The Biggest Lies Property Investors Believe (And What Actually Matters)

In this episode of The Bold Property Podcast, we break down the biggest myths holding investors back right now.

From capital gains tax fear campaigns to negative gearing confusion, we unpack what’s actually happening in the market versus the “white noise” dominating headlines.

We also dive into:

• Why government policy isn’t what drives long-term property growth
• The truth about tax and why it shouldn’t dictate your strategy
• What markets across Australia are really doing right now
• How to approach auctions with a clear, winning plan
• Why preparation and strategy matter more than timing

If you’re feeling uncertain about investing or overwhelmed by conflicting advice, this episode will help you cut through the noise and focus on what actually builds wealth.

 Connect with Karl: https://www.thebarnardgroup.com.au

 Connect with Cameron: https://www.thewaytoinvest.com.au

Transcript

SPEAKER_00 0:05

Welcome to the Bold Property Podcast, where informed decisions shape stronger property portfolios. Your hosts are Carl from the Barnard Group and Cameron from The Way to Invest. Each week they cut through the noise and guide you to invest with clarity, strategy, and confidence.

SPEAKER_02 0:29

How's your week been?

SPEAKER_01 0:31

It's been fun. It's been an exciting week, actually, so far. Had a successful auction campaign on the weekend. I think went well. Got a few more clients looking to buy around Australia, so that's exciting, and a few have settled this week. So yeah, lots of happy buyers all around.

SPEAKER_02 0:48

Yeah, good stuff. It's been a busy week in our household. My wife's been away, and we've got the new puppy. It's like having a baby without support. So uh it's been full on trying to keep going, and it's been double shots of coffee a couple times a day. But uh hey, you know, the market's moving forward and clients need support. So jumping in and cracking on. There's still a lot of good markets out there, and um, a lot of them are still moving at a at a fair, fair crack. Now they're there, you know, it depends on where you are in the country. Some of the markets are slowing down a little bit, but yeah, some of the smaller capitals are still ripping along very nicely. In Sydney and Melbourne at the moment, they're slowing down a bit. If you look at the data, but Brisbane, Perth, Adelaide, uh, Darwin, they're all still cracking on and moving forward. So different markets and finding the right market for the client is is always fun.

SPEAKER_01 1:44

Yeah, I totally agree. I think Victoria is quite impressive at the moment, and it's sort of been on hold for the last few years. And you know, there's certain pockets, especially like your gelongs, bendigos, and ballarats in your regional areas, which are quite good, but then in your sort of areas around uh Melbourne, you have the city of Casey, you've got Dandinong and Whittlesey and Mill Park, and they're sort of showing like really strong growth areas as well, which is great. Um, but yeah, as you said, Darwin's great. That's coming along. Is that a long-term thing? Not too sure for me personally. I feel like it's more of a long, like a shorter term sort of gain. Um, but you've got those great rental yields there too, which we've touched on in the past. So yeah, exciting times. Definitely time to get in if you're ready to go. What we do is make sure that you are ready when we sign you up so that you are ready to go, and then we get you into the right place. But it's a fun times. There's lots of white noise out there at the moment, especially coming into that capital gains tax, what they're gonna do. They're everyone's got an opinion on it, I think. Um, and I think one of the best things you can do when it comes to investing, do not invest for tax purposes. Uh, it's a bonus, I always look at it.

SPEAKER_02 2:59

Yeah, correct. So the the topic of the day is going to be the biggest lies investors are told and keep believing. So I think that's that's a good way to kick off this conversation because you're right. Uh, you know, we've got we've got two tax benefits when it comes to property investing. The one is the capital gains tax benefit, and the second one is negative gearing. Now, obviously, in I think it's about the 1990s, the government made a decision that supplying property for people is going to be done by the private sector and not the government, which, if you ask me, was a good decision. I keep on saying. Governments love to waste taxpayers' money, and we just have to be thankful for it in their eyes. So they've made that decision to privatize the supply of property. And what we've seen is there's been a lot of projects where they wanted to increase property supply, and you know, they've had all these mandates with millions of dollars behind it, and all those projects are behind, they're not getting done, they're not getting built, because when the government touches the property market and they start using taxpayers' money, things don't typically go so well. Uh, and look, we can talk about any government project, really. It's always going to cost more, it's going to take longer than it needs to. I'm a capitalist at heart, and I believe the market will demand what needs to happen, and the government needs to get out of people's ways, let that supply, demand, and private enterprise drive the economy forward. So, yeah, like talking about the capital gains tax, touching on that, and inflation, because there's there's a correlation there between those two. So, inflation numbers have ticked up, and when you look at the data, you look at the articles, you look at the economists, the biggest spender at the moment is actually the government. So the government is spending taxpayers' money left, right, and centre. And as I said, they're not always great at um controlling that spend. So, what's happened is at the same time, you know, they always tend to overpay for stuff because of time and risk and all those good things and the way they they run everything. So, what they've done is they've they've been spending taxpayers' money, first and foremost, they've been overspending it. So they've been driving up inflation, but because they've been on a spending spree, at the same time they need more money. So the way that correlates is property investors. So, first of all, they're driving up inflation and they they're saying, thank you very much, you're gonna pay more in interest because the government's overspending. And secondly, the government's saying, hey, we need a bit more money. So let's go play with the capital gains tax rate so we can fill up our coffers a bit. Yes, the government's getting in the way of the property market, and I think everybody just has to end up paying more because of a lot of mismanagement of funds. That's a pretty hot take.

SPEAKER_01 6:07

You know, there is ways around it, which, you know, if they do introduce it, that's that's on them, that's fine. You know, many of the same government have tried and failed and lost elections over it. So I know New Zealand have just brought back to what they had originally because it didn't work for them. But if you want to look at, you know, implementing this and if it is gonna stick, as an investor, I would suggest don't sell. It's all you're gonna do because they're not gonna get that tax thing. Well, you're gonna not sell. So there's no tax break on either side, except for the gain that you're gonna get is from the growth of your property, because believe it or not, I think it's gonna affect about 1%, and then it'll be like for one or two years anyway, and it's not gonna work. It's writing's on the wall, it never has worked. So it'll go back to the way it was, and you'll get your 50%. Also, you know, when it comes to government spending, you're ling $15 billion for CMFEU, you know, well, let's try and work out where that's gone, and then that's $15 billion that we could also put back into the investors that are trying to do good for the country. Bottom line, as everyone says, you don't have to be a wizard, but you just need to supply more homes. It's all you have to do. It's got one job. But uh bringing the supply is not that easy, as the governments keep saying, because they're so far behind in doing this. But I think a lot of it comes down to the red tape when it comes to the rules and regulations of it. So there's certain criteria that you have to have for like size of bathrooms and you know, certain uh like I know, and I I really am for this one, but like when you're building a house, you know, it has to in Queensland, or at least I know for Cairns, that you have to have a certain width of the door, so it's all disability-friendly, which I think is great because it caters for everyone. There's so many different other regulations that are just holding people back or holding companies back to be able to build the homes. But also, you know, the whole immigration problem, we don't have the enough builders, and it's the highest liquidated profession is tradies at the moment. So, yeah, many factors. But if you want to just keep holding back investors, and I know that their plan is to all the investors will sell, and then you'll have more people in their own principal place of residency, but it's not going to last forever because not everyone wants to buy. Lots of people like to rent. That's their own choice, and if that's what they want to do, that is amazing. Um, but look at what everyone does, what everyone wants to do, um, and let the people that are actually providing accommodation for people who want to rent or can't afford to get into their own home, let them make the decision. Don't go taxing people like the land tax, that went down great for Victoria when that was first introduced. I think it was like tens of thousands of investors that are in that age bracket where they're like us, well, I don't need this now, let's just sell. I don't want to pay the land tax. But if you're someone in your building in that accumulation phase, well, you're gonna be like, okay, I'll buy, I'll hold, I won't sell. This ain't gonna last a little because they can't keep this up anyway. And happy days.

SPEAKER_02 9:22

Yeah, and I think you sort of touched on that, right? They said, well, first of all, you know, if if we're gonna reduce the capital gains tax discount from 50% to 25%, you know, it's gonna have a 1% impact on property prices. Well, if the market does 10%, well, it's now gonna do nine. So it doesn't really do anything. And this is typically a government trying to look like they're doing something. They go, look, look, look at what we're doing for housing. But in reality, it's a bit of a tax grab. But you touched on it as well. Like capital gains tax, you are taxed at your marginal rate in the year that you sell. Now, if you were to hold that property until retirement, guess what? You know, you start from zero when it comes to taxation. And then that just works out anyway. And I think, you know, we can get so focused on those tax benefits, but in reality, if you make a million dollars as a salary, right? Let's say you make an extra million dollars this year, there is no tax benefit on that. You are gonna pay your full marginal tax rate on that million dollars, and you still made a million dollars. Now, for property, if you make a million dollars, you are actually gonna get a discount in terms of the tax you have to pay. You still made that million, yes, you're gonna pay a bit less tax than you would have in a salary, but I think people get hung up on the negative side of things, right? So I was once asked, you know, hey, would you want to pay a million dollars in tax? And I said, absolutely I want to pay a million dollars in tax. Because that means I've made three to four million dollars in profits, right? And people go, oh, I don't want to pay the tax. Well, hang on. Tax, death, and tax is mate, those are the two things that are that are a reality in life. So, you know, if you're gonna make a million dollars and you have to pay tax on it, guess what? You've made a million dollars. Yes, you're gonna have to pay tax on it. Yes, that discount is a bit less than what it was before, but you're still making an insane amount of money, and there is really no other asset class that's gonna give you that growth. So, as you said, tax is a benefit. We use that to our benefit when it comes to property, and when it comes to capital gains tax, mate, you're still making money. Yes, you're gonna pay a bit more tax. As you've said, it they've always had to run this back because ultimately the supply of property is privatized in the country around the red tape. Like obviously, yes, we want win the building standards. We want to make sure that properties are built correctly. But typically building the house, once you get to that stage, that's okay. It's typically the planning, the release of land, and all the taxes the government imposes on the release of land and the amount of money they take from that. You know, they have a lot of infrastructure contribution levies when you start doing, you know, I can massive land estate. And what the government would tell you is, well, that money goes back into providing infrastructure for the community. But that very rarely happens. You know, what you'll see with these big land developers is they'll take those taxes on those properties, but then they'll impose on those developers to go, well, we need a bridge over this road. What nothing to do with with the estate they're building, but they'd say, hey, if you want this estate, you have to build that bridge. So that bridge is a couple of million dollars. Um so now the government takes the tax to build the bridge, but then they also have the developer build the bridge themselves. And guess what happens? That's double taxation to a degree. Um and where did where do all those costs go? Well, they go into the properties themselves in order to be profitable. And then you go, okay, that's that's unnecessary red tape, that's unnecessary cost. I remember with with my one of my first property deals, I did a two-lot subdivision, right? Renovate the front house, battle axe block, house at the back. And this was imposed by the local council. They had a big thing about you know clean water running into their systems, which is fine. Now their system is literally the road, it just runs into the street, right? I was required to put in a $40,000 stormwater retention system for one house for a single property. And like the drainage engineer on that property said, mate, the infrastructure they want you to put in is better than what they've got. So I have this massive pit in, massive stormwater retention, and it just runs onto the dirty road anyway. And you go, well, hang on, that's an extra $40,000 that I now have to spend on a property where that cost gets added to that property, right? So yeah, it is interesting when the government gets involved. And we're not talking about one specific side of government, right? We're just talking about the government in general. One of them tends to be a bit worse than the other side, but uh hopefully we don't get into that. But ultimately, I I think you know, fees are factors that scare people. Uh, you know, they hear capital gains tax discounts are gonna be reduced. Well, there's ways around that, right? You might see an increase in properties being bought in trust structures because it's very, very tax advantageous to buy property in a trust because you can distribute that income to different people at different marginal tax rates. The other thing you'll see and you touched on it, is people just gonna hold their properties longer. So as opposed to selling them, they're just gonna hold on to them longer. Um and at the same time, you know, there's different ways to structure these things. But but again, I think the key point is even if we lose out on a bit of that tax benefit, you're still making a ton of money. Yes, it sucks that you have to pay a bit more tax. Um but yeah, I'd rather invest in an asset class that gives you massive growth. Like the dollar amount in tax might be high, but overall the profit you're gonna make is so much better. Um so yeah, look, we'll see where this ends up. They they love bringing it uh you know to the market, scaring people, and as you say, it never typically lasts long because then they go, oops. And and people people go, oh they're gonna make so much more tax if if they reduce that rate. But the flip side is if you just see the amount of tax they already make for property investors, it it's insane. I think we we both agree on that. Is it's white noise, you're still gonna make a ton of money. Don't not invest and let something like this scare you, right?

SPEAKER_01 15:55

Absolutely. And you know, again, have your accountant to run the figures for you to say, is this a good investment, like you know, in the long run? Am I gonna be putting myself into a situation that I can't sort of get out of? It's very important to have that team behind you and make sure you have a good accountant that's property savvy and um can help you when it comes to these questions when you're looking at growing your portfolio.

SPEAKER_02 16:19

Yeah, absolutely. And look, obviously that tax is not on unrealised gains, which you know they were trying to mess around with so many super funds and unrealized gains, which I think is stupid, right? Now you need to start selling your portfolio just to pay the tax on unrealized gains. So luckily it's not unrealised gains, and it didn't go so well when they started messing with the super funds. It's just being greedy, honestly. You'll get your tax when those gains are realized. Why do you need to take it now? But yeah, you're right, a good accountant can navigate this for you. But I think a lot of people aren't fully educated and they they do get scared when they hear these things, and they go, oh, the property market's gonna fall because of it. But a smart investor goes, well, it's not gonna make much of a difference, right? It's white noise. Now it might slow a bit of demand because people get get scared, but the smart investors go, yeah, there's a there's a massive undersupply of property in the country as it is. Like COVID was gonna supposedly tank the property market. Well, we had record runs over that time frame.

SPEAKER_01 17:23

Thing that irks me is that this is gonna hurt your everyday people, if anything. So people that are in your emergency services, your nurses, your um, you know, your doctors, and all this sort of stuff, they're just everyday people that uh trying to essentially get a second income through property, and they're the ones that are getting taxed.

SPEAKER_02 17:45

You're right. Look, this just hurts mum and dad investors. It hurts people that want to build a nest egg for themselves into the future, right? And and the problem is like these people go, I'm gonna pull my bootstraps up, I'm gonna do what it takes, I'm gonna make the sacrifices so I can invest in property to set myself up for retirement. And you know, I see the foreign people go, oh, people shouldn't, you know, investors shouldn't earn, you know, own 10 properties. Well, I think it's like 95% of investors own one investment property. I think it just hurts investors, and then guess what happens? These people are now older, they didn't invest, and now they need to go on government pension, and it's more taxpayers' money where these people were hoping to look after themselves. So, yeah, look, you're absolutely right. I think it's a it's a short-term tax grab because the government's been overspending. That's just my opinion, right? Um, and I think a lot of the data actually supports that. And the other thing I hear, and again, right, I've been seeing some articles coming out from some economists where people love to blame property investors for property price growth. And they looked at the data and said, actually, that is completely wrong. It's mainly your owner-occupier market and at the moment your first-time buyer market that is pushing the market like to the moon because again, taxpayers are now, you know, securing the 5% deposit scheme along with a lot of other schemes, and a lot of the first-time buyers are overspending, like they are getting in, which is great, but the next generation are going to be screwed because of it. So, like people like to point at at property investors, but in reality, I think like only and I might be sta I stand to be corrected on this. I only think about 30% of the market is owned by property investors. 70% of the market is owned by own occupiers. And if you talk about capital gains tax benefits, your own home is capital gains tax-free. You don't pay a cent on that. So, in re- and again, don't touch this government when you're listening if you're listening, Big Brothers listening to our podcast. You know, I I think sometimes people, when they get into investing, they they feel like you know investors are seen as the big bad wolves, but investors provide so much housing in this country, and what we've seen a lot of times is when the government starts meddling, as you said, tenants get hurt because people vote with their money, like all those investors that pulled out of Melbourne, just put their money elsewhere in the country. Um, well, okay, thank you, Melbourne. Well, we'll go invest somewhere else, thank you very much. So yeah, we're getting on a bit of a tangent around with the government, isn't it?

SPEAKER_01 20:25

Yeah, it's uh it's very hard not to. However, uh, there's plenty more to property as well. I thought we'd touch a bit based on being prepared for an auction. Um, a lot of yes, a lot of buyers' agents they don't just offer like a full service. So from your like, you know, that's finding the property for you, finding where to buy the property, the negotiation, you know, guiding through settlement and lots more. However, you know, there's also other things that I provide anyway, is that like you just if you know what house you want to buy, I can help negotiate that for you. Or again, if you know the house that you want is uh going to auction to help you with that. So I had a great example on the weekend. I was successful at an auction for my clients, and we won because we had a plan. That's how I believe we won. So we worked out what the reserve most likely would be, multiple discussions with the agent. My clients had done all the due diligence that I'd asked them to do prior, in like for getting contracts reviewed, getting building and pests done, and then we had a ceiling of uh what we were going to bid at to start with, and what we were going to um end up um with in line with their budget. I knew the valuation of the house, so that was great. And we weren't going to go. This was an owner occupier, so they were prepared to go a little bit over, but not too much, which was understandable because. Because that's not the aim of the game. However, I put the first bid in, and this is after our due diligence, and I wasn't there. I was doing the online bidding, but my clients were there, and they said it was like when you were at the cricket match and your batsman just went out, and everyone's gone, oh. And everyone went, Oh, it is because there were 12 bidders and there was only two left because my first bid had knocked out that whole crowd. So it's just from doing the planning and the due diligence prior. I then was able to get at $55,000 below the value of the house. I was also able to get at over $100,000 below their budget, more than $100,000 below their budget. And it's just from picking the right house, having the strategic plan before the auction, chatting with the agent as well. Some agents give you some information, some don't give you much, and some give you too much. So it's just about asking those right questions out uh as well, and yeah, to be able to secure the property and be happy careers.

SPEAKER_02 23:08

You can never get too much from a real estate agent if you ask me. The more the better. But I think you're right. Personally, I love auctions. I really, really love auctions because look, it's got pros and cons, but the biggest thing for me is I know exactly where the market is. I know where every other person in the market is, and the bidding process is transparent. There's none of these backroom deals where pricing gets hidden, and you know, it's all gray area stuff where multiple you know offers might be involved. So I I love it. You know, and you're quite right. If you are well prepared, it can be an unbelievable process. And I think, you know, talking about auctions, there's the the downside is a lot of times you know, you have to do your own building of pest ahead of time, you have to spend that money. And if you don't get the property, well, okay, you've spent the money on a building pest inspection report. Uh you always do that, but again, it's being prepared, like you said, right? Understanding what the value of the house is, understanding what your budget is, and then being very clear on those, and then only doing those reports and before you go to auction. I think a lot of buyers underestimate the value of properties. And that's why they get disappointed at auctions a fair bit, first of all. And the second thing I see, and this is to all the real estate agents out there listening, real estate agents love to put properties in a very wide price bracket when they go to auction. Like as an example, I'm looking at properties now for a client, and when you look at like real estate, for instance, a property comes up, yeah, sub-900,000 when you put in the filter. But I look at that property immediately, I know that's a $950,000 property every day of the week. So just because it pops up in real estate or domain within your filter budget, unfortunately, that doesn't mean much. I've seen real estate agents like put properties up at $750 in terms of the search criteria that I know are $950. So people rock up thinking, hey, I've got an $8,850 budget, I'm gonna get this. And then that first bid goes in north of $900, and then they're all disappointed. You need to be prepared, you need to understand the true value of property when you go to auction. But when you do, it is a very clear, transparent process. Uh, the last one I did, um, we were the top bid at 1.25, which where we drew the line on that property, we said, look, that's it, that's what we're gonna pay. It's at auction, I'm standing there, and you know, half the people had walked out by that stage, and the agent does scurrying around and they do their little things, and then they come back to me and they go, Oh, the neighbors offered uh 1.2 million. So, we were at 1.125. They said, Oh, the neighbors offered 1.2. And I said, Well, why aren't they bidding at auction?

unknown 26:05

Yeah.

SPEAKER_02 26:06

And he went, Oh, let me go talk to them, right? So they came back, we won the property, and what had happened is the neighbors that was a subject to sale, so they could not bid at auction. So if that had gone to private tree, then there's a very good chance they would have taken the $1.2 million offer on the property subject to sale, but it was a deceased estate, they wanted to move it on, and I looked back, that property we bought that uh six months ago, that's done $200,000 over the last six months. Firstly, because we were at auction, we could actually get it under what it was worth. But at the same time, there were so many buyers who underestimated the true value of that property, and they were disappointed at the auction. So, look, when an auction's done right, I think it is the most transparent process. You can go through, you know, exactly where everybody else is, and there's no backroom dealings to get deals across the line. So, yeah, I like the transparency of an auction. So a lot of people don't, they get nervous, and I understand that. You know, you're gonna be throwing big numbers around. So it's all about being prepared.

SPEAKER_01 27:17

And it is a show. I kinda I believe this is why a lot of them, a lot of the agents and you know, the big companies like an auction, because essentially we're in a business of emotions, it's all about relationships and emotions. So as buyers' agents, we're building relationships with lots of people, lots of different industries within real estate, like mortgage brokers, accountants, real estate agents, and then you know, so we've got that rapport with these people, but then we also are able to disconnect our emotions when it comes to putting in bids. So, you know, no, it's not our money. Yes, we want the best deal for our clients. Are we going to put a ceiling on us so we don't overbid? But we do that so that our clients aren't overpaying or they're not going to be bidding too much, you know what I mean? You know, because the emotions can easily take you well over, and then you're looking at, oh, geez, I've just bought this house, but I'm going to be um skimping it for the next 15 years because I've paid way too much of what my budget is. So make sure that you've got a clear plan with your mortgage broker that you can afford this.

SPEAKER_02 28:27

Yeah, correct. And I think that's that's the big risk with an auction when you look at your competition on the day. Because, especially with family home buyers, you're right, that emotion comes into that bidding process. And I've seen people walk away from an auction where you go, you've just won a property, and after the hammer falls, they just realize they overpaid 100k over their budget, and it was emotion dragging them along in that process. It's hard not to stay emotional when you show in house, right? And and I fully get that. But I've seen I've seen people go away and just it looks like someone kicked their dog after they won the auction because it's easy, especially if you can these small increments 2,000, 3,000, 5, it's only another five, another five. Well, you do that enough times you're $50,000, $100,000 over what you really wanted to pay. And when you go in and go to auction, you need to take that into account. And you know, we've got strategies to sort of minimize the emotional bit from others. Now, if someone goes to auction and they've they've got a budget on the day higher than yours, they'll they'll take it away. But ultimately, you want to go in and you want to ensure that you don't drag those those emotional bidders above their budget when when you go into the process. So, yeah, auction is is it's a lot of data science, and then there's a little bit of art. I love the art bit. Uh yeah, I thrive on auctions. It's just I I think it's fun. It's really a lot of fun when you've done your homework and when you're sort of sprinkling that little bit of art there to sort of win it for a client. It's it's magical. I I don't do enough of them, I need more.

SPEAKER_01 30:10

I agree, they are fun, they look good, definitely got sweaty palms, and the adrenaline's definitely running on them. How about a favourite part of the episode? Is their bold statement.

SPEAKER_02 30:23

We've done a lot of government bashing in this episode, so um I would say, regardless of what the government's doing, property is probably one of the best investment vehicles around. And look at the numbers, look at the bigger picture, don't let some of the noise distract you from what could be what could potentially be one of the best investments of your lifetime. Perfect.

SPEAKER_01 30:56

Mine is go in with a plan, a long-term plan, forget the white noise, and you'll make the right choice no matter what. There you go.

SPEAKER_02 31:08

So we don't normally bash the government, but I think this this episode took us down a bit of a rabbit hole, and I think some of our personal feelings might have come out. But ultimately, clear plan, clear strategy, run the numbers. If the numbers work, then don't let some of the distractions keep you out of uh, you know, a strong market or a strong investment.

SPEAKER_01 31:33

Yeah, absolutely. And consult your experts, the team you have around you, and they're the best people to guide you.

SPEAKER_02 31:40

Absolutely. Well, I think that's a wrap for this episode. Thanks for listening, and we'll catch you on the next less government-bashing episode.

SPEAKER_00 31:51

Looking forward to it. Thanks for tuning in to the Bold Property Podcast. If you found value in today's episode, share it with someone who wants to make smarter moves in the property market. For more insights and support, connect with Carl at the Barnard Group or Cameron at the Way to Invest. Join us next week as we continue to break down the market and help you invest with clarity and confidence.