November 6, 2024 • 35 mins
What happens when a property investor decides to switch sides and become a mortgage broker? David shares his compelling journey on our latest episode of the Finance Show. Discover how a miscalculation by a lender nearly derailed his property purchase plans in Perth and how It's Simple saved the day. David's experience underscores the importance of motivated brokers and the art of matching clients with the right lender, illustrating how diverse bank offerings can meet specific customer needs.
Ever wonder where the real estate market is headed? With construction delays and tax changes, Victoria emerges as a hotspot for owner-occupiers, while Sydney's urban sprawl and developments near the new Badgerys Creek airport present unique opportunities. We examine how local council regulations and upcoming infrastructure projects can serve as key indicators for savvy property investors.
Follow us for more property news and mortgage advice!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to the Finance Show with Joe.
He's Joe, I'm just some schmo.
Today we're going to be talkingabout interest rate cuts.
They're actually happening.
When are they happening, wedon't know.
But also, we have a happyintroduction to make with David.
Speaker 2 (00:15):
Dave's been with.
It's Simple now since July,july, correct.
Tell us a little bit aboutyourself.
Why it's Simple.
You could have gone anywhereelse, but you chose us scumbags.
Speaker 1 (00:29):
Yeah, good question.
He asks himself that every dayor some late nights, yeah uh.
Speaker 3 (00:34):
So a bit of background on myself.
I'm into property investing soI've bought a few properties in
my lifetime.
I've been working prior to it,simple within finance for four
or so years, covering businessfinance and asset finance.
Never had a business loan,never had a car loan, had
multiple mortgages, so alwayshad an idea of becoming a
(00:57):
mortgage broker, but I guess theopportunity never really
presented itself.
And then I needed a home loan.
Well, it's quite an interestingstory.
Speaker 2 (01:09):
I need to just jump in a little bit here.
So David initially came to usas a client.
He wasn't expecting to become abroker or anything like that.
You found the property.
Is that right?
Speaker 3 (01:19):
Correct.
So I got a pre-approval with aprevious lender.
I won't mention their name.
I already had one property withthis lender and, like everyone
else, probably about six toeight months ago I was looking
to buy in Perth.
Yep, sounds about right.
Speaker 1 (01:34):
Yeah.
Speaker 3 (01:37):
So I flew up there, actually for four days, just to
scope the North Coast, southCoast, just get a little bit of
an idea and also have a littlemini holiday.
I'd never been to Perth before,wanted to see what it was all
about.
Had a look at a few open homes,realized I needed a higher
pre-approval, so called them fora second time.
They gave me a higherpre-approval, flew back to
(01:57):
Sydney, kept watching the market, made a few offers, missed out
on I'm going to say fourproperties because I just went
for much higher for what Ioffered.
And then on the fifth property,all the stars aligned.
The agent was really helpful.
As soon as the property went upwithin an hour, I made an offer
.
I knew the suburb, I knew itwas a good buy.
(02:18):
We exchanged contract of saleand then obviously I sent that
contract of sale to my lender.
And then that's when thingsbecame a little bit tricky and
became stressful, very, very,very stressful.
Speaker 2 (02:32):
Went to shit, as we like to say yeah, that was a
lesson learned.
Speaker 3 (02:37):
A couple hours later the lender calls me or the
manager of the team, and shesaid that they firstly she
apologized.
She told me that my applicationwas going to be a decline and
the reason for that is becausethe BDM that calculated my
borrowing capacity didn't factorin one of my existing mortgages
on another property.
(02:57):
It's a pretty basic mistake tomake, but it was made and
unfortunately, under theirpolicy, I didn't service and you
had exchanged contracts to sellalready, correct.
The real estate agent wascalling me every few hours.
So when I bought I mean Perth'sstill a very hot property
market and at the time when Ibought, the listing would go up
(03:19):
on a Friday and Monday it wasoff.
The listing was off.
Crazy, yeah right.
So the agent obviously had alot of offers.
She had a lot of interest.
She said you know, look, I needto know, do you have the
finance ready?
Speaker 1 (03:34):
So it's complicated.
Yeah, essentially I had to.
It's not simple.
Speaker 3 (03:40):
It wasn't simple, no, so I had to stall her a little
bit and just say look,technically I do, I just don't
know what lender it's going tobe with In theory.
Speaker 1 (03:52):
In theory.
Speaker 3 (03:54):
Essentially called up a friend of mine and he
referred me to.
It's Simple.
We jumped on a Zoom call atmaybe I'm going to say 10 pm
till midnight because I only hadfive days to put a deposit down
.
I wasn't sleeping.
Essentially, I really wantedthat particular property.
Let's fast forward.
(04:14):
What eight months now thatproperty has gone up?
90 or so grand, probably evenmore.
How much?
Did you buy for $550,000.
Speaker 2 (04:24):
Jesus.
So that's gone up to $640.
That's a 20% gain, correct.
That's 18% gain.
That's absolutely amazing,correct.
So you picked well.
Speaker 3 (04:33):
I did, I did very well.
It's four minutes from thebeach, four minutes from the
marina, shops, schools, tickedall the boxes.
Speaker 2 (04:41):
This is the thing about brokers.
Brokers are somewhatself-employed.
They're incentive-basedindividuals.
There's a lot of things behindit.
They need their approvals tohappen.
Somebody working at a bank-.
Speaker 1 (04:52):
It doesn't matter, they're not invested.
Speaker 2 (04:55):
They don't have skin in the game.
Speaker 3 (04:57):
The particular BDM I was speaking to from that lender
sounded very young.
I could tell in their voicethey were young, they weren't
really invested, they weren'tnecessarily switched on, and
that's exactly.
Yeah, they had no skin in thegame.
So what are you?
Speaker 2 (05:12):
telling our clients now, when it comes to
pre-approvals.
Speaker 3 (05:16):
Don't make the mistake I made, obviously
engaging your brokers.
There's so many benefits, right, because you're exploring
multiple lenders, you're gettingthe choice of the best product
for your specific scenario orthe goal you're trying to
achieve.
Speaker 2 (05:33):
You kind of honed in on something.
You called it a product.
A lot of clients don't reallyunderstand this, but some banks
like self-employed people.
Some banks like it if you're ateacher.
Some banks like it if you're apolice officer.
Some banks like it if you're ateacher.
Some banks like it if you're apolice officer.
Some banks like it if you're aprofessional, you're a doctor,
you're in the medical field.
Some like it if you've got alow deposit.
They're like yeah, we'll takeyou on.
(05:54):
We're more than happy to.
And it's really good that youhighlighted that, because two
things number.
One some banks don't like Perthat all.
But then the other thing iswhat do the banks have against
Perth?
I've got some more storiesabout that later.
On the other side of it, Imight have my savings with
Macquarie, but as aself-employed individual and
(06:16):
this isn't a bad mouth,macquarie but their policies
aren't great for self-employedindividuals.
If I'm self-employed, the banksI'm going to are anz, cba, um,
bankwest.
You know that because they'rethe ones that are going to get
the most out of my income andgive me the highest borrowing
capacity.
Yeah, for your particularscenario, the original lender
that you went with you knowprior to contacting us.
(06:36):
They're a good bank, they're areputable, reputable bank, but
they just don't have appetitefor certain things.
Which lender did you end upwith?
I ended upwest, yeah, so eventhough he didn't end up with one
reputable lender, it's not likehe went to a second or a third
tier reputable lender.
It's Bankwest.
It's Bankwest, owned byCommonwealth Bank.
Everyone knows it.
You know they might not havebranches in New South Wales
(06:56):
anymore, but they're all in WA.
Speaker 1 (07:07):
How have you found it working with lenders and
understanding different policies?
Speaker 3 (07:09):
and I imagine you'd learn a little bit of.
Something is like where youmight even like, think to
purchase, like I'm getting a lotof clients and thinking about
buying in kellyville.
What's going on there, correct,correct, yeah, or people are
selling in a certain suburb and,you know, putting moving that
money elsewhere.
Speaker 2 (07:15):
We've been hearing about perth perth, perth, perth,
perth, for the last 15 episodesthat we've done.
Um, you posted something theother day and I mentioned it on
the last episode, but Perth'sgrowing a thousand bucks a day,
so how long have you held yourproperty now?
Speaker 3 (07:28):
initially made the offer in March, settled in April
, six months yeah, six months,ninety thousand dollars.
Speaker 2 (07:35):
Yeah, that's not a bad.
That's 500 bucks a day.
600 bucks a day, you know,that's, that's pretty effing
good.
And that was the last valuation.
The last valuation we did was amonth ago, correct, so it so
it's probably gone up since thentoo.
Speaker 3 (07:44):
Yeah, correct, and I think it's at the end of its
cycle.
Yeah, surely it can't keepgoing like this.
Speaker 2 (07:50):
I think and this brings us to our topic of the
day about interest rates cutsOnce that starts coming down.
I think Sydney and, inparticular, victoria.
I really think Victoria isabout to boom.
Speaker 1 (08:01):
Well, they've got supply now, yeah, and they're
actually because the biggestcomplaint that we've been having
in sydney is that, um, like,construction has been delayed
for correct one reason oranother whereas victoria,
obviously they still have theirown issues with their, with
their councils, but it's beenbetter there, like they're
building way more propertiesthere compared to supply and
also you've got like fewer, uhforeign investors uh going there
, because again what we weretalking about post-covidCOVID
(08:22):
like just with the taxes andstuff like that, like less
incentive to invest in Victoria.
So it's good forowner-occupiers basically in
Victoria, right, which is whyyou think that it might boom.
Am I in the right directionthere?
Speaker 2 (08:34):
Yeah, 100%, because Victoria has always been the
international hub.
You know Sydney is aninternational hub, like people
know Australia for Sydney, forsydney, they're not for the hub
of bridge opera house.
I think it's the capitals.
Did you see that video thatsome guy was asking a bunch of
americans what's the capital ofaustralia?
And like sydney, that everyonethought sydney.
(08:54):
One lady screamed out is itindia?
I was.
I was just like, wow, likeindia.
The average american iq is like98 or something.
Speaker 1 (09:02):
It's's not very high.
Their geography is shocking.
It's absolutely shocking.
Speaker 2 (09:07):
But everyone says Sydney, Nobody says Melbourne.
But when people move toAustralia, a lot of Melbourne
actually gets the majority ofthe expats.
A lot of people actually movedown there.
That's because it's more of acity.
Sydney is a city but it's not.
Speaker 1 (09:20):
It's turning into like a megalopolis type of thing
, like with Tokyo, where it'slike this big spread Because you
can drive an hour and still notleave Sydney, which is crazy I
don't think many cities are likethat so.
Speaker 2 (09:32):
one office in Oran Park, new office in Barangaroo.
Speaker 1 (09:35):
Oh, yeah, yeah.
Speaker 2 (09:36):
Another office, not another office, but I've got
referral partners up in BellaVista so in one day I could
drive from illawong to camden tobella vista, to the city and
home.
That could be like eight hoursof driving done in one day, just
to you know.
See all these clients andeverything, and I have not left
sydney.
They've spoken about the um.
They want three major cities inwithin sydney.
(09:57):
They want paramatta, sydney andthen macarthur, was it or
something?
Speaker 1 (10:01):
yeah, like that campbell town area they're
trying to trying to boost it up,which is, I mean, like the oran
park stuff.
That's why all that stuff'sgoing up.
They're trying I mean they'vebeen trying to do that with
paramount for ages yeah,paramount looks like the city,
if you, if you weren't payingattention, you look out the
train window.
Speaker 2 (10:13):
You're like, oh, have I arrived yeah, I'm at town
hall now, but yeah, back to thetopic interest rates as early as
next month, as late as earlynext year.
So there's been a drop there'sbeen a lot of talks and, as you
mentioned, um, the reason why alot of people have left
melbourne is because theinvestors or people, anyone that
(10:34):
invested there they're notactually costly, then it's too
costly.
They introduced a new land tax,um, rent isn't covering the
repayments and they're goingokay.
If I pull out now, I I'm goingto be able to take my money from
here, I might be able toreinvest it in Queensland and my
money will start growing again.
Speaker 1 (10:50):
Or Perth, as it seems .
Yeah, yeah, I think.
Speaker 3 (10:52):
Melbourne or Victoria .
From an investor's standpointit's going to be a long-term
investment.
It's declining, right?
Yeah, depending on the suburbthat you buy.
In Victoria they're actuallyseeing negative growth.
So if you buy now, there's achance it's going to continue
that negative growth.
But two years, three years,five years, surely it's going to
(11:13):
come good, right?
Speaker 2 (11:14):
The population of Melbourne CBD, like itself, is
actually higher than Sydney CBD.
Speaker 1 (11:20):
Oh yeah, I would hate to live in Sydney CBD, like
specifically right in there.
Speaker 2 (11:24):
No, no.
But I'm not talking about likethe CBD, like just Melbourne
itself.
I'm talking about like greaterMelbourne area is like 5.8 mil
and then greater Sydney area islike 5.3 million.
It does eventually have tostart growing because you can't
just keep building and buildingand building.
Well, you can, but not at thatrate Like it will sprawl and
anything that's in the city isjust going to increase in value
(11:46):
because, okay, they've put ahigh-rise up, then they might
put another high-rise up,everything.
Eventually they're going to runout of high-rises to put up.
Eventually there's not enoughspace.
They're going to startintroducing height limits and
those sorts of things andthey're going to say enough's,
enough, we're capping this nowand that's when it's going to
start booming.
Speaker 1 (12:05):
And I think that's actually going to happen sooner
than later, because I reckonwe're still at that period and
also this is an uneducatedopinion, yeah, but like, are we
not still in that period wherewe kind of need like there's
been more calls for more densityand more high-rises and stuff?
Speaker 2 (12:20):
No, Melbourne itself is already dense and melbourne
has a lot of old buildings?
Yeah, okay so because melbournewas the major city of australia
previously, you got a lot ofheritage, a lot of um yeah,
european inspired buildings downthere.
Yeah, we knocked all those downin sydney you can't touch those
.
You can't touch those over there.
So it's um, it's going to bevery interesting.
(12:40):
Um, I've been doing a lot ofwork in melbourne recently.
There's a lot of savvyinvestors down there.
Yeah, I just think the interestrates and the introduction of
that new um investor tax correcthas hurt individuals.
But to me that also says thatif you're, if you're
pre-prepared now and you're ableto withstand that, that you're
probably going to be able tobenefit in the long run correct.
Speaker 3 (13:02):
You could find a buy If there's less competitors.
When you go to an open home andyou put an offering, you might
be able to negotiate a lowerprice than advertised.
So I think there's definitelygoing to be opportunities like
that.
And, vic, it just depends, likeyou said, how long they're
going to hold it for.
In the long term it has to comeback.
Employment's great, they have.
Speaker 1 (13:29):
Yeah, I guess that's the only thing that's really got
against it.
Speaker 3 (13:33):
Aside from that great , very livable city.
Speaker 1 (13:36):
It's one in the top ten in the world.
Is it ahead?
Speaker 2 (13:40):
of.
Speaker 1 (13:40):
Sydney.
I know they're like neck andneck.
Speaker 2 (13:42):
When I was down there the other day, a suburb called
Keelaw.
Have you heard of Keelaw?
Speaker 3 (13:46):
No.
Speaker 2 (13:47):
It's 15, 20 minutes outside of the CBD, Keelaw.
So when you land you're aroundTullamarine, essendon, all those
sorts of things.
Keelaw is a suburb, just I wantto say west of so around about
that area.
Speaker 3 (14:00):
Yeah, it's around about that area.
Speaker 2 (14:02):
Okay, and townhouses.
And, mind you, this is 15minutes to the city, like
Melbourne CBD on the highway.
Townhouses have gone for like800K, extremely affordable.
Man you can't find.
How far do you have to gobefore you can get a townhouse
for 800 000 in in new southwales?
Past paramount, definitely waypast paramount.
Yeah, you, penrith, even inoran park you'd be struggling so
(14:25):
david and I were looking theother day our properties in oran
park and what did we find?
Speaker 3 (14:29):
we found for a house.
A house is over a mil.
Speaker 1 (14:32):
It's one sitting around 1.2 now and this park,
which is not near anything like,except for campbell town yeah,
pretty much and but original,like that's gone up.
Speaker 2 (14:41):
I think they've gone up quite significantly 10 a year
.
We have a client right now whobought an apartment in oran park
.
They bought for 550 000 I wantto say 18 months ago.
It is valued today at $735,000for an apartment.
So to anyone listening to thispodcast look at those pockets,
(15:03):
look at where you think it'sgoing to boom and where people
are talking about it's going toboom the new airport, badgerys
Creek, that's going to open intwo years.
Speaker 3 (15:09):
Correct, that's creating a lot of buzz.
There's a lot of desirabilityaround that Leppington, oren
Park, norellon, camden area,whereas you looked at Liverpool
or Kisoola for an example and itdoesn't seem people are willing
to buy or pay as much comparedto Oren Park.
I don't know if it's justbecause of the future
(15:31):
development.
I think people are thinking ofwhat that suburb's going to or
has become so far and is goingto become that they're willing
to set themselves up there longterm.
Speaker 2 (15:41):
Yeah.
Speaker 1 (15:42):
I think it's also because it's like new, like the
literal everything is new,people like it, it's shiny, it's
nice, the power lines areunderground.
Speaker 3 (15:48):
It just looks clean when you drive through.
There's lots of nice trees andparks and lakes and all that
sort of stuff.
Speaker 1 (15:54):
Yeah, exactly, it's.
Speaker 3 (15:55):
very family friendly.
Speaker 1 (15:56):
Like my family lives in and around the Liverpool
Fairfield area but like I knowthat there's not the greatest
reputation, so I'm sure that'splaying into the fact that, like
people don't want to pay over amillion dollars to live in
Liverpool or potentially Justpsychology.
Speaker 2 (16:10):
You say that, but Chester Hill is part of the
Liverpool area code.
Speaker 1 (16:13):
Yeah, I imagine it would be.
It's not far from it.
Speaker 2 (16:16):
Chester Hill's gone up in the last year 22%.
Speaker 1 (16:19):
Yeah, fairfield, I think it would be in Fairfield,
yeah, fairfield.
Speaker 2 (16:21):
But it's right next door.
But, that's 22%.
That is an outrageous amount ofgrowth.
Speaker 1 (16:27):
It's the third best performing suburb in New South
Wales.
Speaker 2 (16:35):
You're kidding, yeah, oh, no, I'm not kidding, but
you know the reason why theyallowed people to be able to
build CDC duplexes, ah, okay Forthe uninformed, so for the
uninformed.
Previously there was DA andthere was CDC.
Now DA is a developmentapplication that you need to
submit.
Now the problem is with DANIMBYs can get involved.
(16:57):
What are NIMBYs Not in mybackyard?
The DA needs to be advertised.
The plans need to be lodgedonto the council portal and
people have the opportunity toprotest.
I don't like this.
I don't like that.
This is going to affect myfacade.
I don't like the height limit,those sorts of things.
Cdc is a complying developmentcertificate, which means if you
comply with all of the rules ofthe council, you can literally
(17:21):
start building.
You lodge the application withCDC.
Eight weeks later you've gotyour certificate, you can start
the construction, and ChesterHill started to allow it.
That's the reason why it boomedso much, because people saw the
opportunity.
If I buy this house for $900,000, it's got 16 meters of frontage
, which is one of the key thingsof CDC.
It's got 16 meters of frontage.
That means I could fit onehouse here, one house there, two
(17:42):
keys, strata title.
One's going to be 120 and theother one will be 120A or
something like that.
It's going to be a strata title, but then I've got two
dwellings, I've got two forms ofrental income and then I've got
two properties that areappreciating, not just one.
And that's why Chester Hill isperforming so well, because he
underperformed for so many years.
Because Chester Hill was in anarea that people thought was
(18:05):
undesirable.
There were a lot of housesthere that were going for cheap,
but once they brought in thisnew rule they were like wait a
second If for cheap.
But once they brought in thisnew rule they were like wait a
second if I, if I buy thisproperty cheap, I'll buy four,
let's say back in the day,because dave dave and I are the
same age.
Just to let all the listenersknow, back 15 years ago, yeah,
if you told someone you bought ahouse in chester hill for 1.3
million, they would throw abrick at your head what are you
(18:27):
doing?
they were worth 400 500k backthen.
Yeah, they were, they werecheap, they were cheap houses.
But what you could do, oh, 400k, 500k, okay, perfect, I'll go
put a CDC application in.
It's going to cost me 150,000per site to build this beautiful
duplex.
And then, all of a sudden, Icould sell one for, you know,
650.
I could sell the other one for650.
I've made 300 grand on each one.
(18:49):
So, Dave, where are you seeingthe opportunities around
Australia at the moment?
Speaker 3 (18:53):
For my next investment.
Yeah, like I said, wa is done,just way too hot.
It's going to be at the end ofits cycle now, okay.
So I'm thinking Queensland,either regional Queensland, yeah
, and I've also got my eye onVictoria.
Yeah, I think Victoria.
For me it's a little bit tooearly.
I'm used to buying a propertyand having pretty immediate
growth, first property southwestSydney, second in Gold Coast,
(19:17):
third in Perth.
So all those purchases haveimmediately grown in value.
Speaker 2 (19:23):
Tell me about southwest Sydney.
Where did you buy that?
Speaker 3 (19:25):
So that was my first home.
That was in Leppington where Ihad a reduced stamp duty, so it
wasn't a complete exemption fromstamp duty.
So I bought that in 20s end of2017, settled early 2018, held
that property for three years,got great growth.
So I bought it for 700 and soldit for uh, just under a mil wow
(19:47):
, in three years.
Yeah, and the reason I decidedto sell that property is because
the yield was just terrible,let's say, valued at $1 million,
renting for $520 a week.
I just thought you know whatit's gone up in value.
I can pull some cash out hereand I can use it to buy other
properties elsewhere.
Gold Coast property bought itfor $670, renting it for $830 a
(20:11):
week currently.
So the difference in yield andit's had a growth over the last
two years as well so I don'twant to put my money somewhere
where I'm not going to get thatimmediate growth.
Like I said, perth's done.
I don't think it's, even ifit's still going up month on
month.
I mean, no one knows where theend is, but that's a bit of a
gamble you take.
(20:32):
If you buy something for 700grand at the moment in perth,
where's it going to end up?
Is it going to end up at 730,750?
Is that worth it?
I could take that 700 grandelsewhere, let's say, you know,
earlier on in the cycle and it'sgoing to hit 850, 900, like.
I don't know an exact suburbyet, but I'd say regional
(20:54):
queensland.
Um would be on my radar formore immediate growth and then
maybe further down the linesomewhere in victoria that's
awesome, man.
Speaker 2 (21:05):
Um how, how much time do you spend researching
property?
Speaker 3 (21:09):
when I, when I'm ready to go.
So when i've've got the equityor pre-approval, I won't go to a
lender again for a pre-approval, it'll be via one of our
brokers.
I'm very obsessed.
I'll spend every hour of theday I'll check to see what's
been listed, what's selling,I'll set up alerts.
(21:30):
I'll go on forums online.
I'll try and gather as muchinformation as possible.
I'm just yeah, it usually takesme around two, three months to
actually narrow it down, um,from when I have that
pre-approval and we'll have thefunds ready to go to actually
purchasing some uh something.
But I'm very, very obsessive,so I'll just gather as much
(21:52):
information as possible and justcompare it.
Run the numbers, you know, runthe figures and just compare
with you know other suburbs,because you really have to
narrow it down.
Once you know the state, okay,then you know you might know the
city and then you want to lookat each suburb within that city
and you know, look at the yield,vacancy rate.
(22:13):
What's the growth been like inthe past?
Is that a reflection of thefuture?
What is going to be acceleratorof growth?
Walking score, is it near thewater?
Education, hospitals, schools,shopping centres, all those
sorts of factors that you needto take into play, and you're
not going to know that just bylooking at ads on
(22:34):
realestatecomau right everysingle one of those photos is
extra contrast.
Every agent writes the samething.
Great investment opportunity,you know, near the shops, near
the cafe, near a school, cool.
Speaker 2 (22:47):
That doesn't mean it's going to be a good
investment for me I actuallyreally like the fact that you
flew out to Perth to get a feel.
Speaker 3 (22:58):
Yeah, I wanted to because I spoke to a few agents
before going there and one ofthe agents said the north coast
is a little bit nicer lowercrime rate, just a nicer
coastline than the south coast.
So I essentially went fromPerth CBD all the way up to
Yanchep, so I explored that,from Perth CBD all the way up to
Yanchep, so I explored thatwhole coastline.
And then on the following day Iwent from Perth CBD down to
(23:20):
Mandura or Hall's Head and justgot a general feel for the
suburbs along that wholecoastline and from there I went.
I did establish yeah, northCoast was the choice for me.
And then just driving back fromButler and we stopped in for a
coffee along the way and I saw abeautiful marina just
(23:46):
completely found it by chancecalled Mindari Marina.
I thought, wow, if I could buya property close to this, it's
got the beaches, it's got themarina, it's got all the
shopping centres, the schoolsetc.
That would be a great buy.
So that's where I ended upbuying.
There's a few things to graspthere.
Speaker 2 (24:05):
Invest in places where people want to live.
There's walking score A realestate agent.
I've met with a thousand realestate agents in my life.
Not once has a real estateagent actually brought met with
a thousand real estate agents inmy life.
Not once has a real estateagent actually brought up
walking school.
To me they'll say oh, there'slots of little cafes around,
where's the cafe?
Speaker 3 (24:21):
20 minute drive it's a 20 minute drive, you know oh,
there's a Jiminy here.
Speaker 2 (24:26):
Oh, where is it?
It's a 15 minute drive.
I'm like, come on, man, likethey're always trying to sell
you, and the reason for that isreal estate agents make their
money on the commission, theymake it on the sale and they get
their listings and they justwant to sell the property.
Speaker 3 (24:38):
They're acting for the vendor.
Have you used a buyer's agentbefore?
Speaker 1 (24:42):
No, not yet.
Speaker 3 (24:43):
Really I'm not that busy.
Okay, I'm not that time poor,not yet.
At least You've got to startworking harder.
Speaker 2 (24:52):
This guy gets emails from me.
No, he gets phone calls from meat 10 pm and he's like have you
looked at this?
Speaker 1 (24:58):
this and this and he's like are you seriously
still going to go to sleep?
Speaker 2 (25:01):
I actually want to touch on one last thing.
So perth boomed, seriouslyboomed, because interest rates
were so high, because people atthe lower end of the market
couldn't buy anything.
In sydney you work inpre-approvals.
You've seen it time and timeagain if somebody's earning a
hundred thousand dollar a yearsalary, what can they borrow?
550 grand tops?
Speaker 3 (25:21):
not gonna get you anything.
Yeah, with the majors, you know.
Speaker 2 (25:25):
But you can still go buy something out in wa and
because that was occurring,that's why wa was spiking so
much.
That's why I was growing ata,000 a day.
Do you think, once interestrates drop, that Sydney is going
to boom again?
Or Melbourne is going to boomagain because people are going
to have that opportunity to buyin those?
Speaker 3 (25:45):
locations again?
Absolutely yeah, I think peoplewill look to buy local If they
have more borrowing capacity,then they're not necessarily
going to look interstate.
It depends on what they'relooking to do as well why
they're not necessarily going tolook into state.
It depends on what they'relooking to do as well, why
they're looking to buyOwner-occupiers.
I'd assume more owner-occupiersare going to be active in the
Sydney market once rates drop,because they can now borrow
(26:07):
$200,000, $300,000, $400,000more than they could with rates
sitting at mid-sixes, right.
So I think we're in for anotherboom in sydney.
Um, if I personally, if I waslooking to buy in sydney and I
had a pre-approval ready to go,um, I'd be pretty strategic.
Speaker 1 (26:25):
I'd look to get in before we hit that little boom
yeah because I said, I think assoon as the rates go down, all
buyers are going to startflooding the market and for
those that there'll be initialprice drops.
But all buyers are going tostart flooding the market and
for those there'll be initialprice drops, but then they're
just going to go straight up.
I think it'll be like a coupleof months of relief.
Speaker 3 (26:41):
If a rate drop happens before Christmas, just
imagine how many people aregoing to be turning up to open
homes.
Speaker 1 (26:49):
Yeah, it's going to be insane.
Speaker 2 (26:57):
The competition is going to be fierce and prices
are going to go high, so I'mthinking that they might drop
the rates, because we spokeabout the retail quarter and
retail spending is all the waydown.
I don't know.
Has anyone been to a shoppingcentre recently?
No, they're dead.
I was at Westfield Miranda theother day Rainy day, so perfect
day for people to be outshopping or that sort of stuff.
No one there's no one in theshopping center.
No one's spending money.
The issue with that is there'scommercial tenants in there and
(27:20):
those commercial tenants need topay rent as well.
And if they're not makingbudget, what ends up happening?
They start shutting down.
And those massive and I'mtalking those massive shopping
centers, guess who they're owedby?
Guess who funds them?
A lot of the banks.
So they, the banks, couldactually end up having landlords
defaulting on them because theycan no longer afford to pay the
(27:41):
debts, because they're notgetting the rental income,
because they don't have enoughtenants in.
So, it's not only the mums anddads that are affected, it's
also, you know, the big retailgiants and the large
manufacturers.
So I think, I genuinely believe, we are going to have a rate
cut just before Christmas,because they need that Christmas
(28:03):
boom.
Speaker 1 (28:05):
Even just in consumer spending, let alone property.
Speaker 2 (28:08):
Yeah, but they need the consumer that's where I'm
starting.
It starts with the consumerspending, because as soon as the
consumer spending startshappening, you're not having
businesses shut down.
In Miranda, westfields or BondiJunction, I think I was walking
past Camilla.
No, not Camilla, but one ofthose girl shops like the
popular ones, sass and Bitethat's the one I was thinking
about Closed down, oh damnClosed down in Miranda Bummer,
(28:30):
you know.
Speaker 3 (28:38):
No, but like I'm just saying, like it's, it's not
something that yeah, um, smallbusinesses and retail businesses
are feeling it.
Yeah, even near me in roselle,uh, on darling street, as you go
into roselle, there's aboutfive uh shop fronts that have
just vacated, yeah, yeah.
So think about this okay, thelandlord?
Speaker 2 (28:52):
yeah, they.
They're trying to get the rent.
Why are they trying to get therent?
Because they owe the bank money.
If they default, okay, the bankmight be able to resell the
asset, but the bank still hasdebt.
The bank is borrowing thatmoney from the reserve bank or
they're borrowing it fromsomewhere else.
The world works on debt.
Who's making money?
Who can lend it?
That's all it is.
And there implications if theydon't start reducing the rates.
(29:12):
And I think you're right whenyou say that, like, get in now
if you've got a pre-approval,because it's going to get
fucking hot yeah, don't wait.
Speaker 1 (29:19):
Yeah.
Yeah, the rates aren't good now, but that's why it's a good
time to buy exactly, I won't besaying the same.
The complete opposite.
Once the rates drop, goodbyenow the rates low.
Speaker 2 (29:29):
When's the next best time to purchase?
It's today.
It's an appreciating asset.
Anything, anything with land onit.
What happens?
It goes up, it goes up.
There's only so much land onearth.
There's only so much land nearthe Sydney CBD.
There's only so much nearParramatta.
There's only so much near PerthCBD.
Speaker 1 (29:45):
That's it.
People want to live inAustralia.
It's very clear.
Speaker 2 (29:49):
It's just like you say that now You're like, yeah,
we're going to say the samething when rates are down.
Yeah, I am going to say itBecause it's true, because the
government retirement age is 67.
The pension is shit.
Your superannuation okay, itmight be worth something now,
but it might not be worthsomething by the time you retire
.
Set yourself up for life.
Get in early 18 to 25.
(30:10):
How old were you when youbought your first property?
27.
When you bought your firstproperty?
27, 27.
Okay, get in early.
Get in in your 20s, because bythe time you're 40 you sit in
there.
You're probably gonna haveseven properties by the end of
next year.
Um, knowing this guy and theway that he hunts and everything
he's probably gonna have, youknow, a strong property
portfolio by then.
Okay, by the time you're 40,what happens?
Oh, guess what?
(30:30):
Your back hurts.
Hey, you can actually take timeoff, work and recover.
Speaker 1 (30:35):
The unfortunate part is, so like we've got stats for
this, so like in in 1981, 55% ofAustralians aged 25 to 29 owned
a home.
That's dropped now to 35%.
Yeah, so it is rougher.
Speaker 3 (30:46):
So you're gonna have to find ways to work around that
, or just be more open to buyinginterstate as an investment or
for your first property, I.
Or just be more open to buyinginterstate as an investment or
for your first property.
Speaker 1 (30:56):
I don't think people understand how equity?
Works, correct, like broadlyspeaking, because people are
like but what's the point inbuying this when I can't?
Why would I?
Speaker 3 (31:02):
buy in Queensland.
I don't know anything aboutQueensland.
I've been there twice.
Everyone wears thongs, I don'tknow.
Or they walk through the mallbarefoot.
Do I really want to buy there?
That was literally how I usedto think in my 20s.
I thought why would I ever wantto buy interstate?
I don't visit Queenslandfrequent enough.
(31:22):
What happens with a tenant?
How do I know they're takingcare of the place?
How will I manage it?
You just find a good propertymanager and they'll go out.
They'll do inspections.
They'll take photos for you.
You chase them up for updates.
If anything's fixed, you knowthey'll go out.
They'll do inspections.
They'll take photos for you.
You chase them up for updates.
If anything's fixed, you makesure you know.
If anything's broken, you makesure it's fixed.
So be more open is my advice topeople in purchasing in other
(31:45):
states.
Yeah, because if it's moreaffordable and that's it matches
, you know it's going to be away in for you to build equity
over the next few years?
Speaker 1 (31:54):
Yeah, because it's what Joe said.
The whole world operates ondebt.
Who's got the money to thenlend money?
The way that you get the moneyis to put it into equity, and
then you can access that laterwhen you need it to purchase
another property, maybe thehouse you want to live in.
So that's generally how it willwork.
So don't think about it in away.
(32:15):
It's like I don't want to buyin Queensland because I'm not
going to live in it.
Speaker 3 (32:17):
Yeah, be more open-minded to other states.
I've never had an issue with atenant in any of my properties.
If something's broken, theagent will let me know.
They'll send a tradie in thereto get a few quotes and I'll
make a decision from there.
Speaker 2 (32:34):
Okay, good, you brought up agent.
This is a massive segue, but ifyou are renting a property, I'm
going to give you some verysound advice.
Don't rent it cash.
If you are expecting to growyour equity, refinance and use
that equity to purchase moreproperty, don't rent your
properties with cash.
(32:54):
I promise you you will regretit and it will be 900 times
harder to purchase more property.
Don't rent your properties withcash.
I promise you you will regretit and it will be 900 times
harder and more difficult to getyou an approval if you collect
cash.
Speaker 3 (33:05):
I'm sensing some frustration.
Speaker 2 (33:06):
Oh man.
Speaker 1 (33:08):
I'm sensing some logs have been like yeah, yeah, I
keep trying to explain it.
Speaker 2 (33:13):
I keep trying.
Okay, yeah, cash is great.
Fantastic, get the cash.
There's two things about debt.
Okay, there's two things aboutdebt.
Number one the bank needs tosee money going in.
And number two you need to paytax to borrow more.
If you're trying to hide asmuch tax as possible and do
these ones and do that one,guess what's going to happen
when you want to buy a house?
(33:34):
You're going to get shit.
Speaker 1 (33:36):
You're going to get a horrible interest rate, you're
going to have no borrowingcapacity.
Speaker 2 (33:39):
You're not going to be able to go to a major bank.
Some people just don't want tolisten.
They just believe oh no, no, no, I'm going to do it this way,
I'm going to do it that way.
Speaker 3 (33:55):
But then when push comes to shove and it doesn't
work that way, correct?
They're also better protectedif they have a property manager,
because the property managerknows the landlord legislation
back to front.
Yeah, and they.
They're that you know thirdparty that can just step in and
just take care of any issues foryou.
What?
Why would you, you know?
Why would you run the risk ofhaving an agreement with someone
you know their living situationmight change, they might start
falling behind on payments.
Do you want to be the onehaving that conversation?
(34:18):
Personally, myself I wouldn't,but some people want to run that
risk.
Speaker 2 (34:26):
Yeah, it's not wise, so Dave what are the goals for
the next 12?
Speaker 3 (34:29):
months For me.
Yeah, I'd like to purchase twomore properties in the next 12
months 12 to 14 months and justlearn as much as I can as a
mortgage broker and help peopleachieve their investment goals.
(34:49):
Really, that's fantastic man.
Speaker 2 (34:51):
That's fantastic, as always.
That is definitely some schmo.
My name is Joe.
If you need any assistance withyour investment needs, you can
contact Dave directly or you canvisit wwwitsimplecomau.
As always, my name is Joe andthank you for tuning in.
Is that what I finished with?
Yeah, we can tune in.
I'm very tuned in.
Welcome to the Finance Show with Joe.
He's Joe, I'm just some schmo.
Today we're going to be talkingabout interest rate cuts.
They're actually happening.
When are they happening, wedon't know.
But also, we have a happyintroduction to make with David.
Speaker 2 (00:15):
Dave's been with.
It's Simple now since July,july, correct.
Tell us a little bit aboutyourself.
Why it's Simple.
You could have gone anywhereelse, but you chose us scumbags.
Speaker 1 (00:29):
Yeah, good question.
He asks himself that every dayor some late nights, yeah uh.
Speaker 3 (00:34):
So a bit of background on myself.
I'm into property investing soI've bought a few properties in
my lifetime.
I've been working prior to it,simple within finance for four
or so years, covering businessfinance and asset finance.
Never had a business loan,never had a car loan, had
multiple mortgages, so alwayshad an idea of becoming a
(00:57):
mortgage broker, but I guess theopportunity never really
presented itself.
And then I needed a home loan.
Well, it's quite an interestingstory.
Speaker 2 (01:09):
I need to just jump in a little bit here.
So David initially came to usas a client.
He wasn't expecting to become abroker or anything like that.
You found the property.
Is that right?
Speaker 3 (01:19):
Correct.
So I got a pre-approval with aprevious lender.
I won't mention their name.
I already had one property withthis lender and, like everyone
else, probably about six toeight months ago I was looking
to buy in Perth.
Yep, sounds about right.
Speaker 1 (01:34):
Yeah.
Speaker 3 (01:37):
So I flew up there, actually for four days, just to
scope the North Coast, southCoast, just get a little bit of
an idea and also have a littlemini holiday.
I'd never been to Perth before,wanted to see what it was all
about.
Had a look at a few open homes,realized I needed a higher
pre-approval, so called them fora second time.
They gave me a higherpre-approval, flew back to
(01:57):
Sydney, kept watching the market, made a few offers, missed out
on I'm going to say fourproperties because I just went
for much higher for what Ioffered.
And then on the fifth property,all the stars aligned.
The agent was really helpful.
As soon as the property went upwithin an hour, I made an offer
.
I knew the suburb, I knew itwas a good buy.
(02:18):
We exchanged contract of saleand then obviously I sent that
contract of sale to my lender.
And then that's when thingsbecame a little bit tricky and
became stressful, very, very,very stressful.
Speaker 2 (02:32):
Went to shit, as we like to say yeah, that was a
lesson learned.
Speaker 3 (02:37):
A couple hours later the lender calls me or the
manager of the team, and shesaid that they firstly she
apologized.
She told me that my applicationwas going to be a decline and
the reason for that is becausethe BDM that calculated my
borrowing capacity didn't factorin one of my existing mortgages
on another property.
(02:57):
It's a pretty basic mistake tomake, but it was made and
unfortunately, under theirpolicy, I didn't service and you
had exchanged contracts to sellalready, correct.
The real estate agent wascalling me every few hours.
So when I bought I mean Perth'sstill a very hot property
market and at the time when Ibought, the listing would go up
(03:19):
on a Friday and Monday it wasoff.
The listing was off.
Crazy, yeah right.
So the agent obviously had alot of offers.
She had a lot of interest.
She said you know, look, I needto know, do you have the
finance ready?
Speaker 1 (03:34):
So it's complicated.
Yeah, essentially I had to.
It's not simple.
Speaker 3 (03:40):
It wasn't simple, no, so I had to stall her a little
bit and just say look,technically I do, I just don't
know what lender it's going tobe with In theory.
Speaker 1 (03:52):
In theory.
Speaker 3 (03:54):
Essentially called up a friend of mine and he
referred me to.
It's Simple.
We jumped on a Zoom call atmaybe I'm going to say 10 pm
till midnight because I only hadfive days to put a deposit down
.
I wasn't sleeping.
Essentially, I really wantedthat particular property.
Let's fast forward.
(04:14):
What eight months now thatproperty has gone up?
90 or so grand, probably evenmore.
How much?
Did you buy for $550,000.
Speaker 2 (04:24):
Jesus.
So that's gone up to $640.
That's a 20% gain, correct.
That's 18% gain.
That's absolutely amazing,correct.
So you picked well.
Speaker 3 (04:33):
I did, I did very well.
It's four minutes from thebeach, four minutes from the
marina, shops, schools, tickedall the boxes.
Speaker 2 (04:41):
This is the thing about brokers.
Brokers are somewhatself-employed.
They're incentive-basedindividuals.
There's a lot of things behindit.
They need their approvals tohappen.
Somebody working at a bank-.
Speaker 1 (04:52):
It doesn't matter, they're not invested.
Speaker 2 (04:55):
They don't have skin in the game.
Speaker 3 (04:57):
The particular BDM I was speaking to from that lender
sounded very young.
I could tell in their voicethey were young, they weren't
really invested, they weren'tnecessarily switched on, and
that's exactly.
Yeah, they had no skin in thegame.
So what are you?
Speaker 2 (05:12):
telling our clients now, when it comes to
pre-approvals.
Speaker 3 (05:16):
Don't make the mistake I made, obviously
engaging your brokers.
There's so many benefits, right, because you're exploring
multiple lenders, you're gettingthe choice of the best product
for your specific scenario orthe goal you're trying to
achieve.
Speaker 2 (05:33):
You kind of honed in on something.
You called it a product.
A lot of clients don't reallyunderstand this, but some banks
like self-employed people.
Some banks like it if you're ateacher.
Some banks like it if you're apolice officer.
Some banks like it if you're ateacher.
Some banks like it if you're apolice officer.
Some banks like it if you're aprofessional, you're a doctor,
you're in the medical field.
Some like it if you've got alow deposit.
They're like yeah, we'll takeyou on.
(05:54):
We're more than happy to.
And it's really good that youhighlighted that, because two
things number.
One some banks don't like Perthat all.
But then the other thing iswhat do the banks have against
Perth?
I've got some more storiesabout that later.
On the other side of it, Imight have my savings with
Macquarie, but as aself-employed individual and
(06:16):
this isn't a bad mouth,macquarie but their policies
aren't great for self-employedindividuals.
If I'm self-employed, the banksI'm going to are anz, cba, um,
bankwest.
You know that because they'rethe ones that are going to get
the most out of my income andgive me the highest borrowing
capacity.
Yeah, for your particularscenario, the original lender
that you went with you knowprior to contacting us.
(06:36):
They're a good bank, they're areputable, reputable bank, but
they just don't have appetitefor certain things.
Which lender did you end upwith?
I ended upwest, yeah, so eventhough he didn't end up with one
reputable lender, it's not likehe went to a second or a third
tier reputable lender.
It's Bankwest.
It's Bankwest, owned byCommonwealth Bank.
Everyone knows it.
You know they might not havebranches in New South Wales
(06:56):
anymore, but they're all in WA.
Speaker 1 (07:07):
How have you found it working with lenders and
understanding different policies?
Speaker 3 (07:09):
and I imagine you'd learn a little bit of.
Something is like where youmight even like, think to
purchase, like I'm getting a lotof clients and thinking about
buying in kellyville.
What's going on there, correct,correct, yeah, or people are
selling in a certain suburb and,you know, putting moving that
money elsewhere.
Speaker 2 (07:15):
We've been hearing about perth perth, perth, perth,
perth, for the last 15 episodesthat we've done.
Um, you posted something theother day and I mentioned it on
the last episode, but Perth'sgrowing a thousand bucks a day,
so how long have you held yourproperty now?
Speaker 3 (07:28):
initially made the offer in March, settled in April
, six months yeah, six months,ninety thousand dollars.
Speaker 2 (07:35):
Yeah, that's not a bad.
That's 500 bucks a day.
600 bucks a day, you know,that's, that's pretty effing
good.
And that was the last valuation.
The last valuation we did was amonth ago, correct, so it so
it's probably gone up since thentoo.
Speaker 3 (07:44):
Yeah, correct, and I think it's at the end of its
cycle.
Yeah, surely it can't keepgoing like this.
Speaker 2 (07:50):
I think and this brings us to our topic of the
day about interest rates cutsOnce that starts coming down.
I think Sydney and, inparticular, victoria.
I really think Victoria isabout to boom.
Speaker 1 (08:01):
Well, they've got supply now, yeah, and they're
actually because the biggestcomplaint that we've been having
in sydney is that, um, like,construction has been delayed
for correct one reason oranother whereas victoria,
obviously they still have theirown issues with their, with
their councils, but it's beenbetter there, like they're
building way more propertiesthere compared to supply and
also you've got like fewer, uhforeign investors uh going there
, because again what we weretalking about post-covidCOVID
(08:22):
like just with the taxes andstuff like that, like less
incentive to invest in Victoria.
So it's good forowner-occupiers basically in
Victoria, right, which is whyyou think that it might boom.
Am I in the right directionthere?
Speaker 2 (08:34):
Yeah, 100%, because Victoria has always been the
international hub.
You know Sydney is aninternational hub, like people
know Australia for Sydney, forsydney, they're not for the hub
of bridge opera house.
I think it's the capitals.
Did you see that video thatsome guy was asking a bunch of
americans what's the capital ofaustralia?
And like sydney, that everyonethought sydney.
(08:54):
One lady screamed out is itindia?
I was.
I was just like, wow, likeindia.
The average american iq is like98 or something.
Speaker 1 (09:02):
It's's not very high.
Their geography is shocking.
It's absolutely shocking.
Speaker 2 (09:07):
But everyone says Sydney, Nobody says Melbourne.
But when people move toAustralia, a lot of Melbourne
actually gets the majority ofthe expats.
A lot of people actually movedown there.
That's because it's more of acity.
Sydney is a city but it's not.
Speaker 1 (09:20):
It's turning into like a megalopolis type of thing
, like with Tokyo, where it'slike this big spread Because you
can drive an hour and still notleave Sydney, which is crazy I
don't think many cities are likethat so.
Speaker 2 (09:32):
one office in Oran Park, new office in Barangaroo.
Speaker 1 (09:35):
Oh, yeah, yeah.
Speaker 2 (09:36):
Another office, not another office, but I've got
referral partners up in BellaVista so in one day I could
drive from illawong to camden tobella vista, to the city and
home.
That could be like eight hoursof driving done in one day, just
to you know.
See all these clients andeverything, and I have not left
sydney.
They've spoken about the um.
They want three major cities inwithin sydney.
(09:57):
They want paramatta, sydney andthen macarthur, was it or
something?
Speaker 1 (10:01):
yeah, like that campbell town area they're
trying to trying to boost it up,which is, I mean, like the oran
park stuff.
That's why all that stuff'sgoing up.
They're trying I mean they'vebeen trying to do that with
paramount for ages yeah,paramount looks like the city,
if you, if you weren't payingattention, you look out the
train window.
Speaker 2 (10:13):
You're like, oh, have I arrived yeah, I'm at town
hall now, but yeah, back to thetopic interest rates as early as
next month, as late as earlynext year.
So there's been a drop there'sbeen a lot of talks and, as you
mentioned, um, the reason why alot of people have left
melbourne is because theinvestors or people, anyone that
(10:34):
invested there they're notactually costly, then it's too
costly.
They introduced a new land tax,um, rent isn't covering the
repayments and they're goingokay.
If I pull out now, I I'm goingto be able to take my money from
here, I might be able toreinvest it in Queensland and my
money will start growing again.
Speaker 1 (10:50):
Or Perth, as it seems .
Yeah, yeah, I think.
Speaker 3 (10:52):
Melbourne or Victoria .
From an investor's standpointit's going to be a long-term
investment.
It's declining, right?
Yeah, depending on the suburbthat you buy.
In Victoria they're actuallyseeing negative growth.
So if you buy now, there's achance it's going to continue
that negative growth.
But two years, three years,five years, surely it's going to
(11:13):
come good, right?
Speaker 2 (11:14):
The population of Melbourne CBD, like itself, is
actually higher than Sydney CBD.
Speaker 1 (11:20):
Oh yeah, I would hate to live in Sydney CBD, like
specifically right in there.
Speaker 2 (11:24):
No, no.
But I'm not talking about likethe CBD, like just Melbourne
itself.
I'm talking about like greaterMelbourne area is like 5.8 mil
and then greater Sydney area islike 5.3 million.
It does eventually have tostart growing because you can't
just keep building and buildingand building.
Well, you can, but not at thatrate Like it will sprawl and
anything that's in the city isjust going to increase in value
(11:46):
because, okay, they've put ahigh-rise up, then they might
put another high-rise up,everything.
Eventually they're going to runout of high-rises to put up.
Eventually there's not enoughspace.
They're going to startintroducing height limits and
those sorts of things andthey're going to say enough's,
enough, we're capping this nowand that's when it's going to
start booming.
Speaker 1 (12:05):
And I think that's actually going to happen sooner
than later, because I reckonwe're still at that period and
also this is an uneducatedopinion, yeah, but like, are we
not still in that period wherewe kind of need like there's
been more calls for more densityand more high-rises and stuff?
Speaker 2 (12:20):
No, Melbourne itself is already dense and melbourne
has a lot of old buildings?
Yeah, okay so because melbournewas the major city of australia
previously, you got a lot ofheritage, a lot of um yeah,
european inspired buildings downthere.
Yeah, we knocked all those downin sydney you can't touch those
.
You can't touch those over there.
So it's um, it's going to bevery interesting.
(12:40):
Um, I've been doing a lot ofwork in melbourne recently.
There's a lot of savvyinvestors down there.
Yeah, I just think the interestrates and the introduction of
that new um investor tax correcthas hurt individuals.
But to me that also says thatif you're, if you're
pre-prepared now and you're ableto withstand that, that you're
probably going to be able tobenefit in the long run correct.
Speaker 3 (13:02):
You could find a buy If there's less competitors.
When you go to an open home andyou put an offering, you might
be able to negotiate a lowerprice than advertised.
So I think there's definitelygoing to be opportunities like
that.
And, vic, it just depends, likeyou said, how long they're
going to hold it for.
In the long term it has to comeback.
Employment's great, they have.
Speaker 1 (13:29):
Yeah, I guess that's the only thing that's really got
against it.
Speaker 3 (13:33):
Aside from that great , very livable city.
Speaker 1 (13:36):
It's one in the top ten in the world.
Is it ahead?
Speaker 2 (13:40):
of.
Speaker 1 (13:40):
Sydney.
I know they're like neck andneck.
Speaker 2 (13:42):
When I was down there the other day, a suburb called
Keelaw.
Have you heard of Keelaw?
Speaker 3 (13:46):
No.
Speaker 2 (13:47):
It's 15, 20 minutes outside of the CBD, Keelaw.
So when you land you're aroundTullamarine, essendon, all those
sorts of things.
Keelaw is a suburb, just I wantto say west of so around about
that area.
Speaker 3 (14:00):
Yeah, it's around about that area.
Speaker 2 (14:02):
Okay, and townhouses.
And, mind you, this is 15minutes to the city, like
Melbourne CBD on the highway.
Townhouses have gone for like800K, extremely affordable.
Man you can't find.
How far do you have to gobefore you can get a townhouse
for 800 000 in in new southwales?
Past paramount, definitely waypast paramount.
Yeah, you, penrith, even inoran park you'd be struggling so
(14:25):
david and I were looking theother day our properties in oran
park and what did we find?
Speaker 3 (14:29):
we found for a house.
A house is over a mil.
Speaker 1 (14:32):
It's one sitting around 1.2 now and this park,
which is not near anything like,except for campbell town yeah,
pretty much and but original,like that's gone up.
Speaker 2 (14:41):
I think they've gone up quite significantly 10 a year
.
We have a client right now whobought an apartment in oran park
.
They bought for 550 000 I wantto say 18 months ago.
It is valued today at $735,000for an apartment.
So to anyone listening to thispodcast look at those pockets,
(15:03):
look at where you think it'sgoing to boom and where people
are talking about it's going toboom the new airport, badgerys
Creek, that's going to open intwo years.
Speaker 3 (15:09):
Correct, that's creating a lot of buzz.
There's a lot of desirabilityaround that Leppington, oren
Park, norellon, camden area,whereas you looked at Liverpool
or Kisoola for an example and itdoesn't seem people are willing
to buy or pay as much comparedto Oren Park.
I don't know if it's justbecause of the future
(15:31):
development.
I think people are thinking ofwhat that suburb's going to or
has become so far and is goingto become that they're willing
to set themselves up there longterm.
Speaker 2 (15:41):
Yeah.
Speaker 1 (15:42):
I think it's also because it's like new, like the
literal everything is new,people like it, it's shiny, it's
nice, the power lines areunderground.
Speaker 3 (15:48):
It just looks clean when you drive through.
There's lots of nice trees andparks and lakes and all that
sort of stuff.
Speaker 1 (15:54):
Yeah, exactly, it's.
Speaker 3 (15:55):
very family friendly.
Speaker 1 (15:56):
Like my family lives in and around the Liverpool
Fairfield area but like I knowthat there's not the greatest
reputation, so I'm sure that'splaying into the fact that, like
people don't want to pay over amillion dollars to live in
Liverpool or potentially Justpsychology.
Speaker 2 (16:10):
You say that, but Chester Hill is part of the
Liverpool area code.
Speaker 1 (16:13):
Yeah, I imagine it would be.
It's not far from it.
Speaker 2 (16:16):
Chester Hill's gone up in the last year 22%.
Speaker 1 (16:19):
Yeah, fairfield, I think it would be in Fairfield,
yeah, fairfield.
Speaker 2 (16:21):
But it's right next door.
But, that's 22%.
That is an outrageous amount ofgrowth.
Speaker 1 (16:27):
It's the third best performing suburb in New South
Wales.
Speaker 2 (16:35):
You're kidding, yeah, oh, no, I'm not kidding, but
you know the reason why theyallowed people to be able to
build CDC duplexes, ah, okay Forthe uninformed, so for the
uninformed.
Previously there was DA andthere was CDC.
Now DA is a developmentapplication that you need to
submit.
Now the problem is with DANIMBYs can get involved.
(16:57):
What are NIMBYs Not in mybackyard?
The DA needs to be advertised.
The plans need to be lodgedonto the council portal and
people have the opportunity toprotest.
I don't like this.
I don't like that.
This is going to affect myfacade.
I don't like the height limit,those sorts of things.
Cdc is a complying developmentcertificate, which means if you
comply with all of the rules ofthe council, you can literally
(17:21):
start building.
You lodge the application withCDC.
Eight weeks later you've gotyour certificate, you can start
the construction, and ChesterHill started to allow it.
That's the reason why it boomedso much, because people saw the
opportunity.
If I buy this house for $900,000, it's got 16 meters of frontage
, which is one of the key thingsof CDC.
It's got 16 meters of frontage.
That means I could fit onehouse here, one house there, two
(17:42):
keys, strata title.
One's going to be 120 and theother one will be 120A or
something like that.
It's going to be a strata title, but then I've got two
dwellings, I've got two forms ofrental income and then I've got
two properties that areappreciating, not just one.
And that's why Chester Hill isperforming so well, because he
underperformed for so many years.
Because Chester Hill was in anarea that people thought was
(18:05):
undesirable.
There were a lot of housesthere that were going for cheap,
but once they brought in thisnew rule they were like wait a
second If for cheap.
But once they brought in thisnew rule they were like wait a
second if I, if I buy thisproperty cheap, I'll buy four,
let's say back in the day,because dave dave and I are the
same age.
Just to let all the listenersknow, back 15 years ago, yeah,
if you told someone you bought ahouse in chester hill for 1.3
million, they would throw abrick at your head what are you
(18:27):
doing?
they were worth 400 500k backthen.
Yeah, they were, they werecheap, they were cheap houses.
But what you could do, oh, 400k, 500k, okay, perfect, I'll go
put a CDC application in.
It's going to cost me 150,000per site to build this beautiful
duplex.
And then, all of a sudden, Icould sell one for, you know,
650.
I could sell the other one for650.
I've made 300 grand on each one.
(18:49):
So, Dave, where are you seeingthe opportunities around
Australia at the moment?
Speaker 3 (18:53):
For my next investment.
Yeah, like I said, wa is done,just way too hot.
It's going to be at the end ofits cycle now, okay.
So I'm thinking Queensland,either regional Queensland, yeah
, and I've also got my eye onVictoria.
Yeah, I think Victoria.
For me it's a little bit tooearly.
I'm used to buying a propertyand having pretty immediate
growth, first property southwestSydney, second in Gold Coast,
(19:17):
third in Perth.
So all those purchases haveimmediately grown in value.
Speaker 2 (19:23):
Tell me about southwest Sydney.
Where did you buy that?
Speaker 3 (19:25):
So that was my first home.
That was in Leppington where Ihad a reduced stamp duty, so it
wasn't a complete exemption fromstamp duty.
So I bought that in 20s end of2017, settled early 2018, held
that property for three years,got great growth.
So I bought it for 700 and soldit for uh, just under a mil wow
(19:47):
, in three years.
Yeah, and the reason I decidedto sell that property is because
the yield was just terrible,let's say, valued at $1 million,
renting for $520 a week.
I just thought you know whatit's gone up in value.
I can pull some cash out hereand I can use it to buy other
properties elsewhere.
Gold Coast property bought itfor $670, renting it for $830 a
(20:11):
week currently.
So the difference in yield andit's had a growth over the last
two years as well so I don'twant to put my money somewhere
where I'm not going to get thatimmediate growth.
Like I said, perth's done.
I don't think it's, even ifit's still going up month on
month.
I mean, no one knows where theend is, but that's a bit of a
gamble you take.
(20:32):
If you buy something for 700grand at the moment in perth,
where's it going to end up?
Is it going to end up at 730,750?
Is that worth it?
I could take that 700 grandelsewhere, let's say, you know,
earlier on in the cycle and it'sgoing to hit 850, 900, like.
I don't know an exact suburbyet, but I'd say regional
(20:54):
queensland.
Um would be on my radar formore immediate growth and then
maybe further down the linesomewhere in victoria that's
awesome, man.
Speaker 2 (21:05):
Um how, how much time do you spend researching
property?
Speaker 3 (21:09):
when I, when I'm ready to go.
So when i've've got the equityor pre-approval, I won't go to a
lender again for a pre-approval, it'll be via one of our
brokers.
I'm very obsessed.
I'll spend every hour of theday I'll check to see what's
been listed, what's selling,I'll set up alerts.
(21:30):
I'll go on forums online.
I'll try and gather as muchinformation as possible.
I'm just yeah, it usually takesme around two, three months to
actually narrow it down, um,from when I have that
pre-approval and we'll have thefunds ready to go to actually
purchasing some uh something.
But I'm very, very obsessive,so I'll just gather as much
(21:52):
information as possible and justcompare it.
Run the numbers, you know, runthe figures and just compare
with you know other suburbs,because you really have to
narrow it down.
Once you know the state, okay,then you know you might know the
city and then you want to lookat each suburb within that city
and you know, look at the yield,vacancy rate.
(22:13):
What's the growth been like inthe past?
Is that a reflection of thefuture?
What is going to be acceleratorof growth?
Walking score, is it near thewater?
Education, hospitals, schools,shopping centres, all those
sorts of factors that you needto take into play, and you're
not going to know that just bylooking at ads on
(22:34):
realestatecomau right everysingle one of those photos is
extra contrast.
Every agent writes the samething.
Great investment opportunity,you know, near the shops, near
the cafe, near a school, cool.
Speaker 2 (22:47):
That doesn't mean it's going to be a good
investment for me I actuallyreally like the fact that you
flew out to Perth to get a feel.
Speaker 3 (22:58):
Yeah, I wanted to because I spoke to a few agents
before going there and one ofthe agents said the north coast
is a little bit nicer lowercrime rate, just a nicer
coastline than the south coast.
So I essentially went fromPerth CBD all the way up to
Yanchep, so I explored that,from Perth CBD all the way up to
Yanchep, so I explored thatwhole coastline.
And then on the following day Iwent from Perth CBD down to
(23:20):
Mandura or Hall's Head and justgot a general feel for the
suburbs along that wholecoastline and from there I went.
I did establish yeah, northCoast was the choice for me.
And then just driving back fromButler and we stopped in for a
coffee along the way and I saw abeautiful marina just
(23:46):
completely found it by chancecalled Mindari Marina.
I thought, wow, if I could buya property close to this, it's
got the beaches, it's got themarina, it's got all the
shopping centres, the schoolsetc.
That would be a great buy.
So that's where I ended upbuying.
There's a few things to graspthere.
Speaker 2 (24:05):
Invest in places where people want to live.
There's walking score A realestate agent.
I've met with a thousand realestate agents in my life.
Not once has a real estateagent actually brought met with
a thousand real estate agents inmy life.
Not once has a real estateagent actually brought up
walking school.
To me they'll say oh, there'slots of little cafes around,
where's the cafe?
Speaker 3 (24:21):
20 minute drive it's a 20 minute drive, you know oh,
there's a Jiminy here.
Speaker 2 (24:26):
Oh, where is it?
It's a 15 minute drive.
I'm like, come on, man, likethey're always trying to sell
you, and the reason for that isreal estate agents make their
money on the commission, theymake it on the sale and they get
their listings and they justwant to sell the property.
Speaker 3 (24:38):
They're acting for the vendor.
Have you used a buyer's agentbefore?
Speaker 1 (24:42):
No, not yet.
Speaker 3 (24:43):
Really I'm not that busy.
Okay, I'm not that time poor,not yet.
At least You've got to startworking harder.
Speaker 2 (24:52):
This guy gets emails from me.
No, he gets phone calls from meat 10 pm and he's like have you
looked at this?
Speaker 1 (24:58):
this and this and he's like are you seriously
still going to go to sleep?
Speaker 2 (25:01):
I actually want to touch on one last thing.
So perth boomed, seriouslyboomed, because interest rates
were so high, because people atthe lower end of the market
couldn't buy anything.
In sydney you work inpre-approvals.
You've seen it time and timeagain if somebody's earning a
hundred thousand dollar a yearsalary, what can they borrow?
550 grand tops?
Speaker 3 (25:21):
not gonna get you anything.
Yeah, with the majors, you know.
Speaker 2 (25:25):
But you can still go buy something out in wa and
because that was occurring,that's why wa was spiking so
much.
That's why I was growing ata,000 a day.
Do you think, once interestrates drop, that Sydney is going
to boom again?
Or Melbourne is going to boomagain because people are going
to have that opportunity to buyin those?
Speaker 3 (25:45):
locations again?
Absolutely yeah, I think peoplewill look to buy local If they
have more borrowing capacity,then they're not necessarily
going to look interstate.
It depends on what they'relooking to do as well why
they're not necessarily going tolook into state.
It depends on what they'relooking to do as well, why
they're looking to buyOwner-occupiers.
I'd assume more owner-occupiersare going to be active in the
Sydney market once rates drop,because they can now borrow
(26:07):
$200,000, $300,000, $400,000more than they could with rates
sitting at mid-sixes, right.
So I think we're in for anotherboom in sydney.
Um, if I personally, if I waslooking to buy in sydney and I
had a pre-approval ready to go,um, I'd be pretty strategic.
Speaker 1 (26:25):
I'd look to get in before we hit that little boom
yeah because I said, I think assoon as the rates go down, all
buyers are going to startflooding the market and for
those that there'll be initialprice drops.
But all buyers are going tostart flooding the market and
for those there'll be initialprice drops, but then they're
just going to go straight up.
I think it'll be like a coupleof months of relief.
Speaker 3 (26:41):
If a rate drop happens before Christmas, just
imagine how many people aregoing to be turning up to open
homes.
Speaker 1 (26:49):
Yeah, it's going to be insane.
Speaker 2 (26:57):
The competition is going to be fierce and prices
are going to go high, so I'mthinking that they might drop
the rates, because we spokeabout the retail quarter and
retail spending is all the waydown.
I don't know.
Has anyone been to a shoppingcentre recently?
No, they're dead.
I was at Westfield Miranda theother day Rainy day, so perfect
day for people to be outshopping or that sort of stuff.
No one there's no one in theshopping center.
No one's spending money.
The issue with that is there'scommercial tenants in there and
(27:20):
those commercial tenants need topay rent as well.
And if they're not makingbudget, what ends up happening?
They start shutting down.
And those massive and I'mtalking those massive shopping
centers, guess who they're owedby?
Guess who funds them?
A lot of the banks.
So they, the banks, couldactually end up having landlords
defaulting on them because theycan no longer afford to pay the
(27:41):
debts, because they're notgetting the rental income,
because they don't have enoughtenants in.
So, it's not only the mums anddads that are affected, it's
also, you know, the big retailgiants and the large
manufacturers.
So I think, I genuinely believe, we are going to have a rate
cut just before Christmas,because they need that Christmas
(28:03):
boom.
Speaker 1 (28:05):
Even just in consumer spending, let alone property.
Speaker 2 (28:08):
Yeah, but they need the consumer that's where I'm
starting.
It starts with the consumerspending, because as soon as the
consumer spending startshappening, you're not having
businesses shut down.
In Miranda, westfields or BondiJunction, I think I was walking
past Camilla.
No, not Camilla, but one ofthose girl shops like the
popular ones, sass and Bitethat's the one I was thinking
about Closed down, oh damnClosed down in Miranda Bummer,
(28:30):
you know.
Speaker 3 (28:38):
No, but like I'm just saying, like it's, it's not
something that yeah, um, smallbusinesses and retail businesses
are feeling it.
Yeah, even near me in roselle,uh, on darling street, as you go
into roselle, there's aboutfive uh shop fronts that have
just vacated, yeah, yeah.
So think about this okay, thelandlord?
Speaker 2 (28:52):
yeah, they.
They're trying to get the rent.
Why are they trying to get therent?
Because they owe the bank money.
If they default, okay, the bankmight be able to resell the
asset, but the bank still hasdebt.
The bank is borrowing thatmoney from the reserve bank or
they're borrowing it fromsomewhere else.
The world works on debt.
Who's making money?
Who can lend it?
That's all it is.
And there implications if theydon't start reducing the rates.
(29:12):
And I think you're right whenyou say that, like, get in now
if you've got a pre-approval,because it's going to get
fucking hot yeah, don't wait.
Speaker 1 (29:19):
Yeah.
Yeah, the rates aren't good now, but that's why it's a good
time to buy exactly, I won't besaying the same.
The complete opposite.
Once the rates drop, goodbyenow the rates low.
Speaker 2 (29:29):
When's the next best time to purchase?
It's today.
It's an appreciating asset.
Anything, anything with land onit.
What happens?
It goes up, it goes up.
There's only so much land onearth.
There's only so much land nearthe Sydney CBD.
There's only so much nearParramatta.
There's only so much near PerthCBD.
Speaker 1 (29:45):
That's it.
People want to live inAustralia.
It's very clear.
Speaker 2 (29:49):
It's just like you say that now You're like, yeah,
we're going to say the samething when rates are down.
Yeah, I am going to say itBecause it's true, because the
government retirement age is 67.
The pension is shit.
Your superannuation okay, itmight be worth something now,
but it might not be worthsomething by the time you retire
.
Set yourself up for life.
Get in early 18 to 25.
(30:10):
How old were you when youbought your first property?
27.
When you bought your firstproperty?
27, 27.
Okay, get in early.
Get in in your 20s, because bythe time you're 40 you sit in
there.
You're probably gonna haveseven properties by the end of
next year.
Um, knowing this guy and theway that he hunts and everything
he's probably gonna have, youknow, a strong property
portfolio by then.
Okay, by the time you're 40,what happens?
Oh, guess what?
(30:30):
Your back hurts.
Hey, you can actually take timeoff, work and recover.
Speaker 1 (30:35):
The unfortunate part is, so like we've got stats for
this, so like in in 1981, 55% ofAustralians aged 25 to 29 owned
a home.
That's dropped now to 35%.
Yeah, so it is rougher.
Speaker 3 (30:46):
So you're gonna have to find ways to work around that
, or just be more open to buyinginterstate as an investment or
for your first property, I.
Or just be more open to buyinginterstate as an investment or
for your first property.
Speaker 1 (30:56):
I don't think people understand how equity?
Works, correct, like broadlyspeaking, because people are
like but what's the point inbuying this when I can't?
Why would I?
Speaker 3 (31:02):
buy in Queensland.
I don't know anything aboutQueensland.
I've been there twice.
Everyone wears thongs, I don'tknow.
Or they walk through the mallbarefoot.
Do I really want to buy there?
That was literally how I usedto think in my 20s.
I thought why would I ever wantto buy interstate?
I don't visit Queenslandfrequent enough.
(31:22):
What happens with a tenant?
How do I know they're takingcare of the place?
How will I manage it?
You just find a good propertymanager and they'll go out.
They'll do inspections.
They'll take photos for you.
You chase them up for updates.
If anything's fixed, you knowthey'll go out.
They'll do inspections.
They'll take photos for you.
You chase them up for updates.
If anything's fixed, you makesure you know.
If anything's broken, you makesure it's fixed.
So be more open is my advice topeople in purchasing in other
(31:45):
states.
Yeah, because if it's moreaffordable and that's it matches
, you know it's going to be away in for you to build equity
over the next few years?
Speaker 1 (31:54):
Yeah, because it's what Joe said.
The whole world operates ondebt.
Who's got the money to thenlend money?
The way that you get the moneyis to put it into equity, and
then you can access that laterwhen you need it to purchase
another property, maybe thehouse you want to live in.
So that's generally how it willwork.
So don't think about it in away.
(32:15):
It's like I don't want to buyin Queensland because I'm not
going to live in it.
Speaker 3 (32:17):
Yeah, be more open-minded to other states.
I've never had an issue with atenant in any of my properties.
If something's broken, theagent will let me know.
They'll send a tradie in thereto get a few quotes and I'll
make a decision from there.
Speaker 2 (32:34):
Okay, good, you brought up agent.
This is a massive segue, but ifyou are renting a property, I'm
going to give you some verysound advice.
Don't rent it cash.
If you are expecting to growyour equity, refinance and use
that equity to purchase moreproperty, don't rent your
properties with cash.
(32:54):
I promise you you will regretit and it will be 900 times
harder to purchase more property.
Don't rent your properties withcash.
I promise you you will regretit and it will be 900 times
harder and more difficult to getyou an approval if you collect
cash.
Speaker 3 (33:05):
I'm sensing some frustration.
Speaker 2 (33:06):
Oh man.
Speaker 1 (33:08):
I'm sensing some logs have been like yeah, yeah, I
keep trying to explain it.
Speaker 2 (33:13):
I keep trying.
Okay, yeah, cash is great.
Fantastic, get the cash.
There's two things about debt.
Okay, there's two things aboutdebt.
Number one the bank needs tosee money going in.
And number two you need to paytax to borrow more.
If you're trying to hide asmuch tax as possible and do
these ones and do that one,guess what's going to happen
when you want to buy a house?
(33:34):
You're going to get shit.
Speaker 1 (33:36):
You're going to get a horrible interest rate, you're
going to have no borrowingcapacity.
Speaker 2 (33:39):
You're not going to be able to go to a major bank.
Some people just don't want tolisten.
They just believe oh no, no, no, I'm going to do it this way,
I'm going to do it that way.
Speaker 3 (33:55):
But then when push comes to shove and it doesn't
work that way, correct?
They're also better protectedif they have a property manager,
because the property managerknows the landlord legislation
back to front.
Yeah, and they.
They're that you know thirdparty that can just step in and
just take care of any issues foryou.
What?
Why would you, you know?
Why would you run the risk ofhaving an agreement with someone
you know their living situationmight change, they might start
falling behind on payments.
Do you want to be the onehaving that conversation?
(34:18):
Personally, myself I wouldn't,but some people want to run that
risk.
Speaker 2 (34:26):
Yeah, it's not wise, so Dave what are the goals for
the next 12?
Speaker 3 (34:29):
months For me.
Yeah, I'd like to purchase twomore properties in the next 12
months 12 to 14 months and justlearn as much as I can as a
mortgage broker and help peopleachieve their investment goals.
(34:49):
Really, that's fantastic man.
Speaker 2 (34:51):
That's fantastic, as always.
That is definitely some schmo.
My name is Joe.
If you need any assistance withyour investment needs, you can
contact Dave directly or you canvisit wwwitsimplecomau.
As always, my name is Joe andthank you for tuning in.
Is that what I finished with?
Yeah, we can tune in.
I'm very tuned in.
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