Ticker HOME



Join Ian Ugarte each week as he hosts TICKER HOME on the web news service Ticker NEWS. Catch up on all of the latest property, renovation, and real estate news with Ian each week right here!

May 25, 2021


The lending goal posts are shifting; and whether you need a 2%, 5%, 10%, or 20% deposit to buy your next property, banks will look at how much you've saved as well as how you spend! Use my top tips to show your lender that you're a responsible spender as you prepare to apply for a mortgage.

Adrian Franklin  (00:09):

Welcome to Ticker Home where each week we’ll dive into the latest trends on the property market and answer the questions you need to know. It’s great, as always, to have my cohost on a Monday morning, Ian Ugarte, co-founder of Small is the New Big. How’s your weekend, sir?

Ian Ugarte (00:22):

Pretty awesome, actually. Up on a farm in Victoria, your biggest plant plantation for carbon trading in Australia. It’s pretty amazing fun.

Adrian Franklin  (00:32):

Wow. That’s exciting. What took you there, exactly?

Ian Ugarte (00:35):

One of my mates, Steve McKnight, that’s his legacy project that he’s bringing to the market. And After many years of being in property investing and doing really well, he’s just giving back and that’s his passion.

Adrian Franklin  (00:47):

Awesome stuff. What are you looking forward to talking about today, exactly?

Ian Ugarte (00:51):

Yeah. Today I’m going to talk about saving now and benefiting later, for those people wanting to purchase property. So we want to make people the shiniest object to the lenders out there, so that you become the best borrower possible for them.

Adrian Franklin  (01:02):

Very good. Look forward to that. Ticker Home presented by our partners at Small is the New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at sitnbdev.wpengine.com. We’ll keep that website up throughout the show at different times. All right, let’s go back to my main man, Mr. Ugarte. What’s our first talking point today, exactly?

Ian Ugarte (01:24):

Yeah. Jessica Sier from The Guardian pointing out the $127.4 million that the government announced on homelessness over the next two years. Of course, the community housing providers and everyone out there said, we need more money for housing. You know, I’ve got really strong views around just pouring more money into housing. Women with children, escaping violence, COVID-19 and bush fires have created this massive issue in affordability. Albanese struck back with saying that he was going to spend $10 billion over five years to produce 20,000 homes. That’s basically $500,000 per home for affordable housing. I suggest they give me $10 billion. I’ll be able to produce more than a million homes in the first two years and then you and I, Adrian, can go to The Bahamas and walk hand in hand along the beach. Of course services are required alongside housing, so there’s some social stuff that has to go on there. We’re 173,000 homes and short rental homes short. 60,000 of them are in Sydney alone. 71% of all low income earners are actually suffering with affordability. And you know, this makes me incredibly emotional that this country has got the housing problem we’ve got right now.

Adrian Franklin  (02:35):

Yeah, right. No, I can see that and hear that in your voice, and we know that you’re passionate in this area. This is a big part of what you do. So maybe just briefly on that, why are we getting this so wrong do you think? In your opinion?

Ian Ugarte (02:46):

We’ve got 13 and a half million empty bedrooms every night in Australia. We don’t need more housing, we need fit for purpose housing. So we need to just retrospectively look at those homes and say, how can we create more housing out of what we’ve already got? We could fix this problem in two years. And they’re just so shortsighted in seeing that the housing, building more four bedroom houses doesn’t do anything for the market. It hasn’t done anything for the last 50 years in the market. Let’s get it right.

Adrian Franklin (03:12):

Yeah. Fair enough. I reckon we’ll, let’s have a conversation for sure about that another day. It’s a really interesting topic. Critically important as well. We’ll move on for now. Let’s talk about the large rental price increase across property markets. What are you seeing here?

Ian Ugarte (03:26):

Well yeah, we’ve got some issues going on around our vacancy rate, nationally, is an average 1.9%. That’s a very low vacancy rate for the whole of Australia. The worst two cities that got hit by COVID was Sydney and Melbourne, close into the center. They’re down to 3.1% and 4% retrospectively. So for me, that 4% is a very tight market. So the whole of Australia is in a very tight market right now. Brisbane’s at 1.4%, but every other capital city is way below 1%. Places like Noosa are negative vacancy rates and that’s because it’s a high tourist industry area and the workers in the tourist industry can’t find anywhere to rent. We are seeing rent increases by up to 30% between one tenant and the other and that’s just not sustainable.

Adrian Franklin (04:12):

And our final talking point before we get into our main conversation, the truth of housing affordability in Australia. What’s this one?

Ian Ugarte (04:18):

Yeah. This is Aussie Home Loans on the plus side, saying, how can investors find a place to buy rather than just hoping that they know what suburb they want to be in? And they’ve created a heat map. And basically if you have $100,000 you can alter the price of the deposit you’ve got and what loan you’re going for and as an example, putting a $100,000 deposit down with an 80% loan, you can own [inaudible 00:04:39] suburbs in Sydney, 10 suburbs in Melbourne, many more in other areas in Brisbane and Adelaide. But basically what this shows is where you can afford. The CEO of Aussie Home Loans has said with two in three aspiring buyers missing out on properties, the other half not knowing what suburbs they can afford to buy in and two out of five confused about the current housing prices and what desired suburbs they want to be in. This actually helps them do that. So most buyers are missing out, it’s because they’re not market ready and they don’t know where to buy. So this is actually going to give them some leniency about exactly where they can go to.

Adrian Franklin (05:12):

All right, great start from you. Let’s get into our main discussion. So we’re talking about saving now to spend later. So let’s get into this. When it comes to getting a home loan, most people think about how much they need to save for a deposit, but your advice after 30 years in the property market, which is a long time, is that people also need to be mindful of their pre-home loan spending. So why are people’s spending habits important when it comes to borrowing money for property?

Ian Ugarte (05:37):

Yeah. Everyone concentrates on the deposit and right now the shifting goalposts of whether you need 2% or 5% deposit or 10% or 15% or 20% deposit, is sort of taking the structure away from what you should be looking at. And in parallel, you should be trimming your spending habits so that the bank knows that you’re a good spender and a good saver. So what is important right now is how much you spend, then how much you save, especially during that COVID time, they’d be looking at those places in time as well.

Adrian Franklin (06:06):

So when a bank has a look at your spending habits, which are, it’s incredible to just think about that, it’s like coming into your private home in a way, what sort of things are they looking out for and how far back can they go?

Ian Ugarte (06:18):

Yeah. As a general rule of thumb, most lenders, especially the big four, they look at about three months of your pay and spending. For some, depending on whether you’re self-employed, the smaller banks may look up to 24 months of actually spending habits. So this is looking at a longterm trimming of spending so that you can be attractive to lenders and the sort of things that they’re looking at. So, how much money do you spend on hair and beauty, takeaway food, holidays. And you might say, well, I saved up for the holiday, so I should deserve to be able to go away on one. What they’re looking at is the flow of money. How much money comes in, how much money goes out and how much you save every week, because they need to know that they’re not going to put you in a bad spot by giving you a very large loan that you’re going to have to pay over the next 25 to 30 years.

Adrian Franklin (07:02):

So from your perspective, what are some of the big red flags or no-nos that concern the lenders or items that people are well-advised to trim from their spending in preparation for their home loan application?

Ian Ugarte (07:15):

Yeah, this may sound ridiculous, but they are looking at all your spending and where it’s going. So a big no-no is gambling websites. Do not go anywhere near a gambling website or a TAB. Don’t even eat at a restaurant in a casino because they’re looking at the location that you’re standing at. And credit cards, they will actually look at a credit card and increase that credit card by four times. So if you’ve got a $5,000 limit, even if it’s sitting at zero, they will say that that credit card is worth $20,000 to you. So always use a debit card. Car leases are very, very bad for serviceability. They knock your serviceability down extraordinarily, and the buy now pay later. Now millennials are loving the Afterpay, but if you use Afterpay, to the bank, that basically says you ran out of money one week and you’re now needing to pay it back at a higher interest rate. We’re very suspicious that you’re not a good borrower and we don’t want to lend to you. So be really careful with that.

Speaker 1 (08:09):

Pretty sure everything you just said, I’m doing a hundred percent, so I’m definitely not going to buy a home anytime soon, but that is fine. Thanks for ruining my dream there. Ian, just in one fell swoop. It doesn’t matter.

Ian Ugarte (08:18):


Adrian Franklin  (08:20):

Hey, let’s move on. What about the changes to the money laundering laws? Do any of these have any impact on what the banks look at when assessing your suitability for a home loan?

Ian Ugarte (08:29):

Yeah. Anything above $10,000 will start to raise flags. You know, the banking Royal commission [inaudible 00:08:35] model is going on in the banking sector. And so effectively any $10,000 transaction, that’s even going from one account to another, they’re going to be looking at, and they’re going to be wondering, especially if you’re putting cash in, that’s going to be a big, big, big red flag. So just be really careful with that.

Adrian Franklin (08:51):

And finally, has the COVID situation had an impact on how cautious the banks are now about lending to people who may not be able to afford the loan? What’s changed here? If anything?

Ian Ugarte (09:02):

Yeah. This is a two-way street on the negative side. In one of the first episodes I did with you, Adrian was around this where people accessed their super and the spending habits during COVID. And I said that this was going to be a very big issue moving forward when banks were going to be looking at your serviceability. So, if you accessed your super they’re looking at it really strongly. But banks are also looking at the employment industry and say, as an example, if you’re in the tourist industry, they’re looking at and frowning upon that, because obviously with COVID, that can be affected very quickly. But at the same time, on the other side, we’ve got the stimulus packages that have allowed first homeowners to get into the marketplace by as little as 2% deposit. And the banks are now secure because the government’s been paying the loan mortgage insurance on behalf of the borrower and that’s actually opened up a bigger path. So you know, that the outcome is double-edged, but just spending, they’re watching you like a hawk and they’re watching your pay come in and go out. You’ve just got to be really careful.

Adrian Franklin (10:03):

So just on this, before we look at the five tips to finish, let’s say, six to 12 months ago, you were doing all the wrong things as you’ve mentioned, but then over the last three months you’re doing all the right things. How would that work? Do the bank look and go, oh no, they’ve improved, or do they still worry about 12 months ago?

Ian Ugarte (10:21):

Yeah, that’d be lender specific. The one thing that they will be looking at is whether you accessed your super. Now that’s a definite, because they’ve been doing that across the board. But if you’ve changed, your spending habits in the last three months and that lender’s criteria is only the last three months, then for you, Adrian, you’re saying that you’re doing all the wrong things, it only takes three months from now for you to get that right, and you are then looked at as a very good credit rating.

Adrian Franklin (10:45):

I guess it shows that you can change your habits in a way, which is probably what they’re after. Okay. Let’s put up on the screen, the five tips for property success, to finish, and you can just tick through them there, Mr. Ugarte.

Ian Ugarte (11:01):

[inaudible 00:11:01] Tomorrow, meet your credit card payments and pay it off every month and never pay any interest on it. Make sure that you eat in. It’s cheaper and it’s less convenient, but it actually is better for your specialists servicing. Avoid dipping into your savings. Make sure your savings are always going up and make sure you consult a good mortgage broker that understands all the products in the market. As usual, Adrian, all of our cheat sheets are on sitnbdev.wpengine.com/tickerhome. And as always Adrian, it’s so awesome to be part of what you do.

Adrian Franklin (11:31):

For sure. That’s great to have you particularly on a Monday. It’s always just great energy. Hey, just to finish, if people are out there going “all right, I want to start here”, what advice would you have? In terms of just making sure they’re saving, they’re also not spending. Do you have a tip personally that you, do you write it down? What do you think?

Ian Ugarte (11:48):

Look, I firstly want to know where I’m going to buy and how much I can afford. So a mortgage broker’s going to tell you how much you can afford on your current income and then that’ll tell you how much do I need to save. So then you put your goal, your peg in the sand, and say, I need to save this much per week and within the next six months, nine months or 12 months, I’ll be able to reach that target. Like my mate Steve McKnight says, start with the end and end with the start. So if you know where you want to be, you can start looking at the breaking down of chunking of you being able to afford to buy a house.

Adrian Franklin (12:16):

Great stuff from you as always enjoy your day. We’ll talk very soon.

Ian Ugarte (12:19):

Thanks Adrian.

Adrian Franklin (12:21):

And Ticker Home presented by our great partners at Small is the New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at sitnbdev.wpengine.com. I’m going to go back and watch that episode many times. I want to buy a house at some point, but I’m currently doing all the wrong things, but now I know what to do right. Catch you guys soon.

May 17, 2021


With the Federal Budget announcement last week, and proposed changes to lending eligibility requirements, are you worried about how to get a home loan in the ever-changing landscape? Keep in mind my 3 C's of lending to be sure you have everything you need to qualify for a loan; Character, Capacity, and Collateral.

Adrian (00:09):

That was me playing the drums. Welcome to Ticker Home, where each week we’ll dive into the latest trends on the property market and answer the questions that you need to know. It’s great as always to have, I reckon he’s probably my favorite co-host by now, Ian Ugarte, co-founder of Small is the New Big. Hello there mate.

Ian Ugarte (00:25):

Hey Adrian, how are you mate?

Adrian (00:27):

Good. Say yes, the way you like it, don’t you? You like that introduction. You want favorites. All good.

Ian Ugarte (00:33):

Sure. I mean, me and Elon Musk?

Adrian (00:36):

Yes. True. Although after today, Elon Musk is not my favorite. I think you’ve taken the spot. What are you looking forward to getting into today?

Ian Ugarte (00:46):

Yeah. Look, last week we talked about the age 18 on and off your site, and the week before that. I want to talk, take a step back and say, well, if you’re going to buy property, what do you need to do to get a loan?

Adrian (00:57):

I like it. I like that a lot. All right. Ticker Homes, presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. And it can be stressful. Learn more at sitnbdev.wpengine.com. All right. I think we’ve got three talking points to kick us off before our main conversation. Where would you like to start?

Ian Ugarte (01:19):

Yeah, this is Kate Burke in the Domain talking about last week’s budget release and how property investors or first home buyers, more importantly, have been able to benefit out of the budget. The 5% deposit scheme has been re-introduced and they’ve allocated some more. So that’s basically, you need a 5% deposit, a first home buyer and you don’t have to pay any loan mortgage insurance. But they’ve also released the single parents. If you don’t own a home and you’re a single parent, you only need 2% to be able to buy a property with no loan mortgage insurance put on it. I’m a bit skeptical about that. It’s not great to put people into a 98% loan when interest rates are low. And if there’s a little bit of an upside, that’s going to put them in a lot of damage.

And you know, you might see a lot of banks closing in on people and really a little bit useless this because the ACT has a cap of $500,000 to be able to use these schemes. And there’s no median house price in the suburbs of ACT that’s actually below $500,000. I mean, when we’ve got Sydney at $1.3 million as a median house price, and just in the first quarter of this year, the Sydney market grew by $100,000 in a median house price. That’s essentially earning $400,000 a year for you if you owned a property at $1.2 million. Median in Australia is about $899,509 to be exact. And we need to fix this problem major in, and this is the start of what we do today.

Adrian (02:47):

Absolutely. So second topic is similar to that. So Australia currently experiencing unparalleled rise in housing prices. So tell us more about this and I suppose also a comment from you on the budget. Were you happy with what came out of it when it comes to people looking to get into property?

Ian Ugarte (03:05):

Yeah, look, I don’t think… I just think it’s such a difficult thing with the prices where they are right now. And we’ll talk a little bit about it in one of the sections of today, but essentially, am I happy with the budget now? I don’t really think it addresses affordability. It addresses the thought that people can buy property, but in the end we’ve got the fastest growth. And this is Terrick Brooker in news.com.au, talking about the largest national fastest growth in 32 years. So basically since 1989, we haven’t seen this type of growth. That was, if you don’t know aging, the time when do the locomotion was number one, Kylie Minogue’s song.

Adrian (03:43):

Thank you.

Ian Ugarte (03:44):

And really has been a really quick train ride. I’m not sure you’re even born Adrian, those years. So, we’ve got credit growth in the last year, grown by 55.3%.

So basically, we’ve doubled the amount of credit growth. We’ve got 68.6% of first home buyers coming into the market. That’s a huge increase. There is talk of a slowdown in the property market. My prediction, I’m saying that come September, October, we’re going to get a two week glitch where people are going to say the sky is falling. And I’ll say that there’ll be strong growth up til about 2025. But still the investor market is still not at its peak of 2015 with 22.6% below the investor market. I think these low interest rates and, yet we still haven’t got any migrants coming into the country. So what happens when they open the borders and people start coming back into Australia? I think we’ve got a long-term growth issue going on.

Adrian (04:42):

Yeah, really interesting stuff. Let’s get into our main conversation today. You touched on the budget, it was announced last week, and proposed changes to lending in terms of deposit required for some sectors. So many are now wondering how they go about getting a loan in this ever-changing lending landscape. So, we wanted to go back to some basics and ask what people need to know about getting a loan to get into the market whether as an investor or whichever way you’re looking at it. So let’s go back to basics, what do you want to touch on?

Ian Ugarte (05:11):

Yeah, look, lending’s… A lot of people and especially millennials have this belief that you could just go to a bank and you ask for money, and they give it to you. There’s a number of different aspects that you need to look at in regards to who you are, what you are, and how you present to the bank. So, regardless of what changes the government have announced in budget and what they’re putting on the landscape, there are still some essential ingredients that you have to look at. The first… There’s three of them and I call them the three C’s. The first one is your character. The second one is your capacity. And the third one is your collateral. And you need all three of them.

Like if you and I go out for a drink, Adrian, and you choose the bar stool with three legs that are safe and secure, and I choose the one that’s got a little bit of a wonky leg and I sit on it, it breaks, it falls over. And the same thing with these three seeds. If you’re a little bit weak in one area, you will fall over and we’ve got to make sure that the bank sees you as a good risk.

Adrian (06:05):

Yeah. Very interesting. So you always break it down into these chunks, which makes it easy to understand. So let’s go further into the three C’s and we’ll look at character to begin. So why is your character important when it comes to borrowing money from the bank?

Ian Ugarte (06:19):

Yeah, look, another way to think about character is in relation to your credit history. What have you done in the past that they can look at and make a judgment about you? So there’s a report that’s actually out there that looks at your credit. And every time you’ve applied for finance or a credit card, it all gets documented. Multiple applications can really hurt you because they’ll say, “Why did that application fail? And why did you have to go again?” Every time you miss a repayment of some sort, it’s documented. Every time you miss paying a phone or energy bill, it affects your credit history, and it then starts to drive your score downwards. Essentially, the bank is assessing your character and how you pay things on time. Good character means good credit history, and good character, they’ll look upon you more favorably than someone who’s defaulted. So there are people out there or firms out there that if you have had a credit hit, they can actually go in and help you repair that credit hit and get you into a better character position.

Adrian (07:16):

Okay, so that’s character, which is about keeping yourself tidy, essentially. So it’s important to not have any skeletons in the closet. I’m just thinking about whether I have any myself. I think we’re pretty clean. So if your character is all in order, you mentioned the second C, capacity. What does this term mean in this context?

Ian Ugarte (07:35):

This is about your ability to service your loan agent. Can you actually afford a loan? So you want to earn as much income as possible because in that way, that will give you more money. So before applying for a loan, try and trim some expenses, try and look at your last three months and cut some costs down so they can look at your bank statement and say, “Actually, they’re a handy little saver these people here.” Try and get rid of credit cards and minimize it maybe to just a debit card, because if you’ve got a credit card of $5,000, they we’ll look at it as a $15,000 because of the high interest rate. And you know, so many Australians hate paying tax.

So what they do is they write their income down and get their tax deductions as much as they possibly can, and then the bank says to them, “Well, you don’t earn enough money.” Or that I know from my father’s history, that, how much for cash, and those people that accept cash and don’t put it on the books, means that you’re not actually earning income. Even though you might have a $100,000 in cash, your income is zero. So make sure you got good income.

Adrian (08:37):

Can you do that one more time for us please?

Ian Ugarte (08:40):

How much for cash?

Adrian (08:44):

Very good. Anyway, let’s not get sidetracked. Finally, the last C is collateral. So when it comes to buying a home, what does collateral mean exactly and how do people get more of it?

Ian Ugarte (08:54):

Yeah. Collateral essentially is your deposit. How much income have you, sorry, how much savings have you got to put towards the house? Or how much can you extract out of a property? Or can you sell a car to be able to create the cash, to buy the property? So essentially, generally you’ll need 20% deposit, which means you’ll get an 80% loan. Now that only 80% loan, is known as a loan to value ratio. So that is 20% deposit, 80% loan to value ratio. So some banks will lend you more, obviously 90%, 95, and to [inaudible 00:09:26] today, we talked about a 98% loan. But you will need loan mortgage insurance to pay on top of that. That’s basically the bank saying, “We want an insurance company to back you, in case you default so that we don’t lose out.”

So people sometimes refinance other properties to grab that equity or their collateral to be able to get in. A higher LVR does give you a better opportunity. But like I said, I just don’t think that high LVRs for people that are not great with savings, should be moving towards that direction. Especially if interest rates start to go in an upward direction.

Adrian (09:56):

And I assume that a really good broker can help you put all of these things together. So do you recommend people go directly to their bank or to use a broker to help them get their three C’s in order?

Ian Ugarte (10:08):

Look, I think going to banks directly is a mistake. You really should be… When you go to one of the big fours, as an example, they’re more interested in getting your business and selling their product. When you go to a broker they’re actually looking across, amongst a panel and saying, “That’s a good loan for you right now. Not because of the interest rate, but because I know that you want to do a subdivision, so that’s the right thing.” Remember we talked about last week, the A team. The mortgage broker being a key person in your team, to be able to help you grow and get bigger and better in investments. So you really should be going to a broker because they understand your investment strategy. They’ll get the best deal for you, and they act on your behalf rather than the banks only concerned about themselves.

Adrian (10:55):

Very, very good. Okay. So that’s our five tips. So let’s have a quick look and a wrap up. And this is important for me, I want to get into the property market at some point. I’ve got to go back and watch this episode again. So we’ve got a graph I think, or a page there. So tick through these, and maybe what’s the most important ones? What do you reckon people are missing out the most here?

Ian Ugarte (11:14):

Yeah, I think let’s start with the four big ones here. Make sure your characters good. Make sure that you’re actually got no defaults against your name and that you look squeaky clean to the bank. Make sure you have great income, drive a Uber and [inaudible 00:11:27] vehicle in your off time if you have to get your income up. Make sure you’ve got a good deposit. The more deposit you’ve got, the safer you are, and make sure you’ve got the broker on your side. I’d suggest here that all of them are as important as each other. Essentially, like I said, at the beginning here, you want to make sure that you’ve got a stool with three strong, safe legs. If one of those legs is weak, then you’ll fall over. And especially after a few drinks Adrian.

Adrian (11:54):

Yes, very good. We’re going to grab a drink at one point as well. I want to hear that accent a few more times after a couple of beers. But just to finish, is there one thing in your mind where people fall down the most when it comes to loans or they just miss in a way, one mistake that you could leave us with?

Ian Ugarte (12:09):

Yeah. I think the financial strategy that people think. I think the schooling system should actually be teaching people how to be able to handle their finances so that they actually understand this so that this is actually part of the curriculum. And in that way they can understand their savings, they can understand their budgeting and then they can understand their spending. And the biggest thing that I could say to you, and as a tip, is when someone, understands their budget and how they work their money, that’s when a bank will say to you, “You’re it. You’re the ones that I want to choose and I want to give you money.”

Adrian (12:40):

Yeah. Very good. Very good from you. Okay. So to finish, tell us which website we should check out just in your accent to wrap the show for us one more time.

Ian Ugarte (12:48):

If you want to go the cheat sheet, you have to go to small is the new big, forward slash bigger home.

Adrian (12:54):

Oh my goodness. Incredible stuff Ian Ugarte. Enjoy your day. We’ll catch you soon, okay?

Ian Ugarte (12:59):

Thanks Adrian.

Adrian (13:00):

And just to repeat, Ticker Home presented by our great partners at Small is the New Big, who were on a mission to create one million affordable homes in the next 10 years, and help us all struggling with our housing stress. Learn more at sitnbdev.wpengine.com. Catch you soon.

May 10, 2021


Last week, we looked at the A-team you need around you to be a successful property investor. Today, I'll take you through the on-site A-team, and how having the right construction team can keep more profit in your pocket. Plus, how to create a detailed scope of works to keep your team on A-track.

Adrian Franklin (00:09):

Hey there. Welcome in to Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions that you need to know. It’s great, as always, to have my cohost, Ian Ugarte, co-founder of Small is the New Big. Hello, mate. How was your weekend?

Ian Ugarte (00:23):

It was awesome. Actually, just when you were introducing our most favorite man in the world, I actually went, “Oh, he’s talking about me.” But you were talking about Elon. I actually [crosstalk 00:00:33]

Adrian Franklin (00:33):

You were like, “Oh, I’m ready to go. [crosstalk 00:00:34] I’m ready to go.”

Ian Ugarte (00:37):

Yes. I binge-watched Ted Lasso, Beck, who we both know introduced me to the series on Apple TV-

Adrian Franklin (00:44):


Ian Ugarte (00:44):

And in her description, it’s like a big warm hug. It’s worth watching.

Adrian Franklin (00:49):

Oh really? I haven’t checked it out myself. Where can I watch it? What’s it on?

Ian Ugarte (00:54):

Apple TV. You can get straight on [crosstalk 00:00:55].

Adrian Franklin (00:56):

Apple TV. Right. Right. I don’t know if I have… That’s like the one I don’t have, but I’ll grab your account details after the show, Ian. Does that work for you?

Ian Ugarte (01:01):

No worries. You’re good.

Adrian Franklin (01:03):

All right. What are you looking forward to talking about today exactly?

Ian Ugarte (01:08):

Yeah. Last week we talked about our offsite A team. Today I want to talk about the onsite A team, how to put them together and how to treat them.

Adrian Franklin (01:14):

Very, very good. Ticker Home, presented by our partners at Small is the New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussie’s struggling with housing stress learn more at sitnbdev.wpengine.com. All right. I think we’ve got three trending talking points to get through today. What’s the first one?

Ian Ugarte (01:33):

Yeah. Elizabeth Redmond and Domain talking about a study that was just put together by the University of Melbourne and ArchiTeam. It shows that those houses that were designed by architects have a better increase in capital price over 10 years by 1.2% per year. Now that may not sound a lot, but essentially for every dollar spent with an architect, it will result in $11.40 return. So on a $1.2 million property, you’re talking about a $256,000 increase over that 10-year period.

Ian Ugarte (02:03):

Now, loans in the market have increased investor loans by 52.6% since the announcement of HomeBuilder, especially with the announcements of renovation. So the ArchiTeam chair has said that architects are seen to be expensive, but they are not given the design and adaptability of what the future holds for that house. I, myself actually design my own places, but I’ve had a lot of experience in watching a lot of architects do their jobs. So they’re worth their money.

Adrian Franklin (02:26):

Yeah, absolutely. I mean, that’s not a surprise, is it really? You want good quality stuff. Yeah?

Ian Ugarte (02:33):

Yeah, look, and it’s not just the quality, it’s how the house fits together and how it can change over time as kids grow older. And I think I’ve seen some awfully designed houses by people who think that they’re great designers. So I’d be very cautious.

Adrian Franklin (02:45):

Yeah. You sent through those photos of your parents’ house back in the day as well. I didn’t say it was awful. I didn’t say it was awful. Wasn’t that you?

Ian Ugarte (02:52):

Maybe that was architect design by an immigrant who came to Australia. You don’t know, do you?

Adrian Franklin (02:56):

True. At the time it was beautiful.

Ian Ugarte (02:58):

It wasn’t.

Adrian Franklin (02:59):

At the time it was beautiful. Yeah. Okay. What do we got next in the investment strategy that you wanted to touch on?

Ian Ugarte (03:05):

Yeah, this is Ritchie collapsing in the property investors today. Now this is actually a UK-based article. And I wanted to bring this in because usually the trending of what happens overseas comes to Australia. The Build-to-Rent model, so that is a model that New South Wales Government has actually just approved where they’re asking large institutional investors to put together large accommodation master plans or unit blocks. And they’re not allowed to sell them for 15 years. They must rent them out to the market in an affordable rate, but they get increased floor space ratio. So they can build more on less space.

Ian Ugarte (03:38):

Now the article goes on to say in the UK, this model has worked really well, where they compared someone who had £50,000, who invested in a unit and waited for time growth and had to deal with the tenant directly versus someone who would have lent the $50,000 to the institutional investments that got a return on their money, plus they got an upside of the increased value of the development.

Ian Ugarte (04:01):

So for me, what we’ve been talking in Ticker Home over the last many months is manufactured growth. So it’s the lazy way to manufacture growth. And as an outcome, you end up in a better return. Now a lot of developers are using what we call OPW, other people’s money. And when we get to that point, you start looking at offloading to a developer who’s finding it hard to get money from banks and using your money instead and getting a better return.

Adrian Franklin (04:27):

And finally, our tougher rules, something around tougher rules that we need to take notice of. There are so many rules in the world, isn’t there?

Ian Ugarte (04:36):

Oh, if only they took away a rule every time they made a new one.

Adrian Franklin (04:38):


Ian Ugarte (04:39):

I mean, that’s a Kerry Packer saying, wasn’t it? Lending’s going to get harder. We’re in a place where the reserve bank-

Adrian Franklin (04:46):


Ian Ugarte (04:46):

… has seen an increase of investor loans of 12.7% for the last month alone, first-time buyers are down, but the RBA has already announced and suggested that they’re going to leave interest rates on hold for at least two or three years. Now, I think they made a mistake by jumping on that announcement. So now we’ve got this increased market spending, increased loans happening, and the RBA and APRA are worried that they’re going to need to start curbing the loans so they can get back into control of the market.

Ian Ugarte (05:14):

Now that’s considering that government was actually going and had announced that they were going to make loans easier to get. That was supposed to be announced in March. And we haven’t heard a thing about it. And it looks like they’ll just shelve that. Jerry Harvey has suggested that if they start changing the loans and the ability to get loans, that that will affect the marketplace in other ways. He says that every time the loan market is good, it means spending in his shops are good too, as well. So will APRA and RBA come together and make a change? What’s it going to do to the rest of the marketplace?

Adrian Franklin (05:43):

Okay. Let’s get into our main conversation. Of course, last week, as you mentioned, we were talking about choosing your A team and who makes up your offsite team. So this week we’ll talk about those who are your onsite A team, who are tasked with getting the job done exactly. So what’s the first step property owners should take when it comes to putting together their onsite A team.

Ian Ugarte (06:04):

The onsite A team starts with a document called the Scope of Works. So the Scope of Works includes all the finishes, the fixtures, the fixture locations, the Australian standards that need to be followed by the tradies, all the way down to who disposes the rubbish and cleans up the site. The analogy I would use, it’s like baking a cake. You have the recipe is the scope of works and it has all the ingredients, so the materials that need to go in the job, plus all the instructions, the trades and how they have to put it together. So make sure that all your trades understand exactly what they have to do. And that’s what the Scope of Works ensures that they have that understanding of.

Ian Ugarte (06:42):

Interesting, we’ve talked about tradies, not being great at pricing and quoting. Literally some traders will take the Scope of Works and write numbers next to their jobs and tally it at the bottom and give you that piece of paper with the quote on the bottom. Most of the time a designer or an architect will put your Scope of Works together. And the designer and architect is actually the only link between your offsite team and your onsite team. They’re the ones that actually transfer the information backwards and forwards and one of the key people that we’ll talk about today.

Adrian Franklin (07:14):

Okay. So once the Scope of Work has been mapped out by the designer or the architect, who are the experts who should make up the onsite A team exactly?

Ian Ugarte (07:23):

Yeah. Let’s start with your project manager. Your project manager is the one who makes sure everything runs. You’ve got the builder. And most of the time, the builder is your project manager. Then you’ve got the three essential trades on site. They are the carpenter, the plumber and the electrician. And then the last part of your onsite A team is actually a certifier, which comes in and helps you out. We’ll talk about him in a second.

Ian Ugarte (07:50):

Once you have your onsite team, you’ve got to treat them like your bestie. So it’s not your BFF. It’s your BTF, your best tradie forever because they are the ones that are going to make you the money. They are the ones that are going to work with you and they have to become your friends. I’ve never seen a tradie who doesn’t get on with their own, they continue to come back. And I’ve got an awesome A team that just do some amazing work. And there’s some shots of them there. There’s a shot of me actually doing real work instead of just talking. So yeah, look, really trades are the number one thing that you need to get on with and become best friends with.

Adrian Franklin (08:31):

Okay. So let’s take a closer look at what each one of these experts does exactly and what they can bring to the table to help make a renovation run smoothly. Starting with the project manager or builder, what do they do and what sorts of questions should people be asking before actually appointing them?

Ian Ugarte (08:47):

Yeah. Your project manager, they’re the ones that look after your budgets. They coordinate all the trades to be on site at the right time so they’re not overlapping and getting in each other’s ways. They work out schedules. They work out the orders of the materials that need to turn up on site, when they need to turn up on site. And usually they’re forward-forecasting when that has to come.

Ian Ugarte (09:06):

It’s sort of like a mother in a household who organizes everything and then has to do her own job as well, especially if they’re builder-carpenter. So the builder is like the mama bear in the house and the tradies are like the kids that they need to be able to keep in control and make sure that they’re at the right place, right time doing their things. A quantity surveyor can sometimes project manage for renovations and builds, but generally it’s going to be the builder.

Adrian Franklin (09:29):

So let’s talk now about trades people. There’s often people talking about or news reports regarding the great tradie shortage at the moment. So is this actually a thing? And what sorts of trades are most important do you think for a renovation that’s designed to manufacture growth, which we’re always looking for in the property?

Ian Ugarte (09:48):

Yeah. There is a huge shortage of tradies at the moment when it comes to a perfect storm of the HomeBuilder grant, and then we’ve got the low interest rates. So COVID came along, people are sitting at home thinking, well, I should renovate my house or do something with my property. So they’ve now initiated and we’ve now got this undersupply of materials, undersupply of tradies, and then added to that, we’ve got some licensing issues around the country. Now you should be able to transfer your license from state to state. I hold my builder’s license in five states. I’ve got one state that’s taken me 18 months and I still, haven’t got my full builder’s license in that state by transferring it from another state. I won’t mention what state it is, but it’s Victoria. And from that, that means that we’re not getting enough tradies out there.

Ian Ugarte (10:32):

So your carpenter, very versatile person, puts framing together, does cabinet work, can do roofing, can fit off, can screw off towels and towel rails and all the bits and pieces. Anyone that you need to do the fiddly bits of hanging doors and putting door handles in, that’s the carpenter. Then you’ve got your electrician. Your electrician does all the wiring obviously. They’re good for advice about where you should power outlets. They do ethernet cabling. They do television cabling and air con. And more importantly, the biggest thing that’s happening lately in sustainability is solar panels. And most of them are now into the solar panel industry.

Ian Ugarte (11:09):

Your plumber, I’m a plumber, I’m a builder. The plumber’s basic job is to make sure it flows downhill. And if it doesn’t, they’re a bad plumber. They look after solar hot water, look after water tanks, the irrigation. They’re great with giving you advice on where you should be putting things around your bathroom. I’ve got a basic rule that you should never be able to walk into a bathroom and see a toilet. It should always be behind a door so that you’re not walking and looking at the throne. The builder project manager is usually a carpenter who’s done some extra studies and gone on to become that project manager.

Ian Ugarte (11:46):

But me, as a plumber, I didn’t qualify to do because you need to be a carpenter, concreter or brick layer in cert three, and then get your cert for in plumbing. But for me as a plumber, I had to actually do my cert four and my diploma in building to be able to get my builder’s license. But in that course is all the project management and they are awesome to help you out.

Adrian Franklin (12:05):

All right. We’ve got a couple of minutes to go. So we’ll tick through these last few very quickly. The final member of the A team that you recommend for people is the certifier. I have no idea who this is. Who is this and what do they do?

Ian Ugarte (12:17):

So in the old days, you’d go to counsel, you give counsel your plans and they would stamp them and approve them over a four-month period. Then you would ring the council inspector. They would come out and then inspect all the parts of the project as it was being built. They then created a private certification process where you can go to a private certifier instead, you can give them their plans. I’ve had certification approved in two days, same amount of documentation. Then that same certifier comes out to my project at different points. At the beginning, to inspect slab, [inaudible 00:12:46] bits and pieces.

Ian Ugarte (12:47):

Now these are people that are privately employed to themselves. It’s their own business. So they want to be able to get approvals through as quick as possible so we’re not stuck in the council regime of let’s wait four months. You can get them done quick. Now, the thing with the certifier is they collect all the documentation at the end of the project for you. And they hand it to council and say, “Council, Ian has just done a project. It’s finish, done and dusted. Here’s all the paperwork. It’s all filed. And if you ever need to ask any questions, it’s in that file. Thank you very much.” They best certifiers in the world help you advance your projects by coming with outside-the-box ideas. And that’s what I really love about private certifier.

Adrian Franklin (13:26):

And finally, we’ll get the best five tips up on the screen now for property success. You can also touch on whether property owners should get involved as well, just to wrap us up.

Ian Ugarte (13:39):

Do an owner-builder every five years, but really if you’re an owner-builder, you should be onsite helping the tradies by just cleaning up, buying them lunch or going and picking up lunch for them so they can stay on there. Again, you just want to be the mama bear. The five top tips: Assemble your onsite A team and keep them as friends. Finalize the Scope of Works so every detail is in there. Make sure you set your budget and don’t go over it. Renovation-for-growth experts, that’s what we want to make sure that people around you are helping you grow. And embrace your tradies. Literally give them a hug and buy them a coffee in the morning. They’ll love you for life.

Adrian Franklin (14:09):

True. If they can be your mates, I think it’s going to be a great end result. You are the man, Ian Ugarte. Great to chat every Monday. It’s a good way for me to start my weekend and for everyone out there. Enjoy your day. We’ll talk really soon. Okay?

Ian Ugarte (14:21):

Thanks, mate, from the favorite person in Australia.

Adrian Franklin (14:23):

There you go. As you say, as you say. No, no, he’s very close. He’s very close. Ticker Home presented by our partners at Small is the New Big who are on a mission to create one million affordable homes in the next 10 years and help Aussies who are struggling. Learn more at sitnbdev.wpengine.com.

May 3, 2021


Thinking of investing in property? The first step to success in property, is having your team of professionals at hand – this is your ‘A’ team who are going to be there supporting you through the ‘A – Z’ of your property journey. Learn who you should have in your off-site and on-site teams and what to look for in your 'A'-Team!

Adrian Franklin:

Hey there, welcome to Ticker Home, presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with the stress that is housing stress. Learn more at sitnbdev.wpengine.com. There’s only one man to chat with us. I wonder what he does on a weekend. He must look through the newspapers and just peruse the housing and property market. Ian Ugarte is back, co-founder of Small is the New Big. Hello there, mate. What do you do on a weekend? You must love the weekend newspapers, right?

Ian Ugarte:

I do. I do like looking through properties and making my discussion mind. What’s the best thing that’s happening in the property markets… And it’s always good to be kept up to date by reading what’s out there.

Adrian Franklin:

Very, very good. Let’s get straight into it. I got three talking points before we get into our main conversation. So what’s trending for you first up today?

Ian Ugarte:

Yeah, this is ABC news, there’s is a guy called Phillip, who refused to give his second name, sold his own home in Fairfield. And he said that the reason he did that was because he read three books and he had an aversion to paying someone to do something he could do. In his mind, all you had to do was just got to put an advertisement online, show the property and then negotiate. And he says, if he could do it, then anyone else can do it. Now, I don’t necessarily agree with that.

Ian Ugarte:

Antonia Mercorella who’s the REIQ president in Queensland who did an outstanding job during COVID, I have to say she did really well to inform the public about what was going on, she said basically that an agent is a professional that has a requirement like a doctor and a solicitor to make sure that their client is looked after and that they get the best price. And an agent also has off-market buyers that are looking for stuff, and… When I look at this, I think it’s a little bit crazy to sell your own property, I think your job is to find the best agent. I mean, just because I’ve seen Grey’s Anatomy doesn’t mean I should do my own knee reconstruction, I should find a specialist for that. So the skill is to find the agent not to try and bypass them.

Adrian Franklin:

Please don’t, please don’t. Are you a Grey’s Anatomy fan? Just quietly or you just thought of that off the top of your head?

Ian Ugarte:

No, no, I’m not. I just know that they do like medical stuff.

Adrian Franklin:

Very good. It’s not a great show. I mean, it’s not a great… It went for a very long time. I’m not sure why. That’s fine. Hey, let’s talk about the idea of selling now and buying later. Is this a good idea or not so much?

Ian Ugarte:

Yeah. Liz Hobday in the West Australian, she’s saying that it’s not holding at the moment. So to sell first and buy later is normally a strategy that would work when it’s a seller’s market, but right now it’s a buyer’s market. We’ve got some very aggressive sellers out there, rapid price growth that’s affecting sellers who need to rebuy, so they’re actually not selling. So sellers who want to sell, and I’ve been talking to the agents lately and they’re understocked. And the reason they’re under stocked is that someone needs to sell so they can buy something else, but they’re not selling because they’re worried that the market will move so quickly that they can’t get back in. So it’s a combination of high demand and low interest rates, and it’s creating the perfect storm.

Ian Ugarte:

If I was looking at selling, I’d be looking at selling with conditions in place, subject to me selling this property so I could buy the other one, maybe a longer settlement on the one that you’re going to buy. You certainly want to try and stay away from bridge financing, cause that can be really damaging. Lockdowns have certainly increased people’s wants to buy something else because they’re now looking at the home office space. So I just think right now it’s just a vicious circle of people not wanting to sell, because they’re not sure if they’re going to buy, and I don’t know what’s going to happen in the markets. I’ve seen it once before in ’85 to ’88, and it’ll only last a little while, but it’s certainly not a buyer’s market at the moment.

Adrian Franklin:

And our final training talking point before we get into our main conversation, you wanted to touch on self-managed super funds, something going on here.

Ian Ugarte:

Yeah, there’s Tony Zhang who is from SMSFAdvisor.com.au, he’s saying that the ATO is putting a lot of scrutiny on self-managed super funds at the moment and doing reviews on audits. So they’re making sure that everything is done with a hundred percent compliance. So what they’re looking at are things like making sure that all decisions are documented, that they’re managing their liquidity risks, that there is diversification within the fund, and that they’re not selling assets to related parties undervalued, and making sure that poor documentation is not there. So for me, get advice consistently, make sure you get some private rulings. If you’re looking at doing anything within your self-managed super fund, highly regulated area, and you really have to be careful if you’re going to be doing stuff in that, especially when it comes to property.

Adrian Franklin:

Okay, let’s get stuck into this today. Today, we are going to talk about needing an A-team. Now, firstly, what is an A-team exactly when it comes to property and why are they so important do you think?

Ian Ugarte:

Well, you made to have a team of trusted specialists around you in property and that’s both onsite and offsite. So today we’re looking at the offsite team, one person can’t do everything and one person can’t know everything. So you need those trusted advisors around you, trusted specialists that think of all the things that are really important to you. So for example, last week, we talked about how a builder can save you a lot of time and a lot of money on a job site by managing the process for you. So the same thing with your A-team, it’s going to be really important. So before you even get onsite, you need to make sure you’ve got an offsite A-team.

Adrian Franklin:

So giving your vast experience, as we know in property, who makes up the offsite A-team and why?

Ian Ugarte:

Let’s look at the four majors. First, we’ve got a real estate agent, we’ve got our finest finance or mortgage broker, our self-managed super specialist and our lawyer. Now, when it comes to the lawyer, a lot of people go out and they do property transactions and they use a conveyancer. A conveyancer is not a lawyer. So a conveyancer doesn’t understand the difference between putting a with, a you, a but or an if inside a contract and that can change the contract completely and can cost you hundreds of thousands of dollars. So a good lawyer will help you with buying contracts, with selling contracts, with structure set ups, they’ll give you a building contract advice. Lawyers can save you a lot of money by not going down the costly mistake routes. So I see people look for lawyers and try and save money on lawyers. And I say to that… If you want to find out how expensive an expensive lawyer is, then go and find a cheap one and see what it’s going to do to you in the future, it could cost you hundreds of thousands of dollars.

Adrian Franklin:

Yeah. No one wants a cheap lawyer. You don’t. Yeah, we don’t even want to go down that path really. Anyway, you have a cautionary tale about buyer’s advocates or agents, and you’re recommending turning your selling agent into your buyer’s agent. What do you mean by this?

Ian Ugarte:

Yeah, there are selling agents and they act on behalf of vendors. And then there’s buyers agents or buyers advocates that act on behalf of purchases. And to me, a buyer’s agent is a conflict of interest because they get paid by finding you a job. Now I’ll be open here, we do have a buyer’s agency, but for me, our buyer’s agency means that I have to go out and find a property for a client that meets a certain return on investment and that makes sure that it has the right floor plan to do the co-living micro-apartment strategy that we specialize in. So there’s someone that goes out there and just says, “Well, I’m just going to find a property for this client so I can get paid”. And so if you engage a buyer’s advocate or buyer’s agent that is 400, 500, 800,000 dollars at a bag of trust that you’re putting in that person’s hands and they’re going to get paid to find you anything. So if they’re wanting to make a quick buck, they’ll just go out and find any property for you and you’ll buy it because you’re trusting in what they’re going to do on your behalf.

Ian Ugarte:

So for me, what I do is I actually turn my sellers agents into a buyer’s agent. I have a list of agents in an area that I’m looking at purchasing in. I will call them and email them, and it will be a group of them, every week or two weeks. And I will be giving them my golden goose or my unicorn. I want a corner block that’s 800 square meters that can be sub-dividable, which means that it’s in a special zoning so that I can actually get a duplex on each block or something similar to that. Now, when you start contacting those selling agents and they don’t have that unicorn or golden goose, they will go out and they’ll look at a map and they’ll start door knocking on your behalf to get a client so that they can sell you that property. Now, when that client sells the property to you, you’re not paying that selling agent, the owner is paying that selling agent. So effectively, you’ve got a free buyer’s agent. And that strategy alone has got me into multi-million dollar deals in properties all over the country in the last 30 years.

Adrian Franklin:

With so many lenders on the market now and banking and non-bank lenders being so competitive for the mortgage dollar, you say that the broker is usually a severely underutilized part of the A-team. So why are mortgage brokers so vital to not just one deal, but the entire property portfolio?

Ian Ugarte:

Yeah, not all lenders are created equal and neither are all brokers. So you need to have a broker that understands what you’re doing and they’re there with you for the long haul. And preferably a broker that actually invests in property themselves, because then that way they know and understand what you’re trying to achieve. So you don’t want a broker interested in the trail commission. So that is a broker that just goes out, finds one client, and then wants the next client, next client… They’re one deal clients and they’re not really concerned about your strategic direction. So if you’ve got a broker that’s looking strategically at your next purchase every time you buy, then they’re looking at your current deals, your current portfolio, what the best product is that suits your needs right now.

Ian Ugarte:

So most brokers will go out and find a product that’s the lowest interest rate. Maybe that lowest interest rate product doesn’t allow you to split your property so that you can manufacture growth, which means that you’re now going through another process to then go in through with another mortgage broker to get to that point. And they’ve got lots of clawbacks. So if your broker is not talking about, “The reason we’ve chosen this product is because this line of credit, and that allows you in 12 months time to be able to refinance”, if they’re not talking in that manner and you’re not hearing that, then you’ve got the wrong broker. So stay away from the broker that’s fixated on the trailing commission and just getting more clients through the door. You want one that sticks with you for your next deal and the deal after that and the deal after that. So the closest partner you can have in property journey is a really good, solid mortgage broker that understands the big picture and exactly where you’re aiming at in the longterm.

Adrian Franklin:

And Ian, just finally many people with self-managed super funds opt to buy property through their super fund. But your advice here is all about getting expert advice. So why is buying property with your superannuation so complex?

Ian Ugarte:

Yeah, this is a highly regulated area and if you’re an unqualified person giving advice about self-managed super funds, you can get in real strife. We’re talking jail time and neither you nor I would want to go to jail. We’ve heard some bad stories about it.

Adrian Franklin:


Ian Ugarte:

Nope. So, like me, I’m a property expert, but I’m not a super fund expert. So with anything that I talk about, as soon as it comes to super… And I’ll say it right now, this is not advice. This is something that you need to go to a professional expert around. Now, there are super funds, self-managed super fund experts and they offer all services. They can help you set up your super fund, you can have one to six members in a super fund so that they can go out, and they can also help you with the compliance and the audits that must be done every year.

Ian Ugarte:

So anybody who’s done really well in business and has the ability to create their self-made super fund, you may be considering property in that fund. Again, not advice, but the first call you should make is to that expert. But if you get it wrong, you can lose a lot. And after all, this is money that you need to retire on. So getting private rulings is really important along the way to make sure that you’re not doing the wrong thing. I’ve seen people lose half their super fund in penalties overnight, simply because they did something slightly wrong. Now in Australia, six out of 10 people surveyed have actually said that they don’t believe they’ve got enough money in their super fund to retire on. So the neutral position is about a million dollars or 20 years of living after you retire. Now, wait till you hear this one, the industry data shows that less than five out of 1000 super funds have more than a million dollars in it. That means 995 people are undervalued in their retirement. That’s incredible statistic.

Adrian Franklin:

It is and it’s why it’s good to talk about all of these things and all the great advice that you have to give. Just finally, let’s go through our top five tips for property success, just to finish up.

Ian Ugarte:

Assemble your A-team, make sure you’re not going to them on price, make sure you’re going to them on the service they provide. Make your selling agent your buyer’s agent, it’s the strategy that’s helped me over the last 30 years. Be aware of buyer’s advocates that are only going to get paid by the fact of finding you any property. Lean on your mortgage broker, especially one who invests themselves, get expert advice for your self-managed super funds, and as always, Adrian, sitnbdev.wpengine.com/tickerhome. And we’ve got cheat sheets for you on today’s segments and previous segments that we’ve done in the past too.

Adrian Franklin:

Awesome stuff. So much good advice there for such an important topic right now, property, as we know in Australia and around the world, but particularly here. We need to know more about it. Hey, great to talk. Enjoy the rest of your day. We’ll talk really soon, okay?

Ian Ugarte:

Thanks Adrian. And thanks for having me again. I really enjoy these sessions.

Adrian Franklin:

Of course, as do I, as do we all. Ticker Home presented by our partners at Small is the New Big who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress and it can be stressful. Learn more at sitnbdev.wpengine.com.

April 27, 2021


What to do when your builder doesn't perform, or worse still - goes broke! Find out how to scrutinise your building contract, and what you should do if you are about to build a new home or extension. Plus, find out whether the Federal Government's HomeBuilder Grant applies to you.

Adrian (00:09):

Hi there. Welcome to Ticker Home, where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to have my cohost, Ian Ugarte, co-founder of Small Is The New Big. Hello Mate, good to see you.

Ian Ugarte (00:23):

Hey, how are you? I missed you last week, so it’s nice to see your smiling face again.

Adrian (00:28):

Thank you. I was kind of hoping you’d say that.

Ian Ugarte (00:34):

Well, with the Oscars coming up, you’re going to be nominated for the acting award, you may as well be looking good.

Adrian (00:40):

Very good. You’re the second person that said that to me this morning, so I don’t know what’s going on with the Oscars. I’d love to win one though, but it’s never, ever going to happen. Anyway, what are you looking forward to talking about today, exactly?

Ian Ugarte (00:52):

Yeah, today, the do’s and don’ts of hiring a builder and the necessary information around contracts. So I myself don’t actually do any building, but I hold my builder’s license in five states. The reason I do that is just in case a builder goes broke on me, I can actually take over and finish the build.

Adrian (01:09):

All right, let’s get into it. Ticker Home presented by our partners at Small is the New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at sitnbdev.wpengine.com. All right, Mr. Ugarte, we’ve got three trending topics today. What do we got first?

Ian Ugarte (01:28):

Yeah, Glen Norris in the Courier Mail has got an article on a Queensland building company called Planbuild. They’ve gone into liquidation. Now, this is a project home company that won awards in 2015. Last year, they built 51 homes. This year alone they started 34 builds in a number of different contracts put in place and that is a recipe for disaster for cashflow for builders, because ramping up too quickly really puts them in a lot of problems. There’s a lot of people that paid deposits for houses that haven’t even been started yet, so Planbuild had to drop their prices to get more market share, but then there was increase to labor and materials, and that has really hurt them.

Ian Ugarte (02:07):

The QBCC is actually looking after the matter, and they’ll exclude any directors from being able to hold a license or a supervisor in the next three years. It’s not great, regardless of what side of the coin you’re on. If you’re the consumer and you’ve had a build started or not even started, you’ve lost a deposit and hopefully insurance can help them out there.

Adrian (02:26):

Homebuilder extension has taken place to ease construction bottlenecks. What do we need to know here?

Ian Ugarte (02:33):

Yeah, Ted Tabet, the urban developer has indicated the $25,000 builder grant, that home builder grant that the federal government produced last year, it had to have a contract signed by the 31st of December in 2020, to be able to use it for new builds or some pretty substantial renovations. They extended that to March 31 at a lower rate of $15,000, and the problem with all of this was that you had to start the project within three months of that contract date. That’s now been extended till September, 2022.

Ian Ugarte (03:04):

Now, I personally was not an advocate for the home builder grant. I didn’t think it would get taken up and I thought the money was badly spent. However, the UDIA has just done a report. 121,000 people have taken up the grant. That’s costing the government $2.5 billion, but stimulating the industry by $30 billion. I reckon that’s a great outcome. UDIA said that 750,000 new jobs have been created. There’s doubling of Greenfield land sales, so, that’s 53,617 new pieces of land sold. And new standalone home builds have increased by 27%, so, that 34,313 new builds.

Ian Ugarte (03:41):

The MBA and HIA are predicting an easing of our pricing on the new Greenfield estates. As you know, Adrian, I don’t like them anyway, but that’s very predictable considering the FOMO that’s happened in the last year.

Adrian (03:53):

I do know that indeed. Just finally, our final trending topic, we’re looking at Sydney and a glamorous couple had put together a renovation just next to the harbor. Of course, they have. Tell us more.

Ian Ugarte (04:05):

Yeah, it’s really interesting what you can do in property and when you think outside the box. So this is Sydney artist, Deena Broadhurst and her partner, Max Shepherd, who’s in the building trade. Not your typical renters, they found a property that was derelict and couldn’t be moved into it. It actually was unlivable. It was in Vaucluse, of all places. They contacted the owners and said, “Look, if we went in there, could we renovate it and then have a reduced rent or a longer condition so that we can stay in there for longer.”

Ian Ugarte (04:35):

The owners couldn’t afford to fix the place up, so she did a two week renovation and, really, what a great outcome that they had out of this. They’ve now got a Vaucluse home, which she also uses as her artist studio and she can run exhibitions out of there. And you know, again, in Vaucluse.

Ian Ugarte (04:49):

Now, I don’t know if you know this about me, Adrian, in the last 30 years, over hundreds and hundreds of property deals, I have never had a standard six week contract. I’ve always had something different in the contract and that’s how you operate in property. If you want to do the standard old way, it’s going to take you a long time. But more opportunity opens up, when you think outside the box.

Adrian (05:09):

There you go and I know you like that thinking outside the box. That’s one of your things, right?

Ian Ugarte (05:14):

Absolutely. That’s what I pride myself on. Being able to think of a way that makes everyone win out of the situation and it makes it work.

Adrian (05:22):

Very good. Let’s get into our main conversation. So of course, over the past few weeks, we’ve talked about maximizing people’s property investments by manufacturing growth. So that’s including renovating the property, which we touched on last week. So if someone decides to renovate their property, is this something that they can do themselves or do they need to engage a builder to do this for them?

Ian Ugarte (05:43):

Yeah, even though the do it yourself shows make it look like it’s simple, the reality is, its very different. You wouldn’t go to a GP for neurosurgery and that’s why I’m saying attempting building work is not a good option if you’re not a professional. A cosmetic renovation might be okay, but if you need to pick up a power tool and you’re about to see this, and this poor fellow that’s now been electrocuted, you really should have a professional. So gas, power, structural, you really have to make sure that you’ve got the right people in place.

Ian Ugarte (06:14):

So for me, engage a builder. It’s cheaper compared to your time cost, your error cost and potential injury or death. And added to that with a builder it’s far less stressful, you’ll have a project completed much quicker and you’ll have much better results at the end of the day, as far as finishes are concerned.

Adrian (06:31):

So, if they do need a builder, where do they start? Firstly, how do they find a good one, because that’s what we want. And then how many quotes should people get before they actually make the selection?

Ian Ugarte (06:42):

Yeah, look, we’ve discussed this in the past and there’s nothing better than asking your friends for recommendations or going onto your local Facebook or social media community pages and saying, “Hey, I’m looking for a good builder or a good Sparky,” and you’ll get lots of information out of that. You might contact your MBA or your HIA office and say, “Who are the local members that live in my area, so I can actually find a builder.” Do a license search, an asset search. Maybe the MBA or HIA membership is important, too. Then once you do that, get some quotes.

Ian Ugarte (07:12):

Now you may be happy with one or two quotes, but you need a minimum of five quotes. Now this is going to be really important that you understand this, agent and the people listening and the viewers listening right now. To get five quotes out of any trade, you’re going to have to talk to 20 to 30 different builders or tradies. Now tradies are notorious the for not getting back to people and right now with the time delays and the busy-ness that they’re in because of the construction industry being at a high, it’s going to be even harder.

Ian Ugarte (07:42):

So, you shouldn’t get just one quote. You should make sure that you spend the time to get those five and I can’t stress it enough. By getting five quotes, you’ll get a better feel of the builders. You’ll compare apples with oranges, unfortunately, because the quotes will come back and they’ll all be different. So what you need to do is create a matrix. What’s included with this builder, what’s included with that and what’s excluded. Go back to each builder and make sure that they include what other builders have included. That way you can compare apples with apples and you’ll know who to choose.

Adrian (08:13):

And word of mouth would be good when it comes to quotes and dealing with tradies, right? Like if your friends have had a great experience, reaching out to them.

Ian Ugarte (08:21):

Yeah, absolutely. I mean, word of mouth is what stops you using from a lot of builders and trades, as well, because your friends go, “I had a horrible experience with that person.”

Adrian (08:32):


Ian Ugarte (08:32):

But when you go asking, you say, “Have you had a good experience?” That’s when it really has a great outcome, because you know that there’s a vested interest in this trades person coming along and helping you out because they got recommended by someone else. And a lot of tradies don’t even advertise. The good ones, never have to advertise.

Adrian (08:48):

And then I guess it’s down to contracts, but you say that not all contracts are created equal. What do you mean by this and how many different types are there out there?

Ian Ugarte (08:58):

Well, there’s actually nine different contracts and you can mix and match a lot of them. I only suggest one of them. But when you’re looking at a contract, you have to make sure that the costs are fixed as much as they can be. What’s included, what’s excluded, what’s your prime cost. So what are they allowed for tiles and toilets and bits and pieces like that? Your start dates, your finish dates and penalties if they go over time. Now it’s the unknown cost and variations that get the clients.

Ian Ugarte (09:23):

Now I built a property just up the road here and one of my talent that works in my office two doors down, built exactly the same type of property. I had no problems with groundworks. She had $70,000 worth of groundworks that weren’t included in the contract. So, you’ve got to be really careful. And all of this information’s in our cheat sheet this week at sitnbdev.wpengine.com/tickerhome.

Ian Ugarte (09:45):

But out of the nine different contracts, I suggest only one and that’s the turnkey contract. That is, that you hand the site to the builder, the builder takes over and you’re not allowed on site unless they invite you in. They call you at the end and they say, “Hey, I want to do a handover.” You meet them at the front gate. They literally hand you a set of keys. The landscaping’s done, the painting’s done, the towel rails are done. You turn up, you go to the front door and you literally turn the key and the place is finished. Now, I would do that for the first five build contracts, so that you’ve got an understanding before you looked at any of the other eight contracts. Just make sure that you’re protected with a fixed price and then you’ll be right.

Adrian (10:24):

And do the requirements of the contract, so they vary from state to state because of course, some people might have properties across different states. How on earth do people keep up with these differences?

Ian Ugarte (10:35):

Yeah. It’s almost impossible to know all of the contract rules around every state. And that’s where you lean on your builder or cross check with your local building authority. Just because you had a contract in Victoria and you’ve built over there, you’ve done a sea change to Queensland, doesn’t mean it’s going to be the same type of contract. In some states, $3,300 is the amount where it kicks in, where you have to have a contract. So again, the local government authority was where you need to look at it or consumer affairs for the local state. They have some really awesome websites with some great FAQ’s. And as always, you should get a property lawyer to overlook a build contract before you sign it. Spending $1,000 or $2,000 with a lawyer could save you hundreds of thousand dollars on the build.

Adrian (11:21):

And just finally, I guess it comes down to budget, as well, that’s pretty important. So what’s the simplest way for people to work out how much to spend with their builder when carrying out the renovation?

Ian Ugarte (11:32):

Yeah. Again, it’s a case by case decision. It’s not a matter of saying, “Well, you spend $50,000 or $100,000 dollars.” It’s always about the end value of the property. We’ve talked about this a little bit in the past. There needs to be an uplift of the property and I always suggest a 20% uplift of what you’re spending. So the best way to do that is to research at domain.com or realestate.com. Go into the sold section, look for properties that are similar to yours, right?

Ian Ugarte (12:01):

Example, my property is worth $500,000 today, renovated properties in the area are $600,000, that’s $100,000 difference. Don’t spend more than $80,000, otherwise, you’ll be overcapitalizing and being emotional. If you want some rough indicators of costs for renovations, $15,000 to $20,000 for a new kitchen. $10,000 to $15,000 for a new bathroom. As always renovate to the top of the middle of the market, that’s where the majority of buyers and renters will be looking for properties. But with every property, as I said, it’s a case by case basis. It’s all based around numbers.

Adrian (12:32):

All right, let’s tick through our main key points to remember when hiring a builder just to finish. What have you got for us here?

Ian Ugarte (12:40):

Make sure you scope the job. If you take a scope of work, show your builders of what you want, then that’s going to make it easier for them to quote. Make sure you broaden your search and know where you’re going to be looking for things that you want to put into there. Always read the fine print of contracts. It’s really, really important of what’s not included and what is included. Use your online resources and government sites for understanding about contracts. And as always do your numbers. All of the cheat sheet that we’ve got for this week is at sitnbdev.wpengine.com/tickerhome.

Adrian (13:09):

Great stuff, Ian. Good to be back. Hopefully you enjoyed me being back in the hot seat. Always good to talk with you and I always learn something new. So thanks for your time. We’ll talk again really soon.

Ian Ugarte (13:20):

No worries. And I’m rooting for you at the Oscars.

Adrian (13:23):

All right. Watch closely. You’ll never see me.

Adrian (13:25):

Ticker home presented by our partners at smallisthenewbig, who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. So, learn more at sitnbdev.wpengine.com. Catch you guys really soon.

April 20, 2021


The tiny house movement is as popular as ever, but can you actually finance your tiny house build, and are they even legal? We look at the current state of play around Australia, and how investors can help solve the housing affordability crisis by converting single-family homes into co-living micro-apartment properties.

Jackson (00:09): Hello, and welcome to Ticker Home where each week we will dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to have cohost, Ian Ugarte, he’s the co-founder of Small Is The New Big. Hello, how are you going?

Ian Ugarte (00:26): Good. Well, thank you, Jackson. Hope you’re well.

Jackson (00:28): Yeah, I am. Thank you. What are you looking forward to today? I believe that the tiny house movement has got your attention.

Ian Ugarte (00:36): Yeah. Look, today we’re going to be talking about large living, but actually making smaller spaces to get a better outcome out of life. And yeah, tiny houses, this is an article by Heather Shearer and Paul Burton on The Conversation. Tiny houses took off about seven years ago and the talk is huge. There’s a lot of people within the tiny house fraternity saying that this is the fix to the housing problem, but in seven years, there’s not many people actually living in tiny houses.

And a few reasons behind that. Firstly, plot planning laws don’t allow it anywhere in Australia, there’s no finance options to be able to finance a tiny house because you’re literally talking about a house on a caravan base, and then the cost to build these are about $3,000 a square meter when normal building costs are about $1,100 a square meter. So research is showing that 90% of the tiny house residents want to leave in a little community based outcome where they share veggie gardens, et cetera, et cetera. But again, we’re trying to advise councils around the country on how we can help this out and actually get a tiny house movement started for real, rather than just a conversation.

Jackson (01:39): Can you tell me about the North Perth Dollhouse? I believe this has been designed to demonstrate how small houses can be livable, but without needing to compromise lifestyle.

Ian Ugarte (01:50): Yeah. This is a young couple, architect Laura and her husband who’s a designer, his name’s Jakub, which is a foreign way of saying Jacob. And they’ve built themselves a little Perth Dollhouse is what they’ve called it. It’s on 174 square meters of land. It’s a three bedroom, two bathroom. The bottom floor, 50% of it is taken up by the garage. But that garage is also adaptable because it joins with the living space in the backyard. So if they want to have a party, it can mean that you can open up the space by removing the cars. There’s no main bathroom, there’s only two bathrooms and they’re both main bathrooms. So ensuites are a waste of space. This is a really great outcome of showing how you can use space with an architectural design, really close to the city for those people that like to eat out or like to be part of the lifestyle that is the city. And they’re just about to have a child. So they’re going to be able to test whether this actual little doll house suits their needs as a family as well.

Jackson (02:47): And to our third story that’s trending on Ticker Home this week, NewsCorp has pitched in to rebuild fire effected communities. Tell me more about this.

Ian Ugarte (02:56): Yeah. This is Rhiannon Down on The Australia, she is basically writing about the $3 million that’s been handed out to charity by NewsCorp through the NewsCorp bushfire fund. Amongst the grants is $25,000 handed out to a charity called Container of Dreams. What they did was they built themselves a shelter so they could build smaller houses for people that really needed housing at the time of the bushfire. So small housing bushfire housing has helped out all those people that have suffered, but it’s happy to see that these people that have suffered floods, fires, and droughts are actually getting an outcome from NewsCorp, and I’m a big fan of helping people out when they’re in their lowest situations. That helps them rebound much quicker.

Jackson (03:40): Yeah, absolutely. So we’ve been talking renovations for a couple of weeks now, but of course the main type of renovations you help people carry out are micro apartment conversions. So what exactly are micro apartments and what do you believe are their benefits?

Ian Ugarte (03:55): So micro apartments are simply a reflection of what we had in the sixties and seventies with a house that looks the same as next door, except the inside is broken up into little smaller living areas. So each person has their own kitchenette, their own sitting area, their own bedroom and their own bathroom. And they share the heart of the home which is the kitchen where they can do their cooking. Bringing back genuine community connection and benefits for all the residents as they have a secure place called home, and they save themselves one half to one third off their normal weekly rent, and that includes their utilities. So they’re far, far ahead. At the same time, the investors or the owners of the property are now actually doubling their cashflow by doing this sort of accommodation. Now we’ve got a huge rental crisis in Australia and here I’m seeing that both parties win at the same time. This is a real solution for affordable housing in Australia.

Jackson (04:49): Okay. So when it comes to converting a property into micro apartments, what are some of the key factors that really need to be taken into account when designing the revised layout?

Ian Ugarte (05:04): Yeah. Like with any renovation that you’re ever going to do, you got to look at the load bearing walls in the property, making sure you’re not taking away the structure. And the big thing that we look for is plumbing. Now, Jackson, you don’t know this, but I’m a builder and plumber by trade. And if I don’t have to move plumbing, that’s a big bonus for costs. What we also do with plumbing is we don’t… when we add extra bathrooms, we don’t dig into the concrete. We do everything above the floor level.

We then look at communal spaces for gathering so that people can mingle together if they want to if they’re social butterflies, but we also make sure that they’ve got self-contained. So if they want to actually be in their own space, they can stay there and they don’t really need to mingle if they don’t want to. I love the use of outdoor spaces where you can actually incorporate that into the veggie gardens and sitting spaces and barbecue areas, and also make sure that the property is adaptable so that it can be used for co-living and micro-apartments, but can used for a family home can be used for multi-generational family. It’s really important to think that this home can be a home for many or a home for a bigger family.

Jackson (06:05): Okay. So once you’ve settled on the new layout, what can renovators do to make this the smaller space feel large, but I guess also to make it visually appealing?

Ian Ugarte (06:16): Yeah. Light is everything, Jackson. When we’re designing something, as much light as we can get into a room will give it space and we’ll give it larger complexity of what’s actually in there. So think about circulation space. So walk into the room, where do I want to put a bed? Where do I want to put a sofa? Where do I want to put a dining table? These are the things that we look at. And smaller furnishings for everything except the beds. So smaller dining table, smaller sofa, but when it comes to the bed, queen size bed all the time. When we talk about cabinetry, make sure the cabinetry goes from floor to ceiling because you’re going to need that extra storage space. And it gives you, again, a bigger view of how large this space can be. And the last thing you want to do is make sure that if you can have direct access to the external of the building, so it gives you a little courtyard of some sort, because that will actually make the place feel larger as well.

Jackson (07:08): Okay. So you’ve said that you advocate for each piece of furniture having multiple purposes. What are some examples of what you mean?

Ian Ugarte (07:17): Oh, look Jackson, you cannot go without a wall bed or a Murphy bed when you’re talking about creating space. So if I walked into a small bedroom with a queen size bed in it, it’s a small bedroom, but if I fold that bed out of the way, I now have a functional room and you’ve got… You can see right now, this functional space, we’re talking about desks that fold up. We’ve got bookshelves that are incorporated and the Murphy beds, you can spin beds around and hide the bookshelves. It’s like a little… one of those old shows with the secret passageways that you can go through. Ottomans have really come to life too. We’ve got an ottoman in our own home that’s actually a two bed… sorry, a double bed. 

And my own home actually has five bedrooms and five bathrooms. We’ve got a Murphy bed in every room. Three of the bedrooms are incorporated into the house. So we actually have a full working and maneuverable wall that maneuvers itself out of the way so that the bedroom becomes part of the living space during the day and becomes a bedroom at night by closing it down. Now this adaptable furniture is out there. It was actually quite prevalent in the seventies, and right now, it’s making a comeback and there is not a property that I would not put a wall bed in to create more space.

Jackson (08:28): Okay. So if someone wants to do a micro apartment conversion, do they need to get building approval for these internal modifications? And if so, how do they go about getting the right permits to make it quite a smooth process?

Ian Ugarte (08:41): Yeah. Look, there is an approval process required. Now I don’t particularly like dealing with councils direct, which is why we like the policies that have been created around the country so that you can go to a professional called a private certifier or a building surveyor, depends on what state you’re in. And what they are are they’re professionals that are licensed by the council to act on your behalf. So you go to them, they make sure they’ve got all the paperwork, they lodge that with council, and that means that you don’t have to deal with council at all. And that’s always a good thing. It is an approval process, it’s just not the traditional approval process.

Now at Small is the New Big, we’re advocators for affordable accommodation and I’m an advisor around the country. And right now our mission is to reshape housing so it’s affordable again. And we’re finding that most governments and councils around the country are looking at what we’re doing and are changing policies as we go. Now, if I want to be able to help more people get into affordable housing, I actually need to help them understand it more. So we have a free co-living 101 course for everyone that’s watching Ticker. All you need to do is go to sitnbdev.wpengine.com/tickerhome and they’ll be able to get access to that free course.

Jackson (09:58): Okay. We still have a couple of minutes left. Are there any other tips, any other bits of advice that you have for people who are keen to try out a micro apartment, to get involved?

Ian Ugarte (10:09): Yeah, absolutely. So when you’re looking at online tools, we’ve talked a little bit about it last week, you’ve got Google [inaudible 00:10:17], there’s a couple of different apps where you can stand in the middle of the room and take photos of the rooms it’ll download on the GPS, so Magic Plan is an example of that. So use those and look at the templates. There’s plenty of information out there about co-living properties and we’re specialists in it, so we can also help people out. Don’t sacrifice the aesthetics of the property for functionality, okay? So we want people to walk into a micro apartment and feel like it’s going to be their home so that they can actually fall in love, sit there and enjoy their life while saving themselves a huge amount of money. As I said, use adaptable furniture wherever you can. Anything that converts from a bed into a coffee table into a desk or a bookshelf or an Ottoman that has a transparency of being able to be used as a coffee table as well. All of these things make a big difference.

Make sure that you get approval for this, because there are foreign safety upgrades that are required as part of what we do. You have to protect the residents in your house. And if you don’t do that, you won’t have insurance. So follow the process of getting approvals, and as always, Small is the New Big is here because we do want to reshape so we can create that 1 million self-contained homes in the next six or seven years. And then that will actually make a big difference to people to be able to afford to live again, save some money, and hopefully buy their own home.

Jackson (11:40): Okay. To wrap up the show, would you like to recap your top tips or offer any further thoughts?

Ian Ugarte (11:46): Yeah. Use online design tools like I’ve just said, make sure you don’t sacrifice the looks of the property, use adaptable furniture wherever you, ensure the correct approvals are in place. As always, sitnbdev.wpengine.com/tickerhome, we’ve got a download cheat sheet every week for all the listeners to be able to get the best outcome of what we spoke about today.

Jackson (12:06): Okay. Ian Ugarte, as always, thank you so much for your company here on Ticker Home. Thank you, Jackson. We’ll see you next week.

Ian Ugarte (12:15): Of course. Ticker Home as presented by our partners at Small is the New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress. Learn more at sitnbdev.wpengine.com. Thanks for your company.

April 13, 2021


Why there's a new construction boom and how the world-wide shortage of timber could affect your upcoming renovation. Plus, how to get the best bang for your renovation buck. Make sure your renovation improves your property value with Ian Ugarte's top tips!

Adrian (00:06): Okay, welcome back to TICKER HOME where each week we will dive in the latest trends on the property market and answer the questions that you need to know. It’s great as always to have my cohost Ian Ugarte co-founder of Small Is The New Big. Hello mate, how are you?

Ian Ugarte (00:20): Hi, Adrian. How are you? Good weekend?

Adrian (00:22): Good weekend. Weather’s a bit rubbish down here in Melbourne. What’s it like out there for you?

Ian Ugarte (00:27):

It’s perfect. It’s Queensland. What’d you expect?

Adrian (00:31): I don’t like, I don’t appreciate that tone. As [inaudible 00:00:33] would say, I don’t appreciate that tone. That’s fine. What are you looking forward to talking about today? What’s on the agenda?

Ian Ugarte (00:42): Today, we’re going to talk about the best bang for your buck when renovating and so we want to make sure that people get the best outcome and they remove emotion. Emotional decisions are not good financial decisions. So I see investors make that mistake every day. So let’s see if we can stop them doing that from this, from this week’s session.

Adrian (01:00): Sounds good to me. So take it home. Of course, presented by our partners at Small Is The New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with housing stress, it can be stressful we know that, learn more at sitnbdev.wpengine.com. All right, Mr. Ugarte back you come, what’s trending for you this week?

Ian Ugarte (01:21): We got Gerv Tacadena in yourmortgage.com.au talking about construction loans. The December to February quarter has had a 47.6% increase to home loans for renovation, particularly that’s the highest since 2009 is come about because of the false savings that’s happened in the marketplace. People not being able to travel because of COVID. So they’re directing it to their home and then getting construction loan to pay for the rest. Western Australia has reported the biggest gain at 255% for the quarter, Northern territory 200%, Queensland at 191% and to Tasmania at 176. This is the perfect storm. We got the home builder grant. We’ve got low interest rates. People are shifting out away from apartments and into, and away from capital cities, and into housing. And interestingly, 40% of all new construction loans are first home buyers. So it’s good to see young people getting into the market.

Adrian (02:09): That’s some pretty good news, but the bad news, I guess in some ways is an apparent our timber shortage. We’re looking at the renovation boom, and it’s causing a bit of a shortage. Tell us more about this.

Ian Ugarte (02:20): We’ve got a worldwide shortage of timber and that’s created a huge issue and we haven’t even hit a peak yet of when we need the timber. We’re six months away from that. So it’s pretty scary that we can’t even get timber now. Our minister, Jason Claire playing politics here saying that people aren’t going to be able to get the HomeBuilder Grant because they won’t be able to start the construction. We all know Mr. Claire, that if you put an excavator on site and to dig a sand castle, you get the grant. So let’s not politicize this.

Some outlets are actually ordering stuff from Russia, I didn’t even know how to market over there for timber that they’re bringing an importing in. Prices in the U.S have gone up by 200% in timber. So we’re talking to a bunch rep recently, one of the ships coming out to Australia for Bunnings got turned in the middle of the ocean towards the U.S because they got more money. So when pre-COVID, if I bought a container load of timber was $3,000 a container, we’re now at $9,000 a container. So we’ve got some huge issues going on with that. And it’s a good argument to look at steel frame construction, as long as there’s not a shortage of steel around the world. So, it’s an interesting time ahead.

Adrian (03:23): Let’s have a look at Canada. This story seems fascinating. They’re investing in home renovations to improve their quality of life rather than adding value necessarily to their homes. What’s going on here?

Ian Ugarte (03:35): In the last year Canada has renovated, 50% of Canadians have renovated their home, 30% for lifestyle, 30% for maintenance, and only 16% have done it for a return on investment, and so that number should be higher. You know, Canadians are conscious about overcapitalizing, but at the same time, the market is moving as quickly as in Australia, so they’re not really concerning themselves too much. In Canada, they do renovate to the climate based. So if it’s in a colder climate, they spend money internal for lifestyle, and if it’s a warmer climate, they go outside. But to me like Australia, Canadians I think that Reno is the best strategy to lift the manufactured growth in the property. I think it’s the hardest way to do it. And the rest of the article is let’s watch this space because it’s an interesting space to be in, particularly with those people sitting at home more often and wanting to live in a nicer house home.

Adrian (04:26): All right, let’s get into our main conversation this week. So last week, of course, we talked about having a three by three strategy when it comes to buying property. One of those strategies included renovating as a way of manufacturing growth for your investment property. But you say not all renovations are created equal. What do you mean by this?

Ian Ugarte (04:46): There’s a risk of emotional renovating. So what we do is we ensure that when we renovate that, we make sure that we’re doing it because of the money uplift. We’re not doing a renovation to make our heart sing. So if we’re renovating to make a profit, then we’ll need to follow a set of standards and criteria that is different to renovating when you want to put your personal touches on, or you want your personal taste on the property. You want to make sure that you hit the majority of the marketplace. And for some people, money does make their heart sing. It’s not the way that I live my life. I make sure that people get a good home to live in if I renovate it for them. But if you can get the best of both worlds, and that’s probably the way that you should be operating and making sure that you stick to that standard and criteria that the general market wants.

Adrian (05:29): So what are the main areas to renovate, to ensure a property owner gets the best bang for their renovation buck?

Ian Ugarte (05:37): Look, the best bang for your buck is definitely in kitchens and bathrooms. So if we talk about bathroom, it’s the wet area of house and people spend a lot of time in bathrooms. Now you might think, Oh yeah, because they’re sitting on the toilet. Well, no. Think about the home that has that bath in it. How many times have you seen your mum, just say, I’m going to have a bath just to wash away the worries of the day, or just get away from the stress. So you want them living in a comfortable bathroom that actually fits the needs of de-stressing. From the kitchen it’s the heart of the home. You know, that’s where people are constantly interacting. They’re either going to the fridge or they’re cooking, or they’re sitting at the breakfast bar or having discussions about the day. You want to make that the place that people like to congregate and get together in. Now equally, you mustn’t overcapitalize. If you’re doing an investment property and you get a little bit emotional, you might end up with a $5,000 Miele cooker, which is not really going to make an outcome to your rental or to your sale.

You’re better off getting the Fisher & Paykel $1,500 stainless steel, that looks exactly the same, and then that way you don’t have to spend that much money. Bathroom. Exactly the same. I remember 20 years ago buying a really nice toilet for $2,000 and that same toilet, the same look today, you can get for $200. So you don’t need to pay the million dollar price tag to get the million dollar outcome. And you don’t need bidets or bidets in your house. No one in Australia uses them.

Adrian (07:00): So having decided on either the bathroom or kitchen or both potentially, what’s the first thing to get sorted before you start we wielding that sledgehammer, which I’m sure you’d love to use.

Ian Ugarte (07:12): Yeah, slew time is always fun. Build a team of tradies around you that are trusted and reliable. And if you don’t have that team, then go off and find your friends that have used someone that they’ve used before and they’re happy with. So if you get a good plumber from among your friends, it’s quite likely that they’ve got a good sparky and a good chippy that goes along and works on other job sites with them. Stick to your budget and don’t stray away from it. If you’re going to spend more on one area of a budget, you’re going to have to compensate by dropping the price of the budget in other areas of the renovation and make sure you commit to that budget, especially with bathrooms, don’t change the layout. Now, if you change the layout of, if you want to move a toilet from one side of a room to the other, that’s a minimum of two hundred, two and a half thousand dollars. Now I’m a plumber myself. And I will not change the layout of my bathrooms unless I absolutely have to because plumbers charge a bomb. And I don’t know if you know this Adrian, but before I was a plumber, I was a doctor. I wasn’t earning enough money. And that’s why I went into plumbing.

Adrian (08:09): I did not know. Are you serious? Is that a serious story?

Ian Ugarte (08:12): No, I’m just joking. I’m just joking. Just joking.

Adrian (08:14): All right. I’m gullible. You know that, you know that. Anyway, moving on. Are there any other, are there any helpful renovating tools or guides that people can access to, to learn more about this?

Ian Ugarte (08:27): There’s quite a few out there that I’ll mention 5 of them. Homestyler app. It’s a great little app. What you do is you draw your floor plan up 2D. You then make the floor plan changes that you want. You then put your pallor schemes in, change the little bits and pieces of the finishes that you want, drag in some furniture. And then what it’ll do is a pop out a 3D image where you can do a virtual walkthrough and see what the renovation is going to look like. I love Google SketchUp. Google SketchUp is a great little CAD tool. What it is is that a DWG file. That means that the people around you like your designers and architects, if you can get the stuff out of your head and into SketchUp, then you’ll get a great outcome because then they can draw up and transpose to there.

Now YouTube has a hundred people that have made videos cause they got way too much time on their hand for you to be able to learn how to use SketchUp. I also love magicplan. You grab magicplan. You download it onto your phone. You stand in the middle of the room. You take a picture of the four corners of your room. GPS will download it, move into the next room, put the floor plan together. I’m always about budget. If you’ve got an ABN, go down to Bunnings, get a PowerPass card. It’s 5% discount off everything in store and they’ve got the PowerPass app. You can do all your research on the products you want. Put it into a cart, send it off. They’ll get it ready for you. They’ll even deliver for you if you want to.

And the fifth one is not a construction one. It’s an app called Sleep Cycle. You put your phone onto airport mode, stick it under your pillow so that when you’re sleeping at night time, it picks up your deep sleep and your light sleep cycle. And it wakes you up in your light sleep cycle. So you don’t get out of bed out of the wrong side of bed. And you’re going to need some sleep if you’re going to start renovating.

Adrian (10:00): Very good. You are a man of action. There’s no doubt about that. And finally, having completed the renovation, paid all the tradies, what benefits can the property owner now sit back and enjoy?

Ian Ugarte (10:12): Look, if the property you’re renovating is long-term key, you’ve got depreciation schedule you can put in there. And if you can get tax back from the government, you should always do that. So that’s the number one thing that I would say. With a renovated property that you’re going to keep, there are three advantages to renovating well. The rental will fill quicker and ahead of any other rental on the market. Number two, the tenants will always be happy to pay a little bit extra to live in your property. Number three, those tenants will stay there for longterm, which means less vacancy, more money in your pocket. If you’re selling, the three advantages are that it will sell quicker, it will have a higher buy price and less discount, and the third reason is you’ll have less objections from the marketplace because people will see themselves being able to live in your property because it’s fully renovated. Only 90% of people are only 10% of people can actually visualize living in a home. If you can make it like they can see themselves sitting in the couch or sitting in the bath or standing around the breakfast bar, that’s what you should be doing

Adrian (11:06): Nicely done. So just to wrap, let’s just take through some of those major key points in terms of the biggest bang for our renovation. I think you’ve got, what do we got? Five ready to go? So just tick through to wrap up.

Ian Ugarte (11:19): No worries. Prioritize to high impact zones, making sure that you do the best in the best parts of the property. Stick to a budget, don’t stray away from it. Invest in trades to avoid the “Do it yourself” disasters because that can be very dangerous. Always use professionals. Use free renovating tools and apps that are available to you and always align your renovation to other strategies that you’re stacking as well. As always, sitnbdev.wpengine.com\tickerhome, we’ve got an unreal download cheat sheet for you this week on how to help you get the best bang for your buck out of your renovation, Adrian. And thanks again for having me this week.

Adrian (11:53): Of course, people need to check it out. We want to make sure people are aware of it. We are learning so much here. Thank you so much for your time. We’ll talk again really soon. Okay?

Ian Ugarte (12:02):

So yeah.

Adrian (12:03): TICKER HOME of course, presented by our great partners at Small Is The New Big who are on a mission to create 1 million affordable homes in the next 10 years and help Aussies struggling with distress. Learn more atsmallisthenewbig.com.au. Catch you soon.

April 6, 2021


Is 'fear of missing out' - aka FOMO, leading your investment strategy astray? Do you jump into property deals, excited by the opportunity without thinking about your long-term strategy? Then you might need to tame your inner 'restless puppy investor' and learn to research strategies OVER properties. Join Ian Ugarte as he gives his top tips to keep you focussed on your end financial goal.

Adrian (00:09): Hey there. Welcome to Ticker Home, where each week we’ll dive into the latest trends on the property market and answer the questions you need to know. It’s great as always to have my cohost and co-founder of Small Is The New Big. Good day mate, what are you looking forward to talking about today? Exactly.

Ian Ugarte (00:24): Today I’m going to bring up something we call the restless puppy dog syndrome, where you take emotion out of your decisions. So you can settle down, prepare, focus. And so you don’t make mistakes that 90% of investors make when buying a property and that is that they purchase emotionally.

Adrian (00:39): All right, look forward to that Ticket Home presented by our partners at Small Is The New Big, who are on a mission to create one million affordable homes in the next 10 years and help Aussie struggling with housing stress learn more at sitnbdev.wpengine.com. All right, we’ve got a few what’s trending topics. So what are we going to start with today Ian?

Ian Ugarte (00:59): An article by Alex Brewster in Savings.com where they’re quoting Dr. Andrew Wilson from Archistar. His basic saying the market hasn’t hit its peak yet. And we’ve got some huge increases in property prices over the last year. Brisbane is out ahead and streaks, which actually I predicted about 18 months ago. We’re at 29.3% increase in price. Sydney’s at 16.4% increase in a year Canberra 12.2% Melbourne, 11% and Adelaide at 10.9. So prices are pushing auction clearance rates up. We’ve got Sydney, Adelaide, and now Canberra at 90% clearance rate in auctions, Melbourne at 82% and Brisbane at 81. Tim Lawless from CoreLogic has indicated that there’s 33,791 auctions last week. That’s the highest auction amount since March 2018 at the last peak of the market. And we can see that, we seeing, Melbourne back at its highest ever median house price. It declined 6.1% during COVID, but has now increased 6.7% sitting 0.2% in the hedonic daily home value index. So there’s still a long way to go in this property cycle. I’d say Adrian.

Adrian (02:12): And it’s taking place in New Zealand as well. Their market is super strong right now. So there’s something Australians can learn from how New Zealand are managing this side of things.

Ian Ugarte (02:23): Yeah. Look again, I’ll be controversial on this one. I think that Jacinda made another move, I love Jacinda as a leader, but I think that some of the moves that she’s made is affecting the housing market in particular, every market, in a bad way. They’ve taken away the capital gains tax of five years. You have to now wait 10 years before you can get capital gains tax-free over there. We already have capital gains tax in Australia. So it won’t affect the Australian market. If they put it in over here, tax deductibility on interest rates, well interest rates are really low, so that’s not going to make a big difference in the short term anyway.

I can understand why they’re doing this. New Zealand is the highest median house price in the OECD at 759,767 Australian dollars. Australia’s median house price is 598,884. We have a lot more land and we have a lot more housing and people. So you can’t really compare the two. Dr. Cameron Murray, who’s an economist, has said that those changes that they’ve made in New Zealand, it’s like throwing stuffed toys on the train line to slow the train down. And I agree totally. You know, the negative gearing was a big topic in the election, our last election, it really comes down to supply and demand. If we can fix the supply and demand problem, then we’ll be in a better place when it comes to housing.

Adrian (03:38): And let’s look at Australia once again, in terms of low income earners and what’s available to them in terms of homes, what are you seeing here?

Ian Ugarte (03:53): I’ve lost you.

Adrian (03:53): No. Did you get that last one? Have you got me there?

Ian Ugarte (04:00): Yeah, I’ve got you.

Adrian (04:00): So the affordable homes just for low income earners. What have you got for us there?

Ian Ugarte (04:06): Melissa Heagney in Domain. So pulling out data, even before the pandemic, there was a shortage of 173,000 people in Australia that were living unaffordably. So effectively, we’re short of housing. A study by AHURI in Swinburne University on housing affordability, says that people are now commuting longer than ever before. So effectively from the time that they leave home and get home. It’s one third of that day is spent traveling and that’s just not affordable because you’ve got petrol or transport costs. Regional city vacancy rates have declined and then down Dulong [inaudible 00:04:38] Gold Coast and Sunshine Coast to down Sunshine Coast has a negative 0.3% vacancy rate. We have 1500 families on the coast here that have no where to live. They’re living in caravans or sleeping with the other people in other houses.

Sydney is probably the worst in the country. 60,000 households are living unaffordably. 71% of all lower income earners in private rentals are living unaffordably. And that was before COVID and it’s worse now. There’s an increase of low income earners living unaffordably. In 2006 there was 29% of the population, in 2016 it was 46% of the population. And this year’s census is going to show some extreme data. That’s going to be about even worse. The rest of the articles, talking about government, throwing more money at housing. Governments have got no money. They need to create better policies. The private market can actually fix that problem and at least stagnate the rentals and the cost of properties.

Adrian (05:32): Yeah, it makes a lot of sense. So you’ve given us heaps of advice over the past few weeks on how to really master property investing and maximize the growth of investment properties. But today you have some cautious advice. You’re warning against people becoming the restless puppy. I liked this one of the property scene. Who are these people? What does this mean exactly?

Ian Ugarte (05:51): Well firstly, let me explain the restless puppy dog syndrome. Here’s one I prepared earlier. This is my little Fox Terrier, right? And this guy is nonstop energy. He runs all day long. So for me, I say, well, why don’t I take him out to the paddock? I’m an hour away. I put him in the backseat and he’s on the backseat. And for the whole trip he’s looking across the one side. He’s looking at the dog over there. And now look, look at the cow over there and look at the tree over there. And he’s using all this energy running across the backseat. And finally we get to our destination. I opened the back door and there he is asleep and lost all his energy. Now I’ve spoken to over 300,000 people in the last 11 years talking about property. How can they invest in property and how can they have a better outcome?

And they all get so excited. They go off and they go to real estate.com and they start looking at houses in WA and unit blocks in Victoria and industrial deals in Queensland. And what happens is their eyeballs get fatigued. So they can’t see a good deal. Even if it hits them in the face. It’s what we call a scotoma, Adrian. That’s a scotoma is like when you open the pantry, looking for the salt and you can’t find it and you yell out to your partner, “Hey, where’s the salt?” they come over, it’s right in front of your face. And that’s what happens when you lose the energy. So we need to have more focus when we’re looking for property.

Adrian (07:03): Love it. Absolutely love it. I can’t believe. I mean, I actually can’t believe you have your dog there. Nothing surprises me. That was amazing. So that makes sense in terms of people racing from one property to another, and then getting confused about which option is best, it sounds exhausting. So, what should people focus on when they’re looking for a property in order to attain this restless puppy?

Ian Ugarte (07:24): Well, property purchasers need to think about how they’re going to manufacture growth first. Okay? So are they going to renovate or are they going to subdivide are they constructing, strata titling, are they going to do co-living. Figure out exactly what you want to do. Now. There’s an Italian scientist named Pareto. And he came up with the 80 20 rule, which is actually now the 90 10 rule. Basically 10% of the work that you do on a daily basis gives you 90% of the results. So what I say is get the property right, and be clear about the strategy. And by default, 90% of the properties that are on the market will now no longer fit your criteria. That means that you’ll choose the right property and you’ll know exactly what you are looking for and what can be done on that property, because you’re now an expert spend 10% of the time that you need to prepare. And that you’ll have a 90% result from that.

Adrian (08:14): And when it comes to identifying strategies, you recommend only focusing on a three by three strategy. What does this mean?

Ian Ugarte (08:21): Yeah. The three by three strategy is where you are. Firstly, you’re implementing three strategies in three geographical areas. Now the reason for three strategies is because you will have an outcome that’s better off if you stack strategies on top of each other, that means only one agent, one lawyer, one designer, one architect, one builder, and that will all give you a big uplift. Then the three areas I’m not talking about Europe, Antarctica and Asia, I’m talking about three suburbs where you become an expert, such an expert that when a property comes on the market, you won’t to even need to look at the price of that property. Because you’ll know its value because you know the area so well. So you might implement as an example, a subdivision where you then build a new dwelling on the spare block of land. And then you implement the co-living policy on top of that. Now Zig Ziglar says that success is when opportunity meets preparation. I say that success happens when you prepare and then opportunity appears.

Adrian (09:19): So does this strategy only apply to investment properties or is it also to the home you live in?

Ian Ugarte (09:26): It’s even more important that you implement the three by three strategy in the home that you’re purchasing for your family. Otherwise, you can get caught up in emotion. You could make the mistake of buying something, living in it, the gloss wears off, and then you realize, well, I actually wait for capital growth and I can’t manufacture growth out of this. So every property you buy, including your own home should be a business decision. It’s one of the last tax-free havens that we have in Australia. And you have the right to minimize your tax so that you can take advantage of an uplift.

And even this home, my dream home, took me 25 years to get to here. It’s my home. I have extra rental income that comes from a granny flat. I have sheds for all my equipment. I have this recording studio here. I’ve got my office on site. I also have co-living potential in the new house that I’ve built. And it’s also a wedding venue because I’ve got a thousand square meters of grass on a river where people would love to get married here. I didn’t buy this 25 years ago, but every home that I bought also had manufactured growth strategy so that when I sold it, I had an app uplift. I had a tax-free haven and then I put it into the next one to finally get to where we are today, where I can have my dog in my studio.

Adrian (10:35): You are a smart man, just finally. What should people do if they find themselves falling into the restless puppy trap or perhaps suffering from FOMO?

Ian Ugarte (10:46): Well, property prices are rising quickly and people are making decisions that are detrimental to their short-term investing strategies. So you might say, look, I’m going to live in this property for 20 years. So I don’t care. The property prices will be good in 20 years. But you’ve lost out on the short term. So I don’t like hot markets because people make decisions based on FOMO and saying, everyone else is buying and you get caught in the emotion. So to stop bad purchasing decisions, all you have to do is make sure that you’re not the restless puppy dog. Prepare, make sure you know your three areas and three strategies that you’re going to be able to buy a property in and base your decision on real data.

In episode one of Ticker Home Agent, we talked about not buying in the hotspots and buying in the warm spot. So on our website, we’ve got all the episodes from Ticker Home, including the cheat sheet and download of how you can buy in the warm spot and stay away from that. And if all else fails, go to an advisor and an expert to help you through that process like myself. And then that way you can remove the emotion and make good business decisions.

Adrian (11:42): Makes a lot of sense to me. Let’s just run through ,briefly, the main points for taming the property investor.

Ian Ugarte (11:50): Research your strategies, make sure you know what you want to do. Eliminate properties, limit your search so that you can use the 10 90 rule. 10% of the properties is all you should be looking at. Three areas, three strategies that will help you go to the place where you know exactly what you want. Don’t succumb to the fear of missing out. The emotional based decisions are never a good one and make sure you get expert advice from qualified professional advisors that are around you as always smallisthenewbig.com.as/tickerhome. Where you can have this episode and other episodes and download the cheat sheet every week.

Adrian (12:23): You’re a star. So much information. We’ll talk to you soon. Ticker Home presented by our partners at Small Is The New Big, who were on a mission to create one million affordable homes in the next 10 years and help Aussies struggling with this stress. Learn more at sitnbdev.wpengine.com.

Thank you

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