26 Jan Highrise shock + Poor mis-read Millennials + Problem pools
Highlights from this week:
- Did we get Millennials wrong?
- Properties and pools
- Is your rent up to date?
- Old problems in new high-rise
- Leaving the city
Did we get Millennials wrong? – Emily Jaksch
Kevin: Well, here’s some staggering news for you. There is a generation that we may have totally misread. We might have gotten them the wrong way. That would be the Millennials. According to Emily Jaksch, who is the founder of HR Gurus and We Care recruitment, she says that the Millennials are more established and property market savvy than we think or even give them credit for. Hi, Emily. How are you?
Emily: I’m good, how are you? Thanks for having me.
Kevin: Emily, to start with, just paint the picture for me about Millennials. How old are they, what are they doing and so on.
Emily: So Millennials are 23 to 37, as I said, over half are 30 plus now. About 30% are parents, 46% already have direct report, so these are the future leaders of our country. They’re not going away, so we all need to just get over it. They are different. I think that their values are the same as all the other generations, they just express them differently. So to give you an example, they’re not looking for lifetime jobs like baby boomers were, and those kind of jobs don’t actually exist anymore. So if you can get between three to five years out of a Millennial in your business then you’re doing really well. I think that they make great employees, you’ve just got to find the right ones with the right values.
Kevin: Now we’ve misread them, have we? Tell me what the Millennials are doing.
Emily: So I think that Millennial bashing has become a global sport. It’s quite fun, everyone seems to have gotten on board. But I did a recent study into Millennials in the workplace and some of the results shocked even me. I’m not a Millennial, I’m a Gen X, and according to my study, 48% already own their own homes. That is very different to the narrative we’re being told in the media, and one in three intend to buy in the next five years. So I thinking that they’re a lot more grown up than we think they are.
Kevin: Yeah, well of course we’ve said, and even in this show we’ve said that Millennials are still living at home. I don’t think we’ve used the word sponging, but that’s probably … That’s your word, sponging off their parents, but we have certainly spoken about the bank of Mum and Dad. And I guess when we talk about affordability, property affordability now, that’s one of the things that we have found, is that Mum and Dads are supporting the kids. Is that different?
Emily: I think that it’s a bit of a myth. I think, according to my study, only 16% of Millennials are still living at home with their parents. I do believe that a lot of millennials probably went home and lived with their Mum and Dad to save for their deposit. I mean, I did that but I’m a Gen X and I did that at one point. I was single at the time. But I think that there’s such an amazing amount of information and a wealth of knowledge out there on social media and things like that, I think that Millennials have access to a lot more information about saving and about property, and that they’re really utilising that and they’re getting in there a lot earlier than we think.
Emily: I think that a lot of them are actually grown up now. According to my study, 50% are 30 plus. So they’re not in their 20s anymore, they’ve got kids, they’ve got direct reports, and the good news is for Australian businesses is that if they’ve got mortgages then they need to work, and so they’re going to be looking for stability, which I think is a great thing. And that’s another thing that came out in my study, that they’re not looking for variety anymore. They’re really looking for stability in their careers and their workplaces.
Kevin: Do you think these Millennials have learned some great lessons from their parents? I mean, some of the … our generation, my generation, our kids have seen us grow up with relative wealth through property and so on, they’ve learned those great lessons and they’ve in fact become better savers than we were.
Emily: Correct. Well, according to my study, only one in two have … Sorry, seven in ten have between $2,000 and $30,000 in savings. And I think that that’s because they’re trying to save for a deposit. And there’s this whole narrative that they’re all on after pay and they’ve got heaps of credit card debt. According to my study, one in two have zero unsecured debt. So a lot of them don’t have any debt at all.
Kevin: A lot of this debt probably does sit with my generation as opposed to Millennials. I was also staggered to read in your report too that quite a lot of this generation have actually no debt on their house at all. They’re totally debt free.
Emily: Correct. So 12% own their homes outright. And I know personally quite a few Millennials who bought an investment property when they were single, and then they got married and they both sold them and now they’ve bought their dream home and they own them outright. Which is quite amazing and fantastic, and good on them.
Kevin: So Emily, did your study reveal that these Millennials are going to become property investors in their own right?
Emily: I didn’t really look into that. It was more about what they wanted in the workplace. But about 40% are looking to start their own business. So Bernard Salt said a while back that they’re quite entrepreneurial and I think that that showed up in the survey. They don’t want to work the traditional 9-5 job. They want flexibility, that’s one of the things that they’re looking for in employers. So I think that a lot of them will get into owning their own businesses, which is quite interesting, also.
Kevin: So your study has revealed that a number of Millennials don’t have properties. Do you see them being inspired by their own generation to become property investors in their own right, get out there and buy property?
Emily: I definitely think so. I definitely think that if that’s the trend that we’re seeing, that younger people are buying houses earlier, I think that a lot of people will get onboard and they’ll start following suit. I think property is a great investment and people can see that. And the property market is still booming in Melbourne and Sydney. It is quite expensive, but I know a lot of young people who are knuckling down, saving, and getting in there, which is a great thing for the economy.
Kevin: If you want to get more information about the research and know a little bit more about Millennials, just check out Emily’s website. The website is Emily, E-M-I-L-Y J-A-K-S-C-H.com and there’s also an ebook there. And that summarises this research, Emily?
Emily: It does. Yes, it’s a [inaudible] summary. It’s really about dispelling some of the myths around Millennials.
Kevin: Emily Jaksch has been my guest and that website again is emilyjaksch.com. Check it out for the ebook. Emily, thanks so much for your time.
Emily: No problem. Thank you so much for having me.
Properties and pools – Brad Beer
Kevin: Well, quite often on this show we talk about pools and whether or not they add value to a property. That’s a separate conversation all together, because I want to talk about the pros and cons of investing in a property with a swimming pool if you’re going to be leasing it out, having a tenant in it.
Kevin: Well, given the warmer weather I guess that we’re experiencing right now, one area of a property that’s worth focusing on is the backyard, the backyard pool. I’m going to talk to Brad Beer, the Chief Executive Officer of BMT Tax Depreciation, about the advantages and disadvantage of investing in a property that has a pool.
Kevin: G’day Brad, how ya doing?
Brad: Good, Kevin.
Brad: I like to swim in a pool, in the warm weather.
Kevin: Yeah, exactly. Don’t we all?
Kevin: Let’s have a look at some of the factors that landlords need to consider about depreciation. What are some of the factors that they need to be aware of, if they’re planning to rent a property that’s got a pool, or even put a pool into a property that they’re going to rent?
Brad: I guess before we get to the depreciation part of that, there’s a lot of things around the pool that … firstly a lot of safety issues I guess.
Kevin: Safety, yes.
Brad: Fencing, gates, filters up to scratch, and I think in New South Wales, there’s a bunch of compliance certificates and there’s the risk of people … Unfortunately, pools have got risk attached with drownings, et cetera. And, just making sure that everything’s done properly, is probably the first thing.
Brad: There’s a bit more maintenance required. You’ve got to make sure it’s clean. You’ve got to make sure we got tenants that do want a pool. Electricity costs. They say between $800 and $1,200 a year, so it’s an average of $20-odd bucks a week additional cost just in electricity. So, there’s definitely a few cons sometimes that make it a bit more difficult with a pool, but obviously, people like pools as well.
Kevin: I don’t. In fact, we put two pools in, over our years of owning properties, and I think both of those pools have now been filled in. So, I’m not a great believer in a pool. But having said that, many people are.
Kevin: What are some of the depreciable items found in pool areas?
Brad: Yeah look, we talked there about the fact that there’s a cost associated with the pool, but where there’s cost, there’s depreciation, right Kevin?
Brad: When you spend on things-
Brad: … You get things to claim, and I often don’t like pools in my investment properties for those reasons. Whether you get enough rent is the question before, but your covers, your pumps, your filters. The things you’ve got around it. Lights, chlorinaters, cleaning assets, pool .. anything that operates a pool, pretty much, has got some sort of claim usually associated with it.
Brad: But also, providing it’s been built after the appropriate time, you actually get to claim the actual pool itself as structural item.
Brad: There’s a little bit of work that’s gone on there, so it’s not all bad.
Brad: Look, the weighing up a property with a pool as to whether it’s going to increase your rent enough to cover the hassle and the things. The hassle on the costs, but look, at least depreciation makes the cost a bit less after tax, right?
Kevin: Yeah, I mean there’s some real costs with a pool, but you touched it on earlier, and the safety issue is the one that’s always worried me. The liability of the owner to make sure that the safety is always there. That kids are not going to get access to the pool, so therefore you’ve got to make sure that all the fences are right.
Kevin: So just in talking about that Brad, can you give us some, maybe examples of the deductions that an investor may be able to claim for the pool?
Brad: I’ve, in preparation, a few numbers here –
Kevin: Yeah, good.
Brad: Depending on the cost of what they are, but pool fences, two and a half percent. The fence is two and a half percent part of the construction cost. Depending of the cost of that, it’s two and a half percent of what it actually was, what it cost to put it, actually. To build it, the pool itself, two and half percent of the cost to put the pool in.
Brad: I’ve got an example here, $800. Pools and filters, $500 in a year. Diving board, $30. The couch, $80. Table, chairs, $180. These claims all relate to them. We’ve got one example that shows nearly $3,000 in deductions associated to a pool, with a little pool house and a little bit of furniture around it.
Brad: And look, it’ll always come down to a part of the cost to put in that pool there, but look there’s definitely some … We spend on things, or they’re part of the structure, providing their dates are right. They’re worth a few dollars, and get some deductions.
Kevin: It’s what you said, isn’t it? You spend money, and there’s got to be some benefits coming from that.
Brad: Yeah, but it always does have that fear attached. It’s interesting to hear you put two pools in, and filled them in again.
Kevin: Yeah, well I didn’t, someone else did.
Brad: Oh, okay.
Kevin: Oh, we sold them. We sold the houses, and I think one of them became a rental property, and they instantly filled it in.
Brad: Yeah, so they filled it.
Kevin: The other one … Yeah, they developed as some commercial premises, and they wanted to build over the pool. So I guess there were two good reasons. Maybe the first one was a safety reason, I don’t know, but…
Brad: Yeah, there you are, but we in Australia are.. we love to have a swim, we just got to make sure we balance all these things out, right?
Kevin: Yeah, we do all for the right reasons, don’t we? I think when we put our pools in, I think it was really because we had the kids, but I wouldn’t be doing it now, I don’t think.
Brad: Yeah, there’s a bit of maintenance associated with them, isn’t there?
Kevin: Yeah, well it’s enough … Easier to mow the lawn, Brad. Maybe I’m just getting older, I don’t know.
Kevin: Good on ya. Brad Beer from BMT Tax Depreciation. Thanks for your time, Brad.
Brad: Great Kevin. Thank you.
Is your rent up to date? – Cate Bakos
Kevin: I guess it’d be fair to say that probably what a lot of investors don’t do when they’re looking at property investment is treat it like a business. Here’s a classic example of how you need to think about your portfolio. Joining me to discuss this, Cate Bakos. Cate has written so many articles about this. I’m really looking forward to having a chat to her about it. Good day, Cate. How’re you doing?
Cate: Hi Kevin. I’m good. How are you?
Kevin: Very well indeed, thank you. Cate, of course, a very talented buyer’s agent from CateBakos.com.au. All the links if you want to reach Cate are on this interview. Cate, the importance of investors understanding whether their rent is up to date, I know that’s just a small portion of what we’re going to talk about, but it’s so important to look at this like a business. What do you see are some of the things that they should be focused on?
Cate: I think people need to be very mindful of what sort of rent they’re actually getting and, in particular, where their rental arrangement is. For example, if they’ve got a fixed rental arrangement with a tenant, they’ve got to understand when that lapses. They need their property manager to be on the front foot with not only reinstating a new lease but also recommending where the rental amount should be set and whether the property deserves any upgrades or whether there are any issues that can be bothering a good tenant. At the end of the day, nobody wants a vacancy. Everyone wants their property to be returning them a dollar value that represents its worth. When property managers let that lapse and when the investor isn’t keeping tabs on it, they can find that they’re shortchanging themselves. They’re also setting themselves up for a little bit of an upset with the tenant when the tenant finally has a commensurate rental set. It might be a really hefty hike and it could really put their nose out of joint.
Kevin: I guess the temptation is there when you’re very busy and you’re building a portfolio for you to give it to a good property manager and then abdicate responsibility. You should really delegate the responsibility. The difference between the two is that, while you’re giving the responsibility to a property manager, you’re still going to keep your hands in the deal so you can understand what’s going on.
Cate: Absolutely. I think people lose sight of the fact that they’re running a business and the property manager is an employee. That’s how they should look at it. Just because you have appointed a property manger doesn’t mean that you can walk away from your business responsibilities. You need to make sure that you’re getting the right performance out of them and they they’re delivering their service in a way that suits your communication style and your available time.
Kevin: I guess you’ve got to be in a position, too, to … I mean, you employ them for a reason and that is that they’re experts in their field. You seek their advice, but then you’ve got to challenge it sometimes and really question where it’s coming from to determine if you’re really comfortable with that advice. As an example, I would think, we’ve been confronted from time to time where a property manager has said to us, “Well, look. Let’s just leave the rent where it is. You’ve got a good tenant. Let’s not go for an increase.” You need to challenge that, I think.
Cate: I think you do, too, particularly when you’re in a market where rents are moving solidly. A recent example for me was actually taking note of the changes that are swooping through Hobart. We’ve got two properties down in Hobart. They’re residential properties and It was a little bit of a surprise to see just how much rents have been climbing in the city. That’s a reflection of a stock shortage and also the rise of Airbnb, which is eliminating a lot of long-term available rentals. We suddenly realised that we’re significantly under on one of our properties. For sure, we’ve got a good tenant who we’ve given a little bit of a rent rise break to, but we’ve really set ourselves up for a fail when we do decide to bring that rental into line for them. It was a mistake that I made myself. That was just not paying attention to how rapidly the rents were moving in a particular city that I had property in.
Kevin: Just on that point, too, it’s also worthwhile mentioning that even the term of the tenancy is important when it expires, what’s happening in the market at that point in time. How long do you want the tenancy to go? In a rising market like Hobart, it might be beneficial to only have a 6-month lease as opposed to a 12-month lease so you can review it.
Cate: That’s a really good point. We actually have had legislative changes sweeping through Victoria. It does put a spotlight on how often you can increase rent. Understanding the legislation in any state that you’ve got property in is really important. Chatting to your property manager and getting that information is vital. Also, considering not only the timing of the lease but also the seasonal time. If you’re looking at finding a new tenant in the winter period in a cold city, you might have a hard time. Getting your leases in sync with the seasonal height is a really important thing to try and do.
Kevin: You want to make sure that your lease is not expiring at a time when it’s going to be difficult for you to find a tenant because there’s so many other properties on the market. So many things to consider. It gets back to the point that we opened with, Cate, doesn’t it? You’ve got to look at this as a business. You’ve got to stay involved in it, and for goodness’ sake, do not abdicate responsibility. Delegate it, but then keep your hands in the deal.
Cate: Absolutely. I think the last and most important point is understanding what your property is actually worth. You’ve got to approach that with a bit of science. It is actually easy to do. If you look online and just go onto the rent tab on a search engine and have a look at what other comparable properties are renting for or what the rents are that they’re commanding, then maybe make a phone call or two to verify how much a particular property actually rented for, and make sure that you’re comparing the right area, the right dwelling style, and size and number of bedrooms. That should give you a pretty good idea of what yours is worth. If you find that stock is really limited and you haven’t really got anything to compare to, you will need to talk to your property manager and ask for some examples. If you’re doubtful about the rent that you’re getting, you might need to speak to other property managers. You do need to take responsibility.
Kevin: Great advice, always, from Cate Bakos, buyer’s agent. Cate, thank you so much for your time.
Cate: My pleasure, Kevin. Talk to you next time.
Old problems in new highrise – Sahil Bhasin
Kevin: Well, rightfully so, a lot of concern has been expressed about the safety of high-rise buildings given the horrific events that occurred at the Grenfell Tower in London with combustible cladding, and the recent failure of the Opal Tower in Sydney. This would be alarming for many current owners, but also for purchasers of property.
Kevin: Sahil Bhasin is from Roscon and joins me as my guest to discuss the state of high-rise buildings in Australia. Roscon, by the way, conducts over 5,000 inspections a year for building defects and cladding related issues, and was recently invited by the CEO of the Victorian Cladding Taskforce to provide expert advice and recommendations. So no one better to speak to about this. Sahil, thank you very much for your time.
Sahil: No problems at all, Kevin. Thanks for having me.
Kevin: Let’s deal firstly with the cladding specifically. How widespread has this faulty cladding, that was similar to the one used in Grenfell Tower.. Has that been used in Australia?
Sahil: It sure has. So Kevin, just to clarify things firstly. Cladding is not the right word to be used because cladding is anything that’s on a building façade; bricks, concrete, windows, glass. So the right word to use are the two types of cladding that are being used. One is aluminium composite panels, which is the one that was used at Grenfell Tower. The other is expanded polystyrene. When consumers hear about it, they get a letter from the councils or the fire brigade, it will be relating to ACP, aluminium composite panels, or EPS, expanded polystyrene. Yes, it has been widely used throughout Australia.
Kevin: Which is the bad one? Or are they both bad?
Sahil: They’re both bad types of products that are used on building facades. So expanded polystyrene has some good values with being thermal values, sound property values, so it’s great for keeping heat and cold in. That’s why it’s used for eskies. It’s great along tram and train lines, that’s why they use them around those precincts. It’s lightweight, it’s quick to install, the foundations don’t have to be as deep. However, once it does have a naked flame to it, it catches on fire very, very quickly.
Sahil: The other one being aluminium composite panels. Three types of them available; one being … and these are marketing terms, just to let you know. One is called a polyethylene product, which is essentially what it is, polyethylene which is 100% flammable which was what was used on Grenfell Tower. Then there’s another product called fire-retardant they call it, FR. Which isa 70% mineral mix, 30% polyethylene. Then there’s a non-combustible which is a 90% mineral mix and 10% polyethylene.
Sahil: However, they all fail the Australian standards, and their words are just made up for marketing terms from the actual suppliers themselves.
Kevin: Pretty scandalous if they call it non-combustible that it doesn’t even meet the Australian standards?
Sahil: Well it combusts in around 10 seconds. The Australian standard requires it to have a piece of the material in a furnace at around 700 degrees for about 30 or 60 minutes, and it lasts about 10 seconds when it goes in there. So we’ve got a problem on our hands, yeah.
Kevin: Okay, well why was this cladding allowed in if it doesn’t even meet the Australian standards?
Sahil: Well, the Australian standard 1530 Part One has been around since 1994. However what happens in Australia is that we’ve changed the National Construction Code it’s called to be a more performance-based specification, so it’s a performance-based code now when it used to be a specific code where it used to tell you you have to use x, y, and z. Now it says, if it relates to this performance … If it can meet its performance, then you can utilise the product.
Sahil: So essentially what’s resulted from that is all products having an international code mark certification. Now, some of the code mark certifications don’t meet the Australian standards. Some of the products, what happens is some of the suppliers say that the products meet the standards, however they don’t when individually tested in the testing requirements or under the regime.
Kevin: If they give that sort of undertaking that it does actually meet the standards and then something goes wrong, like heaven forbid what happened in London, who’s responsible for that?
Sahil: Well in Australia to start we have a far better system for fire engineering than what was allowed at Grenfell. So Grenfell fire spread due to an existing building and the actual cladding being put on top of an existing structure. Where in Melbourne, that wouldn’t have even achieved a building permit. So in Melbourne we have … Australia we have far greater fire engineering standards.
Sahil: But to answer your question, all building defects and cladding … all these aluminium composite panels fall under the building defect category are responsible by the builder in Australia under Section 6 of the Domestic Building Contracts Act.
Kevin: Has there been an estimate done of the number of buildings that are likely to be impacted?
Sahil: There has. That is also very light on with the government trying to keep the Australian community less concerned, if I can say it that way. But to give an example of, say, Victoria I’ll use Victoria then we’ll go to Queensland. Victoria as an example, there was 1,400 buildings identified originally. However that was a marketing scheme in itself, because there was only certain classes of buildings, so residential buildings and nursing homes and hospitals that were looked at. We haven’t even started looking at commercial buildings, we haven’t even … That was only with building permit data that was available from the Victorian building authority. So now, as an example when we’re doing our audits, from one council itself I’ve got over 300 building orders on our desk. What I’m trying to say is that there is far greater than the 1,400 … It’s in the, I would say at least 10,000 or so just in Victoria. Because half the buildings haven’t been audited and they haven’t got the information available for half the buildings.
Sahil: So now what’s happening is that Victorian Cladding Taskforce and the Municipal Building Surveyors are employing individual surveyors to literally walk around the neighbourhoods and streets and identify suspect buildings.
Kevin: What about Body Corporates here? If they find or suspect maybe that some of this … And I’ll call it cladding because I can’t use those other words you used-
Sahil: Yeah, sure.
Kevin: Has been used on their building, what can they or what should they do?
Sahil: Sure. So they need to go through a testing regime to find out what’s on the building. Now, a lot of consultants that aren’t fire engineers will tell you to test the product. Now I’ve just told you every single product fails, of the two varieties that I’ve mentioned before. So testing, there’s a specific way to do testing and it’s not through the … Well, I won’t say the big body, but essentially there’s a specific way to do the testing. We can assist in that, but what they essentially have to do is find out the composite of the panel, the three that I mentioned before, and what that will do is allow a fire engineer to come up with a design or a fire engineering brief and a fire engineering report to allow the cladding to either stay or come up with remedial actions that need to be taken to remove some of the cladding. That includes things like fire breaks, extending sprinklers, removing it around exits, things like that.
Kevin: I guess there would be … a lot of Body Corporates, they might not realise that their responsibility is to ensure the safety of all those residents. How seriously in your experience do you think these Body Corporates are actually taking that responsibility?
Sahil: I would say the Body Corporate managers themselves are taking it quite seriously. However the committees themselves and the Body Corporates in terms of a building aren’t being as serious about it. There are a lot of ramifications that come from this, and cost being one of them, fire safety being the other, and there’s a handful that I can name off. But the residents themselves or the owners need to take it a lot more seriously because if you do not follow an emergency order or a building order there are serious ramifications of that. Yeah.
Kevin: Sahil, thank you very much. There’s a wealth of information on this topic on Roscon’s website. It is roscon.com.au, check it out for yourself. Sahil, thank you very much for your time.
Sahil: Thanks, Kevin.
Leaving the city – Bryce Holdaway
Kevin: A guest who has been on the show in the past, Bryce Holdway, you’d remember from Location Location Location, Australia. Great television show, and we’ve spoken to Bryce about that on a number of occasions, but he’s got a brand new venture. Good day Bryce, how are you doing?
Bryce: Hello Kevin, how are you?
Kevin: Yeah, great to be connected again and it’s already on ABC TV, it’s Escape from the City.
Kevin: Yeah. Of course, you’re … well, a lot of people don’t know, well, maybe they do, is that you’re also a buyer’s agent, so you’re dealing with this all the time as well, aren’t you?
Bryce: I am, sort of at the end of 2018, I kicked over my 20th year of being involved on the buy side of the equation as a buyer’s agent. Yeah, I do sort of get to enjoy the trials and tribulations of people buying real estate across the country. So it was nice to do a project with the ABC, as you mentioned, called Escape from the City, showing pretty much every corner of Australia, different real estate in different locations, showcasing different stories.
Kevin: Well, the show, which was hugely popular … I’ve already mentioned Location Location Location, Australia that you did with Veronica, Veronica Morgan. How is this one different?
Bryce: Well, I’ve been really fortunate, Kevin. I’ve been involved with two iconic British shows, Location Location, which we turned into the Australian version. Now there’s one called Escape to the Country, which a lot of your listeners might be familiar with. That’s been going for over 20 seasons. We’ve just adapted the Australian version of it. But unlike the UK, where people do escape to the country, not many of us do it here in Australia, so we’ve just slightly changed the title to Escape from the City. So someone might have gone from Sydney to Port Douglas, or they might have gone from Perth to Margaret River. So we’ve got these really awesome stories of people thinking, “Well, I want to leave the big smoke behind, and I want to go and find a quieter life somewhere across this wonderful land.”
Kevin: So there’s been about 60 episodes, or the series will be 60 episodes. Can you tell me a little bit about the types of people who you do help? Do they have any regrets when they make these moves? And do they do them successfully?
Bryce: Yeah, yeah. I mean, it’s all not sort of straightforward as you know, Kevin. The idea of moving from the city to the country is full of challenges given that … the reason that Australia is highly urbanised on the coastal fringes and the big cities is because that’s where the jobs are. So if you actually go to one of these regional locations or one of these quieter spots, getting a job is often a challenge.
Bryce: But in terms of who we dealt with, me personally, I dealt with a range. I had a retired couple that were moving from Geelong who wanted to chase a bit of warmer weather for their health and ended up to Toowoomba. So I saw some amazing real estate there, because I had a really healthy budget for that location. And then ..
Kevin: Did they go inner city in Toowoomba or they go out of the country?
Bryce: No, they stayed pretty close. They wanted to be near the bars and near the coffee shops. But you know, you could still get some pretty cool … When you see that episode, you know, some amazing properties high on some hills with some epic views.
Kevin: Yes, yep.
Bryce: Then I helped a couple on the other end of the spectrum. They were first time buyers. They lived in Bondi. They were priced out of that market, and they wanted to buy their own first home. So they ended up buying on the central coast and were happy to commute into Sydney each day to work. So I get to see a whole cross-section of people. But ultimately, someone’s just put their hand up and said, “I’m sick of the big smoke,” for either … most of them were for lifestyle reasons. Some were for affordability. “Take me out of here and help me buy something in one of these locations.”
Kevin: ‘Cause as a buyer’s agent with your company Empower Wealth, you would deal with, I would have guessed, correct me if I’m wrong, a lot of investors. But it’s nice to see home buyers wanting to move out of the city and relocate. Is that a fair assessment?
Bryce: Yeah, spot on. I always say as an investor, someone gives you a brief to say, “Hey, look. I need some clothes. Just keep me warm,” and you can can keep that brief pretty generic. But buying for an owner occupier is totally like my wife saying, “Buy me a red dress.”
Bryce: All right, what sort of shade of red? Do you want above the knees, below the knees? Do you want it fitted, not fitted? Like there’s so many permutations around that simple statement of, “Buy me a red dress” that’s the same when someone wants to buy it to live in. There’s not only the pragmatic practicalities, but there’s also the emotion that comes into it. So that’s also something a bit more challenging, a bit more fun.
Kevin: So following that red dress scenario, when they come to you with their wish list, is it long and is it unreasonable?
Bryce: Yeah, well sometimes, absolutely. But I would say that it comes down to, you’re going to compromise. You’ve been in real estate for a long time, Kevin. I don’t know how many times you’ve seen a 10 out of 10 property. I haven’t seen many.
Bryce: But I’ve seen lots of eights and lots of nines. But if I get an eight and a nine, it means I’ve got to compromise somewhere. So if you’re clear on where you’re going to compromise, it’s either price, location, size of the land, quality of the dwelling, one of those four areas, I coach them into saying, “All right, upfront, these are where you’re going to compromise. Where would you most likely compromise out of those four quadrants,” before we start the journey. So that then when they get to the point where they realise there is no 10 out of 10 that matches their criteria, we already know in advance where we might have a bit of flex.
Kevin: ‘Cause that’s very challenging for a lot of people, I would imagine, because they probably never even think that that may be a scenario they might have to consider.
Bryce: Yeah, you’re right. As you know, Kevin, there’s so much more to just sort of trawling through the online portals and deciding on a property, because there’s so much you need to do prior. There’s so much you need to do post. And there’s so many decisions that happen within the search itself, over and above just saying, “Well, I want a four bedroom house in this suburb.” There’s lots going on and lots of emotion.
Bryce: As you also know, the practicalities of usually … and I make this as a generalised statement. But usually, the guys are sort of very focused on the budget, and the gals are very focused on what they want from a practical and a, I guess in some cases, emotional consideration. That’s a broad generalisation, but my observation is, I always see the guys making decisions around, “Is this suitable based on can we afford it.” Whereas I often see the girls go, “Hey look, this is what I really want. These are the things that are important to me.” And it’s often finding the fine line between those two.
Kevin: Given that that is a broad generalisation, but it’s probably fairly accurate, could you then tell me whether or not the male wins over the female?
Bryce: No, we mere males always think that we win, but generally you don’t. No look, I think again in my observation on this show and trying not to generalise too much, the idea is that finding that fine line between what is practical and what is affordable … Because it’s a legitimate thing to not put yourself under mortgage stress. I generally find that good common sense prevails. But if we’ve thought about those things in advance … ’cause price is usually the most fixed. Unless someone wins the lotto or has a really healthy inheritance, that’s usually the most fixed. So it’s usually sort of location, size of the land, quality of the dwelling, they’re the conversations that I’m having. And generally once we sort of bring some of those discussions into the mix, they usually find their eight or their nine out of 10 quite comfortably.
Kevin: Wonderful stuff. Well, the show is on the ABC. It’s called Escape from the City. When is it actually on?
Bryce: It aired earlier this month on the 3rd of January, and then it’s going to be every Thursday on the ABC on a Thursday night at 7:30, pretty much for the foreseeable part of the year.
Kevin: Wonderful stuff. Bryce Holloway, thank you so much for your time. Bryce, of course, is from Empower Wealth, and that new show, Escape from the City, Thursday nights on the ABC. Thanks for your time, Bryce.
Bryce: Good on you, Kevin. Thanks for having me on.