Episode 184 | Listener Q&A: Low-income lending & ex-pat/foreign borrowing | Host Special

We get back to more of your questions!

In this episode we’re answering some of our listener questions. 

We’ll be covering how to maximise borrowing on a low income, what agents mean by ‘expressions of interest”, borrowing from overseas, the research needed when buying your first investment property, dealing with “best and final offers” in a hot market and what due diligence do buyers agents do that regular buyer don’t?

Questions:

1. “I'm 26 years old and already have 1 investment property and currently looking for my second. As a landscaper that is only on 65k a year at a job that I love, how would I be able to increase my max loan from the bank? Down deposit isn't a problem with me with a bit over 110k in the bank ready to go. With my wage being so low and me only having my wage as a source of income what would the next steps be getting investment 3 and going into the future. Thanks for your time.”

2. “Hi Veronica & Chris, love your podcast! I have one question for each of you :)
   For Veronica, I occasionally see a property being listed as "expressions of interest". How is that different to a private treaty sale or auction and what kind of properties are best suited for it?
   For Chris, could you please talk about the borrowing options overseas Australians might have? Especially if they're asset rich and income poor? Many thanks for your time!”

3. “Hi Veronica & Chris, I am a big fan and long time listener of your podcasts. In short I am 22yo and looking to buy my first investment property and have recently graduated my Civil Engineering degree. I have now moved into FT work in my chosen field of study and in the process of getting my finance pre-approved. If possible, I would love you to discuss the following in regards to undertaking research prior to the purchase of an investment property;
   1. Various different online platforms available to the public to research past and future wages growth in numerous suburbs around Australia?
   2. Research methods and frameworks you adopt/prefer?
   3. Most important research indicators for a investment-grade suburb? i.e. wages, employment, population growth.
   4. How to best determine and interpret data available online? i.e. Number of days on market, auction clearance rates, etc. I’m very eager and exciting to begin my wealth creation journey, and would greatly appreciate it if you could take the time to answer my questions. :) Thanks!”

4. “We've bought and sold a lot of different sorts of properties but only in NSW and we were totally bamboozled by the way they do it down there. No auctions, even in a really hot market. They are listing properties with a price, and you are expected to put in your best offer, and then the agent sells it to the highest offer, but without coming back to you to give you the chance to up your offer.”

5. “I have a comment, not a question, after listening to your podcast re hiring a Buyers Agent. I hired a Buyers Agent to assist me in buying an apartment for a family relative to live in. My reason for doing this was primarily to ensure due diligence, not recommend a property. Nicole had a lot of specialist contacts, eg for analysis of body corporate minutes, building contracts, conveyancing etc. I was very happy with the result.”

RELEVANT EPISODES:
Episode 183 | The Secret to Capital Growth | Jeremy Sheppard

Episode 168 | Listener Q&A: How to buy your first investment property

LINKS:
www.suburbtrends.com.au
https://www.homebuyeracademy.com.au/
https://www.rask.com.au/podcasts/australian-investor-podcast/
https://www.corelogic.com.au/reports/pain-and-gain

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: https://linktr.ee/veronicamorgan

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

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 in July, 2021.

Veronica Morgan: In this episode, we're back answering some of your questions. We'll be covering how to maximize borrowing on a low income. What agents mean when they say expressions of interest borrowing from overseas, the research needed when buying your first investment property, dealing with best and final offers in hot market. And what due diligence do buyer's agents do that regular buyers. Don't

Veronica Morgan: Welcome to the elephant in the room. This is the podcast where we love to talk about the big things in property that never usually get talked about. I'm Veronica Morgan, real estate agent buyer's agent co-host of Foxtel's location, location, location, Australia, and author of auction ready.

Chris Bates: And I'm Chris Bates mortgage broker. Before we get started, I need to let you know that nothing we say on here can be taken as personal advice. We always recommend you engage the services of a professional.

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 did I use

Veronica Morgan: All right. Our first question is from Nick I'm 26 years old and already have one investment property. And currently looking for my second as a landscaper that is only on a 65 K a year job, and he loves his job. How would he be able to increase his maximum loan from the bank? I was sort of changing the context as the perspective, as I'm reading the question down deposit, isn't a problem with me. I'm a bit over 110 K in the bank, ready to go. My God with my wage being so low and me only having my wages a source of income. What would the next steps be getting investment? Number three boys only talking about number two and going into the future. What do you say to that, Chris?

Chris Bates: So I spoken about this a few times on the podcast before that lending is nowhere near as easy for investors as it was pre the last boom. So in that sort of 2012 to 2015 period, when investing was the sort of thing to do was a massive part of the property market. And that's what caused APA to step in and put limits and interest on the lines really tough. And the reason is, is that at that point in time, you could leverage, if you knew what you were doing, you knew you could play it across different bank calculators over 10 times, income, you know, maybe even 12, like in, you know, in sometimes you could fix lines and do all these tricky things and it was much easier. Then also when you added the rental income in plus your income to build a massive portfolio on a small income.

Chris Bates: Now that doesn't really exist anymore, that APA went into the banks, they looked at how they're assessing a loan applications. And they said, oh, I'm going to say that's not right. That's a bit of a gap. And bit by bit in that 2015 period banks were releasing new servicing calculators because APA was on their back and saying, no, you can't do that anymore. Now it's probably around six to seven times income, maybe eight times income, if you get a bit tricky, but you know, you're not going to be able to get 10 or 12 times income, like you could have say five years ago. So the thing that drives how much money you can borrow does nothing really to do about how much deposit you've got. It does a little bit, but ultimately comes down to income. You've got the rental income on a property.

Chris Bates: So, you know, the big challenge is, is making. It's not just you, it's everyone, who's single out there really it's much harder to borrow a significant amount of money on wanting income versus two income because a bank wants to be a little bit more conservative in case you lose your job. You know, once you got a second income in, you can potentially have lower living expenses cause you can share and you can potentially borrow more money. So that's the first thing Nick, you know, maybe get a partner really. That's the first idea for you? The second idea is, you know, I'm not saying this is unique, but we have got lots of clients over the year in certain jobs that may attract a cash sort of payment rather than putting it on the books. You know, ultimately if you are running that type of business, not saying you are at all, but the people who are potentially doing that, they're really shooting themselves in the foot when they go to a bank to borrow money.

Chris Bates: You know, because on paper they're owning say 60, but in the reality is they're getting 40, 50 grand a year cash basically behind the scenes. And so if you are in that position, you've got to really think, well, is paying a little bit of tax on my income better than efforts, you know, lots of other reasons, but is paying that tax going to give me a bigger borrowing capacity, which means I can invest more money, which is going to offset the tax that I would have paid anyway and do things legally. And so ultimately I think that's what a lot of people doing cash as shooting themselves in the foot. One little idea. Nikki told you, 26 years old or 26 year olds are still living at home with mum and dad. If you're not, that could be an option for you because that would lower your living expenses and reduce your rent.

Chris Bates: And so you can generally borrow a lot more money when you're living at home because you rent free and you can use the rental income on an investment property. And so that is one idea for you, you know, there's potentially ways to go to some lenders like non-banks and things like that, but you just gotta be aware of sometimes the risks in terms of the cost of capital, because you could pay an outrageous interest rates straightaway, you know, you could pay potentially borrow at 50, 60% LVR and pay 7% interest rates and get a property that's nothing to do with normal lending, but you could get stuck on a ridiculously high and rate, which basically defeats the whole purpose of investing because that would just hamstring your investment. The other sort of option, there is a non-bank, which is like a normal bank, which may be, say 4%, so much lower, but with non-banks you just always have a risk that their rates could rise.

Chris Bates: There are higher risk than say a big retail bank, like a big four or Macquarie or sankalpas orangy those type of banks. So that's really it. You know, the reality is if you want to build a portfolio, you've got to basically increase your income. You know, you can't just have a small income and leverage into a B portfolio. Those days are gone. So I'd really work on your income. Nick, consider waiving at home, maybe the partner I'd also, you know, I think there's a bit of a mindset shift that I'll probably personally make. I think rather than trying to say, I've got three properties and, you know, feel like you're achieving because you've got three properties, I'd shift your focus and saying the why don't I just get one quality property five? And he got limited borrowing capacity, hence, you know, which we all have based on income.

Chris Bates: Do I really want to spread that across three properties that are going to diminish the quality and potentially diminish my returns rather than just buying one property and potentially getting one property growing tax free, like a home that you could live in or use something called the six year rule. So I think that's a bit of a, a challenge there as well. So hopefully that, so it gives you a good basis. Nick shift the mindset, say if you can maximize it, you know, consider maybe a future partner, how that might impact your property decision and yeah. And keep growing your income.

Veronica Morgan: Don't worry about a second job is so if he decided to work on Saturdays, would that help? It's

Chris Bates: A good point. So I mean, you, you know, you could go and do some casual work on the side, but you're gonna want to get at least three, six months of that, if it's different to what he does. But if it's, you know, a bit of Saturday, we'll get it on the books, you know, rather than just getting a bit of cash money on the side, you know, we know we all know it happens out there, but get it on the books, get it paid. Ideally get it paid through your employer. Otherwise, if it's a new job, it could just, you might need three, six months to sort of get that on the books.

Veronica Morgan: So while you're talking there, Chris, I had a bit of an alarm bell go off in my head because I can understand. And I've seen a lot of property plans put together by, you know, quasi spruikers advisors, a lot of people with different sort of different names on their business cards. And quite often there's a property or two in a portfolio plan that is for cashflow. And I could hear the danger signs here, you know, oh, here the danger signs see the danger signs because of course, if income is the problem that leads directly down the path of this, oh, so you need to buy a property for cashflow so that you can increase your income and therefore you can borrow more for the next property. And that's, so that's a commonly held wisdom. And I use, I put rabbit seeds around the word wisdom and on paper, it makes sense, except that fast forward 10, 20 years, it doesn't make sense at all because those assets shall we call them or properties that provide cashflow are usually like 99.9% of the time, really poor assets.

Veronica Morgan: You don't want to own, they will fundamentally hamstring you in one way or another. And that's a danger here when you're trying to accumulate a lot of properties. So I would absolutely go with your, your advice there, Chris, to really change the focus to one or maybe two re the best possible quality properties that you afford to buy. And, you know, and he's already got one investment property. I hope it's a good one, you know, and, and, you know, look at building up that deposit, you know, down the track, you'll hopefully, maybe partner up if you want to. And, you know, hopefully maybe if you want to have kids and all that sort of stuff, your requirements will change. And that will put you in a better position to actually buy a home that has got those tax benefits, et cetera, et cetera, et cetera, because the danger is the quantity, not quality. So it's admirable that at 26 years, you're so focused on your future wealth or current wealth, even it's really admirable, but just slow down a bit and focus on the quality I would say.

Chris Bates: Yeah, absolutely. Like it's your net wealth in that property that, you know the number. Cause ultimately, you know, these properties, you may keep longer term Nick, but unless your income dramatically increases or your partner that you potentially meet down the line has a lot of income. You may not be able to afford it. If you want to buy a home to live in and people do, you know, values shift. The reason I didn't think about that question. He said, Veronica, around buying a property with a higher rent, is it just doesn't come into my mindset into my psyche a hundred percent. That's not something that you should look to consider. It is something that makes sense you you're right? Because if you say, look at two properties and let's say they're around 500,001 can get $400 a week rent and one can get $600 a week rent.

Chris Bates: Now a lot of people would say, I'd go for the $600 a week, rent one, no problems. But you know, that only tells you one side of the story. It doesn't tell you the quality of the asset and longer term and what the rent's going to be longer term. The $400 a week rent could rise to four 50 to 500 to 600 to 700, but the $600 a week rent, right. May never rise. It may actually fall because it's a drop in sort of demand or an increase in supply. And so current rent, you've got to be really careful because it's not guaranteed long-term and it also can, will change. Long-Term either goes up down sideways. But even if we look at those numbers, that extra $200 a week rent, which sounds like a lot of money over a year, that's $10,000 a year. Now what the bank will do haircut that rent.

Chris Bates: And they'll say, well, yeah, it's an extra $10,000 a year of income, but we know that you might have vacancy. We know you've got costs around that property. So we're only going to consider 80% of it. Some banks will be say 75, but let's say 80. So they'll add $8,000 onto your income. But that $8,000 in income could probably only borrow you another 50, maybe $60,000 in terms of the actual borrowing capacity by paying a higher your property. It's not going to add in a huge amount of borrowing capacity. Now that might seem a lot to Nick because he can buy something a little bit more expensive, but ultimately if that is shooting yourself in the foot, because you're not buying as quality asset and it's going to grow for your longer term, don't fall for that sort of 10 patient of just trying to get positive cashflow high yield. So you can borrow more. But if it's not better quality, you're just accumulating quantity. Really? Yeah.

Veronica Morgan: A second question is from Pam and she says she loves the podcast. So thank you very much. She's got a question for each of us, right? For me, I'll have a, I'll go from mine first. How's that I occasionally see a property being listed as expressions of interest. How is it different to a private treaty sale or auction and what kind of properties are best suited for it? Do you know, the expressions of interest really is just a private treaty without a price. And I'm even finding in Sydney that even with private treaty, they'll put a guide on it rather than an asking price. So, and this is the thing that in property, the agents will basically follow a path that seems to be, I guess, it's it's area specific. So there will be certain areas where you'll find you'll everything's offered expressions of interest and normally there's a guide.

Veronica Morgan: So it's like a, an auction where they deal with pre-auction offers not actually an auction. So it normally is when you've got property that they may not find it easy to price that they may be thinking, okay, what's going to be in a range. So I guess there's a basic principle with property. If it's a modular, I E it's the property stock is all very much, same, same. So if you go out to a new subdivision, the houses are just variations on a theme, no major differences between one and another. Then that's what we call homogenous stock or an apartment building where they're all two bedroom, two bathroom, one car space, a little balcony. It's all same, same just whatever floor you're on homogenous. It's one of the things that we go for, we talk about is so valuable is scarcity scarcity, homogenous property, and Scarcey two different things.

Veronica Morgan: Scarcity is we've got properties that have individual features that make them stand out and more desirable. So when you've got scarcity, typically that's when you put something like expressions of interest and it might be, it might be a, a 30 year old subdivision where the houses are all different now because they were on bigger blocks and some have been extended and some haven't, and there's more variety in the type of building in the first place. So you will find scarcity comes in different packages, I guess, or different brands. So the expression of interest is really just a way. It's like a hybrid. It's not quite an auction, but they think that they're going to get more than one interested party. And so that's why they put that out there. The other reason that somebody might use expressions of interest is if they are not game to put the price on.

Veronica Morgan: And that is where the owner really wants way too much. So you'll often see this sometimes with price guides as well with auction campaigns is that if the agent is not putting a guide on it at all, unless you're in Queensland where they're not allowed to, but if the agent is not putting a guide, then that could mean not always, but could mean that the owner's expectations really are a lot higher than what the agent would like. And so the agent isn't game to put a guide on it, it to publish a guide that is reflective of the owner's expectations. So there's a lot in the pricing of a property and trying to understand actually what circumstances are leading to this one, being advertised in a certain way. So just as a general rule of thumb, certain areas, if you'll find it, they're all expressions of interest. Well, that's just the way that those agents operate. And if it's one property sticking out as expressions of interest where you gotta be thinking, well, there's some circumstances around that one that lend the agent to not really want to put a price on it.

Chris Bates: Yeah. And I've seen it also with a lot of the upper end where you're right. It's not just scarcity, but it's also hard to value because it could be 10 or 12 or 15 meals and, or it's a very, very unique property that they know it's going to take a long time to potentially sell. And so they don't want to put the pressure on a short auction campaign. Is that what

Veronica Morgan: You're saying as well? Yeah, actually that's true. And there are those really unique properties absolutely. In that you know, the, one of a kind that sort of pro that, that is a classic, that's probably the original, and I ha I've been talking about the way it's using sort of commonly these days, but that's probably the original intention of a expressions of interest campaign.

Chris Bates: Yeah. And what was I saying, a date on them as well, where, you know, that's almost like a quasi auction, like you mentioned before where they're sort of saying, look, expression is just before the 1st of July, and then all of a sudden it goes past that date. Right. And it's still on the mark and it's now progressive interests trying

Veronica Morgan: To create urgency. So without actually having an auction campaign, so it doesn't always work.

Chris Bates: Yeah. And I think, you know, it was a contract bias. I mean you know, over actually I'll say where it is, but that was an expression of interest on the weekend. Then, you know, you also got to think, well, this is the agent sorta just trying it on, you know, because, you know, w waiting to hear what buyers are willing to sort of show around because, you know, sometimes there are buyers out there and not sometimes, but always buyers out there that, you know, maybe aren't up to speed a hundred percent on the market and what something's worth and, you know, and then it's going to be desperate. And sometimes, you know, they'd probably put paying overs for properties, et cetera. So I kind of always worry about that a little bit as well is you know, what do you, what do you, what is he selling it for? I don't know. What do you think you're going to pay for it? Sort of flipping it back on the uninformed buyer. So that's, hopefully I answered your question there, Pam, and thanks for the lovely,

Veronica Morgan: Well, it's a bit of smoke and mirrors. I guess the, the expressions of interest in it is, you know, not completely transparent. And so therefore it requires a buyer to ask questions, you know, why is this expressions of interest? What happens if you don't get the offer that is suitable for the vendor by the deadline? Like, just start asking those questions and try to get a sense of the backstory. Your question for you, Chris, from Pam is, could you please talk about the borrowing options overseas Australians might have, especially if they're asset rich and income, poor other and other income question, but let's just sort of focus on the overseas side of things. Because there are additional requirements aren't there and it's harder to borrow.

Chris Bates: Oh, it definitely is hard. I like what I've mentioned earlier in the, around it, it was easier in 2015, like ex-pat sort of foreign sort of investors and even foreign Aussies living overseas, wanting to buy future homes, I guess was much easier. Back then. We had lots of clients in places like Dubai and Singapore, London who could leverage their incomes overseas, also lower tax rates overseas and leverage just like they would if they lived here in potentially even more, it was like a real opportunity. If you were living overseas, any, a good income to buy property in Australia that all got was, you know, massive, you know, easy sort of win, I guess, for the government. And for apparatus, I look, you know, the property market's going out of control. What's causing that. And there was a story at the time that a lot of what's pushing prices up expats and foreigners foreign investment, you know, and people were blaming lots of different nationalities, but since then, ex-pat mainly hasn't really come back anyway, ne like it was, and it's much, much tougher now.

Chris Bates: And a lot of banks don't want to do it. So they were just, won't allow you, a lot of banks will put so many haircuts on it that if you're not earning a ridiculous income, you can't really buy anything meaningful here. Now, there are a few lenders that will still land on after tax money and they will won't haircut your income as much, but they're, you know, a real minority and we sometimes have to use them, but you know, the big players, the big four will generally do it, but they'll haircut you so much that even if you only ridiculous income, you could probably only borrow, say three, four times income, which you hear, you could borrow say six times. So you have to have a ridiculous income. You also, one of the issues over there is that usually you're paying a high rent because you know, a lot of these places, Singapore, Hong Kong and London have very high rent.

Chris Bates: And so that's another issue where even if you've got a great income, you might have very high expenditure and for bank looks at your spending and your rent, it really smashes you. So they lending is tough unless you really massively income rich, you do need to be asset rich because a lot of banks especially will want at least a 20% deposit. And they were wanting a 30%, but they've seemed to increase their risk a little bit. And they're willing to do it with a 20% deposit now. So if you're earning a good income overseas and you've got a 20% deposit, it's possible, but it's just a very few number of banks and you want to get pre-approved because you've only got a small number of options. If something goes wrong, there's not many plan B's C's and D's. And so if you're an Ozzy overseas wanting to do X, X-Pack get yourself, pre-approved get a plan B lined up straight away and just be very careful and close to the lending because it can easily go wrong. One of the other things you do definitely want to check is just the stamp duty and land tax. It's very state based. It's always shifting around sort of the premium and you know, whether your Ozzy and you're going to buy it with a partner who's maybe another nationality or how long you've been overseas, et cetera. So just be careful that you don't get burnt on additional stamp duty or, or land tax.

Veronica Morgan: I think the stamp duty in particular can catch people unawares because there are certainly some jurisdictions that put a it's an a non-resident duty basically. And, and that does change time to time as well. So, yeah, definitely check that out. We had a question from Daniel, it's quite a long question. There's a lot of, lot of points to this question. He's a big fan. Thanks Daniel. A time listener is 22. God love him and looking to buy his first investment property recently graduated from civil engineering, civil engineering degree. And he's now working full time in that chosen he's chosen field of study and in the process of getting his finance pre-approved. So he's not mucking around, is he so basically wanting to, you know, go through the process of undertaking research prior to the purchase of an investment property. And this is an interesting one because he's got sort of four questions here, one various online platforms available to the public to research part in future wages, growth in numerous suburbs around Australia.

Veronica Morgan: Now we had a conversation only last week with Jeremy Shepherd about wages growth. And, and so he's using data to say that's not really a determinant for capital growth or an investor grade locations. I guess my jury's still out on that as to whether that is, or isn't true because I guess what he is saying is that by measuring the wages of the people in the area, you should be measuring the wages of the people buying in the area. I still think you've got to look at the wages of people in the area in which you're looking at buying because fundamentally owner-occupiers are what drive capital growth. And you want lots of owner-occupiers in the area, you know, there's that 70, 30 rule. This was the ideal that 70% of properties owner occupied. If we can dig into that too, and I'm not going to dig into that right now. So Chris, have you got any suggestions in terms of researching past and future wages growth? I do know that there's information in the suburb of trends website, that you can look into that, and there are quite a lot of websites around what are you using?

Chris Bates: I think it's quite hard to find, cause you got to think about it. What are all the people in the area and how to here's going to really have access to all that information? And census is probably the best thing, but that's every five years and are people honest or not,

Veronica Morgan: Certainly not reflecting future growth. I don't think you can.

Chris Bates: I was reading an article last year about, you know, the incomes in certain suburbs and things like that. And so, you know, there's things out there. I absolutely think that what matters is the people buying in the suburb, if you've got a hundred properties in a suburb, 5% of those roughly transacting. So that's five properties. If those five properties are selling to people who are got growing incomes in a higher incomes than the suburbs, then that's a really good sort of analysis. And how do you find that out where you can probably find out in terms of, you know, roughly what they're bidding, you know, how they're pushing up the suburb. And so wage growth will hopefully happen, but really what the wage growth that you want to say is a massive increase in terms of the demographic. And that's that gentrification thing. And that's what really pushes up because they've got bigger borrowing capacities, you know, higher income leads to higher borrowing capacity.

Chris Bates: And in that higher borrowing capacity leads into bigger bids. And then that leads into bigger process. So waste growth is a really important part, I think, but what Jeremy sort of said is that I think you do need to do it on the buyers that are buying in the suburbs. Now, you know, if you've got a 60 or 80 year old in a suburb, it's in the pension, but they're living in a three, $4 million house. So their waste doesn't really matter ideally, or you that's actually a good thing because if they're going to stay in that house for another 20 years, that means that that property is never going to hit the market for another 20 years. You know? And so having a lot of people in a suburb that are just wanting to stay in the property and unlikely to sell and maybe on a low income, then that's fine. So that doesn't affect the prices of the properties in that suburb.

Veronica Morgan: The question is research methods and frameworks that we adopt or prefer. It's funny, I'd ran a stepping stone strategy workshop with Megan recently and we will be putting together a tutorial on homebuyer academy for people to purchase if they are interested in what are the elements of a stepping stone strategy. And that is basically where you buy your first home. You know, it's not going to be a dream home and you need to buy with a sort of a, roughly a five plus or minus year timeframe because you're wanting to leverage and leap frog up the property ladder, right? So you've got to be very, very careful what you buy as your first home, regardless of whether you are consciously adopting this strategy or not, but you certainly got to be looking for capital growth. You've got to be looking for it in that sort of short term.

Veronica Morgan: And so, you know, nothing beats local knowledge, right? Nothing, but how do you then develop local knowledge, you know, in 300 S3 regions across country, for instance. So you can't, and with the stepping stone strategy also that you have to live in the property because there's otherwise you're giving away all your gains in tax when you sell it. So, so it's slightly different to buying your first investment property, but the principles are the same in terms of looking for a good area in which to invest, right? And so you've got to start top down, you start regional, you start sort of trying to get an understanding of regional areas and that it is all about demographics because it's understanding really, is there a migration that people to this area, are they going to stay there? Or they're only going there because, because of work and there's no other, there's no lifestyle to hold them there.

Veronica Morgan: I mean, there, there's all these sorts of things that you need to understand in a regional level, then you sort of get down to the next level it's suburb level. So it's sort of understanding the drivers and local dynamics in, in individual suburbs. And then it gets down to the streets when those no suburbs. And then it gets down to the side of the street and then the actual property itself that is in high demand with local buyers or with the buyers typically want to be in that area. And so you are looking at things like gentrification, you look at aspirational buyers, you're looking at the ripple effect. You're looking at all of those sorts of concepts whilst you're doing this jewel down, but you do have to start bigger and start narrowing it down. So when we start bigger and this wide sort of do refer to the suburb trends, that's Kent, Lardners his website because there is a lot of information in there that you off in this process of funneling down from macro down to micro. But until you're at micro, you really don't know enough to make a good decision.

Chris Bates: Yeah. I think the challenge is, is that you're trying to probably bring in your engineering degree, Daniel into property investing, right? And so you're saying the car can systemize and figure out this science and figuring out how to play the property market. And I'd argue, it's not that simple because ultimately property could have all those things that could, you know, good wages, growth, et cetera, but that's not that's part science. The other thing is the part sort of the art to it, right? And that's human behavior. How cities will grow demographics by a preferences of styles of property, all these sorts of things. And this is, I think that I've, I think these would argue even bigger to understand rather than those sorts of other things, because, you know, and I think the other problem is when you look at sort of let's get some research, you're also, I think also asking to be sold to there's a lot of property people will create research ultimately to push a story, whether it's to push regional investing, whether it's to push off the plan and with depreciation schedules or whether it's to push something.

Chris Bates: And the problem is a lot of that research is very conveniently supporting their idea. And it's, I believe it's also missing out a lot of the simpler things, which is just getting the right strategy for you. You know, when you say the question here is in terms of research methods, I think every suburb has a different price point where you may want to enter, or you consider it, or you just haven't got enough money to enter that area or that city or town. And what you want to be doing is definitely getting into the pockets where there's scarcity and pockets that are aspirational, or, you know, where hiring calm couples, families, or people with money or wanting to buy within that city. And if you can't get into, I believe into those parts of that location, then I think you've got to go to a different location.

Chris Bates: And so when you've figured out your budget, Daniel, but it's also your budget today, but what might your budget be in a few years' time? You said here that I'm just going to move into full-time work starting out. Well, your income is probably pretty low. And, you know, as you come back in three or four years time, your income is probably going to grow a lot because you've, you know, you've done this study, but you have to start somewhere. And so you just gotta be careful that you don't just go and use all your capacity on a low income, which won't be that much to buy a property. So you've got an investment property and then you get a pay rise, and then you can borrow a little bit more money. And so then you go and buy another little property when you potentially should have just knuckled down, saved hard, increased your income, and then got a quality asset rather than having two or three really cheap ones. And so I would also argue, that's a thing to be thinking about here, Daniel.

Veronica Morgan: I totally agree. I, you know, it's sort of weird for property people to say, you know, why you should think of investing outside property? The ticking, the box of I've got my first property is, is a bit hollow. It went down the track. You realize you stuffed up and you stuffed up because you jumped in too quickly. And I know when prices arising, that's hard to understand you got a bit, bit process arising. I'm just going to get priced out of it. But you know, if you're on a good career trajectory and we spoke earlier in this episode about how important income is for borrowing. And so whilst you're building up your, you know, your income and you, you're building out your experience in your, in your career, et cetera, et cetera, there are other ways of investing. And I be looking at doing that whilst you're learning about property.

Veronica Morgan: Absolutely. But I'd be learning about, you know, look at, oh, re-ask which, you know, podcasts for instance, and start learning about ETFs. Start learning about lots of other ways that you can build wealth without actually taking ridiculous risks. Because that's what people are failing to understand with property is how risky it is. It feels like an achievement to buy your first investment property, or let's say first investment property. But is it an achievement if it's actually not a good asset? So that's the caution there, but in terms of you, your third part of this question is most important research indicators for an investment grade suburbs are wages, employment, population growth increases, sort of talking there about basically looking for blue-chip suburbs. And unfortunately, and I've said this many times before, I think property investment is a rich man's game or rich person's game, right?

Veronica Morgan: And the reason I say that is because obviously as prices rise across this country, quality assets becoming more and more expensive, you can still buy cheaper assets. They're not quality necessarily, right? So you choose a location that has got a lot of things going for it. You need to have lots of different diverse employment. There's no point buying in a mining town with only one employer or one industry, right? Or even in a tourism area where you've got one employer, one industry, you know, buying in an area because it got a new hospital, a new university, even then I'd just go, oh, that's not enough. I want to know there's multilayered diversity of industry, diversity of employment, a lot of supporting services. And it's, it's a very nice inmeshed web economic web there that is all interdependent as opposed to dependent on one source of income for the area.

Veronica Morgan: So you've got to look at that complexity and, and that established, and they don't have to be all capital cities. Of course, some of the major regional centers have got that. And so then it's understanding, well, where are the most desirable areas if those regional centers are in those cities? And so, you know, applying that sort of logic to Sydney, and this is one of the reasons why we for in, in good deeds, that, that my sort of main business is that we, we focus on the 10 K radius of the CBD because in good markets and bad, I have seen demand for quality properties, go on it. Doesn't waiver. There's always demand for quality property in those areas. Now I'm saying, say Balmain is where my office is. Not every street in Balmain fits the criteria, you know, and not every property in the good streets fits that criteria. You have to get so micro when you understand that. But so, so fundamentally looking at the area, it's got to have that complex in, you know, interconnected employment, sorry, economic factors. So that one lever gets pulled. The whole thing doesn't fall over.

Chris Bates: Yeah, absolutely. I think that the dangerous people would try to find a city or a town and they are the best place to invest is mildew or right. And I go, that only is even if that was the best place to invest, that's not enough information because you moved here, you've got lots of different types of property. You have houses, apartments, you know, townhouses, you know, studio, commercial, blah, blah, blah. And the houses could perform completely different to the apartments and they will, and the townhouses, and then you go, well, what part of the housing market will the new houses on the fringes in Madura probably are going to do that well, because they're going to release lots of those, but maybe the best streets around the city center, the older period homes, or maybe the acreage is the five acre blocks outside the city go up a lot.

Chris Bates: But the new houses don't. And so I think the problem is, you know, Mildura might have you know, hopefully there's some listeners from Bulgaria might have good wages, growth, and might have great employment population growth might be good. Everything's going great. But that doesn't mean that the whole property market in that area is going to go up a lot or, or et cetera. It's got to go. And then even in that sorta housing market, like Veronica said, like even in those good suburbs, the things that may be on the busier roads on that suburb, my underperformed, the better street will most likely would. And then things would better light or a better floor plan or the bigger blocks versus the smaller blocks of houses on those streets. Oh, I saw

Veronica Morgan: The road versus the low side of the road. Yeah,

Chris Bates: Exactly. And so you, the challenge is, is that with these research to get that granular, it's impossible, the reality is you've then got to go out and actually buy it. And that's the real skill is like, okay, well, let's go and find these assets. Let's go negotiate. Let's go price it out. Let's go to auctions and let's have the patients and commitment to do that for many months. And what we find is a lot of investors aren't willing to make that effort. You know, they just want to solve their investment property and get on with their life. And they spend, you know, no much not enough pain in the buy. And they deal with the pine hafta when they try to sell it. And then they go, I didn't work for me. I shouldn't have bought that investment property. And then they never buy a property.

Chris Bates: Again, the deal with the pain take time get one quality asset and get into the, where there's scarcity in whatever city you buy and where as hiring come people and people doing well within that community are going to want to own and compete on where there's only a few properties. And ultimately that's probably what's going to work, but that's also a timing issue because if you're going for these sort of you can get lucky or you can potentially buy that property and nothing happens. But over the longer term, that's the stuff that we'll do better, but you still need time. You still need a bit of luck to sort of go, I'd always say to invest the research, which Ronica loves the report of the pain and gain report, educate yourself on what people do wrong in property. And if someone's selling a strategy to you, go and do your own research on how that actually works across different markets, different timeframes and say how many people it doesn't work for. And if you find that information then, and Ron, obviously

Veronica Morgan: His fourth element who his question is how to best determine and interpret data online, that I, number of days on market auction, clearance rates, et cetera, he says he's very eager and excited to begin his wealth creation journey. And I just think it's wonderful that he is. So, which is great. So, but in terms of this, this element to the question interpreting data online days on market auction, clearance rates they are barometers of the current market. They're not necessarily a an indicator what's going to happen. So that to me, like days on market, that's the number of days it takes to sell property on average in a, in an area. So, and once again, if you look on Kent's Subu trends website, we'll put the link in the show notes. You can find that out, that information there, and he, and he has a comparison for a year ago.

Veronica Morgan: So were really what that does is just gives you an idea which direction the market's heading at the moment is it heading buyer's market seller's market. It doesn't really tell you whether you should be buying there or not. And the same with clearance rates, you know, clearance rates auction clearance rates are the proportion of property that sold at all before auction and versus past in, right? So it clearance rate in the sort of 60 to 70 bracket percentile bracket. That's that's seen as being a pretty balanced market, anything under 60, looking at being a buyer's market, anything over 70 is a sellers market. That's sort of the main way you look at it, but the thing is you need to look at the same data every time I'll be using in my business. We use domain starter, and that's only because that's where I first started using, you know, 15 years ago.

Veronica Morgan: And you can't chop a change because real estate.com that I use data on a Saturday is very different to two domains. And if I'd started using real estate data 15 years ago, I'd be using that. But it's the relativity that, that matters. So I just sort of watch how it's bouncing around, you know, is it in fact in Sydney? It dipped below 80%. So basically as you know, eighties, 80th percentile four year and adept into the seventies in may and, you know, first weekend of lockdown 26th of June went back over 80%. So you know, and that for me just says, that's a hot market, you know, and it, it, all it is. I know that anyway, cause I'm in it, but that just is just a measurement that, that verifies it. Yes, we're in a hot market. So the clearance rates, we'll just give you an indication. So if you're starting to research an area that you're not familiar with and you look at the clearance rate to go, okay, well that's currently a pretty hot market or a coal market or whatever, that's only today could go up next month could go up or down, whatever that is really a barometer of what's happening in the, okay. Yeah.

Chris Bates: I do think it's like, Australia's greatest pastime is talking about property. Right. And you know, people like to throw these things around like, oh, did you say the clearance ride today? Or, you know, have you seen the days of mark? I think that, you know, these in the news perpetuates it right. Or your auction clearance rate today was, you know, 84%. And it's just, I mean, for me, it's a bit pointless. Right. You know? Yes. It helps you give an understanding that the market's pretend things are selling. And if it gets over say, you know, the 90% and you know, you can say that that's maybe okay, the desperation meters through the roof, everyone's just buying absolutely everything, no matter if it's good or not. And usually at a good price, because that's why it's selling, you know, the vendors, but as prices go up and it get a little bit more picky, you know? And so the clearance rate is usually drops back down, which I think is what's happened. Things are still selling. 

Veronica Morgan: Yes, I was just going to be more picky. So there's a LSD city that happens. It's like, oh, overstretched bias starts going. That's a bit crazy. Yeah. So yeah. Pulls back a little bit,

Chris Bates: Just, you know, yes. They, you know, good to know if you're buying in an area though, that's the thing, you know, like if you want to buy in whatever suburb, what's the auction clearance rate in that suburb, you know, how many properties have been on the market in that suburb in the last 12 months, since over the last five years, or even longer than that, you know, what are they roughly selling now they're selling, you know, in 20 days and there's only 50 properties on the market for that year. And there's usually 150, well, it's a super tight market and things are selling fast and the auction clearance rates, 90%, you're going to have your work cut out. Right. And it's going to be harder to buy than if it's those other statistics. There's a lot more properties on than general. They're taking a long time to sell auction, clearance rates really low. Well then you'd only be really questioning whether you should be buying there, firstly. But if you are, then you're going to go on with a different strategy. You're not going to be as desperate as say those other markets. And so yep. Definitely learn about these things and things like that. But when you get your hands, you already only buy one property in one suburb on one street. And so those things are moving. You've got to focus on other fundamentals, I believe, than trying to look too much into those.

Veronica Morgan: I think what's important is there's no magic formula, you know, and, and the thing is that days on markets, auction, clearance rates, they don't actually give you any clue as to how good an area is. And I think that's the important thing to understand it all is doing is telling you what buyers are doing at the moment. How much stock is on versus how many buyers around spine demand, which is fundamentally really what drives the property market. Right. We've got a question here from Marianne. And this is, it was sort of she's suggesting that she'd like us to do a, an episode on the Tasmanian property market, which we may or may not do. It's not in the wings, but maybe we could do one. But there was one thing that she actually raised that I thought was interesting. And she said that, you know, they're bought and sold a lot of different properties only in new south Wales.

Veronica Morgan: And when they went down there, they're totally bamboozled by the way, they do it, no auctions, even in a really hot market listing properties with a price and you're expected putting your best offer. And then the agent sells it to the highest offer. But without coming back to you to give you the chance to increase your offer. And so it's sort of not exactly a question, but I'll sort of end it with a question is to say that really what is going on and what do you do when they like an agent course for best and final offer. And one of the things, you know, in home bar academy you know, we have a whole core element of the course or a section of the course is really about teaching you how to understand what is going on before you even make an offer.

Veronica Morgan: You know, and one of the things that we teach is that you've got to find out the agents process, you've got to find out what do they mean when they call best and finals? You know, will you shop that offer around because there's no actual, there are certainly ways that you'll find different areas behave. Like we were talking about expressions of interest earlier. There's certain areas where that seems to be the modus operandi of the bulk of agents. And likewise with this best and final offers, it's, it's like a regional thing. You know, the, in that area, that's the way property is sold, but agents don't actually have any legislation around how to handle offers other than things like they have to submit it to the owner as soon as practicable and cetera, et cetera, et cetera, how they actually negotiate and field those offers from one bite or another is really up to that agents practice.

Veronica Morgan: So it's very important to ask the question. So if someone is calling you for best and final offer, I will say, what does that mean? Are you giving me a deadline to pre present that offer to you with all the terms? Does that mean that you want that on a contract so that you can actually take that and seal the deal then? And there, will you come back to me and let me know if my offer is not enough or won't you, you know what I mean? These are questions to be asked beforehand rather than just sort of do what they say without actually digging further. And I think that's where a lot of buyers get unstuck because they think the agent's going to come back to them. But the, in some cases the agent will say, well, no, we are going to go with the best offer that.

Veronica Morgan: And, and we've got agents in our area that are like that, and we know that. And so we have a conversation with our clients around what you don't get a second bite at this cherry. You have, you know, it's horrible, it's blind. You don't, you, you have to think about how much you want this property and actually going with your best and final, which is awful. You'll never know the gap between you and the next person. You just never know, but you have to decide how much you want this property. And that's the conversation you have to have. If they're going to come back to you and shop it around then of course, you're not going to go with your best offer. First up, you're going to hope that somebody doesn't come in and you're left with money in your pocket. But if they do come back to you can increase, you know, so it's a very different process. But asking that question, the agents at the outset is absolutely fundamental to getting it right.

Chris Bates: Yeah. It's such a nervy thing though, isn't it? You know, if you're trying to buy this property, you're in love with it. And they say, ah, you know, just curious your best offer and you have no idea how many other buyers or what they're going to willing to pay. And, you know, depending on how desperate you are and how many properties you've missed out on how much you love it and what you can borrow and the stretching you're already stretching yourself. It's such a nervy thing. Isn't it just putting that off and putting that number down and just crossing your fingers without no knowledge of whether you've just shot yourself in the foot. I guess it's when you're making that decision. I think you really just want to base it on the fundamentals. You know, how much does it suit you? How much does it suit your longer term life? How much, how quality of an asset is it? How scarce is it? You know, all how, how close either you're willing to stretch for the right property, how long you've been looking for all these sort of questions, we'll give you that number to put down, but you know, you may potentially be the only buyer, but if you focus on those fundamentals, it doesn't really matter as much as long as you, you know, you're happy

Veronica Morgan: With the outcome sorta interesting. I was having conversation with a client the other day about them sitting there, their limit. And, you know, we have a process, a thinking process, a framework we go through to help them work through that thinking process to get to that final number. And it was funny because when the clients, you know, we're, we're preparing to go to auction and they're sort of started talking about what other buyers might do. And I said, you know, it's really funny. I hadn't even occurred to me before, but our framework does not take into account other buyers. Other than when we research properties, price, we're looking at recent sales that that does take into account what other buyers have been prepared to pay in the past, right. For similar property. But I'm not going to sit here trying to time myself and not trying to second guess what other buyers are going to do.

Veronica Morgan: You know, when I'm in an auction, I can see what other buyers are doing, you know, and, and I will respond accordingly, but also I've got years of practice at this, but when we're actually setting a limit, we're not thinking about the tactics in what other buyers may or may not do. We're not trying to play games. We're focusing on buying this property. And how important is it to us to buy this property and how upset we'll be if we miss out on it, how many other options are going to come out, likely to come up within a reasonable timeframe that, you know, that makes our urgency on this one more or less, you know, all of those things are really important. They're the things to make a decision on what you prepared to pay for property. Not trying to second guess what other buyers are going to do now, when, if we're dealing with a sudden death situation, such as the the best and final offers, and you're not got a, do not get a second opportunity, then the first thing is to work out your walk-away price before you think tactics.

Veronica Morgan: And so it's the same as going to auction in this regard that you really do need to know at what price will you kick yourself. If another buyer does buy it, it does mean putting it all on the table. And it's horrible. Feel like you have to do that, but there are some times when you have to, and what would be more horrible was if you kept 10 or 20 grand in the, in the kitty, in the bank and you would have paid it and then other someone else does pay it and they get it and you don't get it, you know? And so when we have that sort of that conversation, the client comes up with their work away price. Always say, now we need to add an odd number onto that because people think in round numbers, they do, they'll go in with, you know, my limits 850,000 or 1.2 or whatever, they'll go in round numbers.

Veronica Morgan: And I'm like, no, I just whack a seven on top because if it really comes out of the Y with two people on exactly the same number, your seven will buy the property, assuming that all the terms are favorable. And sometimes it is the terms as well, that do do change. And so it's always worth asking the agent, well, you know, what's the vendors, ideal settlement date, you know, or, or terms. And so it's asking those sorts of questions that can actually give your offer a slight edge, but fundamentally to try to play games and second guess what other buyers are doing, you're going to fail, you know, and then, you know, nine times 99%, the time you're gonna be wrong because you actually don't know the circumstances. Yeah.

Chris Bates: I think you gave, in terms of throwing an odd number on top, you could probably argue, you could double bluff that as well, because you know, if other people were thinking the same thing, you know, and so you get one person willing to offer 1.207 and then you think, well, if we got there, maybe they'll go to 1.28. So you can kind of set up then, especially with a refined best and sort of final offer. You might want to go a little bit more than that, right? You might go one to 12 or something like that. No, no,

Veronica Morgan: No, no. But that's what I'm saying is you only do that after you've worked out your walk-away price, you just check an odd number on top of that, and then you're not going to agonize because if you're prepared to go to one to 12, then, then that wasn't your walkaway price, you know? So then we have to start that, start the conversation all over again. Yeah.

Chris Bates: That's yeah, exactly. What's that uncomfortable? Happy you've got it, but probably not happy with the price. And unfortunately that's generally bought, you probably will. Do, you know, if you get a great property at a great price, then you probably more lucky rather than if you get a great property at a fair price or a price that may be a little bit uncomfortable with, but you know, it's a great property. That's probably still a great outcome because you still got a great property. And so don't be too concerned on the price within reason, but absolutely concerned about the property you're purchasing 100%

Veronica Morgan: From Neil. I have a quick comment, not a question. After listening to our podcast regarding hiring a buyer's agent, he hired a buyer's agent to assist him in buying an apartment for a family relative to live in nice work Neal, his reason for doing so was primarily to ensure due diligence. I'm not actually recommending a property, which is sort of interesting because you know, if he's not sort of worried about the asset assessment, you know, he's got unique family requirements. Sometimes that's not sort of the primary driver. He was saying that the the buyers there had a lot of specialist contacts ex for example, analysis of body, corporate minutes, building contracts, conveniency, et cetera. And he was very happy, the result, which is a great, a good story. But I guess you know, there's a question sort of lying underneath this.

Veronica Morgan: So I think which is what due diligence would a buyer's agent do that Neo couldn't do himself or wouldn't do himself. And I think that that's something I actually put together like a in my business, I actually put together a, a graphic, which is a, an iceberg, and it's got the tip of the iceberg, which is the typical things that a regular buyer would do. And then there's in the shallow water is what most buyer's agents do. And then we go down the depths of it, which is what we do, which is ridiculous. And and so, you know, what a typical buyer would do or go and inspect a property. You may be once, usually, you know, usually twice, maybe only once they go, okay, we need a contract or a section 32, if they're in Victoria or, or limited documents, if they're in Queensland or whatever, the jurisdiction you're, you're buying in, you get that, those documents from the agent, you then go to a conveyancer or a lawyer and go here, can you look at this contract for me please?

Veronica Morgan: And they'd say, oh, you need to get a building and pest, or you need to get a strata report one or the other. And, and that's pretty much it. And most buyers think that they've done enough due diligence and going deeper than that. You need to look into a hell of a lot more. And the thing is prescribed documents in every jurisdiction. And there are some areas where there there's quite a lot. So in say new south Wales in Victoria, where the vendor has to provide certain documents in the bound zoning, the actual title search. So they actually show you actually what you're buying. There's a number of documents there, but there's a hell of a lot that are not essential documents or survey for instance, or if you've actually buying a property that's been renovated. There's only a very limited amount of documents that the vendor is required to provide.

Veronica Morgan: You need to ask for additional documentation in inquiry Queensland, I'm mortified and had a little disclosure the owners have to make. So to the point that a title search or a cop copy of the deposited plan, right? It's not even essential. They only have to provide that. It's yeah. It's mind boggling what you don't have. What is not a vendor disclosure up in Queensland. And so buyers need to know what they don't know in order to actually make sure if they're going to make an offer that's conditional and things that they put the right conditions in there. They make the right requisitions before they actually sign the dotted line. They need to get a lawyer or conveyancer. That actually is good. Specializes in property is not, not when there's cut price conveyances, they need to actually make sure they're getting the support of the right advisors.

Veronica Morgan: Not all lawyers know enough about property to really advise you on everything missing in Australia report. Most lawyers don't even read the things. So as a buyer, when you're reading it, do you know what you're looking for? Do you know, what's missing? You know, and so this is the type of buyer's agent that I encourage you look to buy to use. And hopefully this person's a buyer's agent did all of this stuff is the one that's going to look at, you know, what is missing in that building? What about the local development? What could happen around that building that actually will devalue that building, you know, could there be loss of light privacy you know, noise there's, there's, there's outlook, there's all these sorts of things that could happen outside the actual property you're buying that could impact on, on your future enjoyment, also future value.

Veronica Morgan: And also you decide whether to buy the property or not within the complex, you know, w what is their process for actually following up on building issues? You know, how, how robust is a capital works fund you know, are they, are they proactively managing this building or are they really lazy and, you know, don't care. I mean, there's so many things to look into, you know, in, in certain areas, you look at flood zones, bushfire zones, there's, there's a myriad of things that aren't necessarily required for the vendor to provide. And a good buyer's agent is going to be digging, digging, digging, and we can't find everything. Let me tell you, but we can tell you what we can't find out as opposed to just not even looking.

Chris Bates: Yeah. I mean, that's a really good point. You said at the end, because it was on the tip of my tongue when, whenever you stopped your spiel, is that I do think that's the key point. I do think that yes, you should get a great buyer's agent and someone who's really going to care as much as you, but I ultimately think no, one's going to have, they don't have to live in the property. Right. They don't, and they're not going to go on to get the benefits of how that property performs long-term and say, no, one's really ever going to show care as much as you the buyer. And so, yeah, she is buyer's agent to sort of do due diligence and things like that are a little bit wired new. And I'm not saying this is the case, but I'm a little bit worried that you went to a buyer's agent with validation and just went off.

Chris Bates: Can I buy this property? And they said, yep, I'll go and do all these checks and charge you a fee and you go, that's great. I've got a service I've got validated. I'd also argue if you should be going to a buyer's agent for asset quality as well. And you know, that buyer's agent should be stopping you as a real trusted advisor would do and say, look, you know, is this really the right decision for you? Long-Term yes, you might want to help your family, but can you help your family and still make a great lifestyle decision long-term investment decision for yourself? That's what my brain sort of goes to, but I don't think you should ever really outsource everything. You know, buyer's agent when you're not their only customer, a reality is good. Buyer's agents are busy, you know, they've and yes, they can allocate a certain portion to do that due diligence, but there's a limit and there's only so many things that they can do.

Chris Bates: Yes. They might think that. So if there's anything that you think can change on that property or what things you're worried about, you've got to really sort of potentially go above and beyond, you know, ask the neighbors, get your health, you know, really call counsel yourself, you know, like go check the light, go on, look at rat runs. And, you know, I do think you sort of really got to get your hands in there and get and be thinking about these things because outsourcing anything in life, there's always a risks. And the risk really is even though a buyer's agent is good, there's things that they may just not find because, you know, they haven't been able to do that digging cause they haven't got that sort of timeframe or they haven't thought about it. No, because they just, they had missed something, you know, they just don't know about something in that suburb that you know, that they potentially should, but they just don't know about it. And so just be very careful outsourcing absolutely anything to anyone.

Veronica Morgan: It's actually funny. I was just reflecting on a very recent purchase. Clients came to me somewhat similar, actually they are looking to buy an investment property that is actually initially for elderly father to live in. And at first, you know, the important things such as no steps, very easy access, you know all, you know, all single level, just little bit of a shed at the back from the Potter around and et cetera, et cetera. There's sort of things that are quite unique to what not that unique, I guess, but that needed to suit his requirements. Number one, but I just said, well, w what is your overall goal of buying this property? It was like, well, we want to look after dad now, but it's an investment, I'll say, okay, well, so we need to look for investment fundamentals. We can't just buy something that is all one level and has a.

Veronica Morgan: Just because of that, that's a short term goal, and I'm here to help you make sure that we find your longterm, where you achieve your long-term goals as well. And so they had come to me with, or us Rachel initially spoke to them with a property that they'd found and this house was, oh, we hated it on immediately because it's a little house. It's all one level has a shed at the back shore and it's in a nice, nice location, nice suburb, but it's not a nice street in this location. And this particular house is a, is a very narrow terrorist, single level terrorists with only windows at the front of the back. So effectively living in a tunnel with a couple of skylights and I just went, oh, that's awful. That house, you know, and in terms of, you know, longterm, what can you do to it at any, any extension is severely hamstrung by the narrowness of the block.

Veronica Morgan: It's severely hamstrung by the fact you're, you're a terrorist or you're buttered in between two other properties. You know, there's all these sort of really bad, bad issues with that property. And, you know, so we spoke to them about that. You know, how important is that? Long-Term, you know, if you really just want to buy for short term, then, then sure we'll help you buy it. But if you are wanting this to be a good asset for you as a long-term wealth creation vehicle, then, then we were caution you not to buy that property and they didn't go for it. They did listen to us, which was great. And and I just bought a property for them, which is, yes, it did cost them more. There's no doubt about it, but I just say it's such a cracker asset. Like it's really good property to own, and it will suit the data in the short term, but it will absolutely suit their goals in the long-term in a way that the other one VAR would never even approximate, you know?

Veronica Morgan: And and it does come down to the ability to actually say to the client in the nicest possible way, but that is not a good asset. And this is why. And I look, I bought another property on the weekend with clients that I said to them. I don't like this house. It's not a good house. I really don't want to buy it for you. And I want you to understand exactly what it is that you're going into and understand all of all the, I know your pros because, you know, I know why you want to buy it, but I would need you to be really clear and understand all these, these things that I think are wrong with the property. And if you still want to go for it, then great, go for it with your eyes wide open. I don't want to be one of these buyer's agents that sort of goes, oh, okay.

Veronica Morgan: Then if that's what you want, I'll help you. I'm doing what the client wants. You know, so we're very namby pamby. I want to make sure that, you know, there's no mince words here. They know what I feel about that property. They decided to go for it anyway, you know, and, and I offered the many, many times to back out of it. They went for it and I actually was happy for them when I bought it. It was remarkably a competitive auction. It really would never be in a, in a normal market, but they knew that we went there, we bought it. And weirdly enough, there was three other buyer's agents there. And I was actually shocked because most properties I go for a really eighth grade. This was not a grade. I didn't really want to beat for it. Right. But most probably don't go for a grade.

Veronica Morgan: I'm shocked. I'm not seeing buyer's agents more often at eighth grade properties. And I was amazed to see three of them at this B minus property. And I thought, what is that about? And, and a bit more defined because I look at mango or you bet on it, you bought it. But I just thought that was rather interesting that you know, that what were they advising their clients in a hot market? You need to go for crap. You know, it was, it was so anyway, yes, I was there and I bid for it. And when our clients bought it, I'm happy for them because I know that I pointed out all the things wrong with it and they still wanted to buy it. And that's okay.

Chris Bates: Yeah, absolutely. I mean, you can sleep at night Veronica and you know that if you provide great advice over the long-term that sort of compounds, it gets out in communities you get, and that's how you built your business. And that's how you know, you've got a great business because you've got clients and, you know, you've done things that you really love and support. And they refer to you because they know that you really care and that's, that's ultimately a good strategy for you as well. Thanks so much for doing all the questions and add sending them in. We love answering these. We'll probably do another one in a couple of months time. So questions that the elephant in the room.com today, you, and we'll talk to you all soon.