The Clever Investor Property Podcast

Helping your kids into the property market – a easy listing guide to what you need to know
I talk to so many young adults that feel that in today's property market, it's going to be impossible for them to a buy property.
So this week we look at what ways you can help. Let me take you through some options on how parents can help.Let’s debunk a few of the myths around the thoughts that kids will never be able to buy property.
There are great practical solutions to help your adult kids enter the property market sooner.

Albo and is merry band of government people has unveiled they/there/thems first budget. Well done.
Here’s what you need to do. Nothing, its all been done for you but just in case you needed to add to the conversation flow at this weekends family BBQ I have slimmed it down.
We don’t expect this to have any long term impact on investment outcomes with respect to property investment (now is still a great time to invest).
There will be less net spending by the government as well as increased revenue from relatively high commodity prices and some increased tax revenue.
Public debt still remains low compared to other countries
Expected boost in housing supply from 2024 onwards
Expect continued rent increases as the undersupply grows
Lower budget deficits until 2023 doesn’t add to inflation
Less stimulus so that doesn’t put upward pressure on interest rates
Probably one more rate hike next week and then we’ve peaked
Deficit this year expected to be $37b (compared to $78b in March)
Government expects lower budget deficits in 2022 and 2023
Government expects CPI to peak at 7.75% this year
GDP growth for 2023-24 revised down to 1.5% due to weaker consumer spending
Unemployment rate expected to rise from 3.5% to 4.5% by 2024
Net immigration expected to rise to 235,000 (back to pre-pandemic levels)
Terms of trade supported by higher iron ore prices (which will also help reduce the budget deficit)
No new fiscal stimulus for next year (also reduce budget deficit)
Handy hint definitions to get you through grown up talks: 
A fiscal deficit is a shortfall in a government's income compared with its spending.
A fiscal stimulus an attempt by a government to increase economic activity by doing things like reducing taxes, increasing government spending, or sometimes they do both.
 

We peak over the garden fence at the 5 Common mortgage mistakes Aussie make when looking for a mortgage to buy a property.
The mortgage market is worth over $68 billion and we have to admit that us Aussies really do love real estate.
There are at the moment over 10 million properties in Australia with a total value of around $8.4 trillion and of those  around 6 million have mortgages against them.
We also have 12,000 Mortgage Brokers businesses in Australia, and that's a growing market. 
Today, it seems every lender is offering significant borrower incentives – be it low advertised mortgage rates, huge home loan discounts or cash-back offers. With so much happening, it is natural to feel stressed and somewhat confused.

Part 2 of wandering down the alphabet explaining the technical bits that you are going to run into on the bus trip to wealthlyville.

Definition of jargon
noun:
The language, especially the vocabulary, peculiar to a particular trade, profession, or group.
~ unintelligible or meaningless talk or writing; gibberish.
any talk or writing that one does not understand is often vague in meaning.
 
It's high time we took a trip through the list of technical terminology we use in the financial worlds. 
 
There's a big chunk to go through so we've split this into 2 parts.
Sit back and enjoy the A - L of jargon explained in 'Clever Investor Podcast' speak.
 

One of the most important concepts you will ever learn is the effect of compounding.   
Compounding growth is effectively a process whereby the value of an asset increases exponentially over time, in lay man’s terms, the effect can be thought of as ‘growth-on-growth’.
The long term process of creating wealth essentially gathers speed over time, because as your assets grow, the actual dollar return in a future period will also grow.
In other words, wealth creation is function of the size of your asset base and time. As time goes by, the value of your assets increase and so does the amount by which your portfolio grows.
This is the magic of compounding.
Lets explain it.
Imagine you meet a genie and get granted a choice between two cash gifts.
You are given the choice of $1million dollars upfront or a magical one cent piece that doubles in value every day for 30 days.
Which one do you take?
 

A granny flat is a self-contained house or unit, that gets built on the same block of land as the main house.
Its basically a second dwelling with the same amenities and one or two people can comfortably live in it.  They need to still have all the features of the big house, bathroom, kitchen, living space and bedroom, just on a smaller scale.
There has been an increase over the years of the amount of granny flats being built. Traditionally the logical reasons for building it was to convert part of the back yard into extra living space for the more mature members of the immediate family.
However some are being build for the young adult off spring to give them a helping hand while giving them their own space to live in. Some purposely build them as a rental property for the extra income and maybe increase the value of the overall property.....maybe? 
This episode we peep over the garden fence and look at the advantages, disadvantages and what steps you need to think about before building starts.

There a number of distinct advantages in new property and older property. 
 
But....before we dive into this weeks show lets cut straight to the chase, investing in property has one clear our aim,
"to build as much wealth as possible, with the least possible risk, in the smallest amount of time".
You need to be clear on whether new or old properties are going to help you achieve your investment goals.
 
Reduced Maintenance costs:
The simple fact that a building is new means that the building and it’s fixtures and fittings are less likely to require maintenance.
Lower vacancy rates:
The desirability of living in a lovely brand spanking new building, it is not often (definitely more so in the last three years) that a new building will have any vacancy after a month of construction being completed.
Higher tax deductions:
The Australian Tax system acknowledges that when you buy a new building, the building itself and all its fixtures and fittings will be loose value as they age. This depreciation is a business offset.
 
Older properties also have some advantages
Lower price
Due to age, you will be able to purchase an older property for comparatively less than a new property.
Yields
are slightly higher for older properties than new properties.
(this is not necessarily the case once tax deductions are accounted for with a new property)
 

What exactly is build-to-rent?
Over that last 20 years we have seen a steady increase in the amount of  Australian households that are setting up home in rented properties.
The stats show that in 2022 this is one third of the population. A significantly increasing from just approximately 25 percent of homes. 
A concept that is beginning to appear in Australia is this build-to-rent model. It is already well-established overseas, especially in the United Kingdom and the United States but is currently gaining popularity amongst Australians.
So, let’s take a deeper look into what this is all about.
Joining the podcast this week is expert Research Analyst Josh Mellick from Blue Wealth Property.

The Australian Greens party released a statement calling for private rents to be frozen for the next 24 months
And it got shot down and pulled apart pretty quickly and easily.
The Greens stated that Australia is “experiencing a rental and cost-of-living crisis and the government needs to act now”. 
Prime Minister Anthony Albanese said he had not seen any proposal, nor had the Greens raised the potential of a rental freeze with the government. Stating,
“it’s not clear to me, short of nationalising property, how that could be achieved”, the Prime Minister indicated that “what we do is support real action that has a real process to occur”.
Real Estate Institute of Australia (REIA) president Hayden Groves has considered the plan well-intentioned but said that “it will do nothing for Australia’s long term housing supply crunch”.  
What is being experiencing right now is a “rental swing”.
In every city across our nation, rents have swung back to either where they were pre-pandemic or in some cases, slightly above.
Why? I hear you ask…Because putting it quite simply, “demand outweighs supply”.
The apartment supply pipeline started to decline well before COVID-19 showed up on our doorsteps. 
Those 'greedy landlords' that the Green say are putting extreme financial pressure on tenants by increasing rents by 20-34 percent. Well don’t forget they heavily reduced rents during COVID-19.
 
The recent legislative changes have seen new rules around rent increases.
These guidelines are around how often you can increase your rent and how much notice you need to provide your renter:
Victoria  – Once every 12 months – 60-day notice period
New South Wales – Once every 12 months – 60-day notice period
Queensland – Once every six months – 2 months notice period
South Australia – Once every 12 months  – 60-day notice period or
Once every six months if its been a long term tenant that started before March 2014
Western Australia – Once every six months – 60-day notice period
ACT – Once every 12 months – 8 weeks’ notice
NT – Once every six months – 30-day notice

Hello Clever Investors of Brisbane 
This is a personal invitation to all you lovely Brisbane listeners, your friend and family who are having thoughts about becoming a property investor…but
just don’t know where to start.
"Wealth Through Property" is brilliant and going to be live in Brisbane on the evening of Tuesday the 30th August.
This is going to set you in the right direction, you are going to be guided, and shown the principals, on how to start investing in property and exactly where to be looking, but especially where not to be looking.
Presenting is Dr Tony Hayek, the Founder and CEO of Blue Wealth Property and a leader in the property wealth creation industry.
The link to the event is on our web page or via the link in our bio
​#propertyinvestment #australianpropertymarket #realestateknowledge #knowledgeispower #wealthcreation

With the price rises of lettuce, petrol, building materials, wages, rents, and just about anything you can think of lately, the topic of inflation keeps popping up the standard response by the worlds central banks (in our case the RBA) is to raise rates.
In past cycles, real estate prices have tended to continue to rise even as interest rates increase. This is because the fundamental driver was a demand-side push.
This time growth has slowed and even reversed in about 40% of the market nationally, primarily in the premium suburbs.
As we have been saying, the difference this time is that price rises aren’t a result of excess demand.
They’re a result of a supply-side shock stemming from the rolling pandemic lockdowns and the war in Ukraine. The rate rises have been killing demand where the real issue has been a supply shortage.
However, the case for the economy to be approaching peak inflation keeps getting stronger...
Gavin Chau is an Economist and the Senior Research Analyst at Blue Wealth Property and joins us in the studio.

"What am I paying them for?....it can't be that hard...can it??"
Quizzed my friend from across the other side of the table.
" I mean you just get the rent.... What do they actually do? "
My friend was quizzing me about the requirement of him needing a property manager for his upcoming investment property purchase as we enjoyed a couple of beers at Willie the Boatman, one of the many fine craft breweries in Sydney.  
I smiled at him, "That will make a great subject on the podcast, I know just the guy to ask" 
"Yerrr, that's a brilliant idea" he said enthusiastically, "I can't be the only person to ask the question? "
I stood up, finished the last bit of my Albo ale, gave my mate a hug goodbye and started walking out.
"hey..." he shouted at me "so are you going tell me the bloody answer ?"
I smiled back at him, "Of course I am.....you'll have to tune into the podcast"
Cheers
 
Thanks this week to Callum Thompson the Head of Property Management at Motion Property in Melbourne.
Motion Property
 

Sunsets conjure up images of holiday romances, walking hand in hand with the ones we love, the cool water lapping at our toes and cocktails waiting at the bar for us...
...and back to reality.
In the case of our particular Sunset we are talking about the the time by which a property project must be completed. 
Come and hold my hand as this weeks shows leads you across the soft warm sands of Clever Investor Bay and we whisper sweet nothings in each others ears.
"Oh honey what a big Sunset clause you have...!"
 
Sounds like we need an expert to tell us all about them,  and who better than Lynda Sanders from Melbourne's Dixon Sanders Lawyers.
 
 

We'd all love to think we are these highly organised machines, but invariably we still end up grabbing a shoe box full of receipts and dumping it on the accountants desk with a  "sorry....".
So for this week I wanted to get you some super simple things that you should be doing before the end of the next financial year. As we move closer and closer to being a paperless society, the smart operators in the personal accounting world are embracing digitalising documentation, electronic signing and online statements. 
There are even amazing user-friendly Apps, which can track your income, expenses and even file your taxes from your own Smartphone. 
I sat us down in front of Bachir Zreika the CEO of The Tax Factor, fired up the microphones and let him loose. 
www.thetaxfactor.com.au

What is a Trust?
In simple terms its a business structure....then after that it can get as complex as you want or need it to be.
Thankfully we have accountants in this world we live in and they love this stuff. I grabbed Dominic Myssy, head bean counter at Myssy + Co who's knows so much about them, he talks about trusts in his sleep.
According to the government definition. 'A trust is a business structure that doesn’t have an owner or owners in the traditional sense'.
The trust imposes an obligation on the trustee – a person or a company – to hold and operate the business assets for the benefit of others, the beneficiaries.
A trust is the most complex of the four standard business structures. It must have its own Australian Business Number and Tax File Number and requires a formal trust deed that outlines how the trust operates.
The Law society of NSW outlines that there are many differing types of trusts
There are many different kinds of trust. As well as the types of trust described below, trusts include superannuation funds, charitable trusts and special disability trusts.
The two main types of trusts which are used in business and by individuals are:
Discretionary (or family) trust:
A discretionary trust or family trust is the most common form used by families. The beneficiaries of the trust have no defined entitlement to the income or the assets of the trust. Each year, the trustee decides which beneficiaries are entitled to receive the income and how much they should get. For this reason, discretionary trusts have become popular in family tax planning.
Fixed or unit trust:
Unlike a discretionary trust, the beneficiaries of a fixed trust have a defined entitlement under the trust, similar to a shareholder in a company. This is usually done by dividing the trust into units in much the same way a company is divided into shares. The trustee does not have any discretion as to how they distribute the trust’s capital and income. A fixed or unit trust is often used for joint venture arrangements – for example, two families want to own an asset together.

Are you having thoughts of buying a property with a family or friends.
Is the thought of halving all the costs appealing to you?
There are lots of great reason for doing it, there are lots of great reasons for not doing it because it can seem like a bit of a battle getting into the property market for an investment or just somewhere to live. So the idea of buying with a friend or sibling could be a smart way to get a leg up to reach the first step of the ladder.
I dragged David Coulton and Michael Fratto of Scope Financial into the studio and got them to play good cop, bad cop on this subject that seems like such a good idea.
They pulled it all apart and came up with some great reasons to do it, not to do it and other solutions.
 
David Coulton & Michael Fratto
Scope Financial Services (02) 9651 5993
 

What are the 3 main things that banks look for in your mortgage applications? 
The 3 C's of Credit, Character, Capacity and Collateral
 
Our special studio guest this week is Dr Tony Nguyen, mortgage broker and head of DM & King Financial.  Tony takes us through the finer points of these three very basic but vitally important items.
The 3 Cs of credit are a common set of principles that banks and other mortgage lenders consider when assessing your mortgage applications.
It doesn’t matter if it’s a home loan or an investment property loan. The three Cs not only help the lender understand your needs and their risk but can also help them assess your deal much more efficiently.
Character:
From your credit history, a lender may decide whether you are someone they can depend upon to repay a debt. They look at items such as
Have you had a loan before?
Are you paying your bills on time?
How long have you been at your present address?
How long have you been at your job?
Capacity:
This refers to your ability to repay the debt. You got enough income to support the loan repayments long term.
What is your current income?
Do you have any other current loans?
What are your living expenses? 
How many dependents do you have?
Collateral:
Any lender wants to know if you have any valuable assets, especially real estate or savings with which could be used to secure or make the repayment.
 
Dr. Tony Nguyen
DM & King Financial
Mobile: 0406 889 990
Email: tony@dmandking.com.au
 

Unfortunately NSW has been hit yet again with widespread persistent heavy rain. The weather is always easy to complain about but this is bloody ridiculous.
There have been hundred and hundreds of evacuation orders and many more warnings put in place. For so many this is not the first time it happened to them this year.
There have been and will be for quite a while impacts to residents and businesses both large and small .
Lots of the lenders have begun offering support and relief to borrowers. There is and will be more support from the NSW state government. Albo (our Prime Minister) flew over the affected areas and is announcing the Federal Government support.
All lenders are urging anyone affected to contact them as soon as possible should they require support. Our tip is to do this as soon as you get, get it noted on your file and get your bank on your side working with you.
Todays podcast is little overview of what the major banks have said they are offering, plus some details on the financial assistance that the government will be giving out. 
We also touch on how to get yourself some free Financial Counselling and what to do if the relationship with the bank starts falling apart.
Hang in there lovely people, you'll get through this.
Service NSW Financial assistance
Disaster payments, grants and financial assistance for people living in areas affected by severe storms and floods in NSW.
Services Australia:
If you’re directly affected by this declared disaster, we have lump sum payments and ongoing, short term allowances to help you. You may be eligible for more than one of these.
National Debt Helpline 1800 007 007
Financial counselling
Financial counsellors are skilled professionals who will guide you through your options and help you plan your way out of debt.
 
 
 

So you've done the numbers, made the choice that you are going to be a Rentvester......but you still have the words of that friend of a friend from that BBQ you went too who's had to move 5 times in the last 4 years....
How can you avoid this happening to you?  There must be a way.
There's good news Rentvester's, there is a way.
We use the expertise and experience of this weeks special guest to get your application on the top of the pile and make sure that you are going to turn this rental into a great home for you as long as you need it.
We also answer the age old question of "Can I hang a picture?"
Our returning special guest is Helen Matsoukas who looks after Property Management Integration for thousands of investors from Blue Wealth Property.
 
 

Well the interest rate talk has been going on for a couple of months now.
As we expected the banks are well under way moving their variable rates and at times like this the question gets asked around fixed interest rate loans.
"Should I be locking my rate in???"
Unlike variable rates loans you have to pick a time frame to fix for, generally you'll have the options of 1 to 5 years and the rates will vary between these timeframes. Plus you'll lose some flexibility.
Its a big question and like everything we talk about on the show, there's a expert to help you.
I called my buddy Christopher Jonson from 'My Finance Agent' and tapped into his 20+ years of straight-down-the-line knowledge.
Is there a good time to be fixing?
Is there a strategy ?
What doesn't the bank tell you about fixing?
What happens when your fix rate ends?
Can I get out of a fix rate early?
Christopher Jonson started  'My Finance Agent' in 2014 after 15 years’ experience in the financial services and insurance industries. He's built an ethical, independent loan broking service centred around helping clients.
My Finance Agent
(02) 8313-8400
info@myfinanceagent.com.au
 

"The perception is that these landlords are are these rich people that sit back and collect the rent and drink cocktails all week......"
The high percentage of property investors are the everyday people in the street, investing to create a better future for themselves and family.  We also know that the highest percentage own just one property. So lets assume quiet accurately that they are not 'experts' just yet.So its understandable that when the landlords (and mine too) mortgage repayments are drifting up from interest rate rises.....they'll ask the question. 
"What do I do now?"
 "Should I increase my tenant’s rent when their lease is up ?"
We have a rental crisis on our hands, (increased construction costs and undersupply of property). Your Property Manager is the person that needs to swiftly identify the peaks in demand and jump at every opportunity there is to maximise your financial position.
I put a call into my good friend Helen Matsoukas, the most level headed expert in the world of Property Management.
Helen leads up the Blue Wealth Property Management Integration team and is always a breath of fresh air to speak with.
You can read her great blog on increasing tenants rent.

The deposit is a small initial contribution to the purchase price of a property, its like you've put it on lay-by. 
You don't actually own anything just yet.
You'll own the property on the agreed settlement date and that's when you may or may not be contributing other 'funds towards the purchase'.
Find out:
How much the deposit will be.
The various ways you can pay a deposit.
Who holds the deposit.
What happens if you don't come back to complete the purchase.
But lucky for you this gets explained in easy listening non jargon English.
 
 
 

The great Australian dream used to be, we move out from Mum and Dads house, rent while at Uni, get qualified, get a job in the mail room at the company you'll work at for the next 30 years, meet the person of your dreams, have 2.3 kids get a dog, drive a Volvo station waggon, pay the house off just before you get your gold retirement watch, collect the pension, then just wait to die. while your kids look forward to doing the same kind of thing.
Then a whole lot of change happened in the world....The great Australian Dream has changed, we are having kids later in life, we want a convenience of living, a restaurant café lifestyle, we want to find new employment opportunities every few years, we don't want to be stuck in traffic for 3 hours a day, we want a work/life balance.
"When do we want it?....we want it now!!!!!"