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The Buyer's Agent Industry Exposed: What They Don't Want You to Know | ft PK Gupta · The Follio Property Podcast

• 0:00
  Since 2015, the rise of the buyer's agent industry has been phenomenal. Historically, before buyer's agents blew up, people were buying perfectly great properties, accruing large portfolios since the 60s, 70s, 80s, 90s, early 2000s, retiring early, earning passive income, all the rest of it. Ones that use data, but then misinterpret it or distort it to aid the business model of their own organization. Those are the dangerous types of buyer's agents. Okay.
• 0:28
  This particular person had a budget about 1.1 mil and this buyer's agent service was pitching two highly speculative assets, 500k each. So that's probably where we see the risk and we've run into those types of clients pretty regularly.
• 0:41
  The Australian property market has matured and evolved. Investors can genuinely move markets and sustain that movement. I mentioned a suburb on a YouTube video. That thing's going to go up 40k in the next two, three months. I don't know what to do about that. But like you, Rhys, I really question the ones that don't use data correctly. So I really encourage people to listen to podcasts like yours, which is very data heavy and make up their own mind on these things.
• 1:12
  You're listening to the Folio Property Podcast. I'm Rhys Birtle. I want to welcome PK Gupta. For those that don't know PK, he's built up a big online community in the property investment space and particularly more focused on the do-it-yourself model rather than going through the buyer's agent services that there's a lot of investor groups out there. So I thought it'd be great to PK's brain on the model and where he sees the industry and also a little bit on where the Australian market is. So...
• 1:39
  PK, it's a good morning from me, but it's a good afternoon to you. Thanks so much for having me, Reece. I'm very grateful that you reached out and we could make this happen. And yeah, sorry, you had to hire a studio to have me on. It's all right. This is the fourth time I think I've been in the studio this week. So I'm now probably their number one client. So it's all good, mate. They'll be looking after me. So if you're serious about property, you need better inputs.
• 2:03
  PropStack is where our chief economist and research team puts everything together. Our leading investment reports, our suburb level data, and a weekly market update on what's actually moving. It's the same research our advisors work from, and you can get access now. Scan the QR code and click the link in the description.
• 2:19
  PK, I thought, look, let's just touch base and I'd love to get your thoughts on where you see the market in 2026. We've obviously, many markets across the board, probably bar Melbourne in the last couple of years have gone on a serious run. We've seen a couple of rate rises as we're recording this, likely a third one probably by the time this airs. With the Iran war and CGT and negative gearing proposal changes, what's your thoughts on the market in Australia in 2026 and where do you see it going for the remainder of the year?
• 2:46
  Yeah, so I think it's a million dollar question. I think it sort of reminds me of 2021. We've probably not had this much uncertainty in the last five years since sort of COVID really hit us in 2021 and the lockdown started. And I remember back then probably unemployment rate hit.
• 3:03
  I think it was north of 9% and everything was falling down. And I think for probably a new investor, it's a very fearful time because they're not necessarily educated on how the interplay works between things like capital gains tax and house prices, negative gearing in the house prices, interest rates in the house prices, inflation in the house prices, inflation in the house prices.
• 3:26
  cost of living and house prices, oil shocks and house prices. And it's sort of hard enough to explain the one-to-one connection of each of these elements to national house prices, and it's even more difficult to eloquently articulate, put all these elements in a box and you shake them, how that will then impact house prices. So it's a tough question to answer very, very easily. I'll try nonetheless. Look I think, let's just go one by one.
• 3:53
  And I'll try to pick out some regions or specific locations because I think you know better than me. There's always different types of markets across Australia and they behave differently to different elements. Insofar as inflation, I think I take a very macro structural approach on inflation. In times of high inflation, house prices or hard assets, pick your hard asset. You know, they tend to be a really good hedge market.
• 4:17
  of whether it's inflation or hyperinflation. I recently read an article about Zimbabwe and how they experienced hyperinflation. I think it was under that guy, the dictator Robert McGaughy. I don't know how you pronounce the last name exactly. And you'd expect somewhere where hyperinflation is occurring for...
• 4:35
  their economy to tank and also their assets to tank. But what we saw this article explained very, very nicely was that they just pegged the value of their house prices or real estate to the US dollar. In fact, Zimbabwe real estate is more expensive now than before hyperinflation in US dollar terms, which you could say are more stable.
• 4:54
  Whether you pick Zimbabwe or any other country that's experienced this sort of phenomenon, including Australia, you know, let's say in the 70s or 80s when we did experience inflation rates of 7, 8, 9, 10 percent real estate. You know, I think Sydney in the 70s doubled or if not tripled.
• 5:10
  I take that sort of approach to it. I have to say that that doesn't mean everywhere will do that, of course. And the argument against that sort of hypothesis is that, well, house prices were very cheap back in Sydney in the 70s, 80s, like $16,000. Compare that to like $1.1 million now.
• 5:26
  So I don't necessarily think that phenomenon will be so exacerbated in inexpensive parts of Australia like Sydney. But to your point earlier, to your question, I think those areas that are affordable across Australia, especially diversified regional centres, these will be the biggest beneficiaries of this inflationary impact. And so then you might say, what about interest rates? Like won't interest rates have a dampening effect on house prices? And I think that's true.
• 5:52
  But I think every demographer I talk to as well, they say that our economy is a sort of U-shaped economy where the middle class is already sort of dispersed either left or right. And there's enough on the right-hand side of the spectrum, the haves, you know, there's enough people in the top 20, 30 percent that...
• 6:10
  are not so sensitive to interest rate movements. In fact, if you look at a place like the Gold Coast, I don't have hard data to source, but I have a property there, like a principal place of residence. And when I talk to different sales agents who sort of have a good relationship with...
• 6:26
  You know, more than 50% of the Gold Coast market above $2-3 million pays cash when they buy property. So a certain segment of society thinks that everyone is interest rate sensitive, but I don't think that's necessarily the case. There's a lot of money parked on the sidelines right now. And we saw that once again in the 80s when interest rates went up to close to 20%, late 70s when interest rates went up, house prices increased.
• 6:49
  didn't stop doubling. They didn't stop tripling over those time periods. And then you've got the oil shock. Once again, there are really clear comparables that we can see with oil. I'm not saying we're going to have another Iranian revolution in 2026, but when that did happen in 1979 and the preceding three years,
• 7:09
  house prices still went up. And even in the early 70s, OPEC oil shock, that was the biggest one we've actually ever seen in the, I think, six years from 1973 to nine or something. You know, I might get the years wrong by one or two. Once again, Australian house prices still went up two and a half times. So, you know, pick your element and a person like me,
• 7:31
  We'll try to rebut it and say house prices will still go up. But just to kind of balance things out a little bit, I do have to say that overall house prices, you know, price to wages and income ratios are pretty unaffordable these days. So I'm not so bullish on the majority parts of Melbourne, the majority parts of Sydney, but rather some parts of Sydney, especially sort of that Western corridor that's still cheap, maybe down to Liverpool, Northern corridor of Melbourne, which is a good demographic, still relatively inexpensive.
• 8:01
  And then, of course, other places, regional centres, secondary cities, you know, you've got your Bendigo's, Ballarat's, you've got your Hobart's, Launceston's, all these areas where locals can still afford property. You know, the Geelong's going to do very, very well. Newcastle might kick back into gear.
• 8:17
  I think Perth is going to continue to do well just because of local supply demand dynamics, which you probably know much better than me. There's just not enough stock on the market. It hasn't been for many years in Perth. So regardless of macro conditions, local economy is probably the strongest state economy in Australia, and there's just not enough supply. So, yeah, I mean, pick your macro factor, but ultimately it comes down to the local suburb and supply demand dynamics. And I would say the majority of Australia still has a chronic undersupply of both rental homes
• 8:47
  and also just homes in general. And so that sort of local microeconomic ecology means house prices rise, despite a lot of these headwinds or tailwinds. Bit of a convoluted answer.
• 9:00
  No, I mean, the Gold Coast example you said is fascinating as well, where you're mentioning over 50% are paying cash. Do you think, we kind of spoke about this off air, but there's markets like your Brisbane's, your Perth's, your Adelaide's that have been going on a serious run for the last four or five years. We're now starting to see, I mean, Perth's still got some runway to go in terms of its historical affordability ceiling.
• 9:24
  Brisbane's getting close. Adelaide's probably at its peak now. Do you think these markets particularly will still go on a run or a new emerging market will go on a similar run? Or do you think because of the economic dynamics at the moment, it's really going to be bad asset selection to that way you can get the most value?
• 9:41
  I've been wrong about Adelaide. I think two years ago, I sort of said what you just said, which is it's approaching the peak just from a local and historical benchmark, you know, affordability perspective. But I think a lot of government first home buyer grants and, you know, obviously the one that we had starting October last year, 5%.
• 10:00
  All these things have just kind of added another jet engine and given another wave of growth to places like, well, affordable parts of Adelaide, affordable parts of Brisbane. I think Adelaide, I would be surprised if it had another double digit year on average, but certainly those areas in Adelaide that are sub 700, sub 800. I mean, who would have thought Elizabeth would have tripled, you know, in three or four years? I certainly did not pick that, I have to say. But
• 10:27
  There's just, I mean, I didn't even talk about migration yet, but there's just so much demand. Well, in Adelaide, it's interstate demand as well, like it is in Perth, but there's so much demand from interstate migrants and also international migrants that I think historical ceilings when it comes to affordability are being broken through. I would say in Brisbane,
• 10:47
  the affordability is even more shot than, historically speaking, than Adelaide. But there's just so much pent up sentiment because of the Olympic Games. And I think the true infrastructure spend is already priced into the Brisbane market, but there's just so much positive sentiment, especially from folks in Sydney and Melbourne that still see it as affordable, you know, relative to their point of reference.
• 11:12
  that it's still benefiting from that. People are still migrating up there. Investors are still investing remotely up there. So I think that Adelaide and Brisbane probably still have some runway to go. But when I think of, okay, what is the next Perth or what is the next Adelaide? I don't really see any major capital city achieving 25% growth this year or next year.
• 11:34
  But I do see smaller towns achieving that in select areas, like I mentioned before, parts of regional New South Wales, regional Victoria, obviously regional Queensland, places like Mackay, Gladstone, Townsville, Toowoomba. These have already done that and they've got plenty more left in the tank.
• 11:52
  Let's talk about buyers agents specifically. So your business model is very much, whether it's anti-buyers agent or the fact you don't need a buyers agent essentially, and you help your community with the tools to go out and do it themselves. What's your opinion on the buyers agent community and the rise of a buyers agent? Like we've,
• 12:10
  seen over the last couple of years, especially because the barrier to entry is so low. You can be a great marketer and run a really good buyer's agent business in terms of the brand perspective, but actually you're compromising on asset quality. And in some instances, you're seeing the move markets like some of these investor belt led areas.
• 12:29
  I'm not anti-Vise agents at all. I think I've accidentally made about 200 Vise agents through my course as well. So I'm not necessarily anti them, but I have some perspectives on them. I think there's that old adage that, and it's not like a direct comparable or anything, but in times of war, whoever rules the airways in terms of the content airways,
• 12:54
  that person owns the truth of what's going on in the war. So in the similar way, I think in the last, since 2015, I would say, the rise of the buyer's agent industry has been phenomenal. And 9.9 times out of 10, the content that people consume, and including good content, like, of course, your podcast, etc., the content that people are consuming, whether it's on podcasts, Facebook,
• 13:21
  Facebook groups, YouTube, other things, it's dominated by buyers agents. A lot of buyers agents are putting out there is, oh, this thing is all so hard. We're experts. Therefore, you have no chance of getting as good a property as if you were to employ us and we would work for you. I think that is the message that I have a little bit of a beef with because it's not true.
• 13:46
  You know, historically, before buyers agents blew up, people were buying perfectly great properties. And I'm sure many were accruing large portfolios since the 60s, 70s, 80s, 90s, early 2000s, retiring early, earning passive income, all the rest of it.
• 14:02
  I think buyers agents definitely have their place for time-poor individuals, I have to say that. But once again, I think many buyers agents will say that this is actually a full-time job or a part-time job and that if I'm a banker, if I'm an engineer, I'm an IT worker, I'm a nurse, I'm a doctor, that I could not possibly find the time to...
• 14:24
  to get an A grade investment property by myself. And I fundamentally disagree with that. And the reason I disagree with that is because I was in that shoe, in those shoes when I was in my corporate life as a banker and management consultant. And I built my portfolio myself and I found that it's not actually rocket science. And within three to five hours a week, over one or two months, provided I get the right training from whomever that may be from, I can do this, whether it's
• 14:51
  interstate or not, whether I know that location or not. Now we have data, it's democratized. The industry buys agents use the same data as me, use the same data as my clients. It's just a matter of do you have that requisite time and you have that requisite passion. You know, that genuine interest to learn and implement.
• 15:10
  And I think that's my approach. I think a lot of buyer's agents are really, really amazing for their clients. But like you, Rhys, I really question the ones that don't use data correctly and also that don't use data at all. I think ones that don't use data at all are less dangerous because it's sort of just fluff. But ones that use data but then misinterpret it
• 15:36
  or distort it to aid the business model of their own organization, which means, you know, the more clients, the better it is. And there's large waiting lists. So we have to get through them really fast for this business model to work. I think those are the dangerous types of buyer's agents. And so I really encourage people to listen to podcasts like yourselves, like your one, which is very data heavy and make up their own mind on these things.
• 16:02
  I think there's a lot there I agree with, especially in that buyer's agent space at the moment. Not only are you getting people misinterpreting the data or not even looking at the data, the scary thing as well is there's a lot out there that aren't even looking at the property. They're doing it all sight unseen. They're getting the selling agent to go out and take the videos of the property for the client, which is
• 16:26
  a huge risk when you've got the selling agent that's not going to be disclosing certain things in the property to that buyer because it's in the interest of the property. So, from that standpoint, I think the time poor thing, absolutely. And I think that's hence why we've created this podcast and this channel is give away a lot of good free information and data and what we do for strategies because actually the everyday person that can
• 16:49
  do what you said and interpret all that correct information and go out and do it themselves. They're probably not the right type of client for us. We are after those sort of time poor individuals. It'd be interesting to get your feedback on your course and your community itself as well. So I'm just putting myself in, I know what I'm like, right? So if I joined your
• 17:11
  I'm sure I'd miss something, right? Like you could give me the DSR that would show you the right fundamentals to be looking at in a location, the right due diligence, and I'd go out there and I think I'd, I know I would still probably miss something and make a mistake. That's why like I, being a time-poor professional, I'd appreciate some extra help. Have you seen that with your community where you've given them all the tools, but there's just that element that they're missing that forces them into making a mistake when it comes to...
• 17:41
  asset selection. For sure. I think about it like this. I think that you can teach someone everything in the world. Let's say you're a skydiving instructor on the ground. You can teach that person everything about taking that first skydive. But when they're like, I've never actually skydived. So I don't know, maybe 15,000 feet in the air. And they're like strapped up and
• 18:03
  They're like, oh man, I don't think I can do this, right? I don't think I can actually dive, like jump out this plane. So I think education is like fantastic and everything. But as you probably know in your business, people really need mentorship. And that's what I really realized very quickly, that people are better than what they give themselves credit for.
• 18:24
  They need to just back themselves and go hard. And sometimes what it requires is someone to just validate that what they are doing is in fact correct. So for example, I know with my clients, those who choose to, it's all on demand and there's no extra fee or anything.
• 18:41
  Like they will email me properties and they'll say, PK found this property. It's in Hobart. Here's the address. I've gone through the data system. I'm not sure about this factor. Not sure about that factor. It has this kind of easement. Are we okay with those types of easements or are those like a deal breaker? Blah, blah, blah, blah. And then given...
• 18:59
  I mean, my humble self, like I've been involved in more than 4000 transactions, I can kind of see the forest from the trees, I can be like, yo, you just like missed that there's like this massive electrical box in front of the like, the property. And that's gonna potentially curb a little bit of future owner occupier appeal.
• 19:15
  Maybe tenants weren't like that, or maybe the drainage here isn't ideal, and you probably need to get a quote for that or a couple of quotes to make sure that that's not going to cause any issues. Of course, they've done their due diligence with property managers, building and pest inspectors, they've inspected the property through the team that we give. But I think just having this sort of mentor-mentee element,
• 19:37
  really helps. And I think it also helps like, I mean, I don't want to really talk about my course because that's not the reason I'm here, but sort of giving them suburbs so that they can do their own due diligence on them, you know, weekly group coaching calls, private community. I think those clients that avail the mentoring methods and have the initiative
• 19:57
  right, the initiative to actually have the balls to go up on that plane and then get the mentoring so that they can dive off the plane, those are the most successful clients. That's what I've seen over sort of seven, eight years. Let's talk through some of the data that you track. And you
• 20:17
  There's the same software that you're using, your clients using, other buyers, agents are using. We have our own internal software, PropStack, but we also do use DSR, which I know is a big one you're a fan of. Just for those, we actually have never spoke about DSR on the podcast before. Just give the audience a bit of an understanding on what DSR is and what it can do for a client.
• 20:37
  Yeah, sure. I mean, I really like DSR. I also really like other platforms. For me, it's less about the platform, more about the underlying data. And I think what's really cool is in the last, like when I started, like in 2011, you really had to go to CoreLogic. CoreLogic had recently entered the Australian market at that time, and you really had to go and buy wholesale data off them if you wanted to run software.
• 21:02
  sort of long term regression analyses or, you know, test for correlations or what's the coefficient if I run a multivariate and do I normalize it for the correlation? Like you had to do all this stuff, which is what I did. And that's how I built my system for myself, really.
• 21:17
  So 2011 to 2019 or 2020, there was no one really, no prop tech really existed. In the last five, six years, it's almost like a dime a dozen now. DSR, another good one is Suburbs Finder. I have no affiliation by the way, but I'm just saying there's many others as well. There's some free ones as well that people can use. And really it's about the underlying data.
• 21:41
  whether you own a $20 million buyer's agent business and people, not you per se, Reese, but people say, we have our own research team. But when I see the reports from that research team, they're looking at the same data that a retail investor like my clients are looking at. They're looking at days on market. They're looking at inventory levels. They're looking at stock on market. They're looking at building approvals that, you know, all these things that we can go into.
• 22:11
  Well, it really sounds nice to say I have my own research department and I'm sure it's nice and for nerds like me actually it would be cool. But I think these days data is democratized and anyone has access to as much data as the next professional.
• 22:28
  And so I think DSR is great. Suburb finder is great. Some people use HTAG. There's a dozen others now. It's less about which platform to use. It's more about how to interpret the data, what thresholds to look at. For example, someone might look at building approvals and say, okay, in this suburb, there's like 300 building approvals that are going to come out of the ground houses over the next three, four years. Let's pick a suburb like Morfitt Vale in Adelaide, which is kind of a large suburb.
• 22:58
  But what is the threshold out of the total dwelling quantum in that suburb? Morfittville is a very large suburb. So 300 seems a lot, but actually as a percentage on a year-to-year basis, as they come out of the ground, those houses, that actually may not impact the supply story too much. Or even if it does a little bit, you might find that the demand-sized data
• 23:21
  data factors, they suggest that they'll easily absolve or subsume that supply. So I think that the insight is really in how to interpret the data. There are some people who do it every day for a living, and what I do is I teach my clients based on having done it every day for a living. That's the only difference.
• 23:41
  I think that's key. So similar to yourself, we've got our own application software that we have our data in there. I don't deal with clients directly, but our advisors, when they're dealing with clients directly, we use that software. When I'm out doing a presentation or seeing a big referral partner, I'm going through it.
• 23:57
  When you're speaking it out, it all makes sense and you can see their eyeballs light up and go, oh, like really, really, you know, get excited by hearing the data and really shows confidence in why you're saying what you're saying. But if I left that room and I gave them that data set, they'd have no idea.
• 24:15
  how some of that would correlate to house price growth or correlate to runway left on the market. So I think interpretation is key. You're completely right. There's data warehouses out there that everyone's using. It's going to say that, you know, your stock on market, building approvals and stuff like that. It's when you probably start going a little bit more complicated and you're looking at more indexes and affordability ceilings and runways. And I think that's where, you know, your average person is going to struggle or if they haven't had a course or someone explain it to them, they're going to really struggle how to interpret a lot of that data.
• 24:45
  Exactly. I must say as well, like, I don't know if you agree with this, but I don't think one single data source, whether it's DSR or this and that, I don't think one data source really has everything that you need. Like we look at various websites, various inputs to think, look at things like affordability ceilings and how they've tracked over time, wage growth estimates.
• 25:04
  And I think there's also a case to be made for qualitative data. Not everything is quantifiable in the strict sense. So sometimes you've got to pick up the phone and talk to a local, hopefully not the sales agent that's trying to sell you the property, but a different one or property managers. One thing that I found that might be interesting to your audience is when I was building my portfolio, I was very allergic to housing commission areas.
• 25:29
  And certainly I don't recommend anyone just blindly buy in a housing commission area. But what I found by looking, by doing the analysis myself and like this isn't going to be on a DSR or whatever. Well, what I found was just because there is 30 percent housing commission in a given suburb, that doesn't mean that suburb grows any more or any less on average.
• 25:49
  then another suburb that doesn't have that quantum of housing commission, as long as you're buying in the part of the suburb that doesn't have that housing commission. And, you know, you have to then obviously check whether it's a rough street and what type of housing commission is in your block or neighborhood, because they're not all the same. Some housing commission, like, very well-kept properties. And so I think this is the trap that
• 26:14
  sometimes people fall under, they go on a really good website like Microburbs and they see, oh, this suburb has a 60% housing commission and they're like, that's a bad suburb. And then three years later, the things doubled and they're like, what was up with that? So I think, like you said, going that one step deeper beyond the superficial understanding of data, I think that's where the, not secret source, because it's not really secret, but that's where the magic happens.
• 26:42
  And what's your opinion on these software data warehouses, like we mentioned, their DSR, Suburb Finder, moving markets? So whether that's people doing it themselves or particularly, we mentioned it earlier in the podcast, some of these buyers agents where they are actually moving markets because of their activity. Do you think this is an enabler at the moment? Are you seeing it through your community where they're giving you feedback on particular areas?
• 27:08
  Yeah, absolutely. I think because data is so democratized and people interpret it in such a superficial way that there is 100% a sense of it moving markets. I'll give you an example. So there's a suburb in northern Adelaide called Anglevale.
• 27:29
  And fundamentally, like the supply story was not great. Although I don't believe in this, but some people would say high crime leads to low capital growth. I think actually it's quite the opposite. Potential and momentum and gentrification provides both cyclical growth and also structural growth. So I really like those areas in some cases. But Anglevale, it was coming up in different, some of these data websites.
• 27:56
  because my clients were also looking there for a time, right, they were reporting back to me that the sales agents were saying that nine out of every 10 properties bought were interstate investors from Sydney. This was a few years ago. And Anglevale like tripled, right? And I'm pretty sure it tripled in like three or three and a half years. And so everyone's celebrating and kudos to them. Like they've made money, you can't not celebrate that. But it was really all just investor driven. And so,
• 28:26
  I think we're at this point in the market, and I'll be keen to hear your thoughts on it as well. Whereas 10 years ago, we would say, well, that's clearly a speculative bubble, and the tide is going to go out when these people take the profits. So far, what we're seeing is that all of these speculative bubble investor-driven LGAs or SA3s or suburbs, they haven't really retraced their steps.
• 28:49
  And so I think structurally, the Australian property market has matured and evolved from being a shallow market where there were not that many investors to now where it's a much more mature market and investors can genuinely move markets and sustain that movement structurally. So it's not just a cyclical up and down.
• 29:11
  And I think that's a very scary thing when it comes to the affordability story, especially for first home buyers. A person like, I mean, I'm like kind of just a big fish in a very small pond. I mentioned a suburb on a YouTube video, that thing's going to go up 40k in the next two, three months. And it's not even that I'm buying there or my clients have bought there. I've just said something positive about it in passing. And so I think that's dangerous, but I don't know what to do about that. Rhys, I don't know if you have thoughts on that.
• 29:40
  Well, I mean, you've only got to go through if your algorithm like mine is because it's naturally our businesses in that model. But you've only got to go through the algorithm where there's hotspots here and people really sort of targeting these specific areas. I think the concern I have and what we see in our business. So our business model is very much long-term compounding growth rates, blue chip assets.
• 30:02
  We love a value add strategy where we can have some artificial uplift as well as the market doing the heavy lifting. So I'd say from an investor standpoint, you know, we're probably perceived as a boring investor, I guess, or more after that sort of long-term growth. But the one that sort of concerns me, and I've probably said this example on the podcast before, but...
• 30:18
  We had someone who actually came through the podcast and had heard us talking about sort of some spruikery activity, but there was a lot of these buyers agents out there pushing highly speculative assets through SMSFs. And this particular person that came to us, they could go up to 1.1.
• 30:35
  1.1 mil. This buyer's agent service was pitching two highly speculative assets, 500k each. And obviously, with your self-managed super fund, you're going to be wanting to look at a nice long-term hold and ideally a blue chip asset. And our advice to that particular client, everyone's circumstance is going to be different, is let's just get you one blue chip at about 750,800.
• 30:56
  The scary thing is there's a lot of those agencies that are getting those vulnerable people, whether it's the self-managed super funds or a first-time investor and putting in those house and land package areas all those highly speculative regional players that aren't near a sort of major hub or have any sort of long-term compounding growth rates or stability in the market. So, that's probably where we see the risk and we probably run from a business standpoint, we run into those types of clients pretty regularly, I'd say.
• 31:19
  Definitely in an SMSF A, I don't think buyers agents or myself are actually licensed to give SMSF advice. That's the first thing. We can give property guidance, but not necessarily SMSF guidance. But if I was to say anything, SMSF is very much no value add or no structural value add play, set and forget, get something that's relatively low maintenance that sort of hopefully almost pays for itself, maybe with a 70% guidance.
• 31:49
  LVI as is often common in SMSF and you want something like just just very solid very stable I think I agree with you but I think that the danger and the risk is that a lot of people think and I don't want to come across as condescending but a lot of people think that they know property investment because they bought a house and land package in Ripley in Queensland or in Box Hill in New South Wales or
• 32:14
  in Hoppers Crossing in Western Melbourne. And because when everything booms, everything booms. So they're like, this is great. Like now it's 2026, let's get another house and land package off this Facebook ad. But I think my understanding now, which has matured of house and land packages is that they can be great,
• 32:33
  but generally only when everything booms. And when everything does not boom and it's a mixed market, a two-speed market, then the old school fundamentals, which are boring and no one really likes to talk about, land appreciates, buildings depreciate, high land to asset ratio, all these principles come to fruition over the long term. So I'm very much in agreeance with you. And I believe long-term growth is important. I believe short-term growth is important. I think you can get both,
• 33:01
  Don't go for short term at the expense of long term. Do you think, you know, moving into the future, we've obviously got these changes coming with negative gearing. The stat you sort of said earlier around, you know, people that own more than two properties, it's only like 10% of the investors out there.
• 33:18
  But we are getting a lot of this, especially Spruker activity, like I was mentioning, on first-time investors and self-managed super funds. And they're getting it. There's a lot more spotlight. You know, APRA came out, removed the trust lending from a lot of the majors. Obviously, there's still non-banks out there lending in that space. It was more of a fugazi, but the intent in terms of...
• 33:37
  reducing the debt to income ratio down as well. So there's a lot more of a spotlight on investors building multi-property portfolios. Do you think looking into the next 12 to 24 months, we'll start to see, I guess, the death of the multi-property landlord and focusing more on smaller properties with quality or actually will we see an exodus of investors altogether?
• 34:02
  I think that we probably won't see any change materially because those who want to scale will find a way to scale. Most people who scale their property portfolios, they do it in a very resourceful way. They find, you know, by hook and crook, they find a way to do it. And of course, at least with people that I try to work with, we're making sure they have the right buffers. Let's say they are using...
• 34:29
  an NAB or they are using a second tier lender to get that third, fourth, fifth property in a trust. It's about making sure you have the right interest rate sensitivities, those scenarios modeled. What if scenarios, what if interest rates go up by X to long term levels or beyond? What if we come to an end of a potential interest only period and we lose, we've lost our job. So what would we do at that point?
• 34:55
  I think property investors will be forced to become even more educated. But I fundamentally believe that in the economic environment that we're in, the fact that we have such a massive housing shortage, that's such an attractive thing. I know it seems very capitalistic, but it's such an attractive thing for the everyday person, or at least the everyday upper middle class person,
• 35:20
  to use property as a way to build their financial future. So they'll find a way, like I said before, most people with two or more properties, they're not doing it in their own names anyway. I think maybe this is where respectfully our philosophies may diverge a little bit, I'm not sure, but I think with higher and higher interest rates,
• 35:43
  people will actually maybe start to even more so steer clear of your one to two million dollar green leafy street type blue chip quote unquote assets and go towards the more higher yielding assets which tend to be a little bit less expensive. I'm not saying buy in a mining town or a town that there's just one industry that props it up or anything, but this is my hypothesis. I think affordable properties
• 36:13
  will outperform in the next five to 10 years. And I think, especially with AI, and I don't want to make it more than what it is, I genuinely don't know what will happen with AI. But I think with AI, there might be this concept or this concept, this sort of phenomenon of sliding scale down, where the middle class, they will be quite disrupted. I mean, the wealthy
• 36:34
  upper middle class, they're kind of good. AI will obviously impact them, but they have a lot of buffers, they have generational wealth, and maybe they have a lot of passive income, multiple businesses, they have a lot of, they're good. But the middle class will slide down from when they could have bought a 1.5 to $2 million property, they would now be buying a $1 million property. That may mean they need to relocate. And we're already seeing that
• 37:00
  Sydney has got a mass exodus, especially for young people under 35. They're leaking people into regions up and down the coast, you know, New South Wales. I think there'll be this sliding scale, and I think that investors will follow that, where they're looking at this $1.5 million property in, let's say, some eastern suburb of Melbourne, and they're like, well...
• 37:23
  Yeah, it's done pretty well in the past, but it yields two and a half percent. It's going to cost me $50,000, $60,000 to keep every single year. Why would I buy this with the impact it has on my cash flow and borrowing capacity when I could be buying something for $600,000, $500,000, $700,000 with double the yield, maybe less of an impact on my borrowing capacity and less of an impact on my household finances? I see that
• 37:47
  occurring already in the last six, seven, eight years from what property investment used to be in maybe 2012, 13, 14. And I think that will only continue. I could be completely wrong, but this is my hypothesis.
• 38:02
  Look, I couldn't agree more from a yield position, hence ourselves, but really liking that value add strategy where you can sort of increase that cash flow and get the cosmetic uplift as well. PK, appreciate you coming on the podcast, mate. I know time zone wise, it's morning here, evening there, but I really appreciate you coming on and thanks for giving us some insights today.
• 38:25
  Of course. No, I'm very grateful, Rhys, and I have to just admire your work and the fact that you had me on. Not many buyers agents do, so I really appreciate how open-minded you are and how much you're helping your community, especially with data-driven insights. I think it's a great public service. Awesome. Thanks, man.