With interest rates holding steady for now, what opportunities exist in today's property market for home buyers and investors?
Join our experts – Ben Wong, Co-founder & Principal Mortgage Broker at Odin Mortgage, the #1 Mortgage Broker for Australian expats and overseas residents, and Rich Harvey, CEO of Propertybuyer, Australia's most awarded buyers' agency – as they share their insights on navigating the current climate.
Topics will include:
- The implications of stable interest rates for property investments. Rates may fluctuate soon, so we'll discuss responding to potential changes.
- Refinancing opportunities and strategies to prepare for expensive revert rates as fixed terms end.
- Overview of the Australian expat and overseas resident lending landscape in Q4 2023
- Current supply and demand shifts in the Australian property market and how to capitalise on them.
- Migration trends and their possible impact on housing demand.
- Best practices for buying and investing in today's market conditions.
- New opportunities for home buyers, investors, and existing owners.
- Preparing your property plans for potential housing trends ahead.
Market conditions can change quickly, so be sure to check for the latest updates. Join us to make informed decisions for your property goals this year!
Watch the webinar here
Read the transcript of Australian Property: Expert Tips for Expats & Overseas Buyers
Josh Pugh 00:00
All righty. Hi, everyone, and welcome to Australian property expert tips for expats and overseas buyers. I'm America, Josh, and it is my pleasure to be hosting tonight's discussion. We've posed the question broadly, with interest rates holding steady for now, what opportunities exist in today's property market for home buyers and investors. So what we've done is we've gotten to experts in this field to talk about the implications and all of the planning that goes into this. Ben Huang is the co founder and principal mortgage broker at Odin mortgage, and rich Harvey, CEO of property by property buy hello to you both. Today, thanks for having us, Josh. Not a problem at all. So I wanted to head off and sort of set up how we're going to be doing this webinar this evening. So one thing I did want to touch on early is that we won't be going into a lot of depth about tax in this webinar. Now, tax plays a huge role in your decision about buying a home and managing property in Australia, from overseas. And it's incredibly important, we are definitely not minimizing that. And we've had a lot of questions around taxation and the ongoing obligations of someone who's investing your individual situations, your positions, your history, everything that goes into who you are, are all too unique to give proper tax advice. So we will give, we will certainly be touching on the issues and talking about when you need to really think about the tax implications. But it's important that you get individual advice and get a tax professional to separately go through your individual situation. That being said, too, we do have a disclaimer, as always, this webinar is intended to provide a basic understanding of how mortgages home buying and management work between Australia and Australians abroad. And some of these answers may not apply to you. So if you want to be sure about your specific situation, just like the tax, be sure to contact Ben and rich after this webinar. And we'll make sure to share their details. So you'll have no shortage of information coming at you after this webinar, but seek individual professional advice. So that all being said, thanks for coming tonight. Thanks for joining us, we do have the option to add questions through the q&a functionality that you'll find at the bottom of the screen. So I'll be keeping an eye on that. If you do have some questions that you want to raise, please do raise them. And we will get to them as we go along. Rich and Ben have prepared some presentations. So we're going to start with those. And as we go along if there are ways that for me to get some questions in there that when you put your questions in the q&a section, I can make sure we we jump to those. So thank you both very much again, Ben, I'm gonna jump right into you because I know you're a wealth of knowledge when it comes to mortgages with your background at Odin mortgage. So thanks for joining us. Do you want to start by telling us a little bit about yourself and Android mortgage?
Ben Wong 02:45
Yeah, sure. Thanks. Thanks, Josh. Welcome, everyone to the Australian property webinar. So I'm the head mortgage broker and co founder of odor mortgage, been doing this for a decade now, specifically, and just expat mortgage broking for people living overseas. That was based in Hong Kong for the majority of that, but we had an office in Singapore as well. So we are servicing mainly Hong Kong, Singapore and the Middle East. That's predominantly 60% of our market base. And the other 40% is from UK in the US. Those are the five main countries, where are the expats reside. So we've just been doing that day in day out just Friday and come applications for Aziz and also for those with permanent residency visas, but have not yet moved to Australia. And then the other 20% of our clients, foreign buyers, just foreign, you know, foreign nationals that are not Australian citizens looking to buy investment property in Australia. Last year, we launched our tax arm as well, Odin tax, assisting Aziz with their property tax returns from overseas and understanding the tax implications of that. So I'm not the head, you know, the accounting myself but working alongside our tax team. I do have quite a quite a fair bit of general knowledge I can touch on later on, but won't go too deeply into. So I think I'll just get started right, Josh? Yeah, go for it, man. So I'm gonna start off with the Australian lending overview, you know, what's still possible for DLT is live in in the US. You'll notice that we can still go up to 80% loan to value ratio. So this is very standard in Australia, everyone be able to grow up to 80%. And then you can always go up over 80% but with something called lenders mortgage insurance, which is a fee that you need to pay with to the banks. So I like in Australia, in Australia, where you have 4050 different banking options. When you're in the US that probably shrinks down to around 10 banks, okay. Just the vast majority of banks will not lend to expats living in the US and only one bank being CBA will lend you up to 90% of lenders mortgage insurance. You can still leverage your existing Australian properties If you're lucky enough to have one or two existing Australian properties, you can tap into those properties and go back up to 80%. And take any equity cash out to help you buy your next property, or shares slide on that later. You can do a 30 year loan term regardless of age. So you could be like a 80 year old. And if you can still show strong cash flows, they'll give you 30 years loan term, although there is one bank now that has introduced retirement age policy, up to 67 to determine your loan term. So if you're 57, that's 10 years away from retirement, so they're only going to give you 10 year loan term. Well, it's only one bank at the moment, that's heritage heritage bank. There's no early repayment penalties in Australia by law, okay. So I don't know, what's it like in the US, but in Singapore and Hong Kong, if you get a mortgage, on a property, it locally, they have a two 3% early repayment penalty in the first two years. And sometimes it goes up to the third year. But in Australia, there's none of that there's just a nominal discharge fee of around 300 $350. That's why it's quite easy to jump from Bank A to bank B refinancing. And so the banks or the banks in Australia are forced to be quite competitive, you'll notice the interest rates among each other, it's just within 0.1 to 0.2% of each other fees are very nominal. So we're coming to the latter end of 2023. Now, I want to touch on what's been happening this year, as you know, interest rates have been going up month on month for, you know, pretty much 11 months straight. And and that does affect the assessment rate. So what I mean by that is, what the what was the interest rate that the banks use to assess your borrowing capacity. So even if we're gonna get you a loan of 6%, that the banks use something up to nine and a half percent, right to, to calculate how much you can borrow, they do that just to be safe. In case there's another 3% of increases. But they've been adding this 3% buffer all the way along. So obviously, right now, the probability of going up another 3% is very, very wise. It's, I'm not gonna say it's not, it's not going to happen, right? Most people think has peaked or close to peaking. But they still use nine and a half percent. Okay, so just gotta bear that in mind. It's quite conservative. The, the obviously the rates have increased, like I touched on is now flat for the last four months, the RBA has kept the rates on hold for the last four months. And I want to talk about the implications of that. Fixed rates are still slightly higher than the variable rate. So the vast majority of our clients, I'll say 90% of our clients are 95% of our clients in the last six months, have all been opting for variable rates, instead of fixed rates. And in terms of in speaking of fixed rates, there's this term called fixed rate cliff, just talking about all of the people who fixed the interest rates in 2020 and 2021. At super low rates at 2%. They're coming to an end soon. And we're about halfway through that a lot of them have now reverted back to variable. Talk about that a little bit as well, later on. And lastly, I would say the trend for lender options have started get more restricted, slightly more restricted. Okay. So these, like, I put six banks here, you know, they made some changes that were not in favor of expats this year. So bank Australia Virgin Money, they stopped lending to experts, they said temporarily, don't know how long queue Das, they exited the market a year ago, they haven't come back on heritage bank, they went from 80% LVR to 70%. And then bank West and went from 80% to 60%, LVR, two months ago. And St. George bank, this one doesn't really apply to those in America too much. But they force us to use Australian income tax rates to assess Singapore, Hong Kong and UAE income, it hurts because those countries have very low income tax. So when you're forced to use 45%, marginal income tax it obviously, you know, it has the borrowing power. Now, for investor housing rates, I just want to show you what, you know, what the rates are that people in Australia are paying at the moment. So this this graph here shows the average interest rates that homeowners in Australia for investment lending are paying for at the moment. So this red line here is the variable rate. Okay, so you can see that variable rates were higher than fixed rates in 2020 21. So that's why a ton of people fixed the interest rates right in these last two is two years. But that has changed like at the start of 2022, where fixed rates have now much higher than then variable. So you can kind of see this as a proxy for for rates to come in the future because the banks were pricing fixed rates higher than variable rate, so they predicted that rates are going to, you know, start going up from the Reserve Bank of Australia. So you can see now it's kind of like merging now, you know, together. So we're pretty much now at this point where, where, where rates have peaked, maybe slightly, one more, and I'll show you like a prediction in the next slide. So the average investor right now is paying 6.28%. Okay, so if you're at 6.28%, or higher six and a half 7%, someone 8% definitely can check out to us, we'll be able to get you investment variable rates from 6.04%. Right, and fixed investment, fixed rates from 6.19%. Now talking about the fixed rate, Cliff hover over this one quickly. There are so yeah, 2020 2021 $400 billion of fixed rates where you know, what issued, and there's two, and this is what I was talking about where we're halfway done. Alright, so a lot of them have come off already and expired. So when I say expired, right, what it just means is, it just reverts back to the variable rate, you know, but a lot of people, when they get reverted back to the variable rate, it's not, it's not heavily discounted by the bank, the bank just gave you the standard discount. So a lot of people were on around 7%, when they came off, you know, high sixes, 6.5, you know, 6.9 around there. And we're about halfway done. Okay, so the rest will come in early, early 2024. So, there's two school of thoughts, I think we're for the fixed rate, Cliff ending, you know, some of the doomsayers, were saying that, it's going to cause a lot of financial stress. And people coming off fixed rates, their repayments will go up by 50 to 100%, from 2% is, you know, six 7%, it is around like 50 to 100% increment in your monthly repayments. And, and the negative implications of that right in the financial stress where they may be forced to sell their properties. And so they're waiting for that to see, you know, the negative impacts of that, and then maybe that kind of crashes the property prices, so So that's one one school of thought. And then the other one is, um, while people can see fixed rates coming to the end, they can see, you know, it's going to be six 7% Soon, and they have a lot of lead time up to that point. So they can make a smooth, easy transition. So those are the two. And you know, the answer is always just going to be somewhere in the middle. All right, the property
Josh Pugh 12:27
Ben Wong 12:30
So I want to just give the facts that show you that. And then, you know, I think a lot of Aziz, that is pretty smart, you know, financially, they'll see things coming adjusted budget, they've said have saved a lot during the pandemic. And so they may have enough buffer out, say, where the repayment started to eat into their savings. And the other thing, hold on a minute, my savings are going down there, make some adjustments, things like that.
Josh Pugh 12:54
When do we think just on their mortgage? Cliff? Ben, when do we think there'd be a more like, when do you think we could start to really see what was going to be the outcome? Is it like, you're saying we're sort of halfway done? Is it in the next few months? Or is it sort of further out? That we'd be able to really see it?
Ben Wong 13:09
Yeah, there's always going to be a lag, right? You think? Because like, if everyone has built up a, you know, a mistake of savings? Yes. You're not going to see that? Yeah, he's gonna chip away that savings for a while, right. And I think people are just gonna make adjustments to their budget. So look, with the financial stress indicator, it has gone up a tiny bit, right. So I mean, there are effects on that. But definitely, people will make adjustments as well. And and the Central Bank of Australia RBA in this next slide here. I'm sure they're well aware of that. Alright, so they don't want to hurt the lower middle class, which are the ones that are getting impacted by this. Okay, so which I feel like, you know, that kind of the reason why they've also flatlined the rates for the last four months, and probably going to go flat for the rest of this year. We'll see. So, okay, so they're saying, yeah, the high rates. So yeah, we have some two extremes here. really windy, October 2021, all time low cash rate 0.1%. That's pretty much the lowest has ever been ever in the history of Australia. And then this, this, this spike up here from 0.1% to 4.1%, that 4% increment, that that was the fastest increment in any given period. Again, so we went from two extremes. So the higher rates have been working as intended. So the RBA says in suppressing the inflation rate and having a downward effect on that, so with this home fiscal policy, it's just all about controlling inflation. I would say that's 80% of it for for the RBA. And they do predict that inflation will come down to around 3% By mid 2025, which is you know, that target. Yeah. If inflation does not go down, you know, obviously, then they're going to increase rates. Again, I just want to show you quickly the inflation rates here. So let's start at 20 23 worth seven and a half percent, it peaked at around eight when something at the latter end of 2022. And it's come down to 5%. So pretty much if it goes back up, then you know, possibly another rate increase, but it continues to go down or stay at this level, then we're going to just see what's been flat. So in terms of prediction, like, you know, consoles, like rates going to go up, down, sideways, I don't I don't know, like, for me, I'll just say it's going to go flat. Alright. But I also look at the market what the market is predicting. So this is the 30 day interbank cash rate target. So people can put this right on the ASX. And it's just showing here, the last I just grabbed like the last several days, you know, up into the ninth of October 95% chance, no change, okay, there's a 5% chance that it might go up to 4.335. So probably for the next month is going to be flat. So trying to predict what rates are going to be six months out one year out two year out, I think I think that's just it's anyone's guess. But over the next month, I think, you know, this one is, it's fairly accurate. Again, I think the obvious way to think about what house is going to impact the majority of Australian homeowners, and I don't think that they want to keep increasing it. Again, 50 to 100% increment in your monthly repayments is quite significant, I think they're gonna let that rate Cliff kind of like, come off, and see how people adjust to that, and then go from there. So probably gonna go flat for the rest of this year in my thinking. So I want to come back to what the banks look at, for expats, specifically when they're thinking about lending your money. So there's many, many variables, okay, and then, but I want to boil it down to just two main factors that keep things simple for our listeners, here. And it really is just your deposit. Right How much funds you have, and your income, all right, specifically in net income after expenses. So talk about deposit first, that's the easiest thing to look at. It's your cash savings, it's pretty much a liquid assets, cash, shares, gift from your, from your parents or relatives. And we can also look at equity from your existing properties, which I touched on earlier, and I'll talk about in the next slide. So this example, here, you buy a $1 million property, you can borrow up to 80%. So that's 800,000, then you got to you got to add on the stamp duty. So it's roughly around 5%, by scaling, Munich goes from like four to six, but most most around 5%. So for this purchase, you're going to need $250,000, the bank just wants to see that you have, you know, that amount in all these kind of evidence that you can provide, then you can have savings and so forth. So it's fairly straightforward. Now, for equity, cash out this example here, let's say you bought a property five years ago, at 80%, you know, you borrowed $480,000, was 600,000, purchase five years later in 2023, is now worth 1000, you know, it's gone up 5% year on year for five years straight. So and you pay down the mortgage to 400,000. So the loan to value ratio is now 50%, we can actually tap some equity into that, you know, back up to 80%. And we can cash out. So we can take up another 240,000 At this point, as a as a loan, obviously, back up to 80%. And you can use that 240,000 against that example I just gave you in the previous slide. So in this, in this instance, you would only come up with $10,000 of your own cash. And this is a common strategy already that I think a lot of property investors already know about. They just keep rolling over into their next purchase without having to put down much of a cash outlay. And it works amazingly in a bull market. But but less good in a bear market, obviously. Because yeah, leverage is
Josh Pugh 18:53
just if someone's monsoons, interested in sort of taking advantage of things like this and optimizing the strategies, they is the best thing for them just to like early and sort of present, like, here's the full package. Here's everything I've got, like, tell me what the best way forward is early on? Or is that something that people prepare in advance of coming to you?
Ben Wong 19:12
Yeah, so this is something that they don't even need to necessarily tell me about. So later, like, I will tell you about this. Okay, so we have our online form, it takes like less than five minutes to complete. But really just ask for just the questions that I need to know in order to give you the most detailed strategic assessment of your situation of the things that you can do. So like how much you can borrow? What are your lender options, and also the strategies like this? Because I do ask for like your existing Australian properties. And, you know, the the equity position in there because I just asked like, what is your loan amount and what do you think it's worth? That's it? And then I'll know whether you have equity in that and whether you have well whether you have borrowing capacity first of all, and whether you have equity in that and then whether you want to even think about using it that will always be an option that I'll throw out there for you. And a lot of our clients do take it, even though let's say if you had $500,000 cash into your bank account right now, and you didn't need to use five, you didn't even need to use equity. A lot of our clients do choose to use equity in their property, just for optionality. Okay, this is love optionality. You know, because all of that money that the bank gives, you can just be deposited back into your, into your offset account, your mortgage offset account, so it doesn't cost you any interest. So just think of it as just like a big credit card that you can use at a later stage. And if you're not using any money, you know, it doesn't cost you anything, but instead of a credit card 20 to 40% interest rate, you know, the the home loan, and I was like, you know, six 5%, you know, back back then it was only 2%. Right? So you definitely take it for future investment opportunities. Like I think you guys in America have so many opportunities for, for investments. So it's always nice to have money that at any any point in time. Yep. So the second thing here is income. Alright, so this is a thing that trips a lot of people is the more major thing. So as I was saying before, 40, over lenders, vast majority won't lend to you if you're overseas. So the ones that do, some of them are harsh, some of them are lenient, so I kind of want to give you guys like, the look at the two. Okay, so the standard one will discount US dollar income by 20%, straight off the bat. And they do that because of the fluctuation against the Australian dollar pair. And I can't recall what year was, but you know, the Australian dollar was at parity with the US dollar, right one to one at one point. And now it's, you know, 60 cents. So I think amazing value for you guys in the US right now it's ranging on the low end of things. Your dollar can go way further now. So, okay, so anyway, that's why they discounted by 20%, even though it's in your favor, at the moment, you might go back up to parity. So put 20% here. And then they'll apply the Aussie tax rates or your US tax rates, whichever is higher. And then you know, I put in three and a half 1000 rent here. So I don't know, I hear that the rent in New York can be pretty hefty. So
Josh Pugh 22:16
be a nice place to get your few got found something good for three and a half.
Ben Wong 22:21
Maybe a bit bit bit too harsh there. And then living expenses, the banks in Australia have a benchmark living expense that we have to apply. So they'll take like, hey, how much this guy earns. And then and then they'll say, hey, it's going to be around this much. Okay, and by doing this, we're going to be left with that one and a half 1000 US dollar per month. Okay, once I discount all of this stuff, and that equates to $300,000 in borrowing power, which is not that much. Okay. So a lot of people are quite shocked at how much they can borrow, sometimes when we're living overseas, and but I just got explained to them, the banks always very conservative, all right, they're gonna discount the higher tax rate. So maybe you're in Texas, you're in Texas, and it's 0%. state tax, but you know, we're gonna have to use the high Australia income tax at that point. And then you got the more lenient ones that they don't discount US dollar at all. Okay, they don't discount US dollar, maybe they'll let you use the US tax rate, I'm just going to use 30%. Anyway. And then yeah, throw in the rent and eliminate expenses, saying, you know, you'd be able to borrow 700,000. Okay, so like a 2x difference. So unlike in Australia, right, in Australia, or the banks are going to treat you the same because you're earning australian dollar income, you're getting taxed at Australian income tax rates, everyone gets treated the same. Going from Bank A to bank B, bank, C, I think you're boring polish, just like less than 5% variance from from these banks. But when it comes to foreign income, it can actually range up to 5x or 4x. I will say five eggs, okay, especially for our expats in the Middle East where income tax is 0%. So you just imagine they're getting 0% income tax, but I'm still having to put up to 45% marginal income tax on their income is a huge variance in how much they can borrow. So for you guys in the US, it's actually not that bad in terms of the variance. But it's up to myself, I guess, as the expert to advise you which lenders is suitable for you. Most of you guys are fairly high income earners. So you know, I take you to the harsh lenders anyway, and you guys will still be fine. You know, so I want to touch on our value proposition here. So it really comes down to the wealth of knowledge. Having just doing foreign income applications specifically for the last decade. It really helps a lot. The brokers and bankers in Australia 95% vast majority of their loan applications are Australian income applications. When it comes to their desperate foreign income application. It automatically goes into the hard basket, right? They don't want to do it because you It changes from country to country. And even when you submit an application through them, even through the bank directly, you might not even be getting that that 700,000 that I was talking about here, even if you do go through a linear bank, it's how you package the application, you know how you're going to present it, using Osya US tax rates are you, you're going to make it so easy for the assessee, you know, to do the calculations on their behalf, and pretty much write up all the summary notes for them. So I'll prove a rating is very high relative to the standard. We try to make our entire platform online, especially to cater for the expats living all across the world. And we have a tax on like I was saying last year, so there are some tax implications people is thinking like, you know, what's that CGT implications, should I buy my name, or my wife's name, or jointly, my wife is not an Australian citizen, she's a PA, or she's a foreign national, what should I do here to be able to structure your loan application, you know, for, you know, for up to optimal financially for for you. So, you know, not by now in terms of now cash flow, but also later, right with the CGT event, the banks pay us. So we don't charge our clients, we don't charge you guys, fee free service, and auto bands pay the same. So it's just about taking it to which bank is going to be the best for you. But we'll be able to tell you exactly already, as I'm talking to you, you know, we start off with the 10 banks, and it goes down to like the four three, maybe by the time I'm done chatting with you is going to be very clear, there's two banks, and then you can decide between the two, I'll tell you about the pros and cons against each one. And we have created our client Concierge Team Six months ago. So these guys look after you after you're done with us. So once you settled along with us, we're gonna keep pricing your loan every six months for the life of your loan, just calling the banks saying hey, can you get us anything cheaper. So the banks definitely don't do this. And the brokers, they don't have capacity, I will say, they may say they'll do it. And they may do what maybe once every two years, but we'll be doing every six months for you. So to ensure that you're always on the best rate, or you're being looked out there and getting property reports on your property, just you know, especially the Automated Valuation, so you can just keep track on you know, how much your property is still worth, whether you want to tap out any equity from that. And then last but not least, we have now formed a pretty solid network of specialist partners covering legal conveyancing ethics and property. So like rich himself, who's going to be presenting next buyer's agencies because you know, trying to source of property from overseas, I think it's very difficult. Very difficult because you're not on the ground. Are you going to fly down to Australia to see it? It's a bit of a headache. So yeah, I think Bazin sees great value. And bio lead rich talk. Talk more about that. That's more or less. Yeah. Take over there.
Josh Pugh 28:01
Yeah. No, I love it. Thank you. I think that's like good to a good way to start. Because if we have an idea of what you know, the role of what your role in the whole process is, and understanding what the markets looking like now. Rich, CEO of property buyer, so property by you are a buyer's agency. And like, I guess, to start, you want to cover what you do. And then I know you've got a great presentation about the current market and different locations around Australia, because I know a lot of the questions that we got, were around, you know, okay, this is all great. But when you know, as Ben was touching on, it's always like one of the REITs going to be best. And where exactly should I be investing? So Rich? Harvey, thank you very much for taking the time and I'll throw it over to you.
Rich Harvey 28:44
No worries. Just confirm that screens that the slides are up there. Yes, we can. Yep, yep. All right. Well, thank you very much, Josh. And again, welcome, everybody. Thank you for joining us. This evening. Your time off this morning. My time. I've been out on the golf course this morning and my claim to fame this morning. I actually got an eagle. I chipped the ball in Oh,
Josh Pugh 29:03
wow. That is a great start to a day that is absolutely.
Rich Harvey 29:07
So just a quick bit of background on myself. I've been in business for 22 years as a buyer's agent or buyer's advocate. So buyer's advocate is someone that works purely on the buyer side, helping you to find the right property, to appraise the value, do the research, do the negotiations and give you guidance along every step of the process. I've been the president of these real estate buyer's agent Association, Australia did that for four years. I was also the chairman of the bison chapter for 10 years. So I've volunteered a lot of my time to improve standards and ethics in the industry. And I was one of the original buyer's agents in Australia. So now there's a lot of competition, a lot of young whippersnappers coming up but certainly have a lot of experience on as keeps
Josh Pugh 29:48
the market exciting.
Rich Harvey 29:51
So I'm going to rip through my presentation just today. I got a lot of really great content and I know we do have a copy of these slides. So don't panic. You will be getting a copy afterwards of course Some really great info and love your questions as well. So this is what we'll be doing. But let's get straight into it, shall we? Let's just have a look at where the markets up to right now we're in the middle of the spring season at the moment. And as Ben's alluded to, the market is a bit volatile. So consumer sentiment, this is the moment the Westpac Melbourne Institute, that takes a bit of a pulse on how consumers are feeling about the hip pockets. And you can see here, since interest rates went up, since about last year, it's really taken a dive and sitting around this 80 basis points. So it's pretty pretty low, people are feeling a bit gloomy about the cost of living. The word cost of living, I believe, has replaced COVID as the most overused word now. auction clearance rates in most capital cities or Sydney Melbourne have been hovering around early 70 percents about 70 to 72. Last weekend, the week two weeks ago, we had the grand finals for the AFL, NRL. So the volumes were down, but this weekend, the bounce back and pretty reasonably healthy volumes. So it's still slightly in favor of the seller, rather than the buyer. If we see it tipping into the below 65%, you'll start to see the market sort of pull back a bit. But yeah, pretty pretty healthy auction clearance rates. Let's talk about price changes. This is the most important thing to look at. Now. We're like any any good economist I'm actually an economist in my past. And you know, the joke about economists is they know the price of everything and the value of nothing or they read the menu from right to left. But we've got to look at data within a timeframe context and we're looking at just the last three months. You can see here that Perth, Adelaide, Brisbane, Melbourne and Sydney have all had pretty decent increases. I mean, look at Brisbane, 4.2%, Sydney, 3.8%, Adelaide 3.4. Now they're pretty dramatic increases over a three month period. But if we look at it over a 12 month period, you'll see here it's just kind of breaking even where you know, we're Sydney is now reaching a peak slightly above what it was 12 months ago. And we had you know, during COVID, for example, I live on the northern beaches of Sydney in the Northern Beaches prices went up 38.5% In an 18 month period. Unbelievable. I've never seen the market jumps so much. And then when we saw the market slowdown and correct, it probably came back about 15, maybe 20%. So it's still up 18% On what it was. And I think in the next 12 months, we are going to see new record highs even though we have higher interest rates, and I'll explain why in a minute. So pricing is very different in every area. And again, these numbers hide a lot of averages. So you've got to be very careful. Everyone asked me rich, how is the market? And I'm saying which market? Are we talking? You know? Camberwell in in Victoria? Are we talking Palm Beach in Sydney? Are we talking too long in Brisbane? Right? They're all very different markets. So you've got to understand localized factors. Want to skip that one. The other big factor in our market, his sales volumes are quite low, a lot lower than they used to be. So you can see here the turnover is down 21% in Melbourne, it's down 16% in Sydney and down 19% there. You guys just want to mute your background and stop that siren. Yep, thank you. So that's really impacted the turnover in the market, which is quite significant. So I've got two slides here about listing volumes, this is new listings. And you can see that we expect during spring to see a bit of a bounce you typically see there late October, November, it really spikes, we are heading toward that. But this spring has been a lot more muted, I would have expected to see a lot more listings come on the market has probably increased about 10%. And if we look at the next slide, which is total listings, that's the volume of all listings. It's actually still down 23% compared to the five year average. So that tells me that people are holding on to their properties longer. I think investors aren't trading their properties nearly as much as they used to, or people just aren't selling because they can't find the right thing to buy. So there's a number of facts. So that limitation on the market, people are worried because of migration, they're going well if I sell I'm not sure how I can find the right thing. So I'll just stay where I am. And we're seeing a lot of that staying in place happening at the moment. Now rents were as we've said, not as high as New York, but our rental market is really rocketing ahead, you know, significant increases Perth up 30%, Melbourne, 13, Sydney, almost 12%. And we do have a rental crisis in this country. We're not building enough investment properties to keep track of where we need to be in this country, unfortunately. So it is it is a real, real social problem and it's going to get worse. So great news if you're an investor. Pretty tough news if you're a renter. So what's the outlook for the rest of the year and heading that should be 2023? Not 33 is a type of
Josh Pugh 34:59
getting a little ahead of yourself.
Rich Harvey 35:02
So new listings are slowly building up, as Ben alluded to borrow capacities down around 30 to 35%. That's really hampering because of that pre service ability ratio. We're in recovery mode, we are still seeing really strong underlying demand and that we can't, you know, rule that out. So Australia's Got a structural problem with supply and demand. We don't have enough supply and it's not coming on quick enough. And I'll talk about migration in a minute. So I think that's the My coming up in my next slide. Let's have a look. Oh, no, here we go. Like all good economists. This is the Westpac banks forecast. I thought you'd like this one bit. Westpac, you know, they're often pretty conservative, right. But it's all positive. They're saying strong increases this calendar year, pretty strong increases next year, and hitting even more positive increases going ahead. I actually think these are probably an underestimate of what's going to happen. One of my favorite and most accurate forecasters is a guy called Louis Christopher from Sqn research. He's proven to be one of the most knowledgeable in my view, and his numbers are, he doesn't go quite out two years in advance. But he's 24 month forecasts a bit stronger than that. So let's talk about migration. What we saw during COVID was obviously a complete shut off of borders. Now we've had a massive rebound, we're probably going to end up in Australia with somewhere between 450 to 500,000 migrants this current year. So that's just phenomenal number like it's more than the government predicted. Next year, we're expecting 350,000, and the year after probably another 300,000. So that's a million people in three year period. Now, we only build around about 150,000 dwellings a year in Australia. So what's going to happen? It's economics 101, right? You know, the price of real estate has to go up. We're desperately short of rental properties. Now, Albanese, the federal government has announced, you know, $1.2 million target of 1.2 million homes 1.2 million homes in the next five years. But I don't believe we're going to hit that kind of target. We just don't have the infrastructure, nor the resources nor the right incentives for the average mom and dad investor nor institutional investors to really get going. Yes, there's BTR build to rent, but that's only going to be you know, a 5% proportion of the market. So big numbers coming. And as I mentioned, you know, over this guy over two seekers analyze that over the next decade, that 20 period, 24 to 2033, he reckons will be about 300,000 migrants, so it's another, you know, 50,000 more than we've had in the past decade going forward. So very, very strong migration trend. So that's got big implications on where do we place all the people? You know, we're currently at 26 million. I think we're going to be in becoming a bigger Australia pretty quickly going forward. Um, I get asked this question every day of the week, Josh, is now a good time.
Josh Pugh 38:06
I was gonna say the amount of questions that came in was like, you know, this is all fine. But like, when tell me when
Rich Harvey 38:11
I think it's the wrong question to ask Josh. And I'll tell you why the question should be Is now a good time to buy for me, you know, because it's very personalized. You know, I buy properties, whether the markets up, down or sideways. I bought three properties last year. I love to buy properties during downturns, but I'll also buy them during upturns as well. My criteria for buying is does it make economic sense for me? And does it help me get toward my property goals? Now? And thirdly, and most importantly, you like this one Ben, can I afford to buy? Do I have a pre approval, because that's the golden ticket to actually entering the property market. So many people, you know, think about buying a property, don't even bother to talk to a broker, and then have a look and then get a bit disillusioned. And another year goes by, you know, every year that goes by as an opportunity cost to go into the market. So I say buy when you can afford to buy? That's a pretty simple answer for that. But having said that, as I said, you can see here, most people are sitting on the sidelines, low vacancy rates, it is actually a very good time to buy, even though interest rates are higher, because there's less competition. So if you can buy means you can afford to buy and it's a great time to get into a market that's going to get rising rental returns and stronger capital growth. So let's unpack that a little bit more. Oh, actually, before we do that, I created this slide here just to talk about the emotional roller coaster that a lot of people go on, right when you when you're buying properties. It's not like buying a loaf of bread, or buying a pair of shoes, right? When you're buying a property, it's probably one of the most important and biggest financial decisions you're gonna make in your lifetime. Maybe apart from buying a business or the engagement ring for your wife, you know, So. So this is what happens most people start with a bit of confidence. They've read a couple of books been on one or two of these type of webinars. And then they say that yeah, this is great, awesome, I'm going to buy got their pre approval off, they go, they buy. And then after they're bored, they start to worry. They look at the headlines, you know, war, conflict, invasions, interest rates going higher, there's going to be a recession, there's going to be, you know, a major tidal wave of debt coming, and then they get depressed, and they need to go and see a psychologist, what am I going to do? And then they realize, actually, I bought a good asset, it's going up in value, I can increase my rent 10% Oh, gosh, the property price has gone up. It's not the end of the world. Good. I'm confident again, right. So I think we just need to be aware of the emotions that we go through when buying properties when buying properties, and get independent advice from others that have done it before as well isn't
Josh Pugh 40:54
just gonna say it's so rich as a buyer's agent, like is that a lot of your role? Like, obviously, there's a lot of science, a lot of numbers. And as you're shown already, there's a lot of like, a lot that goes into the advice that you give about where and when, but it's a lot of it just sort of the support because you are abroad, basically like it's I'm far away, and I want someone to speak to and say, Good god, what have I done?
Rich Harvey 41:13
Absolutely hadn't said, I mean, we're not marriage counselors. But sometimes when you've got very divergent views, you have to get them on the same page. But it is it is a confidence factor. It's a trust factor as well. And particularly for expats and overseas buyers, when you're not physically inspecting the property, we have to be the eyes and ears and legs on the ground, to give our clients the confidence that they're buying a good asset. And we do that we use WhatsApp, we take videos from all different angles. I mean, a lot of properties you see online or Photoshop, and you go and have a look. And we stop people from buying bad properties. Like we've had one expat turn up. Say, say I want to buy this property, it looks amazing. We went and inspected it. And it's like 10 meter high wall, imposing on the back yard, which completely overshadows the yard. It was awful. Or another one there was like a water tank that was just photoshopped out of the photo. We said you'd never buy this property. So we stopped people from making major mistakes that were. So let's talk about economic headwinds and tailwinds. Obviously, the negative factors are the higher rates barring capacities down cost of living and inflation. You know, consumers are really feeling it at the moment, we're noticing a lot of retail businesses and other businesses are down from what they normally are because people don't have as much money. And there's just general sheer market uncertainty. So they're the headwinds that we've got. But let's look at the things that are underpinning the property market, and what's going to help to push the property market going forward over the next 1020 years. As I said, number one, migration, that's a huge factor. We cannot underestimate how much and where that's going to happen. And look, most migrants are going to end up in capital cities, or major regional towns, not the minor towns, where as I said, we're not building enough. So there's a limited supply. Australia does have a very adaptable and resilient economy, we are based on services professionalism, we're not, you know, based on manufacturing and mining so much. So yes, that's a big part. But we do have an incredibly resilient economy, low vacancy rates, people's savings in their balance sheets are were high, they are getting eroded. So we've just got to watch that number carefully to see at what point has been said there's a lag effect, at what point they're really going to suffer significantly. And if some people are really on that borderline of can I hold a property? That's going to be interesting, I read an article about fiscal cliff Fichter faction. And I believe it's more myth than reality, I think people will do everything they can to hold on to their properties rather than sell. So I don't believe there's going to be widespread carnage in the property market unless we see rates go up and other, you know, 1%, higher than what they are. So that's enough on the tar winds. And, and as I said, property is a safe haven. It's a great hedge against inflation. It's, and I'm going to show you some numbers in a minute that will kind of blow your socks off. I also get asked Josh, where are the best opportunities and look, it's there's opportunities everywhere. But buying investment property is a great opportunity. And I'll talk about where in a minute. If you're an upgrade or a downsizer, there's big opportunities in that market. We're seeing a lot of wealthy experts, particularly by the eastern suburbs, or lower north shore, or like in the premium suburbs of Melbourne and Brisbane as well. Because there's a limited stock of those properties. And in a lot of Asian money is buying that sort of stuff. So good opportunities there good opportunity and commercial development, and positive cash flow or high yielding type properties as well.
Josh Pugh 44:45
So one of the questions we did have was around commercial so you work with commercial and residential as well. You do both? Correct. Yeah,
Rich Harvey 44:51
we do all types of property. resi commercial and development sites are vital. So I'm going to show you two slides now. Because people lost So ask me another favorite question rich, where property prices gonna be in 10 years. So rather than do 10 years, I've done 20 years and 25 years. So, okay, here we go, here's a drumroll. Here's the price of the property in Sydney, Melbourne, and all the capital cities in 2020 years and 25 years. So what I did, I contacted Tim lawless, who's the head of CoreLogic research and said, Tim, I need the average capital growth rate over the past 25 years, and the current median values of each capital city. And then I just use the simple formula, compound annual growth rate in an Excel spreadsheet to determine that the value of property in Sydney is currently 1.3 5 million. And in 20 years time, it'll be $5 million. And yet, if we add another, another five years, on top of that, it will be $7.9 million. And you might go, wow, that's just that's not right, that's too high. But it's true property doubles. If it's a 7% growth rate, it typically doubles every 10 years. And with the compounding, it's amazing what happens. So again, let's go backwards, Sydney's median value back in 2003 was only 475,000. You know, I bought one of my first properties in 1994. And I paid 240,000, for that property. I've sold it, but that property today would be worth 1.8 million had I held it, you know, so it's just a simple compound formula. So I guess the message from these slides is, you know, the longer you stay out of the market, the harder it is to get in because you need a bigger deposit, and you're kind of chasing your tail. And the more properties you can buy, the more you can leverage, you know, which Ben talked about recycling your equity to buy more. And that's exactly what I've done to build my portfolio. I bought one property, got a capital growth refinanced, use that use that as a deposit for the next one, recycle the equity and off we go. Let's also look at apartments as well. So for apartments we can look at Sydney median apartment of in Sydney is 822,000. If we take it's averaged a 5% growth rate over the last 25 years, it'll be worth $2.1 million in 2043, in 20 years time. I also think that these numbers on apartments could actually be an underestimate, simply because apartments are probably going to be more affordable for people. So you may see that the growth rate, you can see the if I go back one slide, the growth rate on houses is higher because they've got land content. I've always bought houses more than I have apartments, I bought both, but I always prefer houses because of the land content. But these figures demonstrate why. But I do you think going forward, you'll probably see a slight increase in the average capital growth rate simply based on affordability going forward. Alright, so I probably shocked you enough with the numbers. I just briefly mentioned how we operate as a buyer's agent. These are the seven steps that we take all of our clients through. Whether you do it with us or on your own, you've got our credit strategy, we help our clients to pinpoint the right locations that fits their budget. So once they've been to see Ben and got a finance approval, we know what we're working with. We provide some background information on the target areas, demographics, median prices, sales volumes, etc. And then we start the search process. And that's quite an exhaustive timeframe to do that, because you've got to look at everything that's both on market and off market, we have a very deep network with real estate agents on the ground. Plus, we do our own social media posts to get access to offer off market opportunities direct with vendors, we go and inspect them. Once we've found a good one, we evaluate it and we tell our client what it's worth, give them a written appraisal report on the property. And then we step into due diligence and negotiation phase. So we organize a pest and building inspection or strata search, if it's an apartment, check all of the neighborhood. And then we step into that negotiation phase. And that's a really important step having someone between you and the agent when you're negotiating, it just creates that professional buffer, so that the agents aren't pulling the wool over your eyes or telling you, you know, a bit of a bit of a yarn on what it's really worth and making up fictitious offers and all the rest of it. So we know how to play that game really well to get it for the best and lowest price we can. And then we coordinate contract exchange. And then the last step, if you're renting it out, we organize a property manager. And then we also attend to the handover and pre settlement inspection as well. So Whoopsie daisy been too quick. So I guess the key benefits if you are thinking of using a buyer's agent is that they'll be able to give you that advice. It really the real strategy and give you that local knowledge, which is really important if you're buying from afar. And having that ability to get the to get the right numbers. We charge a fixed fee. And again, I can email it to anyone so it's not page with all the numbers on a bit, it's a sliding scale, under a million dollars, it's the equivalent of 2%. And then when you get up to around $2 million, it's around about one and a half percent plus GST, so that's 1.65, including GST, and you pay an engagement fee, between three and 5000, to kickstart the process, and then the balance of the fee on exchanging contracts. So for example, the $600,000 investment property, we charge a flat fee of 11,900, including GST, which is also considered a an acquisition cost. So it's tax deductible as well. Just for the last part, on paper, got some questions coming. But I just give you a quick snapshot. If I may, just for a few minutes, you're showing some case studies on what we've bought. I won't go through all of them got a stack of them. But this was actually you love this. This is from an expert in New York, Josh, that lovely couple, he was a trader High Net Worth guy. He had a budget of 15 million. But we only spent just over half his budget, we ended up buying this beautiful property in the same street that the Reserve Bank Governor lives in, for 8.5 million. So yeah, great off market deal took 45 days to find it and really stunning property they're doing, the owners are actually going to do a million dollar renovation on the class.
Josh Pugh 51:17
Just out of interest seeing the time taken. Well, how far in advance Rich, do people generally come to you? Like how long is it normal engagement with someone like yourself,
Rich Harvey 51:26
so our agreement runs for six months. So we've went to work. And typically we buy within about 30 to 60 days of engagement. It's about one to two months on average, it looks sometimes it might take longer. Occasionally you strike it lucky you just find the perfect property in the first two weeks. But it's just a matter of it's not a rush. It's just a matter of finding the one that fits their brief and we believe is the right value for them.
Josh Pugh 51:50
Yeah, but it's a relatively like, I guess that's quicker than I potentially would have thought. So in some cases like it really, you come to you and it's like, let's go, we've got you know, you've got the history, you've got the background, you know, the the numbers, it's time to, it's time to buy.
Rich Harvey 52:03
We've also got I mean, we've got the network, like yeah, we're not a machine. But we have the ability to put our fingers on properties that no one will be able to find themselves like our agent database. We've got, you know, over 10,000 agents on our database, we send out text messages, emails to those agents say, look, we've got a new client engaged. Here's the brief, what have you got, and we're the first ones through the property. Like for example, if you're trying to buy a property in Sydney's eastern suburbs, or interact in Melbourne, you're not going to get access to properties properly. Unless you're using a buyer's agent, that's the bottom line, you won't get access because they just won't be there. This is when we just bought new rose for station really, really great property, we saved the client a cool 180 grand, just simply by negotiating Well, number one, the Northern Beaches. I mean, I'm starting with a really high value ones and I'll get to the other ones admitted. But this was a cracking location right there on the Mona Val Headlands. It's the last one on the block, fantastic location. We wait, we thought it was worth around six mil, but we got it for 5.3. And they got to do a quite a significant read I really, really great location. Now the good one we bought down here coronella. Just in the shiny Oyster Bay, lovely couple from Canberra had kept missing out on this property, I'd be looking for two years. And we're just beyond frustrated. And Nikki and our team just found an awesome deal. Again, saved and significant sum of money. And they couldn't have been happier.
Josh Pugh 53:30
Just out of interest when it comes to locations, because I know we have a lot of questions around like where in the country and the different cities and things. Do people normally come to you with a you know, hey, I really want to invest in Queensland, for whatever reason, or is it an equal balance between people with a sort of focus on an idea and some that just say like, look, whatever is gonna get me a great return. I'm happy to sort of listen to you. Is there a is there a mix of those two groups? Absolutely
Rich Harvey 53:54
makes Josh Yeah, it looks like people have an idea. And I think some people are unfortunately too wedded to buying in their own state. But yes, they are comfortable with that. And I challenge people and say that you never really need to be if you're an investor, you need to be agnostic about where you want to buy. It's all about return on investment. So you know, again, it comes down to there, we do a bit of a deep dive, we asked the your income, how many properties they've got, because you've also got to factor in land tax and you want to diversify not your property holdings across different states to minimize your land tax but also take opportunity of the growth because the cycle is different. It doesn't happen in everywhere all at once. And also, particularly for people perhaps on lower or middle incomes that are cashflow strapped, they want to get a high yield. And so here's a case exactly Case in point with this one. This was a first time via Western Sydney, they wanted to buy a home that had an existing granny flat at the rear and there's you can see the image there. It's a two bedroom flat that was renting for $500 a week so this lovely couple bought it. They're going to help to pay off the mortgage. We actually got featured on a TV show called the product Epson a couple of weeks ago on this particular purchase. So it was it was a great one. Yeah. Here's a good one we buy a lot in Brisbane, because Brisbane is delivering some really good cash flow. This was a really nice house. In a good middle ring suburb. We bought this for 895. And a really interesting thing, we got this offer acceptance at 40,000 below another offer. And that was simply because we had better terms. Our finance client was finance approved, ready to go. Whereas the other office still had to get finance approval, and they seemed a bit shaky. So even though someone offered more, they went with our offer, because we were in a desert. And yeah, rents for 9020 a week. So almost a 6% yield on a house, which is pretty decent.
Josh Pugh 55:49
Yep. But if you don't mind, I might ask, they've got a couple of questions coming in. So I might feed them into it. Ben, if you don't mind, just quickly, to recap, because as Richard was saying, you know, investing in multiple properties and making sure that you're leveraging as much as you possibly can, we had a question come in around if you are using equity, as you mentioned, was a good strategy for people, if they're investing in different properties. One of the questions that came in was around, but if you take if you're using equity, you're still increasing the loan of any example 240,000 And the old property plus taking a loan of 800,000. And the new property was the question. Can you just explain how that that situation works? For the when you were talking about you're using equity to purchase?
Ben Wong 56:29
Yeah, from a, like from a financing perspective? Yeah, sure. So that would be to two separate applications. So actually, this this literal example that Rich's did, demonstrates why getting a pre approval is actually so strong, like, even if you're competent in your, your brand capacity, you should still want to get a pre approval, alright, so because when you do put down offers on properties, that the sellers are just gonna go with certainty, over uncertainty, right. So like, if you have the pre approval in a bank, then they're just gonna, you know, you're more likely to win the thing. So in terms of like, what you're saying, you'll be two different applications, you do one application, a loan application for a pre approval, so up to 80%. So the bank says, Hey, we're gonna lend you one of $800,000 for a $1 million purchase, right? Go go find a property, but then there'll be also be a second application at the same time that we'll be doing like simultaneously. The second, the second application is for the refinancing of your existing property. So it will be refinancing, say, a $500,000 mortgage that you have, but it will also have, you know, the extra 240,000. So the total loan size, there is 740,000. But you know, the accountants, they they do love it when you split out the loan. So that refinance application would be in two loan splits like account one and account to account, one would be the 500,000. Because you want to separate that, but that's 500,000 for that initial property, and then we split out account two for 240,000. So we can tell the ATO the tax office that that 240,000 was used for this upcoming purchase. It just makes the accounting just just easier to follow. So we do like that. So it'd be two separate applications. Yeah.
Josh Pugh 58:12
Yeah, got it. Enrich. I know you were just saying about, you know, you've got to be a little bit agnostic about where the locations that you're looking at, we just have a question coming around purchasing a place in this case in Melbourne, St. Kilda, St. Melbourne, St Kilda Road area to use as a place while visiting relatives a few times a year. So this is not an investment. I assume you obviously work with people that are going down the investment path, but also the ones that are looking to, as you've got there, like home buyers and people that are looking to live in the places and temporarily, is that something that you'd advise? Like, what what kind of strategies are around a place to temporarily when you're back in Australia, visiting family and friends? Yeah,
Rich Harvey 58:49
I guess, you've got to be careful not to mix too many metaphors or too many objectives or in some ways, because if you get to buy an investment property, if you want to get a long term tenant, that's great. You've locked him in. But if you're looking to use the place yourself, you're going to have to do it on a short term, let or do it as an Airbnb. Now, there's various restrictions. Now in Melbourne, for example, the stupid government has just brought in this massive additional 7% tax on Airbnb properties in Victoria. So I would suggest it's not a very viable strategy, you're probably better off to just simply buy an investment property, have it rented out long term, and then just rent your own place out as an Airbnb, like rent another property for you at the time that you're here in Australia. And that way, you've you're not affecting that the long term tenancy, and then paying a huge tax for the privilege of it. But again, we can talk through with that person very soon. Yeah, and run the numbers on that individually.
Josh Pugh 59:47
know for sure. And Ben Rich was just touching on and I know we talked about the fact that we weren't going to go into too much detail about tax but just from what we did have a couple of people that are obviously in the earliest stages of thinking about investing and They were sort of looking for the 30,000 foot view of, you know, investing in real estate, what are the tax implications? Is it just sort of a, an I'm aware of the time, so I don't want to go into too much depth, but are there are a few sort of things that people should be starting to do some research in before, so that they can educate themselves?
Ben Wong 1:00:16
Yeah, yeah. So, um, because right now, I think a lot of expats in the US are just globally, that you guys are all non tax residents of Australia, right. Um, so and so you don't need to lodge a tax return in Australia. But as soon as you're earning Australian source income, you're going to need to lodge a tax return. So that usually comes with your first investment property, your second investment property in Australia, you need to lodge a tax return for that, you'll be eligible for the 100% of the negative gearing benefits, so there's no change for being overseas, you're gonna get exactly the same privileges. As you were living in Australia, you'll be able to get audit tax on tax deductions, with mortgage interest being the largest tax deduction that you'd be able to get. And a lot of our clients are negatively geared, I guess, because it doesn't take too long, too much to get negatively geared at the current interest rates that we're at. So if you're borrowing something like 50 60%, loan to value ratio, you're pretty much already negatively gearing, which means you don't need to pay any income tax in Australia, because the income tax starts at 32.5 cents per dollar straight off the bat. There's no threshold, like you would get if you were, you know, back living in Australia. So some of the things I think that I'll just touch on the most thing that I think that you need to be aware of, which is the nationality, I think because expats do tend to marry non Australians, like when they go overseas, right? Like, myself. Yeah, me as well. So and you know, you're trying to buy a property back home, you think, Okay, I'm gonna buy it with my wife, right. But she's not an Australian citizen. Now I have some massive stamp duty implications. Okay, if you do that. So because there's a foreign buyer stamp duty, even if you're married, so So where the State Revenue Office will charge an extra 8% on the stamp duty for the foreign buyer. So you, the way to do is just to buy in the Australian citizens name. But you can still have your wife on the mortgage application to service the loan, like if you needed her income to help you service that loan for that massive, you know, four or 5 million. You're going to need her income. Yeah, you can still have a run as a co borrower. But you just put yourself on the title. But then, you know, you discuss amongst yourself that, but usually it's fine. So yeah, there's some ways around to doing that. Yeah. I think I'll leave it at that.
Josh Pugh 1:02:38
Yeah, perfect. I think sort of to wrap things up, rich, in terms of preparing for, you know, let's say, I'm someone that started down this path, and I'm starting to think about, like, I want to invest or I want to get a property and I'm really at the earliest stages. Or if I'm a little bit further along, and I know I need a property at a certain time. Are there some things people can start to do to prepare, like to get the sort of the research happening? Do they reach out to you early and start to have a chat? Or is it you know, they really need to go to bed first, or
Rich Harvey 1:03:08
I think just well, they can do both, I think reach out to us just read additional strategy chat. And then the best thing they can do is get their tax affairs, their finance documents and get them over to events straightaway. Because once I mean, we work been really well, we'll send referrals, he sends us referrals. And, you know, we just no money changes, and we just want to help each other's businesses. At the end of the day, we want we're all about helping the client get the best outcome. And, and we have a chat, I think people go too far down the rabbit hole of looking for a property, they think of work before they got the finance approval or before they've thought through their strategy. So I think have a chat to us. We can just talk generally about what might work for this situation, and then get your documents over to Ben, you can do a pre approval, and then you're ready to engage us and we go from there.
Josh Pugh 1:03:51
Yeah, awesome. And Ben, from your side, you know, it's basically that just prepare as much as you possibly can. And obviously, you guys do mortgage and tax, so it can be sort of come to you hat in hand and say, sought me out.
Ben Wong 1:04:05
Yeah, yeah, yeah. So like, yeah, dreamy strategy call, it may be something whereby I have to send you back to do some homework with restructuring for about three months before, you know, we're ready to go. Because like I said, limited lending options. You don't want to submit an application, if it's not going to get approved, because then the bank will have your documents on file for two years. And then it could be a case where I can't go back to that bank. Like you went to that bank initially, like that bank was the best bank for you. misrepresented. Yeah, yeah. So um, you know, so yeah, I won't submit applications if it's not going to get approved. So if it's not going to get approved, I'll just tell you, hey, there's some things you need to you know, tidy up first, and then and then we'll go in three months time.
Josh Pugh 1:04:49
Yeah, cool. So there's no harm in going to both of you early and sort of starting the conversation. But there is potentially harm in saying like, I'm going to just try and wing it and send in some applications to see what can happen. because that can have a negative effect for up to two years,
Ben Wong 1:05:03
basically. Yeah, okay. It doesn't matter. 50 different banks, you scrub with five banks, who cares? This 35 other ones? You don't have that luxury?
Josh Pugh 1:05:14
No. Okay. So I know that rich, you've got a lot of other great examples of case studies that people say you are going to share the document that you are presenting to. So there's plenty of information that's coming out. And I know that Ben also has a document that they're going to circulate after this. So I want to thank rich and Ben, very much rich Harvey CEO, property buyer and Ben Wong, co founder and principal mortgage broker at open mortgage and tax. Thank you very much, guys, this has been obviously there's a lot of numbers, a lot of depth. But I think a lot of people will have really, like gotten down a path where they can now know the questions they have to ask and we will hopefully reach out to all of you watching. Thank you for joining us. We do have a survey that will come out after this to so you can give a bit of feedback, you can tell us what you thought. But also it can give you the opportunity to connect with rich and Ben. So we've got we've already asked you know if you'd like to receive the materials, and we'll make sure that you've got access to those. We'll send that through in the next few hours and tomorrow. But I want to thank you both again very much and thank everyone for for tuning in.
Rich Harvey 1:06:17
Thanks, Josh. Great to be with you. Thanks, guys. Good night. Thanks.