Why High-Income Doctors Still Feel Stuck With Property | Ep. 59

If you're a doctor or high income professional thinking property is just about owning a home. This commization is going to challenge everything you thought you knew about wealth building. Back to one other question about why I've probably so good fundamentally, it's a great hedge against inflation. We've had inflation running really high. Being in the property market, I look back at what I paid for properties 10 years ago. Wow, I'd never expected it to be this high today. You've been well ahead of inflation. It was better than gold. Oh, there it is. Most doctors I speak with are sitting on massive borrowing capacity, but they're not using it. Why? Because of fear, because of their mindset, because of analysis paralysis and it's costing them millions in long term equity. In this episode, we're joined by Rich Harvey, one of Australia's most respected buyers agents. With decades of experience helping professionals like yourself go from one property to building portfolios that outperform the market and outpace inflation. There's 15,000 suburbs in Australia. How do you pick which one to buy? There's both technical and fundamental analysis. Technical is just all the data points and then fundamental analysis is really what I call our own applied knowledge. In this episode, you'll learn why most property investors store after one or two purchases. How doctors can invest safely without over-leveraging and the three strategic property structures that can unlock exponential growth without compromising your lifestyle. Now let's jump into it. Hi, everyone. Welcome back to another episode of the Investing for Doctors podcast. We've got Rich Harvey back with us again. Hi, Rich. Great to be with you, B. Thank you. Welcome back. So recently we had the Investing for Doctor Conference at Wall Square and in one of the sessions, we had a debate. As you recall, the debate was about stocks versus property. From memory, the property team got the debate. We did win. We did win the debate. It was a great debate. It was a lot of fun. It was a lot of fun. I think at the end of the day, the message is it's not one or the other. You do both. At the end of the day, I think sometimes you got to have a preference for one over the other. It's not always 50/50 a perfect balance between property and shares. There's pros and cons, which we can get into. Yeah, absolutely. It's never a 50/50 because a lot of us are more heavy on the property side because that's all-incupied residents. It's a quite expensive these days and the biggest first investment you do. I guess as a extension of that session, let's talk about, again, let's bring the debate content into an episode. Love to. Yeah. So I guess, again, we're not advocating for everyone to go one or the other. It's always going to be a balanced approach and a lot of people have exposure to shares and equities in their superannuation by default and property as their owner occupied. But I think the difference is using property as an investment tool. That's kind of different to just buying a home and living in it. Exactly. Yeah. So what are your takes on that? Of course, you're a biosate and so you're always going to be a bit biased, but make the case for property, again, as you did in the complex. I think a lot of people think property is just something just to have in my own home, right? That's enough, right? Maybe one investment property. A lot of investors get stuck in that kind of mindset that I understand the concept of leverage of building a portfolio and just how fantastically secure and safe property is as a wealth creation tool. It's a wonderful tool. So for me personally, it's been a great way to create an SD for my family. So I think a lot of people have to have the mind said, "Oh, that's a bit too hard or keep the can down the road. I'll start investing in my, when I've got my family set up." But it's too late. If you start investing in your late 40s, you've left two or three property cycles behind. So it's really good to start as early as possible and get into the game. And I think we'll uncover today that the key message I want to get across to the audience, particularly doctors, is use the leverage you've got. When you're on a bit on trajectory, potentially, and really good income as a medical professional, that's the golden goose. That's what's going to lay the golden age every year. And not using that borrowing capacity is something that you're going to regret for the rest of your life. So using that borrowing capacity carefully to leverage safely into property can set you up for life quite quickly. Okay. So if you mention doctors and I believe we are a slightly different breed of people. And one of the reasons for that is that we're very risk of us because I call that one about professional ill because we don't like borrowing money because that's seen as risk. Whereas I fought long and hard against that ideology because we're actually the people that can take the most risk. And as you mentioned, leverage is something that's very useful because doctors can afford to leverage and actually have safe careers in come streams to afford that. Perhaps I'm leading the conversation, but do you see that as a major problem for doctors that they have this mindset that is a bit aversive towards being leveraged? Yeah, I think you're right because your mantra is to save lives. So you're going to do whatever you can to protect and save lives. But you also need to fit your own oxygen mask. That analogy being on the plane, fit your own oxygen mask first before you help others. So you've got to tap into a bloodline or a lifeline or what I call the gravy train of property wealth. And I had a fear of debt. I go back to my own example. I speak to a lot of doctors that they have a fear of a debt. They pay down their home land. They're in a good position. They're fantastic. But they're not taking the action. And I'm asking the question, what's holding you back? And that's a good question to ask the audience that's listening to this today. What is holding you back? Is it a mindset thing? You worry you're going to over leverage and can't pay the money back? Well, property can become self-sustaining quite quickly. Yes, it's a mind shift to take on three to five to $10 million worth of debt. But when you look on the other side of the equation, you might have five to 10 to $20 million worth of equity in a couple of years if you invest smartly. So I think doctors are very risk reversing in terms of their medical training. But it's about taking structured decisions, safe decisions, getting the right kind of structure around your investment portfolio. And not the laying things until life settles down. A lot of people think, I'll just do it when the kids are older or this is done or my medical main training is done. As I said, you're missing out on so much opportunity along the way. So property journey is, property investing is a journey. And the first step is today to get going. Yeah, so looking back at my own journey, I think we got on the property ladder a bit early, but we've got a number of investment properties. And then I made some initial mistakes by not using structures effectively. So I'm sort of capped out in my boring capacity. So I'm trying to fix right now. I'm obviously someone who has not as much a version to debt. Is that the biggest problem you see amongst doctors? Because what we often see is that people would have completely offset their home loan. And that's the stage where they start thinking about investing. Is that something you see in your own? It's not just the fear of debt. I think it's also because medical professionals are so well trained, they fall over themselves with what I call a disease of paralysis of analysis. They can't, they're kind of doing too much research. And they could invest in this area, they could invest in that property or that suburb or there it is. And they end up not doing anything because they're not satisfied in moving forward until all the parameters are solved. And at some point in their investing journey, you've got to make a decision to move forward and pull the trigger. Did you see that? You know, they want that perfection and then that becomes the stable. It's a stable and good. I had the same thing. Yeah. I was an economist right in my past life. And I'd get spreadsheets out and analyze all the different suburbs and everything to three decimal places. And then finally, I said, my wife, we've just got to bite the bullet and pick an area and invest in it. And I've made a few mistakes along the way, which I now iron out, don't let my clients make the same mistakes. So, you know, I've been the guinea pig down the, the canary down the mind in a way and help people to make much, much more safer decisions. I think there's kind of, what's the word for a decision fatigue? People kind of just in their mind, they're just kind of like, oh, there's so many decisions to make. We've got to get this right, that right. And it just kind of, yeah, it just kind of gets becomes overwhelming. And they just don't have the topic. You're never going to have a perfect visit. And the thing is that the longer you delay it, the more you lose out. And then you watch the media, right? You know, typically look back at COVID, right? Yeah. Commonwealth Bank came out at the beginning of COVID saying, property prices could drop 30%. What happened on the Northern beaches, they went up 38%. They complete opposite to what happened. So, there's often fear mungering in the media. So, you don't take your advice from media bites, you know? No, you can't do that because it's one of the things that where they say, oh, prices are going to fall. Yeah, but if no one's selling, it's not going to fall. And I think a lot of that was during COVID now that we've lived through it. Was that the rents didn't get hit quite badly for a lot of landbores. But if they waited through that, it was all fine. That's right. Yeah, that's wrong. Yeah. So, it is what it is. Okay, then, you know, let's start with some positive stuff, right? There's a why is property, you know, one of the most powerful tools. You mentioned leverage, you mentioned tax efficiency. But for medical profession, what makes it so sort of unique? Well, particularly for, I think the borrowing capacity again. So, medical professionals can buy typically 90 to 95%. without paying lenders mortgage insurance. So immediately you can go to the bank with just a 5% deposit, you can leverage 50 grand, you could potentially buy a million dollar property. That's a game changer. From other people, they've got to save up 200 grand, get a 20% deposit, which takes them anywhere from five to 10 years to save that amount of money. So medical professionals can rapidly accelerate the rate at which they buy and invest into the property market. So if you buy a million dollar property today, and I'll just use simple numbers, let's say if you buy property in Brisbane, it's predicted your 10%. Next year, you'll have $1.1 million as a net asset, as a gross asset value. So that extra 100,000, you can then re-leverage into your next property and borrow against that. There's another 95 grand, you can use it as a deposit of your next property. So it's a rinse and repeat strategy. So it's that leveraging ability and the banks love medical professionals, right? They see them as low risk, right? It means they're high income orders, and it's just an easy, easy, easy, self-easy line for them. - Yeah, so I mean, my personal experience, when I was the much more junior doctor, it was a lot easier, but the banks have tightened things up quite a bit. So whereas now you probably, the assessments are a bit tougher, and it's a bit harder to get those loans now, but it's still possible, and you mentioned getting one or two, but that's the start of the strategy, isn't it? - Exactly. - The first, the first, the first couple of easy. - The first couple of easy. - The first couple of easy, and then you gotta get smart. This is where you've gotta work with the team, which we'll talk about later, but getting the right broker. You know, I know you've got the two birds, which are great brokers, and using the brokers to get the right finance, not just the property strategy, but it's getting the finance strategy, right, be that's critical. So it might be the, it might buy one or two in your personal name, and then you might think about buying one or two in a stress structure, right? Then you might buy some in yourself, but it's super fun. So there's kind of three different streams, in my mind as to how you can afford to buy properties, all with completely different borrowing assessments. So when you buy in your personal name, it's based on your personal earn, and then you can get income. When you buy in a stress structure, it's about the income that's earned from that asset you buy in that trust, right? And then you self-manage superfund, that's a completely different entity again. They don't look at your personal borrowing capacity again. It's what the amount of equity, you've got amount of savings you've got in that superfund, and then the rental income and the yield from that property that we've been doing. - Yeah, and I think that's where sort of, I sort of meet some mistakes in my early career. I mean, we probably should have, you know, delayed the loss in investment profits, and the property had it in the structure, because that's still on that. - Really, really caught us in the end. - I mean, afterwards my last property was a commercial one, which is an all-knocky-pack commercial, and that's all in structures, and that's all good. But like, yeah, it takes, I think it takes some time to recover if you get that bit. - Yeah, wrong. - But it's okay, you can fix those to the mistakes of the market. - You can fix those eventually, fix them up. - Yeah, yeah, yeah. - But back to one other question about why properties are so good fundamentally, it's a great hedge against inflation. You know, we've had inflation running really high, but being in the property market, I look back at what I paid for properties 10 years ago, wow, I'd never expected it to be this high today. And so it's a great hedge, you've been well ahead of inflation, you know, and the rents that you're earning on the properties, they're gonna be ahead of inflation too. - So it's better than gold. - Oh, yeah. - You can't leverage this high to gold. - No, you can't leverage it. - But gold's great, yeah. - I've got some gold stocks as well, but you know, I think it's about leverage. - Yeah, yeah. - And, you know, I think one of the other thing, as you mentioned, there's a lot of analysis paralysis, right? So when we look at all the different kinds of properties out there, you know, and we're talking predominantly residential for the argument sake. There's so much variability in property. When people talk about property as if it's one homogenous asset class, whereas it's, as you know, it's every property is unique and every property is different. And unless you're talking about like a high rise with 100 units in there, then they're more or less the same. You know, what is your take? And what do you believe is the right property? And perhaps there might not be the right property for the whole lifecycle of a person. - Really? - Like the different stages that can't be as well. - Let's peel back the under. - Yeah, a lot of innovation. - There's a lot of innovation. - No, no, no, no, no, no, no, no, no. - Question and question and question. - Question about buying the right property. So what might be right for you? Might not be right for your colleague. So what I'd firstly say is it's not a one size fits all approach to proper investing. Firstly, it's going to, I'm going to ask you, if you're a client, I'm going to ask you, be what's your income, what's your goal, what's your age, what's the outcomes you want? So I've got to pick what I call a retirement calculator, spreadsheet, which I share with my prospective clients. And I say, in 15, 10, whatever year's time down the track, what income do you want to earn passively from property? Is it 150, is it 300, is it 500? What's the income do you want to earn? And let's reverse engineer the whole science here. Let's reverse engineer to how many, know what value of property you need and then how many properties within that value. It's not about the number of properties, but it's about the value of property and the yield that that's spinning off. That's how the calculation works. So then it's a matter of breaking down further, what is the right kind of property? So it could be a mix of resian commercial. And then with resian properties, is it going to be houses? Is it going to be apartments, townhouses? Is it going to be rooming houses? Whatever it's going to be. So I guess a couple of key pointers for the audience is, I prefer to buy initially houses because of the land content. I've done a lot of analysis over the last 20, 30 years and found that houses tend to return a capital growth rate in Sydney, Melbourne, Brisbane, for example, of between 8, sorry, 7.5 to 8.5%. So that's 7.5 to 8.5% capital growth return. And then you add on the yield of somewhere between 3.5 to 4.5%. So your total return could be somewhere around 12 to 1.5%. Then you look at apartments. Again, the same time period for those capital cities, apartments have returned between 5 to 5.5% capital growth rate. So by buying apartments, it's okay, but it's an inferior investment to houses. And you're losing about 2.5% per annum on capital growth rate. But the yield is a bit better or something. The yields are slightly better, huh? But then you've got to compound that 2.5%. If you compound 2.5% over 20 years, it's a big number. So what I'm saying is, if you can get in and buy a good quality low maintenance house in a growth area in a capital city, you're going to be doing well. Mm-hmm. Okay. And when we get back to the individual, somebody may not be able to afford something like that initially. Because I think the mentality of most doctors is that I need to get somewhere that I can live in first. And then I start thinking about investing. No, that's the sterile type, right? There are more and more that are sort of open to rent besting. And one of the things about being a doctor is that there's quite a lot of work place mobility because you've got to move around quite a bit. And sometimes go interstate. Well, that's where we're honest, that's where rent besting comes into its eye. Yeah. There's no shame in rent besting. There's no shame in renting at all. In fact, it's a lot of, it can be a much smarter strategy for a lot of people. If you are going to be moving around to different hospitals and different areas to service your clients, it's a great way to go. As long as you've got investment properties in good growth areas. And that's a great way. I see a lot of people do that. You know, they have substantial portfolios, but they're just still renting. And then you can decide 15-year years down the track when you want to slow down and settle down, sell off a couple of your properties and buy your home, your dream home, wherever you want to live, no shame in that. Yeah, yeah, yeah. I mean, but one of the things is that with all the great first home owner sort of stuff out there, I think a lot of people are sort of fixated on getting that. Yeah, yeah. You know, getting that extra tuition, you need a percentage, you know, the government assists you on that 5%. Even the doctors can borrow 5%. But my understanding is if you use the first homeowner grants from the federal government these days, you can still get that 5% loan, which everyone can access now. But your rates are slightly better, I believe. I think that's what I'm not sure about the exact rights. Yeah, yeah, yeah. So I think a lot of people want to do that. And then they live in their place and it just becomes so easy. And they can do that strategy, right? They can buy their principal place of residence using the 5% first home buy scheme. And then after 12 months, 80 months, they could sell it or not sell it, but then convert that into an investment property. Exactly. So again, that's another great strategy. And again, none of this is like, there's no right or wrong for any individual is about what your individual stands are. It's about individual circumstance, about your own individual goals. It's about your own risk tolerance as well. I get a lot of people come to me and go, "Oh, I look like I can borrow $2 million, but I really don't feel comfortable borrowing $2 million. I only really want to spend about a million." I'm saying, "Why would you leave $1 million on the table?" Like, it's crazy. You've got an extra million dollar borrowing capacity. You should be investing that. That's going to really help you to go forward. So don't be so shy. Yeah, yeah, yeah. And do you see a lot of people being shy or is it more that they don't want to buy one property for all of that, but they want to get one first and then get another? I think some people aren't used to the process of buying multiple properties. They're going to be overwhelming. They feel, "Oh, how much time have I got to spend managing it? Am I going to get phone calls from the manager to fix things up and we're going to have to do more spreadsheets?" And honestly, it's like, once you ride a bike, you learn how to ride a bike. Once you buy a property and buy multiple properties, you learn how to do it. And you can outsource everything. So I've got multiple property managers managing my portfolio. It hardly takes any time at all. So yeah. And then you have kind of fears of, "What if I get a bad tenant, right? What if they cause damage? What if they run away, right?" So again, that can all be covered. You get landlord insurance. You get a good property manager that bets the tenant. They do reference checks. They make sure they've got good income. And that's a great way to do it. But I think the key for, I guess, for doctors is to use debt as a smart leveraging tool. really use it as a smart leveraging tool because that's what's going to accelerate your wealth plans and your theme at the FICO conference is giving people choice. Do you want to work six days a week as a medical professional? Great if you do, but if you want to back off a bit, you've got a second resource of income. And it kind of, I find for me, when I've got this extra income, it kind of makes me feel more at peace, I feel more happier, I've got more options, like I just feel more focused on what I do during the day and I'm not as pressured. Yeah, I mean, one of the things where, how I just define it to myself initially is, you know, it's going to have a family and, you know, we have two kids, so they need so much of them. And perhaps when they're old enough, but we have to sell them off, they can buy what they want or they can live in a little where we've bought. And that was sort of like the secondary thought behind the way we've invested. I think, yeah. I think, yeah, just on that point, a lot of people come to me go, look, if I buy an investment property near Sydney, uni or near Melbourne, uni is my kids, I think that'll be a good strategy. Don't you reckon rich? And I'm going, maybe, maybe not. I say honestly, invest for yourselves and don't necessarily think your kids are going to live in it. You better off to buy the best quality property that's going to regenerate the most equity. And then what you can do to help your kids is either loan the money, do what's got a limited equity guarantee loan, you can loan the money against your property or you can give the money, you can get a refinance down and actually give them cash. So that's an easier way to help your kids than tying you down to one particular location or property time, just to think your kids are going to live in that property one day. Oh, no, it's not indeed have to, but like if they can't be bothered or whatever. And the other thing I'd also say about this is what I do with my kids. So I said to my two boys, I said, look, I really want to help you get in the property market and get on the ladder. I'm not just going to give you money guys. I want to see you save money. So what I'm going to do is do a matching grant. I said, if you can save 100 grand, then I'll match that extra with 100 grand myself. So that's what my two sons have done. Yeah, well, that's sort of educating them as they get it. When did you start that? Oh, three, three years ago. Three years ago. Yeah. Yeah. So one son's there and my other son is on the way. Well, on the way. Yeah. Yeah. Yeah. I think recently one of your sons, no, it pushes the properties out. Yes. Yeah. Last year. Very first one. Yeah. Yeah. Yeah. Yeah. How was that? How was that experience? Fantastic. It was like, wow, he's and the young ones don't before the older ones. So it's right. Right. Right. Right. Right. It's funny that like, I mean, they've both got different attitudes to money. I don't want to go into it. But yeah, it's it's funny to see them. But you know, we used to talk about property around the dinner table and I'll share some spreadsheets and they've caught a bit of the entrepreneurial bug from me. You know, they've both got their own businesses. So yeah, it's been great to watch. Okay. Okay. And I guess, you know, you're a buyer's agent. I remember back in the days when I started buying property, which is like around more than 10 years ago now. Yeah. Back then, you could go on to real estate.com and look at a whole list, you know, the rental years were easily as good if not better than the, than the interest you're paying. Yeah. You could pick anything off the street and have a view. It looks like a decent place. You could get it. And it was a reasonably good investment. Right. But those days are probably long gone. Yes. Yeah. And find a good property is getting harder and harder. Exactly. And I guess that's where someone like yourself comes in. Yeah. Now, now tell me what are the sort of, I guess pitfalls. Because some people will be, oh, you know, I can just do this myself. You know, what are the pitfalls to to avoid? Yeah. So you don't know what you don't know. I'll say. Yeah. Yeah. Yeah. Yeah. Of course. Yeah. What other things that you, you know, experience are the adult knows without giving too much away. Well, maybe if I may just go back to the first principle and what are the criteria we should be looking for? If I can choose the question, what's the criteria that investors should be looking for? And then we can get to sort of the sort of red flags, if you like. Yeah. I guess if you want to dumb down property investment, it's three things I look for. PIE, I look for population growth, I look for infrastructure investment and look for diverse employment opportunities. So population infrastructure investment. So all those three things. So I want areas that's got a strong owner occupier appeal. One location that's got a lot more owner occupiers than investors. So and the reason I want that is the owner occupies really stabilise the market. If you've got an area that's got 80% investors in it, you're all competing with each other for the investor stock. Whereas you go to a suburb that's 70 or 80% owner occupier, there's a very limited pool of investment and the tends to you tend to find that the investors, that the yields go faster. So that's one thing I look for. I look for a property that's got good land component, good land content. I want a good yield, I want a low vacancy, shop, schools, transport, all those key amenities and generally low maintenance, so the construction. So first thing I'm looking for is the location. Secondly, I'm looking for attributes about suburb and thirdly attributes about the property. And that's sort of the ranking order that I look for in those three things. So I think for me, the red flags, if you like, is I don't buy high risk or very single niche properties. So I don't buy massive high rise apartments where there's thousands of the same thing. It's ubiquitous, right? Because if Bob and Mary and Sally all sell their properties tomorrow at a fire sale, what happens to the value of my apartment? I go down. So I like to buy unique, I buy unique apartments or something. It's got a special character appeal to it. I don't like Heritage. Heritage is a red flag for me, very difficult to get renovations or anything changed on the property. Maintenance issues, like I remember buying a lot of apartments for owner occupiers around Curibilly. And every single apartment block had a fire order on it from the local council, which is hundreds of thousands of dollars to get fire orders fixed. So they didn't have sprinklers and wooden staircases and fire extinguishers and it was just crazy. So that's something you'll look for. Over supplied areas or what I mean, well that is there's certain land releases. So what's an example? So the Ripley Valley, if you know that in Brisbane, it's west of Whip Switch. It's a big area. I wouldn't be buying right out in that, buying land in that area. There's just too much of the same thing. In Sydney, the southwest, you've got Lodham, you've got Ostrall, Leppington, all that area is being developed. It's going to have great population growth, but there's just a lot of land will be released at the same time. It won't have the same line of constrictional land supply as buying in established suburbs. So if you buy in established suburbs, it's generally a much better thing. And that's a come down to the location. Exactly. Other red flags for me would be flood zones. So Brisbane, first thing we look up is the flood map before we put any client into any property. Look at the flood maps, right? We also look in places like the Hunter Valley for subsidence. So I don't know if you know, but there's a lot of mine subsidence around certain areas in the Hunter Valley. So Singleton, Muscle Brook, you've got to get reports done and you don't want to sink hold in your backyard basically. You know, right. Yeah. So that's the thing. Yeah. Another thing is bushfire. Okay. So buying right on the edge of the bush, where you've got the, that's the figure, the typic Z or protection zones. If you've got to do a renovation, you've got to spend about 10 to 20% more on your property because you've got to get certain types of fire ratings on windows and screens and all that sort of thing. So be aware, if you buy in those kind of environmentally sensitive zones, what it's going to be. So same is when you buy Northern Queensland, like if you're buying in Macai or your Poon or whatever, yes, you might get a cyclone. Not to say you wouldn't buy there, but just be aware that the insurance might cost another $500 or $1,000 here. So just be aware of those things before you go into it. Yeah. Other big things, big risk factors in strata properties, special livis. So be like beach side apartments often they could be concrete cancer that's not diagnosed or, you know, some of the inner city old in a city building, just have water penetration problems. Just get the strata report done, check if there's a history of issues, check if there's any special limits because that can be a game changer for you. Yeah, and that applies for, you know, houses as well. A lot of beach and all that's correct. Yeah. Yeah. Yeah. So and then it just comes down to the numbers. Yeah. And then yeah, exactly. And then I guess doing it on your own, right? Everyone can do it on their own, right? But at the end of the day, how much time have you got to commit to finding a property, researching the market, getting to know the value of the area? So you can jump on a real estate.com or get a totality and get a median price. But often it can be very misleading. And often even if it says the median price in Bondi or Manly who is X for this month, it's often behind. It's because it's looking at a storage data. It's lagging data. So you've got to be on the ground, going to auctions every week, seeing what's happening with agents, seeing how they operate. And that's the other thing, working out how agents operate, right? Dealing with agents is a whole other, we could do a podcast about that. It's a whole other ballgame. Yeah. And understanding how they negotiate is really interesting. I did actually one of my podcasts recently, I interviewed Adrian Boe from the Eastern suburbs and I talked about the psychology of negotiations and got some great intel from an agent's perspective, right? He's a selling agent. He's selling it. He's selling it. And it was fantastic. It was a mostly lightning pot. He was so honest about, it was refreshing, right? I mean, they're there to get the highest price for the vendor, right? And they're going to milk every buyer for what they're worth, right? But the strategies that we use as buyer's agents to get our clients ahead of the competition and close out the deal faster. Because we come prepared, our clients' finance approved, ready to go. We're a professional, doing to another professional. We get a deal done a lot faster. So our average turnaround time is 30 to 50 days after a client engages to win the border property. The average DIY or personal buying on their own is somewhere between six to 12 months. The problem is, we're heading into a market next year in 2026 where the market is going to accelerate across all capital cities. Some capital cities will go to 15% price growth. So if you take 12 months to buy, you could be 15% behind. So there's a kind of a requirement, not a FOMO, but almost a FOMO situation where if you delay, you'll really be behind the 8-B all. Yeah. Yeah. And all those things that the analytics you talked about, how much of that is available to the average Joe? Good question. Not as much. So we use a lot of AI tools and also analytical tools. So we've got our own proprietary research data. Then we use other platforms like micro-burbs, which details it's got unbelievable data points. It looks at crime stats. It looks at everything in the suburb. We use suburbs finder. We just give us a really good narrowing down of all the parameters in the suburb. We use hotspotting, which particularly looks at a lot of infrastructure and employment and demographic statistics. And obviously we use Cotality. So we use that to find all the comparable sales. But then you've got to apply all of that sort of statistical knowledge and put a layer of what are called practical analysis over it all. And watching just how the market is working. So for someone to subscribe to all of those platforms, we'd cost them maybe through a four grand a month. So we provide all of that to our clients as a neat package. Well, I guess a lot of them are like B2B software. Exactly. Really for the consumer could buy it if they want to. And have you interpreted it as well. Yeah. And there's a whole level of interpretation. Because within suburb, well, there's typically what I call golden triangles. There are certain areas or certain streets within suburbs that always have a superior price. So the North Shore of Sydney, right? Everything on the eastern side of the railway line typically sells at a five to 10% premium to everything on the western side of the highway. Why is that? Why is that? Exactly. I knew you can ask me. It's two things. One is historical to its landfall. Because on the western side, it tends to slope away better. So there's a lot steeper. So we're going to the gullies, the properties down this flat. We're on the eastern side. It's a lot flatter. And it's kind of where the major schools are. It's just historically, typically a higher price. Yeah. Yeah. Yeah. No, no, they mention it. It's an extent. And there's certain pockets like in certain suburbs, like there's a village shopping center. All the streets surrounding that village shopping center within like an 800 meter radius. Typically have a higher value because it's got higher emettia. You can walk to the shops by your groceries, get your milk for the day. Yeah. Yeah. And I would assume something like 10, 15 years ago, these software platforms weren't as ready. Not at all. They haven't invented yet. Yeah. Yeah. Exactly. And there's AI as well. But you've got to be really careful with AI. A lot of people coming to us, they've kind of created their property by using AI. And it's actually unrealistic. We have to correct it. So, you know, there's 15,000 suburbs in Australia. And if you know that right, 15,000 suburbs, how do you pick which one to buy it? As I said, there's both technical and fundamental analysis. So the technical is just all the data points, looking at all of that. And then fundamental analysis is really what I call our own applied knowledge. And so applying in a little bit of sensibility and track record knowing, you know, who's moving in, who's moving out. The demographics of a suburb are particularly important as well. Really important. Interesting. Yeah. And it sounds like one of the reasons why back when I started investing was so easy because we didn't have these tools. There wasn't a, there wasn't an arm's race. Yeah. You know, in a way. Yeah. And because properties, obviously, are very hot commodity in Australia. Yeah. So they built all these data analytics tools. And it's getting without these tools, it's getting harder and harder to find the right property. Exactly. Is that your experience over the last 10 years? Absolutely. It is getting harder. Like it's an interesting data for you. I do a lot of presentations as you show at the FICO conference. I think one of the slides I put up was the volume of listings over the last five, 10 years. Listing volumes have been trending down. They're now at 20% below the five year average. Again, why is that? I keep asking Tim Lawless. They had every research. Tim really? Why a listing volume of 20% below the five year average? And he said, Rich, people aren't moving as much. Like, I think stamp duty is a huge impediment for people selling. People are aging in place more. And it might be, people can't find their next property is what I call the Mexican standoff. So people are going, I want to move. I want to downsize or want to up size. But I don't want to sell because I can't find my next property. Yeah. For this kind of stalemate happening in the market as well. Yeah. And because of this, because of the stamp duty, the baritone entry and exit is so high. It's mass, it'll make a mistake. You're selling a $2 million or buying a $2 million property. What's at 150 grand in stamp duty? It's huge. Yeah, 20%. That's a big number. That's a big drop. Yeah. I mean, it does fluctuate during the year. We get these peak selling periods between late February to April. So that March April periods are high. And then we get a big selling period in spring. So September to now to November. They get a big selling period. But during the year, if I was selling a property, I'd probably sell it in winter because there's a lack of listings, lack of competition, probably a good time to sell. Yeah. At the end of the day, you just got to sell when you need to sell. Yeah. Yeah. I mean, do you see because, I mean, if you're telling me the trend is generally less than that's listing. Do you ever foresee the local state government changing that whole stamp duty thing for it better? Well, you know, what's the name? Dominic Perate, the previous premier. You tried to, right? Yeah. They introduced. You could either pay stamp duty upfront or animal land tax. They introduced it. They got it going for six months. Brilliant. It was great idea. And then they got booted out and then they got canned. So good on them. You know, having a crack at that. So it just takes a brave government to, you know, because most governments were addicted to stamp duty. It's such a strong, really. It's a massive source, right? And it's not, it's, you know, as property prices go up, they just get high on ice to empty. Yeah. It's not indexed properly. Yeah. So yeah. I think it's definitely a huge, huge barrier to entry. And I don't know if governments are going to have the balls to do it again. Yeah. That's interesting. That's interesting. And one of these things is that with the, with the changes at times, you know, prices, the way the market works and government, 20% drop in revenue is going to be horrible. Well, I'd worked there. They've done some modeling to work yet. They were going to kind of break even after a certain number of years. Yeah. Yeah. Yeah. But like even now, if there's less transfer and that's why some of the states are broke because they've lost a lot of stamp duty revenue. And yeah, we don't know. I guess as a, as a, as a, like, I call myself a bit of a pundit, do you think like what are the circumstances that you think will, you know, the government will have an appetite to revisit that again? Or do you think that's just something that's in the too hard basket? Well, I think at the moment, it's in the too hard basket. I look at Victoria. Okay. It's a bit of a basket case in terms of their economy because they're kind of a lot of debt. They really got smashed to encovered. And what they did about two years ago, they decided to increase land tax. Yeah. So the threshold starts at 50 grand, right? So they just, again, targeting property investors, cheekway to get money and a whole stack of investors sold their investment properties. I can't remember the number, but tens of thousands, I think it's 25,000. And the rental bond board was flooded with refunds. And so that really created a bit of shortage in rental properties. But again, it's not a reason not to invest in Victoria either. It's not a huge amount more, but it took a little hit for that 12 months or so. But then more people actually just bought into it and they converted some people from renters to that's for owners. So at the end of the day, you know, it's still status wise, the thing, right? The political spectrum, it's like taxes, it's just everything needs a revamp. Everything needs a revamp. The problem is they're doing it in a piecemeal and you've got state taxes, federal taxes, you know, like, it's very piecemeal. So that's where you need a good account to help you navigate that. Yeah. And one of the things, I mean, pulling back a little bit, just looking at the whole whole environment because property investing is a 20, 30 year game. Exactly. We need to think about where the legislation and all of that stuff is hitting into. That's not a reason to not invest. I think a lot of it's not as another people used as an excuse to, oh, well, they're going to change the super law. Is they going to do these? I just sort of sit proud. Just sit on cash. And that's going to be worse than you can do. Of course. Of course. But the thing is that I think we need to because we're here talking about it at some stage in the next 30 years, what we're talking about today is not going to be applicable anymore. And they're going to change all this. Well, this is where you've got to have an adaptive strategy. Exactly. Yeah. And that's where we're someone professionals who can foresee what's coming. And you can plan around it. Correct. Right. It's just like what they've done with the super animation. You can plan around those things. You don't have to worry too much as long as you have adaptive strategy and be flexible about it and not let those things derail your strategy. Yeah. So I guess one of the things we often hear is that there'll be these couple of people that have 5, 10, 20 properties. Yeah. Right. Whereas most investors in Australia will have one or two invest properties. I think the the mode is probably still one. Yeah. Right. The average moment that investor will have one property. Most doctors will have a couple. I'm not sure what the actual data is. How many investment properties most doctors have? I think that might be an interesting survey to do amongst our community. But getting from 2 to 3 to 5, 10, 20, that's a completely different strategy. Yes. And as we touched on, you got to start. using structures. How does someone go from the two to three to first question? So firstly, it's mindset. It's literally having a team around you that's that's going to support you with your goal. Getting clear about your goal firstly, it's going and those are said before it's about reverse engineering. If your goal is 300k as a passive income, how much how much property do you need and how many properties within that value do you need? So let's say let's say the sky for them. Okay, sky's a little bit. I think how would you go? I think it's impossible to get five to 10 properties. So I would say choose your goals and then it's about filling in the blanks. It's like a piece in the puzzle. Okay, so we've got two properties now. Let's leverage the equity you've got from that. Let's give them a pre-approval to buy the next one. Okay, so and and then it's looking at balancing the yield and the growth factor. Those two things are critical. So you've got to keep your borrowing capacity relatively high as your issue is yourself. You've run out of borrowing capacity and stalls you for a period of time. So I recently did a review for one of your other Dr. Clients recently and I won't use any names, but they had a really weird portfolio. They actually had nine properties and a lot of apartments in all we do and I kind of asked, why did you buy these and there's like, well, some tip from this thing and some tip from this magazine was no structural rhyme or reason. So I've recommended we've done a thorough review thorough analysis. I recommended they sell two properties because they have low growth prospects and sometimes it's about getting rid of the underperformers and you portfolio so you can then reinvest that capital to then go in. It's also having a mindset of a lot of people going, I won't leverage against my own home. I just don't want to touch my home. Honestly, you have to do it. That's the easiest. It's the easiest leverage you've got and it's easy to quarantine the amount you borrow against into an offset account so you can defer it for tax purposes. So have that mindset of using your available equity. Otherwise, it's dead equity. So that's going to slow you down if you don't go that approach. So it's very possible to buy, you know, 10, 15 properties over the course of 10 to 20 years in your medical career. And then it's a Rinceton repeat strategy. As I said before, you buy a property every one to two years. You revalue that property, go back to your broker, say, hey, look, I've got another 200k. My income has gone from X to Y. I've got a bit more income. Can I go again? Sure. And in that time, what's surprising for me is my rental income keeps going up. Right? And that helps you with your borrowing capacity. So as I said before, it's a matter of getting both growth properties and higher yield properties that helps you to be creating a self-sustaining and a scalable portfolio. So I think in terms of an overall plan B, the first couple of years, it's about getting a good asset base and getting that equity. It's really about getting growth, minimizing attacks, using a tax-efficient process. And then in two years, three to six, it's about unlocking equity, diversifying across different states. A lot of people get stuck and just want to buy a loan back out. Don't. You've got to have to be a borderless investor right across Australia. And then that's the land tax strategy. And that's the land tax strategy. Yeah. And then it's about bringing in more yield into the portfolio. So it might be you add a granny flat. It might be we buy dueling come properties. It might be we buy a rooming house. It might be we add we add other kinds of or a commercial property. We bring in other kinds of properties with higher yield. And then when you get to like year 10 to year 15, it's then about rebalancing the portfolio. You can just do a reassessment and go, hey, do you want to keep working five days a week or do you want to back off to in three or four days a week? Maybe we sell a property paid out some debt. That'll just release the pressure burden. Right? In terms of the servicing all the lines. So that's kind of what I call the maturing phase. It's about getting the asset base right. It's about getting the right combination of yield and growth. And then finally, it's about rebalancing. So I put up a slide again of on the FICO with that triangle with those three. There's three kind of elements to it. Yeah. Yeah. And so it's and it sounds like doing that all by yourself is pretty difficult. I wouldn't advise it. It's it's like going to the pool on a track. You know, how you're going to get up the mountain. You don't go away. You get a sharper. Yeah. You get a sharper or two. Yeah. Yeah. So I guess the team you need around around you is a you need a good accountant. Yes. Because they can help with all the structuring. You need a good broker that can work with the accountant to to get the right things. Yes. And then is a is a hopefully a buyer's agent like. Absolutely. You need a buyer's agent to place it. Yeah. Board to execute. You need a buyer's agent to help you with the strategy around the property. Helped you execute it. You're also going to need a good solicitor. And we recommend one that's licensed in each state. You'll also need a building inspector to get your personal building down or strata reports done. You also want a good quantity surveyor. We can recommend you to do a good QS reports. You maximize your tax deductions. And as I said, great accountant and great provider. Very important parts of your team. Yeah. So it's and it sounds like all these extended people tend to come from the agent to the bar. Yeah. We've got a really good team. Yeah. Yeah. And so independent part not a part of our business, but we're independent businesses professionals. Yeah. And that's right. And then to do all of that yourself is just like you got to be managing like six different employees. Yeah. Very difficult. Yeah. Yeah. Awesome. No, before we finish, any sort of final words of advice for those that are, you know, stuck at one or two and really want to get to the next level. Good question. I think maybe a couple of case studies if I may. So I think it's really good to sort of look at inspiring people who have achieved more than the path before you and think, gosh, if they've done it, I can do it. It's not that hard. So years ago, we've forgotten his name now. We had a lovely paramedic who came to us to buy his first property. And again, really nervous about it. He was earning modest income as a paramedic. And then he bought his first property. It did really well and went, oh, this is fantastic. And he told all his friends and all these friends started using us. Anyway, he ended up buying five properties in six years, you know, and he's done a really good job. So he's done really well. With another guy called Michael, he bought his first property in 2016 for 580 grand, started in Western Sydney. Now he's leveraged across three states and he's got a portfolio of 4.2 million now and 160 in rental income per annum. And then we've got some not a doctor client, but some really high net worth clients as well. We've got a guy called Jamie. He's got 25 properties. His goal was to replace his earned income that he earns from his professional advisory business, property income. And he's way exceeded that. He's earning over about 1.25 in per annum in rental income now. So it's achievable. Our most prolific client has got 50 properties. And we just help them buy whenever you, or come with you. And that's obviously our structure. Exactly. I mean, I've got a couple of high net worth clients and I'm doing structures for them right now about buying the right kind of properties and the right kind of states. So I guess final bit of advice, so to say, is start earlier than you think. Get start as possible. Yeah, get started and set the goals. You don't have to have all your goals perfectly laid out. It's not about perfection with your goal. It's just a general goal. Look, the goal might be, hey, I want to retire in 10 years or I want to have the choice to retire in 10 years or 15 years, whatever it is. Focus on high quality assets. Don't buy inferior properties. Get the best quality of property you can. Yeah, especially the first couple. Especially the first one. The first one, property by the leverage of that first property is pretty good. People buy the wrong property. They might buy an off the plan, house and land package in some green field area that's over supplied and it's a slow grower or they're bought back in the day in inner city Brisbane apartment that went nowhere for 10 years and now it's just coming out of the doldrums. Don't do that. Use debt intelligently. Use debt smartly. Leverage it to the highest capacity you can but leverage it safely. Follow a plan. Don't read the headlines and let time and leverage do the work. Yeah, and I think you said it brilliantly just the first property is the most important and to get in as soon as possible and that applies to new doctors that are studying our next year as interns and residents. If you haven't thought about it, get in on it early because. And if I may one last thing to finish with, I actually bought the predictions which just came out. So there's two sets of predictions. So, Domain Dicolopow from Domain just brought out her predictions in late last month and she's saying that Sydney will lead the charge to 9.9%. So Sydney's median house price 1.75. She's saying it'll go to 1.92 median by the end of 2026. So her predictions are median house price. Sydney will do 10%, Melbourne 8%, Brisbane 8%, Cambridge 7%, Perth 6, at the late 5. Okay, so there I consider those conservative assumptions but it's interesting she's put Sydney at the top of the trip. Now, Louis Christopher who is one of the best property researchers I know but no personally, I interviewed him quite a bit. He just released his boom and bust report yesterday. So here's his numbers. He does a range. Okay, he doesn't give a specific number and he based it on three different scenarios. So he's base case where he thinks there could be possibly one more rate cut late next year and there's going to be a slow economy and inflation will be modest. He thinks Perth will lead the tree 12% to 16%. Perth, Brisbane 10 to 15%. Darwin 12 to 16%. Melbourne, 4 to 7%. Sydney 3 to 6. Adelaide 10 to 14%. And Hobart 4 to 7%. That's like the opposite of the other person. Exactly, it's quite different. But interestingly, the average across all capital cities is a 6 to 10% rise. So I'm writing one newsletter at the moment and as I'm saying, the only way is up. Not being an optimist but literally we're going to see anywhere from a 5 to 15% growth rate in property prices next year. Yeah, yeah. I don't know. This is getting more and more unfauteable. It's either get in or stay out. Yeah, that's right. So I guess concluding statement I've got to say is for those that may not feel they're ready, have a look at it because you want to get in as soon as possible. And the crucial thing is make sure you get the right first property. Correct. Yeah, don't over leverage, but talk to your broker, work out where you can borrow, then we can work out a strategy, and then it's literally about executing that strategy. And not panicking. Don't worry, you're going to miss out. It'll always be a good deal, but the sooner you get in, the better off you're going to be down the track. Yeah. Awesome. Thanks for joining us again. Thanks for your pleasure. This podcast is for educational and entertainment purposes only. The information and opinion shared are not intended as personal financial advice. 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