In this episode, Terry chats with award winning mortgage broker and property advisor Chris Bates. Chris dispels the myths around mortgages and shares some of his best insights for navigating property purchase decisions and securing loans for property. 

If you’re in the market for a new property soon, or maybe you’re even looking to refinance and you want to make sure that you’re making smart money moves with debt and property, this episode is going to give you a really firm foundation for clear thinking.

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What you’ll learn


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It’s Terry. And welcome to another episode where we’re interviewing a special guest. But in this episode, it’s a little bit different to our others because in the past you’ve heard from others who are on the journey toward money mastery. Whereas in this episode, we’re going to hear from one of our trusted partners of the program, Chris Bates.

Now Chris is a veteran in the financial services industry and he runs a boutique mortgage broking business called willful. And he’s worked with thousands of young people across the years to help them make better property decisions by avoiding the most common thinking traps and thinking clearly about debt and property.

Recently wealth has been recognized with top 10 status for the independent brokers across Australia, collectively the business run 130 million in loans in 2019. So they must be doing something right, but we don’t work with Chris because he’s just good at helping people get good deals from the banks.

We’ve worked with him because he’s top shelf, when it comes to helping people buy property through the clever use of debt structuring, and also a really deep understanding of the asset class. One of the most important rules in finances, don’t lose money and speculating on real estate is one of the favorite pastimes here in the land of Oz.

But because there’s this survivor bias, we only ever really hear about the winners. And there are plenty of organizations came to perpetuate the myth that property only ever goes up. As you’re discovering this episode. Now, Chris is excellent at calling out the smoke in the mirrors and having come from an advice background has a really unique view and approach to property.

That’s as honest as it is refreshing. And it’s easy to sell, hop in real estate, but Chris really takes a term view and is always all about educating people on the fundamentals of what makes the market tick and the difference between property that can improve your life and property. That can become a real burden.

He’s really active in sharing his insights and educating the average Josie on his LinkedIn profile, as well as his own podcast, titled the elephant in the room. So in this conversation, we talk about the biggest risks in purchasing property and why most people get it wrong. We discuss why just getting the best rate is only half the story when it comes to mortgages and what the best brokers do.

In addition to this, why first home buyers games mainly benefit the government, not you, the buyer, and exactly how much. And I’ll have to warn you. The number that he quotes in this episode might just make you fall off your chair. Then we discussed the most common mental mistake people make when purchasing property with debt.

And then how to think about the fixed versus variable interest decision and who wins. Long-term. According to the stats, I also asked Chris to take us through the exact process and path that he took recently to purchase his own property and the tools and tricks that he recommends for prospective buyers.

And then we discussed the shifting trends in property purchasing post COVID and what this might mean for those looking to buy a property that appreciates in value over time. So if you’re in the market for a new property soon, or maybe you’re even looking to refinance and you want to make sure that you’re making smart money moves with debt and property, this episode is going to give you a really firm foundation for clear thinking.

Now, when it comes to property, I don’t really consider myself well-educated I do have some experience, but this was a great opportunity for me to ask questions and learn, because it’s an area where I really haven’t spent too much time and it’s really not in my wheelhouse. So I hope you enjoy the conversation and find it as insightful as I do.

Mike, welcome to the podcast. Pleasure to have you on here. I know we’ve gone back and forth a couple of times. There’s a bit of a sickness scare for you. Everything’s got a guy

Chris: [00:03:48] now. And has

Terry: [00:03:52] you Christmas pain?

Chris: [00:03:53] It was, uh, I probably shouldn’t say, but it was very good. We were actually locked down. So your Melbourne listeners know exactly how that feels, but.

We had a couple of weeks I’ll they bought in the Avalon. Yeah. It was actually a family of three having a Christmas dinner instead of maybe 10 or 12, but to be honest, she’s 89 months. So it’s been very special just to connect with her live life simply now. That’s great.

Terry: [00:04:14] And Avalon, what a beautiful place of the world.

Yeah, it’s

Chris: [00:04:17] not bad to be locked down, but I think the inshallah could eventually they call it. It was a home even though in March, April though, it was just a kind of ignorance or arrogance. I don’t know. So there was no face masks. There was no, it was ever going to get up here. So the irony of it was that it was Avalon that kicks it off, but I think it was a bit of a blessing in disguise for.

New South Wales and Sydney, because you’re not paying an antelope peninsula, people that move around. So it didn’t spread as much as if it was say in the inner city, but it’s not over yet. Yeah. Hi. And

Terry: [00:04:52] I believe congratulations are in order as well. You got number non, you know, the top 10 brokers in Australia.

Is that right? Yeah,

Chris: [00:04:58] it’s right in the MPI door every year. Do a top 100 brokers. And why, why what’s NPI? I BI is like mortgage professional Australia, I think might be association, but I think, but I do a record every year. And that just document the top 100 brokers. Yeah, you do have to apply for it. Series of chunk of top brokers that don’t get on that list.

Give the numbers. There’s a thing on us. I’ve got a bit of a bias as well. Clients are. Young couples and families in Sydney and Melbourne. I spent a few of these living in Melbourne and our clientele as well. Our average line size is much higher than most brokers. Yeah. That helps us as well. So yeah, say that and appreciate it.

But yeah, it’s been a big year. We brought about 130, the million of about 90 families. And most of those are purchases as well. Most brokers do a lot of refinances, whereas we find our passions really guiding people through that whole purchase. So love first time buyers. It’s such an emotional journey, but we also love helping upgraders and people through that journey doing rhinos and maybe buying investment properties.

So that real purchases is what we do.

Terry: [00:05:58] Yeah. I’m keen to dig into that a little bit, but before we do, what made you get started in financial services? What drew you to the industry itself? Good

Chris: [00:06:05] question. It goes back a long way. To be honest, it goes back to 2003 or four finishing school. Good with numbers.

Thought no real guidance from anyone in my life. I should just become an accountant that for a year. No, that’s not what I want to do. What was that? I

Terry: [00:06:19] know it can’t say you’re good with numbers, but you said not accounting

Chris: [00:06:22] an arrogant way at all, but always there was another trainee, the same time as me and after a year I was doing what we were doing.

The other accounts are doing after about seven years. And I was like, God, I don’t really want to be doing this in seven years time if I’m already doing it today. And yeah, and it just didn’t have enough forward thinking and guidance. It was just looking at the numbers and I wanted to get into more strategy and I was like, this isn’t really the right place.

Stay in your box. Sort of thing is what I kind of said. Yeah. So then I got interested in that I would saving through my teens and a little businesses and all that sort of stuff. And I quite enjoy this investing stuff. And then if I joined platinum asset management as a trainee in the data administration sort of thing, to become a fund manager, but watched all the people a year, 15, 20 years older, stressed, overweight, not sleeping, marriage breakdowns, and thought that is not a world I want to be in this

Terry: [00:07:12] time.

So you’re saying the fat cats don’t have

Chris: [00:07:14] it all. Good. No, I don’t think so. A good friend, who’s about 10 years older and I just watched this guy and he looked about 10 to 20 years older, so stressed earning great money, but just not living a great life. And I was a real kind of eye-opener for me watching that and going off, this is not the path I want to apply.

So I actually met a financial advisor, went on holidays, the UK met wine and thought, actually, this is a bit better. You can actually help people plan their life out. And help make big decisions on where they’re going. It’s actually a positive sort of conversation rather than I’m making money, or this is how much money you make last year.

It is

Terry: [00:07:46] more sort of future focus. Isn’t it? Whereas accounting is really retrospective looking back,

Chris: [00:07:51] I think. So if you thought what is financial planning? It should be that, but unfortunately I spent 13 years in it. And the first seven years I was constantly battling. Is it just really a sales industry? Is it really just selling products?

Am I really helping people make big life decisions here? Or am I really helping them just put some more money into an investment fund or put more money into super or take out some insurance? And I really struggled for a long time, how to be that true advisor, where you really. Going deep on someone, what they’re wanting to achieve and goals and accountability and et cetera, it’s a real base match.

That’s something that advisors really struggle with is to get that real clarity and service proposition and get clients to pay for it. Yeah, it was a real journey. We stopped. We got out of financial advice last year, but really since 2012, we just thought, where could we really add value? And we thought only want to work with young clients and young clients.

His biggest problem is property. And it’s where we think we can add the most value. We don’t think we can make money. Betting investment markets or really uninsurance. Let’s just get really good at the property decisions. And that’s really where I think we can add a lot of value rather than just selling.

It makes sense too, because

Terry: [00:08:56] it’s usually the biggest purchase most people will make. Isn’t

Chris: [00:08:59] it? Yeah, it should be the expensive car, I guess, if it’s more expressive than a house or something, but yeah, it’s the biggest, but it’s also the most emotional decision as well. It’s one, you can get wrong. It’s highly leveraged.

So it’s a huge investment decision that you don’t. And most people with property, they buy it and they go, I live in that. And then five or 10 years later, they moved out and very few will look at the opportunity cost. And if they took a different property and, but if it does go well for them, they go, wow, that was amazing.

And it leads on to the next decision and it creates a whole different. Path and the thing we properties, it takes years for someone to make a decision on change of direction. And that’s when that, is it a good property? How does it perform? Has it worked for you? Gets yeah.

Terry: [00:09:38] And what was that process like shifting out of financial advice, moving purely into barking and helping people with that purchase decision.

Was that an easy ride for you? Was there a few bumps along the way?

Chris: [00:09:47] There’s probably I ain’t got element and it’s just being honest. Like it’s a broking industry isn’t being seen as trusted then that got a lot of trust with their customers. And you can see that because over 60% of lions go through brokers and it’s an industry, that’s got very little complaints and it’s got a very good reputation, really the Royal commission didn’t target really brokers and not sort of stuff, but isn’t into the direction of trusted advisor.

Most brokers don’t see themselves as wanting to really care about what they do with the money. That’ll get you a great deal. I can tell you nobody broker’s even really careful, but really go in a lot of detail around structuring and spend a lot of time upfront, really figuring out is it the optimal structure?

And when you say

Terry: [00:10:25] structured it, what do

Chris: [00:10:26] you mean? You’ve got a few elements. So you might split it across different banks just to protect the client. And you might borrow more than 80%. You might borrow less than 80%, 70%. You might get interest only or pay an eye. You might look at different tax structures, why you get equity out.

There’s lots of different ways of attacking it. And before you even look at the banks, And I think a lot of brokers sometimes sell the rate rather than sell the structure and the advice and even structuring. I think you can get good at that if you’re a broker, but the next element is actually understanding what’s a good property.

Why is this a good decision for them? How does this fit their longer term plan? And that’s. Where we use a lot of the financial planning, training, and mindset to go, what are you actually trying to achieve here? Are you trying to buy an apartment? But you’re telling me you want to have kids until years and you’re telling me you want to move overseas, but should you even be buying a property or et cetera.

And a lot of those. And then is this really a good apartment yourself? The plan it’s in a ring, could you be looking at a more of an old apartment and. That’s the fun stuff and the valuable stuff for clients. The

Terry: [00:11:22] difference between really transactional is in lucky I did the job for you versus more relational, more longer term, really bigger picture.

How does this all fit in type thing? Is that what you’re saying? Yeah.

Chris: [00:11:32] I think if clients care for of their clients come from our podcast, the elephant in the room, a bit of a plug there, but they come from five referrals. And so those type of people coming to us realize they’re not going to get the experience of a normal broker.

We’re not going to just ask them, what’s their income. And this is how much borrowed and here’s the best. Right? Sometimes clients come to us and they get shocked because they’re like, why is he asking me if I’m going to have kids? Why are you asking me where I’m from and where I want to leave long-term and what’s happening with work?

Like. Is it just the broker, isn’t it. And so, yeah, it’s a good platelet different experience. They get where we go in a lot of detail from figure out the right thing for them. And then ultimately we know that if we do that, then we can lead into the next decision. Two emails over the break of 20, 21 plans at different rhinos move out of Sydney, all that sort of stuff.

But they’re not broken chats. They’re more of life chats. Yeah. I think that’s

Terry: [00:12:18] what I appreciate about your approach as well. Like I’ve been following you on LinkedIn. If you’re not already following Chris is another plug for Chris. Just get on the LinkedIn and follow Chris, because the posts that you put up, they’re always educational.

They’re always super insightful as well. And there was one post in particular that I really appreciated. It was probably a month or two ago now. I think I might’ve commented on it. And it was just helping people understand. What’s really going on in terms of the government and their policies in particularly this new sort of incentive toward first home buyers.

And you’re basically saying, look, a lot of these first-time buyers that are going and buying property specifically for this grant are almost like lambs to the slaughter. Can you expand on that post a little bit?

Chris: [00:12:59] I’m a vegetarian or a lot of the land. So honestly I’m, every year I get more agitated by this, and I’m not someone who likes to look at things negatively.

I’ll come back and I go about the world and look positive and look at all the positive side. But I can’t say positive. In this. Yes. I could say that as a positive for the construction industry in terms of the creates jobs and that’s good for our economy, but what’s the is great jobs. And do we need to be sacrificing our young futures so we can support a construction industry?

And that’s ultimately what we’re doing. We’re saying to young people buy new. Where there’s new house and land package or a new apartment cause that’ll support our construction street without any sort of regard to, is that a good financial decision for them? And the state government does it, the federal government does it.

And what happens easy is the person buying that property thinks they’re getting a good deal. I think they’re getting something free from the government and we all have things that are afraid and they don’t know the consequences of that decision. And the opportunity cost and what they could have done until years down the line, which is what I said before.

And unfortunately all the facts are there. You can do all the research. It’s easy to find. If you buy an apartment and you can see Melbourne, Sydney, Brisbane, the performance of those versus established, you can look at house and land packages, the risks. And so people don’t know what they’re buying.

They’re just. Falling for the state government and they’re not taking any responsibility for this. They’re just lost by everywhere. And that’s the thing we property it is by everywhere. Like it blows your mind that someone can sell you something the biggest investment decision, but there’s no regulation around what they say or what they do.

It’s like buying a car. It’s actually minimal protection buying a toaster. It’s pretty crazy. That’s why I think it’s really important to be a voice in this area because. There’s not many people that kind of sit really in that middle and try to stay unbiased and really focus on what’s the right thing for Australians.

Unfortunately, even a lot of the property people get enticed because the rewards are so big. If you recommend new property, the money that brokers can make property spruikers and yep.

Terry: [00:14:52] That’s what I really appreciated because it would be so easy to just say, Hey, look at this free money, come to me, I’ll get you the best deal and go buy these new properties.

But instead of saying that, you’re saying. Be really careful with this and understand where all the incentives are, because if I’m not wrong, it’s state government’s number one, revenue source next to gambling is stamp duty and the land taxes. Yeah, it

Chris: [00:15:10] would be, they’re making a lot of money off it. It’s not just a developer profit resigning application fees.

It goes on and on jobs, et cetera, the amount of money. Cause I have houses, I sign apartments with a million dollars. Now don’t quote me on this, anybody, but you know, there’s probably, I say three to $500,000 of debt. Guys in taxes to the government. So when you buy that million dollar property, you take out a $900,000 line and strange granted that somehow it gets back to the government.

So you can say, what does that make it a little bit of money on your GST, but nowhere near that top of mine. Yeah, exactly.

Terry: [00:15:42] And you’ve said in the past as well, that the biggest mistake you see young people making is trying to take out the smallest amount of debt instead of buying a really good property.

Could you

Chris: [00:15:50] expand on that? It would definitely be one of them, whether it’s the biggest or not. I don’t think so. But yeah, a lot of people think that the risk is in the amount that you borrow, but unfortunately it’s actually in the asset that you buy. So if you’d spend a less amount, you think one taking less a risk, but actually comes down.

What did you actually buy with that property? Without money. And so if that was say a rural property at 200,000, that to me is potentially higher risk than say a property that’s in a good location. That was say 500,000 and it all comes down as demand and supply. So the amount someone spends, like sometimes we get clients who feel at the moment, actually that.

Gotcha. Well, I really don’t want to spend more than a million on that site and I’m like, well, you could probably buy up to 1.5. You’ve got the cash. You’ve got the incomes. You’re being quite conservative on that point of view. What’s driving that. Oh, we don’t want a big mortgage. What’s the difference in the property that you’re going to get a million versus say 1.3 or 1.2, five.

Yeah. Oh, it’s a much better property. It’s something we would really love in long-term it’s in a much better straight. It’s not a dark property. And so for me, it’s you can buy the bottom of the market a million and just feel like you’ve got a low mortgage, not enjoy living there, but when you sell that property one day, it’s also underperformed the better property.

Plus you’ve

Terry: [00:16:58] got the transaction costs. Like every time you in and out of property or the middleman take money,

Chris: [00:17:02] right? Yeah, exactly. And, and property is not a mass that you want to trade because transaction costs roughly around 10%, 5% a bar. Couple of two to 3% to the agent, but then there’s two to 3% generally and just sunk costs, fixing things on the house that aren’t going to make, add any money.

And you always have to spend those things on the property. I think if you’re going to buy a property for 500,000, your $50,000 is going to go on transaction costs. So it’s going to have to do quite well for you to beat that 50 grand and to make some money out of it.

Terry: [00:17:29] Definitely. So when you think about the other side of the coin, so you’ve almost got to worried I’m going to take on too much debt, the other sort of side of the pendulum, or if it’s flips the other way, would it be making an overly emotional decision taking on too much debt because you made a romantic decision about

Chris: [00:17:43] this property.

Yeah, I think we see it with investors. So investors got burned a lot in that 2012 to 15 boom, because they could borrow enormous amounts of money and way more than they should be able to borrow. That’s been tightened a lot now, but. Those investors have gone and just really geared up and market was booming.

Let’s just borrow the max we can. And so I’ve seen, definitely saying that with home buyers. I have seen some times where clients have come to us, not when clients we’ve purchased that have gone and taken on too much text. We do a lot of time upfront making sure it’s. They’re aware of what they’re doing in their repayments.

And they’re really think it through, and these are the right property for the longterm, but I’ve seen clients come to me and they’re really hamstring themselves and they’ve gone out and take out too much debt, maybe one partner, I’ve got a few kids, probably maybe one partner can’t work or they want to spend time with the kids.

And then maybe they’ve got a bit over excited about how their career is going to progress. And they’ve taken on that big debt before that maybe broken that ceiling into that next role or something, or maybe potentially doing a job that they don’t aren’t that passionate about. They’re doing it for the money.

And so they’ve got a big mortgage. They’re earning some good money, but everything’s tank is leveraged off them owning that money. And they don’t really enjoy that job. And they just get stuck. And then their friends and family and everything, they built this life in this suburb and they can’t leave the suburb because it’s.

The family impact on the kids and the wife and all that stuff. And you just get stuck and you get a really bad situation. And then one partner you just has to keep on, slugging it out a job. They don’t like keep paying mortgage where really they need to cut the cord and swap careers, move to a new location so they can all be happier.

But yeah, I’ve seen that a few times and it’s not an easy conversation to have. Sales,

Terry: [00:19:20] if you’re peeling back the layers and you’re looking at those two mistakes, like going too small and not buying a good asset or going to large and overextending yourself and not thinking it through clearly enough, would it be fair to say that it’s the same mistake?

It’s the mistake of thinking that the way things are is the way they’ll always be. So things are awesome and I can afford it so I can do it. And, or I feel like this is a dangerous thing now, but in the future, I don’t really be thinking about the future. I’m just thinking

Chris: [00:19:42] about now. Yeah, I think that it potentially, it’s just a different version of it.

I think the person being conservative, sometimes doesn’t even think through that they’re being quite humble and the sign of I’m just working hard. I’m just working on myself and my value, our human capital. And sometimes people really underplay themselves and they don’t actually know how much forgotten and real talent they are in their industry.

And you see them a couple of years later and you’re like, they’ve tripled their salary and they’re killing it and a lot. Wow. But that bank conservative and we see that a lot with business scientists. I got one that I bought last year. And when you meet him in terms of his approach to life, and I was like, wow, you’re really doing really well.

And he didn’t really feel it. And I literally, a year later they’ll be a bit conservative and they, and they bought a place and I think they should have potentially stretch themselves a little bit more just because he was naturally quite conservative ramping new business. And yeah. So. It’s an interesting one to talk through it.

You just gotta be careful where you are and just appreciate though, that being conservative won’t potentially give you the best result. And so you’ve got to potentially get out of your comfort zone a little bit, but if you are in that camp where you’re just super aggressive and just, you’ve gotta be really sure that you love your job.

And you’re really confident that what you think is going to happen in the future is going to happen. Otherwise you can get yourself in a bit of a mess. Where you set up a life that you can’t afford and that’s not a good place to be.

Terry: [00:20:53] Yeah, that’s a hard one. Isn’t it? Because Korea is a lot more transient these days in the voice than they’ve ever been.

Really like people, our age are going to have four or five careers. I think that’s the stat throughout the course of their loft. So that’s, what’s interesting to me is like the way things were when our parents were buying property and making money and property and the way things are now, like all the conditions are different.

We’re taking out longer loans. And our lives are more dynamic and they had shorter lines. Their lives are more stable at the time. It’s it’s an interesting change.

Chris: [00:21:21] Yeah, no regrets. It’s easy to get on the parents’ situation versus the kids or the grandparents versus the kids is often one as well because the parents are still trying to solve their lives out and the grandparents have got nothing to do.

And so they’re getting in their grandkids, ears and stuff, property and what they’re, what they’ve done in the seventies and eighties, there’s nothing to what the world is in the 2000 and twenties. And we find that it’s really quite stressful for first-time buyers because they’ve got all this family pressure.

Well, no, just buy something, just get into the market and you can’t lose money on bricks and mortar one. And it says that and she said, yeah, yeah, it’s a pretty common

Terry: [00:21:54] one. Isn’t it? He thought a lot. Can’t lose money on bricks and mortar owned an apartment in Melbourne over the last 10 years. You probably realize that’s wrong.

Chris: [00:22:02] Yeah, that’s exactly right. Yeah.

Terry: [00:22:03] So how do you see those purchasing trends shifting post pandemic, new sort of world, like what’s changing in your eyes? What are you

Chris: [00:22:10] seeing? This is one of my favorite topics. So I got a bit excited talking about this stuff, but I always try to temper myself because no one knew what 2020 was going to bring in and watching investment markets and watching the world.

I just love watching forecasters sort of full file on the advisors. I’m sitting you off here. Yeah, I guess what we’re saying, we can only really say what we’re saying from our clients and. I think an interesting thing is there was like a social rat race that was getting perpetuated by inherent, under supply property employers being inflexible and saying, people need to be in the city for five days.

And employee is not even demanding it either. They’re not saying I want to work from home. And that pressure cooker on the inner city meant that people didn’t have the confidence to leave the city because if they did, they. Maybe just never going to get back in. I lose that job, et cetera. It’s a big call to leave the city, their friends, that’s all flipped on its head, especially in Sydney.

And I definitely think it’s going to happen in Melbourne, my people a lot, you know, what home ownership and a good life I might have family stage matters a lot to me. And we’re going to move to central coast. We’re going to move to Woolongong. Or the blue mountains is a. Quantum was going to buy over the kind of Christmas break.

And they wouldn’t have done that before we had clients do it, but most fantasize around the idea, but then ultimately would go for the safe option and buy in the inner ring of the capital cities, but complete shift really since may June last year, where people will go further to get something that ticks their boxes.

So that is a big shift and I think it could go even the second ring if the first ring. It gets expensive. So for example, things that are an hour and a half or two hours from the capital city get expensive, the good properties and people go to the next ring three or four hours, and we’ve seen clients go five or six hours and two airports, sunshine coast near the gold coast, brulee Danny Brambilla.

And today’s a professional, usually that a bit more. Established in their careers got more leverage. Yeah, exactly. All my business owners and they’re going well, I’ve always wanted to leave Sydney. I can now run my business virtually. I’m going to move to a big acreage in the sunshine coast and they wouldn’t have done it before because as a perception for customers that you need to be around, et cetera.

And I think. Consumers again without I just want the best person. I don’t really care where they’re located. They’re the best person for me. I can work on zoom or whatever it is. I think that’s a huge shift. And what it will do is we’ll take a lot of pressure off for first-time buyers and give them best competition because potentially more properties will come on because people will potentially look at upgrading outside the city.

But then you’ve still got really strong population growth and people who aren’t from Sydney or aren’t from Melbourne, aren’t really going to be the ones that move say to the regions. It’s people that have grown up in Sydney that are. Kind of been here, lived that life for a long time. And, but if you’ve moved here from say Spain or France or the UK, you don’t really want to move to the coast.

If you want to live in the action, that’s why you moved to Australia. So they’re going to be buying. A lot of the entering. So that’s a big shift. And I just think away from apartments was always a shift. I just think people, if they have to work from home and they’re spending more time at home longer term, then I do think that space is more of a premium when people are willing to commute more.


Terry: [00:25:11] If all of that sort of eventuates or goes that way, how should people factor those changes into their purchasing decisions? They all live in Sydney and I’m looking to buy a property in the next two years. How should I be thinking about that in the context of what you’ve

Chris: [00:25:23] just said was look, I want to be, you know, loft-style location, but.

I’m worried about work or I’m worried about if it’s going to be a good investment decision that isn’t Simon should be concerned anymore. So for example, if you were going to move up to the central coast, say three years ago, you could have been locked. Yeah, no, you want to live up there, but from an investment point of view, it’s probably going to underperform city.

Do you really want to do it from a work point of view? So I think if you’re in that camp where you’re saying, actually I do want to step away a little bit. From traditionally what people did just by the close to the city as I can then. Yeah. It’s probably worthwhile thing to consider. The thing is that every property in those locations won’t go up the same.

And you’ll say flat to the lifestyle areas of those locations, where they provide all the lifestyle benefits and they can say to their friends that are in Sydney or Melbourne, Why don’t you come down and visit before I leave. So in Melbourne might be passed the Mornington peninsula parts of July.

Terry: [00:26:17] That’s where I live in Jalong. And I’m definitely seeing that it’s exploded in the last two years. It’s almost, I think I’m probably gonna move further South soon because of how much more densities. Yeah, exactly. But

Chris: [00:26:27] it won’t be always along little, really. Kickoff, there might be new town. I might be Reposado.

I might be going West all around the city, but it also be big blocks on the fringes down the gradation road, et cetera. But it won’t be the house and land packages in the fringes of July. It’s not going to be your Armstrong Creek. Yeah, exactly. Yeah. I had a client come to me. It bought in then told me that.

Horrible story around the delays and things like that. And it was really hard and they had the whole sales pitch behind it and yep. And I was like, where is this bicycle? A little bit. And I looked at it that

Terry: [00:26:55] explains it. Yeah. You can rent a full bedroom in Armstrong Craig for about 350 bucks. That’s why that’s where the demand is right now.

I just not, there’s not much, there’s a

Chris: [00:27:04] lot of land, so that’s the thing I made a good tip for our listeners. Is it everything about property comes down to demand and supply. That sounds really boring, but you got to think we want it as to demand and how many of them, and can they build more of them and that’s your sorta supplied.

You really need limited supply, but you need really strong demand. People who wanted to earning good money or have got good money. And so a really easy way to think about that is the lifestyle benefits for the people who want the property. But from a supply point of view, I just jumped on Google earth or Google maps go on the satellite.

Look around. Look, what else is getting built? Is that thing you’re buying, is it really scarce? And you can get scarcity across the whole country. It’s not just in the inner ring. We had a client bond. I mentioned just before in the blue mountains, I said, what do you think of this property? And I had a quick squeeze this morning.

It’s a massive block. It’s only 4,000 square meters. A lot of the other blocks in that area around 600, 500. So in that sense, that is scarcity because it’s a huge block, average work. So yeah, really use sort of the satellite. It’s a amazing tool. Yeah. Yeah.

Terry: [00:28:00] That’s a good point. You recently bought your property in Avalon Northern beaches.

You’ve recently just bought a new one there. Correct? Not a new one,

Chris: [00:28:07] but yeah, say you bought

Terry: [00:28:09] one. Yeah. Talk us through your process. Step by step. What did you do first? Second, third. When you talk to people about going through that. Cycle. And what did you do?

Chris: [00:28:18] It was really interesting. I mean, it would probably before, but it was a massive new baby was on the wife.

So we had a pressure cooker oven was on. And so the wife was going to stop working and we’re also at a stage where we were really wanting to get something, you know, we can live in longterm and really getting into the community, et cetera, a bit torn a little bit like my clients, where we ha hearts around nature and wildlife and being a bit away from it all.

But running a business in Sydney, et cetera. Avalon was a kind of good compromise for us where it’s an hour away, but it’s still an, so I lost out gold and also I was in budget of what we could afford and yeah, we didn’t actually buy an have quote book, all that, but I always, I had a bit of a philosophy that the way from high movement was going to get stronger and just West.

Cities get bigger, but I didn’t expect anything like what happened in 2020. And I also knew that the thing was discounting. It was the commute and those good value for money. When you compare it to some, that’s just a little bit closer because it was a perception problem. And that also got broken as well in COVID, which is just coincidence.

Yeah, it was really what do we really want longterm? Can we get something that we can grow into? Something that we were super selective, but as we were looking longer and longer, we had a buyer’s agent, which was a huge help, but. As we’ve kept saying no to properties. And that’s what you have to do. We, the time started ticking before the baby was born out, we were starting to compromise more and more.

And this is one of the challenges of buying properties that you’re limited to what’s on the market. You could drive around the suburbs and say, I’d love to live here, but if you can’t buy any of those properties, you can’t live there and only maybe good suburbs, good streets. Two or 3% of those properties transact a lot of the poor roads, even my way would they have, now that would come out on the market all the time, but we don’t want to leave on those roads.

We won’t live on a good street. And so, yeah, it was a real journey. It was really interesting watching my behavior and my thought process. And how has becoming a really emotional, we almost bought the wrong property just because of out of pure frustration and it pressure time pressure. So yeah, by most the worst, isn’t it?

Yeah. It was more like if we don’t buy now, We probably wind by getting before the baby. And while it makes sense, just let’s just wipe down by their own property, which is what I would say to the client. And it’s, I’ve got a wife and a baby on the way, and we wanted that stability and security, and that was a bigger emotional sort of unconscious sort of thing that was driving us rather than just being patient.

Terry: [00:30:34] Yeah. So if I break it down, you had an end point to the decision. You knew what you wanted. You knew what a good probably looked like for you. You knew what a good investment looks like. Just in general, you knew where you wanted to be in terms of the longer term. And what were you think was feasible in terms of how your life could change?

You engage the buyer’s agent. And then you pretty much did as much research as you could.

Chris: [00:30:55] Would that be fair? Yeah, it is. And the research thing is so important because we hadn’t lived in this area before. And so we did Airbnb, we did the commute, every single property we could possibly see, even if we knew it was a no, just to get that market knowledge and.

Even after moving up here a few months later, though, I realized that what I didn’t know, buying into the suburb when people are ultimately, they can’t afford where they’re potentially living right now because they want to live in the lifestyle locations, but that’s out of budget. You can potentially move to those locations you use before you want to buy, just to get that.

That insight and knowledge because there’s things in our, about the suburbs now that would really make certain areas and streets no go zones. But I wouldn’t have known that if those properties came up on those streets, I potentially would have went for the, so a lot of our clients, their attitude to life is get things done, right?

Set goals, right? Shave tick off, move on to the next morning. I think with home ownership, unfortunately it buys into let’s just get this box tick. I want to buy a house. I’m ready to buy a house. I’ve got pre-approval let’s just go buy something and that’s actually the wrong philosophy. Actually. It’s now to slow down, take advice, maybe engage a buyer’s agent really understand is the right decision.

Don’t just try to tick the box because you can tick the box. Any point you could go and buy any property and you can get the deal done. And say that you now are homeowner, but ultimately you get one shot at it. And so it’s actually better to be slowed down. Take your time, really get play devil’s advocate with yourself.

And what don’t you like about the property and try to turn yourself off most properties, because usually be something that it would be nickeling and you just won’t go there.

Terry: [00:32:22] So you said before you did Airbnb, what you mean is you went and stayed in properties around that area just to see what life

Chris: [00:32:28] looks like.

If you live there. Yeah, multiple times we did it during the week we did on weekends. So the weekends we’re going to do the things that we would do on weekends and guys, this is really the life we want. So around the people and all that sort of stuff, did the things that we would do and thought is this really what we want?

And then also during the week, battling traffic, getting home, getting up early, is this really what we want to do? Interesting.

Terry: [00:32:48] A point that you mentioned it with your own story as well, is that you do advocate for using buys advocates. Can you talk to us a little bit more about why you think that’s really important and how to do that

Chris: [00:32:57] effectively?

Yeah. A fan of professionals, generally. I think we don’t know what we don’t know and what we were joking, Terry, before we came on and you don’t really want to know everything or you can spend your life learning a little bit about everything, but nothing about anything. So I think that’s a quote or something like that.

Yeah. I think with property, you’ve got to understand that this is a huge decision. You’re not going to know your family. Aren’t going to know your friends. Aren’t going to know. And what you really need is a local expert in that market that you want to buy that knows. Has been buying in that cyber for years, I had a huge could.

You’re just a new person entering this world. And they’re like, you don’t know that this happened and this happened, et cetera. And you try to get yourself up to speed, but you’re never actually going to get up to speed because they’re already moving ahead of you. And so the problem is with buyer’s agents, and this is something that is just a maturing industries.

It’s new. There’s not that many buyer’s agents when you compare them versus real estate agents. And it’s a very low barrier to entry library thing, like financial advice, and it’s become a cool job. A lot of people are also. And disillusioned or bought one property. And it’s a very sexy thing looking at properties.

And so you get all these new buyer’s agents entering. And so you gotta be really careful with them because. Ultimately though, their Guinea pig, we’ve got one at the moment who engaged the buyer’s agent. I said, look, you’re looking for button. So the guy’s a buyer’s agent and it’s one of these bars that hasn’t been doing it very long and they don’t know how to negotiate.

So the con’s calling me and saying, what do we do with negotiation? So this is a buyer’s agents, real key skill. They don’t know how to negotiate on this. I can help, but I can’t help as good as a good buyer’s agent. And so you gotta be very careful though, but the good ones, I don’t like to say that you can’t be good at job up to a certain period.

Cause I do think you can be very good at a job after a couple of years in some jobs, but I think we buyer’s agency do need a lot of experience because you need to have got a lot of learnings and you only going to buy a handful of properties. In your first few years, because you’re just growing generally a good bias has been doing it five, seven years.

And there’s not that many have been doing it for that long because it’s quite a new job. So

Terry: [00:34:49] maybe it’s someone who’s got a background in real estate and they’ve been working in that industry for a long period of time in that area. Maybe I was an estate agent or something. Yeah.

Chris: [00:34:56] Even still I’d probably say.

They’re good, but I still want a few years on the boss side, your fairness to real estate agents, real estate agents. I drew it into them. Every property’s good because you can’t have the philosophy that some properties are bad. You don’t believe in what you’re selling. Yeah, exactly. Every property is worth selling.

If it’s got the right price and that’s unfortunately the real estate philosophy, but that’s the opposite thing as a buyer’s agent, most property aren’t worth buying. And the ones that I went along on all, any body, if I can get it for a fair price. Yep. Yep. So it’s a retraining of real estate agents. I think that they take time.

So anyway, getting a good goodbyes, they need to be doing it for a few years. That needs to be a local specialist in that area that you want to buy. A lot of buyer’s agents say I could buy anywhere. And then you’re onto a winner there. Check out Raber as well, which is an association for buyer’s agents, which usually you’ve been doing your fees.

Terry: [00:35:43] Yeah. Cool. So runs on the board in terms of buying for people, good history in the industry. The other part would be, they have some way of doing it, right? They’ve got some process that they follow, like to gather all the information and to break it down and to show you what they’re

Chris: [00:35:58] doing. It’s a good one.

I think it’s a bit tending for people to start doing South spills when they start saying this is my research. So if they’re starting to say research, they bought anything new. I think that’s a time to run. No, thanks go somewhere else. If they started really trying to predict forecasting growth rates, all that sort of stuff.

Like. Good. Buyer’s agents know that don’t play that game. They just focus on the fundamentals. Yeah. Yeah. They’ve got to have a philosophy. They’ve got about explain to you. What’s a good property. What’s not a good property, but it’s also, they’ve got to be a trusted advisor. They’ve got to be really getting to know you where you want to go in life.

Is this the right property for you and your family and take that role with you rather than just trying to be transactional with you, because if they are. When you sign up, then they’re going to be transactional and just like buy this property. And there are a lot of buyer’s agents out like that as well.


Terry: [00:36:41] Okay. And just more on the mortgage side of things right now, just something that’s pressing. I was chatting with one of our members yesterday and I mentioned that you and I would be talking and then she had a question around how to think through. Fixed and variable interest rates. Now, in terms of the economic uncertainty we’ve got, like, how do you think through that decision now?

Or should we fix it? How long can we fix it for? Should we stay very, what’s your opinion?

Chris: [00:37:03] That’s a really interesting one. Generally speaking, you would not fix because there’s no, it’s actually just brings in more commitment. It’s committing to a bank, it’s coming to a lender. It’s committing to a right.

And generally over time, all the stats prove that you’re not going to win versus variable. So why would you do it? But unfortunately, because you’re human and

Terry: [00:37:21] you hate uncertainty, that’s why you do

Chris: [00:37:22] it. Sure. That’s it. So you want that certainty. And I think for a lot of people, there’s something called the danger zone where they, regardless of where fixed rates are fit, even if it’s not the best deal versus the variable, you may have to use a certain lender because of policy app and the fixed rate might not be getting that excited by it, but you just go, well, look.

For the next three or four years, I cannot afford rates to rise or need that certainty. And because I’ve got a lot of debt and I’m still saving, so that danger zone after you’ve taken a lot of debt is a good time to potentially look to fix knowing that you might not win that way by at least you’ve got that certainty.

If putting that to one side, if from a financial point of view, because the RV I’ve got this really cheap funding line to the banks, allow them to land. They’re really pushing down. So the longer term rates as well through this QA, what you’re saying is the fixed rates are much lower than the variable, right?

So we’re getting fixed rates around 2%, I’d say, but the variable rates say 2.5% on home loans and, and the RBA is 1%. So that rates can’t really get dropped. The variable right. Can come down, which is a bit of a misunderstanding come down through competition. So why come down? Because the IVI cuts rights.

It’ll calm down because Citibank Hawks that offering 2.45 and then CBA, or start offering 2.44, and then sign George stopped offering 2.4. And so that they could come down, even if the RBI right. Comp doesn’t cut. Yep. They put on me. I understand that sometimes.

Terry: [00:38:41] Yeah. An important point. Let me just double back on that for a second.

People will assume that what’s happening in the RBA is what’s happening with interest rates. When you’re buying property, but that’s actually not always the case. Is that what you’re saying?

Chris: [00:38:50] Yeah. Loyalty tacks into sort of Google, you’ll say atrial procedures did a report on mortgage pricing, et cetera, pretty frustrating, but it happens in every industry.

It’s not just mortgages. It’s 17 fine contracts that happens in electricity and it happens in businesses which doesn’t really make good business sense. Take advantage of a lot of customers and start offering better deals to new customers. And in mortgages, it’s gone out of control in the last six years.

Where new customers get unbelievably, better rates and existing customers. And so what happens is that the existing customers, the rates aren’t dropping, but new customers are getting offered this better and better. And yet to give you an idea, a good discount when I started broken was around 1%. Yep. No, potentially 1.2%, but good discounts now around 2%, about 1.8 or 1.9.

So that customer who signed up from all these six years ago, got a good discount 1%. But if they went and got that same amount of money today, they could borrow with a 1.8% discount. So if they haven’t gone back to the bank, they’re now 80 basis points too much because they haven’t renegotiated their discount.

And that’s really gone out of control over the last five, six years where existing customers are really getting. The people who are just sitting on their hands a bit apathy thinking the banks have got their best interests at heart. Just hiding their head in the sand, getting on with their life and just letting their mortgage tick over, really getting hurt.

When they go back to the bank a way I could save myself. 50 60, 70 basis points. And one of the

Terry: [00:40:10] things interesting it’s like that language, it sounds like nothing 60, 70 basis points. But when you actually do look at the raw numbers of it and in the timeframes, we’re talking about it’s tens of thousands, if not sometimes hundreds of thousands, right?

Chris: [00:40:21] Compounding. Yeah. I mean, some brokers will say, look, I’m saving you $50,000. Over 30 years. I laugh. When people say that, I was like, there’s not much you’re gonna save in the next two years. And then we’ll probably have to negotiate and saving more money anyway. But yeah, you’re right. It’s a lot of money.

And the thing is that your mortgage is usually your biggest expense. And so you can go and stop having coffees and say $4 here and there. But if you can cut a few thousand dollars off just through a little program one-time decision. Yeah, exactly. But you have to keep going back.

Terry: [00:40:45] Not really once in every couple of year

Chris: [00:40:47] decision.

Yeah. And yeah, a good broker should be able to guide you on that. Make it pretty pain-free sometimes how you go through it. And the bank use makes that whole process a lot more digestible can take time, but. Time’s okay. If you’re not having to do anything for it, you just have to sit on your

Terry: [00:41:02] hands. Yeah.

So basically if you’ve been sitting pretty happy and not really looked at your mortgage for a few years, you’re probably financing new customers for, for whatever bank. You’re basically making it cheaper for them

Chris: [00:41:12] always. And that’s like an easy for us as brokers, right. Because concept come to us. And so I did a mortgage three years ago.

I thought we know. 99% of the time that we can get them a better, if it was gone the other way, I’ve been in a bit of trouble, but, and that’s just because the why that banks are really taking advantage of existing customers and offering good deals to new customers. If

Terry: [00:41:30] you haven’t used a broker before, you’re probably not aware, like you guys are doing all the work, you’re doing all the legwork.

It’s really just giving the person the information so they can make the decision. It’s a chore. It’s pretty easy to do it. Like you bring up Chris at welfare and you say, Hey, can we work fine? And, um, you’ll go and do all the research, figure it all out and find out a better deal. Correct.

Chris: [00:41:49] It’s a bit of a paperwork thing, which I think all read the papers.

Always. Sometimes I’m in them as well when I’m in an article and I’m not, it’s not really correct, but I know. Yeah. And they just basically over saying how hard it is to refinance or how hard the slow the banks are, et cetera. And they might’ve spoken to maybe a couple of banks out. There’s always a couple of banks that are really hard or really slow, but yeah, a good broker would say would not give you that experience.

They’ll know what documents you really need. Getting those documents from you really easy through technology or reverse engineer or your. Your date of birth and your driver’s license, you don’t have to fill in all these forms, et cetera. Yep. Yeah. Good brokers know that. What they’re trying to do is make it as easy as for their customers to, as pain-free, because that’s going to be a better business for them.

You know, my thought for your customers to come on board. So

Terry: [00:42:35] I have a long-term relationship to the power of compounding because I’ve got my mortgage through you. You don’t need all the information you’ve already got it. It’s just this new information that you need.

Chris: [00:42:42] Yeah. I think that a lot of brokers sit on that and then clients will lose them a few years long, long, and they’re always getting cute with all this marketing for better rights.

Yeah. What you want your relationship to be based on is when you call that person up, whatever it is, that’s it. Psychologist or physio, et cetera. They’re giving you actually advice and they’re really helping you and adding value, but not just trying to clip the ticket and a good broker will be able to guide you on their big decisions.

Do I do this run or do we do an upgrade? Do we rent the property out for another year? Doing all these questions? That’s what you want to get from broker who’s on top of their game.

Terry: [00:43:12] Gotcha. And is there any resources you’d recommend site? Somebody wants to educate themselves a little bit. Are there any books or I know you’ve got your podcast.

So another plug for the elephant in the room. It’s definitely a very good podcast to listen to because you self and Veronica is more on the bias side. Russia is a buyer’s agent.

Chris: [00:43:27] Yeah. Yeah. So Veronica Maura was on location. Maybe it’s four locations or something Australia. Yeah. Yeah. And so she’s been buying property for 20 years, but where we try to add the value is just getting amazing guests on and.

But then explain lots of different areas almost to the property market, other resources. It’s an interesting one. I finished Joe Wayne. C’s in Melbourne and he’s a financial advisor. He’s got a pro solutions book there with, I think he’s a good person to know. Pete wardens, an amazing blog. Always look forward to reading that every day.

But I think other resources, it’s more about understanding the macro story, learning a lot about population demographics. People are Bernard salt and Mark McCrindle. And then it’s really tracking what the state government’s doing in your city. I’m always tracking every development that hits as ways to do this through forums or looking online.

And there’s lots of industries like construction industry has newsletters and things like that. Yeah, I think we’ve probably, it depends on how deep you want to go with it. If you just want the fundamentals, I pay Rajan and maybe. Those types of things will be good. But if you really want to get the big picture thing, got a job at different demographics and all that sort of stuff.

I really wanted to get

Terry: [00:44:29] into talking about modern monetary theory there, but I think we’ll leave it. I think we’ll leave it. That’s a completely different can of worms made the businesses growing and you’re doing really well. What’s your longterm vision for welfare?

Chris: [00:44:41] It’s interesting. I think about long-term plans for our clients and talking not true.

So there’s always a personal sort of element to this. What are we going to do as a family? I’m going to another kid now, how’s that going to change a business? I’m going to stay living in Sydney. First fellows. We’re trying to build a business that we can live a great life as well. I don’t have the desire to build a business that is.

My sole identity in life, and I get bigger and bigger and higher lots of staff and have an office and all that sort of stuff. Even a trusted advisor sort of niche approach. We can handle as many classes as we can. And so we’re hiring people that can add more value to our sort of client service proposition.

But do we grow into 10 brokers? I highly doubt it. I’ve got a new broker starting next week. It’s amazing. She’s in Melbourne and yeah, probably another couple Hawes this year. So we look for that hub model where we all work on every client. So I might do. The initial sort of getting to know and the strategy and figuring out where they are.

But then Ben will, as a business partner, he figures out the right bank and Alicia, my guide them through the process and et cetera, I think that is a great option for like service for people, because they’ve got lots of different people managing them and holding their hands and experts in certain parts of the process.

Who’s best

Terry: [00:45:50] at that pot is who you’re working with for that period of form. Yeah. It’s like a squat approach. You get surrounded by a squad of people that are helping you.

Chris: [00:45:57] Yeah. And I actually think it could be that many, actually they could, could burn most double figures for privates on how many people could help me through that process.

Now it’s not nice to get passed along. So it was, but if you’re getting pass it to someone who’s honor, and he’s telling you what you need to know and he’s not missing anything. I think that’s how our process will keep on getting more people, focusing on more things. Yup. Sounds

Terry: [00:46:15] good. Makes sense to me as well.

Awesome. Is there anything you’d want to add before we close out? I’m aware that we’re coming up to our time here together. Was there any advice, anything you’d want people to know with regards to mortgages and property purchase right

Chris: [00:46:26] now? I think just don’t hold your head in the sand. Be careful what the doom stays and listened to.

And friends and family. A lot of people don’t know what they’re talking about and that’s not me being judgemental. It’s just, unfortunately the property market is the Australian favorite pastime watching it. And most people, unfortunately, haven’t gone into a lot of detail thinking it through and understanding where all the conflicts law and how it all works.

And. What makes one property? I think the thing to remember though, is a huge opportunity at PayPal because it is a tax-free growing asset and you get lifestyle benefits living in it with low interest rates. Unfortunately, that’s not going to end well for housing affordability and you’ll see a lot of price rises for good quality assets over the next few years.

And that’s not me trying to forecast. That’s just what the impact of interest rates on. Demand. And ultimately just remember that not any property is a good property and you really got to buy something. That’s ultimately, when you sell it one day, it might be hard to buy. And that’s a good thing, cause it would be easy to sell.

If it’s hard to buy and really focused on a quality of asset, Ebon potentially borrow a little bit more if it means getting a better quality asset, but also be careful buying something that you can’t grow into. We see that a lot of the time just buying something to get on the ladder. And then three years later saying, Oh like your brother doesn’t really want that life.

You’re back to square. One transaction costs lost your biggest opportunity, which is time, educate yourself and then surround yourself with good professionals. Should be careful on the property side. If you go to see someone. It helps you buy a property. Yeah. That’s where you can get yourself into danger.

You ask the wrong questions and say, where should I buy? And then off goes the South speech. Yeah. You speak to them.

Terry: [00:47:55] Awesome. That’s a pretty funny, good summary. So I’m not even gonna bother or I can do it at all. My thank you so much for coming on. It’s been a real pleasure and we really enjoy working with you as well.

We hope that can continue in the future too.

Chris: [00:48:05] Appreciate it. Thanks a lot. Cheers. Hi. If

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