Property Hub - Investment Insights & Inspiration - Realty Talk: Add your voice to the inquiry

Episode Date: August 25, 2023

We start this week with an alert from Ben Kingsley, Chair of the Property Investors Council of Australia.   We will play Ben’s full video message to you in the show today because what he talks about - the Green’s proposal for 2.2 million small business property owners to subsidise their tenants’ rents, with a 2 year freeze on rental increases - promises a very real financial burden on all the Mum and Dad property investors in Australia. We encourage you to pay heed to Ben’s message and, after you have heard the facts, use this link to send a message to the policy makers.  Also today Nicola McDougall from the Property Investment Professionals of Australia adds her thoughts about the Green’s rental freeze proposal and how it is likely to have the reverse effect - a message every renter will need to hear.   Raymond Hempstead joins Bushy with some insight about purchasing property through a Self Managed Super Scheme and Scott Aggett joins Bushy with some excellent advice about how you can overcome the hurdles to accumulate a property portfolio that will attain and sustain your lifestyle goals. Provide your feedback to the Inquiry before Sept 1 Tell them how much your costs have gone up and how much you have increased your tenants rent.  Property investors are NOT price gouging tenants.  They are trying to cover a portion of their increased costs. NEW – Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

Hi and welcome. I want to lead this week with an alert from Ben Kingsley, who's the chair of the Property Investors Council of Australia. Now we're going to play Ben's full video message to you in the show today because what he talks about, and that is the Greens proposal for 2.2 million small business property owners to subsidise their tenants' rents with a two-year rent freeze on any rent increases poses a very real financial burden on all the mum and dad property investors in Australia. Hello, Ben Kingsley here. Very shortly, you're going to watch a video from the housing spokesperson from the Australian Greens Party. Now, you'll see his argument in terms of the political lobbying that he's trying to do to get rental freezers introduced nationally across

the country. Now, that would be catastrophic both economically and socially. And so we need to put a stop to this. Hello, I'm Kevin Turner, and that was Ben Kingsley. Welcome to this week's Realty Talk show. As I said, we're going to play Ben's full message to you and provide links so that you can take action to be heard by the policymakers. Also on today's show, Nicola McDougall from the Property Investment Professionals of Australia adds her thoughts about the Greens' rental freeze proposal and how it's likely to have the absolute reverse effect. And that's a message that every renter will need to hear. Raymond Hempstead joins Bushy with some insight about purchasing property through a self-managed superannuation scheme.

Compared to the industry super funds that are playing in the share market, property is going to be bringing you in rental income year after year, month after month. So being able to have a retirement and generational wealth build up over the period of time from when you start investing to when you retire, you've actually got more money on a year-to-year basis

to reinvest back into your investment strategies and you're putting it back into building generational wealth that you can live on, on the retirement income from positive cash flow from those properties. Hear more details on that in the show today. And Scott Agate joins Bushy with some excellent advice about how you can overcome the hurdles to accumulate a portfolio that will reward your lifestyle goals.

Realty Talk is one of the shows on the Property Hub distributed by DM Media. You're going to find us on all podcast players and through the Southern Cross Austereo Network. Realty Talk is Australia's longest running property podcast with over a decade of presenting property investment insights, inspirational stories and unbiased advice. If you like the show, hit the subscribe button and help us to continue to bring you the very best guests. We're going to kick the show off in just a minute with that very important message from Ben Kingsley and what you can do to voice your thoughts. Back in a moment. for residential investment and commercial properties Australia-wide.

BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. This is Realty Talk, powered by realty.com.au. Hello, Ben Kingsley here. Very shortly, you're going to watch a video from the housing spokesperson from the Australian Greens Party. His name is Max Chandler-Mather. Now, you'll see his argument in terms of the political lobbying that he's trying to do

to get rental freezers introduced nationally across the country. Now, that would be catastrophic both economically and socially, and so we need to put a stop to this. But here, take a listen to what he has to say. We've got over 10,000 submissions to the National Rental Inquiry, but I've got some good news and bad news about that. The good news is over 5,000 of those submissions are from renters like you. The bad news is that over 3,000 of those submissions are from property investors.

Why? Because they know that this is a really important process and they are trying to influence parliament and politics once again to work in their favour. But the reality is it already works for them really well. They're going to get $39 billion in tax concessions this year alone. That's for property investors. Renters get nothing, even though rents are going up at the fastest rate we've seen in 35 years. Now, we know submissions have now been extended until the 1st of September. So if you're a renter watching this right now and you're sick of property investors and landlords getting their way in politics while renters get nothing, now is your time to make a submission.

If you're a renter that's copped a massive rent increase, now is the time to make your submission. If you're a renter who's been evicted unfairly, now is your time to make a submission. You've got to the 1st of September. And if after that date, there are tens of thousands submissions from renters across this country, then that could build the pressure we need to win a two-year freeze on rent increases, longer leases and better protections and rights for renters across this country. Authorised by Jay McColl, Australian Greens Canberra. Pretty provocative stuff, isn't it? I mean, ultimately, he's trying to put an argument of the renter versus the landlord. And basically, the renter gets very little and the landlord gets all of these concessions. Well, the argument is obviously misleading.

Naturally, that $39 billion that he's referring to, the vast majority of that is in interest costs and expense costs that we should be able to claim in running a small business. The other component of that is made up in the concession that we get over the capital gains that we might enjoy if we ever sell the property. So it really is quite disingenuous in the way in which he's presenting that information. But it's absolutely very clear that he's trying to get as many people as possible on the rental side to put their submissions in. So here's the action that I want you to take.

On this page, there is also a link in which you can put your own submission into the inquiry and you can tell your story. Here's what I want you to tell. I want you to basically give them an idea of what your costs have been over the course of the last sort of 12 to 15 months with all of those interest rate rises, all of those higher insurance costs, all of those increased compliance costs and give them a rough estimate in terms of what your costs have gone up and then ultimately how much of that you've passed on to those tenants of yours. That's an important message. Now, the more of us who do that, you can start to see that the balance in the conversation will start to take shape and then hopefully common sense will prevail. In addition to that, there's

one other very important thing I'd like you to do, and that is to complete the current investor sentiment survey that's available that's also on a link on this page. Now, please take your time to fill that in because there's two important things here. We're going to be able to gather thousands of responses. And inside those responses, we're going to see basically how you're feeling. So your general sentiment and feeling towards how things are playing out for property investors. But secondly, and also most importantly, is you're going to also be able to tell your story around what potential actions you might take. So if something was to change in terms of new laws or things like a rental freeze coming, what would you act like? What would you do?

Would you sell your property? All of that information is going to be very meaningful in terms of informing the debate around whether rental freezes or rental caps are actually a good thing, both in the short, medium and longer term for this country. So it's an important time to take action. So please do those two things. Put your submission in to the Federal Government Inquiry and then also complete that Investor Sentiment Survey. Thanks very much for your time. We'll continue to advocate on your behalf and thank you also for being a valued Picker member. Until next time, remember this is an important issue and we need to make sure our voices are heard. Successful property investment is a game of finance. Do you have the right team

and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk, and stress while increasing your capacity for growth. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. Realty Talk and your host, Bushy Martin. As property investors are finding it more and more difficult to secure property and grow their portfolios due to ever tightening lending restrictions and interest rate rises that

slashing your borrowing capacity and purchase price power by 30% to 40% over the last 12 months and effectively taking traditional property purchases off the table, many investors are looking at alternative ways to continue to secure property. And one of these alternatives, depending on your personal situation and risk profile, is to consider purchasing property through a self-managed super scheme or an SMSF. So we're going to investigate this further today. But before we start, I need to reinforce that what we'll be sharing with you today is purely general information of nature and not intended as financial advice in any way, shape or form. So ensure that you seek guidance from independent accounting, legal and other financial

professionals to consider the specifics of your situation before you do anything further. But to open your eyes to SMSF property investment comparisons, along with a unique approach to securing a type of property that normally can't be secured via an SMSF, we're joined by Raymond Hempstead, the Managing Director of One Contract Property, who specialise in helping investors secure properties via SMSFFs. So I'm almost tangled tied there, Raymond, but welcome back to the show. That's my pleasure. Glad to be here again. Thank you. Terrific, Raymond. Well, look, it's a great subject and a very topical subject at the moment. So let's kick off by asking you, how does an SMSF property investment compete with other

investment avenues when it comes to making generational wealth possible it really stands alone like there's especially as you're just saying the borrowing capacity of people have dropped through the floor um over the last several months it's quite quite shocking the generational wealth comes back to the tax holding as well how how are we going to look after ourselves in retirement and now i suppose i've got to put a premise here i'm pro property all right compared to the industry super funds that are playing in the share market property you know where it is it's bricks and mortar it's going to be bringing you in rental income year after year month after month so being able to have a retirement and generational wealth build up

over the period of time from when you start investing to when you retire. When you take into account the SMSF tax structure and you're paying 15% tax rather than 30% to 47%, you've actually got more money on a year-to-year basis to reinvest back into your investment strategies because you're not giving it to the ATO legally and you're putting it back into building generational wealth that you can live on on the retirement income from positive cash flow from those properties

so when when you actually die you're actually leaving fully paid off properties to your kids or your grandkids and that's a big difference to compared to what the industry super funds are promoting yeah it's a massive legacy piece that is clearly well in advance of the the other news i also like your take on the current state of super and what should the government actually be doing instead of posing the soft caps that they talk about the government should be promoting and assisting people to reinvest back into their long-term strategy like yes we got our contributions that are going to be going up by half percent each year for the next couple of years but they should be talking up being able to promote back into your superannuation but also self-managed

superannuation the the government talks about big industry and the big industry super funds putting their money um into housing into australia that's not going to happen it's come down to people like you and me and your investors on the on the show we can take control of our superannuation through a self-managed super fund we can actually buy property that's going to be we can build property and that's what i'm saying you can buy established but i'm talking about building brand new property inside your super fund it's building generational wealth for yourself it's actually building homes for the average australian that can't afford it and it's keeping the money in australia it's building australia's economy so the more money we put into super into self-managed super pump it

back into property it comes back full circle to build the economy build out wealth of australians for australia but also build our family wealth as well so um yeah they just need to be they need to be moving away from just promoting about industry super funds and they need to be promoting yeah this is this is a viable option to be able to handle your superannuation absolutely and the individual investor has much more control over their own destiny and that exercise and and by encouraging that the massive housing shortage that everyone keeps talking about around the country we'll start making dents in that equation as well. So, look, you touched on an important exercise there

as you were speaking, which I want to get back to. But, you know, self-managed super fund property investment has always been possible for establishing existing property in townhouses, apartments and homes. But what makes SMS property investment different with one contract property based on what you just shared? I'll go back and just elaborate on why it's in the past that's been only in those categories,

that's because the builder has taken the risk. Because in a self-managed super fund, it's illegal, still illegal today, to actually enter a two-part contract. So buy a block of land and then enter another build contract if you're going to be using debt and leverage. Yeah. All right?

So because of that, all that's been available in the past are investments where the builders have said, okay, they found a nice location and they think it's a great location to build a property. not for our as our our return as the investor but for their return as the builder it's great for them and they're going to flog it off to us as a single part contract the difference that one contract property brings to the market is when i came up with the solution i said how do i invest outside of super i choose my location i choose my build i choose my style i choose who's going

to fund it and then i go and start negotiating and then i come up with the product so when i when i looked at that i said we've got to have that same choice inside our super but the only direct downfall was that is that it has to be under a single part contract and no builder around the country is going to cover that off so we actually made that possible so we'll convert any two-part contract so a land and house bill into a single part contract that you choose that your super fund can now buy so you you can now invest in your super exactly the same way as you do outside of super now in whatever you like that's a very significant advantage and that's certainly going to be picking up the years of a lot of investors because uh as we've spoken

about previously yeah raymond there are some very significant cost advantages and tax incentives attached with new builds over existing properties and up until now with what you've just shared with us it's been almost impossible to achieve that through the self-managed super vehicle so you've now sort of created a an option where you can have the best of all worlds with what you've pioneered in that regard so look i want to really thank you for revealing these self-managed super fund property investment opportunities for us and i really appreciate the fact that you've made it really clear that this form of investment vehicle has the potential for considerable benefits if it's managed carefully and in conjunction with specialist independent accounting and legal

advice that's in line with the individual's financial position, their risk profile and the time available to manage them. Because as you would know, Raymond, SMFs aren't for everyone depending on their financial position and probably particularly not for hands-off time poor because there is considerable additional cost and time required in the establishment and the ongoing administration of self-managed super funds to ensure compliance but beyond that if you've got the right team behind you there are some very significant advantages and some great unique innovations you've made in that space so i really want to thank you for coming on board and sharing that and for those that are interested in wanting to learn more raymond what's the best way for them

to contact you? Bushy, they can hop onto our website, onecontractproperty.com.au. There's a range of information on there and contact details and email addresses as well. So I look forward to talking to anybody that would like to get further education on the matter. Thanks, Raymond.

We really appreciate your time on the show today. Thanks, Bushy. Appreciate it. Ciao. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in

the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. subscribe now to Realty Talk it's out every week now average housing rents across Australia increased by about 12 per cent per year to June 2023 according to PropTrac PropTrac should I say combined with rapidly increasing interest rates and wage rises not keeping pace with inflation this is placing a huge strain on the average household purse prompting calls for improved rental market conditions as a result the Greens are refusing

to pass the $10 billion Housing Australia Future Fund Bill that's going to provide up to $500 million a year for more community housing, unless the federal Labor government somehow convinces every state and territory to implement rental freezers. What absolute misguided nonsense, it just beggars belief. But are rent freezers and caps a simple panacea or more of a Pandora's box? Will they solve Australia's rental crisis or just make things worse? In the current political atmosphere of short-sighted, reactive finger-pointing by babbling fools who'd like to pin their convenient tail on villainised investor donkeys,

PIPA, or the Property Investment Professionals of Australia, has emerged as the voice of balanced reason to respond to these continued investor strikes and represent the true interests of the property community. So to answer these vexing questions and to dispel more rental crap, Pippa's chair, Nicola McDougall, joins us again. So welcome back to Realty Talk, Nicola. Oh, hi, Bushy.

I remember when you accidentally came up with the term rental crap and not only was it one of the funniest interviews either of us have ever done in our careers, it was perfect. It was a Freudian slip. It was the Freudian slip of all Freudian slips. And it was, you know, we got to laugh about it, even though it's not a funny topic, but but it was just so true and it was so apt and i was annoyed that i hadn't come up with the term

myself well that's going to get another run today because uh i just can't believe some stupid things that are being suggested but it's even got worse since the last time we spoke it has it has and i really want to get into that so just i guess to refresh everyone who's listening in what is being proposed where and by who when it comes to the current round of proposed rent freezes how much to how much time have we got but generally speaking you know we have um rental caps um in place and and most and in most states and territories um which is just you know the limit on the number of times you can increase the rent per year um we did say that we could live with that when it was proposed in queensland um however we weren't aware that they were going

to um implement it retrospectively um so that hasn't been great uh for a number of reasons And then since then, there are some states and territories, specifically Victoria, who are talking about rental freezes of upwards of two years. So, you know, the asset that you own, that your costs, whether it's through higher interest rates or various other costs have increased hugely, they are suggesting that you won't be able to increase the rent potentially for a couple of years. And in New South, there's a bunch of rental reforms going on around the country at the same time, which at an industry association level, look, you know, makes it very difficult to be able to produce submissions for them. And I don't think that's a mistake that they've all kind of got these closing dates very similar. But we will do it. We will do it. We are burning the midnight oil, my friend. But also in New South Wales, it seems to be some suggestion that they're considering an end to no grounds evictions.

just go for a minute if they if they're going to impose uh rent freezes but they're also going to freeze our mortgages and our council rates and maybe yeah people would start to understand but to impose an income uh limitation when everything else is going through the roof just doesn't make any sense you know and also there's you know there's various um sort of the data out there but generally speaking you know i think the latest core logic and i'm not i don't know the exact numbers off the top of my head but the latest CoreLogic sort of research on this you know says that rents have probably increased somewhere in the vicinity of around about $350 per month but mortgages have gone up by a thousand yeah you know and even in my own personal

situation I have a property where because of the retrospective nature of the Queensland legislation in regards to rental caps i wasn't able to increase the rent on my property um and because i had put it up marginally in january and my mortgage is going up it has gone up from yesterday twelve hundred dollars a month and i was about to put the rent i wanted to put up the rent up by fifty dollars a week so two hundred dollars a month um versus versus twelve hundred which would have been useful which would have been very useful when my mortgage has gone up by twelve hundred a So, you know, that's it in action. That's just me, one person with one talking about one property.

Yeah, and it's across the board. So I'd like to spell this out because what impacts have rent freezers or caps had in the past and elsewhere, to your knowledge? I think it's important to understand in the context, certainly internationally, they have been instigated and generally withdrawn in various countries around the world for various reasons. all of the all of the reasons why they have done them in the in the beginning was okay well we need to do this because we want to you know put a cap on on the rents going up but what actually as we know will happen it can always ends up being counterproductive and investors exit the market and then supply drops and then demand goes up and prices go up and generally speaking it has always been withdrawn because it because it has disincentivized investors so much

current investors not only current investors who exit the market but stops would be or prospective investors who may have got into the market and then as I say the supply drops rents go up because demand goes through the roof so international experience and I know that the federal greens are using one particular very very small study in their argument and to you know somehow talk the federal government into talking the state governments around the country into instigating rental freezers, but the vast majority of international experience when it comes to rental freezers have always been a woeful failure and have actually made rental markets far worse than what they were before they instigated those policies.

Yes, let's spell it out in terms of what is likely to happen if rent freezers and rent caps are imposed. And let's talk about some of the unintended consequences that the policies just aren't seeing at the moment. Can you break that down for us? Well, I think, you know, if as an investor you're about to, and certainly we're talking about Victoria, because there doesn't seem to be much appetite for rental freezers in other states and territories as far as we know today. Yeah. But Victoria, they do seem to be having an appetite for it. so if one has an investment property that you all of a sudden you're told well you can't put the rent up on this for two years don't really give a toss that your you know mortgage repayments

have gone up by you know fifteen twenty thousand dollars a year given that the vast majority of investors own one property many of them perhaps have become accidental investors at best they will sell that property and we know history shows us research shows us data shows us that owner occupiers generally buy 65% of investment properties that are sold and that strips it out of the rental market so anything I think and it's not even about clearly no one you know is happy with the fact that rents have increased so much but I tell you what mortgage holders aren't very happy that mortgage repayments have increased so much and it's just like a really unfortunate situation for everybody like no one's winning here we're all struggling with the cost that

we're having to pay you know i mean even i've said to my business partner this morning i actually changed my my my loan on my ppor to principal and interest a couple of months ago um because it used to be an investment property they've actually forgotten to action it the bank um and i said to karen this morning i said you know what i'm kind of pleased about that because it's actually saved me $500 a month when rates had gone up a couple of more times and so I didn't fix but I just changed I mean you know what I'm paying a ridiculously high interest only rate here I might as well do P&I and then somehow my paperwork has got lost and I went you know what I'm going to leave it because for me at the moment you know my mortgage has doubled in the home that I live in

the property that I live in plus my investment property you know and another one as well it's You know, one of my properties has gone from covering itself to now will cost me, you know, more than $1,000 a month when my own mortgage has doubled as well. So there ain't a lot of spare cash, and that's just my example. You know, but everyone is in the same boat, and we're all struggling quite significantly at the moment, and pitting us up against each other is not helping anybody.

And unfortunately, as we've talked about before, Bushy, the end result if some of these policies are implemented will be a further reduction in rental supply it's as you as you really well is illustrated it's actually going to make things far worse uh not better so any market intervention yeah it always does doesn't it it does i just let the market sort itself out because it does but i just don't let it do that because they don't care what the long-term ramifications are it's spot on now you sort of touched on global experience before what what is global experience suggesting is going to be a more effective housing policy approach as you see it yes i mean and obviously um other nations around other countries around

the world have different rental markets i mean you know the us especially um but um what they found in this research that i was recently reading uh for one of our submissions uh was that it would would have been a far better um idea to instigate policies that incentivized um uh investors and or increase um you know um what would you call it um not grants to to renters but uh what's the word i'm looking for bushy you know when you the the incentives the yeah so renters are able to get some more money from the government which will help them pay for higher higher rents for a period of time incentivize investors um via maybe giving them a little bit of money so that they keep the rents you know lower when they when realistically they could put them higher so really just kind of

being fair to both parties instead of just bashing investors over the head and saying well we know that you've taken all the risk on this asset we know that you know that your costs have gone up exponentially but we don't care we're going to make you not put the rent up on this property for two years and generally that means that investors you know may have to sell or sell I know in Ireland a couple of years ago this came in and it saw like you know a huge volume of investors into the market there was a story that was um quite prominent in the media last year that i think in the whole of ireland there was something like 712 available rental properties at one point and in a population of five million people well uh watch this space

some of this madness continues it's going to end up exactly the same here particularly when we're pouring in so many skilled migrants into the country. That's right, exactly. So, look, I know this and other topics are going to be hot topics with PIPA and you're hosting your very first annual conference in Sydney on Friday the 22nd of September. We talked about this briefly on a separate segment from Realty Talk, but tell us a bit more about what it's about

and who and how can we get involved? Yeah, great. Thank you, Bushy, and thanks once again, my friend, for agreeing to be our MC extraordinaire. I'm very excited about that. I'm very excited indeed. You know, obviously we have some of the brightest mind in the property investment sector

coming along to the conference. And what we really wanted to do when we were developing the program was to provide sessions, and we do have a number of panel sessions so we could get, you know, more talent on stage in just a one-day format, was to really, you know, look at the sectors

involved in property investment so that people that were coming and the predominantly members could, you know, learn as much as possible on the day. So, you know, we've got topics like lending, the latest in prop tech. We've even got Justin Nickerson from Apollo Auctions flying in from Brisbane, especially,

who will give us some tips and tricks about auctions. Obviously, our friend Peter Kolesos, you know, how to identify the best investment suburbs. One session that I'm really looking forward to is actually a Sydney valuer going to be interviewed on stage. And all of us who've been on, you know, perhaps the wrong side of a valuation will be very, very interested to hear from her

on, you know, what valuers look for, how you might be able to impact valuations, you know, when is it time to kind of fight a valuation, when is it time to just walk away? So that's one of those, you know, so we really wanted to make sure that, you know, over the course of the day, everyone that came along would be learning a little bit about the majority of factors that

are involved in property investment and property investment strategy. Yeah, I love it. It's going to be a great meeting of the minds and the start of great things to come, I'm sure. So I really encourage everyone to jump on the PIPA site. And if you haven't got a ticket already, make sure you grab one before they sell out. And Nicola, really looking forward to meeting you face to face on that event and spending some time but i i just want to also thank you for opening your eyes to the quite ignorant naivety of the proposed rent freezes and rental caps that are being suggested and as you've made it clearer than ever these ill-conceived band-aid measures are actually going to worsen australia's rental crisis so while freezing rents may appear to be a simple

way to increase rental housing affordability for the uneducated the unintended consequences have you spelled out will have long-term negative effects on the availability of rental housing stock reducing the quality of housing and creating potentially a black market in rental housing if we look at what's happened elsewhere and you know in closing as the senior lecturer in finance at Deakin University you meet Jane well expressed in her recent article in the conversation global experience reinforces that improving supply by easing building instruction building restrictions scrapping red tape for new developments and incentivizing hard-working mums and dads to continue to invest in housing is going to be far more effective. And local

councils and state governments need to simplify and expedite the process of approving new developments at the same time that the federal government needs to reduce taxes and add incentives on rental properties. So I really want to thank you for bringing all of this to our attention again, Nicola, and we look forward to seeing you and everyone else who's serious about ongoing professionalism at the PIPA conference on Friday the 22nd of September. Thanks Bushy, looking forward to seeing you there. Thanks, Nicola. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects

set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less, and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au. Now back to Realty Talk and Bushy Martin. If investing in property is the best way to secure your financial freedom in Australia, then why is it that about 70% of the 2.2 million odd investors only own one property and around 90% of investors own two or less?

If you're one of them or you're an aspiring property investor, how can you overcome the hurdles to accumulate a portfolio that will attain and sustain your lifestyle goals? What's stopping you? Is it uncertainty, fear, or a lack of time, trust and knowledge, or a combination of all of these? What if you could access a trusted team and a proven process that uses data and AI-driven analysis to take the guesswork out of property investment that's going to allow you to build a portfolio that matches your needs with hand-selected A-grade properties right across the country?

Well, to reveal and unpack this unique portfolio builder service, we're joined by the founder of Hello House, Scott Agate, whose team are transforming the way property is done in Australia. So welcome back to the show, Scotty. G'day, Bushy. How are you doing? Great, mate. Really interested to hear on this one because as we both know, there's a lot of would-be investors who are going to and should and would not actually quite get around to making

it happen, mate. So just to sort of dive into that area, what are some of the biggest challenges that you see investors face and the common mistakes they make when it comes to securing their property portfolios? Mate, I think the number one is the tyranny of choice. This seems to be the sucker that brings most people down. So it's commonly referred to as analysis paralysis. And that's really the common one that we come up against when we're talking to investors as to why they haven't bought a second property or why they've never entered the property ladder at all in terms of getting on that investment cycle. So analysis paralysis is a big one. Other ones would

be looking at short-term growth over long-term fundamentals of an area that's another key downfall for a lot of investors and i think others that sacrifice capital growth and asset selection for cash flow so i think they're the three big ones three big challenges i think that face investors australia wide that keep coming up for us on a on a you know daily basis when we're talking to new and some old more experienced investors as well yeah good point so how does your new portfolio builder service overcome these Scott? Well we work with the best minds right in the in in the country to select the best assets we're looking at leading growth locations with great cash flow and we're analysed by a team of property experts that have been doing this for

decades so you've got me on the negotiation front and the asset selection front so tons of experience there in terms of transactional volume over many years and my team we've got you know professional valuers um licensed valuers i should say uh analysts um property investment advisors so we've got a great team of uh individuals that that are trained up and have got a lot of transactional volume history themselves plus we're all on the same journey they're all building their own portfolio and actually enjoy doing this day to day and i think that's the key to it because you've got lots of people that might have an opinion but they haven't actually gone out there themselves and i know you're an avid um you know guru in this space in terms of uh walking the walk

um you know we we like to do the same in our team yeah spot on as a as you say mate there's a a lot of free opinions that don't mean much but uh walking the talk is the stuff that makes the difference so i'd love for you to just run through the key elements of your portfolio build a process if you can yeah sure well it always starts with strategy first so we're always looking for you know what's the risk profile of the client before we then jump into finance and what their capacity is in terms of the target that we chase so strategy might be running their game plan so to work out you know where in the journey they are what the timeline looks like so we can work out you know if you buy this what's the second property the third property look like or

if you're on to number two or number three what's it going to look like in 10-15 years time when you retire so you've got to focus on the strategy before we jump into the finance but once they've got their conditional finance in play and they know what they can afford loosely, we're going to jump into location research. So we've got white papers on different hotspot locations to give you confidence around why we want to invest in those locations. That's going to focus on infrastructure investment, both private and from the government. It's going to look for what's driving population growth in those areas and much, much more. We then jump into asset selection. So typically we look for three bedroom houses or larger minimum 400 square meters we're not really

interested in buying units or even townhouses it depends again on the risk strategy for the client but typically it's a it's a freestanding house and over 400 square meters then we're going to jump in once we've found those assets into deep analysis so analysis for us is a thorough due diligence checklist we can dive into that a little bit longer but we're going to look at dd as one thing and then separately as price. So we're going to look at comparable sales, what else is competing against it on the market to give us confidence around a certain number before I take over and step into the negotiation hot seat then. And it's about buying that asset at the lowest possible price on the best possible terms. And then we see that through with our team in that

buying process. So building in pairs, valuation to get past the finance cost if we've got that and through to a successful settlement. Yeah, I love it. Well, I'd like to drill into the due diligence piece a little bit if we could because that's a really important part of the process. What sort of quantitative and qualitative data validation do you employ to ensure that outperforming properties are actually selected to suit the specific settlement investor strategies?

Yeah, so we've talked about already that we're trying to buy houses and we're trying to buy things over 400 square metres of land to start with. So that's the type of asset. When we're looking at the data, we're looking at days on market, the owner-renter ratios, vacancy rates, online listing demand, rental yields, as well as lowering over the long-term historical data. So we're looking at price growth patterns and those things as well to develop a key understanding of where it's best to invest for short, medium, and long-term. So the asset selection, as we've discussed, is really important. So once we've

looked at that data, we dive into then the asset, and then we dive into the due diligence. So to cover off on that, we might look at things like, and I'll run through these quickly because there's a huge checklist that we go through and we've got to have a green tick bushy to each of these before it gets um the hollow house seal of approval but we're looking at you know the basic things like fire and flood we're looking at heritage zones um how far it is from a high clearance power line um whether or not it's under a flight path or too near a train station or a bus stop or whatever else is going to affect the noise quality and the enjoyment of that property high traffic flow roads we try and steer clear of as well we'll look at um you know dial before

you dig so we'll look at things like easements that might dissect the site problems like that that could impact any future development so if you're trying to manufacture equity through a granny flat or a potential subdivision that it's going to meet that criteria and that means looking at council zoning we might look at town planning advice as well independently of that to get an understanding of what can be done what's the highest and best use of the asset that all forms part of our due diligence there's tons of other checkpoints bushy that we'll go through but there's that long list that it's got to give us confidence that we're buying the right asset in the right location and if any of those are flagged sometimes there might be a it could be a fire risk

and it might be just that it's a a tiny corner of the of the land or the flood is just touching on the land so we won't completely rule out a property for that but we'll flag it with the purchaser we'll talk about the pros and cons of buying a property that has that and whether or not it'll impact their capital growth long term and their ability to sell that asset when they need to and then make a value decision based on that by being completely transparent and up front but most of the properties get a thorough green tick before we move any further love it very thorough and detailed process mate can you give us a couple of examples of how you utilize the portfolio builder experience with clients to put some color around all that yeah

well i mean i've had one this morning we were trying to buy property in southport for a client on the gold coast the house ticked the box they're looking for probably the last three months found the perfect family house the wife was absolutely in love with it the only thing it didn't have was a pool and the agent said to them there's absolutely no problems adding a pool this is this is the only real spot to do it they were very happy with that i told them to go off and get independent due diligence done by town planning and go and work out whether there's any pipes or anything underneath that sewage water that was going to impact it it turns out there was a water pipe that was um one of the really big ones taking about 60 of the load in

that part of Southport running right across that garden strip, which is why there was nothing built on top of it. There was no way that you could build a pool in that location. Even the experts that we outsourced the advice to said it's probably a $500,000 job to move it and council would very unlikely allow you to do it just to put a pool in. So that was a straight red flag for us on that property, which was otherwise ticking all the boxes. And I dare say most purchasers looked at that and the pool wasn't a high priority but they would have loved it and they bought on the proviso they could have done it on the agent's advice and they would have bought a dud asset so that's a that's a good live example others might be um another recent one we just bought a

duplex pair in race view which is a a hotspot um suburb in ipswich in southeast queensland um we bought uh i was 800 square meters surrounded by park on two sides lovely property in a good Street. We spoke to the agent and the agent said to us, well, you know, there's a potential here for you to strata title the duplex pair to see an uplift in the capital value, which was great. And that was one of the prime reasons we were interested in buying it. But we went further, we got independent town planning advice for the buyer. And I had found in council's code that if you're with 200 metres of a shopping centre, that you've got the ability to potentially get through this this kind of not a rare subdivision but it was able to be subdivided whereas otherwise it

wouldn't have been if it was in a normal position in the suburb that wasn't that close to the shops so the town planning advice agreed and they went and seeked further instructions on that and then gave us written confirmation that it could be subdivided as well as strata titled so that gave us another layer of protection in terms of de-risking that site and the potential to manufacturer equity over time. So that thorough due diligence is crucial to buying the right properties. Absolutely right. And I'm very impressed with what I'm hearing in relation to the extent, breadth and depth of what you're going through in that context. So obviously, a lot of time is spent in making that happen. The obvious question, what does the service cost and

how do a house get paid in the event? Yep. So it's a flat fee for service and it's a complete done for you product that we do so it's nine thousand dollars plus gst and we charge that with a half of that up front as a retainer and then half of that on on success typically for us a client is in our system for under a month there's absolutely no rush because we want to find the right asset but because we're uh we've got a team of people looking for these assets all day and we've got deep relationships with local bdms and property managers and also principals of real estate agents in these regional areas and capital cities that we get a lot of direct fee listings.

I've built this system, which we've been calling House Finder internally in the office, which enables us to build rapport with agents quickly. And so we send out weekly a BCC email to these relationship building contacts that we've got across Australia in our hotspotting data. We typically get between 30 and 60 off-market or pre-market opportunities a week that come back from that. and then we filter through that to find and unearth those diamonds but you know you know this bushy as well as i do off market pre-market is a bit of a buzzword there is as much rubbish that

comes in that as there is with the stock that's on the market it is just you have to be really thorough it's a numbers game and you have to be really strict but it's not about just buying off market it's about finding that right asset every time absolutely agree there's a lot of smoke and mirrors around the old exercise that a lot of buyers agents use to basically sell untested price property so with what you'll bring to the table and and applying some real science around that it's going to be much easier to quantify the value of the property and the fact that it's ticking all the right boxes so look uh thanks scott i yeah really clear this sort of zero days on market and complete done for you portfolio builder service sounds really interesting and i

encourage everyone listening to reach out to you and your team at hellohouse.co. That's H-E-L-L-O house, as in the German house, H-A-U-S.co. So thanks for sharing this on the show today. Thanks for having me, Bushy. Cheers. Cheers. Well, that brings us to the end of this week's show. A reminder, if you've not already done so, voice your disapproval of the Greens' rental freeze proposal. The links that you need to do that are in the show description below accompanying this show a big thanks to ben kingsley for allowing us to rebroadcast his message also to nicola mcdougall scott agate raymond hampstead and of

course the star of the show bushy martin we hope you enjoyed our offering this week and if you did well we're pretty glad about that make sure that you don't miss a single episode of realty talk or Bushy's Get Invested podcast delivered to you each week. You'll do that by subscribing to the Property Hub now on your favourite podcast player or wherever you're listening to or watching this show. Thanks to our supporters, realty.com.au, BMT Tax Depreciation, KnowHow Property Finance

and DePiro Marketing for their ongoing support. I'm Kevin Turner and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week. Thanks for watching!