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The podcast series "Confessions of a Property Investor," hosted by Catherine Andrews, delves into various aspects of property investment in Australia. It aims to demystify the property market, offering insights and practical advice for both novice and experienced investors. The series covers a range of topics, including bank interest rates, property cycles, investment strategies, and market trends. It addresses common fears, misconceptions, and challenges faced by property investors, providing expert opinions and real-world examples. The hosts also discuss the impact of economic factors and lifestyle choices on property investment decisions. The series is designed to educate and empower investors by providing them with the knowledge and tools needed to navigate the Australian property market successfully.
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to Confessions of a Property Investor. I'm Catherine Andrews, managing director of Chase Wealth Australia. And I'm Michelle White, director of qualifications. Welcome guys. Welcome. Thank you. All right. Today's going to be a little bit of a fun episode. Okay. Because it's my favorite, favorite, favorite topic,(...) property.(...) Yeah. Who knew? Okay.
The topic today's property type. Does it really matter?
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It's going to be a good one.
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Look, with the risk of sounding like an absolute arrogant
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property agent,
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it is the most frequently asked question that I get from potential investors. Will an apartment make me money, but it's not a house. Do I need to get a house, but it's only a townhouse. There are so many internal thoughts that people vocalize, vocalize, um, when it comes crunch time to actually purchase an investment property.
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Michelle and I are going to delve a little bit into that today, but I will start off with this. There is no one best option
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as such. Each one has its pros and has its cons. Okay. So there essentially is three types of dwellings you can invest in. There's apartments,(...) there's townhouses, which is a mixture of a house and an apartment, depending on how many bedrooms it has. And there's standalone house homes.(...) Okay. Which would be called like your house and land type of packs. Then you go commercial, but we're going to talk to you more basic residential, residential type of investing today. So Michelle and I deal with this, I don't know, probably say two to three times a day. Yes. Give or take. Yes. Uh, that's on a good day. That's on a really busy day. Um, it's two to three times a day where we will get potential investors asking us those types of questions. So Michelle, as I've said to our listeners and I say this, you are on the frontline. And what I mean by that is again, if you haven't tuned into previous podcasts, Michelle White is the first representative from Chase Wealth Australia that people meet in the flesh. Yep. Okay. Um, so she goes out there and she essentially, um, obtains the A and Ls and assets and liabilities of clients and determines whether you really do qualify to become a property investor or not. And she has a bit of a checklist on character as well to determine what the worthiness of a potential investor and whether they're actually worthy to bring through our doors.(...) Um, so it's a lengthy process, but she handles it like a pro makes it look easy. Um, so Michelle, do you want to give some examples to our listeners and our viewers on the types of questions you get and the types of answers you give and why? Yeah, absolutely.(...) So bringing it back to residential property types, the queries behind apartments, townhouses and houses,(...)
all stems from the preconceived thought from back in the day, decades ago that houses will make you money because it's land, but townhouses and apartments will not because you're sharing the land.
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False.(...) Thank you.(...) There is so much that goes on behind whether or not a property is going to be a successful investment. Yes. That that is one small component of it. Correct.
Knowing the lifestyle, knowing what brings people to that location, knowing the population movement, knowing the socioeconomics, knowing the demographics,(...) that is all going to play a huge role. You could have a property in wherever it may be, where there's no population movement, there's minimal infrastructure growth and it's just going to sit flat for however long, hardly making you a cent. And then let's see how quickly your 2000 square meter block of land will increase in value. Yeah. Not very quickly, but the maintenance on it's going to cost you. Very much so. Yeah. Very much so. But then you've got the flip side of that where you've got lifestyles that are so conducive towards apartments and townhouses because tenants don't want that maintenance. They don't. They want a small piece of home. They don't want security and security. Yep. So there's just, there's so much behind it. And it's, look, I understand that decades ago there were less townhouses and there were less apartments. Yeah. So there was a stigma towards it. I think people looked at it as the cheaper, nastier option and the way they were building apartments and began to build apartments was like 40 square meter apartments. Yeah. What we call dog boxes in the property industry. Terrible. Yeah. Most banks won't even borrow against them. No, no. You know? But then you've got the other side of that where you've got people that because they've got that preconceived notion would rather buy a house with a lower borrowing capacity in an area that's not necessarily going to grow than purchasing an apartment that we know very confidently has a hell of a lot of growth ahead of it because they've been conditioned in a way that prevents them from even being able to open up that mindset. Well, this is what makes me laugh during the consultation. So after you've had those discussions and we've looked at the numbers and it turns out that for their particular strategy, the best thing to give them is a four bedroom townhouse. Yep. Okay. And it works. And we've gone out there and we've found one that's within their price point, that's going to give them the right rental yield. You don't have very high body court fees. They've got onsite management. It ticks all the boxes that, you know, Sam determines when looking for a property. So I presented and you see these big smiles on their faces. And then they say this,
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I wouldn't have gone ahead if you presented me with an apartment
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cookie.(...) Really? And I take a step back and I actually move the townhouse information away. And I said, tell me why. I just wouldn't have,(...) but tell me why. Well,(...) well, well, do they go up in value? So you don't know you're asking me.(...) Wow. Interesting.(...) So Michelle has hit the nail on the head beautifully there. And you're absolutely right. So investing in a house, okay. The things you'd look at is capital growth. Houses have historically shown stronger long-term capital growth. Okay. Indesirable suburbs. Yes.(...) Land value. Land ownership with a house does contribute significantly to property value and appreciation. Flexibility. Houses offer more opportunities for renovations or extensions to increase value if you like. And rental demand. It has to be a family friendly suburb because you're going to have a family in a house. If you're in a suburb with high crime,
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I rest my case.(...) Okay.(...) Apartments. Affordability. Apartments are generally more affordable than houses. Maintenance.(...) Exactly what you said. Less maintenance is required with apartments. Ideal for hands-off investors.(...) Location. Brisbane, for example, apartments are closer to the CBD universities, amenities, and they attract a different type of tenant pool. So we come back to those demographics.(...) Exactly. Jonathan you'd be mindful of is strata fees and stuff. So, you know, a lot of people think, yes, do I do this? Do I do that?(...) You can do either.(...) Okay. The downside to investing it in an actual house is, like you said, maintenance. It's also the type of rent, rent, or you're going to get, and have you driven past some rental properties that are homes?
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Cars in the front yard, lawn, that's up to your bloody belly.
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You've got broken fences. I mean, I've seen some terrible ones in my experience. Apartments tend to have a uniformed onsite presence, which kind of
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deters. Yes. Yes. It was through, you know, tenants think twice before putting a hole in the wall. I can tell you that much. It's very, very different. So if you had your choice, Michelle,
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out of the three,(...) personally, I'm a big fan of townhouses. Me too. Yeah. I'm a big fan. I think that, look, don't get me wrong. Houses can be fantastic and so can apartments. I like the combination of both. Both. Yeah. I like the security of a townhouse. I like the size of them. And then I also liked the fact that they are as part of a group. They're part of, there's multiples. So there's often good management towards them as well. Yeah. Well, some notes I took is townhouses bring the best of both worlds. Oh, there you go. And there it is. And Michelle just, you know, they'd be the best of both worlds. They bring that, that the Strata fees. So they have that sense of onsite, you know,(...) unity. They've got a security aspect to them. You have to get in sort of one way and they've got three to four bedrooms, the majority of them. So they've got that, you know, small little backyards. So the maintenance is down and it's also got that sort of size of a house. However, it's got that safe feel about it. Yeah.(...) A house provides independence, which is great, but everything is up to you. Yes. Okay. So if your tenant doesn't want to mow the lawn,(...) who's going to do it?
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That's true. That's the downside there. So you need to be in an area with a house with strong economic drivers, low maintenance costs and track record of strong rental demand. That's what you need. Do not go to a high crime area. You need to stay away. I don't mind. Like what I mean by high crime is crime is everywhere. Yeah. I'm not going to generalize and start to put areas down. Crime is everywhere. But there are certain areas, essentially, especially in southeast Queensland, where you just won't go. The crime that they're trying to push it out, but it's hard, you know, in the lower socioeconomic areas. Where are these people going to go? Yeah. It's true. It's getting out of their homes. It's not right. So so both have a lot to offer, but both have disadvantages.
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With apartments,(...) you know, the main consideration would be they're typically more affordable. They're closer to amenities and it's great. They have a lot higher rental yields than homes as well. However, be aware that the more facilities on offer, pools, barbecue, saunas, gyms, all that sort of stuff. They attract higher strata fees. Yes. So just be mindful of that. And that's something we keep welling within your budget to make sure that you can afford it if an apartment opportunity comes up. But don't dismiss it just because of your conditioning. You could be throwing away an amazing opportunity. And I've people have done that. Oh, definitely. Yeah. Yeah. Can I can I add something to that as well? Yeah, you can add whatever you like. I've noted that. So there's something that a client has come to me and relayed out of your words. And that's what I wanted to bring up here.(...) They were a client who were dead against apartments and particularly because of those strata fees. Yeah. And how you explained it to them was by having these strata fees, you have these extra amenities, which allows us to actually charge a higher rental on that property. Yes. And therefore you have the ongoing growth with a higher year. Yield. And it just puts so much into perspective. And it's something that that has stuck in my mind, personally. That's what I tell people. You are going you've got three lifts in the complex. You've got a sauna. You've got a theater room. You've got a barbecue area. You've got a communal kitchen that you can hire out that oversees a zen garden. You've got a sky bar on top of your roof. And you're going to complain about an eighty one dollar a week strata fee or body corp fee. But you're able to charge an extra two hundred dollars in rental. No, no, no, I don't know. So I'm with you. I love townhouses, but I'm going to be honest. I love all three. Yeah. And I've got all three. OK. And I don't discriminate if the numbers stack up. Just purchase the damn property. OK, instead of trying to find something wrong with it, if Chase Wealth Australia tell you this is what it's going to make you. This is what we're projecting. This is what it's going to cost you. OK, roundabout and indignatively because rates have sort of stayed very stagnant and.(...) It's quite and I will touch on this and you'll appreciate this. When people state and I have received it's cost me more than what we budgeted. When I look into their file or say, OK, but you receive twelve thousand dollars back in tax,(...) what did you do with that extra eight thousand dollars that you got that you wouldn't have had if you hadn't purchased the investment property? So they were four thousand out of pocket. They got twelve back. What it was was that they usually got back about two and a half thousand dollars every rental, every tax return. Due to the investment property, they got an extra eight thousand dollars. And I said to them with that eight thousand dollars, why didn't you put it in another account and put it toward your investment property? And then guess what?(...) Brainy. You wouldn't have been out of pocket. Oh, I forgot I had to do that. You know where they went overseas and they go on holidays or they buy a new TV. And it's like you're not out of pocket. You're just spending where you shouldn't be. You've chosen to spend your tax. I updated my outdoor setting. I updated my kitchen. I bought a new dishwasher. Well, how is that my fault? Look, there's some great things that clients are able to do because they've got those tax returns back. However, property first, be thankful for the ability to be able to do that because of having that property sacrifice a little bit through the year. And that's what we tried to temporarily high and reap the rewards afterwards. Michelle, we tell them that I know. And it's funny, you know, you've got eight out of 10 clients that really listen. And they're the ones that have made some good money. Yes. Buy a choice. But you've got that what my accountant says the 20 percent. Yeah. The 20 percent of clientele that can absolutely drive you crazy because they're spending their tax money like they're. Like it's free money. Oh, yeah. Yeah. I'm not going to drop any names, but it's like just put it aside, put it towards your property. Yes. And wait.(...) Now, the property is appreciating in value and you say to them, OK, you've got the eight thousand dollars extra there and your property's made you one hundred eighty nine thousand dollars in the last two and a half years. Oh,(...) there it is. We've ran five bank vows and there it is.(...) Wow. OK. Yeah.(...) You know, so and then again, six months later, if they have to pay something a little bit like rates that come through quarterly or whatever it may be, it's that moment where they totally forget the mindset that we're trying to get them to live by and they go back down that dark corridor again. And it's only a minute amount of clients, but it keeps happening. It does. It's like they they do see the light and the understanding of the situation when they're talking with us. And then as soon as they go back to their day to day lives, it's very easy to forget because life's in the way. Or they keep realigning. That's the funniest thing. Yeah. Yeah. I agree. So, Michelle, can you tell our viewers and our listeners?(...) I guess.(...) It's not that(...) it's not that we want to command and be like I said before, with the risk of sounding arrogant. It's I guess what we do every day, five days a week. I live and breathe seven days a week, but five days a week. The team at Chase Wealth Australia are continuously
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surrounded by property numbers, suburb reports,
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client feedback,(...) you know, finance strategies, property strategies, marrying them together, dealing with lawyers about settlements. I mean, we live and breathe it daily. Can you tell our listeners un-biasedly? And I know that I'm again putting you on the spot, but you do have a way of shining a light onto people that they have something they may not know.
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Why?(...) The mindset of property, not the sort of property it is, but the why they're investing in property. So I've got an example to use for an answer.(...) OK. A question that I often get asked is, is Katherine going to show me three or four different options of properties to be able to select from?(...) Now, the reason that that's a no is what shines the light. OK. OK. Everybody's situation is different. We are not a cookie cutter type company. No. We will find the right asset for our clients. Now, if you were to show three or four different assets to a client,
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financially, one of them is going to be more superior than another. So why would you be showing them inferior options?
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Well, someone that doesn't have the client's best interest would probably take that path to make it look like no pressure. This isn't a hard sale. You've just given the client something that they probably a decision they probably shouldn't be making. They don't have the knowledge that you're supposed to have on the other side of the desk. Correct. And so understanding their circumstance, finding the right asset for them is what we can confidently look our clients in the eyes and tell them you will succeed with this property.
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They are not going to ever have the knowledge that we have because of the experience that we have as a team and as a conglomerate, I suppose, for lack of a better word, to be able to structure them and find the right asset.(...) And in that, that's what you're coming to us for. That's where that trust component needs to come from. Well, they're not. Look, we use the word trust.
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OK, and I'm not trying to downplay it, but they don't trust initially. It's hard to trust someone when you first meet that initial fee. I don't like the words trust me and I don't like the two words. Don't worry. Yeah, I agree with that. I don't like that because they are going to worry. So that's what the stuff bit deeper into the why, Michelle,(...) why we're giving you a property that we've picked.
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Come on. OK, well, I suppose it again, it comes down to their circumstances, which is looking at affordability,(...) borrowing capacity, no, no, one word.
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Numbers. Yes.
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See how simple. Yeah. OK. And that's what I was sort of alluding to alluding to with with you. And you got it. You absolutely hit the nail on the head with everything you said. But look at these people straight in the eye and say, if we're giving you that property, it's not essentially about trusting us, even though you will, after we prove the benefits of having this type of dwelling or asset in your investment portfolio. It's the numbers that don't lie. I mean, you can argue with me until you're blue in the face. You can argue with Michelle. You can argue with Pamela. You can argue with Maxine. You can argue with every wonderful staff member that I've got within this organization. But you cannot argue with mathematics. And I tend to chuckle again. The risk of sounding arrogant when it's like you present them with the numbers. They go, oh.
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And you feel like saying these two words, but you need to stay humble. Told you,(...) but you don't. So that's all it's about, Michelle. Yep.(...) It's not about the dwelling. Yep.
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If the numbers stack up, the numbers stack up. And numbers stacking up is shown to you during that consultation. We take you through everything. And those that have sat in front of me know exactly what I'm talking about.
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So anything you'd like to conclude on, Michelle? I couldn't have said it better myself. Well, I wanted you to sort of get it in there, but I know that I got it other than the word numbers. You did. Yeah. And you're right. They do need to trust the process. Yes, I think more than that. Yeah. And I think you're absolutely spot on. They need to trust the process because you're doing it and you're doing it with a company that really has never let anyone lose money. And you go back on history on all of our clients. Every single client has made money. Yes, which is great. It is. You know, it is. They don't all understand that, but that's OK.
It's true.
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All right. Well, we'll leave you with that. Yeah, I guess. Yeah. Anything you want to end it on at all? No, Kath. Perfect. No. Yeah. Good. All right. Thank you all for tuning in again.(...) And like I
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