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E116 – How to Start Property Investing Today

4one4 Property Co: The Property Pod E116 Cover
Episode:E116
Show Title:How to Start Property Investing Today
Cast:Patrick Berry & John McGregor
Guests:Chris Sierzant
Show Length:32 minutes 22 seconds

John McGregor
And I think a large part of that comes down to relationships that you hold with that break or that professional. You know, we say that property is a game of finance, but I would argue that property is also a game of people. Yeah, relationships only properties, relationships going well with young wine.

Patrick Berry
You know, you’re listening to those early on. Okay, everyone, welcome back. To another edition of the property pod. Here at the desk today, with me is John McGregor and Chris again, who’s back for a second episode. Welcome back.

Chris Sierzant
My thanks. Pleasure to be back.

Patrick Berry
Well, clearly, we didn’t scare you away on the first one, so that’s always a bonus.

John McGregor
That’s a good start.

Patrick Berry
Is isn’t it, John? It’s straight off the bat is what I felt when Chris came back to me after we put episode one out. And said, I’ve got heaps of episodes to think about. I’m like, well, we didn’t scare him too much.

John McGregor
Now that works for me. Thanks for coming.

Chris Sierzant
Pleasure. Thank you.

Patrick Berry
Yes, I look, Chris you’ve come up with another idea. Looking more at the basic side of investments that you’re keen to have a chat about, how are we going to break down today? Because I’m sure the listeners got a lot out of the last episode, and I’m really excited that you’re back What have we got on the cards today?

Chris Sierzant
Yeah, awesome. So today I was thinking a big good idea to take it back to basics and sort of think about if I want to start getting into property investing. One of the things I should consider So there’s kind of three things that I would look at. The first thing is around having a plan. So that’s around having an idea about why you want to invest.

Chris Sierzant
Yeah, because that will actually help you determine the other things Second thing is around budgets, I think about finance and getting that sorted. And then the third thing is once you’ve got those two steps, the third thing is around educating yourself. So that’s when you can start to go out and start to look at properties, get an idea of what’s out there.

John McGregor
Yeah. And what’s interesting, you haven’t even said about buying a property yet.

Chris Sierzant
Yeah, exactly.

John McGregor
Because I would say the first thing that people will often do very, very quickly is go buy property or got some money. Now let’s go buy something within what they’re told me I could buy. And we’re really not even talking about that. Like, that’s the that’s the fine little pin that exposes the idea being is yours. You’re, you’re building your pillars so that the buying aspect becomes almost the easiest part because all the rest of the area has been completely covered.

Chris Sierzant
Exactly. Once you have that plan, all that you’re doing is just executing on that plan that you’ve set out consistently.

John McGregor
Yeah. Yeah. Brilliant. Really. I mean, there’s so much meat in that. So, I mean, the first thing I guess would just start with number one, which is the plan. Now, I think you said that it’s really about understanding a few things, but one of them is why. But if you want to just talk about what you believe, what you see is a plan and what that looks like stable yet investor.

Chris Sierzant
So one of the common things that I say a lot is that people will ask the first question. They’ll say they’ll say, this is my budget, what should I buy? And to me, the answer is it depends. Where do you want to be? How many properties do you want? You know, is this your first property or 10th property?

Chris Sierzant
Because your end goal will actually determine how you need that property to perform you.

Patrick Berry
Is that something that people think about? Straight off the bat? Like how? What is my goal? Like my goal? If I was to be an investor and I suck at it, I tried once and got back out is done. I want to own as many as possible. Isn’t that the goal or.

Chris Sierzant
It’s a really good question. I think, again, it does depend on where you want to be. So for a lot of people, you might ask them like, why do you want to invest? And they might say, Well, I just want more money. Maybe you want it to be a bit more detailed then than that. Maybe it means you want financial freedom.

Chris Sierzant
What does that look like? Does that mean scaling back on a bit of paid work? Does that mean you want more time? And if that’s the case, you’re really talking about generating a passive income.

John McGregor
Yeah, I think that’s really important because I have more money. Will you buy the wrong thing and you can get yourself to a heck of a lot of trouble and all of a sudden you don’t have more money, you’ve got waitlisted. You would imagine it. And the problem is too, is the property isn’t just one. You can just get in and out in a day.

John McGregor
So if you if you set yourself up really poorly, you can really, you know, do some damage to your self financially. And I think the last few years has shown that people you’ve got a lot of accidental experts because they just chose a lucky time to purchase. They didn’t actually do it. You know, I mean, the real strategy, I suppose, is how to buy when things get tough.

John McGregor
And, you know, part of a really good plan is to ensure will then, you know, everything might not work out as exactly as you like. So making sure that you have a really good plan, a good goal that isn’t just, you know, that you can work to is really important. So you don’t actually get yourself in trouble.

Chris Sierzant
Yeah, exactly. And that’s the thing, like if you bought property in the last few years in Australia, chances are you’re going to be doing well. But you know, again, we look at the horizon for property and you’re looking generally, you know, 15 to 30 years anywhere between that band.

John McGregor
So I guess then if you would, someone was to say, look, I just want to make more money. What we’re really probably talking about is we’re trying to help them get a little bit more detailed on exactly what they want. So you said that what they’re if they want some bit more freedom and time, you said you need passive income, which is obviously then if they put the passive income, is money working for you, it’s putting money into your pocket without you actually physically trading your time or money or labor in that sense.

John McGregor
So in your mind then if someone is to say, okay, great, I had a goal, probably really lousy goal. How can I set better ones and then and then put that into a plan?

Chris Sierzant
Yeah, exactly. So the goal itself is really elect to my plan. I just have one sentence and that’s my why about one why I’m doing it. And for me, that sort of helps me because if I’m looking at passive income, I’m going to break that down into what would that look like for me? So I’ll give an example.

Chris Sierzant
So if you maybe decide, okay, if I want to replace my income or the household income you might pick a nice round number. You might say, okay, I want to have 100 K a year. You know, I want to have portfolio that’s generating $100,000 every year. So what will I need to do that one property won’t do it.

Chris Sierzant
Properties probably won’t do it. Chances are, you know, if you break it down, you know, you might be looking at 20 to $30,000 a year from each property. That’s if they’re fully paid off. So we’re talking about if you sort of, you know, wait one or two property cycles and the property could be paid off, that’s when you want to sort of break it down.

Chris Sierzant
So this is where it gets important. So if you decide that you want to purchase more than one or two properties, you need to start thinking about what are the assets on purchasing Sure. That’s when that’s when we start having that conversation about capital growth and cash flow and that balance and the dance that you play between the two.

John McGregor
Because I know one thing when we caught up last time was that often people will go out and buy, even if it is an investment property. Let’s just assume someone has to work it away. Is it okay they’ve been given a budget of $600,000, $800,000, $1,000,000, especially if you’re in different markets. And then they go out and they buy that million dollar property and the challenge is though, is it obviously the higher you stretch yourself, the longer that is to be able to leverage and, you know, pay down that debt quicker.

John McGregor
So all you’re really doing is delaying that time. Would that be right?

Chris Sierzant
Yeah, definitely. Part of it comes down to having good cashflow. So if you’re borrowing money from a lender, you want to demonstrate to them that you can pay that back. And if you’ve borrowed you know, if you’re pushing yourself in terms of your cashflow, you’re going to make it difficult to demonstrate that you can actually service that loan.

Chris Sierzant
Yeah. And that’s where people get stuck.

John McGregor
And maybe we could say that when we talk about cashflow, what we’re really talking about is how much money you’re getting every week. And if you’ve leveraged yourself too much buy, you know, you might own three properties for example, all of them actually cost you a hundred bucks a week. You’ve actually got $300 a week less to be able to do what you need to do every day.

John McGregor
Exactly. And all of a sudden, if the interest rate rises a little bit or someone has to lose a job, you know, you’re, you’re really crunched and they’ll put you under a lot of stress. So all of a sudden, the idea that having a bunch of properties is going to make you more money is the complete opposite of what you’re hoping to do.

John McGregor
And I suppose where that element the good thing is, let’s just say you were given a budget of a million bucks and you only you found a specific regional area or property that was, you know, a half that expense. Well, worst case scenario, you might have spent $500,000 where you easily be able to support that mortgage with without question.

John McGregor
Even if something goes wrong. So I suppose going back to that plan and you said, okay, my wife is to give yourself financial freedom, you’ll need within a certain timeframe. Well then obviously, Maxine, yourself out financially every single time you buy a property is probably going to be the wrong move.

Chris Sierzant
Correct.

John McGregor
So then with that plan, so we’ve established a why. And in one case, it might be, look, I just want the freedom to take care of my expenses. I think, you know, the rubber case actually calls it the rat race. I’m sure some people familiar with getting stuff out of that rat race where you’re no longer working a job just to pay the bills.

John McGregor
And next thing I suppose of that plan, you’ve talked about was obviously trying to challenge yourself by setting a timeframe. Was that right? Yeah.

Chris Sierzant
That’s right. So you want to set a bit of a timeframe in terms of that. And I’m just going to pick some numbers here. Let’s say I want to retire in 20 years. It’s I want to accelerate retirement a little bit earlier. So that means I want my properties to be performing well enough that the generating cashflow over time.

Chris Sierzant
But at the same time as well, if I’m going to be pulling money out from those properties, I need them to grow during that period. Right. And that’s this concept of capital growth.

Patrick Berry
That’s almost like, you know, finding that even balance between a property that has good capital growth plus the one that has the good return to allow you to purchase the more properties.

Chris Sierzant
Exactly. And that’s the whole art and science of property investing.

John McGregor
Yeah, I know. One of the. And this is a really important thing because I think the House said there’s a lot of, you know, armchair experts by accident over the last few years.

Patrick Berry
That’s the show. Yeah.

John McGregor
Yeah, exactly. We had an advance. The we had a client once many years ago, he had purchased a property in one of the suburbs out here in Old Beach, and he’d purchased it for $400,000. And at the time, back in 2012 2013, it had to sell for 340. So there was a loss of $60,000 in that case. So the thing is, is that, you know, 14 of that is obviously changed dramatically over time.

John McGregor
But that was an instance where he purchased at a time, couldn’t hold onto the property for long enough. It just, there was a market correction and you know, he basically had to take the hit and lucky I suppose he was in a position where he could do that. But we have other investors too who could physically not sell the property because because another client he owed more on the mortgage than he could sell the property for.

John McGregor
So the bank wouldn’t release him from it. And in his particular case, remember, he was just an accidental investor in the idea that that was his principal place of residence. He bought another house, you know, used the equity out of that to be able to borrow into his next property. And then try to sell it too quickly before you know, where the market wasn’t going to pay what he needed to.

John McGregor
So he didn’t specifically have a plan. He just became an investor because he had a property. And that is another common way how we become investors. We’ve just got a house and we can now the house, and we keep it not recognizing that. Or maybe we need to think through it just a little bit more.

Chris Sierzant
Yeah, exactly. And that’s the thing I’d say, generally speaking, most people would or could get one or two properties. No problem. Yeah. It’s once you want to go beyond that, that’s when you really want to start to thinking about how can I pull out some capital to to release capital for the next purchase.

John McGregor
Okay. So we’ve talked about why we’ve talked about setting a probably a a better more defined goal rather than just more money because what does money do? Money, offices, choices. So then if you were to say, okay, let’s just say over the course of our 30, 40 years, if I managed maybe longer, maybe getting an extra one is going to be a pretty easy.

John McGregor
You talked about accumulating more. So how would you see a plan laid out to try and accumulate five to ten properties? What would that look like versus we’ll just call it not being made just an accidental investor.

Chris Sierzant
I think part of it comes down to really considering the assets that you want to buy along the way. So if you’re holding a portfolio of six or ten properties, each property within that portfolio will basically serve a slightly different function. So if I want my first and second property, I want them to grow strongly enough that I can then pull out equity.

Chris Sierzant
So I don’t want to have to fund another purchase out of my own pocket where I’m going to be wanting to pull out that equity Now, generally speaking, some things that I’d be looking for, I’d be looking for properties that you can value, add anything that you can do a renovation along the way and something that has a bit of uplift so the reason I say that is because I could buy a property that’s fully renovated, fully maxed out, and it looks fantastic, but I can’t add to that myself.

Chris Sierzant
So if I need that property to grow, it’s solely the market that’s going to be doing that. And if we take a bit of a if there’s a correction or a downturn things, you know that that growth is going to be slower and so that means I’m going to have to wait longer before I can pull that equity out.

Chris Sierzant
And if I if I’m lasting, you know, if I’m going to be taking two or three years to pull out that equity, that might be too long for me.

Patrick Berry
There’s multiple advantages in what you just described there by buying the property that needs a little bit of work. That means obviously it’s potentially a little bit cheaper as well. So it allows you to be able to look at multiple options in your scenario. Chris. But I think what you touched on, there’s a really good point actually where trying to find something that has the ability to get that little bit extra value by doing some improvements to it now be that a kitchen or bathroom or whatever it may be, that’s definitely going to add more growth to the home’s value over time as well.

Patrick Berry
As the market itself.

Chris Sierzant
Exactly.

John McGregor
Yes, I know a lot of the time, you know, one of the most popular properties in our market right now, especially properties that need no work whatsoever. There’s a real pent up demand because building has been hard and people will pay an absolute premium where they can walk in and just live their life. And realistically, though, if you’re looking for an investment that may not be the way to do it or.

Patrick Berry
You’re giving all the profits to the other person.

John McGregor
Absolutely. And that there’s so much to this. You know, obviously, there’s depreciation schedules on brand new home so there’s this whole form as part of the plan that there’s so much maintenance. It’s crazy. But very simplistically, especially if it’s like where you’re buying for an area and maybe the common property in that area is 1960s commission area, really solid homes but the you know the stock could use a little bit of love and with that you could value and I think you’d call that deep value pretty nicely.

John McGregor
Yeah. And then of course that could enable especially to invest that little bit more will increase your cash flow because then of course you’ve done that work yourself, you can depreciate that asset a bit more and again get a little bit more leverage to get that weekly income being performing a little bit better for you.

Chris Sierzant
Exactly. Yeah. And that’s a really good point you touched on around the cashflow because that’s probably the second component around this equation is that, you know, if a lender will say, Okay, cool, we’re going to lend you money, how are you going to pay that back? So if your income is not increasing, you’re going to need to consider your cashflow.

Chris Sierzant
And you generally look at that in terms of a rental yield that a property will generate.

John McGregor
So now quickly to rental yield is effectively the a value as the value of the home to sell divided by the rent to achieve every grant will give you a percentage. So, I mean, the higher high, the better load.

Patrick Berry
The higher the better depending on what you’re trying to achieve.

Chris Sierzant
Good point. All right.

Patrick Berry
Like you you know, if you’re working on a yield only arrangement, then it’s probably going to be the fact that it’s in an area that’s going to not potentially have massive capital growth. So you know, Chris, I think you speak where he’s looked at different options of where you invest depending on what you’re trying to achieve. And there are different investors out there.

Patrick Berry
So I’m only focused on yield and, you know, you can only get really good yield in really poor areas because the homes are cheap, but people high renters in that area. So they’ll pay a premium to rent and therefore you get the good return. But then you can look at somewhere like what we are here in Glenorchy where you’ll pay more for the property.

Patrick Berry
You won’t get as high yield, but you will get probably some pretty good growth over there. The period of owning the property. Absolutely.

John McGregor
And I suppose that we’re in a hugely higher demand areas then where like the premium end of the markets, you know, if there’s a 10% adjustment upwards where there’s a lot more dollar value on those properties again, but you perform worse than the yields, you’re right. Are you looking for the capital growth or the cash flow immediately?

Patrick Berry
So how does that playing for you Chris, when you’re looking at properties, is it more yield or growth or a balance of both that you’re sort of looking at?

Chris Sierzant
Ideally we try and find a balance of both. But for me personally I do have a preference towards capital growth. Okay. You know, I’m not afraid to be a little bit negatively geared if that means over the long term I’m going to be holding holding property that’s going to be performing.

John McGregor
Well I suppose one thing that’s really important that are in your plan is that because after which probably is negatively geared means it’s going to those properties costing you week on, week out yes. You are in a position where you can manage that, though, is that right? Go ahead. Yeah. So I think that that’s a really important distinction because if if you’re not in a position to be able to manage that well, then negatively gearing a property is probably a terrible idea in my mind because it’s just a bit.

John McGregor
Yeah, you can hold up for capital growth. Yes. Unfortunately, though, is it that does put an a stress on you week in, week out that you cannot manage atolls unless the property’s like your portfolio?

Patrick Berry
I think that’s important to know as well that, you know, no investors the same. No one’s going to have that different approach. And I think that’s what Chris, you’re trying to get across to people today is, is that work at your individual plan? Don’t listen to what we’re saying today and what’s been successful for yourself, because that may not be successful for John.

Patrick Berry
Yeah, I yeah, know, it’s as simple as that.

John McGregor
And the thing is, too, is that your plan is malleable or is you know, it’s changeable because what works today won’t work tomorrow. And you’re looking at that every six to 12 months going right now. We need to reposition it. So those negatively geared properties today will be positively geared tomorrow or not tomorrow, but down down the road.

John McGregor
So, you know, you taking that short term pain so that you get a massive pay off at the at the end, correct? Rather than trying to get all all of it at once. Exactly. So again, so I guess wrapping up into that plan, what we’re really what we’re really looking at is, okay, why are you doing it? You know?

John McGregor
Was it why how the win in some respects exactly is, you know, answer those core questions and then all these little details start to the will that it forms a better way then of what you need to look at. And I know like it was it was there anything else I suppose we could think of that would be important with the plan?

Chris Sierzant
I think the plan itself is it’s just a it’s a flexible, fluid document so that you know that why that we’re talking about, that’s just a couple of sentences and doesn’t have to be a big exercise. You can maybe spend half an hour, you know, having a little bit of a reflective exercise and thinking about what that will be.

Patrick Berry
I love that fluid aspect. I think some people will go and, you know, right. They’re big business plan. We do it here where we all set out our yearly goal. But that can change, you know, market conditions, you know, investment areas. There’s so many variables that change throughout a calendar year and being fluid with your plan and not being stuck in that tunnel vision I think’s important.

Patrick Berry
Exactly. So, yeah, I think that’s what people definitely need to understand, is that what’s working today also for yourself might not be the best plan moving forward for, you know, your next investment opportunity.

Chris Sierzant
That’s right. And that’s also why we sort of talk about this idea that every one situation is different. So again, what will work for me won’t work for everyone else. Some people might have a preference towards cash flow and they might decide, look, I’m actually happy. I don’t want to purchase more properties. I’m happy just to do that.

Chris Sierzant
So I might just want to get more money in my pocket at the end of the day. And in terms of the plan, like, you know, the best laid plans can fall apart, you know? Yeah, I like that quote from Mike Tyson. He says, Everyone has a plan until you get punched in the face.

John McGregor
That’s it. Yeah. It’s so damn true. Yes. I mean, that’s pretty there’s a lot on the plan there. Well, what if then, okay, now you’ve got the plan. That’s I suppose then we move into the budget, which ones? Which I suppose wants to do it once you get your plan laid out, this starts to become a little bit more simpler.

John McGregor
So what do you mean by budget when it comes to financing your properties at this point?

Chris Sierzant
Basically talking about how much can you borrow at a year. Yeah. And so when you’re thinking about that, you want to start to assemble a bit of a team around you. And that team, John loves.

Patrick Berry
The team a lot.

John McGregor
Of good time. Yeah, good. A lot of good time.

Chris Sierzant
Excellent. So you might want someone like an accountant yep. I want to conveyancer or a solicitor. You want a mortgage broker necessary. You might want to go direct to a lender, but I’m having a good mortgage broker in your corner will help a lot. And any of these professionals, if they’re doing a good job, they should take the time to sit down, work on that plan with you.

Chris Sierzant
They won’t give you financial advice precisely because it’s your situation. But they’ll be able to help guide you and brainstorm, bounce some ideas off as well.

John McGregor
Because I think that’s a really important thing because these people aren’t financial planners, are they? They are those that your, your your own financial planner in this case. But now you’re going to the people who have the specialized knowledge in the fields that you need.

Chris Sierzant
Exactly. That’s right. You know, and that’s that whole thing about educating yourself, because when you do that, that empowers you hmm.

Patrick Berry
I love that aspect of, like John always says on this show, put him in your corner and get, you know, this team built around you. Because when you have that and the opportunity comes, you can just go bang bang, bang, and move on so big really fast if you’ve got all the right connections in play, like even right down to simple things like inspection, you know, you might want to get one done, but you know, this time sensitive because there’s other buyers involved.

Patrick Berry
But if you’ve got a relationship built with a inspector that you’ve used multiple times before, you can literally probably pull a few strings to get him to the property nice and fast and you can take that off and move on. The same goes for brokers like that. They’ve helped you finance other deals already. They already know your situation, so they can normally move relatively fast in helping you secure that next property.

Chris Sierzant
Exactly. And I think a large part of that comes down to relationships that you hold with that broker or that professional. You know, we say that property is a game of finance, but I’d argue that property is also a game of people.

John McGregor
Yeah, relationships.

Chris Sierzant
On the properties, relationships.

John McGregor
That’s the thing. Is it, you know, a budget doesn’t it doesn’t have to be complex. Is it really? Like I said, it’s well, what can you borrow can you afford it? And then what? Nobody’s bid at the end of the week with yours, mate. Does that just look like a simple spreadsheet? How does that actually look physically to a person trying to make a budget.

Chris Sierzant
Probably that’s the best way to start is literally crunching back of the envelope numbers and start writing down some figures in terms of what will work for you. Okay. And that’s probably why I put the Y at the beginning. Well, that’s probably why I talked about planning first because if you go to a broker or a finance professional, they’re probably going to ask you those questions.

Chris Sierzant
So you want to be a little bit armed in your responses around that. So it’s a lot of if an idea.

Patrick Berry
So if you’re prepared and you’re going in with that extra knowledge sort of shows to them, that you know what you’re doing and gives them the confidence to to move forward with helping to support the deal.

John McGregor
Oh, look, I know the common question is they’re going to ask you for the breakdown of your expenses over the last three months. Well, going back through your bank statements and actually trying to figure those out not perfectly, but in a loose way is probably a good idea.

Patrick Berry
I reckon if I look at my credit card numbers, I see a lot of guys.

John McGregor
I know I had a couple of extra subscriptions come out that I’d forgotten to cancel before. But but that’s the thing. Hey, look, someone walk in and they’ll start firing back these questions. You got, I don’t know how much I spend every month, so I suppose the budget is, you know, working backwards for what you actually spend over the last three to six months.

John McGregor
What actually does your weekly checkbook look like? Where it goes?

Chris Sierzant
That’s it. And it doesn’t have to be a detailed forensic exercise as well. You can provide a guesstimate too, and that’s really what lenders are looking for. They’re looking at your household expenditure over a month. Yeah. And they’re looking to find out basically how much you’re spending. Are there any in terms of your buffers? Do you have enough left in there as well at the end of the day?

John McGregor
Gotcha.

Patrick Berry
I really like so I bank with one of the major four banks, and when I log in to my portal these days, it’s actually got a little will and it shows me, you know, it makes assumptions as to where I’m spending my money based on the comments that I write when I transfer money places. Yeah. So it’s quite good because it does give you a bit of a breakdown on how you’re spending your money without actually doing any reason it.

Patrick Berry
So then when most of it says fun and entertainment is probably spending.

John McGregor
Just like it is, are you living a good life and it’s a big take? Well, I suppose. And that that’s a thing. A budget doesn’t have to be boring and it doesn’t have to take too long and the other thing is too is why that’s important is you won’t find out that you need to get a little bit more money available.

John McGregor
So what does that look like? Well, does that mean that before we buy a property, do we position ourselves in our jobs so that then that, you know, it gets a little bit of income, do we renegotiate and some other subscriptions that we can draw up another part so you can start to either increase your income and decrease your expenses so that therefore your borrowing capacity starts to increase and you’ve got more flexibility about what you can buy moving forward.

Chris Sierzant
That’s it.

John McGregor
So I suppose then, you know, if you’ve got a plan, you’ve got your money sorted as best as you can. I mean, the last thing you’ve put there then is education for educating yourself. So what is it? I mean, obviously this I come into it on a broader scale than what are you referring to when you’re saying educate yourself?

Chris Sierzant
I’m talking about taking that step in terms of going out and finding properties. Okay. So and the reason I put that third was because you need to know what you kind of what you want to look for. What’s the plan at the beginning? And there’s no point in going out and looking unless you sort of know or have a rough range in terms of your budget.

Patrick Berry
And look, that that’s really important because you might discover through that budgeting phase that you thought you could only buy one investment property, but you’ve got the capacity to potentially only buy two properties. And I think in that last episode with you, you outlined as well that one of the deals that you did, you set up finance to do two at once.

Patrick Berry
It wasn’t a matter of just buy my next it was bang, bang, two in a row really fast. And I assume that all came into that planning and budget stage that allowed you to do that in this third stage, which is obviously the the research and the part of it all.

Chris Sierzant
Yes. But on one of the things around the budget is that, you know, you can rely on the professionals around you to help guide you in terms of how do you how do you want to tighten up that budget.

John McGregor
Sure, sure. So it’s like it’s okay to get your account and go, hey, how can we do this? Or to the broker, what do you need to see in order to be able to increase my capacity.

Patrick Berry
So correct me if I’m wrong, we’re probably backtracking a bit here, Chris, but potentially through this plan planning stage and budget stage, you might uncover, like John just described a few big rocks, that if you spend the next three to four months moving and fixing them, it improves your position. So maybe this and buying the investment property is not a tomorrow thing.

Patrick Berry
It might be a six month thing, but you said you start today to set up for that process so that when the time comes to buy, you’re in that lot stronger position to do. So.

Chris Sierzant
That’s it. In terms of demonstrating that to lenders, well, it’s going to look much more favorably for you, and it also gives you the time in the space to then start to do some education in the meantime as well. So yeah, you know, you don’t necessarily need to wait till the broker will come back and say, yet we’ve got a green light, good to go.

Chris Sierzant
You can start to do all this education in the back at the back end before.

John McGregor
Actually that’s a really good point because one of the most the biggest problems it’s going to get in your in process is the fear of missing out. And what we’re really establishing here, this is a lifetime process, not trying to grab something the next two months and like you said, that fixing those rocks might take you that time, but that’s good.

Patrick Berry
Well, I’m assuming there’s going to be people out there listening knowing what the Hobart marketplace is like and they are automatically assuming, well if jeez, if I wait six months to improve my lending position, house prices have going to have jumped again. That’s going to lead me out of the thing. But I think you’re a great example of this, Chris.

Patrick Berry
You need to look outside your own backyard as well for opportunities. Just because you want to buy an investment property, it doesn’t mean it has to be in the suburb you live in. Like Simon Preston is a great example of this. He’ll suggest people to buy properties all over Australia based on where the good income is currently available and where the good capital growth is.

Patrick Berry
And it’s about becoming the expert on that area. Yeah, that is the next big thing. Rather than trying to buy one close by one that you can go to on the weekend at the open home and feel comfortable by walking through it.

John McGregor
Yeah, which obviously has a degree of separation that could be tough for some people because we’re so connected with our properties. But if, if nothing in your immediate five kilometer radius fits with your plan, you’ll be looking elsewhere.

Chris Sierzant
So like it’s one of the advantages of borderless investing is that if you’re buying in different markets, firstly you can diversify and secondly, you can potentially take advantage of properties that are in different cycles.

John McGregor
You’re going into those property cycles like Western Australia is going to move differently than Hobart, for example. Yep, yep.

Patrick Berry
I guess I just come back down to this knowledge and research aspect of it and just timing yourself with the trends and trying to obviously research the hell out of areas like and you said yourself in the last episode, you’re here before you bought anything, you absorbed every podcast you could to learn about the investing process. You absorbed information online around where properties were selling for and how much they were selling for.

Patrick Berry
So that you weren’t walking into a negotiation with an agent not having an understanding as to what that looks like. So and I think that’s really powerful because some people will come up to us and open home and they make the biggest mistake of their life. And if you’re listening, never do this to me because you’ll never get a property at a good price.

Patrick Berry
I’ll offer for 50. But if the owner wants more I’ll happily pay more like why would you do that? Like so researching and knowing what the median price for an area is and knowing what the Dyson market for an area is, I think a huge advantages to a negotiation conversation because if a property area is on the market, you know, seven or eight days is the average time frame and this one’s been around for three or four weeks.

Patrick Berry
Well, that’s a good power for you to know that potentially it’s a little bit above the market and you’ve got a bit of room to play with.

John McGregor
Absolutely. And what you’re referring to there is getting good knowledge and you get good knowledgeable, ask good questions. And that’s the thing is that you don’t need to expect yourself to be an Australian wide property expert in every little nuance suburb, etc. And then again, that’s by asking the right people the right questions and then they can guide you with the good answers, leverage a person’s 20 years worth of knowledge, experience and research, rather than sitting there thinking, starting from day zero.

Patrick Berry
And I’m going to put a selfish plug out as well for our new website we look this week.

John McGregor
At this point. Yeah.

Patrick Berry
So obviously we just launched our new 41 full website this week and that’s what we’ve we focused on. We’ve shift our website from being a place where you go to buy a house to be in an educational platform. Yeah. So with this podcast that we put together, each week, the blogs that we put together, we’ve ninyo every week.

Patrick Berry
It’s all designed to help you have a better understanding as to the marketplace. And now we’ve just been lucky enough to, to partner with CoreLogic which is one of Australia’s largest database companies for sales data. And you can now search any suburb in the entire country and know how it’s how it’s trending, what the average size of market is, what the you know, what the median sale price, median rental prices, and you can even drill down further.

Patrick Berry
You might find a house that you really want to buy. You can come to our website checking that address and it’ll spit out a potential sale price for you. So you know where you have to be in the market for that home.

John McGregor
Yeah, because it’s like a specialized report, isn’t it?

Patrick Berry
Yeah, definitely. So it’s a specialized report for that exact property. And CoreLogic will use its knowledge of the home in the area to provide you with an idea of what it might sell for.

John McGregor
Oh, look, it’s, it’s phenomenal stuff and I know like when if you’d buy those reports individually, obviously there’s different scales, but sometimes they can be upwards of 50 bucks a property. So the fact we can offer it now is the website. That’s awesome.

Patrick Berry
Yeah, definitely.

John McGregor
Well, I think that, I guess we’ve, we’ve covered off a huge game at 30 minutes. But you know, there’s three parts that we talked about which is, you know, defining your plan then it being able to set the budget and then it’s moving into the education space which I like that which is your, you know, your understanding the market and where you’re going to buy what you need to buy for that particular area.

John McGregor
That’s a go. So my thanks so much for putting all that plan together and it really ties in well I suppose with a vision for this business as well and where we want to be for our clients and you know, the public so obviously this is just a small part and I suppose a larger picture that we’re trying to form, which is a, you know, by the end of it to have a real big understanding to be able to, you know, progression self and property ownership.

John McGregor
So my thanks so much for putting that together and really looking forward to having you back again.

Chris Sierzant
Likewise. Thanks.

Patrick Berry
Now I appreciate you coming in made it’s been a great episode again and you know, I start to continue this partnership with you. Awesome, beautiful. Thanks very much everyone for listening. It’s been fun being on the buttons again. I do think we’ve got one more week without Aaron, but then he’s back on deck for the rest of the year.

Patrick Berry
So looking forward to that. Enjoy your holidays and we’ll talk soon guys. Say I’ve got you have been listening to the Property Board recorded and edited by 41 full media house in conjunction with 414 property code. This podcast is general information only and the thoughts of views expressed is the opinion of our panel and listeners should always take their news, their own investigation into any topic we discuss to ensure they fully understand their own situation.

John McGregor
It does not constitute and should not be relied on as purchasing, selling, financial or investment advice or recommendatons. Expressed or implied. And it should not be used as an invitation to take up any attachment or investment services. No investment decision or activity should be undertaken on the basis of this information without first seeking qualified and professional advice.