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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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Welcome back to today's episode of Confessions of a Property Investor.(...) Today, we'll be looking at a topic pertaining to emotion towards your investment property. I've got with me Michelle White,
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Director of Qualifications,(...) and Senior Executive of Chase Wealth Australia. She's been with us since the beginning.
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So today's topic essentially tackles the, do we really remove emotion when it comes to deciding on what property is best suited for our investment portfolio?
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Now, Michelle, again, as we say in many of our podcasts, and I must reiterate it each time, you are the first point of contact when it comes to facing our potential investors. And you obviously do get a very general,(...) you get very general feedback from a lot of these potential investors of where they want to invest, areas that they've heard are good, that the media is flogging on the TV, they've got a friend who's a developer who bought in this area and has flipped a home here and flipped a home there. So you get a lot of that sort of, what I call entry level chat. Do you wanna take our listeners and our viewers through how you educate our potential investors away from that emotional decision and to make it more of a logical decision? - Definitely, so there's a few things to be able to touch on on that. And firstly, I guess is breaking down where people's mindsets go towards how they choose a property in their own right before they've even spoken with us.
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Number one is the property type.(...) A lot of people will aim towards, I want a house before actually having taken into account anything associated with that house compared to a townhouse or an apartment or a commercial asset. The other one might be the price point. For example,(...) a certain location might have great growth at a $1.5 million mark, but no growth at that $600,000 mark depending on the location, the livability, the demographics.
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And another one is, as you said before, location and different states and where we can, we're able to analyze why those areas have those growth components and what the driving factor is, but the person on the other side and our clients may not be able to. So again, they're going off the media. - So when they come to you with those sort of statements and they do have validity,
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do you educate them around or I guess try to derive why they've come to that conclusion and try to give them some clarity on that? - Definitely, it's often hearsay. So they might've heard,(...) as you said, a friend has done something or the media. - The media is a big one. - Yes, or having grown up just truly thinking that a certain location or a certain type of property is going to be more beneficial in the long run.(...) Being able to provide them with again, those facts and figures to remove the emotion. So for example, if we're looking at growth rates, we want to be able to provide the knowledge and the insight to the clients to be able to trust the facts and figures and remove the conditioning that they may have as to why they were making that decision in the first place. - Yes, and I guess it's something that even when they come through to me for their strategy, there is a lot of emotion that they, by the time they've seen you and they come to me, they've jumped online and they've had a look at where they feel they want to invest. And they've told family and friends, we're going to go see this mob, Chase Wealth Australia, and we're going to buy an investment property. Oh, well don't buy here. And you know, the know it all's come in. But I find that the reality, because this is a confessional,(...) you can't fully remove the emotion when it comes to an investment property.(...) And I'll give you some, I guess, some validity around that.
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Okay, you say to a client, "We look at the numbers and it's an apartment complex, two bedroom apartment in Bowen Hills in Brisbane. And this is just me being general." And that complex offers great rental yields. It's very sought after because of its location. It's capital sitting at about 5%. So you know, it's going to have that continuous growth. It's in an area of Brisbane that is essentially higher rent. You're looking at great restaurants,(...) you know,(...) professional tenants.
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You've got a very close proximity to public transport and bars and clubs and that nightlife's there. So you're going to attract a certain type of tenant.
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So we do all of that and I will present it to a client. And again, exactly with a dwelling type, they'll come back and say, "I don't want an apartment."(...) What I do then is I break them down and ask them why. And they can never actually give me a legitimate reason as to why. So then I educate them as to the reasons why and maybe the why not of house and land or house at that point.
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After that, I talked to them about not having to remove their emotion completely. You don't want an ugly apartment complex. You don't want something that you can't resell. For example, if it's an apartment complex and it doesn't have a barbecue area, pool area, security, some sort of zen garden, a sauna, and close proximity within public transport, you don't want it. So it can't be an ugly dwelling.
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It can't be a dwelling that part of them may not want to live in, but would think, "Hey, that actually, it presents quite well. I would potentially buy it if I had to." So there always is going to be emotion attached to the dwelling or to the property.(...) But the logic and numerical factors must outweigh that emotion.(...) And I think the emotion sits more at the type of dwelling, which you and I break down for them. Where it needs to sit is kind of what the dwelling looks like. - Yes. - If it's hideous, don't buy it. But don't worry so much about the colors or the blinds. Blinds are a big one. Vertical blinds, I think they're absolutely hideous. But with investors, they work. - It doesn't matter. - It doesn't matter.
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Another thing they look at is backyard. - Yes. - They say, "Oh, the backyard's not that big. Tenants don't like to maintain a yard." - And you also, as a landlord, don't want the extra cost and maintenance of having to continue outlying funds to keep that maintenance up. - Correct, because your tenants really,(...) they're not going to do it. - A lot don't care. - A lot don't care.
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So yes,(...) realistically,(...) we do add some emotion to the allocation of the type of property that suits our investors. 10% out of 100. 90% is all the checkpoints that we go through to determine whether it is a great area to invest in, whether an apartment is best suited, Bowen Hills, apartments are best suited.(...) Areas that are more regional, like you've got your Capelabas, you've got your Thornlands out west of Brisbane, out towards sort of Redlands Bay and that, I would probably allocate a townhouse.
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But the areas where you go north of Brisbane, I like to look at area, house and land packages there, because you've got that demographic that prefer to live in a house, the renters. So it varies each and every time. - It does, and it takes into account the lifestyle of that location as well, and the demographic and the socioeconomics of that location too, and the ongoing expenses and costs associated with that property. And so each and every situation is looked at so independently, and that's, I guess, the message that we work really hard to be able to get across, that it is a case by case situation.
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- It is, it is. And look, to everyone out there, do not get that emotionally hung up on your investment. Look at it as a business. Keep that always in the forefront of your mindset. It is a business at the end of the day. And that business will guarantee make you a return.(...) What we're actually investing in, like people super, they've got no idea what they're investing in, at least with a property, you know what you're investing in. Don't worry aesthetically about it too much. Leave that to us, okay? The numbers that we give you(...) are going to be the ones that you will see. And you may not see them straight away. You will see them throughout your journey. Again, it is long-term, but don't get so hung up on the emotions of what the dwelling is and what it looks like. That's gonna be the end of you. Your stress levels are gonna rise. Your blood pressure's gonna rise. You're gonna get so stressed out about it, really, and you're forgetting the most important thing, the numbers.(...) - Absolutely, and the why are you doing this? - Yes, that's another thing. Remember what you told Michelle in the beginning? Why am I doing this? Why am I, because retirement for generational wealth, all the reasons you give us in the beginning, don't forget them. Or because it's an apartment and not a house.
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- Yeah. - Yeah. So I guess with that entire, unless Michelle, you've got anything to add, which you always do, is there anything at all you wanted to sort of add on to this? - Taffy really said it very, very well.
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I don't think there's any more that we can add. Location is something that we delve into significantly. The type of asset or dwelling is very important. The emotion should be behind the driving factor as to why you're investing. - Yes, yes. - That's where the emotion should be. - Yes, put it there. Channel it there. - Yeah. - Yeah, stop giving us a hard time about the asset we'd pick for you. Otherwise, we just won't see you.
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(laughing) - It's been done before. - It's been done before. Thank you so much, everyone, for joining this episode of Confessions of a Property Investor. We really, really love doing these. And you know what? Tell all your friends and family as well, because these are gonna get deeper. They're gonna get better as we go along.(...) And we just love them doing them.(...) - Right, you with you. - Yeah, see you next time. Take care. - Take care. - Bye.