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Would we be better off with less landlords? · The Money Puzzle

0:12
Speaker 1: Hello and welcome to The Australian's Money Puzzle Podcast. I'm
0:16
Speaker 1: James Kirby, the Wealth Editor at The Australian. Folks, my
0:19
Speaker 1: guest today is Anissa Cavallo and she has an exceptional
0:23
Speaker 1: story as a property investor and I want you to
0:25
Speaker 1: hear it and I think you'll find her very interesting
0:29
Speaker 1: as a guest. She started in the funds management world
0:33
Speaker 1: at Mercantile Mutual. She worked for various operations, QIC, you'd
0:36
Speaker 1: know some of them. But at a certain point, things
0:40
Speaker 1: changed and in some ways became very challenging for her.
0:44
Speaker 1: And she was divorced at one stage and ended up
0:47
Speaker 1: having to go back and live in her parents' house
0:49
Speaker 1: with her own kids in tow. At that point, she
0:53
Speaker 1: decided to get very serious about property investment and has
0:58
Speaker 1: since then and has become quite known since then for
1:01
Speaker 1: building a presidential property empire of sorts. She has about
1:04
Speaker 1: 15 investment properties, she tells me. At the moment, we're
1:08
Speaker 1: going to talk about a whole bunch of issues relating
1:11
Speaker 1: to property and her particular perspective on it. Anissa Covello,
1:15
Speaker 1: how are you? Welcome to the show.
1:17
Speaker 2: Oh, thank you for having me, James. It's a pleasure
1:19
Speaker 2: to be here.
1:20
Speaker 1: Great to have you on. The first thing that struck me,
1:22
Speaker 1: even in the course of introducing you there, was that
1:25
Speaker 1: you have now built up a considerable property portfolio of
1:29
Speaker 1: about 15 residential properties. That's a hell of a lot
1:32
Speaker 1: of properties. That's a hell of a lot of issues. Yes.
1:35
Speaker 1: And I imagine you have a considerable spreadsheet telling you
1:38
Speaker 1: all the various situations and the various incomings and outgoings
1:41
Speaker 1: with those. But one of the things that comes up
1:43
Speaker 1: all the time, perhaps not inside property investment, but in
1:48
Speaker 1: national debate, is about people having multiple properties and should
1:52
Speaker 1: people have multiple properties and Is it in some way
1:56
Speaker 1: a problem that people do? I don't know where you
1:59
Speaker 1: come from that, but what I might ask you is,
2:02
Speaker 1: we often have people on right into the show when
2:04
Speaker 1: they're starting to build and they have this target in mind.
2:07
Speaker 1: Is there a number that you think is ideal in
2:10
Speaker 1: terms of investment property ownership?
2:12
Speaker 2: I'm in pains whenever I'm interviewed or I have the
2:16
Speaker 2: privilege of being able to talk to the media about
2:18
Speaker 2: my journey. I'm at pains to tell people that I
2:21
Speaker 2: don't think people should buy 15 properties because you're quite right,
2:23
Speaker 2: 15 properties, 15 headaches, right? The only reason that I'm
2:28
Speaker 2: in that situation is because it's actually my industry. And
2:31
Speaker 2: so it's a lot easier for me to trade and
2:33
Speaker 2: move things around. And you'd expect me to have a
2:37
Speaker 2: larger portfolio than other people if this is indeed my expertise, right?
2:41
Speaker 2: So is 15 property right for everybody?
2:43
Speaker 1: No.
2:43
Speaker 2: Is one right for everybody? No. I say to people,
2:46
Speaker 2: for me, buying property, the benefit of property, where you
2:51
Speaker 2: get the real gold out of property is two things.
2:53
Speaker 2: And I disagree with anybody that disagrees with me. on
2:56
Speaker 2: this one, right? It's leverage and capital growth. So it's
3:01
Speaker 2: where you can take a little bit of money that
3:03
Speaker 2: you've saved. And many of my clients take 10 years
3:06
Speaker 2: to save $ 50, 000. If you put that in the stock
3:09
Speaker 2: market in 10 years, it's not going to be worth
3:12
Speaker 2: very much, James, right? You take that 50 and you
3:14
Speaker 2: leverage it into 500 and you may indeed have a
3:18
Speaker 2: million dollars in 10 years. So I'm at pains to
3:21
Speaker 2: explain to people that what's important in property is the
3:24
Speaker 2: benefits of leverage and that coupled with capital growth. Now,
3:27
Speaker 2: that doesn't mean you need 15 properties and 15 headaches.
3:30
Speaker 2: It means that you need to just buy one, two,
3:33
Speaker 2: three really good quality properties at the right price that
3:37
Speaker 2: you can afford and hang on to them for as
3:40
Speaker 2: long as you can. I'm Italian. Do the European thing.
3:43
Speaker 2: Never sell. Hang on to them. Let the market do
3:46
Speaker 2: the work for you.
3:48
Speaker 1: Yes, it gets tougher as rates go up, I'm sure.
3:50
Speaker 1: But just a couple of things there. So would you
3:53
Speaker 1: think we would be better or worse off if people
3:57
Speaker 1: didn't strive to have as many properties? Would we be
4:00
Speaker 1: better off with less landlords, in other words?
4:02
Speaker 2: Yes, and this comes up all the time. And I
4:04
Speaker 2: find it really interesting, actually, that even through my journey,
4:07
Speaker 2: which was a tough one, but also very lucky. And
4:10
Speaker 2: I realised that I'm privileged. I was able to live
4:12
Speaker 2: with my parents. Many people can't. I don't take any
4:14
Speaker 2: of that for granted. But I'm always fascinated by the
4:17
Speaker 2: people that are actually angry with me. You know, I've
4:20
Speaker 2: had comments saying I'm responsible for the shortage of properties.
4:24
Speaker 2: But the reality is that we live in a society
4:26
Speaker 2: where everybody will never be able to afford property. And
4:30
Speaker 2: there are many other cultures, first world countries, where properties
4:34
Speaker 2: are much more expensive. And as economies get more developed
4:37
Speaker 2: and become more sophisticated and population skilled immigration grows, that
4:42
Speaker 2: gap between affordability gets greater and greater. And so I
4:47
Speaker 2: think if it wasn't for people like us that were
4:49
Speaker 2: purchasing properties to make it more affordable for renters, we'd
4:53
Speaker 2: have even more homelessness. And you think about what even
4:56
Speaker 2: the RBA is saying with interest rates, that the people
4:59
Speaker 2: that have been hardest hit with interest rates is actually
5:02
Speaker 2: it's the renters because there aren't enough people actually putting houses,
5:06
Speaker 2: buying investment properties for renters. We need to actually get
5:09
Speaker 2: the private sector, I think, to solve the housing crisis
5:13
Speaker 2: because we don't have enough money in the government to
5:15
Speaker 2: solve it. I think it's this utopian idea that everybody
5:19
Speaker 2: can afford a house is unrealistic. We live in a
5:22
Speaker 2: capitalist society. And so the more people we can get
5:25
Speaker 2: purchasing properties and making them affordable for people that aren't
5:29
Speaker 2: in a position to purchase and maybe don't want to buy.
5:32
Speaker 2: I know lots of people that don't want to be
5:34
Speaker 2: an owner of a property. I think it's a good thing.
5:37
Speaker 2: It should be encouraged.
5:39
Speaker 1: Is there any one outstanding issue or measure that could
5:43
Speaker 1: be introduced that would accelerate that provision, if you like,
5:48
Speaker 1: supply of rented property?
5:50
Speaker 2: I think an obvious one is stamp duty, interest rates,
5:55
Speaker 2: et cetera. I think the market will do the work
5:57
Speaker 2: for us. I think that eventually, I think markets go
6:02
Speaker 2: through cycles. You and I have discussed before fundamentals in
6:06
Speaker 2: markets and those fundamentals don't change. It's just the market
6:10
Speaker 2: gets driven by sentiment until times are good and then
6:13
Speaker 2: they remember the fundamentals. So fundamentally, No, I think making
6:18
Speaker 2: it easier for investors to produce affordable properties would be helpful.
6:24
Speaker 2: And there's a myriad of things that would need to change,
6:27
Speaker 2: certainly making it more affordable to invest through stamp duty,
6:31
Speaker 2: less taxes, etc., There are a lot of tax incentives
6:34
Speaker 2: for investors still though. And, you know, I believe that
6:37
Speaker 2: as an investor, it is still very affordable to own property,
6:41
Speaker 2: even with additional taxes in Victoria. But I think other
6:44
Speaker 2: things like really getting more people into the construction workforce,
6:49
Speaker 2: because one of the big issues at the moment is
6:51
Speaker 2: just building houses fast enough. So really scaling up construction
6:56
Speaker 2: workers could make a huge difference as well.
6:58
Speaker 1: Yes, yes. You know, one thing that I have to say,
7:01
Speaker 1: and I like a property, I've always been a property investor,
7:05
Speaker 1: but I'm a diversified investor and I'm across all markets.
7:09
Speaker 1: And one thing that strikes me there, and I'm not
7:12
Speaker 1: saying you said this, but there was a sort of
7:14
Speaker 1: implication that you mentioned like a property pays off and
7:18
Speaker 1: part of that big payoff is leverage, right? Sure. Sure.
7:23
Speaker 1: But I mean, you can lever, that is, you can
7:25
Speaker 1: take a loan on shares just as easily. In fact,
7:27
Speaker 1: you can negatively gear shares just as easily. And they're
7:30
Speaker 1: doing 10% a year at the moment. So is there
7:32
Speaker 1: some part of property that makes you more confident, that
7:36
Speaker 1: you personally feel more confident about property as an asset
7:39
Speaker 1: to leverage than shares?
7:41
Speaker 2: Yes, of course, because it's a real asset, right? It's tangible.
7:44
Speaker 2: So it's easier to leverage. And you can't leverage to
7:46
Speaker 2: the same extent. And the cost of leverage is not
7:48
Speaker 2: as much for property.
7:50
Speaker 1: No, that's very true.
7:51
Speaker 2: Yeah.
7:51
Speaker 1: The banks won't go with you.
7:52
Speaker 2: No, that's right. And if you leverage a lot into shares,
7:56
Speaker 2: it is exceedingly expensive and you can get a margin call.
7:58
Speaker 2: Whereas with a property, as long as you pay your
8:01
Speaker 2: loan back, you never get a margin call, right? Nobody says, sorry,
8:04
Speaker 2: the property is now worth 50% less. Your LBR is
8:07
Speaker 2: too high. You owe us some money. So I think
8:10
Speaker 2: that because it's a real asset, it's a tangible asset,
8:13
Speaker 2: it's a lot easier to leverage. Are there other reasons?
8:17
Speaker 2: I think the scarcity issue, you know, we're not making
8:20
Speaker 2: any more land. We've got, I think, one of the
8:22
Speaker 2: things that you and I have discussed or a theme
8:25
Speaker 2: that comes up a lot is are the fundamentals getting greater?
8:29
Speaker 2: Are there more reasons to invest, particularly in Australia? And
8:32
Speaker 2: as our population grows, as we grow, encourage more skilled
8:37
Speaker 2: migration into Australia, I think that the fundamentals do get
8:40
Speaker 2: more compelling in Australia for property. I think that gap
8:44
Speaker 2: is just going to get bigger and bigger.
8:46
Speaker 1: What we might do is take a short break and
8:47
Speaker 1: we'll be back in a moment and we'll have a
8:48
Speaker 1: look at where Anissa thinks in terms of both style,
8:54
Speaker 1: structure and location of good property opportunities at the moment.
8:58
Speaker 1: And she will also give us her five minutes worth
9:01
Speaker 1: on the terrors of investing in the state of victoria
9:05
Speaker 1: at the moment with with its with its rush of
9:08
Speaker 1: unexpected taxes and it is a very live and real
9:11
Speaker 1: issue for investors in that state okay back in a
9:14
Speaker 1: moment Hello, welcome back to the Australian's Money Puzzle podcast.
9:25
Speaker 1: I'm James Kirby, Wealth Editor at The Australian, talking to
9:28
Speaker 1: Anissa Cavallo, property investor and property commentator. And Anissa, I
9:35
Speaker 1: always ask someone new on the show to do this
9:37
Speaker 1: because I think it's in terms of added value, every
9:40
Speaker 1: listener wants to know, is there in terms of types
9:44
Speaker 1: of property that are good value out there at the moment,
9:48
Speaker 1: without talking about locations, what Is there a type that
9:52
Speaker 1: you are particularly attracted to just now?
9:54
Speaker 2: Okay, so when we look, or when I personally look
9:58
Speaker 2: for property, I look for what I call fundamentals. And
10:01
Speaker 2: there's two parts to that. One part is what are
10:03
Speaker 2: the characteristics that are going to drive growth in property?
10:07
Speaker 2: And what are the characteristics that are going to drive
10:11
Speaker 2: risk in property, right?
10:12
Speaker 1: Right.
10:13
Speaker 2: And I think particularly we talked about leveraging into property.
10:17
Speaker 2: Where you're leveraging into any asset, you want to reduce
10:19
Speaker 2: as much volatility and risk as possible. And so those
10:22
Speaker 2: two things have to come together in financial services. We
10:24
Speaker 2: call it a risk-adjusted return, right? So what I'm looking
10:28
Speaker 2: for is I'm looking for understanding where are those pockets
10:32
Speaker 2: that are going to potentially experience the greatest capital growth.
10:38
Speaker 2: And I believe that When you're in property, if you
10:40
Speaker 2: really want to make some money in property, if you
10:42
Speaker 2: really want to change your wealth position, it's capital growth,
10:44
Speaker 2: it'll do it. It's never yield. Yield is really helpful
10:47
Speaker 2: to help you pay for the property while it goes
10:49
Speaker 2: up in value and that's about it because it's not
10:50
Speaker 2: really a yield play. So I'm looking for capital growth
10:53
Speaker 2: and what is that? And there's two things internationally that
10:58
Speaker 2: are very common in first world countries that drive growth, right?
11:01
Speaker 2: They drive property price growth. And one of those things
11:03
Speaker 2: is population growth, but it has to be the right
11:06
Speaker 2: sort of population growth and access to money. At the moment,
11:10
Speaker 2: we've got the right sort of population growth, skilled immigration.
11:13
Speaker 2: And I won't tell you the state because we won't
11:15
Speaker 2: give away our areas, but 50% of skilled immigrants go
11:19
Speaker 2: to one particular state in Australia. That's been a trend
11:22
Speaker 2: for a very long time now. And skilled immigration leads
11:26
Speaker 2: to something called family income growth. You've probably heard that
11:29
Speaker 2: term before, household income growth. So where you've got households
11:32
Speaker 2: becoming wealthier, you generally have property price growth.
11:36
Speaker 1: Okay.
11:37
Speaker 2: So access to money is another one, right? So a
11:39
Speaker 2: lot of people say, well, interest rates are so high,
11:41
Speaker 2: there's no access to money. But we've got massive participation
11:44
Speaker 2: in the workforce. We've got some wages increasing for the
11:48
Speaker 2: first time in a long time. When you compare it
11:50
Speaker 2: to other property markets where interest rates have actually been
11:53
Speaker 2: a lot higher and unemployment's been a lot higher, we've
11:55
Speaker 2: actually got pretty good access to money.
11:58
Speaker 1: It's interesting. I'll just pick up on two things there. One,
12:01
Speaker 1: Victoria is the skilled immigrant state, isn't it? I assume
12:04
Speaker 1: that they all come to. And so you get that
12:06
Speaker 1: improved income here. But it's the weakest of the states.
12:11
Speaker 1: Just now, the numbers in Victoria defy the logic you're applying,
12:15
Speaker 1: but perhaps there's more to it. What's happening there?
12:17
Speaker 2: So we've got these extra taxes that we're paying because
12:21
Speaker 2: of how, for many of us, a lot of the
12:24
Speaker 2: community feels that the government, the state government, mismanaged COVID
12:28
Speaker 2: and set us broke. And as a result, they're taxing
12:31
Speaker 2: in different areas to try and make back some of
12:33
Speaker 2: that money. And I think a lot of it is
12:35
Speaker 2: anger and sentiment. But when you do the numbers, and
12:38
Speaker 2: I've done the numbers, the average cost to an investor,
12:42
Speaker 2: to the average investor, the average additional annual cost is
12:46
Speaker 2: about $ 1, 000. Let's call it $ 1, 000, right? So $ 1, 000 a year,
12:51
Speaker 2: which is tax deductible, not enough of a disincentive to
12:56
Speaker 2: continue affecting property markets when you've got these other true
13:00
Speaker 2: fundamentals like skilled migration, population growth, the need for housing,
13:04
Speaker 2: a shortage. We're building 50,000 houses less than we should
13:08
Speaker 2: be annually at the moment in Victoria. So sentiment's actually...
13:14
Speaker 2: a wonderful opportunity for people to take advantage of a
13:18
Speaker 2: market that's potentially well underpriced.
13:23
Speaker 1: Okay, so you see it as a moment in time, basically,
13:26
Speaker 1: where people have perhaps overreacted to the surprising position of
13:31
Speaker 1: taxes and perhaps the disposition of the particular state government
13:35
Speaker 1: just now about property, around property, and basically they seem
13:38
Speaker 1: to see it as something to tax. That's from the
13:40
Speaker 1: investment point of view. So just back on one other thing,
13:43
Speaker 1: which we didn't quite get was what type of property then,
13:47
Speaker 1: irrespective of location. If I said to you, hey, you're
13:51
Speaker 1: so experienced in property, you've bought 15 properties yourself, at
13:54
Speaker 1: least I want to buy one. What type of property
13:58
Speaker 1: is dollar for dollar the best value? Do you think
14:01
Speaker 1: just now?
14:02
Speaker 2: I would be houses. So I'm a very big one
14:05
Speaker 2: for houses and there's a lot of, history. We don't
14:09
Speaker 2: value air in Australia. We don't. So you need land,
14:13
Speaker 2: which is where the scarcity is, right? And I'd be
14:15
Speaker 2: looking for growth suburbs. Where are these skilled migrants moving?
14:19
Speaker 2: And that's also for affordability. If you've got $ 5 million
14:21
Speaker 2: to spend, by all means, buy in South Melbourne, Middle Park,
14:26
Speaker 2: et cetera. But the average investor hasn't got that sort
14:30
Speaker 2: of amount. Our average client doesn't have that to spend.
14:33
Speaker 2: So there are many areas that are just on the
14:35
Speaker 2: outskirts of in urban Melbourne that have got incredible infrastructure growth,
14:39
Speaker 2: hospital growth, a lot of job growth. The mature and
14:43
Speaker 2: state government's actually been very good at creating employment clusters.
14:46
Speaker 2: Instead of creating a commuter suburbs where the suburb has
14:50
Speaker 2: to commute to go to get to work, there's a
14:53
Speaker 2: lot of local employment. So something like on average, 70%
14:56
Speaker 2: of the people that work full-time in Melton City Council
15:01
Speaker 2: actually live locally. They don't actually commute. And that's a
15:04
Speaker 2: great thing for local economy. So I'd be looking for
15:08
Speaker 2: local employment. I'd be looking for family income growth, skilled immigration, hospitals, education,
15:15
Speaker 2: that infrastructure that brings a community together.
15:18
Speaker 1: It's a really interesting answer. It strikes me, I have
15:22
Speaker 1: a feeling you're a very statistically driven investor i won't
15:26
Speaker 1: say top down but more than most you you're very
15:28
Speaker 1: across the demographics that you're investing in and the economics
15:31
Speaker 1: that you're investing in not just the particular property that's
15:35
Speaker 1: really interesting and a really interesting view okay folks now
15:37
Speaker 1: we have some really good questions uh for anissa and
15:39
Speaker 1: we will be back in one moment Hello and welcome
15:50
Speaker 1: back to the Australian's Money Puzzle. I'm James Kirby and
15:52
Speaker 1: I'm talking to Anissa Kavella of EDA, E-D-A Property. She's
15:57
Speaker 1: the founder of that group and a very experienced investor.
16:01
Speaker 1: Has some really good views, fresh views, I think, on
16:04
Speaker 1: property investing. Great to have her on the show. Okay.
16:07
Speaker 1: I have a few questions. You've seen them in advance.
16:10
Speaker 1: Let's just have a spin through them and see how
16:12
Speaker 1: we go, Anissa. I would be interested to hear your answers. Obviously,
16:15
Speaker 1: some are more property-centric than others. Lorraine. Lorraine. My husband
16:19
Speaker 1: and I are keen to get on the property ladder
16:21
Speaker 1: here in Australia. Our dilemma is what do we do?
16:24
Speaker 1: We have saved. We never give individual advice, Lorraine. Okay,
16:29
Speaker 1: it's information only to all the Lorraines out there. But
16:32
Speaker 1: in any event, I think we could safely say they
16:35
Speaker 1: have saved a few hundred thousand dollars, but less than
16:37
Speaker 1: the price of an average house. Let's put it that way.
16:39
Speaker 1: They live in Sydney. They're debating between a house and
16:42
Speaker 1: an apartment. And they're debating between Sydney and Brisbane, which
16:45
Speaker 1: seems to me, Anissa, if nothing else, they're wide open.
16:49
Speaker 1: They're wide open to what sort of property they will buy,
16:53
Speaker 1: even to the point of living in two different cities,
16:55
Speaker 1: which not a lot of people are. What would your
16:58
Speaker 1: broad observations be to Lorraine?
17:00
Speaker 2: Okay, disclaimer, right? Not knowing everything about Lorraine.
17:03
Speaker 1: Of course.
17:04
Speaker 2: There's two reasons to buy property. One is to make
17:06
Speaker 2: as much money as you can out of it. One
17:08
Speaker 2: is to enjoy the property. I always say to clients,
17:11
Speaker 2: so decide which one you want to do, okay? I'm
17:13
Speaker 2: going to assume that what Lorraine and her husband want
17:15
Speaker 2: to do is make some money out of property. So-
17:18
Speaker 2: I certainly wouldn't be purchasing an apartment. I'd be looking
17:21
Speaker 2: to purchase land, as much land as I can in
17:24
Speaker 2: a growth area, because there's no point buying land in
17:27
Speaker 2: Timbuktu where nobody wants to live anyway, right? So buying
17:30
Speaker 2: in an area which gives me access to as much
17:33
Speaker 2: land as I can afford in a growth area that
17:36
Speaker 2: has those attributes we discussed before, family income growth, skilled immigration,
17:41
Speaker 2: lots of infrastructure growth, etc., I don't like timing the market, James.
17:47
Speaker 2: I believe that we never time it right. The economists
17:49
Speaker 2: get it wrong. Who are we to get it right?
17:52
Speaker 2: But I do believe that there are particular markets that
17:54
Speaker 2: are very cyclical and unless you buy right at the
17:58
Speaker 2: right time, it could be 10 years before you get
18:00
Speaker 2: your money back. So I would be looking at markets
18:04
Speaker 2: with less volatility, markets that tend to have a little
18:07
Speaker 2: bit of volatility, but they're always trending upwards. So it
18:09
Speaker 2: doesn't matter if you buy today or It might take
18:12
Speaker 2: you a year to get your money back, but it
18:13
Speaker 2: certainly won't take you five years, right?
18:15
Speaker 1: So what would that eliminate then?
18:17
Speaker 2: I don't want to poo markets, but I certainly wouldn't
18:19
Speaker 2: be investing in Western Australia at the moment. Western Australia
18:22
Speaker 2: has a history of very strong volatility, and it doesn't
18:25
Speaker 2: mean that it doesn't have a bit more to go,
18:27
Speaker 2: but will it come back? Historically, yes, it will. It's
18:31
Speaker 2: red hot and very pegged to resources still. It's a
18:34
Speaker 2: deeper market than it used to be, but it is
18:36
Speaker 2: still very pegged to resources, right? Queensland is... expensive. It's
18:42
Speaker 2: more expensive than Melbourne. It's never been like that before.
18:44
Speaker 2: We've got a bigger market. We've got a greater, larger
18:47
Speaker 2: need for housing here where a shortage of housing is
18:51
Speaker 2: great and yet it is currently more expensive. So I
18:53
Speaker 2: would be wondering whether it was getting to the top
18:56
Speaker 2: of a cycle. I don't see it as the same as,
18:59
Speaker 2: certainly don't see it as the same as Western Australia.
19:02
Speaker 2: If you're a market timer, certainly wouldn't be investing there.
19:05
Speaker 2: You can afford New South Wales, I think New South
19:08
Speaker 2: Wales has a much smoother ride, a lot less volatility.
19:11
Speaker 2: But I would be telling her to consider Victoria. And
19:13
Speaker 2: I want to preface that with I don't just invest
19:18
Speaker 2: in Victoria. I just think Victoria is really good timing
19:20
Speaker 2: at the moment.
19:22
Speaker 1: Yeah. In terms of the investment clock, that is worth knowing.
19:25
Speaker 1: And I'm sure Lorraine is familiar with that if she's
19:27
Speaker 1: listened to recent shows. It is very much a consensus
19:30
Speaker 1: just at this time that the Victorian market is growing.
19:34
Speaker 1: is weaker than it should be and has an element
19:36
Speaker 1: of catching up to do. And if you believe in
19:38
Speaker 1: the reversion to the mean, which again is another sort
19:40
Speaker 1: of economic notion, which I think that Nyssa is probably
19:44
Speaker 1: backing on there, it is worth more than it's showing
19:48
Speaker 1: at the moment. Okay, two quick questions. ones. One, Imran,
19:51
Speaker 1: I've been looking for a financial advisor. I'm wondering about
19:54
Speaker 1: their minimum account size requirements. Look, Imran, the nature with
19:58
Speaker 1: financial advisors is that there are some that have a minimum.
20:02
Speaker 1: They want you to have whatever, a million, half a million. Generally,
20:05
Speaker 1: what they want is to be able to justify their
20:09
Speaker 1: time with you Very roughly, on average, they're charging 4,300
20:13
Speaker 1: a year. Now, if you reverse that and say, does
20:18
Speaker 1: it make sense for me to pay this person 4,300
20:21
Speaker 1: a year? Then that makes sense for you. Don't worry
20:26
Speaker 1: about whether you make sense for the advisor. The only
20:29
Speaker 1: thing I would say to you, which is tough, but
20:31
Speaker 1: it's true. If you have nothing, if you have no
20:34
Speaker 1: money and you don't look like you're going to make any,
20:36
Speaker 1: an advisor is not going to spend much time with you.
20:38
Speaker 1: You may have a very valuable home, for instance, and
20:42
Speaker 1: you might have a good pension arrangement or something, but
20:44
Speaker 1: that's no good to an advisor. The advisor is in
20:46
Speaker 1: the business of making money for you, and they want
20:50
Speaker 1: it to make sense for both of you that they
20:52
Speaker 1: share your time. I might sound a bit severe on
20:54
Speaker 1: that one, but I do know advice quite well, and
20:58
Speaker 1: I've been obviously involved in it for a long time.
21:01
Speaker 1: And they said, can I ask you, actually, which just
21:02
Speaker 1: struck me, do you use any outside services in the
21:06
Speaker 1: way of, say... buyer's advocates or whatever? Do you do
21:09
Speaker 1: it all yourself?
21:10
Speaker 2: No, I do it all myself, but I've come from
21:12
Speaker 2: financial services as well. So I'm a little bit different.
21:15
Speaker 2: I'm a bit controversial with that whole thing. I think
21:17
Speaker 2: it's a shame that commissions, because one of the things
21:20
Speaker 2: that we used to do with charge commissioners, financial services,
21:23
Speaker 2: and I think that they threw the baby out with
21:25
Speaker 2: the bathwater a bit by no longer allowing a client
21:29
Speaker 2: to have the supplier pay has meant that we're quite
21:32
Speaker 2: underinsured and underrepresented now. I feel like there was probably
21:36
Speaker 2: a better model so that people that don't have $ 5, 000,
21:39
Speaker 2: $ 10, 000 to spend on a financial planner can still get
21:42
Speaker 2: really good advice and it's worth the advisor's time. But
21:45
Speaker 2: I tend to agree with you that if you don't
21:47
Speaker 2: have a lot, the financial planner doesn't have a lot
21:50
Speaker 2: of incentive to work with you, unfortunately.
21:54
Speaker 1: It's difficult. It really is. There's no such thing as
21:56
Speaker 1: cheap financial advice. There just isn't. I'd have to tell
22:00
Speaker 1: you there isn't. But read. and listen to shows like this,
22:03
Speaker 1: and you will learn a lot. That's that much we
22:05
Speaker 1: will try to bring through for you. Okay, Ben, this
22:07
Speaker 1: was on lender's mortgage insurance. He says, surely, if there
22:11
Speaker 1: is not much risk, and it's free market price, then
22:13
Speaker 1: the price of it should drop. What's the go? I
22:16
Speaker 1: don't know, Ben, but I don't see it dropping. I
22:19
Speaker 1: don't see it dropping anytime soon. I know it's a market,
22:21
Speaker 1: but I wouldn't be waiting for that one. All right. Finally,
22:24
Speaker 1: from Dean. Now, this is a detailed question. Again, we
22:28
Speaker 1: are not going to give advice, and we're not going
22:29
Speaker 1: to be too precise here. But Generally, what Dean is
22:32
Speaker 1: asking is he has a townhouse and the townhouse is
22:35
Speaker 1: in WA. And here's the thing. It's one of six.
22:40
Speaker 1: The others are freestanding. He's got a joint wall. Is
22:44
Speaker 1: your expert able to provide general advice on the pros
22:47
Speaker 1: and cons of converting, right? Converting a townhouse from strata
22:51
Speaker 1: title to freehold title to realize potential capital growth? What
22:56
Speaker 1: did you think of that issue? And is there anything
23:00
Speaker 1: you can add to it?
23:02
Speaker 2: Well, I've got to say this is not my expertise,
23:05
Speaker 2: but this is how I would think about it. There'll
23:08
Speaker 2: be additional costs by separating because you'll all of a
23:11
Speaker 2: sudden be charged to lots of rates, et cetera, et cetera.
23:15
Speaker 2: So there are some benefits of keeping it together. I'm
23:18
Speaker 2: not sure how much difference it will make in terms
23:21
Speaker 2: of capital growth, and it depends on what he wants
23:22
Speaker 2: to do with it in the which is my advice
23:27
Speaker 2: with most properties, I wouldn't bother paying the cost of it.
23:30
Speaker 2: If he's wanting to sell one off, then absolutely. But
23:32
Speaker 2: to be honest, I've got to admit, this is not
23:35
Speaker 2: my area of expertise. He needs to speak to a
23:37
Speaker 2: conveyancer and a lawyer about the repercussion.
23:40
Speaker 1: Yeah.
23:41
Speaker 2: Okay.
23:41
Speaker 1: And just one last thing. It struck me that in
23:43
Speaker 1: early the show, you said you like houses, and I'm
23:46
Speaker 1: sure that wasn't a casual comment. Do you mean to
23:49
Speaker 1: say more precisely that your efforts are largely in the
23:53
Speaker 1: investment and management of standalone houses as we know them.
23:57
Speaker 1: And that implies you, to some extent, steer away from townhouses, units, apartments?
24:02
Speaker 2: Very much. Sometimes to my detriment. I've just found in
24:04
Speaker 2: my history that the performance has been very different. It's
24:08
Speaker 2: a lot harder to, you don't have as much flexibility
24:11
Speaker 2: with what you can do with them. And I just
24:13
Speaker 2: haven't seen the capital growth, certainly the yield, but I
24:16
Speaker 2: just haven't seen the capital growth in units and townhouses.
24:20
Speaker 1: Very good. Thank you very much, Anissa, that was really interesting.
24:23
Speaker 1: Interesting story, interesting perspective. Thank you very much for coming
24:26
Speaker 1: on the show.
24:26
Speaker 2: Thanks for having me.
24:27
Speaker 1: Terrific. Okay, folks, some more questions would be very welcome
24:31
Speaker 1: on any issue you like. The email is themoneypuzzle at theaustralian.com.au.
24:37
Speaker 1: Talk to you soon.