The Clever Investor Property Podcast

My Father taught me to drive,
a tale about the importance of getting the correct education.
When I turned sixteen, I got my learners’ permit and my father, like so many dads before him, was given the duty of taking me out on the road for driving lessons.
I love my dad, he’s always done his best for me. But I was unfortunately asking him to do something that he wasn’t trained for. He’s never held any formal driver training qualifications. If the truth be known he’s never even had a driving lesson.
There were plenty of tense moments out on the road between us. So, to stop Dad and I falling out, Mum stepped in and arranged for me to have a professional driving instructor teach me. This initially annoyed Dad because his pride took a bit of a dent.
 
But the instructor was brilliant. She had a well thought out teaching plan. With skills in communication, listening, adaptability, empathy for my skill level and the patience to be able to explain. I was therefore more relaxed, so I was open to absorbing and retaining information. I learnt a lot from those formal driving lessons.
 
If you have ever attended any of the Blue Wealth Property events you will know that no-one provides education like we do. They are down to earth, with real knowledge you can apply.
Over the years we have quite literally had hundreds of clients come back to us with requests for more education, so with over 12 months of hard work building it, we proudly launched the Blue Wealth Property Academy.
Blue Wealth Property Academy is an advanced level of learning, where the public will gain the knowledge needed to become proficient in everything about property investment.
The Academy has been constructed by industry experts to help all attendees smash their property goals and create long-term wealth.
The Academy gives us much more time to cover some seriously high-level topics, explain concepts and go delving into the nitty-gritty of each one.
 
I have now spent nearly 30 years training and teaching us ‘grownups’ how to do things. I believe that having and sharing our knowledge is an essential step in helping establish trust for those building a long-term plan.
Unfortunately, I have seen incorrect and outdated advice about locations, loans and structures handed down by well-meaning family elders or that friend-of-a-friend.
It is said that “You shouldn’t teach your relatives how to drive”. So, with that in mind please come and take a look around the Academy website…maybe book your kids in…
Owun
Knowledge is Power
Owun is the Senior Education Specialist at the Blue Wealth Property Academy and hosts The Clever Investor podcast. He has worked in finance and property for well over 20 years and is known for being able to easily explain the complex world of wealth creation.

A property manager is a professional who manages real estate properties on behalf of you, the owner. Their role is ensuring the property is well-maintained and generating income through rental or lease agreements.However there are plenty of mistakes that a property manager can make, but some of the most common ones include:
Failing to properly screen tenants.
Neglecting maintenance and repairs.
Poor communication with tenants.
Ignoring legal requirements.
Your property manager must be diligent, organized, and knowledgeable about the laws and regulations that govern their industry. Failure to do so can lead to serious consequences for themselves, your tenants and you, the landlord.We grabbed Vanessa Pearce, one of the best in the industry to give us the red flags that you'll need to look out for.

Rentvesting is a popular strategy for those who want to build wealth through property investment without sacrificing their preferred lifestyle or location.
Essentially, it involves renting a property to live in while also owning one or more investment properties that are rented out to tenants.
One of the main advantages of rentvesting is affordability. By renting in a desirable location while still owning an investment property, you can often enjoy a more affordable lifestyle. This is particularly beneficial in areas where property prices are high and buying a home to live in is financially out of reach. With rentvesting, you can still live in your desired location and invest in property without having to compromise on your lifestyle.
But for all that good parts some say the disadvantage of it is the uncertainty of how long they will be able to stay in the property. With of bit of know how and preparation we can overcome these issues.
 

Offset accounts are a type of bank account that can be linked to a mortgage, allowing the balance of the account to be offset against the outstanding balance of the loan.
This can help to reduce the interest charged on the loan, as interest is only calculated on the net balance of the loan after the offset is applied. When used correctly an offset account can negate you having to think about repayment frequency. 
One of the reasons why mortgage offset accounts don’t work for so many people as well as what is hoped is due to the balance of the offset account being too low. In order for the offset to work effectively, the balance of the offset account needs to be maintained at certain level for as long as possible during the month. This is because the interest saved on the home loan is based on the amount of the offset balance. If the balance is too low, the savings may be negligible, making the offset account less effective.
If you have any questions or concerns, it's best to speak to a mortgage broker who can help to determine whether an offset account is the right option for you.

The great mysteries of Repayment frequency
Congratulations, you’ve bought that property, your loan is approved and you are now looking at the loan documents.
Staring back at you from the pages of the mortgage are all the repayment options and they want to know how often you are going to pay them
What do you pick?
Weekly, fortnightly, half monthly….monthly, minimum, higher, standard ……………Arhhhhh
You run from the room screaming.
Most home loans in Australia quote a standard monthly repayment scheduled as it default. But you could potentially save money if you can alter the frequency of your repayments.
Lets look at the basics here

CPI, The consumer price index
You will see and hear it abbreviated to C.P.I. This is the instrument used worldwide to measure inflation.
It is pretty much the main inflation report for the futures and financial markets. Any unexpected rises in this indicator usually lead to falling bond prices, rising interest rates, and increased market volatility.
Now before we go much further into this, it’s important to understand that there is no single best measure of inflation.  Ideally, such an indicator would be comprehensive and cover price changes for all goods and services traded in the economy. However, different measures of price change are suited to analysing different parts of the economy, so the best approach depends on how the data is going to be used.
How is the CPI used?  tune into this weeks episode to find out. 

Basically, you buy and asset for one price and sell it for another price, the difference between the amounts is your capital gain or if you didn’t make any profit, that’s a ‘Capital Loss’.
When we sell an asset, such as investment properties, shares or a business this triggers what’s called a ‘Capital Gains Tax event’
Let go back in time and have a look at what Tax is.
Tax has been in the world for hundreds and hundreds of years and back in ye olden days it often had a spasmodic history mainly because it was usually associated with some sort of national emergency.
The oldest types of direct taxation were either to pay off invaders or to fund a war so you could go off and invade some other country.
In these ancient times, a city or region would run over and launch an attack on their neighbouring area, and if the battle went well and they overthrew the locals they would make them pay so the attacking would stop. This payment was often referred to as a tribute. 
The imposers of these taxes were the leaders of the times, either the government or a good old blood thirty royal family.  
After a while the leaders realised that it might be a good idea to continue the tax even after the extinction of its original purpose, normally this would be under the heading of defending the kingdom.
Today, tax is money that us, the people have to pay to the government.
When we sell an asset, such as investment properties, shares or a business this triggers what’s called a ‘Capital Gains Tax event’
Basically, you buy and asset for one price and sell it for another price, the difference between the amounts is your capital gain or if you didn’t make any profit, that’s a ‘Capital Loss’.
But let’s say you do receive more for your asset than you paid for it, congratulations you’ve made money, but you'll have made a capital gain and you may need to pay this ‘Capital Gains Tax’.
 
How much Capital Gains Tax will I pay?
The amount of Capital Gains Tax you’ll pay depends on factors including how long you’ve owned the asset, what your marginal tax rate is, and whether you’ve also made any capital losses.
Your marginal tax rate is important because your capital gain will be added to your total income in that financial year’s tax return.
The length of time you’ve held your asset is relevant because if you’ve held the asset for over 12 months, certain taxpayers can generally get a 50% discount on their capital gains tax.
 
What if I make a capital loss?
If you’ve sold your assets for less than you paid for it, you’ve made a capital loss. However, the good news it, if you make a capital loss, you can potentially use it to reduce a capital gain in the same financial year.
 

With the rises in the cost of living our eyes look towards our bank accounts and the money we have going in and disappearing out. If you've got some equity in your home, so why not roll all those little annoying debts, like the car loan, personal loans and credit cards into the home loan account? 
On the surface this makes great sense doesn't it. You've probably carried the burden of these extra debts around for years and you know the interest rates on them are all so much higher than the home loan and when you get shown the repayment calculator the total repayment is so much smaller...but.
We sit down this week with Peita Davis (Money Quest Penrith & Blue Mountain) and unleash her of 20+ years of experience so it can run wildly all over this popular subject. 

I have been teaching adults how to do grown up things for over 29 years and whenever its around investing in property I tell them not to get emotional abut it.....but.
I recently read an article written by Fiona McGovern, Head of Client Services at Blue Wealth Property,  "Getting emotional about your investment property" and its changed the way I present....just a bit.I grabbed Fiona and made her talk about crying over Bake-Off TV shows and how family dinners can pave the way for your adult kids starting their own investment path.
"Remember, owning an investment property is a business. You are buying a product in order to provide a service that you are paid for – owning a business means you need to take the emotions out of the decision-making process. Buy based on the research and consider the product that will earn you the best return without adding your personal preferences for where you’d want to live. But enjoy the process, and be proud of your achievement, as we are every time we help a Blue Wealth client create opportunities for their future." Fiona McGovern

With around 97 banking companies offering hundreds and hundreds of differing mortgage products it’s no wonder it makes you dizzy trying to find an ideal solution to fit all your needs.
Every day the lenders marketing departments swing into action, bombarding your brain with incentives – be it low advertised mortgage rates, seemingly huge discounts or the current trend of ‘cash-back’ offers. With so much happening, it is natural to feel stressed out and confused.
The fact is when many Australians try and navigate the mortgage maze too many make some critical errors.   
So this week we take a walk around the park with my Top 5 common mortgage mistakes....and hopefully you'll be able to avoid them. 

Are you one of the eight hundred thousand Australian mortgage holders that have a fix interest rate ending this year?? Those 800,000 mortgages are going to need something doing to them, if you don't you are going to be paying your current lenders full standard variable rate....and don't think its all too hard to do and be silly about it.
There is no way that you should be paying that much no matter who you are.
Now I want you to imagine that you are trying to get out of a football stadium and you are faced with being 1 of 800,000 fans leaving the grounds. Its going to take time, you are one of the crowd and wishing you could get further up the queue.
This weeks special guest is the award winning Aurelio Tenaglia of Casabella Finance. A vastly experienced mortgage broker who's seen this situation happen many times before.
In the time its going to take you to walk the dog around the park, Aurelio will tell you what you need to do right now, so you won't get washed up in that maddening crowd. 
 
Aurelio TenagliaCasabella Finance
P: 02 96306888www.casabellafinance.com.au

With property prices rising across all markets and interest rates starting to rise up, there will still be plenty of Australians questioning whether it’s the best time to sell and upgrade into a bigger home, or do they renovate their existing home.
While upgrading into a bigger and better home is quite often a simpler and more efficient solution – it is not always the most cost-effective option.
It’s really easy to say that before making any major financial decisions, it is important to weigh up the benefits of both options and determine which choice might be right for you and your financial situation.
There are a few basic but key factors to consider when deciding between selling to upgrade or renovating the current home. 

During the early stage of the pandemic years, while the cash rate and therefore the home loan interest rated where coming down, so where fix rates.
I have friends that snapped up rates under 2% for 2 or 3 years.
Research tells me its estimated that around 46 per cent of all home loans in July 2021 were fixed rate loans.
The RBA said recently that it expects about half of all those outstanding fixed loan debt to change to variable rates throughout 2023.
Just how many fixed is hard to determine, but in the words for the government the “back of the envelope” calculations puts it at around 800,000 facilities, and the Reserve Bank says that’s around $350 billion of credit that is rolling off low fix rates. It’s a busy time in lending.
Annual inflation as measured by the Consumer Price Index (CPI) has increased from a little below 2 per cent in the years immediately prior to the pandemic to around 8 per cent at the end of 2022.

“Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing.” Denis Waitley
 
Everything we do in life involves some risk. A high-risk activity that, for the large part, is taken for granted every day is driving our cars. Over the last two decades, we have seen an enormous leap in the number of car electromechanical devices to help us avoid accidents or protect ourselves. If you’ve only been driving for the last 20 years, you will take for granted that cars have seatbelts, antilock brakes, and airbags. All these items have evolved to protect us from injury, but the mere fact we know they are there also instills a greater level of security.
Go with me on this analogy of wearing a seatbelt.
I know the risks of driving and what could happen to me. I have no plan to crash whenever I drive my car. However, I’ll still wear my seatbelt, which gives me the confidence to go on the freeway. If there’s an incident, my antilock brakes help me stay in control. If there is a crash, my seatbelt is there, and of course, the airbags too.
If none of that equipment was in the car, I’d be driving around at 20kph and freaking out if any other road users came near me.
The protection gives me confidence.
So, linking all that back to investing. No matter what we decide to participate in, property, shares, or even bitcoin, there’s a risk, and it has always taken courage to invest. The fear of potentially taking a loss is too great for so many Australians that they’ll never end up investing. The result is missing out on building wealth and, ultimately, having the lifestyle or retirement of their dreams.
However, in the world of investing, we have our own versions of seatbelts, antilock brakes, and airbags. These all come under the heading of insurance.

When we are buying a property, we inevitable need to choose a mortgage and we are faced with so many different features. But the most common question you’ll be asked when setting up investment property finance is “do you want Interest-Only or Principal & Interest repayments?”.
For some of you this might well seem like such a basic question and be quite dismissive with your response, but trust me it’s not quite as simple as flipping a coin.
Let’s start off with some definitions:
Principal is the money that was originally lent to a borrower.
Interest is the cost of borrowing the principal.
No matter the loan type, the interest on the loan is calculated on a daily basis on the outstanding amount of the principal.
Interest-Only
With an Interest-Only mortgage, you pay only the interest charged on the loan as the name suggests. You do not pay down the principal debt at all.
Most lenders will only allow you to have an Interest-Only loan for a certain period of time, generally that’s up to 5 years. After that period has ended, your choices are for it to switch over to a Principal & Interest mortgage or depending on your circumstances and the lender, you can sign into another Interest-Only period.
Principal & Interest
A Principal & Interest mortgage, sometimes abbreviated to just P&I, means that your repayments have two portions, the ‘principal’ and the ‘interest’ component. A portion of the repayment is used to pay off the interest amount due on your outstanding loan and the remaining is the principal portion, which slowly goes towards paying off the outstanding loan amount itself.
What should you pick?
I’m not going to tell you what you should be doing from just reading this blog and it’s also nothing that you should decide after a chat on a Sunday afternoon BBQ with that well-meaning friend who just so happened to have googled it last week.
As part of you being a clever investor, decisions around subjects like this are part of your plan that will need to review over the years.
You absolutely need to check in with your finance team, (accountant, financial advisor and of course your lovely Blue Wealth Property Investment Property Specialist) to help you make these decisions.
Owun
Knowledge is Power
Owun is the Senior Education Specialist at the Blue Wealth Property Academy and hosts The Clever Investor podcast. He has worked in finance and property for well over 20 years and is known for being able to easily explain the complex world of wealth creation.

Lets get going and launch into 2023 and remind ourselves the reasons to invest.
For some its building long-term wealth, paying off that home mortgage or a better lifestyle later on. Maybe you just don't know why.
Are you going to use property, gold, shares?
The worlds banks recognise that property, especially residential property is the lowest risk. Why?
How are we going to invest in property? What is leverage?  What are the risks?
Our bite-sized chunks of brilliance make us the easiest to understand finance podcast, no episode is ever more than 20 minutes.'Knowledge is Power' that's what we are all about. Helping you understand what's possible.
Take us with you next time you take the dog for a walk. 

Over the next few days, while struggling to reinvent what we can do with the remaining 9 kgs of Christmas ham, we also need to start neatly folding up 2022, ready to pop it in our box of memories.
What might lay ahead of us in 2023 is for the main part up to us individually.  We can sit back and let it happen around us or run, jump or skip into it with a positive 'I can do this'.
So I've grabbed a special guest, Roy Azzi, the Head of Property Acquisitions at Blue Wealth Property. Roy has over 20 years experience in the real estate industry. In his day to day role he deals with property developers of all shapes and sizes, the builders who construct these developments and the real estate teams who manage and sell. 
I asked him a simple question.... What's happing in 2023 ?
 

The term 'Gearing' is when you borrow money to invest, and it’s typically talked about in the context of investment properties.
The income earned from your investment property is either positively or negatively geared.
A property is positively geared when your rental return (the amount of rent you receive from your tenants) is higher than your interest repayments and other property-related expenses (e.g. strata levies, council and water rates).
A property is negatively geared when your rental return is less than your interest repayments and other property-related expenses.
Sometimes an investment property can be neutrally geared if the expenses and income are equal.
So Positive gearing must be the way to go…..
Actually…. That not entirely correct, lets look at a bit deeper into some of the benefits and the drawbacks.
 

Population growth is a key factor that is proven to be one of the main drivers for long-term property growth. 
But what's been happening across this great wide land?  Are we correct to think that after all these lockdowns we'll bounce back?  Do all cities grow at the same rate? 
The ABS publish a mass of data on population forecast's and you can sit down with a glass of red wine and google-away filling your brain with numbers... but what's it all mean and what's needed is to be able to effectively interrogate this data for any future planning.
Brisbane has been renowned for being Australia’s fastest-growing city, recording an annual population growth rate of 1.8% over the last five years, however more recent data sourced from the ABS indicates that the tide is turning and that Melbourne is forecasted to be Australia’s fastest-growing city over the next 10 years.
With the assistance of this weeks studio guest, Research Analyst John Bekiaris we de-code the data.
 

You either must save it or you must grow it.
Saving is really code for super, that's the compulsory saving that you have been doing since you first entered the workforce. Money set aside to grow for that mysterious place in the distance called retirement.
The only other way to bridge this Gap is to go for growth. So we'll need to use the technique of leverage. To buy something that grows in value over time and creates substantial equity.
There are only two things that you can borrow to buy- shares or property.
Shares can be a tough road to follow, daily attention is normally required and its something that the average person is not comfortable with, so the reward over risk leaves us with property.So as you walk the dog around the park, lets take a look at the growth of the population and where they are going to call home and how this works into our investment plans.

After Japan and Switzerland, Australia has the third highest life expectancy in the world with the national average of 82.
This is only part of a big and growing problem as  many of us start to live longer, healthier and more active.
Not having enough in the kitty to last for the 30+ years of retirement is a problem Australians have not faced before.
Your income comes from one of two places, your employed work or capital that we hopeful accumulate over time.
So when you retire...will you have enough? 

Let me start this by admitting that I’m obsessed with motorbikes.
I first rode a motorbike when I was about six and haven’t stopped. In my younger years, I raced bikes to some success and eventually became a professional instructor.
Part of why I want to build wealth is to buy a massive block of land, build an enormous barn, buy more bikes, and spend my greying years restoring them all.
Just like the wealth creation world, a large part of motorcycle training is having a plan.
Part of being a riding training instructor was to show people how to take the ‘fright from your ride.’
This episode we take a ride with some fundamental principles.
Look where you want to go
Prepare for the worst and you’ll never be surprised
Look for the obvious dangers
Time and Space
Have an Exit plan
Education builds skills
Happy investing and Stay Upright
Owun

“The investor’s chief problem, and even his worst enemy, is likely to be himself.”
 
All money markets are overwhelmingly controlled by investor emotions.
At the bottom, the majority always expect prices to fall lower,
maybe crash…and at the top, they expect prices to go higher.
This episode we look deeply at how doing well with money isn’t necessarily about what you know.
It’s about how you behave.
 
 

With a firm grip of reality, the hardest part for so many would-be property investors is getting that deposit together, and it’s not easy is it!
Being told “you just need to save for it” really doesn’t help.
The number one reason most of us grownups don’t have a budget is because we don’t know how. We know why we need to have one but it gets pushed away because it’s all too hard.
So this episode we take a look over the simplest little budget plan you can use and you don’t need to buy any flashy apps, you don’t need a mass of Excel spreadsheet running kidding yourself that you are doing something.
The 50/30/20 budget is absolutely fabulous for budgeting beginners, as it gives you a nice easy to understand framework to work from. It also gives you the chance to reassess your own spending over time.
This simple to manage budget splits your monthly income into three categories needs, wants and savings and put them into three separate bank accounts.
Needs:      Your needs are your everyday expenses and the essentials you need to live, such as food, rent, utilities, healthcare and transport costs. This also includes debt repayments, such as credit cards or loans.
Wants:      Your wants are things that generally make your life more enjoyable, but are not necessities, such as phone bills, dining out, that morning coffee and other entertainment such as gigs, after-work cocktails and brunches.  
Savings:    Your savings include any and all savings you are setting aside, such as your emergency fund, extra repayments and goal savings.
 
The main benefit of the 50/30/20 rule is that it gives you the chance to reassess your spending, but still gives you the flexibility to do what you want to do. There are a number of reasons you can try the 50/30/20 budgeting rule in your day-to-day life, including.
The small decision of putting your money in its box’s each month will get you into a good long-term habit and break the cycle you were once in.
Will this fix everything for everyone?
The short answer – no. I can tell you that with 20+ years in finance, there is no magic money pill you can pop, you have to want to make a change and stick to it.
This is a great place to start, but the rules can be a bit too vague for some and although nobody is checking your numbers it’s easy to lie to yourself and fudge the figures.
In summary:
The important thing is to get yourself into a routine of managing your money and then you can look at broadening your goals and building wealth.
Do it, you’ll thank yourself in years to come.