Untitled Episode

🏡 Everyone is watching the capital cities. Smart investors are looking where everyone else isn't.

What if your next investment property wasn't in Melbourne or Sydney?

What if it was in a regional market with stronger rental yields, lower vacancy rates, growing infrastructure, and the potential for both cash flow and long term capital growth?

In this episode of TFS WealthCast, TFS Founder Pramu Rodrigo breaks down:

✅ Why regional Australia is attracting savvy investors
✅ How to identify a suburb with real growth potential
✅ The biggest mistakes investors make and how to avoid them
✅ Why your finance strategy is just as important as the property you buy
✅ How banks assess regional investments
✅ The regional hotspot currently on our radar

If you're thinking about buying your first investment property or expanding your portfolio, this episode is packed with practical insights you can apply today.

🎙️ Watch the full episode now.

If you'd like to explore your borrowing capacity, refinance your existing loans, or build a tailored investment strategy, the team at TFS is here to help.

📞 03 9193 3634 Book your FREE strategy session with TFS today.

Any information discussed or provided in this podcast is general advice and has been provided without taking account of your objectives, financial situation or needs, you should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product Disclosure Statement before deciding to acquire the product.

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Transcript

SPEAKER_02 0:12

Without further ado, let's dive in. Hi guys, and welcome to another episode of the TFS World Cup. Now, before we begin, let me ask you something. If you had $500,000 to invest in property today, would you buy one property in Melbourne or Sydney? Or would you buy two properties in regional Australia, which will give you better rental yield, which has lower vacancy rates and stronger infrastructure investments? Now most people haven't even considered the second option, and that's exactly why we are doing this episode today. Today we are going beyond big cities. We are talking about regional property investment, the opportunities, the risks, the data, and the real numbers. Because the smart money is already moving, and if you're not paying attention, you are going to miss out. As always, I'm Vish, and joining me today is our founder and director, Mr. Pramu Rodrigo, senior finance broker, property investor, and someone who's been placing clients into regional markets long before it became fashionable. So as always, welcome back to the show, Pramu. Thank you for having me. No worries. So, Pramu, are we gonna jump straight into it? I I know you you know you've got your you've got your facts, you've got your research, you've got the hot spots.

SPEAKER_00 1:33

Yeah, we did talk about we're gonna drop some hot spots in the next episode. Yeah, so yeah, let's let's get on to it. So, what do you what do you like to talk about? Regional Victoria. Regional Victoria, yeah. Is it regional wherever?

SPEAKER_02 1:46

Well, we'll get to Victoria first. Let's start with the big picture, yeah. You know, because I want our listeners to understand the context before we get into the specifics. What is actually happening in the Australian property market right now?

SPEAKER_00 2:02

Excuse me. So, as most of you all have seen in um uh media, the news, uh, especially on social media, quite a lot of uh uh uh opinions and uh uh predictions, projections, whatever you want to call it. Scams, yeah, scam scams, you know. Um it's uncertain, it's uncertainty. It is what it is in the market. Now, to me, it's like there's a GFC, same COVID-19 when the COVID-19 came, uh 2019, December, when when the outbreak came to 2020, mid year of 2020.

SPEAKER_02 2:48

Very similar. You you've been investing in the market throughout the majority of these big crises. Yeah.

SPEAKER_00 2:54

These are the reason the markets are a bit um, how do I say this in a way? The the why people are saying it's uncertain is because they they obviously don't know whether it's gonna go like really go up in market like capital growth aspect of it, or if the price uh property prices will come down. Right? But what do people always tend to forget is the rate of growth. And I I still don't understand so much of media we have, especially social media, but it's it's actually about the rate of growth that can get affected. And we've already seen that because when things like these happen, negative gearing is gonna go away, and um only the brand new properties are being given all these uh uh benefits, the rate of growth comes down, and that's more but what happens afterwards is the most important thing you you guys need to understand. So there are areas investors have to get themselves familiar with. One is the finance uh uh uh environment, how uh the banks are going to look at investors, how they're gonna service them, what sort of interest rates, right? And what's what are the other ripple effects coming into play? Rental demand. Is it going to be the same rental market or will it be more? Will you earn more or will you earn less? If you want if you want to earn more, which markets are willing to pay more? Right? So now it's the time for you to get yourself educated if you don't know what's going to happen. You can play in this uncertainty uh trend. Right? It's a trend. You can go with this, go with the trend, or you just get yourself educated. I think outside the box, yeah. Get yourself educated, have a plan, then execute. That's what I think. It's it's it's one of those times uh in in Australian property market. You need to now start looking into different ways of investing. You need to start looking into different ways of borrowing. You gotta really need to open your eyes on um how to navigate the interest rate markets, right? So budgeting is something that you really need to spend more time, uh, not just asking your chat GPT to do a budget for you. Yeah, you really need to get into it now.

SPEAKER_02 5:47

Right, some in-depth research and talk to some experts. Yeah. All right. So now a little bit about uh the metro property markets, right? So we're building nowhere near enough homes at the moment, right? The rental market is incredibly tight, and regional Australia actually outperformed the capital markets on price growth last year, right? Now that's the context. Now let's talk about the shift that's happening. Why are more investors specifically looking at regional markets right now, including yourself? Why regional? Why the investor shift towards regional markets?

SPEAKER_00 6:30

So when you look at the acquisition price or the entry point to a property market, regional markets are cheaper. Right. So you're not going to expose all your borrowing capacity into one property. You can now expose maybe 70%, 60% of your borrowing power into a regional market and buy an investment property. Get it rented out. Usually these days, the uh the yield in regional markets are above six percent. So if you structure it right, it's not gonna be even a negative cash flow investment. It can be even neutral cash flow or even positive cash flow. Six months ago, we we were talking about near impossible to get a uh uh a positive cash flow property because all the energy, all the uh uh focus were on metro markets. Metro markets, yeah. Right now, all of a sudden we see the positive cash flow markets uh booming. Or booming is not the correct word, uh they're they're being highlighted. Right, because there are areas that you wouldn't have even looked at it when you were investing. I'll give you a very simple example. Investors are investing in in Clyde North, which has done very well. Packenham, officer, uh on southeastern areas, right? Um then we go to West, Wereby, Manor Lakes, Fraser, Fraser Eyes, right? And then you go to North, Mikullum, Carl Callow, Donnie, Donny Brook suburbs, you know, there's a lot of the list goes on. They were they were doing very well very good because first buyers are buying. There's a lot of own occupiers moving to those suburbs, right? Yeah, so so a lot of options to select, and the rental demand was also there. So you tend not to look at markets like Wendigo, you tend not to look at markets like um uh Wollongong uh in New South Wales, right? Uh you you tend not to look at markets like uh Swanhill, right? Uh Warner Bull in Victoria, right? And then you have you know uh uh matured or or uh uh regional regional markets such as uh uh uh Ballarat, right? You tend not to look at them. But then when you come into this kind of an environment, now you all of a sudden do start doing your numbers, you see, okay, wow, my my acquisition price is less than 600,000 total price, in some cases less than 550,000. But my rental income is about 650,000, 700,000, 750 per week. Any person who knows how to put income and expenses into an Excel will work it out. Oh, okay, I'm making $50, $100, $150 a month. So positive cash flow. Yeah, right? So this is why it's a good time to actually really get into those kind of markets before it becomes neutral cash flow or negative cash flow. Yeah, exactly. Because developers are not going to keep it forever for you, right? You might be able to buy $150,000, you put $150,000 to buy a piece of land now. Six months later, same developer will be selling that close to $200,000.

SPEAKER_02 10:30

Now, with with all that being said, Pramu, you know, people can't just uh take this advice and go look at the map, pick a random regional suburb and invest in that suburb and expect it to uh give them a good output outcome, right? Yeah, so I mean, because a town can look affordable on paper and still be a terrible investment. Absolutely, right? Yeah, but there are a few indicators that property investors look at when they are looking into a suburb to invest in or regional market to invest in, right? Now, five such indicators uh population growth in that suburb, the type of diversity in terms of employment in that area, the infrastructure investments, yeah, right, vacancy rates and rental yields. Yeah. So I'll ask you to elaborate on each of these points, or and if I missed any that you usually look at, which was not in this list, you can uh enlighten us there as well. Yeah, absolutely. So let's start with population growth.

SPEAKER_00 11:34

Okay, so population growth is always always a factor when it comes to regional markets. Yeah. Right? So population growth, what springs? Jobs. When the population grows, infrastructure development. Yeah. Local governments, um, state governments, and federal governments' investments coming in. Yeah. The reason the population growth is happening, not because they are having more children in the houses. More people are moving, people are moving for employment. For employment. Yeah. Right. So you have to understand what this population growth is, first of all. So then that will also shows you the industries that are currently booming and what will also happen in the future. When I say in the future, it's not 10, 20 years later. Look at what's happening in the five years' term. If there is a if there is a hospital being under construct under construction or redevelopment of a hospital, what does that mean? That means they're gonna bring more doctors, more nurses, different types of medical professionals coming in. Yeah. So then you have to look at what are the other industries gonna benefit out of that medical industry, transport industry. Then they need to buy vehicles, they need to buy clothes, exactly. Restaurants, then you're gonna go to you know, motor mechanics. They're gonna have business there. Warehousing, bannings, coals, woolies.

SPEAKER_02 13:05

It's it's it's it's a web. And on the off days, they're gonna need to do some extracultural activities or you know, gyms.

SPEAKER_00 13:13

Yeah. So small business opportunities are gonna pop up in regional markets. So when somebody goes to a regional market with a small business opportunity, what does that mean? They their entry point is lower, that means they're gonna profit more, which means they're gonna grow that business, which means they're gonna create more jobs opportunities. Yeah, right? That's what happens when you grow more, more jobs. Yeah. So when that happens, what happens to the economy? There's a lot of income coming in. Income is generated, taxation's gonna come into play, which is good for the government. Look, you have to understand why these things are happening as well. Because it's a revenue stream for the government. Yeah, government is never gonna shut down a revenue stream just like how they did it at mining. Because this is a sustainable revenue stream. It's not like people are gonna expire. People are gonna reproduce, right?

SPEAKER_02 14:10

So Australia has this concept. Fun fact Gen Zs are not uh reproducing as much as you millennials did, but you know, that's uh off the topic fact.

SPEAKER_00 14:20

I'm pretty sure they'll figure out the chat GPT or the AI to work it out a way to reproduce when they're ready. But uh but but what it does is job security comes in. Yeah. Right. So so you have to look at the macro side of the market first to understand the micro levels.

SPEAKER_02 14:40

And and this creates demand for places to rent as well, right? Absolutely. Because not everyone can buy a lot of people.

SPEAKER_00 14:46

All these doctors are gonna come, yeah, all these nurses, new business. Um, give you simple examples like Domino's franchise, right? And and um panel beaters. Yeah, cleaning. Cleaning. It's not all the local people are gonna start doing that, right? Yes, it's not. So the new guys are gonna come in, they're gonna start doing that. So they need places to stay. They also want to invest, which means they want to buy their first home sometimes. Right. Um I'm I'm coming back to the medical um industry here. Yeah, a doctor will start their salary about $120,000 in about one and a half to two years later, they're they are $200,000. That means now they need to work out how to mitigate the taxes or get better tax benefits. So they will start investing. As a human factor, if you look at it, if you're comfortable in an area that you're already in, you're gonna invest there first. That area, exactly. Right? And this is exactly what happened to Ballarat. Ballarat went way too fast as well. Because all our investors came into a place at the right point in the Ballarat, just about to start. Just before that rocker took off, and then I remember my first uh first set of investors. We bought it. Uh what's that 370,000, 380,000? Winter Valley. Winter Valley. Right? That was the start. So it went up to what I think now now some of the investors are selling. The properties at about 720, 710, somewhere 752. And these are big, big blocks of land as well. Yeah, exactly. So if you get to go into those developments at the early stage, your acquisition cost is much lower, your demand of rent is much higher, which means it's positive cash flow, and the rate of growth is far greater. So, your investment perspective, if you really look at it from all sides, going to regional markets is safer if you're looking for safer options. That is my opinion. The reason I'm telling you my opinion, because I have done this in multiple regional locations for myself, not just for the investors. Yeah, right. So, more well as an example, one of the best investments I have done. Barat, my God, very good. Right. So I can keep on telling some of the regional areas I have, but it's it's it's it's me. I'm I'm benefiting out of it. And also the investors who followed me who also took the advice from from our uh uh property advisory firm, they are benefiting already. So I'm telling you right now, you have that opportunity in the market to certain locations. I'm not gonna give all the locations, but I will give you one.

SPEAKER_02 17:54

You want me to give you one or two? Uh I mean, we'll give one. They want to know the second one reach out. All right, done. Okay. You know, you scratch our backs, we scratch up.

SPEAKER_00 18:07

Okay. So you want to go down the scratching back.

SPEAKER_02 18:10

Uh I mean an apple fit. Okay. Alright, so so these are you know a few of the clear indicators.

SPEAKER_00 18:18

Yeah.

SPEAKER_02 18:19

And like you explained, they all work together hand in hand.

SPEAKER_00 18:23

Yeah, and then the you mentioned other things such as, you know, I I did touch point on those very quickly. Yields are much higher. The rental yield, yeah. Rental yields are much higher. Right now, now the vacancy rates. Vacancy rates are much lower. Right now, today for an investor, I was looking at some vacancy rates before the meeting. I was blown away to see the 0.4%. Is that the suburb you're gonna let the end? That's exactly the suburb I'm gonna say because it is going that quickly. And I will also say why it's one of those good times to get into that market. Because there's not as much hype around it yet. Yet. A lot of people know about it, but I'm gonna be worried now if I say this, but but you already bought your property. But that's fine. I will go down that path. But yield uh so rent, uh, sorry, uh, the vacancy rates are lower, which also adds that rental is being higher at 6.6% in Victoria, right? And the locality of it, the location of that suburb. Multiple industries already benefiting and operating and creating jobs. So it's a secure location to invest right now. So that's one of the regional uh pockets uh that you can um really really uh uh benefit. So if I had to drop the name of the suburb not right now, let's let's let's let's build up some energy.

SPEAKER_02 20:00

Okay, he wants he wants to build more, all right? Let's let's as the as this episode uh progresses on, you know. Done. Done. What do you want to talk about else? What what are the other things you want to do? So a town could score highly on yield, right? But be a single industry town, and you'd walk away, or it could have booming infrastructure investments, but vacancy rates through the roof, so you need a full picture of an area before you invest. Yeah, right? Now let's get specific. You've been talking about, and this is gonna be the suburb reveal, so you can, you know, you've been talking about Swan Hill. Swan Hill. Yeah, right? As a case study recently, yeah, right? So the numbers there are pretty interesting. So are you gonna break down these numbers for us? Why don't you break the numbers? I know you've done the research. Okay, I'll I'll break down some numbers, right? So this is for Swan Hill based on the case study that you shared with me, Pramu. So the median house price is approximately 490,000 to 499,000 to 500,000. Yeah, right. The gross rental yield is between 5.5% to 5.7% per house. Right? Vacancy rates are sitting between 0.3 to 0.9%, which is extremely tight. Your median weekly rent is around 480 to $500 a week for a house, for a three bedroom house. What's what's what's the rent? Median rent for $480 to $500 a week. Yeah. Right? Yeah. Yeah. Your median rent has increased 8.7% over the last. 12 months in that area. Yeah. A three bedroom house averages 9.6% per annum. Capital growth. In terms of price growth.

SPEAKER_00 22:10

Yeah. Yep.

SPEAKER_02 22:12

Okay.

SPEAKER_00 22:13

Right. So you you pull these data from where? Co-logic. Co-logic. All right. So that data is easily accessible. Now these data is correct. I'm not saying they're wrong. But do you know the actual data? Actual numbers? These are median numbers collectively taken in in different uh time zones of the markets. You gotta look at exact time zone you are in. This is basically like a tally of all those yeah. You know, yeah, whatever, three years ago, two now, it's coming. Right now, your your median price is between 580. It's a range. I'll tell you why it's a range. 580 to 650. So 580 is pretty much your uh uh three-bedder. Uh this is rent, weekly rent. No, 580,000. This is brand new. Right? For a brand new property. Yes, and then your four-bedders are at about 650. Your rental right now in the market, you probably have about, I think you have, when I checked yesterday or today, the more uh yesterday night, you only had about seven properties to rent. Out of that, there was only one property for, uh, which is a brand new property for rent, and they were asking $800 per week. Yes. Four bedroom house. And that house was bought by an investor, not one of our investors, whoever investors obviously is putting it to rent, yeah, is bought it at $780,000. Size of the land was about 780 square meter block. Four-bedroom house, 22 squares house. Mind-boggling the numbers, huh? So now imagine an investor goes to a market like that, build a brand new house, put it to the market, four-bedroom house. What are you gonna put it out to? I mean, you can definitely charge charge go for 800 premium, but just make it simple to it 750. Yeah, right. So some of the investors from Shawn Hill right now who bought from us, they bought everything under 600,000 four-bedroom house. Everything under 600. And and the land price is constantly going up because investors and certain types of bone-occupied buyers are moving. Yeah, they are realizing I can borrow this, I don't need to wait, market is getting hot, I'm gonna get into this property. Even if it doesn't work out, I can just rent it out and move on to parents' house, wherever, I'm gonna, I'm not gonna be paying uh uh rental or what do you call the uh out of pocket to hold the property. So if you do very simple numbers, we see, right? So so let's go $700 per week. That is uh that is a hundred dollars a day. Three uh thirty-six thousand five hundred dollars per year rental income. If you buy a property for six hundred thousand, you borrow, was that uh you let's say you borrow uh uh 80%. Actually, let's even go even more. Let's go you you borrow 90%, $540,000. You're borrowing, right? So $540. Um, what's the current interest rate these days? Interest only, I think uh we would look at um I think it's about uh 6.5% interest interest only as an investor, yeah. Right, probably higher, but let's say let's say 6.5. Good best case scenario, right? Your monthly, you know not a month, your annual interest is 35,100. Where you are earning 36,500. What is that? That is $1,400, your positive cash flow. What can you use that for? $1,400. I mean, you will you will use it for your you know uh council rates or order rates or whatever, right? Now this is a brand new property. Gamma start giving you depreciation on the property, which is average about $12,000, $12,000.

SPEAKER_02 26:53

Yeah, and also as a with the new budget, as an investor, you buy a brand new off-the-plan uh house and land property, you benefit from negative gearing as well. Exactly.

SPEAKER_00 27:03

As opposed to buying an established so you add a cat positive cash flow level, but then you can negatively gear because you can add your council rates, voter rates, insurances, you know, your what whatever, right? Depreciation comes in coming into play. So all of a sudden, your net income before you bought that house will be increasing close to about a seven thousand dollars of a uh tax return, seven to ten K tax return. So your net income goes up by seven to ten K. As an average Panta in Aussie, yeah, your your income only increases by three point five percent. No, yeah, so if you are earning hundred thousand dollar income now your net income has increased by more than seven percent thanks to an investment that you have done it in a smart way. So when investors, savvy investors, understands markets like this, they won't hesitate, they buy. So when you look at the whole the the the whole market, the whole media, the news, everyone is talking about uncertainty because of the labor government, because of this government, because of you know Pauline Hansen might come into uh power, right? Uncertainty, uncertainty.

SPEAKER_01 28:40

The savvy investors don't listen to those.

SPEAKER_02 28:44

Now, one potential uh assumption that individuals are making around Swan Hill is they're saying it's uh agric agriculture-only uh suburb town, which which is which is wrong because their economy is actually pretty diversified. Yeah, and to name a few, and you can correct me, Pramu. When it comes to healthcare, they've got the Swanhill District Health Service.

SPEAKER_00 29:10

Yes.

SPEAKER_02 29:11

Right? Then uh retail, you know, they've got significant service centers for surrounding towns. So people from surrounding towns actually drive to uh Swan Hill for their retail shopping requirements. Yeah, they've got tourism, it's a tourism hub. They've got the Murray River, they've got houseboats, it's events venue. So during the summer, Swanhill is actually a pretty uh beautiful area.

SPEAKER_01 29:36

Yep.

SPEAKER_02 29:36

Right? Uh education, they've got multiple schools and taves in Swan Hill. Yeah, they've got some renewable energy uh projects that's actually happening there. They have some solar farms in the area and they've got logistics, freight and transport hubs from the uh for the Murray, uh, Murray region. Right? So those are a few of the diversified uh areas that they have diversified into.

SPEAKER_00 30:06

It's not just agriculture. No. If you look at the investors who've been investing in Swan Hill before, have a look at those data and stats. Self-managed super funds, not momentar self-managed super funds, self-managed super funds, like large ones. Yeah, they've been investing there. Right? Why? Self-managed super fund is not a short-term investment vehicle, it's a long-term investment vehicle. They've been accumulating good assets with a very low price because your yields are high. Right. So Swan Hill is just one of them. Yeah, that's right. You gotta understand this. I'm not, I'm not, I'm not, I'm not getting a dollar out of Swan Hill. Yeah, right. I I don't own the suburb or whatever. What I'm saying is this is this is one of the times that you can go to that market and invest before it before it goes now. If I to give you very simple stuff, which I have seen on the job, first investor bought it at total price, land price, bought it at $150,000. Second investor comes in $155,000, third goes to $160,000. Right? It's been increasing $5k, $5k, $5k. So far, for this is for the investors that I have seen from my ecosystem, it's gonna keep going up. I have a feeling within the next two months' time these these options, these prices are gonna go to $650 very quickly. If you buy it at 570, if you buy it at 580 now, or even 600 now, that 50,000 or 70,000 or 80,000 increment is yours. And I've been telling this every time. Ballarat, I told Bendigo, I told, right? Uh uh Morwell, Mowy, right, Newbury, Newbury, New, yeah, Newbury.

SPEAKER_02 32:22

Yeah. I mean Mowy and Morwell are still Yeah, they're still going. They're still good to go. Still still going. Even Bendigo.

SPEAKER_00 32:29

Yeah, still going. Right. You you go now when the land prices are going up, you're gonna make a lot of money as well. I mean, money in the sense you're gonna make a lot of equity for you to leverage if you do your um borrowing capacities, if you do your lending structures right, and yeah, make yourself ready to invest. When you invest in these kind of properties, it'll enable you to go in the two years' time to go and buy more. Sometimes it will enable you to invest within six months.

SPEAKER_02 33:01

Yeah, and again, that comes down to your finance structure. Yes. Each person's financial situation is different, so they need a tailored financial uh strategy that works for them. So whether they go with a bank or broker, they need to ensure whoever they speak to. Yeah, they do a tailored financial strategy for them. Or if they don't know anyone, you know, they can uh talk to us at TFS. That's what we do for all our clients. Uh so Prabhu, coming back to Swanhill, right? Now we spoke about the median house price, we spoke about the rental year, the vacancy rates. Now that's all remarkable, you know, that combination. But when you compare it to what's available in Melbourne for the same money, let's shift gears now. Because even if you find the right region and the right property, you still need to get the finance order. Yeah. So, how are banks actually assessing regional investment loans right now?

SPEAKER_00 33:57

Um look, it's actually to be honest with you, it's exactly the same with uh as it says Metro Suburb. Because banks have already identified these suburbs.

SPEAKER_02 34:13

Yeah.

unknown 34:14

Right?

SPEAKER_02 34:15

So are banks supportive of strong regional markets?

SPEAKER_00 34:18

Absolutely. Okay. We think about it from the very simple risk-taking aspect of it, right? Um, you know, Vishy goes to a bank, bank has no idea about Vishy. We say, I'm going to buy something in Swanhill or Bendigo, I need the $500,000 loan. Bank don't know about you. They'll just check you from your normal information that you provide, but they'll give you the money.

SPEAKER_03 34:43

Yeah.

SPEAKER_00 34:43

If you know, if you tick all the boxes, they'll give you that money. Because they know even if you default.

SPEAKER_02 34:50

So, what do banks look at when it comes to regional uh investments?

SPEAKER_00 34:54

So they they they it's all about risk mitigation, right? So we've seen certain types of suburbs. Banks say we will not lend beyond 70%.

SPEAKER_02 35:02

So that's also a good indicator for an investor to think, okay, maybe that suburb is risky. Exactly. Because banks have already said, no, no, no, we are only giving you 70% risk, you have to put. So because the banks already done their research on the economy. They they know the rates, the vacancy rates, population trends.

SPEAKER_00 35:20

Correct. There are different different banks might say, no, that's okay, we'll go 80%. Yeah. High risk takers, we obviously they're gonna charge a premium price for me. Right? But it will tell you. So if you speak to when when when all our investors speak to us and say, hey Bramu, or hey, um, whoever the TFS broker, um I want to invest in this location. First thing we do is we put the suburb into into into our calculations and see what's the maximum LBR the banks are willing to give.

SPEAKER_02 35:54

Damit is one of our TFS brokers who's been getting a lot of uh regional investment clients for some reason.

SPEAKER_00 36:00

Yeah. But but we but but what he has been doing in a very simple way, putting the postcode into the postcode check and see how much XI can do, or what's the maximum. That will also enable them to add at they're not property advising, they can also enable the brokers are enabled to actually give them look, you can only go maximum of 70%. Now the savvy investor is will understand, oh, really? So I can't go 80%. Is there any other banks? Nope, that's it. They can also go with non-bank lenders, right? They can, but then why do you need to create a positive cash flow property into a negative cash flow property? Because you get higher rates and yeah, yeah. But that option is there for or is it positive cash flow as well? Then they also start looking into it properly. Yeah. Is it really? I have seen a couple of uh I have seen this in in some of the investors that we have done uh mortgages with. They've come, no, this is good, this this is uh you know, growing, growing, growing. Banks say, hey, hang on. Beyond this, we won't give you money. They say it's okay. It's it's we will go Airbnb, we will make more money, bang, they go. They're not getting the money, then they realize it while they are investing on, you know, I'm not getting that, which means I'm putting more money. Now it's affecting my cash flow. Negative gearing, negative cash flow. Yes, I'll get some money back from the government, but it is affecting me every month. By the time I get the money, it has affected me for 12 months. 12 months is what? 12 months means 365 days of your lifetime you wasted not investing in a better place that you can actually enjoy. Right? That's the difference. So it's not it's not always buying an established property or uh buying a house and land or buying buying booming areas, you know, Queensland, Western Australia. It's not always about that. Sometimes it's about your own sanity too. Yeah.

SPEAKER_02 38:19

Yeah, because if you live in Melbourne and you buy an investment property which is about four or five hours away from you, it might not give you that, you know, correct sanity when you sleep.

SPEAKER_00 38:31

Yeah.

SPEAKER_02 38:32

Thinking, okay, what's happening to my property? You know, I mean, there are people who get yes.

SPEAKER_00 38:36

What I tell them to them is look, don't make your decision based on that sanity. That sanity you can live with.

SPEAKER_02 38:43

Okay. That's gonna cost you.

SPEAKER_00 38:45

Because you know, you know, you're not gonna live in that investment. So don't, that's an unnecessary thing that you're worried about. But if it's going to really affect your cash flow, that's gonna affect your sanity. Right? You know, we see you you can only put $500 a month for an investment property. Now, because you've done the wrong investment or because you've done the wrong structure, it has forced you to put $800 a month, which is $300 extra. That $300 you have already planned, $3,600, to go at the end of the year to whatever the country you want to go and have some fun. Fun. Now you can't do it. That is where it's gonna hit you. That is where people say, I don't like investment, it's it's it's a pain. I will never invest in property. No, no, no, I will only do this, I will only do that. That because they have done the wrong investment in their history, so they are living with those scars. And scars don't heal.

SPEAKER_02 39:53

Exactly. So, all right, Pramo. So just to recap what you just what we just spoke about, right? A few minutes ago. So banks actually look at uh suburbs, and you know, so uh if you if you actually have a good broker, your broker, you need to speak to a broker first, and the broker will help you identify if a suburb is good or not, as well. Yeah, if the broker has gone through all bank policies, yeah.

SPEAKER_00 40:20

So at TFS, one of the trainings that all our brokers go through is I didn't uh a property market training. They all understand how the market works, they're being always given updates on the markets, right? Even even our brokers listen to our podcast.

SPEAKER_02 40:36

Uh uh very much shout out to uh one of our senior brokers, Mr. Amita Dasana. He is always coming up to us and uh he's actually giving us ideas about this on that. I mean, even this podcast to a certain extent, he's because of some of his clients who keep calling and asking you more information about the suburbs.

SPEAKER_00 40:58

About about yeah, you know, suburbs. So so so the training program is very important to a broker to actually understand the market, not just the finance market. You gotta learn about the property market. Once you learn about the property market, you can really give right advice to the customer to do that finance correctly or structure it correctly. Right? I'm not gonna I'm not gonna um talk about the wrong things other brokers do. I will only tell you what we do, right? What I do, I what I make sure my brokers they get to know about the property market, they understand it. They also listen to the podcast, they also go and learn more, right? Educate themselves every single time. Updates, updates, updates. So then the output of the finance is because of the updates. Yeah. Right. So, so understanding that is very, very, very, very, very important. So that's why whatever the I mean, we we're not doing small numbers, we're doing good numbers. That's why people want to do things with us, I I suppose.

SPEAKER_02 42:12

Right. I mean, that's the reason we uh in the in Victoria's top 15 brokerages every year, right? AFG awards, yeah.

SPEAKER_00 42:22

Yeah, that's I don't know how they, you know, but it's it's uh um but but uh you know the the loyalty that's what matters. You understand what I'm saying? Yeah, the customer loyalty.

SPEAKER_02 42:38

So Pramo, okay. Now now in the current now now we spoke about how you know properties in Spawn Hill are positive cash flow, whatnot, right? But in the current market uh market rate environment, right, should investors be prioritizing, should investors be prioritizing cash flow or capital growth? Current market? Current market because traditional people chase growth. Now, has that changed in this current market?

SPEAKER_00 43:07

Cash flow and capital growth. If you can have the both, have it. I mean, the what's the mindset like now? Now, okay, let's take you. But but it's very hard to do it by the way, yeah, if you don't have a mindset to go to regional markets. If you're gonna stuck yourself, if you're gonna if you're gonna stuck yourself in metro market, you're not gonna have the cash flow.

unknown 43:34

Yeah.

SPEAKER_00 43:35

You wanna lose it, you wanna lose. Because your acquisition price is higher. So therefore, you it's in it is impossible to have a cash flow unless the rates go down back in the day about 1.99% or two point five percent.

SPEAKER_02 43:48

Yeah, I don't think we'll see the days like that. But that many times slowly this rate, you know.

SPEAKER_00 43:52

That'll never happen. Yeah, right. So it it you're not gonna get them, the both together. So, if you want to invest, pick the one that you really like, and also understand the one that you really don't like. And know why you don't like it.

SPEAKER_02 44:14

And it comes down to what we always talk about, you know, do the numbers on whatever investment you try to do.

SPEAKER_00 44:20

If you really think about it, cash flow versus capital growth, most people will go with capital growth because they will think capital growth is where I'll make a million dollars.

SPEAKER_03 44:32

Yeah.

SPEAKER_00 44:32

Because it's it's a long, it's a long game. It's a long game, right? But they don't do some of the numbers such as capital gain tax by the time you actually sell it. That that is where the structures come into play. Right? So so again, it's it's I I can't actually give your answer just like that, saying, Yeah, you know what I'm saying? Yeah, it's it's a very hard question. What do you like? I like both.

SPEAKER_02 45:04

Yeah, I mean, look, look, yeah, cash flow, capital growth, it's good to have a mix of both.

SPEAKER_00 45:08

You need both. I mean, you can counterplay it. Let me put it this way when I'm doing it, I'll have some of the cash flow positive properties, cash flow negative properties. I offset it.

SPEAKER_02 45:20

Yeah, positive will pay negative. But for someone who wants the best of both worlds, like you said, regional markets are currently the place where both are genuinely achievable. Yeah. So let's talk about the other side of this. The mistakes. Because we've seen people get this wrong. What are the three most common mistakes investors make when it uh when it comes to looking into regional properties?

SPEAKER_00 45:43

They think they can subdivide the property into 10 lots and make a killing out of it. Number one mistake. So they buy a bigger land. It's regional, I need a bigger land, I can subdivide it later, but they don't have a $50,000 extra to even pay the town planner to subdivide it. And also there's restrictions around subdividing. Yeah. So you then you can't rent it, you're not getting getting the rent that you're supposed to get because in the old house, big land, so much of expenses, so your rent is gonna come down. So basically, those people are following the hype. Yeah. So they they they want to do a metro strategy in a regional market, it'll never work. Right? Mistake number one. Mistake number two, they think market is paying 700. Let me push it for $900 per week. I have five bedrooms instead of four. Their fifth bedroom is that extra living room that they convert to a fifth. It's on the market, not making money. You're paying, then it becomes I will never invest again. This is a wrong investment.

SPEAKER_02 46:52

Yeah, because I mean, even when someone goes on the market to look for a place to rent, you're gonna filter your search based on price. Yeah, you know.

SPEAKER_00 47:01

Yeah, so so the simple fact don't be greedy. Yeah, third one is the most interesting part. Third one is where a lot of people try to overcapitalize in a regional market. They say, okay, I want to buy a 500-square meter block, but I want to build a big double-story house. Big no no. Big no no. So they you know, you're not you're not gonna get the money back.

SPEAKER_02 47:37

I mean, truth be told, from we've we've seen all these three scenarios play out, right? And we've seen them play out badly. And the brutal truth is they're all avoidable with some upfront discipline and proper guidance. Now, let me ask you something a bit different. Technology and AI have changed so many industries. Yeah, you know. Uh changing. You're you're becoming a master of AI. No, I'm still learning about this thing. Right? How is this changing the property investing market specifically? In terms of because there are so many tools that people can utilize now.

SPEAKER_00 48:18

Simple things, right? Before you get to the advanced level of using AI to do anal analysis for or of the suburbs analysis of your builder analysis of, I mean, there are even more advanced level you can go. Use AI to simplify your investment, right? Get AI to look at your current situation and tell AI, looking at my current situation with your probabilities and projections in certain information and data that you can access, can you give me a plan of what I should do? It might even tell you don't invest. So then don't just take the word of AI, then look at the stats and facts that AI come up with. Ask why you did it, how did you came to that conclusion?

SPEAKER_01 49:18

Or another thing, when you start on AI, get the AI to do some updates of your properties.

SPEAKER_00 49:26

Maintain an Excel sheet of your properties. Are there any ways I can improve the property, uh, my my existing portfolio? Uh, am I doing certain things wrong? Diagnose it. Right?

SPEAKER_02 49:45

We used to get paid for these diagnoses. And also with with some people, you know, using AI, you know, the term uh analysis paralysis. Yeah. Some people go too in-depth with AI that even the AI gets confused and ends up confusing them when they don't know where they started and where they ended up.

SPEAKER_00 50:02

Yeah, yeah. Yeah. You know, so yeah, yeah, it it it it it'll take you to be carried away. Yeah, you gotta stick with your program, you gotta stick with you gotta have an objective, what what I need to do, what's my prompts are. Your prompts must be correct as well, by the way. Yeah, because guys, uh Chat GPT is only as smart as the person using it. Yeah, you have to be very, very careful there too. Yeah. Um, but if you use AI into into managing and diagnosing your current portfolios, you will be able to advance yourself from that point onwards. Yeah. Because you will understand how it works, you will understand what types of prompts it needed. Because AI can't lie to you because you know exactly what you have, right? Yeah. In your pocket, if I if I'm the AI, I tell you, okay, you uh you might say, Well, From what do you reckon? What do you think I I have in my pocket? What if I said uh I believe that you have this amount, and if you go this and AI can't lie to you. You know exactly what you have, so start from there first. From what's in your pocket? Your your your platform, your domain. Start from that. Right, I'm giving now AI uh uh uh advice as well.

SPEAKER_02 51:29

I'm not no, I mean look, we need to come uh our podcast is very diverse.

SPEAKER_00 51:33

You know, it's not just property and finance, but using AI into finance, using AI into investment and property, it's it I think it's a must because I'm teaching my kids already about it, how to do it. Yeah, and how old are your kids? Right, it's seven and and and and and uh uh uh twelve. Yeah, both of things, eight and thirteen. Yeah. We sometimes on our way to school, we we actually talk with AI, we do tutoring with AI. So, what I'm teaching them is to use the AI in the right way. Tutoring means you learn, you ask questions what you need to learn. Don't ask things what you don't know and just say, our AI told me this. Yeah, you'll never ever become successful in your life. Right, because when they grow up, they have to come to my business, they they need to do these things in in my way, in my domain. They might do it in their own way, but they gotta understand the fundamentals how it works. Yeah. Right. So same thing goes to investors, property investors, investors into shares, you know, if you if you're looking getting getting into businesses, right? Now come on, come on. How how how long does it take for you to do a business plan now? Accountants used to get paid for this thing, right?

SPEAKER_01 52:58

Simple, it's a it's a it's uh it's a revenue just gone. Just gone. Yeah, we'll do it for you. So learn how to do it.

SPEAKER_02 53:06

I mean, it'll be better uh in some much better than an accountant. All right, Pram. So we've come to the end of this episode. Okay, been very insightful. Yeah, uh, quite a long episode as well. Is it from our usual? Yeah, it's about 50 53 minutes. Oh wow, uh 50 plus. But I didn't know that. As always, before we end the episode, to recap, you know, now this episode we spoke about uh regional investment hotspots and why invest in regional markets, what to look for, how to structure your finance, the importance of speaking to a broker, right? And also, banks can also give you some inside information, clues, clues, right? Clues, but to do that, you you need to speak to a good broker, yeah, because you don't have a good relationship with the bank, but the brokers do. Yeah, right. We need to leave uh listeners with some uh promo pieces of advice. So three pieces of advice. You're putting me on the spot, Mike. All right.

SPEAKER_00 54:09

Uh okay, what what do you what specifically for regional property investors? Right, okay. I think the three mistakes I told you, yeah, right, go back to that. Yeah, write it down on a paper. Yeah. Don't do them. Advice number one.

SPEAKER_04 54:24

Yeah.

SPEAKER_00 54:25

You can thank me later, whether you do business with us or not. I don't care. If you meet me somewhere, you can say, hey, mate, thank you. Yeah. Thumbs up, whatever. Um, don't get carried away with these regional investments that you're gonna double your property value. Please don't get carried away. Plan it. Learn it from the year one, what I need as a return on investment, year two, year three, year four. Do I need to hold it for five years? Compounding growth. You gotta learn what is compounding growth, then go to real markets. Number two, you gotta use uh uh local agents to rent your property out. Please do not use your metro agent who's renting all over the place in metro. I've seen I've seen agents who have a property in Clyde North, Mikelam, Weraby, my god, I don't know how they how how he he or she is gonna travel like that to manage those properties. Don't you do that? Please have a local agent who understand the local market, who understand the language, who understand the lingo of a local person if you happen to have a local person as your tenant. Right? Yeah, uh third one, an advice. Um go to church. I don't think that'll help you uh to get into the regional markets. Um regional markets. My last my last piece of advice for regional markets is very simply um go and read the councils, the particular local council investments, or what they are doing, the communities, what what kind of things are happening in that area? Are there any festivals happening? Learn the the regional language, don't just become an investor. Yeah, I've got a property there. But if somebody asks you a question, oh do you know in Barad they had this uh festival the other day? I didn't know. The reason I'm telling you to know these things because it will give you so much of information and data of the type of investments, type of properties, type of businesses as well that you you that you could actually invest in those regional markets. Yeah, knowing the local uh local, I mean getting yourself into that local market to understand the the way they work, the way they speak, it'll help you to make your next investment in the correct way.

SPEAKER_02 57:30

Is that yeah? Is that good? That's good promo. And also, you know, uh since you said that, I've got this saying I cooked up in my head, you know. Okay, he cooked something. Here we go. Don't wait for perfect. Uh-huh. Build the strategy, focus on the fundamentals. Ooh, that's very powerful. I think we should use that. Yeah. You just cooked it? Yeah, I cooked it some time ago, but you know, it's been goes well with this uh with everything you just explained.

SPEAKER_03 57:58

Yeah.

SPEAKER_02 57:59

Right? So there you go, guys. That's amazing. Regional Growth Hotspot episode. So, with that being said, thank you guys for tuning in to another episode of the TFS Wealthcast podcast, and we'll see you guys on the next. Thank you. Thank you for tuning in to another episode of the TFS Podcast, where we turn knowledge into action and big goals into real results. Don't forget to like and subscribe and share this episode with someone working towards the next financial step. So, with that being said, until next time.