Property Hub - Investment Insights & Inspiration - Get Invested: Bushy Martin: Is now the time to buy property?

Episode Date: January 29, 2021

In this Summer Series episode of Get Invested, I thought I’d help you with my insights on key property questions for 2021: What is likely to happen in the world of property? What are the key metrics you need to consider before you buy property? And is this the right time to buy Property? To do this, we’re publishing a recent conversation I enjoyed as a guest on the popular Nucleus Investments insight podcast. It was a terrific conversation covering a broad spectrum of areas of property market conditions including the under supply of quality properties, falling mortgage rate impacts and the flow on from the anticipated upcoming changes to responsible lending laws.  We talk about areas of Australian property that have been helped and hindered by the pandemic and we chat around the key metrics you need to use when sizing up the potential of an investment property. We also discuss: Some common property pitfalls that investors make, especially in relation to SMSFs  We delve into the importance of land in property investing We touch on the question of what impact, if any, international border control and migrant population has on property The criticality of professional independence and what checks and balances are required in assembling your elite investment team, and We finish on potential short to medium term property market conditions along with an interesting chat on the Longer term outlook for property The Nucleus Investments insight podcast is produced by the team at Nucleus Wealth, which was formed to bridge the gap in financial market investment solutions for everyday people looking for the middle ground between cookie-cutter robo-advice and high-cost financial planning – Check them out at www.nucleuswealth.com. Get Invested is the podcast dedicated to time poor professionals who want to work less and live more. Join Bushy Martin, one of Australia’s top 10 property specialists, as he and his influential guests share know-how on the ways investing in property can unlock the life you always dreamed about and secure your financial future. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

One of the major differences, and you guys would know this, but one of the major differences between equities and the property game is that sort of quantitative models that aggregate means can be actually very misleading when it comes to property. Because unlike a sort of a perfect market that equities presents, housing is the exact opposite of that. Every property in every street and every precinct and every suburb and every city is different. So it makes good headlines to aggregate all of these figures, but it really hides and disguises the opportunities that sit below that at the individual level. And that's the true mystery, the science and the art of property in real terms. if you're doing it well, then the mean growth or the mean vacancy in a particular area means nothing if you've come up with the right solution in the right location. Welcome to the Get Invested podcast, where we share great conversations with experts

from all walks of life to uncover their secret know-how on where they invest their time, their skills, and their money, and the benefits that this has created. you see the truth is that everyone invests every minute every day we're investing our time our skills our energy and our money in something some of us are investing consciously some unconsciously sometimes for good sometimes for bad sometimes for no impact get invested will help you to start living by design not by default i'm going to help you to make it happen not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can live more, work less, and leave a living legacy by investing now. Listen to the show to discover

the top tips on how to get started, make the most of your investment journey, and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushymartin.com.au forward slash get invested. Thanks for listening, and now let's get invested. Hi, Freedom Fighters. What's likely to happen in the world of property? And what are the key metrics that you need to consider before you buy property? And is this the right time to be buying property? These are just a few of the questions that I'm constantly asked when it comes to considering property.

So in this summer series edition of Get Invested, while I'm still on leave, I thought I'd help you with my insights to these key questions by re-releasing a timely conversation I enjoyed as a guest on the popular Nucleus Investments Insight podcast recently. It was a really terrific conversation and we covered a broad spectrum of areas of property market conditions including the undersupply of quality properties, falling mortgage rate impacts

and the flow on from the anticipated upcoming changes to responsible lending laws. We talk about areas of the Australian property that have been helped and hindered by the pandemic and we chat around the key metrics that you need to use when sizing up the potential of an investment property. We also discuss some common property pitfalls that investors make, especially in relation to self-managed super funds and we delve into what is the importance of land in property investing.

We touch on the question of what impact of any international border control and migrant population has on property and we touch on the criticality of professional independence and what checks and balances are required for you in assembling your elite investment team. And we finish on potential short- to medium-term property market conditions along with an interesting chat on the longer-term outlook for property. Now, the Nucleus Investments Insight Podcast is produced by the team at Nucleus Wealth,

which is a group that was formed to bridge the gap in financial market investment solutions for everyday people looking for the middle ground between cookie-cutter row-buy advice and high-costing financial planning. So check them out at nucleuswealth.com. But before we get into it, I'm going to ask you that same favour that I've been posting for the last few episodes, as I really need your help and feedback. In order to help improving the Get Invested podcast to better suit your preferences, I

really need you to take just a couple of minutes and email me personally on bushey at knowhowproperty.com. www.knowhowproperty.com.au to let me know which investment episode you've enjoyed the most so far and why, which episode you've enjoyed the least and why, along with what I need to be doing more of and less of. Also, feel free to give me any suggestions on topics of interest that you'd like me to explore, along with any other guests that you'd love me to interview. So hit me up at bushey at knowhowproperty.com.au because I'd really appreciate your feedback. So thanks again in advance. And to get you in the mood for today's episode, here are a few of my favourite quotes that I refer to in my book, The Freedom Formula,

that always get me inspired. I have never in my life learned anything from any man who agreed with me. If you don't go after what you want, you'll never have it. If you don't ask, the answer will always be no. If you don't step forward, you'll always be in the same place. And this one's good too. Can you really explain to a fish what it's like to walk on land? One day on land is worth a thousand years of talking about it. And one day buying an investment has exactly the same kind of value. That was one of Warren Buffett's words of wisdom. And a final one, do something today that your future self will thank you for. I hope these get your creative juices flowing. In the meantime, enjoy this great chat on the Nucleus Investment Insights Podcast.

Today on the show, we have keynote speaker, all-round property investment wizard, and award-winning author, Bushy Martin. Welcome to Nucleus Investment Insights. Great to be with you guys. I really appreciate the opportunity to come and have a chat with you today. Great to have you on. And here to share his thoughts on the future of the Australian property market as well, I'm joined by Nucleus Wealth's Head of Investments, Damien Classen.

Hello to you, Damien. Hi, Tim. Good stuff. All right, Bushy, we'll look, just to get our listeners up to speed, would you mind sharing a brief background on yourself and what drove you to publish your recent book, Get Invested, and perhaps a little bit about it, mate? Yeah, sure.

So the books are really driven around my own personal journey, I guess, if I wanted to sum it up in a nutshell. And to give you a very brief rundown on that, I was an architect and a project manager for just under 20 years. I did what most time-poor professionals do and burnt myself out, ended up broken, broken and divorced as a result of working seven days a week, massive wake-up call, recognised the need to start investing to really get some time back and do things differently.

I affectionately referred to it as becoming passive-aggressive at that stage, in other words, being aggressive about creating passive income streams and then went on a journey. So I invested heavily in equities to start with because I really did start again from nothing at that stage and we're talking nearly 25 years ago. So I invested heavily. I almost practically day traded for a couple of years

to build up a float that enabled me to get into my first property and I got into property at that stage because of its leverage value really and it enabled me to make my money work a lot harder. And in those days, guys, you could borrow 97% plus lender's mortgage insurance with a very, very low deposit. So it was fairly easy for me to leverage into a number of properties. We learned pretty quickly that there's some real benefit in building homes and we focus on residential homes

as the highest growth and most affordable property assets to hold. We don't touch apartments or units at all, particularly in the growth accumulation phase of the portfolio, a bit different at the other end. So we really learnt some lessons around the build side of the equation. So we focus on good quality homes in tightly held infield locations with high demand lifestyle amenities that attract strong incomes and growing incomes.

And all of those are the fairly key ingredients to growth. and that put us in a very good position. So it took us about 15 years, my new wife and I, to put ourselves in a very strong position. As always happens, people start asking you, you know, you should write a book and you're helping other people to do this. So we've got a business know-how is really a facilitator for investors with a focus on the property spaces as that part of their portfolio.

And we take them on a holistic journey. So what we found in the property space very much was that there's no independence and there's no transparency. It's filled with vested interests for people trying to flog you something. So what we've deliberately done is positioned ourselves client-side and we act pretty much as their project manager in effect.

So we become their eyes, ears, arms and legs to put the property part of their portfolio together And the simple analogy I often use is that we sit down with people and we help them write their life symphony because most people spend no time thinking about actually how they want to live, what that lifestyle costs and how they're going to make that happen. So we spend a fair bit of energy in that piece, and that really leverages off my architectural design skills.

You know, you start at the end of mine and work backwards until you look at what your capacity is and how you're going to move from where you are to where you want to be. And then we've got a finance arm because property in particular is very much a game of finance and it's the strategy and structure around finance that makes or breaks the performance of the portfolio. And then the third component, we act as the orchestra leader.

So we assemble all of the independent musicians that are required to deliver that individual's personal symphony. And at the same time, keep all of those individual professionals honest along the journey. So it's a far cry from those one-stop shops and the spruikers that flog very average property to unsuspecting individuals. This is really adding a level of independence and transparency to the process, but also a robustness so that time poor professionals can get on with what they're good at, and that's building their career and spending time with friends and family while we orchestrate their portfolio behind the scenes. So that's a long journey into the books. the books became all of our clients over the years kept saying you should be writing a book

about this you should be writing a book about this so uh we've got a fair bit of time back on our hands now so about three years ago i put pen to paper and really documented that process so books in three parts the first part is getting them excited about why they need to invest i guess like yourselves uh there's a big recognition from from us and we want to really wake up hardworking Australians to the fact that just working hard, putting money into super and paying off the home loan is going to leave them in penny-pinching poverty when and if they try and stop work.

So the first part of the book really opens their eyes to the need to invest, and that's not just in property, that's across equities and other things. And then the second two parts of the book give them the fundamental principles, what I like to call preventative wealth where if someone takes the eight vitamin supplements that they need over time progressively and I guess there's an underlying belief that long-term investment success is a long-term 15 to 20 year journey then we've given them all those ingredients and then

the last part of the book is in the six-step process that they need to go through to make that happen so that's that's pretty much in a nutshell the the books really are targeted at lifting people's sights and getting them inspired but also breaking it down in such a way that if they want to do it themselves they can it's not rocket science it's just a matter of following the points and it's it's nothing new that this has been around for a long time we've just collated it in a way that's different so that people can link their lifestyle goals to how investment's going to help them achieve that. Okay.

So while we're talking, I guess, around some of those, I guess, a bit of your journey, you spoke a little bit about the pitfalls and, you know, we've spoken a couple of times in recent podcasts we've done about sort of some of the dangers in the apartment market at the moment. And so it's probably worth just sort of getting your sort of ground view on.

So for people who are looking to do some property investment, You spoke a little bit about some of the real pitfalls and so we've seen it and written about people who turn up at seminars and then the next thing you know, they own an SMSF with some property invested in it and rolled in through, bought it at quite high prices and they've all of a sudden got themselves all these extra financial planning and accounting costs that they're sort of rolling in every year. So I don't know if you've got some sort of similar types of stories or things that people should be looking out for? Absolutely. And the simple mass on anything with investment for me personally and what I'd suggest people adopt similarly is what's the person who's trying to help you, what are they actually investing in?

If they're not doing it themselves and you can't point to it, then I have a fairly limited belief in what they're trying to tell me And I suggest investors do the same. And if we talk about the housing space, it really isn't rocket science. We are looking at a long-term wealth purchase strategy, which is for most investors, when you actually look down and project what the wealth's going to be looking like, then growth is the important part of the exercise.

So we adopt a borderless approach. So we don't look at backyards. One of the biggest mistakes that first-time investors make is either to buy a house like they live in in their suburb because if you live in a house, you automatically think you're a property investment expert and that's a life of trouble. On the flip side of that is the example you just mentioned, Damien,

and that is these one-stop shop slippery shoe salesmen that have very glossy brochures with some fantastic-looking numbers. but if you actually break it down, it doesn't tick any of the boxes. So, you know, one of the first things there is that there must be a good land component in whatever you're investing because it's generally the land component that is the appreciation part and if you're one of tens, hundreds of apartments or units, then you're missing that opportunity straight off the bat.

There's no scarcity in any of that either. You know, scarcity in any investment is a very important part of it. So if you're in units and apartments, you're off to a bad start. The sorts of people who generally buy units and apartments are first-time investors who should know better, or it's on the owner-op side, it's singles, divorcees, students. All of those have very limited buying capacity and very limited income potential.

So guess what? the price growth of those assets is limited accordingly. So I'm very gun-shy of those, also very gun-shy of the self-managed super space, particularly when they're trying to flog them dual lock properties that just don't stack up in the middle of nowhere. Self-managed super can be a vehicle that can be used, but it has to be used very sparingly and with a very clear strategy in mind. but the key there with all of this is independence

and what I'm very gun-shy of are these one-stop shops where there are no checks and balances in the equation. So the sort of approach that we suggest investors take is to recognise that it is an elite team sport and an elite team has a bunch of individuals who are very good at their individual positions but understand the overall game strategy and as an investor, you're not a player at all.

You're just managing your managers. So providing each of those individuals is a separate business and it means that not all of those professionals are going to agree with each other. So the accountant can disagree with the finance guys. They can disagree with the property research teams, the project managers, the buyers' agents, the property managers, the full suite.

That's actually a good thing because that robust discussion allows an investor to then make informed decisions on what feels right for them, not what someone's trying to shove down their throat and take a very great big brown paper bag with some hidden commissions in it. Yes, absolutely. Yeah.

Okay, so with that sort of at one side, I wanted to then sort of jump, so I'm going to split this next part of the conversation into two parts. One is sort of current property market conditions and then the second sort of this longer-term growth aspect and I guess what the issues are there. And so I guess jumping to the current property market,

we've sort of been speaking – well, certainly you write in your book and just to sort of highlight, so this book was written in 2019, was it? Well, that was when you won your business award? Published then but written in 18, so – In 18, yeah. So conditions are obviously – we've had this coronavirus and so there's obviously a lot of things, a lot of different things going on at the moment.

And then I sort of wanted to sort of touch on some of the major things you'd spoken about and then how coronavirus is affecting that. So, under supply was one thing you wrote about in particular, you know, with high levels of unemployment, sorry, with high levels of immigration in Australia. And I guess also a relatively rigid planning system that sort of prevents sort of too much building done too quickly. You spoke of that being sort of a bit of a permanent feature. I guess, have you changed your mind on that one? I guess, how do you see that over the next sort of 12 to 18 months? Yeah, well, it's fair to say that COVID has certainly shaken up the mix as far as that's concerned.

But a couple of things too, you know, I'd see a lot of headlines and a lot of media stuff at the moment around the potentially catastrophic impact of closing our borders. And there is no direct correlation between immigration and housing. And there is an indirect one and a delayed one, but not a direct one. And the reason I say that is that most of the migrants, predominantly migrants, and a lot of them are, you know, I did some homework recently to try and dig up some numbers, but about, what are we now? About 70% of migrants are on temporary visas, so very few of them are property buyers.

That certainly affects the rental market, there's no question as far as that's concerned. And if you look at those numbers generally, then the flow-on effect for those that become permanent migrants is generally a two- to three-year time lag. So what we've got at the moment is a situation where the supply side has been affected by a drop in building approvals.

So we've come back about 60% on the levels of back in 2018. But I guess having said that, we've still got a decent supply hit coming from all the apartments that were started two or three years ago. Yeah, sorry, and I should have differentiated. My focus is on residential housing. I'll be honest, I don't touch apartments for the reason that we spoke about earlier.

Yep, okay. The investment class, I wouldn't touch them. One, they don't get the growth, but two, given the mass of them that has appeared in all of our capital cities, they are already being belted in terms of vacancy rates. There's still stuff coming on the market. There is an oversupply position with those, but what's happened is it's affected the overall aggregate look

at what the supplier side is. So we've actually been supplying the wrong type of properties and on the housing side, there's actually a shortage. Yes, and the demand of people who were living in an apartment and got locked in there for, well, six months in the case of Victoria and two or three months elsewhere is suddenly decided that they actually do need a house, not an apartment. Yeah, exactly.

And this is what happened in the Spanish flu back in the early 1900s. we saw a decentralisation and a regionalisation occur and that's exactly what's happening right now. And that actually excites me because I guess one of the major differences, and you guys would know this, but one of the major differences between equities and the property game is that sort of quantitative models that aggregate means can be actually very misleading when it comes to property because unlike a sort

of a perfect market that equities presents, housing is the exact opposite of that. Every property in every street and every precinct and every suburb and every city is different. So it makes good headlines to aggregate all of these figures, but it really hides and disguises the opportunities that sit below that at the individual level. And that's the true mystery, the science and the art

of property in real terms. if you're doing it well, then the mean growth or the mean vacancy in a particular area means nothing if you've come up with the right solution in the right location. Now, with the regional side of it, I mean, there's – I don't know if I'm oversimplifying the issue, but I sort of feel as if, you know, Australia is a pretty big place and even if you exclude all the middle of the deserts

and all that type of stuff, we're still a massive country relative to our population size. And so it seems to me that a lot of the undersupply issue for houses is a sort of a decision to make development more difficult and to put zoning and things like that. And that sort of regional areas, you know, if you took Dubbo, for example, there's no reason why – there doesn't seem to be a genuine reason as to why a property in Dubbo should be so much more expensive

than a similar regional city in the US or somewhere like that. So do you think there's – how much do you think – I guess where I'm getting to is how much do you think it's an element of the planning side in Australia and whether there's any – you see anything looking to change that or it's more very much the same, you know, looking to restrict sort of bigger expansion in regional areas? Yeah, there's a few topics mixed up in that one.

So let me tackle a couple of those. The biggest issue around planning is infrastructure cost. So the underlying infrastructure cost, once it's there, no problems at all. But if it's limited, and we're talking roads and services essentially, there's a big initial cost, which is generally coming out of government purse to drive that, and that money needs to come first.

So where the government's looking at maximising their opportunity, then putting in big swathes of infrastructure at their cost is often a challenge when there's budgetary constraints. And then offset that with the fact that, as you've well pointed out there, Damian, we have a discretionary planning system here in this country versus a more rules-based approach that happens in other parts of the world, and I do think that that does tend to logjam the whole process.

If you look at most council areas around the country, it takes months and sometimes years to get stuff through. So there's a massive blockage at that level. So while we've got endless buckets of land in real terms, it's unserviced land and when governments are trying to economise and save money, they're generally not in a big hurry to outlay massive amounts on that infrastructure. So that tends to become its own constraint.

So you've got the cost constraint, then you've got the planning approval constraint that tends to cover. And I think, let's face it, guys, in behind this, if we look at, And COVID's been a perfect example of the government's belief and probably appreciation in voting terms that given over 50% of the average Australian's family stored wealth sits in their home, then there's no government that's going to be dumb enough to put that at risk.

And we've seen with the absolutely incredible level of stimulant spending that's occurred during COVID. You know, one respected property researcher, SQM Research, hit the headlines last week saying that the governments will never allow a housing crash, and I think they're right. There's too much riding on it, both from a voting perspective but also the score of wealth. So it's created this critical mass property where no one can afford

to let it fail. yeah well and then let's see that's what we've um our whole investment uh thing for the you know we've sort of switched um you know a couple months ago to to this view that um that's sort of stretched across a number of different range now it's basically just uh we don't want people to go bankrupt we don't want people to get evicted from their home if they can't pay their rent we don't want people to get evicted if they can't pay their mortgage we're just going to try and um we just want everything to stay the same for a little while and we just don't want anything bad to happen and then here's a bunch of money flowing

into the system. And so, yeah, so I guess we sort of had this whole thing about saying that, you know, stock markets are basically and bond markets are basically central banks and governments and so you're just reliant on this stream of money coming because if the money stops or if they decide that, yes, people who can't pay their mortgage or can't pay their rent should be evicted, then all of a sudden there's all these

other flow-on effects, and nobody wants that at the moment, not at least until the next election. Spot on, spot on. Exactly. You've summed it up beautifully there, I think. And I think any government, once they start having a look at their voter base, is going to, in Australia, and I'm talking in Australia, of course,

is going to recognise that the wealth effect of housing has a massive impact on consumer confidence, which affects spending. And everything the government has done since COVID hit and, you know, we're suffering through the recession that we decided to have rather than one that we had to have 30 years ago is that they want us to spend because the only way to get out of recession

is to spend your way out of it. So they've done a very good job of doing that. They've dropped the cost of money so that the cost of money to service to the government as well as the banks and everyone else has never been lower and I don't believe it's going to get much lower. But the flow-on effect there is into housing We're in a situation where you're going backwards if you're leaving money in the bank, which is going to, in a low interest rate environment, is going to, in a low inflation environment as well, and that's not going to change in the foreseeable future, people are going to start sticking into assets.

And if you're talking the psyche of Australians who like the safety and tangibility of bricks and mortar, then all of those things put together are likely to put some pretty strong demand on property generally. But it's going to be patchy, guys. I always say this, you know, the tides aren't going to float all boats. Good quality properties are going to do very well. The rubbish will struggle. And it's no different in the equities markets, I'm sure.

Yeah. Well, I guess if we're sort of leading with one of these next questions about this whole idea of income consistencies, and obviously we've had a lot of problems with tenants and not having to pay rents and governments letting people not have to repay their mortgage with the idea that one day the tenant will suddenly show up with the $10,000, $15,000 worth of rent they've missed and you can repay your mortgage and it'll all be all right.

I guess how much of an issue for investors do you see that sort of investors being scared off by some of the incoming consistency you've seen over the last sort of six months? Yeah, again, it's only a relatively small sample, guys, and it tends to be on the stuff that hits the headlines, which is, again, CBD apartments. If you look at other areas around the country, and this is where good property is very locationally specific, so you've got to line up all the ducks in terms of the growth drivers, but let's take Perth as an example. Vacancy rates in Perth housing, I'm talking housing again, are less than 1%.

We've seen rents rise over the duration of COVID by 9% in Perth. So there's a bit of a danger in looking at a catch-all. It is going to be very segmented and very patchy in terms of where that sits, and a smart investor is going to know that. A smart investor is going to put his money in the sweet spot where the rental demand, the income drivers in that location are going to be working to their favour and avoiding those types of properties and those types of demographics that are going

to be problematic because, if nothing else, COVID has been an accelerator. It's just made the strengths and weaknesses more obvious in a much shorter space of time. In terms of – we spoke a little bit about the banks there, and I guess we looked upon – I don't know whether you see it the same way. We sort of saw the Royal Commission come out,

banks all of a sudden look at what they've been doing and responsible lending type laws and think, hey, maybe they've got a bit of a problem here. And so they wound back a lot of their lending, which then sort of put the – set house prices down a fair bit. And then sort of post-Royal Commission, we had the government come out and basically say, you know, it's all better off. We want as much lending as possible.

And then we've seen recently the government talking about getting rid of the responsible lending laws. So how much do you sort of see that whole bank willingness to lend sort of colouring your view of the market? Yeah, as you know, we've actually got a finance breaking arm. So I'm fairly intimate with what's happening at that level. And a couple of comments because, again, headlines can be a little bit dangerous. If you believe the headlines, they're actually tossing responsible lending out. Well, that's a misrepresentation of what's actually going to happen

because what is actually going to happen is that responsible lending will remain in play for those at-risk products and those at-risk clients because if we actually look at the numbers in the Royal Commission, while some of the predatory behaviour by banks, brokers and others was appalling, represented about 1% of the lending transactions. And what's tended to occur both during the Royal Commission and prior to it, what's happened, if we trace the start of this

back to 2009 when the Labor government introduced the responsible lending regime following the GFC, which was very appropriate. And that was focused around making sure that banks and other lending facilitators didn't give you a loan that was not unsuitable for your purpose. And that's a fairly restrictive exercise. But what happened flowing on from that was that APRA

and ASIC both got involved and there was a progressive tightening because what the fraternity have recognised is that interest rates were traditionally the only blunt instrument that was used to try and dampen demand. That was proven to be a little bit ineffective and what they've then done is to put pressure on lending policy as additional instruments to try and either dampen or turn up the volume.

What's happened after and during the Royal Commission, though, is that the pendulum, unfortunately, has swung too far. So what's tended to happen is where the lending fraternity currently caters for the lowest common denominator and what it's done is hamstrung good quality borrowers from either being able to borrow anything at all or borrow a lot less than what they can actually afford. And we've seen layer upon layer upon layer of risk mitigation put in place to the point where it really has got silly. I've seen multiple investors that we look after in the space of 12 months shift from being able to borrow an extra million dollars to nothing, to zero, and they're strong. You do the numbers, they are in a very strong position

to secure and afford the ongoing debt. So what I see happening here, and there's still a little bit of water to shift in the bucket before it becomes legislation in March. But what we're going to see is, and we're already starting to see it a little bit, is a reduction in that multiple-layered approach that is having a double, triple, quadruple bite at the same cherry. And it's not being removed, it's actually being reformed.

If we look at the broking market, residential loans in the country now, on the 1st of January, the best interest duty legislation comes into play and that's actually going to be far more onerous than the responsible lending laws were with very significant penalties. If a broker steps outside of the line in relation to it,

there's fines of in excess of a million dollars and loss of licence if you transcribe. So I guess what I'm saying there, guys, is that I don't believe they're throwing the baby out with the bathwater with this. What has needed to happen is common sense come back into the equation in terms of lending and to remove the logjamming that's going on.

We've seen people in a position to be able to borrow move from buying a property and getting their finance organised in two weeks to taking two to three months. so there's a and the cost to government the cost to the banks and the cost to the customers in in and the cost of the industry of those delay delays is pretty significant so well can i split this into two parts one part i'm sort of going i can see where i i take your point that um there are individuals out there who are not being addressed properly you know with one way but i guess the flip side is australia's got the second highest level of household debt in the

world we're obviously doing a pretty decent job at getting getting credit out somehow to people um whether whether it's exactly right or not sort of anyway but actually maybe we could even leave that to one side and and because i'm actually interested in your thought your suggestion so so for investors at the moment um versus a versus an owner occupier do you still see it as as relatively difficult for or are you still seeing at the ground level that it's relatively difficult for them to get the lending or is it it has started to ease up a bit now a tiny bit it's still very good i've been saying for a while now that money's never been this cheap but it's never been harder to get and particularly for investors investors are very much victimized and they're an

easy target uh to pin the tail on the donkey and that's exactly what's happened so uh the lvrs the loan devaluation ratios are less the lending criteria is much more stringent the rates are higher uh yeah you know there really are some hurdles to allowing investors into the market there's still a few that are doing it and those those that can but we've seen a massive shift in that over you know the last five years in particular uh it's much more difficult now for an investor and much more expensive for an investor to get involved in property than it ever was yeah because where i'm leading to this is is we're sort of looking at the the whole the economy is sort of from the macro point of view and going,

okay, we can see this sort of housing strong patch coming up over the next sort of 12 to 18 months on the back of lower interest rates, lots of government stimulus, everything thrown at it, and looking at what the danger parts are. But it sounds as if, though, as well, if they do get through some restrictions, reduce the restrictions on investors in March

and manage to get through some of those, then we're actually probably, there's probably a bit more turbocharge for the housing market as investors suddenly get the green light to come back in? I think there will be. I think we're going to see two waves in relation to what's likely to happen.

And again, I hesitate to generalise in property because of the individual nature of it, but in terms of the sort of overall underlying drivers, I think the change to the lending legislation is going to give a boost to demand because we're going to see people who haven't been able to get in get in we're going to see uh people who uh couldn't borrow much you know borrow more so there is going to be significant demand that will come out of that i believe so this is demand though but but in the flip side it like you know if i'm renting and now

i decide to buy a house it's it hasn't really increased it's increased the the demand for to buy a house, but to actually have somebody to live in it, there's still a – does that make sense? Like if I go for – there's one less renter in the market and there's one more buyer in the market. So net, net, the same amount of demand for houses. Yeah. Yeah, and spot on.

Absolutely spot on, Damien. So what I think we're going to see is that we still have an ongoing shortage at this point in time, and that will peter out. Some of the shortage, where population, the international migrants fell off the face of the earth straight away, a lot of that's been soaked up by returning expats. We've had about 25,000 returning expats this year. And it's a compositional shortage. It's too many apartments, too few houses. We've got the wrong mix of what people want.

And that's where the opportunity is as opposed to the whole housing, the whole, yeah, residential market's going to rise. It's actually more of a, yeah. Okay. Yeah, it's on. And then I think the second wave will be when that lag comes through and the borders do open and how long is a piece of string in relation to when the international borders do open.

But one thing I'm pretty confident about is that, and doing some reading around government policy on this, that they recognise that we're going to need to be filling the skilled migrant bucket pretty quickly when we can, and given the way Australia's performed both in terms of the health and the economic performance side of the equation, there's going to be a lot of people that want to come to Australia as well.

So I think if they get it right, you know, and there's a lot of dynamics here, but if they get it right, given the shortage lag, the building approvals lag, the boost to demand that's coming out of lending as wave one, and then when they do open up the borders, and then, as I say, there's normally a sort of one to two-year time lag between migrant arrival and them actually securing a permanent property,

then it's actually going to smooth and lengthen the tail. So I think we'd like to see a strong... Yeah, so has that been, though, as well? So we're sort of... ...protective... Okay. Hey, I cut out, did I? Sorry, I wasn't sure if that was somebody else.

Yeah, so it's sort of suggesting there's a hole somewhere in the future, isn't there, like two or three years out in a little bit of demand, but that's not really affecting demand for houses at the moment. No, no, spot on. There will be a softening at that point in time, and that's when the flight to quality. Again, I've always believed this. because I invest in equities as well as property, obviously,

the major difference between the two is given the imperfection of property, then smart investors are securing the right style of property in a location that's got a real scarcity and there are these zones, particularly with what's happening with decentralisation, it's going to mix up the recipe quite a bit because traditionally everything's been focused around the CBDs. It's, you know, I use a really bad analogy, you know, the fried egg with the yolk being the CBD and then the suburbs surrounding.

We're moving to a scrambled egg type of an exercise in coming years because the infrastructure and the lifestyle and the flight to the perceived safety and security and space that comes from other areas is going to create potential growth signs in locations that wouldn't have been previously. Yeah, but I'd still contend that for a lot of those, it's probably what you're really betting on there is that the planning requirements and everything

will stay roughly the same. Because I guess what I'm thinking is let's say you picked somewhere like, I don't know, Bendigo or Ballarat or Dubbo or where it is, like a regional city and said, yeah, that's where I think there's going to be a big boom in houses there and all that type of stuff, is realistically they're not particularly big and there's lots of empty land around them.

If they wanted to just blast houses, as many houses as it was demand, they could do it, but it's basically a bit of a bet that they're not going to do it. I think the underlying policy that we spoke about earlier is the guiding hand because anything that's done that's going to effectively reduce the value the value of most Australian families' most valuable asset is going to lose votes and lose power.

Yeah, that's right. So regardless of whether it's a good economic decision or not, it's a good political decision to want to have house prices higher. It is. It is. And, I mean, we can argue the toss on that, but I think that's the actual reality of life in Australia. And I guess from my perspective, I'm taking advantage of that.

Yeah, yeah, yeah. Responsible lending, the income inequality, this is another one we sort of pick on as being a key theme within our space in terms of, I guess, all investing in terms of saying, if I give $1,000 to Australia's richest person, then they're going to throw it on the pile or invest it. And if we give $1,000 to Australia's poorest person, they're going to get out and spend it as quickly as possible or pay off their credit card debts or whatever it is. That money's gone quickly. And so we've got this demand imbalance that's sort of driving that. And what that means is it's pushing investment assets up.

It looks like the inequality is growing still. I don't think there's a lot of – well, it doesn't look like it. It is growing still. We're just giving a bunch of tax cuts to higher tax earners. um do you do you look at the again it's almost a bit this houses market versus versus um apartments as well as if you're saying well if you're not getting wage growth at the lower end of the market then and then they're the types of people who generally buy you're still trying to get their foot on the property ladder and buying apartments and and lower priced houses then um you sort of

get that more demand in that sort of i don't know one to three million dollar range of houses is Is that how you'd look at it as well, or how do you see inequality sort of making a difference to house prices? Yeah, it's an interesting one. It's a really interesting one because, again, there's been a lot of noise about social housing during the COVID and the lack of concentration on it. And, you know, there's no question that's an issue.

uh the i think the challenge is and it's maybe i'm showing my age here but uh i know when i was on the bones of my backside uh in my mid-30s when i went belly up and uh i really didn't have two cents i literally didn't have two cents to rub together and uh what we ended up doing that the first property that we secured we we became rent investors before rent investors was even a thing This is in the late 90s. No one even spoke about rent vesting then. Sorry, you probably better define it as well for people who haven't heard about it. Yeah, really simply, rent vesting is you rent where you live and you put your investment power into a property that you can afford.

So I'll give you the exact situation for us. We, my now wife and I, rented a small two-bedroom townhouse close to Adelaide City because that's where our work was at the time. What we could afford to buy, the most we could afford was a property for $85,000 in those days, even with 97% lending because we had a very small deposit. So we bought a property in the beachside town of Aldinga Beach about an hour south of Adelaide for $84,000. That property is now worth just under $500,000. That's sort of like nearly a 20-year or just over a 20-year investment horizon.

This is where I have sort of two minds around this. We have this sort of fixation in Australia that we've got to own the place that we live in. And that's almost unique to Australia. A lot of that's to do with the capital gains tax exemption, though, isn't it? Yeah, yeah, that's right. No, you're right. That's absolutely right.

I mean, we were rent investors for many years because we were focused on building the portfolio and we knew that the cheapest way to live but also maximise our capacity was to rent while we allowed our portfolio to do that. so the question is are we is it inequality in terms of home ownership that's a little bit different to property ownership because i think there are ways and means around it if that that's what we're really talking about if we're talking about hurdles to property ownership versus home ownership then slightly different approach and the other thing that i'll see happening that's already started happening in new south wales and to a lesser extent in victoria is that the biggest

hurdle to property ownership is stamp duty because you can't borrow the stamp duty so you know that's we're talking roughly five percent on the on the value of a property is what you've got to find in cold hard cash now new south wales already trialing the exercise where they're moving to a effectively a an ongoing tax rather than a big lump stamp duty that that will be a big hurdle because remembering that interest rates are very low and money very cheap if you knock out the deposit hurdle then suddenly those that have been missing out have got an opportunity to get into the market

if that's what that's sought to do and actually that's one of the ones we run a property calculator where we rank a few different things one of them is affordability what's a median property cost to rent versus the cost to borrow to have a mortgage on that same property

and and so those those are quite those are all generally quite low and then we do the same thing with wages what's the median uh property uh mortgage versus wages and again that's that's low-ish it's not not that low but you know it's um but then you go back to the okay what your deposit side what are your wages compared to the um compared to a deposit and that's like um yeah that's a basic record highs and it's not getting lower it's spot on it's a it's a for most for most average employees that's to get a 20 deposit you're talking anywhere between four to six years so yeah that's it's a major barrier and the big biggest chunk of that is the uh stamp duty so i think there's going to be some movement in the station there and it's it's already

starting to happen, it's how the government funds it. It's how the state government's, I mean, the stamp duty is a big portion of state government's revenue. Just move it out, they're going to have to replace it with something or come up with a way of doing it. The cost of money is so cheap now that servicing debt for them isn't a big issue. And if it stimulates activity, which New South Wales has recognised,

because New South Wales has the biggest hurdle, by the way, it's the most expensive state. yeah and and i'm i'm i'm fully on board with the whole uh i think it's great be great to because i do think there's an element of um of australian houses that well i think there's two parts one's nimbyism and and the other ones um you know the amount of travel that people have to do which is around the thing is going so i get a job somewhere close to me great then i find another job better job that's you know 30 kilometers away rather than move i'll just i'll just go you know transport across half of melbourne and spend an hour in traffic every day because it's going to

cost me five percent of the value of my house to move and so there's an economic decision there which is like yes i prefer to waste all my life in in transport rather than rather than have to go and save that that huge amount and so i can certainly see the benefits of flipping to um to a uh a land tax it's just interesting that part isn't it about whether does that just mean the land tax will get capitalised in higher house prices if and when it happens. Yeah, but you get the ongoing tax then, haven't you? Yeah, exactly. It becomes a subscription income, basically,

which is ultimately going to be worth more to them. Oh, and much better for government. Oh, fantastic. Totally, much more cash flow. And if that barrier is removed, then you're going to get a lot more churn in property as well for exactly the reasons you just mentioned, Damien, and that it'll be much easier to move.

So I think it's going to be really interesting to see how this pans out. But that balances, of course, with the move to remote working because I think there's going to be a – there already has been a significant shift in the way we work and how we work. And I really do think that work-from-home exercise will become a staple diet for many. Yeah, and that's the other part for the short-term demand is that,

You know, if you have a house without an office, all of a sudden you need a house with an office. And if you have a house with one office, maybe now you need a house with two offices because your wife and yourself are both working from home or whatever it is. And, yeah. Yeah, it's interesting. Investors we've been helping probably for the last five years,

we have been making sure that because we facilitate predominantly new builds, we've made sure that there are separate home offices built in that can double as a living space if it needs to. but it means that if someone has a business from home, someone can walk in the front door into the office and then back out the house without going through the lounge room or anything else.

There's a real shift there. And again, I think all COVID's done is accelerated trends that were starting to occur, but it's thrown the petrol on the fire. Okay. So let's cognizant of your time and thanks for spending so much with us. So I just want to get to some of these longer-term ones as well before we finish, though. So I look upon assets in the longer term,

and we'll do it to houses at the moment, but I'm thinking that it's the same. To me, it's the same for shares. But I'm basically saying the total return for an investor is whatever you're getting in net rent, less whatever you have to spend in capital, and plus whatever you get in capital growth. And then I look upon the capital growth as saying, well, if your rent's growing, then your capital is going to grow roughly at the same rate as your rent if your valuation stays the same.

And let's say we're going to use net yield as a valuation. And so if I want to get capital growth, I need growth in rent and I want to try and get this change in property valuation as well. So I want yields to get lower. So the last 20, 30 years has sort of been this perfect environment where yields just keep falling every year. And when I put those numbers into context, I say, well, let's say rent, although it's been growing less than inflation for a while, let's say it's going to grow at 2%.

And then I say the net rental return, let's say 2% as well. I don't know if that's roughly what you're seeing. So I'm saying, okay, so we're getting about 4%. My capital spending calculation says if a house is sort of a third of the value and the land is the other 67%, and I just give it a back-of-the-envelope 50-year life, and it'll be longer for the structure and shorter for all the bits that go into it, and I depreciate that at 2% per annum, that sort of gives me roughly about 0.7% that's going to be detracted.

I'm going to need to be spending on the house, or if I'm not spending it on you know new kitchens and stuff like that i guess the kitchen's getting worse and so i'm not quite getting the same property growth and so so i sort of look at that part and go okay well that means i'm getting like a sub four percent return um and and and then so and this is long term i think short term i can see where this is this is going to drive but but longer term i'm going well if i'm getting sub four percent return and it's quite geared so i'm taking a fair bit of risk um unless i can really see that valuation the yield's going to keep getting lower then it's pretty hard to get to to higher levels of returns yeah and on a generalized basis i think you're

you're spot on this is where the the the art and science of property uh comes into play damien because you need to line up all of the key factors to ensure you get the right result. And I'll be straight up. In my approach and the approach that we adopt with most of our clients who are in the accumulation phase of their journey, there's a much bigger focus on capital growth than there is on rental yield.

So there are significant benefits in new build versus existing because let me, I guess, let me unpack the sort of approach that became the mainstay for the book. My study of property generally suggests that growth cycles in locations and each location is acting independently of the other generally. I'm talking suburb to suburb level, that sort of more micro level.

property cycle generally if you're really lucky and it goes well it's eight years but more generally it's 15 so if you're looking to go through a full property cycle then you need to be into the property for at least 15 years to do that and there's going to be during that 15 years there's probably going to be five to eight years where the growth is pretty flat and then then you're going to see a growth spurts of between two to five years which is generally driven either by changes in zoning, changes in infrastructure, changes in employment, the things that tend to impact on it. Gentrification gets thrown into that as well.

But if you, for the sake of the book, just so that, you know, you've done some good re-engineering there, I reckon, Damien, in sort of breaking down the numbers, but the sort of growth rates that I was using when I wrote the book from memory, I was using inflation of about 2.65%, which has proven to be a lot higher than what the reality is. And I've been sort of trying to learn it within that sort of 2% to 3% range.

Yep, 2% to 3%. I think it's fair enough. So it's probably a tad higher, but the reality of that is, you know, we're now much lower. Half a percent here or there, yeah. That's a fair bit. The growth rates I was using for property, I think, was about 5.4% to do the numbers and I like to be very conservative

but I was looking backwards. So I looked back at some numbers that were prepared by AMP and the Real Estate Institute and went back to 1926 and we've had both shares and property performed just a tad over 11%. Yeah, I think I'm not sure with those numbers but I guess my concern with those ones is I think the property ones, they haven't included any capital in that, I think, is where the problem is.

But I don't know for certain. I've tried to find the bits. But I do get that property, it's a similar-ish return to shares, I guess. It's similar. And certainly over the last 20, 30 years. But I guess what my concern is, especially the last 20, 30 years, is that it's falling interest rates

that have helped property. and there's a number of stocks that it's really helped as well. Like it's not just – like it's helped both property and shares in that frame. So it's not just a property thing. I guess what I'm just concerned about is I'm always concerned about valuation and just – and for me, it's hard to find any asset class at the moment.

You know, shares look expensive, bonds look expensive, housing looks expensive, it all looks expensive. And now it's just a relative game between the two. And so that's what I – I guess I'm just trying to set the the expectations for people as well that if you buy shares when they're really expensive then you can't expect a great return over the next 20 30 years and the same with property or same with bonds whatever whatever asset class it is spot on and so absolutely spot on so yeah and i totally agree with what you're saying there uh the the trick then is to find affordable

properties that have the growth drivers and that's where if you take a borderless national approach I mean, I'll give you some comparisons here, Damien. If you look at the performance of probably over the last 25 years, and this was a CoreLogic study that was released recently, nine out of the ten best-performing areas in terms of capital growth were all in the regions. Only one of them was in a capital city. Right.

And we're talking… Which reasons were they? Yeah, I'll give you a mix. I'll give them to you, basically. So of the top 10, the highest performing was Suffolk Park in the council area of Byron in New South Wales. That came up at 11.7% over that 25-year period. We've got areas like Lycanot in the southwest of WA.

We've got Millerfield and Kalala Bay in New South, along with Wattle Ponds, Meadows Springs near Mandurah in WA. A big percentage of them have been in WA, actually. And then at the bottom end of the list, we've got Flinders in the Illawarra, New South Wales, and Gundaroo in the Yass Valley. And all of those properties have performed 10.7% and above over that 25-year period. But they're coming off a low base.

the trick with with property and again you know there's everyone's got a different approach to property but our approach is if you find a regional area that has a critical mass of population of a hundred thousand that's got diverse industries because that you can't be a one horse pony in property as the mining towns have evidenced over the last 10 years but it's got a diverse economy and it's got strong and growing incomes based on employment hubs and it's got lifestyle amenity that's attached to that that people want to live there, then they are the fit. Because you need strong incomes and growing incomes

because people have got to be able to continue to pay more for property for the property values ultimately go up. So, and if you throw that blanket across the country, there aren't too many areas that tick all of those boxes. Yeah, well, I'm not trying to be hugely negative on property because the same thing happens for shares as well but it is that point and I guess what you're making is that let's say the average ends up being 4%

or even 5% as a natural sort of growth. If you're in – there's going to be a bunch of properties that are growing at zero or going backwards and there'll be some that are growing at 8% or 10%. Yeah, spot on. Yeah, I can use exactly that analogy. If you look at Adelaide, for example, in recent times, there's a lot of commentators that suggested

You know, it's sort of growth has sort of been 2% or 3%. And if you aggregate, then that's right. But there are areas in the eastern suburbs of Adelaide that have achieved consistently between 15% to 18% growth over the same period. So the devil's in the detail. I'm sure it's no different in the stock market. Oh, absolutely.

And it's the quality of your knowledge and your advice that's putting people into assets that are going to perform better than the average because let's face it, if we're all average, whether it be property or shares, it's a toss of a coin. There's probably better places to stick your money. Yeah, yeah.

Well, at the moment, it's hard to find places to stick your money anywhere. That's what the RBA is trying to do. They're trying to force everyone out of cash into the next highest and next highest and everything's getting bid up. You're right. You're right.

The struggle we're all facing at the moment is trying to find assets that are in some way reasonably priced. Yeah, well, the only good thing I think we have is volatility and a lot of cash. And if you put those two together with a fair bit of change, then the opportunities are going to emerge. So if you're looking at an asset in terms of its function, you want stability.

But if you're looking at an asset in terms of its investability, then you're actually looking for change. and I think we've just had the perfect mix there that's actually going to stir things up and create some significant opportunity. Yeah, excellent. Look, thanks a lot for your time. Sim, if you've got anything you want to...

Oh, look, yeah, just a quick one for me, Bushy, actually. And I know we've probably got a few listeners sitting there gnashing their teeth and obviously you've had some terrific success over the last 20, 25 years, you were saying, in sort of building your base and, you know, getting the experience you have, which is phenomenal.

The question I have, which comes up, and I'm speaking from the Gen Y perhaps and the Gen Z sort of side of things, is back in the day it kind of felt like you just bought a property and that was it, you're on your way and you can buy another one, you can buy another one. Would you say that it's harder now to buy an investment property than it would have been perhaps 20-odd years ago? Is there more skill in it now than there was in just saying, oh, yeah, Essendon seems like an all right joint, I'll go buy there 25

or 30 years ago, there's Essendon Victoria. and, you know, before you know it, it's, you know, it's a multimillion-dollar pile of weatherboards. So, you know, just your reflections, I guess, on, you know, how investing in the property market might have changed over the last 20-odd years or, you know, over the duration? Definitely got tougher and the primary, you know, I've said this a few times, property is a game of finance

because it's access to credit that really determines what you can do. credits got really tough. I've mentioned a couple of times when I started I could borrow 97% plus the mortgage insurance, which meant effectively I needed to come up with 3% deposit plus the stamps. These days, if you're an investor, you've got to come up with at least 10% plus the stamps. So the hurdle to entry in terms of that deposit piece

and the equity piece is a lot harder than what it used to be. but I think we're about to see that change. That's where I think there'll be a fair bit more flexibility come into the process as of March next year. Let's wait and see and it'll take some time. It won't be an overnight change because habits die hard in banks so it'll take six months to flow through. But certainly, and that's why I mentioned the rent vesting exercise, Tim,

because I think that the shift that our psyche needs to be, let's separate access from ownership. So, you know, it's that old collaborative consumption philosophy of accessing things that you want to enjoy lifestyle-wise but invest in assets that are going to appreciate in value. So if you're happy to rent for a period and use what available capacity you have to find a property somewhere else around the country that's going to perform in terms

of its investment potential because that sort of investment potential is still well and truly there, no question about that. But it's just getting in. So if Gen Ys and Zs and the rest of the alphabet are thinking about how can we better establish ourselves, then adopting that sort of a rent-vesting approach, I think, is one that we're going to see a lot more of. It's certainly, I mean, perhaps myself and my wife

are a bit odd, but we were very, very comfortable renting for quite an extensive period of time while we built the portfolio. And yes, it wasn't ours, but it was close to where we wanted to that had all the lifestyle benefits but because we're investing if we knew what the means to an end so we were stressed about it but i think as well that sounds like a that sounds like a lot of um i mean one of the biggest finance tips uh you know i like to give when when friends and relatives ask is saying well you know you want to live um you want to live somewhere as

as um yeah as as cheap as your ego live somewhere and drive something as cheap as your ego will allow because um you know you want it to be functional and and have the things you want but but in the end there's a there's a certain amount of status isn't there and sometimes that you say if you're too busy chasing statuses oh no i have to live in the best house in the best street and i have to drive the the most expensive car i can find and if it means i don't have any money left over for investing because i'm doing that then that's just life you know if i if you feel like you need to show everyone how successful you're being that way um then then you you you you're going to struggle to invest, whereas if you can actually sort of,

you know, you might have the greatest offense in the world in terms of your income, but you also need the defense in terms of saying, well, sometimes it's a matter of just taking the ego back and saying, well, maybe I don't need a new car every three years. Maybe I can wait five or seven years before having to cash in again. Absolutely nailed that, mate. You're absolutely spot on.

And we did live on the smell of an oily rag when we started. We lived really cheap. but I was absolutely determined. I was in my mid-30s and it was a start again, so I was on a mission to try and get myself in the right position as quickly as I possibly could. So we made some sacrifices. We lived pretty simply and pretty lamely there for quite some period.

But by the same time, we still went to Bali every year. It wasn't like we were – we didn't feel like we'd disadvantaged ourselves. Yeah. Spending wisely. Yeah, that's right. You still need to live your life. You can't say, okay, I'm going to live in this place at Hovel and I'm not going to do anything and I'm going to retire

and I'm going to die with $50 million and never have spent it all. Yeah, well, that's a waste. But the flip side is, yeah, it's saying if you want to – it's threading that needle correctly, isn't it? It is. I mean, if you're living on – I've often said if you're living on dog food and baked beans while you grow an investment portfolio, you won't last the distance.

You won't get there. you've got to do this in such a way that it doesn't impact too much on life so there are definitely ways of making that happen but the biggest shift i think we struggle with is that we live in an instant iphone everything world right now and our distance and patient muscles withered on the vine because we just don't have to use them anymore but i now pay later absolutely Exactly, exactly, and I think that's the biggest challenge is how, and I'd love to explore this with you guys at some time because the biggest challenge I have is getting people

to see the benefits in delayed gratification. Well, and I also think there is something in that, look, I mean, we certainly don't advocate debt, certainly not for the equity portfolios. We're very much saying, look, you know, you're better off just investing what you have, but there is a certain element of there's some debt discipline that people in terms of when they have a pile of debt,

they want to pay it down and they're like, okay, if you had to say to them, okay, I need you to save $300,000 over the next 10 years, they'd be like, wow, that sounds like really hard and you build up a pile and then, no, let's go, you know, there's a nice new car or a nice boat I need to buy or whatever but if it's a $300,000 mortgage I want you to pay off over that period, it's like, oh, okay, let me get to it and I can see that going down and it's sort of – there's almost a mental trick in that, isn't there?

There is, yeah, exactly. Absolutely. It becomes forced savings, there's no question about it. And that's exactly what it was for us. Our portfolio had become our forced savings plan, actually. Yeah. So, yeah, no, it's interesting. But it's a good comment you make there, Tim.

I think the – again, it's the same – I guess the same advice I got from my father because I wanted it all yesterday. and he said, well, you can have everything just as soon as you've saved up for it. So that was pretty much, that was as simple as it got when it comes to cars and anything. If I wanted it, I had to go out and earn it myself and I did the same with my own car.

Well, and that's, yeah. I tell my kids, a car's a liability. The more you want to spend on it, you've just created yourself a bigger future liability. Totally. Yeah. Totally. Yeah, 100%.

But I think sort of circling back to your question there, Tim, it certainly isn't as easy to finance the investment size as it used to be, no question. But I do think that rent vesting model is one that I can tell you how good it's been for us personally. And let's face it, $84,000 isn't a lot for a property and you're not in some areas around the country that still have the right sort of parameters.

you can still spend under $150,000 and be off and running and that doesn't require a massive deposit because there are still banks that will let you borrow 95% of the value of a property even today. So it's just a matter of... Just got to make sure you've done your homework. Yeah, exactly. Yeah, and just don't make the mistake of going to your bank

because there's a lot of very competitive and inventive lending solutions out there these days. So that's one of the big mistake people make. Yeah, that's right. And that homework, I'm going to double emphasize that because there's nothing worse than the ones buying it because you saw someone at a property spruiking conference telling you the greatest or you're on the way back from the beach

on your holiday house and you decided, hey, that's a great idea. Why don't I buy the house down the street or whatever? It's like, you know, actually sit back and do the research first before you jump in. One of the – no different – whatever you're investing in, whether it be equities, property, or you name it, crypto, for those that are dipping their toe in that area, I'd be using the same due diligence before I put my hard-earned

into anything. Absolutely. Excellent. Very good. All right. Well, look, yeah, thanks very much for your time there, Bushy. We have gone a tad over, so I do appreciate that. Would you like to share with our audience?

Obviously, we'll put the links to your books up in the show notes for our publication here and our podcast, but where they can follow, where our viewers, sorry, can follow your work. Yeah, so to get in touch with us is just at knowhowproperty.com.au, the website, or my personal website, bushymartin.com.au. And much like your very good podcast here today, guys, if you want to learn a bit more around the property side, come and join me on the Get Invested podcast,

which just type it into Spotify or iTunes, and every week we have a long-form conversation just like this one. Wonderful. Yeah, we'll have to check it out. No worries at all. Well, thanks again for your time, mate, and we look forward to getting you back on the show

sometime soon. Good on you, Bushy. Look forward to it. Thanks a lot, Damien. Thanks, Kim. Well, Freedom Fighters, how good was that? To get a summary of all this investment gold in the show notes, just email me on

hello at khgroup.com.au. It's H-E-L-L-O at khgroup.com.au. or check us out at www.bushymartin.com.au forward slash GetInvested. I look forward to joining you next week for another episode of the GetInvested podcast. So thanks for listening. And as always, dream as if you live forever

and live as if you die tomorrow.