23 Jun Auctions can be fun + How and when to structure your team + It is not too late to claim depreciation
Highlights from this week:
- We catch up with 2 young skilled property experts who happen to be brothers
- How to build your team
- A great tip about how to keep your property tenanted
- How auctions have changed and why it is a great opportunity for buyers
- A commonly missed opportunity for investors
- What strategy is right for you
- The questions you should ask yourself before investing
Make bidding at auction fun – Haesley Cush
Kevin: Haesley Cush is a second-generation real estate agent, having worked in the industry with his family for many years and now owns and operates his own office and, as well as that, is one of the most recognized auctioneers in Australia, having appeared on The Block and taken out many auctioneering competitions in Queensland.
I caught up with Haesley and asked him whether he could give us some tips for anyone looking at bidding at auction this weekend.
Haesley: Okay, tips for buyers: firstly, you have to know the property you’re about to bid on and you have to know the rules of the auction – really fundamental things. Property is research local prices so that you’re comfortable with the price that you’re going to pay.
Kevin: I went to a Ray White auction a couple of weeks ago, or it might even have been last week; I can’t remember. It wasn’t quite as formal as it used to be. It’s become very casual, even with the conditions. “Conditions are on display. I’ll quickly run through a few for you.” But we used to go very formally through those conditions.
Haesley: Yes. We just found when you’d read through all 20, you’d then have to go and wake everybody up because it was so bloody boring. People don’t need to hear them. They’re there to bid. They have all the paperwork they need. Terms of auction are on display. We hit a couple of the main points: you have to be registered, let them know about GST, explain vendor bids, all that sort of stuff.
Kevin: Explain vendor bids because that is interesting.
Haesley: A vendor bid is basically… Let’s imagine you’re a buyer who made an offer of $800,000 and the reserve is $900,000. You turn up to the auction, I call for an opening bid, “Bid it off at a start,” and you think “I might kick things off. I’ll open it at $500,000.”
I have two options as the auctioneer. I can say, “Sorry, Sir. $500,000 is too low, “and then you and I have a bad experience together. Or I say, “Sure. I’ll welcome your $500,000, and let’s run in $100,000 rises to take us to $600,000.”
Now, if nobody else bids, it’s kind of the end of the show. You didn’t expect to buy it for $500,000. We’re a long way from the reserve. So I place a vendor bid at $600,000, which is our way of saying, “You’re not going to buy it for $600,000. We’re still traveling in $100,000s. Will you bid $700,000?” You’ve already offered $800,000, so you say, “Sure. I’ll bid $700,000.” I’ll take a vendor bid at maybe $750,000, again, in the absence of someone else bidding.
Kevin: I just want to stop there. That’s something I can read into the auction straight away – that we’re getting close to a selling point, because you’ve slowed down. You’ve gone from $100,000 back down to $50,000. So, that’s something you can read into the auction.
Haesley: Yes. If you think of bidding like a triangle, the chunks get smaller as we get higher. Usually that’s from buyer pressure. And in the absence of buyer pressure, I have to try to read “Well, if I take $800,000 from a buyer who’s offered $800,000 before, they’re not going to bid again.” So I need to place $750,000 to take their $800,000. So, now they’re back at the level they were at before, and now we’ll see what happens from here.
Kevin: And they might come back at $775,000.
Haesley: They might come at $775,000, and I’d probably take maybe $780,000 to try to keep moving.
Kevin: I want to talk about vendor bids, because I think a lot of people probably would be listening to this and saying, “That sounds so unethical that you as the auctioneer would place a bid,” but in reality, it’s no different from any kind of negotiation, where if you make an offer on a property, the agent will take that into the seller. The seller will counter sign it.
Haesley: And people think it’s a bit foreign because they want to see competition at an auction. But the alternative is “Okay, we pass it into you at $500,000 and that’s the end of the day.” They’ve gone to all of the effort to turn up to bid at the auction. No auctioneer would ever place a vendor bid anywhere near what the owner would accept. This is not about pushing buyers above where they…
Kevin: It’s too risky.
Haesley: It’s just about creating a level platform and then beyond that, leave it for the open market.
Kevin: Because every time you place a vendor bid you’re actually buying it back on behalf of the owner.
Haesley: Effectively it’s called a vendor bid because the vendor is saying “I’ll bid at that price and I’ll keep it.” This is their way of saying “At that price, I would buy it.” And then their next bid comes. “Okay, no better bid on that? Okay, at that price I’d buy it.”
People who are familiar with auctions quite like vendor bids because it’s the vendor playing their hand as where they won’t accept. People who aren’t familiar with auctions find it really bizarre and really foreign. But as soon as that property’s passed in, they’re not going to find it bizarre that the owner says “I want $300,000 or $400,000 more.”
Kevin: In a way, what we’ve done by making vendor bids public – in other words, in the old days, we used to be able to pull them off trees and no one would really know whether that was a real bidder or not – at least today for the buyer, if you nominate a vendor bid, you know exactly where you are in that buying process. You know “That’s a figure that they won’t accept. I need to go higher.”
Haesley: Yes, that’s right. For a buyer looking for tips, they can look at how vendor bids work.
There are two strategies with an auction for someone bidding today. Remember that competition is what fuels the higher price. The lower you start, the more people can afford it, subsequently the more competition you’ll have. The higher you start it, less people can afford it, there’s less competition.
When I bid personally, I work out my maximum price, and I launch my opening bid very, very close to that to try to kill competition. Very few people take that advice because they worry that that bid will be more than the owner accepts.
Kevin: It’s almost like a king hit. It’s never as high as you’d go, but it’s getting close to it.
Haesley: When I’ve done it, because of how comfortable I am with pricing, I just go with everything I have and if it buys it, great, and if it doesn’t, I just leave. Very few people take that tactic so what makes them feel more comfortable…
Kevin: Has it worked for you?
Haesley: It hasn’t, no. Because I’m a little bit too conservative on my pricing maybe when I’m trying to buy.
Kevin: But that’s the thing. You have to go down a few dry gullies, don’t you?
Haesley: That’s right.
Kevin: That’s a great lesson for buyers: to set your limit and lock into it.
Haesley: Yes. You have to kiss some frogs before you get your prince, Kevin.
I think it’s so joyful. Auctions are so easy – no paperwork. “That’s my bid. Do you want to take it?” “No.” “See you later.” There are auctions where I haven’t used that strategy previously. I get caught up in bidding and I do quite like to bid.
And the other strategy is you get to the benchmark first. So if you’re in a bidding battle, people tend to think in round numbers, so you want to get to the next round number first because that is likely or could be their limit. So if you’re at $451,000, get to $460,000 because maybe they said, “We’ll go to $460,000 and no more.” If they bid $461,000, get to $470,000 because that could be the limit. Try to get to the benchmark.
Kevin: We have about a minute to go. There’s one other point I want to make and that is that if you’re going to go to an auction today or even next week, make sure you find out who the auctioneer is, and then go and see one of their auctions and understand how they work before you actually go and go toe to toe with the auctioneer.
Haesley: Usually the agent will be able to give you examples where they are.
A big thing that I want to leave people with today is get pre-approved. Go and see a broker and understand how much you have, because by being pre-approved, you can make what we call a cash offer, and a cash offer can help you buy a property a little bit better.
Kevin: I want to thank you very much for giving us your time today, Haesley. I know you’re very, very, busy. It’s great to see you in the studio. You’re welcome any time, by the way. We’d love to have you back.
It is not too late – don’t miss out! – Brad Beer
Kevin: The end of the financial year is fast approaching. For property investors, it’s important to make sure that all of your paperwork is in order, ready for when you visit the accountant to complete your annual income tax assessment.
Now one part of the process that is quite often overlooked is to ensure that you obtain a comprehensive tax depreciation schedule from a specialist quantities surveyor. We’ll touch on that in just a moment.
Brad Beer from BMT Tax Depreciation joins me.
Brad, I thought it might be timely for us just to go over some of the benefits of doing that, and doing it right now, getting that depreciation schedule in place. Welcome to the show.
Brad: It’s great to be here, Kevin. Yes, for sure. The big thing is that depreciation is one of those tax deductions that’s there that so many people tend to overlook. Now is a good time to think about that because it’s tax time.
You’re about to run to the end of June and we get a situation where we get group certificates, we start thinking about tax returns, of getting some cash back from the tax office. So, if you can get as much of that organized and ready to get as much as possible by the time you get to your accountant makes the whole process quicker, easier.
And this depreciation – the tax deduction for all property investors – is just not done properly so often. You don’t want to leave your cash on the table. The building is getting older, it’s wearing out, there’s deductions there. You want to make sure you’re taking advantage of those and getting the most out of those investment properties.
Kevin: Have you had any idea of how many investors in Australia don’t get depreciation schedules who would be able to?
Brad: The data is not available exactly on how many do and don’t get one, but the research that we’ve done would suggest that 70% to 80% of the people don’t actually maximize their deduction properly.
So you might be claiming some deductions or depreciation, which is some of the data we can see, from tax office producers, but a lot of the time they’re just not claiming as much as they can. And that could be because they guessed, they didn’t realize the old property might have some depreciation still, they use something provided by the builder, or something like that.
Now, it’s best to actually get it done properly because you don’t want to be one of those people who are getting $5000 instead of $10,000. We want to make sure we are maximizing it properly.
Kevin: Yes. Of course, a lot of people think depreciation is only applicable to new builds. I know we’ve discussed this in the past, but it’s well worth asking an expert about an older property, isn’t it?
Brad: I think regardless of the age, we should always ask the question. The simple thing is that old property definitely gets less deductions but it doesn’t necessarily get no deductions. It’s such a myth out there that an old property’s not worth it.
You really should ask someone who knows about depreciation. If I tell you it’s not worth it for the old property, you probably should listen. But if someone who doesn’t do this all day everyday thinks that maybe because it’s old, it may not get enough, let’s assess and see if there’s some money there before you make that decision.
Kevin: Of course, there were some changes recently in the Budget, weren’t there? Bring us up to date on that, Brad.
Brad: The Budget has actually made some changes to the plant and equipment that’s claimed. Some of the claims relate to the structure of the building, some relate to the plant and equipment, carpets, blinds, air conditioners, and those sorts of things. They’ve made some changes from Budget night for everyone that buys from Budget night where in second-hand property you won’t be able claim some of those things. And it will affect those old properties.
It doesn’t mean there’s nothing in any of them. It’s still almost the same question: ask a quantity surveyor that knows about depreciation before you decide, because we’ll be able to tell you whether it’s worth it or not.
Now, under those changes, there will be more properties than there used to be that won’t be worth it. But you still should ask the question because you still don’t know the intricacies of the things that we can find in a place for depreciation. There’s just going to be a few more of you in the future where we’re going to say “Look, no, it’s not worth it.”
One really important thing to consider about those Budget changes is that, unless you exchanged your contract after Budget night, there’s no change to you. It’s only someone who’s bought since then, and it looks like it’s only someone who has bought a second-hand property since then.
So, everyone should ask the question, but most of the people doing a tax return now, we’re coming up to the 30th of June, if you exchanged on Budget night in May, you probably haven’t settled it yet and you’re only just going to settle before the financial year, so you probably weren’t going to be the person thinking about it anyway.
So, if you’re an investor getting to the end of the financial year now, forget about the budget changes; it’s only for your future investing. You still need that deduction because the thing is grandfathered, and there’s no change to people who’ve bought in the past.
Kevin: You can’t beat that professional advice. Can I ask you about back claims? Tell us about that.
Brad: A very important thing to consider is back claims. For all those people who aren’t doing it properly, you can easily go back and amend up to two years of your tax returns and actually go back and get some money from the tax office.
A bit like if you don’t pay your tax, the Tax Office will find you and make you pay it, it kind of works the other way. Didn’t claim all my depreciation for the last two years? It doesn’t matter how long you’ve owned the property, you can amend up to two years easily. If you’ve owned it four years, two years. So, don’t do another tax return and not be able to go back another year; get the two years fixed up before you do the next one.
Back claims are very important because they mean cash, firstly, and so many people are leaving it on the table. But as we get to tax time, if you do another tax return, you’re cutting another year off your potential back claims.
Kevin: Great advice. And as you said right up front too, do not leave any money on the table. If it’s there for you, make sure you chase it.
Brad: To me, not doing a depreciation schedule is like offering the bank more interest or reducing their rent because you’re a nice guy.
Kevin: Brad, just before I let you go, mate. Are there any benefits in arranging the schedule prior to June 30?
Brad: The main benefit pre-June 30 is that if you’re going to get a quantity surveyor to do a depreciation schedule, if you order and pay for it before June 30, that fee is deductible in this year.
You’re going to need this when you do you tax return in July or August anyway, so you might as well buy it in June because then you get a deduction for that fee in this year instead of next year.
On top of that, when you get to your accountant, it is ready, they don’t have to send you out for more things, so you’ll get that tax return back quicker.
Kevin: You have time to do it. Get your skates on. Make sure it happens. BMT Tax Depreciation are the people to talk to.
Brad Beer, thank you very much for your time.
Brad: Kevin, great to be here, thank you.
What we have learnt from smart investors – Shannon and Joel Davis Parts 1 and 2
Kevin: My guests in studio: Shannon Davis from Metropole Properties and Joel Davis from Image Property.
Joel, I don’t know how you feel about this, but foreign buyers are constantly getting caned and investors are constantly getting caned for increased prices. What’s your take on that?
Joel: I think it’s a lot of hype, personally. We deal with probably a hundred new properties a quarter, and out of those hundred new properties, the amount of foreign investment we see within it would make up less than 10%.
Kevin: Joel, let’s talk about investors. Both of you deal with investors all of the time, but you get them at the point where they’ve secured the property. Then they have to go on and get it managed professionally.
How important is mindset, and do you see that changing once they become property owners?
Joel: I think mindset is really important. It depends on what you want out of it. If you’re trying to grow a portfolio over a number of properties, then you need to have a mindset of pick the right person and then trust them to do the job and take the advice.
If you have the intention of micromanaging the person you employ to do the job, then in my opinion, you have no right to build a portfolio because:
(a) The people who you’re working with, if you don’t trust them and take their advice, probably won’t do business with you for very long. That is certainly my experience. I won’t do business with those clients for very long.
(b) You just won’t be able to do it logistically. The stress and the chaos that it creates will make the whole process something that won’t be conducive to getting where you want to go with that portfolio.
Kevin: Do you find you have to educate a number of investors on that point?
Joel: Absolutely. Certainly in recent times, it’s become probably something that we’re much more aware of and we do very early in the process. We just lay out the plan very clearly. We also cover off on what the worst-case scenario could be and how that would look. Obviously, we make them aware of the fact that there is a process for that.
I think A Current Affair has a lot to do with making people believe that you can have a tenant in your property who you can never get out. It’s just not true. There is a process and a system for everything. We know what it is. We’re professional. We know how to do the job. Trust us and then that way, you can focus your attention where it needs to be in order to get to where you want to go.
Kevin: Those stories we see on A Current Affair are the horror stories. They’re probably one in 10,000 or 50,000 – I don’t know – but they certainly paint a very bad picture of tenants, not only of foreign investors but of tenants as well.
Joel: Yes. Typically, it’s also a private landlord looking after a lot of those properties, someone who hasn’t served the paperwork in the timeframes that are required in order to be able to get the process carried out.
Kevin: Shannon, I know in your case, when someone comes to you and they tell you that they want to invest in property, given the fact that we call you a buyer’s agent but you’re more of a strategist, what is the difference between a buyer’s agent and a strategist, and how do you determine whether someone is right and whether their mindset is going to be right as an investor?
Shannon: I think a strategist get you the highest and best use of your property, be it if it’s an apartment, a house, or a development site.
Kevin: You said there “best use of your property.” Wouldn’t it be correct to say “best use of the available funds,” because you actually point them in the right direction? They may have an idea about what property they want, and quite often, you’re going to have to change their mind on that.
Shannon: Yes, definitely. The budget comes into it, but not so much the budget that the bank is going to give; it’s to do with their comfort zone. If they’re allowed to borrow $1 million from the bank, that might be too far, they might not be able to sleep at night. It’s really to do with what their risk tolerance is, and if they have comfort around $600,000, then we would show them how that deployed into the market would be the highest and best use of their funds.
Kevin: The process of qualifying them – to find out whether or not you can actually help them – is that an extended process? How does that take place, and what are the questions you ask?
Shannon: Yes, we’ll do 80% of the work before we get to contract stage or inspection stage of a property. Some people, their values are put into them from an early age, maybe from your parents. And unless you have multi-millionaire parents, then you might have some of those bad values, like “Rich people are evil,” or “I’m hopeless with money.”
Shannon: Yes, those limiting beliefs will affect their relationship with money and wealth.
Kevin: That’s ingrained. You can’t overcome that, can you?
Shannon: You can with the right sort of help. That fear of failure or the fear of success, we have to get rid of those limiting beliefs. And the best investment is in yourself, really. Once you get rid of those limiting beliefs, it opens up the whole world to opportunity.
Kevin: I was at a function recently – in fact, it was only last week – and I heard a young person, a young investor, speak. A young lady, newly married, she and her husband had just purchased, I think, their first or second investment property. She was explaining how her friends were trying to talk it down all of the time, tell her to be careful with her money. It’s not only coming from our parents; it’s actually coming from our peers as well.
Shannon: Yes, abundance. I think if you have that negativity in your life, you need to be finding more abundant people. Recently, Twiggy Forrest has donated $400 million. Wealthy people aren’t necessarily evil; in fact, they’re very generous and they have an abundance mentality, and that’s what has opened up so many opportunities, too. If you’re around that negative influence, you just probably have to get some new mates, Kevin.
Kevin: That’s right. There is a saying, isn’t there, about…?
Joel: You are a reflection of the five people who you surround yourself with.
Kevin: That’s it. Thank you, Joel. Well done.
Kevin: Continuing to talk to Shannon Davis from Metropole Properties and also Joel Davis from Image Property. This time, we talk about building the team.
Joel, I’m just interested to know what you see smart investors doing, how they put the team together, who’s on that team, and at what point do they do it?
Joel: Obviously, I have the fortunate circumstances of working with more than a thousand investors who I look after personally. Probably where they start is, first of all, getting the right advice from someone in terms of strategy – so, similar to what Shannon does as a buyer’s agent or buyer’s advocacy role.
But when you’re actually at the coalface of choosing that property, I think it’s really important that you have a couple of key people. Your property manager is not just there to manage the property; your property manager is there to give you an independent assessment of what the true value of the rental return on that property will be.
I think it’s an error that a lot of people make in terms of taking the rental appraisal that the sales agent is providing. I think there can be a conflict of interests there, and I think seeking an independent appraisal is always important.
Kevin: On that point, if you go to buy an apartment, you’re probably going to get that appraisal from an agent. Accept that, but then what you’re saying is go and get another one.
Joel: Always, Kevin. I had one of my owners who is purchasing come to me only last week, and the appraisal that we gave as opposed to the appraisal that was provided, there was a $50,000 difference on a $500,000 property.
Kevin: That’s fairly major, isn’t it?
Joel: It is. Someone is being, obviously, extremely bullish with their price point and we’re always realistic with our price point. But I think that independent check is important.
I think outside of that, you should be working with someone who has a lot of experience in that local market, so having someone who has that knowledge of the local market and someone who is active within it, I think is really important also.
Kevin: You make a very good point, and I just want to pick up on something too. Sales agents, we do know they’re somewhat ambitious. They do tend to look ahead. There is nothing wrong with that. They’re quite enthusiastic about the market, the market growing all of the time.
But when you’re looking at a property manager, there is someone who you’re going to have a relationship with for quite some time. Therefore, they want to make sure that the information and advice they give you is something that’s not going to come back to haunt them a little bit further down the road. Would you agree with that, Shannon?
Shannon: Yes. Sales is like dating, but property management is like a marriage; it’s going to be a long-term relationship. So yes, there has to be a lot of trust there, and no one is being helped by being lied to, so it’s better to get an accurate appraisal first than be disappointed later.
Kevin: How do you go about choosing the right people to fit onto your team, Shannon?
Shannon: I think, make sure they’re independent. They can’t be having two masters. What I mean by that is “This is great investment stock, just buy any one of these off of this list,” because they’re obviously masquerading as just a developer’s sales agent slash investment expert as well.
We want unbiased advice and we want that advice from people who have been there, done that, and are actually successful. If you’re not successful at this particular activity, I’m not really interested in your opinion. If you are successful, then it’s someone I’m going to make time to sit down and listen to.
Some of my investors have taught me a lot of their strategies. For instance, I rent my properties at 95% of market rent and only 12-month leases because I want the long tenant stays. When you reward them with a little bit of a discount on market price, you’ll get a great tenant who is a long-term fit who is going to not give you much trouble at all.
Kevin: Joel, that’s a very interesting point that Shannon makes there. Do you find that investors are aware of that? Do you pitch your properties for investors at about 95% of the market?
Joel: I think it’s really important that you do go in with a price that’s not above market value. Certainly, 95% of market rate is great if you can afford that. Not everybody can, and not everybody is willing to be that logical with their approach to property.
I think it’s really important that you don’t let the vacancy happen because once that vacancy has been incurred, there’s no getting it back. A lot of the mistakes that I see made are investors calculating their rent by whatever it is times 52. It’s not. It’s how long your property was on market during that 52-week period that determines the yield.
The questions to ask to discover your ideal strategy – Michael Yardney
Kevin: Our theme for the show today is having a strategy around building a property portfolio. No one better to ask that question than Michael Yardney from Metropole Property Strategists.
You’re doing this all the time, Michael. I know you have a strategy, but you’re helping other people build their own strategy to build a portfolio, correct?
Michael: Correct, Kevin. Really, if you don’t have a strategy, any road can get you where you’re heading, but any road can get you lost as well. So, it’s important to begin with the end in mind, and then find a strategy that’s worked for others over multiple cycles to help get you there.
Kevin: Do you find there’s one strategy fits all, Michael, or does it depend on your stage of life?
Michael: You’re right, Kevin; it will vary upon your stage of life, your risk profile, what you’re trying to achieve. I have a strategy that’s worked for me and for our clients, but I accept it’s not for everybody. Some people are not looking for a big asset base; they’re looking for different things in their life.
Kevin: When you’re helping someone build their strategy, Michael, what are some of the key questions you ask that maybe someone should be thinking about when they’re putting it together?
Michael: The first thing is where are you now – in other words, what’s your financial position now – and where do you want to be? Next is to understand what their time frame is. Somebody who’s in their 50s has much less time and can’t afford to take risks than somebody who is in their 20s.
We also have to understand what their risk profiles are. And what’s ahead? What are their job prospects like. Are they going to be on steady incomes, or are they going to stop and have a baby?
It’s a long term process that you can’t plan in concrete. I know some people try to give out 40-year spreadsheets. Kevin, I don’t know what interest rates are going to be next month. So, what we do is set some big goals and then recognize that the plan is going to change along the way.
Kevin: Some of the key things I’ve heard you talk about too, Michael, are preparing and making sure that you have some sort of a buffer. Because as you rightly said, you don’t know what’s going to happen even tomorrow, next month, or even next year.
Michael: What you have to do is plan for the future but also recognize that times will change over the 10 or 15 years. We’ll have some good times, some bad times, some periods of high interest rates, some periods of low interest rates, some times when property values are going to decrease, and other times when they’re going to boom.
So, what you really need to do is cover yourself for the downside while looking forward to the upside. That means protecting yourself personally with life insurance and income protection insurance. It means protecting your property portfolio to ride the storms by having financial buffers in place.
And it means owning the sort of assets that are going to be strong and stable. By strong, I mean they have to grow at wealth-producing rates of return, but by stable, Kevin, I mean that they’re not going to fluctuate in value much [2:53 inaudible] having the ups and downs of the more volatile regional mining and secondary locations, Kevin.
Kevin: Michael, I appreciate you giving us your time and I know we’ve caught you at an airport there. Can I just squeeze one other point in? I received an e-mail from Troy that he’s requested I seek your opinion on, which I’m very happy to do, and thank you for giving me your time.
Troy writes: “Come July 1, with stamp duty cuts in benefits, I’d like to know if buying off the plan before the end of the financial year is wise, or waiting until after first-home buyers or just general buyers have done their thing.”
He wants to know your opinion on that, Michael.
Michael: Well, Troy, I don’t think that short-term fluctuations – whether it’s in tax benefits, incentives, or market cycles – should affect your long-term plans. Of course, everyone wants to buy at the best price or take advantage of First-Home Owner Grants or stamp duty savings, but please don’t make that your major consideration. The time to invest is when you have the finances right or when it’s the right stage of the property cycle for you.
This is, in my mind, not the right stage to buy off-the-plan properties. Most recent results have again shown that prices are moderating, particularly in our two big capital cities – Melbourne and Sydney – but also in other parts of Australia.
Banks are being very cautious about lending for off the plan because in general, most people recognize there’s a glut of off the plan properties. And people who buy them are going to end up regretting it because their contract value is going to be significantly more than what the end value would be. In other words, they’re going to have an equity shortfall. They’re going to have difficulty financing at the end.
This is happening in every state in every location at the moment. So I’d be avoiding off the plan no matter how good the incentive. It won’t make up for buying a second-grade property, Kevin.
Kevin: Michael, thank you for sharing your wisdom with us, and safe travels wherever you’re going. And thank you, Troy for your questions.
Thanks, Michael Yardney from Metropole Property Strategists. Thanks for your time.
Michael: My pleasure, Kevin.