Highlights from this week:
- How things have changed when it comes to getting on with a bank.
- How buyers and sellers are benefitting from third party sites.
- Is there such a thing as ‘capital loss’ as well as ‘capital gain’ and what are the benefits?
- What makes a good – and bad – property for a renovation.
- How the bank scores you and how that impacts your ‘suitability’.
- Why agents need to get on board with the changing needs of consumers.
- Is there a time limit associated with moving out of and then moving back into a PPR?
- Is renovation the best strategy in all market conditions?
- Your credit rating explained, how to protect it and how to monitor it.
How to check your ‘score’ with the bank – Andrew Mirams
Kevin: Just what do lenders mean when they talk about a good credit score? How do you get one and how easily is it damaged? Let’s find out a little bit more about credit scores. Joining me to talk about that, Andrew Mirams from Intuitive Finance.
Andrew, welcome to the show once again. Thanks for your time.
Andrew: G’day, Kevin. Thank you.
Kevin: How are credit scores assessed, and how important are they?
Andrew: A good credit score is vital to be able to get access to credit. And credit now ranges from anything from a loan down to a mobile phone or a utility. Having defaults or bad payment history is going to affect you just in your normal way of life currently, and it obviously will have a significant impact on securing a mortgage or a home loan or an investment loan.
Kevin: So it’s called a credit score; is it actually a score as in numbers, or is it a series of references?
Andrew: A credit history is probably more what you’re talking about. There are things called My Credit Score and Veda check that you can do that’ll tell you what your credit history looks like.
In reality, the only thing with your credit history that matters is if you have bad history. Once upon a time, we all used to get dressed up when we were 18 and our father or grandfather would take us into the bank to get that loan so that we could get a good credit history. That doesn’t matter now because every little inquiry made for a mobile phone or a utility or anything like that actually goes on it.
What you really want to do is just make sure you’re managing to have a good credit history, and that’s just keeping your day-to-day accounts in order, making sure you’re making your payments on time, and everything like that. If you get overdrawn on just your normal bank account by $10, that’ll have a hit on your credit score.
There’s a website called My Credit Score. You can actually put in some information and data that will give you a bit of an idea of whether you’re going to likely be a good credit risk or a bad credit risk to a lender or someone you’re going to seek finance or credit from.
Kevin: If a lender knocks me back because I have some blemish on my credit score that I’m not aware of, will they necessarily tell me about that, or will they just knock me back?
Andrew: Normally if a lender declines, they’ll say “Because of your credit report” or something like that. Some lenders or providers will provide you with the evidence and the details of it. Otherwise for the cost of about $30 or $40, if you really want to check your credit score or get your credit report, you can go to a group called Veda Advantage, and like I said, for the cost of about $30 or $40, you can actually get your personal credit file from there and then have a look at the inquiries that have been made.
Every time you sign a credit application you need to make a disclosure so that a lender or a provider can do a credit check on you. All those inquiries will be there. Any bad credit or any defaults or anything like that will be listed.
Sometimes for people named, say, John Smith, because it’s a fairly common name, these things can get put on the wrong credit file. So it doesn’t mean no; it just means if you can clear it up – and depending on the size of the default or the error of your ways that there’s been – then as long as we can get an explanation around it, often we can still get finance approved.
Kevin: You’re suggesting that we should check it on a reasonably regular basis.
Could I ask you another question just while it occurs to me? If I go to get a loan – say I go to one of the major lenders – and they knock me back, will the fact that they’ve been in to have a look at my credit score be reflected there? In other words, if I went to another lender they’d know that I’d already been to the other lender – in other words, there’s a history?
Andrew: Great question, Kevin. This is why we advocate for not making multiple applications at one time. Yes, every inquiry does get recorded. Whether you’ve been approved or declined at one lender, that will reflect on your credit inquiries. It’ll be marked as an inquiry there.
Now a inquirer will say “Well, what happened with that? Did it proceed? Did it not proceed?” They don’t ask the outcome. They won’t ask whether it was approved or declined, but they’ll ask “Did it proceed, or did it not proceed?”
If you have multiple checks on there, all of recent times for relatively similar amounts, that will start to raise a new lender’s inquiry: “What are they looking for? What am I missing here? What might be something? If they’ve done two or three applications, why are they coming to me? And if I’m going to approve it and if there’s something there,” they might say, “Hmm, there’s something here we want to look a bit further into. Give me the details of those applications.” So it can actually work to your detriment.
Kevin: It’s almost like a red flag, isn’t it, coming up and saying “This person is someone we need to be careful about.”
Is there any point in time if I had something against my credit score that was incorrect and then it was taken off, does it get totally removed, or is there just a note to say that it doesn’t apply?
Andrew: if it’s recorded incorrectly, it’ll get removed. A quite common one is when a group of young people all go into a co-share or a tenancy together, and the person who signs the lease might move out. Then when the other people all leave the property and the property is handed over, often that last power bill or something is in default. It goes to the first person who was there, and often it is doesn’t become known to them until some time in the future when they actually go to apply. That’s an oversight. As long as the debt is paid and it all gets fixed up and there’s an explanation as to why, that will often be viewed favorably still by a lender.
But if there are things you’ve done wrong in the past and you have defaults, yes, they will sit there. Bankruptcies will sit there up to seven years, so it affects your record up to a period of seven years.
Kevin: That explains a lot to me because I’ve heard people say that they’ve missed a phone bill, for the sake of $20 or $40 or whatever, that they were not even aware of and that it’s actually affected them getting their home loan. Could it be that simple, or is it sometimes a bit more?
Andrew: The default response will be no, and then what we need to do is just a little bit more work around “Why did that happen? What were the circumstances? Was it an oversight? Had you moved address and for some reason, the mail didn’t forward on? Were you in a dispute and then you won it but it still got defaulted or recorded in error?” There’s a whole range of things that happen in our lives that might result in these things.
If you’ve done the wrong thing, well, that’s just going to be the fact of life that you’re going to struggle to get access to finance with most of the major lenders and second and third tiers. But if you’ve done the right thing and it was in dispute or there was an oversight or something like that, generally as long as we can provide a valid reason for it – you might have been overseas for six months and just didn’t get to it or the direct debit changed or your credit card was nicked and you got a new card – there are all these things now with direct debit and things like that are an oversight more than a default as such.
Kevin: Great stuff, mate. Just give me that website again.
Andrew: Veda Advantage or Veda Australia, I think it might be now. There’s also the website My Credit Score that you can do without paying. They’ll put a number on there, a numeric graph based on the stats you put in. Or if you actually want to get your credit file, it’s Veda Australia.
Kevin: Okay. Andrew Mirams from Intuitive Finance. More good advice there for you.
Andrew, thanks very much for your time.
Andrew: My pleasure, Kevin.
Agents need to adjust to consumer needs – Greg Dickason
Kevin: You’ve heard us talk in this show about these third-party sites that will offer to put you in touch with a real estate agent. One of the ones we have mentioned in the past is Open Agent. There are other referral sites as well. I want to have a look at that now in my conversation with Greg Dickason from CoreLogic.
Greg, what’s your take on these? There obviously has been a huge uptake on these in Australia. Why is that?
Greg: Hey, Kevin. I think there are multiple reasons why there has been huge uptake. Some of it is simply they’re better at getting their brands in front of consumers, so when you go into Google or something and you search for “property,” their brands will pop up and the advertising is slick enough that people will click on it and go through.
Some of the uptake has simply been that they’ve been able to get right up front with consumers, but I also think some of the uptake has been where they have had a good experience with these type of sites that they’ve actually referred on and told their peers and their contacts about their experiences.
So, I think some of it is about their service and some of it is just about the advertising.
Kevin: Yes, because I’ve heard a lot of criticism from agents who aren’t on those referral sites – in other words, they haven’t agreed to pay them the 20% referral fee – so they’re missing out, some of them being very good agents too.
Is this only a matter of time before, as agents, we need to be looking at these and embracing them more, Greg?
Greg: I think it’s a two-way street. I think there’s going to be a shakeout in the industry. Open Agent, for example, is very good at what they do and they tend to do a lot of value-add, so they’ll actually help an agent if they’re used properly. But some of the others don’t necessarily help the agent; all they do is get a digital lead that would have come to the agent anyway. I think there’s going to be a shakeout on that side.
I think from an agent’s perspective, it’s something to look at as part of your mix of how you get customers. Ideally, the best way you get customers is through phenomenal service so that people will refer you and so their friends and family will use you, but if you’re not going to get leads through that, then which one of these sites do you work with to make sure that they give you the right kind of leads so that it’s actually profitable for you to work with them?
Kevin: Are we seeing these sites also in fairly popular use overseas as well, or is it just an Australian phenomenon?
Greg: It’s largely an Australian phenomenon. I’ve seen some of them overseas, but the Australian phenomenon seems to be quite strong now. I think it’s been a lack of digital advertising from our agents, so it’s almost a need in the market that’s being met by them.
Kevin: Is this highlighting a gap in professionalism with Australian agents? Is this the fault of the Australian agents that these people have been allowed to come in?
Greg: I think some of it has been because prices have gone up quite a lot. There’s been a perception in the market that agents get a fairly big commission, which is not actually true. If you look across the world, agents’ commissions in Australia are in a lot of ways some of the lowest in the world.
But there has been a perception – especially for multi-million-dollar properties – that the value hasn’t been as much as what the seller or the vendor expects, and so some of this has made it fertile ground for these kind of digital businesses to come in.
Kevin: Some of the marketing costs are very high too on selling a property in Australia. We talk about 1% of the value of the property should be spent on marketing, but quite often we see that having to be expanded with the introduction of the Internet.
Australia being probably the most expensive… Not “probably”; I understand it is the most expensive country in the world to advertise a property on the Internet. Has that caused this feeling of “It’s just too costly, agents make too much out of this,” people thinking that the agent also makes the money out of the marketing?
Greg: I think so. I think there’s a lot of pushback on some of the marketing costs – perception that the marketing costs are high. And unfortunately, with an agent, they have to pay the marketing costs up front even if the house or the property doesn’t sell, whereas in their case, they only get commission if it does sell.
We have actually encountered a few solution providers out there that are looking at ways in which they can reduce those marketing costs up front and basically insure your marketing spend so that only if you sell do you have to fully outlay your marketing costs. So, there are some interesting innovations coming in that space.
Kevin: Greg, that’s really exciting news. Thank you very much for joining us, and when there is an update on that, we’d love to hear from you. Thanks for your time.
Greg: No worries, Kevin.
Ken Raiss answers your questions – Ken Raiss
Ken, thanks for your time. How are you?
Ken: I’m well, Kevin. How are you?
Kevin: Good. I think we caught you in sunny Melbourne today too, haven’t we?
Ken: Yes. It’s a bit cold compared to some other states, but beautiful weather.
Kevin: Good on you, mate. A couple of questions, the first one from Andy: “Most people always talk about capital gains and having to pay capital gains tax, but is there a capital loss? Do you claim the loss if you sell at a lower price than the purchase price?”
Ken: I’ll answer it quickly and then a bit of detail. You can claim capital losses, but only against capital gains. What you do is when you have a capital loss, you net it off your capital gain that you could have had in a previous period. It doesn’t matter where that gain or loss comes from, so you can mix profits and losses from different assets, but the loss gets netted off against the capital gain and then you apply the 50% discount.
One trap, though, that a lot of people forget is if you’re talking property, you have to add back the depreciation that you claimed on the building. This reduces your costs when calculating the gain or the loss.
You have to be careful that a capital gain or a loss can only be claimed if you’ve kept that property for more than 12 months if you want the 50% discount. If you have sold that property in under 12 months, it’s still to the capital account but without the 50% discount. And secondly, the date of sale for tax is the contract date, not completion, such as settlement. Hopefully, that answers your question.
Kevin: I’m sure it does. Thanks for your question too, Andy.
I want to move to another one. This one is from Marie, multiple questions in this one. I’ll give you the situation, Ken. Marie writes in saying she has a house in a capital city purchased in 2006. It’s her principal place of residence. In January 2014, Marie remarried and moved to another city and lived in her new husband’s home, which is in his name solely. She then rented out what was previously her principal place of residence in that capital city.
Question number one: “If I wish to retain my house in the capital city as my principal place of residence, will I need to move back into it no later than January 2020 due to the six-year rule?”
Ken: You can only have one main residence for tax purposes, and that includes that property that could either be in your name or your husband’s name. Between you, now that you’re a couple, you can only have one property for exemption on the sale. So, you will have to decide whether you want that to be your property or your husband’s property.
But the beauty is you only have to decide when you sell one of them. At that point, you will then work out maybe which one would have got you the better tax results and then claim that one for tax purposes.
It’s going to be a bit hard in six years’ time, so what I’d be doing is I’d be getting some market valuations for both your property, Maria, and your husband’s so that you have a starting point to do a calculation, depending on what happens in the future.
Kevin: And then take some professional advice.
Ken, just a second question from Marie – and I’ll ask this quickly – if she were to move back in January 2020, how long would she have to physically stay in the house to reestablish it as her principal place of residence? Is there a timeframe?
Ken: There’s no timeframe, because you could move in and then all of a sudden, get a job transfer or whatever. You must move in with the intention for it to be your principal place of residence and therefore occupy it as your home, which means you’re going to have to change all the records – voting records, driver’s license, bank accounts, having mail delivered.
Kevin: Oh, yes. Show evidence that you’re actually living there.
Kevin: Can I move to the third part of this situation from Marie? Alternatively, instead of moving back into her principal place of residence in January 2020, could she transfer or gift the house in the capital city to her adult child before that time – January 2020 – by creating a bloodline trust with her as the settler and he as the beneficiary? If she does transfer or gift the house to her adult child, would the capital gains be exempt because it is her principle place of residence?
Ken: You can always do that, but it will be a trigger for both capital gains tax and stamp duty. And both the tax department and the relevant state government will apply market rates at that date, so you can’t call it a lower number. It’ll have to be done at market rates, full capital gains tax, and then obviously, stamp duty by changing the title.
The other thing you have to be very careful of, of course, is that while that place is not your principal place of residence because you’re not living in it – which is different to tax – you have to look at land tax, because maybe you’ll need to start paying land tax. And the various state governments have got different land tax rules dependent on whether the property is in a person’s name or in a trust. So they have different rates to calculate land tax depending on the structure.
Kevin: A lot to get through there, but I want to thank you, Ken, for helping us, and Marie and also Andy, thank you for your very good questions.
Ken: Thanks, Kevin.
How to REALLY get the best agent – Michael Yardney
Michael: Hi. Michael Yardney here, and I’ve turned the tables. I’ve grabbed the microphone, and I want to interview Kevin Turner, because Kevin is an experienced licensed estate agent – not everyone knows that. Kevin won multiple awards as a winning agent, he speaks to estate agents all day for his own Real Estate Uncut podcast, and he speaks to investors and home owners every day for his Real Estate Talk podcast.
Kevin, welcome to the interview on the other side of the table.
Kevin: This will be interesting.
Michael: Kevin, I’ve sprung this upon you because I’m seeing lots of people who are selling up – they’re selling their homes – to move up, to move down, to downgrade, to upgrade, and also investors who over time, need to sell their homes. So I wanted to pick your brain on how does a seller get the best price for their home, Kevin?
Kevin: This is such an interesting question, Michael, because not many people when it comes time to sell actually focus on the agent. They think more about the price they want to get and how they’re going to market their property, but at the end of the day, the most important decision that a seller will have to make when they come to list their property is the agent that they will list it with. Because, believe me, there’s a huge difference with the expertise of some agents.
Great agents make the industry look really easy, Michael, so much so that anyone thinks “Oh, all I have to do is get myself a nice flash car, put some buyers in it, take them round, show them some properties, they’ll like it and buy it, and I’ll make a lot of money.”
Michael: Even more than that, Kevin, today there are Purplebricks and a lot of these do-it-yourself sites where people think “I know a bit about real estate. I’ve lived in a home. I’ve been to a couple of open for inspections. I know how to handle it.”
Kevin, I think we have to be open and explain that you’ve spent a lot of time researching this for your shows, for yourself, but also for a book that you’ve called How to Find the Best Agent. So I want to pick your brain on some of the homework that you’ve done about how to find the best agent.
I have to say, I do agree that of all the factors involved, an agent is potentially going to make you tens of thousands of dollars.
Kevin: They will.
Michael: How do you choose them, Kevin?
Kevin: Just before I answer that question, Michael, which is the key question of this, can I just address why I wrote that book?
Michael: Yes, please.
Kevin: You mentioned there Purplebricks, you mentioned Open Agent, and all of those organizations who offer to put you in touch with the best agent. That’s the reason I wrote the book, because I was deeply concerned about the fact that that’s misrepresenting what they actually do. They actually will only put you in touch with agents who are going to pay them a commission to get the listing.
This is a real beef that I have about the way these third-party sites work. They basically sit there and take a commission from putting you in touch with not the best agent but just an agent who will pay them a commission. I just wanted to get that on the table. That’s the reason I wrote that book.
Michael: I think that’s a good point, Kevin, because most people don’t realize that. Without mentioning too many sites – there’s Rate My Agent and all of those – the average consumer believes “I’ll go on there,” just like they go on Trip Advisor or Google Reviews to choose their restaurant or choose their holiday. It’s not the same with agents, is it?
Kevin: No, it’s definitely not. You talk about those others – Trip Advisor and people like that – they actually have affiliate arrangements with all of those people, and they do actually come up and they compare deals for you as opposed to anyone who offers to put you in touch with an agent. As I said, they’ll only put you in touch with a select number of agents who will actually pay them a commission.
It gets down to that key point: a lot of people don’t understand the sorts of questions they need to ask, and that’s why right at the back of the book, Michael, I’ve listed down 21 of the key questions you need to ask an agent and the sorts of answers you should expect back.
This is actually going to help you find the best agent, because there are things that the best agents will be able to tell you about the marketplace that you’ll find very interesting, but the more uneducated or the newer agents won’t have that same depth of knowledge.
Believe me, they need to have that knowledge for when they’re talking to a buyer – even being able to test their negotiation skills, Michael. There are a couple of things in the book that will tell you exactly how you can do that and some of the things or the little tests you can put out to find out if the agent is really the full issue, if they’re going to be able to get the job done for you.
Michael: Kevin, we can get that book at RealEstateTalk.com.au. Just go to the home page and click on the link there, and you’ll be able to get that book.
But I’d like to dig into a couple of the questions. How much difference does one agent make to another though, Kevin? Does it really matter?
Kevin: It matters an enormous amount, Michael. It matters because of their database, the number of people they’re working with, but very much so their negotiation skills. Basically what you’re doing is you’re putting someone between you the owner of the property and the buyer – someone who wants to buy it.
Now, every seller wants more than their place is worth – that’s a fact – and every buyer wants to pay less than what it’s worth. So you have that compressed air, and that compressed air sometimes can be $60,000 or $70,000 worth.
If you’re dealing with an agent who doesn’t know how to negotiate to get you the highest price – because they are working for you at the end of the day; you’re going to pay their commission – if they don’t have the skills to do that then you’re leaving thousands and thousands of dollars on the table.
In some cases, Michael… And I know you’re a buyer’s agent and I’m talking to you. You’re an expert negotiator. So, too, is your team. You’re there to get the best deal for the buyer. I want to know that I have an agent who’s equal to your skills and can match you and make sure that I’m going to get every dollar out of you that I possibly can.
This is where this book will really help you identify those things. And yes, Michael, a good agent will make a huge difference.
Michael: Kevin, I agree with you. It was a loaded question, because there are certain agents who, as buyer’s agents, we love working with because they seem to give the properties away a little bit, and there are others we know are going to push the hardest and work the hardest and negotiate the hardest.
As an unassuming consumer who’s selling their home, I’m emotional because I’m either excited or disappointed – there are usually a lot of emotions going on around selling your home – and then I invite a couple of people into my home and they all wear nice suits and they all drive nice cars and they all give me a fancy presentation pack, how do I decide which one to go with?
Kevin: That’s a great question, Michael. The thing that I make a point of in the book is that you have to test their negotiation skills, because that is what you’re employing. You’re employing a paid professional negotiator.
I give you a good example in the book of how you can do that, the sorts of questions you can ask them, and about someone coming in and offering you a price much lower than your asking price. I give you the scenario there and I give you the answer in the book.
Once again, without trying to tout it, Michael, I think all the answers are in the book, actually.
Michael: Yes, they are. And it’s really so cheap that it’s not worth even wondering if you should or shouldn’t get it. If you’re in the position where you’re considering selling a property, whether it’s your home or an investment property, it’s on the home page of Real Estate Talk.
Kevin, is it the agency – the logo, the banners, the brand – that’s important, or is it the specific person?
Kevin: Once again, this is a great topic. Look, it is the person; it’s not the brand. But having said that, can I just make the point that when you engage with an agent, you’re actually giving them an agreement to sell your property but that’s actually with the agency not the agent?
Michael: Most people don’t realize that. You’re signing with the agency, the company.
Kevin: Yes, you are. So it’s important to know that you’re dealing with a good company – that’s the first point – but if you are unhappy with your agent and you make a mistake, don’t think that you can just sack that agent; you have to actually sack the agency because they are the ones you have the agreement with. I think that is an absolute key point, Michael.
Michael: One more hint for our listeners before I let you go and revert the microphone to you taking charge, Kevin. What other hint would you say if you’re looking for the best agent?
Kevin: There’s a part in the book, Michael – I think it’s around pages 9 and 10 – where I give you a table with 13 key things that you need to look for when you’re looking to find the best agent. In other words, you’re going to compare them.
I always advocate that you have to get three agents in, the key questions you ask those agents, you keep a record, and make no commitment until you’ve seen all three of them because you’re going to make a comparison.
On page 9, I actually give you the 13 key comparisons, and right at the front, I talk about the top discount rate performance. This is probably a great demonstration, Michael, of why you need to get a good negotiator on your side, because in table 2, I give you about three or four comparisons about if you employ a dud agent, how much money it’s going to cost you.
This graph alone allows you to do an ABC-type rating, and you’ll very quickly be able to determine who are the best agents because you’ll know the key questions to ask them, Michael, coming straight out of the book.
Michael: Thanks, Kevin.
In summary, the cheapest agent is the one who gets you the highest price, not the one who gives you the lowest commission.
Kevin: Yes. And you’ll see that on pages 10 and 11. I demonstrate that quite graphically for you in the book.
Michael, you mentioned there that it’s quite cheap. It’s the cost of a couple of cups of coffee. I’ve tried to make it as cheap as I possibly could, basically really just covering the cost of production, to get this out to you.
In a bookstore you would pay probably $30 or $40 to get a book like this with this amount of information in it, because I’ve given you all of my experiences over about 25 to 30 years of having worked with agents and having worked as an agent. It’s all in the book here. And as I said, for the price of a couple of cups of coffee – just under $10 – it can be yours.
Michael: How to Find the Best Agent by Kevin Turner. Go to the home page at RealEstateTalk.com.au and click on the link. It’s as easy as that.
Thank you for your time, and thank you for letting me hijack your microphone, Kevin.
Kevin: It was a pleasure. And it’s good to have the tables turned for a while.
Michael: It’s a funny feeling, isn’t it?
Kevin: It is a funny feeling but I’ve enjoyed it. Thanks, Michael.
Michael: My pleasure, Kevin.
Don’t be complacent with your renovation – Jane Slack-Smith
Kevin: With affordability nowadays a key issue, we’re finding more and more people are preferring to stay where they are and renovate or look for renovation to give them some really good cash return in an investment property. But is that the correct strategy? Is this the time to be doing it? That’s a great question to ask Jane Slack-Smith, who joins me.
Jane: Hi. How are you going, Kevin?
Kevin: Good. Good question that one, isn’t it?
Jane: It is actually, because I guess the thing about renovation is it’s been a strategy that I’ve used through a number of different cycles, but when things change, it makes you step back and reassess the strategy that you may be committed to or look at new strategies. So, I still think renovation is a strategy that can be used.
Kevin: Has the market changed a lot to make you step back and question whether renovation is right, Jane?
Jane: Absolutely. A lot of people who renovate, like I did originally – bought a property, renovated it, used the equity that I had created to go and buy the next property and the next property and the next property. I only started with $45,000 and created a very large multimillion dollar portfolio, never putting my own cash in again after that very first property.
That accessing equity was a key to the strategy. And what we’ve seen, April/May 2017, there have been a lot of changes in the lending sector where accessing that equity is not as easy as it used to be, so it could bring up that question.
Kevin: Are there some things you can do in a renovation to give you better bang for buck? In other words, give you a better return?
Jane: Absolutely. And I think that’s why renovation is still very relevant now. You can do it for two reasons. You can do it for an equity gain and get that bang for the buck that is creating more value – the perceived value is higher than what it’s cost you. But there’s also the absolute benefit you’re going to get by pushing the rent up.
So, when you’re looking at what renters want as well as the equity gain, you’re looking at simple things like painting. You’re looking at the prime public areas, like the front of the property and street appeal, and then the kitchen.
There are things that you can do. You don’t need to pull out an entire kitchen and start from scratch. You could go and maybe improve the bench tops or the fixtures and fittings, and just painting alone can just do so much to a property value.
Kevin: Well, if renovation sounds like the key thing for you, I’m going to recommend that you use the button on the right-hand side on the home page at Real Estate Talk. It’ll take you to a webinar that’s absolutely free of charges. It’s coming up on the 25th of this month, at 8:00 actually. All the information is there; just click on the button. Jane is going to host that.
You’re going to take us into some out-of-the-box strategies this time, Jane?
Jane: Yes. Look, I still think that renovation is the key strategy but we do need to think differently. So, there’s things that I want to cover in there, four key strategies that people can take away to improve their portfolio, not just in 2017 but beyond that.
Simple things like collaboration. Maybe you can’t borrow anymore by yourself, but borrowing with someone else. Now, I read an interesting statistic recently, and that was in China, 70% of young adults actually own their home. But China has one of the top ten most expensive real estate markets in world, so how can they do this and why?
And really, it’s come down to the fact that by the end of this decade, there are going to be 30 million more single men than women. The families are collaborating and going “How can we make our boy look better on the market? Well, he must have a home.”
Although it’s not relevant here, we can look at that and take some learning and go “Well, maybe it’s time families pitch in together.” We have things like parental guarantees, but maybe bringing the inheritance forward or maybe buying in a self-managed super fund, maybe buying with your friends in a tenancy in common, or maybe even buying in a crowd-funded platform.
That’s just one of the four strategies that we’re going to explore in full. But it fundamentally comes down to the fact that there are some strategies you can apply to buy a property but still, renovation is the thing that’s going to add the value.
So, when the banks do come back into the norm and start letting you access equity more and you can service that, you have that available to use. But in the meantime, you’re pushing your rents up in your rental properties and minimizing the effect on your hip pocket every month.
Kevin: Yes. I love that idea about being able to help people get into property, because let’s face it; you can’t renovate a property you don’t own. And if renovation is going to be your end goal, you have to get the property first.
I love that idea of getting the family or collaborating with other people to get a property. It’s a great way to start, isn’t it?
Jane: Absolutely. I look at some of my students and their friends buying together or couples buying together three-bedroom houses and they’ve move from the rental accommodation, renting with friends, to buying with friends.
If you can structure that kind of agreement well so that you both get an equity gain, you’re still living with your mates but you’re actually on that property letter. A lot of people miss that kind of step because they’ve seen what their parents have done and that’s the only lesson they know.
Kevin: Okay. The four key out-of-the-box strategies, we have heard about one of them. That’s going to be coming up in a webinar on May 25 at 8:00. Lock into it. Book your place. Places, I imagine, will be limited. Jane?
Jane: Yes. They will be. First in will be on it.
Kevin: And of course, as I said earlier, if you think this could be the answer for you, then spend some time with Jane on this webinar. It’s absolutely free. It’ll come back for you in spades.
Hey, Jane, thank you for joining us today. I love what you’re doing with this webinar because I think getting more people, especially young people, into property and helping them build wealth through renovation is just fabulous. Thank you very much for your time.
Jane: Absolute pleasure.
Kevin: Okay. I’ll mention once again: webinar, May 25. Use the link on the home page at Real Estate Talk. Click there, book your seat now. You will not regret it.
Jane Slack-Smith from Your Property Success. Thanks for your time.
Jane: It’s a pleasure, Kevin.