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Finance, But Neat
Finance, But Neat is a home loan, property and money podcast for Australians who want to get their head around the big stuff — buying a home, building a portfolio, borrowing smarter — without someone making it harder than it needs to be.
Mortgage broker Alex Watson hosts alongside Bindi and a rotating cast of industry guests who actually know what they’re talking about. The conversations are real, the rapport is genuine, and nobody’s here to sell you anything.
The name’s a nod to whiskey — we think the best finance advice is like a good scotch: no ice, no mixers, nothing to water it down. Just the real thing, straight up. We may just enjoy one on the way.
Finance, But Neat
Our Budget Icks.... We mean Response
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
The budget dropped. The hot takes followed. We did something different.
Three conversations with people who actually work in this space every day — a financial planner, an accountant, and a buyer's agent — to give you the honest read on what's changed, what hasn't, and what you should actually be doing about it.
In this episode:
Riley Jan — Financial Advisor, Cruz Financial Nothing is law yet. But the structures conversation has fundamentally changed. Riley breaks down what the CGT changes actually mean for investors, why the numbers still work for property long term, and what he's telling his clients right now.
Laura Stauder — Partner & Chartered Accountant, Empire Accountants. CGT, trusts, companies — Laura gives you the plain "English" version of what's shifted and what you need to be thinking about before you make a move. Spoiler: the answer is get your team around you.
Colin Lee — Buyer's Agent, Inspire Realty Seventeen years in the game. Still buying. Colin explains what investment grade actually means on the ground right now, where the opportunities are opening up in Southeast Queensland, and why fear and uncertainty is exactly when he has faith.
And then I land it with clarity.
The budget might change the rules. It doesn't change the game.
Connect with our guests:
Riley Jan — Cruz Financial: riley@cruz.financial
Laura Stauder — Empire Accountants: laura@empire accountants.com.au
Colin Lee — Inspire Realty: colinlee@inspirerealty.com
Work with Alex: www.funded.finance/podcast
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Finance, But Neat is hosted by Alex Watson, an accredited mortgage broker and director of Funded Finance.
Information shared by guests reflects their own views and expertise and is general in nature only.
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I lied to you. In the soft launch, I said I wasn't going to react to things. Especially the budget. Like we're a small team. That would just be exhausting. Instead, we'd keep stuck to true time-tested principles and how to create wealth slowly and surely. All underpinned with some really solid advice and information around leverage. But then as things started to evolve with the budget, I started to wonder what this show is actually for, and to be honest, who it's for. You see, we simplify things that aren't explained well. We make them neat. And what could be a bigger example of that than the budget? And to be honest, what a better platform than a podcast that I'm in charge of, no time limits, and we can just execute, talk, and understand. And so by now you've probably seen a lot of takes, a lot of headlines, maybe some crazy tips, how to avoid XYZ for legislation that is burning the world down or not, we'll see. All ridden with witty repartee and quick whips. And while I'm sure you're aware I have quite the razor-sharp wit, I find it actually honestly exhausting to figure out if someone's joking or being serious. And so I want to take some time to take a step back and give you something useful. Something that you can actually execute with and in make informed decisions using. And so Australia has always been about, at least to me, everyone having a fair go. And I want the government to have a crack so I can keep having a crack. My grandmother game to this country with barely a cent to her name, just a few bags and her son, my dad, in tow. And then on my mum's side, I remember chatting to my auntie Willie, and she's talking about moving to Australia and living on the eastern sea board, eastern beaches with packing crates as houses, timber packing crates. Those people are all homeowners now. And so as a first generation Aussie, at least born here, my wife in the same boat, I want to see that we can keep having a crack. And there are still so many options to make that happen. It's not over. And I'm sorry I lied in the soft launch, but I think you'll find that this one, it is so worth it. We've got three conversations coming up. One, Riley. Riley's incredible. He's on a podcast with us next. He's got an economics degree, law degree, he's a financial advisor, and he's about to have a baby, so thank you for giving us some time, Riley. And there's no one better to talk about the pub test and how Aussies invest and what these economic principles actually mean. Number two, we've got Laura. She's the accountant in the room, my accountant. Look, CGT has changed structures, maybe. They matter more than ever. And she's the person sitting across from investors and business owners every day, translating what this actually means. So let's get some reality. And then number three, Colin. Oh, my favorite Colin. Why we're still investing long-term, better assets, pay down debt, get income, better properties, longer term view. And then I'll land it. And so the map hasn't fundamentally changed. The road conditions, they're slightly different. But we're Aussies. We know how to adapt with the right cars and vehicles. So let's get into it. Riley, thank you so much for joining me, mate. Uh, there's been a lot going on in the budget, right? There's a lot of different ideas, a lot of different opinions. And I just wanted to touch base with yourself and ask you a couple of questions if that's okay.
SPEAKER_03Yeah, absolutely. It's fine. There's a lot to talk about. Still a lot that we will have to talk about in uh July and the coming sort of months in the new financial year, but happy to chat about uh draft proposal.
SPEAKER_01Awesome. So, mate, I guess first cab off the rank, what is changing how you're structuring client portfolios post-budget? There's a bit of ambiguity about how this is all being executed. We'll obviously got to go through parliament, but what are your first reactions to that?
SPEAKER_03Yeah, well, the first reaction for a lot of people is don't panic. A lot of people move straight into panic mode uh from Tuesday night. And I know for my calendar personally, it just went straight away to form completely full. Everybody wants to chat. The first thing I'm thinking for pretty much everybody is nothing is law yet. And this government and plenty of governments uh of the past have a history of backtracking on things, overdoing or overcooking certain proposals, and then getting second opinions and the debate, you know what I mean, uh picks up from that point and they backtrack. So it is worth uh saying to anybody that's tuning in here, as well as my clients, don't panic over a proposal. There's still plenty of time for us to think about what the next steps are. In saying that though, for my clients in particular who may have been on that journey where they wanted to purchase an investment property, um, I am telling a lot of people just to sit and wait. And that also goes for people with uh considering things like family trusts. Um, but overall, uh, one thing for us to be aware of is that really outside of the family trust realm, just to keep it property focused, the government is trying to really hit residential property with a sledgehammer. But there are certain areas that are completely unaffected, you know what I mean? Shares, superannuation for the most part, commercial property even. So people that have already diversified or are looking to diversify, they will be far better off than somebody whose entire strategy was property, property, property, like a Red Vesta.
SPEAKER_01Awesome. So something I think that's really lar looming large in my mind and similar to what you just said, the ways that we invest and the how we invest and the different assets we invest into, is that going to make it easier for your job to help people diversify from here on? Because it is limited slightly as to the overall, you know, carrot that's hanging for a lot of property investors.
SPEAKER_03Yeah, it's a it's a little bit frustrating because in the in previous years I've had a really good uh network of people around me that were in the property space where they had clients that were either starting their journey or in the middle of their journey. This is property journey that is, and they needed advice because they didn't know what to do next. Unfortunately, the way I'm looking at the budget, if everything gets through at the moment, is there's just a few uh sort of tools in my toolbox that are now gone. So some of the structures like family trusts and bucket companies completely gone. Uh, for a lot of people that were on the fence of being able to afford um an investment property or two and take advantage of that leverage. But between borrowing capacities uh potentially dropping and um just overall cash needed to uh keep that property afloat for 20 years, it is becoming harder, um, which I think is a bad thing. It's a good thing for financial advisors because there's going to be a lot of people that need advice. But I do think it is a bad thing because it means that it's a bit hard to uh, for lack of a better term, separate the men from the boys with financial advisors, uh, given that we have all got maybe three or four tools in the toolbox now. Um, some of the ones that were more um educated on certain structures and willing to uh collaborate with accountants on what the next best step is. For the short term at least, that's sort of been hit with a sledgehammer. But if this law gets through, it might take us three months, six months, a couple of years. Um but there will be another loophole that comes in, or another, not necessarily loophole, another optimal strategy for the vast majority of people.
SPEAKER_01Awesome. One of the things that I've been wondering with the CGT changes uh that are coming through, if the discount decreases, it all passes through with a budget. Does P and I start to become more attractive over time than I think the optimization of interest only has kind of been uh looked at the last few years?
SPEAKER_03Yeah, it's a good question, to be honest. Um, and it could go either way. Um with uh somebody that's purchasing an established uh property, for example, that cannot get the negative gearing uh benefits, principal and interest may become more compelling because that loan isn't deductible. So under the old rules uh with negative gearing, you'd keep that investment debt interest only, have lower repayments, then allocate that surplus cash flow to your non-deductible family home or to shares or super or whatever or to your next property. Now that the uh the current property you're buying is not going to uh get any negative gearing benefits, then having an interest only loan is sort of less attractive there. Um so it does need a better justification compared to years of the past where people are pretty much just scaling interest only, interest only, interest only. Um if somebody that's trying to create uh equity and wealth over the next 20 years, then um if their family home is paid off, for example, yeah, they may go and look at a principal and interest repayment structure on the uh investment property. Um but one thing that you would know better than me is that uh from what I'm hearing on the ground is that people's borrowing capacities already have reduced and could even reduce further. Um and then given there's no negative uh gearing, which is obviously helps people hold a property because they're getting the tax benefits through either a PAYG variation or at the end of a financial year. Now that it's going to cost up to 50% more to hold the same property, if you're now also going from interest only to PI, which is higher repayments, it does mean that affordability considerations become more and more and more important than what they previously were.
SPEAKER_01Yeah. The look, borrowing capacity has dropped drastically over the last 10 years. Uh when I was first becoming a lender and learning what I do, we would easily able to upgrade people, get them into a next home, work through that process. And these days, you know, with things like uh repayment loadings, assessment rates changing over time, uh household expenditure measures, so hem, which is a big, big thing increasing with the cost of living, it's become harder and harder. And I think a lot of people are in a higher tax bracket with higher, you know, uh tax which hits negative gear. Negative sorry which hits your taxable income on the back end and servicing and everything. So it's this really perfect storm over the last 10 years, uh probably eight years post-Royal Commission that we've seen borrowing capacity just tighten and tighten and tighten. And I I think we'll chat to an accountant about this later today, but I think structures and everything is going to be more important to really learn more about as the average investor. But with all these changes, can you just walk us through why the numbers still make sense to have exposure to residential property investing?
SPEAKER_03Yeah, well, it really depends on um where you're at in your journey. And you touched upon there uh with structuring. Structuring is really, really important because it's gonna relate to how much you actually get to keep at the end of your journey. If you consider your structuring before you go out there and invest, that's gonna be, you know what I mean, extremely important because it's not about how many properties you own or anything like that. It's how much wealth are you actually creating in after tax dollars that you will get to retire early with or retire with or pass to the next generation. So um, I look forward to listening in with the accountant because the structuring part's gonna be fantastic and a lot has changed there. Um, but in terms of I'll give you I'll give you a hint.
SPEAKER_01She's very on the fence about everything.
SPEAKER_03Yeah.
SPEAKER_01She's an accountant.
SPEAKER_03People are, and it's it's really for everybody listening in, it's just a wait and see game. We don't know what to get approved. If things get approved as they currently are, um, company structures could become for some people uh a more attractive option, less flexibility. Um, but at least it has a maximum tax rate of 30%. Trusts now have uh a minimum tax rate of 30%. So um something will change there. Um now I do apologize, Alex. You asked me a question and as always a goal topic, so you might need to restamp the children.
SPEAKER_01You and me both, mate. Why do the numbers still work for residential property investing?
SPEAKER_03Yeah, well, look, at the end of the day, it um it's it's about taking that long-term view. Like I'm not here to say we need to throw the baby out with the bath water and never invest in property again because of a budget proposal that could very well be overturned at the next election or may not even get through as it currently stands in a couple of months' time. So assuming people are happy to sit tight, right, and figure out what the rules of the game are, as a long-term asset, it is still a fantastic asset. So if you can't access negative gearing, absolutely, it just means that you need to uh wait and see what you can afford. Um, but overall, if we are still getting a total return of let's say 7% to 11%, um, that's total return. Um, and if the vast majority of that is capital growth, which in my opinion is the way we want to invest, obviously under the new indexation rules, we're going to be paying a little bit more tax, but you're only paying tax if you're making money, right? As part of most people's uh wealth creation journey, we've got the four pillars of wealth. One of those pillars is utilizing leverage, right? And the power of leverage. And there's two really good ways to use leverage. First one is property, the second one is to potentially debt recycle into shares. And shares isn't for everyone because it has a lot more volatility than property. So overall, property bricks and mortar is it's been around for a very long time. It's still going to be around into the future. People just need to think about um, can I afford this first and foremost? Um, under the new rules, then is it, uh, I think above everything, isn't an investment grade asset because it's today, under the if the new rules get passed, it's less about getting property, property, property, and more about with your finite amount of surplus cash flow, what is the best quality asset that I can get at this point in time? Because that's what's actually going to leave you with the after tax dollars one day when you sell.
SPEAKER_01Awesome. And I I think that's a really key thing to keep in mind is the the government tries to take negative gearing away from existing properties, focus on new builds property to fix the housing supply issue that we've got, that we still need to make sure we're getting good assets.
SPEAKER_03That's exactly right. And when we look at supply and demand, um, for me personally, just as a disclosure, uh, I'm not going to be investing in new builds. Um, there are plenty of areas where they do build new houses and it's in a landlocked area and they will do perfectly well over a long period of time. But in my experience, a lot of new build areas, it is uh for the foreseeable future a substantial increase in supply because they're building more and more and more houses. And if demand stays the same and supply rises, then the price isn't going to rise as well. So we invest our money for capital growth, not income, in my opinion. Um, and that's how we're gonna make the most amount of our money uh in property and whatever asset for capital growth. So uh for me personally, I think it just rams home for a lot of people. What is the order of my financial lifestyle? Like the life I'm trying to create. And I think it just takes it back to fundamentals for a lot of people that may have been on a rent vesting strategy. Maybe we need to bring the family home forward if we can. It is easier said than done. If you live in Bondi or North Sydney, it's gonna be pretty tough. Um, but really, it just for me, family home first, leverage second, whether that's shares or property, and then super still unchanged from 1 July up to $2.1 million per person if you're retiring, uh, is the general transfer balance cap, which is the amount you can have tax-free. Um, if you don't plan on retiring pre-60 and you love your job, that's a very, very attractive structure with some surplus cash if you have it.
SPEAKER_01Awesome. Uh, mate, I won't keep you long because you've got to run, you're a busy man. What have you got to say to people who are a little bit spooked out of investing into property at the moment?
SPEAKER_03Yeah, great question. I've got a lot to say to be honest, but I would just say uh be patient and then just look at your own situation objectively. Take emotion out of it. If you already own the properties before budget night and you run the numbers or you get advice for someone else to run the numbers like we do for our clients, you already have access to, you know what I mean, the negative yearing, which is grandfathered. You probably just need to think about what sort of asset you hold and how that's going to be um changed from a tax calculation perspective from one July 27. I think a lot of people are going to need to get valuations leading up to that. Um, but do you already own property or did are you are you starting your journey now and you're thinking you're gonna own property? Um if you are only starting your journey now and you own the family home, then it it could still be a fantastic avenue if you were thinking about going down a rent vesting path. Unfortunately, it's a lot less attractive than what it was. But the second thing is just ask yourself deep down was I investing because I heard something on a podcast or I was following a book or whatever it may be, because a lot of these resources were recorded, drafted, written under the old rules. And you just need to think about how does how do these things slightly change? Get yourself advice and um when you're thinking about investing, uh, make sure that we're buying assets that are investment grade. We're not buying assets for tax benefits, we're buying a long-term set and forget asset for 20 years.
SPEAKER_01Awesome. I look, I love that because I think from my perspective, and you know I'm I love cash flow, right? Uh I'm a nerd when it comes to that sort of thing. Most of the people, I would say all the clients that I work with, I know they can afford the gross payments prior to any negative gearing kicking in. That's it's really been part of the servicing assessment allows for that. You get that negative gearing once a year, generally speaking, unless you opt in to pay cycle. But I think a lot of people have the affordability still, if sometimes the serviceability doesn't appear. And it'll be really interesting to see what accountants, financial advisors like yourself and banks do to make sure that people can still enter the market and invest. And I think personally I'm looking at going, well, what actually changes in my world when it comes to my income, my wife's income, my household's expenses. It's generally not that much when these giant world events happen, like fuel prices. I I drove V8 and I didn't feel it. So if I'm not feeling it, we're all fine. That's my opinion. I'll stick by it. But mate, thank you so much for joining me today. I really appreciate your time. We're gonna move on to the next person.
SPEAKER_03Thank you, mate. Thanks for having me.
SPEAKER_01Walt Riley just said it was incredible. Don't panic, nothing is law yet. And who knows better than someone with a law degree. But the structures conversation has fundamentally changed. So what do you do? You call your accountant Laura Stouter. She's mine. She's gonna tell you exactly what's changed with CGT, give you some info about trust, companies, and what you need to do about it. Laura, thank you so much for joining us here at Finance But Neat. Uh, last minute ring-in, thank you. But the changes were I believed were so important to self-employed clients that I work with, property investors that I work with as well, that I absolutely wanted to get your opinion and information and knowledge on a few things that just aren't clear yet, right? So, first thing off, CGT changes, what are they and what do they actually mean for property investors?
SPEAKER_02Thanks for having me on, Alex. I guess it's really important to point out here that nothing of this has been legislated yet. Us accountants have seen a lot of stuff proposed in the past that's then gotten changed, and there's always been a huge amount of media coverage around it. So everything I say is proposed, not legislated yet. So we'll wait and see. Um CGT, what's changed? It's essentially how it is taxed from the 1st July 2027 onwards. So historically, let's say you purchased an asset for $100, you sold it for $100, you had a hundred sorry, you sold it for $200, you had a hundred dollar capital gain. That capital gain then had a 50% discount, so you only would have been taxed on the $50. What's changing now is if you again bought an asset for $100 and you sell it for $200, that purchase cost is adjusted for inflation. That's what they call indexation, and then the difference between that and what you sell it for is gonna be taxed supposedly at a minimum of 30%. So you can see that there will be a lot more tax payable potentially than historically on capital gains.
SPEAKER_01So one of the things I think that I'm really and look, you you told me about this and really blew my mind. It's going to be kicking in from the 1st of July or 30th of June, 1st of July, these laws come in. If they pass through the budget later, there's a whole heap of layers here, right? So I do not envy your position whatsoever. From a practical perspective, if I'm got my properties commercial, rezi, whatever they are, should I be getting valuations done at the end of this financial year?
SPEAKER_02Um so these changes come in from the 1st of July 2027. So it's not even the end of this financial year.
SPEAKER_01It's never financial year this year. Gosh. I should know that.
SPEAKER_02But it all gets a bit murky at this time of the year. And my understanding is that the government will provide a method how you can calculate out the market value at that time to be confirmed, I think. Again, this is one of those wait and see patterns because I feel like a lot more will become clear in the next year. I think what's important to highlight here is that if you have an existing property on which you have already made a potentially big capital gain and you hold it in your own name or trust or partnership, then that gain from whenever you purchased it up to the first of, well, I guess up to the 30th of June 2027, that is grandfathered. So that's still under the old rules. It's simply then from the 1st of July 2027 onwards, that gain will then be indexed under the new rules.
SPEAKER_01So in terms of practically implementing anything now, it's really just a holding pattern to wait and see what happens when it comes specifically to CGT.
SPEAKER_02For the investors, yes. I would say it's very much the same for us.
SPEAKER_01Yeah.
SPEAKER_02There's just nothing solid yet we've got.
SPEAKER_01Yep, awesome. Moving on to trusts, it feels like they've lost a bit of their shine. Why and what's changed?
SPEAKER_02So again, historically, trusts were giving you the flexibility that you could decide who to distribute the funds to each year. So you could distribute it to someone on a lower tax rate if you had that option, getting a tax incentive. The um again, proposition the government is making to change that moving forward and to change it to a flat rate 30% payable by the trustee. So from a pure tax perspective, trusts are gonna be less attractive. However, you know, the tax side is only one reason why you would use a trust. The other side is also asset protection, succession planning. So that's more a lawyer's play field, I guess, but that is still why you would purchase or use a trust. So again, tax is only one aspect of that.
SPEAKER_01So not only are we making more money out of the budget for accountants, because let's be honest, and financial planners, they're gonna be having a lot of people. Now we're adding lawyers, the real winners of the budget, right?
SPEAKER_02So it's not gonna lie. We were worried about AI, now we're not so much.
SPEAKER_01Awesome. Um what a world to live in. Um is the case with the trusts being somewhat less shiny, so to speak, uh very much like Tamamatoa, is the case coming towards buying in property within companies, or is it just becoming an increasing option?
SPEAKER_02Look, I think I would have given you the same advice two, three weeks ago, is every single case needs to be looked at individually. What's the best structure to use for that particular client at that moment in time? And that's kind of the struggle we're facing now because if I've got a client that's currently wanting to make a purchase, I can only educate them around the proposed changes, what I think might be best in their situation, but also highlighting that I'm not sure if it's going to be legislated. I think the key point here is currently seeking advice. If you are purchasing in the near future, because let's be honest, the world is still going around, people are still going to invest. If you already hold assets in a trust, it's probably a little bit of a wait and see from the tax perspective. Because the government has advised that there are going to be rollover provisions available from the 1st July 2027 again onwards. However, they haven't advised us what those rollover provisions are going to look like. So there's not much that we can actually do yet. It's just waiting.
SPEAKER_01Yeah. It definitely seems they're more in sale mode of the budget as opposed to actually putting a plan forward at times. Um, with all that in mind, this is obviously a pretty murky thing for some investors to walk through. And I I suspect if negative gearing does go away, there will be an increase of people who should have been investing in entities to begin with, investing in certain entities or with certain entities. How do you have that conversation properly with your accountant?
SPEAKER_02I think it is really probably the same what you would tell clients. If you are thinking about investing, talk to your advisors. That is, talk to your accountant, talk to your broker, talk to your financial planner so they are aware and they can highlight anything with you. I mean, again, when someone talks to me about where they want to invest, depending on their situation, I would probably say to them, these are the options. However, I am unsure how you could potentially get finance in those entities. Have you met Alex? So I think that's where moving forward, it's just going to be more important to just advise, like your advice us, what your plans are, so we can flag things with you and highlight them proactively.
SPEAKER_01Yeah. I think it's to kind of round out that analogy, right? Uh for me, the accounting is a necessary evil. No, I'm kidding. Um it's necessary, you're necessary, Laura. But it's really there's so much, like uh I learn every time I chat to you, I learn something new about tax law. And I've been deciphering business financials for a decade plus now when it comes to lending, right? So it never stops. And to think that you can manage that yourself, I think is a little bit like, come on, let's be serious. You've then got the financial planner, who I believe is the glue with the whole thing, really brings a lot together. And then you've got the broker and who's kind of the hey, this is what you can do and where you're at and how you navigate it. So the team matters more than ever. And then, of course, buyers agents actually help you nail that asset. So it there's a lot going on here, and more important than ever to get your team together, uh, which you pay a critical part of my team. So thank you. Last question if this passes, let's just go, hey, the 30% comes through, it's happening. Is there still a reason why would we we would be using a trust to invest in property?
SPEAKER_02Potentially, yes. Again, for asset protection purposes, I would um still consider it and succession planning. Um, again, it really just depends that benefit cost. You have to really look at it at that time. Educate the client and say, look, based on the information we know now, this is our best suggestion. However, this could change and that could change, and that would still apply in the future, you know.
SPEAKER_01Yeah. So to kind of summarize that, I I guess you're saying you need to make sure that your your Wilson estate lawyer is taking care of everything and they're having a collaborative conversation with you to make sure that this is all being executed in a way that makes sense.
SPEAKER_02Is that I think it's um because I mean, again, this is probably more where, you know, if someone runs an extremely risky business that they uh could potentially be sued themselves, if they then own assets in their individual name, such as JS in a company that owns property, that's where still there could be a problem. That is where where you have historically used trusts. I mean, if you talk to any insolvency accountant, they love trusts for that reason.
SPEAKER_01Well, all right. Look, the asset protection discussion is just not one where we've really touched on. I think there's a lot more depth there to kind of break into, right? Especially if you're self-employed, which is your client-based. Exactly.
SPEAKER_02Yeah, and I think that's where I'm hoping the government, if they are going to legislate this or not, they have a lot more thinking to do how these effects actually flow on and are applied to small businesses and not just big businesses and people that make um a lot of money. And yeah, maybe you see some changes.
SPEAKER_01I have some strong thoughts about that, but that is not what we're doing today. Thank you so much for joining us at Finance ButNeet Laura. You're going to be on a podcast in the not too distant future. So looking forward to having you in, and we're going to be doing some talking about tax planning. No worries. Chat to you then. Thank you. We'll do. Laura said the team matters more than ever. The accountant, the planner, the broker. And the person who actually goes and gets the asset, well, that's Colin. So he's still buying. Let's find out why. Colin, thank you so much for joining us here at Finance But Neat. Mate, Riley just made the case for why property still works. We've spoken to Laura to translate the CGT and the structure changes. You're the person who actually goes and buys the property. So let's get into it. My first question, and this is really off the back of what Riley said earlier, was uh investment great assets are more important than ever before. And he mentioned it a lot. So, what does that actually mean for you when you're physically going out and finding properties for your clients?
SPEAKER_00Uh look, from the very beginning, I've never seen the negative gearing as a huge benefit in uh purchasing investment great assets in the first place. Of course it helps. But one of the fundamentals and the foundations of how we assist our clients in purchasing investment great assets comes down to four key uh, I guess, pillars. The fourth pillar is probably what I'm gonna dive a little bit into now. More than ever before, investment great assets for us means finding opportunities where we can manufacture value. It's being able to add a degree of potentiality in the property. It's having a different lens in looking at the property, going, well, this property is great for what it is, but this is what it could become. So it could be as simple as, for example, a little bit of a minor facelift. We all like something that's sometimes a little bit newer and better. So it could be as simple as maybe a bit of a change in the flooring, a bit of a paint in the wall. I've noticed some properties a little bit tired on the outside, so a little bit of landscaping helps. We've done where the roof looks just terrible and so a little bit of facelift. It it helps when you're getting a new tenant in the property that you could get a little bit more from a rental perspective, which ultimately increases your cash flow. But certainly, from a configuration perspective, if you can change that, it just uplifts the capital and the equity within the property. All the way to as complex as potentially a subdivision. Now you don't have to do it now, but it's purchasing blocks of land where at some point in time within your property journey you could subdivide it. Because at the end of the day, if you're buying something that you could convert into something that's more, obviously that's going to uplift the valuation of your property. Where we see a lot of opportunity at the moment is uh a change in terms of something that comes down to an extension. Uh, we've seen a lot of opportunities where understanding the minimum requirements, the setbacks, uh, adding a granny flat as an example is always a quick win. Uh, it's less complex. There's a lot of, I guess, um uh opportunity for you to be able to get builders and and uh and people to go in there and construct a granny flat a little bit sooner than you would otherwise if you have to rebuild a whole house from scratch. So it's looking at the potentiality of the property.
SPEAKER_01Awesome. And so has the budget changed really that much with what you're recommending for your clients?
SPEAKER_00Interesting. I think the I think the market is is shifted a little bit into more of a buyer's market. So I'm looking at this opportunity in this season to be able to get a better deal where we've already had this team meeting where I'm suggesting to our research team if the offers are, for example, offers above 900, we could probably get close to 900. Whereas in the past, offers over 900 means they probably could sell for a million or even much more than that. So I think sellers are a little bit more realistic about their price point. Uh, this week alone, we're noticing a reduction in terms of people going into the open inspections, which typically means there's going to be a lot less offers in place. Still strong offers, but just not the quantifiable offers that are in place, particularly when you're uh putting offers in with the open inspections that we attend.
SPEAKER_01Wow, awesome. I mean, that's a massive shift. We've been working together for a little while now, and that that is really interesting to hear that there is opportunity to make more money when you buy, which I can't wait for you to actually unpack that in a podcast when it comes out in about a month's time. Um I would love to get an example of what you're seeing. Really great assets being bought at the moment.
SPEAKER_00Yeah, so we uh we are now in uh in a in a very interesting twist uh or or or shift in the market. I would generally say as a rule of thumb, and just certainly in a in the in the type of properties we prefer to purchase for our clients, are typically landed properties on a decent block, say around 600 square meters. Uh, and over the last three years it's shifted from 600 is the minimum price point to get in 650, and then it was 700, it was 750, 800, and 850. I think that's going to pair back a little bit. We're seeing a few more opportunities where it's a three-bedroom, one bathroom that you can convert that into a, you know, maybe a three-bedroom, two-bathroom, or a four-bedroom, two-bathroom. So there's a lot more opportunities for us to negotiate something around the 800 mark, is where I'm seeing, you know, a softening in the market. You know, because I see there's a lot of fear and uncertainty. And so when there's fear and uncertainty, that's when I have a degree of faith in being able to negotiate a better deal for our clients. Uh, some of the areas that we're looking at at the moment is like switch. Uh, you couldn't get anything from around 900,000 six months ago. Now we've seen a little bit more of a shift. We've we've managed to get a number of really good opportunities around the 850 mark, even at the beginning of 800, uh, you know, in where we have to go as far as to walk and get something around 8 to 850. We're starting to see the French suburbs, uh, LGAs, Ipswich, even Logan. Logan's still sitting above the nine, the 900 to 950 mark to get anything decent, but I think that's gonna that's gonna shift a little bit, and and therefore we're gonna uh see some opportunities open up in within the Logan City Council.
SPEAKER_01It's a fascinating point because I think uh if I can take my broker's hat off for a second and just be a nerd when it comes to this sort of stuff, uh the interstate migration into Queensland has been so strong. Um the the assets and the areas and the built-up areas that we have in Southeast Queensland are really large local government areas, so you get great infrastructure across the board. And you know, capitalism comes down to supply and demand uh so often that we just have the demand for these properties again and again and again it seems in Southeast Queensland. What like uh you know, for me it always seems a little bit of a no-brainer to be able to take that long-term view of get a property that's gonna invest, you know, or that's gonna raise in growth and value and uh the capital is going to gain over not nailing that question, but it's gonna grow in value over time, right? There's a segment of people out there going, well, CGT, it's kind of ruining uh, you know, this for everyone a little bit. Why we're not going to invest. What is your response to that approach?
SPEAKER_00Uh yeah, so I mean, obviously CGT only applies if you sell the property. My philosophy is always buy and hold for as long as you require, um, it is an asset that you're ultimately building to generate a degree of passive income. So my my philosophy is buy and hold. Um, so if you never have to sell the property, then you shouldn't really worry about CGT. But if you have to worry about CGT, because you need to consolidate your property portfolio, it's nothing we can change. But the reality is uh the the the I guess the government's principles and philosophies change from time to time. I'm working within the framework of what we have with the current CGT exemptions. That's changing, that's for sure. But I'm still looking at capitalizing on the growth. Sure, we may not make as much upon the res the sale of the property, but you're still gonna make money. And I'm incredibly grateful for whatever money that I can make on the consolidation of my property portfolio in the near future.
SPEAKER_01Yeah. And look, we uh we spoke somewhat around, you know, uh property investing being a side hustle a little bit in the podcast that we'll release shortly. Um and I think it still remains that like I don't, even with the increase in CGT or whatever that looks like when it does finally pass the budget, it'll be really fascinating to see what that outcome is. But you're still going to make money, you're still going to win out of that if that is your your portfolio that you're building to sell. Um it was just uh as an aside, it was really interesting. Uh, one of the things I raised to Riley was what are the changes with P and I IO and that approach with you know the optimization of portfolios to reduce debt after capital growth and all that kind of stuff. And I think really it's actually bringing the focus back to your strategy, buy, hold, pay down debt long term. Um mate, just to finish this all off and thank you so much for your very, very, very small amount of time that you have in the day that you're spending with us. Uh, why are you personally still buying property or wanting to keep investing?
SPEAKER_00Well, here's the thing: when there's so much fear and uncertainty in the market, I genuinely believe there is a shift. And let's be really open about the whole thing. Uh, the market is softening, it is gonna plateau for a period of time. I don't know for how long, but the the truth will always be that the demand is gonna continue to outstrip the supply. I know that. The demand is there, it's a built-up demand, people are needing homes, which is something that I don't think people will ever give up. They may spend less on their travel, they may spend less on going out, eating out, entertaining themselves. You know, these disposable income would rather be spent on still buying a place of residence. That's the security, that's the great Australian dream. So I don't think that dream will ever be given up. Of course, you're gonna have to invest a larger proportion of your cash flow in holding your place of residence. So I think there is a period of time now where this uncertainty will mean that I'm preparing myself and my investors to get into the market, knowing your numbers, so negative gearing. Of course, that's gonna impact your cash flow because you're not gonna get the tax savings from the government. CGT, if you sell it, well, let's do your numbers for sure. You're not gonna go in blindly and go, what happens with the CGT? It's just a little bit of uncertainty about indexation and how that works. So I'm still learning, let's be really open with you. And I've got nine properties which I need to take into account what the CGT implications are gonna impact me. You know, from you know, from at home, this this impacts me. Uh, but I am more confident than ever before. It's it's not because I'm just fully optimistic about this, but I'm getting myself in a position now to be ready to take on an opportunity when someone's a little bit more motivated to sell their property because they have to sell their property. And that's when I think for me, I I want to create a situation where I'm ready to purchase when someone's ready to do a deal.
SPEAKER_01Yeah. Look, what a really great point was made to me earlier today that uh they are a couple is moving out of their home, clients of ours moving out of their home, living with some family, they're able to keep their property because they've got negative gearing holding it there, right? So to your point, that's gonna be gone in the future. There are going to be people feeling stress. There's probably going to be some more distressed sales that we can take advantage of as people leave the market. So it's a really, really great point you make there. Thank you so much, Colin. Your wisdom, your knowledge, mate. That was incredible. I learned so much just uh just listening to you talk. So thank you so much for giving us some of your very valuable time. That was awesome. Look, Colin said something that stuck with me there. When there's fear and uncertainty, In the market, that's when he has faith. And I get that because the people who are ready when something else has to sell, those are the people who win long term. And so the mud the budget may change the rules. It just doesn't change the game. Demand still outstrips supply. Interstate immigration is a real thing still. And people still need homes. The dream, it's not going away. Three conversations: a financial planner, an accountant, a buyer's agent. They walk into a bar. No, I'm kidding. I'm kidding. But what did they all keep coming back to? The team. Getting the right people around you. And from my seat, borrowing capacity, structures, serviceability, and working, navigating all that, the rules, they've just kind of shifted. But the job hasn't changed. We've got two pillars, we navigate it that way. We find a way, we work with what we've got, and we build the right team around you, and we get you moving. And so the budget, it might change the rules, but it doesn't change the game. And look, the best way to find out what your options are and where the game's going, it's to find your current location. That's the broker conversation. We get you the now. And that's easy. If you want to do it, let me know. But for now, I think it's time to just enjoy what we have got. I'll be doing it here at FinanceButney. Cheers.