Episodes

  • #284: Market Update Oct 24 – Sentiment Waxes & Wanes but for Which States? Melbourne Yields Make History! Mid-size Capitals Slow
    Nov 18 2024
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    Cate kicks off this episode with Dave while Mike hikes around New Zealand. The Duo note some of the interesting indices for the state of the nation in the month of October. They marvel at Hobart's quick pivot and wonder what has driven the positive growth. The combined regions outperformed the combined capitals too, and despite the strong monthly performance in Perth, they note that growth has slowed of late.

    Dave and Cate delve into reluctant-seller psychology. After the high's of 2021 for the eastern states, and observing Perth's stellar run over the past couple of years, it's interesting to consider what behaviours are exhibited when locations experience downturns following a strong run.

    Dave notes that consumer sentiment data is suggesting many have a keen eye on Melbourne, and Cate shares some observations about the regional performance in Victoria.

    Segmenting the market into price quartiles tells quite a story. Cate and Dave use some examples in the market and they canvas the reasons why the various price points have performed so differently to each other.

    Rents remain steady, and aside from Hobart, the pace of growth has slowed. However, vacancy rates remain very tight and yields have strengthened. Dave points out that this combination of data is a leading indicator for value growth.

    Perth's downward trajectory over the past few months is quite obvious, but what could be driving Hobart's rent? Could it be an increase in short-stay dwellings? Has domestic travel to the Apple Isle increased? Or could it be related to the weather? The Duo mull it over...

    The correlation between capital growth and listing activity is one of the Trio's favourite discussion points each month. Although Dave makes an important point. "One of the issues with a five year average is that it doesn't factor in population growth." What's driving listing activity around the nation? Tune in to find out....

    New listing activity has pivoted and Melbourne, Hobart and Canberra listing activity has dropped compared to this time, last year. On the flip-side, Perth and Darwin are exhibiting higher numbers of new listings.

    The consumer sentiment index shows a marked increase in the "Time to Buy a Dwelling) measure, and Dave breaks down the data by state. Victoria's measure is now over 100, a 31.5% increase, while Western Australia's measure dropped to 66. Dave points out the potential price signals in combination with listing activity.

    Investors are moving back in to the market at a higher rate and lending has remained steady accross the board. Victoria has underperformed on the investment lending front, unsurprisingly. NSW leads the chase with 44% of new loans secured in September.

    Monthly change of employed people jumped 44,000; a figure that eclipses what many would have expected. Our unemployment rate remains steady despite fears of job-losses as coined by the RBA.

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

    Cate Bakos's gold nugget: The new listing activity for 2024 campaigns is easing and there is only realistically another fortnight to run before campaigns finish and the market goes into hibernation over the Christmas period. For any buyers who wanted to purchase in 2024, now is the time! Get out there!

    David Johnston's gold nugget: Make your own decisions based on your own personal economy!

    Shownotes: https://www.propertytrio.com.au/2024/11/15/ep-284-oct-market-update/
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    45 mins
  • #283: Your Guide to Regional Property Investing - Critical Strategies and Townsville in the Spotlight
    Nov 11 2024
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    Today the Trio roll up their sleeves and tackle regional investing. A special callout to our lovely listener, Ester for prompting this exciting episode.

    Why do investors choose to invest regionally? Cate shares some of the reasons she started investing in the regions. Cashflow is one key element, but diversification also counts.Cate sheds light on some of the considerations that investors need to apply when selecting one region over another. Distance, demographics, target tenants and the growth drivers are all important considerations.

    Lack of diverse employers is a threat to some of the smaller regional cities, but Townsville is not one of these. It's the 14th largest city in Australia and this glorious, sunny city has a lot on offer. The Trio delve into what makes Townsville special.

    Cate shares some of the common traps and downsides that investors need to be aware of when it comes to regional investing. Picking a cheapie and buying in the Bronx is a risk for those who don't do their homework. Careful selection of a good investment area is critical.Keeping trade services in mind is really important in the regions.

    Cate also sheds light on some of the difficulties associated with harnessing tradespeople in some of the regional cities.Let's talk about Townsville! There are some significant projects underway and the Trio list some of these. The strategic location and port access count for a lot also, and the Trio also chat about the economic and industrial drivers in the area. Townsville is made up of more than forty suburbs, and it's bigger than Darwin when it comes to population count. It's the largest urban centre in northern Queensland, and surprisingly, health is the number one employer in the city.

    Townsville's involvement in defence is significant and the Trio share some of the insights they've gathered. Job growth is the big item for discussion, though. The fundamentals sound very strong and sustainable. Tune in to find out more......

    .. and our gold nuggets!

    Mike Mortlock's gold nugget: "Firstly, make sure Townsville, (or any other region) fits within your strategy. But... is the word already out about Townsville?"

    Cate Bakos's gold nugget: You really need to understand the growth drivers, the vulnerabilities of the area, the good streets, the tenant demands and the flavour of the region. Buy and hold, long term is a great fit for regional cities.

    Special mention to our industry friend, Simon Pressley from Propertyology, for his generosity with his research and information.

    Show notes: https://www.propertytrio.com.au/2024/11/11/regional_investing/
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    39 mins
  • #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
    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
    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?
    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
    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
    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