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Ethical Landlords, Can They Exist? · She's On The Money

0:00
Speaker 1: Hello.
0:01
Speaker 2: My name's Santasha Nabananga Bamblet. I'm a proud yr the
0:05
Speaker 2: Order Kerney Whalbury and a waddery woman. And before we
0:08
Speaker 2: get started on She's on the Money podcast, I would
0:11
Speaker 2: like to acknowledge the traditional custodians of the land of
0:14
Speaker 2: which this podcast is recorded on a wondery country, acknowledging
0:18
Speaker 2: the elders, the ancestors and the next generation coming through
0:23
Speaker 2: as this podcast is about connecting, empowering, knowledge sharing and
0:27
Speaker 2: the storytelling of you to make a difference for today
0:31
Speaker 2: and lasting impact for tomorrow.
0:33
Speaker 1: Let's get into it.
0:34
Speaker 3: She's on the Money. She's on the Money.
0:57
Speaker 1: Hello and welcomed.
0:59
Speaker 4: She's on the Money podcasts for millennials who want financial freedom.
1:02
Speaker 4: My name is beck Syed and with me is Victoria Divine.
1:06
Speaker 1: How good is salt and vinegar chip?
1:07
Speaker 2: Ah?
1:08
Speaker 4: I was wondering if you'd be finished that mouthful by
1:10
Speaker 4: the time I'm talking.
1:12
Speaker 1: Nearly finished the mouthful. That was quick. I'm very impressed.
1:15
Speaker 4: It was not comfortable, no, very jagged going down, isn't it?
1:19
Speaker 5: But there is no better combination than sultan, vinegar, chips
1:24
Speaker 5: and watermelon.
1:25
Speaker 4: Oh my gosh, okay, I wouldn't have thought, but now
1:29
Speaker 4: they mentioned it, I can see yeah, because it's a
1:31
Speaker 4: bit juicy.
1:32
Speaker 5: I mean, you're not putting them in your mouth at
1:33
Speaker 5: the same time. Okay, you've got like a little snack
1:35
Speaker 5: of watermelon, which I do, and then you've got a
1:37
Speaker 5: little snack of salt and vinegar chips.
1:39
Speaker 1: Which I do.
1:40
Speaker 4: Okay, got cha, gotcha?
1:41
Speaker 1: Gotcha?
1:41
Speaker 5: Anyway, were talking about.
1:43
Speaker 4: Oh yes, okay, I forgot that we're doing a podcast
1:46
Speaker 4: so va.
1:47
Speaker 5: It's actually a food podcast now for real shit foodies.
1:50
Speaker 4: Honestly, I'd be happy with that. So obviously, as you know,
1:53
Speaker 4: we are living in a world where rental housing has
1:55
Speaker 4: been increasingly converted into investment assets.
1:59
Speaker 1: It has indeed, so we've seen.
2:01
Speaker 4: Much debate in our lives in the broader community that
2:03
Speaker 4: people shouldn't own an investment property till everyone has a house.
2:07
Speaker 1: Spicy opinion.
2:08
Speaker 4: I would tend to agree, but you know there's complications anyway.
2:12
Speaker 4: So today what we're talking about is ethical landlords, so mean,
2:17
Speaker 4: is it possible? Also, what are our Australian values around
2:20
Speaker 4: renting and more globally, what's the landscape?
2:24
Speaker 5: I think first things first, there was not one circumstance
2:27
Speaker 5: that created our current housing christ sure, but literally hundreds
2:31
Speaker 5: of years of contributing problems income inequality, colonization, car centric
2:37
Speaker 5: urban sprawl, and urban renewal, to name a few. With
2:41
Speaker 5: such complex societal problems, I just don't think that there
2:44
Speaker 5: is a single solution that fixes absolutely everything back.
2:48
Speaker 4: So can an ethical landlord, in your opinion, exist or
2:53
Speaker 4: is this an Oxymoronah.
2:55
Speaker 1: It's such a spicy opinion.
2:56
Speaker 5: But there are so many different opinions on this, and
2:59
Speaker 5: it really depairs on your personal values.
3:02
Speaker 1: We can't answer that for anyone. Really.
3:04
Speaker 5: At the end of the day, it is personal, and
3:06
Speaker 5: that's the best part about it. You get to have
3:08
Speaker 5: your own opinion, and our entire community is a sea
3:11
Speaker 5: of different opinions and that's what makes us so beautiful.
3:14
Speaker 5: But there are lots of things landlords can do to
3:18
Speaker 5: be more you could say, ethical and help with housing
3:21
Speaker 5: equality and access. In the second half of the show, Beck,
3:25
Speaker 5: we're going to talk about things to consider as a
3:27
Speaker 5: landlord to make the dynamic with tenants a little bit
3:30
Speaker 5: more ethical, and also discuss the difference between a residential
3:34
Speaker 5: owner occupier loan and an investment property loan, which I
3:37
Speaker 5: think are important to understand when it comes down to
3:41
Speaker 5: property ownership in general.
3:43
Speaker 1: Okay, okay, okay.
3:45
Speaker 4: As you know, Australia has very much had home ownership
3:47
Speaker 4: as one of our cultural aspirations slash expectations.
3:51
Speaker 2: Beck.
3:52
Speaker 5: It is the great Australian dream after all. Well, exactly
3:54
Speaker 5: everyone should own a property, right Beck. Well that's what
3:57
Speaker 5: they say, it's what might be the authorities say it's
4:00
Speaker 5: actually just our dads exactly.
4:03
Speaker 4: But obviously rising housing costs, economic recession and demographic changes
4:07
Speaker 4: have shifted that possibility in more recent history, and home
4:10
Speaker 4: ownership isn't a priority for many other countries in the world.
4:14
Speaker 4: Which countries are more rent happy?
4:15
Speaker 5: And why it's actually interesting to dive into this, Beck,
4:18
Speaker 5: because I think we live in our beautiful Australia bubble right.
4:22
Speaker 5: We have these ideals that have been handed down from
4:25
Speaker 5: generation to generation that we should own property. Right, whether
4:28
Speaker 5: you do or don't, it's something that in school you
4:31
Speaker 5: learned about. It's just something that is ingrained in our
4:34
Speaker 5: culture in a way.
4:36
Speaker 1: But that isn't the way most other countries are.
4:38
Speaker 5: To be honest, like so many other countries actually have
4:42
Speaker 5: this expectation that you will rent for life, And I
4:45
Speaker 5: mean there's a lot to say around renter equality and
4:48
Speaker 5: how they're treated and how in different countries there are
4:51
Speaker 5: lots of different benefits like longer leases, etc. Etc. That
4:54
Speaker 5: actually lean towards people being even more comfortable with renting.
4:58
Speaker 5: But here are the top five rent happy countries in
5:02
Speaker 5: the world. So Switzerland fifty six point six percent of
5:06
Speaker 5: their population rent okay, Hong Kong forty nine percent, Germany
5:11
Speaker 5: forty eight point one percent, Austria forty four point three percent,
5:15
Speaker 5: and South Korea forty four point eight percent.
5:18
Speaker 2: Beck.
5:19
Speaker 5: However, there are also, I guess on the flip side
5:22
Speaker 5: of that. When you keep going down and down then
5:24
Speaker 5: down the list, you could start saying that there are
5:25
Speaker 5: like people who own more than they rent. So in
5:30
Speaker 5: Singapore only nine point seven percent of their community rent
5:34
Speaker 5: oh Slovakia ten point seven percent rent, Russia twelve point nine,
5:40
Speaker 5: Poland sixteen point three and Norway seventeen point two percent
5:45
Speaker 5: of people rent okay.
5:47
Speaker 1: Is that crazy? It is crazy?
5:49
Speaker 4: So what data is out there about countries within ingreen
5:52
Speaker 4: culture of property ownership?
5:54
Speaker 2: Beck?
5:54
Speaker 1: Because I'm a superherd.
5:55
Speaker 5: Recently, in lead up to this episode, I was reading
5:59
Speaker 5: an apps from a twenty twenty one research paper out
6:02
Speaker 5: of America called Rental Tenure and Rental Burden.
6:06
Speaker 1: Of course you were, yeah, of course, Savlos.
6:08
Speaker 5: But I found it really interesting and I have summarized
6:11
Speaker 5: it into four dot points that I can share with
6:13
Speaker 5: you so that you don't have to read it for yourself.
6:15
Speaker 1: Would you like me to do that?
6:16
Speaker 2: Yes?
6:16
Speaker 5: Please, So rentals around the globe accommodate for one point
6:20
Speaker 5: two billion people. The data they found that the more
6:23
Speaker 5: developed the country, the more people tend to rent, and
6:27
Speaker 5: vice versa.
6:27
Speaker 1: Ah.
6:29
Speaker 5: This was most obvious in Europe, where formerly communist countries
6:33
Speaker 5: have a high prevalence of homeowners. It is first and
6:36
Speaker 5: foremost a cultural thing, but laws and regulations in certain
6:40
Speaker 5: excommunist countries can make renting a nightmare.
6:43
Speaker 2: Two.
6:44
Speaker 5: While in Western and Central European countries like Switzerland and Germany,
6:49
Speaker 5: around half of the households were renting in twenty fifteen,
6:52
Speaker 5: in the czechs Republic, only two out of ten.
6:56
Speaker 1: Households were choosing to do so.
6:58
Speaker 5: Interesting in Russia and Slovakia, the share of renters is
7:02
Speaker 5: even lower. Only one out of ten households didn't own
7:05
Speaker 5: their home in twenty fifteen, and owning property is arguably
7:09
Speaker 5: the holy grail of the Eastern European society, a much
7:13
Speaker 5: coveted and highly valued right that was once taken away.
7:17
Speaker 5: So long story short, the further east you go in Europe,
7:20
Speaker 5: the more people own, and the further west you go,
7:22
Speaker 5: the more people rent more or less.
7:24
Speaker 1: That is so interesting.
7:25
Speaker 4: I wonder why that is culture communism.
7:28
Speaker 1: I wonder like about the developed nations.
7:31
Speaker 5: And it kind of makes sense, right, The more developed
7:34
Speaker 5: a country, the more people rent because property prices are
7:39
Speaker 5: significantly higher. Yeah, and you think about this in high
7:44
Speaker 5: density environments. And I think the best high density environment
7:47
Speaker 5: that I think we all know about is New York, right,
7:50
Speaker 5: So we all know inherently the New York property is cooked, right, Like,
7:55
Speaker 5: no one in New York basically owns. They all rent,
7:58
Speaker 5: and they do so because it's like a central business hub,
8:02
Speaker 5: which is incredibly expensive to live in. So the more
8:05
Speaker 5: developed your country, not necessarily talking about America in general,
8:08
Speaker 5: it's just an example, but the more developed the country,
8:12
Speaker 5: as we know, Switzerland is pretty good. YEA, like Switzerland,
8:15
Speaker 5: they're bullers, they know so much stuff, like, they are
8:18
Speaker 5: full of rich people as well, But fifty six point
8:21
Speaker 5: six percent of people rent there because I'm assuming coperty
8:26
Speaker 5: prices are astronomy.
8:27
Speaker 1: App Yeah, so that makes sense. That does make sense.
8:29
Speaker 1: And Australia we are billions years old.
8:31
Speaker 5: Yes, but since the white people invaded Australia there has
8:36
Speaker 5: been two hundred years of development, and that is so
8:39
Speaker 5: little in comparison to the development that international countries have
8:43
Speaker 5: had right around the world. It's been thousands and thousands
8:46
Speaker 5: of years. And now Australia is kind of going, oh,
8:49
Speaker 5: actually we're becoming incredibly developed and land is becoming a
8:53
Speaker 5: resource that is actually limited, whereas before with our population
8:57
Speaker 5: and how big our country was. It's a great Australian
9:00
Speaker 5: It's very easy to buy property as cheap as chips.
9:02
Speaker 4: Sure not anymore, not anymore. This is a really good
9:05
Speaker 4: time to go to a quick break.
9:07
Speaker 5: I think we should go to a quick break before
9:09
Speaker 5: we get real heated.
9:10
Speaker 4: Yeah, I think so. On the flip side, we're going
9:12
Speaker 4: to be discussing the difference between a residential owner occupy
9:15
Speaker 4: alone an investment property loan. Sounds fun, plus some things
9:18
Speaker 4: to consider as a landlord to make the dynamic with
9:21
Speaker 4: tenants more ethical, stunning, don't go anywhere, I got it,
9:29
Speaker 4: okav We are back and so, as I mentioned before
9:32
Speaker 4: the break, we are going to be talking about some
9:34
Speaker 4: key points of residential owner occupy alone and investment property loan.
9:40
Speaker 1: Are you ready? I'm very excited.
9:42
Speaker 5: Would you like me to read the key dot points
9:44
Speaker 5: that I listed for this part of the conversation?
9:47
Speaker 2: Yes?
9:47
Speaker 5: Please?
9:47
Speaker 1: You can't wait, can you? I can't wait? You're a liar,
9:50
Speaker 1: all right? So here are the main points.
9:52
Speaker 5: So, if you're getting an investment loan, borrowing is actually
9:56
Speaker 5: going to be different to if you're going to get
9:58
Speaker 5: a loan for a property that you're going to live in.
10:00
Speaker 5: Why because we need to take into account things like
10:03
Speaker 5: rent received, but also any rent payable or mortgages payable
10:07
Speaker 5: for when you keep living there. When it comes to
10:10
Speaker 5: investment loans, you can opt to pay what's called interest
10:13
Speaker 5: only if you want, which is where you aren't paying
10:16
Speaker 5: the loan down, just the interest portion of that loan.
10:19
Speaker 5: Or you could pay what's called P and I, which
10:21
Speaker 5: is principal and interest, which is paying the loan off completely,
10:24
Speaker 5: like not in its entirety, but like a portion of
10:27
Speaker 5: what you would pay each month would go to the
10:28
Speaker 5: principle and a portion would go to the interest, whereas
10:31
Speaker 5: interest only. You're only paying the interests, so usually it's
10:34
Speaker 5: much more cost effective in the short term, but you're
10:36
Speaker 5: not paying your asset off in the long term, right,
10:40
Speaker 5: so you can opt for interest only. However, it's actually
10:44
Speaker 5: way less common to choose this on the property that
10:47
Speaker 5: you actually live in and own, right, So often it's
10:50
Speaker 5: an investment thing where an investor might go and purchase
10:54
Speaker 5: a property beck and go, I'm going to purchase this property.
10:56
Speaker 5: I've worked out the maths on it. The reason I
10:58
Speaker 5: am purchasing this property is because in the next ten years,
11:01
Speaker 5: I think it's going.
11:02
Speaker 1: To double in price.
11:03
Speaker 5: Really great area, really great location. So I'm actually going
11:07
Speaker 5: to probably plan to sell it in ten years, so
11:09
Speaker 5: I don't want to pay any of the loan off
11:11
Speaker 5: stuff that that's silly to pay off the loan, What
11:14
Speaker 5: I'll do is I'm going to pay off just the
11:16
Speaker 5: interest portion.
11:17
Speaker 1: Of the loan, so I'll pay the banks their.
11:19
Speaker 5: Fees so that I can get the property. Then I'm
11:21
Speaker 5: going to sit on the property for ten years.
11:23
Speaker 1: I'm gonna get my.
11:24
Speaker 5: Rental income hopefully that covers some of that interest only portion,
11:28
Speaker 5: and in ten years we're going to look at my
11:29
Speaker 5: property and hope that it has increased in value.
11:33
Speaker 1: And let's say you purchased.
11:34
Speaker 5: An apartment in Richmond for four hundred thousand dollars ten
11:37
Speaker 5: years ago, maybe that is worth six fifty seven fifty now,
11:42
Speaker 5: very very likely. So you go, actually, you know what
11:45
Speaker 5: I'm going to do going to sell that property. I'm
11:47
Speaker 5: going to pay back my loan, and it's entirety of
11:50
Speaker 5: that four hundred and fifty thousand dollars that I borrowed
11:52
Speaker 5: from the bank.
11:52
Speaker 1: The rest is profit.
11:53
Speaker 5: Obviously, you have to pay tax on that because it's
11:56
Speaker 5: investment income. But a lot of people do it this way.
11:59
Speaker 5: Very uncoman to do that for your family home, because
12:02
Speaker 5: usually the intention is to get your family home, pay
12:04
Speaker 5: off your family home, live in it without having any
12:06
Speaker 5: mortgage or rent or anything overhead. Right, So the priorities
12:10
Speaker 5: are usually different, which is why often you don't see
12:12
Speaker 5: that many people putting their home loan on interest only.
12:16
Speaker 5: If you are choosing that, it usually is for a
12:19
Speaker 5: short period of time, beck And usually that short period
12:21
Speaker 5: of time is because you know, interest rates have gone
12:25
Speaker 5: up to seven point two percent and money and cash
12:28
Speaker 5: is really tight, So you go, you know what, I
12:30
Speaker 5: can take a bit of the pressure off right now,
12:32
Speaker 5: beck by going to interest only for a short period
12:35
Speaker 5: of time while I rEFInd my feet, or interest rates
12:38
Speaker 5: come down a little bit and take a bit of
12:40
Speaker 5: pressure off because this is all too much, right? Does
12:42
Speaker 5: that make sense as why you would and wouldn't do that?
12:46
Speaker 5: For investment loans, you actually need a larger deposit than
12:49
Speaker 5: you do for owner occupyer loans. Most banks for investment,
12:53
Speaker 5: although you can totally go down the LMI space, they
12:56
Speaker 5: want you to have a minimum loan to value ratio
12:59
Speaker 5: of ninety including l am I, although exceptions for some
13:03
Speaker 5: banks will you know, go slightly higher here, whereas most
13:07
Speaker 5: banks actually allow ninety five percent including LMI for owner occupy,
13:14
Speaker 5: which is kind of cool, right, So it means that banks, essentially,
13:18
Speaker 5: you know, this is not including any government schemes. Essentially,
13:20
Speaker 5: there are some banks who will let you purchase owner
13:22
Speaker 5: occupied properties for a five percent deposit back, or as
13:26
Speaker 5: for investment property, that is not the case.
13:28
Speaker 4: Okay, I understand, because there's a lot more risk.
13:30
Speaker 5: In investment property than there is a property that you're
13:33
Speaker 5: going to live in, yes.
13:34
Speaker 1: Yourself, Yes, I see.
13:36
Speaker 5: Okay, this is probably a really really good time to
13:39
Speaker 5: plug the guys at Zela Money, the guys, the gals,
13:42
Speaker 5: the team at Zela Money to be like, if you're
13:45
Speaker 5: thinking about this and this conversation about interest rates and
13:49
Speaker 5: mortgages is overwhelming, yeah, go talk to Kate and the team.
13:52
Speaker 1: Honestly, they're good eggs doing good things.
13:54
Speaker 5: And if you don't have a five in front of
13:57
Speaker 5: your interest rate at the moment, if it's higher than that,
14:00
Speaker 5: go see them to get it all fixed up. Because
14:02
Speaker 5: often when you have an investment loan back, what happens
14:06
Speaker 5: is you're usually more likely to be on a variable
14:09
Speaker 5: interest rate, which means it might have gone up. And
14:12
Speaker 5: if you haven't checked your interest rate recently and just
14:14
Speaker 5: assumed it's the same as what it always was, triple
14:17
Speaker 5: check it because it could be higher than what you're
14:18
Speaker 5: expecting it to be. I don't mean to scare people.
14:20
Speaker 5: I just want to make sure everyone's in a good
14:22
Speaker 5: financial position.
14:23
Speaker 4: I love that about you, V.
14:24
Speaker 1: Thank you trying my best.
14:25
Speaker 5: So, if you're buying an investment back to the actual episode,
14:28
Speaker 5: sure it means that if you're a first home buyer,
14:30
Speaker 5: you actually don't get any discounts on stamp duty or
14:33
Speaker 5: like the first home buyer benefits that exist, and you
14:36
Speaker 5: can't go with any of the first home buyer schemes
14:40
Speaker 5: if the purpose isn't owner occupier, even if it is
14:43
Speaker 5: your first property. So if you're planning on purchasing your
14:45
Speaker 5: very first property and it's all very exciting, make sure
14:48
Speaker 5: that you've looked into it and you're not just assuming
14:51
Speaker 5: that you get access to the first home super savor
14:54
Speaker 5: scheme immediately or you're going to get the first home
14:57
Speaker 5: you know grants in your state or territory, because it
15:00
Speaker 5: doesn't necessarily mean you'll get it for an investment property.
15:03
Speaker 5: In fact, the expectation would be that for you to
15:06
Speaker 5: access that, you would live in the property for a
15:09
Speaker 5: minimum of six to twelve months before then renting it
15:12
Speaker 5: out and making it an investment property.
15:14
Speaker 1: Sure makes sense, That does make sense.
15:16
Speaker 5: So rates are higher with investment loans than owner OK,
15:19
Speaker 5: which is interesting but also worthy of consideration because I
15:22
Speaker 5: think you just go into it often just assuming it's
15:24
Speaker 5: the same right or just get a home loan whether
15:26
Speaker 5: I live in it or I have it as an
15:27
Speaker 5: investment property, And that's not the case, not.
15:29
Speaker 1: The case, not the case.
15:31
Speaker 4: Interesting pun intended. Yeah, that's a good pun, pretty good
15:35
Speaker 4: so V what are some things to think about as
15:37
Speaker 4: a landlord?
15:38
Speaker 5: I feel like there are a lot of things the
15:40
Speaker 5: world has enough not so nice human beings. So be
15:44
Speaker 5: a nice human, I think is at the crux of it.
15:47
Speaker 5: And remember that your tenants are human beings as well,
15:50
Speaker 5: and they deserve to be treated as human beings. You
15:53
Speaker 5: have taken on this responsibility of becoming a landlord completely consensually.
15:59
Speaker 5: Beck Like you did accidentally become a landlord and you
16:02
Speaker 5: hated the idea of it. You decided that investment property
16:06
Speaker 5: was for you, and one of the ways you were
16:07
Speaker 5: going to make money from investment property was to tenant
16:11
Speaker 5: the property. And that makes sense. But that doesn't mean
16:14
Speaker 5: that you get to treat those people like trash. It's
16:17
Speaker 5: absolutely not the case. And I think that it doesn't
16:20
Speaker 5: take that many brain cells to just be a kind
16:24
Speaker 5: human like. It's actually, from my perspective, your responsibility to
16:29
Speaker 5: make sure that if you're going to have tenants, you've
16:32
Speaker 5: thought about your emergency fund. You've thought about all of
16:35
Speaker 5: the things that could potentially go wrong, and maybe you
16:37
Speaker 5: have a separate property emergency fund so that if something
16:41
Speaker 5: goes wrong, because inevitably improperty it does and unlike it
16:45
Speaker 5: going wrong in your own house, it usually has to
16:48
Speaker 5: be fixed immediately. Water goes off, beack, like the hot
16:51
Speaker 5: water system completely breaks. I would look about it at
16:55
Speaker 5: my house for a minimum of a week. I'd probably
16:57
Speaker 5: go and you're like, share it at the gym, and
16:59
Speaker 5: just like put off purchasing a new hot water system
17:02
Speaker 5: for as long as possible. You know, yea, if it
17:04
Speaker 5: breaks in your tenant's house, it's classified as an emergency.
17:08
Speaker 5: You have to fix that immediately. Like that's not an
17:10
Speaker 5: if a butt a. Why There's so many different things
17:14
Speaker 5: that could go wrong that are your responsibility, Like and
17:17
Speaker 5: I just don't think it takes that many additional steps
17:20
Speaker 5: to make your tenants feel warm and welcome, like small things.
17:23
Speaker 1: Could you just leave a.
17:25
Speaker 5: Little nice note, maybe like a box of roses, and
17:28
Speaker 5: be like, hey, Beck, so excited that you're moving into
17:31
Speaker 5: our property. We love this property. We hope you love
17:33
Speaker 5: it as much as we do. You know, if you've
17:35
Speaker 5: got any issues, contact your property manager.
17:37
Speaker 1: They're amazing.
17:38
Speaker 5: We've picked them because they are kind. Or you could say,
17:42
Speaker 5: here's my number. If anything goes wrong, you're more than
17:45
Speaker 5: welcome to contact me. I remember moving into a rental
17:48
Speaker 5: and being mind blown. When someone did that to me.
17:50
Speaker 1: I was like, oh my god, that's wild. They care.
17:52
Speaker 5: But there's so many different things that you could do.
17:54
Speaker 5: One just don't be a trash human.
17:56
Speaker 4: Sure.
17:57
Speaker 5: The next is really understanding, like why are you trying
18:01
Speaker 5: to increase rent?
18:02
Speaker 1: Is this an ethical decision?
18:04
Speaker 4: Right?
18:04
Speaker 5: I think there is a big conversation to be had,
18:07
Speaker 5: especially right now around all right, Beck, so you've got
18:11
Speaker 5: an investment property. Interest rates they're cooked. They've gone up
18:15
Speaker 5: so much. You didn't see them going up this much.
18:17
Speaker 5: Totally get it, Totally understand that you're under some financial pressure.
18:21
Speaker 5: Is that financial pressure your tenant's responsibility.
18:25
Speaker 1: That's a tough one.
18:26
Speaker 5: You're the one that chose to have an investment property.
18:29
Speaker 5: Your tenant chose to rent a property for less, pretend
18:32
Speaker 5: five hundred dollars a week. At that amount, they thought, oh,
18:36
Speaker 5: we'll go up, you know a little bit each year
18:38
Speaker 5: in line with inflation. In Line with inflation is usually
18:40
Speaker 5: between two and three percent. I think most of us
18:43
Speaker 5: calculate for that. Sure, but your landlord, their mortgage repayments
18:47
Speaker 5: have gone up, and it couldn't possibly come out of
18:49
Speaker 5: their back pocket to have to cough up some money
18:52
Speaker 5: for the investment property that they own because interest rates
18:56
Speaker 5: are doing what interest rates do and fluctuate. I find
19:00
Speaker 5: it incredibly rich and I'm going to get people jumping
19:02
Speaker 5: down my throat about this. You want bring it on,
19:05
Speaker 5: that's fine, sure, But if you are astronomically increasing your
19:10
Speaker 5: tenants rent because you cannot afford the mortgage, the actual
19:15
Speaker 5: question here is when are you selling your property right?
19:18
Speaker 5: Because what you've just told me is you cannot provide
19:22
Speaker 5: ethical housing, fair housing. You can't afford to do that,
19:27
Speaker 5: meaning you can't afford the property that you own right now,
19:30
Speaker 5: right So what are you going to do? Is it
19:32
Speaker 5: coming out of your back pocket? And the end of
19:34
Speaker 5: the day, that money should be coming out of my
19:36
Speaker 5: personal savings, It should be coming out of my offset.
19:39
Speaker 5: It should be coming out of that because I'm funding
19:41
Speaker 5: this investment property that ultimately should be an investment. It's
19:45
Speaker 5: not your tenants responsibility to pay your astronomical mortgage or
19:49
Speaker 5: payments because you're the one that committed to that. They
19:51
Speaker 5: didn't commit to that. True, they committed to paying the
19:55
Speaker 5: average rent. Maybe they're paying a bit more because you've
19:57
Speaker 5: got a real fancy house. Yeah, they committed to that
20:00
Speaker 5: area because it was making sense to them.
20:04
Speaker 1: And you know what, there are.
20:05
Speaker 5: A lot of people in this world and in our
20:06
Speaker 5: community who choose to rent because they like consistency. Like
20:10
Speaker 5: they might not like the idea of variable interest rates.
20:13
Speaker 5: They might like the idea of the flexibility of being
20:15
Speaker 5: able to move whenever they want, only having a one
20:17
Speaker 5: year lease. They might like the fact that they can
20:21
Speaker 5: guarantee that their property costs are going to be five
20:26
Speaker 5: hundred dollars a week and if the hot water system breaks,
20:28
Speaker 5: it's not their responsibility.
20:30
Speaker 1: And that's fair.
20:31
Speaker 5: Yeah, because that's the deal that you and I have
20:34
Speaker 5: when we sit down and I go, Beck, I'm a
20:36
Speaker 5: property owner. I'm going to lease it out, and you go,
20:38
Speaker 5: no worries. Here's this lease agreement outlining the terms and
20:42
Speaker 5: conditions of this lease. This is what I'll bring to
20:44
Speaker 5: the table, the cash holder. Ah, And this is what
20:46
Speaker 5: you'll bring to the table, yeap. It really grinds my
20:49
Speaker 5: gears when people say, oh, Victoria have no other option
20:52
Speaker 5: but to put up the rent. Have you seen the
20:54
Speaker 5: mortgage repayments? You can't afford your mortgage repayments? Okay, Well, one,
20:59
Speaker 5: you should factored this in a good mortgage broker would
21:02
Speaker 5: have sat you down and made sure that any fair
21:06
Speaker 5: variability was accounted for, that you could have paid more
21:09
Speaker 5: that you know there was a plan in place. Any
21:11
Speaker 5: responsible and ethical landlord would have their own property emergency fund.
21:17
Speaker 5: Any responsible and ethical landlord would know when to pull out.
21:21
Speaker 4: That is a micdrop mode.
21:24
Speaker 5: Like if you cannot afford to keep the investment property
21:27
Speaker 5: that you currently have, that's actually okay. That's the risk
21:31
Speaker 5: you took on when you got the investment property, is
21:34
Speaker 5: that your circumstances might change and this investment asset might
21:38
Speaker 5: not work for you forever. Sure, you don't get to
21:41
Speaker 5: keep it just because you think that you deserve it.
21:44
Speaker 1: It makes me very, very angry.
21:47
Speaker 5: I think the other conversation is really around you know,
21:50
Speaker 5: and obviously there's so many legalities around that in some
21:52
Speaker 5: states and territories you can only put rent type X amount,
21:55
Speaker 5: or you can only do xyz every twelve months or
21:58
Speaker 5: everywhere it's different. But I really think it comes down
22:00
Speaker 5: from my personal opinion, which you know, this podcast should
22:04
Speaker 5: be really about putting all the information on the table
22:06
Speaker 5: then being like beg you make your own decision, but
22:08
Speaker 5: like my opinion right now is don't be a dear.
22:11
Speaker 1: And I think that's really relevant.
22:12
Speaker 5: Sure, And I think that if it comes down to
22:15
Speaker 5: it and you're listening to this and you're like, oh,
22:17
Speaker 5: Victoria's off her rocker, like she.
22:18
Speaker 1: Doesn't understand it.
22:20
Speaker 5: Oh no, Bay, by my own property, I understand that
22:21
Speaker 5: I have an investment property. Yeah, And if I can't
22:24
Speaker 5: afford that one day and it was tenanted, I know
22:28
Speaker 5: deeply that that's not my tenants responsibilities to carry the
22:32
Speaker 5: weight of my investment.
22:34
Speaker 1: It's not.
22:35
Speaker 5: I love that at the end of the day, you
22:37
Speaker 5: need to know when an investment is serving you, and
22:39
Speaker 5: when an investment is not serving you, and when to
22:41
Speaker 5: dispose of one. I love as you took that on yourself.
22:44
Speaker 1: As a perpetual tenant. I thank you. It just makes sense.
22:47
Speaker 5: It's not about thanking me, it's about going Actually now
22:51
Speaker 5: we talk about it, because I think that there's just
22:52
Speaker 5: so much conversation coming from tenants and then being like, Oh,
22:55
Speaker 5: they're just annoyed because they're tenants, right. No, no, No,
22:58
Speaker 5: I'm a property owner. I now own an investment property
23:02
Speaker 5: of my own, and I cannot imagine putting that responsibility
23:06
Speaker 5: on somebody else.
23:07
Speaker 1: Love that sis it makes me so mad.
23:09
Speaker 5: Also, when you have to put up rent, I think
23:11
Speaker 5: clear and honest communication about why when we're and how
23:15
Speaker 5: Like I know a couple of my friends who own
23:17
Speaker 5: investment properties have had to put up their rent because
23:19
Speaker 5: during COVID they offered their properties for really really discounted rent.
23:23
Speaker 1: Sure and now it.
23:24
Speaker 5: Needs to be brought back to market value.
23:27
Speaker 1: But it was articulated at that.
23:29
Speaker 5: Point in time, like oy like it significantly discounted COVID rarah,
23:32
Speaker 5: like it might have been an apartment in the city
23:34
Speaker 5: or whatever. I think that conversation is really valid. But
23:38
Speaker 5: it's about clear, consistent communication and putting timelines in place
23:41
Speaker 5: and going hey, Beck, like so unfortunate, but like maybe
23:44
Speaker 5: in six months we're going to have to put the
23:45
Speaker 5: rent to X, like can we see that? Also negotiate
23:49
Speaker 5: with your tenants because it doesn't mean that just because
23:52
Speaker 5: you think it's only twenty bucks a week more, what's
23:55
Speaker 5: that matter to a lot of people. Twenty bucks a
23:57
Speaker 5: week is eating or not eating. Yes, So if you
24:01
Speaker 5: could just stop pretending that small amounts of money are
24:03
Speaker 5: flippant because it's not an issue for you, that would
24:06
Speaker 5: be great. So it just it really frustrates me. Obviously,
24:11
Speaker 5: I will always advocate for prioritizing lower income tenants, in
24:15
Speaker 5: fact they are probably good long term tenants, and actually
24:20
Speaker 5: having a conversation around well what does that mean?
24:22
Speaker 1: How does that work?
24:23
Speaker 5: Because sure, nowadays landlords have all the applications put in
24:27
Speaker 5: front of them and they see, oh, no.
24:29
Speaker 1: Couples a lawyer and a doctor.
24:31
Speaker 5: Well let's put them in my house because they earn
24:33
Speaker 5: a lot of money. Who cares that they paying the rent? Like,
24:37
Speaker 5: can you pay the rent or not? It's very fair
24:39
Speaker 5: to check if service ability exists. Yes, but why are
24:43
Speaker 5: we prioritizing the lawyer and the doctor is better tenants
24:46
Speaker 5: than somebody who's on a lower income who might arguably
24:49
Speaker 5: be more respectful of your property.
24:51
Speaker 2: Right?
24:52
Speaker 5: The other thing, can we start offering longer than twelve
24:56
Speaker 5: month leases?
24:57
Speaker 1: That would be pretty cool.
24:59
Speaker 5: Financial still, ability for people is really important, and I
25:02
Speaker 5: know that when I was a renter, I would have
25:05
Speaker 5: loved the opportunity of signing a longer lease because I
25:07
Speaker 5: was always so scared that if I signed a one
25:09
Speaker 5: neear lease, oh my gosh, what's rent going to go
25:11
Speaker 5: up by next year? Am I going to have to
25:13
Speaker 5: move around?
25:14
Speaker 2: What?
25:14
Speaker 5: Does that actually look like? And it also gives people
25:17
Speaker 5: that longer term financial stability. It's like, I know that
25:20
Speaker 5: in Australia they've just started offering not everywhere, but I
25:23
Speaker 5: know a few people who have offered ten year leases.
25:26
Speaker 5: Oh that is cool, And I just think it just
25:29
Speaker 5: makes sense, like home would then feel more like your home. Yeah,
25:33
Speaker 5: and you've got a long term, secure tenant. And I mean,
25:35
Speaker 5: you're gonna have all the same issues that derise the
25:38
Speaker 5: hot water system, the xyzed But I think it's important
25:41
Speaker 5: to put other people's financial security at the forefront of
25:44
Speaker 5: decisions that you're making, because you're in a privileged position
25:47
Speaker 5: to be able to afford property.
25:48
Speaker 1: To begin with.
25:49
Speaker 5: Anyway, Beck, I think that the crux of this is
25:53
Speaker 5: if you're a landlord, know when to tap out. I
25:56
Speaker 5: get it, Like saving for a property is so hard, Beck,
25:59
Speaker 5: Like getting your then finally getting loan, it's like you've
26:02
Speaker 5: achieved a life goal, right, like it's a status symbol.
26:05
Speaker 5: And then going backwards. I get that it could feel
26:07
Speaker 5: terrible and you're like, well, I don't want to give
26:08
Speaker 5: that up.
26:09
Speaker 1: Like that sucks.
26:10
Speaker 5: But if you're not in a financial position to be
26:12
Speaker 5: a fair equitable and reasonable landlord. Yeah, maybe you're out,
26:16
Speaker 5: like you have to make the decision that is not
26:18
Speaker 5: just right for you, but it is right for the
26:20
Speaker 5: asset class that you've chosen.
26:21
Speaker 1: And that's an option.
26:22
Speaker 5: It's not like you bought shares and they're just sitting
26:24
Speaker 5: over there and you can't make your monthly contributions to
26:27
Speaker 5: them and they just sit there and they continue to
26:29
Speaker 5: grow and do their own thing. If that's the case,
26:31
Speaker 5: maybe that's a better investment opportunity for you. So at
26:35
Speaker 5: the end of the day, I think a healthy city
26:37
Speaker 5: needs a mix of affordable rentals of different sizes. I
26:40
Speaker 5: think that some people will always prefer renting over owning
26:44
Speaker 5: for various points in their life, and for that to work,
26:47
Speaker 5: they need access to affordable, diverse, and safe rental housing.
26:51
Speaker 5: It's too hard at the moment, and I think that
26:53
Speaker 5: people are too entitled at the moment.
26:56
Speaker 1: You see it.
26:57
Speaker 5: I'm sorry real estate agents and property managers and everybody
27:01
Speaker 5: else who thinks it's like, oh, but the landlord.
27:05
Speaker 1: No, no, no, the landlord.
27:06
Speaker 5: Has just as much responsibility I ask in this as
27:08
Speaker 5: anybody else.
27:09
Speaker 4: Yes, you can probably tell them, really sitting on the
27:11
Speaker 4: fence here just to be safe because I don't know
27:14
Speaker 4: enough about the market. But I really like everything you're saying,
27:18
Speaker 4: and I tend to agree. But I think that's a
27:20
Speaker 4: fantastic place to leave it.
27:21
Speaker 5: I think it is a fantastic place to leave it.
27:23
Speaker 1: Let's get some lunch.
27:25
Speaker 4: Let's do it.
27:25
Speaker 1: Fish bowl ten out of.
27:26
Speaker 5: Ten, ten out of ten, and we will see you
27:29
Speaker 5: guys on Friday. By the advice shared on She's on
27:39
Speaker 5: the Money is general in nature and does not consider
27:41
Speaker 5: your individual circumstances. She's on the Money exists purely for
27:45
Speaker 5: educational purposes and should not be relied upon to make
27:48
Speaker 5: an investment or financial decision. If you do choose to
27:52
Speaker 5: buy a financial product, read the PDS TMD and obtain
27:55
Speaker 5: appropriate financial advice tailored towards your needs. Victoria Divine and
28:00
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