Property Hub - Investment Insights & Inspiration - Realty Talk: When to plan your exit

Episode Date: July 30, 2023

Airbnb certainly changed the short term accommodation market and arguably caused a tectonic upheaval in the availability of rentals for long termers. Currently there are over 100,000 Airbnb properties listed in Australia. A more serious problem than supply has surfaced. Hear Bushy discuss it with Juls Rolnik. There is a lot to be said for planning your exit.  That especially applies to investment property and tax.  The expert we talk to today suggests planning before you even buy.   There is one way to never make a mistake - don’t do anything!  That really isn’t the answer and in fact sometimes the best way to learn is by making mistakes.  Fear of failure is one of the major reasons to sit on your hands but today we hope we can help you overcome that fear and move forward.  Arjun Paliwell joins Bushy to do just that.  NEW – Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

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. Hi and welcome to the show. Realty Talk, one of the shows on the Property Hub, which is distributed by DM Media. You're going to find us on all podcast players and, of course, through the Southern Cross Austereo Network. Realty Talk is Australia's longest-running property podcast with over a decade of presenting

property investment insights, inspirational stories and unbiased advice from Australia's top property experts, leaders and analysts. So what's in today's show? Well, Airbnb certainly has changed the short-term accommodation market and arguably caused a tectonic upheaval in the availability of rentals for long-termers. Currently, there are over 100,000 Airbnb properties listed in Australia. But a more serious problem that supply has surfaced, and Bushy discusses that today with Jules Rolnick.

Really good point that Sonia took instant booking off the table because I originally the years I didn't have instant booking and then I thought, oh well I'll do instant thing and my god that caused me so much grief also on today's show there's a lot to be said for planning your exit that especially applies to investment property and taxation and the expert we talked to today in the show suggests that you should plan before you even buy holding it if it's for a long-term purchase for wealth creation and for retirement there's nothing that beats it and finally in today's show there's one way to make

sure that you never make a mistake, isn't there? Don't do anything. But that really isn't the answer, is it? And in fact, sometimes the very best way to learn is by making those mistakes. A fear of failure is one of the major reasons to sit on your hands and do nothing. But today, we hope that we can give you some inspiration to overcome that fear and move forward. Arjun Palliwell will join Bushy to do just that. Short answer is yes, it's still a good time to invest. At the end of the day, you follow those rules around personal buffers, finance management, and do what you can within your capacity.

You're one property less you need in your plan to long-term financial freedom. Hey, if you like the show, make sure you hit the subscribe button and help us to continue to bring you the very best guests. We'll be back in just a moment as Bushy Cook kicks off this week's show. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry.

They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Realty Talk and your host, Bushy Martin. Just over 10 years ago, Airbnb arrived in Australia. And since then, millions of international and domestic travellers have booked stays through the platform. It brought with it a series of profound shifts and changes, from a new willingness to do business with strangers over the internet and sleep in someone else's bed, to giving anyone the ability to live like a local in someone else's town.

As a result, there are now nearly 100,000 Airbnb listings across the country, and while most guests will respect you and the property, as a host, you always run the risk that you may encounter a difficult guest that has the potential to undo all of your hard work through a bad review, as reviews are your reputation and future currency for the continued success of your property. So how can you effectively handle difficult guests? Well, to discuss this short-term accommodation mission-critical subject, we're joined by Jules Rolnick, an Airbnb super host and the author of her award-winning book, Secrets of a Super Host, How to Become an Airbnb Rockstar. So, welcome back to Realty Talk, Jules. Hi, Bessie. Great to have you back on. This is a subject that a lot of people really don't think enough about when it comes to short-term accommodation, Jules, so I'm really going to enjoy deep diving here. But to kick things off, from an Airbnb super host perspective, who would you class as a difficult guest in terms of what they do or don't do and when?

Well, firstly, I have a whole big chapter with highlights full of difficult guests. Look, it's really interesting because from my perspective, I could always tell pretty much straight away. As soon as you've got a request, you could, from my perspective, you could tell because people that are going to be a little bit challenging usually go into a lot of detail and they want to know a lot of things. They usually ask, can I get a discount? They ask about 20 questions on all different things. Like, you know, I had one guest who even got down to, you know, do you have floaties? She messaged me at like 10 o'clock at night or 11 o'clock at night. where are the floaties where can i buy floaties you know for my child to go to the swimming pool

the next day um but you know they will just be um relentless at um what they're kind of quite needy so yeah you can usually you get it you get a vibe for who's going to be quite challenging yeah no it's a very good point there so what's the best way to deal with difficult guests then from your experience jules okay so you've got to remember everybody wants to just be taken care of and they want you they want to know you care about them so the one thing i've learned which is absolutely gold and i swear by it is you always ask the person what can i do to help that diffuses a difficult person like that they're on a rant they're raving and i've had a few let me know you and you just say what can i do to help you because you can

do all the things you know you can try and do this and try and do that and don't go into a long depth conversation with them because they will just keep coming back at you you just want to ask them how can i make it better and i swear to god i've had people going on and on and they go on about the little things and soon as they know that you you care oh actually what can they do to make it better it diffuses them so that's my first protocol which usually works pretty well yeah and what what i also learned along the way which i think this is a good one with regards to airbnb you can't if you um this is for example if someone has um requested to stay and you know this person's going to be quite difficult,

you just pick that up, you can't go back and say, oh, sorry, you're annoying, I don't want you to stay with me. It doesn't cut the mustard because review the accountancy, and this isn't about a review, but Airbnb will be like, why are you not hosting that person because they're annoying? Well, that's not very good. Let's put a little mark next to your box and your ratings will start to come down.

So, this is a little secret, which, you know, of course, you can learn more about that in my little book. I would, if I knew that somebody was going to be challenging, and I remember one particular couple, they were older, they needed support. And even though I state in my ad, not there to meet and greet, most people, God bless us all, we don't actually read. and see so we're looking oh yeah that's great and then we'll ask the question anyway so um there were all these things that just weren't going to suit them so what i did i went to back to the person and i outlined why look you know i don't feel my airbnb is going to suit you because i you know a there's um i'm not there to meet and greet there's stairs sometimes the lift doesn't work which is the lift didn't work and there was two two slides of stairs um so for these reasons

i don't think my apartment will be suited and i also want the extra step which if you go that little extra step it's like one percent it takes two seconds i looked up a couple of properties that i thought would be suited to them and um even i think a hotel that had concierge and so forth and they were so appreciative and they said great thank you for that they didn't come on the flip side i have moved heaven and earth to with some guests i you know i'm trying to do everything and say everything that they want on a date no no i'm i'm staying and so then i think well and i am married to a lawyer but uh i thought to myself i've covered all my bases i've explained why i don't think my airbnb would suit them so if they whinge carry on nitpick do whatever they

need to do i've already told you i've covered my back yeah and so and that's always worked wonderfully just those little things yeah i love that one of the things that uh my good wife has has learned early on in her airbnb experience is to turn off the instant book function so that you've actually got an opportunity to get a look at them before they've locked themselves into the equation but uh it's flowing on from what you've just said there jules is it is it bad to decline a potentially difficult guest on Airbnb, and if you do, what's the best way to do it? Look, I think, as I said, I would use the, you can't, as I said,

you can't just sort of say no, you can't come. I mean, obviously, if they are really, you know, they're not fitted at all, you just say, look, my apartment's not going to suit you, and you can come up with a couple of different reasons. You know, I've had people that there's, and I'm sorry, I just want to quickly go back, Bushy. That's a really good point that Sonia took instant booking off the table

because I originally, for years, I didn't have instant booking. And then I thought, oh, well, I'll do instant booking. And my God, that caused me so much grief. And, okay, it might take that little bit of extra effort to, you know, respond to a guest if you don't have instant booking. It saves you a world of pain. So I just wanted to commend Sonia for doing that. But, yes, now I've lost my train of thought.

Where was I? I do that a lot. No, that's okay. Yeah, we're just sort of talking about, you know, is it bad to decline them? And if you do, what's the best way to do that? Yeah. Thank you for that.

Yeah, so I would always be polite, go back to them and say, these are the reasons. You can always go to Airbnb and say, look, i'm really this this guest wants to stay i can't deter them and they will guide you on how best to approach and that won't um give you it puts you in a good light always remember that it'll put you in a good light rather than one thing you've got to do and i really can't stress enough is be honest with people yeah because it doesn't matter what it is if you're not honest you will you will come undone in a big way yeah absolutely honestly the best policy at every turn because it sets

expectations right from the get-go uh the reviews as you mentioned uh are the currency of airbnb so if you've got a difficult guest how do you review them well the thing is the funny thing is with airbnb and you'll know this if you both have to a host and a guest have to review if one doesn't review then it doesn't go online so what i would do and mostly if you have a difficult guest you diffuse the situation by using that as another what can i do to help and so forth sometimes it doesn't work and in one case i had this one gentleman frank i remember frank um he came to stay at my airbnb and he whinged and complained about every single thing known to man you know i even was ringing council security line at um three in the morning because there

There was lights coming in from the building works next door. I went above and beyond. And he just was not happy. He left the building. I even wanted to refund his money. No, leave. I was to refund you the whole trip. I was just done and dusted.

He left, didn't hear heart nor hair, didn't know what was happening. He reviewed, I reviewed. He left this absolutely disparaging review. So I contacted Airbnb because, A, it was lies and he was out of line. and and i actually was quite measured because even though it was difficult you've got to remember you've got to pick your battles and never go you know oh i'm going to go to the jugular because it will end there trust me on that so you've got to get your emotion out of it so basically in that situation in frank i contacted airbnb said this has happened

and that already seen a lot of our communication because it's documented through the airbnb their website and because he was disparaging and swore um and said a few bad things his review was um off off gone to god but then i couldn't review as well because i must admit i did get a little bit oh and i'd written out this really like rip up negative um uh review of course i wasn't going to post it but that means if their review gets taken down yours will as well but that's sort of yeah how it will play out yeah i love that so we're sort of bringing that to a head then how can you avoid a disgruntled i can't even say it a disgruntled guest ruining a host rating then well the thing is the only way they can ruin your rating really is if well if it's true but if it's

not then you immediately contact airbnb and they will they will take it down they they can't really I mean, you know, I suppose, I don't know where they can go except review you on Airbnb, but certainly with me, if it's warranted, I would put my hand up and say, okay, that's a fair call. I would have moved heaven and earth to deal with you two at hand before, you know, with the guests while they were staying at my Airbnb. be and as i said even if you don't engage don't get emotive and start engaging in battles of the you know just don't go there even if you read it's like i'll refund you all your money you want to do something that will protect them think about them it's all about them um but as i said yeah if there's a airbnb will take the bad with you down so don't worry about that just um as i they're really important don't go into the emotion and get caught up in it so yeah i think it's really

that removing the emotion is the uh is the best road but the the difficult road because if you put so much of your blood sweat and tears into the property uh and then you then you got these sort of issues occurring that's it's easier said than done but that is the absolute key there are no doubts so uh look these are really great ways to deal with difficult air being guests thanks jules and it's clear that due diligence clarifying mutual expectations and the quality of communication is absolutely critical so now we're much better prepared to prevent potential difficult guests from booking and managing difficult guests if they do complain so i encourage anyone who's serious about building a sustainable short-stay business to grab a copy of your book uh on

superhost.com yep awesome and thanks again for enlightening us on the show today jules Thanks, Bushy. Thanks, Jules. To make sure you get the most from your investment property, you need to claim depreciation. BMT Tax Depreciation ensures that depreciation claims are maximised and compliance is maintained through their physical site inspections. During a site inspection, a specialist BMT site inspector

measures the building and identifies every depreciable asset possible. Call BMT on 1300 728 726 for a free estimate of the likely deductions. One of the biggest and often unseen or misunderstood challenges of investing in property is the tax treatment both during and when and if you eventually sell your properties. If you don't fully consider the right and appropriate entity and ownership structure that you need to be buying a property in right from the outset before you actually buy a property, you can inadvertently be putting yourself in a situation where you end up losing and giving a big chunk of your financial gains right back to the tax office instead of keeping it in your own

pocket. So how can you better ensure that you retain more of your hard-earned gains rather than donating them to the AGO? Well, one option that you may consider, depending on your circumstances and risk profile is securing property via a self-managed super fund or SMSF as it's often referred to which is what we're going to talk about today. Now before we start I need to reinforce that what we're going to share with you today is purely general information in nature and it's not intended as financial advice in any way shape or form. So ensure that you see guidance from independent accounting, legal and other financial professionals to consider the specifics of your situation before you actually do anything. But to unpack tax strategies for investing via an SMSF,

we're joined by Raymond Hempstead, the Managing Director of One Contract Property, who uniquely specialise in helping investors to overcome the normal challenges of securing new built properties via SMSFs. So welcome to Realty Talk, Raymond. Thanks very much for having me. Look forward to having a chat. Yeah, it's a very topical subject that we're diving in today and there's a lot of interest around self-managed super funds they were they were popular for a period and then they for whatever reason they sort of died in popularity but it's right back on the agenda now given the sort of capacity constraints that a lot of investors are facing through the normal channels so i'd love for you to sort of kick off by talking to us about what are the tax benefits of smsf

property investment all right bush as you're saying it always comes back to what what entity you're going to be buying your property in now if you're buying a property and it's for a long-term hold and it's not necessarily for generating income that you're going to be living on until retirement smsf fitted perfectly because of the tax strat the tax regime of 15 and also being able to capitalize that if you're 40 years old and you're holding it for 26 years you're paying 15 percent tax compared to up to 47 percent or 30 percent if you're holding in a company that gives you more cash back into your pocket or into your super funds pocket to reinvest into your wealth creation um short term so again holding it if it's for a long-term purchase for wealth creation and

for your retirement um there's nothing that beats it the other side and we'll touch on this a little bit later i think as well um is if you're making money out of you if you're making 100 grand positive cash flow out of your properties outside of super you're paying between 30 and 47 percent tax when you retire you're still paying that amount of tax year after year yes if you're doing that inside your super and you retire you're paying up to up to zero percent tax so some major benefits in doing long-term asset holds in your super fund absolutely i'd love to just touch on the capital gains uh differences as well because uh if if uh people who invest via their smsf actually end up having to sell an asset post retirement there's some pretty significant

benefits there as well can you just sort of expand on that for us a little bit yeah so if you if you're selling them prior to retirement inside your super fund if you've held them more than 15 sorry more than 12 months you pay 10 capital gains if you sell them after retirement you pay zero percent capital gains so again knowing where where you're buying what you're buying and why you're buying it and the right structure can make a major difference to the bottom line for your retirement absolutely no i really appreciate you sharing that uh i love your take on what tax and legal factors uh should investors consider when they're investing their SMSF into brand new property?

Brand new properties and being able to build it, the depreciation, like I love non-cash deductions and being able to build brand new properties and pick up that full tax deduction of non-cash deductible items inside your super. Again, I'm going to say it's money for jam, but when you're structuring your income, I always talk about it's not how much money you earn, it's how much money you keep.

And if you're buying for that, that side of it is great. The other side of it is when you're looking at your long-term hold, people talk about negative gearing in the past and there's pros and cons to that. But when you can play around, I'm going to call it negative gearing as in salary sacrificing additional money out of your wage and putting it into your super, you're actually getting a tax deduction out in your real life putting more money in your super

putting it in a position where you can invest into better quality assets for longer term wealth as well so there's some other tax treatments there that can save and make you a lot of money on the way through as well absolutely yeah they're quite significant advantages around that whole aspect both from the self-managed super fund but as you well mentioned the additional incentives and the free kicks that you get on the non-cash deductions for brand new property in terms of student duty savings and all of the full suite of depreciation benefits that are still applicable to new build

versus they used to be there for existing properties, but with the changes about three or four years ago, that's now gone. So very significant benefits there. And overall, reducing the actual holding cost of property very significantly when you compare it to other avenues. But, John, in the context of all this, and there is a bit of complexity and some risk around the establishment and administration of self-managed super, how important, then, is it finding an appropriate accountant tax specialist to ensure that the SMF member or members are actually compliant with the regulations? That's a no-brainer.

You have to be talking to licensed financial planners. Now, one of the things, and you've probably covered this in the past, talk... Any financial planner isn't the same. There's a lot of financial planners when you go and get financial advice that they cannot talk to you about property. They don't make any money out of it. They're not licensed to. So you need to be talking to a financial planner that can talk to you

about shares, can talk to you about property, can talk to you about insurances. They're not limited by the advice that they can give. So when you go to them and talk to that property, you know you're getting good advice. and on the other side because that there is some complicated tax legislation around superannuation now it's complicated for us mere mortals but people that study it every day it's just like changing a tire on a car sort of thing so having the right people there to make sure you stay in

line in what you're doing how you're doing it and just stay within the guidelines and the ATO you can have huge benefits and huge rewards for your family but also we also talk about generational wealth because what you're making out of property and superannuation you'll be able to live comfortably but then at the end when we when we pass we can then pass it on to our children or our grandchildren again as long as we've covered everything legally with our advisors on the way through yeah very well said raymond uh look i really want to thank you for these insights and you've certainly outlined the very significant tax advantages of securing investment property via an sms together with the importance of actually seeking guidance and advice from an

accountant and others who specialize in self smsfs right from the outset and if anyone wants to learn more raymond what's the best way to connect with you you can hop onto our website onecontract property.com.au there's some links there there's some phone numbers email however they want to be able to interact with us happy to happy to chat with them the team is ready and waiting perfect raymond will really appreciate you sharing all this with us on the show today thanks mushy 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. 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. Recent rapid rate rises instigated by the Reserve Bank in an effort to calm runaway inflation

have resulted in property buyers and investors' buying capacities being reduced by between 30% to 40% over the last 12 months, which in turn is hamstringing your property purchase price power. As a result, whilst many property investors mistakenly believe that right now isn't the best time to purchase property, Data Driven Buyers Agency Investor Kit's latest white paper on the five rules for investing during high interest rate environments reinforces that any time is suitable to invest in property if you do the right research. So to help you further open your eyes to these rules

and current opportunities, we're actually doing a special two-part feature here on Realty Talk with the white paper's author, Arjun Palliwell, who's Investor's Head of Research. In part one, we covered the first three rules. So if you haven't listened to this yet, go back and make sure you do. Today, in our concluding chapter, Arjun's going to unpack his last two rules together with his thoughts on why, what and where you should be investing right now, which we can't wait to hear. So welcome back to Realty Talk, Arjun.

Always good to be back, mate. And yeah, part one was great and pumped for today's session, part two. Yeah, absolutely, mate. You've really whet our appetite in the first part of our great conversation. So I'm sure everyone's going to be glued to their seats to listen to your words of wisdom for part two. So kicking off with that, Arjun, rule number four suggests that doing something is better than doing nothing. So walk us through what you mean by that. Yeah, I thought to myself, I was like, hey, high interest rate times must mean we should not do something with our money because it's expensive, things cost a lot, and maybe we

should just sit back, hibernate, and wait for the good times to come again. And then I started looking into this all and I realized, hold on a minute, high interest rate times typically and almost only when you look at the charts going back from 1977 to 2023 high interest rates are met due to high inflation and so interest rates are a handy if not the only tool actually for central banks to fight inflation and therefore interest rate environments have a clear correlation with inflation and so in these heightened inflationary times just means that cash in the bank is not your friend so i guess cash in the bank really outside of a buffer and outside of money for a bit of personal leashes and then of course investing should really not be sitting

there and that buffer shouldn't be too big because cash really isn't your friend when you have high inflation so that was the first thing that started to happen doing something better than nothing now what is that something is that something truly going to be better than it and that's when we looked at vanguard's index chart and vanguard's index chart so if you're an investor and you're a property person a shares person or whatever type of investor you are the truth is being in an investing market despite high interest rates in the 1990s high interest rates today high interest rates in the early 2000s have proven to be a better decision than doing nothing with the money And so that's the core part here.

Yeah, I love that. And that Vanguard chart that goes way back makes it really clear that despite global or local disasters that were classified at the time, good investment assets have continued to rise in value. So it certainly reinforces the point that any time is a good time if you know what you're doing. Can you sort of share some examples of this from the past based on what we've just been talking about? Yeah, sure thing. So if we go look at the past and say we go back to the times of, you know, 2000 and 2005 even, interest rates back then weren't the prettiest. And during that time, if you go over, there were many locations, if not the country, was in a boom. And even in recent times, we saw the recent interest rate increase during 2022.

and in the part one of our session we talked about how there was still over 60 sa3s or circle council areas were actually rising in values and so i think the core thing here is that if we look at what our money does for us for us and what we're spending it at that five dollar hamburger that we could once buy probably 10 bucks today and then today's 10 hamburger will probably be 15 to 20 in the future and so what that means for us is that that money that we think we're holding tight to our chest and it's that treasure and that cash in the bank is looking great every time we go and use it gets us less and less and less now when you have money today and say it's invested in debt and let's just say that money is higher in value or costs you bring in more from wage growth

or things cost more but your debt levels are the same as today and so that means that 100k loan 500k loan one million dollar loan is worth less over time so that's inflation doing the opposite effect on your debt because if we're all on circa two three four hundred five hundred k plus wages in the future which sounds silly but it's likely to happen with all things equal with our wage growth index rising at over three percent on long-term averages we're all going to get there now if you've still got today's debt parked away interest only never paid off a cent look back in the future and you go back to this today's debt it's not going to be the hardest thing to pay off i'll tell you that so that's the core thing that's working here both against us and for us but it's

only working against you if you do nothing absolutely i just uh you sort of triggered a couple of memories and i'm going to show my age here arjun but uh on the personal front uh when i was a young lad you could buy a bag of lollies for one cent uh which would now cost dollars to do the same and my very first property yeah talking about the the way inflation actually works for us very first property yeah i picked up for 84 grand and i borrowed most of that because he could in those days that same property now we've still got that property is worth just under a million bucks and the debt in terms of its actual impact on repayments it's gone now but they got to a stage where it didn't mean much at all because of the fact that everything else

had gone up and therefore that it stayed the same it made it a really easy thing to manage so you you make a really good point there now your final rule indicates that there's always something growing somewhere so share with us what you mean by this and again can you give us some examples please yeah so for that first point you raised about the the debt it's such actually a good point you brought up there as well but she uh if you had that same 84k debt and hypothetically you remained on interest only forever a couple on maybe let's just say 80k each or 100k each whatever the number may be 60k each might pay that off in three to five years yeah that is the simple way to demonstrate inflation if bushy kept it on interest only kept calling up his bank mates

and asked for some favors to say can you extend me out of it can you extend me out of it and then today he decided you know what stretch my legs stretch my arms i'm going to pay off this loan one year's wage three years wage two years whatever you're on would have paid that loan off and then you've got to get free property right and if not the rental income would have paid it off too so uh that's a core part but now into number five there's always something growing and i think this is a core part that many people get wrong they see growth in the city and they say that's a growth city they get stuck to that city they never move off that city and that is not what a diversified portfolio that's likely to perform the best for you long term looks like yes anywhere

almost anywhere in fact 90 of local government areas in australia as per core logic have produced five percent or more compound growth over the last 25 years so yes almost anywhere will do okay so you're doing great if you're investing and if you're investing in houses that was the data for houses yeah so if we move on to the index price growth of some of our three capital cities and let's just look at 2002 to 2012 and the three cities in question here are perth adelaide and sydney perth was the rock star between 2002 and 2012 168 percent growth as per abs adelaide the second place amazing 138 and sydney not so good at 75 now we switch it over sydney 2012 to 2022 98 in first place adelaide still doing really well at 72 percent in second and perlick not so well

at 14 in the last decade so that clearly shows to us that something somewhere is always going to be performing at different rates and these are three million plus population cities multi-million plus population cities and are all showing very varied results at the same time and so when we started to look at this and started to go deeper into it you know 1919 if we take melbourne as an example we have a chart there that shows cash rate trends and melbourne's median price and it all the way back from 97 to 2023 and we wanted to really look at this deeper the house price in melbourne like major city declined about six times but only two times were in the middle of interest rate surges so that just shows you that it's not the same time when they're all happening so something somewhere

even during interest rate rises are going to be okay and so in 2023 interest rates were surging and that was when melbourne was declining during 2022. 2019 interest rates were declining yet melbourne was still declining in 2012 interest rates were declining yet melbourne still declined in 2009 interest rates were also declining melbourne again declined and then interest rates was kind of in between two surges in 95 and melbourne declined so it wasn't actually surging it was in between yep and 1992 interest rates declined and 90 to 92 melbourne's prices declined so it's just not clear we cannot park this interest rate high moving up period and simply say that things move in the same way because this rule shows you that every city

different times there's always something growing and they're not all reacting as well sixth price declines in almost 40 years of melbourne's history and only two were during interest rate increases yeah we've we've sort of got into a state where people like really simple linear mind models where they directly correlate one cause with an effect and as you and I know, Arjun, there's more dynamic factors affecting property conditions than a Rubik's Cube combination, which is 48 trillion or something. So just to rely on a couple of factors is really misleading and actually downright dangerous. So I'm glad you emphasised that point. But all of this really brings us to the penultimate question, Arjun. Should

investors be sitting on the sidelines and waiting until finance and property conditions improve or is it still a good time to invest and if so why what and where short answer is yes it's still a good time to invest at the end of the day you follow those rules around personal buffers finance management and do what you can within your capacity you're one property less you need in your plan to long-term financial freedom that's the core thing one property less every time you make a move and so that's the first part now in terms of what i think there's a lot of consistencies here from this particular white paper you can take out houses in undersupplied areas that are able to be managed within your means across the country to get the best possible result

that's the core things now in terms of where hint hint there are a few cities here that haven't had the greatest last 10 years and we talked about perth that seems to be moving along pretty well uh there are many other cities as well across some of our regional markets in queensland So a few things where we've noticed some consistencies or strong economic activity in places like Toowoomba, Bundaberg, Rockhampton, Townsville, their month-on-month growth rates are still in present. And then even if you go down to South Australian cities like Adelaide, there is still high pressure in many parts of Adelaide. Now, we have noticed a shift in Adelaide, though. A very affordable subsegment of Adelaide seems to keep moving along quite well, but the premium areas have flatlined a little bit in many parts of Adelaide. Now, I do expect premium areas to lift back up again as sentiment continues to come back, just because if these affordable areas keep moving the way they are, there's a weird dynamic happening in Adelaide where you might be 40Ks out and they might be just as pricey as some places 10 to 15Ks out.

And if we're putting investors' mindset away and looking at just the home buyer, they might shift their value recognition towards these inner places that are flatlining a little bit now. So I think there's a lot going on across Australia, Sydney and Melbourne are recovering at rapid rates, and they seem to be moving very quickly, especially due to the undersupply. So as long as these undersupply conditions remain in Sydney and Melbourne, and they catch up these decline rates, they could be some star performance too. But the key thing is supply doesn't align. If you use that as your guiding force, as soon as supply conditions change too heavily in a particular area, it's likely that the boom there is going to slow down for some time. absolutely very well said and love the way you've sort of got getting us to focus on the things that are really important when it comes to to property and it's clear that if you're serious about securing your future through property you need to make sure that you adopt these five rules which arjun has very eloquently broken down for us they give you a very comprehensive framework to enable you to secure outperforming properties regardless of economic conditions and if you'd like to read the full white paper and enjoy all of the details feel free to jump on the link in

the show notes that will take you to investorkit.com.au forward slash resources forward slash 5x rules for investing during high interest rate environments thanks for your time again today arjun and thanks for sharing your words of wisdom on the property hubs go to place for all things property here on realty talk thank you my friend appreciate it excellent this is realty talk And that brings us to the end of this week's show. Bushy and I would like to thank our very special guests, Jules Rolnick, Raymond Hempstead and Arjun Pallywell. Now, just before we go, make sure that you don't miss a single episode of Realty Talk or Bushy's very popular Get Invested podcast. they're delivered to you each week

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