Get Invested: Part 2 - PK Gupta on the truth about property market movers & makers
00:00But the problem is, like you're saying, the concentration of where people are buying isoften leading to market making behavior, price making behavior. So I think that's a phenomenonthat's contributing towards a lot of these buyers agents becoming market makers,it shapers, and also just how lucrative the industry is.Welcome to Get Invested on the Property Hub podcast channel,the leading weekly show for Australians who want to learn how to unlock their full self,health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the bestinvestors, experts, leaders and founders to find out what it takes to break free from the grind,
00:44discover freedom and to live by design. Subscribe now and join me and get investedin the life that you really want. Let's get started.Hi, Friday Fighters. Welcome back to part two of my great conversation with PK Gupta. Today,we dive into the details of what I call property market makers and movers, and what you need tobe doing to avoid the mistakes of the growing order of FOMO-driven momentum investors thatare competing with each other to buy subpar properties in short-term artificial hotspotsthat are being fueled by the instant expert, high-profile bias agent, Property Pipe Pipers,so that you're better prepared to protect yourself and you learn what you need to be doing where and
01:31how to ensure you're securing long-term outperforming properties that will fuel yourversion of freedom. So listen up for the wealth of impartial wisdom you're going to learn as weget invested again with the one and only PK Gupta. Let's now jump into the subjects that I'm very keento get your views on. Let's go back to the old buyer's agent, market maker concerns, becausefollowing on from the thoughts I expressed in the intro about high-profile buyer's agents who areself-proclaimed experts mostly, and then creating short-term self-fulfilling prophecies and becomingmarket makers by shoehorning herds of unsuspecting investors into competing with each otherto buy what I consider to be low quality, overpriced and underperforming properties.
02:18What are your observations and thoughts around that?Yeah, it's a tough one because I have to preface by saying I don't have hard data to be ableto prove anything because it's so difficult to isolate buyer's agent transactions andbehavior and say these are the properties that you know did this and these are the properties thatdid that and they weren't by by bias agents so these are hypotheses and i think i'm throwingit out there as well to you bushy and and seeing genuinely and none of this is prepared right sogenuinely what what you think about my inferences i think i want to also be balanced and and not benegative unnecessarily towards bias agents and in what i'm saying yeah so the the first thing
03:04is that I feel that it's a good thing that people have more free education online, right? As yousaid in the intro before, these days on podcasts, YouTube, Facebook groups, so many things, right?You have a lot of free education. I think that really helps people avoid making obvious mistakes.So I think perhaps maybe 10 years ago, where, and these are made up numbers, 30% of investorswould have bought a house and land package because they clicked an ad or that's what their brokerrecommended one of their friends who is a developer you know gets kickbacks or whateverbuy a house land package off the planet apartment now these folks are like you're talking to theirwife or husband or whatever and like saying oh look honey let's uh let's just check out this
03:52facebook group or let's just check out this podcast by this guy called bushy or let's justcheck out this youtube channel by this guy called pk and use some keywords and see if we're doingsomething wrong and then all of a sudden a lot of these folks are saved um and maybe that's notthe perfect analogy because you and i aren't buyers agents but let's say a buyer's agent hasgood free content and so now they've not bought house of land package somewhere where it wouldn'thave grown or they haven't bought in a really poor location instead of they've bought you knowinterstate you know something that's high yield all the good things that we've been talking aboutBut the problem is, like you were saying, the concentration of where people are buying is often leading to market-making behavior, price-making behavior.
04:41But my question to myself is, what's worse?these people have been diverted from making terrible mistakes and and buying on the whimof those folks we see their facebook ads youtube ads uh where they're selling you know all i won'tgo into it but not the best property depreciation benefits and rental guarantees and this and thatat least they're saved from that and they're going to something a little bit better so i think thatthere's that phenomenon right where you know a lot of these suburbs and pockets let's say inperth let's say armadale have been pumped because folks have otherwise would have bought in wallenin in north of melbourne which is probably not the best idea because you're not going to register
05:28that in that land for two years the build will be delayed for three years costs will blow outand you'll have regretted clicking that facebook ad so i think that's that's one phenomenon theother phenomenon i think you alluded to before is i think a lot of people now are becoming propertyinvestors because of a lot of advertising online everyone's on their phone like i myself um i'm onmy phone a lot because of my business and you know it's like a vortex and you end up doom scrollingand you just have to slap yourself after it out of it after five or ten minutes or longer rightand then they find out about property investing because of their magic algorithms and thenyou know six months later they ended up buying a property so i think there's more property
06:11investors now and this and the stats actually show this versus five years ago uh so i thinkthat's a phenomenon that's contributing towards a lot of these buyers agents becoming market makersit shapers and and also just how lucrative the industry is i mean you know them i know themAnd look, everyone's got to pay their bills. So I'm not attacking them from a personal perspective, but you become a buyer's agent today. In a year, 18 months, all of a sudden you're getting 30 clients, right? 30 clients a month. And it's like your wildest hopes and dreams have been fulfilled. You've bought a holiday home. You've got a couple of nice Italian sports cars.and you know now you've got to maintain this thing it's that fix it's that greed a littlebit opposite to to what you're saying for yourself bushy where you're like i don't have to do thislike i don't you're not really doing it for the monetary um outcome alone but a lot of these folksbecause it's new money it's not old money for them it's new money now they're pumping even more
07:18facebook ads and now they have to get they've got 40 staff you see these buyers agents advertisingmy team of 30, my team of 40. And I'm just thinking, all right, I mean, maybe you'repaying them a hundred K a pop, whether that's commission or fixed, you know, they've got 30people, that's 3 million bucks. All right. So now you're going to make at least 6 million bucks tomake us worthwhile after all overheads. It's like, that's a lot of clients a month and I don't seethat many good properties. So a lot of this phenomenon behind the scenes is, and the mainperson may be a super nice girl or guy, right? I'm not attacking them from a personal perspective,but this is the commerce or business capitalistic vortex that sucks you in and ultimately leads to
08:06negative outcomes for clients. So, I mean, I've made it a point. I've never advertised on Facebook,never run a single ad on YouTube, Facebook, Instagram, any social media. A, because I don'tneed to, but B, because I know that that would just mean that the business kind of implodes.There's just too much demand. And yeah, I just also become one of these buyers agents, right?So I think those are all contributing factors. Now, is that something that is going to causeproperty markets? Like let's say Armadale, like I referred to before in Perth, where right now,I think more than 50% of all transactions are East Coast investors.I don't want to poo-poo Armadale, right?
08:53Like my clients have bought there as well, 2021, 2022.They've made a lot of money.Good for them.I don't recommend they sell, you know.But the question is, is this phenomenon of buyer's agents,is this phenomenon even outside of buyer's agents,how there's a shortage of housing, prices are rising,are people going to all of a sudden stop buying in armadale and is that going to cause a price
09:22fall a price crash now let's say for my clients have already made let's say 90percent gains in areas like this even if it falls 20 like it's all good right i mean 90percent gains in three years are highly unusual in the best of times anyway but i i sort of feelfor the folks who are buying in these areas now yeah um not only buying in these areas now butbuying subpar properties main road or you know like there's granny flat potential but there'sa sewage lined under the backyard which they didn't know about or you know pick a hundreddifferent criteria that that aren't ideal and i don't think these buyers agents are bad peopleBut I think they're just caught up in their own success where it's like now they have to churn through these clients to keep that machine ticking along.
10:21Especially, as you said, Bushy, at the start where, and this is unusual.I mean, I'm not as experienced as you and I'm not as wise as you in your property experience.But right now there's almost nothing for sale, right?What was the number in Perth? Less than 3,000 units and houses for sale. The equilibrium is well over 6,000. And I think just houses or detached dwellings is around 2,000. And every month, 1,000 sales occur. So if there was no new listings, after two months, there'll be no properties for sale and detached housing for Perth.So you've got this environment where buyers agents need to get clients and they want to, and they can because social media makes it so easy. People are fed the dream, you know, retire rich, retire early through property, blah, blah, blah. And you've got hardly any properties and let alone good properties. It's kind of like this perfect storm of like, something's not right.you know 100 beautifully said uh i love the way you were uh worked through that because you'vecovered it off and again i agree with you i'm not i'm not having a go at individuals per seor buyers agents there are some there are some very good buyers agents who genuinely are doing
11:39the right thing for the right reasons but i think part of the biggest issue there's a timing issuehere with those conditions you've spoken about but i think the the model of the industry forbuyer's agents is fundamentally flawed because it forces this type of activity. Sadly, the reasonwhy I guess I've become very strongly talking about this subject is that I've now workedon behalf of our investors with a wide range of buyer's agents. Even those that start off wellend up becoming like the others because they have to feed their own machine.And I think it's problematic the way the whole setup is.There needs to be a revisit on this exercise.
12:26Let's take the US, for example, where it's a very different model,where there's almost, in a lot of states, there's a buyer's agentand a selling agent on every transaction, and they share the commission.so it's less pressured for the buyer's agent to do that and it means then that there's a strongerquality rather than a quantity focus that emerges from that exercise and you know sadly I've got tothe point now where a lot of buyer's agents won't work with us if they know an investor's gotbushy martin the know-how team attached they don't want to play uh and by the way we sharethe same view because when i see buyers agents that are giving an investor four hours to make
13:14a decision on a property there's something seriously wrong in in the whole exerciseso so i think there's some structural issues around the exercise that's contributing mostto this exercise there's always going to be good people who will still do the right thing and thereare you know what we we're currently working with a number of buyers agents who investorshave engaged who are doing a fantastic job and they're applying that you know that the litmustest for me is always uh i only say yes to a property when i can't say no uh so i'm lookingi'm looking to say no i'm looking to uh all these different metrics and all the key duediligence points being covered because if they're not and it's a big enough issue then that's a
13:59reason to walk away whereas because of the structural pressure on buyers agents there's ainvisible hand that's saying we've got to say yes because we we need to get the coin and and feedthe machine so it's it's it's a hard nut to crack because like let's say in the u.s a lot of buyersagents say well you know buyers agents are a good thing and and everyone should be using buyersagent because everyone uses the buyer's agent over in the u.s but if you if you actually analyze themarket in the u.s what you have is the sale the seller the vendor actually pays the selling agentor the listing agent's fee and the buyer's agent's fee all right so there's actually it's a differentmodel yeah that would never fly yeah in australia and the listing agent does almost nothing the
14:54buyer's agent actually almost works for the listing agent to sell the property for exampleif you want to go buy you know see an open home you actually contact a buying the buying agentthe buyer's agent and they show you around the property the listing agent's hardly even thelisting agent has almost no uh marketing or advertising they get their money from basicallyjust securing the client who wants to sell and then the buyer's agent effectively sells it ontheir behalf. So huge conflict of interest, right? And actually there was a class action lawsuitthat happened in the US just a few months ago. And so this whole model is being revised. Andin Australia, of course, buyers agents will say we're different because the buyer or the investor
15:41pays for our services. So we're a little bit independent, but really you have to follow themoney trail when it comes to incentivization. And so when Debye's agents get paid, they get paidwhen you buy a property. Some of them are on commission rates. So the more you pay, the moretheir commission is. So I'm not saying they're unscrupulous or their character is flawed, butat the end of the day, humans are humans and you've got to follow the money because the moneyis what really dictates the incentive structure.So this is one problem with the buyer's agent industrywhere I feel that they're an extended arm of the sales agents.
16:29And if you talk to sales agents, which a lot of investors don't,these guys are having the time of their life, right?These guys are like, this is the best job.This is like, I got to do nothing.I put an off-market tag on the property, even if it's online already, and it's going to go out thedoor and the buyer's agent says to their client, you've got three hours to decide. And look,it's kind of disheartening because the new property investor or even the experiencedproperty investor, they know it's a hot market. They've been missing out on property. And so
17:09some point they succumb and they say, I just want to enter into the market. And here's the thing,buyers agents will say, but look at our amazing reviews. Look at this property that we've justbought and it's gone up $50,000 in value in the last three months. And so therefore they get thefive-star review on Google and this and that, and that's great. But all of that client happinessexperience happens in the short term but what what about three years later when you actuallyfound out yes the property went up in the short term but you know that was actually on a mainroad and you can't sell properties in a down market on a on a four lane main road very easilyor you know you find that you know it's actually gone up in value but the value comes out two years
17:55later and says nah this is on a main road or you know it says the easement here or actually thiscarport isn't this granny flat is not council approved we're not going to give you that equityuplift that you wanted but by that time the buyers agents got their good review they'resailing into the horizon business is booming and who's really going to go back two three yearslater and be like update their experience with the buyers agent who's who's really going totalk about them on facebook who's really going to talk about them publicly so and and the circusgoes on so i mean this is not i think there are five percent good bias agents i think in anyindustry there's sort of 80 20 rule right 80 percent of people are probably not great or okay
18:4420 top in the bias agent industry because there's really no qualifications apart from a four-weekcourse right um you don't need a degree you don't need a diploma you don't need any experience youdon't need an iq test you don't need you know anything like that like you said i think there'ssome good ones um i think they're about five percent and 95 percent um either how should isay this they're trying to do the right thing but they just don't know enough themselves you knowlike let's say this guy called pk does a video on youtube in 2022 about how perth's gonna go upand then they produce a whole bunch of content get their clients in perth right um or they genuinelydon't care about the customer. But I don't think there's many buyers agents who genuinely don't
19:29care about the customer. I think there's a level of ignorance. So you can't really blame themto some extent. We can more blame the regulatory bodies for a lack of barriers to entry.100%. And the industry model needs some... I don't have a solution right now,but there needs to be one. Because very simply, some of the things thatinvestors need to be asking the question of if they if they need or looking to engage abuyer's agent how many properties does the buyer's agent actually own over what perioduh and can i just interject very rudely um bushy and and just add to that how many properties didthey get before they became a buyer's agent with their seven figure income post buyer's agency
20:16that is the comment that is the thing because it's so sexy to say and i mean it's the casewith me as well there's there's no way i would be 14 15 million portfolio debt free right nowif i hadn't have had at least some course income i mean i was already six figure passive incomebefore i started the course but definitely not 15 million debt free right so you got to break itdown and say, all right, guys, look, we have to be apples and apples here. I had this portfolio,120K passive income back in 2017, 18, 19, before my course really took off. I had nine, whateverit is. Since then, yes, I've grown. I've become, quote unquote, wealthier for whatever vanitymetric that serves. But some of that is actually due to the course. Or in my case, actually,
21:08I did some development projects. So once again, you can't really expect to achieve what I'veachieved unless you're happy to do development projects, invest this and that. I think peopleneed to be transparent. Otherwise, it's like that 30 properties by age 30. Yeah, I can do that toowithout knowing that guy makes $5 million a year. It's spot on. Really good qualification. And alsoSo talking to existing clients some time ago,anyone who's bought properties post-COVID from a buyer's agent,the buyer's agent is going to be able to brag about the gross.Anyone with a pulse could have done that.
21:47My always focus is let's look at the long-term portfolio potential.I'm not interested in what you're going to tell me, Mr. or Mrs. Buyer's Agent.I want to talk to some of your long-term clientsand have a conversation directly with themAnd so you're actually benchmarking what the truth, the good, bad, and ugly is.Going beyond that, how else do you think investors can better protect themselves and or takeadvantage of some of this sort of herd hunting, market making behavior that we're seeing?Yeah, look, just to tack on one point that just came to my mind in terms of talking with
22:22old clients, I think if you ask, this is a wrong example because I know you're a standup sort of guy bushy but if i asked you bushy hey can you give me like three phone numbers ofclients you work with for the last five years of course anyone with half a brain is going to givethe good ones right that you're mates with or whatever so i think this is the power of socialmedia don't don't ask pk don't ask bushy don't ask the buyers agent for their long-term clientsgo and find them yourself and you know if they have a social media presence like for examplein my facebook community there's 50 000 people go back to posts where i've you know mentionedclient deals and tagged them from five years ago, six years ago, and just DM them. If you DM
23:01enough people, some people are going to reply, especially if they're unhappy, right? Generally,people reply if they're super happy or unhappy. That's who leaves reviews. So I think that's justsomething that came. Sorry to digress. How can people better protect themselves, investorsprotect themselves against this phenomenon? Look, apart from saying the obvious, which is to educateyourself from various sources and educate yourself deeply. I think people should always questioneverything. And I think people are guilty of it with me as well. They kind of put you on apedestal and say, oh, whatever that guy says or that girl says because they have a big followingmust be right but i think we're in the we live in the age of of extreme and um of of heightened
23:51individualism there's many downsides to that but one upside is that you don't have to believe whatanyone else is telling you and you should question everything so in in for example in my case ofcourse i don't give properties to folks i teach them how to find suburbs streets properties andthen they validate that with me. But in the buyer's agent business model where someone isgiving you a property, most of the time it's a rebranded CoreLogic 10-page report, which saysbuyer's agent name, but actually it's the same as CoreLogic. And it has nothing against CoreLogic,cool charts and pie charts and bar charts and all sorts of cool things. But it's like the buyer'sagent says, here's the link to the property and here's the research, the PDF, which they have just
24:40you know automatically generated um let me know in four hours right and you're like youdownload that pdf and i know this bushy and you know this i know they have to me and i'm lookingat them like how do i know if this suburb is good this is just dark this is just charts i meanwhat's the thresholds what what's the story what's the narrative and same with the property i meanthree bullet points in an email isn't going to cut it. You know, you can't just say it's a growthcorridor. You can't just say population's rising. You can't just say there's a new hospital beingplanned. And I think this is the issue. People, they've paid the retainer to the buyer's agentand maybe the buyer's agent sent them like three properties and they've, you know, said no or
25:31missed out. And now they start to feel pressure because there's a bit of pressure coming froma bias agent has always got to get through clients, right? A big wait list. And then you can't, youknow, you can't really ask the questions. And so then you just buy and it may be good. It may notbe good, but I really encourage people, you know, don't leave your bias agent. Funny that I shouldsay that. Don't leave your bias agent. I mean, presumably you've done your due diligence. They'rea good person, but at least have the self-confidence to pick up the phone and have a conversation orat least have the self-confidence to go back 10 email threads right back and forth ask yourquestions it's like okay i get it that it's a big piece of land i get it that you know it might be
26:1810 or 10 000 under comparable properties but what makes you say that this is actually going toperform over the long term because part's gonna crack it at some point maybe not this year maybenot next year maybe not the following year at some point it's going to correct like every market doesso what's going to make this property stand out and please rationalize your answer based onevidence and then all of a sudden i think if more and more people start doing thisbuyers agents will find okay a client doesn't equate to three hours of work for fifteen thousandactually it's going to take 20 hours of work all right for fifteen thousand dollars all right igotta i gotta cut back i can't take this many clients uh i gotta actually provide a better
27:10service all right and i think that could change the industry slowly and uh and surely but thismessage that you're sharing with everyone bushy i think this needs to get out more and more andmore for enough people to back themselves and treat the buyer's agent as a peer as opposed toa magician. Well, beautifully said. While we're talking about that, Anagat, I don't want to gointo any detail here, but it would probably be worth sharing if you're open to it. But the keyindicators and combination of data metrics and trend changes that you focus on to help you readthe property tea leaves in order to identify good locations and good properties. Can you share,just whet our appetite a little bit with that? Yeah, no, of course. I mean, at a LGA or
28:04you could say a suburb level, it's really important to assess both short-term and long-termfactors. I think people know these by now, like, you know, things like days on market, like stockon market inventory levels i won't go into thresholds and everything like that right noweven things like building approvals for example yeah it might be a a booming area right now i'llgive you an example actually in uh just north of adelaide around elizabeth it's an area wherefamously i said the best there publicly and also to my clients lo and behold bushy uh you know gotmy tail behind my between my legs because that thing basically doubled in in the last two and ahalf years but here's the thing i say and my clients say hey pk did you like did you get that
28:57one wrong like what was up with that and i said look there's a area called angle bell and there'sliterally thousands of building approvals now in the last few years we've seen um uh builders goWe've seen construction costs skyrocket. They've started to hockey stick again in WA and South Australia after the rate of growth coming down a little bit. We've seen it really hard to get skilled labor to build these things.So if we were in a normal market, this particular part of Adelaide wouldn't have gone up so much or much at all.And the real risk is that now there's about 80% of all transactions done by investors in some of these Elizabeth areas.Why? Because they're basically the cheapest capital city areas that you can buy.And when these areas, I could be completely wrong. Let's have a discussion in two or three years about this. But when things don't go right for those investors, when let's say interest rates go up again or whatever, a lot of this was speculation.the prices could go right back down when things normalize with building costs with construction
30:12costs these approvals and the thousands are going to come out and so then you're going to have awhole new suburb or suburbs built and then these areas are going to stagnate potentially for thenext 10 15 20 years so look i'm completely wrong right you guys doubled your money you can't arguewith that there's no doubting that and for a flip you know i i don't know how to flip propertiesbased on capital growth by doubling them in two years.I can't do that predictably, right?But for those who have, you know, all credit and kudos to them,but it was an incredibly high-risk strategy,
30:45and I don't think it's repeatable in the long term.For those who hold, you might find that you underperform.But here's the thing, Bushy, and I think folks like me need to be humble.The underlying problem, like you said as well,is that we just don't have enough houses in Australia.And the demand story in Australia has really shallowed out. The only thing that's keeping the ship alive is there's no houses for sale. And so you've got supply really shrunk. You've got demand since rate rises. It has come down. It's not fallen off, but it has come down. But the imbalance is still there.So you've got a lot of uneducated, poor property decisions in what you and I would call normal markets 10, 5, 15 years ago, really disproportionately doing well.And so it's hard to argue with that.
31:42But then we still have to ground ourselves in the fundamentals because property is a long-term hold, 10, 20, 30-year hold, at least the way that I understand and have done it.And so that's how I look at the world.I love the example you shared.And, you know, full disclosure, I'm very jaundiced.I know Adelaide very well because I lived there for, you know,the last 20-odd years or longer, actually.And what I think, I love the way you describe the exercisearound Elizabeth because as an Adelaidean,
32:20there's a real stigma around that area.What gets missed, I think, at times is, yes, there's a direct demand-supply equation, but increasingly, sentiment also has an impact.And it almost needs to be, yes, we might have seen some short-term results because the rising tide has lifted what would otherwise be pretty average-performing areas and properties.so it's happened despite itself basically as a consequence of that but if we take that long-termview because the fundamentals aren't there and there is still some pretty average perceptionsof those areas like people in Adelaide don't want to live there they live there because they haveto not because they want to and that that does have an influence on buyer activity at some whatwhen it's all about the interstate activity starts to to settle down and it's back to local market
33:18of activity that's driving it, that's when it's going to get interesting, I think.Yeah.So, wow.I think there's those mix of exercises that we need to have a look at at a point in time.But if we're looking at those fundamentals, a bad property in a bad location is a badproperty in a bad location.It might do okay short term, but long term, if we're 15 years plus, it's going to showus colors eventually.
33:40And I have nothing against investing in low socioeconomic areas.No.I have properties myself in such areas, so long as they're gentrifying, so long as thelong-term story is positive and there's not a, you know, blush of oversupply that couldcome about in the medium term.What worries me, Bushy, is that the three levels of government, as you and I both know,are woefully either incompetent or have no intention to solve this housing shortage.What worries me is that the next 10 years, the fundamentals won't matter and everything will go up and people will be listening to this conversation in five years and be like, nah, Elizabeth still went up.
34:29So this is what I'm trying to get my head around because we're in very unique territory with so much money supply from all the quantitative easing still flowing around.It's not being absorbed. Record housing shortage still in existence. And I mean, it's a terrific time to be an investor. But, you know, give it maybe 10 years, 15 years, hopefully at some point the housing shortage rectifies or mediates itself. At that point, there could be a lot of blood on the street.that point could be 15 years from now 10 years from now five years from now who knows I'm kindof a low risk guy so I don't want to take any chances I just want to buy good fundamentalassets that I know I'll get a tenant I know that there's not going to be 20 other properties onthe same street from other investors where tenants have optionality I don't want to be up at nightSpot on.Yeah, no, really well said.
35:31Now, just leveraging off what you just mentioned there,I'm seeing increasingly in their media a lot more talk about recessionand potential property market crashes.I'd love for you to share your read on economic and property conditionsin the medium to long term.What are some of the risks that we're facingand what is this going to mean to the peoplethat are looking to invest in property?
35:55Okay, sure.Um, like I think one of the biggest risks is, uh, our foreign exchange or the strengthof the Australian dollar versus the U S dollar.Um, the U S economy is, is becoming quite weak and I'm not basing that based on, youknow, recent stock market tumbles and, and things like that, but employment data, variousother things have started to shift. Whereas just six months ago, things in the US was actuallydoing really, really well. Inflation has come down in the US in a big way. It's almost around3% now, and the economy is coming down. So I think rate cuts are inevitable in the US.
36:43I think the Federal Reserve, they kind of are a little bit more audacious in their predictionsthan at least the current Reserve Bank governor in Australia.So they've said in September they're going to cut it.They've said that before, and they didn't end up doing it.But I think it's really close.In Australia, though, we are linked to the U.S. and the global economy,but we're also our local economy.And inflation here is not coming down as much as international peers just yet.
37:18It is coming down, but it's not quite there yet.And I think the risk to property markets is if the RBA cuts ratesbecause they need to maintain some sort of healthy FX positionto buoy our importers in Australia.And so for U.S. cuts, we kind of need to cut.There's a lot of political pressure as well to cut at some point.whilst the inflation kind of genie isn't quite put back in its lamp.And that could mean in the short term,
37:53property prices actually get another windbecause I don't subscribe to this theory of interest rate rises,drop property prices and interest rate falls, booms.It's easy for folks like you and me to say,interest rate cuts coming, guys, get on the train, another boom.I don't think it quite works that way.Although there will be some tailwinds to property prices, because let's face it, people have all of a sudden more borrowing capacity. So those on the margins, they'll get into the market. So I think the risk is that happens, rates get cut, property prices continue, now get a second wind a little bit, not a boon, but a little bit of a tailwind.But then the inflation genie kind of comes up again, whether that's because of some war and shipping bottlenecks, which have once again reared their ugly head recently, or because the more property prices go up in Australia, of course, the rents go up.
38:48Rents are a key contributor in terms of inflation baskets.So that could mean that now there's six months from now, 12 months from now, there's another maybe cycle of inflation locally, because I think the Australian economy is much stronger than the US economy right now in terms of its momentum.And when that occurs, then that really takes the sentiment out of the market because now people have lost trust in the RBA. They've lost trust that rate cycles are very long and discrete. They don't know what's going to happen. And at that point, there could be then a bit of a correction in property markets.But once again, against the backdrop of a huge housing shortage, like even right now, they've not met their 2024 targets. You still fail to see how prices could come down even in that scenario.So I know I'm painting a nuanced picture where various things can mean rises and falls. It's tough even for you and me, I suppose, to exactly predict what will happen. But overall, I think that it's best to try to contain property prices for the foreseeable future.I don't like it when, being an investor as well, I don't like it when property prices go up double digits every year because it's bad for Australians, it's bad for our economy, it's bad for our productivity, it's good for the government in terms of revenues and things like that, but it's bad for basically the social fabric of Australia.And we always have to remember, forget if whether we're a good Samaritan and a goodcitizen or not, but just economically for long-term prosperity, we need long-term sustainability
40:48and property price is a key linchpin to that sustainability and driving the middle class.I don't want to sound like a politician, but economies only do well when the middle classdoes well, right?And right now, to your example with Elizabeth, people don't want to buy in Elizabeth to live, but they're kind of being forced to because they've been pushed out of other more desirable areas.So, yeah, I don't have a bushy property prices up 20% next five years or 10% or down, but I think it's complex.We're lucky.I think this decade is going to be pretty low-risk property investing,but I hope it doesn't boom too much.
41:32Yeah, again, a really good read,and I would have almost been disappointed if you had to come outand told me some definites about this is exactly what's going to happenbecause every time I hear someone say that, I get very nervousbecause you and I both know there's so many dynamicsthat are going to influence on the exerciseat the global, national, and the local level,that it's like trying to predict the weather.
41:57But that's why I keep reverting to what's not going to change.Let's focus on the fundamentalsbecause we've got the Ukraine war happening.We've got China having a lot of challengesand there's a growing dependence of Australia on China.If China has a cold, we're going to get a headache.There's no question about it.So there's so many moving parts.
42:17we've got to try and weave our way through this and that's where for me if you focus back on thelowest common denominators and the fundamentals underpinning it and you buy good qualityproperties and for me that's not just investment grade that's having owner-occupied appeal becausewe want to be selling our properties down the track to an owner-occupied not to another investorthen we're at least giving ourselves the best insurance policy that we possibly can in thatevent so well look uh we've only just scratched the surface i love talking to you by the way it'sso refreshing to be talking to someone who has a similar outlook on on life and property generallyuh would love to do this uh again because there's a lot of topics that i haven't touched on today
43:02that that i'd love to but i'm going to jump into what i affectionately refer as the the bushfireuh ambush round and ask you four quick questions that uh give you the blindfold and cigarette andjump into those so the first of those pk is what superpower do you wish that you had and whythe superpower that i wish that i had is oh gosh you put me on the spot herelook look i think um if if i the superpower that i wish i had wasfacilitating better communication i think all of the world's problems for many of themare solvable and they don't get solved because people don't communicate in the australianproperty context we just got to get like the three levels of government property investors
43:55people on the far left different opinions in the same room those who have influenceand actually chalk out a solution because as you you know as you go up in the maslow's hierarchyof needs i feel we are talking about it but i kind of care more about the longevity of australia andthe property market rather than making like a quick buck these days yeah yeah no great shareif you could have coffee with anyone either alive or dead who would you choose and whyi think i'd like to have a coffee with donald trump um not because of any political affiliationbut i just want to understand like does he actually believe the stuff that he says um and ifso like that's phenomenal and if not like that's fantastic marketing yes i'm not going to touch
44:45that subject i've already referred to as the orange maniac and it feels like a pretty aptdescription at times but uh next question pg if i gave you 50 million dollars in cold hard cashright here right now what would you do with it and why i do what i'm already doing uh with awith a lot of very humbly with with a lot of what we have um we support a orphanage that was startedafter the tsunamis in sri lanka um about 20 years ago just over 20 years ago so i would actually umi don't know why i don't actually have the ability practically to start one but financially i wouldstart um more orphanages around those areas and i don't know the first thing about regulations butat least i would fund them more yeah i love it i love it last question if i if you could wave a
45:34magic wand and change anything what would you change about property investing what would ichange about property investing i would change in australia i think people are obsessed withproperty probably more so than most parts of the world because it's so easy to make moneyboth as an investor but also as a business owner regardless if you're good or not and if you havescruples or not. So I would make everyone need to do a four-year degree and at least some workexperience before they could either sell a course or a mentor service or become a buyer's agent orsomething like that. I would create some hurdles and I think that would serve the Australian public.Beautifully said. Last question, PK, if I asked you to get invested, what does that mean to you?
46:23I think it means to really work on your limiting beliefs I think people have the financialwherewithal to achieve a really amazing lifestyle design but a lot of it is not achieved because ofself-sabotage and that self-sabotage is mostly due to childhood traumas and things that they'veexperience not because of their fault necessarily in their life so i think before you can getinvested a lot of these people including myself we need or needed a lot of subconscious andmindset healing so get invested means to get invested on your internal environmentto me before you start creating wealth in your external environmentwell i'm walking in money you're singing my tune there pk yeah as you know i'm a big believer in
47:21the intersection of self-health and wealth being the key ingredients to true sustainable successand everything so that's a great thought to leave us with uh really we'll make sure we've got allof the uh contact details and the show notes for those that i know are going to be uh reallyresonating with everything you've shared so they can take advantage of both the volumes of freeinformation that you share as well as the opportunity to jump on board with your acceleratorcourse. So I really want to thank you for taking the time to dive into that. Before we close,if anyone listening would like to discuss any of this further with other like-minded investors ina very safe, relaxed, and no-pressure environment, feel free to join us on the Property Hub Collective
48:07Facebook group by clicking the link in the show notes. And for those that would like toconfidentially delve a bit deeper into your specific property needs or challenges, book inwith me for a personal solution sessions by clicking the link in the show notes or going toknowhowproperty.com.au where we'll have the opportunity to have some complete, dedicatedand undivided time to draw on my 40 years of property experience to help you solve yourbiggest property challenges for a full 60 minutes. And that brings us to the end of another greatconversation and very insightful, engaging discussion, PK. So thanks again for gettinginvested and let's make sure we keep the conversation going. Thanks, Bushy. I don't
48:49do many interviews these days, but I always like chatting with you because I can be myself.Awesome. Thanks, mate. Thanks for tuning in to Get Invested on the Property Hub podcast channel,your home for property investment insights and inspiration make sure you subscribe to propertyhub for free get your weekly dose of get investing inspiration along with every episode of realtytalk australia's top online property show for red hot property investing news and insightsdirect from industry leaders and influencers and finally i'll see you next time
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