Latest / She's On The Money / Investing 101: House it going?

Transcript

Investing 101: House it going? · She's On The Money

0:00
Speaker 1: She's on the Money. She's on the Money.
0:17
Speaker 2: Hello, and welcome to She's on the Money podcast for
0:20
Speaker 2: millennials who want financial freedom. Part four of our investing
0:24
Speaker 2: series is here, and today it is time to.
0:26
Speaker 3: Talk investment properly.
0:28
Speaker 2: Investment correct. My name is Georgia King. I'm a copywriter
0:32
Speaker 2: and journalism student, and joining me as always is Financial
0:35
Speaker 2: Advisor Extraordinary.
0:39
Speaker 3: Every single time I've got to be Hello Georgia King.
0:42
Speaker 2: Hello.
0:43
Speaker 3: People don't like me using your whole name, but that's Savage, Savage,
0:47
Speaker 3: it's a good name. I'm not calling you.
0:48
Speaker 2: Victoria deviand but also Vickig veg p.
0:51
Speaker 3: Just for those playing along with it home, this isn't
0:53
Speaker 3: just for the podcast. We actually call each other this
0:56
Speaker 3: in real life.
0:57
Speaker 2: Yeah, that's the thing.
0:58
Speaker 3: I just think that people think company it on for
1:00
Speaker 3: the show and it's actually not how we roll like.
1:03
Speaker 3: We actually interact like this. I'm sorry if that disappoints anybody,
1:08
Speaker 3: and they think that we're actually as socially awkward as
1:11
Speaker 3: we come across as one fine real life. Yeah we're fine,
1:15
Speaker 3: but all right, carry on. Okay.
1:19
Speaker 2: So with all of that said, they talk us through
1:22
Speaker 2: what is ahead on today's episode of the show.
1:24
Speaker 3: Okay, so we have had so many questions in the
1:28
Speaker 3: Facebook community about property investing this week, which is no
1:31
Speaker 3: surprise because we kind of ask them to ask us
1:33
Speaker 3: the questions about property investing, and obviously it is a
1:36
Speaker 3: huge topic. But by the end of today's episode, we
1:39
Speaker 3: are going to all have a clear idea about we're
1:41
Speaker 3: property ranks within the investment space, and you'll know whether
1:44
Speaker 3: or not property is the right move for you moving forward.
1:47
Speaker 3: Also have a few thoughts to share with you guys
1:50
Speaker 3: about investing in properties versus shares, so I'll absolutely make
1:53
Speaker 3: those pretty well known as well.
1:55
Speaker 2: I've got a feeling I already know what you can
1:56
Speaker 2: say there VB, but you don't though you don't know alrighty,
2:01
Speaker 2: So let's get into it. What is property investing V
2:04
Speaker 2: what's the return like and how does it compare to
2:07
Speaker 2: other forms of investing.
2:08
Speaker 3: Okay, let's just dive straight in and say that property
2:11
Speaker 3: investment actually comes in many, many different forms. A lot
2:15
Speaker 3: of people might say that the home you buy is
2:17
Speaker 3: an investment, but I've said it on the podcast a
2:19
Speaker 3: million times. It's overly dramatic, but that is totally okay
2:23
Speaker 3: that it's not. But you also might buy property purely
2:26
Speaker 3: as an investment, have tenants in it. You also might
2:29
Speaker 3: purchase property to flip and buy a bomb and then
2:31
Speaker 3: renovate it, sell it at a high price point. Very
2:33
Speaker 3: sexy in the Instagram world at the moment, maybe just
2:37
Speaker 3: from me because I like following those Instagram accounts. But
2:41
Speaker 3: you might also buy a block of land or a
2:43
Speaker 3: house and just sit on it for a few years,
2:44
Speaker 3: sell it when it's increased in value. You can also
2:47
Speaker 3: purchase property inside the shere market by going down the
2:51
Speaker 3: commercial property route and purchasing shares that give you exposure
2:55
Speaker 3: to commercial property. But we're not going to talk about
2:58
Speaker 3: that here, but I do want you to know that
3:00
Speaker 3: that is an option as well. So if maybe you
3:02
Speaker 3: don't have a heap of money, but you're like Victoria,
3:04
Speaker 3: but I love property and I really want my money
3:06
Speaker 3: to be exposed to that, but you also just don't
3:09
Speaker 3: want the commitment, you could actually purchase shares that expose
3:13
Speaker 3: you to that asset class. So kind of cool, but
3:15
Speaker 3: we're not going to talk about that today. So there
3:18
Speaker 3: are so so many different ways to invest in property
3:21
Speaker 3: and that's kind of exciting. Now. The biggest benefit which
3:23
Speaker 3: we are going to talk about in more detail. And
3:26
Speaker 3: this is entirely my own opinion, but I've got a
3:30
Speaker 3: really high regard for my own opinion at this own
3:32
Speaker 3: in time, so do I yeah, thank you. No, it's
3:34
Speaker 3: actually so that we create a passive income, and that
3:39
Speaker 3: is very very cool. It's about having an asset that
3:42
Speaker 3: is going to pay us in the future so that
3:44
Speaker 3: we don't have to work so for us. If we
3:46
Speaker 3: have tenants who are paying us rent and the capital
3:49
Speaker 3: growth of that asset, so the increase in value great
3:53
Speaker 3: over the long term. We have an asset that's worth more,
3:55
Speaker 3: but we've actually got an income stream of that tenant
3:58
Speaker 3: paying us money each and every single week after that
4:01
Speaker 3: property is completely paid off and you don't have any
4:03
Speaker 3: mortgage on it.
4:04
Speaker 2: So it's like a double whammy, yes.
4:05
Speaker 3: Because you could always sell that property and obviously make
4:08
Speaker 3: a capital gain, which is where you profit off a
4:11
Speaker 3: base level of capital. So maybe the property when you
4:14
Speaker 3: purchased it was worth three hundred thousand dollars, and then
4:17
Speaker 3: over time it's now worth five hundred thousand dollars, your
4:20
Speaker 3: capital gain would be two hundred thousand dollars, which I
4:23
Speaker 3: think is pretty cool. But the question there is do
4:27
Speaker 3: I actually sell that or is the fact that I've
4:30
Speaker 3: got a tenant in that property paying me four hundred
4:32
Speaker 3: dollars a week better for me long term than actually
4:35
Speaker 3: just having two hundred grod in my pocket right now,
4:37
Speaker 3: which I would arguably have to pay tax on.
4:39
Speaker 2: Yeah, right, and also the capital growth could grow further.
4:43
Speaker 3: I guess yeah, absolutely absolutely. And it's one of those
4:46
Speaker 3: things where I've said this on the podcast before where
4:49
Speaker 3: my favorite types of assets are the ones that produce
4:52
Speaker 3: income but also increase in value over time, so you
4:56
Speaker 3: can actually have exposure to that type of asset. Within
4:58
Speaker 3: the property world as well well. We always talk about
5:01
Speaker 3: things like the Australian dream and everybody wants to buy
5:03
Speaker 3: property and whatnot. But I'm just going to put that
5:05
Speaker 3: to the side. I think something that is really attractive,
5:07
Speaker 3: especially to younger people, is that property is tangible. You
5:12
Speaker 3: can touch it, you can taste it, you can have
5:14
Speaker 3: a pizza on the front lawn of the property, you
5:16
Speaker 3: can drive past it, you can point at it. You
5:18
Speaker 3: can't do the same thing with a share portfolio. It's
5:21
Speaker 3: not nearly as attractive, and it's just not as exciting.
5:23
Speaker 3: Let's be brutally honest. But at the end of the day,
5:26
Speaker 3: I think that's why people see it as a very
5:29
Speaker 3: attractive asset, because they feel quite safe with that because
5:32
Speaker 3: they can see it in front of them, and property
5:35
Speaker 3: in general is not considered as risky as the share market,
5:39
Speaker 3: So the return most people go by is around ten percent.
5:43
Speaker 3: But I'm going to preface that and say that I
5:45
Speaker 3: don't think that that will continue. That is absolutely personal opinion.
5:49
Speaker 3: It is not advice. But I cannot personally see how
5:53
Speaker 3: the increase in the property market is going to be
5:55
Speaker 3: sustained over the long term based on the historical growth.
5:58
Speaker 2: That's the thing, because I was talking to my dad
6:00
Speaker 2: about this the other day. How would you ever get
6:03
Speaker 2: into the market if it goes up ten percent every year?
6:07
Speaker 3: Yeah? Exactly, Yeah, I.
6:08
Speaker 2: Just can't accompany.
6:09
Speaker 3: And we've all seen those properties online where people have
6:12
Speaker 3: flipped them, made a million dollars and all of that.
6:14
Speaker 3: Please don't get me wrong. We've also seen all the
6:16
Speaker 3: clickbaite articles where people are saying things like, oh my gosh,
6:20
Speaker 3: I bought my fiftieth property by my twenty ninth birthday.
6:23
Speaker 3: And to be honest, what you don't see is how
6:25
Speaker 3: much debt they're carrying to be able to afford that,
6:28
Speaker 3: And I think you need to really bring it back
6:30
Speaker 3: down to earth and go, well, what does an investment
6:33
Speaker 3: property mean for me? How does that work? As much
6:36
Speaker 3: as the very attractive return exists, what people don't understand
6:40
Speaker 3: when it comes to return is that's just a great
6:43
Speaker 3: looking return. Does property return? Yes? Absolutely, they haven't taken
6:47
Speaker 3: into consideration the costs that you incur along that journey
6:51
Speaker 3: to maintain that property. They haven't talked about water or
6:54
Speaker 3: about rates. They haven't spoken about the hot water system
6:57
Speaker 3: that broke that you had to reinstall, or that ski
7:00
Speaker 3: tenant that keeps calling saying that the air condition is
7:02
Speaker 3: broken and it's their fault. So I think it's really
7:05
Speaker 3: really important to consider that. If you invest in property,
7:09
Speaker 3: but then you spend fifty thousand dollars on it and
7:12
Speaker 3: then you sell it for one hundred thousand dollars more
7:14
Speaker 3: than you purchased step for you didn't actually make one
7:17
Speaker 3: hundred thousand dollars on their property. You might have made fifty,
7:19
Speaker 3: but then you'd have to play capital gains taxes. And
7:22
Speaker 3: I just think that there's a lot to it that
7:24
Speaker 3: people don't take into consideration. And I think that a
7:27
Speaker 3: lot of us and Georgie you might have experienced this before.
7:31
Speaker 3: People don't tell you how much a cost to renovate
7:33
Speaker 3: theirs or change things, or you know, what costs they incurred.
7:36
Speaker 3: They'll be like, oh, George bought that house in nineteen
7:39
Speaker 3: ninety two for thirty thousand dollars and then sold it
7:42
Speaker 3: in you know, twenty twelve for you know, eight hundred
7:45
Speaker 3: and you go, wow, that's pretty good. How much you
7:48
Speaker 3: spend on that? Nobody asks that for question, So I
7:51
Speaker 3: think it's really important to take that into consideration when
7:54
Speaker 3: we talk about return on a property as well. That's
7:57
Speaker 3: the end of my rant.
7:58
Speaker 2: I liked that. Well, that kind of leads into my
8:00
Speaker 2: next question, which is what we need to be considering
8:04
Speaker 2: when buying an investment property. But before I do ask
8:07
Speaker 2: you that, I just wanted to quickly let everyone know
8:10
Speaker 2: that we do have the property playbook coming.
8:13
Speaker 3: Would thank you for plasing to see.
8:15
Speaker 2: Of home buying. So this chat today isn't about how
8:19
Speaker 2: to buy a home. No, I think a few people
8:21
Speaker 2: might be thinking that, but it's more a chat about
8:23
Speaker 2: investment properties.
8:24
Speaker 3: Yeah, and what that asset class is so that you
8:27
Speaker 3: can properly understand it as an asset, and that actually
8:30
Speaker 3: helps me a lot. Georgia in answering the question that
8:33
Speaker 3: you just asked me, and that is what do we
8:36
Speaker 3: need to consider? And the first thing is what your
8:38
Speaker 3: purpose is. Are you purchasing an investment property or are
8:42
Speaker 3: you purchasing a future home? Those true things are really different.
8:45
Speaker 3: If we are purchasing an investment property, I think people
8:48
Speaker 3: get really tangled up in their emotions. They starting Wow,
8:51
Speaker 3: that's so pretty. I'd love to own that apartment in
8:53
Speaker 3: that location. Once you've decided that your future investment property
8:58
Speaker 3: is going to be just that an investment, you need
9:00
Speaker 3: to look at it pragmatically. You need to say, okay, cool,
9:03
Speaker 3: what are the key features I need to be purchasing.
9:05
Speaker 3: What does this look like. It's not about how pretty
9:08
Speaker 3: it is. It's not about any of that. I mean,
9:10
Speaker 3: it kind of helps sometimes, but it's also, you know,
9:13
Speaker 3: mainly just aesthetics. But at the end of the day,
9:15
Speaker 3: if you are in a position where you're considering investment property,
9:19
Speaker 3: we're not buying a dream home. We're not buying something
9:21
Speaker 3: really attractive. We are purchasing a property with the expectation
9:25
Speaker 3: that it will increase in value and we'd get some
9:27
Speaker 3: capital growth, and we'd also be able to create an
9:30
Speaker 3: income stream and be in a position where we have
9:33
Speaker 3: a tenant paying a mortgage. That's what we're looking for.
9:36
Speaker 3: It's not about what the property is. We then go
9:39
Speaker 3: into budget and what that looks like and how that works.
9:42
Speaker 3: Whereas georgo. If you said, well, I want to buy
9:44
Speaker 3: my first home, or I want to buy a property
9:46
Speaker 3: that will be an investment, then i'll live in it,
9:48
Speaker 3: that's a different store.
9:49
Speaker 2: Yeah, so that's not what we're talking That is.
9:51
Speaker 3: Not what we're talking about. So for me, it's separating
9:55
Speaker 3: your emotions from what you want versus what you need
9:58
Speaker 3: at the very beginning and the we want to do
10:00
Speaker 3: our research. We want to understand what we're buying. And
10:04
Speaker 3: I think that this is something that so many people
10:06
Speaker 3: don't consider when it comes to investment properties. They'll say, yeah,
10:09
Speaker 3: but it's really beautiful and it's in a really great location, fantastic.
10:12
Speaker 3: Would you say the same thing about shares or would
10:15
Speaker 3: you tell me that you chose that share or that
10:17
Speaker 3: ETF or that managed fund because it's got good track
10:20
Speaker 3: record and proof and it's made up of well diversified asset,
10:23
Speaker 3: like you'd have a solid reason. No one looks at
10:26
Speaker 3: a share on the share market says it's just really
10:28
Speaker 3: pretty and it's in a good location, And yeah, no
10:31
Speaker 3: one says that. But we're so much more emotional about property,
10:34
Speaker 3: So we need to strip that away, and when we're
10:37
Speaker 3: doing our research, go, okay, cool, what do we need
10:39
Speaker 3: to consider? Do we need to work out where we're
10:41
Speaker 3: buying and what that location looks like. Do you understand
10:45
Speaker 3: if you're buying in a city and there's a development
10:48
Speaker 3: going to go up in the next twelve months next
10:50
Speaker 3: door to you that's going to decrease the value of
10:52
Speaker 3: your current property, are you aware of it? And have
10:54
Speaker 3: you done your research? Do you know what property is
10:57
Speaker 3: planned around to the outside of that property that you're
10:59
Speaker 3: going to purchase. If you don't, you need to do
11:01
Speaker 3: some more research. So for me, it is really really
11:04
Speaker 3: important when it comes to purchasing property. We're not talking
11:07
Speaker 3: about first homes here, and this is really important for
11:09
Speaker 3: me to preface because I think that a lot of
11:11
Speaker 3: people will be like, oh, but Victoria said X on
11:13
Speaker 3: this podcast about property, I'm not talking about your home,
11:16
Speaker 3: I'm not talking about your first home talking about a
11:19
Speaker 3: property that you do not have any intention of living
11:21
Speaker 3: in at any point. You need to identify areas that
11:25
Speaker 3: are high growth and high yield. The more that you
11:28
Speaker 3: can charge for rent, obviously, the more of an income
11:31
Speaker 3: that you're going to be taking home. Plus you probably
11:33
Speaker 3: should be considering any plans that are in the works
11:36
Speaker 3: as I said just before, that could impact the property
11:38
Speaker 3: purchase price. Now this goes the other way as well.
11:41
Speaker 3: Might not be a high density apartment complex going up
11:44
Speaker 3: near you. Might be a train line that's actually going
11:47
Speaker 3: to increase the value of the property you're purchasing because
11:49
Speaker 3: it's just become more accessible. Yes, school, so you're in
11:53
Speaker 3: a great school zone. Now, might be a hospital which
11:56
Speaker 3: would increase infrastructure in your area. There are so many
11:59
Speaker 3: different things could impact the property price that you have.
12:03
Speaker 3: So generally suburbs that are closer to the city are
12:05
Speaker 3: more expensive to buy in, and also coastal suburbs are
12:08
Speaker 3: as well because life style aesthetic. But the further you
12:12
Speaker 3: go often you'll find greater affordability. But with that comes
12:16
Speaker 3: compromise because obviously the further out you are, the less
12:19
Speaker 3: you can charge for rent. The further out you are,
12:20
Speaker 3: the harder it is to get to work if someone
12:22
Speaker 3: works in the city, et cetera, so on and so forth.
12:25
Speaker 2: Do you see that changing with the whole COVID situation.
12:29
Speaker 2: Obviously a lot of people are making them move to
12:31
Speaker 2: the coast and they're like, I'll work from home three days,
12:34
Speaker 2: go into the office two days, so then they don't
12:35
Speaker 2: need to live it like close to the cbit anymore.
12:37
Speaker 2: Is that going to have an impact on where we
12:40
Speaker 2: should be buying property.
12:41
Speaker 3: It can, it's not. It's not something that I would
12:44
Speaker 3: bet on for the long term. With COVID. We've obviously
12:47
Speaker 3: been you know, granted this ability to be more flexible
12:50
Speaker 3: in our workplaces, and we're seeing that already being reflective
12:54
Speaker 3: in the price of property. So I know where you
12:56
Speaker 3: and I from Georgia, on the Peninsula, property prices are
13:00
Speaker 3: significantly increasing because people want to live down the peninsula
13:03
Speaker 3: now because they can same thing is happening in really
13:06
Speaker 3: beautiful regional towns, So it's definitely worth looking into. But
13:10
Speaker 3: you can see what is going on. I think for me,
13:12
Speaker 3: it's just about understanding what you're buying, why you're buying,
13:15
Speaker 3: and what return you're expecting. It's actually not about well,
13:18
Speaker 3: it's a really pretty location. Like I just get so
13:21
Speaker 3: frustrated when people tell me that when they're looking for property,
13:24
Speaker 3: because that is not the priority when we are actually
13:27
Speaker 3: investing our money. If you're investing, the purpose is to
13:30
Speaker 3: get a return.
13:31
Speaker 2: Okay, So from that investment perspective, then what would you
13:35
Speaker 2: say the benefit of buying an apartment versus a house
13:39
Speaker 2: is which one's better? Because often people would say, go
13:41
Speaker 2: with the house. Talk us through that.
13:43
Speaker 3: So most people are going to say buying a home
13:46
Speaker 3: is a much better investment or a detached property than
13:50
Speaker 3: purchasing an apartment because you get land. Like this is
13:53
Speaker 3: not the first time you guys have heard this. And
13:55
Speaker 3: if you do purchase an apartment, you're actually purchasing part
13:57
Speaker 3: of a complex and you'll probably have to pay body, corpse,
14:00
Speaker 3: roborate feet and so on and so forth, and you're
14:01
Speaker 3: not actually purchasing the land. And the difference is that
14:04
Speaker 3: land appreciates while buildings generally depreciate. So what I'm talking
14:09
Speaker 3: about there is land is land. You can knock something
14:12
Speaker 3: down and rebuild it, often in the more expensive areas.
14:15
Speaker 3: So you look at really expensive areas in Sydney and
14:18
Speaker 3: in Melbourne, it's not actually about the house that is
14:21
Speaker 3: on it. It's about the location of the land and
14:23
Speaker 3: what that looks like. You could knock the house down
14:25
Speaker 3: and not have it there and it would still be
14:27
Speaker 3: very close to the property value that was their prior.
14:30
Speaker 3: So for me, it's really important to understand an apartment
14:33
Speaker 3: cool in fifty years. If you still own that, it's
14:36
Speaker 3: going to need a lot of work. That is a
14:38
Speaker 3: cost you're going to have to cough up. You're not
14:40
Speaker 3: in a position where you just knock it down and
14:42
Speaker 3: sell it like it's just not an option. So I
14:45
Speaker 3: think it's important to understand that land does carry higher value,
14:48
Speaker 3: it does increase in value, whereas apartments tend to cap out.
14:53
Speaker 3: In saying that, I think that there is a really
14:55
Speaker 3: great market for purchasing apartments, but I would be looking
14:57
Speaker 3: into getting advice on where that is because we're not
15:00
Speaker 3: talking about really high density, high volume apartment buildings, because
15:04
Speaker 3: they're not going to increase in value in the same
15:07
Speaker 3: way that an apartment, you know, maybe in like South
15:10
Speaker 3: Yarra or in a city like up to ten k's
15:13
Speaker 3: from the CBD in a block of six is going
15:17
Speaker 3: to That's a very different asset than purchasing an apartment
15:20
Speaker 3: in a high density apartment in the Melbourne CBD that
15:23
Speaker 3: has seven hundred other apartments in that complex. Completely different ballgame.
15:28
Speaker 2: Okay, yeah, I think I always knew about the land thing,
15:32
Speaker 2: but maybe I forgot or something that kind of Yeah,
15:35
Speaker 2: it makes sense. And you also can't knock it down
15:37
Speaker 2: and rebuild it.
15:38
Speaker 3: Right, absolutely. And another one of the benefits of houses
15:41
Speaker 3: over apartments is you can add additional value, So you
15:44
Speaker 3: could add an extension, or you could conduct some renovations,
15:48
Speaker 3: or you know, put a second story on the property.
15:50
Speaker 3: With an apartment, you don't have that choice. Usually you
15:53
Speaker 3: can only move the internal walls. And that's still questionable
15:56
Speaker 3: as to whether they are load bearing wolves or not.
15:58
Speaker 3: And I won't get into that, but really apartments are
16:01
Speaker 3: more affordable, and by no means saying they're a bad investment.
16:04
Speaker 3: We just want you to be educated on what the
16:06
Speaker 3: investment you are making is in comparison to another option.
16:09
Speaker 2: Yeah, and now it kind of makes sense as to
16:11
Speaker 2: why they are cheaper beyond just the size of them
16:13
Speaker 2: generally being smaller. Okay, next question here, This one actually
16:16
Speaker 2: came from erin from our community.
16:19
Speaker 3: What's up bearing?
16:20
Speaker 2: She is asking what the goal is with paying down
16:22
Speaker 2: your mortgage faster versus an offcent an offset account.
16:27
Speaker 3: Rather Okay, so there's no right or wrong here at
16:29
Speaker 3: the end of the day, It completely depends on your
16:32
Speaker 3: own personal situation. The thing I'm gonna say when it
16:35
Speaker 3: comes to right here and now is mortgages are very
16:40
Speaker 3: cheap at the moment. If you do not have a
16:42
Speaker 3: two in front of your mortgage, you need to have
16:44
Speaker 3: a chat to your mortgage broker and get that changed because,
16:48
Speaker 3: to be really blunt, money's really cheap right now. You
16:50
Speaker 3: can borrow at like one point five percent. The shere
16:54
Speaker 3: market is still returning on average seven and a half percent,
16:57
Speaker 3: So I know where I'd want to be putting my
16:59
Speaker 3: additional money. So if you are thinking about that, I
17:02
Speaker 3: think it's definitely worthy of having a conversation with somebody
17:05
Speaker 3: who can advise you on the right decision to make
17:07
Speaker 3: for you and work out what that means. But the
17:10
Speaker 3: benefit of having money in an offset account for those
17:12
Speaker 3: of you playing along a home is you can actually
17:15
Speaker 3: access the money really quickly and it decreases the amount
17:18
Speaker 3: of interest you need to pay. So, for example, if
17:20
Speaker 3: you paid off in quotation marks, your entire mortgage. So
17:24
Speaker 3: say you had three hundred thousand dollars cash, lucky you
17:26
Speaker 3: for one. But say you had three hundred grand cash
17:29
Speaker 3: and you had three hundred thousand dollars owing in your mortgage.
17:32
Speaker 3: If you paid it off, you'd extinguish that debt completely.
17:34
Speaker 3: But if you put that entire amount into your mortgage offset,
17:38
Speaker 3: you actually wouldn't have to pay any of your mortgage because,
17:41
Speaker 3: like the entire amount of interest would be completely offset.
17:44
Speaker 3: So for me, it's a very attractive way of putting
17:48
Speaker 3: money against your mortgage and making sure that you're paying
17:51
Speaker 3: less interest while still having quick access to those funds
17:54
Speaker 3: in case you do want to purchase another home and
17:56
Speaker 3: you've got the ability to put down another deposit or
17:59
Speaker 3: investing something else that has a higher amount of interest
18:02
Speaker 3: being paid on it at that point in time. I
18:05
Speaker 3: think it's really important to understand what works for you, though,
18:08
Speaker 3: because I do have some clients that are just going,
18:10
Speaker 3: you know what, victoriou, I want to pay down my mortgage. Personally,
18:13
Speaker 3: that's not what I'm doing. I am not making additional
18:15
Speaker 3: mortgage or payments at the moment, because for me, I'm
18:18
Speaker 3: actually bumping up my share portfolio because for me, that's
18:22
Speaker 3: where money is working harder. I think the downside of
18:25
Speaker 3: offset accounts is when you withdraw money from an offset account,
18:28
Speaker 3: you're going to be charged additional interest. You're not gonna
18:31
Speaker 3: be charged fees and charges. But essentially, if you were
18:33
Speaker 3: offsetting interest before, now you've pulled the money out, it's
18:35
Speaker 3: no longer offsetting it. You're gonna pay a higher interest rate.
18:38
Speaker 3: So that's definitely worthy of consideration. But I think it's
18:42
Speaker 3: really important for you to understand what your long term
18:45
Speaker 3: financial plan is, not just oh, I've got debt, I
18:49
Speaker 3: should extinguish that. Because we talk about good debt, we
18:52
Speaker 3: talk about bad debt, and we talk about okay debt,
18:54
Speaker 3: And to me, a mortgage is okay debt to hold
18:56
Speaker 3: as long as you've got a long term financial plan, yes,
18:59
Speaker 3: or something like a personal loan to me. Bad debt
19:02
Speaker 3: that's credit cards, that is personal loans that is zippay
19:05
Speaker 3: after pay all of the pays that that needs to
19:08
Speaker 3: go asap because the fees are really high, the interest
19:11
Speaker 3: rates are very high, and they are not putting you
19:13
Speaker 3: in a financially optimal position, whereas a mortgage you're helping
19:17
Speaker 3: create wealth you are helping to buy an asset over
19:20
Speaker 3: a long period of time, and at the end of
19:22
Speaker 3: the day, if you said to me, Hey, Victoria, but
19:24
Speaker 3: I can pay off my mortgage fifteen years earlier, I'm
19:26
Speaker 3: going to do an entire podcast on how to do
19:28
Speaker 3: that so that you understand that. But maybe, Treu, I'm
19:32
Speaker 3: going to pay off my mortgage fifteen years earlier. Okay, great,
19:35
Speaker 3: But would you like to pay it off over thirty
19:36
Speaker 3: and at the end of that period of time have
19:38
Speaker 3: your mortgage paid off completely and have a two million
19:40
Speaker 3: dollar investment port for which one would you like. It's
19:43
Speaker 3: about making the right decision for you, not necessarily just
19:46
Speaker 3: seeing it and going, oh, alarm bells, I need to
19:48
Speaker 3: pay it off asap.
19:50
Speaker 2: So how can Erin figure that out? Is she going
19:52
Speaker 2: to have to chat with someone or well, this is
19:55
Speaker 2: not advice but our chat today. Do you think that'll help?
19:58
Speaker 3: Hopefully it helps her, But I think her question was
20:00
Speaker 3: more about should I be paying down my mortgage past
20:02
Speaker 3: or putting it in an offset account? My friend, it
20:05
Speaker 3: is completely up to you. It's all about access. Do
20:08
Speaker 3: you want access to that cash in the future. My
20:11
Speaker 3: answer is, you know, depending on what your financial goals are.
20:15
Speaker 3: But as I always say, this is not about me saying,
20:18
Speaker 3: oh my gosh, but your money could be making more elsewhere.
20:20
Speaker 3: I mean, good, But it's about saying, do you know
20:24
Speaker 3: that's an option for you? Great? Now you do, go
20:27
Speaker 3: make an educated decision that is right for you. Maybe
20:29
Speaker 3: paying down your mortgage still is the most important thing
20:32
Speaker 3: for you. But it does not necessarily mean that I
20:35
Speaker 3: think you're making the wrong decision. I just worry when
20:38
Speaker 3: people just don't know all of the facts and the
20:40
Speaker 3: figures and don't know what they're missing out on. That
20:42
Speaker 3: would be the worst thing for me.
20:44
Speaker 2: Yeah, all right, good pep talk there. I hope you
20:47
Speaker 2: enjoyed that one Erin up next, we'll be chatting the
20:50
Speaker 2: hidden costs of home buying, which we kind of alluded
20:52
Speaker 2: to a little earlier on.
20:53
Speaker 3: In the show Dun't Dunt Dumn.
20:56
Speaker 2: We'll be getting to the bottom of capital gains tax
20:58
Speaker 2: and we'll be shedding a little on what the devil
21:01
Speaker 2: and negative gearing is now. I do remember, guys, that
21:13
Speaker 2: conversations like the fabulous one we are having right now
21:16
Speaker 2: don't just happen on the podcast. We are also having
21:19
Speaker 2: these chats on our Facebook page. One hundred and thirty
21:22
Speaker 2: eight thousand. I think that's where we're at today.
21:23
Speaker 3: That's wild, that's actually where we're at today.
21:26
Speaker 2: I believe that is what I saw today.
21:28
Speaker 3: Jessica Ritchie. Is that where we're at today?
21:30
Speaker 2: Fact check, it's got up a thousand.
21:36
Speaker 3: It's actually one was a bit ahead of myself there, guys,
21:39
Speaker 3: But that's okay, that's not unlike me.
21:42
Speaker 2: It's a lot of pals.
21:44
Speaker 3: We'll have one hundred and forty tomorrow morning. Five hundred people. Okay,
21:51
Speaker 3: clearly enough attention to the numbers coming in. I just
21:54
Speaker 3: like getting my opinion out on all the posts. So yeah,
21:57
Speaker 3: there's that.
21:59
Speaker 2: We also haven't been deleted by Facebook. I think a
22:01
Speaker 2: few news publications are, but we don't fall into that category.
22:05
Speaker 3: Lucky fine, more space for us to spread financial literacy heaven.
22:11
Speaker 2: We're also on Instagram, YouTube, TikTok. Newsletter was that everything
22:15
Speaker 2: we got?
22:15
Speaker 3: Yeah, we do, but like, don't downplay that newsletter. It's
22:18
Speaker 3: my favorite pieces on money content. Guys.
22:21
Speaker 2: Yeah, yeah, that'll drop today in your inbox.
22:23
Speaker 3: Guys, what are you going to talk about in the
22:25
Speaker 3: Friday newsletter?
22:26
Speaker 2: G A lot to come this week?
22:29
Speaker 3: She doesn't know, guys, what that means.
22:32
Speaker 2: I think last week my recommendation was electric bike. So
22:35
Speaker 2: let me know if anyone got around that, I'm sure
22:38
Speaker 2: you didn't.
22:40
Speaker 3: Do you even own an electric bike?
22:42
Speaker 2: My mom does, and if you read last week's newsletter
22:45
Speaker 2: then you would have known that. But check out, manee,
22:48
Speaker 2: look at that Nari scar.
22:49
Speaker 3: Yeah, everyone's so shocked. They're so impressed.
22:52
Speaker 2: It's actually cool. I'm a biker chick. Anyways, should we
22:55
Speaker 2: get back to the show.
22:56
Speaker 3: Yeah, absolutely, back to the show. Read the newsletter George
22:59
Speaker 3: Kinn's a biker cheek summarized.
23:01
Speaker 2: Okay, so we had a question from Sarah, who was
23:04
Speaker 2: asked what you would say at the hidden costs are
23:06
Speaker 2: that come with buying a house or an investment property?
23:09
Speaker 3: Yeah, there are lots, I know, talk me through them. Thought, okay,
23:13
Speaker 3: so there are a number of hidden I don't know
23:15
Speaker 3: if they're hidden anymore. Keep talking about them, so maybe
23:17
Speaker 3: they're not so secret. Maybe Yeah, you just don't know, right, So,
23:21
Speaker 3: when it comes to purchasing property, there are actually a
23:24
Speaker 3: number of different costs. They're not necessarily hidden, but they
23:27
Speaker 3: feel hidden when you haven't done your research and you're
23:30
Speaker 3: purchasing your property and they're like oh here, I pay
23:32
Speaker 3: the land transfer fee like wash, sorry new phone? Who
23:35
Speaker 3: is this so here? We are trying to educate you
23:38
Speaker 3: the end of the day, beyond the deposit for your
23:40
Speaker 3: home and the repayments that you're going to need to
23:42
Speaker 3: come up for the next few decades. Sorry. Friends. You'll
23:45
Speaker 3: also need to pay stamp duty. I think we already
23:47
Speaker 3: all knew that one. You'll need to pay conveyancing fees.
23:49
Speaker 3: They're non negotiable. You actually do have to get legal
23:51
Speaker 3: advice to count just DIY. You need to pay mortgage insurance,
23:55
Speaker 3: which is something I didn't realize was actually non negotiable
23:58
Speaker 3: for the bank to allow you to get your mortgage.
24:00
Speaker 2: There you go.
24:01
Speaker 3: Council rates very exciting. You'll have to pay water. You'll
24:04
Speaker 3: have to pay for pest inspections on the property, building
24:07
Speaker 3: inspections to make sure that you're not buying a property
24:09
Speaker 3: that is riddled with termites. You'll have to pay for
24:12
Speaker 3: loan application fees, which I just feel like is a
24:14
Speaker 3: bit of a kick in the pants because I'm already
24:17
Speaker 3: giving you all my money bank, Why are you trying
24:19
Speaker 3: to take more grim Yeah, pretty rude, but that's okay.
24:22
Speaker 3: You have to pay moving costs. Those are pretty pricey.
24:25
Speaker 3: At the end of the day, I think it cost
24:26
Speaker 3: me million thousand dollars to move house last time. I did.
24:29
Speaker 2: You're kidding and I just got me round.
24:30
Speaker 3: Yeah I was around the corner, but like, can you
24:32
Speaker 3: pick up a queen bed frame? Yeah? No, I couldn't either,
24:35
Speaker 3: don't worry and giant wardrobes. It was a nightmare. At
24:38
Speaker 3: the end of the day, I'm glad I paid for it,
24:40
Speaker 3: to be honest, because mere dragging it down the road
24:41
Speaker 3: wouldn't have gone well. And appliances also the cost of
24:45
Speaker 3: furniture to refurniture places broken broken appliances. The other week,
24:51
Speaker 3: Georgia King, I had to call out the plumber twice
24:54
Speaker 3: because it turns out I have roots going into the
24:56
Speaker 3: plumbing or the I have roots growing into the pipes
25:00
Speaker 3: under my house, so he had to clear that twice.
25:03
Speaker 3: That cost me two hundred and twenty dollars per call out.
25:06
Speaker 3: So that is four hundred and forty dollars I recently
25:09
Speaker 3: spent on plumbing, which I didn't see coming, but also
25:13
Speaker 3: could have used that as a money loss on the pod.
25:15
Speaker 2: Do you save it for next time?
25:16
Speaker 3: I'll save it for next time. Everybody act shocked when
25:19
Speaker 3: I talk about that, but I think that there's so
25:22
Speaker 3: many different costs that we just don't think about, and
25:24
Speaker 3: it is so important that we're aware of these fees
25:26
Speaker 3: and costs because they genuinely do stack up and it's
25:29
Speaker 3: really stressful. So it's going to be different state to state.
25:33
Speaker 3: But here in Victoria, stamp duty is currently void for
25:35
Speaker 3: first home buyers who are buying property of less than
25:37
Speaker 3: six hundred grand. That is an epic money win because
25:40
Speaker 3: stamp duty is spenno and there's a concession for first
25:44
Speaker 3: home buyers who are buying between the amounts of six
25:46
Speaker 3: hundred thousand and one dollars and seven hundred and fifty grand.
25:50
Speaker 3: So if you fall into those categories, the amount of
25:52
Speaker 3: money falls on a pretty sliding scale. So for me,
25:56
Speaker 3: I think that's pretty good because at the end of
25:58
Speaker 3: the day it used to about ten percent. Stamp duty
26:02
Speaker 3: rarely speno. That is speno.
26:04
Speaker 2: I think crimes were like thirty grand though.
26:07
Speaker 3: Absolute, so like back in the day. I'm not to
26:10
Speaker 3: be honest, I am not the professional here, Amil Lenardi
26:13
Speaker 3: who is going to be on the property to taybook is.
26:15
Speaker 3: But I was genuinely gobsmacked when it came to how
26:18
Speaker 3: much money I had to pay for my house deposit.
26:22
Speaker 3: If you are now purchasing property is much less, so
26:24
Speaker 3: that is pretty attractive. Have a check on your local
26:27
Speaker 3: government website to see what concessions you can get if
26:30
Speaker 3: you are purchasing property. I think it's really important to
26:33
Speaker 3: make sure that you're making the most of everything that
26:35
Speaker 3: is on offer to us, because they could be state
26:37
Speaker 3: level or even national plans. So definitely, if you're looking
26:41
Speaker 3: at properly in the near future, have a look and see,
26:44
Speaker 3: or just ask the shehesl on money community they've got.
26:46
Speaker 3: They'll know, they know, they always know. Arguably sometimes they
26:49
Speaker 3: actually know more than I do because they're more across it.
26:52
Speaker 3: One hundred and thirty thousand people.
26:53
Speaker 2: You can ask, well, that's in one hundred and thirty
26:55
Speaker 2: eight thousand, not to be confused with one hundred and
26:57
Speaker 2: seventy eight thousand.
26:58
Speaker 3: Make sure that you actually search the group before just
27:01
Speaker 3: chucking your question up, because we actually and I know
27:04
Speaker 3: that some people get a little bit annoyed by this,
27:06
Speaker 3: but I actually decline a lot of posts because that
27:09
Speaker 3: question has already been asked in the community, and I
27:11
Speaker 3: don't want our community to become a place that is
27:13
Speaker 3: just super repetitive.
27:15
Speaker 2: I want you to talk to me about capital gains tax.
27:18
Speaker 3: Capital gains tax CGT. CGT very attractive if you use
27:23
Speaker 3: the acronym in a really fast way. It makes you
27:25
Speaker 3: sound like you know what you're talking about, which thankfully
27:28
Speaker 3: I do. So CGT is capital gains tax, and that
27:32
Speaker 3: is a tax that you pay basically if you sell
27:34
Speaker 3: a capital asset, so whether it is shares or whether
27:37
Speaker 3: it is property, you will either make a capital loss
27:40
Speaker 3: or a capital gain, and that means you made money
27:42
Speaker 3: and you'll need to pay tax on that because any
27:44
Speaker 3: money that you make in Australia you do need to
27:47
Speaker 3: pay tax at your marginal tax rate on. So this
27:50
Speaker 3: is referred to as CGT, but it is also lumped
27:53
Speaker 3: onto your income tax rather than just like a completely
27:56
Speaker 3: separate tax return. So it definitely isn't something that you
27:59
Speaker 3: have to go and do above and beyond. Yeah, it'll
28:01
Speaker 3: all be included.
28:03
Speaker 2: How do you know, Like is that an automatic thing
28:06
Speaker 2: or like how do you know?
28:08
Speaker 3: This is where if you own property, it's important to
28:11
Speaker 3: have an accountant or a little bit of prowess when
28:14
Speaker 3: it comes to doing your own tax return. Once you
28:16
Speaker 3: go from just being a salary and wage earner who
28:19
Speaker 3: just submits all this stuff to the ATA website and
28:22
Speaker 3: diise their tax return. This is where you probably need
28:25
Speaker 3: to make sure that you're tracking how much you're spending
28:27
Speaker 3: on the property so that you can claim it. And
28:29
Speaker 3: then if you sell a property, making sure that your
28:31
Speaker 3: accountant or is how much you sold that property for
28:33
Speaker 3: versus how much you purchased it for so that they
28:35
Speaker 3: can calculate the CGT on that asset for you.
28:38
Speaker 2: And you only have to pay capital gains tax once
28:41
Speaker 2: that's once you've sold your asset with property.
28:44
Speaker 3: Yes, it's once you've sold your asset, but it's going
28:47
Speaker 3: to differ depending on shares, based on how much money
28:50
Speaker 3: you make and whether you're reinvesting dividends or not. But
28:52
Speaker 3: at the end of the day, my friends, if you
28:54
Speaker 3: are making money, that is a good thing, and paying
28:56
Speaker 3: tax is also a really great thing. And for me,
29:00
Speaker 3: really frustrated when people are like, oh my gosh, like
29:02
Speaker 3: I can't believe I had to play capital gains tax
29:04
Speaker 3: on that, Like, yeah, but it was never yours. You
29:06
Speaker 3: always knew that, So they changed the goalposts, like that's
29:10
Speaker 3: how it works in this country. So we're really lucky
29:13
Speaker 3: to be able to do that, and that is my
29:14
Speaker 3: personal opinion.
29:15
Speaker 2: Love it well said, Okay, we have lots of questions
29:19
Speaker 2: and we always do about positive and negative gearing.
29:22
Speaker 3: I got you, what's the deal? You don't want to
29:25
Speaker 3: explain it?
29:26
Speaker 2: Absolutely, So.
29:29
Speaker 3: Negative gearing is where the expense is associated with your
29:32
Speaker 3: asset i e. Your home or your share portfolio are
29:35
Speaker 3: more than the amount of money that you made from
29:37
Speaker 3: that asset. So say you purchased an investment property and
29:41
Speaker 3: you spent a whole heap more money on that property
29:43
Speaker 3: than what you made. Say, for example, you spent fifty
29:46
Speaker 3: thousand dollars on it, but you're only made twenty thousand
29:48
Speaker 3: dollars in rent that came in. That is a negatively
29:51
Speaker 3: geared property and that means that you're not going to
29:54
Speaker 3: have to pay heaps and heaps of tax because you
29:55
Speaker 3: can claim it. Whereas a positively geared property is where
29:59
Speaker 3: you were actually making money from that property and the
30:02
Speaker 3: expenses associated with that property are lower than the amount
30:06
Speaker 3: of money that you're making, which is obviously the dream. Okay,
30:09
Speaker 3: so let's have a chat about the gearing of property.
30:12
Speaker 3: So you mentioned negatively geared properties and positively geared properties,
30:15
Speaker 3: But did you also know that you could have a
30:17
Speaker 3: neutraally geared property absolutely making it complex over here, So
30:21
Speaker 3: I will explain all of those really quickly at the
30:23
Speaker 3: end of the day. This can be a little bit complex.
30:26
Speaker 3: But a negatively geared property geared geared, but a negatively
30:31
Speaker 3: gard property means that the income that you are making
30:34
Speaker 3: from that property is less than the more gedge repayments
30:37
Speaker 3: and expenses you're incurred on it. So negative, Does that
30:40
Speaker 3: make sense? You are looking so confused.
30:42
Speaker 2: I know. I think I just have a pre existing
30:45
Speaker 2: fear of positive and negative gearing, which I feel like, sure,
30:48
Speaker 2: it's not scary.
30:49
Speaker 3: It's not scary. I promise. It is just literally a fact,
30:52
Speaker 3: and we just want to understand it.
30:53
Speaker 2: For tax purposes. Can I try and explain it to you? Yeah,
30:55
Speaker 2: of course, it's so negative gearing. Yeah, nothing to do
30:59
Speaker 2: with gears. Even though I'm a bucker girl.
31:02
Speaker 3: You are a biker gals.
31:03
Speaker 2: So if you buy an investment property, yes, sir, and
31:08
Speaker 2: you bought it for like two hundo grand Yeah, thanks,
31:12
Speaker 2: it's pretty shape good, but you spent and you've got
31:16
Speaker 2: tenants in there and over the year they pay you
31:20
Speaker 2: like twenty grand for rent. Yep, nice, but you had
31:24
Speaker 2: to do up the bathroom and that costs fifty grand.
31:27
Speaker 3: No bathroom house.
31:29
Speaker 2: It was made of gold.
31:31
Speaker 3: Oh wow, that's pretty for a gold bathroom.
31:33
Speaker 2: What's happened here is it's negative gearing.
31:35
Speaker 3: Yes, because the rental income that you received is less
31:39
Speaker 3: than the expenses that you incurred and then mortgage repayments
31:43
Speaker 3: that you had to pay.
31:44
Speaker 2: So then you can claim it. Yes, but what does
31:47
Speaker 2: that mean.
31:47
Speaker 3: It means that you can claim it on tax. So
31:49
Speaker 3: each year the property costs you money to owe, right,
31:54
Speaker 3: negative costs you money to owe negative gearing.
31:57
Speaker 2: That is what it is, okay, And the benefit is
31:59
Speaker 2: that it's low attacks and you still have that asset
32:02
Speaker 2: which has that capital growth.
32:04
Speaker 3: Yeah, yes, exactly. And negatively geared doesn't mean you actually
32:08
Speaker 3: have to spend any money on your property. For example,
32:11
Speaker 3: you could have purchased a property where the mortgage repayments
32:13
Speaker 3: are four thousand dollars a month, but you're only generating
32:15
Speaker 3: two thousand dollars a month of rental income. Therefore, your
32:18
Speaker 3: shortfall would be two thousand dollars a month that you
32:20
Speaker 3: have to cough up yourself to pay for that property,
32:23
Speaker 3: making it negatively geared because that asset isn't producing income
32:27
Speaker 3: for you that you could technically spend. Okay, does that help?
32:30
Speaker 2: It does help? And I have a question. Was this
32:33
Speaker 2: the thing that like the rich fellas were doing that
32:35
Speaker 2: kind of shut us young fellas out of the market.
32:39
Speaker 3: No, g that was positively gearing. So that's the opposite
32:42
Speaker 3: of negatively gearing. And that is where the rental income
32:45
Speaker 3: that you make is more money than the mortgage repayments
32:49
Speaker 3: and the expenses that you make on the property. So
32:51
Speaker 3: each year that property is making you money to own.
32:55
Speaker 3: So that's running in okay. Obviously, example of that would
32:58
Speaker 3: be mortgage repayments are eight thousand dollars a month, but
33:01
Speaker 3: you are renting that property out for three and a
33:03
Speaker 3: half thousand dollars a month. Therefore you are making five
33:05
Speaker 3: hundred dollars a month more than what that property is
33:07
Speaker 3: costing you. Right money win. And now to absolutely surprise
33:13
Speaker 3: and shock you all, neutral is where the rental income
33:16
Speaker 3: is actually equal to the mortgage you revaniments and expenses,
33:19
Speaker 3: so each of the property then doesn't cost you anything
33:21
Speaker 3: out of pocket at all. Does that make sense? Is
33:24
Speaker 3: that good. I'm just gonna put.
33:25
Speaker 2: A graphic on the Yeah, let's make it how bad? That?
33:29
Speaker 2: All right, let's move on. That was fun though?
33:31
Speaker 3: Was that fun? Did you like that?
33:33
Speaker 2: I did like that?
33:33
Speaker 3: Thank you. I'm not sure if anybody else did. But
33:36
Speaker 3: at this point it's so deep in the episode that
33:38
Speaker 3: if you're still here.
33:39
Speaker 2: It's way too late.
33:40
Speaker 3: Suck it.
33:41
Speaker 2: Suck it.
33:42
Speaker 3: Indeed.
33:43
Speaker 2: Now, the risks of property, I feel like we don't
33:46
Speaker 2: talk about them as much as we talk about the benefits.
33:49
Speaker 2: So here's our opportunity talk us through.
33:51
Speaker 3: The property is very attractive because it is the Australian dream.
33:55
Speaker 3: I'm not saying it is attractive. I'm saying we think
33:57
Speaker 3: it is attractive, and often we put ourselves in positions
34:00
Speaker 3: where we buy outside of what we can afford. Now,
34:03
Speaker 3: I'm not saying that you purchase something that requires you
34:06
Speaker 3: to spend five grand a month on it you just
34:07
Speaker 3: don't have that money. I'm saying you can't afford it
34:10
Speaker 3: because it's sacrificing too much of your lifestyle and you
34:13
Speaker 3: can't have a life. In addition to that, we forget
34:15
Speaker 3: that a mortgage is a thirty year commitment that puts
34:18
Speaker 3: us in a position where we actually have to honor
34:21
Speaker 3: that commitment each and every single month. It's not like
34:23
Speaker 3: a savings plan where you're saving for your first home
34:25
Speaker 3: and if this month you went out with the girls
34:27
Speaker 3: too many times, you just don't add to your savings.
34:30
Speaker 3: If you don't pay your mortgage, you're actually in a
34:32
Speaker 3: bit of a pickle. So we need to make sure
34:34
Speaker 3: that we are buying within what we can afford and
34:37
Speaker 3: what we actually want to put towards wealth creation, because
34:40
Speaker 3: that's the plan. So when we're buying a mortgage, which
34:43
Speaker 3: is essentially what you are doing, that's a long term commitment.
34:46
Speaker 3: I just don't think that people see the gravity of
34:48
Speaker 3: that situation because we get so caught up in this
34:51
Speaker 3: love bubble of purchasing your property and being excited about
34:55
Speaker 3: having made the deposit, and it's all just really exciting.
34:58
Speaker 3: But what we really need to do is pao it
34:59
Speaker 3: back bit and be okay, what can I afford each
35:02
Speaker 3: and every single month to put to this second thing
35:05
Speaker 3: is timing the market. The best thing to do is
35:07
Speaker 3: buy when you can afford, not when you think is
35:10
Speaker 3: going to be a really great time to buy, Because
35:12
Speaker 3: if you think it's a really great time to buy,
35:14
Speaker 3: so does everybody else. So don't let Fomo actually influence you,
35:19
Speaker 3: because at the end of the day, it's not a
35:21
Speaker 3: good investment if it puts you in a financially strange position.
35:24
Speaker 3: Terrible idea from my point of view. And then also
35:28
Speaker 3: just not considering all the costs and all the fees
35:30
Speaker 3: that come above which we already went with. There is
35:33
Speaker 3: just so much more to buying property than a lot
35:35
Speaker 3: of people think there is.
35:37
Speaker 2: I think something that came up a long term commitment.
35:39
Speaker 2: You know, well that's not ready ready, that's the thing.
35:42
Speaker 2: So we do have the Property Playbook coming up to
35:45
Speaker 2: explain the A to z of buying houses, what about
35:49
Speaker 2: homes everything.
35:50
Speaker 3: I'm genuinely so excited about this. This wasn't meant to
35:52
Speaker 3: be a plug for the show, but it totally is
35:54
Speaker 3: a plug for the show.
35:55
Speaker 2: Let just go hand in hand.
35:56
Speaker 3: Yeah, and also cool name right, the Property Playbook Literally
36:01
Speaker 3: should that one by myself? It is good, Thank you, Chue.
36:03
Speaker 3: I like it.
36:04
Speaker 2: But okay, so Property Playbook aside, if someone is thinking
36:07
Speaker 2: investment property, it's the way I want to go. Who
36:10
Speaker 2: should they be talking to? Where should they start?
36:12
Speaker 3: Chat to? Your mortgage proker? About whether you can afford
36:14
Speaker 3: it or not get pre approval. Start having that conversation.
36:18
Speaker 3: They can assess your financial position, work out where you
36:20
Speaker 3: are actually sitting, what you can afford, what you can't afford.
36:23
Speaker 3: Usually they have a pretty good idea of what the
36:25
Speaker 3: market's up to too, so have a chat to them
36:27
Speaker 3: because they are usually smart individuals. But then also have
36:31
Speaker 3: a chat to a financial advisor. Establish what you can
36:33
Speaker 3: do in the long term, because too many times we
36:36
Speaker 3: just see I need to buy an investment property or
36:38
Speaker 3: work it out all after that, I'll just work out
36:40
Speaker 3: my financial life once I've just cured my first property.
36:43
Speaker 3: That is not the time to work out your financial life.
36:45
Speaker 3: It is when you have the least amount of commitments
36:47
Speaker 3: but the most amount of choice, and that is before
36:49
Speaker 3: you purchase your home. So for me, have a chat
36:51
Speaker 3: to someone who can actually advise you. There are property
36:55
Speaker 3: specific financial advisors. I'm not actually one of them, so
36:59
Speaker 3: I probably you wouldn't talk to me personally about purchasing
37:02
Speaker 3: property because whilst I'm very passionate about it as an
37:05
Speaker 3: asset class, I would not have a clue where you
37:07
Speaker 3: personally should be purchasing a Buia's advocate on the other hand,
37:11
Speaker 3: is going to be able to guide you when it
37:13
Speaker 3: comes to that. And there are buias advocates not to
37:16
Speaker 3: trump Amy's own horn, which you know she'll love this
37:18
Speaker 3: because she does also listen to our podcast. She knows
37:22
Speaker 3: what is good when it comes to purchasing investment properties
37:24
Speaker 3: like that's her bread and butter. She purchases investment properties
37:28
Speaker 3: for investors like she looks for them. She makes sure
37:31
Speaker 3: that they're going to be a great asset. Someone like
37:33
Speaker 3: that on your team is definitely worth the money in
37:35
Speaker 3: my books, do a Google with your location and brokers
37:38
Speaker 3: in that area if you're looking for someone. Obviously, we've
37:41
Speaker 3: got a great, arguably great referral program where we can
37:44
Speaker 3: match you with a broker, but then also have a chat,
37:47
Speaker 3: ask friends and family work out who they've been talking to.
37:50
Speaker 3: Because to me, referral is the best source of finding someone.
37:53
Speaker 2: Okay, And to round out today's show, V please give
37:57
Speaker 2: us the scoop if we had to choose shares or
38:00
Speaker 2: what property? Oh, if you had to choose, I think that's.
38:03
Speaker 3: Really silly you choose. That's a terrible question to wrap
38:07
Speaker 3: a show on Georgia. How awful. Let's not answer that. No. Actually,
38:10
Speaker 3: I think it's really hard to question that because it's
38:13
Speaker 3: personal preference. One is not better than the other. And
38:16
Speaker 3: it frustrates me to think that people like, oh, should
38:18
Speaker 3: I do this? All that, I don't know your values yet,
38:20
Speaker 3: I don't know what you want to do. I don't
38:22
Speaker 3: know what your life plan is. Do you want to
38:23
Speaker 3: have six kids? Do you want to have no kids?
38:25
Speaker 2: Like?
38:26
Speaker 3: Who are you? What are your goals? Find an asset
38:29
Speaker 3: that aligns to your goals, not purchase an asset because
38:33
Speaker 3: you can get better than the other one. Because at
38:35
Speaker 3: the end of the day, this is a long term commitment,
38:37
Speaker 3: and if you have the right strategy in place, there
38:39
Speaker 3: are lots of different ways to create long term wealth.
38:41
Speaker 3: Full stop. End of stories.
38:43
Speaker 2: Stunning. Okay, well, there is so much for us to
38:46
Speaker 2: all take home today, guys. I think the main things
38:48
Speaker 2: I've probably taken.
38:49
Speaker 3: Away take home to your new investment property is that.
38:53
Speaker 2: Stunning, stunning, She's good. So what I've taken away to
38:57
Speaker 2: my home is that property is a great option because
39:01
Speaker 2: of the potential for passive income and capital growth. But
39:04
Speaker 2: you've got to watch out for capital gains tax But
39:06
Speaker 2: you just got to expect it because that's coming for
39:08
Speaker 2: you when you sell.
39:09
Speaker 3: If you did a good job and you bought a
39:11
Speaker 3: good property, you were gonna pay capital gains tax.
39:13
Speaker 2: Correct.
39:14
Speaker 3: That means you bought a good.
39:15
Speaker 2: It's a good thing, good thing, good thing. Generally, houses
39:18
Speaker 2: are better than apartments as an investment because of the
39:20
Speaker 2: land and you can knock down, rebuild.
39:23
Speaker 3: All that to say that apartments won't have good absolutely not.
39:26
Speaker 2: And the final thing I learned was what negative gearing means.
39:30
Speaker 3: It's still out. We'll make a really great graphic and
39:33
Speaker 3: we'll put that in the Instagram this week. Are still
39:36
Speaker 3: confused like.
39:37
Speaker 2: Me, I'll check that one out. I think it's time
39:39
Speaker 2: to leave.
39:39
Speaker 3: It there there, okay, But just before we head off,
39:42
Speaker 3: we'd like to acknowledge and pay respects to Australia's Aboriginal
39:45
Speaker 3: and Torris Straight Islander people's. They're the traditional custodians of
39:48
Speaker 3: the lands, the Wadaways and the sky's all across Australia.
39:52
Speaker 3: We thank you for sharing and for curing on the
39:53
Speaker 3: land which we are able to learn. We pay our
39:56
Speaker 3: respects to elders past and present, and we share our
39:59
Speaker 3: friendship and our kindness.
40:01
Speaker 2: And don't forget guys that the advice shared on She's
40:04
Speaker 2: on the Money is general in nature and does not
40:06
Speaker 2: consider your individual circumstances. Now She's on the Money exists
40:10
Speaker 2: purely for educational purposes and should not be relied upon
40:13
Speaker 2: to make an investment or a financial decision. Absolutely not,
40:16
Speaker 2: And we promise Victoria Divine is more talk.
40:20
Speaker 3: She's still an authorized representative.
40:23
Speaker 2: Still an authorized representative of Australia Pacific Funds Management Propriorly
40:27
Speaker 2: Limited AFSL. Dammit, I tried to do it without looking.
40:33
Speaker 3: Four six, three two five seven. Do you see that?
40:36
Speaker 3: Closed my eyes for that?
40:37
Speaker 2: Yep, AFSL three three nine one five one. I did
40:40
Speaker 2: it too, but I looked first. That's really that impressive
40:44
Speaker 2: back there.
40:45
Speaker 3: So what else do we do.
40:47
Speaker 2: At the end of the show, we say thank you
40:48
Speaker 2: to everyone, thanks to Jess sitting in the room, the
40:51
Speaker 2: big legend. She keeps us saying Track editing.
40:54
Speaker 3: Not in the room because he's editing another podcast of ours.
40:57
Speaker 2: And Beck who's hopefully having a beer on this.
41:00
Speaker 3: No, she's having a bike ride right now. She said,
41:02
Speaker 3: she's coming on a nice bike ride.
41:03
Speaker 2: I hope she doesn't fall off and hurt her knee.
41:05
Speaker 3: Anyway, that's enough from us, Today, we're going to Fonda
41:09
Speaker 3: to have.
41:09
Speaker 2: Our fish burritos.
41:11
Speaker 3: All right, see you next week.
41:12
Speaker 2: Bye guys.