Property Hub - Investment Insights & Inspiration - Realty Talk: Property Hub Collective Q&A

Episode Date: February 10, 2024

This week, we feature highlights from our Q&A webinar from earlier this week where our panel (Bushy Martin, Rasti Vaibhav and Eddie Tchigique) answer questions about Western Australia and a potential imbalance between investors and owner occupiers, whether to chase yield or growth or both, what is on the horizon if Labour get Negative Gearing under the microscope again and we answer a couple of listener questions as well about data and getting cashflow. NEW – join our Facebook group, The Property Hub Collective: https://www.facebook.com/groups/1857513011165686 Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail]  See omnystudio.com/listener for privacy information.

Hi and welcome to this week's Realty Talk show. Well this week we want to feature some of the highlights from our Q&A webinar from earlier this week where I invited our panel to answer questions about Western Australia and a potential imbalance between investors and owner-occupiers, whether to chase yield or growth or maybe both, what's on the horizon if Labor get negative gearing under the microscope again, and I have to say that the panel really don't agree on that issue. We answer a couple of listener questions as well about data and getting cash flow. All that coming up in the show shortly. Hi, if this is your first time with us, welcome. You're going to find us on all podcast players and through the Southern Cross Austereo Network. If you like the show,

make sure you hit that subscribe button. Help us to continue to bring you the best guests every week. Join the conversation too anytime on Facebook. You'll find it at the Property Hub Collective. We'll be back in just a moment as we kick off this week's show. 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 specialists 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 from Property Hub on all podcast players. Okay well let's start this week's show by introducing our Property Hub Collective panel. Eddie does the honours for us. We've got Bushy Martin. So Bushy is the founder of KnowHow Property and he's helping hard work in Aussies define and achieve their financial freedom. We've got Rasti Veba.

He was with us from India last summer, I believe. He's now back in Australia. He's the founder of GetRare Properties. They're much more than a buyer's agent and using a holistic approach for everything property investing. And, of course, we've got Kevin Turner. Kevin is going to be the driver of this show once more, and he's the man behind the hugely popular Property Hub podcast

that comes out every week. Okay, team, well, let's get cracking. Always at this time of month, there's a lot of speculation about the RBA announcement and conflicting thoughts about whether or not it's going to move up, down, sideways, stay where it is. And I thought rather than predict what is likely to happen, can you just give us a bit of an idea about what the board considers when they make that decision? We might kick off with you, Bushy, what do you reckon? Absolutely, mate. Well, there's really six key indicators that the RBA takes into account.

three major ones which include the rate of inflation and the rate of inflation and perhaps i'll just go through them quickly and then i'll put some detail but the rate of inflation is the key driver unemployment levels tied to wage growth is also an important thing they have a look at and then beyond that they look at the overall global and local national economic outlook they have a good look at indicators around consumer and business confidence and of course the state of the housing market does play very squarely into their decision making. So I think, again, the good news from where we sit compared to what we were talking about in our first get-together, the target range for inflation is in the sort of 2% to 3% range.

The unemployment rate target there is around 4.5%, and we're heading in the right direction on both of those major drivers. So I think the current inflation rates are just shy of 5% and falling, which is good news. And the unemployment rate is currently sitting around the 3.8% to 3.9% with the target of getting it up to 4.5% before they seriously start to think about starting to reduce rates, which, as you've already said, Kevin, every man and his dog's got a view on where that's going. But if you round up the medians on that, there's a pretty fair chance that somewhere between September

and December this year, we'll start to see our rates drop again. Rashi, your thoughts on that? Among those expectors which you mentioned, I would also think that the play of the currency would also have a bit of play, especially when the US starts cutting their interest rate on their side. Yeah, it's an interesting perspective you bring there. I think, Rusty, and that is that the international influence,

and I think Bushy really took us through a lot of the local triggers. Does anyone want to comment on how much of an influence, you know, the RBA will look at what's happening overseas, or is it purely what's happening within Australia? I'll jump in real quick. I think, I mean, first of all, it wouldn't be an easy job to be deciding on all this because there's so many variables and so many things in play.

So if you get something right, then something else falls apart. It's just, you know, economics, I guess. But yeah, the US and Europe, obviously their rates went up before our rates and therefore the cash rate went up as well. The inflation is coming down pretty dramatically. Obviously, the Fed, interestingly enough,

everyone thought that they were going to start cutting in March. It seems like it may not be the case and they might wait a bit more and see what happens. So, yeah, no, it is interesting. I mean, it's not different to anything. I guess the RRB, as much as they're looking at all the indicators that Bushy said, you know, like Rusty mentioned, they would be looking at overseas because they're ahead of us,

so to speak, and therefore see what they're doing and how they're doing it. We have had a question come in from Tasmania, actually. Welcome, Jonathan. It's good to have you on the show too. Jonathan asks assuming that I invested in residential property how will I ever be able to get the cash flow needed when the time comes? Rasti might go to you on that one. Yeah so if the question is that how do I get the cash flow out from a residential property investing so it's

basically what I'm hearing is that how do we go about getting some positive cash flow out of the property or maybe it might be the lump sum which probably comes down to the selling of the property I guess so I'll probably hope that it is more of a former interpretation which is like how do I change it into a positive cash flow property when the interest rates are so high so I've always said that it's it's property investing especially when we are really talking about residential property investing is more so for the capital growth as I guess the investment philosophy but for someone who's already invested now it's really a matter of really taking care of the property and in terms of maybe doing some refurbishments maybe some doing some bit of

renovation or maybe thinking about like i'm not really a big fan personally of a short-term rentals because it really depends on the locality and whether it's really suitable but for someone who has actually run a bnb business that has really really worked for them but again it's really a high strategy high risk strategy out there um but there's also a rooming concept that How do we go about changing the current four-bedder into more of a, I guess, renting the room individually? But again, there's a lot of compliance required. The easy one out there would be more around, I guess, trying to uplift the property, whether it's a cosmetic renovation, maybe talking about just checking the rates, going on the rental rates, because in good parts of Australia, rents have really gone up.

Recently, it's actually a matter of catching up on the market rental. um as um that could be one thing and other aspects would be uh to really go and negotiate with the bank whether what sort of rates we are talking about as an example like are we financing a whole loan a book and the current lenders are really when you're talking about discharge form they're like no no hold on we'll give you this much uh interest uh cut and um so that that certainly is one of the opportunities whereby we can really talk to a mortgage broker maybe someone like bushy out here uh that what is really the interest rate that a competitive market rates that we can really go for negotiating on them um and maybe increasing the rental in the property this is a conversation

i actually have with investors just about every day of the week guys and very simply i think there's a big misnomer in the property investing sphere that you just invest in properties pay off the debt and live off the rent because you're never going to be in a position to retire on the rent so the real key here and it's what i call a wealth by stealth approach where you you go for capital growth and make it affordable through clever structuring and then you convert your portfolio to cash flow in the couple of years before and a couple of years after you're looking to stop work or reduce work because what property is very good at doing in australia given it is the highest growth asset that people can get their hands on is building that nest egg level

but uh so when we get into that run-up in the financial years immediately before and after and again you need a really good property accountant and a really good financial planner to help you in this transition to retirement piece then you need to rationalize those high growth assets and convert them into higher cash flow assets so in a typical example uh most investors when they're going for growth they will secure three or four bedroom homes in tightly held high demand suburbs and then when we do that transition to convert to cash flow we do a rationalization a partial sell down an elimination of debt wherever possible and then convert that nest egg and do it very carefully so we're not giving too much back in capital gains tax or other tax impacts

and convert them then into very simple high yielding cash flow assets that don't take a of your time to manage like a mix of index funds it might be commercial properties or high yielding units and apartments so it's just about being careful about how and when you convert those assets to minimize those tax impacts and then make sure you've got the right team around you well in advance and and the key people there are the accountant the financial planner and an investment savvy savvy mortgage broker to then make sure you're pulling the right trigger at the right time to keep as much of that hard-earned in your pocket and then convert that into low required managed cash flow assets that are going to actually fund your lifestyle ongoing.

So I think the key thing while you're holding growth properties is to be very clever around the structuring of that property so that it becomes affordable growth. And what I mean by affordable growth is if you've bought in the right entity, if you've structured the finance in the right way if you're taking advantage of depreciation and you're using things like withholding tax variations and other exercises that can really smooth the cash flow holding of the property so it becomes sustainable to hold that property long term then suddenly it's not impacting on salary savings and lifestyle and you can sit back and allow that property to do its thing and then convert it at the other end so now what you buy the property in how you set up the finance and

who you finance it with, making sure that you're buying properties that not only have the best yield you can get, but also you can apply the depreciation benefits to it, and then using things like the withholding tax variations where, you know, it's not uncommon for a residential home to give someone roughly $10,000 back a year as a tax credit. Now, if that is converted to rather than a lump sum at the end of the year, but you get that back every week

with your pay that's 191 bucks extra you've got in your pay packet that can go a long way to smoothing any any deficit or impact that it's having on on that ability to hold the property long term so uh so yeah does that sort of answer the question kevin oh well and truly man and i jonathan i i hope you made a note of all that there's so much gold in those in those comments from the team and when we return i'm going to ask the panel about the potential imbalance between owner occupiers and investors in Western Australia. Stay with us. KnowHow has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to

invest in your freedom? Visit knowhowproperty.com.au. Realty Talk exclusive to the Property Hub. Let's rejoin the panel, as I ask, with a lot of noise around investing in WA, should we be worried that the percentage of investors versus owner-occupiers is being skewed? Let's start with Rasti. Should I be concerned whether there's a tipping point coming over? Of course, I should be concerned. would there be a the display between uh home occupiers and rental uh renters of course that's certainly one of those data points that the question that you were talking about before kevin is suddenly we look at but i think i'll probably take a step back and just first of all make a comment that there's no such thing called wa market like there is no such thing

there's i'm going to buy our state like i'm not going to buy our etf equivalent of market so it really comes down to where in wa we're referring to what type of property we're talking about what is the segmentation or fragmentation of that market is and then what we're looking at of course it goes back to the previous point that when you're buying what is it that individual is looking for and then are we able to get it so when if you really think from perspective of a buyer yes we need to be mindful of the return expectations as well as the risk around it so yes there is a huge uh i guess return expectations building up for obvious reasons uh which probably we'll talk about in a minute about supply and demand and how do we go about tracking

it infrastructure spending and whatnot but when it comes to the risk of course one of those elements that we look at is that how much number of like as a breakup of that small fragmented market what is the split between renters and owner occupiers typically as an average if i already talk about the statistics australia wide it's pretty much one third one third one third as in one third fully owner occupied properties one third tenanted and one third when there is a mortgage going on now for those who uh want to understand the basis why it's important is that when it is a rising market it doesn't really matter how much how many renters as a percentage are there but when the market is going sideways or going down backwards then if the economy is not

doing so well and as an example if i'm an investor and i i have my own home to live in and i am in dire need of some finances or I need some cash, the property that I'll be selling of the two would be my investment property. Now, an investment property, investment property which is of investment grade is probably very much liked by another investor. And the reason that I'm selling the property might be the reason that the other investors doesn't really get too excited about it. So essentially what I'm really referring to here is that when the average is about one third of property investors in the market as an average when it makes up kind of a balance it is good as a as a matrix that when the number is a bit lower and then the risk gets higher and

higher when the renters build up in that market so specifically coming back to the question should we be worried about it yes we should be worried about it but it's not being worried about getting worried about the wa market it's more about the particular segment the particular neighborhood or even not even the suburbs the neighborhood the street that we are talking about that really uh if we as an buyer's agent we tend to go for the properties of course which are in the right region whereby the supply and demand equation is more in the favor of long-term growth as well as the sentiment is playing in favor of the buyer because we don't really want to just buy for the long-term benefits but also for the sake of that kicker the momentum play of the

short to mid-term growth as well now while we are eyeing the growth on one on one aspect we need to be mindful of the risk we are happy to take as a risk adjusted returns now if there is a lower percentage of renters in that area we are very excited but if statistically yes the thing is that talking some data like a couple of years ago almost one-tenth of the property investors were buying in wa but for the reasons of the the affordable affordability the high yield rate the infrastructure spending lots of investors really took notice of wa market now almost one of the three investors are buying in the way so of course the split or or the number of renters are growing but it's not to the point whereby it's close to the tipping point i mean it's far beyond

that point so i'm not too worried personally and again it's not really about wa it's more about the particular neighborhood that we should be looking at because their pockets whereby we will not touch for the same reason but then then statistically there are very good areas out there where we will happily buy for ourselves or for our clients very good team um i'll keep moving on because shortly i want to discuss lending um and uh as i said at the top of the show lending constraints and their impact on investors just before we do that can i can i just throw it open we'll start with you bushy i think with rates as high as they are um should i be looking at high yield or high growth or is it possible to get both yeah it's a it's a good question and again

And I think rates are a bit of a misnomer because they're only one factor in a whole kaleidoscope of factors that you need to take into account when you're investing. But in a sentence, again, reverting back to what I mentioned before, with a wealth by stealth approach over the long term, you need to go for affordable growth and then convert to that cash flow. So most investors who are particularly investing in the first five to 10 years need to build their portfolio by focusing on growth and there is a real danger and I've seen a lot of investors in the past make this mistake where they chase yield but because the yield ultimately you know

once you take it all of your expenses it's probably going to put somewhere between 10 and 50 dollars a week in your pocket but at the same time it's chewing up a big chunk of your buying capacity which means that whether you're buying yield or growth you're probably going to max out at two or three properties for most people in the current environment. So you're really going to, and if there's no growth attached to that high yield property, then you're really hamstringing yourself to the point where when it gets to the other end of the journey, and you haven't got that nest egg that you convert, then times are going to be pretty tough. So I don't think it's just a rate discussion. I think you've got to look at that more overall in the context of all the factors

that we've touched on already tonight, but I would always go for growth and then convert to cash flow later on, but make it affordable by those things that we mentioned before. So make sure that you're at least getting it as close to cash flow neutral as you possibly can using the right ownership entity

through a good accountant by making sure that finance is really cleverly structured both from a risk and capacity and a cost perspective and then using depreciation and the benefits that a good accountant can bring to the table in terms of the cash flow exercises to make sure that you're still getting reasonable cash flow while you're securing a property that's going to go up in growth long term.

Yeah, the message is quite consistent, isn't it? Those key areas that you talk about there, Bushy, and I've heard everyone on this panel say very similar things and, you know, it's a fine balance, but the formula doesn't really change. Rasti, did you want to say something? Yeah, I just want to, first of all, agree to what Bushy has said, but also have a different perspective on that, if I may.

Now, we are really talking about, I guess, a growth asset here, which is typically we should be buying for the growth. But of course, because there's a leverage involved that we are borrowing money, the holding cost is a bit higher. So we need to be mindful of those expenses or out-of-pocket expenses. And that's where the concept of affordable growth comes into play, which is referring to. Where I would like to add on to it is that what's affordable to me might be a bit different to affordability of someone else. So I would be really bringing that personalization of that someone who's trying to buy, and that really is dependent on their circumstances, their risk appetite, their cash buffer, their, I guess, surplus sitting in their pocket, while we discuss whether it is good for them to buy for the capital growth or for the high yield.

As an example, for someone who is probably earning a bit decent income and paying, say, 40% or 50% marginal tax rate, and they have surplus equity or money sitting in their pocket, I would say, and they're early in the stages of wealth accumulation, I would say, hands down, go all in for capital growth kind of audited property. for someone who is in their preservation stage whereby they build their asset, they are really very much relying on the cash flow, but they are about to go in the stage whereby they have to rely on the cash flow and they're about to switch from accumulation stage to preservation,

I would be saying hands down to go for cash flow-oriented property. Depending where the person is and the affordability definition, I think it should be more strategic around it. Eddie, did you want to add something to that? Yeah, just as from an investor's point of view, I guess, and I mean, everyone on the panel is an investor, I guess I'm probably the freshest of all, I would assume. So it's hard to have a long term view sometimes. Because, you know, what you see is every fortnight, you get paid, you see that cash in your bank account, you see your bank account balance, I guess. And so, but it comes down to the strategy and growth, definitely, you know, 100%, you got to, you know, you got to grow it. an asset to whatever it needs to be and then you can

think about cash flow so 100% agree with all this. I guess it's not easy and it's a matter for advisors to make them visualize what it looks like so that they can get a picture. We're not very good. Human beings aren't very good

typically thinking 15-20 years ahead. It's too far away. I've got a thousand problems today or tomorrow and that's what I need to deal with so so that visualization is paramount to, you know, so the investor understands what they get themselves into, I guess. Rusty, yeah?

I just want to add one more aspect of it because we tend to overlook that aspect. And that is that not, I mean, if you figure it out, what the current exact profile of that property should be, we need to be mindful that there's a portfolio approach. We don't really have to buy all the properties with the same profile but rather go with the element of risk diversification by buying properties of different types.

As an example, only as an example, if I buy a one cash flow oriented property and then I buy another property which is capital growth intensive property, but when I really take it as a portfolio, as a combination of the property, I'm actually driving smack in between, which is really giving me the balance

or the combined effect of a balanced portfolio. So I guess it really comes down to what we were talking about as strategic thinking and then having a right brief for an individual property and how it plays out in the portfolio based on the individuals or the family circumstances. So it's a portfolio approach as well. Property needs to be taken into account with the existing portfolio and what they will be buying eventually later on,

along with their risk on their jobs and other aspects as well. I think that, yeah, flowing on from all of that, You make a really good comment at the investor level, Eddie, and that is to really help you with that visualisation, make sure you're working with independent professionals who are actually putting numbers around what this looks like today, five years, 10 years, 15 and 20. So you're making fully informed decisions

on what's the property likely to grow, what's the actual net cost per week that this property is going to either put in my pocket or burn a hole in my pocket in year 1, 3, 5, 10, 15 and beyond. so you're going in making fully informed decisions rather than a stab in the dark and the fear that goes with well i'm not really sure how much this thing's gonna cost me long term so again i can't reinforce enough the need to get surround yourself with independent professionals in each and every area who are active investors themselves who can actually put numbers around this uh to actually

give you that visual illustration of exactly the best worst and likely case that's going to happen that property. And then you're going in with a pretty good idea. And make sure also that before you invest, you've got a substantial rainy day reserve through either equity or savings. So if you lose your job, you get hit by a bus, something happens to the property, you're never putting yourself in a situation where it's financially scary, and you're not able to maintain the property and you're forced to make a knee-jerk decision. When we return, the panel will discuss investment hurdles caused by lending constraints and if now is a good time to consider other investment categories. Stay with us. Hi, just before we go back to the show, I want to spend

a few seconds and tell you about a book that was sent to me that's now become my go-to reference when I'm looking for inspiration about property investment. You know, sometimes it's not about knowing all the answers. It's certainly more important to know what questions to ask. This book by Rasti is called The Property Wealth Blueprint and it's one that you don't read just once and then put it away. It stays out as a reference. It's a book that you go back to time and time again as I do because it's packed with personal experience and with great examples of how to get property investment right. It's very frank, it's to the point.

And as you can see here, I've needed to bookmark several points. And I can tell you that it's a constant companion on my desk here. The remarkable thing is that it's absolutely free on Rasty's website, getrare.com.au. Get Rare, it's a gateway to a richer life. The website there for you again,

Get rare, r-a-r-e.com.au. So get this book, get it for yourself. This is Realty Talk, powered by realty.com.au. As we join our discussion and the question, due to lending constraints, should I look now at deploying my investment dollars somewhere else? Bushy gets straight to the point.

Simple answer, yes. If you're just leaving your savings in a savings account, you're actually losing money. so you're far better to invest in something that's going to increase either your equity base and returns. Just make sure that it suits your risk profile. Don't put all your eggs in one basket. Invest in things that diversify and also you can get access

to that money reasonably quickly without significant penalties so that when conditions change, you are in a better position to be able to leverage into property. So the answer is yes? Yes. Yes. Eddie, your answer? Yes, as well. And to Bush's point, I think you've got to be very aware of what is your long term strategy. And therefore, you know, am I going to need the money out in a year or two when the landing is easier or not? So it's very important to have the long term strategy, regardless.

Very good. Rashi, is it unanimous? No, my answer would be, yes, we should be diversifying it, but only where you know what you are doing, where you're investing, because investing for the sake of investing is really a bad idea. Having that, again, going with the approach of getting the right professional who can guide you through is the key here. And also, let's not undermine the power of offset account. When we have enough cash, let's park it in, which is a risk-free returns on that particular cash balance. And so my answer would be depends. Depends. Yep, fair enough.

That's pretty balanced, and I'm happy with that response. Thank you, gentlemen. I want to get to the question that's been asked now that I mentioned earlier about data, and then I also want to get your thoughts on what Labor's going to do or not do with negative gearing. But before that, let me ask this question that came in from someone called Just Learning, and that's wonderful

because that's what we should all be doing is just learning. uh when do i um sorry where do i start investing with a plethora of data and info i'm super confused as to where to even start what a what a great question great question rasty what would you say uh um i'll probably reiterate what what you were saying is uh surround yourself with uh among successful people out there because your net worth is your net wealth and your net wealth is your net work. So there's heaps of data. The challenge is actually that because it's so much, it's conflicting. It gets into the problem of analysis paralysis. And sitting on sideline for long, there's a huge opportunity cost. Having said that, without really knowing what you're doing,

it could really lead into a very costly mistake, which is not good either. So it's really about a mindset and understanding that someone who's doing it successfully, professionally not just for themselves but for for this as a profession uh helping others is probably the best way there are quite a few education programs but my experience having done them myself unless you put the effort to go out and do it because it's like swimming you can't you can do all sort of classes online and whatnot but unless you go in the pool try some strokes that's where you learn but the coaching that's what you learn is very very critical saving the property investing looking having the lens of what you look at is one aspect but there's so

much of data and conflicting views out there yeah it's like picking up the newspaper isn't it one day it's a boom next day it's a bust you know you just it really is quite quite challenging um eddie how do you get around that man what do you do yeah who do you rely on that's where we were probably seven years ago we had no idea we knew we wanted to do something but we just had no idea where to start so so i get getting some good advisors definitely it's paramount i mean you i think especially in this the the landing environment that's been the case for probably the last yes six seven years it's uh you've got so you've got a limited amount of bullets to fire so you want to fire them well and there's only one way to fire them well is to get people that have done it for

many years that you know that's what they do end of story i mean like russie said and it works for probably 1% of maybe, you know, 1% to 5% of investors, maybe, when you do a course and you actually do the hard work and you succeed with that specific course, whatever that may be. For most people, they do the course and then they – I mean, there's a lot of work to do after that. It's not just doing a course. It's like anything.

Nothing happens easily. So, for me, definitely getting good advisors, a good team, and just following the process. Yeah, and don't be afraid to make a mistake. is the thing i'd say because you you know there is a lot of information out there you could easily become paralyzed if you just overanalyze and become too conservative i i think you know don't be afraid of making mistakes but learn from them uh that that's i think that's the best thing i could say my own practical experience i guess i i'm bushy sorry did you want to make a comment

on that or yeah and i think it's all been said but very quickly where would i start with investing I'd invest in my knowledge and yes I wouldn't over bury myself but I wouldn't rush out and buy the first property that I got my hands on because you know enough to be dangerous and you don't even know what you don't know at that point in time so you know if I take my own example and you know I'm old and crusty now guys as you know back in the day and this is back in the 90s there was there wasn't anywhere near the amount of information that you can currently get your hands on but I read every Australian property investing book that I could possibly get my hands-on i jumped on the good old robert kiyosaki had the cash flow game then i bought the game and

the whole family played it so it felt like we were actually getting our hands dirty with the the trials and tribulations of what property was about and then i made sure i surrounded myself with really good players who'd done what i wanted to do but i'd also say that make sure that you don't ignore your gut so there's a lot of people who talk a really good story when it comes to property, but if it feels like bullshit and your gut's saying, this doesn't feel right to me, honour that and make sure that what you pursue, because there's 1,000 different ways to make money in property, whatever you do pursue feels right

to you and then surround yourself with those people who've done that. Great advice. Great advice. Hey, guys, I want to get to the final topic. We've got a couple of minutes left to go on this broadcast. I want to ask you about Labor and, you know, we've heard some rumours and some little whispers of recent about whether or not they're going to play with negative gearing.

And I sort of think back last time this came up, it was a massive issue. Is it likely to rear its head again, Bushy? In a nutshell, the only wild card here is we're dealing with politicians, and sadly I don't have a high opinion of most of them because common sense doesn't seem to feature a lot in the decisions they make. But with Albo and the Federal Labor Party breaking their election promise on modifying the stage three tax cuts, it certainly opened the door to speculation around having another crack at it.

But I also note that the Treasurer and Albo were very quick to knock this on the head, because they know that they actually lost two elections in 2017 and 2019. and they will know that it's political suicide to do that at a time when they've come out with massive targets of building and adding an extra 1.2 million houses to the market. 95% of properties that are provided for rental and housing are by private investors. And the numbers there are pretty scary in terms of their sway because, you know, there's about 2.5 million property investors

in the country, and that means a lot of votes. So I think both from a property supply perspective and also from a political expediency perspective, I think that I could be proven wrong that they're not dumb enough to have another crack. Well, that's all great common sense, but we're not dealing with people who deal in common sense. But, like, you've only got to look at, you know,

how Albo's switching around his decision of breaking that promise and what that's done to the polls. I mean, they've increased in popularity. So they're the sort of messages, unfortunately, that politicians listen to. Anyway, enough from me. That's on my high horse. Eddie, your thoughts?

Yeah, it's got to be interesting. I don't think they'll touch it anytime soon, but I could be wrong, I think. I mean, the politicians have properties themselves. they'd probably benefit from the negative gearing themselves. But, yeah, who knows? I mean, I think it'd be political suicide as well because a lot of mums and dads have one property and if you cut the negative gearing,

it's a disaster for them. So, who knows? As Bushy said, they're as volatile as you can get. Hey, don't you watch the news, Eddie? Like, we're all greedy investors. Don't you know? Oh, that's right, yeah. You know, we're just wealthy.

Anyway, Rusty, your thoughts? Yeah, my thoughts are that just recreating the statistics around it, like how many people are actually getting housed in some investor's property. So it's very unlikely even as a common sense doesn't, I mean, the whole thing about taxation, it's basically, or any, it's as a god of hand comes in, rather than the economic disbalances. So while we have this, you know, whether we really talk about stamp duty or the negative gearing, but because it has been so much a norm here in this country, that's how the economics has played out. So if we take that out, the whole reason of, I mean, there's a majority of people who buy investment property because of the tax minimization. So I'll probably comment on that, what it really means. If it happens to go that path of not following the common sense, is that my take is that it will have only an impact in the short term

when lots of, I guess, investors will take away their propensity to buy investment property because they might be open to buy, for example, owner-occupied home. Instead of going rent-investing, they might go and buy their own home or buy for positive cash flow properties, which are probably getting more rare. So the demand of investment properties will go down, but that will only be in short term

because then the supply will catch up and in the sense that they will also bring it down, which is probably, I guess, it will become unaffordable for a common man. So that's the reason why it would not be, I guess, a sensible decision in my opinion to take it away. But if that happens, it will only impact the market in the short term.

For anyone who's buying for the long term, which property investing should be for, I don't think that should really get them worried or even an eye out of that because we are buying for the long term and long term it will balance out anyway. So while I think it should not happen, it should not really bother a regular investor. Gentlemen, thank you very much.

And we look forward to catching up again real soon. Thank you so much. Thanks, Kevin. Thanks, everyone, for joining in. Here's how Realty's discovery search works. Now, think of AI as an assistant on your real estate journey. How AI works is by using algorithms and data, the words that you use to describe the type of property you want.

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Thanks to our supporters and content partners, Realty, BMT Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. I'm Kevin Turner and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week.