Property Hub - Investment Insights & Inspiration - Realty Talk: Female Investor Guide + Housing Affordability Solutions + Property Management Risks

Episode Date: April 2, 2022

With 1 in 3 women retiring with no savings, what can they do about it? Nicola McDougall of Bricks & Mortar Media joins us to reveal her new co-authored book ‘The Female Investor.’ As home values soar around the country, housing affordability is back on the agenda, a new start-up called Ownhome has developed a unique rent-to-buy model to solve it.   Co-founder James Bowe reveals the details. And to close the show, our host Bushy Martin continues our special series on the critical importance of property management to your investment success.   RealtyTalk is your trusted voice in property investment and Australia’s most popular online property show.  RealtyTalk is brought to you by Realty, Australia’s leading search and social property distribution platform that helps investors like you beat the crowd, giving you the earliest access to property opportunities, listings, and insights. Check out Realty. RealtyTalk is hosted by top property investment expert, author, and founder of KnowHow Property, Bushy Martin. Find out how Bushy’s KnowHow team helps investors unlock freedom with finance and property here, and check out Bushy’s podcast Get Invested.  RealtyTalk is supported by BMT, a company that helps property investors save thousands of dollars each year by maximizing tax deductions from investment properties. Find out more. See omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by realty.com.au, connecting buyers, sellers and agents differently. Greetings and welcome to this week's Realty Talk show. I'm Bushy Martin from Know How Property Finance and we've got another great show lined up for you. The gender pay gap maternity leave and relationship breakdowns are leaving about a third of women with absolutely no retirement savings. So what can they do about it? Well, a new book, The Female Investor,

has just been published to solve this, and co-author Nicola McDougall from Bricks and Water Media joins us to discuss the details. As home values soar around the country, housing affordability concerns are growing, and new start-up Own Home has developed a unique rent-to-buy model to solve it. Co-founder James Bauer joins us to reveal the details. And to close out the show, I continue our special series on the critical importance of property management to your investment success by discussing the risks, the benefits, and the costs of property management. And before we share all of this with you, make sure you don't miss an episode of Realty talk by signing up on the realty.com.au homepage so that you can get every show in your inbox

every week. And I'll even give you a free copy of my award-winning book, Get Invested, for making the effort. We've got a lot to unpack, so let's get on with the show. Greetings and welcome. Now, are you, or do you know, a woman who's struggling to make ends meet and is concerned about her financial future? Unfortunately, the gender pay gap and maternity leave, alongside increasing rates of divorce and separation, mean that one in three women stop work with no retirement savings at all. And those that do manage to save often end up with less than half of the retirement funds of we mere males. Now, for me, these are shocking statistics in this day and age. So what can hardworking Aussie women do about it? Well, thankfully, today's special guest and

new Pippa Chair, Nicola McDougall of Bricks and Mortar Media has co-authored her new book, The Female Investor, which gives women an easy step-by-step guide on how to safely, easily and affordably secure their financial future through property investment. So to reveal the details, welcome back to the show, Nicola. Thanks, Bushy. Thanks for such a lovely introduction. I'm excited, actually. Yeah, I think it's going to feel a really good niche in the market. And congratulations on getting the book out there. I think it's very timely.

But to sort of kick things off, diving into that, why is the subject of female investors so close to your heart? Well, to start off with, for all of those reasons that you outlined in the intro there, quite horrifying statistics of the poor financial outcomes for women. You could probably blanket it as that statement, right? and whether it's you know during their working lives or in their twilight years where more women more single women than men are living in poverty in australia in retirement um more more women than men are having to sell the family home and move into rental accommodation in retirement and more

elderly single women than men are having to return to the workforce because they just do not have the funds to survive you know 10 or 20 years that you know suppose the twilight of your life and they don't have the funds available um so you know those sort of statistics are a very very strong motivator for myself and for kate uh for me personally i am the product of everything that we talk about in in the book i um started buying property in my early 30s when i was a single and i bought a built portfolio by myself uh while i was single um doing those things when i'm doing that when I was in my 30s has made a huge difference in my life in my 40s and beyond. I'm now married. I still retain ownership of several properties outside of my marriage. I

have financial independence from my husband. We build assets together, but both of us are dedicated to having financial independence from each other. And that's very important for me as a female investor, as a feminist, that I wanted to, so important to me that I wanted to pass on everything that I have learned from doing it myself, but also from, you know, being involved in the industry for so many decades and having access to a lot of information. I was talking to someone the other day, I think I've written more than a million words about property over my career. So, you know, that is some of the reasons why it was so important to me. And I did have the idea for the book several years ago and it was about June last year where Kate and I decided

that we would team up and write it together. Fantastic well very exciting and it really does fill a niche but one of the things I want to sort of drill into the book provides an overview for women interested in strategic property ownership. Can you enlighten us a little more on this concept please nickel it was it was very interesting um during the you know the process of getting the book published which is through wiley um you know actually when you write a book um you have to come up with the avatar of your of your reader for us it's it's every it's half the world's population uh so probably not very niche uh and we were very mindful that we wanted uh to pass on information to women to understand how they can strategically buy property because we recognize that many women

you know don't may not be able to buy an investment property as such but what we want them to know about is how to buy a home with an investment mindset and even going so far as for women who may need to live in a particular location because of family responsibilities and this is for single and women that are in relationships because every you know each person has different risk profiles and I've certainly met many women whose husbands actually were more conservative risk wise where they would understand that they could understand the things that would enable them to purchase a property strategically in a particular location so that it could do more heavy lifting for them financially over the years ahead so when you know the book is called the

female investor, creating wealth, security and freedom through property. But it touches on both of those things. It's certainly for women who may want to buy an investment property or investment properties. And we believe that, you know, most women should be able to do that. But it's also for women who want to understand if they perhaps have one more opportunity to buy up to purchase a home, how they can select one that may grow in value the most over the years ahead. yeah brilliant awesome now as a successful property investor yourself is there anything that you would have done differently if you had your time again and then in the book we we are as warts and all we talk about the good stuff and we talk about the bad stuff i think there's

actually a chapter in there called the truth about property investment and during the book we actually you know provide our own stories of when we've stuffed up you know we all we all pay learning fees right when as property investors and we're learning as we're going and and certainly my probably the number one thing that um oh we could always say i wish i'd started earlier but uh the number one thing was i bought an off the plan unit um in south brisbane in 2012 at the time uh it was 425 top floor i mean it's actually a very nice building but as we all know you know horrendous oversupply happened in that location um i still have that in my portfolio only because uh it's 2022 now um it's settled in uh I think it was July 2013 from memory

it's only now worth as much as I paid for it wow um so that was a huge learning fee for me to to you know to have to pay um and was because at the time I knew a lot about real estate because I was working at the REIQ but I didn't know a lot about investing strategies so if I had my time again if i'd spent that 425 um i could have bought quite a nice little renovator house um you know closest to brisbane or adelaide or anything like that and it probably be worth double what i paid uh so that is my number one big boo-boo uh and throughout the as i say we all we all you know i'm sure you've got some interesting ones yourself and we've all got anchors in our portfolio um and certainly my intention is to try and jettison that one now that I can actually get my money back.

Yeah, brilliant. Well, look, it's really good that you're doing a warts and all share of the good, bad and the ugly, because that's, you know, we learn more from the bad stuff than we do the good stuff generally. So, which means it's going to be a great read. So how can women, and I'm assuming it's not, while it's targeting women, it's going to be just as relevant for men. How can we get a copy of your book then nicola that's right i mean the information in there is not gender specific uh however the you know it's targeted to women for all the reasons that we've outlined um that we want them to uh take control of their financial future um it comes out in bookstores on the first of april um it is actually available for pre-order now um the usual suspects

amazon booktopia um the major book retailers are starting are stocking it online as well but physically in the bookstores um first week in April which is really exciting so um if anyone would like to but we've had some really good sales coming through online as well so um things looking good for us and and like you said I really hope um that men get behind the book as well if they wanted to support a female in their lives whether that is their their daughter their wife their mother their auntie their female friend um or even if they wanted to pretend and put another book on the outside and they're reading it on the inside then that'll be good too you might have to come up with a couple of covers i reckon but

now i love it that's absolutely fantastic work nicola and thanks for sharing this and the the opportunity that you've created for people on the show today thanks bushy thanks so much for having me thanks nicola well there you have it if you're a woman or you know a woman who's worried about a financial future and is looking for a simple yet powerful guide that will teach you the ins and outs of the property market and reveal how you can grow a modest sum into a small fortune that's going to help you achieve financial independence, provide for your family, prepare for your retirement and realise your best life, make sure they grab a copy of The Female Investor. Stay with us for more here on Realty Talk. 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.

Hi and welcome back. Now with house prices rising between 20% to 30% across the country in the last 12 months, the old chestnut of housing affordability is rising its head again, as first-time homebuyers and many others are struggling to keep pace as their dream of home ownership just keeps running further away from them.

But do we have a housing affordability problem or an accessibility problem? Because it's the size of the deposits that's required to buy a home that's proving to be the biggest hurdle for property buyers to realise their home ownership dreams. And we're talking about home deposits of anywhere between 100 grand right up to 300 grand, depending on how much you're able to borrow and where you live around the country.

So what can we do about housing affordability or housing accessibility, as I've heard it called? Well, to discuss this, we're joined by James Bower, the co-founder of an innovative new startup called Own Home that's looking to help you solve this problem based on their advanced read-to-buy or buy-now-pay-latter model that actually has the backing of none other than the Commonwealth Bank. So welcome back to Realty Talk, James. Great to be here.

Thanks, Bushy. Great, mate. now let's dive into this. What role is intergenerational wealth playing in the market or first-time buyers today? Yeah, well, there's this pervasive myth that all you need to do to get onto the property ladder is to rent and save. And in many ways, it's a harmful myth that if you haven't saved for a deposit, then you don't deserve yet the benefits that flow from home ownership. But we know that property price growth has dramatically outstripped wage growth. And we know that 80% of working households have 50k or less in the bank, which is well below

what you need for a deposit. And it's actually less than you need for stamp duty alone for a median priced house in Sydney. And so what we've seen is this sort of shadow finance in the form of the bank of mum and dad has sort of stepped into that void, very understandably. And so, you know, to the extent that this youngest generation feels like they must be doing something wrong

when they see that their peers have sort of made strides under the property ladder in their early 20s. What we do know is that the majority of successful first home owners are actually relying on direct financial support

from the bank of mum and dad. And that's really just an inevitable consequence of the massive imposition And there are all sorts of problems that sort of flow from this myth and this increasing reliance on the bank of mom and dad. You know, for one, it's really delaying and limiting options of our parents as they sort of contemplate retirement, but feel the need to sort of extend themselves and support their children in what they see as, you know, an increasingly unaffordable prospect.

And then at a societal level, you know, we need to ask ourselves when we know just how powerful a wealth creation engine property ownership has been you know the wealth of the average homeowner is 20 times greater than a renter at the age of 65 we have to ask ourselves do we actually want the deciding factor in access to that asset class to be whether or not you have access to that intergenerational wealth transfer and so we're working hard to create new paths to homeownership that overcome that initial deposit hurdle yeah i love it and it is as you say it's a two-inch sword it's not only uh assisting those getting the home ownership but it's not been hamstringing mom and dad in relation to their own wealth goals as far as their future

retirement is concerned so it's a very good point um tell me james what can australia learn from by diversities and other countries in efforts to tackle this issue of housing affordability and the depository? Yeah, so I spent quite a number of years overseas. I spent eight years in the US and the UK and my co-founder, Tim, spent a lot of time in London as well as the Middle East. And what we saw is that there are a proliferation of multiple paths to home ownership overseas and that rent-to-own specifically is an incredibly mature model overseas. So we've got the government supported our rent to own pathway in the UK also in Singapore the Canadian government has just announced a billion dollar public private partnership for rent to own and it's a core

pillar of their strategy to tackle access to housing and but when we turn to Australia we see that there's a disproportionate reliance on sort of lenders mortgage insurance and the 10 or 20% deposit plus stamp duty approach. And so we asked ourselves, you know, why can't this pathway exist in Australia? And what we do know, and you know, we were briefly talking about it just before the show started, the reputation of rent to own. We're, you know, very clear that in the context of Australia, rent to own has an understandably tarnished reputation. And what we believe is that that's really the consequence of those individual operators that when we actually cast our minds globally we can see that it's a really sound path to home ownership that does

specifically help overcome that deposit hurdle well let's get specific on that then and get to talk to us about how own home actually does help solve this runaway deposit housing accessibility issue so own home uh very specifically is a two and a half percent upfront cost and that's actually one tenth of the upfront cost um for an equivalent you know 20 deposit plus stamp duty plus conveyancing um and then for the period that a customer is with own home um they're actually saving towards that future purchase so 35 of their monthly payments each month are going towards the accrual of this deposit towards that purchase back from own home and on top of that you know we often think about it as getting the best of both worlds

for the period that the customer is sort of a tenant with own home albeit with all of those extra benefits like being able to undertake renovations own home is taking care of all of the typical costs that go along with property ownership that many people myself included you you know, often forget, you know, strata costs, council rates, maintenance and repairs. All of those things are taken care of by OwnHome. And actually, you know, we're really leaning into how do we make that an incredibly delightful experience? So, you know, if I think of my own, you know, apartment in Sydney, if something breaks, you know, I've got to Google and find out who the local, you know, repair person is for that. In contrast, you know, our customers,

broken washing machine get on the app um there's a field service agent that's vetted sent out right away to to remedy that so above and beyond sort of the the cost um proposition of own home we're really excited about um our ability to improve that buyer's agent experience the front end and the diligence of the properties but then effectively what you could almost think of is like the operating system for being a homeowner and making that a much more delightful experience you know for for an individual this is the first time that they've ever confronted it for own home um as a scale provider of these services this is you know the umpteenth time that we've count encountered that edge case yeah you're providing an educated way to transition in a way that they

start to understand the responsibility that goes with it and then a better position so you do that properly once they you know got full fledged ownership of the exercise once they exercise of the option and take on the property within a sort of three to seven-year time horizon that this will allow. So I love it. Great work and thanks for sharing that exciting innovation, James, and thanks again for your time on the show today. Thank you.

Thank you, James. So there you have it. If you're looking to overcome the housing affordability deposit hurdle and get on the home ownership ladder sooner rather than later to avoid missing the buses when values keep running away from you without having to rely on the bank to come back, reach out to James and his team at ownhome.com to find out if this is the solution for you or perhaps your kids. You're watching Australia's most popular property show here on Realty Talk.

Greetings and welcome. This week we continue our focus on the question of whether you should DIY versus professionally property manage your investment property. Last week we revealed the stats on property management, confirming that between 400,000 to 660,000 investors still self-manage their properties. I outlined some horror stories, I gave an outline of everything that's involved in managing your property, and I gave you the questions that you need to ask yourself to determine if self-managing is actually the right option for you. Today, we pick up where we left off by weighing up all of the risks of self-managing your rental property. So in addition to some of the risks that I outlined last week, other risks of self-managing your rental property

include the following five key considerations. Firstly, while a private landlord can place ads in the local newspaper and online, the prospective pool of tenants is smaller than property managers, hence the potential to find the right tenant and best available tenant is also smaller. Secondly, as mentioned last week, tenants who look for private rental ads that don't involve a property manager quite often don't have the best rental history. Because these prospective tenants understand the ins and outs of the rental process, they quite often opt for private listings to avoid background checks that could turn up some unsavoury information. And thirdly, without access to the most accurate and full information, private landlords often are forced to make decisions

based on gut instinct. And this can prove to be very costly down the track if the wrong tenants are chosen and the rent goes unpaid or the condition of the property decreases drastically and getting the right tenants into your rental is clearly an imperative. A good tenant will pay their rent, not make endless trivial demands on looking after the property and they will look after it as if it were their own. A bad tenant on the other hand can be your absolute worst nightmare. Rent arrears, damage, illegal activities, the headaches and the hassles can be endless. Then there's the risk of not following all of the required procedures to the letter of the law. It's not uncommon that disputes involving rental payment, lease conditions and bond claims end up

in a tribunal or court hearing and the judge or mediator will take into consideration whether you as the landlord have taken all the appropriate steps and can provide the appropriate records as evidence that this has all occurred. For example, if you wish to evict a tenant, you need to be able to demonstrate that you provided the required reminders, notices and applications at the correct intervals and on the right dates in order to get the demand you require issued. If you can't do so, you may not get the order you wish, such as an eviction notice, and the tenant is likely to be allowed to stay in the property. Then there's the risk that if you become friendly with the tenants, which often occurs, enforcing the lease agreement can also

become very complicated. And breaches of the lease agreement can be detrimental to you as a landlord and in some cases may actually void your insurance if, for example, your tenants sublet or run a business from the rental. On the flip side, here are five other reasons why I believe it's actually worth investing in a good dedicated specialist professional property manager. Firstly, when it comes to sourcing tenants, good professional property managers can tap into databases that give you access to a larger pool of quality tenants. In addition, property managers have access to thorough screening procedures, which can weed out applicants that are simply not suitable for the property right off the bat. Thirdly, property managers also have access to blacklisted

tenancy databases for tenants who have bad rental histories. And property managers in a local area often talk with each other to share details on bad tenants to protect the area and their landlords. Now this is information that private landlords never get to hear. Fourthly, property managers also perform all the time-consuming tasks involved with the rental. They arrange repairs and maintenance and usually have a panel of preferred suppliers on hand to perform the work. Property managers also deal with tenant requests and any complaints from neighbours 24-7. They conduct the rental inspections and provide a comprehensive report to the owner, ensuring important matters are raised with landlords and resolve to comply with all the legal and duty of

care requirements. And finally, professional property managers give you access to specialist landlord insurance policies that are generally not available to private landlords because the insurers are actually protecting their interests and reducing their risk by only dealing with properties that are managed by property management professionals. For example, the common inclusions and landlord policies are loss of rent and tenant damage. However, one that's sometimes overlooked is denial of access. If the tenant refuses to leave the property and you have to go to court to get them evicted, a denial of access clause in your landlord insurance will cover this. And you should be able to claim for loss of rent while you go through the eviction

process. Because we often see landlords really struggle when it comes to this loss of rent. If they don't have specialised landlord insurance and the tenant has defaulted on the rent, they quickly discover that the bond is nowhere near enough to cover the missing rental income and then the clean up when the tenant vacates, which is what most landlord insurance policies provided by the major general insurers rely on. and while the bond is absolutely there to protect a landlord the time frames to legally get a tenant out of a property when they default on their rent can often really stretch out it generally takes about 8 to 12 weeks and sometimes longer to get into tribunal or court depending on the state and there's the additional 14 day period where the tenant needs to vacate so you could be looking at anywhere between 10 to 14 weeks until you get possession back of the property. On this basis the four-week bond is nowhere near enough to cover this and this is where specialised landlord

insurance via reputable property managers steps in. And making sure appropriate records are kept is absolutely super important especially when it comes to making a claim against your insurance and in our experience it's not a matter of if you'll ever make a claim it's just a matter of when. When you need to make a claim, you often need to submit a pile of paperwork, including the tenancy application, lease agreements, bond lodgements, details about property inspections, notes on repairs and maintenance, and of course, the ledger of payment collected. Reputable property managers are required to have a trust account, and they usually have all of this information right at their fingertips. And if things go pear-shaped and the tenancy needs to

be ended a good property manager knows precisely what to do to meet all of the statutory obligations for example issuing notices applying for termination orders and appearing at tribunal and if you end up in tribunal and you will at some point during your investment property journey you need to have professional representation as the legislation in all states is slanted in the favor of the tenant and the courts often look more favorably on your case if it's being professionally managed. And property managers' intimate knowledge of the legislation and ability to follow due process to the letter of the law will save you thousands, a lot of stress and a lot of sleepless nights. So understanding all of the laws and obligations is a key benefit of engaging a

professional property manager. They're required to be up to date with legislation and all of the regulations and compliance codes that apply to rental properties, not just the Residential tenancies authority, but also other applicable legislation, including building safety, strata laws, and short-term accommodation. Now, no one wants to fall foul of the law, and having a competent property manager handling your investment property can help ensure that this doesn't happen to you. Now, in my humble experience, the costs of engaging a good property manager are often more than offset by the additional rent an experienced manager can get you, the savings enjoyed by reducing tenant changeover and vacancy periods and property managers often save you

maintenance money because they generally get better deals from tradies they use when they have them regularly on repairs and of course there's the considerable saving of your time which will be better spent on earning additional monies for your work than saving a few bucks on property management. With property management being around the cost of a large cup of coffee a day, you need to ask yourself whether it's really worth putting your highest priced assets at risk by trying to save this measly amount. So what are the approximate costs of using a property manager? Well, in return for relieving you as the owner of all the time consuming and sometimes onerous obligations of leasing, managing and maintaining a property, of course, the property managers charge

you fees. Commission usually ranges from somewhere between 6 to 15% of the weekly rent and other fees can sometimes apply for various services such as letting and lease renewal, admin fees, tenancy database checks, file preparation and tribunal attendance, end of financial year statements, lease transfer fees and insurance claims. Some will charge a flat fee or a flat percentage and often it's the ongoing fees involved that are the reason that some landlords choose to self-manage. However, property management fees just like landlord insurance premiums are generally fully tax deductible. And remember, it's never about cost. It's always about the value achieved. So don't get caught chasing the lowest property management rate. Again,

the difference between the cheapest property manager and the most expensive is often only a cup of coffee a week. So if you're prepared to put your highest price asset at risk for the cost of a cup of coffee, then you really need to think seriously about this. Being penny wise and pound full each can end up being very costly. Now we understand that managing a rental can be complex especially in terms of legal obligations and requirements and for all of these reasons we believe a great property manager is worth their weight in gold. So while self-managing might be the preferred option for those who can cope with the workload and have the time to fully understand the legal liability risk that's involved with do-it-yourself, engaging a property manager can

be a wise move to ensure that you achieve and maintain a good return on your investment. So in my humble opinion, in the context of the ever-changing legislative environment that's increasingly favouring tenants, I don't think it's ever been more important for an investor to engage a good, dedicated, professional property manager. This is because a property manager can help you navigate all the changes in the latest legislation and make sure you don't inadvertently do anything wrong without even realising it. I also think it's important that there's a professional distance between the owner and the tenant. Sometimes this relationship becomes a little too cosy and it can be a lot harder to issue a breach notice or have a discussion about upping the rent if there's a

friendship involved. So if getting a good dedicated specialist property manager is so critical to the success of your investment journey, how do you go about ensuring that you find and engage the best one available. Well, this is exactly what I'll help you with in our next property management series installment. I'll give you the lowdown and share with you all of the questions that you need to ask and the performance benchmarks that you need to know to ensure you're engaging the best available property manager in your area. Because it's often what they don't say that's just as important. So being able to read between the lines is absolutely critical here. And for more deep dives on the importance of all things property management,

look out for my recent conversations on both Realty Talk and the Get Invested podcast with Dennis Youssef from Inspired Growth Training. That's more food for thought. Thanks for listening. And I look forward to sharing with you again sometime soon. 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. Well, that brings us to the end of another show. Another big thanks to our special guests, Nicola McDougall and James Bower. And to make sure that you don't miss an episode of Australia's longest running and most popular online property show, subscribe to Realty Talk now on Apple Podcasts, Google Podcasts, Spotify,

YouTube, or wherever you listen. And make sure you sign up on the realty.com.au homepage to get a free copy of my book, Get Invested, so that you get every episode in your inbox every week. And while you're there, make sure you check out one of Australia's most extensive range of properties for sale from over 7,000 agents nationally. Thanks again to Realty.com.au and BMT Tax Depreciation for their ongoing support. I'm Bushy Martin from Know How Property Finance and I look forward to seeing you again next week.

Miss something in this week's show or want to catch up on past shows? Do it anytime at Realty.com.au where we connect buyers, sellers and agents differently.