Property Hub - Investment Insights & Inspiration - Get Invested: Part 2 - Sharyn Burgess on financing your future

Starting point is 00:00:00 So what I do feel that we're going to see as this interest rate, you know, rise and normalization process happens, we are going to see some policy changes that just keep quietly happening in the background that all of a sudden unlock some borrowing potential for everyone. And I think that's exciting. so my advice to everyone is if you've asked the questions before and the answer's no in terms of no you can't borrow it welcome to get invested on the property hub podcast channel the leading weekly show to help you unlock your full self-health and wealth potential i'm your host

Starting point is 00:00:42 bushy martin and each week i go deep with the best investors experts leaders and founders to find out what it takes to break free from the grind, discover freedom and live by design. Subscribe now and join me and get invested in the life you really want. Let's get started. What I'd love to do now, Shan, is sort of pivot into the areas that are near and dear to both of us as far as the importance of finance to people's lives, not just property, but generally, and talk about some of the areas that you've got some real expertise in that regard. So to sort of kick that off, given your personal and the business experience you've had in the lending industry and in the banking system to some degree, what do you see as some of the biggest mistakes

Starting point is 00:01:35 that you see people making around borrowing money to particularly to buy property? That's a good question. Look, I think the number one mistake is getting emotional or emotionally attached to a property um there's there's a polar in sides but for example if we're if you get somebody that has is buying an own occupied so the home that they're going to live in that would generally if they fall in love with it and are emotionally attached to it they will generally pay more because it has to be this property and it's one of the biggest mistakes i think people can make um and the same thing on the flip side for investors that they might actually um choose to invest in their own backyard um because their emotional attachment to be able

Starting point is 00:02:22 to do a drive by on the property ad hoc to check up on them and um i quite often or we quite often do some coaching with our clients to sort of go well actually no an investment property this is a business transaction let's keep it over here so you can't see it so then you're just focusing on the numbers and um so but yeah in terms of like mistakes i think getting emotionally attached to a property or a area or a concept is probably one of the biggest mistakes i see made yeah it's but what about in terms of when people approach the the loan process uh because i you know both of us uh i've seen a lot of people who who come in with with a uh an expectation that is way different to what they're about your experience because the the lack of understanding of what the

Starting point is 00:03:12 the lending policies are and how they vary is there anything that you've seen uh from that front that is a common mistake that you see i i think the the common mistake that people might take is again perception that they expect it to be a certain way particularly if the last loan they did was pre-COVID and the requirements were far less. And then they're like, hang on a second, you're asking for everything I ate for breakfast since 1972. Like, what is this about? You know, I don't very often focus on those types of things with clients though, because that's our job. That's our job to coach them and set the journey expectation and go, okay, listen, it's been a long time since we've done this here's what we can expect from here and then when we

Starting point is 00:04:05 isolate which bank okay here's what you can expect for your journey with this bank um and then we we couch that expectation and then the loan processor backs it up um so i don't really focus too much on what the client mistakes might be because as a broker um we can mitigate those and navigate around them. Love it. Love it. That's exactly right. We're here to actually educate them on how it works

Starting point is 00:04:32 and then take the stress pain and add a way to make a good experience. I love that. Now, if someone was to look to get a loan, why do you think property buyers and investors should engage a savvy finance broker over going direct to a bank or just an average broker? This one is so close to my heart because I did work for a bank for 10 years. In really, really simple terms, a bank will have a limited number of loan options, number

Starting point is 00:05:05 one, so you're limited as to what you can choose. And then number two, there is no training in how to strategically place the lending in the right manner for your protection, the client's protection. the training at the bank level is all about bank risk mitigation and bank risk protection and they don't even teach their lending managers that there are different ways they just say it's this way and it might be cross-collateralizing properties and things like that which you know as you know we avoid at all costs um so you know there's just two really really big things that um why people could be choosing brokers um you know there's multitude with uh how long have

Starting point is 00:05:53 we got but um i think knowledge knowledge is probably let's put knowledge at number one a good broker can isolate what it is that you need how to strategically design that lending That's best for your risk mitigation. And then where can we put that that's best for them? Where the bank has their bank products, that's it. Well, you mentioned earlier the best interest duty. And for anyone listening in, you may or may not be aware that the broking industry actually has a legal duty of care under the best interest duty to make sure that we're actually looking at the best possible solution

Starting point is 00:06:41 to suit your specific circumstance. Banks don't have that obligation at all, which is really interesting actually in the context of making sure that you think you want your client to have the best possible exercise. If the obligation's not there, then they can pretty much do what they like in that context. So I think that's a really important application to make. and certainly a reason why, you know,

Starting point is 00:07:09 if someone's serious about getting someone on their side of the table to look after them and being able to read through that maze of constantly changing lending dynamics and criteria, and as you know, it's a daily exercise in that regard, then someone who's got the finger on the pulse there is going to make a massive difference. Let's talk about the qualities and character traits then that you think separate a great finance broker from the rest chair?

Starting point is 00:07:37 I think a great finance broker has lived the journey and they draw on that journey to actually then have an empathetic, you know, come from an empathetic space to understand what that client needs. I guess I'm going on record to say most brokers can get somebody alone. We might get a few more grey hairs. it's a very stressful environment but it's doable most brokers can get the loan but do you at the end of the day do you want the loan or do you want somebody that's going to absorb most of that

Starting point is 00:08:13 stress and hold your hand along the way and get you there and then celebrate at the end and cheer you on and then check in with you every 12 months to say how's it going is it okay do you need any help um you know it's support support probably nails it down to a key and they're not going to get that from the bank level. Yeah, beautifully said. And I think I also like your thoughts because you've sort of worked with a number of one-person broken shows in the past. How do you feel about that compared to a team like the Know How team? What's your feeling around about that in terms of the benefits to the borrowers and the clients at the end of the day? And look, I'll liken that to, you know, an old adage that people say about children, like it takes a village. And it really, truly does. Anybody out there who's raising children, it takes a village. And brokering is no different. It really does take a village to get this right.

Starting point is 00:09:14 And for me, you know, I saw this saying the other day and like I'll steal it. I'm cocky enough to know that I'm really good at what I do, but I'm intelligent enough to know that I can't do it on my own, you know, and that support and that team and I can't tell you that, you know, in our group, the amount of times I pick up the phone and call one of the brokers, other brokers within our group and I say, oh my God, this is happening and they go, that's nothing, get a load of this. And, you know, it's sort of like, oh, it's way less isolating. There's this support network, it's a team environment

Starting point is 00:09:54 and we champion each other along the way. How that transpires across to a client when they enter into a single broker versus a brokerage is that the right teams have a family unit in place. So if for any reason that broker needs to be with their family that day because their child has medical appointments or something like that, there's somebody in the background that's got your back and they'll help answer questions and keep the client on the right journey and calm and happy. And that's exactly what we want. Yeah, beautifully said. So if someone's listening in going, okay, well, there's 16,000 brokers in Australia.

Starting point is 00:10:31 A lot of them are one person shows. what would you say to them in terms of the the keys that they need to understand or the questions they need to ask to select a great finance broker to help them yeah i think um from a client perspective the majority of australians they they don't know what what they don't know and that's in terms of loans and that's okay because it's our job to know what i want for everybody is that they've got somebody that they can talk to and i don't just mean hey what sort of loan can I get like I mean really talk get deep and personal and say this is going on and I need to find 200 bucks a week because you know my child's going to have

Starting point is 00:11:16 to go into chemotherapy and I can't stop working right be vulnerable lay it out there if that person doesn't respond they're not your person if that person doesn't support you or check in and go are you okay yeah they're not your person so it's not always about what is the right question to ask is can you talk to them and really talk because if you can't talk to them now you're not going to be able to talk to them in six months 12 months if something goes wrong with that loan absolutely spot on notes extremely well said did it sort of shifting now into the the current environment as interest rates rise and and buying capacities are dropping through the floor as a consequence of that. What thoughts can you give property buyers or home line refinancers to

Starting point is 00:12:01 actually optimize their property purchasing power and capacity moving forward? Any tips? Yeah, look, there's a lot of simple things that we can do. I mean, there's the obvious ones of like, let's get rid of those credit cards or consolidate some of those personal loans. And they're all the obvious choices. What a lot of people don't realize is that the discretionary spending. So the day-to-day and in the world of the tapper, tapper, tapper, the card on the whole tap machine, and we don't use cash so much anymore. It's people I feel, and myself included in here, we've lost touch as to how much we're actually spending. So if you sit down and you look at even just the last 30 days of your bank account and go, huh, okay, that's when you can

Starting point is 00:12:49 understand what's going on in your own finances so i think that's probably something that you know we need to do a lot more of yeah you're right that sort of uh the tapping generation now it's just so easy to pull out the card uh we we've actually stopped doing that uh it's on your eye now we'll we'll chuck it in the bottom and it's coming out of their check account so the money's not there that it can't be spent it really it gets you thinking about what you're spending on why you're spending on it so we're incorporating the disciplines really really important percent and setting just one of those little triggers for yourself it means that now it can't spend so we have all these hints and tips and tricks of how to set your own little triggers to kind of go

Starting point is 00:13:33 okay i'm at my capacity now um you know for that week or that month or whatever it is but um a lot of people would not set it taking the time to set around it'll alert so to speak yeah spot on yeah And it all starts there. It starts with the little things. And if that discipline starts to build and that thinking approach starts to occur, then that starts to ripple out into everything you're doing. So really good advice on that front. I want to now shift into an area that's getting a lot of play at the moment because people are maxing out on their borrowing capacities because of the rates are going high and the borrowing capacities have dropped pretty substantially as a consequence of that. all of a sudden self-managed super fund properties have come back into the fray

Starting point is 00:14:19 and I know you've got some expertise in that area can you talk to us about lending to buy through a self-managed super fund and how that works and the things that potential people need to look out for in that regard yeah I mean lending to an SMSF I think it's an amazing it's an amazing tool it's an amazing vehicle and it did get a little bit of a bad rap a few years ago, but it's coming back now with a vengeance. And for those who want to get into an investment property, but either A, can't in their own personal borrowing capacity, or B, don't really want to perhaps contribute any of their own money right now because they have young children and they need to hold some of that money back, then SMSF is definitely

Starting point is 00:15:05 a really good option. There's some small limitations in what you can do. So you can't build a house with it. You have to buy something that's already in place. So there's a few little things like that, but again, a really good broker will actually help you through what you can and can't do. What's important on that one is start the conversation early. If it's something that's in the back of your mind, make the phone call now to actually talk to somebody. It can take up to six months to get the SMSF established and the money in place before we can even look at the lending. So I get multiple calls a week saying, can I do it? Well, yes, you can. I need you to go talk to your accountant. Here's the next steps. And then I'm going to touch base

Starting point is 00:15:50 with you in three months. Oh, so we can do it in three months? Probably not, but I'm going to call you anyway. So again, we're coming back to like opening up that conversation. There is no question that's silly it's if you get the right person they'll coach you through it they'll tell you what you need to do you can go off and do it you know in that time frame and then um you know and then it functions just as as normally as investment properties they just get on with it and do their thing well there's i mean that from a financial perspective there is a lot of uh upfront and longer term benefits because uh if you set up a self-managed super fund uh any of the income or contributions, you only pay a maximum of 15% tax at the moment versus most people on 30% plus for

Starting point is 00:16:38 income earned outside of super. If you hold the property beyond a retirement age and then sell the property, there's no capital gains tax at all imposed on that situation. And any rental income post-retirement age isn't taxed either. So there's some pretty significant benefits for those like myself who invest for the long haul. So some really benefits there. And on the lending front too, Shannon, and again, pretty if I'm wrong now, but when I got heavily involved in the self-managed super lending space nearly 10 years ago now, it was very restrictive. You could only borrow a maximum of 60%. You had to have 200 to 250 minimum in your self-managed super fund to consider it. You had to have a minimum of 10% cash left in the self-managed super fund

Starting point is 00:17:26 after the property was bought. Most of the banks then would still get personal guarantees from the borrowers outside of the super fund. So if something went belly up, the bank could still come and have a crack at the individual, even though it was supposed to be a non-recourse loan. I know that landscape's changed. Can you just share some of the key bits that are now available to people who are thinking? Yeah, yeah, absolutely. So in terms of the borrowing percentage, the interest rates are tiered upon the lending to value ratio or the LVR of the property. So if we're looking at sub-60 or between 60-70, 70-80,

Starting point is 00:18:04 then the interest rate is lower, the lower the LVR. In terms of the liquidity that you mentioned, so holding available cash in the funds, there are still a couple of lenders that require a minimum of $200,000 in the super fund before they'll actually go down to a lending option. There are actually a couple now that require zero liquidity and they require zero dollars to remain in the account on settlement. So, you know, as it's making its comeback,

Starting point is 00:18:42 lenders are getting on board as to what are the demands of the community? what are the demands of the people and what what can we do about that so again it's not a one one size model that fits all um at the moment we've just gained an approval this week for a client that um literally only had 140 000 in their smsf to begin with yeah um and we're still retaining 30 000 of that in their account as in liquidity uh on settlement yeah that's awesome so i'd say it's been becoming much more accessible i know that you know the days that i was i was heavily involved in it. Most of the loan terms were 15 to 20 years. I know they're now 30. They're doing interest-only periods. They're offering offset accounts. So they're

Starting point is 00:19:27 very much functioning like the normal residential housing loans do. There's a lot more structure around it, which we won't bore everyone with tonight. So if anyone really wants to learn more about the self-managed super space, I'm really going to encourage them to reach out to you directly, Shan, to take them through that and how that looks for them and the steps they need to take to walk through both preparation and going, because it's certainly an opportunity in the area. If it's handled well, it can be very good. If you don't do it well, it can be a disaster.

Starting point is 00:19:58 And again, it relies on having the right people around you, not just from the borrowing space, but a really good accountant and a financial planner who needs to be involved in setting up a statement of advice and the investment rules and the constitution for the self-managed fund are important because there is a lot of compliance. There's audits on an annual basis. There are some additional fees that are associated with managing that process. And don't fool yourself that you can do it all yourself because you'll be making mistakes that you're not even aware of given how strict the superannuation act is in terms of protecting the interest of the super fund itself. So thanks for sharing that. I want to circle back because

Starting point is 00:20:37 We spoke earlier about how important the loan processing process is to a brokerage and the client experience. And, you know, both Sonia and I have been very supportive of the business that you've now started to help others to take advantage of that. So can you talk to us a bit about your parallel business become a loan processor? Yeah, thank you. this is exciting and I'm so fortunate that I'm in a position with yourself and Sonia to be able to release something like this and be supported through the process. So Become a Loan Processor is a business where I train loan processors for other brokers. So back when we spoke about loan processors and what they do, currently in Australia, there is no training, formal training

Starting point is 00:21:28 or any training that you can get for loan processors, the only way that we get trained one is if they've actually worked for a broker and been trained on the job. So, but our journey with myself being a loan processor, but as well as with brokers and our group and hiring and no longer hiring and, you know, getting a variety of different loan process and options and what we weren't willing to compromise is the client journey it didn't matter who that person was we were not willing to compromise the client journey and um so it got me thinking one day i created it because it's like well we can't be the only brokers experience in this journey we i still get phone calls today saying are you still a loan

Starting point is 00:22:17 processor I'm like no no no I'm definitely not anymore so if there's still brokers out there desiring that service so then it's like I got to thinking other people need customer-centric loan processors so I thought hell why don't I train them so I created become a loan processor and it's a training and a support network where they can actually train in how to do what they do. And then there's weekly sessions in training them, live sessions in how to do all those fine tuning things. And that's where we get to cover a lot more of customer-centric focus. This is why we do it. Not just, this is what you do. This is what you do. And this is why, because this is the journey it gives both the client and the broker. And that's your job as

Starting point is 00:23:07 the heartbeat of the business it really said and i love what you're doing there because uh now our learning men team has has the privilege of joining you for the training sessions on that and the as you say it's it's not just the hard school stuff about the admin side of the equation it's the it's the relationship stuff and the communication uh approach that really makes or breaks that experience and i and i love how you've made it a really important part of what you're doing with Become A Loan Processor. So for any brokers or others who are out there who are really struggling, either you're on your own and you're getting buried in the administration of the exercise, or people who think, would this not be a career that I can get into? Maybe similar to

Starting point is 00:23:54 yourself, Shan, who are bringing up a family, but you've got some skills that you can still want to put into something that's satisfying and also can help fund the family, then jumping on to join you with Become a Loan Processor is a great way to do it. How can people find Become a Loan Processor, Shant? Look, it's as simple as Googling Become a Loan Processor. It is that simple. I will make sure that there's a link in the show notes as well for everyone, but we're on Facebook, we're on LinkedIn, we're on Instagram,

Starting point is 00:24:28 we're on we have a website um and some great tools on there that people can access oh you know everyone can access as well love it now just to sort of round out the discussion on the the finance piece what's your read on where lending is heading given the constant changes that are happening in the uh industry and across the lenders and and what impact do you think this is going to have on people who are looking to borrow money yeah i think at the moment um there's a lot of focus by media and people are like that with the rising interest rates, it does lower the borrowing capacity. So it can be quite alarming. Sometimes people realize how much they can or can't borrow when they choose to do something. What I like to remind people

Starting point is 00:25:12 is that banks are businesses. They are there to make money and report to their shareholders. they're not there to really serve us um and at the end of the day in business 101 if they're not making money they figure out ways how to make money so and that's not always um something that's visible in terms of like most people would focus on the interest rate um there's all these uh you know as you would know macro prudential changes that happen in the background of like all of a thousand and it's like it doesn't get announced in the media it doesn't come out there so what i do feel that we're going to see as this interest rate um you know rise and normalization process happens we're going to see some some policy changes that just could quietly happen in the

Starting point is 00:26:08 background that all of a sudden unlock some borrowing potential uh for everyone and i think that's exciting um so my advice to everyone is if you've asked the questions before and the answer is no in terms of no you can't borrow it keep checking in every few months has that answer changed um that's the only way we'll capture when it does change so it's exciting saying that and then the secret to that is is uh having a relationship with an investment and a finance savvy broker like yourself, Shannon, who's on top of what's happening day to day. Your inbox gets filled up with policy changes from the banks every day and week, and those little opportunities that creep in. And as you say, banks are businesses. So if people aren't able to borrow money,

Starting point is 00:26:59 that also means that banks are doing it tough because they're not writing the volumes of loans that they're used to, which will be affecting their bottom line, which means that they are likely to become more creative around how they can create opportunities for people to borrow money. So, having a relationship with yourself and other good brokers is an absolute key to, because you get a no today doesn't mean it's going to be a no tomorrow. So, brilliantly said, I now want to switch into the infamous ambush fastball round, Jan. So, get out your cigarette and your blindfold because I want to hit you up with the fastfire questions and you know these well what what's your favorite quote and why okay favorite quote life is like riding a bike

Starting point is 00:27:43 to keep your balance you must keep moving um and it's from albert einstein and it's 100 true i love it because life is all about moving and adapting and changing and pivoting and it's good when things don't work because then you know that doesn't work we pivot and we try something else shifting into the literary field what's the top book that you'd recommend we read with this question because i'm such a big book person um one of my ultimate favorite though is there's a book called so good they can't ignore you um it's by cal uh cal newport um and it's all about why skills trump passion in the quest for the work that you love um so it's it's all about upskilling yourself to be so good they can't ignore you great great it is a great book no

Starting point is 00:28:38 question about that one uh the swinging back into the investment advice arena and you've touched on some of this already but what's both the worst and the best piece of investment advice you've have received okay so um the best piece of investment advice was uh if i think about become a loan processor i sat on the idea for three years before i released it and it was actually my business coach that said sharon you cannot learn to drive a parked car you have to get this out there and then figure the rest out as you go um and that was actually probably one the best piece of advice because um it it will be a very very good um returns yeah and look at the worst piece of advice was you know probably she'll be right mate just do it she'll be right

Starting point is 00:29:29 and it's like no hang on a second research ask questions there's no stupid question so no beautifully said yeah i always ask this question as well because i i believe it's our daily disciplines that that create the opportunity to achieve sustainable success however we decide to find that so what's a a personal happy habit or rewarding ritual that's in that you've actually employed that's contributed most to your success i think this one's hilarious i would love to say that i'm one of those people that get up you know for the 5 a.m club and so forth most of the time I actually feel like I'm winning the day if I can actually finish my cup of coffee while it's hot, given I have young children. However, one thing that I really try to do first, and this is one of those little mechanisms that I set in place to ensure procrastination doesn't creep its way in, is do the ugly bits first.

Starting point is 00:30:25 Do the ugly bits first. Smash them out first thing. Then they're done. You're not then spending the whole day thinking, oh, my God, I have to do that. Do the ugly bits first. love it love it it did it gets that monkey off your back straight away and just uh yeah that lot the load of items immediately when you do that but not many people do it so we'd love that one uh now uh that's pretty much coming off on those is there a question that i haven't asked you that

Starting point is 00:30:53 you would like me to and and if so what would you your response been okay i i'm i'm gonna play the fifth on this one i i don't i don't know what i don't know i'm a very humble and normally a very quiet person so you know me very well bushy and that this was a nice little challenge for me to actually um talk um but one question i didn't get asked um as a society no i won't i won't plead the fifth as a society are we all being vulnerable enough my answer is no absolutely not The more we talk, the more we understand, the more we connect. There's not enough connection at the moment, so let's start talking. Yeah, that's really sage advice. If we just sort of summarize our awesome conversation today, Shan, what would be your key, and I'm really

Starting point is 00:31:48 focusing on the finance piece, what are your key takeaways and initial actions that aspiring property buyers or loan refinancers need to consider? That's so simple. Again, you can't learn to drive a parked car. Start the conversation. I have people that I've worked with for three or four years before we actually write alone because we're fine-tuning, we're making little pivots, things like that. Start the conversation.

Starting point is 00:32:13 The right person will get you there. Ask the question. That is the key piece. For those like myself who really resonate with our chat today, as always, and they're either interested in talking to you about the broken piece or finding out more about become a loan processor how how can they find out more and get more involved with you yeah amazing um first of all uh in in terms of the broker space we can go jump onto our know-how finance um website there is actually an appointment link

Starting point is 00:32:43 so you can actually book directly in with me just to have a chat um and also uh there's some links through to the become a loan processor page and then you'll be able to get direct access to me from there you can find me linkedin and all those normal places um it's not as shan i like shan but it's not a shan it's sharon s-h-r-y-n i'm out there yes now i should have emphasized that sharon with a y so s-h-r-y-n uh it's an important distinction because if people start typing in sharon with an o they're going to start scratching their head so it's sharon with a y-n and just to reinforce uh those key opportunities to catch up with you shan uh if anyone wants to have a chat in a in a no sales very safe uh no obligation environment and an opportunity to ask any

Starting point is 00:33:34 pressing questions and share it with a community i want you to feel free to join us on our recently launched the property hub collective facebook community and you can do that just by searching the property hub collective in facebook or clicking on the link in the show notes and as you've already said Shan if anyone wants to book in to have a private chat with yourself just jump on to knowhowproperty.com.au now and click on the purple book appointment button on the top right hand corner of the home page and then select one of the appointment options to lock in a free call so Shan I really want to thank you for having the courage to join me today yeah I think you underestimate yourself you you're a great communicator and I know everyone's going to

Starting point is 00:34:14 warm to everything that you've shared with us today. So we really appreciate you joining me and I'm really keen to keep the conversation going. Thanks so much, Bushy. I really appreciate it. Thanks for tuning in to Get Invested on the Property Hub podcast channel, your home for property investment insights and inspiration. And don't leave yet until you've taken the next step towards living by design by getting my award-winning book, Get Invested, absolutely free when you sign up at knowhowproperty.com.au or bushymartin.com.au. And finally, make sure you subscribe to Property Hub to get your weekly dose of Get Invested inspiration, along with every episode of Realty Talk, Australia's leading property show for red

Starting point is 00:34:58 hot property investing news and insights, direct from industry leaders and influencers. Remember to always get invested in your knowledge, and I look forward to seeing you next time.

Property Hub - Investment Insights & Inspiration - Get Invested: Part 2 - Sharyn Burgess on financing your future

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