talk about today and what's going to be
• 6:01
  Speaker 3: the catalyst for that growth. So there's a couple of
• 6:03
  Speaker 3: things that are going to go on, and I want
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  Speaker 3: to talk on the investor side.
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  Speaker 2: We are seeing a lot of.
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  Speaker 3: Animal spirits in the investment space at the moment, and
• 6:12
  Speaker 3: those animal spirits are potentially getting ahead of themselves in terms.
• 6:17
  Speaker 2: Of buying in the affordable quartile.
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  Speaker 3: So the bottom twenty five percent of properties are very
• 6:23
  Speaker 3: attractive to obviously first home buyers, but they're also very
• 6:27
  Speaker 3: attractive at the moment to investors, and investors are certainly
• 6:31
  Speaker 3: looking for that sort of classic recantile home that might
• 6:35
  Speaker 3: be an existing property.
• 6:36
  Speaker 2: Because back to your.
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  Speaker 3: Point earlier, Julianne, in terms of this shortage of accommodation,
• 6:42
  Speaker 3: since twenty nineteen, the cost of build a home has
• 6:45
  Speaker 3: basically gone up almost fifty percent being able to provide
• 6:49
  Speaker 3: new stock. So there's been a lot of pressure on
• 6:52
  Speaker 3: the existing stock market, and that's why we're seeing the
• 6:55
  Speaker 3: best performing market at the moment is that bottom twenty
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  Speaker 3: five percent. The percentage price growth that we're seeing in
• 7:02
  Speaker 3: those areas are outstripping what we would call the middle
• 7:04
  Speaker 3: tier suburbs and certainly what we might judge as the
• 7:09
  Speaker 3: prime or the blue chip suburbs in our inner city
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  Speaker 3: areas in most capital cities with the exemption of the Act,
• 7:16
  Speaker 3: which is performing in a more natural way because unfortunately
• 7:20
  Speaker 3: that they policy settings are very anti investment at the moment,
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  Speaker 3: so they're not getting that investment activity. All the other
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  Speaker 3: states and territories are enjoying that, but they're certainly not.
• 7:30
  Speaker 1: We'll get to that lower end of the market soon.
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  Speaker 1: I do want to get your thoughts on what might
• 7:35
  Speaker 1: happen in that area given the expanded first home buyers
• 7:38
  Speaker 1: scheme from the federal government. But can we talk about
• 7:43
  Speaker 1: how you identify different areas of a market you've chosen
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  Speaker 1: So say, we published a story recently in The Australian
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  Speaker 1: where there are a couple of experts that tipped Perth
• 7:52
  Speaker 1: or Southeast Queensland as a sure bet for investors over
• 7:55
  Speaker 1: the next twelve months. They are still bullish on Melbourne,
• 7:58
  Speaker 1: but there are all the taxes and all the other
• 8:00
  Speaker 1: things going there. So to say, if you want a
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  Speaker 1: sure thing pers or Southeast Queensland. Now say if you
• 8:05
  Speaker 1: take that proposition, go, Okay, I'm feeling good about either
• 8:07
  Speaker 1: of those markets. How do you then zone in and
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  Speaker 1: go which area of that particular market should I be
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  Speaker 1: buying in? Because not all suburbs are created equal.
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  Speaker 3: Yeah, great question. So what we would then start to
• 8:19
  Speaker 3: do is as we go through the macro down into
• 8:21
  Speaker 3: the micro, we're starting to then analyze the data that
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  Speaker 3: we're collecting, and we usually collect that at the suburb level,
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  Speaker 3: so we're able to get quite a lot of rich
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  Speaker 3: data at the suburb level around those some of those
• 8:33
  Speaker 3: variables that we were talking before about. So we think
• 8:36
  Speaker 3: along the lines of auction clearance rates. If it's a
• 8:40
  Speaker 3: heavily concentrated auction market, they're not so good if it's
• 8:43
  Speaker 3: not a high concentration of auctions happening in that area.
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  Speaker 1: So just to drop in on that bit, but say,
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  Speaker 1: if you're going for auction clearance rates, what am I
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  Speaker 1: looking for? What exactly should I zone in on?
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  Speaker 3: Yes, So if it is a high area where you
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  Speaker 3: do get lots of auctions and the clearance rate is
• 8:57
  Speaker 3: above seventy percent and moving into five eighty percent, that's
• 9:02
  Speaker 3: giving you an immediate market signal in that area. That
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  Speaker 3: there's more buyers than there are sellers, and so that
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  Speaker 3: is becoming a selling market and so that's going to put.
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  Speaker 2: Pressure on prices. So if there is you know, four.
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  Speaker 3: Or five people or even six, seven, eight people competing
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  Speaker 3: at auction, you're really clear in terms of you've got
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  Speaker 3: a really strong signal that that's a market that's under
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  Speaker 3: pressure in terms of demand, and so that's going to
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  Speaker 3: potentially force prices higher as more of those people decide
• 9:31
  Speaker 3: that they want to get into that location.
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  Speaker 1: And then a market like Perth that doesn't really have auctions,
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  Speaker 1: is it a matter of do you sort of sort
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  Speaker 1: of rock up to some home opens and to see
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  Speaker 1: how many people are trying to get in?
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  Speaker 3: That's right, I mean, certainly that's another indicator in terms
• 9:44
  Speaker 3: of as you so you know, we don't know that
• 9:47
  Speaker 3: if we're if we're doing our research, you know, the
• 9:49
  Speaker 3: in our offices as opposed to being in the field.
• 9:52
  Speaker 3: The first things we start to look at is things
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  Speaker 3: like stock on market and then days on market, So
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  Speaker 3: how long is it taking for those properties to sell
• 10:02
  Speaker 3: over time? And if we're seeing the trend coming down,
• 10:05
  Speaker 3: and then we then go out and do our field research,
• 10:07
  Speaker 3: and yes, to your point. We attend some of those opens,
• 10:10
  Speaker 3: we will start to see the number of people going
• 10:13
  Speaker 3: through those particular properties. Then we're also tracking things like
• 10:17
  Speaker 3: number of offers, number of contracts that are being issued
• 10:20
  Speaker 3: on that particular property. So we're starting to get that
• 10:23
  Speaker 3: those signals, and those signals are stronger than the general
• 10:27
  Speaker 3: noise that we might see in other areas. And then
• 10:30
  Speaker 3: what you then do is you munge all of that
• 10:33
  Speaker 3: data together and you give certain wetings.
• 10:35
  Speaker 2: To some of those variables. So this is the demand
• 10:37
  Speaker 2: supply score or demand supply ratio. So you know, you might.
• 10:40
  Speaker 3: Measure eight, ten, twelve, fifteen variables and you're putting all
• 10:44
  Speaker 3: those together and you've got you've got a belief around.
• 10:47
  Speaker 3: You know, if it is a high auction market and
• 10:49
  Speaker 3: you know where most properties are sold by auction, and
• 10:52
  Speaker 3: you're seeing those high things, you'll give a.
• 10:53
  Speaker 2: Higher weighting to that score.
• 10:55
  Speaker 3: We score every property in Australia out of one hundred
• 10:59
  Speaker 3: and so if we basically then see high scores.
• 11:01
  Speaker 2: Then we know that there is an imbalance in that market.
• 11:04
  Speaker 3: And then we go and validate that out in the
• 11:05
  Speaker 3: field to the research that we were just talking about,
• 11:08
  Speaker 3: which is how many people turned up to the open
• 11:10
  Speaker 3: for inspections, what number of contracts were issued, And we
• 11:13
  Speaker 3: know we're going to be in a competitive market, but
• 11:16
  Speaker 3: we're also then confident in that competitive market that the
• 11:20
  Speaker 3: level of demand, you know, in terms of the depth
• 11:23
  Speaker 3: of that demand is strong enough. And so that's that
• 11:25
  Speaker 3: supply demand story. Then we've got to lift our eyes
• 11:28
  Speaker 3: back to the question you asked earlier around say Southeast
• 11:31
  Speaker 3: Queensland and Western Australia, namely Perth, but even some of
• 11:34
  Speaker 3: the commutable areas of inter Perth they're also under good review.
• 11:39
  Speaker 3: Because that's when I come back to the whole story
• 11:42
  Speaker 3: about economic activity. You know, if you've got a strong
• 11:44
  Speaker 3: economy and that strong economy is driving the migration of
• 11:49
  Speaker 3: people into that market, then that's when you're going to
• 11:52
  Speaker 3: have longevity in regards.
• 11:54
  Speaker 2: To your investment returns.
• 11:56
  Speaker 3: And you mentioned really earlier when we started recording around
• 12:00
  Speaker 3: this idea is how do you know that's going to
• 12:01
  Speaker 3: be sustainable? Well, that's the whole you know, that's one
• 12:04
  Speaker 3: of the great messages I want the community to take
• 12:06
  Speaker 3: away today. If that's all been driven by investors and
• 12:10
  Speaker 3: investors only and there's no fundamentals underneath that then you're
• 12:14
  Speaker 3: going to be exposed and there's going to be risk
• 12:16
  Speaker 3: that you will be potentially buying at the top of
• 12:19
  Speaker 3: market and you may experience a downturn in property prices.
• 12:22
  Speaker 3: So you need to understand the short term drivers, which
• 12:26
  Speaker 3: is the supply demand and that economic stuff, and then
• 12:30
  Speaker 3: make sure that the economy is still strong, because if
• 12:33
  Speaker 3: it is going to be artificially inflated by investors who
• 12:36
  Speaker 3: are ill experienced, or they're being coached by enthusiastic buyers
• 12:40
  Speaker 3: agents who really don't know what they're doing, and they're
• 12:43
  Speaker 3: taking you into these regional markets or some of these
• 12:46
  Speaker 3: types of markets, you do run the risk of basically
• 12:50
  Speaker 3: buying into a dud market that will show its face
• 12:54
  Speaker 3: as the tide goes out over the next five years.
• 12:56
  Speaker 1: I'll ask you about buyers agents in the Sex But
• 12:58
  Speaker 1: just further on that, are you talking about the economy
• 13:02
  Speaker 1: for the state or the city in question. Say you've
• 13:05
  Speaker 1: decided it's Southeast Queensland or state it's Perth, and you're
• 13:07
  Speaker 1: happy about the profile for the next whatever it might
• 13:09
  Speaker 1: be five to ten years. I can imagine I wouldn't
• 13:12
  Speaker 1: be the only person to think this, that you go
• 13:13
  Speaker 1: into a suburb and it's running hot, and I would
• 13:15
  Speaker 1: look left and right that there's some suburbs sort of
• 13:17
  Speaker 1: around the fringe and they look better value to me.
• 13:20
  Speaker 1: But what do I need to be careful about.
• 13:22
  Speaker 2: Well, let's also introduce another concept which I think is
• 13:26
  Speaker 2: a really important concept, and that is investors in residential
• 13:30
  Speaker 2: property shouldn't be the price maker, they should be the
• 13:34
  Speaker 2: price taker. So ultimately, what you're looking for there is
• 13:38
  Speaker 2: that the fundamentals are grounded in owner occupiers wanting to
• 13:42
  Speaker 2: live there. If you don't have that, again.
• 13:45
  Speaker 3: You're giving yourself the risk of well, this has all
• 13:48
  Speaker 3: just been in speculative returns because someone picked a hot
• 13:53
  Speaker 3: spot and half a dozen buyers agents all agreed and
• 13:56
  Speaker 3: they all went in there and artificially inflated the price.
• 13:58
  Speaker 3: So it does come back to what you were saying before.
• 14:01
  Speaker 3: I'm looking at the economic activity that's happening in that center.
• 14:05
  Speaker 3: So if I'm buying in Perth, well, the economy, it's
• 14:08
  Speaker 3: the best economy in the country. The government's got very
• 14:11
  Speaker 3: low debt in comparison to other states and territories.
• 14:14
  Speaker 2: The incomes enjoyed there are the second highest across the country.
• 14:18
  Speaker 3: Per capita, and the livability of living in a city
• 14:23
  Speaker 3: like Perth is very high. So you've got and you're
• 14:26
  Speaker 3: starting to see a stronger diversified economy, and the icing
• 14:29
  Speaker 3: on the cake, their cost of electricity through their gas
• 14:34
  Speaker 3: and their cost of gas and all of those inputs
• 14:36
  Speaker 3: is also at record low levels.
• 14:38
  Speaker 1: But it has been boom bust Perth. People were listening
• 14:40
  Speaker 1: to this sound. That's all very well and good that
• 14:42
  Speaker 1: it sounds good now, but you know.
• 14:44
  Speaker 3: Perth's already had a double digit run and it's probably
• 14:47
  Speaker 3: moved about thirty or forty percent as is already, and
• 14:50
  Speaker 3: then everyone's sort of saying Perth done well. It's still
• 14:53
  Speaker 3: performing in the top two. Darwin is the number one
• 14:55
  Speaker 3: capital city at the moment, but Perth's a strong second.
• 14:58
  Speaker 3: And that's because again they didn't look and lift their eyes.
• 15:02
  Speaker 3: These runs can go seventy eighty percent in some cases,
• 15:05
  Speaker 3: and that's because the fundamentals are good.
• 15:08
  Speaker 2: Whereas if I.
• 15:08
  Speaker 3: Take an example of maybe Townsill, Okay, which is a
• 15:13
  Speaker 3: regional town, there's no easy to commute down into Brisbane
• 15:16
  Speaker 3: for a job. You can't commute there for the day,
• 15:18
  Speaker 3: so you've got to then start to say, well, what's
• 15:20
  Speaker 3: happening in towns will from an economic perspective, because if
• 15:24
  Speaker 3: I've only gone in there because I've been told that
• 15:27
  Speaker 3: rents are really high, and so I'll go in there
• 15:29
  Speaker 3: and compete against all the other investors who are.
• 15:31
  Speaker 2: Going in there, what's the fundamentals.
• 15:33
  Speaker 3: Like if you don't have that economic activity, well, where
• 15:36
  Speaker 3: are your renters going to come from? And what if
• 15:38
  Speaker 3: they don't have the jobs, why are they going to
• 15:40
  Speaker 3: stay there? They'll just relocate to another town. So that's
• 15:44
  Speaker 3: why it really is critical that you need to understand
• 15:47
  Speaker 3: what are those medium to long term drivers to get
• 15:50
  Speaker 3: into those markets.
• 15:51
  Speaker 2: Now back to Perth, you.
• 15:53
  Speaker 3: Were saying, Yep, it's a you know, it's basically a
• 15:55
  Speaker 3: one trick pony town being a mining town. All the
• 15:57
  Speaker 3: reality is is, you know, that's not necessarily the case.
• 16:00
  Speaker 2: We've got the Orchest deal coming in there.
• 16:03
  Speaker 3: We've got shipbuilding, we've got industry that's running at a
• 16:06
  Speaker 3: competitive advantage compared to the East Coast, and so if
• 16:09
  Speaker 3: I'm the multinational and I want to potentially set up there,
• 16:12
  Speaker 3: the conditions are better in Perth than they certainly are
• 16:15
  Speaker 3: in Melbourne. An ex example in terms of attracting me
• 16:18
  Speaker 3: to want to set and make that investment up and
• 16:20
  Speaker 3: then to basically bring the jobs into that particular market.
• 16:23
  Speaker 3: So now the fundamentals economically for Perth are really sound,
• 16:27
  Speaker 3: at least for the next five or ten years.
• 16:29
  Speaker 1: For anyone listening, I promise I haven't paid ben to Perth.
• 16:33
  Speaker 1: It is my favorite city. It is the city I'm based.
• 16:36
  Speaker 2: And I love it and world champion and I live
• 16:38
  Speaker 2: in Melbourne.
• 16:39
  Speaker 1: We've got to head to a break soon. But I
• 16:41
  Speaker 1: do want to get that sense of whether you should
• 16:43
  Speaker 1: be looking at the suburbs across that are cheaper or
• 16:45
  Speaker 1: if you run the risk. It's our idea of if
• 16:47
  Speaker 1: you're buying an investment property you want to maximize your dollar.
• 16:50
  Speaker 1: Is there any risk to that or is it actually
• 16:51
  Speaker 1: a smart strategy to say this suburb is on fire
• 16:54
  Speaker 1: but you just sort of look, you know, I don't
• 16:56
  Speaker 1: know as five case circumference or something. What's the metrics
• 16:58
  Speaker 1: that you would use.
• 17:00
  Speaker 2: At the end of the day.
• 17:01
  Speaker 3: The land is what we're trying to hold long term.
• 17:04
  Speaker 3: That's where the appreciation happened. It's not in the buildings,
• 17:06
  Speaker 3: it's in the land. And so let me introduce you
• 17:09
  Speaker 3: to other concepts, which is human interest in human behavior.
• 17:12
  Speaker 2: So in some respects, a lot of the land carry status.
• 17:16
  Speaker 2: You know.
• 17:17
  Speaker 3: One of the interesting things about property in the way
• 17:19
  Speaker 3: always say it's why it's owner occupier appeal because they
• 17:23
  Speaker 3: buy where their heart's not their heads.
• 17:24
  Speaker 2: So the reality is.
• 17:25
  Speaker 3: When you find those blue chip locations, that is all
• 17:29
  Speaker 3: about my success and showcasing my success. So how do
• 17:32
  Speaker 3: we show off, you know, aspiration, We show it off
• 17:35
  Speaker 3: in the houses that we own, the cars that we drive,
• 17:37
  Speaker 3: the jewelry, et cetera. And so you do have this
• 17:40
  Speaker 3: aspirational element of living in the best suburbs around that
• 17:44
  Speaker 3: and so ultimately those suburbs come at a premium because
• 17:48
  Speaker 3: there's exclusivity, and that's where that land value appreciates over time.
• 17:52
  Speaker 3: So if you're in a fortunate position where you can
• 17:54
  Speaker 3: potentially buy and hold and investment property in those higher markets,
• 17:58
  Speaker 3: you are going to pretendctually see strong the land appreciation
• 18:02
  Speaker 3: because ultimately that is all about how humans activate in
• 18:06
  Speaker 3: the ecology of their lives and the biology of who
• 18:09
  Speaker 3: we are as living in villages. So that is true
• 18:13
  Speaker 3: if your budget doesn't allow for that, and the income
• 18:16
  Speaker 3: off the rental needs to be an important part of
• 18:18
  Speaker 3: sustaining the holding of that property, then you're going to
• 18:21
  Speaker 3: move out to the mid tier suburbs or into the
• 18:24
  Speaker 3: sort of outer fringes of the market. And that's how
• 18:27
  Speaker 3: the land is priced. It's ultimately priced from a ripple
• 18:31
  Speaker 3: effect where the most expensive land is located closer in,
• 18:34
  Speaker 3: and so it's looking at that land and looking at
• 18:37
  Speaker 3: its future productive use in terms of what it can do.
• 18:41
  Speaker 3: A single home can potentially be a duplex in the future,
• 18:43
  Speaker 3: or it could even be a block of flat or
• 18:45
  Speaker 3: some townhousers. So that future productive use of that land
• 18:48
  Speaker 3: in that more exclusive area is potentially going to generate
• 18:51
  Speaker 3: you a longer term return over the decades. But of course,
• 18:55
  Speaker 3: if you want to invest, it's around your budget. So
• 18:57
  Speaker 3: if your budget allows you to take you into the
• 19:00
  Speaker 3: outer suburbs, then we still want to make sure that
• 19:03
  Speaker 3: there's low scarcity in terms of not a lot of
• 19:06
  Speaker 3: vacant land around you.
• 19:07
  Speaker 1: Okay, good tips, all right, Ben. When we come back
• 19:09
  Speaker 1: from the break, we'll have a chat about what you
• 19:12
  Speaker 1: think will happen to the market now that the government
• 19:14
  Speaker 1: is expanding the first Home Buyer scheme. I'll get your
• 19:18
  Speaker 1: top tips where you think the best property investments will
• 19:22
  Speaker 1: be over the next year. And also I wouldn't mind
• 19:24
  Speaker 1: your thoughts on some of the common mistakes people make
• 19:27
  Speaker 1: with property investing. We'll have that chat when we come back.
• 19:39
  Speaker 1: Thanks for joining me on the money Puzzle. I'm your
• 19:42
  Speaker 1: host Julianne Sprague, a wealth editor at The Australian, filling
• 19:45
  Speaker 1: in for James Kirby, who's on a well deserved break.
• 19:48
  Speaker 1: I'm chatting with Benett Kingsley, a property expert. You can
• 19:51
  Speaker 1: find him at Empower Wealth and at the Property Couch podcast.
• 19:55
  Speaker 1: Ben is joining me. We're having a chat about how
• 19:58
  Speaker 1: you can pick a great place to buy investment property.
• 20:01
  Speaker 1: And then we spoke earlier about that lower end of
• 20:04
  Speaker 1: the market and how it is quite hot at the moment.
• 20:07
  Speaker 1: The federal government's expanding the First Home Buyers Scheme. Today,
• 20:12
  Speaker 1: all sorts of measures have been sort of dropped, if
• 20:14
  Speaker 1: you like, or widened. More people will have access to
• 20:17
  Speaker 1: this scheme. What is it going to do for property markets?
• 20:19
  Speaker 3: Look, I'm pleased with the initiative because it will allow
• 20:22
  Speaker 3: people to get into the market, but of course it
• 20:25
  Speaker 3: falls on the demand side, so that's doing to potentially
• 20:29
  Speaker 3: create an additional set of demand for first time buyers
• 20:33
  Speaker 3: to get into the market. So the question for us,
• 20:36
  Speaker 3: and this is one is really hard to analyze, is
• 20:40
  Speaker 3: where is that concentration is. If it's going to be concentrated,
• 20:43
  Speaker 3: then that's going to sharpen the data really quickly and
• 20:45
  Speaker 3: we're going to see price spikes, you know, as that
• 20:49
  Speaker 3: then sort of then becomes the norm in the market.
• 20:51
  Speaker 3: My interesting observation here is that because it's lifted the
• 20:57
  Speaker 3: entry level price is allowing for people to get into
• 21:00
  Speaker 3: the sort of middle tier markets. Hopefully that spread will
• 21:04
  Speaker 3: not necessarily see it being such a high concentrated into
• 21:08
  Speaker 3: the absolute entry level of the market. So I'm hoping
• 21:11
  Speaker 3: it's not going to continue to inflate that price area
• 21:15
  Speaker 3: because there's already enough you know, sort of government policy
• 21:19
  Speaker 3: that's pushing a lot of people into that potential entry
• 21:23
  Speaker 3: level market.
• 21:24
  Speaker 2: And I'll give you a couple of examples. We're seeing a.
• 21:26
  Speaker 3: Lot of spooking property spooking around setting up trusts and
• 21:30
  Speaker 3: buying residential property and trusts, and I'm concerned about that
• 21:34
  Speaker 3: heavily because that's also pushing a lot of people into
• 21:38
  Speaker 3: those entry level markets. And there's more and more social
• 21:41
  Speaker 3: media marketing around that and also setting up self managed
• 21:44
  Speaker 3: super funds.
• 21:44
  Speaker 1: And why do you think that's flourishing. What's the pitch
• 21:47
  Speaker 1: there that's hooking people?
• 21:49
  Speaker 3: Well, I'm in You know if you go on to
• 21:51
  Speaker 3: social media and you look at the property spookers talking
• 21:54
  Speaker 3: about making sixty percent gains in twelve months, and you know,
• 21:59
  Speaker 3: there's that human nature that basically drives people in that
• 22:02
  Speaker 3: they want to They want to know your investor, you
• 22:05
  Speaker 3: want to get that quick win, you know, like I
• 22:06
  Speaker 3: want to be bragging about that, almost like a stock pick.
• 22:10
  Speaker 2: That's sort of what's happening.
• 22:11
  Speaker 3: So I am worried about that, and I've spoken publicly
• 22:14
  Speaker 3: about that recently, and so that's already driving people into
• 22:18
  Speaker 3: that entry level area. The other thing that's also of
• 22:21
  Speaker 3: the interest is appras three percent buffer rate. So that
• 22:23
  Speaker 3: puts a throttle on what both investors and owner occupiers
• 22:27
  Speaker 3: can borrow. And so that means putting that throttling on
• 22:30
  Speaker 3: means that you've got to gain concentration of demand in
• 22:33
  Speaker 3: that sort.
• 22:34
  Speaker 2: Of bottom quarto of the market.
• 22:36
  Speaker 3: And so that in itself is seeing We said it
• 22:40
  Speaker 3: earlier in the podcast that that's why that end of
• 22:42
  Speaker 3: the market is performing better because unfortunately all the demands
• 22:46
  Speaker 3: being pushed into that particular area.
• 22:48
  Speaker 1: But do you then think it's overheated that market because
• 22:52
  Speaker 1: you're funneling, You're pushing everyone into there. So there's the
• 22:54
  Speaker 1: appra measure shore. Now we've got the expanded first home
• 22:57
  Speaker 1: bias scheme. If so much demand is funbling, there is
• 23:00
  Speaker 1: at risk of a bit of a bubble.
• 23:01
  Speaker 3: The short answer that is potentially, and I would say
• 23:04
  Speaker 3: in some of the regional towns, I can't support the
• 23:08
  Speaker 3: fundamental valuations in terms of what those property prices are
• 23:11
  Speaker 3: selling for right now, because you know, the data is
• 23:14
  Speaker 3: suggesting that the vast majority of those buyers are investors,
• 23:17
  Speaker 3: so they are artificially pushing the market up.
• 23:20
  Speaker 2: And I've seen.
• 23:21
  Speaker 3: Those markets are a lot more volatile after the end
• 23:24
  Speaker 3: of these sort of get rich quick type promotions that
• 23:26
  Speaker 3: happen into these particular areas.
• 23:28
  Speaker 1: This could be devastating for first home buyers though, couldn't it.
• 23:31
  Speaker 1: I mean investors that sort of buyer beware. But we're
• 23:33
  Speaker 1: also pulling in first home buyers into this market, and
• 23:35
  Speaker 1: they could be in negative equity territory pretty quickly.
• 23:37
  Speaker 2: They could, And that's why I'm worried about it.
• 23:39
  Speaker 3: That's why I've written to all of the trade associations
• 23:42
  Speaker 3: to say, hey, it's all being led by this social
• 23:45
  Speaker 3: media marketing push and they're talking about, you know, if
• 23:48
  Speaker 3: you can't buy it in your personal name, go on,
• 23:50
  Speaker 3: buy two or three in trusts and then buy them
• 23:52
  Speaker 3: in yourself many superfund So I've got real problems with that,
• 23:55
  Speaker 3: and I've got real problems and the fact that it's
• 23:57
  Speaker 3: being generated by mortgage brokers and buy as agents and
• 24:01
  Speaker 3: property investment advisors who aren't licensed to give financial product advice,
• 24:05
  Speaker 3: which is self managed super funds or trust lending.
• 24:08
  Speaker 2: That's a real problem for me.
• 24:10
  Speaker 3: And yes, it does have consequences, and the same sort
• 24:13
  Speaker 3: of consequences too.
• 24:14
  Speaker 2: You know, they're getting on there.
• 24:15
  Speaker 3: I've bought my fifth I bought my eighth, I bought
• 24:17
  Speaker 3: my tenth property in three years using all of these
• 24:20
  Speaker 3: trust structures. That's that's unsustainable to your point around getting
• 24:25
  Speaker 3: first home buyers into the market if they're if you know,
• 24:29
  Speaker 3: for every ten offers on a property, if nine of
• 24:31
  Speaker 3: them are from investors and only one owner occupier, that's
• 24:35
  Speaker 3: that's not where we want to be. That's not not
• 24:38
  Speaker 3: you know, there's no social contract for investors to have
• 24:41
  Speaker 3: that right to be able to do.
• 24:42
  Speaker 2: That, and it's going to end badly.
• 24:43
  Speaker 3: So I'm trying to get in front of, you know,
• 24:46
  Speaker 3: the potential risk here because I'm seeing it as an
• 24:48
  Speaker 3: emergent risk. Also for the financial stability of the market
• 24:52
  Speaker 3: as well, because at the end of the day, if
• 24:54
  Speaker 3: you think about property, property underpins the wealth in this country,
• 24:58
  Speaker 3: you know, and so you do then have obviously financial risk.
• 25:01
  Speaker 3: And I don't want to be scaring people, but the
• 25:04
  Speaker 3: reality here is that we've got some settings that are
• 25:07
  Speaker 3: wrong and we need to We need to tighten them
• 25:09
  Speaker 3: up in terms of getting easy access to credit for
• 25:13
  Speaker 3: trust lending or for self managed super fund lending.
• 25:15
  Speaker 2: So we need to tighten that up.
• 25:17
  Speaker 3: And we need to get the balance back to the
• 25:19
  Speaker 3: seventy thirty seventy percent owner occupy thirty percent investor. If
• 25:23
  Speaker 3: we're seeing that move outer kilter, we're going to have
• 25:26
  Speaker 3: some problems. And to your point, those first home buyers
• 25:29
  Speaker 3: who got in might think great, property price has gone
• 25:32
  Speaker 3: up twenty percent, but if they then correct by thirty percent,
• 25:36
  Speaker 3: then ultimately they could be in some negative equity area.
• 25:38
  Speaker 2: Now.
• 25:39
  Speaker 3: First for home buyers, look, they're playing in the decades game.
• 25:43
  Speaker 3: They're not necessarily playing in, you know, buyer property and
• 25:47
  Speaker 3: turn it into a commodity and trade it, because we
• 25:49
  Speaker 3: don't want trading in property either. You know, it's unsustainable
• 25:53
  Speaker 3: if we have speculation in residential property. So what I'm
• 25:56
  Speaker 3: hoping is that you know, those first home buyers can
• 25:59
  Speaker 3: get in the market, can hold onto their property for
• 26:02
  Speaker 3: a long period of time, and enjoy some capital growth,
• 26:04
  Speaker 3: which will obviously help them in the future as well.
• 26:07
  Speaker 1: You think, you think governments need to have a bit
• 26:10
  Speaker 1: of a crackdown on those other areas of the market.
• 26:12
  Speaker 1: So it's all very well and good to offer these
• 26:14
  Speaker 1: incentives and these schemes and do what they can to
• 26:16
  Speaker 1: help first home buyers. But if there are these other
• 26:19
  Speaker 1: schemes flourishing that it is just sucking in more investors
• 26:22
  Speaker 1: that's pushing out first home buyers. That they've got to
• 26:23
  Speaker 1: act on that and do that soon.
• 26:25
  Speaker 3: One hundred percent, Julian, it is. I mean, it's just logical, right,
• 26:29
  Speaker 3: Like it might feel great that you're an investor and
• 26:31
  Speaker 3: you've just made a quick thirty percent return, but at
• 26:33
  Speaker 3: the end of the day, investing in property, you're running
• 26:36
  Speaker 3: a private.
• 26:37
  Speaker 2: Rental accommodation business.
• 26:38
  Speaker 3: And that should be something that you think about that
• 26:41
  Speaker 3: you're going to be doing for ten, fifteen, twenty years, right,
• 26:44
  Speaker 3: and enjoy the spoils of that long term. If we
• 26:47
  Speaker 3: turn property into a speculative asset and it becomes a
• 26:51
  Speaker 3: tradable commodity, no politician, no government is going to on
• 26:55
  Speaker 3: either side of politics, is going to want to be responsible.
• 26:59
  Speaker 2: For robbing the Great Australian dream from people.
• 27:02
  Speaker 3: So it's clear to me that the animal spirits that
• 27:05
  Speaker 3: we're currently seeing which is driving a lot of this
• 27:08
  Speaker 3: price growth at the moment, because if you just look
• 27:10
  Speaker 3: at the last quarter of data around investment lending versus
• 27:14
  Speaker 3: owner occupied lending, it's clear investment lending is growing at
• 27:17
  Speaker 3: three to four times greater than owner occupied lending at
• 27:20
  Speaker 3: the moment. What does that tell you about the market mechanisms?
• 27:23
  Speaker 3: And APRA is sort of aware of this, they're flagged
• 27:26
  Speaker 3: something to say, you know, they may potentially put some
• 27:29
  Speaker 3: other macro credential throttles in place, and I'm sort of saying, well,
• 27:33
  Speaker 3: here's something that the regulators can do. Just ban trust
• 27:38
  Speaker 3: lending and have a look at self managed super funds
• 27:41
  Speaker 3: in terms of who's giving the advice. Because the advice
• 27:44
  Speaker 3: is being started by the property sprewkers and then ultimately
• 27:48
  Speaker 3: then you go off and see your financial planner and
• 27:50
  Speaker 3: then they set you up, you know, in your account
• 27:52
  Speaker 3: and sets you up. But it's not the traditional way
• 27:54
  Speaker 3: in which that should work. It should be if I've
• 27:56
  Speaker 3: done my own personal research and I've gone to speak
• 27:59
  Speaker 3: to a financial planner or I've gone to speak to
• 28:02
  Speaker 3: my accountant to learn about No, it doesn't feel like that.
• 28:05
  Speaker 2: What it feels like is, yes, that these.
• 28:07
  Speaker 3: Buyers agents, mortgage brokers and property investment advisors who are
• 28:11
  Speaker 3: self interest. There's all self interest here, and make no
• 28:13
  Speaker 3: mistake about that. And I'm also putting my hand up.
• 28:16
  Speaker 3: I run a business in this space, and I've been
• 28:18
  Speaker 3: running that business for almost twenty years, so you know,
• 28:22
  Speaker 3: I'm talking down you know, a marketplace that obviously I
• 28:26
  Speaker 3: get to benefit from. So that's how concerned I am
• 28:29
  Speaker 3: about the sustainability of the market. It's just not where
• 28:33
  Speaker 3: it needs to be in terms of that particular story.
• 28:36
  Speaker 3: So there is an emerging story here and I'm trying
• 28:39
  Speaker 3: to get that message out there.
• 28:41
  Speaker 1: Then you mentioned a few times about buyers agents, and
• 28:43
  Speaker 1: it's coming across our desks quite often to a lot
• 28:45
  Speaker 1: of people are using buyers agents. It used to be
• 28:47
  Speaker 1: sort of, I don't know, an for very wealthy people,
• 28:50
  Speaker 1: and now it seems to be trickling down to all
• 28:52
  Speaker 1: facets of the market. Do people need a buyers agent?
• 28:56
  Speaker 2: All disclosure. I run a buyers agency business, so.
• 28:58
  Speaker 3: As part of our empower wealth business, we have a
• 29:01
  Speaker 3: full suite of services including mortgage broken, buyers aid, and
• 29:04
  Speaker 3: property advice, et cetera. So I want to make sure
• 29:06
  Speaker 3: the public understands that. So what does a buyer's agent do.
• 29:10
  Speaker 3: The buyer's agent works on behalf of the buyer to
• 29:13
  Speaker 3: effectively find, assess, negotiate and secure the property on behalf
• 29:19
  Speaker 3: of their client.
• 29:20
  Speaker 2: So they work for the buyer obviously, and they are
• 29:23
  Speaker 2: a licensed real estate agent.
• 29:25
  Speaker 3: As opposed to the current way in which we potentially
• 29:28
  Speaker 3: see the mainstream of real estate agents. They work on
• 29:31
  Speaker 3: behalf of the vendor and their job is to obviously
• 29:33
  Speaker 3: get the best result for their client.
• 29:35
  Speaker 2: So each of the parties are working on behalf of
• 29:38
  Speaker 2: their clients to try and get an outcome for those times.
• 29:41
  Speaker 3: So that's what they do. There absolutely has been an
• 29:44
  Speaker 3: explosion of buyers agents wanting it into the market. I
• 29:48
  Speaker 3: mean property, property is our favorite barbecue topic. What and
• 29:52
  Speaker 3: if I can go and earn a commission on helping
• 29:55
  Speaker 3: someone else buy a property, how.
• 29:58
  Speaker 1: I almost might do that in my spare time quite frankly.
• 30:02
  Speaker 1: Then it's like it's so I really love watching the
• 30:04
  Speaker 1: property watch this stite go to home opens. I'm not
• 30:06
  Speaker 1: even in the market to buy home.
• 30:08
  Speaker 3: There you go, so and it's being promoted is that
• 30:10
  Speaker 3: that it's like a side hustle that you can be
• 30:12
  Speaker 3: a buyers agent part time, and so we're worried about
• 30:17
  Speaker 3: the quality of buyers agents. You know, they want to
• 30:20
  Speaker 3: do the right thing, and so I might refer to
• 30:22
  Speaker 3: them as enthusiastic amateurs. They don't really understand that if
• 30:26
  Speaker 3: they're doing it for investment, they really probably don't understand
• 30:29
  Speaker 3: how financial services work. They certainly aren't a clued up
• 30:32
  Speaker 3: in terms of the Regulatory Corporations Act around what you
• 30:36
  Speaker 3: can talk about what you can't talk about from.
• 30:38
  Speaker 2: An advice point of view.
• 30:39
  Speaker 3: So there is definitely a knowledge gap that a lot
• 30:42
  Speaker 3: of them have, and that's also leading to potentially bad
• 30:45
  Speaker 3: outcomes for their clients if they're buying the wrong investment
• 30:48
  Speaker 3: property in the wrong location, if they're not doing their
• 30:51
  Speaker 3: due diligence properly, and give you here's a good example.
• 30:54
  Speaker 3: We've got interstate buyers agents who will buy a property
• 30:57
  Speaker 3: based on what they see on the on the search
• 31:01
  Speaker 3: portals and then the video walk.
• 31:03
  Speaker 2: Through from the selling agent. So do you think the selling.
• 31:07
  Speaker 3: Agent is agent is going to show the structural problems
• 31:11
  Speaker 3: or the cracks in the brick work, or the missing
• 31:13
  Speaker 3: thing here or the broken thing there. No, they're doing
• 31:16
  Speaker 3: a quick walkthrough, and then that buyers agent in a
• 31:19
  Speaker 3: state is not sending their own independent well they're not
• 31:22
  Speaker 3: turning up That has problems everywhere in terms of conflicts
• 31:25
  Speaker 3: of interest and basically outcomes for those customers. So I'm
• 31:29
  Speaker 3: worried about again these animal spirits and these enthusiastic amateurs
• 31:34
  Speaker 3: who are currently operating in our space.
• 31:35
  Speaker 1: It's just on that. So we talked about Person earlier,
• 31:39
  Speaker 1: and it is a fantastic place to live. But if
• 31:43
  Speaker 1: you're not living in Person, you think that's the market
• 31:45
  Speaker 1: I want to go and buy in. It is a
• 31:47
  Speaker 1: bit of a distance. It is an airfare. I mean,
• 31:49
  Speaker 1: do you recommend people actually going physically look at the
• 31:50
  Speaker 1: property themselves or is it about finding a really good
• 31:53
  Speaker 1: buyers agent in that area, and then maybe you can
• 31:56
  Speaker 1: document what are the red flags want to look out
• 31:59
  Speaker 1: for and how to.
• 32:00
  Speaker 3: So let's talk about the three types of buyers agents.
• 32:03
  Speaker 3: There is the local buyers agent who might be you
• 32:05
  Speaker 3: know what they might refer to as their local expert
• 32:08
  Speaker 3: in terms of their pocket of the market, similar to
• 32:10
  Speaker 3: the way in which is selling agent might operate that way.
• 32:12
  Speaker 3: Then you've got what we call the boardless property and
• 32:15
  Speaker 3: buyers agent, and so they're helping clients potentially in other states,
• 32:18
  Speaker 3: and then they often fly into those locations or they
• 32:22
  Speaker 3: have what we refer to as inspectors or spotters on
• 32:25
  Speaker 3: the ground.
• 32:26
  Speaker 1: Maybe I can do that. Can I be someone's spotter who.
• 32:29
  Speaker 2: You can go and walk through properties and inspect them? So, yes,
• 32:32
  Speaker 2: that can.
• 32:32
  Speaker 3: And usually they might be say retired or part time
• 32:36
  Speaker 3: real estate agents or whatever, you know, former property managers,
• 32:39
  Speaker 3: or they could be the property manager that's working on
• 32:40
  Speaker 3: behalf of that group. All of those things can be
• 32:43
  Speaker 3: true in terms of how they do that. But and
• 32:45
  Speaker 3: then of course no property should ever be bought without
• 32:48
  Speaker 3: a building and pest inspection, so and now they are
• 32:51
  Speaker 3: obviously independent. They will come in and do that building
• 32:54
  Speaker 3: and pest inspection. So yes, you will see more and
• 32:57
  Speaker 3: more investors who are buying in their mind sight unseen
• 33:01
  Speaker 3: in terms of their eyes. But they are absolutely relying
• 33:04
  Speaker 3: on quality of the buyers agents to do that due
• 33:07
  Speaker 3: diligence work. And so we're concerned about the corners that
• 33:10
  Speaker 3: are being cut by certain buyers agents in the market
• 33:14
  Speaker 3: at the moment.
• 33:14
  Speaker 1: Okay, we are fast running out of time then, and
• 33:17
  Speaker 1: I do want to make sure we cover off what
• 33:18
  Speaker 1: you think are the top markets for property investing. So
• 33:21
  Speaker 1: if you're going to buy an investment property in the
• 33:23
  Speaker 1: next let's just say six months, shall we say you're
• 33:26
  Speaker 1: in the market, you're on the hunt, you want to
• 33:27
  Speaker 1: buy one, where are you buying?
• 33:29
  Speaker 3: So at the start of the year I said Darwin
• 33:31
  Speaker 3: would be the number one performing market.
• 33:33
  Speaker 1: And have you got the stats to hand? Ben, Now
• 33:34
  Speaker 1: you got what's darting up about? Is it seventeen percent
• 33:36
  Speaker 1: or something? It's definitely I think seventeen percent was the
• 33:41
  Speaker 1: stat I heard, which includes rental yield, But anyway, maybe
• 33:43
  Speaker 1: it's true.
• 33:44
  Speaker 3: No, there's every chance that it's over twenty by the time,
• 33:46
  Speaker 3: because what the data you're looking at is lag data.
• 33:48
  Speaker 2: So if you actually look at what the rolling three
• 33:50
  Speaker 2: month trend is. It's definitely in the twenties plus. Now.
• 33:53
  Speaker 3: It's moving very quickly and it's a pretty logical thing.
• 33:56
  Speaker 3: There's only about one hundred and twenty to one hundred
• 33:57
  Speaker 3: and thirty listed properties in Darwin, the entire market. So
• 34:01
  Speaker 3: you talk about that supply demand imbalance.
• 34:03
  Speaker 1: Is that why you tipped it at the beginning of
• 34:05
  Speaker 1: the year you saw the imbalance or was there some
• 34:07
  Speaker 1: other economic activity?
• 34:09
  Speaker 2: Yeah, well it's definitely not economic activity.
• 34:11
  Speaker 3: Look, you've got a new government in power there, the
• 34:13
  Speaker 3: Liberal National Party, and they are very pro business and
• 34:16
  Speaker 3: so they're very pro economy. So that was the first
• 34:19
  Speaker 3: That was the first cod that needed to go into
• 34:21
  Speaker 3: that wheel. Then you start to have a look at
• 34:22
  Speaker 3: the yield story. And also there's no land tacks in Darwin,
• 34:26
  Speaker 3: so you've got really strong yields. And then the third
• 34:29
  Speaker 3: one was it's been dormant for almost fifteen years, right,
• 34:33
  Speaker 3: it is again in a boombust. And so off the
• 34:35
  Speaker 3: back of that, I've said to people, look, if you're
• 34:37
  Speaker 3: going to go into Darwin, you're only going to be
• 34:39
  Speaker 3: in that market for maybe five to seven years and
• 34:42
  Speaker 3: then you'll probably get out. And then with all of
• 34:44
  Speaker 3: this trust lending and self manitude fund lending where they
• 34:47
  Speaker 3: really do rely on really high rents. That was the
• 34:50
  Speaker 3: final straw, so that one was always going to take off,
• 34:53
  Speaker 3: and it's done that.
• 34:54
  Speaker 2: So the next one was Perth and Melbourne. I had
• 34:56
  Speaker 2: them side by side.
• 34:57
  Speaker 3: I really love Perth in the sense that fundamental are
• 35:00
  Speaker 3: so good economic activity, so good liveability scores off the charts,
• 35:04
  Speaker 3: so you know, job opportunities and all that, so I
• 35:06
  Speaker 3: think the economy will run strong, so that one will
• 35:09
  Speaker 3: continue to perform well. I had Melbourne in that sort
• 35:12
  Speaker 3: of mix through probably more so around sentiment everyone you know,
• 35:16
  Speaker 3: Unfortunately a lot.
• 35:16
  Speaker 2: Of investors aren't. They aren't doing a lot of research
• 35:19
  Speaker 2: on this.
• 35:19
  Speaker 3: So if there's a view that it's affordable and that's
• 35:22
  Speaker 3: where I need to buy, I'll go down and buy
• 35:24
  Speaker 3: in Melbourne. So we're seeing a lot of that borderless
• 35:26
  Speaker 3: investing coming into Melbourne.
• 35:28
  Speaker 2: So I think it's probably.
• 35:28
  Speaker 1: People like myself. Obviously I'm no expert, but when you
• 35:32
  Speaker 1: have a look at the charts, Melbourne has deviated from
• 35:36
  Speaker 1: Sydney prices in a way that just doesn't seem normal,
• 35:40
  Speaker 1: that just can't sustain itself forever. We know that the
• 35:43
  Speaker 1: Victorian government has left all the taxes on, so we
• 35:45
  Speaker 1: know sort of the background story. But it does seem
• 35:47
  Speaker 1: remarkable that Sydney's me in house price can be so
• 35:51
  Speaker 1: much moigher than Melbourne.
• 35:53
  Speaker 3: Correct especially given obviously now Victoria has just moved over
• 35:56
  Speaker 3: seven million people in the state and Melbourne is continued
• 36:00
  Speaker 3: to attract its high share of immigration. It's losing a
• 36:03
  Speaker 3: small portion of interstate migrants who are probably moving up
• 36:07
  Speaker 3: to Southeast Queensland, but that's its superpower. Melbourne's multicultural attraction
• 36:12
  Speaker 3: tool is its superpower. But it's underperformed purely off the
• 36:17
  Speaker 3: back of the economic performance of the state. It's got
• 36:20
  Speaker 3: the highest level of unemployment across the capital cities. It's
• 36:23
  Speaker 3: got a debt story that's going to be a massive
• 36:25
  Speaker 3: problem for future state government, so that's holding it back.
• 36:28
  Speaker 3: But if you think that will be rectified over the
• 36:31
  Speaker 3: period of time, the regression to the means should kick
• 36:33
  Speaker 3: back in and you'll start to see probably prices move
• 36:35
  Speaker 3: high there. The one that surprised me the most has
• 36:38
  Speaker 3: probably been Southeast Queensland, namely Brisbane, is that it's had
• 36:41
  Speaker 3: a terrific run and that run has been going for
• 36:43
  Speaker 3: a good period of time, but the fundamentals and the
• 36:47
  Speaker 3: affordability story is now starting to taper that out, but
• 36:49
  Speaker 3: it's performing still quite strongly.
• 36:52
  Speaker 2: Then I had Adelaide.
• 36:53
  Speaker 3: It's had a sort of strong run for five to
• 36:55
  Speaker 3: seven years, so I suspect that will settle down and
• 36:57
  Speaker 3: there's a good amount of supply that's about to write
• 37:00
  Speaker 3: into Adelaide over the next sort of twelve to eighteen months.
• 37:03
  Speaker 3: Looking at the forwards, then I had Canberra, more so
• 37:06
  Speaker 3: because the labor governor in power and so all of
• 37:08
  Speaker 3: the public servants an't going to lose their job, so
• 37:11
  Speaker 3: that will keep that sort of population and growth going.
• 37:14
  Speaker 3: Then I had Sydney In terms of in that mix,
• 37:17
  Speaker 3: Sydney is an interesting one. It's dynamic city, it's our
• 37:19
  Speaker 3: financial capital market, it's our international city. There's prestige associated
• 37:24
  Speaker 3: with living in but it's still very much unaffordable, so
• 37:27
  Speaker 3: from an investment point of view, it's a challenging market
• 37:29
  Speaker 3: to get into it. And then finally I had Hobart
• 37:31
  Speaker 3: at the bottom of the market. Purely on the back
• 37:34
  Speaker 3: of Hobart. In the last results of population growth, it
• 37:38
  Speaker 3: had about one hundred and sixty two people increased population growth,
• 37:42
  Speaker 3: so it's really stagnating. It needs to get its economy
• 37:45
  Speaker 3: working otherwise it'll lose its knowledge base and its youth.
• 37:48
  Speaker 2: And if that youth moves out into Victoria or other markets,
• 37:52
  Speaker 2: that market's going to be challenged.
• 37:53
  Speaker 3: If it's only going to be reliant on retirees moving
• 37:56
  Speaker 3: down into that market who don't have the incomes or
• 37:59
  Speaker 3: the borrowing powers, price is higher.
• 38:01
  Speaker 1: So if you're buying today or sometime over the next
• 38:03
  Speaker 1: six months based on that list, is it So Darwin
• 38:05
  Speaker 1: is where you're buying.
• 38:07
  Speaker 3: Darwin want to be I need to sort of precursor Darwin.
• 38:10
  Speaker 3: It's a speculative buy. It's not something that I would
• 38:14
  Speaker 3: sit back. So fundamentally, I'm a long term investor, so
• 38:17
  Speaker 3: I want to invest for the decades.
• 38:18
  Speaker 2: I don't want to trade property.
• 38:20
  Speaker 3: So if I'm buying in my individual name to run
• 38:23
  Speaker 3: my private rental accommodation business, I wouldn't necessarily be jumping
• 38:26
  Speaker 3: into Darwin, you know. But if I was buying in
• 38:28
  Speaker 3: a self managed super fund where I have better tax arrangements,
• 38:33
  Speaker 3: I don't want to give advice to anyone in it.
• 38:34
  Speaker 3: Please don't take this as advice. It's not advice. But ultimately,
• 38:38
  Speaker 3: you know, Darwin does provide that sort of ability to
• 38:42
  Speaker 3: get into the market and then potentially trade out of
• 38:45
  Speaker 3: that market at its peak.
• 38:46
  Speaker 1: So does that mean if you're doing a long term
• 38:48
  Speaker 1: traditional investing its perse second on the list, Perth.
• 38:51
  Speaker 3: Melbourne would probably be the markets that I would be
• 38:54
  Speaker 3: playing in at the moment, and I'd be looking at
• 38:56
  Speaker 3: freestanding houses that have a really good proportion of land
• 39:01
  Speaker 3: to asset ratio. So the land needs to be the
• 39:04
  Speaker 3: minimum of sixty percent of the value of the overall
• 39:07
  Speaker 3: asset that you're buying.
• 39:09
  Speaker 1: Okay, good tip to know, Ben. When we come back,
• 39:12
  Speaker 1: we've got some readers, readers, We've got some listeners. You
• 39:14
  Speaker 1: can tell I'm a newspaper, Janelis, can't you. We've got
• 39:16
  Speaker 1: some listeners who have sent through some questions. I'll put
• 39:20
  Speaker 1: them to you. And also we just might get that
• 39:22
  Speaker 1: one one mistake, one common mistake people make when investing
• 39:27
  Speaker 1: in property. We'll have a chat when we come back.
• 39:40
  Speaker 1: Thanks for joining me on the money Puzzle. I'm your host.
• 39:42
  Speaker 1: Julianne Sprague, Wealth editor at The Australian, filling in for
• 39:46
  Speaker 1: James Kirby. Ben Kingsley from Empower Wealth is joining me
• 39:50
  Speaker 1: to talk all things at property. We've got some top
• 39:52
  Speaker 1: tips so far, We've got some listener questions to get to.
• 39:55
  Speaker 1: But first Ben, I just want to get to your
• 39:57
  Speaker 1: insights on Is there one thing that you see ze
• 40:01
  Speaker 1: happens quite frequently when it comes to property investing. The
• 40:04
  Speaker 1: one thing that people get wrong or overlook.
• 40:07
  Speaker 3: The tip I'm going to give here is over extending themselves.
• 40:11
  Speaker 3: Property investments should be a long term investment, and you're
• 40:14
  Speaker 3: taking on debt. What I often see is potentially people
• 40:19
  Speaker 3: aren't thinking about their cash flows in the short.
• 40:22
  Speaker 2: To medium term. So let me give you an example.
• 40:24
  Speaker 3: I buy an investment property and then we decide to
• 40:27
  Speaker 3: have a second child or whatever that may look like,
• 40:30
  Speaker 3: and all of a sudden, now we're really tight in
• 40:33
  Speaker 3: regards to our cash flows, and so I haven't let
• 40:37
  Speaker 3: that property breathe enough in terms of mature enough. So
• 40:41
  Speaker 3: with my high cost of getting into that particular market
• 40:44
  Speaker 3: through stem duty and also the selling costs associated with
• 40:48
  Speaker 3: that in the interest that I had over that time,
• 40:50
  Speaker 3: a lot of people don't necessarily break even if they're
• 40:53
  Speaker 3: held that property for a short period of time. So
• 40:56
  Speaker 3: I'm always about make sure you have a plan. Make
• 40:59
  Speaker 3: sure you understand what your future cash flow impacts are
• 41:02
  Speaker 3: going to be around that plane. Because it's a high
• 41:05
  Speaker 3: cost investment property. We're not buying five thousand dollars worth
• 41:08
  Speaker 3: of shees heer. We're potentially buying half a million dollar
• 41:11
  Speaker 3: towards a million dollar asset. So if we get it wrong,
• 41:14
  Speaker 3: it will put us back for years and so it
• 41:18
  Speaker 3: really is important to know that we can buy and
• 41:20
  Speaker 3: hold and sustain that property for the medium to longer term.
• 41:24
  Speaker 1: Okay, we've got some people who are looking at investment
• 41:27
  Speaker 1: properties as we speak, Ben and I kid you not.
• 41:30
  Speaker 1: We have two questions from two listeners. They're both called Ben.
• 41:34
  Speaker 1: I'm chatting to Ben Kingsley, so this should make it
• 41:36
  Speaker 1: easy for me not to stuff up people's names. So
• 41:39
  Speaker 1: Ben has emailed the show and if you'd like to email,
• 41:42
  Speaker 1: you can email the Money Puzzle at the Australian dot
• 41:44
  Speaker 1: com dot au. But Ben says, my wife and I
• 41:46
  Speaker 1: are thinking of selling our first home, which is now
• 41:49
  Speaker 1: an investment property. They purchased it in twenty sixteen and
• 41:52
  Speaker 1: has been rented out since twenty twenty one. We want
• 41:56
  Speaker 1: to cash out to help knock down their existing mortgage
• 41:59
  Speaker 1: and reallo our investments, and we're hoping to use my
• 42:02
  Speaker 1: wife's lower income during maternity leave to our advantage for
• 42:06
  Speaker 1: capital gains tax. And so Ben says, if we apply
• 42:09
  Speaker 1: the six year rule to avoid capital gains tax on
• 42:13
  Speaker 1: the sale of our investment property, are we just pushing
• 42:16
  Speaker 1: the tax liability down the road to our current home.
• 42:19
  Speaker 1: Both have had similar capital gains, saying about two hundred
• 42:23
  Speaker 1: and forty thousand in game for the investment property versus
• 42:25
  Speaker 1: about two hundred and eighty thousand for the current home.
• 42:28
  Speaker 3: Ben Kingsley, these are tax questions, and there's some tax impacts.
• 42:32
  Speaker 3: I need to put my hand up and say I'm
• 42:33
  Speaker 3: not a tax agent. I'm not a qualified tax agent.
• 42:37
  Speaker 3: So I'll talk in statements of fact to sort of
• 42:39
  Speaker 3: help being on this particular story. So, yes, it's true
• 42:43
  Speaker 3: that if you have owned a property that was your
• 42:46
  Speaker 3: principal place of residence from twenty twenty one, I think
• 42:49
  Speaker 3: was said you have up to six years in which
• 42:52
  Speaker 3: you can declare that your principal place of residence. Now,
• 42:55
  Speaker 3: if you're owning two properties and you're in another property,
• 42:58
  Speaker 3: that obviously means that capital gain in that second property
• 43:02
  Speaker 3: will actually be taxable because you can only ever have
• 43:05
  Speaker 3: one principal place of residence at one time, so you
• 43:08
  Speaker 3: can only have one exemption at one time. So what
• 43:11
  Speaker 3: Ben would need to do is go and speak to
• 43:13
  Speaker 3: his trusted accountant and they would need to do the
• 43:16
  Speaker 3: math in terms of what has been the gain over
• 43:20
  Speaker 3: that period of time versus if they've moved into a
• 43:23
  Speaker 3: new owner occupied property, what has been the gain on
• 43:26
  Speaker 3: that property over that same period of time, and then
• 43:29
  Speaker 3: do the calculation in terms of which is better for
• 43:31
  Speaker 3: them in regards to the sale of that asset. Benning
• 43:35
  Speaker 3: is also right technically again statement of fact that the
• 43:39
  Speaker 3: income that you will learn as a capital income is
• 43:43
  Speaker 3: assessed as income for that tax year. So income for
• 43:47
  Speaker 3: that tax year then is a calculation. So if your
• 43:50
  Speaker 3: wife is on maternity leave, then you have lower income.
• 43:53
  Speaker 3: That means that potentially, now it's all based on ownership,
• 43:57
  Speaker 3: So if it's a fifty to fifty ownership, that still
• 43:59
  Speaker 3: means that Ben can't allocate a higher portion of that
• 44:02
  Speaker 3: income again to his wife.
• 44:05
  Speaker 2: That's not possible.
• 44:06
  Speaker 1: Half of it can go across, that's right.
• 44:07
  Speaker 3: And if that means that you know Ben's wife is
• 44:10
  Speaker 3: on a lower marginal tax rate at that time, then
• 44:14
  Speaker 3: ultimately that could there could be some tax savings there.
• 44:17
  Speaker 3: But again, if the intention is all about minimizing your tax,
• 44:23
  Speaker 3: be very careful. That's why it's always important to go
• 44:25
  Speaker 3: and seek proper tax advice before you take any decisions.
• 44:29
  Speaker 1: Ben, it sounds like Ben has he says he has
• 44:32
  Speaker 1: got some advice, but he's always keen for more opinions
• 44:35
  Speaker 1: than just is there any real benefit to the strategy
• 44:37
  Speaker 1: besides getting more cash?
• 44:39
  Speaker 3: Now, Yeah, I would always try And you know, if
• 44:41
  Speaker 3: I'm in conversations with clients, I'm always looking at what's
• 44:46
  Speaker 3: what is our end goal and what's.
• 44:48
  Speaker 2: Our lifestyle by design look like?
• 44:50
  Speaker 3: And am I putting the big rocks in the jar
• 44:52
  Speaker 3: making sure that you know, like, at the end of
• 44:54
  Speaker 3: the day, money is important, it is, you know, but
• 44:56
  Speaker 3: it doesn't by happiness. And so what are the goals
• 44:59
  Speaker 3: that you're trying to achieve and how does the decisions
• 45:02
  Speaker 3: that you may compliment those goals? And if you can
• 45:05
  Speaker 3: align it that way, you're going to live a more
• 45:07
  Speaker 3: meaningful and purposeful life number one. But two, you're then
• 45:10
  Speaker 3: going to not necessarily get hung up just on how
• 45:13
  Speaker 3: much tax I'm paying or what you know, how much
• 45:16
  Speaker 3: money I've got in my bank account.
• 45:18
  Speaker 2: The bragging rights.
• 45:19
  Speaker 3: No one sees those bragging rights in the cemetery like,
• 45:21
  Speaker 3: so ultimately live now.
• 45:23
  Speaker 2: And make sure you're doing those decisions.
• 45:25
  Speaker 3: So it sounds like they're going to build their dream home,
• 45:27
  Speaker 3: and if this decision is around selling that property so
• 45:30
  Speaker 3: they'll have a better dream home and lower non deductible
• 45:33
  Speaker 3: debt on their family home, that's not a bad that's
• 45:36
  Speaker 3: not a bad idea.
• 45:37
  Speaker 1: Thanks for getting in touch.
• 45:38
  Speaker 2: Ben.
• 45:38
  Speaker 1: Now to another Ben who has emailed the program and says,
• 45:42
  Speaker 1: I have a mate who is starting a side hustle
• 45:45
  Speaker 1: of buying a rundown house, fixing it up and flipping
• 45:48
  Speaker 1: it in six uch. You would have heard about this
• 45:51
  Speaker 1: a lot of Thankingsley with lots of people will go
• 45:53
  Speaker 1: get that door upper. I will not lie to you.
• 45:56
  Speaker 1: I once tried to convince my husband we should buy
• 45:58
  Speaker 1: a house across the road. It a dump, and I
• 46:01
  Speaker 1: had all sorts of visions we would become amazing block
• 46:03
  Speaker 1: contestants or something.
• 46:04
  Speaker 2: You're not alone.
• 46:05
  Speaker 1: Thankfully he was the smarter of us too and said
• 46:08
  Speaker 1: we're not doing that. Yeah. Anyway, So Ben says, it
• 46:11
  Speaker 1: made me wonder if this is actually put into the
• 46:14
  Speaker 1: house price statistics. So he's having to think about this.
• 46:16
  Speaker 1: Major takes a rundown house, does it up, flips it,
• 46:19
  Speaker 1: and obviously the property value has gone up quite a bit.
• 46:21
  Speaker 1: So he says, does this then impact property markets? He
• 46:26
  Speaker 1: hasn't got much work to do with Mayde reckons this
• 46:27
  Speaker 1: is going to fix up the floorboards, fix the garden, repaint,
• 46:30
  Speaker 1: clean it anyway, they flip it. I guess Benn's wondering,
• 46:33
  Speaker 1: is it a big issue or is it just a
• 46:35
  Speaker 1: tiny problem if people are coming into these suburbs doing
• 46:38
  Speaker 1: up the market and then you might see property prices
• 46:40
  Speaker 1: have jumped.
• 46:40
  Speaker 3: Yeah, So he raises a really poignant point around measuring
• 46:45
  Speaker 3: median house price.
• 46:46
  Speaker 2: Now, a meetian is the midpoint.
• 46:48
  Speaker 3: So if you've got five property sales, then you know
• 46:50
  Speaker 3: the midpoint is the third sale of those five, right,
• 46:53
  Speaker 3: And so that's how the market is reported on through
• 46:55
  Speaker 3: totality and through other research area. So if you've got
• 47:00
  Speaker 3: a suburb where there's a new development going in a
• 47:03
  Speaker 3: thirty year old subdivision that's already there, you will see
• 47:07
  Speaker 3: that suburb reporting really strong price growth. But the reality
• 47:11
  Speaker 3: is there hasn't really been any price growth at all
• 47:13
  Speaker 3: all that's basically happened is the more expensive properties have
• 47:16
  Speaker 3: been sold, and so that's artificially manipulating the median price
• 47:21
  Speaker 3: in that particular area.
• 47:22
  Speaker 1: The older properties would still be worth less. The're not
• 47:24
  Speaker 1: going to trade up to those higher prices.
• 47:26
  Speaker 3: Right, yes, but over time the land value of those
• 47:29
  Speaker 3: older properties would have potentially enjoyed the fact that all
• 47:32
  Speaker 3: this extra investment has been put into this new area.
• 47:35
  Speaker 3: But it just goes to show you that the susceptibility
• 47:38
  Speaker 3: of the data that we work with more generally when
• 47:41
  Speaker 3: we're educating people around property is that data is it's
• 47:44
  Speaker 3: a good indicator, but it's certainly not a great indicator.
• 47:48
  Speaker 3: So that's just one thing we need to understand about
• 47:50
  Speaker 3: how we report property data. It's not ideal, but it's
• 47:53
  Speaker 3: the mechanisms that we use onto the question of buying
• 47:56
  Speaker 3: worshouse in the bestreet and doing it up. I love
• 47:58
  Speaker 3: that idea for the first time by I love that
• 48:00
  Speaker 3: idea for anyone who's trying to get on the property ladder.
• 48:03
  Speaker 3: More broadly, I think it's an excellent way if you
• 48:05
  Speaker 3: do your numbers correctly, that you can potentially harvest equity and.
• 48:10
  Speaker 2: Bring that property back up to its original quality.
• 48:12
  Speaker 3: So I like that in terms of flipping property and
• 48:15
  Speaker 3: trading property, there are some costs and challenges around that,
• 48:18
  Speaker 3: and in a lot of cases, I think flippers don't
• 48:21
  Speaker 3: necessarily do their numbers correctly in their due diligence well,
• 48:25
  Speaker 3: and so a lot of them can potentially spend six
• 48:27
  Speaker 3: to twelve months and break even and jot it down
• 48:30
  Speaker 3: as a learning experience.
• 48:32
  Speaker 2: But I would say that the other thing that they
• 48:34
  Speaker 2: also need.
• 48:34
  Speaker 3: To be aware of, and this is the whole political
• 48:37
  Speaker 3: thing that we're getting into here now, is that the
• 48:39
  Speaker 3: governments are definitely looking at negative gearing and capital gains
• 48:43
  Speaker 3: tax exemptions. Those conversations aren't going away, so that the
• 48:48
  Speaker 3: moment you get a fifty percent exemption based on holding
• 48:51
  Speaker 3: theirsset for twelve months a longer. So if you're going
• 48:54
  Speaker 3: to flipping and you're going to flip that property inside
• 48:57
  Speaker 3: six months, then you're paying one hundred percent of your
• 49:01
  Speaker 3: marginal tax rate in tax on that particular property in
• 49:05
  Speaker 3: terms of the profits that it makes. So you've got
• 49:07
  Speaker 3: to then decide whether it's worth going into the business
• 49:09
  Speaker 3: of doing this or whether it's you know, this is
• 49:12
  Speaker 3: just a one off thing that I'm going to do.
• 49:13
  Speaker 2: And that's a game.
• 49:14
  Speaker 3: Where I would say, go and speak to your accountant
• 49:17
  Speaker 3: about your ideas in this particular space and try and
• 49:20
  Speaker 3: get an account And Neo's had some experience in this
• 49:22
  Speaker 3: area might also be helpful for you because it sounds sexy.
• 49:26
  Speaker 3: You know, when I watched the block and that's all
• 49:29
  Speaker 3: summarized into a thirty minute or a sixty minute episode,
• 49:33
  Speaker 3: you don't know what's going on in the background.
• 49:35
  Speaker 2: You don't know how much work's gone into.
• 49:37
  Speaker 3: It, or what cost blowouts they've had and all of
• 49:40
  Speaker 3: those profits. I mean, at the end of the day,
• 49:42
  Speaker 3: they're selling it to a national audience, so that you know,
• 49:45
  Speaker 3: and we've seen you know, there's plenty of articles on
• 49:47
  Speaker 3: the research in terms of how all those properties performed
• 49:50
  Speaker 3: after that first sale. The reality is that those properties
• 49:53
  Speaker 3: were bought at extended prices, and it does they weren't
• 49:58
  Speaker 3: really you know, fair market value at that time.
• 50:00
  Speaker 1: Well, this will test my husband if he's listening to
• 50:02
  Speaker 1: the podcast. Honey, you're right about that one.
• 50:06
  Speaker 4: But if it's across the road to your point, Julian,
• 50:08
  Speaker 4: I'll just finish off that, like, if you can get
• 50:10
  Speaker 4: easy and quick access to it, and you're prepared to
• 50:12
  Speaker 4: do elbow grease and that type thing, but take a
• 50:14
  Speaker 4: longer term view and then rent that out.
• 50:17
  Speaker 2: That could be a sensible thing, right, do you know
• 50:19
  Speaker 2: what I mean? Like, like, here's the tips. Paint, do your.
• 50:22
  Speaker 3: Flooring, don't do anything structural, and make sure you work
• 50:26
  Speaker 3: on a dollar in for two dollars back. And if
• 50:28
  Speaker 3: the numbers don't stack up, just off that. Some people
• 50:30
  Speaker 3: do a one for three, but I think if it's
• 50:32
  Speaker 3: one for two. But be prepared that this is not investing.
• 50:36
  Speaker 3: This is active investing. Like it's not passive investing. You're
• 50:39
  Speaker 3: going to have to put the elbow grease in because
• 50:41
  Speaker 3: if you get too many trades in, there's going to
• 50:43
  Speaker 3: be no profit at the end of the end of
• 50:45
  Speaker 3: the outcome.
• 50:46
  Speaker 1: One dollar in two dollars back. Okay, I'll use That's
• 50:48
  Speaker 1: a nice mat truck to use. Ben Kingsley, thank you
• 50:50
  Speaker 1: so much for joining us on the Money Puzzle. It's
• 50:52
  Speaker 1: been a pleasure.
• 50:52
  Speaker 2: Yeah, thank you very much for the opportunity.
• 50:55
  Speaker 1: Ben Kingsley from in Power. Well, then you can also
• 50:57
  Speaker 1: catch him at the Property Couch podcast. We'll be back
• 51:00
  Speaker 1: Friday for another episode of the Money Puzzle.