Latest / The Follio Property Podcast / The Truth About Buyers Agents In Australia 2025 (WARNING) | ft. Brennan Nash

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The Truth About Buyers Agents In Australia 2025 (WARNING) | ft. Brennan Nash · The Follio Property Podcast

• 0:00
  Perth's oversupply, high vacancy rates, high stock on market is going through a downward cycle. You should be investing in Melbourne or Sydney. What's the general consensus you're seeing specifically to say the Perth market at the moment? Rates are coming down, population's growing, stock on market is so low. Such an accountant answer. Every client's going to get a different strategy, even with the same budget. What's some of the key questions that an advisor should really be finding out? The client isn't dictating what they want. I want to buy a property.
• 0:25
  what are you trying to achieve? I want to make some money. What's happening to your insurance inside your super funds? And they said, what are you talking about? So that property advisor almost costs them life insurance. And the accountant. Yeah. So by not having the right team around them. The accountant. Yeah. Is there still opportunities in the Perth market to get it at or under replacement costs? Because when the market's hot, it's typically much more difficult.
• 0:47
  You're listening to the Folio Property Podcast. I'm Rhys Bettle and I'm here each week with my co-host, Lachlan De La Hunty. If you're enjoying the podcast, do us a favor, hit like, subscribe and leave a comment so we can grow this channel and bring more amazing guests like the man in here today. I want to welcome Brennan Nash, Head of Advisory at Folio. Welcome, Brennan. Thanks for having me. Happy to be here.
• 1:10
  You're obviously dealing in the engine room with the business and hearing and speaking with a lot of clients from a day-to-day basis. So what I thought would be really good to talk about today is what it looks like from a good property advisor standpoint, what's some horror stories that you've heard, any sort of tips and advice you've got for people out there as well. And obviously Lachlan.
• 1:28
  being experienced manager himself, kind of coming in with some of those antidotes as well. Yeah, look, obviously we've seen hundreds, if not thousands of clients over the years. And from first-time buyers, experienced investors, we've seen a lot. Like there's horror stories, there's good stories, there's good operators out there, no doubt about it. But no matter what you do, I think it's always important to just...
• 1:51
  You need to see an advisor who's experienced and got the expertise, the qualifications. We bang on about that all the time. Like there's a lot of accidental heroes in the Perth market and Adelaide and Brisbane who've bought properties in the last five years, made their clients 80% and think they're great. But a rising tide lifts all ships, right?
• 2:08
  It's so true what you say, like a rising tide lifts all ships. But we've seen the other side of that, Brennan, and I think at the moment property's so positive, people are making money, rates are coming down. It's such an exciting time. And we've been there in the trenches in 2018 in a Perth market where no one wanted to invest. Let's cast back the clock a little bit to then and some of the portfolios that we're reviewing back then. It was tough times.
• 2:37
  It was. Look, I'll give you an example of myself, like data and timing. I bought my first property at 23, I think it was 2009, subdivided that there, made money. Five years later, bought the property right next door, block of land, subdivided it and lost 30 grand. So with that there, I held it for five years.
• 2:59
  and lost 30 grand. The person that bought it off me in 2020 sold it six months ago. So they held it for just over four years and has made 400 grand on it. So it's important to understand that data and timing is so important in property.
• 3:16
  and having advisors who are going to take the time to understand your position, and also what you're trying to achieve, can give you that value. So I wish in 2014 when I bought that second property, I paid the 10, 15 grand, whatever it was, to see an advisor who could tell me, Brennan, don't actually go and buy that property in Perth. Perth's oversupplied, high vacancy rates, high stock on market, is going through a downward cycle. You should be investing in Melbourne or Sydney, and it would have been a far better outcome.
• 3:44
  Yeah. Hindsight? No, we've all made mistakes. So, yeah. All three of us haven't, I think. I think any investor who's been in the game long enough is going to make mistakes. And we're not going to put up a handout now and say that we won't make another mistake in a market where we're certainly far more progressed. Yeah.
• 4:02
  I think that anyone in the industry, when it comes to data and analytics, doesn't mean we're perfect, but you've got to set yourself up for success. And to do that, I agree. Data underpins all that. Yeah. And you talk about accidental heroes and we come across a lot of those accidental heroes. You're seeing a lot of these...
• 4:22
  accidental heroes from a day-to-day basis, what's their mindset? So, for a first, I say this all the time, for a first time a generation in Perth, people now have got a positive mindset on property. Are they looking to leverage that equity at the moment? And are they looking to leverage it in their backyard? Or what's the general consensus you're seeing specifically to, say, the Perth market at the moment?
• 4:43
  A lot of people have equity. They're positive because property has done well over the past four or five years. And they think like, look, it's going to continue. Obviously, like Lachlan said, rates are coming down, population's growing, stock on market is so low. So people can see what's happening. And there's definitely confidence in the market. And they definitely want to leverage that equity. Yeah. So in terms of wanting to reinvest that back into the market, a lot of them are saying, look.
• 5:08
  we only know Perth. Should we be investing in Perth or should we be looking at other regions? And what's your advice? Obviously it's circumstantial, right? Yeah, yeah. Look, my advice is speak to an advisor. They'll look at your overall situation, see what's most suitable for you. It might be Perth, it might be Melbourne, it might be Brisbane. Such an accountant answer. But it's true. I say this all the time when I'm speaking to
• 5:34
  clients or some referral partners is we could have four or five people come to us all with a budget of say 800,000 and all four or five will get recommended a different asset, different location because it is going to come down and you could probably speak more to this Brennan.
• 5:49
  in terms of what their strategy is and where they want to get to. Because each asset for that price point could have a different yield, would be in a different growth market, would be different sort of risk profile. Yeah. I agree. 100%. And you hit the nail on the head there. Every client's going to get a different strategy, even with the same budget. So how long do you plan to hold the asset for? Are you looking for high yield as a capital growth? When do you plan to operate your PPOR? Is that going to hinder you? So all this needs to be taken into account. If you're going to go to,
• 6:16
  a buyer's agent or an advisor who's just going to pick up the phone and say, yep, I'll buy you an asset for 800K in Moreland in Perth or in Clyde North in Melbourne without actually understanding what you need. How are they going to ascertain if it's the right property for you? Yeah. So. It's a good point. My last two client meetings that I've had in the last 48 hours, my recommendation was buy no more. Like we've done a lot of the heavy lifting. They're at a different stage of life now, heading probably 10 years, eight years out from retirement.
• 6:43
  And we've pushed the portfolio over the last eight years really hard at the point where they were pretty uncomfortable with debt. Clients that you'll be familiar with, Brennan, you've probably purchased for them as well. And we've just divested a couple of those assets in a really strong, really healthy cash position position.
• 6:59
  You know, the wife's in the ability, in a position now where she can quit work comfortably. We're going to keep three of the assets to pay them a positive income with very low debt on those assets. So it's going to pay them 120, 130K a year in cash flow, which replaces her income. So the advice was they come back and say, look, you've looked after us so well over the last seven, eight years. What do we do next? And they come with a few ideas, a few plans of where they should be buying. And to be honest, it was on reflection. I said, let me think on it.
• 7:29
  Spent some time with you, ran it past you, and the advice was pretty clear. At this stage, they don't have to do anything more, and that's what people need to realise. I know we're very bullish. The stages of life where you need to be bullish, if you want to set yourself up for those later years, but those last two meetings, the advice was do nothing, and you're seeing that all the time. 100%. I think you look at, and we hear some of these horror stories as well, where
• 7:54
  buyers agents or so-called buyers agents or investment advisories, there's an agenda there. So they may be pushing a certain market, but I know the amount of pre-work our team does or the business does in terms of getting to know their circumstances. You deal with a lot of these conversations at the front end and you're not giving out strategies off the whim. What's really important?
• 8:15
  If we've got a potential client here looking to start their property investment journey, what's some of the things they should be getting out of their property advisor, whether it's us or someone else that they're speaking with? That initial meeting, what's some of the key questions that an advisor should really be finding out? Definitely current portfolio, experience with investing, time that they need to be invested in the market. Borrowing capacity is a big one because that usually dictates sometimes the type of asset or the region you may be in as well.
• 8:42
  and making sure that the client isn't dictating what they want. Like the advisor needs to be telling you what you actually need. You should not be dictating to an advisor. Yeah. So that's a role of a buyer's agent. So I think if you look at a buyer's agent versus an advisor, a buyer's agent, and we've got a business that offers home buying services as a buyer's agent,
• 9:05
  you as a client are telling them where you want to live and therefore they can go and achieve that and that's a different service offering how's that different from an advisor so they'll come to us and say right like i got an 800 grand pre-approval i want to create equity i want to create wealth i want to pay off my home in five years um we don't say okay we'll go buy exactly what you want in a sub if you want us to buy so where does the conversation go my client i walked in i've got 800k pre-approval brennan i want to buy a property
• 9:33
  Okay, why do you want to buy a property? What are you trying to achieve? I want to make some money. Everyone's making money in property at the moment. My neighbor just made 200 grand in like six months. Yep, so it's just a truly wealth creation. You want to make money? Great. How long do you plan to hold it for?
• 9:43
  Well, my neighbours are probably going to sell these now. What if I want to make money as quickly as I can? Well, then we need to look at a region that's going to have very quick capital growth. Number one, how much yield do you require? How much cash can you afford to burn? So, yeah, you've got $800,000. What's your free cash flow? That really dictates the type of asset that we're going to look at. So if we needed a higher yield, you might be looking at Perth. If you're looking at a long term, it might be different.
• 10:06
  And this is important because you get asked and that's what everyone wants to come in. They've heard something, you know, it's topical, it's in the papers, it's sexy. Yeah. And so people's circumstances change as well. Like I think your current position now will look different over that period of your goal. Let's say your goal is, you know, 15, 20 years to pay off that principal place or have that retirement. You know through that 15, 20 year period, there's going to be moments in your life that, you know,
• 10:32
  Cash flow is going to be a challenge or maybe you can be super aggressive. Give myself as an example, single income family for the next couple of years, but within two, three years, wife will go back to work, can be a little bit more aggressive with cash flow or lower yielding assets as well. So I think that's what's really key about when you are meeting with people like yourself is –
• 10:52
  Giving them as much detail because it can really change the strategy and what sort of assets are recommended. The advisor has to, like, it's actually more the client. You're just getting, we have to get the client to speak. We really have to understand their current position and really what they're trying to achieve. We try and extract as much information as we can. So it's less of us speaking, I'd say, and getting the client to speak more.
• 11:13
  One of the big mistakes I see people making, and they go, I'm very pro-debt, but not forecasting out big life events that are coming up. And one of those things is typically upgrading a property. So they go, we want to buy an investment property. And then we come back and say, well, let's bring it right back. Do you enjoy where you're living currently? And they're like, no, we're probably going to upgrade that in two or three years. Okay. Do you understand my buying investment property is going to cheer up your serviceability? Have you thought about bringing that?
• 11:40
  where are you going to buy? Is it in a growth market? Well, if it is, have you thought about bringing that forward because it's going to be more expensive to buy in three years than it is now? What are some mistakes that you often see, Brennan? A hundred percent. That can be some of them where people have already made a purchase and then come to us or just received, I don't know if you can call it negligent advice. We just dealt with one yesterday. They went to a property advisor and they've
• 12:05
  said, look, you don't have any serviceability in your personal names. Open up an SMSF. We'll refer you to an accountant. And the accountant had set up the SMSF, said, right, go ahead and call your super fund and do a rollover. The property advisors offered him an off-the-plan apartment in Melbourne. And they said, we don't want that there. So they've come to us.
• 12:24
  And luckily, I've got a financial planning background. I said, right, you've set up the SMSF. The SMSF is the rollover done. And they're like, yep, we've just ordered. I said, okay, what's happening to your insurance inside your super fund? So they said, what are you talking about? So I just said, right. So this person was going to be uninsured. Yeah. Tell the listeners for what? So basically by...
• 12:43
  rolling all of their super out of their, one was in CBUS and one was with an ANZ fund. By rolling their super into the SMSF, they were closing their retail funds and closing off their life insurance, TPD income protection, and not reactivating it or not getting new insurance inside super. So I said, okay, first of all, you need to go see a planner. Make sure you maybe leave your minimum amounts in your retail funds so you're still insured or go and get new insurance, but you need to see a financial planner to make sure they're actually receiving adequate advice
• 13:13
  So that property advisor almost costs them life insurance. And the accountant. Yeah. So by not having the right team around them. The accountant. Wow. Yeah. So we talk about there, we've spoken about on previous podcasts where you need a property team around you. So an advisor, accountant.
• 13:30
  financial planner to a certain extent. The beauty with yourself is you've experienced all three. So you're pretty- And a broker as well for a couple of years. And a broker. A couple of hats there, yeah. So you're pretty well versed in all those areas. From a broking side, any sort of horror stories you've seen recently or-
• 13:49
  ill advice that they've been given in terms of the structuring around the loans? There's a client who's just bought a property in Perth, just got an investment property over the weekend, and has come to us just for structuring advice. So inheriting a property, his mum's going to give him one.
• 14:07
  And obviously she's going to incur CGT on that asset by giving him an investment property, still a CGT asset. And he needs to pay stamp duty. So his serviceability is pretty maxed out. He's got about 1.1 mil of debt. The brokers just said, yeah, look, go and get a loan of 100K and pay your mum 70 grand so she can pay her CGT. And you pay the 30 grand in stamp duty.
• 14:31
  He's currently got 600 grand debt on his principal place of residence and he's now going to have an investment property with only 100 grand debt on it. So first thing that came to mind is why are you going to have such high non-deductible debt and not maximize your deductible debt? So I said.
• 14:46
  So those listening, he's going to have all of his debt on his home, not on his investment property, therefore can't get the tax saving for negative gearing. So I just said, speak to your broker, see if this can be done, buy the house off your mom at market rate, which is $750,000, whatever it may be. She's going to give you back $650,000 of that in cash that you're going to pay off your house with. And now you've got $650,000 or $750,000 in deductible debt.
• 15:10
  So that alone is a 40 grand. You cannot avoid stamp duty, so nothing was going to change from that point of view. Exactly. Nothing's changed from stamp duty. She's still paying the same CGT, but he now has about 42 grand in interest expenses he can claim against his taxable income, getting him back around 12 grand a year. Just by that one conversation, he's going to be saving 12 grand a year in tax.
• 15:30
  And if you think about that, those conversations, if you don't have someone well versed and you have that strong team around you, they're just going to continue that. That was the question. Yeah. So having a good broker, good accountant, good financial planner, good property advisor, all working together. So what I love about us is even though I've done the accounting, the financial planning, the broking, I'm not practicing that anymore. Like property is the passion. Still give tax advice.
• 15:54
  We work with all our clients, financial planners, all their accountants, all their brokers to make sure we're providing holistic advice and the best outcome. So I think that's mostly what's important for the client journey. Just have a good team around you. We've spoken a lot about horror stories, which I see them daily. It's often around structuring or fail to pre-plan.
• 16:13
  and pre-plan those life events and there's nothing worse when a client has to sell a property forced to sell a property because they didn't foresee in the planning you know from their financial plan or their broker or just their own they've gone out and bought properties and didn't realize that a life event was going to change what are some of the good stories that you've helped create or you see often that you know things are gets them in a far better position by just a bit of planning
• 16:38
  I'll use a broker again as an example. This one year we referred to a very good broker. These guys were in an apartment. They bought it 2020. So they've seen growth in it now. But at the time, it was just the two of them didn't plan on having kids so soon. Then I got two kids in a one-by-one apartment. So they need to upgrade.
• 17:01
  Incomes are in the best. Luckily, their apartment's gone up. They've got a bit of equity in it. They don't want to sell it though. So they could only borrow about 550 grand. But you're the advisor. So what we've actually done is they first saw a broker and the broker just told them, look, you're going to have to pay LMI and you can only borrow 550K.
• 17:21
  Knowing already that they've paid LMI on that apartment when they bought it the first time, we went back to the broker and just said, is it possible to refinance the apartment and redraw the equity
• 17:31
  out of it with the same bank. You've already paid LMI, increase your loan back to that same level and take the equity out. And you've now got 70, 80 grand of cash to go help purchase the next asset. So the good thing about that is we just secured an asset for them for 772,000. So they were able to get into a better suburb, a better asset by having the broker on board to be able to get them more borrowing capacity because they could not have to pay LMI again.
• 17:59
  Yep. And they can still keep what we believe is an investment worth holding. Exactly. You obviously give a lot of advice on the front end in terms of how to build out that portfolio. What about exiting a portfolio? And the opportunity cost. And we've made calls, Brennan, obviously we've seen a lot of clients that have had B and C grade assets. That decision around exiting or replacing B and C grade assets with higher quality. What's your stance on that? Give us some examples of where that's worked really well or potentially where clients have missed the read.
• 18:29
  Exiting is important. Obviously, I exited an example of myself quite early, but that was to upgrade the PPR. So I still transacted in the same market. So I did well on the PPR, a lot better by getting to a better. In a tax-free environment. Exactly. So arguably in that scenario, it was better to do that. 100%. So in terms of exiting, it's important to, again, data. Data and timing. You want to always time the top of the market if you can, but making sure that the data is there to see, is stock and market rising?
• 18:56
  Is our vacancy rates rising? Is population growing within that region? Or do we have net interstate migration leaving Perth or Melbourne, wherever it may be? So replacing BNC-grade assets, once a client in a portfolio is maxed, and we see it all the time, clients with multiple properties, but unfortunately they might have four or five properties, but they've got no A-grade quality stock. And we talk about it a lot on the podcast and also we do it.
• 19:23
  in the office that we're a business about quality over quantity. When is it the right time to replace BC and D grade assets with more quality? Because when you exit properties, there's costs involved, exit fees. Talk to us throughout. Definitely the opportunity cost is important. So making sure if you've got those BC D grade assets in your portfolio, that's actually weighing you down. Over a five, 10 year period, that percentage growth that you can get in a blue chip asset far outweighs the cost of selling.
• 19:53
  in my opinion. And you can just look at that if you were holding a C-grade asset when you could be invested in Brisbane or Melbourne from 2015 to 2020. Phenomenal growth in that period. So you'd happily exit those C-grade assets to upgrade if you're going to be holding for the longer term. But again, looking at the data and looking at the type of asset and region you should be invested in.
• 20:15
  But what about trading in the same market, Rob? We've had a client, you spoke about an off-the-plan apartment or apartment, a D-grade apartment. There's been obviously variations of asset types, units, fillers, apartments. What's your thoughts around trading D-grade stock within the same market to upgrade that stock to A-grade? Look, in the same market, I think it's important to get that better asset.
• 20:38
  Especially if you look at Perth right now, apartments did really bad for a long time. Houses ran, villas, townhouses ran. Now apartments are moving. It might be time to offload that apartment while you can get a decent price for it and still get yourself into a really good asset that's still going to have a lot of upside potential. Because if you don't and the market turns, you're then holding a degrade asset that if you're trying to sell.
• 21:02
  And we know we can't. We take our backs off to Perth 2015. You couldn't sell B-grade assets, let alone D, in Melbourne 12 months ago. Yeah. Yeah, you couldn't sell one-by-one bedroom apartments in the Docklands or even Richmond, right? I was supplied. And I'm dealing with that with a client in Canberra at the moment. Two apartments in Canberra have been in the market for eight weeks and has had four people through them.
• 21:23
  the developer has still got empty stock in the building. So we're trying to get rid of those assets. But Cranber two years ago when the market was absolutely at its pinnacle, those things would have been selling like hot gates. So that's the timing factor of exiting is so important. Before we let you go, Brennan, it's thought it'd be just good to wrap up and get your opinion on the current market today and what areas are you seeing good value in across Australia? You've obviously mentioned, we've mentioned Perth. We know that's still on a run there.
• 21:49
  Is there any other areas? Is Perth still an area that you'd support for? Yeah. Look, Perth, what did we do? 0.9% last month, 0.7% the month before. Vacancy rates are low. Stock on market's now critically undersupplied. We still have 50,000 people a year coming into Perth. People are able to spend more, and they need to. So it's critically undersupplied. I see massive upside for Perth. Melbourne, I like Melbourne. It's...
• 22:18
  Obviously went through the trenches the last three years, but it's turned a corner, positive price growth since February. Every month since Feb, clearance rates are at above 70% now at auctions. You're buying in many areas, sometimes below replacement price, which is a great time to enter a market when you're buying below replacement cost. So I'd say, yeah, definitely Perth got legs in it still and Melbourne would be my second bet.
• 22:40
  I know you've talked to us about replacement costs. It's a huge metric that we use to measure opportunities in a market. But talk to us about where you see that opportunity and what is replacement cost and how to benefit from it as an investor. Yeah. Yes, I'll give you an example in terms of, let's say, Melbourne. If you're in north in Burwood, View Bank, you're able to buy a townhouse, for example, for 675 grand.
• 23:04
  To build that, there's likely going to cost you $450,000, you know, and you're not buying the block for $220,000. You're spending nearly $350,000 to $400,000 on a block. So the replacement cost for you to buy the land and build is likely going to be $750,000, $800,000. But there is those opportunities where you're picking them up now for $675,000 to $700,000.
• 23:22
  We're talking about $100,000 below replacement cost and you see that as a huge opportunity because when that product's finished, there's instant equity. Exactly. Yeah. Perth on the other hand, look, we're critically undersupplied building here. It's stabilised. You're able to get really good builds done as well. Is there still opportunities in the Perth market to get it at or under replacement costs? Because when the market's hot, it's typically much more difficult.
• 23:46
  I would say certain areas. It depends on the land prices and the builders you choose. So there's always going to be, I think, opportunities. There definitely is. But you'd have to pick your areas very, very, be quite precise with where you're investing.
• 24:02
  We don't go too much into vast areas with lots of land supply where there's going to be no scarcity in the future. So just making sure you do, again, data, looking at the data for each area. What about retained subs? What do you think?
• 24:17
  We get hit with this all the time. I think people are still running on the gravy chain from 2019. Are you still getting a lot of clients coming to you, wanting that retained sub? Every day. Yeah. What's sort of the overall consensus that you're feeding back to them on what's achievable from a price point? Is there still value in the market going down? It's opportunity cost. Go and try to find a retained sub. Sorry to cut in here. No, go.
• 24:40
  Go and try to find one. It's like a needle in a haystack that doesn't exist, which you may have to overpay by 50 to 100,000. That's six to 12 months where you're trying to find that asset. Established non-subdividable blocks, just gone up 150 to 200,000. Your net difference, you could be out of pocket 200 grand by the time you could have made a decision on a very good A-grade value-add asset. And value-add can be in many forms. Renovation, extension, modest renovation, facelift, development, not just retain and sub.
• 25:09
  And that opportunity costs by getting into the market prematurely rather than trying to find the needle in the haystack.
• 25:17
  will typically make you more money in the long run. Do you agree or disagree? A hundred percent, a hundred percent. And it comes down to just stock levels. So like you said, needle in a haystack, 3,200 properties in Perth at the moment. And owner occupiers are now buying retained subs and not actually. Not to subdivide. Yeah. They just need a house to live in. There's no money in the deals. When we do the feasibility, you're buying a retained sub. If you developed and sold it as of today, you'll be negative a hundred K. So.
• 25:42
  There's no money in the deal. So you're forecasting, speculating growth in the market to get the upside. And everyone just thinks, oh, retain sub. I'm going to buy it, subdivide it, sell the land, and I'm going to make money on the front house. But you do the numbers. Yeah, the feasibility studies we do. Because building prices. 30 or 40 might we do. And yeah, not all of them stack up. So yeah. Majority don't. Yeah. Majority don't. Yeah.
• 26:05
  So they are there, but very, very difficult. And again, you're- It comes back to your strategies. And that's where I love talking to these clients. They come in, this is what I'm gonna buy. They might've watched one of our Instagram reels where I bought something at 18 that was a retained sub. Melbourne's a market where we can explore those options and we are at the moment because it's, there's more stock available. It's certainly not in highest demand as Perth is and it's a market that's early in the cycle. So that's a great strategy in that market. But coming into a market like Perth later in the cycle,
• 26:34
  you just got to be realistic. And by trying to go down that path, you're just going to cost yourself time and therefore cost yourself money. Thanks for joining us today, Brennan. My pleasure. Thank you. Been listening to the Folio Property Podcast.