Last week we looked at what the current state of play is on the post COVID property market. This week, we’re diving deeper with a look at the major economic policies and factors affecting property prices, interest rates, and access to finance.
If you’re in the market for a property, or considering your next investment move, don’t miss the replay of this week’s Matter Of Fact webinar series below.
Plus, I’ll break down one of the recent cash flow positive co-living properties that my team has completed for our clients. Watch to find out how we achieved double digit gross annual returns on this awesome adaptable housing project.
No bull … just matter of fact!
Ian Ugarte (00:00:00):
Okay. Just let me get rid of some of these boxes that you can’t see in front of me. And let’s get started with where we’re at. Obviously, tonight, I’m going to be talking about markets and doing what we’re doing and what could possibly happen moving forward. As you know with Matter of Fact, we ran our first one in, oh, it was probably March, maybe February 2020. And here we are many months later, I think we’re up to 30. And essentially what I talk about tonight is not to be taken as advice. You have professionals around you that you need to contact. If you don’t get some professionals around you, anyone going off and taking what I say tonight as advice and investing that into their future is nutbags and crazy. So you’ve got the time there to have read that disclaimer, essentially tonight’s a chat. And let’s see how we go from there.
Let’s move on to the way that I always start our webinars, and I just want to acknowledge the traditional custodians of the land on where you’re meeting. I’m in New Zealand at the moment and hopefully, back in the next month or so, depending on borders opening and whatever. So I want to pay my respects to the [foreign language 00:01:30] Maori tribes that are part of the makeup of where I’m on, in Nelson, in New Zealand. I want to pay my respects to elders past, present, future and emerging. And obviously, we are meeting on their lands so we want to pay respects to those people that are also indigenous that are with us today.
So let’s talk about where we’re at right now and what that means moving forward and how that can make a difference to the way that you’re thinking. As always, this data has been pulled together by Rebecca in my office, who does an amazing job, and me deciphering and having a look at what I can see is going on in the future. And if you haven’t met Rebecca yet, she’s an amazing woman who does a lot of work and helps me out a huge amount.
Let’s look at what we’re moving forward with as far as gross domestic product and where we’re going to move on and what’s happening in other states around the country. Now the economic outlook is far better than what was expected. But there I was, last year, saying exactly the same thing. Everyone’s talking doom and gloom, there’s only a few of us talking up the marketplace and what’s going to happen. I did say it was going to move and those people that listened to that, good. I was watching one Facebook post today of someone who said, “Oh, I was going to invest at the beginning of 2020, but I got shy and I should have invested back then.” Hindsight’s an awesome thing. But just remember investing when you see other people being fearful, as long as you’re protected. And cashflow is always the way to protect yourself.
So yeah, I go back to that simple analogy of saying to you, if you went out and invested in market shares, so share market, and your share price dropped out completely, say you invested at $100 a share and the share price dropped down to $20, now, if you sold, you would acknowledge a loss at that point in time, but if you don’t sell and you’re getting a dividend return, okay, so it’s not costing you money, you’re getting a return on those shares, as long as you’re holding those shares, then the chance of them going up again is pretty good. I mean, share markets and housing markets go up and down a lot. I don’t really like the share market per se because of what it does, it goes down hard and it goes up hard too. I like the safety and stability of bricks and mortar. If we do have a down, it’s not so far down and when we have ups, they are good, steady ups and make a big difference to the marketplace.
So here you can see that the RBA is essentially saying we’re actually surprised and we see that the near-term outlook is uncertain. But really, in the longterm, we’re looking pretty good. If we move forward into this slide here, which is a great little slide, which shows GDP growth, here, we’ve got little higher than expected underpinned, stronger private investment and public demand. GDP forecast to grow by little above 4%. That’s not too bad. When your gross domestic product is above 4%, you’ve got to be pretty happy. The only problem with that is that eventually inflation will catch up with you, 2.5% predicted in 2023.
Now, I remember that when I look at these economics and RBA and all the rest of them, I’m a bit standoffish because I don’t feel that… They’re guessing as much as anyone else is guessing as well. They are expecting unemployment rate to rise, but to not a huge figure, 4% is not a huge unemployment rate. Wages growth are underpinning the inflation, so underlying inflation forecast. So I am concerned about inflation, they are saying 2% by the end of 2023, I suggest that it’s probably going to be a bit stronger than that in 2023.
So if we move on a bit further from there and we say, “Okay, let’s look at disposable income and what people are doing with that.” So we’ve got our disposable income up by 1% in March and quarter to 6% above its pandemic level. So now we’ve got… Remember, we had a retraction in spending during the first few months of COVID of up to 16% in every household. So think about that. For households that were spending $100,000, they’re now spending $84,000 instead of the hundred, or if they’re going shopping and they’re spending $100, they’re not any more, they’re spending $84. So we lowered a huge amount.
Households stopped their spending because they just didn’t know what the markets were going to do, and they didn’t know whether they would lose their job. So we have increases that are happening now, which to me is a little bit scary. We’ve got retail sales up again, but though in the June quarter, we did have an incline of 1.8%. So sales declined sharply in New South Wales, Victoria, effected by lockdowns, obviously. And who knows what’s going to happen as far as vaccine passports to do whatever they need to do. But let’s see what happens moving forward from that.
Now, this is a very telling little chart. So basically, they take 20 million economic indicators from 196 countries and they start putting all those things together to come on outcome. What’s really interesting for me is that gross domestic product, year-on-year, Australia is up 9.6%. So effectively, we’re exporting more than we’re importing, essentially. That may be that when you’re going to Good Guys or Harvey Norman, or whatever, you walk in through their stores, they got nothing on the shelves. You can not get an appliance from anywhere in most parts of Australia right now. Now, is it because we can’t get stuff in? Or is it that we’ve got some great exports happening out? I suspect it’s the other way around, that we can’t get stuff into the country. I mean, now building materials alone are a problem.
New Zealand, 17.4% GDP increase. That’s an incredible figure for a country of 5 million people. So they’re exporting much, much more than they’re importing. However, the real figure for me is when I come across to… If you look at the current account. A current account is essentially the net figure. GDP is the gross figure, the current account is the net figure. So Australia’s got a 2.5 point increase, that is, they’re actually exporting more than they’re importing. All the figures associated to that are actually in favor. So New Zealand, although a 17.4% GDP, has a negative 2.7% net figure outcome.
So Papua New Guinea, just don’t know how they’re ending up with that figure there, but obviously it’s based on the lot of different things. Now, what does that tell you? Well, it tells you obviously that we’ve got some movement in an upward direction, we’ve got some support around some of the export. Obviously, Australia’s got mining and the strength of coking coal and iron ore, obviously, to make steel. Brazil seems to be taking over the iron ore market, but they seem to have backed off a fair bit. When I’d start doing my research and looking into their marketplace, it’s an unsophisticated iron ore mining practice, basically. They’re not very advanced as far as, they could have been but they didn’t. And I think COVID hit and it made a big difference to them in a negative way.
I think this tells us that we’ve got well-established… I don’t want to call Papua New Guinea, Caledonia, and Fiji anything other than a first world country, but when we talk about advanced first world countries, Australia and New Zealand seems to be doing fairly well compared to the rest. Although, I would be concerned if I was Auntie Jacinda. Is that what they call them? Auntie Jacinda… because she’d be looking at that figure thinking, “How can we have a 17.4% GDP increase and still be in a net figure decrease from year-on-year?” So a bit scary for them, but Australia looks to be okay.
All right. Australian House Pricing Index, where we have been at and where we’ve got to. We’ve got July 2020, where we had a decline. If we look from a perspective of downward cycle, this is what it’s talking about, everyone was talking about doom and gloom and the housing market was gone. And just as it started to recover, we then had COVID hit. And we had one negative quarter. And then, look at that ride. What a great ride that is. So we’ve got retail sales drops for the third month, ASX retreats, Australia services sector shrinks, Australia manufacturing up to a three-month high.
Now, it’s good to see Australia manufacturing back. Let’s hope that the government understands that now that we can’t import stuff, that we actually start to support the local manufacturing industry in Australia rather than letting it go like it did in the mining boom of 2008 through to 2012, where they let manufacturing go out the window. And unfortunately, our car manufacturers have gone now too. So let’s hope they bring more of that and support it more.
No rate hike on the horizon for the RBA, they basically said, “We’re putting rates on hold.” And that might be scaring the hell out of the government because ultimately the government’s saying, “The housing market’s gone don’t crazy. How are we going to stop it?” And they were actually concerned. Remember March? They announced that they were going to make it easier to get home loans. And then, in May, they were going to announce it and then they’re going… “Well, what happened to that?” No one said anything about deregulating so that we could get proper no more doc loans or low doc loans in there. So Australia home sales are up 5.8% for month-on-month in August. The jobless rate lowest in nearly 14 years. And the sentiment in Australia right now is quite strong. But we do have the Australian dollar moving around in different ways.
So for me, I looked at the way that we say that the housing industry is going to move and what’s the price index going to do. Now, Australia’s expected to be a 3% by the end of the quarter. The House Price Index, quarter-on-quarter, is projected to trend around 2%. Now, the 2% is not a 2% of growth, it’s 2% on the housing pricing index. Now, 2%, effectively, will mean that they’re predicting about a 10% value growth if you looked at it in that perspective. But you really have to deal down to what that means because it’s sort of like a swaying splay when someone says a 2% Housing Price Index increase, it’s sort of like a… What’s the best way to explain that? At the lower end of the scale, it will be a higher percentage than the high end of the scale. And you have to adjust that in particular ways. And you’ll have to understand that. With all of this, you can just simply Google the terms.
Record breaking property prices with the biggest three-month growth ever in the history of Australian, I’m going to say [inaudible 00:13:07] Australia property prices. The three months up to June 2021 was the strongest residential price growth on record. Residential property prices have reached an unprecedented level at 835,700 representing a growth of 21.22% since 12 months ago when prices were at $689,000.
Now, for those of you that are online, can any of you remember what I said what prices were going to do in the next year to 18 months? I said somewhere between 20 to 30% was the price growth that we’re going to get. In some areas, that 30% did happen, and places like Brisbane, were topping out on 30%. And I was quite clear about that. While everyone was talking about a 40% drop or 30% drop or 20% drop or even stagnation, I’m talking, “Go. Go hard and make a big difference to what you can do.”
But I just want to point out again, the average price to buy a property in Australia is $835,000. So that’s the average price. Sydney, I think, is topping out at 1.146, the last time I looked, as the average in Sydney, which is actually not the most expensive property prices in Australia. The most expensive property prices in Australia right now is in Byron Bay where I think it’s $1.21 million as an average to buy a property, if you want to buy something in Byron Bay. So Michael was saying that Domain’s saying 1.41 million is the average Sydney price. I don’t know if you’ve got the chance there, Michael, to look up Byron Bay and tell me what that’s at the moment, because they’re all growing as quick as each other. So, it’s a really interesting time in the market.
Okay. RBA definitely saying no rate hikes until February 2022. And as I said, that must be scaring the government a fair bit, because we have some lending that’s going and it’s increasing from the investment strategy rather than home owner strategy. And that would be scaring a lot of the politicians, because they want to make a difference to the housing pricing, because ultimately, do you want to be that government that put ourselves in a place where people just couldn’t afford to buy a house in Australia anymore, and they can’t already, and yet it’s getting worse. So here we are. Thanks, Michael. RP data is saying that the average price in Byron Bay is $2.54 million. Oh, good on you.
Can you see my screen, everyone, or not? I’ll just punch that in. Apparently, my screen share has been lost. Yep. We’re good. So Mr. Frydenberg, he is our treasurer and he’s extremely concerned about the amount of lending that’s going on. So this is really interesting because they were looking at trying to stimulate the property market by creating proper low doc loans. And now they’re going, “Hey, Hey, we need to pull up.” And this is scary for me because when the government gets involved and then they start to go to APRA, so Australian Prudential Regulating Authority, when they start going to APRA and saying to APRA, “Can you make some changes?” That’s when it becomes really difficult.
And the last thing I would want to see is what happened when they forced APRA to make changes last time. So for those of you who haven’t heard what happened… You’re probably aware of what happened, but what the after marks of stupid decision-making happened, they essentially said, “For anyone that wants to go for a loan, every bank has to calculate everyone’s previous loans at 8% minimum and principal and interest.” Now, you look at my portfolio, my average interest rate was probably sitting at 4% at the time. And I probably had 70% of it. All my lending was interest only. So we went from being able to go and borrow a huge amount of money to not being able to borrow at all. And I was scared they were going to call in loans, like that was the place. Now, I had cash in the bank, so it wouldn’t have mattered because I had offsets in there.
But what it did for me was it took me out of the marketplace to do standard investment deals, right, that is, I go and put a deposit down and then I go and get a loan and I pay for it that way. I do the development deal and out via the back end. And what then happened was we were turning up at options, standing at back of the auction room and watching first time investors who weren’t getting the same treatment as I was, because a first time investor has their own home loan and maybe no home at all and they were investing for the first time. So on paper, they looked really good, but they didn’t have the knowledge or experience that Christine and myself have. And so, we’re standing at the back of the room willing to pay a million dollars for a property and there’s two unsophisticated investors at the front of the room bidding against each other because everyone investing in property must make themselves rich and forcing this thing up to 1.2.
So we’re standing in the back of the room going, “This is absolutely crazy. We can’t bid on it if we want to do a standard deal,” remembering that I’m the king of outside the box stuff. So then, the market moved in a direction that wasn’t good and it wasn’t sophisticated. And what they should have done was said, “For those people that can prove to us via the home loan or investment loan application system that you are experienced, that you’ve done this before, that you’ve got runs on the board, we’re willing to actually discount your investment and allow you to borrow more money because you’re a safer bet than the mom and dad investor who doesn’t have any idea at all.” So it’s a bit scary to say that we are probably on the brink of that happening again. And it’s just scary to know that they’re going to get sophisticated people out of the marketplace and let the marketplace be driven by inexperienced investors.
Les, is saying, “You made all the other property gurus look like fools.” Well, I’m their guru. “Their bad predictions are still up on YouTube. They made the same predictions in the crash after the 1990 boom.” Yeah. Interesting. And all of this is just about going back to cycles and going back to what happened. I mean, if you’ve followed, I won’t say his name, but let’s say Harry, who got a smash and ended up with this convex shape in his car, if you followed what he has been saying in 2009 and 2013 and 2015, and even I was on tour with him and stood on the stage with him while he was telling us about a 40% decrease in the marketplace, and look where we’re at. So God forbid you follow some of those gurus, it’s a bit of a problem. Perhaps Glen, perhaps that’s who I meant.
Okay. So home loans. Home loans, depending on where you go… home loans are going down, investment loans are going up again. So we’ve had an all-time high of 234, so that’s in billions, I think, that’s billions in those figures there and I’ll show you that in a second on the other side. But you can say down here where we’re going as far as percentages and increases and decreases that are going,. If we look at this one from the home loan perspective, we can see that there’s a drop off in home loans.
So the retail sales drops for the third month. Services sector shrinks for third month. Manufacturing going up, this is similar to that last slide that we showed with the manufacturing in it. New home sales prices rising by 5.8%. And the Australian dollar at its weakest for a while too.
So here we’ve got total value of dwelling stock in June quarter 2021. Now you’re going to have to put all your zeros to the side because you need extra zeros for this slide. So you’re going to need spare zeros, this is the best way to use them by understanding this. If you look at the bottom right-hand side here, in the three months leading up to June 2021, the total value of residential dwellings rose by $596.4 billion. So think about this. We’re not talking about the value of the dwellings, we’re talking about the rise of the value of the dwelling. So if they were valued at $500 billion, they’re now worth over a trillion dollars. So you think about that. In June 2018, value of dwelling stock sat just below 7 billion, which has grown near to that 9 billion in just three years.
So, we’ve got this stuff going on in the background here where it’s just a bit scary. This is the same spike that happened between 1988 and 1991, it happened in 1960 to ’63, it happened in ’69 to ’72, and if you go back, if you could track back to the roaring ’20s, the 1920s after the last pandemic, you would see a similar slop to what’s going on in here. So look, where are we at when we start seeing slides like that? An upward slide, will you see it down? Yeah, you will, but it won’t be like every other three that I just mentioned. The down is 10% on average across the country so that’s usually hits the 1.5, $2 million to three, $4 million price points. So call it the two to $4 million housing, that’s the one that takes and suffers the biggest loss. Those lower price point properties, they don’t decrease by 10%. So just remember that if you’re needing to sell a $4 million property, you’ve got to think about your timing if that’s what you’re going to do.
Housing price growth that we have here. So year-ended, we’ve got Sydney at 18.2. Let’s go down. Brissie’s only showing 15.9 and I would argue that because I think it’s far greater than that. So it’s showing Hobart with the biggest growth at 21.9%, year-ended. So prices are moving. Darwin is probably the one that I would have suggested earlier this year because it hadn’t had a move for a long time. Canberra’s really interesting. I can never predict Canberra because Canberra has a release of land by government. And that’s really hard to predict what prices are going to do when you’ve got a government that understands housing to a particular level and they release land on demand and you don’t actually buy land in the ACT, you actually lease the land for 99 years. They do release, obviously, when it comes up. But yeah, it’s an interesting marketplace. It’s always very difficult to be able to predict.
So look, I think the biggest thing down here is that Perth still hasn’t hit its mark from five years ago. And it might be telling… Hobart concerns me. I think you’ll still see a drop in Hobart. It’s had too much growth in a short period of time, for a number of different reasons, and COVID probably emphasized that. In a safe spot, Tasmania doing all that sort of stuff, but worth looking at.
The value of new home loans, obviously, we’ve got a drop in home loans, but an increase in investment loans going from there. Again, just looking at the price index, as far as what we’re looking at in Australia, housing price index in Australia grew by 6.7% quarter-on-quarter. This is coming out of Trade Economics. This was more than 5.4% growth in quarter one. Above market consensus of 6%. So steepest pace of increase in residential properties since 2003 and the most recent COVID 19 shutdown in Sydney did not have a noticeable impact, which is interesting. So all capital cities recorded high prices through the year to quarter two. House prices jumped by 16.8% on average. Sydney saw the biggest gain since quarter 2, 2015, within Sydney, that is. Melbourne reported the fastest growth since quarter 4, 2009. Brisbane gained the most since quarter 2, 2007. Hobart has the steepest rise since quarter 2003. Adelaide rose at the strongest rate since quarter 2007. And Canberra posted the largest quarterly rise since the start of the series of being able to put basis points on properties.
So at this point in time, I’m wondering whether anyone has any comments. So there’s a couple of comments there. Michael saying, “You can borrow 1.4 million down to 1.2 with the changes [inaudible 00:27:24] are proposing.” Yeah. So, they’re making it very difficult to be able to go through that process of getting more home loans.
That’s a quick market update for everyone just so that you know where you’re at and you can start doing some research based on what I’ve just spoken about. Let’s go ahead and see where we’re at here. I thought I might just quickly take you through… So you can see, obviously, we’ve got Invida on there. Look at that, it kind of looks like an emoji in my hand.
So peak, I think, is going to be 2023, late 2023, ’24, I think, we’ll peak. And there’s going to be some ups and downs, but that 2023, ’24 peak is going to see just a slow stagnant movement. Now, remember, I’ve changed my mind a couple of times, and I’m allowed to, based on… But when I change my mind, I’ll change it ahead of schedule. I don’t change my mind afterwards like some people do. So I think what’s important here is that you just watch these markets and watch these figures and see what’s going on.
Now, the last Matter of Fact, I talked about, how long does it take to actually get someone to a point where they will be foreclosed on and how long does it take to get them out of the property? And in some circumstances, that can take up to three years, average would be about somewhere between nine months to 18 months, really. 18 months is probably more closer to the mark. So if it takes 18 months, 2023, ’24, you’re looking mid 2025 before the market starts to get an oversupply of properties.
Will regional peak before the major cities? No, I think in this marketplace, you could throw a dart at a map of Australia and you’ll be getting the whole area’s growing, as a percentage, growing as quick as other areas. So I don’t really think regional and Metro will have a significant difference in peaks, which is not usual because their cycles don’t usually peak at the same time. Well, Michael, all centers are growing well, it’s not just regional that’s growing well, it’s all centers.
So I think, for the purpose of understanding where we’re going, I’m as good as the economists. Why? Because I’m better because I get paid a lot of money and [inaudible 00:30:29] to talk about the economies and I’m not an economist and I seem to be getting it better than they do. Well, a lot better.
Is apartment oversupplied in Sydney? Well, that would be going back and having a look at building trends. So if I go back some slides here. Building permits. Right. So if you look here, we’ve got building permits going down and up. The highest was 31.7 and we’re now down, lowest at negative 22%. Right. I’m concerned about the lack of building permits coming through. And for me, it’s interesting to see, where now, I think we’re going to have an oversupply of building materials very soon. We’re going to have builders finishing up stuff in the next nine months to one year from the stimulus packages. And I think that you’re going to see a housing slump that comes from that once everyone catches up to themselves.
How much do I think Sydney will grow? Let’s go and play some darts and see what number we can hit, really. I think that that question is more about you researching and you being confident in your research, rather than me predicting what I think Sydney will do.
Will living regionally and working from home and city jobs lose its gloss with people moving back to the cities because they’re missing family and friends? Yep, I absolutely believe that the regional market was stimulated by COVID. People working from home, they may have sold up and moved there or rented and moved regionally. And while it was nice and glossy when they first moved out there and they lived the good life, they’re missing the city life, and people are starting to miss working with their coworkers. And that being the case, if they’re missing their coworkers, they’re going to want to get back into an office. And bosses are starting to say, “Probably, come back in now, because I’d like to…” Like I’m in New Zealand and I’m suffering from not being around my team and my team’s suffering as well. Even though we didn’t see each other a huge amount of time during the week, while they didn’t spend maybe a huge amount of time, the ability to see me is gone, and that weighs on them too.
Is Brisbane, Morton Bay… Okay. So, let’s go back to the question. Is Brisbane, Morton Bay area a good area to invest. So firstly, I must say that Morton Bay is not Brisbane. Okay. Brisbane is Brisbane. It’s like calling Woolongong Sydney. You’ve got to understand that Morton Bay is a different council to Brisbane City Council as is Redlands, as is Redcliffe, as in Logan, as in Ipswich. So don’t start me on Logan and Ipswich because even if you bought in Logan and Ipswich, you’ve actually gone up in value, but the bowels of this country is full of shit and they’ll stay full of shit for a long time. When people ask me, is Brisbane a good area to invest? Well, it’s a big area. Is Morton Bay a good area to invest? Well, it’s another area. You really have to do your own research. Don’t come to me and ask me. I specialize in teaching people where they’re going to invest, rather than I’m telling people where they’re going to invest. This is like a huge conflict for me to put your in that place.
Now, in saying that, if you want some research put behind your investments, well, you can actually come through to Invida and talk to us and we can help you through that process of saying, “Okay, well, you’re not sure where to invest, we’ll come along and we’ll help you invest for you,” which is where we start in Invida. I’ll talk about it in second. Sydney… Ah, well, that’s a guess.
Is it a good time to invest in Brisbane properties? The price of houses has risen so much. Well, the price of housing has risen everywhere. So we’re a buyer’s agency and we’re getting priced out of markets, and it’s only because we’ve got good relationships with agents that we’re staying in the marketplace.
The ABC did a program saying that some city people are starting to move back to city from regional, moving back to city from regional because of lack of city facilities. Absolutely. And Peter’s asking about any news about the proposed changes in New South Wales [inaudible 00:34:53]. I advised the New South Wales government that… It’s interesting to know that the minister for housing, minister for planning, minister for women, minister for young, for youth, minister for indigenous, minister of disabilities, the premiere and the treasurer were all supportive of a policy that I put in front of them and they’ve got one bureaucrat that basically said no. It could still make it or they may run a pilot program with me and say, “Okay, well, look, we like the idea. We’re a bit unsure. Can we do a pilot program? Can you do five projects across New South Wales?” In which case, that means I then am controlling the ability to create a better policy. I am hoping that they’re actually going to include it. The announcement was supposed to be in this month, September. It hasn’t been released yet, so it may come out in October.
So yeah, that’s where we’re at. So Invida is the business that we started. Essentially, vida, it means life in Spanish. And for those of you don’t know, I have a Spanish background. My parents were born in the north of Spain. And so, in life. And so, this is about investing, not just in your life, it’s about investing in property that has the adaptability to be able to be a house. It has the adaptability to be a house with a secondary dwelling. It’s a house that can be used with disability. So that means you can use it for a lower level of NDIS. It can be used for co-living. It can be used for rooming. It can be used for a multi-generational family. It can use by the first home buyer. It can also be used by downsizes or what we call up-lifers.
So for me, Invida is something that we see a lot of people using within my, I’m going to call tribe, my community, because people just want the safety and security of knowing that they can get the cashflow. So when I talked about earlier investing in shares and the share prices dropping out, as long as you’ve got dividend returns, you don’t really care, as long as you’re getting return on your money. And that’s exactly how you should be looking at property. No one knows what property prices are going to do, upward, sidewards, in any direction. So we’re all at the mercy of what the markets do and what other people do, and that affects the total marketplace.
So if you were to buy into a property… And we’ve had some incredible growth in the properties we’ve purchased for our clients over the last 18 months, two years. And the outcomes for them have been incredibly good. We’ve based our research on 120 points of where we’re investing and why we’re investing in those areas. In some areas we do in-field properties, that is, properties that are existing and then we convert them. In other areas, we find blocks of land that are in-field. And in other areas, we find blocks of land from developers that are willing to work with us. And Invida gives you those three options, basically. I’ll talk about that in a second.
But really, what I wanted to show you tonight was the ability of how people’s lives are changing in doing this because you’re supplying great, affordable accommodation to not low socio people, we’re talking about doctors, nurses, engineers, project managers, trainees at the upper end, those sort of things there. And yeah, Brian’s making a good point. You’ve got someone like ourselves and my team that are off and they’re making sure that the land that we’re going to is good land, that it is in the right areas, that it does have growth. And Brian’s one of the happy clients.
So let’s have a look at… This is one of the rooms here. And I think this is… I’m trying to pick this property. This might be one of the properties in Southeast Queensland. I think it is. No, it’s not. This one might be Kelly Avenue, actually. But that’s the sort of finishes that we put together so that you can see. That’s fully furnished. We do all the works. Whether it’s a purpose-built or whether it’s a conversion, this is what you sort of end up with when it comes to that. Here’s another room showing you the area of the kitchenette plus the bedroom. So it’s a studio. Studios are somewhere between 22 to 35 square meters. And we’ve had some larger ones. But effectively, what you’re looking at is a double digit return. Depending on what market you want to go to, it’ll be somewhere between seven and a half to 11% gross return.
And we specialize in this, but remember that this property can be used in other ways as well, which is why we’re the best in the marketplace. So we’re finding different ways for you to be able to invest in the [inaudible 00:40:04] affordable housing market, but at the same time, being able to get a growth perspective, hopefully, moving forward. And we were the first to market in the most recent times for co-living properties. If you talk about co-living, I’m the guy who they talk about, I’m the guy who talks to councils and governments all over the country.
And so, we eventually want to make sure that if you’re a interested savvy investor, that you know what you want to do and where and why you want to do it, then we can help you find that property. And so, if we can look at housing affordability and tackle it head on, then you’re the person that can help us achieve that marketplace. But more importantly, what we want to do is help you get your cashflow up. And so, what better way to sit at the end of the picnic table, barbecue table, saying that you are a property investor, but not only are you a property investor that gets great returns, you’re actually more interested in helping people out so that they get into places so that they can save some money so they can buy their own homes as well. It’s a very strong position to hold where you can actually help people out at the same time as you invest.
So all you need to do to get started is… I think what we’ll do is we’ll just go through where… I see too much hassle and packaged stuff go out there that doesn’t suit the investor. It’s more about getting them into a market which is overstimulated and doesn’t give them the right product and the builds aren’t that great. Now, we have to build the properties to a specific spec, which means that you’ll have a better quality of finish of property at a higher level of finish as well. Like I said, you will have the ability to have an NDIS home if you come through Invida and do what we do.
But I just want to take you through some figures of what we’ve got. So the way it will work is really quite simple. You book a strategy call. We might get Josh to pop up the link, if not, I’ll have to find it. And I’m sure Josh will put it into the chat box now. You have a one-on-one, you basically will fill out some details and… Sorry. You’ll get straight in and book a strategy call by putting your phone number and a few bits and pieces in. One of my team will talk to you. The link has just hit the chat box there. Thank you, Josh. I-K-I-N. Then the next one is to make sure you’re financially in a position to be able to invest and you go off and make sure that you can get the finance. And then, obviously, the due diligence about what needs to happen moving forward. You then join a small token membership and get an understanding of the deals that are going to be put in front of you. So we will only offer people deals if they are part of the membership.
And then, once the deal gets put in front of you, you basically have a green light to say, “Yep, I’m in. Let’s go.” So that will depend on which deal you’re going for, whether you’re going to take an existing property, or we’re going to find you an existing property and we’ll convert it for you, or whether you want to do a house and land package that’ll give you a much better return.
Is there a limit to how many kitchen that a standard house can have? And is there a minimum room size including lounge? So Maggie, I’m not sure why you’re asking that question here. You’re a member of HI-RES then you can ask that question on the HI-RES page and the answer to that will be dependent on where in the country you’re going to be investing.
So we’ve got an upside down marketplace, here, 60 to 80% of the people looking for accommodation are singles and couples, and 60 or 80% of the properties that are available to rent are three, four, and five bedroom houses. So, we make sure that everyone that’s living in our co-living properties have their own space that they can live in and if they want to share their common areas, that they can. Okay. So this is about the flexibility of being able to save some money, have utilities included and being able to socialize if they want to or not and keep to their own space.
So, you’re basically tapping into one of the biggest marketplaces in the country, and the biggest marketplace that will be around for the next five to 10 years. So you certainly want to be able to get in early. Those people that got in early in other strategies have done really well for themselves, I’ve done well for myself, and I suppose you’re expecting that you should do well as well. Not suppose, you will do well if you get in early. But don’t be like that guy that waited at the beginning of 2020 to see what the market was going to do and didn’t get anything done, can’t get in the market.
So here we’ve got a property. This is a different couple of properties here that we did convert. This one was renting at 670 per week and now getting 1350 per week after we converted that property. That was a five room property. We ended up turning that top one into a five-bed, five-bath, five-kitchenette. This bottom one down here we turned it into a four-bed micro-apartment setup. Was getting 410 a week and now I’m getting 930. So basically you’re doubling your cashflow to get the outcomes that we want to get for you.
This one here is a recent project that’s just finished construction. Purchase price was 359,000, construction at 387,000, total cost of 746. For that $746,000, that will be achieving quite easily, $1,500. And I think we’ve got a walkthrough video that we can talk you through and walk you through on this one here. But as you can see, we’ve got a entry down the side here into the main common area. And then, we’ve got micro apartment one, micro apartment two, micro apartment three, four, and five. Now, some people say, “Oh yeah, but you can’t get financing for this.” Great. If you can’t get financing for this type of property, which we are specialists in, then let’s get your finance in something else which doesn’t require too hard a job. Your percentage return will drop a little bit, but still far greater than anything else that you’ll get in the marketplace at any point in time.
This one here, 10.27% return, gross return, at the time. It’s actually increased since then. This one’s getting 1580 a week. I think it’s actually more than 1580. I think it’s over 1600, but let’s say it is 1580. Normal weekly rent in the area is about 700 bucks a week. And so, what would you prefer $700 a week or 1600 a week? Yeah. This is where this is a good outcome. We do these all over the country.
Just be very careful to say that I want to invest in a area, it’s about you understanding. And that’s what this strategy call’s about. There’s no implications of you making a strategy call. We’re not pressure salespeople, we simply talk about where you’re at and what you want to do and go from there. So if you want to know about what we do and what areas we go to, just simply fill out the strategy call. We’ll get Josh to put the link up again. We don’t do the student market, we’re well away from the student market. So get your head out of the gutter, Tim. This is not what we do, we do professional worker all over the country.
And you’ve got to understand what we do is far better than any product than anyone else’s putting on the marketplace. We’ve got over 10 years of experience in this marketplace and we don’t do what everyone else does. We’ve worked a way to my sure that this work. When it comes to co-living, again, there’s policies all over the country about what you have to do and what you have to provide. And it’s what we do. So, again, you’re all asking questions about, can I do it here and can I do it there? Book the strategy call, talk to the team, get an understanding of where you’re at and what you want to do and then we can direct you into the best place for you because everyone’s price point’s different, everyone’s needs are different and we need to make sure we know what you want. And again, no hard sales tactics, no hard pressure sells. We’re here to be able to fix the marketplace, and you’re part of that fix. So if you can be part of that, then that’s what we want you to do.
Inside here, basically, they’re getting an extra $46,000 per year because of that. They’re net cash flow on this property here is $34,000 based on an 80% loan on that property. Now, that’s a great return on your investment. Just think about that, it’s $34,000. Let’s say you’ve got to pay tax on that, it’s $20,000. So for the investment that they’ve put into this property, they’re getting a $500 after tax return per week. So think about $500 in your pocket at the end of the week, while at the same time fixing the housing market. In this property here, there is… What do you say? There’s three chefs and one policeman, and then there’s one other in there that’s a professional, basically.
Yes, I did notice that, Brian. But there is a color above too, you must realize that. So, I don’t know if that’s the end of the slide show.
Basically, we’ve got a number of options for you. So when it comes to all of that, again, what you’re asking there, when it comes to utilities and it comes to people sharing bills and all of that, that’s all part of what we handle. Unless you can measure people, you can’t charge them. And so, effectively, we either put aftermarket readers in, or we include it in their rent. But again, all part of the membership of being able to put these deals in front of you. But book the strategy call is a small, quick program so that you understand those questions that you’re asking right there. Strategy call is really quite simple, just book it and you’ll be able to book a time. And one of my team will be able to talk to you about that. And the link is back up there again.
I think what I might do is take you through the walk-through that Joe put together. So I’ll just stop this share and I will find it on Facebook so that you can see the walk-through. Let’s et it here. Let’s make this bigger.
Joel Keefer (00:51:05):
I’m Joe from Invida, what used to be known as Do It For You, we’ve now rebranded. And we’re just standing inside a property that we took you through a couple of weeks ago. It’s now approved for him to go in and taking photos. I’m going to take you for a bit of a walk-through, get a bit of an idea of the finished product. I just to show you the street. Well, you can see it’s quite a busy street. You’ve got public transport right out the front which is a big thing for [inaudible 00:51:39]… so having public transport out there is definitely a plus. But come on through, I want to take you for a quick walk-through and give you a bit of an idea.
First up that I want to show you is this thing hanging off the side of the wall, solar system, got a 15 kilowatt solar system top, on the roof here, that will mean that the client has no bills. None whatsoever. That’s how we make the money. So come on through, front door, [inaudible 00:52:12] door locks. As you can see… Is the photographer down there?
Speaker 3 (00:52:15):
No. I think [inaudible 00:52:15].
Joel Keefer (00:52:15):
Yep. We’ve got two rooms off to your left, but I just want to take photos in there so I’m going to have a go this way.
Speaker 3 (00:52:30):
Joel Keefer (00:52:30):
That is [inaudible 00:52:30] my better half.
Speaker 3 (00:52:30):
Hie everyone. Enjoy your tour. It’s amazing.
Joel Keefer (00:52:29):
You can see on the wall there fire and safety. Actually something that I’ll quickly show you, we walked straight past it because it’s hidden, the laundry, there’s communal laundry, communal kitchen, communal dining Area.
Ian Ugarte (00:52:59):
Can you not see this?
Joel Keefer (00:52:59):
Take a walk down here. So there’s two bedrooms down there, there’s another one in here. I’ll take you in this one, have a look.
Ian Ugarte (00:53:16):
Joel Keefer (00:53:17):
As you can see, this one’s fully furnished, our main staging. They’ve done an absolutely fabulous job. They do all of our staging for us, and as you can see, it has come up really good. So all five rooms in this poverty are set up quite similar to this. So you can see that they’ve got their own, essentially, living room, couch, TV, study desk, fridge, their own kitchenette in here, their own bathroom. And just behind you, which we find super important, this is obviously the bedroom. Good work Josh getting that angle. Let’s see out here. This is a huge factor in, I guess, these rooms being super comfortable for the residents. They get their own courtyard, every single room in here has their own courtyard, their own private courtyard, set up a table and chairs out here, have their morning coffee, whatever they want to do.
This whole property… I’ll give you some numbers. The client purchased this for around 370,000, the build was in the threes. So all up, including furniture, we ended up being around total cost of just over 750,000. And the expected rent on this is $1,500 a week, $300 a room. So we’re looking at around 75K a year. So we’re getting about 10% gross return on something like this, which if you compare it to any of the houses up and down the street, they look exactly the same [inaudible 00:55:07] they are renting for 550 bucks a week. So great investment for the client and a great outcome for the residents, obviously.
So guys, if you want something like this in your portfolio, come see us, go to the Invida web page, jump on the Hi-Res page and ask about it. We can answer any questions you have. The sooner you get on board, the better [inaudible 00:55:28]. Property prices are just skyrocketing at the moment. This land, we picked this up for 360 [inaudible 00:55:35] any day of the week now. So guys, if you want something like this, jump on now, we’re going to source you the land, we can package it all up, build and everything, and we’re going to do everything for you so get in touch.
And can I just make a comment on your beautiful shoes, today?
Joel Keefer (00:55:50):
My beautiful shoes.
Ian Ugarte (00:55:56):
So there you have it. That is Joel, one of my awesome team members, he and Bianca and Josh were there helping out. So without them, I couldn’t be in New Zealand, without them, this business wouldn’t continue to run. And so, I’m very thankful for what they do. People are asking about how much growth do you get in these and all that sort of stuff. Look, that client is extremely happy, let’s just say that. Just in the chat box there you do have the link that Josh has just put up and you can book your strategy call. Bianca or Joel, or one of my other team members is going to be able to talk to you.
As far as capital growth is concerned, we only go to areas where we can see growth and we’re pretty strong around that. Now, growth is never guaranteed. What can be quite strongly suggested is that the cashflow that we talk about, you will get. And for all the projects that we’ve done in Do It For You for the last 15 months, every one of them has had a 10% return gross minimum, one as far as 16%, but they’re outliers. So we say, seven and a half to 11% is what we’re going to be able to achieve for you.
No problems with shortage of materials, we’ve got some strong building relationships with builders. People are asking about banks recognizing this type of property. And we’ve got lenders that will lend in this type of property and we also got other strategies you’ll be able to use so that you can get loans.
You want to make sure that you copy that link right now, because as soon as I end this webinar, you’re going to be in a position where you won’t have that link anymore. So if you can copy and paste that link right now, you will be able to put it into a separate browser so that you’ve got that link. Remember, the strategy call doesn’t cost you anything, it’s just about understanding what we do and where we’re at and what you want to do so that we can actually say that this is for you or not. Don’t get upset if we say to you, “maybe this is not for you.” This is about you understanding what you can do moving forward. And we’re strong around our integrity to be able to get in there.
To be able to get into these sort of deals, you probably need a minimum of… I think I saw a deal recently that was $113,000, $114,000 plus the serviceability component. So you need some money and you also need income to be able to get loans to be able to move forward. So the link is just… There’s Shamail, if you can… Channel? Chanel? If you can just let us know, Chanel, that you do see the link right below your comment and remember, everyone, copy and then paste into that.
Thank you as always to those people that help and support. Brian, appreciate what you do. Michael, I know that you are well invested in following what I do so I appreciate that too. More importantly, my whole team and Josh who’s on tonight, it’s awesome that you can help me out. Josh, I really appreciate what you are doing.
“I only get numbers on the link. I don’t know what that means.” Yeah, let me see that. I’ll share my screen. [inaudible 00:59:32] copy and let me click on that link. [inaudible 00:59:38]. Just want to double check that. Yeah, it seems like you may have missed something in the copying link because everyone else… “They will need to type it into their own browser.” Why can’t they just copy and paste it? Let me see if I can copy and paste into mine. Yeah, it’s worked for me. So just copy and paste that link. So make sure your copy it and then past it in. I’m not sure why those numbers are coming up for you. Megan saying she clicks it and it works. All right.
Okay. Awesome. Thank you. I will give you a few more minutes, if anyone’s got any questions to be able to answer those before I close off. So Alvera saying, “Had a fantastic experience with Jen.” Jen’s a bomb. She’s an unbelievable part of our team. “I’d never been able to do it from Sydney in lockdown.” So awesome that you’ve got that experience, Alvera, and I’ll make sure Jen gets that feedback. She just loves doing what she does. And we talk about, in my business, being sucked into the vortex. People come in and help us for a day or two, and all of a sudden, they’re full-time workers. So it’s been really great to be able to build this team in the last few years and we’re taking this to a very different level. We’ve grown from a small business to a medium-sized business and where taking that medium-sized business to a large business. And that’s really exciting.
And I really need to get back to Australia, so if someone can talk to Palaszczuk and get me back into the country, that would be awesome. At the moment, we had a bit of a surprise, we got down to single figures in COVID cases in New Zealand, which is all up on the north island, at the top of the north island. I’m at the top of the south island. We haven’t had any cases on the south island yet. Today we had a bit of surprise with 45 new COVID cases, they are all in Oakland, at the north. Let’s hope that they will open up to us. If they do, and we’re down at level two, so if they get us back to level one, maybe the Australian government, or at least the Queensland government will open up to us.
Is the property management 15% and the interest rates 4% in your calculation? [inaudible 01:02:08]. Yeah, we have a high interest rate normally when we do our calculations and then our management fees, we put in at the right rate. So we don’t fudge our figures. And any of the figures that you saw tonight, other than that walkthrough, were actual figures and with actual returns. Okay. So we don’t make up figures. I know there’s that one guy out there right now, goose by head, goose by nature, who makes up these stupid, ridiculous figures. He reckons he’s getting 16% returns for his clients, and he’s not doing what we’re doing, he’s just doing standard rentals and that’s just a load of bullshit. I just can’t stand people that do that.
Well, that’s been an option, [inaudible 01:02:49]. If I could get a flight out of here to New South Wales, it would be awesome. They won’t let us in yet because I can’t get a flight in. And we’re bringing two cats and a lot of household furniture behind this screen, the green screen that you saw at the beginning of the session.
All right, last chance, copy and paste in there, Josh. So where are we? We’re at 10:30 my time, so that’s 7:30 your time, I think. I have considered a private jet because there is someone that’s done that, but I would have to quarantine. And I don’t know. The thought of quarantining for 14 days… So myself and my partner, we’re both very active people. [inaudible 01:03:35]. I don’t know. [inaudible 01:03:41] stands better than that. But I did read a story about six people that got together and hired a private jet across from New Zealand over to there, so it is a possibility. I might do that. So here we go.
Is your returns based on interest only loans? No. I think we put principal interest in there as well. But regardless, we would want you to make sure that you check all the figures and that you understand them. And if it is principal and interest that you adjust it that way as well if we haven’t [inaudible 01:04:15] that way. We’ve been conservative with all our figures and we’re yet to not achieve what the expected results have been since we started. So I’m really proud of that. I’m really proud that we give conservative figures and that people are pleasantly surprised when they get better than that. So, that’s pretty awesome.
All right. Last chance. I’m going to give you two minutes to be able to copy that link, put it into your browser. I haven’t seen you in an age. You look 10 years younger with a haircut, sharp dressed, man. See you back in Aussie. I do look sharp, don’t I? There is something I could say, but yeah, I do feel 10 years younger. I’m doing a little bit of exercise. I’ve got a bit of a calf strain at the moment, which is stopping me running. But I do have a partner that I have to chase around all the time, while we’re running is what I mean. So, yeah, it’s been an interesting few months. And for those of you who don’t follow me, maybe jump onto my Facebook page and you’ll see an explanation of why I look 10 years younger and what I’m doing.
So if you’re in Hi-Res, there’s still a membership for this program? No, if you’re in Hi-Res, you don’t need to pay for the membership for the program, you just simply just need to fill out. I would just fill out to get a strategy call for yourself, [inaudible 01:05:44]. That would be fine.
All right. So we got down to one minute. Yeah, this detox is just… I’m… Oh, I don’t know. I just want to get some… It’s not that I’m unhealthy, but it’s good just to clear the system out every now and then. So, all right. We’re down to 30 seconds before I will say good night and thank you to everyone. My team, Rebecca, Josh, and everyone on tonight makes it worthwhile. If you didn’t turn up, it would be boring. Good one, Les. All right, everyone, have a great night and we’ll catch you next time. We’re hoping to do these more often just to give people updates on what the market’s are doing so that you’ve got a better return for yourself. So thank you and catch you then.