Latest / The Follio Property Podcast / Why Holding Your Property Portfolio Could Cost You $1.5M | Here’s What To Do

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Why Holding Your Property Portfolio Could Cost You $1.5M | Here’s What To Do · The Follio Property Podcast

• 0:00
  The chief economist of Australia's biggest mortgage lender is warning housing headwinds are growing.
• 0:06
  The whole buy and hold never sell is lazy investing.
• 0:09
  But as of today the portfolio value would be 4.71 million with 2.25 million of equity.
• 0:15
  One thing I don't care about is portfolio value.
• 0:17
  Equity position is what matters.
• 0:18
  I like to move my capital and follow the markets.
• 0:20
  Invest in markets that represent value and have clear runway is the more sophisticated and modern way of investing.
• 0:27
  Fees, taxes, stamp duty, entry costs, exit costs, for that to take place was just north of $150,000, which is a lot of money.
• 0:35
  Sell down Packingham to buy Mount Lawley.
• 0:37
  And we're talking about a $700,000 equity swing in that one decision alone.
• 0:41
  To see where you can take money off the table, where it makes sense to do so, to de-risk your exposure.
• 0:46
  What's the advice moving forward?
• 0:48
  I think...
• 0:53
  You're listening to the Folio Property Podcast.
• 0:55
  I'm Rhys Bettle and I'm here each week with my co-host Lachlan De La Hunte.
• 0:59
  Lachlan, uncertain times are in right now.
• 1:01
  It is, Rhys, and the media aren't helping with that narrative.
• 1:04
  Every day there's a different news story that is hurting sentiment and we know that sentiment can move markets.
• 1:11
  We've been meeting with a lot of potential clients and probably listeners of the podcast that have downloaded PropStack actually and have onboarded onto the system.
• 1:18
  A lot of them are, it's not to buy.
• 1:21
  It's not to, it's to sell or to hold.
• 1:24
  They're not really sure what to, or potentially buy as well.
• 1:26
  I think a lot of people, you know, now the markets have started to all catch up with each other in some sense and in some instances go on a decline.
• 1:33
  People are now trying to weigh up their options.
• 1:35
  Do I take money off the table and put on my PPR?
• 1:37
  Do I take money off the table and reinvest in other markets?
• 1:40
  And I thought today, let's actually review a portfolio that you did of a personal client of yours in uncertain times back of 2020, so just off the back of COVID.
• 1:49
  I thought it'd be good to bring that scenario to life, get your feedback on why you made certain advice and strategies for this particular client.
• 1:56
  And then we can maybe relate it to some instances in the current market as well.
• 1:59
  Yeah, definitely.
• 2:00
  And I think with people exploring PropStack, those with properties, I think it's a lot
• 2:05
  There is uncertainty, and that's why I use PropStack personally, is to take the guesswork out of it so you can really look at it analytically at these portfolios to see where you can take money off the table, where it makes sense to do so, to de-risk your exposure when you look at your statistics, like your debt to income, your cash buffers, but also seeing where there's potentially some opportunity.
• 2:27
  We went back and obviously I've been meeting with clients since about 2017, right, 2016.
• 2:30
  So we've been doing this for a while, which shows my age.
• 2:35
  But this was an interesting scenario because I only met with them again recently to do another review.
• 2:40
  We do review our clients' portfolio at least every 12 months, but encourage every six months.
• 2:45
  And so it was pleasing to actually go back and look at the different transactions and sales that took place because hindsight's always easy.
• 2:54
  You look back now and you're like, that was really good advice.
• 2:57
  But in the moment of this portfolio review that you're about to get up and talk through to the listeners that can't see it,
• 3:03
  It was uncertain times, similar to what we are now.
• 3:05
  It was just post-COVID, early 2021.
• 3:06
  We're, you know, 12 months into COVID.
• 3:11
  So the uncertainty was still there, but you could start to see, you know, how the government were playing their hand.
• 3:18
  And the client was, you know,
• 3:21
  maxed out on their capacity.
• 3:22
  Debt income, as you can see on the screen there, was at 6%.
• 3:26
  And they probably had ridden the Victorian market pretty hard and wanted to know what to do next.
• 3:34
  Let's talk through the portfolio then in a bit more detail before we go through what your advice was for those particular clients and what the strategy actually was.
• 3:41
  But for those that are listening, I'll do my best to explain these assets.
• 3:46
  But those that are on YouTube or watching us on Spotify, we have got props back up with their particular portfolio.
• 3:51
  Just some high level stuff here.
• 3:53
  The overall portfolio view value, I should say, was 2.76 mil.
• 3:58
  This was in 2021 when I met the client, January 2021.
• 4:00
  Yeah.
• 4:01
  January 2021, about 660K in equity.
• 4:05
  Debt position 2.1.
• 4:06
  As you mentioned, their debt to income was on the- It was maxed, it was at six.
• 4:11
  And this is joint income about 220K and they'd maxed their exposure.
• 4:15
  And overall LVR as well, it's not like in concerns levels, but not on 76.1%.
• 4:20
  Yeah, that was okay, I was comfortable with that.
• 4:23
  But they had ridden the Victorian boom and probably got the back end of that.
• 4:28
  They bought most of their assets in sort of 2017, 18, and 19.
• 4:32
  And Victoria went on an extremely strong run pretty much from 2015 to 2021.
• 4:38
  We weren't knowing specifically that the steam had run out of the market, but they were far too exposed to Victoria.
• 4:44
  And the quality of the assets, particularly that one in Packingham, concerned me.
• 4:49
  Let's talk through the portfolio then.
• 4:51
  So there's four investment properties there.
• 4:53
  Let's talk through the first asset there at Bendigo.
• 4:55
  So the valuation at the time was $610,000 for this particular asset, purchased in March 2018.
• 5:01
  So I'd imagine they probably had, what, two to three years growth?
• 5:05
  Yeah, yeah.
• 5:06
  They made 150K equity.
• 5:07
  130K equity.
• 5:07
  Yep, in a pretty short period of time.
• 5:09
  So they've done well out of that.
• 5:11
  Then there was Ballarat.
• 5:12
  Then there's Ballarat there, so 570 at the time.
• 5:15
  That was purchased in July 19.
• 5:17
  So not too dissimilar from a timeframe perspective.
• 5:20
  About 180K equity in that asset as well.
• 5:22
  had ridden that market, got in it pretty late in the cycle.
• 5:25
  And then the Geelong West home, which beautiful looking picture here on PropStack, 810K, that was purchased, it looks like the first asset they'd purchased, so it might have been their principal place, I'd imagine, at one point.
• 5:37
  2017, and the equity position 270K for that one.
• 5:40
  Again, they timed the back end of the Geelong bubble.
• 5:44
  If anyone knows that Geelong went up, probably missed a large portion.
• 5:47
  From 15 to 18, Geelong went up by about 50%, 60%, and then tapered up until 2021.
• 5:52
  And then the last asset they'd put in their portfolio, but it looks like probably within six months of seeing yourself, was Pakenham.
• 5:59
  Now, for those that aren't familiar with Pakenham, just give us – I'm familiar with Pakenham with the several trips we do to Melbourne each quarter –
• 6:06
  But give me a bit of a, give the viewers that aren't familiar with Pakenham, what's the demographic of that particular asset?
• 6:12
  A decade ago, Reece, it was a new developed area.
• 6:16
  So we're talking out of fringes, not a heap of infrastructure, but it is almost, it is classed as infield now when we caught up in 2020.
• 6:24
  It was still one of those markets that was more saturated by investors than it was on occupiers.
• 6:30
  A lot of people, you know, through the late 2008, 2009 and 2009,
• 6:35
  2020 period had gone in there, those house and package spookers had gone in there and bought up a lot of properties.
• 6:40
  So there was about, the weighting of investors to own Occupy was about 65%.
• 6:43
  Yeah.
• 6:44
  So for me, in this conversation on this portfolio review, that was their most recent purchase and that was the first property we exited.
• 6:51
  So it had the lowest amount of equity, which is going to surprise a lot of people because
• 6:55
  Surely you take the equity out of the previous assets, but my concern was that was by far the worst property in their portfolio.
• 7:03
  Actually, like the rest of the portfolio, it's just I've seen an opportunity cost because I understand they were maxed at their capacity.
• 7:10
  So the saying of holding this portfolio and then continuing to add to it
• 7:15
  wasn't a possibility.
• 7:16
  So let's, you know, they're pretty much sold back in a minute, almost a loss when you look at the transaction costs of buying in stamp duty and then selling agents.
• 7:26
  They would have covered their costs, but only just.
• 7:28
  But that freed up the equity to get into other markets.
• 7:31
  Firstly, to diversify, but the data was clear.
• 7:34
  You know, Brisbane at the time,
• 7:36
  and Perth were representing far better opportunities.
• 7:38
  And that was really important in this conversation was Melbourne had just been through pretty much a decade run and the data was suggesting it was topping out.
• 7:46
  Melbourne, Perth and Brisbane were on the opposite end of that cycle without starting to represent really good value.
• 7:54
  And this was an opportune time to divest assets and re-expose or redeploy that capital.
• 8:01
  I am going to ask you to go back sort of five, six years here, but it must take a bit of mental doing from those particular clients to sell the asset they just purchased, right, six months before you.
• 8:12
  Like how, you know, when you're having those conversations with those clients, is that an easy conversation to have or is there a lot of data backing up what you're saying there to convince them that, you know, this is the right strategy for them?
• 8:22
  There's a lot of trust from them to listen to me because they bought that through a buyer's agent.
• 8:25
  So they'd have been told a story that Pakenham was going to go on a run.
• 8:27
  It was a growth corridor in Victoria.
• 8:29
  As you know, Rhys, I'm very honest.
• 8:31
  Sometimes delivering bad news is my responsibility.
• 8:34
  I think most of our listeners and most of our clients probably, I hope, appreciate the honesty.
• 8:38
  And in this scenario, it was very direct.
• 8:40
  This wasn't a good asset to buy.
• 8:42
  And I believe...
• 8:43
  that based on my experience and the data that we track and looking at the numbers, comparing to where we're buying in Western Australia and Queensland, I had strong conviction that we would outperform that particular asset with no guarantees, mind you.
• 8:58
  So there is a leap of faith, but looking at the data sets at the time, it was very, very
• 9:03
  as we look at the data sets today and compare these markets in reverse.
• 9:07
  And it's interesting, the dynamic and the shift in data over a six-year period.
• 9:12
  So it is, it's a leap of faith in confidence.
• 9:16
  And it wasn't an easy conversation to have Rees to look someone in the eye and say, you've just made it.
• 9:21
  a mistake in the last six months in your portfolio.
• 9:24
  That conversation then is the same conversations I'm having today.
• 9:27
  Had a meeting just this week with a client who's gone very aggressively and had to be honest, there was some good assets in the portfolio, but again used a buyer's agent and 50 to 60% of that portfolio, we need to restructure and divest them out of the portfolio and replace them with better quality assets to protect his equity and give him some longevity.
• 9:48
  And they appreciate the honesty.
• 9:50
  Let's go through the rest of the portfolio.
• 9:51
  I think what's going to be easier, because we've got two profiles up here of the decisions you made, rather than you telling us your advice was to sell Pakenham and you said they've probably just broken even once they've looked at the equity positions past some of the exit costs.
• 10:04
  Talk me through the other assets first, whether you decided to hold or sell and which one was next if you did.
• 10:11
  So looking at Bendigo, what was the advice on that particular asset?
• 10:14
  Bendigo and Ballarat, they were the two next sales, but it didn't happen.
• 10:18
  We didn't just go out there and sell three properties out of their portfolio and then buy three.
• 10:22
  This planning, so if we fast forward to what actually took place, the listeners can understand, this portfolio over the next three years, we did sell Packingham first, then Ballarat and Bendigo, and we replaced that with a blue chip asset in Perth, a blue chip asset in Queensland, and a B-grade unit, villa unit in Perth as well,
• 10:45
  So in summary, sold the three Victorian assets, kept one in Geelong West, and bought one in Queensland, two in Perth.
• 10:51
  That's what took place.
• 10:52
  That didn't happen in one fell swoop.
• 10:54
  That took three years of planning, and it was almost like a seesaw effect.
• 10:59
  We would sell one, replace that equity into another market, have another portfolio review, look at the stats, look at the opportunity cost, which led to another decision to then sell Bendigo.
• 11:09
  I like the Bendigo asset.
• 11:11
  Right now, fast forward six years, we will likely sell that Victoria Park one in Perth and buy that Bendigo asset.
• 11:18
  And we're buying it at a very similar price of what we sold it to.
• 11:21
  That's what timing of markets does, Rhys.
• 11:25
  So it was a well-planned, well-thought-out, but we were reviewing this every six to 12 months.
• 11:29
  Now, Bendigo, Ballarat and Geelong West, all regional players in Victoria?
• 11:35
  Commutable regionals.
• 11:37
  Commutable regional or metropolitan regionals that you've called on the podcast before.
• 11:41
  What was the idea behind keeping the Geelong West and not advising to sell all three of them, but particularly the other metropolitan regionals you've got there?
• 11:52
  Again, it was opportunity cost.
• 11:53
  We won't sell unless there's better allocation of money, and it's diversification.
• 11:58
  Having five properties or four properties they had in the one market in Victoria was an overexposure.
• 12:04
  Do I want to keep some exposure to Victoria?
• 12:05
  Absolutely.
• 12:07
  And fortune would show that I'm glad we did keep Geelong West because of those four properties, it's without a doubt been the best performing asset in that portfolio.
• 12:15
  Looking at that portfolio, looking at those four properties,
• 12:18
  back in 2021.
• 12:20
  It's fortunate that we did keep Geelong West because of those four assets that he started with, Geelong West has been the best performing, albeit in comparison to Queensland and the Perth assets, it's significantly underformed.
• 12:31
  So in this scenario, in hindsight, I've probably cost this client another $500,000 of equity by not selling Geelong West and buying another one in Queensland and Perth.
• 12:41
  But again, I think when we look at the portfolio when we start and where we finished, he's almost in a $1.5 million better position equity-wise.
• 12:50
  So fast forward to where these values are today.
• 12:52
  Where are they at, Reece?
• 12:53
  What's the difference?
• 12:53
  So you're looking as an overall portfolio value, 2.76 mil with about $660,000 equity at today.
• 13:00
  If they had kept that original portfolio.
• 13:02
  Correct.
• 13:02
  Correct.
• 13:03
  Now let's...
• 13:05
  Fast forward onto the plays where you diversified those into.
• 13:10
  Now, we'll dig into the assets, but as of today, the portfolio value would be $4.71 million with $2.25 million of equity.
• 13:18
  Debt to income roughly the same.
• 13:20
  LVR, though, from those high 70s is now down to 52.2%.
• 13:24
  Yeah, one thing I don't care about is portfolio value.
• 13:26
  Equity position is what matters.
• 13:28
  So if we had kept that portfolio, the equity position today would be $660,000.
• 13:33
  $660,000, correct.
• 13:34
  Which is still a fantastic position to be in, particularly when you're sort of mid to late 30s.
• 13:40
  However, due to changing that portfolio, restructuring that portfolio, and selling down at the top of the cycle and buying somewhere near the bottom, they're in, what's their current equity position?
• 13:53
  2.25 million.
• 13:55
  2.25 million.
• 13:55
  They're $1.5 million better off from an equity position than they would have been if they had held onto those particular assets.
• 14:03
  So that is a lot of work, a lot of planning, a lot of preparation, like you said.
• 14:06
  Yeah.
• 14:06
  Looking at the first acquisition, once you did diversify some of those regional Victorian assets out of the portfolio, was the Mount Lawley House here in Perth.
• 14:17
  Explain that asset and why that was the asset that was chosen for this particular portfolio.
• 14:21
  Again, 2021, the Perth market was representing really good value from a data point of view, similar to the data sets that we've probably seen in Melbourne today.
• 14:31
  It was population growth was strong,
• 14:33
  We saw an undersupply in the previous three years.
• 14:37
  And Mount Law is a very blue chip for those listening in Western Australia, very blue chip, strong school zones, the owner-occupier versus investment activities, well north of 90%, and characterised by a lot of established housing.
• 14:49
  So I ticked a lot of boxes, able to pick it up at a discount because you're buying at the low point of the market.
• 14:53
  And today it's conservatively worth 1.7 and will likely remain in the portfolio longer term because the fundamentals of that asset are strong longer term.
• 15:01
  Yep, and purchase at $920K, so we're talking over $800K equity uplift since the acquisition.
• 15:09
  Next asset in that portfolio was the Queensland asset in Ashgrove.
• 15:14
  Talk us through that particular asset.
• 15:15
  So it looks like from a purchase standpoint, it's probably six months after the Perth asset.
• 15:19
  Why did you choose to go to Brisbane with this particular asset?
• 15:21
  Look, to be honest, at that point in time, we were buying four clients in Brisbane and Perth.
• 15:28
  It was a matter of getting some diversification.
• 15:30
  That was the key.
• 15:31
  Let's not put all our eggs in one basket.
• 15:33
  Let's get diversification into Queensland, into Perth.
• 15:38
  And for a lot of our clients who continued to buy more properties, that third asset was in Adelaide.
• 15:42
  So talk about
• 15:43
  The definition of diversification, there's three different markets.
• 15:46
  Yes, you could say if you put all three assets in the Perth market, you would have outperformed.
• 15:51
  But having that diversification does de-risk it because that Melbourne example, if you have all your chips in one basket and that market doesn't perform, then you're exposed to that.
• 16:01
  So we had to do a lot in that scenario.
• 16:04
  So originally sell down...
• 16:06
  Bacchanem to buy Perth.
• 16:08
  In that same process, we sold down Bendigo to buy Brisbane.
• 16:13
  All of a sudden, that portfolio is starting to look a lot different.
• 16:16
  We've now got two in Victoria, one in Brisbane, one in Perth.
• 16:19
  If they do nothing else, they're in a far better situation.
• 16:21
  Purchase price on that one was $900,000 and rough value today is about $1.43,000.
• 16:25
  So decent $730,000 worth of equity in that asset as well.
• 16:29
  Land sizes, though, for those we're talking assets here, both these ones we're looking at, over 500 square metres.
• 16:35
  That's, from this particular strategy, super important to get the appreciation.
• 16:40
  Both in school belt areas as well?
• 16:42
  which is, for those listening, school catchment areas, so public zones, and both are in suburbs where the own occupier demographic exceeds 90%, so two critical elements to understand.
• 16:55
  The last asset then looks like, you know, was probably a couple of years after the first two.
• 16:59
  So gone pretty aggressive, I guess, with the first two to maintain a bit of growth.
• 17:04
  And then you've then got the Victoria Park unit.
• 17:07
  So talk us through the mindset on that particular asset.
• 17:10
  Yeah, so after purchasing Brisbane,
• 17:12
  Not too long after that, we sold down Ballarat, and that was to pay down some debt.
• 17:18
  At that point, interest rates were starting to move and their cash flow was getting tighter, so we paid down from debt.
• 17:25
  Once they started to manage that debt a little bit more effectively,
• 17:29
  there was an opportunity to free up some capital, use some of the equity they'd made from Queensland and the Perth asset to buy a Perth unit.
• 17:37
  And, you know, that market performed tremendously well over the last two years, and they've only held it for 24 months.
• 17:44
  But they've been able to produce some serious equity out of that asset.
• 17:48
  So looking at this portfolio, I mean, we've gone over the high-level details there.
• 17:51
  You're right in saying it's down to the equity position, right?
• 17:54
  Like if they had done nothing with their portfolio and maybe just sat and hold like a passive investor, they would only have been up 600K, whereas now they're at 2.25K.
• 18:04
  They started with an equity position of close to 500,000.
• 18:07
  Over the next six years, they've increased that by almost 150,000.
• 18:10
  If they hadn't done nothing, they still would have made money.
• 18:14
  That's been the market for the last five or six years.
• 18:17
  But the difference is in timing cycles and the opportunity cost.
• 18:22
  And that's what I'm coming across a lot of portfolios that I'm seeing now resembles this scenario, but in different markets.
• 18:27
  It might be a significant overexposure to Queensland, regional Queensland.
• 18:33
  It could be a significant over exposure to Perth where they've got 10, 20, 30 assets in the one market or even just an over exposure to both Queensland and Western Australia and or still have an over exposure in Victoria potentially.
• 18:44
  So diversification is key.
• 18:47
  But if you have ridden a market and you are overexposed in that market and you've seen well over double digit growth for the last five years, it would be unlikely that you're going to see similar growth moving forward.
• 18:59
  And I like to move my capital and follow the markets because the whole buy and hold and never sell, as I've said on this podcast before, is lazy investing.
• 19:07
  To be sharp, to be nimble, take the money when you need to take the money off the table, but invest in markets that represent value and have clear runway is the more sophisticated and modern way of investing.
• 19:19
  Fees, taxes, stamp duty, entry costs, exit costs, for that to take place, there's a
• 19:25
  was just north of $150,000, which is a lot of money.
• 19:29
  Understood.
• 19:30
  But the difference in their equity position is just over $1.5 million.
• 19:35
  So that $150,000 has gone a long way, and I think my clients are very happy in their decisions to divest some of the assets
• 19:43
  through a stagnant cycle and reinvesting in the market is a represented opportunity.
• 19:48
  That is a, you know, you've got to factor in those costs.
• 19:51
  Now, that's where that Packingham example at the start was a tough one because, you know, they're pretty much exiting that for, you know, no gain when you take away the transaction fees.
• 20:00
  But they were very pleased if you look at that Mount Lawley and compare that Packingham, you look at just that one exchange, sell down Packingham to buy Mount Lawley.
• 20:08
  We're talking about a $700,000 equity swing in that one decision alone.
• 20:15
  I want to close it out with a couple of questions, and I think you're right.
• 20:18
  There is a lot of investors in Australia that would have similar portfolios.
• 20:22
  They might not have gone on that journey where they had the portfolio diversified.
• 20:27
  This might be their first set of assets within their portfolio, and that's probably what we're seeing a lot with the clients that we're speaking with.
• 20:32
  They're bought in these areas, like you said, the regional Queensland, the Brisbane, the Adelaide, the Perth's,
• 20:37
  Mostly regional markets.
• 20:40
  We're seeing a real exposure to regional markets, which is dangerous.
• 20:44
  At least with this particular portfolio, they're metropolitan regionals and the Pakenham one was still in Melbourne.
• 20:50
  So if they were going to do nothing, they still would have been in front.
• 20:53
  Where my concern is, is these saturated regional portfolios.
• 20:59
  The scenario might be in the next three to four years that they aren't not only above what they paid for it, but potentially...
• 21:06
  They could stagnate or be below what they've paid for.
• 21:09
  So then they start to get some of the assets into a negative equity territory and that becomes dangerous.
• 21:15
  So with these particular clients then, what's their advice moving forward?
• 21:19
  They've had some significant growth with the Perth assets, particularly the Mount Lawley house and the Brisbane house as well.
• 21:27
  What's their advice moving forward?
• 21:29
  And then from a, I know you're talking there especially about a lot of clients with regional assets, but...
• 21:35
  throw into another variable into the mix.
• 21:37
  Those clients that maybe have bought in Perth or Brisbane or Adelaide, so not necessarily regional and they've had some growth, would their advice be similar to what you're gonna give to these clients as well?
• 21:46
  Yeah, look, I'll be transparent.
• 21:48
  So with a particular client we've walked away and we're waiting, the lease for the Queensland for the Brisbane asset is up in November.
• 21:55
  We're not going to renew
• 21:56
  We're going to get it vacant, staged, painted and cleaned, ready to take the market early New Year.
• 22:00
  We're going to replace that asset with a wholesale asset in Melbourne, Reece.
• 22:04
  So the pendulum's completely shift.
• 22:06
  So we'll be selling down Brisbane, albeit could keep it in the long term.
• 22:09
  If you look at their debt to income, it's currently capped out at 6%.
• 22:12
  So our options are, do we sell down on Perth?
• 22:14
  Still think Perth has some small amount of runway.
• 22:17
  The conversation was, do we sell the unit or do we sell Queensland?
• 22:20
  Mount Lawley will stay in the portfolio long term.
• 22:22
  Due to the lease renewals, the unit's not up until November next year, and I do think the unit market in Perth's got more runway than the housing market in Brisbane.
• 22:30
  Data is absolutely clear on that.
• 22:32
  We're selling down Brisbane early next year, reallocate those funds into a wholesale asset into Melbourne, takes some debt off the table as well.
• 22:41
  So they're going to reduce their overall LVR exposure, which is going to get their total LVR down to 50%, which is fantastic.
• 22:48
  put that off the primary place of residence, still get exposure at a low point in the cycle into Victoria and able to keep Perth and ride that market, you know, potentially for another 12 months.
• 22:59
  This from a portfolio perspective is almost simple to understand in terms of assets.
• 23:05
  There's not a lot of overexposure here, right?
• 23:06
  There is two assets in Perth, but they're completely different asset types, right?
• 23:10
  What I am seeing a lot of with clients out there at the moment is four or five assets in the exact same location.
• 23:16
  If they've experienced growth, Lachlan...
• 23:19
  would you be recommending to sell all those four or five assets even if some of them were in some good blue chip areas or would it be keeping some exposure in there and just re-diversifying your risk elsewhere?
• 23:31
  Subject to every individual and subject to what they've got in their portfolio.
• 23:36
  Like decisions that led us to selling those Victorian assets was because their debt to income was tapped out.
• 23:42
  They were out six times.
• 23:43
  Yes, I could have pushed them to seven and a half or eight through trust lending, which a lot of institutes do.
• 23:48
  I don't feel comfortable doing that, nor did they.
• 23:50
  They were already uncomfortable with the level of debt they had.
• 23:54
  So that conversation was easy.
• 23:55
  Well, let's not go to the bank, go to the Monopoly board, pass go and just get some more cash, take on more debt, more sleepless nights.
• 24:03
  How about we work with the debt that you've got and reallocate that debt?
• 24:07
  And often, that is the solution.
• 24:08
  I know a lot of people out there are very bullish and just set up a trust company, finance up.
• 24:15
  Some of these people I've seen are coming on debt to incomes at 10 times, 11 times.
• 24:18
  We're in winter.
• 24:19
  We're very much going into winter.
• 24:22
  I don't want people sitting at 10 times their income or having cash buffers below 2 or 3%.
• 24:29
  I want people to have high cash buffers, lower LVRs, and utilizing the debt they're having in environments where they can de-risk and still get exposure to upside.
• 24:42
  I think that was a good breakdown.
• 24:43
  And the reason we want to bring this up is we're getting a lot of questions regarding the buy-hold sell.
• 24:49
  For those that have enjoyed the episode or those who want us to unpack a particular portfolio, a particular area where there might be some exposure, put your comments in the YouTube or in Spotify or even reach out to us.
• 25:01
  There's a link in the show notes.
• 25:03
  We'd love to highlight more of these because it is starting to be more common now.
• 25:06
  It definitely doesn't feel like the buy, buy, buy market.
• 25:09
  It's now people needing actual strategic advice and is it hold, is it sell, is it buy?
• 25:13
  You've been listening to the Follow Your Property Podcast.