When evaluating property investment opportunities, watch for red flags including one-stop shop companies offering everything from finance to tenant guarantees, unlicensed financial advisers, guaranteed returns or tenant placement, and arbitrary timeframes like seven-year plans; for capital gains tax, the main residence exemption allows treating a property as your main residence for up to six years after moving out, even if rented, and the CGT discount was designed to exempt inflation from taxation rather than real growth.
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dodgy property deals, CGT changes, the 6 year rule, financial regret + more (ep919)Ajouté :
These would have to be the reddest of red flags I've seen in a while. I had both of these emails come through uh to our inbox through our website. And I might get you to read the first one, John, and then I'll read the second one, then we'll talk about it because there's some wild stuff here I would hypothesize.
Hi Glenn, new listener here. Never cared about finance shite until turning 40 and now I'm balls deep in it and absolutely loving the podcast. Just wondering if you've ever done an episode deep diving into companies like XXX which help you build investment properties. They're a one-stop shop who help you with everything from getting the finance, choosing house and land package to suit your budget and even guarantee you'll have tenants within so many months. My mate has just signed up with them to build two properties straight off the bat. The strategy is set up as a seven-year plan, paying interest only and selling after seven years and profiting whatever the growth margin has been. I'm not sure if it's sus or a legitimate good idea. Cheers. And then the next one that we got, uh, my partner, his siblings, and parents have a financial adviser that they all use and has helped them set up a shared self-managed super fund. So self-managed super fund can have up to I think six members that are somewhat related.
Recently my partner and I have had a big conversation around planning our financial future.
We decided to meet with their financial advisor to discuss our options. I'm not paying for the advice as it is being covered under their family agreement.
After doing some research, I found that the financial adviser does not currently hold an Australian financial services license.
My partner and his family are aware and do not feel that this is an issue.
I'm cons I'm concerned about the implications of receiving financial advice from an unlicensed financial advisor, especially free advice.
I'm also uncomfortable discussing strategies involving us making contributions to a self-managed super fund that I'm not a part of.
What would you do? So, they kind of tie in together and the We'll go to the first one, John.
I've circled one, two, three, four red flags and there's probably a fifth within a paragraph, right?
>> Mhm. What are you saying about this?
What are you immediately seeing as a red flag?
>> So, I think before the red flags, when we're buying investment properties, there's the option of buying existing or the option of buying new, unseen yet, right? And the risks of buying unseen, i.e. apartment or house that's hasn't been built yet, is what it's all going to look like at the end. and and supply and demand in that particular area because it's a new building essentially or a new a green fill estate if it's a house and land generally. So there's variables in that and higher risks. So if you're a first-time investor um it's understanding that concept >> a lot of in when we look at property around Australia majority of it is existing stock. Now, we're at a a housing supply shortage right now and we need new houses. So, a lot of this stuff is relevant, >> but the red flags within it um are real.
So, I suppose what is your to strip it back first?
What is your strategy? Or you mentioned your friend, what is their strategy? Did they go in saying, "Well, I want to just do only new because I get great depreciation and and I know I'm making money because comparable sales once it's complete is X, meaning I've made X amount of profit." Um, or have I just spoken to someone and they've said, "Yeah, you need to to build new."
>> Um, so that's the first part of it there is what is your strategy? It doesn't sound as though there's a complete strategy involved. Maybe there is. Don't know.
um two properties straight off the bat probably not going to do. Uh it's just hard enough doing one existing property.
>> But the the thing that is a red flag risk on that is the blowout times cuz nothing ever goes to the timeline that they say.
>> No. No. So, well, when you're looking at, I suppose, project homes, they control the narrative a bit more than than custom generally because they've got this cookie cutter approach, haven't they? But you're right, the if the land's hopefully titled, you then you've got a succinct time frame that they try to to keep to, but who knows? But doing two in at the same time when there's unknowns.
>> But also my and this is probably a question to you. For example, >> is the contract an actual fixed price contract?
>> Well, and that's that was my next point is is well, how much are we paying and >> how is that comparable to what's out there in the market in the immediate area >> and uh is it fixed price? Because if I'm doing a house and land, which I've done a few over the journey, they're always fixed price.
>> There's no more dollar to pay.
>> Yeah.
>> Now, I don't know if if if this is or this isn't, but from a lending perspective, number one, amongst a few others, you cannot get extra lending on the finishings. I.e., If I've built a house and it's got a front door and and but it hasn't got landscaping or a driveway or fencing, the the banks lent you on what that build contract was. If the build contract didn't state those things, then you've got to pay for that out of your own pocket.
>> So, another risk and everything's a like living waking up in the morning is a risk. I get that.
>> Yeah.
>> And everything's fine until it isn't.
Now, if it is fixedric contract, right, you you you're like, "Yeah, for 12 months, we've got the holding costs and the without receiving rent." So, we're paying the land mortgage, we're paying build >> um stage mortgage rollouts.
>> Yes.
>> What if there happened to be an oil shock halfway around the world?
>> Yeah. that made pipes for plumbing and storm water triple the price because it's plastics.
>> What if the builder said to their clients?
>> Cuz they're like, "We're just going to press." In the background, they were like, "Look, we're just pressing pause.
We're not buying any of this [ __ ] until this blows over a bit."
>> Yeah.
>> What if they said to the customer, "We just can't get the pipes. It's a supply issue."
>> Correct.
>> Aka, you can get them, but you don't want to be carrying the bag for three times more. So they push out the the project.
>> Yeah.
>> And them pushing out the project for four months.
>> You've got to fund that extra four months.
>> And I think a bit of that happened through co where the bill got extended and then all of a sudden >> the builder went under, >> right? And then they're left trying to find a new builder to finish the home.
So yeah, they're the risks that uh generally speaking are are real, but you don't really see play out too often. Now, at at this point in time when we're going through what we're going through around the world, it's it's uh it's a bit of a volatile period anyway.
>> Yeah.
>> Um but bill prices have just exploded, right? So, yeah, that there's that to think about. And generally, when you're doing a house in land, you're saying, right, the land contract and the bill contract. So, you pay for the land up front, you only pay stamp duty on that.
So, there's the savings, but then you've got progress payments through the build, >> and that would be part of the sales pitch as well.
>> Correct. I save on stamp duty, but I always looked at it as though if I'm saving on stamp duty, let's say I save 10 grand on the stamp duty, then I'll allocate that 10 grand to the holding costs throughout the build.
>> And when you do the numbers, depending on the interest rates, yeah, it's not too much of a difference. But I think um now that build costs have increased, it will be. What are the other red flags that you can see from this? And we'll pop it back up on the screen so people can reread the first comment.
>> Yeah. So, two others. Um, we we're never buying a property saying we're going to sell in this finite period, seven years. Like, where do we get seven from?
>> Yeah.
>> What what's the market doing in seven years? No one knows.
>> I had seven circle, John.
>> Good on you.
>> I'm a good boy.
>> So, like why why is a seven? I don't know. I just does it sound um confident.
I don't know. But it should we we're never saying unless we've got something happening in our life.
>> Yes, >> that might be a period. And then the other one is um guaranteed tenants.
>> Yeah. I I had the the the Gword right there.
>> Had that circle John.
>> Yeah. So >> we you run from any type of professional >> who uses the G word I think.
>> So generally what they're saying there is if you don't get a tenant I think in a certain period we'll cover the cost of that or we'll guarantee that you'll get X amount of rent. Now, they've either said, "Right, we'll guarantee the X amount of rent, but that's well under what market price is, or they might guarantee it for a period of time, which they may need to foot the bill because they're potentially concerned about the supply issue, right? And that's like we're seeing a little bit of that in the in the at the moment in outer suburbs of certain cities is there's in this world of under supply, there's actually vacancy rates of four to 5%. in certain suburbs.
>> So to go and do a strategy like this, there's volatility wherever you look.
>> Any other final red dogs that you can see?
>> Um, look, I I I think what's what's the fee for service? And are are they are they paying for strategy? Like are they paying for any service here or is it just simply oh no, we'll um we'll make money on the build.
So here you go.
>> So just on that, if I pull that thread as a buyers advocate >> in general or if you do a a strategy call with a client who wants a strategy and they want your team to execute like anywhere in Australia, >> you guys aren't picking up a mouse pointer engaging for less than 15 grand.
Like I mean we Yeah, I think generally >> as a fee for service in the property world >> around there or 2% is probably a common one but yeah.
>> Yeah. So we'll use that as an example.
>> You did an episode on the property show this is property someone who didn't want to pay >> rack rate of you know 14 to 16 grand for a BA service. He went to a company that only charged five, John, >> and they supplied a really good property and outcome for him. Guess what? Didn't end well. It was a dog of an asset.
>> He done his ass.
>> Cuz generally, they're not getting holistic strategy. Yeah.
>> They're getting the product.
>> Well, they're getting sales, not strategy.
>> Yeah. And and that's where this person's like, "Okay, we're just asking good questions." I'm not sitting here saying, "Well, this house and land package is 700,000. Um, it might be worth 1.4 in 20 years. Who knows?" But you've got to ask enough questions to do your research on the area, the supply and demand, the vacancy rates, the build time frames, the fixed fixed fee, what that includes, what what's sold around the area that's comparable, like a whole range of things around that.
my my couple of things, you know, the one-stop shop ordinarily like >> there are a lot of legitimate businesses particularly in finance >> that it could be u my accounting firm for example that I use they've got accountants inhouse they've got financial advisers and broker in house right >> all good lot of good businesses that and it's it's a win for the client it's win for them because they can do strategy altogether.
>> They know each other. Yeah.
>> But when the P word enters the chat or anything to do with property, >> that's the red flag for me.
>> Like John Pigeon doesn't have in your property business. You don't have mortgage brokers that you employ. You don't have um >> accountants that you employ. You don't have house and land package developers that you engage with.
>> Like this stuff. And the reason it property is unregulated >> and sure for every bad example and red flag we talk about there's probably legitimate ones out there.
>> But as a firsttime investor I'm very gunshy about this whole situation because if we look at it and every business deserves to supply a product or service, >> make money to cover their overheads and make a profit. Welcome to life. It's called business.
>> We know based on potentially two properties, the mortgages, they could be up to eight grand of mortgage commission, which you know, it's fine.
Mortgage brokers need to get paid.
>> Yeah.
>> The house and land package, there will be undisclosed payments to this provider from the developer. Like, I would put my house on it.
there would be it just that's the way the world works. There's going to probably between the two properties maybe 30k that is undisclosed back to the company that owns the one-stop shop.
>> And that's where you can look at comparable sales, right? And and cost of existing versus new.
>> So off the bat, they're in the whole 30 grand on the buy price.
>> But this is where, you know, you can add us in the comments, that's fine. This is where it just comes back to watch your strategy because we're not saying off the plan is always a bad investment choice.
>> Yeah.
>> You know, I bought that one up here off the plan. We got a good deal. It's made >> two probably more than 300 grand in a short amount of time. Like >> that's an off plan apartment. The fundamentals were there.
>> I didn't go to a one-stop shop and get it shoved down my face.
>> Yeah.
>> And it wasn't my first investment property either.
>> And and not your first. So, and generally what comes with first uh well a sophisticated investor will just continue to ask good questions to see well whether it's actually stacks up for them or not.
>> Yeah.
>> I mean what planet are you just committing to two properties off the bat?
>> Yeah. Well, who knows? Like it when when you look at that, if the mortgage brokers there, they're saying, "Well, you can borrow 1.5. We've got two house and land packages at 750."
>> Yeah, >> that's probably how it's played out.
>> Yeah.
>> So, >> um, also another thing around this interest only, well, in 5 years when it rolls off interest only, one, what are rates? two, can you >> recommit to another IO term >> or are you on a cliff at the end of that?
>> Another red dog is around the two properties and you know, we've talked about this before many moons ago when I was practicing on the coast. I had a client went to a similar company, >> bought two off the plan properties brand new in an estate up here in the Hunter mining region.
Both of them had no tenants for 12 months. Both of them were underwater in terms of the value they paid >> and in a super fund. And the danger with this stuff is there's probably in the background some self-managed super fund layered strategies as well.
>> The second one.
>> No, no, the first one.
>> If it's a onetop shop, >> it's not in super.
>> No, no. It's I'm not saying that it they're not talking about it explicitly, but I'd put my house on it in the background. There'll be strategies and suggestions in place. Well, we can do this and then we'll do your self-managed super fund like >> this stuff. So, the other big red flag is are we buying two brand new properties in the same green field development?
>> You're probably going with a probably.
>> Yeah. Generally, generally they're not working nationally.
>> Yeah. So, and I think finally on the the next point before I outstay my welcome, I wanted to flag this one and we'll put this one back up on the screen. Now, the this screams to me like it's it's got a property vibe through it because we've got a self-managed super fund >> and it's the person saying that they're a financial adviser. I don't know if the company's calling themselves a financial adviser. You know how it's like, >> you know, I go to my hygienist the other day to get my teeth cleaned. I tell people I just went to the dentist. M >> like, "No, you didn't. You went to the freaking hygienist. They're not a dentist." Like, >> so there could be that. Um there's a couple of red flags here.
Number one, if I'm this um uh it's a girl, I know what it is.
I'm if I'm her not only the the fundamentals of the prop or the this advice relationship and the family if I'm her I'm not putting my money into the family self-managed super fund. If I'm her, there are bigger red flags around your in-laws or in-laws to be basically seeing that they know that they've going to this expert.
>> They've been told that, you know, they're calling themselves a financial advisor. They're not on the ASIC moneys smart register.
>> The red flag of it himself to go, "Yeah, whatever. We're going to get a good outcome with this." like this is just another >> giant red flag.
>> So >> and I would imagine there is property involved.
So it it's quite common that like in agriculture for example like big big farming organizations will say right let's in a family setup let's go and buy property or whatever it may be and we'll have one financial advisor that will control that for us and and the siblings or the kids uh going along for the ride.
>> Yeah. Yeah. So, >> I mean, it's a bigger discussion and we've talked about this with self-managed super funds and taxing unrealized gains. Yeah. It's a bigger discussion if you're putting the farm in a self-managed super fund, but we'll park that.
>> So, that's this is off farm.
>> This is just Yeah. family wealth planning.
>> Yeah.
>> Got to put it somewhere sort of stuff.
But, >> um understanding there that the the financial advisor does not currently hold an AFSL, >> it just screams property dude.
>> Yeah. What is that?
>> Yeah.
like the so we h so I even have I'm an authorized representative you can look up moneys smart website >> Glen James I have a license provided by an Australian financial services license >> company to provide general financial advice I mean that's the bottom that's the easiest thing to get you just provide some type of >> relevant information that you you're not you know what you're talking about.
>> There's audit stuff in the background.
Like I've I've got professional indemnity insurance for what I say on the podcast around financial advice.
>> Yeah. Okay. So, um >> it just screams property to me.
>> Yeah. Well, the fact that like uh not paying for the advice has been covered on the family agreement, that can happen.
>> Yes. Now, and I don't know, I may have read this wrong when I did the reel on it a few weeks ago when it came in.
Are is the family unit getting the advice for free? No.
>> Or is it periph?
>> I took this saying, okay, the families get build for it and you're under that umbrella. So, we'll have a conversation.
>> I'm not taking financial advice from someone not licensed.
>> No, >> whether it's free or paid for.
>> No, it's a red flag.
>> Anyway, I I just think there is more there and I think there's a bigger problem. And again, there's three sides to every story. So, like there's that, but >> Well, absolutely there is. and and there's obviously yeah it it happens a little bit but when you look at this if the financial advisor did have an AFSL does that change the narrative on it?
Um, yes, it probably does >> cuz everything else doesn't.
>> No, cuz super selfish super funds aren't bad in their own right. No, like they're used a lot of the time like but I think the reason we're starting to get some of this and that's why I think property's involved with this second one, John, >> the amount of crap and ads that we're seeing online from these property spruers saying, "Do you earn over this?
Do you have this much over super?" And using self like it's coming back. It went silent for a while.
>> Yeah.
>> But it's it's in my feed. I'm getting targeted to set up a self-managed super fund to buy property >> with guarantees. There's two actually there's three that I can think of that I've been targeted with ads. All three at the moment say if we can't get you this amount of return or this by this, we'll give you the money back. So that means in the background they're printing money off everyone else and any little anomalies that fall off they will just pay part of their marketing cost. Like this stuff stinks. And while I'm on my rant, >> all the talk about uh capital gains tax changes and exemptions. In fact, this um episode probably is recorded uh before it Yeah. This this episode's going up after the federal budget. Ooh, actually, this is on the 12th of the 5th. Federal budget's tonight if you're listening to this.
>> You're right.
>> So, with all the changes, you made a comment this morning to us. Talk to us about your comment and incentives for these property peeps.
>> Uh, are we moving on from this or are we coming back to that?
>> Oh, we can come back to this. Yeah.
>> Yeah.
>> Oh, no. No. Like, we'll do it in the same segment. Yeah.
>> Yeah. Okay. Cuz the other the part of this I suppose as an action step is right. She says she's uncomfortable discussing strategies involving us making contributions to an SMSF that I'm not a part of.
>> Yeah.
>> That's a big thing.
>> Yeah.
>> So that needs to be clarified. It's like okay, what are we investing in? And if I'm not a part of this, I'm just a partner of someone who is.
>> Yeah. So this is the wild thing. So So we're saying her partner is a member of the super fund. They probably share money and all that. This is why there's bigger red flags at play here with relational things and >> because if they split up and she's already made contributions to it, she's not getting that money back.
>> No. Like that. This is the crazy thing like how long. So, for example, if you were in a relationship, which you are with Amy, >> and you come in all guns blazing and had all this strategy stuff, >> she wasn't comfortable, but he's dragged on anyway. and you know that she's not uncomfortable.
>> You're heading to problem town pretty fast.
>> Well, there there's not the dress thing to begin with.
>> So, I don't know. I just think everyone >> slow down.
>> Yeah. Um, so yeah, what did you say?
>> Uh, we'll talk we'll talk about in the next segment around the CGT possible changes that will be happening at the federal budget tonight on the 12th. But until then, um I don't run a one-stop shop, but we do have Sphere Home Loans who support the show. Uh but we, you know, again, we can't do this show without the support of good quality businesses and partners, whether ads or sphere home loans. I do know one thing.
If you use a company like Sphere Home Loans that we refer you to, you're not going to a shark. It's a simple like it's just there's been scenarios over time where I've referred people to different brokers and advisers and there hasn't been a good relationship fit or there's a ball was dropped or something like that.
>> Life happens. I get that. And we don't get on with everyone. But I do know the companies that we refer people to, they're not sharks.
>> And that's a good place to start. So, it's probably the crappiest ad ever for a mortgage broker, but Sphere Home Loans, thank you so much for supporting the show. You can reach out to Sphere Home Loans, wherever you do your Googling. Until then, the longest segment that we've done ever. My name is Glenn James, joined by John Pigeon from This is Property, and let's do a a show right now.
Before we get into it, this show is general advice only. I've got a license to provide that advice. Full details can be found in the show description. My name's Glenn James, former financial adviser. I host this show and a show called Retireite. I've got some books, the award-winning quick start guide to investing and the quick start guide to your first property available where good books are sold or in the description. If you're new here, welcome. If you're an old hand, welcome to M3. Let's get into it right now.
Okay. I want to move and talk about capital gains tax. Uh as I said, we are recording this uh before the federal budget. Federal budget is tonight. If you are listening to this on the May the 12th, I think it's the 12th, isn't it, John?
>> 12th it is.
>> No, the budget's on the 12th.
>> Monday's the 12th. Yeah.
>> Of May. Mon. Yep.
>> All right. I got that wrong then.
>> No, you No, no, no, no, no. But this is going up on Tuesday the 12th and the budget is tonight if you are listening to this episode.
>> Today.
>> I thought Monday was the 12th.
>> Monday the 11th.
>> Okay.
>> Yeah.
>> My bad. Ah, Charlie's birthday.
>> There you go. John's uh child. When's Charlie's birthday?
>> Monday the 11th.
>> Yesterday. So, thanks. Happy birthday, PSA Charles. I hope um hope daddy bought you something good. Okay, so >> a CGT exemption.
>> Yeah. So, let's talk about CGT.
Following off from that, if tonight the federal government do a couple of things. One, reduce the CGT discount. My gut feeling and this is probably won't time or won't vibe well. My gut instinct knowing what I know and we are recording this at the end of April cuz we're a bit ahead. I reckon maybe if anything they will reduce it down to 40 maybe 30%. And that's it.
and maybe carve out property because that was in the media about >> so it only applies to property. Yeah.
>> Yeah. I think that's a no-brainer, isn't it?
>> Yeah. So, talk to us about what you were mentioning um if they as part of the carve out it is new builds exempt.
Yeah, I I think there'll definitely be a change and I'm I'm thinking it'll be 33.
>> Yeah. Okay.
>> So hopefully if the Greens don't and and we're all talking now cuz the results already known so I'm just we're hypothesizing.
>> It'll be known tonight.
>> Yeah. But if the Greens get their mits on, it could be dangerous. But um 33% uh for for property that's held for longer than 12 months.
But I think >> so it's still paying tax on 66% of the gain on the property.
>> Oh, no. 60 >> 67 >> 67. Yeah. Sorry.
And uh I think they'll be playing around with like for investors that have got more than two properties, >> they'll be hit hit harder.
>> Okay. You reckon it will cascade?
>> Y because I think they just want to limit those people trying to Yeah. take advantage of the tax system. Um grandfathered.
I'm praying for.
But the new property one like I they there's talk that there'll be more concessions for those that are building new property because fundamentally that needs to happen.
>> Yeah. We need to stimulate.
>> So it might not be 33. They might say right for new builds for existing that's 33 but for new builds it's still at 50 >> and business as usual there. um because they've got to keep incentives for new new stock coming on because we're obviously under supplied. So I think that's where the the changes may occur.
But I could be completely wrong on all that. That's simply my view and what I've heard.
>> Okay. And tonight on Tuesday the 12th, there is a very high chance I will be in CRA at the budget lockup.
>> Probably when you're listening to this.
I do aim to do an episode later tonight on Tuesday the 12th and have it up Wednesday morning 5:00 a.m.
for everyone if not the same night.
>> I'll just see. I'm trying to get Vince and Ryan to a ticket as well.
>> Okay.
>> Um >> that'll be fun.
>> Yes.
>> Go for >> the budget. Well, the the lockup we went in there for was like from 2:00 p.m.
till 7:30 it ends. Uhhuh.
>> So they take your phones and all that stuff and >> but and then we can record all the stuff during lockup >> so we know all the stuff. I I might even if I can line the ducks up >> and make it happen and they give me the room to do it.
>> I may even release the budget update episode at 7:35 p.m. because I would have been in the lockup and know all the stuff. So >> that's cool.
>> That's a bit of how the sausage is made.
Um but yeah, so the the biggest thing is my whole thing is a lot of people that are actually losing their crap around capital gains tax discount.
I reckon a lot of people don't actually know what it was designed to do.
Like fundamentally don't understand.
Like Vince and I did the numbers on an episode. It probably sits around 40% nails it most of the time.
>> Yeah. I mean, you're not you're not buying property number one for tax reasons.
>> No. And and what we might do as a an educational point, I might just draw on the screen just to explain what the CGT discount was meant to do. So, if you purchased a property for 500K um 20 years ago, right? And today, I could probably even get the actual numbers, but we'll just make it up. And today, it's worth it's probably worth, we'll say $2 million. Okay, we know that the growth, actually, I will do it live.
Um, I'll just get chat to do it. If I got a property in 20 uh, what did we do?
2006 for 500k and in 2026 it was worth $2 million with inflation being we just say 3%.
um what is the breakdown of growth verse inflation because this is and when when people understand that and I they should just go back to actually using the index method like we've got the numbers of inflation. So basically when we have a look at this 27% um the 27% of this growth over time or approximately $43,000 is literally the 3% inflation over time.
>> Yep. And the real growth is going to be about one yeah about $1.1 million.
So basically what we're saying is we'll just bush math it. Um 73% is the actual growth. We'll call it 1.1.
>> We'll call 400 grand the actual inflation plus the 500 purchase price gets us to $2 million. Yeah.
>> So what the discount, the CGT discount after holding it for 12 months was to do was to stop you getting taxed on the inflation component. So having said all that, I think when we did the numbers, the 40% was pretty spot on because at the moment with a 50% discount, people are getting um it's eating into the actual real growth.
>> It's cutting the inflation which was was designed to do.
>> Yeah.
>> And then getting a free ride on the real growth of the property. So what you're saying is roughly 10% is a bonus to investors under the current >> Yeah. Yeah. So that's why I would expect maybe around 40, but not sure.
>> Um >> Yeah. Who knows? Depends who's uh pulling the levers in there.
>> Yeah.
>> Is it? Because the greens want it scrapped all together.
>> Yeah. But this is the problem with the pendulum. It can swing, but if it goes too far one way, you won't get any growth.
>> No.
>> Um because there'll be no incentive.
>> But I I I think I'm probably okay with 30 to 40%.
>> Or literally just go back to the actual real inflation method. We've got all the data.
>> Have some guard rails in place.
>> If you don't have the data on the fifth of the month, well, it reverts to the end of the quarter or the end of the month that we last have the inflation data.
>> It it it was put in to make it simple.
>> Yeah. But let's just use the real numbers.
>> Yeah. I mean, it's 40%'s fine. Like, it's uh Yeah, I think it it's fair. Um but yeah, I don't want to go on a rant, but they if if someone's got five investment properties, right? Um sounds as though they'll be penalized, which is okay. Don't believe it. Um but, uh >> only if they sell. Yeah. Only if they sell and grandfathered, right? Yeah. So, um but if they if they didn't have those properties, who buys them?
Is owner occupier buying it? Therefore, >> can afford to?
>> Yeah. Well, what do we put first home owners in there? Or if we don't and some another first-time investor buys them, then we get a tenant out of it, right?
As in >> fixing the homelessness or the housing supply. So, we just need more houses.
Let's be frank. Um, but the cutting the CGT is more about revenue from the government than it is fixing the housing.
>> Well, I think it's more political posturing.
>> Roio, on the theme of capital gains tax um, and the six-year rule and the ME main residence exemption.
A few months ago, John, I did an episode, episode 914B.
It was a what would Glenn do episode. Y >> they effectively had a couple investment properties, moved out of one, bought the house, >> and they are getting personal financial advice because I said like you guys need to get some advice here on the strategy.
>> Mh. Um, and there was a query in real time on the show around capital gains tax and the main residence exemption, aka the six-year rule. What I'm going to do, I'm just going to share this on the screen first and we'll just have a bit of a read ski. Your main residence, your home is generally exempt from capital gains tax. Usually a property stops being your main residence when you stop living in it. However, for capital gains tax purposes, you can contribute treating a property as your main residence. One for up to 6 years if you used to produce income such as rented out, sometimes called the six-year rule.
I would say ATO is often called the 60-year rule or indefinitely if you didn't use it to produce income. During the time that you treat the property as your main residence after you stop living in it, it continues to be exempt from CGT the same as if you were living in it, even if you start renting it out after you leave. and you can't treat any other property as your main residence except for up to six months if you're moving house. So that's what the ATO website says. The basically what I'm going to draw is uh a rough similar example of what I talked about in this episode. And I spoke to two financial professionals before the episode because I was I saw the >> the case come like, "Oh, let me check."
So the paraphrase is, John, we had our home that we lived in.
>> Mhm.
>> And we'll make a number up. We'll say that it's owned for 800K. No mortgage on it, right?
>> Y.
>> Perfect.
Then what we've done is and we'd lived there for 5 years.
We then went and and they did have another investment property, but it's after the fact for this example.
We then purchased a new home and I'll just say we purchased this for 1.5 million. And for simplicity for this discussion, um they've got an 800k mortgage, right?
on the new home because they've kept two other properties as investment properties. So, my hypothesis Oh, and they had I I forget the amount, but for this example, they've lived in the new house uh for 2 years. Okay, >> make sense?
>> Yep.
>> So, what I checked with and people questioned it on the Facebook group and I'm like, I don't know. I'm not a tax accountant. I think I had some hesitation talking to this person in real time. But what I basically said was, and this is where in the Facebook group, like I fully understand that you can only have one residence treated as your ME or have the main residence exemption.
So, you can only use one at a time.
>> I use the two years as an example. So, people will message me like, there's no two-year rule. I'm like, I know there's not a 2-year rule. I'm just saying we're using 2 years as an example.
>> Mhm.
>> So, what I basically said, and I since this morning before recorded this called another accountant and financial advisor, and it all comes down to interpretation of the ATO and the rules.
>> Mhm. They can get a ruling. Well, you might get a ruling or your accountant or tax professional might um interpret the rules this way >> and you sign off on it. Y >> yeah. So what I basically said in the episode, sell this now investment property here.
Sell that, right? Because why would you want to have 800 grand of equity there and 800 grand of deductible non-deductible debt on your mortgage?
like what are we doing here? If you pay the mortgage off, you want to go buy another investment property, go and buy it. You still end up with 800k debt, but you've it's all taxdeductible now. So, >> there's that. So, what I said is potentially, and there's a big asterisk here, get your own legal, financial, spiritual advice, all that stuff.
Sell this and pay zero CGT.
claim the main residence exemption. Y >> okay.
>> Effectively that means for the house that you're now living in, let's make a number up and this is really round numbers. 2 years ago when you moved in, we'll say that you did pay 1.2 million for it. Today it's worth 1.5. Okay. So, it's grown um $300,000 in two years, right? So, what I hypothesized is get the minute you sell the investment property, get this house revalued, and we've just had it revalued at 1.5.
Then, because they're going to be living there the next 20 years, like they said, we're happy to die here cuz it's big block. They're happy with it.
>> Yeah.
Then at that point when we get it valued then we declare that as our main residence for the ME which just means that when we sell it in 20 years time we have to pay capital gains tax on the first two years.
All the comments in the Facebook group said you can't do that. I had accountants messaging me saying, "You can't do that." I spoke to three other people.
>> One of them actually said to me, he said, "No, I had a client in this situation." And I said, "Don't do it."
They came back and said, "No, our accountant says we can do it and they're comfortable to do it."
>> So why' they say you couldn't do it?
because of the ME and because you get a you get a six-month window if you're moving house.
>> Yeah.
>> But I'm saying we just we just at the time of that property is sold. We then get it valued the house and then self declaration document I don't know to say from this date forward this current property we are now claiming as our MR as our main residence.
>> Yeah.
>> Like based on your experience in the wild do you have any comments on that?
Because the gray the interpretation that you're talking about at the start there is that you can choose where which one your main residence is.
>> You can Yeah, you can only have one main residence, >> but it doesn't have to be the one you're living in.
>> Um Well, I don't think it actually No, it doesn't because you can move out of it and rent somewhere >> and then you can you've got a tenant in that property.
>> Yeah.
um for >> but if you go back to the uh atto so your main residence is generally exempt so your home so which one is your home out of those two >> can your home be the one that you're not living in >> well yes because how is it different if I went to rent down the road >> the whole thing is from the people that I talked to was You can't call your new home >> your main residence from the day one that you moved in, >> but you'd have to have paperwork to provide. So when you did sell that property for the first up to 6 years of value growth because we have to sell that last property >> within the 6 years >> for that first 6 years of growth >> when we sell our new home there's a prora CGT paid on the first bit of growth but then we're calling it our main residence.
>> Yeah. The the gray area in all of that is that the first one was my principal place residence. Now my second one I'm living in, but I still choose that first property as my main residence. Yeah.
>> But just not living in it.
>> Correct. Yeah.
>> So which one goes up more is the one that I choose as my main residence.
>> Well, yeah. But in this scenario, it was it was broadly and that's why they just had to do the numbers.
>> I would probably rather sell that property regardless of paying tax or not to clear non-deductible debt. Like that's the first >> Yeah. Yeah. And then what I'm probably saying is I'm I think the point I wanted to make is I couldn't see any type of rulings online about this scenario.
>> No.
>> But the three people that I talked to >> said it's an interpretation and if you're not claiming two MREs at once, you might be comfortable to hang your hat off that. And that's what I'm saying is like that property that the first property at 800K in that two years where the you own two properties, which one grew more? Okay, that's my main residence for that two years.
>> Yes, but if you wanted to sell No, because one's got to one's still being sold regardless.
>> Yeah.
>> Yeah, >> I know. But when you're calculating capital gains tax, that's where the gray area.
>> Well, it's always like if they had lived in that first property for 10 years, >> that's going to have way more gain than the property living in two years >> generally. But that's where that's where you need to look at that strategically.
And just on your 800k property, no brainer, sell it, rid your bad debt.
>> Generally, 99% yes, you would do that.
But unless this first property, okay, we can knock down and put four town houses up.
>> Oh yeah, there's always offramps to those discussions. Like, yeah, you probably would do that all day long if it was a block that you could develop and service it, make some money.
>> Your debt over here is quite manageable for yourself as well.
>> Yeah, but that's also on the provisor.
If you did develop that house, there would be an intention to build wealth and then pay down the mortgage.
>> Yeah.
>> Because you probably got to borrow to build anyway. So whatever way you cook it, in two years time, we're not having a family mortgage. Whether we sell the house today.
>> That's right.
>> Or we develop the block, put a townhouse on it, put a granny flat, then sell it.
>> Yeah. You got options. But this the reason I wanted to re-swing back around and talk about this one, you need to get your own tax advice and be comfortable with your own accountants and tax accountants >> position on the interpretation. In the very least or the very extreme scenario, you may get if if your tax accountant can't find any type of things, you may get a a private ruling from the ATO, >> which you effectively write to the ATO, go, "Hey, can you please assess what we want to do here and give us a private ruling like yes, we believe you can do that.
>> It's not written anywhere in law.
>> You can do that." But the biggest thing that I want to talk about here is actually two years ago when they bought the home to live in that if they had an underlying strategy.
>> Yeah.
>> We wouldn't have never needed a mortgage to start with for more than 10 minutes if we're Yeah. we're gonna sell this, put the equity into this and not. It all goes back to when you got big financial flash points in your life, >> you need a plan and a strategy >> because if they >> and then they wouldn't have carried two years worth of non-deductible interest payments as well.
>> No, but what was the growth on that other property in that 2-year period?
That's what you want to find out >> on the old one or the new one?
>> The old one.
>> Yeah. I mean, it I I don't know. You can get into the weeds of all that, but at the end of the day, >> if I've got a mortgage with 800 grand debt on it, >> I'm not having 800 grand of asset out there for too long for much longer.
>> Okay. All right. So, let's go there for a little bit.
>> Yeah.
>> Where at the time that you moved out of that first property, >> Yeah.
>> that that house is valued at 600,000.
>> Yep.
>> Yeah. And two years later, it's now worth 800,000.
>> Yeah.
>> So, I've had 200k of growth.
>> Yeah.
>> Um I I bought my principal place of residence >> at 1.2.
>> Yeah.
>> Yeah.
>> And I carried 800 of debt.
>> Yeah.
>> Now, I've got an asset that's increasing by more than the interest that I'm paying on the bad debt.
>> Yes. So, what if I'm a net net in front by keeping that property even though I've still got my 800k bad debt?
>> Well, this is where the planning and actually doing the fundamentals comes in. Has that asset run its course? And that's what I'm saying is like looking at both assets and saying >> have I got just a house that I lived in that's oh yeah whatever it's just trickled up in value or have I got an asset that's actually got >> so what okay so what you're saying is you're you're comfortable to be borrowing 800 grand for an investment property that the so even if we did it right so 800 grand time 6.5 5% you're comfortable with blowing $52,000 >> per year non-deductible >> because over there >> look at that point at that camera over there there is an asset that is growing >> by more than that >> more than the after tax 52k per year >> I mean there's a lot there's a lot of psychology there >> there is there is But we have these conversations all the time and it's not it's it's based on risk profile. It's based on opportunity. It's based on looking at that original asset and saying where's the upside coming from?
>> But would you not say like in a perfect world they've obviously got two investment properties they want to hold investment properties investments.
>> Would you not go all right let's just we think the house has run its course. We think if we got rid of it knowing that we could probably sell it that 200 grand gain in the last two years and not pay any CGT on it because we're going to use that as our main residence. So it's going to be exempt there.
>> Would you not still >> take cuz when you go to the casino and you're up, you're allowed to take chips off the table. Your dopamine doesn't want you to, but you're allowed to. And that's the same thing, the dopamine and the addiction to property and assets and equity.
>> And the the bias of why would I want to sell a winner?
>> Yeah.
>> My hypothesis is why don't we press restart? Why don't we not have any consumer any non-deductible debt?
>> Then we go on a property buying campaign. We call John from Invisage Property and go we've got a million dollars to spend because we've got 800 grand worth of debt. we can put some extra whatever it is >> we can buy an asset that's probably got a better healthier runway >> and on balance it will do better doing that >> potentially. Yeah. But I'm just saying don't close one eye and look at just get getting rid of our debt just for the sake of it without looking at the asset at play here because >> when you do that >> and then phase two is right we're going to buy another investment property.
Yeah, >> there's 40 grand of stamp duty that goes out as well, >> which we wouldn't have if you kept that property.
>> 40?
>> Well, well, I'm making it up at 800K.
>> Yeah. What state?
>> Well, Victoria, >> I just snorted. Um, >> yeah, >> I I think either way, this is like it all comes down to the name of the episode is what will Glenn do, >> not not what would John do.
>> That's right. And Glenn would not live on any planet where he'd be carrying non-deductible debt if he's got the equity there because things change, John.
>> They do. But my accountant would look at that and say, "Keep the 800 there."
>> Yeah. Well, but I've met plenty of accountants who don't read the whole scope of the room as well.
>> I know. I know. I know.
>> And if your accountant knew what was up, you would think, "Do I know your accountant?"
>> No. um >> they would be more a lot of tax accountants they'll tell you probably not yours and the ones listening to this but an accountant will say you'll pay less tax if you get a a car lease. It's like yeah you will but you still net 30% out of your wallet after tax. So your logic's rubbish.
>> Yeah. Yeah.
>> So >> you would think a good accountant would be looking at and go how do we optimize the debt so it's taxdeductible?
Yeah, good infotainment.
>> Gosh. Anyway, it's worth what you paid for it.
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All right, we are moving into the community segment of the week. Gosh, it's a bit of a property themed episode today, >> Johnson.
>> It is brand new. We asked you in the Facebook group, rent money, is it dead money? Yay or nay?
If you are not in our Facebook group and you want to be in our Facebook group, uh on the way in, just say you heard Glenn and John on episode 919, so we know that you're not spam and uh I reckon 90% of profiles that are joining our group are >> legit.
>> No, not legit.
>> Oh, really?
>> Oh, yeah.
>> Oh, jeez.
>> Easy. I would probably I could almost put my hand on heart and say 95% of fake accounts.
>> Wow.
>> Y >> Brandon says, "Nay, grew up thinking it was dead money. Now I now understand it can mean flexibility, travel, jobs, etc. Living where you couldn't afford a mortgage in in brackets a mortgage and investing in other items."
>> Caitlyn Nay, my husband did a whole spreadsheet about how if you disciplined and saved the money you would spend on rates, plumbers, etc. you can end up on top renting.
>> The problem with that, Caitlyn, your husband, I know we don't like we will move on. I'll I'll I'll come back.
>> Says there is a small percentage of people deciding between renting and buying. Most people are deciding between renting and being homeless, which I guess does increase the odds of an early death.
>> Colin, nay, you either rent the property or you rent the money.
>> Colin Tracy, yes, if you do nothing, no if you invest. I'm very pro rent vesting.
>> Connor, in today's world and the prices, yes, >> Amanda, it depends. If you're renting something bigger than you need for a huge cost, even though you could rent something cheaper, then a portion of that is dead money in my personal opinion. If renting is the only option for you to have a roof over your head or you're rent vesting, then it's absolutely not dead money.
>> Chrissy, dead money. Example, I purchased a home in 2022 for 500K. It's now worth 1.4 million. My friend moved into a rental in 2020. They have paid 500 every week with nothing to show for it.
>> That's a 900k increase.
>> No, >> in four years.
>> In four years.
>> Yeah. Yeah. Look, it hard to argue that one, but um >> No, it's more than 900, isn't it?
>> No, 94 years when I last went to school.
Elenor says, "For many of us, it's rent money or nowhere to live. So rent money is pretty important." And I think there's two parts of this, isn't it?
It's like, well, you got to live somewhere, so all I can do is rent versus I live in Sydney. I can't afford anything, so I'm going to rent vest.
>> Well, this was the whole thing in the the new book that we've got out.
Pre-order it now. We'll put a link in the in the comments. It's the sequel to this award-winning book, The Quick Start Guide to Investing. It's called the quick start guide to your first property. The first basically page opening statement I wrote that bit it was like yeah between 1990 and now the median house prices worth nine times more than the median income.
>> Sure. If for example you were like I grew up in Berkeley on the central coast in 1990, it was probably like you'd be if you had the deposit and you could you'd be an idiot not to buy because a lot of the times the mortgage repayments over the years were less than the rent in certain pockets. So but we're not living in that world anymore.
>> No, it's a different you have to live somewhere.
>> Yeah. And the the asterisk that I wanted to put on um Caitlyn's point, we've you know, I've just come off writing um many words for our retireite book that's coming out at the end of the year. And it might have been in the chapter that you proofed for me about investing in property.
I actually I don't think I'd put the case study in when I sent it to you. The problem we have if you don't have the strategy in play long-term to build wealth, rent increases and the price rent moves faster than inflation.
So if you don't have a plan to grow your wealth in the background or do something that will catch you out long term because we did a case study in the book about a woman or was a guy I forget um retired at 67 had rented most their life but had 550 in their super. it was actually better off for them to withdraw the super completely, >> buy a house with cash, >> right?
>> Lock in that um indexation on rent. So you got no rental increases, you got security, >> and then also I used an example of the um home equity release scheme with Centerlink. plugged in that scheme, at the end of the day, they lived off the same amount they would have lived off renting and super income and age pension income, >> or buy a house, have only 60 grand left in super, >> receive full age pension, and then pull out 11 grand a year of equity out of the house.
>> Yeah.
>> Same year-on-year lifestyle expenses.
>> Yeah. However, at age 92 when we modeled it, they've got 169 grand left over in today's dollars.
Then if they didn't, they would have had no super left and still no house >> anyway. So that's why >> there's an asterisk there.
>> Yeah, there's a bit of personal choice, isn't there, involved in all this. Like if you want to over exceed your principal place and have a larger debt, go for your life.
>> But there's a financial aspect to say, well, that's going to hurt you. I just think when it comes to your housing, you want to get to the point where you toolled down with this working life >> that you're hopefully in a position to be debtree on your family home.
>> Got to be >> or buy a home >> because you need that security because you don't have the income coming in anymore to >> build and generate wealth. And then as we get older, it could get harder to move and you want that security so you don't get evicted or have to move. So anyway, I'm just I'm still >> triggery from writing 40,000 words in one week. Um >> yeah, and like the goal for every Australian that wants a house is to be mortgage free by 65.
All right, if you're listening to the full show, it's a longer segment to longer episode today. John, do you want to read what Nat has to say there that we'll chat about around this?
>> Has anyone successfully gotten over obsessing over past ifies involving money? I'm really struggling at the moment with the weight of life, and it's killing me that if we'd made a couple of different decisions a few years ago that we would be in a such better place. I could be a stay-at-home mom while my kids are little. I would have time to do things for me. I could have a half clean house and I wouldn't be overwhelmed and reactive person who I hate half the time who worries about money every moment of the day. I don't know how to get past this. So any tips would be great. Glenn, I mean I every decision I've ever made in my life, good or bad, I look back with regret. Like for me it's baked in to this I should have done that or shouldn't have done that.
>> I've had to constantly battle with this.
>> Um every car that I've ever purchased I regret selling it cuz I loved them but at the time I want to get rid. So >> I just want to say to Nat and anyone listening, >> we can't live in the mindset of what if or if only.
It just will eat you from the inside out. M >> it you know what if we did this and what if I did that or if only I did this.
>> You can't live there. We we we have to live in a place called reality.
>> And the only thing I would say is we're here now. How do you want the next part of your life to look? I'm going through this crap myself at the moment with stuff that's happened over the last couple of years in my life that's been out of control, out of my own control.
It's, you know, caused a lot of pain and train wrecked a few things and all that that none of it was my control and it was deep trauma and all that stuff.
I still think about it and go down that thro. I was like, "No, no, you just can't live in that state." And that was not even a financial decision, you know, it was something that was completely >> out of my control. M >> um you've just got to do the you got to make the best decision for you based on the information and resource that you that you have today.
>> That's all we can do and own it.
Yep.
>> I mean, do call me Gandandy in in this episode or >> No, look it I suppose I I wrote three things on this. Mindset is like, well, okay, what can I impact? What can't I impact? And my thought patterns like you mentioned it before about okay, well, if I'm going down that path of negativity, I've got to change the transcript in my own head. Um, control the controllables.
And invariably comparison is a thief of joy.
So are we comparing to someone else similar age or a a brother, a sister, cousin, friend, I don't know. Good chance we are. Are we looking online and seeing all these success stories and feeling envy? Like we've just got to control what we can control. Now that's easier said than done. It's very easy to sit there and say, "Well, we could have done this. We could have done that." But we also could be on the other hand living in a third world country.
>> I believe they call the developing nation nowadays John >> developing nation we we could be like couldn't we like as uh we can always see a glass half empty or half full >> and we don't want to go through our life thinking that everything's doom and gloom.
>> I think it's important to c like just to do a self assessment of what your natural state is. I think my natural state's probably not glass half full, but there's glasses smashed and there's water everywhere. So, that's what I'm naturally working from.
>> But if you're working from a place where what do you mean half full? It's full to the brim. Life's good, baby. That has its own risks cuz you walk into stuff thinking everything will always work out and >> do dumb things like buy two properties with a seven-year time frame in the one-stop shop. So I I think for Nat like what can we do? Well, we can surround oursel with positive people, realistic people that we can have conversations with about this and and it's awesome that Nat's reaching out talking about this cuz it's that's hard enough in itself, isn't it?
>> We've got to have these conversations around, well, what can we do for the next 30 years? Okay. I wasn't really happy with what happened in the previous 30, but I can it's in my control what I can do about the next 30.
>> Yeah, it's like it's like that drawing the the vendor diagram. I'll draw it on the screen here. Um, if this is life >> and this is I don't know other chat.
>> Yeah. Like I don't know what the actual words they use but like you can only control that.
>> That's all that you can control. What is in your control and it goes back to what decisions can you make for yourself that number one looks at today with the information and the resources that you have also looks for tomorrow. So it's I always say one eye on today one eye on the future. M >> we have to cuz we can't all live in the now because it screws us for later on.
>> But we can't all live on the later on because we don't have a life now.
>> So, it's got to be both.
>> Yeah.
>> And then we've got to control what we can control.
>> Absolutely.
>> Anyway, if you found this episode useful, let us know uh in the comments.
I hang around in the YouTube comments, John, and try and reply to some people and just, you know, want to talk to the talk to the good people out there cuz we basically do a YouTube show now. We got the smallest YouTube audience in Australia, but we don't.
>> It's on there.
>> We're we're really good podcasters, but >> subscribe.
>> Um, don't even subscribe. Just give us a like on the video and let us know what one thing that you have done um around a tradeoff of making a decision today >> or owning a decision from last yesterday year >> and not living in the what ifs or if or if only. You can find John Pigeon um on Instagram @ solvage property >> invis. Are we getting rid of soul?
>> Yeah.
>> Okay. Well, I'll talk about that in the after party. We'll do an afterparty today.
>> We >> We will.
>> Okay.
>> We got to go though. Um, find John wherever you need to. Don't find me. My name is Glenn James and you are listening to money or we're listening to money, money, money.
Any advice is general financial advice only, which does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product, read the product disclosure statement, PDS, and target market determination, TMD, and obtain appropriate financial advice tailored to your needs. Simo Interactive, Pty Ltd, the publisher of this podcast, and Glenn James are authorized representatives of Money Sherper, PTY LTD, which holds financial services license 451289.
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So, okay, give me and all the boys and girls an update. So, we're Is it hot off the press? Will it be hot off the press in May?
>> Uh, well, we just focusing more on Invisage property, are we? Yeah. Well, it's sort of um like as people in the inner sanctum would know, soul air has been education and invisage property buyers agent service. Um why do we need a name when I'm the only educator in it?
So, it's just me.
>> Okay.
>> Yeah. So, the name will you won't see the name appear anywhere now. It's just me.
>> This is just John Vision, >> the educator.
>> So, okay. So you're you're basically a retiring soul air wealth website or just not actively >> Yeah, that's a good question. Actually, I haven't checked, but like when you go on there, my Yeah, the the logo is still there, but it it's more so about um >> why don't you just have a solve our wealth landing page and go if you want a clarity call with John, click here. For everything else, click here. And it flicks them over to Invisage.
>> Yeah, it sort of does that anyway. But yeah, I don't know. I just my marketing team just sort of sorts that out but comes up with different thoughts but I just like yeah don't want to confuse the issue.
>> Um but education is important Glenn.
>> So a couple of things um important business >> around here Charles Town Toyota.
>> Yes.
>> So you take your PRA there. I do.
>> Did they fix the squealing brakes?
>> They did.
>> Yeah. Yeah. So, John bought a new PRA and the brakes squeealled, but Shell's new PRAO did the same thing. So, it's obviously it's a common thing, isn't it?
>> It is. Yeah. They've It's um It's a factory thing. They just go in and do.
So, yeah, they I don't know if they've recalled it. I think people just go in there and say, "No, no, I didn't. You a guy like you would have asked a million questions about it." I was just like, "Is it fixed?"
Great. Fantastic.
>> Um Okay. So, there's a guy who listens to the property show that works there.
>> Yes.
>> Um, >> name escapes me at the minute, but he does. And we sell every time and very nice.
>> Do you reckon they would service Alex a Lexus there asking for a friend?
>> I knew this where it was going.
>> Well, I think they've got bigger fish to fry cuz the Toyota dealership generally is like it's like a McDonald's. They just print money. I don't know if they need Alexexas in there. How? Speaking of printing money and burgers.
Okay, so I'm the first to admit that I love a dirty burger and chips and a shake.
>> Yeah. Yeah.
>> I went to Betty's Burgers the other night for dinner. Just down at Newcastle.
So, rode my bike down cuz I'm healthy now.
>> Riding my ebike to a burger.
>> Can I just stop you there for a minute because this is funny. Glenn came in on his ebike today.
>> Yeah, baby.
>> Like, you have a shower. He goes, "No, I don't sweat."
>> That's true.
>> 30k is no sweat.
>> It wasn't 30k. It's under 20.
>> I It's weird, everyone. I do not heavily sweat and if I do, I don't get heaps bad bo.
>> I build a shower here at the studio when we built the building because >> obviously if it's stinking hot, I'll >> for athletes, >> I'll come in and have a shower. But I I couldn't be bothered today.
>> Um and do I >> You don't smell? No.
>> Um and I changed my shirt. So there's that.
>> Yeah.
>> Um so all that aside, I'm healthy. Got my ebike. Ride and get a dirty burger.
Right. It's Sunday night. I'm like, I can't bother cooking. I need to go get a burger.
>> Walk in and I'm like, "Hey, can I just get a burger?" I'm like, "Oh, do you like can I just get a the standard burger meal?"
Like, we don't do meals on the weekend.
Like, what?
>> On the weekend?
>> Yeah.
>> When you thought you'd do them?
>> Yeah, we don't do meals on the weekend.
>> Wow.
>> Um I'm like, okay, well, can I just get the classic burger and medium fries and the strawberry shake? Right. Guess how much, John. For >> Well, I went you just guess.
>> I went in there and not to Betty's Burgers, but a similar place during the week, over the weekend.
>> And we're mentioning the name because this is public information, everyone.
>> Yeah. No, it is. Um, I would say $28.
>> You say 28.
29.
>> Ooh.
>> And I'm just like, >> I might as well go and get a snitty at a hotel.
>> Ser like and I get it. I'm not buying a burger. I'm buying wages and rent and energy bills.
>> But am I going back to have a meal at Betty's Burgers?
>> Yeah.
>> I'm not going I'm not not going back because the burgers are bad. To be honest, the fries weren't great, but I couldn't be bothered complaining cuz the teenagers there wouldn't have Strawberry Shake was good. I'm disappointed they don't do larger ones.
>> Did you put your chips in the shake?
>> No, I'm not a not an animal. Um, but I I just like I'm just not doing it. Like for me, >> there's just no value. There's no value exchange.
>> No.
>> Like it wasn't good enough. Like I go down the Honeysuckle Hotel, get a good steak and veggies.
>> I would do that for $35 because it's like clean food and it's >> I'm And this is a problem. I was like you go to Grill, for example, you got to get a mortgage.
>> Yeah. And and that's where I wouldn't classify that as fast food, but it's in between. you say, "Okay, people go to McDonald's and KFC and all that because it's convenient and cheaper. It's no longer that."
>> So, I'm looking at a a McDonald's large meal at the moment cuz honestly, I would rather go to McDonald's >> because the value is there. Like even if a large meal How much is a large meal at Mackers, John?
>> Menu?
>> I wouldn't know. burgers.
>> I'd think a meal would still be 20, wouldn't it?
>> No. No. Um, classic Angus. That's my go-to.
>> Yeah.
>> Um, that's interesting. They don't have the price on the website.
>> That's very interesting. They they have um prices.
I reckon that the prices change because if I order a coffee >> and I'm driving here and I go down to Belmont or whatever, if it updates the location, the price changes.
>> Does it?
>> Yeah. I I didn't think anyway. I don't know why I'm whispering.
>> The Uber Uber price changed on the weekend dramatically.
>> Oh, did it? Um, so if I'm going to go pick up um beef, my cli classic Angus, make it a meal, medium meal, medium fries, medium Coke Zero, cuz I'm obviously healthy, please. All right. What do you reckon? Pick up.
Yeah, I reckon 18 to 20.
>> 1645. I mean, I'm doing seriously. I'm I'm sorry.
>> Betty's burgers and grilled. I'm really sorry.
>> Oh, actually, I didn't do that right.
>> Well, you can have eggs on toast at home.
>> I do sometimes. I I need to change the drink to a medium shake to make it um medium strawberry shake. Here we go.
What do you reckon the new price is from 1645? Swapping the Coke for a medium shake.
>> Uh, yeah. Up to 18 now. 19.
>> Yeah. 1840. So, this is where it comes down to for me.
>> I love getting a burger from Betty's Burgers.
>> Yeah.
>> I also equally love hitting a McNus.
>> Yes.
>> My lizard brain just like it's a bad burger. Yum.
>> For me, the value just the I'm sorry.
the in this economy.
>> Yeah.
>> I'm I'm just not paying $30.
>> No, I agree.
>> And that's no shade on them.
>> They got to pay the rent, the staff, and the energy bills.
>> But this is a runaway train, everyone.
>> And we've got some serious problems in Australia >> where and I get it. We you you're paying for a more premium burger. I get it.
>> But where does it end? But I'm not paying an extra like so $18.40 take away I think it was almost 29 square. Yeah. I'm not paying an extra $1060 to have the premium burger where the >> the increase it's only a$1 or $2 experience increase of the food >> and the feeling is the same.
>> Yeah. M so I don't actually before we go on food I did something that many people would not do the other day John >> so we had friends um I was meeting some friends for dinner >> in Newcastle so Dirty Mike met me >> yes >> you met Dirty Mike >> how is he going >> he's good dirty >> anyway they were running late like I'm running late. So like, all right, we we'll get dinner. We'll meet you later for a drink or whatever. So he walked over to the I I don't mind the food there. The I think it's Kasanova at Honeysuckle, little Italian >> establishment.
>> And like, let's just go get a pizza, take it back, cuz I just live across the road, walk back to my house with the pizzas, >> smash the pizzas, then we'll go and meet them for for drinks.
We got there as we order the pizza.
Oh, no. We got there. I said, "Yeah, we can order the pizza. You can grab a seat in the restaurant >> while we're waiting." So, I'm like, "All right." So, walked walked over to a table. A party had previously been there >> and they had left.
>> The food.
>> You didn't eat the food?
>> No, no, no, no. Well, they um they had clearly had some type of banquet or something because there was like some some plates with like little cakes.
>> Okay. That had >> three or four hadn't been eaten.
>> And I said to Dirty Mark, I'm like, >> I'm going to eat one.
>> I mean, they're going to throw them out.
>> We're sitting here waiting.
>> Yeah.
>> And then my phone rang. It was my friends. I'm like, yeah, hey, hey. While I was on the phone, the chick said to Dirty Mike, "Oh, you can eat those desserts if you want." And Mike's like, "I'm not eating the freaking dessert."
I'm like, "Yoink."
I was committed to it, but then her saying, "You can eat them if you want.
You're in." And then it pissed down rain and like far out. So then we just they said, "You can still eat your pizza here." So in their restaurant >> and the dessert >> with an open pizza box. Oh wow.
>> Anyway, good people there.
>> That's great. Well, >> a similar story. I was in Adelaide on the weekend and we're sitting there having some or waiting for waiting for dinner to arrive and this couple up and left and they left chips, >> half half a bowl.
>> The couple next table over had a little baby girl.
She might have been Two, the husband takes the chips from the other table that were weren't eaten and feeds them to the baby.
>> Why not?
>> Hard times.
>> But I think it's more so I had a very >> So I can have another beer so you can eat free chips.
>> Yeah. I mean I don't So I had a similar situation when I did the cruise at the start of the year in Canes with my nephews. We No, it was early Ali Beach.
Ely Beach, whatever. We cuz I'd never been there. So, I'm like, I'll get off and go into town with everyone. They had their fishing rods. So, >> they went and fished and I was just I'm going to go >> take my laptop up and do some work.
>> And um anyway, the boys, they came back up and we ordered some pizzas and I think there was like half a pizza left over and it was still warm. And there was some guys who were had just arrived and sat down and grabbed a drink >> and I just hate waste.
>> Yeah.
>> And I'm like, "Oh, we've got half a literally half a piece of still hot left over.
I can't take it cuz I'm about to get on a >> boat. Like it's just not practical."
>> And then as we're leaving, I'm like, "Oh, hey guys. Sorry. Do you guys want half a pizza? Like it's still hot. If you weren't gonna if you're gonna order food or just while you're having a business with some beers, >> but they were weirded out.
>> I thought you'd laced it.
>> Yeah. Like I don't know. I just >> I don't know. It's I just hate the waste >> of it. And Yeah. Sure. It's weird if someone's like, "Would you like our pizza?"
>> I'm like, "Oh, yeah. What What flavor have you got?" But >> you talked before about me proofing the um chapter.
>> Oh, yes.
Look at my scribble.
>> Oh yeah, that wouldn't open. So passes this. So of this retireite book that we've got.
Um month eight or cuz we're calling them months not chapters is property. Um so I wrote this investing in property chapter John.
>> Yes, you did.
So, I said we believe a 7-year minimum hold time is mostly a prerequisite prerequisite of property investing.
>> So, you've got that from the red >> flag from the episode.
>> Yeah, I'd written this before that came in.
>> Um, why did you circle sevenyear minimum whole time improving my work?
>> Uh, I would I would I would just add like ideally 10. We want a full cycle.
>> One Yeah. One thing >> like one I might change it, two I might not.
>> Yeah. And this is what this is what he does. Like I I proof his stuff and then he's has a counterargument for why it doesn't need to be changed and writes it.
>> No, but there's going to be stuff here.
The the reason why I in the chapters before this we talked about investing in like shares and super like general investing.
>> Yeah.
>> In the chapter that you didn't see >> I put for investing we believe these are general hold times like short-term medium-term and long-term.
>> Yes.
>> I think I did long-term 7 plus >> right >> and medium-term four to seven. I >> Yeah. So that that's a even gives that more reinforcement to say property needs to be 10 plus >> versus there's costs.
>> Yes.
>> On the way in and on the way out.
>> I think if I can my whole thing was if I can get someone in their mind >> when they buy a property that this is at least seven years >> I've won as opposed to five or six.
>> Yeah.
Um, and as well it kind of one of the reasons it is as well because we talk about age 60 is that flash point >> and then 67 as being eligible for age pension.
>> No, you do you.
>> Um, no, no, I'm I'm looking at your comments here. Did you learn something around the center stuff? Bet you did, didn't you?
>> Yeah. Yeah. Yeah, >> I did. Um, no, it's a good chapter.
>> Oh, yeah. You've Yeah. Yeah. See, I'll use these comments like the the yields vary from 3 to 5%.
>> Investing a bit cash flow.
Um, >> I do need to go to the toilet.
>> Yeah, I need to go. I need to eat. It's 1:30 and I need to ride. I cuz it's gets cold. I want to I want to ride.
>> It's 2:00 in the afternoon. It doesn't get cold.
>> No, no, no. What I'm saying is I want to try and leave the office by 4 when I'm writing.
>> Okay. cuz I haven't worked out cuz I'm a cyclist. Professional cyclist now. What do you wear to keep warm riding?
>> Yeah. So, there's You can wear like jackets that are really thin but warm resistance.
>> Yeah. Where do I get them?
>> Yeah. Well, ask your trek mates.
>> Um >> online. I've got some good websites for you, but you'll bork at it.
>> Yeah.
11k BA fee.
I'd have to read it.
>> Yeah.
>> Yeah.
>> Oh, no, no, no. The 11k BA fee that you queried, >> I was doing a CGT case study and said 10 years ago they paid 11 grand.
>> All right.
>> For the VA. So, if you're going to proofread, read it probably.
>> Well, 10 years ago, no one knew what a BA was.
>> Exactly. They got a good deal. Um, but that was interesting around. So I literally the student is the greatest teacher or the teacher is the greatest student.
>> I reckon it took like I actually did learn quite a lot writing this chapter particularly around how >> Centerlink treats investment properties.
Yeah.
>> So, for those in finishing this after party, if you've got 500 grand or if you've got a million dollars of or we'll go 500 grand of cash in the bank or ETFs >> for Centerlink over age 67, they will deem that. So, it's like whatever it does, whether it's a share that produces dividends or doesn't, we're going to deem it 3% growth or 3% yield.
Cash shares, anything like that. But for property as an investment class, they if you got a million-doll property and it's generating 50 grand in rent, >> they're going to they're not going to deem and say, "Well, that million dollar asset there, we're just going to assume it does 30 grand a year."
>> They'll actually use the rent at 50.
>> So, this whole message that we want to get across, property is a great way to build wealth.
>> Yeah. not that good to have an income stream, particularly if you're on the cusp of getting some age pension.
>> Yeah. And that's the question, isn't it?
Hopefully, you don't have to rely on it, but you can potentially if you do need the property, if you're if you're out of age pension territory with assets >> and so you're out of that territory anyway, >> a lot of the time the liquidity will bite you before anything else.
>> Yeah. So yeah. All right. Bye.
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