Property Hub - Investment Insights & Inspiration - Realty Talk - Buying property …..properly!

Episode Date: August 1, 2024

John Pidgeon is an active and successful long term investor, property coach, buyers agent and host of his own podcast called This Is Property.  John shares some powerful insights in the show this week as he sums up the sad plight of many hard working Aussie investors who fail to realise that just working hard and putting money into super is not going to be enough when they retire. Then Bushy is joined by Aaron Emery to discuss the impact of evolving tenant expectations on investors and he provides practical advice on how you can adapt to these changes. Subscribe for free to Realty Talk on the Property Hub channel, join our community and get more insights here: https://linktr.ee/propertyhubau 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.See omnystudio.com/listener for privacy information.

Hello and welcome to the show. John Pigeon is an active and successful long-term investor, property coach, buyer's agent, and host of his own podcast called This Is Property. First-time investor, just get your hands dirty multiple times to the point where you can start to put in 10 offers. John expands on that and shares other powerful insights in the show this week as he sums up the sad plight of many hard-working Aussie investors right now.

And then in the show, Bushy is joined by Aaron Emery to discuss the impact of evolving tenant expectations on investors, and he provides some practical advice on how you can adapt to those changes. Before we start, I want to thank our supporters and content partners, realty.com.au, BMT Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. You'll find us on all podcast players as The Property Hub, also on Southern Cross Austeria Network, Hot Copper and all social media platforms. 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. Realty Talk and your host Bushy Martin. Now, let me start with a great quote. Follow along, don't take risks, just keep your head down and work, and you'll achieve your dreams. And who said this? No one ever.

Now, I had a real chuckle when I read this quote from the new book, Sort Your Property Out and Build Your Property, Outbuild Your Future, because it sadly sums up the plight of many hard-working Aussies who fail to realise that just working hard and putting your money into super and then paying off your home loan is actually going to leave you on either penny-pinching poverty when you try and stop work, or you'll be forced and have no choice but to keep working until the day you drop. Now, I can tell you from first-hand experience that investing in property is the best way to overcome this and to actually fuel your freedom and have a great country, but many who jump into

property fail to work out how to actually buy property properly. So to help you with this critical aspect, we're privileged to have the author of the great book, Sort Your Property Out, John Pigeon joining us again on the show today and for those of you who missed him on our previous property hub episodes he's an active and successful long-term investor himself he's a fellow podcast host on this is property and a property coaching bias agent so welcome back to the show John thanks for having me Bushy I'd loved our chat so far and I know this one will be exactly the same level so I guess just to get in the groove John of how to buy property properly what are your thoughts on property hot spots and not spots that you talk about in the book

yeah i suppose um speaking blasé about it i i threw it in there because it's it's hot off um hot on the press always isn't it and um it's on people's minds as to where to where to buy and when someone says hot spot everyone um pricks their ears up and uh and and takes a look don't know so um i think uh yeah marketing and media have a lot to lot to play in this space um are the hot spots and not spots well generally the i'll find the not spots are generally not spots all the time they're not just going through a phase um whether that be yeah population dwindling locations or or even property types as such that don't have a have a history of um of slow to no growth um and then the hot spot thing yeah look i don't i don't drink the kool-aid when uh when

people say yeah we need to invest in this particular location and i don't think it changes as quickly as people think um most but in saying that i think a lot of growth phases last or real growth phases hot phases will last anywhere from sort of 18 to 24 months and then it'll start to cool off so that there is an aspect of timing the market um but but generally i think a lot of investors get carried away with with just focusing on on this particular topic now 100 agree and i don't know whether you've seen it as well john but i certainly have particularly in recent times where there are so many buyers agents piling into the game now

and they're all using a lot of the same data-driven information. They're identifying the same spots and they're all piling into those areas and it almost becomes a self-fulfilling prophecy where you'll see the property prices spike and then all of a sudden it'll run out of puff and then they'll start to turn their attention elsewhere.

A bit like a bit of a piranha feeding frenzy to some degree. So I guess I'm not a big ascriber to those exercises my own belief is if you hold property long enough and providing the right growth under underlying growth drivers are there uh the property is going to perform uh well if you've got a 15 plus year horizon uh if you're looking at much shorter terms than that then perhaps you need to be at least trying to stack the deck in your favor by finding areas that are that are likely to enjoy some level of growth sooner rather later but uh i know that that's something that you uh

really do detail well in the book. So the people have really got their hands dirty and actually know what they're looking for is your great 110-1 rule. So can you talk to us a bit about what that is in terms of finding and buying the right property? Yeah, sure. And I suppose in a previous episode, we spoke about the eight-point plan and getting those eight points together and defining what it really means for you as an individual investor so when when i talk about the 110-1 um it's really ensuring that that eight point is on point and it's clear and concise uh before we we start to even look at the 110-1 so essentially it's it's basically look through look at or look through 100 properties doesn't have to be always physically in person uh put offers in 10 in put

offers in on 10 properties and essentially buy one that might be multiple offers at one time but I suppose what that does is it gives the investor the feeling of right I'm in for the long haul and I'm prepared to get my hands dirty and not just look for five minutes and put one offer in and say oh that was too hard it got rejected the market's too hot sort of thing so it's a bit of work ethic involved in there in that uh in those sort of numbers but what it also does especially with a first-time investor is if um if i'm looking through 100 properties whether that be online and tracking what they end up selling for or even in person what i'm doing organically is is gaining confidence in that location and i'm getting to talk to agents and i'm getting a feel

for the market and the heat of the market how quickly properties are selling for the good properties how long they're staying on the market for um and i really get a really good foundation of what i think something's worth and it doesn't have to be 100 it could be 80 or 70 and and as a as a sophisticated investor you can probably do it with 20 or 30 to be honest but um yeah first time investor just uh just get your hands dirty multiple times to the point where you can start to put in 10 offers and when when people hear me say 10 offers it's like oh wow i'm a bit nervous about putting in the first one but by the fifth or sixth it's like clockwork and it's it's comfortable for them and they start to negotiate better and and they it's very clear and concise that it's

non-emotional now and i don't have to buy the first thing that comes up on my feed um and we get to that point where that that that one property that we end up do buying um it was a non-emotional purchase based on logic and research and and know that i've i've been in the market long enough to um to buy a property and and the premise that there's another good property every every other week yeah that's really good advice mate and there's so many learnings from just adopting that sort of hands-on roll up your sleeves and and do an approach uh you know you know the obvious thing there joining the dots and what you've said is that if you've seen enough properties and you've made enough offers uh one your knowledge is going to be there secondly your

confidence is going to be there you're actually going to negotiate better uh once you've done it a few times anyway because the the care factor isn't going to be quite as strong and you'll be able to present a bit of a poker face in a way that well if you get it you do and if you don't you know there's going to be another one tomorrow or around the corner, so take advantage of that. So I love that. Again, on a similar exercise, and again, it's something you talk about a fair bit in the book,

and it's a bit of a subject. I think there's a fair bit of smoke and mirrors around, to be honest, particularly from a lot of buyers' ages in the space, and that's the good old off-market, silent listings or pre-market properties. What's your view on those, John? Yeah, one of our BAs actually rang us today and said, look, we've got an off-market property.

Our client will probably buy it. We think it's a good price. It hasn't listed yet and probably won't list if we buy it. And that doesn't happen every day. It doesn't happen every week. And we realize, and we talk about this every week in our team catch-ups, like off-markets, there's plenty of off-market opportunities that we get exclusively that are overpriced.

So again, it's a little bit like the whole hotspots, isn't it? like the the words off market it's like wow this is fantastic i'm getting exclusive look at this property it must be a great deal um no one else has got access to it well the general facts are if majority of smart people that are selling property won't want to pigeonhole their their sale to just simply one person does that mean there are never any good off-market opportunities absolutely um it doesn't but you need good relations with agents in order to do that which obviously we we work hard on um so as an investor listening in i would say okay if we can get access to off-market properties well done and we teach people how to do that um but don't think that

it's automatically a fantastic deal no i think the the you've got a question why is that property off-market because there are going to be instances where there might be a relationship split or there might be multiple reasons why a vendor doesn't want a public list of property. But given that it's going to be not market tested from the buyer's perspective, you've got to be pretty, you've either got to have someone sitting alongside you who understands what its true value is or you've done enough homework to understand what represents good value because in a

normal course events if i was selling a property i wanted as many buyers falling over it as they could to pay as much as they could to get their hands on it so it comes back to that why i think from my perspective in terms of whether it's a valid and appropriate asset to look at through that sort of opportunity i don't resent bush and i think the common ones we see which was an example of the one we got today was the vendor had lived in the house for 30 years or more they didn't want anyone tramping through their house they they reluctant to let it go but they just wanted to for it to be a nice easy process and know that it obviously didn't owe them anything we weren't getting amazing discounts because of the type of market it is but we'd also didn't

have to compete with 15 others to pay 30 grand too much for it either yeah no brilliantly said Now, it sort of leads nicely into another subject that gets a lot of airplay in the space at the moment, and that's the old subject of due diligence. And, you know, I guess there's due diligence and there's due diligence, John, because I see a very wide spectrum between what one person thinks is due diligence and someone else does. so you can just walk us through what you think real due diligence actually looks like and if you can focus on the elements that most don't or fail to consider in that if you can yeah so the the whole dd stuff for investors i think begins with before they even look at the property market in general it's like have i done due diligence on my own life first and foremost and due diligence on the the market factors or the factors that are out of my control

interest rates and vacancies and those sort of things so that that's the more macro due diligence but then there's the micro due diligence on a on a local level for that particular property or that particular suburb and and obviously the book explains it in a lot more detail but um basic things like uh how many owner occupiers are in the street versus versus investors and what are the vacancy rates what's the unemployment rate like what's the percentage of owner ox owned their house outright uh what's the school zones like and and uh what's the general infrastructure changes over the next five to ten years what's the population percentage doing and what's it done for the last sort of five to ten years um yeah like we could go on for hours about the dd that

we need to be doing and i suppose from a ba point of view we've done all that for a lot of people but that i'm sure there's a lot of listeners wanting to take that on themselves and and i think there's no better way than to get your hands dirty yourself uh the the way to learn and um and and just really understanding that you have ticked all the boxes now that's actually before you walk in the house so once you walk in the house there's another set of of dds and obviously your building and pest comes into play but uh but then looking at past sales for like for like land size and and uh internal bedrooms and bathrooms and and then of course relating it back to our strategy to say well i want to add some value down the track how easily can i do

that do i need to engage a builder to come through and say yeah we can easily knock out that wall we can extend on we can put a granny flat etc etc yeah and i well said there's a number of layers to it and i guess the uh in simple terms for me i think we've got to a point where we've shifted from a time when i first started in property you know 30 years ago where you had basically no information uh and really you really had to had walk the blocks to get get the sense of it and spend hours going through the newspaper on the weekend so now there's so much data that we're at a point where i think to some degree we're starting to measure what doesn't matter uh and at the same time we're we're not we're not measuring things that do matter to some degree so it's a matter

of getting this balance right not getting paralysis analysis and getting so lost in the facts and figures and the historic data but probably as well focusing on what's going to happen rather than what has happened because i think you know particularly given what we've been through in the last three years post-covid where just about every property ship got lifted by the tide and even more so now those those fundamental underlying growth drivers of new infrastructure strong growing industry and strong and growing incomes in particular are things that people really need to get some confidence around to ensure that an area is going to continue to grow long term so where your thoughts on that yeah actually i was firsthand this morning um

someone rang up and said oh look we're looking at using a buyer's agent and we've just spoken to a company and where a lot of their research and data is ai driven and um and there's a lot of technical um support around where we should be buying where we shouldn't be buying um i'm i'm sitting on the fence as to how that can be effective for you as a personal investor when it doesn't take into account your own situation and we can easily try and replace the human element of buying property with ai and and all these technological advancements but the end of the day it comes back to the basics and those basics will will never change um so yes there's a place for for fast tracking research but the fundamentals of why people are buying real estate

and and um making sure that we're not in that 54 percent that have to sell then we need to do our own research in our own backyard before any ai comes into play yeah extremely well said mate 100 agree and that that personalization i think the one of the key points you're making here there is no one size fits all on this it's it's what where are you at do do the due diligence on yourself uh to look at where you're at where you're heading what you can do and what you need to do and then balance that against an appropriate property approach that's going to satisfy that i think there's a it really makes a lot of sense uh look uh again we've only just scratched the surface on all of this john but uh i really want to thank you again for shedding better light on

all of these key matters. And for those who'd like to grab a copy of your book, just make sure they go to sortyourpropertyout.com. And if you'd like more help on this and other aspects of your property investment approach, you've got a couple of options. You can either feel free to book in with me personally for a personal solution session on knowhowproperty.com.au and just click the link in the show notes. And similarly, you can book in with John for a clarity call or a one-on-one coaching session by clicking the solvablewealth.com.au show note link. And again, make sure you mention Bushy, some special treatment from John. So thanks again for joining us on the Property Hub today, mate. No worries, Bushy. Thanks for the shout out. 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 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 freedom? Visit knowhowproperty.com.au This is Realty Talk powered by realty.com.au. Now it doesn't matter where you look, property investors appear to be copying it left, right and centre. Whether it be interest rate

high cost increases, tax treatment changes and an ever-increasing raft of rental restrictions and legislation changes that all appear to favour tenants. So investors seem to be attacked from pretty much all sides. So how can you accommodate and adapt to these changes and continue to achieve investment success? Well to explore this we're joined by Aaron Emery, a founder and MD of Pulse Property Management Consulting. So welcome to the Property Hub's Realty Talk Show Aaron. Thanks so much, Bushy. Thanks very much for having me on today. Looking forward to it. Now, I guess to kick straight into the exercise, Aaron, what are the details of the current challenges that are being faced by the property investment

industry across the states as you see at the moment? Oh gosh, where do I start? You know, look, there's a lot of regulatory changes that are going on across most states of Australia. The current state labour governments are tearing trends, for better words, into the Residential Tenancies Acts all over the place. New South Wales, Victoria was obviously the first to start. Queensland followed. New South Wales is under review. Tasmania is under review. South Australia. It's kind of happening wherever there is a Labor government. And, you know, I guess there's a lot of impacts that are kind of coming along with those regulatory changes. Obviously, they're aimed at enhancing the protections for tenants and improve

housing affordability and quality but I think that that comes with its own set of challenges and some critics might argue that those changes are excessively in favor of the tenant but you know they're citing adverse effects such as different considerable number of landlords selling their investment properties but anyway we'll get more into that as we talk through but you know there's certainly a lot of changes going on and it's being felt right across the board for property investors and even down to property managers you know just them having to keep up with all the changes and pivoting all the time very fast usually because the government's announced these changes pretty quickly and the property management companies are left to quickly pivot

and change and implement as fast as they can and provide that education and knowledge to the investors which is sometimes pretty difficult but we get there so yes a bit of a moving face and the poor old property manager often ends up as the meat in the sandwich and all of that exercise. Something that I'd like to expand on a little bit if we can, Aaron, is your thoughts on the impact of evolving tenant expectations that are emerging as a consequence of all the stuff that's going on. What's your thoughts there? Yeah, look, I think it's definitely happening. There's a clear shift influenced, I suppose, in some ways by a broader social dynamic and definitely a heightened awareness of tenant rights um you only have to look just recently i don't

know if you're aware bushy but um the victorian and queensland uh residential tenancies authority who kind of look after and oversee those things for tenants they're now have recently actively started encouraging tenants to dob in their property owners and real estate agents um if they think that their property is not compliant with one of the minimum housing standards and you know again some might argue that that's a good thing because it helps bring um bring that to light and highlight those properties but i think there's a bit of controversy around it because it might emphasize a lot of non-compliant cases which might overshadow really the reality of the vast majority who do the right thing um and so yeah tenants i would say to a certain degree

they have their own their expectations are definitely heightened and maybe a little bit unrealistic but i think that um when you've got all the governments changing all the legislation and as i say tipping in in favor a little bit of the tenant um look don't get me wrong i don't disagree with some of the changes. I think that some of them do represent good changes in terms of the domestic violence side of things. Obviously, no one deserves to go through that. And if they do go through that, there needs to be measures there that offer them some assistance. But I think things like taking away without grounds termination and landlords potentially losing the right to you know kind of say when they need to take their property back and some of these

prescribed reasons that they're introducing are a bit funny as well um obviously i understand some of the consequences around them where they might get um you know if they do evict a tenant and say that they need to evict them because they're going to sell then they might not be able to rent it again for a six month or a 12 month period and so those ones out there that might try to be a little bit sneak around the act and what the law says. Sure, I think that needs to be there to protect the tenant. But at the end of the day, the fundamental, you know, right of a landlord is it's their property, it's their right to kind of say. And I think it's probably having a bit of an impact, Bushy, on investors potentially even turning away from the property market. You know,

why should they continue to invest hundreds of thousands, millions of dollars into property where they're going to be dictated to quite heavily and scrutinized where they could go and invest in shares and not have that same level of scrutiny and what might be interruption and injection that might not be welcome. Interesting. I guess it comes down to the perceived shift of control.

If you're spending half a million to a million dollars on a property you would expect to be able to and paying pretty heavily for it, You'd expect to be able to do what you want within reason. That's right, within reason, yeah. Yeah, pretty interesting shift in the power balance. And I guess it'd be very interesting to see how, when there are tribunal and other cases arise, how that's going to be interpreted, Aaron, because it's all right to have it in black and white, but it's how it's then read and then put in place in actual cases in that regard that's going to be interesting. You got any thoughts on that?

well we all know that the act in most cases or if we don't know i'm happy to share but you know with legislation it really does come down to interpretation and one person's interpretation could be different to the other um we obviously know what the law may be trying to achieve sometimes it might be a little bit gray in the early stages but ultimately if you understand what it's trying to achieve then you know it shouldn't be um it shouldn't be an issue but i'm i'm not sure how the tribunals are going to go already we are seeing a bit of an issue in terms of backlogs um like most of our qcat and vcat and ncat tribunals were already backlogged following covid and now we're going to have even a greater backlog of an overflow of you know these

cases for minor modifications or retaliatory eviction or increasing rents, whatever the case may be that they end up there for. And it's going to certainly impact wait times. We're already seeing some wait times blow out as far as six months, some even as far as 12 months. I remember during COVID, I had one issue that had to go to QCAT and I think I waited almost 18 months until i actually had a hearing um so you know that's certainly going to get worse i think um and the government possibly haven't really thought that process through so yeah it's it's it's okay to make the change but they're not going to resource it appropriately to then oversee uh the discussions they're going to have around issues that arise and the landlord ends up carrying the cost in the

meantime until a resolution comes through then that that's a a bit of a unseen and probably big consequential impact that might flow on that will again make investors question the longevity of hanging on to properties and buying into properties versus other assets even though if you do the numbers that property from the leverage perspective is always going to outpace shares or other equities in terms of that long-term growth perspective so very interesting I guess sort of nailing it down then, Aaron, what practical advice can you give to investment landlords and how best to adapt to these changes moving forward? Sure. Well, I think there's a lot of noise out there in regards to what's happening. So the

best advice I can give them is to stay informed and don't be ignorant to it. I'm sure that they're not being ignorant on purpose. We all live a busy lifestyle and everyone is busy. But if your property manager does share some information with you in regards to these changes and what's happening and what to look out for and how to be prepared, take it seriously and take it on board because the more informed you are, the better educated you are, the better decisions you can make and hopefully the better outcomes you will have. In terms of tenant expectations and how to kind of, you know, work with that, I think everything within reason. We do know that tenants want you know safe properties they want to live somewhere that's convenient they want

modern residences so i think in some ways minimum housing standards are a good thing maybe they do go a little bit over the top in some areas but ultimately just align your property upgrades with the modern tenant expectations where you can i'm not saying go and spend thousands of dollars if you're not going to get the return but at least make sure there's the basics ceiling fans in bedrooms window coverings on windows no water leaks from your major you know kitchen bathrooms etc um in addition they could seek professional advice always engage with other industry there's property management companies out there but there's also many facebook groups and landlord advisory pages there's landlord advisory services available and i'm more about that um i think we

talked previously, only because, well, she, I really think that the industry needs to do a little bit better too, and be more of a landlord advocate to the landlords. We need to fight for them because no one else is. The current government certainly isn't. And so I'm trying to do my best to help the industry in becoming better landlord advocates, because there's so many tenant advocate services out there. We don't need any more of those, but we definitely need to be advocating for the landlord so 100 and and and we'll get you back to talk in more detail about that very subject uh aaron given the quite pioneering work you're doing in that capacity to try and balance the the uh the books and and create a more even playing field in relation to it i know that uh

picker the property investors council of australia has been endeavoring to do that to build up a quorum of people across the country that has a voice to be able to lobby governments and actually create a much more balanced perspective but at the at the the level we're talking about here with landlords feeling like there's someone that they can talk to that it can communicate arguments to the appropriate people in a way that's going to have an impact absolutely it's not just seen as a as a whinging landlord and we all know how villainized the investors have become pretty much the dartboard to pin every problem on by successive labor governments in in recent times uh i think appropriately because i think uh you know the

housing rental crisis that we keep hearing about and the housing affordability crisis that that hits the headlines every second day uh yeah landlords and investors are actually the solution not the problem because it's absolutely incentivized to add get back into property through meaningful means, then we can actually increase the stock far faster than relying on builders who are currently in that industry is in a lot of trouble trying to bridge the gap. So I think there's a lot of opportunity there. We will get you back to talk on that very subject because I think it's one that has a gaping hole. But for today, I really want to thank you for the insights on this ever evolving property investment world. And we really appreciate your generous time

on the show today Aaron. Thanks so much thank you very much for having me I have loved being on the show so thank you. Are you curious about harnessing your super for property investment? Propel your future with the enlightening online seminar the ultimate masterclass to self-managed super fund property mastery. Reserve your spot now at GetRare.com.au forward slash SMSF. Spearheaded by Rasty from independent buyers agency GetRare Properties, this masterclass unravels strategic property investment using your self-managed superannuation fund. You know, it's not just about learning. It's about transforming your financial future through education. So embrace this opportunity to enrich your investing acumen. Enroll now in the free masterclass and begin a

journey that marries insight with action, leading to a financially empowered tomorrow. Unlock bonus content now as a premium subscriber. Join us for more property news each week with realty talk and get invested you can do that by subscribing to the property hub on your chosen podcast player join the conversation on facebook just search the property hub collective and give us a like and a follow as well thanks to our supporters and content partners realty.com.au bmt tax depreciation know our property finance get rare property and apiro marketing and until next week, all the best.