Is Property Different?

Adam Keily: [00:00:56] Hello again and welcome to comedian versus economist, we demystify the world of money and help you get a handle on the bigger picture. My name's Adam and I'm joined, as always by my older, dare I say, wiser brother and real life economist. Thomas, how are you going, Thomas? [00:01:12][16.0]

Thomas Keily: [00:01:13] Good, thanks. That's the nicest thing you've ever said about me. [00:01:15][2.0]

Adam Keily: [00:01:15] I think it might be, actually. I just wanted to mention before we get started that anyone out there maybe got some questions. I want you to reach out to us, contact us, give us some feedback, tell us how we're going. You can always email us at C.V at Equity meIt's dot com. So we'd love to hear from you if you got thoughts you want to share or questions maybe for Thomas or even me, then send us an email and we'd really appreciate it. So look, Thomas, we're about midway through our intro series where we talk about Economics 101. I guess we've been through some of the basics. We've talked about the economics dashboard where we've got GDP and unemployment and interest rates, inflation, currency, and asset prices. So we're getting into it now. Last week we talked about how I guess, the macroeconomic factors affect the share market, which was very interesting. If you haven't heard it, go back and listen to it this week, though, particularly interesting for me. I want to think about it. I want to ask you about what are we looking at in terms of the property market? I know you've done quite a lot of work looking at the property market. I'm a homeowner. I've got a mortgage. I'm sure there's a bunch of other people out there that have got one as well. So thinking about our economics dashboard and we've got GDP and unemployment, interest rates and stuff, what are the things that we're interested in in terms of the property market and how should we be thinking about investing in the property market property as an asset class? What are we looking for? [00:02:40][85.1]

Thomas Keily: [00:02:41] Yes, the property is quite interesting in terms of the macro factors in a lot of the same factors that influence share prices to have the same impact on property prices. So if we go through our dashboard, if the economy is growing, that tends to have a positive impact on property prices in a similar way. That has an impact on share prices. Unemployment has a particular impact on the property market because people need jobs to be able to get loans. And so there's a stylized. The fact that you only see property prices fall in recessions and in periods of unemployment when people are unable to meet their mortgage repayments. And so that unemployment data point becomes key because you really need that to see that tick up quite high and have sustained high remain at a sustained high level before you're going to see property prices fall. [00:03:32][50.8]

Adam Keily: [00:03:33] Right. And we've seen that. We've seen that with covid. Right. So, you know, obviously, covid has had a pretty significant impact on lots of people. Unemployment has gone up. I don't know. Is it still up? I'm not sure. And so as a result of that, we saw house prices fall the way property prices, but not at maybe not as significant as everyone thought. Is that because things like job Kaper and job seeker were able to keep the market running? [00:03:58][25.7]

Thomas Keily: [00:03:59] Yeah, that's right. So typically, people don't sell unless they have to. And there are a number of measures that came enduring covid that stopped that having to come into effect. So you had the job keeper and job seeker supplement. So that held up household income. So people were able to make their mortgage repayments. You also had mortgage deferrals. That was a really big factor. So is the mortgage holiday. [00:04:22][23.3]

Adam Keily: [00:04:23] Mortgage holiday. That's right. The term that could have only come up in marketing the mortgage holiday [00:04:29][6.2]

Adam Keily: [00:04:31] where everyone got to take a holiday from their mortgage. But unlike a regular holiday where I guess maybe a lot like a regular holiday, in a sense, you'd be paying for it for a fair while after that, particularly if you used your credit card while you're on holidays like a mortgage holiday where you still have to pay for it, didn't you? [00:04:49][18.1]

Thomas Keily: [00:04:50] Yeah, that's right. That's right. So, yeah, it sort of got pushed back at, you know. Yeah. You just it just rolled out. You still had to pay it back in the same amount of time. I mean, I think I still think it was, you know, a good deal for people who, you know, were facing hard economic times. Having that mortgage deferral would have definitely helped a lot of people. And I think it did. It stopped for sales coming onto the market and the number of properties sold through the company, period. And we're talking out December Ren. It's sort of like we're almost looking at it in the rearview mirror now. Yeah, the property number of transactions fell and so that mortgage deferrals really stopped for sales coming onto the market. And with that, you know, without that supply coming on, without that big boost in supply, then we didn't see prices for. And I think nationally, I think prices at the moment are only down three per cent. So almost and almost had no impact on the property market that we've seen so far. [00:05:40][50.8]

Adam Keily: [00:05:41] Right. It's pretty amazing. So, OK, so getting back to our dashboard, we've got unemployment. That is obviously one of the key things we're looking at. GDP obviously comes into sorry interest rates on the other side of the dashboard comes into it pretty significantly as well. When we're talking house prices, obviously people who want to buy a house have already got one the obvious, you know, cash rate or the interest rate, is that is that the biggest factor in the home loan rates? [00:06:06][25.0]

Thomas Keily: [00:06:07] Yeah, that's right. That's right. Yeah. Yetto swings of that. Yeah, it's and in terms of property prices, it's almost the only game in town. So I think there was a study or a year or so ago saying that 81 percent of house price movements can be explained by interest rates. And so, yeah, it really is, and it makes sense because your ability, your mortgage that you can afford really depends on the interest payments that you've got you've got to stump up with. And so, yeah, probably prices swing with interest rates, OK. [00:06:38][30.7]

Adam Keily: [00:06:38] And so, like, I'm a homeowner, right? This particular interest to me, the big question is how do we know? Like a lot of banks are fixing their interest rates now, offering pretty good fixed interest rates? You know, historically speaking, how do we know when we've hit bottom? How do we how can we kind of predict interest rate movements? Can we or is that the job for people who are far more experienced than us? [00:07:02][24.2]

Adam Keily: [00:07:03] Well, I say as far more experienced than you and [00:07:09][6.1]

Adam Keily: [00:07:09] have some sense of what's going on. [00:07:11][1.6]

Thomas Keily: [00:07:12] Yeah, it's notoriously difficult to pick. A lot of people spend a lot of time trying to get a bit of a view of where it's going. I think probably as a homeowner, you shouldn't worry too much. You should make sure you've got a bit of a buffer there that, you know, you can afford to keep making repayments if interest rates rise to some extent, you know, and make sure you have that buffer. But I definitely as a homeowner, I don't think you'd be buying. And on the basis of your outlook for the interest for interest rates. [00:07:43][31.2]

Adam Keily: [00:07:44] Yeah, right. You want to have a little bit of wriggle room, given [00:07:50][5.6]

Adam Keily: [00:07:50] that it's like a 30-year commitment or whatever it is like, you know, you can't be like, let's say 2020 and [00:07:55][4.3]

Adam Keily: [00:07:55] interest rates are two percent. If they ever reach six, I'm going to be in trouble. But surely that won't happen. So, yeah, [00:08:06][11.8]

Thomas Keily: [00:08:07] yeah, it is a long-term commitment. And I think for homeowners, it's not something you want to be too stressed about because also, like over, you know, interest rates in five years might be quite different to what they are now, but your financial situation could be quite different by then as well. Like you might have had a pay rise, you might have found a better job, you know, so [00:08:25][17.8]

Adam Keily: [00:08:27] you might [00:08:27][0.2]

Adam Keily: [00:08:27] have stopped being a comedian and actually got some income, [00:08:29][1.8]

Adam Keily: [00:08:29] got a real job. So, yeah. [00:08:34][4.9]

Thomas Keily: [00:08:35] So, yeah. So I think as a homeowner, you shouldn't be too stressed about it. But I think it's one of the interesting things. One of the things that makes the property unique as an asset class is that you do have this mix of owner-occupiers and investors. So you've got people who are treating it purely as a financial vehicle and you've got people who are treating it as a consumable as something that they're actually going to live in. [00:08:57][22.4]

Adam Keily: [00:08:58] I think this is a timely point to remind people that none of this is financial advice. And if you're at all you're concerned about your own situation, you should go and speak with a licensed financial professional. So just throw that in there. But so those two types of people, the property investor versus the owner-occupier, they're thinking about the property market. They should be thinking about it in totally different ways. Is that raising? [00:09:22][24.7]

Adam Keily: [00:09:25] Yeah, I mean, are they [00:09:26][1.0]

Adam Keily: [00:09:26] thinking about different parts of the dashboard, are they is one of them like not thinking about. Interest rates so much and the other one is all about interest rates or is it kind of money? [00:09:37][11.6]

Thomas Keily: [00:09:38] And yeah, I think I think investors definitely care more about the outlook for the dollar and how that's going to influence capital gain and the yield they get through Ren. Yeah, they're going to be more interested in it. And yes, owner-occupiers, I think probably shouldn't. They should really be only focused on whether they're going to be able to keep affording to pay to make their repayments or not. That should really be the only factor they're thinking about. Right. But it's interesting as an asset class that you do have these owner-occupiers because it's something you don't have in the share market. Say, you know, if you're buying BHP shares, you're buying as an investor. No one's buying BHP shares because they need BHP shares. They don't need to put and need the shares to put a roof over their head or something. [00:10:25][46.9]

Adam Keily: [00:10:26] What if you bought shares in the holiday in. [00:10:27][1.4]

Adam Keily: [00:10:34] Even around anymore? I don't know, maybe that's why there's enough not enough of these owners and nobody was occupying it, but it [00:10:44][9.2]

Thomas Keily: [00:10:44] does create this interesting dynamic in the property market. And one of the things you've seen in covid is the investor interest in the market has fallen. So we've seen investor mortgages go backward with there are fewer investors coming into the property market than there were recovered. But we've seen owner occupiers take up that slack. And so we've seen something of the pivot away from investor investors to owner-occupiers. And so and that's been an interesting sort of dynamic. And that's not something you see in the share market, isn't it? [00:11:14][30.0]

Adam Keily: [00:11:14] Like a there's you know, kind of to my naive view, there's an interesting parallel between, say, institutional investors versus, you know, the flood of retail investors that came on with the Robin Hood to the world and started buying up during covid. Is there no correlation? [00:11:30][15.7]

Adam Keily: [00:11:31] But this might be a really tenuous link. Is there no correlation [00:11:35][3.9]

Adam Keily: [00:11:35] if can we think of them as property investors as like the institutional type investors versus owner-occupiers as the retail type investor? Or is that just too long a bow to draw? That's what wanting to create [00:11:50][14.1]

Adam Keily: [00:11:50] like a link where there really isn't one. [00:11:51][1.4]

Thomas Keily: [00:11:52] Yeah, yeah, I think there isn't really one. I mean, if you think about institutional investors, you don't really see institutional investors in the bond market that especially, by and large, that's driven by what you call mom and dad, you retail investors, right? Yeah, institutional investors. You don't see hedge funds buying up, you know, houses to rent out to people. You saw a bit of that in the U.S. following the GFC. And there are some apartment blocks being built on a sort of rent-to-own basis. So the developer buys it and holds onto the properties and rents them out and becomes the landlord. You don't really see that. And so you don't see so much institutional money holding property, holding investment properties. [00:12:36][43.8]

Adam Keily: [00:12:37] Is it because it's too hard to get out quickly if you like? Is that is that one of the main reasons? Because, you know, like Shaimaa, you know, there's plenty of liquidity in the share market. You can just go, oh, no [00:12:48][10.9]

Adam Keily: [00:12:49] covid version to [00:12:50][1.3]

Adam Keily: [00:12:51] getting out, whereas, you know, it's much harder to sell a piece of property. [00:12:55][3.7]

Thomas Keily: [00:12:56] Yeah, yeah. That's probably part of it. What were the yields probably aren't as attractive to head to the big money, to the institutional money. [00:13:04][7.5]

Adam Keily: [00:13:05] What's the yield like the percent that you make. [00:13:07][1.8]

Thomas Keily: [00:13:07] Yeah, the rent that you rent you're getting as a percent of the property's value. So the return on the asset, it's probably not as juicy managing being a landlord, a bit of a headache [00:13:18][10.5]

Adam Keily: [00:13:18] and not as glamorous as being a hotshot hedge fund manager. [00:13:22][4.0]

Adam Keily: [00:13:23] Yeah, someone who's like wheeling and dealing and buying Berkshire Hathaway versus someone who's running an apartment block in Frankston or something. So they're going to leave the party. I've got to go fix the tab. So, uh, well, [00:13:45][22.2]

Adam Keily: [00:13:46] there's always money to be made where people don't want to get their hands dirty. That's what I've always, always had. You know, if if you are willing to take on the less glamorous role of of maintenance guy at an apartment block, then you don't have to pay someone else to do it. So. Well, look, I think it's probably a good spot. We might take a quick break and grab a word from our sponsor. And we'll be right back to talk. More property macro after this. [00:14:12][25.5]

Thomas Keily: [00:14:13] Banking with Virgin money has never been more rewarding. Earn rewards on your everyday spending and pay zero monthly fees with the Virgin Money Go transaction account. And with point perks and epic experiences tailored to you, you can manage your money easily on the go, smash the savings goals, get money fit, and be rewarded for it. Thanks to your own beat. Virgin Money terms and conditions and monthly criteria apply. Now let's get into the show. [00:14:39][25.9]

Adam Keily: [00:14:40] OK, we're back on comedian versus economist, so Thomas, we've got property investors versus owner-occupiers. I guess I mean, what are the other differences between when we're thinking about investing in the property market versus the share market, for example? Like how what things are we looking at there? [00:14:59][18.7]

Thomas Keily: [00:15:00] And the key difference there is the leverage that you get into property versus into shares. So if you went into a major bank, one of the big four banks, and said, I really love you guys, I think you're an amazing company, I want to buy 100000 dollars worth of your shares and I want to borrow some money to do that. They might look at you and go like, yeah, you're awesome [00:15:20][20.2]

Adam Keily: [00:15:20] to be the best customer we've ever had. Never had this kind of feedback. Can ratings as not so nice? [00:15:29][9.4]

Thomas Keily: [00:15:32] Yeah, they might look at you and go, yeah, you've got a good asset base. Good, you're good serviceability. Yeah. We're happy to lend to you. If you can stump up 50 grand will stump up the other 50. Right. And you can buy one hundred thousand dollars worth of shares. And so something like that you might get like a what we call a 50 percent loan to valuation ratio. The loan relative to the value of the asset that you're buying is about 50 percent. [00:15:53][21.8]

Adam Keily: [00:15:54] Elvia, I've seen it before. Yeah. You never knew. Never knew what it was. [00:15:57][3.5]

Adam Keily: [00:15:58] You're right. There you go. And I've got a home. Yeah. So that's that's the area. [00:16:05][6.8]

Thomas Keily: [00:16:05] That's the loan to valuation ratio. Now in property, the loan to valuation ratio is going to get very high so you can get up to ninety-five percent area, which is the equivalent of you going in and then going like yeah if you can chip in five grand will lend you the other 95, run it. Okay. But they're not going to do that. They're not going to do that for investing in the share market, but they will do it for uh, for a property. For residential property. [00:16:32][26.5]

Adam Keily: [00:16:32] Is that because the risk is lower? [00:16:34][1.5]

Thomas Keily: [00:16:35] Yeah, that's right. Typically the risk the lower the there's less volatility in share in property prices. They move around less on a sort of month-to-month basis is also another key difference is that the downside is limited. So with the equity, you are buying ownership in a company. So if the company goes bankrupt and a lot of companies do eventually go bankrupt. The share value, the equity value, the ownership value goes to zero. Yep. And so, you know, there's a real, real chance that they their lending money against an asset that has no value anymore. [00:17:15][39.5]

Adam Keily: [00:17:15] I should point out at this point today, the Thomases recording inside ivory. If anyone can hear the birds in the [00:17:20][4.5]

Adam Keily: [00:17:20] background, not the best choice for a broadcast recording location. But, you know, if it is episode five now, Thomas is making demands about were winning a record. So coming to you from a bird ridden ivory, just let them bring me peace [00:17:40][19.9]

Thomas Keily: [00:17:42] so that doesn't happen in property. A property will never go to zero. No, never becomes totally worthless. I mean, I'm one of them. [00:17:51][9.0]

Adam Keily: [00:17:52] What about, like the Christopher Skase of the world? [00:17:54][2.1]

Adam Keily: [00:17:56] didn't he sell a bunch of property that pretty much went to zero? It chased out of the country, [00:18:00][4.3]

Adam Keily: [00:18:01] this guy is in blackface. I'm showing my age again. Yeah. [00:18:04][2.2]

Thomas Keily: [00:18:05] No, I don't remember that one. [00:18:06][0.9]

Adam Keily: [00:18:06] Grandpa can remember. Think he built a resort, didn't he? And he built a resort [00:18:12][6.0]

Adam Keily: [00:18:12] and then [00:18:13][0.2]

Thomas Keily: [00:18:14] the resort still would have been worth something. It just might have like I don't know how he is running the finances. [00:18:18][4.7]

Adam Keily: [00:18:19] No, I think it was built maybe maybe it was built on a swamp. [00:18:21][2.0]

Thomas Keily: [00:18:22] Yeah. Yeah. [00:18:23][0.4]

Adam Keily: [00:18:24] There wasn't a big demand for swampland after [00:18:26][1.9]

Adam Keily: [00:18:27] the development fell through. Yeah. But tourism. Yeah. Like those Olympic villages after they've been, you know, not used for the Olympics anymore. [00:18:41][14.1]

Adam Keily: [00:18:42] And have you ever seen photos of the Greek Olympic village after Athens 2000 and whatever it was? But there's just kind of. Yeah. Those properties I'm sure still not not not worth zero, but they're not worth much, that's for sure. Anyway. [00:18:56][14.0]

Thomas Keily: [00:18:57] Yeah, so, so anyway so that's what I mean, that we value the property and make sure it's not on a swamp or something [00:19:03][6.3]

Thomas Keily: [00:19:06] But typically there's a there's you know, council. [00:19:08][1.9]

Adam Keily: [00:19:11] Oh that's a tick box on a form somewhere. So like property valuation for. Is it on a swamp. Yes or no. [00:19:21][10.0]

Thomas Keily: [00:19:22] No. Every time. [00:19:23][0.8]

Thomas Keily: [00:19:24] Yeah. So yeah. So it's almost never going to zero and then this comes to another, not the difference. And what you're buying when you're buying a property, you're actually buying two assets combined into a single vehicle. So property is both the land beneath the dwelling and the dwelling itself. Right. And so effectively getting two assets bundled together. And they're interesting because typically they move in different directions. So the land appreciates goes up in value while the property depreciates, goes down in value because it just gets older and yeah. More rundown and whatever. So yeah. So you kind of buying effectively buying two assets. And so property investors like professional property investors, think a lot more about the land value than they do about the dwelling value. Hmm. So that's another key difference. You sort of getting two assets bundled up together in one package deal. Package deal, combo. [00:20:21][57.0]

Adam Keily: [00:20:21] Sweet combo. All right. What else have we got? [00:20:24][2.7]

Thomas Keily: [00:20:24] The other difference is the ongoing maintenance of a property. So if you're renting it out, you need to maintain the property to a certain standard. And that's going to cost you money and it costs you Ines's. Yeah. And an unknown amount of money. You can sort of like factor it in, but it's what goes wrong with the property in any given year. It is difficult to predict. And often when you're looking at the sort of the raw metrics around the property like yield, for example. So the rent relative to the value is a bit of a trap for young players that you're not factoring in how much maintenance costs are going to be. And those maintenance costs can vary with age of the house and so on. [00:21:01][37.0]

Adam Keily: [00:21:02] One of the advantages of being an owner-occupier that I found is you can really let the maintenance slide for a while. And if you have issues, say, [00:21:11][9.4]

Adam Keily: [00:21:11] with your plumbing, you can have a crack yourself at fixing it and not actually pay a professional plumber. I actually dug a hole in my shed to unearth some pipe and it when it went remarkably well. In the end, it's like that. Yeah. So there you go. Little money tip there from your own. Your own. Do your own probably. Right. [00:21:40][28.4]

Adam Keily: [00:21:41] I'll tell you what, maintenance costs. [00:21:42][1.0]

Thomas Keily: [00:21:42] Yeah, yeah, don't have [00:21:43][1.1]

Adam Keily: [00:21:43] maintenance costs of equities. [00:21:44][0.8]

Thomas Keily: [00:21:45] Yeah. And if you say if you're in a. That's right. They're not going to come after you and want you to fix the lawns or whatever. [00:21:49][4.3]

Adam Keily: [00:21:52] Were you? Well, I guess it's all part of the ownership. I mean, obviously, they're paying, you know you know, Apple's headquarters, they're paying someone to mow the lawns at the front. I look pretty Schmick. So it's all part of, you know, the costs of the company. [00:22:05][13.1]

Thomas Keily: [00:22:06] Yeah, yeah, yeah. But it doesn't come out of your pocket. Not on that board. [00:22:10][3.6]

Adam Keily: [00:22:12] And is that a good point? Is that a good point to talk about negative gearing. Because is that. I don't know much about negative gearing, except that baby boomers do it and they've made tons of money by doing it and everyone and everyone who's not a baby boomer is kind of annoyed that they get to do it. Is that a fair summary? Yeah, it's not that I wouldn't quibble with that. Can I do it? Yeah. [00:22:39][27.3]

Thomas Keily: [00:22:39] Yeah, anyone can do it any. So. So basically what negative gearing is, is, is if you're earning less on your property then it's costing you to hold it, including the mortgage payments that you've got on the property. So typically you borrow to buy an investment property. That means you've got mortgage repayments on that investment property loan. If you're earning less, then it's costing you. You're losing money if you're losing money, you can offset that against your income and reduce your income tax, right? OK, that's good. And that's as an important difference. Like, that's not something you can do as a share investor. If you're investing in the share market for your shares are losing money. If you lose capital gain or something, you can't then turn around and go like. Well, I want a discount on my income tax. [00:23:33][53.6]

Adam Keily: [00:23:34] Yeah, right. So even if I buy shares in a company that sees Apple as an example, again, an Apple, my shares go down. That's just I just have to write that off as a loss to me. And I can't use that in any way to offset my interest. My income tax. Yes. [00:23:50][16.7]

Thomas Keily: [00:23:51] Whereas if you sell the shares for less than you bought them and you and you crystallize that loss, you actually made a capital loss. That's just on Yukon's where an offset. Yeah. Yeah. So negative gearing wasn't always around. I think Howard Borden in and on and on and on. Something like that. Yeah. And so it's a particular perk that's offered to property investors. [00:23:51][0.0]

Adam Keily: [00:24:12] Why is everyone outraged about boomers getting it more than anyone else is just because they've got more property? [00:24:16][3.8]

Thomas Keily: [00:24:17] Yeah, I don't think it wasn't targeted at people born in a particular year. It's just it just came in at a time where boomers were at their sort of peak property buying age. They had the money to do it. And so. Yeah, and so did it. And sort of its sort of like it's a sort of a negative carry that you you're losing money on the property, on with the hope that it goes up and capital value. So, you know, you lose five grand a year for five years and then hope that you've made two hundred thousand capital gains at the end of that. And so it's fine that sort of have the basic strategy works. [00:24:53][35.7]

Adam Keily: [00:24:53] Yeah. And without getting into the tax to tax law, you've still got to pay a capital gain at the end of it. Like so. So you write off the losses on the maintenance against your income tax, but then you still pay a capital gains tax at the end. [00:25:09][15.1]

Thomas Keily: [00:25:09] Yeah, yeah, yeah, yeah. You would [00:25:11][1.8]

Adam Keily: [00:25:12] think we stumbled across something less interesting than economics Now it's good to understand. I mean, I don't really you know, [00:25:21][9.5]

Adam Keily: [00:25:22] I don't really understand. And I keep hearing about negative gearing in the news. And I've never really taken the time to kind of understand it or think about how I could make it work, how I can tap into it. [00:25:33][11.7]

Thomas Keily: [00:25:33] Like, yeah, probably what I would say about negative gearing is that so the property investors that I work with don't recommend negative gearing because once you if you're losing money, that starts affecting your serviceability. And so if you're trying to grow a portfolio, if you're losing money on a bunch of properties, at some point the banks are going to cut you off. Yeah. [00:25:56][23.0]

Adam Keily: [00:25:57] So you don't look like you're very smart either. You're not doing this. Right. So let me get this right. You're a property investor and you've bought six properties and you're losing money on every single one of them. Mhm. [00:26:15][17.8]

Thomas Keily: [00:26:15] Mhm. Yeah, I know. And what they would say is often that its sort of people buying negatively geared properties on the, on the advice of their accountant with the accountants purely looking to minimize tax. Yeah. And if you, if you, you know and if that's not really how you should be arranging finances. You know, you're trying to build wealth. Minimizing tax is sort of a vehicle to build wealth. It's not it's not an end in itself. So you shouldn't be investing in properties with a view to minimizing your tax, [00:26:43][27.6]

Adam Keily: [00:26:44] not to be doing it. You should just be doing more cash jobs. [00:26:46][2.5]

Adam Keily: [00:26:48] It's what I was. All right. When I should do. What else have we got? Anything else you want to cover of the day before we let go? Before we get going? [00:26:59][10.9]

Thomas Keily: [00:27:00] Probably the big thing is the big difference with property is that you can change the nature of the asset itself. You can change what the property is. And there's a number of ways you could do that. So you might rezone the property. So it might be rural land. It gets rezoned into residential. You might be able to subdivide the properties or split the property into two lots. You might be able to add a granny flat. You might be able to turn it into a boarding house or something and increase the number of rentable doors, the different rentable doors. [00:27:31][31.0]

Adam Keily: [00:27:31] I've never heard that term before. [00:27:32][0.9]

Thomas Keily: [00:27:33] That's a term. [00:27:33][0.2]

Adam Keily: [00:27:34] How many rentable doors you've got in your house. [00:27:35][1.7]

Thomas Keily: [00:27:36] Mm. So if you've got a house and a granny flat at the back, you got to rentable door. [00:27:39][3.3]

Adam Keily: [00:27:40] home or if you got a spare room, rentable door [00:27:43][2.8]

Thomas Keily: [00:27:44] and the door could be. Yeah, there's regulations around that. [00:27:46][2.4]

Adam Keily: [00:27:51] There's your door over there, the garden. It's a bit weathered. [00:27:56][4.8]

Adam Keily: [00:27:59] I'm only thinking about doors at the moment because my father-in-law is staying with us and he's he found this. This wooden door, there's a particular wood, I forget what it is, maple or something, and it's his prized possession, we've just moved it from his old house to the new one. It's been him he's held this door for 40 years with the intention of making it into a table at some point. But it's been set out in the weather for 40 years. It's like I don't even think it would burn. That's the state that it's in. Still carrying it around from house to house. Thanks for allowing me to help you move that. It is not easy to do. He should rent it out. He should rot. So I'm thinking we finally found use after 40 years of carrying indoor better to do that and finally make some money. [00:28:47][48.0]

Thomas Keily: [00:28:50] But that's the big difference between like if you own a share in BHP or whatever, there's nothing that you can do about with that. Yeah. That you're you're reliant on what the company does and what the market does. That's how you're going to make money. There's nothing that you can actively engage with that share and change the nature of it and make it more valuable. And that's the big difference with property and sort of where professional property investors, that's where they really look. So buy and hold is is is a strategy. That's how you can make money and property. You buy it, hold onto it. It goes up in value and you sell it and you make money. So that's a buy and hold strategy and that is one way to make money. But you don't have much control in that story and you're reliant on the market. And so, yeah, the investors are aware with a much more interested in what can I do with the property, how can I create value in this property? Maybe it's a renovation, maybe it's a flip, or whatever it is. How can I create value? And I think that's sort of where those property investors will think about property [00:29:50][60.1]

Adam Keily: [00:29:50] or at least how could I give the impression of value by, you know, doing a bodge patch up on a wall. I've also seen done mainly in rentals, the real estate. I've lived it over the years. [00:30:02][11.3]

Adam Keily: [00:30:03] All right. I reckon that's probably enough for today. Hopefully, you found that informative and useful. We'll be back again next week. In the meantime, be sure to give us a rating. Wherever you listen to your podcasts, leave us a review. Remember, you can always send us an email cve@equitymates.com Or you can visit the website equitymates.com/cve. Thanks again to our good buddies at Equity Mates for all their support and thank you for listening out there. Really appreciate it. And we'll see you again next week. [00:30:03][0.0]

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