Property Hub - Investment Insights & Inspiration - Realty Talk - Making ‘real money’ in property

Episode Date: June 1, 2024

A staggering 54% of first time property investors sell their property within the first 5 years.  Why?  John Pidgeon, the author of a book called  ‘Sort you property out and build your future’ joins Bushy to explain why and how to make real money from property.   Given the recent and ongoing changes in property legislation, we have invited Lauren Robinson, Head of Property Partnerships with Longview, to join us and  discuss what strategies you need to adopt to maximize your returns in the current Australian property landscape. 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 this week's Realty Talks Show. You know, 54% of first-time property investors sell their property within the first five years. Why? Well, it's because they're chasing the quick fix. John Pidgeon, who is the author of a book called Sort Your Property Out and Build Your Future, joins Bushy today to explain why the property should be the very last thing you need to consider to make real money from property. Also this week, given the recent and ongoing changes in property legislation, we've invited Lauren Robinson, Head of Property Partnerships at Longview, to join us and discuss what strategies you need to adopt to maximise your returns

in the current Australian property landscape. Hey, before we start, I want to say a special thanks to our supporters and content partners, Realty.com.au, BMT Tax Depreciation, Know How Property Finance, Get Rare Property into Piro Marketing. And if this is your first time with us, a big welcome. You're going to find us on all podcast players and through the Southern Cross Stereo Network. If you like the show, please hit the subscribe button. Help us to continue to bring you the best guests every week. You too can join the conversation anytime on Facebook at the Property hub collective we'll be back in just a moment 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. Realty Talk and your host, Bushy Martin. Now, how do you really make money with property investing? Lots of aspiring investors jump into property investing and immediately start listening to podcasts and web searching for areas that others tell them where to buy. And then they spend endless hours scrolling through listing lists

as they focus on what they look like as some form of property porn. Now, I'm confident that this is why 54% of first-time and property investors generally end up selling their property within the first five years because they're not seeing instant results. But to make real money with property investing, the property is just the tip of the iceberg and often the last thing that you need to consider. And like yours truly, today's special guest has just released his book

on how to do this properly and much more. It's called Sort Your Property Out and Build Your Future. And its author, John Pidgeon, who's an active and successful long-term investor himself, as well as a fellow podcast host on business property and a property coach and buyers agent, joins us now to reveal the answer. So welcome to Realty Talk, John. Pleasure to be here, Bushy. Thanks for having me.

No, I really enjoyed our chats recently on Get Invested and as sort of fellow born and bred Western Victorian country boys. We really enjoyed a great discussion then. But today, I guess we're keen to dig into more of it with your great chapter on unlocking your investing side. I guess to set the scene, John, when and why do you think that many property investors fail? Yeah, interested to hear your stats at the top of the show. I didn't think it was that high that people sort of come and go with property investing. It's quite alarming, isn't I suppose I think a lot of failing before they actually purchased

without even realising it. I think if you strip it right back and you look back on those that maybe had to sell their property prematurely, you ask the key questions, well, did you know your cash flow management plan? Did you know what was coming in and out? Did you have your emergency buffers? Did you know what the property was going to yield for and the running costs of property?

and did we factor in variables out of our control, let alone the things in our control. So I reckon the majority would be asking themselves, yeah, I probably didn't have the answers to those when I bought in. And if we did, maybe it was potentially buying the wrong asset because location for me, and we'll talk about it, location is one aspect but the type of property is very important. 100%.

Totally agree. Give us a really good outline in the book on the key elements of how you can make money as a property investor. You've got a really great structure, so I'd love you to sort of walk us through your eight-point property plan and how that works if we can. Yeah, no problems. We ideally need about three hours to run through it in real detail,

but I'll give it a crack in short form. And I suppose the key that I tell all my clients is it's in no particular order, but all those points to the plan complement each other. And, yeah, you could argue that there are certain points that are more important, but at the end of the day, if you haven't got these parts to the puzzle, I think, yeah, you're not giving yourself the best chance. So, yeah, as I said, no particular order. We probably start with what the strategy is. What are we trying to achieve from it? Is it capital growth? Is it cash flow?

Is it some tax benefits? Is it a combination of all three? And in what portion is probably the first one? The class of property is really important. Am I after something blue chip that's potentially consistent growth but lower yielding? Am I aiming for maybe that middle class meat and potatoes property that yields and grows reasonably well?

are almost something that's potentially a cheaper price point, higher cash flow that potentially is an ad value or development type project. So the strategy and the class of property need to be worked out. Then you involve your accountant with your buying entity and a lot of people strangely get this wrong as well. So just working out whose names are going to be in, majority will purchase in their personal name but what's the do we need asset protection do we do we

relating back to the strategy itself that that's really important point so having a meeting with your accountant the the loan to value ratio and I was talking to someone this morning about this they're using equity for their first investment property but in what portion like they were looking at putting in a 30 deposit to save themselves 0.2 percent of interest but they're using all of their equity available and that's tying in potentially not for 10 years. So we thrashed that out a bit and I gave them a two cents worth on that. So what is that?

Is it cash? Is it equity? And in what percentages? And then obviously that expands to the interest only versus P&I. And there's no right and wrong in all this, is there, Bushy? Like you just look at it and say, well, yeah, they're all valid reasons to go one way or the other, but what's going to work for us?

And this is why property is really personal. The price point is really key, obviously ascertaining what the banks will lend you but what you're actually comfortable with and that sleep at night figure that you're okay with. And then we start to get into the weeds of the yield that we need based on the price point which in line with the type and then the location. So I make a tongue-in-cheek statement to say realestate.com

your last point of call when you're designing this strategy and what it does is gets people to think further than just the location when they're designing the strategy so in this in this example the location is the last point because once you make it your last point you've already got your price you've already got the yield you need and that eliminates a lot of the locations and then when you combine the type of property you think is going to work in that particular location you've then trimmed probably 80 to 90 percent of of the country's locations and then you can hone in on the five or six locations that might work for you and the research behind that which we we obviously do a lot a lot on yeah let's say yeah you did very

well to summarize all of those eight points into that space of time that i i take my hat off and as i think you know the key point there that you made is that each and every one of those eight spheres of influence need to be considered uh collectively if you eliminate or ignore one you do it at your own peril uh so i think there's a there's a real key in that i you know i talk about the it's it's interesting i talked about the eight preventative health vitamins uh that's that's uh different names for exactly the same thing that you've just described uh and and it's the old story if you do if you uh deny yourself of the right vitamins then long term you're going to have an issue you just don't know it at the time and it's very much that sort of kaleidoscope

that you've talked about with all those eight key factors that it as you say it's not necessarily in order but if you don't consider each and every one of them and their impact on each other too because you know you talked about yield uh which which has an influence on cash flow people a lot of people focus on gross yield but but don't really look at net yield which is where the where the truth is and entities are also another interesting issue too i find because there's been a a big push by accountants and others towards trust in recent times and that's okay there's great asset protection and all of that that goes with it but a lot of investors don't recognize that from a holding cost perspective once you do your numbers because you're quarantining

all your tax deductions within the trust and not being able to apportion it against your incomes then normally that's two to three times higher holding costs so it comes back to what's that affordable piece to the individual how are we structuring this whole piece to make sure that we're really honing in on what's right to them and as you say the sleep at night factor that's attached to that so that's a brilliant run through now i know all of that's and more is incorporated in the book sort your property out along with a host of other essential property infos so i guess to wet our appetites a bit further, what are some of the key messages in addition to that in the book and who's the book best suited to, John? Yeah, I suppose having released the book a couple

of months ago, we're now starting to get a bit of feedback on who's been reading the book. And interestingly enough, and I thought when I wrote it, it was designed for someone that was starting out from scratch. If I was to start my journey again, I would want to read something like this. But the more feedback we're getting, it's like, okay, I've been investing for eight or 10 years. I've got a few properties and I took X, Y, and Z from the book. I thought that just sort of put me back on path and kept me focused again. So I don't think it eliminates anyone as long as you've got an appetite for investing in property and whether that be buying your own home or building an investment portfolio. So I suppose it starts with the basics, but then

as the book goes on, it elaborates into more sophisticated stuff that a lot of investors might never get to, but it's just good to know there's some opportunities out there. And I call it a bit of a shield of armor so that if something comes across your desk and it looks all glossy and And Flash, we've got enough knowledge to be dangerous to say, yeah, I don't reckon that's a good idea. That doesn't suit me. Yeah, I love that. And looking at the books in the background there, John,

you're obviously still a keen reader yourself. And, you know, I've really enjoyed the book personally. I'm an avid reader because I think you've got to invest in your knowledge first and keep investing your knowledge because there's never a time you're not going to learn something, even if it's reinforcing something you've heard before but you've forgotten. you know as the old saying you've got to hear something seven times before it actually sticks

well uh i i think uh you know in a very readable and digestible uh format uh you've made that really easy for listeners so uh look i really want to thank you for sharing your words of wisdom again on this quite mission critical subject john and for those that listened in who'd like to grab a copy of the book just go to your website sortyourpropertyout.com and if you'd like to help a bit more help to develop your property investment strategy so that you can actually truly start making money in your investment you've got a couple of options you can either book in with me for a personal solution sessions by jumping on the knowhowproperty.com.au site by just clicking the link in the show notes and there will integrate your freedom numbers

along with your six-step property wealth cycle or given what john says share with us you can join him for a clarity call or a one-on-one coaching session to develop your eight-point plan by going to solverwealth.com.au. So make sure you take advantage of that. Make sure you mention Bushy so that John looks after you and gives you a bit of special treatment. And thanks again for your valuable time on the Property Hub today, John. Pleasure. Thanks a lot, Bushy. 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 world. 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. If you've been involved in the wonderful world of property for any length of time, you'll be aware that the only thing that doesn't change is change itself. And the rate of change just keeps increasing exponentially. And with the increased media focus on all things property post-COVID, with the all-too-familiar catch cries over housing affordability and the rental crisis,

it feels like a day doesn't go by when property isn't the subject of some discussion. So given the recent and ongoing changes in property legislation and associated market trends, what strategies do you need to adopt or maximise your returns in the current Australian property landscape. To answer this important question, and as part of our ongoing special focus series on property management, we're joined by author, property management veteran, a long-term show favourite, Lauren Robinson, a property management trainer, and the head of property partnerships with Longview, who specialise in creating new solutions to Australia's housing problems. So welcome back to the show, Lauren. Thanks very much, Bushy.

This is a great subject to dive into because there is a lot of changing happening in the space, particularly around rental reform and the property management space. So just to set the scene, can you start with a bit of a summary of some recent property legislation changes that are impacting on investors in particular? Yeah, definitely. So I guess in Australia, it's important to note that legislation can vary by state and territory, but there's been some overarching trends and changes that have been impacting the investors nationwide. So a couple of those changes have been around tenancy laws. So, a lot of the states and territories have implemented changes to tenancy laws to provide protection for tenants. So, these are things such

as rent freezes in terms of how often the frequency of rent increases, termination notices, repairs and maintenance, minimum housing standards. So, there's been a lot of changes in regards to that also there have been changes around foreign investment regulations so australia's tightened the regulations around foreign investment um so now foreign buyers need to obtain approval from the foreign investment review board before purchasing so that's definitely had an impact on foreign investors seeking to invest in the australian real estate market we've seen strata title reforms so these have if owners have properties in townhouse or apartment complexes it's important to understand how that's been in fact that has impacted their property

we've had land tax regulations change as well so and that probably particularly affects those owners with high value assets or multiple properties and then in energy efficient standards are another one which a lot of investors really should understand the requirements when they're purchasing properties or new properties in particular and to make sure that their property is compliant. Certainly a lot in there and we could wax lyrical for hours breaking that down but in association with that can you sort of outline any market trends that you're seeing that investors need to be aware of and accounting for then in the context of all this moving forward? Yeah I guess a few things we've seen over the last probably year in particular is a shift in

what tenants are demanding from a property. So I guess a couple of the factors that we're seeing is changing demographics. We're seeing a lot of, I guess, generational tenants combining in a property. And that can be coming down to lifestyle preferences, affordability, economic factors. We're also seeing a demand for home offices in particular with a lot of remote work occurring these days and outdoor space. So, tenants are often seeking to be near parklands or wanting to be able to have a larger yard. So, they're just a few things that we're seeing in the market. We've also seen regional property boom. So, and again, coming back to affordability, the lifestyle appeal that people are experiencing from having a regional property, remote work

opportunities. So I guess if you're an investor considering those regional markets as well and but also keeping in mind factors such as what the local economic growth is, what's the infrastructure development and the rental demand for that particular area. A few other things that we've seen is around sustainability. So a lot of investors and tenants alike are pretty conscious of wanting to make sure that they have a positive property influence. So they're looking for things like solar, solar panels, you know, water tanks at a property, so energy efficiency in terms of, you know, lighting and things like that.

So that's been a recent demand as well from tenants. And I think also rental market dynamics, so really just understanding vacancy rates for particular areas, rental yields what's the rental growth and how that impacts the return on the investment and also investors really should monitor those rental market trends to make sure they're really making informed decisions when buying but I also think surrounding yourself with experts in the industry to guide you on that as well is really important and likewise interest rates so affordability, making sure that with the changes and fluctuations in the increased interest rates

that we've seen that people can still afford the property and how's that impacting on their finances? Well, there's a multi-pronged world of opportunity in the change you've just danced across and it'd be great to deep dive on those at some stage. But in the context of the rapid change and the level of opportunity that's emerging from all that. What sort of resulting strategies do you think investors need to adopt to accommodate these legislative and market changes in order to optimise their returns in the current property landscape? I guess I just touched on one of those, but really making sure you're staying up to date and understand what's going on. So if you have excellent professional advice around you, so you have an excellent mortgage broker,

great financial advisor, really good property manager or real estate agent surrounding you, that's pretty imperative to understand what's going on in your market. And I think every investor should really understand what's happening and stay informed. Other things to consider would be possibly diversifying your investment portfolio. So, you know, whether that's through like commercial or residential or mixed use properties, but also diversifying geographically to capitalise on that regional growth opportunities focusing on value adding opportunities too so perhaps it's understanding what those tenants are looking for in a property and then renovating to make sure you provide that or also really understanding what the tenants in your area are looking for

because you don't want to be over capitalizing or spending money on an asset when you know perhaps it's not going to return any like an additional rent or perhaps resale value won't be there if you spend that money. I think embracing sustainability as well. So like I mentioned, electricity these days is skyrocketing. So also, you know, tenants are seeking things like solar panels, water tanks, like everyone's looking for ways to cut costs of living. So tenants are actually prepared to pay more these days or may prefer a property with solar as opposed to not. and adapting I guess like as property managers making sure that you understand as an investor you understand what the property manager's practices are so there's a lot of technology

out there in terms of making sure that there's fast response times for tenants really effective tenant screening proactive communication to attract and retain quality tenants so I think that's really important to understand what your property manager's processes are and are they leveraging technology to make sure your tenants have a great experience and also you do as well um yeah beautifully said and i guess it's all reinforcing that there is considerable variation across the country by state to state and then within regions in terms of what you need to know and what you need to be looking for and that also reinforces your very good point about making sure you've got independent professionals in each and every area that can add some value to that

discussion so that you know what sort of property works for what sort of tenant and what sort of investor are in each and every location. And so I just wanted to thank you for drawing our attention to these rafts of property related changes, Lauren, and the resulting strategies we need to be adopting to take advantage of all this, because it's clear that continual change creates the greatest opportunities for creating creative and quick thinking opportunities for property players. So if anyone listening would like to know more, we suggest they reach out to you at longview.com.au forward slash Property Management Queensland or if you're a property management professional they need to actually contact you at laurenrobinson.com.au so thanks

again for joining us and thanks for your time on the Property Hub today. Thanks Bushy. Are you curious about harnessing your super for property investment? Propel your future with the enlightening online seminar, The Ultimate Masterclass to Self-Managed Superfund 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. And that brings us to the end of this week's show. Make sure you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast, both delivered to you each week by subscribing to the Property Hub now on your favourite podcast player or wherever you're listening to or watching the show. Join the conversation anytime on Facebook at the Property Hub Collective. Thanks to our supporters and content partners, Realty, BMT, Know How Property Finance, Get Rare Property and DePiro Marketing. I'm Kevin Turner, and on behalf of Bushy and the Property Hub team,

we look forward to seeing you again next week.