December 16, 2025 • 44 mins
If you’ve ever looked at property prices and thought, cool, guess I’ll just rent forever then, this episode is for you. Because while the white picket fence dream might feels further away than ever, that doesn’t mean property investing is completely off the table. This ep is your DIY guide to becoming a trust fund baby... a real estate investment trust fund baby. Victoria is breaks down the other way to get property exposure without a mortgage, stamp duty, or a single call about a broken hot water system aka REITs. Think shopping centres, warehouses, data centres and supermarkets… without owning the building, chasing rent, or committing your entire financial future to one postcode.
In this ep:
🏬The “trust fund baby” move that pays you from property
🏬How to get property exposure without locking your entire life into one postcode
🏬 The kinds of property you’ve probably never thought to invest in
🏬 Non-negotiables Victoria checks before she’ll touch a property ETF
🏬 The trade-off you’re making for flexibility, freedom, and liquidity
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Acknowledgement of Country By Nartarsha Bamblett aka Queen Acknowledgements.
The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708, AFSL - 451289.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
My name is Tatasha Bamblet. I'm a proud First Nations
woman and I'm here to acknowledge country t Glenn Young
Ganya Niana Kaka yah Ya bin Ahaka Nian our guy
in Nimbina, yakarum jar Dominyamka Domaga Ithawakaman damon Imlan bomber
bang Gadabomba in and now in wakah ghana on yak
rum jar Watnadaa. Hello, beautiful friends, we gather on the
(00:24):
lands of the Aboriginal people. We thank acknowledge and respect
the Aberiginal people's land that we're gathering on today. Take
pleasure in all the land and respect all that you see.
She's on the Money podcast acknowledges culture, country, community and connections,
bringing you the tools, knowledge and resources for you to thrive.
Speaker 2 (00:44):
She's on the Money. She's on the Money. Hello and
(01:08):
welcome to She's on the Money, the podcast that shows
you investing isn't just for the rich, It's for you too.
If you've ever looked at the housing market and thought
that's actually literally never going to happen for me, you're
definitely not alone. What if I told you there were
other ways to get your foot in the property door.
I'm beck scited and here to show us how we
can invest in property without taking on a million dollar mortgage.
Is our favorite finance expert Victoria Divine. Hello, Vi Hello.
(01:31):
You can take on a million dollar mortgage if you
want to, but like, if you want, that's not what
you have to do to get into the property market.
That's actually crazy. And I mean I'm a skeptic right now,
but I really want to know. I actually hate it
so much. I did a presentation the other day actually
for Australian Unity and it was really really cool. I
went into this complete side note. I got invited to
(01:54):
their executive leadership retreat. Whoa soundspoosy. I was so scared
where I entered to them about like, you know, our
demographic Beck, like you and I and like what the
world looks like in nineteen seventy six, when people like
our parents were probably you know, thinking about property or
buying property. Property cost like twenty five thousand dollars and
(02:18):
the average property in Melbourne and Sydney cost about four
times your annual salary. Yeah, and so now if we
look at it, property in Melbourne and Sydney will cost
on average thirteen times your annual salary. And if you
were to and I did all the maths and stuff
in the background, that's why it's like so fresh in
my mind. And I was like, oh, you'll love this bad.
(02:38):
If salary and wage growth kept up with you know,
how prices of houses had increased, our average salary would
be about one hundred and ninety thousand dollars each per year.
So like, you know, each and every single one of
us would have an average. So like spack Man in
the middle, like that would just be They're like, oh, yeah,
most people earn. That reality is we earn on average
(03:02):
sixty five thousand dollars a year. But I think that
we still apply the same pressure that our parents' generation did.
I said to you right now, BEG, do you want
to buy property? Definitely? How the hell?
Speaker 3 (03:14):
Yeah?
Speaker 2 (03:14):
But you might you know, if we had a deep conversation,
you might go, yeah, I would. I would love to
own property, but I just don't think it's accessible for me,
or I just don't think with the lifestyle I lead
like that's an option. And I guess what today is
about is really teaching you that it can be an option,
that there's just a different way of going about it.
It's not going to be the you know, white picket
(03:36):
fence and three bedroom home on like a seven hundred
square meter block, Like that's just completely inaccessible for the
average person because the average of that type of property
in Melbourne and Sydney is about one point two million dollars.
Speaker 3 (03:47):
Betch.
Speaker 2 (03:48):
So I think that's important from my perspective to contextualize,
to give you like some solid proof that it is harder.
But what if I told you that you can still
get exposure to the property market without needing a house
deposit or even a mortgage. I'd say, Victoria, you're a liar. Victoria,
what MLM are you starting? What are you doing? Well,
(04:10):
you can actually invest in property beck on the share
market through something called an ariit And like we all
know that our girl Beck, she's now got more than
a thousand dollars in her She again, isn't that crazy?
That is so crazy? It was just like little bits
like five dollars every few weeks comes out. I think
Chares's shoot, hit you up so that you can be
like their ambassador of like girl, like, it's actually not
(04:33):
that hard. Yeah. I've been saying this for years. I've
had this podcast, what like six years, and I'm like,
I promise it's not that hard. I promise it's not
that hard. And people were like, oh no, like I'll
do it when I earn more. I'll do it when
I do. Like you just started, and you're like, hold on,
hold on, hold on, yeah, yeah, yeah, this is not
that bad. But Beck, you could give yourself exposure to ariit,
okay through Chasya's or and like, it's not about chairs
(04:55):
Eya's at all. This is more about like the ability
to access ARIA which is a real estate investment trust,
and these are you can buy them on the AX
in the same way that you would like look up
you know, the ASX top two hundred. You would just
look up ariits and see what comes up. But they
basically own and manage big income producing properties like shopping
(05:19):
centers or warehouses or office buildings or even like storage facilities,
which make bank by the way, really yeah, and they're
super super accessible. So if you're like, oh, I really
like the idea of property because to me it feels
a bit more stable, like the share market maybe is
not what you're super super comfortable with, but you also
don't have heaps of cash to start with, Like, oh,
(05:40):
you can start with five dollars. Yeah, so if you
want exposure to that, an ariit might be a good idea, Okay,
so be say units. Yeah, you can buy units in
a ariit, which is not a pun so not shares.
They're not shares, they're not shared. Okay, they're not shares,
and they are different. So a share and a unit
is a different thing. Sometimes people use them interchangeably, and
(06:03):
those people, my friend, are wrong. I see a share
belongs to a company and they issue shares. Units belong
to trusts. Right, So if you would to establish a trust,
you'd have units in that trust. You wouldn't have shares
in that trust. And an ariit is a trust, so
you're basically a unit holder, not a shareholder. Does that
(06:23):
make a lot of a difference, Not really if we're
being brutally honest, because all of these things are so
highly regulated. But at the same time, to me, it
does change your risk profile because obviously property over time
has been a little bit more stable, and like, if
we look at a risk and reward chart and I
(06:43):
like drew one up for you, we've kind of got
like cash and then some bonds and like you're getting
a bit more risky and property would sit there, and
then like Australian shares that's like getting a bit more risky,
and then international shares up here. So basically you're kind
of using the share market platform to invest, but taking
your risk back down to a property level. God, if
(07:04):
that makes sense, yes, yes, yes, definitely, so on the
stock market or on the share market, also very interchangeable,
they trade in exactly the same way, so like it's
not more complex to you as a buyer, even though
you might go, oh, but I've never heard of these
God's probably just because you haven't looked them up. Like
it's because you haven't been told about them. And that's
what this whole episode is for. So with an ariit,
(07:26):
you're not technically an owner of the company. So with
a share, you like buy a tiny piece of the
pie and then that enables you to get part of
their profit and part of their growth, and you're kind
of like a tiny little CEO. Absolutely. Instead, in an ariit,
you are a beneficiary of the trust. Sure, so becoming
a trust fund baby. Oh we love trust fund babies, right,
(07:47):
could you say that? Technically? I mean technically you're a
beneficiary of the trust. Okay, for someone who's the trust
fund baby would be the beneficiary of a trust, so
like for me, that's the same. But I'm buying my
status myself. Yeah, I didn't have wealthy parents. They didn't
set up a trust for me. I'm gonna do it myself.
Oh my god, I love So if you want to
(08:07):
be a trust one baby, like, that's maybe a way
in it's never too late to be a trust one baby,
never too late, And you could do it with five
dollars and then like in your like insta bio, you
could write trust one baby. Wow, I think that would
be fun. But what that means, yes, is like with shares,
you kind of become, as I was explaining before, a
part owner of the company. And like, technically you have
voting rights and dividends, but like because we're tiny and
(08:33):
because like we're only buying small amounts, like you can vote,
but there's not a lot going on there. Sure, But
with units, you hold a stake in the trust's assets,
so the property portfolio, and you're entitled to a proportional
share of the income that that trust generates. And instead
of being called dividends. They're called distributions. Got you again
(08:56):
because trust fun babies get distributions, I see. And that
is why with ariits like when it comes to like
tax time, you'll see annual distribution statements, which I feel
like so many people are like, oh my god, Like
I signed up to this, and at tax time, I
got an annual distribution statement and I also got my
tax statement from Chaza's and like everything's a bit confusing.
I promise it's just because it's the first time you've
(09:17):
seen it. Like it's fine. So instead of that, you'll
get your annual distribution statement instead of a dividend slip
in the mail. Because the income kind of flows through
a trust structure, which means you're buying into that trust.
But they could also like put new properties and stuff
into that trust as well, which you would then benefit from.
So to give you a good example, if you wanted
something to look up on Chazy's, because you're like I
(09:38):
don't even know where to look up, Yeah this, do
I look up Ariit, you could because like you know,
I'm not trying to be promotional here, but Chaz's has
its like AI search function, So if you looked up ariit.
It would come up with a lot of different like
curriit options, But Goodman Group, I would say, is and
this is not a recommendation. This is just my example
(09:58):
and the reason I'm using this is because it is
Australia's largest ariit I see and it's ASX ticker code
if you want to look it up, is GMG. But
it's focused on industrial property and logistics, so it buys
lots of warehouses and data centers and in that space
demand has absolutely surged because of AI. So the reason
(10:21):
AI is making that surges because there's a lot of
infrastructure needed for AI and you need to put it
in warehouses, you need to put it in data centers,
and this company buys that. So they're just the biggest
one in Australia. Are they the best? Who knows? It's
not a recommendation, it's just a like if you're starting
to quote do your research, how do I do my research?
What does that mean? Have a look at this, get
(10:43):
a feel for what that looks like, and then we
can find some more and like maybe find one that
really aligns with your values if that's what you're looking for.
Cool okay, okay, okay, and like an RAIT is the
only option to invest in property on the share market
or are there other ways to get in? So we
always talk about ETF, so I I always talk about
ets so I don't pick You're the first to bring
them up. You're just like sick of me yapping about
(11:05):
how cool I think they are. But we talk or
I talk a lot about them being one of the
easiest ways to get instant diversification in your portfolio. And
I would say that the property market is no different.
So instead of just picking one ariit and just being like, oh, well,
I hope Goodman does a good job for me, you
can actually invest in a real estate ETF gotcha that
(11:29):
would then hold a lot of different ariits yep. So
instead of an ETF that goes, oh, I'm going to
pick like the Australian Top one hundred and it's got
things like Woolworths Group and it's got like BHP and
you kind of go, oh, I know those companies, you
might look at an ETF that holds ariits and be
like what the heck? M Like, I don't really understand
(11:51):
what these companies are. And that's where we've got to
like do a bit of googling, like how good is
it that we live in twenty twenty five and we
can just google the answer? What is Goodman group? Tell
me how responsible they are? Like I ask google everything?
Speaker 1 (12:05):
Right?
Speaker 3 (12:05):
You know what?
Speaker 2 (12:05):
That's a lie? I asked chutchpt a lot. Don't tell anybody,
especially you who doesn't agree with chut ChiPT. But to
give you another example of something that you could look up,
you could look up the Vanguard Australian Property Securities Index ETF. Okay,
it's a lot easier if you just type in the
ticket code a VAP VAP VAP, gotchaap, It's like a WAP,
(12:28):
Yes it's VAP. But they hold lots of different ariits.
So they hold Goodman, they hold Center, and they also
hold Stockland. And you might have heard a lot about
stockland before because they own lots of like supermarket locations,
so like they might own the building that then coals
and woolies lease from. Like you walk into a Stockland
and they've got like their baker's delight, they've got their
(12:49):
like oh you know they're woolies and like that local
place that always does a really good dumplings. Like, yes,
they rent their stockland locations out to other businesses. That
makes so much. It's realist still, it's not you know,
residential real estate. But the money that they make is
from the leases that they lease out to people like
Baker's Delight or Brumbies or Woolies. There you go, right,
(13:10):
So that's where the money is coming from. It's not
just from owning property. Yes, property over time increases in value,
but the income part and then stockland also have gone
into building homes, so they do like house and land
packages and stuff like that. My god, may as well.
I mean, the more money you get, well, that's it.
Why not, That's exactly what we were going to do. Yeah,
(13:32):
these ETFs basically hold ariits and they can be a
really good option for you if you're like, well, I
want access to the real estate market, but I don't
want to go buy just one ariit. Because Victoria said,
it's not always a good idea to put all your
eggs in one basket. You could look at an ETF
and like, we just have to be really caught, not
really cautious. I feel like I'm trying to scare you.
(13:54):
I'm not, But like when we pick an ETF, just
really understanding what the holdings are of it, because obviously
an ETF is basically just a basket. It's a it's
a vehicle. Yep, it's your clown car, right, what types
of clowns are you putting in the car? Do you
want to know which ones you've got and want to
hit so different? You've got lots of different ones. I
don't want three, it's the same. You don't want through
(14:14):
the Absolutely, like if you're gonna like fill a clown
car like I need an elephant, I need, like you know,
an actual clown, I need the monkey, like I want
all of them in all of them. Absolutely. I think
it's really important that you understand what companies they hold
because that could give you a lot of peace of mind. Yes,
and as Warren Buffet Buffet you can call him Warren Buffet.
(14:35):
Sorry that feels but like he's American, so it would
be Buffett. But if it was French, it might be
Warren Buffo, he says, to make sure you understand before
you invest. I think something like that, And I mean,
maybe I'm the next war and Buffett watch out. But
I agree, like I just go, if you're going to
buy this, just do a bit of googling what's good Man,
(14:57):
what's center, Like, what's stockland, what do they hold? So
that you feel confident. What would be the benefits of
investing in riits and real estate ETFs? I mean you
can call yourself a trust fund, baby, Yes, it's one.
That's like number probably the biggest benefit. Yeah, I would say,
as I touched on before, like instead of having to
have a two hundred thousand dollars deposit, And like, maybe
(15:18):
I'm scaring you a little bit because I have a
mortgage broking business and I have six beautiful mortgage brokers
who get first home owners into their properties every single day.
And most of the time it's not with a twenty
percent deposit. Absolutely, with an ariit really low barrier to
entry so that you don't need a big deposit. There's
no stamp duty to pay because I pay it for you,
(15:40):
no building inspections. You just kind of open your brokery jap,
pick an oriit and you're in, Oh my god, that's
so good. And getting into the market if you are
a first home buyer, ask miss Jess Gricci, Yeah takes forever.
So like this is a really easy way to go.
I'm an exposure to property, and I want it right now.
Money win. I love a regular comestream. I don't know
(16:01):
anybody who doesn't like getting paid. We all like getting paid,
right absolutely. Ariits collect rent from their tenants and then
they pass most of that back to their investors as distribution.
Is that so money wins, so you can kind of
pocket and they usually pay quarterly or semi annual income,
so it's not going to be like consistent consistent. Sure,
(16:23):
that's the same as any type of share. You only
get your distributions or your dividends, sorry, when it's a
share every six months or every twelve months, So like
there's no real difference there. I would say, sure, but
you don't even have to chase her tenant for rent.
You don't have to be like, hey rent stewbabes like
they do that. You don't have to feel bad about it.
I would feel bad if I was a landlord. I
would feel so bad asking for it. But you don't
(16:43):
have to. Stockland can do it for you. But it's
so good, so you don't worry about that exactly. And
then I would say, another benefit is the potential for
capital growth, So like all of us are seeing at
the moment, the property is increasing in price like every
man in his dog And like, I'm bitching about this too, because,
like I have shared that I'm trying to buy a
new house, I go to auctions and they go so
(17:04):
far over I'm annoyed. Yeah, and I know that the
market is still increasing. How much longerfore, who knows. But
over time the value of property in an ariit can rise,
and as that happens, the unit price on the stock
market climbs as well. So like let's say, you know,
ten years ago, an ariit would have cost you ten
(17:26):
bucks to get into. Now this one in particular might
be twenty dollars. That's kind of how house prices go to.
So that's kind of a win. And just like shares,
if investors get really excited about like certain sectors, like
if you if you're really into AI and you're like, oh,
I love the idea of having lots of data centers
full of like AI infrastructure, you can find like an
(17:49):
ETF that holds only those ariits, or you know, if
you're a little bit more conservative, and that's why I've
mentioned Stockman and Goodman. Right these places they just down
really big, like the skyscrapers in the city, which, as
you can tell, are quite tall. Lots of different tenants
on lots of different levels. Yeah, Stockland has supermarket like facilities,
(18:09):
but they're not just the one supermarket. It's like the
whole center. Right, you might go, ah, I really like. Yeah,
some of the little shops you know, in a like
financial downturn might have to close. You know, the nail
shop might not get as many clients. Actually that's not true.
The nail shop during a financial downturns booming because of
(18:30):
the lipstick index. Yes, so like the little treaty treats
people like you know what if I can't buy a
new car or I can't pay rent, I'll just get
my nails done and then I'll feel good about myself. Anyway,
completely different conversation. But you still have access to capital
growth because you go well during financial downturn the supermarket
people still need food. We all buy out the toilet paper. True,
(18:51):
I'm pretty sure woolies could still pay their rent. Yeahbolutely right. Anyway,
then I love liquidity. Liquidity is basically how quickly you
can get rid of something. So if I said to you,
how liquid are you right now?
Speaker 3 (19:06):
Beck?
Speaker 2 (19:07):
You probably have some cash sitting in a bank account
and we could like trot down to the AATM pull
that out. Great, very liquid. Your ETFs or your like
shares on your shares these app not as liquid, but
you could probably get that cash back into your hands
in like three days if you really really needed to. Sure,
so little less liquid. But then property in general, like
if it and my house is on the market right
(19:28):
now as of recording, I'm trying to sell that, but
I don't get cash for that the second I decide
to sell. True, I've had to lease the property, I've
had to style the property, I've had to you know,
put it online. We're doing open for inspections, and then
once someone decides to buy it, we have settlement. I'm
very flexible on settlement terms, but most properties settle between
thirty and one hundred and twenty days, with ninety days
(19:50):
being the most common settlement. Yeah, that's at least three months,
got you, gotcha. I can get that cash back in
my hot little hands. So not liquid, not very liquid,
not very lick could But when you're buying and selling ariits,
you've got that three day share thing. It's like the
same as the share market, so like you can just
sell your shares in that you don't have to wait
(20:11):
for them to sell the supermarket. Yeah, so I really
like that there's no waiting months for settlements or like
paying an agent to list your house, and you can
kind of rebalance or top up or cash out whenever
you need, but still get exposure to real estate. Yeah, okay,
if that's what you're into, right, I like that, And
then I would say the last thing, None of the
(20:32):
additional stress in ariits exists for being a landlord. So
like someone that you or me who kind of I
don't think either of us resonate with the idea of
being a landlord, but there is teams of leasing experts
and maintenance experts and tenant negotiators and finances. You aren't
involved in any of that. So if you really like
the idea of real estate, but you also, like I
(20:54):
don't want to buy a house, lease it out and
being investor in that way, this could be a sexy option.
That's such a great idea, And I know you don't
have like you know, a lot of people want to
get into the I mean I do personally, and you know,
buy properties for the security of having a roof of
my head forever. But with this in an indirect but
(21:14):
also direct kind of way, you could make money with
this to eventually afford something of that. So I know
that this is exactly so I'm actually curious to interest
rates like affect the riits. Yes, they do, and I
feel like there's been a lot of conversation about interest
rates recently. So firstly, one thing that is very important
(21:35):
to note about ariits is that, as you probably could understand,
just like you going and buying a residential property to
have an iriit, it takes a lot of debt to
buy and run. Properties like these aren't always super like.
If you looked at their balance sheet, they might be
generating some great cash, but they might also be in
(21:57):
a whole heap of debt and that doesn't have to
be scary. But if interest rates for money is cheaper,
so borrowing gets cheaper, which then boosts the profits that
they get because they're not paying six percent for their
mortgages anymore. Technically they might be paying five and a
half percent, And that makes a big difference in an ariit,
because we're talking about millions, if not hundreds of millions,
(22:20):
if not billions of dollars worth of property, so we're
not talking oh yeah, they own like three million dollars
worth of but that's not it at all. It's massive.
So if interest rates rise, the debt actually gets more
expensive and then it eats into the returns that you get.
So right now, and this is one of the reasons
why we're doing this episode is lots of people are going, oh,
interest rates are dropping, ariits are looking a little bit
(22:43):
more SEXYV tell me a little bit more about them,
because they're obviously becoming a little bit more attractive. Secondly,
an diriit is built for income, so otherwise it wouldn't
exist because what's the point of creating this structure and
having this trust if we're not making money? Of course,
(23:03):
like there's no point they're required to pay out. So
legally they're required to pay out most of what they
earn straight back to investors. Wow money whin, which makes
them I would say, very appealing in low rate environments
when things like term deposits or bonds are over. So
you're probably seeing a lot of conversation in our shees
(23:25):
on the money community but also the community in general
about like, oh, my interest rate on my high interest
savings account is going down? What the hell? Well, that's
because interest rates are coming down, and when interest rates
come down, so does your savings rate. But then your
mortgage rate drops, so it's like a great time to
have a mortgage, but not a great time to have
a savings account. So something that's also interesting is that
(23:48):
ariits usually move or change their cash rate before the
RBA even makes its announcement because markets are forward looking,
so they're kind of predicting, oh, this will go down,
so we're going to change this and this, And if
investors expect their rates to go up, like their interest rates,
they're going to be paying more money. They often start
selling riits ahead of time because they're like, Okay, cool,
(24:09):
I can see the interest rates are probably going to surge,
Like maybe I'll sell now because I don't want to
be in this anymore. And if they think that cuts
are on the horizon, I eat right now. There's a
lot of conversation about oh, when's the next interest rate cut?
What's going on? Riits can really rally before the RBA
even touches the cash rate because people are kind of like, oh,
(24:29):
we better get in because it's about to get good.
Got you, right? But Beck, you and I are long
term investors, so you don't actually want to be dipping
in and out. But that's just how the market react.
So I'm thinking about like risks and stuff like that.
So it sounds like that's the only risk. Like, if
you know there's an expected rate increase, they start selling
riits ahead of time, and then I assume we don't
(24:51):
make as much money. But like, is that the only risk? No,
and I would not be doing my job if I
didn't try and scare the hell out of you. At
the same time, it's like educ you, right, I would
say the interest rates are only one part of the
bigger puzzle. If you're really serious about adding property to
your portfolio, I would say that there are a lot
of other things that you really need to be across.
(25:12):
So let's take a really quick break because I need
a cup of tea. Yeah, I'll walk you through the
stuff the very switched on investors are actually looking at,
because the last thing you want to do is invest
in something that you actually don't understand. So guys don't
go anywhere. All right, Beck, we are back, and before
the break, you asked about whether the interest rates were
(25:33):
the only risk when it came to investing in an
ariit and I was like, oh no, Like, I haven't
done my job if I made you think that that's
the only risk. And as much as I want to
be positive, I also am an ex financial advisor. So
I'm like, let's talk about the risks like risk risk risk.
Of course, yes, we want rewards, but I also want
you to be really well educated. So the answer is no.
(25:54):
And there are a handful of other risks that I
want to go through, and I've written a little list
for you so that we don't get too off track, because, like,
as you know, I was born to yap. So let's
go through them. And the first one that I've written
down is sector specific risks. Okay, I wish I had
(26:14):
given myself a little bit more clarity on that one
before writing it down. What I believe I meant by that, beg,
is that not all property sectors performing exactly the same way.
Like before, we touched on warehouses and data centers booming
at the moment because of AI infrastructure, uh huh, and
that I would say pretty new and that's obviously going
(26:37):
to perform in a very different way. Than us lacing
out a supermarket, right, because like there's one that I
would say is a little bit more stable and one
that's a little bit more topical. So retail ariits, like
the shopping centers, they can kind of struggle if consumer
spending is slow or if like online sales have like
(26:58):
picked up. But like, obviously they're going to be different
depending on the economics of the world. There are office ariits,
seeing how I say, sometimes oh, the skyscrapers. They are
especially sensitive at the moment because there's all this work
from home conversation going on after COVID, and like there
has been this conversation recently about legally requiring stuff that
(27:22):
can to let them work from home for two days
a week. Love that, yes we do. But do you
think an ariit that then owns office space is going
to love that? I see, yes, probably not. It's like
they make their money from putting bums on desks and yeah,
does that make sense. Absolutely So at the moment, we
are seeing really high vacancy rates in CBDs. The next
(27:44):
thing I wrote down is I believe there's tenant risk.
So ariit has come with this risk that your tenants
just don't pay rent on time. Ah, happens true the
best of us. What if they just decide not to
pay rent, where's our income come from? So if a
big tenant like I don't know, a supermarket or like
you're looking at a Westfield, they lease to places like
(28:05):
Maya and David Jones, And I mean, I'm just trying
to contextualize it to give you examples. But what if
those department stores go, oh, we don't want to have
a Maya here anymore. It's not very good. And then
that's an empty space. That's a really big empty space.
How many other tenants or how many other people would
go and lease the space that big? So how totally
is it staying empty? And am Aya, you're going to
(28:28):
need like four or five different retail shops exactly. And
then also what about the smaller shops where people maybe
have opened their small business in one Westfield and taken
on this lease and then they're not making money so
they default. So they've got all their stuff in the
shop and we can't really lease it out to someone
else yet we have to go through a legal process.
But they're not paying rent income for that ariait is
(28:48):
going to drop. And then the next is property valuations.
So if property price is full, which over time, sometimes
they fall and sometimes they rise, or valuers decide, oh,
I think that asset is worth as much like they
downgrade an asset. The ariit is what's called NTA, so
a net tangible assets drops, which can then hit the
(29:10):
unit price as well. So any other risks, yes, I
have two more. Okay, oh my god, Well I tell
you that I'm mentally blocking is out because I am
going to go get an riit after this. Okay, Well,
I'm trying to sell unit. This is not advice. This
is just information so you can make your own decision, right, yes, ma'am,
because I would never give advice because that would be
against my financial services license. Just to remind everybody, I'm
(29:31):
a legitimate licensed person to give general financial advice, which
sounds really fancy. Yeah, it means I can't just raw
dog content. No license. It's rude. It's rude. Anyway. Two
more things that I wrote down, and this is not
going to make sense, but I will tell you dilution
and capital raisings. I see, I see. So because aris
(29:51):
have to pay out most of their income by law,
like that's the rules, they often have to raise more
money by issuing new units. So if they're like, oh,
we want to buy new property, like let's say they've
got a million dollars coming in, but they actually have
to give most of that to their shareholders. To get
new property, they need more money coming in the door,
and it can't really be in income from the properties
(30:11):
because if it was, they'd have to give it to
you back if you're going to own an ariit. So
what they'll do is issue new units. Does that make sense?
That makes sense? So you're kind of diluting it and
making it less what it's like watery cordial? Yeah, okay,
we like cordial. We do like like if we're taking
a fleet cup crush, I want I don't want to
(30:33):
follow the instructions on the market. We want it jam
pack exactly. It's like drinking Milo. How many scoops do
you follow the tin's rules? I just put a tiny
bit of milk, Yeah, and mostly myloc it's basically a
paste exactly, because we're here for the Milo, not the milk.
Exact milk is just the vehicle to make them Milo
more enjoyable. Milk you could even go without. So good.
And then last one because we're going to get back
(30:54):
on track because I'm pretty sure people are going to
get pretty bored of me just yapping about aris really quick.
But the last one I've got is market sentiment. And
even if the underlying property is a really steady and
really good and you know, from a logical perspective, we're
putting out Warren Buffett hat on for a second, we're
(31:14):
like no, like we're here for the long term. We're
not here for a short term. Like that's all fine
and good. Ariit unit prices can kind of swing around
with the broader share market. So like if people are
getting anxious and we saw this during the GFC, and
we saw this during COVID. What happens is if there
is a downturn, we feel less confident as investors, we
(31:36):
kind of see what's going on because we're always consistently
as human beings trying to keep up with the joneses.
We are really bad at like comparison. So often investors
sell ariits because they want their cash back and they're
kind of like, oh, I just need to like be secure.
That's not how you be secure long term, but okay,
but this can push prices lower because if everyone's selling. Obviously,
(31:59):
the markets is not as good. So regardless of how
good the properties are, regardless of whether they lost a
tenant or not, the price of the property can drop
just because people are basically scared. Okay, got you, And
that's not a bad thing. That's just how the market is.
And that's where with really good education, you and I
might go, oh, I see how the market's a bit off,
(32:21):
but that Ariit hasn't lost a tenant, Like, they're still
really good at income producing, they're at a bit of
a discount. That's when a lot of good investors get
into the market and go oh hello, yeah okay, but again,
we can't time the market. No, but you know you
might see a little opportunity and splash a little bit
more cash. Why not? So how do you know if
an Ariit is a goodbye? Like if you're evaluating it
(32:44):
and how you look? Yeah, okay, So it's just like shares. Honestly,
you don't want to buy into an ariit just blindly,
like if you just heard a couple of names on
this podcast and you're like, they must be going to
just buy it, Like, don't do that. You're better than that.
Even things I say, need to be taken with a
grain of salt. There are three big areas I would say,
(33:05):
I want you to check before you invest. Sure, So
what are the properties? Beck? What are they? This is
all about what's inside the portfolio. And you'll find this
in like the fact sheet or the investor presentations. They'll
be on their websites, really easy to find. So it'll
show you, like what's the sector mix? So are they warehouses?
Are they healthcare? Are they retail? Are they CBD high
(33:27):
rise officers? Is it cols and woolies? Like, do you
know what I mean? Yeah? The next is whale. Oh, whales, Yes, whales.
Can you see whales from the That's what you need
to be figuring out. Yeah, figure that out. But it's
actually the weighted average lease expiry weighted average lease expire Okay, yeah,
but we're looking for the whales. Yeah, gotcha, gotcha. So
longer leases, steady er incomes. Yes, And instead of being
(33:51):
like residential properties, commercial properties can sometimes be leased for
like even ten or twenty years. God, that's good as
an investor, low key, I love that. Yeah, because you're
telling me secure income secure we like I want to know.
I'm going to get paid. Yes, right, and like cosm
all these aren't going And I'm just using these as
examples because I think we just get it easier. Like
(34:11):
I am, if nothing, a visual learner. Oh yeah, I
was never good at reading the textbook and then being like, oh,
it makes sense. But if the teacher at the front
had drawn a diagram, I'd be like, oh, I get
it immediately, Like that's so good. A completely my best.
When I was at university, one of my best lecturers,
her name is evading me right now, and someone's going
(34:32):
to slide into my DMS and remind me she was
this little old lady like she definitely could have retired,
but she clearly was too passionate. And she was my
financial management lecture when I did my NBA RT, so
you can slide in and tell me who she was.
But she would use examples of owning a cupcake shop
every time we would like talk about some type of
(34:52):
like very serious like financial management technique. She'd be like, okay,
so in your cupcake shop, and I'd be like, slay, queen,
I get it. It's so clever. I feel like I
would get that tie. Yeah, that's so smart because if
she's like, okay, cool, Like you know when you're talking
about your balance sheet, like you obviously have to buy
flour and eggs, and I'll be like, okay, that makes sense,
and I'm paying rent like totally anyway. I just try
(35:14):
to make it make sense, and obviously I'm not very
good at it because I just told you to look
out for the whales and that makes no sense. But
the longer a lease is like coals and wales aren't
signing a lease for one year, Yeah, they're planning on
being there kind of forever, I would assume likely groceries
aren't going anywhere. More often than not, those bigger businesses
(35:35):
are signing twenty year leases and going, yeah, we want
that site for twenty years. Yeah, good deal for your income.
Because shorter leases, when you look at it, actually means
more risk because there's you know, lots of turnover. There
might be times where that small business leaves that location
and there's like empty vacant time where we're finding someone new.
(35:55):
But on the flip side of that, when there's lots
of turnover, there's also the potential upside that rents can
reset and you can kind of like charge the next
person more, Whereas if you're negotiating a twenty year lease,
you'll be like, well, yes, i'll pay this price in
the start, but there's usually an agreed upon percentage that
that rent increases by it and you can't really go, oh,
(36:15):
actually the market's doing really well. Instead of two percent,
we might increase it by four. You can't do that, sure,
So like pros and cons, And then with looking at
properties as well, I've mentioned it a few times occupancy,
So are there people actually leasing these properties back? Ideally
ninety five percent of their properties are tenanted and lease
(36:36):
out lower than that. I just feel like you could
be getting some poutchy income. Yeah, that makes sense, That
makes a lot of sense. And when they're big like
five percent of not leased out, thus red flag material
to me. Oh yeah, like what's going on there? The
next thing, let's talk about money. Okay, sorry, this is
where we have to zoom out and boring, but I'll
do it for you. I won't actually do it for you,
(36:58):
but like, think of me while you're reading the financial
results and annual reports, because that's where I get very excited.
I want you to talk about gearing. So like this
is just talking about their debt levels. So moderate gearing
is pretty healthy, and that's where they're gearing. Or the
debt that that company holds is between twenty to thirty
five percent, it's pretty normal. I would say that's a
(37:20):
healthy middle ground. I don't know what gearing. So it's
just basically the percentage of debt you hold to the
income that you have. I see. So, like, you know,
if you're drowning in debt, beck and ninety five percent
of your income is going to paying off your debt,
you're probably struggling, got you? But if I said, oh,
thirty percent of your income is going to like your
mortgage repayment or thirty percent of your incomes going to debt, Like,
(37:42):
that's not so bad, is your? Yeah, Like that's a
bit more comfy. Absolutely, So when I talk about gearing,
moderate gearing in these companies, I'm happy to see twenty
to thirty five percent. So the rest of the income
that's coming in, like, isn't paying off debt. It's going
to you, the investor. That's what we want to see.
And then NTAs not the asshole. No, no, it's actually
(38:04):
a net tangible asset price. And we're gonna look at
those so I want you to compare what the ariit
is trading at to the underlying value of the property.
So paying a big premium, I would say, is really
risky if the growth isn't showing up, Like, don't overpay
just don't overpay back Yeah for nothing if you can
(38:26):
help it, if you can help it. But also we
can help it by doing our research. Yes, so true.
And then the last thing that I would say is
the people. The people we're gonta have good people. Well, yeah,
you do. Good people make a good business. And it's's toxic, no,
I mean you can't tell that from the outside. But finally,
I want you to have a look at who's in charge. Like,
if you're looking at an ariit, who's managing it? Like,
(38:50):
is it some trust fund kids who just got a
really big amount of money and like mummy and daddy
let them buy some stuff that doesn't happen often. But like,
obviously that me would be a pretty red flag. But
like I want to see that there's an experienced team
who've been doing this for a number of years. I
want to see a history of really stable distribution so
that the people who own the ariat we get paid
(39:13):
and we get paid consistently, and ideally their internal management
exists so that their interests are aligned with the investors.
They haven't just been brought in from different sectors. Like
I'm want property people managing my property. Yeah. I don't
know about you, but I read a book and you
definitely didn't. But it's called The Richest Man in Babylon.
Not because you didn't read a book. Go, I know
(39:33):
you read books, but like, you didn't read The Richest
Man in recent But I will tell you that that's
a fantastic investing read. In fact, it's one of the
first books I want you to pick up if you're
going to start investing to understand just investing methodology and
where it's come from and how it works. But I
will warn you it's the most boring book you'll ever read. God,
I can't imagine. She's so dry. Oh, she's so dry.
(39:56):
But she talks about like marketplaces I see way back
where gorgeous. Anyway, I can give you the TLDR on that,
so you don't have to read it. But one of
the top tips in there is they say do not
take advice on buying diamonds from a bricklayer. Ah, that
makes sense, right, So, like a bricklayer might be really
passionate about diamonds because like one time he bought his
(40:18):
girlfriend and engagement ring, but that doesn't mean he knows
everything about diamonds. I'm probably if I'm going to buy
a diamond that's a really big expense, I'm going to
go to a diamond expert. I'm not going to go
to the bricklayer.
Speaker 3 (40:28):
Yeah.
Speaker 2 (40:28):
So I think it's about getting your advice from the
right places. And I would say there's been instances of
external management of some Australian ETFs that prioritize fees over
holders income. So I just want the right people doing
the right thing. And does a management look like they
know what they're doing. So I guess for real estate ETFs,
(40:49):
like just to summarize it, or one of the benefits
of a property ETF is that you just don't need
to do a deep dive into every single landlord.
Speaker 3 (40:55):
You know.
Speaker 2 (40:56):
I was like, look at their management team, do this,
do that? Like, if you're buying an ETF, you basically
don't have to worry as much because all the hard
work's been done by you by the ETF manager, they
wouldn't have been putting it into the ETF, it was
if it was terrible, beck, because like their whole job
is to make an ETF that performs. I promise you
they have gone through every single one and been like good, bad, No,
(41:16):
you don't make it to the ETF. That's what you want,
Like they're the gatekeepers. But I would say that if
you're looking at a property ETF, you still need to
look at the fact sheet because we still need to
know what we're buying. Yeah, I want you to know
what sector are you buying into? Does it tilt one
way or the other? Like is it really healthcare? Is
it really supermarkets? You know, what are the top holdings
and do they kind of make sense to you? So
(41:36):
you don't need to look into the top one hundred
that's okay? What are like the top five right when
you google them? And when you look at those companies,
are you like, okay, that makes sense? Holdings are so
that the companies or the assets that they own, So
like in your ETF, it's a basket of shares, and
then inside that, I just want you to know, like
the top five. I just want you to google. Guys
might be like willl words calls came out yeah, and
(41:58):
I want you to be like, yeah, check that makes sense.
See how much is it going to cost you? So
what are the fees? And then what does performance over
the long term look like? Again, ex financial advisor in
me is like flashing red lights. And I need to
say past performance is not a reliable predictor of future performance,
but it can make you feel secure. Yeah, absolutely can
make you go, oh, they've been doing a pretty good
(42:19):
job for a pretty long time. The risk is less. Yes, yes,
So that's a pretty good checklist. Actually, so I made
it up myself and honestly, god, you're so smart. Well
I'm not. Actually, I just had to write a list
and I was like, oh, it's all about the money.
Other people safe, what are they doing? I'm so god,
she's good. I'm just so critical. I'm so sorry. No,
someone's going to be I'll do it for you. It
(42:41):
doesn't sound as scary as I thought, like kind of
like GNALT is literally you're already kind of investing. So
if real estate is something that you want to dabble in,
this might be something that you look into. I think
I actually might, But I think like if I add
property to my shares's account. The ETFs are more my style.
So that's great advice. I just want you to have
(43:02):
a portfolio that kind of makes sense to you. Yeah,
Like I use the example of going down to the pub, Like,
I want you to have these conversations, like it's not
just men who talk about their shares, like and it
historically was because they're basically trying to one up each other. Yeah, Like,
I want you to be like, oh my god, I
found this arit and it's like full of healthcare companies
and I really believe in that, Like isn't that cool. Yeah,
(43:23):
we have the power to do that. We love a
ETF as well because they're just so simple and so diversified.
God gorgeous. Okay, So before today, I didn't think I
would ever be property invester, but and I'm sure a
lot of people listening maybe think the same thing. But
guess what, guys, we can do it. You absolutely can
do it. And at the end of the day, ariits
and property ETFs, they're just another tool in your little
(43:44):
investing kit. The beauty is that you can kind of
dip your toe in without committing all of your life savings,
which can be terrifying. And the best bit is I
would say, you don't have any tenants calling about broken
hot water systems. Oh my god, that's gorgeous.
Speaker 1 (43:58):
I know.
Speaker 2 (43:59):
So we'll see you on the guys. Bye, my guys.
Speaker 3 (44:08):
The advice shared on She's on the Money is general
in nature and does not consider your individual circumstances. She's
on the Money exists purely for educational purposes and should
not be relied upon to make an investment or financial decision.
Speaker 2 (44:21):
If you do choose to buy a financial.
Speaker 3 (44:23):
Product, read the PDS TMD and obtain appropriate financial advice
tailored towards your needs. Victoria Divine and She's on the
Money are authorized representatives of money.
Speaker 2 (44:33):
Sheper pty Ltd
Speaker 3 (44:35):
ABN three two one is six four nine two seven
seven zero eight AFSL four five one two eight nine
My name is Tatasha Bamblet. I'm a proud First Nations
woman and I'm here to acknowledge country t Glenn Young
Ganya Niana Kaka yah Ya bin Ahaka Nian our guy
in Nimbina, yakarum jar Dominyamka Domaga Ithawakaman damon Imlan bomber
bang Gadabomba in and now in wakah ghana on yak
rum jar Watnadaa. Hello, beautiful friends, we gather on the
(00:24):
lands of the Aboriginal people. We thank acknowledge and respect
the Aberiginal people's land that we're gathering on today. Take
pleasure in all the land and respect all that you see.
She's on the Money podcast acknowledges culture, country, community and connections,
bringing you the tools, knowledge and resources for you to thrive.
Speaker 2 (00:44):
She's on the Money. She's on the Money. Hello and
(01:08):
welcome to She's on the Money, the podcast that shows
you investing isn't just for the rich, It's for you too.
If you've ever looked at the housing market and thought
that's actually literally never going to happen for me, you're
definitely not alone. What if I told you there were
other ways to get your foot in the property door.
I'm beck scited and here to show us how we
can invest in property without taking on a million dollar mortgage.
Is our favorite finance expert Victoria Divine. Hello, Vi Hello.
(01:31):
You can take on a million dollar mortgage if you
want to, but like, if you want, that's not what
you have to do to get into the property market.
That's actually crazy. And I mean I'm a skeptic right now,
but I really want to know. I actually hate it
so much. I did a presentation the other day actually
for Australian Unity and it was really really cool. I
went into this complete side note. I got invited to
(01:54):
their executive leadership retreat. Whoa soundspoosy. I was so scared
where I entered to them about like, you know, our
demographic Beck, like you and I and like what the
world looks like in nineteen seventy six, when people like
our parents were probably you know, thinking about property or
buying property. Property cost like twenty five thousand dollars and
(02:18):
the average property in Melbourne and Sydney cost about four
times your annual salary. Yeah, and so now if we
look at it, property in Melbourne and Sydney will cost
on average thirteen times your annual salary. And if you
were to and I did all the maths and stuff
in the background, that's why it's like so fresh in
my mind. And I was like, oh, you'll love this bad.
(02:38):
If salary and wage growth kept up with you know,
how prices of houses had increased, our average salary would
be about one hundred and ninety thousand dollars each per year.
So like, you know, each and every single one of
us would have an average. So like spack Man in
the middle, like that would just be They're like, oh, yeah,
most people earn. That reality is we earn on average
(03:02):
sixty five thousand dollars a year. But I think that
we still apply the same pressure that our parents' generation did.
I said to you right now, BEG, do you want
to buy property? Definitely? How the hell?
Speaker 3 (03:14):
Yeah?
Speaker 2 (03:14):
But you might you know, if we had a deep conversation,
you might go, yeah, I would. I would love to
own property, but I just don't think it's accessible for me,
or I just don't think with the lifestyle I lead
like that's an option. And I guess what today is
about is really teaching you that it can be an option,
that there's just a different way of going about it.
It's not going to be the you know, white picket
(03:36):
fence and three bedroom home on like a seven hundred
square meter block, Like that's just completely inaccessible for the
average person because the average of that type of property
in Melbourne and Sydney is about one point two million dollars.
Speaker 3 (03:47):
Betch.
Speaker 2 (03:48):
So I think that's important from my perspective to contextualize,
to give you like some solid proof that it is harder.
But what if I told you that you can still
get exposure to the property market without needing a house
deposit or even a mortgage. I'd say, Victoria, you're a liar. Victoria,
what MLM are you starting? What are you doing? Well,
(04:10):
you can actually invest in property beck on the share
market through something called an ariit And like we all
know that our girl Beck, she's now got more than
a thousand dollars in her She again, isn't that crazy?
That is so crazy? It was just like little bits
like five dollars every few weeks comes out. I think
Chares's shoot, hit you up so that you can be
like their ambassador of like girl, like, it's actually not
(04:33):
that hard. Yeah. I've been saying this for years. I've
had this podcast, what like six years, and I'm like,
I promise it's not that hard. I promise it's not
that hard. And people were like, oh no, like I'll
do it when I earn more. I'll do it when
I do. Like you just started, and you're like, hold on,
hold on, hold on, yeah, yeah, yeah, this is not
that bad. But Beck, you could give yourself exposure to ariit,
okay through Chasya's or and like, it's not about chairs
(04:55):
Eya's at all. This is more about like the ability
to access ARIA which is a real estate investment trust,
and these are you can buy them on the AX
in the same way that you would like look up
you know, the ASX top two hundred. You would just
look up ariits and see what comes up. But they
basically own and manage big income producing properties like shopping
(05:19):
centers or warehouses or office buildings or even like storage facilities,
which make bank by the way, really yeah, and they're
super super accessible. So if you're like, oh, I really
like the idea of property because to me it feels
a bit more stable, like the share market maybe is
not what you're super super comfortable with, but you also
don't have heaps of cash to start with, Like, oh,
(05:40):
you can start with five dollars. Yeah, so if you
want exposure to that, an ariit might be a good idea, Okay,
so be say units. Yeah, you can buy units in
a ariit, which is not a pun so not shares.
They're not shares, they're not shared. Okay, they're not shares,
and they are different. So a share and a unit
is a different thing. Sometimes people use them interchangeably, and
(06:03):
those people, my friend, are wrong. I see a share
belongs to a company and they issue shares. Units belong
to trusts. Right, So if you would to establish a trust,
you'd have units in that trust. You wouldn't have shares
in that trust. And an ariit is a trust, so
you're basically a unit holder, not a shareholder. Does that
(06:23):
make a lot of a difference, Not really if we're
being brutally honest, because all of these things are so
highly regulated. But at the same time, to me, it
does change your risk profile because obviously property over time
has been a little bit more stable, and like, if
we look at a risk and reward chart and I
(06:43):
like drew one up for you, we've kind of got
like cash and then some bonds and like you're getting
a bit more risky and property would sit there, and
then like Australian shares that's like getting a bit more risky,
and then international shares up here. So basically you're kind
of using the share market platform to invest, but taking
your risk back down to a property level. God, if
(07:04):
that makes sense, yes, yes, yes, definitely, so on the
stock market or on the share market, also very interchangeable,
they trade in exactly the same way, so like it's
not more complex to you as a buyer, even though
you might go, oh, but I've never heard of these
God's probably just because you haven't looked them up. Like
it's because you haven't been told about them. And that's
what this whole episode is for. So with an ariit,
(07:26):
you're not technically an owner of the company. So with
a share, you like buy a tiny piece of the
pie and then that enables you to get part of
their profit and part of their growth, and you're kind
of like a tiny little CEO. Absolutely. Instead, in an ariit,
you are a beneficiary of the trust. Sure, so becoming
a trust fund baby. Oh we love trust fund babies, right,
(07:47):
could you say that? Technically? I mean technically you're a
beneficiary of the trust. Okay, for someone who's the trust
fund baby would be the beneficiary of a trust, so
like for me, that's the same. But I'm buying my
status myself. Yeah, I didn't have wealthy parents. They didn't
set up a trust for me. I'm gonna do it myself.
Oh my god, I love So if you want to
(08:07):
be a trust one baby, like, that's maybe a way
in it's never too late to be a trust one baby,
never too late, And you could do it with five
dollars and then like in your like insta bio, you
could write trust one baby. Wow, I think that would
be fun. But what that means, yes, is like with shares,
you kind of become, as I was explaining before, a
part owner of the company. And like, technically you have
voting rights and dividends, but like because we're tiny and
(08:33):
because like we're only buying small amounts, like you can vote,
but there's not a lot going on there. Sure, But
with units, you hold a stake in the trust's assets,
so the property portfolio, and you're entitled to a proportional
share of the income that that trust generates. And instead
of being called dividends. They're called distributions. Got you again
(08:56):
because trust fun babies get distributions, I see. And that
is why with ariits like when it comes to like
tax time, you'll see annual distribution statements, which I feel
like so many people are like, oh my god, Like
I signed up to this, and at tax time, I
got an annual distribution statement and I also got my
tax statement from Chaza's and like everything's a bit confusing.
I promise it's just because it's the first time you've
(09:17):
seen it. Like it's fine. So instead of that, you'll
get your annual distribution statement instead of a dividend slip
in the mail. Because the income kind of flows through
a trust structure, which means you're buying into that trust.
But they could also like put new properties and stuff
into that trust as well, which you would then benefit from.
So to give you a good example, if you wanted
something to look up on Chazy's, because you're like I
(09:38):
don't even know where to look up, Yeah this, do
I look up Ariit, you could because like you know,
I'm not trying to be promotional here, but Chaz's has
its like AI search function, So if you looked up ariit.
It would come up with a lot of different like
curriit options, But Goodman Group, I would say, is and
this is not a recommendation. This is just my example
(09:58):
and the reason I'm using this is because it is
Australia's largest ariit I see and it's ASX ticker code
if you want to look it up, is GMG. But
it's focused on industrial property and logistics, so it buys
lots of warehouses and data centers and in that space
demand has absolutely surged because of AI. So the reason
(10:21):
AI is making that surges because there's a lot of
infrastructure needed for AI and you need to put it
in warehouses, you need to put it in data centers,
and this company buys that. So they're just the biggest
one in Australia. Are they the best? Who knows? It's
not a recommendation, it's just a like if you're starting
to quote do your research, how do I do my research?
What does that mean? Have a look at this, get
(10:43):
a feel for what that looks like, and then we
can find some more and like maybe find one that
really aligns with your values if that's what you're looking for.
Cool okay, okay, okay, and like an RAIT is the
only option to invest in property on the share market
or are there other ways to get in? So we
always talk about ETF, so I I always talk about
ets so I don't pick You're the first to bring
them up. You're just like sick of me yapping about
(11:05):
how cool I think they are. But we talk or
I talk a lot about them being one of the
easiest ways to get instant diversification in your portfolio. And
I would say that the property market is no different.
So instead of just picking one ariit and just being like, oh, well,
I hope Goodman does a good job for me, you
can actually invest in a real estate ETF gotcha that
(11:29):
would then hold a lot of different ariits yep. So
instead of an ETF that goes, oh, I'm going to
pick like the Australian Top one hundred and it's got
things like Woolworths Group and it's got like BHP and
you kind of go, oh, I know those companies, you
might look at an ETF that holds ariits and be
like what the heck? M Like, I don't really understand
(11:51):
what these companies are. And that's where we've got to
like do a bit of googling, like how good is
it that we live in twenty twenty five and we
can just google the answer? What is Goodman group? Tell
me how responsible they are? Like I ask google everything?
Speaker 1 (12:05):
Right?
Speaker 3 (12:05):
You know what?
Speaker 2 (12:05):
That's a lie? I asked chutchpt a lot. Don't tell anybody,
especially you who doesn't agree with chut ChiPT. But to
give you another example of something that you could look up,
you could look up the Vanguard Australian Property Securities Index ETF. Okay,
it's a lot easier if you just type in the
ticket code a VAP VAP VAP, gotchaap, It's like a WAP,
(12:28):
Yes it's VAP. But they hold lots of different ariits.
So they hold Goodman, they hold Center, and they also
hold Stockland. And you might have heard a lot about
stockland before because they own lots of like supermarket locations,
so like they might own the building that then coals
and woolies lease from. Like you walk into a Stockland
and they've got like their baker's delight, they've got their
(12:49):
like oh you know they're woolies and like that local
place that always does a really good dumplings. Like, yes,
they rent their stockland locations out to other businesses. That
makes so much. It's realist still, it's not you know,
residential real estate. But the money that they make is
from the leases that they lease out to people like
Baker's Delight or Brumbies or Woolies. There you go, right,
(13:10):
So that's where the money is coming from. It's not
just from owning property. Yes, property over time increases in value,
but the income part and then stockland also have gone
into building homes, so they do like house and land
packages and stuff like that. My god, may as well.
I mean, the more money you get, well, that's it.
Why not, That's exactly what we were going to do. Yeah,
(13:32):
these ETFs basically hold ariits and they can be a
really good option for you if you're like, well, I
want access to the real estate market, but I don't
want to go buy just one ariit. Because Victoria said,
it's not always a good idea to put all your
eggs in one basket. You could look at an ETF
and like, we just have to be really caught, not
really cautious. I feel like I'm trying to scare you.
(13:54):
I'm not, But like when we pick an ETF, just
really understanding what the holdings are of it, because obviously
an ETF is basically just a basket. It's a it's
a vehicle. Yep, it's your clown car, right, what types
of clowns are you putting in the car? Do you
want to know which ones you've got and want to
hit so different? You've got lots of different ones. I
don't want three, it's the same. You don't want through
(14:14):
the Absolutely, like if you're gonna like fill a clown
car like I need an elephant, I need, like you know,
an actual clown, I need the monkey, like I want
all of them in all of them. Absolutely. I think
it's really important that you understand what companies they hold
because that could give you a lot of peace of mind. Yes,
and as Warren Buffet Buffet you can call him Warren Buffet.
(14:35):
Sorry that feels but like he's American, so it would
be Buffett. But if it was French, it might be
Warren Buffo, he says, to make sure you understand before
you invest. I think something like that, And I mean,
maybe I'm the next war and Buffett watch out. But
I agree, like I just go, if you're going to
buy this, just do a bit of googling what's good Man,
(14:57):
what's center, Like, what's stockland, what do they hold? So
that you feel confident. What would be the benefits of
investing in riits and real estate ETFs? I mean you
can call yourself a trust fund, baby, Yes, it's one.
That's like number probably the biggest benefit. Yeah, I would say,
as I touched on before, like instead of having to
have a two hundred thousand dollars deposit, And like, maybe
(15:18):
I'm scaring you a little bit because I have a
mortgage broking business and I have six beautiful mortgage brokers
who get first home owners into their properties every single day.
And most of the time it's not with a twenty
percent deposit. Absolutely, with an ariit really low barrier to
entry so that you don't need a big deposit. There's
no stamp duty to pay because I pay it for you,
(15:40):
no building inspections. You just kind of open your brokery jap,
pick an oriit and you're in, Oh my god, that's
so good. And getting into the market if you are
a first home buyer, ask miss Jess Gricci, Yeah takes forever.
So like this is a really easy way to go.
I'm an exposure to property, and I want it right now.
Money win. I love a regular comestream. I don't know
(16:01):
anybody who doesn't like getting paid. We all like getting paid,
right absolutely. Ariits collect rent from their tenants and then
they pass most of that back to their investors as distribution.
Is that so money wins, so you can kind of
pocket and they usually pay quarterly or semi annual income,
so it's not going to be like consistent consistent. Sure,
(16:23):
that's the same as any type of share. You only
get your distributions or your dividends, sorry, when it's a
share every six months or every twelve months, So like
there's no real difference there. I would say, sure, but
you don't even have to chase her tenant for rent.
You don't have to be like, hey rent stewbabes like
they do that. You don't have to feel bad about it.
I would feel bad if I was a landlord. I
would feel so bad asking for it. But you don't
(16:43):
have to. Stockland can do it for you. But it's
so good, so you don't worry about that exactly. And
then I would say, another benefit is the potential for
capital growth, So like all of us are seeing at
the moment, the property is increasing in price like every
man in his dog And like, I'm bitching about this too, because,
like I have shared that I'm trying to buy a
new house, I go to auctions and they go so
(17:04):
far over I'm annoyed. Yeah, and I know that the
market is still increasing. How much longerfore, who knows. But
over time the value of property in an ariit can rise,
and as that happens, the unit price on the stock
market climbs as well. So like let's say, you know,
ten years ago, an ariit would have cost you ten
(17:26):
bucks to get into. Now this one in particular might
be twenty dollars. That's kind of how house prices go to.
So that's kind of a win. And just like shares,
if investors get really excited about like certain sectors, like
if you if you're really into AI and you're like, oh,
I love the idea of having lots of data centers
full of like AI infrastructure, you can find like an
(17:49):
ETF that holds only those ariits, or you know, if
you're a little bit more conservative, and that's why I've
mentioned Stockman and Goodman. Right these places they just down
really big, like the skyscrapers in the city, which, as
you can tell, are quite tall. Lots of different tenants
on lots of different levels. Yeah, Stockland has supermarket like facilities,
(18:09):
but they're not just the one supermarket. It's like the
whole center. Right, you might go, ah, I really like. Yeah,
some of the little shops you know, in a like
financial downturn might have to close. You know, the nail
shop might not get as many clients. Actually that's not true.
The nail shop during a financial downturns booming because of
(18:30):
the lipstick index. Yes, so like the little treaty treats
people like you know what if I can't buy a
new car or I can't pay rent, I'll just get
my nails done and then I'll feel good about myself. Anyway,
completely different conversation. But you still have access to capital
growth because you go well during financial downturn the supermarket
people still need food. We all buy out the toilet paper. True,
(18:51):
I'm pretty sure woolies could still pay their rent. Yeahbolutely right. Anyway,
then I love liquidity. Liquidity is basically how quickly you
can get rid of something. So if I said to you,
how liquid are you right now?
Speaker 3 (19:06):
Beck?
Speaker 2 (19:07):
You probably have some cash sitting in a bank account
and we could like trot down to the AATM pull
that out. Great, very liquid. Your ETFs or your like
shares on your shares these app not as liquid, but
you could probably get that cash back into your hands
in like three days if you really really needed to. Sure,
so little less liquid. But then property in general, like
if it and my house is on the market right
(19:28):
now as of recording, I'm trying to sell that, but
I don't get cash for that the second I decide
to sell. True, I've had to lease the property, I've
had to style the property, I've had to you know,
put it online. We're doing open for inspections, and then
once someone decides to buy it, we have settlement. I'm
very flexible on settlement terms, but most properties settle between
thirty and one hundred and twenty days, with ninety days
(19:50):
being the most common settlement. Yeah, that's at least three months,
got you, gotcha. I can get that cash back in
my hot little hands. So not liquid, not very liquid,
not very lick could But when you're buying and selling ariits,
you've got that three day share thing. It's like the
same as the share market, so like you can just
sell your shares in that you don't have to wait
(20:11):
for them to sell the supermarket. Yeah, so I really
like that there's no waiting months for settlements or like
paying an agent to list your house, and you can
kind of rebalance or top up or cash out whenever
you need, but still get exposure to real estate. Yeah, okay,
if that's what you're into, right, I like that, And
then I would say the last thing, None of the
(20:32):
additional stress in ariits exists for being a landlord. So
like someone that you or me who kind of I
don't think either of us resonate with the idea of
being a landlord, but there is teams of leasing experts
and maintenance experts and tenant negotiators and finances. You aren't
involved in any of that. So if you really like
the idea of real estate, but you also, like I
(20:54):
don't want to buy a house, lease it out and
being investor in that way, this could be a sexy option.
That's such a great idea, And I know you don't
have like you know, a lot of people want to
get into the I mean I do personally, and you know,
buy properties for the security of having a roof of
my head forever. But with this in an indirect but
(21:14):
also direct kind of way, you could make money with
this to eventually afford something of that. So I know
that this is exactly so I'm actually curious to interest
rates like affect the riits. Yes, they do, and I
feel like there's been a lot of conversation about interest
rates recently. So firstly, one thing that is very important
(21:35):
to note about ariits is that, as you probably could understand,
just like you going and buying a residential property to
have an iriit, it takes a lot of debt to
buy and run. Properties like these aren't always super like.
If you looked at their balance sheet, they might be
generating some great cash, but they might also be in
(21:57):
a whole heap of debt and that doesn't have to
be scary. But if interest rates for money is cheaper,
so borrowing gets cheaper, which then boosts the profits that
they get because they're not paying six percent for their
mortgages anymore. Technically they might be paying five and a
half percent, And that makes a big difference in an ariit,
because we're talking about millions, if not hundreds of millions,
(22:20):
if not billions of dollars worth of property, so we're
not talking oh yeah, they own like three million dollars
worth of but that's not it at all. It's massive.
So if interest rates rise, the debt actually gets more
expensive and then it eats into the returns that you get.
So right now, and this is one of the reasons
why we're doing this episode is lots of people are going, oh,
interest rates are dropping, ariits are looking a little bit
(22:43):
more SEXYV tell me a little bit more about them,
because they're obviously becoming a little bit more attractive. Secondly,
an diriit is built for income, so otherwise it wouldn't
exist because what's the point of creating this structure and
having this trust if we're not making money? Of course,
(23:03):
like there's no point they're required to pay out. So
legally they're required to pay out most of what they
earn straight back to investors. Wow money whin, which makes
them I would say, very appealing in low rate environments
when things like term deposits or bonds are over. So
you're probably seeing a lot of conversation in our shees
(23:25):
on the money community but also the community in general
about like, oh, my interest rate on my high interest
savings account is going down? What the hell? Well, that's
because interest rates are coming down, and when interest rates
come down, so does your savings rate. But then your
mortgage rate drops, so it's like a great time to
have a mortgage, but not a great time to have
a savings account. So something that's also interesting is that
(23:48):
ariits usually move or change their cash rate before the
RBA even makes its announcement because markets are forward looking,
so they're kind of predicting, oh, this will go down,
so we're going to change this and this, And if
investors expect their rates to go up, like their interest rates,
they're going to be paying more money. They often start
selling riits ahead of time because they're like, Okay, cool,
(24:09):
I can see the interest rates are probably going to surge,
Like maybe I'll sell now because I don't want to
be in this anymore. And if they think that cuts
are on the horizon, I eat right now. There's a
lot of conversation about oh, when's the next interest rate cut?
What's going on? Riits can really rally before the RBA
even touches the cash rate because people are kind of like, oh,
(24:29):
we better get in because it's about to get good.
Got you, right? But Beck, you and I are long
term investors, so you don't actually want to be dipping
in and out. But that's just how the market react.
So I'm thinking about like risks and stuff like that.
So it sounds like that's the only risk. Like, if
you know there's an expected rate increase, they start selling
riits ahead of time, and then I assume we don't
(24:51):
make as much money. But like, is that the only risk? No,
and I would not be doing my job if I
didn't try and scare the hell out of you. At
the same time, it's like educ you, right, I would
say the interest rates are only one part of the
bigger puzzle. If you're really serious about adding property to
your portfolio, I would say that there are a lot
of other things that you really need to be across.
(25:12):
So let's take a really quick break because I need
a cup of tea. Yeah, I'll walk you through the
stuff the very switched on investors are actually looking at,
because the last thing you want to do is invest
in something that you actually don't understand. So guys don't
go anywhere. All right, Beck, we are back, and before
the break, you asked about whether the interest rates were
(25:33):
the only risk when it came to investing in an
ariit and I was like, oh no, Like, I haven't
done my job if I made you think that that's
the only risk. And as much as I want to
be positive, I also am an ex financial advisor. So
I'm like, let's talk about the risks like risk risk risk.
Of course, yes, we want rewards, but I also want
you to be really well educated. So the answer is no.
(25:54):
And there are a handful of other risks that I
want to go through, and I've written a little list
for you so that we don't get too off track, because, like,
as you know, I was born to yap. So let's
go through them. And the first one that I've written
down is sector specific risks. Okay, I wish I had
(26:14):
given myself a little bit more clarity on that one
before writing it down. What I believe I meant by that, beg,
is that not all property sectors performing exactly the same way.
Like before, we touched on warehouses and data centers booming
at the moment because of AI infrastructure, uh huh, and
that I would say pretty new and that's obviously going
(26:37):
to perform in a very different way. Than us lacing
out a supermarket, right, because like there's one that I
would say is a little bit more stable and one
that's a little bit more topical. So retail ariits, like
the shopping centers, they can kind of struggle if consumer
spending is slow or if like online sales have like
(26:58):
picked up. But like, obviously they're going to be different
depending on the economics of the world. There are office ariits,
seeing how I say, sometimes oh, the skyscrapers. They are
especially sensitive at the moment because there's all this work
from home conversation going on after COVID, and like there
has been this conversation recently about legally requiring stuff that
(27:22):
can to let them work from home for two days
a week. Love that, yes we do. But do you
think an ariit that then owns office space is going
to love that? I see, yes, probably not. It's like
they make their money from putting bums on desks and yeah,
does that make sense. Absolutely So at the moment, we
are seeing really high vacancy rates in CBDs. The next
(27:44):
thing I wrote down is I believe there's tenant risk.
So ariit has come with this risk that your tenants
just don't pay rent on time. Ah, happens true the
best of us. What if they just decide not to
pay rent, where's our income come from? So if a
big tenant like I don't know, a supermarket or like
you're looking at a Westfield, they lease to places like
(28:05):
Maya and David Jones, And I mean, I'm just trying
to contextualize it to give you examples. But what if
those department stores go, oh, we don't want to have
a Maya here anymore. It's not very good. And then
that's an empty space. That's a really big empty space.
How many other tenants or how many other people would
go and lease the space that big? So how totally
is it staying empty? And am Aya, you're going to
(28:28):
need like four or five different retail shops exactly. And
then also what about the smaller shops where people maybe
have opened their small business in one Westfield and taken
on this lease and then they're not making money so
they default. So they've got all their stuff in the
shop and we can't really lease it out to someone
else yet we have to go through a legal process.
But they're not paying rent income for that ariait is
(28:48):
going to drop. And then the next is property valuations.
So if property price is full, which over time, sometimes
they fall and sometimes they rise, or valuers decide, oh,
I think that asset is worth as much like they
downgrade an asset. The ariit is what's called NTA, so
a net tangible assets drops, which can then hit the
(29:10):
unit price as well. So any other risks, yes, I
have two more. Okay, oh my god, Well I tell
you that I'm mentally blocking is out because I am
going to go get an riit after this. Okay, Well,
I'm trying to sell unit. This is not advice. This
is just information so you can make your own decision, right, yes, ma'am,
because I would never give advice because that would be
against my financial services license. Just to remind everybody, I'm
(29:31):
a legitimate licensed person to give general financial advice, which
sounds really fancy. Yeah, it means I can't just raw
dog content. No license. It's rude. It's rude. Anyway. Two
more things that I wrote down, and this is not
going to make sense, but I will tell you dilution
and capital raisings. I see, I see. So because aris
(29:51):
have to pay out most of their income by law,
like that's the rules, they often have to raise more
money by issuing new units. So if they're like, oh,
we want to buy new property, like let's say they've
got a million dollars coming in, but they actually have
to give most of that to their shareholders. To get
new property, they need more money coming in the door,
and it can't really be in income from the properties
(30:11):
because if it was, they'd have to give it to
you back if you're going to own an ariit. So
what they'll do is issue new units. Does that make sense?
That makes sense? So you're kind of diluting it and
making it less what it's like watery cordial? Yeah, okay,
we like cordial. We do like like if we're taking
a fleet cup crush, I want I don't want to
(30:33):
follow the instructions on the market. We want it jam
pack exactly. It's like drinking Milo. How many scoops do
you follow the tin's rules? I just put a tiny
bit of milk, Yeah, and mostly myloc it's basically a
paste exactly, because we're here for the Milo, not the milk.
Exact milk is just the vehicle to make them Milo
more enjoyable. Milk you could even go without. So good.
And then last one because we're going to get back
(30:54):
on track because I'm pretty sure people are going to
get pretty bored of me just yapping about aris really quick.
But the last one I've got is market sentiment. And
even if the underlying property is a really steady and
really good and you know, from a logical perspective, we're
putting out Warren Buffett hat on for a second, we're
(31:14):
like no, like we're here for the long term. We're
not here for a short term. Like that's all fine
and good. Ariit unit prices can kind of swing around
with the broader share market. So like if people are
getting anxious and we saw this during the GFC, and
we saw this during COVID. What happens is if there
is a downturn, we feel less confident as investors, we
(31:36):
kind of see what's going on because we're always consistently
as human beings trying to keep up with the joneses.
We are really bad at like comparison. So often investors
sell ariits because they want their cash back and they're
kind of like, oh, I just need to like be secure.
That's not how you be secure long term, but okay,
but this can push prices lower because if everyone's selling. Obviously,
(31:59):
the markets is not as good. So regardless of how
good the properties are, regardless of whether they lost a
tenant or not, the price of the property can drop
just because people are basically scared. Okay, got you, And
that's not a bad thing. That's just how the market is.
And that's where with really good education, you and I
might go, oh, I see how the market's a bit off,
(32:21):
but that Ariit hasn't lost a tenant, Like, they're still
really good at income producing, they're at a bit of
a discount. That's when a lot of good investors get
into the market and go oh hello, yeah okay, but again,
we can't time the market. No, but you know you
might see a little opportunity and splash a little bit
more cash. Why not? So how do you know if
an Ariit is a goodbye? Like if you're evaluating it
(32:44):
and how you look? Yeah, okay, So it's just like shares. Honestly,
you don't want to buy into an ariit just blindly,
like if you just heard a couple of names on
this podcast and you're like, they must be going to
just buy it, Like, don't do that. You're better than that.
Even things I say, need to be taken with a
grain of salt. There are three big areas I would say,
(33:05):
I want you to check before you invest. Sure, So
what are the properties? Beck? What are they? This is
all about what's inside the portfolio. And you'll find this
in like the fact sheet or the investor presentations. They'll
be on their websites, really easy to find. So it'll
show you, like what's the sector mix? So are they warehouses?
Are they healthcare? Are they retail? Are they CBD high
(33:27):
rise officers? Is it cols and woolies? Like, do you
know what I mean? Yeah? The next is whale. Oh, whales, Yes, whales.
Can you see whales from the That's what you need
to be figuring out. Yeah, figure that out. But it's
actually the weighted average lease expiry weighted average lease expire Okay, yeah,
but we're looking for the whales. Yeah, gotcha, gotcha. So
longer leases, steady er incomes. Yes, And instead of being
(33:51):
like residential properties, commercial properties can sometimes be leased for
like even ten or twenty years. God, that's good as
an investor, low key, I love that. Yeah, because you're
telling me secure income secure we like I want to know.
I'm going to get paid. Yes, right, and like cosm
all these aren't going And I'm just using these as
examples because I think we just get it easier. Like
(34:11):
I am, if nothing, a visual learner. Oh yeah, I
was never good at reading the textbook and then being like, oh,
it makes sense. But if the teacher at the front
had drawn a diagram, I'd be like, oh, I get
it immediately, Like that's so good. A completely my best.
When I was at university, one of my best lecturers,
her name is evading me right now, and someone's going
(34:32):
to slide into my DMS and remind me she was
this little old lady like she definitely could have retired,
but she clearly was too passionate. And she was my
financial management lecture when I did my NBA RT, so
you can slide in and tell me who she was.
But she would use examples of owning a cupcake shop
every time we would like talk about some type of
(34:52):
like very serious like financial management technique. She'd be like, okay,
so in your cupcake shop, and I'd be like, slay, queen,
I get it. It's so clever. I feel like I
would get that tie. Yeah, that's so smart because if
she's like, okay, cool, Like you know when you're talking
about your balance sheet, like you obviously have to buy
flour and eggs, and I'll be like, okay, that makes sense,
and I'm paying rent like totally anyway. I just try
(35:14):
to make it make sense, and obviously I'm not very
good at it because I just told you to look
out for the whales and that makes no sense. But
the longer a lease is like coals and wales aren't
signing a lease for one year, Yeah, they're planning on
being there kind of forever, I would assume likely groceries
aren't going anywhere. More often than not, those bigger businesses
(35:35):
are signing twenty year leases and going, yeah, we want
that site for twenty years. Yeah, good deal for your income.
Because shorter leases, when you look at it, actually means
more risk because there's you know, lots of turnover. There
might be times where that small business leaves that location
and there's like empty vacant time where we're finding someone new.
(35:55):
But on the flip side of that, when there's lots
of turnover, there's also the potential upside that rents can
reset and you can kind of like charge the next
person more, Whereas if you're negotiating a twenty year lease,
you'll be like, well, yes, i'll pay this price in
the start, but there's usually an agreed upon percentage that
that rent increases by it and you can't really go, oh,
(36:15):
actually the market's doing really well. Instead of two percent,
we might increase it by four. You can't do that, sure,
So like pros and cons, And then with looking at
properties as well, I've mentioned it a few times occupancy,
So are there people actually leasing these properties back? Ideally
ninety five percent of their properties are tenanted and lease
(36:36):
out lower than that. I just feel like you could
be getting some poutchy income. Yeah, that makes sense, That
makes a lot of sense. And when they're big like
five percent of not leased out, thus red flag material
to me. Oh yeah, like what's going on there? The
next thing, let's talk about money. Okay, sorry, this is
where we have to zoom out and boring, but I'll
do it for you. I won't actually do it for you,
(36:58):
but like, think of me while you're reading the financial
results and annual reports, because that's where I get very excited.
I want you to talk about gearing. So like this
is just talking about their debt levels. So moderate gearing
is pretty healthy, and that's where they're gearing. Or the
debt that that company holds is between twenty to thirty
five percent, it's pretty normal. I would say that's a
(37:20):
healthy middle ground. I don't know what gearing. So it's
just basically the percentage of debt you hold to the
income that you have. I see. So, like, you know,
if you're drowning in debt, beck and ninety five percent
of your income is going to paying off your debt,
you're probably struggling, got you? But if I said, oh,
thirty percent of your income is going to like your
mortgage repayment or thirty percent of your incomes going to debt, Like,
(37:42):
that's not so bad, is your? Yeah, Like that's a
bit more comfy. Absolutely, So when I talk about gearing,
moderate gearing in these companies, I'm happy to see twenty
to thirty five percent. So the rest of the income
that's coming in, like, isn't paying off debt. It's going
to you, the investor. That's what we want to see.
And then NTAs not the asshole. No, no, it's actually
(38:04):
a net tangible asset price. And we're gonna look at
those so I want you to compare what the ariit
is trading at to the underlying value of the property.
So paying a big premium, I would say, is really
risky if the growth isn't showing up, Like, don't overpay
just don't overpay back Yeah for nothing if you can
(38:26):
help it, if you can help it. But also we
can help it by doing our research. Yes, so true.
And then the last thing that I would say is
the people. The people we're gonta have good people. Well, yeah,
you do. Good people make a good business. And it's's toxic, no,
I mean you can't tell that from the outside. But finally,
I want you to have a look at who's in charge. Like,
if you're looking at an ariit, who's managing it? Like,
(38:50):
is it some trust fund kids who just got a
really big amount of money and like mummy and daddy
let them buy some stuff that doesn't happen often. But like,
obviously that me would be a pretty red flag. But
like I want to see that there's an experienced team
who've been doing this for a number of years. I
want to see a history of really stable distribution so
that the people who own the ariat we get paid
(39:13):
and we get paid consistently, and ideally their internal management
exists so that their interests are aligned with the investors.
They haven't just been brought in from different sectors. Like
I'm want property people managing my property. Yeah. I don't
know about you, but I read a book and you
definitely didn't. But it's called The Richest Man in Babylon.
Not because you didn't read a book. Go, I know
(39:33):
you read books, but like, you didn't read The Richest
Man in recent But I will tell you that that's
a fantastic investing read. In fact, it's one of the
first books I want you to pick up if you're
going to start investing to understand just investing methodology and
where it's come from and how it works. But I
will warn you it's the most boring book you'll ever read. God,
I can't imagine. She's so dry. Oh, she's so dry.
(39:56):
But she talks about like marketplaces I see way back
where gorgeous. Anyway, I can give you the TLDR on that,
so you don't have to read it. But one of
the top tips in there is they say do not
take advice on buying diamonds from a bricklayer. Ah, that
makes sense, right, So, like a bricklayer might be really
passionate about diamonds because like one time he bought his
(40:18):
girlfriend and engagement ring, but that doesn't mean he knows
everything about diamonds. I'm probably if I'm going to buy
a diamond that's a really big expense, I'm going to
go to a diamond expert. I'm not going to go
to the bricklayer.
Speaker 3 (40:28):
Yeah.
Speaker 2 (40:28):
So I think it's about getting your advice from the
right places. And I would say there's been instances of
external management of some Australian ETFs that prioritize fees over
holders income. So I just want the right people doing
the right thing. And does a management look like they
know what they're doing. So I guess for real estate ETFs,
(40:49):
like just to summarize it, or one of the benefits
of a property ETF is that you just don't need
to do a deep dive into every single landlord.
Speaker 3 (40:55):
You know.
Speaker 2 (40:56):
I was like, look at their management team, do this,
do that? Like, if you're buying an ETF, you basically
don't have to worry as much because all the hard
work's been done by you by the ETF manager, they
wouldn't have been putting it into the ETF, it was
if it was terrible, beck, because like their whole job
is to make an ETF that performs. I promise you
they have gone through every single one and been like good, bad, No,
(41:16):
you don't make it to the ETF. That's what you want,
Like they're the gatekeepers. But I would say that if
you're looking at a property ETF, you still need to
look at the fact sheet because we still need to
know what we're buying. Yeah, I want you to know
what sector are you buying into? Does it tilt one
way or the other? Like is it really healthcare? Is
it really supermarkets? You know, what are the top holdings
and do they kind of make sense to you? So
(41:36):
you don't need to look into the top one hundred
that's okay? What are like the top five right when
you google them? And when you look at those companies,
are you like, okay, that makes sense? Holdings are so
that the companies or the assets that they own, So
like in your ETF, it's a basket of shares, and
then inside that, I just want you to know, like
the top five. I just want you to google. Guys
might be like willl words calls came out yeah, and
(41:58):
I want you to be like, yeah, check that makes sense.
See how much is it going to cost you? So
what are the fees? And then what does performance over
the long term look like? Again, ex financial advisor in
me is like flashing red lights. And I need to
say past performance is not a reliable predictor of future performance,
but it can make you feel secure. Yeah, absolutely can
make you go, oh, they've been doing a pretty good
(42:19):
job for a pretty long time. The risk is less. Yes, yes,
So that's a pretty good checklist. Actually, so I made
it up myself and honestly, god, you're so smart. Well
I'm not. Actually, I just had to write a list
and I was like, oh, it's all about the money.
Other people safe, what are they doing? I'm so god,
she's good. I'm just so critical. I'm so sorry. No,
someone's going to be I'll do it for you. It
(42:41):
doesn't sound as scary as I thought, like kind of
like GNALT is literally you're already kind of investing. So
if real estate is something that you want to dabble in,
this might be something that you look into. I think
I actually might, But I think like if I add
property to my shares's account. The ETFs are more my style.
So that's great advice. I just want you to have
(43:02):
a portfolio that kind of makes sense to you. Yeah,
Like I use the example of going down to the pub, Like,
I want you to have these conversations, like it's not
just men who talk about their shares, like and it
historically was because they're basically trying to one up each other. Yeah, Like,
I want you to be like, oh my god, I
found this arit and it's like full of healthcare companies
and I really believe in that, Like isn't that cool. Yeah,
(43:23):
we have the power to do that. We love a
ETF as well because they're just so simple and so diversified.
God gorgeous. Okay, So before today, I didn't think I
would ever be property invester, but and I'm sure a
lot of people listening maybe think the same thing. But
guess what, guys, we can do it. You absolutely can
do it. And at the end of the day, ariits
and property ETFs, they're just another tool in your little
(43:44):
investing kit. The beauty is that you can kind of
dip your toe in without committing all of your life savings,
which can be terrifying. And the best bit is I
would say, you don't have any tenants calling about broken
hot water systems. Oh my god, that's gorgeous.
Speaker 1 (43:58):
I know.
Speaker 2 (43:59):
So we'll see you on the guys. Bye, my guys.
Speaker 3 (44:08):
The advice shared on She's on the Money is general
in nature and does not consider your individual circumstances. She's
on the Money exists purely for educational purposes and should
not be relied upon to make an investment or financial decision.
Speaker 2 (44:21):
If you do choose to buy a financial.
Speaker 3 (44:23):
Product, read the PDS TMD and obtain appropriate financial advice
tailored towards your needs. Victoria Divine and She's on the
Money are authorized representatives of money.
Speaker 2 (44:33):
Sheper pty Ltd
Speaker 3 (44:35):
ABN three two one is six four nine two seven
seven zero eight AFSL four five one two eight nine
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