Episodes

  • #282: The Ultimate Guide to Property Depreciation - Maximise Your Investment Returns with Expert Advice on Tax Deductions

    #282: The Ultimate Guide to Property Depreciation - Maximise Your Investment Returns with Expert Advice on Tax Deductions
    Nov 4 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM


    Today's episode is all about depreciation; Mike's wheelhouse! Dave opens the conversation with a question for Mike, "How often should I update or review my depreciation schedule to maximise my tax benefits?" Reports last an owner as long as they hold the property. Mike delves into the role of the quantity surveyor when it comes to estimating construction costs.

    One of Cate's investing mistakes gets aired; after having completed a significant renovation on an investment property, Cate overlooked the chance to arrange a depreciation schedule at the onset. Mike unlocks the magnitude of unclaimed deductions in our nation.

    How easy is it to arrange a depreciation schedule, and what documentation is required? And how do self managed superannuation fund property assets differ when it comes to deprecation?

    Mike explains the challenges of high depreciation versus high capital growth. He is often asked the question by investors, and his Southbank high-rise, one bedroom apartment example illustrates the inverse relationship between the two measures.

    If a property is over forty years old, is there any point looking at arranging a depreciation report? Tune in to hear the answer!

    Mike explains the importance of physical inspections when a tax depreciation specialist is formulating the depreciation schedule, and he also sheds light on the circumstances that allow for a physical inspection not to be conducted. Mike's service station story is a warning to investors who engage professionals who cut corners.

    What is the difference between a repair you claim through your accountant and a depreciable item on your schedule? Mike shares the nuts and bolts for our listeners.

    ..... and our gold nuggets!

    Cate Bakos's gold nugget: Well-meaning advice from accountants to maximise tax deductions isn't always great property advice. If in doubt, get a second opinion.

    Mike Mortlock's gold nugget: Don't assume that it's not worth getting a depreciation schedule. Always check!

    Show Notes: https://www.propertytrio.com.au/2024/11/04/depreciation/
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    43 mins
  • #281: Mastering Accessing Equity - Loan to Value Ratio Strategy, Risks, Benefits & Hidden Opportunities that Shape Mortgage Strategy

    #281: Mastering Accessing Equity - Loan to Value Ratio Strategy, Risks, Benefits & Hidden Opportunities that Shape Mortgage Strategy
    Oct 28 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

    Today's episode is all about loan to value ratio's (LVR). Mike throws Dave the first question;
    "In twenty words or less, what is LVR?"

    Cate delves into the reasons why LVR is so important when it comes to Mortgage Insurance. Managing risk is what lenders do, but once a buyer triggers mortgage insurance, dwelling types, quirks and risks count for a lot. Heightened scrutiny and having the final say on loan approval is something that a mortgage insurer often holds. Cate also explores those professionals who get exemptions when it comes to LVR and mortgage insurance waivers. Dave's examples bring this point to life; from postcode restrictions to zoning types to the property condition. Policies vary greatly among lenders and it can be quite complex. Cate also shares some of her experiences and insights in relation to tricky properties that sometimes pack a nasty lending surprise. Strategic mortgage brokers can assist with the associated challenges.

    Dave shares the history of LVR and Lenders Mortgage Insurance in Australia with the listeners... a step down memory lane for some, but a significant step for home ownership in Australia.
    Cate reminisces about the impact of smaller deposits and the burden of Lender's Mortgage Insurance. Is it a cost of doing business? Absolutely, but it's tough on first home buyers. Cate's support of the First Home Guarantee is strong, but she feels our Government need to offer more places to eligible applicants. And the 2% savings guarantee for eligible single parents is one policy she loves.
    LVR can be a great metric to track our prudential regulator’s level of concern. Macro-prudential policy intervention is evident when we look through the history books at high LVR loan origination. But what does the current five-year data show us? Tune in to find out.

    We talk a lot about macro-prudential regulation and how it affected credit, particularly for investors during the 2014 – 2019 period. APRA intervened, and before we knew it, lending became tough, despite reasonable interest rates. Credit was almost impossible for investors. Dave talks our listeners through the challenges of this period and the impact that our regulator had on the property market.
    LVR is a viable measure of health that a lot of investors and businesses use. Cate talks us through the concept of overall LVR, and how it can be reduced/optimised.

    Lastly, Cate and Dave touch on cross-securitisation... the good, the bad, the ugly.

    ..... and our gold nuggets!

    Cate Bakos's gold nugget: Buyers must manage risk when they are in high LVR territory when they are making unconditional offers.

    Dave Johnston's gold nugget: "LMI is the cost of doing business, as Peter Koulizos has told us." Dave talks about the benefit of being open minded to a higher LVR and LMI in order to get into the market earlier.

    Mike Mortlock's gold nugget: Mike talks about the potential cost of avoiding LMI, and he reminds listeners that these costs can be modelled.

    Show Notes: https://www.propertytrio.com.au/2024/10/28/mastering-accessing-equity/
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    45 mins
  • #280: The Impact of Infrastructure on Property Values & Choosing Between Melbourne and Brisbane for Your Next Investment

    #280: The Impact of Infrastructure on Property Values & Choosing Between Melbourne and Brisbane for Your Next Investment
    Oct 21 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

    Marilyn's question is about the suburban rail loop civil works in Melbourne, and how this could influence the suburbs and property markets that are impacted by the project. Dave sheds light on the shortfalls of Melbourne's current rail lines, and the future changes that the project will enable.

    "It is the most expensive infrastructure project in Australian history".

    Mike ponders how the new stations and hubs could impact different genres of properties and he dares to step into town planning initiatives. Dave asks the obvious question; how will higher density, (and more inhabitants) impact businesses and heightened demand for services? How could this impact property prices in the 1.6km radius within these affected stations? Cate points out that this insight is transferrable amongst several other cities that have invested in their rail infrastructure.

    Cate and Mike discuss the positives of a commutable location with easy transport hubs. Will buyers pay more for an easy commute to work? Absolutely. What are the likely impacts of higher density hubs in designated locations?

    The Trio consider the impact across the nation for various planning changes for high-amenity areas. And Cate raises the question: what do these new stations mean for the various precincts that are impacted?

    Melbourne has four new train stations hitting the map in 2025 and there will be plenty of positives.

    Hunter asks the Trio where they'd invest if they had $500,000 or $1,000,000 in either Melbourne or Brisbane. Cate ponders why Melb vs Brisbane is a popular consideration. Recency-bias from the Olympics, or weather differential are two considerations, but could it be price-points? Or the media? Is Melbourne's potential bounce back a factor? Dave lays done some really important property planning considerations, and Hunter's scenario is put under the microscope.

    The Trio unpack some of the complexity that should be considered, and Cate shares some specific Victorian examples at these two price points.

    Mike unpacks locations around the country where listings have increased at the highest rate. What are they? And why have the listings exploded? Tune in to find out....

    ..... and our gold nuggets!

    Mike Mortlock's gold nugget: The strategy is more important than the hotspot!

    Cate Bakos's gold nugget: Rail amenity counts for a lot. What are our town planners thinking, and how is rail infrastructure playing a key role in our growing population threat to traffic congestion?

    Show Notes: https://www.propertytrio.com.au/2024/10/21/listener-questions-rail-projects-and-melb-vs-brisbane/
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    58 mins
  • #279: Market Update Sep 24 – National Price Growth Slows, Rents Drop to 4-Year Low, Is Perth Finally Slowing as Listings Boom Nationwide?

    #279: Market Update Sep 24 – National Price Growth Slows, Rents Drop to 4-Year Low, Is Perth Finally Slowing as Listings Boom Nationwide?
    Oct 14 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

    Mike kicks off this episode, and after stumbling with Cate's surname (yes, he's on fire with names), the Trio crack into the market update for September.

    "Is this the beginning of the peak or decline for these markets?"

    Perth's rate of growth has slowed, and the Trio ponder whether it's listing numbers, tightening household savings, or interest rate pain that is contributing. How long can the three top performers maintain this strength? And are they at their peak? Perth's annualised growth is currently sitting at 24.4%, which is significant by any historical measures.

    Taking the Reserve Board's monthly press releases into account is important. Until we return our inflation numbers to a figure within the target band, our interest rate pain is likely to remain.

    Dave sheds light on net overseas migration numbers and draws a parallel with the slowdown in price growth, and the Trio overlay the listing figures that are amplifying the supply/demand imbalance.

    Mike and Cate chat about mean reversion and some of the weaknesses of this popular argument. Just because Darwin hasn't performed well over many years, does not mean that Darwin's 'turn' is next. There is more to mean reversion than just labelling a slow performer 'the next one'.

    Rental pressure continues to soften. What could explain Hobart's pattern? Rents have all come off the boil with the exception of Hobart. Cate has some insider insights....

    Will pressure on rents continue to ease? As Dave mentions, household formation rates are playing a powerful role in the rental numbers also. Cate ponders the impact of student numbers and the effect on market segments, specifically inner-city apartments.


    The key takeaways from the consumer sentiment index include 'Time to buy a dwelling'. The WA figures are interesting in particular. The 'Interest rate expectations index' has dropped substantially, and once again, the differences across the states and territories might be telling us a valuable story.

    Sentiment counts for a lot, and Cate considers the impact of the anticipation for a rate cut during September. The 'House price expectation' index was another that the Trio noted and Dave noted WA's and QLD's softening for this measure, and contrasted it against Vic's and NSW's uptick. And we've hit the highest number of new investor lending commitments that we've seen since Jan 2022 this month, and as Dave points out, "That was back when the cash rate was just 0.1%."

    Are first homebuyers getting enough support?

    Shared equity... yeah/nah? The Trio chat about some of the government led initiatives that offer some support to first homebuyers.

    And... time for our gold nuggets...

    Cate Bakos's gold nugget: The rate of change of rental growth is easing and it will be interesting to see how this filters through into political policies.

    David Johnston's gold nugget: "Markets are cyclical. No market is always flying or always struggling. Have a long term plan when you're buying property."

    Mike Mortlock's gold nugget: When it comes to first homebuyer activity, it seems that we're addicted to stimulatory stuff. But we don't tend to have many policies that help with supply. "We need to attack the supply issue, rather than stimulus, stimulus, stimulus."
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    51 mins
  • #278: Crafting a Personalised Plan for Retirement Success: Boosting Cash Flow, Scaling Back Work and Strategic Downsizing

    #278: Crafting a Personalised Plan for Retirement Success: Boosting Cash Flow, Scaling Back Work and Strategic Downsizing
    Oct 7 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

    Today's episode is a great case study. Georgia is stating to feel the strain of managing her two investment properties and she wants to make sure she makes the right decisions now so that she can enjoy her retirement. Georgia is 52 and has no children, lives in Sydney, and works four days per week. She owns a property in Pagewood, (Sydney's eastern suburbs) and St Leonards (lower north shore). Collectively they are valued at $2.86M and they bring in a rental income of $86,000 per year.

    Her plan has always been to eventually move in to the Pagewood property, but she wants some help working out when and how to do this. Ultimately though, Georgia will want to downsize into something more manageable.

    What are Georgia's key challenges?

    Georgia has no borrowing capacity in this current economic and lending climate. The change in interest rates have been tough on Georgia, (and many others), but her offset balance and savings balance ($285,000) are holding her in good stead. Dave steps through these challenges in details and has some ideas and modelled scenarios to share with Georgia.

    Should she hold? Should she sell? Or are there other options?

    Considering the cashflows is one thing, but calculating the recent capital growth that Georgia's two properties have delivered is also important.

    Mike shares Georgia's financials with our listeners, and while the data is detailed, it's reassuring to see just how much wealth she has built whilst also enjoying the important things in life. One key observation is the power of time, and what this has done for Georgia. Georgia has a portfolio equity position of $1.257M and an LVR of 56%. She has stayed the course, and as Cate points out, "It's a healthy LVR!"

    Georgia considered selling one of her properties to fund her cashflow. Dave chats about the modelling, likely outcomes and questions they addressed. What did they determine would optimise Georgia's scenario? And what did she decide? Tune in to find out how the modelling gave her the answer.

    Cate touches on the value of time, and the prize that it can deliver for those who are patient. Mike discusses the shock that our pace of interest rate increases delivered for a lot of investors. While we may be close to equilibrium, our last two years have been tough on plenty of households.

    Back to Georgia... what is her risk profile? And what determines risk profile? And how does risk profile translate into goals, options and decisions?

    Back to metrics... the Trio chat about how to best construct conservative estimates and Cate leans on her 29 years of investing experience and assures Dave that his vacancy rate modelled assumptions are reliable. Mike circles in on the historical growth of each of Georgia's two properties and he wholeheartedly supports her decision.

    Dave shares in detail the three scenarios that were modelled... and following trialling multiple versions, the findings were compelling. Tune in to find out!

    ..... and our gold nuggets!

    Cate Bakos's gold nugget: "Personal finance is just that.... it's personal!"

    Mike Mortlock's gold nugget: Mike's vegies and dessert metaphor is apt, but in this case, he marvels at how Georgia made the vegies into dessert. Her regimented approach impressed us all.

    Dave Johnston's gold nugget: This was one of Dave's favourite case studies and he highlights why you don't need to own lots of properties to get a benefit out of one key plan.

    Show notes: https://www.propertytrio.com.au/2024/10/07/case-study-retirement-success/
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    46 mins
  • #277: Cate, Dave and Mikes First Property Purchase – Lessons, Insights and Reflections

    #277: Cate, Dave and Mikes First Property Purchase – Lessons, Insights and Reflections
    Sep 30 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM

    Today's episode is a special one. The Trio have often reflected on their own past experiences as investors and home buyers. This time, they decided to share their nerves, excitement and rookie mistakes when they each tackled their own first purchases.

    Mike had an exciting week when he bought a home, rolled his car and took of to Thailand on a trip. He paid $230,000 for a home in Waratah (Newcastle) and thought hard about all of the ways that he could generate some income out of his asset. Renting a room to his previous flatmate, drawing up a depreciation schedule, and contemplating a cleanup of an otherwise rugged property was the beginning of Mr Mortlock's property success.

    A $30,000 immediate uplift for a $12,000 investment was a great payoff.

    Young Dave was a 25/26 year old mortgage broker, driving around in his EB Ford Falcon when he decided to get serious about mortgage broking. His red clinker brick, older style apartment caught his eye immediately, and for all of the right reasons. Dave paid $176,500 for his first home.

    Cate touched on the fear of debt and the enormity of the pressure she felt once she took possession of her first home. This isn't an uncommon feeling for some buyers. "What if I lose my job?" Cate's first purchase was a townhouse that she bought off-the-plan in Mordialloc. She talks about the pros, cons, and the better alternatives she could have targeted. She contrasts the skills she had then vs now.

    Dave was able to apply his mortgage broking skillset to his acquisition, but he maintains that he felt very nervous about the purchase itself. From contract signing to comparable sales data, Dave recalls that he was relatively green as a first home buyer. He recalls the ways that he monitored and researched loan products and interest rates.

    How did buyers navigate the home buying process back in their day? Cate recalls her expensive phone bills, when agents had mobile phones and Telstra charged by thirty second blocks for landline calls to mobiles. "Doing the legwork" was different for first home buyers prior to online property search engines being commonplace. From slicing out line advertisements in the paper to collecting magazines in the coffee shops, Dave and Cate reminisce.

    What were their income to asset price ratios? Clearly, Dave and Mike were on better incomes than Cate. Mike: 3.4% Dave: 3.5% Cate: 4.8%

    How did the Trio members each borrow? What were their loan products? Did they go via a broker? And how did grants and initiatives spur on their decision to purchase?

    And how have their first purchased properties performed over the years since reselling?

    ..... and our gold nuggets!

    Mike Mortlock's gold nugget: "Don't sell if you can avoid it!"

    Dave Johnston's gold nugget: Getting into the market and making a decision is important. Don't overanalyse, get in the game.

    Cate Bakos's gold nugget: Surrounding yourself with knowledgeable people is important. Cate's top two picks are; 1. a strategic mortgage broker, and 2. a great conveyancer.

    Show notes: https://www.propertytrio.com.au/2024/09/30/our-first-property-purchase/
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    39 mins
  • #276: Where to Find Budget-Friendly Properties in Australia’s Capitals

    #276: Where to Find Budget-Friendly Properties in Australia’s Capitals
    Sep 23 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM


    Mike's company, MCG Quantity Surveyors, recently released a comprehensive report on affordable housing in our capital cities. The report focuses on the lower 25% of the property market across Australia’s major capital cities. MCG wanted to identify what’s truly "affordable" in each market by analysing the 25th percentile of sales prices.

    This approach gives a clear snapshot of the most budget-friendly properties currently available, which is crucial information for anyone trying to navigate today’s challenging market. Cate steps through some of the median prices around our nation and she contrasts Sydney against Perth.

    Mike asks, "How many years of income it would take to purchase a median priced home in the market?"

    House price to income multiples are a reasonable measure of affordability, and the multiples for both houses and units across the two cities is fascinating. Contrasting other cities is intriguing too; Perth vs Hobart requires more consideration than just income multiples. There is no doubt that the metric is a bit of a blunt instrument, though.

    Are there specific areas within our cities where affordability is better, or is it tough across the board? I

    In Sydney, for example, regions like the Outer South West, Central Coast, and the Outer West and Blue Mountains offer more affordable options compared to the inner suburbs. These areas typically offer a more suburban or semi-rural lifestyle, which tends to come with a lower price tag. In Melbourne, the western suburbs such as Werribee and Tarneit are also known for being more affordable, particularly for houses. These areas are popular among families and first-time buyers who are looking for more space without the hefty price tag of inner-city living.

    "Mike, for someone looking to buy or invest, where should they be focusing their attention?" Despite the strong recent growth, Perth still rates. Tune in to hear why....

    Cate prompts Mike to share what the data means for the future of affordable housing in Australia.

    Affordability varies significantly not just across the country, but even within individual cities. It’s crucial for buyers and investors to understand these local dynamics and to do their homework. While the headlines often focus on the un-affordability of the major capitals, there are still opportunities out there if you know where to look.

    The data really emphasises the importance of being informed and strategic in your property decisions. Whether you’re buying your first home or looking to expand your investment portfolio, understanding the market is key to making the right choices.

    ..... and our gold nuggets!

    Mike Mortlock's gold nugget: Median house price to income multiples challenge some buyers and Mike showcases the opportunities that quality units can provide when considering the lure of inner-ring, blue chip suburbs.

    Cate Bakos's gold nugget: With all of the changes we're seeing at local council level, it will be interesting to see how the affordability measure changes with higher density developments that are closer to CBD.

    Dave Johnston's gold nugget: "Always flip it around to your own situation, your own economy and your own price point in order to work out what the best investment is for you."

    Show notes: https://www.propertytrio.com.au/2024/09/23/budget-friendly-properties-in-aussie-capitals/
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    31 mins
  • #275: Market Update Aug 24 - Perth & Adelaide Surpass Melbourne Median, Buyer Sentiment Up in NSW & Vic as National Market Cools

    #275: Market Update Aug 24 - Perth & Adelaide Surpass Melbourne Median, Buyer Sentiment Up in NSW & Vic as National Market Cools
    Sep 16 2024
    Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXMMike kicks off this episode, and after establishing Dave's surname's correct spelling, the Trio launch into the August figures. National figures were up across the board +0.5%, but as Mike eludes, it's really a tale of eight cities. How long can the three top performers maintain this strength? And are they at their peak?Perth's annualised growth is currently sitting at 24.4%, which is significant by any historical measures. "We've got three very heavy lifters, and their growth isn't really easing", says Cate. Although Dave's focus on Brisbane's growth rate suggests it may be a city that is coming off it's recent high pace of growth. Interestingly, median values are not the most reliable indicator of places on the performance league ladder. The Trio have discussed the imbalance of houses to units in the various capital cities, and they cite this example as a case in point. Given Melbourne has a higher proportion of units than each of Adelaide, Perth and Brisbane, the median value figure is influenced by this ratio in every city. What could trigger Melbourne's market to rebound? Cate steps through her three possible triggers for change. Dave points out the rental yield figure; a potential indicator of a price signal to a lot of investors. For the first time in the history of the Core Logic gross rental figures, this is the first time that Melbourne has been on par with Brisbane and Adelaide.The Trio delve into the impact of COVID and the market recovery, followed by Victoria's static performance on the Victorian regions. Will pressure on rents continue to ease? Supply is our challenge, but quite a few cities are showing a slowdown in rental rises. An increasing household formation rate, seasonality in the southern states, and lower student numbers are contributing to some of the easing. In addition, holiday house sales have softened the rental conditions, as has the return to work for many workers. Less people need their additional bedroom for work-from-home purposes, hence household formation rates have been able to increase. Listing numbers count for a lot when it comes to capital growth, because supply and demand can tell us a lot. The three high performing cities have particularly tight stock levels and a decline in old listing numbers, however Brisbane appears to be exhibiting higher new listing numbers this month; a possible sign of market easing.And while listing figures are segmented for cities, unfortunately they aren't segmented for dwelling types, and as Cate points out, there are markets within markets. The Trio cast their gaze over the Westpac Consumer Confidence Index. A slight increase in the 'time to buy a dwelling' looks significant until we recognise that sentiment to buy a dwelling is still well under 100, indicating that less than half of the population believe that now is a good time to buy a dwelling. Dave's state-based focus is intriguing though. Which cities have had modest increases, and which have shown far higher figures? The answer may surprise...Inflation remains our RBA's challenge. As Dave points out, inflation hurts everyone, while higher interest rates hurt a segment of our market. Our reserve bank governor's caution is palpable and the Trio's general consensus is that we won't see an interest rate cut in 2024.Turning to finance and lending; refinances have fallen away and loan percentages have been impacted by this change. But what has caused the tumble in refinancing? The Trio unpack the various triggers for this.And the Trio consider Loan to Value Ratios (LVR's) and the historical changes that have occurred with leveraging, deposit sizes and costs of borrowing..... an ep in the making! Dave, Cate and Mike discuss the intricate balance that the RBA have to manage between inflation, employment, wage growth and market confidence. Lastly, the three year bond yield currently sits slightly below our current interest rate and indicates a potential for short to medium term market expectations for a rate reduction (or two or three)... time will tell, but our money markets are interesting leading indicators. And... time for our gold nuggets... Cate Bakos's gold nugget: For all of the investors who have been experiencing rental growth.... we have to keep market conditions in perspective, and given rental growth is slowing, investors need to pay attention to their property manager and take on good advice.David Johnston's gold nugget: "If you invest, expect ups and downs, but don't lose sleep during the downs. Usually, when we make mistakes, it's when our investments are flat, and people feel the heat and sell." Maintaining a long term, pragmatic expectation is a healthy perspective. Show notes: https://www.propertytrio.com.au/2024/09/16/ep-275-aug-market-update/
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    59 mins