Episode 105 | Host Special: Property Dumbos | Veronica Morgan & Chris Bates

Veronica and Chris open up on their own property journeys and their dumbos they have made when purchasing property
On this week's episode Veronica dives into the past to talk about her own property dumbos.  With 25 years experience in the property sector, from buying, selling and advising on all things property, Veronica relives the early days of her own property journey. Chris discusses the common mistakes first home buyers make and the opportunity costs associated.

Here’s what we covered:

• Next steps to take when you purchase a property

• How market conditions can alter your decision making time frame

• How to visualise your dream property

• Choosing a safe property for your children

• What you need to know about the influence your subconscious has on your decision making

• Why reactionary purchases are likely to lead to bad property decisions 

• How property purchases when single affect your ability to purchase with a future partner

• Make good property decisions now rather than regretting your decision in the future

• Does purchasing where infrastructure is being built improve property growth?

• How home bias impacts new investors

• What is the appropriate loan structure for investment properties 

• The opportunity of cost of waiting and buying later

• Chris and his new home inspection story

MENTIONED EPISODES:
Simon Russell | Episode 1

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: info@gooddeeds.com.au 

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

EPISODE TRANSCRIPT: 
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded Dec 2019

Veronica Morgan: You're listening to the elephant in the room property podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent, cohost of Foxtel's location, location, location Australia and author of a new book auction ready how to buy property even though you're scared shitless,

Chris Bates: And I'm Chris Bates, financial planner, mortgage broker, and together we're going to uncover who's really making the decisions when you buy a property.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website as well as download our free oo or forecaster report. Which experts can you trust to get it right, Theelephantintheroom.com.au.

Chris Bates: Before we get started, everything we talk about on this podcast is generally nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: Well, this is going to be an episode with a difference. I'm putting myself on the firing line. I'm volunteering myself opposite property Dumbo. And the reason I'm doing this is because I've now been buying and selling and renovating property for God coming up to 25 years. So I've got a few, it says Chris, I've got a few runs on the board now. I wasn't always in the property industry, so I've been in the property industry for around 20 years. So for five of those years I was completely unaware. And even for the first probably five years in the property game, I was unaware of a lot of stuff. And to be honest, I'm continuing to learn stuff. So one of the things when I look back and reflect on the properties that I've bought and renovated and sold and, and kept and so on over the years, is that had I had advice or how do I know what some of the pitfalls were?

Veronica Morgan: Had I even considered that you can make mistakes? What could I have done differently? What would I have done differently and where could I have got information now, to be quite Frank, I'm not sure. I always could have done things differently in terms of getting information or getting advice and things of changing and at this thing, things I should say and things are changing obviously that you've got people like me out there that can actually guide people now to buying property. We really didn't exist back then, so I wanted to share some of my own learnings and particularly because Chris is planning to settle on his first house with his wife and baby soon to be born. And you've got a, an inspection of that property that you've already bought right tonight, haven't you?

Chris Bates: Yeah, we do. It's one of those you know, getting access just before you settle and just to do a few measurements and see exactly what we need to fix and whether we painted it and, you know, check the NBN and a few other things that I'm keen to just do. But because of the speed we had to act on this purchase from the moment we actually made the offer to the moment we actually first saw it was under 24 hours. And so we did sleep on it. But in saying that though, it was a funny sleep on it because we had to make a decision that day. Cause if we didn't decide on this property, we would have went to auction on another property. And so it all, and we had to make a decision that fast because the only way to actually get this property was at a reasonable price was to try to make an offer and get something before it hit the market. So it was a fast decision and I haven't actually seen the house since. So you feel it,

Veronica Morgan: How many times did you see it before you bought it?

Chris Bates: Twice.

Veronica Morgan: Within 24 hours.

Chris Bates: Within 24, we'll probably almost be doing 12 hours. So yeah, I mean one was six, 6:00 PM and then 9:00 AM. So

Veronica Morgan: We're not unpacking my number yet where I'm picking yours, so, so, okay. And this happens, you know, when the market's hot and you've been looking for a long time and you've been you know, how'd you miss out on anything or had you

Chris Bates: Technically no, but we had kind of got close and so emotionally we had, and we'd missed out because we had thought that we'd found the right property and then we lock it. For example, one of those properties, there was a building and pest came back really poor. That was a big red flag. Decided against that one. I know.

Veronica Morgan: We did discuss it and one of them and.

Chris Bates: Another one was we fell in love with some features of the property, but then the practicality of a small living area, we were overlooking that. And then that once we came to that realization yeah, another one was that kind of a busier road that we were probably self-justifying there'll be. Okay. But then in my heart I knew that was another good idea. And so when that realization, so there was, they had an Eagle. Yeah. These end, you know, that was part of the process is that we kept going for the niggle. But my only worry with this one is that because it was such a fast decision, I didn't give it time to let those niggles buy out. And now I've had a five or six weeks without seeing it. I don't know. I'm, I'm positive. I just have just interested to see how I feel today.

Veronica Morgan: Do you have niggles or did you have niggles that you didn't have time to explore and he just decided to squash them down or a, do you have niggles now that you didn't have time to have niggles?

Chris Bates: Cause I didn't have time to niggle, so I know that as a business and what I'm like personally I'm not someone who wants to just think about, I actually like think much better when I delay decisions. So if I feel like I'm making a decision too fast, I usually just walk away. Like give it time, I'll let it just sit there and over days I'll make a decision on something. And you know, sometimes weeks. And so that's what I'm like, just, and so when I have to make a fast decision like that, I don't feel like I've made that in the right mood. Like he can't do that. Sometimes your property, you had to make a quick decision.

Veronica Morgan: Yeah, you do. And so how, I mean, how did you come to the point in that short period of time, given that it's different to the way you usually like to make decisions, which we've had so many episodes now and interviewing various people where we know that taking time to make decisions is better but isn't always possible given market conditions and you're under pressure to, because obviously there's a baby on the way nesting. Is it a bell that goes off in your brain? It just gets louder and louder and louder. And so that's the elephant just quietly.

Chris Bates: Yes. Yeah. Pregnancy was definitely big. Cause I mean that's you're kind of working that back within the seasons of property and you're thinking, okay, so she's doing early March or like fair. So, you know, we don't really want to moving in an early fibs. That means we've got to really be buying, you know, at the start of December. And so then you go and we'll, you know, there's only four or five weeks or six weeks of stock in a market that is already low stock. And then looking back on the last couple of years and seeing any, a couple of properties that we actually wanted we knew we wanted something that was quite scare. So yeah, 100% that was all playing into it.

Veronica Morgan: We might have to do a little postscript at the end of this episode to see how you did feel when you went through this inspection tonight.

Chris Bates: Yeah, I think it would be used and be also how I feel in 12 months and how I feel in five years. And that's the thing. It's you know, it's, it's, we don't know these things and I think it's what made me make a decision so fast, while I was comfortable. Two things. One, it was on alternative to help us stopping the buying the wrong property. Which wasn't common sense. 

Veronica Morgan: So you want to buy this one to stop you buying the wrong one.

Chris Bates: I think that was like, I was conscious of it at the time. I read about.

Veronica Morgan: The one that you were going to go to auction on. You felt was wrong. This was stopping you. This was less wrong. Yes.

Chris Bates: So this was like, ah, in my brain I could feel it. It was, it was actually a light bulb when a flashing light to say you actually doing the wrong thing. Here you are actually like, like you're lucky you've missed a dodged a bullet. Now maybe that I didn't really recognize not solved without at the time and whether to go look actually do I mind just jumping from one pool to another pool sort of thing. You know, but it was a, it was an eye opening experience to feel that emotion. Cause that was, that was good. But then the other thing was we've just have been looking for six months and, and so I think that that decision fatigue. Yeah, no, but potentially that, but also we still went, if you look back at what we got versus what we wanted from the start, it was still very much aligned. So he was not jumping around and one minute the swapping and swapping and swapping. So yeah, I think that's, that's what made us feel comfortable is that this is the best thing we've seen. And it's

Veronica Morgan: So using the benefit of all of that research that you've been doing, all that leg work, you've been doing, all those properties that you've been seeing that give you the context spare to measure this property in the context of what else is out there in the market.

Chris Bates: Yup. Yeah. And so, and then also, and that's good because I think over that journey we saw lots of properties we weren't interested in and we really were glad we missed out or not. I don't feel like that with this one. So that's a good thing.

Veronica Morgan: And what are you worried about tonight?

Chris Bates: Ah, I think it's the worry about is the kid's situation and, and how does life evolve and the problems with this house potentially with, with kids. But I guess, you know, people would say, just go for the flat block, just go for the, you know, et cetera. Go put the kids. But I guess what we love in a house is things other things around the,

Veronica Morgan: Did you buy a tree house?

Chris Bates: It's, it is on levels, but it's gotta be, it's gotta be open level. So it's not like you have to keep going up and downstairs you would spend 80% of your time on one massive level.

Veronica Morgan: So that indoor outdoor flow

Chris Bates: Um yeah, you've got an outdoor space, you've got really nice balconies and things like that. So you have got lots of areas too, but you.

Veronica Morgan: Can kids climb over the sides and kill themselves.

Chris Bates: Uh reasonably safe. Cause he seems, she say that some of the houses we looked at were completely unsafe and

Veronica Morgan: Ships wire on, on railings for instance. And kids can climb the ladders.

Chris Bates: Well that's right. And then they're not actually legal, are they? I don't know. Yeah, I think the, the, the wires on the balconies aren't legal. Then one of the properties that though is another property had balconies work completely unsafe and run down. And so yeah, it's, it's, it's one of those risks you need to think about.

Veronica Morgan: Right. Sorry. Let's, let's, so that potentially could be a Dumbo for you. We'll see. We're going to watch this space.

Chris Bates: It is a, the spice and I think that's part of the learning, right? You yeah, you just don't know sometimes. And so even if you think, you know, and you've done enough research and et cetera if you're buying a very low risk asset, and I think that's in an inner ring of the capital city, on a good street and North facing block, in a surrounded by houses, these are things that, you know, most of the time or investors will, clients will buy. And but this is a bit of a different, we've gone for a more of a, you know, a different style property. It doesn't mean they won't perform. It's just that it's a different asset.

Veronica Morgan: Well, yeah. And we've had many conversations about this too because he's born in the Northern beaches. And I'd never recommend buying up there unless you rent there first. And he hasn't done that. The other thing too, I think that what this points out, and this is what this whole podcast is about, is that our elephants are really strong. You know, our elephants and our elephant, just to remind you guys out there and girls are, is the metaphor for our subconscious mind. And our subconscious mind is very, very strong in terms of directing our decision making. So we, part of the reason for this podcast is so that we can shine the spotlight on when the elephant might be in control, but knowledge isn't enough. Sometimes you can be fully aware that your elephant is in control and elephant still controls, in fact, a lot of the behavioral science you know, if you read any of that stuff, you read experiments and in fact, go back to episode one and Simon Russell talks about some of these experiments where people have been knowingly manipulated in these experiments around our, our behavioral biases.

Veronica Morgan: And even when you're told, you've been manipulated, even when you're told that the information that you've been given is, is not correct. It's a study and which we're testing how people react, they still react accordingly. So, so we do this. So awareness is not necessarily enough, but so yeah, Chris's concerns or niggles or worries around that and, and I guess what the future will, will will hold for him and his family in this home. Interesting because that sort of got me thinking about my, my property journey and I think I've added up to something like eight properties that I've owned, maybe more, maybe less, I don't know. Let's see. The first one, well, the first one was when I was 27 and I bought a, are.

Chris Bates: We were you doing for work then?

Veronica Morgan: Well, I was in recruitment, so I got good money.

Chris Bates: Um recruiting what sort of industry?

Veronica Morgan: I was sales and marketing in the building industry actually in industrial? Yeah. Yeah.

Chris Bates: Uh single or coupled at the time.

Veronica Morgan: I was, what was in between. I was single but not, and while, yes, I was single actually. And then I coupled and subsequently after buying, after buying. Yeah.

Chris Bates: So you were thinking

Veronica Morgan: Um I wasn't thinking at all. Do you know when I think about it, I was, it was an ex partner of mine said, Oh, you could buy a property. I went, ah, probably could went along to the bank and I was living, where was I living? I kind of remember it got so long ago. I should actually, I was living with some friends. I was flooding with some friends. Yeah. In what area? I was in lower North shore. Then this place was in Erskineville new town border, my apartment that I bought.

Chris Bates: But you weren't living there. So what made you go there?

Veronica Morgan: Did move there? Well, yeah. Good question. Yeah. I'm telling you, this is a full on Dumbo, so you could afford, this is this past boyfriend of mine had said to me he could afford to buy a unit. And I've got a friend, he's a developer and they've got these building actually on Cleveland street. And I'm going, Oh, fabulous. And I hadn't looked at any property at this point ever, other than to rent ever. So I go and look at this apartment now. Thank God I had the fourth, you know, the foresight to look at this and went, it's horrible, you know, so there was one left in the building, you know, it was us, you know, affordable. But when about this all asked about, I looked at this apartment, I thought, that's horrible. I could never live there anyway.

Veronica Morgan: And so it didn't even look any further in that area. But I did like the inner city. I'd already always said I'd live in a shoe box in the inner city rather than a house in the burbs. And I've lived too to honor that statement. And I bought myself a shoe box. So I started the process of looking and I went to the bank and I honestly can't remember what conversation I had with the bank. But it was like, I don't even think I asked how much I could borrow. Like I don't even think. And I started looking just for what I assumed I could afford. And I, the God, there was one property, a big apartment in the Gold's remote building. Thank God I didn't buy that one too. It, it was on the side of the freeway. It didn't have one opening window because it was so noisy.

Veronica Morgan: And it was nice though. And it had a city view and it had lovely high ceilings and lots of original features. But it was just, you know, I actually looked at that quite seriously and tried to talk myself into it, you know?

Chris Bates: So was anyone helping you on this journey or you.

Veronica Morgan: Just go, no, this ex boyfriend has made this suggestion and left me to it. Nobody was helping me. Where do you turn? My parents were useless at this stuff. You know?

Chris Bates: What was motivating you at this point in time though? If you can remember back, I know this was a couple of years ago. Was it? Cause you want to own your own place? Is it, you think it's a good investment you need to make? Yeah,

Veronica Morgan: No it was just because I could, it was because I could, the idea was placed in my head that you could and I went, ah, that's a good idea. Much better than renting. You know, I didn't really like renting.

Chris Bates: So it's that potential belief that money is dead money. You need to own a home. If you're successful, this is what you need to do. Just go buy something. So you can say that you're a homeowner or an investor or you're a property owner. Yep. Okay. And so it didn't really matter in your mind, it didn't really matter what you owned, it just mattered that you owned some.

Veronica Morgan: Yeah, although it did matter what? Cause if you think about it, their first apartment on Cleveland street, I didn't like it. The one, the one that was next to the freeway often drove past that on the floor over. You can look straight in the windows. I mean I thought seriously, cause I really liked the floorboards and the high ceilings. I mean, you know, you do focus on, sometimes you focus on minutiae, not even the big picture. You know, I had a car, I had a Cabriolet, this, this fancy little car I used to drive around in. And even then if I bought in that building, I would have had to lease a space in the car park next door. You know, I was not being practical in the slightest.

Chris Bates: It's interesting. Sorry. So, you know, cause I was saying this, you know it is a challenge that you know, younger people potentially singles have is that they start earning good money. They're potentially lived at home or if they haven't lived at home, they've earned really good money and they've been able to save or live frugally and then they're built or they're potentially got a little bit of a gift from their parents, like maybe 30, 50 grand. And they've got, you know, they're still starting out and then they get told by their parents and their family and their colleagues by some thing and then you're right. Then they go and buy something and it's just so early on they start, you know, doing this and going out and buying something. And the state governor's giving me some exemptions and et cetera like that. So, but you were looking for something that you just wanted to live in, but you weren't that bothered

Chris Bates: About like the investment at all. It was just, it.

Veronica Morgan: Thought about it as an investment, not, didn't even occur to me that this is an investment. It was just like it's better to own than rent. That was pretty much it. And when I went SA, I don't even know how I ended up looking at this building. It was actually technically off the plan, but it was, it was finished. It was almost completely finished. So I could physically walk inside the apartment that I subsequently bought and I ended up buying a studio. Now I think I'm pretty confident that I could have afforded a one bedroom in this complex. I bought a studio with no parking, so I fudged parking for the year that I lived there.

Chris Bates: Because you felt it was cheaper weirdness to David? Look as a one bedroom.

Veronica Morgan: I did look at the one better, but I think the one bit, it was like 180,000 and what I bought was 129 right. She told us a good deal came down to affordability. And when I say affordability was perceived affordability and was that risk, it was like Oh I'm feel a lot more comfortable with a mortgage of a hundred and whatever. Low hundreds rather than high hundreds mortgage. That's really what it came down to.

Chris Bates: Yeah. I mean that's something that we do talk about quite commonly with quiets. Cause I'll get clients who are, let's figure out the max we can borrow and we really want to get a good place and you know, we'll push to the limit. You know, sometimes it was raining them back and saying look, this one domain from a mortgage repayment, this is what your life's gonna end. Start to wind that back and go, maybe you should or what's your future decisions? And, but sometimes people are like, I only want to spend more than a million dollars.

Chris Bates: Like I've got some of them at the moment. And it's actually saying, look, if you had to spend 1.1 or 1.2 and you got an much better asset and you sold that one day and you've got a much better return, would you buy it? And then they go, well yeah. And so maybe we need to have a move more of a flexible budget and, and so neither or is probably great. Yeah. So that's interesting. So you just went for what was perceived lower risk.

Veronica Morgan: Yeah, it felt safe and yet it was 36 square meters. That was a world designed 36 square meter studio. But it literally, a friend of mine and they're spending are badly designed was a friend of mine came to see my new apartment after I'd moved here and he said, show me around. And I said, stand in the corner and swivel your head that seat and look, it had a lovely little cover, you know, terrace, little veranda.

Veronica Morgan: And he would look, it was cleverly design, had full kitchen and all that sort of thing. And look, it was a great, I lived there for a year. Right. And in that time, I then met fella that I ended up marrying.

Chris Bates: That's just an interesting point in itself. So bought it with the idea I'm going to live here for X number of years.

Veronica Morgan: Didn't even think of that. Didn't even occur to me to think, well where do I want to be? None of it. I don't even know what I was thinking. I was smart enough to earn good money but not smart enough to think, well, what am I going to do with these property?

Chris Bates: So it is a I mean, and this is a challenge. Like I, you know, I was single for five years before I met Melanie and you know, you just don't know what's going to happen, right? And you don't know when your life's gonna change and things like that. So you know, when I am helping singles, I do find it, you know, really tough sometimes because you know, I'm very focused on the longterm, what's the right thing for their future, et cetera. Then you've got, look, I just want to enter the market. I want to buy something. And you know, the problem is I've seen so many times where someone is single, has bought in and they've met someone and then they've owned a property that doesn't suit them longterm. They end up having to sell it and they're back to square one. So,

Veronica Morgan: Well the problem is, is well you don't want to buy with the partner in mind that you don't have or, or you don't want to not buy it cause you're waiting to find, you know, mr or mrs. Right. you know, so there, there's really complicated and in fact, I've met a young woman who listens to the podcast. So hello is you're listening. The other day and we were having that exact discussion, you know, what these options are for you. What, what I should have done in retrospect was it wasn't until I'd actually bought place and you know, I enjoyed living there. It was great life style and I've met some great neighbors, et cetera, et cetera. And I had a friend who had a little house that she'd bought a nurse can bill some years earlier and run around the corner. And we used to hang out a lot together and when I actually pulled up and did a little bit of a helicopter view rather than being so sort of laser focus as well, it sounded like it wasn't focused, but I was only focused at looking really at one bedrooms and then I saw the studio, Oh, that's more affordable.

Veronica Morgan: And I think that's pretty much why I jumped at it because Oh, it's cheaper. Great. but if I pulled out just a little bit for not much more, I could've bought like a semi in Merrickville. Yes. Not far away. In fact, very close. Cause where my place was the bottom end of Newtown and Marrickville was only you a few streets away really. Or more. I could have actually bought a little house now. I never inspected any of them, so I couldn't vouch for the condition. But certainly given that I was, you know, had a good earning capacity and my, my runway was long and, and you know, today I would have a very different conversation with somebody in my position than I had with myself at the time. I just didn't even know what the possibilities were.

Chris Bates: Well that's it. And that's the thing. It's not about you shouldn't do it. You shouldn't have bought that one better or that studio, but at least had that eyes wide open view that this is an alternative option. I could have bought it, say house in Merrickville that it say you did made by someone a year later. Then if instead of having a studio where you're going to kill each other to something that potentially you could stay in and renovate in the future. And that's one of the discussions. But it's sometimes not possible wanting come. It's really hard to borrow from a bank on morning so you can't, and the price, the difference between an apartment and a house in areas that people want to leave, he's so big. It wasn't always that way. 

Veronica Morgan: It's also an example, I paid a premium cause I bought brand new. And so when you look at the differential between, well actually you could get a much better asset for not a lot more money because of that premium.

Chris Bates: So maybe a cheap studio back then was 80 grand and you paid one 20, or maybe it's a hundred. Yeah. Or something like that. Okay.

Veronica Morgan: I didn't investigate studios so I didn't even have any relativity. I judged the price on that studio against the one betters. And there's another example of we ego wrong because what I really needed to do was judge it against other studios. You know, I still may have, who knows, made that decision. The other thing that changed in the five years that I owned that property, so I mean I lived in it for a year. Yeah. I never lived in it with my ex. We, they rented out, became an investment property. It became an investment property and, and it was positive cash flow after, I think, two years. Like it, it was you know, you say a good investment in terms of yield. Right.

Chris Bates: So I imagine that when you set your loan up and what your deposit was, but did you just get like an 80% loan or something or you know what?

Veronica Morgan: I borrowed 95%. Right. Okay. But obviously paid it down.

Chris Bates: There's mortgage insurance.

Veronica Morgan: Can't remember it was a long time ago. A long time. My stamp duty was like $3,000 or something. I remember thinking what highway robbery. Yeah.

Chris Bates: Okay. Sorry. Even if you hit that. So Amy, if you had a, you know, 20, 30, 40% deposit, which sometimes you know, people have you know, you might even borrow an 88% or 90% and pay lenders mortgage insurance. So when you do in the future, you out, you can afford to keep that as an investment property from a loan structuring point of view. And so just that small mistake about potentially putting all your money into it, five years later when you turn to 20 invest property, you might've had a choice to have to sell it rather than keep it,

Veronica Morgan: I had a choice, I had to sell it but not because of affordability and not because of my borrowing capacity, but because it was less than 50 square meters and the banks had changed their policy in that intervening time. And it was under, like, because of the LVR required for that size apartment, the bank wouldn't lend me the money. Cause when I ultimately got married and we bought a house, it effected my borrowing capacity for the house. Whereas if, if it was the same value property but it was more than 50 square meters, they would have allowed me to keep it.

Chris Bates: Yeah. Unfortunately we're dealing with a very similar situation this week and she's very but it's not the size, it's the company title. And it's the same. It's exact same situation. You know, like there's only a few banks that will do company title is only a few banks that will do 80% on company title. Some will do 70. And so the demand for that asset, if they ever sell that means everyone, everybody's gotta have at least a 20% deposit. But the banks that have that, sometimes their policy isn't great. Like they are not gray with bonuses, they're not great with, you know and so if you're like self employed, so you know, those, those bangs are, do offer 80%. Sometimes the policy means that some buyers can't use those banks. And so, you know, it's just where you're, when your buyers can't get the money, it means you haven't got demand for the property. So when you sold that, who could buy it

Veronica Morgan: An investor.

Chris Bates: With a big deposit?

Veronica Morgan: Well, or would they're quitting and on the property? Yeah. Yeah. So yes, it's sold to an investor, but it did, it actually did look, it made enough money in that five years time that that basically was the deposit for my house. It did its job, but it could have been a better investment. And it could have been something I didn't need to sell. And also it could have been something bigger in the first place. I didn't need to actually, you know, buy a house so I could have already owned a house potentially.

Chris Bates: Yeah. I mean that did its job is you gotta be the Kavier, you know you know, rabbit ears around all that because yeah, the opportunity costs is something that we always want to factor into it because what could we have done bought the house? How did that perform? This is when these decisions really the different paths that you go on when you start tax taking consideration, opportunity costs. 

Veronica Morgan: And this is a thing, I mean, and this is quite often I think about these sorts of things because, you know, I look at myself now and my situation and I've done very well in property but I, and I haven't done exact numbers on this, it's really hard to do a full relativity to compare opportunity costs, but it's potentially $1 million in it for me after 20 odd years, you know, and that's small amount. I really, if you consider, well, because I've made good decisions subsequently on some properties, but, but you know, there's, let me tell you about the second one, right? Yeah.

Chris Bates: Before we go there. I think that biggest opportunity costs, because opportunity costs is relative to time. And so this is the, where people think about opportunity costs. It's the first ones that are the most, they've got the biggest opportunity costs if you get the first ones right. That allows more deposit today to do more investing too. And so it's, that's why I love helping first time buyers and the the early in their journey. Cause if we, I know if we get that first decision right and we, we make sure we think everything through the next decisions all play out and for the rest of their life it's, you know, as long as they're getting good advice down the line you know, they've made it. And that's where I sometimes where I, you know, I used to work with a lot of clients in the, you know, 50, 60, seventies a lot of around retirement. Like it's kind of done. Like I can't go back and rewind those decisions 20, 30 years ago. I'm now on damage limitation. How do we make the best of what we've got? And it's just very, it's quite,

Veronica Morgan: This is actually one of the reasons why I wanted to do this episode because, you know, yeah, this is, you know, we always talk about property being a long game and the benefits on compounding, you know, and this is, this is it, you know, because these we talk in this first property cost me $129,000, but now we're talking 20 odd years and the chain of events that this sort of set up and not just this property and not just the impact of this individual property. But, you know, I think fundamentally there's been some areas of judgment and some missed opportunities along the way that, that, as I said, I think probably could have had up to a million dollars difference now. So the second one I bought was actually with my ex husband and we bought house and it was in Leichardt and it happened to be, I did it again, right?

Veronica Morgan: It was brand new, just finished. Right. There was four in a row, Torrens title. There were two, two pairs of semis. And look, it did okay. It did. Okay. It wasn't the highest build quality or anything like that and it did fine. And, and look, I own that. And to be honest, six months, it's a two NS study. So two and a study it could be big enough for a nursery, like it was a separate room, the study. So had that flexibility, the family market per se. No, but you've, you know, you, somebody's pregnant with their first baby or even with the second one on the way would buy it. It's that sort of property. It had the open plan downstairs and it's a nice level.

Chris Bates: Three bed terraces or three bed cottages in that long.

Veronica Morgan: No, it was a similar price to two bedrooms, semis. So if I had gone for something that was, that wasn't new something similar would have been a two better. It would have been, you know, maybe needed a bit of work as well. So in a way, I actually, the price, what I pay for that was actually not bad and I didn't do too badly in terms of growth where I missed out on that one. An interest in this, this is my, my own personal history as well. Of course my husband and I broke up six months after buying it. But you know, by this time I was in real estate and I was earning good money again and I bought him out and, and it was my deposit that bought the place anyway. So, you know this is a big lesson for women taking responsibility for your own finances as well. A man is on a financial plan.

Veronica Morgan: And in this particular case you know, I was able to to yeah, to fund that because of the decisions I made. So they weren't all bad decisions, you know, I just think that there could have been better. So I kept that and then I subsequently met George just.

Chris Bates: While we're there. Cause it's interesting. So was it a was it a good straighter lockup?

Veronica Morgan: It was an okay street. I act, he's another one. I bought that because I knew the light rail was going to be going in. And this was on the far Western side, very close to where one of the stations was planned to be fun. It was built, but after I sold it. So when I talk about people, it was talked about, so it was, it was you know, green are called greenfields. So, and this is the thing too, because so many people talk about buying where infrastructure's going to go in, right.

Veronica Morgan: So this is a good location. It's in a city, et cetera, et cetera. Doesn't happen or it doesn't happen in, yeah, or in your timeframe. I, I was in real estate. I'd seen what had happened in Lilyfield, seen what had happened to and the demand at the suburb when the light rail went in. I went, Oh, this is good. I buy there because I didn't buy there purely because of that. It was one of the decision making factors. But I was very proud of that. I thought, Oh, this is great. I justified it by saying this is really good because that's going to go in there. And it, yes, it did go in. As I said, some, I think 10 years after, well after I sold anyway. So I bought that property and it was fine and I lived there and had more space and I could have actually re partnered in that place and I could have probably had a child maybe too and all that sort of stuff.

Veronica Morgan: And so he'd had a good point north-facing at the front South facing garden. Right.

Chris Bates: And was that a bit dark?

Veronica Morgan: Um look the way it was designed, while it wasn't dark, there were nice big windows everywhere and there was plenty of light everywhere. The garden did annoy me that it got a bit dank in winter and there was no sun in winter. Really definitely no sun in the mornings cause I was also on the Western side. So there's another example about the planes as well. This was actually not, and still isn't really under the main flight path. It's on the far Western side of the suburb. And a lot of people think like it is all flight noise effected, but it isn't. Yeah. So now that was a plus, but.

Chris Bates: You probably didn't really think that through the time.

Veronica Morgan: It actually, cause we'd been renting in Annandale on the Western side of Annandale and that gets hammered with flight noise. So I, yes, I did think about it. Fly past sometime change, right? Change or change with wind, with the seasons and when prevailing winds. But, but there are, there's a landing path you know, and then there's a takeoff path and this is under the takeoff path. They can always change in terms of new routes and different things as all happened with Badgerys Creek with,

Chris Bates: Yeah. The flight pass. The only other things you know, would you have bought, if you bought the semi, the older semi you said you could have added, you could potentially turn that to a three bed, et cetera, you know, would you, would you wish you went back and bought a two bed semi in an older,

Veronica Morgan: Well, interestingly enough about how long after I bought that, about two years after I bought that property, I bought an investment property which was a semi, which was a two bedroom send me, which I did subsequently do a full renovation and turn it into a three bedroom, two bathroom, semi.

Chris Bates: What suburb was that in? Like art. It's an investment property.

Veronica Morgan: So that's what you call home bias.

Chris Bates: So the elephant in the room is 100% for you.

Veronica Morgan: The reason that Chris and I do this podcast is because we passionately believe that property buyers can do it better. We really want to help all of you understand all the risks, but also the ways in which you can avoid your elephant making the decisions.

Chris Bates: For what we would love for you to do is just to share this episode and share other episodes with people around you that are going through the property process.

Veronica Morgan: Give us a review on iTunes. Five-Star please will be very appreciated because this is about making sure that we all benefit from the wonderful information that our guests have been sharing with us.

Chris Bates: Well, you're working in that market. There was a real estate agent.

Veronica Morgan: It was and, and, and I was looking. I tell you there's some mistakes here because I was, I had it in my brain that you have to buy in December, you have to buy in December and to look, I like buying December to two. I still like buying in December, but I had this sort of time limit, this self-imposed time limit because I knew that the spring market usually depressed prices a little bit. There was better buying opportunities and that all came true. That all came to pass. But that did mean that I jumped at a property in the same suburb that I already had a house in, which was wasn't the wisest thing to do and it was the other end of the suburbs. So it was actually more flight noise affected actually it was on the Annandale border. 

Chris Bates: That's kind of, it's just a tricky one, this one. So if you live in a very good Saba with great growth prospects and without doubt it is, you know, a great a suburb longterm and it's going to keep those, you know, foundations longterm and you also live in that suburb. Then you could say home bias. Yes, it's not a great idea, but is it really more protesting? Not because you actually know the intricacies of that suburb

Veronica Morgan: Where it wasn't like that's the only place a little door. And like a lot of people that fall for home buyers, so they, they literally wander around the corner from the house, see a for sale sign and go, Oh, wouldn't that be a good idea to invest around the corner from home? It wasn't that it just happened to be that that was the best property that came up.

Chris Bates: Yeah. And I think the home bias thing is a massive thing for most property investors across the whole country. If you live in Newcastle, you buy properties in Newcastle, you live in Brisbane, you buy properties in Brisbane and within the same suburb of Brisbane that you live in. And you know, you don't, you only basically invest on what you know, and unfortunately you don't know much. So it is a big thing to always be conscious of because you know, even most people fall for it, you know, and it's expand your visions a little bit. So that was a two bed semi was a North facing backyard. Yep. It was.

Veronica Morgan: Yes. North facing backyard. No. Yes, very good street. It was actually a really good street. I'm very well regarded, but it was next to the worst house in that good street. And I made assumptions and I was selling back then, and this is one of the things I talk about selling agents and not as critical as buying agents. And I certainly was not as critical back then as I am now. And I looked at the house next door, I had this in the house I lived in and the other end of the suburb, I had these wonderful Portuguese neighbors

Veronica Morgan: The next thing she's put on the market and somebody else bought the property and I thought, brilliant, good news for you, great news. But in the meantime, I've actually got my plans approved with putting some posts in to actually provide that support. So my new neighbors, they made contact with me and said, Oh, we'd like to renovate to, can we have a bit of a chat? So I sat down with them and they just had no understanding of really what was involved or anything and it just became ridiculous. And I went, you know, I'm just going to go ahead. So I, I did that renovation without getting an easement on that wall. And you know what, you barely notice it. To be honest. It wasn't a big deal. So, so I did, I renovated that house in 2010 but, so if we can rewind a little bit I ended up selling the other house that I was living in because I subsequently met someone new, but he had his own home and it was nicer than mine.

Veronica Morgan: So we moved into eat and I rented my nap for a while, had this 60 rule, you know and at some point we decided to have Molly and and we decided to buy a bigger house and all that was sort of going on the side. And I made the decision when Molly was a baby to reduce my outgoings and just reduce my reliance on my own income and going back to work straight away and all that sort of thing. And so I decided to sell my principal place of residence and that was fine. I got a good price for it or good where I didn't get good advice was from my accountant. And the accountant did say, what are you gonna do with that money? And I did say put her off the mortgage of the other house and he said, don't do that.

Veronica Morgan: And I didn't listen to him. So he said it wasn't good advice. No, it wasn't good advice because it's an investment property. Why would a pay down the mortgage? I have, I should have said no. He told me not to do it and I couldn't understand. He didn't go the next step further and explain why or what the alternatives were, you know

Chris Bates: Um gave good advice. He just didn't give good advice in a way that made you not take action.

Veronica Morgan: Yeah. He didn't explain why he was telling me that. He said, don't do that. And I'm like, but why, why, why wouldn't you do that? It was only when I lodged my next tax return. Well, I told you not to do it. You didn't tell me why you didn't explain to me what the implications were. Also, obviously I didn't have very good broker at the time because I didn't, it wasn't structured. None of those questions were asked around, you know, well, what will you do, et cetera, et cetera. What do you plans? And none of those questions were ever asked. It was just essentially,

Chris Bates: So we get this I do get it quite a bit where it makes common sense as like a belief and a myth out there that you know, paying off your debt is a good thing. You know, paying off your mortgages is a good thing. Even just last week we had a really good discussion with a client and actually it was with a wise agent and a buyer's agent. And I were kind of battling it out on this discussion and he was arguing that you should go pay in. I on investment properties and I was like, well, no, you shouldn't. She go interest only. And you know, couldn't really, I guess, figure out why that was possibly great advice. What was a buyer's agent giving advice on that anyway, no, it was just more of a discussion around what he thought the best way to structure it was. But it was interesting though. It was like, so he's there, you know, helping people every day to do that, but still just didn't really get lunch structuring and how important. So, you know, when I do get clients who have, you know, paid off properties that were always going to be investment properties, there's no way you know, they just became cash rich. They've, you know, they've got cash and we'll just pay off our debts. Well, you know, it's kind of, you can't go back, you know, and so,

Veronica Morgan: Well that's the thing. It doesn't, but what I actually did do I use that money instead to renovate the house equity? Well, the money that I paid off the loan. Yeah. I then redrew it and paid for the renovation. So with that money

Chris Bates: On that property, on that property. Yeah. So that's, that's kinda half solved your problem. But what you could have done is potentially got a construction line. I don't know, at that point in time, and these are the things,

Veronica Morgan: The thing, I didn't ever have the discussion with anybody because I didn't realize there were options and I didn't, you know exactly that. It's like, it would have been good to explore that and then make a decision with your eyes wide open. Right?

Chris Bates: Yeah. And so instead of having a debt on it of 200,000, you could have debt on a 900,000 and still had your 700 grand in an offset account and you know, et cetera. So, yeah. Oh, and so,

Veronica Morgan: Which would have, because I subsequently sold that property to pay to fund the renovation of my home that I'm doing now, and if I had structured it differently, I may never have needed to do that.

Chris Bates: Yeah. And that's the, and then if we're going to talk about opportunity costs, it's like you've sold that in 2019 let's say 18 yet. Yeah. But if you did, if there was a way for you to keep that property and still still achieve what you wanted to achieve with the renovation and you know, get, although, and with low interest rates, that would have potentially been more doable cause you would have had less pressure on having a home debt. And so with the renovation costs, it's what the opportunity cost really is. What would you have sold that property in 2030 years time?

Veronica Morgan: Tell you exactly what I would've sold it for a year later, but maybe not in 20 years. Well, no, no, but let's talk about a year later even. Cause this is quite telling, right? I sold that.

Chris Bates: Is this painful to say?

Veronica Morgan: Well, a little bit, but no. Yes. But no. Yes, but no, but no, but yes, but so look, I made a decision to sell it that time and I knew that the market was crap, but I also knew that I wanted to renovate this house to live in. I'm sick and tired of not being in the house I want to be in. Right. So I made a decision around that and I'm very clear on that. I put it on the market knowing the market was crap. I sold it for 1.55. I figured that a year earlier I probably would have got 1.7 for it. And that's, yeah, it's pretty much what I reckon would have happened.

Veronica Morgan: So 1.55 that money has allowed me to, I'm only two months away from moving into my new house and I'm not going anywhere for a long time and I'm very, very happy. This is, this is a beautiful home, right.

Chris Bates: But the housewarming party for all that was.

Veronica Morgan: Going to be a massive housewarming party. Elephant listeners. Yes. Yes. So this, this is, this is about life decisions as well. And so that, that's clear and I knew and I'd made that decision, et cetera, et cetera. The thing is though that the person who bought it, so the story I was told subsequently re partnered and bought another home and decided to create a Brady bunch and all moving to this other home and then put some property on the market a year later. I mean that's a Dumbo story except for the fact she locked it. And in terms of her timing, so she paid one five five and the price she saw was either one seven, four one seven nine.

Veronica Morgan: Okay. So it was 102 hundred grand. Yeah, bounce back. So the thing was if I waited, I would be a year behind on where I'm at now and I'm excited and potentially the bill costs would have been higher as well. But if I build cost might have gone down while they're not at the moment. Demand demand is going up at the moment. I think I would have paid more but, but be that as it may, I can justify that to the cows come home. The difference being if I had structured it differently, way back when, I didn't have all that equity tied up in that property. If I'd had an offset account, offset account, if I'd had access to money without having to sell it, I could have been had more flexibility on my timing of the sale. But because I committed myself to doing this renovation in order to to get the builder on, on and in order to line all those things up, I had to have the cash and so then I had to sell it and so it, all of that stuff, your wind right back, you know, two 2002 when I bought it, even the way in which I structured that loan, the way in which in 2007 when I sold the other house and, and then, and then in 2010 when I did the renovation, the, all those decisions way back then fed into 2018 and what my options were, not what options I did not have available to me in terms of what I'm doing now.

Veronica Morgan: And that's really the Dumbo part of this, you know, because we all learn from these mistakes.

Chris Bates: I would say yes. So then loan structuring, obviously that's what I do and I love, and I do think about this, you know, all the time with clients trying to structure their loans today. So in the future maximize the chances of if it's a quality asset and whether it should be boring and quarterly I said the maximum was a chance of being able to keep it and then facilitate their next changes in life. So if it's buy a home, well buy a home that you can grow into if it's an investment property by something that you structure your loan. So if you go and buy a house in a few years time, you can still keep it. I reckon is probably another one. I reckon when you know, if there was a frustration on where you were living and you wanted to live in this house renovated, I would argue at that point in time you potentially could have bit the bullet and gone and rented something that was very, very nice for two to three years. 

Veronica Morgan: You mean instead of renovating now renovating. But I've been, you know, cause this is like my sad relationship story. I have a nightmare. So I, you know, I was in a, in a blended family fast forward and we had been renting a big house that all of us could live in for the last 24 years since I sold my house in Balmain. And I didn't want it anymore. I've had enough. I want to be in my home now. And this is, this is that, you know, yes, this is an a full awareness of elephant. Yes. If I was purely making financial decisions, now I could make different decisions around that. But this is the point. I need a home. I want a home. I want my own place. You know, I bought the house that I'm, that I'm rebuilding, I'm not renovating, I'm rebuilding it. I bought that house in 2014. So you know, it's been doing its thing for a while. But you say, yes, I could have, but it got to the point where you have to make a decision for your home. Yes,

Chris Bates: I think so. And I think it's just, I mean, you've thought about it, but you know, from a pure financial point of view, and if you if you potentially went out and looked at other homes,

Veronica Morgan: Oh, I did rent it to rent. No, but no, no, no, I did. Actually that's not true. Yes, I did look at other homes to rent. I did the, the cost because I'm no longer in a blended family. Right. So the cost to rent something that I really wanted to live in with my daughter, it was a lot, actually, a lot. And I couldn't really say. I actually did go through that exercise. It's a lot.

Chris Bates: You know, I'd say it's like when clients are upgrading from one property to another property and you know, just recently it's the fear of renting or the fear of having to pay a low rent or the, I don't want to do that. They're motivated. No, no, not saying you haven't done it, but it motivates them to buy something that potentially is not the right property because already

Veronica Morgan: Owned this property. So that's a bit different. And I really went through this exercise. I know what you're saying there. The desire to avoid renting often drives people to buy the wrong property. Yes, absolutely. 100%. And I encourage people to say there are more things, there are worse things in renting and buying the wrong property is one of them. Definitely. For me personally, it really got to the point where as I've had enough of being in limbo, I'm a Taurian as well. I love having the earth under my feet. And, and for me it's a, it's a, it's an important thing to be settled. And I really am at that point where I just want to get back and being.

Chris Bates: Settled person were exactly the same point. Or we could have, we could have gone up there and rented up there, which is as an example for a year. You know, lots of people said that I would say that to clients, but the reality is we do want to get our own house, but you do want to, you know, have a family there and et cetera. And so, you know, great advise, go live up there for a year. But for us, it's like we're committed. We want that. We've thought about it enough. We're going to do it. Knowing of the risks, knowing what good advice is switching off and just going for what we think. And it's that pool of home ownership. And and I think that's the thing that really drives a lot of the market anyway is, you know, the houses that have got that real owner occupier feel. Well, you know, no matter what happens in the water, the next city, is this still going to be that real strong desire to live in it. And so yeah, I mean, is there any other kind of Dumbos down the line now the building sounds like it's all gone well, which Shane's like you haven't many made in big mistake.

Veronica Morgan: No, I'm very actually very happy with the way that's been going. And, and look, you know, I've renovated, I haven't talked about all of the properties that I've owned and some, some are still owned, some I've sold. And the elephant, even though I'm very experienced in buying and selling property, both being a sale sales agent and a buyer's agent, when I'm doing it for myself, and I've spoken about this in previous episodes, you know, that, that, that pool of the elephant is very, very strong. And at times when I've asked my colleagues, my team fought to give me advice, I think I've made better decisions in those times when I've thought I didn't need the advice. Yeah. And that's me, who knows my shit, right? Yeah. So, so if I can do that, if I can make mistakes, then height, give it to your listeners. It doesn't matter how smart you are, you can too. And, but I've made some, you know, I've made some great decisions around property.

Veronica Morgan: I mean, certainly my house in by mine was it, I mean, no, that was obviously not just me. It was my partner and I it was a great house. And what we did, the renovation we did was fantastic. I mean, it still breaks my heart a little bit, leaving it. And in a way, that's what I'm somewhat recreating at Newtown.

Chris Bates: Um soundboard isn't it? Where you've, you're ruminating your head, you're bouncing it back, you know, left to right and you're not sure where you're going and you start to make yourself dizzy, then you start to see your partner. If you're in a relationship and they're doing the same thing, then you're in the car driving property to property. You kind of like, you know, in your own little bubble. And you know, you don't really getting that third person in there too, you know, asked you that question, open ended question that stops you both to think and you have to answer someone direct.

Chris Bates: You know, that's, you know, using a buyer's agent to buy this house. That's what he did. So well, you know, will was kind of, have you thought about this, have you thought about that? Have you and you know, and it, it was, you know, multiple times where he found that little hole in our thought process. And then went for it. And then we, we had to told him we got, yeah, actually we need to think about that more. All except.

Veronica Morgan: One of the, one of our clients actually said about, I did a bit of a survey of 'em some years back of husbands who had, had initially been reticent about using or engaging a buyer's agent as to, you know, what their, what their hurdles were and all that sort of stuff. And one of them would definitely was a lot of a lot of men. So think, well I should be at and not this out. This is, this is an admission of failure on my part. If I, if I need to go to get help, but where's one, one couple actually said to me, well, you the threesome, that's good for our marriage. I just don't want to go. Cool. And allergy. It sounds like you had a threesome that was good.

Chris Bates: Yeah, I think it was. Yeah, I mean it was definitely a, you know, guided our conversations and allowed us to come to a decision easier and, you know, make a decision on where we're going. You know, there's always a, and so I think there's so much value in that. And then also just, I mean the independence around the actual offer and then negotiation. And yeah, that was a thing. And to be honest, I was my own worst nightmare looking at property. Um you know, all the agents, you know, I want to potentially, you know, work with these agents. I want to be known in the area up there. I was kinda, you know, being nice. So you've got some sort of ulterior motive going on. Well, potentially, yeah. I mean, you know, it was just a small place up there and you, I.

Veronica Morgan: Want to be the mortgage broker if a choice.

Chris Bates: Yes, exactly. It's a up on that Northern beaches pockets. But yeah, I mean that's the, you know, one that's, but then that's, that's completely conflicting to how I need to be in negotiation with, with purchasing. So yeah, fortunately that was you know, that's another reason why people would just, just that negotiation independence.

Veronica Morgan: I can honestly say for myself because you know, I bought, I bought another semi 2012, Alexandria, the process of buying that was very different to the process of buying the one in, in Leichhardt back in 2002. No, they were both investments. It was because I was a much better thinker around this stuff. And because it's investment, it is less fraught. Certainly selling that house in Leichhardt was, even though it was an investment that was fraught because money's money is personal, regardless of whether the property is an investment or not, it's very personal. And what it allows you to do is very personal. And obviously that was all tied in with this renovation, but purchasing any investment what was interesting, just the two different, and you know, I bought it actually is in October, 2012 honestly, I could dine out on the timing of that know right? The beginning of this,

Veronica Morgan: This, that boom. But that's sort of, you know, that was a little luck. I had been looking, but that was sort of more luck than good management is really being opportunistic enough to recognize or not recognize the property. The, and this actually is a, a little story. I was looking at a property in the same street for a client, for an investor client. And that client was overseas at the time and didn't want to make a decision without having seen the property. So I went through it and then when she said that, Oh, I thought, well maybe I'll look at it for myself. And I started doing our pricing research and in that process I could see that another one up the road had been on the market a year earlier and failed to sell. And it's what I call a Nana's house. Like I was in fabulous, really well maintained, but very, very dated.

Veronica Morgan: So it was actually owned by an 80 year old, a couple in their eighties and he was an interior decorator. So we had blue satin striped wallpaper and blue for shag pile. Carpet had mean Tufts is the 60s I'm a very successful one. No, well it might've been in the 60s but it was, it was very camp, but he was married to a woman for many, many years. Anyway, I saw that that had been on the market a year earlier and I thought, Oh, I like the look of that. I wonder if they'd still be interested in selling. And so I made an inquiry as to the, the agent who had headed on the market a year earlier. She gave me all the background. Tell me what they well, they, yeah, they wanted too much money. They'd had an offer 770,000 that, you know, that, and they turned it down and they should have taken it.

Veronica Morgan: It was a good offer at the time, et cetera, et cetera. And they sit, they should have sold because they're really, they're so frail and they need to be in a nursing home, et cetera, et cetera. So they'd be under a lot of pressure now. And she said, you know, I suspect they're coming back on the market cause they've, they've spoken to me, but I think they're signed with another agent, but I'll look out. And so she, she found out. Yes, they have signed up with another agent. She gave me the details of the other agent. This is a good about having relationships with agents. She's, you know, very generous. I rang that other agent, I said, look, I've heard it's coming back on, you know, I'd be very keen to look through it. I, I bought it for seven 70, same offer, the had a year earlier.

Veronica Morgan: I bought it for, they regretted not selling it at that price. The market had moved, it was worth more. Right. But because I did it very quickly and that was timing.

Chris Bates: The the loss of version that we couldn't solve or what we could have or we, we said no to that awful last time. I do it again.

Veronica Morgan: So I spent around about 20 ripping out carpet polishing floorboards painting, doing a few bits and pieces to it. And then you compare that to the one up the road. So you know it by that time, you know, cost plus Reno cost me 800,000. The one at the road that I had originally looked at solve rate 10, I think so it was, yeah, 10 grand head. She looked a bit better than one robot in. So I was

Veronica Morgan: Pretty happy with that. You know, that was a great end. Look, I still have that property. And down the track one day I will renovate that as well. I will turn it into something more. There's definite potential there and I'm happy for that to sit there and doing what it does. And that's a success story of an investment property.

Chris Bates: I think the as you're seeing, it's when you buying any investment versus buying a home, it's just the, obviously it's much more different from a mindset point of view. It's weighing, you overlay home buy with investing, things get very murky very fast.

Veronica Morgan: We're trying to buy an investment that you'd live in. Yeah. And I think that's you know, which you never going to live in a, I think it's just been released or you're going to live in it for a couple of years.

Chris Bates: We should, we'll have them in the first one. And are you really going to live in at longterm? No. and so, you know, I think there's one client I'm trying to help at the moment. It's,

Veronica Morgan: Can you afford to hold at longterm if you're not going to live in it longterm? And I think that's the important question is when.

Chris Bates: People don't really understand the impact of borrowing capacity and what you'd have to be earning at that point in time to allow that to happen. And redoing that calculation. Now you may have a client just recently you know, got a wanting V got a townhouse then really, you know, should have been thinking. We baby second child, I'm pretty sure going to want to buy a house upgrade, but just wasn't ready for that decision. So felt like they needed to be doing something.

Chris Bates: And they went off and bought an investment property in Melbourne and now, so they've got a townhouse, they're in their eye growing, got an investment property in Melbourne, but they would now want to buy a house in Sydney and they can't upgrade. The only way to upgrade now is to sell one property. They really just shouldn't have bought the investment property in Melbourne. And we had that conversation and it was, you know, that's where he's thinking was already. And it's just, you know, just that's where the thinking through the longer term upgrades would it potentially stop dividing the restaurant and potentially would have got into the Sydney market a year or two earlier, which is a bit of a painful thing to think through. So I'll let you know how my inspection goes today,

Veronica Morgan: Chris. So we're two weeks down the track. Last time we spoke you were about to go, you're nervous actually about going and having a look at the house that you bought that you bought within 24 hours of first seeing and you're worried about what was going to look like when you went through to measure up for various things. So here we go. Drum roll.

Chris Bates: Oh, so it was interesting. So it was, didn't start very well. So we've been going up to the Northern beaches, quite a few test runs. So you have the commute goes and you know, it's always been pretty good sailor. Like it hasn't actually been, it's like go, well there's most of of time. I mean going at four, four 35 which is the time I'll probably leave. And most of the time had quite a pretty smooth run. So that the perception versus reality, I thought it'd be much worse. But on this day

Chris Bates: It was definitely, cause I think when you look at Google maps, it's quite funny because you know, when you're trying to predict in the future how long travel times is, and it's usually quite accurate. But when it like does a trip to say, you know, Northern beaches or Newport or whatever, it leaves a huge window. It could be anywhere from 50 minutes to an hour and 40 minutes. That's how far. So Google just doesn't know cause that's how like unpredictable, the travel can be. Anyway. So this was one of those days where it was, so what have we done? And you know, I'm just, I just hate being late, just generally. It's just something I get uncomfortable with. So when I could see the time, so I was calling the agent saying, sorry, this is all going wrong. I must be used to it.

Chris Bates: Yeah, but I that they kind of got there. And now when we walked up, it was funny because, I mean, hopefully the owner of the house isn't listening, but you know, it's interesting cause the pre-inspection then they've moved out not only physically but mentally. And so the house is a not in a great state like boxers. It definitely does not look like it was presented. There's tree leaves everywhere. Like boxers, like the storm. It's not looking great at all. All the lights are off. I thought that was quite funny. Because you know, when you rock up to the dark, well it was not dark, but it was darker because you lights were off and you didn't turn the lights off. No, we didn't. I was expecting, I just thought it was funny because it was just, I was just walking in and just noticing the difference and all.

Chris Bates: Yeah. And so, you know, last time we went there, she got there early, she opened up all the windows, the doors and.

Veronica Morgan: Boxes lying around and all the lays, it means sweeped up and now you're be reminded of a little bit of your ongoing maintenance.

Chris Bates: It's true actually. Yeah, cause I was actually thinking that when I was going, I bet as I can do, it leaves a lot of good duties and to the upstairs back. And he was like covered in leaves and I was like, there's only two weeks ago we saw it. So it's not too much has happened. But no, it was it was good. I mean we had a we were thinking about painting it before we moved in. And fortunately the, a real estate agent had a little painter there and a little, cause he was a smaller guy and he but he was he was amazing.

Chris Bates: And yeah, he's got a whole big ladder. Well I said to you how you're going to do this. And he says, ah, you know, getting any scaffolding. Is that scaffolding? No, I said okay guys, are we now how to do it? And I was like, this is ceilings at six meters high. I'm not sure if this is safe, but he goes, no, he's he's got four men to do it. So, but that's I mean overall, like I think the painting was, is a big thing that we can do. And obviously the flooring and a few other things, but you know, did we walk away happy and, yeah, exactly. I mean the, the view and everything we wanted from the house is all there and it does need a bit of love. So more than we expected probably.

Veronica Morgan: Yeah. Interesting. So you felt relief that you hadn't made a mistake. Yeah. Is that fair?

Chris Bates: Yep. Yeah. So that was, phew. Yay. It was like, yeah, we were happy with the house. I mean it was a little bit darker than we expected. So that was like, I think Donna was the day, cause you've got the clouds and smoke, you know, we were always actually really smoky as well. So that was part of it. But, you know, I was like, Whoa, we can put a skylight here, we can put a silo there and a few things like that. So that was interesting.

Veronica Morgan: Oh so that wraps up. I had to find out, you know, and I think what we need to do is actually do it again in a year. See you living in it for a year. Let's see how you go.

Chris Bates: Excellent. Trying to say quite diplomatic with it and notice how I'm feeling and what I'm thinking. And you know, the, the, the buying journey. Cause I think it's interesting to reflect on, you know, your emotions. I'm still checking domain, right.

Veronica Morgan: So you haven't got out of the habit.

Chris Bates: I haven't gotten out of that kind of posts, decision, dissonance where you're still checking and I'm sure you have a

Veronica Morgan: Fear of a better option.

Chris Bates: Yeah. And every obviously every buyer does it. I mean we've done it before in other properties and I still do it on those like, you know, you're, you're always kinda watching and you know, tracking backing time. Cause you know, that's just what we do as humans. So it's interesting. And I'm like, Oh, would I buy that? And I'm thinking, Oh, maybe I want to say no, but I'm like, if I didn't buy this, would I go for it? Like, well yeah I would. So it's just interesting even watching that. But fortunately the market is going up in that area.

Veronica Morgan: You can feel very confident that you're in it, not out of it. Exactly. Okay. We'll pick up on this one in a year.

Chris Bates: I mean, you use time.

Chris Bates: Don't forget, we're on all the social channels. We're on Facebook, we're on LinkedIn, we're on Twitter, or you can connect with us on the elephant in the room.com today, you, the links are all there for you. Please connect and send us a message we'd love to hear from you.

Veronica Morgan: The elephant in the room property podcast is recorded at the Sydney sound brewery. This week's podcast was recorded by John risk editorial by Gordie Fletcher.

Chris Bates: Until next week. Don't be done by

Veronica Morgan: Now remember, everything we talked about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.

Veronica Morgan:            Now remember, everything we talked about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.