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You Can Invest in Property With $5. Yes, Really. (A Beginner’s Guide to REITs) · She's On The Money

• 0:00
  Speaker 1: My name is Tatasha Bamblet. I'm a proud First Nations
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  Speaker 1: woman and I'm here to acknowledge country t Glenn Young
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  Speaker 1: Ganya Niana Kaka yah Ya bin Ahaka Nian our guy
• 0:11
  Speaker 1: in Nimbina, yakarum jar Dominyamka Domaga Ithawakaman damon Imlan bomber
• 0:16
  Speaker 1: bang Gadabomba in and now in wakah ghana on yak
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  Speaker 1: rum jar Watnadaa. Hello, beautiful friends, we gather on the
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  Speaker 1: lands of the Aboriginal people. We thank acknowledge and respect
• 0:27
  Speaker 1: the Aberiginal people's land that we're gathering on today. Take
• 0:30
  Speaker 1: pleasure in all the land and respect all that you see.
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  Speaker 1: She's on the Money podcast acknowledges culture, country, community and connections,
• 0:40
  Speaker 1: bringing you the tools, knowledge and resources for you to thrive.
• 0:44
  Speaker 2: She's on the Money. She's on the Money. Hello and
• 1:08
  Speaker 2: welcome to She's on the Money, the podcast that shows
• 1:10
  Speaker 2: you investing isn't just for the rich, It's for you too.
• 1:13
  Speaker 2: If you've ever looked at the housing market and thought
• 1:14
  Speaker 2: that's actually literally never going to happen for me, you're
• 1:18
  Speaker 2: definitely not alone. What if I told you there were
• 1:20
  Speaker 2: other ways to get your foot in the property door.
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  Speaker 2: I'm beck scited and here to show us how we
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  Speaker 2: can invest in property without taking on a million dollar mortgage.
• 1:27
  Speaker 2: Is our favorite finance expert Victoria Divine. Hello, Vi Hello.
• 1:31
  Speaker 2: You can take on a million dollar mortgage if you
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  Speaker 2: want to, but like, if you want, that's not what
• 1:36
  Speaker 2: you have to do to get into the property market.
• 1:38
  Speaker 2: That's actually crazy. And I mean I'm a skeptic right now,
• 1:42
  Speaker 2: but I really want to know. I actually hate it
• 1:45
  Speaker 2: so much. I did a presentation the other day actually
• 1:48
  Speaker 2: for Australian Unity and it was really really cool. I
• 1:50
  Speaker 2: went into this complete side note. I got invited to
• 1:54
  Speaker 2: their executive leadership retreat. Whoa soundspoosy. I was so scared
• 1:59
  Speaker 2: where I entered to them about like, you know, our
• 2:02
  Speaker 2: demographic Beck, like you and I and like what the
• 2:04
  Speaker 2: world looks like in nineteen seventy six, when people like
• 2:09
  Speaker 2: our parents were probably you know, thinking about property or
• 2:12
  Speaker 2: buying property. Property cost like twenty five thousand dollars and
• 2:18
  Speaker 2: the average property in Melbourne and Sydney cost about four
• 2:21
  Speaker 2: times your annual salary. Yeah, and so now if we
• 2:25
  Speaker 2: look at it, property in Melbourne and Sydney will cost
• 2:28
  Speaker 2: on average thirteen times your annual salary. And if you
• 2:32
  Speaker 2: were to and I did all the maths and stuff
• 2:34
  Speaker 2: in the background, that's why it's like so fresh in
• 2:36
  Speaker 2: my mind. And I was like, oh, you'll love this bad.
• 2:38
  Speaker 2: If salary and wage growth kept up with you know,
• 2:42
  Speaker 2: how prices of houses had increased, our average salary would
• 2:47
  Speaker 2: be about one hundred and ninety thousand dollars each per year.
• 2:51
  Speaker 2: So like, you know, each and every single one of
• 2:53
  Speaker 2: us would have an average. So like spack Man in
• 2:56
  Speaker 2: the middle, like that would just be They're like, oh, yeah,
• 2:58
  Speaker 2: most people earn. That reality is we earn on average
• 3:02
  Speaker 2: sixty five thousand dollars a year. But I think that
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  Speaker 2: we still apply the same pressure that our parents' generation did.
• 3:09
  Speaker 2: I said to you right now, BEG, do you want
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  Speaker 2: to buy property? Definitely? How the hell?
• 3:14
  Speaker 3: Yeah?
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  Speaker 2: But you might you know, if we had a deep conversation,
• 3:17
  Speaker 2: you might go, yeah, I would. I would love to
• 3:19
  Speaker 2: own property, but I just don't think it's accessible for me,
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  Speaker 2: or I just don't think with the lifestyle I lead
• 3:24
  Speaker 2: like that's an option. And I guess what today is
• 3:27
  Speaker 2: about is really teaching you that it can be an option,
• 3:30
  Speaker 2: that there's just a different way of going about it.
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  Speaker 2: It's not going to be the you know, white picket
• 3:36
  Speaker 2: fence and three bedroom home on like a seven hundred
• 3:38
  Speaker 2: square meter block, Like that's just completely inaccessible for the
• 3:42
  Speaker 2: average person because the average of that type of property
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  Speaker 2: in Melbourne and Sydney is about one point two million dollars.
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  Speaker 3: Betch.
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  Speaker 2: So I think that's important from my perspective to contextualize,
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  Speaker 2: to give you like some solid proof that it is harder.
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  Speaker 2: But what if I told you that you can still
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  Speaker 2: get exposure to the property market without needing a house
• 4:01
  Speaker 2: deposit or even a mortgage. I'd say, Victoria, you're a liar. Victoria,
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  Speaker 2: what MLM are you starting? What are you doing? Well,
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  Speaker 2: you can actually invest in property beck on the share
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  Speaker 2: market through something called an ariit And like we all
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  Speaker 2: know that our girl Beck, she's now got more than
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  Speaker 2: a thousand dollars in her She again, isn't that crazy?
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  Speaker 2: That is so crazy? It was just like little bits
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  Speaker 2: like five dollars every few weeks comes out. I think
• 4:27
  Speaker 2: Chares's shoot, hit you up so that you can be
• 4:29
  Speaker 2: like their ambassador of like girl, like, it's actually not
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  Speaker 2: that hard. Yeah. I've been saying this for years. I've
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  Speaker 2: had this podcast, what like six years, and I'm like,
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  Speaker 2: I promise it's not that hard. I promise it's not
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  Speaker 2: that hard. And people were like, oh no, like I'll
• 4:42
  Speaker 2: do it when I earn more. I'll do it when
• 4:43
  Speaker 2: I do. Like you just started, and you're like, hold on,
• 4:45
  Speaker 2: hold on, hold on, yeah, yeah, yeah, this is not
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  Speaker 2: that bad. But Beck, you could give yourself exposure to ariit,
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  Speaker 2: okay through Chasya's or and like, it's not about chairs
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  Speaker 2: Eya's at all. This is more about like the ability
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  Speaker 2: to access ARIA which is a real estate investment trust,
• 5:04
  Speaker 2: and these are you can buy them on the AX
• 5:06
  Speaker 2: in the same way that you would like look up
• 5:08
  Speaker 2: you know, the ASX top two hundred. You would just
• 5:11
  Speaker 2: look up ariits and see what comes up. But they
• 5:14
  Speaker 2: basically own and manage big income producing properties like shopping
• 5:19
  Speaker 2: centers or warehouses or office buildings or even like storage facilities,
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  Speaker 2: which make bank by the way, really yeah, and they're
• 5:28
  Speaker 2: super super accessible. So if you're like, oh, I really
• 5:31
  Speaker 2: like the idea of property because to me it feels
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  Speaker 2: a bit more stable, like the share market maybe is
• 5:35
  Speaker 2: not what you're super super comfortable with, but you also
• 5:38
  Speaker 2: don't have heaps of cash to start with, Like, oh,
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  Speaker 2: you can start with five dollars. Yeah, so if you
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  Speaker 2: want exposure to that, an ariit might be a good idea, Okay,
• 5:47
  Speaker 2: so be say units. Yeah, you can buy units in
• 5:51
  Speaker 2: a ariit, which is not a pun so not shares.
• 5:54
  Speaker 2: They're not shares, they're not shared. Okay, they're not shares,
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  Speaker 2: and they are different. So a share and a unit
• 5:59
  Speaker 2: is a different thing. Sometimes people use them interchangeably, and
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  Speaker 2: those people, my friend, are wrong. I see a share
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  Speaker 2: belongs to a company and they issue shares. Units belong
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  Speaker 2: to trusts. Right, So if you would to establish a trust,
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  Speaker 2: you'd have units in that trust. You wouldn't have shares
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  Speaker 2: in that trust. And an ariit is a trust, so
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  Speaker 2: you're basically a unit holder, not a shareholder. Does that
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  Speaker 2: make a lot of a difference, Not really if we're
• 6:27
  Speaker 2: being brutally honest, because all of these things are so
• 6:29
  Speaker 2: highly regulated. But at the same time, to me, it
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  Speaker 2: does change your risk profile because obviously property over time
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  Speaker 2: has been a little bit more stable, and like, if
• 6:41
  Speaker 2: we look at a risk and reward chart and I
• 6:43
  Speaker 2: like drew one up for you, we've kind of got
• 6:45
  Speaker 2: like cash and then some bonds and like you're getting
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  Speaker 2: a bit more risky and property would sit there, and
• 6:50
  Speaker 2: then like Australian shares that's like getting a bit more risky,
• 6:54
  Speaker 2: and then international shares up here. So basically you're kind
• 6:57
  Speaker 2: of using the share market platform to invest, but taking
• 7:01
  Speaker 2: your risk back down to a property level. God, if
• 7:04
  Speaker 2: that makes sense, yes, yes, yes, definitely, so on the
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  Speaker 2: stock market or on the share market, also very interchangeable,
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  Speaker 2: they trade in exactly the same way, so like it's
• 7:14
  Speaker 2: not more complex to you as a buyer, even though
• 7:16
  Speaker 2: you might go, oh, but I've never heard of these
• 7:17
  Speaker 2: God's probably just because you haven't looked them up. Like
• 7:20
  Speaker 2: it's because you haven't been told about them. And that's
• 7:22
  Speaker 2: what this whole episode is for. So with an ariit,
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  Speaker 2: you're not technically an owner of the company. So with
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  Speaker 2: a share, you like buy a tiny piece of the
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  Speaker 2: pie and then that enables you to get part of
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  Speaker 2: their profit and part of their growth, and you're kind
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  Speaker 2: of like a tiny little CEO. Absolutely. Instead, in an ariit,
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  Speaker 2: you are a beneficiary of the trust. Sure, so becoming
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  Speaker 2: a trust fund baby. Oh we love trust fund babies, right,
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  Speaker 2: could you say that? Technically? I mean technically you're a
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  Speaker 2: beneficiary of the trust. Okay, for someone who's the trust
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  Speaker 2: fund baby would be the beneficiary of a trust, so
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  Speaker 2: like for me, that's the same. But I'm buying my
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  Speaker 2: status myself. Yeah, I didn't have wealthy parents. They didn't
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  Speaker 2: set up a trust for me. I'm gonna do it myself.
• 8:06
  Speaker 2: Oh my god, I love So if you want to
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  Speaker 2: be a trust one baby, like, that's maybe a way
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  Speaker 2: in it's never too late to be a trust one baby,
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  Speaker 2: never too late, And you could do it with five
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  Speaker 2: dollars and then like in your like insta bio, you
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  Speaker 2: could write trust one baby. Wow, I think that would
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  Speaker 2: be fun. But what that means, yes, is like with shares,
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  Speaker 2: you kind of become, as I was explaining before, a
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  Speaker 2: part owner of the company. And like, technically you have
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  Speaker 2: voting rights and dividends, but like because we're tiny and
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  Speaker 2: because like we're only buying small amounts, like you can vote,
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  Speaker 2: but there's not a lot going on there. Sure, But
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  Speaker 2: with units, you hold a stake in the trust's assets,
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  Speaker 2: so the property portfolio, and you're entitled to a proportional
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  Speaker 2: share of the income that that trust generates. And instead
• 8:51
  Speaker 2: of being called dividends. They're called distributions. Got you again
• 8:56
  Speaker 2: because trust fun babies get distributions, I see. And that
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  Speaker 2: is why with ariits like when it comes to like
• 9:03
  Speaker 2: tax time, you'll see annual distribution statements, which I feel
• 9:06
  Speaker 2: like so many people are like, oh my god, Like
• 9:08
  Speaker 2: I signed up to this, and at tax time, I
• 9:10
  Speaker 2: got an annual distribution statement and I also got my
• 9:12
  Speaker 2: tax statement from Chaza's and like everything's a bit confusing.
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  Speaker 2: I promise it's just because it's the first time you've
• 9:17
  Speaker 2: seen it. Like it's fine. So instead of that, you'll
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  Speaker 2: get your annual distribution statement instead of a dividend slip
• 9:24
  Speaker 2: in the mail. Because the income kind of flows through
• 9:26
  Speaker 2: a trust structure, which means you're buying into that trust.
• 9:29
  Speaker 2: But they could also like put new properties and stuff
• 9:31
  Speaker 2: into that trust as well, which you would then benefit from.
• 9:34
  Speaker 2: So to give you a good example, if you wanted
• 9:36
  Speaker 2: something to look up on Chazy's, because you're like I
• 9:38
  Speaker 2: don't even know where to look up, Yeah this, do
• 9:40
  Speaker 2: I look up Ariit, you could because like you know,
• 9:43
  Speaker 2: I'm not trying to be promotional here, but Chaz's has
• 9:46
  Speaker 2: its like AI search function, So if you looked up ariit.
• 9:49
  Speaker 2: It would come up with a lot of different like
• 9:51
  Speaker 2: curriit options, But Goodman Group, I would say, is and
• 9:55
  Speaker 2: this is not a recommendation. This is just my example
• 9:58
  Speaker 2: and the reason I'm using this is because it is
• 10:01
  Speaker 2: Australia's largest ariit I see and it's ASX ticker code
• 10:05
  Speaker 2: if you want to look it up, is GMG. But
• 10:07
  Speaker 2: it's focused on industrial property and logistics, so it buys
• 10:11
  Speaker 2: lots of warehouses and data centers and in that space
• 10:17
  Speaker 2: demand has absolutely surged because of AI. So the reason
• 10:21
  Speaker 2: AI is making that surges because there's a lot of
• 10:24
  Speaker 2: infrastructure needed for AI and you need to put it
• 10:27
  Speaker 2: in warehouses, you need to put it in data centers,
• 10:29
  Speaker 2: and this company buys that. So they're just the biggest
• 10:32
  Speaker 2: one in Australia. Are they the best? Who knows? It's
• 10:35
  Speaker 2: not a recommendation, it's just a like if you're starting
• 10:38
  Speaker 2: to quote do your research, how do I do my research?
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  Speaker 2: What does that mean? Have a look at this, get
• 10:43
  Speaker 2: a feel for what that looks like, and then we
• 10:45
  Speaker 2: can find some more and like maybe find one that
• 10:47
  Speaker 2: really aligns with your values if that's what you're looking for.
• 10:50
  Speaker 2: Cool okay, okay, okay, and like an RAIT is the
• 10:53
  Speaker 2: only option to invest in property on the share market
• 10:55
  Speaker 2: or are there other ways to get in? So we
• 10:58
  Speaker 2: always talk about ETF, so I I always talk about
• 11:01
  Speaker 2: ets so I don't pick You're the first to bring
• 11:02
  Speaker 2: them up. You're just like sick of me yapping about
• 11:05
  Speaker 2: how cool I think they are. But we talk or
• 11:08
  Speaker 2: I talk a lot about them being one of the
• 11:10
  Speaker 2: easiest ways to get instant diversification in your portfolio. And
• 11:15
  Speaker 2: I would say that the property market is no different.
• 11:18
  Speaker 2: So instead of just picking one ariit and just being like, oh, well,
• 11:21
  Speaker 2: I hope Goodman does a good job for me, you
• 11:24
  Speaker 2: can actually invest in a real estate ETF gotcha that
• 11:29
  Speaker 2: would then hold a lot of different ariits yep. So
• 11:32
  Speaker 2: instead of an ETF that goes, oh, I'm going to
• 11:35
  Speaker 2: pick like the Australian Top one hundred and it's got
• 11:39
  Speaker 2: things like Woolworths Group and it's got like BHP and
• 11:43
  Speaker 2: you kind of go, oh, I know those companies, you
• 11:46
  Speaker 2: might look at an ETF that holds ariits and be
• 11:48
  Speaker 2: like what the heck? M Like, I don't really understand
• 11:51
  Speaker 2: what these companies are. And that's where we've got to
• 11:52
  Speaker 2: like do a bit of googling, like how good is
• 11:55
  Speaker 2: it that we live in twenty twenty five and we
• 11:57
  Speaker 2: can just google the answer? What is Goodman group? Tell
• 12:01
  Speaker 2: me how responsible they are? Like I ask google everything?
• 12:05
  Speaker 1: Right?
• 12:05
  Speaker 3: You know what?
• 12:05
  Speaker 2: That's a lie? I asked chutchpt a lot. Don't tell anybody,
• 12:08
  Speaker 2: especially you who doesn't agree with chut ChiPT. But to
• 12:12
  Speaker 2: give you another example of something that you could look up,
• 12:15
  Speaker 2: you could look up the Vanguard Australian Property Securities Index ETF. Okay,
• 12:21
  Speaker 2: it's a lot easier if you just type in the
• 12:23
  Speaker 2: ticket code a VAP VAP VAP, gotchaap, It's like a WAP,
• 12:28
  Speaker 2: Yes it's VAP. But they hold lots of different ariits.
• 12:32
  Speaker 2: So they hold Goodman, they hold Center, and they also
• 12:35
  Speaker 2: hold Stockland. And you might have heard a lot about
• 12:37
  Speaker 2: stockland before because they own lots of like supermarket locations,
• 12:42
  Speaker 2: so like they might own the building that then coals
• 12:44
  Speaker 2: and woolies lease from. Like you walk into a Stockland
• 12:47
  Speaker 2: and they've got like their baker's delight, they've got their
• 12:49
  Speaker 2: like oh you know they're woolies and like that local
• 12:51
  Speaker 2: place that always does a really good dumplings. Like, yes,
• 12:54
  Speaker 2: they rent their stockland locations out to other businesses. That
• 12:59
  Speaker 2: makes so much. It's realist still, it's not you know,
• 13:01
  Speaker 2: residential real estate. But the money that they make is
• 13:04
  Speaker 2: from the leases that they lease out to people like
• 13:07
  Speaker 2: Baker's Delight or Brumbies or Woolies. There you go, right,
• 13:10
  Speaker 2: So that's where the money is coming from. It's not
• 13:12
  Speaker 2: just from owning property. Yes, property over time increases in value,
• 13:16
  Speaker 2: but the income part and then stockland also have gone
• 13:19
  Speaker 2: into building homes, so they do like house and land
• 13:23
  Speaker 2: packages and stuff like that. My god, may as well.
• 13:26
  Speaker 2: I mean, the more money you get, well, that's it.
• 13:29
  Speaker 2: Why not, That's exactly what we were going to do. Yeah,
• 13:32
  Speaker 2: these ETFs basically hold ariits and they can be a
• 13:36
  Speaker 2: really good option for you if you're like, well, I
• 13:38
  Speaker 2: want access to the real estate market, but I don't
• 13:41
  Speaker 2: want to go buy just one ariit. Because Victoria said,
• 13:44
  Speaker 2: it's not always a good idea to put all your
• 13:45
  Speaker 2: eggs in one basket. You could look at an ETF
• 13:49
  Speaker 2: and like, we just have to be really caught, not
• 13:52
  Speaker 2: really cautious. I feel like I'm trying to scare you.
• 13:54
  Speaker 2: I'm not, But like when we pick an ETF, just
• 13:56
  Speaker 2: really understanding what the holdings are of it, because obviously
• 14:00
  Speaker 2: an ETF is basically just a basket. It's a it's
• 14:02
  Speaker 2: a vehicle. Yep, it's your clown car, right, what types
• 14:06
  Speaker 2: of clowns are you putting in the car? Do you
• 14:08
  Speaker 2: want to know which ones you've got and want to
• 14:10
  Speaker 2: hit so different? You've got lots of different ones. I
• 14:12
  Speaker 2: don't want three, it's the same. You don't want through
• 14:14
  Speaker 2: the Absolutely, like if you're gonna like fill a clown
• 14:17
  Speaker 2: car like I need an elephant, I need, like you know,
• 14:19
  Speaker 2: an actual clown, I need the monkey, like I want
• 14:21
  Speaker 2: all of them in all of them. Absolutely. I think
• 14:24
  Speaker 2: it's really important that you understand what companies they hold
• 14:28
  Speaker 2: because that could give you a lot of peace of mind. Yes,
• 14:30
  Speaker 2: and as Warren Buffet Buffet you can call him Warren Buffet.
• 14:35
  Speaker 2: Sorry that feels but like he's American, so it would
• 14:38
  Speaker 2: be Buffett. But if it was French, it might be
• 14:41
  Speaker 2: Warren Buffo, he says, to make sure you understand before
• 14:44
  Speaker 2: you invest. I think something like that, And I mean,
• 14:49
  Speaker 2: maybe I'm the next war and Buffett watch out. But
• 14:52
  Speaker 2: I agree, like I just go, if you're going to
• 14:54
  Speaker 2: buy this, just do a bit of googling what's good Man,
• 14:57
  Speaker 2: what's center, Like, what's stockland, what do they hold? So
• 15:00
  Speaker 2: that you feel confident. What would be the benefits of
• 15:03
  Speaker 2: investing in riits and real estate ETFs? I mean you
• 15:07
  Speaker 2: can call yourself a trust fund, baby, Yes, it's one.
• 15:10
  Speaker 2: That's like number probably the biggest benefit. Yeah, I would say,
• 15:13
  Speaker 2: as I touched on before, like instead of having to
• 15:16
  Speaker 2: have a two hundred thousand dollars deposit, And like, maybe
• 15:18
  Speaker 2: I'm scaring you a little bit because I have a
• 15:20
  Speaker 2: mortgage broking business and I have six beautiful mortgage brokers
• 15:24
  Speaker 2: who get first home owners into their properties every single day.
• 15:27
  Speaker 2: And most of the time it's not with a twenty
• 15:29
  Speaker 2: percent deposit. Absolutely, with an ariit really low barrier to
• 15:34
  Speaker 2: entry so that you don't need a big deposit. There's
• 15:38
  Speaker 2: no stamp duty to pay because I pay it for you,
• 15:40
  Speaker 2: no building inspections. You just kind of open your brokery jap,
• 15:43
  Speaker 2: pick an oriit and you're in, Oh my god, that's
• 15:46
  Speaker 2: so good. And getting into the market if you are
• 15:48
  Speaker 2: a first home buyer, ask miss Jess Gricci, Yeah takes forever.
• 15:53
  Speaker 2: So like this is a really easy way to go.
• 15:55
  Speaker 2: I'm an exposure to property, and I want it right now.
• 15:58
  Speaker 2: Money win. I love a regular comestream. I don't know
• 16:01
  Speaker 2: anybody who doesn't like getting paid. We all like getting paid,
• 16:05
  Speaker 2: right absolutely. Ariits collect rent from their tenants and then
• 16:09
  Speaker 2: they pass most of that back to their investors as distribution.
• 16:13
  Speaker 2: Is that so money wins, so you can kind of
• 16:16
  Speaker 2: pocket and they usually pay quarterly or semi annual income,
• 16:19
  Speaker 2: so it's not going to be like consistent consistent. Sure,
• 16:23
  Speaker 2: that's the same as any type of share. You only
• 16:24
  Speaker 2: get your distributions or your dividends, sorry, when it's a
• 16:27
  Speaker 2: share every six months or every twelve months, So like
• 16:30
  Speaker 2: there's no real difference there. I would say, sure, but
• 16:32
  Speaker 2: you don't even have to chase her tenant for rent.
• 16:34
  Speaker 2: You don't have to be like, hey rent stewbabes like
• 16:36
  Speaker 2: they do that. You don't have to feel bad about it.
• 16:38
  Speaker 2: I would feel bad if I was a landlord. I
• 16:41
  Speaker 2: would feel so bad asking for it. But you don't
• 16:43
  Speaker 2: have to. Stockland can do it for you. But it's
• 16:45
  Speaker 2: so good, so you don't worry about that exactly. And
• 16:47
  Speaker 2: then I would say, another benefit is the potential for
• 16:49
  Speaker 2: capital growth, So like all of us are seeing at
• 16:52
  Speaker 2: the moment, the property is increasing in price like every
• 16:55
  Speaker 2: man in his dog And like, I'm bitching about this too, because,
• 16:58
  Speaker 2: like I have shared that I'm trying to buy a
• 17:02
  Speaker 2: new house, I go to auctions and they go so
• 17:04
  Speaker 2: far over I'm annoyed. Yeah, and I know that the
• 17:10
  Speaker 2: market is still increasing. How much longerfore, who knows. But
• 17:14
  Speaker 2: over time the value of property in an ariit can rise,
• 17:18
  Speaker 2: and as that happens, the unit price on the stock
• 17:21
  Speaker 2: market climbs as well. So like let's say, you know,
• 17:23
  Speaker 2: ten years ago, an ariit would have cost you ten
• 17:26
  Speaker 2: bucks to get into. Now this one in particular might
• 17:28
  Speaker 2: be twenty dollars. That's kind of how house prices go to.
• 17:32
  Speaker 2: So that's kind of a win. And just like shares,
• 17:35
  Speaker 2: if investors get really excited about like certain sectors, like
• 17:38
  Speaker 2: if you if you're really into AI and you're like, oh,
• 17:41
  Speaker 2: I love the idea of having lots of data centers
• 17:45
  Speaker 2: full of like AI infrastructure, you can find like an
• 17:49
  Speaker 2: ETF that holds only those ariits, or you know, if
• 17:53
  Speaker 2: you're a little bit more conservative, and that's why I've
• 17:55
  Speaker 2: mentioned Stockman and Goodman. Right these places they just down
• 17:59
  Speaker 2: really big, like the skyscrapers in the city, which, as
• 18:02
  Speaker 2: you can tell, are quite tall. Lots of different tenants
• 18:04
  Speaker 2: on lots of different levels. Yeah, Stockland has supermarket like facilities,
• 18:09
  Speaker 2: but they're not just the one supermarket. It's like the
• 18:12
  Speaker 2: whole center. Right, you might go, ah, I really like. Yeah,
• 18:15
  Speaker 2: some of the little shops you know, in a like
• 18:18
  Speaker 2: financial downturn might have to close. You know, the nail
• 18:22
  Speaker 2: shop might not get as many clients. Actually that's not true.
• 18:25
  Speaker 2: The nail shop during a financial downturns booming because of
• 18:30
  Speaker 2: the lipstick index. Yes, so like the little treaty treats
• 18:33
  Speaker 2: people like you know what if I can't buy a
• 18:34
  Speaker 2: new car or I can't pay rent, I'll just get
• 18:36
  Speaker 2: my nails done and then I'll feel good about myself. Anyway,
• 18:38
  Speaker 2: completely different conversation. But you still have access to capital
• 18:42
  Speaker 2: growth because you go well during financial downturn the supermarket
• 18:46
  Speaker 2: people still need food. We all buy out the toilet paper. True,
• 18:51
  Speaker 2: I'm pretty sure woolies could still pay their rent. Yeahbolutely right. Anyway,
• 18:57
  Speaker 2: then I love liquidity. Liquidity is basically how quickly you
• 19:02
  Speaker 2: can get rid of something. So if I said to you,
• 19:04
  Speaker 2: how liquid are you right now?
• 19:06
  Speaker 3: Beck?
• 19:07
  Speaker 2: You probably have some cash sitting in a bank account
• 19:09
  Speaker 2: and we could like trot down to the AATM pull
• 19:11
  Speaker 2: that out. Great, very liquid. Your ETFs or your like
• 19:15
  Speaker 2: shares on your shares these app not as liquid, but
• 19:18
  Speaker 2: you could probably get that cash back into your hands
• 19:20
  Speaker 2: in like three days if you really really needed to. Sure,
• 19:22
  Speaker 2: so little less liquid. But then property in general, like
• 19:26
  Speaker 2: if it and my house is on the market right
• 19:28
  Speaker 2: now as of recording, I'm trying to sell that, but
• 19:31
  Speaker 2: I don't get cash for that the second I decide
• 19:33
  Speaker 2: to sell. True, I've had to lease the property, I've
• 19:36
  Speaker 2: had to style the property, I've had to you know,
• 19:38
  Speaker 2: put it online. We're doing open for inspections, and then
• 19:41
  Speaker 2: once someone decides to buy it, we have settlement. I'm
• 19:44
  Speaker 2: very flexible on settlement terms, but most properties settle between
• 19:47
  Speaker 2: thirty and one hundred and twenty days, with ninety days
• 19:50
  Speaker 2: being the most common settlement. Yeah, that's at least three months,
• 19:53
  Speaker 2: got you, gotcha. I can get that cash back in
• 19:56
  Speaker 2: my hot little hands. So not liquid, not very liquid,
• 19:59
  Speaker 2: not very lick could But when you're buying and selling ariits,
• 20:03
  Speaker 2: you've got that three day share thing. It's like the
• 20:05
  Speaker 2: same as the share market, so like you can just
• 20:09
  Speaker 2: sell your shares in that you don't have to wait
• 20:11
  Speaker 2: for them to sell the supermarket. Yeah, so I really
• 20:15
  Speaker 2: like that there's no waiting months for settlements or like
• 20:18
  Speaker 2: paying an agent to list your house, and you can
• 20:20
  Speaker 2: kind of rebalance or top up or cash out whenever
• 20:23
  Speaker 2: you need, but still get exposure to real estate. Yeah, okay,
• 20:27
  Speaker 2: if that's what you're into, right, I like that, And
• 20:30
  Speaker 2: then I would say the last thing, None of the
• 20:32
  Speaker 2: additional stress in ariits exists for being a landlord. So
• 20:36
  Speaker 2: like someone that you or me who kind of I
• 20:38
  Speaker 2: don't think either of us resonate with the idea of
• 20:40
  Speaker 2: being a landlord, but there is teams of leasing experts
• 20:44
  Speaker 2: and maintenance experts and tenant negotiators and finances. You aren't
• 20:49
  Speaker 2: involved in any of that. So if you really like
• 20:51
  Speaker 2: the idea of real estate, but you also, like I
• 20:54
  Speaker 2: don't want to buy a house, lease it out and
• 20:55
  Speaker 2: being investor in that way, this could be a sexy option.
• 20:59
  Speaker 2: That's such a great idea, And I know you don't
• 21:01
  Speaker 2: have like you know, a lot of people want to
• 21:03
  Speaker 2: get into the I mean I do personally, and you know,
• 21:06
  Speaker 2: buy properties for the security of having a roof of
• 21:10
  Speaker 2: my head forever. But with this in an indirect but
• 21:14
  Speaker 2: also direct kind of way, you could make money with
• 21:17
  Speaker 2: this to eventually afford something of that. So I know
• 21:19
  Speaker 2: that this is exactly so I'm actually curious to interest
• 21:23
  Speaker 2: rates like affect the riits. Yes, they do, and I
• 21:27
  Speaker 2: feel like there's been a lot of conversation about interest
• 21:29
  Speaker 2: rates recently. So firstly, one thing that is very important
• 21:35
  Speaker 2: to note about ariits is that, as you probably could understand,
• 21:40
  Speaker 2: just like you going and buying a residential property to
• 21:44
  Speaker 2: have an iriit, it takes a lot of debt to
• 21:47
  Speaker 2: buy and run. Properties like these aren't always super like.
• 21:51
  Speaker 2: If you looked at their balance sheet, they might be
• 21:54
  Speaker 2: generating some great cash, but they might also be in
• 21:57
  Speaker 2: a whole heap of debt and that doesn't have to
• 22:00
  Speaker 2: be scary. But if interest rates for money is cheaper,
• 22:04
  Speaker 2: so borrowing gets cheaper, which then boosts the profits that
• 22:08
  Speaker 2: they get because they're not paying six percent for their
• 22:10
  Speaker 2: mortgages anymore. Technically they might be paying five and a
• 22:13
  Speaker 2: half percent, And that makes a big difference in an ariit,
• 22:16
  Speaker 2: because we're talking about millions, if not hundreds of millions,
• 22:20
  Speaker 2: if not billions of dollars worth of property, so we're
• 22:23
  Speaker 2: not talking oh yeah, they own like three million dollars
• 22:25
  Speaker 2: worth of but that's not it at all. It's massive.
• 22:29
  Speaker 2: So if interest rates rise, the debt actually gets more
• 22:33
  Speaker 2: expensive and then it eats into the returns that you get.
• 22:36
  Speaker 2: So right now, and this is one of the reasons
• 22:38
  Speaker 2: why we're doing this episode is lots of people are going, oh,
• 22:40
  Speaker 2: interest rates are dropping, ariits are looking a little bit
• 22:43
  Speaker 2: more SEXYV tell me a little bit more about them,
• 22:45
  Speaker 2: because they're obviously becoming a little bit more attractive. Secondly,
• 22:50
  Speaker 2: an diriit is built for income, so otherwise it wouldn't
• 22:56
  Speaker 2: exist because what's the point of creating this structure and
• 23:00
  Speaker 2: having this trust if we're not making money? Of course,
• 23:03
  Speaker 2: like there's no point they're required to pay out. So
• 23:07
  Speaker 2: legally they're required to pay out most of what they
• 23:10
  Speaker 2: earn straight back to investors. Wow money whin, which makes
• 23:14
  Speaker 2: them I would say, very appealing in low rate environments
• 23:19
  Speaker 2: when things like term deposits or bonds are over. So
• 23:22
  Speaker 2: you're probably seeing a lot of conversation in our shees
• 23:25
  Speaker 2: on the money community but also the community in general
• 23:28
  Speaker 2: about like, oh, my interest rate on my high interest
• 23:31
  Speaker 2: savings account is going down? What the hell? Well, that's
• 23:33
  Speaker 2: because interest rates are coming down, and when interest rates
• 23:37
  Speaker 2: come down, so does your savings rate. But then your
• 23:40
  Speaker 2: mortgage rate drops, so it's like a great time to
• 23:43
  Speaker 2: have a mortgage, but not a great time to have
• 23:44
  Speaker 2: a savings account. So something that's also interesting is that
• 23:48
  Speaker 2: ariits usually move or change their cash rate before the
• 23:52
  Speaker 2: RBA even makes its announcement because markets are forward looking,
• 23:56
  Speaker 2: so they're kind of predicting, oh, this will go down,
• 23:58
  Speaker 2: so we're going to change this and this, And if
• 24:00
  Speaker 2: investors expect their rates to go up, like their interest rates,
• 24:03
  Speaker 2: they're going to be paying more money. They often start
• 24:06
  Speaker 2: selling riits ahead of time because they're like, Okay, cool,
• 24:09
  Speaker 2: I can see the interest rates are probably going to surge,
• 24:12
  Speaker 2: Like maybe I'll sell now because I don't want to
• 24:15
  Speaker 2: be in this anymore. And if they think that cuts
• 24:17
  Speaker 2: are on the horizon, I eat right now. There's a
• 24:20
  Speaker 2: lot of conversation about oh, when's the next interest rate cut?
• 24:22
  Speaker 2: What's going on? Riits can really rally before the RBA
• 24:26
  Speaker 2: even touches the cash rate because people are kind of like, oh,
• 24:29
  Speaker 2: we better get in because it's about to get good.
• 24:32
  Speaker 2: Got you, right? But Beck, you and I are long
• 24:35
  Speaker 2: term investors, so you don't actually want to be dipping
• 24:37
  Speaker 2: in and out. But that's just how the market react.
• 24:39
  Speaker 2: So I'm thinking about like risks and stuff like that.
• 24:42
  Speaker 2: So it sounds like that's the only risk. Like, if
• 24:44
  Speaker 2: you know there's an expected rate increase, they start selling
• 24:48
  Speaker 2: riits ahead of time, and then I assume we don't
• 24:51
  Speaker 2: make as much money. But like, is that the only risk? No,
• 24:54
  Speaker 2: and I would not be doing my job if I
• 24:56
  Speaker 2: didn't try and scare the hell out of you. At
• 24:58
  Speaker 2: the same time, it's like educ you, right, I would
• 25:01
  Speaker 2: say the interest rates are only one part of the
• 25:03
  Speaker 2: bigger puzzle. If you're really serious about adding property to
• 25:07
  Speaker 2: your portfolio, I would say that there are a lot
• 25:09
  Speaker 2: of other things that you really need to be across.
• 25:12
  Speaker 2: So let's take a really quick break because I need
• 25:15
  Speaker 2: a cup of tea. Yeah, I'll walk you through the
• 25:16
  Speaker 2: stuff the very switched on investors are actually looking at,
• 25:19
  Speaker 2: because the last thing you want to do is invest
• 25:21
  Speaker 2: in something that you actually don't understand. So guys don't
• 25:24
  Speaker 2: go anywhere. All right, Beck, we are back, and before
• 25:31
  Speaker 2: the break, you asked about whether the interest rates were
• 25:33
  Speaker 2: the only risk when it came to investing in an
• 25:36
  Speaker 2: ariit and I was like, oh no, Like, I haven't
• 25:39
  Speaker 2: done my job if I made you think that that's
• 25:40
  Speaker 2: the only risk. And as much as I want to
• 25:43
  Speaker 2: be positive, I also am an ex financial advisor. So
• 25:46
  Speaker 2: I'm like, let's talk about the risks like risk risk risk.
• 25:49
  Speaker 2: Of course, yes, we want rewards, but I also want
• 25:51
  Speaker 2: you to be really well educated. So the answer is no.
• 25:54
  Speaker 2: And there are a handful of other risks that I
• 25:57
  Speaker 2: want to go through, and I've written a little list
• 25:59
  Speaker 2: for you so that we don't get too off track, because, like,
• 26:02
  Speaker 2: as you know, I was born to yap. So let's
• 26:07
  Speaker 2: go through them. And the first one that I've written
• 26:10
  Speaker 2: down is sector specific risks. Okay, I wish I had
• 26:14
  Speaker 2: given myself a little bit more clarity on that one
• 26:17
  Speaker 2: before writing it down. What I believe I meant by that, beg,
• 26:22
  Speaker 2: is that not all property sectors performing exactly the same way.
• 26:25
  Speaker 2: Like before, we touched on warehouses and data centers booming
• 26:29
  Speaker 2: at the moment because of AI infrastructure, uh huh, and
• 26:32
  Speaker 2: that I would say pretty new and that's obviously going
• 26:37
  Speaker 2: to perform in a very different way. Than us lacing
• 26:40
  Speaker 2: out a supermarket, right, because like there's one that I
• 26:43
  Speaker 2: would say is a little bit more stable and one
• 26:47
  Speaker 2: that's a little bit more topical. So retail ariits, like
• 26:51
  Speaker 2: the shopping centers, they can kind of struggle if consumer
• 26:55
  Speaker 2: spending is slow or if like online sales have like
• 26:58
  Speaker 2: picked up. But like, obviously they're going to be different
• 27:03
  Speaker 2: depending on the economics of the world. There are office ariits,
• 27:07
  Speaker 2: seeing how I say, sometimes oh, the skyscrapers. They are
• 27:11
  Speaker 2: especially sensitive at the moment because there's all this work
• 27:14
  Speaker 2: from home conversation going on after COVID, and like there
• 27:17
  Speaker 2: has been this conversation recently about legally requiring stuff that
• 27:22
  Speaker 2: can to let them work from home for two days
• 27:24
  Speaker 2: a week. Love that, yes we do. But do you
• 27:27
  Speaker 2: think an ariit that then owns office space is going
• 27:30
  Speaker 2: to love that? I see, yes, probably not. It's like
• 27:33
  Speaker 2: they make their money from putting bums on desks and yeah,
• 27:36
  Speaker 2: does that make sense. Absolutely So at the moment, we
• 27:39
  Speaker 2: are seeing really high vacancy rates in CBDs. The next
• 27:44
  Speaker 2: thing I wrote down is I believe there's tenant risk.
• 27:48
  Speaker 2: So ariit has come with this risk that your tenants
• 27:51
  Speaker 2: just don't pay rent on time. Ah, happens true the
• 27:54
  Speaker 2: best of us. What if they just decide not to
• 27:56
  Speaker 2: pay rent, where's our income come from? So if a
• 28:00
  Speaker 2: big tenant like I don't know, a supermarket or like
• 28:03
  Speaker 2: you're looking at a Westfield, they lease to places like
• 28:05
  Speaker 2: Maya and David Jones, And I mean, I'm just trying
• 28:08
  Speaker 2: to contextualize it to give you examples. But what if
• 28:10
  Speaker 2: those department stores go, oh, we don't want to have
• 28:13
  Speaker 2: a Maya here anymore. It's not very good. And then
• 28:16
  Speaker 2: that's an empty space. That's a really big empty space.
• 28:20
  Speaker 2: How many other tenants or how many other people would
• 28:23
  Speaker 2: go and lease the space that big? So how totally
• 28:25
  Speaker 2: is it staying empty? And am Aya, you're going to
• 28:28
  Speaker 2: need like four or five different retail shops exactly. And
• 28:31
  Speaker 2: then also what about the smaller shops where people maybe
• 28:33
  Speaker 2: have opened their small business in one Westfield and taken
• 28:36
  Speaker 2: on this lease and then they're not making money so
• 28:39
  Speaker 2: they default. So they've got all their stuff in the
• 28:41
  Speaker 2: shop and we can't really lease it out to someone
• 28:43
  Speaker 2: else yet we have to go through a legal process.
• 28:44
  Speaker 2: But they're not paying rent income for that ariait is
• 28:48
  Speaker 2: going to drop. And then the next is property valuations.
• 28:52
  Speaker 2: So if property price is full, which over time, sometimes
• 28:56
  Speaker 2: they fall and sometimes they rise, or valuers decide, oh,
• 29:00
  Speaker 2: I think that asset is worth as much like they
• 29:02
  Speaker 2: downgrade an asset. The ariit is what's called NTA, so
• 29:06
  Speaker 2: a net tangible assets drops, which can then hit the
• 29:10
  Speaker 2: unit price as well. So any other risks, yes, I
• 29:12
  Speaker 2: have two more. Okay, oh my god, Well I tell
• 29:14
  Speaker 2: you that I'm mentally blocking is out because I am
• 29:16
  Speaker 2: going to go get an riit after this. Okay, Well,
• 29:18
  Speaker 2: I'm trying to sell unit. This is not advice. This
• 29:20
  Speaker 2: is just information so you can make your own decision, right, yes, ma'am,
• 29:24
  Speaker 2: because I would never give advice because that would be
• 29:26
  Speaker 2: against my financial services license. Just to remind everybody, I'm
• 29:31
  Speaker 2: a legitimate licensed person to give general financial advice, which
• 29:35
  Speaker 2: sounds really fancy. Yeah, it means I can't just raw
• 29:39
  Speaker 2: dog content. No license. It's rude. It's rude. Anyway. Two
• 29:43
  Speaker 2: more things that I wrote down, and this is not
• 29:45
  Speaker 2: going to make sense, but I will tell you dilution
• 29:47
  Speaker 2: and capital raisings. I see, I see. So because aris
• 29:51
  Speaker 2: have to pay out most of their income by law,
• 29:53
  Speaker 2: like that's the rules, they often have to raise more
• 29:57
  Speaker 2: money by issuing new units. So if they're like, oh,
• 29:59
  Speaker 2: we want to buy new property, like let's say they've
• 30:01
  Speaker 2: got a million dollars coming in, but they actually have
• 30:04
  Speaker 2: to give most of that to their shareholders. To get
• 30:06
  Speaker 2: new property, they need more money coming in the door,
• 30:08
  Speaker 2: and it can't really be in income from the properties
• 30:11
  Speaker 2: because if it was, they'd have to give it to
• 30:14
  Speaker 2: you back if you're going to own an ariit. So
• 30:16
  Speaker 2: what they'll do is issue new units. Does that make sense?
• 30:20
  Speaker 2: That makes sense? So you're kind of diluting it and
• 30:22
  Speaker 2: making it less what it's like watery cordial? Yeah, okay,
• 30:27
  Speaker 2: we like cordial. We do like like if we're taking
• 30:29
  Speaker 2: a fleet cup crush, I want I don't want to
• 30:33
  Speaker 2: follow the instructions on the market. We want it jam
• 30:35
  Speaker 2: pack exactly. It's like drinking Milo. How many scoops do
• 30:38
  Speaker 2: you follow the tin's rules? I just put a tiny
• 30:40
  Speaker 2: bit of milk, Yeah, and mostly myloc it's basically a
• 30:43
  Speaker 2: paste exactly, because we're here for the Milo, not the milk.
• 30:47
  Speaker 2: Exact milk is just the vehicle to make them Milo
• 30:50
  Speaker 2: more enjoyable. Milk you could even go without. So good.
• 30:52
  Speaker 2: And then last one because we're going to get back
• 30:54
  Speaker 2: on track because I'm pretty sure people are going to
• 30:55
  Speaker 2: get pretty bored of me just yapping about aris really quick.
• 30:59
  Speaker 2: But the last one I've got is market sentiment. And
• 31:04
  Speaker 2: even if the underlying property is a really steady and
• 31:07
  Speaker 2: really good and you know, from a logical perspective, we're
• 31:11
  Speaker 2: putting out Warren Buffett hat on for a second, we're
• 31:14
  Speaker 2: like no, like we're here for the long term. We're
• 31:16
  Speaker 2: not here for a short term. Like that's all fine
• 31:19
  Speaker 2: and good. Ariit unit prices can kind of swing around
• 31:24
  Speaker 2: with the broader share market. So like if people are
• 31:26
  Speaker 2: getting anxious and we saw this during the GFC, and
• 31:29
  Speaker 2: we saw this during COVID. What happens is if there
• 31:33
  Speaker 2: is a downturn, we feel less confident as investors, we
• 31:36
  Speaker 2: kind of see what's going on because we're always consistently
• 31:40
  Speaker 2: as human beings trying to keep up with the joneses.
• 31:42
  Speaker 2: We are really bad at like comparison. So often investors
• 31:46
  Speaker 2: sell ariits because they want their cash back and they're
• 31:48
  Speaker 2: kind of like, oh, I just need to like be secure.
• 31:52
  Speaker 2: That's not how you be secure long term, but okay,
• 31:55
  Speaker 2: but this can push prices lower because if everyone's selling. Obviously,
• 31:59
  Speaker 2: the markets is not as good. So regardless of how
• 32:03
  Speaker 2: good the properties are, regardless of whether they lost a
• 32:06
  Speaker 2: tenant or not, the price of the property can drop
• 32:09
  Speaker 2: just because people are basically scared. Okay, got you, And
• 32:13
  Speaker 2: that's not a bad thing. That's just how the market is.
• 32:16
  Speaker 2: And that's where with really good education, you and I
• 32:19
  Speaker 2: might go, oh, I see how the market's a bit off,
• 32:21
  Speaker 2: but that Ariit hasn't lost a tenant, Like, they're still
• 32:24
  Speaker 2: really good at income producing, they're at a bit of
• 32:26
  Speaker 2: a discount. That's when a lot of good investors get
• 32:29
  Speaker 2: into the market and go oh hello, yeah okay, but again,
• 32:32
  Speaker 2: we can't time the market. No, but you know you
• 32:35
  Speaker 2: might see a little opportunity and splash a little bit
• 32:37
  Speaker 2: more cash. Why not? So how do you know if
• 32:41
  Speaker 2: an Ariit is a goodbye? Like if you're evaluating it
• 32:44
  Speaker 2: and how you look? Yeah, okay, So it's just like shares. Honestly,
• 32:50
  Speaker 2: you don't want to buy into an ariit just blindly,
• 32:53
  Speaker 2: like if you just heard a couple of names on
• 32:54
  Speaker 2: this podcast and you're like, they must be going to
• 32:56
  Speaker 2: just buy it, Like, don't do that. You're better than that.
• 33:00
  Speaker 2: Even things I say, need to be taken with a
• 33:02
  Speaker 2: grain of salt. There are three big areas I would say,
• 33:05
  Speaker 2: I want you to check before you invest. Sure, So
• 33:08
  Speaker 2: what are the properties? Beck? What are they? This is
• 33:11
  Speaker 2: all about what's inside the portfolio. And you'll find this
• 33:14
  Speaker 2: in like the fact sheet or the investor presentations. They'll
• 33:18
  Speaker 2: be on their websites, really easy to find. So it'll
• 33:21
  Speaker 2: show you, like what's the sector mix? So are they warehouses?
• 33:25
  Speaker 2: Are they healthcare? Are they retail? Are they CBD high
• 33:27
  Speaker 2: rise officers? Is it cols and woolies? Like, do you
• 33:29
  Speaker 2: know what I mean? Yeah? The next is whale. Oh, whales, Yes, whales.
• 33:34
  Speaker 2: Can you see whales from the That's what you need
• 33:36
  Speaker 2: to be figuring out. Yeah, figure that out. But it's
• 33:38
  Speaker 2: actually the weighted average lease expiry weighted average lease expire Okay, yeah,
• 33:43
  Speaker 2: but we're looking for the whales. Yeah, gotcha, gotcha. So
• 33:46
  Speaker 2: longer leases, steady er incomes. Yes, And instead of being
• 33:51
  Speaker 2: like residential properties, commercial properties can sometimes be leased for
• 33:55
  Speaker 2: like even ten or twenty years. God, that's good as
• 33:57
  Speaker 2: an investor, low key, I love that. Yeah, because you're
• 34:00
  Speaker 2: telling me secure income secure we like I want to know.
• 34:03
  Speaker 2: I'm going to get paid. Yes, right, and like cosm
• 34:07
  Speaker 2: all these aren't going And I'm just using these as
• 34:09
  Speaker 2: examples because I think we just get it easier. Like
• 34:11
  Speaker 2: I am, if nothing, a visual learner. Oh yeah, I
• 34:15
  Speaker 2: was never good at reading the textbook and then being like, oh,
• 34:17
  Speaker 2: it makes sense. But if the teacher at the front
• 34:20
  Speaker 2: had drawn a diagram, I'd be like, oh, I get
• 34:22
  Speaker 2: it immediately, Like that's so good. A completely my best.
• 34:26
  Speaker 2: When I was at university, one of my best lecturers,
• 34:30
  Speaker 2: her name is evading me right now, and someone's going
• 34:32
  Speaker 2: to slide into my DMS and remind me she was
• 34:34
  Speaker 2: this little old lady like she definitely could have retired,
• 34:38
  Speaker 2: but she clearly was too passionate. And she was my
• 34:40
  Speaker 2: financial management lecture when I did my NBA RT, so
• 34:44
  Speaker 2: you can slide in and tell me who she was.
• 34:46
  Speaker 2: But she would use examples of owning a cupcake shop
• 34:50
  Speaker 2: every time we would like talk about some type of
• 34:52
  Speaker 2: like very serious like financial management technique. She'd be like, okay,
• 34:56
  Speaker 2: so in your cupcake shop, and I'd be like, slay, queen,
• 34:59
  Speaker 2: I get it. It's so clever. I feel like I
• 35:01
  Speaker 2: would get that tie. Yeah, that's so smart because if
• 35:04
  Speaker 2: she's like, okay, cool, Like you know when you're talking
• 35:06
  Speaker 2: about your balance sheet, like you obviously have to buy
• 35:08
  Speaker 2: flour and eggs, and I'll be like, okay, that makes sense,
• 35:11
  Speaker 2: and I'm paying rent like totally anyway. I just try
• 35:14
  Speaker 2: to make it make sense, and obviously I'm not very
• 35:16
  Speaker 2: good at it because I just told you to look
• 35:18
  Speaker 2: out for the whales and that makes no sense. But
• 35:22
  Speaker 2: the longer a lease is like coals and wales aren't
• 35:26
  Speaker 2: signing a lease for one year, Yeah, they're planning on
• 35:28
  Speaker 2: being there kind of forever, I would assume likely groceries
• 35:32
  Speaker 2: aren't going anywhere. More often than not, those bigger businesses
• 35:35
  Speaker 2: are signing twenty year leases and going, yeah, we want
• 35:38
  Speaker 2: that site for twenty years. Yeah, good deal for your income.
• 35:41
  Speaker 2: Because shorter leases, when you look at it, actually means
• 35:45
  Speaker 2: more risk because there's you know, lots of turnover. There
• 35:48
  Speaker 2: might be times where that small business leaves that location
• 35:51
  Speaker 2: and there's like empty vacant time where we're finding someone new.
• 35:55
  Speaker 2: But on the flip side of that, when there's lots
• 35:57
  Speaker 2: of turnover, there's also the potential upside that rents can
• 36:01
  Speaker 2: reset and you can kind of like charge the next
• 36:03
  Speaker 2: person more, Whereas if you're negotiating a twenty year lease,
• 36:07
  Speaker 2: you'll be like, well, yes, i'll pay this price in
• 36:10
  Speaker 2: the start, but there's usually an agreed upon percentage that
• 36:13
  Speaker 2: that rent increases by it and you can't really go, oh,
• 36:15
  Speaker 2: actually the market's doing really well. Instead of two percent,
• 36:18
  Speaker 2: we might increase it by four. You can't do that, sure,
• 36:20
  Speaker 2: So like pros and cons, And then with looking at
• 36:24
  Speaker 2: properties as well, I've mentioned it a few times occupancy,
• 36:28
  Speaker 2: So are there people actually leasing these properties back? Ideally
• 36:32
  Speaker 2: ninety five percent of their properties are tenanted and lease
• 36:36
  Speaker 2: out lower than that. I just feel like you could
• 36:39
  Speaker 2: be getting some poutchy income. Yeah, that makes sense, That
• 36:41
  Speaker 2: makes a lot of sense. And when they're big like
• 36:43
  Speaker 2: five percent of not leased out, thus red flag material
• 36:47
  Speaker 2: to me. Oh yeah, like what's going on there? The
• 36:49
  Speaker 2: next thing, let's talk about money. Okay, sorry, this is
• 36:53
  Speaker 2: where we have to zoom out and boring, but I'll
• 36:56
  Speaker 2: do it for you. I won't actually do it for you,
• 36:58
  Speaker 2: but like, think of me while you're reading the financial
• 37:00
  Speaker 2: results and annual reports, because that's where I get very excited.
• 37:05
  Speaker 2: I want you to talk about gearing. So like this
• 37:08
  Speaker 2: is just talking about their debt levels. So moderate gearing
• 37:11
  Speaker 2: is pretty healthy, and that's where they're gearing. Or the
• 37:15
  Speaker 2: debt that that company holds is between twenty to thirty
• 37:18
  Speaker 2: five percent, it's pretty normal. I would say that's a
• 37:20
  Speaker 2: healthy middle ground. I don't know what gearing. So it's
• 37:23
  Speaker 2: just basically the percentage of debt you hold to the
• 37:26
  Speaker 2: income that you have. I see. So, like, you know,
• 37:28
  Speaker 2: if you're drowning in debt, beck and ninety five percent
• 37:31
  Speaker 2: of your income is going to paying off your debt,
• 37:34
  Speaker 2: you're probably struggling, got you? But if I said, oh,
• 37:37
  Speaker 2: thirty percent of your income is going to like your
• 37:39
  Speaker 2: mortgage repayment or thirty percent of your incomes going to debt, Like,
• 37:42
  Speaker 2: that's not so bad, is your? Yeah, Like that's a
• 37:44
  Speaker 2: bit more comfy. Absolutely, So when I talk about gearing,
• 37:48
  Speaker 2: moderate gearing in these companies, I'm happy to see twenty
• 37:51
  Speaker 2: to thirty five percent. So the rest of the income
• 37:53
  Speaker 2: that's coming in, like, isn't paying off debt. It's going
• 37:56
  Speaker 2: to you, the investor. That's what we want to see.
• 38:00
  Speaker 2: And then NTAs not the asshole. No, no, it's actually
• 38:04
  Speaker 2: a net tangible asset price. And we're gonna look at
• 38:07
  Speaker 2: those so I want you to compare what the ariit
• 38:11
  Speaker 2: is trading at to the underlying value of the property.
• 38:15
  Speaker 2: So paying a big premium, I would say, is really
• 38:18
  Speaker 2: risky if the growth isn't showing up, Like, don't overpay
• 38:22
  Speaker 2: just don't overpay back Yeah for nothing if you can
• 38:26
  Speaker 2: help it, if you can help it. But also we
• 38:28
  Speaker 2: can help it by doing our research. Yes, so true.
• 38:30
  Speaker 2: And then the last thing that I would say is
• 38:33
  Speaker 2: the people. The people we're gonta have good people. Well, yeah,
• 38:36
  Speaker 2: you do. Good people make a good business. And it's's toxic, no,
• 38:41
  Speaker 2: I mean you can't tell that from the outside. But finally,
• 38:43
  Speaker 2: I want you to have a look at who's in charge. Like,
• 38:46
  Speaker 2: if you're looking at an ariit, who's managing it? Like,
• 38:50
  Speaker 2: is it some trust fund kids who just got a
• 38:53
  Speaker 2: really big amount of money and like mummy and daddy
• 38:56
  Speaker 2: let them buy some stuff that doesn't happen often. But like,
• 38:59
  Speaker 2: obviously that me would be a pretty red flag. But
• 39:02
  Speaker 2: like I want to see that there's an experienced team
• 39:04
  Speaker 2: who've been doing this for a number of years. I
• 39:06
  Speaker 2: want to see a history of really stable distribution so
• 39:10
  Speaker 2: that the people who own the ariat we get paid
• 39:13
  Speaker 2: and we get paid consistently, and ideally their internal management
• 39:18
  Speaker 2: exists so that their interests are aligned with the investors.
• 39:21
  Speaker 2: They haven't just been brought in from different sectors. Like
• 39:24
  Speaker 2: I'm want property people managing my property. Yeah. I don't
• 39:26
  Speaker 2: know about you, but I read a book and you
• 39:28
  Speaker 2: definitely didn't. But it's called The Richest Man in Babylon.
• 39:31
  Speaker 2: Not because you didn't read a book. Go, I know
• 39:33
  Speaker 2: you read books, but like, you didn't read The Richest
• 39:35
  Speaker 2: Man in recent But I will tell you that that's
• 39:37
  Speaker 2: a fantastic investing read. In fact, it's one of the
• 39:41
  Speaker 2: first books I want you to pick up if you're
• 39:42
  Speaker 2: going to start investing to understand just investing methodology and
• 39:47
  Speaker 2: where it's come from and how it works. But I
• 39:50
  Speaker 2: will warn you it's the most boring book you'll ever read. God,
• 39:53
  Speaker 2: I can't imagine. She's so dry. Oh, she's so dry.
• 39:56
  Speaker 2: But she talks about like marketplaces I see way back
• 39:59
  Speaker 2: where gorgeous. Anyway, I can give you the TLDR on that,
• 40:04
  Speaker 2: so you don't have to read it. But one of
• 40:06
  Speaker 2: the top tips in there is they say do not
• 40:08
  Speaker 2: take advice on buying diamonds from a bricklayer. Ah, that
• 40:13
  Speaker 2: makes sense, right, So, like a bricklayer might be really
• 40:15
  Speaker 2: passionate about diamonds because like one time he bought his
• 40:18
  Speaker 2: girlfriend and engagement ring, but that doesn't mean he knows
• 40:21
  Speaker 2: everything about diamonds. I'm probably if I'm going to buy
• 40:23
  Speaker 2: a diamond that's a really big expense, I'm going to
• 40:25
  Speaker 2: go to a diamond expert. I'm not going to go
• 40:27
  Speaker 2: to the bricklayer.
• 40:28
  Speaker 3: Yeah.
• 40:28
  Speaker 2: So I think it's about getting your advice from the
• 40:30
  Speaker 2: right places. And I would say there's been instances of
• 40:33
  Speaker 2: external management of some Australian ETFs that prioritize fees over
• 40:38
  Speaker 2: holders income. So I just want the right people doing
• 40:42
  Speaker 2: the right thing. And does a management look like they
• 40:46
  Speaker 2: know what they're doing. So I guess for real estate ETFs,
• 40:49
  Speaker 2: like just to summarize it, or one of the benefits
• 40:51
  Speaker 2: of a property ETF is that you just don't need
• 40:53
  Speaker 2: to do a deep dive into every single landlord.
• 40:55
  Speaker 3: You know.
• 40:56
  Speaker 2: I was like, look at their management team, do this,
• 40:57
  Speaker 2: do that? Like, if you're buying an ETF, you basically
• 41:00
  Speaker 2: don't have to worry as much because all the hard
• 41:02
  Speaker 2: work's been done by you by the ETF manager, they
• 41:05
  Speaker 2: wouldn't have been putting it into the ETF, it was
• 41:07
  Speaker 2: if it was terrible, beck, because like their whole job
• 41:10
  Speaker 2: is to make an ETF that performs. I promise you
• 41:13
  Speaker 2: they have gone through every single one and been like good, bad, No,
• 41:16
  Speaker 2: you don't make it to the ETF. That's what you want,
• 41:18
  Speaker 2: Like they're the gatekeepers. But I would say that if
• 41:20
  Speaker 2: you're looking at a property ETF, you still need to
• 41:22
  Speaker 2: look at the fact sheet because we still need to
• 41:24
  Speaker 2: know what we're buying. Yeah, I want you to know
• 41:27
  Speaker 2: what sector are you buying into? Does it tilt one
• 41:29
  Speaker 2: way or the other? Like is it really healthcare? Is
• 41:32
  Speaker 2: it really supermarkets? You know, what are the top holdings
• 41:35
  Speaker 2: and do they kind of make sense to you? So
• 41:36
  Speaker 2: you don't need to look into the top one hundred
• 41:38
  Speaker 2: that's okay? What are like the top five right when
• 41:42
  Speaker 2: you google them? And when you look at those companies,
• 41:44
  Speaker 2: are you like, okay, that makes sense? Holdings are so
• 41:47
  Speaker 2: that the companies or the assets that they own, So
• 41:50
  Speaker 2: like in your ETF, it's a basket of shares, and
• 41:52
  Speaker 2: then inside that, I just want you to know, like
• 41:54
  Speaker 2: the top five. I just want you to google. Guys
• 41:56
  Speaker 2: might be like willl words calls came out yeah, and
• 41:58
  Speaker 2: I want you to be like, yeah, check that makes sense.
• 42:01
  Speaker 2: See how much is it going to cost you? So
• 42:03
  Speaker 2: what are the fees? And then what does performance over
• 42:05
  Speaker 2: the long term look like? Again, ex financial advisor in
• 42:09
  Speaker 2: me is like flashing red lights. And I need to
• 42:11
  Speaker 2: say past performance is not a reliable predictor of future performance,
• 42:15
  Speaker 2: but it can make you feel secure. Yeah, absolutely can
• 42:18
  Speaker 2: make you go, oh, they've been doing a pretty good
• 42:19
  Speaker 2: job for a pretty long time. The risk is less. Yes, yes,
• 42:24
  Speaker 2: So that's a pretty good checklist. Actually, so I made
• 42:26
  Speaker 2: it up myself and honestly, god, you're so smart. Well
• 42:29
  Speaker 2: I'm not. Actually, I just had to write a list
• 42:31
  Speaker 2: and I was like, oh, it's all about the money.
• 42:33
  Speaker 2: Other people safe, what are they doing? I'm so god,
• 42:36
  Speaker 2: she's good. I'm just so critical. I'm so sorry. No,
• 42:39
  Speaker 2: someone's going to be I'll do it for you. It
• 42:41
  Speaker 2: doesn't sound as scary as I thought, like kind of
• 42:44
  Speaker 2: like GNALT is literally you're already kind of investing. So
• 42:48
  Speaker 2: if real estate is something that you want to dabble in,
• 42:50
  Speaker 2: this might be something that you look into. I think
• 42:52
  Speaker 2: I actually might, But I think like if I add
• 42:54
  Speaker 2: property to my shares's account. The ETFs are more my style.
• 42:58
  Speaker 2: So that's great advice. I just want you to have
• 43:02
  Speaker 2: a portfolio that kind of makes sense to you. Yeah,
• 43:05
  Speaker 2: Like I use the example of going down to the pub, Like,
• 43:07
  Speaker 2: I want you to have these conversations, like it's not
• 43:10
  Speaker 2: just men who talk about their shares, like and it
• 43:12
  Speaker 2: historically was because they're basically trying to one up each other. Yeah, Like,
• 43:16
  Speaker 2: I want you to be like, oh my god, I
• 43:17
  Speaker 2: found this arit and it's like full of healthcare companies
• 43:20
  Speaker 2: and I really believe in that, Like isn't that cool. Yeah,
• 43:23
  Speaker 2: we have the power to do that. We love a
• 43:25
  Speaker 2: ETF as well because they're just so simple and so diversified.
• 43:29
  Speaker 2: God gorgeous. Okay, So before today, I didn't think I
• 43:32
  Speaker 2: would ever be property invester, but and I'm sure a
• 43:34
  Speaker 2: lot of people listening maybe think the same thing. But
• 43:36
  Speaker 2: guess what, guys, we can do it. You absolutely can
• 43:39
  Speaker 2: do it. And at the end of the day, ariits
• 43:41
  Speaker 2: and property ETFs, they're just another tool in your little
• 43:44
  Speaker 2: investing kit. The beauty is that you can kind of
• 43:47
  Speaker 2: dip your toe in without committing all of your life savings,
• 43:50
  Speaker 2: which can be terrifying. And the best bit is I
• 43:52
  Speaker 2: would say, you don't have any tenants calling about broken
• 43:55
  Speaker 2: hot water systems. Oh my god, that's gorgeous.
• 43:58
  Speaker 1: I know.
• 43:59
  Speaker 2: So we'll see you on the guys. Bye, my guys.
• 44:08
  Speaker 3: The advice shared on She's on the Money is general
• 44:10
  Speaker 3: in nature and does not consider your individual circumstances. She's
• 44:14
  Speaker 3: on the Money exists purely for educational purposes and should
• 44:18
  Speaker 3: not be relied upon to make an investment or financial decision.
• 44:21
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• 44:23
  Speaker 3: Product, read the PDS TMD and obtain appropriate financial advice
• 44:27
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