July 5, 2023 • 22 mins
Would you purchase a house with your sibling? Because that's exactly what today's diarist did! Having received a small amount of inheritance, our diarist decided to purchase an investment property with her brother. While buying with a family member may not be right for everyone, this was a positive experience. But like any buying journey, there are always lessons to be learned. Listen in for all the goss and important takeaways!
Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements.
The advice shared on The Property Playbook is general in nature and does not consider your individual circumstances. The property Playbook 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 The Property Playbook are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708, AFSL - 451289.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Property Playbook would like to acknowledge the traditional custodians
of the lands of where this podcast is recorded. There
were wondering people of the cooler nations acknowledging the culture,
the history and the connection to the lands of what
we call home. Let's get into it.
Speaker 2 (00:27):
Hello and welcome back to The Property Playbook, the podcast
where we take you from A to V of all
things property. My name is Jessica Ricky and hopefully one
day I'll be a first homeowner. But until then, I'm
asking lots of experts and incredible people from our community
to share their stories, their tips, their tricks with me
to help all of us along the way. Today, I'm
(00:48):
back with another property diary and it's one I think
you guys are really going to enjoy. So let me
tell you all about our diarist. Our diarist said, Hi, ladies,
I bought a place in New South Wales with my
brother and it's been an property since. We've been super
lucky because the property has increased in value by about
sixty percent. My brother and I are both in long
term relationships and are getting ready for the next stages
(01:09):
of our lives, and we're now considering our options my
brother doesn't want to sell, and I'm happy with just
being brought out, so the ball is now in his court.
Property diarists. We haven't had somebody on the show before
who's purchased with somebody who's not a significant other, so
I'm really excited to hear a little bit about the
logistics of how that worked for you.
Speaker 3 (01:26):
Yeah, so my brother and I sort of we had
some cousins who had done the same thing as in
bought together just to get their foot into the property market,
and we were both fortunate enough to be gifted ten
thousand dollars each by our grandmother. But the caveats are
using that was it could only be used towards property
(01:46):
or education, and we thought, you know, hex exists at
that point, it wasn't a seven percent indexation.
Speaker 4 (01:52):
I think it was like two.
Speaker 3 (01:54):
But we decided, you know what, let's just put all
of our savings towards that ten thousand dollars each and
then we will sort of keep an eye on the
market and see what the options are in terms of
buying a place that we could use as an investment property. So, yeah,
we decided to ban that ten thousand dollars together each
(02:14):
so twenty thousand, and I think over the time in
hyjer satings accounts as well, we kind of had about
forty five thousand.
Speaker 4 (02:20):
Dollars over a couple of years to put towards a place.
So yeah, we started the search incredible.
Speaker 2 (02:26):
Now I'm going to jump into the structured questions first.
I do have a lot of other questions I want
to ask you, but let's keep things running in the
proper way. Tell me when and where did you purchase.
Speaker 3 (02:36):
So we bought in Newcastle in South Wales, or sort
of on the outskirts. It was a little sleeper suburb
called Taro and it's kind of out by the highway.
But the beauty of that suburb is that it's like
twenty minutes to the beach, twenty minutes to the vineyards,
twenty minutes of the airport, just kind.
Speaker 4 (02:51):
Of really central.
Speaker 3 (02:52):
And although there's not much there in the suburb itself,
because Newcastle does have a lot of you know, the
defense and it's very industry as well in the minds
and what not to we thought it doesn't really matter
where it is, just as long as where able to
get somebody in there and paying rent.
Speaker 4 (03:08):
We thought that was a pretty good place to start.
Speaker 2 (03:10):
Yeah, it sounds like a dream location, close to each
close to the vineyards. Amazing side that now, tell me
at the time, how much were you earning and what
were you doing for work?
Speaker 3 (03:20):
So I had only recently, only just before that, started
work as a business development manager, so sales for a corporate.
Speaker 4 (03:29):
Travel brand, so looking after business corporate travel.
Speaker 3 (03:33):
And I was on a base plus commission structure, so
I was on a fifty k base and then the
guaranteed commission at the time was twenty five thousand a year,
so seventy five in total, and my brother at the
time was on about sixty I think, so combined it
wasn't heeds, but for what we were looking for, it
ended uping enough, thankfully.
Speaker 2 (03:54):
Yeah, you said that the guaranteed commission was twenty five thousand.
Did you have the opportunity to earn above that?
Speaker 4 (04:01):
I did at the time.
Speaker 3 (04:02):
So the way that they structured it was for your
first six months of employment, they guaranteed that amount because
over the first twelve months that's what they would expect
you to be earning sort of annualized. But yes, if
I earned over that, then that's what I could have
taken home.
Speaker 2 (04:17):
Very cool. And now you did purchase with somebody else?
Who was that?
Speaker 4 (04:21):
So I purchased with my brother.
Speaker 2 (04:23):
And what was he doing and how much was he
earning at the time.
Speaker 3 (04:26):
He was earning about sixty thousand dollars and he's an
environmental consultant, so he was only a couple of years
out of UNI.
Speaker 4 (04:33):
So still on that sort of lower grad salary.
Speaker 2 (04:36):
Amazing, And between the two of you, how much did
you spend on that property?
Speaker 3 (04:41):
The purchase value was three hundred and seventy thousand, so
the mortgage ended up being, after expenses and deposits, around.
Speaker 4 (04:49):
Three hundred and twenty five. I think when we settled.
Speaker 2 (04:52):
I'm trying to do the math in my head backwards,
but can you if you just make it easy and
tell me how much that deposit was.
Speaker 4 (04:59):
So deposit and upfront was about forty.
Speaker 2 (05:02):
Five thousand and twenty thousand of that came from the
gift that your grandmother.
Speaker 4 (05:07):
Gave you guys.
Speaker 2 (05:08):
That's right, amazing. Did you use any government grants or
schemes to help you, guys along the way with that deposit?
Speaker 4 (05:16):
So slight backstory with this one.
Speaker 3 (05:17):
Initially, yes, we did receive the first home owners grant,
which at the time was no stamp duty, so we
didn't have to pay I think it was around twelve
thousand at that point would have been the stamp duty. However,
in the end we didn't end up satisfying all the
criteria to have that waived and just last year, so
five years later we did get audited and slept with
(05:40):
a twelve thousand dollars stamp duty bill plus interest. Unfortunately,
so that was a bit like a huge money loss.
But we were fortunate enough at the time that obviously
the place had increased so much that we just sort
of dipped into some of the equity to settle that bill. Unfortunately,
that we were lucky enough, oh initially that the first
(06:01):
time Instagram was available to us.
Speaker 2 (06:03):
Yeah. Oh, that is such a kick in the guts,
isn't it? Five years later as well, I definitely have
some questions, but I'll save them for after the break
the lucky Last question that I will ask you right now, though,
is looking back, would you change anything about your journey?
Speaker 3 (06:18):
Yes, big yes, to do with the stamp duty and
the criteria to obviously have that waved. The only thing
that we didn't satisfy at that point was having lived
in it for six months over the first twelve months,
I think it was. But we did have plans, well,
myself and my partner at the time did have plans
to move from Sydney to Newcastle to live in it,
(06:41):
but that fell through further reasons. So kind of maybe
could have saved the interest portion of the stamp duty
bill by being upfront with him at that point, but
it literally just didn't cross my mind at all.
Speaker 2 (06:54):
Yeah, and it's one of those things as well, if
you're looking at a big move and you've just bought
a house, like all of those little detail I think
can sometimes slip through the cracks a little bit. How
much was that interest that you ended up having to pay.
Speaker 4 (07:05):
It was about four and a half thousand dollars.
Speaker 2 (07:08):
Oh my gosh. So you just got an email or
something one day that said, hey, like, we've been checking this,
you owe us sixteen thousand dollars please and thank you.
Speaker 4 (07:16):
Yeah, my brother actually received a phone call.
Speaker 3 (07:19):
It would have been from I guess the State Debt
Recovery office, probably saying that hey, we've noticed this, this,
and this on our records. Can you confirm that you know,
did you live in the place during this period and
it's just like I didn't. I'm not sure whether my
sister who's the co owner did, which obviously is very vague.
But then yeah, he called me very panicked and said,
(07:42):
I'm going to receive an email with some more information.
Can you shed any more light on this? And I
tried my best to get out of it, but no
budging on the government's side.
Speaker 2 (07:51):
Oh no, how sad or well, I want to hear
a little bit more about that and the logistics I
suppose of organizing everything with your brother. Actually, if you're
in two different places after the break, so don't go anywhere, guys.
Welcome back everybody. Today we're chatting to a property diarist
who purchased her first home with her brother. And as
we were chatting about just before the break, you got
(08:13):
slapped with a bit of a nasty surprise because of
the first home owners grant.
Speaker 4 (08:17):
That you used.
Speaker 2 (08:18):
How did you work out? I suppose in that case,
you guys had agreed that, Yeah, I think you were
going to live in it for the six months. And
was it a conversation at the beginning where he said
I'm not going to live there at all? And you
put your hand up and said, I would really like to.
Speaker 3 (08:35):
Yeah, that's probably going back to something that it would change,
definitely something that I would you know, probably put more
official put in writing that that was the plan.
Speaker 4 (08:44):
This is what we need to do to satisfy the criteria.
One of us needs to do this. But it is
honestly a conversation that should have happened and big lesson
learned for if and when an opportunity comes up like
that next time.
Speaker 2 (08:58):
Yeah, so you both kind of just thought the other
all over it and then turned out nobody was what
did that mean? Then when that conversation came and you
had the call come through saying, hey, like, you need
to pay sixteen thousand dollars, have you guys decided to
just tack that onto the mortgage and you'll split it
equally or what does that kind of look like?
Speaker 4 (09:15):
Now? Yeah, So we didn't throw any blame either way.
Speaker 3 (09:19):
We just decided, you know, let's not waste any time
we're fortunate enough to have the equity here available it
is house related, we will just tack it on and
it will be paid down with the rest of the
investment income towards the mortgage.
Speaker 4 (09:32):
So it has set us back a little bit.
Speaker 3 (09:35):
So the mortgage now is basically back at it what
it was when we first got the place, but and
now with interest rates rising as well, it's going to
take us obviously longer, but it's we just thought, you know,
it's probably worth just lumping it all in with the same.
Speaker 4 (09:53):
Sort of purpose with the house mortgage.
Speaker 3 (09:55):
There's no real reason why either one of us should
have to fork out more than the other. Yeah.
Speaker 2 (10:00):
I really like what you said there about how you
didn't lay any blame anywhere. And I think for me,
when I consider the thought of purchasing with anyone, but
particularly perhaps with someone who's not your life partner, you know,
a friend or a family member, I wonder about the
logistics of how that works, because I think the dynamic
(10:20):
that you have with you know, your partner versus the
dynamic that you have with other people in your life
is definitely different. And I suppose theoretically when you're buying
with a partner, you've got shared goals, shared finances potentially
as well, which again may not be the case with
anybody else. How did you find navigating that, particularly because
(10:41):
it was your first property. What was the experience like
kind of figuring out how to do things with your brother,
particularly because it sounds like you guys might have been
living in different places at the time as well.
Speaker 4 (10:53):
Yeah, so we were both living in Sydney at the time.
Speaker 3 (10:56):
I've since moved to Melbourne, so we are managing it
different areas, but at the time.
Speaker 4 (11:02):
It wasn't as hard.
Speaker 3 (11:03):
However, I had a finance background, so I was working
for Westpac Bank prior to the job that I was
employed BOS when we got the mortgage, so I was
fortunate enough to have the relationship with the broker from
a professional sense and the financial background in terms of
lending and things as well. So I really sort of
drove the whole process. And his risk profile is very
(11:27):
much so different to mine, as in I've got a
much higher risk profile compared to him, so it was
easier for.
Speaker 4 (11:33):
Me, I guess, to.
Speaker 3 (11:35):
Drive the process and for him to just kind of
say yes. And I think I look back on it now,
I'm just like kind of was a bit of a
guest man during this whole thing. However, he has thanked
me for it since, because you know, without banding together
and just jumping at this particular opportunity, who knows whether
we ever would have got into the market at the time,
(11:56):
but yeah, I guess we're really fortunate to have that
relationship where we've got a really good level of trust
and the support of our partners as well in terms
of managing it together.
Speaker 2 (12:06):
You said that you had a finance background and your
risk profile is at a higher level. Would you say,
in a very non judgmental way, that your level of
financial literacy might have been higher than his.
Speaker 3 (12:18):
Yes, definitely, yeah, in terms of like how mortgagees work
in general, and what was required in terms of deposits,
and what different fees and things meant and why we
needed to pay them, and things like that. I guess
working for a bank and having that kind of background
definitely a much higher level of financial literacy.
Speaker 2 (12:40):
Well, because we don't learn any of those things. I
think in the day to day average person probably wouldn't
have more than a rudimentary understanding of how the ins
and outs of property and loans and all those kinds
of things work. Did that mean that you found yourself
helping to educate him or explain things to him during
the process, or was it more a case of him
really just say you know what you're doing. You take
(13:02):
the reins. I am just fine for you to make
all of those kinds of decisions without too much input
from me.
Speaker 3 (13:09):
Yeah, so I tried my best where I could to
sort of explain and educate along the way. However, there
were definitely times where he was just like, just tell
me what I need to give you. Just tell me
what you need and I will just follow suit kind
of thing. And no disrespect to him, but he's come
along a long way in terms of understanding that whole
(13:30):
process sidetrack. Sorry, we do also manage the property ourselves,
so we don't actually grow through an agent, so it's
been a whole other level of learning curve for both
of us in terms of property management as well.
Speaker 2 (13:45):
Yeah, talk to me about that.
Speaker 3 (13:46):
Yeah, it can be really challenging, especially so I do
the bulk of the sort of admin side of I
guess what the real estate agent property manager would do,
but he does a lot of because he's closer. He's
in Sydney, the property is in newcas there's any kind
of maintenance and stuff to do, he will more than
likely go and do that. So we're saving money in
terms of paying laborers for anything that we need to do.
(14:10):
We're saving money in terms of not paying commissions to
an agent and extra fees on that side as well.
So big learning curve in terms of the entire for
him in terms of the entire financial services side of
property management or getting a mortgage, and then for me,
for both of us in terms of property management and
(14:31):
managing various tenants and leases and advertising and things like that.
Speaker 2 (14:36):
Yeah, there's a lot to I suppose do with I
guess if you're a landlord, obviously there's a level of responsibility,
but if you're then directly managing that property as well,
it's a whole extra undertaking. Have you had anything go wrong?
Have you had any problems with tenants? I'm super curious
because I think a lot of the time when you
have that property manager as a buffer between the tenant
(14:59):
and the la landlord, I think sometimes things maybe kind
of get smoothed over a bit before they go from
one person to the other, whereas you're obviously seeing it
all directly in first person. Have you had any disasters
or anything that you've gone, Oh my gosh, if only
I knew that, you know, right at the start when
we started working on it.
Speaker 4 (15:17):
We've actually been super fortunate.
Speaker 3 (15:19):
So we have had I think maybe five different parties
living in the place over the time that we've had it,
but everyone has been really, really good.
Speaker 4 (15:29):
I think we've just been really lucky in that sense.
Speaker 3 (15:31):
I think the hardest thing we had to deal with
was the previous tenancy, where we sort of discovered when
they moved out that the entire garage was left full
of stuff that they just refused to take with them,
so we had to organize disposal about ourselves. And then
we also found out from one of our contractors that
(15:53):
they'd actually been subletting for a lot of the tenancy
as well, which is obviously illegal and against the agreement.
Speaker 4 (16:00):
But in the end, it.
Speaker 3 (16:01):
Really just wasn't worth us tackling that through any kind
of tribunal or anything, so we just let it go.
I don't know what the outcome would have been either way,
but that's probably the most difficult. And because you're not
there and you're not doing what we weren't doing regular
site inspections, then you don't know. And that's probably a
benefit of having a property manager. But yeah, a risk
(16:24):
you take, I suppose.
Speaker 2 (16:26):
One hundred percent it is I guess, like any investment.
There's risk involved. Is there anything you've learned? I know
we're fully getting off track, and I will come back
around your brother, but I'm just so curious, is there
anything you've learned being I guess the direct property manager
and landflored that you know when you were renting previously
that you just didn't know. Now you've seen both sides
(16:47):
of it, does it give you an understanding of anything differently?
Speaker 3 (16:50):
To be honest, I think that there's all that not
much to it. To be honest, you know, you make
sure that the rent's paid on time, and where you can,
you make sure that you're doing inspections and whatnot as well.
But I think the biggest learning or realization is that
And I know that there's probably going to be property
(17:11):
managers listening to this going are you wrong? But I
just feel like there's not all that much to lease management.
And I just thought, you know, paying an agent for
a couple of years at the beginning, we just thought,
you know, that's kind of wasted money. That's a couple
of hundred dollars a month that could be going towards
own mortgage or other overheads. I think that's the biggest
(17:32):
realization that a lot of people are probably out there
paying through the roof for property management, where if you've
got really good tenants and good insurance, then.
Speaker 4 (17:44):
There's a lot that you could potentially do yourself if
you've got the time.
Speaker 2 (17:47):
Yeah, and I suppose as well, when you've got one
property versus if you had five, it might be different. Again, yes,
but it's really cool to know that you can do
it yourself and that you've found it relatively easy. And
it's obviously been worthwhile for you guys to be able
to put that extra money towards your morgot and pay
it down a little bit faster. He said in your
letter that you wrote in that you want to sell
(18:08):
the property and your brother doesn't. So how did that
conversation come about? What kind of made you think that
you're done, you're ready to move on, you want a
different asset. What prompted that? And then how did the
conversation kind of go?
Speaker 4 (18:20):
So, I guess I prompted it was.
Speaker 3 (18:22):
I mean, we're both in long term relationships now and
wanting to and I want to purchase with my partner.
We're kind of ready to go down that path. But
for me, I need access to the equity from the
existing investment property, and if we were to go down
the path of accessing the equity while I am still
tied into that property with my brother, that it means that.
Speaker 4 (18:44):
He is.
Speaker 3 (18:46):
I guess tied to our new purchase in a sense
as well, and vice versa if he was to buy
with his partner and access equity.
Speaker 4 (18:54):
So we just thought, you know, one of two things
has to happen.
Speaker 3 (18:58):
Either one of us has to buy the other hour
or we sell and split. So I did a lot
of I guess homework with my partner, a lot of
calculations and planning just to see like, is it worth
at this particular point in time going through that process
of being bought out or selling. Will we have enough
if we do that to then buy or is it
(19:19):
worth waiting? So yeah, but there was a lot of
sort of conversations that we had to have first before
I put anything to my brother to say, you know,
these are the two scenarios, because, as we spoke about before,
I've got I guess a higher level of financial literacy
and I can sort of work these kind of calculations out.
So I put the different scenarios to my brother and said,
(19:40):
this is what you would be up for if you
brought me out, if we were to sell and split,
this is what our positions would be. This is what
my and my partner's plans are in our timeline, and
if that works in with you and your partner, then
let's talk about the options there.
Speaker 4 (19:56):
So I guess now that I've.
Speaker 3 (19:58):
Put those different to him, the balls in his court
as to which way that he would like to go.
I'm easy either way. I think it's a good outcome
either way, and we will have enough to sort of
put towards a deposit for our own places, which were
really fortunate for as well. But he's been really got
in terms of understanding that, you know, instead of me
(20:22):
just saying I want my equity, I've given him the
reasons why and what the plan is, and I don't
have to do that, but that just makes the partnership
so much easier and to get his support for that too.
Speaker 4 (20:33):
And I'm sure he's got the same kind of plans as.
Speaker 3 (20:35):
Well with his partner, so they've kind of chatted as well,
and they're talking about maybe so when I come off
the land title, then his partner will go on. So
they will essentially buy me out. That sounds like what
the plan will be in the end, So.
Speaker 2 (20:51):
He's leaning towards buying you out and then him and
his partner keeping that property and moving into it together.
Speaker 4 (20:57):
Exactly.
Speaker 2 (20:57):
Yeah, amazing. It sounds like it has worked really smoothly
for you, which, if I'm being honest, I'm a little
bit surprised by I always I don't know why. I
just always thought in my brain that these things would
have to be quite complex. So it's really cool to
hear that it has worked really well for you. I
guess the last question I wanted to ask you is
do you feel like, since entering into this purchase together,
(21:22):
has your relationship with your brother change it all? And
do you feel like, if it has, has that been
for the better or for the worse.
Speaker 3 (21:28):
I definitely think it's changed in a way. We've probably
got a little bit more respect for each other in
terms of out different strengths in the partnership. There has
definitely been sometimes, as with any relationship, in any partnership,
that we've butted heads on things, and that might be
the way that the finances are managed, or any kind
of maintenance is managed, or following up with any communication
(21:49):
with the tenants.
Speaker 4 (21:51):
So I think it's changed for the better.
Speaker 3 (21:53):
I think it's made us stronger overall, but that's not
without the lumps and buns along the road.
Speaker 2 (21:58):
That is incredible to hear, our Property Diarist, Thank you
so much for taking the time to share that with us,
because I think it's a really cool, unique story, and
I'm very grateful to you for being so open with
us about that experience and the ups and the downs.
So thank you so much for your time, and thank
you to everybody at home for listening. Just before we
head off, let's quickly wrap the boring but important stuff.
(22:19):
The advice shared on the Property Playbook is generally in
nature and does not consider your individual circumstances. The Property
Playbook exists purely for educational purposes and should not be
relied upon to make an investment or a financial decision.
The Property Playbook would like to acknowledge the traditional custodians
of the lands of where this podcast is recorded. There
were wondering people of the cooler nations acknowledging the culture,
the history and the connection to the lands of what
we call home. Let's get into it.
Speaker 2 (00:27):
Hello and welcome back to The Property Playbook, the podcast
where we take you from A to V of all
things property. My name is Jessica Ricky and hopefully one
day I'll be a first homeowner. But until then, I'm
asking lots of experts and incredible people from our community
to share their stories, their tips, their tricks with me
to help all of us along the way. Today, I'm
(00:48):
back with another property diary and it's one I think
you guys are really going to enjoy. So let me
tell you all about our diarist. Our diarist said, Hi, ladies,
I bought a place in New South Wales with my
brother and it's been an property since. We've been super
lucky because the property has increased in value by about
sixty percent. My brother and I are both in long
term relationships and are getting ready for the next stages
(01:09):
of our lives, and we're now considering our options my
brother doesn't want to sell, and I'm happy with just
being brought out, so the ball is now in his court.
Property diarists. We haven't had somebody on the show before
who's purchased with somebody who's not a significant other, so
I'm really excited to hear a little bit about the
logistics of how that worked for you.
Speaker 3 (01:26):
Yeah, so my brother and I sort of we had
some cousins who had done the same thing as in
bought together just to get their foot into the property market,
and we were both fortunate enough to be gifted ten
thousand dollars each by our grandmother. But the caveats are
using that was it could only be used towards property
(01:46):
or education, and we thought, you know, hex exists at
that point, it wasn't a seven percent indexation.
Speaker 4 (01:52):
I think it was like two.
Speaker 3 (01:54):
But we decided, you know what, let's just put all
of our savings towards that ten thousand dollars each and
then we will sort of keep an eye on the
market and see what the options are in terms of
buying a place that we could use as an investment property. So, yeah,
we decided to ban that ten thousand dollars together each
(02:14):
so twenty thousand, and I think over the time in
hyjer satings accounts as well, we kind of had about
forty five thousand.
Speaker 4 (02:20):
Dollars over a couple of years to put towards a place.
So yeah, we started the search incredible.
Speaker 2 (02:26):
Now I'm going to jump into the structured questions first.
I do have a lot of other questions I want
to ask you, but let's keep things running in the
proper way. Tell me when and where did you purchase.
Speaker 3 (02:36):
So we bought in Newcastle in South Wales, or sort
of on the outskirts. It was a little sleeper suburb
called Taro and it's kind of out by the highway.
But the beauty of that suburb is that it's like
twenty minutes to the beach, twenty minutes to the vineyards,
twenty minutes of the airport, just kind.
Speaker 4 (02:51):
Of really central.
Speaker 3 (02:52):
And although there's not much there in the suburb itself,
because Newcastle does have a lot of you know, the
defense and it's very industry as well in the minds
and what not to we thought it doesn't really matter
where it is, just as long as where able to
get somebody in there and paying rent.
Speaker 4 (03:08):
We thought that was a pretty good place to start.
Speaker 2 (03:10):
Yeah, it sounds like a dream location, close to each
close to the vineyards. Amazing side that now, tell me
at the time, how much were you earning and what
were you doing for work?
Speaker 3 (03:20):
So I had only recently, only just before that, started
work as a business development manager, so sales for a corporate.
Speaker 4 (03:29):
Travel brand, so looking after business corporate travel.
Speaker 3 (03:33):
And I was on a base plus commission structure, so
I was on a fifty k base and then the
guaranteed commission at the time was twenty five thousand a year,
so seventy five in total, and my brother at the
time was on about sixty I think, so combined it
wasn't heeds, but for what we were looking for, it
ended uping enough, thankfully.
Speaker 2 (03:54):
Yeah, you said that the guaranteed commission was twenty five thousand.
Did you have the opportunity to earn above that?
Speaker 4 (04:01):
I did at the time.
Speaker 3 (04:02):
So the way that they structured it was for your
first six months of employment, they guaranteed that amount because
over the first twelve months that's what they would expect
you to be earning sort of annualized. But yes, if
I earned over that, then that's what I could have
taken home.
Speaker 2 (04:17):
Very cool. And now you did purchase with somebody else?
Who was that?
Speaker 4 (04:21):
So I purchased with my brother.
Speaker 2 (04:23):
And what was he doing and how much was he
earning at the time.
Speaker 3 (04:26):
He was earning about sixty thousand dollars and he's an
environmental consultant, so he was only a couple of years
out of UNI.
Speaker 4 (04:33):
So still on that sort of lower grad salary.
Speaker 2 (04:36):
Amazing, And between the two of you, how much did
you spend on that property?
Speaker 3 (04:41):
The purchase value was three hundred and seventy thousand, so
the mortgage ended up being, after expenses and deposits, around.
Speaker 4 (04:49):
Three hundred and twenty five. I think when we settled.
Speaker 2 (04:52):
I'm trying to do the math in my head backwards,
but can you if you just make it easy and
tell me how much that deposit was.
Speaker 4 (04:59):
So deposit and upfront was about forty.
Speaker 2 (05:02):
Five thousand and twenty thousand of that came from the
gift that your grandmother.
Speaker 4 (05:07):
Gave you guys.
Speaker 2 (05:08):
That's right, amazing. Did you use any government grants or
schemes to help you, guys along the way with that deposit?
Speaker 4 (05:16):
So slight backstory with this one.
Speaker 3 (05:17):
Initially, yes, we did receive the first home owners grant,
which at the time was no stamp duty, so we
didn't have to pay I think it was around twelve
thousand at that point would have been the stamp duty. However,
in the end we didn't end up satisfying all the
criteria to have that waived and just last year, so
five years later we did get audited and slept with
(05:40):
a twelve thousand dollars stamp duty bill plus interest. Unfortunately,
so that was a bit like a huge money loss.
But we were fortunate enough at the time that obviously
the place had increased so much that we just sort
of dipped into some of the equity to settle that bill. Unfortunately,
that we were lucky enough, oh initially that the first
(06:01):
time Instagram was available to us.
Speaker 2 (06:03):
Yeah. Oh, that is such a kick in the guts,
isn't it? Five years later as well, I definitely have
some questions, but I'll save them for after the break
the lucky Last question that I will ask you right now, though,
is looking back, would you change anything about your journey?
Speaker 3 (06:18):
Yes, big yes, to do with the stamp duty and
the criteria to obviously have that waved. The only thing
that we didn't satisfy at that point was having lived
in it for six months over the first twelve months,
I think it was. But we did have plans, well,
myself and my partner at the time did have plans
to move from Sydney to Newcastle to live in it,
(06:41):
but that fell through further reasons. So kind of maybe
could have saved the interest portion of the stamp duty
bill by being upfront with him at that point, but
it literally just didn't cross my mind at all.
Speaker 2 (06:54):
Yeah, and it's one of those things as well, if
you're looking at a big move and you've just bought
a house, like all of those little detail I think
can sometimes slip through the cracks a little bit. How
much was that interest that you ended up having to pay.
Speaker 4 (07:05):
It was about four and a half thousand dollars.
Speaker 2 (07:08):
Oh my gosh. So you just got an email or
something one day that said, hey, like, we've been checking this,
you owe us sixteen thousand dollars please and thank you.
Speaker 4 (07:16):
Yeah, my brother actually received a phone call.
Speaker 3 (07:19):
It would have been from I guess the State Debt
Recovery office, probably saying that hey, we've noticed this, this,
and this on our records. Can you confirm that you know,
did you live in the place during this period and
it's just like I didn't. I'm not sure whether my
sister who's the co owner did, which obviously is very vague.
But then yeah, he called me very panicked and said,
(07:42):
I'm going to receive an email with some more information.
Can you shed any more light on this? And I
tried my best to get out of it, but no
budging on the government's side.
Speaker 2 (07:51):
Oh no, how sad or well, I want to hear
a little bit more about that and the logistics I
suppose of organizing everything with your brother. Actually, if you're
in two different places after the break, so don't go anywhere, guys.
Welcome back everybody. Today we're chatting to a property diarist
who purchased her first home with her brother. And as
we were chatting about just before the break, you got
(08:13):
slapped with a bit of a nasty surprise because of
the first home owners grant.
Speaker 4 (08:17):
That you used.
Speaker 2 (08:18):
How did you work out? I suppose in that case,
you guys had agreed that, Yeah, I think you were
going to live in it for the six months. And
was it a conversation at the beginning where he said
I'm not going to live there at all? And you
put your hand up and said, I would really like to.
Speaker 3 (08:35):
Yeah, that's probably going back to something that it would change,
definitely something that I would you know, probably put more
official put in writing that that was the plan.
Speaker 4 (08:44):
This is what we need to do to satisfy the criteria.
One of us needs to do this. But it is
honestly a conversation that should have happened and big lesson
learned for if and when an opportunity comes up like
that next time.
Speaker 2 (08:58):
Yeah, so you both kind of just thought the other
all over it and then turned out nobody was what
did that mean? Then when that conversation came and you
had the call come through saying, hey, like, you need
to pay sixteen thousand dollars, have you guys decided to
just tack that onto the mortgage and you'll split it
equally or what does that kind of look like?
Speaker 4 (09:15):
Now? Yeah, So we didn't throw any blame either way.
Speaker 3 (09:19):
We just decided, you know, let's not waste any time
we're fortunate enough to have the equity here available it
is house related, we will just tack it on and
it will be paid down with the rest of the
investment income towards the mortgage.
Speaker 4 (09:32):
So it has set us back a little bit.
Speaker 3 (09:35):
So the mortgage now is basically back at it what
it was when we first got the place, but and
now with interest rates rising as well, it's going to
take us obviously longer, but it's we just thought, you know,
it's probably worth just lumping it all in with the same.
Speaker 4 (09:53):
Sort of purpose with the house mortgage.
Speaker 3 (09:55):
There's no real reason why either one of us should
have to fork out more than the other. Yeah.
Speaker 2 (10:00):
I really like what you said there about how you
didn't lay any blame anywhere. And I think for me,
when I consider the thought of purchasing with anyone, but
particularly perhaps with someone who's not your life partner, you know,
a friend or a family member, I wonder about the
logistics of how that works, because I think the dynamic
(10:20):
that you have with you know, your partner versus the
dynamic that you have with other people in your life
is definitely different. And I suppose theoretically when you're buying
with a partner, you've got shared goals, shared finances potentially
as well, which again may not be the case with
anybody else. How did you find navigating that, particularly because
(10:41):
it was your first property. What was the experience like
kind of figuring out how to do things with your brother,
particularly because it sounds like you guys might have been
living in different places at the time as well.
Speaker 4 (10:53):
Yeah, so we were both living in Sydney at the time.
Speaker 3 (10:56):
I've since moved to Melbourne, so we are managing it
different areas, but at the time.
Speaker 4 (11:02):
It wasn't as hard.
Speaker 3 (11:03):
However, I had a finance background, so I was working
for Westpac Bank prior to the job that I was
employed BOS when we got the mortgage, so I was
fortunate enough to have the relationship with the broker from
a professional sense and the financial background in terms of
lending and things as well. So I really sort of
drove the whole process. And his risk profile is very
(11:27):
much so different to mine, as in I've got a
much higher risk profile compared to him, so it was
easier for.
Speaker 4 (11:33):
Me, I guess, to.
Speaker 3 (11:35):
Drive the process and for him to just kind of
say yes. And I think I look back on it now,
I'm just like kind of was a bit of a
guest man during this whole thing. However, he has thanked
me for it since, because you know, without banding together
and just jumping at this particular opportunity, who knows whether
we ever would have got into the market at the time,
(11:56):
but yeah, I guess we're really fortunate to have that
relationship where we've got a really good level of trust
and the support of our partners as well in terms
of managing it together.
Speaker 2 (12:06):
You said that you had a finance background and your
risk profile is at a higher level. Would you say,
in a very non judgmental way, that your level of
financial literacy might have been higher than his.
Speaker 3 (12:18):
Yes, definitely, yeah, in terms of like how mortgagees work
in general, and what was required in terms of deposits,
and what different fees and things meant and why we
needed to pay them, and things like that. I guess
working for a bank and having that kind of background
definitely a much higher level of financial literacy.
Speaker 2 (12:40):
Well, because we don't learn any of those things. I
think in the day to day average person probably wouldn't
have more than a rudimentary understanding of how the ins
and outs of property and loans and all those kinds
of things work. Did that mean that you found yourself
helping to educate him or explain things to him during
the process, or was it more a case of him
really just say you know what you're doing. You take
(13:02):
the reins. I am just fine for you to make
all of those kinds of decisions without too much input
from me.
Speaker 3 (13:09):
Yeah, so I tried my best where I could to
sort of explain and educate along the way. However, there
were definitely times where he was just like, just tell
me what I need to give you. Just tell me
what you need and I will just follow suit kind
of thing. And no disrespect to him, but he's come
along a long way in terms of understanding that whole
(13:30):
process sidetrack. Sorry, we do also manage the property ourselves,
so we don't actually grow through an agent, so it's
been a whole other level of learning curve for both
of us in terms of property management as well.
Speaker 2 (13:45):
Yeah, talk to me about that.
Speaker 3 (13:46):
Yeah, it can be really challenging, especially so I do
the bulk of the sort of admin side of I
guess what the real estate agent property manager would do,
but he does a lot of because he's closer. He's
in Sydney, the property is in newcas there's any kind
of maintenance and stuff to do, he will more than
likely go and do that. So we're saving money in
terms of paying laborers for anything that we need to do.
(14:10):
We're saving money in terms of not paying commissions to
an agent and extra fees on that side as well.
So big learning curve in terms of the entire for
him in terms of the entire financial services side of
property management or getting a mortgage, and then for me,
for both of us in terms of property management and
(14:31):
managing various tenants and leases and advertising and things like that.
Speaker 2 (14:36):
Yeah, there's a lot to I suppose do with I
guess if you're a landlord, obviously there's a level of responsibility,
but if you're then directly managing that property as well,
it's a whole extra undertaking. Have you had anything go wrong?
Have you had any problems with tenants? I'm super curious
because I think a lot of the time when you
have that property manager as a buffer between the tenant
(14:59):
and the la landlord, I think sometimes things maybe kind
of get smoothed over a bit before they go from
one person to the other, whereas you're obviously seeing it
all directly in first person. Have you had any disasters
or anything that you've gone, Oh my gosh, if only
I knew that, you know, right at the start when
we started working on it.
Speaker 4 (15:17):
We've actually been super fortunate.
Speaker 3 (15:19):
So we have had I think maybe five different parties
living in the place over the time that we've had it,
but everyone has been really, really good.
Speaker 4 (15:29):
I think we've just been really lucky in that sense.
Speaker 3 (15:31):
I think the hardest thing we had to deal with
was the previous tenancy, where we sort of discovered when
they moved out that the entire garage was left full
of stuff that they just refused to take with them,
so we had to organize disposal about ourselves. And then
we also found out from one of our contractors that
(15:53):
they'd actually been subletting for a lot of the tenancy
as well, which is obviously illegal and against the agreement.
Speaker 4 (16:00):
But in the end, it.
Speaker 3 (16:01):
Really just wasn't worth us tackling that through any kind
of tribunal or anything, so we just let it go.
I don't know what the outcome would have been either way,
but that's probably the most difficult. And because you're not
there and you're not doing what we weren't doing regular
site inspections, then you don't know. And that's probably a
benefit of having a property manager. But yeah, a risk
(16:24):
you take, I suppose.
Speaker 2 (16:26):
One hundred percent it is I guess, like any investment.
There's risk involved. Is there anything you've learned? I know
we're fully getting off track, and I will come back
around your brother, but I'm just so curious, is there
anything you've learned being I guess the direct property manager
and landflored that you know when you were renting previously
that you just didn't know. Now you've seen both sides
(16:47):
of it, does it give you an understanding of anything differently?
Speaker 3 (16:50):
To be honest, I think that there's all that not
much to it. To be honest, you know, you make
sure that the rent's paid on time, and where you can,
you make sure that you're doing inspections and whatnot as well.
But I think the biggest learning or realization is that
And I know that there's probably going to be property
(17:11):
managers listening to this going are you wrong? But I
just feel like there's not all that much to lease management.
And I just thought, you know, paying an agent for
a couple of years at the beginning, we just thought,
you know, that's kind of wasted money. That's a couple
of hundred dollars a month that could be going towards
own mortgage or other overheads. I think that's the biggest
(17:32):
realization that a lot of people are probably out there
paying through the roof for property management, where if you've
got really good tenants and good insurance, then.
Speaker 4 (17:44):
There's a lot that you could potentially do yourself if
you've got the time.
Speaker 2 (17:47):
Yeah, and I suppose as well, when you've got one
property versus if you had five, it might be different. Again, yes,
but it's really cool to know that you can do
it yourself and that you've found it relatively easy. And
it's obviously been worthwhile for you guys to be able
to put that extra money towards your morgot and pay
it down a little bit faster. He said in your
letter that you wrote in that you want to sell
(18:08):
the property and your brother doesn't. So how did that
conversation come about? What kind of made you think that
you're done, you're ready to move on, you want a
different asset. What prompted that? And then how did the
conversation kind of go?
Speaker 4 (18:20):
So, I guess I prompted it was.
Speaker 3 (18:22):
I mean, we're both in long term relationships now and
wanting to and I want to purchase with my partner.
We're kind of ready to go down that path. But
for me, I need access to the equity from the
existing investment property, and if we were to go down
the path of accessing the equity while I am still
tied into that property with my brother, that it means that.
Speaker 4 (18:44):
He is.
Speaker 3 (18:46):
I guess tied to our new purchase in a sense
as well, and vice versa if he was to buy
with his partner and access equity.
Speaker 4 (18:54):
So we just thought, you know, one of two things
has to happen.
Speaker 3 (18:58):
Either one of us has to buy the other hour
or we sell and split. So I did a lot
of I guess homework with my partner, a lot of
calculations and planning just to see like, is it worth
at this particular point in time going through that process
of being bought out or selling. Will we have enough
if we do that to then buy or is it
(19:19):
worth waiting? So yeah, but there was a lot of
sort of conversations that we had to have first before
I put anything to my brother to say, you know,
these are the two scenarios, because, as we spoke about before,
I've got I guess a higher level of financial literacy
and I can sort of work these kind of calculations out.
So I put the different scenarios to my brother and said,
(19:40):
this is what you would be up for if you
brought me out, if we were to sell and split,
this is what our positions would be. This is what
my and my partner's plans are in our timeline, and
if that works in with you and your partner, then
let's talk about the options there.
Speaker 4 (19:56):
So I guess now that I've.
Speaker 3 (19:58):
Put those different to him, the balls in his court
as to which way that he would like to go.
I'm easy either way. I think it's a good outcome
either way, and we will have enough to sort of
put towards a deposit for our own places, which were
really fortunate for as well. But he's been really got
in terms of understanding that, you know, instead of me
(20:22):
just saying I want my equity, I've given him the
reasons why and what the plan is, and I don't
have to do that, but that just makes the partnership
so much easier and to get his support for that too.
Speaker 4 (20:33):
And I'm sure he's got the same kind of plans as.
Speaker 3 (20:35):
Well with his partner, so they've kind of chatted as well,
and they're talking about maybe so when I come off
the land title, then his partner will go on. So
they will essentially buy me out. That sounds like what
the plan will be in the end, So.
Speaker 2 (20:51):
He's leaning towards buying you out and then him and
his partner keeping that property and moving into it together.
Speaker 4 (20:57):
Exactly.
Speaker 2 (20:57):
Yeah, amazing. It sounds like it has worked really smoothly
for you, which, if I'm being honest, I'm a little
bit surprised by I always I don't know why. I
just always thought in my brain that these things would
have to be quite complex. So it's really cool to
hear that it has worked really well for you. I
guess the last question I wanted to ask you is
do you feel like, since entering into this purchase together,
(21:22):
has your relationship with your brother change it all? And
do you feel like, if it has, has that been
for the better or for the worse.
Speaker 3 (21:28):
I definitely think it's changed in a way. We've probably
got a little bit more respect for each other in
terms of out different strengths in the partnership. There has
definitely been sometimes, as with any relationship, in any partnership,
that we've butted heads on things, and that might be
the way that the finances are managed, or any kind
of maintenance is managed, or following up with any communication
(21:49):
with the tenants.
Speaker 4 (21:51):
So I think it's changed for the better.
Speaker 3 (21:53):
I think it's made us stronger overall, but that's not
without the lumps and buns along the road.
Speaker 2 (21:58):
That is incredible to hear, our Property Diarist, Thank you
so much for taking the time to share that with us,
because I think it's a really cool, unique story, and
I'm very grateful to you for being so open with
us about that experience and the ups and the downs.
So thank you so much for your time, and thank
you to everybody at home for listening. Just before we
head off, let's quickly wrap the boring but important stuff.
(22:19):
The advice shared on the Property Playbook is generally in
nature and does not consider your individual circumstances. The Property
Playbook exists purely for educational purposes and should not be
relied upon to make an investment or a financial decision.
Popular Podcasts
Monster: BTK
'Monster: BTK', the newest installment in the 'Monster' franchise, reveals the true story of the Wichita, Kansas serial killer who murdered at least 10 people between 1974 and 1991. Known by the moniker, BTK – Bind Torture Kill, his notoriety was bolstered by the taunting letters he sent to police, and the chilling phone calls he made to media outlets. BTK's identity was finally revealed in 2005 to the shock of his family, his community, and the world. He was the serial killer next door. From Tenderfoot TV & iHeartPodcasts, this is 'Monster: BTK'.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations.