Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

I took some time last weekend to look at some articles and commentary that came out about a year ago when the GVC (Great Virus Crisis) was just beginning.

The media was full of negative commentary but in my regular podcasts my guests and I gave a much more measured commentary using our perspective gained from many years in the market, and as a result we were circled by a pack of "hangry" housing bears.

They were all confidently growling that local house prices would slump by the largest margin on record.

Of course, they were fuelled at that time by some crazy forecast from the banks and the perennial negative Perma Bears who were praying for the mother of all housing depressions.

Now the media is full of positive news and most of the bears have gone back hibernating in their caves, but some are still out there telling us the upturn in our property markets is just temporary.

We have an embarrassment of riches, with our economy and our property markets surging ahead.

While much of the commentary is about the micro factors – what's happening on the ground in our property markets, I like to regularly get together with property commentator Pete Wargent in these "Big Picture" podcasts to look at the macroeconomic factors affecting our economy and the property markets to help give you some more clarity about what the future holds so you can make better investment and business decisions.

No fiscal cliff at the end of March

Remember how the property pessimists were worried that we would fall off the cliff due to the many deferred home loans?

Many banks gave temporary relief to borrowers impacted by COVID-19, allowing them to defer payments for a period of time.

However, APRA reports that as of 28 February, a total of $14 billion worth of loans are on temporary repayment deferrals, which is around 0.5 percent of total loans outstanding, down from $37 billion (1.4 percent of total loans outstanding) in January.

Sure, lots of homeowners and property investors took advantage of the mortgage safety net, but they didn't need to use it and are now repaying their debts.

We're not falling off of a fiscal cliff and our banking system is sound and stable – so it's a pity the Negative Nellys created so much stress amongst those who listened to them last year.

Property prices and GST boost state budgets by $7billion

The fastest house price growth in 32 years nationally has fuelled stronger than expected stamp duty revenues while also adding a feeling of wealth for existing homeowners.

We know when we feel wealthy and secure, we will tend to spend more. This all good news to help continue boosting the post-COVID-19 economy.

And this has a flow-on effect on government budgets.

We know our governments have taken on more debt to help us get through the coronavirus crisis, but now it seems that State government budgets are a collective $7 billion better than expected as rapidly recovering housing markets and consumer spending lift goods and services tax and stamp duty collections run ahead of forecasts.

Federal estimates of GST collections are already $5.9 billion ahead of where they were forecast to be just three months ago, while stamp duty estimates have improved in every state by more than a combined $1.5 billion compared to past figures.

The latest home loan figures show that investors are back in the market

The latest ABS figures show the value of new loan commitments for housing fell by 0.4 percent from a record-high $28.75 billion in January to $28.64 billion.

On the other hand, investors are back in the market with lending to investors rising by 4.5 percent in February to 3-year highs of $6.94 billion, while lending to owner-occupiers fell by 1.8 percent to $21.70 billion.

For owner-occupiers, the value of loans for construction rose 4.4 percent in February to a record-high $4.25 billion.

Renovation loans rose 8.3 percent to 11-year highs of $322.4 million.

Building approvals surging

​February saw another big upside surprise for dwelling approvals which leapt 21.6% in the month to be up 20.1%yr.

​The record house building approvals were driven by the government's HomeBuilder program which has now have sparked shortages of key tradespeople and helped push the price of materials up by as much as 50 percent.

​Rampant demand in the renovation and home building sector is hitting customers with significant delays and pushing up the price of materials.

And disruptions to international supply chains are only making matters worse.

​​With dwelling approvals for houses at record highs, it's likely we will see additional pressure growing on construction costs as demand continues to build for residential construction materials and resources.

The lift in residential construction costs is also placing upwards pressure on inflation where housing costs receive the heaviest weighting within the CPI 'basket' of goods.

Although HomeBuilder has now been phased out at the end of March 2021, it's highly likely we will see a continuation in this trend towards higher residential construction costs as it will take some time for builders to work through the surging pipeline of house approvals.

Job vacancies

Despite the concerns of double-digit unemployment, 90% of the jobs lost over Covid have been recovered.

In seasonally adjusted terms, job vacancies rose by 13.7 percent or 34,800 to a record 288,700 available positions in the three months to February.

Vacancies are up 26.8 percent or 61,000 available positions in February compared with a year ago.

Of course, JobKeeper has now ended and while there is some concern that more people become unemployed, the residential property boom if you're in strong demand for construction workers.

ANZ Bank Forecasts

A new report released from ANZ Bank predicts house prices at the national level will rise to a strong 17% through 2021, before slowing to 6% in 2022.

What a turnaround from all the pessimistic forecasts all the banks made in the middle of last year. ANZ senior economist Felicity Emmett said she expected the Australian Prudential Regulation Authority (APRA) would then introduce macroprudential measures to slow house price growth into 2022.

Also… it is unlikely that APRA will intervene with macroprudential controls any time soon, in light of APRA chairman Wayne Byres' comment this week when he reminded Parliament that its primary responsibility is financial stability, not soaring house prices, and it is not seeing activity right now that would compel it to intervene.

Links and Resources:

Michael Yardney

Metropole's Strategic Property Plan – to help both beginning and experienced investors

Join us at Wealth Retreat 2021 on the Gold Coast June 12th – 16th – get more details here

Pete Wargent – Next Level Wealth Pete Wargent's new book Low Rates High Returns

Shownotes plus more here: The Big Picture Economic and Property Trends You Must Understand, with Pete Wargent

Some of our favorite quotes from the show:

"March has come and gone, and there was no fiscal cliff." – Michael Yardney

"I believe that good debt, debt against appreciating assets, is really an asset." – Michael Yardney

"Once you realize that no amount of money is going to make you happy unless you shift your mindset into gratitude and abundance mode, you'll never be happy." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Why are you investing in property? Or why do you want to get involved in property investment?

It's not really for the properties, is it?

For some people, it's because they want to fund their retirement, while for others it's that they want more choices in life – they don't particularly want to retire, but they want to work when and how they want to work and because they want to go to work, not because they have to.

However, the inconvenient truth is that despite over 2.1 million Australians investing in property, 92% of them never get past one or two properties in the portfolio, meaning they won't be able to fund their retirement.

So, is it really possible to live off your property portfolio in the current economic climate and in our more challenging finance environment?

The answer is… the rules of finance have changed considerably and how one funds the longest holiday you're ever going to have – your retirement – is very different from how you would have structured it many years ago.

And that's what we discuss today in my chat with financial advisor Stuart Wemyss. At the end of today's podcast, you'll have more clarity on how to successfully live off your property portfolio.

And I'm sure you won't be surprised if I tell you it's not what most people would recommend.

Funding your retirement from property investment

More and more Australians are looking at property investment as a form of taking control of their financial futures.

Yet some people seem to be questioning the ability to really fund a reasonable retirement through property investment.

So, today I'm going to have a chat with Stuart Wemyss, to get an understanding of how to fund the longest holiday you'll ever have – your retirement.

Many years ago, I was introduced to the concept of living off the increasing equity of your properties, but that really isn't possible in the current lending environment. In fact, it's changed since the global financial crisis.

So you'll have to build an investment portfolio that will allow for a great retirements

Stuart and I discuss

• The importance of building an asset base.
• How does one structure a portfolio?
• So many unknowns for the future
• Must account for taxes
• What about interest rates – will they remain low
• it is best to acquire a combination of investment assets i.e. some property, some shares (hopefully in super), and some cash by the time you reach retirement. It is not necessary to acquire these assets equally each year. People who insist on "property, property, property" or "shares, shares, shares" are probably biased.
• It's OK to take a level of debt into retirement if you can comfortably service it.
• Borrowing to invest is typically a good wealth accumulation strategy as long as you do it prudently and adopt a proven methodology to select quality investments.
• If used wisely, debt can be a very effective tool. However, whilst your investment strategy will require you to get into debt, the strategy must also articulate how you will get out of debt (i.e. repay it).

Links and Resources:

Michael Yardney

Metropole's Strategic Property Plan – to help both beginning and experienced investors

Join us at Wealth Retreat 2021 on the Gold Coast June 12th – 16th – get more details here

Stuart Wemyss – Prosolution Private Clients

Stuart's Book – Rules of the Lending Game

Shownotes plus more here: How do you fund your retirement using a property portfolio in today's financial environment, with Stuart Wemyss

Some of our favourite quotes from the show:

"We don't know what the rules are going to be when you retire in the future." – Michael Yardney

"To get the results most of us are looking for, you need a plan. You need a strategic financial plan." – Michael Yardney

"Your wealth operating system is what connects your inner self, your thoughts and your feelings, with the outer world." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

If you want to take advantage of our property markets and become financially independent, today's show is for you, because I've got 3 segments during which I share a number of concepts that will help you along the way.

First, we discuss whether property investing is an art or a science.

Spoiler alert: it's both. But you still need to listen to the balance of the show because I'm going to explain how and why they interact.

I'm also going to discuss the concept of becoming a borderless investor – investing in another state.

I know a lot of people find this difficult. I see this particularly among intelligent and analytical people because they want more control. But bear with me as I explain some of the benefits and why you should at least consider becoming a borderless investor.

Then in my mindset moment, I'm going to share a lesson that's made a difference to how I structure my life and I'm going to talk about the big rocks in the jar of your life.

Is successful property investing an art or a science?

So, Let's look at the three types of property investor.

1. The passive investor

A passive investor tends to spend little time doing any due diligence and is keen to buy one of the first properties they come across.

They aren't really interested in understanding all of the ins and outs that go along with creating a property portfolio such as finance, tax laws, compounding and so forth.

Instead, a passive investor tends to let their emotions get involved in their investment decisions, which we know can lead to disastrous results.

1. The active investor

An active investor puts in some degree of work in order to find a good investment prospect, including conducting some due diligence in the hope they can increase the likelihood of making a good and viable investment purchase.

They generally look to gain a basic understanding of the principles involved in property, finance and taxation and would look to seek professional advice for help with structuring a portfolio.

1. The analytical investor

An analytical investor is the far extreme of a passive investor.

Instead of undertaking little research and due diligence, this type of investor tends to go overboard and spend months, or even years, examining data, seeking advice and reading material in order to look for the 'ultimate' investment property.

While it may seem that an analytical investor is more likely to make successful investment decisions, it's actually not the case.

The problem with property data

There's no doubt that it's important to understand the property fundamentals and research appropriate and reliable property data, and the more extensive the data research is and the longer it goes back, the more accurate it is in forecasting future trends.

But the problem is, data is often wrong.

Unfortunately, the most commonly-reported data - median price data - is actually very unreliable.

There are three reasons:

1. Because median prices fluctuate depending on the way the property is sold. In many suburban areas, where property sold a number of years ago and vacant land has now been replaced by new homes, this data is irrelevant.
2. Similarly, new apartment or townhouse developments can skew median house prices of other local properties.
3. Gentrification and renovation changes the nature or quality of properties which again, results in the median house price for the area being incorrect.

Using median price data is risky for investment purchases and can cause costly investment mistakes.

Just because median prices go up in the area doesn't mean that value of any local property also increases.

So is property investing an 'art' or a 'science'?

Both.

It's true, successful property investors need research and data to aid an investment decision, but it's not enough on its own.

Investors also need to compliment any applicable data with local area knowledge and expertise, plus experience and perspective in order to make the best-informed choices.

Someone looking at data can make it say almost anything they want; the trick is knowing how to take that information and use it in conjunction with some practical experience in order to accurately make an investment decision.

In other words, data and research is a critical step in getting ready to invest, but it is only one of the many important steps.

What's the key lesson here?

Property investment is an expensive game, and you can't afford to get it wrong.

Engaging with experts with many years of experience can help you avoid making the costly mistakes made by so many naïve investors.

Remember, property investment data is crucial when making an investment decision, but it's only half of the work.

Should you become a borderless investor?

You know…invest in another state?

The short answer? Yes, absolutely!

The long answer? There's so much you need to consider when investing in property, and the location and your proximity to the property is just one of them.

Investing interstate is not without its risks.

But to be a successful property investor who creates sustainable, lasting wealth from your property portfolio, it's my belief that you need to adopt a diversification strategy.

This is because (and I may sound like a broken record here to people who have read my articles or seen me speak on this topic before), there is not one "single" property market in Australia.

Our country is made up of many real estate markets, which don't always move in sync – they each have their own cycle.

Just look at the significant variance of the different property markets in 2020 for evidence of that.

Values have been falling in one market and rising in another, a dynamic that sometimes plays out at a suburb level.

By that I mean, one suburb can be experiencing growth, while a nearby suburb may not.

Investing in a city other than your own can be a wise way to spread your risk across multiple markets, and take advantage of growth cycles that may be stronger than your local area.

Think about it: if you limit your investment options to your own backyard, are you really setting yourself up for financial success?

Furthermore, searching for properties in your local area is not really "researching".

Rather, it's searching for facts to support your ready-made preconceived opinion that the area is a good place to live or invest.

And here's the truth about property investing...

Diversification of location is key.

This is very different to having a philosophy of diversification of investments, which is a whole other ballgame (on which I have very strong opinions!)

It's those investors who have diversified property portfolios who will find they benefit, as different capital cities each have their own day in the sun – as their cycles peak at different times.

There are also land tax issues to take into consideration. If you acquire a number of property assets within one state, you could end up paying a whopping land tax bill every year.

By spreading your risk and buying properties in various locations, you may minimise the amount of land tax you're required to pay. This is not a reason to diversify, it's just one of the possible benefits.

Now don't get me wrong… I'm not suggesting investing in other states just for the sake of it. What I'm recommending is that as investors build their property portfolios, they should add investment grade properties in the 3 big capital cities in Australia to their assets.

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Shownotes plus more here: Is Property Investing an Art or Science? Becoming a Borderless Investor + More

Some of our favourite quotes from the show:

"Instead of undertaking appropriate due diligence by closely looking at property data, many investors are making emotional purchases and it's causing poor decision making." – Michael Yardney

"Failing to combine the science and the art of property investment could end up costing you a fortune." – Michael Yardney

"By spreading your risk and buying properties in various locations, you might minimize the amount of land tax you're required to pay." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

With the property markets surging around Australia, people are starting to ask is this more than a just a property boom? Are we about to enter a property bubble?

That's what I'm going to discuss today with property researcher John Lindeman, and we'll explain the difference between a boom in the bubble in what we believe is ahead for a property market so you have more clarity in making investment decisions

But before I have that chat with John, I will explain to you what it takes to be in the top 1% of wealthy Australians. And what it takes to be in the top 1% wealthy people in the world.

And the figures I'm going to share with you may surprise you, in fact, if you're listening to this, you're likely to be amongst the top 1% of wealthy people in the world.

But I'm then going to share with you what you can do to work your way up the ranks. And I will also have my regular mindset message for you at the end of the show.

Who is in the Top 1%?

Today, I'd like to have a bit of a chat about what it takes to be in the top 1% of wealthy people. We know that true wealth is more than how much money you have or how many properties you own. But you don't have to look far to see the references to the top 1% of money earners and how disproportionate the distribution is in Australia and around the world.

The coronavirus also helped expose the deep divide between the rich and the poor.

But you may be surprised to find that the 1% doesn't just include the superrich. It may include you or someone you know. How rich do you think you need to be to make it into the 1% club?

It's very likely if you're listening to this podcast you're already in the one percent. According to last year's Global Wealth Report, an individual net worth of Australian one million two hundred ninety-five thousand dollars, a combined income of investments and personal assets, will make you amongst the world's richest people. In other words, you need about 1.3 million to be in the world's 1%.

As it turns out, there are discrepancies even among the 1%.

But when you look at the Bureau of Statistics, the average Australian has a net worth of just over a million dollars, and the Australian top 20% have a net worth of 3.2 million dollars.

So, a net worth of just 147,000 Australian dollars puts you in the top 10%. To be in the top 1%, you only need 1.3 million And Australian wealth is heavily skewed to property ownership. Just owning their own home can make many Australians more money than their day-to-day work.

That's why I discuss how to become successful in property. I want you to be in that 1%.

But what's the solution to wealth inequality? Focus less on taking action that could inhibit the top earners and more on what's stopping others from being successful and what's holding back the bottom 50%.

If we're in a property boom, when will the bubble burst?

We are in a new property cycle, but rather than starting off slowly as they have in previous cycles, almost every property market around Australia is exhibiting strong capital growth.

This time around is very different from other cycles I've experienced where capital growth starts slowly and different segments of the market in different states behave differently.

Currently almost every market, in capital cities and regional Australia at the high-end price segments of the market and it's the first homeowner level are moving upwards in price.

The one segment which is languishing is the CBD high-rise apartment.

Some commentators are claiming that our property markets are heading for a boom – I'd say they're a bit late to call you at that – we are in boom conditions.

But others are warning that we could soon be in a price bubble that is about to bust.

So, what's the difference between property booms and price bubbles, which are we in, and what's ahead.

That's the question I would like to ask leading property researcher John Lindemann of Property Power Partners – John is one of the popular regular guests on this podcast and a regular blogger on property update and Your Investment Property Magazine

So, let's start with some basics – what's the difference between and property boom and bubble?

Bubbles invariably bust and when they do, housing prices end up much lower than where they started.

Property booms, on the other hand eventually run out of steam with an occasional small price correction followed by a prolonged period of little to no growth.

While bubbles do not happen in the general Australian property markets which are underpinned by a large proportion of owner occupiers, in the past we have seen property bubbles in certain speculative sectors of the property market such as mining towns or off the plan poor quality high-rise apartment towers in our capital city CBDs.

The issue is that they both look the same at the start.

It's the type of buyers causing the growth.

Buying demand from investors grows when prices rise and the more that they increase, the more that investors want to buy properties.

Owner-occupier booms take place despite price growth and the more that prices rise, the more that demand slows down and then stops as prices become unaffordable.

Only investor led booms can become bubbles.

Investor-led booms can become bubbles because investors don't buy properties to live in, like owner-occupiers do.

Profit is their only consideration, and fear of loss their only concern.

This means that when price growth slows down or stops, investors start to put their properties on the market and try to sell.

When the number of properties for sale exceeds buyer demand, prices start to fall.

Panic starts to set in as more and more investors try to sell and because no one wants to buy, the bubble busts.

Owner-occupier booms merely slow down and when they end prices don't crash, because the purchased properties are now people's homes.

When buyer demand comes to an end, there's no motivation to sell.

Only those homeowners who really need to move for personal, family or business reasons will do so.

Property booms can occur anytime and anywhere that the demand for housing outpaces the supply, but only investor led booms can turn into bubbles.

So what type of property boom are we in right now?

There's a simple benchmark that tells us the type of boom taking place right now, and therefore what is likely to occur when the boom has ended.

The benchmark is called tenure, a technical term that refers to the conditions by which homes are held or occupied.

Just over one quarter of homes in Australia are rented from private investors, so if the percentage of homes being bought by investors is lower than this, then owner-occupiers are driving buyer demand, but if the percentage climbs higher, then we are heading for an investor led boom and a possible bubble that could bust.

Investors buying have been lower than the 26% benchmark since 2019, and also the percentage of investors buying homes is declining.

Investor Approvals

Investor interest in residential property has waned in recent years because rental demand is falling and the yield from rent is too low.

Investor interest has turned instead to high yielding investments such as shares, commodities and even commercial property.

Owner-occupiers are not deterred by low rental yields, because they buy properties to live in, not to rent out.

The current mix of low interest rates, easy finance, reduced repayment buffers plus government incentives and waivers is causing the current surge in owner-occupier demand and when the new affordability ceilings are reached, growth will slow down and then end, but it won't bust like a bubble.

This is a period with many Australians that are upgrading their accommodation.

• Tenants who are unhappy with their accommodation are upgrading to better tenancies.
• Other tenants who've got a bit of money behind them and can take advantage of the government grants and incentives are upgrading and becoming first homebuyers.
• Established homebuyers can see property prices surging and many are looking to upgrade their homes to bigger or better accommodation in better locations.
• Other homeowners are upgrading to lifestyle locations and
• Some baby boomers are upgrading their lifestyle by downgrading their homes to larger apartments or townhouses in desirable neighbourhoods.

While there's no doubt some people are moving to regional locations close to the CBD, you just have to go to the open for inspection in Sydney, Melbourne, Brisbane, or any capital city for that matter or attend any auction and you'll see that the bulk of the buyers still want to live in the big city.

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Why not join us at Wealth Retreat 2021 – click here to find out more

John Lindeman – Lindeman Reports

Shownotes plus more here: How to be part of the rich 1% | Are we in a property boom or bubble? With John Lindeman

Some of our favorite quotes from the show:

"Even though our system has lots of faults, it has actually created more prosperity, even for the lowest one percent, than most of the world can comprehend." – Michael Yardney

"It's the investors that create the swings." – Michael Yardney

"The more you invest in yourself, the more opportunities you create." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Who do you ask for property advice?

With so many mixed messages and so many people out there with property advice, who can you trust?

Today I'm going to teach you the ten-meter rule, and suggest you never break the ten-meter rule when getting property advice.

The rule will also stand you in good stead in other situations where people are willing to offer you advice.

Then I'm going to have a long chat with you about the reticular activating system.

At the end of today's show, you'll have some new ideas and tools that will help you take advantage of our property markets. Introducing the 10 Meter Rule

Now that the conversation has moved away from COVID-19, it seems everybody I bump into has an opinion on our property markets.

They're reading all the news and while some believe property markets are going to perform strongly there are still many who believe we are in a bubble or a Ponzi scheme that's about to collapse.

Some are keen on buying off the plan, others are looking at houses and land packages and yet others think it's better to rent and buy.

I saw something similar when I was having a chat with the young lady who came up to me a few weeks ago when I was sitting in Church Street Brighton having a coffee.

She obviously recognized me from my blogs or my photos on the Internet and wanted to ask me some questions about real estate, so I gave her a few minutes of my time.

The conversation started with what I thought was going to happen to our property markets, but then when I asked her what her plans were, she explains to me how she recently paid a lot of money for a course to learn how to be a buyers' agent and was going to help homebuyers and investors.

She was going to make that her career.

I know the course she is talking about because it has produced a whole swag of new buyers' agents, so I asked her a little bit about her background.

She had brought one investment property a couple of years ago in a suburb of Melbourne, which hasn't performed very well, and up until last year, she was a teacher.

But now with her newfound knowledge and enthusiasm, she was going to charge others to buy real estate for them.

As I listened to her story it reminded me of a blog that I read probably over a decade ago by Canadian property commentator Don Campbell where he explained how a comedian made a significant difference to his property investing.

Now investing in real estate is no joke, but a comedian taught him the final 30-foot rule, which I have changed to the final 10-meter rule, and understanding this will make a difference for you.

Okay, in a nutshell, it comes from the comedian, old-school comedian, Buddy Hackett.

My understanding of The Final 30 Feet (or the Final 10 Metres as I'm now calling it) came from a warning given by Buddy Hackett to a young and upcoming comedian on how to deal with the mountains of advice that TV executives, promoters, friends, and family will give him as he built his comedy career.

Buddy's advice was simple yet profound: "Listen politely, smile and allow them to feel helpful… then turn around and seek out and take advice only from those who have walked The Final 30 Feet."

The obvious follow-up question was: "What do you mean the Final 30 Feet?"

Apparently, Buddy said:

"Only take advice from those who have walked the final and most important 30 feet from backstage to being alone in front of a microphone with nowhere to hide. Then, and only then, will you know the advice comes from reality and not theory. They'll understand the emotions, the work it takes to get it right. They'll have made the mistakes and created the laughs, not just read about how to do it."

This sage advice is obviously very relevant about whom you should listen to with regards to property and wealth advice.

In essence, there are a lot of enthusiastic amateurs out there who despite their best intentions, and even if they're confident with their thoughts are correct, will steer you in the wrong direction.

And that's not necessarily because they mean to you or intend to, but because they don't have the experience or perspective to give the right advice.

So, my advice to you is to be very careful to choose advisors who have the final 10 meters of experience in whatever field you are asking assistance with; be it property investment, business, relationships; because there are just too many inexperienced pretenders out there.

By the way… this doesn't surprise me.

I have seen this happen at the beginning of every new property cycle, a flood of new so-called experts trying to make a living giving advice.

And while a rising market may cover up some of their shortcomings, I keep coming back to Warren Buffett's saying – "A rising tide will lift all ships, but when the tide goes out, you'll see who swimming naked."

In the past, I've written about the fact that successful property investing is part science and part art.

There's no doubt that science, theory, data, and research, are very important.

But they tend to be useless unless you have the art part mastered as well – the perspective and that comes from years of experience and from the lessons of failure.

Perspective is something that you can't buy – but it's something you can hire when you get the right team of experts on your side.

Despite my success in investing and business I still have mentors and pay for business coaches.

And the concept of The Final 10 Meters has served me well.

I seek out who people have already achieved what I want to achieve, have solved the problems I need to solve, and have made the mistakes I want to minimize.

Your Reticular Activating System (RAS)

The RAS plays into the psychology of success. The RAS is a filter that sorts through the input into your brain and decides what you're going to see and what you'll ignore.

Your RAS responds to your name, anything that threatens your survival, and anything you need to know. It also seeks data to validate your beliefs.

You program your own RAS filters with your parameters, along with your own past experiences. If you learn how to control and reprogram your RAS, you can get the results – and the success – that you want.

Your RAS works like a search engine, looking for what you've programmed it to look for. So if you create a clear picture of what you want, your RAS will know what to look for.

But your RAS also aligns with your own preconceived belief system, so it will pay more attention to things that fit with what you already believe.

If you believe you will find opportunity and success, your RAS will help you see them. But if you believe you'll find debt and risk, your RAS will filter for those and you'll see more of them instead.

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Shownotes plus more here: Never Break The Final 10 Meter Rule When Investing In Real Estate

Some of our favorite quotes from the show:

"You see, theory is not real life." –Michael Yardney

"Be careful who you take advice from and use the final 10-meter rule to sort out who you take seriously." –Michael Yardney

"You are what you believe yourself to be." –Michael Yardney

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One of the most significant changes in the time I've been investing in property, and that's close to five decades now, is the availability of data.

When I first started investing in the 1970s there weren't any blogs, podcasts, YouTube channels and the only way to get property data was to be part of the secret inner circle – which was then a men's club of Real Estate agents – because the lag in publicly available data was often over a year.

The estate agents were custodians of the data, because back then the Valuer-General would only publicly release property once a year.

Over the last decade, there's been an abundance of monthly data available to property investors and over the last year, most of the data houses have been providing weekly updates.

But in our current fast-moving market sometimes even this is a little bit too slow.

For property investors who need to make important financial decisions, the lagging available data can be an issue and the other significant challenge is understanding which data is important and which isn't and that's the topic of my chat today with financial adviser Stuart Wemyss.

At the end of the show, you should have a much better understanding of what data you should be paying attention to and where to find it, and this should help better property investment decisions.

Filtering Property Data

It seems that currently every man, woman, and pet dog is upbeat about our property markets.

Just look at the messages we are getting in the media.

It seems that all the economists have now done an about-face and agree we're in for strong property markets for the next few years, with some being comfortable using the word house price boom.

In fact, they seem to be out doing each other to see who can come up with the most upbeat price increase forecasts.

Six percent gains? How about eight percent? No, it will be double-digit growth. What about sixteen percent over the next two years!

But looking back over the last few years, we know that most economists have had a very poor track record, and we know much of the information we read is not useful.

So, today in my chat with Stuart Wemyss, we get an understanding of what information is relevant and what is not.

The media tend to only run stories that they consider newsworthy.

Newsworthy often means that the information is time-sensitive e.g. what happened yesterday or what will happen tomorrow. This short-term information does not help if you intend to own a property for many decades.

So what information is relevant?

Very little from the media.

A good and bad property costs the same to hold. You will pay the same amount of interest with respect to the mortgages. And the income and expenses will be relatively similar. The biggest difference between a good and bad property is capital growth. That is, what will the property be worth in 10, 20, or 30 years?

In this regard, when selecting a property, there are three fundamentals you must consider:

1. Land value
2. Scarcity
3. Past performance

There's only a handful of important macros considerations

1. Population growth
2. Money supply
3. Diversified employment opportunities
4. Infrastructure

Ignore the rest!

Property investment is part art and part science, and that's where investors who only base their decisions on data get it so wrong.

I know there are a number of people out there currently saying that they research every market around Australia sitting at the computers all day. Unfortunately, what they are missing is the perspective – they have the same speed right but not the bit right – not the on the ground knowledge - you can't get it by flying in & flying out and speaking to a few agents – perspective takes years to develop – it's something you can't buy.

Some examples of when the data can lie to you

• Not enough data
• Not long enough time between transactions
• Too hard to ascertain its current value
• Our sales did not represent Fair market value
• You overpaid for the property when you purchased it

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Stuart Wemyss – Prosolution Private Clients

Stuart's Book – Rules of the Lending Game

Shownotes plus more here: What property data should I be paying attention to and what should I ignore? with Stuart Wemyss

Some of our favourite quotes from the show:

"I think we've got to remember that the media's job is not to educate you but to entertain you." –Michael Yardney

"Part of an investor's job is to maximize their returns while minimizing their risk." – Michael Yardney

"The few who do succeed are able to do so when the pain that does come to them – they can endure it because they prepared for it." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Just like 2020 was the year of surprises many of us didn't foresee, I believe 2021 will offer its own surprises – but this time, on the upside.

There is a perfect storm of economic outcomes and that's what I'm going to be chatting about with Pete Wargent in today's show as we have a look at the macroeconomic big picture that will affect our property markets, our economy, and our lives in general in the coming year.

It's really only been a year since Coronavirus started to affect us.

Just look where we were in the middle of last year and it's hard to believe where we are now.

• We've had spectacular success in containing the Coronavirus.
• The Morrison Government build the bridge he promised to get us across the other side and federal government and state government spending killed the recession, which was the deepest since the Great Depression.
• We now have record low-interest rates.
• A sooner-than-expected arrival of vaccines.
• And all the above has pumped up economic growth above expectations and helped the property markets and the stock market rebound, bringing both business and consumer confidence.

We have an embarrassment of riches, with our economy surging ahead, so I hope my chat with Pete Wargent will give you some more clarity about what the future holds so you can make better investment and business decisions.

Economic and property trends for 2021 with Pete Wargent

Our property markets don't operate in isolation, so I believe it's good to regularly have a look at the big picture, the macroeconomic factors affecting not just Australia's economy, but the world economy.

Australia's V-shaped economic recovery.

Australia's economy has surprised on the upside.

While technically we had a recession last year – two consecutive quarters of negative GDP growth, really the March quarter had very minor falls in GDP – there was really only one quarter, the June quarter, with a significant drop in economic activity. And boy has the economy rebounded since.

Our economy is likely to keep performing well moving forward

While the recovery to date has unfolded much more quickly than expected, it is important to remember that:

• it has been uneven and
• that despite recovering to pre-COVID levels by mid-2021, there remains a high degree of spare capacity in the economy.

There is still some way to go and there are still risks ahead.

$120 billion savings war chest is firing our economic recovery

Saving is about to become unfashionable again.

After rushing to build deposits during the COVID crisis, it seems we are now determined to burn through accumulated cash. What's more, the trend is going to accelerate.

New forecasts suggest that by the end of this year we will be saving less than half what we are putting away just now, and that level will be around a quarter of what we were saving at the peak of the crisis.

As panic swept the broader economy last year, the national savings rate soared to unprecedented levels, hitting 22 percent — or 22c for every dollar — at its peak.

To put that number in historical perspective, it meant we saved $187bn in 2020, which works out at more than the total savings over the past 3½ years.

More recently the savings rate figure has started to drop, though it is still sitting somewhere near 12 percent.

The Commonwealth Bank ­estimates that households have put aside $120bn more than what is normally saved in the June, September, and December quarters last year — equivalent to 6 percent of gross domestic product as overseas travel and social activities were curtailed.

The bank's analysts believe this money will be spent over the next few years, providing continued economic momentum as a good chunk of this money will find its way into consumer spending.

And some of it will go to paying down debt and some will go into buying assets.

We're already seeing this in retail spending and in our property markets.

RBA and interest rates

There has been a lot of chatter amongst media commentators that our booming property markets will force the RBA to intervene earlier than planned and raise interest rates.

But in his recent statement, RBA Governor Philip Lowe once again put these predictions to rest explaining that the surging housing market will not cause the RBA to raise interest rates.

He said it would not make any sense to do so.

I know the media loves headlines about rising interest rates, but Philip Lowe once again reminded us that his aim is to bring inflation sustainably within a range of 2 to 3%, and to do this we need higher rates of wages growth and in his words: "The evidence strongly suggests that this will not occur quickly and that it will require a tight labour market to be sustained for some time."

The Reserve Bank Governor emphasised this point, noting that the road to "normality" was long. Governor Lowe said that wage growth was a long way from 3 percent. And indeed

inflation was a long way from sustainably being back in the 2-3 percent target band.

Rising bond yields:

The Governor sought to emphasise that he believes that rising bond yields are sending false signals on the inflation risk and the potential for a lift in the cash rate: "market pricing has implied an expectation of possible increases in the cash rate as early as late next year and then again in 2023. This is not an expectation that we share."

What else could our regulators do to subdue our property markets?

I understand why our regulators intervene in our finance and housing market, even though I don't always like how they do this – we saw what happened with APRA overshot the mark a few years ago, but Philip Lowe said

"I recognise that low interest rates are one of the factors contributing to higher housing prices and that high and rising housing prices raise concerns for many people.

"There are various tools, other than higher interest rates, to address these concerns, leaving monetary policy to maintain its strong focus on the recovery in the economy, jobs, and wages."

Big Australia vital to protect the home front: Rudd

Prior to the pandemic, Australia's population was growing faster than most other developed countries, and of course, this has now been temporarily put on hold.

With unemployment still high some people are wondering whether we should open our borders quickly, or whether we should restrict immigration until all Aussies find a job.

Recently former prime minister Kevin Rudd came out explaining how a Big Australia is needed on national security grounds to provide the tax and population base to increase the size of a military amid the challenges posed by China's rise.

Global economic outlook

The rapid development of vaccines and their rollout has improved the global outlook and lessened some of the downside risks. The plan for further fiscal stimulus in the United States has also improved growth prospects there.

Links and Resources:

Michael Yardney

Metropole's Strategic Property Plan – to help both beginning and experienced investors

Join us at Wealth Retreat 2021 on the Gold Coast June 12th – 16th – get more details here

Pete Wargent Next Level Wealth Pete Wargent's new book Low Rates High Returns

Shownotes plus more here: The Big Picture – What's ahead for our economy and property, with Pete Wargent

Some of our favourite quotes from the show:

"There's been a significant war chest of savings that now people are starting to spend." – Michael Yardney

"I think we've got to acknowledge that while we're saying Australia's booming and the economy's doing well and the property market's doing well, there are still some people who are not doing well." – Michael Yardney

"The media knows this. They know we react more to negative news than positive news. So they force-feed us negative news just to get the clicks." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

As we move into a new property cycle, a whole new generation of people are going to become financially independent through property.

So, today's show is going to be dedicated to helping you become one of those. I've got two segments for you today.

The first segment is a chat with Brett Warrant about 10 questions you should ask yourself when you're going to buy an investment property – whether you're a beginner or an experienced investor.

Then, in my next segment, I'm going to share five things that you can do today to become more successful tomorrow. 10 things to consider when buying an investment property

With our housing markets entering a new cycle - a new phase of strong growth - there are more people interested in getting into property investment.

Close to 50% of investors who buy a property sell up in the first five years and 92% never get past the first or second property.

In fact there around 1.9 million Australian investors never get past the first or second property and less than 21,000 Australian investors only six or more properties

So how do you succeed, how do you get into that small group of investors who build a substantial property portfolio?

Currently, there are so many options out there. Everyone seems to have become a property expert with an opinion of how to create wealth through property.

And, I don't know if you've noticed - many of their suggestions are conflicting.

So whether you're a beginning property investor or an experienced investor, I'd like to help you take advantage of this new property cycle by discussing 10 questions that I believe all investors need to get their head around with Brett Warren, National Director of Metropole Properties, and my business partner who is based in Brisbane.

1. What do I want to achieve?

Is it money? Wealth? Financial freedom? Maybe all of the above!

Remember the bricks and mortar are not really the end goal; rather they're just the vehicle you choose to get there.

So firstly, identify your end goal and then formulate a plan to get you there in a time frame that works for you.

Unfortunately, most investors don't have a plan and that's why they get lost along the way or get distracted by the latest investment fad or the next "hot spot."

And if they do have a plan, I've found they rarely review it to make sure they're on track.

Maybe you don't know what the future will hold – but you do know you need a substantial asset base.

1. What is my preferred strategy?

Once you know where you are going, you need to implement an investment strategy that helps you get there.

Since you can't save your way to wealth, my goal is to build a substantial asset base through capital growth.

1. Where should I buy?

Location is critical to the long-term performance of your investment.

I look for suburbs that have always outperformed the averages or one's going through gentrification.

These are generally lifestyle suburbs in major capital cities close to the CBD, amenities, or the water.

And the significance of the neighbourhood has only become more important. In urban planning circles, it's a concept known as the 20-minute neighbourhood.

1. What type of property?

This will depend upon your budget and while, in general, houses deliver stronger capital growth than apartments, this has a lot to do with the location of your property.

I'd rather own a villa unit, townhouse, or apartment in a great neighborhood in an inner or middle ring suburb than a house out in the sticks

Today more people are trading their backyards for courtyards and balconies to be situated in the right locations.

6 Stranded Strategic Approach – only buy a property:

1. That would appeal to owner-occupiers. Not that I plan to sell the property, but because owner-occupiers will buy similar properties pushing up local real estate values. This will be particularly important in the future as the percentage of investors in the market is likely to diminish.
2. Below intrinsic value – that's why I'd avoid new and off-the-plan properties which come at a premium price.
3. With a high land to asset ratio – that doesn't necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.
4. In an area that has a long history of strong capital growth and that will continue to outperform the averages because of the demographics in the area including gentrifying areas.
5. With a twist – something unique, or special, different or scarce about the property, and finally;
6. Where they can manufacture capital growth through refurbishment, renovations, or redevelopment rather than waiting for the market to do the heavy lifting as we're heading into a period of lower capital growth.

1. Should I buy something old or new?

More often than not, new or off-the-plan apartments are a "box" in a high-rise monolith.

The problem here is that you pay a premium to the developer and miss out on the first decade or so of capital growth.

At the same time, the majority of owners in the building are likely to be investors. I prefer buying where owner-occupiers, who look after the building better, predominate.

This gives you the potential to not only increase your rental income but also "manufacture" some capital growth.

1. When should I buy?

There's no sense in trying to time the market, even the experts can't get it right.

Instead, the right time to buy your next investment property or home is when you're in the financial position to do so.

1. What can I afford?

Before you start looking at what to buy, you need to know what you can afford to buy.

Get a loan pre-approved and make sure you've set some funds aside for acquisition costs, holding costs, and a financial buffer for a rainy day or rising interest rates.

Michael:

1. Your budget – that determined by the bank
2. Location – we are not prepared to compromise on that
3. The type of property in the location

1. How will I set up my purchase?

It's important to own your investment property in an entity that protects your assets and legally minimizes your tax.

Whether you buy in your own name, your super fund, or a trust, you need to be aware of what it will mean for you and your family, now and in the future.

That's why it's important to get independent finance and structuring advice before you buy your property.

1. Who should I ask for help?

If you are the smartest person in the room, you are in the wrong room!

The real estate game is a team sport, requiring expert input and advice from a qualified accountant, a smart solicitor, a finance broker, an independent property strategist, and a mentor who will help set you up for a win.

In other words, to secure your financial future you'll need much more than just a buyer's agent or a property strategist.

1. Should I take advice from my friends and family?

In general, the answer is - no!

Not unless they're a particularly smart investor having invested successfully through a number of property cycles.

This is because "the crowd" is usually wrong.

As our real estate markets pick up and the cycle moves on, a whole new generation of investors will enjoy the prosperity property can bring.

If you ask the right questions you could be one of them.

5 things you can do today to become more successful tomorrow

You know what so interesting about success?

When I look at people around me who are ultra-successful—I mean, whether it's in their business, their investments, with money or in their physical health or maybe it's in their relationships —it's not that they're any smarter.

It's not that they're any more talented. They weren't born with something special.

Instead, they simply have a different mindset.

They think differently and you've heard me say it before – your thoughts lead to your feelings; your feelings lead to your actions and your actions lead to your results.

For these successful people, their outside world – the results you see - is a reflection of their inside world – the way they think.

Here are five ways you can think differently to help make you more successful.

1. The average person thinks "I can't". Successful people think "How do I?"

Currently, many people are saying, "I can't afford to get into the property market – it's too expensive."

Yet a small group of people is asking a better question "How can I get into the property market?" and by doing that they spend less than they earn, save a deposit, educate themselves to become financially fluent, or take advantage of first homeowner grants or the 5% first home buyers scheme.

1. The average person thinks "I want to". Successful people think "I will".

In Star Wars Yoda famously said: "Do. Or do not. There is no try."

There is a massive difference between desire and commitment.

And that's why if you want to become successful, an important mindset shift is moving from "I want to do it" to "I will do it."

1. The average person thinks "It's not my fault." Successful people think "It's my responsibility."

There is no such thing as a victim.

Yet when things go wrong, most people love to say, "It's not my fault."

In contrast, successful people take responsibility.

Fact is, it doesn't matter whose fault something is. Successful people take ownership and responsibility for everything in their life.

1. The average person thinks "I got lucky." Successful people think "I created my own luck."

A lot of people think that rich people are just lucky. Successful people are lucky. Great athletes are lucky.

But talk to any of those rich people, those successful people, or the great athletes and you'll find out it's not luck.

Sure, we occasionally get random good luck or bad luck, like winning the lottery or receiving an inheritance.

However, the rich and successful people manufacture their own luck – they're in the business of creating luck.

They do certain things every day that creates the opportunity for good luck to occur in their lives.

1. The average person thinks "It happened." Successful people think "I made that happen."

A lot of people think that everything in their life just happened by accident.

On the other hand, successful people realize that nothing happens.

They understand the principle of cause and effect.

They realize they are creating their future every day by the things that they do today.

Just like you have created what's happening to you today by things you did quite some time ago.

For example, you are reading this blog today because a while ago you were interested in more success or money or property investment and you subscribed to my blog.

Everything that happens is a result of something else.

But the good news is, you can change your future by changing your way of thinking today and changing your actions today.

So, if you're unhappy with any part of your life, realize that you are where you are today because of all the things you've chosen to do, and the things you've chosen not to do.

Now, rather than taking this as a negative, look at the positive side.

So, the lesson from this is to stop treating your life like everything just happens. Start creating a new future by thinking differently and developing good habits.

What's the quickest way to do this?

There is a shortcut, get a good mentor who can see your blind spots and who can teach you different ways of thinking.

By the way that's exactly what happens to those people who join us at Wealth Retreat each year.

Join me for five transformative days on the Gold Coast from June 12th to 16th and get the one-on-one private mentorship you need to achieve your most ambitious goals and dreams.

Not just in property, but in business and in life in general, because the aim of Wealth Retreat is to create Lifetime Wealth and leave a legacy.

When you join us you will get:

1. Mentorship- You'll have the opportunity to interact one-on-one with me and our guest experts so we can help you gain deeper insight and achieve your specific goals in property, business, and life.
2. Masterminding- You'll spend several hours a day brainstorming and getting ideas, advice, and solutions to your challenges from a hand-picked group of high-achievers.
3. Networking- You'll have plenty of time to build relationships with the other participants during breaks, at meals, and at night, so you can connect on a deeper level and benefit from their input and expertise.
4. Fun– the days will be very full, but at night we've got some surprises for you.

And if you would like to get the highest possible level of support for your most ambitious life and business goals, I encourage you to join me there!

You can learn more about this life-changing retreat here.

Don't count yourself out...

When you surround yourself with such motivated, energized, spiritually charged people, you tap into the power of the group and become more energized and powerful yourself.

There's no limit to what you can accomplish with the support and encouragement of such incredible people!

Please note that to ensure the best possible experience, Wealth Retreat is limited to a small number of participants only.

Learn more and register your interest today.

I look forward to helping you perfect the life of your dreams!

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Brett Warren – Director of Metropole Property Strategists

Learn more about Wealth Retreat here

Shownotes plus more here: 10 Critical Questions All Property Investors Should Ask Themselves with Brett Warren

Some of our favourite quotes from the show:

"You've got to know what the end game is, and it's different for everybody and it depends how long your journey is." – Michael Yardney

"My preferred strategy is to invest for capital growth." –Michael Yardney

"The answer is not just to convince the logical side of your mind that you're going to do something, but you also need to work on the unconscious part of your mind. The emotional side." –Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

There is no doubt that our property markets are in a broad-based boom, with almost all segments, other than the inner-city apartment market showing strong property price growth.

And the media is having a field day whipping up a frenzy of emotions with headlines causing some buyers to worry that the housing market is running away from them.

In fact, FOMO (fear of missing out) seems to be a common theme around Australia's property markets.

But the general media and certain commentators on social media are worrying home buyers and investors by speculating that interest rates are about to rise or that unemployment will escalate to 8% when JobKeeper ends, or that everybody is moving to the country and city property values will be affected.

So in today's show, I want to bust some property myths in two segments.

You probably know that I host a regular weekly Property Insiders video on my YouTube channel where Dr. Andrew Wilson gives sensible, down to earth commentary about what's happening in the property market, and the audio recording of last week's video will be the main feature of today's show but first I'd like to bust some of the media myths about regional Australia's property markets, who's moving there and whether you should consider investing in regional Australia.

The Regional Australia Myth

I'd like to start by discussing the myth being promoted in the media that investing in regional Australia is a great idea.

First, that's a silly comment – there are so many different regional markets, as you know I don't suggest investing in the Sydney property market or the Brisbane property market because even within capital cities there are many different markets divided by geography, price point, and type of dwelling.

So, therefore, just suggesting investing in regional Australia makes little sense.

Then there's the argument that some put in the media that this particular town in regional Australia has performed better than the Sydney property market.

Again, that's a silly comparison, because the regional town may have 5, 10- 20,000 people in it and Sydney has 5 million people in it.

A better comparison would be the long-term performance of a particular regional town against a high-performing capital city suburb.

When it comes to investing, you shouldn't be considering how you want to live, you should be investing in numbers, stats, demographics, and evidence and that's what I'm going to share with you in a moment.

What about migrants?

We know that prior to the Covid pandemic and Australia shutting its borders, the population was growing faster than almost every other developed country and more than half our population growth of almost 400,000 people each year was coming from immigration.

Property commentator Michael Matusik wrote a recent blog discussing the myths about regional population growth.

Now there is no doubt that there is a small cohort of people who now want to live in regional towns within commuting distance of big capital cities because they have found they can work from home either part-time or full time, but Michael Matusik asks, "Is this what has been driving our regional property markets?"

Matusik suggests that the real reason why the regions have seen an increase in net internal migration over the last 12 months is because people who would normally have moved from the regions to the capital cities are (for now) staying put.

And the ABS statistics suggest that this is true.

Net internal migration to the regions was 36,500 last year, which was up 14,000 or 62% on the year before.

Now that sounds impressive, doesn't it?

But you know how you can make numbers lie and twist them to make your point?

You see… net migration is worked out by comparing those that move into an area against those that leave the same place during the same time frame.

Firstly, that the overall level of arrivals to, and departures from, regional Australia has fallen over the last 12 months. This is because there are no overseas migrants arriving in Australia. This impacts both the capital cities and regional Australia.

Secondly, the ABS statistics show that there has been little change in the number of people moving from the capital cities to the regions, whilst on the other hand, there has been a big increase in the number of regional residents who haven't moved.

This trend increased during 2020 as certain Australian States implemented increasingly strict covid-related lockdowns and other restrictions.

Around 70% of Australians live in our six main cities. I don't think this will change because of the pandemic.

In short, the capital cities are where the jobs and the services that people want are located. The majority of high-paying jobs that are going to be created are going to remain in capital cities.

Many regional residents have put their move to the capital cities on hold last year, and as a result, I believe we will see a big snapback to positive net migration to the capitals once the covid vaccines roll out and travel-related restrictions cease.

Unless major money is spent on regional infrastructure and this amount rivals the amounts being spent in the capitals, any population movement to regional Australia will be modest at best.

Matusik puts it well:

"Despite recent weasel words suggesting otherwise the decision-makers must think this too.

Ask yourself, if we were truly going to see a regional resurgence, then why is almost all the existing, and proposed, infrastructure projects focused on the major capitals and mainly in the inner-city areas within those cities."

if your investment budget is limited, and that may mean you can only buy one to three or four investments in your lifetime – you need to buy high growth properties in areas where the demographics will be able to afford to pay more in the long term pay more to buy properties and pay more to rent your property – don't fight the big trends.

Some of the Topics Discussed in My Chat with Dr. Andrew Wilson:

• The housing markets are surging
• Rental markets have been fragmented, with a disparity between house markets and unit markets
• Rental growth is continuing for houses, but on the slide for units
• Business investments have been coming back
• The government quickly pulled the country out of the recession that it purposely caused
• There has been strong growth in job ads, signaling that unemployment could fall quickly

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Read Michael Matusik's blog mentioned in the show here

Join us at Wealth Retreat 2021 on the Gold Coast in June – learn more here

Shownotes plus more here: Busting media property myths with Dr. Andrew Wilson

Some of our favorite quotes from the show:

"Don't believe this media myth that investing in regional Australia is the right thing to do." – Michael Yardney

"It's unlikely that those inner CBD high rise towers will start filling up until our international borders are open, students come back, Airbnb comes into the market." – Michael Yardney

"The problem is that people are listening to those "experts" on YouTube and "experts" on Facebook and they're being a bit worried by them." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Have you considered getting involved in property renovations?

If so, then today's show is just for you. Making a tidy profit renovating a property seems like an attractive proposition, doesn't it?

And that's why more real estate investors are turning to renovations: you know, buy low, renovate cheaply, add substantial value. That's the aim of their game.

Sounds simple enough. But it's not really that simple.

Sure, anyone can renovate, but not everyone can renovate for a profit. If you've been reading my blogs and listening to my podcast, you know that my preferred investment strategy is to add value. It is to manufacture growth through renovation and development.

So in today's show, I chat with Greg Hankinson, director of Metropole Constructions. Greg has completed thousands of renovations. We're going to give you some tips and share some traps to avoid if you're going to get involved in property renovations.

And at the end of the show, I'm going to share my mindset moment with you.

Renovations Insights and Mistakes

The BRRRR strategy

• Buy, Renovate, Rent, Refinance, Repeat
• Flips flop
  • You need to manufacture significant capital growth - upside to cover the costs and unless you do a structural renovation this is too hard to achieve – can't achieve with cosmetic renovation.
  • Patients take time, cost more, require permits and the associated costs could easily add 50% to your renovation budget.
  • With cosmetic renovations, you can't really get two dollars for every dollar you spend
  • Why they flop - Transaction and holding costs, tax, unrealistic expectations, and flipping in a fickle market

Which tasks to outsource

• Anyone can renovate, but that doesn't mean they can make a profit, so let's look at some tips to make your renovations more profitable.
• What needs licenses – the electrician, plumber, any building works over 5000 in Victoria and different in other states
• Hire a project manager; don't do the work yourself.

Mistakes:

1. Choosing the wrong location

• Do you need the right market location where there is a significant differential value if you renovate.?
• This is unlikely in cheaper blue-collar or regional areas.
• Become an expert in your location can't rely on Internet reports
• avoid Main roads

1. Wrong Property

• Cosmetic renovations – must be 20+ years old and of significant value, a lick of paint is not enough
• Structural – probably 50+ years old – must have good bones

1. Refurbish versus renovate

• What's the difference?
• The refurbishment has no direct equity creation no additional capital growth but it does increase the rental returns and possibly some depreciation benefits
• Refurbish and not renovate? When a good property needs refreshing, kitchen bathrooms are in good nick, all the basics are sound, when if you renovated it would be a risk of overcapitalizing

1. Not getting the appropriate permissions

• Check the permissions required
• Council & building permits? Owners corporation?

1. Avoid overcapitalizing

• It's very easy to find a property that needs a renovation, but not so easy to find one that will reap a profit.
• Work backward – establish a post-renovation market appraisal on the property, subtract the purchase price, associated costs, interest, and a healthy buffer and profit margin. What's left is your renovation budget. As a rule, keep the renovation budget to 10% of the market value of the property

1. Not allowing a sufficient contingency amount

• Once a budget is established, allow a contingency based on your experience level and the extent of the renovation works. Allow a little more if structural works or there are planning/building approvals required and a little less if the works are purely cosmetic.
• Ballooning budget Unreliable tradesmen, deadlines slipping through your fingers like sand, and alterations to the plan can quickly add up to cause your renovation budget to blow. Planning for delays and allowing for contingencies is critical to a successful renovation.
• Unexpected and Invisible costs
  • From finding asbestos to hitting hard stone when excavating, these are just some of the unexpected costs that can come out of the woodwork when your renovation begins. These additional costs burn into your wallet, but removing the issues do not add perceived value to the property.

1. Tailor the renovation for the target market

• Becoming an expert in the area.
• Understand local demographics By knowing what the market expects, you can tailor the works to suit that market and therefore not spend on things that may not bring a return on your dollars.
• It's not how you want to live – think…The Block

1. First impressions matter

• The wow factor –
• Natural light, fresh paint, new floor coverings, and window furnishings go a long way towards transforming a tired old property into something that will be sought after.
• Often it's the little things that can make or break a successful renovation. Neutral colors allow tenants to create their own identity with their belongings. Dominant colors and textures tend to close in the wall and make spaces feel smaller than they are.
• If you're doing cosmetic renovations make sure the changes you make are highly visible
• Don't waste money rewiring or replumbing (OK for structural)
• New floor coverings, carpets polish floorboards paint, blinds, air conditioning
• Make people think you've spent more money than you have
• Houses - cement render the exterior

1. Kitchens and bathrooms sell properties

• Beware of diluting your dollar by doing half the job
• If you renovate the kitchen but leave the original tired and rundown bathroom, it will de-value the kitchen and vice versa.
• If the budget doesn't allow for both of them, it may be worth deferring renovation works

1. Avoid DIY

• Unless you're a skilled tradesperson, don't get lured into to misconception that you'll save money by doing the work yourself.
• TV shows like the block glamorize and simplify the renovation process.
• In most cases, it will cost you the same or more but always take you longer if you're doing the work yourself, therefore resulting in poor finishes, delayed completion dates, and unnecessary holding costs due to the extended completion times.
• How do you value your time? Many people do not factor in the cost of their own time and stress when 'running the numbers'. Be prepared to set aside significant portions of your time for planning, making/taking phone calls, wrangling, and negotiating with suppliers, making decisions. If renovating is not your day job, this could mean hours after work and on weekends. Could that time be better spent with your family? Or doing your regular job?

1. Remove the emotion

• Adding value to an investment property should be run like a business.
• There's no room for latest fads in design and you shouldn't be trying to make the cover of Belle magazine, that's for your own home.
• The purpose of renovating investment properties should always be about maximizing both the rental return and capital value of that property.

1. Get a good team around you

• Renovation involves coordinating various tradespeople - who are busy and unreliable Remember, they're the experts.
• They've done it before and probably seem the mistakes others have made. By getting close to your trades, you'll avoid falling into the same trap.

1. Don't be stingy

• Stretch – you normally get only one chance per property every 20 years - do it right - don't be cheap
• Thrifty is good, cheap is bad
  • There's a lot of cheap products in the market place these days, especially online. In my experience, cheap stuff is cheap for a reason and will cost you more in the long term.
  • Take engineered timber flooring for example; you can buy an imported laminated timber board from your local hardware store starting from about $19 that has a lifespan of 1-2 years if you're lucky. Same deal with paint, carpet, window dressings etc.
  • Cheap just doesn't last and it's a false economy to suggest otherwise.

Ask yourself the tough questions

• "Do I have time to execute this renovation effectively?"
• If the answer to this "No" or "I think so?" Consider paying a professional to manage it for you.
• The additional cost will most like be offset by the works being completed in a more timely manner, to a higher standard, and with a guarantee.

Links and Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Greg Hankinson Director Metropole Constructions

Why not see how Metropole Constructions can help you.

Shownotes plus more here: Renovations are a great way to lose your money if you make these mistakes | With Greg Hankinson

Some of our favourite quotes from the show:

"I know last year, during the difficult times of letting properties with COVID, our team at Metropole constructions did a lot of refurbishments and quite a few renovations, and those properties, when they got put back onto the market, actually got leased very quickly." – Michael Yardney

"It's very easy to find a property that needs renovation, but it's not as easy to find one where you're going to reap a profit at the end." – Michael Yardney

"You get one chance to do this every 20 years or so. Do it right, don't be cheap." – Michael Yardney

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