Why half of all investors sell up in under 5 years + Abolish stamp duty

Why half of all investors sell up in under 5 years + Abolish stamp duty

 

Fifty percent of those who buy an investment property sell up in the first 5 years. Put another way – most Australians who get into property investment never achieve the financial freedom they aspire to, and worse still many property investors lose a heap of money and lost opportunities along the way. Michael Yardney shares some thoughts on how not to fall into that category.

Nhan Nguyen has some advice for those wanting to get into small developments. How to find the sites and carry out the feasibility and more importantly, how to minimise your risk.

Design guru and star of Selling Houses Australia, Shaynna Blaze returns to share some thoughts on her business and we get to see another side of Shaynna.

The Mortgage Choice Annual Investor Survey has found that investors are being affected by lending restrictions introduced by the banks. What sort of restrictions have the banks had to make and how does this affect borrowers?  John Flavell, Mortgage Choice Chief Executive joins us to outline what is happening.

The Real Estate Institute of New South Wales has called for an end to stamp duty, but how realistic is that? Institute president John Cunningham has called the tax unjust, inefficient and market distorting and he joins us to look at the alternatives.

 

Transcripts:

John Cunningham – Stamp Duty should be abolished

Kevin:  Stamp duty is one of those conversations that comes up all the time when we talk about affordability, and the different regimes for stamp duty around Australia are really quite amazing when you do look into it.

Recently, the president of the Real Estate Institute in New South Wales, John Cunningham – who is my next guest – made the statement that he believes Stamp duty should be abolished around Australia. It’s probably not going to happen, but I’m interested to get your view on that.

John, good morning, and thanks for your time.

John:  Good morning, Kevin.

Kevin:  You’re probably a bit surprised to see just how different the stamp duty levels are around Australia state by state.

John:  It’s absolutely extraordinary, and I think one of the issues we have in Australia is that there are no level playing field on much of the legislation or taxation, particularly where it’s levied from the states. Therefore, it’s pretty confusing.

Kevin:  It’s interesting, too, to note that stamp duty is being called a wealth tax, but it’s one of those taxes that is levied against anyone, even first-home buyers. If you’re looking for ways to make it affordable, that would be a good place to start, I would have thought.

John:  Absolutely. There are two measures of stamp duty that are quite critical. Obviously, the higher you go in price – which is into the wealth area – the more tax you pay. This is an interesting concept that a lot of people don’t realize. In New South Wales alone, the median house price now means that you’re paying something like 4% average of the purchase price. So if you’re going to save 20% as a first-home buyer, you’d have to stump up another close to 4% to actually secure the property. It’s a massive inhibitor, particularly for that first-home buyer.

In New South Wales and in many states, there is only relief for new dwellings, and as you and I both know, 95% of first-home buyers actually buy established housing, so there are not a lot of advantages there.

Kevin:  Speaking about first-home buyers, it would be a great way to give them some leverage into the market if they abolish it for first-home buyers, but it raises the other question, too, of what we’re now seeing as “rentvestors” – these are people who will rent but go in and buy an investment property as their first property purchase.

I think it was Mortgage Choice said that about 36.6% of first-home buyers are actually investors, so it really makes it difficult to say, “Well, let’s abolish it just for first-home buyers” for that reason, John.

John:  That’s a really tricky one. That’s how both of my daughters bought their first properties. They were living at home, they bought as an investment property to move into when they could afford to do that, and I encourage that. But then you’ve got to ask the question, “Are they first-home buyers? Are they investors?” I think we’re taking probably too narrow a view on how that’s applied and, as I say, in many states if you’re buying established housing there is no relief anyway.

I think that the whole tax debate at the moment is being looked at in so many little piecemeal sectors instead of taking a complete view, as the Henry Review did, to look at taxation as a whole. In that Henry Review, he quite clearly stated that you cannot break these tax reforms down into little segments; you have to take an overall picture.

And at the moment, many states are talking about adding stamp duty for foreign investors, and as some states – like Victoria –that have already applied that, then you say, “Well, there’s another little piecemeal.” You look at the negative gearing issue, and it’s another that only applies to new dwellings – another piecemeal approach instead of getting to the nitty gritty of the whole situation.

Unfortunately, I think most people in the property industry are of the view that the GST was introduced to abolish these state taxes but no one has had the guts to actually implement the right GST reforms to make that happen. It doesn’t appear that it’s politically favorable to go that way, but at the end of the day, it’s probably one of the most equitable taxes there is.

Kevin:  A property tax is only one part of that whole scheme, which is what you’re pointing out there – that taxation covers lots and lots of issues. It’s almost like a bit of a Band-Aid; you put a Band-Aid on here, another one there, but you’re creating more layers of problems that some say have got to be unfolded.

It would take a very courageous government, I would have thought, to actually put the entire tax system on the table and pull it to bits.

John:  Yes, it’s interesting. If you go back to the GST when John Hewson tried to introduce it and it was absolutely smashed by the opposition. When it finally came in, it was only a short period of time – remember that in 2000, there was a little hiccup for about six months, “Oh, my god; the GST is here” – and then it was business as usual.

I think there is so much hype around this sort of reform that politicians play the game, and we’re living in an environment where when you think about the federal term of parliament being three years, they can’t get anything done. It’s just politics for the first year, politics for the last year, and maybe a bit of progress for the middle. I think we’re ultimately never going to get anywhere on these sort of things unless, you’re right, someone actually has the guts to do it.

Kevin:  Yes, good luck with that one.

What is the bottom line, John? What do you think are the alternatives? If the government said to you, “John, what should we do?” What would you say?

John:  In our tax policy, we’ve put forward a proposal, and as you said Kevin at the beginning, the reality of saying good-bye to stamp duty is just not here in this environment. We’ve suggested that we need stimulation in our marketplace to get certain supply chains moving

An economy is driven by activity, so in certain states, and particularly New South Wales and Victoria to a certain extent and certain parts of Brisbane, you’ve seen the clogs in the supply chain where people aren’t moving. The cost of moving is prohibitive. They’re reluctant to move from an area they like because they just can’t find a home they want.

That often happens right at the top end of the food chain where the retiree – the Baby Boomer now – is staying put in their home because they don’t want to pay all of that money out in stamp duty. And then the first-home buyer has to actually find that extra 3% to 4% to buy a property.

We believe that one of the solutions is to actually free up the first and the end. If you give some concession… And we’ve suggested one of the possibilities is to give a 50% reduction across the board to first-home buyers up to a certain level – and that might vary from state to state – and also apply the same rule to the over 65s, that they are given actually one opportunity, one purchase, where their stamp duty is reduced by 50%.

Because they don’t appear to be wanting to change the threshold, which is the worst bracket-creep example you’ve ever seen – no change in 30 years in New South Wales. I’m not sure what it’s like in Queensland, but we’ve gone from 2% average to 4% average. We need to actually do something, because government is so reliant upon stamp duty revenue that they are reluctant to do anything, but once you get activity, you then can make up the difference.

Kevin:  John Cunningham, president of the Real Estate Institute of New South Wales. Thank you for joining us today on the show, John.

John:  Thanks, Kevin.

 

Michael Yardney – Why property investors fail Part 1

Kevin:  I sometimes wonder, what are the common investor concerns? What are the concerns that most investors have about the market and investing in property? So I asked Michael Yardney whether he could think back and talk to his team about what they see as those common investor concerns. What’s coming up time and time again?

Good day, Michael.

Michael:  Hello Kevin.

Kevin:  How did you go with the team? Did you put it together?

Michael:  Yes, I did. Interestingly there were common concerns that when people came to us and said, “Look, I want to get involved in property,” common concerns they had, reasons why they hadn’t achieved the financial freedom that they wanted or gotten to where they had hoped to get to, considering that in our markets recently, property values have risen considerably, Kevin.

Kevin:  I imagine there would be a bit of duplication in some of those, too, where they cross over lines. But you’ve actually been able to identify 11 core concerns; is that right?

Michael:  Eleven common complaints people come and say, “Gee, I wish I knew that before.”

Kevin: Okay, let’s deal with them. We’ll deal with all 11 today in the show and we’ll break it into two parts, Michael. So let’s deal with the first five or six.

What was the first one?

Michael:  Kevin, the first one was that they feel they’ve missed the recent property boom while they’ve seen others have managed to grow their property portfolio. In general, it was because of poor property selection. They owned the wrong properties. They didn’t get the sufficient capital growth.

Some bought off the plan and overpaid for their property; others bought in regional Australia where property values didn’t increase much – not as much as in the Big Smoke. I know there are some experts who recommended investing in regional Australia, but I’ve avoided those locations because we had more jobs growth, more employment, and more wages growth in the capital cities where there was a shortage of land, and that caused population growth and capital growth in property values.

Kevin:  Great. What was the second one, Michael?

Michael:  Many had concerns because they had difficulty holding onto their properties because they hadn’t organized their finance correctly, didn’t have a cash flow buffer in place, many of them because they were hoping to get a level of negative gearing but they couldn’t cover the shortfall.

A lesson from this is get your finances set up correctly. Cash flow is important, even if you’re investing for capital growth because cash flow keeps the wolves away from the door and keeps the banks happy.

Kevin:  And line of credit, Michael?

Michael:  Either a line of credit or an offset account. You really need to have some sort of financial rainy-day buffer, not just for a shortfall in your mortgages but also for all of those little things that go wrong and the unexpected expenses you have, Kevin.

Kevin:  Yes. These are not necessarily in any order, Michael, are they? These are just the concerns as you see them.

Michael:  No, they’re not. But interestingly, I think that the first two I mentioned – the poor property selection and the poor cash flow management – are really still among the most common issues that investors who haven’t done well have.

Kevin:  And the third one for us?

Michael:  A lot of them were concerned that maybe they bought the property in the wrong structure, they bought it in their own name, or maybe they should have bought it in a family trust or their self-managed super fund.

It’s important to begin with the end in mind. Therefore, if you are planning that in 10 or 15 years’ time when you retire you’re going to have a substantial portfolio, work back from then and understand what you would like it to look like then more than what it is that you need today because it’s too hard to change ownership structures down the track.

And that really involves sitting down with a property strategist and an accountant who can give you correct advice, Kevin.

Kevin:  Yes, get the right people on your team.

What was the fourth one, Michael?

Michael:  I found that people were concerned that they’d left their investment run too late. They were now approaching retirement age and suddenly they realized that they hadn’t built enough of a nest egg. The worrying reality is that for most Australian Baby Boomers, they believe they are going to run out of money and need the pension or need to be dependent upon the government, and we’re not sure that the pension is going to be there in the future.

Clearly, superannuation isn’t going to be enough for most Australians because most Baby Boomers nearing retirement didn’t have compulsory superannuation when they were young. So the concern really is “Gee, have I got enough time to still build a good enough cash machine?”

Kevin:  Of course, many people sat on the sidelines, didn’t they? Does that lead us into the fifth one?

Michael:  Life got in the way for a lot of people. They had their family, they had their kids, and they just didn’t think of investing.

The other one considers “Have I missed the boat?” They weren’t sure whether it was too late now considering that we’re at a more mature stage of the property cycle. I found that many investors didn’t invest because of information overload. Some were stuck with what we call analysis paralysis. They just didn’t know where to start or which way to go.

I guess my advice for those investors would be not to try too hard to time the property markets. Also remember that Australia is not just one property market; each state is at its own stage in its own property cycle. Sure, it’s a bit hard to work out where we are in the cycle with all the messages there, and again, that’s probably a good reason to get some good advisors on your side who have some “on the ground” knowledge in those property markets, Kevin.

Kevin:  Michael, I think before we take a break, we have time for just one more, if we could.

Michael:  A very common complaint we’re seeing is investors who have bought off the plan. This has caused concerns now because when they are coming to settle, sometimes they don’t have enough finance – the banks aren’t lending as much; they were hoping not to put any more down thinking that the value of their property would increase but it hasn’t. Others are finding that the properties aren’t valuing up for what their contract price was. Others were lured by various incentives.

In general, they would have been much better off buying an established property than a new or off the plan one, Kevin.

Kevin:  Michael, that is six you’ve given us now. We have another five to go. We’ll come back later in the show and have a look at those with Michael Yardney.

Thanks, Michael. We’ll catch you later in the show.

Michael:  Great. Look forward to it, Kevin.

 

John Flavell – Lender restrictions hold the market back

Kevin:  Over the last 16 months, most of Australia’s lenders have been forced to tweak their policy and pricing in order to stem their level of investment lending growth. Let’s get a bit of an insight on this. Mortgage Choice chief executive John Flavell joins me.

John, thank you for your time.

John:  Thank you very much for having me.

Kevin:  There is a changing landscape, isn’t there? But even in recent times we have heard that some of the lending criteria may actually just be being loosened again, John. Is that correct?

John:  I think our markets find their own level after a while, don’t they? We saw quite a lot of change starting with the September/October period last year in relation to policy and pricing, specifically regarding investment lending on the back of the Prudential Regulator’s desire and direction to our lending institutions to cap the growth on investment lending to no more than 10% annually.

Kevin:  The Mortgage Choice Annual Investor Survey found that investors are being affected by lending restrictions introduced by the banks. Tell us about those restrictions. How strong are they?

John:  Sure. As I said, the intention from the regulator was to cap the growth in investment lending to 10%, and in order to limit that, you saw a number of changes from a policy front and also from the pricing front. Both of those things actually have an impact of subduing demand and also restricting supply.

From a pricing perspective, you see differences in pricing for investment lending compared to owner-occupied – it may be 0.8% or 0.9% – and then from a policy perspective, a lot of lenders turned around and capped the loan-to-valuation ratios on investment lending and may have made adjustments in terms of concessions for proportion of rental income that can be contributed to debt servicing. Then they may have precluded lenders from certain geographies or lending in certain geographies, and all of those things have changed the shape of the market a little bit.

Kevin:  Of course, all of this is on the back of people wanting to make housing more affordable. Do you think it’s really having that impact?

John:  It’s an interesting thing because I suppose at the end of the day, when I went to school, the worth of an asset was always determined by supply and demand, and in the instance of housing, then housing affordability is also determined by the cost of credit and the access to credit. You don’t really change the overall demand, but what you end up doing is changing the shape of the market.

What we’ve found is that those investors who have been pushed out of the market are the ones who are actually the would-be first-home buyers who are looking to use an investment property as a leg up into the market.

Middle age, middle class Australia who have equity in their home who are typically paying higher rates of tax, then these sorts of changes haven’t taken them out of the investment market, but the younger people who are saying, “Look, I can’t quite afford to buy my first owner-occupied place, but I’ll get in an investment property and leg myself into the market,” they’re the ones who are being pushed out of the market, so it’s a real challenge.

If you’re saying that the object of the exercise in some parts is to actually increase housing affordability or access to housing, then the people who you want to encourage and give a leg up to the most are the ones who are being pushed out.

Kevin:  As we head towards a Federal election, typically at this time we tend to see the market slow down. But that certainly is not what we are seeing. Let’s have a look at Brisbane, as an example, where we’re seeing a lot of investors now flocking back into the market. How much of that has to do with trying to get in just in case Labor win the next election and play around with negative gearing?

John:  It’s a great question. You’re always going to have an impact on the market when you talk about legislative changes. There will be those people who, as you’ve said, are saying, “Goodness. In advance of the change, I’ll make my move now,” and they might accelerate activity. There will be people who are possibly contemplating selling investment properties who are saying, “Geez, if I sell this investment property, my ability to get these sorts of concessions under a Labor government might not be there in the future, so I won’t sell.”

It distorts markets. Even talk of legislative changes – to your point – distorts markets. There probably is a good portion of acceleration in the market at the moment in anticipation or in the off-chance that there might be some changes, and that’s not unique to this market.

If you look at the buy-to-let market in the United Kingdom in particular, where there is a raft of legislative changes coming in to restrict the tax concessions to investors, what that has done over there is effectively stalled the market. People are not selling property at all. It’s actually driven prices up, and it’s also driven rents up, as well.

So you have to be very careful about what you even utter, let alone what you do, because it does have an impact and it does distort markets.

Kevin:  We’re certainly seeing that right now. I guess the politicians will never learn those kinds of lessons. They tend to play around the edges.

Let’s talk about interest rates. Where do you see them going? There is talk that there may even be another drop in the next 12 months. Do you subscribe to that?

John:  If you take the widest and best-considered view of the market, then you look at the forward rates, and if you have a look at the forward rates, then the market is actually pricing in another cut in the cash rate over the next 6 to 12 months. It’s in the forward rates there.

If you ask yourself the question, “Where does this go in the next 12, 24, and 36 months?” then things that are happening globally have an impact on that. In the US just last week, Yellen made comments to the effect that the Fed was contemplating actually upping rates again and that they were probably going to consider doing so moderately. The last time she said that, of course, that led to a real sell-off in the equities markets.

The markets globally are very, very, very, very, sensitive. But if you looked at this next 12 months or 24 months, the market is pricing in another cut to the cash rate over 12 months. And if you look further out, the market is actually expecting the cash rate, within Australia certainly, to stay at these lower levels. There is not a pricing in there with an expectation of a rate increase in the next 12 or 24 months.

Kevin:  It’s always great talking to you, John. Thank you very much for your time.

John Flavell, Mortgage Choice chief executive. Thanks for your time, John.

John:  Thank you for having me. Bye-bye.

 

Nhan Nguyen – So you want to become a small developer

Kevin:  In the latest edition of Profitable Small Development, the newsletter produced by Australian Property Investor magazine, it focuses very much on small development. These are investors moving into small development. Nhan Nguyen from Advance Property Strategies is quoted quite a lot in that particular article, and he joins me as our special guest.

Nhan, thanks for your time.

Nhan:  My pleasure, Kevin. Thanks for having me.

Kevin:  What would you determine as a small development? What size?

Nhan:  Small developments generally start as one into two, and then you can go into threes and fives and eights and tens. I think any more than ten, you start going to the next tier up, which would be small-to-medium. Then when you’re hitting 100, you’re probably big boys then and probably need a fair bit of capital.

Kevin:  What’s driving property investors into small development?

Nhan:  Look, I think they see that the market is buoyant in certain areas, especially Southeast Queensland. You have Logan; you have Ipswich where markets have the opportunity where you can do granny flats at the back or secondary dwellings. People are jumping on the bandwagon

Banks are happy to fund certain small projects, generally one into two or one into three at the same loan-to-value ratios as a small investment property, so people are finding it easier to get into up to around about the three dwelling mark. When you get bigger than three, generally, the banks change their rules and you go into commercial and it gets a bit more difficult and more capital is required in pre-sales and things like that.

Kevin:  I guess we’re talking here about investors who have maybe traditionally gone out and bought a property and either held it as it is or do a small reno on it, maybe flip it over, but they’re building their wealth and their portfolio as they go along.

You and I have talked about splitter blocks in the past. Is this a step for someone who wants to move into development?

Nhan:  Yes, I think splitter blocks are a really great entry-level way to get into small developments because it is quite straightforward in many aspects. There can be some complex aspects if the house needs to be removed and you can’t, or the block is what we call a widow block, which is two triangles as opposed to two rectangles.

But generically speaking, 80%, 90% of the time, splitter blocks are very, very easy to do. You don’t need to lift a paintbrush, and most of the things that I like about splitter blocks are I can’t do them myself, so it means I definitely have to leverage my time and get other people who are qualified, like people with demolition tickets, people who are plumbers with those certificates, and engineers.

It’s a highly leveraged form of development, which is very, very quick. You just basically knock down the house, install the services, and you can get in and out in 8 to 12 weeks if you’re organized.

Kevin:  Widow blocks: you mentioned those that go triangular, so the lot divisions turns it into two triangles as you described. That requires a re-alignment of the boundary, doesn’t it? Is that a difficult project to undertake?

Nhan:  Look. If you’re looking at the standard 20-by-40, where the line of demarcation might be from one corner to the other diagonal corner to create those triangles, the re-configuration of lots is generally a standard procedure and can be done quite quickly in less than two to eight weeks — maybe even 12 weeks depending on other constraints of the site. It can be done quite quickly and quite cheaply. When I say cheaply, I’m talking about $3000 to $5000 if you’re getting surveyors or engineers in to be able to re-configure the lot and draw the new plans.

Kevin:  I was going to ask you how investors can get the jump on other developers because of the high competition for these sorts of blocks, but I know that in your company, Advance Property Strategies – and I’ve spoken to a number of people who have been through your course – you advocate doing it on your own, going and doing your homework, and even doing some door-knocking, Nhan.

Nhan:  Yes, absolutely. I laugh because I know that a lot of our clients who come through the door are complaining about how we can’t find deals, and that might be right to a certain degree because you’re competing with everybody else when they look on the typical RealEstate.com.au. I think that RealEstate.com.au is a good place to start; however, you need to go direct to owners, whether it’s sending out letters, sending out fliers, door-knocking, and getting a lot more connected with the owners.

I’m not necessarily talking about bypassing agents full stop. I know you’re a real estate agent, and in terms of property, I work with real estate agents, so I might buy it directly and I might sell it to a real estate agent. It’s just that real estate agents only source some of the deals that are out there. There are a lot of sellers out there who don’t want to work with an agent or they’re just not ready to sell right now, and you just have to be the person knocking on their door to have a chat with them.

Kevin:  Yeah, it always looks easy from the outside, but I guess many of these people who have become very successful at these small-type developments – splitter blocks and the like – they have really done their homework, they have gotten on the ground, they have walked the area, and they have become a bit of an area expert, Nhan, haven’t they?

Nhan:  Yes, that’s right. I think it is very important to become an area expert. Too oftentimes, many people look at different areas where they spread themselves from north side, south side, east side, west side, and they don’t become a laser focus, and when you become laser-focused, just like with anything, opportunities come because you focus your energy.

If you’re too scattered and you’re looking at every bell and whistle and shiny object out there, going from splitter blocks and townhouses and this and that, and you have no skill, then it’s very likely that you won’t succeed.

It does take three, six, 12 months to get your head around it. It took me six months to buy my first property. But after that, everything fell into place and I was buying a lot faster.

Kevin:  Just on that point of not losing heart and understanding that you need to become an area expert, is there a rule of thumb? How many properties should you be looking at to actually get one viable gem?

Nhan:  The ratio – and I’ve mentioned this many times in my seminars – is that in a normal market… I don’t believe we’re in a normal market right now; we’re in probably more of a buoyant market. But in a normal market, you need to look at roughly 50 to 100 to find three to five. In a more buoyant market, you might have to look at 200, maybe even 300 properties to get that same three to five.

But if you do door-knocking or you do letterbox drops or fliers and connect directly with the owners, those ratios get a lot better and you can look at a lot less than the 300.

Kevin:  There’s a good reality snap there for us to make sure you get your homework done. It’s not always as easy as it looks, but do your homework and it could really pay some big dividends. My guest has been Nhan Nguyen from Advance Property Strategies.

Nhan, thank you so much for your time.

Nhan:  My pleasure, Kevin. Thanks for having me.

 

Michael Yardney – Why property investors fail Part 2

Kevin:  And coming back with the final five common investor concerns that Michael Yardney and his team have found in talking to investors for many, many years. We’re going to touch on the last five.

Let’s have a look at the first few, Michael. You shared with us that number one was poor property selection, number two was poor cash flow management, also wrong ownership structure, running out of time. That’s a terrible feeling – the feeling that they have missed the boat. Then the final one that you gave us earlier in the show was off-the-plan woes.

I guess that leads us to the next one, doesn’t it, about hype in the market, Michael?

Michael:  Yes, Kevin. Many unfortunate investors bought the wrong property because they looked for the next hot spot. While some enjoyed some short-term capital growth, since then, property values in all of these so-called hot spots as well as rentals have actually dropped considerably, and unfortunately, we’re seeing a lot of investors with negative equity. In other words, their loans are more than the value of their properties, especially those who bought in mining towns.

Many of Australia’s worst performing property markets over the last couple of years have really mirrored these mining towns that have gone up and down, and investors have been burned by those hot spotters who recommended them.

Kevin:  Yes, that’s certainly one to watch out for. What was number eight, Michael?

Michael:  Some investors didn’t maximize their tax position because they hadn’t obtained a depreciation report. Depreciation deductions can make a real difference for investors by helping them reduce their taxable income. Again, it’s not a reason to invest, but it’s nice cream on top of your other rewards, Kevin.

Kevin:  Yes, it is indeed. And if you are confused, of course, you can always talk to our good friends at BMT Tax Depreciation.

Michael:  Well, Kevin, can I say that just recently, I’ve organized another depreciation schedule on one of my properties and I did it online through BMT, and gee, do they make it easy. I’d definitely recommend that, too.

Kevin:  Yes, indeed, and you can get on to them through the link on Real Estate Talk, of course.

Moving on to the next one, number nine, Michael?

Michael:  Another regular concern I’ve had is people who have tried to save money by using a cheap property manager, or, Kevin, worse still, managing their own properties and running into trouble.

Good business owners – and that’s what you have to be as a property investor – recognize they can’t do it all themselves. They hire a good team of professionals around them, and that includes a professional property manager. Anyone can collect rents; it’s when things go wrong that you need a good professional property manager on your side.

Kevin:  I’ve always found it’s great to have that arm’s length relationship. Just to have someone in the middle there, Michael, so that you’re not dealing with the tenants yourself.

Michael:  Definitely. The legislation is too complicated. It’s too hard to do it on your own. It’s a false saving, Kevin.

Kevin:  Yes, and of course, many investors go across borders, as well, and the rules do change state to state, as well, so you just have to be very, very careful.

Gee, we’re up to number ten.

Michael:  Another concern is that the Internet is currently littered with stories of investors who have succumbed to a lot of the properties spruikers’ tactics. They went to a seminar and they got pressured by high sales tactics. You rush to the back of the room and make a decision and sign the contract now, and if you do, you’re going to get a discount on buying this property.

They’re buying off stock lists. At people’s seminars, they have this list of properties to sell. Sure, they can be claims of strong capital growth and no money down, but similarly, people got a bit taken by project marketers who are working for the developer and lost out because the advice they received was far from independent, Kevin.

Kevin:  And the final one, Michael?

Michael:  I guess we’ve mentioned it a couple of times, but it’s the concern that they didn’t build a good team around themselves early enough. These investors realized that they didn’t get the maximum out of their properties, so I’d be recommending that you get a good network early in your investment career. That includes a good finance broker, a smart solicitor, a property-savvy accountant, and a knowledgeable property strategist.

Kevin:  Yes. Just to recap, in this little segment, Michael has shared with us the 11 common investor concerns in the show this week that he and his team have gleaned and put together from all of the people they’ve spoken to for many, many years.

Just to recap on this little portion, they believe the hype, the confusion about depreciation, property management problems, getting caught out by spruikers, and the final point you just made, Michael, about putting a great team together.

At this point, too, it’s always good to mention that if you really do want to get a great team together, you could probably do a lot worse than start with talking to Metropole Property Strategists.

Michael:  Thanks, Kevin. I guess in summary, I often say, “Property investment is simple, but it’s not easy,” and that’s really not a play on words. If you follow the formula, it works, and if you try and be smart and miss steps along the way, you could up end up failing.

Kevin:  You could, indeed. Michael, great sharing some knowledge with you. Thank you very much for that. Your extended exposure today in the show was very, very welcome. Thanks for your time.

Michael:  My pleasure, Kevin.

 

Shaynna Blaze – Shaynna’s next mission

Kevin:  Makeover magician on Foxtel, much-loved judge on The Block, designer of a fabulous lighting range, and if you watched the Yass episode of Selling Houses Australia, you would have known that Shaynna Blaze – my next guest – is a talented singer, as well.

Hi, Shaynna.

Shaynna:  Hi, Kevin. How you going?

Kevin:  Wonderful. I want to pause because I just want to play this little bit of music to you.

So there you go. Does that sound very familiar?

Shaynna:  Just a little bit. You put me on the spot.

Kevin:  Yes. That was the song that you sang there in that Yass episode. I have to confess that this version that I’m playing here is not your version of It Don’t Mean A Thing If It Ain’t Got That Swing. That was a great song. What does it mean to you – that song?

Shaynna:  I actually used to play it in one of my bands. We had a 12-piece band. We had a horn section, double bass. It was one of those songs that we used to play, and we used to have a lot of jive dancers who used to follow us and swing dance. They used to come and just dance. It’s a great memory of the time when I used to do a lot of swing singing and jazz, and it’s just about pumping it up and having a great time.

Kevin:  Well, there you go. There’s something I didn’t know about you, Shaynna Blaze, that you’re a talented singer, as well, so it’s more than just a hobby. Tell me a little bit more about the band. Is it still going?

Shaynna:  Oh, God, no. No. There’s no way I can do what I do and do singing at the same time. No. It was a time in my life. I sang really from when I was about 17 or 18 and used to be in a few very basic cover bands and things like that.

I used to sing at night when I was at design school. I used it to get myself through college, and then when I became a mum, having my business was absolutely overwhelming and having two little kids, so I actually stopped designing for a while and ended up just singing at night a couple of nights a week because the kids would be in bed. So it was just one of these really great things that when they were little, I was there when they were awake, but when they were asleep, I was off at bands and having a great time.

Kevin:  Well, you’re obviously very good at it. I was surprised when I saw it. I thought, “Wow. I didn’t even know.” How come you’ve been able to keep that under wraps?

Shaynna:  It’s one of those things… Well, thank you, anyway. I heard a few bum notes. But anyway, that was nice of you.

Kevin:  Oh, well, I didn’t.

Shaynna:  Look. It’s one of those things… There’s so much about design and creativity that all masks together, and when you’re on a roll of one part of your life, you can’t do all the different areas. It was really important for me to focus on the design, but also the writing, and that’s why I have a couple of books out is that those are limits for the ones that work together.

The actual singing wasn’t part of what that was. It really only came out when I was presenting the ASTRAs a couple of years ago. They found out that I sang and they said, “Do you want to do an opening number?” So the first time anyone had really heard me sing was when Matt Shirvington and I did the opening number for the ASTRA awards a couple of years ago. Can I tell you, we blew them away and it was so good.

Kevin:  I must admit, I missed that, so I wasn’t aware until I saw the Selling Houses Australia. Maybe I’m just so focused on real estate, that’s a problem.

Shaynna:  Well, it was very in-house, too. That’s the Foxtel awards night, so it was very in-house, yes.

Kevin:  Is singing a way for you to relax?

Shaynna:  It is. It’s actually a bit of an escape. Painting is one of my escapes, as well. But music is something that’s just definitely ingrained in my soul. My mum used to do a little part-time musical theater, and my kids have grown up with music. My daughter was learning violin. My daughter now is very into alternative music, and my kids just love music, so it’s something that wasn’t ingrained as a child; it was more just about have fun and a release.

Kevin:  There are a few things I want to talk to you about, but I’m delighted that we’re able to cover off on your musical talents. Thank you for that.

The other thing I wanted to talk to you about was that you were featured recently on the front cover of My Business, and how good was that? That magazine cover, that was great.

Shaynna:  Honestly, it was one of those moments where you look at it and you think, “Wow. Is that really me?”

The funny thing is I had done the interview, I knew that was happening, and I had forgotten that they said they might make it the front cover. I was sitting in the Qantas lounge. It was 6:00 a.m., no makeup, just sitting there going, “Oh my god. Here I go again.”

Then I went to go get a magazine and literally looking at me was me. But a different version of me because I didn’t quite have the makeup and hairstyle that I was looking at. So, just to see that, I was very taken aback going, “Oh, wow.”

It’s one of those moments that you think, “Oh, okay. That’s pretty good,” and I did give myself a little pat on the back, which I don’t tend to do, and I tell other people to do, so I just took that in. It was a pretty nice moment.

Kevin:  We know of you on Selling Houses Australia. We now know that you’re an accomplished singer, as well. I very rarely think of you – and I should – as being a small business owner, but that’s effectively what you are, isn’t it?

Shaynna:  Yes. Well, I’ve been a small business owner really since I was about 21. I used to run my own design business before I had kids, and when I was doing music, I actually ran the band. I used to do all the bookings and the books and create the events and things like that. So I’ve always had my finger in creating stuff, always making sure behind the scenes that I have control of what all the financial elements are, and that’s really hard as a creative person really tapping into that business side.

I think one of the interesting things is that my business has always been going quite smoothly, and it’s really the past 18 months, it’s actually really escalated. That’s because I’m letting it escalate and taking on more jobs. I could have been ridiculously flat out with my business the whole time with inquiries, but I just wanted to stay small and just keep it myself and one other person.

But now, with all that knowledge and everything, it’s time to create the business and make it bigger. There are actually seven of us in the office at the moment, so it’s a whole different world for me at the moment.

Kevin:  It is, indeed. The business is called Blank Canvas Interiors. How did it get started?

Shaynna:  Probably out of just wanting to be my own boss. I worked for a couple of big corporations when I was first studying design. My husband at the time – who’s now my ex-husband – had his own business. He was a builder and a carpenter, so it made sense for us to work together. I would design and he would create and build. I set up my own business back then, so we kept our businesses separately. That was a good thing by the sound of it, doesn’t it?

Kevin:  Yes, I reckon. You must have known something.

Shaynna:  I must have known. And really, it just went from there. When I came back into the world of design, I couldn’t get a job, and that had a lot to do with technology that had taken over in the short time that I was away. I think it was only about four years. Everything was incredibly high tech – because I was from a commercial background –and it was a lot harder to get into.

For me to try to be fulfilled and do what I wanted to do, I actually had to do it myself. I did work for a couple of other people in some small areas and I was incredibly frustrated. It was one of those things that I knew I could do it on my own; I just had to push myself and take the leap.

Kevin:  Have you got a mentor, someone who helps you in your business?

Shaynna:  No, and one thing that I said in this business interview is get a mentor. It was one of the things that I never did.

I did have mentors in the fact of people who I looked up to. It was my first boss, and he is an amazing man who I still have lunch with once a year. He’s incredibly humble. He owns a corporation that is immensely successful, and he sometimes still serves behind the counter and no one would know who he is.

He keeps it very grounded, and to me, that’s the type of mentorship that keeps me grounded. Never try and be bigger than what you are, and you’re always on the same level with everybody else. That’s my biggest advice I feel that’s been given to me.

A mentor for running a small business would have been really helpful, but it’s one of those things where I never felt like I was big enough to ask for help. In hindsight, you can’t get bigger unless you get help.

Don’t be afraid to reach out for help. That’s something that I always kept inside me and didn’t do. I would not recommend that because you can actually turn yourself in circles and not grow as you should and you make too many mistakes.

Kevin:  Great advice. Just before I let you go, you’re currently filming Deadline Design, your new show. When is that due to be on the screen?

Shaynna:  We don’t have a date as yet. We’re looking at towards the last half of the year with Lifestyle and Lifestyle Home. It’s absolutely something I’ve been wanting to do for years, pitching all different ideas to the station, and it’s based around my private business and working with private clients.

Most of the design shows that are Australian are working on houses that are for sale and getting things ready on a budget, and this is all about people’s real money, what they spend, how to do things to suit their own lifestyle and how people live, so it really is a peek into design and also a peek into how people live and how decisions are made of how interiors work.

Kevin:  Well, when it does hit the screens, I’d love to have you back on the show so that we can talk a little bit more about it.

Shaynna:  I’d love to. That would be fantastic, Kevin.

Kevin:  My guest has been Shaynna Blaze. Thank you, Shaynna, for your time, and keep up that singing, okay?

Shaynna:  Thanks.

Tags:
Kevin Turner
kevin@realestatetalk.com.au
3 Comments
  • Trace
    Posted at 15:03h, 24 June Reply

    Some very interesting (and surprising) stats in this – especially the inability for people to hold onto their investment property for 5+ years. Very surprising actually.

    Looking forward to Deadline Design as well.

    Thanks again.

  • Pingback:Top 5 complaints of a property investor | CPS Property
    Posted at 12:46h, 23 January Reply

    […] investing is seen by many as a way to secure one’s financial future, but with statistics showing that 50% of property investors sell up within the first 5 years, where are we going […]

  • Pingback:Top 5 complaints of a property investor | CPS Finance
    Posted at 13:28h, 15 March Reply

    […] investing is seen by many as a way to secure one’s financial future, but with statistics showing that 50% of property investors sell up within the first 5 years, where are we going […]

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