WATCH: Rentvesting in 2025: Still Smart or a Trap in Disguise? | NAPP. Podcast Ep.3

[00:11] So welcome back everybody.

[00:12] Today we're talking about whether rentvesting in 2025 is still a good idea.

[00:17] I'm surrounded by my power team here Michael O'Malley,

[00:20] mortgage manager from Rate Money Sydney CBD.

[00:23] Andrew Chen, strategic financial planner from Phoenix Private Wealth Management.

[00:28] George Koletti, principal, accountant from Access Professionals.

[00:31] Daniella Muzitano, founder and executive director of Titlespace

[00:35] Conveyancing and myself Gianni Musumeci from Leverage Property Advisers.

[00:39] Before we get into the nitty gritty,

[00:41] the content in this podcast is only general in nature

[00:44] and it does not constitute financial, legal or tax advice.

[00:47] And it's strongly recommended that you seek professional advice

[00:51] that is specific to your situation before acting on anything.

[00:55] So that being said, I wanted to kick in two things.

[00:58] What are some of the considerations that people need to take into account

[01:01] when deciding whether to go owner occupied and rentvesting round?

[01:05] I wanted to direct this question at you, Andrew.

[01:08] Coming from a financial planning perspective, what do I need to understand?

[01:13] I mean, it's all about goals.

[01:15] I know you asked me specifically for rentvesting,

[01:17] but rentvesting is nothing new.

[01:18] It's just opportunity costs, right?

[01:20] So you're in a situation, you have money and you're looking to invest

[01:25] and you're looking to derive an income with that money.

[01:29] And and I would step back

[01:31] one step prior as a financial advisor because there's opportunities,

[01:36] if you have the opportunity to start your business,

[01:39] that's the opportunity to make more money.

[01:41] If you're going to make a success out of that than maybe buying a property.

[01:44] Right. And so, you know, you could example, you could buy a property.

[01:46] And often in Australia the dream is to have

[01:48] that white picket fence and we all fall into that trap.

[01:51] But that means that that's a 30 year mortgage that we're in,

[01:53] and we slowly pay that down where the opportunity cost is.

[01:57] If you had the skills, you had the knowledge, you had the opportunity,

[02:01] you might have you might have started a company instead

[02:04] and you

[02:05] would have scaled that and bought many, many properties further down the track.

[02:09] Or if you don't have those skills, then you might rentvest, right?

[02:13] So you might be able to instead of buying a home and it's yielding you.

[02:18] It's it's $1 million home yielding you 3%.

[02:21] You might buy two properties that are yielding you more.

[02:24] But you know, there's there's a trade off. Right?

[02:26] So, you know, you might buy two properties and you might be in a situation

[02:30] like Covid where your tenants might not be able to pay your rent.

[02:35] And you you'll be in a difficult situation where they're able to stay there

[02:38] and you have to wait the prescribed periods before

[02:42] you can go to the ombudsman and you might not get a favorable result.

[02:45] So there's a whole lot of risks

[02:47] that I'll apply to clients who say, are you up for this strategy?

[02:50] Are you able to rentvest?

[02:51] But the reality is it's just simply about cash flow, rentvesting.

[02:55] I've seen done poorly.

[02:56] I've seen it done really, really well.

[02:58] So rentvesting, you buy a property that's yielding

[03:01] higher, that has greater prospects that ‘s very important who you.

[03:03] What buyers agents you engage like yourself

[03:06] who will be able to find those necessary products of the right characteristics.

[03:11] The mortgage that you engage, Mike get a good rate from your mortgage.

[03:15] Make sure that there's no issues.

[03:16] Daniella with the inspection and and know that this property is going to these

[03:21] investment properties are going to yield you a higher amount of income

[03:25] that will not only pay for your rent,

[03:29] but you'll be able to rent something nicer and also put some money in your pocket.

[03:33] And that's what we're investing is if you're

[03:36] buying

[03:37] something that is not going to yield you as much

[03:40] and you're renting for more, then you're actually in a worse situation.

[03:44] And these are the numbers that we often need to do.

[03:47] And George, you will see that in the in their tax returns to say that,

[03:49] at the end of the day, why are we doing it?

[03:52] We're doing it because we're trying to invest and get more cash flow.

[03:55] Right.

[03:55] And so if you're coming back with more negative cash flow doesn't make sense.

[03:59] Negative cash flow is not the worst thing.

[04:01] Because negative cash flow in terms of rent investing

[04:02] allows you to negative gear. And ding ding ding.

[04:05] That's that's really exciting.

[04:06] But just remember it's not that's in the beginning stages.

[04:11] We don't always want to negative gear because it's rather than lose 100

[04:16] to get some tax back we rather win get 100 and have a profit in the end.

[04:22] And often if we are profitable we can actually build our wealth

[04:25] a much more quickly.

[04:27] And George, you could chime in if you if you agree or disagree.

[04:30] You know, I've got a couple of clients who,

[04:33] are in that exact situation

[04:35] where they, their lifestyle choices are that they don't necessarily,

[04:40] or aren't able to afford where they actually want to live.

[04:45] So what they do is they've got these beautiful pool of assets

[04:48] that they growing, and renting and investing in,

[04:51] but they're living in the place where they actually really want to live.

[04:54] One of them, you know, we're talking about,

[04:57] someone owning a half million dollars plus who has two

[05:00] fantastic investment properties but wants to live right by the water.

[05:04] So they're renting by the water

[05:05] because they may want to move to somewhere else later down the track

[05:08] without having all the entry

[05:09] and exit costs of having to buy a property as a home.

[05:13] And another couple who basically bought beautiful investment properties,

[05:18] but again, are living in an area, where their kids

[05:21] are going to be going to school.

[05:22] And that's a temporary situation for them.

[05:25] So they're going to rent there so they can get their kids into that school

[05:28] catchment area and, invest in the areas that are lucrative to them.

[05:32] So that's a good point that you hit on because it's about life goals.

[05:37] And so it's really you might have kids that need to go to a certain school

[05:41] that you maybe you went to and you and you and then previous generations went to.

[05:45] And there's a bit of a legacy there.

[05:47] There might be a place that you need to live because you have elderly parents.

[05:50] You want to look after them.

[05:51] And so there's so many life decisions when you're buying property

[05:55] that you might not be able to buy in the same area as, our

[06:00] the parents because often our parents come in, they,

[06:02] they're in better areas and really the children because of affordability.

[06:06] Just on the start of their journey pushed out so you can effectively

[06:11] still be on the property ladder and still be able to rent near.

[06:14] But the reality is, is George also touched on is if you have a high

[06:17] incomes, it's a way to be able to keep the tax efficiency

[06:23] or be able to acquire more and more properties whilst

[06:26] making the cost of strata, interest or deductible into your strategy.

[06:32] But you have to talk to your accountant along with your advisor to make sure that

[06:35] that's at an even level where it's manageable,

[06:37] because you want to put a buffer in to say that

[06:39] just one financial downturn won't put you in a in a stress situation

[06:43] where you're forced to sell property because,

[06:45] as we know with Daniella, the, you know, the stamp duty to pay.

[06:48] And that's a that's a big chunk.

[06:49] And if you you're in a situation where you're forced to sell a property

[06:53] then all that hard work can go to waste, and it really is a big balance

[06:56] between lifestyle goals

[06:58] and financial goals, and I feel like I'm almost the perfect case study for

[07:01] for this topic, because I live in an area, Sydney, where the median

[07:05] price point is about $2.5 million, actually a house across the road from me.

[07:09] Sold for $2.65 million at auction.

[07:11] Now, in my head, as I work that out, I think 20%

[07:15] deposit is just over half million dollars.

[07:16] Then we've got stamp duty of just over $100,000.

[07:19] So you need $600,000 just to get your foot in the door.

[07:22] And then I'm still left with a $2 million debt,

[07:25] even if I'm paying interest only at, what, 6%?

[07:28] We're talking $120,000 a year just in interest only payments.

[07:32] Then this council rights, water rights and property maintenance as well.

[07:35] Instead, I actually rent the property

[07:37] for around about $50,000 a year, and I don't pay to maintain the property.

[07:41] I don't make council. Do I understand you to nothing?

[07:43] Instead, I have a property portfolio behind me that actually pays for my rent.

[07:47] And so it's a it's a perfect balance between lifestyle goals

[07:51] and investment or financial goals as well.

[07:54] Mike, coming back to you, coming back to a financial position,

[07:57] what are the differences in lending between a rentvestor and owner occupied?

[08:00] Well, just going back to the start of the topic, rentvesting.

[08:03] Certainly not a trap. It's a strategy.

[08:05] And the dream scenario for me is that someone will come.

[08:08] Having had the discussion with George or with Andrew,

[08:12] have a clear strategy in mind and know what they're doing and why.

[08:15] And as George mentioned earlier, you know, what rentvesting does is it

[08:19] gives you flexibility because you can live where you want

[08:22] and buy where you can afford.

[08:24] It does come with some downsides, though.

[08:26] I mean, rentvesting means that your borrowing

[08:28] is going to be slightly more expensive.

[08:30] And in terms of what you can borrow for an owner occupied property, you could,

[08:34] you know, on a mortgage insured loan you'd be able to borrow up to, you know,

[08:37] typically 95%, whereas for an investment property, you'd be capped at 90%.

[08:43] So there are some things to consider.

[08:45] Servicing is another one.

[08:47] If you're buying an owner occupied property,

[08:50] then your income's going to be assessed at 100% of what your income is, whereas

[08:54] if it's an investment

[08:55] property, then your rent income will likely be shaded as as banks do.

[08:59] They'll take it, they'll assess it.

[09:01] I'd say 80%, sometimes 70%.

[09:03] But, you know, it won't be all of what it is.

[09:06] So your, borrowing capacity and servicing capacity

[09:09] are going to be impacted by those decisions that you make.

[09:12] So yeah, look, rentvesting is just, you know, it's a clever strategy if you

[09:17] if you want a buy, you know, want to live where you want to live and you want to

[09:21] buy a property that's going to, to, benefit your long term investment goals.

[09:26] Yeah. Awesome.

[09:26] And I'm thinking more around

[09:29] how rent versus might be able to protect themselves

[09:32] a little bit better, especially as they start to accumulate property.

[09:35] Daniella, I wanted to ask what other considerations do

[09:38] they need

[09:38] to take from a legality standpoint when they're starting to look at investing

[09:42] in property?

[09:44] Well, I guess it

[09:44] comes down to the conversation that they will have,

[09:48] you know, with a George and Andrew, what's the entity they're buying under?

[09:53] Yeah. Are you going to buy as an individual.

[09:55] Are you going to buy it as joint.

[09:58] And you know, tenants.

[10:00] Self-managed super fund trust company.

[10:03] It comes down to that the legal work then it's you know, it's the same.

[10:08] We just have to make sure that, you know, they've had their conversation

[10:12] before that with the they account on to their financial planners to make sure

[10:17] what's the best way for them, you know, to purchase that property.

[10:21] And I think that's very outcome driven as well.

[10:24] Yeah, absolutely.

[10:25] Because going back to your financial goals as well, the you begin

[10:29] with the end in mind and understanding what your exit

[10:32] planning will determine the entity ultimately.

[10:35] Absolutely.

[10:36] I mean, George and I, we work together on on these sorts of, clients,

[10:42] and you really want to say, like with a business,

[10:47] if at some point, you know, acquisition is one point

[10:49] that you consider, we always look at the exit strategy

[10:52] and it depends on whether you're still working,

[10:53] whether you sell what the impacts there on the capital gains.

[10:57] Is it in a trust. How are you going to stream that?

[11:00] Or if you buy it in a company, right then, then you lose those benefits

[11:04] around those CGT, concessions.

[11:07] And so it's very important how you buy, how you choose to divert your cash.

[11:11] So it's something that needs to be in a sit down with your accountant,

[11:15] with your financial advisor to make sure that it's going to make sense,

[11:18] and particularly the entity, you know, whether you buy it,

[11:22] instead of drawing the income from your business to yourself to buy it,

[11:26] or whether you leave it in your company or whether you put it in

[11:29] and you put it in your trust.

[11:30] And so, all these considerations are, an extra layer of complexity

[11:35] that on top of just what property you buy, how you borrow it and, and,

[11:39] and that it's the, the right at legality in terms of your contracts

[11:44] are, watertight. So

[11:46] going back to it, I would say

[11:49] make sure that you're depending on the client is that a client

[11:53] might be acquiring and they are so wealthy they never need to sell.

[11:56] Right.

[11:57] And that's a very different position

[11:59] from someone who's, again, limited in their income,

[12:02] who again needs to buy, but they're buying because it's just a step.

[12:08] Eventually they do want to settle down and buy that dream home.

[12:12] So it's to say

[12:15] rentvesting can be a strategy

[12:20] that you take all the way through your life.

[12:23] Or it can be a means to an end to accelerate

[12:26] your wealth generation to the point where you feel comfortable

[12:29] that you can buy that home that you're comfortable with.

[12:31] I don't think you can undersell Daniella's contribution to this either,

[12:35] because the discussions that she has, like,

[12:37] she will actually call me at 8:00 at night,

[12:40] I've got this client doing this,

[12:42] and they've got it in this name and doing it in this way.

[12:45] I don't think that it's appropriate for them.

[12:47] What do you think?

[12:48] And then she'll go back to them with some common sense

[12:51] approaches on how to do stuff, because it really makes a difference

[12:54] whether they go as joint tenants or tenants in common,

[12:57] or whether it should have been or shouldn't have been in the trust

[13:00] and whether the names are correct for what's been done

[13:03] that is just super important.

[13:05] And and Daniella picks it up literally every time.

[13:07] We've got to make sure before, when I get that sales advice

[13:10] that I always tell the client,

[13:12] is that the right name, have you talk to your accountant about that?

[13:16] You know.

[13:17] A good conveyancer really is the last line of defense

[13:19] when it comes to purchasing a property.

[13:20] Because once that contract is signed and it's unconditional, you're done.

[13:23] Like, yeah, absolutely.

[13:25] Supposedly they've done all their due diligence before they come to us.

[13:28] But we check. Yeah yeah. No for sure. So it's

[13:32] a funny,

[13:33] perspective because you know, before we,

[13:36] we just when we bought property and and you and correct me if I'm wrong is

[13:40] we often bought property in joint tenants because that's the way we, we didn't.

[13:45] And the culture was very different than when you're married.

[13:47] You married for life.

[13:48] And if we look at the divorce rates

[13:50] at 40% at the moment, you know, the average divorcee is 42.

[13:54] And, you know, the average marriage last for fourteen years.

[13:58] And suddenly you have these all this property

[14:01] that potentially that you're bought and held for so long

[14:05] and and there's a, there's there's no guarantee that

[14:10] when you divorce you your partner won't find another spouse.

[14:13] And you're saying, how do I protect that for my children?

[14:17] And it's to say, well, a good conversation with Daniella

[14:21] is to actually make that decision, is that maybe instead of having joint tenants,

[14:25] whether the person who owns an asset is the one who survives, might

[14:30] maybe have tenants in common where that that

[14:32] that value of the asset will be protected for the children going forward.

[14:35] And so even though you

[14:36] might have blended families going forward, you can still have those relationships,

[14:40] but also, stay true to the money from the previous

[14:44] marriage passes on to that bloodline.

[14:47] And so I think Dani's conversations with my clients around those, those,

[14:53] not only the,

[14:54] the name that goes on the contract, but how and how you buy it, is so important.

[14:59] But I think it goes back to even just that.

[15:01] What is the goal around purchasing the property

[15:03] and even taking your estate planning in mind as well?

[15:05] So having having somebody like Daniella to be that last line of defense will

[15:09] have you considered

[15:10] whether to go tenants in common and or tenants in estate is is very important.

[15:14] What I'm seeing a lot lately is a lot of prospective clients coming to me

[15:17] saying, should I purchased through a trust and I'm like, speak to your accountant.

[15:21] There are so many podcasts promoting that.

[15:25] Yeah, yeah.

[15:26] This, this this myth of unlimited borrowing through a trust is is one

[15:29] that gets me all the time.

[15:30] But George should rentvestors buy in their own name or what

[15:34] considerations do that I need to take into account around the entity?

[15:37] It's a really good question that I probably would get 2 to 3 times a week.

[15:41] It's it's

[15:43] everybody's circumstances is different.

[15:45] Whether they're going to be investing, in a trust

[15:49] as individuals through a superannuation fund, through a corporation.

[15:53] It really depends on what are their circumstances

[15:55] in this particular situation?

[15:57] Do they have the business?

[15:59] Do they have assets to protect?

[16:00] Are they in a risky, occupation that requires

[16:04] and have some more asset protection put in place?

[16:06] What are the considerations?

[16:08] Their family makeup?

[16:09] How wide is their family, you know, do they need to basically spread

[16:13] some of the load?

[16:14] Are they trying to assist children in buying, you know,

[16:17] or starting their investment process through a trust?

[16:20] Like there are so many different questions and it's all very,

[16:25] I suppose customizable depending on the circumstances.

[16:29] There are considerations.

[16:30] So if you're going to buy through a trust, one thing, especially in New South

[16:34] Wales, you've got to consider

[16:35] is this, you know, land tax is you get land tax a dollar one.

[16:39] Yeah.

[16:40] So you don't get the exemption threshold.

[16:42] As you would as an individual.

[16:43] Or as a company or the superfund.

[16:45] But there are other advantages by doing that.

[16:48] And certainly through the ability to protect assets primarily

[16:54] and then be able to do a discretionary distributions from that depending on

[16:58] who is going to be getting what, and then can fund

[17:03] in the medium to long term other things

[17:05] that the family's doing by that discretionary distribution.

[17:09] Yeah.

[17:09] And that's important as well because

[17:10] and then there's also maintenance costs associated

[17:12] if you do decide to purchase through a trust, you're paying a lot more land tax.

[17:16] You lose some tax.

[17:17] You know, tax considerations as well.

[17:21] So that being said, it really depended on your goal.

[17:24] And I think the location is just as important as well

[17:27] where you're buying because it goes back to what are your financial goals as well.

[17:31] So typically rentvestors.

[17:33] They rentvest because the, they’re cash flow poor or they have a lower barrier

[17:37] to entry where they can't buy in these high

[17:39] to higher medium price point capital cities as well.

[17:42] So so that being said, you need to understand where the best

[17:45] place to invest is in, as well as what the most appropriate entity and,

[17:50] and that

[17:51] sort of couples in or ties in a lot with the financial planning goals as well.

[17:55] What is the purpose of you rentvesting?

[17:58] Is it because you want to get on the property ladder,

[18:01] because there's a ton of assets out there that can do the same or similar job.

[18:05] It might be managed funds or shares or how does the asset selection,

[18:10] how does the the asset selection conversation go

[18:13] when you're talking to people around, you know, what should they invest in?

[18:18] I mean,

[18:19] the vesting pieces is the tactical.

[18:21] You know, the strategic part of financial planning is, you know,

[18:25] do I have, you know, trust if we go back to the trust, like,

[18:28] do I have a disabled child that I need to put money aside for?

[18:31] Am I expecting a large inheritance from my family?

[18:35] You know how broad the family is.

[18:37] Do I have a previous marriage?

[18:39] Do I need to protect some assets?

[18:41] Do I have a capacity to income stream?

[18:43] So it's either asset protection or income streaming.

[18:46] But then you say to yourself, okay, I've dealt with all of those broad issues

[18:49] of what we want to do and which country and which you want to be or tax resident.

[18:54] But when it comes to choosing an asset, the asset is purely about quality, right?

[18:58] Because if you're saying, I'm going to derive an income, and that income's

[19:03] going to replace the, the money I would have outlay for mortgage.

[19:07] Right.

[19:08] And so that's what you're comparing.

[19:09] So you're comparing am I.

[19:11] My base case is had I bought the property that I was going to live in.

[19:16] And this is what it cost to hold that property, for example,

[19:20] $50,000 or $80,000 a year.

[19:22] What if I took that money and that servicing capacity and I bought and I geared

[19:29] to be comparable because it's gearing a comparable investment.

[19:32] And so it's purely down to the quality of the asset. Right.

[19:35] So, you sit down with your buyers and you work out what you're comfortable with.

[19:39] And, and a lot of Australians are very comfortable with property. Right.

[19:42] But you know, and I believe in property because,

[19:46] you know, as a strategic advisor, everyone knows and should be comfortable.

[19:50] But there's a limit, right? Yeah.

[19:51] You know, I just, you know, I would never say that one asset class

[19:55] is the be all and end or you want to spread your assets wisely.

[19:58] But let's face it, most people want to feel comfortable with one.

[20:01] They want one that they live in.

[20:03] And like you said, they might might want to buy a unit

[20:05] for when they're they're older, that's close to where they want to retire

[20:08] or one for their children if they know they're going to go to university.

[20:11] And, and they're out of town, you might

[20:15] you might live in, on a farm and you want to buy something in town.

[20:19] And, and so they're all considerations that the rentvesting

[20:22] allows you to do while still living in the place that you desire.

[20:26] And so, but back to your question about choosing the asset.

[20:30] It's got to have the affordability and usually the cash flow.

[20:34] It also needs to make this make sense, depreciate over time

[20:36] because the return of asset is just not rental yield.

[20:40] It is the, the capital growth that you get.

[20:44] And you want to do a bit more research.

[20:45] You want to be that to be supported by, you know, demographics,

[20:51] population growth, industrialization

[20:54] in your area because that's going to drive the property prices.

[20:58] You know, the advantages of being further out is that

[21:02] when George is saying,

[21:04] I have clients that have done really well under the million dollar mark,

[21:06] because naturally people have that, that cash

[21:09] flow and affordability and it brings out.

[21:10] And so we saw with Covid, when you no longer need to live in those big cities,

[21:13] you could you could move out and out, up, up and down the coast, that sea change

[21:18] and that, that, that, that city money just drove up property prices.

[21:22] But on the on the flip side to that is, is that

[21:25] if you if you do buy out there,

[21:28] that's for that generation,

[21:30] the next generation, will they be earning those city incomes.

[21:34] They might not be.

[21:34] And so that might be a false inflation.

[21:37] I'm not I'm not.

[21:38] And this is, this is just a scenario.

[21:39] But to say why property in Sydney is rises so quickly is the fact that

[21:44] if we're in a suburb and everyone and you have,

[21:48] you have enclaves in Sydney, and for example, you might have like

[21:52] in Epping or Bellevue Hill or whatever, Bondi

[21:56] Junction, you know, you want to be close to your community, right?

[21:59] And so you, you pay a bit more and you get emotional.

[22:03] And, you know, that's another factor

[22:05] why people wouldn't necessarily buy in those areas.

[22:07] And that's actually a positive factor.

[22:09] So so in many ways the house that you live

[22:13] in, you might not be able to afford there,

[22:14] but you'd be able to buy, for example, units,

[22:16] they aren't telling people to go out and do that, but I'm just saying

[22:19] there's some considerations

[22:21] that you will say, oh, the asset might be a high quality asset

[22:23] that will appreciate over a over a course of decades.

[22:27] Why don't I get it now?

[22:28] Because that would appreciate far more quickly than had I just thrown

[22:31] everything, at, a property in Macquarie Fields.

[22:35] Right. I'm not telling people to buy, but I think we know that.

[22:38] That it's an interesting point to.

[22:40] I mean,

[22:40] you can take all the logic you like, but some investors are the kind of people

[22:44] who want to be able to drive past the house

[22:46] and look at it in pattern and feel it, and others are quite dispassionate.

[22:49] They don't care if it's in Western Australia or far north Queensland.

[22:52] So yeah, I mean, there are different motivations

[22:54] and different styles of borrowers around those kind of decisions.

[22:57] Can I say something?

[22:58] What I'm seeing as well, I'm not sure if you're coming across that too.

[23:02] I've got clients who are selling all their property,

[23:06] all the investments to buy their

[23:09] home.

[23:10] A dream home. Yeah.

[23:12] I've just, you know, one of my clients recently, they just sold

[23:15] five investment properties to buy their home.

[23:18] Yeah.

[23:18] And that's often a strategy that that people take.

[23:20] They, they use their, investment portfolio to eventually

[23:24] get them into their dream home, whether it's through the income,

[23:27] being able to service a loan or through the capital value as well.

[23:31] But I think one important aspect from a financial planning perspective

[23:34] that I just wanted to touch on briefly was their tolerance to risk,

[23:37] because we using debt to invest in an asset

[23:41] and that magnifies our exposure to the market.

[23:44] So we're increasing our exposure to the market,

[23:46] and a lot of people may not be comfortable with that.

[23:48] So that's one of the conversations that they need to have

[23:51] is around their tolerance.

[23:53] Like can they afford to increase their risk.

[23:56] Yeah. But that's a that's a good point. Yeah.

[23:58] So like in Australia we've had such a good run with property as an asset class.

[24:02] And what we forget is property is a growth asset class.

[24:06] So, so regardless of whether it's managed fund shares or whatever it might be,

[24:09] an asset class has volatility.

[24:12] The only difference is property is not valued every day. Yeah.

[24:15] And so every hour every second.

[24:17] And then that's

[24:17] how we get really decent senses sensitive to fluctuations in volatility.

[24:22] But the reality is is that what we do know as financial advisors looking

[24:26] historically at returns is that growth assets outperform cash assets.

[24:31] And so we're in a low income, low cash environment where we saw,

[24:35] the reserve Bank last month dropped interest rates by 25 basis points.

[24:39] They're forecasting another four rate cuts over the successive quarters

[24:43] that had me that cash

[24:45] is is is going to return you less.

[24:49] It will cause people to shift to growth assets,

[24:52] to be able to protect the time value of their money and inflation.

[24:55] And that's that's really what it is.

[24:57] And so, when you have, a fall

[25:01] in asset value, you multiply that effect with gearing.

[25:05] Right?

[25:05] And so it's to say, do I have is my time

[25:09] frame in your risk profile to hold this asset.

[25:12] So return to bed.

[25:13] There's no question that growth assets will return to where they are

[25:16] based off history.

[25:17] So it's just a matter of am I am I

[25:21] solid in my income?

[25:23] Am I solid in my role and is my business cashflow solid?

[25:27] Am I?

[25:27] And so these are the conversations I'll be having with the clients to say,

[25:32] are you happy? Because really, I'll.

[25:35] Before I start any of these conversations, it's a conversation of responsibility.

[25:39] Yeah.

[25:40] And so, you know, in, in, in a day and age where it's so easy to have a,

[25:45] a Amazon Prime subscription and Netflix

[25:47] subscription, you know, every day it's 5000 card.

[25:50] So you got your phone, you got the internet,

[25:51] you got so many subscriptions and then but that's bad debt, right?

[25:56] You then you have the good debt.

[25:57] And I'm very I'm all for investing. Right.

[26:01] Because it's it's good that and the education around that.

[26:04] But it's only good if you can see the benefit at the end of the day.

[26:07] And so that means, sorry to talk so much

[26:11] is to, to, to make sure that you can

[26:14] derive the benefit and see that capital growth come out over time.

[26:18] And, and so you have your exit plan to say, I'm going to exit

[26:21] at ten years on my exit, at 20 years on my exit 30 years.

[26:24] But the most important thing is I can see through that,

[26:27] maybe the eight year rocky period and and see the benefits of widening this.

[26:31] And and if you're a long term investor then definitely using gearing you

[26:35] you it's very difficult to go wrong.

[26:37] It's only when you're forced to sell down

[26:40] then you lose out on those those costs that we spoke about stamp duty.

[26:44] Your deposits LMI just doesn't make sense.

[26:47] The longer you leave it, the more it makes sense.

[26:49] But only if and only if the asset is a good asset.

[26:54] Right? Correct. Yeah.

[26:55] Little golden nuggets in there.

[26:57] I'm sure we can talk about this topic all day but we'll need to cut out there.

[27:00] So thanks everybody for joining us. So catch you on the next episode.

[27:06] Of.