Property Hub - Investment Insights & Inspiration - Realty Talk: Barriers to growing a portfolio

Episode Date: August 12, 2023

During the week we were interested to hear concern expressed about the possibility of an El Nino event occurring.  We were not so surprised at it being raised, but more about the person raising it. �� Ray Ellis - CEO for First National Group joins us in today’s show to tell us why a weather event should concern property owners.   Victoria has been named as the worst state in Australia for renters.  That is according to research by the Property Investors Council of Australia and the Property Investment Professionals of Australia.  PIPA’s chairperson joins Bushy to set out the reasons.   Over the last decade, Drew Evans has amassed a property portfolio worth over $25M.  Bushy asks Drew about some of the obstacles he has had to overcome to build to that level.  Get your pens out for that one!  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 to Realty Talk, 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 of Stereo Network. Realty Talk is Australia's longest running property podcast with over a decade of presenting property investment insights, inspirational stories and unbiased advice from Australia's top property experts, leaders and analysts. I was interested to hear during the week concern being expressed about the possibility of an El Nino event occurring. I wasn't so much surprised about it being raised, but I was surprised by the person raising it. So we invited Ray Ellis, CEO for First National Group, to join us to tell us why that should concern property owners.

Living in Australia, we have that great attitude, she'll be right, mate, or it won't happen to me. but the the chances are it will or it might so we just ask people to be prepared and they are good common sense things but the weather cycle we've seen the past seven or eight years has been wet mild conditions and this cycle it affects our great continent here in the southern hemisphere the El Nino is coming to that dry hot and perhaps more extreme weather as it's now referred to and I'll talk to Ray shortly in the show. Victoria has been named as the worst state in Australia for renters. That's according to research by the Property Investors Council of Australia and the Property Investment Professionals of Australia.

So Pippa's chairperson joins Bushy to set out the reasons why. I think the biggest challenge that people have is not understanding that property investing initially is definitely a finance game. At these times, now more than ever, it's super important to understand what do the banks need and what do they want to see? Because at the end of the day, they're a business. They want to lend you the money, but as a business, they need to make sure that their investment is safe. And your job as an investor is to show them how safe it is to lend you the cash. Now that's Drew Evans. And over the last decade, Drew has amassed a property portfolio with over $25 million. Bushy asks Drew about some of the obstacles that he's had to overcome to build

to that level. Make sure you get your pens out for that one. It's a ripper. Hey, if you like the show, hit the subscribe button and help us to continue to bring you the best guests. We'll be back in just a moment as Bushy kicks off this week's show. lower your costs tax risk and stress while increasing your capacity for growth know how has helped over 1900 homeowners and investors secure more than 800 million dollars in property wealth so get set to live more work less and live your legacy want to know how to invest in your Martin. Ray Ellis, the CEO for First National Group joins me. Ray, welcome to the show. Good to be talking to you again. It's a pleasure to be back and it's an important topic, but real

estate's always on the tip of people's tongues, as you know. It is indeed, Matt. I was particularly interested to pick up on your thoughts and you've offered advice to existing homeowners about how they can ensure the resilience of their properties from the potential hot and dry conditions if El El Nino does, in fact, turn up. But just before we talk about that, I'm just really interested to hear from you about how, if we do get El Nino, that event, do you expect any changes in buyer preferences to what they're looking for? Australians have a passion for property. It's their castle, to quote that well-known movie.

And whether it's a rental property, investment property, or their own house they live in, they value that property. Of course, there's cycles of spring, winter, El Nino, election campaigns, Easter, Christmas. They come and go. But the underlying passion is what drives the Australian market. It has ebbs and flows. We've seen interest rates affect the market in the past 12 months. But after 12 months of quiet activity, sales are strong again. and people looking to have their first home,

their dream home, their investment, their downsizing, upsizing. That's the cycle of the Australian property market. Yeah, you're an experienced campaigner, Ray, and you and I spoke about this off air without giving out too much. I'm probably a bit older than you, so I can make reference to how old we both are.

But, mate, you've seen a lot of cycles and you just hit on it there a little bit. Is there anything in today's market that really surprises you? Is it all that different? People are delaying their choice to sort of take their first home. And that's not so much a real estate factor. That's a society factor.

The dream of an overseas holiday every year, the lifestyle we now choose to lead, that inhibits owning a home. But what we're seeing amongst first home buyers now is they may continue to rent in an inner city suburb that has all the facilities of their capital city, but buy an investment property in the regions or buy an investment property in the outer suburbs so the buying strategy is still there it's just taking a different form than being 22 have a mortgage in your own house it's just different but it still has shows a great passion for property yeah the tips that you've given for people to prepare their property I guess relates to all

people whether they're owner occupiers or whether they're investors but I am going to ask you to Give me your five tips on what they should be doing. And then let's look at how we apply that to a property investor, you know, whether they need to approach this differently through their property manager or with their tenant. But firstly, give me your tips. What do you think owners should be doing to minimise the impact of El Nino?

Well, living in Australia, we have that great attitude of she'll be right, mate, or it won't happen to me. But the chances are it will or it might. So we just ask people to be prepared. They are good common sense things, but the weather cycle we've seen in the past seven or eight years has been wet, mild conditions, and this cycle, it affects our great continent here in the southern hemisphere. The El Nino is coming to that dry, hot, and perhaps more extreme weather, as it's now referred to. The first one we're saying is, look at your landscaping, your water management. What irrigation systems do you have?

What's the lawn you have that means you have to use more of your water to keep that lawn going? what are the measures you can do to conserve resources what water collection habits do you have you know what hose system do you have how do you manage water in your garden your acreage or your investment property make sure it's available the second one is and this is for a lot of areas don't have bushfires but we have fires and the major contributor of bushfires with houses in the regions is the debris that's on the roof the debris that's on the in the gutters and these are embers that keep the fires going or start the fires so we're not advocating getting up on that 60 foot ladder we're advocating have it cleaned by a professional or someone in your household

that can do it with safety clean the gutters because that dry leaves lead to lots of bushfires so that's the second thing the next one i already touched on before is rainwater harvesting Many councils still don't require you to collect water. We're the driest continent on earth. We have more than enough water. We just allow it to go down our drains. So if you're not required to have a collection unit, please make sure you have one.

You can use that for your garden. You can use that in this emergency we're talking about, but make sure you have a collection water system. The fourth one is protecting against the heat. Now, of course, if you're not building your house, it's hard to put extra insulation in, but you can put tint on your windows which reflects the heat and in today's world of higher electricity prices that's a good thing for your air conditioning units which most people in

australia now have but how do you protect your house from being hot what is the roofing system you have but then you can plant trees to put shade across your house you can have a nice pergola a nice garden which puts shade on that area and that stops but this is not a protection from a bushfire concept this is a protection of your comfort to make sure your home you live in or the investment home you have is a more profitable one to rent and a more prepared one to rent and the last one which is probably the most serious be prepared be a scout as i used to and still say be prepared spend that half an hour working out your evacuation plan what is important to you apart from your family's lives and your pet's lives have that plan ready have a flashlight have batteries in areas

where there's cyclones and that's part of the El Nino effect as well you know do you have a couple of days prepared food I hear good old-fashioned baked beans as a tin is a good one bit of spam bit of rice pudding just I don't want to sound alarmist I'm just asking people to be prepared so what we're saying is if you put all these into place you'll be as well prepared as you can be prepare your emergency plan and that'll hold you in good stead not that we wanted to if these disasters come from the heat that's coming you're just looking at what you said there uh you know from the perspective of an investor as like a landlord they're going to make their property a lot more desirable if they actually follow a few of those things exactly i mean in

in this with australia facing a housing shortage australia facing a rental crisis particularly down there in Victoria, how the relationship between the landlord and the tenant, and these are two relationships that come together. There has to be a good landlord, there has to be a good tenant. And if yours is a more desirable property, you'll attract a better tenant. Having a better tenant, they'll look after your property and protect your investment. And that relationship of mutual understanding of looking after the property with comfort will make it a better investment. Yeah, some of the things you've said there too, I'd like to address those now to buyers. What do you think they should be considering or even should they be considering, you know,

some of these client-related factors when they're looking to buy a property? Well, very important. We see throughout the driest states of northern Victoria and New South Wales, a lot of people now live in acreage properties i know in the great fires two years ago in victoria down in bairnsdale a lot of the tragic deaths and the destruction was in homes that were built in rainforest areas that 20 or 30 years ago no one lived so if you have those properties as areas it's very important but then also as a buyer you want to be comfortable in your house so asking the questions about energy efficiency is quite appropriate asking that looking around to see is this a good well-sheltered house does it have air conditioning if not air conditioning is it

going to be cool are those bedrooms going to be too hot for the children to sleep in so these are questions that you can ask your good property manager ask your good agent but certainly consider amongst yourself because i quoted it before it's your castle let me ask you now how are you preparing your agents and i guess in a way you touched on your property managers as well i mean you've got you know one of the biggest groups in australia so you've got a thousands of agents who are working for you what are you telling them about this and are you they starting to use this in their marketing oh 100 i mean we we have a philosophy not only our industry but specifically here at first national your best source of information is your local real estate

agent of course i have to say the best ones first national that that's of course but your local real estate agent he understands the conditions he understands what happened two three five twenty and some cases 50 years ago he understands planning requirements he understands he or she understand legislation and the property manager they have a great intimate knowledge of this so the relationship you build with them as a buyer and investor is very very important and the information we put out we have a program every fortnight we send that information to our vast databases around the country not on what buying and selling conditions are but we call it information express which is about these are the information that enables you to better make better property

decisions and i implore people to get contact your local first national agent get on that database so could we uh is there a link that we can provide in this description if people are interested in getting on that database right the first place is go to firstnational.com.au click on our blogs information section everything is there for your disposal okay we'll try and get that uh a link to that direct link to that in our description thank you in the show yeah hey ray great advice and as always mate you're a font of wonderful knowledge so thank you very much for your time too kind we just want australians and anywhere where there's a first national office to make better buying decisions and people can live in comfort of their home or their investment property that's the

australian dream and we love supporting it okay we'll check it out at your local first national office they're all over australia you'll find them and make sure you get onto that database ray once again thanks for your time mate thanks kevin great to catch up see you soon my friend property deductions can save you thousands of dollars each year to make sure you maximize 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. From Queensland's retrospective annual rental cap to the Victorian government's new land tax regime and ridiculous talks of rental freezes, it's clear that politicians and governments at all levels are continuing to focus on naive, half-baked populist policies

to win votes that react with band-aid solutions that are only going to make things worse rather than addressing the true cause of our housing and rental issues. So which is the worst state in Australia for investors and renters right now? well to reveal the wooden spooner we're joined by nicola mcdougall the chair of the property investment professionals of australia commonly known as pippa who are actually hosting their inaugural conference in sydney in september this year so welcome back to the show nicola

thank you for having me bushy it's always wonderful to be here with you always i always love the energy yeah we had some good laughs last time we had a chat and the the subject matter hasn't changed a great deal because there's still some ridiculous uh schemes out there but i guess Just to cut straight to the chase, Nicola, which is the worst state in Australia for investors and renters right now and why? Well, we, anecdotally, we put this together a few weeks ago in light of the Victorian government's new land tax regime,

which is stinging, attacking investors yet again. And so we have given that mantle to Victoria. Clearly, this time last year, we would have given it to Queensland. So it does appear that it's being, you know, the worst state in the nation for investors investors is kind of it's moving depending on the ridiculous policies that they seem to come up with all the time and also in Victoria like elsewhere but certainly in Victoria a huge volume of rental reforms and currently at the moment if the new land tax wasn't enough to get us to shake it to

scratch our heads in bewilderment talking now about potentially two-year rental freezes which It's just honestly a beggar's belief. I just can't even understand why they would think that that was an appropriate or sound policy. Unbelievable. And when you tip on top of that, the highest stamp duty in the country in Victoria, then there's plenty of disincentives as far as that's concerned.

But how does Victoria then compare with other states around the country? Look, at the moment, definitely the worst for an investor because of all the significant financial imposts that are on investors there. And the continual changing of the goalposts. As we've talked before about many times, Bushy and no doubt, unfortunately, will again. There's a lot of these policies that are, you know, being chopped and changed all the time. And when we're talking about people who are trying to buy and hold an asset for a long term, for the long term, it causes a lot of them to be spooked and to sell their property. Now, I'm not suggesting that that is what they should do. However, there are a lot of perhaps newer investors out there, perhaps some that are less educated,

who just decide that it's all too hard. It's all too hard for them. They're sick and tired of these policy levers being pulled, you know, each way all the time. And they just decide, and certainly in light of, you know, much higher interest rates, that they just don't want to do it anymore. And so they sell their asset, which clearly everyone can do whatever they want.

It's their own individual, you know, decision, but it's not the best thing for them. It's certainly not the best thing for their final financial future. And it's certainly not the best thing for rental supply. Absolutely. And that is the critical piece. But tell me, you wrote a great article in Pepper's latest newsletter. And I'd love for you to give us sort of a bit of a rundown of the latest ATO data that indicates, you know, the net average annual number of people

with rental property incomes. Can you sort of give us a quick run through some of that? Yeah, the ATO, you know, puts out data that's unfortunately quite old by the time it comes out. And one data set, which we all talk about in the industry quite often is, you know, the number of investors in the market, including the number of investors who own one property and who own two, three, four, five, six.

And generally speaking, you know, the percentage of those investors who own one doesn't change a huge amount. But what we found with analysing the latest ATO stats, which was from the 2020 and 2021 financial year, was that the actual net number of investors has fallen off a cliff. You know, it's fallen by about 55% in the last five years. So generally speaking, we would, you know, I think the numbers are just look at my notes here. Generally, there's about 66,000 net investors

every year nationally that had fallen to around about 29,600 over a five year period. The first year of COVID, there was actually a negative net result. So over the last five years, we have been seeing a huge volume of investors, as we know, selling. And that's why part of the big reason that we have such an undersupply of rental properties around the country. What's interesting with this data is that it predates COVID and we've already started to see those APRA changes that came in, look, nearly 10 years ago now, I suppose you could say. For those of us who've been in the game a while, like me and you,

you can actually start to see clearly from these results that the volume of investors, the number of investors has started falling quite a few years ago. Many of them because they sold, but many of them because they couldn't get finance and didn't transact in the first place. Well, and as you well point out, the data that you're quoting is 2021.

With some of the draconian impositions that have come in since then, it's only going to have made matters worse. So I'm lovely to share with us what impacts this is having in both the short and the long term, and perhaps particularly in Victoria, given its wooden spoon condition. Yeah, I mean, unfortunately, Bushy,

We read about it every day in the headlines, don't we? And for those of us that are investors, those of us that might be renters, we are seeing it on the ground, whether it's in Victoria, which is obviously woeful at the moment for tenants and for property investors, but around the nation, just this drastic, critical undersupply of rental properties. As we've said before, that started happening many years ago. These things don't happen overnight. so it's like a perfect storm in a way um where we're at this critical moment uh where there is

simply just not enough rental accommodation in this nation um available to house our current resident population uh that's why i found it so um interesting you know mind-boggling i suppose last year um when it was announced about the massive increase into of overseas migration into australia some one half a million seemingly in 2022 and the same again in 2023 i hear um and i think i posted on linkedin at the time um where are these people going to live and that was all that i that i said so we were already in dire straits uh 18 months ago when it came to rental supply in this country and now it's it's worse because you know i couldn't even imagine it you know a lot of these people were coming here and and clearly australia is a wonderful country to

migrate to me being one of those people many years ago but imagine coming here and not being able to find anywhere to live and that's clearly the case for many of these migrants but it's also clearly the case unfortunately for many of the people that were born in Australia or have who have may have been here for decades already. Yeah spot on well from a PIPA's perspective then Nicola what alternative approaches need to be considered to ease the housing and rental crisis? I mean, clearly, it's a supply story. And unfortunately, supply takes a long time to come online. We've been talking about this for many years. We have been warning about it for years. When lending became very difficult for investors to secure, we were talking about the unintended consequences of that some 8, 9, 10 years ago. and clearly we haven't seen the normal amount of supply being added to the market so as I mentioned before when I use the term perfect storm it is because we don't have the

usual supply coming onto the market and we also have a reduction in the normal amount of supply because investors are exiting the market there are there is another term that I might use but i won't on the show um and it does end with the word storm as well um that's kind of where we're at you know um because it's just a dire situation and whilst it does appear at a policy level in some way there's a lot of talk and bumping gums about improving supply quickly but that's a misnomer like you can't actually improve supply quickly there's no such thing um so you know i think they're making the right noises and and hopefully we do see you know a reasonable uptick in supply hitting the market but none of these things are going to be happening anytime soon and

in the meantime we're going to be stuck in this quagmire because that's what it is for the foreseeable future clearly from a PIPA point of view we support any policies that increase the supply of rental accommodation in this nation including respecting the vital role that investors play in the provision of that rental accommodation. Perhaps there might be discussions about incentivisation in some way. I don't know what that looks like. But certainly we would always advocate for not doing anything that is going to further reduce the supply of rental accommodation, such as rental caps, rental freezers, increased taxes and levies. None of these things are going to improve the rental market,

they're actually going to make it worse. So we would certainly advocate that investors and the wider sector are given an opportunity to discuss these issues at government level and that governments really, really think hard about some of these ridiculous policies that they're now considering. Beautifully said.

Now, look, as the balanced voice of property professionalism, PIPA is actually hosting, you're hosting the first annual conference in Sydney on Friday the 22nd of September. Tell us a bit more about it and how can we get involved, Nicola? Well, and I do believe that there might be someone that I'm looking at right now

who is our fantastic emcee, Mr. Bushy Martin. Look out, can't wait. Thank you so much for agreeing to be part of this, Bushy. Obviously, it's been a long time coming and we have put on breakfast around, you know, in Sydney, Melbourne and Brisbane for a number of years, but this is our first ever national conference,

which we're super excited about. But we've managed to, as well as Secure You as our fantastic emcee, have managed to secure, you know, some of the biggest names in the sector. You know, the likes of Eliza Owen, Louis Christopher, obviously our dear friend Peter Kolesos, to name but a few. So we're really, really excited about that. Ticket sales have been going really well. We actually only have about 50 tickets left to sell, which is amazing. I mean, it's not a ginormous conference, but we should have, you know, 130 or so people in the room. And it's been wonderful to see every single ticket sale that we have made, apart from a couple, are all to PIPA members.

And we've got people coming in from around the nation, lots of people coming in for the weekend and things like that. So we are really excited. Hopefully, we anticipate those ticket sales to be actually sold out. hopefully in you know in coming weeks um and um just really looking forward to everyone getting together and and you know in a forum that we've never had at a national level um and we might be even maybe putting on some drinks afterwards love it well very timely given uh some of the rubbish that the industry is having to deal with right now and getting their collective together uh so that we can as a unified voice uh make more noise about the issues at hand for those property

professionals who haven't grabbed their tickets where do they need to get them from nicola let's pop to the paper website they'll be able to find information about the national conference on the website but i wouldn't delay um too much longer because as i say we i think we've got about 53 tickets uh left to sell and we actually don't have the ability to um increase the room so once those tickets are sold they are sold and um and you don't want to miss out because it'll be a fantastic a really fantastic day and the first of many i hope in the future i totally agree and uh with the subject matter that we're talking about today great forum to to really make some noise about that but i just want to take the opportunity to to thank you for leading the charge on that and

also thank you for the very sobering insights that you've shared with us today because it's again obviously that governments at all levels need to lift their sights above the immediate needs of the short-term reactive band-aid political expediency and the teflon finger pointing that we're seeing in order to avoid taking the blame themselves that effectively is making things worse by cutting off our rental noses despite our housing face and instead we need to be addressing the underlying housing supply cause which you've so well enunciated by adopting long-term sustainable strategies that stop villainizing investors as foes and start embracing them as friends and, again, returning to incentivising hard-working mums and dads

to invest in their futures and to add to much-needed housing stock rather than continue to drive them away and compounding the problems. So I really want to thank you for joining us on the show again today, Nicola, and I'm really looking forward to actually catching up with you in the flesh to enjoy the PIPA conference on Friday the 22nd of September. Awesome. Thanks for having me, Bushida. I'm looking forward to having you at the conference too. Thank you.

Can't wait. Thanks, Nicola. Bye for now. Bye. 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 know how 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 know how 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 exclusive to the Property Hub. Now according to the latest stats over 90% of Australia's property investors own two properties or less with under 6% owning three properties, 2% owning four properties and under 1% owning five or more investment properties. Now two or less investment properties is unlikely to allow you to stop work while attaining and then maintaining your ideal lifestyle. So why is there such a massive chasm in the numbers of investors who appear to get stuck on just one to two investment properties versus those that are able to grow significant property portfolios. While many will be quick to blame current borrowing capacity constraints,

there's got to be more than this, as these relative property investment ownership numbers have been in play for many years now. So how can you overcome the apparent barriers to join the select few and be able to accumulate sufficient property to fuel your version of financial freedom? To reveal your opportunity, we're joined by the Director of KFU Property, Drew Evans,

who is an active property investor himself, having built a property portfolio valued at $25 million over the last 10 years. So, welcome back to Realty Talk, Drew. Thanks for having me, Bushy. Drew, great topic on this exercise, given some of the current constraints that investors around the country are experiencing. So, to sort of kick things off there, what's the normal approach to residential property investment? I think the biggest challenge that people have is not understanding that property investing initially is definitely a finance game, right? And that's where you need to keep the banks happy unless you have the bank of mum and dad or a rich uncle that's left you an absolute fortune of an inheritance. So at these times, now more than ever, it's super important to understand what do the banks need and what do they want to see?

Because at the end of the day, they're a business. they want to lend you the money, but as a business, they need to make sure that their investment is safe. And your job as an investor is to show them how safe it is to lend you the cash. Yeah, extremely well done. So I'd love for you to sort of detail the limitations that result from not addressing the finance piece appropriately. Of course, yeah. So realistically, when we work with clients, you need to identify, do you have a borrowing capacity challenge, which is your household income versus your expenses? Or do you have a buying power challenge, which is the cash that you have, the equity that you have, or access to somebody else's equity? I follow a lot of Tony

Robbins and one of his favorite sayings is people don't have a lack of resources, they have a lack of resourcefulness. And I think property investing is no different. Where there's a will, there's a way. And if you follow people that have already done what you want to do, I can assure you that there's plenty of help out there. Yeah, spot on. So the big question, obviously, then is how can the average investor best overcome these in order to grow significant portfolios like sunday yeah i think i mean you and i are no different to the average investor right it's very simple it's a either increase your income or b decrease your debt and and that's easier said than done sometimes especially if you work for somebody else hey bushy if i'm an employee of yours please can i

have a hundred thousand dollar pay rise pretty hard right but it's different when you invest in the right type of real estate. For me, I'm never an advocate of selling any property unless you need to. However, if it's preventing you from doing something else, I have absolutely no issue with taking profit off the table, paying down the debt in order to free up your borrowing capacity to keep growing and moving up your pipeline. There's also some phenomenal strategies in play now with the different entities that you can use where banks, depending on the entity, if you can prove that that structure is trading profitably via clarification from an accountant's declaration letter some banks will actually exclude the debt that it contains therefore having you creating

massive borrowing capacity for the future yeah it's using the special purpose vehicle trust that that a lot of people are talking about at the moment i'd love for you to just to put some color and shape around this to share a couple of examples if you might please try yeah so i've got a client. I'm not allowed to say his name because it's a unique one. We helped him get into a duplex acquisition and he was super charged and ready to go. Unfortunately, through COVID, he had a bit of a pay decrease, which is a shame. And his project got to completion. And unfortunately, he was stuck because the banks weren't prepared to lend him any more money. So this is what we did, Bushy, is I've got the numbers here for you. He paid $869,800 for the duplex. It's a six bed, four

bath, two car design. Now, when it finished, he found out that he was stuck. We worked out the numbers and said, hey, what if you were to sell one half, use the proceeds to then pay down the debt on the other? What does that look like? And there's a lot of numbers involved, but this is the summary. He actually generated a gross uplift of $254,100 on the sale of Duplex A. Yes, he's got to pay tax. Yes, he's got to pay an agent to sell it. Yes, yes, yes. There's all these expenses, but we worked out if he used just half of the net proceeds to pay into the loan of the duplex he decided to keep which is renting out for 520 a week he is generating now a gross yield of 15.2 and that's a strategy that a lot of our clients are doing today if the pinch is really coming

where interest rates are getting a lot higher it is impacting the bottom line sell one half use the proceeds pay down the debt redeploy the capital and rinse and repeat the process yeah and the benefits of building a duplex like you've just described there one is that is the dual income exercise which helps a capacity piece in any case but in in the building exercise you're getting the benefits of much reduced stamp duty because you're paying it on the vacant land not the full purchase price and of course you're still getting the full benefits of the tax depreciation incentives that are on offer for new build properties that are no longer being able to access on existing property so look i really want to

thank you for opening our eyes to this opportunity drew which has really reinforced the need to proactively create build and manufacture equity in cash flow by thinking outside of the square and breaking the mold of the old traditional buy hold and hope approach so thanks again for sharing all this with us on the show today thanks we'll talk to you soon thanks true property depreciation is the natural wear and tear of a building and its assets property investors can claim depreciation as a tax deduction each financial year depreciation is a non-cash deduction this means you don't need to spend any money in order to claim it on average bmt tax depreciation find residential investors almost nine thousand dollars in 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 And that brings us to the end of this week's show. A big

thank you to our special guests, to Nicola, Drew and to Ray for their contributions this week. Before we go, make sure that you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast delivered to you each and every week by subscribing to the Property Hub now

on your favourite podcast player or wherever you're listening to this show or watching it, in fact. Thanks to our supporters, Realty.com.au, BMT Tax Depreciation, Know How Property Finance and Apera 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