The Property Trio (formerly The Property Planner, Buyer and Professor)

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The Trio decided to celebrate Bastille Day by giving this listener a pseudo name; Amelie. Our listener sent through a multitude of great questions and the trio decided to circle in on Amalie’s challenge for this episode. Amelie* is in her mid-twenties and she co-owns a property with her brother in Sydney’s west. She’s a good saver, has a good job and she is keen to purchase her second property. She has a few ideas, but her brother has very different thoughts. With such an important person in her life creating a bit of a debate, Amelie wonders if she should reconsider her original plans. From units versus houses, to market timing, first homeowner grants, alternative cities and co-ownership, she has quite a few variables that her brother has challenged her with. Amelie puts her conundrum to the Trio and asks for some help.

The Trio broke Amelie’s questions into seven main segments;

1. Timing the market vs timing the market.
Dave’s general rule is “buy when you’re ready.” It is very difficult to time the market, and lost time can be costly.
The clear steps that Amalie needs to initially take hinge on getting great, specialised advice. After all, we don’t even know what Amelie’s borrowing capacity is as this stage.

Cate asks, “Where do you want to live? And how quickly do you want to get there? Are you happy renting/living at home for now?”

Mike suggests that Henri is “trying to get a bit too fancy with timing cycles.”

2. House versus unit.
Although the twenty-year price history demonstrates that median house price growth has outperformed median unit price growth, Dave points out that this is general data only, and there are markets within markets. Unit buyers need to be cognisant of the negative impact of buying new, along with the associated strata costs.

Capital growth is directly linked to a high Land to Asset Ratio, and it’s integral that investors give their portfolio the best chance of high performance by noting this important ratio.

Other special attributes, particularly for units in Sydney include;
- views/vista
- quality street
- great suburb
- boutique block
- scarce, older style block

Dave also notes that Sydney in particular is quite different to other cities when it comes to apartments because Sydney offers the highest proportion of apartments and units in the nation.

Cate has concerns about Amelie’s affordability comment. She focuses on the need for thorough due diligence to avoid surprise costs and cashflow threats. Cate also sheds light on the challenges that borrowers face when co-borrowing, particularly in relation to ‘joint and several’ borrowing.

Mike shares concerns about Amelie’s safety net ideal and he discusses the risks that could impact family relationships when cashflow gets tight and parents are asked to help financially.

3. Buying in the city you live in.
Dave talks about the difference between buying in a familiar city, versus buying in the city where you ultimately plan to live. Gaining a foothold in the market where you wish to live is a great risk mitigation strateg. Hedging against another location underperforming is the path that Dave is going down.

Cate needs to see Amelie’s borrowing capacity before she can agree with Dave’s approach. If Amelie’s borrowing capacity is too insufficient for a quality Sydney property, she may well be better placed to consider alternative cities.

The Trio all agree that timeline is an important consideration for Amelie.

4. Outer-ring
As Cate points out, investors will get a different result in an outer ring and the negatives include;
- tougher socio-economic demographics
- the threat of low scarcity and surrounding house and land package areas

And Cate suggests that contrasting an inner- or middle-ring location within a nearby regional city against the Sydney outer-ring options is a valuable exercise. Dave shares some of the merits of such an approach too. Tune in to find out why this could be a great alternative.

5. Rental yield.
This consideration is driven by current cashflow requirements, future acquisition projections and Amelie’s ability to increase her income over time. Rental yield can’t be overlooked, otherwise the risk of an unplanned sale (or co-ownership) will rear it’s head.

6. First home buyer schemes.
Sometimes saving $30,000 now is very valuable for a buyer, but for someone like Amelie who has good savings on hand, the scheme may cost Amelie far more than the $30,000 of upfront savings.

The Trio talk about the false economy that is sometimes represented in the quest for pocketing the grants or discounts.

“It’s a bonus, not a driver”, says Cate about the opportunity cost.

7. Buy and hold versus selling earlier.
The Trio unanimously agree that Amalie’s brother’s recommendation in relation to selling is not the best advice for her situation.

Dave talks about the importance of understanding how she can use equity to leverage and get into her next property.


And our gold nuggets……

Cate Bakos’s gold nugget: Cate draws on her client experience over the years and notes that many have ultimately unwound their co-owned property structures with family members. This is due to a combination of joint and several lending restrictions and changing personal plans.

Mike Mortlock’s gold nugget: Mike congratulates Amelie but he implores her to think about where she wants to live and to develop a good strategy that incorporates her principle place of residence.

Dave Johnston’s gold nugget: suggests that Amalie needs to figure out her price point with a strategic mortgage broker and then consider how her next purchase fits within her property plan.

Show notes: https://www.propertytrio.com.au/wp-admin/post.php?post=490&action=edit

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Mike kicks off our episode with the fresh announcement of our new RBA Governor. The trio wish Michelle the very best in her new role, and they also chat about the departure of Philip Lowe and the key mistake that likely drove the change in Governor.

Mike points out that the overall national increase of 1.1% is not really a national story and Cate reinforces that the strength of the Sydney market is driving much of this positive growth data.

Dave also draws regional performance to our listeners' attention. The capital cities are outperforming the regions; a twist that we have been anticipating but haven't seen for quite some time. The pace of growth across the board has slowed down, however, and this could be apportioned to the continued rate rises through June.

Internal migration patterns have normalised; our rate of moving to the regions has certainly calmed down since COVID lockdowns. In some cities (such as Melbourne) we are seeing some elasticity and people are returning to the city.

Cate shares an interesting observation from her coalface. She is taking enquiry from quite a few Sydneysiders who are either investing in Melbourne, or moving to Melbourne. The disparity between the two biggest cities is greater how than historical ratios, and Sydneysiders are obviously seeing value in the Melbourne market now that the differential is higher.

Cate also mentions that established, boutique units in the Melbourne market seem to be demonstrating capital growth too, and this is something that Melbourne hasn't experienced for over a decade.

Mike has been chatting to many business owners and property managers about the proportion of sales that are investor-owned properties. Rent rolls are eroding as many investors opt out of property, and anecdotally this is obvious across the board in many cities, but particularly in Victoria.

"The sales department are basically setting fire to their rent rolls...maintaining rent rolls as a steady source of listings," says Mike.

The Trio look at the 'days on market' data but Cate uncovers a key reason why this data isn't neccessariliy a perfect reflection of buyer/seller demand. In auction-centric markets, agents have strong control over the type of campaign that a property can be sold by. Auction campaigns have a usual four week lead time until the sale date, and surely this data skews the data.

"It's not an organic reflection; it's deliberately controlled by agents."

Mike prompts the underquoting debate also... perhaps this is a good topic for another episode! Stay tuned.

Hobart and Canberra are the two capital cities that have bucked the trend and had strong listing activity. This supply and demand imbalance is reflected in the growth data, unsurprisingly.


Mike asks Cate and Dave about distressed listings, and despite the media suggestions that the fixed rate cliff and the increased interest rates could give rise to distressed listings, Cate points out that this is not occurring, and the data supports this.

And the CoreLogic findings for new listings vs total listings is telling. New listings are still well below the historical five year average, however the total listing figures have nose-dived. This illustrates an increased buyer appetite for old listings, (those with greater days on market than 180 days), a sure sign that buyers are outstripping sellers.

Mike asks Cate to comment on the vacancy rate data. A slight amount of easing is evident in some markets, but as Cate points out, "there are markets within markets" so the data is not entirely reliable. Melbourne is still surging with house rents, and units remain tough propositions for renters. Dave suggests that migration (both internal and overseas) are still contributing to the rental issue.

Mike does challenge the relationship between new arrivals and unit rents; it's an interesting conundrum.

The Westpac Consumer Sentiment data is out, and it's somewhat puzzling for the Trio.

Cate's 'toys' index is a concerning figure. We are still spending, and the increasing interest rates haven't curtailed our attitudes towards spending like our RBA wish they would.

As Mike says, "It's the buying-stuff activity that is keeping our inflation high."

Lastly, Dave shares some clever data about purchase activity. It might surprise our listeners! Tune in to hear more.

And... time for our recaps this time, (because Mike forgot about gold nuggets)..

Dave Johnston's gold nugget: Dave summarises the market by saying price growth is slowing down, but it's still positive. He also touches on investor-led sales and he hints at supply of new listings increasing... happy news for the buyers out there. However, upgrading remains a challenge for a large cohort of buyers.

Cate Bakos's gold nugget: We have a segmented market and the renovation projects remain a significant challenge while builders and trade materials are in limited supply.

Mike Mortlock's gold nugget: it's an uptick in sentiment, and an uptick in investors getting out of the market.

Show notes: https://www.propertytrio.com.au/2023/07/17/ep-214-june-market-update-what-is-driving-interstate-interest-to-melbourne/

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Mike's planning for this episode has Cate and Dave laughing... our newest muskateer is challenging the Trio with his cheeky script. But they won't fall prey to his tricks.

Today's episode is all about some insightful data that Mike and the team at MCG uncovered about changing investor behaviours during the Queensland land tax proposed changes of 2022.
"Anecdotally, (investors) were avoiding Queensland when they were legislating the land tax changes."

Mike's data captured three significant segments in time: pre, during and post the land tax legislation and eventual repeal.

"I was pretty unimpressed as an investor," says Cate, who considered selling her Queensland property at the time.

Cate sheds light on the attitude of investors at the time of the legislation changes. Buyer behaviour was a reflection of the concern about increased land tax obligations.

Focusing on the data - as Mike points out, 40.9% investment purchases in Australia were in Queensland prior to the legislation being enacted.

"During that 98 day period, the figure dropped to 33.6%, representing a 17.8% drop", says Mike.

Cate queries some of the other variables that may have impacted the data, including interest rate increases, COVID lockdowns.

Dave asks Cate about the impact of this legislation on the rental market. The volume of sales would have no doubt eroded the rental stock, and as Cate points out, Queensland was enormously impacted by homelessness.

Mike also sheds light on how the State Government taxes are offset by Federal Government negative gearing benefits.. Tune in to hear more...

The Trio are clearly not supportive of the Queensland Government's land tax move on land tax in 2022. Post-the repealed date, the figure only rebounded to 34.73%, a figure that still signals that investors were spooked. Combined with the Greens' policies, the investor market are cautious, particularly in Queensland.

And as Dave noted, a lag effect can last a long time. Victorian land tax changes, combined with tough rental reforms and a supply/demand imbalance will likely erode Victorian rental supply and the two resident Victorians in the trio discuss this. Household formation changes, combined with Air BnB and investor fears are playing havoc with Victoria's investor stock levels.

As Cate says, "it goes beyond assuming that it will net itself out."

Mike discusses the 'build to rent' and superfund theories that are populist decisions presently. The conundrum is that the conditions are just making things tougher for renters. From developers to local council to The Great Australian identity....

Cate sheds light on some current Victorian government established property acquisitions and the challenges that are associated with high rise social housing stock. She also chats about the current vacancy rates and how historically significant our current vacancy rates are.

As far Queensland's land tax legislated land tax changes boded; "It's misguided and it has unintended consequences", says Dave.

Cate discusses the need for continued investor participation to quench the current renter thirst. Combined with limited control over this asset class, the Trio agree that things are precarious for the current rental housing crisis.

Lastly, Mike feels that Queensland didn't acknowledge that they got it wrong with the 2022 policy.

Moving on to our gold nuggets!...

Cate Bakos's gold nugget: For our investors who are wondering how all of this legislative change impacts them. Check your legislation and find out all about market rent, how regularly you can increase rent, and what new policies impact you.

Mike Mortlock's gold nugget: It's very unpopular to discuss positive roles that investors provide in society. It's a tough juggle socially for many who are balancing the need to grow their wealth with the altruistic drive to provide housing.

Show notes:

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This episode is all about the things that buyers should look for when inspecting property; the red flags, practical tips, seeing beyond hire furniture and fresh paint, .... and the non-negotiables.

"Before we put any inspections in the diary, we check Google Street View."

Cate talks through the things that she's looking for when selecting properties to shortlist for her clients. From electrical transformers on power poles, speed humps and roundabouts, to dodgy neighbourhoods, Street View can safe wasting time driving across town.

Technology really has revolutionised how we do business.

Cate also looks for title types and zoning before getting excited about a listing. She and Dave ponder the importance of this in relation to lender scrutiny too. As Dave points out, understanding where true value lies can save buyers from wasting time and missing out on a lot of viable opportunities.

Dave asks Cate to share some of the steps she recommends when embarking on price analysis. Starting with recently sold examples on the sold tab of the search engine is a great first step. We can't underestimate the value of talking to friendly local agents too.

Mike sheds light on how he also looks forensically at past sales of the subject property, overlaying capital growth forecasting based on sale dates. He also throws out an AI challenge to our listeners! And Mike chats about the need for buyers to dig deeper when a property listing photo is missing a facade picture. Tune in to hear more...

Checking the status of the sale is important too. Sometimes properties are under offer, withdrawn, or about to sell quickly, so it's a worthwhile phone call before you plan a drive across town.

"When you arrive, what is important to note before you even get out of the car?"

• Parking and any parking restrictions - can you get a park nearby when you visit?
• Surrounding area - does it feel safe?
• Neighbouring properties - are they well kept? Are they shadowing the property?
• Any noises or smells?
• Ease of getting in/out of the property - can you pull in and out of your own drive?

Dave quizzes Cate on what she looks for once she's inside the property. She starts with the agent conversations, and the ways that buyers can be remembered for all the right reasons. Capturing video notes is a very handy tool that Cate employs, but she always asks permission from the agent. She sheds light on the aspects of the inspection that she notes in her inspection videos, and explains the benefits of doing so.

COVID really changed things for property inspections, particularly for the lockdown cities. "If you remember back to 2021, we had just five minute inspections at one stage", says Cate.

Mike talks about the value of a virtual inspection for spacial awareness; an understanding of the flow of the property. The trio talk about the hidden things that buyers don't always capture, and how a video inspection can aid this. From subfloor to gutters, there are tips and tricks that they share to give our listeners an extra edge with their inspections. And MIke's Quantity surveyor strengths shine though in relation to understanding functionality and age of items. Functional obsolescence is a term they all have a chuckle about, but understanding ATO effective lives is a great insight for investors.

...And our gold nuggets!

Cate Bakos's gold nugget: Going in with a really clear idea of must-haves and nice-to-haves is integral. If the property has a deal-breaker, buyers need to be prepared to walk away.

Mike Mortlock's gold nugget: Imagining the property without styling and staging is a real blind spot of people and we have to remember that staging is designed to make us pay more for the property. He also notes that many investors make the mistake of looking through the wrong lens. Lastly, asking the agents the right questions is critical. Being coy won't help buyers at all, particularly in this market.

David Johnston's gold nugget: Differentiating what is 'easily changeable' from what isn't is is Dave's big tip. It's the unchangeables that make a difference in the long run.

Shownotes: https://www.propertytrio.com.au/2023/07/03/unlocking-the-secrets-of-inspecting-property-with-expert-strategies-for-assessing-properties-like-a-pro/

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The trio enjoy a catch up after Cate's visit to Adelaide and a day out with Pete and the students. Pete sends a special hello to all of our listeners!
Mike's weekly market update circles around the RBA minutes and the monetary policy paragraphs. He notes that "the case for justification is getting stronger" and he highlights the increased risk of inflation returning to the target, hence the interest rate move.

Cate's interlude into off-market transactions may surprise our listeners. "Situational" off-markets can be ideal, but "Opportunistic" off-markets are becoming problematic.

Dave weighs in with his insights also and shares Cate's concerns about buyer's agents who purport to transact a heavy weighting of off-market sales.

Our episode entails two great listener questions.

The first is intriguing: Llohyd bought a rundown house in Hillcrest, SA for $550K with $440K debt November 2022. It’s in the process of getting subdivided to build two. His broker has just conducted a CBA desktop valuation and his property has almost $120K equity, and his options are bountiful. He reaches out to the trio examine his options and it's an enthralling conversation. Does he build? Sit tight? Consider other options?

Tune in to find out what the trio discuss. From considerations around build cost to equity positions, long term land banking to selling with plans and permits, all options are on the table.

Our second listener question is always a ripper. Jasmin asks the trio, "If I have a loan for $820K with an LVR or 80%, can I use that to buy two properties worth, and should I consider that option. Or can I only buy 1 property? "

"If I had a dollar for every time I've been asked this question, I'd have a piggy bank full of dollar coins", says Cate.

Cate asks whether our listener is investing for capital growth, or for rental yield. There is no right or wrong answer, in fact it boils down to an investor's personal financial position. Mike supports this view but he also loves the idea of diversification, however he focuses on asset quality and the need for an investor to understand what it is that they are trying to achieve.

Dave sheds light on the risks associated with price point selection, the power of compounding, the perils of procrastination, and the impact on the ability to purchase their family home.

"Make sure you've got the big rock in the jar sorted out", says Dave.

A true key point for Jasmin to consider.

...And our gold nuggets!

Cate Bakos' gold nugget: The winter market can be tough on the southern states, so for people who are contemplating shopping through the winter months, perhaps thinking about gearing up for spring is a good idea. Bear in mind supply and demand during winter months and don't put pressure on yourselves.

Mike Mortlock's gold nugget, (or black opal): Mike ponders the merit of having full context of our listener's long term plan. We can't just tell Lloyhd and Jasmin to opt one way or the other... it all comes down to planning.

Shownotes: https://www.propertytrio.com.au/2023/06/26/listener-questions-june-2023-2/

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Mike kicks off our market update with Sydney - up by 5% for the quarter. While this big city does a lot of heavy lifting when it comes to median figures, Cate points out that every single capital city is recording positive median price movement for the month of May. Dave brings our attention to the pace of growth for the city markets over the short term, as we see these markets gain pace over the regional markets as they play catch up.

Dave also chats about the breakdown of the market segments, specifically pointing out the relative volatility of the top quartile of the market. As history has shown us, the highest priced properties are often the first to tumble in downturn and the fastest to rebound in a recovery.

An intriguing fact that the Trio discuss as media headlines focus on the mortgage holders' pain is the cohort who are paying cash for their purchases. Whether they be down-sizers or those who have inherited wealth, many purchases are actually settled without the need for lending.

First home buyer participation rates are another side-topic of conversation for the duo and Dave notes some of the grants, opportunities, initiatives and changes that give today's FHB's some significantly higher benefits than in previous years.

"The bank of Mum and Dad's average assistance is over $50,000 nowadays," says Dave.

Dave points out the distortion caused within the median values data when it comes to houses and units. Taking two very different cities into consideration (ie. Melbourne and Brisbane) is a case in point when we consider the ratio of units to houses. And Cate raises another data-distortion consideration; what happens when we have an overrepresentation of sales from one particular segment of the market? Mike reminds us about the impact of initiatives that favour particular price-points too. We need to remember that data analysis sometimes needs to be drilled much deeper.

Dave reports the rental movement for capital cities and regions. Capitals are still experiencing pressure and new arrivals will be amplifying this impact. Regions are slowing down, and as Dave explains, only about 15% of new arrivals head to the regions, with the vast majority heading to the capital cities.

Units rents are rising much faster than houses and an obvious reason for this is affordability; units are simply cheaper to rent.

Listings are well under the five year average. Mike questions Cate about the slight uptick in May, but Cate is quick to put it down to Easter school holidays avoidance. There are no signs of reprieve for buyers who are experiencing the impact of stock shortage, unfortunately.

House price expectations have increased; indicating that people are expecting house prices to rise. Key changes include 'time to buy a major household item', 'economic conditions over the next five years', and 'time to buy a dwelling'. Mike delves into this last one; it seems a strange contradiction, but as Cate points out, this measure wasn't much different a year ago. Even in the crazy pace of 2021, this figure still sat below 100 which suggests that the broad consensus is that it's not a good time to buy a dwelling. People are pessimists!

Dave's pet subject... lending! "But we're not lending anymore", says Mike. Dave unpacks these loan commitment figures and hints that investors may be turning a corner. Cate queries the investment loan data and whether these figures could be including vacant (or personal use) dwellings that aren't actually housing tenants.

Productivity remains a key concern and stagflation represents a threat to our economy if things don't improve. Dave details this risk for our listeners.

Lastly, our new favourite index, the Freightos Baltic Index is a revealing chart. Freight costs have returned to pre-pandemic levels and this could be a positive beacon for our inflationary problems.

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

Dave Johnston's gold nugget: The breakdown of Goods and Services is an interesting dilemma. With services costs rising but goods settling down, our RBA has their work cut out for them.

Cate Bakos's gold nugget: Freightos Baltic Index! This is a compelling chart when it comes to gauging the cost of freighting goods; a significant proportion of the overall cost for imported goods.

Mike Mortlock's gold nugget: When will our spring selling season arrive? Or could listing activity remain low? Mike talks about the challenges buyers face while our supply and demand ratio sits at current levels.

Show notes: https://www.propertytrio.com.au/2023/06/19/ep-210-may-market-update-from-generational-shifts-to-the-r-word-recession/

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Mike's market update focuses on some new tax data which identifies the highest earning suburbs in Australia. WA's Cottesloe and Peppermint Grove take the lead and the range of incomes will surprise a few. Among other facts and figures, gender wage gaps, average superannuation balances and richest professions all featured in Mike's segment.

"The average Australian taxable income currently sits at $63,882." Our first listener question asked the Trio about their take on the Four Corners Episode that aired in late March 2023. The show focused on poor agent behaviours and conflicts of interest, and our lovely listener wondered what sort of controls exist around such behaviours and duty to disclose. Cate pares it back to two important things that buyers must remember.

• agent behaviours, and
• warning bells for consumers

Our listener also asks about agents' representation to buyers when it comes to asking prices and auction quotes. Cate shares her thoughts about underquoting and some of the challenges that are faced by both listing agents, vendors and consumers.

While underquoting is a horrible practise, Cate agrees with Dave's message. Buyers owe it to themselves to be familiar with resultant sales prices in their area, and applying some pricing methodology is not a difficult science for a committed buyer. Mike's reference of cognitive bias is so true for so many vendors though, and it's crucial that vendors maintain a realistic approach.

Impartiality is the key word and Cate, Dave and Mike decipher what can go wrong for consumers when their trusted professional has a conflict that undermines their fiduciary duties.

Our second listener question is a special one; a loyal listener (and property investor) is keen to help her friend get a strong foot holding on the property ladder and she asks the Trio whether her friend's Melbourne apartment is one to hold or one to sell in the quest for a strong performer longer term.

Cate, Dave and Mike rise to the challenge with their individual strengths shaping some ideas about how our listener can best help her friend. Cate focuses on another element that loving friends and family often overlook.... we can't imprint our own values and dreams on others. Property investing needs to be prompted by a fire in one's belly, and dragging a friend along for the ride is often a difficult challenge.

As Mike points out, strategy, deliberation and commitment is essential for a committed investor. And Dave discusses the need for a desired spending limit, methodical cashflow analysis, and a determination of savings on hand, LVR and borrowing capacity... and then accessing funding is another step yet again.

...And our gold nuggets!

David Johnston's gold nugget: Dave addresses both listener questions. For our first listener, Dave harks back to the most important point to retain: "Do your due diligence." And his advice for our second listener's friend is to "Do your plan!" Simple, but not easy.

Mike Mortlock's gold nugget: As much as we want to be kind and look after our friends, we can't go too far with it. "Imagine if Da Vinci was petrified of not being able to pay the rent and wasn't sketching in his notebook, what kind of world would we be living in?"

Show notes: https://www.propertytrio.com.au/2023/06/12/listener-questions-june-2023/

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This midweek updaate was too juicy to wait for, so the trio bring to light three new market updates to share with our listeners.

Mike talks about some breaking data signalling a weakening job market and he sheds light on what futher changes could mean for the economy.

Cate touches on an interesting rental story where a tenant took on the landlord at a tribunal.

And Dave discusses a new lender option for some borrowers who may be eligible for a significant buffer rate reduction; a surpring move in a sea of 3% buffer rates.

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The trio kick off this exciting episode with a discussion about the Westpac consumer sentiment index and the recent changes that our markets have been experiencing.

Dave and Mike ponder the role that the media play versus the money market commentary, and Cate highlights the shrinking confidence about the time to buy a major household item index, a positive signal that the RBA rate increases could be (slowly) taking effect.

Today’s show is all about the distance people buy their investment properties from where they live and whether that has changed over the last few years. The popular view is that people typically buy very close to where they live because they know their own backyard. However, we’re diving into some new industry research that dispenses with the stereotypes and gets down to facts with real data.

We are fortunate to have some valuable and telling data at our fingertips due to MCG Quantity Surveying's 1000 assets study; an annualised data release that Mike and Marty share with the property community and media. Mike shares with the listeners what it was that prompted this collation of information.

Mike challenges Dave and Cate to consider how far they each thought investors were generally prepared to travel. Cate also asks Mike to shed light on some of the 'accidental investment' examples, and how this data signals such a property.

Dave chats openly about the biggest risks associated with dual-purpose investing and Cate also talks about some of the emotional reasons that can lead an investor to purchase 'around the corner'.

The trio talk through the changing figures associated with this amazing measure, from pre-pandemic to pandemic, through to post-pandemic. Prior to the pandemic, the average distance that an Aussie investor's property was from their home measured 293km.

The pandemic average distance shifted to a colossal 599km, a startling change.

The trio unpacked the drivers, the changes and their thoughts on the significant jump. The intriguing question that Mike asks is, "what on earth happened post-pandemic?" ....and the answer may surprise (we won't ruin the surprise for our listeners!)

This incredible evidence supports some of the trends that we've witnessed in Australian property investing and we love that Mike and Marty's business have some clever data that is unique to what we'd typically find through the usual data channels.

The trio sift through the radii findings listed in this table, not only analysing the pre-, pandemic and post- average distance, but also the changes within the shorter-distance data findings. It's a ripping episode and one that showcases our third muscateer's appreciation for great data.

"While it appears that we’re transitioning back to a more normal reality in the post-pandemic era, there’s no doubt some needles have shifted forever. In fact, discussion about modern history will almost always be divided along pre- and post-pandemic lines."

Shownotes: https://www.propertytrio.com.au/2023/06/05/decoding-the-proximity-puzzle-for-property-investors/

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This ep is crafted around two excellent listener questions that hinge around mortgage strategy. But before the trio jump into the questions, they share their market updates.

Land tax reforms (and other 'fruity' ideas) are the topic of conversation for many Victorian investors, and Cate talks through the changes with Mike and Dave. She touches on some of the challenges that Victorian property owners have faced through the pandemic and she also considers some of the negative implications of the new changes. Cate wonders whether the direct impact on renters will result in segmentation due to the vulnerability of cash-flow neutral investors.

Dave ponders the impact of this tax change on the Victorian market, and holds concerns that the unintended consequences could the exacerbate the existing rental problems in the state. With supply issues at record lows and such tight vacancy rates, Dave fears that this will just make the problem worse.

Mike asks Dave and Cate a left-field question, "as land tax increases state revenue in one state, federal government tax revenue decreases. How does our Federal Government feel about this?"

Our first listener question is sent to us by Emily, who asks the Trio about converting her home loan to an interest only loan product once her offset account is working at full capacity. Dave's rationale for recommending interest only is intriguing, but it's important to note that this information is not designed as a 'one size fits all' solution.

Investors need to have a plan, understand their options and remain focused on the long term goals when it comes to stepping-stone properties. Accidental investing is not necessarily a great outcome if the property is not a suitable long-term asset to hold as an investment.

Some of the key benefits of an interest only loan as outlined by Dave include;

• More interest to claim once the property becomes an investment property
• Building up savings more rapidly, and in turn these savings can be used to pay more for a future home and will reduce the debt balance on the non-deductable loan.

The big unknowns, according to Dave are; "most people don't understand the strategy, and we also can't be certain that the home will eventually be an investment property down the track."

Dave's sagely explanation of this common dilemma is gold for our listeners, and many investors benefit from this approach when a stepping-stone property is no longer personally used and a future home acquisition is on the agenda.

The Trio remember the old days when lenders offered much longer interest-only periods to investors, and they compare the differences now that today's investors face, particularly when it comes to loan amortisation.

Our second question comes to us from another fabulous listener, Marco, who asks a great question about the use of equity, as opposed to applying higher loan to value ratios, (LVRs) and paying for Lender's Mortgage Insurance.

"Is LMI the devil, or should we consider holding onto that cash as a buffer?" asks Mike.

Dave distils some of the important details when it comes to mortgage insurance and LVRs, pointing out how tax deductions are optimised, and savings are maximised in tandem. Cate adds some questions that are important for investors to ask themselves; understanding how much time remains to achieve the investment goals, what incomes they'll potentially earn in the future, how long they wish to work for, what the short-term economic cost impact is, and what is in their plan.

Life throws up curveballs, but one eye-opening aspect that Dave touches on is the importance of remaining patient. Some acquisitions take many years, but the visibility that can be offered through clever modelling software can't be underestimated. Having a clear plan and a scope of timeframes is integral to a successful journey.

One of the biggest costs that Dave sees impacting property investors is selling a property that they could have otherwise kept if they'd had the right mortgage strategy.

Thank you to our listeners - we appreciate these great questions. We have more listener questions eps to come too!

And... our gold nuggets!

Mike Mortlock's gold nugget; "don't be the cleverest person in the room!" Mike supports reaching out for specialist advice - the financial difference when it comes to getting great advice can really add up. "It could be the best ROI you ever get."

Cate Bakos's gold nugget relates to the first listener question.... refinancing! Cate implores investors to stay on top of their paperwork, supporting documentation and their credit conduct so that they can ensure that refinancing isn't a nightmare.

David Johnston's gold nugget: If you get your mortgage strategy right and align it to your property plans, (particularly in relation to converting a current home to a future investment property), you can not only optimise your tax deductions and have more cash to put towards your next home, your extra property in your portfolio will make a significant difference to your retirement.

Shownotes here: https://www.propertytrio.com.au/2023/05/29/ep-207-mortgage-mastery-for-investment-borrowing-and-the-hold-or-fold-dilemma/