The Property Trio Cate Bakos, David Johnston and Mike Mortlock

Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

Cate kicks off the episode by sharing that the podcast is just a couple of recordings away from it's fifth birthday!

Kym is a single mum of two teenage kids, a business owner and her rent on her home has just gone up substantially. Kym has been yearning to get into property ownership for a few years now, but she is facing a few headwinds currently.

Dave talks our listeners through some of the hurdles that self employed borrowers face, from financials and timeframes, to heightened scrutiny. He also sheds light on some interesting small business statistics. "Small businesses comprise 97.3% of businesses in the whole nation". Dave steps through the impact that dependants (i.e. children) have on borrowing capacity with some context of a case study.

While Mike talks through the high rate of rental increase that Kym is facing. What can a renter do if their rental increase is unfair or unsubstantiated? Tune in to hear...

The Trio chat about some of the initiatives available to those who need a bit of assistance with their home buying. From National initiatives to state-based offerings, the Trio chat about each opportunity and consider those that could be helpful for Kym to explore. Shared equity schemes, deposit guarantees, regional opportunities and concessions are some of the items on the discussion table. (See these initiatives in the show notes). 

We hope Kym finds some of this helpful, and we love the fact that Kym reached out with a question that applies to so many people.

For our second listener questions, Claire asks, "What do you do when your financial planner is anti-property?"

Dave breaks down some of the key differences between the role of a financial planner and a property planner. The Trio ponder some of the reasons why some financial planners are less than enthusiastic about property as an asset class. Cate has a few possible reasons on her laundry list and she chats with Mike and Dave about some of these reasons.

"You can't sell a third of a property easily."

So, how can investors get the best out of their financial planners, and how can they navigate any perceived negativity about property. The Trio have a few tips to share.

..... and the gold nuggets! 

Cate Bakos's gold nugget: "To anyone who's looking to get into the property market and needs a little bit of help.... check out some of the initiatives on offer and familiarise yourself with them."

Dave Johnston's gold nugget: Dave expands on his answer for Claire about the role of a property planner versus a financial planner.

Mike Mortlock's gold nugget: Look at the 'ad-backs' and make sure your accountant is providing reliable information to your broker.

Show notes: https://www.propertytrio.com.au/2024/04/22/listener-questions-single-parent-and-financial-planners-vs-property-planners/

The March 2024 data is out, and Cate concedes she got it wrong with her March data predictions. She's considered the reasons why, and Cate sheds light on a possible reason for this, and it relates to bias.

Dave overviews the last twelve months of growth, and he points out that the last year has delivered almost 10% growth for the combined capitals; something very few would have predicted.

Cate sheds light on some of the enquiry she's getting, and some of the reasons why investors are turning away from ultra-hot markets. Perth is one example of a hot market, and the Trio explore how much steam remains in the Perth market.

Cate recalls a great article from Pete Koulizos in the recent PIPA Newsletter... he believes that Adelaide will continue to perform. Tune in to hear more...

Mike segues into rental performance. Median rents as a function of income highlight the expensive cities for tenants. Cate's insights into house versus unit rents is interesting also. Is there a correlation between increased land tax and increasing house rents? Mike explores.

Mike dares to broach the question Perth's climbing rents and tight vacancy rates; surely this signals that Perth is not at the top of the cycle.

Sales data is showing volumes above the five year average; although the Trio plead with CoreLogic to reinstate listing numbers and agent appraisal activity.

Distressed listings are showing an uptick in a few states, however. Are any jungle drums beating in Victoria? Cate delves into the data and asks the hard questions, although Dave wonders if distressed listings paint a picture of the overall health of a given market. Is there a correlation?

The Westpac consumer sentiment index isn't showing a dramatically different outlook since last month, but at a state level the indices aren't all aligned. Dave hints at the cities that are showing a more optimistic outlook.

Investment lending has increased despite headwinds such as interest rates, additional taxes and onerous rental reforms.

This state breakdown of investment activity is intriguing, particularly the disparity between Vic/Tas and the other, hotter states.

And... time for our gold nuggets...

Cate Bakos's gold nugget: Cate considers how we interpret data, and how bias can be introduced.
 
Dave Johnston's gold nugget: "n order to avoid FOMO, understand the right price point for yourself. Work out your strategy and match up the property location and type to your strategy. Look at the long term when you're making your property decision.

Mike Mortlock's gold nugget: "You can't buy the data, you can only buy the property."

Shownotes: https://www.propertytrio.com.au/2024/04/15/ep-253-march-market-update/

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Sally is about to purchase her first home. She has a deposit of $300K and is targeting a purchase price of $700K - $800K. Sally wants to live in the home, but is feeling that her borrowing capacity as an owner occupier is holding her back. She asks the Trio whether she should initially purchase as an investor in order to borrow more. Dave breaks down Sally's initial strategy with a few clever questions.

Sally is targeting Melbourne and she works in town. She is thinking of living in it for 5-10 years, and then upgrading to a larger family home when the time comes, keeping this initial property as an investment. Five to ten years is a long time though, and Sally is keen to find a property that will be adequate for her for a 5-10 year period. Cate has some thought-provoking ideas for Sally to consider. Cate also talks about tenure, and the importance of buyers making sure they have at least five years of tenure in their plan. 

Sally has indeed stated that she has done some homework and she’s identified that 2BR townhouses and villa units might be the ideal purchase. Cate demystifies villa units and recalls the conversations she had in previous eps with Pete about dwelling description variations around the nation. 

Sally has made a deliberate decision to avoid apartments. But.. not all apartments are equal. 

"There's apartments, and then there are apartments". 

Which are the variety that Cate thinks are absolute out-performers? Tune in to find out. 

Given townhouses aren’t all equal, the Trio unpack the various types of townhouses. 

Sally notes that the market conditions have changed a bit over the last couple of years in Melbourne.

How can Sally best navigate the Melbourne market over the coming months?  Sally circles back to her original suggestion about getting an investment loan for a property that she wants to live in. But as Dave explains, it’s not that easy.  How do the banks regulate this?

Lastly, Sally is unclear on whether she gets the stamp duty benefits if it’s an investment loan. Dave sheds light on some great tips for our loyal listener. 

.....and the gold nuggets:

Cate Bakos’s gold nugget: Sally can use the ‘sold’ tab on the property search engine to get a great peg in the sand.

Dave Johnston’s gold nugget: “Make sure you can purchase a property that you can see yourself living in for 5-7, even 10 years. Can you get a better quality asset in a better location, even if it means forgoing stamp duty savings?”

Mike Mortlock’s gold nugget: Mike congratulates Sally for saving $300,000 for a deposit, and he assures Sally not to worry about Melbourne’s slow performance.

Shownotes: https://www.propertytrio.com.au/2024/04/08/listener-question-owner-occupier-versus-investor-dilemma/

Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM


For today's episode, Dave throws it out to Mike... the paper that Mike's business has uncovered relates to growth of rents in units, contrasted to house rental price growth. Median rental growth for units have eclipsed that of houses, but why?

The Trio unpack their theories. Are investors pushing rents up or is the supply/demand equation speaking up? Mike hands the wooden spoon to the Victorian Parliament "People always want to be close to the action".

Mike ponders the pull of the city. And Cate mentions traffic congestion... is it an issue?  Labour shortage is challenging our economy. As Mike and Dave point out, "Anyone who wants a job, can have one."

Cate sheds light on unit performance in Melbourne and the investors who feel disenfranchised. We now have an undersupply issue that has challenged units in Melbourne.

But what is Mike's data telling us?  "How is our aging population likely to challenge this data?", asks Dave. Mike shares his thoughts. And why is WA outperforming? The Trio shed light on this outperformance.
 
And our gold nuggets:

Dave Johnston's gold nugget: Dave looks forward to the pub!

Mike Mortlock's gold nugget: Unit yields may outperform houses. Mike ponders affordability and concludes that units should be considered. 

Cate Bakos's gold nugget: "There are markets within markets. It's pockets, it's streets, it's orientation. You have to remember to use the data wisely when you have a specific wish list." 

Show notes: https://www.propertytrio.com.au/2024/04/01/median-rental-gap-between-houses-and-units-closing/

Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

For today's episode, the Trio are diving into the sophisticated world of investment borrowing and they'll unpack the nuances of leveraging borrowed funds to not just acquire investment properties, but also to optimise the financial structure surrounding your investment to legally optimise deductions.

Despite accountants being tax expertes, they are not mortgage strategists and so it is important that investors understand these strategies and are able to impliment them with their strategic mortgage broker.

Whether our listeners are seasoned investors or just starting out, today's masterclass with Dave will equip buyers with the insights to navigate the complex landscape of investment borrowing.


Dave launches into the ep with the first tip about investment borrowing. But he confuses Mike about good debt versus bad debt. Cate defines good debt, bad debt and terrible debt!

Should buyers try to borrow the full purchase price plus all purchase costs? Surely this could feel alarming for those who are debt averse, but the Trio shed light on when this is a great idea, and why it's so beneficial for investors. 

Cate raises the concept of 106% Loan to Value Ratio and Dave distils how this works, and why it's not an uncommon LVR.

Why is 80% LVR such a well-versed figure though, and what lender benefits to some professionals get to enjoy in relation to higher LVRs?  "If you read in the media, it's all about the cost you have to save for a deposit, but who really saves 20%?", asks Mike. Good question, Mike. The Trio shed light on the reality of this claim.

Is there any reason to set up the investment loan limit for more than the full purchase price plus costs? And when is this a dangerous play? Mike delves a bit deeper... From cash-out policies to drawdown processes, Dave walks our listeners through this complex question. 

"The true cost of your interest rate after the tax deduction is cheaper than the cost of your interest on your home loan (as long as you're above the tax free threshold with your earnings." What does Dave mean by this, and why is this so critical to understand in relation to 'good debt'? 

Which tricky scenarios might fall outside of that general rule of paying interest-only on investment, and P&I on your home loan? Dave has three scenarios, and Cate excitedly recognises that her own personal journey currently fits one of these quirks. 

And lastly, Dave has some general advice for listeners who are planning to upgrade their home and retain their old home as an investment. 

.... and our Gold Nuggets! 

Dave Johnston's gold nugget: "If you're getting strategic mortgage advice, make notes." The retention rate of detailed information isn't often compromised, and it's important for borrowers to be clear on their mortgage strategy and set up.

Mike Mortlock's gold nugget: Number one rule - investment debt is what you want to maximise, and home loan debt should be minimised. 


Cate Bakos's gold nugget: Not being afraid of good debt is important. But being aware of the worst kind of debt is also very important too. Unsecured, expensive and short-amortised debt can be problematic. "I highly recommend you talk to a strategic mortgage advisor if you have that kind of debt." 

Show notes: https://www.propertytrio.com.au/2024/03/25/mortgage-masterclass/

Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

The February 2024 data is out, and the Trio circle the headline; the ridiculously tight vacancy rates nationally. Mike compares houses and unit performance and ponders the drivers for unit purchasers. Dave delves into Perth's outperformance and notes the predictions he and Pete made eighteen months' prior.

Is buyer confidence up? Cate sheds light on her own experience at the coalface. But how does data lag impact the figures, and will Cate's prediction match the March data? Only time will tell... 

What is happening with the regions? For the quarter, combined regions have outperformed the combined cities, but why? The Trio unpack this.

Mike dares to broach the question... "Where is Melbourne at?" The Novocastrian dares to challenge the proud Melburnians with this question, but they rise to the challenge and shed light on what is going on in their home city with investors.  And have the regions suffered to the detriment of Melbourne's recovery? Not at all, but Cate explains the dynamics post-COVID. Cate also shares the value-proposition of houses in nearby regions versus apartments in Melbourne's inner-east. 

Vacancy rates are so tough on tenants right now and the Trio note that vacancies have tightened even further. From changed planning laws to talk of investor incentives, the jungle drums are beating. But sadly the Trio concur that conditions will continue to deteriorate until governments make a different kind of change. 

Listing activity is higher, yet sales volumes reflect that buyer demand is meeting supply and this coming weekend is set to be a stand-out weekend for auction numbers. But what will post Easter, and early winter look like?

"We only need to talk about rate decreases and people go crazy"

Rental values have re-accelerated in 2024. Feb recorded the highest rental reading for the last eleven months.

Will rent growth outpace capital growth? The Trio weigh in... and they don't all agree. 

The three year bonds curve shows that the money markets are predicting three rate reductions as an average cash rate. 

And... time for our gold nuggets...

Cate Bakos's gold nugget: For any prospective tenants out there, you have to be prepared to differentiate yourself in this tight vacancy rate environment.

Dave Johnston's gold nugget: This month suggests that so many data points are pointing towards a property price rebound this year, so if you are considering buying property, it's time to get your ducks in a row. Narrow in on your strategy, arrange your pre-approval and be clear on the plan. 

Shownotes: https://www.propertytrio.com.au/2024/03/18/ep-249-february-market-update/