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🎧 Real deals, real strategies, real results. Learn how to find, fund, and operate profitable property plays from someone who’s actually done it.
Hosted by Andrew Wright, principal of Professionals Southport and a commercial investor who rebuilt after losing a ~$15M portfolio during the GFC, this podcast gives you a straight-talking look at what it really takes to build wealth through property.
Each episode delivers practical frameworks, real deal breakdowns, and honest conversations with high-performing investors and operators across residential and commercial.
But it’s bigger than the episodes. The goal is to build a community of like-minded investors who share stories, swap insights, help each other grow and maybe even do deals together.
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What, what are your feelings about the Australian property market at the moment, Duncan?
Well, if you go with the statistics-
Mm ...
um-
It is possible but unlikely that property prices could drop another 10% in the next 12 months. I'm not predicting that, but it's certainly on a downhill trajectory, so-
Time heals all wounds-
Yeah
when it comes to property.
I like to talk about the mistakes that I've made so that hopefully you don't have to if you're going down a similar track. So-
Everyone, um, blames everyone else.
Mm.
And that's one thing I found very frustrating.
When does refinancing make sense for most either first homeowners- Yep
or investors in your opinion?
I like to use the word restructure-
Mm ...
uh, instead of refinancing.
What do you think sets successful investors apart from those who maybe aren't
so successful, Duncan?
Hi, I'm Andrew Wright, principal of Professional Southport, and this is the Andrew Wright Property Podcast. I've built a multi-million dollar property portfolio, delivering a seven-figure annual rental income, and led my real estate team through thousands of sale and lease transactions. In each episode, I share real deals and strategies that will help you find, fund, and operate profitable property deals.
The aim of this show is to provide education and build a community of like-minded investors who can collaborate, share insights, and help each other in each other's journeys. You can make excuses or you can make money, but you can't do both. So come and join us
Hello there and welcome back to the Andrew Wright Property Podcast. Today we're joined by someone who has spent more than four decades helping Australians build wealth through smarter financial decisions. Duncan Perkins is an associate director of client relationships at an accounting firm, Blinks 360 Accounting.
Is that correct?
Yep.
And principal of a mortgage lending business named Home Loan Essentials.
That's it.
Duncan holds qualifications in accounting, financial planning, and also holds a real estate license When advising his clients, he calls his approach getting people fitter financially via finance, insurance, taxation, trusts, estate and retirement.
And that's the framework behind a book he is writing now called Getting Fitter Financially. As part of a joint property development strategy with a few mates, Duncan is out there right now knocking down houses and splitting blocks, a case example that we'll run through shortly. Duncan, welcome to the podcast.
It's good to be on.
Now, you, um, I understand your family has had a very long history working in the banks, particularly with Westpac. Yes. Can you, can you tell us about the family history and how you got into banking?
Yeah, it's been there for a long time. Um, my grandfather started with the little red W's at Bank of New South Wales.
It's in our blood. Um, my dad was in the bank. Um, I've been in the bank , got transferred all around the place. I met my partner, mother of our two kids, in the bank. She still- And she still works there ... still in the bank . Uh, and I escaped the bank, uh, in 2000. Um, I had a moment and I went into finance broking, so.
Very good.
And then that led me into accounting, and that led me into financial planning, and then back to accounting, and now I'm back to broking again, so full circle. So.
Fantastic. And geographically, where, where did you grow up, Duncan?
Well, 'cause my dad was in the bank-
Yeah ...
uh, all over the place. So born in Brisbane, um, then we ended up in Proserpine, then Toowoomba, then Mackay, then Townsville.
Um, yeah, so, um- Wow,
so he got transferred from different-
Every, every few years. Every few years he would get a- Why is
that?
Well, that was a, that's the way it worked. That was the way you got promoted. Mm. So
Does that still happen these days?
No. No. No? Yeah. Um, there's very few banks around, um, in small towns.
So when I was at Westpac at Mackay, we had- Mm-hmm ... 120 staff in the building. There would probably be six or four staff there today. Um,
we had on average probably over a million dollars in our treasury At any one time in cash. Yep. Um, we had payrolls of several hundred thousand dollars every day, uh, for council employees or contractors, et cetera. So it's totally different. Right. Everything's electronic now, and therefore-
Mm ...
bank managers, um, are not required to be trans- They were the, they were the kings of the t- They were the community mayors, basically.
That
industry has changed so much- It- ... even in the last five years, hasn't it?
Yeah. So, uh, I call it a service industry.
Mm.
Um-
Really?
No, it was a service industry. Yeah, it was. It, it was a service industry. It was based around service, servicing the clients- Yeah ... looking after the customers. Um, and now it's very much a sales, sale, sale, sale.
Yeah. Yeah, I, look, interesting, when in 80, '84 when I joined the bank, in the mid-'80s to late-'80s, I started into lending.
Mm.
And our book was mainly in lending, was about 80% commercial or small business lending, and about 20% of it was home loans.
Yeah. Right.
And it's the other way around now. Other way around.
It's, it's about 20% is commercial and small business lending, and the rest of it's resi lending. Uh, and that's because of deregulation. It's, yeah, but it's, it's totally changed now. Totally changed. Yeah. Yeah. So very rarely do you see or hear, um, bank officers being transferred from city to city or in, in Westpac anyhow.
Yeah. Right. It's, it's rare. So they just employ locally. Mm.
Okay, viewers. Well, we're going to have a, a chat about, um, uh, lending situation now across Australia after the budget. We're gonna talk about structuring because Duncan has an accounting background. Mm-hmm. But before we get into that, um, I wanna talk about, uh, what he's learnt about a property development which didn't go to plan.
And as you know, with my podcast, I like to talk about the mistakes that I've made so that hopefully you don't have to if you're going down a similar track. So Duncan, tell us about this, this interesting story about you and your mates going out and what, the opportunity you saw and what didn't go to plan.
Well, uh, a, a good rule is don't flex with your mates with alcohol, uh, and then think that you can save the world. So we did that. We all thought we could make lots of money in property development-
Mm ...
uh, on the booze, and we thought, "Well, we've made lots of money for property developers over the years, and real estate agents and whatnot.
Um, so why can't we do it?" And so we rushed in and we bought a property, uh, i- for 950, call it a million. Um, and then the agent rang us and said, "Why don't you buy the one next door?" So we thought, "Why not?" So we bought the one next door. Very, very lucky in that those two properties today are probably in the $1.5, $1.6 million each.
What s- what suburb is this, uh, Duncan?
North Brisbane.
North Brisbane.
Yeah. Okay. Up, up Redcliffe way. And, um, we've knocked one house down and split the block, um, and dealing with town planners, and civil engineers, and civil works gentlemen, and utilities providers, and there's so many council- Mm ... there's so many lawyers, there's so many people involved-
Mm
uh, in it, and everyone blames everyone else. It is simply like herding cats. It, uh . But the knowledge and the experience and the wealth of knowledge that we've gotten- Mm ... from it is really a savior that I can say. Uh, look, we will come out of it maybe five years, 100- thousand each- Mm ... after tax maybe.
Mm-hmm.
But the mistakes that you've made, uh, how much did you actually have to spend in, in doing that subdivision?
We've... Well, every dollar we've put into it-
Mm ...
um, we will get every dollar back.
Mm.
And probably make a little bit of a cherry on top.
Mm.
Um, but I, I think the indirect value, I wanna convince myself- Yeah
that the indirect value that we make from it will be paramount. You know, that'll be fantastic. Yeah, yeah. So I, you know, I've dealt with a lot of developers. Mm. I've dealt with a lot of builders over this time, and I have a lot more confidence when I speak to them.
Mm.
Um, because we can talk the talk now, so.
Yeah. You were telling me about, um, some of the, uh, inefficiencies when you need to rely on the, the council workers and utilities. C- Are, do you happy to share what you told me in the coffee shop about the digger? Well,
yeah. So it, it, it, it fires me up as much as it fires you up. Mm. So, um, everyone, um, blames everyone else.
Mm.
And that's one thing I found very frustrating. Mm. Um, we even had, uh, a utilities business turn up, four or five, um, council work- oh, not council, stop/go people turned up. Um, 60, $70,000 for this particular job to get done this particular day.
Mm.
And- For one
day?
For one day, yeah, yeah, to dig a hole basically-
Yeah
and connect up some pipes. There's a lit- lot more to it than that, I suppose. Yeah, yeah. But, um, there was diggers and dirt going everywhere and, um, and they rang me up and they said, "We've ordered the wrong part to connect up these pipes. We have to close it all down and start again, and, oh, we're a bit busy so it'll be about another 40 or 50 days."
Now-
Yeah ...
just, but that's just, uh, one example of many along the way. Yeah. I think we're getting ch- So we get charged n- today, we're still getting charged today an inspection fee by a civil engineer-
Mm ...
to inspect the property, which is a vacant block of land.
Yeah.
Side by side.
Mm.
$700, $800 for an- Mm
inspection for them- Mm ... to apparently go out there and say-
Mm ...
e- everything's fine with the block. Now, it's $350 for the inspection, but because there's two blocks- Mm ... they charge me an inspection. I'm like, "What the hell?"
Mm-hmm.
So, um, yeah, everyone's out to take their piece of meat off you, that's for sure.
Yeah, yeah.
Um-
Yeah, especially, um, for the viewers, when you're doing a one into two, um, I've talked about it before, you have to work out whether it's worth, um, you know, worth the profit margin or the house. If that was- Do your due diligence ... yeah, do your due diligence. I mean, if, if that was one into 20- Yeah
I mean, you can, you can spend an extra 100 grand in costs-
Yeah ...
if you've got 20 blocks of land to sell, because you can get that- Yeah ... money back. But when you're only doing one into two-
Yeah ...
fortunately, in the last five years, the- Oh, we've just been very lucky ... value's gone up and the market's, uh, sort of covered you.
Yeah. So as I've said before, property can be very forgiving if you can afford to hang onto it.
Yeah, yeah. Mm. And, uh, we, we're all, we all go, we all go all right in our own area. Yeah. So, um, when there was a bit of extra money needed or whatever, we could, we could always do that, so, um-
I'm glad the market's been on your side.
Yeah. It's- It's turned out all right ...
it's, it's worked out all right, yeah.
Okay. So let's, um, we've just had, uh, the, the May budget. Um, what, what are your feelings about the, uh, uh, just an opinion r- rather- Mm-hmm ... than fact on the Australian property market at the moment, Duncan?
Well, if you go with the statistics-
Mm
um, last four months since the budget, it's been basically a percent-
Mm-hmm ...
every month.
Yeah.
So if you extrapolate that out over 12 months-
Mm ...
we could be looking at a 12% drop in property markets across- Mm ... the capital cities- Yeah ... um, and maybe even more in some of the regional areas.
Yeah.
But if you are speculating on property and playing the short game, um, you could be nervous.
However, I think if you play the long game in property, you'll be okay.
I 100% agree.
Yeah. I, I was listening to, um, one of the guys from, um, CoreLogic the other day- Yeah ... Tim, I think his name- Tim Lawless, yep ... yeah. And he was saying, which I thought was great, he said that if property has a cycle of 18 months going down-
Mm
it, it's back up there after about 18 months- Mm ... to where it was 18 months ago. So if you are buying in the down cycle, pick up on the up-
Yeah, if you-
You'll be okay. Yeah. Yeah,
if you're a long-term. Yeah. I can, I can definitely confirm as a, as a active agent, I mean, I showed 10 properties in open homes last weekend, and I can tell you the number of people turning up, buyers turning up to open homes has halved.
Mm.
Any properties over 1 million, I'm getting one or two people turn up. Mm. I used to have four.
Mm.
Properties under a million are a bit stronger. I'm probably getting three or four buyers through instead of seven or eight. So-
Mm ...
the people coming through open homes has halved, and, uh, from the media reports that I see, a lot of the reason for that is people can borrow 20% less money with those three interest rate rises and the abolishment of negative gearing.
So-
Yeah ...
I do think that we probably do have a tough 18 months ahead, maybe two years, where at best property prices may go sideways.
Yeah, but that'd be tough for some, won't it? It'll be tough for some- Yeah ... but it'll be a great opportunity for others.
100%.
And I think that you've been selling property for well over a decade- Yep
tw- two decades. Two
decades, yeah.
And, um, how many properties have you reflected back on, back in your early days- Mm ... I don't know, Sovereign Island or- Mm ... Chevron Island or something, and you go, "I sold that place for-
Mm ...
I don't know, d- like $800,000- Yeah ... and what is it worth today? Oh, yeah, yeah, yeah.
Absolutely. Like $3 million- Yeah, that's right ... and stuff like that. I, I was, um, in, in my, where I live, and, um- Just after the GFC, we saw prices get hammered, uh, in housing a little bit after the GFC. And I remember our price valued in at about 1.2 before the GFC, and after the GFC, about it two years after it, um, it valued in at about 880.
And, uh, I thought really long and hard and sad for a lot of those people that bought when it was about 1.2 in that area. Yeah. They were down $400,000, b- which was a lot of money back then, yeah. But those same properties today, they'd be all over $3 million today. So time heals all wounds-
Yeah ...
when it comes to property.
Yeah. Y- y- you have a mortgage, uh, lending business- Yep ... and y- your, your son Jack works in that. Have you seen, since the budget in the last few months, uh, any change in the number of lenders looking for pre-approvals? F- let's go first homeowners and investors, treat them separately. Mm. Have you seen a big drop?
The, the inquiry is still fairly strong across the board. I think the investors, um... It's a bit tricky. I, I was talking to an agent the other day, "How's the market going up there?" He was ringing from Kedron, and he said, "Oh, a lot of, uh, a lot of investors are buying."
Mm.
And it got me th- I said, "Why would an investor be buying," especially after the budget?
Because there's no negative gearing, there's no c- uh, capital gains tax is- Mm ... is a lot worse than what it is, minimum 30%. And it got me thinking, I think that those investors are investors just for the loan application, in that they're probably selling their principal place of residence, but buying first as an investor, in inverted commas, and then would be then selling their home to then live in that new property.
Yeah,
right. Which is a... So statistically, they're investors.
Mm.
Um, and I think the other thing that a lot of Um, homeowners are doing is they probably bought in 2000 and, um, let's say 2017- Mm ... 2018 for a million.
Mm.
Or sorry, um, 500. Those properties are worth 1.2. Yeah. And so I think that what those parents are doing is grabbing equity from those, and they're helping their kids get into the market.
So that's your first home buyer market. Yep. Um, so it's, it's heating up, I think, all the time. It, uh, people are just so infatuated with property, and they're very worried about getting into it as well, so yeah.
Yeah, right. So let's, like, i- is there any real changes, uh, since the budget or in the last 12 months, uh, w- in the lending environment?
I mean, I, I, I hear on social media that, yes, the banks have already assumed that negative gearing is not allowed, which for investors, uh- Mm ... definitely reduces their borrowing capacity. Are all lenders that way?
No. Um, I, I think- But maybe all your lenders are the same. Mm-hmm. Um, i- it's l- a lot of lenders are looking at applications differently now- Mm
and that's probably been driven by those that are inv- um, advising those investors. Mm. So you would yourself, I would suggest, take a lot of advice from your accountant and, and, and other- Mm ... professionals that you deal with, lawyers especially- Mm-hmm. Yeah ... um, of how to structure the deal. Yeah. And then the lender or the broker is then advised of h- by the client a lot of the time, or the investor- Mm
of how they wanna do the deal, and then the lender then goes to the, or the broker then goes to the bank or the lender-
Yeah ...
and says, "This is how the client wants to do it." Yeah. So, and the lender just goes, "Okay. Well, that- Yeah ... that works with us."
So- T- let's talk about those pre-approvals. Um, how long do they, let's say Westpac, for example- Mm
um, do they have a... I don't do a lot of residential loans- Mm ... myself because I'm a, I mainly invest in commercial. Mm. How long do these pre-approvals usually last, and can, is it common for banks when you have interest rate rises just to come back and say, "Oh, we're not gonna honor that pre-approval 'cause rates have gone up- Oh
25 basis points?"
Yeah, yeah, yeah. It's, it's, it's very disheartening, and it's very stressful from a broker's perspective as well because you do all of- Mm ... this work, you do all of this pre-work with the client-
Mm ...
and then three months, four months down the track, it's, it all falls apart. So- Yeah ... especially when you get interest rate rises or- Yeah
you get changes in policy, um, some, some lenders add 3% on for, um, the margin- Yeah ... and others, uh, uh, do the margin at one. But I think that if there's a broker out there that has 20 or 30 different lenders at their disposal, and then you've also got private lending and you've got second tier lending-
Yeah
if you can't get a person a deal over the line, they probably shouldn't have that loan-
Yeah ...
uh, to be honest. Yeah, I agree. Um, yeah.
I- I'd imagine, um, I'm not sure if you ever track your own numbers, uh, in the, in the home loans business, but a fair bit of business from a, a mortgage broking, uh, business model usually is, uh, refinancing, not just new investments.
Yeah,
yeah. Um, when does refinancing make sense for most, either first homeowners or- Yeah ... investors, in your opinion?
I like to use the word restructure-
Mm ...
um, instead of refinancing. Um, because if you can restructure with the lender that you're currently with, you'll save possibly a lot of upfront costs to move to the next lender, such as maybe new mortgage insurance and other-
Yeah
fees. Um, and then there's release fees, and then there's re-registration fees, and, um, possibly lender's charges and valuation fees. So sometimes a lot of the time you're better off with the lender you're with, so restructuring with the current lender is, is a great thing. Yeah. And we try and review every 12 months or so.
Um, from a broker's perspective, um- Ideally, you would try and refinance that client to another lender, especially to get them a, a much, much better deal.
Mm.
Um, and the thing is that lenders, um, they've got their margins worked out on the profit on that client, and the other lender over here to the right, they wanna win that business.
So even if you go to that bank and you say, "Guys, we're gonna move it to another," they go, "Too bad, we have to lose it." So you're still doing the best thing by yourself as the broker, but you're also- Mm ... doing the best thing by the client. I think as long as you're always trying to do the right thing by the client, it's, um- Yeah
yeah, but restructuring is, is very important.
Yeah. Um- I think, um, just I'd like to share with the viewers a couple of experience I've had personally in the last couple of years. One was, um- couple of years ago in my business I didn't have much profit, and I knew if I did a full doc loan I wouldn't qualify with another bank to refinance an office premises I had.
Mm.
And I actually faked a story, uh, with that bank and said, "Look, your interest rate's way too high. I'm gonna refinance with another bank if you don't drop it." They were ripping me off.
Mm.
And they, with that one phone call, because of the- Yeah ... threat that I was gonna refinance it, they dropped my interest rate 1.1% immediately.
Mm. It was a variable rate.
Yeah.
Over 1% reduction from one phone call because I bluffed them. I'm not good at poker, but I did bluff them because- Yeah ... I knew my financials weren't very good for that particular year. I wasn't gonna get a full doc loan- Mm.
Mm ...
but I told them that I was gonna refinance it, and they dropped the rate 1%.
Mm.
Another example of a story where it, it did help me to actually go through and refinance was I had a, um, one particular lender who didn't want to lend a higher percentage to my trust on that type of property, and another lender would. And just simply on the LVR, maximum LVRs at those banks- Mm ... the new bank was gonna lend me, I went and redrew out a whole heap of equity so I could continue buying property- Yeah
to build my portfolio.
And, you know, the other thing is, is say that to your, say that to your broker as well.
Yeah.
Because a lot of the time we wanna hear that.
Yeah.
Um, we hate it when we, we feel like we're being played up on, right? Mm. We f- we feel like that guy that the wife's been playing up on us. So yeah, i- if anyone's listening there, don't be afraid.
Don't be backwards in coming forwards. Mm. I say that to clients a lot. Come to me and say, "I, I think we're getting ripped off."
Mm.
If, if I don't listen to you then okay, fine.
Uh- I, I'll tell the listeners now, like y- you probably should call Duncan, uh, if there's a possibility-
Mm ...
of refinancing. I've just instructed, uh, my broker now, um, this week to go and refinance four of my properties because I'm wanting to get some cash in the bank now so I can settle on loans in the next 12 months.
I'll give you an example. So it is possible but unlikely that property prices could drop another 10% in the next 12 months. I'm not predicting that, but it's certainly on a downhill trajectory. So if you've got a $2 million property and you've got $200,000 of usable equity that you can draw out right now- In one year's time, if the market drops 10%, that won't be there.
So why not go and refinance now, get that 200 grand in the bank so the cash is already sitting there ready to pull out in case an opportunity comes up in 12 months, and that's exactly what I'm doing now.
Yeah, so and, and on a flip side to that too, a, a friend of mine, uh, I was talking to just the other day.
Mm. There's been some tragedy in the family and, um, they're high flyers, um, high income, but through this tragedy-
Mm ...
they just wanna take time off. They want to take 12 months off, and they've probably got a property worth close to $3 million, and they've got a $500,000 debt on it And he said, "What's the chances of taking time off?"
And he's freaking out about- Mm ... um, covering the interest rate repayments and stuff. And I said, "Mate, take the time off."
Yeah. "
But what I want you to do first, what I want you to do first is just top up your loan to a 700 facility, have a $200,000 line of credit there-
Yep ...
or, you know, redraw, whatever you wanna call it."
A buffer. Yeah. And if you do wanna take that time off, you've got years- Yeah ... I mean years of loan repayments-
Yep ...
built into that other loan facility that can just capitalize and, and cover
you. Peace of mind.
Oh, man. Sleep at night factor. Yeah, and that's, like he was so stressed out about it. He said, "Banks don't do that.
Banks don't..." Mm. I said, "They do." So ask the question. And there's no such thing as a silly question, only silly people.
Okay. So let's just talk briefly- Yeah ... um, um, about parents helping their kids into the property market. Yep, yep. What's your-
Bank of Mum and Dad.
Bank of Mum and Dad- Mm-hmm ... guarantor loans.
What's your opinion of all that sort of stuff? Love it. Good. Mm.
Love it. And, um, I highly recommend it. Early days when I went into broking- Mm ... um, I hated mortgage insurance, uh, with a passion.
Mm.
Um, and it's so much more now 'cause- Mm ... um, it's based on a percentage of the loan. So 3% of a $120,000 loan back then- Mm
or purchase house property- Yeah ... um, was only 3 or $4,000, which made me fall off my chair. But now 3% of an $800,000 loan, it's just insane that amount of mortgage insurance.
Mm.
Um, and the percentage of defaults to the banks is extremely low. I hate mortgage insurance. Mm. Um, it's a, it's an evil that you have to have.
But, um, so I always say to parents, "I would rather see you receive something from your kids than them hand over money to the bank for mortgage insurance." I, you know, I love it. And if you can put up a deposit for your kids, if you can put up the 20% or 30%, fantastic. Mm-hmm. But cover yourself.
Mm-hmm.
And, and, and, and the kids don't mind that, right?
So what I do, I don't like guarantor loans, and the reason I don't like them is because years ago when I was working in the bank at Airlie Beach, um, a plumber was guaranteed by his parents, and a worker of that plumber did something really stupid and, um, it came back on him as the owner of the business.
And his PI or his insurance would not cover him for that. Mm. So he w- he lost everything. He was sued. And our, the bank, ourselves, there was not enough- Um, money to cover the loan shortfall. So we didn't even bother about his property. We actually sold the parents' property who were the guarantors. Yeah,
scary, isn't
it?
And that was ex- that was just so sad. And, uh, from then I just went once bitten. Um, and so what I usually do is I go to the parents and I get a set amount of money off them, and I get them to then lend that to the kids. Um, and by lending it to the kids, um, it increases their serviceability ratios-
Mm-hmm
but I try and get them to lend it to it and not gift it to them-
Yeah ...
because I've seen other heartaches under the gifting rules as well.
Mm.
Um, yeah.
That's good advice. I mean, I, I bought my first property in 1993. I had no money, and my father lent me- Yeah ... the $15,000 deposit at 10% interest. Good on your dad.
Yeah.
But anyway, it got me in and-
Yeah ...
and, and I've done the same just r- this year I've got my son and daughter into their first property to help 'em out and, you know, if you can help your kids out-
Yeah ...
it, it, you know, as long as you protect yourself, it's a good, a good thing.
Yeah. And I think that for the, for the, for the parents that are the one investment property par- Mm
parents- Mm ... so, um, you know, they've got a $1.5 million home, and they've got a $800,000 investment property, um, they're thinking now, "What do I do since the budget?" Mm. I think a lot of those parents could possibly sell down that property, pay their capital gains at a 50% discount and not hold on, um, and then go, "Righto, well, what do I buy now?"
Well, invest it in your kids-
Mm ...
and buy property in your kids' names. Get your kids into the property, um, because then any capital gain in the future, that's the kids' capital gain, no tax.
Yep.
You're gonna give it to them anyhow most of the time, so
Let's expand on that. I mean, I- Yeah ... I do see, uh ... I think it's highly, highly likely as a result of the, um, capital gains tax discounts- Mm-hmm
and loss- Mm ... of negative gearing that-
Mm ...
there will be a lot of people in this country that actually decide to put more money into their principal place of residence- Yep ... because of the tax-free, uh, status of your principal place- Yep ... of residence. And from a arbitrage point of view, um, what I will say as a real estate agent, even in the last three months- Mm
as I mentioned just before, I'm still getting a lot more people come into open homes for properties under $1 million. Mm. They haven't been affected as much as stuff over a million dollars. Mm. So if you wanna upgrade, let's just say your property under a million, a million dollar property might've gone down 5%- Mm
it's down 50. Well, if you're wanting to upgrade now to a $2 million property, that $2 million property would've fallen 10%, which is 200 grand.
Yep.
So you're down 50 on your current one. If you're wanting to upgrade at some stage in the future, there's probably a $200,000 drop on that- There's an uptake ... $2 million one, and that's the arbitrage where- That's right
maybe, maybe now's not a bad time to be selling your million-dollar property, upgrading to the two, which is all gonna be in that CGT-free, uh, environment of your principal place of residence, provided- Mm ... you talk to Duncan or- Mm ... your other, whoever your broker is with, and you've got the cash flow to service it.
Yeah, I s- I spoke to a mate the other day. He's got, um, three, um, investment properties- Mm ... all on the Gold Coast , and he also lives o- on the Gold Coast. Yeah. And he is close to retirement.
Mm.
And if he sold all of his properties, he'd have four or $5 million in the bank. Yeah. He's done really well. So he came to this country 20 years ago with nothing, and, uh, he's, he's done very, very well for himself, and good on him.
But, um, we were sort of working out a bit of a, a plan for him-
Mm ...
um, which I call tax planning. It's not really financial planning. And Um, yeah, he was going, "Why don't I just sell my principal place of residence? That's all tax-free." I said yes, and then he moves into the, uh, investment property, one of the investment properties.
Mm. And I said, "Y- you still got that capital gains tax that you're going to pay- Mm ... but it's at 50%." So he's now quarantined in the future for- Mm ... that 30%, um, that new capital gains tax that's in play. Yeah, right. So it's an interesting play. It's even... So selling your principal place of residence now-
Yeah ...
is a way to arbitrage, as you say.
Yeah, yeah. Um, the- If, if you're
upgrading, yeah ... ca-
well, even, even moving into your investment property. Oh, yeah,
yeah, yeah.
You know what I mean? Yep. So, um, because then you're, you're putting a fine line on that, um, 50% capital gains tax because it's, it's... there's no capital gains tax on your principal place of residence- Yep
from the date that you move into it.
Gotcha.
So, um, yeah, some really cool conversations should be had, uh, in that space, most definitely.
Questions, uh-
Mm-hmm ...
opinions, um, just remember everything we talk about, like certain people have certain, um, things they're trying to achieve in property. So you, you really do have to get individual advice.
Mm. But just in, as a general rule, do you like fixing interest rates or variable?
I've been burnt giving advice on fixed rates- Mm ... and so I'm very heavy on variable.
Me too.
Um, and the r- thing about variable is things change all the time. You were talking about refinancing and restructuring. Mm-hmm.
Mm.
Um, life gets in the way, births, deaths, and marriages.
B- the way that I see fixed rates is it's like an insurance policy.
Yep.
If you feel that you really need it, um- lock in maybe a percentage of it, so a split fixed variable Yeah,
I think that's good advice. Yeah. I mean, I, I remember, uh, I thought I was smart as a financial planner 'cause I followed markets every day for a living.
That's what I did. Mm. And I remem- I can't remember the year, but I remember I fixed for five years my home loan when I thought, "Oh, there's no way. Based on the last 30 years, interest rates aren't gonna go down anymore." And guess what? Mm. They continued to go down, and then later on when I tried to, I wanted to refinance out of that one, the bank sent me this, uh, break, break- Break
fee?
break fee. Yeah. And it was like 50 grand.
Mm. '
Cause I, I, I borrowed up, it was a large, uh, loan. Yeah. 50 grand to change the loan- Yeah. Once bit- ... as a break fee.
Once bitten, twice shy. And yeah, so it happened to a young couple that I saw in Airlie Beach. Mm-hmm. Mm. Um, and they came in and they said, "We've seen f- interest rates come from 18, 17, 15.
They're down to 12."
Mm.
And I said, "Take it. Five years, 12%'s so good." And then I saw them at 9% and 7% and they were locked in for five years. But I don't think their break fee was 50 grand.
Well, it was a $2 million loan on that- Yeah ... particular facility-
No, there
was ... So. Yeah, yeah. Yeah, okay. Gosh.
It was probably tax-deductible at least.
Uh,
it was.
Yeah.
It was, but I didn't break it. I- Yeah ... I, I, I just couldn't bring myself to, uh- Yeah ... to do it, so I paid the higher interest rate. I think I still had, like, two and a half years left- Mm ... and I just saw it out, and every day the countdown, I can't wait to- Yeah, yeah ... get out of this, uh- Yeah ... higher fixed rate.
Yeah. So, uh, okay. So the, we had the budget, um, change, um-
Mm-hmm ...
restrictions on, uh, negative gearing- Mm ... uh, for secondhand assets. Um, how do you think that's all gonna play out, or will it make any difference do you think?
Oh, definitely make, make a change. Um- A lot of our clients, and you would, uh, as well, have found that we've been talking about negative gearing, um, has been too loose, I think- Mm-hmm
for a long time. Um, w- and, and the 50% discount was probably too high for- On capital gains, yeah ... for a long time, yeah, on, on the capital gains tax. Um, so we knew that something was going to happen. Mm-hmm. Um, Bill Shorten spoke about it. We, we could just smell that something was in the air. Mm-hmm. So a lot of our clients were talking about changing their structure, um, for the last couple of years.
So-
Mm.
We've had clients move investment assets over to company assets, um, for, for some time now.
Hopefully, I'm, like I'm trying to, uh, h- provide strategy to the listeners and- Mm ... and maybe help just one person to make- Mm ... the podcast worthwhile, but-
Mm ...
I just wanna caution the viewers and the listeners on, you know, the potential advice you might get to go out and buy brand-new stock, uh, now just so that you can get negative gearing.
Because- Mm ... a lot of these new stock houses, they're probably not gonna be built right in the middle of town. They're gonna be out in the sticks. Mm. And if you buy them as an investment hoping to get negative gearing, you may just find that the vacancy risk is a lot higher because it's a lot further away from employment hubs.
Yeah.
And the people selling you those new homes, uh, I know as an agent Uh, they might be getting 30 or 50 grand commission for selling you that home, and you're the one paying- Mm ... for it. So-
Mm ...
just be very, very careful with your strategy going forward if someone tells you that, "Oh, you need to go out and buy, uh, brand-new stock," is just one tip- And-
that I'd give ...
and the other thing is that, um, builders are doing it really tough. Mm. So you could find that a builder goes belly up halfway through your project as well. Um- Absolutely ... I've seen that many times. Um, and the new builder that takes it on says, "I'm, I'm sorry that there's a slab and there's a frame and there's everything, but I'm not touching it."
Yeah. "
And the whole thing has to come down again, and you've got QBCC, and it just goes on." So you'd be very, very careful about that. Oh, yeah,
it is amazing. Like, I just saw on, uh, YouTube, um, some documentary about how many builders in New South Wales and Victoria and Queensland went broke in the last couple of years- Oh
and it's in the thousands- Mm ... and it, and it is very, very scary.
Yeah. So a, a builder said to me, and this sort of made sense to me, he said to me years ago, he said, um, w- I s- I said to him, I said, "Would you, would you build? 'Cause you do good quality homes." He said, "I'd, I'd never b- I love you, but I'd never build for you."
Mm-hmm. And I said, "Why?" And he said, "You buy a place for $500,000. I build on it for $500,000. Duncan, you're in the hole h- a million bucks." I said, "Well-" Mm ... "a little bit more." I said, "Okay, in m- 1.1 million, you're in the hole." But then you then sell it in 12 or 18 months' time for 1.5, and if it's your principal place of residence, you've made half a million bucks tax-free.
Me, as the builder, I've made 50 grand, 60 grand on the whole thing- Mm ... if I'm lucky, and I'm still responsible for it, insurances, staff, apprentices- "... go away." I went, "Oh, okay. So w- so who do you build for?" And he says, "Well, I build for family. I only build for family."
Yeah, right. "
Because they then make the profit, it's tax-free or it's very low, and then they pass it back."
"Oh, okay, very clever." So I, I'm just... They're thinning out. Mm. They're thinning out a lot. Um, so it's a really tough game. So yes, if you're thinking about buying a brand-new property for tax purposes alone-
Yep ...
really sit down and look at your numbers, uh, especially if you've never been into new property before as well.
Mm. So yeah.
Okay, let's talk a little bit about, uh, structuring. So- Mm-hmm ... most of the viewers, um, would be reasonably, uh, educated on the different options, buying- Mm-hmm ... buying properties, um- Mm-hmm ... in their own name or through a corporate structure, through a trust or- Yep ... through a self-managed super fund.
Yep.
Um, tell us about, just at a very high level, keep in mind, viewers, like this is very, very, uh, generic advice that'll probably suit 90% of people, but not everyone- Mm ... so you need to sit down and get proper advice.
Mm.
Your, your thoughts, Duncan?
Well, the most basic initial investment that you make is usually your principal place of residence.
Mm. Um, and that's the shelter over your head. Um, and I ideally prefer to see that simply go in your personal name.
Yep.
Um, or if it's husband and wife, uh, joint tenants.
Yep.
And obviously the difference between the two, tenants in common and it runs through the estate and other things like that. Um, when you start venturing out into y- buying your investment property, um, you might be on 200,000 a year and your wife might be on 40,000 a year or vice versa.
Um, okay, well, you need to seriously think about buying that property maybe 90/10, so 90% in your name and 10% in your wife, tenants in common. Uh- S- trust structures were an okay thing to think about a little while ago Up to
now
Yeah.
Yeah, up to now.
Yeah And, um, um, trust structures are probably not that sexy anymore.
Mm.
Um, again, uh, and so the lending in that space is quite limited as well.
Just for the viewers, I mean, I'm, I'm of the opinion a- and I may be 100% wrong here- Mm ... but I still think there's a reasonable chance that the proposed changes will not get through on, uh, taxing trusts at 30%. And I'm hoping like crazy that it doesn't go through, um, because I have, uh, many, many trusts.
Um, and- Yeah ... they're talking about maybe offering a two or three-year term to restructure, uh, without, uh, triggering stamp duties and things like that. But the, the fine detail hasn't come out, but I'm really still hoping like crazy- Yeah ... that that's one part of these budget changes that doesn't go through.
But if it does, well, um, I'll be using companies. Um- Yeah ... 30% cap rate, and also the ability to distribute 30% franking credits in dividends, which they're saying w- at the, this point of recording, there, there's no indication that a trust will be able to pass on a 30% tax credit once it actually pays tax, whereas a company can if it's structured the right way.
Yeah, so I think there's a couple of mandates going on here. Um, one is the AML-
Mm ...
which you love. Uh, um, so any money laundering. Um, so, you know, finance brokers, accountants- Mm. Real estate agents ... lawyers, real estate agents, buyer's agents- Mm ... they're all under any money laundering.
Yeah.
Um, and the amount of paperwork that you- It's a nightmare
it, it is, it's ridiculous.
And they're scaring off buyers too. I, I mean, I signed a contract- Ah, yeah ... a week ago, and the buyer For five days, uh, was saying that they didn't wanna provide all of this stuff 'cause he didn't know who would have access to it and, um, it almost killed the transaction. Yeah. That, that's how serious, uh, it is.
Yeah, so, um, the, the, uh, the knowledge that the ATO possibly wants- Mm ... ASIC, AUSTRAC-
Mm ...
that they want, I think it, a lot of it is got something to do with AML and tax law. Yeah. Um, and they're trying to bring it all together, and maybe yes, as you say, you'll, they'll then relax some of the laws. Mm. Especially if another p- um, government gets in.
Mm. Um, I think they're even making promises, the LNP, that they will put an ax through most of the budget changes that came out. Mm. So, um, I don't know if they will, but yeah.
Look, I just wanted to let the viewers know, because most of you probably haven't bought a pr- or sold a property in the last one month.
I mean, we're- Mm ... we're mid, towards the end of July now. This has only just come through from 1 July, but- Mm ... just so the viewers know, from 1 July 2026, whenever a real estate agent signs up a client to sell a property, we have to comply with new anti-money laundering obligations, which means verifying who the seller is, getting all the h- 100 points of ID or whatever is required there.
And then for a buyer, when a buyer signs a contract, once it becomes unconditional, we need to do all the identity checks from the buyer, and we also need to find out where they're getting the money from to buy it, and we have to fill in a thing called a suspicious matter report, uh, if we think that it could be a dodgy source of funds, and send it to a government department called AUSTRAC- AUSTRAC.
Mm ... so that they can investigate the buyer to make sure that they're not laundering money from some illegal activity. Mm. Now, it sounds like a very simple thing, but this is literally adding a lot of expense to real estate agents', uh, operations, and it's certainly, uh- Oh,
and broking as well. Yeah ...
and also-
Accounting
a lot of time for buyers and sellers of extra administration-
Mm ...
just to get a transaction across the line.
And the thing that scares me from an accountant's perspective, just a simple story, um, and it's never happened with me, but, um, imagine if, um, someone came to me and I was suspicious of their money straight away.
Mm. And the, you know, the neck tattoo was kind of a dead giveaway, and they turned up on a rather large Harley Davidson. I'm not going to look after that person. I'm certainly not gonna say, "I think I need to do a suspicious activity report on you." Mm. And it must have s- some of you real estate agents a bit nervous as well, like if you get some strange characters coming in wanting to put $2 million down on a, a property, cash, and you kinda go, "Don't like the look of this guy."
Yeah. What, what do you do?
Yeah. Look, I, I'm, I'm 100% sure that at least for the next 12 months, there are gonna be a lot less transactions in real estate- Yeah ... in this country. So real estate agents- Mm ... will have less commissions. L- loan-
Mm ...
lend- lenders, mortgage brokers will probably have- Mm ... less commissions.
And-
Mm ...
um, all of the budget changes and combined with all of these anti-money laundering re- requirements- Mm. Mm ... it's gonna be a tough 12 months- Mm, mm ... if you're relying on transactions. So, uh, brace yourself for it because, um, it's a certainty.
Yeah.
Self-managed super funds, the, um-
Yep ...
lovely Labor government has just abolished, um, non-recourse loans- Mm
which effectively means that you can no longer borrow for residential property.
Crazy. Yeah,
yeah. But you can for commercial. Yeah. So, um, do you get any, or do you get many inquiries from self-employed people buying commercial properties through their self-managed super funds? And secondly-
Yep ...
their actual business premises that they operate from because the self-managed super fund legislation does have a, a, uh, an ability there- Mm
to actually rent your own property through a self-managed super fund if it's a commercial premises.
Yep, yep. I do that myself, actually. So.
Okay.
Yeah, so, um, the office that I, uh, have for Tax Time Accountants- Yeah ... um, up in Berrinba, um, that's owned by a unit trust.
Yep.
Um, 'cause it, the unit trust was the original borrower.
Yep.
And then all of those units over time, when the loan was wiped out, um, all of those units are now 100% owned- Were owned by me- Yep ... and now those 100% of those units now owned by the self-managed super fund. So you can imagine AML rules when I try and lease- ... that place out now. I've got to get all of the documents of the trust deed of the unit trust and all the documents for the self-managed super fund.
But apart from that, that works really well. Um, and the great thing about that is they're not affected through the budget change. So the 50% discount, um, and 'cause I'm nearly 60, um, the sale of that asset in the future will fall into the tax-free zone, which is- Yeah, yeah ... fantastic. So, um, buying through a self-managed super fund is a pretty cool way to go.
Um, just be very careful about your return on investment.
Mm.
So I've probably shut down more self-managed super funds than I've set up over the years.
Mm-hmm.
Um, and that's because the poor bug has gone along to a seminar of sorts, um, been convinced that a key word is control. Get control of your money.
Mm.
My thing is, if you have no control over the market that you're investing your money in- Mm ... there's no point having control of your money. And if you've got a super fund that's giving you 10, 12, 15% some years, net after all expenses and headaches- Mm ... um, and you don't know much about property-
Mm-hmm ...
um, you please leave it in there until you work out how to do it, so.
Look, one, one, one thing viewers will get from my podcast is- Mm ... transparency. Mm. And I'm open, honest, and fair, and I can- Mm. I just like talking about my mistakes. And-
Mm ...
let me tell you, I set up a self-managed super fund in, uh, in the mid 2000s-
Yeah ...
and thought that I could do a great job with the money, and I gambled away.
I, I still have n- to this day 600 grand I lost share trading-
Mm ...
in my self-managed super fund because I wanted to control my money, and- Yeah ... I could do better than the managed funds. But-
Mm ...
because I was, uh, share trading in the GFC time of 2008- Mm ... I gambled it all away. And- Yeah ... uh, sometimes, uh, even for experienced, trained financial...
And I've got graduate diplomas- Mm ... in finance and investment and- Mm ... and all these types- Mm ... a diploma of financial planning. Mm. Doesn't matter how good you are, sometimes the markets can wipe you out. So just be very cautious- Yeah ... if you're, if you're overly optimistic about making money with your super funds.
But-
Yeah ...
the reverse side of that is-
Yeah ...
I, I do consider it a extremely low-risk strategy if you're buying a business premises that you're already- Oh, absolutely ... renting anyway.
Yeah. Goes well.
And it's a really- Goes really well ... really good idea, and Duncan just mentioned the opportunity.
Yeah. So, so I, um, so my business- Yeah
rents that property- Yeah ... from my self-managed super fund.
Yeah.
So my business gets a tax deduction- Off the rent ... at 25 cents in the dollar.
Yeah.
Pays it into the super fund- Yeah ... which pays tax on that- Yeah ... at 15 cents in the dollar. Yeah. Um, but nothing In, in pension phase.
Yeah.
Um, but, um, so pays 15 cents on the dollar on it.
Yep.
And then if it sells it in the future-
Mm ...
before the age of 60, it's taxed at 10 cents on the dollar-
Yep ...
um, or nothing, uh, later on.
If you've started a pension, yeah.
Yeah. So- So- Yeah ... like fantastic. So, um, a really good space. And the... Yeah, there's a little bit of work, okay? Mm. So you've gotta get valuations every year, and you've gotta get it- Mm
audited every year, and there's a lot of, a lot of, uh, there's a lot going on there. Mm. Um, and you make a couple of steps wrong in it, and then you've got a non-compliant super fund. I've seen people take their money out of their super fund, and I've done silly things in that super fund. Like, I think I spent money on something.
I didn't have the lease right. I didn't- Mm ... have the lease right, and, uh, the auditor picked me up on the lease. But it was going for two years before the auditor picked me up.
Yeah,
yeah. And I said, "Why didn't you tell me about this in the first place?" And they said, "Oh, we're, you know, we're, um, we're watchdogs.
We're not bloodhounds." Mm. So, oh, God.
This is all serious stuff, folks. Like the- Yeah ... potential penalty for a non-complying super fund is 47% of the fund assets. Not the income for that year, but 47% of the fund's assets, or it was back in the day when I was- Yeah ... advising. It doesn't come from the
members. It comes from the trustees.
And it's, it's- ... pretty scary stuff. But- So ... this particular strategy- Yeah ... is such a, it's such a great strategy because what Duncan has just said is, um- Mm ... the, the business can still get a tax deduction for the rent paid to your super fund. It's on- the super fund's only gonna pay 15% if it's in- Yeah
accumulation phase. And the big strategy that's always been around and remains untouched with the budget is if that asset has gone up significantly in value, defer the sale until the fund members commence a pension.
Yeah.
Because when you commence a pension in a self-managed super fund, it changes the tax status to tax-exempt, and you pay 0% capital gains tax.
Mm. So-
Mm ...
get advice on that. Don't listen to my strategy there without talking to your accountant or Duncan- Yeah, yeah ... or whoever your accountant is. But it's always great to pay a tax rate of 0%.
Yeah, yeah. Abs- abs- absolutely. Um, it's, it's that one space that you can really take advantage of. Um, yeah.
Mindset. You've helped a lot of people over the last, you know, 30 or 40 years as an accountant- Mm-hmm ... and also as a, a mortgage broker.
Mm-hmm.
What do you think sets successful investors apart from those who maybe aren't so successful, Duncan?
Take your time.
Mm.
Uh, structure.
Yeah.
I, I, I think I've seen so many frustrating structures.
Mm-hmm. And by the time they've come to me... Like, one of the things that I just said to a client, um, the other day, I said, "You should've spoken to me four months ago before the end of the financial year." Um, and it was just a simple thing. It was, um, concessional contributions.
Mm.
They earned about $60,000 for the year.
They're single, single lady. Yeah. Um, she owns a house outright and other things like that, and she earned another 50 or $60,000, um, through her s- sole trader business.
Yeah.
She didn't pay any tax on that. And I said... And she, and she said, "I don't need it." I said, "If you just push that into your super-"
Mm. '
Cause she's got a low super balance.
Yeah.
Um, she could have made carry forward concessional contributions. You know- Yeah ... you just go, oh, man, you wouldn't pay tax on any of that.
Yeah.
And she's got an exist- an existing tax debt that she's paying off from the previous year. I said, "Just-" Mm. So, uh, but structure's very, very important. Mm. Um- Mm
again, you were just talking about sup- super funds.
Mm.
Think about putting it in the super fund instead of putting it in your joint names or- Yeah ... superannuation, if you wanna keep talking about superannuation. But, um, owning, um... I, I saw beautiful lady the other day. Her brother passed away.
Mm.
And, uh, when he passed away, she was the sole recipient of the super.
And do you know what happens to super if it, if it's, um, it's, it's passed on to a non-financial beneficiary?
If it's a non-financial dependent, child over 18, for example.
17%. Yeah. Yeah. Yeah. He did, he did no, uh, recontribution scheme.
Yeah.
Um, just so- Ask a question here, ask a question there. Mm. Um, it will like structure and, and building your knowledge, understanding what's going on, what it's about.
You're dealing with hundreds, millions- Mm ... sometimes hundreds of thousands of dollars, millions of dollars, especially in property.
Mm.
And you go, "Oh, I don't wanna pay $500 for the advice."
Mm.
Are, are you kidding? Like that's the cheapest insurance policy out, so.
Should retirees downsize? Now this is a complicated question.
What are your, some of your thoughts around that, Duncan?
I think they should definitely consider it. Mm. Um, I'm a big fan of it.
Mm-hmm.
Um, I've seen a lot of people from GFC time through till now-
Mm ...
um, regret not at least considering downsizing. And when it is time that they have to downsize, it's usually well and truly too late.
Yeah.
Um, there's a lot of beautiful old dears living in big homes that they can't maintain and look after.
Mm.
They're hanging onto that full age pension, um, which is what? 30K a year. Um, and you know, I have a joke, it's probably not that funny, but what's invisible and smells like pal?
What?
A pensioner's fart.
And that's because that's what they, that's all they can afford to live off. Mm-hmm. Mm. And they're sitting on a 1.5 or a $2 million home-
Mm ...
and going, "Well, that's it. I wanna hold my own pension." But if you sold this, you'd have 750, $800,000 earning you pretty good coin. Mm. You've got the downsizer rule, which is 300,000 can go straight into pension phase for you.
Mm.
Um, you'd probably earn more than 30 grand a year. Mm. And you'd have a much better home and in a much better of a place. But-
Yeah ...
um, yeah, so please, yeah, consider those things. I think ideally you should start thinking about retirement when you're in your 50s. Um, I see a lot of people with lumpy assets in their 50s and very, very small superannuation balances because they've been concentrating so hard on paying off the home loan and paying off that, and negative gearing and their, and they've got so much or so little sitting in super.
Mm-hmm.
And usually by the... And, and now with the, um, tax rate now not discounted by 50% on capital gains tax, they're regretting that they didn't do something with that lumpy asset or restructure things or put something in their kids' names or other things like that. Mm-hmm. And these, a lot of the times with me anyhow, I'm the world's worst financial planner.
I just sit down and I tell people, "Do this and do this or consider this or consider that." It's not financial advice.
Mm.
And someone says, "Oh, you're giving financial..." Well, sue me. Mm. Who's gonna, who's gonna sue me for just saying- Yeah ... look into what an ETF stands for or- Yeah ... or, or, or, you know, whatever.
Yeah. Um, I'm not telling them to buy BHP shares. I'm not telling them to margin lend. I'm not telling them to buy silver. Mm. I'm just saying look into those things. Mm. Check it out.
Yeah. So it is- Um- ... it is, um, uh, it's an interesting topic, but one of the, the structural problems in this whole housing shortage in this country is based around the legislation because a lot of these older people have owned houses for 20 or 30 years.
They're worth millions of dollars, and they might be five bedrooms, and there's no kids living there anymore. But one of the reasons why those older people don't sell is because of the assets test limit for Centrelink, which- Mm ... you're only allowed to have half a million dollars for a couple- Mm ... outside of your own home and still qualify for the full pension.
And if they sell a $3 or $4 million home and buy a $1 million apartment somewhere-
Mm ...
there's another $3 million that goes into investments, and they lose their whole pension. So-
Yeah ...
you know, it's a, it's a structural problem which maybe could be partially resolve the housing problem- Yeah ... if the government could find some sort of incentive for those downsizers.
Yeah, I think, yeah. So, so, um, kids, if you're listening, uh, buy your parents, uh, and put a granny flat on the back of your yard, uh, for them. That's probably another thing. So, um, I've seen situations where the parents have sold their property for $1.5 million or $1 million. Um, they've then spent, say, $400,000 on a granny flat.
Yeah. Nice granny flat.
Mm-hmm.
Um, on the back of the kids' property. The parents are happy there. The kids are happy with the parents living there. The parents still get the full age pension 'cause the asset test is a lot higher
Yep
Um, and they're living there rent-free, and they're not stuck in a nursing home.
They're not living in their house that's falling down, and everyone's happy. Yeah. The real estate agent sells the property- ... and away we go. So yeah, look at all options, I think, and, and, and pick the best one.
Okay. Well, look, final advice, um, Duncan, is there any, uh, advice, uh, you give to first homeowners or investors in relation to property in particular?
I think a lot of first homeowners out there, um, are, are living with, say, um, they, they, they're, they're living with their kids. Uh, sorry, they're living with their parents.
Yep.
Um, and they're ... Or they're paying $30,000 a year rent somewhere.
Yeah.
And they're saving $20,000 a year. Yeah. So, and that's all they can save.
Yeah. So in other words, they're spending 30 and f- and 20, so they're dropping 50 grand a year on accommodation, you could call it.
Yep.
If they're now looking at buying a property that's going to now cost them $85,000 a year, they can only afford 50 But they're now saying, "Oh, I can afford 85." There's a reality check that you need to do there.
Yep.
But again, you're dealing with high emotions, and it's the only way they can get in the property market. Mm. That's why family has to help out.
Mm-hmm.
Um, and I think that if it is depressing or if it's, if it seems like a mountain too high to climb, I know when you probably bought your first property in '90s, it seemed like a mountain too high, and-
you go, "My God, how am I ever gonna pay this off?" Um, you will. Time heals all debt. Inflation reduces debt. Um, and I think don't give up hope. Keep focused, and, um, there's a lot of people around you that will want to help.
You're big on education, so would you advise also to be- young people to educate themselves?
Absolutely. So, um, a, a lot of people say to me, "Is it property or is it shares?" I go, "Well, property and shares run third for me, and it's an e- equal third." Um, I always say, uh, education- Mm ... is your best investment. If you can, invest in your own business. Uh, and then lastly, uh, property and shares.
Fantastic, Duncan.
Thanks for your time. Where can people get hold of you if they wanna contact you?
They can, um, just Google my name, uh, or-
Duncan Perkins?
Yeah, or duncanperkins.com. I've got a very bad website. Um, you could also find me at duncan@homeloanessentials.com.au.
Thanks for your advice, Duncan.
Peace out.
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