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

http://propertyplannerbuyerandprofessor.com.au/ In this week's episode of the Property Planner, Buyer and Professor Podcast, the team analyse the important considerations for completing a successful subdivision and the risks that small time developers need to be aware of. Dave, Cate and Pete take you through: 1. The first step - planning Ask yourself how does this step fit in with your overall property plan? Start with the big picture and work out what stage of life is the best time for you to complete this project. Is it an acceptable risk to take on now? 2. Buying well - a critical requirement to success Selecting the right property and the right block will either make or break your plans. It could be the difference between make a profit or ending up with a vacant block and a hole in your wallet. 3 Know your market Is there demand for smaller blocks of land with townhouses in the location that you're purchasing in? Who is your target buyer and how will the property cater to their desires and price point? And is the project likely to be as profitable as other, similar priced alternatives? 4 Have an in-depth understanding of council plans Even if your plan is to subdivide, sell and leave the building project up to the next purchaser, the council still wants to see the plans. If you want to get three townhouses onto a block, be prepared to demonstrate the feasibility of your plans. Each council has their own guidelines, so it is important to understand the sensitivities, likely steps and local town planner's approach at every step of your process. In particular, it helps to get to know who you will be dealing with. 5 Consider all costs From transaction costs, holding costs, tax obligations and the value of your own time - ensure you have an accurate understanding of the true projected cost of your project. Have you modelled what your budget will look like if a few key costs vary by 5%? And will you still make a profit? 6 Obtaining finance for developments Development finance is not as straight forward as getting a loan for a purchase. There are many additional hoops to jump through before you get the lenders tick of approval. 7 Common mistakes and how to avoid them Just because your neighbour did a subdivision 5 years ago, doesn't mean you are bound for success. We outline the common mistakes, misconceptions and unwitting risks we see time and time again, so you can put your best foot forward on your development journey. 8 Getting educated One of the most critical factors to success is to 'know your stuff' and learn from the experts. We provide a bonanza of resources in our show notes for you to start learning and work out if subdivision and development is the right move for you. 9. And of course, our 'gold nuggets' Visit the show notes - https://bit.ly/2ZVJJSo

http://propertyplannerbuyerandprofessor.com.au/ In this week's episode of the Property Planner, Buyer and Professor Podcast, the team delve into the top fears that keep landlords up at night and what you can do to safeguard yourself. Dave, Cate and Pete dissect: 1. The property market dipping CoreLogic capital city data shows that 5 out of the 8 cities have started growing in value or remained at the same level, while Melbourne and Sydney have dropped slightly further. It appears that we are now at an inflection point. Contrary to the property doomsayers, we haven't yet seen a gross drop of 5%, which has been our central case since April. 2. Tenants claiming COVID financial distress Anecdotally we've seen 8% to 14% of tenants looking for reductions in rent, as a result of loss of income due to COVID. There are also areas that have seen a much lower percentage of tenants claiming COVID financial distress - due to location demographics and property features that may attract a particular quality of tenant. Careful tenant selection is critical. 3. Debt and cash flow management Treat your investment property like a business! That means understanding how to manage your risk and selecting an appropriate repayment strategy and buffer. Letting your money goals drive strategy and price point will mean that you are prepared and comfortable, when income ebbs and flows. 4. Repairs and maintenance - does your buffer cover rainy days (and leaks)? Unexpected repairs can burn deep holes in your pockets, but an appropriate risk management strategy will avoid the financial stress of having to carry out major repairs on your property. 5. Building and pest inspections Do your due diligence and get a building and pest inspection done before you purchase. This will help guide your negotiations if you know there are maintenance issues lurking! 6. Tenants from hell From non-payment of rent to trashing properties, a tenant from hell can be a landlord's worst nightmare. Starting with a good property manager and selection process can help you avoid a painful tenant. Listen to episode 41 "Tenants from hell" for more education on how to select a quality tenant and property manager. 7. Protecting yourself with insurance It is critical to know the difference between accidental, deliberate and malicious damage and how your insurance policy covers you in these situation - it can be difference between a successful claim or not! 8. And of course, our 'gold nuggets'

http://propertyplannerbuyerandprofessor.com.au/ In this week's episode of the Property Planner, Buyer and Professor Podcast, the team take a deep dive into the world of credit reporting, debt consolidation and how you can manage your money effectively to get a great credit score. Dave, Cate and Pete dissect: 1. Credit scores and comprehensive credit reporting Big brother is watching! The team take you through the new comprehensive credit reporting system, what goes into your credit report, and how your credit score is calculated for a positive or negative outcome. 2. The traps to avoid that impact your credit score Even honest mistakes that are rectified quickly can show up on your credit report (and remain there for 5 years). We take you through some careful tips to help you avoid these common errors. 3. Tips on how you can manage your money effectively Money management is a critical pillar for success in your property journey. We outline key strategies on how you can keep a handle on your spending habits and build the foundation of your wealth creation journey through an effective money management system. 4. Money management and a detour into the Australian economy Australian's rate of savings is up 20% during Covid. We are saving more money than ever since our lenders have been monitoring the rate of consumers savings. This huge amount of savings will be spent domestically, especially when travel is back on the cards, and it will play a large part of supporting the Australian economy. If you can save now, you can save any time! 5. Debt consolidation and why prevention is always better than cure! Debt consolidation through refinancing can make it easier when you have multiple, (higher interest/shorter loan term) repayments that are getting out of hand. With tailored assistance, you can consolidate into one loan to reduce your overall monthly repayment(s). The key is to act quickly before the situation unravels - speak to your strategic mortgage broker today about the pros and cons, but the most important part of the equation is changing your spending habits! 6. Real life bad credit stories Have you heard the one about the bank that gave a poor unsuspecting consumer a permanent credit default because they were uncontactable, even though they made the payment right away once they were reached? It happens all the time. The same lender 5 years later is now the only lender who will lend money for a new mortgage. Oh, the irony! David and Cate share some of the weird, wonderful, and frightening stories and first-hand experiences, how they could have been prevented, and the different solutions available. 7. Credit scores are very important, but there are lenders who cater for those getting their finances back on track! There are many niche and non-conforming non-bank lenders that are willing to take on consumers with poor credit ratings - but it comes at a price, normally in the form of higher fees and interest rates. Accessing these lenders can means that property plans don't need to be on hold while you clean up your credit rating, and once you get yourself tidied up, you can always refinance to a mainstream lender with lower rates that suit your mortgage strategy! 8. How to check your credit score Did you know that you are entitled to access your credit score and credit report for free? There are a number of websites that allow you access, ensure that you choose one that is government recommended. Check below in our show notes for some portals. 9. And of course, our 'gold nuggets' Visit the show notes ...

In this week's episode of the Property Planner, Buyer and Professor Podcast, the team answer burning questions from our listeners. From mortgage strategy and prepping for decisions for first time buyers, to what would you do if you had a time machine and could go back 25 years and start again. We put Dave, Cate and Pete in the hot seat to discuss: 1. Top tips for first time buyers entering the market during COVID-19 Although we're currently in a unique time (did someone say pandemic?), there are some fundamentals of property purchasing that always apply, rain hail or shine if you are a first-time buyer. 2. What should you focus on if you're not purchasing your long-term home? Your first purchase can catapult you forward on your wealth creation journey if you get it right. But conversely, it can set your lifestyle and financial goals back if you get it wrong. Each property decision can either help or hinder and should be considered very carefully, but none is more important that your first! 3. Getting your mortgage strategy right at the beginning of your journey. In episode 50, Dave, Cate and Pete shared their biggest mistakes and one mistake they all had in common was selling property they could have kept. This is in part due to not understanding mortgage strategy and how it helps you to keep properties during your wealth creation journey. Is your lender or mortgage broker an expert in mortgage strategy? Very few are! 4. Have a plan for holding your first purchase It is unlikely that your first property will be your long-term home, but you will be better off if you can keep it as an investment when your long-term home comes along. 5. Rentvesting, a viable option but not everyone's cup of tea As a first-time buyer, you often can stretch your budget by purchasing an investment property based on the fact that the projected rent will be added to your income tally. This might allow you to secure a stepping stone home that will meet your requirements for longer, or just purchase a superior quality asset whilst maintaining your lifestyle. Education and understanding your options is the key to successful property decisions. 6. Price tag v comparable sales Adjusting your expectations at the beginning of your search will help you narrow in faster and make any necessary compromises to purchase your property. Make sure you are following the sale prices and not the asking prices! And here's a little secret, there are always compromises. Shhh! 7. If Dave, Cate and Pete and could go back 25 years, what would they do differently? The answer to the first question is they would do many things differently, and yes, they would have a better financial outcome, even if the property market does not perform as strongly as it has over the next 25 years... but it might! 8. And would they have a better financial outcome? From buying and holding rather than having less itchy feet, starting earlier, making each property count, to self-education, the advice is varied! 9. And of course, our 'gold nuggets'! Visit the show notes - https://propertyplanning.com.au/tips-for-first-time-buyers-listener-questions-1/

In this week's episode of the Property Planner, Buyer and Professor Podcast, the team explore the commercial property sector in part two and share with you how to determine the value of a commercial property, what to look for in a tenant, investing in real estate investment trusts and the ins and outs of warehouses - and more! David Johnston, Cate Bakos and Peter Koulizos discuss: •How to determine the value of commercial property when buying. The Property Professor explains what determines the value of a commercial property and what to look for in a quality commercial investment. •Land tax. Due to the higher cost of getting in and out of commercial real estate, land tax must be considered as part of the ongoing costs and factored into your decision making. For most states and territories, land tax is grouped with residential property. Be sure to do the sums on your land tax bill because the costs grow proportionately to total aggregated land value. Take a listen to Ep#43 "Diversification 101 - How and why to plan for diversification within your property portfolio" for more on this topic. •What should you look for in an ideal tenant? Long-term lease agreements and stable companies or government organisations can be your best friend! •Unpacking warehouses (pun intended!) Everything you need to know about investing in warehouses and logistics. This category has outstripped office and retail for popularity and overall returns with the advent of online shopping, and Covid has only hastened this transition. However, there are some traps for new players! •Real Estate Investment Trusts (REITs) - The pro's and con's, and everything in between. REITs are a great way to gain exposure to commercial property without having to outlay millions of dollars on a single asset, which brings huge concentration risk. REIT's offer instant exposure to commercial real estate in a bite size chunk that suits your investment profile. No need to buy the whole shopping centre or office. You also can get exposure to various properties across office, retail and logistics providing diversification. REIT's are a great way to provide cash flow as part of your transition to retirement as a trust must distribute all profits, unlike companies. •Publicly listed V unlisted/private Real Estate Investment Trust's (REIT's). Unlisted property funds are the closest proxy to direct property investment - but with the benefit of professional management. A major con is that your capital is locked in for the duration of the trust as private units cannot be bought and sold on the ASX in the open market, which usually ensures greater liquidity. If you are selling, you may be required to sell to someone within the private REIT. If you are worried about liquidity, this is not the asset class for you and you would be better off in a listed REIT. •Flexibility of the property to mitigate risk. Investing in commercial property comes with higher risk than residential for many reasons, but you can mitigate that risk by purchasing a property that allows for flexibility of tenant types. •Let's go in reverse, beep, beep, beep, how about converting a warehouse into a residential property?! The 'latest' craze in modern living, well actually this has been happening for two decades as industrial property in inner cities cease being used for their original purpose and transition to residential property. Warehouse conversions can pay off from a lifestyle and financial perspective, but often do not. They are high risk, and are not for the faint hearted (or those with a tight budget). So go in with your eyes open and be sure that the property really is your dream home, or the investment will get a sustainable long-term financial return. Enter at own risk! Caveat emptor! •And of course, our 'gol...

In this week's episode of the Property Planner, Buyer and Professor Podcast, the team intimately share with you some of the most significant mistakes that they have made along their property journeys, and their lessons learnt. In this episode David Johnston, Cate Bakos and Peter Koulizos discuss: •Selling properties they could have held. The Planner, Buyer and Professor have all made this mistake at some point on their journey, along with many other Australians. Selling a property that you could have kept, is one of the most common regrets we see. •Not having a mortgage strategy in place. Your mortgage strategy allows you to use equity, optimise your tax deductions and plan for holding property into the future as you accumulate more properties in your portfolio. It is critical to help you avoid the first mistake of selling properties that you could have held. •Keeping track of your Money Management! The way you manage your money is critical to success and ensuring that you have an effective money management system in place will not only give you peace at night, but will allow you to build your cash reserves to take the next step in your property journey. •Not knowing what makes a good investment. The allure of shiny and new can be tempting, but beware! Not all that glitters is gold. •Listening to the wrong people. Whilst your friends and family are well meaning and have your best interests at heart, they are most likely not property experts, (unless you are lucky to have a dad like Pete's who worked in real estate). Ensure that you surround yourself with, (and get advice from) independent experts. •Buying a 'bargain'. We all love a good bargain, but when it comes to property, looks can be deceiving. Purchasing a bargain property can attract a poor quality of tenant and you need to ask yourself whether it's worth the headache and trouble. •Not purchasing when you could have. Your risk profile may preclude you from taking that critical step in your journey. Whilst most people regret selling a property, you can also regret not taking the risk of purchasing a property that would have performed well. As they say, hindsight is 20/20. •And of course, our 'gold nuggets'! Visit the show notes - https://bit.ly/34c3hVU

In this week's episode of the Property Planner, Buyer and Professor Podcast, the team take you through the ins and outs of investing in commercial property. In this episode David Johnston, Cate Bakos and Peter Koulizos discuss: •How commercial property investment differs from residential, from a higher return on investment, duration and construction of leases, flexibility in lease length, business category of tenant and to ongoing running costs. •An introduction to the different types of commercial property - industrial, retail and office. •Higher return also means higher risk, and that risk comes in the form of vacancy rates, rental volatility and higher funding costs. It's often much easier to find a tenant for your home, than your warehouse or high street shop. •The high cost of entry and ongoing maintenance. Buying commercial property is often much more expensive than buying residential property, on top of that commercial property investment requires higher deposits as a direct result of lower loan to value ratio constraints, and higher interest rates for commercial lending. •Real estate investment trusts and how you can invest in commercial property without purchasing the whole building; Dave touches on this exciting purchase pathway, but only scratches the surface. The trio look forward to delving even further into REIT's. •Volatility in the commercial market as a result of the Covid-led economic slow-down, with sentiment dropping to unprecedented levels for some categories, dire vacancy rates are the market indicators. •The economic outlook for retail, office and industrial commercial property including some positive insights for specific subsets of commercial property •And of course, our 'gold nuggets'!

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ This week, the Property Planner, Buyer and Professor turn their thoughts to established properties and why they offer superior capital growth prospects. In this episode David Johnston, Cate Bakos and Peter Koulizos take you through: 1. Established houses tend to be located close to the CBD, and generally the older the property; the closer to the CBD, (being the central location for the majority of jobs and the highest land value per square metre.) 2. People want to live close to where they work, but will that be the case going forward as many businesses comfortably shift to 'working from home' life? 3. Established properties are more likely to have an optimal land to asset ratio, with the majority of the value invested in the appreciating component of the asset - the land! 4. New estates may offer larger blocks of land than inner established areas, but that doesn't equate to a higher land to asset ratio. In fact, the abundance, (and lack of scarcity) of land in these new estates means that they have a lower value per square metre. 5. You don't pay a 'brand new premium' for established property. Paying for a brand-new property means that you also pay for the developers profits and cost of labour. For established property, you pay only 'market value'. 6. The NIMBY effect (Not in my backyard!) - Long established communities have great influence over councils, (including the implementation of heritage listing and overlays) that make it significantly more challenging to increase supply through development in the preferred pockets and streets. 7. Melbourne's highly sought-after ring of suburbs located 5-20km from the CBD have seen very little growth in population in the last 30 years. This phenomenon has directly impacted property price growth in such areas. 8. Period homes have architectural appeal and features that Australian's love, increasing the demand for those properties due to the irreplaceable nature of these elements. 9. And of course, our 'gold nuggets'! Visit the show notes - https://propertyplanning.com.au/why-established-properties-outperform/

The Property Planner, Buyer and Professor continue analysing off the plan purchases, and in particular, high rise apartments. This week, in the second of two episodes dedicated to this type of property, their focus is on the financial risks of purchasing off the plan. In this episode David Johnston, Cate Bakos and Peter Koulizos take you through: 1. The 'Pros' of purchasing off the plan. The team start off outlining a number of financial benefits of purchasing off the plan, however many are short-term and what you could call a 'catch 22'. 2. The risks of not being able to access finance (through no fault of your own). Lenders protect themselves by limiting their exposure to off the plans because they understand they are 'risky' securities - less likelihood of capital growth and hard to sell in a fire sale. That includes limiting the number of properties in a building or postcode they will take as security, limiting the loan to value ratio (requiring a higher deposit), and working to a minimum limit of the number of square metres in the apartment that they will lend against. 3. The contract can limit your re-sale options, with many contracts stipulating that only a particular real estate agent can on-sell your property. This is so the developers can maintain control of the sale prices within the block. 4. Homogenous dwellings of identical apartments in a building or houses in a development have significantly reduced scarcity value, and it is likely that sellers will have competition from properties that are similar to theirs. Buyers must consider what makes a property unique and desirable? 5. Over-supply can adversely impact the expected rental yield, particularly when many identical properties flood the market at the same time, causing a race to the bottom for landlords to find a tenant. 6. Limited capital growth prospects from low land to asset ratios, as the land component which is appreciating can make up only a small percentage of the overall asset value. 7. The likelihood that the value of the property will go backwards after you purchase, as the largest component of the asset (the dwelling) is depreciating. 8. The cost of management fees that are not certain upfront. Owners corporation and strata fees are not typically specifically outlined at the time of an off the plan sale. To compound the issue, future special levies for maintenance or issues arising out of poor quality builds can quickly eat into your available funds. 9. Lost opportunity costs in waiting years for an asset to be finished, that you could have invested in the meantime in an asset with superior capital growth prospects. 10. And of course, our 'gold nuggets'

The Property Planner, Buyer and Professor take a deep dive into the risks of purchasing off the plan. Because the risks are many and varied, this will be a two-part episode with an episode solely on financial risks to come next week! In this episode David Johnston, Cate Bakos and Peter Koulizos take you through: 1. Pros of purchasing off the plan - for a balanced view, we take you through the advantages of purchasing off the plan. Following the pro's, we then detail the risks that buyers need to be aware of. 2. Risks of buying a property that doesn't exist. You may be able to visit a display home, but often you are looking at plans, dioramas and drawings - and unless you are an architect or builder, it can be quite difficult to visualise the end product. 3. Alterations to the property without your consent. The contract will normally allow the developer to make changes to the property within a certain percentage of variance, and without your approval. Often this results in unexpected changes/reductions in floor area to the plans, specifications or differences in the quality of the final finishes. 4. Lenders may not accept the property as security if the alterations cause the square metreage to fall beneath their prescribed level. 5. Contracts often favour the developer and the build completion almost never runs on time. 6. The timeline to settlement is uncertain and you could be waiting between 12 to 48 months. In the meantime, your lifestyle, financial position, lender policy, property value and the market could change. The lost opportunity is pertinent if the project is cancelled or builder becomes insolvent. 7. The value of the property can fall before settlement, and combined with a large number of off the plan purchases being overpriced from the start, valuations coming in lower than the purchase price can cause significant out of pocket expenses. 8. Limited recourse against the builder in the event of a dispute, your contract of purchase is with the developer and not the builder. 9. Are you dealing with a spruiker or an independent advisor? Is the person selling the property receiving an income from the developer for the sale? Beware of spruikers masquerading as advisors! 10. And of course, our 'gold nuggets' Visit the show notes - https://bit.ly/2OIrp9x