Episode 127 | Listener Q&A: Investment types, Land tax, Yields, Bank Collapses | Host Special

How do different investments hold up and what you want to know about the lending system
In our third Q&A host special, Veronica and Chris answer your need to know questions on various aspects on property and the process of purchasing:

Questions:

1. “What are your opinions on different types of investments (Student accommodation, holiday house, home dwelling, Commercial?)”

2. “If you live in the property are you liable to pay land tax? And if so at what value is anyone really exempt from paying land tax? If so, who? And how do you structure your property ownership to avoid paying land tax?”

3. “How does capital gains tax work and what is the 12 month rule? Are there any exemptions to capital gains tax?”

4. “Why do you think yields are lower from family home rentals”

5. “What happens to your assets if your bank collapses”

6. “Is it worth forgoing an offset account to go with a sharper fixed interest rate?”

This weeks Dumbo:

• How having a bad credit rating can destroy your opportunity of purchasing property

• What happens when you don’t seek out appropriate financial advice

RELEVANT EPISODES:
Episode 57 | Q&A 1
Episode 98 | Q&A 2
Episode 104 | Build-to-rent
Episode 117 | Fool or Forecaster report

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

Buy the book - AUCTION READY How to buy property at auction even though you’re scared s#!tless:
www.getauctionready.com.au
Use the coupon ELEPHANT for your 30% listener discount.

Send in your questions to: questions@theelephantintheroom.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 on 19 May, 2020.

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 buyers agent cohost of Foxtel's location, location, location Australia and author of a new book called auction ready, how to buy property at auction. 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 full or forecast to report which experts can you trust to get it right. The elephant in the room.com.Au.

Chris Bates: Please stick around for this week's elephant rider bootcamp and we have a cracking Dumbo of the week coming up

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 buyer's agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: In this episode we're answering some of your questions and can you believe it when you lead 130 episodes and we've only managed to do three Q and a episodes. This is our third one, so we want to encourage you to send more questions through. In this episode we're going to be covering what will happen to your property if the bank, your mortgage is with goes bust. Also alternative forms of property investment, a first time investor has been thinking about and whether we'd recommend them or not, a capital gains tax exemptions and my favorite texts to hate land tax and fixed rates versus variable in the current climate and when to forego an offset account.

Chris Bates: Thank you so much for sending in your questions and feedback. We'll tackle more of your questions in future episodes and we'll also look for guests who can share specific knowledge when we have more complex problems thrown at us. Keep them coming and remember to stick around for this week's property Dumbo as we have a doozy for you.

Veronica Morgan: So let's kick off with a question from Steve and it's a big one. He says your episode and the topic of build to rent becoming a trend has definitely opened up some further nighttime reading on the topic for him. Obviously I was curious if you increase, we're planning to do a topic on the real estate investment choices options that are out there in the market. For example, student accommodation investment, high yield, low capital growth, holiday pool investments. He's got okay yields more lifestyle choice, standard unit and home dwellings. Perhaps even commercial real estate as a relatively young first time investor. Having more information regarding the different choices and options in the real estate market would be good knowledge to have. So it's quite a big question. This one and we could probably tackle each one of these on their own merits. What do you think there Chris?

Chris Bates: It comes down to your goals, right? He's mentioned he's a relatively young first time investor, so you know, I reckon he's in his twenties maybe or 30.

Veronica Morgan: He's put apostrophe around relatively. So maybe he's in his thirties,

Chris Bates: Maybe thirties. Yeah, there you go. That's true. But I mean, so you got to think, well what would the, you know, what are your goals at that age and where in that stage of life and where you're going. I mean, if the question was coming from someone who was say, nearing retirement or in retirement or in later stages of retirement you know, if they're very wealthy versus they've got no other assets as well, like, so someone's personal situation will determine a lot of the time what's the best option for them to consider. And I guess that's the key here is to figure out what is, what are you actually trying to achieve? And I think when you're younger you're really trying to build your assets cause you haven't got any. And so you've got to always be looking at ways to grow your asset base rather than potentially get a little bit more income, which you can still receive by working.

Veronica Morgan: So what you said there, Chris is fundamental for any investor and that is working out a, what their goals are and be where they're at in their investment journey. And obviously if you're at the beginning of your investment journey, you really do need to actually grow your asset base. And in order to do that, you need capital growth, right? Which is in line obviously with what we bang on about all the time. Being that property as an investment vehicle is so risky because you're putting all your eggs in one basket, you're borrowing a lot of money. It's expensive, it's expensive to get in and get out of. Plus it ties all your assets up, sorry, all your capital up. So therefore you've got to make really good decisions because you can't afford to fail particularly with your first fund. And so therefore the capital growth story is always there for us in that anything else is too risky.

Veronica Morgan: So when he lists out things investment, he's come up with some examples. Some examples he's come out with, they, they fly in the face of one of the principles, which is in order to get good capital growth over time, you've got to have a property that has owner occupier appeal or at any within owner occupier appeal. We're looking at multiple buyer appeal, so we'd love it. Owner occupier appeal being a downsizer could like it or a first home buyer or potentially an investor as well. If you've got three different groups of potential buyers down the track, there'll be interested in that property. It's more likely to grow in value at a greater rate than one that's only going to appeal to investors. Right? So when you look at some of those ones that he's listed out, you've got student accommodation investment, well that is never going to appeal to an owner occupier and it's only ever going to appeal to investors and probably a very small pool of investors at that. So I would say the high yield, low capital growth, he's actually listed that in this question. That is definitely not something you look at as someone starting off your investment journey. Would you agree Chris? 170,

Chris Bates: You know, this is kind of the you know, the Warren buffet quote saying he can say who's kind of swimming naked when the tide goes out. I mean, this is what's happening right now, but student accommodation, right? So yeah, high yield, if you can get it, if you can rinse it, I mean vacancy rates in the city now, whatever they are, you know, potentially 10% in the Sydney CBD. So you know, high yield if you can get it. But you know, there's risks involved with that, which is kind of getting seen now. And low capital growth without a doubt. I mean the, the amount of demand that you know, that wants that type of property will pushes the property up, its investors and investors are kind of switched to tap on and off. And if it becomes too expensive, then they don't buy it.

Chris Bates: So you've always got this kind of downward pressure on prices and you can always build more. I mean, they can always knock down a building and bought, build more boarding houses and more student accommodation. So there's no real cap on supply at all. So personally I don't think they're great investments at all, really. And why yields, some people just always kind of get confused with you and they go, Oh, you know, what's the rent and is it a good yield, et cetera. But unfortunately, when you're young you know, you have to pay tax on yield, so it's all income. So even if you do get a better rent depending on how much you're earning, you're going to lose, you know, 40 or potentially up to 50% of that extra rent in tax. So yields not a great thing to get when you're younger and you're working, you're paying tax because you lose 40 or 50% of it anyway. So what you really want is kind of capital growth where you don't pay tax on it until you sell

Veronica Morgan: And even then you get a concession. So what's interesting though is this question was actually written before coronavirus. We have been storing up some of these questions. But what the, what the, the recent changes have really put the spotlight on is the volatility of certain sectors of the market where they do rely on only one type of tenant or one type of future buyer. And I think this is a classic where student accommodation really does rely on the overseas students predominantly and, and it's shown the, the vulnerability in the weakness of really, it's a bit like Airbnb, you know, for people that have bought apartments and decided that that's going to be, that the top apartment they want is one to appeal to an Airbnb, a market with, you know, they're really hurting now because they've bought a property that may not appeal to the general rental market in the same way.

Veronica Morgan: You know, so it's, it's a very, very limited way of approaching property investment. The holiday pool investments that I don't, I couldn't for a minute think of a good example of why anyone should buy one of those. You know, I, I've heard horror stories of people buying into these buildings where they've got like a managed, the buildings managed. You know, it's like a service apartments if you like, in the gold coast buildings managed. There's no real control over whether your apartment gets rented out more often than anybody else's apartment. You know, so then the pressure's on to keep your furnishings up to date, you know, the renovation, et cetera, et cetera. There's all these other pressures that come with having your apartment in that type of building. But also, you know, if it's in an area where owner, once again it's the owner occupied thing, this is purely holidays, there's a lot of wear and tear on these properties. What if you decide you don't want to go there anymore yourself? Like as a lifestyle choice, it's extraordinarily limiting. And I think particularly as a young person, you know, why would you limit yourself even to, to lock yourself into going to one place for your holidays every year. So there's lots of why that's limited.

Chris Bates: Yeah, I mean I've seen some really poor outcomes with sort of the service department world where, you know, clients have held them for 15 years and had negative growth and made very little rental income from them as well. Cause of all the service fees and, and things like that. So I mean, even if it's, even if it's just a holiday investment, you know, more broadly like you're going to buy a, you know, a house down the South coast or North coast or you know, rural or whatever it is you've got to be extremely careful that, you know, this is not just other investors buying there because if it's everyone's holiday homes in the area, there's a crash, like, you know, in the market people are losing wealth. What they get rid of is their holiday home. They get rid of don't get rid of their home that they're living in, which is kind of what happened in the GFC in places like Noosa. And it's happening right now in sort of places like that where people are kind of having to force sell to sell assets. So you gotta be really careful with any type of holiday area. But there are holiday areas where you've got lots of strong sort of growing communities and owner-occupied event, et cetera. And so they're potentially, you know, better to invest here, but they're not without their risks.

Veronica Morgan: Well, I think that's the thing here. This is all about risk and it's like a lifestyle investment. If you want to use the word investment or lifestyle property, it's, it's something, it's a luxury. It's, it's not really designed to actually provide you with the wealth sort of welfare state. Right? if that's even a term, you know, clearly I'm not a financial planner, so I maybe get the terms or wrong, but it's not, it's a luxury asset. It's not an essential asset. It's not actually really guaranteed to provide you with you know, with a future income stream or with future capital growth is going to help you in your retirement. So that's, I think the way it needs to be viewed that people are looking at investment sorry, as a holiday type area as investment. I think that they're using the word investment to justify making what is a luxury decision or, or is a want rather than a need. He asks about standard unit and home toolings. I mean, we talk about that enough I guess in all the other episodes. But then he has asked about commercial real estate. And I think that's an interesting area now to just post or were not postcode. We're were postcode restrictions. It's going to be interesting to see what happens with commercial property because I think the pattern with which we work and the demand on commercial real estate from organizations, smaller, large, it's going to change.

Chris Bates: Yeah. And then you've got lots of commercials, very broad. You've got retail shopfronts, you've got officers, you've got industrial, your warehouses et cetera. So commercial is extremely broad. Is there people who make a lot of money through commercial real estate? Without a doubt. I actually think some of the best and biggest property investors and the people that made the most money out of real estate is in commercial. The problem is the entry price to buy the big ticket items where you're going to get a lot of the big growth. And the real scarce assets is much, much higher than residential. And so, you know, you're just going to just playing in a different field, I think. And you just got to have a different asset base to play in it. And a lot of commercial developments can be yeah, it can provide amazing capital growth and amazing yield, but it might be a shopping center that's, you know, five to $10 million, you know what I mean?

Chris Bates: So it's not just a little shop front that might have the risks of rates retail just kind of vanishing, which might happen at the moment or old office blocks kind of no longer being needed, you know, so you just gotta I guess just with commercial, it's a very broad area. The biggest problem I find is just it's the entry price is too high for most investors to get in. And secondly, it's just the stage of life. If most of the desirability of commercial is the yield, the rent that's what you buy potentially with lesser amount of capital growth. And if you're at that sort of stage and you're hitting retirement, that yeah, maybe commercial is a good option because capital growth isn't your number one goal right now. It's that steady income stream in retirement. And so potentially a dry cleaner in a small little high street could be a good investment for you just to give you that regular regular rental income, but maybe not when you're in your twenties and thirties, where really what you're trying to do is kind of build your asset base.

Veronica Morgan: I think it's a really good point about the entry point with commercial that, you know, with residential that, you know, yes, it's still expensive, but yes, you can buy, you know, a smaller apartment in a really good location as a way to get into the market. Whereas with commercial, you know, when you're looking at an individual strata office or set or a shopfront, you know, that might be less expensive, but you know, you gotta remember also we didn't talk about the borrowing for commercial, you know, the banks view them as riskier. And so therefore, what's the LVR on commercials at 60, 60%?

Chris Bates: Yeah, he's probably got 70. And sometimes you can potentially can get up to 90, like you know, depending on your profession and what you're doing and history and stuff. So it's, but it's nowhere near as easy to get it as kind of residential loans, which so kind of lend up to 95% in some cases. So yeah. And you know, LMI is all there, et cetera. And there's a whole you know, lending system built on high LVRs whereas commercial, yet the banks are always looking to, to protect themselves because I know the potential commercial values of and more volatile. And you know, they, they go in the market cycles a lot more. You know, when we're growing, we want more and more commercial space. Businesses are growing. When things get tough, we, you know, we cut back. And so that's kind of the issues that commercial real estate have.

Veronica Morgan: I think that's the thing too, about residential week that one of the things that makes it very different asset class every single thing else is that people live in it and people have to live in something. And so people don't have to have a shop. They don't have to have an office. I can work from home. They can have an online shop these days. So I guess, you know, for small businesses, even a wheelchair to reinvent and, and not and there's also fashions, you know, in terms of the industrial parks and things that there's, when I say fashion is there's what's the word? There's periods of time where type of property would work very well with what's happening commercially, just generally in, in the business world. And then then that will change, you know, like drain drone deliveries for argument's sake, we'll change the way warehousing is done. You know, there's this, there's all these sort of technological and change that comes along and economic change that will fundamentally shift and change the way in which commercial property is needed. And so that's sort of more a macro level, but it, it, you know, that that filters down obviously to the individual investor.

Chris Bates: Yeah. It's been like what I was, you know I've been accused of potentially saying too many anecdotes, but I find that they actually help people understand. And back in there's about 2014 Oxford street in Sydney in Paddington. If he, if, you know, it was a, you know, a great, a sort of commercial street, all the shops are full, we fashion and retail. And in the last few years before that was like 2012, 13, et cetera. The shop started shutting down. And I remember I used to live not all along that road and I used to run a longer and you know, there was 30, 40, you know, places for rent and this kind of, this cancer that kind of spreads. And you know, what was a amazing sort of shopping strip sort of over time sort of lost its you know, whole appeal, right?

Chris Bates: A location to own a retail shop front to maybe a C or a D because, you know, there were so many options for people looking to kind of rent on Oxford street. And there's been similar stories in Melbourne in sort of Richmond and certain areas as well. So, you know, you just gotta be careful with commercial because you're right, the society does shift. And what we need today from a commercial point of view can be completely different in five years. But with home ownership and you know, residential property, you know, we still need the same amount of homes in five years time and potentially more because the population and so that's the more known thing, whereas commercial, you just don't know where that, you know, is that commercial space really going to be needed in the future under the second question over to you Chris. So the second question here is from Veronica. Thank you for this. It's all around land tax. So the first one, part of it is, you know, if you live in the property, are you liable to pay land tax? And if so, at what value is anyone really exempt from paying land tax? If so, who? And how do you structure your property ownership to avoid paying land tax? So there's lots of levels to this question, but it's all around kind of land tax and the rules around it. Yeah. My favorite

Veronica Morgan: Favorite topic, well, correct me if I'm wrong, but if you live in the property, you don't have to pay land tax. Correct?

Chris Bates: Yep.

Veronica Morgan: Okay. So that's good. We don't have to worry about that. One second part of the question is, is anyone exempt from paying land tax? Are you aware of anyone being exempt from paying land tax?

Chris Bates: Not really, but there are like certain industries like farming you know, if it's producing you potentially didn't, can exempt land tax boarding houses. I think some low cost accommodation caravan parks and things like that. Retirement villages, you know childcare centers, they sort of places can, but for most people, residential sort of housing investors, no, you've got, you got to pay 10 main tax so you don't get an exemption unless it's your home.

Veronica Morgan: So I'd like to direct anyone who's interested in this. Actually back to episode 116 where we really covered property in Texas, one Oh one with Alison Lacey who's an accountant. I specialized in this area. But so, but very briefly, and I'm recalling some of the things that she said cause of into this question is how do people need to restructure their property ownership to avoid paying land tax. And one thing she did mention was that, so if you've got your principal place of residence, then you buy an investment property, then there's a threshold, right? And so, and it's the unimproved land value. So if that second property, the unimproved land value of that property exceeds the threshold, then you're going to have to pay land tax on whatever amount of money is over that threshold. Right. and eat and then if you have another property and so on and so on. And she did say one, one strategy was to actually make sure that you buy in different States because this is a state government tax, not a federal tax.

Chris Bates: Yeah, I mean a hundred percent. So it's comes down to who's owning the property. So the no, the taxpayer I guess. And then what state, cause it's a state based tax. So yeah, I mean, a simple way is to go and buy five different properties in five different States. And if the all those properties, the land values underneath the land tax threshold which might be say 500,000, let's just call it in each state then you wouldn't pay any land tax and you could potentially have two and a half million dollars of land and not be paying any land tax.

Veronica Morgan: There's a weakness with,

Chris Bates: Is that the best decision? Maybe not. No. Do you really want to be going to buy a property in Northern territory or South Australia or WA? And is there an opportunity cost of buying that? So you can avoid paying land tax. But at some point in time that that might be the best decision you might want to buy some in new South Wales, some in Queensland, some in Victoria because you're building up and land tax threshold gets, the percentage gets bigger, the more lens you've got. So there's like usually a second rate of how much they charge you. So you know, the more land you've got, the more tax you pay. So potentially it's a good idea to start split your world if you get this problem across different States. So it's a good problem to have in my view

Veronica Morgan: There is the other side of it as well is that if you buy a house that unimproved Lando, that house is going to be proportionately more than if you bought an apartment for the same value. So say for argument's sake, you spent one point $2 million on a house in Sydney you're not probably not going to be in the inner ring if you buy that house. So, or if you are, you might be buying a highly compromised house. So you might be suffering on, on capital growth because of the choice of asset because of the budget. But if you went out with 1.2, you could buy a really good apartment, a really good location with scarcity, et cetera, et cetera. Probably will go up in value more than a compromised house. But the land portion of that apartment is a lot smaller. And so you might still be under the threshold and not pay any land tax. So on that one investment. So there's, there's lots of different ways that sort of cutting and dicing this. But I think, I think if you're going to make sacrifices to the caliber of the asset in order to stay under land tax threshold, then you could be actually shooting yourself in the foot because you might not be buying as good a quality investment.

Chris Bates: A hundred percent. It's the land tax is tax deductible as well. So you know, if it's, you know, a thousand dollars you know, it's really only $600 out of your pocket, right? So or $500 depending on your tax rates. So it's not the end of the world if you have to pay the land tax cause you get 40 or 50% of it back. And then you've got to think of, well what actually, what am I actually getting to? That is land and land generally what goes up in value anyway. So you actually, it's a good thing to be buying now. I a hundred percent agree with you.

Chris Bates: Yeah, exactly. Yeah. And it actually grows. But you're right with apartments. But if you kind of took that strategy and put that into Melbourne or into Brisbane you know, potentially the apartments those apartments in those others haven't grown anywhere near as strongly saying Sydney. So I agree that the, the apartment strategy is a really good one in new South Wales where you can buy a very scarce apartment, get a much smaller land content versus say a house and potentially avoid paying more land tax. You know, there's some things you can do with buying companies. You can buy in certain trusts in certain States as well. You like for example, in new South Wales, don't know that you can use fixed trusts and in Victoria, et cetera. But yeah, but you've got different thresholds cause it's in a different name.

Chris Bates: You can potentially open up another threshold, but there's problems, there's problems buying companies, you know, you don't get their capital gains tax exemption et cetera. So, and you might have problems with borrowing and actually getting banks to lend in the company and things like that. So yeah, there's all these sorts of other ways you can get tricky. The reality is, is the government gonna let you just avoid land tax easily? No. and is it the end of the world if you have to pay a bit more land tax if you get a quality investment? I don't think so. So yeah, that's kind of the crux of it.

Veronica Morgan: More on tax. We've got our third question. Aussie has asked, how does capital gains tax work and what is the 12 month rule? Are there any exemptions from capital gains tax?

Chris Bates: So it's the same as land tax. I mean, this is one of the things that pushes up house prices really is that the gains on home ownership or tax rate you know, if you buy a house for a million dollars and you sell it for $2 million, you know, just, let's say you make a million dollars there, you don't pay a single dollar in tax. And what generally most people do is take that gain and then go and borrow more money and then go and buy another property. And so one of the things that you know is pushed up our house prices the most is we don't pay any capital gains tax on home ownership. The second part to that question is how does capital gains tax work? Well, you know, when you earn an income, you pay tax you know, and you pay that at your marginal rate, whether that's 35, 40 or 50% is rounding up.

Chris Bates: It's the same thing with capital gains tax. You, you've made a gain, the government want to tax you on that. Now what they'll do is they'll allow you to potentially minus off the cost of making that gain. So, you know, if it's a property, they'll allow you to minus off the legals and the you know, the real estate agent, you know, 2% to sell it, et cetera, but they'll also minus off the cost to buy the assets. So stand Judy and maybe some borrowing costs, et cetera. So this is kinda, you know, whatever your net gain is, let's just say it was, you know, $900,000 the 12 month rule make basically means if you've owned that property or that asset for more than 12 months, they will have that gain. So in, in the tax offers view, you know, yes, you might've made $900,000 in your pocket, that's your net gain, but the ATO LA to have that.

Chris Bates: So they say, well, you're only actually made four 50 and then that four 50 is added on top of your income. So in that tax year, so most times that would push you into the top tax rate at 50% or 49 and then you'd lose 50% of that gain, roughly. So in this situation, you really are, I think the best way to think about capital gains tax is if you sell it, you pay it. So a lot of best strategy with Keppra guys tax is buy good assets and hold onto them because you don't pay taxes. So, but even if do sell, you're really only going to lose about 20 to 25% of that gain in tax because it's half of the capital gain times your marginal rate.

Veronica Morgan: And this is one of the things that was under review. Well, under the firing in the firing line with the labor election policy back in 2019 which obviously failed, but it was branded the negative gearing tax, but in reality or their, their tax reform. But in reality they had the tax concessional the capital gains tax concession in their science because you know, 50%, you know, and I actually, I have to tend to agree, it is a bit generous. So it's one of these days it might end, you know, but for the moment, it's a really good opportunity for investors.

Chris Bates: It is. Because if, for example, let's say you and you know, over a hundred and you know, the site cut 200 grand, you pay 50% tax. So you know, every single dollar that you earn, you lose 50% of it, you know, so it's, it's kinda it's tough going. But with capital gains tax, that max you're going to lose, he's like 25%. Right? So it's a big benefit to invest in assets that grow in value because you pay a lot less tax that way.

Veronica Morgan: Okay. So we've got our fourth question. Chris, you want to give it to us?

Chris Bates: So this one is from Marie. I did pick up from you in the past episode that you thought family home being rented out would produce a lower yield. We've had our place a four bed, three bath renovated with pool on an acreage in oxen, Ford in the gold coast for rent for three months. Not much interest have dropped price from eight 25 to seven 90. Why do you think that yields are lower from family home rentals?

Veronica Morgan: Well, there's a one here. The fact it's on acreage would make it even harder because you've got a very, very limited pool of potential tenants who would want to take on the responsibility of looking after more grounds. I would say that, that, that could be one thing that's particularly an issue with this particular property. But the, generally speaking there are, there are fewer potential tenants for larger homes. You know, you've got gotta think that a lot of families do want to own. So I don't know what the percentages are, but like there's probably more percentage of families would own than rent as opposed to say apartments where you've got, you know, younger people and, and you know, young couples and sharers or you know, living in share houses for argument's sake. So I guess the lack of the demand will keep a lid on the rent, but also a lot of tenants, you know, they really don't want to be, you know, having a pool and having all those gardens and all the rest of it that, that is a lot of work pretends cause they are responsible so they've got to spend more money maintaining it. So that's one of the reasons that that would keep a lid on the rent too, I would think. So. It really just comes down to demand.

Chris Bates: I have a few parts to it. I think when you, when you talk about homes versus say apartments it's generally because the low yields caused by high prices. It's cause the price of the asset has kind of gone up over time and that rent as a percentage of the asset values now very small. And you're right, I think a lot of people, there's a, there's a price floor and a price ceiling on rents. You know, like if you think about a young couple you know, they might be comfortable to spend, you know, six to $700 a week in rent, but they don't want to go spend 1100 because you know, there's enough choice at say seven to 800 a week. And so they don't just go and there's not just this kind of EMF, infinite sort of growth in sort of rent.

Chris Bates: And so I think what you'll find is that most people who are renting are trying to say potentially to buy houses. And so, you know, they, they, that I think does limit how much people will go and spend on renting a three, $4 million house because there'll be another other options for them and they'll just won't justify spending so much money on rent unless they have to. And so that's I think another reason why houses don't get the rent, even if the house phase worth a lot of money because the people renting it go, you know, what do we really need to go and spend two and a half thousand dollars for this when we can rent a really nice apartment for, you know, $1,200 or something. So I think that's another part to it. On top of the upkeep, et cetera.

Veronica Morgan: So we've got our fifth question. Here's a really good one from Ravi and I'm sure you can tackle this one. Chris. I was wondering if someone on your show going forward can answer a question. It relates to offset loans. If there is a bank failure or Baylin, which I understand would proceed the former who owns the property and money as in can they confiscate your property as their own equity as part of the bail-in. This is crazy stuff. I know, but there are respected people who do not rule out such things occurring post debt problems. It's easy putting brackets, Jim Richardson and Robert Kiyosaki, my bank guys can't or don't answer it because it's never occurred. Do you have an answer?

Chris Bates: Offset accounts or a savings account? So there's govern guarantees there to protect you. I think it's after about two 50. The reality is in a bank failure you know, there's usually assets that the bank gets sold on and the assets get sold onto different you know, it's a liquidated, it's like at any other business going bankrupt, they'll start to sell the assets. So you know, the loans of so yeah, there'll be an asset there. Your mortgage is an asset, so that'll get sold to another bank. Your cash in the offset account should be yours and you should, if you can't access it, there'll be government guarantees that to say two 50. So you've gotta be a little bit careful with this. Let's say you've got a $2 million house and you know, a million dollar mortgage and a million dollars in the offset or something.

Chris Bates: And the bank that you've got your money in, the offset goes under, like this would be a pretty bad situation, but you potentially could lose a lot of that money and your mortgage would get on sold to another bank. So that's kind of roughly what would happen. And that's what happened in the UK when through the JFC, you know, banks got sold off. You know, the, the loan book got sold off to one bank and the asset book, which is say this, that the savings, which is the liabilities, the bank got sold off to another bank so banks can get split up and sold off.

Veronica Morgan: So, even if you have an offset account, you could foresee that potentially, I mean actually it's funny cause we do talk about offset accounts being a really good thing to have, but there's obviously an element of risk associated with that. As you say, the offset balance is considered savings. Which part, which are covered by bank or a government guarantee, but that potentially could be separated. That's the interesting, that's quite scary.

Chris Bates: If you all of the camp and you think that a bank an Australian bank seen to go under and do you think that your you would potentially wanna use one of the bigger banks? So, you know, and I, and Z going on that is, or you know, one of the other big four is a catastrophe. Potentially if they're gonna let a smaller bank go under, it's not, you know, they can't let a bank would say millions and millions of Australians kind of go under you know, too big to fail. And unfortunately that is the case. So yeah, if you're really worried about these issues, potentially have your money at a big bank. And then yeah, and potentially only limited it to 15 year offset and then put two 50 at a different bank in two 50 to different pack.

Veronica Morgan: If you're in a a smaller bank, you know, one of the third tier lenders for instance, and they, and they do offer an offset account. Are they a, your lent is your borrowing, sorry. Is your savings or your savings protected by the same government guarantee and that type of institution?

Chris Bates: Yeah. Any idea is kind of protected by two 50? I believe so. Yeah, deposit Australian deposit institution or whatever it is. So yeah, it's your card, but you know, you've got to kind of understand that they still have situations happening. It's pretty, even in the, in the UK when the situation kicked off in the JFC they didn't really let any banks kind of go under all the other banks, just no one really lost money. All the banks just got sold off to other banks. Because it's, it's, you know, a total run on the bank would cause sort of riots on the street. If you think about you losing, you know, all your wealth overnight you're not going to be happy. Right. So the bank does everything they can to, to kind of protect the asset holders.

Veronica Morgan: Yes. And obviously where the government is protecting asset holders as well because the government doesn't want to run on the banks and if this is potentially going to happen, they might have an increase, you know, the two 50 to a million dollars and they'll do all these things to bring confidence to the banking sector. And so, you know, it's highly unlikely these sort of things would happen. But if you want to kinda, you can kind of sit in your sort of doomsday camp and worry about all these risks. But is it a no point, not, not 1% chance? Yes, potentially. You know, is it something to be seriously concerned about on a daily basis? Probably not.

Veronica Morgan: That's interesting though. I like to I thought it was a good question. Then we've got another one for you, Chris. This one's from Daniel at the moment. There is a reasonable difference between variable and fixed rate mortgage for principal place of residence. I'm tempted to shift however I'm concerned that no, I've said account for fixed. Is there any way around this?

Chris Bates: It's a common mistake. I sometimes see when clients come to me maybe seeing another broker or going direct to the bank and they didn't really understand how loan structuring works. And some people believe you've got over to fix a hundred percent or you gotta have a hundred percent variable. You can't have half fixed, half variable or 80% fixed, 20% variable. So you know, and so what they'll do is they'll go into a bank and then they'll say, Oh yeah, I want to fix my loan. I'll fix it all. It's the, you know, one of the common mistakes I see with mortgages that you should not do that. The reason why she don't need to, you could potentially keep, you know, 10% of your loan in variable and then have your offset account linked to that 10%. You're right, you can't have offset accounts.

Chris Bates: Generally linked to fixed loans, you potentially can pay fixed loans off faster, but you know, with, you know, maybe 10, 20, 30, 40,000 or something, but generally speaking, the best way to structure these, have a decent portion variable and have your offset account linked to that portion and never fix your whole loan. Entirely. You your second, the first point there around tempted to fix cause of low rates a hundred percent right now, I mean you've got you know, two years, three fixed rates around 2.2, 2.3%. And good variable rates right now around 2.7. And most people are paying more than that. Most. Most people are paying, you know, closer to 3% on their variable rate. So you know, if you potentially could fix for 50, 60 basis points under what your variable rate is today it's a pretty good bet. Because the RBI is at point 25 basis points that can only go potentially a little bit. There are any, firstly, they're starting to talk about maybe going to zero, which was a possible apparently a few weeks ago. And so yeah, I think it's a good bet right now to fix just because of where the RBA rate is and just how far under the variable rate it is from day one.

Veronica Morgan: It's interesting though, because like the banks have got access to, you know, much smarter people than your eye. In terms of they're predicting which way interest rates are going to go, aren't they? So then if they offer a fixed rate that's lower than variable, that's because they really think that rates are gonna go down. 

Chris Bates: Sure. Just not at the moment. Unfortunately. at the moment they've got access to an RBI funding line that the banks, the IB are using to allow the banks to lend at cheap rates and the IVR getting that money for three years at really cheap rates. So the banks have got access to this funding line just for the next three years, guaranteed at low rates. And so hence why and I was also part of the response with this sort of Corona was to give them this funding line. And the bank said, okay, well we're going to use this funding line and we'll offer our clients really cheap fixed rates, but we're not cutting our variable rate because we know that this funding line is not going to last forever. So in this situation is a bit of a unique circumstance, which is causing the fixed rates to be very low. But generally speaking, what you were saying is true, that banks go to the wholesale market other banks, institution, super funds, bonds, et cetera and they raise that capital and then they lend it out. And so if they can raise that capital out cheaply, longer term or more expensive, longer term, that will drive their fixed rates, not the RBA funding line, which is what's happening at the moment.

Veronica Morgan: Cause it's sorta interesting. I go back to when I got my first mortgage. Oh God, it's about 25 years ago now. And you know, and I've often mentioned this, that you know, the memory of my friends being stuck with sort of 17, 18% interest rates in the last recession you know, was always large in my mind. And so I was really proud of myself. I fixed half of my first mortgage at 9.85%. And back then fixed rates were higher than variable. And because you were paying, you know, you offsetting that risk cause everyone remembered that Oh seven, 8%. That's huge. I'd rather pay and have a, there was, I think a couple of percentage points difference. By the time my fixed rate period expired, the variable portion of my loan was down in the sixties somewhere. So I've been paying his higher interest rate by 3% higher for quite a period of time on a portion of the loan.

Veronica Morgan: But you know, if recent years, so the last decade it's switched where the fixed rates have been less than variable. But I guess also even back when, 25 years ago, I don't think there was such a thing as an offset account then. So there's obviously benefits to having a variable. Now that I think potentially, I might be wrong, but I certainly wasn't aware of offset accounts back then. So that, but I find that interesting that it's cheaper to fix and has been for a long time given that it used to be that people will pay for the privilege of, of fixing for this certainty.

Chris Bates: Yeah. I mean we had you know, I guess higher rates than the world and so a lot of the funding around the world was potentially cheaper, longer term. So the banks were forcing rates to go down and but fixing, fixing can flip pretty fast. Wholesale funding international markets can get more expensive. And when it's, for example, Donald Trump got in fixed rates jumped on percent in the space of just a few months. They went from a five year fixed rates, good, about 3.8% to 4.8%. Not long after Donald Trump got in because he was going to go spend all this money and potentially create inflation and longterm rates went up, et cetera. So, you know, they, they do move around and so, but you're right, like they have been kind of on this downward trend. The question is right now, can their rates go lower? You know, the RBA is at 25 basis points. All the banks around the water are zero. You know, are we going to see variable REITs at low twos? It's, it's hard to know, but you know, that's kind of what you could already fix in now for, you know, two or three years at, you know, 2.1, 2.2.

Veronica Morgan: So summing this up, the way around not having an offset account for fixed rates is to split your loan into keep part of it variable that you can have an offset attached to. And then the rest of it. So what you're saying, yep.

Veronica Morgan: Every week we hear incredible stories of the dumb things. Property buyers do, dumb things that end up costing them a lot of money and or creating a whole lot of stress mistakes that can be avoided. Chris, if you've got a property Dumbo for us this week, we can all learn what not to do from these stories.

Chris Bates: We've got plenty problems. We do see all the steaks or things that people could do better. And I think this one I think is something that we just, it's kind of finance one Oh one. And you know, you really unfortunately these areas take years to fix and this is all about taking care of your credit writing and making sure that you're just doing the basics. I've got a client, you know, just recently, you know, big transaction looking to borrow a lot of money. They earn a lot of money and just haven't been paying their credit card and miss payments and just really kind of sloppy sort of day to day management of their loans. The reality is they've got more money coming in then, you know, then they and money going out and they're just not doing the basics.

Chris Bates: And the reality is most banks won't lend to them. And this situation takes two years to clean up your credit. In this scenario, it can be a lot worse than that depending on if there's a default and all this other thing. But just keep your, keep your credit rating and take care of it because you just don't know when you might want to borrow money, et cetera. And it, and then more and more credit ratings going to matter because of open banking. And you can, it's a much easier for your other banks to see what your other credit limits are and your behavior is at other banks. And so going forward, I think your credit rating might become a bit like the U S system where it's really based on your point system and that may even determine your rate. So I'd really be taking care of your credit rating right now and just making sure that you really understand how it works and just doing the basics, like paying your minimum repayments.

Veronica Morgan: Yeah, that's a one Oh one. It's funny, isn't it? Yeah. There's some people are very discipliner on this stuff and others aren't so disciplined, but it's going to cost, right.

Chris Bates: Most people just think are missing your credit cards, just, Oh, it's 10 bucks. And if you've got, you know, you're earning a lot of money, you know, 10 bucks isn't a lot of money, right? And you don't pay a bit of interest, it doesn't really matter. Right? But that's not the, the issue here is if it's actually just making sure that you're paying your obligations of alone, it doesn't matter. That is a thousand dollar limit or a hundred thousand dollar limit or you know, it's a car for $10,000 or a hundred thousand. It's just doing what you said you're going to do with taking out that loan. And if you're going to go ask for a multimillion dollar mortgage, which was in this situation their bank won't look past that small credit card dismissing the repayments. So you just gotta be really careful. I do think we're going to move to a more of a points based system and who knows, potentially in the future you'll basically be able to borrow based on your LVR but also your credit rating, you know, better credit rating might get you a better. Right.

Veronica Morgan: Wow. And so there is also, I mean you get a what are the credit rating? Right? So what does that mean? What is a credit? I mean I got one, I got it recently. Mom was pretty good, but then what is pretty good? Like

Chris Bates: I think there's, in Australia it's really just a negative system I think at the moment. So it's like something you're doing. You know, and I think applications for credit, like if you go and try to, I've seen clients try to play the point system with credit cards and things like that. It just doesn't look great. You know, when you've got after pay and you know, you have applied for six different credit cards in the last year and things like that. A lot of the time it's usually fine. But sometimes if it's a, a loan that might be in mortgage insurance territory and it's high risks and the bank might say, ah, you're just looking at a bit more of a high risk customer for us. Your kind of appetite for debt and credit isn't really the type of client that we want.

Chris Bates: So yeah, at the moment it's really just an negative based system. So if you do something wrong that it will really affect your credit rating. Whereas like for example, in the U S like actually having credit and paying off credit gets you points. So taking out credit, paying it off is actually good for your credit rating. It's not really like that here. So you know, it's, it's kind of like sometimes you have no credit and you haven't missed any repayments. You have a good credit rating here. Even though you haven't had any debt. So it's kind of a bit of a miss but I think it's moving in that direction. So yeah, you just gotta be really careful with your credit rating because you know, with open banking coming forward, banks will know absolutely everything about your credit and your account behavior because it has to get shared between all the banks. We want to make you a better elephant rider. And this week's elephant rider training is

Veronica Morgan: Well way back in the territory is seeing a lot of negative headlines around property prices. And it always irritates me mainly because I guess when you see our annual fill or forecast to report, which you can of course download from the website, the elephant in the room.com did I you,And you can go back and listen to our most recent episode 114 which is a 2024 forecaster report episode. But the thing is, so we, you know, we know that forecasters get it wrong more than they get it right, but they're back out again. Commbank spin, you know, quoted as saying that a property market's going to fall by us. Third, you know, in a BS behind them saying similar things, et cetera, et cetera, et cetera. And here we go again. It doesn't seem to matter that none of them got it right in the last downturn. It doesn't seem to matter that forecasters get it wrong more than they get it right. But individuals have been reading it and being I guess using this sort of a headline data to make their decisions. And so I guess what I want to talk about is that why are these forecasts credited in the first place and why are we as individuals using that information that's been created for a very different purpose?

Veronica Morgan: It has actually, actually, none of it's actually been created to allow individual property owners or property buyers to make decisions on their situation. It's been created for a macro macro decisions from a business case. There's lots of reasons why these economists come out with these, this data and this modeling and these predictions. And yet it's because it's on the headline. Because the worst case scenario is, is usually what the headline is made out of as well. Individual owners will look to that and think they're going to make their decisions on their circumstances based on that. So I just really want to talk about that in this boot camp to say, well look, let's take a step back and realize that this information doesn't necessarily apply to you.

Chris Bates: Yeah, I mean, it happened to me last week. I mean the CVR report came out on Monday, I think it was. And you know, all the papers picked up 30%. And you know, CBI thinking house prices are gonna fall by 30%. I mean, that was one of their scenarios. It was actually the more negative scenario. But that was what the headline, this is what people picked up. And I had a client, you know, ring me up and he was still in his cooling off period after purchasing. And we had a really good chat around that and what does that actually mean to them and the type of property that they're buying in that area and how does that affect their situation and potentially has completely different stories. So you're right, I think it's, you've gotta be very careful reading the headlines because yeah, they're always there to sell the news.

Veronica Morgan: Well the headline is there to sell the news and the very fact that they tend to latch onto the worst case scenario because when we interviewed Shane Oliver you know, the, the head economist at amp capital back in episode 117 and that's an excellent episode to go back to if anyone's interested in this sort of thing because he talks about really the value of the forecasting. He also talks about is his own accuracy or lack of, and he also talks about the set of data or information that is used for, for putting together the case at the time, comes up with these predictions. And why it's flawed in terms of making your day to day decisions based on, because of really the purpose of that that modeling is not around, as I said, individual decisions. So that's a great episode back to 117 and you know, so you got the headlines wanting to basically sell advertising and let's just, you know, click bait and all the rest of it.

Veronica Morgan: Then you've got the actual individual bank that's coming up with those scenarios because they've got to have their own, make their own business decisions based on this sort of stuff. You know they got a lot of money at stake. They got to make decisions about who they're going to lend money to, what sort of properties is going to lend money on. Who's the bigger risk, you know, how are they going to protect the bank, the bank's business. I mean, there's all of that stuff that goes on in terms of why they're actually doing this modeling. And then the individuals need to understand that not, you know, when they come out with a data point or with a prediction that says, okay, worst case scenario property in Australia could fall 30%. That doesn't mean that every single house, every single apartment is going to fall in value by 30% that an understanding on the micro or the granular level is so important to really fundamentally get whether you're buying a good asset, whether you're holding a good asset and not knee jerking out of it or not knee jerking and not buying something when it's actually the right property for you.

Veronica Morgan: So it's just something that I really wanted to, to bring up that these predictions and what made to help individuals make decisions.

Chris Bates: Yeah, I mean I can kind of watch the read the media. You've always got to kind of kind of laugh at kind of somehow the story behind it and the facts they're using a, I mean there was two just last week that on Saturday there was an article about all the housing process falls and the journalist base for using an example of a mining town. And then kind of then made that sort of analogy that the other markets are gonna fall like these mining towns and it's completely different. And another article was a prominent buyer's agent that's out there that, you know, quite famous. He's getting out of his property because it's a better time to sell. And so he was kinda and then know using that his reason a buyer's agent is selling a property that's and he actually said that it's a better time to sell them in 12 months time. The reason why if you actually looked at the property that he was selling, he was on a busy road next to a train line. It wasn't, the height wasn't actually a great asset. He was just selling one of his arms, poor assets that he knows won't go well in a downstairs. Yeah.

Veronica Morgan: I don't know who you're talking about. I honestly don't. But I mean, why did he buy one of them in the first place?

Chris Bates: Exactly. I wouldn't want, if I was a boss, I would want to know people I know.

Veronica Morgan: I wouldn't think about fricking than I'd ever bought one of them.

Chris Bates: But the thing is, in this scenario, you'd be opening the door on Monday and telling people what's a good time to buy. He's a buyer's agent. So you know, I do find it funny how the media always just working to latch on to stories and yeah, you just gotta be take it with a grain of salt.

Veronica Morgan: Actually. That is interesting. You just say that about, and he's a buyer's agent. I've actually come across, I've had a bit of inquiries lately from you know, potential clients and, and it is quite surprising the amount that has said, Oh my God, it's so refreshing to hear you talk about the pros and cons and what may or may not happen. Not with these sort of great sense of certainty because so many buyer's agents are basically just pushing this line. You got to buy now, great opportunities, great opportunities. And it's not really true. You know, it's, there's not a lot of stock around and not many people are actually under pressure. So therefore there's not a lot of great opportunities if you're looking for a bargain. And look, we can have a whole episode on the folly of doing that anyway. But you know, and then I talked to selling agents, you got selling agents telling vendors one thing and they're telling buyers a completely different story. And it's really, really awful. And I have to say that it is a period of time that is not making me feel very proud to be a real estate agent.

Chris Bates: Yeah. I mean that's the always the challenge of a real estate agent. Lots of kind of middle sort of jobs, right? You've got the buyer and the seller and you know, both motivated potentially by different things. If the buyer thought prices were going to fall, then they'd wait. You know, but then the, a lot of what motivating the seller sometimes is they're worried about prices. Again. It's that's sometimes the, unfortunately the page that the best real estate agents, the most honest ones, don't get that the seller to sell because they say to them, look, we don't know what's going to happen. You know, I'm sure where the price is going to be cheaper in 12 months. I think the best real estate agents who do that longterm survive though cause they built a reputation on good advice. I, I, I'm the same as you actually.

Chris Bates: I think a lot of the stuff I'm reading out there, I think a lot of people are too early to call that. We're out of the woods. You just gotta buy, market's gonna go up. They're looking at potentially one or two data points, like real estate search activity, well, or low stock or and they, they're kind of pulling this one data yeah. Clearance rate. Yeah, exactly. And then they're saying, Oh, our market's going to go back up. There's so much more at play. Here is a bigger sort of global story. That would impact us here. And you know, a lot of these things haven't played through yet. You know, we haven't seen the unemployment, the job keeper go. We haven't seen what happens in the U S and the UK economies and Europe. What happens in China with, you know, a lot of these things impact us as a country in our economy. We haven't seen how bank lending's going to play out et cetera. So there's lots of story here. So but I feel like a lot of people are either playing on the using one piece of data like at the moment, like discounting has gone up in Sydney property. So, you know, if you pull that one piece of data, you'd say the market's going to fall because you know, price discounting is increased on Sydney properties.

Veronica Morgan: I read, read about that. There was core logic data that came out. And what really irritates me is that you can't at that in isolation because the reality, they're talking about discounting in April. Right. And the reason the is discounted in April was because we couldn't hold auctions and properties that had been pitched too high because nobody knew where to get these properties. Right. In terms of pricing. And of course they're going to get discounted because they're going to get it wrong. And, and that it's, it's, it's a very unique market circumstances. And so that's gonna result in market discounting because of course all these properties are coming to an auction campaign. All the owners had this elevated exp ex expectations on price because of the way the market had been as early as beginning of March. And they only caught out. So, so I think that to just say, Oh my God, prices are falling.

Veronica Morgan: Or because of discounting is, yes, I agree. As a single data point without putting any context is really, really dangerous. And just to play that out, I went to an auction on Saturday night before a client. We didn't buy it. Pand this is interesting because this property sold for, I think it was 3.8 2 million right now. The agent had brought it to market originally and she was talking to buyers and saying, look, I really think it sits somewhere between three, seven, three, eight. Now nobody wanted to hear a bar of that, including my clients. They didn't want to hear a bar of that. No, no, no, price is gonna fall. Price is gonna fall. Now we go through the whole exercise and then of course in that whole process, auctions were allowed to be held again. So they set an auction date. But in that process that actually reduce the, the the guide to three, three to three, four now in consultation with the owner and the owners are reserve ended up being 3.5 at auction and it ended up, you know, there's seven registered bidders and ended up getting competition that sold at 3.82.

Veronica Morgan: It was a very good asset, is a very good property and that's the conversation with our clients is that this, it's hard to know exactly what will happen because here we are in new unchartered territories. This could happen is a V various scenarios that could happen at the auction. But one thing we need to remember is the caliber of the asset, the caliber of the property. It's a scarce property and that's why people lined up for it, you know, registered to bid and bid for it and actually ended up selling slightly above the range. The agent was originally pitching it at no, she had to under quote that and, and I think she did her job very well actually. I think she, she had that conversation with her agent, sorry, vendor. The vendor's reserved came down, she was entertaining. She was introducing that 3.5 figure to all the buyers.

Veronica Morgan: She did her job very, very well. That agent but it just shows that that was a pre covert expectation if you like it required that that re reduced quoting to get it there. But it got, it got the end result, not one bar. I wanted a bar of that agent telling them where they thought, where she thought the property sat price-wise. So, but it's also an a grade asset that did very, very well in, in uncertain conditions. And that's the sort of property that will continue to do well a hundred percent and then they sort of down to NCS, you know, one the things that supporting the

Chris Bates: Market is, you know, low supply or low listings. And you know, and that's even worse for, you know, quality assets. There's actually less quality assets on the market now. Cause a lot of them hold on through these periods. So you see less quality properties on the market, even compounding by low listings anyway. You can say that in 2018 like there was properties that clients were interested in when the market was, you know, prices were still falling. Market was down 10 to 15%, and there was still properties that would come up. You know, I remember wanting a client was looking in the inner West, it was a cracking frontage, great street and it went for a great price in those huge competition in because there was just nothing at that quality had come on for ages. And when it falling deed, there was a whole truckload of buyers willing to try their luck and they ended up going for a great price, which I think exactly what's happened in this situation. Right? So you're right, I think the quality assets are hard to buy in good times and even harder to buy in downtimes because there's just very few of them on the market.

Veronica Morgan: And that's the moral of the story. So we thank you for coming and joining us for this Q and a episode. As we said earlier, please send us your questions and we will put together another episode in the future where we answer your questions. We love your feedback. We do actually read and listen to every review that is sent to us and we do take it on board very seriously. So we'd love to hear from you in terms of who would you like to hear from, who would you like us to interview and what topics are you interested in us covering?

Veronica Morgan: Join us next week when we interview Mike Mortlock. Mike Mortlock is a self-confessed data nerd, but what he is bringing to our system, really great insights into the actual behavior, all the property investors in Australia and blows some of the mess. So we thinking about how many people really are investing in brand new versus established, which state are property investors spending the most amount of money on renovations and just how many people are accidental investors. So it's an interesting episode to tune in to just to give you some insights into what's really going on out there in the minds and behaviors of individual property investors. Don't forget, we're on all the social channels. We're on Facebook, we're on LinkedIn, 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 until next week. Don't be a Dumbo. Now remember, everything we talked 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 buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.