The Property Investor Playbook
Welcome to The Property Investor Playbook, your ultimate guide to building wealth through property investment. Hosted by Daniel Chadrawy and Lara Osborn, this podcast offers step-by-step insights into growing your financial portfolio through real estate.
Join us as we bring you in-depth interviews with industry experts, successful investors, and everyday Australians on their journey to financial freedom. Learn from those who have successfully navigated the path to prosperity and gain invaluable tips to kickstart your own investment journey.
Tune in to discover the strategies, tips, and secrets to creating long-term wealth through property investments, only on The Property Investor Playbook.
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The Property Investor Playbook
Boosting Borrowing Power with Stage Three Tax Cuts - The Property Investor Playbook
Ever wondered how the stage three tax cuts could revolutionise your property investment journey? Join us as we uncover this and much more with our special guest, Natalie Elazzi from Liviti Finance. Natalie shares her inspiring journey into the world of finance and property investment, providing invaluable insights into boosting your borrowing capacity. Learn how these tax cuts could potentially increase your borrowing power by $30,000 or more, and hear a touching client story that demonstrates the real-world impact of financial planning and guidance.
Discover the growth opportunities in today's property market, especially if you're aiming to secure a second property. We'll tackle the pressing challenges posed by rising interest rates and construction costs, particularly for low to middle-income earners. Get multiple perspectives on financial advice, understand the importance of starting small, and realise why taking action when financially prepared beats waiting for perfect market conditions. Real-life client stories provide a compelling look at how property values can still appreciate amid uncertainties, reinforcing the value of timely investments.
Understand the significance of having a strong support team in your property investment journey. Just like a sporting team, success is driven by a collaborative effort behind the scenes. Natalie sheds light on managing borrowing capacity, leveraging equity growth, and the benefits of refinancing. We also delve into the importance of consistent savings and financial planning, drawing parallels to disciplined fitness regimes for long-term stability. Tune in to grasp the full scope of maximising your property investment potential and building a robust financial future.
Welcome to the Property Investor Playbook. I'm Lara.
Speaker 2:And I'm Daniel. We're going to show you, step-by-step, how you can grow your wealth. Lara, welcome back.
Speaker 1:Hi, good to be here. I'm excited for today's episode. What's?
Speaker 2:new.
Speaker 1:We've got Natalie on Natalie Alazi from Liberty Finance. I'm excited to have a chat with her. We did a bit of a deep dive. It was good. She's going to break down all my finances now.
Speaker 2:Yes, it was good she's going to break down all my finances now. Yes, I was talking to her outside actually before she was telling me all those client stories, so that'd be good to get into. Yeah, definitely. And the biggest question is how you can increase your borrowing capacity.
Speaker 1:Yes, definitely the biggest topic at the moment, I think, is how the stage three tax cuts can impact borrowing capacity. So it'll be good to hear from her.
Speaker 2:Definitely, I'm hoping now we've now it's been three days into july so far. How can we move forward if those stage three cuts? How can they increase my borrowing capacity?
Speaker 1:but the biggest thing around that is now now if I can afford to buy my property 30, 40, 50 grand more yeah, as a couple now that may be a big increase yeah, yeah, yeah, she spoke about um, the, the cuts or the tax savings, I guess could increase potentially borrowing capacity up to $30,000. That could be make or break for some people 100%. It could even be more than that if they're a couple. So, yeah, it'll be good to chat about.
Speaker 2:Sure, finance is one of those. It's boring, but it's not that makes sense Like we need it. So the majority of people need finance. Yeah, I think the biggest thing is once we understand it, we can use it to our advantage. So definitely hopefully not give us those little pointers. Um, everyone's been asking us those questions, so we'll, we'll throw them at that. See how she takes it. Um, what are you? What are you most excited other than the stage three tax cuts about not coming on?
Speaker 1:um, I'm interested to hear about, um, some of her personal stories and client stories that she's worked on. I did ask her a little bit about you know any stories that have touched her heart on how she helps people, and one of them really stood out to me. But I'll leave that there and let everyone have a listen.
Speaker 2:So, yeah, let's jump in, let's get into it. Hey guys, welcome to episode two. It's me Daniel again.
Speaker 3:I'm Lara and I'm Natalie. Thanks for coming in, nat, thanks for having me.
Speaker 1:First off, do you want to tell all our listeners a little bit about yourself?
Speaker 3:Yeah, so I'm a mortgage broker. I've been a mortgage broker for about five years now, been working with Liberty Finance for the last two years, and you may have seen me at like Women in Property event. I speak at events and help women and general people understand investment lending, how to increase their borrowing capacity, how to better their credit scores. So that's pretty much what I specialise in Awesome.
Speaker 1:A little quick question for you, but how did you get into finance and property?
Speaker 3:I would say I was working in accounts at first, found it pretty boring, um, but I started to see ads about property wealth and finance and so I started to get interested in how to like better your wealth through finance and then. So I went and did a mortgage broker course, found it very interesting and then, once I stepped into the property side of it because they go coincide together um, I just really enjoyed it and I found that you could learn so much for your personal growth as well as helping others in property wealth growth.
Speaker 1:So that's what made me change are you a property investor yourself too? Yes, I am. How many properties do you have?
Speaker 3:at the moment one do you live in?
Speaker 1:it. No, it's an investment um.
Speaker 3:I rent invest at the moment nice yeah, very nice.
Speaker 1:Where's the property? Uh, it's in yuguna in sydney oh nice yeah how long have you held that one for?
Speaker 3:um, we'll say a year now yeah nice, nice.
Speaker 2:How was the mortgage broken? Course, you enjoyed it, you liked it. They don't teach you this stuff at school, hey.
Speaker 3:Oh no, it's very different to practical being a mortgage broker in real life. It's a lot of theory, but what I found interesting was I was learning about mortgages things they don't teach you in high school, like understanding tax, understanding your credit score, general terminology around owning property, how to make repayments, and so when I just started to learn that, the curiosity peaked. And then, once I got into the field, when you start to deal with real life people, you just see a whole world of different scenarios and I think the enjoyment comes in problem solving. I think when you see someone really struggling but then you actually help them fix it.
Speaker 2:yeah, it's so rewarding does everyone come up to you at the family barbecue saying now are the rates going up, they're going down? Is that a common yeah?
Speaker 3:they think I can predict it, um, and then they get mad at me like I'm controlling it, so you can't predict. I can't predict it and I can't control it. It's got nothing to do with me, I'm just um one person in the millions in austral.
Speaker 1:Yeah, is there a pivotal story or client that's happened in your career? That kind of went like it touched your heart a little bit, like you felt like you really helped them.
Speaker 3:Yeah, actually it was recent. Especially in this market you just see a lot of people really down, they're not getting into the market, they're working so hard and it's not getting anywhere. Um, this one client was her and her husband. Both are full-time workers, she's self-employed and he um works for family. They spoke with a previous broker and they were only able to get like about 300 000 to borrow from a bank and I thought already that was odd for two people, yeah, to not be able to get more. Um.
Speaker 3:So I went into it and she actually reached out because she saw me at a women in property event and she said can you see if you can get us better? And then once I actually went through her financials I think it was a very complicated deal and the broker just was not bothered to look into it. You have to look at ad backs, depreciation, see how you can better the client's position, and it took us a while, it wasn't an easy fix, but once we went through it and you know she put the effort in responding to me and we both spoke to different lenders we were able to get her $800,000.
Speaker 1:Yeah, wow, yeah. And then they bought a property.
Speaker 3:So $500,000 increase. Yeah, and they bought a property $500,000 increase.
Speaker 2:Yeah, and they bought a property within a month. Wow, yeah, it confuses me. Not all brokers have the same access, the same software, the same bank calculators. How can one broker go from $300,000 to $800,000? What's the difference?
Speaker 3:I would say it's effort. I think, especially with self-employed, a lot of brokers don't want to touch it. Why is that touch it? Why is that? It's to them? It's complicated.
Speaker 3:I think you have to really think outside the box when it comes to how to position the client to the bank, because if you see a lot of expenses or things on their system, like on their statements, a lot of them are just like they're not going to be able to afford it or it's too complicated to you know. Comment on to the bank. I think with us we put the effort to actually come up with scenarios and actually go back and forth with the bank to convince them that this is a strong client, and then we proved the bank wrong in a lot of instances about how much they were earning, how much they were spending, and just. It is really about effort going through the statements, looking through the client's history, everything like that. So a lot of brokers just like to go to the standard easy home loan. Um, with this one I really wanted to because I just couldn't believe that she could only get 300 000 for a couple as well.
Speaker 3:Yeah, that's crazy and they were trying to buy their like their own home and they finally got one. She was so happy like that was so rewarding. Just to see that was my.
Speaker 1:That's easily my favorite story to tell yeah, do you think um the fact that the client was also willing to work with? You and be in touch with you regularly and provide all the information that was needed.
Speaker 3:That really helped as well yeah, I think the main thing we built from the beginning was trust. Um, she came to me and I told her straight away um, this is what to expect, like it's not going to be something that's going to happen quick. Um, you need to work with me to be able to, like, get over the line, and I'll be honest with her along the line, and I think that's what we did. I kept communication very consistent. Every time I had a response, she knew about it. Anytime there was a change, she knew about it. So I think building trust with clients is one of the the main priorities you have to have. Yeah, because it is their financials. It's very information, so you have to treat it as such.
Speaker 2:And I think what you just said there I think that's one of the most common things that a lot of people don't do anymore is building trust with your client. Even for myself, when I'm talking to someone, if they don't trust me, they're not going to listen to me, and it's the same thing for the finance guys as well. If a client doesn't feel like it's to show you everything or send you everything, you can't truly help them, correct? Yeah, exactly. I know for a fact that when it comes to me and I want to buy the property, they may say they have a little bit more than they actually do, or this situation is not exactly what it seems. So I want to help. I want to help the people in front of me.
Speaker 2:We can't help them unless they tell us everything, and sometimes there's always a solution. I'm sure we've all been through um, we've all been through people and clients and stories that there's more than there's more than what's actually sits in front of us. So you want to help them, we want to get into that next step, but if you're not open with us, we really can't do much. Exactly, and there is a. There is something that we can do to fix every situation. It might not be the most ideal situation today, but again, it could be a plan for the next six or twelve months for them to get their goal or go for that journey.
Speaker 3:Yeah, exactly right, and I think that's so important, like the client has to be willing to work with you but also be reasonable in understanding, like, what we can and can't do. And I think in my situation she understood that, okay, we may have been in a tight spot, she might be restricted with some lenders. She accepted that from the get-go, that you know she might not have the best interest rate but she might get the property she wants, and she understood the long-term effect of that and that getting her foot in the door mattered more than worrying about interest rates and things like that.
Speaker 2:All right, let me ask you the question everyone's asking um around the barbecue. What is um? How do you increase your borrowing capacity? What can you do to increase it? Yeah, what are those little myths? What can you actually do properly to actually maximize your borrowing capacity?
Speaker 3:yeah, um, besides the standard like, increase your income, yeah, um, a lot of people need to really review statements and where their money is going. I can't tell you the amount of people I've seen with multiple subscriptions that they are unaware of donations going to places they're not even sure of. Um, after pay zip, pay all those little buy now, pay later.
Speaker 1:Yeah, that one caught me and my husband out? Definitely, yeah, my husband had an after pay account that he honestly had never used, but he had forgotten that he opened it and that held up our lending until he could close it and get a letter from the I think it was Afterpay get a letter from them basically confirming that it was closed.
Speaker 3:Exactly yeah.
Speaker 1:And I think in our minds it was like but he's never used it, what's the big deal? Right, but it held up and limited our borrowing capacity.
Speaker 3:Yeah, and that's the same mindset a lot of people have with credit cards. I'll ask or do you have any credit cards? They say no, yeah, and then I'll do a credit check and they have like an eight thousand dollar credit card. They're like but I'm not owing any money. I was like what the bank thinks you are? Like they don't care if it says zero balance, yeah, there's an eight thousand limit and they're assuming that that's fully owing. Yeah, so credit cards is another way. Close any that you're not using. It's just unnecessary.
Speaker 3:Um, like your gambling habits, um, sports, but tab, I think. Okay, he looks at all of that, he sees all of it. They assess your everyday statements. They look at your spending habits and a lot of it is they think about like your history and your and your potential to repay their loan. If they think you have a gambling habit that then don't want to borrow, even if your credit score is good, yeah, and even if you might have the money to make repayments, they still might be like well, they gamble this much a month. I don't think we want that type of client.
Speaker 1:Yeah, um yeah, I mean another one. Um, that is big in the news at the moment. Everybody's's talking about is the Stage 3 tax cuts and how they'll impact people's borrowing capacity. There's a lot of talk around that it will increase people's borrowing capacity, but what's your take on that?
Speaker 3:So so far we obviously haven't seen it into effect yet because it's only just come into play, but based off what the tax cuts look like with each tax bracket, we could see a potential increase by 4% for people, which is a big deal when a lot of people are falling short by a couple of thousand. Just based off simple calculations we're seeing we could see an increase by 30,000 in borrowing capacity. Doesn't sound like a lot, but overall it actually is. If you are falling short for certain property groups, yeah, um, and things like that. So it'd be very interesting to see how that plays out. Um, from the calculations that you know the uh people are doing and the reports that are coming out, it looks like there could be an increase by at least four percent. So that's a, that's great that's really good.
Speaker 1:Yeah, I mean 30 000 that could be.
Speaker 3:You know the difference between securing a property and, yeah, it could be a difference between one bedroom, two bedroom, even getting that one bedroom, where a lot of people are falling short on even buying, yeah, a standard property even those people trying to buy a second property.
Speaker 1:we were just talking about this, about myself before. Um, I'd like to buy a second property and potentially this could open up a little bit more borrowing capacity to to get me over the line. Yeah, and I'm sure there's a lot of people in my position. You're one of them. You have one property. Yeah, maybe you want to go to two. Of course, some people would be rent investors, some people would be own occupiers. I think it's going to make a big impact on a lot of people.
Speaker 3:Yeah, it'd be worth to review your situation and not give up on, think, oh, that's it, I can't do it, especially if they've got an advice from one previous person. I always say it's worth getting a second and third opinion because everyone will look at your situation differently and have access to different things and just might be more willing to take more risks with you as a client. So I think it's always good to get a second opinion and not give up on yourself there let me ask a question.
Speaker 2:You've been broken for five years now. Yeah, so you were there when the rates were 1.99 percent those mad amazing rates, yeah, I wish I was like that now. Um, what's been the biggest impact? You've seen clients who were borrowing three years ago, four years ago, until now. I'm assuming that's priced a lot of people out of the market.
Speaker 3:Yeah, is that correct? Yeah, unfortunately you see a lot of, I think, low to middle range income earners falling off. Whereas before they could at least get their foot into smaller properties, now they're just not qualifying, and it's so sad to see because rates will go up and down all the time. So the rate increases we've had have now made these people believe they can never buy property. But in a couple of years, we don't know what it might look like.
Speaker 1:But right now it feels out of reach.
Speaker 3:Right now it feels like it's impossible for them.
Speaker 2:It's not just the rate increases but construction prices have gone up over 37%. So it's crazy. We used to be able to find and build a home for about $450. Now it's $450. Before you could do it for about $320, $300. So with the increase in the rates and the bull prices have gone up, people are priced out of the market these days.
Speaker 3:Yeah, but I think the property market always has a balance. Especially I've only been doing it for five years, but I've already seen two sides of the coin. Even though rates increased, property prices went up too. So I had clients that purchased at $330,000 two years ago and literally I did an evaluation this year and her property went up to $570,000. And that's crazy, and people are telling me the property is slowing down, it's not the right time to invest, and that was in COVID when everyone said you shouldn't buy.
Speaker 1:Her property went up. It's at its peak stock.
Speaker 3:That's crazy how fast that went up Two years, $570,000. It's crazy.
Speaker 2:I was going to say never buy, don't buy now. But have you ever seen people's properties go down in price? Have you ever experienced that?
Speaker 3:No, no, I've never seen property go like. In my experience I've never seen someone's property get valued less than yeah, that's crazy, yeah.
Speaker 2:And people do say oh, maybe it should wait next year, maybe it should wait end of the year, or maybe it should wait four or five years' time. It doesn't really matter. If you bought now, even if the rates are high in three years' time, say, for example, your house only rises by 5% a year, you're still making, in three years' time, 15% growth.
Speaker 3:Yeah, I mean, if you can buy now, I would say buy now, don't wait for rates to drop.
Speaker 2:Yeah, the perfect time is when you're actually ready not, yeah, yeah.
Speaker 1:I think that's the best advice that I was given before I purchased is don't wait for the market to be ready. Don't wait for interest rates to be at a certain number. Um, buy when you're ready if you've got a deposit and you find a property, buy, yeah, pretty much yeah, basically I mean, I feel like we have.
Speaker 3:I have a lot of people that have the potential to buy, but they get a lot of advice from family members that's like, well, it's not the one million dollar property we want you to have. And it's like, well, why do you need to have?
Speaker 1:yeah, one million dollars as a single. Yeah, why do?
Speaker 3:you have to have a million dollar property at 25 years old. Why can't you start smaller, like yeah, it doesn't make sense.
Speaker 1:A lot of people don't don't understand the concept of a stepping stone property either. They just think you know I want my dream home or I want my ideal property that I'm going to live in with my family. But purchase something smaller, get into the market, have an increase in a couple of hundred thousand in value and then use that equity to buy your dream home or sell it if you need to.
Speaker 3:But I mean, the family members are just going off their own experience. But the only way you prove them wrong is by proving them wrong. They're not going to listen to people speaking on a podcast or anything like that to take it seriously. They will see the result once you do it yourself. So take action, take action, yeah definitely take action.
Speaker 1:Um, have you got a client story that might, um, I guess, relate to the the tax cuts impacting borrowing capacity? Is there anyone that you've been working with for a little while that this might have a really positive impact on?
Speaker 3:yeah, I think I think there's a few in that in my clientele that we call them like. We've been nurturing them for a while because we want them to probably increase their capacity. A lot of it comes down to income, so this tax might benefit them. So there is one I'm thinking about where she's literally probably 20 000 short on what she wants to get. She can get her foot in the door for a smaller property, but she's really set on this larger one. So I feel like if, um, I think we might be able to get her across the line now with this new tax, cut um, because if it increases her capacity by at least 20 000, I think she'll hit that mark so so that could be the difference between maybe a one bedroom apartment.
Speaker 3:Yeah, potentially and I think her sticking it out and trusting like that we could get her there. I think this will be really exciting for her to see.
Speaker 2:We were having a discussion before and you said that you and I'll let you elaborate on this you're an investment-minded broker, correct, yeah, so what does that actually mean? So I know everyone's a broker at the end of the day. So what does that mean? You're an investment-minded broker. What's your specialty?
Speaker 3:Yeah. So I think, specifically with the clients I'm getting, they're wanting to invest. So ideally, what their goals will be is to have more than one property in their life. So with an investment-minded broker, I would say we look at your portfolio as a whole. I'm not specifically looking at you just buying that one property forever. I overall look at your position to if you were to buy this first property, what's it look like for you to get the second? So not maxing your capacity is probably the main thing I focus on.
Speaker 3:I don't like my clients just buying that one and that's it. That's all they can afford for the rest of their life. I like them seeing bigger picture things. Um, they come to me with properties and I'm I look at them as if, okay, what's the rental you would look like here? So how's that going to benefit you income-wise? And then is that going to potentially benefit you in the second property and what's the growth look like there? So a lot of my mindset with lending focuses on if your goal is to increase your property portfolio, what does that look like with you purchasing one property? And then that comes into mind with refinancing. I talk to them a lot about equity release and what that could be used for, and a lot of people don't know that they could release equity from their first property to put the deposit on the second. They think they have to save all over again so I always keep that mindset.
Speaker 1:Do you want to explain a little bit about what equity release?
Speaker 3:yeah sure who we'll use. My client, for example, that bought that 330 property and then her property grew to 570. So that was about over 170 000 dollars increase. I think I'm calculating that right. So she now can access that that growth from how much she owes in debt to how much the property is valued. You can refinance with your lender and you can take that money out, for example, if she wants to take out that $100,000. And then she can use that that's called equity to buy her second property. So equity growth is pretty much what you're looking for when you're buying property. So, yeah, you just refinance with it.
Speaker 3:Doesn't have to be your current lender. You can move to a new bank whoever values your property pretty much the strongest, um, and it's whatever that value is against what you're owing. And then that money can be used for renovations, purchasing another 80, up to 80, always, yeah, unless you want to pay lenders, mortgage insurance and go above 80, yeah, um, you would keep your loan at 80, but pretty much you can take up to 80% out and use that for traveling, wedding renovations, buying a new property. There's, that's your money, that's what you're buying that property for and you didn't have to sit and save, yeah, for another five years to get a 10 to 12 percent deposit and that's how it's been at all for lifestyle.
Speaker 2:When you buy property can help you with your lifestyle. So, now that client can do whatever they want. Practically they can go buy their car, go travel for three to six months without worrying about income. They've got the properties back and they're up now. So I think that's the biggest key message is, if you can get into the market and you're ready for it, go ahead and take that punch.
Speaker 1:Yeah, yeah, definitely, and I think a lot of people don't know how they can use it to then grow their portfolio even further in terms of buying another property. What does that mean? Do I need to have cash in the bank to have another deposit? But in fact they can use that equity right to place a deposit on a new property.
Speaker 3:Yeah, exactly right. So if you don't have savings but you have the borrowing capacity to to get a second property and you have that one property, it's worth doing some valuations, speaking to a broker, get them to work for you, find out what your property is now valued at and if it has sufficient equity in there to get you that second property. You should refinance, take it out and put a deposit down and continue. And that's how a lot of people grow their portfolios. If you listen to people that own 14, 15, 15 properties, it's not because they're saving that money they always talk about oh, I took out money on my first house to buy my second, third, fourth, yeah, so I think that's the mindset um investors take and I think a lot of people need to start looking at it that way definitely.
Speaker 1:Yeah, they're leveraging the bank to get those, yeah, extra properties and eventually they'll pay off and turn into passive income or lead to an early retirement maybe. Whatever their goal is.
Speaker 2:One of the crazy things is I was looking at your email you sent me the other day. You have just over 50 banks. There's that many banks now. Yeah, I knew there was your major banks and there's a few other ones out there, but so there's 50 banks. I'm assuming that one bank can give you money. There's a few other ones out there, but so there's 50 banks. I'm assuming that one bank can give you money. There's one, I'm assuming, bad credit score, all that kind of stuff. So is that why you can get higher borrowing capacities? Does that come into effect there?
Speaker 3:Yeah, definitely. I think if you're going to stick with the four major banks, you're very restricted. They follow a very standard policy. They like a vanilla deal. I would say like a vanilla deal. I would say so as clean as it can be. So no one is vanilla, so no one's situation is vanilla. So you know, if you're lucky, you go to those big banks.
Speaker 3:But there's second-tier, third-tier lenders that have the same rates, have less stricter policy. For example, self-employed. At a standard bank, you need to be there for at least two. You need to have had an ABN for two years. At a standard bank, you need to be there for at least two. You need to have had an ABN for two years. Yeah, we have lenders that can take you at six months or one day registered. It's important to have access to lenders that may ignore credit credit impairments. Yeah, because Some people have made mistakes, but that shouldn't deter them from buying property, and you have a lot of lenders that will look at people's overall situation realistically, whereas your standard big banks are over-assessing it. Yeah, and that difference makes it so huge. When it comes to borrowing capacities, you see differences in over hundreds of thousands of dollars in borrowing capacity.
Speaker 2:Lara, you study the market a lot. I know you always send me these little articles Just based on what Natalie said and all those little ads on Instagram that we go through. What sticks out in terms of different brokers, different people, the messaging Is it all the same thing? People just want to buy a property, or do people have different you would you say, have a different view of what finance is in their eyes?
Speaker 1:I think people have different views of what finance is. Yes, um, I don't think a lot of people understand finance. Yeah, um, there's so many, um different companies and ads and you know, people are being bombarded these days by different information and they don't know who to trust or who to believe or which avenue to take, which one is right for them. So I think what you said about building trust with one of your clients that you mentioned before, I think that's a really big piece that a lot of brokers that I've seen in the market miss. They don't spend that time nurturing, they just want an easy deal and move on. So I did work with a broker a long time ago and he just wanted the simple, the simple option yeah, I wanted to apply for the first time guarantee I think that's what it was called at the time.
Speaker 1:He did not want us to go that route. Okay, we'll keep saving them. So they kind of, if you don't have a broker that is there to kind of build you and guide you on a path that is right for you, you're going to go in a complete different direction. Yeah, on a path that is right for you, you're gonna go in a complete different direction. I ended up changing brokers at the time, went with somebody else and managed to buy a property. We didn't use the first home guarantee in the end, but it's just a stark contrast and taking that time to nurture and trust is a big missing piece of that. And you can really see that online in what companies are sharing and what brokers are sharing online. Some are happy to give you that information and that guidance and not necessarily advice up front, but they're they're just willing to to chat and have a conversation first rather than just get straight into the deal yeah, and I mean it's important.
Speaker 2:If you have the right support team around you, you have the right property person, the right finance person around you, you can make moves. You can actually hit your goals and always be like that Put your steps down, what are your goals, how do you want to achieve it, when do you want to achieve it? You write it down, you set them out correctly, you get. Look, nothing's impossible as long as you understand that it may take time.
Speaker 1:It's not gonna happen overnight. You'll eventually get there, but that support network around you is crucial and key. Yeah, definitely, and I think it starts with. It starts with brokers, yes, but there's a whole other group of people that you should involve in your a team as well, and the same goes for them. If you don't have somebody that you know nurtures you and supports you so that you trust them, then your a team is not so a team.
Speaker 2:Yeah, 100% easiest way to describe that people who may not understand is just like a sporting team. In a sporting team, you see the athlete there, look like they're on the tv, they're on the papers, they're everywhere, but behind the athlete is the organization, the club physio yeah, the club doctor, the strength and conditioning the fitness guy, like all those people contribute to that athlete success. So same thing in your own journey. If you want to buy property and you have your goals, all those people behind you're going to help elevate you.
Speaker 3:Yeah, so then you can get to those goals but again, the athlete trusts that those people will get him there. So I think it you definitely need. If you're going to work with a team, you have to trust them and if you don, that means it's the wrong team for you. So I think once everyone works together and understands the goal, at the end you know you have to have that team support.
Speaker 1:Yeah, definitely, and I think on that point as well. Sometimes people will feel locked into a person Like I'm already speaking to this person, I can't change. I don't know how many of my friends that have tried to buy property they've spoken to a broker. The broker can't get them what they want and they're too scared to switch halfway through yeah, I think I preferred you and maybe you didn't finalize the process as a broker, but you kind of helped them as a bit of guidance yeah, I gave them a lot of advice yes, they were too scared to change broker they're too scared to ask questions to their broker what this meant.
Speaker 3:Yeah, what does the bank need? That that's I remember your friend, uh was asking about that. Her broker just wouldn't communicate what they actually needed to do. Yeah, um, and I just simplified it and I think that's the. The point is like, if something's not working with and I say the same thing with banks a lot of people are so loyal to one. I have my everyday account there, I have my savings, I have it's too they don't change the bank does not care.
Speaker 3:Yeah, they're not giving you a better rate or a better position because you have your accounts with them. You need to do what's best for you. Need to move to the next lender, yeah, um, and if you keep competition in that field, it's better for you. Yeah, because then they're all fighting to give better rates. I think when it a market is saturated by like one leader, you'll see issues with it. So I think it's good to move around, find what works for you, and that's with the broker, with an agent, with a bank, anything yeah, yeah, definitely do?
Speaker 2:a lot of young people come to you because now a lot of people are generational buying properties now and there's more knowledge out there. What are they saying to you? Is everyone scared to make that fund? Is it a hard process for them? Are they understanding what finance can help?
Speaker 3:I think it's like they want to do it because they've seen videos and people talk about wealth grows through property. But I think family holds a lot of people back because the younger generation, our market, is very different to how our parents grew up. I mean, our parents bought houses for under $100,000. Like, in Sydney alone, the median price range is $1 million. It's definitely not the same field and we grew up with this idea of, like, you buy one home and that's your home forever.
Speaker 3:And I think this younger generation is actually more open-minded to be like I'm happy to buy interstate as my first property. I don't need to physically see it if it's got good growth, good rental, yeah, but again, they hold back because they'll go ask their parents. But again, they hold back because they'll go ask their parents, and which you know you would do. We all do that. We ask our parents for advice. But I think, uh, this generation needs to like, maybe trust their instincts a little bit and take a risk, yeah, um, and see where that goes um, and they're willing to learn. I think they're more open-minded, um, but again, they're learning everything online. So there's there's there's a risk there too, because they're getting advice from very uneducated people as well. So you have to kind of talk them through the myths and misconceptions of what they're seeing as well.
Speaker 1:Yeah, there's a lot of people on social media these days pushing education and advice. 18-year-olds are giving advice. They're probably not even trained to give advice.
Speaker 3:Yeah don't have the qualifications.
Speaker 2:Definitely, yeah, other than that, I just want to go back to that quickly. That, um, because my brother's looking at buying now and I was telling him what he should do and how he should be doing it. He goes to me that his friend told him he has to save up 10 to buy his first investment, no matter if he lives in or not. I said to him, I'm sure there's ways around it. What do you want to do exactly? He goes and then he set up another 10%, plus the M2D, plus everything. I'm like have you looked at the grants? Are you sure you can find something around that or what you want to do? I was explaining the rent vesting tool.
Speaker 2:Yeah, I was telling that me. As an example, I rent an area that the median price is 1.5, 1.6 mil. So for me to buy a property in that area I would need to have a minimum. If it's a 10% deposit plus LMI, plus the MGT, around 200K, it's a lot of money. I can buy multiple properties around that interstate and high-growth areas. So obviously I'm not doing that. I was telling you, maybe look at areas where you can buy interstate then so you don't yeah, people come to? Is it a bit more open now?
Speaker 3:yeah, I feel like there is a lot of more open-mindedness. It depends on, I think, the person and what their goals are. If someone is has like put in the head, I can just buying an investment, they're much more open-minded to investing interstate, especially because outside of Sydney the rental yields are higher like if you look at WA, they're in the six percent, like that's, and their property prices are much lower. I mean outside of Sydney the rental yields are higher, like if you look at WA, they're in the 6%, and their property prices are much lower. I mean they're around $500,000, maybe.
Speaker 3:I think that's so much more affordable for a younger person than trying to buy $800,000 to $1 million here with a 3% to 4% rental yield. It doesn't make sense. So I think once you explain that logic to them, they kind of see that Like they're like oh, okay, and they start to consider it. I think getting the right property and speaking to the right you know property agent that can show you growth areas, because you can't go find this stuff on your own, you're not going to know where to buy if you're going to buy in Queensland or WA and I think once you connect them with the right people, they're more willing to consider it. Can you buy with any deposit.
Speaker 2:Pardon Can you buy with any deposit. Do you need a certain deposit?
Speaker 3:You can buy with any deposit, okay.
Speaker 2:There is ways.
Speaker 3:There is ways. You just have to be smart about the ways you go about it.
Speaker 2:It's all about the structure.
Speaker 3:It's all about the structure. It's all about the structure.
Speaker 1:Excuse my ignorance.
Speaker 3:When I say structure, you've got to think about the lender, because there are lenders out there that will accept 2% to 5%. So I think if you are willing to explore those lenders, then you've opened your door already to different opportunities. I think if you're very strict with the type of lender you will use, again, you're restricted with policy, so there are lenders that are happy to take more of a risk with you. A lot of people are scared of lenders' mortgage insurance, so that gets charged when you're spending over 80% on the property. So if you're borrowing 90%, for example, a lot of people don't know that with investment properties you can claim some of that back on tax. You can capitalise it into the loan, so you're not physically paying it out of pocket and if you calculate that expense against the growth of the property, it's not much after all, like after a couple of years of owning it. So I think once you get past that fear of OK, you might get charged lenders mortgage insurance again.
Speaker 1:You've opened that door to more lenders and more options. So, yeah, yeah, I think that's definitely a bit of a hole. That is uneducated, I would say, in a lot of young people. I was the same before I purchased LMI is scary, you know. You think, oh, it's five, ten thousand dollars just going to the bank for nothing, just because I don't have a big enough deposit. But you're right, if it's over the life of the loan and it's getting you into the property market now that's growing at 5% it's worth it and you can capitalize it and you're not paying it out of cash, right? Yeah, you don't have to pay. It can be added to the loan, exactly right?
Speaker 3:Right, so you can pay it out of cash if you want, but you can add it to the loan. And what's? $5,000, $10,000, $13,000 across a loan across 30 years, if that's the term you choose. So again, it all depends on the strategy and structure you want. So if you're more willing to be open to ideas and restructuring and changing you know that traditional mindset about how a mortgage should look, you can get into the market differently yeah.
Speaker 1:Um, a question I got asked by somebody yesterday actually was does age play a factor in um approval and do you have any advice for young people wanting to take out a mortgage? What, what steps should they look at taking before coming to you?
Speaker 3:um, yeah, so your age doesn't necessarily play a part in approval. It depends if you're close to retirement or are in retirement. That's a different story. But again, if you are close to retirement, there's exit strategies. There's lenders that will consider you if you put together the right plan on how that will be repaid. The term you're looking at how much of a deposit you have. For younger people, no, it doesn't play a part. I think savings and income is what will determine if they can get into the market or not. Also their spending habits. So the main thing I would suggest is just be very cautious about their credit and the inquiries they make for types of credit, how much they save, how to boost their income and if they are low-income owners, how can they maybe boost it to become medium to top range. Um, second jobs, things like that. I think you side hustles, yeah, side hustles, and that's, I think, a thing of this generation. Everyone has a side business or it's selling something on instagram. It's worth it if you're earning consistent income and you're adding on top you.
Speaker 1:That's how you're going to get get into the market if your base income isn't strong enough yeah you just got to push yourself definitely would you advise young people to come and see you early on, even if they don't feel like they're ready to purchase property, so that they can be, I guess, set on the right direction yeah, 100.
Speaker 3:We come up with like savings plans. Um, if I notice anything that might be adverse on their, their spendings or their credit, I can help them fix it now. Put a plan for them, that in one to use time. Okay, let's reassess, because you're young, so putting that effort in it's, you're putting time into yourself to invest and get better and stronger. And I think it's like going to the gym you're not just going for one day, you will go for six, twelve months a year. Consistency, consistency is the key.
Speaker 1:Yes, don't relax that I think we've used the the cash is king reference.
Speaker 3:Maybe it's consistency is key yeah, everyone speaks about consistency with diet, with life, with mindset, with motivation, everything right thanks, matt thank you, thanks for coming in.
Speaker 1:I'm sure we'll speak to you another time as well, yep, anytime, thank you.
Speaker 3:Thank you, thanks for coming in.
Speaker 1:I'm sure we'll speak to you another time as well. Yep, any time.
Speaker 3:Thank you, thank you.
Speaker 1:This is intended for general informational purposes only and should not be considered financial advice. For specific guidance on your situation, consulting a qualified financial professional is essential.
